Estate Insolvency Debt Prioritization

If the assets don't cover all of the estate, the estate is considered insolvent. In New Mexico, the following generally happens:
- Priority is given to certain debts, e.g., funeral expenses, administration costs, taxes, and secured debts.
- Remaining debts may be paid proportionally from the remaining assets.
- Unpaid debts may be discharged.
Do you need more detailed information about the debt prioritization in this scenario?

In New Mexico, the priority of debt payment in an insolvent estate is as follows:
- Funeral expenses
- Costs and expenses of administration
- Debts and taxes with preference, under federal or state law
- Reasonable and necessary medical and hospital expenses of the decedent's last illness
- Debts incurred or assessed for the estate's benefit
- All other claims
Do you need help understanding any specific priority or category?

If the assets aren't enough to cover the mortgage, the mortgage lender typically has a secured interest in the property. They may foreclose on the property to recover the owed amount. If there's still a shortfall after foreclosure, it may be classified as an unsecured debt and be discharged.
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If the mortgage lender forecloses on the property and there is still a remaining balance, the following steps usually occur in New Mexico:
- The lender may file a deficiency judgment to recover the remaining amount.
- The deficiency judgment becomes an unsecured debt.
- This debt is then handled as part of the insolvent estate.
Would you like more details about deficiency judgments or the foreclosure process?