Bankruptcy can help or harm debtors
Filing for bankruptcy is one
option forthose in debt, but
debt reduction services are also
available for consumers
Jody Burruss
Environment/Science/Technology Reporter
Faced with student loans, living
expenses and credit cards, students
often feel their debt is too over
whelming to handle. Bankruptcy
may seem like a way out of this
mess, but is not always the right
choice for everyone.
“I’m hesitant to recommend
(bankruptcy) to a student, because
until they get out into the work
force, we can’t tell if they’re going to
make it,” attorney Edward Hill said.
Hill, a University School of Law
graduate, said when students are
considering bankruptcy, it is im
portant to look at a credit report to
determine if the student’s credit is
already ruined or if there is just
too much debt. This helps deter
mine if bankruptcy should be re
garded as an alternative.
But attorney John Henderson
says bankruptcy can help students
get a fresh start.
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If a student goes bankrupt, this
will show on their credit. But, Hen
derson said, this can actually be
better than doing nothing.
“It’s the first step in resurrecting
their credit,” he said. “Bankruptcy
is there to offer a fresh start.”
Paying bills late — not going
bankrupt — is what gives destroys
people’s credit, he added.
Henderson said that a different
option to bankruptcy is consumer
credit counseling. This involves bar
gaining with creditors to attempt to
reduce debts owed.
Debt Reduction Services branch
manager Timothy Carson said
debt reduction is a great alterna
tive to bankruptcy because once
the debtor has paid on all out
standing accounts, his or her cred
it rating will be restored. With
bankruptcy, it can take seven to
10 years to restore one’s rating.
Carson said DRS doesn’t barter
"I'm hesitant to
recommend
(bankruptcy) to a
student, because until
they get out into the
work force, we can't
tell if they're going to
make it"
Edward Hill
attorney
with creditors for the amount owed;
it works with those companies to
reduce interest rates and stop over
limit and late fees.
Bankruptcies in Oregon
Number of
bankruptcies
23,071
18,210
18,205
J_
1997 1998
1999
2000
2001
24.000
18.000
12,000
6,000
0
“We start with (the debtors’) budg
et and go from there,” Carson said.
Many clients come in with tunnel
vision, thinking it’s the end of the
world because they are so far in
debt, Carson said. But often some
one else can look at their budget
and find a way to better manage
their money, and the client leaves
happy, Carson said.
As long as the debtor has the abil
ity to make payments, debt reduc
tion will likely work as an alterna
tive to bankruptcy, Carson added.
If a student does go bankrupt, it
does not mean that student loans
will be forgiven. There are three
types of debt — priority, unsecured
and secured. Student loans are pri
ority debt; secured is debt that is
connected to property. The only
kind of liability that is discharged in
a bankruptcy is unsecured.
Hill said it is just as common to
see parents who have co-signed stu
dent loans for their children to have
financial trouble because their chil
dren are in default. He said credi
tors will usually look to the student
first, but in the end they don’t care
who repays the loan.
Hill added that many creditors
practice illegal debt collection by
threatening debtors with jail.
ASUO Legal Services Attorney
Ilona Koleszar said they do not offer
bankruptcy services for students
because it is very labor-intensive
and time-consuming. They do, how
ever, have a book of local contacts
available for more information on
bankruptcy, she said.
For more on debt reduction, visit
www. debtreductionservices .com.
Contact the reporter
at jodyburruss@dailyemerald.com.
utMtiM
Cox
continued from page 1
aren’t being filled.
As one example of a way to cut
spending, Cox-said he’d stop the
OLGG from running liquor
warehouses.
“Seagrams is more than happy to
deliver a case of liquor directly to a
bar instead of an Oregon City ware
house,” he said. “You can’t tell me
we need a tax increase if there’s that
much waste that even I, a third-party
candidate without a huge staff, with
out millions of dollars, without full
time accountants and lawyers on
staff to pour over these issues, I can
still find these things.”
As a Libertarian, Gox said as
Governor he’d stimulate Oregon’s
economy by issuing tax cuts, mon
ey that would be free to use once
the budget had been trimmed
under his plan.
Cox slammed his opponents in
the gubernatorial race, chastising
Republican Kevin Mannix for his so
cial intolerance and Democrat Ted
Kulongoski for being tax-happy.
“I’m the only fiscal conservative
in this race, and I’m socially toler
ant,” he said. “We don’t want some
body who’s going to tax and spend
or borrow and spend, and we also
don’t want somebody who’s going
to try and use the power of state
government to
tell us how to
live our lives
or what values
to have.”
The Liber
tarian, who
mentions
Thomas Jeffer
son, John
Adams and
George Wash- COX
ington as his
role models, said by fixing the state’s
budget and instigating reforms, he
can conquer issues problems with
higher education spending.
“We absolutely have to get state
spending under control,” he said. “I
am the right guy with the right plan
at the right time.”
Contact the news editor
atbrookreinhard@dailyemerald.com.
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