New Mexico: So Close but Not Close Enough – House Bill 36

Category: Bankruptcy

New Mexico House Bill 36 was introduced during the 2021 Legislative session and passed the House of Representative’s committee with flying colors but could not make it out of the Senate Judiciary committee. The bill would have increased a number of protections for debtors facing a financial crisis and would have helped some filing for greater protections in Bankruptcy. This was not its year. Perhaps next year?

Why was the bill important to New Mexico families? New Mexico is one of only 16 states and jurisdictions that allow a debtor filing for bankruptcy to choose between State law or Federal law to protect property from liquidation. The Federal law protections are found in the Bankruptcy Code under 11 U.S.C. §522. The Federal exemption currently allows each debtor to claim $25,150 in equity in a home, so a married couple could protect up to $50,200. New Mexico law, on the other hand, allows each debtor to claim $60,000.00 in equity for a total of $120,000 for a married couple. Thankfully, New Mexico families have tremendous flexibility to protect property from liquidation but it is not enough. You might think $120,000 would be sufficient, and for many is it, but the truth is the exemption has not been updated since 2007. A refresh of the statute is needed, and the time is right to update the law. House Bill 36 would have increased the exemption to $90,000 each. This level of protection is not unprecedented across the United States. Other states in our fine county allow significantly higher amounts. Take for example, New Hampshire. New Hampshire’s homestead exemption is $120,000 each for a total of $240,000 for a married couple and California is a whopping $600,000! Our Arizona neighbors can claim $150,000 total, Colorado allows $105,000, and Texas is 100% exempt without a dollar limit. New Mexico families need the additional protection that House Bill 36 would have afforded them.

Filing for Bankruptcy can be as stressful as it comes but losing a home to the liquidation process hurts families and disrupts economies. Families have become displaced, and  the financial crisis that was 2020 is still not over, in fact the worst is yet to come. New Mexico debtors has been under the protections of stay orders issued by the New Mexico Supreme Court. The stay orders have delayed or even prevented certain collection activities against debtors so many have become comfortable in waiting it out. Those days will come to an end because the stays were never designed to be permanent, and when they are lifted, the flood of bankruptcies will follow. The time is now to get the advice you need in order to prepare for the inevitable.

Ron Holmes offers a free, no obligation consultation to discuss consumer bankruptcy options and will discuss asset protection allowed under the law. Please him a call today at 505-268-3999