The number of filings indicates that the isle economy continues to gain momentum
POSTED: 1:30 a.m. HST, Aug 2, 2011
LAST UPDATED: 2:26 p.m. HST, Aug 5, 2011
The number of Hawaii residents filing for bankruptcy fell in July for the sixth time in the past seven months in another sign that the state's economic recovery is gathering momentum.
The 268 cases filed in July were 22 percent fewer than in July 2010, according to data released Monday by U.S. Bankruptcy Court. It was the lowest monthly total since January when 245 cases were filed.
Through the first seven months of the year, bankruptcy filings averaged 301 a month, down from the average of 330 a month in 2010 but up from the 258 monthly average in 2009.
Bankruptcy filings, like the unemployment rate, tend to be among the last areas of the economy to show improvement after a downturn. Bankruptcy cases on a seasonally adjusted basis peaked in mid-2010 following the 2008-2009 recession and have been slowly trending downward since then, said Paul Brewbaker, principal of TZ Economics.
"So these data would fall into alignment with other indicators like payroll employment, unemployment rates and monthly tax revenue that suggest Hawaii's recovery may be slow but it's somewhere between 1 and 2 years old," Brewbaker said.
Hawaii's 6 percent unemployment rate, while among the lowest in the country, has been slow to decline since peaking at 7 percent in the summer of 2009. First time claims for unemployment insurance are averaging about 2,100 per week versus the recent high of 2,500 a month in 2009.
The slow and fragile nature of the recovery might be of concern, but the job growth being experienced by the state is stonger than after the last recession in 2001, Brewbaker said. About 10,000 of 40,000 jobs lost during the latest recession have been restored, putting Hawaii near the top nationally, he said.
"There's a way to go, but the local economy is on its way; even bankruptcy filings provide evidence of that."
Honolulu-based bankruptcy attorney Ed Magauran said he's noticed a slight decrease in bankruptcy filings this year, but added business is still brisk at his downtown office.
"There are still 200 plus cases a month (statewide). That's not going to change. We may go down a little bit, but there are still all kinds of people who are hurting," Magauran said.
Many people he sees have put off filing for a variety of reasons but eventually run out of options, Magauran said.
"The stigma has kind of gone away, but not really. Nobody in their right mind wants to file for bankruptcy, but for the person who needs it, the bankruptcy code is a true blessing."
The bulk of the filings in July — 221 cases — were filed under Chapter 7 of the federal bankruptcy code, which calls for liquidation of a debtor's assets.
Filings fell in all counties, led by a 38 percent drop to 35 cases in Hawaii County. Filings fell by 22 percent to 168 cases in Honolulu County, by 14 percent to 19 cases in Kauai County and by 13 percent to 46 cases in Maui County.