A bill making it harder to file Chapter 7 bankruptcy may be a nightmare for indebted consumers

• The bankruptcy reform train is barreling down the track toward congressional approval.
• The effort is aimed at making it harder for financially strapped Americans to shed their debts in bankruptcy.
• The bill appeared headed for Senate approval last week, and it will next be taken up by the House.
• Charles Grassley, the Iowa Republican who is at the throttle of this legislation backed by the nation's financial industry, argues that bankruptcy "was not intended to be a convenient financial planning tool where deadbeats can get out of paying their debts scot-free while honest Americans who play by the rules have to foot the bill."
• But legal experts say morally simplistic arguments that demonize people who go bankrupt --- more than 1.5 million last year --- don't stand up to scrutiny.
• Pelofsky said the bill would transfer more costs to the public while reducing lending risks for the credit card industry, which has spent millions lobbying for the bill and whose profits have grown from $12.9 billion in 1995 to $31.6 billion last year.
• And Pelofsky said conservative lawmakers have made no allowance to pay for the rules they want to install to make sure consumers can't skip out on their bills.
• It will just make a mess of everything."
• What particularly frustrates many legal experts is a rule that would make debtors submit to a means test.
• Critics say it's hard to imagine that forcing more consumers into Chapter 13 will make a difference.
• That's especially true, they say, when you consider that consumers who end up in Chapter 13 would also be responsible for more debts under the new law, especially car loans.
• Little wonder nearly 100 nonpartisan bankruptcy professors asked Congress to rethink the bill, which they say is headed in the wrong direction.