Business Debt Restructuring in Arizona: 7 Laws That Change Your Leverage (2026)

Arizona Decides This on Procedure, Not on Price

Owners call us from Phoenix and Tucson expecting a conversation about rate. It is the wrong conversation, and finding that out early saves months. Arizona sets a default rate of ten percent and then, in the same paragraph, allows the parties to contract in writing for any rate at all. There is no commercial usury ceiling in this state for a written agreement, no threshold above which the arithmetic becomes unlawful, and no criminal usury line to fall back on the way Massachusetts and New York have one.

What Arizona does have is a set of procedural and marital-property rules that decide outcomes more often than any rate argument would. A confession of judgment signed at funding is void here for a reason that has nothing to do with fairness and everything to do with the date it was acknowledged. A creditor going after community property has to sue both spouses and satisfy the judgment in a statutory order. Garnishment of a paycheck is capped at ten percent rather than the twenty-five percent most states allow. The homestead is four hundred thousand dollars and it moves with inflation every January.

Read the seven below as a map of where Arizona actually helps and where it does not. The order runs from the paper you signed to the property a creditor can reach, and the two items in the middle are the ones that most often change a settlement number.

1. Ten Percent Is the Default, and It Yields to Anything in Writing

A.R.S. §44-1201(A)(2) is short enough to quote in substance and decisive enough to end most Arizona rate arguments before they start. For any loan, indebtedness or obligation other than medical debt, interest runs at ten percent a year unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to. The statute does not qualify that by the size of the deal, the sophistication of the borrower or the purpose of the money. A signed writing is the whole requirement.

Two related pieces of the same section are worth knowing because they follow you after a judgment. The remainder of §44-1201(A)(2) provides that interest on a judgment based on a written agreement evidencing a loan or obligation that bears a lawful rate runs at the rate provided in the agreement, and that the rate must be specified in the judgment. Section 44-1201(B) supplies the fallback where no rate was contracted for: the lesser of ten percent a year or one percent plus the prime rate published in Federal Reserve statistical release H.15, with the judgment stating the applicable rate and that rate not changing after entry. A funder that drafted a high default rate will try to carry it onto the judgment, and the difference across five or ten years of accrual is usually larger than the amount in dispute today.

The one place price still matters in Arizona is characterization, and for reasons unrelated to usury. Whether the agreement is a purchase of receivables or a secured loan determines what the funder’s security interest actually covers under Article 9, whether the reconciliation obligation had to be performed, how the claim gets treated if a bankruptcy filing becomes necessary, and what a court makes of a demand that accelerated the whole purchased amount on a technical default. Those questions are answered from the document and the payment history rather than from a rate table. The provisions that drive them are set out on our breakdown of the contract clauses that decide leverage.

2. The Confession of Judgment That Was Signed Too Early to Work

Arizona did not abolish the confessed judgment. It did something more surgical, and the result is that the version funders actually use cannot be entered here. A.R.S. §44-143 provides that judgment by confession shall not be entered upon a note, bond or other written instrument for the payment of money under the authority of a power of attorney to confess judgment, unless that authority is executed and acknowledged on a day subsequent to the date on which the indebtedness to be confessed became due and payable.

Set that against how these documents are produced. A merchant signs the funding agreement, the guaranty and any confession rider on the same day the money arrives, months or years before a default exists and before any amount is due and payable. The authority in that stack was executed before the indebtedness matured, not after, and the section requires the opposite sequence. It also requires that the authority be acknowledged, which is a formality separate from signing and one that boilerplate riders routinely skip.

What that means practically is that an Arizona merchant facing a confession clause is looking at a document with a dating problem visible on its face, and the two facts that resolve it are on the signature page and in the payment history. Pull the execution date of the confession authority, pull the date the funder says the balance became due and payable under its acceleration provision, and put them side by side. If a confessed judgment has already been entered against you somewhere, that comparison is where an Arizona motion starts, and it should start quickly rather than after a garnishment lands.

None of this stops a funder from suing you in the ordinary way, or from obtaining a judgment in another state and bringing it here. It removes the shortcut, which changes the timeline in your favor and gives a negotiation room it would not otherwise have. Where a judgment is already in hand somewhere else, the conversation shifts to domestication and to what defenses travel, and that belongs with Arizona counsel rather than with the funder’s collection desk.

3. Community Property Means They Have to Name Your Spouse

Arizona is a community property state, and A.R.S. §25-215 turns that into a procedural requirement that changes how a guaranty is collected. Subsection (D) provides that either spouse may contract debts and otherwise act for the benefit of the community, and that in an action on such a debt the spouses shall be sued jointly, with the obligation satisfied first from the community property and second from the separate property of the spouse who contracted it. The word is shall, and the order of satisfaction is written into the statute rather than left to the creditor.

The companion rule runs the other way. Subsection (A) provides that the separate property of a spouse is not liable for the separate debts or obligations of the other spouse absent the property owner’s agreement to the contrary. Subsection (B) makes community property liable for a spouse’s premarital debts only to the extent of that spouse’s contribution to the community that would have been separate property if single, and subsection (C) makes community property liable for out-of-state debts incurred during the marriage that would have been community debts if incurred here.

For a merchant who signed a personal guaranty alone, the practical questions become who was named in the funder’s complaint, whether the obligation was contracted for the benefit of the community, and what property is separate rather than community. A creditor that sued only the signing spouse has a materially narrower judgment than one that named both, and whether that defect can be cured later, and on what terms, is exactly the sort of question that changes the value of a settlement. It is also the reason a guaranty presented for a spouse’s signature deserves its own conversation with counsel before anyone signs it.

Two cautions belong here. Arizona’s rules are not a shelter you construct after the fact, and moving assets between spouses once a creditor is circling runs directly into the transfer statute two items below. And the analysis is genuinely technical, turning on when the obligation arose, whether it benefited the community and how title is held. Get an Arizona lawyer to run it on your actual facts rather than working from a summary.

4. Arizona Kept the Older Transfer Statute and Its Language

The article that governs what you moved out of the company is A.R.S. §§44-1001 through 44-1010, and it still speaks of a transfer being fraudulent rather than voidable. That vocabulary difference is the fastest way to check whether advice you have been given was written for Arizona. A memo about voidable transactions citing sections in the 39-23 range or chapter 19.40 was drafted for North Carolina or Washington.

Section 44-1004(A) sets the two tests. Paragraph (1) reaches a transfer made or obligation incurred with actual intent to hinder, delay or defraud any creditor, whether the creditor’s claim arose before or after. Paragraph (2) requires no intent: no reasonably equivalent value received, plus either remaining assets unreasonably small for the business or transaction you were engaged in or about to engage in, or debts you intended or believed or reasonably should have believed you would incur beyond your ability to pay. Subsection (B) then lists the factors a court weighs on intent, beginning with whether the transfer was to an insider, whether you retained possession or control afterward, whether it was disclosed or concealed, and whether you had already been sued or threatened with suit.

One definitional detail in §44-1001(1) is worth noticing because it shapes what is even reachable. An asset excludes property to the extent it is encumbered by a valid lien and property that is generally exempt under nonbankruptcy law. In a business that has granted blanket liens to three funders, a large share of what looks like value on a balance sheet is already encumbered and therefore outside the definition, which cuts in a direction most owners do not expect.

The deadlines at §44-1009 are the operative constraint on any plan. A claim under §44-1004(A)(1) must be brought within four years of the transfer, or within one year after the fraudulent nature of it was or through reasonable diligence could have been discovered. A claim under §44-1004(A)(2) or §44-1005 must be brought within four years. Build the dated schedule of distributions, member loan repayments, equipment sales and intercompany transfers before anyone proposes a new entity or a wind-down, and have Arizona counsel look at it first. The traps in that area are laid out on our page on OldCo and NewCo transfer traps.

5. Ten Percent of a Paycheck, and Ten Years of a Judgment

Arizona protects earnings considerably better than most states, and the figure surprises creditors from out of state. A.R.S. §33-1131(B) provides that the maximum part of a debtor’s disposable earnings for any workweek subject to process may not exceed ten percent of disposable earnings for that week, or the amount by which disposable earnings exceed sixty times the applicable minimum hourly wage, whichever is less. The applicable minimum wage is whichever of the federal, state or local figure is highest, which in Arizona means the state figure rather than the federal one. Subsection (A) defines disposable earnings broadly, sweeping in wages, salary, bonuses, commissions and payments under a pension, retirement or deferred compensation plan, less amounts required by law to be withheld.

The exceptions are narrow and none of them describes a merchant advance. Subsection (C) removes the exemption for support orders, where one-half of disposable earnings is exempt instead, and subsection (D) removes it for a bankruptcy court order under chapter 13 and for state or federal tax debt. A judgment on a personal guaranty of a business advance gets the ten percent rule.

Ten percent is a meaningful ceiling but it is not a reason to relax, because a judgment in Arizona is a long-lived instrument. A.R.S. §12-1551(A) allows a writ of execution or other process at any time within ten years after entry and within ten years after any renewal by affidavit or by action. Subsection (B) bars execution after ten years unless the judgment is renewed by affidavit or process under §12-1612 or an action is brought on it within that period, and subsection (D) applies the rule to judgments entered on or after August 3, 2013 and to earlier judgments that were renewed on or before August 2, 2018.

The number that follows from all of that is the one worth thinking about before you accept or reject a settlement. A judgment that accrues at a contract rate for ten years, renewable, against a guarantor whose wages give up ten percent a week, is a slow instrument rather than a harmless one, and it sits on your credit and your ability to finance anything for the whole period. That is the arithmetic funders count on. It is also the reason an early resolution is usually cheaper than the alternative even when the ten percent cap makes the immediate pressure feel survivable.

6. No Disclosure Statute, and the Consumer Fraud Act That Half Fills the Gap

Arizona had not enacted a commercial financing disclosure or broker statute as of August 2026, and it is not one of the eleven jurisdictions that had. Nothing in the Arizona Revised Statutes obliged your funder to state the amount financed, the total repayment, the dollar cost or an estimated annual percentage rate before you signed, and no Arizona agency licenses small business finance providers or the brokers who place their paper. Combine that with the absence of a rate ceiling in item one and Arizona is, on the front end of a transaction, one of the least regulated states in this library.

The statute that reaches furthest into the gap is the Consumer Fraud Act, and its coverage rests on a definition rather than on a heading. A.R.S. §44-1521(5) defines merchandise as any objects, wares, goods, commodities, intangibles, real estate or services, and §44-1521(6) defines person to include a partnership, a domestic or foreign corporation, any company, trust, business entity or association, and their agents and officers. Section 44-1522(A) then declares unlawful the use of any deception, deceptive or unfair act, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of a material fact with intent that others rely on it, in connection with the sale or advertisement of any merchandise, whether or not anyone was in fact misled or damaged. Subsection (C) directs courts to use Federal Trade Commission and federal court interpretations of 15 U.S.C. §§45, 52 and 55(a)(1) as a guide.

Two honest limits. First, the enforcement architecture in the act is built around the Attorney General: §44-1531(A) lets the Attorney General recover a civil penalty of up to ten thousand dollars per violation on a court finding of a wilful violation, defined in subsection (B) as one where the party knew or should have known the conduct was of the prohibited nature. A private damages action under the Consumer Fraud Act is a matter of Arizona case law rather than express statutory text, so its availability and its elements in a commercial financing dispute are questions for Arizona counsel on your facts. Second, the act reaches conduct in connection with a sale or advertisement, which fits a broker’s pitch and a funder’s marketing better than it fits a dispute about how a contract was performed.

The upshot is that an Arizona file is built on documents rather than on statutes. The offer that preceded the contract, the emails promising a reconciliation that never happened, the funding statement showing what was withheld and the payoff letters to prior positions are what a negotiator uses here. Where those documents are strong the file is strong, and where they are thin no statute rescues it. Our fifty-state disclosure comparison shows which states do impose the duties Arizona left out.

7. Four Hundred Thousand Dollars, Reset Every January

Arizona’s homestead is among the more generous in the country and, unusually, it keeps pace with inflation. A.R.S. §33-1101(A) allows any person at least eighteen years old who resides in this state to hold exempt from attachment, execution and forced sale, not exceeding four hundred thousand dollars in value, an interest in real property in one compact body with a dwelling house in which the person resides, a condominium or cooperative unit in which the person resides, or a mobile home, park model, motor home, travel trailer, houseboat or manufactured home plus the land beneath it.

Subsection (D) is the provision that keeps the number current. The exemption is adjusted annually on January 1 by the increase in the cost of living, measured by the percentage change from August of the previous year to August of the year before that in the consumer price index for all urban consumers, United States city average for all items, rounded up to the nearest one hundred dollars. Because the adjustments have run each January since 2024, the operative figure in a live case is higher than the four hundred thousand dollars printed in subsection (A), and the current number needs to be pulled rather than assumed.

Two features make the Arizona homestead more useful than a flat exemption elsewhere. Subsection (B) limits a married couple or a single person to one homestead exemption and measures value as equity rather than as gross value, and it caps the total available to a divorced couple for the same residence at the same figure. Subsection (C) attaches the exemption automatically to identifiable cash proceeds of a voluntary or involuntary sale and keeps it attached for eighteen months or until a new homestead is established, whichever is shorter, while expressly excluding proceeds from a refinance. Subsection (F) fixes the bankruptcy figure as of the petition date and protects post-petition appreciation entirely where the equity was within the exemption when the case was filed.

For a guarantor the practical consequence is that Arizona real estate equity is frequently the least attractive target a creditor has, which pushes the pressure onto the operating account, the receivables and the vehicles instead. That reordering is worth knowing before you respond to a demand, because a collector pricing an Arizona file is pricing a shorter list of reachable assets than the same collector would be in most states, and a negotiator can make that point early rather than after a fruitless execution.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.