Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In New Mexico, bankruptcy exemptions allow individuals to protect certain property from creditors when filing for bankruptcy. The homestead exemption specifically protects equity in a person's home. As of the knowledge cutoff in 2023, New Mexico allows a homestead exemption of up to $60,000 for an individual and $120,000 for a couple who are co-owners of the property. This means that if the equity in your home is less than the exemption amount, it is protected from being used to pay creditors in a bankruptcy case. The state also offers a wildcard exemption that can be applied to any property, including additional equity in a home, and other specific exemptions for personal property, retirement accounts, and more. The amounts and types of exemptions can be used differently depending on whether the bankruptcy is filed under Chapter 7 or Chapter 13. It's important to consult with an attorney to understand how these exemptions apply to your specific situation and to ensure that you are maximizing the protection of your assets under New Mexico law.