NEW YORK, NY -- Sweeping consumer bankruptcy reform has been promised and much ballyhooed in the media for several years. While bankruptcy experts around the nation are uncertain about the ultimate fate of major reform legislation, according to Michael L. Moskowitz, a bankruptcy attorney who has closely followed the bills, the House adopted the most recent bankruptcy reform legislation late Wednesday, March 19, 2003, that would toughen bankruptcy rules for individuals and corporations.

The measure was overwhelmingly passed by a vote of 315-113, as it moved quickly through the Republican-controlled House. But the bill, which has been stalled for nearly six years, faces a more difficult time in the closely divided Senate. Similar legislation stalled last year due to a dispute over an amendment that would have barred anti-abortion protesters from using bankruptcy laws to discharge momentary judgments related to their anti-abortion practices. The new House bill does not include this provision.

According to Moskowitz, the Senate should not be as easy a place to adopt the bill as in the House because of the new legislation's elimination of the abortion language championed by New York Senator Charles Schumer. The failure of Congress to reconcile its disagreements regarding this provision caused last year's legislation to fail.

The Bankruptcy Reform Act, as written, would make it harder for consumers to eliminate their debts in bankruptcy court. Democrats in the House criticized the legislation as being unfair to consumers struggling because of a difficult economy.

The U.S. Chamber of Commerce praised the expected House passage. "People who can't afford to pay their debts have nothing to fear from bankruptcy reform, but those who can will be held accountable," said U.S. Chamber of Commerce President Thomas Donohue in a statement. "The Senate must pass and the President sign a bill that will prevent wealthy debtors from abusing the system and passing the buck to American business and consumers.

Before the legislation can become law, it must pass through the Senate and then sent to President Bush for approval. While we anticipate the sailing will not be as smooth in the Senate as it was in the House, bankruptcy reform of some sort appears more likely with the current Congress. Stay Tuned.

Michael L. Moskowitz, is a member of the firm of Weltman & Moskowitz, LLP, having offices for the practice of law in New York and New Jersey, where it handles cases involving bankruptcy and creditors' rights, business litigation, organization, sale and transfer, intellectual property protection, real estate, and other transactional matters. He can be reached at 212.684.7800 or 201.794.7500 or by e-mail.