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What is the homestead exemption in an Arizona bankruptcy?

When filing for bankruptcy in Arizona, there are many factors that will be worrisome with the entire process. One is which bankruptcy exemptions are available to retain certain assets as the process moves forward. It is important to understand the Arizona homestead exemption and what it entails.

What Is the Arizona Homestead Exemption?

A homestead is defined as a dwelling in which the land and buildings are occupied by the owner. The homestead law protects it from being seized to pay for debt.

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Homestead Exemption in Arizona

Arizona does not recognize federal exemptions. However, state exemptions are available. The homestead exemption in Arizona protects up to $150,000 of equity in a dwelling from being attached, executed, or forcibly sold. An individual or married couple can claim one homestead exemption for a dwelling in which they live.

A person will be able to live away from the dwelling for as long as two years without there being a waiver. The exemption is for the house and land, condo or co-op, mobile residence or mobile residence and land, and cash proceeds from the sale - voluntary or involuntary - of the property for as long as 18 months after it was sold.

Since the maximum that can be protected is $150,000, the creditor can force a sale if the equity a person has is higher than that amount. The creditor is not able to do this unless the proceeds from selling it covers the homestead exemption and all liens and encumbrances prioritized over the creditor to force the sale and its costs.

In most instances, if there is more than $150,000 in equity, the creditor might not be able to force the sale. There are other issues with the homestead exemption and bankruptcy exemptions that must be understood when filing for bankruptcy. For assistance with an exemption plan or a bankruptcy exemption of any kind, speaking to a legal professional is a wise first step.

Source:, "Arizona's Homestead Exemption," accessed on Jan. 11, 2016

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