Michael

In this adversary proceeding, the bankruptcy court ruled that Jereld J. and Shirley K. Michael could not claim a homestead exemption because they failed to record a declaration of homestead as required by Montana law before filing their bankruptcy petition. The district court affirmed, and the Michaels appeal. We vacate and remand.

I

When the Michaels filed their voluntary Chapter 7 bankruptcy petition, they had not yet recorded a declaration of homestead as required by Mont.Code Ann. §§ 70-82-105, 106, 107. They also failed to list their home as exempt property on their bankruptcy Schedule B-4. Several months later, after the bankruptcy court had ordered the Mi-chaels’ debts discharged, they recorded a declaration of homestead in Yellowstone County and filed an amended Schedule B — 4 with the bankruptcy court, listing their home as exempt property. The trustee objected to the amendment and brought this adversary proceeding to obtain possession of the home. The bankruptcy court sustained the trustee’s objection and held that the Michaels’ failure to file a declaration of homestead prior to their bankruptcy petition was fatal to their claimed exemption, because the late-filed…