Arizona Collection Law and Procedures

An overview of the procedure and relevant time frames in connection with obtaining judgment in Arizona to collect a debt.

1. Filing the Lawsuit

2. Pre-Judgment Remedies

3. The Underlying Remedies: Replevin, Attachment and Non-Wage Garnishment

4. Miscellaneous Remedies

5. Enforcing the Judgment

6. Bankruptcy

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Folks Hess, PLLC (“F&O”) conducts a multidisciplinary practice of law throughout Arizona. The firm’s primary client base consists of many of the banks and financial institutions located in the region. F&O lawyers have significant experience representing such clients concerning both complex commercial and consumer legal matters. In particular, the lawyers of the firm have expertise in all substantive areas related to collection, creditors’ rights, bankruptcy, foreclosure and eviction litigation.

Although F&O often serves as legal counsel to major banks and financial institutions in high dollar and complex transactions and cases, its loan workout, bankruptcy, collection and foreclosure lawyers have significant experience with consumer and small business cases and understand their clients’ conflicting need in such matters to both aggressively prosecute claims and minimize legal fees to be able to maximize their recoveries.

The firm has seasoned bankruptcy attorneys with experience in commercial and consumer cases. In particular, they have years of experience representing banks and other financial institutions with respect to: (i) all aspects of prosecuting their rights as secured and unsecured creditors in Chapter 7, 11 and 13 bankruptcy proceedings; and (ii) prosecuting their rights when their claims concern liens secured by all types of real and personal property.

F&O lawyers also have many years of experience representing banks concerning commercial and consumer foreclosure, loss mitigation, default servicing and eviction cases. The firm is one of the leading law firms that performs such services in Arizona. The firm represents major banks in every county of Arizona to: (i) conduct non-judicial trustee’s foreclosure sales; (ii) prosecute judicial foreclosures; (iii) monitor senior lien foreclosure sales and bid at such sales to protect our clients’ junior lien positions; (iv) apply for excess foreclosure sale proceeds; (v) document deeds-in-lieu of foreclosure and loan forbearance and modification agreements; (vi) complete UCC sales of personal property; and (vii) prosecute post-foreclosure evictions.

I. FILING THE LAWSUIT.

Following is the procedure and relevant time frames in connection with obtaining judgment in Arizona to collect a debt.

A. Filing the Lawsuit

1. The Demand Letter. A demand letter is not statutorily required. The bank, however, must fulfill any contractual notice requirements included in the loan documents. Although it is not necessary, it is best to have a demand letter attached as an exhibit to the Complaint. Therefore, if the bank has not sent a demand letter to the debtors, we recommend that we either prepare one or that you send one out. Notice of default and acceleration is not required by statute, but it is a good practice to send out a demand letter to reinstate the terms of the loan documents and to notify the debtors that the terms of the loan documents will be strictly enforced.

2. The Loan Documents. It is also very important to have a copy of the contract attached as an exhibit to the Complaint. We also like to have the Confirmed Loan Terms and/or the Additional Note Terms and any documents that: (i) reference the applicable interest rate; (ii) define an event of default; and (iii) provide for recovery of attorneys’ fees and costs. When it comes time to file a motion for default judgment, we must be able to direct the court to the contract provisions that contain the interest rate and that allow for attorneys’ fees and costs. If the bank does not have any documents evidencing the interest rate, we can apply the statutory rate of 10%.

3. Filing the Complaint, Service and Motions for Alternative Service. Once the Complaint is filed, it usually takes a week or so to serve. If the defendant is avoiding service, we file a motion for authority to use alternative service. It generally takes two weeks to obtain the order authorizing such service. Alternative service consists of posting the complaint, summons and order authorizing alternative service and mailing theses documents by regular and certified mail. Service is complete once posting and mailing are completed.

4. Skip Tracing and Service by Publication. When the addresses to serve the debtors are not valid and the bank does not have any additional addresses to attempt service, we recommend requesting a skip trace. We have an investigator who charges $150.00 and is approximately 95% successful.

Attempting to locate a debtor by a skip trace is important when deciding whether to serve a debtor by publication. Serving a debtor by publication should be used as a last resort and should only be used once all efforts to locate a debtor are exhausted. To serve a debtor by publication, the creditor must publish the summons in a publication in the county where the action is pending once a week for four (4) successive weeks. Service is complete thirty (30) days after the first date of publication. Service in this manner can be costly.

When a debtor is served by publication, and the case proceeds to default judgment, a hearing is required prior to entry of judgment. The hearing requires the creditor to explain to the court why service by publication was used to serve the debtor with the lawsuit. As long as the creditor has used all means available to locate the debtor, the court will sign the default judgment.

B. The Answer

Once service is obtained, the defendant has 20 days to file an answer or other responsive pleading. Defendants served outside of Arizona have 30 days to file an answer or other responsive pleading.

C. Where No Answer or Other Responsive Pleading is Filed

1. The Application for Entry of Default. Once the applicable time period has passed and an answer or other responsive pleading is not received, we file an application for entry of default. The Superior Courts in Maricopa County, Pima County and Yavapai County also require a supporting affidavit. After the application for entry of default is filed, the debtor has 10 business days to file an answer or other responsive pleading.

2. The Motion for Default Judgment. Once the applicable time period has passed following the filing of an application for entry of default and an answer or other responsive pleading is not received, we file a motion for default judgment.

a. Maricopa County requires submission of a default judgment packet that contains the following:

i. Motion;

ii. Affidavit of Attorneys’ Fees;

iii. Verified Statement of Costs;

iv. Form of Default Judgment;

v. Sum Certain Affidavit;

vi. Copies of certificates of service; and

vii. Copies of the contract with the interest and attorneys’ fees provisions highlighted.

b. The other county courts simply require the first four pleadings.

c. Currently, the Commissioners in Maricopa County are signing default judgments in 30-60 days. In other counties, it may take 30-60 days to obtain a signed default judgment.

D. When An Answer is Filed

In most cases, when an answer is filed, the answer admits execution of the loan documents at issue and on many occasions, the default on the loan. In this case, we have a basis to file a motion for summary judgment that asserts there are no disputed material facts and the bank deserves judgment as a matter of law.

1. The 26.1 Disclosure Statement. Once an answer is filed, the Arizona Rules of Civil Procedure require that the parties exchange Rule 26.1 Disclosure Statements within 40 days of filing the answer. These disclosure statements are not filed with the court. The Disclosure Statements must disclose the following:

a. Factual Basis of the Claims/Defenses

b. Legal Basis of the Claims/Defenses

c. Witnesses

d. Other Persons with Knowledge

e. Persons Who Have Given Statements

f. Expert Witnesses

g. Computation of Damages

h. Tangible Exhibits and Relevant Documents

i. Other Documents Known to Exist

2. Relevant Time Frames for the Motion for Summary Judgment. Once a motion for summary judgment is filed, the opposing party has 30 days to file a response. If the motion for summary judgment is sent by mail, an additional 5 days is added to the response time. Thereafter, the moving party has 15 days to file a reply. If the response is sent to the moving party by mail, the moving party has an additional 5 days to file its reply.

If the opposing party fails to file a response to the motion for summary judgment, we file a motion for summary disposition. This motion advises the court that a timely response has not been filed and that the court should grant the motion for summary judgment. It generally takes the court 30 days or more to sign an order granting the motion for summary judgment. At this point, the bank only has the order granting the motion for summary judgment, but not the signed judgment.

3. Motion for Attorneys’ Fees and Costs. Once the motion for summary judgment is granted, we must submit a motion for attorneys’ fees and costs along with a supporting affidavit, verified statement of costs and a form of judgment. It can take the court 30-60 days to sign the judgment.

II. PRE-JUDGMENT REMEDIES

 There are certain collection remedies that may be used by a party seeking to collect a debt before it obtains judgment. These pre-judgment remedies are limited to: (i) attachment; (ii) replevin and (iii) non-wage garnishments. Under the Arizona Revised Statutes, such remedies are called “provisional remedies.”

A. General Requirements

Before a party seeking to collect a debt may use a provisional remedy, it must determine whether it will be able to satisfy certain requirements.

1. Compliance with Provisional Remedy Statute and Underlying Remedy Statute. If a party would like to use a provisional remedy to collect a debt, it must comply with the statute governing provisional remedies (A.R.S. § 12-2401). In addition, the party must comply with the requirements of the underlying remedy statute, i.e., the statute that governs the replevin procedure.

2. Bond. For each provisional remedy, a bond is required. The underlying remedy statute governs the amount and conditions of the bond.

3. Provisional Remedy With or Without Notice. Whether to use a provisional remedy with or without notice depends on the circumstances of each case.

a. Without Notice. A provisional remedy may be issued without notice to the debtor under very specific circumstances. It may be used where the debtor:

i. Is about to remove permanently from the state and has refused to secure the debt;

ii. Has secreted property for the purpose of defrauding creditors;

iii. Has disposed of property, in whole or in part, with intent to defraud creditors; or

iv. Is about to dispose of property with intent to defraud creditors.

A provisional remedy without notice may also be used where:

i. the party seeking to use the provisional remedy is an owner, lessor or otherwise entitled to possession of the property claimed as long as the party satisfies the requirements for a replevin (this is applicable in situations where the party seeking to use the provisional remedy is a secured creditor); or

ii. the property subject to the provisional remedy is the subject of an underlying dispute and is located within the jurisdiction.

b. With Notice. A provisional remedy may be issued with notice as long as certain requirements are satisfied. The requirements are:

i. All statutory requirements for the issuance of the provisional remedy have been met;

ii. An application and notice for issuance of any provisional remedy has been filed with the clerk and a copy of the notice and application have been served on the debtor; and

iii. The debtor has been afforded an opportunity for a hearing or a hearing has been held.

B. Procedure

1. Provisional Remedy Without Notice

a. File an application and affidavit establishing with specificity:

i. Sufficient facts supporting the claim;

ii. One of the requirements for issuance of a provisional remedy without notice is satisfied; and

iii. The party seeking the provisional remedy will file such other pleadings and/or affidavits necessary for the issuance of the particular provisional remedy sought.

b. Obtain the order from the issuing court authorizing the particular remedy sought. It is important to have the order signed quickly. Thereafter, the attorney generally will take the application and related pleadings to the court himself, get them filed, and present them to the presiding judge in person.

c. File the appropriate bond.

2. Provisional Remedy With Notice

a. File Application and Notice with the Court;

b. File the appropriate bond; and

c. Serve the debtor.

3. Debtor’s Right to a Hearing

a. If the Debtor properly requests a hearing, the court must set the hearing within five calendar days of the request.

b. The issues at the hearing are limited to:

i. The probable validity of the claim or claims of the party seeking the provisional remedy and any defenses and claims of personal property exemptions of the debtor; and

ii. The existence of any statutory requirement for the issuance of the provisional remedy sought.

4. Attorneys’ Fees. If a hearing is held and the provisional remedy is either quashed or otherwise denied, the court may award reasonable attorneys’ fees to the debtor.

III. THE UNDERLYING REMEDIES: REPLEVIN, ATTACHMENT AND NON-WAGE GARNISHMENT

A. Replevin

In addition, to the following the procedure and requirements for provisional remedies, a party seeking possession of specific personal property in which the creditor holds an interest may apply for an order of replevin. Replevin may be used where a party has a security interest in certain personal property, like a motor vehicle, and where such security interest has been perfected by filing the appropriate UCC-1 filing or noting the secured party’s lien on the certificate of title for a motor vehicle. Generally speaking, we do not use replevins that often for the smaller business loans since they can be expensive and not worth the cost when compared to the debt owed. Further, the bank usually has a blanket lien on all business assets without a specific list of those assets. As noted below, a detailed list of the property sought is necessary for a successful replevin. It is vital to this remedy to have the following information:

1. A list of the personal property sought;

2. The location of the personal property; and

3. Its actual value. The actual value of the personal property is required for the affidavit in support of the application as well as to determine the amount of the bond.

B. Procedure

In order to obtain a replevin order prior to judgment, a party must:

1. Send a demand letter requesting the surrender of the property;

2. File the required documents for a provisional remedy;

3. File an Affidavit showing:

a. That the party seeking the property is the owner of such property claimed or lawfully entitled to its possession;

b. A sufficient description of the property;

c. That the property is wrongfully detained by the debtor; and

d. The actual value of the property.

4. Execute a bond and deliver it to the sheriff.

a. The bond must be payable to the debtor;

b. In an amount not less than double the value of the property as stated in the affidavit; and

c. For the return of the property if the debtor is successful in challenging the replevin. If the debtor is successful in challenging the replevin and the property is not returned, the party seeking the replevin must pay:

i. The assessed value of the property;

ii. All damages suffered by the debtor by virtue of the taking and detention of the property; and

iii. All costs and reasonable attorneys’ fees incurred by the debtor.

5. Once the replevin order is signed by the court, it is executed upon by the sheriff by physically taking possession of the property sought. The party seeking possession of the property should make sure in advance that it has a place to store the property pending its sale or auction.

C. The Redelivery Bond

The Debtor has two days after execution of the replevin order to post a redelivery bond and have the property returned to him. The amount of the redelivery bond must also be double the value of the property as stated in the affidavit.

D. Attachment

Attachment is used to ensure the debtor’s property is not disposed of prior to judgment in favor of the plaintiff. The writ of attachment directs the sheriff to seize and hold sufficient property of the debtor to satisfy the plaintiff’s potential judgment. It can be used for personal property as well as real property.

If you know that a debtor has real property with sufficient equity above the other consensual liens (i.e., deeds of trust) and the homestead exemption of $150,000.00, attachment can be a great source to create leverage to ultimately get the debt paid.

There are four bases for seeking a writ of attachment:

1. In an action upon contract for payment of money that is not fully secured by real or personal property, or if originally so secured, the value of such security has, without any act of the plaintiff, or the person to whom the security was given, substantially diminished below the balance owed;

2. When an action is pending for damages and the defendant is about to dispose of or remove his property beyond the jurisdiction of the court in which the action is pending;

3. In an action for damages upon contract, against a defendant not residing in this state or a foreign corporation doing business in this state; or

4. In an action upon a judgment of any state.

E. Procedure

1. File the required documents for a provisional remedy;

2. File an affidavit establishing one or more bases for obtaining a writ of attachment;

3. Execute a bond and deliver it to the sheriff;

a. The bond must be made payable to the debtor;

b. The bond must be in an amount not less than the amount for which the action is brought;

c. The bond must be approved by the officer issuing the writ; and

d. The bond must be conditioned that plaintiff will prosecute his action to effect and will pay all damages and costs that may be sustained by defendant by reason of the wrongful obtaining of the attachment.

4. Upon receipt of the writ of attachment, the sheriff levies upon so much of the defendant’s property subject to levy under the writ and is found within the county as is sufficient to satisfy the writ. Only non-exempt property may be levied upon.

Importantly, the levying officer will require the plaintiff to execute and deliver an indemnity bond in an amount double of the claim. This is in addition to the attachment bond. As such, to obtain and levy upon a writ of attachment, two bonds are required.

F. The Defendant’s Replevin of the Attached Property

At any time before judgment is rendered and if the attached property has not been claimed or sold, the defendant may replevy the property by giving a bond to the attaching officer who levied the writ.

G. Garnishments

Garnishments will be discussed in the post-judgment section of these materials. A pre-judgment garnishment requires a bond.

IV. MISCELLANEOUS REMEDIES

A. Lis Pendens

A notice of lis pendens may be filed in any action affecting title to real property. It operates to put a cloud on title of property subject to litigation during the pendency of the case. It is designed to prevent third parties from acquiring interest in the property which may hinder or preclude the court’s ability to render adequate relief to parties in the litigation with respect to the property. It is typically used in such actions as judicial foreclosures. Extreme caution must be used in filing a Lis Pendens. It is only authorized in limited circumstances and wrongful filing can subject a creditor to significant damages.

V. ENFORCING THE JUDGMENT

It is important to note that Arizona is a community property estate. Therefore, if you have a judgment against only one spouse, it makes it difficult to collect on the judgment.

Community property consists of all property acquired by a spouse after marriage. As such, wages and bank account deposits are presumed to be community property. However, if a creditor has information that: (i) the property is subject to a premarital agreement; (ii) the debtor acquired the property by gift, devise or descent; or (iii) the property was acquired before the marriage, the creditor may pursue it. Moreover, we recommend moving forward with enforcing the judgment and leaving it to the debtor to file the appropriate objection.

A. Recording the Judgment

Once we obtain a signed judgment either by default or motion for summary judgment, we record the judgment in the county in which the debtor resides and any other counties where he or she may have real property.

Once the judgment is recorded, it serves as a lien on any real property the debtor has or may acquire in the future. However, there is a caveat: Arizona’s homestead exemption is $150,000.00. Therefore, if you wish to foreclose, you must determine whether there is sufficient equity after payment of any superior deeds of trust and the homestead exemption.

B. Judgments Must Be Renewed Every 5 Years

The judgment creditor, his personal representative or assignee may within ninety days preceding the expiration of five years from the date of entry of such judgment, make and file an affidavit, known as a renewal affidavit to renew the judgment. The renewal affidavit must be recorded with the county recorder to continue the judgment lien on any real property.

C. Finding the Assets

The most commonly used method of obtaining asset information is either an asset search or a judgment debtor examination. However, there are other means to obtain such information:

1. Dissolution Decrees and Property Settlement Agreements;

2. Statements and Schedules in a dismissed bankruptcy case;

3. UCC Filings;

4. Secretary of State Department of Motor Vehicles;

5. Credit Reports;

6. Corporation Commission;

7. County Assessor’s Office; and

8. County Recorder’s Office.

D. Judgment Debtor Examinations

Another method to obtain information concerning a debtor’s assets is the judgment debtor examination. A judgment debtor examination directs the debtor to appear in court or at the attorney’s office to answer questions concerning his or her assets. In addition, a creditor may issue a subpoena duces tecum that requires the debtor to bring certain documents that identify his or her assets to the examination.

In order to compel a debtor to appear for a judgment debtor examination in Arizona, one must:

1. File the appropriate motion with the court.

2. Issue a subpoena duces tecum.

3. Obtain a court order that provides for issuing a civil arrest warrant against the debtor if he or she fails to appear on the date and time in the order.

4. Personal service of the debtor examination documents on the debtor.

Alternative service is not sufficient to obtain an arrest warrant in the event the debtor fails to appear. If the debtor fails to appear on the ordered date and time and the debtor was personally served with the debtor examination documents, then upon request, the court will issue a civil arrest warrant in the amount of $250.00. We must provide the court with the debtor’s date of birth, otherwise they will not issue the civil arrest warrant.

If a civil arrest warrant is enforced, we will receive a call from the sheriff or other officer advising that they have detained the debtor and we may come down and question him or her. However, please note that civil arrest warrants are rarely enforced in Arizona.

E. Once You Have Asset Information, What Do You Do With It?

1. Wage Garnishments. If employment information is uncovered, a creditor may file a wage garnishment. In order to obtain a writ to garnish wages, the creditor must do the following:

a. Send a letter to the debtor demanding that payment be made. We have recently revised the demand letter to demand payment within ten (10) days.

b. After the 10 days has expired and no payment has been made, a creditor may apply to the court for a writ of garnishment.

c. Once the creditor obtains and serves the writ and other necessary documents on the debtor’s employer, the employer, or “garnishee”, has 10 business days to file an answer to the garnishment.

d. Upon receipt of the employer’s answer, we file an application and order for continuing lien with the court. It usually takes 2 weeks or so to obtain the signed order from the court.

e. Once we receive the signed order, we forward a copy to the employer. Thereafter, the employer must forward an earnings statement to the creditor or its attorney along with the earnings subject to the writ of garnishment at the time the writ was served. The earnings statements and garnishment checks shall continue to be submitted until either the debt is paid, the debtor files for bankruptcy or leaves the garnishee’s employment.

f. Within 21 days after the end of each quarter, the creditor must prepare a report that is submitted to the garnishee and the debtor. Amongst other things, the report must advise of the following:

i. the total amount credited to the judgment balance during that period;

ii. the interest that accrued during that period; and

iii. the total outstanding balance due on the judgment as of the ending date of the reporting period.

2. Objection to the Garnishment. A debtor or other party may request a hearing on the wage garnishment. The hearing must be requested within 10 days of receipt of the answer. The prevailing party at the hearing may be awarded fees and costs as determined by the court.

3. Default. If the garnishee fails to file an answer, the creditor may pursue a judgment by default against the garnishee for the full amount of the underlying judgment.

4. Non-Wage Garnishments. Typically, when one thinks of a non-wage garnishment, they think of garnishing a bank account. However, there is other property one can garnish. For example, one can garnish rents, periodic payments and other contract payments. It also includes escrow accounts, the contents of a safe-deposit box and stock of a corporation. Importantly, the property subject to the garnishment is that property in possession of the garnishee at the time the writ is served. If the garnishee receives property after the writ is served, it is not subject to garnishment.

a. Bank Accounts. The most common non-wage garnishment is to garnish the funds held in a bank account. To garnish a bank account, a creditor must:

i. file an application for a writ of garnishment and obtain a writ;

ii. Serve the writ on the banking institution and pay a $25.00 fee to enable the bank to search all of its branches within the county in which the branch was served for all accounts in the debtor’s name. Once the bank is served, the debtor’s accounts are frozen;

iii. The bank or “garnishee” has 10 business days to file an answer advising whether they do or do not have funds in the debtor’s name;

iv. If the bank has funds in the debtor’s name, the creditor must file an application for judgment against the garnishee;

v. Once the judgment is entered against the garnishee, the creditor must send it to the bank, and the bank will release the funds.

b. Objection to the Garnishment. Like wage-garnishments, a debtor may object to a bank account garnishment and request a hearing within 10 days of service of the writ. The objection may assert that the funds sought are exempt because they are comprised of social security or other exempt funds. In such a situation, the creditor may want to subpoena the banks’ records to determine whether the basis for any objection is justified. The prevailing party may be awarded its attorneys’ fees and costs.

c. Default. If the garnishee fails to file an answer, the creditor may pursue a judgment by default against the garnishee for the full amount of the underlying judgment.

5. Writs of Execution. A writ of execution is a collection device used to require an officer to take possession and control over a debtor’s property and sell it to satisfy the judgment. As a practical matter, the creditor must be able to advise the officer what to execute on and where to find the property. The officer will not look for it. There are two types of writs.

a. Writ of Special Execution. A writ of special execution commands the executing officer to sell certain specific property or to deliver specific real or personal property to the creditor. All non-exempt real or personal property and all property and rights to property seized and held under attachment or garnishment may be executed upon.

b. Writ of General Execution. A writ of general execution commands the executing officer to try to satisfy the judgment from unspecified property. The judgment must be satisfied first from personal property and then real property.

c. The Sale. Once the officer levies upon the property, he must sell it and deliver the proceeds necessary to satisfy the judgment.

i. The officer must provide the appropriate notice of sale at least 10 days prior to the sale;

ii. The sale of real property is held at or near the courthouse door of the county where the property is located;

iii. The sale of personal property may be conducted on the premises where it is taken, at the courthouse door in the county where the property is located or at some other more convenient place for exhibiting the property to purchasers if necessitated by the nature of the property.

iv. The sale is conducted by a public auction to the highest bidder.

VI. BANKRUPTCY

It seems that, more often than not, debtors are filing bankruptcy these days. Once a debtor files for bankruptcy protection, an automatic stay is triggered. The automatic stay prevents creditors from further pursuing a debtor for the debt owed. For example, if a creditor has a wage garnishment in place, it must be quashed or the creditor is deemed to be violating the automatic stay and may be subject to an order of contempt which may include payment of attorneys’ fees.

There are three main chapters of the United States Bankruptcy Code under which a debtor may file for bankruptcy protection. These are Chapter 7, Chapter 11 or Chapter 13 bankruptcies.

If a creditor is unsecured, there is little to do other than file a notice of appearance and we always recommend filing a proof of claim. A notice of appearance ensures that a creditor or its attorney is given notice of all significant filings in a bankruptcy case.

All attorneys, including judges, recommend that a creditor always file a proof of claim even in a Chapter 7 no asset case. The basis for such a recommendation is that a creditor never knows whether a trustee will find assets. A trustee may re-open a case for that very purpose. If a proof of claim is filed, the trustee will know where to find the creditor to distribute any proceeds from the sale of the late discovered property.

If a creditor is secured, then in addition to filing a notice of appearance and proof of claim, it may wish to pursue its collateral whether real property or personal property. In the event a secured creditor wishes to pursue its collateral, it must file a motion for relief from the automatic bankruptcy stay.

In a Chapter 13 case, it should also review the Chapter 13 Plan to evaluate whether the creditor is treated appropriately and in accordance with its loan documents. Also, the Chapter 13 Plan should be reviewed to determine whether it’s feasible. This means that the debtor’s payments to the trustee are sufficient to make the payments proposed in the Plan. If the creditor is not treated appropriately and/or the Plan is unfeasible, the creditor should file an objection to the Plan.

It is important to note that even if one spouse files for bankruptcy, a creditor may not pursue any community property. When one spouse files for bankruptcy, all of a married couple’s then existing community property becomes property of the bankruptcy estate. Technically the debt of the non-filing spouse has not been discharged and a creditor may pursue any non-exempt separate property. However, a creditor cannot pursue any property considered community property to satisfy the debt.

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