Hawaii
bankruptcies
top 5,000

An economist predicts
recovery is years away

By Peter Wagner
Star-Bulletin

It came as no surprise when a Makiki man walked into U.S. Bankruptcy Court last week and filed an application for Chapter 7 liquidation.

Clerks stamped his document "98-05000" and tossed it on the stacks, confirming predictions that Hawaii would reach 5,000 bankruptcies this year.

Having watched bankruptcies climb from 873 in 1990 to 4,454 last year, federal bankruptcy officials here now wonder if we'll top 6,000 before year's end.

"We could be close if we continue at this pace," said U.S. Trustee Curtis Ching.

With about 100 personal and business filings coming in a week, the tally by noon yesterday was up to 5,114.

Economist Carl Bonham of the University of Hawaii Economic Research Organization says the bankruptcies go hand in hand with Hawaii's struggling economy.

"It shouldn't surprise anyone," Bonham said.

"We continue to have job losses. Put that together with no wage increases and a weak economy with stagnant or falling housing pri-ces and you're going to see higher rates of bankruptcies,." he said.

Bonham said he sees no reason to doubt that bankruptcies will continue their record-breaking pace in Hawaii, perhaps surpassing 7,000 filings in the year 2000 before a mild recovery is seen.

"Our forecast for 1999 and 2000 isn't all that different from 1997 and 1998, said Bonham, who's organization tracks economic trends in Hawaii.

"I'm not predicting a turnaround until 2001, and even then it won't be very robust."

But economists at the State Department of Business and Economic Development are puzzled by the bankruptcy phenomenon. They wonder why bankruptcies are also soaring on the mainland, where the economy is strong.

An inconclusive report by the department last year suggested credit abuse and falling real estate values may be part of the cause.

Bankruptcies nationwide jump-ed nearly 20 percent last year, to 1.34 million filings.

Despite skyrocketing filings, Hawaii remains low on a per capita basis compared with other states.

DBEDT found that Hawaii ranked 8th lowest among the states for bankruptcy filings per 1,000 residents for the year ending March 31, 1997.