West, Longenbaugh and Zickerman P.L.L.C.
We Can Help You 520-790-7337 Se Habla Español

Can I Lose My Home to Unpaid Creditors?

Named One of the Best Divorce Law Firms in
Tucson by Kgun9
View All Legal Services »

Circumstances arise where you may be unable to pay your creditors and collection agents begin threatening you with lawsuits, judgments, garnishments, attachments. You may not be able financially to pay the creditors. Are you at risk of losing your home?

We need to identify the creditor(s) who are pursuing you. The creditor who has a mortgage or deed of trust on your home is commonly referred to as a "consensual" creditor which means the mortgage, deed of trust or other type of lien is one which you voluntarily agreed to. A consensual lien would include the mortgage you signed when you purchased the home, the home improvement loan where the lender was given a lien on your home or any other type of loan where you signed a lien document on your home as collateral for repayment of the loan. Failing to pay the consensual creditor can result in loss of your home through a deed of trust sale or mortgage foreclosure.

Other types of creditors have a very limited ability to force a sale of your home in Arizona because of the "homestead exemption." The first $150,000 of "equity" in your Arizona home is protected from creditors (other than the consensual creditor). "Equity" is the difference between the market value of your home (what it would sell for) and the unpaid balance of all consensual liens you have placed on the home. For example, your home is currently worth $200,000 and you owe $125,000 on consensual liens on the home. The equity is the difference between the $200,000 and the $125,000 or $75,000. The equity is less than $150,000 and is protected from creditors (other than the consensual creditor). Your creditors cannot force a sale of the home!

But what if your home is worth $200,000 and you have no consensual liens on it or the total consensual liens are less than $50,000. The equity is therefore greater than $150,000. The creditor(s) could force a sale of your home but the first $150,000 of proceeds from the sale of the home must be delivered to you. The creditor(s) get only the proceeds in excess of $150,000.

If your home is sold (either voluntarily by you or through a forced sale to pay creditors), The proceeds up to the $150,000 can be placed in a separate bank account and protected from creditors for up to 18 months from the date of sale or such earlier time as you purchase a new home.

The homestead exemption is available only on your personal residence. You can have only one residence on which the homestead exemption can be claimed. The exemption is "automatic". You do NOT have to record any document(s) establishing the homestead exemption. Your home can be a free-standing residence, a condominium or cooperative, a mobile home or a mobile home plus land on which the mobile home is located.

No Comments

Leave a comment
Comment Information

Let’s Begin Solving Your Legal Problem

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Contact Us Today »
West, Longenbaugh and Zickerman P.L.L.C.

310 S. Williams Blvd
Suite 250
Tucson, AZ 85711

Phone: 520-518-3781
Fax: 520-748-0852
Tucson Law Office Map

  • BirdEye Best Lawyers 2019