Filing bankruptcy in Hawaii gives honest debtors a chance to obtain relief from debt, and also gives creditors a chance to recover some payments based on the value of the debtor’s property or dependability of earnings. 3,959 bankruptcies were filed in Hawaii in 2010, ranking Hawaii 40th in the country for the number of bankruptcy filings per capita. 78% of Hawaii’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.
Filing Bankruptcy in Hawaii
Bankruptcy in Hawaii is governed by federal law and all bankruptcy cases are initiated in the US Bankruptcy Courts in Honolulu. Although federal courts have jurisdiction over bankruptcy proceedings, Hawaiian law permits petitioners to use the exemptions found in the U.S. bankruptcy code or the exemptions provided under Hawaii law. The federal and state exemption systems cannot be mixed and matched. With the guidance of a bankruptcy attorney Hawaiian debtors can gain a full understanding of what personal property the systems permit the petitioner to keep in bankruptcy, and what must be sold.
Chapter 7 Bankruptcy, Hawaii
Chapter 7 bankruptcies in Hawaii are the most common bankruptcy filing. Chapter 7 is preferable for petitioners who don’t have a significant amount of assets, such as investments and substantial equity in a home. This is because a Bankruptcy Trustee may liquidate personal property that isn’t protected by Hawaii’s bankruptcy exemptions. Liquidation occurs when the Trustee converts personal assets to cash for distribution to creditors. Hawaii’s Chapter 7 bankruptcy law allows petitioners to keep some essential property; the exempt assets are strictly off-limits to creditors looking for repayment.
The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.
Hawaii Bankruptcy Exemptions
Hawaii bankruptcy law designates property exemptions that allow petitioners to retain certain personal property and assets so they may begin again from scratch without being entirely destitute. That is, the creditors cannot force debtors to sell the shirt off their back. Bankruptcy in Hawaii permits petitioners to choose the most beneficial exemptions from either the state or federal lists.
Property exemption amounts are subject to change, and a Hawaii bankruptcy attorney will have the most reliable and up-to-date information on hand. Hawaii bankruptcy exemptions include:
Hawaii Homestead Exemption
- $30,000: Head of family or over 65; all others to $20,000
- Property cannot exceed 1 acre
- Sale proceeds exempt for 6 months after sale (Husband and wife may not double)
Hawaii Tenancy by Entirety Exemption
- Property held as tenancy by the entirety may be exempt against debts owed by only one spouse
Hawaii Personal Property Exemption
- $1,000 total: Jewelry, watches and articles of adornment
- $2,575 total: Motor vehicle
- Appliances and furnishings
- Proceeds for sold or damaged exempt property; sale proceeds exempt for 6 months after sale
- Burial plot to 250 sq. ft. plus tombstones, monuments and fencing
Hawaii Tools of the Trade Exemption
- Tools, implements, books, instruments, uniforms, furnishings, fishing boat, nets, motor vehicle and other property needed for livelihood
Hawaii Wage Garnishment Exemption
- Prisoner’s wages held by Dept. of Public Safety (except for restitution, child support, and other claims)
- Unpaid wages due for services of past 31 days
Hawaii Public Benefits Exemption
- Temporary disability benefits
- Workers’ and Unemployment compensation
- $60 per month: Unemployment work relief funds
- Public assistance paid by Dept. of Health Services for work done in home or workshop
- Crime victims’ compensation and special accounts
Hawaii Insurance Exemption
- Accident, health, or sickness benefits
- Fraternal benefit society benefits
- Annuity contract or endowment policy proceeds if beneficiary is insured’s spouse, child, or parent
- Group life insurance policy or proceeds
- Life or health insurance policy for spouse or child
- Life insurance proceeds if clause prohibits proceeds from being used to pay beneficiary’s creditors
Hawaii Pensions and Retirement Savings Exemption
- Firefighters, Police officers, Public officers and employees
- IRAs and Roth IRAs, ERISA-qualified benefits deposited 3 years prior to filing bankruptcy
Hawaii Miscellaneous Exemption
- Property of business partnership
Chapter 13 Bankruptcy, Hawaii
In 2010, 22% of debtors filed for protection under Chapter 13 bankruptcy laws in Hawaii. When a petitioner files Chapter 13 bankruptcy in Hawaii, a court-appointed Trustee restructures the petitioner’s debts and designs a 3-5 year repayment plan using the debtor’s future earnings to repay creditors. Chapter 13 petitioners in Hawaii keep most – or all – of their property.
How to File Bankruptcy in Hawaii
Eligibility for property exemptions ought to be a significant consideration in deciding if bankruptcy is a viable answer to one’s financial problems. The goal is to find a solution that will allow you to keep your major assets and qualify your debts for discharge. Since every case is unique, a Hawaii bankruptcy attorney can help debtors understand the facts of their financial situations and advise whether Chapter 7 or Chapter 13 bankruptcy are among the best options in their circumstances.
Bankruptcy Attorney: Hawaii
It is the debtor’s obligation to know their privileges and duties as bankruptcy petitioners. A Hawaii bankruptcy attorney can interpret and break down the federal laws and state exemptions for those considering filing bankruptcy. Due to the complexity and stressful nature of personal bankruptcy cases, the counsel and support of a trusted Hawaii bankruptcy attorney is a worthwhile investment.