Chapter 7 Bankruptcy Basics in Arizona
Chapter 7 bankruptcy is often called a “fresh start” bankruptcy because it allows people to eliminate (discharge) certain debts, such as credit card balances, personal loans, and medical bills. In exchange, you may have to give up some property so that creditors can be repaid.
What is Chapter 7 bankruptcy?Unlike repayment plans (such as Chapter 13), Chapter 7 is usually a faster process — most cases are resolved within 3 to 6 months.
Who Can File for Chapter 7 bankruptcy in Arizona?
Not everyone qualifies. To file Chapter 7 in Arizona, you must pass a means test that compares your household income to the Arizona median income:
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If your income is below the median, you likely qualify.
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If it’s higher, you may still qualify after accounting for necessary expenses like housing, transportation, and childcare.
You also cannot file another chapter 7 if you’ve had another bankruptcy discharge within the past 8 years.
Debts That Chapter 7 bankruptcy Can Eliminate in Arizona
Typically erased (discharged):
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Credit cards
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Medical bills
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Unsecured personal loans
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Utility bills
Not usually discharged:
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Student loans (except in rare hardship cases)
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Child support and alimony
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Most recent tax debts
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Criminal fines and restitution
What Happens to my property in chapter 7 bankruptcy in Arizona
Arizona bankruptcy exemptions determine what property you can keep. These exemptions are specific to Arizona law (you cannot use federal exemptions if you live here).
As of 2025, common Arizona bankruptcy exemptions include:
Homestead exemption: up to $425,000 of equity in your primary residence
Motor vehicle exemption: up to $16,000 equity in one car (or $26,000 if you are disabled)
Household furniture and goods: up to $15,600 total
Clothing and personal items: reasonable amounts
Retirement accounts and pensions: generally protected
Because of these exemptions, most Arizonans filing Chapter 7 keep their home, car, and personal belongings.
Frequently Asked Questions
Do I lose my car if I file Chapter 7 in Arizona?
Its extremely rare for a client to lose a car in a chapter 7 bankruptcy, and you will know before you file if your car is at risk. If your equity is under $16,000 (or $26,000 if disabled), Arizona exemptions protect it. Typically, people have far less equity than the exemption and thus their car is safe!
How long does bankruptcy stay on my credit report in Arizona?
A Chapter 7 filing appears on your credit report for 10 years, but many Arizonans start rebuilding their credit within 1–2 years. It is common for clients with lower credit scores to even experience their score go UP right after filing since the positive of discharging their debt in bankruptcy exceeds the negative mark of the bankruptcy itself
Can both spouses file Chapter 7 together in Arizona?
Yes. Married couples can file jointly, which can save court fees and streamline the process. It also typically doubles the exemption amounts, while you can certainly file as in individual in Arizona while married, the community property laws typically make it much simpler to file together.
Thinking about filing bankruptcy
Don’t worry — you won’t be branded with a giant “B” on your forehead, and no one’s going to play sad violin music when you walk into a bank. Bankruptcy is simply a financial reset button, and the sooner you push it, the sooner you can move forward. A chapter 7 bankruptcy will provide you with a fresh start, so put the social stigma to the side and make the right decision for your future.
Our network of trusted Arizona bankruptcy attorneys can help you stop dodging creditor calls, explain your options in plain English, and point you toward the best path forward — without judgment (and definitely without paperwork-induced tears).