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Exemptions in Bankruptcy

Filing a bankruptcy does not mean you will lose all your property. Exemptions are provided to every person who files a bankruptcy, which allows the filer to keep the property that  property. In order to take full advantage of the exemptions available to you, you should contact an attorney well versed in pre-bankruptcy planning and has a firm understanding of the exemptions available to you.

There are several exemptions common to filers in Montana, but these exemptions are but a few of the exemptions available to a person filing a bankruptcy.

I. Homestead Exemption

The homestead exemption applies to property used as your residence, and is applied very liberally in Montana. This exemption exempts $250,000.00 of equity in your residence. Equity is the difference between the amount you owe and the value of your residence. For example, if you owe $100,000.00 to the bank and your residence is valued at $200,000.00, you have $100,000.00 of equity in your residence.

You must remember the exemption only exempts the equity in your residence, it does not stop the you from having to continue payments on the house.  You are required to continue making payments on your mortgage, and the failure to do so will result in the creditor seeking a foreclosure.

II. Automobile Exemptions

The automobile exemption exempts $2,500.00  of equity per person for one automobile. If the vehicle is jointly owned by a husband and wife filing a bankruptcy together, both exemptions can be applied to that vehicle for a $5,000.00 exemption.

III. Household Goods and Furnishings

The household exemptions exempts $4,500.00 in household goods and furnishings, as long as any individual asset does not exceed $600.00 in value at garage sale / auction sale prices.

IV. Retirement Assets

Retirement funds are exempt. This protection is important, as your retirement account balances are probably among the most substantial assets you have.

Exemptions are very important. Knowing what may or may not be exempt may make you change your mind about filing for bankruptcy, and will certainly impact your lifestyle after the bankruptcy is over. Be sure to discuss your exemptions in detail with your attorney.


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