Hawaii's Woes

Hawaii, the land of sun and fun is seeing an increase in bankruptcy filings, with no end in sight.

At Consumer Credit Counseling Service of Hawaii business is booming, especially when it comes to providing the mandatory financial counseling that's required before someone can file for bankruptcy.
That's been increasing and figures to rise even more this year, says Wendy Burkholder, head of the agency that provides advice and counseling on how to handle debt problems.
"I think we're going to see a tremendous increase in volume this year," said Burkholder, ticking off a list of factors that could contribute to a rise in bankruptcies. Rising adjustable-rate mortgage payments. Record gasoline prices. Higher food prices. Aloha Airlines' collapse. The closing of Molokai Ranch.
"It's going to be a really busy year."
Bankruptcy filings are increasing in Hawai'i, as witnessed by an about 26 percent jump during the first three months of the year. The surge in people going broke is in line with the trend nationally, where experts are saying heavy household debt burden and growing mortgage problems are forcing people into bankruptcy court.
The increase is being driven by a number of factors, one of which involves some history. A year and a half ago the U.S. bankruptcy code was tightened up, making it more difficult for people to clear their debts through the process. Congress changed the law after credit card companies and other lenders complained too many consumers were using bankruptcy to shed debt even if they could make partial payments. Article.

Of course to make matters worse, housing prices in Hawaii are extremely high with an average home price of nearly $1,000,000.

Terry Tolman, chief staff executive of the Realtors Association of Maui, noted that Maui real estate has shown a “general cooling trend” since its peak in mid-2005. But nothing like the plunge being experienced in many Mainland areas.The association compiles the numbers from its Multiple Listing Service database. Tolman cautions that particular neighborhoods can diverge from the overall trend.The trend for single-family homes shows a 12 percent decline in average prices, which were over $1 million a year ago. So far this year, the average is $909,000.But median prices, which are less affected by whopper sales, have moved much less. They are down 4 percent to $603,000.The number of days on market, which gives an idea of how hard it is to sell a house, was 162. That was about a month longer than last year. Article.