Bankruptcy in New Mexico
When debt starts taking over your life, it can feel like there’s no way out. If you’re falling behind and struggling to stay afloat, it may be time to look at your legal options.
Bankruptcy isn’t a failure—it’s a chance to rebuild. Filing for bankruptcy can stop wage garnishments, halt foreclosures, and eliminate certain debts altogether.
But no two bankruptcy cases are exactly the same. Having the right guidance from the start can mean the difference between a smooth process and unnecessary setbacks.
That’s where we can help. We connect New Mexico residents with experienced bankruptcy attorneys who understand both the law and the practical realities of filing.
Types of Bankruptcy in New Mexico
Bankruptcy is a legal tool that helps individuals and businesses reset when debts become too much to manage. Filing can erase some or all of your financial liabilities, giving you a way to start over. In NM, you’ll need to prove that you’re facing a real financial hardship—something that prevents you from keeping up with your obligations.
It’s important to remember, though, that not every debt can be wiped away. Child support, alimony, certain taxes, and most student loans usually survive the bankruptcy process.
If you’re falling behind and see no way to catch up, filing for bankruptcy might be the right move. Depending on your situation, you may be eligible to file under Chapter 7, Chapter 11, or Chapter 13. Each option offers a different type of relief and comes with its own set of rules.
In New Mexico, bankruptcy cases are overseen by the U.S. Bankruptcy Court for the District of New Mexico, with its main office located in Albuquerque. Additionally, hearings are held in Las Cruces and Roswell at their respective federal courthouses.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy can be a powerful way to wipe the slate clean if you’re struggling to keep up with debt. For many people, it offers the chance to start fresh and move forward financially. Before you file, though, it’s important to take a serious look at your income, expenses, and ability to repay. Speaking with a bankruptcy attorney in New Mexico can help you figure out if a Chapter 7 liquidation plan makes sense.
Most people who qualify for Chapter 7 either have unstable income or have faced a major life change—like job loss or unexpected medical expenses—that left them unable to keep up. While Chapter 7 can eliminate many unsecured debts, it often comes at a cost. You might have to give up certain assets, such as a car, a home, or valuable personal property.
In New Mexico, qualifying for Chapter 7 bankruptcy hinges on passing the means test, which compares your household income to the state’s median income levels. As of April 2025, the median annual income thresholds in New Mexico are:
- $54,219 for a single filer
- $71,105 for a household of two
- $76,968 for a household of three
- $93,628 for a household of four
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more complicated process compared to other forms of bankruptcy. Instead of wiping out debts or forcing a sell-off of property, Chapter 11 focuses on creating a reorganization plan that restructures payments over time—usually between four and eighteen months.
The biggest advantage is that you don’t have to liquidate everything you own. Instead, you work out new terms with your creditors, giving you a structured way to stay current on your obligations while keeping your assets intact.
Filing for Chapter 11 bankruptcy requires full financial disclosure and careful attention to detail. You’ll need to present the court with a complete picture of your assets, debts, income, and expenses. This documentation is critical to moving your case forward.
Forms you’ll need to submit include:
- Voluntary Petition for Individuals Filing for Bankruptcy (Form B101)
- Summary of Assets and Liabilities (Form B106)
- Schedules A/B through J (covering all property, debts, income, and expenses)
- Statement of Financial Affairs (Form B107)
- Chapter 11 Statement of Current Monthly Income (Form B122B)
- Creditor Matrix (list of creditors with contact details)
- Schedule of Executory Contracts and Unexpired Leases (Form B106G)
- Proposed Disclosure Statement and Reorganization Plan
Chapter 13 Bankruptcy
Chapter 13 bankruptcy—often called the wage earner’s plan—gives individuals with regular income a way to reorganize their debt without losing important property. In NM, after you file, the court will assign a trustee to review your income, assets, debts, and ability to make payments.
Then, you’ll propose a repayment plan that typically lasts three to five years. How flexible that plan is will depend on how steady your income is and what property you want to keep. If you complete the plan successfully, you may also have some or even most of your remaining debts discharged at the end.
Unlike Chapter 11, which is generally designed for businesses or individuals with massive debts and complex financial structures, Chapter 13 is intended for regular wage earners who simply need time and protection to reorganize. It’s a simpler and more affordable process than Chapter 11 and doesn’t require giving up property like Chapter 7 often does.
The Bankruptcy Process in New Mexico
There’s no perfect moment to file for bankruptcy—but if it’s clear you won’t be able to pay off your debts within the next five years, it might be the right move. Filing can help you take control of your finances, limit the long-term damage, and start building a more stable future.
In New Mexico, the first step is gathering a full set of your financial documents. You’ll need to pull together records showing your monthly expenses, outstanding debts, assets, and annual income. The court will use this information to assess your eligibility and build your case.
In New Mexico, the bankruptcy process is governed by federal law, but the state also provides specific exemptions. When filing for bankruptcy, you must choose between using New Mexico’s state exemptions or the federal ones; you cannot mix and match between the two.
Here are some of the key exemptions available under New Mexico state law:
- Homestead Exemption: Up to $60,000 of equity in your primary residence is protected.
- Motor Vehicle Exemption: You can exempt up to $4,000 in equity in one motor vehicle.
- Personal Property: Household goods and furnishings are exempt up to a total value of $18,000.
- Jewelry: Exemptions for jewelry, including wedding and engagement rings, are capped at $2,500.
- Tools of the Trade: Tools and equipment necessary for your profession are exempt up to $15,000.
- Public Benefits: Social Security, unemployment compensation, and public assistance benefits are fully exempt.
- Retirement Accounts: Most tax-exempt retirement accounts, such as 401(k)s and IRAs, are fully protected under federal law.
Work With an Experienced New Mexico Lawyer
New Mexico’s exemption laws can help you protect important assets like your home, vehicle, and retirement accounts, but navigating the process on your own can be overwhelming. One wrong step could delay your case or cost you property you could have kept.
Working with an experienced bankruptcy attorney can make all the difference. They can help you understand your options, apply the correct exemptions, and guide you every step of the way toward a stronger financial future.
Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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