WASHINGTON (AP) -- Hours after making big business more liable to the public, Congress also moved toward making it more difficult for Americans to escape overwhelming debt through bankruptcy protection.
"In these hard economic times, while we're dealing with corporate responsibility, we should also address personal responsibility," GOP Sen. Orrin Hatch of Utah said.
After arguing for five years, House and Senate negotiators finally came to an agreement Thursday on a compromise bill that would make it tougher to get credit card and other debts forgiven in bankruptcy court.
The legislation had been stalled all year over a Democratic demand for a provision ensuring that abortion protesters who are sued successfully may not use bankruptcy laws to avoid payment. But with the new agreement, lawmakers planned to put the bill on the fast track before going home for the summer.
The Republican-controlled House was expected to take the bankruptcy bill up Friday, GOP aides said.
How quickly it would move through the Democratic-controlled Senate was uncertain, but "we have worked hard for a year to make this a better and more balanced bill, and we have succeeded," said Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee.
The legislation applies a new standard for determining whether people filing for bankruptcy should be forced to repay debts under court-approved reorganization plans rather than having them dissolved. If a debtor is found to have sufficient income to repay at least 25 percent of the debt over five years or has at least the median income for his or her state, a reorganization plan generally would be required.
Under the current system, it is left to a bankruptcy judge or a private attorney appointed by the Justice Department to decide whether someone qualifies for dissolution of debts or should be forced to repay under a reorganization plan.
The credit card industry, which claims millions of dollars in losses a year from bankrupt consumers, has long lobbied for changes in the bankruptcy laws.
"At long last, we'll be able to close loopholes exploited by big spenders who have the ability to repay their debts and better protect consumers who have been left to pay higher prices for goods and services as a result," said Sen. Charles Grassley, R-Iowa.
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