How to File Bankruptcy in Hawaii
People often file for bankruptcy when they have problems with debt, but only under the necessary circumstances. Bankruptcy is recommended for those who can only pay the minimum amount of their bills, those who cannot find a budget solution under a five-year mark, those who have continuous notices of foreclosures on their loans or mortgages, and those who have seen financial halts, such as divorces, loss of a job, or severe illness.
Unlike popular thought, bankruptcy does not clear all debts. Filing for bankruptcy does not eliminate a majority of student loans, child support, government agency penalties and fines, debts of fraud, alimony, back taxes, large purchases of five hundred fifty dollars or more made within a ninety-day time span of filing, or any cash advances within a seventy-day time span of more than eight hundred twenty-five dollars.
The state of Hawaii allows for individuals to file for two different kinds of bankruptcy: Chapter Seven and Chapter Thirteen. Chapter Seven bankruptcy is often called straight bankruptcy and clears all debts–with the exception of those previously listed–and allows a clean slate. Chapter Thirteen bankruptcy is often called wage earner bankruptcy and requires a repayment arrangement to be set up so that debt can be repaid over an extended time period.
As of April 2005, the Bankruptcy Abuse Prevention and Consumer Prevention Acts were passed by the President. These acts put limitations on personal access to United States bankruptcy courts. October 2005 stipulated more changes that place specific bans on Chapter Seven bankruptcies, increase all payments for Chapter Thirteen bankruptcies, give specific presumptions towards debtors who have an increase in penalties, and reduce any judicial discretion for balancing interests that have competitions.
Chapter Seven and Thirteen Bankruptcy
Chapter Seven bankruptcy is usually called a liquidation of debts. This kind of bankruptcy is fast and easy for individuals who are eligible. These include partnerships, sole individuals, married individuals, and corporations.
Under Chapter Seven an assigned trustee will sell gathered non-exempt property and use the received funds to pay the outstanding debts. A majority of cases under Chapter Seven do not have any non-exempt property for sale and are named as no-asset cases.
A means test will decided whether or not an individual or corporation is eligible for federal bankruptcy under Chapter Seven. One finite determiner for bankruptcy eligibility is usually the amount of income a home has. If the income is under the stipulated amount, then bankruptcy through Chapter Seven is normally an option.
Those who do not qualify for Chapter Seven bankruptcy can often qualify for Chapter Thirteen bankruptcy. All expenses will be taken into consideration upon eligibility determination along with the monthly income of the entire household. Car payment and mortgage amounts will be deducted from the income amount to determine what is in fact disposable.
To determine the payment amounts for the next five years, the disposable amount is then multiple by sixty. Before individuals can apply for bankruptcy, despite eligibility, they must first have approval from credit counseling, as stipulated by the October 2005 act.