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New Mexico Bankruptcy Laws

New Mexico Bankruptcy Laws should be known by every resident of the state of New Mexico. There is no easy way out of your insurmountable debts. This should be clear from the start because even if you file for bankruptcy, there are so many complexities in the process it will make your head spin.

Contrary to the usual claims that bankruptcy is the easy way out, this has all changed in 2005 when the Bankruptcy Abuse Prevention and Consumer Protection Act made some minor changes to the existing bankruptcy laws requiring more paperwork and stringent application criteria for debtors to prevent bankruptcy frauds. These changes also apply to New Mexico bankruptcy laws.

A bankruptcy decision should not be made hastily, even a well-thought of decision can go awry during the formal application for bankruptcy. There is no definite court requirement to hire a lawyer during bankruptcy application, it is the debtor’s prerogative if he wants to employ the services of one. However, bankruptcy laws employ labyrinthine processes that a lawyer’s services are indispensable. It is good to be knowledgeable in bankruptcy laws, but some problems may arise that need a lawyer’s expertise.

Most bankruptcy protection availed by debtors is the Chapter 7 bankruptcy protection program. It offers an enticing option for debtors who have insurmountable debts through a fresh start. Under this bankruptcy program full liquidation of all your debts is required by the court, and all of your exempt debts will be eliminated.

However, the application process of Chapter 7 is very strict. You must have a monthly income below the median income level of the state of New Mexico to qualify for the program. This median income is based on the latest statistics of the US Census Bureau for the state of New Mexico. If your monthly income is above the comparison data, you may opt to dismiss your case or proceed on the next option that is available.

The next option on the list available for individuals, couples, and family is Chapter 13. For this bankruptcy option, you are to follow a court-approved repayment plan to pay all your existing debts for a minimum of 3 years to a maximum of 5 years. A court-selected trustee will oversee the implementation of the repayment plan and will collect the monthly funds from the debtor. These funds will be distributed by the trustee to the creditors according to a priority structure recommended by the bankruptcy court. During this period the creditors are given an automatic stay notice to prevent them from harassing the debtors or threaten them with foreclosure or repossession.

During bankruptcy application, your assets will be classified as exempt and non-exempt assets. The former will warrant the courts protection from the creditors. New Mexico bankruptcy laws provide for the following assets as exemptions:

• A home with an amount of $60,000;
• A vehicle with an amount of $6,000;
• Jewelry amounting to $2,500;
• Tools of the trade worth $1,500;
• 75% of earnings; and
• Other benefits including public assistance, retirement fund, and life insurance.

A Chapter 7 bankruptcy declaration will be in your credit record for 10 years, while Chapter 10 stays on your record for 7 years. Your credit rating will also be affected by a bankruptcy declaration.