Creditors are digging in for a fight as the Clinton administration insists bankruptcy reform must go easier on consumers.

Both sides are likely to give some ground, though, because lawmakers face a tight deadline to reconcile versions of the legislation approved by the House and Senate. Congress is scheduled to adjourn next week.

Jacob J. Lew, director of the Office of Management and Budget, jarred lenders with a letter to lawmakers Monday that threatens a presidential veto unless congressional negotiators dump the heart of the House bill and retain consumer protections added to the Senate version.

"The President believes bankruptcy reform should be both balanced and moderate," Mr. Lew wrote. "We should, therefore, avoid a bill that takes indiscriminate aim at debtors and fails to address some troubling practices of creditors."

Banks and credit card issuers favor the House bill because it would use a formula based on income and living expenses to decide whether bankruptcy applicants may eliminate their debts in Chapter 7 or be forced to repay some of them in Chapter 13. The Senate version would require a court hearing and leave the decision in the hands of a judge.

Describing the House approach as "rigid and arbitrary," Mr. Lew argued that "bankruptcy courts must have discretion to consider the specific circumstances of a debtor in bankruptcy."

Though President Clinton had already signaled support for the Senate version, this is the first time a veto has been threatened. But industry representatives said the letter is just a bargaining ploy, and they expect the administration's position to soften.

Philip S. Corwin, a lobbyist who works for the American Bankers Association on bankruptcy issues, said the White House is "playing hardball."

William P. Binzel, vice president of government relations for MasterCard International, said the administration's demands would gut the legislation. "I am hard-pressed to identify what substantive reform provisions the White House would accept."

Industry representatives expect a compromise to emerge. "Between the House and Senate bills, they can construct a needs-based approach that will address the administration's concerns about flexibility," Visa spokesman Michael J. McGarry said.

According to Mr. Lew's letter, the administration will oppose the legislation unless credit card companies "give consumers more and better information" to manage their debts.

Senate amendments would prevent credit card companies from penalizing customers who pay their monthly bills in full and would require issuers to disclose on statements how long it would take customers to pay off their balance if they only pay the monthly minimum.

Signaling the tough political fight ahead, a House-passed resolution Monday urges negotiators to preserve the amendment that would bar credit card companies from canceling the accounts or imposing fees on customers who pay in full each month. "It is not a sin to pay your debts on time," said Rep. Jerrold Nadler, D-N.Y.

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