Bush signs tougher bankruptcy bill

A new bill which U.S. President George W. Bush said was "restoring integrity to the bankruptcy process" will make it harder for debtors to have their obligations erased.

Bush signed the bill into law on Wednesday and said: "Bankruptcy should always be a last resort in our legal system. If someone does not pay his or her debts, the rest of society ends up paying them."

The law, which takes effect in six months, requires debtors to work out plans to repay as much as they can afford instead of dissolving their debts in bankruptcy.

The legislation met strong opposition from consumer rights activists, who said the change will hurt low-income working people, single mothers, minorities and the elderly and will remove a safety net for people who have lost their jobs or face major medical bills.

"The big winners under the new law will be the special interests that literally wrote it, particularly the credit card industry," said Travis B. Plunkett, legislative director of the Consumer Federation of America, in an interview with the Associated Press. "This is particularly ironic because reckless and abusive lending practices by credit card companies have driven many Americans to the brink of bankruptcy."

The financial services industry complain that bankruptcy frequently is taken advantage of by gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires who buy mansions in states with liberal exemptions to shelter assets from creditors.

In an interview with the Associated Press, Mallory Duncan, senior vice president and general counsel of the National Retail Federation, said: "Bankruptcy has gone from a stigma to a financial planning tool for many." Bankruptcy filings in America have increased nine-fold since 1978, when bankruptcy laws were last updated, he added.

Source: Xinhua