Bankruptcy ✦ New Mexico
A Fresh Start Is Not Failure. It’s Federal Law.
Chapter 7 bankruptcy exists so honest people buried by debt can start over. North Star Law Firm guides New Mexicans through the process for a flat fee — with the rare advantage of an attorney-CPA who knows exactly when bankruptcy can eliminate tax debt too.
Overview
Is Chapter 7 right for me?
Chapter 7 is the straight-line version of bankruptcy: qualifying debtors discharge most unsecured debt — credit cards, medical bills, personal loans, old tax debt that meets the rules — in roughly three to four months, while exemption law protects the property that matters. Eligibility runs through the means test of 11 U.S.C. § 707(b): if your household income is below the New Mexico median for your household size, you generally qualify; above it, a fuller calculation applies. We run the means test and the exemption analysis in your free consultation, so you know before filing exactly what would be discharged and what you would keep.
- Free means-test and exemption analysis before you decide
- Automatic stay — collections, garnishments & lawsuits stop at filing (11 U.S.C. § 362)
- Flat-fee, start-to-finish representation including the 341 meeting
- Tax discharge analysis by an attorney-CPA using your IRS transcripts
- Choice of New Mexico or federal exemptions — whichever protects more
- Honest advice when Chapter 7 is not the right tool
When does collection actually stop?
The moment your petition is filed. The automatic stay of 11 U.S.C. § 362 takes effect immediately and stops wage garnishments, bank levies, repossessions, foreclosure sales, lawsuits, and collection calls — including the IRS. For many clients the stay is the first quiet they’ve had in years, and it holds while the case proceeds to discharge.
Can bankruptcy really wipe out tax debt?
Yes — when the timing rules are met. Income taxes are generally dischargeable if the return was due more than three years before filing, the return was actually filed more than two years before filing, and the tax was assessed more than 240 days before filing, with no fraud or willful evasion (11 U.S.C. §§ 507(a)(8), 523(a)(1)). Those dates come from your IRS account transcripts, and reading transcripts is CPA work. We pull them, compute the earliest safe filing date, and time the case so the maximum amount of tax is discharged. Filing even a few weeks too early can leave a fully payable tax debt alive — this analysis is where an attorney-CPA matters most.
What does the Chapter 7 process look like?
After the free analysis, you complete a short credit counseling course, we prepare the petition and schedules, and we file. About a month later you attend the trustee’s 341 meeting — typically a brief phone or video appearance that we attend with you. After a second short course, the discharge order arrives, usually within 90 to 120 days of filing. Our engagement is flat-fee and covers the whole process.
Questions & Answers
Bankruptcy questions New Mexicans ask us
Will I lose my house or car in Chapter 7?
Most Chapter 7 debtors in New Mexico keep everything they own. New Mexico allows debtors to choose between the state exemption scheme and the federal bankruptcy exemptions in 11 U.S.C. § 522(d) — whichever protects more of your property. Homes with modest equity, ordinary vehicles, household goods, and virtually all retirement accounts are typically fully protected. Exemption planning is exactly the analysis we run before filing anything.
How long does Chapter 7 take?
Most consumer Chapter 7 cases run about 90 to 120 days from filing to discharge. The automatic stay protects you from day one — the discharge at the end is what permanently wipes out the eligible debt.
Will bankruptcy stop the IRS?
The automatic stay under 11 U.S.C. § 362 stops IRS levies and garnishments just like any other collection. Whether the underlying tax is discharged depends on the age-and-filing rules — and where it isn’t dischargeable, bankruptcy can still force a manageable resolution. This tax-bankruptcy intersection is the core of our practice.
What debts does Chapter 7 not wipe out?
Domestic support obligations, most student loans (absent undue hardship), recent income taxes, trust-fund payroll taxes, court fines and restitution, and debts incurred by fraud generally survive discharge under 11 U.S.C. § 523. Part of the free consultation is mapping which of your debts go away and which need a different strategy.
Find out what a fresh start looks like — for free.
A confidential means-test and tax-discharge analysis with an attorney-CPA. Flat fee quoted in writing if you decide to file.