If bills are piling up and you’re losing sleep, you’re not alone. Many people face financial struggles, but there is no reason to feel powerless in your situation. If you live in Arizona, there are options for debt relief that you can explore. When you cannot pay your debts at the moment, here are a few steps that you can take to protect your home, your wages, and your sanity:

Assess your Financial Situation

You have to act quickly instead of ignoring your dilemma. Do not give your debt collectors momentum. Take immediate actions to protect yourself from unnecessary legal and financial harm. To figure out which relief plan to choose, you must first know where you stand in terms of debt and income:  

List all debts

Start by listing each debt with the creditor’s name, balance, interest rate, last payment date, and whether it’s secured (like a car loan) or unsecured (like a credit card).

Review Credit Reports

Pull free annual credit reports from AnnualCreditReport.com and match what you see on your list. 

Communicate with Creditors Early

Under the Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. § 1692), you can request that debt collectors stop contacting you in writing (though it won’t erase the debt). In Arizona, debt collectors must also follow the Arizona Consumer Fraud Act (A.R.S. § 44-1521 et seq.).

Prioritize Essential Expenses

Based on your income and essential expenses, see how much is available for debt payments. Pay housing, utilities, food, transportation, and necessary medical care first. For example, an Arizona resident facing both rent and credit card debt should pay rent first to avoid eviction under A.R.S. § 33-1368. In Arizona, landlords generally must give a written 5-day notice before filing an eviction for nonpayment. So, even if you’re behind, you may still have a small window to catch up or make a plan.

• Prioritize secured debts (like mortgages or car loans) to avoid repossession or foreclosure. You can slow down on unsecured debts such as credit cards and personal loans while trying to stabilize your financial situation. 
• Identify protected assets under Arizona law before making payment decisions.

Explore Options for Debt Relief 

Direct Negotiation

Among the options for debt relief, one require you to negotiate directly with creditors. Here, you need to explain your hardship and ask for a lower interest rate, fee waivers, or a lump-sum settlement. In many cases, they’ll meet you halfway because a modest, predictable payment beats a default. Get every settlement agreement in writing before you send money to prevent future collection attempts. For example, you can try to negotiate with a medical provider to pay $100/month instead of $400/month, avoiding a collections lawsuit.

If the account is old, check the statute of limitations before you restart payments. Arizona gives creditors six years to sue on most written contracts and credit cards. Hence, paying or promising to pay can affect that clock. The safest move is to confirm timing first. Then, if you are sued, file a response (usually due 20 days after service) so you don’t lose by default.

Debt Management Plan (DMP) 

Through nonprofit credit counseling agencies, you can have structured options for debt relief. You just need to make one monthly payment to the agency (that they will use to pay your creditors), and you typically get reduced interest and fees. In Arizona, debt management companies are regulated and licensed. State law (Title 6, Chapter 6) sets standards for these companies, and the Arizona Department of Insurance and Financial Institutions (DIFI) publishes information about licensees. Watch out for these red flags:

• A company that does not clearly disclose fees
• They won’t show you a proposed plan
• You are pressured to stop paying all creditors immediately

A compliant DMP will provide you with a consistent and organized approach to financial recovery.

Debt Consolidation Loan

If your credit score is still strong, one of your good options for debt relief would be a debt consolidation loan. It combines multiple debts (credit cards, medical bills, personal loans) into one new loan with a single monthly payment. Here, your goal is to secure a lower interest rate or longer repayment term to make payments more manageable.

Debt consolidation loans in Arizona are subject to both state consumer lending laws and federal credit regulations:

• Consumer Lenders Act (A.R.S. § 6-601 et seq.) – Requires lenders making loans of $10,000 or less for personal or household use to be licensed unless exempt (such as banks or credit unions).
• Arizona Usury Law (A.R.S. § 44-1201(A)) – For non-licensed lenders, the maximum legal interest rate is 10% per year unless otherwise agreed in writing. If agreed, the parties can set a higher rate.
• Federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) – Requires clear disclosure of loan terms, annual percentage rate (APR), and fees.

Debt Settlement

Debt settlement is a process where you or a third party negotiates with your creditors to accept less than the full balance owed as a lump-sum payment. It is typically used for unsecured debts like credit cards, personal loans, or medical bills. Settlement amounts can range from 40–70% of the original balance, depending on the creditor. However, debt settlement comes with the following risks:

• Credit Damage: Settling a debt shows as “settled for less than full balance” on credit reports.
• Tax Liability: Forgiven debt over $600 is generally considered taxable income by the IRS (IRC § 61(a)(12)), unless you qualify for the insolvency exception (IRC § 108). Arizona follows federal income tax rules.
• Creditor Lawsuits: While you’re saving money for a lump-sum settlement, creditors can still sue for the full balance under Arizona law (statute of limitations = 6 years, A.R.S. § 12-548).
• Scams: Some companies charge high fees without settling debts. The Arizona Attorney General has prosecuted such cases under the Consumer Fraud Act.

Choose this option if you have access to lump-sum funds (savings, family help, or tax refund) to settle. You may avoid bankruptcy this way, but you have to accept some credit score damage.

Bankruptcy

If your income and assets are limited and most of your debt is unsecured, Chapter 7 can wipe those balances in a matter of months. If you have a steady income, need to catch up on a car or mortgage, or want to protect assets that Chapter 7 would put at risk, Chapter 13 sets up a 3–5 year repayment plan. Either way, your exemptions matter. 

Arizona’s homestead exemption protects equity in your primary residence up to $400,000. The statute now adjusts that cap each year for inflation. That protection also carries over to the cash proceeds from selling the home for 18 months while you buy another. This can be beneficial if you need to downsize. You’ll also use Arizona personal property exemptions (for household goods, a vehicle up to a certain amount, and other basics) to protect everyday items. A local bankruptcy attorney can map your assets to these exemptions in one meeting so you can make an informed decision. 

Government & Hardship Assistance

If you’re facing a mortgage delinquency because of a temporary hardship, check whether any remaining Homeowner Assistance Fund options or similar state programs are taking applications. These funds have helped thousands of homeowners cover arrears or certain housing costs. 

On the rental side, that 5-day notice in Arizona is a legal requirement before an eviction can be filed for nonpayment. So, if you receive a notice, respond quickly. Sometimes, a partial payment and a written plan will stop a filing. 

Utility providers like APS also have hardship and crisis programs. For example, the Energy Support and Crisis Bill Assistance programs can stabilize a bill to prevent service shutoff. 

To conclude, you have more leverage than you think. Understand the laws that protect your home and wages, and choose the path that fits your income and stress level. If you need tailored advice for your situation, seek an approved credit counseling agency. You may also talk to an attorney specializing in bankruptcy, debt defense, or general consumer law.