Money — 5 months ago

Montana Bankruptcy Laws

by Keren P.

Montana Bankruptcy Laws, Bankruptcy Laws Montana

Montana Bankruptcy Laws: What are the Laws Regarding Bankruptcy in the State of Montana?

Although federal bankruptcy laws apply in all 50 states in the U.S., there are slight variations in the details in each state when a debtor files for bankruptcy. Usually, exemptions on assets and property, as well as the qualifying median income are different.  

That being said, here, we will discuss the laws and other important details that are related to bankruptcies in the state of Montana.

Chapter 7 and Chapter 13 bankruptcy

When you are no longer to pay off your debts, Montana bankruptcy laws allow you to file for either Chapter 7 or Chapter 13. What are the differences between the two? How do you know which one to file under? Let’s try and answer these questions below.

For many Montana residents, Chapter 7 is a popular option. This is because your property and assets, those who are not exempt, are liquidated by the trustee so your creditors can be paid off. The trustee pays the creditors the net proceeds from the liquidation in order to clear your debts. Any amount which is exempted goes to you, the debtor, while the trustee for their services will take a commission.

It is important to note that there are some debts which Chapter 7 cannot clear, including child support, alimony, student loans, fraudulent debts, etc. These are known as nondischargeable debts.

Montana Bankruptcy Laws

Since Chapter 7 bankruptcy in Montana has a qualifying income, if your income is above this limit, then you have no choice but to file for Chapter 13. When you file for Chapter 13 bankruptcy, you will have to propose a four to a five-year repayment plan to your creditor, by which you will pay off all or part of your debt from your future income during the stipulated time. If you wish to prevent a house foreclosure, pay back taxes, make up for a missed mortgage or car payments, keep the valuable non-exempt property, or stop interest from piling up on your local, state or federal tax debt, then filing for Chapter 13 is a smart choice. 

To qualify to file for Chapter 13, a debtor needs to have a “regular source of income” in addition to having disposable income they can use for their repayment plan. Also, the total amount that the debtor pays to the creditors must be at least as much as the amount that the creditors would have received if the debtor had filed for Chapter 7.

Montana Bankruptcy Exemption

As per Montana bankruptcy law, if you file for Chapter 7 bankruptcy, all or a portion of your property is protected from being seized by the trustee or the creditor. And if you file for Chapter 13 bankruptcy, there is a good chance you will be allowed to keep most of your assets and properties.

Bankruptcy Laws Montana

Montana bankruptcy laws allow exemptions on certain assets, meaning that those assets which are exempted cannot be taken away from you by the trustee or your creditor. Exceptions for Montana bankruptcy include up to up to one motor vehicle that has a value of no more than $2,500 and $100,000 of equity in your homestead. Coming to other property, a total of $4,500 of equity is exempted. However, any one item under it should not exceed $600, including appliances, books, furnishings and goods, clothes, sporting goods, firearms, musical instruments, animals, feed and crops. Additionally, no more than $3,000 of equity in any professional books, implements, and tools of the trade are also exempted.

You should also remember that Montana is not a community property state. This means that you will not be held responsible for any debt your spouse may have, until and unless you voluntarily claim those debts.


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