Tools of the Trade

From a handyman or plumber...

Whenever a person files for bankruptcy, they get to keep certain property, while other property must be turned over to the Bankruptcy Court.  Whether or not a person gets to keep a certain type or amount of property depends on whether or not it is exempt.  This is what is meant by the word "Exemptions."  In the State of Arizona, exemptions are granted by statute (written law).

Today, we want to touch on the "Tools of the Trade" exemption.  Arizona's "Tools of the Trade" exemption is written in A.R.S. Section 33-1130.  Here is the language:


...to a hairdresser,
the "Tools of the Trade"
exemption may protect your
ability to make a living!

"The following tools and equipment of a debtor used in a commercial activity, trade, business or profession shall be exempt from process:

1. The tools, equipment, instruments and books of a debtor or the spouse of a debtor primarily used in, and necessary to carry on, the commercial activity, trade, business or profession of the debtor or the debtor's spouse, not in excess of an aggregate fair market value of two thousand five hundred dollars. For the purpose of this paragraph, "tools" do not include a motor vehicle primarily used by a debtor for personal, family or household purposes such as transportation to and from the debtor's place of employment.

2. Farm machinery, utensils, implements of husbandry, feed, seed, grain and animals not in excess of an aggregate value of two thousand five hundred dollars belonging to a debtor whose primary income is derived from farming.


3. All arms, uniforms and accoutrements required by law to be kept by a debtor."

Obviously, sections 2 and 3 above will not apply to most people, since farmers/ranchers/law enforcement are fairly specific types of employment.  However, it is important to note that there are specific Tools of the Trade exemptions available to them, and no one else.

For most people using the Tools of the Trade exemption, section 1 above becomes very important.



Here's the short of it...  If a person files for bankruptcy and they own their own business, that person can protect $2,500 worth (garage sale value) of any tools, equipment, instruments and books that are primarily used, and necessary, to that business.  The exemption increases to $5,000 worth of tools, if the debtor is married, since the debtor's spouse gets an exemption as well. 

It is important to realize that the Tools of the Trade exemption does NOT apply to a vehicle that is primarily used for household purposes, such as driving to and from work.



Whether you're a handyman, a hairdresser, or anything in between, you may be able to protect your "Tools of the Trade" if you need to file for bankruptcy.  If you have questions, and you would like to discuss your situation with us, please give us a call to set up your free bankruptcy consultation.