ARIZONA STATE SENATE
Phoenix, Arizona
Increases
the fair market value (FMV) exemption for a personal motor vehicle during a
bankruptcy proceeding.
Although bankruptcies occur in federal court, each state sets the
value of personal property that may be exempted from the process. When a person enters bankruptcy court, certain
items are exempt from bankruptcy proceedings under Arizona law, including
vehicles up to a value of $1,500 or up
to $4,000 if the debtor is “maimed or crippled.” S.B. 1175 increases the values to $5,000 and $10,000
respectively.
In the joint bankruptcy
filing of spouses, spouses may combine their exemptions or each spouse may
separately declare the allowable exemption (A.R.S. 33-1121.01). Therefore, under the bill, vehicles valued
under $5,000 are exempt. Spouses
jointly filing for bankruptcy could exempt up to a total of $10,000 in FMV for their vehicle or vehicles.
Current statutory limits
regarding the FMV of vehicles have not increased since 1976 or kept pace with
inflation. Some practicing bankruptcy
attorneys believe current values are below the cost of reasonable and reliable
transportation.
The anticipated fiscal
impact of S.B. 1175 on the state general fund is expected to be minimal.
1.
Increases,
from $1,500 to $5,000, the motor vehicle FMV exemption in bankruptcy
proceedings.
2.
Increases,
from $4,000 to $10,000, the FMV exemption in bankruptcy proceedings for
individuals referred to in statute as “maimed or crippled.”
3. Provides for a general effective date.
Prepared by Senate Staff
January 26, 2001