The US House of Representatives passed Thursday a legislation to make it harder for people to wipe away their debts in bankruptcy courts, marking the biggest changes in the country's bankruptcy laws in a quarter of century.
Thursday's 302-126 vote by the House sent the bill to President George W. Bush to sign. The legislation was approved by the Senate last month with a 74-25 vote.
According to the bill, people with incomes above a certain level would be required to pay credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan.
Under the current system, a federal bankruptcy judge determines whether individuals must repay some or all of their debts.
The new legislation would hurt especially low-income working people, single mothers, minorities and the elderly. It would remove a safety net for those who have lost their jobs or face crushing medical bills, opponents say.
But congressional backers, banks and credit card companies argue that bankruptcy frequently is the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires who buy mansions in states with liberal homestead exemptions to shelter assets from creditors.
Under the new legislation, between 30,000 to 210,000 people, or 3.5 percent to 20 percent of those who dissolve their debts in bankruptcy court each year in exchange for forfeiting some assets, would be disqualified from doing so, the American Bankruptcy Institute estimated.
The new legislation will take effect six months after Bush signs it.