Residency Issues in
Debtors who are considering filing for bankruptcy
will be affected to varying degrees by at least three significant residency
issues that are described below.
Time in the State. For a debtor to file a
bankruptcy petition in Arizona (or any other state), they must have lived in
Arizona for the greater part of the 180 days prior to the bankruptcy filing.
Another residency issue arises in regard to which states exemptions apply
to a recently relocated debtor. Exemptions are those provisions of state,
federal and bankruptcy law that allow a debtor to keep some of their money and
property despite filing a bankruptcy.
For a bankruptcy filed in Arizona, the exemptions
are those provided by Arizona law and as well as some by federal law. However,
in order to claim Arizona exemptions, the debtor must have lived continuously in
Arizona for two years. If the debtor has not lived continuously in Arizona for
two years, then the debtor can claim the exemptions from the state in which they
previously lived, so long as they had continuously lived there for two years. If
the debtor does not meet either residency requirement, the debtor must use those
of the Bankruptcy Code.
Homestead Exemptions. The right to claim a
homestead exemption is also effected by a residency requirement. The homestead
exemption under Arizona law protects $150,000 of equity in a residence a
house, or a mobile home and the land on which it is located that is used
primarily for personal, family or household purposes (see
related article). The homestead is reduced
to $125,000 if the filing debtor owned the house for less than 3.3 years
(actually 1,215 days) unless the debtor had lived in another house in Arizona
and sold that house to move into their current home.