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Chapter 7 Bankruptcy

Your path to financial freedom starts here. Get in touch with the experienced bankruptcy attorneys at the Law Offices of Blake Goodman today to explore your options.

Chapter 7 Bankruptcy Lawyers in Hawaii

How Does Chapter 7 Bankruptcy Work?

When you file for Chapter 7 (also known as "straight" bankruptcy") you are requesting that the court settle your debts by liquidating assets to repay the debt while also discharging a large portion of it.

Here is how Chapter 7 bankruptcy works:

  • Eligibility: Not everyone will qualify for Chapter 7. You will need to pass the Means Test, which shows whether your income is lower than the state's median for your household.
  • Trustee: A bankruptcy trustee will be appointed. The trustee collects all non-exempt assets of the debtor, sells those assets, and distributes the proceeds to creditors.
  • Minimum debt: There is no minimum or maximum debt limitation for Chapter 7 and the debtor doesn’t have to be insolvent.
  • Discharge: The goal of an individual debtor in a Chapter 7 case is to get a “discharge” of their debts. In other words, bankruptcy is a tool that can help you get your life back from creditors.

What you don’t want to do is spend too much time waiting to actually apply for bankruptcy. The longer you wait, the deeper your debts will grow. If you are on the verge of losing absolutely everything to your debt, then you should consider seeking out guidance from a seasoned lawyer at the Law Offices of Blake Goodman PC to help you through it.

What Is An “Automatic Stay”?

The automatic stay is a feature of bankruptcy law that goes into effect immediately upon filing a petition.

This forces creditors to stop all collection actions against the debtor, including:

  • Foreclosures
  • Repossessions
  • Garnishments
  • Evictions

During this process, the collection and distribution of assets can occur according to a fair and orderly method as specified in the Bankruptcy Code. Above all, filing Chapter 7 will give you the time to review your best options with a qualified attorney.

Which Assets Can I Keep in Chapter 7 Bankruptcy?

Under federal or state exemption laws, individual debtors are entitled to keep certain assets free from the claims of creditors. Typical exemptions are the homestead exemption, cash value of insurance policies, household furnishings, clothing, and wages. Tools used in the debtor’s job are also protected. The amount of the exemption depends on whether federal or state exemptions are available and or used.

Exempt property can include:

  • The equity in your home up to about $25,150 per person filing
  • Motor vehicles, up to a certain value
  • Reasonably necessary clothing
  • Necessary household goods and furnishings
  • Household appliances
  • Jewelry, up to a certain value
  • Pensions
  • A portion of unpaid but earned wages
  • Public benefits, including public assistance (welfare) and Social Security

Generally, a discharge means that a debtor’s obligations are erased or wiped out. When a discharge is granted, it protects the debtor from personal liability on the discharged debt. A discharge is only available to certain debtors and for certain debts. For example, debtors that are not individuals cannot receive a discharge in a Chapter 7 bankruptcy.

What Is a Secured Debt?

A secured debt is one where your creditor has a lien or security interest in something you own. For instance, if you’re paying off your car or house, these creditors have a security interest in the house or car. In most cases, you will be able to continue paying on the secured debts without losing them. You will also be given the opportunity to return these assets back to the creditor and erase all responsibilities for continuing to pay these debts.

Will I Be Able to Keep My Home in Chapter 7?

Whether or not you can keep your home and car will depend on several factors.

Can you keep up with payments?

You may be able to keep your home during a Chapter 7 plan if you are able to exempt the equity you have and if you can continue to pay the mortgage after bankruptcy. An exemption effectively means your equity is protected from being sold by the bankruptcy trustee to pay your creditors.

Are you covered by exemptions?

The bankruptcy code allows for debtors to utilize bankruptcy exemptions to the fullest extent. The federal bankruptcy rules allow for a home equity exemption of $25,150; which is double for married couples filing jointly. If these amounts are equal to or greater than the amount of equity you have in your home, then the trustee will not be able to sell your home.

Even if your mortgage exceeds the full value of your home and you have no equity, Chapter 7 can still be very beneficial. Without filing for bankruptcy, the lender would be able to foreclose on the home, and then sue you personally for the remainder of the debt. However, if you cannot afford to keep your home, you can surrender the property and the remaining amount owed will be completely wiped out in Chapter 7.

Can I Keep My Vehicle in Chapter 7?

If you own your car when you file Chapter 7 bankruptcy, it will be protected from being sold if its value is less than or equal to the allowed exempt amount. Similar to a home, you can use the exemptions to maximize the property you can keep.

If you are being threatened with repossession of your vehicle, a Chapter 7 bankruptcy will stop repossession attempts immediately. If your car was recently repossessed, you may even be able to get it back if you act at once. Contact our Hawaii bankruptcy attorney immediately for more information if your car was repossessed.

There are several options available to help you keep your vehicle if you can afford it. Some lenders will allow you to keep your car and will release you from the loan in exchange for purchasing the car at its current value (called a redemption). Others will let you sign a new contract (called a reaffirmation) which may let you keep making the same payments you had before filing bankruptcy. These options have important consequences, so it is best that you first consult with a qualified bankruptcy attorney before entering into a redemption or reaffirmation agreement with a lender.

Complete Financial Rehabilitation for Clients in Hawaii

At the Law Offices of Blake Goodman PC, we know that debt can be frightening. We also know that it can be difficult to know what effect your debt will have on your family’s future. However, there’s no need to suffer the unknown. Having an experienced Hawaii bankruptcy lawyer can end the collection calls and put you on the path towards a new financial life.


Contact our law firm today at (808) 518-4844 or fill out our online questionnaire to take the first step towards financial freedom.


Does Filing for Chapter 7 Impact My Credit Score?

Although your credit score will be damaged for 10 years when you file for bankruptcy, in most cases, people bounce back quicker than they might think. One of the free services we offer our clients is our 720 Credit Rebuild Program. We believe in complete financial rehabilitation, which is why our 720 Program guides clients through the mechanics of returning to a 720+ credit rating within as little as 12 to 24 months after filing bankruptcy or completing a debt negotiation plan. Clients who take advantage of our 720 Credit Rebuild Program can usually obtain financing for a vehicle immediately after their case is finished and can obtain credit cards and unsecured bank loans way before the ten year period expires.

If You Have Questions,
We Have Answers

Bankruptcy can be difficult to navigate, but our team is ready to help guide you. Read our frequently asked questions or reach out to us directly to schedule a free consultation for more information.

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