Chapter 7 Bankruptcy in Arizona: How It Works, Who Qualifies, and What You Can Keep

Reviewed by: Casey Yontz, Attorney (18+ years bankruptcy experience)

Last updated: December 12, 2025

About the Author

If you’re researching chapter 7 bankruptcy Arizona, you’re probably trying to answer a few practical questions: “Can I erase credit cards and medical bills?”, “Will I lose my house or car?”, and “Do I qualify under the means test?” This guide walks through how bankruptcy chapter 7 in Arizona works in plain English, what the process looks like in real life, and the big decisions people usually face before filing.

What Chapter 7 Bankruptcy Does (and Does Not) Do

Chapter 7 is designed to give eligible filers a fresh start by discharging certain debts, usually without a long repayment plan. In many cases, the biggest relief is stopping the monthly “minimum payment treadmill” and getting breathing room to rebuild.

Debts Chapter 7 Commonly Discharges

• •Credit card debt
• •Medical bills
• •Personal loans and many signature loans
• •Many older utility balances and collections

Important Limits to Know Up Front

Some obligations typically survive bankruptcy, even after a chapter 7 discharge. Examples often include domestic support obligations and many student loans (unless a separate legal standard is met). Certain recent taxes can also be complex. The point isn’t to discourage you—it’s to help you set accurate expectations before you file bankruptcy chapter 7 Arizona.

What Happens to Your Property in an Arizona Chapter 7 Case

A chapter 7 case is administered by a trustee, who reviews the paperwork, looks for non-exempt value, and can administer non-exempt assets if it makes financial sense for creditors. Most consumer chapter 7 cases are “no-asset” cases, meaning the filer keeps their exempt property and there’s nothing to liquidate.

The key concept is exemptions. Exemptions are laws that protect certain equity or property from creditors—and in bankruptcy, they often determine what you can keep.

Arizona Exemptions: Two Big Examples

• •Homestead (primary residence): Arizona provides a homestead exemption not exceeding $400,000 in value (and the statute notes an annual adjustment). See A.R.S. § 33-1101 on the Arizona Legislature site. A.R.S. § 33-1101 (Homestead).
• •Motor vehicle equity: Arizona exempts equity in one motor vehicle up to $15,000, or $25,000 if the debtor (or a dependent) has a qualifying physical disability, with annual adjustment language in the statute. A.R.S. § 33-1125 (Personal Items; Vehicle Equity).

If you want a deeper exemptions walk-through (including common categories and planning issues), see our Arizona bankruptcy exemptions guide.

Do You Qualify? The Chapter 7 Means Test in Arizona

Most people qualify for chapter 7 bankruptcy Arizona in one of two ways:

• •You’re under Arizona’s median income threshold for your household size (based on your average gross income over the last six full calendar months).
• •You’re over median, but you still pass the means test after allowed deductions (certain living expenses and other deductions that bankruptcy forms apply).

In other words, being above the median doesn’t automatically mean you can’t file. It usually means you have more math to do before you know whether bankruptcy chapter 7 in Arizona is available to you.

Arizona Chapter 7 Income Limits

The table below shows Arizona’s median income levels for common household sizes. If your household’s average gross income over the last six full months is below the median for your household size, you typically qualify under the first “gate” of the analysis.

These figures reflect chapter 7 bankruptcy Arizona income limits effective for cases filed on or after November 1, 2025, based on the U.S. Trustee Program’s median income table (updated periodically). Always verify the most recent table here: UST Median Family Income by Family Size.

If You’re Above Median: The Arizona Chapter 7 Bankruptcy Means Test

If your income is above the Arizona median, you typically complete the chapter 7 means test calculation. The goal is to see whether, after allowed deductions, the numbers suggest you have enough “disposable income” to repay a meaningful amount of debt. If the calculation shows you don’t, you may still qualify to file bankruptcy chapter 7 Arizona.

• •Your “current monthly income” uses a lookback: it’s based on the last six full months, not just what you’re earning today.
• •Allowed deductions aren’t always your exact spending: many categories use standardized amounts and rules from the bankruptcy forms.
• •Timing can matter: if your income recently dropped (job change, reduced overtime, medical leave), a careful review of the six-month average and documentation can be important.

For an official overview of how the U.S. Trustee Program approaches means testing (including the data sources and forms involved), see: U.S. Trustee Program: Means Testing.

If you’re on the line, or you’re not sure how household size, overtime, self-employment, or irregular income should be handled, that’s one of the situations where speaking with an arizona chapter 7 bankruptcy lawyer can save you time and help you avoid filing mistakes.

How to File Bankruptcy Chapter 7 in Arizona: The Real-World Steps

If you’re considering filing for bankruptcy chapter 7 in Arizona, here’s what the process usually looks like from start to finish. (The details can vary, but this is the common roadmap.)

1. 1.Get organized: Pay stubs, tax returns, bank statements, a list of debts, and a basic household budget are the usual starting point.
2. 2.Take the required credit counseling course: This is a standard pre-filing requirement (timing matters, so don’t do it too early).
3. 3.Prepare and file the petition and schedules: Accuracy matters. Missing accounts, incorrect values, or incomplete disclosures can create delays or risk dismissal of the case.
4. 4.Automatic stay goes into effect: Filing typically stops most collection activity (calls, lawsuits, garnishments) while the case is pending.
5. 5.Attend the 341 meeting: You answer questions under oath about your paperwork. It’s usually brief, but you should be prepared and truthful.
6. 6.Complete the debtor education course: This is the post-filing course required to receive a discharge.
7. 7.Receive the discharge (if eligible): In many cases, the discharge arrives a few months after filing if there are no objections or unusual issues.

When an Arizona Chapter 7 Bankruptcy Lawyer Helps the Most

You can technically file on your own, but chapter 7 can get complicated fast when you have equity in a home, questions about a vehicle, recent transfers, business income, tax issues, or anything that could trigger objections. A lawyer typically helps by:

• •Running a means test analysis and spotting eligibility issues early (before you file).
• •Mapping out Arizona exemptions to reduce the risk of losing non-exempt value.
• •Preparing you for trustee questions and documenting any “special circumstances” that may matter.

If you’re deciding between chapter 7 and another path (like a repayment plan under chapter 13), you can compare approaches here: Chapter 13 bankruptcy in Arizona.

Downsides and Tradeoffs to Consider Before You File

• •Credit impact: A chapter 7 filing can affect credit for years, even though many people start rebuilding sooner than they expect.
• •Non-exempt property risk: If you have meaningful non-exempt equity, the trustee may administer assets in some cases.
• •Co-signers: Your discharge doesn’t automatically protect a co-signer from collection on a shared debt.
• •Some debts remain: Certain categories may survive, so plan for what your budget looks like after the case.

Alternatives to Chapter 7 (When They Make Sense)

Not everyone who searches bankruptcy chapter 7 arizona ends up filing chapter 7. Depending on your goals, one of these might fit better:

• •Negotiation or settlement: Sometimes workable when you have lump-sum funds or leverage (but watch for tax and credit consequences).
• •Debt management plan: A structured plan through a reputable credit counseling agency (often focused on interest reduction rather than principal forgiveness).
• •chapter 13 repayment plan: Often used to catch up on arrears, protect certain assets, or handle non-exempt equity over time.

Bottom Line: Is Chapter 7 Bankruptcy in Arizona Right for You?

Chapter 7 can be a powerful reset for people facing overwhelming unsecured debt—especially when income is tight and a long repayment plan would be unrealistic. But the “right” answer depends on your exemptions, equity, income trend, and what you want to protect.

If you’re ready for a personalized review of whether you can file bankruptcy chapter 7 Arizona, consider talking with an arizona chapter 7 bankruptcy lawyer to confirm eligibility, protect what you can keep under Arizona exemptions, and avoid preventable filing mistakes.

Arizona Chapter 7 Bankruptcy FAQs

What debts can chapter 7 bankruptcy discharge in Arizona?

chapter 7 commonly discharges many unsecured debts, such as credit card balances, medical bills, personal loans, and many collection accounts. Some categories often have special rules or may not be discharged in a typical case—so it’s important to identify exactly what debts you have (including any lawsuits, judgments, support obligations, or recent tax issues) before assuming everything will be wiped out. A review of your creditor list and any court paperwork helps set accurate expectations.

Will I lose my house or car if I file chapter 7 bankruptcy in Arizona?

Not necessarily. In most consumer chapter 7 cases, people keep their exempt property, and many cases are “no-asset” cases. What you can keep usually depends on Arizona exemptions and how much equity you have in the home or vehicle. Payment status can matter too—being current versus behind can change the strategy. If you’re worried about a home or car, the key is to evaluate equity, exemptions, and timing before you file.

How do I qualify for chapter 7 bankruptcy in Arizona?

Most people qualify in one of two ways: their household’s average gross income over the last six full calendar months is below Arizona’s median for their household size, or they’re above the median but still pass the means test after allowed deductions. Because the “current monthly income” calculation uses a six-month lookback, recent changes in overtime, job hours, or self-employment income can affect the result. If you’re close to the line, a careful means test review can prevent mistakes.

How long does a chapter 7 bankruptcy case usually take in Arizona?

Many chapter 7 cases follow a predictable timeline: complete the required pre-filing credit counseling course, file the petition and schedules, attend the 341 meeting with the trustee, complete the post-filing debtor education course, and then receive a discharge in eligible cases. While timelines vary, many cases reach discharge a few months after filing if there are no unusual issues or objections. The fastest cases are usually the ones with complete, accurate paperwork and good documentation.

What should I avoid doing before filing chapter 7 bankruptcy in Arizona?

The most common problems come from last-minute decisions that create extra questions later—like using credit right before filing (especially cash advances), transferring property to family “for safekeeping,” repaying relatives right before filing, or withdrawing retirement funds without understanding the tax and bankruptcy consequences. If bankruptcy is on the table, it’s usually smart to pause major financial moves and get advice on what to do (and not do) before you file.