The New Rules

Key features of legislation to overhaul bankruptcy laws now before theSenate:

* Bankruptcy judges would have to consider a debtor’s ability to repaywhen deciding how the debtor is treated. People generally would berequired to file for financial reorganization under Chapter 13, subject to a court-ordered repayment plan, if they can pay back 30% ormore of their debt within three years. Credit card companies complainthat too many people take shelter under the more lenient Chapter 7,which erases debts, when they could afford to restructure their debtsunder Chapter 13.

* Credit card bills would have to show how long it would take consumers to pay off their debts by paying the monthly minimum amount and what their total payments would be, including interest.

* Child support and alimony payments would get top priority in bankruptcy cases, putting them ahead of federal income taxes, bankruptcy attorneys’ fees and other obligations.

* Parents who set up special savings accounts for their children’s college education and later filed for bankruptcy would be able to keepthe money in the accounts.

* Credit card companies would be barred from dropping consumers who pay on time or charging them higher interest rates.

* Fines would be imposed on creditor companies that try to intimidateor harass consumers into giving up their legal protections.

* Bankruptcy Court filing fees would be waived for people who can’t afford to pay them.

* A $100,000 nationwide cap would be put on homestead exemptions forbankruptcy, in an effort to prevent debtors from shielding their assets in luxury homes. Currently, Florida and Texas allow debtors toshield their homes no matter how high their value.