When you declare bankruptcy in New Mexico, there are actually two different methods by which it may be accomplished: Chapter 7 and Chapter 13. If you are interested in removing most or all of your debts permanently, then Chapter 7 is for you. On the other hand, if you are in danger of losing your home to foreclosure, then you need to file Chapter 13 Bankruptcy. Both methods should be discussed in detail with your attorney so you make sure that you choose the best method
Chapter 7 bankruptcy is also known as liquidation bankruptcy. However, you won't have to liquidate too much of your stuff as you will be given exemptions which will be discussed later. After you have completed the Chapter 7 process you are no longer subject to pay back any of your debts and can have a fresh start. It will stay on your credit report for seven to10 years though. Also, certain debts such as student loans and debts owed to the government cannot be expunged.
Another option is Chapter 13 bankruptcy in New Mexico. Here, you will still maintain most of your debt; but your creditors will not be able to take your home, your car, or anything else. Instead, they must work out a plan with you by which you can have your debt paid off to them within the next three to five years.
When you declare Chapter 7 bankruptcy in New Mexico, you will be able to save most of your property due to exemptions. In the state of New Mexico there are two different schemes by which you may receive exemptions. The first scheme involves the following: your home up to $20,200, life insurance payments needed for support, un-matured life insurance contracts, alimony, child support, pensions and retirement benefits, household goods up to $10,775, health aids, jewelry up to $1,350, motor vehicle to $3,225, compensation payments for personal injuries, lost earnings payments, and tools of your trade up to $20,200.
You also have this choice of exemptions when declaring bankruptcy in New Mexico: homestead to $30,000, property in place of homestead up to $2,000, personal property up to $500, tools of trade up to $1,500, one motor vehicle up to $4,000, jewelry up to $2,500, clothing, furniture, books, health aids, pensions proceeds, public assistance, unemployment compensation, workmen's compensation, etc. For a complete list of exemptions be sure to see a bankruptcy lawyer.