The number of Hawaii bankruptcy filings in May grew by double digits over the same month last year, the U.S. Bankruptcy Court District of Hawaii reported this week.
May cases showed a 14.3% increase from 2018, with 144 cases filed last month as compared to 126 cases in May last year. This year’s statistics are the highest for May since 2014.
Personal bankruptcies most commonly occur under two different chapters of the U.S. Bankruptcy Code: Chapter 7 allows for liquidation of an individual’s assets to pay off debts. Chapter 13 of the code establishes a repayment plan for a wage-earning individual to pay off any money owed, typically over three to five years.
Under Chapter 7, the most common type of bankruptcy filing, 85 cases were filed in May 2019, an increase of 7.6% from May 2018.
There was also a 23.4% increase in Chapter 13 filings over the same period last year. A total of 58 cases were filed this month in contrast to 47 filed in May 2018.
Attorney Ted Pettit, who has long experience in bankruptcy law in Hawaii, says there has been a general decrease in filings within the past few years. However, an uptick in this year’s filings has him thinking that there are multiple economic factors working against individuals.
Among them: large student loan debt and Hawaii’s high cost of living.
“There are some people that are just hanging on,” Pettit said. “They’ve been accumulating debt through credit cards, not paying taxes, not being able to keep up with ordinary expenses, medical bills, and all of the high living expenses in Hawaii.
"So, I think people have been holding on and bankruptcy is the court of last resort.”
Pettit also said the growth in student loan debt is close to exceeding mortgage debt in the state. This extends around the country. Student loan debt is also exceeding the amount of credit card debt in the U.S.
“And yet, you can’t discharge the [student loan] debt as bankruptcy very easily,” Pettit said. The reason is the government restricts dismissal of student loan balances.
In May, Honolulu County experienced the highest number of bankruptcy filings the counties with 105 cases. Last year, Honolulu had only 80 cases filed in May.
Maui County also saw an increase, going from 17 cases in May 2018 to 25 cases this past month. Hawaii and Kauai counties had a decrease in case filings, with Hawaii filing nine cases and Kauai filing only five. In May 2018, Hawaii filed 14 cases and Kauai 15.