Understanding the Hawaii Bankruptcy Exemptions

Professor’s Corner

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Hawaii bankruptcy exemptions allow debtors to protect certain assets when filing for bankruptcy, with the option to choose between state and federal exemptions. While this flexibility can be advantageous, you must carefully evaluate which set of exemptions offers the most protection for your situation, because mixing the exemptions is prohibited.

To file for bankruptcy in Hawaii, you must satisfy the residency requirements. If you don’t, then you have to use the exemptions of the state you previously resided in.

How Many Bankruptcies Were Filed in Hawaii?

In Hawaii, even though the state has more than one million residents, the number of bankruptcies filed was few. The year-end figures for 2024 were 748 Chapter 7 cases filed versus 443 Chapter 13 cases.

The 730-Day Rule and the 180-Day Rule

There are two important dates to consider when determining if you can file for bankruptcy in Hawaii. The first one is known as the 730-day rule. This means you must have lived in Hawaii for at least 730 days to use the state exemptions.

If you do not meet this residency requirement but have at least resided in Hawaii for 91 days, you would apply the exemptions from your previous state of residence. This is known as the 180-day rule.

This is crucial because whether you are moving to or from Hawaii, you need to evaluate which state offers better exemptions based on your specific situation. You also have to compare those exemptions to the federal exemptions, since you can choose between state and federal exemptions. To learn more about exemptions under the Bankruptcy Code, see §522(b)(3)(A).

• Filing for Bankruptcy After Moving? Keep Your Exemptions!

Hawaii Homestead Exemption

Hawaii has two sets of homestead exemptions for homeowners. Up to $30,000 in home equity is protected as head of household, or if you are over age 65. If not, then $20,000 is protected up to one 1 parcel of land.

Hawaii’s statute on real property exemption reads as follows under §651-92  Real property exempt.  (a)  Real property shall be exempt from attachment or execution as follows:

     (1)  An interest in one parcel of real property in the State of Hawaii, of a fair market value not exceeding $30,000, owned by the defendant who is either the head of a family or an individual sixty-five years of age or older.

• Understanding the Bankruptcy Homestead Exemption

Applying Hawaii’s Bankruptcy Exemptions

Per Redfin, the average home in Hawaii is valued at $752,600. Per Bankrate.com, the average mortgage balance is $409,068. The difference between those two figures is $343,532, which is the home’s equity.

Applying the homestead exemption means subtracting $30,000 from the equity, leaving $313,532. That is the amount not protected or nonexempt. Considering the minimal homestead exemption Hawaii offers and the high value of properties, it is probably why there is a minimal amount of bankruptcies filed. Simply, debtors aren’t protected in the Aloha state. However, there is the option of choosing the federal homestead exemption.

Personal Property Exemptions

Personal property is also subject to protections, which include up to $1,000 in total value for household furnishings, appliances, books, clothing, jewelry, and watches used by you and your family.

 §651-121  Certain personal property and insurance thereon, exempt.  The following described personal property of an individual up to the value set forth shall be exempt from attachment and execution as follows:

     (1)  All necessary household furnishings and appliances, books and wearing apparel, ordinarily and reasonably necessary to, and personally used by a debtor or the debtor’s family residing with the debtor; and, in addition thereto, jewelry, watches, and items of personal adornment up to an aggregate cash value not exceeding $1,000;

Also, a burial plot up to 250 square feet, including tombstones and fencing is protected.

§651-121   (4)  One parcel of land, not exceeding two hundred fifty square feet in size, niche or interment space owned, used, or occupied by any person, or by any person jointly with any other person or persons, in any graveyard, cemetery, or other place for the sole purpose of burying the dead, together with the railing or fencing enclosing the same, and all gravestones, tombstones, monuments, and other appropriate improvements thereon erected;

The Tools of the Trade Exemption

Not all states offer a tools of the trade exemption, but Hawaii does, and it is generous. So far, it’s the only state that I have come across where it is almost fully exempt.

§651-121  (3)  Any combination of the following:  tools, implements, instruments, uniforms, furnishings, books, equipment, one commercial fishing boat and nets, one motor vehicle, and other personal property ordinarily and reasonably necessary to and personally owned and used by the debtor in the exercise of the debtor’s trade, business, calling, or profession by which the debtor earns the debtor’s livelihood;

• Tools of the Trade: Protect Bankruptcy Assets
• Understanding Bankruptcy Exemptions for Business Owners

Note that some states offer an additional protection known as the wildcard exemption, but Hawaii doesn’t.

Motor Vehicle Exemption

You can protect up to $2,575 in equity for a vehicle. To determine the value of your vehicle, you can use trusted sources such as Kelly’s Blue Book. If the appraisal seems high, consider taking your vehicle to a dealer for a written appraisal.

§651-121  (2)  One motor vehicle up to a value of $2,575 over and above all liens and encumbrances on the motor vehicle; provided that the value of the motor vehicle shall be measured by established wholesale used car prices customarily found in guides used by Hawaii motor vehicle dealers; or, if not listed in such guides, fair wholesale market value, with necessary adjustment for condition;

When applying the motor vehicle exemption, if there is nonexempt equity, in Chapter 7 cases, the maximum amount of time a trustee can extend payments on non-exempt assets is twelve months. However, bankruptcy trustees prefer a ten-month payment plan.

Note that Chapter 13 does offer what is known as a cramdown. The cramdown allows you to reduce the value of your vehicle to the fair market value. It could potentially save you thousands of dollars. Use the links below to learn more about the Chapter 13 cramdown.

Research! Research! Research!

As I go through each state, I have noticed errors every time. It’s common for law firms or attorney blogs to not be updated, including state websites. So, if you are filing bankruptcy without a lawyer, I suggest you triple and quadruple-check the exemption amounts. Failing to properly use the Hawaii bankruptcy exemptions could affect your case.

For information on the Hawaii Bankruptcy Court System, follow this link. Contact information for the trustees can be found via this link.

Educational Resources

• For Institutions: Colleges and universities can purchase or request examination copies of my textbook directly from Routledge Publishing.
• For Students & Practitioners: Single print and digital copies are available via Amazon Books.
• Video Lectures: Stream comprehensive legal breakdowns and video explanations on the Prof. Hernandez YouTube Channel.

Bankruptcy Court & Consumer Resources

Explore a deep dive for consumer guides and court directories to navigate your legal options:

• A step-by-step master guide on Filing for Bankruptcy and Navigating the Petition.
• Access full directories for the Federal Bankruptcy Court System and Trustee Contact Information.
• Protect your assets by reviewing your specific State Bankruptcy Exemptions or compare them against the Federal Bankruptcy Exemptions.
• Prepare for your court date with the updated brief on the 341 Meeting of Creditors Rules and Procedures.

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.