Hawaii Bankruptcy Laws should be known by every resident of the state of Hawaii. For debtors who have fallen short in their credit card payments because of some emergency or accident, it is very difficult to catch up on the payments. In the state of Hawaii, consumer credit has become a way of life. In turn, more and more individuals and married couples turn to bankruptcy protection in times of dire financial problems.
Hawaii bankruptcy laws adhere to majority of the federal laws, but there are also some specific laws that the state has implemented. As a matter of fact, the filing fee, filing method, state income for the means test, and asset exemptions differ for each state. It is to your best advantage if you know the basic laws of bankruptcy in the state of Hawaii.
Another important step you should take when considering for bankruptcy application is to visit an experienced lawyer. It is common knowledge that bankruptcy laws are complex. A lawyer who is well-versed in the state laws of Hawaii will help you understand these complexities. You might want to know which of your assets will be protected and which will be subject to seizure when you file for bankruptcy.
As expected, when the word bankruptcy is mentioned the first thing that comes to mind for most individuals is Chapter 7. This bankruptcy program is called debt liquidation program. A trustee will evaluate your current financial status and take over your non-exempt assets, liquidates it, and pays the creditors from proceeds of the sale. Before this scenario happens, a means test will be conducted by the trustee. Comparing your monthly income with the mean income of the state will help determine if you really qualify for Chapter 7. This change is implemented to screen potential bankruptcy fraud cases. Base on the trustee’s analysis, if your income is below the state median income, you can apply for this protection program.
In the event that you are declined in your application for Chapter 7, a sounder bankruptcy protection program is also available. Chapter 13 may be less popular than the previous one, but it is still effective. It is advantageous to individuals who have a number of assets. In this bankruptcy type, assets won’t be seized. The debtor, together with the trustee assigned to the case will come up with a repayment plan to be implemented in 3 to 5 years. The repayment plan should be submitted to the court with all the necessary documents during filing for Chapter 13 bankruptcy. All creditor names should be listed, together with the amount you owed to each creditor and all other important information. The plan is subject to the court’s approval and once this is processed, the trustee will oversee the progress of your repayment plan.
As mentioned earlier, Hawaii bankruptcy laws have specific exemptions that the debtor can choose instead of the federal exemptions. If you decide to push for bankruptcy protection, discuss with your lawyer the best exemptions that will correspond to your situation. The state defines the following as exemptions:
• Homestead exemptions for head of the family, as well as citizens older than 65 years old for up to $30,000;
• Any single vehicle up to $2,575;
• Personal belongings like jewelry, books, and clothing with a total of $1,000;
• Salary for the last 31 days before filing for bankruptcy;
• Any tool of trade or property needed for livelihood; and
• Insurance proceeds and other benefits.
Compare these exemptions with the federal exemptions, and be sure to make the right decision because this will not only affect you but your family as well.