Last week's Senate vote on personal bankruptcy promises to tighten the laws which permit consumers to erase debt. The Senate voted to 83 to 15 in favor of a bill that would require consumers facing bankruptcy to file for bankruptcy protection under Chapter 13 of the Bankruptcy Code instead of the more popular Chapter 7.

A debtor undergoing a Chapter 13 bankruptcy must repay at least a portion of the debt over a three- to five-year period. The bankruptcy court determines a repayment plan based on the debtor's ability to pay, and creditors work with the court to determine a plan that is acceptable to them.

The Chapter 7 plan, which credit card companies dislike, allows for debtors to completely erase debt without having to repay. Certain debts, such as home mortgages and recent tax obligations, cannot be erased with a Chapter 7 plan.

The House has already passed a similar bill and President Bush has indicated his support of whatever compromise bill on which the two chambers can agree.