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Bankruptcy: Montana

Filing bankruptcy in Montana not only gives honest debtors an opportunity to recover from debt, but also repays creditors to the extent that a debtor’s property value or earnings permit. 2,949 bankruptcies were filed in Montana in 2010, ranking Montana 41st in the country for the number of bankruptcy filings per capita. 85% of Montana’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Montana

Federal law governs bankruptcy proceedings in Montana, and as such all bankruptcy cases are filed in the US Bankruptcy Courts located in:

  • Montana Eastern District Court: Cape Girardeau, Hannibal, St. Louis
  • Montana Western District Court: Jefferson City, Joplin, Kansas City, Springfield, St. Joseph

Although the federal courts have exclusive jurisdiction over bankruptcy proceedings, Montana law excludes petitioners from using the exemptions listed in the U.S. bankruptcy code in favor of the exemptions provided under Montana law. With the guidance of a bankruptcy attorney Montana petitioners can gain a full understanding of what personal property they are permitted to keep in bankruptcy and what must be sold.

Chapter 7 Bankruptcy, Montana

Chapter 7 bankruptcies in Montana are the most common bankruptcy petition filed.  Chapter 7 is suitable for petitioners who do not possess major assets such as investments or much equity in a home, for the reason that a Bankruptcy Trustee may liquidate personal property that is not protected by Montana’s bankruptcy exemptions. Liquidation occurs when a court-appointed Trustee converts personal assets to cash to distribute among creditors. Montana’s Chapter 7 bankruptcy law allows petitioners to keep some essential property and the exempt assets are unavailable to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Montana Bankruptcy Exemptions

Montana bankruptcy law assigns defined property exemptions permitting debtors to keep specific personal property and assets so bankruptcy proceedings do not leave them financially ruined.  In real terms, this means creditors cannot force debtors to sell the shirt off their back to settle outstanding debts.  Bankruptcy in Montana lets petitioners choose exemptions from the state list, exclusively.

Due to changing exemption values, individuals or couples entering bankruptcy proceedings should first visit a Montana bankruptcy attorney to learn which exemptions are applicable to their current financial situation.  Montana bankruptcy exemptions include:

Montana Homestead Exemption

  • Must record homestead declaration before filing for bankruptcy
  • $250,000 total: Real property or mobile home you occupy; sale, condemnation, or insurance proceeds exempt for 18 months

Montana Personal Property Exemption

  • $4,500 total: Appliances, household furnishings, goods, animals with feed, crops, musical instruments, books, firearms, sporting goods, clothing and jewelry to $600 per item
  • $2,500 total: Motor vehicle
  • Health aids
  • Proceeds from sale or for damage or loss of exempt property for 6 mos. after received
  • $500 total: Burial plot Cooperative association shares

Montana Tools of the Trade Exemption

  • $3,000 total: Implements, books and tools of trade
  • Uniforms, arms and accoutrements needed to carry out government functions

Montana Wage Garnishment Exemption

  • 75% of earned but unpaid weekly disposable earnings, or 30 times the federal hourly minimum wage, whichever is greater (Low-income debtors may be authorized for more)

Montana Public Benefits Exemption

  • Local public assistance, Social Security and aid to aged, disabled needy persons
  • Vocational rehabilitation to blind needy persons
  • Workers’ and Unemployment compensation
  • Silicosis benefits
  • Subsidized adoption payments to needy persons
  • Veterans’ benefits
  • Crime victims’ compensation

Montana Insurance Exemption

  • Disability or illness proceeds, avails, or benefits
  • Medical, surgical, or hospital care benefits
  • $350 per month: Annuity contract proceeds
  • Fraternal benefit society benefits
  • Hail insurance benefits
  • Group life insurance policy or proceeds
  • Un-matured life insurance contracts
  • Debtor’s interest in any un-matured life insurance contracts owned by the debtor
  • Life insurance proceeds if clause prohibits proceeds from being used to pay beneficiary’s creditors

Montana Pensions and Retirement Savings Exemption

  • Firefighters, Police officers, and Public employees
  • Teachers and University system employees
  • ERISA-qualified benefits deposited over 1 year prior to filing bankruptcy or up to 15% of debtor’s gross annual income
  • IRA contributions and earnings made before judgment filed

Montana Miscellaneous Exemption

  • Alimony, child support

Chapter 13 Bankruptcy, Montana

In 2010, 15% of petitioners filed Chapter 13 bankruptcy in Montana.  Seeking protection under Chapter 13 bankruptcy in Montana brings in a court-appointed Trustee to reorganize the petitioner’s finances and implement a 3-5 year repayment plan, using the debtor’s future earnings to repay creditors.  Chapter 13 petitioners in Montana keep most – or all – of their property.

How to File Bankruptcy in Montana

Whether a debtor qualifies for key property exemptions should be a major deciding factor when considering bankruptcy protection as a solution for one’s financial problems. The most favorable outcome consists of having major assets protected and major debts discharged. A Montana bankruptcy attorney can help explain the rules for exemptions and advise the benefits and realities of Chapter 7 and Chapter 13 bankruptcy.

Bankruptcy Attorney: Montana

Filing for bankruptcy protection can be a complicated and worrying process.  A Montana bankruptcy attorney can advise petitioners what bankruptcy options are appropriate for their circumstances and help guide them through the bankruptcy exemption process.