Chapter 7 or a “straight” bankruptcy is the most common type of bankruptcy in New Mexico. Approximately 92% of all bankruptcy cases filed in the state are Chapter 7.
Chapter 7 discharges or eliminates unsecured debt giving you a “fresh start.” However, some debts like child support and alimony (known as Domestic Support Obligations or DSO’s) are not discharged in Chapter 7. Under certain circumstances some taxes may be discharged. The Law Offices of Ron Holmes can review your tax liability to determine if any of the tax debt can be discharged. Student loans are non-dischargeable except in rare cases.
A typical Chapter 7 case will be open for approximately 3 1/2 months from the day the case is filed until the date the discharge is entered by the Court.
A Chapter 7 Trustee is appointed to review your financial affairs and assets. You are entitled to keep certain types of your property provided you have an allowed protection for the property. These protections are known as “exemptions” and have limitations on the available dollar values. Exemptions can be complicated and experience is critical. One of the services that our firm offers is a review of your assets and the exemptions available to you. The Law Offices of Ron Holmes will claim every available exemption that you may be entitled.
The Trustee has the power to liquidate (“sell”) assets that have not been claimed exempt. If the trustee determines that there are no assets available for him/her to sell (this happens about 95% of the time), the case is reported as a “no asset” case and the trustee files a “No Distribution Report”. The Bankruptcy Court will automatically issue a discharge about 60 days later provided no objections are filed. All debts entitled to be discharged are forgiven and the creditors are forever prohibited from trying to collect those debts from you.