When considering filing for bankruptcy protection, many individuals believe that they will lose all of their property when they file the bankruptcy petition. Bankruptcy exemptions, however, allow you to protect your property, such as the equity in your house, your vehicle, and your personal property, such as jewelry, clothing and other personal items.
If you are exploring bankruptcy as an option for you or you are preparing to file bankruptcy, it is imperative that you provide our bankruptcy attorneys with a full list of your assets. Once our attorneys have reviewed the list of assets, they will analyze which is the best set of bankruptcy exemptions to use to protect your property. In New Mexico, there are two sets of bankruptcy exemptions in which to chose from, either the federal bankruptcy exemptions or the New Mexico state exemptions. if you are married and file a joint petition, you and your spouse will have to chose the same set of bankruptcy exemptions. Our New Mexico bankruptcy attorneys will analyze your assets, including the value and make a recommendation regarding the best set of exemptions to use.
Bankruptcy exemptions are one of the strongest tools that our Albuquerque bankruptcy attorneys can use to help you get a fresh start. The bankruptcy code was drafted to help those that are dealing with more debt than they can repay. As part of the process, the bankruptcy code provided that the individuals going through the process would retain their financial dignity as well as provide a basis to rebuild their financial life after the bankruptcy.
Bankruptcy exemptions are often listed in dollar amounts. Under New Mexico law, the bankruptcy exemption will protect, for an individual, up to $60,000.00 of equity in your home (the value of your home – the loan amount = equity). A motor vehicle can protected up to $4,000.00. Other assets that can be protected include pensions, retirement accounts, and life insurance benefits. These are usually fully protected no matter how large the accounts are.
There are limits on exemption amounts. For example, an individual, who owns a motor vehicle free and clear that is approximately worth $8,000, cannot exempt the entire amount. At some point, the value of the assets you have could adversely affect the rights of the creditors that you owe. Therefore, under a chapter 7, if you have assets worth more than you can exempt, the trustee can sell that property and use it to pay back your creditors. If you own more assets than you can exempt, a chapter 13 is the better option for you.
The majority of our clients who filed a chapter 7 bankruptcy were able to completely eliminate their unsecured debt and keep their property. If you have more assets than can be exempted, then it may make sense to pay back the extra amount over a period of years to your unsecured creditors under a Chapter 13.
To find out more about you can protect your home, car and personal possession, you should speak to our New Mexico bankruptcy lawyers or fill out an initial bankruptcy evaluation here.