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Bankruptcy: New Mexico

Filing bankruptcy in New Mexico gives petitioners a chance to recover from debt and repay creditors to the extent that the debtor’s property value or earnings permit.  6,470 bankruptcies were filed in New Mexico in 2010, ranking New Mexico 36th in the country for the number of bankruptcy filings per capita. 92% of New Mexico’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in New Mexico

Federal law governs bankruptcy proceedings in New Mexico, and as such, all bankruptcy cases are filed in the US Bankruptcy Courts located Albuquerque, Las Cruses and Roswell.  Although federal courts have exclusive jurisdiction over bankruptcy procedures, New Mexico law permits petitioners to use the exemptions found in the U.S. bankruptcy code or the exemptions provided under New Mexico law. The exemption systems cannot be mixed and matched. With the expert guidance of a bankruptcy attorney New Mexico petitioners can prepare for what personal property the systems permit them to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, New Mexico

Chapter 7 bankruptcies in New Mexico make up an overwhelming majority of the state’s personal bankruptcy filings.  Chapter 7 is most beneficial to petitioners who lack major assets such as investments or significant home equity, because a Bankruptcy Trustee may liquidate personal property that is not protected by New Mexico’s bankruptcy exemptions. Liquidation occurs when a court-appointed Trustee converts personal assets to cash to distribute to creditors. New Mexico’s Chapter 7 bankruptcy law allows petitioners to keep some essential property and these exempt assets cannot be claimed by creditors looking for repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

New Mexico Bankruptcy Exemptions

New Mexico bankruptcy law lists detailed property exemptions that permit debtors to keep some personal property and eligible assets so that bankruptcy proceedings do not leave them destitute.  Bankruptcy in New Mexico lets petitioners choose exemptions from either the federal list or the state list.

Because exemption amounts are subject to change, those planning to file bankruptcy should first speak with a New Mexico bankruptcy attorney to learn which exemptions are applicable to their personal financial situation.  New Mexico bankruptcy exemptions include:

New Mexico Homestead Exemption

  • $60,000 total (Joint owners may double)

New Mexico Personal Property Exemption

  • Clothing
  • Books and furniture
  • $2,500 total: Jewelry
  • $4,000 total: Motor vehicle
  • Health aids
  • Building materials
  • Materials, tools and machinery to dig, drill, complete, operate, or repair oil line, gas well, or pipeline
  • Cooperative association shares, minimum amount needed to be member

New Mexico Tools of the Trade Exemption

  • $1,500 total

New Mexico Wage Garnishment Exemption

  • 75% of disposable earnings or 40 times the federal hourly minimum wage, whichever is more (Low-income debtors may qualify for more)

New Mexico Public Benefits Exemption

  • General assistance
  • Occupational disease disablement benefits
  • Workers’ and Unemployment compensation

New Mexico Insurance Exemption

  • $5,000 total: Benevolent association benefits
  • Fraternal benefit society benefits
  • Life insurance proceeds
  • Life, accident, health, or annuity benefits, withdrawal or cash value, if beneficiary is a New Mexico resident

New Mexico Pensions and Retirement Savings Exemption

  • Pension or retirement benefits
  • Public school employees

New Mexico Miscellaneous Exemption

  • Ownership interest in unincorporated association
  • Property of business partnership

New Mexico Wild Card Exemption

  • $5,000 total: Any real or personal property, in lieu of homestead
  • $500 total: Any personal property

Chapter 13 Bankruptcy, New Mexico

In 2010, 8% of petitioners filed Chapter 13 bankruptcy in New Mexico.  Filing for protection under Chapter 13 bankruptcy in New Mexico involves the assistance of a court-appointed Trustee to restructure debts and implement a 3-5 year repayment plan, using the debtor’s future earnings to repay creditors.  Chapter 13 petitioners in New Mexico keep most – or all – of their property.

How to File Bankruptcy in New Mexico

Qualifying for key property exemptions should be a key consideration when discussing whether bankruptcy is right for your financial circumstances. The goal ought to be to protect major assets and discharge debts.  A New Mexico bankruptcy attorney can explain bankruptcy exemption rules and provide counsel for the benefits and impact of Chapter 7 and Chapter 13 bankruptcy.

Bankruptcy Attorney: New Mexico

A New Mexico bankruptcy attorney can break down and simplify the federal laws and New Mexico bankruptcy exemptions for those considering filing for protection.  Personal bankruptcy cases can be incredibly complex and stressful, and the bankruptcy advice and guidance of a New Mexico bankruptcy attorney in these situations is a good investment in your financial future.