New Mexico Bankruptcy Laws
While those filing for Chapter 7 bankruptcy often have no assets of any significance, they often have some property that they would hope to protect. State and federal statutes allow them to do so by claiming eligible exemptions on some types of property. New Mexico allows clients to choose either federal or state exemptions; however, they cannot choose a combination of the two.The state exemptions in New Mexico include:
Homestead |
Up to $60,000 |
Personal Property |
Motor vehicles up to $4,000; clothing; furniture; health aids; jewelry up to $2,500; and up to $500 of any property; $5,000 of property in lieu of homestead; building materials; tools, machinery and materials needed to operate or repair oil lines, gas wells, or pipelines |
Wages |
40 times the federal minimum hourly wage or minimum of 75% of disposable earnings, whichever is greater |
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; public school employees; pension or retirement benefits |
Public Benefits |
General assistance; crime victims’ compensation; unemployment; worker’s comp; occupational disease disablement benefits |
Tools of the Trade |
Up to $1,400 |
Insurance |
Life, accident, health, or annuity benefits or their cash value, if beneficiary is a New Mexico citizen; benevolent association benefits up to $5,000; life insurance proceeds; fraternal society benefits |
Once the client and their attorney make all the required choices, the debtor must attend credit counseling before filing their petition for bankruptcy. A bankruptcy trustee is appointed by the court to:
- Analyze and administer the petition
- Determine what, if any, property should be liquidated
- Determine which debts can be discharged
- Hold a 341 meeting with the creditors, the debtor, and their attorney to allow all parties to question the client under oath concerning their assets, obligations, and bankruptcy plan
If the petition is approved, the client must attend debt education classes before any debts can be discharged. The Chapter 7 client is then free to build a new financial future, and the Chapter 13 client fulfills their repayment plan, at which time they experience the same debt relief.
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