At the Pew Law Center, PLLC, we’ve noted over the years that a misconception many people have about bankruptcy is that there is a separate Arizona bankruptcy code. Attorney Lawrence ‘D’ Pew would like to take a moment to dispel a few myths regarding the existence of a so-called Arizona bankruptcy code.
First Myth about an Arizona Bankruptcy Code
That there is an Arizona bankruptcy code is, in itself, a myth. Bankruptcy laws are federal laws, not state laws. What we refer to as the U.S. Bankruptcy Code is in Title 11 of the U.S. Code. 11 U.S.C. § 101 et seq. The U.S. Bankruptcy Code is comprised of nine different chapters:
• Chapter 1: The General Provisions (§§ 101 — 112)
• Chapter 3: The Case Administration (§§ 301 — 366)
• Chapter 5: The Creditors, The Debtor, and The Estate (§§ 501 — 562)
• Chapter 7: The Liquidation (§§ 701 — 784)
• Chapter 9: The Adjustment of Debts of a Municipality (§§ 901 — 946)
• Chapter 11: The Reorganization (§§ 1101 — 1174)
• Chapter 12: The Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income (§§ 1201 — 1231)
• Chapter 13: The Adjustment of Debts of an Individual with Regular Income (§§ 1301 — 1330)
• Chapter 15: The Ancillary and other Cross-Border Cases (§§ 1501 — 1532)
Also, the U.S. Bankruptcy Court for the District of Arizona is a federal court, not a state court.
Second Myth about an Arizona Bankruptcy Code
The state exemption laws that apply to bankruptcy cases in Arizona do not create a so-called Arizona bankruptcy code. The statutory exemptions are state laws that exempt specific assets listed in a debtor’s federal bankruptcy petition. Our Arizona property exemptions are neatly encompassed in Chapter 8 of Title 33 on Property. Probably the most notable is the homestead exemption which protects up to $150,000 of the debtor’s equity value in certain real property interests. A.R.S. § 33-1101. The Arizona personal property exemptions (including equity in a vehicle of up to $5,000) protect the debtor’s interest from the reach of bankruptcy creditors in the identified personal property.
Be mindful that the U.S. Bankruptcy Code, the only bankruptcy code applicable to the states, has federal exemptions, too. 11 U.S.C. § 522. The states have chosen whether to accept the federal exemptions, or opt out of the federal scheme and adopt state exemptions instead. Whenever you have questions about such things it is usually best to contact a legal professional who can help. Arizona opted out of the federal bankruptcy exemptions, which is why we have our state exemption laws involved in a federal bankruptcy case. So once again, our state’s exemption laws are not part of some so-called Arizona bankruptcy code.
Third Myth about an Arizona Bankruptcy Code
The Local Rules of Bankruptcy Procedure for the District of Arizona are local procedural rules that apply to all bankruptcy cases in our state. The local rules only supplement (and in some limited circumstances may modify) the Federal Rules of Bankruptcy Procedure. The local rules indicate how the pleadings should appear, how amendments should be made, what a declaration of evidence of employers’ payments must include, when a case should be consolidated, and many other procedural matters. Therefore, Arizona’s local bankruptcy court rules are not considered in any way to be some kind of Arizona bankruptcy code.
Now that you have the truth – there is no Arizona bankruptcy code – you will not be fooled by misleading advertisements and threatening statements from bill collectors.