A Brief Guide to Hawaii State Bankruptcy Law
All businesses need a Hawaii bankruptcy lawyer to file for bankruptcy in the state, but the same is not true for individuals. However, most experts recommend that everyone without specific legal backgrounds in bankruptcy get some outside help. Thankfully, pro bono legal programs such as the Legal Aid Society of Hawaii offer assistance at little or no cost.
All personal filers do need to have some credit counseling before filing for bankruptcy. A certificate of completion of counseling must be given to the judge for the filing to be approved. For a list of Justice Department-approved counseling services, visit their site here.
Filing for Hawaii Bankruptcy
Individuals and businesses both may file for bankruptcy at the United States Bankruptcy Court for the District of Hawaii located at 1132 Bishop Street in Honolulu. Some filing may also be done by mail or, for more attorneys, electronically. Hefty fines may be charged at the time of filing, $306 for Chapter 7, $1046 for Chapter 11, or $281 for Chapter 13.
All relevant local and federal forms can be found at this site: https://www.hib.uscourts.gov/forms/index_forms_menu.htm. Before you print them off though, know what kind of bankruptcy you are applying for since that determines which forms you need to file. To learn more about the types of bankruptcy, read below.
Corporate Hawaii Bankruptcy
Some businesses are luckier than others, and those that are particularly unlucky may end up suffering from huge debts that appear unbeatable without assistance. Thankfully, that assistance does exist in the form of corporate Hawaii bankruptcy strategies, of which there are two primary ones:
• Chapter 11: This type of Hawaii bankruptcy is in place to help struggling businesses regain their foothold in the marketplace without being cornered unreasonably by exhaustive debts. It allows a temporary moratorium on debts while a repayment plan is discussed and settled upon by the business and the court. Meanwhile, all the businesses assets are protected, and day-to-day operations can continue as normal.
• Chapter 7: This is point-of-no-return Hawaii bankruptcy, where the filing business has no hope for continuing on afterwards. It should only be pursued by companies who believe that there is no point of continuing to chase profits that, because of a faulty business plan or various circumstances beyond anyone’s control, will never appear. The court will liquidate all assets of the company and try to use them to pay off every bank and investor who has loaned the company money.
Personal Hawaii Bankruptcy
Personal Hawaii bankruptcy laws provide a route back to a normal life for those financial distress. Here are a few of the principal routes:
• Chapter 7: As with businesses, Chapter 7 personal Hawaii bankruptcy has the court liquidating a person’s assets. For individuals it is an excellent option if they have large amounts of unsecured debt such as credit card debt but not a lot of assets that will be taken away. Only individuals below a certain income line (the median income of Hawaii) or those who pass the Hawaii Means Test are eligible.
• Chapter 13: The traditional option for filers whose income exceeds Chapter 7 levels, Chapter 13 orders the filer to work with a judge on creating a repayment plan that will then be put in place using the filer’s discretionary income to pay off debts.
• Chapter 11: Another option available for very high income, high debt filers, it runs similarly to corporate Chapter 11 Hawaii bankruptcy and is intended only for individuals with greater debt and assets than those filing for Chapter 13.
The Tax Debt Warning
Bankruptcy can be useful in many different situations in which someone is suffering from insurmountable debt. However, you should do some research before rushing out to the U.S. Bankruptcy Court in Hawaii to file for bankruptcy if your primary debt is tax debt. Most tax debt is not covered by Hawaii bankruptcy laws, though some types of tax are. Research and consult a Hawaii bankruptcy lawyer to decide what is best for you.