Some things to be aware of to keep your home in Arizona
- The value of your property
- The amount of the mortgage or any liens on the property
- The homestead exemption for Arizona is $150,000.
The value of the property
Figuring out the value of your property can be difficult without using an appraiser. Zillow is a site that we have used before.
Mortgage or liens on the property
A lien is the right of a mortgage lender to force a sale of the mortgaged property if the borrower fails to repay the loan as agreed.
Homestead Exemption
Homestead-exemption laws protect a person’s home from creditors that do not have liens against the property. The homestead exemption in Arizona is $150,000 which means you can have up to $150,000 in equity in your home without having to surrender it in bankruptcy.
Keeping your home in a Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
| Situation | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy |
| Mortgage current, equity less than $150,000 | Home shouldn’t be affected. Continue to make regular payments. | Home shouldn’t be affected. Continue to make payments outside the plan to avoid paying commission to the trustee |
| Mortgage payments are behind, equity less than $150,000 | The trustee won’t have much interest. Make up all back pay unless the mortgage company agrees otherwise | Must make regular monthly payments and make up back payments through the plan. |
| Equity is greater than the exemption | Trustee can sell the home, pay you $150,000, and pay the rest to the creditors. | Trustee can’t sell your home. Plan payments will be higher to cover the amount of nonexempt equity over the life of the plan. |
| No equity, mortgage is more than the property is worth and is in default | Temporarily stops foreclosure. Chapter 7 won’t save the home, but you won’t be personally liable for the loan. | If mortgages don’t qualify for dential mortgages, bifurcation is an option. |