Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Hawaii, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to keep certain property from being liquidated or claimed by creditors. The homestead exemption is particularly important for homeowners, as it protects the equity in their home up to a certain amount. As of the knowledge cutoff in 2023, Hawaii's homestead exemption allows an individual to exempt up to $30,000 in equity if the individual is the head of a family or over 65 years old, and $20,000 for other filers. Additionally, Hawaii provides a range of other exemptions that can protect personal property, retirement accounts, insurance, public benefits, tools of the trade, and more. The specific amounts and types of property that can be exempted will depend on the applicable state statutes. It's important to note that exemption amounts are subject to change, and individuals considering bankruptcy should consult with an attorney to understand the most current exemption limits and how they apply to their situation.