Bankruptcy and Losing Your Home in Arizona

bankruptcy and losing your homeWe know that debt can be overwhelming and consume all aspects of your life. However, bankruptcy protections are in place to help people get out of debt and get their life back on track. We know that there are many reasons that people are hesitant to discuss or file for bankruptcy. Often, they feel they will be stigmatized by family or friends and labeled as a failure. Other times, people have misconceptions about what will happen during the bankruptcy process.

One of the main things people fear is losing their home. However, we want you to know that this is not something you need to fear. There are many exemptions a person can claim when filing for Chapter 7 bankruptcy and one of those deals with your home.

Homestead Exemption

Bankruptcy protections are in place so a person can get their debts discharged. However, this is not possible without some sacrifice on the part of the person who files. A person filing for Chapter 7 bankruptcy will almost always lose some of their property.

  • But that does not mean they will be left with nothing.

In recognition that having a home is vital for a person’s ability to get back on their feet financially, the Arizona homestead exemption protects up to $150,000 of a person’s equity in their primary residence.

What if the value of the homestead exceeds $150,000?

It the value of a person’s primary residence is over $150,000, a creditor can theoretically force the sale of the home. However, the homestead statute will only allow this if the sale would cover the full $150,000 exemption as well as all liens and encumbrances associated with the property. This means that even if a person has more than $150,000 in equity on their home property, a creditor may very well not force its sale.

Please note that a married couple in Arizona is not eligible to double the homestead exemption.

What kind of property is covered?

Under the homestead exemption, you can include the following:

  • A home and the land it is on
  • A mobile home and the land it is on (if you own the land)
  • A condominium

In all of these cases, the exemption can only be made if you actually live in the dwelling.

Can I Keep Other Property?

Yes, you can keep property other than your residence. After all, what good would a home be if you lost everything else that makes it a home? You can view a complete list of Arizona bankruptcy exemptions by clicking here. Some of the common exemptions include:

  • A range of personal property (furniture, appliances, electronics) up to $6,000
  • A vehicle up to $6,000 in value ($12,000 if the person or their spouse is disabled)
  • Up to 75% of a person’s disposable income
  • Food and fuel for six months
  • Retirement savings and pensions
  • Clothing up to $500

Moving Forward From Here

Filing for bankruptcy can seem like a daunting process. It would be in your best interest to seek help from a qualified and experienced Arizona bankruptcy attorney who can walk you through the process from beginning to end. The paperwork can be complicated. You must gather an enormous amount of information about your finances, assets, and debts. By trying to handle the process by yourself, you could end up losing more money than you would have paid an attorney to assist you. An attorney can help you decided which type of bankruptcy will be the most beneficial and handle all negotiations with courts and creditors on your behalf.

Click here for information on child support and alimony in bankruptcy.