Bankruptcy filings fall for first time in 5 years

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The number of bankruptcy cases filed in Hawaii fell in 2011 for the first time in five years as consumers paid down debt and improved their household balance sheets.

There were 3,325 cases filed during the year, down 15.9 percent from the 3,954 filings in 2010, according to data released by U.S. Bankruptcy Court. The decline followed double-digit increases in every year since 2007.

Even with the decrease, however, the number of filings in 2011 was still more than the annual average of 3,260 cases through the past decade.

The improvement in Hawaii’s bankruptcy picture was slightly better than the nation as a whole. Bankruptcy filings totaled 1,379,113 nationally in 2011, down 12 percent from 1,561,008 cases in 2010, according to the American Bankruptcy Institute.

"The decline in total filings reflects the retrenchment in consumer spending associated with a down U.S. economy," said Samuel J. Gerdano, ABI executive director. "As consumers continue to de-leverage their debt and access to credit remains tight, bankruptcy filings will continue to decrease."

Average credit card debt in Hawaii has declined from a peak of $6,002 in mid-2009 to $4,851 in mid-2011, and is expected to continue its descent through next year, according to a recent report by TransUnion, one of the three major U.S. credit reporting agencies.

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TransUnion is forecasting Hawaii credit card delinquencies to fall to 0.59 percent by the end of 2012, compared with 0.69 percent nationally.

The number of bankruptcy cases filed in Hawaii fell steadily throughout 2011, finishing the year with a 31.1 percent decline in December compared with the same month a year earlier.

There were 2,562 Chapter 7 asset liquidations in 2011 accounting for 77 percent of all Hawaii bankruptcies for the year. More than half of the cases, 1,985, were filed in Honolulu. There were 683 cases filed in Maui County, 438 in Hawaii County and 209 in Kauai County.

Hawaii’s larger commercial bankruptcies in 2010 included Hawaii Medical Center, Unity House Inc., M Waikiki LLC (Modern Honolulu hotel), and Bassan (Ka‘u Gold oranges).