Law Offices of 

Deborah M. DeMack 

Committed to Fight for your Consumer Rights!


Bankruptcy Overview

Bankruptcy -- General Information and Chapter 7

There are five different types, or "chapters," of bankruptcy. However, most consumers file either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy, sometimes called "liquidation bankruptcy," is the type of bankruptcy most consumers file. Chapter 7 bankruptcy eliminates your unsecured debts without further repayment. Approximately three months after filing your Chapter 7 bankruptcy petition, the bankruptcy court issues a "discharge" order, meaning, the debts are discharged, and the debtor is no longer personally liable for payment of the discharged debts. Once a debt is discharged in a bankruptcy, it is forever discharged, and creditors can no longer demand payment of the discharged debts.


In a Chapter 7 bankruptcy, you are entitled to claim various exemptions under either federal or state law. These exemptions protect your property, both real and personal property, up to a certain dollar amount, from being taken either by creditors or by the bankruptcy trustee. In the overwhelming majority of Chapter 7 bankruptcy cases filed by individuals in New Mexico, all (or virtually all) of an individual debtor's property is exempt. For more information about exemptions, see Bankruptcy FAQs.


Once you file for bankruptcy, the "automatic stay" goes into effect. The "automatic stay" immediately stops creditors from trying to collect on debts. The "automatic stay" protects you, at least temporarily, from creditors garnishing your wages, trying to repossess your car, taking money from your bank account, cutting off your utilities, and more.


A bankruptcy trustee is appointed by the court to oversee your bankruptcy case until your Chapter 7 bankruptcy case ends. The trustee assumes legal control of your property (except exempt property, which is yours to keep) and your debts. The trustee's primary duties are to review your bankruptcy petition, hold what's called the creditors' meeting, and, if you have any property which is either unprotected by an exemption or not fully protected by an exemption, decide whether or not the property should be sold and the proceeds from the sale distributed to your creditors. For most consumers filing for Chapter 7 bankruptcy, this is a rare occurrence.


If you are considering whether filing for bankruptcy is right for you, you should consult an attorney. Call the Law Offices of Deborah M. DeMack today to set up a meeting to review your financial circumstances before deciding whether Chapter 7 bankruptcy is the right choice for you. We can advise and guide you through the bankruptcy process. 

Chapter 13 Bankruptcy:

Chapter 13 bankruptcy allows individual debtors to pay off debts -- or a percentage of your debts -- over the course of 3 to 5 years under an installment payment plan. How much you pay back to your creditors varies, depending on the amount an individual debtor may have available to repay creditors after taking into account his or her living expenses. Generally speaking, any unpaid debts remaining at the end of your 3-5 year repayment plan are then discharged.


There are a number of reasons why an individual may file under Chapter 13. For example, if you're behind on your mortgage, and you would like to keep your house, you can repay the arrears over the course of time through your Ch. 13 repayment plan. Or if you're behind on child support or alimony payments (both, as "domestic support obligations" are not dischargeable in bankruptcy), these arrears can be included in your Chapter 13 bankruptcy repayment plan, giving you the opportunity to repay these arrears over time. However, unlike other debts in a Chapter 13 bankruptcy, any unpaid domestic support obligations still remaining at the end of your 3-5 year repayment plan will not be erased.


Chapter 13 bankruptcy may be a good option for individuals who, though they may have run into some financial difficulties in the past, now have a steady income that can cover not only their living expenses, but also, some debt over time. However, as Chapter 13 bankruptcy is more complex than Chapter 7 bankruptcy, it is advisable to consult a bankruptcy attorney before deciding whether to file for Chapter 13 bankruptcy.

If you are considering whether filing for bankruptcy is right for you, you should consult an attorney. Call today ! The Law Offices of Deborah M. DeMack is available to set up a meeting to review your financial circumstances, before deciding whether Chapter 13 bankruptcy is the right choice for you. We can advise and guide you through the bankruptcy process.


To read click on the titles below:


5 Signs That It May Be Time to File Bankruptcy by Carl H. Starrett II

The Case for Walking Away by Jane Bryant Quinn

Medical Bills: Leading Cause of Personal Bankruptcy

According to a recent article by NerdWallet Health,* an estimated 56 million Americans under age 65 -- or one in 5 Americans -- will struggle to pay medical bills in 2013.  In fact, medical bills are a leading cause of personal bankruptcy, as many families drain their savings, max out their credit cards, and even refinance their homes in order to pay medical bills. 


While some are quick to blame those who find themselves forced to file for bankruptcy on bad spending habits and poor savings, in fact, health expenses are the single largest cause of bankruptcy for consumers.  Medical bills can completely overwhelm a family when illness or injury strikes.  Even with insurance, co-pays for medical tests, x-rays, MRIs, ambulances, ER care, prescription medications, and more, can quickly add up to thousands of dollars, leaving many with bills they are unable to pay.  Furthermore, there are indirect costs, such as lost wages, when a serious illness or an accident strikes.  These costs, both direct and indirect, only add to a family's burdens, to include the emotional toll when a family member is ill or injured.   


    Fortunately, bankruptcy can provide relief.  Congress long ago recognized that consumers sometimes need a helping hand, a chance to start over.  Bankruptcy can liquidate those medical bills that threaten to drown families in debt.  So if you are struggling to pay medical bills, bankruptcy may be an option for you.  Consult a bankruptcy attorney for more information.