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State bankruptcies soar


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POSTED: Wednesday, April 01, 2009

Statewide bankruptcy filings jumped 70 percent in March to their highest level in more than three years as Hawaii residents and businesses continued to struggle with the recession.

               

     

 

BANKRUPTCIES UP

        Filings in March increased from a year earlier:
       

 

       

       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 2009 2008 Change
Chap. 7231127+81.9%
Chap. 1101-100%
Chap. 133830+26.7%
Total269158+70.3%

       

 

       

        Chapter 7— liquidation; Chapter 11— primarily business reorganizations; Chapter 13— individuals with regular source of income set up plans to pay creditors over time
       

Source: Office of the U.S. Trustee

       

 

       

There were 269 bankruptcies filed in Hawaii last month, the most in a single month since October of 2005 when 1,463 cases were filed. Most of those came ahead of a new federal bankruptcy law implemented that month that made filing for bankruptcy more difficult and costly.

A year ago, 158 cases were filed, notably including one by Aloha Airlines, which eventually shut down and converted its filing to Chapter 7 liquidation.

In the first quarter of 2009, bankruptcies totaled 703, nearly double the 414 in the first quarter of 2008.

Honolulu bankruptcy attorney Blake Goodman saw “;an onslaught”; of cases during the first quarter and said predictions are for “;a million cases to be filed in the U.S. this year, or even more.”;

“;Shortly, we will be returning to the pre-law-change numbers”; of filings, he said.

In 2008, a total of 2,077 bankruptcies were filed in Hawaii, “;half of where we were in the late 1990s,”; he said. The most filings ever for Hawaii were 5,813 in 1998.

Goodman, who has handled bankruptcies for 18 years in three states, said he's never seen anything like what is occurring in the state and national economies.

“;Unemployment is staggering, and business failures ... established restaurants in business for 30 years can't keep their doors open for the first time,”; he said. “;Executives with 20-year tenures are now on the street.”;

Job loss, which in Hawaii rose to 6.5 percent in February, is the primary culprit for his rising caseload, Goodman said.

On top of “;income interruption,”; average credit-card debt for a family filing for bankruptcy used to be in the $50,000 to $60,000 range, “;but it's not uncommon to see a six-figure credit-card obligation—that's a medium-sized case now,”; Goodman said.