The biggest changes in U.S. bankruptcy laws in a quarter-century will occur 180 days after President Bush signs a bill that Congress sent him Thursday. The 30,000 to 210,000 people that the American Bankruptcy Institute estimates will be affected by the new law can escape its impact if they file for bankruptcy before then.
Mr. Bush said he was eager to sign the bill to curb abuses of the system. "These commonsense reforms will make the system stronger and better so that more Americans — especially lower-income Americans — have greater access to credit," he said.
"We will be up working late trying to get those petitions filed before the deadline," said Eric Roland Spencer, a bankruptcy attorney practicing in Roanoke, Va.
In recent weeks as Congress has debated the legislation, Spencer said, he's seeing seven to eight clients a day, up from four a day beforehand.
The bill passed by the House Thursday on a 302-126 vote marks the second major change in law to benefit business since Republicans increased their House and Senate majorities in last fall's elections. The Senate passed the bill last month, 74-25.
The legislation has been a long-time goal of credit-card companies and banks, and primarily affects consumers of such services, CBS News Radio Correspondent Bob Fuss reports.
It doesn't affect corporate bankruptcy, but dramatically re-writes the rules for individuals in financial trouble. The law will make it harder for the financially strained to start over, and require thousands of would-be filers to keep paying, even when drastically in debt, Fuss reports.
Legislators who voted for the bill say the changes will stop people from declaring bankruptcy to avoid paying their bills. But the major changes also wipe out a safety net for people like Brooklyn, N.Y., resident Hector Cintron, a former police officer whose plight illustrates the impact this new law will have.
Cintron spoke with CBS News Correspondent Jim Axelrod as he examined the piles of credit card bills accumulated on his table. Due to his mother's illness and expenses of caring for his children, Cintron owed about $50,000 on credit cards.
"I was ashamed," Cintron said. "I was embarrassed. I didn't want to go [to the courthouse and declare bankruptcy], but I was told I should."
The idea of starting over with a "clean slate," which the old bankruptcy code provided for, was appealing to Cintron, he told Axelrod.
"I just wanted to, like when you get a heart transplant or something, get a new lease on life," he said.