New Mexico Debt Collection Laws: The 75%-or-40x Garnishment Floor and the Medical Debt Bar

No collector can touch a New Mexico paycheck without first suing, winning a judgment, and getting a writ of garnishment from the court. Most New Mexico garnishments start with a default judgment entered because nobody answered the lawsuit, which makes answering it, even briefly, the single most valuable move available. Once a creditor does have a judgment, New Mexico's garnishment formula is unusually protective, and its patient-debt law goes further than almost any other state's.

New Mexico's Garnishment Formula: Whichever Protects You More

New Mexico's garnishment rule, printed on the official court form used in every wage-garnishment case, works backward from most states. Instead of setting one cap, it tells the garnishee (your employer) to pay YOU whichever amount is greater: 75% of your disposable earnings for the pay period, or 40 times the highest applicable minimum hourly wage rate at the place you work, calculated weekly. The creditor can only reach whatever residual amount is left after that comparison, so the more protective number always wins.

The «highest applicable» language matters. A 2023 amendment replaced the old reference to the federal minimum wage with a comparison across federal, state, and local minimum wage rates, whichever is highest. New Mexico cities including Albuquerque, Santa Fe, and Las Cruces have set local minimum wages above the state rate, so a worker in one of those cities gets a higher 40x floor than the state minimum alone would produce. The amendment applies to garnishment actions filed on or after July 1, 2023.

This single formula governs both tracks of New Mexico court: Magistrate Court cases and Metropolitan or District Court cases use the identical rule, so there is no separate, weaker standard depending on which court a creditor chooses.

There is no separate head-of-household percentage in New Mexico garnishment law; the 75%/40x formula applies the same way to every debtor regardless of family size, and it is already more protective than the federal 25%/30x baseline used in most states.

State Tax Garnishment: Correcting a Common Claim

A figure claiming New Mexico allows garnishment of 70% for unpaid state taxes circulates online. It does not hold up against the primary source. The official New Mexico garnishment form treats a prior demand warrant for unpaid taxes as simply PAID FIRST in priority, under the same 75%/40x formula used for every other garnishment, not as a separate and much higher percentage. Until a New Mexico statute or Taxation and Revenue Department rule states otherwise in writing, do not rely on the 70% figure.

Bank Accounts and Other Property

New Mexico's non-wage exemptions are set by NMSA 1978 Section 42-10-1. They include $75,000 in household goods and furnishings, $15,000 in tools of the trade, $10,000 in motor vehicles, and up to $5,000 in jewelry beyond a wedding band and engagement ring. Everything not otherwise specified falls into a single catch-all: a person's aggregate interest of up to $15,000 in any other personal property, tangible or intangible. Homestead equity up to $150,000 is exempt, or, if you do not own a home, an additional $15,000 of any type of property instead.

Bank accounts sit inside that $15,000 catch-all rather than beside it, and this is the point most summaries get wrong. For an individual or sole proprietor defending any action other than a bankruptcy, Section 42-10-1(A)(14) caps the cumulative amount claimable as exempt in a depository or investment account at $2,400. That $2,400 is a sub-limit on one slice of the general personal property exemption, not a second, separate $2,400 exemption for other personal property.

Read alone, the $2,400 also badly understates what a real account holds, because the statute does not stop there. The same paragraph sets the account cap at $2,400 «plus any money derived from the sources set forth in Paragraphs (6) through (11)» of that subsection: Social Security, veterans' benefits, disability, illness, unemployment and workers' compensation benefits, public assistance such as Medicaid, Medicare and food stamps, alimony and family support, qualifying pension and retirement distributions, refundable federal and state tax credits, exempt wages, stimulus payments, and interests in or proceeds from pensions, IRAs, annuities, profit-sharing plans and other retirement accounts. Separately, Section 35-12-7(D) provides that amounts exempt as wages «shall retain their exempt status when deposited into a personal bank account, provided that they are reasonably traceable.» An account holding nothing but a traceable paycheck or direct-deposited Social Security is protected well beyond $2,400.

None of this is automatic. To assert any of it you must file a Claim of Exemptions with the court, and filing early is still the right move. But the ten-day figure that circulates in summaries of New Mexico law runs the opposite direction from how it is usually reported. Section 42-10-13(A) provides that the time to file a claim of exemption «shall not be less than ten days after the filing of a writ of execution as set forth in New Mexico Rule of Civil Procedure 1-065.1.» Ten days is a statutory floor measured from the writ, a minimum window the court cannot shorten, not a cutoff tied to the levy notice that destroys your exemptions on day eleven. Section 42-10-13(B) adds a duty the creditor owes you: it must provide notice of the right to claim an exemption, or a form for claiming one, containing a complete list of the exemptions provided by law. If no such notice arrived, or it left exemptions out, raise that when you file.

Medical Debt: The Indigent-Patient Bar

New Mexico's Patients' Debt Collection Protection Act is one of the strongest medical-debt laws in the country. For any patient whose household income is at or below 200% of the federal poverty level, defined by the statute as «indigent,» the Act bars every collection avenue at once: no lawsuit, no lien, no garnishment, and no sale of the debt to a third-party collector. If you are being pursued for a hospital or medical bill in New Mexico and your income falls in that range, this law may stop the collection effort entirely, not just cap what can be taken.

Statute of Limitations and Revival

New Mexico gives written contracts 6 years to sue, under NMSA 1978 Section 37-1-3, and unwritten contracts and open accounts 4 years, under Section 37-1-4. Whether a credit card debt counts as a written contract (6 years) or an open account (4 years) depends on whether the creditor produces a signed cardholder agreement, and current New Mexico authority on that split is thin; do not assume either period applies to a card debt without checking how the claim is actually pleaded.

New Mexico is a payment-revival state, and notably a generous one for creditors. Official regulations implementing the state's Unfair Practices Act require debt collectors to disclose that a time-barred New Mexico debt can be revived by any payment on the debt, by a signed admission that the debt is owed, or by a signed new promise to pay. Unlike some states, a bare payment with no writing at all is enough on its own. Anyone considering paying anything toward an old New Mexico debt should confirm how old it actually is first, because a partial payment can hand the collector a fresh 4 or 6 year window to sue.

An expired limitation period does not erase the debt. A collector may still ask for payment; the account can also remain on a credit report for up to 7 years on its own separate clock. What a collector may not do is sue or threaten to sue on a time-barred debt, which federal Regulation F prohibits outright.

Repossession in New Mexico

New Mexico follows the standard rule for secured debt: after default, a lender with a security interest in a vehicle may repossess it without a court order, as long as it proceeds without a breach of the peace. New Mexico's Motor Vehicle Sales Finance Act may impose additional procedural duties tied to certain finance-charge violations, but we could not confirm a general pre-repossession notice or right-to-cure requirement for ordinary auto loans this session, so do not count on advance warning. After repossession, a commercially unreasonable sale can undercut a lender's right to pursue you for the deficiency, the gap between what the car sold for and what was owed. A servicemember whose loan predates military service cannot be repossessed without a court order under federal law.

If You Are Being Garnished or Sued in New Mexico

Answer the summons before the deadline; a default judgment forfeits every defense, including the statute of limitations. If a garnishment notice arrives, run both sides of the 75%/40x comparison to confirm the larger protection is being applied. If the debt is medical and your household income is modest, check the 200% federal poverty level threshold before assuming collection can proceed at all. File a Claim of Exemptions as soon as you learn of a bank levy or property seizure, since New Mexico's protections are not automatic, and remember that the ten days in Section 42-10-13 is a minimum window you must be given after a writ of execution is filed rather than a deadline that erases your exemptions. Do not pay anything on an old debt before dating the clock, because even a bare payment can restart it. And when judgments have stacked past what a budget can absorb, bankruptcy's automatic stay halts garnishment while the case is pending; the guide to stopping wage garnishment walks through the options in order.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

• Debt Collection Laws by State
• Statute of Limitations on Debt
• How to Stop Wage Garnishment
• Car Repossession Laws
• New Mexico Statute of Limitations
• New Mexico Bankruptcy

---

Last updated: 2026-08-12.

More New Mexico Laws

• New Mexico Final Paycheck Laws
• New Mexico Statute of Limitations
• New Mexico Unclaimed Property