Chapter 7 vs. Chapter 13 Bankruptcy in Hawaiʻi: Which Is Right for You?
This guide is legal information, not legal advice, and reading it does not create an attorney-client relationship. Every situation is different, and the right move in your case depends on your facts. For advice about your own situation, start with my free questionnaire or call me at (808) 468-7000.
I work hard to keep this page accurate, but errors or omissions are possible and the law can change. The information here is current only as of the date above.
Should I file Chapter 7 or Chapter 13 in Hawaiʻi?
It depends on what you are trying to protect. Chapter 7 is the faster path: it erases most unsecured debt in about four to six months and fits people whose income qualifies and whose property the exemptions protect. Chapter 13 is a three to five year repayment plan: it is the tool that can stop a foreclosure, let you catch up on a mortgage or car loan, and protect a co-signer, and it remains available when your income is too high for Chapter 7. The right chapter usually becomes clear once you look at your budget, what you own, what you owe, and what you are trying to keep.
This is the question I answer on every first call, and it is rarely a close call. The two chapters solve different problems, so your situation usually points to one of them. This guide walks through the same reasoning I use with clients, so you can see where you are likely to land before you call. For the full detail on either chapter, my Chapter 7 guide and Chapter 13 guide each cover their subject start to finish.
Start With What You Are Trying to Do
Forget the statute numbers for a moment. In practice, the choice usually comes down to which of these sounds like you.
"I want this over as fast as possible, and I mostly owe credit cards and medical bills."
That is the classic Chapter 7 case. It is the clean slate: most unsecured debt is erased in about four to six months, and in the ordinary case the exemptions protect what you own, so the trustee takes nothing. If your ordinary monthly expenses, not counting the debts you want to wipe out, are more than or equal to your income, you will usually qualify for Chapter 7. The formal version of that question is the means test, an income and expense formula that decides who can use Chapter 7, and if your income is above the Hawaiʻi median it takes a closer look at your budget. Even then, many people qualify. If you are not trying to catch up on a house or car, Chapter 7 is usually the faster, cheaper answer.
"I am behind on my house, and I want to keep it."
That is Chapter 13, and it is not close. Chapter 7 stops a foreclosure only briefly, because it gives you no way to repay the missed payments. A Chapter 13 plan spreads the past-due balance over three to five years while you resume your regular payment, and the lender cannot foreclose while you keep up both. A car works differently. Rather than catching up alongside a regular payment, the car loan itself is paid through the plan, which is a separate calculation I look at early. Protecting home equity, along with stopping a foreclosure, is the biggest reason I file Chapter 13 cases. My Chapter 13 guide explains exactly how the cure works.
“My car has already been repossessed.”
The first question is whether it has been sold, because that decides the rest. If it has not been sold, filing stops the sale in either chapter, and getting the car itself back is a separate step after that, with no outcome guaranteed. Which chapter fits then turns on how the car gets paid for going forward: a Chapter 13 plan catches up what you missed over three to five years, while a Chapter 7 gives you no way to catch up, so keeping the car means reaffirming the loan or paying the lender what the car is worth in a single payment. If the car has already been sold, neither chapter brings it back, and what is left is the balance you still owe, which either chapter erases. My guide to car repossession covers all three.
"I earn too much to pass the means test."
Then Chapter 13 is your path, and it is a good one. There is no income ceiling for Chapter 13, as long as your debts are inside Chapter 13's limits, which are set separately for secured and for unsecured debt; a higher income simply means your plan runs five years and your budget determines what unsecured creditors receive. Being above the median income is not an automatic no. A second look at your allowed expenses decides it. And if your debts are primarily business debts, the means test does not apply at all. The details are in my Chapter 7 guide's means test section.
"I own something Chapter 7 might not protect."
Chapter 13 lets you keep property that would be at risk in a Chapter 7. Instead of the trustee selling the unprotected asset, your plan pays your unsecured creditors at least the value of what you are keeping, over time, while the asset stays yours. Whether anything you own is actually at risk is an exemptions question, and my exemptions guide covers that; for many people the answer is simply that everything they own is already protected and Chapter 7 is safe.
"I am behind on my condominium or association fees."
That usually points to Chapter 13, and the reason is specific to associations. The fees you owed before you file are erased in either chapter. What separates the two is what happens to the fees that come due after you file: in a Chapter 7 those stay your responsibility for as long as your name is on the unit, and in a Chapter 13 that you complete they can be erased. That is sharpest if you are giving the unit up, because a surrendered condominium can sit in your name for a long time while the fees keep adding up. If you are keeping it, a Chapter 13 plan also pays the past due fees over three to five years while you stay current. My guide to association fees covers both.
"I am going through a divorce."
The chapter matters here in three separate places. Support survives both chapters, but a Chapter 13 plan pays off support you are behind on over three to five years, and a Chapter 7 does nothing for arrears. Non-support divorce debt, which is money you owe your former spouse that is not support, survives a Chapter 7 and can be erased in a Chapter 13 you complete. And on a debt you and your former spouse are both on, only Chapter 13 holds the creditor off, and only while the case is open and only as far as the plan pays that claim in full. My guide to divorce and bankruptcy also covers whether to file before or after the decree.
"Someone co-signed for me."
That points to Chapter 13, because one protection belongs to it alone: the co-debtor stay, which shields a person who co-signed your consumer debt while your plan is active. Chapter 7 offers a co-signer nothing. If a parent or sibling co-signed for you, tell me early, because it can change the recommendation. The details are in the Chapter 13 guide.
What I Ask First Is Not Really a Question
When someone calls and asks "which one am I?", I do not start with a checklist. I say: why don't you tell me a little about your situation? Then I listen, because the answer is almost always in the story.
If the story is about collection calls, maxed cards, and a medical bill that snowballed, I am hearing a Chapter 7. If it is about a mortgage that got behind after a layoff, a car the lender is threatening to take, or a tax bill on a payment plan that is not working, I am hearing a Chapter 13. Along the way I am listening for a handful of facts: whether you are current or behind on the house and the car, what kinds of debt you carry, whether your income is steady, whether anyone co-signed for you, and whether there is a tax debt or support obligation in the mix.
By the end of that first conversation, the chapter has usually chosen itself. My job is to check the choice against the numbers, the means test, the exemptions, and the plan math, and tell you plainly what I would do in your situation.
Where the Two Chapters Are the Same
Whichever chapter fits, the protection starts the same way. The moment either case is filed, the automatic stay, a federal injunction (a binding legal order), stops collection calls, lawsuits, garnishments (other than for child support and alimony), and foreclosure activity. If you have had a bankruptcy case dismissed within the past year, that protection can be much shorter or may not arrive at all, so tell me at the start if you have filed before. And both chapters end the same way: with a discharge that permanently erases the remaining dischargeable debt.
The Court Costs
The court charges a modest filing fee for either chapter, and it can usually be paid in installments. The current amounts are in my Chapter 7 guide and Chapter 13 guide, where they stay up to date. My guide to what bankruptcy costs in Hawaiʻi breaks down both fees in detail. Attorney fees differ between the chapters. In Chapter 13, court-approved fees can be paid partly through the plan itself rather than up front, and in most cases the majority of my fee is paid that way. I explain how the fee works at the free consultation, before you commit.
Let's talk about your options.
I have helped more than a thousand people through this. Tell me what you are dealing with and I will tell you what you may qualify for: Chapter 7, Chapter 13, or another path entirely.
Frequently Asked Questions
Can I switch from Chapter 13 to Chapter 7 if my situation changes?
Yes. You have the right to convert a Chapter 13 to a Chapter 7, and that right cannot be signed away. What changes is what the case can still do for you, because several of the debts a Chapter 13 erases are wiped out only if you finish the plan. If the payment stops working, tell me early, because converting is not the only option.
Is Chapter 7 or Chapter 13 better for my credit?
Both are the start of rebuilding, and the practical difference between them is small. The law allows both to be reported for up to ten years from filing. The credit bureaus remove a completed Chapter 13 sooner than that, but as their own policy rather than a legal requirement. Either way, the discharge erases the debt that has been dragging your score down, and many people see real improvement within twelve to twenty-four months of filing.
Can I file Chapter 7 if I make too much money?
Sometimes. The means test compares your income to the Hawaiʻi median for your household size, but being above the median is not an automatic no. A second calculation of your allowed expenses decides it, and if your debts are primarily business debts rather than consumer debts, the means test does not apply at all. When Chapter 7 truly is unavailable, Chapter 13 remains open at any income, as long as your debts are inside its limits, which are set separately for secured and for unsecured debt.
How much faster is Chapter 7?
Much faster. A typical Hawaiʻi Chapter 7 runs about four to six months from filing to discharge, while a Chapter 13 plan runs three to five years before its discharge. The protection is equally fast in both: the automatic stay stops collection the minute either case is filed.
Does Chapter 13 protect a co-signer when Chapter 7 does not?
Yes. Chapter 13 has a co-debtor stay that blocks creditors from pursuing the person who co-signed your consumer debt while your plan is active and the debt stays current through the plan. Chapter 7 has no similar protection: your discharge protects only you, and the creditor can turn to your co-signer. When protecting a family member is the priority, that difference often decides the chapter.
Sources & Legal Authorities
The authorities behind this guide.
- United States Code. 11 U.S.C. § 109(e); § 362; § 523(a)(16); § 707(b); § 727; § 1301; § 1307(a); § 1322(b)(5); § 1325(a)(5); § 1328(a); 15 U.S.C. § 1681c(a)(1); 28 U.S.C. § 1930
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