Statewide bankruptcies remained near historic lows as they plunged 30.7% in July to their lowest point for that month in 15 years.
The 97 cases marked the sixth month out of seven this year that filings were down from the year-earlier period, and represented the fewest cases for any July since there were 86 in 2006, according to new data released by the U.S. Bankruptcy Court, District of Hawaii.
Year to date, bankruptcies through July were down 17.6% to 754 from 915 in the year-ago period as they stayed on track to decline for the second year in a row. At the current pace of filings, Hawaii will end the year with 1,293 cases — the fewest number of cases since the 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.
“The low number (in July) reflects the continued impacts of federal assistance and the opening of Hawaii’s economy,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “I believe the number will stay low for the rest of the year.”
Honolulu bankruptcy attorney Greg Dunn said as long as there is a lot of government support, the recent spike in COVID-19 cases in the state won’t affect bankruptcies.
“I’m not surprised with the drop in bankruptcies again for July,” Dunn said. “When government financial support expires, bankruptcies will increase.”
Dunn said bankruptcy cases have remained low because more people are going back to work; people are continuing to receive government support through unemployment benefits, stimulus money and Paycheck Protection Program loans for businesses; and people are benefiting from government suspension of evictions or foreclosures and the deferment of student loans.
Gov. David Ige on Friday extended the state’s more than year-old eviction moratorium until Oct. 3 to match the extension announced Tuesday by the U.S. Centers for Disease Control and Prevention. The extension applies to the state’s four major counties.
“There is still a lot of government support, so I don’t think bankruptcies will increase just yet,” Dunn said. “Bankruptcies may increase later this year or 2022 because of evictions, foreclosures and people’s old unresolved debt.”
Honolulu bankruptcy attorney Edward Magauran said the extension will provide a lifeline to tenants in financial straits.
“The CDC, somewhat surprisingly, at least tacitly encouraged by the (Biden) administration, and despite the recent Supreme Court ruling, went ahead and extended the eviction moratorium nationally,” Magauran said. “Whatever happens with the courts, the moratorium is in place until a court rules otherwise.
“So for now it should be a major sigh of relief to those folks facing potential eviction and the folks who are concerned about those folks. I think also that it will get some governors to think more about extending their own moratoriums as both a humane and responsible act of governing with the CDC extension as cover for their regional and local extensions.”
In July, Chapter 7 liquidation filings — the most com- mon type of bankruptcy — dropped 34.6% to 70 from 107 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, fell 18.2% to 27 from 33.
There were no Chapter 11 filings last month, compared with one in the year-earlier period. Chapter 11 filings are primarily for business reorganization.
Around the state, bankruptcies fell in the four major counties last month. Honolulu County filings dropped to 71 from 100, Hawaii County filings fell to eight from 13, Maui County filings declined to 17 from 20 and Kauai County filings slipped to one from seven.
SEEKING RELIEF
Bankruptcy filings in July fell from a year ago.
2021 2020 PCT. CHANGE
Chapter 7 70 107 -34.6%
Liquidation
Chapter 11 0 0 0%
Business reorganization
Chapter 13 27 33 -18.2%
Individuals with regular sources of income set up plans to pay creditors over time
Total 97 140 -30.7%
Source: U.S. Bankruptcy Court, District of Hawaii
