A robust Hawaii economy pushed down statewide bankruptcy filings in 2016 for the sixth straight year with few signs that the trend is going to reverse anytime soon.
“I don’t see anything out there in the economy in Hawaii which looks like it is transitioning,” Honolulu bankruptcy attorney Blake Goodman said Tuesday. “It doesn’t look like employment is looking at any drastic shake-up. It doesn’t look like real estate prices are having any kind of shake-up. But there is an interest rate increase, which if that continues will decrease the real estate values. It always translates to more bankruptcies when there’s less equity in properties and people no longer have the option of taking cash out of their real estate to pay off debt.”
There were 1,382 bankruptcy cases last year, which represented an 11.9 percent decline from 1,569 in 2015 and the lowest level in the last nine years, according to data released Tuesday by the U.S. Bankruptcy Court, District of Hawaii.
An uptick in December — 119 versus 106 in December 2015 — prevented bankruptcies from finishing below the 2007 total of 1,381. Statewide filings have been flat or down from the year-earlier period for 65 of the past 69 months.
Goodman said Hawaii bankruptcies would be at a 24-year low if 2006 was excluded, and that 2006 was an unusual year. In 2005 there were 4,481 cases filed as people rushed to file before a new law went into effect that made it more costly and time-consuming to file. Consequently, the 955 cases filed in 2006 was artificially low because of the flood of filings in the previous year.
President-elect Donald Trump could determine the near-term outlook for bankruptcy filings in Hawaii, Goodman said.
“Trump is either going to deliver as promised and make America great again with more solvency, more opportunities, more economic prowess, more jobs, lower taxes,” Goodman said. “To me it sounds like a Santa Claus list. But if he’s got the magic that everybody voted for, then we may see a continued decrease in bankruptcies for years to come. I think, though, the outcome will be as real as Santa Claus.”
