Being in a situation that causes you to consider bankruptcy can be incredibly challenging, especially if you are facing foreclosure or losing your vehicle. Before making this decision, it is important to examine all your options to determine if there is something else that will be more beneficial for your unique situation. 

One of the biggest downsides to filing for any type of bankruptcy is that it remains on your credit history for several years and can affect your credit score long-term. This can make it difficult to obtain new credit cards and loans later on. 

Credit counseling 

As you consider Chapter 13 bankruptcy, also known as Wage Earner’s Bankruptcy, this likely means you still have a steady income and can afford to catch up on mortgage payments and pay some of your debts. However, before you file bankruptcy paperwork, most states require you to go through an approved credit counseling program first. 

Eligibility 

You must meet further requirements to qualify for Chapter 13 bankruptcy in New Mexico: 

  • Unsecured debts are less than $419,275, as of 2019. 
  • Secured debts are less than $1,257,850, as of 2019. 
  • You cannot have a prior case that was dismissed in the last six months because you did not show up to court or after a creditor requested permission from the court to take action on property liens.
  • You must have received credit counseling from an approved agency, unless the court decides there is not an acceptable approved agency nearby. 

Required information 

Bankruptcy paperwork requires many personal financial details, including a list of all your creditors and the size of their claims, all sources of your income and how much you make, a list of your property and belongings, and all your monthly living expenses. If you have a spouse, whether you file together or separately, the court still needs to know the details of her or his finances and incomes. 

If after completing credit counseling your new payment plan does not work for you, filing for Chapter 13 bankruptcy is the best option if you want to save your home, vehicle and protect your credit score as much as possible while still giving yourself a fresh start.