There are many contributing factors that are associated with financial troubles. The most common reasons include overwhelming debt, divorce, sudden unemployment, sudden illness, or home foreclosure.
In fact, the average credit card debt in Hawaii is a whopping $5,965 per person. In addition, foreclosure rates are also as staggering, one out of every 3,516 HI homes is currently in foreclosure.
If you can relate to the scenarios above, then you are probably struggling with other personal issues that come with being in debt. The fear of losing your automobile, house or your income can drain a person physically and emotionally. You may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are undoubtedly not alone. Close to a million people file bankruptcy each year in America. Bankruptcy is a device established by the US Government to help struggling Americans find relief from unpayable debt. You may want to research bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the freedom to get out from underneath considerable debt while still working with lenders in a legal capacity. It is initiated by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy, a trustee is appointed to oversee the deatils of the case. His or her responsibilities will vary and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Hawaii ranks #47 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 124 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Hawaii, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to keep your valuable assets over a 3- to 5-year period.
In order to decide which type of bankruptcy an individual can file, he or she will have to assess their ability to repay using the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Up to $30,000 if head of family or over 65; up to $20,000 otherwise. Property cannot exceed 1 acre. Sale proceeds are exempt for 6 months after sale. Spouses may not double. Tenancies by the entirety are exempt without limit as to debts of one spouse or reciprocal beneficiary.
- Motor vehicle up to wholesale value of $2,575; clothing; appliances and furnishings needed; books; jewelry, watches, and articles of adornment up to $1,000; proceeds for sold or damaged exempt property (sale proceeds exempt for 6 months after sale); burial plot up to 250 square feet, plus on-site tombstones, monuments, and fencing.
- Prisoner’s wages held by Dept. of Public Safety excluding child support, restitution and other claims.
- Unpaid wages due for services of the past 31 days.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Police officers and firefighters.
- Public officers and employees.
- Roth IRAs, IRAs, and ERISA-qualified benefits, if deposited more than 3 years before filing.
- Public assistance paid by Dept. of Health Services for work done in home or a workshop.
- Crime victims’ compensation; special accounts that were created to limit the commercial exploitation of crimes.
- Unemployment compensation.
- Workers’ compensation.
- Temporary disability benefits.
- Unemployment work relief up to $60 per month.
Tools of Trade
- Tools, books, uniforms, implements, instruments, furnishings, fishing boat, nets, motor vehicle, and other personal property needed for livelihood.
- Accident, sickness or health benefits.
- Annuity contract or endowment policy proceeds if beneficiary is insured spouse, child or parent.
- Group life insurance policy or proceeds.
- Life or health insurance policy for child or spouse.
- Life insurance proceeds if policy prohibits use to pay creditors.
- Fraternal benefit society benefits.
- Business partnership property.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire an attorney to declare bankruptcy. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.
Filing Bankruptcy without an Attorney
A basic Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Generally speaking, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy attorney is there to represent you and not in the interest of creditors.
An attorney is also keenly familiar with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in HI, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Hawaii
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In Hawaii
Additional Hawaii Resources
Foreclosure Help Program
Disability SSDI Benefits