Bankruptcy bill to make dissolving debts harder

Congress expected to pass legislation after 5 years of debate

? Breaking a yearlong deadlock, key lawmakers reached agreement Thursday night on legislation making it harder to dissolve debts through bankruptcy court.

The legislation has been hung up over a Democratic demand for a provision ensuring that abortion protesters who are sued successfully may not use bankruptcy laws to avoid payment.

The breakthrough came on the same day Congress overwhelmingly passed legislation aimed at restoring Americans’ confidence in business and stemming the erosion of people’s retirement savings with stiff new penalties against corporate fraud.

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 usually 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.

Lawmakers have been working on the bankruptcy language for five years, GOP Sen. Charles Grassley of Iowa said.

Grassley and GOP Sen. Orrin Hatch of Utah told reporters they expected the measure to clear Congress within a matter of days.

President Bush indicated earlier that he would sign a bankruptcy bill, but there was no immediate reaction from the White House Thursday night.

The provision holding up the bill was targeted at violent abortion protesters. It would prohibit people who attack or block access to abortion clinics from declaring bankruptcy to avoid paying court-ordered fines.

Opponents charge that, particularly in a sagging economy, the bill would remove a crucial safety net for people who have lost their jobs or face huge medical bills, as well as for single mothers seeking child support from bankrupt fathers.