II 

109TH CONGRESS 

1ST SESSION S. 256 

To amend title 11 of the United States Code, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 1, 2005 

Mr. GRASSLEY (for himself, Mr. HATCH, Mr. SESSIONS, Mr. THUNE, Mr. 

CARPER, Mr. NELSON of Nebraska, Mr. SHELBY, and Mr. ENZI) introduced the following bill; which was read twice and referred to the Committee on the Judiciary 

A BILL 

To amend title 11 of the United States Code, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CON4 TENTS. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Bankruptcy Abuse Prevention and Consumer Protection 

7 Act of 2005’’. 

8 (b) TABLE OF CONTENTS.—The table of contents for 

9 this Act is as follows: 

Sec. 1. Short title; references; table of contents. 
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TITLE I—NEEDS-BASED BANKRUPTCY 

Sec. 101. Conversion. 

Sec. 102. Dismissal or conversion. 

Sec. 103. Sense of Congress and study. 

Sec. 104. Notice of alternatives. 

Sec. 105. Debtor financial management training test program. 

Sec. 106. Credit counseling. 

Sec. 107. Schedules of reasonable and necessary expenses. 

TITLE II—ENHANCED CONSUMER PROTECTION 

Subtitle A—Penalties for Abusive Creditor Practices 

Sec. 201. Promotion of alternative dispute resolution. 

Sec. 202. Effect of discharge. 

Sec. 203. Discouraging abuse of reaffirmation agreement practices. 

Sec. 204. Preservation of claims and defenses upon sale of predatory loans. 

Sec. 205. GAO study and report on reaffirmation agreement process. 

Subtitle B—Priority Child Support 

Sec. 211. Definition of domestic support obligation. 

Sec. 212. Priorities for claims for domestic support obligations. 

Sec. 213. Requirements to obtain confirmation and discharge in cases involving 

domestic support obligations. 

Sec. 214. Exceptions to automatic stay in domestic support obligation proceedings. 

Sec. 215. Nondischargeability of certain debts for alimony, maintenance, and 

support. 

Sec. 216. Continued liability of property. 

Sec. 217. Protection of domestic support claims against preferential transfer 

motions. 

Sec. 218. Disposable income defined. 

Sec. 219. Collection of child support. 

Sec. 220. Nondischargeability of certain educational benefits and loans. 

Subtitle C—Other Consumer Protections 

Sec. 221. Amendments to discourage abusive bankruptcy filings. 

Sec. 222. Sense of Congress. 

Sec. 223. Additional amendments to title 11, United States Code. 

Sec. 224. Protection of retirement savings in bankruptcy. 

Sec. 225. Protection of education savings in bankruptcy. 

Sec. 226. Definitions. 

Sec. 227. Restrictions on debt relief agencies. 

Sec. 228. Disclosures. 

Sec. 229. Requirements for debt relief agencies. 

Sec. 230. GAO study. 

Sec. 231. Protection of personally identifiable information. 

Sec. 232. Consumer privacy ombudsman. 

Sec. 233. Prohibition on disclosure of name of minor children. 

TITLE III—DISCOURAGING BANKRUPTCY ABUSE 

Sec. 301. Reinforcement of the fresh start. 

Sec. 302. Discouraging bad faith repeat filings. 
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Sec. 303. Curbing abusive filings. 

Sec. 304. Debtor retention of personal property security. 

Sec. 305. Relief from the automatic stay when the debtor does not complete intended surrender of consumer debt collateral. 

Sec. 306. Giving secured creditors fair treatment in chapter 13. 

Sec. 307. Domiciliary requirements for exemptions. 

Sec. 308. Reduction of homestead exemption for fraud. 

Sec. 309. Protecting secured creditors in chapter 13 cases. 

Sec. 310. Limitation on luxury goods. 

Sec. 311. Automatic stay. 

Sec. 312. Extension of period between bankruptcy discharges. 

Sec. 313. Definition of household goods and antiques. 

Sec. 314. Debt incurred to pay nondischargeable debts. 

Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases. 

Sec. 316. Dismissal for failure to timely file schedules or provide required information. 

Sec. 317. Adequate time to prepare for hearing on confirmation of the plan. 

Sec. 318. Chapter 13 plans to have a 5-year duration in certain cases. 

Sec. 319. Sense of Congress regarding expansion of rule 9011 of the Federal 

Rules of Bankruptcy Procedure. 

Sec. 320. Prompt relief from stay in individual cases. 

Sec. 321. Chapter 11 cases filed by individuals. 

Sec. 322. Limitations on homestead exemption. 

Sec. 323. Excluding employee benefit plan participant contributions and other 

property from the estate. 

Sec. 324. Exclusive jurisdiction in matters involving bankruptcy professionals. 

Sec. 325. United States trustee program filing fee increase. 

Sec. 326. Sharing of compensation. 

Sec. 327. Fair valuation of collateral. 

Sec. 328. Defaults based on nonmonetary obligations. 

Sec. 329. Clarification of postpetition wages and benefits. 

Sec. 330. Delay of discharge during pendency of certain proceedings. 

TITLE IV—GENERAL AND SMALL BUSINESS BANKRUPTCY 

PROVISIONS 

Subtitle A—General Business Bankruptcy Provisions 

Sec. 401. Adequate protection for investors. 

Sec. 402. Meetings of creditors and equity security holders. 

Sec. 403. Protection of refinance of security interest. 

Sec. 404. Executory contracts and unexpired leases. 

Sec. 405. Creditors and equity security holders committees. 

Sec. 406. Amendment to section 546 of title 11, United States Code. 

Sec. 407. Amendments to section 330(a) of title 11, United States Code. 

Sec. 408. Postpetition disclosure and solicitation. 

Sec. 409. Preferences. 

Sec. 410. Venue of certain proceedings. 

Sec. 411. Period for filing plan under chapter 11. 

Sec. 412. Fees arising from certain ownership interests. 

Sec. 413. Creditor representation at first meeting of creditors. 

Sec. 414. Definition of disinterested person. 

Sec. 415. Factors for compensation of professional persons. 

Sec. 416. Appointment of elected trustee. 

Sec. 417. Utility service. 

Sec. 418. Bankruptcy fees. 
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Sec. 419. More complete information regarding assets of the estate. 

Subtitle B—Small Business Bankruptcy Provisions 

Sec. 431. Flexible rules for disclosure statement and plan. 

Sec. 432. Definitions. 

Sec. 433. Standard form disclosure statement and plan. 

Sec. 434. Uniform national reporting requirements. 

Sec. 435. Uniform reporting rules and forms for small business cases. 

Sec. 436. Duties in small business cases. 

Sec. 437. Plan filing and confirmation deadlines. 

Sec. 438. Plan confirmation deadline. 

Sec. 439. Duties of the United States trustee. 

Sec. 440. Scheduling conferences. 

Sec. 441. Serial filer provisions. 

Sec. 442. Expanded grounds for dismissal or conversion and appointment of 

trustee. 

Sec. 443. Study of operation of title 11, United States Code, with respect to 

small businesses. 

Sec. 444. Payment of interest. 

Sec. 445. Priority for administrative expenses. 

Sec. 446. Duties with respect to a debtor who is a plan administrator of an employee benefit plan. 

Sec. 447. Appointment of committee of retired employees. 

TITLE V—MUNICIPAL BANKRUPTCY PROVISIONS 

Sec. 501. Petition and proceedings related to petition. 

Sec. 502. Applicability of other sections to chapter 9. 

TITLE VI—BANKRUPTCY DATA 

Sec. 601. Improved bankruptcy statistics. 

Sec. 602. Uniform rules for the collection of bankruptcy data. 

Sec. 603. Audit procedures. 

Sec. 604. Sense of Congress regarding availability of bankruptcy data. 

TITLE VII—BANKRUPTCY TAX PROVISIONS 

Sec. 701. Treatment of certain liens. 

Sec. 702. Treatment of fuel tax claims. 

Sec. 703. Notice of request for a determination of taxes. 

Sec. 704. Rate of interest on tax claims. 

Sec. 705. Priority of tax claims. 

Sec. 706. Priority property taxes incurred. 

Sec. 707. No discharge of fraudulent taxes in chapter 13. 

Sec. 708. No discharge of fraudulent taxes in chapter 11. 

Sec. 709. Stay of tax proceedings limited to prepetition taxes. 

Sec. 710. Periodic payment of taxes in chapter 11 cases. 

Sec. 711. Avoidance of statutory tax liens prohibited. 

Sec. 712. Payment of taxes in the conduct of business. 

Sec. 713. Tardily filed priority tax claims. 

Sec. 714. Income tax returns prepared by tax authorities. 

Sec. 715. Discharge of the estate’s liability for unpaid taxes. 

Sec. 716. Requirement to file tax returns to confirm chapter 13 plans. 

Sec. 717. Standards for tax disclosure. 

Sec. 718. Setoff of tax refunds. 
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Sec. 719. Special provisions related to the treatment of State and local taxes. 

Sec. 720. Dismissal for failure to timely file tax returns. 

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASES 

Sec. 801. Amendment to add chapter 15 to title 11, United States Code. 

Sec. 802. Other amendments to titles 11 and 28, United States Code. 

TITLE IX—FINANCIAL CONTRACT PROVISIONS 

Sec. 901. Treatment of certain agreements by conservators or receivers of insured depository institutions. 

Sec. 902. Authority of the FDIC and NCUAB with respect to failed and failing 

institutions. 

Sec. 903. Amendments relating to transfers of qualified financial contracts. 

Sec. 904. Amendments relating to disaffirmance or repudiation of qualified financial contracts. 

Sec. 905. Clarifying amendment relating to master agreements. 

Sec. 906. Federal Deposit Insurance Corporation Improvement Act of 1991. 

Sec. 907. Bankruptcy law amendments. 

Sec. 908. Recordkeeping requirements. 

Sec. 909. Exemptions from contemporaneous execution requirement. 

Sec. 910. Damage measure. 

Sec. 911. SIPC stay. 

TITLE X—PROTECTION OF FAMILY FARMERS AND FAMILY 

FISHERMEN 

Sec. 1001. Permanent reenactment of chapter 12. 

Sec. 1002. Debt limit increase. 

Sec. 1003. Certain claims owed to governmental units. 

Sec. 1004. Definition of family farmer. 

Sec. 1005. Elimination of requirement that family farmer and spouse receive 

over 50 percent of income from farming operation in year prior 

to bankruptcy. 

Sec. 1006. Prohibition of retroactive assessment of disposable income. 

Sec. 1007. Family fishermen. 

TITLE XI—HEALTH CARE AND EMPLOYEE BENEFITS 

Sec. 1101. Definitions. 

Sec. 1102. Disposal of patient records. 

Sec. 1103. Administrative expense claim for costs of closing a health care business and other administrative expenses. 

Sec. 1104. Appointment of ombudsman to act as patient advocate. 

Sec. 1105. Debtor in possession; duty of trustee to transfer patients. 

Sec. 1106. Exclusion from program participation not subject to automatic stay. 

TITLE XII—TECHNICAL AMENDMENTS 

Sec. 1201. Definitions. 

Sec. 1202. Adjustment of dollar amounts. 

Sec. 1203. Extension of time. 

Sec. 1204. Technical amendments. 

Sec. 1205. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions. 

Sec. 1206. Limitation on compensation of professional persons. 
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Sec. 1207. Effect of conversion. 

Sec. 1208. Allowance of administrative expenses. 

Sec. 1209. Exceptions to discharge. 

Sec. 1210. Effect of discharge. 

Sec. 1211. Protection against discriminatory treatment. 

Sec. 1212. Property of the estate. 

Sec. 1213. Preferences. 

Sec. 1214. Postpetition transactions. 

Sec. 1215. Disposition of property of the estate. 

Sec. 1216. General provisions. 

Sec. 1217. Abandonment of railroad line. 

Sec. 1218. Contents of plan. 

Sec. 1219. Bankruptcy cases and proceedings. 

Sec. 1220. Knowing disregard of bankruptcy law or rule. 

Sec. 1221. Transfers made by nonprofit charitable corporations. 

Sec. 1222. Protection of valid purchase money security interests. 

Sec. 1223. Bankruptcy Judgeships. 

Sec. 1224. Compensating trustees. 

Sec. 1225. Amendment to section 362 of title 11, United States Code. 

Sec. 1226. Judicial education. 

Sec. 1227. Reclamation. 

Sec. 1228. Providing requested tax documents to the court. 

Sec. 1229. Encouraging creditworthiness. 

Sec. 1230. Property no longer subject to redemption. 

Sec. 1231. Trustees. 

Sec. 1232. Bankruptcy forms. 

Sec. 1233. Direct appeals of bankruptcy matters to courts of appeals. 

Sec. 1234. Involuntary cases. 

Sec. 1235. Federal election law fines and penalties as nondischargeable debt. 

TITLE XIII—CONSUMER CREDIT DISCLOSURE 

Sec. 1301. Enhanced disclosures under an open end credit plan. 

Sec. 1302. Enhanced disclosure for credit extensions secured by a dwelling. 

Sec. 1303. Disclosures related to ‘‘introductory rates’’. 

Sec. 1304. Internet-based credit card solicitations. 

Sec. 1305. Disclosures related to late payment deadlines and penalties. 

Sec. 1306. Prohibition on certain actions for failure to incur finance charges. 

Sec. 1307. Dual use debit card. 

Sec. 1308. Study of bankruptcy impact of credit extended to dependent students. 

Sec. 1309. Clarification of clear and conspicuous. 

TITLE XIV—PREVENTING CORPORATE BANKRUPTCY ABUSE 

Sec. 1401. Employee wage and benefit priorities. 

Sec. 1402. Fraudulent transfers and obligations. 

Sec. 1403. Payment of insurance benefits to retired employees. 

Sec. 1404. Effective date; application of amendments. 

TITLE XV—GENERAL EFFECTIVE DATE; APPLICATION OF 

AMENDMENTS 

Sec. 1501. Effective date; application of amendments. 

Sec. 1502. Technical corrections. 
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1 TITLE I—NEEDS-BASED 

2 BANKRUPTCY 

3 SEC. 101. CONVERSION. 

4 Section 706(c) of title 11, United States Code, is 

5 amended by inserting ‘‘or consents to’’ after ‘‘requests’’. 

6 SEC. 102. DISMISSAL OR CONVERSION. 

7 (a) IN GENERAL.—Section 707 of title 11, United 

8 States Code, is amended— 

9 (1) by striking the section heading and insert10 ing the following: 

11 ‘‘§ 707. Dismissal of a case or conversion to a case 

12 under chapter 11 or 13’’; 

13 and 

14 (2) in subsection (b)— 

15 (A) by inserting ‘‘(1)’’ after ‘‘(b)’’; 

16 (B) in paragraph (1), as so redesignated 

17 by subparagraph (A) of this paragraph— 

18 (i) in the first sentence— 

19 (I) by striking ‘‘but not at the re20 quest or suggestion of’’ and inserting 

21 ‘‘trustee (or bankruptcy adminis22 trator, if any), or’’; 

23 (II) by inserting ‘‘, or, with the 

24 debtor’s consent, convert such a case 

25 to a case under chapter 11 or 13 of 
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1 this title,’’ after ‘‘consumer debts’’; 

2 and 

3 (III) by striking ‘‘a substantial 

4 abuse’’ and inserting ‘‘an abuse’’; and 

5 (ii) by striking the next to last sen6 tence; and 

7 (C) by adding at the end the following: 

8 ‘‘(2)(A)(i) In considering under paragraph (1) wheth9 er the granting of relief would be an abuse of the provi10 sions of this chapter, the court shall presume abuse exists 

11 if the debtor’s current monthly income reduced by the 

12 amounts determined under clauses (ii), (iii), and (iv), and 

13 multiplied by 60 is not less than the lesser of— 

14 ‘‘(I) 25 percent of the debtor’s nonpriority un15 secured claims in the case, or $6,000, whichever is 

16 greater; or 

17 ‘‘(II) $10,000. 

18 ‘‘(ii)(I) The debtor’s monthly expenses shall be the 

19 debtor’s applicable monthly expense amounts specified 

20 under the National Standards and Local Standards, and 

21 the debtor’s actual monthly expenses for the categories 

22 specified as Other Necessary Expenses issued by the In23 ternal Revenue Service for the area in which the debtor 

24 resides, as in effect on the date of the order for relief, 

25 for the debtor, the dependents of the debtor, and the 
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1 spouse of the debtor in a joint case, if the spouse is not 

2 otherwise a dependent. Notwithstanding any other provi3 sion of this clause, the monthly expenses of the debtor 

4 shall not include any payments for debts. In addition, the 

5 debtor’s monthly expenses shall include the debtor’s rea6 sonably necessary expenses incurred to maintain the safe7 ty of the debtor and the family of the debtor from family 

8 violence as identified under section 309 of the Family Vio9 lence Prevention and Services Act, or other applicable 

10 Federal law. The expenses included in the debtor’s month11 ly expenses described in the preceding sentence shall be 

12 kept confidential by the court. In addition, if it is dem13 onstrated that it is reasonable and necessary, the debtor’s 

14 monthly expenses may also include an additional allowance 

15 for food and clothing of up to 5 percent of the food and 

16 clothing categories as specified by the National Standards 

17 issued by the Internal Revenue Service. 

18 ‘‘(II) In addition, the debtor’s monthly expenses may 

19 include, if applicable, the continuation of actual expenses 

20 paid by the debtor that are reasonable and necessary for 

21 care and support of an elderly, chronically ill, or disabled 

22 household member or member of the debtor’s immediate 

23 family (including parents, grandparents, siblings, children, 

24 and grandchildren of the debtor, the dependents of the 

25 debtor, and the spouse of the debtor in a joint case who 
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1 is not a dependent) and who is unable to pay for such 

2 reasonable and necessary expenses. 

3 ‘‘(III) In addition, for a debtor eligible for chapter 

4 13, the debtor’s monthly expenses may include the actual 

5 administrative expenses of administering a chapter 13 

6 plan for the district in which the debtor resides, up to an 

7 amount of 10 percent of the projected plan payments, as 

8 determined under schedules issued by the Executive Office 

9 for United States Trustees. 

10 ‘‘(IV) In addition, the debtor’s monthly expenses may 

11 include the actual expenses for each dependent child less 

12 than 18 years of age, not to exceed $1,500 per year per 

13 child, to attend a private or public elementary or sec14 ondary school if the debtor provides documentation of such 

15 expenses and a detailed explanation of why such expenses 

16 are reasonable and necessary, and why such expenses are 

17 not already accounted for in the National Standards, 

18 Local Standards, or Other Necessary Expenses referred 

19 to in subclause (I). 

20 ‘‘(V) In addition, the debtor’s monthly expenses may 

21 include an allowance for housing and utilities, in excess 

22 of the allowance specified by the Local Standards for 

23 housing and utilities issued by the Internal Revenue Serv24 ice, based on the actual expenses for home energy costs 

25 if the debtor provides documentation of such actual ex-
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1 penses and demonstrates that such actual expenses are 

2 reasonable and necessary. 

3 ‘‘(iii) The debtor’s average monthly payments on ac4 count of secured debts shall be calculated as the sum of— 

5 ‘‘(I) the total of all amounts scheduled as con6 tractually due to secured creditors in each month of 

7 the 60 months following the date of the petition; and 

8 ‘‘(II) any additional payments to secured credi9 tors necessary for the debtor, in filing a plan under 

10 chapter 13 of this title, to maintain possession of the 

11 debtor’s primary residence, motor vehicle, or other 

12 property necessary for the support of the debtor and 

13 the debtor’s dependents, that serves as collateral for 

14 secured debts; 

15 divided by 60. 

16 ‘‘(iv) The debtor’s expenses for payment of all pri17 ority claims (including priority child support and alimony 

18 claims) shall be calculated as the total amount of debts 

19 entitled to priority, divided by 60. 

20 ‘‘(B)(i) In any proceeding brought under this sub21 section, the presumption of abuse may only be rebutted 

22 by demonstrating special circumstances that justify addi23 tional expenses or adjustments of current monthly income 

24 for which there is no reasonable alternative. 
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1 ‘‘(ii) In order to establish special circumstances, the 

2 debtor shall be required to itemize each additional expense 

3 or adjustment of income and to provide— 

4 ‘‘(I) documentation for such expense or adjust5 ment to income; and 

6 ‘‘(II) a detailed explanation of the special cir7 cumstances that make such expenses or adjustment 

8 to income necessary and reasonable. 

9 ‘‘(iii) The debtor shall attest under oath to the accu10 racy of any information provided to demonstrate that ad11 ditional expenses or adjustments to income are required. 

12 ‘‘(iv) The presumption of abuse may only be rebutted 

13 if the additional expenses or adjustments to income re14 ferred to in clause (i) cause the product of the debtor’s 

15 current monthly income reduced by the amounts deter16 mined under clauses (ii), (iii), and (iv) of subparagraph 

17 (A) when multiplied by 60 to be less than the lesser of— 

18 ‘‘(I) 25 percent of the debtor’s nonpriority un19 secured claims, or $6,000, whichever is greater; or 

20 ‘‘(II) $10,000. 

21 ‘‘(C) As part of the schedule of current income and 

22 expenditures required under section 521, the debtor shall 

23 include a statement of the debtor’s current monthly in24 come, and the calculations that determine whether a pre-
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1 sumption arises under subparagraph (A)(i), that show how 

2 each such amount is calculated. 

3 ‘‘(3) In considering under paragraph (1) whether the 

4 granting of relief would be an abuse of the provisions of 

5 this chapter in a case in which the presumption in sub6 paragraph (A)(i) of such paragraph does not arise or is 

7 rebutted, the court shall consider— 

8 ‘‘(A) whether the debtor filed the petition in 

9 bad faith; or 

10 ‘‘(B) the totality of the circumstances (includ11 ing whether the debtor seeks to reject a personal 

12 services contract and the financial need for such re13 jection as sought by the debtor) of the debtor’s fi14 nancial situation demonstrates abuse. 

15 ‘‘(4)(A) The court, on its own initiative or on the mo16 tion of a party in interest, in accordance with the proce17 dures described in rule 9011 of the Federal Rules of 

18 Bankruptcy Procedure, may order the attorney for the 

19 debtor to reimburse the trustee for all reasonable costs 

20 in prosecuting a motion filed under section 707(b), includ21 ing reasonable attorneys’ fees, if— 

22 ‘‘(i) a trustee files a motion for dismissal or 

23 conversion under this subsection; and 

24 ‘‘(ii) the court— 

25 ‘‘(I) grants such motion; and 
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1 ‘‘(II) finds that the action of the attorney 

2 for the debtor in filing a case under this chap3 ter violated rule 9011 of the Federal Rules of 

4 Bankruptcy Procedure. 

5 ‘‘(B) If the court finds that the attorney for the debt6 or violated rule 9011 of the Federal Rules of Bankruptcy 

7 Procedure, the court, on its own initiative or on the motion 

8 of a party in interest, in accordance with such procedures, 

9 may order— 

10 ‘‘(i) the assessment of an appropriate civil pen11 alty against the attorney for the debtor; and 

12 ‘‘(ii) the payment of such civil penalty to the 

13 trustee, the United States trustee (or the bank14 ruptcy administrator, if any). 

15 ‘‘(C) The signature of an attorney on a petition, 

16 pleading, or written motion shall constitute a certification 

17 that the attorney has— 

18 ‘‘(i) performed a reasonable investigation into 

19 the circumstances that gave rise to the petition, 

20 pleading, or written motion; and 

21 ‘‘(ii) determined that the petition, pleading, or 

22 written motion— 

23 ‘‘(I) is well grounded in fact; and 

24 ‘‘(II) is warranted by existing law or a 

25 good faith argument for the extension, modi-
15 

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1 fication, or reversal of existing law and does not 

2 constitute an abuse under paragraph (1). 

3 ‘‘(D) The signature of an attorney on the petition 

4 shall constitute a certification that the attorney has no 

5 knowledge after an inquiry that the information in the 

6 schedules filed with such petition is incorrect. 

7 ‘‘(5)(A) Except as provided in subparagraph (B) and 

8 subject to paragraph (6), the court, on its own initiative 

9 or on the motion of a party in interest, in accordance with 

10 the procedures described in rule 9011 of the Federal Rules 

11 of Bankruptcy Procedure, may award a debtor all reason12 able costs (including reasonable attorneys’ fees) in con13 testing a motion filed by a party in interest (other than 

14 a trustee or United States trustee (or bankruptcy adminis15 trator, if any)) under this subsection if— 

16 ‘‘(i) the court does not grant the motion; and 

17 ‘‘(ii) the court finds that— 

18 ‘‘(I) the position of the party that filed the 

19 motion violated rule 9011 of the Federal Rules 

20 of Bankruptcy Procedure; or 

21 ‘‘(II) the attorney (if any) who filed the 

22 motion did not comply with the requirements of 

23 clauses (i) and (ii) of paragraph (4)(C), and the 

24 motion was made solely for the purpose of co-
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1 ercing a debtor into waiving a right guaranteed 

2 to the debtor under this title. 

3 ‘‘(B) A small business that has a claim of an aggre4 gate amount less than $1,000 shall not be subject to sub5 paragraph (A)(ii)(I). 

6 ‘‘(C) For purposes of this paragraph— 

7 ‘‘(i) the term ‘small business’ means an unin8 corporated business, partnership, corporation, asso9 ciation, or organization that— 

10 ‘‘(I) has fewer than 25 full-time employees 

11 as determined on the date on which the motion 

12 is filed; and 

13 ‘‘(II) is engaged in commercial or business 

14 activity; and 

15 ‘‘(ii) the number of employees of a wholly 

16 owned subsidiary of a corporation includes the em17 ployees of— 

18 ‘‘(I) a parent corporation; and 

19 ‘‘(II) any other subsidiary corporation of 

20 the parent corporation. 

21 ‘‘(6) Only the judge or United States trustee (or 

22 bankruptcy administrator, if any) may file a motion under 

23 section 707(b), if the current monthly income of the debt24 or, or in a joint case, the debtor and the debtor’s spouse, 
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1 as of the date of the order for relief, when multiplied by 

2 12, is equal to or less than— 

3 ‘‘(A) in the case of a debtor in a household of 

4 1 person, the median family income of the applicable 

5 State for 1 earner; 

6 ‘‘(B) in the case of a debtor in a household of 

7 2, 3, or 4 individuals, the highest median family in8 come of the applicable State for a family of the same 

9 number or fewer individuals; or 

10 ‘‘(C) in the case of a debtor in a household ex11 ceeding 4 individuals, the highest median family in12 come of the applicable State for a family of 4 or 

13 fewer individuals, plus $525 per month for each in14 dividual in excess of 4. 

15 ‘‘(7)(A) No judge, United States trustee (or bank16 ruptcy administrator, if any), trustee, or other party in 

17 interest may file a motion under paragraph (2) if the cur18 rent monthly income of the debtor and the debtor’s spouse 

19 combined, as of the date of the order for relief when multi20 plied by 12, is equal to or less than— 

21 ‘‘(i) in the case of a debtor in a household of 

22 1 person, the median family income of the applicable 

23 State for 1 earner; 

24 ‘‘(ii) in the case of a debtor in a household of 

25 2, 3, or 4 individuals, the highest median family in-
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1 come of the applicable State for a family of the same 

2 number or fewer individuals; or 

3 ‘‘(iii) in the case of a debtor in a household ex4 ceeding 4 individuals, the highest median family in5 come of the applicable State for a family of 4 or 

6 fewer individuals, plus $525 per month for each in7 dividual in excess of 4. 

8 ‘‘(B) In a case that is not a joint case, current month9 ly income of the debtor’s spouse shall not be considered 

10 for purposes of subparagraph (A) if— 

11 ‘‘(i)(I) the debtor and the debtor’s spouse are 

12 separated under applicable nonbankruptcy law; or 

13 ‘‘(II) the debtor and the debtor’s spouse are liv14 ing separate and apart, other than for the purpose 

15 of evading subparagraph (A); and 

16 ‘‘(ii) the debtor files a statement under penalty 

17 of perjury— 

18 ‘‘(I) specifying that the debtor meets the 

19 requirement of subclause (I) or (II) of clause 

20 (i); and 

21 ‘‘(II) disclosing the aggregate, or best esti22 mate of the aggregate, amount of any cash or 

23 money payments received from the debtor’s 

24 spouse attributed to the debtor’s current 

25 monthly income.’’. 
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1 (b) DEFINITION.—Section 101 of title 11, United 

2 States Code, is amended by inserting after paragraph (10) 

3 the following: 

4 ‘‘(10A) ‘current monthly income’— 

5 ‘‘(A) means the average monthly income 

6 from all sources that the debtor receives (or in 

7 a joint case the debtor and the debtor’s spouse 

8 receive) without regard to whether such income 

9 is taxable income, derived during the 6-month 

10 period ending on— 

11 ‘‘(i) the last day of the calendar 

12 month immediately preceding the date of 

13 the commencement of the case if the debt14 or files the schedule of current income re15 quired by section 521(a)(1)(B)(ii); or 

16 ‘‘(ii) the date on which current income 

17 is determined by the court for purposes of 

18 this title if the debtor does not file the 

19 schedule of current income required by sec20 tion 521(a)(1)(B)(ii); and 

21 ‘‘(B) includes any amount paid by any en22 tity other than the debtor (or in a joint case the 

23 debtor and the debtor’s spouse), on a regular 

24 basis for the household expenses of the debtor 

25 or the debtor’s dependents (and in a joint case 
20 

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1 the debtor’s spouse if not otherwise a depend2 ent), but excludes benefits received under the 

3 Social Security Act, payments to victims of war 

4 crimes or crimes against humanity on account 

5 of their status as victims of such crimes, and 

6 payments to victims of international terrorism 

7 (as defined in section 2331 of title 18) or do8 mestic terrorism (as defined in section 2331 of 

9 title 18) on account of their status as victims 

10 of such terrorism;’’. 

11 (c) UNITED STATES TRUSTEE AND BANKRUPTCY

12 ADMINISTRATOR DUTIES.—Section 704 of title 11, United 

13 States Code, is amended— 

14 (1) by inserting ‘‘(a)’’ before ‘‘The trustee 

15 shall—’’; and 

16 (2) by adding at the end the following: 

17 ‘‘(b)(1) With respect to a debtor who is an individual 

18 in a case under this chapter— 

19 ‘‘(A) the United States trustee (or the bank20 ruptcy administrator, if any) shall review all mate21 rials filed by the debtor and, not later than 10 days 

22 after the date of the first meeting of creditors, file 

23 with the court a statement as to whether the debt24 or’s case would be presumed to be an abuse under 

25 section 707(b); and 
21 

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1 ‘‘(B) not later than 5 days after receiving a 

2 statement under subparagraph (A), the court shall 

3 provide a copy of the statement to all creditors. 

4 ‘‘(2) The United States trustee (or bankruptcy ad5 ministrator, if any) shall, not later than 30 days after the 

6 date of filing a statement under paragraph (1), either file 

7 a motion to dismiss or convert under section 707(b) or 

8 file a statement setting forth the reasons the United 

9 States trustee (or the bankruptcy administrator, if any) 

10 does not consider such a motion to be appropriate, if the 

11 United States trustee (or the bankruptcy administrator, 

12 if any) determines that the debtor’s case should be pre13 sumed to be an abuse under section 707(b) and the prod14 uct of the debtor’s current monthly income, multiplied by 

15 12 is not less than— 

16 ‘‘(A) in the case of a debtor in a household of 

17 1 person, the median family income of the applicable 

18 State for 1 earner; or 

19 ‘‘(B) in the case of a debtor in a household of 

20 2 or more individuals, the highest median family in21 come of the applicable State for a family of the same 

22 number or fewer individuals.’’. 

23 (d) NOTICE.—Section 342 of title 11, United States 

24 Code, is amended by adding at the end the following: 
22 

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1 ‘‘(d) In a case under chapter 7 of this title in which 

2 the debtor is an individual and in which the presumption 

3 of abuse arises under section 707(b), the clerk shall give 

4 written notice to all creditors not later than 10 days after 

5 the date of the filing of the petition that the presumption 

6 of abuse has arisen.’’. 

7 (e) NONLIMITATION OF INFORMATION.—Nothing in 

8 this title shall limit the ability of a creditor to provide in9 formation to a judge (except for information commu10 nicated ex parte, unless otherwise permitted by applicable 

11 law), United States trustee (or bankruptcy administrator, 

12 if any), or trustee. 

13 (f) DISMISSAL FOR CERTAIN CRIMES.—Section 707 

14 of title 11, United States Code, is amended by adding at 

15 the end the following: 

16 ‘‘(c)(1) In this subsection— 

17 ‘‘(A) the term ‘crime of violence’ has the mean18 ing given such term in section 16 of title 18; and 

19 ‘‘(B) the term ‘drug trafficking crime’ has the 

20 meaning given such term in section 924(c)(2) of title 

21 18. 

22 ‘‘(2) Except as provided in paragraph (3), after no23 tice and a hearing, the court, on a motion by the victim 

24 of a crime of violence or a drug trafficking crime, may 

25 when it is in the best interest of the victim dismiss a vol-
23 

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1 untary case filed under this chapter by a debtor who is 

2 an individual if such individual was convicted of such 

3 crime. 

4 ‘‘(3) The court may not dismiss a case under para5 graph (2) if the debtor establishes by a preponderance of 

6 the evidence that the filing of a case under this chapter 

7 is necessary to satisfy a claim for a domestic support obli8 gation.’’. 

9 (g) CONFIRMATION OF PLAN.—Section 1325(a) of 

10 title 11, United States Code, is amended— 

11 (1) in paragraph (5), by striking ‘‘and’’ at the 

12 end; 

13 (2) in paragraph (6), by striking the period and 

14 inserting a semicolon; and 

15 (3) by inserting after paragraph (6) the fol16 lowing: 

17 ‘‘(7) the action of the debtor in filing the peti18 tion was in good faith;’’. 

19 (h) APPLICABILITY OF MEANS TEST TO CHAPTER

20 13.—Section 1325(b) of title 11, United States Code, is 

21 amended— 

22 (1) in paragraph (1)(B), by inserting ‘‘to unse23 cured creditors’’ after ‘‘to make payments’’; and 

24 (2) by striking paragraph (2) and inserting the 

25 following: 
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1 ‘‘(2) For purposes of this subsection, the term 

2 ‘disposable income’ means current monthly income 

3 received by the debtor (other than child support pay4 ments, foster care payments, or disability payments 

5 for a dependent child made in accordance with appli6 cable nonbankruptcy law to the extent reasonably 

7 necessary to be expended for such child) less 

8 amounts reasonably necessary to be expended— 

9 ‘‘(A)(i) for the maintenance or support of 

10 the debtor or a dependent of the debtor, or for 

11 a domestic support obligation, that first be12 comes payable after the date the petition is 

13 filed; and 

14 ‘‘(ii) for charitable contributions (that 

15 meet the definition of ‘charitable contribution’ 

16 under section 548(d)(3) to a qualified religious 

17 or charitable entity or organization (as defined 

18 in section 548(d)(4)) in an amount not to ex19 ceed 15 percent of gross income of the debtor 

20 for the year in which the contributions are 

21 made; and 

22 ‘‘(B) if the debtor is engaged in business, 

23 for the payment of expenditures necessary for 

24 the continuation, preservation, and operation of 

25 such business. 
25 

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1 ‘‘(3) Amounts reasonably necessary to be ex2 pended under paragraph (2) shall be determined in 

3 accordance with subparagraphs (A) and (B) of sec4 tion 707(b)(2), if the debtor has current monthly in5 come, when multiplied by 12, greater than— 

6 ‘‘(A) in the case of a debtor in a household 

7 of 1 person, the median family income of the 

8 applicable State for 1 earner; 

9 ‘‘(B) in the case of a debtor in a household 

10 of 2, 3, or 4 individuals, the highest median 

11 family income of the applicable State for a fam12 ily of the same number or fewer individuals; or 

13 ‘‘(C) in the case of a debtor in a household 

14 exceeding 4 individuals, the highest median 

15 family income of the applicable State for a fam16 ily of 4 or fewer individuals, plus $525 per 

17 month for each individual in excess of 4.’’. 

18 (i) SPECIAL ALLOWANCE FOR HEALTH INSUR19 ANCE.—Section 1329(a) of title 11, United States Code, 

20 is amended— 

21 (1) in paragraph (2) by striking ‘‘or’’ at the 

22 end; 

23 (2) in paragraph (3) by striking the period at 

24 the end and inserting ‘‘; or’’; and 

25 (3) by adding at the end the following: 
26 

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1 ‘‘(4) reduce amounts to be paid under the plan 

2 by the actual amount expended by the debtor to pur3 chase health insurance for the debtor (and for any 

4 dependent of the debtor if such dependent does not 

5 otherwise have health insurance coverage) if the 

6 debtor documents the cost of such insurance and 

7 demonstrates that— 

8 ‘‘(A) such expenses are reasonable and 

9 necessary; 

10 ‘‘(B)(i) if the debtor previously paid for 

11 health insurance, the amount is not materially 

12 larger than the cost the debtor previously paid 

13 or the cost necessary to maintain the lapsed 

14 policy; or 

15 ‘‘(ii) if the debtor did not have health in16 surance, the amount is not materially larger 

17 than the reasonable cost that would be incurred 

18 by a debtor who purchases health insurance, 

19 who has similar income, expenses, age, and 

20 health status, and who lives in the same geo21 graphical location with the same number of de22 pendents who do not otherwise have health in23 surance coverage; and 
27 

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1 ‘‘(C) the amount is not otherwise allowed 

2 for purposes of determining disposable income 

3 under section 1325(b) of this title; 

4 and upon request of any party in interest, files proof 

5 that a health insurance policy was purchased.’’. 

6 (j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

7 104(b) of title 11, United States Code, is amended by 

8 striking ‘‘and 523(a)(2)(C)’’ each place it appears and in9 serting ‘‘523(a)(2)(C), 707(b), and 1325(b)(3)’’. 

10 (k) DEFINITION OF ‘MEDIAN FAMILY INCOME’.— 

11 Section 101 of title 11, United States Code, is amended 

12 by inserting after paragraph (39) the following: 

13 ‘‘(39A) ‘median family income’ means for any 

14 year— 

15 ‘‘(A) the median family income both cal16 culated and reported by the Bureau of the Cen17 sus in the then most recent year; and 

18 ‘‘(B) if not so calculated and reported in 

19 the then current year, adjusted annually after 

20 such most recent year until the next year in 

21 which median family income is both calculated 

22 and reported by the Bureau of the Census, to 

23 reflect the percentage change in the Consumer 

24 Price Index for All Urban Consumers during 
28 

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1 the period of years occurring after such most 

2 recent year and before such current year;’’. 

3 (k) CLERICAL AMENDMENT.—The table of sections 

4 for chapter 7 of title 11, United States Code, is amended 

5 by striking the item relating to section 707 and inserting 

6 the following: 

‘‘707. Dismissal of a case or conversion to a case under chapter 11 or 13.’’. 

7 SEC. 103. SENSE OF CONGRESS AND STUDY. 

8 (a) SENSE OF CONGRESS.—It is the sense of Con9 gress that the Secretary of the Treasury has the authority 

10 to alter the Internal Revenue Service standards estab11 lished to set guidelines for repayment plans as needed to 

12 accommodate their use under section 707(b) of title 11, 

13 United States Code. 

14 (b) STUDY.— 

15 (1) IN GENERAL.—Not later than 2 years after 

16 the date of enactment of this Act, the Director of 

17 the Executive Office for United States Trustees shall 

18 submit a report to the Committee on the Judiciary 

19 of the Senate and the Committee on the Judiciary 

20 of the House of Representatives containing the find21 ings of the Director regarding the utilization of In22 ternal Revenue Service standards for determining— 

23 (A) the current monthly expenses of a 

24 debtor under section 707(b) of title 11, United 

25 States Code; and 
29 

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1 (B) the impact that the application of such 

2 standards has had on debtors and on the bank3 ruptcy courts. 

4 (2) RECOMMENDATION.—The report under 

5 paragraph (1) may include recommendations for 

6 amendments to title 11, United States Code, that 

7 are consistent with the findings of the Director 

8 under paragraph (1). 

9 SEC. 104. NOTICE OF ALTERNATIVES. 

10 Section 342(b) of title 11, United States Code, is 

11 amended to read as follows: 

12 ‘‘(b) Before the commencement of a case under this 

13 title by an individual whose debts are primarily consumer 

14 debts, the clerk shall give to such individual written notice 

15 containing— 

16 ‘‘(1) a brief description of— 

17 ‘‘(A) chapters 7, 11, 12, and 13 and the 

18 general purpose, benefits, and costs of pro19 ceeding under each of those chapters; and 

20 ‘‘(B) the types of services available from 

21 credit counseling agencies; and 

22 ‘‘(2) statements specifying that— 

23 ‘‘(A) a person who knowingly and fraudu24 lently conceals assets or makes a false oath or 

25 statement under penalty of perjury in connec-
30 

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1 tion with a case under this title shall be subject 

2 to fine, imprisonment, or both; and 

3 ‘‘(B) all information supplied by a debtor 

4 in connection with a case under this title is sub5 ject to examination by the Attorney General.’’. 

6 SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING 

7 TEST PROGRAM. 

8 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

9 AND TRAINING CURRICULUM AND MATERIALS.—The Di10 rector of the Executive Office for United States Trustees 

11 (in this section referred to as the ‘‘Director’’) shall consult 

12 with a wide range of individuals who are experts in the 

13 field of debtor education, including trustees who serve in 

14 cases under chapter 13 of title 11, United States Code, 

15 and who operate financial management education pro16 grams for debtors, and shall develop a financial manage17 ment training curriculum and materials that can be used 

18 to educate debtors who are individuals on how to better 

19 manage their finances. 

20 (b) TEST.— 

21 (1) SELECTION OF DISTRICTS.—The Director 

22 shall select 6 judicial districts of the United States 

23 in which to test the effectiveness of the financial 

24 management training curriculum and materials de25 veloped under subsection (a). 
31 

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1 (2) USE.—For an 18-month period beginning 

2 not later than 270 days after the date of the enact3 ment of this Act, such curriculum and materials 

4 shall be, for the 6 judicial districts selected under 

5 paragraph (1), used as the instructional course con6 cerning personal financial management for purposes 

7 of section 111 of title 11, United States Code. 

8 (c) EVALUATION.— 

9 (1) IN GENERAL.—During the 18-month period 

10 referred to in subsection (b), the Director shall 

11 evaluate the effectiveness of— 

12 (A) the financial management training cur13 riculum and materials developed under sub14 section (a); and 

15 (B) a sample of existing consumer edu16 cation programs such as those described in the 

17 Report of the National Bankruptcy Review 

18 Commission (October 20, 1997) that are rep19 resentative of consumer education programs 

20 carried out by the credit industry, by trustees 

21 serving under chapter 13 of title 11, United 

22 States Code, and by consumer counseling 

23 groups. 

24 (2) REPORT.—Not later than 3 months after 

25 concluding such evaluation, the Director shall sub-
32 

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1 mit a report to the Speaker of the House of Rep2 resentatives and the President pro tempore of the 

3 Senate, for referral to the appropriate committees of 

4 the Congress, containing the findings of the Director 

5 regarding the effectiveness of such curriculum, such 

6 materials, and such programs and their costs. 

7 SEC. 106. CREDIT COUNSELING. 

8 (a) WHO MAY BE A DEBTOR.—Section 109 of title 

9 11, United States Code, is amended by adding at the end 

10 the following: 

11 ‘‘(h)(1) Subject to paragraphs (2) and (3), and not12 withstanding any other provision of this section, an indi13 vidual may not be a debtor under this title unless such 

14 individual has, during the 180-day period preceding the 

15 date of filing of the petition by such individual, received 

16 from an approved nonprofit budget and credit counseling 

17 agency described in section 111(a) an individual or group 

18 briefing (including a briefing conducted by telephone or 

19 on the Internet) that outlined the opportunities for avail20 able credit counseling and assisted such individual in per21 forming a related budget analysis. 

22 ‘‘(2)(A) Paragraph (1) shall not apply with respect 

23 to a debtor who resides in a district for which the United 

24 States trustee (or the bankruptcy administrator, if any) 

25 determines that the approved nonprofit budget and credit 
33 

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1 counseling agencies for such district are not reasonably 

2 able to provide adequate services to the additional individ3 uals who would otherwise seek credit counseling from such 

4 agencies by reason of the requirements of paragraph (1). 

5 ‘‘(B) The United States trustee (or the bankruptcy 

6 administrator, if any) who makes a determination de7 scribed in subparagraph (A) shall review such determina8 tion not later than 1 year after the date of such deter9 mination, and not less frequently than annually thereafter. 

10 Notwithstanding the preceding sentence, a nonprofit 

11 budget and credit counseling agency may be disapproved 

12 by the United States trustee (or the bankruptcy adminis13 trator, if any) at any time. 

14 ‘‘(3)(A) Subject to subparagraph (B), the require15 ments of paragraph (1) shall not apply with respect to 

16 a debtor who submits to the court a certification that— 

17 ‘‘(i) describes exigent circumstances that merit 

18 a waiver of the requirements of paragraph (1); 

19 ‘‘(ii) states that the debtor requested credit 

20 counseling services from an approved nonprofit 

21 budget and credit counseling agency, but was unable 

22 to obtain the services referred to in paragraph (1) 

23 during the 5-day period beginning on the date on 

24 which the debtor made that request; and 

25 ‘‘(iii) is satisfactory to the court. 
34 

•S 256 IS 

1 ‘‘(B) With respect to a debtor, an exemption under 

2 subparagraph (A) shall cease to apply to that debtor on 

3 the date on which the debtor meets the requirements of 

4 paragraph (1), but in no case may the exemption apply 

5 to that debtor after the date that is 30 days after the debt6 or files a petition, except that the court, for cause, may 

7 order an additional 15 days.’’. 

8 (b) CHAPTER 7 DISCHARGE.—Section 727(a) of title 

9 11, United States Code, is amended— 

10 (1) in paragraph (9), by striking ‘‘or’’ at the 

11 end; 

12 (2) in paragraph (10), by striking the period 

13 and inserting ‘‘; or’’; and 

14 (3) by adding at the end the following: 

15 ‘‘(11) after filing the petition, the debtor failed 

16 to complete an instructional course concerning per17 sonal financial management described in section 

18 111, except that this paragraph shall not apply with 

19 respect to a debtor who resides in a district for 

20 which the United States trustee (or the bankruptcy 

21 administrator, if any) determines that the approved 

22 instructional courses are not adequate to service the 

23 additional individuals who would otherwise be re24 quired to complete such instructional courses under 

25 this section (The United States trustee (or the bank-
35 

•S 256 IS 

1 ruptcy administrator, if any) who makes a deter2 mination described in this paragraph shall review 

3 such determination not later than 1 year after the 

4 date of such determination, and not less frequently 

5 than annually thereafter.).’’. 

6 (c) CHAPTER 13 DISCHARGE.—Section 1328 of title 

7 11, United States Code, is amended by adding at the end 

8 the following: 

9 ‘‘(g)(1) The court shall not grant a discharge under 

10 this section to a debtor unless after filing a petition the 

11 debtor has completed an instructional course concerning 

12 personal financial management described in section 111. 

13 ‘‘(2) Paragraph (1) shall not apply with respect to 

14 a debtor who resides in a district for which the United 

15 States trustee (or the bankruptcy administrator, if any) 

16 determines that the approved instructional courses are not 

17 adequate to service the additional individuals who would 

18 otherwise be required to complete such instructional 

19 course by reason of the requirements of paragraph (1). 

20 ‘‘(3) The United States trustee (or the bankruptcy 

21 administrator, if any) who makes a determination de22 scribed in paragraph (2) shall review such determination 

23 not later than 1 year after the date of such determination, 

24 and not less frequently than annually thereafter.’’. 
36 

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1 (d) DEBTOR’S DUTIES.—Section 521 of title 11, 

2 United States Code, is amended— 

3 (1) by inserting ‘‘(a)’’ before ‘‘The debtor 

4 shall—’’; and 

5 (2) by adding at the end the following: 

6 ‘‘(b) In addition to the requirements under subsection 

7 (a), a debtor who is an individual shall file with the 

8 court— 

9 ‘‘(1) a certificate from the approved nonprofit 

10 budget and credit counseling agency that provided 

11 the debtor services under section 109(h) describing 

12 the services provided to the debtor; and 

13 ‘‘(2) a copy of the debt repayment plan, if any, 

14 developed under section 109(h) through the ap15 proved nonprofit budget and credit counseling agen16 cy referred to in paragraph (1).’’. 

17 (e) GENERAL PROVISIONS.— 

18 (1) IN GENERAL.—Chapter 1 of title 11, United 

19 States Code, is amended by adding at the end the 

20 following: 

21 ‘‘§ 111. Nonprofit budget and credit counseling agen22 cies; financial management instructional 

23 courses 

24 ‘‘(a) The clerk shall maintain a publicly available list 

25 of— 
37 

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1 ‘‘(1) nonprofit budget and credit counseling 

2 agencies that provide 1 or more services described in 

3 section 109(h) currently approved by the United 

4 States trustee (or the bankruptcy administrator, if 

5 any); and 

6 ‘‘(2) instructional courses concerning personal 

7 financial management currently approved by the 

8 United States trustee (or the bankruptcy adminis9 trator, if any), as applicable. 

10 ‘‘(b) The United States trustee (or bankruptcy ad11 ministrator, if any) shall only approve a nonprofit budget 

12 and credit counseling agency or an instructional course 

13 concerning personal financial management as follows: 

14 ‘‘(1) The United States trustee (or bankruptcy 

15 administrator, if any) shall have thoroughly reviewed 

16 the qualifications of the nonprofit budget and credit 

17 counseling agency or of the provider of the instruc18 tional course under the standards set forth in this 

19 section, and the services or instructional courses 

20 that will be offered by such agency or such provider, 

21 and may require such agency or such provider that 

22 has sought approval to provide information with re23 spect to such review. 

24 ‘‘(2) The United States trustee (or bankruptcy 

25 administrator, if any) shall have determined that 
38 

•S 256 IS 

1 such agency or such instructional course fully satis2 fies the applicable standards set forth in this section. 

3 ‘‘(3) If a nonprofit budget and credit counseling 

4 agency or instructional course did not appear on the 

5 approved list for the district under subsection (a) 

6 immediately before approval under this section, ap7 proval under this subsection of such agency or such 

8 instructional course shall be for a probationary pe9 riod not to exceed 6 months. 

10 ‘‘(4) At the conclusion of the applicable proba11 tionary period under paragraph (3), the United 

12 States trustee (or bankruptcy administrator, if any) 

13 may only approve for an additional 1-year period, 

14 and for successive 1-year periods thereafter, an 

15 agency or instructional course that has dem16 onstrated during the probationary or applicable sub17 sequent period of approval that such agency or in18 structional course— 

19 ‘‘(A) has met the standards set forth under 

20 this section during such period; and 

21 ‘‘(B) can satisfy such standards in the fu22 ture. 

23 ‘‘(5) Not later than 30 days after any final de24 cision under paragraph (4), an interested person 
39 

•S 256 IS 

1 may seek judicial review of such decision in the ap2 propriate district court of the United States. 

3 ‘‘(c)(1) The United States trustee (or the bankruptcy 

4 administrator, if any) shall only approve a nonprofit budg5 et and credit counseling agency that demonstrates that it 

6 will provide qualified counselors, maintain adequate provi7 sion for safekeeping and payment of client funds, provide 

8 adequate counseling with respect to client credit problems, 

9 and deal responsibly and effectively with other matters re10 lating to the quality, effectiveness, and financial security 

11 of the services it provides. 

12 ‘‘(2) To be approved by the United States trustee (or 

13 the bankruptcy administrator, if any), a nonprofit budget 

14 and credit counseling agency shall, at a minimum— 

15 ‘‘(A) have a board of directors the majority of 

16 which— 

17 ‘‘(i) are not employed by such agency; and 

18 ‘‘(ii) will not directly or indirectly benefit 

19 financially from the outcome of the counseling 

20 services provided by such agency; 

21 ‘‘(B) if a fee is charged for counseling services, 

22 charge a reasonable fee, and provide services without 

23 regard to ability to pay the fee; 
40 

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1 ‘‘(C) provide for safekeeping and payment of 

2 client funds, including an annual audit of the trust 

3 accounts and appropriate employee bonding; 

4 ‘‘(D) provide full disclosures to a client, includ5 ing funding sources, counselor qualifications, pos6 sible impact on credit reports, and any costs of such 

7 program that will be paid by such client and how 

8 such costs will be paid; 

9 ‘‘(E) provide adequate counseling with respect 

10 to a client’s credit problems that includes an anal11 ysis of such client’s current financial condition, fac12 tors that caused such financial condition, and how 

13 such client can develop a plan to respond to the 

14 problems without incurring negative amortization of 

15 debt; 

16 ‘‘(F) provide trained counselors who receive no 

17 commissions or bonuses based on the outcome of the 

18 counseling services provided by such agency, and 

19 who have adequate experience, and have been ade20 quately trained to provide counseling services to in21 dividuals in financial difficulty, including the mat22 ters described in subparagraph (E); 

23 ‘‘(G) demonstrate adequate experience and 

24 background in providing credit counseling; and 
41 

•S 256 IS 

1 ‘‘(H) have adequate financial resources to pro2 vide continuing support services for budgeting plans 

3 over the life of any repayment plan. 

4 ‘‘(d) The United States trustee (or the bankruptcy 

5 administrator, if any) shall only approve an instructional 

6 course concerning personal financial management— 

7 ‘‘(1) for an initial probationary period under 

8 subsection (b)(3) if the course will provide at a min9 imum— 

10 ‘‘(A) trained personnel with adequate expe11 rience and training in providing effective in12 struction and services; 

13 ‘‘(B) learning materials and teaching 

14 methodologies designed to assist debtors in un15 derstanding personal financial management and 

16 that are consistent with stated objectives di17 rectly related to the goals of such instructional 

18 course; 

19 ‘‘(C) adequate facilities situated in reason20 ably convenient locations at which such instruc21 tional course is offered, except that such facili22 ties may include the provision of such instruc23 tional course by telephone or through the Inter24 net, if such instructional course is effective; and 
42 

•S 256 IS 

1 ‘‘(D) the preparation and retention of rea2 sonable records (which shall include the debt3 or’s bankruptcy case number) to permit evalua4 tion of the effectiveness of such instructional 

5 course, including any evaluation of satisfaction 

6 of instructional course requirements for each 

7 debtor attending such instructional course, 

8 which shall be available for inspection and eval9 uation by the Executive Office for United 

10 States Trustees, the United States trustee (or 

11 the bankruptcy administrator, if any), or the 

12 chief bankruptcy judge for the district in which 

13 such instructional course is offered; and 

14 ‘‘(2) for any 1-year period if the provider there15 of has demonstrated that the course meets the 

16 standards of paragraph (1) and, in addition— 

17 ‘‘(A) has been effective in assisting a sub18 stantial number of debtors to understand per19 sonal financial management; and 

20 ‘‘(B) is otherwise likely to increase sub21 stantially the debtor’s understanding of per22 sonal financial management. 

23 ‘‘(e) The district court may, at any time, investigate 

24 the qualifications of a nonprofit budget and credit coun25 seling agency referred to in subsection (a), and request 
43 

•S 256 IS 

1 production of documents to ensure the integrity and effec2 tiveness of such agency. The district court may, at any 

3 time, remove from the approved list under subsection (a) 

4 a nonprofit budget and credit counseling agency upon 

5 finding such agency does not meet the qualifications of 

6 subsection (b). 

7 ‘‘(f) The United States trustee (or the bankruptcy ad8 ministrator, if any) shall notify the clerk that a nonprofit 

9 budget and credit counseling agency or an instructional 

10 course is no longer approved, in which case the clerk shall 

11 remove it from the list maintained under subsection (a). 

12 ‘‘(g)(1) No nonprofit budget and credit counseling 

13 agency may provide to a credit reporting agency informa14 tion concerning whether a debtor has received or sought 

15 instruction concerning personal financial management 

16 from such agency. 

17 ‘‘(2) A nonprofit budget and credit counseling agency 

18 that willfully or negligently fails to comply with any re19 quirement under this title with respect to a debtor shall 

20 be liable for damages in an amount equal to the sum of— 

21 ‘‘(A) any actual damages sustained by the debt22 or as a result of the violation; and 

23 ‘‘(B) any court costs or reasonable attorneys’ 

24 fees (as determined by the court) incurred in an ac25 tion to recover those damages.’’. 
44 

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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for chapter 1 of title 11, United States Code, 

3 is amended by adding at the end the following: 

‘‘111. Nonprofit budget and credit counseling agencies; financial management 

instructional courses.’’. 

4 (f) LIMITATION.—Section 362 of title 11, United 

5 States Code, is amended by adding at the end the fol6 lowing: 

7 ‘‘(i) If a case commenced under chapter 7, 11, or 13 

8 is dismissed due to the creation of a debt repayment plan, 

9 for purposes of subsection (c)(3), any subsequent case 

10 commenced by the debtor under any such chapter shall 

11 not be presumed to be filed not in good faith. 

12 ‘‘(j) On request of a party in interest, the court shall 

13 issue an order under subsection (c) confirming that the 

14 automatic stay has been terminated.’’. 

15 SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY 

16 EXPENSES. 

17 For purposes of section 707(b) of title 11, United 

18 States Code, as amended by this Act, the Director of the 

19 Executive Office for United States Trustees shall, not 

20 later than 180 days after the date of enactment of this 

21 Act, issue schedules of reasonable and necessary adminis22 trative expenses of administering a chapter 13 plan for 

23 each judicial district of the United States. 
45 

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1 TITLE II—ENHANCED 

2 CONSUMER PROTECTION 

3 Subtitle A—Penalties for Abusive 

4 Creditor Practices 

5 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU6 TION. 

7 (a) REDUCTION OF CLAIM.—Section 502 of title 11, 

8 United States Code, is amended by adding at the end the 

9 following: 

10 ‘‘(k)(1) The court, on the motion of the debtor and 

11 after a hearing, may reduce a claim filed under this sec12 tion based in whole on an unsecured consumer debt by 

13 not more than 20 percent of the claim, if— 

14 ‘‘(A) the claim was filed by a creditor who un15 reasonably refused to negotiate a reasonable alter16 native repayment schedule proposed on behalf of the 

17 debtor by an approved nonprofit budget and credit 

18 counseling agency described in section 111; 

19 ‘‘(B) the offer of the debtor under subpara20 graph (A)— 

21 ‘‘(i) was made at least 60 days before the 

22 date of the filing of the petition; and 

23 ‘‘(ii) provided for payment of at least 60 

24 percent of the amount of the debt over a period 
46 

•S 256 IS 

1 not to exceed the repayment period of the loan, 

2 or a reasonable extension thereof; and 

3 ‘‘(C) no part of the debt under the alternative 

4 repayment schedule is nondischargeable. 

5 ‘‘(2) The debtor shall have the burden of proving, by 

6 clear and convincing evidence, that— 

7 ‘‘(A) the creditor unreasonably refused to con8 sider the debtor’s proposal; and 

9 ‘‘(B) the proposed alternative repayment sched10 ule was made prior to expiration of the 60-day pe11 riod specified in paragraph (1)(B)(i).’’. 

12 (b) LIMITATION ON AVOIDABILITY.—Section 547 of 

13 title 11, United States Code, is amended by adding at the 

14 end the following: 

15 ‘‘(h) The trustee may not avoid a transfer if such 

16 transfer was made as a part of an alternative repayment 

17 schedule between the debtor and any creditor of the debtor 

18 created by an approved nonprofit budget and credit coun19 seling agency.’’. 

20 SEC. 202. EFFECT OF DISCHARGE. 

21 Section 524 of title 11, United States Code, is 

22 amended by adding at the end the following: 

23 ‘‘(i) The willful failure of a creditor to credit pay24 ments received under a plan confirmed under this title, 

25 unless the order confirming the plan is revoked, the plan 
47 

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1 is in default, or the creditor has not received payments 

2 required to be made under the plan in the manner re3 quired by the plan (including crediting the amounts re4 quired under the plan), shall constitute a violation of an 

5 injunction under subsection (a)(2) if the act of the creditor 

6 to collect and failure to credit payments in the manner 

7 required by the plan caused material injury to the debtor. 

8 ‘‘(j) Subsection (a)(2) does not operate as an injunc9 tion against an act by a creditor that is the holder of a 

10 secured claim, if— 

11 ‘‘(1) such creditor retains a security interest in 

12 real property that is the principal residence of the 

13 debtor; 

14 ‘‘(2) such act is in the ordinary course of busi15 ness between the creditor and the debtor; and 

16 ‘‘(3) such act is limited to seeking or obtaining 

17 periodic payments associated with a valid security 

18 interest in lieu of pursuit of in rem relief to enforce 

19 the lien.’’. 

20 SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION 

21 AGREEMENT PRACTICES. 

22 (a) IN GENERAL.—Section 524 of title 11, United 

23 States Code, as amended section 202, is amended— 

24 (1) in subsection (c), by striking paragraph (2) 

25 and inserting the following: 
48 

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1 ‘‘(2) the debtor received the disclosures de2 scribed in subsection (k) at or before the time at 

3 which the debtor signed the agreement;’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(k)(1) The disclosures required under subsection 

6 (c)(2) shall consist of the disclosure statement described 

7 in paragraph (3), completed as required in that para8 graph, together with the agreement specified in subsection 

9 (c), statement, declaration, motion and order described, 

10 respectively, in paragraphs (4) through (8), and shall be 

11 the only disclosures required in connection with entering 

12 into such agreement. 

13 ‘‘(2) Disclosures made under paragraph (1) shall be 

14 made clearly and conspicuously and in writing. The terms 

15 ‘Amount Reaffirmed’ and ‘Annual Percentage Rate’ shall 

16 be disclosed more conspicuously than other terms, data or 

17 information provided in connection with this disclosure, 

18 except that the phrases ‘Before agreeing to reaffirm a 

19 debt, review these important disclosures’ and ‘Summary 

20 of Reaffirmation Agreement’ may be equally conspicuous. 

21 Disclosures may be made in a different order and may 

22 use terminology different from that set forth in para23 graphs (2) through (8), except that the terms ‘Amount 

24 Reaffirmed’ and ‘Annual Percentage Rate’ must be used 

25 where indicated. 
49 

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1 ‘‘(3) The disclosure statement required under this 

2 paragraph shall consist of the following: 

3 ‘‘(A) The statement: ‘Part A: Before agreeing 

4 to reaffirm a debt, review these important disclo5 sures:’; 

6 ‘‘(B) Under the heading ‘Summary of Reaffir7 mation Agreement’, the statement: ‘This Summary 

8 is made pursuant to the requirements of the Bank9 ruptcy Code’; 

10 ‘‘(C) The ‘Amount Reaffirmed’, using that 

11 term, which shall be— 

12 ‘‘(i) the total amount of debt that the debt13 or agrees to reaffirm by entering into an agree14 ment of the kind specified in subsection (c), and 

15 ‘‘(ii) the total of any fees and costs ac16 crued as of the date of the disclosure statement, 

17 related to such total amount. 

18 ‘‘(D) In conjunction with the disclosure of the 

19 ‘Amount Reaffirmed’, the statements— 

20 ‘‘(i) ‘The amount of debt you have agreed 

21 to reaffirm’; and 

22 ‘‘(ii) ‘Your credit agreement may obligate 

23 you to pay additional amounts which may come 

24 due after the date of this disclosure. Consult 

25 your credit agreement.’. 
50 

•S 256 IS 

1 ‘‘(E) The ‘Annual Percentage Rate’, using that 

2 term, which shall be disclosed as— 

3 ‘‘(i) if, at the time the petition is filed, the 

4 debt is an extension of credit under an open 

5 end credit plan, as the terms ‘credit’ and ‘open 

6 end credit plan’ are defined in section 103 of 

7 the Truth in Lending Act, then— 

8 ‘‘(I) the annual percentage rate deter9 mined under paragraphs (5) and (6) of 

10 section 127(b) of the Truth in Lending 

11 Act, as applicable, as disclosed to the debt12 or in the most recent periodic statement 

13 prior to entering into an agreement of the 

14 kind specified in subsection (c) or, if no 

15 such periodic statement has been given to 

16 the debtor during the prior 6 months, the 

17 annual percentage rate as it would have 

18 been so disclosed at the time the disclosure 

19 statement is given to the debtor, or to the 

20 extent this annual percentage rate is not 

21 readily available or not applicable, then 

22 ‘‘(II) the simple interest rate applica23 ble to the amount reaffirmed as of the date 

24 the disclosure statement is given to the 

25 debtor, or if different simple interest rates 
51 

•S 256 IS 

1 apply to different balances, the simple in2 terest rate applicable to each such balance, 

3 identifying the amount of each such bal4 ance included in the amount reaffirmed, or 

5 ‘‘(III) if the entity making the disclo6 sure elects, to disclose the annual percent7 age rate under subclause (I) and the sim8 ple interest rate under subclause (II); or 

9 ‘‘(ii) if, at the time the petition is filed, the 

10 debt is an extension of credit other than under 

11 an open end credit plan, as the terms ‘credit’ 

12 and ‘open end credit plan’ are defined in section 

13 103 of the Truth in Lending Act, then— 

14 ‘‘(I) the annual percentage rate under 

15 section 128(a)(4) of the Truth in Lending 

16 Act, as disclosed to the debtor in the most 

17 recent disclosure statement given to the 

18 debtor prior to the entering into an agree19 ment of the kind specified in subsection (c) 

20 with respect to the debt, or, if no such dis21 closure statement was given to the debtor, 

22 the annual percentage rate as it would 

23 have been so disclosed at the time the dis24 closure statement is given to the debtor, or 
52 

•S 256 IS 

1 to the extent this annual percentage rate is 

2 not readily available or not applicable, then 

3 ‘‘(II) the simple interest rate applica4 ble to the amount reaffirmed as of the date 

5 the disclosure statement is given to the 

6 debtor, or if different simple interest rates 

7 apply to different balances, the simple in8 terest rate applicable to each such balance, 

9 identifying the amount of such balance in10 cluded in the amount reaffirmed, or 

11 ‘‘(III) if the entity making the disclo12 sure elects, to disclose the annual percent13 age rate under (I) and the simple interest 

14 rate under (II). 

15 ‘‘(F) If the underlying debt transaction was dis16 closed as a variable rate transaction on the most re17 cent disclosure given under the Truth in Lending 

18 Act, by stating ‘The interest rate on your loan may 

19 be a variable interest rate which changes from time 

20 to time, so that the annual percentage rate disclosed 

21 here may be higher or lower.’. 

22 ‘‘(G) If the debt is secured by a security inter23 est which has not been waived in whole or in part 

24 or determined to be void by a final order of the 

25 court at the time of the disclosure, by disclosing that 
53 

•S 256 IS 

1 a security interest or lien in goods or property is as2 serted over some or all of the debts the debtor is re3 affirming and listing the items and their original 

4 purchase price that are subject to the asserted secu5 rity interest, or if not a purchase-money security in6 terest then listing by items or types and the original 

7 amount of the loan. 

8 ‘‘(H) At the election of the creditor, a state9 ment of the repayment schedule using 1 or a com10 bination of the following— 

11 ‘‘(i) by making the statement: ‘Your first 

12 payment in the amount of $lll is due on 

13 lll but the future payment amount may be 

14 different. Consult your reaffirmation agreement 

15 or credit agreement, as applicable.’, and stating 

16 the amount of the first payment and the due 

17 date of that payment in the places provided; 

18 ‘‘(ii) by making the statement: ‘Your pay19 ment schedule will be:’, and describing the re20 payment schedule with the number, amount, 

21 and due dates or period of payments scheduled 

22 to repay the debts reaffirmed to the extent then 

23 known by the disclosing party; or 
54 

•S 256 IS 

1 ‘‘(iii) by describing the debtor’s repayment 

2 obligations with reasonable specificity to the ex3 tent then known by the disclosing party. 

4 ‘‘(I) The following statement: ‘Note: When this 

5 disclosure refers to what a creditor ‘‘may’’ do, it 

6 does not use the word ‘‘may’’ to give the creditor 

7 specific permission. The word ‘‘may’’ is used to tell 

8 you what might occur if the law permits the creditor 

9 to take the action. If you have questions about your 

10 reaffirming a debt or what the law requires, consult 

11 with the attorney who helped you negotiate this 

12 agreement reaffirming a debt. If you don’t have an 

13 attorney helping you, the judge will explain the ef14 fect of your reaffirming a debt when the hearing on 

15 the reaffirmation agreement is held.’. 

16 ‘‘(J)(i) The following additional statements: 

17 ‘‘ ‘Reaffirming a debt is a serious financial decision. 

18 The law requires you to take certain steps to make sure 

19 the decision is in your best interest. If these steps are not 

20 completed, the reaffirmation agreement is not effective, 

21 even though you have signed it. 

22 ‘‘ ‘1. Read the disclosures in this Part A care23 fully. Consider the decision to reaffirm carefully. 

24 Then, if you want to reaffirm, sign the reaffirmation 
55 

•S 256 IS 

1 agreement in Part B (or you may use a separate 

2 agreement you and your creditor agree on). 

3 ‘‘ ‘2. Complete and sign Part D and be sure you 

4 can afford to make the payments you are agreeing 

5 to make and have received a copy of the disclosure 

6 statement and a completed and signed reaffirmation 

7 agreement. 

8 ‘‘ ‘3. If you were represented by an attorney 

9 during the negotiation of your reaffirmation agree10 ment, the attorney must have signed the certification 

11 in Part C. 

12 ‘‘ ‘4. If you were not represented by an attorney 

13 during the negotiation of your reaffirmation agree14 ment, you must have completed and signed Part E. 

15 ‘‘ ‘5. The original of this disclosure must be 

16 filed with the court by you or your creditor. If a sep17 arate reaffirmation agreement (other than the one in 

18 Part B) has been signed, it must be attached. 

19 ‘‘ ‘6. If you were represented by an attorney 

20 during the negotiation of your reaffirmation agree21 ment, your reaffirmation agreement becomes effec22 tive upon filing with the court unless the reaffirma23 tion is presumed to be an undue hardship as ex24 plained in Part D. 
56 

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1 ‘‘ ‘7. If you were not represented by an attorney 

2 during the negotiation of your reaffirmation agree3 ment, it will not be effective unless the court ap4 proves it. The court will notify you of the hearing on 

5 your reaffirmation agreement. You must attend this 

6 hearing in bankruptcy court where the judge will re7 view your reaffirmation agreement. The bankruptcy 

8 court must approve your reaffirmation agreement as 

9 consistent with your best interests, except that no 

10 court approval is required if your reaffirmation 

11 agreement is for a consumer debt secured by a mort12 gage, deed of trust, security deed, or other lien on 

13 your real property, like your home. 

14 ‘‘ ‘Your right to rescind (cancel) your reaffirmation 

15 agreement. You may rescind (cancel) your reaffirmation 

16 agreement at any time before the bankruptcy court enters 

17 a discharge order, or before the expiration of the 60-day 

18 period that begins on the date your reaffirmation agree19 ment is filed with the court, whichever occurs later. To 

20 rescind (cancel) your reaffirmation agreement, you must 

21 notify the creditor that your reaffirmation agreement is 

22 rescinded (or canceled). 

23 ‘‘ ‘What are your obligations if you reaffirm the debt? 

24 A reaffirmed debt remains your personal legal obligation. 

25 It is not discharged in your bankruptcy case. That means 
57 

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1 that if you default on your reaffirmed debt after your 

2 bankruptcy case is over, your creditor may be able to take 

3 your property or your wages. Otherwise, your obligations 

4 will be determined by the reaffirmation agreement which 

5 may have changed the terms of the original agreement. 

6 For example, if you are reaffirming an open end credit 

7 agreement, the creditor may be permitted by that agree8 ment or applicable law to change the terms of that agree9 ment in the future under certain conditions. 

10 ‘‘ ‘Are you required to enter into a reaffirmation 

11 agreement by any law? No, you are not required to reaf12 firm a debt by any law. Only agree to reaffirm a debt if 

13 it is in your best interest. Be sure you can afford the pay14 ments you agree to make. 

15 ‘‘ ‘What if your creditor has a security interest or 

16 lien? Your bankruptcy discharge does not eliminate any 

17 lien on your property. A ‘‘lien’’ is often referred to as a 

18 security interest, deed of trust, mortgage or security deed. 

19 Even if you do not reaffirm and your personal liability 

20 on the debt is discharged, because of the lien your creditor 

21 may still have the right to take the security property if 

22 you do not pay the debt or default on it. If the lien is 

23 on an item of personal property that is exempt under your 

24 State’s law or that the trustee has abandoned, you may 

25 be able to redeem the item rather than reaffirm the debt. 
58 

•S 256 IS 

1 To redeem, you make a single payment to the creditor 

2 equal to the current value of the security property, as 

3 agreed by the parties or determined by the court.’. 

4 ‘‘(ii) In the case of a reaffirmation under sub5 section (m)(2), numbered paragraph 6 in the disclo6 sures required by clause (i) of this subparagraph 

7 shall read as follows: 

8 ‘‘ ‘6. If you were represented by an attorney 

9 during the negotiation of your reaffirmation agree10 ment, your reaffirmation agreement becomes effec11 tive upon filing with the court.’. 

12 ‘‘(4) The form of such agreement required under this 

13 paragraph shall consist of the following: 

14 ‘‘ ‘Part B: Reaffirmation Agreement. I (we) agree to 

15 reaffirm the debts arising under the credit agreement de16 scribed below. 

17 ‘‘ ‘Brief description of credit agreement: 

18 ‘‘ ‘Description of any changes to the credit agreement 

19 made as part of this reaffirmation agreement: 

20 ‘‘ ‘Signature: Date: 

21 ‘‘ ‘Borrower: 

22 ‘‘ ‘Co-borrower, if also reaffirming these debts: 

23 ‘‘ ‘Accepted by creditor: 

24 ‘‘ ‘Date of creditor acceptance:’. 

25 ‘‘(5) The declaration shall consist of the following: 
59 

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1 ‘‘(A) The following certification: 

2 ‘‘ ‘Part C: Certification by Debtor’s Attorney (If 

3 Any). 

4 ‘‘ ‘I hereby certify that (1) this agreement represents 

5 a fully informed and voluntary agreement by the debtor; 

6 (2) this agreement does not impose an undue hardship on 

7 the debtor or any dependent of the debtor; and (3) I have 

8 fully advised the debtor of the legal effect and con9 sequences of this agreement and any default under this 

10 agreement. 

11 ‘‘ ‘Signature of Debtor’s Attorney: Date:’. 

12 ‘‘(B) If a presumption of undue hardship has 

13 been established with respect to such agreement, 

14 such certification shall state that in the opinion of 

15 the attorney, the debtor is able to make the pay16 ment. 

17 ‘‘(C) In the case of a reaffirmation agreement 

18 under subsection (m)(2), subparagraph (B) is not 

19 applicable. 

20 ‘‘(6)(A) The statement in support of such agreement, 

21 which the debtor shall sign and date prior to filing with 

22 the court, shall consist of the following: 

23 ‘‘ ‘Part D: Debtor’s Statement in Support of Reaffir24 mation Agreement. 
60 

•S 256 IS 

1 ‘‘ ‘1. I believe this reaffirmation agreement will not 

2 impose an undue hardship on my dependents or me. I can 

3 afford to make the payments on the reaffirmed debt be4 cause my monthly income (take home pay plus any other 

5 income received) is $lll, and my actual current 

6 monthly expenses including monthly payments on post7 bankruptcy debt and other reaffirmation agreements total 

8 $lll, leaving $lll to make the required payments 

9 on this reaffirmed debt. I understand that if my income 

10 less my monthly expenses does not leave enough to make 

11 the payments, this reaffirmation agreement is presumed 

12 to be an undue hardship on me and must be reviewed by 

13 the court. However, this presumption may be overcome if 

14 I explain to the satisfaction of the court how I can afford 

15 to make the payments here: lll. 

16 ‘‘ ‘2. I received a copy of the Reaffirmation Disclosure 

17 Statement in Part A and a completed and signed reaffir18 mation agreement.’. 

19 ‘‘(B) Where the debtor is represented by an attorney 

20 and is reaffirming a debt owed to a creditor defined in 

21 section 19(b)(1)(A)(iv) of the Federal Reserve Act, the 

22 statement of support of the reaffirmation agreement, 

23 which the debtor shall sign and date prior to filing with 

24 the court, shall consist of the following: 
61 

•S 256 IS 

1 ‘‘ ‘I believe this reaffirmation agreement is in my fi2 nancial interest. I can afford to make the payments on 

3 the reaffirmed debt. I received a copy of the Reaffirmation 

4 Disclosure Statement in Part A and a completed and 

5 signed reaffirmation agreement.’. 

6 ‘‘(7) The motion that may be used if approval of such 

7 agreement by the court is required in order for it to be 

8 effective, shall be signed and dated by the movant and 

9 shall consist of the following: 

10 ‘‘ ‘Part E: Motion for Court Approval (To be com11 pleted only if the debtor is not represented by an attor12 ney.). I (we), the debtor(s), affirm the following to be true 

13 and correct: 

14 ‘‘ ‘I am not represented by an attorney in connection 

15 with this reaffirmation agreement. 

16 ‘‘ ‘I believe this reaffirmation agreement is in my best 

17 interest based on the income and expenses I have disclosed 

18 in my Statement in Support of this reaffirmation agree19 ment, and because (provide any additional relevant rea20 sons the court should consider): 

21 ‘‘ ‘Therefore, I ask the court for an order approving 

22 this reaffirmation agreement.’. 

23 ‘‘(8) The court order, which may be used to approve 

24 such agreement, shall consist of the following: 
62 

•S 256 IS 

1 ‘‘ ‘Court Order: The court grants the debtor’s motion 

2 and approves the reaffirmation agreement described 

3 above.’. 

4 ‘‘(l) Notwithstanding any other provision of this title 

5 the following shall apply: 

6 ‘‘(1) A creditor may accept payments from a 

7 debtor before and after the filing of an agreement of 

8 the kind specified in subsection (c) with the court. 

9 ‘‘(2) A creditor may accept payments from a 

10 debtor under such agreement that the creditor be11 lieves in good faith to be effective. 

12 ‘‘(3) The requirements of subsections (c)(2) and 

13 (k) shall be satisfied if disclosures required under 

14 those subsections are given in good faith. 

15 ‘‘(m)(1) Until 60 days after an agreement of the kind 

16 specified in subsection (c) is filed with the court (or such 

17 additional period as the court, after notice and a hearing 

18 and for cause, orders before the expiration of such period), 

19 it shall be presumed that such agreement is an undue 

20 hardship on the debtor if the debtor’s monthly income less 

21 the debtor’s monthly expenses as shown on the debtor’s 

22 completed and signed statement in support of such agree23 ment required under subsection (k)(6)(A) is less than the 

24 scheduled payments on the reaffirmed debt. This pre25 sumption shall be reviewed by the court. The presumption 
63 

•S 256 IS 

1 may be rebutted in writing by the debtor if the statement 

2 includes an explanation that identifies additional sources 

3 of funds to make the payments as agreed upon under the 

4 terms of such agreement. If the presumption is not rebut5 ted to the satisfaction of the court, the court may dis6 approve such agreement. No agreement shall be dis7 approved without notice and a hearing to the debtor and 

8 creditor, and such hearing shall be concluded before the 

9 entry of the debtor’s discharge. 

10 ‘‘(2) This subsection does not apply to reaffirmation 

11 agreements where the creditor is a credit union, as defined 

12 in section 19(b)(1)(A)(iv) of the Federal Reserve Act.’’. 

13 (b) LAW ENFORCEMENT.— 

14 (1) IN GENERAL.—Chapter 9 of title 18, United 

15 States Code, is amended by adding at the end the 

16 following: 

17 ‘‘§ 158. Designation of United States attorneys and 

18 agents of the Federal Bureau of Inves19 tigation to address abusive reaffirma20 tions of debt and materially fraudulent 

21 statements in bankruptcy schedules 

22 ‘‘(a) IN GENERAL.—The Attorney General of the 

23 United States shall designate the individuals described in 

24 subsection (b) to have primary responsibility in carrying 

25 out enforcement activities in addressing violations of sec-
64 

•S 256 IS 

1 tion 152 or 157 relating to abusive reaffirmations of debt. 

2 In addition to addressing the violations referred to in the 

3 preceding sentence, the individuals described under sub4 section (b) shall address violations of section 152 or 157 

5 relating to materially fraudulent statements in bankruptcy 

6 schedules that are intentionally false or intentionally mis7 leading. 

8 ‘‘(b) UNITED STATES ATTORNEYS AND AGENTS OF

9 THE FEDERAL BUREAU OF INVESTIGATION.—The indi10 viduals referred to in subsection (a) are— 

11 ‘‘(1) the United States attorney for each judi12 cial district of the United States; and 

13 ‘‘(2) an agent of the Federal Bureau of Inves14 tigation for each field office of the Federal Bureau 

15 of Investigation. 

16 ‘‘(c) BANKRUPTCY INVESTIGATIONS.—Each United 

17 States attorney designated under this section shall, in ad18 dition to any other responsibilities, have primary responsi19 bility for carrying out the duties of a United States attor20 ney under section 3057. 

21 ‘‘(d) BANKRUPTCY PROCEDURES.—The bankruptcy 

22 courts shall establish procedures for referring any case 

23 that may contain a materially fraudulent statement in a 

24 bankruptcy schedule to the individuals designated under 

25 this section.’’. 
65 

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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for chapter 9 of title 18, United States Code, 

3 is amended by adding at the end the following: 

‘‘158. Designation of United States attorneys and agents of the Federal Bureau 

of Investigation to address abusive reaffirmations of debt and 

materially fraudulent statements in bankruptcy schedules.’’. 

4 SEC. 204. PRESERVATION OF CLAIMS AND DEFENSES UPON 

5 SALE OF PREDATORY LOANS. 

6 Section 363 of title 11, United States Code, is 

7 amended— 

8 (1) by redesignating subsection (o) as sub9 section (p), and 

10 (2) by inserting after subsection (n) the fol11 lowing: 

12 ‘‘(o) Notwithstanding subsection (f), if a person pur13 chases any interest in a consumer credit transaction that 

14 is subject to the Truth in Lending Act or any interest in 

15 a consumer credit contract (as defined in section 433.1 

16 of title 16 of the Code of Federal Regulations (January 

17 1, 2004), as amended from time to time), and if such in18 terest is purchased through a sale under this section, then 

19 such person shall remain subject to all claims and defenses 

20 that are related to such consumer credit transaction or 

21 such consumer credit contract, to the same extent as such 

22 person would be subject to such claims and defenses of 

23 the consumer had such interest been purchased at a sale 

24 not under this section.’’. 
66 

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1 SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION 

2 AGREEMENT PROCESS. 

3 (a) STUDY.—The Comptroller General of the United 

4 States shall conduct a study of the reaffirmation agree5 ment process that occurs under title 11 of the United 

6 States Code, to determine the overall treatment of con7 sumers within the context of such process, and shall in8 clude in such study consideration of— 

9 (1) the policies and activities of creditors with 

10 respect to reaffirmation agreements; and 

11 (2) whether consumers are fully, fairly, and 

12 consistently informed of their rights pursuant to 

13 such title. 

14 (b) REPORT TO THE CONGRESS.—Not later than 18 

15 months after the date of the enactment of this Act, the 

16 Comptroller General shall submit to the President pro 

17 tempore of the Senate and the Speaker of the House of 

18 Representatives a report on the results of the study con19 ducted under subsection (a), together with recommenda20 tions for legislation (if any) to address any abusive or co21 ercive tactics found in connection with the reaffirmation 

22 agreement process that occurs under title 11 of the United 

23 States Code. 
67 

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1 Subtitle B—Priority Child Support 

2 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA3 TION. 

4 Section 101 of title 11, United States Code, is 

5 amended— 

6 (1) by striking paragraph (12A); and 

7 (2) by inserting after paragraph (14) the fol8 lowing: 

9 ‘‘(14A) ‘domestic support obligation’ means a 

10 debt that accrues before, on, or after the date of the 

11 order for relief in a case under this title, including 

12 interest that accrues on that debt as provided under 

13 applicable nonbankruptcy law notwithstanding any 

14 other provision of this title, that is— 

15 ‘‘(A) owed to or recoverable by— 

16 ‘‘(i) a spouse, former spouse, or child 

17 of the debtor or such child’s parent, legal 

18 guardian, or responsible relative; or 

19 ‘‘(ii) a governmental unit; 

20 ‘‘(B) in the nature of alimony, mainte21 nance, or support (including assistance provided 

22 by a governmental unit) of such spouse, former 

23 spouse, or child of the debtor or such child’s 

24 parent, without regard to whether such debt is 

25 expressly so designated; 
68 

•S 256 IS 

1 ‘‘(C) established or subject to establish2 ment before, on, or after the date of the order 

3 for relief in a case under this title, by reason 

4 of applicable provisions of— 

5 ‘‘(i) a separation agreement, divorce 

6 decree, or property settlement agreement; 

7 ‘‘(ii) an order of a court of record; or 

8 ‘‘(iii) a determination made in accord9 ance with applicable nonbankruptcy law by 

10 a governmental unit; and 

11 ‘‘(D) not assigned to a nongovernmental 

12 entity, unless that obligation is assigned volun13 tarily by the spouse, former spouse, child of the 

14 debtor, or such child’s parent, legal guardian, 

15 or responsible relative for the purpose of col16 lecting the debt;’’. 

17 SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP18 PORT OBLIGATIONS. 

19 Section 507(a) of title 11, United States Code, is 

20 amended— 

21 (1) by striking paragraph (7); 

22 (2) by redesignating paragraphs (1) through 

23 (6) as paragraphs (2) through (7), respectively; 

24 (3) in paragraph (2), as so redesignated, by 

25 striking ‘‘First’’ and inserting ‘‘Second’’; 
69 

•S 256 IS 

1 (4) in paragraph (3), as so redesignated, by 

2 striking ‘‘Second’’ and inserting ‘‘Third’’; 

3 (5) in paragraph (4), as so redesignated— 

4 (A) by striking ‘‘Third’’ and inserting 

5 ‘‘Fourth’’; and 

6 (B) by striking the semicolon at the end 

7 and inserting a period; 

8 (6) in paragraph (5), as so redesignated, by 

9 striking ‘‘Fourth’’ and inserting ‘‘Fifth’’; 

10 (7) in paragraph (6), as so redesignated, by 

11 striking ‘‘Fifth’’ and inserting ‘‘Sixth’’; 

12 (8) in paragraph (7), as so redesignated, by 

13 striking ‘‘Sixth’’ and inserting ‘‘Seventh’’; and 

14 (9) by inserting before paragraph (2), as so re15 designated, the following: 

16 ‘‘(1) First: 

17 ‘‘(A) Allowed unsecured claims for domes18 tic support obligations that, as of the date of 

19 the filing of the petition in a case under this 

20 title, are owed to or recoverable by a spouse, 

21 former spouse, or child of the debtor, or such 

22 child’s parent, legal guardian, or responsible 

23 relative, without regard to whether the claim is 

24 filed by such person or is filed by a govern25 mental unit on behalf of such person, on the 
70 

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1 condition that funds received under this para2 graph by a governmental unit under this title 

3 after the date of the filing of the petition shall 

4 be applied and distributed in accordance with 

5 applicable nonbankruptcy law. 

6 ‘‘(B) Subject to claims under subpara7 graph (A), allowed unsecured claims for domes8 tic support obligations that, as of the date of 

9 the filing of the petition, are assigned by a 

10 spouse, former spouse, child of the debtor, or 

11 such child’s parent, legal guardian, or respon12 sible relative to a governmental unit (unless 

13 such obligation is assigned voluntarily by the 

14 spouse, former spouse, child, parent, legal 

15 guardian, or responsible relative of the child for 

16 the purpose of collecting the debt) or are owed 

17 directly to or recoverable by a governmental 

18 unit under applicable nonbankruptcy law, on 

19 the condition that funds received under this 

20 paragraph by a governmental unit under this 

21 title after the date of the filing of the petition 

22 be applied and distributed in accordance with 

23 applicable nonbankruptcy law. 

24 ‘‘(C) If a trustee is appointed or elected 

25 under section 701, 702, 703, 1104, 1202, or 
71 

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1 1302, the administrative expenses of the trustee 

2 allowed under paragraphs (1)(A), (2), and (6) 

3 of section 503(b) shall be paid before payment 

4 of claims under subparagraphs (A) and (B), to 

5 the extent that the trustee administers assets 

6 that are otherwise available for the payment of 

7 such claims.’’. 

8 SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND 

9 DISCHARGE IN CASES INVOLVING DOMESTIC 

10 SUPPORT OBLIGATIONS. 

11 Title 11, United States Code, is amended— 

12 (1) in section 1129(a), by adding at the end the 

13 following: 

14 ‘‘(14) If the debtor is required by a judicial or 

15 administrative order, or by statute, to pay a domes16 tic support obligation, the debtor has paid all 

17 amounts payable under such order or such statute 

18 for such obligation that first become payable after 

19 the date of the filing of the petition.’’; 

20 (2) in section 1208(c)— 

21 (A) in paragraph (8), by striking ‘‘or’’ at 

22 the end; 

23 (B) in paragraph (9), by striking the pe24 riod at the end and inserting ‘‘; and’’; and 

25 (C) by adding at the end the following: 
72 

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1 ‘‘(10) failure of the debtor to pay any domestic 

2 support obligation that first becomes payable after 

3 the date of the filing of the petition.’’; 

4 (3) in section 1222(a)— 

5 (A) in paragraph (2), by striking ‘‘and’’ at 

6 the end; 

7 (B) in paragraph (3), by striking the pe8 riod at the end and inserting ‘‘; and’’; and 

9 (C) by adding at the end the following: 

10 ‘‘(4) notwithstanding any other provision of this 

11 section, a plan may provide for less than full pay12 ment of all amounts owed for a claim entitled to pri13 ority under section 507(a)(1)(B) only if the plan 

14 provides that all of the debtor’s projected disposable 

15 income for a 5-year period beginning on the date 

16 that the first payment is due under the plan will be 

17 applied to make payments under the plan.’’; 

18 (4) in section 1222(b)— 

19 (A) in paragraph (10), by striking ‘‘and’’ 

20 at the end; 

21 (B) by redesignating paragraph (11) as 

22 paragraph (12); and 

23 (C) by inserting after paragraph (10) the 

24 following: 
73 

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1 ‘‘(11) provide for the payment of interest accru2 ing after the date of the filing of the petition on un3 secured claims that are nondischargeable under sec4 tion 1228(a), except that such interest may be paid 

5 only to the extent that the debtor has disposable in6 come available to pay such interest after making 

7 provision for full payment of all allowed claims; 

8 and’’; 

9 (5) in section 1225(a)— 

10 (A) in paragraph (5), by striking ‘‘and’’ at 

11 the end; 

12 (B) in paragraph (6), by striking the pe13 riod at the end and inserting ‘‘; and’’; and 

14 (C) by adding at the end the following: 

15 ‘‘(7) the debtor has paid all amounts that are 

16 required to be paid under a domestic support obliga17 tion and that first become payable after the date of 

18 the filing of the petition if the debtor is required by 

19 a judicial or administrative order, or by statute, to 

20 pay such domestic support obligation.’’; 

21 (6) in section 1228(a), in the matter preceding 

22 paragraph (1), by inserting ‘‘, and in the case of a 

23 debtor who is required by a judicial or administra24 tive order, or by statute, to pay a domestic support 

25 obligation, after such debtor certifies that all 
74 

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1 amounts payable under such order or such statute 

2 that are due on or before the date of the certifi3 cation (including amounts due before the petition 

4 was filed, but only to the extent provided for by the 

5 plan) have been paid’’ after ‘‘completion by the debt6 or of all payments under the plan’’; 

7 (7) in section 1307(c)— 

8 (A) in paragraph (9), by striking ‘‘or’’ at 

9 the end; 

10 (B) in paragraph (10), by striking the pe11 riod at the end and inserting ‘‘; or’’; and 

12 (C) by adding at the end the following: 

13 ‘‘(11) failure of the debtor to pay any domestic 

14 support obligation that first becomes payable after 

15 the date of the filing of the petition.’’; 

16 (8) in section 1322(a)— 

17 (A) in paragraph (2), by striking ‘‘and’’ at 

18 the end; 

19 (B) in paragraph (3), by striking the pe20 riod at the end and inserting ‘‘; and’’; and 

21 (C) by adding at the end the following: 

22 ‘‘(4) notwithstanding any other provision of this 

23 section, a plan may provide for less than full pay24 ment of all amounts owed for a claim entitled to pri25 ority under section 507(a)(1)(B) only if the plan 
75 

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1 provides that all of the debtor’s projected disposable 

2 income for a 5-year period beginning on the date 

3 that the first payment is due under the plan will be 

4 applied to make payments under the plan.’’; 

5 (9) in section 1322(b)— 

6 (A) in paragraph (9), by striking ‘‘; and’’ 

7 and inserting a semicolon; 

8 (B) by redesignating paragraph (10) as 

9 paragraph (11); and 

10 (C) inserting after paragraph (9) the fol11 lowing: 

12 ‘‘(10) provide for the payment of interest accru13 ing after the date of the filing of the petition on un14 secured claims that are nondischargeable under sec15 tion 1328(a), except that such interest may be paid 

16 only to the extent that the debtor has disposable in17 come available to pay such interest after making 

18 provision for full payment of all allowed claims; 

19 and’’; 

20 (10) in section 1325(a), as amended by section 

21 102, by inserting after paragraph (7) the following: 

22 ‘‘(8) the debtor has paid all amounts that are 

23 required to be paid under a domestic support obliga24 tion and that first become payable after the date of 

25 the filing of the petition if the debtor is required by 
76 

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1 a judicial or administrative order, or by statute, to 

2 pay such domestic support obligation; and’’; 

3 (11) in section 1328(a), in the matter preceding 

4 paragraph (1), by inserting ‘‘, and in the case of a 

5 debtor who is required by a judicial or administra6 tive order, or by statute, to pay a domestic support 

7 obligation, after such debtor certifies that all 

8 amounts payable under such order or such statute 

9 that are due on or before the date of the certifi10 cation (including amounts due before the petition 

11 was filed, but only to the extent provided for by the 

12 plan) have been paid’’ after ‘‘completion by the debt13 or of all payments under the plan’’. 

14 SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC 

15 SUPPORT OBLIGATION PROCEEDINGS. 

16 Section 362(b) of title 11, United States Code, is 

17 amended by striking paragraph (2) and inserting the fol18 lowing: 

19 ‘‘(2) under subsection (a)— 

20 ‘‘(A) of the commencement or continuation 

21 of a civil action or proceeding— 

22 ‘‘(i) for the establishment of paternity; 

23 ‘‘(ii) for the establishment or modi24 fication of an order for domestic support 

25 obligations; 
77 

•S 256 IS 

1 ‘‘(iii) concerning child custody or visi2 tation; 

3 ‘‘(iv) for the dissolution of a marriage, 

4 except to the extent that such proceeding 

5 seeks to determine the division of property 

6 that is property of the estate; or 

7 ‘‘(v) regarding domestic violence; 

8 ‘‘(B) of the collection of a domestic sup9 port obligation from property that is not prop10 erty of the estate; 

11 ‘‘(C) with respect to the withholding of in12 come that is property of the estate or property 

13 of the debtor for payment of a domestic support 

14 obligation under a judicial or administrative 

15 order or a statute; 

16 ‘‘(D) of the withholding, suspension, or re17 striction of a driver’s license, a professional or 

18 occupational license, or a recreational license, 

19 under State law, as specified in section 

20 466(a)(16) of the Social Security Act; 

21 ‘‘(E) of the reporting of overdue support 

22 owed by a parent to any consumer reporting 

23 agency as specified in section 466(a)(7) of the 

24 Social Security Act; 
78 

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1 ‘‘(F) of the interception of a tax refund, as 

2 specified in sections 464 and 466(a)(3) of the 

3 Social Security Act or under an analogous State 

4 law; or 

5 ‘‘(G) of the enforcement of a medical obli6 gation, as specified under title IV of the Social 

7 Security Act;’’. 

8 SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR 

9 ALIMONY, MAINTENANCE, AND SUPPORT. 

10 Section 523 of title 11, United States Code, is 

11 amended— 

12 (1) in subsection (a)— 

13 (A) by striking paragraph (5) and insert14 ing the following: 

15 ‘‘(5) for a domestic support obligation;’’; and 

16 (B) by striking paragraph (18); 

17 (2) in subsection (c), by striking ‘‘(6), or (15)’’ 

18 each place it appears and inserting ‘‘or (6)’’; and 

19 (3) in paragraph (15), as added by Public Law 

20 103–394 (108 Stat. 4133)— 

21 (A) by inserting ‘‘to a spouse, former 

22 spouse, or child of the debtor and’’ before ‘‘not 

23 of the kind’’; 

24 (B) by inserting ‘‘or’’ after ‘‘court of 

25 record,’’; and 
79 

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1 (C) by striking ‘‘unless—’’ and all that fol2 lows through the end of the paragraph and in3 serting a semicolon. 

4 SEC. 216. CONTINUED LIABILITY OF PROPERTY. 

5 Section 522 of title 11, United States Code, is 

6 amended— 

7 (1) in subsection (c), by striking paragraph (1) 

8 and inserting the following: 

9 ‘‘(1) a debt of a kind specified in paragraph (1) 

10 or (5) of section 523(a) (in which case, notwith11 standing any provision of applicable nonbankruptcy 

12 law to the contrary, such property shall be liable for 

13 a debt of a kind specified in section 523(a)(5));’’; 

14 (2) in subsection (f)(1)(A), by striking the dash 

15 and all that follows through the end of the subpara16 graph and inserting ‘‘of a kind that is specified in 

17 section 523(a)(5); or’’; and 

18 (3) in subsection (g)(2), by striking ‘‘subsection 

19 (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’. 

20 SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS 

21 AGAINST PREFERENTIAL TRANSFER MO22 TIONS. 

23 Section 547(c)(7) of title 11, United States Code, is 

24 amended to read as follows: 
80 

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1 ‘‘(7) to the extent such transfer was a bona fide 

2 payment of a debt for a domestic support obliga3 tion;’’. 

4 SEC. 218. DISPOSABLE INCOME DEFINED. 

5 Section 1225(b)(2)(A) of title 11, United States 

6 Code, is amended by inserting ‘‘or for a domestic support 

7 obligation that first becomes payable after the date of the 

8 filing of the petition’’ after ‘‘dependent of the debtor’’. 

9 SEC. 219. COLLECTION OF CHILD SUPPORT. 

10 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec11 tion 704 of title 11, United States Code, as amended by 

12 section 102, is amended— 

13 (1) in subsection (a)— 

14 (A) in paragraph (8), by striking ‘‘and’’ at 

15 the end; 

16 (B) in paragraph (9), by striking the pe17 riod and inserting a semicolon; and 

18 (C) by adding at the end the following: 

19 ‘‘(10) if with respect to the debtor there is a 

20 claim for a domestic support obligation, provide the 

21 applicable notice specified in subsection (c); and’’; 

22 and 

23 (2) by adding at the end the following: 

24 ‘‘(c)(1) In a case described in subsection (a)(10) to 

25 which subsection (a)(10) applies, the trustee shall— 
81 

•S 256 IS 

1 ‘‘(A)(i) provide written notice to the holder of 

2 the claim described in subsection (a)(10) of such 

3 claim and of the right of such holder to use the serv4 ices of the State child support enforcement agency 

5 established under sections 464 and 466 of the Social 

6 Security Act for the State in which such holder re7 sides, for assistance in collecting child support dur8 ing and after the case under this title; 

9 ‘‘(ii) include in the notice provided under clause 

10 (i) the address and telephone number of such State 

11 child support enforcement agency; and 

12 ‘‘(iii) include in the notice provided under 

13 clause (i) an explanation of the rights of such holder 

14 to payment of such claim under this chapter; 

15 ‘‘(B)(i) provide written notice to such State 

16 child support enforcement agency of such claim; and 

17 ‘‘(ii) include in the notice provided under clause 

18 (i) the name, address, and telephone number of such 

19 holder; and 

20 ‘‘(C) at such time as the debtor is granted a 

21 discharge under section 727, provide written notice 

22 to such holder and to such State child support en23 forcement agency of— 

24 ‘‘(i) the granting of the discharge; 
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1 ‘‘(ii) the last recent known address of the 

2 debtor; 

3 ‘‘(iii) the last recent known name and ad4 dress of the debtor’s employer; and 

5 ‘‘(iv) the name of each creditor that holds 

6 a claim that— 

7 ‘‘(I) is not discharged under para8 graph (2), (4), or (14A) of section 523(a); 

9 or 

10 ‘‘(II) was reaffirmed by the debtor 

11 under section 524(c). 

12 ‘‘(2)(A) The holder of a claim described in subsection 

13 (a)(10) or the State child support enforcement agency of 

14 the State in which such holder resides may request from 

15 a creditor described in paragraph (1)(C)(iv) the last 

16 known address of the debtor. 

17 ‘‘(B) Notwithstanding any other provision of law, a 

18 creditor that makes a disclosure of a last known address 

19 of a debtor in connection with a request made under sub20 paragraph (A) shall not be liable by reason of making such 

21 disclosure.’’. 

22 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.— 

23 Section 1106 of title 11, United States Code, is amend24 ed— 

25 (1) in subsection (a)— 
83 

•S 256 IS 

1 (A) in paragraph (6), by striking ‘‘and’’ at 

2 the end; 

3 (B) in paragraph (7), by striking the pe4 riod and inserting ‘‘; and’’; and 

5 (C) by adding at the end the following: 

6 ‘‘(8) if with respect to the debtor there is a 

7 claim for a domestic support obligation, provide the 

8 applicable notice specified in subsection (c).’’; and 

9 (2) by adding at the end the following: 

10 ‘‘(c)(1) In a case described in subsection (a)(8) to 

11 which subsection (a)(8) applies, the trustee shall— 

12 ‘‘(A)(i) provide written notice to the holder of 

13 the claim described in subsection (a)(8) of such 

14 claim and of the right of such holder to use the serv15 ices of the State child support enforcement agency 

16 established under sections 464 and 466 of the Social 

17 Security Act for the State in which such holder re18 sides, for assistance in collecting child support dur19 ing and after the case under this title; and 

20 ‘‘(ii) include in the notice required by clause (i) 

21 the address and telephone number of such State 

22 child support enforcement agency; 

23 ‘‘(B)(i) provide written notice to such State 

24 child support enforcement agency of such claim; and 
84 

•S 256 IS 

1 ‘‘(ii) include in the notice required by clause (i) 

2 the name, address, and telephone number of such 

3 holder; and 

4 ‘‘(C) at such time as the debtor is granted a 

5 discharge under section 1141, provide written notice 

6 to such holder and to such State child support en7 forcement agency of— 

8 ‘‘(i) the granting of the discharge; 

9 ‘‘(ii) the last recent known address of the 

10 debtor; 

11 ‘‘(iii) the last recent known name and ad12 dress of the debtor’s employer; and 

13 ‘‘(iv) the name of each creditor that holds 

14 a claim that— 

15 ‘‘(I) is not discharged under para16 graph (2), (4), or (14A) of section 523(a); 

17 or 

18 ‘‘(II) was reaffirmed by the debtor 

19 under section 524(c). 

20 ‘‘(2)(A) The holder of a claim described in subsection 

21 (a)(8) or the State child enforcement support agency of 

22 the State in which such holder resides may request from 

23 a creditor described in paragraph (1)(C)(iv) the last 

24 known address of the debtor. 
85 

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1 ‘‘(B) Notwithstanding any other provision of law, a 

2 creditor that makes a disclosure of a last known address 

3 of a debtor in connection with a request made under sub4 paragraph (A) shall not be liable by reason of making such 

5 disclosure.’’. 

6 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.— 

7 Section 1202 of title 11, United States Code, is amend8 ed— 

9 (1) in subsection (b)— 

10 (A) in paragraph (4), by striking ‘‘and’’ at 

11 the end; 

12 (B) in paragraph (5), by striking the pe13 riod and inserting ‘‘; and’’; and 

14 (C) by adding at the end the following: 

15 ‘‘(6) if with respect to the debtor there is a 

16 claim for a domestic support obligation, provide the 

17 applicable notice specified in subsection (c).’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(c)(1) In a case described in subsection (b)(6) to 

20 which subsection (b)(6) applies, the trustee shall— 

21 ‘‘(A)(i) provide written notice to the holder of 

22 the claim described in subsection (b)(6) of such 

23 claim and of the right of such holder to use the serv24 ices of the State child support enforcement agency 

25 established under sections 464 and 466 of the Social 
86 

•S 256 IS 

1 Security Act for the State in which such holder re2 sides, for assistance in collecting child support dur3 ing and after the case under this title; and 

4 ‘‘(ii) include in the notice provided under clause 

5 (i) the address and telephone number of such State 

6 child support enforcement agency; 

7 ‘‘(B)(i) provide written notice to such State 

8 child support enforcement agency of such claim; and 

9 ‘‘(ii) include in the notice provided under clause 

10 (i) the name, address, and telephone number of such 

11 holder; and 

12 ‘‘(C) at such time as the debtor is granted a 

13 discharge under section 1228, provide written notice 

14 to such holder and to such State child support en15 forcement agency of— 

16 ‘‘(i) the granting of the discharge; 

17 ‘‘(ii) the last recent known address of the 

18 debtor; 

19 ‘‘(iii) the last recent known name and ad20 dress of the debtor’s employer; and 

21 ‘‘(iv) the name of each creditor that holds 

22 a claim that— 

23 ‘‘(I) is not discharged under para24 graph (2), (4), or (14A) of section 523(a); 

25 or 
87 

•S 256 IS 

1 ‘‘(II) was reaffirmed by the debtor 

2 under section 524(c). 

3 ‘‘(2)(A) The holder of a claim described in subsection 

4 (b)(6) or the State child support enforcement agency of 

5 the State in which such holder resides may request from 

6 a creditor described in paragraph (1)(C)(iv) the last 

7 known address of the debtor. 

8 ‘‘(B) Notwithstanding any other provision of law, a 

9 creditor that makes a disclosure of a last known address 

10 of a debtor in connection with a request made under sub11 paragraph (A) shall not be liable by reason of making that 

12 disclosure.’’. 

13 (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.— 

14 Section 1302 of title 11, United States Code, is amend15 ed— 

16 (1) in subsection (b)— 

17 (A) in paragraph (4), by striking ‘‘and’’ at 

18 the end; 

19 (B) in paragraph (5), by striking the pe20 riod and inserting ‘‘; and’’; and 

21 (C) by adding at the end the following: 

22 ‘‘(6) if with respect to the debtor there is a 

23 claim for a domestic support obligation, provide the 

24 applicable notice specified in subsection (d).’’; and 

25 (2) by adding at the end the following: 
88 

•S 256 IS 

1 ‘‘(d)(1) In a case described in subsection (b)(6) to 

2 which subsection (b)(6) applies, the trustee shall— 

3 ‘‘(A)(i) provide written notice to the holder of 

4 the claim described in subsection (b)(6) of such 

5 claim and of the right of such holder to use the serv6 ices of the State child support enforcement agency 

7 established under sections 464 and 466 of the Social 

8 Security Act for the State in which such holder re9 sides, for assistance in collecting child support dur10 ing and after the case under this title; and 

11 ‘‘(ii) include in the notice provided under clause 

12 (i) the address and telephone number of such State 

13 child support enforcement agency; 

14 ‘‘(B)(i) provide written notice to such State 

15 child support enforcement agency of such claim; and 

16 ‘‘(ii) include in the notice provided under clause 

17 (i) the name, address, and telephone number of such 

18 holder; and 

19 ‘‘(C) at such time as the debtor is granted a 

20 discharge under section 1328, provide written notice 

21 to such holder and to such State child support en22 forcement agency of— 

23 ‘‘(i) the granting of the discharge; 

24 ‘‘(ii) the last recent known address of the 

25 debtor; 
89 

•S 256 IS 

1 ‘‘(iii) the last recent known name and ad2 dress of the debtor’s employer; and 

3 ‘‘(iv) the name of each creditor that holds 

4 a claim that— 

5 ‘‘(I) is not discharged under para6 graph (2) or (4) of section 523(a); or 

7 ‘‘(II) was reaffirmed by the debtor 

8 under section 524(c). 

9 ‘‘(2)(A) The holder of a claim described in subsection 

10 (b)(6) or the State child support enforcement agency of 

11 the State in which such holder resides may request from 

12 a creditor described in paragraph (1)(C)(iv) the last 

13 known address of the debtor. 

14 ‘‘(B) Notwithstanding any other provision of law, a 

15 creditor that makes a disclosure of a last known address 

16 of a debtor in connection with a request made under sub17 paragraph (A) shall not be liable by reason of making that 

18 disclosure.’’. 

19 SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDU20 CATIONAL BENEFITS AND LOANS. 

21 Section 523(a) of title 11, United States Code, is 

22 amended by striking paragraph (8) and inserting the fol23 lowing: 

24 ‘‘(8) unless excepting such debt from discharge 

25 under this paragraph would impose an undue hard-
90 

•S 256 IS 

1 ship on the debtor and the debtor’s dependents, 

2 for— 

3 ‘‘(A)(i) an educational benefit overpayment 

4 or loan made, insured, or guaranteed by a gov5 ernmental unit, or made under any program 

6 funded in whole or in part by a governmental 

7 unit or nonprofit institution; or 

8 ‘‘(ii) an obligation to repay funds received 

9 as an educational benefit, scholarship, or sti10 pend; or 

11 ‘‘(B) any other educational loan that is a 

12 qualified education loan, as defined in section 

13 221(d)(1) of the Internal Revenue Code of 

14 1986, incurred by a debtor who is an indi15 vidual;’’. 

16 Subtitle C—Other Consumer 

17 Protections 

18 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK19 RUPTCY FILINGS. 

20 Section 110 of title 11, United States Code, is 

21 amended— 

22 (1) in subsection (a)(1), by striking ‘‘or an em23 ployee of an attorney’’ and inserting ‘‘for the debtor 

24 or an employee of such attorney under the direct su25 pervision of such attorney’’; 
91 

•S 256 IS 

1 (2) in subsection (b)— 

2 (A) in paragraph (1), by adding at the end 

3 the following: ‘‘If a bankruptcy petition pre4 parer is not an individual, then an officer, prin5 cipal, responsible person, or partner of the 

6 bankruptcy petition preparer shall be required 

7 to— 

8 ‘‘(A) sign the document for filing; and 

9 ‘‘(B) print on the document the name and ad10 dress of that officer, principal, responsible person, or 

11 partner.’’; and 

12 (B) by striking paragraph (2) and insert13 ing the following: 

14 ‘‘(2)(A) Before preparing any document for filing or 

15 accepting any fees from a debtor, the bankruptcy petition 

16 preparer shall provide to the debtor a written notice which 

17 shall be on an official form prescribed by the Judicial Con18 ference of the United States in accordance with rule 9009 

19 of the Federal Rules of Bankruptcy Procedure. 

20 ‘‘(B) The notice under subparagraph (A)— 

21 ‘‘(i) shall inform the debtor in simple language 

22 that a bankruptcy petition preparer is not an attor23 ney and may not practice law or give legal advice; 

24 ‘‘(ii) may contain a description of examples of 

25 legal advice that a bankruptcy petition preparer is 
92 

•S 256 IS 

1 not authorized to give, in addition to any advice that 

2 the preparer may not give by reason of subsection 

3 (e)(2); and 

4 ‘‘(iii) shall— 

5 ‘‘(I) be signed by the debtor and, under 

6 penalty of perjury, by the bankruptcy petition 

7 preparer; and 

8 ‘‘(II) be filed with any document for fil9 ing.’’; 

10 (3) in subsection (c)— 

11 (A) in paragraph (2)— 

12 (i) by striking ‘‘(2) For purposes’’ and 

13 inserting ‘‘(2)(A) Subject to subparagraph 

14 (B), for purposes’’; and 

15 (ii) by adding at the end the fol16 lowing: 

17 ‘‘(B) If a bankruptcy petition preparer is not an indi18 vidual, the identifying number of the bankruptcy petition 

19 preparer shall be the Social Security account number of 

20 the officer, principal, responsible person, or partner of the 

21 bankruptcy petition preparer.’’; and 

22 (B) by striking paragraph (3); 

23 (4) in subsection (d)— 

24 (A) by striking ‘‘(d)(1)’’ and inserting 

25 ‘‘(d)’’; and 
93 

•S 256 IS 

1 (B) by striking paragraph (2); 

2 (5) in subsection (e)— 

3 (A) by striking paragraph (2); and 

4 (B) by adding at the end the following: 

5 ‘‘(2)(A) A bankruptcy petition preparer may not offer 

6 a potential bankruptcy debtor any legal advice, including 

7 any legal advice described in subparagraph (B). 

8 ‘‘(B) The legal advice referred to in subparagraph 

9 (A) includes advising the debtor— 

10 ‘‘(i) whether— 

11 ‘‘(I) to file a petition under this title; or 

12 ‘‘(II) commencing a case under chapter 7, 

13 11, 12, or 13 is appropriate; 

14 ‘‘(ii) whether the debtor’s debts will be dis15 charged in a case under this title; 

16 ‘‘(iii) whether the debtor will be able to retain 

17 the debtor’s home, car, or other property after com18 mencing a case under this title; 

19 ‘‘(iv) concerning— 

20 ‘‘(I) the tax consequences of a case 

21 brought under this title; or 

22 ‘‘(II) the dischargeability of tax claims; 

23 ‘‘(v) whether the debtor may or should promise 

24 to repay debts to a creditor or enter into a reaffir25 mation agreement with a creditor to reaffirm a debt; 
94 

•S 256 IS 

1 ‘‘(vi) concerning how to characterize the nature 

2 of the debtor’s interests in property or the debtor’s 

3 debts; or 

4 ‘‘(vii) concerning bankruptcy procedures and 

5 rights.’’; 

6 (6) in subsection (f)— 

7 (A) by striking ‘‘(f)(1)’’ and inserting 

8 ‘‘(f)’’; and 

9 (B) by striking paragraph (2); 

10 (7) in subsection (g)— 

11 (A) by striking ‘‘(g)(1)’’ and inserting 

12 ‘‘(g)’’; and 

13 (B) by striking paragraph (2); 

14 (8) in subsection (h)— 

15 (A) by redesignating paragraphs (1) 

16 through (4) as paragraphs (2) through (5), re17 spectively; 

18 (B) by inserting before paragraph (2), as 

19 so redesignated, the following: 

20 ‘‘(1) The Supreme Court may promulgate rules under 

21 section 2075 of title 28, or the Judicial Conference of the 

22 United States may prescribe guidelines, for setting a max23 imum allowable fee chargeable by a bankruptcy petition 

24 preparer. A bankruptcy petition preparer shall notify the 

25 debtor of any such maximum amount before preparing any 
95 

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1 document for filing for a debtor or accepting any fee from 

2 the debtor.’’; 

3 (C) in paragraph (2), as so redesignated— 

4 (i) by striking ‘‘Within 10 days after 

5 the date of the filing of a petition, a bank6 ruptcy petition preparer shall file a’’ and 

7 inserting ‘‘A’’; 

8 (ii) by inserting ‘‘by the bankruptcy 

9 petition preparer shall be filed together 

10 with the petition,’’ after ‘‘perjury’’; and 

11 (iii) by adding at the end the fol12 lowing: ‘‘If rules or guidelines setting a 

13 maximum fee for services have been pro14 mulgated or prescribed under paragraph 

15 (1), the declaration under this paragraph 

16 shall include a certification that the bank17 ruptcy petition preparer complied with the 

18 notification requirement under paragraph 

19 (1).’’; 

20 (D) by striking paragraph (3), as so redes21 ignated, and inserting the following: 

22 ‘‘(3)(A) The court shall disallow and order the imme23 diate turnover to the bankruptcy trustee any fee referred 

24 to in paragraph (2) found to be in excess of the value 

25 of any services— 
96 

•S 256 IS 

1 ‘‘(i) rendered by the bankruptcy petition pre2 parer during the 12-month period immediately pre3 ceding the date of the filing of the petition; or 

4 ‘‘(ii) found to be in violation of any rule or 

5 guideline promulgated or prescribed under para6 graph (1). 

7 ‘‘(B) All fees charged by a bankruptcy petition pre8 parer may be forfeited in any case in which the bankruptcy 

9 petition preparer fails to comply with this subsection or 

10 subsection (b), (c), (d), (e), (f), or (g). 

11 ‘‘(C) An individual may exempt any funds recovered 

12 under this paragraph under section 522(b).’’; and 

13 (E) in paragraph (4), as so redesignated, 

14 by striking ‘‘or the United States trustee’’ and 

15 inserting ‘‘the United States trustee (or the 

16 bankruptcy administrator, if any) or the court, 

17 on the initiative of the court,’’; 

18 (9) in subsection (i)(1), by striking the matter 

19 preceding subparagraph (A) and inserting the fol20 lowing: 

21 ‘‘(i)(1) If a bankruptcy petition preparer violates this 

22 section or commits any act that the court finds to be 

23 fraudulent, unfair, or deceptive, on the motion of the debt24 or, trustee, United States trustee (or the bankruptcy ad25 ministrator, if any), and after notice and a hearing, the 
97 

•S 256 IS 

1 court shall order the bankruptcy petition preparer to pay 

2 to the debtor—’’; 

3 (10) in subsection (j)— 

4 (A) in paragraph (2)— 

5 (i) in subparagraph (A)(i)(I), by strik6 ing ‘‘a violation of which subjects a person 

7 to criminal penalty’’; 

8 (ii) in subparagraph (B)— 

9 (I) by striking ‘‘or has not paid 

10 a penalty’’ and inserting ‘‘has not 

11 paid a penalty’’; and 

12 (II) by inserting ‘‘or failed to dis13 gorge all fees ordered by the court’’ 

14 after ‘‘a penalty imposed under this 

15 section,’’; 

16 (B) by redesignating paragraph (3) as 

17 paragraph (4); and 

18 (C) by inserting after paragraph (2) the 

19 following: 

20 ‘‘(3) The court, as part of its contempt power, may 

21 enjoin a bankruptcy petition preparer that has failed to 

22 comply with a previous order issued under this section. 

23 The injunction under this paragraph may be issued on the 

24 motion of the court, the trustee, or the United States 

25 trustee (or the bankruptcy administrator, if any).’’; and 
98 

•S 256 IS 

1 (11) by adding at the end the following: 

2 ‘‘(l)(1) A bankruptcy petition preparer who fails to 

3 comply with any provision of subsection (b), (c), (d), (e), 

4 (f), (g), or (h) may be fined not more than $500 for each 

5 such failure. 

6 ‘‘(2) The court shall triple the amount of a fine as7 sessed under paragraph (1) in any case in which the court 

8 finds that a bankruptcy petition preparer— 

9 ‘‘(A) advised the debtor to exclude assets or in10 come that should have been included on applicable 

11 schedules; 

12 ‘‘(B) advised the debtor to use a false Social 

13 Security account number; 

14 ‘‘(C) failed to inform the debtor that the debtor 

15 was filing for relief under this title; or 

16 ‘‘(D) prepared a document for filing in a man17 ner that failed to disclose the identity of the bank18 ruptcy petition preparer. 

19 ‘‘(3) A debtor, trustee, creditor, or United States 

20 trustee (or the bankruptcy administrator, if any) may file 

21 a motion for an order imposing a fine on the bankruptcy 

22 petition preparer for any violation of this section. 

23 ‘‘(4)(A) Fines imposed under this subsection in judi24 cial districts served by United States trustees shall be paid 

25 to the United States trustee, who shall deposit an amount 
99 

•S 256 IS 

1 equal to such fines in a special account of the United 

2 States Trustee System Fund referred to in section 

3 586(e)(2) of title 28. Amounts deposited under this sub4 paragraph shall be available to fund the enforcement of 

5 this section on a national basis. 

6 ‘‘(B) Fines imposed under this subsection in judicial 

7 districts served by bankruptcy administrators shall be de8 posited as offsetting receipts to the fund established under 

9 section 1931 of title 28, and shall remain available until 

10 expended to reimburse any appropriation for the amount 

11 paid out of such appropriation for expenses of the oper12 ation and maintenance of the courts of the United 

13 States.’’. 

14 SEC. 222. SENSE OF CONGRESS. 

15 It is the sense of Congress that States should develop 

16 curricula relating to the subject of personal finance, de17 signed for use in elementary and secondary schools. 

18 SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED 

19 STATES CODE. 

20 Section 507(a) of title 11, United States Code, as 

21 amended by section 212, is amended by inserting after 

22 paragraph (9) the following: 

23 ‘‘(10) Tenth, allowed claims for death or per24 sonal injury resulting from the operation of a motor 

25 vehicle or vessel if such operation was unlawful be-
100 

•S 256 IS 

1 cause the debtor was intoxicated from using alcohol, 

2 a drug, or another substance.’’. 

3 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK4 RUPTCY. 

5 (a) IN GENERAL.—Section 522 of title 11, United 

6 States Code, is amended— 

7 (1) in subsection (b)— 

8 (A) in paragraph (2)— 

9 (i) in subparagraph (A), by striking 

10 ‘‘and’’ at the end; 

11 (ii) in subparagraph (B), by striking 

12 the period at the end and inserting ‘‘; 

13 and’’; 

14 (iii) by adding at the end the fol15 lowing: 

16 ‘‘(C) retirement funds to the extent that those 

17 funds are in a fund or account that is exempt from 

18 taxation under section 401, 403, 408, 408A, 414, 

19 457, or 501(a) of the Internal Revenue Code of 

20 1986.’’; and 

21 (iv) by striking ‘‘(2)(A) any property’’ 

22 and inserting: 

23 ‘‘(3) Property listed in this paragraph is— 

24 ‘‘(A) any property’’; 
101 

•S 256 IS 

1 (B) by striking paragraph (1) and insert2 ing: 

3 ‘‘(2) Property listed in this paragraph is property 

4 that is specified under subsection (d), unless the State law 

5 that is applicable to the debtor under paragraph (3)(A) 

6 specifically does not so authorize.’’; 

7 (C) by striking ‘‘(b) Notwithstanding’’ and 

8 inserting ‘‘(b)(1) Notwithstanding’’; 

9 (D) by striking ‘‘paragraph (2)’’ each place 

10 it appears and inserting ‘‘paragraph (3)’’; 

11 (E) by striking ‘‘paragraph (1)’’ each place 

12 it appears and inserting ‘‘paragraph (2)’’; 

13 (F) by striking ‘‘Such property is—’’; and 

14 (G) by adding at the end the following: 

15 ‘‘(4) For purposes of paragraph (3)(C) and sub16 section (d)(12), the following shall apply: 

17 ‘‘(A) If the retirement funds are in a retirement 

18 fund that has received a favorable determination 

19 under section 7805 of the Internal Revenue Code of 

20 1986, and that determination is in effect as of the 

21 date of the filing of the petition in a case under this 

22 title, those funds shall be presumed to be exempt 

23 from the estate. 

24 ‘‘(B) If the retirement funds are in a retirement 

25 fund that has not received a favorable determination 
102 

•S 256 IS 

1 under such section 7805, those funds are exempt 

2 from the estate if the debtor demonstrates that— 

3 ‘‘(i) no prior determination to the contrary 

4 has been made by a court or the Internal Rev5 enue Service; and 

6 ‘‘(ii)(I) the retirement fund is in substan7 tial compliance with the applicable requirements 

8 of the Internal Revenue Code of 1986; or 

9 ‘‘(II) the retirement fund fails to be in 

10 substantial compliance with the applicable re11 quirements of the Internal Revenue Code of 

12 1986 and the debtor is not materially respon13 sible for that failure. 

14 ‘‘(C) A direct transfer of retirement funds from 

15 1 fund or account that is exempt from taxation 

16 under section 401, 403, 408, 408A, 414, 457, or 

17 501(a) of the Internal Revenue Code of 1986, under 

18 section 401(a)(31) of the Internal Revenue Code of 

19 1986, or otherwise, shall not cease to qualify for ex20 emption under paragraph (3)(C) or subsection 

21 (d)(12) by reason of such direct transfer. 

22 ‘‘(D)(i) Any distribution that qualifies as an eli23 gible rollover distribution within the meaning of sec24 tion 402(c) of the Internal Revenue Code of 1986 or 

25 that is described in clause (ii) shall not cease to 
103 

•S 256 IS 

1 qualify for exemption under paragraph (3)(C) or 

2 subsection (d)(12) by reason of such distribution. 

3 ‘‘(ii) A distribution described in this clause is 

4 an amount that— 

5 ‘‘(I) has been distributed from a fund or 

6 account that is exempt from taxation under sec7 tion 401, 403, 408, 408A, 414, 457, or 501(a) 

8 of the Internal Revenue Code of 1986; and 

9 ‘‘(II) to the extent allowed by law, is de10 posited in such a fund or account not later than 

11 60 days after the distribution of such amount.’’; 

12 and 

13 (2) in subsection (d)— 

14 (A) in the matter preceding paragraph (1), 

15 by striking ‘‘subsection (b)(1)’’ and inserting 

16 ‘‘subsection (b)(2)’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(12) Retirement funds to the extent that those 

19 funds are in a fund or account that is exempt from 

20 taxation under section 401, 403, 408, 408A, 414, 

21 457, or 501(a) of the Internal Revenue Code of 

22 1986.’’. 

23 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

24 United States Code, is amended— 
104 

•S 256 IS 

1 (1) in paragraph (17), by striking ‘‘or’’ at the 

2 end; 

3 (2) in paragraph (18), by striking the period 

4 and inserting a semicolon; and 

5 (3) by inserting after paragraph (18) the fol6 lowing: 

7 ‘‘(19) under subsection (a), of withholding of 

8 income from a debtor’s wages and collection of 

9 amounts withheld, under the debtor’s agreement au10 thorizing that withholding and collection for the ben11 efit of a pension, profit-sharing, stock bonus, or 

12 other plan established under section 401, 403, 408, 

13 408A, 414, 457, or 501(c) of the Internal Revenue 

14 Code of 1986, that is sponsored by the employer of 

15 the debtor, or an affiliate, successor, or predecessor 

16 of such employer— 

17 ‘‘(A) to the extent that the amounts with18 held and collected are used solely for payments 

19 relating to a loan from a plan under section 

20 408(b)(1) of the Employee Retirement Income 

21 Security Act of 1974 or is subject to section 

22 72(p) of the Internal Revenue Code of 1986; or 

23 ‘‘(B) a loan from a thrift savings plan per24 mitted under subchapter III of chapter 84 of 
105 

•S 256 IS 

1 title 5, that satisfies the requirements of section 

2 8433(g) of such title; 

3 but nothing in this paragraph may be construed to 

4 provide that any loan made under a governmental 

5 plan under section 414(d), or a contract or account 

6 under section 403(b), of the Internal Revenue Code 

7 of 1986 constitutes a claim or a debt under this 

8 title;’’. 

9 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of 

10 title 11, United States Code, as amended by section 215, 

11 is amended by inserting after paragraph (17) the fol12 lowing: 

13 ‘‘(18) owed to a pension, profit-sharing, stock 

14 bonus, or other plan established under section 401, 

15 403, 408, 408A, 414, 457, or 501(c) of the Internal 

16 Revenue Code of 1986, under— 

17 ‘‘(A) a loan permitted under section 

18 408(b)(1) of the Employee Retirement Income 

19 Security Act of 1974, or subject to section 

20 72(p) of the Internal Revenue Code of 1986; or 

21 ‘‘(B) a loan from a thrift savings plan per22 mitted under subchapter III of chapter 84 of 

23 title 5, that satisfies the requirements of section 

24 8433(g) of such title; 
106 

•S 256 IS 

1 but nothing in this paragraph may be construed to 

2 provide that any loan made under a governmental 

3 plan under section 414(d), or a contract or account 

4 under section 403(b), of the Internal Revenue Code 

5 of 1986 constitutes a claim or a debt under this 

6 title; or’’. 

7 (d) PLAN CONTENTS.—Section 1322 of title 11, 

8 United States Code, is amended by adding at the end the 

9 following: 

10 ‘‘(f) A plan may not materially alter the terms of a 

11 loan described in section 362(b)(19) and any amounts re12 quired to repay such loan shall not constitute ‘disposable 

13 income’ under section 1325.’’. 

14 (e) ASSET LIMITATION.— 

15 (1) LIMITATION.—Section 522 of title 11, 

16 United States Code, is amended by adding at the 

17 end the following: 

18 ‘‘(n) For assets in individual retirement accounts de19 scribed in section 408 or 408A of the Internal Revenue 

20 Code of 1986, other than a simplified employee pension 

21 under section 408(k) of such Code or a simple retirement 

22 account under section 408(p) of such Code, the aggregate 

23 value of such assets exempted under this section, without 

24 regard to amounts attributable to rollover contributions 

25 under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 
107 

•S 256 IS 

1 403(b)(8) of the Internal Revenue Code of 1986, and 

2 earnings thereon, shall not exceed $1,000,000 in a case 

3 filed by a debtor who is an individual, except that such 

4 amount may be increased if the interests of justice so re5 quire.’’. 

6 (2) ADJUSTMENT OF DOLLAR AMOUNTS.— 

7 Paragraphs (1) and (2) of section 104(b) of title 11, 

8 United States Code, are amended by inserting 

9 ‘‘522(n),’’ after ‘‘522(d),’’. 

10 SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK11 RUPTCY. 

12 (a) EXCLUSIONS.—Section 541 of title 11, United 

13 States Code, is amended— 

14 (1) in subsection (b)— 

15 (A) in paragraph (4), by striking ‘‘or’’ at 

16 the end; 

17 (B) by redesignating paragraph (5) as 

18 paragraph (9); and 

19 (C) by inserting after paragraph (4) the 

20 following: 

21 ‘‘(5) funds placed in an education individual re22 tirement account (as defined in section 530(b)(1) of 

23 the Internal Revenue Code of 1986) not later than 

24 365 days before the date of the filing of the petition 

25 in a case under this title, but— 
108 

•S 256 IS 

1 ‘‘(A) only if the designated beneficiary of 

2 such account was a child, stepchild, grandchild, 

3 or stepgrandchild of the debtor for the taxable 

4 year for which funds were placed in such ac5 count; 

6 ‘‘(B) only to the extent that such funds— 

7 ‘‘(i) are not pledged or promised to 

8 any entity in connection with any extension 

9 of credit; and 

10 ‘‘(ii) are not excess contributions (as 

11 described in section 4973(e) of the Internal 

12 Revenue Code of 1986); and 

13 ‘‘(C) in the case of funds placed in all such 

14 accounts having the same designated bene15 ficiary not earlier than 720 days nor later than 

16 365 days before such date, only so much of 

17 such funds as does not exceed $5,000; 

18 ‘‘(6) funds used to purchase a tuition credit or 

19 certificate or contributed to an account in accord20 ance with section 529(b)(1)(A) of the Internal Rev21 enue Code of 1986 under a qualified State tuition 

22 program (as defined in section 529(b)(1) of such 

23 Code) not later than 365 days before the date of the 

24 filing of the petition in a case under this title, but— 
109 

•S 256 IS 

1 ‘‘(A) only if the designated beneficiary of 

2 the amounts paid or contributed to such tuition 

3 program was a child, stepchild, grandchild, or 

4 stepgrandchild of the debtor for the taxable 

5 year for which funds were paid or contributed; 

6 ‘‘(B) with respect to the aggregate amount 

7 paid or contributed to such program having the 

8 same designated beneficiary, only so much of 

9 such amount as does not exceed the total con10 tributions permitted under section 529(b)(7) of 

11 such Code with respect to such beneficiary, as 

12 adjusted beginning on the date of the filing of 

13 the petition in a case under this title by the an14 nual increase or decrease (rounded to the near15 est tenth of 1 percent) in the education expend16 iture category of the Consumer Price Index pre17 pared by the Department of Labor; and 

18 ‘‘(C) in the case of funds paid or contrib19 uted to such program having the same des20 ignated beneficiary not earlier than 720 days 

21 nor later than 365 days before such date, only 

22 so much of such funds as does not exceed 

23 $5,000;’’; and 

24 (2) by adding at the end the following: 
110 

•S 256 IS 

1 ‘‘(e) In determining whether any of the relationships 

2 specified in paragraph (5)(A) or (6)(A) of subsection (b) 

3 exists, a legally adopted child of an individual (and a child 

4 who is a member of an individual’s household, if placed 

5 with such individual by an authorized placement agency 

6 for legal adoption by such individual), or a foster child 

7 of an individual (if such child has as the child’s principal 

8 place of abode the home of the debtor and is a member 

9 of the debtor’s household) shall be treated as a child of 

10 such individual by blood.’’. 

11 (b) DEBTOR’S DUTIES.—Section 521 of title 11, 

12 United States Code, as amended by section 106, is amend13 ed by adding at the end the following: 

14 ‘‘(c) In addition to meeting the requirements under 

15 subsection (a), a debtor shall file with the court a record 

16 of any interest that a debtor has in an education individual 

17 retirement account (as defined in section 530(b)(1) of the 

18 Internal Revenue Code of 1986) or under a qualified State 

19 tuition program (as defined in section 529(b)(1) of such 

20 Code).’’. 

21 SEC. 226. DEFINITIONS. 

22 (a) DEFINITIONS.—Section 101 of title 11, United 

23 States Code, is amended— 

24 (1) by inserting after paragraph (2) the fol25 lowing: 
111 

•S 256 IS 

1 ‘‘(3) ‘assisted person’ means any person whose 

2 debts consist primarily of consumer debts and the 

3 value of whose nonexempt property is less than 

4 $150,000;’’; 

5 (2) by inserting after paragraph (4) the fol6 lowing: 

7 ‘‘(4A) ‘bankruptcy assistance’ means any goods 

8 or services sold or otherwise provided to an assisted 

9 person with the express or implied purpose of pro10 viding information, advice, counsel, document prepa11 ration, or filing, or attendance at a creditors’ meet12 ing or appearing in a case or proceeding on behalf 

13 of another or providing legal representation with re14 spect to a case or proceeding under this title;’’; and 

15 (3) by inserting after paragraph (12) the fol16 lowing: 

17 ‘‘(12A) ‘debt relief agency’ means any person 

18 who provides any bankruptcy assistance to an as19 sisted person in return for the payment of money or 

20 other valuable consideration, or who is a bankruptcy 

21 petition preparer under section 110, but does not in22 clude— 

23 ‘‘(A) any person who is an officer, director, 

24 employee, or agent of a person who provides 
112 

•S 256 IS 

1 such assistance or of the bankruptcy petition 

2 preparer; 

3 ‘‘(B) a nonprofit organization that is ex4 empt from taxation under section 501(c)(3) of 

5 the Internal Revenue Code of 1986; 

6 ‘‘(C) a creditor of such assisted person, to 

7 the extent that the creditor is assisting such as8 sisted person to restructure any debt owed by 

9 such assisted person to the creditor; 

10 ‘‘(D) a depository institution (as defined in 

11 section 3 of the Federal Deposit Insurance Act) 

12 or any Federal credit union or State credit 

13 union (as those terms are defined in section 

14 101 of the Federal Credit Union Act), or any 

15 affiliate or subsidiary of such depository institu16 tion or credit union; or 

17 ‘‘(E) an author, publisher, distributor, or 

18 seller of works subject to copyright protection 

19 under title 17, when acting in such capacity.’’. 

20 (b) CONFORMING AMENDMENT.—Section 104(b) of 

21 title 11, United States Code, is amended by inserting 

22 ‘‘101(3),’’ after ‘‘sections’’ each place it appears. 
113 

•S 256 IS 

1 SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES. 

2 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

3 title 11, United States Code, is amended by adding at the 

4 end the following: 

5 ‘‘§ 526. Restrictions on debt relief agencies 

6 ‘‘(a) A debt relief agency shall not— 

7 ‘‘(1) fail to perform any service that such agen8 cy informed an assisted person or prospective as9 sisted person it would provide in connection with a 

10 case or proceeding under this title; 

11 ‘‘(2) make any statement, or counsel or advise 

12 any assisted person or prospective assisted person to 

13 make a statement in a document filed in a case or 

14 proceeding under this title, that is untrue and mis15 leading, or that upon the exercise of reasonable care, 

16 should have been known by such agency to be untrue 

17 or misleading; 

18 ‘‘(3) misrepresent to any assisted person or pro19 spective assisted person, directly or indirectly, af20 firmatively or by material omission, with respect 

21 to— 

22 ‘‘(A) the services that such agency will pro23 vide to such person; or 

24 ‘‘(B) the benefits and risks that may result 

25 if such person becomes a debtor in a case under 

26 this title; or 
114 

•S 256 IS 

1 ‘‘(4) advise an assisted person or prospective 

2 assisted person to incur more debt in contemplation 

3 of such person filing a case under this title or to pay 

4 an attorney or bankruptcy petition preparer fee or 

5 charge for services performed as part of preparing 

6 for or representing a debtor in a case under this 

7 title. 

8 ‘‘(b) Any waiver by any assisted person of any protec9 tion or right provided under this section shall not be en10 forceable against the debtor by any Federal or State court 

11 or any other person, but may be enforced against a debt 

12 relief agency. 

13 ‘‘(c)(1) Any contract for bankruptcy assistance be14 tween a debt relief agency and an assisted person that 

15 does not comply with the material requirements of this 

16 section, section 527, or section 528 shall be void and may 

17 not be enforced by any Federal or State court or by any 

18 other person, other than such assisted person. 

19 ‘‘(2) Any debt relief agency shall be liable to an as20 sisted person in the amount of any fees or charges in con21 nection with providing bankruptcy assistance to such per22 son that such debt relief agency has received, for actual 

23 damages, and for reasonable attorneys’ fees and costs if 

24 such agency is found, after notice and a hearing, to have— 
115 

•S 256 IS 

1 ‘‘(A) intentionally or negligently failed to com2 ply with any provision of this section, section 527, 

3 or section 528 with respect to a case or proceeding 

4 under this title for such assisted person; 

5 ‘‘(B) provided bankruptcy assistance to an as6 sisted person in a case or proceeding under this title 

7 that is dismissed or converted to a case under an8 other chapter of this title because of such agency’s 

9 intentional or negligent failure to file any required 

10 document including those specified in section 521; or 

11 ‘‘(C) intentionally or negligently disregarded the 

12 material requirements of this title or the Federal 

13 Rules of Bankruptcy Procedure applicable to such 

14 agency. 

15 ‘‘(3) In addition to such other remedies as are pro16 vided under State law, whenever the chief law enforcement 

17 officer of a State, or an official or agency designated by 

18 a State, has reason to believe that any person has violated 

19 or is violating this section, the State— 

20 ‘‘(A) may bring an action to enjoin such viola21 tion; 

22 ‘‘(B) may bring an action on behalf of its resi23 dents to recover the actual damages of assisted per24 sons arising from such violation, including any liabil25 ity under paragraph (2); and 
116 

•S 256 IS 

1 ‘‘(C) in the case of any successful action under 

2 subparagraph (A) or (B), shall be awarded the costs 

3 of the action and reasonable attorneys’ fees as deter4 mined by the court. 

5 ‘‘(4) The district courts of the United States for dis6 tricts located in the State shall have concurrent jurisdic7 tion of any action under subparagraph (A) or (B) of para8 graph (3). 

9 ‘‘(5) Notwithstanding any other provision of Federal 

10 law and in addition to any other remedy provided under 

11 Federal or State law, if the court, on its own motion or 

12 on the motion of the United States trustee or the debtor, 

13 finds that a person intentionally violated this section, or 

14 engaged in a clear and consistent pattern or practice of 

15 violating this section, the court may— 

16 ‘‘(A) enjoin the violation of such section; or 

17 ‘‘(B) impose an appropriate civil penalty 

18 against such person. 

19 ‘‘(d) No provision of this section, section 527, or sec20 tion 528 shall— 

21 ‘‘(1) annul, alter, affect, or exempt any person 

22 subject to such sections from complying with any 

23 law of any State except to the extent that such law 

24 is inconsistent with those sections, and then only to 

25 the extent of the inconsistency; or 
117 

•S 256 IS 

1 ‘‘(2) be deemed to limit or curtail the authority 

2 or ability— 

3 ‘‘(A) of a State or subdivision or instru4 mentality thereof, to determine and enforce 

5 qualifications for the practice of law under the 

6 laws of that State; or 

7 ‘‘(B) of a Federal court to determine and 

8 enforce the qualifications for the practice of law 

9 before that court.’’. 

10 (b) CONFORMING AMENDMENT.—The table of sec11 tions for chapter 5 of title 11, United States Code, is 

12 amended by inserting after the item relating to section 

13 525, the following: 

‘‘526. Restrictions on debt relief agencies.’’. 

14 SEC. 228. DISCLOSURES. 

15 (a) DISCLOSURES.—Subchapter II of chapter 5 of 

16 title 11, United States Code, as amended by section 227, 

17 is amended by adding at the end the following: 

18 ‘‘§ 527. Disclosures 

19 ‘‘(a) A debt relief agency providing bankruptcy assist20 ance to an assisted person shall provide— 

21 ‘‘(1) the written notice required under section 

22 342(b)(1); and 

23 ‘‘(2) to the extent not covered in the written no24 tice described in paragraph (1), and not later than 

25 3 business days after the first date on which a debt 
118 

•S 256 IS 

1 relief agency first offers to provide any bankruptcy 

2 assistance services to an assisted person, a clear and 

3 conspicuous written notice advising assisted persons 

4 that— 

5 ‘‘(A) all information that the assisted per6 son is required to provide with a petition and 

7 thereafter during a case under this title is re8 quired to be complete, accurate, and truthful; 

9 ‘‘(B) all assets and all liabilities are re10 quired to be completely and accurately disclosed 

11 in the documents filed to commence the case, 

12 and the replacement value of each asset as de13 fined in section 506 must be stated in those 

14 documents where requested after reasonable in15 quiry to establish such value; 

16 ‘‘(C) current monthly income, the amounts 

17 specified in section 707(b)(2), and, in a case 

18 under chapter 13 of this title, disposable income 

19 (determined in accordance with section 

20 707(b)(2)), are required to be stated after rea21 sonable inquiry; and 

22 ‘‘(D) information that an assisted person 

23 provides during their case may be audited pur24 suant to this title, and that failure to provide 

25 such information may result in dismissal of the 
119 

•S 256 IS 

1 case under this title or other sanction, including 

2 a criminal sanction. 

3 ‘‘(b) A debt relief agency providing bankruptcy assist4 ance to an assisted person shall provide each assisted per5 son at the same time as the notices required under sub6 section (a)(1) the following statement, to the extent appli7 cable, or one substantially similar. The statement shall be 

8 clear and conspicuous and shall be in a single document 

9 separate from other documents or notices provided to the 

10 assisted person: 

11 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK12 RUPTCY ASSISTANCE SERVICES FROM AN AT13 TORNEY OR BANKRUPTCY PETITION PRE14 PARER. 

15 ‘‘ ‘If you decide to seek bankruptcy relief, you can 

16 represent yourself, you can hire an attorney to represent 

17 you, or you can get help in some localities from a bank18 ruptcy petition preparer who is not an attorney. THE 

19 LAW REQUIRES AN ATTORNEY OR BANKRUPTCY 

20 PETITION PREPARER TO GIVE YOU A WRITTEN 

21 CONTRACT SPECIFYING WHAT THE ATTORNEY 

22 OR BANKRUPTCY PETITION PREPARER WILL DO 

23 FOR YOU AND HOW MUCH IT WILL COST. Ask to 

24 see the contract before you hire anyone. 
120 

•S 256 IS 

1 ‘‘ ‘The following information helps you understand 

2 what must be done in a routine bankruptcy case to help 

3 you evaluate how much service you need. Although bank4 ruptcy can be complex, many cases are routine. 

5 ‘‘ ‘Before filing a bankruptcy case, either you or your 

6 attorney should analyze your eligibility for different forms 

7 of debt relief available under the Bankruptcy Code and 

8 which form of relief is most likely to be beneficial for you. 

9 Be sure you understand the relief you can obtain and its 

10 limitations. To file a bankruptcy case, documents called 

11 a Petition, Schedules and Statement of Financial Affairs, 

12 as well as in some cases a Statement of Intention need 

13 to be prepared correctly and filed with the bankruptcy 

14 court. You will have to pay a filing fee to the bankruptcy 

15 court. Once your case starts, you will have to attend the 

16 required first meeting of creditors where you may be ques17 tioned by a court official called a ‘trustee’ and by credi18 tors. 

19 ‘‘ ‘If you choose to file a chapter 7 case, you may 

20 be asked by a creditor to reaffirm a debt. You may want 

21 help deciding whether to do so. A creditor is not permitted 

22 to coerce you into reaffirming your debts. 

23 ‘‘ ‘If you choose to file a chapter 13 case in which 

24 you repay your creditors what you can afford over 3 to 

25 5 years, you may also want help with preparing your chap-
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1 ter 13 plan and with the confirmation hearing on your 

2 plan which will be before a bankruptcy judge. 

3 ‘‘ ‘If you select another type of relief under the Bank4 ruptcy Code other than chapter 7 or chapter 13, you will 

5 want to find out what should be done from someone famil6 iar with that type of relief. 

7 ‘‘ ‘Your bankruptcy case may also involve litigation. 

8 You are generally permitted to represent yourself in litiga9 tion in bankruptcy court, but only attorneys, not bank10 ruptcy petition preparers, can give you legal advice.’. 

11 ‘‘(c) Except to the extent the debt relief agency pro12 vides the required information itself after reasonably dili13 gent inquiry of the assisted person or others so as to ob14 tain such information reasonably accurately for inclusion 

15 on the petition, schedules or statement of financial affairs, 

16 a debt relief agency providing bankruptcy assistance to an 

17 assisted person, to the extent permitted by nonbankruptcy 

18 law, shall provide each assisted person at the time re19 quired for the notice required under subsection (a)(1) rea20 sonably sufficient information (which shall be provided in 

21 a clear and conspicuous writing) to the assisted person 

22 on how to provide all the information the assisted person 

23 is required to provide under this title pursuant to section 

24 521, including— 
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1 ‘‘(1) how to value assets at replacement value, 

2 determine current monthly income, the amounts 

3 specified in section 707(b)(2) and, in a chapter 13 

4 case, how to determine disposable income in accord5 ance with section 707(b)(2) and related calculations; 

6 ‘‘(2) how to complete the list of creditors, in7 cluding how to determine what amount is owed and 

8 what address for the creditor should be shown; and 

9 ‘‘(3) how to determine what property is exempt 

10 and how to value exempt property at replacement 

11 value as defined in section 506. 

12 ‘‘(d) A debt relief agency shall maintain a copy of 

13 the notices required under subsection (a) of this section 

14 for 2 years after the date on which the notice is given 

15 the assisted person.’’. 

16 (b) CONFORMING AMENDMENT.—The table of sec17 tions for chapter 5 of title 11, United States Code, as 

18 amended by section 227, is amended by inserting after the 

19 item relating to section 526 the following: 

‘‘527. Disclosures.’’. 

20 SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES. 

21 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

22 title 11, United States Code, as amended by sections 227 

23 and 228, is amended by adding at the end the following: 

24 ‘‘§ 528. Requirements for debt relief agencies 

25 ‘‘(a) A debt relief agency shall— 
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1 ‘‘(1) not later than 5 business days after the 

2 first date on which such agency provides any bank3 ruptcy assistance services to an assisted person, but 

4 prior to such assisted person’s petition under this 

5 title being filed, execute a written contract with such 

6 assisted person that explains clearly and conspicu7 ously— 

8 ‘‘(A) the services such agency will provide 

9 to such assisted person; and 

10 ‘‘(B) the fees or charges for such services, 

11 and the terms of payment; 

12 ‘‘(2) provide the assisted person with a copy of 

13 the fully executed and completed contract; 

14 ‘‘(3) clearly and conspicuously disclose in any 

15 advertisement of bankruptcy assistance services or of 

16 the benefits of bankruptcy directed to the general 

17 public (whether in general media, seminars or spe18 cific mailings, telephonic or electronic messages, or 

19 otherwise) that the services or benefits are with re20 spect to bankruptcy relief under this title; and 

21 ‘‘(4) clearly and conspicuously use the following 

22 statement in such advertisement: ‘We are a debt re23 lief agency. We help people file for bankruptcy relief 

24 under the Bankruptcy Code.’ or a substantially simi25 lar statement. 
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1 ‘‘(b)(1) An advertisement of bankruptcy assistance 

2 services or of the benefits of bankruptcy directed to the 

3 general public includes— 

4 ‘‘(A) descriptions of bankruptcy assistance in 

5 connection with a chapter 13 plan whether or not 

6 chapter 13 is specifically mentioned in such adver7 tisement; and 

8 ‘‘(B) statements such as ‘federally supervised 

9 repayment plan’ or ‘Federal debt restructuring help’ 

10 or other similar statements that could lead a reason11 able consumer to believe that debt counseling was 

12 being offered when in fact the services were directed 

13 to providing bankruptcy assistance with a chapter 

14 13 plan or other form of bankruptcy relief under 

15 this title. 

16 ‘‘(2) An advertisement, directed to the general public, 

17 indicating that the debt relief agency provides assistance 

18 with respect to credit defaults, mortgage foreclosures, evic19 tion proceedings, excessive debt, debt collection pressure, 

20 or inability to pay any consumer debt shall— 

21 ‘‘(A) disclose clearly and conspicuously in such 

22 advertisement that the assistance may involve bank23 ruptcy relief under this title; and 

24 ‘‘(B) include the following statement: ‘We are a 

25 debt relief agency. We help people file for bank-
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1 ruptcy relief under the Bankruptcy Code.’ or a sub2 stantially similar statement.’’. 

3 (b) CONFORMING AMENDMENT.—The table of sec4 tions for chapter 5 of title 11, United States Code, as 

5 amended by section 227 and 228, is amended by inserting 

6 after the item relating to section 527, the following: 

‘‘528. Requirements for debt relief agencies.’’. 

7 SEC. 230. GAO STUDY. 

8 (a) STUDY.—Not later than 270 days after the date 

9 of enactment of this Act, the Comptroller General of the 

10 United States shall conduct a study of the feasibility, ef11 fectiveness, and cost of requiring trustees appointed under 

12 title 11, United States Code, or the bankruptcy courts, 

13 to provide to the Office of Child Support Enforcement 

14 promptly after the commencement of cases by debtors who 

15 are individuals under such title, the names and social secu16 rity account numbers of such debtors for the purposes of 

17 allowing such Office to determine whether such debtors 

18 have outstanding obligations for child support (as deter19 mined on the basis of information in the Federal Case 

20 Registry or other national database). 

21 (b) REPORT.—Not later than 300 days after the date 

22 of enactment of this Act, the Comptroller General shall 

23 submit to the President pro tempore of the Senate and 

24 the Speaker of the House of Representatives a report con25 taining the results of the study required by subsection (a). 
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1 SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE IN2 FORMATION. 

3 (a) LIMITATION.—Section 363(b)(1) of title 11, 

4 United States Code, is amended by striking the period at 

5 the end and inserting the following: 

6 ‘‘, except that if the debtor in connection with offering 

7 a product or a service discloses to an individual a policy 

8 prohibiting the transfer of personally identifiable informa9 tion about individuals to persons that are not affiliated 

10 with the debtor and if such policy is in effect on the date 

11 of the commencement of the case, then the trustee may 

12 not sell or lease personally identifiable information to any 

13 person unless— 

14 ‘‘(A) such sale or such lease is consistent with 

15 such policy; or 

16 ‘‘(B) after appointment of a consumer privacy 

17 ombudsman in accordance with section 332, and 

18 after notice and a hearing, the court approves such 

19 sale or such lease— 

20 ‘‘(i) giving due consideration to the facts, 

21 circumstances, and conditions of such sale or 

22 such lease; and 

23 ‘‘(ii) finding that no showing was made 

24 that such sale or such lease would violate appli25 cable nonbankruptcy law.’’. 
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1 (b) DEFINITION.—Section 101 of title 11, United 

2 States Code, is amended by inserting after paragraph (41) 

3 the following: 

4 ‘‘(41A) ‘personally identifiable information’ 

5 means— 

6 ‘‘(A) if provided by an individual to the 

7 debtor in connection with obtaining a product 

8 or a service from the debtor primarily for per9 sonal, family, or household purposes— 

10 ‘‘(i) the first name (or initial) and last 

11 name of such individual, whether given at 

12 birth or time of adoption, or resulting from 

13 a lawful change of name; 

14 ‘‘(ii) the geographical address of a 

15 physical place of residence of such indi16 vidual; 

17 ‘‘(iii) an electronic address (including 

18 an e-mail address) of such individual; 

19 ‘‘(iv) a telephone number dedicated to 

20 contacting such individual at such physical 

21 place of residence; 

22 ‘‘(v) a social security account number 

23 issued to such individual; or 

24 ‘‘(vi) the account number of a credit 

25 card issued to such individual; or 
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1 ‘‘(B) if identified in connection with 1 or 

2 more of the items of information specified in 

3 subparagraph (A)— 

4 ‘‘(i) a birth date, the number of a cer5 tificate of birth or adoption, or a place of 

6 birth; or 

7 ‘‘(ii) any other information concerning 

8 an identified individual that, if disclosed, 

9 will result in contacting or identifying such 

10 individual physically or electronically;’’. 

11 SEC. 232. CONSUMER PRIVACY OMBUDSMAN. 

12 (a) CONSUMER PRIVACY OMBUDSMAN.—Title 11 of 

13 the United States Code is amended by inserting after sec14 tion 331 the following: 

15 ‘‘§ 332. Consumer privacy ombudsman 

16 ‘‘(a) If a hearing is required under section 

17 363(b)(1)(B), the court shall order the United States 

18 trustee to appoint, not later than 5 days before the com19 mencement of the hearing, 1 disinterested person (other 

20 than the United States trustee) to serve as the consumer 

21 privacy ombudsman in the case and shall require that no22 tice of such hearing be timely given to such ombudsman. 

23 ‘‘(b) The consumer privacy ombudsman may appear 

24 and be heard at such hearing and shall provide to the 

25 court information to assist the court in its consideration 
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1 of the facts, circumstances, and conditions of the proposed 

2 sale or lease of personally identifiable information under 

3 section 363(b)(1)(B). Such information may include pres4 entation of— 

5 ‘‘(1) the debtor’s privacy policy; 

6 ‘‘(2) the potential losses or gains of privacy to 

7 consumers if such sale or such lease is approved by 

8 the court; 

9 ‘‘(3) the potential costs or benefits to con10 sumers if such sale or such lease is approved by the 

11 court; and 

12 ‘‘(4) the potential alternatives that would miti13 gate potential privacy losses or potential costs to 

14 consumers. 

15 ‘‘(c) A consumer privacy ombudsman shall not dis16 close any personally identifiable information obtained by 

17 the ombudsman under this title.’’. 

18 (b) COMPENSATION OF CONSUMER PRIVACY OM19 BUDSMAN.—Section 330(a)(1) of title 11, United States 

20 Code, is amended in the matter preceding subparagraph 

21 (A), by inserting ‘‘a consumer privacy ombudsman ap22 pointed under section 332,’’ before ‘‘an examiner’’. 

23 (c) CONFORMING AMENDMENT.—The table of sec24 tions for subchapter II of chapter 3 of title 11, United 
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1 States Code, is amended by adding at the end the fol2 lowing: 

‘‘332. Consumer privacy ombudsman.’’. 

3 SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF 

4 MINOR CHILDREN. 

5 (a) PROHIBITION.—Title 11 of the United States 

6 Code, as amended by section 106, is amended by inserting 

7 after section 111 the following: 

8 ‘‘§ 112. Prohibition on disclosure of name of minor 

9 children 

10 ‘‘The debtor may be required to provide information 

11 regarding a minor child involved in matters under this title 

12 but may not be required to disclose in the public records 

13 in the case the name of such minor child. The debtor may 

14 be required to disclose the name of such minor child in 

15 a nonpublic record that is maintained by the court and 

16 made available by the court for examination by the United 

17 States trustee, the trustee, and the auditor (if any) serving 

18 under section 586(f) of title 28, in the case. The court, 

19 the United States trustee, the trustee, and such auditor 

20 shall not disclose the name of such minor child maintained 

21 in such nonpublic record.’’. 

22 (b) CLERICAL AMENDMENT.—The table of sections 

23 for chapter 1 of title 11, United States Code, as amended 
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1 by section 106, is amended by inserting after the item re2 lating to section 111 the following: 

‘‘112. Prohibition on disclosure of name of minor children.’’. 

3 (c) CONFORMING AMENDMENT.—Section 107(a) of 

4 title 11, United States Code, is amended by inserting ‘‘and 

5 subject to section 112’’ after ‘‘section’’. 

6 TITLE III —DISCOURAGING 

7 BANKRUPTCY ABUSE 

8 SEC. 301. TECHNICAL AMENDMENTS. 

9 Section 523(a)(17) of title 11, United States Code, 

10 is amended— 

11 (1) by striking ‘‘by a court’’ and inserting ‘‘on 

12 a prisoner by any court’’; 

13 (2) by striking ‘‘section 1915(b) or (f)’’ and in14 serting ‘‘subsection (b) or (f)(2) of section 1915’’; 

15 and 

16 (3) by inserting ‘‘(or a similar non-Federal 

17 law)’’ after ‘‘title 28’’ each place it appears. 

18 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS. 

19 Section 362(c) of title 11, United States Code, is 

20 amended— 

21 (1) in paragraph (1), by striking ‘‘and’’ at the 

22 end; 

23 (2) in paragraph (2), by striking the period at 

24 the end and inserting a semicolon; and 

25 (3) by adding at the end the following: 
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1 ‘‘(3) if a single or joint case is filed by or 

2 against debtor who is an individual in a case under 

3 chapter 7, 11, or 13, and if a single or joint case 

4 of the debtor was pending within the preceding 1- 

5 year period but was dismissed, other than a case 

6 refiled under a chapter other than chapter 7 after 

7 dismissal under section 707(b)— 

8 ‘‘(A) the stay under subsection (a) with re9 spect to any action taken with respect to a debt 

10 or property securing such debt or with respect 

11 to any lease shall terminate with respect to the 

12 debtor on the 30th day after the filing of the 

13 later case; 

14 ‘‘(B) on the motion of a party in interest 

15 for continuation of the automatic stay and upon 

16 notice and a hearing, the court may extend the 

17 stay in particular cases as to any or all credi18 tors (subject to such conditions or limitations 

19 as the court may then impose) after notice and 

20 a hearing completed before the expiration of the 

21 30-day period only if the party in interest dem22 onstrates that the filing of the later case is in 

23 good faith as to the creditors to be stayed; and 

24 ‘‘(C) for purposes of subparagraph (B), a 

25 case is presumptively filed not in good faith 
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1 (but such presumption may be rebutted by clear 

2 and convincing evidence to the contrary)— 

3 ‘‘(i) as to all creditors, if— 

4 ‘‘(I) more than 1 previous case 

5 under any of chapters 7, 11, and 13 

6 in which the individual was a debtor 

7 was pending within the preceding 1- 

8 year period; 

9 ‘‘(II) a previous case under any 

10 of chapters 7, 11, and 13 in which the 

11 individual was a debtor was dismissed 

12 within such 1-year period, after the 

13 debtor failed to— 

14 ‘‘(aa) file or amend the peti15 tion or other documents as re16 quired by this title or the court 

17 without substantial excuse (but 

18 mere inadvertence or negligence 

19 shall not be a substantial excuse 

20 unless the dismissal was caused 

21 by the negligence of the debtor’s 

22 attorney); 

23 ‘‘(bb) provide adequate pro24 tection as ordered by the court; 

25 or 
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1 ‘‘(cc) perform the terms of a 

2 plan confirmed by the court; or 

3 ‘‘(III) there has not been a sub4 stantial change in the financial or per5 sonal affairs of the debtor since the 

6 dismissal of the next most previous 

7 case under chapter 7, 11, or 13 or 

8 any other reason to conclude that the 

9 later case will be concluded— 

10 ‘‘(aa) if a case under chap11 ter 7, with a discharge; or 

12 ‘‘(bb) if a case under chap13 ter 11 or 13, with a confirmed 

14 plan that will be fully performed; 

15 and 

16 ‘‘(ii) as to any creditor that com17 menced an action under subsection (d) in 

18 a previous case in which the individual was 

19 a debtor if, as of the date of dismissal of 

20 such case, that action was still pending or 

21 had been resolved by terminating, condi22 tioning, or limiting the stay as to actions 

23 of such creditor; and 

24 ‘‘(4)(A)(i) if a single or joint case is filed by or 

25 against a debtor who is an individual under this 
135 

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1 title, and if 2 or more single or joint cases of the 

2 debtor were pending within the previous year but 

3 were dismissed, other than a case refiled under sec4 tion 707(b), the stay under subsection (a) shall not 

5 go into effect upon the filing of the later case; and 

6 ‘‘(ii) on request of a party in interest, the court 

7 shall promptly enter an order confirming that no 

8 stay is in effect; 

9 ‘‘(B) if, within 30 days after the filing of the 

10 later case, a party in interest requests the court may 

11 order the stay to take effect in the case as to any 

12 or all creditors (subject to such conditions or limita13 tions as the court may impose), after notice and a 

14 hearing, only if the party in interest demonstrates 

15 that the filing of the later case is in good faith as 

16 to the creditors to be stayed; 

17 ‘‘(C) a stay imposed under subparagraph (B) 

18 shall be effective on the date of the entry of the 

19 order allowing the stay to go into effect; and 

20 ‘‘(D) for purposes of subparagraph (B), a case 

21 is presumptively filed not in good faith (but such 

22 presumption may be rebutted by clear and con23 vincing evidence to the contrary)— 

24 ‘‘(i) as to all creditors if— 
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1 ‘‘(I) 2 or more previous cases under 

2 this title in which the individual was a 

3 debtor were pending within the 1-year pe4 riod; 

5 ‘‘(II) a previous case under this title 

6 in which the individual was a debtor was 

7 dismissed within the time period stated in 

8 this paragraph after the debtor failed to 

9 file or amend the petition or other docu10 ments as required by this title or the court 

11 without substantial excuse (but mere inad12 vertence or negligence shall not be sub13 stantial excuse unless the dismissal was 

14 caused by the negligence of the debtor’s at15 torney), failed to provide adequate protec16 tion as ordered by the court, or failed to 

17 perform the terms of a plan confirmed by 

18 the court; or 

19 ‘‘(III) there has not been a substan20 tial change in the financial or personal af21 fairs of the debtor since the dismissal of 

22 the next most previous case under this 

23 title, or any other reason to conclude that 

24 the later case will not be concluded, if a 

25 case under chapter 7, with a discharge, 
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1 and if a case under chapter 11 or 13, with 

2 a confirmed plan that will be fully per3 formed; or 

4 ‘‘(ii) as to any creditor that commenced an 

5 action under subsection (d) in a previous case 

6 in which the individual was a debtor if, as of 

7 the date of dismissal of such case, such action 

8 was still pending or had been resolved by termi9 nating, conditioning, or limiting the stay as to 

10 such action of such creditor.’’. 

11 SEC. 303. CURBING ABUSIVE FILINGS. 

12 (a) IN GENERAL.—Section 362(d) of title 11, United 

13 States Code, is amended— 

14 (1) in paragraph (2), by striking ‘‘or’’ at the 

15 end; 

16 (2) in paragraph (3), by striking the period at 

17 the end and inserting ‘‘; or’’; and 

18 (3) by adding at the end the following: 

19 ‘‘(4) with respect to a stay of an act against 

20 real property under subsection (a), by a creditor 

21 whose claim is secured by an interest in such real 

22 property, if the court finds that the filing of the pe23 tition was part of a scheme to delay, hinder, and de24 fraud creditors that involved either— 
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1 ‘‘(A) transfer of all or part ownership of, 

2 or other interest in, such real property without 

3 the consent of the secured creditor or court ap4 proval; or 

5 ‘‘(B) multiple bankruptcy filings affecting 

6 such real property. 

7 If recorded in compliance with applicable State laws gov8 erning notices of interests or liens in real property, an 

9 order entered under paragraph (4) shall be binding in any 

10 other case under this title purporting to affect such real 

11 property filed not later than 2 years after the date of the 

12 entry of such order by the court, except that a debtor in 

13 a subsequent case under this title may move for relief from 

14 such order based upon changed circumstances or for good 

15 cause shown, after notice and a hearing. Any Federal, 

16 State, or local governmental unit that accepts notices of 

17 interests or liens in real property shall accept any certified 

18 copy of an order described in this subsection for indexing 

19 and recording.’’. 

20 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

21 United States Code, as amended by section 224, is amend22 ed by inserting after paragraph (19), the following: 

23 ‘‘(20) under subsection (a), of any act to en24 force any lien against or security interest in real 

25 property following entry of the order under sub-
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1 section (d)(4) as to such real property in any prior 

2 case under this title, for a period of 2 years after 

3 the date of the entry of such an order, except that 

4 the debtor, in a subsequent case under this title, 

5 may move for relief from such order based upon 

6 changed circumstances or for other good cause 

7 shown, after notice and a hearing; 

8 ‘‘(21) under subsection (a), of any act to en9 force any lien against or security interest in real 

10 property— 

11 ‘‘(A) if the debtor is ineligible under sec12 tion 109(g) to be a debtor in a case under this 

13 title; or 

14 ‘‘(B) if the case under this title was filed 

15 in violation of a bankruptcy court order in a 

16 prior case under this title prohibiting the debtor 

17 from being a debtor in another case under this 

18 title;’’. 

19 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY 

20 SECURITY. 

21 Title 11, United States Code, is amended— 

22 (1) in section 521(a), as so designated by sec23 tion 106— 

24 (A) in paragraph (4), by striking ‘‘, and’’ 

25 at the end and inserting a semicolon; 
140 

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1 (B) in paragraph (5), by striking the pe2 riod at the end and inserting ‘‘; and’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(6) in a case under chapter 7 of this title in 

5 which the debtor is an individual, not retain posses6 sion of personal property as to which a creditor has 

7 an allowed claim for the purchase price secured in 

8 whole or in part by an interest in such personal 

9 property unless the debtor, not later than 45 days 

10 after the first meeting of creditors under section 

11 341(a), either— 

12 ‘‘(A) enters into an agreement with the 

13 creditor pursuant to section 524(c) with respect 

14 to the claim secured by such property; or 

15 ‘‘(B) redeems such property from the secu16 rity interest pursuant to section 722. 

17 If the debtor fails to so act within the 45-day period re18 ferred to in paragraph (6), the stay under section 362(a) 

19 is terminated with respect to the personal property of the 

20 estate or of the debtor which is affected, such property 

21 shall no longer be property of the estate, and the creditor 

22 may take whatever action as to such property as is per23 mitted by applicable nonbankruptcy law, unless the court 

24 determines on the motion of the trustee filed before the 

25 expiration of such 45-day period, and after notice and a 
141 

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1 hearing, that such property is of consequential value or 

2 benefit to the estate, orders appropriate adequate protec3 tion of the creditor’s interest, and orders the debtor to 

4 deliver any collateral in the debtor’s possession to the 

5 trustee.’’; and 

6 (2) in section 722, by inserting ‘‘in full at the 

7 time of redemption’’ before the period at the end. 

8 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE 

9 DEBTOR DOES NOT COMPLETE INTENDED 

10 SURRENDER OF CONSUMER DEBT COLLAT11 ERAL. 

12 Title 11, United States Code, is amended— 

13 (1) in section 362, as amended by section 

14 106— 

15 (A) in subsection (c), by striking ‘‘(e), and 

16 (f)’’ and inserting ‘‘(e), (f), and (h)’’; 

17 (B) by redesignating subsection (h) as sub18 section (k) and transferring such subsection so 

19 as to insert it after subsection (j) as added by 

20 section 106; and 

21 (C) by inserting after subsection (g) the 

22 following: 

23 ‘‘(h)(1) In a case in which the debtor is an individual, 

24 the stay provided by subsection (a) is terminated with re25 spect to personal property of the estate or of the debtor 
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1 securing in whole or in part a claim, or subject to an unex2 pired lease, and such personal property shall no longer be 

3 property of the estate if the debtor fails within the applica4 ble time set by section 521(a)(2)— 

5 ‘‘(A) to file timely any statement of intention 

6 required under section 521(a)(2) with respect to 

7 such personal property or to indicate in such state8 ment that the debtor will either surrender such per9 sonal property or retain it and, if retaining such per10 sonal property, either redeem such personal property 

11 pursuant to section 722, enter into an agreement of 

12 the kind specified in section 524(c) applicable to the 

13 debt secured by such personal property, or assume 

14 such unexpired lease pursuant to section 365(p) if 

15 the trustee does not do so, as applicable; and 

16 ‘‘(B) to take timely the action specified in such 

17 statement, as it may be amended before expiration 

18 of the period for taking action, unless such state19 ment specifies the debtor’s intention to reaffirm such 

20 debt on the original contract terms and the creditor 

21 refuses to agree to the reaffirmation on such terms. 

22 ‘‘(2) Paragraph (1) does not apply if the court deter23 mines, on the motion of the trustee filed before the expira24 tion of the applicable time set by section 521(a)(2), after 

25 notice and a hearing, that such personal property is of 
143 

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1 consequential value or benefit to the estate, and orders 

2 appropriate adequate protection of the creditor’s interest, 

3 and orders the debtor to deliver any collateral in the debt4 or’s possession to the trustee. If the court does not so de5 termine, the stay provided by subsection (a) shall termi6 nate upon the conclusion of the hearing on the motion.’’; 

7 and 

8 (2) in section 521, as amended by sections 106 

9 and 225— 

10 (A) in subsection (a)(2) by striking ‘‘con11 sumer’’; 

12 (B) in subsection (a)(2)(B)— 

13 (i) by striking ‘‘forty-five days after 

14 the filing of a notice of intent under this 

15 section’’ and inserting ‘‘30 days after the 

16 first date set for the meeting of creditors 

17 under section 341(a)’’; and 

18 (ii) by striking ‘‘forty-five day’’ and 

19 inserting ‘‘30-day’’; 

20 (C) in subsection (a)(2)(C) by inserting ‘‘, 

21 except as provided in section 362(h)’’ before the 

22 semicolon; and 

23 (D) by adding at the end the following: 

24 ‘‘(d) If the debtor fails timely to take the action speci25 fied in subsection (a)(6) of this section, or in paragraphs 
144 

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1 (1) and (2) of section 362(h), with respect to property 

2 which a lessor or bailor owns and has leased, rented, or 

3 bailed to the debtor or as to which a creditor holds a secu4 rity interest not otherwise voidable under section 522(f), 

5 544, 545, 547, 548, or 549, nothing in this title shall pre6 vent or limit the operation of a provision in the underlying 

7 lease or agreement that has the effect of placing the debt8 or in default under such lease or agreement by reason of 

9 the occurrence, pendency, or existence of a proceeding 

10 under this title or the insolvency of the debtor. Nothing 

11 in this subsection shall be deemed to justify limiting such 

12 a provision in any other circumstance.’’. 

13 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT 

14 IN CHAPTER 13. 

15 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title 

16 11, United States Code, is amended to read as follows: 

17 ‘‘(i) the plan provides that— 

18 ‘‘(I) the holder of such claim retain 

19 the lien securing such claim until the ear20 lier of— 

21 ‘‘(aa) the payment of the under22 lying debt determined under nonbank23 ruptcy law; or 

24 ‘‘(bb) discharge under section 

25 1328; and 
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1 ‘‘(II) if the case under this chapter is 

2 dismissed or converted without completion 

3 of the plan, such lien shall also be retained 

4 by such holder to the extent recognized by 

5 applicable nonbankruptcy law; and’’. 

6 (b) RESTORING THE FOUNDATION FOR SECURED

7 CREDIT.—Section 1325(a) of title 11, United States Code, 

8 is amended by adding at the end the following: 

9 ‘‘For purposes of paragraph (5), section 506 shall not 

10 apply to a claim described in that paragraph if the creditor 

11 has a purchase money security interest securing the debt 

12 that is the subject of the claim, the debt was incurred 

13 within the 910-day preceding the date of the filing of the 

14 petition, and the collateral for that debt consists of a 

15 motor vehicle (as defined in section 30102 of title 49) ac16 quired for the personal use of the debtor, or if collateral 

17 for that debt consists of any other thing of value, if the 

18 debt was incurred during the 1-year period preceding that 

19 filing.’’. 

20 (c) DEFINITIONS.—Section 101 of title 11, United 

21 States Code, is amended— 

22 (1) by inserting after paragraph (13) the fol23 lowing: 

24 ‘‘(13A) ‘debtor’s principal residence’— 
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1 ‘‘(A) means a residential structure, includ2 ing incidental property, without regard to 

3 whether that structure is attached to real prop4 erty; and 

5 ‘‘(B) includes an individual condominium 

6 or cooperative unit, a mobile or manufactured 

7 home, or trailer;’’; and 

8 (2) by inserting after paragraph (27), the fol9 lowing: 

10 ‘‘(27A) ‘incidental property’ means, with re11 spect to a debtor’s principal residence— 

12 ‘‘(A) property commonly conveyed with a 

13 principal residence in the area where the real 

14 property is located; 

15 ‘‘(B) all easements, rights, appurtenances, 

16 fixtures, rents, royalties, mineral rights, oil or 

17 gas rights or profits, water rights, escrow 

18 funds, or insurance proceeds; and 

19 ‘‘(C) all replacements or additions;’’. 

20 SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS. 

21 Section 522(b)(3) of title 11, United States Code, as 

22 so designated by section 106, is amended— 

23 (1) in subparagraph (A)— 

24 (A) by striking ‘‘180 days’’ and inserting 

25 ‘‘730 days’’; and 
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1 (B) by striking ‘‘, or for a longer portion 

2 of such 180-day period than in any other place’’ 

3 and inserting ‘‘or if the debtor’s domicile has 

4 not been located at a single State for such 730- 

5 day period, the place in which the debtor’s 

6 domicile was located for 180 days immediately 

7 preceding the 730-day period or for a longer 

8 portion of such 180-day period than in any 

9 other place’’; and 

10 (2) by adding at the end the following: 

11 ‘‘If the effect of the domiciliary requirement under sub12 paragraph (A) is to render the debtor ineligible for any 

13 exemption, the debtor may elect to exempt property that 

14 is specified under subsection (d).’’. 

15 SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR 

16 FRAUD. 

17 Section 522 of title 11, United States Code, as 

18 amended by section 224, is amended— 

19 (1) in subsection (b)(3)(A), as so designated by 

20 this Act, by inserting ‘‘subject to subsections (o) and 

21 (p),’’ before ‘‘any property’’; and 

22 (2) by adding at the end the following: 

23 ‘‘(o) For purposes of subsection (b)(3)(A), and not24 withstanding subsection (a), the value of an interest in— 
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1 ‘‘(1) real or personal property that the debtor 

2 or a dependent of the debtor uses as a residence; 

3 ‘‘(2) a cooperative that owns property that the 

4 debtor or a dependent of the debtor uses as a resi5 dence; 

6 ‘‘(3) a burial plot for the debtor or a dependent 

7 of the debtor; or 

8 ‘‘(4) real or personal property that the debtor 

9 or a dependent of the debtor claims as a homestead; 

10 shall be reduced to the extent that such value is attrib11 utable to any portion of any property that the debtor dis12 posed of in the 10-year period ending on the date of the 

13 filing of the petition with the intent to hinder, delay, or 

14 defraud a creditor and that the debtor could not exempt, 

15 or that portion that the debtor could not exempt, under 

16 subsection (b), if on such date the debtor had held the 

17 property so disposed of.’’. 

18 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 

19 13 CASES. 

20 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP21 TER 13.—Section 348(f)(1) of title 11, United States 

22 Code, is amended— 

23 (1) in subparagraph (A), by striking ‘‘and’’ at 

24 the end; 

25 (2) in subparagraph (B)— 
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1 (A) by striking ‘‘in the converted case, 

2 with allowed secured claims’’ and inserting 

3 ‘‘only in a case converted to a case under chap4 ter 11 or 12, but not in a case converted to a 

5 case under chapter 7, with allowed secured 

6 claims in cases under chapters 11 and 12’’; and 

7 (B) by striking the period and inserting ‘‘; 

8 and’’; and 

9 (3) by adding at the end the following: 

10 ‘‘(C) with respect to cases converted from chap11 ter 13— 

12 ‘‘(i) the claim of any creditor holding secu13 rity as of the date of the petition shall continue 

14 to be secured by that security unless the full 

15 amount of such claim determined under appli16 cable nonbankruptcy law has been paid in full 

17 as of the date of conversion, notwithstanding 

18 any valuation or determination of the amount 

19 of an allowed secured claim made for the pur20 poses of the case under chapter 13; and 

21 ‘‘(ii) unless a prebankruptcy default has 

22 been fully cured under the plan at the time of 

23 conversion, in any proceeding under this title or 

24 otherwise, the default shall have the effect given 

25 under applicable nonbankruptcy law.’’. 
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1 (b) GIVING DEBTORS THE ABILITY TO KEEP

2 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section 

3 365 of title 11, United States Code, is amended by adding 

4 at the end the following: 

5 ‘‘(p)(1) If a lease of personal property is rejected or 

6 not timely assumed by the trustee under subsection (d), 

7 the leased property is no longer property of the estate and 

8 the stay under section 362(a) is automatically terminated. 

9 ‘‘(2)(A) If the debtor in a case under chapter 7 is 

10 an individual, the debtor may notify the creditor in writing 

11 that the debtor desires to assume the lease. Upon being 

12 so notified, the creditor may, at its option, notify the debt13 or that it is willing to have the lease assumed by the debt14 or and may condition such assumption on cure of any out15 standing default on terms set by the contract. 

16 ‘‘(B) If, not later than 30 days after notice is pro17 vided under subparagraph (A), the debtor notifies the les18 sor in writing that the lease is assumed, the liability under 

19 the lease will be assumed by the debtor and not by the 

20 estate. 

21 ‘‘(C) The stay under section 362 and the injunction 

22 under section 524(a)(2) shall not be violated by notifica23 tion of the debtor and negotiation of cure under this sub24 section. 
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1 ‘‘(3) In a case under chapter 11 in which the debtor 

2 is an individual and in a case under chapter 13, if the 

3 debtor is the lessee with respect to personal property and 

4 the lease is not assumed in the plan confirmed by the 

5 court, the lease is deemed rejected as of the conclusion 

6 of the hearing on confirmation. If the lease is rejected, 

7 the stay under section 362 and any stay under section 

8 1301 is automatically terminated with respect to the prop9 erty subject to the lease.’’. 

10 (c) ADEQUATE PROTECTION OF LESSORS AND PUR11 CHASE MONEY SECURED CREDITORS.— 

12 (1) CONFIRMATION OF PLAN.—Section 

13 1325(a)(5)(B) of title 11, United States Code, as 

14 amended by section 306, is amended— 

15 (A) in clause (i), by striking ‘‘and’’ at the 

16 end; 

17 (B) in clause (ii), by striking ‘‘or’’ at the 

18 end and inserting ‘‘and’’; and 

19 (C) by adding at the end the following: 

20 ‘‘(iii) if— 

21 ‘‘(I) property to be distributed pursu22 ant to this subsection is in the form of 

23 periodic payments, such payments shall be 

24 in equal monthly amounts; and 
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1 ‘‘(II) the holder of the claim is se2 cured by personal property, the amount of 

3 such payments shall not be less than an 

4 amount sufficient to provide to the holder 

5 of such claim adequate protection during 

6 the period of the plan; or’’. 

7 (2) PAYMENTS.—Section 1326(a) of title 11, 

8 United States Code, is amended to read as follows: 

9 ‘‘(a)(1) Unless the court orders otherwise, the debtor 

10 shall commence making payments not later than 30 days 

11 after the date of the filing of the plan or the order for 

12 relief, whichever is earlier, in the amount— 

13 ‘‘(A) proposed by the plan to the trustee; 

14 ‘‘(B) scheduled in a lease of personal property 

15 directly to the lessor for that portion of the obliga16 tion that becomes due after the order for relief, re17 ducing the payments under subparagraph (A) by the 

18 amount so paid and providing the trustee with evi19 dence of such payment, including the amount and 

20 date of payment; and 

21 ‘‘(C) that provides adequate protection directly 

22 to a creditor holding an allowed claim secured by 

23 personal property to the extent the claim is attrib24 utable to the purchase of such property by the debt25 or for that portion of the obligation that becomes 
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1 due after the order for relief, reducing the payments 

2 under subparagraph (A) by the amount so paid and 

3 providing the trustee with evidence of such payment, 

4 including the amount and date of payment. 

5 ‘‘(2) A payment made under paragraph (1)(A) shall 

6 be retained by the trustee until confirmation or denial of 

7 confirmation. If a plan is confirmed, the trustee shall dis8 tribute any such payment in accordance with the plan as 

9 soon as is practicable. If a plan is not confirmed, the trust10 ee shall return any such payments not previously paid and 

11 not yet due and owing to creditors pursuant to paragraph 

12 (3) to the debtor, after deducting any unpaid claim al13 lowed under section 503(b). 

14 ‘‘(3) Subject to section 363, the court may, upon no15 tice and a hearing, modify, increase, or reduce the pay16 ments required under this subsection pending confirma17 tion of a plan. 

18 ‘‘(4) Not later than 60 days after the date of filing 

19 of a case under this chapter, a debtor retaining possession 

20 of personal property subject to a lease or securing a claim 

21 attributable in whole or in part to the purchase price of 

22 such property shall provide the lessor or secured creditor 

23 reasonable evidence of the maintenance of any required 

24 insurance coverage with respect to the use or ownership 
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1 of such property and continue to do so for so long as the 

2 debtor retains possession of such property.’’. 

3 SEC. 310. LIMITATION ON LUXURY GOODS. 

4 Section 523(a)(2)(C) of title 11, United States Code, 

5 is amended to read as follows: 

6 ‘‘(C)(i) for purposes of subparagraph 

7 (A)— 

8 ‘‘(I) consumer debts owed to a single 

9 creditor and aggregating more than $500 

10 for luxury goods or services incurred by an 

11 individual debtor on or within 90 days be12 fore the order for relief under this title are 

13 presumed to be nondischargeable; and 

14 ‘‘(II) cash advances aggregating more 

15 than $750 that are extensions of consumer 

16 credit under an open end credit plan ob17 tained by an individual debtor on or within 

18 70 days before the order for relief under 

19 this title, are presumed to be non20 dischargeable; and 

21 ‘‘(ii) for purposes of this subparagraph— 

22 ‘‘(I) the terms ‘consumer’, ‘credit’, 

23 and ‘open end credit plan’ have the same 

24 meanings as in section 103 of the Truth in 

25 Lending Act; and 
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1 ‘‘(II) the term ‘luxury goods or serv2 ices’ does not include goods or services rea3 sonably necessary for the support or main4 tenance of the debtor or a dependent of the 

5 debtor.’’. 

6 SEC. 311. AUTOMATIC STAY. 

7 (a) IN GENERAL.—Section 362(b) of title 11, United 

8 States Code, as amended by sections 224 and 303, is 

9 amended by inserting after paragraph (21), the following: 

10 ‘‘(22) subject to subsection (l), under subsection 

11 (a)(3), of the continuation of any eviction, unlawful 

12 detainer action, or similar proceeding by a lessor 

13 against a debtor involving residential property in 

14 which the debtor resides as a tenant under a lease 

15 or rental agreement and with respect to which the 

16 lessor has obtained before the date of the filing of 

17 the bankruptcy petition, a judgment for possession 

18 of such property against the debtor; 

19 ‘‘(23) subject to subsection (m), under sub20 section (a)(3), of an eviction action that seeks pos21 session of the residential property in which the debt22 or resides as a tenant under a lease or rental agree23 ment based on endangerment of such property or 

24 the illegal use of controlled substances on such prop25 erty, but only if the lessor files with the court, and 
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1 serves upon the debtor, a certification under penalty 

2 of perjury that such an eviction action has been 

3 filed, or that the debtor, during the 30-day period 

4 preceding the date of the filing of the certification, 

5 has endangered property or illegally used or allowed 

6 to be used a controlled substance on the property; 

7 ‘‘(24) under subsection (a), of any transfer that 

8 is not avoidable under section 544 and that is not 

9 avoidable under section 549;’’. 

10 (b) LIMITATIONS.—Section 362 of title 11, United 

11 States Code, as amended by sections 106 and 305, is 

12 amended by adding at the end the following: 

13 ‘‘(l)(1) Except as otherwise provided in this sub14 section, subsection (b)(22) shall apply on the date that 

15 is 30 days after the date on which the bankruptcy petition 

16 is filed, if the debtor files with the petition and serves upon 

17 the lessor a certification under penalty of perjury that— 

18 ‘‘(A) under nonbankruptcy law applicable in the 

19 jurisdiction, there are circumstances under which the 

20 debtor would be permitted to cure the entire mone21 tary default that gave rise to the judgment for pos22 session, after that judgment for possession was en23 tered; and 

24 ‘‘(B) the debtor (or an adult dependent of the 

25 debtor) has deposited with the clerk of the court, 
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1 any rent that would become due during the 30-day 

2 period after the filing of the bankruptcy petition. 

3 ‘‘(2) If, within the 30-day period after the filing of 

4 the bankruptcy petition, the debtor (or an adult dependent 

5 of the debtor) complies with paragraph (1) and files with 

6 the court and serves upon the lessor a further certification 

7 under penalty of perjury that the debtor (or an adult de8 pendent of the debtor) has cured, under nonbankrupcty 

9 law applicable in the jurisdiction, the entire monetary de10 fault that gave rise to the judgment under which posses11 sion is sought by the lessor, subsection (b)(22) shall not 

12 apply, unless ordered to apply by the court under para13 graph (3). 

14 ‘‘(3)(A) If the lessor files an objection to any certifi15 cation filed by the debtor under paragraph (1) or (2), and 

16 serves such objection upon the debtor, the court shall hold 

17 a hearing within 10 days after the filing and service of 

18 such objection to determine if the certification filed by the 

19 debtor under paragraph (1) or (2) is true. 

20 ‘‘(B) If the court upholds the objection of the lessor 

21 filed under subparagraph (A)— 

22 ‘‘(i) subsection (b)(22) shall apply immediately 

23 and relief from the stay provided under subsection 

24 (a)(3) shall not be required to enable the lessor to 
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1 complete the process to recover full possession of the 

2 property; and 

3 ‘‘(ii) the clerk of the court shall immediately 

4 serve upon the lessor and the debtor a certified copy 

5 of the court’s order upholding the lessor’s objection. 

6 ‘‘(4) If a debtor, in accordance with paragraph (5), 

7 indicates on the petition that there was a judgment for 

8 possession of the residential rental property in which the 

9 debtor resides and does not file a certification under para10 graph (1) or (2)— 

11 ‘‘(A) subsection (b)(22) shall apply immediately 

12 upon failure to file such certification, and relief from 

13 the stay provided under subsection (a)(3) shall not 

14 be required to enable the lessor to complete the 

15 process to recover full possession of the property; 

16 and 

17 ‘‘(B) the clerk of the court shall immediately 

18 serve upon the lessor and the debtor a certified copy 

19 of the docket indicating the absence of a filed certifi20 cation and the applicability of the exception to the 

21 stay under subsection (b)(22). 

22 ‘‘(5)(A) Where a judgment for possession of residen23 tial property in which the debtor resides as a tenant under 

24 a lease or rental agreement has been obtained by the les25 sor, the debtor shall so indicate on the bankruptcy petition 
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1 and shall provide the name and address of the lessor that 

2 obtained that pre-petition judgment on the petition and 

3 on any certification filed under this subsection. 

4 ‘‘(B) The form of certification filed with the petition, 

5 as specified in this subsection, shall provide for the debtor 

6 to certify, and the debtor shall certify— 

7 ‘‘(i) whether a judgment for possession of resi8 dential rental housing in which the debtor resides 

9 has been obtained against the debtor before the date 

10 of the filing of the petition; and 

11 ‘‘(ii) whether the debtor is claiming under para12 graph (1) that under nonbankruptcy law applicable 

13 in the jurisdiction, there are circumstances under 

14 which the debtor would be permitted to cure the en15 tire monetary default that gave rise to the judgment 

16 for possession, after that judgment of possession was 

17 entered, and has made the appropriate deposit with 

18 the court. 

19 ‘‘(C) The standard forms (electronic and otherwise) 

20 used in a bankruptcy proceeding shall be amended to re21 flect the requirements of this subsection. 

22 ‘‘(D) The clerk of the court shall arrange for the 

23 prompt transmittal of the rent deposited in accordance 

24 with paragraph (1)(B) to the lessor. 
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1 ‘‘(m)(1) Except as otherwise provided in this sub2 section, subsection (b)(23) shall apply on the date that 

3 is 15 days after the date on which the lessor files and 

4 serves a certification described in subsection (b)(23). 

5 ‘‘(2)(A) If the debtor files with the court an objection 

6 to the truth or legal sufficiency of the certification de7 scribed in subsection (b)(23) and serves such objection 

8 upon the lessor, subsection (b)(23) shall not apply, unless 

9 ordered to apply by the court under this subsection. 

10 ‘‘(B) If the debtor files and serves the objection under 

11 subparagraph (A), the court shall hold a hearing within 

12 10 days after the filing and service of such objection to 

13 determine if the situation giving rise to the lessor’s certifi14 cation under paragraph (1) existed or has been remedied. 

15 ‘‘(C) If the debtor can demonstrate to the satisfaction 

16 of the court that the situation giving rise to the lessor’s 

17 certification under paragraph (1) did not exist or has been 

18 remedied, the stay provided under subsection (a)(3) shall 

19 remain in effect until the termination of the stay under 

20 this section. 

21 ‘‘(D) If the debtor cannot demonstrate to the satis22 faction of the court that the situation giving rise to the 

23 lessor’s certification under paragraph (1) did not exist or 

24 has been remedied— 
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1 ‘‘(i) relief from the stay provided under sub2 section (a)(3) shall not be required to enable the les3 sor to proceed with the eviction; and 

4 ‘‘(ii) the clerk of the court shall immediately 

5 serve upon the lessor and the debtor a certified copy 

6 of the court’s order upholding the lessor’s certifi7 cation. 

8 ‘‘(3) If the debtor fails to file, within 15 days, an 

9 objection under paragraph (2)(A)— 

10 ‘‘(A) subsection (b)(23) shall apply immediately 

11 upon such failure and relief from the stay provided 

12 under subsection (a)(3) shall not be required to en13 able the lessor to complete the process to recover full 

14 possession of the property; and 

15 ‘‘(B) the clerk of the court shall immediately 

16 serve upon the lessor and the debtor a certified copy 

17 of the docket indicating such failure.’’. 

18 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY 

19 DISCHARGES. 

20 Title 11, United States Code, is amended— 

21 (1) in section 727(a)(8), by striking ‘‘six’’ and 

22 inserting ‘‘8’’; and 

23 (2) in section 1328, by inserting after sub24 section (e) the following: 
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1 ‘‘(f) Notwithstanding subsections (a) and (b), the 

2 court shall not grant a discharge of all debts provided for 

3 in the plan or disallowed under section 502, if the debtor 

4 has received a discharge— 

5 ‘‘(1) in a case filed under chapter 7, 11, or 12 

6 of this title during the 4-year period preceding the 

7 date of the order for relief under this chapter, or 

8 ‘‘(2) in a case filed under chapter 13 of this 

9 title during the 2-year period preceding the date of 

10 such order.’’. 

11 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN12 TIQUES. 

13 (a) DEFINITION.—Section 522(f) of title 11, United 

14 States Code, is amended by adding at the end the fol15 lowing: 

16 ‘‘(4)(A) Subject to subparagraph (B), for purposes 

17 of paragraph (1)(B), the term ‘household goods’ means— 

18 ‘‘(i) clothing; 

19 ‘‘(ii) furniture; 

20 ‘‘(iii) appliances; 

21 ‘‘(iv) 1 radio; 

22 ‘‘(v) 1 television; 

23 ‘‘(vi) 1 VCR; 

24 ‘‘(vii) linens; 

25 ‘‘(viii) china; 
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1 ‘‘(ix) crockery; 

2 ‘‘(x) kitchenware; 

3 ‘‘(xi) educational materials and educational 

4 equipment primarily for the use of minor dependent 

5 children of the debtor; 

6 (xii) medical equipment and supplies; 

7 ‘‘(xiii) furniture exclusively for the use of minor 

8 children, or elderly or disabled dependents of the 

9 debtor; 

10 ‘‘(xiv) personal effects (including the toys and 

11 hobby equipment of minor dependent children and 

12 wedding rings) of the debtor and the dependents of 

13 the debtor; and 

14 ‘‘(xv) 1 personal computer and related equip15 ment. 

16 ‘‘(B) The term ‘household goods’ does not include— 

17 ‘‘(i) works of art (unless by or of the debtor, or 

18 any relative of the debtor); 

19 ‘‘(ii) electronic entertainment equipment with a 

20 fair market value of more than $500 in the aggre21 gate (except 1 television, 1 radio, and 1 VCR); 

22 ‘‘(iii) items acquired as antiques with a fair 

23 market value of more than $500 in the aggregate; 
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1 ‘‘(iv) jewelry with a fair market value of more 

2 than $500 in the aggregate (except wedding rings); 

3 and 

4 ‘‘(v) a computer (except as otherwise provided 

5 for in this section), motor vehicle (including a trac6 tor or lawn tractor), boat, or a motorized rec7 reational device, conveyance, vehicle, watercraft, or 

8 aircraft.’’. 

9 (b) STUDY.—Not later than 2 years after the date 

10 of enactment of this Act, the Director of the Executive 

11 Office for United States Trustees shall submit a report 

12 to the Committee on the Judiciary of the Senate and the 

13 Committee on the Judiciary of the House of Representa14 tives containing its findings regarding utilization of the 

15 definition of household goods, as defined in section 

16 522(f)(4) of title 11, United States Code, as added by sub17 section (a), with respect to the avoidance of nonpossessory, 

18 nonpurchase money security interests in household goods 

19 under section 522(f)(1)(B) of title 11, United States Code, 

20 and the impact such section 522(f)(4) has had on debtors 

21 and on the bankruptcy courts. Such report may include 

22 recommendations for amendments to such section 

23 522(f)(4) consistent with the Director’s findings. 
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1 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE 

2 DEBTS. 

3 (a) IN GENERAL.—Section 523(a) of title 11, United 

4 States Code, is amended by inserting after paragraph (14) 

5 the following: 

6 ‘‘(14A) incurred to pay a tax to a governmental 

7 unit, other than the United States, that would be 

8 nondischargeable under paragraph (1);’’. 

9 (b) DISCHARGE UNDER CHAPTER 13.—Section 

10 1328(a) of title 11, United States Code, is amended by 

11 striking paragraphs (1) through (3) and inserting the fol12 lowing: 

13 ‘‘(1) provided for under section 1322(b)(5); 

14 ‘‘(2) of the kind specified in paragraph (2), (3), 

15 (4), (5), (8), or (9) of section 523(a); 

16 ‘‘(3) for restitution, or a criminal fine, included 

17 in a sentence on the debtor’s conviction of a crime; 

18 or 

19 ‘‘(4) for restitution, or damages, awarded in a 

20 civil action against the debtor as a result of willful 

21 or malicious injury by the debtor that caused per22 sonal injury to an individual or the death of an indi23 vidual.’’. 
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1 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 

2 AND 13 CASES. 

3 (a) NOTICE.—Section 342 of title 11, United States 

4 Code, as amended by section 102, is amended— 

5 (1) in subsection (c)— 

6 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; 

7 (B) by striking ‘‘, but the failure of such 

8 notice to contain such information shall not in9 validate the legal effect of such notice’’; and 

10 (C) by adding at the end the following: 

11 ‘‘(2)(A) If, within the 90 days before the commence12 ment of a voluntary case, a creditor supplies the debtor 

13 in at least 2 communications sent to the debtor with the 

14 current account number of the debtor and the address at 

15 which such creditor requests to receive correspondence, 

16 then any notice required by this title to be sent by the 

17 debtor to such creditor shall be sent to such address and 

18 shall include such account number. 

19 ‘‘(B) If a creditor would be in violation of applicable 

20 nonbankruptcy law by sending any such communication 

21 within such 90-day period and if such creditor supplies 

22 the debtor in the last 2 communications with the current 

23 account number of the debtor and the address at which 

24 such creditor requests to receive correspondence, then any 

25 notice required by this title to be sent by the debtor to 
167 

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1 such creditor shall be sent to such address and shall in2 clude such account number.’’; and 

3 (2) by adding at the end the following: 

4 ‘‘(e)(1) In a case under chapter 7 or 13 of this title 

5 of a debtor who is an individual, a creditor at any time 

6 may both file with the court and serve on the debtor a 

7 notice of address to be used to provide notice in such case 

8 to such creditor. 

9 ‘‘(2) Any notice in such case required to be provided 

10 to such creditor by the debtor or the court later than 5 

11 days after the court and the debtor receive such creditor’s 

12 notice of address, shall be provided to such address. 

13 ‘‘(f)(1) An entity may file with any bankruptcy court 

14 a notice of address to be used by all the bankruptcy courts 

15 or by particular bankruptcy courts, as so specified by such 

16 entity at the time such notice is filed, to provide notice 

17 to such entity in all cases under chapters 7 and 13 pend18 ing in the courts with respect to which such notice is filed, 

19 in which such entity is a creditor. 

20 ‘‘(2) In any case filed under chapter 7 or 13, any 

21 notice required to be provided by a court with respect to 

22 which a notice is filed under paragraph (1), to such entity 

23 later than 30 days after the filing of such notice under 

24 paragraph (1) shall be provided to such address unless 

25 with respect to a particular case a different address is 
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1 specified in a notice filed and served in accordance with 

2 subsection (e). 

3 ‘‘(3) A notice filed under paragraph (1) may be with4 drawn by such entity. 

5 ‘‘(g)(1) Notice provided to a creditor by the debtor 

6 or the court other than in accordance with this section 

7 (excluding this subsection) shall not be effective notice 

8 until such notice is brought to the attention of such cred9 itor. If such creditor designates a person or an organiza10 tional subdivision of such creditor to be responsible for 

11 receiving notices under this title and establishes reason12 able procedures so that such notices receivable by such 

13 creditor are to be delivered to such person or such subdivi14 sion, then a notice provided to such creditor other than 

15 in accordance with this section (excluding this subsection) 

16 shall not be considered to have been brought to the atten17 tion of such creditor until such notice is received by such 

18 person or such subdivision. 

19 ‘‘(2) A monetary penalty may not be imposed on a 

20 creditor for a violation of a stay in effect under section 

21 362(a) (including a monetary penalty imposed under sec22 tion 362(k)) or for failure to comply with section 542 or 

23 543 unless the conduct that is the basis of such violation 

24 or of such failure occurs after such creditor receives notice 

25 effective under this section of the order for relief.’’. 
169 

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1 (b) DEBTOR’S DUTIES.—Section 521 of title 11, 

2 United States Code, as amended by sections 106, 225, and 

3 305, is amended— 

4 (1) in subsection (a), as so designated by sec5 tion 106, by amending paragraph (1) to read as fol6 lows: 

7 ‘‘(1) file— 

8 ‘‘(A) a list of creditors; and 

9 ‘‘(B) unless the court orders otherwise— 

10 ‘‘(i) a schedule of assets and liabil11 ities; 

12 ‘‘(ii) a schedule of current income and 

13 current expenditures; 

14 ‘‘(iii) a statement of the debtor’s fi15 nancial affairs and, if section 342(b) ap16 plies, a certificate— 

17 ‘‘(I) of an attorney whose name 

18 is indicated on the petition as the at19 torney for the debtor, or a bankruptcy 

20 petition preparer signing the petition 

21 under section 110(b)(1), indicating 

22 that such attorney or the bankruptcy 

23 petition preparer delivered to the 

24 debtor the notice required by section 

25 342(b); or 
170 

•S 256 IS 

1 ‘‘(II) if no attorney is so indi2 cated, and no bankruptcy petition pre3 parer signed the petition, of the debt4 or that such notice was received and 

5 read by the debtor; 

6 ‘‘(iv) copies of all payment advices or 

7 other evidence of payment received within 

8 60 days before the date of the filing of the 

9 petition, by the debtor from any employer 

10 of the debtor; 

11 ‘‘(v) a statement of the amount of 

12 monthly net income, itemized to show how 

13 the amount is calculated; and 

14 ‘‘(vi) a statement disclosing any rea15 sonably anticipated increase in income or 

16 expenditures over the 12-month period fol17 lowing the date of the filing of the peti18 tion;’’; and 

19 (2) by adding at the end the following: 

20 ‘‘(e)(1) If the debtor in a case under chapter 7 or 

21 13 is an individual and if a creditor files with the court 

22 at any time a request to receive a copy of the petition, 

23 schedules, and statement of financial affairs filed by the 

24 debtor, then the court shall make such petition, such 

25 schedules, and such statement available to such creditor. 
171 

•S 256 IS 

1 ‘‘(2)(A) The debtor shall provide— 

2 ‘‘(i) not later than 7 days before the date first 

3 set for the first meeting of creditors, to the trustee 

4 a copy of the Federal income tax return required 

5 under applicable law (or at the election of the debt6 or, a transcript of such return) for the most recent 

7 tax year ending immediately before the commence8 ment of the case and for which a Federal income tax 

9 return was filed; and 

10 ‘‘(ii) at the same time the debtor complies with 

11 clause (i), a copy of such return (or if elected under 

12 clause (i), such transcript) to any creditor that time13 ly requests such copy. 

14 ‘‘(B) If the debtor fails to comply with clause (i) or 

15 (ii) of subparagraph (A), the court shall dismiss the case 

16 unless the debtor demonstrates that the failure to so com17 ply is due to circumstances beyond the control of the debt18 or. 

19 ‘‘(C) If a creditor requests a copy of such tax return 

20 or such transcript and if the debtor fails to provide a copy 

21 of such tax return or such transcript to such creditor at 

22 the time the debtor provides such tax return or such tran23 script to the trustee, then the court shall dismiss the case 

24 unless the debtor demonstrates that the failure to provide 
172 

•S 256 IS 

1 a copy of such tax return or such transcript is due to cir2 cumstances beyond the control of the debtor. 

3 ‘‘(3) If a creditor in a case under chapter 13 files 

4 with the court at any time a request to receive a copy 

5 of the plan filed by the debtor, then the court shall make 

6 available to such creditor a copy of the plan— 

7 ‘‘(A) at a reasonable cost; and 

8 ‘‘(B) not later than 5 days after such request 

9 is filed. 

10 ‘‘(f) At the request of the court, the United States 

11 trustee, or any party in interest in a case under chapter 

12 7, 11, or 13, a debtor who is an individual shall file with 

13 the court— 

14 ‘‘(1) at the same time filed with the taxing au15 thority, a copy of each Federal income tax return re16 quired under applicable law (or at the election of the 

17 debtor, a transcript of such tax return) with respect 

18 to each tax year of the debtor ending while the case 

19 is pending under such chapter; 

20 ‘‘(2) at the same time filed with the taxing au21 thority, each Federal income tax return required 

22 under applicable law (or at the election of the debt23 or, a transcript of such tax return) that had not 

24 been filed with such authority as of the date of the 

25 commencement of the case and that was subse-
173 

•S 256 IS 

1 quently filed for any tax year of the debtor ending 

2 in the 3-year period ending on the date of the com3 mencement of the case; 

4 ‘‘(3) a copy of each amendment to any Federal 

5 income tax return or transcript filed with the court 

6 under paragraph (1) or (2); and 

7 ‘‘(4) in a case under chapter 13— 

8 ‘‘(A) on the date that is either 90 days 

9 after the end of such tax year or 1 year after 

10 the date of the commencement of the case, 

11 whichever is later, if a plan is not confirmed be12 fore such later date; and 

13 ‘‘(B) annually after the plan is confirmed 

14 and until the case is closed, not later than the 

15 date that is 45 days before the anniversary of 

16 the confirmation of the plan; 

17 a statement, under penalty of perjury, of the income 

18 and expenditures of the debtor during the tax year 

19 of the debtor most recently concluded before such 

20 statement is filed under this paragraph, and of the 

21 monthly income of the debtor, that shows how in22 come, expenditures, and monthly income are cal23 culated. 

24 ‘‘(g)(1) A statement referred to in subsection (f)(4) 

25 shall disclose— 
174 

•S 256 IS 

1 ‘‘(A) the amount and sources of the income of 

2 the debtor; 

3 ‘‘(B) the identity of any person responsible with 

4 the debtor for the support of any dependent of the 

5 debtor; and 

6 ‘‘(C) the identity of any person who contrib7 uted, and the amount contributed, to the household 

8 in which the debtor resides. 

9 ‘‘(2) The tax returns, amendments, and statement of 

10 income and expenditures described in subsections 

11 (e)(2)(A) and (f) shall be available to the United States 

12 trustee (or the bankruptcy administrator, if any), the 

13 trustee, and any party in interest for inspection and copy14 ing, subject to the requirements of section 315(c) of the 

15 Bankruptcy Abuse Prevention and Consumer Protection 

16 Act of 2005. 

17 ‘‘(h) If requested by the United States trustee or by 

18 the trustee, the debtor shall provide— 

19 ‘‘(1) a document that establishes the identity of 

20 the debtor, including a driver’s license, passport, or 

21 other document that contains a photograph of the 

22 debtor; or 

23 ‘‘(2) such other personal identifying information 

24 relating to the debtor that establishes the identity of 

25 the debtor.’’. 
175 

•S 256 IS 

1 (c)(1) Not later than 180 days after the date of the 

2 enactment of this Act, the Director of the Administrative 

3 Office of the United States Courts shall establish proce4 dures for safeguarding the confidentiality of any tax infor5 mation required to be provided under this section. 

6 (2) The procedures under paragraph (1) shall include 

7 restrictions on creditor access to tax information that is 

8 required to be provided under this section. 

9 (3) Not later than 540 days after the date of enact10 ment of this Act, the Director of the Administrative Office 

11 of the United States Courts shall prepare and submit to 

12 the President pro tempore of the Senate and the Speaker 

13 of the House of Representatives a report that— 

14 (A) assesses the effectiveness of the procedures 

15 established under paragraph (1); and 

16 (B) if appropriate, includes proposed legislation 

17 to— 

18 (i) further protect the confidentiality of tax 

19 information; and 

20 (ii) provide penalties for the improper use 

21 by any person of the tax information required 

22 to be provided under this section. 
176 

•S 256 IS 

1 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED2 ULES OR PROVIDE REQUIRED INFORMATION. 

3 Section 521 of title 11, United States Code, as 

4 amended by sections 106, 225, 305, and 315, is amended 

5 by adding at the end the following: 

6 ‘‘(i)(1) Subject to paragraphs (2) and (4) and not7 withstanding section 707(a), if an individual debtor in a 

8 voluntary case under chapter 7 or 13 fails to file all of 

9 the information required under subsection (a)(1) within 

10 45 days after the date of the filing of the petition, the 

11 case shall be automatically dismissed effective on the 46th 

12 day after the date of the filing of the petition. 

13 ‘‘(2) Subject to paragraph (4) and with respect to 

14 a case described in paragraph (1), any party in interest 

15 may request the court to enter an order dismissing the 

16 case. If requested, the court shall enter an order of dis17 missal not later than 5 days after such request. 

18 ‘‘(3) Subject to paragraph (4) and upon request of 

19 the debtor made within 45 days after the date of the filing 

20 of the petition described in paragraph (1), the court may 

21 allow the debtor an additional period of not to exceed 45 

22 days to file the information required under subsection 

23 (a)(1) if the court finds justification for extending the pe24 riod for the filing. 

25 ‘‘(4) Notwithstanding any other provision of this sub26 section, on the motion of the trustee filed before the expi-
177 

•S 256 IS 

1 ration of the applicable period of time specified in para2 graph (1), (2), or (3), and after notice and a hearing, the 

3 court may decline to dismiss the case if the court finds 

4 that the debtor attempted in good faith to file all the infor5 mation required by subsection (a)(1)(B)(iv) and that the 

6 best interests of creditors would be served by administra7 tion of the case.’’. 

8 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON 

9 CONFIRMATION OF THE PLAN. 

10 Section 1324 of title 11, United States Code, is 

11 amended— 

12 (1) by striking ‘‘After’’ and inserting the fol13 lowing: 

14 ‘‘(a) Except as provided in subsection (b) and after’’; 

15 and 

16 (2) by adding at the end the following: 

17 ‘‘(b) The hearing on confirmation of the plan may 

18 be held not earlier than 20 days and not later than 45 

19 days after the date of the meeting of creditors under sec20 tion 341(a), unless the court determines that it would be 

21 in the best interests of the creditors and the estate to hold 

22 such hearing at an earlier date and there is no objection 

23 to such earlier date.’’. 
178 

•S 256 IS 

1 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION 

2 IN CERTAIN CASES. 

3 Title 11, United States Code, is amended— 

4 (1) by amending section 1322(d) to read as fol5 lows: 

6 ‘‘(d)(1) If the current monthly income of the debtor 

7 and the debtor’s spouse combined, when multiplied by 12, 

8 is not less than— 

9 ‘‘(A) in the case of a debtor in a household of 

10 1 person, the median family income of the applicable 

11 State for 1 earner; 

12 ‘‘(B) in the case of a debtor in a household of 

13 2, 3, or 4 individuals, the highest median family in14 come of the applicable State for a family of the same 

15 number or fewer individuals; or 

16 ‘‘(C) in the case of a debtor in a household ex17 ceeding 4 individuals, the highest median family in18 come of the applicable State for a family of 4 or 

19 fewer individuals, plus $525 per month for each in20 dividual in excess of 4, 

21 the plan may not provide for payments over a period that 

22 is longer than 5 years. 

23 ‘‘(2) If the current monthly income of the debtor and 

24 the debtor’s spouse combined, when multiplied by 12, is 

25 less than— 
179 

•S 256 IS 

1 ‘‘(A) in the case of a debtor in a household of 

2 1 person, the median family income of the applicable 

3 State for 1 earner; 

4 ‘‘(B) in the case of a debtor in a household of 

5 2, 3, or 4 individuals, the highest median family in6 come of the applicable State for a family of the same 

7 number or fewer individuals; or 

8 ‘‘(C) in the case of a debtor in a household ex9 ceeding 4 individuals, the highest median family in10 come of the applicable State for a family of 4 or 

11 fewer individuals, plus $525 per month for each in12 dividual in excess of 4, 

13 the plan may not provide for payments over a period that 

14 is longer than 3 years, unless the court, for cause, ap15 proves a longer period, but the court may not approve a 

16 period that is longer than 5 years.’’; 

17 (2) in section 1325(b)(1)(B), by striking 

18 ‘‘three-year period’’ and inserting ‘‘applicable com19 mitment period’’; and 

20 (3) in section 1325(b), as amended by section 

21 102, by adding at the end the following: 

22 ‘‘(4) For purposes of this subsection, the ‘applicable 

23 commitment period’— 

24 ‘‘(A) subject to subparagraph (B), shall be— 

25 ‘‘(i) 3 years; or 
180 

•S 256 IS 

1 ‘‘(ii) not less than 5 years, if the current 

2 monthly income of the debtor and the debtor’s 

3 spouse combined, when multiplied by 12, is not 

4 less than— 

5 ‘‘(I) in the case of a debtor in a 

6 household of 1 person, the median family 

7 income of the applicable State for 1 earn8 er; 

9 ‘‘(II) in the case of a debtor in a 

10 household of 2, 3, or 4 individuals, the 

11 highest median family income of the appli12 cable State for a family of the same num13 ber or fewer individuals; or 

14 ‘‘(III) in the case of a debtor in a 

15 household exceeding 4 individuals, the 

16 highest median family income of the appli17 cable State for a family of 4 or fewer indi18 viduals, plus $525 per month for each indi19 vidual in excess of 4; and 

20 ‘‘(B) may be less than 3 or 5 years, whichever 

21 is applicable under subparagraph (A), but only if the 

22 plan provides for payment in full of all allowed unse23 cured claims over a shorter period.’’; and 
181 

•S 256 IS 

1 (4) in section 1329(c), by striking ‘‘three 

2 years’’ and inserting ‘‘the applicable commitment pe3 riod under section 1325(b)(1)(B)’’. 

4 SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF 

5 RULE 9011 OF THE FEDERAL RULES OF BANK6 RUPTCY PROCEDURE. 

7 It is the sense of Congress that rule 9011 of the Fed8 eral Rules of Bankruptcy Procedure (11 U.S.C. App.) 

9 should be modified to include a requirement that all docu10 ments (including schedules), signed and unsigned, sub11 mitted to the court or to a trustee by debtors who rep12 resent themselves and debtors who are represented by at13 torneys be submitted only after the debtors or the debtors’ 

14 attorneys have made reasonable inquiry to verify that the 

15 information contained in such documents is— 

16 (1) well grounded in fact; and 

17 (2) warranted by existing law or a good faith 

18 argument for the extension, modification, or reversal 

19 of existing law. 

20 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL 

21 CASES. 

22 Section 362(e) of title 11, United States Code, is 

23 amended— 

24 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and 

25 (2) by adding at the end the following: 
182 

•S 256 IS 

1 ‘‘(2) Notwithstanding paragraph (1), in a case under 

2 chapter 7, 11, or 13 in which the debtor is an individual, 

3 the stay under subsection (a) shall terminate on the date 

4 that is 60 days after a request is made by a party in inter5 est under subsection (d), unless— 

6 ‘‘(A) a final decision is rendered by the court 

7 during the 60-day period beginning on the date of 

8 the request; or 

9 ‘‘(B) such 60-day period is extended— 

10 ‘‘(i) by agreement of all parties in interest; 

11 or 

12 ‘‘(ii) by the court for such specific period 

13 of time as the court finds is required for good 

14 cause, as described in findings made by the 

15 court.’’. 

16 SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS. 

17 (a) PROPERTY OF THE ESTATE.— 

18 (1) IN GENERAL.—Subchapter I of chapter 11 

19 of title 11, United States Code, is amended by add20 ing at the end the following: 

21 ‘‘§ 1115. Property of the estate 

22 ‘‘(a) In a case in which the debtor is an individual, 

23 property of the estate includes, in addition to the property 

24 specified in section 541— 
183 

•S 256 IS 

1 ‘‘(1) all property of the kind specified in section 

2 541 that the debtor acquires after the commence3 ment of the case but before the case is closed, dis4 missed, or converted to a case under chapter 7, 12, 

5 or 13, whichever occurs first; and 

6 ‘‘(2) earnings from services performed by the 

7 debtor after the commencement of the case but be8 fore the case is closed, dismissed, or converted to a 

9 case under chapter 7, 12, or 13, whichever occurs 

10 first. 

11 ‘‘(b) Except as provided in section 1104 or a con12 firmed plan or order confirming a plan, the debtor shall 

13 remain in possession of all property of the estate.’’. 

14 (2) CLERICAL AMENDMENT.—The table of sec15 tions for subchapter I of chapter 11 of title 11, 

16 United States Code, is amended by adding at the 

17 end the following: 

‘‘1115. Property of the estate.’’. 

18 (b) CONTENTS OF PLAN.—Section 1123(a) of title 

19 11, United States Code, is amended— 

20 (1) in paragraph (6), by striking ‘‘and’’ at the 

21 end; 

22 (2) in paragraph (7), by striking the period and 

23 inserting ‘‘; and’’; and 

24 (3) by adding at the end the following: 
184 

•S 256 IS 

1 ‘‘(8) in a case in which the debtor is an indi2 vidual, provide for the payment to creditors under 

3 the plan of all or such portion of earnings from per4 sonal services performed by the debtor after the 

5 commencement of the case or other future income of 

6 the debtor as is necessary for the execution of the 

7 plan.’’. 

8 (c) CONFIRMATION OF PLAN.— 

9 (1) REQUIREMENTS RELATING TO VALUE OF

10 PROPERTY.—Section 1129(a) of title 11, United 

11 States Code, as amended by section 213, is amended 

12 by adding at the end the following: 

13 ‘‘(15) In a case in which the debtor is an indi14 vidual and in which the holder of an allowed unse15 cured claim objects to the confirmation of the plan— 

16 ‘‘(A) the value, as of the effective date of 

17 the plan, of the property to be distributed 

18 under the plan on account of such claim is not 

19 less than the amount of such claim; or 

20 ‘‘(B) the value of the property to be dis21 tributed under the plan is not less than the pro22 jected disposable income of the debtor (as de23 fined in section 1325(b)(2)) to be received dur24 ing the 5-year period beginning on the date that 

25 the first payment is due under the plan, or dur-
185 

•S 256 IS 

1 ing the period for which the plan provides pay2 ments, whichever is longer.’’. 

3 (2) REQUIREMENT RELATING TO INTERESTS IN

4 PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11, 

5 United States Code, is amended by inserting before 

6 the period at the end the following: ‘‘, except that 

7 in a case in which the debtor is an individual, the 

8 debtor may retain property included in the estate 

9 under section 1115, subject to the requirements of 

10 subsection (a)(14) of this section’’. 

11 (d) EFFECT OF CONFIRMATION.—Section 1141(d) of 

12 title 11, United States Code, is amended— 

13 (1) in paragraph (2), by striking ‘‘The con14 firmation of a plan does not discharge an individual 

15 debtor’’ and inserting ‘‘A discharge under this chap16 ter does not discharge a debtor who is an indi17 vidual’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(5) In a case in which the debtor is an individual— 

20 ‘‘(A) unless after notice and a hearing the court 

21 orders otherwise for cause, confirmation of the plan 

22 does not discharge any debt provided for in the plan 

23 until the court grants a discharge on completion of 

24 all payments under the plan; 
186 

•S 256 IS 

1 ‘‘(B) at any time after the confirmation of the 

2 plan, and after notice and a hearing, the court may 

3 grant a discharge to the debtor who has not com4 pleted payments under the plan if— 

5 ‘‘(i) the value, as of the effective date of 

6 the plan, of property actually distributed under 

7 the plan on account of each allowed unsecured 

8 claim is not less than the amount that would 

9 have been paid on such claim if the estate of 

10 the debtor had been liquidated under chapter 7 

11 on such date; and 

12 ‘‘(ii) modification of the plan under section 

13 1127 is not practicable; and’’. 

14 (e) MODIFICATION OF PLAN.—Section 1127 of title 

15 11, United States Code, is amended by adding at the end 

16 the following: 

17 ‘‘(e) If the debtor is an individual, the plan may be 

18 modified at any time after confirmation of the plan but 

19 before the completion of payments under the plan, whether 

20 or not the plan has been substantially consummated, upon 

21 request of the debtor, the trustee, the United States trust22 ee, or the holder of an allowed unsecured claim, to— 

23 ‘‘(1) increase or reduce the amount of payments 

24 on claims of a particular class provided for by the 

25 plan; 
187 

•S 256 IS 

1 ‘‘(2) extend or reduce the time period for such 

2 payments; or 

3 ‘‘(3) alter the amount of the distribution to a 

4 creditor whose claim is provided for by the plan to 

5 the extent necessary to take account of any payment 

6 of such claim made other than under the plan. 

7 ‘‘(f)(1) Sections 1121 through 1128 and the require8 ments of section 1129 apply to any modification under 

9 subsection (a). 

10 ‘‘(2) The plan, as modified, shall become the plan 

11 only after there has been disclosure under section 1125 

12 as the court may direct, notice and a hearing, and such 

13 modification is approved.’’. 

14 SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION. 

15 (a) EXEMPTIONS.—Section 522 of title 11, United 

16 States Code, as amended by sections 224 and 308, is 

17 amended by adding at the end the following: 

18 ‘‘(p)(1) Except as provided in paragraph (2) of this 

19 subsection and sections 544 and 548, as a result of elect20 ing under subsection (b)(3)(A) to exempt property under 

21 State or local law, a debtor may not exempt any amount 

22 of interest that was acquired by the debtor during the 

23 1215-day period preceding the date of the filing of the 

24 petition that exceeds in the aggregate $125,000 in value 

25 in— 
188 

•S 256 IS 

1 ‘‘(A) real or personal property that the debtor 

2 or a dependent of the debtor uses as a residence; 

3 ‘‘(B) a cooperative that owns property that the 

4 debtor or a dependent of the debtor uses as a resi5 dence; 

6 ‘‘(C) a burial plot for the debtor or a dependent 

7 of the debtor; or 

8 ‘‘(D) real or personal property that the debtor 

9 or dependent of the debtor claims as a homestead. 

10 ‘‘(2)(A) The limitation under paragraph (1) shall not 

11 apply to an exemption claimed under subsection (b)(3)(A) 

12 by a family farmer for the principal residence of such 

13 farmer. 

14 ‘‘(B) For purposes of paragraph (1), any amount of 

15 such interest does not include any interest transferred 

16 from a debtor’s previous principal residence (which was 

17 acquired prior to the beginning of such 1215-day period) 

18 into the debtor’s current principal residence, if the debt19 or’s previous and current residences are located in the 

20 same State. 

21 ‘‘(q)(1) As a result of electing under subsection 

22 (b)(3)(A) to exempt property under State or local law, a 

23 debtor may not exempt any amount of an interest in prop24 erty described in subparagraphs (A), (B), (C), and (D) 
189 

•S 256 IS 

1 of subsection (p)(1) which exceeds in the aggregate 

2 $125,000 if— 

3 ‘‘(A) the court determines, after notice and a 

4 hearing, that the debtor has been convicted of a fel5 ony (as defined in section 3156 of title 18), which 

6 under the circumstances, demonstrates that the fil7 ing of the case was an abuse of the provisions of this 

8 title; or 

9 ‘‘(B) the debtor owes a debt arising from— 

10 ‘‘(i) any violation of the Federal securities 

11 laws (as defined in section 3(a)(47) of the Secu12 rities Exchange Act of 1934), any State securi13 ties laws, or any regulation or order issued 

14 under Federal securities laws or State securities 

15 laws; 

16 ‘‘(ii) fraud, deceit, or manipulation in a fi17 duciary capacity or in connection with the pur18 chase or sale of any security registered under 

19 section 12 or 15(d) of the Securities Exchange 

20 Act of 1934 or under section 6 of the Securities 

21 Act of 1933; 

22 ‘‘(iii) any civil remedy under section 1964 

23 of title 18; or 

24 ‘‘(iv) any criminal act, intentional tort, or 

25 willful or reckless misconduct that caused seri-
190 

•S 256 IS 

1 ous physical injury or death to another indi2 vidual in the preceding 5 years. 

3 ‘‘(2) Paragraph (1) shall not apply to the extent the 

4 amount of an interest in property described in subpara5 graphs (A), (B), (C), and (D) of subsection (p)(1) is rea6 sonably necessary for the support of the debtor and any 

7 dependent of the debtor.’’. 

8 (b) ADJUSTMENT OF DOLLAR AMOUNTS.—Para9 graphs (1) and (2) of section 104(b) of title 11, United 

10 States Code, as amended by section 224, are amended by 

11 inserting ‘‘522(p), 522(q),’’ after ‘‘522(n),’’. 

12 SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI13 PANT CONTRIBUTIONS AND OTHER PROP14 ERTY FROM THE ESTATE. 

15 Section 541(b) of title 11, United States Code, as 

16 amended by section 225, is amended by adding after para17 graph (6), as added by section 225(a)(1)(C), the following: 

18 ‘‘(7) any amount— 

19 ‘‘(A) withheld by an employer from the 

20 wages of employees for payment as contribu21 tions— 

22 ‘‘(i) to— 

23 ‘‘(I) an employee benefit plan 

24 that is subject to title I of the Em25 ployee Retirement Income Security 
191 

•S 256 IS 

1 Act of 1974 or under an employee 

2 benefit plan which is a governmental 

3 plan under section 414(d) of the In4 ternal Revenue Code of 1986; 

5 ‘‘(II) a deferred compensation 

6 plan under section 457 of the Internal 

7 Revenue Code of 1986; or 

8 ‘‘(III) a tax-deferred annuity 

9 under section 403(b) of the Internal 

10 Revenue Code of 1986; 

11 except that such amount under this sub12 paragraph shall not constitute disposable 

13 income as defined in section 1325(b)(2); or 

14 ‘‘(ii) to a health insurance plan regu15 lated by State law whether or not subject 

16 to such title; or 

17 ‘‘(B) received by an employer from employ18 ees for payment as contributions— 

19 ‘‘(i) to— 

20 ‘‘(I) an employee benefit plan 

21 that is subject to title I of the Em22 ployee Retirement Income Security 

23 Act of 1974 or under an employee 

24 benefit plan which is a governmental 
192 

•S 256 IS 

1 plan under section 414(d) of the In2 ternal Revenue Code of 1986; 

3 ‘‘(II) a deferred compensation 

4 plan under section 457 of the Internal 

5 Revenue Code of 1986; or 

6 ‘‘(III) a tax-deferred annuity 

7 under section 403(b) of the Internal 

8 Revenue Code of 1986; 

9 except that such amount under this sub10 paragraph shall not constitute disposable 

11 income, as defined in section 1325(b)(2); 

12 or 

13 ‘‘(ii) to a health insurance plan regu14 lated by State law whether or not subject 

15 to such title;’’. 

16 SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV17 ING BANKRUPTCY PROFESSIONALS. 

18 (a) IN GENERAL.—Section 1334 of title 28, United 

19 States Code, is amended— 

20 (1) in subsection (b), by striking ‘‘Notwith21 standing’’ and inserting ‘‘Except as provided in sub22 section (e)(2), and notwithstanding’’; and 

23 (2) by striking subsection (e) and inserting the 

24 following: 
193 

•S 256 IS 

1 ‘‘(e) The district court in which a case under title 

2 11 is commenced or is pending shall have exclusive juris3 diction— 

4 ‘‘(1) of all the property, wherever located, of the 

5 debtor as of the commencement of such case, and of 

6 property of the estate; and 

7 ‘‘(2) over all claims or causes of action that in8 volve construction of section 327 of title 11, United 

9 States Code, or rules relating to disclosure require10 ments under section 327.’’. 

11 (b) APPLICABILITY.—This section shall only apply to 

12 cases filed after the date of enactment of this Act. 

13 SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE 

14 INCREASE. 

15 (a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE

16 11, UNITED STATES CODE.—Section 1930(a) of title 28, 

17 United States Code, is amended by striking paragraph (1) 

18 and inserting the following: 

19 ‘‘(1) For a case commenced— 

20 ‘‘(A) under chapter 7 of title 11, $160; or 

21 ‘‘(B) under chapter 13 of title 11, $150.’’. 

22 (b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec23 tion 589a(b) of title 28, United States Code, is amended— 

24 (1) by striking paragraph (1) and inserting the 

25 following: 
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1 ‘‘(1)(A) 40.63 percent of the fees collected 

2 under section 1930(a)(1)(A) of this title in cases 

3 commenced under chapter 7 of title 11; and 

4 ‘‘(B) 70.00 percent of the fees collected under 

5 section 1930(a)(1)(B) of this title in cases com6 menced under chapter 13 of title 11;’’; 

7 (2) in paragraph (2), by striking ‘‘one-half’’ 

8 and inserting ‘‘three-fourths’’; and 

9 (3) in paragraph (4), by striking ‘‘one-half’’ 

10 and inserting ‘‘100 percent’’. 

11 (c) COLLECTION AND DEPOSIT OF MISCELLANEOUS

12 BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap13 propriations Act, 1990 (28 U.S.C. 1931 note) is amended 

14 by striking ‘‘pursuant to 28 U.S.C. section 1930(b)’’ and 

15 all that follows through ‘‘28 U.S.C. section 1931’’ and in16 serting ‘‘under section 1930(b) of title 28, United States 

17 Code, and 31.25 percent of the fees collected under section 

18 1930(a)(1)(A) of that title, 30.00 percent of the fees col19 lected under section 1930(a)(1)(B) of that title, and 25 

20 percent of the fees collected under section 1930(a)(3) of 

21 that title shall be deposited as offsetting receipts to the 

22 fund established under section 1931 of that title’’. 

23 SEC. 326. SHARING OF COMPENSATION. 

24 Section 504 of title 11, United States Code, is 

25 amended by adding at the end the following: 
195 

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1 ‘‘(c) This section shall not apply with respect to shar2 ing, or agreeing to share, compensation with a bona fide 

3 public service attorney referral program that operates in 

4 accordance with non-Federal law regulating attorney re5 ferral services and with rules of professional responsibility 

6 applicable to attorney acceptance of referrals.’’. 

7 SEC. 327. FAIR VALUATION OF COLLATERAL. 

8 Section 506(a) of title 11, United States Code, is 

9 amended by— 

10 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(2) If the debtor is an individual in a case under 

13 chapter 7 or 13, such value with respect to personal prop14 erty securing an allowed claim shall be determined based 

15 on the replacement value of such property as of the date 

16 of the filing of the petition without deduction for costs 

17 of sale or marketing. With respect to property acquired 

18 for personal, family, or household purposes, replacement 

19 value shall mean the price a retail merchant would charge 

20 for property of that kind considering the age and condition 

21 of the property at the time value is determined.’’. 
196 

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1 SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA2 TIONS. 

3 (a) EXECUTORY CONTRACTS AND UNEXPIRED

4 LEASES.—Section 365 of title 11, United States Code, is 

5 amended— 

6 (1) in subsection (b)— 

7 (A) in paragraph (1)(A), by striking the 

8 semicolon at the end and inserting the fol9 lowing: ‘‘other than a default that is a breach 

10 of a provision relating to the satisfaction of any 

11 provision (other than a penalty rate or penalty 

12 provision) relating to a default arising from any 

13 failure to perform nonmonetary obligations 

14 under an unexpired lease of real property, if it 

15 is impossible for the trustee to cure such de16 fault by performing nonmonetary acts at and 

17 after the time of assumption, except that if 

18 such default arises from a failure to operate in 

19 accordance with a nonresidential real property 

20 lease, then such default shall be cured by per21 formance at and after the time of assumption 

22 in accordance with such lease, and pecuniary 

23 losses resulting from such default shall be com24 pensated in accordance with the provisions of 

25 this paragraph;’’; and 
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1 (B) in paragraph (2)(D), by striking ‘‘pen2 alty rate or provision’’ and inserting ‘‘penalty 

3 rate or penalty provision’’; 

4 (2) in subsection (c)— 

5 (A) in paragraph (2), by inserting ‘‘or’’ at 

6 the end; 

7 (B) in paragraph (3), by striking ‘‘; or’’ at 

8 the end and inserting a period; and 

9 (C) by striking paragraph (4); 

10 (3) in subsection (d)— 

11 (A) by striking paragraphs (5) through 

12 (9); and 

13 (B) by redesignating paragraph (10) as 

14 paragraph (5); and 

15 (4) in subsection (f)(1) by striking ‘‘; except 

16 that’’ and all that follows through the end of the 

17 paragraph and inserting a period. 

18 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec19 tion 1124(2) of title 11, United States Code, is amend20 ed— 

21 (1) in subparagraph (A), by inserting ‘‘or of a 

22 kind that section 365(b)(2) expressly does not re23 quire to be cured’’ before the semicolon at the end; 

24 (2) in subparagraph (C), by striking ‘‘and’’ at 

25 the end; 
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1 (3) by redesignating subparagraph (D) as sub2 paragraph (E); and 

3 (4) by inserting after subparagraph (C) the fol4 lowing: 

5 ‘‘(D) if such claim or such interest arises 

6 from any failure to perform a nonmonetary ob7 ligation, other than a default arising from fail8 ure to operate a nonresidential real property 

9 lease subject to section 365(b)(1)(A), com10 pensates the holder of such claim or such inter11 est (other than the debtor or an insider) for any 

12 actual pecuniary loss incurred by such holder as 

13 a result of such failure; and’’. 

14 SEC. 329. CLARIFICATION OF POSTPETITION WAGES AND 

15 BENEFITS. 

16 Section 503(b)(1)(A) of title 11, United States Code, 

17 is amended to read as follows: 

18 ‘‘(A) the actual, necessary costs and expenses of pre19 serving the estate including— 

20 ‘‘(i) wages, salaries, and commissions for 

21 services rendered after the commencement of 

22 the case; and 

23 ‘‘(ii) wages and benefits awarded pursuant 

24 to a judicial proceeding or a proceeding of the 

25 National Labor Relations Board as back pay 
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1 attributable to any period of time occurring 

2 after commencement of the case under this 

3 title, as a result of a violation of Federal or 

4 State law by the debtor, without regard to the 

5 time of the occurrence of unlawful conduct on 

6 which such award is based or to whether any 

7 services were rendered, if the court determines 

8 that payment of wages and benefits by reason 

9 of the operation of this clause will not substan10 tially increase the probability of layoff or termi11 nation of current employees, or of nonpayment 

12 of domestic support obligations, during the case 

13 under this title;’’. 

14 SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF 

15 CERTAIN PROCEEDINGS. 

16 (a) CHAPTER 7.—Section 727(a) of title 11, United 

17 States Code, as amended by section 106, is amended— 

18 (1) in paragraph (10), by striking ‘‘or’’ at the 

19 end; 

20 (2) in paragraph (11) by striking the period at 

21 the end and inserting ‘‘; or’’; and 

22 (3) by inserting after paragraph (11) the fol23 lowing: 

24 ‘‘(12) the court after notice and a hearing held 

25 not more than 10 days before the date of the entry 
200 

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1 of the order granting the discharge finds that there 

2 is reasonable cause to believe that— 

3 ‘‘(A) section 522(q)(1) may be applicable 

4 to the debtor; and 

5 ‘‘(B) there is pending any proceeding in 

6 which the debtor may be found guilty of a fel7 ony of the kind described in section 

8 522(q)(1)(A) or liable for a debt of the kind de9 scribed in section 522(q)(1)(B).’’. 

10 (b) CHAPTER 11.—Section 1141(d) of title 11, 

11 United States Code, as amended by section 321, is amend12 ed by adding at the end the following: 

13 ‘‘(C) unless after notice and a hearing held not 

14 more than 10 days before the date of the entry of 

15 the order granting the discharge, the court finds 

16 that there is no reasonable cause to believe that— 

17 ‘‘(i) section 522(q)(1) may be applicable to 

18 the debtor; and 

19 ‘‘(ii) there is pending any proceeding in 

20 which the debtor may be found guilty of a fel21 ony of the kind described in section 

22 522(q)(1)(A) or liable for a debt of the kind de23 scribed in section 522(q)(1)(B).’’. 

24 (c) CHAPTER 12.—Section 1228 of title 11, United 

25 States Code, is amended— 
201 

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1 (1) in subsection (a) by striking ‘‘As’’ and in2 serting ‘‘Subject to subsection (d), as’’, 

3 (2) in subsection (b) by striking ‘‘At’’ and in4 serting ‘‘Subject to subsection (d), at’’, and 

5 (3) by adding at the end the following: 

6 ‘‘(f) The court may not grant a discharge under this 

7 chapter unless the court after notice and a hearing held 

8 not more than 10 days before the date of the entry of 

9 the order granting the discharge finds that there is no rea10 sonable cause to believe that— 

11 ‘‘(1) section 522(q)(1) may be applicable to the 

12 debtor; and 

13 ‘‘(2) there is pending any proceeding in which 

14 the debtor may be found guilty of a felony of the 

15 kind described in section 522(q)(1)(A) or liable for 

16 a debt of the kind described in section 

17 522(q)(1)(B).’’. 

18 (d) CHAPTER 13.—Section 1328 of title 11, United 

19 States Code, as amended by section 106, is amended— 

20 (1) in subsection (a) by striking ‘‘As’’ and in21 serting ‘‘Subject to subsection (d), as’’, 

22 (2) in subsection (b) by striking ‘‘At’’ and in23 serting ‘‘Subject to subsection (d), at’’, and 

24 (3) by adding at the end the following: 
202 

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1 ‘‘(h) The court may not grant a discharge under this 

2 chapter unless the court after notice and a hearing held 

3 not more than 10 days before the date of the entry of 

4 the order granting the discharge finds that there is no rea5 sonable cause to believe that— 

6 ‘‘(1) section 522(q)(1) may be applicable to the 

7 debtor; and 

8 ‘‘(2) there is pending any proceeding in which 

9 the debtor may be found guilty of a felony of the 

10 kind described in section 522(q)(1)(A) or liable for 

11 a debt of the kind described in section 

12 522(q)(1)(B).’’. 

13 TITLE IV—GENERAL AND SMALL 

14 BUSINESS BANKRUPTCY PRO15 VISIONS 

16 Subtitle A—General Business 

17 Bankruptcy Provisions 

18 SEC. 401. ADEQUATE PROTECTION FOR INVESTORS. 

19 (a) DEFINITION.—Section 101 of title 11, United 

20 States Code, is amended by inserting after paragraph (48) 

21 the following: 

22 ‘‘(48A) ‘securities self regulatory organization’ 

23 means either a securities association registered with 

24 the Securities and Exchange Commission under sec25 tion 15A of the Securities Exchange Act of 1934 or 
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1 a national securities exchange registered with the 

2 Securities and Exchange Commission under section 

3 6 of the Securities Exchange Act of 1934;’’. 

4 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

5 United States Code, as amended by sections 224, 303, and 

6 311, is amended by inserting after paragraph (24) the fol7 lowing: 

8 ‘‘(25) under subsection (a), of— 

9 ‘‘(A) the commencement or continuation of 

10 an investigation or action by a securities self 

11 regulatory organization to enforce such organi12 zation’s regulatory power; 

13 ‘‘(B) the enforcement of an order or deci14 sion, other than for monetary sanctions, ob15 tained in an action by such securities self regu16 latory organization to enforce such organiza17 tion’s regulatory power; or 

18 ‘‘(C) any act taken by such securities self 

19 regulatory organization to delist, delete, or 

20 refuse to permit quotation of any stock that 

21 does not meet applicable regulatory require22 ments;’’. 
204 

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1 SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY 

2 HOLDERS. 

3 Section 341 of title 11, United States Code, is 

4 amended by adding at the end the following: 

5 ‘‘(e) Notwithstanding subsections (a) and (b), the 

6 court, on the request of a party in interest and after notice 

7 and a hearing, for cause may order that the United States 

8 trustee not convene a meeting of creditors or equity secu9 rity holders if the debtor has filed a plan as to which the 

10 debtor solicited acceptances prior to the commencement 

11 of the case.’’. 

12 SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN13 TEREST. 

14 Subparagraphs (A), (B), and (C) of section 547(e)(2) 

15 of title 11, United States Code, are each amended by strik16 ing ‘‘10’’ each place it appears and inserting ‘‘30’’. 

17 SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED 

18 LEASES. 

19 (a) IN GENERAL.—Section 365(d)(4) of title 11, 

20 United States Code, is amended to read as follows: 

21 ‘‘(4)(A) Subject to subparagraph (B), an unexpired 

22 lease of nonresidential real property under which the debt23 or is the lessee shall be deemed rejected, and the trustee 

24 shall immediately surrender that nonresidential real prop25 erty to the lessor, if the trustee does not assume or reject 

26 the unexpired lease by the earlier of— 
205 

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1 ‘‘(i) the date that is 120 days after the date of 

2 the order for relief; or 

3 ‘‘(ii) the date of the entry of an order con4 firming a plan. 

5 ‘‘(B)(i) The court may extend the period determined 

6 under subparagraph (A), prior to the expiration of the 

7 120-day period, for 90 days on the motion of the trustee 

8 or lessor for cause. 

9 ‘‘(ii) If the court grants an extension under clause 

10 (i), the court may grant a subsequent extension only upon 

11 prior written consent of the lessor in each instance.’’. 

12 (b) EXCEPTION.—Section 365(f)(1) of title 11, 

13 United States Code, is amended by striking ‘‘subsection’’ 

14 the first place it appears and inserting ‘‘subsections (b) 

15 and’’. 

16 SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS 

17 COMMITTEES. 

18 (a) APPOINTMENT.—Section 1102(a) of title 11, 

19 United States Code, is amended by adding at the end the 

20 following: 

21 ‘‘(4) On request of a party in interest and after notice 

22 and a hearing, the court may order the United States 

23 trustee to change the membership of a committee ap24 pointed under this subsection, if the court determines that 

25 the change is necessary to ensure adequate representation 
206 

•S 256 IS 

1 of creditors or equity security holders. The court may 

2 order the United States trustee to increase the number 

3 of members of a committee to include a creditor that is 

4 a small business concern (as described in section 3(a)(1) 

5 of the Small Business Act), if the court determines that 

6 the creditor holds claims (of the kind represented by the 

7 committee) the aggregate amount of which, in comparison 

8 to the annual gross revenue of that creditor, is dispropor9 tionately large.’’. 

10 (b) INFORMATION.—Section 1102(b) of title 11, 

11 United States Code, is amended by adding at the end the 

12 following: 

13 ‘‘(3) A committee appointed under subsection (a) 

14 shall— 

15 ‘‘(A) provide access to information for creditors 

16 who— 

17 ‘‘(i) hold claims of the kind represented by 

18 that committee; and 

19 ‘‘(ii) are not appointed to the committee; 

20 ‘‘(B) solicit and receive comments from the 

21 creditors described in subparagraph (A); and 

22 ‘‘(C) be subject to a court order that compels 

23 any additional report or disclosure to be made to the 

24 creditors described in subparagraph (A).’’. 
207 

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1 SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, 

2 UNITED STATES CODE. 

3 Section 546 of title 11, United States Code, is 

4 amended— 

5 (1) by redesignating the second subsection (g) 

6 (as added by section 222(a) of Public Law 103–394) 

7 as subsection (h); 

8 (2) in subsection (h), as so redesignated, by in9 serting ‘‘and subject to the prior rights of holders of 

10 security interests in such goods or the proceeds of 

11 such goods’’ after ‘‘consent of a creditor’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(i)(1) Notwithstanding paragraphs (2) and (3) of 

14 section 545, the trustee may not avoid a warehouseman’s 

15 lien for storage, transportation, or other costs incidental 

16 to the storage and handling of goods. 

17 ‘‘(2) The prohibition under paragraph (1) shall be ap18 plied in a manner consistent with any State statute appli19 cable to such lien that is similar to section 7–209 of the 

20 Uniform Commercial Code, as in effect on the date of en21 actment of the Bankruptcy Abuse Prevention and Con22 sumer Protection Act of 2005, or any successor to such 

23 section 7–209.’’. 
208 

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1 SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11, 

2 UNITED STATES CODE. 

3 Section 330(a) of title 11, United States Code, is 

4 amended— 

5 (1) in paragraph (3)— 

6 (A) by striking ‘‘(A) In’’ and inserting 

7 ‘‘In’’; and 

8 (B) by inserting ‘‘to an examiner, trustee 

9 under chapter 11, or professional person’’ after 

10 ‘‘awarded’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(7) In determining the amount of reasonable com13 pensation to be awarded to a trustee, the court shall treat 

14 such compensation as a commission, based on section 

15 326.’’. 

16 SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION. 

17 Section 1125 of title 11, United States Code, is 

18 amended by adding at the end the following: 

19 ‘‘(g) Notwithstanding subsection (b), an acceptance 

20 or rejection of the plan may be solicited from a holder 

21 of a claim or interest if such solicitation complies with ap22 plicable nonbankruptcy law and if such holder was solic23 ited before the commencement of the case in a manner 

24 complying with applicable nonbankruptcy law.’’. 
209 

•S 256 IS 

1 SEC. 409. PREFERENCES. 

2 Section 547(c) of title 11, United States Code, is 

3 amended— 

4 (1) by striking paragraph (2) and inserting the 

5 following: 

6 ‘‘(2) to the extent that such transfer was in 

7 payment of a debt incurred by the debtor in the or8 dinary course of business or financial affairs of the 

9 debtor and the transferee, and such transfer was— 

10 ‘‘(A) made in the ordinary course of busi11 ness or financial affairs of the debtor and the 

12 transferee; or 

13 ‘‘(B) made according to ordinary business 

14 terms;’’; 

15 (2) in paragraph (8), by striking the period at 

16 the end and inserting ‘‘; or’’; and 

17 (3) by adding at the end the following: 

18 ‘‘(9) if, in a case filed by a debtor whose debts 

19 are not primarily consumer debts, the aggregate 

20 value of all property that constitutes or is affected 

21 by such transfer is less than $5,000.’’. 

22 SEC. 410. VENUE OF CERTAIN PROCEEDINGS. 

23 Section 1409(b) of title 28, United States Code, is 

24 amended by inserting ‘‘, or a debt (excluding a consumer 

25 debt) against a noninsider of less than $10,000,’’ after 

26 ‘‘$5,000’’. 
210 

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1 SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11. 

2 Section 1121(d) of title 11, United States Code, is 

3 amended— 

4 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject 

5 to paragraph (2), on’’; and 

6 (2) by adding at the end the following: 

7 ‘‘(2)(A) The 120-day period specified in paragraph 

8 (1) may not be extended beyond a date that is 18 months 

9 after the date of the order for relief under this chapter. 

10 ‘‘(B) The 180-day period specified in paragraph (1) 

11 may not be extended beyond a date that is 20 months after 

12 the date of the order for relief under this chapter.’’. 

13 SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN14 TERESTS. 

15 Section 523(a)(16) of title 11, United States Code, 

16 is amended— 

17 (1) by striking ‘‘dwelling’’ the first place it ap18 pears; 

19 (2) by striking ‘‘ownership or’’ and inserting 

20 ‘‘ownership,’’; 

21 (3) by striking ‘‘housing’’ the first place it ap22 pears; and 

23 (4) by striking ‘‘but only’’ and all that follows 

24 through ‘‘such period,’’ and inserting ‘‘or a lot in a 

25 homeowners association, for as long as the debtor or 

26 the trustee has a legal, equitable, or possessory own-
211 

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1 ership interest in such unit, such corporation, or 

2 such lot,’’. 

3 SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING 

4 OF CREDITORS. 

5 Section 341(c) of title 11, United States Code, is 

6 amended by inserting at the end the following: ‘‘Notwith7 standing any local court rule, provision of a State constitu8 tion, any otherwise applicable nonbankruptcy law, or any 

9 other requirement that representation at the meeting of 

10 creditors under subsection (a) be by an attorney, a cred11 itor holding a consumer debt or any representative of the 

12 creditor (which may include an entity or an employee of 

13 an entity and may be a representative for more than 1 

14 creditor) shall be permitted to appear at and participate 

15 in the meeting of creditors in a case under chapter 7 or 

16 13, either alone or in conjunction with an attorney for the 

17 creditor. Nothing in this subsection shall be construed to 

18 require any creditor to be represented by an attorney at 

19 any meeting of creditors.’’. 

20 SEC. 414. DEFINITION OF DISINTERESTED PERSON. 

21 Section 101(14) of title 11, United States Code, is 

22 amended to read as follows: 

23 ‘‘(14) ‘disinterested person’ means a person 

24 that— 
212 

•S 256 IS 

1 ‘‘(A) is not a creditor, an equity security 

2 holder, or an insider; 

3 ‘‘(B) is not and was not, within 2 years be4 fore the date of the filing of the petition, a di5 rector, officer, or employee of the debtor; and 

6 ‘‘(C) does not have an interest materially 

7 adverse to the interest of the estate or of any 

8 class of creditors or equity security holders, by 

9 reason of any direct or indirect relationship to, 

10 connection with, or interest in, the debtor, or 

11 for any other reason;’’. 

12 SEC. 415. FACTORS FOR COMPENSATION OF PROFES13 SIONAL PERSONS. 

14 Section 330(a)(3) of title 11, United States Code, is 

15 amended— 

16 (1) in subparagraph (D), by striking ‘‘and’’ at 

17 the end; 

18 (2) by redesignating subparagraph (E) as sub19 paragraph (F); and 

20 (3) by inserting after subparagraph (D) the fol21 lowing: 

22 ‘‘(E) with respect to a professional person, 

23 whether the person is board certified or otherwise 

24 has demonstrated skill and experience in the bank25 ruptcy field; and’’. 
213 

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1 SEC. 416. APPOINTMENT OF ELECTED TRUSTEE. 

2 Section 1104(b) of title 11, United States Code, is 

3 amended— 

4 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 

5 (2) by adding at the end the following: 

6 ‘‘(2)(A) If an eligible, disinterested trustee is elected 

7 at a meeting of creditors under paragraph (1), the United 

8 States trustee shall file a report certifying that election. 

9 ‘‘(B) Upon the filing of a report under subparagraph 

10 (A)— 

11 ‘‘(i) the trustee elected under paragraph (1) 

12 shall be considered to have been selected and ap13 pointed for purposes of this section; and 

14 ‘‘(ii) the service of any trustee appointed under 

15 subsection (d) shall terminate. 

16 ‘‘(C) The court shall resolve any dispute arising out 

17 of an election described in subparagraph (A).’’. 

18 SEC. 417. UTILITY SERVICE. 

19 Section 366 of title 11, United States Code, is 

20 amended— 

21 (1) in subsection (a), by striking ‘‘subsection 

22 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and 

23 (2) by adding at the end the following: 

24 ‘‘(c)(1)(A) For purposes of this subsection, the term 

25 ‘assurance of payment’ means— 

26 ‘‘(i) a cash deposit; 
214 

•S 256 IS 

1 ‘‘(ii) a letter of credit; 

2 ‘‘(iii) a certificate of deposit; 

3 ‘‘(iv) a surety bond; 

4 ‘‘(v) a prepayment of utility consumption; or 

5 ‘‘(vi) another form of security that is mutually 

6 agreed on between the utility and the debtor or the 

7 trustee. 

8 ‘‘(B) For purposes of this subsection an administra9 tive expense priority shall not constitute an assurance of 

10 payment. 

11 ‘‘(2) Subject to paragraphs (3) and (4), with respect 

12 to a case filed under chapter 11, a utility referred to in 

13 subsection (a) may alter, refuse, or discontinue utility 

14 service, if during the 30-day period beginning on the date 

15 of the filing of the petition, the utility does not receive 

16 from the debtor or the trustee adequate assurance of pay17 ment for utility service that is satisfactory to the utility. 

18 ‘‘(3)(A) On request of a party in interest and after 

19 notice and a hearing, the court may order modification 

20 of the amount of an assurance of payment under para21 graph (2). 

22 ‘‘(B) In making a determination under this para23 graph whether an assurance of payment is adequate, the 

24 court may not consider— 
215 

•S 256 IS 

1 ‘‘(i) the absence of security before the date of 

2 the filing of the petition; 

3 ‘‘(ii) the payment by the debtor of charges for 

4 utility service in a timely manner before the date of 

5 the filing of the petition; or 

6 ‘‘(iii) the availability of an administrative ex7 pense priority. 

8 ‘‘(4) Notwithstanding any other provision of law, with 

9 respect to a case subject to this subsection, a utility may 

10 recover or set off against a security deposit provided to 

11 the utility by the debtor before the date of the filing of 

12 the petition without notice or order of the court.’’. 

13 SEC. 418. BANKRUPTCY FEES. 

14 Section 1930 of title 28, United States Code, is 

15 amended— 

16 (1) in subsection (a), by striking ‘‘Notwith17 standing section 1915 of this title, the’’ and insert18 ing ‘‘The’’; and 

19 (2) by adding at the end the following: 

20 ‘‘(f)(1) Under the procedures prescribed by the Judi21 cial Conference of the United States, the district court or 

22 the bankruptcy court may waive the filing fee in a case 

23 under chapter 7 of title 11 for an individual if the court 

24 determines that such individual has income less than 150 

25 percent of the income official poverty line (as defined by 
216 

•S 256 IS 

1 the Office of Management and Budget, and revised annu2 ally in accordance with section 673(2) of the Omnibus 

3 Budget Reconciliation Act of 1981) applicable to a family 

4 of the size involved and is unable to pay that fee in install5 ments. For purposes of this paragraph, the term ‘filing 

6 fee’ means the filing fee required by subsection (a), or any 

7 other fee prescribed by the Judicial Conference under sub8 sections (b) and (c) that is payable to the clerk upon the 

9 commencement of a case under chapter 7. 

10 ‘‘(2) The district court or the bankruptcy court may 

11 waive for such debtors other fees prescribed under sub12 sections (b) and (c). 

13 ‘‘(3) This subsection does not restrict the district 

14 court or the bankruptcy court from waiving, in accordance 

15 with Judicial Conference policy, fees prescribed under this 

16 section for other debtors and creditors.’’. 

17 SEC. 419. MORE COMPLETE INFORMATION REGARDING AS18 SETS OF THE ESTATE. 

19 (a) IN GENERAL.— 

20 (1) DISCLOSURE.—The Judicial Conference of 

21 the United States, in accordance with section 2075 

22 of title 28 of the United States Code and after con23 sideration of the views of the Director of the Execu24 tive Office for United States Trustees, shall propose 

25 amended Federal Rules of Bankruptcy Procedure 
217 

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1 and in accordance with rule 9009 of the Federal 

2 Rules of Bankruptcy Procedure shall prescribe offi3 cial bankruptcy forms directing debtors under chap4 ter 11 of title 11 of United States Code, to disclose 

5 the information described in paragraph (2) by filing 

6 and serving periodic financial and other reports de7 signed to provide such information. 

8 (2) INFORMATION.—The information referred 

9 to in paragraph (1) is the value, operations, and 

10 profitability of any closely held corporation, partner11 ship, or of any other entity in which the debtor holds 

12 a substantial or controlling interest. 

13 (b) PURPOSE.—The purpose of the rules and reports 

14 under subsection (a) shall be to assist parties in interest 

15 taking steps to ensure that the debtor’s interest in any 

16 entity referred to in subsection (a)(2) is used for the pay17 ment of allowed claims against debtor. 

18 Subtitle B—Small Business 

19 Bankruptcy Provisions 

20 SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT 

21 AND PLAN. 

22 Section 1125 of title 11, United States Code, is 

23 amended— 

24 (1) in subsection (a)(1), by inserting before the 

25 semicolon ‘‘and in determining whether a disclosure 
218 

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1 statement provides adequate information, the court 

2 shall consider the complexity of the case, the benefit 

3 of additional information to creditors and other par4 ties in interest, and the cost of providing additional 

5 information’’; and 

6 (2) by striking subsection (f), and inserting the 

7 following: 

8 ‘‘(f) Notwithstanding subsection (b), in a small busi9 ness case— 

10 ‘‘(1) the court may determine that the plan 

11 itself provides adequate information and that a sepa12 rate disclosure statement is not necessary; 

13 ‘‘(2) the court may approve a disclosure state14 ment submitted on standard forms approved by the 

15 court or adopted under section 2075 of title 28; and 

16 ‘‘(3)(A) the court may conditionally approve a 

17 disclosure statement subject to final approval after 

18 notice and a hearing; 

19 ‘‘(B) acceptances and rejections of a plan may 

20 be solicited based on a conditionally approved disclo21 sure statement if the debtor provides adequate infor22 mation to each holder of a claim or interest that is 

23 solicited, but a conditionally approved disclosure 

24 statement shall be mailed not later than 25 days be-
219 

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1 fore the date of the hearing on confirmation of the 

2 plan; and 

3 ‘‘(C) the hearing on the disclosure statement 

4 may be combined with the hearing on confirmation 

5 of a plan.’’. 

6 SEC. 432. DEFINITIONS. 

7 (a) DEFINITIONS.—Section 101 of title 11, United 

8 States Code, is amended by striking paragraph (51C) and 

9 inserting the following: 

10 ‘‘(51C) ‘small business case’ means a case filed 

11 under chapter 11 of this title in which the debtor is 

12 a small business debtor; 

13 ‘‘(51D) ‘small business debtor’— 

14 ‘‘(A) subject to subparagraph (B), means a 

15 person engaged in commercial or business ac16 tivities (including any affiliate of such person 

17 that is also a debtor under this title and exclud18 ing a person whose primary activity is the busi19 ness of owning or operating real property or ac20 tivities incidental thereto) that has aggregate 

21 noncontingent liquidated secured and unsecured 

22 debts as of the date of the petition or the date 

23 of the order for relief in an amount not more 

24 than $2,000,000 (excluding debts owed to 1 or 

25 more affiliates or insiders) for a case in which 
220 

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1 the United States trustee has not appointed 

2 under section 1102(a)(1) a committee of unse3 cured creditors or where the court has deter4 mined that the committee of unsecured credi5 tors is not sufficiently active and representative 

6 to provide effective oversight of the debtor; and 

7 ‘‘(B) does not include any member of a 

8 group of affiliated debtors that has aggregate 

9 noncontingent liquidated secured and unsecured 

10 debts in an amount greater than $2,000,000 

11 (excluding debt owed to 1 or more affiliates or 

12 insiders);’’. 

13 (b) CONFORMING AMENDMENT.—Section 1102(a)(3) 

14 of title 11, United States Code, is amended by inserting 

15 ‘‘debtor’’ after ‘‘small business’’. 

16 (c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

17 104(b) of title 11, United States Code, as amended by 

18 section 226, is amended by inserting ‘‘101(51D),’’ after 

19 ‘‘101(3),’’ each place it appears. 

20 SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND 

21 PLAN. 

22 Within a reasonable period of time after the date of 

23 enactment of this Act, the Judicial Conference of the 

24 United States shall prescribe in accordance with rule 9009 

25 of the Federal Rules of Bankruptcy Procedure official 
221 

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1 standard form disclosure statements and plans of reorga2 nization for small business debtors (as defined in section 

3 101 of title 11, United States Code, as amended by this 

4 Act), designed to achieve a practical balance between— 

5 (1) the reasonable needs of the courts, the 

6 United States trustee, creditors, and other parties in 

7 interest for reasonably complete information; and 

8 (2) economy and simplicity for debtors. 

9 SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE10 MENTS. 

11 (a) REPORTING REQUIRED.— 

12 (1) IN GENERAL.—Chapter 3 of title 11, United 

13 States Code, is amended by inserting after section 

14 307 the following: 

15 ‘‘§ 308. Debtor reporting requirements 

16 ‘‘(a) For purposes of this section, the term ‘profit17 ability’ means, with respect to a debtor, the amount of 

18 money that the debtor has earned or lost during current 

19 and recent fiscal periods. 

20 ‘‘(b) A small business debtor shall file periodic finan21 cial and other reports containing information including— 

22 ‘‘(1) the debtor’s profitability; 

23 ‘‘(2) reasonable approximations of the debtor’s 

24 projected cash receipts and cash disbursements over 

25 a reasonable period; 
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1 ‘‘(3) comparisons of actual cash receipts and 

2 disbursements with projections in prior reports; 

3 ‘‘(4)(A) whether the debtor is— 

4 ‘‘(i) in compliance in all material respects 

5 with postpetition requirements imposed by this 

6 title and the Federal Rules of Bankruptcy Pro7 cedure; and 

8 ‘‘(ii) timely filing tax returns and other re9 quired government filings and paying taxes and 

10 other administrative expenses when due; 

11 ‘‘(B) if the debtor is not in compliance with the 

12 requirements referred to in subparagraph (A)(i) or 

13 filing tax returns and other required government fil14 ings and making the payments referred to in sub15 paragraph (A)(ii), what the failures are and how, at 

16 what cost, and when the debtor intends to remedy 

17 such failures; and 

18 ‘‘(C) such other matters as are in the best in19 terests of the debtor and creditors, and in the public 

20 interest in fair and efficient procedures under chap21 ter 11 of this title.’’. 

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for chapter 3 of title 11, United States Code, 

24 is amended by inserting after the item relating to 

25 section 307 the following: 

‘‘308. Debtor reporting requirements.’’. 
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1 (b) EFFECTIVE DATE.—The amendments made by 

2 subsection (a) shall take effect 60 days after the date on 

3 which rules are prescribed under section 2075 of title 28, 

4 United States Code, to establish forms to be used to com5 ply with section 308 of title 11, United States Code, as 

6 added by subsection (a). 

7 SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR 

8 SMALL BUSINESS CASES. 

9 (a) PROPOSAL OF RULES AND FORMS.—The Judicial 

10 Conference of the United States shall propose in accord11 ance with section 2073 of title 28 of the United States 

12 Code amended Federal Rules of Bankruptcy Procedure, 

13 and shall prescribe in accordance with rule 9009 of the 

14 Federal Rules of Bankruptcy Procedure official bank15 ruptcy forms, directing small business debtors to file peri16 odic financial and other reports containing information, 

17 including information relating to— 

18 (1) the debtor’s profitability; 

19 (2) the debtor’s cash receipts and disburse20 ments; and 

21 (3) whether the debtor is timely filing tax re22 turns and paying taxes and other administrative ex23 penses when due. 
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1 (b) PURPOSE.—The rules and forms proposed under 

2 subsection (a) shall be designed to achieve a practical bal3 ance among— 

4 (1) the reasonable needs of the bankruptcy 

5 court, the United States trustee, creditors, and other 

6 parties in interest for reasonably complete informa7 tion; 

8 (2) a small business debtor’s interest that re9 quired reports be easy and inexpensive to complete; 

10 and 

11 (3) the interest of all parties that the required 

12 reports help such debtor to understand such debtor’s 

13 financial condition and plan the such debtor’s fu14 ture. 

15 SEC. 436. DUTIES IN SMALL BUSINESS CASES. 

16 (a) DUTIES IN CHAPTER 11 CASES.—Subchapter I 

17 of chapter 11 of title 11, United States Code, as amended 

18 by section 321, is amended by adding at the end the fol19 lowing: 

20 ‘‘§ 1116. Duties of trustee or debtor in possession in 

21 small business cases 

22 ‘‘In a small business case, a trustee or the debtor in 

23 possession, in addition to the duties provided in this title 

24 and as otherwise required by law, shall— 
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1 ‘‘(1) append to the voluntary petition or, in an 

2 involuntary case, file not later than 7 days after the 

3 date of the order for relief— 

4 ‘‘(A) its most recent balance sheet, state5 ment of operations, cash-flow statement, and 

6 Federal income tax return; or 

7 ‘‘(B) a statement made under penalty of 

8 perjury that no balance sheet, statement of op9 erations, or cash-flow statement has been pre10 pared and no Federal tax return has been filed; 

11 ‘‘(2) attend, through its senior management 

12 personnel and counsel, meetings scheduled by the 

13 court or the United States trustee, including initial 

14 debtor interviews, scheduling conferences, and meet15 ings of creditors convened under section 341 unless 

16 the court, after notice and a hearing, waives that re17 quirement upon a finding of extraordinary and com18 pelling circumstances; 

19 ‘‘(3) timely file all schedules and statements of 

20 financial affairs, unless the court, after notice and a 

21 hearing, grants an extension, which shall not extend 

22 such time period to a date later than 30 days after 

23 the date of the order for relief, absent extraordinary 

24 and compelling circumstances; 
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1 ‘‘(4) file all postpetition financial and other re2 ports required by the Federal Rules of Bankruptcy 

3 Procedure or by local rule of the district court; 

4 ‘‘(5) subject to section 363(c)(2), maintain in5 surance customary and appropriate to the industry; 

6 ‘‘(6)(A) timely file tax returns and other re7 quired government filings; and 

8 ‘‘(B) subject to section 363(c)(2), timely pay all 

9 taxes entitled to administrative expense priority ex10 cept those being contested by appropriate pro11 ceedings being diligently prosecuted; and 

12 ‘‘(7) allow the United States trustee, or a des13 ignated representative of the United States trustee, 

14 to inspect the debtor’s business premises, books, and 

15 records at reasonable times, after reasonable prior 

16 written notice, unless notice is waived by the debt17 or.’’. 

18 (b) CLERICAL AMENDMENT.—The table of sections 

19 for chapter 11 of title 11, United States Code, as amended 

20 by section 321, is amended by inserting after the item re21 lating to section 1115 the following: 

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’. 

22 SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES. 

23 Section 1121 of title 11, United States Code, is 

24 amended by striking subsection (e) and inserting the fol25 lowing: 
227 

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1 ‘‘(e) In a small business case— 

2 ‘‘(1) only the debtor may file a plan until after 

3 180 days after the date of the order for relief, unless 

4 that period is— 

5 ‘‘(A) extended as provided by this sub6 section, after notice and a hearing; or 

7 ‘‘(B) the court, for cause, orders otherwise; 

8 ‘‘(2) the plan and a disclosure statement (if 

9 any) shall be filed not later than 300 days after the 

10 date of the order for relief; and 

11 ‘‘(3) the time periods specified in paragraphs 

12 (1) and (2), and the time fixed in section 1129(e) 

13 within which the plan shall be confirmed, may be ex14 tended only if— 

15 ‘‘(A) the debtor, after providing notice to 

16 parties in interest (including the United States 

17 trustee), demonstrates by a preponderance of 

18 the evidence that it is more likely than not that 

19 the court will confirm a plan within a reason20 able period of time; 

21 ‘‘(B) a new deadline is imposed at the time 

22 the extension is granted; and 

23 ‘‘(C) the order extending time is signed be24 fore the existing deadline has expired.’’. 
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1 SEC. 438. PLAN CONFIRMATION DEADLINE. 

2 Section 1129 of title 11, United States Code, is 

3 amended by adding at the end the following: 

4 ‘‘(e) In a small business case, the court shall confirm 

5 a plan that complies with the applicable provisions of this 

6 title and that is filed in accordance with section 1121(e) 

7 not later than 45 days after the plan is filed unless the 

8 time for confirmation is extended in accordance with sec9 tion 1121(e)(3).’’. 

10 SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE. 

11 Section 586(a) of title 28, United States Code, is 

12 amended— 

13 (1) in paragraph (3)— 

14 (A) in subparagraph (G), by striking 

15 ‘‘and’’ at the end; 

16 (B) by redesignating subparagraph (H) as 

17 subparagraph (I); and 

18 (C) by inserting after subparagraph (G) 

19 the following: 

20 ‘‘(H) in small business cases (as defined in 

21 section 101 of title 11), performing the addi22 tional duties specified in title 11 pertaining to 

23 such cases; and’’; 

24 (2) in paragraph (5), by striking ‘‘and’’ at the 

25 end; 
229 

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1 (3) in paragraph (6), by striking the period at 

2 the end and inserting a semicolon; and 

3 (4) by adding at the end the following: 

4 ‘‘(7) in each of such small business cases— 

5 ‘‘(A) conduct an initial debtor interview as 

6 soon as practicable after the date of the order 

7 for relief but before the first meeting scheduled 

8 under section 341(a) of title 11, at which time 

9 the United States trustee shall— 

10 ‘‘(i) begin to investigate the debtor’s 

11 viability; 

12 ‘‘(ii) inquire about the debtor’s busi13 ness plan; 

14 ‘‘(iii) explain the debtor’s obligations 

15 to file monthly operating reports and other 

16 required reports; 

17 ‘‘(iv) attempt to develop an agreed 

18 scheduling order; and 

19 ‘‘(v) inform the debtor of other obliga20 tions; 

21 ‘‘(B) if determined to be appropriate and 

22 advisable, visit the appropriate business prem23 ises of the debtor, ascertain the state of the 

24 debtor’s books and records, and verify that the 

25 debtor has filed its tax returns; and 
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1 ‘‘(C) review and monitor diligently the 

2 debtor’s activities, to identify as promptly as 

3 possible whether the debtor will be unable to 

4 confirm a plan; and 

5 ‘‘(8) in any case in which the United States 

6 trustee finds material grounds for any relief under 

7 section 1112 of title 11, the United States trustee 

8 shall apply promptly after making that finding to 

9 the court for relief.’’. 

10 SEC. 440. SCHEDULING CONFERENCES. 

11 Section 105(d) of title 11, United States Code, is 

12 amended— 

13 (1) in the matter preceding paragraph (1), by 

14 striking ‘‘, may’’; and 

15 (2) by striking paragraph (1) and inserting the 

16 following: 

17 ‘‘(1) shall hold such status conferences as are 

18 necessary to further the expeditious and economical 

19 resolution of the case; and’’. 

20 SEC. 441. SERIAL FILER PROVISIONS. 

21 Section 362 of title 11, United States Code, as 

22 amended by sections 106, 305, and 311, is amended— 

23 (1) in subsection (k), as so redesignated by sec24 tion 305— 
231 

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1 (A) by striking ‘‘An’’ and inserting ‘‘(1) 

2 Except as provided in paragraph (2), an’’; and 

3 (B) by adding at the end the following: 

4 ‘‘(2) If such violation is based on an action taken by 

5 an entity in the good faith belief that subsection (h) ap6 plies to the debtor, the recovery under paragraph (1) of 

7 this subsection against such entity shall be limited to ac8 tual damages.’’; and 

9 (2) by adding at the end the following: 

10 ‘‘(n)(1) Except as provided in paragraph (2), sub11 section (a) does not apply in a case in which the debtor— 

12 ‘‘(A) is a debtor in a small business case pend13 ing at the time the petition is filed; 

14 ‘‘(B) was a debtor in a small business case that 

15 was dismissed for any reason by an order that be16 came final in the 2-year period ending on the date 

17 of the order for relief entered with respect to the pe18 tition; 

19 ‘‘(C) was a debtor in a small business case in 

20 which a plan was confirmed in the 2-year period 

21 ending on the date of the order for relief entered 

22 with respect to the petition; or 

23 ‘‘(D) is an entity that has acquired substan24 tially all of the assets or business of a small business 

25 debtor described in subparagraph (A), (B), or (C), 
232 

•S 256 IS 

1 unless such entity establishes by a preponderance of 

2 the evidence that such entity acquired substantially 

3 all of the assets or business of such small business 

4 debtor in good faith and not for the purpose of evad5 ing this paragraph. 

6 ‘‘(2) Paragraph (1) does not apply— 

7 ‘‘(A) to an involuntary case involving no collu8 sion by the debtor with creditors; or 

9 ‘‘(B) to the filing of a petition if— 

10 ‘‘(i) the debtor proves by a preponderance 

11 of the evidence that the filing of the petition re12 sulted from circumstances beyond the control of 

13 the debtor not foreseeable at the time the case 

14 then pending was filed; and 

15 ‘‘(ii) it is more likely than not that the 

16 court will confirm a feasible plan, but not a liq17 uidating plan, within a reasonable period of 

18 time.’’. 

19 SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON20 VERSION AND APPOINTMENT OF TRUSTEE. 

21 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON22 VERSION.—Section 1112 of title 11, United States Code, 

23 is amended by striking subsection (b) and inserting the 

24 following: 
233 

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1 ‘‘(b)(1) Except as provided in paragraph (2) of this 

2 subsection, subsection (c) of this section, and section 

3 1104(a)(3), on request of a party in interest, and after 

4 notice and a hearing, absent unusual circumstances spe5 cifically identified by the court that establish that the re6 quested conversion or dismissal is not in the best interests 

7 of creditors and the estate, the court shall convert a case 

8 under this chapter to a case under chapter 7 or dismiss 

9 a case under this chapter, whichever is in the best inter10 ests of creditors and the estate, if the movant establishes 

11 cause. 

12 ‘‘(2) The relief provided in paragraph (1) shall not 

13 be granted absent unusual circumstances specifically iden14 tified by the court that establish that such relief is not 

15 in the best interests of creditors and the estate, if the 

16 debtor or another party in interest objects and establishes 

17 that— 

18 ‘‘(A) there is a reasonable likelihood that a plan 

19 will be confirmed within the timeframes established 

20 in sections 1121(e) and 1129(e) of this title, or if 

21 such sections do not apply, within a reasonable pe22 riod of time; and 

23 ‘‘(B) the grounds for granting such relief in24 clude an act or omission of the debtor other than 

25 under paragraph (4)(A)— 
234 

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1 ‘‘(i) for which there exists a reasonable 

2 justification for the act or omission; and 

3 ‘‘(ii) that will be cured within a reasonable 

4 period of time fixed by the court. 

5 ‘‘(3) The court shall commence the hearing on a mo6 tion under this subsection not later than 30 days after 

7 filing of the motion, and shall decide the motion not later 

8 than 15 days after commencement of such hearing, unless 

9 the movant expressly consents to a continuance for a spe10 cific period of time or compelling circumstances prevent 

11 the court from meeting the time limits established by this 

12 paragraph. 

13 ‘‘(4) For purposes of this subsection, the term ‘cause’ 

14 includes— 

15 ‘‘(A) substantial or continuing loss to or dimi16 nution of the estate and the absence of a reasonable 

17 likelihood of rehabilitation; 

18 ‘‘(B) gross mismanagement of the estate; 

19 ‘‘(C) failure to maintain appropriate insurance 

20 that poses a risk to the estate or to the public; 

21 ‘‘(D) unauthorized use of cash collateral sub22 stantially harmful to 1 or more creditors; 

23 ‘‘(E) failure to comply with an order of the 

24 court; 
235 

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1 ‘‘(F) unexcused failure to satisfy timely any fil2 ing or reporting requirement established by this title 

3 or by any rule applicable to a case under this chap4 ter; 

5 ‘‘(G) failure to attend the meeting of creditors 

6 convened under section 341(a) or an examination or7 dered under rule 2004 of the Federal Rules of 

8 Bankruptcy Procedure without good cause shown by 

9 the debtor; 

10 ‘‘(H) failure timely to provide information or 

11 attend meetings reasonably requested by the United 

12 States trustee (or the bankruptcy administrator, if 

13 any); 

14 ‘‘(I) failure timely to pay taxes owed after the 

15 date of the order for relief or to file tax returns due 

16 after the date of the order for relief; 

17 ‘‘(J) failure to file a disclosure statement, or to 

18 file or confirm a plan, within the time fixed by this 

19 title or by order of the court; 

20 ‘‘(K) failure to pay any fees or charges required 

21 under chapter 123 of title 28; 

22 ‘‘(L) revocation of an order of confirmation 

23 under section 1144; 

24 ‘‘(M) inability to effectuate substantial con25 summation of a confirmed plan; 
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1 ‘‘(N) material default by the debtor with re2 spect to a confirmed plan; 

3 ‘‘(O) termination of a confirmed plan by reason 

4 of the occurrence of a condition specified in the plan; 

5 and 

6 ‘‘(P) failure of the debtor to pay any domestic 

7 support obligation that first becomes payable after 

8 the date of the filing of the petition.’’. 

9 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

10 TRUSTEE.—Section 1104(a) of title 11, United States 

11 Code, is amended— 

12 (1) in paragraph (1), by striking ‘‘or’’ at the 

13 end; 

14 (2) in paragraph (2), by striking the period at 

15 the end and inserting ‘‘; or’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(3) if grounds exist to convert or dismiss the 

18 case under section 1112, but the court determines 

19 that the appointment of a trustee or an examiner is 

20 in the best interests of creditors and the estate.’’. 

21 SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED 

22 STATES CODE, WITH RESPECT TO SMALL 

23 BUSINESSES. 

24 Not later than 2 years after the date of enactment 

25 of this Act, the Administrator of the Small Business Ad-
237 

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1 ministration, in consultation with the Attorney General, 

2 the Director of the Executive Office for United States 

3 Trustees, and the Director of the Administrative Office 

4 of the United States Courts, shall— 

5 (1) conduct a study to determine— 

6 (A) the internal and external factors that 

7 cause small businesses, especially sole propri8 etorships, to become debtors in cases under title 

9 11, United States Code, and that cause certain 

10 small businesses to successfully complete cases 

11 under chapter 11 of such title; and 

12 (B) how Federal laws relating to bank13 ruptcy may be made more effective and efficient 

14 in assisting small businesses to remain viable; 

15 and 

16 (2) submit to the President pro tempore of the 

17 Senate and the Speaker of the House of Representa18 tives a report summarizing that study. 

19 SEC. 444. PAYMENT OF INTEREST. 

20 Section 362(d)(3) of title 11, United States Code, is 

21 amended— 

22 (1) by inserting ‘‘or 30 days after the court de23 termines that the debtor is subject to this para24 graph, whichever is later’’ after ‘‘90-day period)’’; 

25 and 
238 

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1 (2) by striking subparagraph (B) and inserting 

2 the following: 

3 ‘‘(B) the debtor has commenced monthly 

4 payments that— 

5 ‘‘(i) may, in the debtor’s sole discre6 tion, notwithstanding section 363(c)(2), be 

7 made from rents or other income generated 

8 before, on, or after the date of the com9 mencement of the case by or from the 

10 property to each creditor whose claim is se11 cured by such real estate (other than a 

12 claim secured by a judgment lien or by an 

13 unmatured statutory lien); and 

14 ‘‘(ii) are in an amount equal to inter15 est at the then applicable nondefault con16 tract rate of interest on the value of the 

17 creditor’s interest in the real estate; or’’. 

18 SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES. 

19 Section 503(b) of title 11, United States Code, is 

20 amended— 

21 (1) in paragraph (5), by striking ‘‘and’’ at the 

22 end; 

23 (2) in paragraph (6), by striking the period at 

24 the end and inserting a semicolon; and 

25 (3) by adding at the end the following: 
239 

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1 ‘‘(7) with respect to a nonresidential real prop2 erty lease previously assumed under section 365, 

3 and subsequently rejected, a sum equal to all mone4 tary obligations due, excluding those arising from or 

5 relating to a failure to operate or a penalty provi6 sion, for the period of 2 years following the later of 

7 the rejection date or the date of actual turnover of 

8 the premises, without reduction or setoff for any 

9 reason whatsoever except for sums actually received 

10 or to be received from an entity other than the debt11 or, and the claim for remaining sums due for the 

12 balance of the term of the lease shall be a claim 

13 under section 502(b)(6);’’. 

14 SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A 

15 PLAN ADMINISTRATOR OF AN EMPLOYEE 

16 BENEFIT PLAN. 

17 (a) IN GENERAL.—Section 521(a) of title 11, United 

18 States Code, as amended by sections 106 and 304, is 

19 amended— 

20 (1) in paragraph (5), by striking ‘‘and’’ at the 

21 end; 

22 (2) in paragraph (6), by striking the period at 

23 the end and inserting ‘‘; and’’; and 

24 (3) by adding after paragraph (6) the following: 
240 

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1 ‘‘(7) unless a trustee is serving in the case, con2 tinue to perform the obligations required of the ad3 ministrator (as defined in section 3 of the Employee 

4 Retirement Income Security Act of 1974) of an em5 ployee benefit plan if at the time of the commence6 ment of the case the debtor (or any entity des7 ignated by the debtor) served as such adminis8 trator.’’. 

9 (b) DUTIES OF TRUSTEES.—Section 704(a) of title 

10 11, United States Code, as amended by sections 102 and 

11 219, is amended— 

12 (1) in paragraph (10), by striking ‘‘and’’ at the 

13 end; and 

14 (2) by adding at the end the following: 

15 ‘‘(11) if, at the time of the commencement of 

16 the case, the debtor (or any entity designated by the 

17 debtor) served as the administrator (as defined in 

18 section 3 of the Employee Retirement Income Secu19 rity Act of 1974) of an employee benefit plan, con20 tinue to perform the obligations required of the ad21 ministrator; and’’. 

22 (c) CONFORMING AMENDMENT.—Section 1106(a)(1) 

23 of title 11, United States Code, is amended to read as 

24 follows: 
241 

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1 ‘‘(1) perform the duties of the trustee, as speci2 fied in paragraphs (2), (5), (7), (8), (9), (10), and 

3 (11) of section 704;’’. 

4 SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EM5 PLOYEES. 

6 Section 1114(d) of title 11, United States Code, is 

7 amended— 

8 (1) by striking ‘‘appoint’’ and inserting ‘‘order 

9 the appointment of’’, and 

10 (2) by adding at the end the following: ‘‘The 

11 United States trustee shall appoint any such com12 mittee.’’. 

13 TITLE V—MUNICIPAL 

14 BANKRUPTCY PROVISIONS 

15 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI16 TION. 

17 (a) TECHNICAL AMENDMENT RELATING TO MUNICI18 PALITIES.—Section 921(d) of title 11, United States 

19 Code, is amended by inserting ‘‘notwithstanding section 

20 301(b)’’ before the period at the end. 

21 (b) CONFORMING AMENDMENT.—Section 301 of title 

22 11, United States Code, is amended— 

23 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’; 

24 and 
242 

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1 (2) by striking the last sentence and inserting 

2 the following: 

3 ‘‘(b) The commencement of a voluntary case under 

4 a chapter of this title constitutes an order for relief under 

5 such chapter.’’. 

6 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP7 TER 9. 

8 Section 901(a) of title 11, United States Code, is 

9 amended— 

10 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 

11 (2) by inserting ‘‘559, 560, 561, 562,’’ after 

12 ‘‘557,’’. 

13 TITLE VI—BANKRUPTCY DATA 

14 SEC. 601. IMPROVED BANKRUPTCY STATISTICS. 

15 (a) IN GENERAL.—Chapter 6 of title 28, United 

16 States Code, is amended by adding at the end the fol17 lowing: 

18 ‘‘§ 159. Bankruptcy statistics 

19 ‘‘(a) The clerk of the district court, or the clerk of 

20 the bankruptcy court if one is certified pursuant to section 

21 156(b) of this title, shall collect statistics regarding debt22 ors who are individuals with primarily consumer debts 

23 seeking relief under chapters 7, 11, and 13 of title 11. 

24 Those statistics shall be in a standardized format pre25 scribed by the Director of the Administrative Office of the 
243 

•S 256 IS 

1 United States Courts (referred to in this section as the 

2 ‘Director’). 

3 ‘‘(b) The Director shall— 

4 ‘‘(1) compile the statistics referred to in sub5 section (a); 

6 ‘‘(2) make the statistics available to the public; 

7 and 

8 ‘‘(3) not later than July 1, 2008, and annually 

9 thereafter, prepare, and submit to Congress a report 

10 concerning the information collected under sub11 section (a) that contains an analysis of the informa12 tion. 

13 ‘‘(c) The compilation required under subsection (b) 

14 shall— 

15 ‘‘(1) be itemized, by chapter, with respect to 

16 title 11; 

17 ‘‘(2) be presented in the aggregate and for each 

18 district; and 

19 ‘‘(3) include information concerning— 

20 ‘‘(A) the total assets and total liabilities of 

21 the debtors described in subsection (a), and in 

22 each category of assets and liabilities, as re23 ported in the schedules prescribed pursuant to 

24 section 2075 of this title and filed by debtors; 
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1 ‘‘(B) the current monthly income, average 

2 income, and average expenses of debtors as re3 ported on the schedules and statements that 

4 each such debtor files under sections 521 and 

5 1322 of title 11; 

6 ‘‘(C) the aggregate amount of debt dis7 charged in cases filed during the reporting pe8 riod, determined as the difference between the 

9 total amount of debt and obligations of a debtor 

10 reported on the schedules and the amount of 

11 such debt reported in categories which are pre12 dominantly nondischargeable; 

13 ‘‘(D) the average period of time between 

14 the date of the filing of the petition and the 

15 closing of the case for cases closed during the 

16 reporting period; 

17 ‘‘(E) for cases closed during the reporting 

18 period— 

19 ‘‘(i) the number of cases in which a 

20 reaffirmation agreement was filed; and 

21 ‘‘(ii)(I) the total number of reaffirma22 tion agreements filed; 

23 ‘‘(II) of those cases in which a reaffir24 mation agreement was filed, the number of 
245 

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1 cases in which the debtor was not rep2 resented by an attorney; and 

3 ‘‘(III) of those cases in which a reaf4 firmation agreement was filed, the number 

5 of cases in which the reaffirmation agree6 ment was approved by the court; 

7 ‘‘(F) with respect to cases filed under 

8 chapter 13 of title 11, for the reporting pe9 riod— 

10 ‘‘(i)(I) the number of cases in which a 

11 final order was entered determining the 

12 value of property securing a claim in an 

13 amount less than the amount of the claim; 

14 and 

15 ‘‘(II) the number of final orders en16 tered determining the value of property se17 curing a claim; 

18 ‘‘(ii) the number of cases dismissed, 

19 the number of cases dismissed for failure 

20 to make payments under the plan, the 

21 number of cases refiled after dismissal, 

22 and the number of cases in which the plan 

23 was completed, separately itemized with re24 spect to the number of modifications made 

25 before completion of the plan, if any; and 
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1 ‘‘(iii) the number of cases in which 

2 the debtor filed another case during the 6- 

3 year period preceding the filing; 

4 ‘‘(G) the number of cases in which credi5 tors were fined for misconduct and any amount 

6 of punitive damages awarded by the court for 

7 creditor misconduct; and 

8 ‘‘(H) the number of cases in which sanc9 tions under rule 9011 of the Federal Rules of 

10 Bankruptcy Procedure were imposed against 

11 debtor’s attorney or damages awarded under 

12 such Rule.’’. 

13 (b) CLERICAL AMENDMENT.—The table of sections 

14 for chapter 6 of title 28, United States Code, is amended 

15 by adding at the end the following: 

‘‘159. Bankruptcy statistics.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall take effect 18 months after the date of 

18 enactment of this Act. 

19 SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK20 RUPTCY DATA. 

21 (a) AMENDMENT.—Chapter 39 of title 28, United 

22 States Code, is amended by adding at the end the fol23 lowing: 
247 

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1 ‘‘§ 589b. Bankruptcy data 

2 ‘‘(a) RULES.—The Attorney General shall, within a 

3 reasonable time after the effective date of this section, 

4 issue rules requiring uniform forms for (and from time 

5 to time thereafter to appropriately modify and approve)— 

6 ‘‘(1) final reports by trustees in cases under 

7 chapters 7, 12, and 13 of title 11; and 

8 ‘‘(2) periodic reports by debtors in possession or 

9 trustees in cases under chapter 11 of title 11. 

10 ‘‘(b) REPORTS.—Each report referred to in sub11 section (a) shall be designed (and the requirements as to 

12 place and manner of filing shall be established) so as to 

13 facilitate compilation of data and maximum possible ac14 cess of the public, both by physical inspection at one or 

15 more central filing locations, and by electronic access 

16 through the Internet or other appropriate media. 

17 ‘‘(c) REQUIRED INFORMATION.—The information re18 quired to be filed in the reports referred to in subsection 

19 (b) shall be that which is in the best interests of debtors 

20 and creditors, and in the public interest in reasonable and 

21 adequate information to evaluate the efficiency and practi22 cality of the Federal bankruptcy system. In issuing rules 

23 proposing the forms referred to in subsection (a), the At24 torney General shall strike the best achievable practical 

25 balance between— 
248 

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1 ‘‘(1) the reasonable needs of the public for in2 formation about the operational results of the Fed3 eral bankruptcy system; 

4 ‘‘(2) economy, simplicity, and lack of undue 

5 burden on persons with a duty to file reports; and 

6 ‘‘(3) appropriate privacy concerns and safe7 guards. 

8 ‘‘(d) FINAL REPORTS.—The uniform forms for final 

9 reports required under subsection (a) for use by trustees 

10 under chapters 7, 12, and 13 of title 11 shall, in addition 

11 to such other matters as are required by law or as the 

12 Attorney General in the discretion of the Attorney General 

13 shall propose, include with respect to a case under such 

14 title— 

15 ‘‘(1) information about the length of time the 

16 case was pending; 

17 ‘‘(2) assets abandoned; 

18 ‘‘(3) assets exempted; 

19 ‘‘(4) receipts and disbursements of the estate; 

20 ‘‘(5) expenses of administration, including for 

21 use under section 707(b), actual costs of admin22 istering cases under chapter 13 of title 11; 

23 ‘‘(6) claims asserted; 

24 ‘‘(7) claims allowed; and 
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1 ‘‘(8) distributions to claimants and claims dis2 charged without payment, 

3 in each case by appropriate category and, in cases under 

4 chapters 12 and 13 of title 11, date of confirmation of 

5 the plan, each modification thereto, and defaults by the 

6 debtor in performance under the plan. 

7 ‘‘(e) PERIODIC REPORTS.—The uniform forms for 

8 periodic reports required under subsection (a) for use by 

9 trustees or debtors in possession under chapter 11 of title 

10 11 shall, in addition to such other matters as are required 

11 by law or as the Attorney General in the discretion of the 

12 Attorney General shall propose, include— 

13 ‘‘(1) information about the industry classifica14 tion, published by the Department of Commerce, for 

15 the businesses conducted by the debtor; 

16 ‘‘(2) length of time the case has been pending; 

17 ‘‘(3) number of full-time employees as of the 

18 date of the order for relief and at the end of each 

19 reporting period since the case was filed; 

20 ‘‘(4) cash receipts, cash disbursements and 

21 profitability of the debtor for the most recent period 

22 and cumulatively since the date of the order for re23 lief; 
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1 ‘‘(5) compliance with title 11, whether or not 

2 tax returns and tax payments since the date of the 

3 order for relief have been timely filed and made; 

4 ‘‘(6) all professional fees approved by the court 

5 in the case for the most recent period and cumula6 tively since the date of the order for relief (sepa7 rately reported, for the professional fees incurred by 

8 or on behalf of the debtor, between those that would 

9 have been incurred absent a bankruptcy case and 

10 those not); and 

11 ‘‘(7) plans of reorganization filed and confirmed 

12 and, with respect thereto, by class, the recoveries of 

13 the holders, expressed in aggregate dollar values 

14 and, in the case of claims, as a percentage of total 

15 claims of the class allowed.’’. 

16 (b) CLERICAL AMENDMENT.—The table of sections 

17 for chapter 39 of title 28, United States Code, is amended 

18 by adding at the end the following: 

‘‘589b. Bankruptcy data.’’. 

19 SEC. 603. AUDIT PROCEDURES. 

20 (a) IN GENERAL.— 

21 (1) ESTABLISHMENT OF PROCEDURES.—The 

22 Attorney General (in judicial districts served by 

23 United States trustees) and the Judicial Conference 

24 of the United States (in judicial districts served by 

25 bankruptcy administrators) shall establish proce-
251 

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1 dures to determine the accuracy, veracity, and com2 pleteness of petitions, schedules, and other informa3 tion that the debtor is required to provide under sec4 tions 521 and 1322 of title 11, United States Code, 

5 and, if applicable, section 111 of such title, in cases 

6 filed under chapter 7 or 13 of such title in which the 

7 debtor is an individual. Such audits shall be in ac8 cordance with generally accepted auditing standards 

9 and performed by independent certified public ac10 countants or independent licensed public account11 ants, provided that the Attorney General and the 

12 Judicial Conference, as appropriate, may develop al13 ternative auditing standards not later than 2 years 

14 after the date of enactment of this Act. 

15 (2) PROCEDURES.—Those procedures required 

16 by paragraph (1) shall— 

17 (A) establish a method of selecting appro18 priate qualified persons to contract to perform 

19 those audits; 

20 (B) establish a method of randomly select21 ing cases to be audited, except that not less 

22 than 1 out of every 250 cases in each Federal 

23 judicial district shall be selected for audit; 

24 (C) require audits of schedules of income 

25 and expenses that reflect greater than average 
252 

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1 variances from the statistical norm of the dis2 trict in which the schedules were filed if those 

3 variances occur by reason of higher income or 

4 higher expenses than the statistical norm of the 

5 district in which the schedules were filed; and 

6 (D) establish procedures for providing, not 

7 less frequently than annually, public informa8 tion concerning the aggregate results of such 

9 audits including the percentage of cases, by dis10 trict, in which a material misstatement of in11 come or expenditures is reported. 

12 (b) AMENDMENTS.—Section 586 of title 28, United 

13 States Code, is amended— 

14 (1) in subsection (a), by striking paragraph (6) 

15 and inserting the following: 

16 ‘‘(6) make such reports as the Attorney General 

17 directs, including the results of audits performed 

18 under section 603(a) of the Bankruptcy Abuse Pre19 vention and Consumer Protection Act of 2005;’’; and 

20 (2) by adding at the end the following: 

21 ‘‘(f)(1) The United States trustee for each district is 

22 authorized to contract with auditors to perform audits in 

23 cases designated by the United States trustee, in accord24 ance with the procedures established under section 603(a) 
253 

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1 of the Bankruptcy Abuse Prevention and Consumer Pro2 tection Act of 2005. 

3 ‘‘(2)(A) The report of each audit referred to in para4 graph (1) shall be filed with the court and transmitted 

5 to the United States trustee. Each report shall clearly and 

6 conspicuously specify any material misstatement of income 

7 or expenditures or of assets identified by the person per8 forming the audit. In any case in which a material 

9 misstatement of income or expenditures or of assets has 

10 been reported, the clerk of the district court (or the clerk 

11 of the bankruptcy court if one is certified under section 

12 156(b) of this title) shall give notice of the misstatement 

13 to the creditors in the case. 

14 ‘‘(B) If a material misstatement of income or expend15 itures or of assets is reported, the United States trustee 

16 shall— 

17 ‘‘(i) report the material misstatement, if appro18 priate, to the United States Attorney pursuant to 

19 section 3057 of title 18; and 

20 ‘‘(ii) if advisable, take appropriate action, in21 cluding but not limited to commencing an adversary 

22 proceeding to revoke the debtor’s discharge pursuant 

23 to section 727(d) of title 11.’’. 

24 (c) AMENDMENTS TO SECTION 521 OF TITLE 11, 

25 U.S.C.—Section 521(a) of title 11, United States Code, 
254 

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1 as so designated by section 106, is amended in each of 

2 paragraphs (3) and (4) by inserting ‘‘or an auditor serving 

3 under section 586(f) of title 28’’ after ‘‘serving in the 

4 case’’. 

5 (d) AMENDMENTS TO SECTION 727 OF TITLE 11, 

6 U.S.C.—Section 727(d) of title 11, United States Code, 

7 is amended— 

8 (1) in paragraph (2), by striking ‘‘or’’ at the 

9 end; 

10 (2) in paragraph (3), by striking the period at 

11 the end and inserting ‘‘; or’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(4) the debtor has failed to explain satisfac14 torily— 

15 ‘‘(A) a material misstatement in an audit 

16 referred to in section 586(f) of title 28; or 

17 ‘‘(B) a failure to make available for inspec18 tion all necessary accounts, papers, documents, 

19 financial records, files, and all other papers, 

20 things, or property belonging to the debtor that 

21 are requested for an audit referred to in section 

22 586(f) of title 28.’’. 

23 (e) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect 18 months after the date of 

25 enactment of this Act. 
255 

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1 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY 

2 OF BANKRUPTCY DATA. 

3 It is the sense of Congress that— 

4 (1) the national policy of the United States 

5 should be that all data held by bankruptcy clerks in 

6 electronic form, to the extent such data reflects only 

7 public records (as defined in section 107 of title 11, 

8 United States Code), should be released in a usable 

9 electronic form in bulk to the public, subject to such 

10 appropriate privacy concerns and safeguards as Con11 gress and the Judicial Conference of the United 

12 States may determine; and 

13 (2) there should be established a bankruptcy 

14 data system in which— 

15 (A) a single set of data definitions and 

16 forms are used to collect data nationwide; and 

17 (B) data for any particular bankruptcy 

18 case are aggregated in the same electronic 

19 record. 

20 TITLE VII—BANKRUPTCY TAX 

21 PROVISIONS 

22 SEC. 701. TREATMENT OF CERTAIN LIENS. 

23 (a) TREATMENT OF CERTAIN LIENS.—Section 724 

24 of title 11, United States Code, is amended— 

25 (1) in subsection (b), in the matter preceding 

26 paragraph (1), by inserting ‘‘(other than to the ex-
256 

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1 tent that there is a properly perfected unavoidable 

2 tax lien arising in connection with an ad valorem tax 

3 on real or personal property of the estate)’’ after 

4 ‘‘under this title’’; 

5 (2) in subsection (b)(2), by inserting ‘‘(except 

6 that such expenses, other than claims for wages, sal7 aries, or commissions that arise after the date of the 

8 filing of the petition, shall be limited to expenses in9 curred under chapter 7 of this title and shall not in10 clude expenses incurred under chapter 11 of this 

11 title)’’ after ‘‘507(a)(1)’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(e) Before subordinating a tax lien on real or per14 sonal property of the estate, the trustee shall— 

15 ‘‘(1) exhaust the unencumbered assets of the 

16 estate; and 

17 ‘‘(2) in a manner consistent with section 

18 506(c), recover from property securing an allowed 

19 secured claim the reasonable, necessary costs and 

20 expenses of preserving or disposing of such property. 

21 ‘‘(f) Notwithstanding the exclusion of ad valorem tax 

22 liens under this section and subject to the requirements 

23 of subsection (e), the following may be paid from property 

24 of the estate which secures a tax lien, or the proceeds of 

25 such property: 
257 

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1 ‘‘(1) Claims for wages, salaries, and commis2 sions that are entitled to priority under section 

3 507(a)(4). 

4 ‘‘(2) Claims for contributions to an employee 

5 benefit plan entitled to priority under section 

6 507(a)(5).’’. 

7 (b) DETERMINATION OF TAX LIABILITY.—Section 

8 505(a)(2) of title 11, United States Code, is amended— 

9 (1) in subparagraph (A), by striking ‘‘or’’ at 

10 the end; 

11 (2) in subparagraph (B), by striking the period 

12 at the end and inserting ‘‘; or’’; and 

13 (3) by adding at the end the following: 

14 ‘‘(C) the amount or legality of any amount aris15 ing in connection with an ad valorem tax on real or 

16 personal property of the estate, if the applicable pe17 riod for contesting or redetermining that amount 

18 under any law (other than a bankruptcy law) has ex19 pired.’’. 

20 SEC. 702. TREATMENT OF FUEL TAX CLAIMS. 

21 Section 501 of title 11, United States Code, is 

22 amended by adding at the end the following: 

23 ‘‘(e) A claim arising from the liability of a debtor for 

24 fuel use tax assessed consistent with the requirements of 

25 section 31705 of title 49 may be filed by the base jurisdic-
258 

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1 tion designated pursuant to the International Fuel Tax 

2 Agreement (as defined in section 31701 of title 49) and, 

3 if so filed, shall be allowed as a single claim.’’. 

4 SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF 

5 TAXES. 

6 Section 505(b) of title 11, United States Code, is 

7 amended— 

8 (1) in the first sentence, by inserting ‘‘at the 

9 address and in the manner designated in paragraph 

10 (1)’’ after ‘‘determination of such tax’’; 

11 (2) by striking ‘‘(1) upon payment’’ and insert12 ing ‘‘(A) upon payment’’; 

13 (3) by striking ‘‘(A) such governmental unit’’ 

14 and inserting ‘‘(i) such governmental unit’’; 

15 (4) by striking ‘‘(B) such governmental unit’’ 

16 and inserting ‘‘(ii) such governmental unit’’; 

17 (5) by striking ‘‘(2) upon payment’’ and insert18 ing ‘‘(B) upon payment’’; 

19 (6) by striking ‘‘(3) upon payment’’ and insert20 ing ‘‘(C) upon payment’’; 

21 (7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and 

22 (8) by inserting before paragraph (2), as so 

23 designated, the following: 
259 

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1 ‘‘(b)(1)(A) The clerk shall maintain a list under 

2 which a Federal, State, or local governmental unit respon3 sible for the collection of taxes within the district may— 

4 ‘‘(i) designate an address for service of requests 

5 under this subsection; and 

6 ‘‘(ii) describe where further information con7 cerning additional requirements for filing such re8 quests may be found. 

9 ‘‘(B) If such governmental unit does not designate 

10 an address and provide such address to the clerk under 

11 subparagraph (A), any request made under this subsection 

12 may be served at the address for the filing of a tax return 

13 or protest with the appropriate taxing authority of such 

14 governmental unit.’’. 

15 SEC. 704. RATE OF INTEREST ON TAX CLAIMS. 

16 (a) IN GENERAL.—Subchapter I of chapter 5 of title 

17 11, United States Code, is amended by adding at the end 

18 the following: 

19 ‘‘§ 511. Rate of interest on tax claims 

20 ‘‘(a) If any provision of this title requires the pay21 ment of interest on a tax claim or on an administrative 

22 expense tax, or the payment of interest to enable a creditor 

23 to receive the present value of the allowed amount of a 

24 tax claim, the rate of interest shall be the rate determined 

25 under applicable nonbankruptcy law. 
260 

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1 ‘‘(b) In the case of taxes paid under a confirmed plan 

2 under this title, the rate of interest shall be determined 

3 as of the calendar month in which the plan is confirmed.’’. 

4 (b) CLERICAL AMENDMENT.—The table of sections 

5 for subchapter I of chapter 5 of title 11, United States 

6 Code, is amended by adding at the end the following: 

‘‘511. Rate of interest on tax claims.’’. 

7 SEC. 705. PRIORITY OF TAX CLAIMS. 

8 Section 507(a)(8) of title 11, United States Code, is 

9 amended— 

10 (1) in subparagraph (A)— 

11 (A) in the matter preceding clause (i), by 

12 inserting ‘‘for a taxable year ending on or be13 fore the date of the filing of the petition’’ after 

14 ‘‘gross receipts’’; 

15 (B) in clause (i), by striking ‘‘for a taxable 

16 year ending on or before the date of the filing 

17 of the petition’’; and 

18 (C) by striking clause (ii) and inserting the 

19 following: 

20 ‘‘(ii) assessed within 240 days before 

21 the date of the filing of the petition, exclu22 sive of— 

23 ‘‘(I) any time during which an 

24 offer in compromise with respect to 

25 that tax was pending or in effect dur-
261 

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1 ing that 240-day period, plus 30 days; 

2 and 

3 ‘‘(II) any time during which a 

4 stay of proceedings against collections 

5 was in effect in a prior case under 

6 this title during that 240-day period, 

7 plus 90 days.’’; and 

8 (2) by adding at the end the following: 

9 ‘‘An otherwise applicable time period specified in 

10 this paragraph shall be suspended for any period 

11 during which a governmental unit is prohibited 

12 under applicable nonbankruptcy law from collecting 

13 a tax as a result of a request by the debtor for a 

14 hearing and an appeal of any collection action taken 

15 or proposed against the debtor, plus 90 days; plus 

16 any time during which the stay of proceedings was 

17 in effect in a prior case under this title or during 

18 which collection was precluded by the existence of 1 

19 or more confirmed plans under this title, plus 90 

20 days.’’. 

21 SEC. 706. PRIORITY PROPERTY TAXES INCURRED. 

22 Section 507(a)(8)(B) of title 11, United States Code, 

23 is amended by striking ‘‘assessed’’ and inserting ‘‘in24 curred’’. 
262 

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1 SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP2 TER 13. 

3 Section 1328(a)(2) of title 11, United States Code, 

4 as amended by section 314, is amended by striking ‘‘para5 graph’’ and inserting ‘‘section 507(a)(8)(C) or in para6 graph (1)(B), (1)(C),’’. 

7 SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP8 TER 11. 

9 Section 1141(d) of title 11, United States Code, as 

10 amended by sections 321 and 330, is amended by adding 

11 at the end the following: 

12 ‘‘(6) Notwithstanding paragraph (1), the confirma13 tion of a plan does not discharge a debtor that is a cor14 poration from any debt— 

15 ‘‘(A) of a kind specified in paragraph (2)(A) or 

16 (2)(B) of section 523(a) that is owed to a domestic 

17 governmental unit, or owed to a person as the result 

18 of an action filed under subchapter III of chapter 37 

19 of title 31 or any similar State statute; or 

20 ‘‘(B) for a tax or customs duty with respect to 

21 which the debtor— 

22 ‘‘(i) made a fraudulent return; or 

23 ‘‘(ii) willfully attempted in any manner to 

24 evade or to defeat such tax or such customs 

25 duty.’’. 
263 

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1 SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO 

2 PREPETITION TAXES. 

3 Section 362(a)(8) of title 11, United States Code, is 

4 amended by striking ‘‘the debtor’’ and inserting ‘‘a cor5 porate debtor’s tax liability for a taxable period the bank6 ruptcy court may determine or concerning the tax liability 

7 of a debtor who is an individual for a taxable period end8 ing before the date of the order for relief under this title’’. 

9 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 

10 CASES. 

11 Section 1129(a)(9) of title 11, United States Code, 

12 is amended— 

13 (1) in subparagraph (B), by striking ‘‘and’’ at 

14 the end; 

15 (2) in subparagraph (C), by striking ‘‘deferred 

16 cash payments,’’ and all that follows through the 

17 end of the subparagraph, and inserting ‘‘regular in18 stallment payments in cash— 

19 ‘‘(i) of a total value, as of the effective 

20 date of the plan, equal to the allowed 

21 amount of such claim; 

22 ‘‘(ii) over a period ending not later 

23 than 5 years after the date of the order for 

24 relief under section 301, 302, or 303; and 

25 ‘‘(iii) in a manner not less favorable 

26 than the most favored nonpriority unse-
264 

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1 cured claim provided for by the plan (other 

2 than cash payments made to a class of 

3 creditors under section 1122(b)); and’’; 

4 and 

5 (3) by adding at the end the following: 

6 ‘‘(D) with respect to a secured claim which 

7 would otherwise meet the description of an un8 secured claim of a governmental unit under sec9 tion 507(a)(8), but for the secured status of 

10 that claim, the holder of that claim will receive 

11 on account of that claim, cash payments, in the 

12 same manner and over the same period, as pre13 scribed in subparagraph (C).’’. 

14 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB15 ITED. 

16 Section 545(2) of title 11, United States Code, is 

17 amended by inserting before the semicolon at the end the 

18 following: ‘‘, except in any case in which a purchaser is 

19 a purchaser described in section 6323 of the Internal Rev20 enue Code of 1986, or in any other similar provision of 

21 State or local law’’. 

22 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI23 NESS. 

24 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of 

25 title 28, United States Code, is amended— 
265 

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1 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and 

2 (2) by adding at the end the following: 

3 ‘‘(b) A tax under subsection (a) shall be paid on or 

4 before the due date of the tax under applicable nonbank5 ruptcy law, unless— 

6 ‘‘(1) the tax is a property tax secured by a lien 

7 against property that is abandoned under section 

8 554 of title 11, within a reasonable period of time 

9 after the lien attaches, by the trustee in a case 

10 under title 11; or 

11 ‘‘(2) payment of the tax is excused under a spe12 cific provision of title 11. 

13 ‘‘(c) In a case pending under chapter 7 of title 11, 

14 payment of a tax may be deferred until final distribution 

15 is made under section 726 of title 11, if— 

16 ‘‘(1) the tax was not incurred by a trustee duly 

17 appointed or elected under chapter 7 of title 11; or 

18 ‘‘(2) before the due date of the tax, an order of 

19 the court makes a finding of probable insufficiency 

20 of funds of the estate to pay in full the administra21 tive expenses allowed under section 503(b) of title 

22 11 that have the same priority in distribution under 

23 section 726(b) of title 11 as the priority of that 

24 tax.’’. 
266 

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1 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.— 

2 Section 503(b)(1)(B)(i) of title 11, United States Code, 

3 is amended by inserting ‘‘whether secured or unsecured, 

4 including property taxes for which liability is in rem, in 

5 personam, or both,’’ before ‘‘except’’. 

6 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

7 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of 

8 title 11, United States Code, is amended— 

9 (1) in subparagraph (B), by striking ‘‘and’’ at 

10 the end; 

11 (2) in subparagraph (C), by adding ‘‘and’’ at 

12 the end; and 

13 (3) by adding at the end the following: 

14 ‘‘(D) notwithstanding the requirements of sub15 section (a), a governmental unit shall not be re16 quired to file a request for the payment of an ex17 pense described in subparagraph (B) or (C), as a 

18 condition of its being an allowed administrative ex19 pense;’’. 

20 (d) PAYMENT OF TAXES AND FEES AS SECURED

21 CLAIMS.—Section 506 of title 11, United States Code, is 

22 amended— 

23 (1) in subsection (b), by inserting ‘‘or State 

24 statute’’ after ‘‘agreement’’; and 
267 

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1 (2) in subsection (c), by inserting ‘‘, including 

2 the payment of all ad valorem property taxes with 

3 respect to the property’’ before the period at the 

4 end. 

5 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS. 

6 Section 726(a)(1) of title 11, United States Code, is 

7 amended by striking ‘‘before the date on which the trustee 

8 commences distribution under this section;’’ and inserting 

9 the following: ‘‘on or before the earlier of— 

10 ‘‘(A) the date that is 10 days after the 

11 mailing to creditors of the summary of the 

12 trustee’s final report; or 

13 ‘‘(B) the date on which the trustee com14 mences final distribution under this section;’’. 

15 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU16 THORITIES. 

17 Section 523(a) of title 11, United States Code, as 

18 amended by sections 215 and 224, is amended— 

19 (1) in paragraph (1)(B)— 

20 (A) in the matter preceding clause (i), by 

21 inserting ‘‘or equivalent report or notice,’’ after 

22 ‘‘a return,’’; 

23 (B) in clause (i), by inserting ‘‘or given’’ 

24 after ‘‘filed’’; and 

25 (C) in clause (ii)— 
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1 (i) by inserting ‘‘or given’’ after 

2 ‘‘filed’’; and 

3 (ii) by inserting ‘‘, report, or notice’’ 

4 after ‘‘return’’; and 

5 (2) by adding at the end the following: 

6 ‘‘For purposes of this subsection, the term ‘return’ means 

7 a return that satisfies the requirements of applicable non8 bankruptcy law (including applicable filing requirements). 

9 Such term includes a return prepared pursuant to section 

10 6020(a) of the Internal Revenue Code of 1986, or similar 

11 State or local law, or a written stipulation to a judgment 

12 or a final order entered by a nonbankruptcy tribunal, but 

13 does not include a return made pursuant to section 

14 6020(b) of the Internal Revenue Code of 1986, or a simi15 lar State or local law.’’. 

16 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN17 PAID TAXES. 

18 Section 505(b)(2) of title 11, United States Code, as 

19 amended by section 703, is amended by inserting ‘‘the es20 tate,’’ after ‘‘misrepresentation,’’. 

21 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON22 FIRM CHAPTER 13 PLANS. 

23 (a) FILING OF PREPETITION TAX RETURNS RE24 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of 

25 title 11, United States Code, as amended by sections 102, 
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1 213, and 306, is amended by inserting after paragraph 

2 (8) the following: 

3 ‘‘(9) the debtor has filed all applicable Federal, 

4 State, and local tax returns as required by section 

5 1308.’’. 

6 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

7 RETURNS.— 

8 (1) IN GENERAL.—Subchapter I of chapter 13 

9 of title 11, United States Code, is amended by add10 ing at the end the following: 

11 ‘‘§ 1308. Filing of prepetition tax returns 

12 ‘‘(a) Not later than the day before the date on which 

13 the meeting of the creditors is first scheduled to be held 

14 under section 341(a), if the debtor was required to file 

15 a tax return under applicable nonbankruptcy law, the 

16 debtor shall file with appropriate tax authorities all tax 

17 returns for all taxable periods ending during the 4-year 

18 period ending on the date of the filing of the petition. 

19 ‘‘(b)(1) Subject to paragraph (2), if the tax returns 

20 required by subsection (a) have not been filed by the date 

21 on which the meeting of creditors is first scheduled to be 

22 held under section 341(a), the trustee may hold open that 

23 meeting for a reasonable period of time to allow the debtor 

24 an additional period of time to file any unfiled returns, 
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1 but such additional period of time shall not extend be2 yond— 

3 ‘‘(A) for any return that is past due as of the 

4 date of the filing of the petition, the date that is 120 

5 days after the date of that meeting; or 

6 ‘‘(B) for any return that is not past due as of 

7 the date of the filing of the petition, the later of— 

8 ‘‘(i) the date that is 120 days after the 

9 date of that meeting; or 

10 ‘‘(ii) the date on which the return is due 

11 under the last automatic extension of time for 

12 filing that return to which the debtor is enti13 tled, and for which request is timely made, in 

14 accordance with applicable nonbankruptcy law. 

15 ‘‘(2) After notice and a hearing, and order entered 

16 before the tolling of any applicable filing period deter17 mined under this subsection, if the debtor demonstrates 

18 by a preponderance of the evidence that the failure to file 

19 a return as required under this subsection is attributable 

20 to circumstances beyond the control of the debtor, the 

21 court may extend the filing period established by the trust22 ee under this subsection for— 

23 ‘‘(A) a period of not more than 30 days for re24 turns described in paragraph (1); and 
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1 ‘‘(B) a period not to extend after the applicable 

2 extended due date for a return described in para3 graph (2). 

4 ‘‘(c) For purposes of this section, the term ‘return’ 

5 includes a return prepared pursuant to subsection (a) or 

6 (b) of section 6020 of the Internal Revenue Code of 1986, 

7 or a similar State or local law, or a written stipulation 

8 to a judgment or a final order entered by a nonbankruptcy 

9 tribunal.’’. 

10 (2) CONFORMING AMENDMENT.—The table of 

11 sections for subchapter I of chapter 13 of title 11, 

12 United States Code, is amended by adding at the 

13 end the following: 

‘‘1308. Filing of prepetition tax returns.’’. 

14 (c) DISMISSAL OR CONVERSION ON FAILURE TO

15 COMPLY.—Section 1307 of title 11, United States Code, 

16 is amended— 

17 (1) by redesignating subsections (e) and (f) as 

18 subsections (f) and (g), respectively; and 

19 (2) by inserting after subsection (d) the fol20 lowing: 

21 ‘‘(e) Upon the failure of the debtor to file a tax return 

22 under section 1308, on request of a party in interest or 

23 the United States trustee and after notice and a hearing, 

24 the court shall dismiss a case or convert a case under this 
272 

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1 chapter to a case under chapter 7 of this title, whichever 

2 is in the best interest of the creditors and the estate.’’. 

3 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of 

4 title 11, United States Code, is amended by inserting be5 fore the period at the end the following: ‘‘, and except that 

6 in a case under chapter 13, a claim of a governmental 

7 unit for a tax with respect to a return filed under section 

8 1308 shall be timely if the claim is filed on or before the 

9 date that is 60 days after the date on which such return 

10 was filed as required’’. 

11 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

12 CONFIRMATION.—It is the sense of Congress that the Ju13 dicial Conference of the United States should, as soon as 

14 practicable after the date of enactment of this Act, pro15 pose amended Federal Rules of Bankruptcy Procedure 

16 that provide— 

17 (1) notwithstanding the provisions of Rule 

18 3015(f), in cases under chapter 13 of title 11, 

19 United States Code, that an objection to the con20 firmation of a plan filed by a governmental unit on 

21 or before the date that is 60 days after the date on 

22 which the debtor files all tax returns required under 

23 sections 1308 and 1325(a)(7) of title 11, United 

24 States Code, shall be treated for all purposes as if 
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1 such objection had been timely filed before such con2 firmation; and 

3 (2) in addition to the provisions of Rule 3007, 

4 in a case under chapter 13 of title 11, United States 

5 Code, that no objection to a claim for a tax with re6 spect to which a return is required to be filed under 

7 section 1308 of title 11, United States Code, shall 

8 be filed until such return has been filed as required. 

9 SEC. 717. STANDARDS FOR TAX DISCLOSURE. 

10 Section 1125(a)(1) of title 11, United States Code, 

11 is amended— 

12 (1) by inserting ‘‘including a discussion of the 

13 potential material Federal tax consequences of the 

14 plan to the debtor, any successor to the debtor, and 

15 a hypothetical investor typical of the holders of 

16 claims or interests in the case,’’ after ‘‘records,’’; 

17 and 

18 (2) by striking ‘‘a hypothetical reasonable inves19 tor typical of holders of claims or interests’’ and in20 serting ‘‘such a hypothetical investor’’. 

21 SEC. 718. SETOFF OF TAX REFUNDS. 

22 Section 362(b) of title 11, United States Code, as 

23 amended by sections 224, 303, 311, and 401, is amended 

24 by inserting after paragraph (25) the following: 
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1 ‘‘(26) under subsection (a), of the setoff under 

2 applicable nonbankruptcy law of an income tax re3 fund, by a governmental unit, with respect to a tax4 able period that ended before the date of the order 

5 for relief against an income tax liability for a taxable 

6 period that also ended before the date of the order 

7 for relief, except that in any case in which the setoff 

8 of an income tax refund is not permitted under ap9 plicable nonbankruptcy law because of a pending ac10 tion to determine the amount or legality of a tax li11 ability, the governmental unit may hold the refund 

12 pending the resolution of the action, unless the 

13 court, on the motion of the trustee and after notice 

14 and a hearing, grants the taxing authority adequate 

15 protection (within the meaning of section 361) for 

16 the secured claim of such authority in the setoff 

17 under section 506(a);’’. 

18 SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT19 MENT OF STATE AND LOCAL TAXES. 

20 (a) IN GENERAL.— 

21 (1) SPECIAL PROVISIONS.—Section 346 of title 

22 11, United States Code, is amended to read as fol23 lows: 
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1 ‘‘§ 346. Special provisions related to the treatment of 

2 State and local taxes 

3 ‘‘(a) Whenever the Internal Revenue Code of 1986 

4 provides that a separate taxable estate or entity is created 

5 in a case concerning a debtor under this title, and the in6 come, gain, loss, deductions, and credits of such estate 

7 shall be taxed to or claimed by the estate, a separate tax8 able estate is also created for purposes of any State and 

9 local law imposing a tax on or measured by income and 

10 such income, gain, loss, deductions, and credits shall be 

11 taxed to or claimed by the estate and may not be taxed 

12 to or claimed by the debtor. The preceding sentence shall 

13 not apply if the case is dismissed. The trustee shall make 

14 tax returns of income required under any such State or 

15 local law. 

16 ‘‘(b) Whenever the Internal Revenue Code of 1986 

17 provides that no separate taxable estate shall be created 

18 in a case concerning a debtor under this title, and the in19 come, gain, loss, deductions, and credits of an estate shall 

20 be taxed to or claimed by the debtor, such income, gain, 

21 loss, deductions, and credits shall be taxed to or claimed 

22 by the debtor under a State or local law imposing a tax 

23 on or measured by income and may not be taxed to or 

24 claimed by the estate. The trustee shall make such tax 

25 returns of income of corporations and of partnerships as 

26 are required under any State or local law, but with respect 
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1 to partnerships, shall make such returns only to the extent 

2 such returns are also required to be made under such 

3 Code. The estate shall be liable for any tax imposed on 

4 such corporation or partnership, but not for any tax im5 posed on partners or members. 

6 ‘‘(c) With respect to a partnership or any entity treat7 ed as a partnership under a State or local law imposing 

8 a tax on or measured by income that is a debtor in a case 

9 under this title, any gain or loss resulting from a distribu10 tion of property from such partnership, or any distributive 

11 share of any income, gain, loss, deduction, or credit of a 

12 partner or member that is distributed, or considered dis13 tributed, from such partnership, after the commencement 

14 of the case, is gain, loss, income, deduction, or credit, as 

15 the case may be, of the partner or member, and if such 

16 partner or member is a debtor in a case under this title, 

17 shall be subject to tax in accordance with subsection (a) 

18 or (b). 

19 ‘‘(d) For purposes of any State or local law imposing 

20 a tax on or measured by income, the taxable period of 

21 a debtor in a case under this title shall terminate only 

22 if and to the extent that the taxable period of such debtor 

23 terminates under the Internal Revenue Code of 1986. 

24 ‘‘(e) The estate in any case described in subsection 

25 (a) shall use the same accounting method as the debtor 
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1 used immediately before the commencement of the case, 

2 if such method of accounting complies with applicable non3 bankruptcy tax law. 

4 ‘‘(f) For purposes of any State or local law imposing 

5 a tax on or measured by income, a transfer of property 

6 from the debtor to the estate or from the estate to the 

7 debtor shall not be treated as a disposition for purposes 

8 of any provision assigning tax consequences to a disposi9 tion, except to the extent that such transfer is treated as 

10 a disposition under the Internal Revenue Code of 1986. 

11 ‘‘(g) Whenever a tax is imposed pursuant to a State 

12 or local law imposing a tax on or measured by income pur13 suant to subsection (a) or (b), such tax shall be imposed 

14 at rates generally applicable to the same types of entities 

15 under such State or local law. 

16 ‘‘(h) The trustee shall withhold from any payment of 

17 claims for wages, salaries, commissions, dividends, inter18 est, or other payments, or collect, any amount required 

19 to be withheld or collected under applicable State or local 

20 tax law, and shall pay such withheld or collected amount 

21 to the appropriate governmental unit at the time and in 

22 the manner required by such tax law, and with the same 

23 priority as the claim from which such amount was with24 held or collected was paid. 
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1 ‘‘(i)(1) To the extent that any State or local law im2 posing a tax on or measured by income provides for the 

3 carryover of any tax attribute from one taxable period to 

4 a subsequent taxable period, the estate shall succeed to 

5 such tax attribute in any case in which such estate is sub6 ject to tax under subsection (a). 

7 ‘‘(2) After such a case is closed or dismissed, the 

8 debtor shall succeed to any tax attribute to which the es9 tate succeeded under paragraph (1) to the extent con10 sistent with the Internal Revenue Code of 1986. 

11 ‘‘(3) The estate may carry back any loss or tax at12 tribute to a taxable period of the debtor that ended before 

13 the date of the order for relief under this title to the extent 

14 that— 

15 ‘‘(A) applicable State or local tax law provides 

16 for a carryback in the case of the debtor; and 

17 ‘‘(B) the same or a similar tax attribute may be 

18 carried back by the estate to such a taxable period 

19 of the debtor under the Internal Revenue Code of 

20 1986. 

21 ‘‘(j)(1) For purposes of any State or local law impos22 ing a tax on or measured by income, income is not realized 

23 by the estate, the debtor, or a successor to the debtor by 

24 reason of discharge of indebtedness in a case under this 
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1 title, except to the extent, if any, that such income is sub2 ject to tax under the Internal Revenue Code of 1986. 

3 ‘‘(2) Whenever the Internal Revenue Code of 1986 

4 provides that the amount excluded from gross income in 

5 respect of the discharge of indebtedness in a case under 

6 this title shall be applied to reduce the tax attributes of 

7 the debtor or the estate, a similar reduction shall be made 

8 under any State or local law imposing a tax on or meas9 ured by income to the extent such State or local law recog10 nizes such attributes. Such State or local law may also 

11 provide for the reduction of other attributes to the extent 

12 that the full amount of income from the discharge of in13 debtedness has not been applied. 

14 ‘‘(k)(1) Except as provided in this section and section 

15 505, the time and manner of filing tax returns and the 

16 items of income, gain, loss, deduction, and credit of any 

17 taxpayer shall be determined under applicable nonbank18 ruptcy law. 

19 ‘‘(2) For Federal tax purposes, the provisions of this 

20 section are subject to the Internal Revenue Code of 1986 

21 and other applicable Federal nonbankruptcy law.’’. 

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for chapter 3 of title 11, United States Code, 

24 is amended by striking the item relating to section 

25 346 and inserting the following: 

‘‘346. Special provisions related to the treatment of State and local taxes.’’. 
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1 (b) CONFORMING AMENDMENTS.—Title 11 of the 

2 United States Code is amended— 

3 (1) by striking section 728; 

4 (2) in the table of sections for chapter 7 by 

5 striking the item relating to section 728; 

6 (3) in section 1146— 

7 (A) by striking subsections (a) and (b); 

8 and 

9 (B) by redesignating subsections (c) and 

10 (d) as subsections (a) and (b), respectively; and 

11 (4) in section 1231— 

12 (A) by striking subsections (a) and (b); 

13 and 

14 (B) by redesignating subsections (c) and 

15 (d) as subsections (a) and (b), respectively. 

16 SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX 

17 RETURNS. 

18 Section 521 of title 11, United States Code, as 

19 amended by sections 106, 225, 305, 315, and 316, is 

20 amended by adding at the end the following: 

21 ‘‘(j)(1) Notwithstanding any other provision of this 

22 title, if the debtor fails to file a tax return that becomes 

23 due after the commencement of the case or to properly 

24 obtain an extension of the due date for filing such return, 
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1 the taxing authority may request that the court enter an 

2 order converting or dismissing the case. 

3 ‘‘(2) If the debtor does not file the required return 

4 or obtain the extension referred to in paragraph (1) within 

5 90 days after a request is filed by the taxing authority 

6 under that paragraph, the court shall convert or dismiss 

7 the case, whichever is in the best interests of creditors and 

8 the estate.’’. 

9 TITLE VIII—ANCILLARY AND 

10 OTHER CROSS-BORDER CASES 

11 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, 

12 UNITED STATES CODE. 

13 (a) IN GENERAL.—Title 11, United States Code, is 

14 amended by inserting after chapter 13 the following: 

15 ‘‘CHAPTER 15—ANCILLARY AND OTHER 

16 CROSS-BORDER CASES 

‘‘Sec. 

‘‘1501. Purpose and scope of application. 

‘‘SUBCHAPTER I—GENERAL PROVISIONS

‘‘1502. Definitions. 

‘‘1503. International obligations of the United States. 

‘‘1504. Commencement of ancillary case. 

‘‘1505. Authorization to act in a foreign country. 

‘‘1506. Public policy exception. 

‘‘1507. Additional assistance. 

‘‘1508. Interpretation. 

‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS

TO THE COURT

‘‘1509. Right of direct access. 

‘‘1510. Limited jurisdiction. 

‘‘1511. Commencement of case under section 301 or 303. 

‘‘1512. Participation of a foreign representative in a case under this title. 

‘‘1513. Access of foreign creditors to a case under this title. 
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‘‘1514. Notification to foreign creditors concerning a case under this title. 

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

‘‘1515. Application for recognition. 

‘‘1516. Presumptions concerning recognition. 

‘‘1517. Order granting recognition. 

‘‘1518. Subsequent information. 

‘‘1519. Relief that may be granted upon filing petition for recognition. 

‘‘1520. Effects of recognition of a foreign main proceeding. 

‘‘1521. Relief that may be granted upon recognition. 

‘‘1522. Protection of creditors and other interested persons. 

‘‘1523. Actions to avoid acts detrimental to creditors. 

‘‘1524. Intervention by a foreign representative. 

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND FOREIGN

REPRESENTATIVES

‘‘1525. Cooperation and direct communication between the court and foreign 

courts or foreign representatives. 

‘‘1526. Cooperation and direct communication between the trustee and foreign 

courts or foreign representatives. 

‘‘1527. Forms of cooperation. 

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘1528. Commencement of a case under this title after recognition of a foreign 

main proceeding. 

‘‘1529. Coordination of a case under this title and a foreign proceeding. 

‘‘1530. Coordination of more than 1 foreign proceeding. 

‘‘1531. Presumption of insolvency based on recognition of a foreign main proceeding. 

‘‘1532. Rule of payment in concurrent proceedings. 

1 ‘‘§ 1501. Purpose and scope of application 

2 ‘‘(a) The purpose of this chapter is to incorporate the 

3 Model Law on Cross-Border Insolvency so as to provide 

4 effective mechanisms for dealing with cases of cross-bor5 der insolvency with the objectives of— 

6 ‘‘(1) cooperation between— 

7 ‘‘(A) courts of the United States, United 

8 States trustees, trustees, examiners, debtors, 

9 and debtors in possession; and 
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1 ‘‘(B) the courts and other competent au2 thorities of foreign countries involved in cross3 border insolvency cases; 

4 ‘‘(2) greater legal certainty for trade and in5 vestment; 

6 ‘‘(3) fair and efficient administration of cross7 border insolvencies that protects the interests of all 

8 creditors, and other interested entities, including the 

9 debtor; 

10 ‘‘(4) protection and maximization of the value 

11 of the debtor’s assets; and 

12 ‘‘(5) facilitation of the rescue of financially 

13 troubled businesses, thereby protecting investment 

14 and preserving employment. 

15 ‘‘(b) This chapter applies where— 

16 ‘‘(1) assistance is sought in the United States 

17 by a foreign court or a foreign representative in con18 nection with a foreign proceeding; 

19 ‘‘(2) assistance is sought in a foreign country in 

20 connection with a case under this title; 

21 ‘‘(3) a foreign proceeding and a case under this 

22 title with respect to the same debtor are pending 

23 concurrently; or 

24 ‘‘(4) creditors or other interested persons in a 

25 foreign country have an interest in requesting the 
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1 commencement of, or participating in, a case or pro2 ceeding under this title. 

3 ‘‘(c) This chapter does not apply to— 

4 ‘‘(1) a proceeding concerning an entity, other 

5 than a foreign insurance company, identified by ex6 clusion in section 109(b); 

7 ‘‘(2) an individual, or to an individual and such 

8 individual’s spouse, who have debts within the limits 

9 specified in section 109(e) and who are citizens of 

10 the United States or aliens lawfully admitted for 

11 permanent residence in the United States; or 

12 ‘‘(3) an entity subject to a proceeding under the 

13 Securities Investor Protection Act of 1970, a stock14 broker subject to subchapter III of chapter 7 of this 

15 title, or a commodity broker subject to subchapter 

16 IV of chapter 7 of this title. 

17 ‘‘(d) The court may not grant relief under this chap18 ter with respect to any deposit, escrow, trust fund, or 

19 other security required or permitted under any applicable 

20 State insurance law or regulation for the benefit of claim 

21 holders in the United States. 

22 ‘‘SUBCHAPTER I—GENERAL PROVISIONS 

23 ‘‘§ 1502. Definitions 

24 ‘‘For the purposes of this chapter, the term— 
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1 ‘‘(1) ‘debtor’ means an entity that is the subject 

2 of a foreign proceeding; 

3 ‘‘(2) ‘establishment’ means any place of oper4 ations where the debtor carries out a nontransitory 

5 economic activity; 

6 ‘‘(3) ‘foreign court’ means a judicial or other 

7 authority competent to control or supervise a foreign 

8 proceeding; 

9 ‘‘(4) ‘foreign main proceeding’ means a foreign 

10 proceeding pending in the country where the debtor 

11 has the center of its main interests; 

12 ‘‘(5) ‘foreign nonmain proceeding’ means a for13 eign proceeding, other than a foreign main pro14 ceeding, pending in a country where the debtor has 

15 an establishment; 

16 ‘‘(6) ‘trustee’ includes a trustee, a debtor in 

17 possession in a case under any chapter of this title, 

18 or a debtor under chapter 9 of this title; 

19 ‘‘(7) ‘recognition’ means the entry of an order 

20 granting recognition of a foreign main proceeding or 

21 foreign nonmain proceeding under this chapter; and 

22 ‘‘(8) ‘within the territorial jurisdiction of the 

23 United States’, when used with reference to property 

24 of a debtor, refers to tangible property located with25 in the territory of the United States and intangible 
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1 property deemed under applicable nonbankruptcy 

2 law to be located within that territory, including any 

3 property subject to attachment or garnishment that 

4 may properly be seized or garnished by an action in 

5 a Federal or State court in the United States. 

6 ‘‘§ 1503. International obligations of the United States 

7 ‘‘To the extent that this chapter conflicts with an ob8 ligation of the United States arising out of any treaty or 

9 other form of agreement to which it is a party with one 

10 or more other countries, the requirements of the treaty 

11 or agreement prevail. 

12 ‘‘§ 1504. Commencement of ancillary case 

13 ‘‘A case under this chapter is commenced by the filing 

14 of a petition for recognition of a foreign proceeding under 

15 section 1515. 

16 ‘‘§ 1505. Authorization to act in a foreign country 

17 ‘‘A trustee or another entity (including an examiner) 

18 may be authorized by the court to act in a foreign country 

19 on behalf of an estate created under section 541. An entity 

20 authorized to act under this section may act in any way 

21 permitted by the applicable foreign law. 

22 ‘‘§ 1506. Public policy exception 

23 ‘‘Nothing in this chapter prevents the court from re24 fusing to take an action governed by this chapter if the 
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1 action would be manifestly contrary to the public policy 

2 of the United States. 

3 ‘‘§ 1507. Additional assistance 

4 ‘‘(a) Subject to the specific limitations stated else5 where in this chapter the court, if recognition is granted, 

6 may provide additional assistance to a foreign representa7 tive under this title or under other laws of the United 

8 States. 

9 ‘‘(b) In determining whether to provide additional as10 sistance under this title or under other laws of the United 

11 States, the court shall consider whether such additional 

12 assistance, consistent with the principles of comity, will 

13 reasonably assure— 

14 ‘‘(1) just treatment of all holders of claims 

15 against or interests in the debtor’s property; 

16 ‘‘(2) protection of claim holders in the United 

17 States against prejudice and inconvenience in the 

18 processing of claims in such foreign proceeding; 

19 ‘‘(3) prevention of preferential or fraudulent 

20 dispositions of property of the debtor; 

21 ‘‘(4) distribution of proceeds of the debtor’s 

22 property substantially in accordance with the order 

23 prescribed by this title; and 
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1 ‘‘(5) if appropriate, the provision of an oppor2 tunity for a fresh start for the individual that such 

3 foreign proceeding concerns. 

4 ‘‘§ 1508. Interpretation 

5 ‘‘In interpreting this chapter, the court shall consider 

6 its international origin, and the need to promote an appli7 cation of this chapter that is consistent with the applica8 tion of similar statutes adopted by foreign jurisdictions. 

9 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP10 RESENTATIVES AND CREDITORS TO THE 

11 COURT 

12 ‘‘§ 1509. Right of direct access 

13 ‘‘(a) A foreign representative may commence a case 

14 under section 1504 by filing directly with the court a peti15 tion for recognition of a foreign proceeding under section 

16 1515. 

17 ‘‘(b) If the court grants recognition under section 

18 1517, and subject to any limitations that the court may 

19 impose consistent with the policy of this chapter— 

20 ‘‘(1) the foreign representative has the capacity 

21 to sue and be sued in a court in the United States; 

22 ‘‘(2) the foreign representative may apply di23 rectly to a court in the United States for appropriate 

24 relief in that court; and 
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1 ‘‘(3) a court in the United States shall grant 

2 comity or cooperation to the foreign representative. 

3 ‘‘(c) A request for comity or cooperation by a foreign 

4 representative in a court in the United States other than 

5 the court which granted recognition shall be accompanied 

6 by a certified copy of an order granting recognition under 

7 section 1517. 

8 ‘‘(d) If the court denies recognition under this chap9 ter, the court may issue any appropriate order necessary 

10 to prevent the foreign representative from obtaining com11 ity or cooperation from courts in the United States. 

12 ‘‘(e) Whether or not the court grants recognition, and 

13 subject to sections 306 and 1510, a foreign representative 

14 is subject to applicable nonbankruptcy law. 

15 ‘‘(f) Notwithstanding any other provision of this sec16 tion, the failure of a foreign representative to commence 

17 a case or to obtain recognition under this chapter does 

18 not affect any right the foreign representative may have 

19 to sue in a court in the United States to collect or recover 

20 a claim which is the property of the debtor. 

21 ‘‘§ 1510. Limited jurisdiction 

22 ‘‘The sole fact that a foreign representative files a 

23 petition under section 1515 does not subject the foreign 

24 representative to the jurisdiction of any court in the 

25 United States for any other purpose. 
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1 ‘‘§ 1511. Commencement of case under section 301 or 

2 303 

3 ‘‘(a) Upon recognition, a foreign representative may 

4 commence— 

5 ‘‘(1) an involuntary case under section 303; or 

6 ‘‘(2) a voluntary case under section 301 or 302, 

7 if the foreign proceeding is a foreign main pro8 ceeding. 

9 ‘‘(b) The petition commencing a case under sub10 section (a) must be accompanied by a certified copy of 

11 an order granting recognition. The court where the peti12 tion for recognition has been filed must be advised of the 

13 foreign representative’s intent to commence a case under 

14 subsection (a) prior to such commencement. 

15 ‘‘§ 1512. Participation of a foreign representative in a 

16 case under this title 

17 ‘‘Upon recognition of a foreign proceeding, the for18 eign representative in the recognized proceeding is entitled 

19 to participate as a party in interest in a case regarding 

20 the debtor under this title. 

21 ‘‘§ 1513. Access of foreign creditors to a case under 

22 this title 

23 ‘‘(a) Foreign creditors have the same rights regarding 

24 the commencement of, and participation in, a case under 

25 this title as domestic creditors. 
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1 ‘‘(b)(1) Subsection (a) does not change or codify 

2 present law as to the priority of claims under section 507 

3 or 726, except that the claim of a foreign creditor under 

4 those sections shall not be given a lower priority than that 

5 of general unsecured claims without priority solely because 

6 the holder of such claim is a foreign creditor. 

7 ‘‘(2)(A) Subsection (a) and paragraph (1) do not 

8 change or codify present law as to the allowability of for9 eign revenue claims or other foreign public law claims in 

10 a proceeding under this title. 

11 ‘‘(B) Allowance and priority as to a foreign tax claim 

12 or other foreign public law claim shall be governed by any 

13 applicable tax treaty of the United States, under the con14 ditions and circumstances specified therein. 

15 ‘‘§ 1514. Notification to foreign creditors concerning a 

16 case under this title 

17 ‘‘(a) Whenever in a case under this title notice is to 

18 be given to creditors generally or to any class or category 

19 of creditors, such notice shall also be given to the known 

20 creditors generally, or to creditors in the notified class or 

21 category, that do not have addresses in the United States. 

22 The court may order that appropriate steps be taken with 

23 a view to notifying any creditor whose address is not yet 

24 known. 
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1 ‘‘(b) Such notification to creditors with foreign ad2 dresses described in subsection (a) shall be given individ3 ually, unless the court considers that, under the cir4 cumstances, some other form of notification would be 

5 more appropriate. No letter or other formality is required. 

6 ‘‘(c) When a notification of commencement of a case 

7 is to be given to foreign creditors, such notification shall— 

8 ‘‘(1) indicate the time period for filing proofs of 

9 claim and specify the place for filing such proofs of 

10 claim; 

11 ‘‘(2) indicate whether secured creditors need to 

12 file proofs of claim; and 

13 ‘‘(3) contain any other information required to 

14 be included in such notification to creditors under 

15 this title and the orders of the court. 

16 ‘‘(d) Any rule of procedure or order of the court as 

17 to notice or the filing of a proof of claim shall provide 

18 such additional time to creditors with foreign addresses 

19 as is reasonable under the circumstances. 

20 ‘‘SUBCHAPTER III—RECOGNITION OF A 

21 FOREIGN PROCEEDING AND RELIEF 

22 ‘‘§ 1515. Application for recognition 

23 ‘‘(a) A foreign representative applies to the court for 

24 recognition of a foreign proceeding in which the foreign 
293 

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1 representative has been appointed by filing a petition for 

2 recognition. 

3 ‘‘(b) A petition for recognition shall be accompanied 

4 by— 

5 ‘‘(1) a certified copy of the decision com6 mencing such foreign proceeding and appointing the 

7 foreign representative; 

8 ‘‘(2) a certificate from the foreign court affirm9 ing the existence of such foreign proceeding and of 

10 the appointment of the foreign representative; or 

11 ‘‘(3) in the absence of evidence referred to in 

12 paragraphs (1) and (2), any other evidence accept13 able to the court of the existence of such foreign 

14 proceeding and of the appointment of the foreign 

15 representative. 

16 ‘‘(c) A petition for recognition shall also be accom17 panied by a statement identifying all foreign proceedings 

18 with respect to the debtor that are known to the foreign 

19 representative. 

20 ‘‘(d) The documents referred to in paragraphs (1) 

21 and (2) of subsection (b) shall be translated into English. 

22 The court may require a translation into English of addi23 tional documents. 
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1 ‘‘§ 1516. Presumptions concerning recognition 

2 ‘‘(a) If the decision or certificate referred to in section 

3 1515(b) indicates that the foreign proceeding is a foreign 

4 proceeding and that the person or body is a foreign rep5 resentative, the court is entitled to so presume. 

6 ‘‘(b) The court is entitled to presume that documents 

7 submitted in support of the petition for recognition are 

8 authentic, whether or not they have been legalized. 

9 ‘‘(c) In the absence of evidence to the contrary, the 

10 debtor’s registered office, or habitual residence in the case 

11 of an individual, is presumed to be the center of the debt12 or’s main interests. 

13 ‘‘§ 1517. Order granting recognition 

14 ‘‘(a) Subject to section 1506, after notice and a hear15 ing, an order recognizing a foreign proceeding shall be en16 tered if— 

17 ‘‘(1) such foreign proceeding for which recogni18 tion is sought is a foreign main proceeding or for19 eign nonmain proceeding within the meaning of sec20 tion 1502; 

21 ‘‘(2) the foreign representative applying for rec22 ognition is a person or body; and 

23 ‘‘(3) the petition meets the requirements of sec24 tion 1515. 

25 ‘‘(b) Such foreign proceeding shall be recognized— 
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1 ‘‘(1) as a foreign main proceeding if it is pend2 ing in the country where the debtor has the center 

3 of its main interests; or 

4 ‘‘(2) as a foreign nonmain proceeding if the 

5 debtor has an establishment within the meaning of 

6 section 1502 in the foreign country where the pro7 ceeding is pending. 

8 ‘‘(c) A petition for recognition of a foreign proceeding 

9 shall be decided upon at the earliest possible time. Entry 

10 of an order recognizing a foreign proceeding constitutes 

11 recognition under this chapter. 

12 ‘‘(d) The provisions of this subchapter do not prevent 

13 modification or termination of recognition if it is shown 

14 that the grounds for granting it were fully or partially 

15 lacking or have ceased to exist, but in considering such 

16 action the court shall give due weight to possible prejudice 

17 to parties that have relied upon the order granting rec18 ognition. A case under this chapter may be closed in the 

19 manner prescribed under section 350. 

20 ‘‘§ 1518. Subsequent information 

21 ‘‘From the time of filing the petition for recognition 

22 of a foreign proceeding, the foreign representative shall 

23 file with the court promptly a notice of change of status 

24 concerning— 
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1 ‘‘(1) any substantial change in the status of 

2 such foreign proceeding or the status of the foreign 

3 representative’s appointment; and 

4 ‘‘(2) any other foreign proceeding regarding the 

5 debtor that becomes known to the foreign represent6 ative. 

7 ‘‘§ 1519. Relief that may be granted upon filing peti8 tion for recognition 

9 ‘‘(a) From the time of filing a petition for recognition 

10 until the court rules on the petition, the court may, at 

11 the request of the foreign representative, where relief is 

12 urgently needed to protect the assets of the debtor or the 

13 interests of the creditors, grant relief of a provisional na14 ture, including— 

15 ‘‘(1) staying execution against the debtor’s as16 sets; 

17 ‘‘(2) entrusting the administration or realiza18 tion of all or part of the debtor’s assets located in 

19 the United States to the foreign representative or 

20 another person authorized by the court, including an 

21 examiner, in order to protect and preserve the value 

22 of assets that, by their nature or because of other 

23 circumstances, are perishable, susceptible to devalu24 ation or otherwise in jeopardy; and 
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1 ‘‘(3) any relief referred to in paragraph (3), 

2 (4), or (7) of section 1521(a). 

3 ‘‘(b) Unless extended under section 1521(a)(6), the 

4 relief granted under this section terminates when the peti5 tion for recognition is granted. 

6 ‘‘(c) It is a ground for denial of relief under this sec7 tion that such relief would interfere with the administra8 tion of a foreign main proceeding. 

9 ‘‘(d) The court may not enjoin a police or regulatory 

10 act of a governmental unit, including a criminal action or 

11 proceeding, under this section. 

12 ‘‘(e) The standards, procedures, and limitations ap13 plicable to an injunction shall apply to relief under this 

14 section. 

15 ‘‘(f) The exercise of rights not subject to the stay 

16 arising under section 362(a) pursuant to paragraph (6), 

17 (7), (17), or (27) of section 362(b) or pursuant to section 

18 362(n) shall not be stayed by any order of a court or ad19 ministrative agency in any proceeding under this chapter. 

20 ‘‘§ 1520. Effects of recognition of a foreign main pro21 ceeding 

22 ‘‘(a) Upon recognition of a foreign proceeding that 

23 is a foreign main proceeding— 

24 ‘‘(1) sections 361 and 362 apply with respect to 

25 the debtor and the property of the debtor that is 
298 

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1 within the territorial jurisdiction of the United 

2 States; 

3 ‘‘(2) sections 363, 549, and 552 apply to a 

4 transfer of an interest of the debtor in property that 

5 is within the territorial jurisdiction of the United 

6 States to the same extent that the sections would 

7 apply to property of an estate; 

8 ‘‘(3) unless the court orders otherwise, the for9 eign representative may operate the debtor’s busi10 ness and may exercise the rights and powers of a 

11 trustee under and to the extent provided by sections 

12 363 and 552; and 

13 ‘‘(4) section 552 applies to property of the debt14 or that is within the territorial jurisdiction of the 

15 United States. 

16 ‘‘(b) Subsection (a) does not affect the right to com17 mence an individual action or proceeding in a foreign 

18 country to the extent necessary to preserve a claim against 

19 the debtor. 

20 ‘‘(c) Subsection (a) does not affect the right of a for21 eign representative or an entity to file a petition com22 mencing a case under this title or the right of any party 

23 to file claims or take other proper actions in such a case. 
299 

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1 ‘‘§ 1521. Relief that may be granted upon recognition 

2 ‘‘(a) Upon recognition of a foreign proceeding, wheth3 er main or nonmain, where necessary to effectuate the 

4 purpose of this chapter and to protect the assets of the 

5 debtor or the interests of the creditors, the court may, at 

6 the request of the foreign representative, grant any appro7 priate relief, including— 

8 ‘‘(1) staying the commencement or continuation 

9 of an individual action or proceeding concerning the 

10 debtor’s assets, rights, obligations or liabilities to the 

11 extent they have not been stayed under section 

12 1520(a); 

13 ‘‘(2) staying execution against the debtor’s as14 sets to the extent it has not been stayed under sec15 tion 1520(a); 

16 ‘‘(3) suspending the right to transfer, encumber 

17 or otherwise dispose of any assets of the debtor to 

18 the extent this right has not been suspended under 

19 section 1520(a); 

20 ‘‘(4) providing for the examination of witnesses, 

21 the taking of evidence or the delivery of information 

22 concerning the debtor’s assets, affairs, rights, obliga23 tions or liabilities; 

24 ‘‘(5) entrusting the administration or realiza25 tion of all or part of the debtor’s assets within the 

26 territorial jurisdiction of the United States to the 
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1 foreign representative or another person, including 

2 an examiner, authorized by the court; 

3 ‘‘(6) extending relief granted under section 

4 1519(a); and 

5 ‘‘(7) granting any additional relief that may be 

6 available to a trustee, except for relief available 

7 under sections 522, 544, 545, 547, 548, 550, and 

8 724(a). 

9 ‘‘(b) Upon recognition of a foreign proceeding, wheth10 er main or nonmain, the court may, at the request of the 

11 foreign representative, entrust the distribution of all or 

12 part of the debtor’s assets located in the United States 

13 to the foreign representative or another person, including 

14 an examiner, authorized by the court, provided that the 

15 court is satisfied that the interests of creditors in the 

16 United States are sufficiently protected. 

17 ‘‘(c) In granting relief under this section to a rep18 resentative of a foreign nonmain proceeding, the court 

19 must be satisfied that the relief relates to assets that, 

20 under the law of the United States, should be adminis21 tered in the foreign nonmain proceeding or concerns infor22 mation required in that proceeding. 

23 ‘‘(d) The court may not enjoin a police or regulatory 

24 act of a governmental unit, including a criminal action or 

25 proceeding, under this section. 
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1 ‘‘(e) The standards, procedures, and limitations ap2 plicable to an injunction shall apply to relief under para3 graphs (1), (2), (3), and (6) of subsection (a). 

4 ‘‘(f) The exercise of rights not subject to the stay 

5 arising under section 362(a) pursuant to paragraph (6), 

6 (7), (17), or (27) of section 362(b) or pursuant to section 

7 362(n) shall not be stayed by any order of a court or ad8 ministrative agency in any proceeding under this chapter. 

9 ‘‘§ 1522. Protection of creditors and other interested 

10 persons 

11 ‘‘(a) The court may grant relief under section 1519 

12 or 1521, or may modify or terminate relief under sub13 section (c), only if the interests of the creditors and other 

14 interested entities, including the debtor, are sufficiently 

15 protected. 

16 ‘‘(b) The court may subject relief granted under sec17 tion 1519 or 1521, or the operation of the debtor’s busi18 ness under section 1520(a)(3), to conditions it considers 

19 appropriate, including the giving of security or the filing 

20 of a bond. 

21 ‘‘(c) The court may, at the request of the foreign rep22 resentative or an entity affected by relief granted under 

23 section 1519 or 1521, or at its own motion, modify or 

24 terminate such relief. 
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1 ‘‘(d) Section 1104(d) shall apply to the appointment 

2 of an examiner under this chapter. Any examiner shall 

3 comply with the qualification requirements imposed on a 

4 trustee by section 322. 

5 ‘‘§ 1523. Actions to avoid acts detrimental to creditors 

6 ‘‘(a) Upon recognition of a foreign proceeding, the 

7 foreign representative has standing in a case concerning 

8 the debtor pending under another chapter of this title to 

9 initiate actions under sections 522, 544, 545, 547, 548, 

10 550, 553, and 724(a). 

11 ‘‘(b) When a foreign proceeding is a foreign nonmain 

12 proceeding, the court must be satisfied that an action 

13 under subsection (a) relates to assets that, under United 

14 States law, should be administered in the foreign nonmain 

15 proceeding. 

16 ‘‘§ 1524. Intervention by a foreign representative 

17 ‘‘Upon recognition of a foreign proceeding, the for18 eign representative may intervene in any proceedings in 

19 a State or Federal court in the United States in which 

20 the debtor is a party. 
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1 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR2 EIGN COURTS AND FOREIGN REPRESENTA3 TIVES 

4 ‘‘§ 1525. Cooperation and direct communication be5 tween the court and foreign courts or for6 eign representatives 

7 ‘‘(a) Consistent with section 1501, the court shall co8 operate to the maximum extent possible with a foreign 

9 court or a foreign representative, either directly or 

10 through the trustee. 

11 ‘‘(b) The court is entitled to communicate directly 

12 with, or to request information or assistance directly from, 

13 a foreign court or a foreign representative, subject to the 

14 rights of a party in interest to notice and participation. 

15 ‘‘§ 1526. Cooperation and direct communication be16 tween the trustee and foreign courts or 

17 foreign representatives 

18 ‘‘(a) Consistent with section 1501, the trustee or 

19 other person, including an examiner, authorized by the 

20 court, shall, subject to the supervision of the court, cooper21 ate to the maximum extent possible with a foreign court 

22 or a foreign representative. 

23 ‘‘(b) The trustee or other person, including an exam24 iner, authorized by the court is entitled, subject to the su-
304 

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1 pervision of the court, to communicate directly with a for2 eign court or a foreign representative. 

3 ‘‘§ 1527. Forms of cooperation 

4 ‘‘Cooperation referred to in sections 1525 and 1526 

5 may be implemented by any appropriate means, includ6 ing— 

7 ‘‘(1) appointment of a person or body, including 

8 an examiner, to act at the direction of the court; 

9 ‘‘(2) communication of information by any 

10 means considered appropriate by the court; 

11 ‘‘(3) coordination of the administration and su12 pervision of the debtor’s assets and affairs; 

13 ‘‘(4) approval or implementation of agreements 

14 concerning the coordination of proceedings; and 

15 ‘‘(5) coordination of concurrent proceedings re16 garding the same debtor. 

17 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS 

18 ‘‘§ 1528. Commencement of a case under this title 

19 after recognition of a foreign main pro20 ceeding 

21 ‘‘After recognition of a foreign main proceeding, a 

22 case under another chapter of this title may be commenced 

23 only if the debtor has assets in the United States. The 

24 effects of such case shall be restricted to the assets of the 

25 debtor that are within the territorial jurisdiction of the 
305 

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1 United States and, to the extent necessary to implement 

2 cooperation and coordination under sections 1525, 1526, 

3 and 1527, to other assets of the debtor that are within 

4 the jurisdiction of the court under sections 541(a) of this 

5 title, and 1334(e) of title 28, to the extent that such other 

6 assets are not subject to the jurisdiction and control of 

7 a foreign proceeding that has been recognized under this 

8 chapter. 

9 ‘‘§ 1529. Coordination of a case under this title and a 

10 foreign proceeding 

11 ‘‘If a foreign proceeding and a case under another 

12 chapter of this title are pending concurrently regarding 

13 the same debtor, the court shall seek cooperation and co14 ordination under sections 1525, 1526, and 1527, and the 

15 following shall apply: 

16 ‘‘(1) If the case in the United States pending 

17 at the time the petition for recognition of such for18 eign proceeding is filed— 

19 ‘‘(A) any relief granted under section 1519 

20 or 1521 must be consistent with the relief 

21 granted in the case in the United States; and 

22 ‘‘(B) section 1520 does not apply even if 

23 such foreign proceeding is recognized as a for24 eign main proceeding. 
306 

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1 ‘‘(2) If a case in the United States under this 

2 title commences after recognition, or after the date 

3 of the filing of the petition for recognition, of such 

4 foreign proceeding— 

5 ‘‘(A) any relief in effect under section 

6 1519 or 1521 shall be reviewed by the court 

7 and shall be modified or terminated if incon8 sistent with the case in the United States; and 

9 ‘‘(B) if such foreign proceeding is a foreign 

10 main proceeding, the stay and suspension re11 ferred to in section 1520(a) shall be modified or 

12 terminated if inconsistent with the relief grant13 ed in the case in the United States. 

14 ‘‘(3) In granting, extending, or modifying relief 

15 granted to a representative of a foreign nonmain 

16 proceeding, the court must be satisfied that the re17 lief relates to assets that, under the laws of the 

18 United States, should be administered in the foreign 

19 nonmain proceeding or concerns information re20 quired in that proceeding. 

21 ‘‘(4) In achieving cooperation and coordination 

22 under sections 1528 and 1529, the court may grant 

23 any of the relief authorized under section 305. 
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1 ‘‘§ 1530. Coordination of more than 1 foreign pro2 ceeding 

3 ‘‘In matters referred to in section 1501, with respect 

4 to more than 1 foreign proceeding regarding the debtor, 

5 the court shall seek cooperation and coordination under 

6 sections 1525, 1526, and 1527, and the following shall 

7 apply: 

8 ‘‘(1) Any relief granted under section 1519 or 

9 1521 to a representative of a foreign nonmain pro10 ceeding after recognition of a foreign main pro11 ceeding must be consistent with the foreign main 

12 proceeding. 

13 ‘‘(2) If a foreign main proceeding is recognized 

14 after recognition, or after the filing of a petition for 

15 recognition, of a foreign nonmain proceeding, any 

16 relief in effect under section 1519 or 1521 shall be 

17 reviewed by the court and shall be modified or termi18 nated if inconsistent with the foreign main pro19 ceeding. 

20 ‘‘(3) If, after recognition of a foreign nonmain 

21 proceeding, another foreign nonmain proceeding is 

22 recognized, the court shall grant, modify, or termi23 nate relief for the purpose of facilitating coordina24 tion of the proceedings. 
308 

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1 ‘‘§ 1531. Presumption of insolvency based on recogni2 tion of a foreign main proceeding 

3 ‘‘In the absence of evidence to the contrary, recogni4 tion of a foreign main proceeding is, for the purpose of 

5 commencing a proceeding under section 303, proof that 

6 the debtor is generally not paying its debts as such debts 

7 become due. 

8 ‘‘§ 1532. Rule of payment in concurrent proceedings 

9 ‘‘Without prejudice to secured claims or rights in 

10 rem, a creditor who has received payment with respect to 

11 its claim in a foreign proceeding pursuant to a law relating 

12 to insolvency may not receive a payment for the same 

13 claim in a case under any other chapter of this title re14 garding the debtor, so long as the payment to other credi15 tors of the same class is proportionately less than the pay16 ment the creditor has already received.’’. 

17 (b) CLERICAL AMENDMENT.—The table of chapters 

18 for title 11, United States Code, is amended by inserting 

19 after the item relating to chapter 13 the following: 

‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’. 

20 SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, 

21 UNITED STATES CODE. 

22 (a) APPLICABILITY OF CHAPTERS.—Section 103 of 

23 title 11, United States Code, is amended— 

24 (1) in subsection (a), by inserting before the pe25 riod the following: ‘‘, and this chapter, sections 307, 
309 

•S 256 IS 

1 362(n), 555 through 557, and 559 through 562 

2 apply in a case under chapter 15’’; and 

3 (2) by adding at the end the following: 

4 ‘‘(k) Chapter 15 applies only in a case under such 

5 chapter, except that— 

6 ‘‘(1) sections 1505, 1513, and 1514 apply in all 

7 cases under this title; and 

8 ‘‘(2) section 1509 applies whether or not a case 

9 under this title is pending.’’. 

10 (b) DEFINITIONS.—Section 101 of title 11, United 

11 States Code, is amended by striking paragraphs (23) and 

12 (24) and inserting the following: 

13 ‘‘(23) ‘foreign proceeding’ means a collective ju14 dicial or administrative proceeding in a foreign coun15 try, including an interim proceeding, under a law re16 lating to insolvency or adjustment of debt in which 

17 proceeding the assets and affairs of the debtor are 

18 subject to control or supervision by a foreign court, 

19 for the purpose of reorganization or liquidation; 

20 ‘‘(24) ‘foreign representative’ means a person 

21 or body, including a person or body appointed on an 

22 interim basis, authorized in a foreign proceeding to 

23 administer the reorganization or the liquidation of 

24 the debtor’s assets or affairs or to act as a rep25 resentative of such foreign proceeding;’’. 
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1 (c) AMENDMENTS TO TITLE 28, UNITED STATES

2 CODE.— 

3 (1) PROCEDURES.—Section 157(b)(2) of title 

4 28, United States Code, is amended— 

5 (A) in subparagraph (N), by striking 

6 ‘‘and’’ at the end; 

7 (B) in subparagraph (O), by striking the 

8 period at the end and inserting ‘‘; and’’; and 

9 (C) by adding at the end the following: 

10 ‘‘(P) recognition of foreign proceedings 

11 and other matters under chapter 15 of title 

12 11.’’. 

13 (2) BANKRUPTCY CASES AND PROCEEDINGS.— 

14 Section 1334(c) of title 28, United States Code, is 

15 amended by striking ‘‘Nothing in’’ and inserting 

16 ‘‘Except with respect to a case under chapter 15 of 

17 title 11, nothing in’’. 

18 (3) DUTIES OF TRUSTEES.—Section 586(a)(3) 

19 of title 28, United States Code, is amended by strik20 ing ‘‘or 13’’ and inserting ‘‘13, or 15’’. 

21 (4) VENUE OF CASES ANCILLARY TO FOREIGN

22 PROCEEDINGS.—Section 1410 of title 28, United 

23 States Code, is amended to read as follows: 
311 

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1 ‘‘§ 1410. Venue of cases ancillary to foreign pro2 ceedings 

3 ‘‘A case under chapter 15 of title 11 may be com4 menced in the district court of the United States for the 

5 district— 

6 ‘‘(1) in which the debtor has its principal place 

7 of business or principal assets in the United States; 

8 ‘‘(2) if the debtor does not have a place of busi9 ness or assets in the United States, in which there 

10 is pending against the debtor an action or pro11 ceeding in a Federal or State court; or 

12 ‘‘(3) in a case other than those specified in 

13 paragraph (1) or (2), in which venue will be con14 sistent with the interests of justice and the conven15 ience of the parties, having regard to the relief 

16 sought by the foreign representative.’’. 

17 (d) OTHER SECTIONS OF TITLE 11.—Title 11 of the 

18 United States Code is amended— 

19 (1) in section 109(b), by striking paragraph (3) 

20 and inserting the following: 

21 ‘‘(3)(A) a foreign insurance company, engaged 

22 in such business in the United States; or 

23 ‘‘(B) a foreign bank, savings bank, cooperative 

24 bank, savings and loan association, building and 

25 loan association, or credit union, that has a branch 

26 or agency (as defined in section 1(b) of the Inter-
312 

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1 national Banking Act of 1978 in the United 

2 States.’’; 

3 (2) in section 303, by striking subsection (k); 

4 (3) by striking section 304; 

5 (4) in the table of sections for chapter 3 by 

6 striking the item relating to section 304; 

7 (5) in section 306 by striking ‘‘, 304,’’ each 

8 place it appears; 

9 (6) in section 305(a) by striking paragraph (2) 

10 and inserting the following: 

11 ‘‘(2)(A) a petition under section 1515 for rec12 ognition of a foreign proceeding has been granted; 

13 and 

14 ‘‘(B) the purposes of chapter 15 of this title 

15 would be best served by such dismissal or suspen16 sion.’’; and 

17 (7) in section 508— 

18 (A) by striking subsection (a); and 

19 (B) in subsection (b), by striking ‘‘(b)’’. 
313 

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1 TITLE IX—FINANCIAL 

2 CONTRACT PROVISIONS 

3 SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON4 SERVATORS OR RECEIVERS OF INSURED DE5 POSITORY INSTITUTIONS. 

6 (a) DEFINITION OF QUALIFIED FINANCIAL CON7 TRACT.— 

8 (1) FDIC-INSURED DEPOSITORY INSTITU9 TIONS.—Section 11(e)(8)(D) of the Federal Deposit 

10 Insurance Act (12 U.S.C. 1821(e)(8)(D)) is amend11 ed— 

12 (A) by striking ‘‘subsection—’’ and insert13 ing ‘‘subsection, the following definitions shall 

14 apply:’’; and 

15 (B) in clause (i), by inserting ‘‘, resolution, 

16 or order’’ after ‘‘any similar agreement that the 

17 Corporation determines by regulation’’. 

18 (2) INSURED CREDIT UNIONS.—Section 

19 207(c)(8)(D) of the Federal Credit Union Act (12 

20 U.S.C. 1787(c)(8)(D)) is amended— 

21 (A) by striking ‘‘subsection—’’ and insert22 ing ‘‘subsection, the following definitions shall 

23 apply:’’; and 
314 

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1 (B) in clause (i), by inserting ‘‘, resolution, 

2 or order’’ after ‘‘any similar agreement that the 

3 Board determines by regulation’’. 

4 (b) DEFINITION OF SECURITIES CONTRACT.— 

5 (1) FDIC-INSURED DEPOSITORY INSTITU6 TIONS.—Section 11(e)(8)(D)(ii) of the Federal De7 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is 

8 amended to read as follows: 

9 ‘‘(ii) SECURITIES CONTRACT.—The 

10 term ‘securities contract’— 

11 ‘‘(I) means a contract for the 

12 purchase, sale, or loan of a security, a 

13 certificate of deposit, a mortgage loan, 

14 or any interest in a mortgage loan, a 

15 group or index of securities, certifi16 cates of deposit, or mortgage loans or 

17 interests therein (including any inter18 est therein or based on the value 

19 thereof) or any option on any of the 

20 foregoing, including any option to 

21 purchase or sell any such security, 

22 certificate of deposit, mortgage loan, 

23 interest, group or index, or option, 

24 and including any repurchase or re25 verse repurchase transaction on any 
315 

•S 256 IS 

1 such security, certificate of deposit, 

2 mortgage loan, interest, group or 

3 index, or option; 

4 ‘‘(II) does not include any pur5 chase, sale, or repurchase obligation 

6 under a participation in a commercial 

7 mortgage loan unless the Corporation 

8 determines by regulation, resolution, 

9 or order to include any such agree10 ment within the meaning of such 

11 term; 

12 ‘‘(III) means any option entered 

13 into on a national securities exchange 

14 relating to foreign currencies; 

15 ‘‘(IV) means the guarantee by or 

16 to any securities clearing agency of 

17 any settlement of cash, securities, cer18 tificates of deposit, mortgage loans or 

19 interests therein, group or index of se20 curities, certificates of deposit, or 

21 mortgage loans or interests therein 

22 (including any interest therein or 

23 based on the value thereof) or option 

24 on any of the foregoing, including any 

25 option to purchase or sell any such se-
316 

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1 curity, certificate of deposit, mortgage 

2 loan, interest, group or index, or op3 tion; 

4 ‘‘(V) means any margin loan; 

5 ‘‘(VI) means any other agree6 ment or transaction that is similar to 

7 any agreement or transaction referred 

8 to in this clause; 

9 ‘‘(VII) means any combination of 

10 the agreements or transactions re11 ferred to in this clause; 

12 ‘‘(VIII) means any option to 

13 enter into any agreement or trans14 action referred to in this clause; 

15 ‘‘(IX) means a master agreement 

16 that provides for an agreement or 

17 transaction referred to in subclause 

18 (I), (III), (IV), (V), (VI), (VII), or 

19 (VIII), together with all supplements 

20 to any such master agreement, with21 out regard to whether the master 

22 agreement provides for an agreement 

23 or transaction that is not a securities 

24 contract under this clause, except that 

25 the master agreement shall be consid-
317 

•S 256 IS 

1 ered to be a securities contract under 

2 this clause only with respect to each 

3 agreement or transaction under the 

4 master agreement that is referred to 

5 in subclause (I), (III), (IV), (V), (VI), 

6 (VII), or (VIII); and 

7 ‘‘(X) means any security agree8 ment or arrangement or other credit 

9 enhancement related to any agree10 ment or transaction referred to in this 

11 clause, including any guarantee or re12 imbursement obligation in connection 

13 with any agreement or transaction re14 ferred to in this clause.’’. 

15 (2) INSURED CREDIT UNIONS.—Section 

16 207(c)(8)(D)(ii) of the Federal Credit Union Act 

17 (12 U.S.C. 1787(c)(8)(D)(ii)) is amended to read as 

18 follows: 

19 ‘‘(ii) SECURITIES CONTRACT.—The 

20 term ‘securities contract’— 

21 ‘‘(I) means a contract for the 

22 purchase, sale, or loan of a security, a 

23 certificate of deposit, a mortgage loan, 

24 or any interest in a mortgage loan, a 

25 group or index of securities, certifi-
318 

•S 256 IS 

1 cates of deposit, or mortgage loans or 

2 interests therein (including any inter3 est therein or based on the value 

4 thereof) or any option on any of the 

5 foregoing, including any option to 

6 purchase or sell any such security, 

7 certificate of deposit, mortgage loan, 

8 interest, group or index, or option, 

9 and including any repurchase or re10 verse repurchase transaction on any 

11 such security, certificate of deposit, 

12 mortgage loan, interest, group or 

13 index, or option; 

14 ‘‘(II) does not include any pur15 chase, sale, or repurchase obligation 

16 under a participation in a commercial 

17 mortgage loan unless the Board deter18 mines by regulation, resolution, or 

19 order to include any such agreement 

20 within the meaning of such term; 

21 ‘‘(III) means any option entered 

22 into on a national securities exchange 

23 relating to foreign currencies; 

24 ‘‘(IV) means the guarantee by or 

25 to any securities clearing agency of 
319 

•S 256 IS 

1 any settlement of cash, securities, cer2 tificates of deposit, mortgage loans or 

3 interests therein, group or index of se4 curities, certificates of deposit, or 

5 mortgage loans or interests therein 

6 (including any interest therein or 

7 based on the value thereof) or option 

8 on any of the foregoing, including any 

9 option to purchase or sell any such se10 curity, certificate of deposit, mortgage 

11 loan, interest, group or index, or op12 tion; 

13 ‘‘(V) means any margin loan; 

14 ‘‘(VI) means any other agree15 ment or transaction that is similar to 

16 any agreement or transaction referred 

17 to in this clause; 

18 ‘‘(VII) means any combination of 

19 the agreements or transactions re20 ferred to in this clause; 

21 ‘‘(VIII) means any option to 

22 enter into any agreement or trans23 action referred to in this clause; 

24 ‘‘(IX) means a master agreement 

25 that provides for an agreement or 
320 

•S 256 IS 

1 transaction referred to in subclause 

2 (I), (III), (IV), (V), (VI), (VII), or 

3 (VIII), together with all supplements 

4 to any such master agreement, with5 out regard to whether the master 

6 agreement provides for an agreement 

7 or transaction that is not a securities 

8 contract under this clause, except that 

9 the master agreement shall be consid10 ered to be a securities contract under 

11 this clause only with respect to each 

12 agreement or transaction under the 

13 master agreement that is referred to 

14 in subclause (I), (III), (IV), (V), (VI), 

15 (VII), or (VIII); and 

16 ‘‘(X) means any security agree17 ment or arrangement or other credit 

18 enhancement related to any agree19 ment or transaction referred to in this 

20 clause, including any guarantee or re21 imbursement obligation in connection 

22 with any agreement or transaction re23 ferred to in this clause.’’. 

24 (c) DEFINITION OF COMMODITY CONTRACT.— 
321 

•S 256 IS 

1 (1) FDIC-INSURED DEPOSITORY INSTITU2 TIONS.—Section 11(e)(8)(D)(iii) of the Federal De3 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is 

4 amended to read as follows: 

5 ‘‘(iii) COMMODITY CONTRACT.—The 

6 term ‘commodity contract’ means— 

7 ‘‘(I) with respect to a futures 

8 commission merchant, a contract for 

9 the purchase or sale of a commodity 

10 for future delivery on, or subject to 

11 the rules of, a contract market or 

12 board of trade; 

13 ‘‘(II) with respect to a foreign fu14 tures commission merchant, a foreign 

15 future; 

16 ‘‘(III) with respect to a leverage 

17 transaction merchant, a leverage 

18 transaction; 

19 ‘‘(IV) with respect to a clearing 

20 organization, a contract for the pur21 chase or sale of a commodity for fu22 ture delivery on, or subject to the 

23 rules of, a contract market or board 

24 of trade that is cleared by such clear25 ing organization, or commodity option 
322 

•S 256 IS 

1 traded on, or subject to the rules of, 

2 a contract market or board of trade 

3 that is cleared by such clearing orga4 nization; 

5 ‘‘(V) with respect to a commodity 

6 options dealer, a commodity option; 

7 ‘‘(VI) any other agreement or 

8 transaction that is similar to any 

9 agreement or transaction referred to 

10 in this clause; 

11 ‘‘(VII) any combination of the 

12 agreements or transactions referred to 

13 in this clause; 

14 ‘‘(VIII) any option to enter into 

15 any agreement or transaction referred 

16 to in this clause; 

17 ‘‘(IX) a master agreement that 

18 provides for an agreement or trans19 action referred to in subclause (I), 

20 (II), (III), (IV), (V), (VI), (VII), or 

21 (VIII), together with all supplements 

22 to any such master agreement, with23 out regard to whether the master 

24 agreement provides for an agreement 

25 or transaction that is not a com-
323 

•S 256 IS 

1 modity contract under this clause, ex2 cept that the master agreement shall 

3 be considered to be a commodity con4 tract under this clause only with re5 spect to each agreement or trans6 action under the master agreement 

7 that is referred to in subclause (I), 

8 (II), (III), (IV), (V), (VI), (VII), or 

9 (VIII); or 

10 ‘‘(X) any security agreement or 

11 arrangement or other credit enhance12 ment related to any agreement or 

13 transaction referred to in this clause, 

14 including any guarantee or reimburse15 ment obligation in connection with 

16 any agreement or transaction referred 

17 to in this clause.’’. 

18 (2) INSURED CREDIT UNIONS.—Section 

19 207(c)(8)(D)(iii) of the Federal Credit Union Act 

20 (12 U.S.C. 1787(c)(8)(D)(iii)) is amended to read as 

21 follows: 

22 ‘‘(iii) COMMODITY CONTRACT.—The 

23 term ‘commodity contract’ means— 

24 ‘‘(I) with respect to a futures 

25 commission merchant, a contract for 
324 

•S 256 IS 

1 the purchase or sale of a commodity 

2 for future delivery on, or subject to 

3 the rules of, a contract market or 

4 board of trade; 

5 ‘‘(II) with respect to a foreign fu6 tures commission merchant, a foreign 

7 future; 

8 ‘‘(III) with respect to a leverage 

9 transaction merchant, a leverage 

10 transaction; 

11 ‘‘(IV) with respect to a clearing 

12 organization, a contract for the pur13 chase or sale of a commodity for fu14 ture delivery on, or subject to the 

15 rules of, a contract market or board 

16 of trade that is cleared by such clear17 ing organization, or commodity option 

18 traded on, or subject to the rules of, 

19 a contract market or board of trade 

20 that is cleared by such clearing orga21 nization; 

22 ‘‘(V) with respect to a commodity 

23 options dealer, a commodity option; 

24 ‘‘(VI) any other agreement or 

25 transaction that is similar to any 
325 

•S 256 IS 

1 agreement or transaction referred to 

2 in this clause; 

3 ‘‘(VII) any combination of the 

4 agreements or transactions referred to 

5 in this clause; 

6 ‘‘(VIII) any option to enter into 

7 any agreement or transaction referred 

8 to in this clause; 

9 ‘‘(IX) a master agreement that 

10 provides for an agreement or trans11 action referred to in subclause (I), 

12 (II), (III), (IV), (V), (VI), (VII), or 

13 (VIII), together with all supplements 

14 to any such master agreement, with15 out regard to whether the master 

16 agreement provides for an agreement 

17 or transaction that is not a com18 modity contract under this clause, ex19 cept that the master agreement shall 

20 be considered to be a commodity con21 tract under this clause only with re22 spect to each agreement or trans23 action under the master agreement 

24 that is referred to in subclause (I), 
326 

•S 256 IS 

1 (II), (III), (IV), (V), (VI), (VII), or 

2 (VIII); or 

3 ‘‘(X) any security agreement or 

4 arrangement or other credit enhance5 ment related to any agreement or 

6 transaction referred to in this clause, 

7 including any guarantee or reimburse8 ment obligation in connection with 

9 any agreement or transaction referred 

10 to in this clause.’’. 

11 (d) DEFINITION OF FORWARD CONTRACT.— 

12 (1) FDIC-INSURED DEPOSITORY INSTITU13 TIONS.—Section 11(e)(8)(D)(iv) of the Federal De14 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is 

15 amended to read as follows: 

16 ‘‘(iv) FORWARD CONTRACT.—The 

17 term ‘forward contract’ means— 

18 ‘‘(I) a contract (other than a 

19 commodity contract) for the purchase, 

20 sale, or transfer of a commodity or 

21 any similar good, article, service, 

22 right, or interest which is presently or 

23 in the future becomes the subject of 

24 dealing in the forward contract trade, 

25 or product or byproduct thereof, with 
327 

•S 256 IS 

1 a maturity date more than 2 days 

2 after the date the contract is entered 

3 into, including, a repurchase trans4 action, reverse repurchase transaction, 

5 consignment, lease, swap, hedge 

6 transaction, deposit, loan, option, allo7 cated transaction, unallocated trans8 action, or any other similar agree9 ment; 

10 ‘‘(II) any combination of agree11 ments or transactions referred to in 

12 subclauses (I) and (III); 

13 ‘‘(III) any option to enter into 

14 any agreement or transaction referred 

15 to in subclause (I) or (II); 

16 ‘‘(IV) a master agreement that 

17 provides for an agreement or trans18 action referred to in subclauses (I), 

19 (II), or (III), together with all supple20 ments to any such master agreement, 

21 without regard to whether the master 

22 agreement provides for an agreement 

23 or transaction that is not a forward 

24 contract under this clause, except that 

25 the master agreement shall be consid-
328 

•S 256 IS 

1 ered to be a forward contract under 

2 this clause only with respect to each 

3 agreement or transaction under the 

4 master agreement that is referred to 

5 in subclause (I), (II), or (III); or 

6 ‘‘(V) any security agreement or 

7 arrangement or other credit enhance8 ment related to any agreement or 

9 transaction referred to in subclause 

10 (I), (II), (III), or (IV), including any 

11 guarantee or reimbursement obliga12 tion in connection with any agreement 

13 or transaction referred to in any such 

14 subclause.’’. 

15 (2) INSURED CREDIT UNIONS.—Section 

16 207(c)(8)(D)(iv) of the Federal Credit Union Act 

17 (12 U.S.C. 1787(c)(8)(D)(iv)) is amended to read as 

18 follows: 

19 ‘‘(iv) FORWARD CONTRACT.—The 

20 term ‘forward contract’ means— 

21 ‘‘(I) a contract (other than a 

22 commodity contract) for the purchase, 

23 sale, or transfer of a commodity or 

24 any similar good, article, service, 

25 right, or interest which is presently or 
329 

•S 256 IS 

1 in the future becomes the subject of 

2 dealing in the forward contract trade, 

3 or product or byproduct thereof, with 

4 a maturity date more than 2 days 

5 after the date the contract is entered 

6 into, including, a repurchase trans7 action, reverse repurchase transaction, 

8 consignment, lease, swap, hedge 

9 transaction, deposit, loan, option, allo10 cated transaction, unallocated trans11 action, or any other similar agree12 ment; 

13 ‘‘(II) any combination of agree14 ments or transactions referred to in 

15 subclauses (I) and (III); 

16 ‘‘(III) any option to enter into 

17 any agreement or transaction referred 

18 to in subclause (I) or (II); 

19 ‘‘(IV) a master agreement that 

20 provides for an agreement or trans21 action referred to in subclauses (I), 

22 (II), or (III), together with all supple23 ments to any such master agreement, 

24 without regard to whether the master 

25 agreement provides for an agreement 
330 

•S 256 IS 

1 or transaction that is not a forward 

2 contract under this clause, except that 

3 the master agreement shall be consid4 ered to be a forward contract under 

5 this clause only with respect to each 

6 agreement or transaction under the 

7 master agreement that is referred to 

8 in subclause (I), (II), or (III); or 

9 ‘‘(V) any security agreement or 

10 arrangement or other credit enhance11 ment related to any agreement or 

12 transaction referred to in subclause 

13 (I), (II), (III), or (IV), including any 

14 guarantee or reimbursement obliga15 tion in connection with any agreement 

16 or transaction referred to in any such 

17 subclause.’’. 

18 (e) DEFINITION OF REPURCHASE AGREEMENT.— 

19 (1) FDIC-INSURED DEPOSITORY INSTITU20 TIONS.—Section 11(e)(8)(D)(v) of the Federal De21 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is 

22 amended to read as follows: 

23 ‘‘(v) REPURCHASE AGREEMENT.—The 

24 term ‘repurchase agreement’ (which defini-
331 

•S 256 IS 

1 tion also applies to a reverse repurchase 

2 agreement)— 

3 ‘‘(I) means an agreement, includ4 ing related terms, which provides for 

5 the transfer of one or more certifi6 cates of deposit, mortgage-related se7 curities (as such term is defined in 

8 the Securities Exchange Act of 1934), 

9 mortgage loans, interests in mortgage10 related securities or mortgage loans, 

11 eligible bankers’ acceptances, qualified 

12 foreign government securities or secu13 rities that are direct obligations of, or 

14 that are fully guaranteed by, the 

15 United States or any agency of the 

16 United States against the transfer of 

17 funds by the transferee of such certifi18 cates of deposit, eligible bankers’ ac19 ceptances, securities, mortgage loans, 

20 or interests with a simultaneous 

21 agreement by such transferee to 

22 transfer to the transferor thereof cer23 tificates of deposit, eligible bankers’ 

24 acceptances, securities, mortgage 

25 loans, or interests as described above, 
332 

•S 256 IS 

1 at a date certain not later than 1 year 

2 after such transfers or on demand, 

3 against the transfer of funds, or any 

4 other similar agreement; 

5 ‘‘(II) does not include any repur6 chase obligation under a participation 

7 in a commercial mortgage loan unless 

8 the Corporation determines by regula9 tion, resolution, or order to include 

10 any such participation within the 

11 meaning of such term; 

12 ‘‘(III) means any combination of 

13 agreements or transactions referred to 

14 in subclauses (I) and (IV); 

15 ‘‘(IV) means any option to enter 

16 into any agreement or transaction re17 ferred to in subclause (I) or (III); 

18 ‘‘(V) means a master agreement 

19 that provides for an agreement or 

20 transaction referred to in subclause 

21 (I), (III), or (IV), together with all 

22 supplements to any such master 

23 agreement, without regard to whether 

24 the master agreement provides for an 

25 agreement or transaction that is not a 
333 

•S 256 IS 

1 repurchase agreement under this 

2 clause, except that the master agree3 ment shall be considered to be a re4 purchase agreement under this sub5 clause only with respect to each agree6 ment or transaction under the master 

7 agreement that is referred to in sub8 clause (I), (III), or (IV); and 

9 ‘‘(VI) means any security agree10 ment or arrangement or other credit 

11 enhancement related to any agree12 ment or transaction referred to in 

13 subclause (I), (III), (IV), or (V), in14 cluding any guarantee or reimburse15 ment obligation in connection with 

16 any agreement or transaction referred 

17 to in any such subclause. 

18 For purposes of this clause, the term 

19 ‘qualified foreign government security’ 

20 means a security that is a direct obligation 

21 of, or that is fully guaranteed by, the cen22 tral government of a member of the Orga23 nization for Economic Cooperation and 

24 Development (as determined by regulation 
334 

•S 256 IS 

1 or order adopted by the appropriate Fed2 eral banking authority).’’. 

3 (2) INSURED CREDIT UNIONS.—Section 

4 207(c)(8)(D)(v) of the Federal Credit Union Act (12 

5 U.S.C. 1787(c)(8)(D)(v)) is amended to read as fol6 lows: 

7 ‘‘(v) REPURCHASE AGREEMENT.—The 

8 term ‘repurchase agreement’ (which defini9 tion also applies to a reverse repurchase 

10 agreement)— 

11 ‘‘(I) means an agreement, includ12 ing related terms, which provides for 

13 the transfer of one or more certifi14 cates of deposit, mortgage-related se15 curities (as such term is defined in 

16 the Securities Exchange Act of 1934), 

17 mortgage loans, interests in mortgage18 related securities or mortgage loans, 

19 eligible bankers’ acceptances, qualified 

20 foreign government securities or secu21 rities that are direct obligations of, or 

22 that are fully guaranteed by, the 

23 United States or any agency of the 

24 United States against the transfer of 

25 funds by the transferee of such certifi-
335 

•S 256 IS 

1 cates of deposit, eligible bankers’ ac2 ceptances, securities, mortgage loans, 

3 or interests with a simultaneous 

4 agreement by such transferee to 

5 transfer to the transferor thereof cer6 tificates of deposit, eligible bankers’ 

7 acceptances, securities, mortgage 

8 loans, or interests as described above, 

9 at a date certain not later than 1 year 

10 after such transfers or on demand, 

11 against the transfer of funds, or any 

12 other similar agreement; 

13 ‘‘(II) does not include any repur14 chase obligation under a participation 

15 in a commercial mortgage loan unless 

16 the Board determines by regulation, 

17 resolution, or order to include any 

18 such participation within the meaning 

19 of such term; 

20 ‘‘(III) means any combination of 

21 agreements or transactions referred to 

22 in subclauses (I) and (IV); 

23 ‘‘(IV) means any option to enter 

24 into any agreement or transaction re25 ferred to in subclause (I) or (III); 
336 

•S 256 IS 

1 ‘‘(V) means a master agreement 

2 that provides for an agreement or 

3 transaction referred to in subclause 

4 (I), (III), or (IV), together with all 

5 supplements to any such master 

6 agreement, without regard to whether 

7 the master agreement provides for an 

8 agreement or transaction that is not a 

9 repurchase agreement under this 

10 clause, except that the master agree11 ment shall be considered to be a re12 purchase agreement under this sub13 clause only with respect to each agree14 ment or transaction under the master 

15 agreement that is referred to in sub16 clause (I), (III), or (IV); and 

17 ‘‘(VI) means any security agree18 ment or arrangement or other credit 

19 enhancement related to any agree20 ment or transaction referred to in 

21 subclause (I), (III), (IV), or (V), in22 cluding any guarantee or reimburse23 ment obligation in connection with 

24 any agreement or transaction referred 

25 to in any such subclause. 
337 

•S 256 IS 

1 For purposes of this clause, the term 

2 ‘qualified foreign government security’ 

3 means a security that is a direct obligation 

4 of, or that is fully guaranteed by, the cen5 tral government of a member of the Orga6 nization for Economic Cooperation and 

7 Development (as determined by regulation 

8 or order adopted by the appropriate Fed9 eral banking authority).’’. 

10 (f) DEFINITION OF SWAP AGREEMENT.— 

11 (1) FDIC-INSURED DEPOSITORY INSTITU12 TIONS.—Section 11(e)(8)(D)(vi) of the Federal De13 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is 

14 amended to read as follows: 

15 ‘‘(vi) SWAP AGREEMENT.—The term 

16 ‘swap agreement’ means— 

17 ‘‘(I) any agreement, including the 

18 terms and conditions incorporated by 

19 reference in any such agreement, 

20 which is an interest rate swap, option, 

21 future, or forward agreement, includ22 ing a rate floor, rate cap, rate collar, 

23 cross-currency rate swap, and basis 

24 swap; a spot, same day-tomorrow, to25 morrow-next, forward, or other for-
338 

•S 256 IS 

1 eign exchange or precious metals 

2 agreement; a currency swap, option, 

3 future, or forward agreement; an eq4 uity index or equity swap, option, fu5 ture, or forward agreement; a debt 

6 index or debt swap, option, future, or 

7 forward agreement; a total return, 

8 credit spread or credit swap, option, 

9 future, or forward agreement; a com10 modity index or commodity swap, op11 tion, future, or forward agreement; or 

12 a weather swap, weather derivative, or 

13 weather option; 

14 ‘‘(II) any agreement or trans15 action that is similar to any other 

16 agreement or transaction referred to 

17 in this clause and that is of a type 

18 that has been, is presently, or in the 

19 future becomes, the subject of recur20 rent dealings in the swap markets (in21 cluding terms and conditions incor22 porated by reference in such agree23 ment) and that is a forward, swap, fu24 ture, or option on one or more rates, 

25 currencies, commodities, equity securi-
339 

•S 256 IS 

1 ties or other equity instruments, debt 

2 securities or other debt instruments, 

3 quantitative measures associated with 

4 an occurrence, extent of an occur5 rence, or contingency associated with 

6 a financial, commercial, or economic 

7 consequence, or economic or financial 

8 indices or measures of economic or fi9 nancial risk or value; 

10 ‘‘(III) any combination of agree11 ments or transactions referred to in 

12 this clause; 

13 ‘‘(IV) any option to enter into 

14 any agreement or transaction referred 

15 to in this clause; 

16 ‘‘(V) a master agreement that 

17 provides for an agreement or trans18 action referred to in subclause (I), 

19 (II), (III), or (IV), together with all 

20 supplements to any such master 

21 agreement, without regard to whether 

22 the master agreement contains an 

23 agreement or transaction that is not a 

24 swap agreement under this clause, ex25 cept that the master agreement shall 
340 

•S 256 IS 

1 be considered to be a swap agreement 

2 under this clause only with respect to 

3 each agreement or transaction under 

4 the master agreement that is referred 

5 to in subclause (I), (II), (III), or (IV); 

6 and 

7 ‘‘(VI) any security agreement or 

8 arrangement or other credit enhance9 ment related to any agreements or 

10 transactions referred to in subclause 

11 (I), (II), (III), (IV), or (V), including 

12 any guarantee or reimbursement obli13 gation in connection with any agree14 ment or transaction referred to in any 

15 such subclause. 

16 Such term is applicable for purposes of 

17 this subsection only and shall not be con18 strued or applied so as to challenge or af19 fect the characterization, definition, or 

20 treatment of any swap agreement under 

21 any other statute, regulation, or rule, in22 cluding the Securities Act of 1933, the Se23 curities Exchange Act of 1934, the Public 

24 Utility Holding Company Act of 1935, the 

25 Trust Indenture Act of 1939, the Invest-
341 

•S 256 IS 

1 ment Company Act of 1940, the Invest2 ment Advisers Act of 1940, the Securities 

3 Investor Protection Act of 1970, the Com4 modity Exchange Act, the Gramm-Leach5 Bliley Act, and the Legal Certainty for 

6 Bank Products Act of 2000.’’. 

7 (2) INSURED CREDIT UNIONS.—Section 

8 207(c)(8)(D) of the Federal Credit Union Act (12 

9 U.S.C. 1787(c)(8)(D)) is amended by adding at the 

10 end the following new clause: 

11 ‘‘(vi) SWAP AGREEMENT.—The term 

12 ‘swap agreement’ means— 

13 ‘‘(I) any agreement, including the 

14 terms and conditions incorporated by 

15 reference in any such agreement, 

16 which is an interest rate swap, option, 

17 future, or forward agreement, includ18 ing a rate floor, rate cap, rate collar, 

19 cross-currency rate swap, and basis 

20 swap; a spot, same day-tomorrow, to21 morrow-next, forward, or other for22 eign exchange or precious metals 

23 agreement; a currency swap, option, 

24 future, or forward agreement; an eq25 uity index or equity swap, option, fu-
342 

•S 256 IS 

1 ture, or forward agreement; a debt 

2 index or debt swap, option, future, or 

3 forward agreement; a total return, 

4 credit spread or credit swap, option, 

5 future, or forward agreement; a com6 modity index or commodity swap, op7 tion, future, or forward agreement; or 

8 a weather swap, weather derivative, or 

9 weather option; 

10 ‘‘(II) any agreement or trans11 action that is similar to any other 

12 agreement or transaction referred to 

13 in this clause and that is of a type 

14 that has been, is presently, or in the 

15 future becomes, the subject of recur16 rent dealings in the swap markets (in17 cluding terms and conditions incor18 porated by reference in such agree19 ment) and that is a forward, 

20 swap,future, or option on one or more 

21 rates, currencies, commodities, equity 

22 securities or other equity instruments, 

23 debt securities or other debt instru24 ments, quantitative measures associ25 ated with an occurrence, extent of an 
343 

•S 256 IS 

1 occurrence, or contingency associated 

2 with a financial, commercial, or eco3 nomic consequence, or economic or fi4 nancial indices or measures of eco5 nomic or financial risk or value; 

6 ‘‘(III) any combination of agree7 ments or transactions referred to in 

8 this clause; 

9 ‘‘(IV) any option to enter into 

10 any agreement or transaction referred 

11 to in this clause; 

12 ‘‘(V) a master agreement that 

13 provides for an agreement or trans14 action referred to in subclause (I), 

15 (II), (III), or (IV), together with all 

16 supplements to any such master 

17 agreement, without regard to whether 

18 the master agreement contains an 

19 agreement or transaction that is not a 

20 swap agreement under this clause, ex21 cept that the master agreement shall 

22 be considered to be a swap agreement 

23 under this clause only with respect to 

24 each agreement or transaction under 

25 the master agreement that is referred 
344 

•S 256 IS 

1 to in subclause (I), (II), (III), or (IV); 

2 and 

3 ‘‘(VI) any security agreement or 

4 arrangement or other credit enhance5 ment related to any agreements or 

6 transactions referred to in subclause 

7 (I), (II), (III), (IV), or (V), including 

8 any guarantee or reimbursement obli9 gation in connection with any agree10 ment or transaction referred to in any 

11 such subclause. 

12 Such term is applicable for purposes of 

13 this subsection only and shall not be con14 strued or applied so as to challenge or af15 fect the characterization, definition, or 

16 treatment of any swap agreement under 

17 any other statute, regulation, or rule, in18 cluding the Securities Act of 1933, the Se19 curities Exchange Act of 1934, the Public 

20 Utility Holding Company Act of 1935, the 

21 Trust Indenture Act of 1939, the Invest22 ment Company Act of 1940, the Invest23 ment Advisers Act of 1940, the Securities 

24 Investor Protection Act of 1970, the Com25 modity Exchange Act, the Gramm-Leach- 
345 

•S 256 IS 

1 Bliley Act, and the Legal Certainty for 

2 Bank Products Act of 2000.’’. 

3 (g) DEFINITION OF TRANSFER.— 

4 (1) FDIC-INSURED DEPOSITORY INSTITU5 TIONS.—Section 11(e)(8)(D)(viii) of the Federal De6 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) 

7 is amended to read as follows: 

8 ‘‘(viii) TRANSFER.—The term ‘trans9 fer’ means every mode, direct or indirect, 

10 absolute or conditional, voluntary or invol11 untary, of disposing of or parting with 

12 property or with an interest in property, 

13 including retention of title as a security in14 terest and foreclosure of the depository in15 stitution’s equity of redemption.’’. 

16 (2) INSURED CREDIT UNIONS.—Section 

17 207(c)(8)(D) of the Federal Credit Union Act (12 

18 U.S.C. 1787(c)(8)(D)) (as amended by subsection 

19 (f) of this section) is amended by adding at the end 

20 the following new clause: 

21 ‘‘(viii) TRANSFER.—The term ‘trans22 fer’ means every mode, direct or indirect, 

23 absolute or conditional, voluntary or invol24 untary, of disposing of or parting with 

25 property or with an interest in property, 
346 

•S 256 IS 

1 including retention of title as a security in2 terest and foreclosure of the depository in3 stitution’s equity of redemption.’’. 

4 (h) TREATMENT OF QUALIFIED FINANCIAL CON5 TRACTS.— 

6 (1) FDIC-INSURED DEPOSITORY INSTITU7 TIONS.—Section 11(e)(8) of the Federal Deposit In8 surance Act (12 U.S.C. 1821(e)(8)) is amended— 

9 (A) in subparagraph (A)— 

10 (i) by striking ‘‘paragraph (10)’’ and 

11 inserting ‘‘paragraphs (9) and (10)’’; 

12 (ii) in clause (i), by striking ‘‘to cause 

13 the termination or liquidation’’ and insert14 ing ‘‘such person has to cause the termi15 nation, liquidation, or acceleration’’; and 

16 (iii) by striking clause (ii) and insert17 ing the following new clause: 

18 ‘‘(ii) any right under any security 

19 agreement or arrangement or other credit 

20 enhancement related to one or more quali21 fied financial contracts described in clause 

22 (i);’’; and 

23 (B) in subparagraph (E), by striking 

24 clause (ii) and inserting the following: 
347 

•S 256 IS 

1 ‘‘(ii) any right under any security 

2 agreement or arrangement or other credit 

3 enhancement related to one or more quali4 fied financial contracts described in clause 

5 (i);’’. 

6 (2) INSURED CREDIT UNIONS.—Section 

7 207(c)(8) of the Federal Credit Union Act (12 

8 U.S.C. 1787(c)(8)) is amended— 

9 (A) in subparagraph (A)— 

10 (i) by striking ‘‘paragraph (12)’’ and 

11 inserting ‘‘paragraphs (9) and (10)’’; 

12 (ii) in clause (i), by striking ‘‘to cause 

13 the termination or liquidation’’ and insert14 ing ‘‘such person has to cause the termi15 nation, liquidation, or acceleration’’; and 

16 (iii) by striking clause (ii) and insert17 ing the following new clause: 

18 ‘‘(ii) any right under any security 

19 agreement or arrangement or other credit 

20 enhancement related to 1 or more qualified 

21 financial contracts described in clause 

22 (i);’’; and 

23 (B) in subparagraph (E), by striking 

24 clause (ii) and inserting the following new 

25 clause: 
348 

•S 256 IS 

1 ‘‘(ii) any right under any security 

2 agreement or arrangement or other credit 

3 enhancement related to 1 or more qualified 

4 financial contracts described in clause 

5 (i);’’. 

6 (i) AVOIDANCE OF TRANSFERS.— 

7 (1) FDIC-INSURED DEPOSITORY INSTITU8 TIONS.—Section 11(e)(8)(C)(i) of the Federal De9 posit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 

10 amended by inserting ‘‘section 5242 of the Revised 

11 Statutes of the United States or any other Federal 

12 or State law relating to the avoidance of preferential 

13 or fraudulent transfers,’’ before ‘‘the Corporation’’. 

14 (2) INSURED CREDIT UNIONS.—Section 

15 207(c)(8)(C)(i) of the Federal Credit Union Act (12 

16 U.S.C. 1787(c)(8)(C)(i)) is amended by inserting 

17 ‘‘section 5242 of the Revised Statutes of the United 

18 States or any other Federal or State law relating to 

19 the avoidance of preferential or fraudulent trans20 fers,’’ before ‘‘the Board’’. 

21 SEC. 902. AUTHORITY OF THE FDIC AND NCUAB WITH RE22 SPECT TO FAILED AND FAILING INSTITU23 TIONS. 

24 (a) FEDERAL DEPOSIT INSURANCE CORPORATION.— 
349 

•S 256 IS 

1 (1) IN GENERAL.—Section 11(e)(8) of the Fed2 eral Deposit Insurance Act (12 U.S.C. 1821(e)(8)) 

3 is amended— 

4 (A) in subparagraph (E), by striking 

5 ‘‘other than paragraph (12) of this subsection, 

6 subsection (d)(9)’’ and inserting ‘‘other than 

7 subsections (d)(9) and (e)(10)’’; and 

8 (B) by adding at the end the following new 

9 subparagraphs: 

10 ‘‘(F) CLARIFICATION.—No provision of law 

11 shall be construed as limiting the right or 

12 power of the Corporation, or authorizing any 

13 court or agency to limit or delay, in any man14 ner, the right or power of the Corporation to 

15 transfer any qualified financial contract in ac16 cordance with paragraphs (9) and (10) of this 

17 subsection or to disaffirm or repudiate any such 

18 contract in accordance with subsection (e)(1) of 

19 this section. 

20 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC21 TIVE.— 

22 ‘‘(i) IN GENERAL.—Notwithstanding 

23 the provisions of subparagraphs (A) and 

24 (E), and sections 403 and 404 of the Fed25 eral Deposit Insurance Corporation Im-
350 

•S 256 IS 

1 provement Act of 1991, no walkaway 

2 clause shall be enforceable in a qualified fi3 nancial contract of an insured depository 

4 institution in default. 

5 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

6 For purposes of this subparagraph, the 

7 term ‘walkaway clause’ means a provision 

8 in a qualified financial contract that, after 

9 calculation of a value of a party’s position 

10 or an amount due to or from 1 of the par11 ties in accordance with its terms upon ter12 mination, liquidation, or acceleration of the 

13 qualified financial contract, either does not 

14 create a payment obligation of a party or 

15 extinguishes a payment obligation of a 

16 party in whole or in part solely because of 

17 such party’s status as a nondefaulting 

18 party.’’. 

19 (2) TECHNICAL AND CONFORMING AMEND20 MENT.—Section 11(e)(12)(A) of the Federal Deposit 

21 Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amend22 ed by inserting ‘‘or the exercise of rights or powers 

23 by’’ after ‘‘the appointment of’’. 

24 (b) NATIONAL CREDIT UNION ADMINISTRATION

25 BOARD.— 
351 

•S 256 IS 

1 (1) IN GENERAL.—Section 207(c)(8) of the 

2 Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 

3 amended— 

4 (A) in subparagraph (E) (as amended by 

5 section 901(h)), by striking ‘‘other than para6 graph (12) of this subsection, subsection 

7 (b)(9)’’ and inserting ‘‘other than subsections 

8 (b)(9) and (c)(10)’’; and 

9 (B) by adding at the end the following new 

10 subparagraphs: 

11 ‘‘(F) CLARIFICATION.—No provision of law 

12 shall be construed as limiting the right or 

13 power of the Board, or authorizing any court or 

14 agency to limit or delay, in any manner, the 

15 right or power of the Board to transfer any 

16 qualified financial contract in accordance with 

17 paragraphs (9) and (10) of this subsection or to 

18 disaffirm or repudiate any such contract in ac19 cordance with subsection (c)(1) of this section. 

20 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC21 TIVE.— 

22 ‘‘(i) IN GENERAL.—Notwithstanding 

23 the provisions of subparagraphs (A) and 

24 (E), and sections 403 and 404 of the Fed25 eral Deposit Insurance Corporation Im-
352 

•S 256 IS 

1 provement Act of 1991, no walkaway 

2 clause shall be enforceable in a qualified fi3 nancial contract of an insured credit union 

4 in default. 

5 ‘‘(ii) WALKAWAY CLAUSE DEFINED.— 

6 For purposes of this subparagraph, the 

7 term ‘walkaway clause’ means a provision 

8 in a qualified financial contract that, after 

9 calculation of a value of a party’s position 

10 or an amount due to or from 1 of the par11 ties in accordance with its terms upon ter12 mination, liquidation, or acceleration of the 

13 qualified financial contract, either does not 

14 create a payment obligation of a party or 

15 extinguishes a payment obligation of a 

16 party in whole or in part solely because of 

17 such party’s status as a nondefaulting 

18 party.’’. 

19 (2) TECHNICAL AND CONFORMING AMEND20 MENT.—Section 207(c)(12)(A) of the Federal Credit 

21 Union Act (12 U.S.C. 1787(c)(12)(A)) is amended 

22 by inserting ‘‘or the exercise of rights or powers by’’ 

23 after ‘‘the appointment of’’. 
353 

•S 256 IS 

1 SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF 

2 QUALIFIED FINANCIAL CONTRACTS. 

3 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

4 (1) TRANSFERS OF QUALIFIED FINANCIAL

5 CONTRACTS TO FINANCIAL INSTITUTIONS.—Section 

6 11(e)(9) of the Federal Deposit Insurance Act (12 

7 U.S.C. 1821(e)(9)) is amended to read as follows: 

8 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON9 TRACTS.— 

10 ‘‘(A) IN GENERAL.—In making any trans11 fer of assets or liabilities of a depository institu12 tion in default which includes any qualified fi13 nancial contract, the conservator or receiver for 

14 such depository institution shall either— 

15 ‘‘(i) transfer to one financial institu16 tion, other than a financial institution for 

17 which a conservator, receiver, trustee in 

18 bankruptcy, or other legal custodian has 

19 been appointed or which is otherwise the 

20 subject of a bankruptcy or insolvency pro21 ceeding— 

22 ‘‘(I) all qualified financial con23 tracts between any person or any af24 filiate of such person and the deposi25 tory institution in default; 
354 

•S 256 IS 

1 ‘‘(II) all claims of such person or 

2 any affiliate of such person against 

3 such depository institution under any 

4 such contract (other than any claim 

5 which, under the terms of any such 

6 contract, is subordinated to the claims 

7 of general unsecured creditors of such 

8 institution); 

9 ‘‘(III) all claims of such deposi10 tory institution against such person or 

11 any affiliate of such person under any 

12 such contract; and 

13 ‘‘(IV) all property securing or 

14 any other credit enhancement for any 

15 contract described in subclause (I) or 

16 any claim described in subclause (II) 

17 or (III) under any such contract; or 

18 ‘‘(ii) transfer none of the qualified fi19 nancial contracts, claims, property or other 

20 credit enhancement referred to in clause (i) 

21 (with respect to such person and any affil22 iate of such person). 

23 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR24 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

25 AGENCY OF A FOREIGN BANK OR FINANCIAL IN-
355 

•S 256 IS 

1 STITUTION.—In transferring any qualified fi2 nancial contracts and related claims and prop3 erty under subparagraph (A)(i), the conservator 

4 or receiver for the depository institution shall 

5 not make such transfer to a foreign bank, fi6 nancial institution organized under the laws of 

7 a foreign country, or a branch or agency of a 

8 foreign bank or financial institution unless, 

9 under the law applicable to such bank, financial 

10 institution, branch or agency, to the qualified 

11 financial contracts, and to any netting contract, 

12 any security agreement or arrangement or other 

13 credit enhancement related to one or more 

14 qualified financial contracts, the contractual 

15 rights of the parties to such qualified financial 

16 contracts, netting contracts, security agree17 ments or arrangements, or other credit en18 hancements are enforceable substantially to the 

19 same extent as permitted under this section. 

20 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

21 TO THE RULES OF A CLEARING ORGANIZA22 TION.—In the event that a conservator or re23 ceiver transfers any qualified financial contract 

24 and related claims, property, and credit en25 hancements pursuant to subparagraph (A)(i) 
356 

•S 256 IS 

1 and such contract is cleared by or subject to the 

2 rules of a clearing organization, the clearing or3 ganization shall not be required to accept the 

4 transferee as a member by virtue of the trans5 fer. 

6 ‘‘(D) DEFINITIONS.—For purposes of this 

7 paragraph, the term ‘financial institution’ 

8 means a broker or dealer, a depository institu9 tion, a futures commission merchant, or any 

10 other institution, as determined by the Corpora11 tion by regulation to be a financial institution, 

12 and the term ‘clearing organization’ has the 

13 same meaning as in section 402 of the Federal 

14 Deposit Insurance Corporation Improvement 

15 Act of 1991.’’. 

16 (2) NOTICE TO QUALIFIED FINANCIAL CON17 TRACT COUNTERPARTIES.—Section 11(e)(10)(A) of 

18 the Federal Deposit Insurance Act (12 U.S.C. 

19 1821(e)(10)(A)) is amended in the material imme20 diately following clause (ii) by striking ‘‘the conser21 vator’’ and all that follows through the period and 

22 inserting the following: ‘‘the conservator or receiver 

23 shall notify any person who is a party to any such 

24 contract of such transfer by 5:00 p.m. (eastern time) 

25 on the business day following the date of the ap-
357 

•S 256 IS 

1 pointment of the receiver in the case of a receiver2 ship, or the business day following such transfer in 

3 the case of a conservatorship.’’. 

4 (3) RIGHTS AGAINST RECEIVER AND CONSER5 VATOR AND TREATMENT OF BRIDGE BANKS.—Sec6 tion 11(e)(10) of the Federal Deposit Insurance Act 

7 (12 U.S.C. 1821(e)(10)) is amended— 

8 (A) by redesignating subparagraph (B) as 

9 subparagraph (D); and 

10 (B) by inserting after subparagraph (A) 

11 the following new subparagraphs: 

12 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE13 ABLE.— 

14 ‘‘(i) RECEIVERSHIP.—A person who is 

15 a party to a qualified financial contract 

16 with an insured depository institution may 

17 not exercise any right that such person has 

18 to terminate, liquidate, or net such con19 tract under paragraph (8)(A) of this sub20 section or section 403 or 404 of the Fed21 eral Deposit Insurance Corporation Im22 provement Act of 1991, solely by reason of 

23 or incidental to the appointment of a re24 ceiver for the depository institution (or the 

25 insolvency or financial condition of the de-
358 

•S 256 IS 

1 pository institution for which the receiver 

2 has been appointed)— 

3 ‘‘(I) until 5:00 p.m. (eastern 

4 time) on the business day following 

5 the date of the appointment of the re6 ceiver; or 

7 ‘‘(II) after the person has re8 ceived notice that the contract has 

9 been transferred pursuant to para10 graph (9)(A). 

11 ‘‘(ii) CONSERVATORSHIP.—A person 

12 who is a party to a qualified financial con13 tract with an insured depository institution 

14 may not exercise any right that such per15 son has to terminate, liquidate, or net such 

16 contract under paragraph (8)(E) of this 

17 subsection or section 403 or 404 of the 

18 Federal Deposit Insurance Corporation 

19 Improvement Act of 1991, solely by reason 

20 of or incidental to the appointment of a 

21 conservator for the depository institution 

22 (or the insolvency or financial condition of 

23 the depository institution for which the 

24 conservator has been appointed). 
359 

•S 256 IS 

1 ‘‘(iii) NOTICE.—For purposes of this 

2 paragraph, the Corporation as receiver or 

3 conservator of an insured depository insti4 tution shall be deemed to have notified a 

5 person who is a party to a qualified finan6 cial contract with such depository institu7 tion if the Corporation has taken steps 

8 reasonably calculated to provide notice to 

9 such person by the time specified in sub10 paragraph (A). 

11 ‘‘(C) TREATMENT OF BRIDGE BANKS.— 

12 The following institutions shall not be consid13 ered to be a financial institution for which a 

14 conservator, receiver, trustee in bankruptcy, or 

15 other legal custodian has been appointed or 

16 which is otherwise the subject of a bankruptcy 

17 or insolvency proceeding for purposes of para18 graph (9): 

19 ‘‘(i) A bridge bank. 

20 ‘‘(ii) A depository institution orga21 nized by the Corporation, for which a con22 servator is appointed either— 

23 ‘‘(I) immediately upon the orga24 nization of the institution; or 
360 

•S 256 IS 

1 ‘‘(II) at the time of a purchase 

2 and assumption transaction between 

3 the depository institution and the Cor4 poration as receiver for a depository 

5 institution in default.’’. 

6 (b) INSURED CREDIT UNIONS.— 

7 (1) TRANSFERS OF QUALIFIED FINANCIAL CON8 TRACTS TO FINANCIAL INSTITUTIONS.—Section 

9 207(c)(9) of the Federal Credit Union Act (12 

10 U.S.C. 1787(c)(9)) is amended to read as follows: 

11 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON12 TRACTS.— 

13 ‘‘(A) IN GENERAL.—In making any trans14 fer of assets or liabilities of a credit union in 

15 default which includes any qualified financial 

16 contract, the conservator or liquidating agent 

17 for such credit union shall either— 

18 ‘‘(i) transfer to 1 financial institution, 

19 other than a financial institution for which 

20 a conservator, receiver, trustee in bank21 ruptcy, or other legal custodian has been 

22 appointed or which is otherwise the subject 

23 of a bankruptcy or insolvency proceeding— 

24 ‘‘(I) all qualified financial con25 tracts between any person or any af-
361 

•S 256 IS 

1 filiate of such person and the credit 

2 union in default; 

3 ‘‘(II) all claims of such person or 

4 any affiliate of such person against 

5 such credit union under any such con6 tract (other than any claim which, 

7 under the terms of any such contract, 

8 is subordinated to the claims of gen9 eral unsecured creditors of such credit 

10 union); 

11 ‘‘(III) all claims of such credit 

12 union against such person or any af13 filiate of such person under any such 

14 contract; and 

15 ‘‘(IV) all property securing or 

16 any other credit enhancement for any 

17 contract described in subclause (I) or 

18 any claim described in subclause (II) 

19 or (III) under any such contract; or 

20 ‘‘(ii) transfer none of the qualified fi21 nancial contracts, claims, property or other 

22 credit enhancement referred to in clause (i) 

23 (with respect to such person and any affil24 iate of such person). 
362 

•S 256 IS 

1 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR2 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

3 AGENCY OF A FOREIGN BANK OR FINANCIAL IN4 STITUTION.—In transferring any qualified fi5 nancial contracts and related claims and prop6 erty under subparagraph (A)(i), the conservator 

7 or liquidating agent for the credit union shall 

8 not make such transfer to a foreign bank, fi9 nancial institution organized under the laws of 

10 a foreign country, or a branch or agency of a 

11 foreign bank or financial institution unless, 

12 under the law applicable to such bank, financial 

13 institution, branch or agency, to the qualified 

14 financial contracts, and to any netting contract, 

15 any security agreement or arrangement or other 

16 credit enhancement related to 1 or more quali17 fied financial contracts, the contractual rights 

18 of the parties to such qualified financial con19 tracts, netting contracts, security agreements or 

20 arrangements, or other credit enhancements are 

21 enforceable substantially to the same extent as 

22 permitted under this section. 

23 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

24 TO THE RULES OF A CLEARING ORGANIZA25 TION.—In the event that a conservator or liqui-
363 

•S 256 IS 

1 dating agent transfers any qualified financial 

2 contract and related claims, property, and cred3 it enhancements pursuant to subparagraph 

4 (A)(i) and such contract is cleared by or subject 

5 to the rules of a clearing organization, the 

6 clearing organization shall not be required to 

7 accept the transferee as a member by virtue of 

8 the transfer. 

9 ‘‘(D) DEFINITIONS.—For purposes of this 

10 paragraph— 

11 ‘‘(i) the term ‘financial institution’ 

12 means a broker or dealer, a depository in13 stitution, a futures commission merchant, 

14 a credit union, or any other institution, as 

15 determined by the Board by regulation to 

16 be a financial institution; and 

17 ‘‘(ii) the term ‘clearing organization’ 

18 has the same meaning as in section 402 of 

19 the Federal Deposit Insurance Corporation 

20 Improvement Act of 1991.’’. 

21 (2) NOTICE TO QUALIFIED FINANCIAL CON22 TRACT COUNTERPARTIES.—Section 207(c)(10)(A) of 

23 the Federal Credit Union Act (12 U.S.C. 

24 1787(c)(10)(A)) is amended in the material imme25 diately following clause (ii) by striking ‘‘the conser-
364 

•S 256 IS 

1 vator’’ and all that follows through the period and 

2 inserting the following: ‘‘the conservator or liqui3 dating agent shall notify any person who is a party 

4 to any such contract of such transfer by 5:00 p.m. 

5 (eastern time) on the business day following the date 

6 of the appointment of the liquidating agent in the 

7 case of a liquidation, or the business day following 

8 such transfer in the case of a conservatorship.’’. 

9 (3) RIGHTS AGAINST LIQUIDATING AGENT AND

10 CONSERVATOR AND TREATMENT OF BRIDGE

11 BANKS.—Section 207(c)(10) of the Federal Credit 

12 Union Act (12 U.S.C. 1787(c)(10)) is amended— 

13 (A) by redesignating subparagraph (B) as 

14 subparagraph (D); and 

15 (B) by inserting after subparagraph (A) 

16 the following new subparagraphs: 

17 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE18 ABLE.— 

19 ‘‘(i) LIQUIDATION.—A person who is 

20 a party to a qualified financial contract 

21 with an insured credit union may not exer22 cise any right that such person has to ter23 minate, liquidate, or net such contract 

24 under paragraph (8)(A) of this subsection 

25 or section 403 or 404 of the Federal De-
365 

•S 256 IS 

1 posit Insurance Corporation Improvement 

2 Act of 1991, solely by reason of or inci3 dental to the appointment of a liquidating 

4 agent for the credit union institution (or 

5 the insolvency or financial condition of the 

6 credit union for which the liquidating 

7 agent has been appointed)— 

8 ‘‘(I) until 5:00 p.m. (eastern 

9 time) on the business day following 

10 the date of the appointment of the liq11 uidating agent; or 

12 ‘‘(II) after the person has re13 ceived notice that the contract has 

14 been transferred pursuant to para15 graph (9)(A). 

16 ‘‘(ii) CONSERVATORSHIP.—A person 

17 who is a party to a qualified financial con18 tract with an insured credit union may not 

19 exercise any right that such person has to 

20 terminate, liquidate, or net such contract 

21 under paragraph (8)(E) of this subsection 

22 or section 403 or 404 of the Federal De23 posit Insurance Corporation Improvement 

24 Act of 1991, solely by reason of or inci25 dental to the appointment of a conservator 
366 

•S 256 IS 

1 for the credit union or the insolvency or fi2 nancial condition of the credit union for 

3 which the conservator has been appointed). 

4 ‘‘(iii) NOTICE.—For purposes of this 

5 paragraph, the Board as conservator or 

6 liquidating agent of an insured credit 

7 union shall be deemed to have notified a 

8 person who is a party to a qualified finan9 cial contract with such credit union if the 

10 Board has taken steps reasonably cal11 culated to provide notice to such person by 

12 the time specified in subparagraph (A). 

13 ‘‘(C) TREATMENT OF BRIDGE BANKS.— 

14 The following institutions shall not be consid15 ered to be a financial institution for which a 

16 conservator, receiver, trustee in bankruptcy, or 

17 other legal custodian has been appointed or 

18 which is otherwise the subject of a bankruptcy 

19 or insolvency proceeding for purposes of para20 graph (9): 

21 ‘‘(i) A bridge bank. 

22 ‘‘(ii) A credit union organized by the 

23 Board, for which a conservator is ap24 pointed either— 
367 

•S 256 IS 

1 ‘‘(I) immediately upon the orga2 nization of the credit union; or 

3 ‘‘(II) at the time of a purchase 

4 and assumption transaction between 

5 the credit union and the Board as re6 ceiver for a credit union in default.’’. 

7 SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR 

8 REPUDIATION OF QUALIFIED FINANCIAL 

9 CONTRACTS. 

10 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

11 Section 11(e) of the Federal Deposit Insurance Act (12 

12 U.S.C. 1821(e)) is amended— 

13 (1) by redesignating paragraphs (11) through 

14 (15) as paragraphs (12) through (16), respectively; 

15 (2) by inserting after paragraph (10) the fol16 lowing new paragraph: 

17 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

18 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

19 the rights of disaffirmance or repudiation of a con20 servator or receiver with respect to any qualified fi21 nancial contract to which an insured depository in22 stitution is a party, the conservator or receiver for 

23 such institution shall either— 

24 ‘‘(A) disaffirm or repudiate all qualified fi25 nancial contracts between— 
368 

•S 256 IS 

1 ‘‘(i) any person or any affiliate of 

2 such person; and 

3 ‘‘(ii) the depository institution in de4 fault; or 

5 ‘‘(B) disaffirm or repudiate none of the 

6 qualified financial contracts referred to in sub7 paragraph (A) (with respect to such person or 

8 any affiliate of such person).’’; and 

9 (3) by adding at the end the following new 

10 paragraph: 

11 ‘‘(17) SAVINGS CLAUSE.—The meanings of 

12 terms used in this subsection are applicable for pur13 poses of this subsection only, and shall not be con14 strued or applied so as to challenge or affect the 

15 characterization, definition, or treatment of any 

16 similar terms under any other statute, regulation, or 

17 rule, including the Gramm-Leach-Bliley Act, the 

18 Legal Certainty for Bank Products Act of 2000, the 

19 securities laws (as that term is defined in section 

20 3(a)(47) of the Securities Exchange Act of 1934), 

21 and the Commodity Exchange Act.’’. 

22 (b) INSURED CREDIT UNIONS.—Section 207(c) of 

23 the Federal Credit Union Act (12 U.S.C. 1787(c)) is 

24 amended— 
369 

•S 256 IS 

1 (1) by redesignating paragraphs (11), (12), and 

2 (13) as paragraphs (12), (13), and (14), respec3 tively; 

4 (2) by inserting after paragraph (10) the fol5 lowing new paragraph: 

6 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

7 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

8 the rights of disaffirmance or repudiation of a con9 servator or liquidating agent with respect to any 

10 qualified financial contract to which an insured cred11 it union is a party, the conservator or liquidating 

12 agent for such credit union shall either— 

13 ‘‘(A) disaffirm or repudiate all qualified fi14 nancial contracts between— 

15 ‘‘(i) any person or any affiliate of 

16 such person; and 

17 ‘‘(ii) the credit union in default; or 

18 ‘‘(B) disaffirm or repudiate none of the 

19 qualified financial contracts referred to in sub20 paragraph (A) (with respect to such person or 

21 any affiliate of such person).’’; and 

22 (3) by adding at the end the following new 

23 paragraph: 

24 ‘‘(15) SAVINGS CLAUSE.—The meanings of 

25 terms used in this subsection are applicable for pur-
370 

•S 256 IS 

1 poses of this subsection only, and shall not be con2 strued or applied so as to challenge or affect the 

3 characterization, definition, or treatment of any 

4 similar terms under any other statute, regulation, or 

5 rule, including the Gramm-Leach-Bliley Act, the 

6 Legal Certainty for Bank Products Act of 2000, the 

7 securities laws (as that term is defined in section 

8 (a)(47) of the Securities Exchange Act of 1934), 

9 and the Commodity Exchange Act.’’. 

10 SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER 

11 AGREEMENTS. 

12 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

13 Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance 

14 Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as 

15 follows: 

16 ‘‘(vii) TREATMENT OF MASTER

17 AGREEMENT AS ONE AGREEMENT.—Any 

18 master agreement for any contract or 

19 agreement described in any preceding 

20 clause of this subparagraph (or any master 

21 agreement for such master agreement or 

22 agreements), together with all supplements 

23 to such master agreement, shall be treated 

24 as a single agreement and a single quali25 fied financial contract. If a master agree-
371 

•S 256 IS 

1 ment contains provisions relating to agree2 ments or transactions that are not them3 selves qualified financial contracts, the 

4 master agreement shall be deemed to be a 

5 qualified financial contract only with re6 spect to those transactions that are them7 selves qualified financial contracts.’’. 

8 (b) INSURED CREDIT UNIONS.—Section 

9 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 

10 1787(c)(8)(D)) is amended by inserting after clause (vi) 

11 (as added by section 901(f)) the following new clause: 

12 ‘‘(vii) TREATMENT OF MASTER

13 AGREEMENT AS ONE AGREEMENT.—Any 

14 master agreement for any contract or 

15 agreement described in any preceding 

16 clause of this subparagraph (or any master 

17 agreement for such master agreement or 

18 agreements), together with all supplements 

19 to such master agreement, shall be treated 

20 as a single agreement and a single quali21 fied financial contract. If a master agree22 ment contains provisions relating to agree23 ments or transactions that are not them24 selves qualified financial contracts, the 

25 master agreement shall be deemed to be a 
372 

•S 256 IS 

1 qualified financial contract only with re2 spect to those transactions that are them3 selves qualified financial contracts.’’. 

4 SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION 

5 IMPROVEMENT ACT OF 1991. 

6 (a) DEFINITIONS.—Section 402 of the Federal De7 posit Insurance Corporation Improvement Act of 1991 (12 

8 U.S.C. 4402) is amended— 

9 (1) in paragraph (2)— 

10 (A) in subparagraph (A)(ii), by inserting 

11 before the semicolon ‘‘, or is exempt from such 

12 registration by order of the Securities and Ex13 change Commission’’; and 

14 (B) in subparagraph (B), by inserting be15 fore the period ‘‘, that has been granted an ex16 emption under section 4(c)(1) of the Com17 modity Exchange Act, or that is a multilateral 

18 clearing organization (as defined in section 408 

19 of this Act)’’; 

20 (2) in paragraph (6)— 

21 (A) by redesignating subparagraphs (B) 

22 through (D) as subparagraphs (C) through (E), 

23 respectively; 

24 (B) by inserting after subparagraph (A) 

25 the following new subparagraph: 
373 

•S 256 IS 

1 ‘‘(B) an uninsured national bank or an un2 insured State bank that is a member of the 

3 Federal Reserve System, if the national bank or 

4 State member bank is not eligible to make ap5 plication to become an insured bank under sec6 tion 5 of the Federal Deposit Insurance Act;’’; 

7 and 

8 (C) by amending subparagraph (C), so re9 designated, to read as follows: 

10 ‘‘(C) a branch or agency of a foreign bank, 

11 a foreign bank and any branch or agency of the 

12 foreign bank, or the foreign bank that estab13 lished the branch or agency, as those terms are 

14 defined in section 1(b) of the International 

15 Banking Act of 1978;’’; 

16 (3) in paragraph (11), by inserting before the 

17 period ‘‘and any other clearing organization with 

18 which such clearing organization has a netting con19 tract’’; 

20 (4) by amending paragraph (14)(A)(i) to read 

21 as follows: 

22 ‘‘(i) means a contract or agreement 

23 between 2 or more financial institutions, 

24 clearing organizations, or members that 

25 provides for netting present or future pay-
374 

•S 256 IS 

1 ment obligations or payment entitlements 

2 (including liquidation or close out values 

3 relating to such obligations or entitle4 ments) among the parties to the agree5 ment; and’’; and 

6 (5) by adding at the end the following new 

7 paragraph: 

8 ‘‘(15) PAYMENT.—The term ‘payment’ means a 

9 payment of United States dollars, another currency, 

10 or a composite currency, and a noncash delivery, in11 cluding a payment or delivery to liquidate an 

12 unmatured obligation.’’. 

13 (b) ENFORCEABILITY OF BILATERAL NETTING CON14 TRACTS.—Section 403 of the Federal Deposit Insurance 

15 Corporation Improvement Act of 1991 (12 U.S.C. 4403) 

16 is amended— 

17 (1) by striking subsection (a) and inserting the 

18 following: 

19 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

20 provision of State or Federal law (other than paragraphs 

21 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

22 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and 

23 (10)(B) of section 207(c) of the Federal Credit Union Act, 

24 or any order authorized under section 5(b)(2) of the Secu25 rities Investor Protection Act of 1970), the covered con-
375 

•S 256 IS 

1 tractual payment obligations and the covered contractual 

2 payment entitlements between any 2 financial institutions 

3 shall be netted in accordance with, and subject to the con4 ditions of, the terms of any applicable netting contract (ex5 cept as provided in section 561(b)(2) of title 11, United 

6 States Code).’’; and 

7 (2) by adding at the end the following new sub8 section: 

9 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE10 MENTS.—The provisions of any security agreement or ar11 rangement or other credit enhancement related to one or 

12 more netting contracts between any 2 financial institu13 tions shall be enforceable in accordance with their terms 

14 (except as provided in section 561(b)(2) of title 11, United 

15 States Code), and shall not be stayed, avoided, or other16 wise limited by any State or Federal law (other than para17 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the 

18 Federal Deposit Insurance Act, paragraphs (8)(E), 

19 (8)(F), and (10)(B) of section 207(c) of the Federal Cred20 it Union Act, and section 5(b)(2) of the Securities Investor 

21 Protection Act of 1970).’’. 

22 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

23 NETTING CONTRACTS.—Section 404 of the Federal De24 posit Insurance Corporation Improvement Act of 1991 (12 

25 U.S.C. 4404) is amended— 
376 

•S 256 IS 

1 (1) by striking subsection (a) and inserting the 

2 following: 

3 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

4 provision of State or Federal law (other than paragraphs 

5 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

6 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and 

7 (10)(B) of section 207(c) of the Federal Credit Union Act, 

8 and any order authorized under section 5(b)(2) of the Se9 curities Investor Protection Act of 1970), the covered con10 tractual payment obligations and the covered contractual 

11 payment entitlements of a member of a clearing organiza12 tion to and from all other members of a clearing organiza13 tion shall be netted in accordance with and subject to the 

14 conditions of any applicable netting contract (except as 

15 provided in section 561(b)(2) of title 11, United States 

16 Code).’’; and 

17 (2) by adding at the end the following new sub18 section: 

19 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE20 MENTS.—The provisions of any security agreement or ar21 rangement or other credit enhancement related to one or 

22 more netting contracts between any 2 members of a clear23 ing organization shall be enforceable in accordance with 

24 their terms (except as provided in section 561(b)(2) of 

25 title 11, United States Code), and shall not be stayed, 
377 

•S 256 IS 

1 avoided, or otherwise limited by any State or Federal law 

2 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec3 tion 11(e) of the Federal Deposit Insurance Act, para4 graphs (8)(E), (8)(F), and (10)(B) of section 207(c) of 

5 the Federal Credit Union Act, and section 5(b)(2) of the 

6 Securities Investor Protection Act of 1970).’’. 

7 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN8 SURED NATIONAL BANKS, UNINSURED FEDERAL

9 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

10 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The 

11 Federal Deposit Insurance Corporation Improvement Act 

12 of 1991 (12 U.S.C. 4401 et seq.) is amended— 

13 (1) by redesignating section 407 as section 

14 407A; and 

15 (2) by inserting after section 406 the following 

16 new section: 

17 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED 

18 NATIONAL BANKS, UNINSURED FEDERAL 

19 BRANCHES AND AGENCIES, CERTAIN UNIN20 SURED STATE MEMBER BANKS, AND EDGE 

21 ACT CORPORATIONS. 

22 ‘‘(a) IN GENERAL.—Notwithstanding any other pro23 vision of law, paragraphs (8), (9), (10), and (11) of section 

24 11(e) of the Federal Deposit Insurance Act shall apply 

25 to an uninsured national bank or uninsured Federal 
378 

•S 256 IS 

1 branch or Federal agency, a corporation chartered under 

2 section 25A of the Federal Reserve Act, or an uninsured 

3 State member bank which operates, or operates as, a mul4 tilateral clearing organization pursuant to section 409 of 

5 this Act, except that for such purpose— 

6 ‘‘(1) any reference to the ‘Corporation as re7 ceiver’ or ‘the receiver or the Corporation’ shall refer 

8 to the receiver appointed by the Comptroller of the 

9 Currency in the case of an uninsured national bank 

10 or uninsured Federal branch or agency, or to the re11 ceiver appointed by the Board of Governors of the 

12 Federal Reserve System in the case of a corporation 

13 chartered under section 25A of the Federal Reserve 

14 Act or an uninsured State member bank; 

15 ‘‘(2) any reference to the ‘Corporation’ (other 

16 than in section 11(e)(8)(D) of such Act), the ‘Cor17 poration, whether acting as such or as conservator 

18 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer 

19 to the receiver or conservator appointed by the 

20 Comptroller of the Currency in the case of an unin21 sured national bank or uninsured Federal branch or 

22 agency, or to the receiver or conservator appointed 

23 by the Board of Governors of the Federal Reserve 

24 System in the case of a corporation chartered under 
379 

•S 256 IS 

1 section 25A of the Federal Reserve Act or an unin2 sured State member bank; and 

3 ‘‘(3) any reference to an ‘insured depository in4 stitution’ or ‘depository institution’ shall refer to an 

5 uninsured national bank, an uninsured Federal 

6 branch or Federal agency, a corporation chartered 

7 under section 25A of the Federal Reserve Act, or an 

8 uninsured State member bank which operates, or op9 erates as, a multilateral clearing organization pursu10 ant to section 409 of this Act. 

11 ‘‘(b) LIABILITY.—The liability of a receiver or conser12 vator of an uninsured national bank, uninsured Federal 

13 branch or agency, a corporation chartered under section 

14 25A of the Federal Reserve Act, or an uninsured State 

15 member bank which operates, or operates as, a multilat16 eral clearing organization pursuant to section 409 of this 

17 Act, shall be determined in the same manner and subject 

18 to the same limitations that apply to receivers and con19 servators of insured depository institutions under section 

20 11(e) of the Federal Deposit Insurance Act. 

21 ‘‘(c) REGULATORY AUTHORITY.— 

22 ‘‘(1) IN GENERAL.—The Comptroller of the 

23 Currency in the case of an uninsured national bank 

24 or uninsured Federal branch or agency and the 

25 Board of Governors of the Federal Reserve System 
380 

•S 256 IS 

1 in the case of a corporation chartered under section 

2 25A of the Federal Reserve Act, or an uninsured 

3 State member bank that operates, or operates as, a 

4 multilateral clearing organization pursuant to sec5 tion 409 of this Act, in consultation with the Fed6 eral Deposit Insurance Corporation, may each pro7 mulgate regulations solely to implement this section. 

8 ‘‘(2) SPECIFIC REQUIREMENT.—In promul9 gating regulations, limited solely to implementing 

10 paragraphs (8), (9), (10), and (11) of section 11(e) 

11 of the Federal Deposit Insurance Act, the Comp12 troller of the Currency and the Board of Governors 

13 of the Federal Reserve System each shall ensure 

14 that the regulations generally are consistent with the 

15 regulations and policies of the Federal Deposit In16 surance Corporation adopted pursuant to the Fed17 eral Deposit Insurance Act. 

18 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

19 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign 

20 bank’ have the same meanings as in section 1(b) of the 

21 International Banking Act of 1978.’’. 

22 SEC. 907. BANKRUPTCY LAW AMENDMENTS. 

23 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR24 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, 

25 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU-
381 

•S 256 IS 

1 RITIES CONTRACT.—Title 11, United States Code, is 

2 amended— 

3 (1) in section 101— 

4 (A) in paragraph (25)— 

5 (i) by striking ‘‘means a contract’’ 

6 and inserting ‘‘means— 

7 ‘‘(A) a contract’’; 

8 (ii) by striking ‘‘, or any combination 

9 thereof or option thereon;’’ and inserting 

10 ‘‘, or any other similar agreement;’’; and 

11 (iii) by adding at the end the fol12 lowing: 

13 ‘‘(B) any combination of agreements or 

14 transactions referred to in subparagraphs (A) 

15 and (C); 

16 ‘‘(C) any option to enter into an agreement 

17 or transaction referred to in subparagraph (A) 

18 or (B); 

19 ‘‘(D) a master agreement that provides for 

20 an agreement or transaction referred to in sub21 paragraph (A), (B), or (C), together with all 

22 supplements to any such master agreement, 

23 without regard to whether such master agree24 ment provides for an agreement or transaction 

25 that is not a forward contract under this para-
382 

•S 256 IS 

1 graph, except that such master agreement shall 

2 be considered to be a forward contract under 

3 this paragraph only with respect to each agree4 ment or transaction under such master agree5 ment that is referred to in subparagraph (A), 

6 (B), or (C); or 

7 ‘‘(E) any security agreement or arrange8 ment, or other credit enhancement related to 

9 any agreement or transaction referred to in 

10 subparagraph (A), (B), (C), or (D), including 

11 any guarantee or reimbursement obligation by 

12 or to a forward contract merchant or financial 

13 participant in connection with any agreement or 

14 transaction referred to in any such subpara15 graph, but not to exceed the damages in con16 nection with any such agreement or transaction, 

17 measured in accordance with section 562;’’; 

18 (B) in paragraph (46), by striking ‘‘on any 

19 day during the period beginning 90 days before 

20 the date of’’ and inserting ‘‘at any time before’’; 

21 (C) by amending paragraph (47) to read 

22 as follows: 

23 ‘‘(47) ‘repurchase agreement’ (which definition 

24 also applies to a reverse repurchase agreement)— 

25 ‘‘(A) means— 
383 

•S 256 IS 

1 ‘‘(i) an agreement, including related 

2 terms, which provides for the transfer of 

3 one or more certificates of deposit, mort4 gage related securities (as defined in sec5 tion 3 of the Securities Exchange Act of 

6 1934), mortgage loans, interests in mort7 gage related securities or mortgage loans, 

8 eligible bankers’ acceptances, qualified for9 eign government securities (defined as a 

10 security that is a direct obligation of, or 

11 that is fully guaranteed by, the central 

12 government of a member of the Organiza13 tion for Economic Cooperation and Devel14 opment), or securities that are direct obli15 gations of, or that are fully guaranteed by, 

16 the United States or any agency of the 

17 United States against the transfer of funds 

18 by the transferee of such certificates of de19 posit, eligible bankers’ acceptances, securi20 ties, mortgage loans, or interests, with a 

21 simultaneous agreement by such transferee 

22 to transfer to the transferor thereof certifi23 cates of deposit, eligible bankers’ accept24 ance, securities, mortgage loans, or inter25 ests of the kind described in this clause, at 
384 

•S 256 IS 

1 a date certain not later than 1 year after 

2 such transfer or on demand, against the 

3 transfer of funds; 

4 ‘‘(ii) any combination of agreements 

5 or transactions referred to in clauses (i) 

6 and (iii); 

7 ‘‘(iii) an option to enter into an agree8 ment or transaction referred to in clause 

9 (i) or (ii); 

10 ‘‘(iv) a master agreement that pro11 vides for an agreement or transaction re12 ferred to in clause (i), (ii), or (iii), together 

13 with all supplements to any such master 

14 agreement, without regard to whether such 

15 master agreement provides for an agree16 ment or transaction that is not a repur17 chase agreement under this paragraph, ex18 cept that such master agreement shall be 

19 considered to be a repurchase agreement 

20 under this paragraph only with respect to 

21 each agreement or transaction under the 

22 master agreement that is referred to in 

23 clause (i), (ii), or (iii); or 

24 ‘‘(v) any security agreement or ar25 rangement or other credit enhancement re-
385 

•S 256 IS 

1 lated to any agreement or transaction re2 ferred to in clause (i), (ii), (iii), or (iv), in3 cluding any guarantee or reimbursement 

4 obligation by or to a repo participant or fi5 nancial participant in connection with any 

6 agreement or transaction referred to in 

7 any such clause, but not to exceed the 

8 damages in connection with any such 

9 agreement or transaction, measured in ac10 cordance with section 562 of this title; and 

11 ‘‘(B) does not include a repurchase obliga12 tion under a participation in a commercial 

13 mortgage loan;’’; 

14 (D) in paragraph (48), by inserting ‘‘, or 

15 exempt from such registration under such sec16 tion pursuant to an order of the Securities and 

17 Exchange Commission,’’ after ‘‘1934’’; and 

18 (E) by amending paragraph (53B) to read 

19 as follows: 

20 ‘‘(53B) ‘swap agreement’— 

21 ‘‘(A) means— 

22 ‘‘(i) any agreement, including the 

23 terms and conditions incorporated by ref24 erence in such agreement, which is— 
386 

•S 256 IS 

1 ‘‘(I) an interest rate swap, op2 tion, future, or forward agreement, in3 cluding a rate floor, rate cap, rate col4 lar, cross-currency rate swap, and 

5 basis swap; 

6 ‘‘(II) a spot, same day-tomorrow, 

7 tomorrow-next, forward, or other for8 eign exchange or precious metals 

9 agreement; 

10 ‘‘(III) a currency swap, option, 

11 future, or forward agreement; 

12 ‘‘(IV) an equity index or equity 

13 swap, option, future, or forward 

14 agreement; 

15 ‘‘(V) a debt index or debt swap, 

16 option, future, or forward agreement; 

17 ‘‘(VI) a total return, credit 

18 spread or credit swap, option, future, 

19 or forward agreement; 

20 ‘‘(VII) a commodity index or a 

21 commodity swap, option, future, or 

22 forward agreement; or 

23 ‘‘(VIII) a weather swap, weather 

24 derivative, or weather option; 
387 

•S 256 IS 

1 ‘‘(ii) any agreement or transaction 

2 that is similar to any other agreement or 

3 transaction referred to in this paragraph 

4 and that— 

5 ‘‘(I) is of a type that has been, is 

6 presently, or in the future becomes, 

7 the subject of recurrent dealings in 

8 the swap markets (including terms 

9 and conditions incorporated by ref10 erence therein); and 

11 ‘‘(II) is a forward, swap, future, 

12 or option on one or more rates, cur13 rencies, commodities, equity securities, 

14 or other equity instruments, debt se15 curities or other debt instruments, 

16 quantitative measures associated with 

17 an occurrence, extent of an occur18 rence, or contingency associated with 

19 a financial, commercial, or economic 

20 consequence, or economic or financial 

21 indices or measures of economic or fi22 nancial risk or value; 

23 ‘‘(iii) any combination of agreements 

24 or transactions referred to in this subpara25 graph; 
388 

•S 256 IS 

1 ‘‘(iv) any option to enter into an 

2 agreement or transaction referred to in 

3 this subparagraph; 

4 ‘‘(v) a master agreement that provides 

5 for an agreement or transaction referred to 

6 in clause (i), (ii), (iii), or (iv), together 

7 with all supplements to any such master 

8 agreement, and without regard to whether 

9 the master agreement contains an agree10 ment or transaction that is not a swap 

11 agreement under this paragraph, except 

12 that the master agreement shall be consid13 ered to be a swap agreement under this 

14 paragraph only with respect to each agree15 ment or transaction under the master 

16 agreement that is referred to in clause (i), 

17 (ii), (iii), or (iv); or 

18 ‘‘(vi) any security agreement or ar19 rangement or other credit enhancement re20 lated to any agreements or transactions re21 ferred to in clause (i) through (v), includ22 ing any guarantee or reimbursement obli23 gation by or to a swap participant or fi24 nancial participant in connection with any 

25 agreement or transaction referred to in 
389 

•S 256 IS 

1 any such clause, but not to exceed the 

2 damages in connection with any such 

3 agreement or transaction, measured in ac4 cordance with section 562; and 

5 ‘‘(B) is applicable for purposes of this title 

6 only, and shall not be construed or applied so 

7 as to challenge or affect the characterization, 

8 definition, or treatment of any swap agreement 

9 under any other statute, regulation, or rule, in10 cluding the Securities Act of 1933, the Securi11 ties Exchange Act of 1934, the Public Utility 

12 Holding Company Act of 1935, the Trust In13 denture Act of 1939, the Investment Company 

14 Act of 1940, the Investment Advisers Act of 

15 1940, the Securities Investor Protection Act of 

16 1970, the Commodity Exchange Act, the 

17 Gramm-Leach-Bliley Act, and the Legal Cer18 tainty for Bank Products Act of 2000;’’; 

19 (2) in section 741(7), by striking paragraph (7) 

20 and inserting the following: 

21 ‘‘(7) ‘securities contract’— 

22 ‘‘(A) means— 

23 ‘‘(i) a contract for the purchase, sale, 

24 or loan of a security, a certificate of de25 posit, a mortgage loan or any interest in a 
390 

•S 256 IS 

1 mortgage loan, a group or index of securi2 ties, certificates of deposit, or mortgage 

3 loans or interests therein (including an in4 terest therein or based on the value there5 of), or option on any of the foregoing, in6 cluding an option to purchase or sell any 

7 such security, certificate of deposit, mort8 gage loan, interest, group or index, or op9 tion, and including any repurchase or re10 verse repurchase transaction on any such 

11 security, certificate of deposit, mortgage 

12 loan, interest, group or index, or option; 

13 ‘‘(ii) any option entered into on a na14 tional securities exchange relating to for15 eign currencies; 

16 ‘‘(iii) the guarantee by or to any secu17 rities clearing agency of a settlement of 

18 cash, securities, certificates of deposit, 

19 mortgage loans or interests therein, group 

20 or index of securities, or mortgage loans or 

21 interests therein (including any interest 

22 therein or based on the value thereof), or 

23 option on any of the foregoing, including 

24 an option to purchase or sell any such se-
391 

•S 256 IS 

1 curity, certificate of deposit, mortgage 

2 loan, interest, group or index, or option; 

3 ‘‘(iv) any margin loan; 

4 ‘‘(v) any other agreement or trans5 action that is similar to an agreement or 

6 transaction referred to in this subpara7 graph; 

8 ‘‘(vi) any combination of the agree9 ments or transactions referred to in this 

10 subparagraph; 

11 ‘‘(vii) any option to enter into any 

12 agreement or transaction referred to in 

13 this subparagraph; 

14 ‘‘(viii) a master agreement that pro15 vides for an agreement or transaction re16 ferred to in clause (i), (ii), (iii), (iv), (v), 

17 (vi), or (vii), together with all supplements 

18 to any such master agreement, without re19 gard to whether the master agreement pro20 vides for an agreement or transaction that 

21 is not a securities contract under this sub22 paragraph, except that such master agree23 ment shall be considered to be a securities 

24 contract under this subparagraph only with 

25 respect to each agreement or transaction 
392 

•S 256 IS 

1 under such master agreement that is re2 ferred to in clause (i), (ii), (iii), (iv), (v), 

3 (vi), or (vii); or 

4 ‘‘(ix) any security agreement or ar5 rangement or other credit enhancement re6 lated to any agreement or transaction re7 ferred to in this subparagraph, including 

8 any guarantee or reimbursement obligation 

9 by or to a stockbroker, securities clearing 

10 agency, financial institution, or financial 

11 participant in connection with any agree12 ment or transaction referred to in this sub13 paragraph, but not to exceed the damages 

14 in connection with any such agreement or 

15 transaction, measured in accordance with 

16 section 562; and 

17 ‘‘(B) does not include any purchase, sale, 

18 or repurchase obligation under a participation 

19 in a commercial mortgage loan;’’; and 

20 (3) in section 761(4)— 

21 (A) by striking ‘‘or’’ at the end of subpara22 graph (D); and 

23 (B) by adding at the end the following: 
393 

•S 256 IS 

1 ‘‘(F) any other agreement or transaction 

2 that is similar to an agreement or transaction 

3 referred to in this paragraph; 

4 ‘‘(G) any combination of the agreements or 

5 transactions referred to in this paragraph; 

6 ‘‘(H) any option to enter into an agree7 ment or transaction referred to in this para8 graph; 

9 ‘‘(I) a master agreement that provides for 

10 an agreement or transaction referred to in sub11 paragraph (A), (B), (C), (D), (E), (F), (G), or 

12 (H), together with all supplements to such mas13 ter agreement, without regard to whether the 

14 master agreement provides for an agreement or 

15 transaction that is not a commodity contract 

16 under this paragraph, except that the master 

17 agreement shall be considered to be a com18 modity contract under this paragraph only with 

19 respect to each agreement or transaction under 

20 the master agreement that is referred to in sub21 paragraph (A), (B), (C), (D), (E), (F), (G), or 

22 (H); or 

23 ‘‘(J) any security agreement or arrange24 ment or other credit enhancement related to 

25 any agreement or transaction referred to in this 
394 

•S 256 IS 

1 paragraph, including any guarantee or reim2 bursement obligation by or to a commodity 

3 broker or financial participant in connection 

4 with any agreement or transaction referred to 

5 in this paragraph, but not to exceed the dam6 ages in connection with any such agreement or 

7 transaction, measured in accordance with sec8 tion 562;’’. 

9 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI10 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER11 CHANT.—Section 101 of title 11, United States Code, is 

12 amended— 

13 (1) by striking paragraph (22) and inserting 

14 the following: 

15 ‘‘(22) ‘financial institution’ means— 

16 ‘‘(A) a Federal reserve bank, or an entity 

17 (domestic or foreign) that is a commercial or 

18 savings bank, industrial savings bank, savings 

19 and loan association, trust company, federally20 insured credit union, or receiver, liquidating 

21 agent, or conservator for such entity and, when 

22 any such Federal reserve bank, receiver, liqui23 dating agent, conservator or entity is acting as 

24 agent or custodian for a customer in connection 
395 

•S 256 IS 

1 with a securities contract (as defined in section 

2 741) such customer; or 

3 ‘‘(B) in connection with a securities con4 tract (as defined in section 741) an investment 

5 company registered under the Investment Com6 pany Act of 1940;’’; 

7 (2) by inserting after paragraph (22) the fol8 lowing: 

9 ‘‘(22A) ‘financial participant’ means— 

10 ‘‘(A) an entity that, at the time it enters 

11 into a securities contract, commodity contract, 

12 swap agreement, repurchase agreement, or for13 ward contract, or at the time of the date of the 

14 filing of the petition, has one or more agree15 ments or transactions described in paragraph 

16 (1), (2), (3), (4), (5), or (6) of section 561(a) 

17 with the debtor or any other entity (other than 

18 an affiliate) of a total gross dollar value of not 

19 less than $1,000,000,000 in notional or actual 

20 principal amount outstanding on any day dur21 ing the previous 15-month period, or has gross 

22 mark-to-market positions of not less than 

23 $100,000,000 (aggregated across 

24 counterparties) in one or more such agreements 

25 or transactions with the debtor or any other en-
396 

•S 256 IS 

1 tity (other than an affiliate) on any day during 

2 the previous 15-month period; or 

3 ‘‘(B) a clearing organization (as defined in 

4 section 402 of the Federal Deposit Insurance 

5 Corporation Improvement Act of 1991);’’; and 

6 (3) by striking paragraph (26) and inserting 

7 the following: 

8 ‘‘(26) ‘forward contract merchant’ means a 

9 Federal reserve bank, or an entity the business of 

10 which consists in whole or in part of entering into 

11 forward contracts as or with merchants in a com12 modity (as defined in section 761) or any similar 

13 good, article, service, right, or interest which is pres14 ently or in the future becomes the subject of dealing 

15 in the forward contract trade;’’. 

16 (c) DEFINITION OF MASTER NETTING AGREEMENT

17 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec18 tion 101 of title 11, United States Code, is amended by 

19 inserting after paragraph (38) the following new para20 graphs: 

21 ‘‘(38A) ‘master netting agreement’— 

22 ‘‘(A) means an agreement providing for 

23 the exercise of rights, including rights of net24 ting, setoff, liquidation, termination, accelera25 tion, or close out, under or in connection with 
397 

•S 256 IS 

1 one or more contracts that are described in any 

2 one or more of paragraphs (1) through (5) of 

3 section 561(a), or any security agreement or ar4 rangement or other credit enhancement related 

5 to one or more of the foregoing, including any 

6 guarantee or reimbursement obligation related 

7 to 1 or more of the foregoing; and 

8 ‘‘(B) if the agreement contains provisions 

9 relating to agreements or transactions that are 

10 not contracts described in paragraphs (1) 

11 through (5) of section 561(a), shall be deemed 

12 to be a master netting agreement only with re13 spect to those agreements or transactions that 

14 are described in any one or more of paragraphs 

15 (1) through (5) of section 561(a); 

16 ‘‘(38B) ‘master netting agreement participant’ 

17 means an entity that, at any time before the date of 

18 the filing of the petition, is a party to an out19 standing master netting agreement with the debt20 or;’’. 

21 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 

22 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR23 CHASE AGREEMENTS, AND MASTER NETTING AGREE24 MENTS UNDER THE AUTOMATIC-STAY.— 
398 

•S 256 IS 

1 (1) IN GENERAL.—Section 362(b) of title 11, 

2 United States Code, as amended by sections 224, 

3 303, 311, 401, and 718, is amended— 

4 (A) in paragraph (6), by inserting ‘‘, 

5 pledged to, under the control of,’’ after ‘‘held 

6 by’’; 

7 (B) in paragraph (7), by inserting ‘‘, 

8 pledged to, under the control of,’’ after ‘‘held 

9 by’’; 

10 (C) by striking paragraph (17) and insert11 ing the following: 

12 ‘‘(17) under subsection (a), of the setoff by a 

13 swap participant or financial participant of a mutual 

14 debt and claim under or in connection with one or 

15 more swap agreements that constitutes the setoff of 

16 a claim against the debtor for any payment or other 

17 transfer of property due from the debtor under or in 

18 connection with any swap agreement against any 

19 payment due to the debtor from the swap partici20 pant or financial participant under or in connection 

21 with any swap agreement or against cash, securities, 

22 or other property held by, pledged to, under the con23 trol of, or due from such swap participant or finan24 cial participant to margin, guarantee, secure, or set25 tle any swap agreement;’’; and 
399 

•S 256 IS 

1 (D) by inserting after paragraph (26) the 

2 following: 

3 ‘‘(27) under subsection (a), of the setoff by a 

4 master netting agreement participant of a mutual 

5 debt and claim under or in connection with one or 

6 more master netting agreements or any contract or 

7 agreement subject to such agreements that con8 stitutes the setoff of a claim against the debtor for 

9 any payment or other transfer of property due from 

10 the debtor under or in connection with such agree11 ments or any contract or agreement subject to such 

12 agreements against any payment due to the debtor 

13 from such master netting agreement participant 

14 under or in connection with such agreements or any 

15 contract or agreement subject to such agreements or 

16 against cash, securities, or other property held by, 

17 pledged to, under the control of, or due from such 

18 master netting agreement participant to margin, 

19 guarantee, secure, or settle such agreements or any 

20 contract or agreement subject to such agreements, 

21 to the extent that such participant is eligible to exer22 cise such offset rights under paragraph (6), (7), or 

23 (17) for each individual contract covered by the mas24 ter netting agreement in issue; and’’. 
400 

•S 256 IS 

1 (2) LIMITATION.—Section 362 of title 11, 

2 United States Code, as amended by sections 106, 

3 305, 311, and 441, is amended by adding at the end 

4 the following: 

5 ‘‘(o) The exercise of rights not subject to the stay 

6 arising under subsection (a) pursuant to paragraph (6), 

7 (7), (17), or (27) of subsection (b) shall not be stayed 

8 by any order of a court or administrative agency in any 

9 proceeding under this title.’’. 

10 (e) LIMITATION OF AVOIDANCE POWERS UNDER

11 MASTER NETTING AGREEMENT.—Section 546 of title 11, 

12 United States Code, is amended— 

13 (1) in subsection (g) (as added by section 103 

14 of Public Law 101–311)— 

15 (A) by striking ‘‘under a swap agreement’’; 

16 (B) by striking ‘‘in connection with a swap 

17 agreement’’ and inserting ‘‘under or in connec18 tion with any swap agreement’’; and 

19 (C) by inserting ‘‘or financial participant’’ 

20 after ‘‘swap participant’’; and 

21 (2) by adding at the end the following: 

22 ‘‘(j) Notwithstanding sections 544, 545, 547, 

23 548(a)(1)(B), and 548(b) the trustee may not avoid a 

24 transfer made by or to a master netting agreement partici25 pant under or in connection with any master netting 
401 

•S 256 IS 

1 agreement or any individual contract covered thereby that 

2 is made before the commencement of the case, except 

3 under section 548(a)(1)(A) and except to the extent that 

4 the trustee could otherwise avoid such a transfer made 

5 under an individual contract covered by such master net6 ting agreement.’’. 

7 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

8 AGREEMENTS.—Section 548(d)(2) of title 11, United 

9 States Code, is amended— 

10 (1) in subparagraph (C), by striking ‘‘and’’ at 

11 the end; 

12 (2) in subparagraph (D), by striking the period 

13 and inserting ‘‘; and’’; and 

14 (3) by adding at the end the following new sub15 paragraph: 

16 ‘‘(E) a master netting agreement participant 

17 that receives a transfer in connection with a master 

18 netting agreement or any individual contract covered 

19 thereby takes for value to the extent of such trans20 fer, except that, with respect to a transfer under any 

21 individual contract covered thereby, to the extent 

22 that such master netting agreement participant oth23 erwise did not take (or is otherwise not deemed to 

24 have taken) such transfer for value.’’. 
402 

•S 256 IS 

1 (g) TERMINATION OR ACCELERATION OF SECURITIES

2 CONTRACTS.—Section 555 of title 11, United States Code, 

3 is amended— 

4 (1) by amending the section heading to read as 

5 follows: 

6 ‘‘§ 555. Contractual right to liquidate, terminate, or 

7 accelerate a securities contract’’; 

8 and 

9 (2) in the first sentence, by striking ‘‘liquida10 tion’’ and inserting ‘‘liquidation, termination, or ac11 celeration’’. 

12 (h) TERMINATION OR ACCELERATION OF COMMOD13 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 

14 United States Code, is amended— 

15 (1) by amending the section heading to read as 

16 follows: 

17 ‘‘§ 556. Contractual right to liquidate, terminate, or 

18 accelerate a commodities contract or for19 ward contract’’; 

20 (2) in the first sentence, by striking ‘‘liquida21 tion’’ and inserting ‘‘liquidation, termination, or ac22 celeration’’; and 

23 (3) in the second sentence, by striking ‘‘As 

24 used’’ and all that follows through ‘‘right,’’ and in25 serting ‘‘As used in this section, the term ‘contrac-
403 

•S 256 IS 

1 tual right’ includes a right set forth in a rule or 

2 bylaw of a derivatives clearing organization (as de3 fined in the Commodity Exchange Act), a multilat4 eral clearing organization (as defined in the Federal 

5 Deposit Insurance Corporation Improvement Act of 

6 1991), a national securities exchange, a national se7 curities association, a securities clearing agency, a 

8 contract market designated under the Commodity 

9 Exchange Act, a derivatives transaction execution 

10 facility registered under the Commodity Exchange 

11 Act, or a board of trade (as defined in the Com12 modity Exchange Act) or in a resolution of the gov13 erning board thereof and a right,’’. 

14 (i) TERMINATION OR ACCELERATION OF REPUR15 CHASE AGREEMENTS.—Section 559 of title 11, United 

16 States Code, is amended— 

17 (1) by amending the section heading to read as 

18 follows: 

19 ‘‘§ 559. Contractual right to liquidate, terminate, or 

20 accelerate a repurchase agreement’’; 

21 (2) in the first sentence, by striking ‘‘liquida22 tion’’ and inserting ‘‘liquidation, termination, or ac23 celeration’’; and 

24 (3) in the third sentence, by striking ‘‘As used’’ 

25 and all that follows through ‘‘right,’’ and inserting 
404 

•S 256 IS 

1 ‘‘As used in this section, the term ‘contractual right’ 

2 includes a right set forth in a rule or bylaw of a de3 rivatives clearing organization (as defined in the 

4 Commodity Exchange Act), a multilateral clearing 

5 organization (as defined in the Federal Deposit In6 surance Corporation Improvement Act of 1991), a 

7 national securities exchange, a national securities as8 sociation, a securities clearing agency, a contract 

9 market designated under the Commodity Exchange 

10 Act, a derivatives transaction execution facility reg11 istered under the Commodity Exchange Act, or a 

12 board of trade (as defined in the Commodity Ex13 change Act) or in a resolution of the governing 

14 board thereof and a right,’’. 

15 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

16 OF SWAP AGREEMENTS.—Section 560 of title 11, United 

17 States Code, is amended— 

18 (1) by amending the section heading to read as 

19 follows: 

20 ‘‘§ 560. Contractual right to liquidate, terminate, or 

21 accelerate a swap agreement’’; 

22 (2) in the first sentence, by striking ‘‘termi23 nation of a swap agreement’’ and inserting ‘‘liquida24 tion, termination, or acceleration of one or more 

25 swap agreements’’; 
405 

•S 256 IS 

1 (3) by striking ‘‘in connection with any swap 

2 agreement’’ and inserting ‘‘in connection with the 

3 termination, liquidation, or acceleration of one or 

4 more swap agreements’’; and 

5 (4) in the second sentence, by striking ‘‘As 

6 used’’ and all that follows through ‘‘right,’’ and in7 serting ‘‘As used in this section, the term ‘contrac8 tual right’ includes a right set forth in a rule or 

9 bylaw of a derivatives clearing organization (as de10 fined in the Commodity Exchange Act), a multilat11 eral clearing organization (as defined in the Federal 

12 Deposit Insurance Corporation Improvement Act of 

13 1991), a national securities exchange, a national se14 curities association, a securities clearing agency, a 

15 contract market designated under the Commodity 

16 Exchange Act, a derivatives transaction execution 

17 facility registered under the Commodity Exchange 

18 Act, or a board of trade (as defined in the Com19 modity Exchange Act) or in a resolution of the gov20 erning board thereof and a right,’’. 

21 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

22 OFFSET UNDER A MASTER NETTING AGREEMENT AND

23 ACROSS CONTRACTS.— 
406 

•S 256 IS 

1 (1) IN GENERAL.—Title 11, United States 

2 Code, is amended by inserting after section 560 the 

3 following: 

4 ‘‘§ 561. Contractual right to terminate, liquidate, ac5 celerate, or offset under a master netting 

6 agreement and across contracts; pro7 ceedings under chapter 15 

8 ‘‘(a) Subject to subsection (b), the exercise of any 

9 contractual right, because of a condition of the kind speci10 fied in section 365(e)(1), to cause the termination, liquida11 tion, or acceleration of or to offset or net termination val12 ues, payment amounts, or other transfer obligations aris13 ing under or in connection with one or more (or the termi14 nation, liquidation, or acceleration of one or more)— 

15 ‘‘(1) securities contracts, as defined in section 

16 741(7); 

17 ‘‘(2) commodity contracts, as defined in section 

18 761(4); 

19 ‘‘(3) forward contracts; 

20 ‘‘(4) repurchase agreements; 

21 ‘‘(5) swap agreements; or 

22 ‘‘(6) master netting agreements, 

23 shall not be stayed, avoided, or otherwise limited by oper24 ation of any provision of this title or by any order of a 
407 

•S 256 IS 

1 court or administrative agency in any proceeding under 

2 this title. 

3 ‘‘(b)(1) A party may exercise a contractual right de4 scribed in subsection (a) to terminate, liquidate, or accel5 erate only to the extent that such party could exercise such 

6 a right under section 555, 556, 559, or 560 for each indi7 vidual contract covered by the master netting agreement 

8 in issue. 

9 ‘‘(2) If a debtor is a commodity broker subject to sub10 chapter IV of chapter 7— 

11 ‘‘(A) a party may not net or offset an obligation 

12 to the debtor arising under, or in connection with, 

13 a commodity contract traded on or subject to the 

14 rules of a contract market designated under the 

15 Commodity Exchange Act or a derivatives trans16 action execution facility registered under the Com17 modity Exchange Act against any claim arising 

18 under, or in connection with, other instruments, con19 tracts, or agreements listed in subsection (a) except 

20 to the extent that the party has positive net equity 

21 in the commodity accounts at the debtor, as cal22 culated under such subchapter; and 

23 ‘‘(B) another commodity broker may not net or 

24 offset an obligation to the debtor arising under, or 

25 in connection with, a commodity contract entered 
408 

•S 256 IS 

1 into or held on behalf of a customer of the debtor 

2 and traded on or subject to the rules of a contract 

3 market designated under the Commodity Exchange 

4 Act or a derivatives transaction execution facility 

5 registered under the Commodity Exchange Act 

6 against any claim arising under, or in connection 

7 with, other instruments, contracts, or agreements 

8 listed in subsection (a). 

9 ‘‘(3) No provision of subparagraph (A) or (B) of 

10 paragraph (2) shall prohibit the offset of claims and obli11 gations that arise under— 

12 ‘‘(A) a cross-margining agreement or similar 

13 arrangement that has been approved by the Com14 modity Futures Trading Commission or submitted 

15 to the Commodity Futures Trading Commission 

16 under paragraph (1) or (2) of section 5c(c) of the 

17 Commodity Exchange Act and has not been abro18 gated or rendered ineffective by the Commodity Fu19 tures Trading Commission; or 

20 ‘‘(B) any other netting agreement between a 

21 clearing organization (as defined in section 761) and 

22 another entity that has been approved by the Com23 modity Futures Trading Commission. 

24 ‘‘(c) As used in this section, the term ‘contractual 

25 right’ includes a right set forth in a rule or bylaw of a 
409 

•S 256 IS 

1 derivatives clearing organization (as defined in the Com2 modity Exchange Act), a multilateral clearing organiza3 tion (as defined in the Federal Deposit Insurance Cor4 poration Improvement Act of 1991), a national securities 

5 exchange, a national securities association, a securities 

6 clearing agency, a contract market designated under the 

7 Commodity Exchange Act, a derivatives transaction execu8 tion facility registered under the Commodity Exchange 

9 Act, or a board of trade (as defined in the Commodity 

10 Exchange Act) or in a resolution of the governing board 

11 thereof, and a right, whether or not evidenced in writing, 

12 arising under common law, under law merchant, or by rea13 son of normal business practice. 

14 ‘‘(d) Any provisions of this title relating to securities 

15 contracts, commodity contracts, forward contracts, repur16 chase agreements, swap agreements, or master netting 

17 agreements shall apply in a case under chapter 15, so that 

18 enforcement of contractual provisions of such contracts 

19 and agreements in accordance with their terms will not 

20 be stayed or otherwise limited by operation of any provi21 sion of this title or by order of a court in any case under 

22 this title, and to limit avoidance powers to the same extent 

23 as in a proceeding under chapter 7 or 11 of this title (such 

24 enforcement not to be limited based on the presence or 

25 absence of assets of the debtor in the United States).’’. 
410 

•S 256 IS 

1 (2) CONFORMING AMENDMENT.—The table of 

2 sections for chapter 5 of title 11, United States 

3 Code, is amended by inserting after the item relating 

4 to section 560 the following: 

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a 

master netting agreement and across contracts; proceedings 

under chapter 15.’’. 

5 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 

6 United States Code, is amended by inserting after section 

7 766 the following: 

8 ‘‘§ 767. Commodity broker liquidation and forward 

9 contract merchants, commodity brokers, 

10 stockbrokers, financial institutions, fi11 nancial participants, securities clearing 

12 agencies, swap participants, repo partici13 pants, and master netting agreement par14 ticipants 

15 ‘‘Notwithstanding any other provision of this title, 

16 the exercise of rights by a forward contract merchant, 

17 commodity broker, stockbroker, financial institution, fi18 nancial participant, securities clearing agency, swap par19 ticipant, repo participant, or master netting agreement 

20 participant under this title shall not affect the priority of 

21 any unsecured claim it may have after the exercise of such 

22 rights.’’. 
411 

•S 256 IS 

1 (m) STOCKBROKER LIQUIDATIONS.—Title 11, 

2 United States Code, is amended by inserting after section 

3 752 the following: 

4 ‘‘§ 753. Stockbroker liquidation and forward contract 

5 merchants, commodity brokers, stock6 brokers, financial institutions, financial 

7 participants, securities clearing agencies, 

8 swap participants, repo participants, and 

9 master netting agreement participants 

10 ‘‘Notwithstanding any other provision of this title, 

11 the exercise of rights by a forward contract merchant, 

12 commodity broker, stockbroker, financial institution, fi13 nancial participant, securities clearing agency, swap par14 ticipant, repo participant, or master netting agreement 

15 participant under this title shall not affect the priority of 

16 any unsecured claim it may have after the exercise of such 

17 rights.’’. 

18 (n) SETOFF.—Section 553 of title 11, United States 

19 Code, is amended— 

20 (1) in subsection (a)(2)(B)(ii), by inserting be21 fore the semicolon the following: ‘‘(except for a 

22 setoff of a kind described in section 362(b)(6), 

23 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 

24 560, or 561)’’; 
412 

•S 256 IS 

1 (2) in subsection (a)(3)(C), by inserting before 

2 the period the following: ‘‘(except for a setoff of a 

3 kind described in section 362(b)(6), 362(b)(7), 

4 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 

5 561)’’; and 

6 (3) in subsection (b)(1), by striking 

7 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 

8 362(b)(27), 555, 556, 559, 560, 561,’’. 

9 (o) SECURITIES CONTRACTS, COMMODITY CON10 TRACTS, AND FORWARD CONTRACTS.—Title 11, United 

11 States Code, is amended— 

12 (1) in section 362(b)(6), by striking ‘‘financial 

13 institutions,’’ each place such term appears and in14 serting ‘‘financial institution, financial participant,’’; 

15 (2) in sections 362(b)(7) and 546(f), by insert16 ing ‘‘or financial participant’’ after ‘‘repo partici17 pant’’ each place such term appears; 

18 (3) in section 546(e), by inserting ‘‘financial 

19 participant,’’ after ‘‘financial institution,’’; 

20 (4) in section 548(d)(2)(B), by inserting ‘‘fi21 nancial participant,’’ after ‘‘financial institution,’’; 

22 (5) in section 548(d)(2)(C), by inserting ‘‘or fi23 nancial participant’’ after ‘‘repo participant’’; 

24 (6) in section 548(d)(2)(D), by inserting ‘‘or fi25 nancial participant’’ after ‘‘swap participant’’; 
413 

•S 256 IS 

1 (7) in section 555— 

2 (A) by inserting ‘‘financial participant,’’ 

3 after ‘‘financial institution,’’; and 

4 (B) by striking the second sentence and in5 serting the following: ‘‘As used in this section, 

6 the term ‘contractual right’ includes a right set 

7 forth in a rule or bylaw of a derivatives clearing 

8 organization (as defined in the Commodity Ex9 change Act), a multilateral clearing organiza10 tion (as defined in the Federal Deposit Insur11 ance Corporation Improvement Act of 1991), a 

12 national securities exchange, a national securi13 ties association, a securities clearing agency, a 

14 contract market designated under the Com15 modity Exchange Act, a derivatives transaction 

16 execution facility registered under the Com17 modity Exchange Act, or a board of trade (as 

18 defined in the Commodity Exchange Act), or in 

19 a resolution of the governing board thereof, and 

20 a right, whether or not in writing, arising under 

21 common law, under law merchant, or by reason 

22 of normal business practice.’’; 

23 (8) in section 556, by inserting ‘‘, financial par24 ticipant,’’ after ‘‘commodity broker’’; 
414 

•S 256 IS 

1 (9) in section 559, by inserting ‘‘or financial 

2 participant’’ after ‘‘repo participant’’ each place 

3 such term appears; and 

4 (10) in section 560, by inserting ‘‘or financial 

5 participant’’ after ‘‘swap participant’’. 

6 (p) CONFORMING AMENDMENTS.—Title 11, United 

7 States Code, is amended— 

8 (1) in the table of sections for chapter 5— 

9 (A) by amending the items relating to sec10 tions 555 and 556 to read as follows: 

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract. 

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’; 

11 and 

12 (B) by amending the items relating to sec13 tions 559 and 560 to read as follows: 

‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase 

agreement. 

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’; 

14 and 

15 (2) in the table of sections for chapter 7— 

16 (A) by inserting after the item relating to 

17 section 766 the following: 

‘‘767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial 

participants, securities clearing agencies, swap participants, 

repo participants, and master netting agreement participants.’’; 

18 and 
415 

•S 256 IS 

1 (B) by inserting after the item relating to 

2 section 752 the following: 

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, 

securities clearing agencies, swap participants, repo participants, and master netting agreement participants.’’. 

3 SEC. 908. RECORDKEEPING REQUIREMENTS. 

4 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.— 

5 Section 11(e)(8) of the Federal Deposit Insurance Act (12 

6 U.S.C. 1821(e)(8)) is amended by adding at the end the 

7 following new subparagraph: 

8 ‘‘(H) RECORDKEEPING REQUIREMENTS.— 

9 The Corporation, in consultation with the ap10 propriate Federal banking agencies, may pre11 scribe regulations requiring more detailed rec12 ordkeeping by any insured depository institu13 tion with respect to qualified financial contracts 

14 (including market valuations) only if such in15 sured depository institution is in a troubled 

16 condition (as such term is defined by the Cor17 poration pursuant to section 32).’’. 

18 (b) INSURED CREDIT UNIONS.—Section 207(c)(8) of 

19 the Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is 

20 amended by adding at the end the following new subpara21 graph: 

22 ‘‘(H) RECORDKEEPING REQUIREMENTS.— 

23 The Board, in consultation with the appropriate 
416 

•S 256 IS 

1 Federal banking agencies, may prescribe regula2 tions requiring more detailed recordkeeping by 

3 any insured credit union with respect to quali4 fied financial contracts (including market valu5 ations) only if such insured credit union is in 

6 a troubled condition (as such term is defined by 

7 the Board pursuant to section 212).’’. 

8 SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU9 TION REQUIREMENT. 

10 Section 13(e)(2) of the Federal Deposit Insurance 

11 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows: 

12 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

13 EXECUTION REQUIREMENT.—An agreement to pro14 vide for the lawful collateralization of— 

15 ‘‘(A) deposits of, or other credit extension 

16 by, a Federal, State, or local governmental enti17 ty, or of any depositor referred to in section 

18 11(a)(2), including an agreement to provide col19 lateral in lieu of a surety bond; 

20 ‘‘(B) bankruptcy estate funds pursuant to 

21 section 345(b)(2) of title 11, United States 

22 Code; 

23 ‘‘(C) extensions of credit, including any 

24 overdraft, from a Federal reserve bank or Fed25 eral home loan bank; or 
417 

•S 256 IS 

1 ‘‘(D) one or more qualified financial con2 tracts, as defined in section 11(e)(8)(D), 

3 shall not be deemed invalid pursuant to paragraph 

4 (1)(B) solely because such agreement was not exe5 cuted contemporaneously with the acquisition of the 

6 collateral or because of pledges, delivery, or substi7 tution of the collateral made in accordance with such 

8 agreement.’’. 

9 SEC. 910. DAMAGE MEASURE. 

10 (a) IN GENERAL.—Title 11, United States Code, is 

11 amended— 

12 (1) by inserting after section 561, as added by 

13 section 907, the following: 

14 ‘‘§ 562. Timing of damage measurement in connection 

15 with swap agreements, securities con16 tracts, forward contracts, commodity con17 tracts, repurchase agreements, and mas18 ter netting agreements 

19 ‘‘(a) If the trustee rejects a swap agreement, securi20 ties contract (as defined in section 741), forward contract, 

21 commodity contract (as defined in section 761), repur22 chase agreement, or master netting agreement pursuant 

23 to section 365(a), or if a forward contract merchant, 

24 stockbroker, financial institution, securities clearing agen25 cy, repo participant, financial participant, master netting 
418 

•S 256 IS 

1 agreement participant, or swap participant liquidates, ter2 minates, or accelerates such contract or agreement, dam3 ages shall be measured as of the earlier of— 

4 ‘‘(1) the date of such rejection; or 

5 ‘‘(2) the date or dates of such liquidation, ter6 mination, or acceleration. 

7 ‘‘(b) If there are not any commercially reasonable de8 terminants of value as of any date referred to in para9 graph (1) or (2) of subsection (a), damages shall be meas10 ured as of the earliest subsequent date or dates on which 

11 there are commercially reasonable determinants of value. 

12 ‘‘(c) For the purposes of subsection (b), if damages 

13 are not measured as of the date or dates of rejection, liq14 uidation, termination, or acceleration, and the forward 

15 contract merchant, stockbroker, financial institution, secu16 rities clearing agency, repo participant, financial partici17 pant, master netting agreement participant, or swap par18 ticipant or the trustee objects to the timing of the meas19 urement of damages— 

20 ‘‘(1) the trustee, in the case of an objection by 

21 a forward contract merchant, stockbroker, financial 

22 institution, securities clearing agency, repo partici23 pant, financial participant, master netting agree24 ment participant, or swap participant; or 
419 

•S 256 IS 

1 ‘‘(2) the forward contract merchant, stock2 broker, financial institution, securities clearing agen3 cy, repo participant, financial participant, master 

4 netting agreement participant, or swap participant, 

5 in the case of an objection by the trustee, 

6 has the burden of proving that there were no commercially 

7 reasonable determinants of value as of such date or 

8 dates.’’; and 

9 (2) in the table of sections for chapter 5, by in10 serting after the item relating to section 561 (as 

11 added by section 907) the following new item: 

‘‘562. Timing of damage measure in connection with swap agreements, securities 

contracts, forward contracts, commodity contracts, repurchase 

agreements, or master netting agreements.’’. 

12 (b) CLAIMS ARISING FROM REJECTION.—Section 

13 502(g) of title 11, United States Code, is amended— 

14 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(2) A claim for damages calculated in accordance 

17 with section 562 shall be allowed under subsection (a), (b), 

18 or (c), or disallowed under subsection (d) or (e), as if such 

19 claim had arisen before the date of the filing of the peti20 tion.’’. 

21 SEC. 911. SIPC STAY. 

22 Section 5(b)(2) of the Securities Investor Protection 

23 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 

24 at the end the following new subparagraph: 
420 

•S 256 IS 

1 ‘‘(C) EXCEPTION FROM STAY.— 

2 ‘‘(i) Notwithstanding section 362 of 

3 title 11, United States Code, neither the 

4 filing of an application under subsection 

5 (a)(3) nor any order or decree obtained by 

6 SIPC from the court shall operate as a 

7 stay of any contractual rights of a creditor 

8 to liquidate, terminate, or accelerate a se9 curities contract, commodity contract, for10 ward contract, repurchase agreement, swap 

11 agreement, or master netting agreement, 

12 as those terms are defined in sections 101, 

13 741, and 761 of title 11, United States 

14 Code, to offset or net termination values, 

15 payment amounts, or other transfer obliga16 tions arising under or in connection with 

17 one or more of such contracts or agree18 ments, or to foreclose on any cash collat19 eral pledged by the debtor, whether or not 

20 with respect to one or more of such con21 tracts or agreements. 

22 ‘‘(ii) Notwithstanding clause (i), such 

23 application, order, or decree may operate 

24 as a stay of the foreclosure on, or disposi25 tion of, securities collateral pledged by the 
421 

•S 256 IS 

1 debtor, whether or not with respect to one 

2 or more of such contracts or agreements, 

3 securities sold by the debtor under a repur4 chase agreement, or securities lent under a 

5 securities lending agreement. 

6 ‘‘(iii) As used in this subparagraph, 

7 the term ‘contractual right’ includes a 

8 right set forth in a rule or bylaw of a na9 tional securities exchange, a national secu10 rities association, or a securities clearing 

11 agency, a right set forth in a bylaw of a 

12 clearing organization or contract market or 

13 in a resolution of the governing board 

14 thereof, and a right, whether or not in 

15 writing, arising under common law, under 

16 law merchant, or by reason of normal busi17 ness practice.’’. 

18 TITLE X—PROTECTION OF FAM19 ILY FARMERS AND FAMILY 

20 FISHERMEN 

21 SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12. 

22 (a) REENACTMENT.— 

23 (1) IN GENERAL.—Chapter 12 of title 11, 

24 United States Code, as reenacted by section 149 of 

25 division C of the Omnibus Consolidated and Emer-
422 

•S 256 IS 

1 gency Supplemental Appropriations Act, 1999 (Pub2 lic Law 105–277), and as in effect on June 30, 

3 2005, is hereby reenacted. 

4 (2) EFFECTIVE DATE OF REENACTMENT.— 

5 Paragraph (1) shall take effect on July 1, 2005. 

6 (b) AMENDMENTS—Chapter 12 of title 11, United 

7 States Code, as reenacted by subsection (a), is amended 

8 by this Act. 

9 (c) CONFORMING AMENDMENT.—Section 302 of the 

10 Bankruptcy Judges, United States Trustees, and Family 

11 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is 

12 amended by striking subsection (f). 

13 SEC. 1002. DEBT LIMIT INCREASE. 

14 Section 104(b) of title 11, United States Code, as 

15 amended by section 226, is amended by inserting 

16 ‘‘101(18),’’ after ‘‘101(3),’’ each place it appears. 

17 SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL 

18 UNITS. 

19 (a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 

20 11, United States Code, as amended by section 213, is 

21 amended to read as follows: 

22 ‘‘(2) provide for the full payment, in deferred 

23 cash payments, of all claims entitled to priority 

24 under section 507, unless— 
423 

•S 256 IS 

1 ‘‘(A) the claim is a claim owed to a govern2 mental unit that arises as a result of the sale, 

3 transfer, exchange, or other disposition of any 

4 farm asset used in the debtor’s farming oper5 ation, in which case the claim shall be treated 

6 as an unsecured claim that is not entitled to 

7 priority under section 507, but the debt shall be 

8 treated in such manner only if the debtor re9 ceives a discharge; or 

10 ‘‘(B) the holder of a particular claim 

11 agrees to a different treatment of that claim;’’. 

12 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) 

13 of title 11, United States Code, as so designated by section 

14 719, is amended by striking ‘‘a State or local govern15 mental unit’’ and inserting ‘‘any governmental unit’’. 

16 (c) EFFECTIVE DATE; APPLICATION OF AMEND17 MENTS.—This section and the amendments made by this 

18 section shall take effect on the date of the enactment of 

19 this Act and shall not apply with respect to cases com20 menced under title 11 of the United States Code before 

21 such date. 

22 SEC. 1004. DEFINITION OF FAMILY FARMER. 

23 Section 101(18) of title 11, United States Code, is 

24 amended— 

25 (1) in subparagraph (A)— 
424 

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1 (A) by striking ‘‘$1,500,000’’ and inserting 

2 ‘‘$3,237,000’’; and 

3 (B) by striking ‘‘80’’ and inserting ‘‘50’’; 

4 and 

5 (2) in subparagraph (B)(ii)— 

6 (A) by striking ‘‘$1,500,000’’ and inserting 

7 ‘‘$3,237,000’’; and 

8 (B) by striking ‘‘80’’ and inserting ‘‘50’’. 

9 SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY 

10 FARMER AND SPOUSE RECEIVE OVER 50 PER11 CENT OF INCOME FROM FARMING OPER12 ATION IN YEAR PRIOR TO BANKRUPTCY. 

13 Section 101(18)(A) of title 11, United States Code, 

14 is amended by striking ‘‘for the taxable year preceding the 

15 taxable year’’ and inserting the following: 

16 ‘‘for— 

17 ‘‘(i) the taxable year preceding; or 

18 ‘‘(ii) each of the 2d and 3d taxable 

19 years preceding; 

20 the taxable year’’. 

21 SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 

22 DISPOSABLE INCOME. 

23 (a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of 

24 title 11, United States Code, is amended— 
425 

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1 (1) in subparagraph (A) by striking ‘‘or’’ at the 

2 end; 

3 (2) in subparagraph (B) by striking the period 

4 at the end and inserting ‘‘; or’’; and 

5 (3) by adding at the end the following: 

6 ‘‘(C) the value of the property to be distributed 

7 under the plan in the 3-year period, or such longer 

8 period as the court may approve under section 

9 1222(c), beginning on the date that the first dis10 tribution is due under the plan is not less than the 

11 debtor’s projected disposable income for such pe12 riod.’’. 

13 (b) MODIFICATION OF PLAN.—Section 1229 of title 

14 11, United States Code, is amended by adding at the end 

15 the following: 

16 ‘‘(d) A plan may not be modified under this section— 

17 ‘‘(1) to increase the amount of any payment 

18 due before the plan as modified becomes the plan; 

19 ‘‘(2) by anyone except the debtor, based on an 

20 increase in the debtor’s disposable income, to in21 crease the amount of payments to unsecured credi22 tors required for a particular month so that the ag23 gregate of such payments exceeds the debtor’s dis24 posable income for such month; or 
426 

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1 ‘‘(3) in the last year of the plan by anyone ex2 cept the debtor, to require payments that would 

3 leave the debtor with insufficient funds to carry on 

4 the farming operation after the plan is completed.’’. 

5 SEC. 1007. FAMILY FISHERMEN. 

6 (a) DEFINITIONS.—Section 101 of title 11, United 

7 States Code, is amended— 

8 (1) by inserting after paragraph (7) the fol9 lowing: 

10 ‘‘(7A) ‘commercial fishing operation’ means— 

11 ‘‘(A) the catching or harvesting of fish, 

12 shrimp, lobsters, urchins, seaweed, shellfish, or 

13 other aquatic species or products of such spe14 cies; or 

15 ‘‘(B) for purposes of section 109 and chap16 ter 12, aquaculture activities consisting of rais17 ing for market any species or product described 

18 in subparagraph (A); 

19 ‘‘(7B) ‘commercial fishing vessel’ means a ves20 sel used by a family fisherman to carry out a com21 mercial fishing operation;’’; and 

22 (2) by inserting after paragraph (19) the fol23 lowing: 

24 ‘‘(19A) ‘family fisherman’ means— 
427 

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1 ‘‘(A) an individual or individual and spouse 

2 engaged in a commercial fishing operation— 

3 ‘‘(i) whose aggregate debts do not ex4 ceed $1,500,000 and not less than 80 per5 cent of whose aggregate noncontingent, liq6 uidated debts (excluding a debt for the 

7 principal residence of such individual or 

8 such individual and spouse, unless such 

9 debt arises out of a commercial fishing op10 eration), on the date the case is filed, arise 

11 out of a commercial fishing operation 

12 owned or operated by such individual or 

13 such individual and spouse; and 

14 ‘‘(ii) who receive from such commer15 cial fishing operation more than 50 percent 

16 of such individual’s or such individual’s 

17 and spouse’s gross income for the taxable 

18 year preceding the taxable year in which 

19 the case concerning such individual or such 

20 individual and spouse was filed; or 

21 ‘‘(B) a corporation or partnership— 

22 ‘‘(i) in which more than 50 percent of 

23 the outstanding stock or equity is held 

24 by— 
428 

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1 ‘‘(I) 1 family that conducts the 

2 commercial fishing operation; or 

3 ‘‘(II) 1 family and the relatives 

4 of the members of such family, and 

5 such family or such relatives conduct 

6 the commercial fishing operation; and 

7 ‘‘(ii)(I) more than 80 percent of the 

8 value of its assets consists of assets related 

9 to the commercial fishing operation; 

10 ‘‘(II) its aggregate debts do not ex11 ceed $1,500,000 and not less than 80 per12 cent of its aggregate noncontingent, liq13 uidated debts (excluding a debt for 1 

14 dwelling which is owned by such corpora15 tion or partnership and which a share16 holder or partner maintains as a principal 

17 residence, unless such debt arises out of a 

18 commercial fishing operation), on the date 

19 the case is filed, arise out of a commercial 

20 fishing operation owned or operated by 

21 such corporation or such partnership; and 

22 ‘‘(III) if such corporation issues stock, 

23 such stock is not publicly traded; 

24 ‘‘(19B) ‘family fisherman with regular annual 

25 income’ means a family fisherman whose annual in-
429 

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1 come is sufficiently stable and regular to enable such 

2 family fisherman to make payments under a plan 

3 under chapter 12 of this title;’’. 

4 (b) WHO MAY BE A DEBTOR.—Section 109(f) of title 

5 11, United States Code, is amended by inserting ‘‘or fam6 ily fisherman’’ after ‘‘family farmer’’. 

7 (c) CHAPTER 12.—Chapter 12 of title 11, United 

8 States Code, is amended— 

9 (1) in the chapter heading, by inserting ‘‘OR 

10 FISHERMAN’’ after ‘‘FAMILY FARMER’’; 

11 (2) in section 1203, by inserting ‘‘or commer12 cial fishing operation’’ after ‘‘farm’’; and 

13 (3) in section 1206, by striking ‘‘if the property 

14 is farmland or farm equipment’’ and inserting ‘‘if 

15 the property is farmland, farm equipment, or prop16 erty used to carry out a commercial fishing oper17 ation (including a commercial fishing vessel)’’. 

18 (d) CLERICAL AMENDMENT.—In the table of chap19 ters for title 11, United States Code, the item relating to 

20 chapter 12, is amended to read as follows: 

‘‘12. Adjustments of Debts of a Family Farmer or Family 

Fisherman with Regular Annual Income ..... 1201’’. 

21 (e) APPLICABILITY.—Nothing in this section shall 

22 change, affect, or amend the Fishery Conservation and 

23 Management Act of 1976 (16 U.S.C. 1801 et seq.). 
430 

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1 TITLE XI—HEALTH CARE AND 

2 EMPLOYEE BENEFITS 

3 SEC. 1101. DEFINITIONS. 

4 (a) HEALTH CARE BUSINESS DEFINED.—Section 

5 101 of title 11, United States Code, as amended by section 

6 306, is amended— 

7 (1) by redesignating paragraph (27A) as para8 graph (27B); and 

9 (2) by inserting after paragraph (27) the fol10 lowing: 

11 ‘‘(27A) ‘health care business’— 

12 ‘‘(A) means any public or private entity 

13 (without regard to whether that entity is orga14 nized for profit or not for profit) that is pri15 marily engaged in offering to the general public 

16 facilities and services for— 

17 ‘‘(i) the diagnosis or treatment of in18 jury, deformity, or disease; and 

19 ‘‘(ii) surgical, drug treatment, psy20 chiatric, or obstetric care; and 

21 ‘‘(B) includes— 

22 ‘‘(i) any— 

23 ‘‘(I) general or specialized hos24 pital; 
431 

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1 ‘‘(II) ancillary ambulatory, emer2 gency, or surgical treatment facility; 

3 ‘‘(III) hospice; 

4 ‘‘(IV) home health agency; and 

5 ‘‘(V) other health care institution 

6 that is similar to an entity referred to 

7 in subclause (I), (II), (III), or (IV); 

8 and 

9 ‘‘(ii) any long-term care facility, in10 cluding any— 

11 ‘‘(I) skilled nursing facility; 

12 ‘‘(II) intermediate care facility; 

13 ‘‘(III) assisted living facility; 

14 ‘‘(IV) home for the aged; 

15 ‘‘(V) domiciliary care facility; and 

16 ‘‘(VI) health care institution that 

17 is related to a facility referred to in 

18 subclause (I), (II), (III), (IV), or (V), 

19 if that institution is primarily engaged 

20 in offering room, board, laundry, or 

21 personal assistance with activities of 

22 daily living and incidentals to activi23 ties of daily living;’’. 
432 

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1 (b) PATIENT AND PATIENT RECORDS DEFINED.— 

2 Section 101 of title 11, United States Code, is amended 

3 by inserting after paragraph (40) the following: 

4 ‘‘(40A) ‘patient’ means any individual who ob5 tains or receives services from a health care busi6 ness; 

7 ‘‘(40B) ‘patient records’ means any written doc8 ument relating to a patient or a record recorded in 

9 a magnetic, optical, or other form of electronic me10 dium;’’. 

11 (c) RULE OF CONSTRUCTION.—The amendments 

12 made by subsection (a) of this section shall not affect the 

13 interpretation of section 109(b) of title 11, United States 

14 Code. 

15 SEC. 1102. DISPOSAL OF PATIENT RECORDS. 

16 (a) IN GENERAL.—Subchapter III of chapter 3 of 

17 title 11, United States Code, is amended by adding at the 

18 end the following: 

19 ‘‘§ 351. Disposal of patient records 

20 ‘‘If a health care business commences a case under 

21 chapter 7, 9, or 11, and the trustee does not have a suffi22 cient amount of funds to pay for the storage of patient 

23 records in the manner required under applicable Federal 

24 or State law, the following requirements shall apply: 

25 ‘‘(1) The trustee shall— 
433 

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1 ‘‘(A) promptly publish notice, in 1 or more 

2 appropriate newspapers, that if patient records 

3 are not claimed by the patient or an insurance 

4 provider (if applicable law permits the insur5 ance provider to make that claim) by the date 

6 that is 365 days after the date of that notifica7 tion, the trustee will destroy the patient 

8 records; and 

9 ‘‘(B) during the first 180 days of the 365- 

10 day period described in subparagraph (A), 

11 promptly attempt to notify directly each patient 

12 that is the subject of the patient records and 

13 appropriate insurance carrier concerning the 

14 patient records by mailing to the most recent 

15 known address of that patient, or a family 

16 member or contact person for that patient, and 

17 to the appropriate insurance carrier an appro18 priate notice regarding the claiming or dis19 posing of patient records. 

20 ‘‘(2) If, after providing the notification under 

21 paragraph (1), patient records are not claimed dur22 ing the 365-day period described under that para23 graph, the trustee shall mail, by certified mail, at 

24 the end of such 365-day period a written request to 

25 each appropriate Federal agency to request permis-
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1 sion from that agency to deposit the patient records 

2 with that agency, except that no Federal agency is 

3 required to accept patient records under this para4 graph. 

5 ‘‘(3) If, following the 365-day period described 

6 in paragraph (2) and after providing the notification 

7 under paragraph (1), patient records are not claimed 

8 by a patient or insurance provider, or request is not 

9 granted by a Federal agency to deposit such records 

10 with that agency, the trustee shall destroy those 

11 records by— 

12 ‘‘(A) if the records are written, shredding 

13 or burning the records; or 

14 ‘‘(B) if the records are magnetic, optical, 

15 or other electronic records, by otherwise de16 stroying those records so that those records 

17 cannot be retrieved.’’. 

18 (b) CLERICAL AMENDMENT.—The table of sections 

19 for subchapter III of chapter 3 of title 11, United States 

20 Code, is amended by adding at the end the following: 

‘‘351. Disposal of patient records.’’. 
435 

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1 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS 

2 OF CLOSING A HEALTH CARE BUSINESS AND 

3 OTHER ADMINISTRATIVE EXPENSES. 

4 Section 503(b) of title 11, United States Code, as 

5 amended by section 445, is amended by adding at the end 

6 the following: 

7 ‘‘(8) the actual, necessary costs and expenses of 

8 closing a health care business incurred by a trustee 

9 or by a Federal agency (as defined in section 551(1) 

10 of title 5) or a department or agency of a State or 

11 political subdivision thereof, including any cost or 

12 expense incurred— 

13 ‘‘(A) in disposing of patient records in ac14 cordance with section 351; or 

15 ‘‘(B) in connection with transferring pa16 tients from the health care business that is in 

17 the process of being closed to another health 

18 care business; and’’. 

19 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA20 TIENT ADVOCATE. 

21 (a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.— 

22 (1) APPOINTMENT OF OMBUDSMAN.—Title 11, 

23 United States Code, as amended by section 232, is 

24 amended by inserting after section 332 the fol25 lowing: 
436 

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1 ‘‘§ 333. Appointment of patient care ombudsman 

2 ‘‘(a)(1) If the debtor in a case under chapter 7, 9, 

3 or 11 is a health care business, the court shall order, not 

4 later than 30 days after the commencement of the case, 

5 the appointment of an ombudsman to monitor the quality 

6 of patient care and to represent the interests of the pa7 tients of the health care business unless the court finds 

8 that the appointment of such ombudsman is not necessary 

9 for the protection of patients under the specific facts of 

10 the case. 

11 ‘‘(2)(A) If the court orders the appointment of an 

12 ombudsman under paragraph (1), the United States trust13 ee shall appoint 1 disinterested person (other than the 

14 United States trustee) to serve as such ombudsman. 

15 ‘‘(B) If the debtor is a health care business that pro16 vides long-term care, then the United States trustee may 

17 appoint the State Long-Term Care Ombudsman appointed 

18 under the Older Americans Act of 1965 for the State in 

19 which the case is pending to serve as the ombudsman re20 quired by paragraph (1). 

21 ‘‘(C) If the United States trustee does not appoint 

22 a State Long-Term Care Ombudsman under subpara23 graph (B), the court shall notify the State Long-Term 

24 Care Ombudsman appointed under the Older Americans 

25 Act of 1965 for the State in which the case is pending, 
437 

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1 of the name and address of the person who is appointed 

2 under subparagraph (A). 

3 ‘‘(b) An ombudsman appointed under subsection (a) 

4 shall— 

5 ‘‘(1) monitor the quality of patient care pro6 vided to patients of the debtor, to the extent nec7 essary under the circumstances, including inter8 viewing patients and physicians; 

9 ‘‘(2) not later than 60 days after the date of 

10 appointment, and not less frequently than at 60-day 

11 intervals thereafter, report to the court after notice 

12 to the parties in interest, at a hearing or in writing, 

13 regarding the quality of patient care provided to pa14 tients of the debtor; and 

15 ‘‘(3) if such ombudsman determines that the 

16 quality of patient care provided to patients of the 

17 debtor is declining significantly or is otherwise being 

18 materially compromised, file with the court a motion 

19 or a written report, with notice to the parties in in20 terest immediately upon making such determination. 

21 ‘‘(c)(1) An ombudsman appointed under subsection 

22 (a) shall maintain any information obtained by such om23 budsman under this section that relates to patients (in24 cluding information relating to patient records) as con25 fidential information. Such ombudsman may not review 
438 

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1 confidential patient records unless the court approves such 

2 review in advance and imposes restrictions on such om3 budsman to protect the confidentiality of such records. 

4 ‘‘(2) An ombudsman appointed under subsection 

5 (a)(2)(B) shall have access to patient records consistent 

6 with authority of such ombudsman under the Older Amer7 icans Act of 1965 and under non-Federal laws governing 

8 the State Long-Term Care Ombudsman program.’’. 

9 (2) CLERICAL AMENDMENT.—The table of sec10 tions for subchapter II of chapter 3 of title 11, 

11 United States Code, as amended by section 232, is 

12 amended by adding at the end the following: 

‘‘333. Appointment of ombudsman.’’. 

13 (b) COMPENSATION OF OMBUDSMAN.—Section 

14 330(a)(1) of title 11, United States Code, is amended— 

15 (1) in the matter preceding subparagraph (A), 

16 by inserting ‘‘an ombudsman appointed under sec17 tion 333, or’’ before ‘‘a professional person’’; and 

18 (2) in subparagraph (A), by inserting ‘‘ombuds19 man,’’ before ‘‘professional person’’. 

20 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO 

21 TRANSFER PATIENTS. 

22 (a) IN GENERAL.—Section 704(a) of title 11, United 

23 States Code, as amended by sections 102, 219, and 446, 

24 is amended by adding at the end the following: 
439 

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1 ‘‘(12) use all reasonable and best efforts to 

2 transfer patients from a health care business that is 

3 in the process of being closed to an appropriate 

4 health care business that— 

5 ‘‘(A) is in the vicinity of the health care 

6 business that is closing; 

7 ‘‘(B) provides the patient with services 

8 that are substantially similar to those provided 

9 by the health care business that is in the proc10 ess of being closed; and 

11 ‘‘(C) maintains a reasonable quality of 

12 care.’’. 

13 (b) CONFORMING AMENDMENT.—Section 1106(a)(1) 

14 of title 11, United States Code, as amended by section 

15 446, is amended by striking ‘‘and (11)’’ and inserting 

16 ‘‘(11), and (12)’’. 

17 SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION 

18 NOT SUBJECT TO AUTOMATIC STAY. 

19 Section 362(b) of title 11, United States Code, is 

20 amended by inserting after paragraph (27), as amended 

21 by sections 224, 303, 311, 401, 718, and 907, the fol22 lowing: 

23 ‘‘(28) under subsection (a), of the exclusion by 

24 the Secretary of Health and Human Services of the 

25 debtor from participation in the medicare program 
440 

•S 256 IS 

1 or any other Federal health care program (as de2 fined in section 1128B(f) of the Social Security Act 

3 pursuant to title XI or XVIII of such Act).’’. 

4 TITLE XII—TECHNICAL 

5 AMENDMENTS 

6 SEC. 1201. DEFINITIONS. 

7 Section 101 of title 11, United States Code, as 

8 amended by this Act, is further amended— 

9 (1) by striking ‘‘In this title—’’ and inserting 

10 ‘‘In this title the following definitions shall apply:’’; 

11 (2) in each paragraph (other than paragraph 

12 (54A)), by inserting ‘‘The term’’ after the paragraph 

13 designation; 

14 (3) in paragraph (35)(B), by striking ‘‘para15 graphs (21B) and (33)(A)’’ and inserting ‘‘para16 graphs (23) and (35)’’; 

17 (4) in each of paragraphs (35A), (38), and 

18 (54A), by striking ‘‘; and’’ at the end and inserting 

19 a period; 

20 (5) in paragraph (51B)— 

21 (A) by inserting ‘‘who is not a family farm22 er’’ after ‘‘debtor’’ the first place it appears; 

23 and 
441 

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1 (B) by striking ‘‘thereto having aggregate’’ 

2 and all that follows through the end of the 

3 paragraph and inserting a semicolon; 

4 (6) by striking paragraph (54) and inserting 

5 the following: 

6 ‘‘(54) The term ‘transfer’ means— 

7 ‘‘(A) the creation of a lien; 

8 ‘‘(B) the retention of title as a security in9 terest; 

10 ‘‘(C) the foreclosure of a debtor’s equity of 

11 redemption; or 

12 ‘‘(D) each mode, direct or indirect, abso13 lute or conditional, voluntary or involuntary, of 

14 disposing of or parting with— 

15 ‘‘(i) property; or 

16 ‘‘(ii) an interest in property;’’; 

17 (7) in paragraph (54A)— 

18 (A) by striking ‘‘the term’’ and inserting 

19 ‘‘The term’’; and 

20 (B) by indenting the left margin of para21 graph (54A) 2 ems to the right; and 

22 (8) in each of paragraphs (1) through (35), in 

23 each of paragraphs (36), (37), (38A), (38B) and 

24 (39A), and in each of paragraphs (40) through (55), 
442 

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1 by striking the semicolon at the end and inserting a 

2 period. 

3 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS. 

4 Section 104 of title 11, United States Code, is 

5 amended by inserting ‘‘522(f)(3),’’ after ‘‘522(d),’’ each 

6 place it appears. 

7 SEC. 1203. EXTENSION OF TIME. 

8 Section 108(c)(2) of title 11, United States Code, is 

9 amended by striking ‘‘922’’ and all that follows through 

10 ‘‘or’’, and inserting ‘‘922, 1201, or’’. 

11 SEC. 1204. TECHNICAL AMENDMENTS. 

12 Title 11, United States Code, is amended— 

13 (1) in section 109(b)(2), by striking ‘‘subsection 

14 (c) or (d) of’’; and 

15 (2) in section 552(b)(1), by striking ‘‘product’’ 

16 each place it appears and inserting ‘‘products’’. 

17 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 

18 FRAUDULENTLY PREPARE BANKRUPTCY PE19 TITIONS. 

20 Section 110(j)(4) of title 11, United States Code, as 

21 so redesignated by section 221, is amended by striking 

22 ‘‘attorney’s’’ and inserting ‘‘attorneys’ ’’. 
443 

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1 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES2 SIONAL PERSONS. 

3 Section 328(a) of title 11, United States Code, is 

4 amended by inserting ‘‘on a fixed or percentage fee basis,’’ 

5 after ‘‘hourly basis,’’. 

6 SEC. 1207. EFFECT OF CONVERSION. 

7 Section 348(f)(2) of title 11, United States Code, is 

8 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the 

9 first place it appears. 

10 SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES. 

11 Section 503(b)(4) of title 11, United States Code, is 

12 amended by inserting ‘‘subparagraph (A), (B), (C), (D), 

13 or (E) of’’ before ‘‘paragraph (3)’’. 

14 SEC. 1209. EXCEPTIONS TO DISCHARGE. 

15 Section 523 of title 11, United States Code, as 

16 amended by sections 215 and 314, is amended— 

17 (1) by transferring paragraph (15), as added by 

18 section 304(e) of Public Law 103–394 (108 Stat. 

19 4133), so as to insert such paragraph after sub20 section (a)(14A); 

21 (2) in subsection (a)(9), by striking ‘‘motor ve22 hicle’’ and inserting ‘‘motor vehicle, vessel, or air23 craft’’; and 

24 (3) in subsection (e), by striking ‘‘a insured’’ 

25 and inserting ‘‘an insured’’. 
444 

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1 SEC. 1210. EFFECT OF DISCHARGE. 

2 Section 524(a)(3) of title 11, United States Code, is 

3 amended by striking ‘‘section 523’’ and all that follows 

4 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1), 

5 or 1328(a)(1), or that’’. 

6 SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT. 

8 Section 525(c) of title 11, United States Code, is 

9 amended— 

10 (1) in paragraph (1), by inserting ‘‘student’’ be11 fore ‘‘grant’’ the second place it appears; and 

12 (2) in paragraph (2), by striking ‘‘the program 

13 operated under part B, D, or E of’’ and inserting 

14 ‘‘any program operated under’’. 

15 SEC. 1212. PROPERTY OF THE ESTATE. 

16 Section 541(b)(4)(B)(ii) of title 11, United States 

17 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’. 

18 SEC. 1213. PREFERENCES. 

19 (a) IN GENERAL.—Section 547 of title 11, United 

20 States Code, as amended by section 201, is amended— 

21 (1) in subsection (b), by striking ‘‘subsection 

22 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and 

23 (2) by adding at the end the following: 

24 ‘‘(i) If the trustee avoids under subsection (b) a 

25 transfer made between 90 days and 1 year before the date 

26 of the filing of the petition, by the debtor to an entity 
445 

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1 that is not an insider for the benefit of a creditor that 

2 is an insider, such transfer shall be considered to be avoid3 ed under this section only with respect to the creditor that 

4 is an insider.’’. 

5 (b) APPLICABILITY.—The amendments made by this 

6 section shall apply to any case that is pending or com7 menced on or after the date of enactment of this Act. 

8 SEC. 1214. POSTPETITION TRANSACTIONS. 

9 Section 549(c) of title 11, United States Code, is 

10 amended— 

11 (1) by inserting ‘‘an interest in’’ after ‘‘transfer 

12 of’’ each place it appears; 

13 (2) by striking ‘‘such property’’ and inserting 

14 ‘‘such real property’’; and 

15 (3) by striking ‘‘the interest’’ and inserting 

16 ‘‘such interest’’. 

17 SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE. 

18 Section 726(b) of title 11, United States Code, is 

19 amended by striking ‘‘1009,’’. 

20 SEC. 1216. GENERAL PROVISIONS. 

21 Section 901(a) of title 11, United States Code, is 

22 amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’. 
446 

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1 SEC. 1217. ABANDONMENT OF RAILROAD LINE. 

2 Section 1170(e)(1) of title 11, United States Code, 

3 is amended by striking ‘‘section 11347’’ and inserting 

4 ‘‘section 11326(a)’’. 

5 SEC. 1218. CONTENTS OF PLAN. 

6 Section 1172(c)(1) of title 11, United States Code, 

7 is amended by striking ‘‘section 11347’’ and inserting 

8 ‘‘section 11326(a)’’. 

9 SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS. 

10 Section 1334(d) of title 28, United States Code, is 

11 amended— 

12 (1) by striking ‘‘made under this subsection’’ 

13 and inserting ‘‘made under subsection (c)’’; and 

14 (2) by striking ‘‘This subsection’’ and inserting 

15 ‘‘Subsection (c) and this subsection’’. 

16 SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR 

17 RULE. 

18 Section 156(a) of title 18, United States Code, is 

19 amended— 

20 (1) in the first undesignated paragraph— 

21 (A) by inserting ‘‘(1) the term’’ before 

22 ‘‘ ‘bankruptcy’’; and 

23 (B) by striking the period at the end and 

24 inserting ‘‘; and’’; and 

25 (2) in the second undesignated paragraph— 
447 

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1 (A) by inserting ‘‘(2) the term’’ before 

2 ‘‘ ‘document’’; and 

3 (B) by striking ‘‘this title’’ and inserting 

4 ‘‘title 11’’. 

5 SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 

6 CORPORATIONS. 

7 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d) 

8 of title 11, United States Code, is amended by striking 

9 ‘‘only’’ and all that follows through the end of the sub10 section and inserting ‘‘only— 

11 ‘‘(1) in accordance with applicable nonbank12 ruptcy law that governs the transfer of property by 

13 a corporation or trust that is not a moneyed, busi14 ness, or commercial corporation or trust; and 

15 ‘‘(2) to the extent not inconsistent with any re16 lief granted under subsection (c), (d), (e), or (f) of 

17 section 362.’’. 

18 (b) CONFIRMATION OF PLAN OF REORGANIZA19 TION.—Section 1129(a) of title 11, United States Code, 

20 as amended by sections 213 and 321, is amended by add21 ing at the end the following: 

22 ‘‘(16) All transfers of property of the plan shall 

23 be made in accordance with any applicable provi24 sions of nonbankruptcy law that govern the transfer 

25 of property by a corporation or trust that is not a 
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1 moneyed, business, or commercial corporation or 

2 trust.’’. 

3 (c) TRANSFER OF PROPERTY.—Section 541 of title 

4 11, United States Code, as amended by section 225, is 

5 amended by adding at the end the following: 

6 ‘‘(f) Notwithstanding any other provision of this title, 

7 property that is held by a debtor that is a corporation de8 scribed in section 501(c)(3) of the Internal Revenue Code 

9 of 1986 and exempt from tax under section 501(a) of such 

10 Code may be transferred to an entity that is not such a 

11 corporation, but only under the same conditions as would 

12 apply if the debtor had not filed a case under this title.’’. 

13 (d) APPLICABILITY.—The amendments made by this 

14 section shall apply to a case pending under title 11, United 

15 States Code, on the date of enactment of this Act, or filed 

16 under that title on or after that date of enactment, except 

17 that the court shall not confirm a plan under chapter 11 

18 of title 11, United States Code, without considering 

19 whether this section would substantially affect the rights 

20 of a party in interest who first acquired rights with respect 

21 to the debtor after the date of the filing of the petition. 

22 The parties who may appear and be heard in a proceeding 

23 under this section include the attorney general of the State 

24 in which the debtor is incorporated, was formed, or does 

25 business. 
449 

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1 (e) RULE OF CONSTRUCTION.—Nothing in this sec2 tion shall be construed to require the court in which a 

3 case under chapter 11 of title 11, United States Code, is 

4 pending to remand or refer any proceeding, issue, or con5 troversy to any other court or to require the approval of 

6 any other court for the transfer of property. 

7 SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SE8 CURITY INTERESTS. 

9 Section 547(c)(3)(B) of title 11, United States Code, 

10 is amended by striking ‘‘20’’ and inserting ‘‘30’’. 

11 SEC. 1223. BANKRUPTCY JUDGESHIPS. 

12 (a) SHORT TITLE.—This section may be cited as the 

13 ‘‘Bankruptcy Judgeship Act of 2005’’. 

14 (b) TEMPORARY JUDGESHIPS.— 

15 (1) APPOINTMENTS.—The following bankruptcy 

16 judges shall be appointed in the manner prescribed 

17 in section 152(a)(1) of title 28, United States Code, 

18 for the appointment of bankruptcy judges provided 

19 for in section 152(a)(2) of such title: 

20 (A) One additional bankruptcy judge for 

21 the eastern district of California. 

22 (B) Three additional bankruptcy judges for 

23 the central district of California. 

24 (C) Four additional bankruptcy judges for 

25 the district of Delaware. 
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1 (D) Two additional bankruptcy judges for 

2 the southern district of Florida. 

3 (E) One additional bankruptcy judge for 

4 the southern district of Georgia. 

5 (F) Three additional bankruptcy judges for 

6 the district of Maryland. 

7 (G) One additional bankruptcy judge for 

8 the eastern district of Michigan. 

9 (H) One additional bankruptcy judge for 

10 the southern district of Mississippi. 

11 (I) One additional bankruptcy judge for 

12 the district of New Jersey. 

13 (J) One additional bankruptcy judge for 

14 the eastern district of New York. 

15 (K) One additional bankruptcy judge for 

16 the northern district of New York. 

17 (L) One additional bankruptcy judge for 

18 the southern district of New York. 

19 (M) One additional bankruptcy judge for 

20 the eastern district of North Carolina. 

21 (N) One additional bankruptcy judge for 

22 the eastern district of Pennsylvania. 

23 (O) One additional bankruptcy judge for 

24 the middle district of Pennsylvania. 
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1 (P) One additional bankruptcy judge for 

2 the district of Puerto Rico. 

3 (Q) One additional bankruptcy judge for 

4 the western district of Tennessee. 

5 (R) One additional bankruptcy judge for 

6 the eastern district of Virginia. 

7 (S) One additional bankruptcy judge for 

8 the district of South Carolina. 

9 (T) One additional bankruptcy judge for 

10 the district of Nevada. 

11 (2) VACANCIES.— 

12 (A) DISTRICTS WITH SINGLE APPOINT13 MENTS.—Except as provided in subparagraphs 

14 (B), (C), (D), and (E), the first vacancy occur15 ring in the office of bankruptcy judge in each 

16 of the judicial districts set forth in paragraph 

17 (1)— 

18 (i) occurring 5 years or more after the 

19 appointment date of the bankruptcy judge 

20 appointed under paragraph (1) to such of21 fice; and 

22 (ii) resulting from the death, retire23 ment, resignation, or removal of a bank24 ruptcy judge; 

25 shall not be filled. 
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1 (B) CENTRAL DISTRICT OF CALIFORNIA.— 

2 The 1st, 2d, and 3d vacancies in the office of 

3 bankruptcy judge in the central district of Cali4 fornia— 

5 (i) occurring 5 years or more after the 

6 respective 1st, 2d, and 3d appointment 

7 dates of the bankruptcy judges appointed 

8 under paragraph (1)(B); and 

9 (ii) resulting from the death, retire10 ment, resignation, or removal of a bank11 ruptcy judge; 

12 shall not be filled. 

13 (C) DISTRICT OF DELAWARE.—The 1st, 

14 2d, 3d, and 4th vacancies in the office of bank15 ruptcy judge in the district of Delaware— 

16 (i) occurring 5 years or more after the 

17 respective 1st, 2d, 3d, and 4th appoint18 ment dates of the bankruptcy judges ap19 pointed under paragraph (1)(F); and 

20 (ii) resulting from the death, retire21 ment, resignation, or removal of a bank22 ruptcy judge; 

23 shall not be filled. 

24 (D) SOUTHERN DISTRICT OF FLORIDA.— 

25 The 1st and 2d vacancies in the office of bank-
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1 ruptcy judge in the southern district of Flor2 ida— 

3 (i) occurring 5 years or more after the 

4 respective 1st and 2d appointment dates of 

5 the bankruptcy judges appointed under 

6 paragraph (1)(D); and 

7 (ii) resulting from the death, retire8 ment, resignation, or removal of a bank9 ruptcy judge; 

10 shall not be filled. 

11 (E) DISTRICT OF MARYLAND.—The 1st, 

12 2d, and 3d vacancies in the office of bankruptcy 

13 judge in the district of Maryland— 

14 (i) occurring 5 years or more after the 

15 respective 1st, 2d, and 3d appointment 

16 dates of the bankruptcy judges appointed 

17 under paragraph (1)(F); and 

18 (ii) resulting from the death, retire19 ment, resignation, or removal of a bank20 ruptcy judge; 

21 shall not be filled. 

22 (c) EXTENSIONS.— 

23 (1) IN GENERAL.—The temporary office of 

24 bankruptcy judges authorized for the northern dis25 trict of Alabama, the district of Delaware, the dis-
454 

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1 trict of Puerto Rico, and the eastern district of Ten2 nessee under paragraphs (1), (3), (7), and (9) of 

3 section 3(a) of the Bankruptcy Judgeship Act of 

4 1992 (28 U.S.C. 152 note) are extended until the 

5 first vacancy occurring in the office of a bankruptcy 

6 judge in the applicable district resulting from the 

7 death, retirement, resignation, or removal of a bank8 ruptcy judge and occurring 5 years after the date of 

9 the enactment of this Act. 

10 (2) APPLICABILITY OF OTHER PROVISIONS.— 

11 All other provisions of section 3 of the Bankruptcy 

12 Judgeship Act of 1992 (28 U.S.C. 152 note) remain 

13 applicable to the temporary office of bankruptcy 

14 judges referred to in this subsection. 

15 (d) TECHNICAL AMENDMENTS.—Section 152(a) of 

16 title 28, United States Code, is amended— 

17 (1) in paragraph (1), by striking the first sen18 tence and inserting the following: ‘‘Each bankruptcy 

19 judge to be appointed for a judicial district, as pro20 vided in paragraph (2), shall be appointed by the 

21 court of appeals of the United States for the circuit 

22 in which such district is located.’’; and 

23 (2) in paragraph (2)— 
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1 (A) in the item relating to the middle dis2 trict of Georgia, by striking ‘‘2’’ and inserting 

3 ‘‘3’’; and 

4 (B) in the collective item relating to the 

5 middle and southern districts of Georgia, by 

6 striking ‘‘Middle and Southern . . . . . . 1’’. 

7 (e) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on the date of the enactment 

9 of this Act. 

10 SEC. 1224. COMPENSATING TRUSTEES. 

11 Section 1326 of title 11, United States Code, is 

12 amended— 

13 (1) in subsection (b)— 

14 (A) in paragraph (1), by striking ‘‘and’’; 

15 (B) in paragraph (2), by striking the pe16 riod at the end and inserting ‘‘; and’’; and 

17 (C) by adding at the end the following: 

18 ‘‘(3) if a chapter 7 trustee has been allowed 

19 compensation due to the conversion or dismissal of 

20 the debtor’s prior case pursuant to section 707(b), 

21 and some portion of that compensation remains un22 paid in a case converted to this chapter or in the 

23 case dismissed under section 707(b) and refiled 

24 under this chapter, the amount of any such unpaid 

25 compensation, which shall be paid monthly— 
456 

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1 ‘‘(A) by prorating such amount over the 

2 remaining duration of the plan; and 

3 ‘‘(B) by monthly payments not to exceed 

4 the greater of— 

5 ‘‘(i) $25; or 

6 ‘‘(ii) the amount payable to unsecured 

7 nonpriority creditors, as provided by the 

8 plan, multiplied by 5 percent, and the re9 sult divided by the number of months in 

10 the plan.’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(d) Notwithstanding any other provision of this 

13 title— 

14 ‘‘(1) compensation referred to in subsection 

15 (b)(3) is payable and may be collected by the trustee 

16 under that paragraph, even if such amount has been 

17 discharged in a prior case under this title; and 

18 ‘‘(2) such compensation is payable in a case 

19 under this chapter only to the extent permitted by 

20 subsection (b)(3).’’. 

21 SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, 

22 UNITED STATES CODE. 

23 Section 362(b)(18) of title 11, United States Code, 

24 is amended to read as follows: 
457 

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1 ‘‘(18) under subsection (a) of the creation or 

2 perfection of a statutory lien for an ad valorem 

3 property tax, or a special tax or special assessment 

4 on real property whether or not ad valorem, imposed 

5 by a governmental unit, if such tax or assessment 

6 comes due after the date of the filing of the peti7 tion;’’. 

8 SEC. 1226. JUDICIAL EDUCATION. 

9 The Director of the Federal Judicial Center, in con10 sultation with the Director of the Executive Office for 

11 United States Trustees, shall develop materials and con12 duct such training as may be useful to courts in imple13 menting this Act and the amendments made by this Act, 

14 including the requirements relating to the means test 

15 under section 707(b), and reaffirmation agreements under 

16 section 524, of title 11 of the United States Code, as 

17 amended by this Act. 

18 SEC. 1227. RECLAMATION. 

19 (a) RIGHTS AND POWERS OF THE TRUSTEE.—Sec20 tion 546(c) of title 11, United States Code, is amended 

21 to read as follows: 

22 ‘‘(c)(1) Except as provided in subsection (d) of this 

23 section and in section 507(c), and subject to the prior 

24 rights of a holder of a security interest in such goods or 

25 the proceeds thereof, the rights and powers of the trustee 
458 

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1 under sections 544(a), 545, 547, and 549 are subject to 

2 the right of a seller of goods that has sold goods to the 

3 debtor, in the ordinary course of such seller’s business, 

4 to reclaim such goods if the debtor has received such goods 

5 while insolvent, within 45 days before the date of the com6 mencement of a case under this title, but such seller may 

7 not reclaim such goods unless such seller demands in writ8 ing reclamation of such goods— 

9 ‘‘(A) not later than 45 days after the date of 

10 receipt of such goods by the debtor; or 

11 ‘‘(B) not later than 20 days after the date of 

12 commencement of the case, if the 45-day period ex13 pires after the commencement of the case. 

14 ‘‘(2) If a seller of goods fails to provide notice in the 

15 manner described in paragraph (1), the seller still may 

16 assert the rights contained in section 503(b)(9).’’. 

17 (b) ADMINISTRATIVE EXPENSES.—Section 503(b) of 

18 title 11, United States Code, as amended by sections 445 

19 and 1103, is amended by adding at the end the following: 

20 ‘‘(9) the value of any goods received by the 

21 debtor within 20 days before the date of commence22 ment of a case under this title in which the goods 

23 have been sold to the debtor in the ordinary course 

24 of such debtor’s business.’’. 
459 

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1 SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO 

2 THE COURT. 

3 (a) CHAPTER 7 CASES.—The court shall not grant 

4 a discharge in the case of an individual who is a debtor 

5 in a case under chapter 7 of title 11, United States Code, 

6 unless requested tax documents have been provided to the 

7 court. 

8 (b) CHAPTER 11 AND CHAPTER 13 CASES.—The 

9 court shall not confirm a plan of reorganization in the case 

10 of an individual under chapter 11 or 13 of title 11, United 

11 States Code, unless requested tax documents have been 

12 filed with the court. 

13 (c) DOCUMENT RETENTION.—The court shall de14 stroy documents submitted in support of a bankruptcy 

15 claim not sooner than 3 years after the date of the conclu16 sion of a case filed by an individual under chapter 7, 11, 

17 or 13 of title 11, United States Code. In the event of a 

18 pending audit or enforcement action, the court may extend 

19 the time for destruction of such requested tax documents. 

20 SEC. 1229. ENCOURAGING CREDITWORTHINESS. 

21 (a) SENSE OF THE CONGRESS.—It is the sense of the 

22 Congress that— 

23 (1) certain lenders may sometimes offer credit 

24 to consumers indiscriminately, without taking steps 

25 to ensure that consumers are capable of repaying 

26 the resulting debt, and in a manner which may en-
460 

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1 courage certain consumers to accumulate additional 

2 debt; and 

3 (2) resulting consumer debt may increasingly be 

4 a major contributing factor to consumer insolvency. 

5 (b) STUDY REQUIRED.—The Board of Governors of 

6 the Federal Reserve System (hereafter in this section re7 ferred to as the ‘‘Board’’) shall conduct a study of— 

8 (1) consumer credit industry practices of solic9 iting and extending credit— 

10 (A) indiscriminately; 

11 (B) without taking steps to ensure that 

12 consumers are capable of repaying the resulting 

13 debt; and 

14 (C) in a manner that encourages con15 sumers to accumulate additional debt; and 

16 (2) the effects of such practices on consumer 

17 debt and insolvency. 

18 (c) REPORT AND REGULATIONS.—Not later than 12 

19 months after the date of enactment of this Act, the 

20 Board— 

21 (1) shall make public a report on its findings 

22 with respect to the indiscriminate solicitation and 

23 extension of credit by the credit industry; 

24 (2) may issue regulations that would require 

25 additional disclosures to consumers; and 
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1 (3) may take any other actions, consistent with 

2 its existing statutory authority, that the Board finds 

3 necessary to ensure responsible industrywide prac4 tices and to prevent resulting consumer debt and in5 solvency. 

6 SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMP7 TION. 

8 Section 541(b) of title 11, United States Code, as 

9 amended by sections 225 and 323, is amended by adding 

10 after paragraph (7), as added by section 323, the fol11 lowing: 

12 ‘‘(8) subject to subchapter III of chapter 5, any 

13 interest of the debtor in property where the debtor 

14 pledged or sold tangible personal property (other 

15 than securities or written or printed evidences of in16 debtedness or title) as collateral for a loan or ad17 vance of money given by a person licensed under law 

18 to make such loans or advances, where— 

19 ‘‘(A) the tangible personal property is in 

20 the possession of the pledgee or transferee; 

21 ‘‘(B) the debtor has no obligation to repay 

22 the money, redeem the collateral, or buy back 

23 the property at a stipulated price; and 

24 ‘‘(C) neither the debtor nor the trustee 

25 have exercised any right to redeem provided 
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1 under the contract or State law, in a timely 

2 manner as provided under State law and sec3 tion 108(b); or’’. 

4 SEC. 1231. TRUSTEES. 

5 (a) SUSPENSION AND TERMINATION OF PANEL

6 TRUSTEES AND STANDING TRUSTEES.—Section 586(d) of 

7 title 28, United States Code, is amended— 

8 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

9 (2) by adding at the end the following: 

10 ‘‘(2) A trustee whose appointment under subsection 

11 (a)(1) or under subsection (b) is terminated or who ceases 

12 to be assigned to cases filed under title 11, United States 

13 Code, may obtain judicial review of the final agency deci14 sion by commencing an action in the district court of the 

15 United States for the district for which the panel to which 

16 the trustee is appointed under subsection (a)(1), or in the 

17 district court of the United States for the district in which 

18 the trustee is appointed under subsection (b) resides, after 

19 first exhausting all available administrative remedies, 

20 which if the trustee so elects, shall also include an admin21 istrative hearing on the record. Unless the trustee elects 

22 to have an administrative hearing on the record, the trust23 ee shall be deemed to have exhausted all administrative 

24 remedies for purposes of this paragraph if the agency fails 

25 to make a final agency decision within 90 days after the 
463 

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1 trustee requests administrative remedies. The Attorney 

2 General shall prescribe procedures to implement this para3 graph. The decision of the agency shall be affirmed by 

4 the district court unless it is unreasonable and without 

5 cause based on the administrative record before the agen6 cy.’’. 

7 (b) EXPENSES OF STANDING TRUSTEES.—Section 

8 586(e) of title 28, United States Code, is amended by add9 ing at the end the following: 

10 ‘‘(3) After first exhausting all available administra11 tive remedies, an individual appointed under subsection 

12 (b) may obtain judicial review of final agency action to 

13 deny a claim of actual, necessary expenses under this sub14 section by commencing an action in the district court of 

15 the United States for the district where the individual re16 sides. The decision of the agency shall be affirmed by the 

17 district court unless it is unreasonable and without cause 

18 based upon the administrative record before the agency. 

19 ‘‘(4) The Attorney General shall prescribe procedures 

20 to implement this subsection.’’. 

21 SEC. 1232. BANKRUPTCY FORMS. 

22 Section 2075 of title 28, United States Code, is 

23 amended by adding at the end the following: 

24 ‘‘The bankruptcy rules promulgated under this sec25 tion shall prescribe a form for the statement required 
464 

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1 under section 707(b)(2)(C) of title 11 and may provide 

2 general rules on the content of such statement.’’. 

3 SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO 

4 COURTS OF APPEALS. 

5 (a) APPEALS.—Section 158 of title 28, United States 

6 Code, is amended— 

7 (1) in subsection (c)(1), by striking ‘‘Subject to 

8 subsection (b),’’ and inserting ‘‘Subject to sub9 sections (b) and (d)(2),’’; and 

10 (2) in subsection (d)— 

11 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

12 (B) by adding at the end the following: 

13 ‘‘(2)(A) The appropriate court of appeals shall have 

14 jurisdiction of appeals described in the first sentence of 

15 subsection (a) if the bankruptcy court, the district court, 

16 or the bankruptcy appellate panel involved, acting on its 

17 own motion or on the request of a party to the judgment, 

18 order, or decree described in such first sentence, or all the 

19 appellants and appellees (if any) acting jointly, certify 

20 that— 

21 ‘‘(i) the judgment, order, or decree involves a 

22 question of law as to which there is no controlling 

23 decision of the court of appeals for the circuit or of 

24 the Supreme Court of the United States, or involves 

25 a matter of public importance; 
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1 ‘‘(ii) the judgment, order, or decree involves a 

2 question of law requiring resolution of conflicting de3 cisions; or 

4 ‘‘(iii) an immediate appeal from the judgment, 

5 order, or decree may materially advance the progress 

6 of the case or proceeding in which the appeal is 

7 taken; 

8 and if the court of appeals authorizes the direct appeal 

9 of the judgment, order, or decree. 

10 ‘‘(B) If the bankruptcy court, the district court, or 

11 the bankruptcy appellate panel— 

12 ‘‘(i) on its own motion or on the request of a 

13 party, determines that a circumstance specified in 

14 clause (i), (ii), or (iii) of subparagraph (A) exists; or 

15 ‘‘(ii) receives a request made by a majority of 

16 the appellants and a majority of appellees (if any) 

17 to make the certification described in subparagraph 

18 (A); 

19 then the bankruptcy court, the district court, or the bank20 ruptcy appellate panel shall make the certification de21 scribed in subparagraph (A). 

22 ‘‘(C) The parties may supplement the certification 

23 with a short statement of the basis for the certification. 

24 ‘‘(D) An appeal under this paragraph does not stay 

25 any proceeding of the bankruptcy court, the district court, 
466 

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1 or the bankruptcy appellate panel from which the appeal 

2 is taken, unless the respective bankruptcy court, district 

3 court, or bankruptcy appellate panel, or the court of ap4 peals in which the appeal in pending, issues a stay of such 

5 proceeding pending the appeal. 

6 ‘‘(E) Any request under subparagraph (B) for certifi7 cation shall be made not later than 60 days after the entry 

8 of the judgment, order, or decree.’’. 

9 (b) PROCEDURAL RULES.— 

10 (1) TEMPORARY APPLICATION.—A provision of 

11 this subsection shall apply to appeals under section 

12 158(d)(2) of title 28, United States Code, until a 

13 rule of practice and procedure relating to such provi14 sion and such appeals is promulgated or amended 

15 under chapter 131 of such title. 

16 (2) CERTIFICATION.—A district court, a bank17 ruptcy court, or a bankruptcy appellate panel may 

18 make a certification under section 158(d)(2) of title 

19 28, United States Code, only with respect to matters 

20 pending in the respective bankruptcy court, district 

21 court, or bankruptcy appellate panel. 

22 (3) PROCEDURE.—Subject to any other provi23 sion of this subsection, an appeal authorized by the 

24 court of appeals under section 158(d)(2)(A) of title 

25 28, United States Code, shall be taken in the man-
467 

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1 ner prescribed in subdivisions (a)(1), (b), (c), and 

2 (d) of rule 5 of the Federal Rules of Appellate Pro3 cedure. For purposes of subdivision (a)(1) of rule 

4 5— 

5 (A) a reference in such subdivision to a 

6 district court shall be deemed to include a ref7 erence to a bankruptcy court and a bankruptcy 

8 appellate panel, as appropriate; and 

9 (B) a reference in such subdivision to the 

10 parties requesting permission to appeal to be 

11 served with the petition shall be deemed to in12 clude a reference to the parties to the judg13 ment, order, or decree from which the appeal is 

14 taken. 

15 (4) FILING OF PETITION WITH ATTACHMENT.— 

16 A petition requesting permission to appeal, that is 

17 based on a certification made under subparagraph 

18 (A) or (B) of section 158(d)(2) shall— 

19 (A) be filed with the circuit clerk not later 

20 than 10 days after the certification is entered 

21 on the docket of the bankruptcy court, the dis22 trict court, or the bankruptcy appellate panel 

23 from which the appeal is taken; and 

24 (B) have attached a copy of such certifi25 cation. 
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1 (5) REFERENCES IN RULE 5.—For purposes of 

2 rule 5 of the Federal Rules of Appellate Proce3 dure— 

4 (A) a reference in such rule to a district 

5 court shall be deemed to include a reference to 

6 a bankruptcy court and to a bankruptcy appel7 late panel; and 

8 (B) a reference in such rule to a district 

9 clerk shall be deemed to include a reference to 

10 a clerk of a bankruptcy court and to a clerk of 

11 a bankruptcy appellate panel. 

12 (6) APPLICATION OF RULES.—The Federal 

13 Rules of Appellate Procedure shall apply in the 

14 courts of appeals with respect to appeals authorized 

15 under section 158(d)(2)(A), to the extent relevant 

16 and as if such appeals were taken from final judg17 ments, orders, or decrees of the district courts or 

18 bankruptcy appellate panels exercising appellate ju19 risdiction under subsection (a) or (b) of section 158 

20 of title 28, United States Code. 

21 SEC. 1234. INVOLUNTARY CASES. 

22 (a) AMENDMENTS.—Section 303 of title 11, United 

23 States Code, is amended— 

24 (1) in subsection (b)(1), by— 
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1 (A) inserting ‘‘as to liability or amount’’ 

2 after ‘‘bona fide dispute’’; and 

3 (B) striking ‘‘if such claims’’ and inserting 

4 ‘‘if such noncontingent, undisputed claims’’; 

5 and 

6 (2) in subsection (h)(1), by inserting ‘‘as to li7 ability or amount’’ before the semicolon at the end. 

8 (b) EFFECTIVE DATE; APPLICATION OF AMEND9 MENTS.—This section and the amendments made by this 

10 section shall take effect on the date of the enactment of 

11 this Act and shall apply with respect to cases commenced 

12 under title 11 of the United States Code before, on, and 

13 after such date. 

14 SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES 

15 AS NONDISCHARGEABLE DEBT. 

16 Section 523(a) of title 11, United States Code, as 

17 amended by section 314, is amended by inserting after 

18 paragraph (14A) the following: 

19 ‘‘(14B) incurred to pay fines or penalties im20 posed under Federal election law;’’. 
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1 TITLE XIII—CONSUMER CREDIT 

2 DISCLOSURE 

3 SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END 

4 CREDIT PLAN. 

5 (a) MINIMUM PAYMENT DISCLOSURES.—Section 

6 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) 

7 is amended by adding at the end the following: 

8 ‘‘(11)(A) In the case of an open end credit plan 

9 that requires a minimum monthly payment of not 

10 more than 4 percent of the balance on which finance 

11 charges are accruing, the following statement, lo12 cated on the front of the billing statement, disclosed 

13 clearly and conspicuously: ‘Minimum Payment 

14 Warning: Making only the minimum payment will 

15 increase the interest you pay and the time it takes 

16 to repay your balance. For example, making only the 

17 typical 2 percent minimum monthly payment on a 

18 balance of $1,000 at an interest rate of 17 percent 

19 would take 88 months to repay the balance in full. 

20 For an estimate of the time it would take to repay 

21 your balance, making only minimum payments, call 

22 this toll-free number: llllll.’ (the blank 

23 space to be filled in by the creditor). 

24 ‘‘(B) In the case of an open end credit plan 

25 that requires a minimum monthly payment of more 
471 

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1 than 4 percent of the balance on which finance 

2 charges are accruing, the following statement, in a 

3 prominent location on the front of the billing state4 ment, disclosed clearly and conspicuously: ‘Minimum 

5 Payment Warning: Making only the required min6 imum payment will increase the interest you pay and 

7 the time it takes to repay your balance. Making a 

8 typical 5 percent minimum monthly payment on a 

9 balance of $300 at an interest rate of 17 percent 

10 would take 24 months to repay the balance in full. 

11 For an estimate of the time it would take to repay 

12 your balance, making only minimum monthly pay13 ments, call this toll-free number: llllll.’ 

14 (the blank space to be filled in by the creditor). 

15 ‘‘(C) Notwithstanding subparagraphs (A) and 

16 (B), in the case of a creditor with respect to which 

17 compliance with this title is enforced by the Federal 

18 Trade Commission, the following statement, in a 

19 prominent location on the front of the billing state20 ment, disclosed clearly and conspicuously: ‘Minimum 

21 Payment Warning: Making only the required min22 imum payment will increase the interest you pay and 

23 the time it takes to repay your balance. For exam24 ple, making only the typical 5 percent minimum 

25 monthly payment on a balance of $300 at an inter-
472 

•S 256 IS 

1 est rate of 17 percent would take 24 months to 

2 repay the balance in full. For an estimate of the 

3 time it would take to repay your balance, making 

4 only minimum monthly payments, call the Federal 

5 Trade Commission at this toll-free number: 

6 llllll.’ (the blank space to be filled in by 

7 the creditor). A creditor who is subject to this sub8 paragraph shall not be subject to subparagraph (A) 

9 or (B). 

10 ‘‘(D) Notwithstanding subparagraph (A), (B), 

11 or (C), in complying with any such subparagraph, a 

12 creditor may substitute an example based on an in13 terest rate that is greater than 17 percent. Any 

14 creditor that is subject to subparagraph (B) may 

15 elect to provide the disclosure required under sub16 paragraph (A) in lieu of the disclosure required 

17 under subparagraph (B). 

18 ‘‘(E) The Board shall, by rule, periodically re19 calculate, as necessary, the interest rate and repay20 ment period under subparagraphs (A), (B), and (C). 

21 ‘‘(F)(i) The toll-free telephone number disclosed 

22 by a creditor or the Federal Trade Commission 

23 under subparagraph (A), (B), or (G), as appro24 priate, may be a toll-free telephone number estab25 lished and maintained by the creditor or the Federal 
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1 Trade Commission, as appropriate, or may be a toll2 free telephone number established and maintained 

3 by a third party for use by the creditor or multiple 

4 creditors or the Federal Trade Commission, as ap5 propriate. The toll-free telephone number may con6 nect consumers to an automated device through 

7 which consumers may obtain information described 

8 in subparagraph (A), (B), or (C), by inputting infor9 mation using a touch-tone telephone or similar de10 vice, if consumers whose telephones are not equipped 

11 to use such automated device are provided the op12 portunity to be connected to an individual from 

13 whom the information described in subparagraph 

14 (A), (B), or (C), as applicable, may be obtained. A 

15 person that receives a request for information de16 scribed in subparagraph (A), (B), or (C) from an ob17 ligor through the toll-free telephone number dis18 closed under subparagraph (A), (B), or (C), as ap19 plicable, shall disclose in response to such request 

20 only the information set forth in the table promul21 gated by the Board under subparagraph (H)(i). 

22 ‘‘(ii)(I) The Board shall establish and maintain 

23 for a period not to exceed 24 months following the 

24 effective date of the Bankruptcy Abuse Prevention 

25 and Consumer Protection Act of 2005, a toll-free 
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1 telephone number, or provide a toll-free telephone 

2 number established and maintained by a third party, 

3 for use by creditors that are depository institutions 

4 (as defined in section 3 of the Federal Deposit In5 surance Act), including a Federal credit union or 

6 State credit union (as defined in section 101 of the 

7 Federal Credit Union Act), with total assets not ex8 ceeding $250,000,000. The toll-free telephone num9 ber may connect consumers to an automated device 

10 through which consumers may obtain information 

11 described in subparagraph (A) or (B), as applicable, 

12 by inputting information using a touch-tone tele13 phone or similar device, if consumers whose tele14 phones are not equipped to use such automated de15 vice are provided the opportunity to be connected to 

16 an individual from whom the information described 

17 in subparagraph (A) or (B), as applicable, may be 

18 obtained. A person that receives a request for infor19 mation described in subparagraph (A) or (B) from 

20 an obligor through the toll-free telephone number 

21 disclosed under subparagraph (A) or (B), as applica22 ble, shall disclose in response to such request only 

23 the information set forth in the table promulgated 

24 by the Board under subparagraph (H)(i). The dollar 

25 amount contained in this subclause shall be adjusted 
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1 according to an indexing mechanism established by 

2 the Board. 

3 ‘‘(II) Not later than 6 months prior to the expi4 ration of the 24-month period referenced in sub5 clause (I), the Board shall submit to the Committee 

6 on Banking, Housing, and Urban Affairs of the Sen7 ate and the Committee on Financial Services of the 

8 House of Representatives a report on the program 

9 described in subclause (I). 

10 ‘‘(G) The Federal Trade Commission shall es11 tablish and maintain a toll-free number for the pur12 pose of providing to consumers the information re13 quired to be disclosed under subparagraph (C). 

14 ‘‘(H) The Board shall— 

15 ‘‘(i) establish a detailed table illustrating 

16 the approximate number of months that it 

17 would take to repay an outstanding balance if 

18 a consumer pays only the required minimum 

19 monthly payments and if no other advances are 

20 made, which table shall clearly present stand21 ardized information to be used to disclose the 

22 information required to be disclosed under sub23 paragraph (A), (B), or (C), as applicable; 

24 ‘‘(ii) establish the table required under 

25 clause (i) by assuming— 
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1 ‘‘(I) a significant number of different 

2 annual percentage rates; 

3 ‘‘(II) a significant number of different 

4 account balances; 

5 ‘‘(III) a significant number of dif6 ferent minimum payment amounts; and 

7 ‘‘(IV) that only minimum monthly 

8 payments are made and no additional ex9 tensions of credit are obtained; and 

10 ‘‘(iii) promulgate regulations that provide 

11 instructional guidance regarding the manner in 

12 which the information contained in the table es13 tablished under clause (i) should be used in re14 sponding to the request of an obligor for any 

15 information required to be disclosed under sub16 paragraph (A), (B), or (C). 

17 ‘‘(I) The disclosure requirements of this para18 graph do not apply to any charge card account, the 

19 primary purpose of which is to require payment of 

20 charges in full each month. 

21 ‘‘(J) A creditor that maintains a toll-free tele22 phone number for the purpose of providing cus23 tomers with the actual number of months that it will 

24 take to repay the customer’s outstanding balance is 
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1 not subject to the requirements of subparagraph (A) 

2 or (B). 

3 ‘‘(K) A creditor that maintains a toll-free tele4 phone number for the purpose of providing cus5 tomers with the actual number of months that it will 

6 take to repay an outstanding balance shall include 

7 the following statement on each billing statement: 

8 ‘Making only the minimum payment will increase 

9 the interest you pay and the time it takes to repay 

10 your balance. For more information, call this toll11 free number: llll.’ (the blank space to be filled 

12 in by the creditor).’’. 

13 (b) REGULATORY IMPLEMENTATION.— 

14 (1) IN GENERAL.—The Board of Governors of 

15 the Federal Reserve System (hereafter in this title 

16 referred to as the ‘‘Board’’) shall promulgate regula17 tions implementing the requirements of section 

18 127(b)(11) of the Truth in Lending Act, as added 

19 by subsection (a) of this section. 

20 (2) EFFECTIVE DATE.—Section 127(b)(11) of 

21 the Truth in Lending Act, as added by subsection 

22 (a) of this section, and the regulations issued under 

23 paragraph (1) of this subsection shall not take effect 

24 until the later of— 
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1 (A) 18 months after the date of enactment 

2 of this Act; or 

3 (B) 12 months after the publication of 

4 such final regulations by the Board. 

5 (c) STUDY OF FINANCIAL DISCLOSURES.— 

6 (1) IN GENERAL.—The Board may conduct a 

7 study to determine the types of information available 

8 to potential borrowers from consumer credit lending 

9 institutions regarding factors qualifying potential 

10 borrowers for credit, repayment requirements, and 

11 the consequences of default. 

12 (2) FACTORS FOR CONSIDERATION.—In con13 ducting a study under paragraph (1), the Board 

14 should, in consultation with the other Federal bank15 ing agencies (as defined in section 3 of the Federal 

16 Deposit Insurance Act), the National Credit Union 

17 Administration, and the Federal Trade Commission, 

18 consider the extent to which— 

19 (A) consumers, in establishing new credit 

20 arrangements, are aware of their existing pay21 ment obligations, the need to consider those ob22 ligations in deciding to take on new credit, and 

23 how taking on excessive credit can result in fi24 nancial difficulty; 
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1 (B) minimum periodic payment features 

2 offered in connection with open end credit plans 

3 impact consumer default rates; 

4 (C) consumers make only the required 

5 minimum payment under open end credit plans; 

6 (D) consumers are aware that making only 

7 required minimum payments will increase the 

8 cost and repayment period of an open end cred9 it obligation; and 

10 (E) the availability of low minimum pay11 ment options is a cause of consumers experi12 encing financial difficulty. 

13 (3) REPORT TO CONGRESS.—Findings of the 

14 Board in connection with any study conducted under 

15 this subsection shall be submitted to Congress. Such 

16 report shall also include recommendations for legis17 lative initiatives, if any, of the Board, based on its 

18 findings. 

19 SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN20 SIONS SECURED BY A DWELLING. 

21 (a) OPEN END CREDIT EXTENSIONS.— 

22 (1) CREDIT APPLICATIONS.—Section 

23 127A(a)(13) of the Truth in Lending Act (15 

24 U.S.C. 1637a(a)(13)) is amended— 
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1 (A) by striking ‘‘CONSULTATION OF TAX

2 ADVISER.—A statement that the’’ and inserting 

3 the following: ‘‘TAX DEDUCTIBILITY.—A state4 ment that— 

5 ‘‘(A) the’’; and 

6 (B) by striking the period at the end and 

7 inserting the following: ‘‘; and 

8 ‘‘(B) in any case in which the extension of 

9 credit exceeds the fair market value (as defined 

10 under the Internal Revenue Code of 1986) of 

11 the dwelling, the interest on the portion of the 

12 credit extension that is greater than the fair 

13 market value of the dwelling is not tax deduct14 ible for Federal income tax purposes.’’. 

15 (2) CREDIT ADVERTISEMENTS.—Section 147(b) 

16 of the Truth in Lending Act (15 U.S.C. 1665b(b)) 

17 is amended— 

18 (A) by striking ‘‘If any’’ and inserting the 

19 following: 

20 ‘‘(1) IN GENERAL.—If any’’; and 

21 (B) by adding at the end the following: 

22 ‘‘(2) CREDIT IN EXCESS OF FAIR MARKET

23 VALUE.—Each advertisement described in subsection 

24 (a) that relates to an extension of credit that may 

25 exceed the fair market value of the dwelling, and 
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1 which advertisement is disseminated in paper form 

2 to the public or through the Internet, as opposed to 

3 by radio or television, shall include a clear and con4 spicuous statement that— 

5 ‘‘(A) the interest on the portion of the 

6 credit extension that is greater than the fair 

7 market value of the dwelling is not tax deduct8 ible for Federal income tax purposes; and 

9 ‘‘(B) the consumer should consult a tax 

10 adviser for further information regarding the 

11 deductibility of interest and charges.’’. 

12 (b) NON-OPEN END CREDIT EXTENSIONS.— 

13 (1) CREDIT APPLICATIONS.—Section 128 of the 

14 Truth in Lending Act (15 U.S.C. 1638) is amend15 ed— 

16 (A) in subsection (a), by adding at the end 

17 the following: 

18 ‘‘(15) In the case of a consumer credit trans19 action that is secured by the principal dwelling of 

20 the consumer, in which the extension of credit may 

21 exceed the fair market value of the dwelling, a clear 

22 and conspicuous statement that— 

23 ‘‘(A) the interest on the portion of the 

24 credit extension that is greater than the fair 
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1 market value of the dwelling is not tax deduct2 ible for Federal income tax purposes; and 

3 ‘‘(B) the consumer should consult a tax 

4 adviser for further information regarding the 

5 deductibility of interest and charges.’’; and 

6 (B) in subsection (b), by adding at the end 

7 the following: 

8 ‘‘(3) In the case of a credit transaction described in 

9 paragraph (15) of subsection (a), disclosures required by 

10 that paragraph shall be made to the consumer at the time 

11 of application for such extension of credit.’’. 

12 (2) CREDIT ADVERTISEMENTS.—Section 144 of 

13 the Truth in Lending Act (15 U.S.C. 1664) is 

14 amended by adding at the end the following: 

15 ‘‘(e) Each advertisement to which this section applies 

16 that relates to a consumer credit transaction that is se17 cured by the principal dwelling of a consumer in which 

18 the extension of credit may exceed the fair market value 

19 of the dwelling, and which advertisement is disseminated 

20 in paper form to the public or through the Internet, as 

21 opposed to by radio or television, shall clearly and con22 spicuously state that— 

23 ‘‘(1) the interest on the portion of the credit ex24 tension that is greater than the fair market value of 
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1 the dwelling is not tax deductible for Federal income 

2 tax purposes; and 

3 ‘‘(2) the consumer should consult a tax adviser 

4 for further information regarding the deductibility of 

5 interest and charges.’’. 

6 (c) REGULATORY IMPLEMENTATION.— 

7 (1) IN GENERAL.—The Board shall promulgate 

8 regulations implementing the amendments made by 

9 this section. 

10 (2) EFFECTIVE DATE.—Regulations issued 

11 under paragraph (1) shall not take effect until the 

12 later of— 

13 (A) 12 months after the date of enactment 

14 of this Act; or 

15 (B) 12 months after the date of publica16 tion of such final regulations by the Board. 

17 SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY 

18 RATES’’. 

19 (a) INTRODUCTORY RATE DISCLOSURES.—Section 

20 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 

21 is amended by adding at the end the following: 

22 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRO23 DUCTORY RATES’.— 

24 ‘‘(A) IN GENERAL.—Except as provided in 

25 subparagraph (B), an application or solicitation 
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1 to open a credit card account and all pro2 motional materials accompanying such applica3 tion or solicitation for which a disclosure is re4 quired under paragraph (1), and that offers a 

5 temporary annual percentage rate of interest, 

6 shall— 

7 ‘‘(i) use the term ‘introductory’ in im8 mediate proximity to each listing of the 

9 temporary annual percentage rate applica10 ble to such account, which term shall ap11 pear clearly and conspicuously; 

12 ‘‘(ii) if the annual percentage rate of 

13 interest that will apply after the end of the 

14 temporary rate period will be a fixed rate, 

15 state in a clear and conspicuous manner in 

16 a prominent location closely proximate to 

17 the first listing of the temporary annual 

18 percentage rate (other than a listing of the 

19 temporary annual percentage rate in the 

20 tabular format described in section 

21 122(c)), the time period in which the intro22 ductory period will end and the annual 

23 percentage rate that will apply after the 

24 end of the introductory period; and 
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1 ‘‘(iii) if the annual percentage rate 

2 that will apply after the end of the tem3 porary rate period will vary in accordance 

4 with an index, state in a clear and con5 spicuous manner in a prominent location 

6 closely proximate to the first listing of the 

7 temporary annual percentage rate (other 

8 than a listing in the tabular format pre9 scribed by section 122(c)), the time period 

10 in which the introductory period will end 

11 and the rate that will apply after that, 

12 based on an annual percentage rate that 

13 was in effect within 60 days before the 

14 date of mailing the application or solicita15 tion. 

16 ‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of 

17 subparagraph (A) do not apply with respect to 

18 any listing of a temporary annual percentage 

19 rate on an envelope or other enclosure in which 

20 an application or solicitation to open a credit 

21 card account is mailed. 

22 ‘‘(C) CONDITIONS FOR INTRODUCTORY

23 RATES.—An application or solicitation to open 

24 a credit card account for which a disclosure is 

25 required under paragraph (1), and that offers a 
486 

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1 temporary annual percentage rate of interest 

2 shall, if that rate of interest is revocable under 

3 any circumstance or upon any event, clearly 

4 and conspicuously disclose, in a prominent man5 ner on or with such application or solicitation— 

6 ‘‘(i) a general description of the cir7 cumstances that may result in the revoca8 tion of the temporary annual percentage 

9 rate; and 

10 ‘‘(ii) if the annual percentage rate 

11 that will apply upon the revocation of the 

12 temporary annual percentage rate— 

13 ‘‘(I) will be a fixed rate, the an14 nual percentage rate that will apply 

15 upon the revocation of the temporary 

16 annual percentage rate; or 

17 ‘‘(II) will vary in accordance with 

18 an index, the rate that will apply after 

19 the temporary rate, based on an an20 nual percentage rate that was in ef21 fect within 60 days before the date of 

22 mailing the application or solicitation. 

23 ‘‘(D) DEFINITIONS.—In this paragraph— 

24 ‘‘(i) the terms ‘temporary annual per25 centage rate of interest’ and ‘temporary 
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1 annual percentage rate’ mean any rate of 

2 interest applicable to a credit card account 

3 for an introductory period of less than 1 

4 year, if that rate is less than an annual 

5 percentage rate that was in effect within 

6 60 days before the date of mailing the ap7 plication or solicitation; and 

8 ‘‘(ii) the term ‘introductory period’ 

9 means the maximum time period for which 

10 the temporary annual percentage rate may 

11 be applicable. 

12 ‘‘(E) RELATION TO OTHER DISCLOSURE

13 REQUIREMENTS.—Nothing in this paragraph 

14 may be construed to supersede subsection (a) of 

15 section 122, or any disclosure required by para16 graph (1) or any other provision of this sub17 section.’’. 

18 (b) REGULATORY IMPLEMENTATION.— 

19 (1) IN GENERAL.—The Board shall promulgate 

20 regulations implementing the requirements of section 

21 127(c)(6) of the Truth in Lending Act, as added by 

22 this section. 

23 (2) EFFECTIVE DATE.—Section 127(c)(6) of 

24 the Truth in Lending Act, as added by this section, 
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1 and regulations issued under paragraph (1) of this 

2 subsection shall not take effect until the later of— 

3 (A) 12 months after the date of enactment 

4 of this Act; or 

5 (B) 12 months after the date of publica6 tion of such final regulations by the Board. 

7 SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS. 

8 (a) INTERNET-BASED SOLICITATIONS.—Section 

9 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 

10 is amended by adding at the end the following: 

11 ‘‘(7) INTERNET-BASED SOLICITATIONS.— 

12 ‘‘(A) IN GENERAL.—In any solicitation to 

13 open a credit card account for any person under 

14 an open end consumer credit plan using the 

15 Internet or other interactive computer service, 

16 the person making the solicitation shall clearly 

17 and conspicuously disclose— 

18 ‘‘(i) the information described in sub19 paragraphs (A) and (B) of paragraph (1); 

20 and 

21 ‘‘(ii) the information described in 

22 paragraph (6). 

23 ‘‘(B) FORM OF DISCLOSURE.—The disclo24 sures required by subparagraph (A) shall be— 
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1 ‘‘(i) readily accessible to consumers in 

2 close proximity to the solicitation to open 

3 a credit card account; and 

4 ‘‘(ii) updated regularly to reflect the 

5 current policies, terms, and fee amounts 

6 applicable to the credit card account. 

7 ‘‘(C) DEFINITIONS.—For purposes of this 

8 paragraph— 

9 ‘‘(i) the term ‘Internet’ means the 

10 international computer network of both 

11 Federal and non-Federal interoperable 

12 packet switched data networks; and 

13 ‘‘(ii) the term ‘interactive computer 

14 service’ means any information service, 

15 system, or access software provider that 

16 provides or enables computer access by 

17 multiple users to a computer server, in18 cluding specifically a service or system that 

19 provides access to the Internet and such 

20 systems operated or services offered by li21 braries or educational institutions.’’. 

22 (b) REGULATORY IMPLEMENTATION.— 

23 (1) IN GENERAL.—The Board shall promulgate 

24 regulations implementing the requirements of section 
490 

•S 256 IS 

1 127(c)(7) of the Truth in Lending Act, as added by 

2 this section. 

3 (2) EFFECTIVE DATE.—The amendment made 

4 by subsection (a) and the regulations issued under 

5 paragraph (1) of this subsection shall not take effect 

6 until the later of— 

7 (A) 12 months after the date of enactment 

8 of this Act; or 

9 (B) 12 months after the date of publica10 tion of such final regulations by the Board. 

11 SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT 

12 DEADLINES AND PENALTIES. 

13 (a) DISCLOSURES RELATED TO LATE PAYMENT

14 DEADLINES AND PENALTIES.—Section 127(b) of the 

15 Truth in Lending Act (15 U.S.C. 1637(b)) is amended 

16 by adding at the end the following: 

17 ‘‘(12) If a late payment fee is to be imposed 

18 due to the failure of the obligor to make payment on 

19 or before a required payment due date, the following 

20 shall be stated clearly and conspicuously on the bill21 ing statement: 

22 ‘‘(A) The date on which that payment is 

23 due or, if different, the earliest date on which 

24 a late payment fee may be charged. 
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1 ‘‘(B) The amount of the late payment fee 

2 to be imposed if payment is made after such 

3 date.’’. 

4 (b) REGULATORY IMPLEMENTATION.— 

5 (1) IN GENERAL.—The Board shall promulgate 

6 regulations implementing the requirements of section 

7 127(b)(12) of the Truth in Lending Act, as added 

8 by this section. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by subsection (a) and regulations issued under para11 graph (1) of this subsection shall not take effect 

12 until the later of— 

13 (A) 12 months after the date of enactment 

14 of this Act; or 

15 (B) 12 months after the date of publica16 tion of such final regulations by the Board. 

17 SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL18 URE TO INCUR FINANCE CHARGES. 

19 (a) PROHIBITION ON CERTAIN ACTIONS FOR FAIL20 URE TO INCUR FINANCE CHARGES.—Section 127 of the 

21 Truth in Lending Act (15 U.S.C. 1637) is amended by 

22 adding at the end the following: 

23 ‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAIL24 URE TO INCUR FINANCE CHARGES.—A creditor of an ac25 count under an open end consumer credit plan may not 
492 

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1 terminate an account prior to its expiration date solely be2 cause the consumer has not incurred finance charges on 

3 the account. Nothing in this subsection shall prohibit a 

4 creditor from terminating an account for inactivity in 3 

5 or more consecutive months.’’. 

6 (b) REGULATORY IMPLEMENTATION.— 

7 (1) IN GENERAL.—The Board shall promulgate 

8 regulations implementing the requirements of section 

9 127(h) of the Truth in Lending Act, as added by 

10 this section. 

11 (2) EFFECTIVE DATE.—The amendment made 

12 by subsection (a) and regulations issued under para13 graph (1) of this subsection shall not take effect 

14 until the later of— 

15 (A) 12 months after the date of enactment 

16 of this Act; or 

17 (B) 12 months after the date of publica18 tion of such final regulations by the Board. 

19 SEC. 1307. DUAL USE DEBIT CARD. 

20 (a) REPORT.—The Board may conduct a study of, 

21 and present to Congress a report containing its analysis 

22 of, consumer protections under existing law to limit the 

23 liability of consumers for unauthorized use of a debit card 

24 or similar access device. Such report, if submitted, shall 
493 

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1 include recommendations for legislative initiatives, if any, 

2 of the Board, based on its findings. 

3 (b) CONSIDERATIONS.—In preparing a report under 

4 subsection (a), the Board may include— 

5 (1) the extent to which section 909 of the Elec6 tronic Fund Transfer Act (15 U.S.C. 1693g), as in 

7 effect at the time of the report, and the imple8 menting regulations promulgated by the Board to 

9 carry out that section provide adequate unauthorized 

10 use liability protection for consumers; 

11 (2) the extent to which any voluntary industry 

12 rules have enhanced or may enhance the level of pro13 tection afforded consumers in connection with such 

14 unauthorized use liability; and 

15 (3) whether amendments to the Electronic 

16 Fund Transfer Act (15 U.S.C. 1693 et seq.), or re17 visions to regulations promulgated by the Board to 

18 carry out that Act, are necessary to further address 

19 adequate protection for consumers concerning unau20 thorized use liability. 

21 SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX22 TENDED TO DEPENDENT STUDENTS. 

23 (a) STUDY.— 

24 (1) IN GENERAL.—The Board shall conduct a 

25 study regarding the impact that the extension of 
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•S 256 IS 

1 credit described in paragraph (2) has on the rate of 

2 cases filed under title 11 of the United States Code. 

3 (2) EXTENSION OF CREDIT.—The extension of 

4 credit described in this paragraph is the extension of 

5 credit to individuals who are— 

6 (A) claimed as dependents for purposes of 

7 the Internal Revenue Code of 1986; and 

8 (B) enrolled within 1 year of successfully 

9 completing all required secondary education re10 quirements and on a full-time basis, in postsec11 ondary educational institutions. 

12 (b) REPORT.—Not later than 1 year after the date 

13 of enactment of this Act, the Board shall submit to the 

14 Senate and the House of Representatives a report summa15 rizing the results of the study conducted under subsection 

16 (a). 

17 SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS. 

18 (a) REGULATIONS.—Not later than 6 months after 

19 the date of enactment of this Act, the Board, in consulta20 tion with the other Federal banking agencies (as defined 

21 in section 3 of the Federal Deposit Insurance Act), the 

22 National Credit Union Administration Board, and the 

23 Federal Trade Commission, shall promulgate regulations 

24 to provide guidance regarding the meaning of the term 

25 ‘‘clear and conspicuous’’, as used in subparagraphs (A), 
495 

•S 256 IS 

1 (B), and (C) of section 127(b)(11) and clauses (ii) and 

2 (iii) of section 127(c)(6)(A) of the Truth in Lending Act. 

3 (b) EXAMPLES.—Regulations promulgated under 

4 subsection (a) shall include examples of clear and con5 spicuous model disclosures for the purposes of disclosures 

6 required by the provisions of the Truth in Lending Act 

7 referred to in subsection (a). 

8 (c) STANDARDS.—In promulgating regulations under 

9 this section, the Board shall ensure that the clear and con10 spicuous standard required for disclosures made under the 

11 provisions of the Truth in Lending Act referred to in sub12 section (a) can be implemented in a manner which results 

13 in disclosures which are reasonably understandable and 

14 designed to call attention to the nature and significance 

15 of the information in the notice. 

16 TITLE XIV—PREVENTING COR17 PORATE BANKRUPTCY ABUSE 

18 SEC. 1401. EMPLOYEE WAGE AND BENEFIT PRIORITIES. 

19 Section 507(a) of title 11, United States Code, as 

20 amended by section 212, is amended— 

21 (1) in paragraph (4) by striking ‘‘90’’ and in22 serting ‘‘180’’, and 

23 (2) in paragraphs (4) and (5) by striking 

24 ‘‘$4,000’’ and inserting ‘‘$10,000’’. 
496 

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1 SEC. 1402. FRAUDULENT TRANSFERS AND OBLIGATIONS. 

2 Section 548 of title 11, United States Code, is 

3 amended— 

4 (1) in subsections (a) and (b) by striking ‘‘one 

5 year’’ and inserting ‘‘2 years’’, 

6 (2) in subsection (a)— 

7 (A) by inserting ‘‘(including any transfer 

8 to or for the benefit of an insider under an em9 ployment contract)’’ after ‘‘transfer’’ the 1st 

10 place it appears, and 

11 (B) by inserting ‘‘(including any obligation 

12 to or for the benefit of an insider under an em13 ployment contract)’’ after ‘‘obligation’’ the 1st 

14 place it appears, and 

15 (3) in subsection (a)(1)(B)(ii)— 

16 (A) in subclause (II) by striking ‘‘or’’ at 

17 the end, 

18 (B) in subclause (III) by striking the pe19 riod at the end and inserting ‘‘; or’’, and 

20 (C) by adding at the end the following: 

21 ‘‘(IV) made such transfer to or for the benefit 

22 of an insider, or incurred such obligation to or for 

23 the benefit of an insider, under an employment con24 tract and not in the ordinary course of business.’’. 
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1 SEC. 1403. PAYMENT OF INSURANCE BENEFITS TO RETIRED 

2 EMPLOYEES. 

3 Section 1114 of title 11, United States Code, is 

4 amended— 

5 (1) by redesignating subsection (l) as subsection 

6 (m), and 

7 (2) by inserting after subsection (k) the fol8 lowing: 

9 ‘‘(l) If the debtor, during the 180-day period ending 

10 on the date of the filing of the petition— 

11 ‘‘(1) modified retiree benefits; and 

12 ‘‘(2) was insolvent on the date such benefits 

13 were modified; 

14 the court, on motion of a party in interest, and after notice 

15 and a hearing, shall issue an order reinstating as of the 

16 date the modification was made, such benefits as in effect 

17 immediately before such date unless the court finds that 

18 the balance of the equities clearly favors such modifica19 tion.’’. 

20 SEC. 1404. EFFECTIVE DATE; APPLICATION OF AMEND21 MENTS. 

22 (a) EFFECTIVE DATE.—Except as provided in sub23 section (b), this title and the amendments made by this 

24 title shall take effect on the date of the enactment of this 

25 Act. 

26 (b) APPLICATION OF AMENDMENTS.— 
498 

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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this title shall 

3 apply only with respect to cases commenced under 

4 title 11 of the United States Code on or after the 

5 date of the enactment of this Act. 

6 (2) AVOIDANCE PERIOD.—The amendment 

7 made by section 1402(1) shall apply only with re8 spect to cases commenced under title 11 of the 

9 United States Code more than 1 year after the date 

10 of the enactment of this Act. 

11 TITLE XV—GENERAL EFFECTIVE 

12 DATE; APPLICATION OF 

13 AMENDMENTS 

14 SEC. 1501. EFFECTIVE DATE; APPLICATION OF AMEND15 MENTS. 

16 (a) EFFECTIVE DATE.—Except as otherwise provided 

17 in this Act, this Act and the amendments made by this 

18 Act shall take effect 180 days after the date of enactment 

19 of this Act. 

20 (b) APPLICATION OF AMENDMENTS.— 

21 (1) IN GENERAL.—Except as otherwise pro22 vided in this Act and paragraph (2), the amend23 ments made by this Act shall not apply with respect 

24 to cases commenced under title 11, United States 

25 Code, before the effective date of this Act. 
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•S 256 IS 

1 (2) CERTAIN LIMITATIONS APPLICABLE TO

2 DEBTORS.—The amendments made by sections 308, 

3 322, and 330 shall apply with respect to cases com4 menced under title 11, United States Code, on or 

5 after the date of the enactment of this Act. 

6 SEC. 1502. TECHNICAL CORRECTIONS. 

7 (a) CONFORMING AMENDMENTS TO TITLE 11 OF

8 THE UNITED STATES CODE.—Title 11 of the United 

9 States Code, as amended by the preceding provisions of 

10 this Act, is amended— 

11 (1) in section 507— 

12 (A) in subsection (a)— 

13 (i) in paragraph (5)(B)(ii) by striking 

14 ‘‘paragraph (3)’’ and inserting ‘‘paragraph 

15 (4)’’; and 

16 (ii) in paragraph (8)(D) by striking 

17 ‘‘paragraph (3)’’ and inserting ‘‘paragraph 

18 (4)’’; 

19 (B) in subsection (b) by striking ‘‘sub20 section (a)(1)’’ and inserting ‘‘subsection 

21 (a)(2)’’; and 

22 (C) in subsection (d) by striking ‘‘sub23 section (a)(3)’’ and inserting ‘‘subsection 

24 (a)(1)’’; 
500 

•S 256 IS 

1 (2) in section 523(a)(1)(A) by striking 

2 ‘‘507(a)(2)’’ and inserting ‘‘507(a)(3)’’; 

3 (3) in section 752(a) by striking ‘‘507(a)(1)’’ 

4 and inserting ‘‘507(a)(2)’’; 

5 (4) in section 766— 

6 (A) in subsection (h) by striking 

7 ‘‘507(a)(1)’’ and inserting ‘‘507(a)(2)’’; and 

8 (B) in subsection (i) by striking 

9 ‘‘507(a)(1)’’ each place it appears and inserting 

10 ‘‘507(a)(2)’’; 

11 (5) in section 901(a) by striking ‘‘507(a)(1)’’ 

12 and inserting ‘‘507(a)(2)’’; 

13 (6) in section 943(b)(5) by striking ‘‘507(a)(1)’’ 

14 and inserting ‘‘507(a)(2)’’; 

15 (7) in section 1123(a)(1) by striking 

16 ‘‘507(a)(1), 507(a)(2)’’ and inserting ‘‘507(a)(2), 

17 507(a)(3)’’; 

18 (8) in section 1129(a)(9)— 

19 (A) in subparagraph (A) by striking 

20 ‘‘507(a)(1) or 507(a)(2)’’ and inserting 

21 ‘‘507(a)(2) or 507(a)(3)’’; and 

22 (B) in subparagraph (B) by striking 

23 ‘‘507(a)(3)’’ and inserting ‘‘507(a)(1)’’; 

24 (9) in section 1226(b)(1) by striking 

25 ‘‘507(a)(1)’’ and inserting ‘‘507(a)(2)’’; and 
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•S 256 IS 

1 (10) in section 1326(b)(1) by striking 

2 ‘‘507(a)(1)’’ and inserting ‘‘507(a)(2)’’. 

3 (b) RELATED CONFORMING AMENDMENT.—Section 

4 6(e) of the Securities Investor Protection Act of 1970 (15 

5 U.S.C. 78fff(e)) is amended by striking ‘‘507(a)(1)’’ and 

6 inserting ‘‘507(a)(2)’’. 

Æ