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Bankruptcy filings let up

Hawaii cases in August reach their lowest level in six months, but still remain high

By Alan Yonan Jr.

POSTED:
LAST UPDATED: 02:01 a.m. HST, Sep 02, 2010


The number of Hawaii residents filing for bankruptcy protection in August eased slightly from July, but cases remained above the 300 mark for the sixth month in a row.

There were 329 filings in August compared with 345 cases filed in July, according to federal Bankruptcy Court statistics. Although the volume of cases is high by historical standards, filings have been trending down since peaking at 391 in April. The number of August filings was the lowest since February, when there were 291 cases filed.

David Farmer, one of three federal bankruptcy court trustees operating in the District of Hawaii, said he's noticed the downward trend. He said the improving economy, including rising visitor arrivals, appears to be having an impact.

"The dollar that I pull out of my wallet probably started with a tourist," he said.

However, some of the decline in bankruptcy filings could have been the result of what he called the "summer effect."

SEEKING RELIEF

Bankruptcy filings in August rose from a year ago:
2010 2009 Pct. Change
Chapter 7 266 208 +27.9%
Chapter 11 0 4 ----
Chapter 13 63 46 +37.0%
Total 329 258 +27.5%

 

» Chapter 7: Liquidation
» Chapter 11: Business reorganization
» Chapter 13: Individuals with regular sources of income set up plans to pay creditors over time.

Source: U.S. Bankruptcy Court, District of Hawaii

"We observed this last year. A lot of debtors and their counsel go on vacation in August," he said.

Filings also continued to ease on a year-over-year basis. The number of August filings was up 27.6 percent over August 2009. That was the smallest year-over-year increase since last fall.

Bankruptcies began their climb after the recession broke out in late 2007. After averaging 115 filings a month in 2007, the pace accelerated to 173 a month in 2008 and 258 a month in 2009. For the first eight months of this year, filings have averaged 337 a month.

Farmer said the number of bankruptcy filings has varied widely in cities around the country, with places like Las Vegas and California getting hit the hardest and cities in the Midwest generally faring better.

During a recent meeting with bankruptcy trustees from around the country, Farmer said, there was discussion about whether there would be more filings in their areas in 2010 than in 2005, when a change in the bankruptcy law resulted in a record number of bankruptcies in Hawaii and elsewhere.

"We're not out of the woods yet, but I'm guardedly optimistic that if tourism says up we'll do better than 2005," Farmer said.






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