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New Mexico debt collection laws: How to get out of debt

Anyone can get into debt; it does not discriminate. Debt may be following you around, whether it was caused by a financial emergency that caused you to max out your credit cards or by the fact that you are already behind on your loan payments. Payday loans are legal in many states, but you’ll be relieved to know that they are not in New Mexico. 2017 saw the abolition of payday loan laws in New Mexico. Payday loans are short-term loans that must be repaid by the following payday, typically two to four weeks later. Interest rates are often very high; they can even exceed 400%. Regardless, residents of New Mexico also experience debt-related problems. Knowing the New Mexico debt collection laws and statutes can be of great help if you’re struggling with it and are being chased by a debt collection agency. 

New Mexico debt collection laws and statutes of limitations

1. What the FDCPA mandates

FDCPA stands for Fair Debt Collection Practices Act. It was implemented in 1977 and forbids debt collectors in New Mexico from using abusive tactics to recover a debt. Debt collectors can't get in touch with you at work, contact you between 9 p.m. and 8 a.m., or post your personal information online. Debt collectors are prohibited from harassing you, using foul language, or contacting you if you have an attorney. To collect debt in New Mexico, collection companies must get a license.

2. CARA in New Mexico

The New Mexico Collection Agency Regulatory Act, or CARA, is a New Mexico debt collection law that doesn't impose any new restrictions for the recovery of consumer debt, unlike some states that offer additional protections on top of the FDCPA. This indicates that the FDCPA would take effect in the absence of CARA.

3. Garnishment laws

According to New Mexico collection laws and regulations, some protections are in place if a debt collector wins a court judgment against you for a consumer debt in New Mexico. In New Mexico, the maximum amount of your salary that can be garnished is 75% of your disposable income for that pay period. Garnishment may continue until the debt is fully paid, and it may also apply to any fees or other expenses you have incurred as a result of the unpaid debt.

In addition, a debtor's equity in a home or mobile home up to $60,000 (or $120,000 if they are married) and their vehicle up to $5,000 are both excluded according to New Mexico debt collection laws and rules. However, as these exemptions will otherwise be waived, it is the debtor's responsibility to claim them.

4. New Mexico statute of limitations

The statute of limitations specifies how long debt collectors must wait before suing you to recoup past-due obligations. Debt collectors will find it challenging to obtain a court order after the statute of limitations for a debt expires, which makes your outstanding debt a time-barred debt.

Depending on the kind of debt, New Mexico's statute of limitations for collecting it can be anywhere between four and ten years. The statute of limitations expires, for instance, after four years if you are being pursued by a debt collector for outstanding credit card bills. For medical debt, the statute of limitations expires after six years. For auto loan debt and state tax debt, the statute of limitations expires after four years and ten years, respectively.

Remember that the clock starts over and the statute of limitations resets if you pay even a fraction of a time-barred debt. You might not be required to pay an old debt if the statute of limitations has passed. On the other hand, missed payments and defaulted debt might remain on your credit report for six years.

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Responding to debt collection letters

A debt collector has the right to pursue payment from you whether you have the money to do so or not. First, request further information from the debt collector to verify the debt, such as the original creditor's name and the total amount owed. If the debt is not yours, you still have 30 days to dispute it after receiving the information the debt collector has sought. A few methods are there that let you stop a debt collector from harassing you according to debt collection laws in New Mexico.

If you send a written request, a debt collector must stop contacting you. To stop debt collectors from contacting you, you can send them a letter using a sample provided by the Consumer Financial Protection Bureau (CFPB). Keep copies of every letter you send. If you have legal representation, be sure to let the debt collector know so they can get in touch with your lawyer rather than you.

A debt collector won’t stop contacting you just because you ignore them. If the debt is yours, the collector may use additional tactics, such as suing you, to get you to repay the debt. File a complaint with the CFPB or the New Mexico Attorney General if the debt is not yours or if a debt collector is using abusive or harmful tactics against you.

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How you can tackle debt in New Mexico: The Debt Consolidation method

If you’re struggling with debt, debt consolidation might be an excellent way for you to take care of it. Consolidating your debts allows you to make affordable payments based on your income by combining all of your debts into one. You will just have to pay one business or lender instead of making multiple payments to multiple lenders. There are various organizations and services that provide credit counseling and debt consolidation choices.

If you decide to do it yourself, you can obtain a debt consolidation loan to pay off all of your outstanding debt, including credit card balances and other loans, and then make monthly payments on that loan. Depending on your creditworthiness, debt consolidation loans have different interest rates and terms, although they frequently have lower APRs than credit cards.

But if you're drowning in debt, it's possible that your credit score will prevent you from getting a low-interest debt consolidation loan. If so, you might want to look for a cosigner. You might not ordinarily be eligible for such a loan, but having a cosigner can be of great help in this matter. Your cosigner's credit score will determine your interest rate; thus, a higher credit score will result in a cheaper interest rate. But keep in mind that having a cosigner has disadvantages as well. Your cosigner's credit score will suffer if you are behind on your payments. 

If you can’t pay off your debt, you might want to think about declaring bankruptcy; this is typically your last option.

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Things to know while filing for bankruptcy in New Mexico

The elimination of some of your debt through bankruptcy can provide you with a fresh start, but this isn't a guarantee that all of your debt will be erased. Unless you can demonstrate hardship, student loan debt is typically not wiped in bankruptcy.

Which bankruptcy filing strategy is ideal for you depends on your income and assets. When you file for Chapter 7 bankruptcy, sometimes referred to as liquidation bankruptcy, your assets will be sold to pay off your previous debt. Based on your income level and discretionary income, you must assess if you qualify, and not everybody is eligible.

Your debts are broken down into affordable amounts through Chapter 13 bankruptcy. In contrast to Chapter 7, which liquidates your assets, Chapter 13 reorganizes your debts. As a result, you can be required to make regular monthly payments, which are then divided into smaller amounts for each creditor you still owe money to. The best candidates are those who own homes or other real estates. You might lose your property if you fail to comply with the court-ordered repayment plan in Chapter 13.

In New Mexico, Chapter 7 bankruptcy filings cost $338, while Chapter 13 bankruptcy filings cost $313. You should definitely consult a bankruptcy lawyer if you’re thinking about going ahead with this option.

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You can feel overburdened, concerned, and unsure of how you'll get out of debt if you're drowning in it. When attempting to deal with it, being aware of New Mexico's rules governing debt collection can be quite beneficial. Fortunately, there are debt consolidation and relief solutions in New Mexico explicitly designed for people struggling with debt. Consider all options before making a decision.

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