Arizona Anti-Deficiency Bankruptcy Law
When a house is lost to foreclosure 99% of the time, the mechanism to complete is the process is called a “trustee sale”. If your house goes through a trustee sale, than you have a chance to be protected by the anti-deficiency law in Arizona. The law states in part:
“If trust property [the home] of two and one half acres or less which is limited to and utilized for either a single one family or a single two family dwelling is sold pursuant to the trustee’s power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.” 33-814 (G)
So if your house goes through a trustee sale and you owe $200,000 but it is only worth $150,000 than you will not be responsible for the $50,000 deficiency.
The most common exception to this rule is if you have a home equity line of credit which is secured by the home. The anti-deficiency law will not protect you from collection efforts regarding this debt. Generally speaking, if you want to protect yourself from collection efforts regarding a home equity line of credit your best option is bankruptcy.
There are other exceptions that should be discussed with a tucson bankruptcy attorney so you can make informed choices regarding the possibility of bankruptcy.