Hume Law Firm

Creditoribus Mortem

Bankruptcy Attorney in Albuquerque, Santa Fe & for all of north-central New Mexico .  Chapter 7 & Chapter 11.  Mortgage foreclosure defense.

Chapter 7

The vast majority of bankruptcies filed in New Mexico are Chapter 7.  Both consumers (people) and businesses (corporations, LLCs, sole proprietorships, etc.) may file Chapter 7 bankruptcy.  By far, most Chapter 7s are filed by people.  

Before filing bankruptcy, you should meet with an attorney and discuss your rights, options and responsibilities under the Bankruptcy Code and Rules. My goal is that you get the fresh start you are entitled to under Chapter 7.  If you meet certain income and expense limits, the Bankruptcy Court may relieve you of responsibility for certain debts.  For a person considering bankruptcy, I do not recommend filing Chapter 7 bankruptcy if your regular monthly income exceeds your regular monthly expenses. There are always exceptions - that's why God invented lawyers.

​However, the 2005 changes to the bankruptcy laws created more hoops and hurdles between you and a fresh start. To clear those hoops and hurdles, I'll need some information and documents from you.

First, before your bankruptcy can be filed, you must complete a counseling class from a counselor approved by the United States Trustee. Don't pay more than $25 for the counseling class - I know a very reputable, approved course provider that'll provide the course for $9.95, over the internet, for a single filer or a married couple.

Second, I'll need to see your pay-stubs or other proof of income from all sources for the six months before we file your bankruptcy. 

Third, please provide copies of your federal tax returns for the previous two years.

We are now ready to prepare a draft of your petition.  We'll need to meet for about an hour.  A copy of your credit report, compiled from information provided to the three major credit reporting agencies, will be given to you.  However, you must list all creditors in your bankruptcy and many creditors do not report to credit reporting agencies - if you owe your brother $500, you must list your brother as a creditor.  Please tell me if you are aware of any creditors that are not on your credit report as you are responsible for listing all creditors in your bankruptcy.  We'll discuss issues such as your income and expenses, assets and liabilities, and other things such as anticipated increases or decreases in income and expenses or active or potential lawsuits.  I'll prepare a draft of your bankruptcy petition.  We'll review the petition, sign the petition and I will file the petition with the Bankruptcy Court.

After filing, I will immediately e-mail a copy of your petition to you along with a letter disclosing the date and time we will meet with an assigned Chapter 7 Trustee.  You will have about four weeks notice for the meeting.  The Chapter 7 Trustee is an impartial administrator representing both your rights and the rights of your creditors.  At the meeting, the Trustee, or any interested party attending the meeting, may ask you questions about your debts, financial affairs, property or income.  After the meeting, if there are not outstanding issues, the Trustee will issue a report to the Bankruptcy Court concerning recommended further action. Generally, the Trustee will recommend that your debts be discharged and your case closed. However, there is a 60-day period after the meeting for any interested party to object to your bankruptcy even if the Trustee recommends discharge of debts. Generally, objections are filed because you earn too much money or used credit with the three months before filing bankruptcy. We'll have discussed these eventualities in detail.

Chapter 7 bankruptcy for a business is a very simple way to terminate operation of the business and discharge the debts of the business but may not be the best solution for relieving you of any personal obligation for the debts of the business. Liquidation of the business may be a better way to terminate operation of the business - you use the assets of the business to pay the debts of the business and whatever debts remain may be not be collectible. However, be very careful that you do not have personal liability for the business debts! The law may be black and white but there's a big grey area in between. If you are considering Chapter 7 for a business you should speak with an experienced attorney first. 

​Most Chapter 7 bankruptcies in New Mexico are "no asset" bankruptcies.  A no asset case is what you want - your debts are discharged and you keep your assets.

Contact Hume Law Firm today and discuss your rights!