May 24, 2016
Bankruptcy is a creature of federal law, so the process to file for Chapter 7 bankruptcy or to file for Chapter 13 bankruptcy is nearly identical in every state, including Hawaii. However, Hawaii state laws still play an important role, particularly when it comes to property exemptions, which determine what property you get to keep (if you file for Chapter 7) and how much you have to repay your creditors (if you file for Chapter 13). There are also important resources available to you by state.
Before you file for Chapter 7 or Chapter 13 bankruptcy in Hawaii, you will have to complete mandatory credit counseling with an agency that’s been approved by the United States Trustee’s Office. Here’s a list of agencies in Hawaii that have been approved to provide this counseling.
The Hawaii bankruptcy court is in Honolulu. You can find information on forms, local rules, and more at the court’s website.
Like every other state, Hawaii has its own set of property exemptions. (To learn more about how property exemptions work generally and which exemptions you may use, see Bankruptcy Exemptions: What Do I Keep When I File for Bankruptcy?)
Hawaii law allows bankruptcy filers to choose between the state’s list of exemptions and a federal exemption list. Filers may use one list or the other; they may not mix and match some exemptions from each list.
Hawaii’s exemptions protect up to $20,000 of equity in a home; filers who are the head of the family or are older than 65 may exempt $30,000. Filers in Hawaii may also exempt up to $2,575 of equity in a vehicle. The exemption list includes an unlimited exemption for tools of the trade; In Hawaii, this includes a fishing boat and nets. Here’s the list of exemptions for Hawaii.
When you file for bankruptcy, you must compare your income to the median income in Hawaii for a household of your size. If your income is less than the Hawaii state median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years).
The median income for a one-person household in Hawaii is around $60,000; these figures change frequently. You can find the most recent amounts on the website of the U.S. Trustee at www.justice.gov/ust. Click on “Means Testing Information.”
After you file for bankruptcy but before you receive your discharge, you must take a debtor education course. Like the mandatory credit counseling you must take before filing your forms, you must receive debtor education from an agency approved by the U.S. Trustee’s Office. Here’s a list of agencies in Hawaii that are approved to provide this counseling.
If you're considering bankruptcy, you may want to talk to an experienced Hawaii bankruptcy lawyer.