Congress passes bankruptcy reform

The U.S. House of Representatives on April 14 voted 302–126 to pass legislation making it harder for consumers to avoid paying debts by filing for bankruptcy. The bill last month passed by 74–25 in the Senate—where it has stalled several times in recent years—and now goes to President Bush, who has said he will sign it.

The reform has long been supported by many business groups, including Jewelers of America and the National Retail Federation.

The bill adds a means test for those who file for bankruptcy. Those with incomes above that level and judged able to repay their debts will have to comply with court-approved payment plans.

This is the biggest reform of the U.S. bankruptcy code in 25 years, and caps eight years of effort by its congressional supporters, business groups, bankers, and credit card companies to get it passed.

Rep. David Dreier of California said the legislation would save American families an average $400 annually in higher interest rates now charged to consumers to recoup losses from those who abuse bankruptcy proceedings.