Arizona Collection Laws

What are my rights and liabilities regarding debt in Arizona?

I have many debts that I cannot pay. Can my wages be garnished or my home be seized under Arizona law?

Read full question
Bill's Answer
4.5
/5.0
(22 Votes)
Bills.com Team
Pro

By

Highlights


  • Arizona's mortgage recourse laws are a bit tricky.
  • Wage garnishment, liens, and account levies are legal in Arizona.
  • Arizona is a community property state, and creditors can reach one spouse's assets for the other's debt liability.

In Arizona, you can have your wages garnished and your property could be at risk, if a creditor has a judgment against you. In Arizona, a creditor has several legal means for collecting on a debt.

If an Arizona court grants a creditor a judgment against you, then the creditor has the legal right to demand a wage garnishment, a levy on the your bank accounts, and a lien on the your property. Which of these tools the judgment-creditor will use depends on the circumstances. We discuss each of these remedies below.

Arizona Wage Garnishment

Wage garnishment is the most common method judgment-creditors use to enforce judgments. A judgment-creditor sends legal documents to your employer and requires it to withhold a certain amount of your wages each pay period and send that to the judgment-creditor.

n most states, creditors are allowed to garnish between 10% and 25% of your wages, with the percentage allowed being determined by each state. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law. See the Bills.com Wage Garnishment article to learn more.

In Arizona, wage garnishment is allowed under Arizona Title 12, Chapter 9, Article 4.1 12-1598. If the judgment-creditor is aware of your place of employment, it may seek wage garnishment.

The maximum you can be garnished for a consumer debt in Arizona is 25%, the same as under federal law. The garnishment applies to 25% of the your net, take home pay (your gross pay less certain required deductions). A calculation, that takes 25% of disposable income and minimum wage into consideration, determines the correct garnishment amount (see Title 12, Chapter 9, Article 4.1 12-1598.16 for the exact calculation. Garnishment can occur only you have received a 10-day’s notice.

However, under Arizona Title 12, Chapter 5.1, Article 2 A.R.S. § 12-592, periodic installments for future damages for loss of earnings or loss of support for beneficiaries of a judgment entered in a wrongful death action are exempt from garnishment, attachment, execution and any other process or claim to the extent wages or earnings are exempt under any applicable law. Periodic installments for all other future damages are exempt under garnishment, attachment, execution and any other process or claim except to the extent they may be assigned pursuant to section 12-591.

Garnishment is allowed for child support under Arizona Title 33, Chapter 8, Article 2 33-1131. Definition; wages; salary; compensation.

Levy Bank Accounts

A levy means that the creditor has the right to take money in your bank account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. Some states call levy attachment or garnishment.

In Arizona, levy for family support is allowed under Arizona Title 25, Chapter 5, Article 1 25-521. If there is a court-ordered judgment or if the obligor is in arrears in an amount equal to twelve months of support, the department may issue a levy and collect the amount owed by the obligor by levy on all property and rights to property not exempt under federal or state law.

Arizona levy laws are also found in Title 23, Chapter 4, Article 5 23-752, and 23-755. What Arizona calls its levy law covers what other states consider garnishment. Personal property and wages can be seized under Arizona Title 23, Chapter 4, Article 5.

If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.

Lien

A lien is an encumbrance — a claim — on a property. For example, if your own a home, a creditor with a judgment has the right to place a lien on your home. That means if you try to sell or refinance your home, the creditor can require that you pay it off or you transaction will be stopped. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent you from selling or refinancing until the debtor can pay off the judgment.

Under Arizona Title 33, Chapter 7, Article 5 A.R.S. § 33-964, a judgment shall become a lien for a period of five years from the date it is given, on all real property of the judgment debtor except real property exempt from execution, including homestead property, in the county in which the judgment is recorded, whether the property is then owned by you or is later acquired. A judgment lien for support, as defined in section 25-500, remains in effect until satisfied or lifted.

If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.

Arizona Statutes of Limitations

Each state has is own statute of limitations rules for debt. Arizona law regarding consumer accounts is found in Title 12, Chapter 5, Article 3. The statute of limitations for oral contracts is 3 years (A.R.S. § 12-543), written contracts is 6 years (A.R.S. § 12-546), and credit cards is 6 years (A.R.S. § 12-548). For credit cards, A.R.S. § 12-548 specifically carves out exceptions where, in some cases, a shorter statute of limitations may apply. (The statute of limitations for credit cards was 3 years prior to 2011.)

Arizona Title 47 contains three references to statutes of limitations relating to property:

  • Default Under a Lease Contract, must be commenced within four years after the cause of action accrued. See Chapter 2A, Article 5 A.R.S. § 47-2A506.
  • Breach of any Contract for Sale, must be commenced within four years after the cause of action has accrued. See Chapter 2, Article 7 A.R.S. § 47-2725.
  • Taxpayer’s obligations for any tax, interest or penalty required to be collected by the department for any tax period are extinguished, if not previously satisfied, six years after the amount of tax determined to be due becomes final unless extenuating circumstances apply. See Title 42, Chapter 2, Article 2 A.R.S. § 42-2066.

ollection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

Regarding judgments, a judgment-creditor has 5 years to enforce a judgment unless the judgment is renewed. See A.R.S. § 12-1551(B). A judgment may be renewed by filing an action to enforce the judgment or by filing an affidavit with the court within 90 days before the expiration of the 5-year period. See § 12-1611 and A.R.S. § 12-1612.

Arizona Foreclosure

Arizona foreclosure laws are found in Title 33, Chapter 6, Article 2.

Under Arizona law, a lender may be prevented from suing the borrower for the deficiency following a foreclosure. However, Arizona’s anti-deficiency laws are tricky. Under Arizona A.R.S. § 33-814, a homeowner is liable for a deficiency judgment if they have not resided in their home for six consecutive months. A deficiency on a purchase-money mortgage is not allowed on residential property if a single one-family or single two-family dwelling that is on 2.5 acres or less (33-814G).

The Arizona anti-deficiency laws apply to second mortgages and deeds of trust if they are purchase money loans (Baker v. Gardner, 160 Ariz. at 104, 770 P.2d; and Ross Realty Co. v. First Citizens Bank & Trust, 296 N.C. 366, 250 S.E.2d 271, 275 (1979); and Nydam v. Crawford, 181 Ariz. 101, 887 P.2d 631 (App. 1994)). A deficiency is allowed if the value of the house has declined because the homeowner has committed waste (33-814A). Consult with an Arizona attorney with experience in property law to understand your rights and liabilities in your situation.

Community Property & Arizona Law

Arizona is one of the 10 community property states. Regarding debts, this means if a married Arizona debtor individually signs a contract at the time he or she is married, both the debtor and spouse have liability to repay the debt, with a few exceptions.

Analysis of spousal debt is complicated. According to the University of Arizona James E. Rogers College of Law, "All property owned by each spouse before marriage is the separate property of that spouse. (A.R.S. § 25-213). The statutes also provide that any inheritance and income earned from rents, issues, and profits of separate property during marriage are separate property. Case law has established certain other acquisitions as separate property as well. These are:

  • "Purchases made with separate funds or property
  • "Professional degrees and license
  • "Damages or benefits for personal injuries, and
  • "Certain federal retirement benefits such as social security"

Upon divorce, property be divided approximately equally (A.R.S. § 25-318).

Creditors may not use the separate property of a spouse to satisfy a separate debt of the other spouse. Community property is available to creditors to pay the separate debt of a spouse if the debt was incurred before the marriage and after September 1, 1973, but only to the extent of that spouse’s contribution to the community property that would have been such spouse’s separate property if single (A.R.S. § 25-215).

Arizona Collection Agency Law

Arizona adds protections not found in the federal Fair Debt Collection Practices Act. Arizona law requires collection agencies:

  • Be licensed in Arizona and provide a bond
  • "...deal openly, fairly and honestly..." in their business

Arizona collection agent licensees may not:

  • "Engage in any unfair or misleading practices"
  • Use any "oppressive, vindictive or illegal" collection methods
  • Send any written communication that imitates any form of judicial process from a court, government entity, or lawyer
  • Represent the debt collector practices law or maintains a legal department unless the collector is, in fact, also licensed to practice law
  • Attempt to collect any collection fee, attorney's fee, court cost or expenses the debtor is not legally obligated to pay
  • Misrepresent the amount of the existing debt or falsely stating that if the debt is not paid, the debtor will incur additional attorney fees, investigation fees, service fees, or any other additional charge
  • Give the impression the debt collector represents the state
  • Say the Arizona government or any state agency endorses its activities

Violation of these laws is a class 1 misdemeanor. If you have been victimized by a collection agency, file a report of the violation with your local city or county district attorney or prosecutor. Also consult with a lawyer to discuss filing a civil lawsuit against the collection agent. Some lawyers take these cases on a contingency basis, which means no out-of-pocket costs to you. These limits and prohibitions can be found in A.R.S. § 32-1001 to 32-1057.

Recommendation

Consult with an Arizona attorney experienced in civil litigation to get precise answers to your questions about liens, levies, garnishment, foreclosure, and community property law in Arizona.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

86 Comments

Recent Best
1500 characters remaining
  • 35x35
    Jan, 2013
    Jeremy
    My wife is trying to pay a judgment that is showing up on one of her credit reports. When we called the original creditor they transferred us to what I assume to be the Judgment Creditor. They claim they won't settle the judgment for less than $3,500. The judgment listed on her credit report is $1,400. When we call to ask why it is so high they tell us it is for legal fees and interest that is somewhere around 28%. What can we do in this situation, and can they legally charge us interest or try to collect for more than the judgment listed in the credit file?
    0 Votes

    • 35x35
      Jan, 2013
      Bill
      First, just because a collection account or judgment appears on a credit report does not mean the debt is owed. There are three main credit reporting agencies (CRAs) in the US, and many smaller ones. A credit reporting agency is a specialized publisher. Think of a CRA as a type of newspaper or Web site — the information may be accurate or it may not be. Your first task is to learn if a judgment even exists, its amount, and whether the plaintiff (the party that filed the action) followed all of your state's civil procedure rules. If it didn't, then you can file a motion to vacate the judgment.

      Second, many states allow judgment-creditors to charge interest on a judgment. The state will set the maximum amount. Your second task is to learn how much is allowed in your state. Do not take the judgment-creditor's word for what the maximum may be.

      Third, realize that when it comes to debt collection, everything is subject to negotiation. Scrape together $750 or so and offer the judgment-creditor that amount as a settlement.

      However, before you start making offers, take steps 1 and 2 to learn if the debt is even a real judgment, and if so, whether the mystery-fee add-ons are allowable under your state's laws. Consult with a lawyer who has consumer law experience for assistance.
      0 Votes

    • 35x35
      Mar, 2013
      Ron
      In Arizona the maximum allowed post judgment interest rate is 10% Judgments over five years old and NOT renewed are unenforceable. If it's over 5yrs from the date it was obtained they cannot legally force you to pay. The problem becomes the credit report. It can legally stay on there for 7-10 years.
      0 Votes

  • 35x35
    Apr, 2012
    Carmen
    I defaulted on my school loan of $11,000. The creditor (through a judgment) has been receiving payments (garnishment) for 4 1/2 years. I have $9,000 but now the creditor said the $9,000 was fees and interest and I can't be released from the garnishment until I pay $11,000 principle. Can they do this?
    0 Votes

  • 35x35
    Mar, 2012
    Mark
    My Father received a court judgement on $6,500 credit card debt by a law firm. He acquired the debt from health issues some years ago and his only income is social security and a very small pension. As I understand it wage garnishment is not allowed on those incomes but can the court order a garnishment of his bank account? He has no savings and no money left over each month after bills and expenses. Also, my Father and I co-own the home we live in; can the court order a lien on our house? He has no car and no real assets besides some furniture. He is an 86 year old veteran. We live in Arizona. Thank you.
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      In most states, a judgment-creditor for credit card debt has three remedies:
      • Wage garnishment
      • Account levy
      • Lien on property

      Let us look at each for a retired person who owns real property.

      Federal law prevents garnishment of Social Security benefits. Social Security benefits deposited into an account are protected, too, if the account contains only Social Security funds. Ask your bank or credit union to place a notation on the account that it contains money from the Social Security Administration. Most states protect pensions from garnishment.

      A levy is possible for account containing non-Social Security funds, or accounts that contain funds from Social Security and another source.

      A judgment-creditor can obtain a lien on property titled in the judgment-debtor's name.

      Here, you mentioned your father is on the title to the home. Therefore, the property is at risk for having a lien is filed against it. A lien will encumber the property, making the lien an issue when you want to refinance or sell the property.

      0 Votes

  • 35x35
    Feb, 2012
    Curtis
    We are looking to do a refi next month under HARP 2.0. Currently, I am pretty sure we have a non-recourse loan here in Arizona. What I would like to know is if we will still have a non-recourse loan once we refi or if it will become a recourse loan. Does that status change whether we are living in the home or renting it?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      It is quite probable that if your current loan falls under the anti-deficiency laws, and it is a purchase money loan, then the new HARP loan will also qualify as a non-recourse loan. However, since the Arizona anti-deficiency laws are complicated, and open to some interpretation, I recommend that you speak with an Arizona lawyer. You want to be 100% certain about the recourse/non-recourse issue, before you refinance.
      0 Votes

  • 35x35
    Feb, 2012
    Ernesto
    We bought our first house about 4 years ago, and the payment was to high and could no longer afford it. We lived in the house for a year. I tried to get it lowered but was not successfull. We had to walk away from the house. They recently started garnishinmg my paychecks and took my irs refund. Can they do that on your first house?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      As the article stated, anti-deficiency laws can be tricky. Consult with an Arizona attorney with experience in property law to understand your rights and liabilities in your situation.
      0 Votes

  • 35x35
    Jan, 2012
    Allen
    Hello, I recently ran my 3 free credit reports in an attempt to start paying down some of my past indiscretions and mistakes. In less than a week now I have received several calls from collectors that have my current information now and made plans to help pay off my debts. However, I just (minutes ago) got off the phone with an Attorney's office that called and didn't give me the mini or recorded miranda (i used to be a collector) when I called them on it the man told me they would pursue legal actions then and hung up. I called back in order to find out why I deserved the bad treatment for asking a simple question and he said it was a The Attorney Office of R.L. Bernadheli (sic) and that he was calling on a $1200.00 Sears credit card that was charged off in 2004. I know the AZ statute of limitations is 6 years so I think I'm correct in thinking this is past it's statute and that I don't have to worry about it. I requested the information sent to my PO Box so I can dispute the debt, he told me it was coming to my residence "Good luck deadbeat" and hung up... I am very upset and would like to know what I should do next.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      That was a smart move to get your three free credit reports. Remember to monitor your credit files regularly. You should expect professional and courteous treatment by anyone giving you service. A creditor or collection agency is obliged to treat you in a fair manner, without threats. Read the Bills.com article about the Fair Debt Collections Practices Act. You will find information about filing a complaint there.

      Under the FDCPA, when you receive communication from the collection agency about a debt, you have 30 days to ask for a debt validation. Read the Bills.com article about validating a debt. Even if the statute of limitations has expired, you may still be sued in most states. If that happens, you may raise the statute of limitations as an affirmative defense.
      0 Votes

  • 35x35
    Oct, 2011
    craig
    I received a wage garnishment notice in the mail for an employee who works for me. On the page where it shows that the Plaintiff was granted Judgement, it mentions Accrued interest from 1/28/2004 - 4/21/2009. Does this mean the debt is over 6 years old, and that it is beyond any Statute of Limitation? We are located in Arizona. Any advice here would be appreciated.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Once the judgment was granted, a different type of statute of limitations applies, the one that governs for how long a judgment remains valid. In Arizona, a judgment is valid for five years, but can be renewed, if the judgment-creditor takes the proper steps.

      You or your employee could choose to look into whether this old judgment was renewed properly. Hiring an attorney to look into that is one option.

      It is legal for interest to accrue on a debt post-judgment, as long as it is charged at the rate allowed by Arizona law.
      0 Votes

  • 35x35
    Oct, 2011
    Steve
    A friend of mine is owed on a Deed of Trust, which the Trustor has not paid on since September 2007. is there a statute of limitations on her starting a trustee's sale?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Impossible for me to answer your question without learning more facts. Tell your friend to consult with a lawyer in his or her state with remedies law experience to learn what his or her rights are regarding the debt.
      1 Votes

  • 35x35
    Sep, 2011
    Tim
    I have a line of credit with Bank of America. In February they sent me a letter that said they were changing the terms of my line and that the entire amount would be due and payable in 12 months. Since I owed $50,000 on the line I spoke with the bank and said it was not possible to repay that amount in such a short time. I have been negotiating a settlement with them since May, but we do not agree on the amount. Last week the bank siezed $6,000 in various accounts I had at the bank including accounts of my children that I was also listed on. My current past due amount was only about $900. What is my recourse, if any. I am afraid it will cost more to hire an attorney than what I could recover.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      You have one option if you wish to address the injustice you described — hire a lawyer who has experience litigating contracts or real property law.
      0 Votes

  • 35x35
    Sep, 2011
    Corinna
    Hello bill i live in Arizona and i was given a summons and was required to file with the court and serve upon the plaintiffs attorney an answer to the complaint. Well my question to you is after i went to the court to find out what i was suppose to do they told me i had to file a blank title page and answer the question on the summons so what exactly do i do and what will happen to me after this??? My car was repossed in 2008 and there is no way i can afford to pay back the loan so can they garnish my wages???
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Court clerks may not offer legal advice, or otherwise help anyone complete a legal document. Bite the bullet and hire a lawyer to help you answer the summons and complaint adequately. If you cannot afford a lawyer, see the Legal Services Corp.-Funded Programs Web page to find an organization in your area that provides legal services for people with low or no income.
      0 Votes

    • 35x35
      Sep, 2011
      Corinna
      So what will happen if i dont file the blank title page???
      0 Votes

    • 35x35
      Sep, 2011
      Bill
      I confess I do not know what a "blank title page" is under Arizona or any other state law. Consult with a Arizona lawyer who has civil litigation or consumer law to learn how to respond to the summons and complaint adequately.
      0 Votes

    • 35x35
      Sep, 2011
      Corinna
      What will happen if i dont respond to the summons within the 20 days??
      1 Votes

  • 35x35
    Sep, 2011
    Kay
    There is a collection agency calling where I work. Isn't there a law against that?
    1 Votes

    • 35x35
      Sep, 2011
      Bill
      You can request the creditor cease contacting you at your place of work. See the Bills.com Debt Do It Yourself page to see a sample letter that makes this request.
      0 Votes

    • 35x35
      Sep, 2011
      Kay
      This issue is for another employee, as the secretary, I answer the phones. I told the creditor not to call again, since it wasn't related to our business and he got intensely beligerant and abusive and wanted to talk to my boss (who was gone for the day).
      0 Votes

    • 35x35
      Sep, 2011
      Bill
      Explain you are happy and eager to provide customers and potential clients excellent service, but since the collection agent's call is not related to your employer's business, you are under no obligation to continue with their call. State that if they call again, you will bring the call to the attention of your firm's legal counsel. Hang up. If the calls persist, gather all of the information you can about the caller, including his or her name, address, employer, and so on, and forward the information you gather to your employer's legal counsel.
      0 Votes

    • 35x35
      Sep, 2011
      Kay
      Thx, that sounds pretty much like what I thought, and I will do that if I hear from this caller or his company again. I looked them up on the internet, apparently they have a rep for being obnoxious, so he was just following a company standard.
      0 Votes

  • 35x35
    Sep, 2011
    Toni
    Hello, SRP just added a $500 charge to my current utility statement for what they claim was an outstanding bill from a previous address I had over 6 years ago. I no longer have copies of those bills or any records from 6 years ago for that matter. Furthermore - they are saying the charges are due immediately or my services will be interrupted. Can they do this?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Contact the Arizona Corporation Commission, Utility Division, Consumer Services. Use the link above to visit their Web site. According to their site, "To request help from the Arizona Corporation Commission, please call us at the numbers below between the hours of 8:00 a.m. and 5:00 p.m. Within Metro Phoenix: 602-542-4251; Within Metro Tucson: 520-628-6550. Outside the Metro Phoenix or Tucson areas, but within Arizona, call toll free 1-800-222-7000 connects you to the Phoenix Office and 1-800-535-0148 connects you to the Tucson Office."
      0 Votes

  • 35x35
    Aug, 2011
    Ruben
    Hi Bill. I live in Arizona and was awarded with a judgment and I proceeded with the garnishment but the debtor quit his job and I know he is in debt with some other people, so I would like to know if there is something else I can do to collect the money which is $8500. I will appreciate any suggestion. Thank you
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      You can pursue getting a lien or garnishing a bank account, deposit account, or business receipts. If you pursue a lien, check to see if there are other liens in front of you.

      Your judgment lasts for five years, if it was entered in Arizona. It can be renewed, if you act before it expires.

      You may want to consult with an attorney that specializes in collecting debts, to see if hiring him or her will increase your chances of collecting on the debt.
      0 Votes

  • 35x35
    Jun, 2011
    Polly
    I currently reside in a home that is worth about 100K in Glendale, AZ. I owe 221K. I have a line of credit for 11K. If I let my home forclose am I still responsible for the line of credit as well. The money was used for home improvements. I have done a mortgage modification and that did lower my payments some because they stretched my loan to 36 years but I am still stuck with the huge balance.
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Read the link in the original answer to Arizona's anti-deficiency statute, or see the Bills.com resource Mortgage Foreclosure Arizona for a brief discussion of these rules. I do not believe that non-purchase money loans are included in Arizona's anti-deficiency statute. However, I hasten to add that I am not an Arizona lawyer, and my understanding of Arizona's anti-deficiency rules is probably incomplete. Consult with an Arizona lawyer who has experience in real property law for a precise answer.
      0 Votes

    • 35x35
      Jun, 2011
      Polly
      I did read the link you mentioned. However, it is difficult to interpret the meaning of the definition given. I will take your advise and consult with a real estate attorney. Thank you!
      0 Votes

    • 35x35
      Jul, 2011
      jimm
      Bill, Arizona law re: Disability Income levy. I called Wells Fargo legal dept to try and stave off future levy's. I informed them that my sole income to my account was/is disability. that as I understood the law, disability income was exempt from levy. I was told that wasn't true in ARIZONA. I have researched Az revised statutes and cannot find any reference to disability being levied other than in child support cases. I have not found a comprehensive chapter addressing disability. Any help would be appreciated. Am 60 yr old with credit card debt. Adding to my situation is i am totally bedridden, and cannot get to a lawyer, much less to court to explain my situation. I see on court website where I have a case open. No letter, or service of papers. Stress is rising. Thank you for your time...
      0 Votes

    • 35x35
      Jul, 2011
      Bill
      The University of Arizona James E. Rogers College of Law offers an excellent reference on Arizona Wage Garnishment.

      Regarding Arizona account levy rules, see Title 12, Chapter 9, Article 4 Garnishment of Monies or Property for Arizona's remedies rules regarding financial accounts.
      0 Votes

    • 35x35
      Jul, 2011
      jimm
      Bill: Re: Az law on Levy of Disability deposits into my bank account.. THANK YOU for your quick reply, with pertinent information through links to sites on point with my questions.. My stress level has eased. Again thank you
      0 Votes

  • 35x35
    Jun, 2011
    Erin
    My fiance had a judgment of $11,428 placed against him on December 19, 2007 for an unpaid credit card. No payments on this judgment have been made. He was employed until April 2009 and he never had wage garnishments placed against him for this judgment. He was incarcerated in November 2009 and will not be released until 2014. He currently does not make any income nor does he own any property. We have a joint checking account. Here are my questions: 1) Can our joint checking account be levied if we are not married and I am not responsible for his credit card debt? 2) The SOL for AZ in which we live is 5 years for judgments so when he is released in 2014, will he most likely no longer have to pay this judgment if the creditor does not renew the judgment? His home foreclosed in March 2010 and before the foreclosure he was considering filing for bankruptcy because of this judgment and the inevitable foreclosure. The fair market value of his home was less than his loan balance and the REO sale price was even less. I don't think the lender has forgiven the debt so I fear the lender can come after him for the deficiency balance. Should he still consider filing for bankruptcy?
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Any account with your fiance's social security number on it is at risk for a bank levy. I strongly urge you to open a separate account, in your name only, ASAP.

      I believe that you are correct that the SOL on the judgment will expire in five years, if the judgment-creditor does not renew it.

      If someone is even considering filing for bankruptcy, I recommend seeking a free consultation with an experienced bankruptcy attorney. That way, the person can find out whether or not he or she qualifies, what kind of bankruptcy is available, and what kind of results to expect.

      Regarding the deficiency balance, you and he should check to see if his loan was a recourse or non-recourse loan. Arizona Revised Statutes Section 33-814(G) may protect him from having to repay the deficiency balance, if the loan was a purchase-money loan. Because interpretation of the Arizona anti-deficiency statutes and related real estate laws can be very complicated, you or your fiance should consult with an attorney to see if he is or is not responsible for the deficiency balance.
      0 Votes

  • 35x35
    May, 2011
    Nicole
    I recently got served for an old credit card which I opened in another state in August '05. I haven't made a payment since Nov. of '08, they served my in April '11. I sent in my answer and got a mediation date. I have requested documents and have not had anything sent to me. If they fail to produce these documents could this lead to me winning the judgment? Also, the statue of limitations is 6 years for written contract, when does this time line start? Thanks
    0 Votes

    • 35x35
      May, 2011
      Bill
      I don't know what documents you requested that were not supplied and am not sure what effect this will have on your case

      Regarding the statute of limitations, it starts running from the last time you made payment on the account. Keep in mind that in some states credit card accounts are viewed as written contracts and in others they are not. If the statute of limitations in the state in which you reside is shorter for a credit card than for a written contract (see: statue of limitations), then check with an attorney in your state to see if your account would be viewed as a written contract or not.
      0 Votes

  • 35x35
    May, 2011
    ahmet
    I am on SSI. I am not in a position to pay any of my monthly bills against credit and charge cards. I cannot also claim bankruptcy due to lack of funds..Do the creditors garnish my SSI pay
    0 Votes

    • 35x35
      May, 2011
      Bill
      Do not allow lack of funds to be an excuse to not seek legal counsel. Call your county bar association, and ask for the name of the organization in your area that offers no-cost legal services to low and no income people. Make an appointment with that organization, and bring all of the documents relating to all of your debts to that meeting. The lawyer you meet will advise you accordingly.

      Federal law disallows Social Security benefits from being garnished by judgment-creditors, although they can be garnished by the IRS, for collecting on delinquent federal student loans, and for collecting back child support. However, once the funds are in your bank or credit union account, the account may be ripe for a bank levy that can snatch the money in your account.
      1. In some states, funds from a retirement plan or a Social Security benefit may not be levied from an account that contains only those funds and is noted as such. Therefore, if a Social Security benefit recipient has the Social Security Administration deposit funds into a separate, specially notated account, those funds should be immune from levy.
      2. But they may not be immune because banks make mistakes, or may operate under state rules that do not allow a specially-notated account to be immune from levy. Let us assume for a moment that Spouse A has a judgment against him or her, and Spouse B does not. Let us also assume that Spouse B has a separate bank or credit union account from Spouse A, but at the same bank or credit union. It would be possible, on Social Security payment day, for Spouse A to use the bank or credit union's online banking Web site to transfer the deposit to Spouse B's separate account. (The account must be separate and not a joint account.) If the judgment-creditor then levies Spouse A's account, no funds will be available.
        1. Consider doing both No. 1 and No. 2 that I described above.

      0 Votes

  • 35x35
    Apr, 2011
    Vince
    Hi Bill, I live in Arizona and my salary is currently being garnished for 25% of my net income. I would to confirm that a imminent garnishment from an unsecured creditor will have to 'wait in line' until the child support garnishment has been paid, since I am already at the cap of 25% of net income.
    0 Votes

    • 35x35
      Apr, 2011
      Bill
      See 15 U.S.C. 1673(a) to read the federal statute that limits wage garnishment.
      0 Votes

    • 35x35
      May, 2011
      Bella
      Hello Bill.com, I have recently discovered that a collection agency, Mertola Llc.working under Chase Mastercard has put a levy on my account. Upon further investigation and phone calls to the debt collection agency's representing lawyer, law offices of James Vaughn, I discovered that they served me through my then 13 year old son back in 08/18/2009. I love my son dearly but he is not the most responsible individual and my son never provided me the court documents. It is now May 09, 2011 and my bank assests are frozen. My bank also Chase has advised that the collection agency has put a $6000 levy on my account. First of all i don't have that kind of money in the bank and since I don't will they now continue to garnish my paycheck instead. Also I discovered that this debt is under my married name, so I know that my ex-husband most likely did something fraudulent with my ss# btu since it would be to hard to prove fraudulent activity... I would like to proceed with bankruptcy. Is bankruptcy even an option for me in order to stop this levy and future garnishments and harassments from other debt collectors...? Thank you in advance!
      0 Votes

    • 35x35
      May, 2011
      Bill
      I am assuming from the context of your question you reside in Arizona. I am not competent to offer an observation about Arizona's civil procedure law, but in the states where I have studied, age 13 is not considered competent to receive a service of process. In other words, if Arizona has a rule about the service of process age, the process server screwed up when he or she slapped the summons in your child's hands.

      Consult with a lawyer in your state who has civil litigation experience, and ask about the service of process rules. You may be able to have the judgment vacated.
      0 Votes

  • 35x35
    Feb, 2011
    Isabella
    Bill, Please help me with a question. I am having my wages garnished at this time. I have had consultations with bankruptcy lawers, I will need to file chapter 7, since I have other creditors that I owe. I would like to take out a loan from my 401K to pay off the bankruptcy lawer and help with other costs, I am a single mother of two and it is difficult for me to live financially. I also purchased a car from a friend that I been paying in cash, I still owe them money before the car is mine. So the only way I can think of is taking a 401k loan,would that be ok, with me getting ready to proceed with filing bankruptcy and to have my garnishment stopped?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      That sounds like an excellent idea.
      0 Votes

  • 35x35
    Feb, 2011
    Vicki
    I live in Arizona and had a garnishment in effect, then received paperwork for "Application and Order of Continuing Lien on Nonexempt Earnings" can you explain what this means? Ever since I received this paperwork my check amount has been exactly the same every payday ($394.01) like I am now only able to receive that amount every check, even though I work on production and the amount I make every payday fluctuates significantly - one time they got $27 for the garnishment, and the next check they got $123. Can you explain this to me?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      The $394.01 amount you are receiving is the amount of money that is exempt from attachment by your creditor, the amount that you get to keep. That amount does not fluctuate. It is based on the size of your family. Anything you earn above that amount is remitted to the creditor.

      You did not state if the judgment creditor listed on the "Application and Order of Continuing Lien on Nonexempt Earnings" is the same creditor that is currently garnishing you. Is it possible that you have a second creditor that sued you? If it is from the creditor that is already garnishing you, then it is just some paperwork about the garnishment that the creditor is required to send you to comply with the legal requirements for garnishing your wages.
      0 Votes

    • 35x35
      Feb, 2011
      Vicki
      Yes this did come from the same creditor. A family member has offered to loan me the money to pay this off so I can stop the garnishment but I have tried to contact the law firm handling this several times by telephone and just recently by email as well but have received no response. My husband is currently unemployed making me the sole breadwinner for now and this garnishment is killing me. Any advice on what I can do?
      0 Votes

    • 35x35
      Feb, 2011
      Bill
      I can imagine how frustrating it must be to WANT TO PAY your debt off and get the garnishment stopped and to have the creditor not accept your payment.

      I suggest that you send a letter by certified mail to the law firm. State that you have funds to pay the debt in full, by borrowing them from a relative, and need the law firm to contact you ASAP. Save a copy of your letter and your proof that you mailed it for your records.

      If you don't get a reply, contact the court clerk at the court that ordered the garnishment. You should be able to locate the court clerk by using information that appeared on your "Application and Order of Continuing Lien on Nonexempt Earnings."

      If the court clerk can't assist you, contact your country bar association, and ask for information on reaching the organization in your area that provides legal aid to low- and no-income people.Make an appointment with that organization, and bring all of the documentation you have regarding this issue to the meeting.
      0 Votes

  • 35x35
    Jan, 2011
    Marty
    Hi Bill, I have a credit card jugdment against me for $9,000. The original balance was $5500. I have offered settlement and payment plans based on what I can afford. They have denied everything I had to offer. They want me to pay $800 a month which I don't have. I offered $2500 down and $400 a month.They denied me. Anyways, they are not cooperating with me. I own a business with my brother. Can they do anything to my business or business accounts even though I am partners.
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      Generally, it is very hard for a creditor to mess with a business account when attempting to collect on a personal debt. I think the greater risk you face is having your personal bank accounts levied. Continue to try and work out a mutually acceptable payment plan. Get any agreement in writing.
      0 Votes

    • 35x35
      Jan, 2011
      Marty
      Hi Bill, Thanks for the advice. Unfortunately the judgment against me did not cooperate with me and has now sent out wage garnishment papers. Is there any advice you have for me to tell the judge about my situation. Can a judge reduce my balance if I tell him these people kept denying my offers to make the balance higher. How much of my wages can they take. I take home $450 a week.
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      If your payroll department received paperwork about a wage garnishment, then your checks will start being garnished as soon as the next pay period. I don't believe the judge can do anything to reduce your balance. In Arizona, 75% of your wages are exempt from garnishment. This means that the creditor could come after 25% of your wages on each and every check until the debt is paid off. If you can't work out a payment plan that you will pay on each and every month, you may need to speak with a bankruptcy attorney. Whether you can eliminate the debt or not, via a Chapter 7 bankruptcy, you can get a wage garnishment stopped, if you file for either a Chapter 7 or a Chapter 13 bankruptcy.
      0 Votes

    • 35x35
      Jan, 2011
      Marty
      Thanks Bill. I think I'm just going to let him garnish my wages but I will go to court to ask the judge to only allow them to take 10%. Also, if he gets wage garnishment can he still freeze my checking account. And one last thing, how do I get paperwork that the judgment is paid in full after this is done. Are the people with the judgment required to give me this evidence.
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      Marty, if there is a judgment against you and you are a resident of the state of Arizona, the judgment can definitely be enforced through a bank levy. A bank levy can freeze any money in your bank account up to the amount you owe in the judgment. According to my reading of the Arizona collection exemption rules, all of your bank holdings aside from $150 can be taken in a levy. Once you pay the debt off, you are entitled to receive paperwork that shows that the debt no longer exists. I don't think the creditor will have any issue with providing you proof that the debt is paid, once you pay it. Take the extra steps of checking your credit reports, making sure that all three credit reporting bureaus show that the account has been paid in full.
      0 Votes

    • 35x35
      Jan, 2011
      George
      What makes this one creditor anymore special then the others a debtor has that enables them to garnish wages? For example, if you live in Arizona and you are heavily in debt with many creditors. But you determine by removing one creditor will enable you to continue to pay the others. So you surrender property to them, and then you end up with a balance owed. That creditor takes you to court and then garnishes your wages. By doing that, all the other creditors are now affected because that one creditor is taking 25% of your income as payments. If before the judge makes that ruling you provide them all the existing creditors you have, would they still authorize the garnishment? Just curious, because it seems the single creditor wants to force you into bankruptcy hurting them all.
      0 Votes

    • 35x35
      Jan, 2011
      Marty
      Hi Bill, I'm starting to get really worried. The law firm holding this judgement against me is still not cooperating with me. They tole me they sent out for a wage garnishment but its been a while and my job has not recieved anything. I think the lawyers are just trying to build up the interest. The credit card debt I owed was $6000. Since the judgement it has raised $4000. So now I owe $10,000. Is there a limit to how high this can go? Will I end up paying $45,000 for a $6000 credit card? What should I do? I don't want to file bankruptcy.
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      Based on my experience with lawyers and law firms, I doubt the firm holding your judgment is dragging out its collections activities intentionally. It would be a very rare law firm that would not want to collect on its receivables, collection accounts, and judgments immediately. Hollywood paints a rosy picture of law firm economics that is not true for most firms.

      Every state has a rule on the amount of interest and fees a judgment-debtor can tack onto a judgment, and woe be to any law firm that exceeds this amount. See the Bills.com resource Statute of Limitations on Debt to learn the judgment interest rate for your state.

      You have three options:
      1. Negotiate a deal
      2. Wait for a wage garnishment, lien, account levy, or nothing at all to happen
      3. File for bankruptcy

      None of these options are particularly good, but you need to pick the one that offers the fewest negatives for your situation.

      0 Votes

    • 35x35
      Jan, 2011
      Bill
      The answer to your main question is unsatisfying but correct factually: The judgment-creditor who gets to a debtor's employer with a wage garnishment order first is the special creditor. It is really that simple. There is no one-for-all, all-for-one when it come to collecting debt. However, if you are a very large debtor, such as a major corporation in an industry where suppliers know each other and discover through happenstance that the large debtor is stiffing everyone, then the suppliers/creditors can band together on the local bankruptcy courthouse steps and petition the bankruptcy court with an involuntary bankruptcy filing. In bankruptcy, all of the debts and assets are revealed, and each creditor gets a piece of the pie. However, creditors rarely go to this trouble for consumer debtors, and hustle to be the first to garnish wages, file a lien, or levy accounts.
      0 Votes

    • 35x35
      Feb, 2011
      Marty
      Hi again Bill. I just received papers stating a motion to quash non-earnings garnishment. Apparently the Plaintiff(judgment) went to chase bank and tried to freeze my account. Well forturnately I don't have an account. Basically I just wanted to make sure that these papers just mean that the plaintiff failed to collect from chase. There's nothing for me to do right?
      0 Votes

    • 35x35
      Feb, 2011
      Bill
      A motion to quash is used to invalidate a court's previous decision.

      I am reluctant to offer an observation on a document I have not read regarding a case I know nothing about because there is a chance I may steer you wrong. Bring the document in question and all other documents relating to the creditor's lawsuit against you to a lawyer in your state who has experience in civil litigation. He or she will read the motion and will advise you accordingly.
      0 Votes

  • 35x35
    Dec, 2010
    al
    Bill, I owe wells fargo 129,000 on my 1st mortgage.I tried to modify my loan 3 times to no avail.The loan was managed through a servicing company.They foreclosed and had a sale date of 12/28/08 which was suspended. Again in 05/29/09 it was up for sale but was stopped by a modification agency. Then I never heard from them again and I would call ASC Svcng. and they told me my account was inactive and no information was available. Last week a lady from an agency that does mods. came to my house and called ASC and after about 30 minutes they told her the loan was charged off on 04/26/10 because the loan off 129,000 was more than the home's value of 35,000.00 She asked them if they were still considering foreclosure and she was told that the home value would have to equal or exceed the loan amount. Can I still be evicted or foreclosed? I appreciate your help,Thanks.
    0 Votes

    • 35x35
      Dec, 2010
      You wrote, "Last week a lady from an agency that does mods. came to my house..." This give me pause. Did you ask for this person's help, or did she just show up at your door unsolicited? If you initiated this relationship, then the advice you receive from her may be trustworthy. If she inserted herself into your situation without your asking, then be extremely cautious of her word.

      Legally, foreclosure is inevitable if you fail to reach a settlement with the owner of your collection account/mortgage. Economically, it is unwise to foreclose today because the property's market value is a small fraction of the loan balance and it is unlikely you possess almost $100,000 in liquid assets to satisfy the deficiency balance. Your account sits in limbo.

      One strategy is to start saving money. When the time comes and the owner of your collection account starts foreclosure, open a negotiation and offer a lump-sum settlement. If the fair market value of your property is still $35,000, the creditor will be lucky to get $20,000 for it in an auction or REO, and less when the the cost of the foreclosure and sale is included. A lump-sum offer may be a better deal for everyone.
      0 Votes

    • 35x35
      Jan, 2011
      Eloy ( Al )
      If I have been foreclosed once and have had 2 sale dates but both have been postponed with help from a modification company,does my mortgage co. have to do a new foreclosure and sale date or can they just send me an eviction notice without foreclosing again?
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      If you reside in Arizona, which I assume is true based on the context of where you asked your question, you are asking about the timeline Arizona home loan lenders must follow when foreclosing. The most understandable resource I found for Arizona residents is Arizona Foreclosure Information Workbook, which is produced by the Arizona attorney general. See page 9 of this booklet for an illustration of the Arizona foreclosure timeline.

      Regarding the specifics of your question, different states have different rules allowing the postponing of a foreclosure. In some, a foreclosure can be postponed for a year before the lender must file an extension request. In other states, once the window is closed a new foreclosure notice must be filed. If you reside in Arizona, please see the resource I mentioned.
      0 Votes

    • 35x35
      Jan, 2011
      Al
      If they hand me an eviction notice can they keep my personal possesions,furniture etc.? I have a loan that was charged off and haven't heard from the lender. Thank you, Bill.
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      An eviction is intended to eject you from the land. An eviction is not a seizure of your personal property. If you are evicted, remove yourself and all of your personal property from the premises before the deadline indicated on the eviction notice. Any personal property remaining on the premises after the deadline may be considered abandoned, and the owner has no duty to preserve or store abandoned property.
      1 Votes

    • 35x35
      Apr, 2011
      eloy
      Bill I received an OMB No.1545-1424 2010 Substitute Form 1099-C, Cancellation of Debt from my servicing company which is a division of Wells Fargo. Debt was cancelled effective 12/31/10 although they charged off the loan in July,2009 for 129,792.56 with zero interest.The Fair market value of the property is listed at 22,233.00. What exactly does this mean.It was mailed out 04/16/11 and I just got the letter Thursday 04/21/11. I really appreciate your help regarding this matter and would like to receive your advice or opinion. Thank You very much.
      0 Votes

    • 35x35
      Apr, 2011
      Bill
      What this means is that you can thank Wells Fargo for causing you to, at minimum, file an amended tax return for 2010, if you have not filed your 2010 taxes already. Consult with a tax preparer about filing an amended return, and see the IRS Form 982 and Publication 4681. Whatever you do, do not ignore this 1099-C.
      0 Votes

  • 35x35
    Nov, 2010
    Bill I owe $148,000 thousand dollars to wells fargo from two business cards I have a rental property and a home , Home is worth $90,000 I owe $78,000 ,and rental prop worth $325,000 I owe $290,000,they want to settle between $99,000 to $71,000 ,I can borrow about $60,000 from a family member , But they wont settle for that , Should I wait it out or file bankrupsy Id like to keep my house . Ive had 7 operations in 13 months ,In bad health and 70 years old ,John
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      I cannot offer an observation regarding your situation without knowing more. I do not mean to sound callous, but based on your age and the comments about your dire health, one option to consider is doing nothing. However, if you wish to resolve your debts now so that your heirs have a better chance of receiving something from your estate, then contact a bankruptcy attorney in your state now to learn your options.
      1 Votes

  • 35x35
    Nov, 2010
    Tracy
    Hi Bill! I have a weird one and I'm totally lost as to what I can or should do about it at this point. I left my last job three weeks ago, started my new one about a week and a half ago. This last Friday I got a packet from the payroll company from my last job with a TON of paperwork inside, stating that a wage garnishment was going to be held against me. It has a bunch of copied paperwork inside and I'm trying to make sense of it. If this is for an alleged debt as stated in the packet paperwork, how come I had not received any notices about this, how come I hadn't been served for the judgement, and what are my options now? I'd like to give the Court Clerks and the issuing law office a call tomorrow when the offices open but I'm not sure what I'd ask about or how I could get this handled properly, as I won't be making enough with my new job to carry the 25% garnishment amount they're calling for and still manage rent and other living expenses. It's listing my parents' home address as the last known but my parents have never received anything regarding this to that address, and I have not lived at that address in a long while. Please let me know what my next course of action should be! Thank you!
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      You should have received notice. In some states, if the notice of the lawsuit and garnishment were defective then you can unwind the judgment. Consult with an attorney in your state regarding your civil procedure questions and the garnishment.
      0 Votes

  • 35x35
    Jul, 2010
    Bill
    File a dispute for this derogatory entry on your credit report, if indeed the creditor has no recourse for the default.
    0 Votes

    • 35x35
      Nov, 2012
      B
      I purchased a house in 2004. I did a 80/10/10 loan. 10% was issues as a home equity line of credit. Secured my the first loan/house. I ended up going through foreclosure. The house sold at auction but the first was the only loan paid. They are now saying that the secured second loan is being made Unsecured and that I am personally responsible. they said I would have to file for bankruptcy to avoid losing my current residence or have my wages garnished? How can you unsecure a loan? Is that legal?
      0 Votes

    • 35x35
      Dec, 2012
      Bill
      The debt you had became unsecured when the property that secured it was sold. You should speak with an attorney in Arizona, to see whether you have financial responsibility for the debt or if Arizona's anti-deficiency laws remove your need to pay.
      0 Votes

  • 35x35
    Jul, 2010
    Michael
    Hello Bill - We had our home foreclosed in December of 2009. Our credit report shows the first as settled but the second is reporting as a severe default. Since this was a purchase money second for our primary residence is there anything I can do to get the reporting changed on our credit report?
    0 Votes

  • 35x35
    Jul, 2010
    Bill
    Aside from their ill-fated foray into investing in mortgage-backed derivatives that no one understood, banks are afraid of their own shadows. Your bank almost certainly does not own the money tied up in your HELOC. It is representing an investor (foreign bank, government, retirement fund, or similar institution) that does not want to see a default on the HELOC. It does not surprise me your bank will want documentation showing financial distress before negotiating. After all, it needs to show the investor it is trying to make the best of a bad situation, and is not forgiving customer debt willy-nilly. I am stating the obvious, but you have two choices: Continue paying the note or default, wait for charge-off, and negotiate a settlement. If you take Plan B, your credit score will suffer a significant but temporary setback.
    0 Votes

  • 35x35
    Jul, 2010
    Scott
    Bill - I wrote to you (under your Charge-Off comment) and want to thank you for taking the time to respond. I also want to give you an update. By way of background again, I have a home that is worth approximately the amount of a first loan on it, but has a HELOC for $85,000 on top of the first. It is a second property that I rent out. I wrote a detailed letter to the bank explaining that I could afford to make the payments, but that it makes little sense to do so from a business perspective. I provided detailed comparable home sales data, articles on the Arizona market (showing data from the past 6 months) and a detail of Arizona law on recourse (or lack thereof). I am an Arizona attorney (though a corporate attorney, not a real estate attorney). Long story short, US Bank as a policy will not negotiate with ANYONE who does not have a financial hardship. They acknowledged their loan is worth nothing and that they have no recourse against me. Nonetheless, they have a corporate policy that draws a line in the sand. Very odd from a business perspective (as an aside, I offered them $10,000 on an $85,000 loan that is now valueless). Additionally, they told me it is policy to report settlements to credit agencies as settlement for less than full value meaning the purpose of me trying to settle with them is lost (saving my credit was the only reason I was offering $10,000 for a valueless loan).
    0 Votes

    • 35x35
      Jan, 2013
      Steve
      Bill: My sister-in-law lives in Phoenix. She had a mortgage on a townhome. She subsequently obtained a loan for $10,000 from the same bank. That loan was documented with a "Real Estate Security Note and Security Agreement". The townhome was the real property security on the loan. The townhome was foreclosed upon because she quit making her mortgage payments. Subsequently, she also quit paying on the loan. Is she personally liable for the loan or is the bank out of luck because their collateral has disappeared?
      0 Votes

    • 35x35
      Feb, 2013
      Bill
      The issue you refer to is called anti-deficiency and non-recourse by people in the legal and mortgage fields. You mentioned your relative is an Arizona resident. Arizona has anti-deficiency laws that might apply here. It is unclear to me if the $10,000 loan you described is subject to Arizona's anti-deficiency laws. If the loan was a second mortgage, then it may be covered and therefore your relative has no liability for the deficiency balance. If the loan was not secured by the property, then it is not covered Arizona's anti-deficiency law.

      The best advice anyone can give your relative is she take all documents she has concerning the loan to an Arizona lawyer who has real property experience. A lawyer will review the loan contract, do a title search to see if the mystery loan is a second mortgage, and explain if this loan is subject to Arizona's anti-deficiency law. A lawyer's time is not cheap, but paying a creditor for a loan a person has no legal liability for would be very expensive, indeed.
      0 Votes