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Isle bankruptcies increase at breakneck pace
POSTED: 01:30 a.m. HST, Jul 01, 2009
Hawaii residents filed 64.4 percent more bankruptcy cases last month than in June of last year, according to preliminary figures from U.S. Bankruptcy Court.
NO RELIEF IN SIGHTStatewide filings over the past 12 months:268: June 2009 |
As of yesterday afternoon, 268 bankruptcies had been filed, versus the 163 filed last June.
The 1,473 filings for the first half of this year dwarf the 889 cases filed in the first six months of last year, a rise of 65.77 percent.
Filings generally increase each year, with the exception of the year following October 2005, when a law change made bankruptcy filing more difficult, said Blake Goodman, a Honolulu bankruptcy attorney.
"When the economy's really bad, (filings are) up 10 to 15 percent more than they would be in a prosperous period."
Part of the problem is that lenders have been too aggressive, not just with mortgage loans and vehicle loans, but in issuing credit cards, "and their lending (practices) come back to hurt them at a time like this," Goodman said.
He commonly sees six-figure credit card debt among his clients, some of them with "shockingly small" incomes.
Increased unemployment and foreclosures have contributed to the bankruptcy boom because "people have no equity and they can't borrow against their equity. That route is no longer available."
Mortgage modification attempts are another increasing problem, Goodman said.
"They dangle this as an option, and it's very few people who will qualify for it. A lot of people are putting their hopes in a place that isn't going to turn into reality," he said.
Mortgage-modification intermediaries are marketing themselves to homeowners in distress "and many, many of those are shams," he said. "They are online businesses which are taking huge fees and doing very little other than taking the borrowers' money and making the situation worse, forcing them into bankruptcy, ultimately," he said.
His advice is, "Do it yourself or don't do it at all."
Chapter 7 liquidation cases, the most common type of bankruptcy, jumped 64.5 percent to 204 cases from the 124 a year ago. Chapter 13 filings, sometimes called wage-earner bankruptcies, as they enable people with regular income to pay creditors over time, were up 67.6 percent to 62 cases from the 37 of last June.
The only dip in the numbers came in the single Chapter 11 filing for business reorganization. There was one case in June, a filing by Anekona LLC, led by real estate developer Brian Anderson. There were two filings in June 2008.
Anderson also filed a Chapter 11 case in May for another of his companies.
On the riseBankruptcy filings in June increased from a year ago:
» Chapter 11: Business reorganization » Chapter 13: Individuals with regular source of income set up plans to pay creditors over time » Chapter 15: U.S. adoption of case brought in another country Source: Office of the U.S. Trustee |
Hawaii residents filed 64.4 percent more bankruptcy cases last month than in June of last year, according to preliminary figures from U.S. Bankruptcy Court.
NO RELIEF IN SIGHTStatewide filings over the past 12 months:268: June 2009 |
As of yesterday afternoon, 268 bankruptcies had been filed, versus the 163 filed last June.
The 1,473 filings for the first half of this year dwarf the 889 cases filed in the first six months of last year, a rise of 65.77 percent.
Filings generally increase each year, with the exception of the year following October 2005, when a law change made bankruptcy filing more difficult, said Blake Goodman, a Honolulu bankruptcy attorney.
"When the economy's really bad, (filings are) up 10 to 15 percent more than they would be in a prosperous period."
Part of the problem is that lenders have been too aggressive, not just with mortgage loans and vehicle loans, but in issuing credit cards, "and their lending (practices) come back to hurt them at a time like this," Goodman said.
He commonly sees six-figure credit card debt among his clients, some of them with "shockingly small" incomes.
Increased unemployment and foreclosures have contributed to the bankruptcy boom because "people have no equity and they can't borrow against their equity. That route is no longer available."
Mortgage modification attempts are another increasing problem, Goodman said.
"They dangle this as an option, and it's very few people who will qualify for it. A lot of people are putting their hopes in a place that isn't going to turn into reality," he said.
Mortgage-modification intermediaries are marketing themselves to homeowners in distress "and many, many of those are shams," he said. "They are online businesses which are taking huge fees and doing very little other than taking the borrowers' money and making the situation worse, forcing them into bankruptcy, ultimately," he said.
His advice is, "Do it yourself or don't do it at all."
Chapter 7 liquidation cases, the most common type of bankruptcy, jumped 64.5 percent to 204 cases from the 124 a year ago. Chapter 13 filings, sometimes called wage-earner bankruptcies, as they enable people with regular income to pay creditors over time, were up 67.6 percent to 62 cases from the 37 of last June.
The only dip in the numbers came in the single Chapter 11 filing for business reorganization. There was one case in June, a filing by Anekona LLC, led by real estate developer Brian Anderson. There were two filings in June 2008.
Anderson also filed a Chapter 11 case in May for another of his companies.
On the riseBankruptcy filings in June increased from a year ago:
» Chapter 11: Business reorganization » Chapter 13: Individuals with regular source of income set up plans to pay creditors over time » Chapter 15: U.S. adoption of case brought in another country Source: Office of the U.S. Trustee |
Today’s Edition
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