How to Use Bankruptcy For Protection in a Deed of Trust State Like Arizona
Arizona is a deed of trust state, which means that when an individual or company buys a piece of property, the title of that property is conveyed to a Trustee. The Trustee is a neutral third party that holds the title for the lender. The lender legally owns the property, and the borrower has the right to title once the loan is paid.
These deed trusts provide lenders with an immense advantage during a foreclosure. Because the foreclosure procedures were written up in the deed of trust, it saves the lender from having to file a lawsuit to foreclose on a property.
For the borrower, a deed of trust is also advantageous if there is a foreclosure sale. While a mortgage borrower is responsible for the difference between the balance owed and the sale price in a foreclosure in a mortgage state, the lender cannot sue for this balance in a deed of trust state.
In a deed of trust state, generally the Trustee will sell your home during foreclosure, and you will not have the right to buy the property back or redeem the property after the sale. However, by declaring bankruptcy, you are much more likely to avoid foreclosure. You will, of course, still be responsible for the debt secured in the deed of trust, but you might be able to keep your home.
An Arizona deed of trust, however, makes it unnecessary for someone to file bankruptcy simply to avoid being sued by the lender. The deed of trust specifically says that the lender cannot sue the borrower for the balance remaining on the mortgage after the foreclosure sale.
This doesn’t mean that filing for bankruptcy in Arizona cannot help you keep your home. As soon as you file for bankruptcy, the lender is not allowed to foreclose or evict, nor will they be allowed to contact you regarding any late or missed payments. This can be a huge relief and buys you the time you need to reorganize and rebuild your finances. For those in a deed of trust state, a bankruptcy can still be a helpful way to prevent a foreclosure.
Emely Peight likes writing about legal issues. To get more bankruptcy information or for Tucson bankruptcy help, or if you require a Phoenix bankruptcy attorney, please visit these bankruptcy websites today.
