Chapter 7 Bankruptcy Process In Hawaii

Under Hawaii bankruptcy laws, an individual debtor can file either Chapter 7 or 13. Chapter 7 allows liquidation of assets while Chapter 13 allows the debtor to reorganize a company with either a three- or a five-year payment plan. Although the primary bankruptcy laws are governed by the Bankruptcy Code, cases also depend on state laws. Hawaii allows a petitioner to choose between Hawaii's bankruptcy laws and federal laws.

Hawaii Bankruptcy Laws

When a debtor files for bankruptcy Hawaii, he or she is allowed both federal and state exemptions. Hawaii limits exemption to equity in property secured by loans. The following are exemption properties under Hawaii's bankruptcy laws:

• Debtor homestead (up to $30,000 for senior citizens and $20,000 for others)
• Insurances policies and pensions
• Property belonging to business partnerships,
• Personal property such as clothes, jewelry (up to a value of $1,000), motor books, appliances, motor vehicles (up to a value of $2,575) and tools of trade
• Burial plots
• Public benefits
• Wages up to a minimum of 80%

Chapter 7

A Chapter 7 bankruptcy in Hawaii does not require a minimum limit on the debt and offers a quick discharge of the case. Also, Hawaii's bankruptcy laws offer more dischargeable debts and separates creditors by class. However, certain assets remain non-dischargeable. These include:

• Alimony
• Child support
• Recent back taxes
• Student loans
• Large luxury purchases with a value of more than $550 bought within 90 days of filing
• Governmental fines or penalties
• Any fraudulent debts
• Cash advances worth $825 or more given within 70 days of filing

Hawaii bankruptcy procedures also include:

• a means test
• proof of petitioner's income
• any state exemptions
• pre-requisite credit counseling
• child support.

Chapter 13

Those who do not qualify for Chapter 7 bankruptcy can file for a Chapter 13 bankruptcy. If the petitioner makes more than the median income for families in the state, the trustee must determine whether the petitioner's disposable income will cover outstanding debts. Expenses such as mortgage payments and car notes are deducted from the average monthly income to determine the monthly disposable income. The monthly disposable income is then multiplied by 60 to determine what the petitioner needs to pay over 5 years.

The trustee takes control of any non-exempt property and puts the property up for sale. From the sale's proceeds, the trustee first pays administrative expenses of the case. The trustee then divides the remaining money to valid creditors according to the priority of the creditor's claims. Those with secured claims are paid first. Earned wages subsequent to the bankruptcy filing remains the petitioners and are beyond the reach of valid creditors.

Find an Attorney

If you file bankruptcy in Hawaii, you have the option of both Chapters 7 and 13 if you are an individual. Additionally, Hawaii gives you the option of state or federal bankruptcy laws. Under state law, you are allowed several asset exemptions. Discuss your case with an experienced bankruptcy attorney to provide you with advice during the full bankruptcy process.