Because so many people are upside down on their homes and facing foreclosure, I often have people asking me if they need to file bankruptcy to protect them from the debt they owe on their home. If the only debt these people have is a first mortgage on an Arizona home, then the answer is usually no. Arizona has what is called Anti-deficiency statutes. These statutes protect home owners in Arizona from having to pay the balance of a mortgage debt if the entire debt is not satisfied and paid through the foreclosure sale.
To qualify for this protection, both the loan and property must meet the statutory requirements. First, the loan must be a purchase money loan. This means the loan must have been taken out for the purchase of the property. Second, the home must be situated on less than 2 ½ acres of land. Third, the structure on the property may only be utilized as a single or double family home. The property does not need to be your primary residence, so it is possible to obtain this protection even on a rental property.
Therefore, if your first mortgage is the only debt you have, and you qualify for anti-deficiency protection, then bankruptcy may not be the right choice for you. If, however, you have other debts, or you do not qualify for anti-deficiency protection, you may still need to file.
If you have any questions about Arizona Mortgage Debt and bankruptcy, call to set up a consultation. You have more options than you think. Call experienced Arizona Bankruptcy Attorney, Benjamin Skinner at JacksonWhite today! (480) 648-8975.