Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Montana (MT), bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to keep certain property from being sold to pay off creditors. The homestead exemption is particularly important for homeowners, as it protects a portion of the equity in their home. As of the knowledge cutoff in 2023, Montana's homestead exemption allows an individual to exempt up to $250,000 of their home's equity. This means that if the equity in the home is less than this amount, it is generally protected from being seized in bankruptcy. It's important to note that to claim the full amount of the homestead exemption, the individual must have occupied the home for at least 24 months prior to filing for bankruptcy. Other exemptions in Montana cover personal property such as clothing, jewelry, tools of the trade, and certain benefits like unemployment and veterans' benefits. The specific exemptions and amounts are subject to change, so it is advisable to consult with an attorney for the most current information and guidance tailored to individual circumstances.