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 U.S. Bankruptcy Court for the District of New Mexico's exemption packet, 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 appear in NMSA 1978 sections 42-10-1 (married persons or heads of household) and 42-10-2 (persons who support only themselves). Each provides one motor vehicle up to $4,000, personal property up to $500, tools of the trade up to $1,500, and jewelry up to $2,500, along with clothing, furniture, books, and medical or health equipment used for the person's health. 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.

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 must qualify through 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 April 1, 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, you generally pass and may proceed under Chapter 7. If it is above, you complete the longer means-test calculation that subtracts allowed expenses to see whether you still qualify 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. Filing affects your credit for years, and giving away or selling property before filing can create problems, so the timing and the choice between federal and New Mexico exemptions are decisions many people review with a licensed New Mexico bankruptcy attorney. 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.