Democratic presidential candidate Barack Obama today will propose overhauling US bankruptcy laws to ease their impact on people unable to pay their bills because of medical expenses or military service.
"I'll reform our bankruptcy laws to give Americans who find themselves trapped in debt a second chance," Mr Obama will say in prepared remarks for a town hall in Powder Springs, Georgia, which is outside of Atlanta.
"While Americans should pay what they owe and we should be fair to those creditors who were fair to their borrowers, we also have to do more for the struggling families who need help most," he added.
Mr Obama, an Illinois senator, and Republican John McCain, an Arizona senator, have been squaring off this week over the economy as they court voters who are increasingly anxious over soaring energy costs and a deteriorating job market. Mr McCain and Mr Obama will face each other in the November election.
Mr Obama took aim at a 2005 overhaul of bankruptcy laws that was strongly supported by credit card companies and other consumer lenders which made it tougher for people facing personal bankruptcy to discharge debt.
The bankruptcy law was passed by a Republican-led Congress and signed by President George W. Bush.
Mr Obama has sought to link Mr McCain to Mr Bush's policies on the economy, which the Democratic candidate contends have left the middle class struggling while favoring the wealthy.
He accused Mr McCain of having "sided with the big banks" to support the rewrite of the bankruptcy laws.
Mr Obama said about half of all personal bankruptcies result in part from the burden of high medical expenses.
He said he would change the law so that Americans who can prove that their bankruptcies resulted from high medical costs could get some relief from their debts.
Mr Obama would also create a "fast-track" bankruptcy process for people serving in the military and their families who get behind on expenses because of long deployments, repeated moves and predatory lenders.
"If you're serving our country, you should be protected no matter where you live," Mr Obama said.
In addition, he would make it easier for people over 62 to keep their homes if they are facing bankruptcy and give some relief to people burdened by bills because of a natural disaster.
Amid worries the US economy may be sinking into a recession, personal bankruptcy filings are on the rise.
Such filings jumped 30 per cent in the first six months of this year compared to the same period in 2007, according to the American Bankruptcy Institute, a research organization.
Rising mortgage costs in a slumping housing market and high levels of other household debt led to the jump in bankruptcy filings, the institute said.