New Mexico Bankruptcy Law and Means Testing Provisions
Most New Mexico bankruptcy laws are well settled, yet new amendments recently added a layer of complexity to filing both Chapter 7 and Chapter 13. Discharges are likely in both types of cases, if qualified under new disposable income tests. The new "means testing" requirement affects both chapters.
Debtors will no longer be qualified to file Chapter 7 if earning an income greater than the New Mexico median income for the state. Median income is a different standard than average income. Median is the income earned by the single person who is located exactly in the middle of a list of all income earners, whereas average is the total of all income divided by the number of persons used in the calculation. The difference in these two statistical calculations is that the median income will be lower in a state in which a few people earn a disproportionately high income compared to most other income earners.
In Chapter 13, debtors who earn more than the New Mexico me3dian income level must file plans lasting 5 years, unless all debts and claims owed can be repaid sooner.
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