The number of people declared bankrupt hit a record high last month, surging 20 per cent from the previous month to 3,193 as the struggling economy left many people unable to pay their debts. On the positive side, requests for bankruptcy declaration - a lagging indicator of bankruptcies - fell for a second consecutive month to 2,099 in January from 2,111 in the previous month. The number of bankruptcy cases climbed steadily in the past year as people were squeezed by an anaemic economy, soaring unemployment and tumbling property prices. The number of people declared bankrupt last month is almost three times the level in January last year. 'It's not only bad news - it's alarming news,' said Sin Chung-kai, the Democratic Party's spokesman on economic issues. He urged Financial Secretary Antony Leung Kam-chung in his Budget speech next month not to take 'any drastic action that will dampen the economy [because] that will trigger more bankruptcy cases'. The drop in the number of requests for bankruptcy declarations could indicate that bankruptcies have peaked, after hitting a high of 2,441 in November. Petitions for bankruptcy usually take several months to wind their way through the courts before a decision is made. Joe Lo, an economist at Citibank, said: 'It is quite obvious that the number of petitions have peaked at about 2,500 over the past few months.' He said it was also possible the court system, which in previous years did not have so many bankruptcy cases to deal with, had become more efficient in handling petitions, allowing them to clear up a large backlog last month. But Paul Thurston, acting chairman of the Hong Kong Association of Banks, was more sceptical about the implications of the dip in bankruptcy petitions, saying that because they came during the holiday season, 'this is not necessary a typical time of the year'. Last year, he said, 'petitions dropped quite significantly in February, then shot up in March'. He cautioned against drawing long-term conclusions from the recent data. Both Mr Sin and Mr Lo said moves by banks to tighten credit card lending could help cut the number of future bankruptcy cases. The introduction on April 1 of an amendment to the personal privacy code to allow banks to share financial information about their clients would also 'help a little but not much', Mr Sin said.
