Bankruptcy in Montana (2026): Exemptions & Means Test

Filing bankruptcy in Montana means following one set of property rules: Montana has opted out of the federal bankruptcy exemptions, so filers must use Montana's own exemption statutes in the Montana Code Annotated. Bankruptcy itself is federal, but the exemptions that decide what you keep, and the means-test income that decides which chapter you can use, are state-specific. Montana's homestead is one of the more generous in the country and is adjusted for inflation each year, so the figures below are current as of mid-2026, and you should confirm the latest amounts before relying on them.

This page is general legal information, not legal advice. It is part of our Bankruptcy by State series.

Does Montana use state or federal bankruptcy exemptions?

Montana has opted out of the federal exemption system. Under MCA 31-2-106, an individual may not exempt in any bankruptcy proceeding the property specified in 11 U.S.C. 522(d). In plain terms, a debtor domiciled in Montana must use the state exemptions found in the Montana Code Annotated, primarily Title 70 for the homestead and Title 25, Chapter 13 for personal property. The menu of federal bankruptcy exemptions is not available here. About two-thirds of states have opted out in this way.

Even though the federal exemption schedule is off the table, a Montana filer may still claim the federal nonbankruptcy exemptions preserved by 11 U.S.C. 522(b)(3). Those include things like Social Security benefits, certain veterans' and federal-employee benefits, and tax-exempt retirement accounts. Married couples filing jointly can generally each claim a full set of the Montana exemptions, which often doubles the protected amounts.

Montana homestead exemption

Montana's homestead exemption is the headline protection for homeowners, and unlike many states it is large and indexed for inflation. Under MCA 70-32-104, the homestead value limit was $350,000 in 2021 and increases by 4 percent each calendar year after 2021, with the Montana Department of Revenue setting the figure by administrative rule. For 2026 the limit is $425,827. It was $409,450 in 2025, and it rises another 4 percent for 2027, with the exact dollar figure set by Department of Revenue rule. Because the limit moves every year, confirm the current figure with the Department of Revenue before filing.

Montana also differs from most states in how the protection is claimed. To secure the full homestead exemption, an owner generally must record a homestead declaration with the county clerk and recorder under MCA 70-32-105 and following. The exemption protects equity up to the current limit, so the value is measured after subtracting mortgages and other liens.

Homestead protection covers equity, not the full value of the home. Even with Montana's high limit, a residence worth far more than the mortgage plus the exemption can leave non-exempt equity that a Chapter 7 trustee may reach, which is one reason homeowners with substantial equity sometimes look at Chapter 13 instead.

Vehicle, wildcard, and personal-property exemptions

Montana's personal-property exemptions are set mainly in MCA 25-13-609 and related sections. A debtor may exempt:

• The debtor's interest in one motor vehicle, up to $4,000 in value.
• Household furnishings, goods, appliances, jewelry, wearing apparel, books, firearms, animals, feed, and musical instruments, up to $7,000 in aggregate value, with no single item exceeding $1,250.
• Implements, professional books, and tools of the trade, up to $4,500.
• Health aids and certain other categories.

Montana does not provide a broad general-purpose wildcard exemption the way some states do, so filers should fit their property within the specific categories above. Wages are protected as well: under MCA 25-13-614 and the federal wage-garnishment rules it incorporates, at least 75 percent of disposable earnings is generally exempt from execution. Tax-qualified retirement accounts are protected under separate Montana exemptions and federal law.

The Chapter 7 means test in Montana

The means test screens who can file Chapter 7. The first step compares your household's current monthly income, annualized, to the median family income for a Montana household of the same size. If your income is at or below the Montana median, you generally pass and may proceed with Chapter 7. If it is above the median, you complete the longer calculation that subtracts allowed expenses to see whether you have disposable income that should fund a Chapter 13 plan instead.

The U.S. Trustee Program publishes the median figures and updates them periodically. For cases filed on or after July 15, 2026, the Montana median family income is:

Add $11,100 for each additional person beyond four. These figures apply only to cases filed on or after July 15, 2026. The U.S. Trustee Program revises the median income data roughly twice a year, so confirm the current numbers for your filing date.

Chapter 7 vs. Chapter 13 in Montana

Chapter 7 is a liquidation. A trustee can sell non-exempt property to pay creditors, but because Montana's homestead protects a large amount of home equity and household goods are protected up to $7,000, many Chapter 7 cases are "no-asset" cases where nothing is sold. Most remaining unsecured debt, such as credit cards and medical bills, is discharged in a few months.

Chapter 13 is a reorganization for filers with regular income. You keep your property and repay some or all of what you owe through a three-to-five-year plan. Chapter 13 is often chosen by Montana homeowners who are behind on a mortgage or who have home equity above the homestead limit, because the plan can spread out missed payments and stop a foreclosure while you catch up.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362. The stay immediately halts most collection activity, including foreclosure sales, wage garnishment, repossession, and collection calls, while the case proceeds.

Where you file bankruptcy in Montana

Montana is a single federal bankruptcy district. The U.S. Bankruptcy Court for the District of Montana is headquartered in Butte and accepts filings there, with hearings also held in Billings, Great Falls, Missoula, and Helena. Because there is only one district, every Montana filer uses the same court regardless of county, though the divisional hearing location depends on where you live. Before filing, federal law requires you to complete an approved credit-counseling course, and you must complete a debtor-education course before your debts are discharged.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts, but several categories generally survive: most student loans (absent a separate showing of undue hardship), recent income taxes, child support and alimony, and debts from fraud or willful injury. Secured debts like a car loan or mortgage continue if you want to keep the collateral and keep paying.

Because the homestead is indexed and requires a recorded declaration, and the choice between Chapter 7 and Chapter 13 depends on your full financial picture, many people consult a licensed Montana bankruptcy attorney before filing.