Debt Relief is Just Ahead
When people are struggling under the weight of unmanageable debt in Hawaii, they might be unclear about how to handle the situation. Hawaii bankruptcy can help people who are unable to pay many types of debts to have a fresh financial start. An experienced bankruptcy lawyer in Hawaii can help you to understand whether a type of Hawaii bankruptcy might be a good solution for you.
How Does Bankruptcy in Hawaii Work?
The Hawaii bankruptcy process begins with determining the correct bankruptcy chapter under which you should file. Before you can file a petition for bankruptcy, you will first need to complete a pre-filing credit counseling course. The U.S. Department of Justice has a list of approved credit counseling agencies on its website. Many of the credit counseling agencies offer the pre-filing credit counseling course online. Once you complete your course, you will be given a certificate to print out. Save this certificate because you must file it together with your bankruptcy petition. How your Hawaii bankruptcy will work will depend on whether you choose to file for protection under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is known as liquidation bankruptcy because some of a debtor’s property and assets are sold to repay the creditors a portion of what they are owed. However, many types of assets are exempt, which means that they will not be included in the Hawaii bankruptcy estate under Chapter 7. You can choose the Hawaii bankruptcy exemptions or the federal exemptions, depending on which list allows you to keep more of your assets. Many people can keep much of what they own because of exemptions. An experienced bankruptcy lawyer in Hawaii can help you to decide whether to take the state or federal exemptions when you file for bankruptcy protection.
To file a Chapter 7 bankruptcy petition, you may have to pass the means test. The means test applies to people with higher incomes. If your income is below the median income for your area and your household size, you will be allowed to file for Chapter 7 bankruptcy test. It is still possible for you to qualify for Chapter 7 bankruptcy if your income exceeds the median income as long as you pass the means test. The Hawaii bankruptcy means test involves you subtracting your expenses from your income to see how much money you have remaining to repay your creditors under a Chapter 13 bankruptcy plan. If the amount of money that remains is less than the threshold amount, you will pass the means test and will be able to file for Chapter 7 bankruptcy.
The Hawaii bankruptcy process under Chapter 7 begins with filing your Chapter 7 petition and your certificate from the credit counseling course. To complete the petition, you will need to list all of your debts and creditors and your assets along with their values. There is a bankruptcy filing fee that you must pay unless you are approved for a waiver. To be approved for a waiver of the bankruptcy filing fee, you must file Form 103B.
Once your documents have been filed by your bankruptcy lawyer in Hawaii, the bankruptcy court will issue an automatic stay. This is an injunction that prevents your creditors from pursuing any further collection activities. A meeting of creditors will be scheduled, and you will be required to attend. This is a meeting at which your creditors can object to your bankruptcy case. In many Chapter 7 cases, the creditors do not attend, however. After the meeting of creditors, the bankruptcy court will review your petition and the documents that you have filed and will decide whether to grant your petition. If your petition is granted, most of your unsecured debts will be discharged. When a debt is discharged in a Chapter 7 bankruptcy case, you will no longer be obligated to repay it. Creditors cannot try to recover discharged debts from you and can face penalties if they do.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a form of bankruptcy through which your debts are restructured. Under this chapter, you will propose a repayment plan for your debts that will last from three to five years. Your debts will be in the order of priority. Priority debts must be repaid in full during your repayment plan. These include things like back taxes, back spousal support, and back child support. Most unsecured debts will not be repaid in full, and you will instead pay a percentage of them.
A Chapter 13 Hawaii bankruptcy is used by people who do not qualify for Chapter 7 bankruptcy and by people who have priority debts that they need to repay. To be eligible for Chapter 13 bankruptcy, your unsecured debts must not total $394,725 or more, and your secured debts must not total $1,184,200 or more. You also must have a steady income source and cannot be a business. Chapter 13 bankruptcy can be a good choice if you are facing potential foreclosure. With this type of bankruptcy, you will have more time to catch up on the back house payments that you owe while you continue to make your regular payments.
When you file a Chapter 13 petition, you must file a copy of your credit counseling certificate and schedules of your debts and assets. You will also be required to file a proposed repayment plan. The court will issue an automatic stay once you file your petition, and a creditor’s meeting will be scheduled. The creditors will have the opportunity to object to your repayment plan and to propose other plans. If your repayment plan is approved, you will make one payment each month to the bankruptcy trustee, and the trustee will remit the payments to the creditors for you. If you complete the repayment plan, your remaining unsecured debts will be discharged.
Filing Bankruptcy in Hawaii
Filing bankruptcy in Hawaii can help you to regain your financial footing and have a fresh start. When your debts are discharged, you will no longer have the obligation of repaying them. Many people are forced to deal with overwhelming debt, and bankruptcy is an option for dealing with it. Attorney Mujtabaa has more than 38 years of legal experience representing people who are struggling with unmanageable levels of debt. To learn about whether bankruptcy might be the right option for you, contact us today to request a free consultation.