Hawaii bankruptcies started 2021 the same way
it ended last year: with a downturn in filings.
The number of cases in January plunged 24.8% on the strength of financial aid as well as signs that the vaccine rollout is providing hope that Hawaii’s economy can recover in the second half of the year.
There were 91 cases in January, matching the lowest total for any month since November 2017 and the fewest for any January since 2007 when there were 89, according to data released Monday by the U.S. Bankruptcy Court, District of Hawaii. Bankruptcies in 2020 fell 8.6% after consumers were propped up by various forms of federal and state financial aid, according to local economists.
“This low number (in January) is mainly due to the federal assistance programs,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “Hawaii was allocated more than $10.6 billion in federal funds in 2020. Much of the funds went to households and prevented people from filing for bankruptcy.”
Tian said this year the federal government is expected to release $1.9 trillion under President Joe Biden’s proposal — unless Congress
reduces that amount — and that Hawaii is expected to receive about $7 billion.
“These federal funds are of great help for Hawaii households and businesses,” Tian said.
In January, Chapter 7 liquidation filings — the most common type of bankruptcy — fell 12.9% to 74 from 85 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, declined 51.4% to 17 from 35.
There were no Chapter 11 filings, compared with one in the year-earlier quarter. Chapter 11 filings are primarily for business reorganization.
Bankruptcies fell in all four of the major counties last month. Honolulu County filings decreased to 71 from 79, Hawaii County filings declined to eight from 13, Maui County filings dropped 11 from 18 and Kauai County nosedived to one from 11.
Tian said it’s hard to predict which direction bankruptcies will trend this year because there is still a very high degree of uncertainty with the COVID-19 situation, and the allocation of federal money to Hawaii is not clear at this moment.
“In the 2009 economic recession, the peak of the bankruptcy filing occurred in 2010,” Tian said. “This time the economic recession was in 2020, but the degree of federal assistance is historically high and that may help in reducing the bankruptcy filings.”
Tian said that with the rollout of vaccine, Hawaii tourism is expected to be fully open during the summer this year.
“I expect the bankruptcy filings will not increase significantly this year due to the reopening of the economy and the further federal government assistance,”
he said.
