Will I lose my home or the savings in my home during bankruptcy?

One of the most common questions I am faced with in my bankruptcy consultations is, “Will I lose my home or my savings in my home?” Fortunately, for most the answer is “no.” This is because of the bankruptcy exemptions provided to those who have resided in AZ for 2 years or longer.

An exemption in bankruptcy means that this property is exempt from the reach of creditors in the bankruptcy process. Here, as it relates to housing, individuals declaring bankruptcy in Arizona and eligible to take Arizona bankruptcy exemptions are entitled to a $150,000 homestead exemption per A.R.S. § 33-1101 in the equity of their residence.

Specifically, the Arizona homestead exemption provides as follows:

Interest in real property upon which debtor’s house sits, condominium, or cooperative, mobile home, in which the debtor resides plus the land upon which the mobile home is located in the amount of $150,000. May not be doubled by husband and wife.

Although the exemption may not be doubled by spouses, the exemption provides for a rather expansive protection of an individual’s (or married couple’s) home or living quarters. Further, with the current status of the Arizona real estate market for residential property, most debtors who are also homeowners end up keeping their home equity during the bankruptcy process.

This article is not intended to be legal advice. Consult an Arizona bankruptcy attorney to see if and how the law referenced above may apply to your specific situation and circumstances.

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