Bankruptcy in Hawaii
Even in Hawaii, where the beaches are serene and the sunsets are world-class, bills can pile up fast. A sudden job loss, rising housing costs, or unexpected medical expenses can quickly turn into overwhelming debt.
Bankruptcy isn’t about giving up—it’s about clearing a path forward. For individuals and families across the islands, filing for bankruptcy can offer a powerful form of legal protection.
You don’t have to figure this out on your own. A local Hawaii bankruptcy attorney can help you understand your options, choose the right chapter, and guide you forward.
Types of Bankruptcy in Hawaii
Bankruptcy is a legal framework that gives individuals and businesses in HI the chance to regain financial control when debt becomes unmanageable. Filing can result in partial or full relief from eligible debts, depending on the chapter you pursue.
You must show that a legitimate hardship is preventing you from keeping up with your obligations. That said, some types of debt—like child support, most student loans, certain tax debts, and court-ordered alimony—usually cannot be discharged.
Deciding which path to take means looking at your income, what you own, and what you’re trying to protect.
In Hawaii, bankruptcy cases are handled by the United States Bankruptcy Court for the District of Hawaii. The court is located in Honolulu and oversees all Chapter 7, 11, and 13 filings for individuals and businesses throughout the state.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy can offer immediate relief for individuals in Hawaii who are overwhelmed by debt and don’t have the income to pay it back. It’s often used by people who’ve had a sudden drop in income—like job loss or medical leave, and need a clean break from their financial obligations.
But before you file, it’s important to review your financial picture carefully. You’ll want to understand how your income, debts, and assets fit the eligibility requirements. A bankruptcy attorney can help you decide if liquidation is the right move and what you may be asked to give up in the process.
Most Chapter 7 filers are dealing with circumstances that make debt repayment impossible. While this type of bankruptcy can eliminate unsecured debts like credit cards or medical bills, it may also require you to surrender assets.
In Hawaii, the means test is the first step in determining whether you qualify for Chapter 7 bankruptcy. It compares your average monthly income over the past six months to the state’s median income for a household of your size. If your income is below the median, you typically qualify. If it’s above, you’ll need to complete a more detailed calculation that deducts allowed living expenses to determine how much disposable income remains. If your remaining income is too high, you may be required to file under Chapter 13 instead.
As of 2024, the median household income in Hawaii is $98,317, according to the U.S. Census Bureau’s American Community Survey. For bankruptcy means testing purposes, the U.S. Department of Justice provides specific median income figures by household size:
- 1-person household: $78,745
- 2-person household: $94,677
- 3-person household: $113,594
- 4-person household: $133,656
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more involved process, typically used by businesses or individuals with complex financial situations. It allows you to restructure your debt through a reorganization plan approved by the court, usually lasting between four and eighteen months.
Chapter 11 doesn’t require you to sell off your property to satisfy creditors. Instead, it allows you to renegotiate payment terms with creditors and create a manageable plan.
To get started, you’ll need to submit the following forms to the U.S. Bankruptcy Court:
- Voluntary Petition (Official Form 101)
- Schedules A/B through J (listing all income, expenses, assets, and debts)
- Statement of Financial Affairs (Official Form 107)
- Creditor Matrix (names and mailing addresses of all creditors)
- Summary of Assets and Liabilities
- Disclosure of compensation paid to your attorney
- Most recent financial statements, including income and cash flow reports (for businesses)
- A reorganization plan and disclosure statement (filed later in the process)
Chapter 13 Bankruptcy
Chapter 13 bankruptcy—often called a wage earner’s plan—allows individuals in HI to reorganize their debts while keeping important assets. Once your case is filed, a trustee is appointed to review your income, expenses, and overall ability to repay.
Rather than liquidating property, you’ll follow a repayment plan that typically spans three to five years. The terms of that plan depend on how stable your income is and what property you want to hold onto.
What makes Chapter 13 stand out is its ongoing court involvement. After filing, you’re not just done—you’re committed to following a detailed repayment plan that the court and your creditors must approve. A trustee will manage your case, collect your monthly payments, and distribute them according to your plan.
During this time, you have legal protection from new collection efforts, but you’re also expected to stay financially disciplined. It’s a second chance that requires consistency, but it can offer long-term stability for those willing to follow through.
The Bankruptcy Process in Hawaii
There’s rarely a perfect moment to file for bankruptcy, but if your debt has reached the point where repayment within five years isn’t realistic, it may be time to act. Bankruptcy can stop the damage from getting worse and give you the structure you need to rebuild your finances with legal protection in place.
To begin the process in Hawaii, you’ll need to organize a complete picture of your financial life. That includes a list of all debts, monthly expenses, sources of income, and the value of any property you own.
The court relies on this information to determine your eligibility and how your case should move forward. If anything is missing or inaccurate, your case could be delayed or denied entirely. Accurate documentation is one of the most important parts of a successful filing.
In Hawaii, the bankruptcy process follows federal law, but the state provides its own set of exemptions to help protect your property. These exemptions are crucial in both Chapter 7 and Chapter 13 cases, as they determine what assets you can keep. If you’ve lived in Hawaii for at least two years before filing, you must use the state’s exemption list. Key protections include:
- Homestead exemption: Up to $30,000 in equity in your primary residence
- Vehicle exemption: Up to $2,575 in equity in one motor vehicle
- Personal property: Up to $1,000 in household furnishings, appliances, books, and clothing
- Tools of the trade: Up to $2,575 in work-related tools or equipment
- Wages: A portion of unpaid wages is protected
- Public benefits: Fully exempt, including unemployment, Social Security, and disability income
- Retirement accounts: Most tax-deferred retirement plans are fully protected
Work With an Experienced Hawaii Lawyer
Filing is a serious step, but you don’t have to navigate it alone. A Hawaii bankruptcy attorney can walk you through the process, help you make informed decisions, and ensure your case is handled properly from start to finish.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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