New Mexico Debt Collection Laws: Rights, Disputes, and Garnishment

New Mexico’s debt collection laws combine the federal Fair Debt Collection Practices Act with the state Collection Agency Regulatory Act, and together they control when a collector can call you, what they must tell you about the debt, how much of your paycheck and property is off-limits, and what you can do if a collector crosses the line. New Mexico also has unusually strong protections in two areas: generous property exemptions, and a 2021 law that shields low-income patients from medical debt collection entirely.

The FDCPA covers third-party debt collectors, not the original creditor collecting its own account.¹²³

What Collectors Are Not Allowed to Do

Federal law draws hard lines around collector conduct. A collector cannot use threats of violence, obscene language, or repeated calls meant to annoy or harass. They cannot publish your name on a “deadbeat list” or advertise the debt for sale to pressure you into paying.⁴

They also cannot lie to you. That includes falsely claiming to be an attorney, a government agent, or a credit bureau; misstating the amount you owe; threatening arrest, wage garnishment, or other legal action they do not actually intend to pursue; or suggesting that not paying a bill is a crime.¹

Your debt is your business. A collector generally cannot discuss it with anyone but you, your spouse, your attorney, or the original creditor. They can contact a third party only to find you, and even then they cannot reveal that the call is about a debt.⁵

New Mexico’s administrative code echoes and extends the federal rule. Licensed agencies “shall not threaten, coerce, infer consequences or effects in which there is no truth in substance, simulate legal process, use innuendoes or misleading phraseology, or engage in unethical or unfair practices.”³

When They Can Call

Collectors cannot contact you before 8:00 a.m. or after 9:00 p.m. in your local time zone without your prior consent. They also cannot call you at work if they know your employer prohibits it.⁵

If you hire a lawyer, the collector must go through your lawyer once they know who it is. A collector who keeps calling you directly after learning you have counsel is violating federal law.⁵

Your 30-Day Right to Dispute the Debt

Within five days of first contacting you, a debt collector must send a written validation notice that includes five things: the amount of the debt, the name of the creditor, a statement that the debt will be assumed valid unless you dispute it within 30 days, a statement that the collector will send verification if you dispute in writing within that window, and a statement that you can request the name of the original creditor if it differs from the current one.⁶

The 30-day window is the most important consumer tool in the FDCPA, and it is easy to miss. Send a written dispute inside those 30 days and the collector must stop all collection activity on the disputed amount until they mail you verification or a copy of a court judgment. Nothing the collector does during that period can overshadow or contradict your right to dispute.⁶ The CFPB’s Regulation F, effective in 2021, spelled out the format for these notices and separately banned suing or threatening to sue on time-barred debts.⁷

How to Make the Contact Stop

You can end communication entirely. Send the collector a written letter stating that you refuse to pay the debt or that you want them to stop contacting you. Once they receive it, they can only reach out for three narrow reasons: to confirm collection efforts are ending, to notify you that they or the creditor may pursue a specific legal remedy, or to tell you they intend to pursue that remedy.⁵

Stopping contact does not erase the debt. The collector can still sue you or report the account to credit bureaus. But the calls and letters stop. Send the letter by certified mail so you have proof of receipt.

How Long a Debt Can Be Collected in Court

Every debt has a deadline for lawsuits. In New Mexico, it depends on the kind of agreement behind the debt:

Written contracts: six years from the date payment was due. This covers most loans, mortgages, and agreements signed by both parties.⁸
Oral contracts and open accounts: four years. Credit card debts usually fall here because they run on revolving account terms rather than a single written promise to pay a fixed sum.⁹

Once the limitations period runs, the debt is “time-barred.” A collector can still ask you to pay, but they cannot sue, and suing or threatening to sue on a time-barred debt violates Regulation F.⁷ Be careful about making a partial payment on an old debt. In some situations a fresh payment can restart the clock.

What They Can Take if They Sue You

A lawsuit that ends in a judgment lets a creditor try to reach your paycheck and property, but New Mexico protects a substantial amount of both.

Wage Garnishment

For most debts, the amount exempt from garnishment is the greater of 75% of your disposable earnings for the pay period, or an amount equal to 40 times the highest applicable minimum wage where you work.¹⁰ Put the other way, a creditor can garnish whichever is less: 25% of your disposable pay, or the amount by which your weekly disposable pay exceeds 40 times the applicable minimum wage. Disposable earnings are your take-home pay after legally required deductions like taxes and Social Security.

“Highest applicable minimum wage” means whichever minimum wage governs your workplace: federal, state, or local. Several New Mexico cities, including Albuquerque, Santa Fe, and Las Cruces, have local minimum wages higher than the state rate, so workers there keep more of their paycheck protected. Child support garnishments follow a different rule: only 50% of disposable earnings is exempt, letting creditors reach a larger share.¹⁰

Property You Get to Keep

New Mexico shields core personal property from judgment creditors, bankruptcy trustees, and garnishment:

Homestead: up to $150,000 in equity in your primary residence. If your spouse died within the previous two years, that doubles to $300,000.¹¹
Household goods and furnishings: up to $75,000 in total value.¹²
Motor vehicles: up to $10,000 in value.¹²
Tools of your trade: up to $15,000 in tools, equipment, professional books, instruments, inventory, and supplies reasonably necessary for your work.¹²
Jewelry: wedding bands and engagement rings are fully exempt. Additional jewelry is exempt up to $5,000.¹²
Other personal property: up to $15,000 in anything not covered by another category.¹²

Some income cannot be touched at all, no matter the amount. Social Security, veterans’ benefits, disability and unemployment compensation, workers’ compensation, public assistance, and federal stimulus payments are all off-limits. Retirement accounts that qualify under the Internal Revenue Code, including 401(k) plans, IRAs, 403(b) plans, and 529 education savings accounts, are fully protected.¹²

Medical Debt: Extra Protection for Low-Income Patients

New Mexico’s Patients’ Debt Collection Protection Act (Senate Bill 71), enacted in 2021, gives low-income patients some of the strongest medical debt protections in the country. The law reaches patients whose household income is at or below 200% of the federal poverty level.¹³¹⁴

For an “indigent patient” who qualifies, medical creditors, debt buyers, and collectors cannot pursue any collection action. No lawsuits, no wage garnishment, no property liens, no seizures. They also cannot sell the patient’s medical debt to a third-party collector. Before pursuing collection at all, a medical creditor has to determine whether the patient qualifies using the federal poverty guidelines together with household income and size. Hospitals and other health care facilities must also screen patients, on request, for public insurance, assistance programs, and any financial assistance the facility itself offers.¹³

Interest on a Judgment

Once a creditor gets a judgment, interest begins accruing from the date of entry. The standard rate in New Mexico is 8.75% per year. If the underlying agreement specifies a different rate, the court applies that contractual rate instead. Judgments based on bad faith or intentional wrongdoing carry a 15% rate. A court also has discretion to award prejudgment interest of up to 10% from the date the complaint was served, weighing whether either side caused unreasonable delays and whether the defendant made a reasonable settlement offer.¹⁵

Penalties and How to Complain

Operating as a collection agency in New Mexico without the required license is a fourth-degree felony. Other violations of the Collection Agency Regulatory Act are misdemeanors, and the Financial Institutions Division can revoke or suspend a license for any violation of the Act or its regulations.³

On the federal side, the FDCPA lets you sue a collector for your actual damages, such as lost wages or emotional distress, plus statutory damages of up to $1,000 per lawsuit. That $1,000 cap is per lawsuit, not per violation, so multiple violations in the same case still max out there. In a class action, statutory damages can reach the lesser of $500,000 or 1% of the collector’s net worth. A court must award reasonable attorney’s fees and costs to a consumer who wins.¹⁶ The fee-shifting rule is why lawyers will sometimes take FDCPA cases on contingency even when the dollar damages are modest.

Two complaint routes are open to you. At the state level, the New Mexico Financial Institutions Division investigates complaints against licensed collection agencies through the Regulation and Licensing Department. At the federal level, the Consumer Financial Protection Bureau handles FDCPA complaints and can pursue enforcement against collectors.

Whichever route you use, document everything before you file. Save voicemails, screenshot texts, and keep every letter. Note dates, times, and what was said in each call. The strength of your evidence often decides whether an administrative complaint or a lawsuit is worth pursuing.

1
Office of the Law Revision Counsel. 15 USC 1692e – False or Misleading Representations
2
Justia. New Mexico Code 61-18A-5 – Unlawful to Conduct Business Without License
3
New Mexico State Records Center and Archives. 12.24.2 NMAC – Collection Agency Regulatory Act
4
Office of the Law Revision Counsel. 15 USC 1692d – Harassment or Abuse
5
Office of the Law Revision Counsel. 15 USC 1692c – Communication in Connection With Debt Collection
6
Office of the Law Revision Counsel. 15 USC 1692g – Validation of Debts
7
Consumer Financial Protection Bureau. Debt Collection Rule (Regulation F)
8
Justia. New Mexico Code 37-1-3 – Six-Year Limitation
9
Justia. New Mexico Code 37-1-4 – Accounts and Unwritten Contracts; Four-Year Limitation
10
FindLaw. New Mexico Statutes 35-12-7 – Garnishment Exemptions
11
FindLaw. New Mexico Statutes 42-10-9 – Homestead Exemption Amount
12
Justia. New Mexico Code 42-10-1 – Exemptions
13
New Mexico State Records Center and Archives. 13.10.29 NMAC – Patients’ Debt Collection Protection Act Emergency Rule
14
New Mexico Legislature. Senate Bill 71 – Patients’ Debt Collection Protection Act
15
FindLaw. New Mexico Statutes 56-8-4 – Interest on Judgments and Decrees
16
Office of the Law Revision Counsel. 15 USC 1692k – Civil Liability