Hawaii bankruptcy filings plunged 18.5 percent in August to their second lowest level of the year.

August marked the 14th straight monthly decline in filings on a year-over-year basis, according to data released Tuesday from U.S. Bankruptcy Court. There were 137 cases filed in August compared with 168 in the year-earlier period.

The only month this year with fewer filings was January when there were 122 cases.

Hawaii bankruptcy filings have been flat or down for 29 months in a row. The only month when they did not fall was June 2013 when the number of cases — 185 — matched the total of June 2012.

"It appears the economy is improving right now and the federal government is doing a lot of things to help that in terms of keeping interest rates low," Hono­lulu bankruptcy attorney Greg Dunn said. "Jobs are a little bit better now than in the past and people are being more careful in creating less debt."

Through the first eight months of this year, there have been 1,178 filings, or an average of about 147 a month. At that pace, 2014 would end with 1,764 filings, which would be the lowest total since 1,381 were filed in 2007 — the year before the 18-month recession began. It also would mark the fourth year in a row that bankruptcies had declined from the previous 12 months.

At their recent peak in 2010, bankruptcy cases averaged 330 a month and hit 3,954 for the year as the local economy recovered from the 2008-2009 recession.

Dunn, who specializes in bankruptcies, acknowledged he’s working fewer hours now than in the past.

"I’m working less than 40 hours a week," he said. "It’s kind of a good thing for me because I needed a break. It’s kind of slowed down the last 15 or 20 months. Between the period from 2009 to 2011, I was working 80 to 90 hours a week — and I’m still recovering."

In August the most common type of bankruptcy — Chapter 7 liquidation — dropped 32.4 percent to 92 from 136.

However, Chapter 13 filings, which allow individuals with regular sources of income to set up plans to pay creditors over time, rose 41.9 percent to 44 from 31. The 44 filings were in line with what has been filed in other months this year, but the percentage increase was significant because the year-earlier number matched the lowest total of any month in 2013.

Dunn said he’s seen an uptick in Chapter 13 filings in his own practice.

"About 21 percent of my cases this year are Chapter 13, which means about 1 out of every 5 cases," he said. "That’s an increase for me of about 10 percent."

But Dunn said he’s not steering clients to Chapter 13, and is just doing what is in the client’s best interest.

"I’m not trying to push people into it," he said. "I’d prefer to do (Chapter) 7 because usually 7 is in the person’s best interest unless a person is trying to save a house from foreclosure, then I’d do a 13. Or if people are trying to protect assets, then I’ll do a 13."

The other major type of filing, Chapter 11, had just one case last month as well as in the year-earlier period. Chapter 11 filings allow a business to reorganize.

Across the state, August bankruptcies in Honolulu County fell 19.8 percent to 89 from 111. Hawaii island filings edged up 7.1 percent to 15 from 14. Maui County cases fell 15.2 percent to 28 from 33, and Kauai cases dropped 50 percent to five from 10.

Even though the economy is improving, he said it’s only a matter of time before the trend reverses and bankruptcies begin to climb.

"The federal government might be creating a bubble," Dunn said. "With the Federal Reserve keeping interest rates low for the foreseeable future, it looks like this (declining bankruptcy trend) could go on for one or two more years.

"I’ve been doing bankruptcies since 1988 and have been through these cycles over the years where the economy goes up and falls apart and then goes back up. So I’m expecting another crash. I don’t know when it’s going to be, maybe one or two years from now, but I’ll be ready."