Bankruptcy Chapter 7 Lawyers in Albuquerque
Chapter 7 bankruptcy is a method of clearing away debts for individuals and businesses unable to repay them. While this may provide you with a fresh start, it is important to weigh the advantages with the consequences. Filing for Chapter 7 bankruptcy can leave you with bad credit and an inability to find funding for business or personal expenses in the future.
Declaring bankruptcy is a choice most individuals hope never to have to make. The process can be complicated and costly, so it should not be taken lightly. Chapter 7 bankruptcy in particular often means the forfeiture of nonexempt property, which is sold to pay off creditors.
Before making the decision to file for bankruptcy, getting in touch with a qualified Albuquerque bankruptcy attorney can help you discover the best way forward, whether you decide to declare bankruptcy or want to explore alternatives.
At New Mexico Financial & Family Law, we can help you along this challenging path by providing the legal advice you need to increase the likelihood of coming out on top of your Chapter 7 bankruptcy. Call us at (505) 503-1637 or contact us online to schedule a consultation to go over the details of your financial situation.
What to Know About Filing for Chapter 7 Bankruptcy in Albuquerque
When you choose to file Chapter 7 bankruptcy in Albuquerque, you must first receive credit counseling services before you will be able to file. The U.S. Bankruptcy Court, District of New Mexico also recommends that you receive legal counseling and guidance from a qualified Chapter 7 attorney in Albuquerque.
All filings will be conducted through the U.S. Bankruptcy Court, District of New Mexico, which is located at the following address:
333 Lomas Blvd. NW, Suite 360
Albuquerque, NM 87102
Note that ongoing COVID-19 restrictions may limit public access and in-person services available.
Filers (petitioners) can instead file the needed Chapter 7 paperwork online using fillable electronic pdf forms or an Electronic Self-Representation (eSR) Bankruptcy Petition.
What Do I Need in Order to File?
All petitioners should have a full inventory of real property (real estate), personal possessions, and the value of each held asset or item. They should also prepare a list of all known creditors, including mortgages, credit card service providers, and auto loans. A two-year record of all financial transactions is requested. The petitioner should also have a copy of their credit report available, if possible.
Court Employees Cannot Answer Questions or Offer Guidance
One frustrating aspect of filing for bankruptcy to many people is that they cannot get explanations from court employees. If a petitioner has a question about their form or how exemptions work, then the court employees are legally not allowed to provide answers. They also cannot provide any sort of legal advice, guidance, or suggestions.
Because of this requirement, the U.S. Bankruptcy Court, District of New Mexico, recommends that you consult with an experienced Chapter 7 bankruptcy lawyer in Albuquerque prior to filing.
Hearings for Chapter 7 in Albuquerque
Once you have completed credit counseling and prepared and submitted the needed forms, you will be assigned a case number and a trustee. All creditors will be notified, and they will have the opportunity to be heard at a hearing.
While in-person proceedings are halted due to COVID-19 restrictions, all Chapter 7 hearings will be conducted over the telephone.
Choosing New Mexico Property Exemptions or Federal Bankruptcy Code Exemptions
Filing for Chapter 7 bankruptcy in Albuquerque requires the petitioner to give up most property for sale (liquidation) unless it is covered by an exemption rule. Exemption rules allow you to keep the property up to a certain value. For married couples filing for bankruptcy, these values are doubled.
Unlike many other states, when filing for bankruptcy in New Mexico you are allowed to choose either the state’s exemption rules or the federal rules. You must pick one or the other; you cannot pick and choose exemptions from each.
For more information on which set of rules you may wish to choose, review our resource on Choosing Which Exemption System to Use When Filing for Bankruptcy in Albuquerque, and then contact an Albuquerque Chapter 7 bankruptcy attorney for specific guidance and answers to your questions.
Who is eligible for Chapter 7 bankruptcy in Albuquerque?
Eligibility for filing Chapter 7 bankruptcy in New Mexico is based on the state means test. If your average yearly income is less than the median New Mexico yearly income, it is assumed that you will pass the means test, and you may file Chapter 7 bankruptcy.
If your income is over the New Mexico median income, you must fill out this form in order to determine your eligibility. This test is intended to prevent individuals with high incomes from filing Chapter 7 bankruptcy when they have other means of clearing their debts.
You also need to take a credit counseling course from an approved credit counseling agency before you’re allowed to file for bankruptcy. Once the course is completed, you must file proof of completion along with your bankruptcy petition. Individuals on active military duty and the physically or mentally impaired may be exempt from this requirement.
Advantages of Chapter 7 Bankruptcy
- There is no minimum debt required to file.
- You get to start from scratch with all unsecured debts and some secured debts discharged.
- You have protection against wage garnishment and other collection tactics employed by creditors as soon as you file.
- After a bankruptcy is filed, property and wages acquired (besides inheritance) can not be taken by creditors or the court.
- You will usually clear your unsecured debt in under six months
Disadvantages of Chapter 7 Bankruptcy
- You must meet income requirements set by the New Mexico means test in order to file.
- Your home can still be foreclosed upon, and your automobile can still be repossessed if you are behind on your payments and have no agreement in place with these creditors, as Chapter 7 discharge does not prevent repossession for secured debts with an outstanding lien.
- You may be forced to sell your home or your car if either is not adequately covered by the New Mexico bankruptcy exemptions.
- If you want to keep your home or car, you will need to figure out a way to pay off unpaid balances on these loans in order to defer foreclosure and repossession.
- Any non-secured property not covered by these exemptions can be liquidated and used to pay back creditors.
- Anyone who has cosigned on your loan can be stuck with the debt unless they also file for bankruptcy.
- Can only file Chapter 7 if it’s been eight years since previously filing and six years since filing Chapter 13
Alternatives to Filing Chapter 7 Bankruptcy in Albuquerque
While Chapter 7 bankruptcy can offer a way out for individuals and businesses that have no other means of paying back their debts, it’s often preferable to figure out another method of paying the debt back.
Many creditors would prefer to avoid the expensive and lengthy process of dealing with a bankruptcy filing. They may be willing to provide a more forgiving repayment plan or partial to total forgiveness in the hopes that you’re able to continue making regular payments. In these cases, seeking the help of a bankruptcy attorney is highly recommended, as a skilled bankruptcy negotiator can mean the difference between a payment plan you can afford and one you can’t.
Chapter 13 bankruptcy may also be preferable to chapter 7, particularly when you have a property you want to keep. Unlike Chapter 7 bankruptcy, Chapter 13 allows the debtor to choose a payment plan that they can afford, often with reduced payoff amounts. As long as you follow the terms of the repayment plan, you have protection against foreclosure and other repossessions.
Chapter 13 may also be preferable for debts when a cosigner is involved, as Chapter 13 provides immunity for cosigners when the payment plan aims to fully cover debts.
Should I file Chapter 7 bankruptcy?
Chapter 7 is usually best for businesses and individuals with a lot of debt and no other avenues of paying it off. If your assets are mostly exempt (New Mexico bankruptcy exemptions), Chapter 7 bankruptcy may be a good way for you to start over with a clean slate.
If you want to keep your home or car and are behind on payments for them, you will need to make arrangements with individual creditors, as mortgage and car loan holders may still have the right to take your car or home in order to cover your debts. In any case, individual financial situations are unique to each person. Seeking advice from experienced bankruptcy Chapter 7 lawyers in Albuquerque, New Mexico will provide you with a clearer understanding of your options.
Get Help With Filing for Chapter 7 Bankruptcy in Albuquerque
Before making the final decision about your Chapter 7 bankruptcy, seeking out further education on the consequences and benefits can be helpful. Since you are required to take a pre-bankruptcy credit counseling course before filing, it can be one of the best places to start learning about your current and future options. A list of US Trustee-approved services can be found here.
If you’re still unsure about your situation, getting in touch with a seasoned New Mexico bankruptcy attorney can help you on your path towards a fresh start.
Chapter 7 bankruptcy is not right for everyone, so be sure to speak with an experienced lawyer before making your final decision. You may be entitled to a free consultation with an Albuquerque attorney from New Mexico Financial & Family Law to get a better grasp on your financial future as soon as possible. Call us at (505) 503-1637 or contact us online to get started today.
We are a debt relief agency and have practiced bankruptcy law for a combined 50+ years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code.