CHAPTER 13

In a Chapter 13 bankruptcy, you repay your debts using your disposable income. The exemptions you claim, in part, determine how much you must pay the trustee over the 3-5 year plan. If all of your assets are exempt, then you do not need to pay their value into your Chapter 13 plan.

For example, if you own a vehicle with a $10,000 value, then you will need to pay $6,000 into your plan over the repayment period. This happens because only $4,000 of the vehicle is exempt; meaning, you have $6,000 of non-exempt equity in the vehicle to be repaid.

Montana Bankruptcy Exemptions

When you file bankruptcy, many of your assets may be protected because of various State and/or Federal Exemptions. These exemptions apply statewide - Helena, Butte, Anaconda, Deer Lodge, Great Falls, or anywhere. In a Chapter 7 bankruptcy, exempt assets are protected from sale by the trustee, and in a Chapter 13 bankruptcy, you do not need to include the value of the exempt assets in your plan payments. The following assets are a few of Montana’s most common exemptions:

  • Homestead up to a value of $350,000. This includes both traditional and mobile homes if a homestead exemption is filed.

  • Medical savings accounts.

  • Social Security benefits.

  • Local public assistance benefits.

  • Veterans benefits.

  • Disability benefits.

  • Most retirement accounts.

  • Alimony and child support.

  • 75% of wages.

  • Personal property up to $7,000, no item worth more than $1,250.

  • Motor vehicle up to $4,000 in equity.

  • Tools of the trade up to $4,500.

This list is not exhaustive. Contact our bankruptcy attorneys to help you determine whether your assets are exempt.

CHAPTER 7

In a Chapter 7 bankruptcy, the trustee looks to liquidate your assets to the extent they are not exempt. By claiming exemptions in your petition, you may avoid having to sell, or repurchase your assets. If all of your assets are exempt, you have a no asset bankruptcy, and the trustee will not be entitled to recover any funds from you.

If you have non-exempt assets, you will have to either buy the asset back based on the non-exempt portion of the value, or let the trustee sell it and give you the exempt amount. For example, if your car is worth $10,000, you have $6,000 of non-exempt value. You can either pay the trustee $6,000 or the trustee can sell it and give you $4,000.