Attention homeowners! If you are considering filing for bankruptcy in Arizona, there is a very important exemption that you need to know about to ensure that you can keep your home.
The homestead exemption is an important thing to consider, especially for Arizonans. It looks at the equity you have in your home—that is, when your home is worth more than you owe on your mortgage—to determine if you must sell your home to pay off creditors.
Why is the homestead exemption so important for those living in Arizona, namely the greater Phoenix area?
When the housing market crashed at the beginning of the decade, homes in the area were selling for far less than they were worth. This lead to many people buying houses that gained value as the market recovered, leaving many new homeowners with significant equity after only a short period of time.
For many people, equity in a home is a good thing—a very good thing. When you are filing for bankruptcy, however, too much equity could lead you to lose your home.
What is the homestead exemption amount in Arizona?
Arizona bankruptcy law sets the homestead exemption amount at $150,000 for both single and married filers on their primary residence. This means that if your house is worth $350,000 and you owe $200,000, you can apply your homestead exemption to protect your house from being sold to pay off your creditors.
If your house is worth $400,000 and you owe $200,000, however, there is a good chance that the bankruptcy trustee will sell your home to pay off your debt. You will be paid the amount of your exemption, and the remainder (in this case, $50,000) will be divided amongst your creditors.
There are other important requirements to taking full advantage of the homestead exemption in Arizona, and the Phoenix bankruptcy lawyers at Curry, Pearson & Wooten can help you explore this option. Call today for a free consultation with one of our experienced attorneys at 602-258-1000.