Debtors Can Choose Which Exemption System to Use When Filing in New Mexico

In most states, when filing for bankruptcy, the Debtor has no choice about exemptions.The only exemptions available to the individual in most other states will be the state exemptions.The bankruptcy code provides that state law may provide for debtors to have a choice of the federal exemptions or state exemptions in bankruptcy, and New Mexico has done so.Under New Mexico law, you may elect either the state exemptions or federal exemptions, depending on which benefits you more.

New Mexico bankruptcy exemptions

Listed below are the common state of New Mexico exemptions from creditor collections, which can be elected as the exemptions in bankruptcy (the amounts are doubled if you are married, filing jointly):

  • Homestead exemption. You can protect up to $60,000 of equity in your primary dwelling
  • Personal property exemptions. You can protect the following personal property:
    • $4,000 for a motor vehicle
    • Up to $2,500 for jewelry,
    • Unlimited for clothing, furniture, books, medical-health equipment being used for the health of the person
    • $1,500 for tools of your trade
    • $5,000, benevolent association or fraternal association benefit
  • Wage exemptions. 75% of your disposable earnings or 40 times the federal minimum wage (whichever is greater)
  • Life Insurance or Annuities. Unlimited exemptions for life insurance benefits of any kind or for annuities.
  • Support or benefit exemptions. Social security benefits, unemployment benefits, VA benefits, public assistance, and disability benefits are all exempt
  • Retirement account exemptions. Unlimited under New Mexico law.
  • New Mexico wildcard exemption. A wildcard exemption of $500 and up to $5,000 of real or personal property if you don’t use the homestead exemption.
  • Certain Building Materials or Oil and Gas Equipment.

Federal bankruptcy exemptions

Some common federal bankruptcy exemptions are listed below (the amounts are doubled if you are married, filing jointly):

  • Homestead exemption. You can protect up to $25,150 of equity in your primary dwelling
  • Personal property exemptions. You can protect the following other personal property:
    • $4,000 for a motor vehicle
    • $1,700 for jewelry
    • Up to $13,400 for household items (no more than $625 per item) such as clothing, appliances, animals, crops, musical instruments
    • $2,525 for tools of your trade
    • $13,400 in life insurance loan value, dividends or interest
    • Any unmatured life insurance contract, and the proceeds of life insurance to the extent necessary to support the debtor or any dependent.
  • Benefit exemptions., Social security benefits, unemployment benefits, VA benefits, public assistance are all exempt.
  • Support exemptions. Spousal support and child support, annuities or disability payments to the extent necessary to support debtor or dependent.
  • Personal injury recovery exemptions. If you are awarded compensation for personal injuries you can exempt up to $25,150. There are also exemptions for other personal injury awards and compensation as a crime victim.
  • Retirement account exemptions. Retirement accounts that are not taxed are fully exempt, but IRAs and Roth IRAs are limited to a $1,362,800 exemption property you own.
  • Federal wildcard exemption. A wildcard exemption of $1,325 (plus up to $12,575 of any unused portion of the homestead exemption) is applied to any property.

Unfortunately, you cannot mix and match New Mexico and federal exemptions. You must choose the exemptions that will benefit your specific situation. You should consult with a New Mexico bankruptcy attorney to determine which of these exemptions will provide the best benefits when you file for bankruptcy.

Contact us for a free initial bankruptcy consultation

New Mexico Financial and Family Law is an Albuquerque-based bankruptcy law firm.Attorney Don Harris works with clients throughout New Mexico. At your free initial consultation, he can help you determine the type of bankruptcy and bankruptcy exemptions that are best for your specific situation. Contact New Mexico Financial and Family Law online or call (505) 503-1637 to arrange a free bankruptcy consultation.