Montana Bankruptcy Exemptions and Law

Filing for bankruptcy in Montana lets debtors recover financially and get a fresh start while keeping most of their exempt assets and homestead property. Montana bankruptcy exemptions allow you to protect most of your property while paying off debts or discharging unsecured debts that are preventing you from moving forward with your life.

The bankruptcy process is governed by federal law and overseen by federal bankruptcy courts. The U.S. Bankruptcy Code allows states to enact rules to help residents shield their property from creditors. Montana has its own set of exemptions for state residents. When you file for bankruptcy in Montana, you must use these exemptions.

To file for bankruptcy in Montana, you must have resided in the state for 730 days (two years). If not, you must file under the rules of the state where you resided prior to living in Montana, or use the federal exemptions.

Before filing your bankruptcy petition, you must complete a credit counseling course. The Bankruptcy Trustee’s website has a list of approved credit counseling agencies for petitioners. You must also pay the filing fee of $338 for a Chapter 7 or $313 for a Chapter 13. You can apply to pay in installments or file a fee waiver if your income is below a certain amount.

Filing Bankruptcy in Montana

There are two basic types of consumer bankruptcy: Chapter 7 and Chapter 13. Debtors should get legal advice from a bankruptcy attorney before filing to determine which one best fits their needs.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy, or liquidation bankruptcy, is commonly filed by those who have a lot of unsecured debt but few valuable non-exempt assets. In Chapter 7, the bankruptcy trustee takes control of your non-exempt property and sells it to pay off your unsecured creditors. Any unpaid debt is discharged by court order.

To qualify for Chapter 7, debtors must pass a means test. If your annual income is below the median annual income for Montana, you automatically qualify. If not, the courts look at your debt load and monthly expenses to determine if you can reasonably pay your debts and still make your monthly living costs. This may allow you to qualify for a Chapter 7. Otherwise, you must file a Chapter 13 bankruptcy.

Chapter 13 Bankruptcy

A Chapter 13, or reorganization bankruptcy, is used by people who have assets they don’t want to lose in liquidation. It’s a popular choice for those who don’t want to lose their house for being behind on mortgage payments. Under Chapter 13, you and the bankruptcy trustee work out a three- to five-year repayment plan that lets you pay off your debts. If you stay current on the payment plan, the judge will discharge any remaining deficiencies when it’s done.

To qualify for Chapter 13, you must have a steady income and the ability to meet your monthly living expenses while making your agreed-upon payments to your creditors. If you fall behind on your payments during the bankruptcy, a judge may order you to refile as a Chapter 7.

Automatic Stay

Both types of bankruptcy begin with an automatic stay. The automatic stay freezes all debt collection activity as soon as you file your bankruptcy case and prevents any collection actions from going forward, including:

• Foreclosures and repossessions
• Eviction actions
• Wage garnishments
• Harassing phone calls, emails, and other communications

The stay will not last forever. A creditor can file a Motion for Relief from the Automatic Stay to have it lifted in some instances. It will prevent immediate action and last during the payment period of a Chapter 13 as long as you are current with your payments.

Montana Bankruptcy Exemptions

When you file for bankruptcy in Montana, you must use the exemptions provided for in state law. The values of property exemptions are updated periodically, so debtors should get legal help from a bankruptcy attorney when filing their petition.

Homestead Exemption

The Montana homestead exemption protects up to $425,828 in equity from creditors and increases by 4% each year. The exemption extends to one-quarter of a city acre, one acre outside a city, or 320 acres of farmland.

Homeowners must file for a homestead exemption before filing for bankruptcy. Homestead filing is done through the County Clerk’s office.

Personal Property Exemptions

Property exemptions are updated periodically. These reflect the maximum amount available for exemptions:

• One motor vehicle to the value of $4,000
• Personal property, such as household goods, clothing, books, jewelry, firearms, etc., to a total of $7,000
• “Tools of the trade” exemption to the value of $4,500

These values are current as of 2026. Debtors should always consult a bankruptcy attorney before filing to ensure they have the correct figures.

Filers may receive unlimited exemptions for the following:

• Life insurance
• Alimony and child support payments to the debtor
• Retirement and pension benefits
• Public assistance such as Social Security
• Sale of exempt property
• Up to 75% of weekly wages

Married couples filing jointly can double the personal property and vehicle exemptions.

Dischargeable and Non-Dischargeable Debt

A Chapter 7 bankruptcy will eliminate most of your unsecured debt, such as credit card debt, medical bills, and personal loans. It will not eliminate any secured debt. These are non-dischargeable debts, such as student loans or tax debt.

In Chapter 13, your payment plan may address some of your unsecured debts and repay many of your secured debts. For instance, if you had fallen behind on your mortgage, a Chapter 13 lets you pay less on your mortgage while you pay off your credit card bills. Once you finish the payment plan, you can resume your mortgage payments.

Get Legal Advice From a Montana Bankruptcy Attorney

Filing for bankruptcy is more complex than downloading a few bankruptcy forms and paying the fees. To ensure you get the correct number of exemptions and attend any required hearings, consider meeting with a Montana bankruptcy attorney to review your documents before filing. An attorney can help you at the meeting of creditors and make certain you have obeyed any local rules as well as state and federal requirements.