Both state and federal laws apply to your Hawaii bankruptcy filing. Qualifying for bankruptcy can be easier in Hawaii than in other states, because the average income and expenses that are used to determine your eligibility are relatively high. Hawaii has only one bankruptcy district, with courts located in Honolulu, Hilo, Wailuku and Lihue (see Resources).
You Can Choose Your Chapter
Bankruptcy is generally a voluntary process. If you are a Hawaii debtor overwhelmed by debt, you can choose the chapter you want to file, as long as you qualify. If you can afford to pay your creditors, the court will only allow you to file Chapter 13 bankruptcy, which involves a repayment plan. With sufficiently low income, you can file Chapter 7, but you must be prepared to turn over any assets that the courts deem to be non-exempt.
Hawaii Has Eight Exemption Categories
If you file Chapter 7 bankruptcy, Hawaii offers eight categories of assets that you can keep. Categories include pensions, public benefits, wages, insurance, personal property, tools of trade and miscellaneous. Hawaii allows you to keep up to $20,000 in value in a homestead. This amount is increased to $30,000 if you are over 65 or the head of a household. If your property is registered as tenants by the entirety, you have an unlimited homestead exemption, to the extent of the debts of one spouse. In a tenancy by the entirety, which can only be created by a married couple, each owner has a legal right to the entire property but needs the consent of the other owner to sell an interest in the property.
Hawaii Has A High Median Income
You must use the median income in Hawaii to determine if you qualify for Chapter 7 bankruptcy. Since Hawaii is an expensive state in which to live, the median income in Hawaii is higher than in many other states. For example, the median income for a family of two in Hawaii is $63,143, while the median income for a family of two in Kentucky is only $44,353. As a result, you can have a higher annual income in Hawaii and qualify for Chapter 7 than you could in many other states, including Kentucky. The U.S. Trustee publishes an updated list of state median incomes regularly. You can compute your annual income for bankruptcy purposes using Bankruptcy Form 22A for comparison (see Resources).
Hawaii Has High Average Expenses
Another way to qualify for Chapter 7 bankruptcy in Hawaii is to subtract allowable expenses from your income. Since Hawaii has high average expenses, you can take greater deductions for qualification purposes than in many other states. For example, the maximum monthly allowance for the housing and utilities for a family of two in Honolulu County is $2,426. By way of comparison, the same allowance in Modoc County, California is just $970.
Tags: Chapter bankruptcy, median income, other states, file Chapter, income Hawaii