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Hawaii bankruptcy filings remained steady in July

Hawaii bankruptcies were virtually flat in July as federal and state assistance programs kept individuals and businesses afloat.

Whether it was Paycheck Protection Program loans, federal stimulus payments, state unemployment benefits or the federal $600 weekly plus-up payments, bankruptcies held steady last month after spiking nearly 22% in June. Through the first seven months of the year, bankruptcy filings are down 5.6% from the same time in 2019.

There were 140 bankruptcy filings in July, just two fewer than the same period a year ago, according to new data from the U.S. Bankruptcy Court, District of Hawaii. There were 915 cases year to date through July 31 compared with 969 in the year-earlier period.

“The federal assistance programs are critical for the survival of businesses and individuals,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “The bankruptcy situation for the next few months and even the next few years depends on the condition of the pandemic, the magnitude and timing of the federal stimulus funds, and the speed of recovery of the economy. In the Great Recession (of December 2007 to June 2009), the peak of the bankruptcy filing was two years later in 2011 with nearly 4,000 — 3,954 to be exact — bankruptcy filings.”

The recent triple-digit daily surge in COVID-19 cases in Hawaii is casting a shadow over the state’s economy, Tian said.

“The spike in COVID-19 cases in Hawaii has created a high degree of uncertainty,” he said. “All of us are concerned about our safety and the economy. If the trans-Pacific travel pre-test program is delayed (past Sept. 1) due to the spike, it would add more difficulties for the debtors to survive, especially those in the tourism industry.”

Tian said forecasting the trend of bankruptcies depends on the magnitude and timing of the federal stimulus funds.

“I would not be surprised if bankruptcy filings go up in some degree during the next few months if federal money is delayed or in a smaller quantity,” he said.

In July, Chapter 7 liquidation filings — the most common type of bankruptcy — slipped 2.7% to 107 from 110 in the year-earlier period.

Chapter 13 filings, which allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years, inched up 6.5% to 33 from 31.

There were no Chapter 11 reorganization filings last month compared with one in the year-earlier period.

Bankruptcies were mixed in the four major counties. Honolulu County filings inched up to 100 from 99 and Maui County filings rose to 20 from 13. Hawaii County filings fell to 13 from 20 and Kauai County filings declined to seven from 10.

SEEKING RELIEF

Bankruptcy filings in July fell from a year ago.

2020 2019 PCT. CHANGE

Chapter 7 107 110 -2.7%

Liquidation

Chapter 11 0 1 —

Business reorganization

Chapter 13 33 31 6.5%

Individuals with regular sources of income set up plans to pay creditors over time

Total 140 142 -1.4%

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

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