If you file for Chapter 7 bankruptcy in Hawaii, you can use Hawaii’s bankruptcy exemptions to protect your property. Hawaii’s bankruptcy exemptions also play a role in Chapter 13 bankruptcy. Continue reading to learn about what property is protected by Hawaii’s bankruptcy exemptions.
Exemptions are specific laws that allow you to protect certain property from your creditors, such as your car or home. If you file a Chapter 7 bankruptcy, you can keep the items that are protected by the Hawaii bankruptcy exemptions. If you file for Chapter 13 bankruptcy, Hawaii’s bankruptcy exemptions play a role in how much you repay your creditors through your Chapter 13 plan.
Hawaii has its own state exemptions that you can use when you file a bankruptcy. There is also a set of bankruptcy exemptions established by federal law (called the federal bankruptcy exemptions). In Hawaii, you may choose between the state and federal exemptions. However, you may not mix and match the Hawaii Bankruptcy exemptions and the federal bankruptcy exemptions. If you file a bankruptcy in Hawaii, you must choose either the Hawaii or the federal exemptions.
If you choose to use the Hawaii bankruptcy exemptions, you may also use any of the applicable federal non-bankruptcy exemptions. The federal non-bankruptcy exemptions protect items such as federal retirement accounts and military and veteran’s benefits.
Married couples who file a joint bankruptcy in Hawaii are allowed to “double” the exemption amounts, meaning if you and your spouse file a joint bankruptcy, you may each claim the full exemption amount for any property belonging to you. Note that you may only claim an exemption and protect property that belongs to you.
To learn more about bankruptcy exemptions, including how they work, which state exemption system you should use, and special rules for the homestead exemption, see Nolo’s Bankruptcy Exemptions topic page.
Property held by the entirety in Hawaii is exempt against claims of creditors of only one spouse or reciprocal beneficiary. Similar protection is available to same-sex couples registered as reciprocal beneficiaries.
Below is a list of commonly used Hawaii bankruptcy exemptions. Unless otherwise indicated, all references are to the Hawaii Revised Statutes.
Up to $30,000 of equity in real property, up to one acre, located in Hawaii, if you are the head of family or over 65. Head of family is defined as meeting the IRS standard for head of household or residing in the real property and caring for a direct relative (for example, a child, parent, sibling, or grandchild). If you are not head of family, you may protect up to $20,000 of equity in your home. Sale proceeds are exempt for six months after sale. Spouses may not double the Hawaii homestead exemption. Haw. Rev. Stat. § 651-91, 92, 96
Example. You own a home worth $140,000 and you owe $116,000 to the mortgage lender; which means you have $24,000 worth of equity in your home. If you are the head of your family, you can protect the full value of your home with the Hawaii homestead exemption. If you are not the head of a family, you can protect up to $20,000 of the equity in your home.
To learn more, see The Hawaii Homestead Exemption.
Household furnishings, appliances, books, and clothing used by you and your family. Jewelry and watches up to a total of $1,000 in value. Haw. Rev. Stat. § 651-121 (1)
Up to $2,575 of equity in one motor vehicle. Haw. Rev. Stat. § 651-121
A burial plot, up to 250 square feet, and all improvements and gravestones upon it. Haw. Rev. Stat. § 651-121
Insurance proceeds or proceeds from the sale of personal property (up to six months after sale) protected under Haw. Rev. Stat. § 651-121.
Income earned during the 31 days before filing bankruptcy. Haw. Rev. Stat. § 651-121
IRAs and ERISA-qualified retirement accounts. Haw. Rev. Stat. § 651-124
Firefighters’ pensions. Haw. Rev. Stat. § 88-169
Police officers’ pensions. Haw. Rev. Stat. § 88-169
Public officers’ & employees' pensions. Haw. Rev. Stat. § § 88-91 and 653-3
Tools, instruments, uniforms, books, equipment, one commercial fishing boat and nets, one motor vehicle, and any other personal property ordinarily and reasonably necessary to your business, trade, or profession. Haw. Rev. Stat. § 651-121
Accident, health, or sickness benefits. Haw. Rev. Stat. § 431:10-231
Annuity contract or endowment policy proceeds wherein the beneficiary is the insured's spouse, child, or parent. Haw. Rev. Stat. § 431:10-232 (b)
Group life insurance proceeds. Haw. Rev. Stat. § 431:10-233
Life insurance proceeds if text of the policy prohibits proceeds from being used to pay the beneficiary's creditors. Haw. Rev. Stat. § 431:10D-112
Life or health insurance policy for spouse or child. Haw. Rev. Stat. § 431:10-234
This list includes some of the more commonly used Hawaii bankruptcy exemptions, but there are numerous other exemptions available to protect specific property. You can verify the current exemption amounts at the website of the Hawaii Legislature or by checking the statutes yourself. (To learn how to do this, see Nolo’s Legal Research Center).