HONOLULU -- Hawaiian Telcom announced Monday morning that it will file for Chapter 11 bankruptcy.

The local phone company said the move will not affect its 1,400 employees, service or customer programs.

In a news release sent out on Monday morning, Chief Executive Officer Eric Yeaman said, "Our decision to restructure through a Chapter 11 filing allows the company to reduce its level of debt and reorganize its business, so we can emerge a stronger and more financially secure company."

The company has about $1 billion in debt and recently postponed a $26 million interest payment.

It has also been hurt by the increase competition from wireless companies. In 2005, it had about 645,000 residential and business customers. Today, that number is down to 524,000.

Many people are like Rebecca Cummings, of Kailua, who has not had a landline at home for four years.

"So many people just rely on their cell phones now, and if you move, you can just keep your cell phone and the same number, so you don't really need a landline. I guess it's a sign of the times," Cummings said.

The written statement pointed out that, "Hawaiian Telcom's actions are a result of increased competition in an ever-evolving communications industry, an inability to satisfy its capital expenditure needs while continuing to meet its debt service requirements, a significant downturn in the economy, as well as the difficulties in the transition of certain back office functions from Verizon following the 2005 acquisition."

In three years since the Washington-based Carlyle Group bought the company, it has lost about 21 percent of its customers. People like Andrew Neuman of Manoa, who complained of bad service.

"They double-billed us. (It) took us almost a year and a half to get our money back, then they misbilled us a second time. It was a real bummer," Neuman said.

Hawaiian Telcom was plagued by billing problems after the switch over from Verizon.

The company said its biggest unsecured creditors include Hawaiian Electric Co., which is owed $1.2 million, Hawaii Electric Light Co. on the Big Island, which has a $416,000 outstanding bill and Commercial Roofing and Waterproofing of Kalihi, which Hawaiian Telcom owes $309,000.

Gov. Linda Lingle issued a written statement following the news of Hawaiian Telcom's bankruptcy filing plans.

"Our Department of Commerce and Consumer Affairs, the Consumer Advocate and the Public Utilities Commission has been closely monitoring the company's financial circumstances and correspondingly has been informed of the company's hopes to restructure in an effort to make Hawaiian Telcom financially stronger," she said.

Some longtime customers said they are not worried about the phone company's future.

"A lot of companies are going through tough times and I'd rather see them take active steps to reorganize, to do what they need to do to get in order and rather than just all of a sudden, they're gone. Then I'd be worried," customer Cheryl Kido said. "During the last power outage, my cell phone didn't work, but the landlines were working and they've given me a free phone, so I'm with them 'til the end."