Billions of dollars of financial aid appear to be keeping most Hawaii residents out of Bankruptcy Court.
Even with thousands of state residents struggling due to loss of work, reduced income or closed businesses because of the COVID-19 pandemic, the number of bankruptcy filings continued their downward trend and fell 4.8% in November to 118 from 124 in the year-earlier period, according to data released Tuesday from the U.S. Bankruptcy Court, District of Hawaii. Cases have now fallen nine of 11 months in 2020.
Year to date through November, bankruptcy filings were down 9.4% to 1,392 from 1,536 during the same period in 2019.
The lower number of filings may be surprising to some, but a top state economist attributes the decline to $10.3 billion in federal aid as well as state assistance. Among the financial relief received by some residents were the one-time $1,200 federal stimulus payments disbursed earlier in the year as well as the weekly unemployment insurance supplements of $600, and then $300, which were doled out in addition to the state’s unemployment insurance benefits. There also were the federal Paycheck Protection Program loans given out to businesses, the state mortgage assistance program and, most recently, the $500 restaurant cards to be used in Hawaii.
“There may be more federal stimulus coming, but it will be smaller than what has been awarded in 2020 because the proposal today from Congress is only $908 billion. That’s very small. That’s talking about the whole United States,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism.
“You can imagine the amount of money Hawaii will receive will be a lot smaller in 2021 than in 2020. The economy will be open next year, but at the same time we’ll have less federal assistance, so bankruptcies will go up. We just don’t know what percent bankruptcies will increase, but so far, so good this year.”
In November, Chapter 7 liquidation filings — the most common type of bankruptcy — rose 32.1% to 103 from 78 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, tumbled 68.2% to 14 from 44.
There was one Chapter 11 reorganization filing, compared with two in the year-earlier period. Last month’s Chapter 11 bankruptcy filing was from air charter broker Wing Spirit Inc., which does business as Anela Wing Medevac, Hawaii Emergency Air Lift, Jet Excellent Service and JEXS. Wing Spirit said in its filing Sunday that it has 44 employees, all located in Hawaii. Chapter 11 filings are typically used for business reorganizations.
Bankruptcies rose in three of the four major counties in November. Honolulu County filings fell to 80 from 91, but Hawaii County filings edged up to 11 from 9, Maui County filings increased to 22 from 20 and Kauai County filings ticked up to five from four.
Bankruptcy filings in November fell from a year ago.
2020 2019 PCT. CHANGE
Chapter 7 103 78 32.1%
Chapter 11 1 2 -50%
Chapter 13 14 44 -68.2%
Individuals with regular sources of income set up plans to pay creditors over time
Total 118 124 -4.8%
Source: U.S. Bankruptcy Court, District of Hawaii