The best business debt settlement companies in Arizona know Arizona law, including the fact that both spouses have to sign a guarantee in order for community property to be liable, the homestead exemption ($400,000, adjusted each January), Arizona's wage garnishment laws (10%), and the State's unique usury laws.
Unfortunately, there is no good list of the best Arizona companies. The lists out there mostly include consumer credit card settlement companies, most of which will not settle merchant cash advance debt. This post covers the Arizona laws used in negotiating with your funders anywhere in the State and what to look for in a provider.
Why isn't a usury defense much of a defense in Arizona?
In Arizona, a lender and borrower can agree to any rate of interest so long as it is in writing, so there is generally no maximum interest rate for a funder to exceed. See Arizona Revised Statutes 44-1201: interest "shall be at the rate of ten percent a year, unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to." Even if an MCA were re-characterized as a loan, the signed factor rate would be the written rate. See our full explanation of usury laws and merchant cash advances.
How does community property change what a funder can collect from a married owner?
If your spouse did not sign a guarantee, the funder may not be able to go after your community property. Under A.R.S. 25-214(C)(2), "joinder of both spouses is required" in "any transaction of guaranty, indemnity or suretyship." Under A.R.S. 25-215, "the separate property of a spouse shall not be liable for the separate debts or obligations of the other spouse," and on a community debt "the spouses shall be sued jointly."
Often only the spouse operating the business signs the MCA guarantee, so the funder can only reach the business' accounts and the guarantor's separate property, but not the joint accounts or the community property. A good debt settlement company should show the funder that its ability to collect is limited. But if you have a stack of advances, your spouse may have signed one of them, waiving this right for that debt.
A 2008 Arizona appellate decision, Rackmaster Systems, Inc. v. Maderia, 219 Ariz. 60, shows the protection can depend on which state's law governs the guarantee and where the spouses lived when it was signed. Most MCAs are governed by New York law, so make sure your provider reviews your agreements.
What exemptions are available to a guarantor in Arizona?
Arizona has a homestead exemption of $400,000 and other exemptions a provider should use to negotiate your settlement. Proposition 209 (2022) indexed the exemptions to inflation beginning January 1, 2024, and Arizona opted out of the Federal bankruptcy exemptions. A.R.S. 33-1133. So the same exemptions apply in bankruptcy:
Key Arizona exemptions for an individual guarantor (base amounts, indexed)
| Type of Exemption | Description of Exemption | Applicable Statute |
|---|
| Home that you live in | $400,000 and will go up beginning January of each year | 33-1101 |
| Wages | At least 90% of your weekly disposable earnings is protected | 33-1131 |
| Vehicle Equity | $15,000, $25,000 if you or a dependent is physically disabled | 33-1125 |
| One Bank Account | $5,000 exemption in one account | 33-1126 |
| 401K's, IRA's, Roth's, etc. | All exempt with a few exceptions | 33-1126(B) |
The homestead covers only the home you live in, not a rental, and the bank account exemption is yours, not your LLC's. A judgment can become a lien on your real property for ten (10) years in the county it is recorded. A.R.S. 33-964. But if you sell, the judgment creditor is paid only after the homestead amount and all previous liens.
Can a funder enforce a New York judgment or confession of judgment in Arizona?
A funder can enforce a New York judgment by filing it with the clerk of the superior court in Arizona, but it cannot enter a judgment here based on your confession of judgment. Arizona's A.R.S. 44-143 only allows judgment by confession where the authority "is executed and acknowledged on a day subsequent to the date on which the indebtedness to be confessed became due and payable." That statute only binds Arizona courts, so a judgment another state already entered on your confession comes in as a foreign judgment, which, once filed, is subject to "the same procedures, defenses and proceedings for reopening, vacating, or staying" as an Arizona judgment. A.R.S. 12-1702. It is enforceable for ten (10) years and can be renewed. A.R.S. 12-1551. Before collection starts, a provider working with an Arizona attorney may be able to stop it. For Maricopa County, see our page on business debt settlement in Phoenix.
How do you choose among business debt settlement companies in Arizona?
If the company will collect money from you in Arizona and pay your creditors, it may need to be licensed in Arizona to do debt management under A.R.S. 6-701. Also ask:
- Do they do both MCA and other types of business debt?
- Will they review all of your agreements to see if your spouse signed any?
- Can they tell you what the funds can actually collect after exemptions?
- If you are already sued, will they work with an attorney to respond?
- Is their primary negotiating tool usury? (This should be a red flag in Arizona.)
Costs vary by company, so read about the cost of business debt settlement.
Business Debt Settlement Companies in Arizona FAQs
If only I signed the personal guaranty, can they take money from our joint account?
Generally not. Under A.R.S. 25-214(C)(2), both you and your spouse must join in the guaranty to bind the community property. The guaranty does bind your separate property, and the funds may argue that the contract's chosen state law applies instead.
Can the MCA funds sue me in Arizona on the confession of judgment that I signed when I took the funding?
Not in an Arizona court. Under A.R.S. 44-143, a confession signed when you took the funding cannot be used to enter judgment here. Note that since 2019, New York will only allow a confession of judgment to be filed if you are a resident of New York so most Arizona owners are sued instead.
Do business debt settlement companies need to be licensed in Arizona?
They may. A.R.S. 6-701 makes anyone who takes money from an Arizona debtor and pays creditors for a fee a debt management company, and it is not limited to consumer debt. There are exemptions in A.R.S. 6-702 for attorneys incident to their practice and others; ask if they will hold your money and, if so, to see their Arizona license.