The Hawaii Motor Vehicle Exemption in Bankruptcy
The Hawaii motor vehicle exemption protects up to $2,575 of vehicle equity, and more if you are married and filing bankruptcy jointly.
In Hawaii, the motor vehicle exemption allows you to protect up to $2,575 of vehicle equity, and more if you are married and filing jointly. Hawaii's motor vehicle exemption can help you keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy.
Here you’ll find information about the Hawaii car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Hawaii’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Hawaii’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Hawaii’s Motor Vehicle Exemption
In Hawaii, you can exempt up to $2,575 in equity in your car or other vehicle.
Example. Mia owns a 2010 Ford Fusion worth $9,000. She owes the dealer $7,000 on the loan, so there is $2,000 of equity in her car. Mia can use the Hawaii motor vehicle exemption to fully protect her car in a Chapter 7 bankruptcy.
The Federal Motor Vehicle Exemption
Hawaii allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.
Can Married Couples Double Hawaii’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Hawaii allows married couples to double the motor vehicle exemption to protect up to $5,150 of equity in a motor vehicle.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Hawaii motor vehicle exemption allows you to protect equity in one motor vehicle, such as a car, truck, van, or motorcycle. Hawaii law also allows you to protect proceeds from the sale of your vehicle, for up to six months after you receive them, or insurance proceeds, if your vehicle is lost or damaged.
Hawaii’s Tools of the Trade Exemption
Hawaii allows you to protect the full value of one motor vehicle that is necessary for you to carry on your profession or livelihood. Some professions clearly require the use of a motor vehicle, such as towing. However, merely commuting to and from work may not qualify you for this exemption. Consult with a local attorney to find out whether your vehicle qualifies under this exemption.
Checking Hawaii’s Exemption Laws
You can find Hawaii’s motor vehicle exemption at Haw. Rev. Stat. Section 6510-121.
When the Hawaii Exemption Amounts Are Updated
The exemption laws in Hawaii change periodically. The main page of the Hawaii State Legislature website usually indicates whether the posted information reflects the most recent legislative session. The website can be found at www.capitol.hawaii.gov.