The get-tough bankruptcy overhaul signed by President Bush last week should be a bonanza for collection agents, given that the law is aimed at coaxing consumers to pay off their bills rather than just walking away.

But collection agents are unsure how things will turn out. Though the industry supported the law, bill collectors are worried about the cost of tracking accounts from debtors who can’t pay and won’t file for bankruptcy.

Ron Sargis, a Sacramento attorney who represents collection agents, said that an outgrowth of the law could be a rash of small-scale accounts that are more trouble than they’re worth.

“If we can get 15 cents to 20 cents on the dollar, then it’s worth it,” Sargis said. “If we’re going to get 4 cents on the dollar, then I’d rather have the debts dismissed in Chapter 7.”

The law, pushed heavily by banks and credit card companies, was designed to force wage earners who are capable of repaying at least 25 percent of their debts over five years to file under Chapter 13 of the Bankruptcy Code and establish a payment plan. Many of these people would have filed under Chapter 7 of the old code and erased all their debts.

Nationwide, roughly 1.3 million Americans filed for Chapter 7 in 2003. The American Bankruptcy Institute estimates that anywhere from 30,000 to 210,000 potential bankruptcy filers will be disqualified under the new law.

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