Question: Four years ago, our son had an auto-repair business in Mesa that was struggling. To keep his business alive, we personally guaranteed a loan for our son. After our son’s business ultimately failed, the bank sued us and got a judgment against us. After they recorded the judgment with the Maricopa County Recorder’s Office, this judgment became a lien on our home. Even in this down market, we have at least $200,000 equity in our home. Do we have the protection of the homestead exemption? If so, what do we have to do to prevent the loss of our home?

  Answer: The amount of the homestead exemption in Arizona is now $150,000. This homestead exemption is automatic and protects equity in the home up to $150,000. In other words, there is no longer any separate paperwork required, and the homestead exemption will limit the enforcement of the judgment lien by your bank. Most banks or other creditors will not foreclose their judgment lien unless there is significant equity in the home above the $150,000 homestead exemption. If your bank does foreclose, however, you will have 18 months to invest your $150,000 homestead exemption in the purchase of another home.

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