A final-month surge in bankruptcy filings pushed Hawaii's total in 2009 to a four-year high as the economy tried to climb out of a nationwide recession.

The 320 filings in December—the most since 1,463 cases in October 2005—represented a 43.5 percent increase over December 2008, while the 3,100 filed for the year was 49.3 percent higher than the 2,077 filed in 2008, according to preliminary data from U.S. Bankruptcy Court.

It was the most filings in a single year since 4,461 in 2005 when people rushed to file ahead of a federal law that went into effect in mid-October that made it more difficult and costly to file for bankruptcy. The final numbers could rise slightly since electronic filings could be made up until midnight last night.

There were 2,482 Chapter 7 cases filed in 2009. Those liquidation filings, which are the most common, apply to individuals with mostly credit card and medical bill debts, auto loan deficiencies and other unsecured debts.

In addition, there were 597 Chapter 13 filings and 19 Chapter 11 cases.

Chapter 13 filings allows individuals with regular sources of income to set up plans to pay creditors over time. Chapter 11 filings involve business reorganizations.

Bankruptcy attorneys say the high volume was connected, in large part, to the economic recession, falling home values, loss of jobs and higher credit card debts.

Greg Dunn, a Honolulu-based bankruptcy attorney, said many clients coming to him are facing foreclosure.

“;A lot of homeowners are falling behind,”; he said. “;A lot of people are trying to save their house.”;

In some cases Dunn can help them keep the house, if there's little or no equity and the clients are up to date on their payments. In other cases, clients have to give up their homes to wipe out their debts.

Dunn estimated his firm fielded about 20 percent more cases in 2009 than in 2008.

He has been putting in long hours, meeting with clients early in the morning until late at night, seven days a week, and was even working on New Year's Eve.

Loss of income is another leading reason why people are filing for bankruptcy.

“;People are, in fact, losing their jobs or their overtime pay,”; said Dunn. “;In many cases, people worked two jobs and now have one job, so now they can't pay their credit cards and turn to bankruptcy if there's no other option.”;

Dunn said he's even beginning to see more state workers, which he rarely saw before, due to furloughs.

Businesses across several sectors filed for Chapter 11 bankruptcy in 2009—ranging from real estate (Anekona W LLC) to health care (Honolulu Medical Group) to entertainment (Royal Hawaiian Showroom).

Hawaii Biotech and the Honolulu Symphony Society were among the three Chapter 11 cases filed in December.

David Farmer, bankruptcy attorney and Chapter 7 trustee, said to his knowledge the number of filings this year was higher than any he recalls in his 25-year career, with the exception of 2005 when the Bankruptcy Code was amended and there was a surge in filings beforehand.

“;We've gone through recessions,”; said Farmer, “;but never one like this.”;

Besides mounting medical bills, one of the leading reasons why people file for bankruptcy is divorce, he said, as well as a job loss. Sometimes all three happen at the same time.

The overuse of credit instead of cash, said Farmer, is another leading cause of personal bankruptcy filings.

Farmer said homeowners on Maui, in particular, were struggling this year with a drop in property values and high mortgages, and difficulty obtaining loan modifications.

The bankruptcies take a “;great spiritual toll”; on the community, said Farmer. The economic impact when an Aloha Airlines going out of business, or when Maui Land & Pineapple struggles for survival, is enormous, he said.

“;Economically, it all has a human impact,”; said Farmer. “;It's not just anonymous businesses.”;