Congressional negotiators announced Thursday that they had reached agreement on a bill that would rewrite bankruptcy laws, making it much harder for people to escape their debts when they declare bankruptcy.
The agreement, a victory for the nation's credit card companies and other lenders, came late Thursday, after conference committee members reached a compromise on the language of an abortion-rights provision that had threatened to scuttle the overall bill. The compromise will restrict the ability of antiabortion protesters to use bankruptcy laws to shield themselves from paying court fines resulting from abortion clinic protests.
The overall bankruptcy bill, which has been passed by both houses of Congress by overwhelming margins, appears destined for final approval in the House and Senate, and the White House has suggested that President Bush will sign it.
The House could vote on the legislation, which would be the biggest change in bankruptcy law in 25 years, as soon as today, and the Senate as soon as next week.
"We have worked hard for a year to make this a better and more balanced bill, and we have succeeded," said Sen. Patrick J. Leahy, D-Vt., chairman of the Senate Judiciary Committee. He led the conference committee. "I look forward to working on a bipartisan basis to get it passed."
In April, Senate and House negotiators resolved the other key sticking point, a disagreement over how much home equity a person filing for bankruptcy could keep in the five states, including Florida and Texas, that set no limit under what is known as an unlimited homestead exemption.
The compromise would require home ownership for at least 40 months before an unlimited exemption could be used in a bankruptcy filing. People who have owned homes for less than 40 months would be allowed to shield $125,000 of equity.
People convicted of certain felonies or securities fraud in the 10 years before filing for bankruptcy could not claim the unlimited exemption under a provision inserted after the collapse of Enron Corp. and other corporate scandals.
Lawmakers pushing for that wording cited homes such as the $15-million mansion that Scott D. Sullivan, the ousted chief financial officer of WorldCom Inc., is building in Boca Raton and the $7-million penthouse that former Enron Corp. chairman Kenneth L. Lay owns in Houston.
Neither Lay nor Sullivan has filed for bankruptcy protection from creditors, nor has either been charged with securities violations. Both are the subjects of investigations.
The pending legislation would force 25,000 to 84,000 people a year who file for Chapter 7 bankruptcy to file instead under Chapter 13, which requires at least some debt repayment under a court-supervised plan.
Under current law, individuals can file under Chapter 7 to wipe out their debts if they agree to give up most of their assets, excluding in most cases their house and other essentials. They do not have to prove insolvency, but a court can deny them bankruptcy status if a judge thinks the law is being abused.
President Clinton vetoed a similar bill while he was president, saying it was unfair to consumers.
The bill, which has been vigorously opposed by consumer-rights groups, had long been the top legislative priority of credit card companies and some banks, which insist that many debtors are abusing the bankruptcy laws to escape debts they should be able to pay. The companies had drastically stepped up campaign contributions to members of Congress in recent years as they pushed for the legislation.
Sen. Charles E. Grassley, R-Iowa, who began work on the legislation in 1998, said Thursday's agreement would "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."
A leading opponent of the bill, Sen. Paul Wellstone, D-Minn., said through a spokeswoman that the the bill was "dastardly for consumers, especially in these economic times," and that he would fight to stop it on the Senate floor. "It should be embarrassing for people to vote for this."
The deliberations of the conference committee had been stalled for months over the abortion provision.
The provision had been sought by abortion-rights supporters, led by Sen. Charles E. Schumer, D-N.Y. They had cited cases in recent years in which antiabortion advocates had filed for bankruptcy to avoid paying court fines and judgments owed as a result of illegal clinic protests.
But antiabortion advocates in Congress, led by Rep. Henry J. Hyde, R-Ill., had argued that the provision could restrict the free-speech rights of antiabortion protesters and that it was unfair to single them out for punishment in the bankruptcy bill.
The final wording of the compromise provision was not immediately made public Thursday night, but Schumer said in an interview that it "contains language that says that those who use violence or blockades to close or harass clinics are not protected by bankruptcy for their liabilities."
_ Information from the New York Times and Washington Post was used in this report.