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How to File for Bankruptcy in Hawaii
Although no state has completely escaped the economic troubles of our day, Hawaii is farther down the list of those suffering increases in bankruptcies in recent years. However, more than 2 in every 1,000 citizens filed for bankruptcy in 2009, more than double the 2007 rate. Many are concerned about having unpaid bills or defaulting on loans and fear that bankruptcy will ruin their financial future forever. That is not the case if it is handled wisely and carefully.
Finding a Bankruptcy Attorney
Experienced bankruptcy attorneys provide the advice and help that most people require. They not only know the legal guidelines and requirements for using this form of debt relief, they understand the financial ramifications of taking this serious step. It is vital, however, for debtors to take the time to locate a skilled bankruptcy expert who will work hard to understand and answer their financial needs by following recommendations and taking the time to interview candidates and researching their track record to ensure a good choice.
Bankruptcy Options
While there are a number of types of bankruptcy to choose from, for individuals and families, the most common and helpful choices are Chapter 7 or Chapter 13.
- Chapter 7 is chosen 81% of the time in Hawaii, often because those filing for bankruptcy have few assets to be liquidated to pay creditors before debts can be discharged, or erased.
- Chapter 13 does not erase debt, but it does provide a reorganization and repayment plan that allows the debtor to fulfill their financial obligations, but with extended payment schedules and lower monthly payments. This is a good choice for those with significant property they do not want to have liquidated in their bankruptcy proceeding.
Hawaii Exemptions
Those that do file for Chapter 7 bankruptcy can often save most of their remaining property through property exemptions allowed under federal and state laws. Hawaii allows its citizens to choose either option; however, they cannot mix the two. The state exemptions for Hawaii include:
|
Homestead |
Up to $30,000 for head of family or over 65, up to $20,000 for others |
|
Personal Property |
Motor vehicles up to wholesale value of $2,575; clothing; furnishings; miscellaneous heirlooms and jewellery up to $1,000; burial plot |
|
Wages |
Prisoner’s wages, excluding child support, restitution and other claims; wages unpaid due for services from the past 31 days |
|
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; police; firefighters; public officers and employees; ERISA-qualified benefits |
|
Public Benefits |
Public assistance from Dept. of Health; crime victims’ compensation; unemployment; worker’s comp; temporary disability benefits |
|
Tools of the Trade |
Tools, books, uniforms, implements, motor and water vehicles, needed for livelihood |
|
Insurance |
Accident, sickness, or health benefits; group life insurance; fraternal benefits; various forms of life insurance proceeds |
Filing the Petition
It is important to prepare well before filing for bankruptcy. There are some legal steps that a filer can take in advance to protect some of their property and assets, as well as the credit counselling required by law, but with an attorney to help with those preparations and filing, as well as to work with the bankruptcy trustee during the process, a consumer should be able to complete the process and begin restoring their financial future.