Natives in Hawaii say “Mai ho`okaumaha” when they are cheerful. Meaning, “No worries,” this saying describes a carefree and happy life. However, for Hawaiians swamped with medical bills, credit card debt, personal loans, and other types of debt, a lot of worry surrounds daily living. A Chapter 7 can get rid of debt and worry, turning a stressed out life back into one filled with freedom and no worries.
Chapter 7 Bankruptcy Sets Hawaiians Free
A Chapter 7 is also known as a liquidation or straight bankruptcy. Individuals who file this type of bankruptcy are required to list all assets and debts in a document called a petition. The petition is typically between 45-60 pages and includes all your financial information. Your creditors and the bankruptcy court will see your petition when you file for bankruptcy.
Bankruptcy, Chapter 7 and other Chapters of bankruptcy allows you to get relief from your debt. Specifically, a Chapter 7 allows debtors who qualify to get rid of nearly all of their secured or unsecured debts. Some debt no matter the type of bankruptcy cannot be discharged. These debts include:
- Student loans
- Certain state and federal taxes
- Debts obtained through fraudulent means
- Alimony payments
- Child support payments
Once you have filed your bankruptcy petition, the process takes approximately six months to complete. You will be required to attend “Meeting of Creditors,” a hearing with your bankruptcy attorney. Usually this hearing lasts a few minutes, and Trustee (a representative of your creditors) will ask you and your attorney a couple of brief questions. Before you file for bankruptcy you must determine if you meet the federal and state requirements for a Chapter 7.
Meeting the Requirements to file for Bankruptcy Chapter 7
Even though you think you will benefit from a Chapter 7 bankruptcy, Congress has passed certain limitations that prohibit some from filing for bankruptcy. In Hawaii residents must fall at or below the average income level. If a debtor exceeds the income level for their family size, you still may be able to qualify for Chapter 7, but you will be required to supply additional financial information to pass the means test. This test is a procedure that mathematically examines your debt to asset ratio to see if a bankruptcy will benefit you or your family. For residents in Hawaii the income level is as follows:
- Single Individual: $50,664
- Family of Two: $64,179
- Family of Three: $75,670
- Family of Four: $86,587
- Additional family members: Add $7,500 per person to the base income level
If you exceed the income level and your attorney determines you do not pass the means test for a Chapter 7 bankruptcy, there may be another option for you to file a Chapter 13 bankruptcy. Talk to your attorney about your bankruptcy options before you file either Chapter.
Property You are Allowed to Keep
Bankruptcy might not seem like a worthy option if you lost everything when you filed. Fortunately, bankruptcy law allows families filing forChapter 7 to keep some property and assets exempt from the bankruptcy. This means that a debtor can come out of a bankruptcy filing with some property to start over. Some states, including Hawaii, allow debtors to choose between federal and state exemption laws as they file their petition. This allows individuals to tailor exemptions specifically to their needs. Property and assets that are exempt in Hawaii according to state law include:
- Home exemption – Any primary residence up to $30,000 if you are the head of your family OR at least 65 years of age is considered exempt. If you are neither, the max exemption is $20,000.
- Pensions – The following industries all include 100% pension exemptions
- Public Officers
- Police Department
- Foreign Service employees
- Medal of Honor pensions for all: Army, Navy, Air Force, or Coast Guard individuals receiving the Medal of Honor roll.
- CIA employees
- Benefits – 100% of the following
- FEMA benefits
- Public Assistance benefits
- Worker’s Compensation benefits
- Disability benefits
- Fraternal Benefit Society benefits
- Veterans Administration benefits
- Social Security benefits
- Insurance – 100% of the following
- Disability insurance proceeds
- Group life insurance
- Crop insurance
- Railroad unemployment insurance
- Personal goods and property – 100% of all necessary household furnishings, appliances, and clothing
- Jewelry – Up to $1,000 in watches, bracelets, and other jewelry
- Tools – 100% of tools and machinery including fishing gear, 1 boat, and 1 vehicle used for a business
- Vehicle – Up to $2,575 in value for one vehicle
- Wages – 100% of wages for the past 31 day prior to filing for bankruptcy (not including taxes)
Talk to a local Hawaiian Bankruptcy Attorney Today
Your Chapter 7 bankruptcy attorney will help you navigate the complexities of bankruptcy law. Note that exemption laws and their amounts can change from year to year. It’s important that you consult an attorney for the most up-to-date laws. While it’s possible to file bankruptcy without a lawyer (called a “pro se” filing) an uncompleted form or inaccurate records on your petition could lead to an immediate dismissal without discharge, or even fraudulent charges. It is highly recommended that you discuss your options fully with a legal professional before you file.
Fill your life with “no worries” by taking action today. Talk to a Hawaiian bankruptcy attorney about a Chapter 7 filing to get rid of your debt and worry right away.
Hawaii Bankruptcy Court
1132 Bishop Street, Room 250L
Honolulu, Hawaii 96813-2807
Phone: (808) 522-8100