Filing Chapter 7 Bankruptcy in New Mexico (2026)
Reviewed by DocDraft Legal Team · New Mexico · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set largely by New Mexico. New Mexico is a choice state: you may elect either the federal exemptions under 11 U.S.C. 522(d) or the New Mexico exemption set, but not both, and you take one list in full. This page explains the New Mexico homestead exemption under NMSA 42-10-9, the motor vehicle and wildcard figures under NMSA 42-10-1 and 42-10-10, the means-test median income, and the U.S. Bankruptcy Court for the District of New Mexico where residents file. New Mexico is a community-property state, which can affect how jointly held property and marital debt are treated. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, child support, or spousal support.
Does New Mexico use state or federal bankruptcy exemptions?
New Mexico is a choice state. Under 11 U.S.C. 522(b), because New Mexico has not opted out, a debtor filing in New Mexico may elect either the federal 522(d) exemption list or the New Mexico exemptions under Chapter 42, Article 10 of the New Mexico Statutes. You must take one list in full and cannot combine the two.
Can I keep my house if I file Chapter 7 in New Mexico?
Often yes. New Mexico's homestead exemption under NMSA 42-10-9 protects up to $150,000 of equity in your primary residence, or $300,000 if your spouse died within the two years before you claim it, and joint owners can each claim it. If your home equity fits within the New Mexico homestead, or within the federal 522(d)(1) homestead if you elect federal exemptions, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in New Mexico?
Usually yes if your equity is modest. New Mexico exempts $4,000 of equity in one motor vehicle under NMSA 42-10-1 and 42-10-2. If you instead elect the federal exemptions, 11 U.S.C. 522(d)(2) protects a separate vehicle amount. If your car equity fits within the figure you choose, the vehicle is protected; higher equity may be reachable.
What is the income limit to file Chapter 7 in New Mexico?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for New Mexico are $66,235 for one earner, $79,574 for two, $88,041 for three, and $98,602 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
New Mexico's Exemption Choice, the 42-10-9 Homestead, and the District of New Mexico Court
New Mexico is a bankruptcy choice state. Because New Mexico has not opted out under 11 U.S.C. 522(b)(2), a debtor filing here may elect either the full federal 522(d) exemption set or the full New Mexico exemption set found in Chapter 42, Article 10 of the New Mexico Statutes. You choose one list in its entirety; you cannot mix federal and state exemptions. New Mexico's headline protections come from NMSA 42-10-9 (the homestead exemption of $150,000, or $300,000 if the debtor's spouse died within the prior two years, which joint owners may each claim) and NMSA 42-10-1 and 42-10-2, which exempt $4,000 in one motor vehicle, $1,500 in tools of the trade, $2,500 in jewelry, and $500 in other personal property. NMSA 42-10-10 adds a wildcard of $500 in any property, or up to $5,000 of real or personal property in lieu of the homestead for a debtor who does not claim it. New Mexico is also a community-property state, which can affect how marital property and debt are handled. All New Mexico residents file in a single court: the U.S. Bankruptcy Court for the District of New Mexico, seated in Albuquerque.
Relevant Laws
New Mexico Homestead Exemption (NMSA 42-10-9)
Sets New Mexico's homestead exemption protecting equity in a primary residence from creditors and from a bankruptcy trustee, and allows each joint owner to claim the exemption. It protects up to $150,000 of equity, or $300,000 if the debtor's spouse died within the prior two years. This is the exemption that lets many New Mexico homeowners keep their house in Chapter 7.
New Mexico Personal Property, Vehicle, and Tools Exemptions (NMSA 42-10-1 and 42-10-2)
Exempts $4,000 in one motor vehicle, $1,500 in tools of the trade, $2,500 in jewelry, $500 in other personal property, plus clothing, furniture, books, and any interest in or proceeds from a pension or retirement fund, from a bankruptcy trustee and judgment creditors.
New Mexico Wildcard Exemption (NMSA 42-10-10)
Provides a wildcard exemption of $500 in any real or personal property, and up to $5,000 of real or personal property in lieu of the homestead for a debtor who does not claim the homestead exemption. This benefits renters and low-equity filers who elect the New Mexico set.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b) lets a state opt out of the federal 522(d) exemptions, which New Mexico has not done, so New Mexico debtors may choose federal or state exemptions. Section 707(b) sets the means test measured against state median income.
Regional Variances
New Mexico Chapter 7 Exemption Table
Homestead
New Mexico set (NMSA 42-10-9): $150,000 of equity in a primary residence, or $300,000 if the debtor's spouse died within the prior two years, with each joint owner able to claim it separately. Federal alternative (11 U.S.C. 522(d)(1)): the inflation-adjusted federal homestead amount if you elect the federal list instead.
Motor vehicle
New Mexico set (NMSA 42-10-1 and 42-10-2): $4,000 of equity in one motor vehicle. Federal alternative (11 U.S.C. 522(d)(2)): the inflation-adjusted federal vehicle exemption. Equity above the figure you choose may be reachable by the trustee.
Wildcard
New Mexico set (NMSA 42-10-10): $500 in any real or personal property, or up to $5,000 in lieu of the homestead for a debtor who does not claim the homestead. Federal alternative (11 U.S.C. 522(d)(5)): a base wildcard plus any unused portion of the federal homestead.
Personal property
New Mexico set (NMSA 42-10-1 and 42-10-2): $500 in other personal property, $2,500 in jewelry, plus clothing, furniture, books, and medical-health equipment used for the person's health. Federal alternative (11 U.S.C. 522(d)(3) and (d)(4)): household goods and jewelry up to the federal caps.
Wages
New Mexico garnishment law protects the greater of 75 percent of disposable earnings or 40 times the applicable minimum wage per week (NMSA 35-12-7), and a court may protect more for a low-income debtor. Under the federal set, 522(d) does not itself exempt wages, but the federal wildcard can protect cash on hand.
Retirement and tools
New Mexico set (NMSA 42-10-1 and 42-10-2): any interest in or proceeds from a pension or retirement fund is exempt, and tools of the trade are exempt up to $1,500. ERISA-qualified plans are separately excluded from the estate under federal law. Federal alternative (11 U.S.C. 522(d)(6) and (d)(12)): tools up to the federal cap and tax-exempt retirement funds.
Suggested Compliance Checklist
Confirm the current New Mexico means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee New Mexico median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $66,235 for one, $79,574 for two, $88,041 for three, and $98,602 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for the District of New Mexico and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Choose your New Mexico exemption set and value your assets
Before preparing your schedules days after startingDecide between the full federal 522(d) list and the full New Mexico list under Chapter 42, Article 10 (the New Mexico homestead is $150,000, or $300,000 if your spouse died within the prior two years). Value your home, vehicle, and personal property so you can match assets to whichever set protects more. You must take one list in full.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of New Mexico, the single federal bankruptcy court covering the whole state. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current New Mexico means-test median income | Check your household size against the U.S. Trustee New Mexico median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $66,235 for one, $79,574 for two, $88,041 for three, and $98,602 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for the District of New Mexico and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Choose your New Mexico exemption set and value your assets | Decide between the full federal 522(d) list and the full New Mexico list under Chapter 42, Article 10 (the New Mexico homestead is $150,000, or $300,000 if your spouse died within the prior two years). Value your home, vehicle, and personal property so you can match assets to whichever set protects more. You must take one list in full. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of New Mexico, the single federal bankruptcy court covering the whole state. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
No. New Mexico is a choice state. It has not opted out of the federal exemptions under 11 U.S.C. 522(b)(2), so a debtor filing in New Mexico may elect either the federal 522(d) list or the New Mexico exemptions in Chapter 42, Article 10 of the New Mexico Statutes. You must choose one list in full and cannot combine federal and state exemptions.
New Mexico's homestead exemption under NMSA 42-10-9 protects up to $150,000 of equity in your primary residence, or $300,000 if your spouse died within the two years before you claim it, and each joint owner may claim it separately. If you elect federal exemptions instead, the 522(d)(1) homestead applies.
Under NMSA 42-10-10, a New Mexico debtor may exempt $500 of any real or personal property, and a debtor who does not claim the homestead may instead exempt up to $5,000 of real or personal property in lieu of the homestead. This lets filers who rent or have little home equity protect other assets such as cash or a bank balance.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
Largely yes. New Mexico wage garnishment law protects the greater of 75 percent of disposable earnings or 40 times the applicable minimum wage per week, and a court may protect more for a low-income debtor. NMSA 42-10-1 and 42-10-2 also exempt interest in or proceeds from a pension or retirement fund, and ERISA-qualified plans are separately excluded from the bankruptcy estate under federal law.
Other New Mexico guides
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