Bankruptcy in New Mexico (2026): Exemptions & Means Test

Bankruptcy is a federal process, but what you keep depends heavily on the exemption rules of your state, and New Mexico gives filers an important advantage: it is one of the minority of states that lets you choose between the federal bankruptcy exemptions and the state exemptions. New Mexico also offers a substantial homestead exemption of $150,000 per person, which can double for a married couple who both own and live in the home. This guide explains how Chapter 7 and Chapter 13 work for New Mexico residents, the key New Mexico exemptions, and the current Chapter 7 means-test income figures, all dated to primary sources.

This guide is part of our Bankruptcy by State series. It is general information, not legal advice, and exemption and income figures change, so confirm current amounts before relying on them.

Federal or state exemptions: New Mexico lets you choose

The first question in any bankruptcy is which set of exemptions applies, because exemptions decide what property you keep. Under 11 U.S.C. 522(b), each state either keeps the federal exemption menu available or opts out and forces filers onto state law. New Mexico did not opt out, so a New Mexico filer may elect either the federal exemptions in 11 U.S.C. 522(d) or the New Mexico exemptions in NMSA 1978, Chapter 42, Article 10. The U.S. Bankruptcy Court for the District of New Mexico explains in its self-help materials that a debtor must choose all federal or all state exemptions, not a mix, and that if spouses file jointly, both must use the same system. The choice matters: filers with significant home equity often prefer the New Mexico homestead, while filers who rent or have little equity sometimes do better with the federal wildcard.

The New Mexico homestead exemption: $150,000 per person

New Mexico protects a primary residence through its homestead statute. Under NMSA 1978 section 42-10-9, summarized in the New Mexico Supreme Court's official claim-of-exemptions form, a person has a homestead exemption of $150,000 in a domicile or land that is the person's primary residence. The amount rises to $300,000 where the claimant's spouse died within two years before the date of claiming the exemption and the deceased spouse could have claimed the homestead. Because the exemption is granted per person, a married couple who both own and occupy the home can each claim $150,000, shielding up to $300,000 of equity in a jointly owned residence. One federal limit applies regardless of state law: under 11 U.S.C. 522(p), equity in a homestead acquired within 1,215 days before filing is capped at a federally adjusted amount, so recently acquired equity may be limited.

A filer who does not own a homestead is not left empty-handed. NMSA 1978 section 42-10-10 provides an exemption in lieu of the homestead of $15,000 in any real or personal property, an amount the legislature raised from $5,000 effective July 1, 2023. That in-lieu exemption functions much like a wildcard, letting a renter protect cash, a vehicle, or other property.

Vehicle, personal property, and wage exemptions in New Mexico

The New Mexico personal-property exemptions are unified in NMSA 1978 section 42-10-1; the parallel section 42-10-2, which once applied to single filers, has been repealed. Section 42-10-1 provides one motor vehicle up to $10,000, household goods and furnishings up to $75,000, jewelry up to $5,000 (plus a wedding band and engagement ring), tools of the trade up to $15,000, and a catch-all of up to $15,000 in other personal property. Subsection B defines "household goods and furnishings" to include furniture, appliances, clothing and personal effects, electronic equipment, medical equipment and professionally prescribed health aids, books, and two firearms, so those items are counted within the $75,000 aggregate rather than exempted on top of it, and within that same total musical instruments are capped at $4,000 and toys, games, sports and hobby equipment at $2,500. For wages, New Mexico's garnishment statute, NMSA 1978 section 35-12-7, available through the New Mexico Compilation Commission, exempts the greater of 75 percent of disposable earnings for a pay period or an amount equal to 40 times the highest applicable minimum hourly wage, with a stricter limit for child-support enforcement. None of these New Mexico dollar figures is permanently fixed: NMSA 1978 section 42-10-14 directs that on July 1, 2025 and at each two-year interval after that, every dollar amount in sections 35-12-18, 42-10-1, 42-10-4, 42-10-9 and 42-10-10 be adjusted for the consumer price index for all urban consumers, rounded to the nearest $25, and published by the Administrative Office of the Courts, and an adjustment does not apply to proceedings commenced before its effective date. The amounts in this guide are the figures set by the 2023 statute, so check the Administrative Office of the Courts for any published adjustment before relying on one.

Because New Mexico permits the choice, many filers compare the state list with the federal exemptions in 11 U.S.C. 522(d), summarized by Cornell Law School's Legal Information Institute. The federal figures, which adjust every three years, include a homestead, a motor-vehicle exemption, household goods, tools of the trade, and a wildcard that can cover any property, so a renter with little home equity may protect more under the federal system. Confirm the current federal amounts when you file.

The Chapter 7 means test and New Mexico median income

Chapter 7 erases most unsecured debt, but you generally must complete the means test, which starts by comparing your household income to the median family income for your state and household size. The U.S. Trustee Program publishes those medians from Census Bureau data and updates them periodically. For cases filed on or after July 15, 2026, the New Mexico median family income figures are $66,235 for one earner, $79,574 for a household of two, $88,041 for three, and $98,602 for four, adding $11,100 for each additional person. If your income is at or below the figure for your household size, there is no presumption of abuse (the rule that presumes a Chapter 7 case is an abuse when income left after allowed expenses reaches set thresholds) and you do not need to complete Form 122A-2, the second means-test form, but that alone does not make you eligible for Chapter 7. If it is above, you complete the longer means-test calculation that subtracts allowed expenses to see whether a presumption of abuse arises or whether Chapter 13 is the path. These figures change roughly twice a year, so check the current table at filing.

Chapter 7 versus Chapter 13 in New Mexico

Chapter 7 is a liquidation: a trustee can sell non-exempt property to pay creditors, and most remaining unsecured debt is discharged in a few months. With New Mexico's homestead and personal-property exemptions, many filers keep everything they own, but a high-value non-exempt asset can be at risk. Chapter 13 is a repayment plan that runs three to five years; you keep your property and catch up on missed mortgage or car payments over time, which is why Chapter 13 is common for people trying to stop a foreclosure or cure an arrearage. The moment either case is filed, the automatic stay under 11 U.S.C. 362 stops most collection efforts, including foreclosure sales, repossessions, lawsuits, and wage garnishment. Before filing, federal law requires a credit-counseling course from an approved provider, and a debtor-education course is required before discharge.

Where you file: the New Mexico bankruptcy court

New Mexico is a single federal judicial district, so all residents file with the U.S. Bankruptcy Court for the District of New Mexico, which serves all 33 counties from its courthouse in Albuquerque. The court posts local rules, official forms, filing fees, and self-help resources for people filing without a lawyer, including a packet that lists the federal and New Mexico exemptions.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts such as credit cards, medical bills, and personal loans, but several categories survive a discharge. Most student loans remain unless you prove undue hardship in a separate proceeding, and recent income taxes, domestic-support obligations like child support and alimony, and most court fines are not dischargeable. Giving away or selling property before filing can create problems, so get a free bankruptcy evaluation from a New Mexico lawyer on the timing and which exemption system to elect (attorney advertising). Nothing here predicts how a particular case will turn out; the result depends on your income, your property, your debts, and which exemption system you elect.

Frequently Asked Questions

Does New Mexico use state or federal bankruptcy exemptions?

New Mexico lets you choose. Because New Mexico did not opt out under 11 U.S.C. 522(b), a filer may elect either the federal exemptions in 11 U.S.C. 522(d) or the New Mexico state exemptions in NMSA 1978 Chapter 42, Article 10, but not a mix of both. If spouses file jointly, both must use the same system.

What is the homestead exemption in New Mexico?

Under NMSA 1978 section 42-10-9, the homestead exemption is $150,000 in a primary residence per person, rising to $300,000 where the claimant's spouse died within two years before the claim. Because it is per person, a married couple who both own and occupy the home can each claim $150,000, protecting up to $300,000 of equity. A filer who owns no home may instead claim a $15,000 in-lieu exemption under section 42-10-10. Confirm current amounts when you file.

What is the New Mexico median income for the means test?

For Chapter 7 cases filed on or after July 15, 2026, the U.S. Trustee Program lists New Mexico median family income as $66,235 for one person, $79,574 for two, $88,041 for three, and $98,602 for four, adding $11,100 for each additional person. The figures update periodically, so confirm the current table when you file.

Will I lose my house or car in a New Mexico bankruptcy?

Often not. The $150,000 per-person homestead (up to $300,000 for a couple) protects significant home equity, and a Chapter 13 plan can stop a foreclosure by curing missed payments. A vehicle is protected by the $10,000 New Mexico motor-vehicle exemption or by the federal motor-vehicle exemption if you elect the federal system. Whether any asset is at risk depends on your equity and which exemptions you use.

Can a married couple double the New Mexico homestead?

Yes. The homestead under NMSA 1978 section 42-10-9 is granted per person, so spouses who both own and occupy the home can each claim $150,000, shielding up to $300,000 of equity in a jointly owned residence.

Where do I file bankruptcy in New Mexico?

In the U.S. Bankruptcy Court for the District of New Mexico, a single statewide district covering all 33 counties, based in Albuquerque. The court posts forms, local rules, fees, and self-help resources online.

What is the difference between Chapter 7 and Chapter 13 in New Mexico?

Chapter 7 is a liquidation that discharges most unsecured debt in a few months, subject to the means test. Chapter 13 is a three-to-five-year repayment plan that lets you keep property and cure missed mortgage or car payments, which is why it is used to stop foreclosure. Both trigger the automatic stay that halts most collection.

What debts cannot be erased in bankruptcy?

Most student loans (absent proven undue hardship), recent income taxes, child support and alimony, and most court fines generally survive a bankruptcy discharge. Credit cards, medical bills, and most personal loans are typically dischargeable.