When your income just isn’t enough to cover your credit card payments and bills each month, filing a bankruptcy case might give you a fresh start. After you decide whether to file for Chapter 7 or Chapter 13 bankruptcy, you’ll discover that there’s a lot of information you have to gather to prepare your paperwork, and sometimes it’s hard to find.
This article will help you locate official bankruptcy forms, Hawaii means testing information, credit counseling providers, and your local Hawaii bankruptcy court. You’ll also learn about protecting your property when filing for bankruptcy in Hawaii.
Official Bankruptcy Forms
The bankruptcy court needs to know about your complete financial picture before it will wipe out (discharge) your debts. You’ll disclose income, expenses, property, debt, and property transactions on official forms you can fill out on the U.S. Courts Form webpage. Once complete, you’ll file the packet of paperwork (schedules) in your local Hawaii bankruptcy court along with a filing fee or fee waiver and a credit counseling completion certificate (more below).
Hawaii Bankruptcy Information
Federal law governs bankruptcy filings. However, you’ll need to use some aspects of Hawaii’s rules and law, too.
Means Testing and Credit Counseling Information
Two types of Hawaii-specific information are found on the U.S. Trustee website: means testing figures and approved education providers.
- Means testing information. Most debtors can qualify for Chapter 7 bankruptcy only if they meet income requirements subject to a “means test.” A family income that exceeds the median income of Hawaii might pass after subtracting pre-set expenses. If your family income is below the median, you automatically qualify. The income charts and expense guidelines that you’ll need are under “Means Testing Information” on the U.S. Trustee’s website. To determine your monthly payment in a Chapter 13 bankruptcy, you’ll do a similar calculation.
- Credit counseling providers. Most filers must participate in a credit counseling session before they file a bankruptcy case and a debt management course after they file. The providers approved for Hawaii are listed on the website of the U.S. Trustee under “Credit Counseling & Debtor Education.”
Hawaii Bankruptcy Court Locations
On the Hawaii Bankruptcy Court website, you’ll find the court’s local rules and instructions for filing your paperwork (click on “Resources” in the left-hand column). Hawaii has only one bankruptcy court location:
United States Bankruptcy Court
District of Hawaii
1132 Bishop Street, Suite 250
Honolulu, HI 96813
Hawaii Bankruptcy Exemptions
Filing for bankruptcy in Hawaii doesn’t mean losing everything, but you might not be able to exempt (protect) it all, either. Whether you keep your property will depend on whether it appears on the exemption list you choose to use (you can’t use both): the list of federal bankruptcy exemptions or the list of Hawaii exemptions.
Any nonexempt (unprotected) property can be sold by the Chapter 7 bankruptcy trustee for the benefit of your creditors. If you file a Chapter 13 case, you won’t turn over nonexempt property. Instead, your Chapter 13 plan payments will include the nonexempt value of those assets (you’ll pay to keep the nonexempt property).
Spouses who file a joint bankruptcy in Hawaii can double the exemption amount in each category (except for the homestead) as long as both spouses have an ownership interest in the time. Property held by the entirety in Hawaii is exempt against claims of creditors of only one spouse or reciprocal beneficiary.
Below is a list of commonly used Hawaii bankruptcy exemptions. Unless otherwise indicated, all references are to the Hawaii Revised Statutes.
- Homestead. If you are the head of family or over 65, up to $30,000 of equity up to one acre of real property located in Hawaii, 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’re not the 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 cannot double the Hawaii homestead exemption (Haw. Rev. Stat. § 651-91, 92, 96).
- Personal property. 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); 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) (Haw. Rev. Stat. § 651-121); income earned during the 31 days before filing bankruptcy (Haw. Rev. Stat. § 651-121).
- Pensions and retirement accounts. 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 of the trade. 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)
- Insurance. 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).
Hawaii's exemption amounts adjust periodically, and additional exemptions exist. To make sure you are maximizing your exemptions, be sure to check for any updates on the website of the Hawaii State Legislature.
This overview provides some, but not all, of the information you’ll need to file for bankruptcy without a lawyer. Also, you’re responsible for understanding the law. For detailed coverage of bankruptcy issues, you might want to buy a do-it-yourself book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D.