TO FILE OR NOT TO FILE BANKRPTCY: EXPERTS DISAGREE

The Consumer Credit Counseling Service calls bankruptcy "a ten-year mistake."

The nonprofit agency, which helps people avoid bankruptcy through restructuring their debt, contends that those who do file bankruptcy face at least 10 years of difficulty getting credit or loans.

Pat McCann, a Cape Girardeau attorney who specializes in bankruptcy law, disagrees. "Some (creditors) will discriminate against people who file bankruptcy," he says, "but most will not.

"...If the person has an income, most of them will get credit."

The two most common types of bankruptcy are Chapter 7, which wipes away all debt, and Chapter 13, which reorganizes the debt and establishes a repayment plan lasting up to five years.

Chapter 13 covers certain types of debt which cannot be discharged, such as student loans and taxes unless long overdue and mortgage payments.

Chapter 7 bankruptcy accounts for about 90 percent of the total bankruptcies filed, McCann says. He argues that it offers an immediate "fresh start," while signing on with a counseling agency means no credit will be available during the three-year repayment program.

"I would say it would be almost impossible to get a credit card or a loan if you're in a counseling service," McCann said.

William Holly, branch manager of the Consumer Credit Counseling Service, insists that his clients incur no new debt during the repayment period anyway. A loan may be difficult to acquire while repaying the debt, he says, but there are still many ways to obtain a credit card.

McCann, who has been practicing law for 13 years, says his office files about 20 bankruptcies per month. Despite the recession, that number is down from past years.

"People are too broke to file bankruptcy," McCann said. "If you're unemployed, why not wait until you have a job to file?"

Another change McCann has seen in recent years is a shift in the cause of bankruptcies. "Twelve years ago, lots of the bankruptcies were on bank loans. Now they're on credit cards."

He doesn't think going bankrupt carries quite the stigma it once did. "John Connally filed bankruptcy," McCann. "He was the secretary of the treasury."

"...I think it's just a fact of life."