The main concern of many that file for bankruptcy is whether or not they will love their personal property in New Mexico. If you are in the position of having to contemplate bankruptcy, your fears are understandable. Fortunately, as we here at the Sanders Law Firm have had the privilege of telling many of our concerned clients, the law does allow you to protect certain types of property from being sold as part of a bankruptcy. Both federal and state bankruptcy exemptions exist. Some states allow you to choose which to apply to your case; New Mexico is among them.
The most obvious asset that you will likely want to protect is your home. The bankruptcy homestead exemption allows you to exempt the interest you have in it. Here is how it works: if your home is worth $250,000, and you owe $225,000 on your mortgage, then you have $25,000 in equity. If the homestead exemption is $30,000, then you get to keep your house. Yet if the exemption is only $10,000, then your house will likely be sold, and you will be given the $10,000 exemption amount.
When deciding which exemption model to follow (federal or state), you obviously will want to consider which offers you the best chance to keep your home. The current federal homestead exemption is $23,675. Per Section 42-10-9 of New Mexico's Annotated Statutes, the state exemption amount is $60,000. Keep in mind that if you and your spouse own your home jointly (and are also filing for bankruptcy together), then you can combine your exemptions to protect even more equity in your home ($47,350 under federal guidelines, $120,000 under New Mexico's exemptions).
You can learn more about protecting personal assets from bankruptcy proceedings by continuing to explore our site.