Effect of Homestead Exemption in New Mexico Bankruptcies

In bankruptcy cases filed in the District of New Mexico, individual debtors filing for bankruptcy protection have the right to claim certain exemptions pursuant to either state or federal law, and can elect to use whichever is more favorable to them. Certain types of property or certain portions of the value of assets may be exempt from being sold by a chapter 7 bankruptcy trustee to pay creditors.

If the amount of equity the Debtor has in a piece of property (the value above all mortgages or liens on the property) exceeds the amount of the allowed exemption, the Debtor may have that property liquidated by the chapter 7 trustee. For instance, in New Mexico a homeowner can claim a homestead exemption of $60,000 under state exemptions. If such a New Mexico homeowner has only $60,000 of equity or less, the property is wholly exempt and cannot be liquidated by the trustee.  If, however, the value is more than $60,000.00, the trustee can sell the property.  In such an event, the trustee must pay the costs of sale, any debt secured by the property, any taxes on the property, and the value of the exemption before receiving any of the proceeds to pay unsecured creditors. Thus, it is important that debtors understand what exemptions they are entitled to claim in bankruptcy, and consult with an expert to determine how best to distribute those exemptions to protect the maximum amount of the debtors’ assets.

An important part of the bankruptcy planning process is evaluating what assets are exempt to help in making the decision as to whether a chapter 7 case is in the debtors’ best interest.


(In an upcoming blog post the types of exemptions bankruptcy debtors can claim will be summarized.)

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 specifically provide advice as to disposition of property in Chapter 7, Chapter 11 and Chapter 13 cases.. The New Mexico 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 giddenslaw.com. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.