HONOLULU (KHON2) — It’s law week on Wake Up 2Day and Wake Up 2Day spoke with James Terry, an associate attorney at Blake Goodman, PC about bankruptcy.
Terry said that almost anyone struggling with debt can file for bankruptcy and get some meaningful relief.
“The most common individual bankruptcy is a Chapter 7 or “liquidation” bankruptcy. In this chapter, a court-appointed trustee has the authority to sell assets in order to pay off debt. However, most filings do not involve a sale because debtors are entitled to keep assets as long as their value is below thresholds set forth by the state and federal governments. Assets that could be protected include personal residence, money, vehicles, insurance policies, household goods, clothing, wages, and tools. In order to determine if a debtor qualifies for this relief, the court will review their income to see if they have the means to pay a significant amount of what they owe to their creditors.”
There are a variety of different chapters of bankruptcy.
“The process is surprisingly short and usually only takes three to four months from filing to the close of the case and the cancelation of the debt,” Terry said. “Given the possibility of the sale of assets, it is important for a debtor to seek knowledgeable legal counsel prior to a filing. The second most common individual bankruptcy is a Chapter 13 and is typically described as a reorganization of debt. This process consists of a payment plan over the course of three to five years. The amount paid back to creditors varies on a case-by-case basis and is determined by a debtor’s income, the value of their assets, and the types of debt they may have. A chapter 13 can offer an opportunity to catch up on delinquent debt obligations in a favorable environment while protecting your property. It can be a powerful tool, especially for individuals facing foreclosure of a home and repossession of a car. A chapter 13 can be complicated and nuanced compared to chapter 7. For that reason, it is important for a debtor to seek legal counsel who is familiar with the process.”
If you do file for bankruptcy, Terry said it is possible to rehabilitate your credit.
“In our office, we sign all of our clients up with a credit rebuilding program a few months after filing their case. The goal of the program is to get a debtor’s score back into the 700s within a couple of years. So, while it may not seem possible you can achieve a better credit score following the filing of the case.”
The HSBA Young Lawyers division also has a legal hotline, (808) 537-1868, to help offer general advice and referrals. That’s from 6 to 7 p.m. until Friday night. Lawyers will be standing by at various in-person booths across the state during the week.