I have many debts that I cannot pay. Can my wages be garnished or my home be seized under Arizona law?
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.
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.
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.
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.
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.
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:
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 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.
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:
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 adds protections not found in the federal Fair Debt Collection Practices Act. Arizona law requires collection agencies:
Arizona collection agent licensees may not:
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.
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.
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