When filing bankruptcy, we usually use Federal exemptions because of a generous wildcard exemption to protect cash and other assets. But there are some situations in which we will use Hawaii exemptions:

1.  Tenants by the entirety. Hawaii allows us to exempt assets held as tenants by the entirety (by spouses) against creditors of just one spouse. Since the tenants by the entirety exemption is essentially unlimited, it works well to protect large amounts of equity in real estate from creditors in just the right situation.

2.  Whole life insurance. Federal exemptions allow you to protect about $10,000 of cash value of a whole life insurance policy. Hawaii allows an unlimited exemption for life insurance. So if you have a lot of whole life insurance, we may use Hawaii exemptions.

3.  Tools of the trade and fishing boats. Hawaii’s exemptions allow an unlimited exemption for tools of the trade and a fishing boat (if you are a commercial fisherman). The Federal exemptions only allow about $2,000 for tools of the trade, so if you have a lot of tools and equipment used in business, or a boat used for commercial fishing, Hawaii exemptions may be best for you.

Sound complex? Don’t worry, when you retain our office for bankruptcy, we will figure out which set of exemptions work best for your situation.