Nationwide bankruptcies fell for the fourth time in five months and fell to their lowest level in May in 15 years thanks to an improving economy that resulted in more people returning to work.
The 100 cases in May were down 10.7% from 112 in the same period last year, according to new data from the Hawaii District Bankruptcy Court. It was the lowest number of cases in May since 93 in 2006.
In the first five months of 2021, bankruptcies fell 11.2% from 624 in the same period last year to 554 as they remain on the path to decline for the second year in a row.
The 19.3% increase in April appears to have been an anomaly, according to Eugene Tian, chief economist for the State Department of Business, Economic Development and Tourism.
“It happened for no reason,” Tian said via email. “In May of this year, the recovery of tourism accelerated. Visitor arrivals in May 2021 were about 74% of the May 2019 level, while the visitor arrivals recovery in April 2021 was about 57% of the April 2019 level. The improvement in May was clear. Looking at US visitors alone, we saw more US visitors in May 2021 than in May 2019.
The improvement in the economy is also reflected in the state’s falling unemployment rate, which slumped six tenths of a percentage point to 8.5% in April when the state created 10,000 non-agricultural jobs.
But while domestic tourism is recovering, international visitors coming to Hawaii are less than 1% of what they were two years ago.
“The companies and individuals who rely on international visitors can keep waiting,” said Tian. “The recovery of international tourism will be very slow until the end of the year.”
Tian said the state’s extension of the eviction moratorium will give tenants and homeowners an additional 60 days before deciding whether to avoid eviction by filing for bankruptcy.
“But I think the cases wouldn’t be many,” he said. “With our economy opening up, travel restrictions lifted, and the American Rescue Plan Act (ARPA) money from the federal government, I believe bankruptcy filings will remain low for the remainder of the year.”
Honolulu bankruptcy attorney Greg Dunn said he wasn’t sure what will happen in the rest of 2021, but he “will take it as it comes”.
He said in his own practice that bankruptcies rose 54% in April compared to the same period last year, but he noticed a sharp decline in May.
“With the government aid programs, people were able to stay afloat like the 60-day extension of the moratorium on housing evictions,” Dunn said via email. “I also noticed that unemployment benefits have been extended for many, and benefits are higher with the additional federal aid, which can discourage people from returning to work if they have to take a job that pays less than unemployment. ” Services. Jobs are starting to open up and more people are going back to work, but since the pandemic there has been more debt that people will soon have to deal with. “
In May, Chapter 7 liquidation filings – the most common type of bankruptcy – fell 13.6% to 76 from 88 in the same period last year.
Chapter 13 filings, which allow individuals with regular sources of income to develop plans to make installment payments to creditors over three to five years, increased 9.1% from 22 to 24 years.
There were no Chapter 11 registrations last month, compared to two in the same period last year. The submissions according to Chapter 11 are primarily used to reorganize companies.
Across the state, bankruptcies in the four major counties were mixed last month. Honolulu County‘s filings dropped from 92 to 69, and Kauai County’s filings dropped from six to four. The Hawaii County filings increased from four to six, and the Maui County filings increased from 10 to 21.
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The number of bankruptcy registrations in May decreased compared to the previous year.
2021 2020 PCT. CHANGE
Chapter 7 76 88 -13.6%
liquidation
Chapter 11 0 2 –
Business reorganization
Chapter 13 24 22 9.1%
Individuals with regular sources of income plan to pay the creditors over time
total 100 112 -10.7%
Source: US Bankruptcy Court, Hawaii District
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