I

103D CONGRESS

2D SESSION H. R. 4711

To amend title 11 of the United States Code with respect to certain debts

in connection with divorce or separation; to establish a commission to

analyze bankruptcy issues; and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 30, 1994

Ms. SLAUGHTER introduced the following bill; which was referred to the

Committee on the Judiciary

A BILL

To amend title 11 of the United States Code with respect

to certain debts in connection with divorce or separation;

to establish a commission to analyze bankruptcy issues;

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 TITLE I—AMENDMENTS TO

4 TITLE 11 OF THE UNITED

5 STATES CODE

6 SEC 101. SHORT TITLE.

7 This title may be cited as the ‘‘Spousal Equity in

8 Bankruptcy Amendments of 1994’’.
2

•HR 4711 IH

1 SEC. 102. AMENDMENTS.

2 (a) RELIEF FROM AUTOMATIC STAY.—Section

3 362(b)(2) of title 11, United States Code, is amended to

4 read as follows:

5 ‘‘(2) under subsection (a) of this section—

6 ‘‘(A) of the commencement or continuation

7 of an action or proceeding for—

8 ‘‘(i) the establishment of paternity; or

9 ‘‘(ii) the establishment or modification

10 of an order for alimony, maintenance, or

11 support; or

12 ‘‘(B) of the collection of alimony, mainte13 nance, or support from property that is not

14 property of the estate;’’.

15 (b) PRIORITY OF CLAIMS.—(1) Section 507 of title

16 11, United States Code, is amended—

17 (A) in subsection (a)—

18 (i) in paragraph (8) by striking ‘‘(8)

19 Eighth’’ and inserting ‘‘(9) Ninth’’,

20 (ii) in paragraph (7) by striking ‘‘(7) Sev21 enth’’ and inserting ‘‘(8) Eighth’’, and

22 (iii) by inserting after paragraph (6) the

23 following:

24 ‘‘(7) Seventh, allowed unsecured claims due to

25 a spouse, former spouse, or child of the debtor for

26 alimony to, maintenance for, or support of such
3

•HR 4711 IH

1 spouse or child, in connection with a separation

2 agreement, divorce decree, or other order of a court

3 of record, a determination made in accordance with

4 State or territorial law by a governmental unit, or

5 a property settlement agreement, but not to the ex6 tent that—

7 ‘‘(A) such debt is assigned to another en8 tity, voluntarily, by operation of law, or other9 wise (other than debts assigned pursuant to

10 section 402(a)(26) of the Social Security Act,

11 or any such debt which has been assigned to

12 the Federal Government or to a State or any

13 political subdivision of such State); or

14 ‘‘(B) such debt includes a liability des15 ignated as alimony, maintenance, or support,

16 unless such liability is actually in the nature of

17 alimony, maintenance or support;’’, and

18 (B) in subsection (d) by striking ‘‘or (6)’’ and

19 inserting ‘‘(6), or (7)’’.

20 (2) Title 11 of the United States Code is amended—

21 (A) in sections 502(i), 503(b)(1)(B)(i),

22 523(a)(1)(A), and 1123(a)(1) by striking

23 ‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,

24 (B) in section 724(b)(2) by striking ‘‘or

25 507(a)(6)’’ and inserting ‘‘507(a)(6), or 507(a)(7)’’,
4

•HR 4711 IH

1 (C) in section 726(b) by striking ‘‘or (7)’’ and

2 inserting ‘‘, (7), or (8)’’, and

3 (D) in section 1129(a)(9)—

4 (i) in subparagraph (B) by striking ‘‘or

5 507(a)(6)’’ and inserting ‘‘, 507(a)(6), or

6 507(a)(7)’’, and

7 (ii) in subparagraph (C) by striking

8 ‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’.

9 (c) PROTECTION OF LIENS.—Section 522(f)(1) of

10 title 11, United States Code, is amended to read as fol11 lows:

12 ‘‘(1) a judicial lien (other than a judicial lien

13 that secures a debt to a spouse, former spouse, or

14 child of the debtor, for alimony to, maintenance for,

15 or support of the spouse or child, in connection with

16 a separation agreement, divorce decree or other

17 order of a court of record, determination made in

18 accordance with State or territorial law by a govern19 mental unit, or property settlement agreement, to

20 the extent that the debt—

21 ‘‘(A) is not assigned to another entity, vol22 untarily, by operation of law, or otherwise; and

23 ‘‘(B) includes a liability designated as ali24 mony, maintenance, or support, unless such li-
5

•HR 4711 IH

1 ability is actually in the nature of alimony,

2 maintenance or support).’’.

3 (d) EXCEPTION TO DISCHARGE.—Section 523 of title

4 11, United States Code, is amended—

5 (1) in subsection (a)—

6 (A) in paragraph (11) by striking ‘‘or’’ at

7 the end,

8 (B) in paragraph (12) by inserting ‘‘or’’

9 after the semicolon at the end, and

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

11 ‘‘(13) assumed or incurred by the debtor in the

12 course of a divorce or separation or in connection

13 with a separation agreement, divorce decree or other

14 order of a court of record, a determination made in

15 accordance with State or territorial law by a govern16 mental unit, or property settlement agreement, un17 less—

18 ‘‘(A) excepting such debt from discharge

19 under this paragraph would impose an undue

20 hardship for the debtor; and

21 ‘‘(B) discharging such debt would result in

22 a benefit to the debtor that outweighs the det23 rimental consequences to a spouse, former

24 spouse, or child of the debtor.’’, and
6

•HR 4711 IH

1 (2) in subsection (c)(1) by striking ‘‘or (6)’’

2 each place it appears and inserting ‘‘, or (13)’’.

3 (e) PROTECTION AGAINST TRUSTEE AVOIDANCE.—

4 Section 547(c) of title 11, United States Code, is amend5 ed—

6 (1) by striking ‘‘or’’ at the end of para7 graph (6);

8 (2) by redesignating paragraph (7) as

9 paragraph (8); and

10 (3) by inserting after paragraph (6) the

11 following new paragraph:

12 ‘‘(7) to the extent that the transfer was a bona

13 fide payment of a debt to a spouse, former spouse,

14 or child of the debtor, for alimony to, maintenance

15 for, or support of such spouse or child, in connection

16 with a separation agreement, divorce decree or other

17 order of a court of record, determination made in

18 accordance with State or territorial law by a govern19 mental unit, or property settlement agreement, but

20 not to the extent that such debt—

21 ‘‘(A) is assigned to another entity, volun22 tarily, by operation of law, or otherwise; or

23 ‘‘(B) includes a liability designated as ali24 mony, maintenance, or support, unless such li-
7

•HR 4711 IH

1 ability is actually in the nature of alimony,

2 maintenance or support; or’’.

3 (f) APPEARANCE BEFORE COURT.—A child support

4 creditor or its representative shall be permitted to appear

5 and intervene without charge and without meeting any

6 special local court rule requirement for attorney appear7 ances in any bankruptcy proceeding in any bankruptcy

8 court or district court of the United States if the creditor

9 or representative files with the court a statement describ10 ing in detail the child support debt, its status, and other

11 characteristics.

12 TITLE II—BANKRUPTCY REVIEW

13 COMMISSION

14 SEC. 201. SHORT TITLE.

15 This title may be cited as the ‘‘National Bankruptcy

16 Review Commission Act’’.

17 SEC. 202. ESTABLISHMENT.

18 There is established the National Bankruptcy Review

19 Commission (referred to as the ‘‘Commission’’).

20 SEC. 203. DUTIES OF THE COMMISSION.

21 The duties of the Commission are—

22 (1) to investigate and study issues and prob23 lems relating to title 11, United States Code (com24 monly known as the ‘‘Bankruptcy Code’’);
8

•HR 4711 IH

1 (2) to evaluate the advisability of proposals and

2 current arrangements with respect to such issues

3 and problems;

4 (3) to prepare and submit to the Congress, the

5 Chief Justice, and the President a report in accord6 ance with section 208;

7 (4) to solicit divergent views of all parties con8 cerned with the operation of the bankruptcy system;

9 and

10 (5) to study the impact of the bankruptcy laws

11 on the family and particularly on the increase in the

12 number of women and children living in poverty

13 after divorce.

14 SEC. 204. MEMBERSHIP.

15 (a) NUMBER AND APPOINTMENT.—The Commission

16 shall be composed of 10 members appointed from among

17 individuals who have experience and expertise in bank18 ruptcy law as follows:

19 (1) Four members appointed by the President,

20 one of whom shall be designated as chairman by the

21 President.

22 (2) One member shall be appointed by the

23 President pro tempore of the Senate.

24 (3) One member shall be appointed by the Mi25 nority Leader of the Senate.
9

•HR 4711 IH

1 (4) One member shall be appointed by the

2 Speaker of the House of Representatives.

3 (5) One member shall be appointed by the Mi4 nority Leader of the House of Representatives.

5 (6) Two members appointed by the Chief Jus6 tice.

7 (b) TERM.—Members of the Commission shall be ap8 pointed for the life of the Commission.

9 (c) QUORUM.—Six members of the Commission shall

10 constitute a quorum, but a lesser number may conduct

11 meetings.

12 (d) APPOINTMENT DEADLINE.—The first appoint13 ments made under subsection (a) shall be made within 60

14 days after the date of enactment of this Act.

15 (e) FIRST MEETING.—The first meeting of the Com16 mission shall be called by the chairman and shall be held

17 within 90 days after the date of enactment of this Act.

18 (f) VACANCY.—A vacancy on the Commission result19 ing from the death or resignation of a member shall not

20 affect its powers and shall be filled in the same manner

21 in which the original appointment was made.

22 (g) CONTINUATION OF MEMBERSHIP.—If any mem23 ber of the Commission who was appointed to the Commis24 sion as a member of Congress or as an officer or employee

25 of a government leaves that office, or if any member of
10

•HR 4711 IH

1 the Commission who was not appointed in such a capacity

2 becomes an officer or employee of a government, the mem3 ber may continue as a member of the Commission for not

4 longer than the 90-day period beginning on the date the

5 member leaves that office or becomes such an officer or

6 employee, as the case may be.

7 (h) CONSULTATION PRIOR TO APPOINTMENT.—Prior

8 to the appointment of members of the Commission, the

9 President, the President pro tempore of the Senate, the

10 Speaker of the House of Representatives, and the Chief

11 Justice shall consult with each other to ensure fair and

12 equitable representation of various points of view in the

13 Commission and its staff.

14 SEC. 205. COMPENSATION OF THE COMMISSION.

15 (a) PAY.—

16 (1) NONGOVERNMENT EMPLOYEES.—Each

17 member of the Commission who is not otherwise em18 ployed by the United States Government shall be en19 titled to receive the daily equivalent of the annual

20 rate of basic pay payable for level IV of the Execu21 tive Schedule under section 5315 of title 5, United

22 States Code, for each day (including travel time)

23 during which he or she is engaged in the actual per24 formance of duties as a member of the Commission.
11

•HR 4711 IH

1 (2) GOVERNMENT EMPLOYEES.—A member of

2 the Commission who is an officer or employee of the

3 United States Government shall serve without addi4 tional compensation.

5 (b) TRAVEL.—Members of the Commission shall be

6 reimbursed for travel, subsistence, and other necessary ex7 penses incurred by them in the performance of their du8 ties.

9 SEC. 206. STAFF OF COMMISSION; EXPERTS AND CONSULT10 ANTS.

11 (a) STAFF.—

12 (1) APPOINTMENT.—The chairman of the Com13 mission may, without regard to the civil service laws

14 and regulations, appoint, and terminate an executive

15 director and such other personnel as are necessary

16 to enable the Commission to perform its duties. The

17 employment of an executive director shall be subject

18 to confirmation by the Commission.

19 (2) COMPENSATION.—The chairman of the

20 Commission may fix the compensation of the execu21 tive director and other personnel without regard to

22 the provisions of chapter 51 and subchapter II of

23 chapter 53 of title 5, United States Code, relating

24 to classification of positions and General Schedule

25 pay rates, except that the rate of pay for the execu-
12

•HR 4711 IH

1 tive director and other personnel may not exceed the

2 rate payable for level V of the Executive Schedule

3 under section 5316 of that title.

4 (b) EXPERTS AND CONSULTANTS.—The Commission

5 may procure temporary and intermittent services of ex6 perts and consultants under section 3109(b) of title 5,

7 United States Code.

8 SEC. 207. POWERS OF THE COMMISSION.

9 (a) HEARINGS AND MEETINGS.—The Commission or,

10 on authorization of the Commission, a member of the

11 Commission, may hold such hearings, sit and act at such

12 time and places, take such testimony, and receive such evi13 dence, as the Commission considers appropriate. The

14 Commission or a member of the Commission may admin15 ister oaths or affirmations to witnesses appearing before

16 it.

17 (b) OFFICIAL DATA.—The Commission may secure

18 directly from any Federal department, agency, or court

19 information necessary to enable it to carry out this title.

20 Upon request of the chairman of the Commission, the

21 head of a Federal department or agency or chief judge

22 of a Federal court shall furnish such information, consist23 ent with law, to the Commission.

24 (c) FACILITIES AND SUPPORT SERVICES.—The Ad25 ministrator of General Services shall provide to the Com-
13

•HR 4711 IH

1 mission on a reimbursable basis such facilities and support

2 services as the Commission may request. Upon request of

3 the Commission, the head of a Federal department or

4 agency may make any of the facilities or services of the

5 agency available to the Commission to assist the Commis6 sion in carrying out its duties under this title.

7 (d) EXPENDITURES AND CONTRACTS.—The Commis8 sion or, on authorization of the Commission, a member

9 of the Commission may make expenditures and enter into

10 contracts for the procurement of such supplies, services,

11 and property as the Commission or member considers ap12 propriate for the purposes of carrying out the duties of

13 the Commission. Such expenditures and contracts may be

14 made only to such extent or in such amounts as are pro15 vided in appropriation Acts.

16 (e) MAILS.—The Commission may use the United

17 States mails in the same manner and under the same con18 ditions as other Federal departments and agencies of the

19 United States.

20 (f) GIFTS.—The Commission may accept, use, and

21 dispose of gifts or donations of services or property.

22 SEC. 208. REPORT.

23 The Commission shall submit to the Congress, the

24 Chief Justice, and the President a report not later than

25 2 years after the date of its first meeting. The report shall
14

•HR 4711 IH

1 contain a detailed statement of the findings and conclu2 sions of the Commission, together with its recommenda3 tions for such legislative or administrative action as it con4 siders appropriate.

5 SEC. 209. TERMINATION.

6 The Commission shall cease to exist on the date that

7 is 30 days after the date on which it submits its report

8 under section 208.

9 SEC. 410. AUTHORIZATION OF APPROPRIATIONS.

10 There is authorized to be appropriated $1,500,000 to

11 carry out this title.

Æ

HR 4711 IH——2