If you file for Chapter 7 bankruptcy in Montana, you can protect some or all of your property with Montana’s bankruptcy exemptions. The bankruptcy exemptions in Montana also play a role in Chapter 13 bankruptcy. Read on to learn about what property is covered by Montana’s bankruptcy exemptions.
For a general overview of bankruptcy exemptions, how they work, and which ones you can use, visit the Bankruptcy Exemption topic page.
Montana Requires Debtors to Use State Exemptions
Montana has opted out of the federal exemption scheme, meaning you are not permitted to use the federal bankruptcy exemptions when you file a bankruptcy in Montana. If you file for bankruptcy in Montana, you may only exempt property using the Montana exemptions.
Although you can’t use the federal exemptions in Montana, you may use any of the applicable federal non-bankruptcy exemptions. The federal non-bankruptcy exemptions protect property such as federal retirement accounts and veterans’ benefits.
Married Couples May Double Montana Exemptions
Married couples filing a joint bankruptcy in Montana may double the exemption amount. This means that each spouse may claim the full exemption amount for any property in which the spouse has ownership interest. For example, if both spouses own a car and they file jointly, they can double the amount of their personal property exemption in order to protect the car’s value.
Montana’s Exemptions Apply Only In Bankruptcy
Montana is one of a few states in which the exemption scheme applies only in bankruptcy, meaning you can’t use the exemptions to protect your property in proceedings outside of bankruptcy. Some courts have held that bankruptcy-only exemption schemes are unconstitutional, while others have determined that debtors may use these exemptions.
Common Montana Exemptions
Below are some of the most common exemptions available under Montana law. Unless otherwise noted, all references are to the Montana Code Annotated.
Homestead or Residential Property
The homestead exemption protects equity in your home. In Montana, you can exempt up to $250,000 of equity in the real estate or mobile home in which you live. You may also protect proceeds from insurance, condemnation, or the sale of the home in which you lived for 18 months. You are required to file a homestead declaration before filing bankruptcy in order to protect your home. Mont. Code Ann. §70-32-104, 201, 213
For more details about how the homestead exemption works in Montana, see The Montana Homestead Exemption.
Life insurance proceeds if the contract language prohibits the proceeds from bring used to pay the beneficiary’s creditors. Mont. Code Ann. §33-20-120
Medical, surgical, or hospital care benefits. Mont. Code Ann. §25-13-608
Group life insurance policy and proceeds. Mont. Code Ann. §33-15-512
Hail insurance benefits. Mont. Code Ann. §80-2-245
Fraternal group society benefits. Mont. Code Ann. §33-7-522
Unmatured life insurance contracts that you own. Mont. Code Ann. §25-13-608
Annuity contracts up to $350 per months. Mont. Code Ann. §33-15-514
In Montana, you can protect up to $2,500 of equity in one motor vehicle. Mont. Code Ann. §25-13-609
To learn more about how to exempt your motor vehicle under Montana law, visit The Montana Motor Vehicle Exemption in Bankruptcy.
Furniture, appliances, animals, feed, and crops, musical instruments, books, firearms, sporting goods, jewelry, and clothing, up to $600 per item and $4,500 total. Mont. Code Ann. §25-13-609
Health aids and a burial plot. Mont. Code Ann. §25-13-608
Cooperative association shares. Mont. Code Ann. §35-15-404
Proceeds from insurance or the sale of exempt property for six months after receipt, if traceable to the exempt property. Mont. Code Ann. §25-13-610
Alimony and child support. Mont. Code Ann. §25-13-608
Pension, Retirement, and Life Insurance Benefits
Public employee retirement benefits. Mont. Code Ann. §19-2-1004, §25-13-608
ERISA qualified benefits deposited more than one year before filing bankruptcy, or up to 15% of your gross annual income. Mont. Code Ann. §31-2-106
Firefighters’ retirement benefits. Mont. Code Ann. §19-18-612
Police officers’ retirement benefits. Mont. Code Ann. §19-19-504
IRA contributions made prior to judgment being filed. Mont. Code Ann. §25-13-608
Teachers’ retirement benefits. Mont. Code Ann. §19-20-706, Mont. Code Ann. §25-13-608
University system employees’ retirement benefits. Mont. Code Ann. §19-21-212
Local public assistance. Mont. Code Ann. §25-13-608
Unemployment compensation. Mont. Code Ann. §31-2-106, Mont. Code Ann. §39-51-3105
Veterans’ benefits. Mont. Code Ann. §25-13-608
Vocational rehabilitation to blind needy persons. Mont. Code Ann. §53-2-607
Silicosis benefits. Mont. Code Ann. §39-73-110
Crime victims’ compensation. Mont. Code Ann. §53-9-129
Aid to aged, disabled, needy persons. Mont. Code Ann. §53-2-607
Tools of the Trade
Tools and implements of your trade up to $3,000. Mont. Code Ann. §25-13-609
Military uniforms and arms. Mont. Code Ann. §25-13-613
Confirming Montana’s Bankruptcy Exemptions
Montana’s exemption amounts are adjusted periodically. To make sure you have the most recent figures, be sure to check for any updates at the official website of the State Law Library of Montana at http://courts.mt.gov/library/default.mcpx.