I am selling my house and the capital gain is $175,000. There is a judgement against me worth of $50,000.
According to the Homestead Act in Arizona I can keep 150,000 and everything else goes for the judgement. Is this true?
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Yes. It is true. See ARS 33-1101. However, the "homestead exemption in identifiable cash proceeds continues for eighteen months after the date of the sale of the property or until the person establishes a new homestead with the proceeds, whichever period is shorter." ARS 33-1101(C). So, you must either spend it or use it to purchase a new home.