{"id":286865,"date":"2021-04-22T15:57:14","date_gmt":"2021-04-22T20:57:14","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/bankruptcy-laws-by-state\/new-mexico-bankruptcy-exemptions-and-law.html"},"modified":"2026-07-13T10:53:28","modified_gmt":"2026-07-13T15:53:28","slug":"new-mexico-bankruptcy-exemptions-and-law","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/bankruptcy-laws-by-state\/new-mexico-bankruptcy-exemptions-and-law.html","title":{"rendered":"New Mexico Bankruptcy Exemptions and Law"},"content":{"rendered":"\n
\n

New Mexico Bankruptcy Exemptions and Law<\/h1>\n\n
\n
\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

\n
\n
\n

Key Takeaways<\/h2>\n

New Mexico<\/span> bankruptcy laws<\/span> allow individuals and businesses to discharge or reorganize their secured and unsecured debts under federal court jurisdiction. Filers<\/span> can choose between Chapter 7 liquidation<\/span> or Chapter 13 reorganization, utilizing state or federal exemptions to protect vital personal property<\/span>. This structured process triggers an automatic stay<\/span> that halts foreclosures<\/span>, wage garnishments<\/span>, and collection lawsuits while debtors work on resolving overwhelming debt.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

New Mexico<\/span>\u2019s bankruptcy laws<\/span> give debtors a chance to clear their secured and unsecured debts and get a fresh start<\/span>. Under New Mexico<\/span> law, debtors can choose federal exemptions or New Mexico<\/span> state exemptions. The bankruptcy process<\/span> is handled in federal court, but state laws can determine what property is protected and the value of the exemptions.<\/p>\n

New Mexico<\/span> follows the Federal Bankruptcy Code<\/a>, although New Mexico<\/span> statutes<\/a> provide state-specific exemptions for debtors. As a \u201cchoice\u201d state, New Mexico<\/span>\u00a0allows debtors to choose either state or federal exemptions.<\/p>\n

While other types of bankruptcy are available to businesses and agricultural interests, most debtors in New Mexico<\/span> will choose between Chapter 7 and Chapter 13 bankruptcy<\/span>. Let\u2019s take a look at how each type works.<\/p>\n

Chapter 7 Bankruptcy<\/span><\/h3>\n

Chapter 7, also called a liquidation<\/span> bankruptcy, requires debtors to pass a means test<\/span><\/a>. If your income falls below the median income in your state, you automatically qualify for Chapter 7 bankruptcy<\/span>. If you make more than that, the court considers your living expenses and other factors to determine whether you qualify.<\/p>\n

In a Chapter 7 case<\/span>, your assets become the property of the \u201cbankruptcy estate.\u201d A bankruptcy trustee sells any non-exempt assets to pay off your creditors. Any remaining debts are discharged<\/a>. Chapter 7 bankruptcy<\/span> is preferred if you have few valuable assets and mostly unsecured debt, such as credit cards<\/span> and medical bills<\/span>.<\/p>\n

Chapter 13 Bankruptcy<\/span><\/h3>\n

A Chapter 13, also known as reorganization, requires debtors to work with the trustee to develop a repayment plan<\/span> with their creditors. A Chapter 13 combines your secured debts<\/span> and pays them off over three to five years. You must stay current on the payment plan<\/span>.<\/p>\n

At the end of the payment period, the court may grant a discharge of many remaining dischargeable debts<\/span>. Some debts are not dischargeable, and some liens can survive.<\/p>\n

Chapter 13 is the best choice for homeowners facing foreclosure<\/span> or those with non-exempt assets they wish to keep. To qualify for Chapter 13, you must have a steady income that can support a monthly <\/span>payment<\/span> plan<\/span> and cover your living expenses.<\/p>\n

New Mexico<\/span> Bankruptcy Exemptions<\/span><\/h3>\n

New Mexico<\/span> is a \u201cchoice\u201d state, meaning you can choose either the New Mexico<\/span> bankruptcy exemptions<\/span> or the federal exemptions, but not both. Some of the important exemptions in a bankruptcy filing<\/span> include:<\/p>\n