Court Data Provides Snapshot of Bankruptcy Debtors’ Assets and Income

By certain measures, those residents of Albuquerque – and New Mexico more broadly – who are experiencing some form of financial distress proportionately tend to have more wealth tied up in their real estate compared to people in certain neighboring states.  But they also appear to have lower levels of regular income than folks in those same states.

In July, the Administrative Office of U.S. Courts released a study compiled from information available in bankruptcy courts throughout the nation.  The report sought to compare debtors in different states who file either Chapter 7 or Chapter 13 bankruptcy cases. They list differences in asset values, income and expenses between residents of New Mexico filing consumer bankruptcies and those in the other 49 states. The report also makes comprehensive comparisons between bankruptcy debtors in New Mexico and the other states comprising the Tenth Judicial Circuit. This circuit which hears appeals from New Mexico’s federal courts (which includes the U.S. Bankruptcy Court in Albuquerque) also contains the states of Colorado, Kansas, Oklahoma, Utah and Wyoming.

Specifically, the report finds that the average consumer bankruptcy petition listed assets worth $109,012 in real and personal property last year, highest among the six states in the 10th judicial circuit. But it also shows that the median monthly income listed on consumer bankruptcy petitions filed in the state last year was $2,466, which ranked New Mexico 62 out of the 90 district bankruptcy courts nationwide. The median monthly income nationwide was $2,772, while the median for the 10th circuit was $2,625.

Accordingly, people in New Mexico have invested more than the national or 10th Circuit average in their homes but do not earn as much people in other states. These results appear to indicate that New Mexico residents place a high premium on ownership. But one distinction which must be made is this: the fact that people own real estate with relatively higher value does not mean they also have comparable levels of equity in their homes. Many have negative equity meaning they owe more on the home than it is worth. Others used the equity in their home as collateral in order to qualify for loans or lines of credit.

The question of whether a particular person garners a higher income than others or holds most of their value in their homes is an important consideration in determining whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy better serves an individual’s needs.  Generally speaking, a Chapter 13 bankruptcy suits the needs of regular wage earners better. Chapter 13 actions also give the debtor the chance – if it is their first filing – to stop a foreclosure on their home. Chapter 7 bankruptcy actions, by contrast, give those who own certain assets the opportunity to liquidate their assets to pay off some of their unsecured creditors’ claims. Chapter 7 bankruptcy actions also allow debtors the option to surrender their home and/or vehicles in the bankruptcy, which allows the secured creditors to regain possession of their collateral and sell it to pay off a portion or all of their claim.

In Albuquerque, Giddens & Gatton Law, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can provide advice over which type of bankruptcy fits one’s particular needs. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment or visit the firm’s website at Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.