Congress proposes measure to restrict Chapter 7 bankruptcy filings.

By Elana Schor, The Sun Herald, Biloxi, Miss. Knight Ridder/Tribune Business News

Feb. 23--WASHINGTON -- Congress has proposed a new law to restrict Chapter 7 bankruptcy filings, which have been climbing steadily in Mississippi despite two years of decrease on the Coast.

Chapter 7 is the most extreme form of debt forgiveness, in which a filer liquidates assets to prevent any creditor action. A bankruptcy bill supported by Sens. Thad Cochran and Trent Lott that the Senate will take up next week would reroute many Chapter 7 filers into Chapter 13 bankruptcy, which requires them to make partial debt payments.

"It would adversely affect consumers to …