Legal Question in Real Estate Law in Arizona

''Personal real estate loan''

Can a person, whose only source of income is from long term disability, be held liable to repay a personal loan?(for real estate)

Asked on 1/20/02, 8:10 pm

3 Answers from Attorneys

Chris Johnson Christopher B. Johnson, Attorney at Law

Re: ''Personal real estate loan''

If you agreed to repay, or if this is a community debt of your spouse, then yes, you can be liable to repay.

As a practical matter, though, the creditor may not be too agressive if you have no money or assets to repay the loan. If the loan is secured by real estate, you may also try to renegotiate the loan repayment terms.

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Answered on 1/21/02, 1:14 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: ''Personal real estate loan''

The answer is yes except. The exception relates to the terms of the loan and the circumstances in which the loan was made. In some circumstances the lender's recourse is limited to foreclosing on the collateral (the real estate) and then the lender is barred from pursuing the borrower's other assets or income. The protection afforded by these so-called 'antideficiency statutes' generally applies to purchase-money loans and not refinances or home-equity, and may or may not afford protection to third-party cosigners or guarantors. If the maount is substantial, take your paperwork to a lawyer.

The other answers are correct in pointing out that if you have few assets and little income the creditor is unlikely to pursue you vigorously. This is not to say you can relax and fail to defend. If you are served with a lawsuit, see an attorney immediately.

You may be able to get the creditor to back off by demonstrating that you have no assets and little income, but no guarantee that'll work!

Finally, certain assets and income streams are protected from creditors by law. You can probably get valuable free advice on this from or through your local Legal Aid.

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Answered on 1/21/02, 4:44 pm
Victor Hobbs Victor E. Hobbs

Re: ''Personal real estate loan''

You're probably judgement proof. Have you disability payments go direct deposit to your bank account. From the paucity of facts it sounds like the creditor would be wasting their time trying to collect. They might make a half hearted attempt. You need to stand your ground.

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Answered on 1/20/02, 8:58 pm

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