Filing Chapter 13 in Hawaii

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Bankruptcy laws are largely set by the chapters in the federal code that regulate bankruptcy rights. This means chapter 13 in Colorado is going to be similar to chapter 13 in Hawaii, New York, or any other state. However, if you live in the state of Hawaii, you do need to be aware of the specific rules for seeking bankruptcy protection within that state, as there are a few factors that differ from place to place. 

Qualifying For Bankruptcy in Hawaii

There are several specific requirements for those interested in seeking bankruptcy protection in Hawaii. Your income will be considered. Those who make below the Hawaii median or who show on a means test that they do not have the money to create a debt repayment plan may file chapter 7 bankruptcy. This is a total liquidation bankruptcy that involves seizure of non-exempt assets to repay debts, after which debts are discharged.

If you make above the median and do have the money to pay some of your debts back, then a chapter 13 may be your primary or only option as a debtor. Your unsecured debt must be less than $307,675 and your secured debt must be less than $922,975 in order to file for chapter 13. Otherwise, you may not have options for traditional consumer bankruptcy and may need to turn to one of the other chapters, like chapter 11, which is more often used by corporations. These numbers can and do change every three years based on an established formula, so depending upon the time when you are filing, the debt limits may be higher. 

You must complete credit counseling with an approved credit counselor. You must create a repayment agreement/plan that the creditors to whom you owe money approve of. The debts must be repaid in this plan over a 3-5 year period, with the monthly payment amount based on both how much you make and how high your debts are. Payments are normally made to a trustee and distributed by him/her to individual creditors. At the close of the 3-5 year repayment period, the debts that are included in the plan and that remain are discharged. 

You must have proof of a regular and consistent income to make your plan payments. This can come in the form of a record of your earnings in the six months leading up to bankruptcy and in the form of past tax returns/income tax statements. Provided you meet the requirements and your repayment plan is approved, you should be able to renegotiate most of your debts to a manageable level. Debts for things like student loans and child support, however, aren't included in a chapter 13 plan and aren't eligible for bankruptcy protection. Furthermore, things like mortgages and car loans usually have to be paid if you want to keep the asset acting as collateral. 

Getting Help

If you are filing for chapter 13 in Hawaii, you should have a lawyer help you. A bankruptcy attorney will assist you in deciding what chapter of bankruptcy is best and then can help you throughout the entire process of bankruptcy to make sure all of your individual debts are addressed in the best and most financially advantageous manner possible.