But on Oct. 1, Norwood filed for Chapter 7 bankruptcy protection, a move that stopped the house from going into foreclosure and allowed Norwood and her daughter, Shari Murphy, 49, to stay afloat.
"We had to do something," said Murphy, an electrician who, after a back injury and two ensuing surgeries, has had a hard time finding a job.
For young people with jobs, it will be probably tougher under the new law to qualify for Chapter 7 bankruptcy, which would wipe out much or all of their debts. For the elderly, a group badly in need of debt erasure, higher legal fees are likely to be the big disincentives.
Legal fees for Chapter 7 bankruptcy now range from as low as $500 in some parts of the country to as high as $2,500 in metropolitan areas like Chicago and Los Angeles, said lawyer James Cossitt, who conducted a national attorney fee survey. Experts estimate that these costs will double under the new law, and older debtors already struggling on limited incomes will be hard-pressed to come up with that money.
"It's creating a lot more hoops they're going to have to jump through," said bankruptcy attorney Kevin Chern, president of Start Fresh Today Inc.
The law's supporters say its aim is to weed out big spenders who are trying to take advantage of the bankruptcy system. To qualify for Chapter 7 bankruptcy under the new law, debtors will have to pass what's called a means test — if their household incomes are higher than their states' median incomes and they're able to pay $6,000 over five years, or about $100 a month, they'll have to go into Chapter 13 and face a court-imposed debt repayment plan.
That will make it harder for debtors seeking a fresh start.
"It's probably younger people who may see the law change more substantially," Chern said. Although under-35 debtors are often burdened with as much debt as older people, their income is higher and living expenses lower — most have jobs, health, a chance at upward mobility, and many have no dependents.
Chris Chung, a single 34-year-old in New Jersey, was one of hundreds of thousands of Americans who rushed to file for bankruptcy before the new law took effect, fearing he may not qualify for relief under its provisions.
Chung is more than $40,000 in debt after two years of unemployment. He recently got a new job, but the debt's still there.
"I tried to keep up with it, but it became near impossible," Chung said.
Ashleigh Anglemeyer, 25, who recently remarried and gave birth to a second child, also rushed to file under the old law. She has about $16,000 in credit card debt from her previous marriage.
"I just want to get rid of it and start fresh," said Anglemeyer, a legal assistant who bought a do-it-yourself bankruptcy kit to save on fees.
Opponents of the law say it hurts younger Americans in another way: It will discourage them from trying their hands at entrepreneurship.
"A young entrepreneur opens a bagel shop, but it's in the wrong neighborhood. Guess what? He'll have that on his head for the rest of his life, and never be able to get back on his feet," said Gary Norgaard, president of the New Jersey Bankruptcy Lawyers.
Officially, only about 2 percent of bankruptcy filings in 2003 were business bankruptcies, but law professors Robert M. Lawless and Elizabeth Warren estimate the figure is closer to 17 percent. A big reason, they wrote in an article for the California Law Journal, is because many personal bankruptcies are actually due to business failure.
Robert Werner, now 63 and running a business called Proud Pappy's Pretzels, filed for bankruptcy in the 1980s when another business venture failed. He was hundreds of thousands of dollars in debt, and while bankruptcy destroyed his credit for several years, it was the only way out, he said.
"It literally would've been the rest of my life completely destroyed," Werner said. "Some very, very bad things go through your mind, from suicide — it's totally hopeless. There's nothing you can do."
The law isn't expected to affect the ability of most senior citizens to qualify Chapter 7 bankruptcy, because most are retired and the bulk of their income comes from Social Security and pensions, which won't be counted as part of household income.
"If a person had a lot of medical bills but not much income, the system would work for them," said Nathalie Martin of the American Bankruptcy Institute.
According to the Consumers Union, 85 percent of elderly debtors cite medical or employment problems as the reason for bankruptcy.
Norwood, for one, didn't want to file for bankruptcy, but she said that it was a last and necessary resort.
"At 85, you realize that time's running out," Norwood said. "I just want some peace while I'm still here. What do I need materialistically? A place to eat, a place to sleep, to know that my bills are paid."