Bankruptcy in Hawaii (2026): Exemptions & Means Test

Bankruptcy is a federal process, but in Hawaii the property you keep and the income test you must pass turn on state-specific rules. Unlike most states, Hawaii lets filers choose between the state exemptions and the federal bankruptcy exemptions, which makes the comparison an important early decision. This page explains Hawaii's exemptions, the Chapter 7 means test, and where cases are filed, as general legal information rather than legal advice.

Does Hawaii use state or federal bankruptcy exemptions?

Federal law lets each state decide whether residents may choose the federal exemption list in 11 U.S.C. 522(d). Hawaii has not opted out, so Hawaii filers may select either the state exemptions in HRS chapter 651 or the federal 522(d) list. You must choose one full set, not mix and match. Many filers compare the two, since the federal list includes a generous wildcard that can protect cash and other assets, while the Hawaii homestead exemption can protect more home equity for older filers or heads of family. If you recently moved to Hawaii, the federal domicile rules in 11 U.S.C. 522(b)(3) may require you to use a prior state's exemptions for a period, which can affect whether the federal option is available to you.

Hawaii homestead exemption

Under HRS 651-92, real property used as a residence is exempt from execution up to a fair market value of $30,000 if the owner is the head of a family or is 65 years of age or older, and up to $20,000 for any other person. The exemption covers the dwelling and one parcel of land not exceeding one acre, and the protected value is measured over and above prior liens and encumbrances. Only one exemption may be claimed per parcel. Under HRS 651-96, the proceeds from a sale remain protected for six months, allowing reinvestment in a new home. Because the federal homestead exemption may protect more equity for some filers, the homestead figure is a key part of the state-versus-federal comparison.

Motor-vehicle, personal-property, and wage exemptions

Hawaii's personal-property exemptions appear in HRS 651-121:

• Motor vehicle: one vehicle up to $2,575 of value over and above all liens and encumbrances.
• Household goods and clothing: all necessary household furnishings, appliances, books, and wearing apparel; plus jewelry, watches, and items of personal adornment up to $1,000 in aggregate.
• Tools of the trade: tools, implements, instruments, uniforms, equipment, one commercial fishing boat and nets, and one motor vehicle reasonably necessary to the debtor's trade or business.
• Wages: wages, salaries, commissions, and other compensation for personal services due for the 31 days before the proceeding. Hawaii and federal garnishment limits protect a portion of ongoing earnings.
• Burial plots and insurance proceeds of exempt property are also protected, the latter for six months.

These statutory figures are subject to amendment, so confirm current amounts before relying on them, and remember they apply only if you choose the Hawaii exemptions rather than the federal list.

The Chapter 7 means test in Hawaii

The means test decides whether your income is low enough to file Chapter 7 without a presumption of abuse. The first step compares your household's current monthly income, annualized, to the median family income for a Hawaii household of your size, as published by the U.S. Trustee Program (justice.gov/ust). At or below the median, you generally pass the first step; above it, a detailed calculation of allowed expenses and disposable income applies.

For cases filed on or after April 1, 2026, the U.S. Trustee Program lists Hawaii's median family income as:

• 1 earner: $85,254
• 2 people: $106,202
• 3 people: $123,454
• 4 people: $142,181
• Add $11,100 for each individual in excess of four.

These figures are updated periodically, typically about twice a year, so check the current table for your filing date.

Chapter 7 vs. Chapter 13

Chapter 7 is a liquidation. A trustee may sell non-exempt property to pay creditors, and most remaining unsecured debts are discharged, often within a few months. Because Hawaii filers can choose whichever exemption set protects more property, many keep all of what they own. Chapter 7 suits people with limited income and mostly unsecured debt.

Chapter 13 is a reorganization for people with regular income who want to cure a mortgage or car-loan default, or who do not pass the Chapter 7 means test. You repay some or all of what you owe through a court-approved plan over three to five years, then receive a discharge of remaining eligible balances.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362, which immediately stops most collection actions, including foreclosure, repossession, lawsuits, and wage garnishment, while the case proceeds.

Where you file in Hawaii

Hawaii is a single federal district. All bankruptcy cases are filed in the U.S. Bankruptcy Court for the District of Hawaii, located in Honolulu, which serves the entire state.

What bankruptcy can and cannot do

Most unsecured debts, such as credit cards, medical bills, and personal loans, are dischargeable. Some obligations generally are not, including most student loans, recent income taxes, child support and alimony, and debts arising from fraud. Credit counseling from an approved agency is required before filing, and a debtor-education course is required before discharge. Bankruptcy has lasting effects on credit, so consider consulting a licensed Hawaii bankruptcy attorney, who can also advise whether the state or federal exemptions are better for your situation.