Prospects for enactment of bankruptcy reform nosedived Thursday as sparring by Democrats and Republicans kept committees in the House and Senate from passing legislation as expected.

"I'm very disappointed," Senate Judiciary Committee Chairman Orrin G. Hatch said. "I really thought we'd get this done today. But to try to do more would just be an exercise in futility."

At issue is how to force debtors with high disposable incomes to repay at least some unsecured credit.

Republicans generally support using a formula based on income and living expenses to determine if consumers may eliminate all unsecured debt by filing under Chapter 7 or must repay some under Chapter 13.

Democrats generally want bankruptcy judges to decide if consumers may use Chapter 7. They also advocate protecting consumers by imposing more disclosure requirements on credit card companies.

The Judiciary committees of both the House and Senate will attempt to wrap up work on their contentious bills Tuesday. The full House is expected to vote Thursday, with the Senate expected to follow next month.

The Clinton administration has repeatedly threatened to veto any bill that relies too heavily on formulas to decide eligibility for Chapter 7. It also has demanded restrictions on credit card lenders.

Both bills, however, appear to be moving away from the administration's position. If Republicans succeed in pushing reform through Congress and President Clinton vetoes, the votes for an override could be hard to muster.

But industry lobbyists said epitaphs are premature.

"It is not over until it is over," said William P. Binzel, director of government affairs for MasterCard International. "There is still a lot of work left to be done."

"It is too soon to say how these bills will turn out," said Gary J. Kohn, vice president and senior legislative counsel at the Credit Union National Association. "But we have some obvious concerns over what is happening."

Earlier this week industry officials expressed concern that House Democrats were making too much progress weakening the bill in committee. They urged Republican lawmakers to fight back.

On Thursday, House Republicans took on the challenge and successfully reversed a compromise that Judiciary Committee Chairman Henry Hyde reached Tuesday with Democrats.

Rep. Hyde's plan required judges to force consumers into Chapter 13 if, after "reasonable" living expenses, the debtors could afford to repay at least $6,000 over five years. Anyone earning less than the regional, median family income would automatically qualify for Chapter 7.

Lawmakers voted Thursday 20 to 17 to use a formula based on Internal Revenue Service living expense data to determine eligibility for Chapter 7. The formula would include allowances for school tuition and extra food and clothing costs. Judges could override the formula-based test if the debtor could demonstrate "extraordinary circumstances" that showed he could not afford to repay at least $5,000 over five years.

"This took a major step toward getting better today," said Philip S. Corwin, a principal at Federal Legislative Associates who lobbies for the American Bankers Association.

But the move infuriated Democrats. "This bill is an example of a special interest that has the entire Republican party bought and paid for," said Rep. Jerrold Nadler, D-N.Y.

"The influence of the credit card industry is incredible," said William Delahunt, D-Mass. "They are dictating this bill. This isn't about ability to repay. This is about how they can enhance their bottom lines."

Action by the Senate Judiciary was delayed for the second straight week as Sen. Hatch was unable to maintain a quorum for much of the meeting. This prevented a vote on an amendment by Sen. Charles E. Schumer, D-N.Y., to adopt Rep. Hyde's original approach to determining who may use Chapter 7.

Sen. Schumer also was expected to introduce amendments requiring credit card companies to specify on statements the number of months it would take to retire a balance by making only the minimum monthly payment. He would bar credit card lenders from charging fees to consumers who pay their balance in full every month and require better disclosure of all fees and penalties.

Lenders oppose all of the Schumer amendments.

Meanwhile, credit union lobbyists are warning that their industry might oppose the Senate bill unless provisions on reaffirmations are changed. They want senators to adopt measures in the House bill permitting debtors to voluntarily repay unsecured loans to credit unions without obtaining a judge's approval. Credit unions also want to be exempted from a provision voiding reaffirmation agreements obtained through coercive tactics.

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