Bankruptcy in Hawaii
Most Americans dream of living in Hawaii, at some point in their lives. They wonder, "What would it be like to experience beaches, water falls, mountains, luscious greenery, flowers, blue skies, ocean, and beautiful weather?" If you're reading this, you're likely living someone else's dream and, hopefully, your own.
The cost of living in Hawaii when combined with the current economic downturn, housing crisis, job loss, medical bills, predatory lending, and underemployment can cause financial devastation. In 2011, 3,328 Hawaii residents filed bankruptcy.
If you are wondering whether bankruptcy is a path to explore, this article is for you.
- We'll summarize how Hawaii bankruptcy law differs from the laws other states;
- Discuss whether you should file Chapter 7 or Chapter 13 bankruptcy;
- Provide tips on how to find and select a bankruptcy lawyer; and
- Show you how to prepare to work with a bankruptcy attorney.
How Hawaii Bankruptcy Law Differs from the Laws of Other States
If you're a Hawaii resident, you have a choice. You can use the federal bankruptcy exemptions or you can select the Hawaii bankruptcy exemptions. The choice is yours and your bankruptcy attorney will guide you.
Here is a summary of the Hawaii bankruptcy exemptions:
- Between $20,000 and $30,00 of home equity.
- Up to $2,575 of motor vehicle equity.
- Up to $1,000 of personal property and household items.
Your Choices in Filing Bankruptcy in Hawaii: Chapter 7 or Chapter 13
Of those 3,328 Hawaiians who filed bankruptcy in 2011, 78% filed under Chapter 7 and 22% filed under Chapter 13.
- Chapter 7 is the "liquidation" bankruptcy. Assets are sold to pay off debts and many "non-secured" debts are discharged. It takes about 6 months (and most people don't lose assets).
- Chapter 13 is the "reorganization" bankruptcy. Debts are renegotiated and reorganized. Debts are repaid over a three to five year period.
Generally, you must qualify to file a Chapter 7 bankruptcy by way of a "means test." Your income must be below the Hawaii state median income, which is $52,712 for an individual and $85,337 for a family of four.
But don't get discouraged if you don't immediately qualify. There is more than one path to filing Chapter 7. Get good legal advice.
How to Find and Select a Bankruptcy Attorney
To find a bankruptcy attorney:
- Get a referral from a loved one or professional advisor.
- Contact your local bar association.
- Do an Internet search for "Find a Hawaii Bankruptcy Attorney."
To select a bankruptcy attorney:
- Narrow your list to lawyers who focus on bankruptcy law and are licensed in Hawaii.
- Then, use the free consultation, likely offered, to ask questions and get to know the attorney.
- Select whomever you're most comfortable with.
How to Prepare to Work with a Bankruptcy Attorney
Organize your financial files and documentation. Gather everything together and make a list of:
- Monthly bills
- Debt payments made in the last year
- Questions and concerns
Bankruptcy may be the key to making your dream of being debt-free a reality.