For most Phoenix residents, the answer is yes. Arizona provides a vehicle exemption of $6,000, and Chapter 13 offers additional options.
Arizona's vehicle exemption protects $6,000 per person under A.R.S. section 33-1125(8) (or $12,000 if no homestead is claimed). Vehicle equity is calculated as the fair market value minus what you owe on the loan.
Example: If your car is worth $12,000 and you owe $10,000, your equity is $2,000. If your equity is within the $6,000 exemption, it is fully protected.
Under 11 U.S.C. section 1325(a), if you purchased your vehicle more than 910 days (approximately 2.5 years) before filing:
Example: You owe $18,000 on a car worth $10,000. Through cramdown, you pay approximately $10,000 plus interest. The $8,000 difference is treated as unsecured debt.
If your car was recently repossessed in Phoenix, time is critical. Filing bankruptcy triggers the automatic stay, which can force the creditor to return the vehicle if it has not been sold yet.
Contact a Phoenix bankruptcy attorney immediately if your car has been repossessed or is about to be.
In most cases, yes. Arizona allows a vehicle exemption of $6,000. If you owe more than the car is worth, your equity is protected. In Chapter 13, you can keep your car regardless of equity.
Arizona allows a vehicle exemption of $6,000 per person under A.R.S. section 33-1125(8) (or $12,000 if no homestead is claimed).
A reaffirmation agreement is a new contract with your car lender that keeps you personally liable for the debt after bankruptcy. You continue making payments and keep the car. The debt survives your discharge.
Redemption under 11 U.S.C. section 722 allows you to keep your car by paying the lender the current fair market value in a single lump-sum payment, even if you owe more.
In Chapter 13, if you purchased your car more than 910 days before filing, you can cram down the loan to the car's current value. You pay only the vehicle's value through your plan at a court-approved interest rate.
If your car was recently repossessed, filing bankruptcy may allow you to recover it. The automatic stay can force the creditor to return the vehicle if it has not been sold yet.
Use the free 1328(f) screener to check whether a prior discharge affects your eligibility for a new bankruptcy discharge.
Free Discharge Screener Means Test Guide