Law Off of D.L. Drain P.A., Arizona Bankruptcy Lawyer | "Helping You Get Your Life Back on Track"
Law Off of D.L. Drain P.A., Arizona Bankruptcy Lawyer | "Helping You Get Your Life Back on Track"

AZ Trustee's Sale, Foreclosure & More Overview

Arizona Foreclosure, Eviction & Excess Sale Proceeds

Trustee’s Sale & Foreclosure OverviewDiane Drain2024-03-25T08:52:11-07:00

Overview of Foreclosure, Trustee’s Sale, Eviction and Excess Sale Proceeds

House in foreclosure

What does a real estate default mean?

According to Investopedia, a default is when a debt, such as a mortgage loan secured by a property, does not get the necessary interest or principal payments. Any failing that a contract requires could be considered a default. This may involve neglecting to make mortgage payments, maintain current insurance, pay other secured obligations, pay real estate taxes, or adhere to other specific contract clauses. Defaults subject borrowers to legal claims and may restrict their access to credit in the future.

Never allow a trustee’s sale, short sale, deed in lieu of foreclosure, or foreclosure proceed without first obtaining legal and tax advice.

Once the process is finished, most mistakes cannot be fixed. That means, you be locked into the consequences of your choices. How do you avoid this horrible situation?  Don’t take any advice from a realtor, your neighbor, or an inexperienced lawyer. For instance, a sweet family from Africa, who barely speak English, followed the directions of their realtor, who told them to ignore a demand from the HOA.  They have now lost their home and significant equity. We are helping get some excess sale proceeds, but no where near the equity they had in their home.

You should always make informed decisions because this is your life and your future. I don’t say this to scare you; rather, it’s because I’ve seen hundreds of people deal with disastrous consequences that could have been avoided if they had just sought expert legal and/or tax counsel.

Beware of home and land scams

Thousands of frauds are perpetrated on unwary homeowners. Because they are unable to seek legal guidance, many prey on a certain population, such as the low-income or minorities. The best advise anyone can give is to never respond to someone who contacts you in a crisis and offers to “assist” you. Always reach out to well-established companies with a track record of providing high-quality services.

Here is just one example of such greed – “Campos Gets Prison in Arizona Housing Scheme“.

Foreclosure Law

What laws control real estate?

Foreclosure, eviction and excess sale proceeds are usually state law specific

Unless it is federal land, the law of the state where the property is located controls the processes governing judicial foreclosure, trustee sales, eviction or excess sale proceeds.  In Arizona a trustee’s sale or judicial foreclosure are two of the processes a lender can use when there is a default of the original loan agreement (e.g. not paying the mortgage).

Overviews, Laws & More

What choices does a lender have in the event that the mortgage is not paid?

A foreclosure or trustee’s sale is usually recorded by the lender. A procedure, such as a trustee sale or foreclosure, is governed by the laws of the state where your Arizona trustee salesreal property is located. Arizona permits a lender to choose either course of action. You should see a local lawyer who is experienced in this field of law because all states do not have the same laws. Because each person’s situation is different and the legal and tax advice you will receive will vary greatly, do not rely on the internet for correct information.

What is a Judicial foreclosure, and how does it work?

A court-filed legal action known as a judicial foreclosure (this is a court process). The real estate’s owner is served with the notice and given the chance to respond. In the end, the court will issue a judgment, typically in the lender’s favor. The law in the state where the property is located determines what occurs next. The next step in Arizona is a Sheriff’s sale.

What is a trustee’s sale, and how does it work?

A trustee is hired by a lender to collect the money they’ve invested in the property by selling it at a public auction.

If other people bid at the auction, the lender is compensated. If no one bids on the property, the lender becomes the new owner.

What happens once a trustee’s sale or foreclosure is finished? Most likely there will be an eviction.

After a lender completes the trustee’s sale or foreclosure There will be a new owner of the property.  Most likely, the new owner will want the previous owner or tenant to vacate the real estate, therefore they will file a forcible entry and detainer action (again, under Arizona law), also known as a FED.

The tenant/occupant is served with a written notice to vacate the premises. The length of the notice to vacate is determined by the type of occupancy, type of lease – commercial or residential, and whether the property is occupied by a renter or a foreclosed owner. Unless the contract specifies otherwise, this period is usually 5 or 7 days. If the tenant/occupant refuses to leave after the 5-7 days have passed, a complaint for forceful detainer action might be initiated. A notice of hearing will be delivered to the property’s occupant.  In the end, the new owner will get an eviction order requiring the resident (often the previous owner or tenant) to vacate by a certain time.  If the tenant, or old owner, does not leave then the sheriff will forcibly evict the occupant.

If the property is residential (ARS 33-1377) or non-residential (ARS 33-361), the laws regulating forcible entry and detainer actions are different (ARS 33-361).

What happened to any money that was left over after my house was sold at a trustee’s sale or during a foreclosure?

The money in question is known as “excess sale proceeds“. The application process for the funding is set by law.  NEVER give up the opportunity to pursue out those monies.  Instead, consult an expert lawyer instead so that you are aware of your rights.

house precariously sitting on jinga blocks

Our homes are typically both our most expensive investment and most treasured property.

As a creditor’s attorney many years ago, I conducted thousands of trustee sales in Arizona. Because I wanted to help people keep their homes and prevent them from being lost, I left that industry.

The homeowner should always seek legal and tax advice before moving forward with a trustee’s sale (foreclosure), short sale, or deed in lieu of foreclosure. After the process is finished, significant mistakes cannot be fixed.

hand holding clay house, bound with chain

As your circumstances change, you might need to learn about your options for dealing with a home that is suddenly a burden.

The rights and obligations of the landowner and the landowner’s creditors are typically defined by the laws of the state where the land is located (except federal lands). The laws that set the rules of the land differ in each state. As soon as your financial situation becomes troubling, see a knowledgeable attorney who specializes in bankruptcy and foreclosure to learn about your choices. You could be pleasantly surprised by your options.

Bankruptcy in Arizona and My Philosophy represented with helping hands bridge

Am I Eligible to File Bankruptcy in Arizona?

Chapter 7 Qualifications

The means test is the major qualification for Chapter 7 debtors. If your annual household income is less than the national average, you may be eligible for this type of bankruptcy. This figure is updated every few months.

If you do not qualify for Chapter 7, other options, such as Chapter 13 bankruptcy are usually available.

More on Chapter 7…..

Chapter 13 Qualifications

In Chapter 13 cases have limits on the amount and type of debts. There is also a minimum income and expense requirement. Debtors in Chapter 13 must have enough disposable income to make a monthly plan payment.

More on Chapter 13….

Helpful Insight

The right to file Bankruptcy bankruptcy is Protected by the United States Constitutional.

As early as 1789, Congress was authorized by the US Constitution’s Art. 1, Section 8, Clause 4 to enact bankruptcy laws to assist all citizens in obtaining a fresh start. The first bankruptcy law was enacted in 1800. Clearly, this option has been viewed as an important tool for protecting our citizens. As a result, you should never feel obligated to apologize to me or anyone else for exercising your constitutional rights.

Arizona Bankruptcy Law

When you file for bankruptcy, an automatic stay is triggered, which immediately stops things like:

  • Repossession
  • Wage garnishment
  • Foreclosure
  • Lien placement
  • Creditor harassment

The protected repayment period in a Chapter 13 and immediate debt discharge in a Chapter 7 are two other features of bankruptcy law. If you file for Chapter 13, you will have three to five years to catch up on mortgage payments and other delinquent secured debts. If your income is above the median income you will most likely have a five year plan (there are exceptions).  Most credit card, medical bill, and other unsecured debt is eliminated in a few months under Chapter 7.  But any non-exempt property can be seized and sold to pay your creditors.  The result is different in a Chapter 13.


Confused? Of course! That is why it is very important to have an experienced Arizona bankruptcy attorney on your side and helping you with the options.

Bankruptcy in Arizona is a complex interaction of multiple laws that should not be attempted without competent legal counsel.

Do not hire inexperienced attorneys who are unfamiliar with bankruptcy law. I say this not to scare you, but because I’ve seen good people make bad and costly decisions without realizing it.

What are the terms “Pre-Petition Assets” and “Pre-Petition Debts”?  What are Assets and Debts after filing the bankruptcy in Arizona?

Pre-petition assets are assets that you owned prior to filing for bankruptcy. Some of these assets may be used to settle pre-petition debts, or payments owed prior to filing for bankruptcy. In a chapter 7, any assets you obtain after filing for bankruptcy in Arizona are usually considered post-petition assets, and most of your pre-petition creditors cannot seize them. Similarly, any liabilities you incur after filing for bankruptcy, referred to as post-petition liabilities, are not discharged in a bankruptcy proceeding. But note that this may differ slightly in a chapter 13 case.

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