Hawaii Bankruptcy Attorneys Provide Answers about Exempt and Non-Exempt Assets
Honolulu Bankruptcy Firm Experienced in Bankruptcy Exemptions
When a debtor files for chapter 7 bankruptcy, almost all of their personal assets will become the property of the bankruptcy estate. Each state, as well as the federal bankruptcy system, has a set of exemptions that allows debtors to keep certain personal property. In Hawaii, the debtor has a choice of using the federal exemption statutes or the Hawaii state exemptions.
Exempt or Non-Exempt?
Some of the exemptions available under Hawaii law include:
- Up to $2,575 equity in one motor vehicle
- Household goods, furnishings, appliances, and clothing
- Jewelry and watches, up to $1000 in value
- Police officer, firefighter, public officer, and public employee pension plans
- Up to $30,000 equity in real property located in Hawaii, if the debtor is the head of a family or over 65
- Up to $20,000 of equity in a home if the debtor is not the head of a family
- Tools necessary to the debtor's trade or profession
- Income earned during the 31 days prior to filing bankruptcy
- Burial plots, up to 250 square feet, including gravestones and improvements
Non-exempt property that a debtor might have to give up in bankruptcy under the Hawaii exemptions includes:
- Family heirlooms
- A second vehicle or home
- Stamp, coin, and other valuable collections
- Expensive musical instruments, unless the debtor is a professional musician
- Cash, bank accounts, stocks, bonds, and other investments
Some of the exemptions available under the federal exemption statutes are:
- Up to $22,975 in equity in real property that the debtor uses as a residence
- Up to $3,675 in equity in a motor vehicle
- Jewelry and watches, up to $1,550 in value
- Up to $1 million in certain tax-exempt retirement accounts
- Up to $12,725 in any property if the homestead exemption is not claimed
- Up to $1,225 in any property if the maximum homestead exemption is claimed
- Up to $2,300 in equity in tools of the trade
An exemption limit applies to any equity, or the difference between the value of the property and what is owned on it, that a debtor has. If the property is secured by a loan and the debtor is current on the payments, the equity is covered by exemptions, and if he elects to continue making payments on the loan, he will generally be able to keep the property. If all the equity is not covered by exemptions, the bankruptcy trustee might elect to liquidate the asset and distribute the net proceeds to creditors.
If you have questions about whether to use the Hawaii state bankruptcy exemptions or the federal list and which exemptions you might be entitled to, an experienced Honolulu bankruptcy attorney at The Law Office of Jean Christensen LLLC can help you make informed decisions. Contact us online or call 808-521-1202 to set up a free initial consultation to discuss your situation with an experienced Honolulu bankruptcy attorney today.