Arizona debt collection laws, debtors' rights against creditor who filed a lawsuit

I am not an Arizona lawyer but a quick check of the Arizona Statutes indicate that your home is exempt to the extent of $100,000 in equity. I did not check to see if this applied to one debtor or it doubled for a married couple.
The Arizona exemption statutes are by most standards very small and Arizona is one of the states that opted out under the Banruptcy reform Act of 1972 and therefore those exemptions would not within your reach if you should decide to file bankruptcy.
In your case a chapter 7 bankruptcy sounds like one reasonable solution and under certain circumstances a chapter 13 bankruptcy.
Assuming that more than 50% of your debts are related to your business you do not have to qualify under the "Means Test", which is the test that was put into the bankruptcy code apprxoimately 4 years ago to determine whether or not your income would require you to file a chapter 7 case.
Each situation is different and it not only depends on the numbers themselves, but also the future prospects of the client(s), present economic conditions, the clients personalty and a number of other factors.
However, you are not going to know what your options are until to seek the advise of someone who can explain all of your options to you which includes bankruptcy as well as other potential options such as an out of court workout which would probably be better than using a debt consolidation agency.
Good insolvency or bankruptcy lawyers usually offer an initial free consultation to review your entire situation and you should make an appointment to see such a lawyer making careful note of the items that the lawyer would like you bring with you to that meeting.
In selecting a lawyer your look for one is experienced and is recognized by his peers as having special knowledge about your type of situation. In this regard you should look for a lawyer that is certified in business bankruptcy law by the American Board of Bankruptcy Certification. This certification requires the lawyer to have passed a very difficult bar examination, a demonstration that he has been extensively involved in insolvency matters for the previous five years and recommendation from a number of his peers including lawyers that he opposed in various insolvency matters.
I have had a number of cases in Arizona and would be glad to recommend several lawyers from which can select one if you give me a call.