What Happens When You File Bankruptcy in New Mexico?

No matter the circumstances that brought you here, you may find yourself in a position where you need to file bankruptcy. The most important things you need to know are how the process works, what you can expect, risks and costs, and whether or not there are alternatives. When you understand these things, you’ll be able to better navigate what is a difficult situation.

Different Types of Bankruptcy in Albuquerque, New Mexico

First, you need to know that there are two different categories of bankruptcy that you can file. Whether you file Chapter 7 or Chapter 13 will be entirely dependent upon your income.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy has a few benefits but also a few different setbacks. This type of bankruptcy is sometimes called “liquidation bankruptcy.” First of all, it’s important to note that you may lose assets when filing for this type of bankruptcy. Chapter 7 will also stay on your credit report for ten years. However, this kind of bankruptcy moves much quicker than Chapter 13, in as little as 120 days. In order to qualify for Chapter 7, your family’s income has to be cumulatively lower than the median wage for families in New Mexico.

Chapter 13 Bankruptcy

This kind of bankruptcy is different in a number of ways from Chapter 7 and is sometimes called “wage earner’s bankruptcy.” First, you’re more likely to retain your assets during this process. Chapter 13 will only remain on your credit report for seven years. Chapter 13 is slow, however. It can take as long as five years for your debt to be cleared. Finally, there are no qualifications for Chapter 13 as long as you are under the debt limits. These change every few years.

What Does the Bankruptcy Process Look Like?

First, you need to list all of your current sources of income, any significant monetary transactions that have occurred within the last two years, your monthly expenses, both unsecured and secured debts, and all property, including real estate and possessions. Additionally, you’ll need your last two years’ tax returns, titles to any vehicles you own, deeds to any of your real estate, and loan documents.

Then, you can work with an attorney to decide which assets may be exempt from being seized as described by New Mexico’s exemption rules. Next, you can file the actual paperwork that begins the bankruptcy process. The petition is two pages long, and you will need other documents, including a declaration of your financial situation, to be included in the actual filing. If you’re filing Chapter 13, you also need to include a repayment plan.

When your attorney has filed your paperwork, an automatic stay occurs, which prohibits claims being made to your property or creditors from contacting you. This will also halt any foreclosures that may be happening. Then, the courts will take control of any properties that aren’t found exempt and your debts. A specific bankruptcy trustee will be appointed, and their role is to work toward paying back your creditors as much as possible.

One month after filing, a 341 meeting will occur. This includes you as well as the creditors, and it is meant to resolve any issues or objections. After this meeting, any nonexempt property will be given over to the bankruptcy trustee, and they will sell this property so that your creditors can be paid back. After the meeting, challenges can be made within 60 days of the hearing to discharge your debts.

FAQs

Q: What Do You Lose After Bankruptcy?

A: What you lose depends on whether you file Chapter 7 or Chapter 13 and if you have any qualifying nonexempt assets. You could lose many of your assets in order to pay back your creditors. If you file Chapter 7, you’re more likely to lose assets than if you file Chapter 13.

Q: How Much Does Bankruptcy Cost in NM?

A: This also depends on whether you’re filing Chapter 7 or Chapter 13. For Chapter 7, filing bankruptcy costs $306. It may not be possible to waive this fee; however, it might be able to be paid in installments to lessen the burden. For Chapter 13, it costs $281 to file for bankruptcy, and it’s not possible to waive this fee.

Q: What Cannot Be Forgiven When Filing Bankruptcy?

A: For a Chapter 7 bankruptcy, there are certain kinds of debts that can’t be forgiven. These include alimony, fraudulent debts, child support, student loans, personal injury debts, any penalties or fines incurred while breaking the law, any income tax debts from within the last three years, and anything that was excluded from your debt list.

Q: Will Filing Bankruptcy Hurt You?

A: Filing bankruptcy can hurt you in different ways. First, you can lose assets through bankruptcy, as creditors will have to be paid back in different circumstances. Additionally, filing for bankruptcy will stay on your credit report. In the case of Chapter 7, that stays on your credit report for ten years. When you file Chapter 13, it stays on your credit report for seven years. This greatly impacts your credit score, which affects your buying power.

Q: Do I Need to Hire an Attorney to File for Bankruptcy?

A: While it’s possible to file for bankruptcy on your own, working with an attorney can help in making sure that you’re protecting as many exempt assets as possible and filing the correct type of bankruptcy. Additionally, an attorney can help make sure that things happen on time and that complicated paperwork is handled skillfully.

Gilchrist Law, Your Albuquerque Bankruptcy Attorney

If the time comes, and it looks like filing for bankruptcy is in your future, it may seem like having an attorney is an unnecessary expense, but hiring an experienced bankruptcy attorney can be more important than you think. With Gilchrist Law, you can be confident knowing that your interests will be protected as much as possible while you work through this challenging time. You’ll have attorney Grieta Gilchrist and the team on your side, protecting you with compassion and skill. Contact us today to protect your future.