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The Honolulu Advertiser
Posted on: Wednesday, June 2, 2010

May bankruptcies up about 33% from 2009

BY Greg Wiles
Advertiser Staff Writer

Recent improvements in Hawai'i's economy failed to put the brakes on bankruptcies last month.

In May, 336 people petitioned to discharge debts through the bankruptcy process, up by more than a third compared to the same month a year earlier.

"It's hard to see any green shoots out there," said Jean Christensen, a Honolulu bankruptcy attorney.

"It's hard to be optimistic about the economy from my perspective."

She said clients are still calling for help because they've been laid off, can't get jobs paying as much as the one they lost or are having problems making car and mortgage payments.

That includes people dealing with mortgage arrears that are up to a year delinquent.

Others are facing possible wage garnishment after failing to make car payments on $10,000 or more still owed on their auto loans.

People who have jobs but are experiencing financial difficulties also are coming in because they are being threatened with wage garnishments for unpaid car loans, Christensen said.

"I think there's so much uncertainty out there."

It may be that bankruptcy filings continue to increase as the state's economy improves because insolvencies often trail economic recovery. From that perspective, bankruptcies are often called a lagging economic indicator.

The figures for May, while an increase on a year-over-year basis, do show a glimmer of hope in that the 336 filed last month were the lowest since February.

The figures also show:

• O'ahu bankruptcies were also the lowest in three months at 181.

• Bankruptcies on all islands were higher than a year earlier.

• There were 57 bankruptcy petitions filed by Big Island residents, 10 more than in April.

• Maui's total of 76 was the highest total in five months.

• Kaua'i residents filed 22 bankruptcies.