Posner provides straightforward explanation of the Bankruptcy Reform Legislation, echoed by Becker. A useful overview of the basic economics involved, and along the lines of which I testified in more depth in the Senate Judiciary Committee I haven't said before.
Je also fails to note the empirical evidence that demonstrates the trivial payouts made to unsecured creditors in chapter 7 (about 95% of cases pay nothing, and the others generally only pay a couple of pennies on the dollar), so that the model that contemplates an actual surrender of nonexempt property in chapter 7 is not really a very realistic description of how the world actually operates in practice.
His punchline is right on though:
Behind the Bankruptcy Reform Act, as behind the President's proposal for social security reform, is an ideology of giving nonwealthy people greater responsibility for their own economic welfare, which entails subjecting them to additional financial risk. Under the present system, the prudent and the imprudent consumer pay the same high interest rates, assuming creditors can't readily determine which consumers are prudent and which are imprudent. By lowering interest rates on credit-card and other consumer debt while at the same time discouraging default, the Bankruptcy Reform Act will encourage consumers to exercise greater care in borrowing—yet at the same time, because interest rates will be lower, the Act will enable prudent consumers (who do not face a high risk of bankruptcy) to borrow more and by doing so will increase their consumption options. The Act will not redistribute wealth from the poor to the rich, but from the imprudent borrower to the prudent borrower.
As I have said before, this bill is at bottom about rewarding personal responsibility.