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Bankruptcy reform hits women hard

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Jennifer Moran was only 23 when she faced a financial nightmare. After quitting a $45,000 sales job because it took her into dangerous neighborhoods, she became a CVS store manager, earning only $23,000. With her salary cut in half, her debts mounted. Her car was repossessed, and bill collectors knocked on her door at 3 a.m. Frightened, she took a lawyer's advice and filed for bankruptcy.

"I was a young, naive girl and had no understanding of finance or legal matters or what my options were," says Ms. Moran, of Point Pleasant Beach, N.J.

Whether she should have filed for bankruptcy is debatable. But under reform legislation now working its way through Congress, debtors like her may no longer have the option of filing in the first place. By making it tougher and, possibly, more expensive to declare insolvency, the bill aims to encourage personal responsibility and restore more power to creditors in an era when personal bankruptcies have become more popular.

If the reform becomes law, however, women will be the most affected, experts say.

"Make no mistake, the new bankruptcy bill will fall hardest on women," says Elizabeth Warren, a professor at Harvard Law School and coauthor of "All Your Worth: The Ultimate Lifetime Money Plan."

Even without the reform, more than 1 million women will find themselves in bankruptcy court this year, outnumbering men by about 150,000, if past trends hold, says Jill Miller, chief executive officer of Women Work! in Washington, D.C.

Women with children, Professor Warren explains, are more vulnerable than ever before. "They're spending more on the basics, so they have less flexibility in their budgets if something goes wrong. Single women early in their career tend to have lower income and higher expenses. That puts them at risk. Older women often have much less built up in retirement funds and are counting on home and cash assets that won't be protected in bankruptcy."

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