There are many contributing factors that are associated with financial adversity. Some common reasons include personal debt, home foreclosure, divorce, illness, or loss of a job.
In fact, the average credit card debt in New Mexico is a whopping $5,615 per person. In addition, foreclosure rates are also as staggering, one out of every 1,508 NM homes is currently in foreclosure.
If you have found yourself in similar situations, then you are probably dealing with other personal issues that come with dealing with debt. The fear of losing your automobile, home or your income can drain a person emotionally. You may have even considered Filing Chapter 7 or Chapter 13 Bankruptcy .
If you are thinking “Should I File Bankruptcy?” you are surprisingly not alone. Just under a million people file bankruptcy each year in America. Bankruptcy is a means created by the US Government to help struggling Americans find relief from uncontrollable debt. You may want to check your eligibility for bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy offers people the chance to lift their financial burden while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her duties differ and depend on whether the individual has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that New Mexico ranks #35 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 183 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in New Mexico, who claim bankruptcy, will elect to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. What is the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to retain his or her valuable assets over a 3- to 5-year time frame.
In order to decide which type of bankruptcy an individual can file, he or she will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The objective of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, they will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Motor vehicle up to $4,000; clothing; books; furniture; health aids; and jewelry up to $2,500.
- $5,000 of any property if the filer doesn’t use the homestead exemption.
- Building materials.
- Minimum amount of shares needed for membership in cooperative association.
- The greater of the following: 40 times the federal hourly minimum wage or minimum of 75% of disposable earnings. Judge may approve more for low income debtors.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Public employee retirement benefits.
- Judge and magistrate pensions.
- State police pensions.
- Pension or retirement interest or proceeds.
- Public assistance.
- Crime victims’ compensation.
- Unemployment compensation.
- Workers’ compensation.
- Occupational disease disablement benefits.
Tools of Trade
- Life, accident, health or annuity benefits or cash value.
- Benevolent association benefits up to $5,000.
- Life insurance proceeds.
- Fraternal benefit society benefits.
- Ownership in an unincorporated association.
- Business partnership property.
- Escrow funds for construction.
- $500 of any property, other than money.
- $5,000 of any real or personal property if the filer does not use the homestead exemption.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire a lawyer to declare relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.
Filing Bankruptcy without an Attorney
A simple Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Most of the time, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not the creditors.
An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in NM, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In New Mexico
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In New Mexico
Additional New Mexico Resources
Foreclosure Help Program
Disability SSDI Benefits