Filing Chapter 7 Bankruptcy in Arizona (2026)
Reviewed by DocDraft Legal Team · Arizona · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set by Arizona. Arizona is an opt-out state: under A.R.S. 33-1133 you must use Arizona's exemptions and cannot choose the federal 522(d) list. Arizona raised its exemptions sharply through Proposition 209 in 2022, lifting the homestead to a base of $400,000 that is now adjusted for inflation every year and shrinking wage garnishment. This page explains Arizona's homestead exemption under A.R.S. 33-1101, the vehicle, household, and bank-funds figures, the means-test median income, and the single U.S. Bankruptcy Court for the District of Arizona where Arizonans file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Arizona use state or federal bankruptcy exemptions?
Arizona is an opt-out state. Under A.R.S. 33-1133 the state has opted out of the federal 11 U.S.C. 522(d) exemption set, so a debtor filing bankruptcy in Arizona must use Arizona's own exemptions. You cannot choose or mix in the federal list; only the Arizona exemptions, plus federal non-bankruptcy protections like ERISA plans, apply.
Can I keep my house if I file Chapter 7 in Arizona?
Often yes. Under A.R.S. 33-1101, Arizona's homestead exemption protects a base of $400,000 in equity in your home, adjusted for inflation every January 1 since 2024, so the current figure is higher. Proposition 209 raised this cap in 2022. If your home equity fits within that amount, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in Arizona?
Usually yes if your equity is modest. Under A.R.S. 33-1125, Arizona exempts a base of $15,000 of equity in one motor vehicle, adjusted for inflation annually, and a higher figure if you or a dependent has a physical disability. If your car equity is at or below the current adjusted figure, the vehicle is protected. Higher equity may be partly reachable.
What is the income limit to file Chapter 7 in Arizona?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Arizona are $73,935 for one earner, $89,027 for two, $104,965 for three, and $121,174 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Arizona's Opt-Out Rule, the Prop 209 Homestead, and the District of Arizona Court
Arizona is a bankruptcy opt-out state. Under A.R.S. 33-1133 the legislature has opted out of the federal 11 U.S.C. 522(d) exemptions, so a debtor filing in Arizona must use Arizona's exemptions and cannot elect the federal set. Unlike a handful of choice states, there is no federal-versus-state election here. What makes Arizona distinctive today is Proposition 209, the Predatory Debt Collection Protection Act passed by voters in 2022, which sharply raised Arizona's exemptions and, under A.R.S. 33-1101, lifted the homestead to a base of $400,000 in equity that is adjusted for the cost of living every January 1 beginning in 2024, so the amount protected in 2026 is higher than the base. Prop 209 also cut wage garnishment, protecting roughly 90 percent of disposable earnings under A.R.S. 33-1131. The headline personal-property figures are large by national standards: a base of $15,000 in one motor vehicle under A.R.S. 33-1125 and $15,000 in household goods under A.R.S. 33-1123, both inflation-adjusted, plus protected bank funds under A.R.S. 33-1126. Arizona has a single federal district, so every Arizona debtor files in the U.S. Bankruptcy Court for the District of Arizona, which sits in Phoenix, Tucson, Yuma, and Flagstaff.
Relevant Laws
Arizona Homestead Exemption (A.R.S. 33-1101)
Sets Arizona's homestead exemption at a base of $400,000 in equity in a home, dwelling, condominium, or mobile home, raised by Proposition 209 in 2022 and adjusted for the cost of living every January 1 beginning in 2024. This is the exemption that lets many Arizona homeowners keep their house in Chapter 7.
Arizona Opt-Out From Federal Exemptions (A.R.S. 33-1133)
The statute by which Arizona opts out of the federal 11 U.S.C. 522(d) exemption set. Because of this section, a debtor filing bankruptcy in Arizona must use the Arizona exemptions rather than choosing the federal list, and cannot combine the two.
Arizona Motor Vehicle and Personal Property Exemptions (A.R.S. 33-1125)
Exempts a base of $15,000 of equity in one motor vehicle, with a higher figure for a debtor or dependent with a physical disability, plus a schedule of personal-property items, all adjusted for inflation annually after the Proposition 209 increases.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which Arizona has done, and section 707(b) sets the means test measured against state median income.
Regional Variances
Arizona Chapter 7 Exemption Table
Homestead
A.R.S. 33-1101: a base of $400,000 of equity in a home, dwelling, condominium, or mobile home. Raised by Proposition 209 in 2022 and adjusted for the cost of living every January 1 beginning in 2024, so the amount protected in 2026 exceeds the $400,000 base. Confirm the current adjusted figure.
Motor vehicle
A.R.S. 33-1125: a base of $15,000 of equity in one motor vehicle, adjusted for inflation each year, and a higher figure if the debtor or a dependent has a physical disability. Equity above the current figure may be reachable by the trustee.
Household goods
A.R.S. 33-1123: a base of $15,000 in household furniture, furnishings, goods, and appliances used personally by the debtor and family, adjusted for inflation annually. Arizona does not provide a broad general wildcard, so these category-specific figures are what protect most personal property.
Bank funds and benefits
A.R.S. 33-1126: protects money benefits and proceeds, including a portion of funds on deposit in a single account at one financial institution (a base figure adjusted for inflation), plus life insurance, annuity, and certain benefit proceeds. This is the closest Arizona comes to protecting general cash.
Wages
A.R.S. 33-1131: after Proposition 209, a creditor can generally garnish only about 10 percent of a debtor's disposable earnings, leaving roughly 90 percent exempt, far more protective than the federal 25 percent cap. This exemption carries into bankruptcy for wage earners.
Retirement and tools
A.R.S. 33-1126 protects IRAs and similar retirement funds, and ERISA-qualified plans are separately excluded from the bankruptcy estate under federal law. A.R.S. 33-1130 exempts tools, equipment, and instruments used in the debtor's trade or business up to the statutory amount, adjusted for inflation.
Suggested Compliance Checklist
Confirm the current Arizona means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Arizona median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $73,935 for one, $89,027 for two, $104,965 for three, and $121,174 for four, adding $11,100 per additional person.
Confirm the current inflation-adjusted Arizona exemption amounts
Before preparing your schedules days after startingArizona's homestead ($400,000 base under A.R.S. 33-1101), vehicle (A.R.S. 33-1125), and household-goods (A.R.S. 33-1123) exemptions are adjusted for inflation every January 1 since 2024, so the protected figure in 2026 is above the base. Verify the current adjusted amounts before you value your assets.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for the District of Arizona and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of Arizona, the single federal bankruptcy court for the state, in the division for where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Arizona means-test median income | Check your household size against the U.S. Trustee Arizona median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $73,935 for one, $89,027 for two, $104,965 for three, and $121,174 for four, adding $11,100 per additional person. | - | Before you file |
| Confirm the current inflation-adjusted Arizona exemption amounts | Arizona's homestead ($400,000 base under A.R.S. 33-1101), vehicle (A.R.S. 33-1125), and household-goods (A.R.S. 33-1123) exemptions are adjusted for inflation every January 1 since 2024, so the protected figure in 2026 is above the base. Verify the current adjusted amounts before you value your assets. | - | Before preparing your schedules |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for the District of Arizona and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of Arizona, the single federal bankruptcy court for the state, in the division for where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Under A.R.S. 33-1101, Arizona's homestead exemption protects a base of $400,000 of equity in your home, dwelling, condominium, or mobile home. Proposition 209 raised the amount in 2022, and the statute adjusts it for the cost of living every January 1 beginning in 2024, so the figure protected in 2026 is above $400,000. Confirm the current adjusted amount before you rely on it.
Under A.R.S. 33-1125, Arizona exempts a base of $15,000 of equity in one motor vehicle, adjusted for inflation each year, with a higher figure if you or a dependent has a physical disability. Only your equity counts, so a car with a loan near its value has little exposed equity. Equity above the current figure may be reachable by the trustee.
Arizona is a single federal judicial district, so every Arizona debtor files in the U.S. Bankruptcy Court for the District of Arizona. It has divisional offices in Phoenix, Tucson, Yuma, and Flagstaff. You file where you have lived for most of the prior 180 days, and the court assigns your case to the appropriate division.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
Proposition 209 sharply cut Arizona wage garnishment. Under A.R.S. 33-1131, disposable earnings are protected so that a creditor can generally reach only about 10 percent, leaving roughly 90 percent exempt, well above the federal 25 percent garnishment cap. This protection carries into bankruptcy and shields most of a wage earner's take-home pay from unsecured creditors.
Other Arizona guides
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