Filing bankruptcy chapter 7 is often considered the last step in the situation. It differs from chapter 13 as it is the liquidation bankruptcy. Chapter 7 bankruptcy wipes out your debts by selling your assets. In this article, we’ll discuss the process and the reason for filing bankruptcy chapter 7 in New Mexico.
It can be challenging to have a positive outlook when our financial matters are not straight. Being in debt doesn’t feel right. That’s why many people don’t consult a financial counselor and filing for bankruptcy is the last thing in their mind.
Guilt, shock, and fear clouds our minds. We try to solve the matter on our own, but sometimes, life is not in our hands. In that case, it’s best to ask for help. Many people look at bankruptcy as the last option while it can be a beginning. Done the right way, chapter 7 bankruptcy can give you a fresh start. You’ll lose your current assets, and it feels terrible to go through this situation, but with the right help, you can get through this and start a new financial career.
Chapter 7 is the best choice if your unsecured debt exceeds secured debts. If you can’t afford mortgage payments, it is not the best reason to file for chapter 7. However, if you are in credit card debt worth thousands of dollars, then you need to consider this type of bankruptcy. Double-digit interest rates and challenging terms often make it difficult to pay the unsecured debt. In that case, bankruptcy can wipe out your debt even if your assets are not enough to cover the loan.
Bankruptcy courts allow you shelter, food, clothing, and other necessities of life. You get to keep at least 75% of earned but unpaid wages. The judge might issue you the full payments depending on the circumstances.
In your home, you get to keep $30,000 in equity. You are entitled to insurance benefits such as life, accident or annuity benefits, whether in cash value or otherwise. All retirement benefits are available as well as the unemployment/workers/disease compensation. You can keep vehicles worth $4,000, or you’ll receive cash worth $4,000. You can keep jewelry worth $2,500.
In New Mexico, you also have the choice of using federal exemptions instead of New Mexico exemptions. You can check which option works best for your case.
Certain debts are your responsibility. That includes spouse alimony, student debt, taxes, child support and some other debts. Filing for bankruptcy won’t remove these debts.
If you have a house or a car and you want to assume its loan, you can do so by signing a reaffirmation agreement. You can keep those assets, but you must make loan payments on time, as you cannot file for chapter 7 bankruptcy in the next eight years.
Many people think that you can file for bankruptcy if you are facing foreclosure. It is true to some extent, but you need to undergo mandatory credit counseling before you can file for bankruptcy.