By a vote of 74-25, lawmakers passed a bill that would require more people who file for personal bankruptcy protection to repay a portion of their debts.
Under present bankruptcy law about 70% of debtors are processed under Chapter 7 where their financial obligations are completely erased. The new law would force more debtors into Chapter 13 where, after means testing, the court would help them restructure their debt, establish a repayment schedule and creditors would get paid at least part of what is owed them. People in bankruptcy would also be required to get credit counseling.
What it means is, if you have a job and you go out and buy too much house and too much car and you max out your credit cards at Circuit City, you can no longer get out of your mess scot-free by filing for bankruptcy. But if you have fallen on hard times, can't get a job or have huge medical bills, there is still a safety net. This is decent legislation that is way past due.
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