Like all other U.S. states, Hawaii experienced an unprecedented rise in unemployment rates due to COVID-19. The worst of the pandemic’s effects were felt in June, when the state’s bankruptcy filings increased by a whopping 22%. However, the filing rate has begun to level off, leaving many to wonder if the archipelago’s consumers and businesses are starting to bounce back or if this is just the calm before a much larger storm.
Factors That May Have Contributed to Fewer Bankruptcy Petitions
According to news reports, the number of bankruptcy petitions filed in Hawaii courts during the month of July seem to be slowing down, especially when compared to the previous month’s record number of filings. June proved to be an extraordinarily difficult month for the state’s workforce, with over 150 individuals and businesses filing for bankruptcy protection. A survey conducted by the Bank of Hawaii Foundation in May further revealed that nearly 50% of the state’s residents took a hit on their income, especially households with children.
Many of the state’s debtors who either lost their jobs outright or experienced a significant decrease in income were able to stave off filing for bankruptcy due to the fact that they qualified for unemployment benefits. At $648 per week, Hawaii boasts one of the highest unemployment payouts in the country. Not to mention, those who were unemployed also qualified for the additional $600 weekly provided by the CARES Act.
Still, at some point, benefits end and bills continue to pile up.
What Happens to Debtors in Hawaii Who Are Still Struggling Financially?
Although bankruptcy rates in Hawaii have appeared to level off for now, several residents have yet to find new sources of income and are falling behind (or farther behind) on crucial bills, including rent, mortgage, and car payments. Some residents are struggling to cover the basic cost of their monthly utility bills and others are so affected by the current state of the economy that they’ve been unable to pay for grocery expenses and have had no other choice but to turn to local food banks and drives for aid.
Furthermore, the cost of living in Hawaii is significantly higher than that of other U.S. states, making it difficult for even those with little or no debt to remain current on their mortgages. Despite unemployment benefits and other methods of financial aid, many debtors can’t keep up with housing expenses and have already been issued foreclosure notices.
Will Bankruptcy Filing Rates Rise Again?
It’s hard to say whether bankruptcy filings in Hawaii will remain steady or spike anew. If unemployed residents don’t find a reliable source of income soon, it may be in their best interest to speak with a bankruptcy attorney for advice on how to proceed with their debts.