Well, the bankruptcy bill already passed, so I suppose whether it's good or not is not a pressing issue, but
The Economist had an interesting analysis I hadn't seen mentioned before, which surprisingly was wary of the reform (surprisingly because
The Economist is unabashedly (classically) liberal in its economic viewpoints).
First, recount the arguments for tightening bankruptcy laws:
Economic theory says that making it easier to shrug off debts makes bankruptcy safer for borrowers, but increases the risk to creditors. The supply of credit shrinks: financial institutions, fearing more defaults, become less keen to lend at any given interest rate. Meanwhile, demand grows, because borrowers are more willing to take on even high interest payments. [...]
Conversely, tougher bankruptcy provisions mean lower interest rates for those who never declare bankruptcy. Those who fear they might go bust may have to cut back their borrowing. Fine, you might think, the virtuous are rewarded, while the profligate must watch their step.
So far so good. But there is a problem:
But what if borrowers' assets are at risk not because they are shopping till they drop or backing lame racehorses, but because they are trying to start a business? Entrepreneurs often have to give personal guarantees on loans to their fledgling firms. More than a few aspiring, but assetless, corporate titans have been forced to get their seed capital from Mastercard and Visa. Make bankruptcy more costly, and you make entrepreneurship less attractive.
They then go through a brief analysis of state-by-state laws on bankruptcy, and suggest that current evidence (though not necessarily reliable due to the number of factors involved) indicates that states with higher exemptions for e.g. a personal residence tend to both: 1) have higher interest rates due to the higher risk; but 2) have more entrepreneurs. The same is true when comparing to Europe, which has much stricter bankruptcy laws than even the new U.S. ones.
Now how such a complex market actually effects entrepreneurs in detail would require a lot of assumptions about (or studies on) the psychology of entrepreneurs and the dynamics of lending markets and startup markets. Perhaps the sort of person who takes bankruptcy laws into account when deciding what state to start his business isn't likely to be on the level, so encouraging those sorts of entrepreneurs isn't good. But perhaps some of those are just cautious rather than shady.
Hard to say a priori, but it's worth considering that tightening bankruptcy laws isn't necessarily unambiguously good even if you consider it only from a business standpoint:
At the very least, American policymakers ought to think carefully about the trade-off they are about to make. In stricter Europe, studies show, attitudes to risk are much more conservative. If in pursuit of a few profligates America ends up punishing the risk-takers who drive its widely envied entrepreneurial culture, that will be a bad bargain indeed.