Hawaii bankruptcies surged last month amid a slowing state economy and are now guaranteed to finish the year with the worst outcome since at least 2016.
The 126 filings in November jumped 38.5 percent from 91 in the year-earlier period, and with one month to go now total 1,389, ending the state’s streak of seven straight years of declines, according to data released Monday by the U.S. Bankruptcy Court, District of Hawaii. The 11-month total already exceeds the 1,352 filed in all of 2017 and the 1,382 in 2016, and the number of filings likely will end this year close to the 1,569 filed in 2015.
“The increase in bankruptcy is consistent with the slowing growth of our economy,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “It is still far below the filings in the most recent recession year (2010 at 3,954).”
Tian said the number of bankruptcies might increase in the next few years — a signal that a recession could be looming down the road.
“In the most recent business cycle, it increased for three consecutive years (2006-2009) before recession occurred (2009),” he said.
The uptick in bankruptcies coincides with the state’s rising unemployment rate, which is still the lowest in the country at 2.3 percent as of October.
But Hawaii’s jobless rate, which hit an all-time low of 2 percent in April and May, has been up two months in a row and is now just barely ahead of runner-up Iowa at 2.4 percent. Hawaii is scheduled to release its November data for unemployment Dec. 20.
“Bankruptcy filings follow business cycles,” Tian said. “When the economy is rising, bankruptcy filings are declining and vice versa. When the economy is rising, the unemployment rate decreases. Therefore, bankruptcy filings are moving in the same direction of the unemployment rate. In other words, when unemployment is high, bankruptcy filings are high. It is not surprising that when our unemployment rate is slowly rising, bankruptcy filings are also increasing.”
In November there were 89 Chapter 7 liquidation filings, up 56.1 percent from 57 filings a year ago. Chapter 7 is the most common type of bankruptcy.
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, rose 6.1 percent to 35 from 33.
There were two Chapter 11 cases last month compared with one in the year-earlier period. Chapter 11 filings typically involve business reorganization.
Bankruptcy filings were mixed in Hawaii’s four main counties.
Honolulu County filings jumped to 90 from 61, Hawaii County filings more than doubled to 17 from seven, Kauai County filings dipped to six from seven and Maui County filings fell to 13 from 16.
SEEKING RELIEF
Bankruptcy filings were up in November from a year ago.
2018 | 2017 | PERCENT CHANGE
Chapter 7 | 89 | 57 | 56.1%
Liquidation
Chapter 11 | 2 | 1 | 100%
Business reorganization
Chapter 13 | 35 | 33 | 6.1%
Individuals with regular sources of income set up plans to pay creditors over time.
Total | 126| 91 | 38.5%
Source: U.S. Bankruptcy Court, District of Hawaii
