Card companies as well as banks are now lobbying before the outgoing Governor David Paterson, against a bill that limits the recovery by banks from their bankrupt customers. As per the bill, the major portion of the assets such as property, etc., would be shielded when consumers file for bankruptcy or when creditors or the collection agencies sue the customer in order to recover the unpaid debts.

As per the bill, the consumers can hold onto a lot of things such as cell phones to home equity or computers. The level of these assets that are protected will then be indexed to inflation so it can increase in value each year.

While the potential changes would benefit the small businesses as their owners normally use their personal cards in order to finance their businesses. The majority of the impact, however, will cover consumer cases.

Filing for bankruptcy has remained high and new bankruptcy filings are likely to top 5,000 this year. This is up by 16% since the recession began.

Banks claim that by limiting these assets that can be attached to recover their losses will only help in driving the lending costs up in the future. Banks will also become more apprehensive to extend any sort of credit facility, especially at a time when lawmakers are trying to extend credit even now.

As per the legislation, it is very clear that there would be less tomorrow compared to what there is today, stated Roberta Kotkin, New York Bankers` Association.