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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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We purchased our home in AZ in 2004 with a first and second

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We purchased our home in AZ in 2004 with a first and second loan in order to have the first be a conforming loan balance. In 2005 we refinanced to combine both loans into a single loan. In 2006 we took out a home equity loan for which all the proceeds were used to renovate the house, including an addition. We made an offer last year to the second lender to buy it out at a discount which was rejected, not in writing and I had to call the lender repeatedly to find out the status and was told over the phone "there would be no offer accepted on this loan" and that they weren't even required to notify me if they denied our offer. This year, we tried to refinance to combine both loans into a loan and it fell through because of the appraised value. When we purchased the home, both of us were employed but I lost my job in 2008 and have only been able to replace 50% of my income. We've lost 50% of our equity in our home and no longer wish to use our savings to make payments. We are emotionally ready to go through the foreclosure process but are concerned that since the loan used to originally purchase the home was refinanced that we are not protected by the AZ laws to prevent the lenders from suing us for any deficiency judgments. Secondly, I've heard that the second lender can sue us for not making payments on the second loan. We want to ensure we can protect our other assets (stocks, investments, retirement). Can we do so by placing them in a separate LLC and can these lenders go after wage garnishment? How best can we protect ourselves from these lenders who have not been interested in working with us to modify our payments given loss of employment? The amounts of the loans combined total over $700K so I'm afraid that the size of the amounts will encourage the lenders to try to recoup their losses.
Hello,

So sorry to hear of this dilemma. If my answer is not clear to you, please ask me for clarification by using the reply button.

Unfortunately you are correct that it appears that the loans are not protected under Arizona's antideficiency statute.

Transferring your assets into an LLC will not protect them from execution by a judgment creditor. Your ownership interest in the LLC could easily be attached. Your best bet may be to file a chapter 7 bankruptcy. A chapter 7 bankruptcy would allow you to protect your retirement funds and would discharge your liability on the mortgages


Please let me know if you have any questions concerning my answer.
Customer: replied 5 years ago.
What our our options, what do you suggest?

Your best bet may be to file a chapter 7 bankruptcy. A chapter 7 bankruptcy would allow you to protect your retirement funds and would discharge your liability on the mortgages
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