Bill would update permissible items in bankruptcies

2013-02-10T00:00:00Z Bill would update permissible items in bankruptciesHoward Fischer Capitol Media Services Arizona Daily Star
February 10, 2013 12:00 am  • 

PHOENIX - The head of the House Judiciary Committee wants to update Arizona's dated and sometimes anachronistic bankruptcy laws.

Nothing in the proposal by Rep. Eddie Farnsworth, a Gilbert Republican, would alter the process that allows individuals to seek protection from creditors. Those are set in federal law.

That same federal law allows each state to decide what people declaring bankruptcy can keep. And Arizona's list is long overdue for an overhaul, Farnsworth said.

The big problem, he said, is that it is far too specific.

Consider: The Arizona law allows debtors to keep one kitchen table and one dining room table with four chairs each. They can keep additional chairs if there are more than four in the house.

The list of permissible items also includes three living room lamps, one radio alarm clock, one vacuum cleaner and a choice of one television set, radio or stereo.

The total value of all that cannot exceed $4,000.

House Bill 2325 would keep that $4,000 limit for household items. But it would strike the specifics of what can be included, to give those in bankruptcy some individual choices in deciding what's important to them.

"One person may have a hutch from their great grandmother that they want," Farnsworth explained. "Somebody else may have a clock that's important, or two clocks that are family heirlooms. This just gives them flexibility within the already established cap on exempted property."

Another section of existing law gets into other kinds of items that are off-limits to creditors. Individuals can keep all their musical instruments - but only up to a fair market value of $200. Farnsworth's legislation would double that figure.

Ditto for an allowance for all engagement and wedding rings, with the new cap on their total value proposed to go to $2,000.

The law even deals with domestic pets, horses, milk cows and poultry. These now can be shielded from bankruptcy if they're worth no more than $500; Farnsworth's legislation moves that figure to $800.

And an individual would be able to have up to $6,000 equity in a motor vehicle, up by $1,000, and $300 in a bank account, double the current limit.

Finally, Farnsworth wants to bring Arizona's law into the 21st century - or at least the late 20th century.

As the statute exists, individuals can keep one typewriter, one bicycle, one sewing machine, a family Bible, a lot in any burial ground and one shotgun, rifle or pistol, though there is an aggregate limit on value of $500. HB 2325 would not only update that total figure to $1,000 but add one other thing to that list: a computer.

And that may not be the last word.

Farnsworth acknowledged that there is another piece of technology which has become indispensible for many - and is a tool they may need to seek and keep a job: a cellphone. He said the legislation could be altered as it goes through the hearing process.

Another update being proposed to the law relates to employment needs.

The law already exempts tools, equipment, instruments and books used in a debtor's business, up to a value of $2,500. Farnsworth not only seeks to double that figure, but he wants that exemption to include something else that might have value: telephone numbers or client contact information.

Not everything in the list of what debtors can keep has a dollar value attached. Someone seeking protection from creditors also can keep a professionally prescribed artificial limb or a wheelchair.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.