Hawaii bankruptcy filings increased in September for the second time in three months as evidence continued to mount that growth in the economy is slowing.
State and University of Hawaii economists have issued reports over the past two months lowering their forecasts for the inflation-adjusted gross domestic product amid a leveling off in the once-booming construction sector and slowing job growth. The GDP is the broadest measure of economic output.
Statewide bankruptcy cases rose 7.1 percent last month to 120 from 112 in the year-earlier period, according to data released Monday by the U.S. Bankruptcy Court, District of Hawaii. It was the fifth time in nine months this year that filings have exceeded the year-earlier total.
| SEEKING RELIEF
Bankruptcy filings in September rose from a year ago.
2017 2016 PCT. CHANGE
Chapter 7 81 76 6.6%
Liquidation
Chapter 11 1 2 -50%
Business reorganization
Chapter 13 38 34 11.8%
Individuals with regular sources of income set up plans to pay creditors over time
Total 120 112 7.1%
Source: U.S. Bankruptcy Court, District of Hawaii
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“At this point I think we have bottomed out,” Honolulu bankruptcy attorney Lars Peterson said. “I don’t believe (the number of filings) will go any lower. We are probably at the turnaround point and we will be seeing the number increasing slowly but steady over the next few years.”
Bankruptcy cases have been flat or down from the year-earlier period for 69 of the past 78 months. On an annual basis, bankruptcies have declined for six straight years since 2010 amid a solid state economy that has been bolstered by record tourist arrivals, low unemployment, a booming construction industry and record-high housing prices.
“(Bankruptcies) can’t really go any lower anymore,” he said. “We’ve been historically on a decline for 10 to 12 years now. Unemployment has pretty much reached a low point (of 2.6 percent).”
Peterson said credit cards continue to be an ongoing problem for those seeking financial relief.
“That is always very high up on the list,” he said. “We see increasingly people with student loans having significant problems in paying back, especially when there are collection attempts. And the default rate in car loans has increased in the recent past. Unemployment is not really so much of an issue because the rate is relatively low. Construction is forecast to be on the decline because a lot of the construction work has happened, so there’s a decline in construction employment on the horizon.”
Through the first nine months of this year, there have been 1,019 cases compared with 1,045 during the same period in 2016. At that pace there will be 1,359 bankruptcy cases this year — the fewest since 955 were filed in 2006. The peak number of cases since 2006 was 3,954 in 2010.
In last month’s filings, Chapter 7 liquidation — the most common type of bankruptcy — rose 6.6 percent, to 81 from 76 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, increased 11.8 percent, to 38 from 34.
There was one Chapter 11 reorganization filing last month compared with two in the year-earlier period. Chapter 11 filings typically involve businesses.
Across the state, the number of cases rose from the year-earlier period in two of the four major counties. Honolulu County filings increased to 97 from 73 and Hawaii County filings edged up to 11 from 10. Bankruptcies in Maui County fell in half to 11 from 22 while there was just one filing in Kauai County compared with seven in the year-earlier period.
