Filing for Bankruptcy in New Mexico (NM)

New Mexico bankruptcy exemptions protect essential assets like homes, vehicles, and personal property, allowing debtors to eliminate debt through Chapter 7 or repay creditors through Chapter 13.

By , Attorney University of the Pacific McGeorge School of Law
Updated 11/13/2025

New Mexico bankruptcy exemptions let you keep essential property when you file Chapter 7 or Chapter 13, including homestead, vehicle, and a wildcard, subject to New Mexico's rules. This guide explains New Mexico bankruptcy exemptions, filing for bankruptcy in New Mexico, and when Chapter 7 vs. Chapter 13 makes sense.

You'll learn what property is protected, how the means test affects eligibility, and what paperwork and deadlines to expect in New Mexico courts. If you're weighing debt relief options, use this overview to decide whether to file, what you can keep, and how to prepare the right forms.

New Mexico Bankruptcy Laws: Eligibility Requirements

If you're struggling financially and aren't sure what to do, filing for bankruptcy in New Mexico can provide a structured, lawful way to rebuild your finances. Economic changes are making it increasingly difficult for American families to weather job losses, illnesses, and other emergencies, leading to a rise in bankruptcy filings nationwide.

New Mexico Bankruptcy: Chapter 7 vs. 13

These are the key steps to file for Chapter 7 or Chapter 13 in New Mexico, and how to decide which chapter best fits your goals.

Chapter 7 "Liquidation" Bankruptcy Chapter 13 "Repayment Plan" Bankruptcy Citations

Duration to Discharge

 three to six months three to five years 11 U.S.C. § 727(a); § 1322(d)

Filing Fee

 $338 $313 28 U.S.C. § 1930; as of October 2025 (subject to change)

Potential Property Loss

 Yes. Nonexempt assets are sold for creditors. No. Filers pay the value of nonexempt assets through the plan and keep the property. 11 U.S.C. § 541, § 726, § 1322(b)(2)

Means Test Required

Yes. Income can't exceed limits; filers must not have disposable income to repay debts.

 No. However, filers must earn enough to pay the required Chapter 13 plan amount. 11 U.S.C. § 707(b); § 1325(b)

Debt Limits

 None Unsecured $526,700; secured $1,580,125

11 U.S.C. § 109(e); April 1, 2025 - March 31, 2028

Best For

 Lower income, limited assets.

Regular income, want to avoid property loss.

 11 U.S.C. § 101(10A); § 109(e)

Biggest Benefits

 Erases most debts quickly without requiring repayment.

Saves homes and cars by catching up on payments over time; can pay to keep property that would be lost in Chapter 7; can repay nondischargeable debts over time.

 11 U.S.C. § 362 (automatic stay)

Main Downsides

 Property not covered by exemptions is lost.

The repayment plan requires payment of all disposable income to creditors for years, with court oversight. Payment isn't always affordable.

 11 U.S.C. § 727(a); § 1307

Mortgage and Car Payments

 No catch-up for missed payments, risk of property loss to the lender. Can catch up on missed payments in the plan and keep a house, car, or other property serving as collateral. 11 U.S.C. § 1322(b)(5)

Nondischargeable Debts

Debts that aren't eliminated include child support, many taxes, and student loans. Debt will remain after bankruptcy.

 Nondischargeable debts are repaid in the plan. 11 U.S.C. § 523(a)

Previous Filings

 8 years after prior Ch. 7; 6 after Ch. 13

4 years after Ch. 7; 2 years after Ch. 13

 11 U.S.C. § 727(a)(8); § 1328(f)

Chapter 7 Bankruptcy New Mexico: Fast Debt Relief

If your primary goal is to erase debt fast, Chapter 7 bankruptcy is the best option. It eliminates unsecured debts, such as credit cards and medical bills, typically within a few months. However, you could lose property exceeding New Mexico's exemption limits because the Chapter 7 trustee can sell that property to repay creditors.

Who Qualifies for Chapter 7 Bankruptcy in New Mexico

The steps you'll need to take will depend on whether your income falls below or above your state's median income. The U.S. Trustee Program "Means Testing" page has current amounts.

Income Below Median

If your gross yearly family income is below New Mexico's median income for your family size, you qualify. For a filing between November 1, 2025, and May 14, 2026, you would be eligible at or below the following limits:

  • $64,537 for a one-person household
  • $77,534 for a two-person household
  • $85,784 for a three-person household, and
  • $96,074 for a four-person household.

Income Above Median

If your gross family income is higher than the median, an additional "means test" calculation is necessary to determine your eligibility. This test lets you subtract expenses from your income and determines whether you have anything left to pay creditors.

Take the bankruptcy eligibility quiz. Find out about particular issues and whether you qualify by taking the Chapter 7 bankruptcy quiz.

Chapter 13 in New Mexico: Keep Your Home

Chapter 13 creates a repayment plan lasting three to five years. Most people pay a minimal amount toward debts they can discharge (erase).

Chapter 13 vs. Chapter 7 Bankruptcy

Chapter 13 can help prevent foreclosure or repossession, allowing filers to keep assets like homes and cars while catching up on missed mortgage or vehicle payments. Because Chapter 7 doesn't have a repayment plan, most people lose their home or car if they file when they're behind.

Chapter 13 Income Requirements and Eligibility

A fundamental requirement for Chapter 13 is having a regular income source to fund your repayment plan. Also, your total debt must fall within specific limits, which are updated periodically (check the chart above for current amounts).

Try the payment calculator. Estimate your Chapter 13 repayment plan in minutes using the Chapter 13 payment calculator.

New Mexico Bankruptcy Exemptions: What You Can Keep

You keep assets protected by specific bankruptcy exemptions. In Chapter 7, nonexempt property is sold for the creditors. In Chapter 13, you can keep nonexempt property by paying its value in your repayment plan.

You can choose whether you use the state exemption list or the list of federal bankruptcy exemptions, but you can't mix and match exemptions from both sets. The federal bankruptcy exemption amounts below are valid until March 31, 2028.

Federal Exemptions vs. New Mexico State Exemptions Table

Federal Exemptions New Mexico Exemptions

Homestead or Residential Property
  • $150,000
  • 300,000 if the spouse of the person claiming the exemption died within two years prior to the date of claiming the homestead exemption, and if the deceased spouse would have been able to claim the homestead exemption had the deceased spouse survived until the date of claiming the homestead exemption. (N.M. Stat. §§ 42-10-9 and -11.)
Motor Vehicles
  • $5,025. (11 U.S.C. § 522(d)(2).)
Personal Property and Wildcard
  • $16,850 aggregate value ($800 per item) in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments.
  • $2,125 in jewelry.
  • $1,675 in any property, plus up to $15,800 of unused homestead exemption.
  • Professionally prescribed health aids. (11 U.S.C. §§ 522(d)(3),(4),(5),(9).)
  • $4,000 in the aggregate of an individual's interest in household goods and furnishings, including furniture, appliances, clothing, electronic equipment, and musical instruments.
  • $2,500 in the aggregate of toys and games.
  • $75,000 in books and firearms.
  • A wedding band and an engagement ring.
  • $5,000 in additional jewelry.
  • Artwork of the person or any relative, not exceeding $2,500 in the aggregate.
  • Up to $15,000 in any personal property not otherwise specified in the exemption statute (check statute or with local counsel for exceptions and limitations). (N.M. Stat. § 42-10-1(A).)
Trade Implements
  • $3,175. (11 U.S.C. § 522(d)(6).)
  • $15,000 in the aggregate, for tools, equipment, implements, professional books, instruments, inventory, supplies, and materials reasonably necessary for use in the person's trade, profession, business, or occupation, or that of the person's spouse. (N.M. Stat. § 42-10-1(A)(5).)
Alimony, Support, Separate Maintenance
  • To the extent reasonably necessary for support. (11 U.S.C. § 522(d)(10)(D).)
  • Exempt to the extent reasonably necessary for support of the person or any dependent of the person. (N.M. Stat. § 42-10-1(A)(6)(e).)
Claims for Negligence or Tortious Conduct
  • Wrongful death payments to the extent reasonably necessary for support.
  • $31,575 for personal bodily injury (not including pain and suffering or pecuniary loss).
  • Loss of future earnings to the extent reasonably necessary for support.
  • (11 U.S.C. §§ 522(d)(11)(B),(C),(D),(E).)
  • N/A

Crime Victims' Compensation
  • Awards under crime victims' reparation laws. (11 U.S.C. § 522(d)(11)(A).)
  • Check with local counsel.

Fraternal Benefit Society Benefits
  • N/A
  • $50,000. (N.M. Stat. §§ 42-10-4 and 59A-44-18.)

Insurance Benefits
  • Unmatured life insurance contract (except credit life insurance).
  • $16,850 in accrued dividends, interest, or loan value of unmatured life insurance.
  • Life insurance proceeds for an insured of whom the debtor was a dependent, to the extent reasonably necessary for support. (11 U.S.C. §§ 522(d)(7),(8),(11)(B),(C).)
  • Cash surrender values and benefits of life insurance contracts and payments from life, accident, and health insurance policies or annuity contracts are exempt from the insured's debts.
  • Life insurance proceeds are not subject to the debts of the deceased. (N.M. Stat. §§ 42-10-3 and 42-10-5.)

Pensions & Retirement Benefits
  • Stock bonus, pension, profit-sharing, annuity, or similar plan payments—to the extent reasonably necessary for support.
  • Tax-exempt and qualified retirement plans—federal cap for IRAs is $1,711,975. (11 U.S.C. §§ 522(d)(10)(E),(12), (n).)
  • Pension or retirement fund payments are exempt except for the enforcement of child support orders.
  • Specifically includes payments pursuant to stock bonus, pension, profit-sharing individual retirement account, annuity or similar plans or contracts on account of illness, disability, death or length of service, to the extent reasonably necessary for the support of the person or any dependent of the person (unless such plan or contract does not qualify pursuant to Section 401(a), 403(a), 403(b) or 408 of the Internal Revenue Code of 1986).
  • Social Security benefits and veterans benefits are also exempt. (N.M. Stat. §§ 42-10-1(A)(6)(a), (b), (f); 42-10-1(A)(10), (11).)
  • Tax-exempt and qualified retirement plans—federal cap for IRAs is $1,711,975. (11 U.S.C. §§ 522(d)(10)(E),(12), (n).)

Public Assistance
  • Social Security benefits.
  • Unemployment compensation.
  • Local public assistance benefits.
  • Veterans benefits.
  • Disability, illness, or unemployment benefits. (11 U.S.C. §§ 522(d)(10)(A),(B),(C).)
  • Exempt, including benefits such as Medicaid, Medicare, food stamps or other aid from a government assistance program.
  • Exemption provided for refundable federal and state tax credits and stimulus payments. (N.M. Stat. § 42-10-1(A)(6)(d).)
  • Unemployment, disability, and illness compensation benefits are exempt from all claims, except those for necessities furnished while the debtor was unemployed and child support, if the funds are not commingled. (N.M. Stat. §§ 51-1-37(C); 42-10-1(A)(6)(c).)

Wages
  • N/A
  • 50% of wages are exempt from child support obligations; the greater of 75% of wages or 40 times the federal minimum hourly wage is exempt in all other cases.
  • The applicable minimum hourly wage is the highest applicable minimum hourly wage rate (federal, state, or local) at the place the wages were earned. (N.M. Stat. § 35-12-7.)

Partnership Property
  • N/A
  • Partnership law doesn't deprive a partner of a right under exemption laws with respect to the partner's interest in the partnership. (N.M. Stat. §§ 54-1A-504, 54-2A-703.)

Tenancies by the Entirety
  • N/A
  • N/A

How to File Bankruptcy in New Mexico: 6 Steps

When you first file, both the Chapter 13 and Chapter 7 processes are similar.

Complete Credit Counseling

Complete a U.S. Trustee-approved credit counseling course within 180 days before filing. Also, make sure you are prepared to file for bankruptcy by securing housing, transportation, and a bank account in good standing.

Assemble Financial Documents

Gather all financial documents you'll need to complete and file the bankruptcy forms, including pay stubs, tax returns, bank statements, and debt lists (we've highlighted what you'll need below).

File in the Correct New Mexico District

File your forms with the New Mexico Bankruptcy Court website. On the website, you'll find instructions for filing your paperwork, local rules, and more. Fees can be waived or paid in installments. Once you file, the automatic stay will go into effect. Almost all collection efforts, lawsuits, garnishments, and foreclosures stop when you file.

Attend the 341 Meeting of Creditors

Attend this mandatory court-supervised session. After the 341 meeting, all filers complete the second required U.S. Trustee-approved course, debtor education. Chapter 13 filers must also attend a plan confirmation (approval) hearing and complete the repayment plan.

Receive the Discharge

After fulfilling requirements, the court issues a discharge order that erases eligible debts.

After Filing for Bankruptcy in New Mexico

After discharge, you'll want to maintain financial stability by reviewing your credit report and rebuilding credit. Maintaining emergency savings is another good way to avoid another bankruptcy.

Learn more details about bankruptcy and whether it's better to file for Chapter 7 or 13.

New Mexico Bankruptcy FAQs 2025

Can I keep my car if I file for bankruptcy in New Mexico?

You can keep a vehicle if your equity is within the exemption limit. If it's financed, you must be and stay current on payments in Chapter 7. You can catch up on missed payments and keep your car in Chapter 13.

Will I lose my house in bankruptcy in New Mexico?

As long as your home equity is exempt and you stay current on payments, you should be able to keep your house in Chapter 7. If you're behind on payments, Chapter 13 allows you to catch up and keep your home. Learn which chapter to file to keep your house.

Can I file bankruptcy again if I've filed before?

Yes, but bankruptcy waiting periods apply. You must wait eight years between Chapter 7 filings. The time is reduced to six years if you choose to file for Chapter 13 after filing for Chapter 7.

How much does bankruptcy cost?

You'll pay filing fees, counseling and debtor education course fees, as well as attorney costs, which vary according to the bankruptcy chapter and case complexity. A Chapter 7 case typically costs between $1,800 and $3,500. You'll likely pay $3,500 to $5,000 for Chapter 13. Chapter 7 costs must be paid in full before filing. However, legal fees can be included in the Chapter 13 plan.

How long does bankruptcy stay on my credit report?

Chapter 7 remains on your credit report for up to 10 years. Chapter 13 stays on your credit report for seven years. However, the impact diminishes over time, and many people see credit improvement within a year or two.

How long does Chapter 7 take in New Mexico?

Chapter 7 typically takes three to five months to complete. While you'll receive your discharge within that time, the case could remain open longer if the trustee needs to sell property or resolve litigation.

Can I file bankruptcy without a lawyer in New Mexico?

Many people can file for bankruptcy without a lawyer if they're willing to do the proper research. Simple Chapter 7 cases tend to be the most successful—those with dischargeable debts and minimal assets. Bankruptcy courts advise against filing a Chapter 13 without a lawyer because Chapter 13 cases are complicated and rarely successful without a lawyer's help.

What debts can't be discharged in a New Mexico bankruptcy?

You won't be able to eliminate support obligations and most taxes. Student loans can be eliminated, but you must file a bankruptcy lawsuit and prove that paying the loans would be an "undue hardship." Learn more about nondischargeable debts in bankruptcy.

Finding a New Mexico Bankruptcy Attorney

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

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