Albuquerque Chapter 7 Bankruptcy Lawyers
Providing Chapter 7 Bankruptcy Services throughout the Albuquerque and New Mexico
Maxwell Gilchrist is a woman-owned firm that provides Chapter 7 bankruptcy services to individuals in the Albuquerque, Rio Rancho and Santa Fe Metro areas. We regularly represent clients in Chapter 7 proceedings and we provide our clients with well-informed representation and dependable service. If you are considering personal bankruptcy, we will work closely with you to protect your financial future.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most straightforward and the most common form of bankruptcy. It is what most people think about when they consider bankruptcy. You will often see Chapter 7 bankruptcies referred to as “liquidation bankruptcy.” The idea behind the liquidation bankruptcy is that the individual will sell their unprotected (non-exempt) assets to pay back their unsecured debt. Unsecured debt is debt that is not secured by property; credit cards, personal loans and medical bills are all examples of unsecured debt. The idea that an individual must sell their assets to pay back unsecured creditors is a confusing one as most individuals considering bankruptcy do not have assets to sell or have already sold the assets they have. However, it is only the assets that unprotected, or non-exempt, that can be sold. The bankruptcy code, fortunately, does not want to strip debtors of all their things. So, under bankruptcy law, things like your personal property, vehicle, and equity in your house are protected, or are exempt from the bankruptcy process.
Not everyone is eligible for a Chapter 7 bankruptcy. To qualify for a chapter 7 bankruptcy, your income must be less than the median income for a household of the same size in the State of New Mexico. If your household income exceeds this amount, you may still qualify for a Chapter 7 if you can pass the “means test” or that you do not have sufficient disposable income to pay back your debts. If you qualify for a Chapter 7 bankruptcy, then most – but not all – of your unsecured debts will be discharged – or eliminated. Credit card debt, personal loans, medical bills, payday loans, collection accounts and deficiency amounts from repossession of a vehicle or a foreclosure of house will most likely be discharged in a Chapter 7 bankruptcy.
Student loans, most taxes, domestic support obligations (alimony or child support) and criminal fines are not dischargeable, or eliminated.
But what about my property? Will I be able to keep my car or my house?
As discussed above, only your non-exempt assets can be sold to pay back your unsecured creditors. Most property can be protected, or exempted in a bankruptcy filing. However,
it is important to list all of your property or it may lose that protection. It is important to let your attorney at Maxwell Gilchrist know about your assets as well so that she can properly analyze which exemptions to use to provide the maximum protection.
In New Mexico, debtors are allowed to use either New Mexico state exemptions or the federal bankruptcy exemptions. There are pros and cons to using each one and deciding which one to use depends on a variety of factors, such as whether as you own a house and how much equity is in your house. If you do not own home, it usually better for the debtor use the federal bankruptcy exemptions. The federal “wildcard” exemption can protect personal property with a value up to $25,000.00. This wildcard exemption can be used to protect tax refunds, cash on hand, or cash in the bank. You may be able to keep your property while filing for a Chapter 7 bankruptcy, but it is important that you let your attorney at Maxwell Gilchrist know about all of your property so that they can analyze the various options available.
Vehicles are also exempted under the New Mexico exemption statute as well as the federal bankruptcy statute, but only up to the amount of $4,000.00 In most Chapter 7 bankruptcies, debtors are able to keep their car but it depends again on the amount of the equity in the vehicle as well as the exemptions used based on all of your property.
Finally, most debts secured by property, such as a mortgage or an auto loan, will continue through the bankruptcy unchanged. It is important that you keep paying on those loans unless you want to “surrender” the property. When you surrender the property, you essentially give it back to the lender and any amount that is still owed (a deficiency) is discharged in the bankruptcy. When you meet with us, we will walk through the options regarding your secured loans.
The Bankruptcy Process
The first step in deciding whether a Chapter 7 bankruptcy is the right option for you is to contact us and schedule a free case evaluation. If it looks like a chapter 7 bankruptcy may be an option for you, we then enter into an attorney-client agreement, request that you do some “homework” as well as complete a credit counseling course. The homework is a request for your financial information. We need review your income (6 months worth), bank statements, your household expenses, your unsecured and secured debt as well as any information relating to prior property sales or large payments made to creditors. This is information that we need to provide in the bankruptcy petition and schedules to the bankruptcy court and to make the job as easy as possible for the trustee who is reviewing your bankruptcy.
Once we have prepared the paperwork and you have completed the credit counseling course (required for all filers), we file your paperwork. At this point, the automatic bankruptcy stay starts. Creditors cannot call you or contact you. They cannot continue with any collection activity. This stay remains in place throughout the Chapter 7 bankruptcy. About 30 days after we file your case, a meeting of creditors (or a 341 meeting) is held. At the meeting of creditors, the trustee will ask you under oath about the information provided in your petition and schedules. This is a lot less scary than it sounds and we will be there with you at the meeting. After the meeting, the order discharging your debts is entered about 75 days after the creditors meeting. Depending on how fast you are able to get the homework and credit counseling, your case from start to finish will last between 4-6 months.
If you are interested in learning more, contact us here and we will set up a free evaluation.