Hawaii ends the year the wayBy Rob Perez
it began, with a record number
of bankruptcies filed
Bankruptcy attorney Dawn Smith wasn't planning to open her office today, figuring no one would want to pursue a case on New Year's Eve.
But Smith got so many calls yesterday from would-be filers wanting to meet with her today that she decided to stay open.
"We're going to be swamped," she said.
It's no wonder.
Hawaii is ending the year just as it began - with people and businesses continuing their record-setting pace of bankruptcy filings.
Last year's high of 4,454 was easily smashed in 1998, an indication many people are still struggling through Hawaii's eight-year economic slump.
Through yesterday, 5,774 bankruptcy cases had been filed in federal court, a 29.6 percent increase from 1997's total. And the court will be accepting filings until 4 p.m. today.
Most local bankruptcies involved individuals mired in debt.
But some well-known Hawaii businesses, including Liberty House and Honolulu Book Shops, also fell victim to bankruptcy.
And with few indications that the state's economic slump is over, most economists expect the record-setting pace to continue into 1999, though perhaps at a slower rate.
"We're still going to see casualties," said Leroy Laney, Hawaii Pacific University economics professor.
Smith, who typically files 12 to 18 cases a week, said she sees no signs the pace is slowing. On the contrary, she said she has been unusually busy during the holidays this year. "It has not let up at all."
Unlike several years ago when Smith's cases involved mostly military and transient residents, she said she is seeing more local people resorting to bankruptcy.
Many are homeowners who have been frugal with their money, but extenuating circumstances, usually linked to the poor economy, forced them to go too heavily into debt, Smith said.
Indeed, the number of foreclosure lawsuits - triggered when a homeowner or property owner defaults on a mortgage - was up significantly this year.
As of Tuesday, a total of 3,583 such lawsuits had been filed statewide, according to a state Judiciary spokeswoman. That's up nearly 14 percent from 1997's record.
Laney says many of the bankruptcy and foreclosure cases are directly or indirectly tied to the sluggishness of Hawaii's largest industry, tourism.
Because he isn't projecting much change for tourism next year, especially with Japan's economy still in the doldrums, and because he expects Hawaii's economy to grow only slightly, Laney anticipates little change in the bankruptcy picture.
"The people who have been holding on and holding on as long as they possibly can are finally throwing in the towel," he said.
Henry Wong, chief economist for City Bank, is more optimistic.
He expects the rate of growth in bankruptcies to continue slowing as the economy picks up. The 29.6 percent increase this year compared with a 44.5 percent rise in 1997 and a 52.5 percent jump in 1996.
One particularly encouraging statistic, Wong said, was the 2.7 percent growth in personal income - a key economic gauge - in Hawaii for 1997.
Juxtaposing that number against the climbing bankruptcy cases and no inflation, Wong said the data suggest that people with jobs are becoming better off, while those with no jobs or only part-time work are becoming worse off.
Attorney Smith serves people who clearly are worse off. She questions whether politicians and others understand how badly such people are hurting financially.