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Can Sallie Mae force the sale of our home under Arizona law?

Can Sallie Mae force the sale of our home under Arizona law?

Full question:

According to the Arizona Homestead Act, residents are exempt from liens and forced sales up to $150,000. Our property's value right now is about $400,000. Sallie Mae may come after my wife since she co-signed for a student loan for our Daughter. Our Daughter has been unable to pay this ($850/mo) and we are reaching a point where we cannot either. The outstanding loan amount is $106,000. Question: Assuming Sallie Mae comes after my wife, can they force the sale of our home or are they limited to only a lien?

Category: Debts and Credit
Date: 04/07/2025
State: Arizona

Answer:

In Arizona, homestead exemption laws provide varying levels of protection. Under the Arizona statute (A.R.S. § 33-1105), a judgment creditor, excluding mortgagees, can sell a property with a homestead exemption. However, they can only do so if the debtor's interest in the property exceeds the homestead exemption amount plus any consensual liens on the property.

Your home is valued at $400,000, and the homestead exemption protects up to $150,000. If Sallie Mae pursues a judgment against your wife, they may be able to force the sale of your home, but they must first pay the homestead exemption amount and any existing consensual liens from the sale proceeds. If no sufficient bid is made during the sale, the creditor cannot charge additional costs or fees to the debtor.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What property is exempt from creditors in Arizona?

In Arizona, certain properties are exempt from creditors under the homestead exemption laws. This includes a primary residence up to a value of $150,000. This exemption protects homeowners from forced sales by creditors, allowing them to retain their home even if they face financial difficulties. However, this protection does not apply to all types of debts, such as mortgage debts or consensual liens. It's important to consult with a legal professional for specific situations.

What does homestead exemption waived?

When a homestead exemption is waived, it means that the homeowner has voluntarily given up their right to claim the exemption. This can occur when a homeowner signs a waiver or agrees to terms that allow creditors to pursue the property without the protections of the homestead exemption. Waiving this exemption can expose the property to forced sale by creditors in certain situations.

Does a homestead declaration may not protect a homestead from a forced sale if a judgment is attained?

Yes, a homestead declaration may not fully protect a property from forced sale if a creditor obtains a judgment against the homeowner. While the homestead exemption provides some protection, creditors can still force the sale if the homeowner's equity exceeds the exemption limit, which is $150,000 in Arizona. It's essential to understand the specifics of any judgment and seek legal advice for clarity.

What is the homestead exemption law in Arizona?

The homestead exemption law in Arizona allows homeowners to protect a portion of their home's value from creditors. Under Arizona Revised Statutes (A.R.S. § 33-1105), homeowners can exempt up to $150,000 in equity from forced sales. This protection applies to a primary residence and helps safeguard homeowners during financial distress, but it does not apply to all debts, such as mortgages or consensual liens.

What is the meaning of waive exemption?

To waive an exemption means to voluntarily relinquish the right to claim that exemption. In the context of homestead exemptions, it means that a homeowner agrees to allow creditors to pursue their property without the protections typically afforded by the exemption. Waiving this right can lead to increased risk of losing the property in the event of financial difficulties.

What does waiver of homestead exemption mean?

A waiver of homestead exemption refers to a formal agreement or action taken by a homeowner to give up their right to the homestead exemption. This means that the homeowner allows creditors to potentially pursue their home for debts, which could lead to forced sale. It's a significant decision that can expose the homeowner to greater financial risk.