There are help-wanted signs all across the state, but apparently Hawaii residents have been comfortable enough in their financial situations to stay out of the labor force.
With the Hawaii unemployment rate falling to a pre-pandemic low of 6.3% in October, the number of bankruptcy filings plunged 26.3% in November to its lowest total for the month in 15 years.
The 87 cases in November marked the 10th month out of 11 this year that filings were down from the year-earlier period. It also was the fifth month in a row that cases had fallen below 100, according to new data released by the U.S. Bankruptcy Court, District of Hawaii.
The last time there were fewer cases in November was in 2006, when 82 cases were filed.
There were 118 cases filed in November 2020.
“I don’t know how the residents are coping with all these job-wanted signs around,” Honolulu bankruptcy attorney Ed Magauran said. “I do know that most of us are facing crushing debt. I suspect that the issue isn’t jobs, it’s living wages.
“People need a living wage. That living wage doesn’t only include rent and food and electricity and car insurance and day care. It includes servicing at least their debts. Not sure that even taking those job-wanted offers will fully fit the bill.”
There have been 1,101 filings through the first 11 months of the year, down 20.9% from 1,392 at the same time in 2020. At the current pace the state will finish the year with 1,201 filings. That would be the lowest annual total since there were 955 in 2006, when there were fewer cases because people had rushed to file in 2005 ahead of an October change in the Bankruptcy Code that made it more difficult and costly to seek financial protection.
Honolulu bankruptcy attorney Greg Dunn said several factors are contributing to the help-wanted signs in Hawaii. He cited labor shortages, partially due to some people leaving Hawaii to escape the high cost of living; continued unemployment benefits that provide a financial incentive for workers to stay at home than going back to work; less child care availability, which is keeping parents at home; and continued fear of potential exposure to COVID-19 and now the new omicron variant.
Dunn said it’s just a matter of time before the downward spiral in bankruptcies reverses and begins to trend upward.
“As protections and financial lifelines continue to expire, bankruptcy filings should increase in 2022,” he said. “Many people come to see me to file for bankruptcy due to loss of jobs, divorce, credit card debts, loan debts, auto repossessions, garnishments and foreclosures to save their house.”
Magauran said the clients that come to see him are over their head in debt and need help.
“Those that are filing today are the ones who likely do not have the wolf at the door but know that when the world normalizes and the creditors come out of their coffins and prey upon them that they will not be able to pay,” he said. “In general, the people who are filing now are pretty smart. In most cases, it’s only when the wolf is at the door that somebody files or even considers bankruptcy.”
In November, Chapter 7 liquidation filings — the most common type of bankruptcy — dropped 42.7% to 59 from 103 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, doubled to 28 from 14.
There were no Chapter 11 filings last month compared with one in the year-earlier period. Chapter 11 filings are primarily for business reorganization.
Across the state, bankruptcies fell in three of the four major counties last month. Honolulu County filings dropped to 58 from 80, Hawaii County filings declined to 10 from 11 and Maui County filings fell to 14 from 22. There were five Kauai County filings to match its year-earlier total.
SEEKING RELIEF
Bankruptcy filings for November fell from a year ago.
2021 2020 PCT. CHANGE
Chapter 7 59 103 -42.7%
Liquidation
Chapter 11 0 1 —
Business reorganization
Chapter 13 28 14 100%
Individuals with regular sources of income set up plans to pay creditors over time
Total 87 118 -26.3%
Source: U.S. Bankruptcy Court, District of Hawaii
