The New Mexico Answer in One Paragraph
New Mexico filers choose between Chapter 7 (liquidation, 3-4 months, strong discharge rate) and Chapter 13 (3-5 year repayment plan, better for saving a home from foreclosure or for filers above the means test). Three New Mexico-specific inputs drive the choice: (1) the New Mexico means test median of $57,528 for a 1-person household, (2) the New Mexico homestead exemption of $150,000, and (3) the local filing mix and outcome data below. Everything else on this page is elaboration on those three factors.
Quick Side-by-Side
Chapter 7 in New Mexico
Chapter 13 in New Mexico
New Mexico Means Test Thresholds (April 2026)
New Mexico's single-person median of $57,528 is below the national average. Most filers here clear Part 1 of the means test on income alone and qualify for Chapter 7 without running the full Part 2 expense deduction.
| Household Size | New Mexico Median Income |
|---|---|
| 1-person household | $57,500 |
| 2-person household | $74,800 |
| 3-person household | $87,400 |
| 4-person household | $101,800 |
| 5-person household | $110,500 |
| 6-person household | $119,100 |
For household sizes above 6, add $11,100 per additional member. Full details at the New Mexico means test calculator. For a general discussion, see our means test overview.
New Mexico Homestead Exemption and the Chapter Choice
New Mexico's homestead exemption protects $150,000 of primary-residence equity under NMSA 42-10-9. If your home equity is below that amount, Chapter 7 can usually wipe out your unsecured debt without putting the home at risk. If your equity exceeds the exemption, Chapter 13 is typically the right tool to keep the home while cramming down or curing mortgage arrears over 3-5 years.
New Mexico lets filers choose between state exemptions and the federal bankruptcy exemption scheme (11 U.S.C. Section 522(d)). Review the full exemption list at bankruptcyexemptionsbystate.com/new-mexico before assuming any specific asset is safe.
Homestead amount (New Mexico): $150,000. Statute: NMSA 42-10-9.
New Mexico's Chapter 7 vs Chapter 13 Filing Mix
The Federal Judicial Center does not report enough consumer cases from New Mexico to characterize local Chapter 7 vs Chapter 13 filing patterns. National averages (about two-thirds Chapter 7, one-third Chapter 13) are the best available proxy.
Why does filing mix matter? Attorney fee structures often favor Chapter 13 (paid through the plan rather than up-front), which can produce local-market bias toward Chapter 13 that is not driven by individual debtor facts. FJC data lets you see whether New Mexico's mix matches the economics of the typical filer's situation.
Which Chapter Fits Which New Mexico Filer?
- If your income is below the New Mexico median ($57,528, 1-person) and you own little non-exempt property: Chapter 7 is almost certainly the right choice. Fast, cheap, and the highest discharge rate in consumer bankruptcy.
- If you are behind on your mortgage or car loan and want to keep the collateral: Chapter 13 lets you cure arrears over 36 to 60 months while the automatic stay blocks foreclosure and repossession.
- If you have high home equity and New Mexico caps the homestead exemption: run the numbers on Chapter 13 cramdown, lien stripping (for wholly underwater junior liens), and the federal BAPCPA homestead cap before assuming Chapter 7 is safe.
- If you have filed before within the lookback windows: use the 1328(f) discharge screener first -- a prior Chapter 7 discharge bars another Chapter 7 for 8 years, and a prior Chapter 13 discharge bars another Chapter 13 for 2 years.
Rule of thumb for New Mexico: if you qualify for Chapter 7 on the means test AND your home equity is within the $150,000 homestead, Chapter 7 is almost always the right choice. Chapter 13 is the right answer when specific facts (arrears, non-exempt equity, prior Chapter 7 within 8 years) rule Chapter 7 out.
Frequently Asked Questions
Is Chapter 7 or Chapter 13 better in New Mexico?
For most New Mexico filers who pass the means test, Chapter 7 is faster, cheaper, and succeeds more often. Chapter 13 is the right choice if you need to save a home from foreclosure, cure arrears, catch up on priority taxes, or cannot qualify for Chapter 7.
What is the Chapter 7 income limit in New Mexico?
There is no hard dollar limit. The means test compares your 6-month average income (annualized) to the New Mexico median for your household size. One person: $57,528. Four person: $101,800. Above-median filers can still qualify by running Part 2 expense deductions.
Can I use federal bankruptcy exemptions in New Mexico?
Yes. New Mexico is an opt-in state -- filers may choose federal exemptions under 11 U.S.C. Section 522(d) instead of state exemptions. Compare both schedules before filing; federal can offer a larger wildcard while state may offer a larger homestead.
How much home equity is protected in New Mexico bankruptcy?
New Mexico's homestead exemption protects $150,000 under NMSA 42-10-9. Federal BAPCPA limits (11 U.S.C. Section 522(p)) can cap this at approximately $214,000 for a residence acquired within 1,215 days of filing.
How long does bankruptcy take in New Mexico?
Chapter 7 takes 3 to 4 months from filing to discharge in New Mexico federal bankruptcy court. Chapter 13 takes 3 years (below-median) or 5 years (above-median) of monthly plan payments before discharge.
Can I switch from Chapter 13 to Chapter 7 in New Mexico?
Yes. Under 11 U.S.C. Section 1307(a), a Chapter 13 debtor in New Mexico generally has the right to convert to Chapter 7 at any time, as long as the case was not previously converted from Chapter 7. You must still pass the means test at the time of conversion.
Related New Mexico Resources
Browse Every State
Last updated: 2026-04-18. Not legal advice. Statutory homestead and median-income figures are reproduced from public sources and may lag statutory amendments -- verify against current state statute before relying.
Part of the Bankruptcy Transparency Network