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The number of Hawaii residents filing for bankruptcy dropped below 300 in October for the first time in eight months, although local bankruptcy attorneys say business is still brisk by historical standards.
The 297 filings last month were the fewest since 291 cases were filed in February, according to federal Bankruptcy Court statistics. There was an 8.4 percent rise in filings from October 2009, the smallest increase in nearly a year.
Bankruptcy filings for the first 10 months of the year are still running well ahead of last year’s pace. Despite signs that the economy is finally showing signs of improvement, many consumers are continuing to dig themselves out of debt racked up during the recent recession, which saw Hawaii’s unemployment rate hit a three-decade high.
"There is still a lot of activity. I think that in terms of my business, it was busier last month than the month before," said Honolulu-based bankruptcy attorney Ed Magauran.
"I don’t see the numbers on an annual basis coming down significantly. We’re only seeing the tip of the iceberg," he said.
SEEKING RELIEFBankruptcy filings in October rose from a year ago:
» 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 |
"There are a significant number of people that come to me that have already tried some kind of debt workout or modification. They’re in deep financial trouble."
Many of his clients are trying to save their homes from foreclosure, Magauran said. They are behind on their mortgage payments because they’ve already tapped out their credit cards, borrowed from family members and dipped into their 401(k) retirement plans, he said.
Through October, bankruptcy filings statewide have averaged 332 per month, peaking at 391 cases in April. That’s up from an average of 258 per month in 2009 and compares with just 80 a month as recently as 2006 when the state’s economy was running full tilt.
The bulk of the October bankruptcies in Hawaii — 223 — were Chapter 7 liquidation cases. Another 72 were filed under Chapter 13 of the federal bankruptcy code, in which individuals with regular sources of income set up plans to pay creditors over time. There other two filings were for Chapter 11 bankruptcy reorganization.
Oahu led all islands with 177 bankruptcy cases filed. The Big Island accounted for 55 cases, while Maui had 53 and Kauai had 12.
