Filing in Oregon, Arizona Exemptions, or Federal Exemptions?

[abrokebum]

Hello everyone,

I am filling out the paperwork in preparation for filing Chapter 7 in Oregon (moved back from Arizona in July 2009).

I have a couple of questions, but am breaking them down in different posts:

Question 2: Which exemptions to use? Arizona, or Federal?

I have lived in Oregon for just over a year now, and according to the exemptions rules, I cannot use Oregon's exemptions, and must use my previous states exemption laws.

I have found several references on the Internet which state that Arizona exemptions are only available to people who reside in Arizona at the time of filing, and that the only exemptions available to me would be the federal exemptions. However, I can't find the official language in the AZ revised statutes that confirms that the AZ exemptions are not available to me. Can anyone point me to the document that tells me I cannot use AZ exemptions?

Thank you in advance!

[tcreegan]

Hello again abrokebum!

AZ 'opted out' of federal exemptions so you have to use AZ exemptions since you haven't lived in Oregon long enough.

You don't have to be currently living in AZ to use AZ exemptions. You just need to have lived there 2 yrs before you moved.

So you are stuck with AZ exemptions, which is not altogether a bad thing, their exemptions are not half bad compared to some other states.

Check out http://www.azb.uscourts.gov/Document...exemptions.pdf

Tom in Colo

[abrokebum]

You don't have to be currently living in AZ to use AZ exemptions. You just need to have lived there 2 yrs before you moved.

So you are stuck with AZ exemptions, which is not altogether a bad thing, their exemptions are not half bad compared to some other states.

Tom, thank you for the link to AZ's exemptions.

An excerpt from the PDF that you linked states:

"As of October 17, 2005, Arizona residents may claim the exemptions made available by Arizona law only if they were domiciled in Arizona for all of those two years before the bankruptcy filing. If the debtor was not domiciled in Arizona for all of those two years, then the debtor must claim the exemptions provided by the state where the debtor was domiciled for the greater part of the six months between two years and two and a half years before the bankruptcy filing."

Which leads me to the same conclusion that you have come to, and I actually had planned on using AZ exemptions until I went to the website exemptionsexpress .com, which is stating that I should use federal exemptions, but I cannot verify that to be true.

Here is the scenario from exemptionsexpress .com which makes me think AZ exemptions are not usable:

Assume your client has moved his domicile from another state to your
state of practice about one year ago.
1. If that debtor moved from Arizona, what exemptions are available to him/her?

Answer: The debtor is limited to use of the federal exemptions although Arizona has opted out of them. See chart on this website for explanation.

Unfortunately, I am still not certain which to use (neither set of exemptions is a problem for me), but I don't know how much trouble it will cause if I use the wrong ones, and how difficult it would be to change them later.

It's really important to me that I get this right, as I currently can't afford any additional filing fees that might be necessary to make changes, and I certainly can't afford to have the case dismissed due to incorrect paperwork, or procedure.

[tcreegan]

Hi abrokebum,

I'll bet the document from the AZ BK court will be more reliable than exemptionsexpress.com....this website seems a little sketchy...

Read a post from someone who used the wrong exemptions, trustee pointed it out at the 341 meeting, was a MAJOR problem, stuff that was exempt now wasn't, admending, refiling, stress,

BK law spells out residency for the BK:

If you have been in the state for 2yrs or more; that state is your BK residency state

If you have not been in the state for 2yrs, your residency is where you were living for the 6 months right before 2yrs ago.

So if you file Oct 2010, and have been in Oregon for less than 2yrs, your BK residency is where you were from May-Sept 2008

If you were in AZ for 2008, you use AZ exemptions. Federal exemptions are not allowed.

Hope this helps,

Tom in Colo

[abrokebum]

Tom,

I appreciate the effort that you have put in trying to help me out.

I finally found some information via google that makes me think the federal exemptions are indeed the way to go for my situation. As near as I can tell, AZ specifies that exemption rules only apply to residents of AZ. Thus, if you are not an AZ resident, then you can use the federal exemptions under the 180-day rule.

(www .arb.uscourts.gov/orders-rules-opinions/opinions/barry/wood.pdf)

Arizona Revised Statutes
33-1133. Other exemption laws

A. Nothing in this article shall be construed to displace other provisions of law which afford additional or greater protection to a debtor's property.

B. Notwithstanding subsection A, in accordance with 11 U.S.C. 522 (b), residents of this state are not entitled to the federal exemptions provided in 11 U.S.C. 522 (d). Nothing in this section affects the exemptions provided to residents of this state by the constitution or statutes of this state.

[ccsjoe]

abrkebum,

Unless I read this wrong, for the purposes of the filing, you are a resident of AZ. Therefore, you must use AZ exemptions as AZ, like CA, opted out of federal exemptions altogether.

This is quite normal for states that have opted out of federal exemptions and do not have a residency requirement, meaning you do not have to be a current resident to use their exemptions, but a resident during the legal time frame that applies under bk law.

The only time you can use federal in a state that opted out is if the state has residency requirements which would disqualify you from using their exemptions, then you would default to federal.

Hope this is not too confusing, felt a bit like it typing it in.

[abrokebum]

ccsjoe,

Thank you for the reply, I appreciate it.

After further review, the only thing that is confusing is the way Arizona has written their exemption laws, and that I have no idea what behavior to expect from the trustee.

In the post above, I attempted to link (but cannot as I do not have enough posts to include a link) an Arkansas Bankruptcy court order which mirrors my situation exactly.

In that order, the trustee objected to the use of federal exemptions, but was over-ruled, because the filers were not considered residents of AZ at the time of filing, and could therefore choose to use either the AZ exemptions, or the federal exemptions, because of 33-1133(A), and that 33-1133(B) only applies to AZ residents at the time of filing.

The only thing that is substantially different in this case is that the venue was Arkansas, and not Oregon.

At the end of the day, at least in this case, it looks like it is a choice for non-residents where AZ BK laws are applicable under the 180-day rule.

Personally, I am ready to, and can use either set of exemptions. (I've already completed schedule C both ways, and the benefits of using federal, over AZ, don't appear to make much difference for me.)

My only concern now, which will decide the set of exemptions I use, is if there is some reason the trustee would object to me using the AZ exemptions.

[ccsjoe]

OK, here's what I found from a law firm in AZ:

"State law decides what property you can keep out of bankruptcy proceedings, but you must be a valid resident to use these laws. Go back two years from the date of filing, and look at the 180 days before that. If you lived in Arizona during that 180 day period, you can use Arizona bankruptcy laws to protect your property."

Here's the link: http://arizonasbankruptcylaw.com/

[abrokebum]

Thanks Joe.

I doubt I will receive an answer, but I just fired off an email to the US Trustee program, detailing the situation, and asking them which set of exemptions would be more appropriate.

I do intend to use the AZ exemptions, unless there is a compelling reason not to do so.

[ccsjoe]

Maybe you could use this question along with some others and get yourself a couple free consults in which to get them answered.

[tcreegan]

Hi again brokebum,

The Arkansas people could use the federal because Arkansas allows the federal exemptions.

I think you are thinking about the requirement to be domciled (actually living there) in order to use the states exemptions.
(the Texas homestead exemption for example, cannot be applied outside Texas borders)

A couple states have this requirment, but not AZ.

You are good to go with AZ exemptions.

Good luck w/ your filing!

Tom in Colo