Filing Chapter 7 Bankruptcy In New Mexico
Chapter 7 Bankruptcy is a “liquidation” of your personal assets to pay your debt. Chapter 7 Bankruptcy is the most popular, quickest and least expensive type of bankruptcy. Chapter 7 Bankruptcy is available to individuals, corporations, married couples and partnerships. Under Chapter 7 Bankruptcy, a trustee is appointed by the bankruptcy court and this trustee is responsible for selling your non-exempt personal assets to pay your creditors.
Beginning in 2005, the bankruptcy laws were updated to include a means test to determine if an individual could file Chapter 7 Bankruptcy. The bankruptcy laws were updated to make it more difficult to file Chapter 7 Bankruptcy and force more people to repay a portion of their debt under Chapter 13 Bankruptcy.
If your income is below the median income of other New Mexico Families of the same size, in most cases you can file for Chapter 7 Bankruptcy, but if your median income in the last six months is greater than other families, additional testing is done. The additional testing will analyze your mortgage, car expenses, taxes owed, child support payments and school expenses up to $1650 annually. If after these expenses are deducted from your income, you can pay at least $6,000 or $100 per month to your creditors for the next five years, you will not be able to file Chapter 7 Bankruptcy and instead may have to file Chapter 13 Bankruptcy.
The median income data is provided by the United States Trustee Program and is adjusted by the Census Bureau. In the State of New Mexico, after March 15, 2009, the median income level for a single wage earner in the state of New Mexico was $35,913. For a family of two it was $48,708 and for a family of three it was $53,018. For a family of four it was $56,009.
Bankruptcy laws are generally the same for each state and are updated and formulated at the federal level. If you are considering filing bankruptcy in New Mexico, not only will you have to pass the means test to file Chapter 7 Bankruptcy, but you will also have to complete certain financial management classes, and a credit counseling class. Chapter 7 Bankruptcy will take about four to six months to complete and can be a relatively easy way to immediately discharge most of your personal unsecured debt.
