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The Homestead Exemption Is Changing In Arizona – Good News Or Not!?

March 21, 2024

Among the bankruptcy attorney community many of us are discussing Arizona House Bill 2617, which amends the Arizona Homestead Statute, and related statutes, effective January 1, 2022. The short take on the bill is that the bill is not primarily anti-consumer, and has significant redeeming qualities that may benefit a lot of people but, as usual, it’s not all good.

What Changed?

First, the bill clarifies a question regarding the 2018 statutory amendment increasing the effective period of a judgment. I’m not a fan of that amendment as it was clearly anti-consumer. I just don’t understand why they basically made judgments seemingly eternal if you continue to renew them. A.R.S. § 12-1551 is amended to state expressly (a) that the 10-year renewal period of current law applies to (i) judgments entered on or after August 3, 2013, and (ii) judgments entered on or before August 2, 2013 and renewed under the prior 5-year statute on or before prior to August 2, 2018, and (b) judgments entered on or before August 2, 2013 and not timely renewed on or before August 2, 2018 are not revived.


Second, the bill increases the homestead exemption from $150,000.00 to $250,000.00. WOO HOO!!! Given the recent skyrocketing in the housing market values, the increase is long overdue and they should probably amend it again so that the exemption at least increases annually with the cost of living. The prior $150,000.00 exemption was an absolute joke and completely insufficient to enable people to use the proceeds of a forced sale to acquire a new homestead. The change is beneficial to debtors and contrary to the interests of creditors...for once. This has led to some people to start bankruptcy planning; since the state law exemptions available under 11 U.S.C. § 522(b)(3)(A) are those that are "applicable on the date of the filing of the petition." The higher homestead exemption has created quite the incentive to prospective bankruptcy filers to delay filing until 2022.


Finally, A.R.S. § 33-964 will be amended to provide that a recorded judgment is a lien against all property owned by judgment debtor in the county where recorded, including homestead property!


Therefore, if you get sued and a civil judgment is granted against you, this judgment could become a lien on your real property, homestead or not, provided that the property is in the same county that the lien is recorded. Furthermore, this judgment can travel through time and attach to property that you acquire AFTER the judgment! Lastly, this subsection applies retroactively to all judgments without regard to when the judgment was recorded. So, if you have a judgment against you that was recorded in 2020 and you bought a house in 2021, that judgment will now attach to your house! Super cool, huh? I’m pretty sure if voters were asked if they wanted this, 99% of us would say “HELL NO!!!”

A.R.S. § 33-964B (as amended eff. 1/1/2022)

This is a significant change from the anomalous situation presented by prior law, under which (a) a recorded judgment was not a "lien" against homestead property, yet (b) the judgment creditor nevertheless could cause the sheriff to levy against and sell the property. Thus, under existing law, a judgment lien does not attach to a homestead property. Nevertheless, the judgment creditor has the right to cause a writ of execution to be issued, and to sell the property, so long as the judgment debtor's interest in the property is greater than "the sum of the judgment debtor's homestead plus the amount of any consensual liens on the property having priority to the judgment." A.R.S. § 33-1105. This provision remains unchanged under the Amendments. The intent of the change to § 33-96433-964, in this context, is to provide clarity as to the competing rights and obligations of the parties regarding homestead property. Whether it accomplishes this goal is another matter entirely.

So, What Can You Expect?

If you want to refinance and get cash out of your house: If you receive cash proceeds from refinancing the homestead property that is subject to a judgment lien, the judgment creditor must be paid in full from those proceeds before the judgment debtor or other person receives any proceeds.


If you want to sell the house then things get complicated and those pesky title agents will start to earn their money.


1. If the anticipated payment to the judgment debtor is less than 80% of the homestead exemption (i.e., $200,000.00 under the amended law), the title insurer is authorized to record a partial release without notice to the judgment creditor.


2. If the anticipated payment to the judgment debtor will exceed $200,000 (80% of the exemption), the lien is extinguished as to the homestead property, subject to compliance with requirements for notice and opportunity to object on the part of the judgment creditor. Specifically, in such circumstances:

  • The title insurer must mail a notice to the judgment creditor (20 days before the sale is final) by certified mailing, informing the judgment creditor of the position of the title insurer (not the judgment debtor) that the judgment creditor's lien will be extinguished by the voluntary sale (A.R.S. § 33-364(B) as amended eff. 1/1/2022); and
  • If the judgment creditor has "good cause to believe that the judgment lien should not be extinguished," the judgment creditor has 20 days after the date of the title insurer's notice to submit an objection. (Id.)


The statutes provide no sense of clarity, and litigation will likely be the only mechanism to obtain bright line rules, as to multiple issues. I could elaborate but, since this doesn’t pertain to bankruptcy law, I will try not to bore you further.


I’m a bankruptcy attorney that practices in Arizona. I’ve had clients all over the state in cities like Chandler, Mesa, Tempe, Scottsdale, Apache Junction, Queen Creek, Phoenix, Peoria, Litchfield Park, Ahwatukee, Gilbert, Florence, Sedona, Lake Havasu, Peoria, Glendale, Fountain Hills, Avondale, Goodyear, and Cave Creek. While most of my clients reside in Maricopa and Pinal County, I can assist you with a Chapter 7 or Chapter 13 bankruptcy anywhere in the state. If you have questions, please don’t hesitate to call or email me.

Nyx’s Guide to Lawsuits and Bankruptcy

May 17, 2024
Okay, so I may just look like a pretty face to you, but trustees can be just like me; hiding and watching and looking for the opportunity to pounce. While I prefer to pounce on bugs, mice and birds, the trustee’s favorite prey is dimes, quarters and dollars and the bigger the prey, the better…for them. I’m not about getting into a brawl with a bear but, if you are a bear, don’t mess around with me and find out. So, I wrote this guide to hopefully answer questions that you might have about lawsuits and bankruptcy. IN A WRECK AND NEED A CHECK? We’ve all heard the commercials but, realistically, if you bring a lawsuit or have the right to bring one against someone for a personal injury case, that's considered an asset during your bankruptcy case. That is true for ALL LAWSUITS. Just like many other assets, judgments are not protected by a bankruptcy exemption . Therefore, any award recovered can be used to pay off your creditors as part of your bankruptcy case. If there is money left over after everyone has been paid off, though, you’ll get a refund from the trustee.

Should You File for Chapter 7 or Chapter 13 Bankruptcy?

March 21, 2024
A Bankruptcy Lawyer from Chandler, AZ Can Help You Make Strategic Decisions

Is Bankruptcy the Solution to Your Financial Struggles?

March 21, 2024
Sit Down With a Bankruptcy Lawyer in Chandler, AZ to Discuss Your Options

Behind in Your Mortgage in Arizona? Chapter 13 Can Help

March 21, 2024
For a lot of people, Covid-19 or other issues may have caused you to fall behind in your mortgage payments. Perhaps the mortgage company allowed you to miss a few payments and now they are asking you to catch up and they’ve demanded a large catch-up payment. For whatever reason you may have, a Chapter 13 bankruptcy may be able to allow you to catch up on those missed payments and spread them out over a period of 36 to 60 months. Losing your house in 2021 would be devastating. First, there is the cost of relocation. Then, you’ll be shocked at the cost of rental in 2021. Whether you’re in Chandler, Gilbert, Scottsdale, Phoenix, Mesa, Tempe, Peoria, Goodyear, Litchfield Park, or anywhere else in Maricopa County or beyond, the rents have skyrocketed as much as the costs of houses. If you’re behind and need a Chapter 13 to help you keep your house, here is how that works: Upon filing a Chapter 13, you would stop paying the mortgage directly to your mortgage company or mortgage servicer and, instead, you would make a payment to the Chapter 13 Trustee, instead. The first payment is due 30 days after you file your case. The mortgage company will then file a claim in your bankruptcy case indicating what the current payment is and how much you are behind on your mortgage. The amount that you are behind is called “arrears.” I often hear people call it “in the rears,” though, and it makes me secretly snicker. They may also file what is called a “Notice of Post-Petition Mortgage Costs and Fees” and THIS is really where they get you in the rears because these expenses are an absolute joke. Sadly, we are stuck with these stupid fees and they are usually $600-1,200 for reviewing the Plan, filing a claim and basically picking their nose. Once these are filed, this is how the claims are classified and paid. First, the plan will propose that the mortgage is paid through the trustee and he adds his 10% trustee fee. Therefore, a $2,000 mortgage payment would become $2,200. The arrears and the post-petition fees are classified as secured claims and get paid without interest over the duration of your plan. If you have $6,000 in arrears and post-petition fees, that adds about $100 to your plan payment. Obviously there are a lot of other factors that go into determining what your plan payment will be like your disposable income and other claims that are required to be paid (taxes, car payments, attorney fees) but this is a simplified explanation of how a Chapter 13 can help you save your house from foreclosure.

I Can’t Afford Bankruptcy

March 21, 2024
I’m on the phone discussing a client’s financial situation and it is not good. The client says, “It looks like I can’t afford bankruptcy." Sometimes, that is exactly correct. To be sure, bankruptcy can help most people but sometimes there are situations or people with particular financial goals in mind for whom bankruptcy may not work. It can be a very discouraging realization. So, what might these situations be? Before we get to those, it might be helpful to brush up on the differences between a Chapter 7 and a Chapter 13 bankruptcy filing—the two most often filed by consumer debtors. In a chapter 7 filing, the debtor basically gives all of his or her non-exempt assets to the chapter 7 trustee. In most cases, there are no non-exempt assets. If there are, the trustee liquidates those assets and distributes the money to the creditors. The balance of the debt is discharged. Alternatively, the debtor can enter into an arrangement with the trustee to buy those non-exempt assets back. Typically, non-exempt assets would be having too much money in the bank, a tax refund, too much equity in a car or truck or something along those lines. A chapter 7 filing works well if debtor passes the “means test" and usually has a lot of unsecured debt to be discharged. If there are secured debts (like a car, house or other property), the debtor is either able to continue to pay those debts or is surrendering the collateral and discharging the debt. However, some debts entitled to priority and may not be discharged through a chapter 7 filing. For a chapter 13 filing, there are a couple of typical situations for which a chapter 13 filing is more likely to meet the debtor’s goals. If the debtor is behind on his house payment or car payment and does not have enough to pay the missed payments, then a chapter 13 allows the debtor to pay back the late payments through the plan. If the debtor owes taxes or back support, a chapter 13 filing may be a good way to deal with those debts by paying the debts in full over the life of a chapter 13 plan. Also, for a chapter 13 filing, if the debtor has assets over and above what may be exempt, the debtor will be allowed to keep those assets if the debtor can pay for the value of those assets over the life of the plan. So now–back to our prospective client who “can’t afford bankruptcy." What might this debtor’s situation be?

Income Tax Debt and the IRS

March 21, 2024
They say that there are two things that you can’t avoid in life: DEATH and TAXES. While we haven’t found a way to avoid death yet, the personal income tax debt can be effectively managed and often discharged in bankruptcy. If your bank account has been frozen, your wages are being garnished, you have entered into a payment arrangement with the tax man or even just received a notice from your state or the IRS, then I can have your bank account and wages released. In most cases, I can file for protection the same day you call me. It is illegal for the Internal Revenue Service to attempt tax levies, wage garnishment, bank account garnishment or any kind of seizure of your property after you file for chapter 13 or chapter 7 bankruptcy protection. The same protections hold true if you owe the Arizona Department of Revenue or other state tax agencies, and if you owe county or city taxes as well. The law on which tax debts are forgiven and which you will have to pay are complex and there are many exceptions to rules: but in general, if you filed your tax returns at least two years ago and the tax debt is for years that are over three years in the past, then that tax debt may be discharged in bankruptcy. Interest and penalties often stop when you file chapter 13 or chapter 7; and in many cases, penalties will be waived or reduced.

Adding Creditors To Your Bankruptcy After Filing

March 21, 2024
Oh no! You forgot about a creditor and didn’t list them on your bankruptcy schedules. Or maybe you didn’t even know about them and just received a notice from them in the mail. Can you add an omitted creditor after the fact? In the fateful words of a careful lawyer, it depends . It really depends on when the amendment is made and what chapter you’ve filed. Also, the effect of adding a creditor varies between the two chapters and the timing. Let’s walk through the legal jungle of adding a creditor to your bankruptcy papers.
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