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All You Need to Know About Bankruptcy Exemptions in Albuquerque


— June 30, 2023

New Mexico has very generous bankruptcy exemptions so you can protect a good deal of your assets.


Albuquerque, NM – If you’ve come to that point where you’re considering filing for bankruptcy, you need to know that all is not lost. It may be the hardest thing you’ve done in your life and you’re understandably concerned you’ll lose everything. Fortunately, that is not so. There are several types of bankruptcy procedures, or Chapters as they’re called, you can use. And, various state or federal exemptions will allow you to keep some of your assets. To understand which chapter or exemptions are best suited to your particular situation, you must sit down with seasoned lawyers and let them guide you through the process.

Chapter 7 vs. Chapter 13

Individuals filing for bankruptcy in New Mexico can choose between Chapter 7 and Chapter 13. Each has its own requirements and its merits. Talking to dedicated Albuquerque bankruptcy lawyers can help you choose the procedure that’s right for you.

Here’s a brief look at the two types of bankruptcy procedures most commonly used in New Mexico

Chapter 7 or ‘liquidation bankruptcy’

The good part is that most of your debts can be discharged, including credit card debt, medical bills, income taxes, personal loans, etc. It comes at a price though. When you file for Chapter 7 bankruptcy, the trustee appointed to your case will sell or liquidate most of your non-exempt assets. Read on to see how you can protect part of your assets through state or federal exemptions.

Chapter 13 or ‘reorganization bankruptcy’

While Chapter 7 is meant to relieve most of your debts, when you file for Chapter 7 you will still have to pay your debts or most of them. Your debts are ‘reorganized’ and you get 3-5 years to repay them. The good news is that your assets will remain safe, meaning you won’t have to sell them. If you’re interested in Chapter 13, do yourself a favor and contact reliable New Mexico bankruptcy lawyers to help you negotiate the most favorable repayment plan. 

What types of exemptions are available when filing for bankruptcy in Albuquerque?

As mentioned above, there are both federal and state exemptions you can use when you file for bankruptcy under Chapter 7. The only thing is you must choose one of them – there’s no cherry-picking or mix and match, so you’d do well to consult knowledgeable Albuquerque bankruptcy lawyers before making a decision. Keep in mind that all the amounts listed below are doubled if you are married and you file for bankruptcy as a couple.

Homestead exemption

Most New Mexico residents choose state exemptions because it allows them to protect their house. Under New Mexico’s homestead exemption, you can protect up to $60,000 of equity in your primary dwelling. Under the federal homestead exemption, you can protect only $25,150 of equity

Personal property exemptions:

  • $4,000 for a motor vehicle
  • Up to $2,500 for jewelry,
  • Unlimited for clothing, furniture, books, medical equipment 
  • $1,500 for the tools of your trade

Wage exemptions

New Mexico exemptions will protect 75% of your disposable earnings or 40 times the federal minimum wage (whichever is greater)

Life Insurance

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Unlimited exemptions for life insurance benefits or annuities.

Support or benefit exemptions. 

State exemptions will protect your social security benefits, unemployment benefits, VA benefits, and disability benefits

Retirement account exemptions

There is no cap on the amount protected in your retirement account.

New Mexico has very generous bankruptcy exemptions so you can protect a good deal of your assets. Best of all, it will be over in a few months and you can start a new debt-free life. 

Since you’ll be dealing with lawyers and court clerks, now would be a good time to educate yourself a bit on legal matters. 

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