Arizona anti-deficiency law

Follow these guidelines if you have lost your Arizona home in foreclosure.

Arizona has an anti-deficiency law that is spelled out in ARS§33-814. In order for the statute to protect you from a deficiency after foreclosure the following circumstances must exist:

1.   The home is situated on 2.5 acres or less;

2.   The home was used as a dwelling;

3.   A trustee sale occurred

So long as these three elements exist than you are not responsible for any difference between the value of the home and the amount of debt outstanding on the home. The banks recourse is to auction the home at a trustee sale. If no one buys the home at the trustee sale and the property reverts back to the bank than the deficiency statute still protects you.

An exception to this rule includes a home equity line of credit. These types of debts are still collectible after a trustee sale and the deficiency statute will not protect you from the bank. However, the bank has only 90 days in which to file a lawsuit against you and sometimes that is not enough time to accomplish that task. Filing bankruptcy is one way to deal with this type of lawsuit as it would, more likely than not, extinguish your obligation to pay the debt. Tucson bankruptcy filings have increased because many debtors have been sued by banks that hold home equity line of credit notes. Many times bankruptcy is the best solution when dealing with this type of situation; however it is best to consult with a qualified bankruptcy attorney before making any decisions.

Stephen Trezza, Tucson Bankruptcy Attorney.