BOZEMAN (AP)
Homeowners now have more protection against certain types of creditors, thanks to a change in state law by the 2007 Legislature. People who own homes and mobile homes can sign homestead declarations that will protect the value of their home up to $250,000 against some types of claims, such as gambling debts or medical bills. The homestead exemption used to be set at the first $100,000 of a person's home, but the Legislature this year raised the exemption to $250,000. "Its for everyone, but what it protects is the equity in your home," Bozeman attorney Stuart Whitehair said. What it doesn't affect is any mortgages or any secured debts you voluntarily placed against your property, he told the Bozeman Daily Chronicle. The Montana State University Extension service produced a fact sheet about the law change and provided an example of how it works: Say a homeowner has a house with an assessed value of $80,000 and a $50,000 mortgage balance. The homestead declaration protects only the $30,000 equity in the house, even though the maximum exemption is $250,000. Attorneys recommended that homeowners take the time to fill out the exemption forms if they haven't done so already. "Most people are vaguely aware of it," Bozeman attorney James Screnar said. "A lot of people who haven't financed recently don't have one." The exemption was increased because home values across the state are rising. Two states, Florida and Texas, have unlimited protection on the value of a home, although those laws were curtailed somewhat in 2005 when the U.S. Congress changed bankruptcy laws. Homestead declarations will not provide protection in cases of bankruptcy where the forms were not filed until after bankruptcy was declared. They also won't protect furniture and other items inside a home. Declarations must be completed, signed and notarized, and then recorded at the local clerk and recorders office. There is no standard declaration form, but MSU Extension provides one people can use, as well as fact sheet about the exemption, on its Web site.
