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106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 106–970

BANKRUPTCY REFORM ACT OF 2000

OCTOBER 11, 2000.—Ordered to be printed

Mr. HYDE, from the committee of conference,

submitted the following

CONFERENCE REPORT

[To accompany H.R. 2415]

The committee of conference on the disagreeing votes of the

two Houses on the amendment of the Senate to the bill (H.R.

2415), an Act to enhance security of United States missions and

personnel overseas, to authorize appropriations for the Department

of State for fiscal year 2000, and for other purposes, having met,

after full and free conference, have agreed to recommend and do

recommend to their respective Houses as follows:

That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as

follows:

In lieu of the matter proposed to be inserted by the Senate

amendment, insert the following:

SECTION 1. ENACTMENT OF BANKRUPTCY REFORM ACT OF 2000.

The provisions of S. 3186 of the 106th Congress, as introduced

on October 11, 2000, are hereby enacted into law.

SEC. 2. PUBLICATION OF ACT.

In publishing this Act in slip form and in the United States

Statutes at Large pursuant to section 112 of title 1, United States

Code, the Archivist of the United States shall include after the date

of approval an appendix setting forth the provisions referred to in

section 1.

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And the Senate agree to the same.

HENRY HYDE,

GEORGE W. GEKAS,

DICK ARMEY,

Managers on the Part of the House.

JESSE HELMS,

RICHARD G. LUGAR,

ROD GRAMS,

JOE BIDEN,

Managers on the Part of the Senate.

(3)

JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF

CONFERENCE

The managers on the part of the House and the Senate at the

conference on the disagreeing votes of the two Houses on the

amendment of the Senate to the bill (H.R. 2415) an Act to enhance

security of United States missions and personnel overseas, to authorize appropriations for the Department of State for fiscal year

2000, and for other purposes, submit the following joint statement

to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report:

The Senate amendment struck out all of the House bill after

the enacting clause and inserted a substitute text.

The House recedes from its disagreement to the amendment of

the Senate with an amendment which is a substitute for the House

bill and the Senate amendment.

The conference agreement would enact the provision of S. 3186

of the 106th Congress, as introduced on October 11, 2000. The text

of that bill follows:

SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

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

Reform Act of 2000’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act is

as follows:

Sec. 100. Short title; references; table of contents.

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 practices.

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.

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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.

TITLE III—DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.

Sec. 302. Discouraging bad faith repeat filings.

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. Residency requirement for homestead exemption.

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. Limitation.

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.

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.

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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.

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.

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.

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 corporation with respect to failed and failing institutions.

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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 Code amendments.

Sec. 908. Recordkeeping requirements.

Sec. 909. Exemptions from contemporaneous execution requirement.

Sec. 910. Damage measure.

Sec. 911. SIPC stay.

Sec. 912. Asset-backed securitizations.

Sec. 913. Effective date; application of amendments.

TITLE X—PROTECTION OF FAMILY FARMERS

Sec. 1001. Permanent reenactment of chapter 12.

Sec. 1002. Debt limit increase.

Sec. 1003. Certain claims owed to governmental units.

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.

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. Discharge under chapter 12.

Sec. 1220. Bankruptcy cases and proceedings.

Sec. 1221. Knowing disregard of bankruptcy law or rule.

Sec. 1222. Transfers made by nonprofit charitable corporations.

Sec. 1223. Protection of valid purchase money security interests.

Sec. 1224. Extensions.

Sec. 1225. Bankruptcy judgeships.

Sec. 1226. Compensating trustees.

Sec. 1227. Amendment to section 362 of title 11, United States Code.

Sec. 1228. Judicial education.

Sec. 1229. Reclamation.

Sec. 1230. Providing requested tax documents to the court.

Sec. 1231. Encouraging creditworthiness.

Sec. 1232. Property no longer subject to redemption.

Sec. 1233. Trustees.

Sec. 1234. Bankruptcy forms.

Sec. 1235. Expedited appeals of bankruptcy cases to courts of appeals.

Sec. 1236. Exemptions.

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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.

Sec. 1310. Enforcement of certain foreign judgments barred.

TITLE XIV—GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1401. Effective date; application of amendments.

TITLE I—NEEDS-BASED BANKRUPTCY

SEC. 101. CONVERSION.

Section 706(c) of title 11, United States Code, is amended by inserting ‘‘or consents to’’ after ‘‘requests’’.

SEC. 102. DISMISSAL OR CONVERSION.

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

is amended—

(1) by striking the section heading and inserting the following:

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

chapter 11 or 13’’;

and

(2) in subsection (b)—

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

(B) in paragraph (1), as redesignated by subparagraph

(A) of this paragraph—

(i) in the first sentence—

(I) by striking ‘‘but not at the request or suggestion of’’ and inserting ‘‘trustee, bankruptcy administrator, or’’;

(II) by inserting ‘‘, or, with the debtor’s consent, convert such a case to a case under chapter

11 or 13 of this title,’’ after ‘‘consumer debts’’; and

(III) by striking ‘‘a substantial abuse’’ and inserting ‘‘an abuse’’; and

(ii) by striking the next to last sentence; and

(C) by adding at the end the following:

‘‘(2)(A)(i) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the

court shall presume abuse exists if the debtor’s current monthly income reduced by the amounts determined under clauses (ii), (iii),

and (iv), and multiplied by 60 is not less than the lesser of—

‘‘(I) 25 percent of the debtor’s nonpriority unsecured claims

in the case, or $6,000, whichever is greater; or

‘‘(II) $10,000.

‘‘(ii)(I) The debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly exVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00007 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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penses for the categories specified as Other Necessary Expenses

issued by the Internal Revenue Service for the area in which the

debtor resides, as in effect on the date of the entry of the order for

relief, for the debtor, the dependents of the debtor, and the spouse

of the debtor in a joint case, if the spouse is not otherwise a dependent. Notwithstanding any other provision of this clause, the monthly

expenses of the debtor shall not include any payments for debts. In

addition, the debtor’s monthly expenses shall include the debtor’s

reasonably necessary expenses incurred to maintain the safety of the

debtor and the family of the debtor from family violence as identified under section 309 of the Family Violence Prevention and Services Act (42 U.S.C. 10408), or other applicable Federal law. The expenses included in the debtor’s monthly expenses described in the

preceding sentence shall be kept confidential by the court. In addition, if it is demonstrated that it is reasonable and necessary, the

debtor’s monthly expenses may also include an additional allowance

for food and clothing of up to 5 percent of the food and clothing categories as specified by the National Standards issued by the Internal Revenue Service.

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

applicable, the continuation of actual expenses paid by the debtor

that are reasonable and necessary for care and support of an elderly, chronically ill, or disabled household member or member of the

debtor’s immediate family (including parents, grandparents, and

siblings of the debtor, the dependents of the debtor, and the spouse

of the debtor in a joint case) who is not a dependent and who is unable to pay for such reasonable and necessary expenses.

‘‘(III) In addition, for a debtor eligible for chapter 13, the debtor’s monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which

the debtor resides, up to an amount of 10 percent of the projected

plan payments, as determined under schedules issued by the Executive Office for United States Trustees.

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

actual expenses for each dependent child under the age of 18 years

up to $1,500 per year per child to attend a private elementary or

secondary school, if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary.

‘‘(iii) The debtor’s average monthly payments on account of secured debts shall be calculated as—

‘‘(I) the sum of—

‘‘(aa) the total of all amounts scheduled as contractually due to secured creditors in each month of the 60

months following the date of the petition; and

‘‘(bb) any additional payments to secured creditors necessary for the debtor, in filing a plan under chapter 13 of

this title, to maintain possession of the debtor’s primary

residence, motor vehicle, or other property necessary for the

support of the debtor and the debtor’s dependents, that

serves as collateral for secured debts; divided by

‘‘(II) 60.

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‘‘(iv) The debtor’s expenses for payment of all priority claims

(including priority child support and alimony claims) shall be calculated as—

‘‘(I) the total amount of debts entitled to priority; divided by

‘‘(II) 60.

‘‘(B)(i) In any proceeding brought under this subsection, the presumption of abuse may only be rebutted by demonstrating special

circumstances that justify additional expenses or adjustments of

current monthly income for which there is no reasonable alternative.

‘‘(ii) In order to establish special circumstances, the debtor shall

be required to—

‘‘(I) itemize each additional expense or adjustment of income; and

‘‘(II) provide—

‘‘(aa) documentation for such expense or adjustment to

income; and

‘‘(bb) a detailed explanation of the special circumstances that make such expenses or adjustment to income necessary and reasonable.

‘‘(iii) The debtor shall attest under oath to the accuracy of any

information provided to demonstrate that additional expenses or adjustments to income are required.

‘‘(iv) The presumption of abuse may only be rebutted if the additional expenses or adjustments to income referred to in clause (i)

cause the product of the debtor’s current monthly income reduced by

the amounts determined under clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be less than the lesser of—

‘‘(I) 25 percent of the debtor’s nonpriority unsecured claims,

or $6,000, whichever is greater; or

‘‘(II) $10,000.

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

required under section 521, the debtor shall include a statement of

the debtor’s current monthly income, and the calculations that determine whether a presumption arises under subparagraph (A)(i),

that shows how each such amount is calculated.

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

of relief would be an abuse of the provisions of this chapter in a

case in which the presumption in subparagraph (A)(i) of such paragraph does not apply or has been rebutted, the court shall

consider—

‘‘(A) whether the debtor filed the petition in bad faith; or

‘‘(B) the totality of the circumstances (including whether the

debtor seeks to reject a personal services contract and the financial need for such rejection as sought by the debtor) of the debtor’s financial situation demonstrates abuse.

‘‘(4)(A) The court shall order the counsel for the debtor to reimburse the trustee for all reasonable costs in prosecuting a motion

brought under section 707(b), including reasonable attorneys’ fees,

if—

‘‘(i) a trustee appointed under section 586(a)(1) of title 28

or from a panel of private trustees maintained by the bankruptcy administrator brings a motion for dismissal or conversion under this subsection; and

‘‘(ii) the court—

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‘‘(I) grants that motion; and

‘‘(II) finds that the action of the counsel for the debtor

in filing under this chapter violated rule 9011 of the Federal Rules of Bankruptcy Procedure.

‘‘(B) If the court finds that the attorney for the debtor violated

rule 9011 of the Federal Rules of Bankruptcy Procedure, at a minimum, the court shall order—

‘‘(i) the assessment of an appropriate civil penalty against

the counsel for the debtor; and

‘‘(ii) the payment of the civil penalty to the trustee, the

United States trustee, or the bankruptcy administrator.

‘‘(C) In the case of a petition, pleading, or written motion, the

signature of an attorney shall constitute a certification that the attorney has—

‘‘(i) performed a reasonable investigation into the circumstances that gave rise to the petition, pleading, or written

motion; and

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

motion—

‘‘(I) is well grounded in fact; and

‘‘(II) is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing

law and does not constitute an abuse under paragraph (1).

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

a certification that the attorney has no knowledge after an inquiry

that the information in the schedules filed with such petition is incorrect.

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

paragraph (6), the court may award a debtor all reasonable costs

(including reasonable attorneys’ fees) in contesting a motion brought

by a party in interest (other than a trustee, United States trustee,

or bankruptcy administrator) under this subsection if—

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

‘‘(ii) the court finds that—

‘‘(I) the position of the party that brought the motion

violated rule 9011 of the Federal Rules of Bankruptcy Procedure; or

‘‘(II) the party brought the motion solely for the purpose

of coercing a debtor into waiving a right guaranteed to the

debtor under this title.

‘‘(B) A small business that has a claim of an aggregate amount

less than $1,000 shall not be subject to subparagraph (A)(ii)(I).

‘‘(C) For purposes of this paragraph—

‘‘(i) the term ‘small business’ means an unincorporated

business, partnership, corporation, association, or organization

that—

‘‘(I) has less than 25 full-time employees as determined

on the date the motion is filed; and

‘‘(II) is engaged in commercial or business activity; and

‘‘(ii) the number of employees of a wholly owned subsidiary

of a corporation includes the employees of—

‘‘(I) a parent corporation; and

‘‘(II) any other subsidiary corporation of the parent corporation.

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‘‘(6) Only the judge, United States trustee, or bankruptcy administrator may bring a motion under section 707(b), if the current

monthly income of the debtor, or in a joint case, the debtor and the

debtor’s spouse, as of the date of the order for relief, when multiplied by 12, is equal to or less than—

‘‘(A) in the case of a debtor in a household of 1 person, the

median family income of the applicable State for 1 earner last

reported by the Bureau of the Census;

‘‘(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census; or

‘‘(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable

State for a family of 4 or fewer individuals last reported by the

Bureau of the Census, plus $525 per month for each individual

in excess of 4.

‘‘(7) No judge, United States trustee, panel trustee, bankruptcy

administrator or other party in interest may bring a motion under

paragraph (2), if the current monthly income of the debtor and the

debtor’s spouse combined, as of the date of the order for relief when

multiplied by 12, is equal to or less than—

‘‘(A) in the case of a debtor in a household of 1 person, the

median family income of the applicable State for 1 earner last

reported by the Bureau of the Census;

‘‘(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census; or

‘‘(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable

State for a family of 4 or fewer individuals last reported by the

Bureau of the Census, plus $525 per month for each individual

in excess of 4.’’.

(b) DEFINITION.—Section 101 of title 11, United States Code, is

amended by inserting after paragraph (10) the following:

‘‘(10A) ‘current monthly income’—

‘‘(A) means the average monthly income from all

sources which the debtor, or in a joint case, the debtor and

the debtor’s spouse, receive without regard to whether the

income is taxable income, derived during the 6-month period preceding the date of determination; and

‘‘(B) includes any amount paid by any entity other than

the debtor (or, in a joint case, the debtor and the debtor’s

spouse), on a regular basis to the household expenses of the

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

debtor’s spouse if not otherwise a dependent), but excludes

benefits received under the Social Security Act and payments to victims of war crimes or crimes against humanity

on account of their status as victims of such crimes;’’.

(c) UNITED STATES TRUSTEE AND BANKRUPTCY ADMINISTRATOR

DUTIES.—Section 704 of title 11, United States Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘The trustee shall—’’; and

(2) by adding at the end the following:

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‘‘(b)(1) With respect to an individual debtor under this

chapter—

‘‘(A) the United States trustee or bankruptcy administrator

shall review all materials filed by the debtor and, not later than

10 days after the date of the first meeting of creditors, file with

the court a statement as to whether the debtor’s case would be

presumed to be an abuse under section 707(b); and

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

subparagraph (A), the court shall provide a copy of the statement to all creditors.

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

shall, not later than 30 days after the date of filing a statement

under paragraph (1), either file a motion to dismiss or convert

under section 707(b) or file a statement setting forth the reasons the

United States trustee or bankruptcy administrator does not believe

that such a motion would be appropriate, if the United States trustee or bankruptcy administrator determines that the debtor’s case

should be presumed to be an abuse under section 707(b) and the

product of the debtor’s current monthly income, multiplied by 12 is

not less than—

‘‘(A) in the case of a debtor in a household of 1 person, the

median family income of the applicable State for 1 earner last

reported by the Bureau of the Census; or

‘‘(B) in the case of a debtor in a household of 2 or more individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census.

‘‘(3) In any case in which a motion to dismiss or convert, or a

statement is required to be filed by this subsection, the United

States trustee or bankruptcy administrator may decline to file a motion to dismiss or convert pursuant to section 704(b)(2) if the product of the debtor’s current monthly income multiplied by 12 exceeds

100 percent, but does not exceed 150 percent of—

‘‘(A)(i) in the case of a debtor in a household of 1 person,

the median family income of the applicable State for 1 earner

last reported by the Bureau of the Census; or

‘‘(ii) in the case of a debtor in a household of 2 or more individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census; and

‘‘(B) the product of the debtor’s current monthly income, reduced by the amounts determined under section 707(b)(2)(A)(ii)

(except for the amount calculated under the other necessary expenses standard issued by the Internal Revenue Service) and

clauses (iii) and (iv) of section 707(b)(2)(A), multiplied by 60 is

less than the lesser of—

‘‘(i) 25 percent of the debtor’s nonpriority unsecured

claims in the case or $6,000, whichever is greater; or

‘‘(ii) $10,000.’’.

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

amended by adding at the end the following:

‘‘(d) In an individual case under chapter 7 in which the presumption of abuse is triggered under section 707(b), the clerk shall

give written notice to all creditors not later than 10 days after the

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date of the filing of the petition that the presumption of abuse has

been triggered.’’.

(e) NONLIMITATION OF INFORMATION.—Nothing in this title

shall limit the ability of a creditor to provide information to a judge

(except for information communicated ex parte, unless otherwise

permitted by applicable law), United States trustee, bankruptcy administrator or trustee.

(f) DISMISSAL FOR CERTAIN CRIMES.—Section 707 of title 11,

United States Code, as amended by this section, is amended by adding at the end the following:

‘‘(c)(1) In this subsection—

‘‘(A) the term ‘crime of violence’ has the meaning given that

term in section 16 of title 18; and

‘‘(B) the term ‘drug trafficking crime’ has the meaning given

that term in section 924(c)(2) of title 18.

‘‘(2) Except as provided in paragraph (3), after notice and a

hearing, the court, on a motion by the victim of a crime of violence

or a drug trafficking crime, may when it is in the best interest of

the victims dismiss a voluntary case filed by an individual debtor

under this chapter if that individual was convicted of that crime.

‘‘(3) The court may not dismiss a case under paragraph (2) if

the debtor establishes by a preponderance of the evidence that the

filing of a case under this chapter is necessary to satisfy a claim for

a domestic support obligation.’’.

(g) CONFIRMATION OF PLAN.—Section 1325(a) of title 11, United

States Code, is amended—

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

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

a semicolon; and

(3) by adding at the end the following:

‘‘(7) the action of the debtor in filing the petition was in

good faith;’’.

(h) APPLICABILITY OF MEANS TEST TO CHAPTER 13.—Section

1325(b) of title 11, United States Code, is amended—

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

(2) by striking paragraph (2) and inserting the following:

‘‘(2) For purposes of this subsection, the term ‘disposable income’ means current monthly income received by the debtor

(other than child support payments, foster care payments, or

disability payments for a dependent child made in accordance

with applicable nonbankruptcy law to the extent reasonably

necessary to be expended for such child) less amounts reasonably necessary to be expended—

‘‘(A) for the maintenance or support of the debtor or a

dependent of the debtor or for a domestic support obligation

that first becomes payable after the date the petition is filed

and for charitable contributions (that meet the definition of

‘charitable contribution’ under section 548(d)(3) to a qualified religious or charitable entity or organization (as that

term is defined in section 548(d)(4)) in an amount not to exceed 15 percent of gross income of the debtor for the year

in which the contributions are made; and

14

‘‘(B) if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business.

‘‘(3) Amounts reasonably necessary to be expended under

paragraph (2) shall be determined in accordance with subparagraphs (A) and (B) of section 707(b)(2), if the debtor has current

monthly income, when multiplied by 12, greater than—

‘‘(A) in the case of a debtor in a household of 1 person,

the median family income of the applicable State for 1

earner last reported by the Bureau of the Census;

‘‘(B) in the case of a debtor in a household of 2, 3, or

4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals last reported by the Bureau of the Census; or

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

4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus $525 per month

for each individual in excess of 4.’’.

(i) CLERICAL AMENDMENT.—The table of sections for chapter 7

of title 11, United States Code, is amended by striking the item relating to section 707 and inserting the following:

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

SEC. 103. SENSE OF CONGRESS AND STUDY.

(a) SENSE OF CONGRESS.—It is the sense of Congress that the

Secretary of the Treasury has the authority to alter the Internal

Revenue Service standards established to set guidelines for repayment plans as needed to accommodate their use under section

707(b) of title 11, United States Code.

(b) STUDY.—

(1) IN GENERAL.—Not later than 2 years after the date of

enactment of this Act, the Director of the Executive Office for

United States Trustees shall submit a report to the Committee

on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives containing the findings of

the Director regarding the utilization of Internal Revenue Service standards for determining—

(A) the current monthly expenses of a debtor under section 707(b) of title 11, United States Code; and

(B) the impact that the application of such standards

has had on debtors and on the bankruptcy courts.

(2) RECOMMENDATION.—The report under paragraph (1)

may include recommendations for amendments to title 11,

United States Code, that are consistent with the findings of the

Director under paragraph (1).

SEC. 104. NOTICE OF ALTERNATIVES.

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

read as follows:

‘‘(b) Before the commencement of a case under this title by an

individual whose debts are primarily consumer debts, the clerk

shall give to such individual written notice containing—

‘‘(1) a brief description of—

15

‘‘(A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of proceeding under each of those

chapters; and

‘‘(B) the types of services available from credit counseling agencies; and

‘‘(2) statements specifying that—

‘‘(A) a person who knowingly and fraudulently conceals

assets or makes a false oath or statement under penalty of

perjury in connection with a bankruptcy case shall be subject to fine, imprisonment, or both; and

‘‘(B) all information supplied by a debtor in connection

with a bankruptcy case is subject to examination by the Attorney General.’’.

SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.

(a) DEVELOPMENT OF FINANCIAL MANAGEMENT AND TRAINING

CURRICULUM AND MATERIALS.—The Director of the Executive Office

for United States Trustees (in this section referred to as the ‘‘Director’’) shall consult with a wide range of individuals who are experts

in the field of debtor education, including trustees who are appointed under chapter 13 of title 11, United States Code, and who

operate financial management education programs for debtors, and

shall develop a financial management training curriculum and materials that can be used to educate individual debtors on how to better manage their finances.

(b) TEST.—

(1) SELECTION OF DISTRICTS.—The Director shall select 6

judicial districts of the United States in which to test the effectiveness of the financial management training curriculum and

materials developed under subsection (a).

(2) USE.—For an 18-month period beginning not later than

270 days after the date of enactment of this Act, such curriculum and materials shall be, for the 6 judicial districts selected under paragraph (1), used as the instructional course

concerning personal financial management for purposes of section 111 of title 11, United States Code.

(c) EVALUATION.—

(1) IN GENERAL.—During the 18-month period referred to in

subsection (b), the Director shall evaluate the effectiveness of—

(A) the financial management training curriculum and

materials developed under subsection (a); and

(B) a sample of existing consumer education programs

such as those described in the Report of the National Bankruptcy Review Commission (October 20, 1997) that are representative of consumer education programs carried out by

the credit industry, by trustees serving under chapter 13 of

title 11, United States Code, and by consumer counseling

groups.

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

such evaluation, the Director shall submit a report to the

Speaker of the House of Representatives and the President pro

tempore of the Senate, for referral to the appropriate committees

of the Congress, containing the findings of the Director regardVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00015 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
16

ing the effectiveness of such curriculum, such materials, and

such programs and their costs.

SEC. 106. CREDIT COUNSELING.

(a) WHO MAY BE A DEBTOR.—Section 109 of title 11, United

States Code, is amended by adding at the end the following:

‘‘(h)(1) Subject to paragraphs (2) and (3), and notwithstanding

any other provision of this section, an individual may not be a debtor under this title unless that individual has, during the 180-day

period preceding the date of filing of the petition of that individual,

received from an approved nonprofit budget and credit counseling

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

(including a briefing conducted by telephone or on the Internet) that

outlined the opportunities for available credit counseling and assisted that individual in performing a related budget analysis.

‘‘(2)(A) Paragraph (1) shall not apply with respect to a debtor

who resides in a district for which the United States trustee or

bankruptcy administrator of the bankruptcy court of that district

determines that the approved nonprofit budget and credit counseling agencies for that district are not reasonably able to provide

adequate services to the additional individuals who would otherwise

seek credit counseling from that agency by reason of the requirements of paragraph (1).

‘‘(B) Each United States trustee or bankruptcy administrator

that makes a determination described in subparagraph (A) shall review that determination not later than 1 year after the date of that

determination, and not less frequently than every year thereafter.

Notwithstanding the preceding sentence, a nonprofit budget and

credit counseling service may be disapproved by the United States

trustee or bankruptcy administrator at any time.

‘‘(3)(A) Subject to subparagraph (B), the requirements of paragraph (1) shall not apply with respect to a debtor who submits to

the court a certification that—

‘‘(i) describes exigent circumstances that merit a waiver of

the requirements of paragraph (1);

‘‘(ii) states that the debtor requested credit counseling services from an approved nonprofit budget and credit counseling

agency, but was unable to obtain the services referred to in

paragraph (1) during the 5-day period beginning on the date on

which the debtor made that request; and

‘‘(iii) is satisfactory to the court.

‘‘(B) With respect to a debtor, an exemption under subparagraph (A) shall cease to apply to that debtor on the date on which

the debtor meets the requirements of paragraph (1), but in no case

may the exemption apply to that debtor after the date that is 30

days after the debtor files a petition, except that the court, for cause,

may order an additional 15 days.’’.

(b) CHAPTER 7 DISCHARGE.—Section 727(a) of title 11, United

States Code, is amended—

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

(2) in paragraph (10), by striking the period and inserting

‘‘; or’’; and

(3) by adding at the end the following:

17

‘‘(11) after the filing of the petition, the debtor failed to

complete an instructional course concerning personal financial

management described in section 111.

‘‘(12)(A) Paragraph (11) shall not apply with respect to a

debtor who resides in a district for which the United States

trustee or bankruptcy administrator of that district determines

that the approved instructional courses are not adequate to

service the additional individuals required to complete such instructional courses under this section.

‘‘(B) Each United States trustee or bankruptcy administrator that makes a determination described in subparagraph

(A) shall review that determination not later than 1 year after

the date of that determination, and not less frequently than

every year thereafter.’’.

(c) CHAPTER 13 DISCHARGE.—Section 1328 of title 11, United

States Code, is amended by adding at the end the following:

‘‘(g) The court shall not grant a discharge under this section to

a debtor, unless after filing a petition the debtor has completed an

instructional course concerning personal financial management described in section 111.

‘‘(h) Subsection (g) shall not apply with respect to a debtor who

resides in a district for which the United States trustee or bankruptcy administrator of the bankruptcy court of that district determines that the approved instructional courses are not adequate to

service the additional individuals who would be required to complete the instructional course by reason of the requirements of this

section.

‘‘(i) Each United States trustee or bankruptcy administrator

that makes a determination described in subsection (h) shall review

that determination not later than 1 year after the date of that determination, and not less frequently than every year thereafter.’’.

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

Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘The debtor shall—’’; and

(2) by adding at the end the following:

‘‘(b) In addition to the requirements under subsection (a), an individual debtor shall file with the court—

‘‘(1) a certificate from the approved nonprofit budget and

credit counseling agency that provided the debtor services under

section 109(h) describing the services provided to the debtor;

and

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

under section 109(h) through the approved nonprofit budget

and credit counseling agency referred to in paragraph (1).’’.

(e) GENERAL PROVISIONS.—

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

is amended by adding at the end the following:

‘‘§ 111. Credit counseling services; financial management instructional courses

‘‘(a) The clerk of each district shall maintain a publicly available list of—

‘‘(1) credit counseling agencies that provide 1 or more programs described in section 109(h) currently approved by the

18

United States trustee or the bankruptcy administrator for the

district, as applicable; and

‘‘(2) instructional courses concerning personal financial

management currently approved by the United States trustee or

the bankruptcy administrator for the district, as applicable.

‘‘(b) The United States trustee or bankruptcy administrator

shall only approve a credit counseling agency or instructional course

concerning personal financial management as follows:

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

shall have thoroughly reviewed the qualifications of the credit

counseling agency or of the provider of the instructional course

under the standards set forth in this section, and the programs

or instructional courses which will be offered by such agency or

provider, and may require an agency or provider of an instructional course which has sought approval to provide information

with respect to such review.

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

shall have determined that the credit counseling agency or

course of instruction fully satisfies the applicable standards set

forth in this section.

‘‘(3) When an agency or course of instruction is initially approved, such approval shall be for a probationary period not to

exceed 6 months. An agency or course of instruction is initially

approved if it did not appear on the approved list for the district under subsection (a) immediately prior to approval.

‘‘(4) At the conclusion of the probationary period under

paragraph (3), the United States trustee or bankruptcy administrator may only approve for an additional 1-year period, and

for successive 1-year periods thereafter, any agency or course of

instruction which has demonstrated during the probationary or

subsequent period that such agency or course of instruction—

‘‘(A) has met the standards set forth under this section

during such period; and

‘‘(B) can satisfy such standards in the future.

‘‘(5) Not later than 30 days after any final decision under

paragraph (4), that occurs either after the expiration of the initial probationary period, or after any 2-year period thereafter,

an interested person may seek judicial review of such decision

in the appropriate United States District Court.

‘‘(c)(1) The United States trustee or bankruptcy administrator

shall only approve a credit counseling agency that demonstrates

that it will provide qualified counselors, maintain adequate provision for safekeeping and payment of client funds, provide adequate

counseling with respect to client credit problems, and deal responsibly and effectively with other matters as relate to the quality, effectiveness, and financial security of such programs.

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

administrator, a credit counseling agency shall, at a minimum—

‘‘(A) be a nonprofit budget and credit counseling agency, the

majority of the board of directors of which—

‘‘(i) are not employed by the agency; and

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

from the outcome of a credit counseling session;

19

‘‘(B) if a fee is charged for counseling services, charge a reasonable fee, and provide services without regard to ability to

pay the fee;

‘‘(C) provide for safekeeping and payment of client funds,

including an annual audit of the trust accounts and appropriate employee bonding;

‘‘(D) provide full disclosures to clients, including funding

sources, counselor qualifications, possible impact on credit reports, and any costs of such program that will be paid by the

debtor and how such costs will be paid;

‘‘(E) provide adequate counseling with respect to client credit problems that includes an analysis of their current situation,

what brought them to that financial status, and how they can

develop a plan to handle the problem without incurring negative amortization of their debts;

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

or bonuses based on the counseling session outcome, and who

have adequate experience, and have been adequately trained to

provide counseling services to individuals in financial difficulty, including the matters described in subparagraph (E);

‘‘(G) demonstrate adequate experience and background in

providing credit counseling; and

‘‘(H) have adequate financial resources to provide continuing support services for budgeting plans over the life of any

repayment plan.

‘‘(d) The United States trustee or bankruptcy administrator

shall only approve an instructional course concerning personal financial management—

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

(b)(3) if the course will provide at a minimum—

‘‘(A) trained personnel with adequate experience and

training in providing effective instruction and services;

‘‘(B) learning materials and teaching methodologies designed to assist debtors in understanding personal financial management and that are consistent with stated objectives directly related to the goals of such course of instruction;

‘‘(C) adequate facilities situated in reasonably convenient locations at which such course of instruction is offered,

except that such facilities may include the provision of such

course of instruction or program by telephone or through

the Internet, if the course of instruction or program is effective; and

‘‘(D) the preparation and retention of reasonable

records (which shall include the debtor’s bankruptcy case

number) to permit evaluation of the effectiveness of such

course of instruction or program, including any evaluation

of satisfaction of course of instruction or program requirements for each debtor attending such course of instruction

or program, which shall be available for inspection and

evaluation by the Executive Office for United States Trustees, the United States trustee, bankruptcy administrator, or

chief bankruptcy judge for the district in which such course

of instruction or program is offered; and

20

‘‘(2) for any 1-year period if the provider thereof has demonstrated that the course meets the standards of paragraph (1)

and, in addition—

‘‘(A) has been effective in assisting a substantial number of debtors to understand personal financial management; and

‘‘(B) is otherwise likely to increase substantially debtor

understanding of personal financial management.

‘‘(e) The District Court may, at any time, investigate the qualifications of a credit counseling agency referred to in subsection (a),

and request production of documents to ensure the integrity and effectiveness of such credit counseling agencies. The District Court

may, at any time, remove from the approved list under subsection

(a) a credit counseling agency upon finding such agency does not

meet the qualifications of subsection (b).

‘‘(f) The United States trustee or bankruptcy administrator shall

notify the clerk that a credit counseling agency or an instructional

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

it from the list maintained under subsection (a).

‘‘(g)(1) No credit counseling service may provide to a credit reporting agency information concerning whether an individual debtor has received or sought instruction concerning personal financial

management from the credit counseling service.

‘‘(2) A credit counseling service that willfully or negligently fails

to comply with any requirement under this title with respect to a

debtor shall be liable for damages in an amount equal to the sum

of—

‘‘(A) any actual damages sustained by the debtor as a result

of the violation; and

‘‘(B) any court costs or reasonable attorneys’ fees (as determined by the court) incurred in an action to recover those damages.’’.

(2) CLERICAL AMENDMENT.—The table of sections for chapter 1 of title 11, United States Code, is amended by adding at

the end the following:

‘‘111. Credit counseling services; financial management instructional courses.’’.

(f) LIMITATION.—Section 362 of title 11, United States Code, is

amended by adding at the end the following:

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

due to the creation of a debt repayment plan, for purposes of subsection (c)(3), any subsequent case commenced by the debtor under

any such chapter shall not be presumed to be filed not in good faith.

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

order under subsection (c) confirming that the automatic stay has

been terminated.’’.

SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY EXPENSES.

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

as amended by this Act, the Director of the Executive Office for

United States Trustees shall, not later than 180 days after the date

of enactment of this Act, issue schedules of reasonable and necessary

administrative expenses of administering a chapter 13 plan for each

judicial district of the United States.

21

TITLE II—ENHANCED CONSUMER

PROTECTION

Subtitle A—Penalties for Abusive Creditor

Practices

SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.

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

States Code, is amended by adding at the end the following:

‘‘(k)(1) The court, on the motion of the debtor and after a hearing, may reduce a claim filed under this section based in whole on

unsecured consumer debts by not more than 20 percent of the claim,

if—

‘‘(A) the claim was filed by a creditor who unreasonably refused to negotiate a reasonable alternative repayment schedule

proposed by an approved credit counseling agency described in

section 111 acting on behalf of the debtor;

‘‘(B) the offer of the debtor under subparagraph (A)—

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

petition; and

‘‘(ii) provided for payment of at least 60 percent of the

amount of the debt over a period not to exceed the repayment period of the loan, or a reasonable extension thereof;

and

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

schedule is nondischargeable.

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

convincing evidence, that—

‘‘(A) the creditor unreasonably refused to consider the debtor’s proposal; and

‘‘(B) the proposed alternative repayment schedule was made

prior to expiration of the 60-day period specified in paragraph

(1)(B)(i).’’.

(b) LIMITATION ON AVOIDABILITY.—Section 547 of title 11,

United States Code, is amended by adding at the end the following:

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

made as a part of an alternative repayment plan between the debtor

and any creditor of the debtor created by an approved credit counseling agency.’’.

SEC. 202. EFFECT OF DISCHARGE.

Section 524 of title 11, United States Code, is amended by adding at the end the following:

‘‘(i) The willful failure of a creditor to credit payments received

under a plan confirmed under this title (including a plan of reorganization confirmed under chapter 11 of this title), unless the plan

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

required to be made under the plan in the manner required by the

plan (including crediting the amounts required under the plan),

shall constitute a violation of an injunction under subsection (a)(2)

if the act of the creditor to collect and failure to credit payments in

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

22

‘‘(j) Subsection (a)(2) does not operate as an injunction against

an act by a creditor that is the holder of a secured claim, if—

‘‘(1) such creditor retains a security interest in real property

that is the principal residence of the debtor;

‘‘(2) such act is in the ordinary course of business between

the creditor and the debtor; and

‘‘(3) such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit

of in rem relief to enforce the lien.’’.

SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION PRACTICES.

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

as amended by this Act, is amended—

(1) in subsection (c), by striking paragraph (2) and inserting the following:

‘‘(2) the debtor received the disclosures described in subsection (k) at or before the time at which the debtor signed the

agreement;’’;

(2) by adding at the end the following:

‘‘(k)(1) The disclosures required under subsection (c)(2) shall

consist of the disclosure statement described in paragraph (3), completed as required in that paragraph, together with the agreement,

statement, declaration, motion and order described, respectively, in

paragraphs (4) through (8), and shall be the only disclosures required in connection with the reaffirmation.

‘‘(2) Disclosures made under paragraph (1) shall be made clearly and conspicuously and in writing. The terms ‘Amount Reaffirmed’ and ‘Annual Percentage Rate’ shall be disclosed more conspicuously than other terms, data or information provided in connection with this disclosure, except that the phrases ‘Before agreeing

to reaffirm a debt, review these important disclosures’ and ‘Summary of Reaffirmation Agreement’ may be equally conspicuous. Disclosures may be made in a different order and may use terminology

different from that set forth in paragraphs (2) through (8), except

that the terms ‘Amount Reaffirmed’ and ‘Annual Percentage Rate’

must be used where indicated.

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

shall consist of the following:

‘‘(A) The statement: ‘Part A: Before agreeing to reaffirm a

debt, review these important disclosures:’;

‘‘(B) Under the heading ‘Summary of Reaffirmation Agreement’, the statement: ‘This Summary is made pursuant to the

requirements of the Bankruptcy Code’;

‘‘(C) The ‘Amount Reaffirmed’, using that term, which shall

be—

‘‘(i) the total amount which the debtor agrees to reaffirm, and

‘‘(ii) the total of any other fees or cost accrued as of the

date of the disclosure statement.

‘‘(D) In conjunction with the disclosure of the ‘Amount Reaffirmed’, the statements—

‘‘(i) ‘The amount of debt you have agreed to reaffirm’;

and

23

‘‘(ii) ‘Your credit agreement may obligate you to pay additional amounts which may come due after the date of this

disclosure. Consult your credit agreement.’.

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

shall be disclosed as—

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

end credit as defined under the Truth in Lending Act (15

U.S.C. 1601 et seq.), then—

‘‘(I) the annual percentage rate determined under

paragraphs (5) and (6) of section 127(b) of the Truth

in Lending Act (15 U.S.C. 1637(b)(5) and (6)), as applicable, as disclosed to the debtor in the most recent periodic statement prior to the agreement or, if no such

periodic statement has been provided the debtor during

the prior 6 months, the annual percentage rate as it

would have been so disclosed at the time the disclosure

statement is given the debtor, or to the extent this annual percentage rate is not readily available or not applicable, then

‘‘(II) the simple interest rate applicable to the

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest

rate applicable to each such balance, identifying the

amount of each such balance included in the amount

reaffirmed, or

‘‘(III) if the entity making the disclosure elects, to

disclose the annual percentage rate under subclause (I)

and the simple interest rate under subclause (II);

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

closed end credit as defined under the Truth in Lending

Act (15 U.S.C. 1601 et seq.), then—

‘‘(I) the annual percentage rate under section

128(a)(4) of the Truth in Lending Act (15 U.S.C.

1638(a)(4)), as disclosed to the debtor in the most recent disclosure statement given the debtor prior to the

reaffirmation agreement with respect to the debt, or, if

no such disclosure statement was provided the debtor,

the annual percentage rate as it would have been so

disclosed at the time the disclosure statement is given

the debtor, or to the extent this annual percentage rate

is not readily available or not applicable, then

‘‘(II) the simple interest rate applicable to the

amount reaffirmed as of the date the disclosure statement is given the debtor, or if different simple interest

rates apply to different balances, the simple interest

rate applicable to each such balance, identifying the

amount of such balance included in the amount reaffirmed, or

‘‘(III) if the entity making the disclosure elects, to

disclose the annual percentage rate under (I) and the

simple interest rate under (II).

‘‘(F) If the underlying debt transaction was disclosed as a

variable rate transaction on the most recent disclosure given

24

under the Truth in Lending Act (15 U.S.C. 1601 et seq.), by

stating ‘The interest rate on your loan may be a variable interest rate which changes from time to time, so that the annual

percentage rate disclosed here may be higher or lower.’.

‘‘(G) If the debt is secured by a security interest which has

not been waived in whole or in part or determined to be void

by a final order of the court at the time of the disclosure, by disclosing that a security interest or lien in goods or property is

asserted over some or all of the obligations you are reaffirming

and listing the items and their original purchase price that are

subject to the asserted security interest, or if not a purchasemoney security interest then listing by items or types and the

original amount of the loan.

‘‘(H) At the election of the creditor, a statement of the repayment schedule using 1 or a combination of the following—

‘‘(i) by making the statement: ‘Your first payment in the

amount of $lll is due on lll but the future payment

amount may be different. Consult your reaffirmation or

credit agreement, as applicable.’, and stating the amount of

the first payment and the due date of that payment in the

places provided;

‘‘(ii) by making the statement: ‘Your payment schedule

will be:’, and describing the repayment schedule with the

number, amount and due dates or period of payments

scheduled to repay the obligations reaffirmed to the extent

then known by the disclosing party; or

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

with reasonable specificity to the extent then known by the

disclosing party.

‘‘(I) The following statement: ‘Note: When this disclosure refers to what a creditor ‘may’ do, it does not use the word ‘may’

to give the creditor specific permission. The word ‘may’ is used

to tell you what might occur if the law permits the creditor to

take the action. If you have questions about your reaffirmation

or what the law requires, talk to the attorney who helped you

negotiate this agreement. If you don’t have an attorney helping

you, the judge will explain the effect of your reaffirmation when

the reaffirmation hearing is held.’.

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

‘‘ ‘Reaffirming a debt is a serious financial decision. The law requires you to take certain steps to make sure the decision is in your

best interest. If these steps are not completed, the reaffirmation

agreement is not effective, even though you have signed it.

‘‘ ‘1. Read the disclosures in this Part A carefully. Consider

the decision to reaffirm carefully. Then, if you want to reaffirm,

sign the reaffirmation agreement in Part B (or you may use a

separate agreement you and your creditor agree on).

‘‘ ‘2. Complete and sign Part D and be sure you can afford

to make the payments you are agreeing to make and have received a copy of the disclosure statement and a completed and

signed reaffirmation agreement.

‘‘ ‘3. If you were represented by an attorney during the negotiation of the reaffirmation agreement, the attorney must have

signed the certification in Part C.

25

‘‘ ‘4. If you were not represented by an attorney during the

negotiation of the reaffirmation agreement, you must have completed and signed Part E.

‘‘ ‘5. The original of this disclosure must be filed with the

court by you or your creditor. If a separate reaffirmation agreement (other than the one in Part B) has been signed, it must

be attached.

‘‘ ‘6. If you were represented by an attorney during the negotiation of the reaffirmation agreement, your reaffirmation agreement becomes effective upon filing with the court unless the reaffirmation is presumed to be an undue hardship as explained

in Part D.

‘‘ ‘7. If you were not represented by an attorney during the

negotiation of the reaffirmation agreement, it will not be effective unless the court approves it. The court will notify you of the

hearing on your reaffirmation agreement. You must attend this

hearing in bankruptcy court where the judge will review your

agreement. The bankruptcy court must approve the agreement

as consistent with your best interests, except that no court approval is required if the agreement is for a consumer debt secured by a mortgage, deed of trust, security deed or other lien

on your real property, like your home.

‘‘ ‘Your right to rescind a reaffirmation. You may rescind (cancel) your reaffirmation at any time before the bankruptcy court enters a discharge order or within 60 days after the agreement is filed

with the court, whichever is longer. To rescind or cancel, you must

notify the creditor that the agreement is canceled.

‘‘ ‘What are your obligations if you reaffirm the debt? A reaffirmed debt remains your personal legal obligation. It is not discharged in your bankruptcy. That means that if you default on your

reaffirmed debt after your bankruptcy is over, your creditor may be

able to take your property or your wages. Otherwise, your obligations will be determined by the reaffirmation agreement which may

have changed the terms of the original agreement. For example, if

you are reaffirming an open end credit agreement, the creditor may

be permitted by that agreement or applicable law to change the

terms of the agreement in the future under certain conditions.

‘‘ ‘Are you required to enter into a reaffirmation agreement by

any law? No, you are not required to reaffirm a debt by any law.

Only agree to reaffirm a debt if it is in your best interest. Be sure

you can afford the payments you agree to make.

‘‘ ‘What if your creditor has a security interest or lien? Your

bankruptcy discharge does not eliminate any lien on your property.

A ‘‘lien’’ is often referred to as a security interest, deed of trust,

mortgage or security deed. Even if you do not reaffirm and your personal liability on the debt is discharged, because of the lien your

creditor may still have the right to take the security property if you

do not pay the debt or default on it. If the lien is on an item of personal property that is exempt under your State’s law or that the

trustee has abandoned, you may be able to redeem the item rather

than reaffirm the debt. To redeem, you make a single payment to

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

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

26

‘‘(ii) In the case of a reaffirmation under subsection (m)(2),

numbered paragraph 6 in the disclosures required by clause (i)

of this subparagraph shall read as follows:

‘‘ ‘6. If you were represented by an attorney during the negotiation of the reaffirmation agreement, your reaffirmation agreement becomes effective upon filing with the court.’.

‘‘(4) The form of reaffirmation agreement required under this

paragraph shall consist of the following:

‘‘ ‘Part B: Reaffirmation Agreement. I/we agree to reaffirm the

obligations arising under the credit agreement described below.

‘‘ ‘Brief description of credit agreement:

‘‘ ‘Description of any changes to the credit agreement made as

part of this reaffirmation agreement:

‘‘ ‘Signature: Date:

‘‘ ‘Borrower:

‘‘ ‘Co-borrower, if also reaffirming:

‘‘ ‘Accepted by creditor:

‘‘ ‘Date of creditor acceptance:’.

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

‘‘ ‘Part C: Certification by Debtor’s Attorney (If Any).

‘‘ ‘I hereby certify that (1) this agreement represents a fully informed and voluntary agreement by the debtor(s); (2) this agreement

does not impose an undue hardship on the debtor or any dependent

of the debtor; and (3) I have fully advised the debtor of the legal

effect and consequences of this agreement and any default under

this agreement.

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

‘‘(B) In the case of reaffirmations in which a presumption of

undue hardship has been established, the certification shall state

that in the opinion of the attorney, the debtor is able to make the

payment.

‘‘(C) In the case of a reaffirmation agreement under subsection

(m)(2), subparagraph (B) is not applicable.

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

which the debtor shall sign and date prior to filing with the court,

shall consist of the following:

‘‘ ‘Part D: Debtor’s Statement in Support of Reaffirmation Agreement.

‘‘ ‘1. I believe this agreement will not impose an undue hardship

on my dependents or me. I can afford to make the payments on the

reaffirmed debt because my monthly income (take home pay plus

any other income received) is $lll, and my actual current

monthly expenses including monthly payments on post-bankruptcy

debt and other reaffirmation agreements total $lll, leaving

$lll to make the required payments on this reaffirmed debt. I

understand that if my income less my monthly expenses does not

leave enough to make the payments, this reaffirmation agreement is

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

the court. However, this presumption may be overcome if I explain

to the satisfaction of the court how I can afford to make the payments here: lll.

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

in Part A and a completed and signed reaffirmation agreement.’.

27

‘‘(B) Where the debtor is represented by counsel and is reaffirming a debt owed to a creditor defined in section 19(b)(1)(A)(iv) of the

Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(iv)), the statement of

support of the reaffirmation agreement, which the debtor shall sign

and date prior to filing with the court, shall consist of the following:

‘‘ ‘I believe this agreement is in my financial interest. I can afford to make the payments on the reaffirmed debt. I received a copy

of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation agreement.’

‘‘(7) The motion, which may be used if approval of the agreement by the court is required in order for it to be effective and shall

be signed and dated by the moving party, shall consist of the following:

‘‘ ‘Part E: Motion for Court Approval (To be completed only

where debtor is not represented by an attorney.). I (we), the debtor,

affirm the following to be true and correct:

‘‘ ‘I am not represented by an attorney in connection with this

reaffirmation agreement.

‘‘ ‘I believe this agreement is in my best interest based on the income and expenses I have disclosed in my Statement in Support of

this reaffirmation agreement above, and because (provide any additional relevant reasons the court should consider):

‘‘ ‘Therefore, I ask the court for an order approving this reaffirmation agreement.’.

‘‘(8) The court order, which may be used to approve a reaffirmation, shall consist of the following:

‘‘ ‘Court Order: The court grants the debtor’s motion and approves the reaffirmation agreement described above.’.

‘‘(9) Subsection (a)(2) does not operate as an injunction against

an act by a creditor that is the holder of a secured claim, if—

‘‘(A) such creditor retains a security interest in real property

that is the debtor’s principal residence;

‘‘(B) such act is in the ordinary course of business between

the creditor and the debtor; and

‘‘(C) such act is limited to seeking or obtaining periodic

payments associated with a valid security interest in lieu of

pursuit of in rem relief to enforce the lien.

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

‘‘(1) A creditor may accept payments from a debtor before

and after the filing of a reaffirmation agreement with the court.

‘‘(2) A creditor may accept payments from a debtor under

a reaffirmation agreement which the creditor believes in good

faith to be effective.

‘‘(3) The requirements of subsections (c)(2) and (k) shall be

satisfied if disclosures required under those subsections are

given in good faith.

‘‘(m)(1) Until 60 days after a reaffirmation agreement is filed

with the court (or such additional period as the court, after notice

and hearing and for cause, orders before the expiration of such period), it shall be presumed that the reaffirmation agreement is an

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

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

and signed statement in support of the reaffirmation agreement required under subsection (k)(6)(A) is less than the scheduled payVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00027 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
28

ments on the reaffirmed debt. This presumption shall be reviewed

by the court. The presumption may be rebutted in writing by the

debtor if the statement includes an explanation which identifies additional sources of funds to make the payments as agreed upon

under the terms of the reaffirmation agreement. If the presumption

is not rebutted to the satisfaction of the court, the court may disapprove the agreement. No agreement shall be disapproved without

notice and hearing to the debtor and creditor and such hearing

shall be concluded before the entry of the debtor’s discharge.

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

where the creditor is a credit union, as defined in section

19(b)(1)(A)(iv) of the Federal Reserve Act (12 U.S.C.

461(b)(1)(A)(iv)).’’.

(b) LAW ENFORCEMENT.—

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

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

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

shall designate the individuals described in subsection (b) to have

primary responsibility in carrying out enforcement activities in addressing violations of section 152 or 157 relating to abusive reaffirmations of debt. In addition to addressing the violations referred to in the preceding sentence, the individuals described under

subsection (b) shall address violations of section 152 or 157 relating

to materially fraudulent statements in bankruptcy schedules that

are intentionally false or intentionally misleading.

‘‘(b) UNITED STATES DISTRICT ATTORNEYS AND AGENTS OF THE

FEDERAL BUREAU OF INVESTIGATION—The individuals referred to in

subsection (a) are—

‘‘(1) a United States attorney for each judicial district of the

United States; and

‘‘(2) an agent of the Federal Bureau of Investigation (within

the meaning of section 3107) for each field office of the Federal

Bureau of Investigation.

‘‘(c) BANKRUPTCY INVESTIGATIONS.—Each United States attorney designated under this section shall, in addition to any other responsibilities, have primary responsibility for carrying out the duties of a United States attorney under section 3057.

‘‘(d) BANKRUPTCY PROCEDURES.—The bankruptcy courts shall

establish procedures for referring any case which may contain a materially fraudulent statement in a bankruptcy schedule to the individuals designated under this section.’’.

(2) CLERICAL AMENDMENT.—The analysis for chapter 9 of

title 18, United States Code, 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.’’.

29

Subtitle B—Priority Child Support

SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.

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

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

(2) by inserting after paragraph (14) the following:

‘‘(14A) ‘domestic support obligation’ means a debt that accrues before or after the entry of an order for relief under this

title, including interest that accrues on that debt as provided

under applicable nonbankruptcy law notwithstanding any other

provision of this title, that is—

‘‘(A) owed to or recoverable by—

‘‘(i) a spouse, former spouse, or child of the debtor

or such child’s parent, legal guardian, or responsible

relative; or

‘‘(ii) a governmental unit;

‘‘(B) in the nature of alimony, maintenance, or support

(including assistance provided by a governmental unit) of

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

child’s parent, without regard to whether such debt is expressly so designated;

‘‘(C) established or subject to establishment before or

after entry of an order for relief under this title, by reason

of applicable provisions of—

‘‘(i) a separation agreement, divorce decree, or

property settlement agreement;

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

‘‘(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit;

and

‘‘(D) not assigned to a nongovernmental entity, unless

that obligation is assigned voluntarily by the spouse,

former spouse, child, or parent, legal guardian, or responsible relative of the child for the purpose of collecting the

debt;’’.

SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT OBLIGATIONS.

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

(1) by striking paragraph (7);

(2) by redesignating paragraphs (1) through (6) as paragraphs (2) through (7), respectively;

(3) in paragraph (2), as redesignated, by striking ‘‘First’’

and inserting ‘‘Second’’;

(4) in paragraph (3), as redesignated, by striking ‘‘Second’’

and inserting ‘‘Third’’;

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

(A) by striking ‘‘Third’’ and inserting ‘‘Fourth’’; and

(B) by striking the semicolon at the end and inserting

a period;

(6) in paragraph (5), as redesignated, by striking ‘‘Fourth’’

and inserting ‘‘Fifth’’;

(7) in paragraph (6), as redesignated, by striking ‘‘Fifth’’

and inserting ‘‘Sixth’’;

30

(8) in paragraph (7), as redesignated, by striking ‘‘Sixth’’

and inserting ‘‘Seventh’’; and

(9) by inserting before paragraph (2), as redesignated, the

following:

‘‘(1) First:

‘‘(A) Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition, are

owed to or recoverable by a spouse, former spouse, or child

of the debtor, or the parent, legal guardian, or responsible

relative of such child, without regard to whether the claim

is filed by such person or is filed by a governmental unit

on behalf of that person, on the condition that funds received under this paragraph by a governmental unit under

this title after the date of filing of the petition shall be applied and distributed in accordance with applicable nonbankruptcy law.

‘‘(B) Subject to claims under subparagraph (A), allowed unsecured claims for domestic support obligations

that, as of the date the petition was filed are assigned by

a spouse, former spouse, child of the debtor, or such child’s

parent, legal guardian, or responsible relative to a governmental unit (unless such obligation is assigned voluntarily

by the spouse, former spouse, child, parent, legal guardian,

or responsible relative of the child for the purpose of collecting the debt) or are owed directly to or recoverable by

a government unit under applicable nonbankruptcy law, on

the condition that funds received under this paragraph by

a governmental unit under this title after the date of filing

of the petition be applied and distributed in accordance

with applicable nonbankruptcy law.’’.

SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE IN CASES INVOLVING DOMESTIC SUPPORT OBLIGATIONS.

Title 11, United States Code, is amended—

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

‘‘(14) If the debtor is required by a judicial or administrative order or statute to pay a domestic support obligation, the

debtor has paid all amounts payable under such order or statute for such obligation that first become payable after the date

on which the petition is filed.’’;

(2) in section 1208(c)—

(A) in paragraph (8), by striking ‘‘or’’ at the end;

(B) in paragraph (9), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(10) failure of the debtor to pay any domestic support obligation that first becomes payable after the date on which the petition is filed.’’;

(3) in section 1222(a)—

(A) in paragraph (2), by striking ‘‘and’’ at the end;

(B) in paragraph (3), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding at the end the following:

31

‘‘(4) notwithstanding any other provision of this section, a

plan may provide for less than full payment of all amounts

owed for a claim entitled to priority under section 507(a)(1)(B)

only if the plan provides that all of the debtor’s projected disposable income for a 5-year period, beginning on the date that

the first payment is due under the plan, will be applied to make

payments under the plan.’’;

(4) in section 1222(b)—

(A) by redesignating paragraph (11) as paragraph (12);

and

(B) by inserting after paragraph (10) the following:

‘‘(11) provide for the payment of interest accruing after the

date of the filing of the petition on unsecured claims that are

nondischargeable under section 1328(a), except that such interest may be paid only to the extent that the debtor has disposable

income available to pay such interest after making provision for

full payment of all allowed claims;’’;

(5) in section 1225(a)—

(A) in paragraph (5), by striking ‘‘and’’ at the end;

(B) in paragraph (6), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(7) if the debtor is required by a judicial or administrative

order or statute to pay a domestic support obligation, the debtor

has paid all amounts payable under such order for such obligation that first become payable after the date on which the petition is filed.’’;

(6) in section 1228(a), in the matter preceding paragraph

(1), by inserting ‘‘, and in the case of a debtor who is required

by a judicial or administrative order to pay a domestic support

obligation, after such debtor certifies that all amounts payable

under such order or statute that are due on or before the date

of the certification (including amounts due before the petition

was filed, but only to the extent provided for in the plan) have

been paid’’ after ‘‘completion by the debtor of all payments

under the plan’’;

(7) in section 1307(c)—

(A) in paragraph (9), by striking ‘‘or’’ at the end;

(B) in paragraph (10), by striking the period at the end

and inserting ‘‘; or’’; and

(C) by adding at the end the following:

‘‘(11) failure of the debtor to pay any domestic support obligation that first becomes payable after the date on which the petition is filed.’’;

(8) in section 1322(a)—

(A) in paragraph (2), by striking ‘‘and’’ at the end;

(B) in paragraph (3), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding in the end the following:

‘‘(4) notwithstanding any other provision of this section, a

plan may provide for less than full payment of all amounts

owed for a claim entitled to priority under section 507(a)(1)(B)

only if the plan provides that all of the debtor’s projected disposable income for a 5-year period beginning on the date that

32

the first payment is due under the plan will be applied to make

payments under the plan.’’;

(9) in section 1322(b)—

(A) in paragraph (9), by striking ‘‘; and’’ and inserting

a semicolon;

(B) by redesignating paragraph (10) as paragraph (11);

and

(C) inserting after paragraph (9) the following:

‘‘(10) provide for the payment of interest accruing after the

date of the filing of the petition on unsecured claims that are

nondischargeable under section 1328(a), except that such interest may be paid only to the extent that the debtor has disposable

income available to pay such interest after making provision for

full payment of all allowed claims; and’’;

(10) in section 1325(a) (as amended by this Act), by adding

at the end the following:

‘‘(8) the debtor is required by a judicial or administrative

order or statute to pay a domestic support obligation, the debtor

has paid all amounts payable under such order or statute for

such obligation that first becomes payable after the date on

which the petition is filed; and’’;

(11) in section 1328(a), in the matter preceding paragraph

(1), by inserting ‘‘, and in the case of a debtor who is required

by a judicial or administrative order to pay a domestic support

obligation, after such debtor certifies that all amounts payable

under such order or statute that are due on or before the date

of the certification (including amounts due before the petition

was filed, but only to the extent provided for in the plan) have

been paid’’ after ‘‘completion by the debtor of all payments

under the plan’’.

SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT

OBLIGATION PROCEEDINGS.

Section 362(b) of title 11, United States Code, is amended by

striking paragraph (2) and inserting the following:

‘‘(2) under subsection (a)—

‘‘(A) of the commencement or continuation of a civil action or proceeding—

‘‘(i) for the establishment of paternity;

‘‘(ii) for the establishment or modification of an

order for domestic support obligations;

‘‘(iii) concerning child custody or visitation;

‘‘(iv) for the dissolution of a marriage, except to the

extent that such proceeding seeks to determine the division of property that is property of the estate; or

‘‘(v) regarding domestic violence;

‘‘(B) the collection of a domestic support obligation

from property that is not property of the estate;

‘‘(C) with respect to the withholding of income that is

property of the estate or property of the debtor for payment

of a domestic support obligation under a judicial or administrative order;

‘‘(D) the withholding, suspension, or restriction of drivers’ licenses, professional and occupational licenses, and

33

recreational licenses under State law, as specified in section

466(a)(16) of the Social Security Act (42 U.S.C. 666(a)(16));

‘‘(E) the reporting of overdue support owed by a parent

to any consumer reporting agency as specified in section

466(a)(7) of the Social Security Act (42 U.S.C. 666(a)(7));

‘‘(F) the interception of tax refunds, as specified in sections 464 and 466(a)(3) of the Social Security Act (42

U.S.C. 664 and 666(a)(3)) or under an analogous State

law; or

‘‘(G) the enforcement of medical obligations as specified

under title IV of the Social Security Act (42 U.S.C. 601 et

seq.);’’.

SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY,

MAINTENANCE, AND SUPPORT.

Section 523 of title 11, United States Code, is amended—

(1) in subsection (a)—

(A) by striking paragraph (5) and inserting the following:

‘‘(5) for a domestic support obligation;’’;

(B) in paragraph (15)—

(i) by inserting ‘‘to a spouse, former spouse, or

child of the debtor and’’ before ‘‘not of the kind’’;

(ii) by inserting ‘‘or’’ after ‘‘court of record,’’; and

(iii) by striking ‘‘unless—’’ and all that follows

through the end of the paragraph and inserting a semicolon; and

(C) by striking paragraph (18); and

(2) in subsection (c), by striking ‘‘(6), or (15)’’ each place it

appears and inserting ‘‘or (6)’’.

SEC. 216. CONTINUED LIABILITY OF PROPERTY.

Section 522 of title 11, United States Code, is amended—

(1) in subsection (c), by striking paragraph (1) and inserting the following:

‘‘(1) a debt of a kind specified in paragraph (1) or (5) of section 523(a) (in which case, notwithstanding any provision of applicable nonbankruptcy law to the contrary, such property shall

be liable for a debt of a kind specified in section 523(a)(5));’’;

(2) in subsection (f)(1)(A), by striking the dash and all that

follows through the end of the subparagraph and inserting ‘‘of

a kind that is specified in section 523(a)(5); or’’; and

(3) in subsection (g)(2), by striking ‘‘subsection (f)(2)’’ and

inserting ‘‘subsection (f)(1)(B)’’.

SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST

PREFERENTIAL TRANSFER MOTIONS.

Section 547(c)(7) of title 11, United States Code, is amended to

read as follows:

‘‘(7) to the extent such transfer was a bona fide payment of

a debt for a domestic support obligation;’’.

SEC. 218. DISPOSABLE INCOME DEFINED.

(a) CONFIRMATION OF PLAN UNDER CHAPTER 12.—Section

1225(b)(2)(A) of title 11, United States Code, is amended by inserting ‘‘or for a domestic support obligation that first becomes payable

34

after the date on which the petition is filed’’ after ‘‘dependent of the

debtor’’.

(b) CONFIRMATION OF PLAN UNDER CHAPTER 13.—Section

1325(b)(2)(A) of title 11, United States Code, is amended by inserting ‘‘or for a domestic support obligation that first becomes payable

after the date on which the petition is filed’’ after ‘‘dependent of the

debtor’’.

SEC. 219. COLLECTION OF CHILD SUPPORT.

(a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Section 704 of

title 11, United States Code, as amended by this Act, is amended—

(1) in subsection (a)—

(A) in paragraph (8), by striking ‘‘and’’ at the end;

(B) in paragraph (9), by striking the period and inserting a semicolon; and

(C) by adding at the end the following:

‘‘(10) if, with respect to an individual debtor, there is a

claim for a domestic support obligation, provide the applicable

notification specified in subsection (c); and’’; and

(2) by adding at the end the following:

‘‘(c)(1) In any case described in subsection (a)(10), the trustee

shall—

‘‘(A)(i) notify in writing the holder of the claim of the right

of that holder to use the services of a State child support enforcement agency established under sections 464 and 466 of the

Social Security Act (42 U.S.C. 664, 666) for the State in which

the holder resides for assistance in collecting child support during and after the bankruptcy procedures;

‘‘(ii) include in the notice under this paragraph the address

and telephone number of the child support enforcement agency;

and

‘‘(iii) include in the notice an explanation of the rights of

the holder of the claim to payment of the claim under this chapter; and

‘‘(B)(i) notify in writing the State child support agency of

the State in which the holder of the claim resides of the claim;

‘‘(ii) include in the notice under this paragraph the name,

address, and telephone number of the holder of the claim; and

‘‘(iii) at such time as the debtor is granted a discharge

under section 727, notify the holder of that claim and the State

child support agency of the State in which that holder resides

of—

‘‘(I) the granting of the discharge;

‘‘(II) the last recent known address of the debtor;

‘‘(III) the last recent known name and address of the

debtor’s employer; and

‘‘(IV) with respect to the debtor’s case, the name of each

creditor that holds a claim that—

‘‘(aa) is not discharged under paragraph (2), (4), or

(14A) of section 523(a); or

‘‘(bb) was reaffirmed by the debtor under section

524(c).

‘‘(2)(A) A holder of a claim or a State child support agency may

request from a creditor described in paragraph (1)(B)(iii)(IV) the

last known address of the debtor.

35

‘‘(B) Notwithstanding any other provision of law, a creditor that

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable to the debtor or any other person by reason of making that disclosure.’’.

(b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—Section 1106 of

title 11, United States Code, is amended—

(1) in subsection (a)—

(A) in paragraph (6), by striking ‘‘and’’ at the end;

(B) in paragraph (7), by striking the period and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(8) if, with respect to an individual debtor, there is a claim

for a domestic support obligation, provide the applicable notification specified in subsection (c).’’; and

(2) by adding at the end the following:

‘‘(c)(1) In any case described in subsection (a)(7), the trustee

shall—

‘‘(A)(i) notify in writing the holder of the claim of the right

of that holder to use the services of a State child support enforcement agency established under sections 464 and 466 of the

Social Security Act (42 U.S.C. 664, 666) for the State in which

the holder resides; and

‘‘(ii) include in the notice under this paragraph the address

and telephone number of the child support enforcement agency;

and

‘‘(B)(i) notify, in writing, the State child support agency (of

the State in which the holder of the claim resides) of the claim;

‘‘(ii) include in the notice under this paragraph the name,

address, and telephone number of the holder of the claim; and

‘‘(iii) at such time as the debtor is granted a discharge

under section 1141, notify the holder of the claim and the State

child support agency of the State in which that holder resides

of—

‘‘(I) the granting of the discharge;

‘‘(II) the last recent known address of the debtor;

‘‘(III) the last recent known name and address of the

debtor’s employer; and

‘‘(IV) with respect to the debtor’s case, the name of each

creditor that holds a claim that—

‘‘(aa) is not discharged under paragraph (2), (3), or

(14) of section 523(a); or

‘‘(bb) was reaffirmed by the debtor under section

524(c).

‘‘(2)(A) A holder of a claim or a State child support agency may

request from a creditor described in paragraph (1)(B)(iii)(IV) the

last known address of the debtor.

‘‘(B) Notwithstanding any other provision of law, a creditor that

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable to the debtor or any other person by reason of making that disclosure.’’.

(c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—Section 1202 of

title 11, United States Code, is amended—

36

(1) in subsection (b)—

(A) in paragraph (4), by striking ‘‘and’’ at the end;

(B) in paragraph (5), by striking the period and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(6) if, with respect to an individual debtor, there is a claim

for a domestic support obligation, provide the applicable notification specified in subsection (c).’’; and

(2) by adding at the end the following:

‘‘(c)(1) In any case described in subsection (b)(6), the trustee

shall—

‘‘(A)(i) notify in writing the holder of the claim of the right

of that holder to use the services of a State child support enforcement agency established under sections 464 and 466 of the

Social Security Act (42 U.S.C. 664, 666) for the State in which

the holder resides; and

‘‘(ii) include in the notice under this paragraph the address

and telephone number of the child support enforcement agency;

and

‘‘(B)(i) notify, in writing, the State child support agency (of

the State in which the holder of the claim resides) of the claim;

‘‘(ii) include in the notice under this paragraph the name,

address, and telephone number of the holder of the claim; and

‘‘(iii) at such time as the debtor is granted a discharge

under section 1228, notify the holder of the claim and the State

child support agency of the State in which that holder resides

of—

‘‘(I) the granting of the discharge;

‘‘(II) the last recent known address of the debtor;

‘‘(III) the last recent known name and address of the

debtor’s employer; and

‘‘(IV) with respect to the debtor’s case, the name of each

creditor that holds a claim that—

‘‘(aa) is not discharged under paragraph (2), (4), or

(14) of section 523(a); or

‘‘(bb) was reaffirmed by the debtor under section

524(c).

‘‘(2)(A) A holder of a claim or a State child support agency may

request from a creditor described in paragraph (1)(B)(iii)(IV) the

last known address of the debtor.

‘‘(B) Notwithstanding any other provision of law, a creditor that

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable to the debtor or any other person by reason of making that disclosure.’’.

(d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—Section 1302 of

title 11, United States Code, is amended—

(1) in subsection (b)—

(A) in paragraph (4), by striking ‘‘and’’ at the end;

(B) in paragraph (5), by striking the period and inserting ‘‘; and’’; and

(C) by adding at the end the following:

37

‘‘(6) if, with respect to an individual debtor, there is a claim

for a domestic support obligation, provide the applicable notification specified in subsection (d).’’; and

(2) by adding at the end the following:

‘‘(d)(1) In any case described in subsection (b)(6), the trustee

shall—

‘‘(A)(i) notify in writing the holder of the claim of the right

of that holder to use the services of a State child support enforcement agency established under sections 464 and 466 of the

Social Security Act (42 U.S.C. 664, 666) for the State in which

the holder resides; and

‘‘(ii) include in the notice under this paragraph the address

and telephone number of the child support enforcement agency;

and

‘‘(B)(i) notify in writing the State child support agency of

the State in which the holder of the claim resides of the claim;

‘‘(ii) include in the notice under this paragraph the name,

address, and telephone number of the holder of the claim; and

‘‘(iii) at such time as the debtor is granted a discharge

under section 1328, notify the holder of the claim and the State

child support agency of the State in which that holder resides

of—

‘‘(I) the granting of the discharge;

‘‘(II) the last recent known address of the debtor;

‘‘(III) the last recent known name and address of the

debtor’s employer; and

‘‘(IV) with respect to the debtor’s case, the name of each

creditor that holds a claim that—

‘‘(aa) is not discharged under paragraph (2), (4), or

(14) of section 523(a); or

‘‘(bb) was reaffirmed by the debtor under section

524(c).

‘‘(2)(A) A holder of a claim or a State child support agency may

request from a creditor described in paragraph (1)(B)(iii)(IV) the

last known address of the debtor.

‘‘(B) Notwithstanding any other provision of law, a creditor that

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable to the debtor or any other person by reason of making that disclosure.’’.

SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS AND LOANS.

Section 523(a) of title 11, United States Code, is amended by

striking paragraph (8) and inserting the following:

‘‘(8) unless excepting such debt from discharge under this

paragraph would impose an undue hardship on the debtor and

the debtor’s dependents, for—

‘‘(A)(i) an educational benefit overpayment or loan

made, insured, or guaranteed by a governmental unit, or

made under any program funded in whole or in part by a

governmental unit or nonprofit institution; or

‘‘(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

38

‘‘(B) any other educational loan that is a qualified education loan, as that term is defined in section 221(e)(1) of

the Internal Revenue Code of 1986, incurred by an individual debtor;’’.

Subtitle C—Other Consumer Protections

SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANKRUPTCY FILINGS.

Section 110 of title 11, United States Code, is amended—

(1) in subsection (a)(1), by striking ‘‘a person, other than an

attorney or an employee of an attorney’’ and inserting ‘‘the attorney for the debtor or an employee of such attorney under the

direct supervision of such attorney’’;

(2) in subsection (b)—

(A) in paragraph (1), by adding at the end the following: ‘‘If a bankruptcy petition preparer is not an individual, then an officer, principal, responsible person, or

partner of the preparer shall be required to—

‘‘(A) sign the document for filing; and

‘‘(B) print on the document the name and address of that

officer, principal, responsible person or partner.’’; and

(B) by striking paragraph (2) and inserting the following:

‘‘(2)(A) Before preparing any document for filing or accepting

any fees from a debtor, the bankruptcy petition preparer shall provide to the debtor a written notice to debtors concerning bankruptcy

petition preparers, which shall be on an official form issued by the

Judicial Conference of the United States.

‘‘(B) The notice under subparagraph (A)—

‘‘(i) shall inform the debtor in simple language that a bankruptcy petition preparer is not an attorney and may not practice

law or give legal advice;

‘‘(ii) may contain a description of examples of legal advice

that a bankruptcy petition preparer is not authorized to give, in

addition to any advice that the preparer may not give by reason

of subsection (e)(2); and

‘‘(iii) shall—

‘‘(I) be signed by—

‘‘(aa) the debtor; and

‘‘(bb) the bankruptcy petition preparer, under penalty of perjury; and

‘‘(II) be filed with any document for filing.’’;

(3) in subsection (c)—

(A) in paragraph (2)—

(i) by striking ‘‘(2) For purposes’’ and inserting

‘‘(2)(A) Subject to subparagraph (B), for purposes’’; and

(ii) by adding at the end the following:

‘‘(B) If a bankruptcy petition preparer is not an individual, the

identifying number of the bankruptcy petition preparer shall be the

Social Security account number of the officer, principal, responsible

person, or partner of the preparer.’’; and

(B) by striking paragraph (3);

(4) in subsection (d)—

39

(A) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’; and

(B) by striking paragraph (2);

(5) in subsection (e)—

(A) by striking paragraph (2); and

(B) by adding at the end the following:

‘‘(2)(A) A bankruptcy petition preparer may not offer a potential

bankruptcy debtor any legal advice, including any legal advice described in subparagraph (B).

‘‘(B) The legal advice referred to in subparagraph (A) includes

advising the debtor—

‘‘(i) whether—

‘‘(I) to file a petition under this title; or

‘‘(II) commencing a case under chapter 7, 11, 12, or 13

is appropriate;

‘‘(ii) whether the debtor’s debts will be eliminated or discharged in a case under this title;

‘‘(iii) whether the debtor will be able to retain the debtor’s

home, car, or other property after commencing a case under this

title;

‘‘(iv) concerning—

‘‘(I) the tax consequences of a case brought under this

title; or

‘‘(II) the dischargeability of tax claims;

‘‘(v) whether the debtor may or should promise to repay

debts to a creditor or enter into a reaffirmation agreement with

a creditor to reaffirm a debt;

‘‘(vi) concerning how to characterize the nature of the debtor’s interests in property or the debtor’s debts; or

‘‘(vii) concerning bankruptcy procedures and rights.’’;

(6) in subsection (f)—

(A) by striking ‘‘(f)(1)’’ and inserting ‘‘(f)’’; and

(B) by striking paragraph (2);

(7) in subsection (g)—

(A) by striking ‘‘(g)(1)’’ and inserting ‘‘(g)’’; and

(B) by striking paragraph (2);

(8) in subsection (h)—

(A) by redesignating paragraphs (1) through (4) as

paragraphs (2) through (5), respectively;

(B) by inserting before paragraph (2), as redesignated,

the following:

‘‘(1) The Supreme Court may promulgate rules under section

2075 of title 28, or the Judicial Conference of the United States may

prescribe guidelines, for setting a maximum allowable fee chargeable by a bankruptcy petition preparer. A bankruptcy petition preparer shall notify the debtor of any such maximum amount before

preparing any document for filing for a debtor or accepting any fee

from the debtor.’’;

(C) in paragraph (2), as redesignated—

(i) by striking ‘‘Within 10 days after the date of filing a petition, a bankruptcy petition preparer shall file

a’’ and inserting ‘‘A’’;

(ii) by inserting ‘‘by the bankruptcy petition preparer shall be filed together with the petition,’’ after

‘‘perjury’’; and

40

(iii) by adding at the end the following: ‘‘If rules

or guidelines setting a maximum fee for services have

been promulgated or prescribed under paragraph (1),

the declaration under this paragraph shall include a

certification that the bankruptcy petition preparer complied with the notification requirement under paragraph (1).’’;

(D) by striking paragraph (3), as redesignated, and inserting the following:

‘‘(3)(A) The court shall disallow and order the immediate

turnover to the bankruptcy trustee any fee referred to in paragraph (2) found to be in excess of the value of any services—

‘‘(i) rendered by the preparer during the 12-month period immediately preceding the date of filing of the petition;

or

‘‘(ii) found to be in violation of any rule or guideline

promulgated or prescribed under paragraph (1).

‘‘(B) All fees charged by a bankruptcy petition preparer may

be forfeited in any case in which the bankruptcy petition preparer fails to comply with this subsection or subsection (b), (c),

(d), (e), (f), or (g).

‘‘(C) An individual may exempt any funds recovered under

this paragraph under section 522(b).’’; and

(E) in paragraph (4), as redesignated, by striking ‘‘or

the United States trustee’’ and inserting ‘‘the United States

trustee, the bankruptcy administrator, or the court, on the

initiative of the court,’’;

(9) in subsection (i)(1), by striking the matter preceding

subparagraph (A) and inserting the following:

‘‘(i)(1) If a bankruptcy petition preparer violates this section or

commits any act that the court finds to be fraudulent, unfair, or deceptive, on motion of the debtor, trustee, United States trustee, or

bankruptcy administrator, and after the court holds a hearing with

respect to that violation or act, the court shall order the bankruptcy

petition preparer to pay to the debtor—’’;

(10) in subsection (j)—

(A) in paragraph (2)—

(i) in subparagraph (A)(i)(I), by striking ‘‘a violation of which subjects a person to criminal penalty’’;

(ii) in subparagraph (B)—

(I) by striking ‘‘or has not paid a penalty’’ and

inserting ‘‘has not paid a penalty’’; and

(II) by inserting ‘‘or failed to disgorge all fees

ordered by the court’’ after ‘‘a penalty imposed

under this section,’’;

(B) by redesignating paragraph (3) as paragraph (4);

and

(C) by inserting after paragraph (2) the following:

‘‘(3) The court, as part of its contempt power, may enjoin a

bankruptcy petition preparer that has failed to comply with a previous order issued under this section. The injunction under this

paragraph may be issued upon motion of the court, the trustee, the

United States trustee, or the bankruptcy administrator.’’; and

(11) by adding at the end the following:

41

‘‘(l)(1) A bankruptcy petition preparer who fails to comply with

any provision of subsection (b), (c), (d), (e), (f), (g), or (h) may be

fined not more than $500 for each such failure.

‘‘(2) The court shall triple the amount of a fine assessed under

paragraph (1) in any case in which the court finds that a bankruptcy petition preparer—

‘‘(A) advised the debtor to exclude assets or income that

should have been included on applicable schedules;

‘‘(B) advised the debtor to use a false Social Security account number;

‘‘(C) failed to inform the debtor that the debtor was filing

for relief under this title; or

‘‘(D) prepared a document for filing in a manner that failed

to disclose the identity of the preparer.

‘‘(3) The debtor, the trustee, a creditor, the United States trustee, or the bankruptcy administrator may file a motion for an order

imposing a fine on the bankruptcy petition preparer for each violation of this section.

‘‘(4)(A) Fines imposed under this subsection in judicial districts

served by United States trustees shall be paid to the United States

trustee, who shall deposit an amount equal to such fines in a special

account of the United States Trustee System Fund referred to in section 586(e)(2) of title 28. Amounts deposited under this subparagraph shall be available to fund the enforcement of this section on

a national basis.

‘‘(B) Fines imposed under this subsection in judicial districts

served by bankruptcy administrators shall be deposited as offsetting

receipts to the fund established under section 1931 of title 28, and

shall remain available until expended to reimburse any appropriation for the amount paid out of such appropriation for expenses of

the operation and maintenance of the courts of the United States.’’.

SEC. 222. SENSE OF CONGRESS.

It is the sense of Congress that States should develop curricula

relating to the subject of personal finance, designed for use in elementary and secondary schools.

SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES

CODE.

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

inserting after paragraph (9) the following:

‘‘(10) Tenth, allowed claims for death or personal injuries

resulting from the operation of a motor vehicle or vessel if such

operation was unlawful because the debtor was intoxicated from

using alcohol, a drug, or another substance.’’.

SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

(a) IN GENERAL.—Section 522 of title 11, United States Code,

is amended—

(1) in subsection (b)—

(A) in paragraph (2)—

(i) in subparagraph (A), by striking ‘‘and’’ at the

end;

(ii) in subparagraph (B), by striking the period at

the end and inserting ‘‘; and’’;

(iii) by adding at the end the following:

42

‘‘(C) retirement funds to the extent that those funds are in

a fund or account that is exempt from taxation under section

401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue

Code of 1986.’’; and

(iv) by striking ‘‘(2)(A) any property’’ and inserting:

‘‘(3) Property listed in this paragraph is—

‘‘(A) any property’’;

(B) by striking paragraph (1) and inserting:

‘‘(2) Property listed in this paragraph is property that is specified under subsection (d), unless the State law that is applicable to

the debtor under paragraph (3)(A) specifically does not so authorize.’’;

(C) by striking ‘‘(b) Notwithstanding’’ and inserting

‘‘(b)(1) Notwithstanding’’;

(D) by striking ‘‘paragraph (2)’’ each place it appears

and inserting ‘‘paragraph (3)’’;

(E) by striking ‘‘paragraph (1)’’ each place it appears

and inserting ‘‘paragraph (2)’’;

(F) by striking ‘‘Such property is—’’; and

(G) by adding at the end the following:

‘‘(4) For purposes of paragraph (3)(C) and subsection (d)(12),

the following shall apply:

‘‘(A) If the retirement funds are in a retirement fund that

has received a favorable determination under section 7805 of

the Internal Revenue Code of 1986, and that determination is

in effect as of the date of the commencement of the case under

section 301, 302, or 303 of this title, those funds shall be presumed to be exempt from the estate.

‘‘(B) If the retirement funds are in a retirement fund that

has not received a favorable determination under such section

7805, those funds are exempt from the estate if the debtor demonstrates that—

‘‘(i) no prior determination to the contrary has been

made by a court or the Internal Revenue Service; and

‘‘(ii)(I) the retirement fund is in substantial compliance

with the applicable requirements of the Internal Revenue

Code of 1986; or

‘‘(II) the retirement fund fails to be in substantial compliance with the applicable requirements of the Internal

Revenue Code of 1986 and the debtor is not materially responsible for that failure.

‘‘(C) A direct transfer of retirement funds from 1 fund or account that is exempt from taxation under section 401, 403, 408,

408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986,

under section 401(a)(31) of the Internal Revenue Code of 1986,

or otherwise, shall not cease to qualify for exemption under

paragraph (3)(C) or subsection (d)(12) by reason of that direct

transfer.

‘‘(D)(i) Any distribution that qualifies as an eligible rollover

distribution within the meaning of section 402(c) of the Internal

Revenue Code of 1986 or that is described in clause (ii) shall

not cease to qualify for exemption under paragraph (3)(C) or

subsection (d)(12) by reason of that distribution.

43

‘‘(ii) A distribution described in this clause is an amount

that—

‘‘(I) has been distributed from a fund or account that

is exempt from taxation under section 401, 403, 408, 408A,

414, 457, or 501(a) of the Internal Revenue Code of 1986;

and

‘‘(II) to the extent allowed by law, is deposited in such

a fund or account not later than 60 days after the distribution of that amount.’’; and

(2) in subsection (d)—

(A) in the matter preceding paragraph (1), by striking

‘‘subsection (b)(1)’’ and inserting ‘‘subsection (b)(2)’’; and

(B) by adding at the end the following:

‘‘(12) Retirement funds to the extent that those funds are in a

fund or account that is exempt from taxation under section 401,

403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code

of 1986.’’.

(b) AUTOMATIC STAY.—Section 362(b) of title 11, United States

Code, is amended—

(1) in paragraph (17), by striking ‘‘or’’ at the end;

(2) in paragraph (18), by striking the period and inserting

a semicolon;

(3) by inserting after paragraph (18) the following:

‘‘(19) under subsection (a), of withholding of income from a

debtor’s wages and collection of amounts withheld, under the

debtor’s agreement authorizing that withholding and collection

for the benefit of a pension, profit-sharing, stock bonus, or other

plan established under section 401, 403, 408, 408A, 414, 457,

or 501(a) of the Internal Revenue Code of 1986, that is sponsored by the employer of the debtor, or an affiliate, successor,

or predecessor of such employer—

‘‘(A) to the extent that the amounts withheld and collected are used solely for payments relating to a loan from

a plan that satisfies the requirements of section 408(b)(1) of

the Employee Retirement Income Security Act of 1974 or is

subject to section 72(p) of the Internal Revenue Code of

1986; or

‘‘(B) in the case of a loan from a thrift savings plan described in subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title;’’; and

(4) by adding at the end of the flush material at the end

of the subsection, the following: ‘‘Nothing in paragraph (19)

may be construed to provide that any loan made under a governmental plan under section 414(d), or a contract or account

under section 403(b) of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title.’’.

(c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of title 11,

United States Code, as amended by this Act, is amended by adding

at the end the following:

‘‘(18) owed to a pension, profit-sharing, stock bonus, or

other plan established under section 401, 403, 408, 408A, 414,

457, or 501(c) of the Internal Revenue Code of 1986, under—

‘‘(A) a loan permitted under section 408(b)(1) of the

Employee Retirement Income Security Act of 1974, or subVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00043 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
44

ject to section 72(p) of the Internal Revenue Code of 1986;

or

‘‘(B) a loan from the thrift savings plan described in

subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title.

Nothing in paragraph (18) may be construed to provide that

any loan made under a governmental plan under section

414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt under

this title.’’.

(d) PLAN CONTENTS.—Section 1322 of title 11, United States

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

‘‘(f) A plan may not materially alter the terms of a loan described in section 362(b)(19) and any amounts required to repay

such loan shall not constitute ‘disposable income’ under section

1325.’’.

(e) ASSET LIMITATION.—Section 522 of title 11, United States

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

‘‘(n) For assets in individual retirement accounts described in

section 408 or 408A of the Internal Revenue Code of 1986, other

than a simplified employee pension under section 408(k) of that

Code or a simple retirement account under section 408(p) of that

Code, the aggregate value of such assets exempted under this section, without regard to amounts attributable to rollover contributions under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and

403(b)(8) of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed $1,000,000 (which amount shall be adjusted as

provided in section 104 of this title) in a case filed by an individual

debtor, except that such amount may be increased if the interests of

justice so require.’’.

SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANKRUPTCY.

(a) EXCLUSIONS.—Section 541 of title 11, United States Code, is

amended—

(1) in subsection (b)—

(A) in paragraph (4), by striking ‘‘or’’ at the end;

(B) by redesignating paragraph (5) as paragraph (10);

and

(C) by inserting after paragraph (4) the following:

‘‘(5) funds placed in an education individual retirement account (as defined in section 530(b)(1) of the Internal Revenue

Code of 1986) not later than 365 days before the date of filing

of the petition, but—

‘‘(A) only if the designated beneficiary of such account

was a son, daughter, stepson, stepdaughter, grandchild, or

step-grandchild of the debtor for the taxable year for which

funds were placed in such account;

‘‘(B) only to the extent that such funds—

‘‘(i) are not pledged or promised to any entity in

connection with any extension of credit; and

‘‘(ii) are not excess contributions (as described in

section 4973(e) of the Internal Revenue Code of 1986);

and

‘‘(C) in the case of funds placed in all such accounts

having the same designated beneficiary not earlier than

45

720 days nor later than 365 days before such date, only so

much of such funds as does not exceed $5,000;

‘‘(6) funds used to purchase a tuition credit or certificate or

contributed to an account in accordance with section

529(b)(1)(A) of the Internal Revenue Code of 1986 under a

qualified State tuition program (as defined in section 529(b)(1)

of such Code) not later than 365 days before the date of filing

of the petition, but—

‘‘(A) only if the designated beneficiary of the amounts

paid or contributed to such tuition program was a son,

daughter, stepson, stepdaughter, grandchild, or step-grandchild of the debtor for the taxable year for which funds

were paid or contributed;

‘‘(B) with respect to the aggregate amount paid or contributed to such program having the same designated beneficiary, only so much of such amount as does not exceed the

total contributions permitted under section 529(b)(7) of

such Code with respect to such beneficiary, as adjusted beginning on the date of the filing of the petition by the annual increase or decrease (rounded to the nearest tenth of

1 percent) in the education expenditure category of the Consumer Price Index prepared by the Department of Labor;

and

‘‘(C) in the case of funds paid or contributed to such

program having the same designated beneficiary not earlier

than 720 days nor later than 365 days before such date,

only so much of such funds as does not exceed $5,000;’’;

and

(2) by adding at the end the following:

‘‘(e) In determining whether any of the relationships specified in

paragraph (5)(A) or (6)(A) of subsection (b) exists, a legally adopted

child of an individual (and a child who is a member of an individual’s household, if placed with such individual by an authorized

placement agency for legal adoption by such individual), or a foster

child of an individual (if such child has as the child’s principal

place of abode the home of the debtor and is a member of the debtor’s household) shall be treated as a child of such individual by

blood.’’.

(b) DEBTOR’S DUTIES.—Section 521 of title 11, United States

Code, as amended by this Act, is amended by adding at the end the

following:

‘‘(c) In addition to meeting the requirements under subsection

(a), a debtor shall file with the court a record of any interest that

a debtor has in an education individual retirement account (as defined in section 530(b)(1) of the Internal Revenue Code of 1986) or

under a qualified State tuition program (as defined in section

529(b)(1) of such Code).’’.

SEC. 226. DEFINITIONS.

(a) DEFINITIONS.—Section 101 of title 11, United States Code,

is amended—

(1) by inserting after paragraph (2) the following:

‘‘(3) ‘assisted person’ means any person whose debts consist

primarily of consumer debts and whose non-exempt assets are

less than $150,000;’’;

46

(2) by inserting after paragraph (4) the following:

‘‘(4A) ‘bankruptcy assistance’ means any goods or services

sold or otherwise provided to an assisted person with the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance at a creditors’ meeting or appearing in a proceeding on behalf of another

or providing legal representation with respect to a case or proceeding under this title;’’; and

(3) by inserting after paragraph (12) the following:

‘‘(12A) ‘debt relief agency’ means any person who provides

any bankruptcy assistance to an assisted person in return for

the payment of money or other valuable consideration, or who

is a bankruptcy petition preparer under section 110, but does

not include—

‘‘(A) any person that is an officer, director, employee or

agent of that person;

‘‘(B) a nonprofit organization which is exempt from taxation under section 501(c)(3) of the Internal Revenue Code

of 1986;

‘‘(C) a creditor of the person, to the extent that the creditor is assisting the person to restructure any debt owed by

the person to the creditor;

‘‘(D) a depository institution (as defined in section 3 of

the Federal Deposit Insurance Act) or any Federal credit

union or State credit union (as those terms are defined in

section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such a depository institution or credit

union; or

‘‘(E) an author, publisher, distributor, or seller of

works subject to copyright protection under title 17, when

acting in such capacity.’’.

(b) CONFORMING AMENDMENT.—Section 104(b)(1) of title 11,

United States Code, is amended by inserting ‘‘101(3),’’ after ‘‘sections’’.

SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

(a) ENFORCEMENT.—Subchapter II of chapter 5 of title 11,

United States Code, is amended by adding at the end the following:

‘‘§ 526. Restrictions on debt relief agencies

‘‘(a) A debt relief agency shall not—

‘‘(1) fail to perform any service that such agency informed

an assisted person or prospective assisted person it would provide in connection with a case or proceeding under this title;

‘‘(2) make any statement, or counsel or advise any assisted

person or prospective assisted person to make a statement in a

document filed in a case or proceeding under this title, that is

untrue and misleading, or that upon the exercise of reasonable

care, should have been known by such agency to be untrue or

misleading;

‘‘(3) misrepresent to any assisted person or prospective assisted person, directly or indirectly, affirmatively or by material

omission, with respect to—

‘‘(i) the services that such agency will provide to such

person; or

47

‘‘(ii) the benefits and risks that may result if such person becomes a debtor in a case under this title; or

‘‘(4) advise an assisted person or prospective assisted person

to incur more debt in contemplation of such person filing a case

under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing

for or representing a debtor in a case under this title.

‘‘(b) Any waiver by any assisted person of any protection or

right provided under this section shall not be enforceable against

the debtor by any Federal or State court or any other person, but

may be enforced against a debt relief agency.

‘‘(c)(1) Any contract for bankruptcy assistance between a debt relief agency and an assisted person that does not comply with the

material requirements of this section, section 527, or section 528

shall be void and may not be enforced by any Federal or State court

or by any other person, other than such assisted person.

‘‘(2) Any debt relief agency shall be liable to an assisted person

in the amount of any fees or charges in connection with providing

bankruptcy assistance to such person that such debt relief agency

has received, for actual damages, and for reasonable attorneys’ fees

and costs if such agency is found, after notice and hearing, to

have—

‘‘(A) intentionally or negligently failed to comply with any

provision of this section, section 527, or section 528 with respect

to a case or proceeding under this title for such assisted person;

‘‘(B) provided bankruptcy assistance to an assisted person

in a case or proceeding under this title that is dismissed or converted to a case under another chapter of this title because of

such agency’s intentional or negligent failure to file any required document including those specified in section 521; or

‘‘(C) intentionally or negligently disregarded the material

requirements of this title or the Federal Rules of Bankruptcy

Procedure applicable to such agency.

‘‘(3) In addition to such other remedies as are provided under

State law, whenever the chief law enforcement officer of a State, or

an official or agency designated by a State, has reason to believe

that any person has violated or is violating this section, the State—

‘‘(A) may bring an action to enjoin such violation;

‘‘(B) may bring an action on behalf of its residents to recover the actual damages of assisted persons arising from such

violation, including any liability under paragraph (2); and

‘‘(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and

reasonable attorney fees as determined by the court.

‘‘(4) The United States District Court for any district located in

the State shall have concurrent jurisdiction of any action under subparagraph (A) or (B) of paragraph (3).

‘‘(5) Notwithstanding any other provision of Federal law and in

addition to any other remedy provided under Federal or State law,

if the court, on its own motion or on motion of the United States

trustee or the debtor, finds that a person intentionally violated this

section, or engaged in a clear and consistent pattern or practice of

violating this section, the court may—

‘‘(A) enjoin the violation of such section; or

48

‘‘(B) impose an appropriate civil penalty against such person.’’.

‘‘(d) No provision of this section, section 527, or section 528

shall—

‘‘(1) annul, alter, affect, or exempt any person subject to

such sections from complying with any law of any State except

to the extent that such law is inconsistent with those sections,

and then only to the extent of the inconsistency; or

‘‘(2) be deemed to limit or curtail the authority or ability—

‘‘(A) of a State or subdivision or instrumentality thereof, to determine and enforce qualifications for the practice

of law under the laws of that State; or

‘‘(B) of a Federal court to determine and enforce the

qualifications for the practice of law before that court.’’.

(b) CONFORMING AMENDMENT.—The table of sections for chapter 5 of title 11, United States Code, is amended by inserting before

the item relating to section 527, the following:

‘‘526. Debt relief enforcement.’’.

SEC. 228. DISCLOSURES.

(a) DISCLOSURES.—Subchapter II of chapter 5 of title 11,

United States Code, as amended by this Act, is amended by adding

at the end the following:

‘‘§ 527. Disclosures

‘‘(a) A debt relief agency providing bankruptcy assistance to an

assisted person shall provide—

‘‘(1) the written notice required under section 342(b)(1) of

this title; and

‘‘(2) to the extent not covered in the written notice described

in paragraph (1), and not later than 3 business days after the

first date on which a debt relief agency first offers to provide

any bankruptcy assistance services to an assisted person, a

clear and conspicuous written notice advising assisted persons

that—

‘‘(A) all information that the assisted person is required

to provide with a petition and thereafter during a case

under this title is required to be complete, accurate, and

truthful;

‘‘(B) all assets and all liabilities are required to be

completely and accurately disclosed in the documents filed

to commence the case, and the replacement value of each

asset as defined in section 506 of this title must be stated

in those documents where requested after reasonable inquiry to establish such value;

‘‘(C) current monthly income, the amounts specified in

section 707(b)(2), and, in a case under chapter 13, disposable income (determined in accordance with section

707(b)(2)), are required to be stated after reasonable inquiry; and

‘‘(D) information that an assisted person provides during their case may be audited pursuant to this title, and

that failure to provide such information may result in disVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00048 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
49

missal of the proceeding under this title or other sanction

including, in some instances, criminal sanctions.

‘‘(b) A debt relief agency providing bankruptcy assistance to an

assisted person shall provide each assisted person at the same time

as the notices required under subsection (a)(1) with the following

statement, to the extent applicable, or one substantially similar. The

statement shall be clear and conspicuous and shall be in a single

document separate from other documents or notices provided to the

assisted person:

‘‘ ‘IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.

‘‘ ‘If you decide to seek bankruptcy relief, you can represent

yourself, you can hire an attorney to represent you, or you can get

help in some localities from a bankruptcy petition preparer who is

not an attorney. THE LAW REQUIRES AN ATTORNEY OR

BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR

BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND

HOW MUCH IT WILL COST. Ask to see the contract before you

hire anyone.

‘‘ ‘The following information helps you understand what must

be done in a routine bankruptcy case to help you evaluate how much

service you need. Although bankruptcy can be complex, many cases

are routine.

‘‘ ‘Before filing a bankruptcy case, either you or your attorney

should analyze your eligibility for different forms of debt relief made

available by the Bankruptcy Code and which form of relief is most

likely to be beneficial for you. Be sure you understand the relief you

can obtain and its limitations. To file a bankruptcy case, documents

called a Petition, Schedules and Statement of Financial Affairs, as

well as in some cases a Statement of Intention need to be prepared

correctly and filed with the bankruptcy court. You will have to pay

a filing fee to the bankruptcy court. Once your case starts, you will

have to attend the required first meeting of creditors where you may

be questioned by a court official called a ‘trustee’ and by creditors.

‘‘ ‘If you choose to file a chapter 7 case, you may be asked by

a creditor to reaffirm a debt. You may want help deciding whether

to do so and a creditor is not permitted to coerce you into reaffirming your debts.

‘‘ ‘If you choose to file a chapter 13 case in which you repay your

creditors what you can afford over 3 to 5 years, you may also want

help with preparing your chapter 13 plan and with the confirmation

hearing on your plan which will be before a bankruptcy judge.

‘‘ ‘If you select another type of relief under the Bankruptcy Code

other than chapter 7 or chapter 13, you will want to find out what

needs to be done from someone familiar with that type of relief.

‘‘ ‘Your bankruptcy case may also involve litigation. You are

generally permitted to represent yourself in litigation in bankruptcy

court, but only attorneys, not bankruptcy petition preparers, can

give you legal advice.’.

‘‘(c) Except to the extent the debt relief agency provides the required information itself after reasonably diligent inquiry of the assisted person or others so as to obtain such information reasonably

50

accurately for inclusion on the petition, schedules or statement of financial affairs, a debt relief agency providing bankruptcy assistance

to an assisted person, to the extent permitted by nonbankruptcy law,

shall provide each assisted person at the time required for the notice

required under subsection (a)(1) reasonably sufficient information

(which shall be provided in a clear and conspicuous writing) to the

assisted person on how to provide all the information the assisted

person is required to provide under this title pursuant to section

521, including—

‘‘(1) how to value assets at replacement value, determine

current monthly income, the amounts specified in section

707(b)(2)) and, in a chapter 13 case, how to determine disposable income in accordance with section 707(b)(2) and related

calculations;

‘‘(2) how to complete the list of creditors, including how to

determine what amount is owed and what address for the creditor should be shown; and

‘‘(3) how to determine what property is exempt and how to

value exempt property at replacement value as defined in section 506 of this title.

‘‘(d) A debt relief agency shall maintain a copy of the notices required under subsection (a) of this section for 2 years after the date

on which the notice is given the assisted person.’’.

(b) CONFORMING AMENDMENT.—The table of sections for chapter 5 of title 11, United States Code, as amended by this Act, is

amended by inserting after the item relating to section 526 the following:

‘‘527. Disclosures.’’.

SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.

(a) ENFORCEMENT.—Subchapter II of chapter 5 of title 11,

United States Code, as amended by this Act, is amended by adding

at the end the following:

‘‘§ 528. Requirements for debt relief agencies

‘‘(a) A debt relief agency shall—

‘‘(1) not later than 5 business days after the first date such

agency provides any bankruptcy assistance services to an assisted person, but prior to such assisted person’s petition under

this title being filed, execute a written contract with such assisted person that explains clearly and conspicuously—

‘‘(A) the services such agency will provide to such assisted person; and

‘‘(B) the fees or charges for such services, and the terms

of payment;

‘‘(2) provide the assisted person with a copy of the fully executed and completed contract;

‘‘(3) clearly and conspicuously disclose in any advertisement

of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public (whether in general media,

seminars or specific mailings, telephonic or electronic messages,

or otherwise) that the services or benefits are with respect to

bankruptcy relief under this title; and

51

‘‘(4) clearly and conspicuously using the following statement: ‘We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.’ or a substantially

similar statement.

‘‘(b)(1) An advertisement of bankruptcy assistance services or of

the benefits of bankruptcy directed to the general public includes—

‘‘(A) descriptions of bankruptcy assistance in connection

with a chapter 13 plan whether or not chapter 13 is specifically

mentioned in such advertisement; and

‘‘(B) statements such as ‘federally supervised repayment

plan’ or ‘Federal debt restructuring help’ or other similar statements that could lead a reasonable consumer to believe that

debt counseling was being offered when in fact the services were

directed to providing bankruptcy assistance with a chapter 13

plan or other form of bankruptcy relief under this title.

‘‘(2) An advertisement, directed to the general public, indicating

that the debt relief agency provides assistance with respect to credit

defaults, mortgage foreclosures, eviction proceedings, excessive debt,

debt collection pressure, or inability to pay any consumer debt

shall—

‘‘(A) disclose clearly and conspicuously in such advertisement that the assistance may involve bankruptcy relief under

this title; and

‘‘(B) include the following statement: ‘We are a debt relief

agency. We help people file for bankruptcy relief under the

Bankruptcy Code,’ or a substantially similar statement.’’.

(b) CONFORMING AMENDMENT.—The table of sections for chapter 5 of title 11, United States Code, as amended by this Act, is

amended by inserting after the item relating to section 527, the following:

‘‘528. Debtor’s bill of rights.’’.

SEC. 230. GAO STUDY.

(a) STUDY.—Not later than 270 days after the date of enactment

of this Act, the Comptroller General of the United States shall conduct a study of the feasibility, effectiveness, and cost of requiring

trustees appointed under title 11, United States Code, or the bankruptcy courts, to provide to the Office of Child Support Enforcement

promptly after the commencement of cases by individual debtors

under such title, the names and social security numbers of such

debtors for the purposes of allowing such Office to determine whether such debtors have outstanding obligations for child support (as

determined on the basis of information in the Federal Case Registry

or other national database).

(b) REPORT.—Not later than 300 days after the date of enactment of this Act, the Comptroller General shall submit to the President pro tempore of the Senate and the Speaker of the House of Representatives a report containing the results of the study required by

subsection (a).

52

TITLE III—DISCOURAGING

BANKRUPTCY ABUSE

SEC. 301. REINFORCEMENT OF THE FRESH START.

Section 523(a)(17) of title 11, United States Code, is amended—

(1) by striking ‘‘by a court’’ and inserting ‘‘on a prisoner by

any court’’,

(2) by striking ‘‘section 1915(b) or (f)’’ and inserting ‘‘subsection (b) or (f)(2) of section 1915’’, and

(3) by inserting ‘‘(or a similar non-Federal law)’’ after ‘‘title

28’’ each place it appears.

SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.

Section 362(c) of title 11, United States Code, is amended—

(1) in paragraph (1), by striking ‘‘and’’ at the end;

(2) in paragraph (2), by striking the period at the end and

inserting a semicolon; and

(3) by adding at the end the following:

‘‘(3) if a single or joint case is filed by or against an individual debtor under chapter 7, 11, or 13, and if a single or joint

case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b)—

‘‘(A) the stay under subsection (a) with respect to any

action taken with respect to a debt or property securing

such debt or with respect to any lease shall terminate with

respect to the debtor on the 30th day after the filing of the

later case;

‘‘(B) upon motion by a party in interest for continuation

of the automatic stay and upon notice and a hearing, the

court may extend the stay in particular cases as to any or

all creditors (subject to such conditions or limitations as

the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the

party in interest demonstrates that the filing of the later

case is in good faith as to the creditors to be stayed; and

‘‘(C) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such presumption

may be rebutted by clear and convincing evidence to the

contrary)—

‘‘(i) as to all creditors, if—

‘‘(I) more than 1 previous case under any of

chapter 7, 11, or 13 in which the individual was

a debtor was pending within the preceding 1-year

period;

‘‘(II) a previous case under any of chapter 7,

11, or 13 in which the individual was a debtor

was dismissed within such 1-year period, after the

debtor failed to—

‘‘(aa) file or amend the petition or other

documents as required by this title or the court

without substantial excuse (but mere inadvertence or negligence shall not be a substantial

53

excuse unless the dismissal was caused by the

negligence of the debtor’s attorney);

‘‘(bb) provide adequate protection as ordered by the court; or

‘‘(cc) perform the terms of a plan confirmed by the court; or

‘‘(III) there has not been a substantial change

in the financial or personal affairs of the debtor

since the dismissal of the next most previous case

under chapter 7, 11, or 13 or any other reason to

conclude that the later case will be concluded—

‘‘(aa) if a case under chapter 7, with a discharge; or

‘‘(bb) if a case under chapter 11 or 13,

with a confirmed plan which will be fully performed; and

‘‘(ii) as to any creditor that commenced an action

under subsection (d) in a previous case in which the individual was a debtor if, as of the date of dismissal of

such case, that action was still pending or had been resolved by terminating, conditioning, or limiting the

stay as to actions of such creditor; and

‘‘(4)(A)(i) if a single or joint case is filed by or against an

individual debtor under this title, and if 2 or more single or

joint cases of the debtor were pending within the previous year

but were dismissed, other than a case refiled under section

707(b), the stay under subsection (a) shall not go into effect

upon the filing of the later case; and

‘‘(ii) on request of a party in interest, the court shall

promptly enter an order confirming that no stay is in effect;

‘‘(B) if, within 30 days after the filing of the later case, a

party in interest requests the court may order the stay to take

effect in the case as to any or all creditors (subject to such conditions or limitations as the court may impose), after notice and

hearing, only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be

stayed;

‘‘(C) a stay imposed under subparagraph (B) shall be effective on the date of entry of the order allowing the stay to go into

effect; and

‘‘(D) for purposes of subparagraph (B), a case is presumptively not filed in good faith (but such presumption may be rebutted by clear and convincing evidence to the contrary)—

‘‘(i) as to all creditors if—

‘‘(I) 2 or more previous cases under this title in

which the individual was a debtor were pending within the 1-year period;

‘‘(II) a previous case under this title in which the

individual was a debtor was dismissed within the time

period stated in this paragraph after the debtor failed

to file or amend the petition or other documents as required by this title or the court without substantial excuse (but mere inadvertence or negligence shall not be

substantial excuse unless the dismissal was caused by

54

the negligence of the debtor’s attorney), failed to pay

adequate protection as ordered by the court, or failed

to perform the terms of a plan confirmed by the court;

or

‘‘(III) there has not been a substantial change in

the financial or personal affairs of the debtor since the

dismissal of the next most previous case under this

title, or any other reason to conclude that the later case

will not be concluded, if a case under chapter 7, with

a discharge, and if a case under chapter 11 or 13, with

a confirmed plan that will be fully performed; or

‘‘(ii) as to any creditor that commenced an action under

subsection (d) in a previous case in which the individual

was a debtor if, as of the date of dismissal of such case,

such action was still pending or had been resolved by terminating, conditioning, or limiting the stay as to action of

such creditor.’’.

SEC. 303. CURBING ABUSIVE FILINGS.

(a) IN GENERAL.—Section 362(d) of title 11, United States Code,

is amended—

(1) in paragraph (2), by striking ‘‘or’’ at the end;

(2) in paragraph (3), by striking the period at the end and

inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(4) with respect to a stay of an act against real property

under subsection (a), by a creditor whose claim is secured by an

interest in such real estate, if the court finds that the filing of

the bankruptcy petition was part of a scheme to delay, hinder,

and defraud creditors that involved either—

‘‘(A) transfer of all or part ownership of, or other interest in, the real property without the consent of the secured

creditor or court approval; or

‘‘(B) multiple bankruptcy filings affecting the real property.

If recorded in compliance with applicable State laws governing notices of interests or liens in real property, an order entered under

this subsection shall be binding in any other case under this title

purporting to affect the real property filed not later than 2 years

after the date of entry of such order by the court, except that a debtor in a subsequent case may move for relief from such order based

upon changed circumstances or for good cause shown, after notice

and a hearing. Any Federal, State, or local governmental unit that

accepts notices of interests or liens in real property shall accept any

certified copy of an order described in this subsection for indexing

and recording.’’.

(b) AUTOMATIC STAY.—Section 362(b) of title 11, United States

Code, is amended by inserting after paragraph (19), as added by

this Act, the following:

‘‘(20) under subsection (a), of any act to enforce any lien

against or security interest in real property following the entry

of an order under section 362(d)(4) as to that property in any

prior bankruptcy case for a period of 2 years after entry of such

an order, except that the debtor, in a subsequent case, may

move the court for relief from such order based upon changed

55

circumstances or for other good cause shown, after notice and

a hearing;

‘‘(21) under subsection (a), of any act to enforce any lien

against or security interest in real property—

‘‘(A) if the debtor is ineligible under section 109(g) to

be a debtor in a bankruptcy case; or

‘‘(B) if the bankruptcy case was filed in violation of a

bankruptcy court order in a prior bankruptcy case prohibiting the debtor from being a debtor in another bankruptcy

case;’’.

SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

Title 11, United States Code, is amended—

(1) in section 521(a) (as so designated by this Act)—

(A) in paragraph (4), by striking ‘‘, and’’ at the end and

inserting a semicolon;

(B) in paragraph (5), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(6) in an individual case under chapter 7 of this title, not

retain possession of personal property as to which a creditor

has an allowed claim for the purchase price secured in whole

or in part by an interest in that personal property unless, in the

case of an individual debtor, the debtor, not later than 45 days

after the first meeting of creditors under section 341(a), either—

‘‘(A) enters into an agreement with the creditor pursuant to section 524(c) of this title with respect to the claim

secured by such property; or

‘‘(B) redeems such property from the security interest

pursuant to section 722 of this title.

If the debtor fails to so act within the 45-day period referred to in

paragraph (6), the stay under section 362(a) of this title is terminated with respect to the personal property of the estate or of the

debtor which is affected, such property shall no longer be property

of the estate, and the creditor may take whatever action as to such

property as is permitted by applicable nonbankruptcy law, unless

the court determines on the motion of the trustee brought before the

expiration of such 45-day period, and after notice and a hearing,

that such property is of consequential value or benefit to the estate,

orders appropriate adequate protection of the creditor’s interest, and

orders the debtor to deliver any collateral in the debtor’s possession

to the trustee.’’; and

(2) in section 722, by inserting ‘‘in full at the time of redemption’’ before the period at the end.

SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR

DOES NOT COMPLETE INTENDED SURRENDER OF CONSUMER DEBT COLLATERAL.

Title 11, United States Code, is amended—

(1) in section 362—

(A) in subsection (c), by striking ‘‘(e), and (f)’’ inserting

‘‘(e), (f), and (h)’’;

(B) by redesignating subsection (h) as subsection (k);

and

(C) by inserting after subsection (g) the following:

56

‘‘(h)(1) In an individual case under chapter 7, 11, or 13, the

stay provided by subsection (a) is terminated with respect to personal property of the estate or of the debtor securing in whole or in

part a claim, or subject to an unexpired lease, and such personal

property shall no longer be property of the estate if the debtor fails

within the applicable time set by section 521(a)(2) of this title—

‘‘(A) to file timely any statement of intention required under

section 521(a)(2) of this title with respect to that property or to

indicate in that statement that the debtor will either surrender

the property or retain it and, if retaining it, either redeem the

property pursuant to section 722 of this title, reaffirm the debt

it secures pursuant to section 524(c) of this title, or assume the

unexpired lease pursuant to section 365(p) of this title if the

trustee does not do so, as applicable; and

‘‘(B) to take timely the action specified in that statement of

intention, as it may be amended before expiration of the period

for taking action, unless the statement of intention specifies reaffirmation and the creditor refuses to reaffirm on the original

contract terms.

‘‘(2) Paragraph (1) does not apply if the court determines, on the

motion of the trustee filed before the expiration of the applicable

time set by section 521(a)(2), after notice and a hearing, that such

property is of consequential value or benefit to the estate, and orders

appropriate adequate protection of the creditor’s interest, and orders

the debtor to deliver any collateral in the debtor’s possession to the

trustee. If the court does not so determine, the stay provided by subsection (a) shall terminate upon the conclusion of the proceeding on

the motion.’’; and

(2) in section 521—

(A) in subsection (a)(2), as so designated by this Act, by

striking ‘‘consumer’’;

(B) in subsection (a)(2)(B), as so designated by this

Act—

(i) by striking ‘‘forty-five days after the filing of a

notice of intent under this section’’ and inserting ‘‘30

days after the first date set for the meeting of creditors

under section 341(a) of this title’’; and

(ii) by striking ‘‘forty-five day’’ and inserting ‘‘30-

day’’;

(C) in subsection (a)(2)(C), as so designated by this Act,

by inserting ‘‘, except as provided in section 362(h) of this

title’’ before the semicolon; and

(D) by adding at the end the following:

‘‘(d) If the debtor fails timely to take the action specified in subsection (a)(6) of this section, or in paragraphs (1) and (2) of section

362(h) of this title, with respect to property which a lessor or bailor

owns and has leased, rented, or bailed to the debtor or as to which

a creditor holds a security interest not otherwise voidable under section 522(f), 544, 545, 547, 548, or 549 of this title, nothing in this

title shall prevent or limit the operation of a provision in the underlying lease or agreement which has the effect of placing the debtor

in default under such lease or agreement by reason of the occurrence, pendency, or existence of a proceeding under this title or the

57

insolvency of the debtor. Nothing in this subsection shall be deemed

to justify limiting such a provision in any other circumstance.’’.

SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER

13.

(a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title 11, United

States Code, is amended to read as follows:

‘‘(i) the plan provides that—

‘‘(I) the holder of such claim retain the lien securing such claim until the earlier of—

‘‘(aa) the payment of the underlying debt determined under nonbankruptcy law; or

‘‘(bb) discharge under section 1328; and

‘‘(II) if the case under this chapter is dismissed or

converted without completion of the plan, such lien

shall also be retained by such holder to the extent recognized by applicable nonbankruptcy law; and’’.

(b) RESTORING THE FOUNDATION FOR SECURED CREDIT.—Section 1325(a) of title 11, United States Code, is amended by adding

at the end the following flush sentence:

‘‘For purposes of paragraph (5), section 506 shall not apply to a

claim described in that paragraph if the creditor has a purchase

money security interest securing the debt that is the subject of the

claim, the debt was incurred within the 5-year period preceding the

filing of the petition, and the collateral for that debt consists of a

motor vehicle (as defined in section 30102 of title 49) acquired for

the personal use of the debtor, or if collateral for that debt consists

of any other thing of value, if the debt was incurred during the 1-

year period preceding that filing.’’.

(c) DEFINITIONS.—Section 101 of title 11, United States Code,

as amended by this Act, is amended—

(1) by inserting after paragraph (13) the following:

‘‘(13A) ‘debtor’s principal residence’—

‘‘(A) means a residential structure, including incidental

property, without regard to whether that structure is attached to real property; and

‘‘(B) includes an individual condominium or cooperative unit, a mobile or manufactured home, or trailer;’’; and

(2) by inserting after paragraph (27), the following:

‘‘(27A) ‘incidental property’ means, with respect to a debtor’s principal residence—

‘‘(A) property commonly conveyed with a principal residence in the area where the real estate is located;

‘‘(B) all easements, rights, appurtenances, fixtures,

rents, royalties, mineral rights, oil or gas rights or profits,

water rights, escrow funds, or insurance proceeds; and

‘‘(C) all replacements or additions;’’.

SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

Section 522(b)(3)(A) of title 11, United States Code, as so designated by this Act, is amended—

(1) by striking ‘‘180 days’’ and inserting ‘‘730 days’’; and

(2) by striking ‘‘, or for a longer portion of such 180-day period than in any other place’’ and inserting ‘‘or if the debtor’s

domicile has not been located at a single State for such 730-day

58

period, the place in which the debtor’s domicile was located for

180 days immediately preceding the 730-day period or for a

longer portion of such 180-day period than in any other place’’.

SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EXEMPTION.

Section 522 of title 11, United States Code, is amended—

(1) in subsection (b)(3)(A), as so designated by this Act, by

inserting ‘‘subject to subsections (o) and (p),’’ before ‘‘any property’’; and

(2) by adding at the end the following:

‘‘(o) For purposes of subsection (b)(3)(A), and notwithstanding

subsection (a), the value of an interest in—

‘‘(1) real or personal property that the debtor or a dependent of the debtor uses as a residence;

‘‘(2) a cooperative that owns property that the debtor or a

dependent of the debtor uses as a residence; or

‘‘(3) a burial plot for the debtor or a dependent of the debtor;

shall be reduced to the extent that such value is attributable to any

portion of any property that the debtor disposed of in the 7-year period ending on the date of the filing of the petition with the intent

to hinder, delay, or defraud a creditor and that the debtor could not

exempt, or that portion that the debtor could not exempt, under subsection (b), if on such date the debtor had held the property so disposed of.’’.

SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 13 CASES.

(a) STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.—Section 348(f)(1) of title 11, United States Code, is amended—

(1) in subparagraph (A), by striking ‘‘and’’ at the end;

(2) in subparagraph (B)—

(A) by striking ‘‘in the converted case, with allowed secured claims’’ and inserting ‘‘only in a case converted to a

case under chapter 11 or 12, but not in a case converted to

a case under chapter 7, with allowed secured claims in

cases under chapters 11 and 12’’; and

(B) by striking the period and inserting ‘‘; and’’; and

(3) by adding at the end the following:

‘‘(C) with respect to cases converted from chapter 13—

‘‘(i) the claim of any creditor holding security as of the

date of the petition shall continue to be secured by that security unless the full amount of such claim determined

under applicable nonbankruptcy law has been paid in full

as of the date of conversion, notwithstanding any valuation

or determination of the amount of an allowed secured claim

made for the purposes of the chapter 13 proceeding; and

‘‘(ii) unless a prebankruptcy default has been fully

cured under the plan at the time of conversion, in any proceeding under this title or otherwise, the default shall have

the effect given under applicable nonbankruptcy law.’’.

(b) GIVING DEBTORS THE ABILITY TO KEEP LEASED PERSONAL

PROPERTY BY ASSUMPTION.—Section 365 of title 11, United States

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

‘‘(p)(1) If a lease of personal property is rejected or not timely

assumed by the trustee under subsection (d), the leased property is

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no longer property of the estate and the stay under section 362(a)

is automatically terminated.

‘‘(2)(A) In the case of an individual under chapter 7, the debtor

may notify the creditor in writing that the debtor desires to assume

the lease. Upon being so notified, the creditor may, at its option, notify the debtor that it is willing to have the lease assumed by the

debtor and may condition such assumption on cure of any outstanding default on terms set by the contract.

‘‘(B) If, not later than 30 days after notice is provided under

subparagraph (A), the debtor notifies the lessor in writing that the

lease is assumed, the liability under the lease will be assumed by

the debtor and not by the estate.

‘‘(C) The stay under section 362 and the injunction under section 524(a)(2) shall not be violated by notification of the debtor and

negotiation of cure under this subsection.

‘‘(3) In a case under chapter 11 in which the debtor is an individual and in a case under chapter 13, if the debtor is the lessee

with respect to personal property and the lease is not assumed in

the plan confirmed by the court, the lease is deemed rejected as of

the conclusion of the hearing on confirmation. If the lease is rejected, the stay under section 362 and any stay under section 1301

is automatically terminated with respect to the property subject to

the lease.’’.

(c) ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY

SECURED CREDITORS.—

(1) CONFIRMATION OF PLAN.—Section 1325(a)(5)(B) of title

11, United States Code, is amended—

(A) in clause (i), by striking ‘‘and’’ at the end;

(B) in clause (ii), by striking ‘‘or’’ at the end and inserting ‘‘and’’; and

(C) by adding at the end the following:

‘‘(iii) if—

‘‘(I) property to be distributed pursuant to this

subsection is in the form of periodic payments,

such payments shall be in equal monthly amounts;

and

‘‘(II) the holder of the claim is secured by personal property, the amount of such payments shall

not be less than an amount sufficient to provide to

the holder of such claim adequate protection during the period of the plan; or’’.

(2) PAYMENTS.—Section 1326(a) of title 11, United States

Code, is amended to read as follows:

‘‘(a)(1) Unless the court orders otherwise, the debtor shall commence making payments not later than 30 days after the date of the

filing of the plan or the order for relief, whichever is earlier, in the

amount—

‘‘(A) proposed by the plan to the trustee;

‘‘(B) scheduled in a lease of personal property directly to the

lessor for that portion of the obligation that becomes due after

the order for relief, reducing the payments under subparagraph

(A) by the amount so paid and providing the trustee with evidence of such payment, including the amount and date of payment; and

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‘‘(C) that provides adequate protection directly to a creditor

holding an allowed claim secured by personal property to the

extent the claim is attributable to the purchase of such property

by the debtor for that portion of the obligation that becomes due

after the order for relief, reducing the payments under subparagraph (A) by the amount so paid and providing the trustee with

evidence of such payment, including the amount and date of

payment.

‘‘(2) A payment made under paragraph (1)(A) shall be retained

by the trustee until confirmation or denial of confirmation. If a plan

is confirmed, the trustee shall distribute any such payment in accordance with the plan as soon as is practicable. If a plan is not

confirmed, the trustee shall return any such payments not previously paid and not yet due and owing to creditors pursuant to

paragraph (3) to the debtor, after deducting any unpaid claim allowed under section 503(b).

‘‘(3) Subject to section 363, the court may, upon notice and a

hearing, modify, increase, or reduce the payments required under

this subsection pending confirmation of a plan.

‘‘(4) Not later than 60 days after the date of filing of a case

under this chapter, a debtor retaining possession of personal property subject to a lease or securing a claim attributable in whole or

in part to the purchase price of such property shall provide the lessor or secured creditor reasonable evidence of the maintenance of

any required insurance coverage with respect to the use or ownership of such property and continue to do so for so long as the debtor

retains possession of such property.’’.

SEC. 310. LIMITATION ON LUXURY GOODS.

Section 523(a)(2)(C) of title 11, United States Code, is amended

to read as follows:

‘‘(C)(i) for purposes of subparagraph (A)—

‘‘(I) consumer debts owed to a single creditor and aggregating more than $250 for luxury goods or services incurred by an individual debtor on or within 90 days before

the order for relief under this title are presumed to be nondischargeable; and

‘‘(II) cash advances aggregating more than $750 that

are extensions of consumer credit under an open end credit

plan obtained by an individual debtor on or within 70 days

before the order for relief under this title, are presumed to

be nondischargeable; and

‘‘(ii) for purposes of this subparagraph—

‘‘(I) the term ‘extension of credit under an open end

credit plan’ means an extension of credit under an open end

credit plan, within the meaning of the Consumer Credit

Protection Act (15 U.S.C. 1601 et seq.);

‘‘(II) the term ‘open end credit plan’ has the meaning

given that term under section 103 of Consumer Credit Protection Act (15 U.S.C. 1602); and

‘‘(III) the term ‘luxury goods or services’ does not include goods or services reasonably necessary for the support

or maintenance of the debtor or a dependent of the debtor.’’.

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SEC. 311. AUTOMATIC STAY.

Section 362(b) of title 11, United States Code, is amended by inserting after paragraph (21), as added by this Act, the following:

‘‘(22) under subsection (a)(3), of the continuation of any

eviction, unlawful detainer action, or similar proceeding by a

lessor against a debtor involving residential real property in

which the debtor resides as a tenant under a rental agreement;

‘‘(23) under subsection (a)(3), of the commencement of any

eviction, unlawful detainer action, or similar proceeding by a

lessor against a debtor involving residential real property in

which the debtor resides as a tenant under a rental agreement

that has terminated under the lease agreement or applicable

State law;

‘‘(24) under subsection (a)(3), of eviction actions based on

endangerment to property or person or the use of illegal drugs;

‘‘(25) under subsection (a) of any transfer that is not avoidable under section 544 and that is not avoidable under section

549;’’.

SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY DISCHARGES.

Title 11, United States Code, is amended—

(1) in section 727(a)(8), by striking ‘‘six’’ and inserting ‘‘8’’;

and

(2) in section 1328, by inserting after subsection (e) the following:

‘‘(f) Notwithstanding subsections (a) and (b), the court shall not

grant a discharge of all debts provided for by the plan or disallowed

under section 502 if the debtor has received a discharge in any case

filed under this title within 5 years before the order for relief under

this chapter.’’.

SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND ANTIQUES.

(a) DEFINITION.—Section 522(f) of title 11, United States Code,

is amended by adding at the end the following:

‘‘(4)(A) Subject to subparagraph (B), for purposes of paragraph

(1)(B), the term ‘household goods’ means—

‘‘(i) clothing;

‘‘(ii) furniture;

‘‘(iii) appliances;

‘‘(iv) 1 radio;

‘‘(v) 1 television;

‘‘(vi) 1 VCR;

‘‘(vii) linens;

‘‘(viii) china;

‘‘(ix) crockery;

‘‘(x) kitchenware;

‘‘(xi) educational materials and educational equipment primarily for the use of minor dependent children of the debtor,

but only 1 personal computer only if used primarily for the education or entertainment of such minor children;

‘‘(xii) medical equipment and supplies;

‘‘(xiii) furniture exclusively for the use of minor children, or

elderly or disabled dependents of the debtor; and

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‘‘(xiv) personal effects (including the toys and hobby equipment of minor dependent children and wedding rings) of the

debtor and the dependents of the debtor.

‘‘(B) The term ‘household goods’ does not include—

‘‘(i) works of art (unless by or of the debtor or the dependents of the debtor);

‘‘(ii) electronic entertainment equipment (except 1 television,

1 radio, and 1 VCR);

‘‘(iii) items acquired as antiques;

‘‘(iv) jewelry (except wedding rings); and

‘‘(v) a computer (except as otherwise provided for in this

section), motor vehicle (including a tractor or lawn tractor),

boat, or a motorized recreational device, conveyance, vehicle,

watercraft, or aircraft.’’.

(b) STUDY.—Not later than 2 years after the date of enactment

of this Act, the Director of the Executive Office for United States

Trustees shall submit a report to the Committee on the Judiciary of

the Senate and the Committee on the Judiciary of the House of Representatives containing its findings regarding utilization of the definition of household goods, as defined in section 522(f)(4) of title 11,

United States Code, as added by this section, with respect to the

avoidance of nonpossessory, nonpurchase money security interests in

household goods under section 522(f)(1)(B) of title 11, United States

Code, and the impact that section 522(f)(4) of that title, as added

by this section, has had on debtors and on the bankruptcy courts.

Such report may include recommendations for amendments to section 522(f)(4) of title 11, United States Code, consistent with the Director’s findings.

SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE DEBTS.

(a) IN GENERAL.—Section 523(a) of title 11, United States Code,

is amended by inserting after paragraph (14) the following:

‘‘(14A) incurred to pay a tax to a governmental unit, other

than the United States, that would be nondischargeable under

paragraph (1);’’.

(b) DISCHARGE UNDER CHAPTER 13.—Section 1328(a) of title

11, United States Code, is amended by striking paragraphs (1)

through (3) and inserting the following:

‘‘(1) provided for under section 1322(b)(5);

‘‘(2) of the kind specified in paragraph (2), (3), (4), (5), (8),

or (9) of section 523(a);

‘‘(3) for restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime; or

‘‘(4) for restitution, or damages, awarded in a civil action

against the debtor as a result of willful or malicious injury by

the debtor that caused personal injury to an individual or the

death of an individual.’’.

SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 AND 13

CASES.

(a) NOTICE.—Section 342 of title 11, United States Code, as

amended by this Act, is amended—

(1) in subsection (c)—

(A) by inserting ‘‘(1)’’ after ‘‘(c)’’;

63

(B) by striking ‘‘, but the failure of such notice to contain such information shall not invalidate the legal effect

of such notice’’; and

(C) by adding at the end the following:

‘‘(2) If, within the 90 days prior to the date of the filing of

a petition in a voluntary case, the creditor supplied the debtor

in at least 2 communications sent to the debtor with the current

account number of the debtor and the address at which the

creditor wishes to receive correspondence, then the debtor shall

send any notice required under this title to the address provided by the creditor and such notice shall include the account

number. In the event the creditor would be in violation of applicable nonbankruptcy law by sending any such communication

within such 90-day period and if the creditor supplied the debtor in the last 2 communications with the current account number of the debtor and the address at which the creditor wishes

to receive correspondence, then the debtor shall send any notice

required under this title to the address provided by the creditor

and such notice shall include the account number.’’; and

(2) by adding at the end the following:

‘‘(e) At any time, a creditor, in a case of an individual debtor

under chapter 7 or 13, may file with the court and serve on the

debtor a notice of the address to be used to notify the creditor in

that case. Five days after receipt of such notice, if the court or the

debtor is required to give the creditor notice, such notice shall be

given at that address.

‘‘(f) An entity may file with the court a notice stating its address

for notice in cases under chapters 7 and 13. After 30 days following

the filing of such notice, any notice in any case filed under chapter

7 or 13 given by the court shall be to that address unless specific

notice is given under subsection (e) with respect to a particular case.

‘‘(g)(1) Notice given to a creditor other than as provided in this

section shall not be effective notice until that notice has been

brought to the attention of the creditor. If the creditor designates a

person or department to be responsible for receiving notices concerning bankruptcy cases and establishes reasonable procedures so

that bankruptcy notices received by the creditor are to be delivered

to such department or person, notice shall not be considered to have

been brought to the attention of the creditor until received by such

person or department.

‘‘(2) No sanction under section 362(k) or any other sanction that

a court may impose on account of violations of the stay under section 362(a) or failure to comply with section 542 or 543 may be imposed on any action of the creditor unless the action takes place

after the creditor has received notice of the commencement of the

case effective under this section.’’.

(b) DEBTOR’S DUTIES.—Section 521 of title 11, United States

Code, as amended by this Act, is amended—

(1) in subsection (a), as so designated by this Act, by striking paragraph (1) and inserting the following:

‘‘(1) file—

‘‘(A) a list of creditors; and

‘‘(B) unless the court orders otherwise—

‘‘(i) a schedule of assets and liabilities;

64

‘‘(ii) a schedule of current income and current expenditures;

‘‘(iii) a statement of the debtor’s financial affairs

and, if applicable, a certificate—

‘‘(I) of an attorney whose name is on the petition as the attorney for the debtor or any bankruptcy petition preparer signing the petition under

section 110(b)(1) indicating that such attorney or

bankruptcy petition preparer delivered to the debtor any notice required by section 342(b); or

‘‘(II) if no attorney for the debtor is indicated

and no bankruptcy petition preparer signed the petition, of the debtor that such notice was obtained

and read by the debtor;

‘‘(iv) copies of all payment advices or other evidence of payment, if any, received by the debtor from

any employer of the debtor in the period 60 days before

the filing of the petition;

‘‘(v) a statement of the amount of monthly net income, itemized to show how the amount is calculated;

and

‘‘(vi) a statement disclosing any reasonably anticipated increase in income or expenditures over the 12-

month period following the date of filing;’’; and

(2) by adding at the end the following:

‘‘(e)(1) At any time, a creditor, in the case of an individual

under chapter 7 or 13, may file with the court notice that the creditor requests the petition, schedules, and a statement of affairs filed

by the debtor in the case, and the court shall make those documents

available to the creditor who requests those documents.

‘‘(2)(A) The debtor shall provide either a tax return or transcript

at the election of the debtor, for the latest taxable period prior to filing for which a tax return has been or should have been filed, to

the trustee, not later than 7 days before the date first set for the first

meeting of creditors, or the case shall be dismissed, unless the debtor demonstrates that the failure to file a return as required is due

to circumstances beyond the control of the debtor.

‘‘(B) If a creditor has requested a tax return or transcript referred to in subparagraph (A), the debtor shall provide such tax return or transcript to the requesting creditor at the time the debtor

provides the tax return or transcript to the trustee, or the case shall

be dismissed, unless the debtor demonstrates that the debtor is unable to provide such information due to circumstances beyond the

control of the debtor.

‘‘(3)(A) At any time, a creditor in a case under chapter 13 may

file with the court notice that the creditor requests the plan filed by

the debtor in the case.

‘‘(B) The court shall make such plan available to the creditor

who request such plan—

‘‘(i) at a reasonable cost; and

‘‘(ii) not later than 5 days after such request.

‘‘(f) An individual debtor in a case under chapter 7, 11, or 13

shall file with the court at the request of any party in interest—

65

‘‘(1) at the time filed with the taxing authority, all tax returns required under applicable law, including any schedules

or attachments, with respect to the period from the commencement of the case until such time as the case is closed;

‘‘(2) at the time filed with the taxing authority, all tax returns required under applicable law, including any schedules

or attachments, that were not filed with the taxing authority

when the schedules under subsection (a)(1) were filed with respect to the period that is 3 years before the order of relief;

‘‘(3) any amendments to any of the tax returns, including

schedules or attachments, described in paragraph (1) or (2);

and

‘‘(4) in a case under chapter 13, a statement subject to the

penalties of perjury by the debtor of the debtor’s income and expenditures in the preceding tax year and monthly income, that

shows how the amounts are calculated—

‘‘(A) beginning on the date that is the later of 90 days

after the close of the debtor’s tax year or 1 year after the

order for relief, unless a plan has been confirmed; and

‘‘(B) thereafter, on or before the date that is 45 days before each anniversary of the confirmation of the plan until

the case is closed.

‘‘(g)(1) A statement referred to in subsection (f)(4) shall

disclose—

‘‘(A) the amount and sources of income of the debtor;

‘‘(B) the identity of any person responsible with the debtor

for the support of any dependent of the debtor; and

‘‘(C) the identity of any person who contributed, and the

amount contributed, to the household in which the debtor resides.

‘‘(2) The tax returns, amendments, and statement of income and

expenditures described in subsection (e)(2)(A) and subsection (f)

shall be available to the United States trustee, any bankruptcy administrator, any trustee, and any party in interest for inspection

and copying, subject to the requirements of subsection (h).

‘‘(h)(1) Not later than 180 days after the date of enactment of

the Bankruptcy Reform Act of 2000, the Director of the Administrative Office of the United States Courts shall establish procedures for

safeguarding the confidentiality of any tax information required to

be provided under this section.

‘‘(2) The procedures under paragraph (1) shall include restrictions on creditor access to tax information that is required to be provided under this section.

‘‘(3) Not later than 1 year and 180 days after the date of enactment of the Bankruptcy Reform Act of 2000, the Director of the Administrative Office of the United States Courts shall prepare and

submit to Congress a report that—

‘‘(A) assesses the effectiveness of the procedures under paragraph (1); and

‘‘(B) if appropriate, includes proposed legislation to—

‘‘(i) further protect the confidentiality of tax information; and

66

‘‘(ii) provide penalties for the improper use by any person of the tax information required to be provided under

this section.

‘‘(i) If requested by the United States trustee or a trustee serving

in the case, the debtor shall provide—

‘‘(1) a document that establishes the identity of the debtor,

including a driver’s license, passport, or other document that

contains a photograph of the debtor; and

‘‘(2) such other personal identifying information relating to

the debtor that establishes the identity of the debtor.’’.

SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR

PROVIDE REQUIRED INFORMATION.

Section 521 of title 11, United States Code, as amended by this

Act, is amended by adding at the end the following:

‘‘(j)(1) Notwithstanding section 707(a), and subject to paragraph

(2), if an individual debtor in a voluntary case under chapter 7 or

13 fails to file all of the information required under subsection

(a)(1) within 45 days after the filing of the petition commencing the

case, the case shall be automatically dismissed effective on the 46th

day after the filing of the petition.

‘‘(2) With respect to a case described in paragraph (1), any party

in interest may request the court to enter an order dismissing the

case. If requested, the court shall enter an order of dismissal not

later than 5 days after such request.

‘‘(3) Upon request of the debtor made within 45 days after the

filing of the petition commencing a case described in paragraph (1),

the court may allow the debtor an additional period of not to exceed

45 days to file the information required under subsection (a)(1) if

the court finds justification for extending the period for the filing.’’.

SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE PLAN.

Section 1324 of title 11, United States Code, is amended—

(1) by striking ‘‘After’’ and inserting the following:

‘‘(a) Except as provided in subsection (b) and after’’; and

(2) by adding at the end the following:

‘‘(b) The hearing on confirmation of the plan may be held not

earlier than 20 days and not later than 45 days after the date of

the meeting of creditors under section 341(a).’’.

SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN CERTAIN CASES.

Title 11, United States Code, is amended—

(1) by amending section 1322(d) to read as follows:

‘‘(d)(1) If the current monthly income of the debtor and the debtor’s spouse combined, when multiplied by 12, is not less than—

‘‘(A) in the case of a debtor in a household of 1 person, the

median family income of the applicable State for 1 earner last

reported by the Bureau of the Census;

‘‘(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census; or

‘‘(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable

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State for a family of 4 or fewer individuals last reported by the

Bureau of the Census, plus $525 per month for each individual

in excess of 4,

the plan may not provide for payments over a period that is longer

than 5 years.

‘‘(2) If the current monthly income of the debtor and the debtor’s

spouse combined, when multiplied by 12, is less than—

‘‘(A) in the case of a debtor in a household of 1 person, the

median family income of the applicable State for 1 earner last

reported by the Bureau of the Census;

‘‘(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable

State for a family of the same number or fewer individuals last

reported by the Bureau of the Census; or

‘‘(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable

State for a family of 4 or fewer individuals last reported by the

Bureau of the Census, plus $525 per month for each individual

in excess of 4,

the plan may not provide for payments over a period that is longer

than 3 years, unless the court, for cause, approves a longer period,

but the court may not approve a period that is longer than 5 years.’’;

(2) in section 1325(b)(1)(B), by striking ‘‘three-year period’’

and inserting ‘‘applicable commitment period’’; and

(3) in section 1325(b), as amended by this Act, by adding

at the end the following:

‘‘(4) For purposes of this subsection, the ‘applicable commitment period’—

‘‘(A) subject to subparagraph (B), shall be—

‘‘(i) 3 years; or

‘‘(ii) not less than 5 years, if the current monthly income of the debtor and the debtor’s spouse combined, when

multiplied by 12, is not less than—

‘‘(I) in the case of a debtor in a household of 1 person, the median family income of the applicable State

for 1 earner last reported by the Bureau of the Census;

‘‘(II) in the case of a debtor in a household of 2, 3,

or 4 individuals, the highest median family income of

the applicable State for a family of the same number

or fewer individuals last reported by the Bureau of the

Census; or

‘‘(III) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of

the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus

$525 per month for each individual in excess of 4; and

‘‘(B) may be less than 3 or 5 years, whichever is applicable

under subparagraph (A), but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period.’’; and

(4) in section 1329(c), by striking ‘‘three years’’ and inserting ‘‘the applicable commitment period under section

1325(b)(1)(B)’’.

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SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF RULE 9011

OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE.

It is the sense of Congress that rule 9011 of the Federal Rules

of Bankruptcy Procedure (11 U.S.C. App.) should be modified to include a requirement that all documents (including schedules),

signed and unsigned, submitted to the court or to a trustee by debtors who represent themselves and debtors who are represented by an

attorney be submitted only after the debtor or the debtor’s attorney

has made reasonable inquiry to verify that the information contained in such documents is—

(1) well grounded in fact; and

(2) warranted by existing law or a good-faith argument for

the extension, modification, or reversal of existing law.

SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

Section 362(e) of title 11, United States Code, is amended—

(1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

(2) by adding at the end the following:

‘‘(2) Notwithstanding paragraph (1), in the case of an individual filing under chapter 7, 11, or 13, the stay under subsection

(a) shall terminate on the date that is 60 days after a request is

made by a party in interest under subsection (d), unless—

‘‘(A) a final decision is rendered by the court during the 60-

day period beginning on the date of the request; or

‘‘(B) that 60-day period is extended—

‘‘(i) by agreement of all parties in interest; or

‘‘(ii) by the court for such specific period of time as the

court finds is required for good cause, as described in findings made by the court.’’.

SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.

(a) PROPERTY OF THE ESTATE.—

(1) IN GENERAL.—Subchapter I of chapter 11 of title 11,

United States Code, is amended by adding at the end the following:

‘‘§ 1115. Property of the estate

‘‘(a) In a case concerning an individual debtor, property of the

estate includes, in addition to the property specified in section 541—

‘‘(1) all property of the kind specified in section 541 that the

debtor acquires after the commencement of the case but before

the case is closed, dismissed, or converted to a case under chapter 7, 12, or 13, whichever occurs first; and

‘‘(2) earnings from services performed by the debtor after

the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 12, or 13,

whichever occurs first.’’.

‘‘(b) Except as provided in section 1104 or a confirmed plan or

order confirming a plan, the debtor shall remain in possession of all

property of the estate.’’.

(2) CLERICAL AMENDMENT.—The table of sections for chapter 11 of title 11, United States Code, is amended by adding at

the end of the matter relating to subchapter I the following:

‘‘1115. Property of the estate.’’.

69

(b) CONTENTS OF PLAN.—Section 1123(a) of title 11, United

States Code, is amended—

(1) in paragraph (6), by striking ‘‘and’’ at the end;

(2) in paragraph (7), by striking the period and inserting

‘‘; and’’; and

(3) by adding at the end the following:

‘‘(8) in a case concerning an individual, provide for the payment to creditors through the plan of all or such portion of

earnings from personal services performed by the debtor after

the commencement of the case or other future income of the

debtor as is necessary for the execution of the plan.’’.

(c) CONFIRMATION OF PLAN.—

(1) REQUIREMENTS RELATING TO VALUE OF PROPERTY.—Section 1129(a) of title 11, United States Code, is amended by adding at the end the following:

‘‘(15) In a case concerning an individual in which the holder of an allowed unsecured claim objects to the confirmation of

the plan—

‘‘(A) the value of the property to be distributed under

the plan on account of such claim is, as of the effective date

of the plan, not less than the amount of such claim; or

‘‘(B) the value of the property to be distributed under

the plan is not less than the debtor’s projected disposable

income (as that term is defined in section 1325(b)(2)) to be

received during the 5-year period beginning on the date

that the first payment is due under the plan, or during the

term of the plan, whichever is longer.’’.

(2) REQUIREMENT RELATING TO INTERESTS IN PROPERTY.—

Section 1129(b)(2)(B)(ii) of title 11, United States Code, is

amended by inserting before the period at the end the following:

‘‘, except that in a case concerning an individual, the debtor

may retain property included in the estate under section 1115,

subject to the requirements of subsection (a)(14)’’.

(d) EFFECT OF CONFIRMATION—Section 1141(d) of title 11,

United States Code, is amended—

(1) in paragraph (2), by striking ‘‘The confirmation of a

plan does not discharge an individual debtor’’ and inserting ‘‘A

discharge under this chapter does not discharge a debtor’’; and

(2) by adding at the end the following:

‘‘(5) In a case concerning an individual—

‘‘(A) except as otherwise ordered for cause shown, the discharge is not effective until completion of all payments under

the plan; and

‘‘(B) at any time after the confirmation of the plan and

after notice and a hearing, the court may grant a discharge to

a debtor that has not completed payments under the plan only

if—

‘‘(i) for each allowed unsecured claim, the value, as of

the effective date of the plan, of property actually distributed under the plan on account of that claim is not less

than the amount that would have been paid on such claim

if the estate of the debtor had been liquidated under chapter 7 of this title on such date; and

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‘‘(ii) modification of the plan under 1127 of this title is

not practicable.’’.

(e) MODIFICATION OF PLAN.—Section 1127 of title 11, United

States Code, is amended by adding at the end the following:

‘‘(e) In a case concerning an individual, the plan may be modified at any time after confirmation of the plan but before the completion of payments under the plan, whether or not the plan has

been substantially consummated, upon request of the debtor, the

trustee, the United States trustee, or the holder of an allowed unsecured claim, to—

‘‘(1) increase or reduce the amount of payments on claims

of a particular class provided for by the plan;

‘‘(2) extend or reduce the time period for such payments; or

‘‘(3) alter the amount of the distribution to a creditor whose

claim is provided for by the plan to the extent necessary to take

account of any payment of such claim made other than under

the plan.

‘‘(f)(1) Sections 1121 through 1128 of this title and the requirements of section 1129 of this title apply to any modification under

subsection (a).

‘‘(2) The plan, as modified, shall become the plan only after

there has been disclosure under section 1125, as the court may direct, notice and a hearing, and such modification is approved.’’.

SEC. 322. LIMITATION.

(a) EXEMPTIONS.—Section 522 of title 11, United States Code,

as amended by this Act, is amended by adding at the end the following:

‘‘(p)(1) Except as provided in paragraph (2) of this subsection

and sections 544 and 548 of this title, as a result of electing under

subsection (b)(3)(A) to exempt property under State or local law, a

debtor may not exempt any amount of interest that was acquired by

the debtor during the 2-year period preceding the filing of the petition which exceeds in the aggregate $100,000 in value in—

‘‘(A) real or personal property that the debtor or a dependent of the debtor uses as a residence;

‘‘(B) a cooperative that owns property that the debtor or a

dependent of the debtor uses as a residence; or

‘‘(C) a burial plot for the debtor or a dependent of the debtor.

‘‘(2)(A) The limitation under paragraph (1) shall not apply to

an exemption claimed under subsection (b)(3)(A) by a family farmer

for the principal residence of that farmer.

‘‘(B) For purposes of paragraph (1), any amount of such interest

does not include any interest transferred from a debtor’s previous

principal residence (which was acquired prior to the beginning of

the 2-year period) into the debtor’s current principal residence,

where the debtor’s previous and current residences are located in the

same State.’’.

(b) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 104(b) of title

11, United States Code, is amended—

(1) in paragraph (1), by striking ‘‘522(d),’’ and inserting

‘‘522(d), 522(n), 522(p),’’; and

(2) in paragraph (3), by striking ‘‘522(d),’’ and inserting

‘‘522(d), 522(n), 522(p),’’.

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SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT CONTRIBUTIONS AND OTHER PROPERTY FROM THE ESTATE.

(a) IN GENERAL.—Section 541(b) of title 11, United States Code,

is amended by inserting after paragraph (6), as added by this Act,

the following:

‘‘(7) any amount—

‘‘(A) withheld by an employer from the wages of employees for payment as contributions to—

‘‘(i) an employee benefit plan subject to title I of the

Employee Retirement Income Security Act of 1974 (29

U.S.C. 1001 et seq.) or under an employee benefit plan

which is a governmental plan under section 414(d) of

the Internal Revenue Code of 1986, a deferred compensation plan under section 457 of the Internal Revenue Code of 1986, or a tax-deferred annuity under section 403(b) of the Internal Revenue Code of 1986, except that amount shall not constitute disposable income, as defined in section 1325(b)(2) of this title; or

‘‘(ii) a health insurance plan regulated by State

law whether or not subject to such title; or

‘‘(B) received by the employer from employees for payment as contributions to—

‘‘(i) an employee benefit plan subject to title I of the

Employee Retirement Income Security Act of 1974 (29

U.S.C. 1001 et seq.) or under an employee benefit plan

which is a governmental plan under section 414(d) of

the Internal Revenue Code of 1986, a deferred compensation plan under section 457 of the Internal Revenue Code of 1986, or a tax-deferred annuity under section 403(b) of the Internal Revenue Code of 1986, except that amount shall not constitute disposable income, as defined in section 1325(b)(2) of this title; or

‘‘(ii) a health insurance plan regulated by State

law whether or not subject to such title;’’.

(b) APPLICATION OF AMENDMENT.—The amendments made by

this section shall not apply to cases commenced under title 11,

United States Code, before the expiration of the 180-day period beginning on the date of enactment of this Act.

SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLVING BANKRUPTCY PROFESSIONALS.

(a) IN GENERAL.—Section 1334 of title 28, United States Code,

is amended—

(1) in subsection (b), by striking ‘‘Notwithstanding’’ and inserting ‘‘Except as provided in subsection (e)(2), and notwithstanding’’; and

(2) by striking subsection (e) and inserting the following:

‘‘(e) The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction—

‘‘(1) of all the property, wherever located, of the debtor as

of the date of commencement of such case, and of property of

the estate; and

‘‘(2) over all claims or causes of action that involve construction of section 327 of title 11, United States Code, or rules

relating to disclosure requirements under section 327.’’.

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(b) APPLICABILITY.—This section shall only apply to cases filed

after the date of enactment of this Act.

SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE.

(a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE 11, UNITED

STATES CODE.—Section 1930(a) of title 28, United States Code, is

amended by striking paragraph (1) and inserting the following:

‘‘(1) For a case commenced—

‘‘(A) under chapter 7 of title 11, $160; or

‘‘(B) under chapter 13 of title 11, $150.’’.

(b) UNITED STATES TRUSTEE SYSTEM FUND.—Section 589a(b)

of title 28, United States Code, is amended—

(1) by striking paragraph (1) and inserting the following:

‘‘(1)(A) 40.63 percent of the fees collected under section

1930(a)(1)(A) of this title in cases commenced under chapter 7

of title 11; and

‘‘(B) 70.00 percent of the fees collected under section

1930(a)(1)(B) of this title in cases commenced under chapter 13

of title 11;’’;

(2) in paragraph (2), by striking ‘‘one-half’’ and inserting

‘‘three-fourths’’; and

(3) in paragraph (4), by striking ‘‘one-half’’ and inserting

‘‘100 percent’’.

(c) COLLECTION AND DEPOSIT OF MISCELLANEOUS BANKRUPTCY

FEES.—Section 406(b) of the Judiciary Appropriations Act, 1990 (28

U.S.C. 1931 note) is amended by striking ‘‘pursuant to 28 U.S.C.

section 1930(b) and 30.76 per centum of the fees hereafter collected

under 28 U.S.C. section 1930(a)(1) and 25 percent of the fees hereafter collected under 28 U.S.C. section 1930(a)(3) shall be deposited

as offsetting receipts to the fund established under 28 U.S.C. section

1931’’ and inserting ‘‘under section 1930(b) of title 28, United States

Code, and 31.25 percent of the fees collected under section

1930(a)(1)(A) of that title, 30.00 percent of the fees collected under

section 1930(a)(1)(B) of that title, and 25 percent of the fees collected

under section 1930(a)(3) of that title shall be deposited as offsetting

receipts to the fund established under section 1931 of that title’’.

SEC. 326. SHARING OF COMPENSATION.

Section 504 of title 11, United States Code, is amended by adding at the end the following:

‘‘(c) This section shall not apply with respect to sharing, or

agreeing to share, compensation with a bona fide public service attorney referral program that operates in accordance with non-Federal law regulating attorney referral services and with rules of professional responsibility applicable to attorney acceptance of referrals.’’.

SEC. 327. FAIR VALUATION OF COLLATERAL.

Section 506(a) of title 11, United States Code, is amended by—

(1) inserting ‘‘(1)’’ after ‘‘(a)’’; and

(2) by adding at the end the following:

‘‘(2) In the case of an individual debtor under chapters 7 and

13, such value with respect to personal property securing an allowed

claim shall be determined based on the replacement value of such

property as of the date of filing the petition without deduction for

costs of sale or marketing. With respect to property acquired for perVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00072 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
73

sonal, family, or household purpose, replacement value shall mean

the price a retail merchant would charge for property of that kind

considering the age and condition of the property at the time value

is determined.’’.

SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.

(a) EXECUTORY CONTRACTS AND UNEXPIRED LEASES.—Section

365 of title 11, United States Code, is amended—

(1) in subsection (b)—

(A) in paragraph (1)(A), by striking the semicolon at

the end and inserting the following: ‘‘other than a default

that is a breach of a provision relating to the satisfaction

of any provision (other than a penalty rate or penalty provision) relating to a default arising from any failure to perform nonmonetary obligations under an unexpired lease of

real property, if it is impossible for the trustee to cure such

default by performing nonmonetary acts at and after the

time of assumption, except that if such default arises from

a failure to operate in accordance with a nonresidential

real property lease, then such default shall be cured by performance at and after the time of assumption in accordance

with such lease, and pecuniary losses resulting from such

default shall be compensated in accordance with the provisions of paragraph (b)(l);’’; and

(B) in paragraph (2)(D), by striking ‘‘penalty rate or

provision’’ and inserting ‘‘penalty rate or penalty provision’’;

(2) in subsection (c)—

(A) in paragraph (2), by inserting ‘‘or’’ at the end;

(B) in paragraph (3), by striking ‘‘; or’’ at the end and

inserting a period; and

(C) by striking paragraph (4);

(3) in subsection (d)—

(A) by striking paragraphs (5) through (9); and

(B) by redesignating paragraph (10) as paragraph (5);

and

(4) in subsection (f)(1) by striking ‘‘; except that’’ and all

that follows through the end of the paragraph and inserting a

period.

(b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Section 1124(2) of

title 11, United States Code, is amended—

(1) in subparagraph (A), by inserting ‘‘or of a kind that section 365(b)(2) of this title expressly does not require to be cured’’

before the semicolon at the end;

(2) in subparagraph (C), by striking ‘‘and’’ at the end;

(3) by redesignating subparagraph (D) as subparagraph

(E); and

(4) by inserting after subparagraph (C) the following:

‘‘(D) if such claim or such interest arises from any failure to perform a nonmonetary obligation, other than a default arising from failure to operate a non-residential real

property lease subject to section 365(b)(1)(A), compensates

the holder of such claim or such interest (other than the

debtor or an insider) for any actual pecuniary loss incurred

by such holder as a result of such failure; and’’.

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TITLE IV—GENERAL AND SMALL

BUSINESS BANKRUPTCY PROVISIONS

Subtitle A—General Business Bankruptcy

Provisions

SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.

(a) DEFINITION.—Section 101 of title 11, United States Code, as

amended by this Act, is amended by inserting after paragraph (48)

the following:

‘‘(48A) ‘securities self regulatory organization’ means either

a securities association registered with the Securities and Exchange Commission under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) or a national securities

exchange registered with the Securities and Exchange Commission under section 6 of the Securities Exchange Act of 1934 (15

U.S.C. 78f);’’.

(b) AUTOMATIC STAY.—Section 362(b) of title 11, United States

Code, is amended by inserting after paragraph (25), as added by

this Act, the following:

‘‘(26) under subsection (a), of—

‘‘(A) the commencement or continuation of an investigation or action by a securities self regulatory organization to

enforce such organization’s regulatory power;

‘‘(B) the enforcement of an order or decision, other than

for monetary sanctions, obtained in an action by the securities self regulatory organization to enforce such organization’s regulatory power; or

‘‘(C) any act taken by the securities self regulatory organization to delist, delete, or refuse to permit quotation of

any stock that does not meet applicable regulatory requirements;’’.

SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

Section 341 of title 11, United States Code, is amended by adding at the end the following:

‘‘(e) Notwithstanding subsections (a) and (b), the court, on the

request of a party in interest and after notice and a hearing, for

cause may order that the United States trustee not convene a meeting of creditors or equity security holders if the debtor has filed a

plan as to which the debtor solicited acceptances prior to the commencement of the case.’’.

SEC. 403. PROTECTION OF REFINANCE OF SECURITY INTEREST.

Subparagraphs (A), (B), and (C) of section 547(e)(2) of title 11,

United States Code, are each amended by striking ‘‘10’’ each place

it appears and inserting ‘‘30’’.

SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

(a) IN GENERAL.—Section 365(d)(4) of title 11, United States

Code, is amended to read as follows:

‘‘(4)(A) Subject to subparagraph (B), in any case under any

chapter of this title, an unexpired lease of nonresidential real property under which the debtor is the lessee shall be deemed rejected,

75

and the trustee shall immediately surrender that nonresidential real

property to the lessor, if the trustee does not assume or reject the unexpired lease by the earlier of—

‘‘(i) the date that is 120 days after the date of the order for

relief; or

‘‘(ii) the date of the entry of an order confirming a plan.

‘‘(B)(i) The court may extend the period determined under subparagraph (A), prior to the expiration of the 120-day period, for 90

days upon motion of the trustee or lessor for cause.

‘‘(ii) If the court grants an extension under clause (i), the court

may grant a subsequent extension only upon prior written consent

of the lessor in each instance.’’.

(b) EXCEPTION.—Section 365(f)(1) of title 11, United States

Code, is amended by striking ‘‘subsection’’ the first place it appears

and inserting ‘‘subsections (b) and’’.

SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.

(a) APPOINTMENT.—Section 1102(a) of title 11, United States

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

‘‘(4) On request of a party in interest and after notice and a

hearing, the court may order the United States trustee to change the

membership of a committee appointed under this subsection, if the

court determines that the change is necessary to ensure adequate

representation of creditors or equity security holders. The court may

order the United States trustee to increase the number of members

of a committee to include a creditor that is a small business concern

(as described in section 3(a)(1) of the Small Business Act (15 U.S.C.

632(a)(1))), if the court determines that the creditor holds claims (of

the kind represented by the committee) the aggregate amount of

which, in comparison to the annual gross revenue of that creditor,

is disproportionately large.’’.

(b) INFORMATION.—Section 1102(b) of title 11, United States

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

‘‘(3) A committee appointed under subsection (a) shall—

‘‘(A) provide access to information for creditors who—

‘‘(i) hold claims of the kind represented by that committee; and

‘‘(ii) are not appointed to the committee;

‘‘(B) solicit and receive comments from the creditors described in subparagraph (A); and

‘‘(C) be subject to a court order that compels any additional

report or disclosure to be made to the creditors described in subparagraph (A).’’.

SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES

CODE.

Section 546 of title 11, United States Code, is amended—

(1) by redesignating the second subsection designated as

subsection (g) (as added by section 222(a) of Public Law 103–

394) as subsection (i); and

(2) by adding at the end the following:

‘‘(j)(1) Notwithstanding paragraphs (2) and (3) of section 545,

the trustee may not avoid a warehouseman’s lien for storage, transportation, or other costs incidental to the storage and handling of

goods.

76

‘‘(2) The prohibition under paragraph (1) shall be applied in a

manner consistent with any applicable State statute that is similar

to section 7–209 of the Uniform Commercial Code, as in effect on

the date of enactment of the Bankruptcy Reform Act of 2000, or any

successor thereto.’’.

SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11, UNITED

STATES CODE.

Section 330(a) of title 11, United States Code, is amended—

(1) in paragraph (3)—

(A) by striking ‘‘(A) In’’ and inserting ‘‘In’’; and

(B) by inserting ‘‘to an examiner, trustee under chapter

11, or professional person’’ after ‘‘awarded’’; and

(2) by adding at the end the following:

‘‘(7) In determining the amount of reasonable compensation

to be awarded to a trustee, the court shall treat such compensation as a commission, based on section 326 of this title.’’.

SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.

Section 1125 of title 11, United States Code, is amended by

adding at the end the following:

‘‘(g) Notwithstanding subsection (b), an acceptance or rejection

of the plan may be solicited from a holder of a claim or interest if

such solicitation complies with applicable nonbankruptcy law and

if such holder was solicited before the commencement of the case in

a manner complying with applicable nonbankruptcy law.’’.

SEC. 409. PREFERENCES.

Section 547(c) of title 11, United States Code, is amended—

(1) by striking paragraph (2) and inserting the following:

‘‘(2) to the extent that such transfer was in payment of a

debt incurred by the debtor in the ordinary course of business

or financial affairs of the debtor and the transferee, and such

transfer was—

‘‘(A) made in the ordinary course of business or financial affairs of the debtor and the transferee; or

‘‘(B) made according to ordinary business terms;’’;

(2) in paragraph (8), by striking the period at the end and

inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(9) if, in a case filed by a debtor whose debts are not primarily consumer debts, the aggregate value of all property that

constitutes or is affected by such transfer is less than $5,000.’’.

SEC. 410. VENUE OF CERTAIN PROCEEDINGS.

Section 1409(b) of title 28, United States Code, is amended by

inserting ‘‘, or a nonconsumer debt against a noninsider of less than

$10,000,’’ after ‘‘$5,000’’.

SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

Section 1121(d) of title 11, United States Code, is amended—

(1) by striking ‘‘On’’ and inserting ‘‘(1) Subject to paragraph

(2), on’’; and

(2) by adding at the end the following:

‘‘(2)(A) The 120-day period specified in paragraph (1) may not

be extended beyond a date that is 18 months after the date of the

order for relief under this chapter.

77

‘‘(B) The 180-day period specified in paragraph (1) may not be

extended beyond a date that is 20 months after the date of the order

for relief under this chapter.’’.

SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

Section 523(a)(16) of title 11, United States Code, is amended—

(1) by striking ‘‘dwelling’’ the first place it appears;

(2) by striking ‘‘ownership or’’ and inserting ‘‘ownership,’’;

(3) by striking ‘‘housing’’ the first place it appears; and

(4) by striking ‘‘but only’’ and all that follows through ‘‘such

period’’ and inserting ‘‘or a lot in a homeowners association, for

as long as the debtor or the trustee has a legal, equitable, or

possessory ownership interest in such unit, such corporation, or

such lot,’’.

SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.

Section 341(c) of title 11, United States Code, is amended by inserting at the end the following: ‘‘Notwithstanding any local court

rule, provision of a State constitution, any other Federal or State

law that is not a bankruptcy law, or other requirement that representation at the meeting of creditors under subsection (a) be by an

attorney, a creditor holding a consumer debt or any representative

of the creditor (which may include an entity or an employee of an

entity and may be a representative for more than 1 creditor) shall

be permitted to appear at and participate in the meeting of creditors

in a case under chapter 7 or 13, either alone or in conjunction with

an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at

any meeting of creditors.’’.

SEC. 414. DEFINITION OF DISINTERESTED PERSON.

Section 101(14) of title 11, United States Code, is amended to

read as follows:

‘‘(14) ‘disinterested person’ means a person that—

‘‘(A) is not a creditor, an equity security holder, or an

insider;

‘‘(B) is not and was not, within 2 years before the date

of the filing of the petition, a director, officer, or employee

of the debtor; and

‘‘(C) does not have an interest materially adverse to the

interest of the estate or of any class of creditors or equity

security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for

any other reason;’’.

SEC. 415. FACTORS FOR COMPENSATION OF PROFESSIONAL PERSONS.

Section 330(a)(3) of title 11, United States Code, as amended by

this Act, is amended—

(1) in subparagraph (D), by striking ‘‘and’’ at the end;

(2) by redesignating subparagraph (E) as subparagraph

(F); and

(3) by inserting after subparagraph (D) the following:

‘‘(E) with respect to a professional person, whether the

person is board certified or otherwise has demonstrated

skill and experience in the bankruptcy field; and’’.

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SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.

Section 1104(b) of title 11, United States Code, is amended—

(1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

(2) by adding at the end the following:

‘‘(2)(A) If an eligible, disinterested trustee is elected at a meeting

of creditors under paragraph (1), the United States trustee shall file

a report certifying that election.

‘‘(B) Upon the filing of a report under subparagraph (A)—

‘‘(i) the trustee elected under paragraph (1) shall be considered to have been selected and appointed for purposes of this

section; and

‘‘(ii) the service of any trustee appointed under subsection

(d) shall terminate.

‘‘(C) In the case of any dispute arising out of an election described in subparagraph (A), the court shall resolve the dispute.’’.

SEC. 417. UTILITY SERVICE.

Section 366 of title 11, United States Code, is amended—

(1) in subsection (a), by striking ‘‘subsection (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

(2) by adding at the end the following:

‘‘(c)(1)(A) For purposes of this subsection, the term ‘assurance of

payment’ means—

‘‘(i) a cash deposit;

‘‘(ii) a letter of credit;

‘‘(iii) a certificate of deposit;

‘‘(iv) a surety bond;

‘‘(v) a prepayment of utility consumption; or

‘‘(vi) another form of security that is mutually agreed on between the utility and the debtor or the trustee.

‘‘(B) For purposes of this subsection an administrative expense

priority shall not constitute an assurance of payment.

‘‘(2) Subject to paragraphs (3) through (5), with respect to a case

filed under chapter 11, a utility referred to in subsection (a) may

alter, refuse, or discontinue utility service, if during the 30-day period beginning on the date of filing of the petition, the utility does

not receive from the debtor or the trustee adequate assurance of payment for utility service that is satisfactory to the utility.

‘‘(3)(A) On request of a party in interest and after notice and a

hearing, the court may order modification of the amount of an assurance of payment under paragraph (2).

‘‘(B) In making a determination under this paragraph whether

an assurance of payment is adequate, the court may not consider—

‘‘(i) the absence of security before the date of filing of the

petition;

‘‘(ii) the payment by the debtor of charges for utility service

in a timely manner before the date of filing of the petition; or

‘‘(iii) the availability of an administrative expense priority.

‘‘(4) Notwithstanding any other provision of law, with respect to

a case subject to this subsection, a utility may recover or set off

against a security deposit provided to the utility by the debtor before

the date of filing of the petition without notice or order of the

court.’’.

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SEC. 418. BANKRUPTCY FEES.

Section 1930 of title 28, United States Code, is amended—

(1) in subsection (a), by striking ‘‘Notwithstanding section

1915 of this title, the’’ and inserting ‘‘The’’; and

(2) by adding at the end the following:

‘‘(f)(1) Under the procedures prescribed by the Judicial Conference of the United States, the district court or the bankruptcy

court may waive the filing fee in a case under chapter 7 of title 11

for an individual if the court determines that such debtor has income less than 150 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved

and is unable to pay that fee in installments. For purposes of this

paragraph, the term ‘‘filing fee’’ means the filing required by subsection (a), or any other fee prescribed by the Judicial Conference

under subsections (b) and (c) that is payable to the clerk upon the

commencement of a case under chapter 7.

‘‘(2) The district court or the bankruptcy court may waive for

such debtors other fees prescribed under subsections (b) and (c).

‘‘(3) This subsection does not restrict the district court or the

bankruptcy court from waiving, in accordance with Judicial Conference policy, fees prescribed under this section for other debtors

and creditors.’’.

SEC. 419. MORE COMPLETE INFORMATION REGARDING ASSETS OF THE

ESTATE.

(a) IN GENERAL.— (1) DISCLOSURE.—The Advisory Committee on Bankruptcy

Rules of the Judicial Conference of the United States, after consideration of the views of the Director of the Executive Office for

United States Trustees, shall propose for adoption amended

Federal Rules of Bankruptcy Procedure and Official Bankruptcy Forms directing debtors under chapter 11 of title 11,

United States Code, to disclose the information described in

paragraph (2) by filing and serving periodic financial and other

reports designed to provide such information.

(2) INFORMATION.—The information referred to in paragraph (1) is the value, operations, and profitability of any closely held corporation, partnership, or of any other entity in which

the debtor holds a substantial or controlling interest.

(b) PURPOSE.—The purpose of the rules and reports under subsection (a) shall be to assist parties in interest taking steps to ensure

that the debtor’s interest in any entity referred to in subsection (a)(2)

is used for the payment of allowed claims against debtor.

Subtitle B—Small Business Bankruptcy

Provisions

SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

Section 1125 of title 11, United States Code, is amended—

(1) in subsection (a)(1), by inserting before the semicolon

‘‘and in determining whether a disclosure statement provides

adequate information, the court shall consider the complexity of

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the case, the benefit of additional information to creditors and

other parties in interest, and the cost of providing additional

information’’; and

(2) by striking subsection (f), and inserting the following:

‘‘(f) Notwithstanding subsection (b), in a small business case—

‘‘(1) the court may determine that the plan itself provides

adequate information and that a separate disclosure statement

is not necessary;

‘‘(2) the court may approve a disclosure statement submitted on standard forms approved by the court or adopted

under section 2075 of title 28; and

‘‘(3)(A) the court may conditionally approve a disclosure

statement subject to final approval after notice and a hearing;

‘‘(B) acceptances and rejections of a plan may be solicited

based on a conditionally approved disclosure statement if the

debtor provides adequate information to each holder of a claim

or interest that is solicited, but a conditionally approved disclosure statement shall be mailed not later than 20 days before the

date of the hearing on confirmation of the plan; and

‘‘(C) the hearing on the disclosure statement may be combined with the hearing on confirmation of a plan.’’.

SEC. 432. DEFINITIONS.

(a) DEFINITIONS.—Section 101 of title 11, United States Code,

as amended by this Act, is amended by striking paragraph (51C)

and inserting the following:

‘‘(51C) ‘small business case’ means a case filed under chapter 11 of this title in which the debtor is a small business debtor;

‘‘(51D) ‘small business debtor’—

‘‘(A) subject to subparagraph (B), means a person engaged in commercial or business activities (including any

affiliate of such person that is also a debtor under this title

and excluding a person whose primary activity is the business of owning or operating real property or activities incidental thereto) that has aggregate noncontingent, liquidated secured and unsecured debts as of the date of the

petition or the order for relief in an amount not more than

$3,000,000 (excluding debts owed to 1 or more affiliates or

insiders) for a case in which the United States trustee has

not appointed under section 1102(a)(1) a committee of unsecured creditors or where the court has determined that the

committee of unsecured creditors is not sufficiently active

and representative to provide effective oversight of the debtor; and

‘‘(B) does not include any member of a group of affiliated debtors that has aggregate noncontingent liquidated

secured and unsecured debts in an amount greater than

$3,000,000 (excluding debt owed to 1 or more affiliates or

insiders);’’.

(b) CONFORMING AMENDMENT.—Section 1102(a)(3) of title 11,

United States Code, is amended by inserting ‘‘debtor’’ after ‘‘small

business’’.

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SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.

Within a reasonable period of time after the date of enactment

of this Act, the Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States shall propose for adoption

standard form disclosure statements and plans of reorganization for

small business debtors (as defined in section 101 of title 11, United

States Code, as amended by this Act), designed to achieve a practical balance between—

(1) the reasonable needs of the courts, the United States

trustee, creditors, and other parties in interest for reasonably

complete information; and

(2) economy and simplicity for debtors.

SEC. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS.

(a) REPORTING REQUIRED.— (1) IN GENERAL.—Chapter 3 of title 11, United States Code,

is amended by inserting after section 307 the following:

‘‘§ 308. Debtor reporting requirements

‘‘(a) For purposes of this section, the term ‘profitability’ means,

with respect to a debtor, the amount of money that the debtor has

earned or lost during current and recent fiscal periods.

‘‘(b) A small business debtor shall file periodic financial and

other reports containing information including—

‘‘(1) the debtor’s profitability;

‘‘(2) reasonable approximations of the debtor’s projected

cash receipts and cash disbursements over a reasonable period;

‘‘(3) comparisons of actual cash receipts and disbursements

with projections in prior reports;

‘‘(4)(A) whether the debtor is—

‘‘(i) in compliance in all material respects with

postpetition requirements imposed by this title and the Federal Rules of Bankruptcy Procedure; and

‘‘(ii) timely filing tax returns and other required government filings and paying taxes and other administrative

claims when due;

‘‘(B) if the debtor is not in compliance with the requirements referred to in subparagraph (A)(i) or filing tax returns

and other required government filings and making the payments referred to in subparagraph (A)(ii), what the failures are

and how, at what cost, and when the debtor intends to remedy

such failures; and

‘‘(C) such other matters as are in the best interests of the

debtor and creditors, and in the public interest in fair and efficient procedures under chapter 11 of this title.’’.

(2) CLERICAL AMENDMENT.—The table of sections for chapter 3 of title 11, United States Code, is amended by inserting

after the item relating to section 307 the following:

‘‘308. Debtor reporting requirements.’’.

(b) EFFECTIVE DATE.—The amendments made by subsection (a)

shall take effect 60 days after the date on which rules are prescribed

under section 2075 of title 28, United States Code, to establish

forms to be used to comply with section 308 of title 11, United

States Code, as added by subsection (a).

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SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR SMALL BUSINESS CASES.

(a) PROPOSAL OF RULES AND FORMS.—The Advisory Committee

on Bankruptcy Rules of the Judicial Conference of the United States

shall propose for adoption amended Federal Rules of Bankruptcy

Procedure and Official Bankruptcy Forms to be used by small business debtors to file periodic financial and other reports containing

information, including information relating to—

(1) the debtor’s profitability;

(2) the debtor’s cash receipts and disbursements; and

(3) whether the debtor is timely filing tax returns and paying taxes and other administrative claims when due.

(b) PURPOSE.—The rules and forms proposed under subsection

(a) shall be designed to achieve a practical balance among—

(1) the reasonable needs of the bankruptcy court, the United

States trustee, creditors, and other parties in interest for reasonably complete information;

(2) the small business debtor’s interest that required reports

be easy and inexpensive to complete; and

(3) the interest of all parties that the required reports help

the small business debtor to understand the small business

debtor’s financial condition and plan the small business debtor’s future.

SEC. 436. DUTIES IN SMALL BUSINESS CASES.

(a) DUTIES IN CHAPTER 11 CASES.—Subchapter I of title 11,

United States Code, as amended by this Act, is amended by adding

at the end the following:

‘‘§ 1116. Duties of trustee or debtor in possession in small

business cases

‘‘In a small business case, a trustee or the debtor in possession,

in addition to the duties provided in this title and as otherwise required by law, shall—

‘‘(1) append to the voluntary petition or, in an involuntary

case, file not later than 7 days after the date of the order for

relief—

‘‘(A) its most recent balance sheet, statement of operations, cash-flow statement, Federal income tax return; or

‘‘(B) a statement made under penalty of perjury that no

balance sheet, statement of operations, or cash-flow statement has been prepared and no Federal tax return has

been filed;

‘‘(2) attend, through its senior management personnel and

counsel, meetings scheduled by the court or the United States

trustee, including initial debtor interviews, scheduling conferences, and meetings of creditors convened under section 341

unless the court waives that requirement after notice and hearing, upon a finding of extraordinary and compelling circumstances;

‘‘(3) timely file all schedules and statements of financial affairs, unless the court, after notice and a hearing, grants an extension, which shall not extend such time period to a date later

than 30 days after the date of the order for relief, absent extraordinary and compelling circumstances;

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‘‘(4) file all postpetition financial and other reports required

by the Federal Rules of Bankruptcy Procedure or by local rule

of the district court;

‘‘(5) subject to section 363(c)(2), maintain insurance customary and appropriate to the industry;

‘‘(6)(A) timely file tax returns and other required government filings; and

‘‘(B) subject to section 363(c)(2), timely pay all administrative expense tax claims, except those being contested by appropriate proceedings being diligently prosecuted; and

‘‘(7) allow the United States trustee, or a designated representative of the United States trustee, to inspect the debtor’s

business premises, books, and records at reasonable times, after

reasonable prior written notice, unless notice is waived by the

debtor.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter 11

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

of the matter relating to subchapter I the following:

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.

SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.

Section 1121 of title 11, United States Code, is amended by

striking subsection (e) and inserting the following:

‘‘(e) In a small business case—

‘‘(1) only the debtor may file a plan until after 180 days

after the date of the order for relief, unless that period is—

‘‘(A) extended as provided by this subsection, after notice and hearing; or

‘‘(B) the court, for cause, orders otherwise;

‘‘(2) the plan, and any necessary disclosure statement, shall

be filed not later than 300 days after the date of the order for

relief; and

‘‘(3) the time periods specified in paragraphs (1) and (2),

and the time fixed in section 1129(e), within which the plan

shall be confirmed, may be extended only if—

‘‘(A) the debtor, after providing notice to parties in interest (including the United States trustee), demonstrates

by a preponderance of the evidence that it is more likely

than not that the court will confirm a plan within a reasonable period of time;

‘‘(B) a new deadline is imposed at the time the extension is granted; and

‘‘(C) the order extending time is signed before the existing deadline has expired.’’.

SEC. 438. PLAN CONFIRMATION DEADLINE.

Section 1129 of title 11, United States Code, is amended by

adding at the end the following:

‘‘(e) In a small business case, the plan shall be confirmed not

later than 175 days after the date of the order for relief, unless such

175-day period is extended as provided in section 1121(e)(3).’’.

SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.

Section 586(a) of title 28, United States Code, is amended—

(1) in paragraph (3)—

(A) in subparagraph (G), by striking ‘‘and’’ at the end;

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(B) by redesignating subparagraph (H) as subparagraph (I); and

(C) by inserting after subparagraph (G) the following:

‘‘(H) in small business cases (as defined in section 101

of title 11), performing the additional duties specified in

title 11 pertaining to such cases; and’’;

(2) in paragraph (5), by striking ‘‘and’’ at the end;

(3) in paragraph (6), by striking the period at the end and

inserting a semicolon; and

(4) by adding at the end the following:

‘‘(7) in each of such small business cases—

‘‘(A) conduct an initial debtor interview as soon as

practicable after the entry of order for relief but before the

first meeting scheduled under section 341(a) of title 11, at

which time the United States trustee shall—

‘‘(i) begin to investigate the debtor’s viability;

‘‘(ii) inquire about the debtor’s business plan;

‘‘(iii) explain the debtor’s obligations to file monthly operating reports and other required reports;

‘‘(iv) attempt to develop an agreed scheduling

order; and

‘‘(v) inform the debtor of other obligations;

‘‘(B) if determined to be appropriate and advisable,

visit the appropriate business premises of the debtor and

ascertain the state of the debtor’s books and records and

verify that the debtor has filed its tax returns; and

‘‘(C) review and monitor diligently the debtor’s activities, to identify as promptly as possible whether the debtor

will be unable to confirm a plan; and

‘‘(8) in any case in which the United States trustee finds

material grounds for any relief under section 1112 of title 11,

the United States trustee shall apply promptly after making

that finding to the court for relief.’’.

SEC. 440. SCHEDULING CONFERENCES.

Section 105(d) of title 11, United States Code, is amended—

(1) in the matter preceding paragraph (1), by striking ‘‘,

may’’; and

(2) by striking paragraph (1) and inserting the following:

‘‘(1) shall hold such status conferences as are necessary to

further the expeditious and economical resolution of the case;

and’’.

SEC. 441. SERIAL FILER PROVISIONS.

Section 362 of title 11, United States Code, as amended by this

Act is amended—

(1) in subsection (k), as redesignated by this Act—

(A) by striking ‘‘An’’ and inserting ‘‘(1) Except as provided in paragraph (2), an’’; and

(B) by adding at the end the following:

‘‘(2) If such violation is based on an action taken by an entity

in the good faith belief that subsection (h) applies to the debtor, the

recovery under paragraph (1) of this subsection against such entity

shall be limited to actual damages.’’; and

(2) by adding at the end the following:

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‘‘(l)(1) Except as provided in paragraph (2) of this subsection,

the provisions of subsection (a) do not apply in a case in which the

debtor—

‘‘(A) is a debtor in a small business case pending at the

time the petition is filed;

‘‘(B) was a debtor in a small business case that was dismissed for any reason by an order that became final in the 2-

year period ending on the date of the order for relief entered

with respect to the petition;

‘‘(C) was a debtor in a small business case in which a plan

was confirmed in the 2-year period ending on the date of the

order for relief entered with respect to the petition; or

‘‘(D) is an entity that has succeeded to substantially all of

the assets or business of a small business debtor described in

subparagraph (A), (B), or (C).

‘‘(2) This subsection does not apply—

‘‘(A) to an involuntary case involving no collusion by the

debtor with creditors; or

‘‘(B) to the filing of a petition if—

‘‘(i) the debtor proves by a preponderance of the evidence that the filing of that petition resulted from circumstances beyond the control of the debtor not foreseeable

at the time the case then pending was filed; and

‘‘(ii) it is more likely than not that the court will confirm a feasible plan, but not a liquidating plan, within a

reasonable period of time.’’.

SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND

APPOINTMENT OF TRUSTEE.

(a) EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION.—Section 1112 of title 11, United States Code, is amended by striking

subsection (b) and inserting the following:

‘‘(b)(1) Except as provided in paragraph (2) of this subsection,

subsection (c) of this section, and section 1104(a)(3), on request of

a party in interest, and after notice and a hearing, the court shall

convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interest of

creditors and the estate, if the movant establishes cause.

‘‘(2) The relief provided in paragraph (1) shall not be granted

if the debtor or another party in interest objects and establishes by

a preponderance of the evidence that—

‘‘(A) a plan with a reasonable possibility of being confirmed

will be filed within a reasonable period of time; and

‘‘(B) the grounds include an act or omission of the debtor—

‘‘(i) for which there exists a reasonable justification for

the act or omission; and

‘‘(ii) that will be cured within a reasonable period of

time fixed by the court.

‘‘(3) The court shall commence the hearing on any motion under

this subsection not later than 30 days after filing of the motion, and

shall decide the motion not later than 15 days after commencement

of the hearing, unless the movant expressly consents to a continuance for a specific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph.

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‘‘(4) For purposes of this subsection, the term ‘cause’ includes—

‘‘(A) substantial or continuing loss to or diminution of the

estate;

‘‘(B) gross mismanagement of the estate;

‘‘(C) failure to maintain appropriate insurance that poses a

risk to the estate or to the public;

‘‘(D) unauthorized use of cash collateral harmful to 1 or

more creditors;

‘‘(E) failure to comply with an order of the court;

‘‘(F) repeated failure timely to satisfy any filing or reporting

requirement established by this title or by any rule applicable

to a case under this chapter;

‘‘(G) failure to attend the meeting of creditors convened

under section 341(a) or an examination ordered under rule

2004 of the Federal Rules of Bankruptcy Procedure;

‘‘(H) failure timely to provide information or attend meetings reasonably requested by the United States trustee or the

bankruptcy administrator;

‘‘(I) failure timely to pay taxes due after the date of the

order for relief or to file tax returns due after the order for relief;

‘‘(J) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of

the court;

‘‘(K) failure to pay any fees or charges required under chapter 123 of title 28;

‘‘(L) revocation of an order of confirmation under section

1144;

‘‘(M) inability to effectuate substantial consummation of a

confirmed plan;

‘‘(N) material default by the debtor with respect to a confirmed plan;

‘‘(O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and

‘‘(P) failure of the debtor to pay any domestic support obligation that first becomes payable after the date on which the petition is filed.

‘‘(5) The court shall commence the hearing on any motion under

this subsection not later than 30 days after filing of the motion, and

shall decide the motion not later than 15 days after commencement

of the hearing, unless the movant expressly consents to a continuance for a specific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph.’’.

(b) ADDITIONAL GROUNDS FOR APPOINTMENT OF TRUSTEE.—

Section 1104(a) of title 11, United States Code, is amended—

(1) in paragraph (1), by striking ‘‘or’’ at the end;

(2) in paragraph (2), by striking the period at the end and

inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(3) if grounds exist to convert or dismiss the case under

section 1112, but the court determines that the appointment of

a trustee or an examiner is in the best interests of creditors and

the estate.’’.

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SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED STATES CODE,

WITH RESPECT TO SMALL BUSINESSES.

Not later than 2 years after the date of enactment of this Act,

the Administrator of the Small Business Administration, in consultation with the Attorney General, the Director of the Administrative Office of United States Trustees, and the Director of the Administrative Office of the United States Courts, shall—

(1) conduct a study to determine—

(A) the internal and external factors that cause small

businesses, especially sole proprietorships, to become debtors in cases under title 11, United States Code, and that

cause certain small businesses to successfully complete

cases under chapter 11 of such title; and

(B) how Federal laws relating to bankruptcy may be

made more effective and efficient in assisting small businesses to remain viable; and

(2) submit to the President pro tempore of the Senate and

the Speaker of the House of Representatives a report summarizing that study.

SEC. 444. PAYMENT OF INTEREST.

Section 362(d)(3) of title 11, United States Code, is amended—

(1) by inserting ‘‘or 30 days after the court determines that

the debtor is subject to this paragraph, whichever is later’’ after

‘‘90-day period)’’; and

(2) by striking subparagraph (B) and inserting the following:

‘‘(B) the debtor has commenced monthly payments

that—

‘‘(i) may, in the debtor’s sole discretion, notwithstanding section 363(c)(2), be made from rents or other

income generated before or after the commencement of

the case by or from the property to each creditor whose

claim is secured by such real estate (other than a claim

secured by a judgment lien or by an unmatured statutory lien); and

‘‘(ii) are in an amount equal to interest at the then

applicable nondefault contract rate of interest on the

value of the creditor’s interest in the real estate; or’’.

SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.

Section 503(b) of title 11, United States Code, is amended—

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

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

inserting a semicolon; and

(3) by adding at the end the following:

‘‘(7) with respect to a nonresidential real property lease previously assumed under section 365, and subsequently rejected,

a sum equal to all monetary obligations due, excluding those

arising from or relating to a failure to operate or penalty provisions, for the period of 2 years following the later of the rejection date or the date of actual turnover of the premises, without

reduction or setoff for any reason whatsoever except for sums

actually received or to be received from a nondebtor, and the

claim for remaining sums due for the balance of the term of the

lease shall be a claim under section 502(b)(6);’’.

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TITLE V—MUNICIPAL BANKRUPTCY

PROVISIONS

SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.

(a) TECHNICAL AMENDMENT RELATING TO MUNICIPALITIES.— Section 921(d) of title 11, United States Code, is amended by inserting ‘‘notwithstanding section 301(b)’’ before the period at the end.

(b) CONFORMING AMENDMENT.—Section 301 of title 11, United

States Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’; and

(2) by striking the last sentence and inserting the following:

‘‘(b) The commencement of a voluntary case under a chapter of

this title constitutes an order for relief under such chapter.’’.

SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

Section 901(a) of title 11, United States Code, is amended—

(1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

(2) by inserting ‘‘559, 560, 561, 562’’ after ‘‘557,’’.

TITLE VI—BANKRUPTCY DATA

SEC. 601. IMPROVED BANKRUPTCY STATISTICS.

(a) IN GENERAL.—Chapter 6 of title 28, United States Code, is

amended by adding at the end the following:

‘‘§ 159. Bankruptcy statistics

‘‘(a) The clerk of each district shall collect statistics regarding

individual debtors with primarily consumer debts seeking relief

under chapters 7, 11, and 13 of title 11. Those statistics shall be on

a standardized form prescribed by the Director of the Administrative Office of the United States Courts (referred to in this section as

the ‘Director’).

‘‘(b) The Director shall—

‘‘(1) compile the statistics referred to in subsection (a);

‘‘(2) make the statistics available to the public; and

‘‘(3) not later than October 31, 2002, and annually thereafter, prepare, and submit to Congress a report concerning the

information collected under subsection (a) that contains an

analysis of the information.

‘‘(c) The compilation required under subsection (b) shall—

‘‘(1) be itemized, by chapter, with respect to title 11;

‘‘(2) be presented in the aggregate and for each district; and

‘‘(3) include information concerning—

‘‘(A) the total assets and total liabilities of the debtors

described in subsection (a), and in each category of assets

and liabilities, as reported in the schedules prescribed pursuant to section 2075 of this title and filed by those debtors;

‘‘(B) the current monthly income, average income, and

average expenses of those debtors as reported on the schedules and statements that each such debtor files under sections 521 and 1322 of title 11;

‘‘(C) the aggregate amount of debt discharged in the reporting period, determined as the difference between the

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total amount of debt and obligations of a debtor reported

on the schedules and the amount of such debt reported in

categories which are predominantly nondischargeable;

‘‘(D) the average period of time between the filing of the

petition and the closing of the case;

‘‘(E) for the reporting period—

‘‘(i) the number of cases in which a reaffirmation

was filed; and

‘‘(ii)(I) the total number of reaffirmations filed;

‘‘(II) of those cases in which a reaffirmation was

filed, the number of cases in which the debtor was not

represented by an attorney; and

‘‘(III) of those cases in which a reaffirmation was

filed, the number of cases in which the reaffirmation

was approved by the court;

‘‘(F) with respect to cases filed under chapter 13 of title

11, for the reporting period—

‘‘(i)(I) the number of cases in which a final order

was entered determining the value of property securing

a claim in an amount less than the amount of the

claim; and

‘‘(II) the number of final orders determining the

value of property securing a claim issued;

‘‘(ii) the number of cases dismissed, the number of

cases dismissed for failure to make payments under the

plan, the number of cases refiled after dismissal, and

the number of cases in which the plan was completed,

separately itemized with respect to the number of modifications made before completion of the plan, if any;

and

‘‘(iii) the number of cases in which the debtor filed

another case during the 6-year period preceding the filing;

‘‘(G) the number of cases in which creditors were fined

for misconduct and any amount of punitive damages

awarded by the court for creditor misconduct; and

‘‘(H) the number of cases in which sanctions under rule

9011 of the Federal Rules of Bankruptcy Procedure were

imposed against debtor’s counsel or damages awarded

under such Rule.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter 6

of title 28, United States Code, is amended by adding at the end

the following:

‘‘159. Bankruptcy statistics.’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall take effect 18 months after the date of enactment of this Act.

SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY

DATA.

(a) AMENDMENT.—Chapter 39 of title 28, United States Code, is

amended by adding at the end the following:

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‘‘§ 589b. Bankruptcy data

‘‘(a) RULES.—The Attorney General shall, within a reasonable

time after the effective date of this section, issue rules requiring uniform forms for (and from time to time thereafter to appropriately

modify and approve)—

‘‘(1) final reports by trustees in cases under chapters 7, 12,

and 13 of title 11; and

‘‘(2) periodic reports by debtors in possession or trustees, as

the case may be, in cases under chapter 11 of title 11.

‘‘(b) REPORTS.—Each report referred to in subsection (a) shall

be designed (and the requirements as to place and manner of filing

shall be established) so as to facilitate compilation of data and maximum possible access of the public, both by physical inspection at

one or more central filing locations, and by electronic access through

the Internet or other appropriate media.

‘‘(c) REQUIRED INFORMATION.—The information required to be

filed in the reports referred to in subsection (b) shall be that which

is in the best interests of debtors and creditors, and in the public

interest in reasonable and adequate information to evaluate the efficiency and practicality of the Federal bankruptcy system. In issuing

rules proposing the forms referred to in subsection (a), the Attorney

General shall strike the best achievable practical balance between—

‘‘(1) the reasonable needs of the public for information

about the operational results of the Federal bankruptcy system;

‘‘(2) economy, simplicity, and lack of undue burden on persons with a duty to file reports; and

‘‘(3) appropriate privacy concerns and safeguards.

‘‘(d) FINAL REPORTS.—Final reports proposed for adoption by

trustees under chapters 7, 12, and 13 of title 11 shall, in addition

to such other matters as are required by law or as the Attorney General in the discretion of the Attorney General, shall propose, include

with respect to a case under such title—

‘‘(1) information about the length of time the case was

pending;

‘‘(2) assets abandoned;

‘‘(3) assets exempted;

‘‘(4) receipts and disbursements of the estate;

‘‘(5) expenses of administration, including for use under

section 707(b), actual costs of administering cases under chapter 13 of title 11;

‘‘(6) claims asserted;

‘‘(7) claims allowed; and

‘‘(8) distributions to claimants and claims discharged without payment,

in each case by appropriate category and, in cases under chapters

12 and 13 of title 11, date of confirmation of the plan, each modification thereto, and defaults by the debtor in performance under

the plan.

‘‘(e) PERIODIC REPORTS.—Periodic reports proposed for adoption

by trustees or debtors in possession under chapter 11 of title 11

shall, in addition to such other matters as are required by law or

as the Attorney General, in the discretion of the Attorney General,

shall propose, include—

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‘‘(1) information about the standard industry classification,

published by the Department of Commerce, for the businesses

conducted by the debtor;

‘‘(2) length of time the case has been pending;

‘‘(3) number of full-time employees as of the date of the

order for relief and at the end of each reporting period since the

case was filed;

‘‘(4) cash receipts, cash disbursements and profitability of

the debtor for the most recent period and cumulatively since the

date of the order for relief;

‘‘(5) compliance with title 11, whether or not tax returns

and tax payments since the date of the order for relief have been

timely filed and made;

‘‘(6) all professional fees approved by the court in the case

for the most recent period and cumulatively since the date of the

order for relief (separately reported, for the professional fees incurred by or on behalf of the debtor, between those that would

have been incurred absent a bankruptcy case and those not);

and

‘‘(7) plans of reorganization filed and confirmed and, with

respect thereto, by class, the recoveries of the holders, expressed

in aggregate dollar values and, in the case of claims, as a percentage of total claims of the class allowed.’’.

(b) CLERICAL AMENDMENT.—The table of sections at the beginning of chapter 39 of title 28, United States Code, is amended by

adding at the end the following:

‘‘589b. Bankruptcy data.’’.

SEC. 603. AUDIT PROCEDURES.

(a) IN GENERAL.—

(1) ESTABLISHMENT OF PROCEDURES.—The Attorney General (in judicial districts served by United States trustees) and

the Judicial Conference of the United States (in judicial districts served by bankruptcy administrators) shall establish procedures to determine the accuracy, veracity, and completeness of

petitions, schedules, and other information which the debtor is

required to provide under sections 521 and 1322 of title 11,

and, if applicable, section 111 of title 11, in individual cases

filed under chapter 7 or 13 of such title. Such audits shall be

in accordance with generally accepted auditing standards and

performed by independent certified public accountants or independent licensed public accountants, provided that the Attorney

General and the Judicial Conference, as appropriate, may develop alternative auditing standards not later than 2 years

after the date of enactment of this Act.

(2) PROCEDURES.—Those procedures required by paragraph

(1) shall—

(A) establish a method of selecting appropriate qualified persons to contract to perform those audits;

(B) establish a method of randomly selecting cases to

be audited, except that not less than 1 out of every 250

cases in each Federal judicial district shall be selected for

audit;

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(C) require audits for schedules of income and expenses

which reflect greater than average variances from the statistical norm of the district in which the schedules were

filed if those variances occur by reason of higher income or

higher expenses than the statistical norm of the district in

which the schedules were filed; and

(D) establish procedures for providing, not less frequently than annually, public information concerning the

aggregate results of such audits including the percentage of

cases, by district, in which a material misstatement of income or expenditures is reported.

(b) AMENDMENTS.—Section 586 of title 28, United States Code,

is amended—

(1) in subsection (a), by striking paragraph (6) and inserting the following:

‘‘(6) make such reports as the Attorney General directs, including the results of audits performed under section 603(a) of

the Bankruptcy Reform Act of 2000; and’’; and

(2) by adding at the end the following:

‘‘(f)(1) The United States trustee for each district is authorized

to contract with auditors to perform audits in cases designated by

the United States trustee, in accordance with the procedures established under section 603(a) of the Bankruptcy Reform Act of 2000.

‘‘(2)(A) The report of each audit referred to in paragraph (1)

shall be filed with the court and transmitted to the United States

trustee. Each report shall clearly and conspicuously specify any material misstatement of income or expenditures or of assets identified

by the person performing the audit. In any case in which a material

misstatement of income or expenditures or of assets has been reported, the clerk of the bankruptcy court shall give notice of the

misstatement to the creditors in the case.

‘‘(B) If a material misstatement of income or expenditures or of

assets is reported, the United States trustee shall—

‘‘(i) report the material misstatement, if appropriate, to the

United States Attorney pursuant to section 3057 of title 18; and

‘‘(ii) if advisable, take appropriate action, including but not

limited to commencing an adversary proceeding to revoke the

debtor’s discharge pursuant to section 727(d) of title 11.’’.

(c) AMENDMENTS TO SECTION 521 OF TITLE 11, U.S.C.—Section

521(a) of title 11, United States Code, as so designated by this Act,

is amended in each of paragraphs (3) and (4) by inserting ‘‘or an

auditor appointed under section 586(f) of title 28’’ after ‘‘serving in

the case’’.

(d) AMENDMENTS TO SECTION 727 OF TITLE 11, U.S.C.—Section

727(d) of title 11, United States Code, is amended—

(1) in paragraph (2), by striking ‘‘or’’ at the end;

(2) in paragraph (3), by striking the period at the end and

inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(4) the debtor has failed to explain satisfactorily—

‘‘(A) a material misstatement in an audit referred to in

section 586(f) of title 28; or

‘‘(B) a failure to make available for inspection all necessary accounts, papers, documents, financial records, files,

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and all other papers, things, or property belonging to the

debtor that are requested for an audit referred to in section

586(f) of title 28.’’.

(e) EFFECTIVE DATE.—The amendments made by this section

shall take effect 18 months after the date of enactment of this Act.

SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY DATA.

It is the sense of Congress that—

(1) the national policy of the United States should be that

all data held by bankruptcy clerks in electronic form, to the extent such data reflects only public records (as defined in section

107 of title 11, United States Code), should be released in a usable electronic form in bulk to the public, subject to such appropriate privacy concerns and safeguards as Congress and the Judicial Conference of the United States may determine; and

(2) there should be established a bankruptcy data system in

which—

(A) a single set of data definitions and forms are used

to collect data nationwide; and

(B) data for any particular bankruptcy case are aggregated in the same electronic record.

TITLE VII—BANKRUPTCY TAX

PROVISIONS

SEC. 701. TREATMENT OF CERTAIN LIENS.

(a) TREATMENT OF CERTAIN LIENS.—Section 724 of title 11,

United States Code, is amended—

(1) in subsection (b), in the matter preceding paragraph (1),

by inserting ‘‘(other than to the extent that there is a properly

perfected unavoidable tax lien arising in connection with an ad

valorem tax on real or personal property of the estate)’’ after

‘‘under this title’’;

(2) in subsection (b)(2), by inserting ‘‘(except that such expenses, other than claims for wages, salaries, or commissions

which arise after the filing of a petition, shall be limited to expenses incurred under chapter 7 of this title and shall not include expenses incurred under chapter 11 of this title)’’ after

‘‘507(a)(1)’’; and

(3) by adding at the end the following:

‘‘(e) Before subordinating a tax lien on real or personal property

of the estate, the trustee shall—

‘‘(1) exhaust the unencumbered assets of the estate; and

‘‘(2) in a manner consistent with section 506(c), recover

from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving or disposing of

that property.

‘‘(f) Notwithstanding the exclusion of ad valorem tax liens

under this section and subject to the requirements of subsection (e),

the following may be paid from property of the estate which secures

a tax lien, or the proceeds of such property:

‘‘(1) Claims for wages, salaries, and commissions that are

entitled to priority under section 507(a)(4).

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‘‘(2) Claims for contributions to an employee benefit plan

entitled to priority under section 507(a)(5).’’.

(b) DETERMINATION OF TAX LIABILITY.—Section 505(a)(2) of

title 11, United States Code, is amended—

(1) in subparagraph (A), by striking ‘‘or’’ at the end;

(2) in subparagraph (B), by striking the period at the end

and inserting ‘‘; or’’; and

(3) by adding at the end the following:

‘‘(C) the amount or legality of any amount arising in connection with an ad valorem tax on real or personal property of

the estate, if the applicable period for contesting or redetermining that amount under any law (other than a bankruptcy

law) has expired.’’.

SEC. 702. TREATMENT OF FUEL TAX CLAIMS.

Section 501 of title 11, United States Code, is amended by adding at the end the following:

‘‘(e) A claim arising from the liability of a debtor for fuel use

tax assessed consistent with the requirements of section 31705 of

title 49 may be filed by the base jurisdiction designated pursuant

to the International Fuel Tax Agreement and, if so filed, shall be

allowed as a single claim.’’.

SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

Section 505(b) of title 11, United States Code, is amended—

(1) in the first sentence, by inserting ‘‘at the address and in

the manner designated in paragraph (1)’’ after ‘‘determination

of such tax’’;

(2) by striking ‘‘(1) upon payment’’ and inserting ‘‘(A) upon

payment’’;

(3) by striking ‘‘(A) such governmental unit’’ and inserting

‘‘(i) such governmental unit’’;

(4) by striking ‘‘(B) such governmental unit’’ and inserting

‘‘(ii) such governmental unit’’;

(5) by striking ‘‘(2) upon payment’’ and inserting ‘‘(B) upon

payment’’;

(6) by striking ‘‘(3) upon payment’’ and inserting ‘‘(C) upon

payment’’;

(7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and

(8) by inserting before paragraph (2), as so designated, the

following:

‘‘(b)(1)(A) The clerk of each district shall maintain a listing

under which a Federal, State, or local governmental unit responsible for the collection of taxes within the district may—

‘‘(i) designate an address for service of requests under this

subsection; and

‘‘(ii) describe where further information concerning additional requirements for filing such requests may be found.

‘‘(B) If a governmental unit referred to in subparagraph (A)

does not designate an address and provide that address to the clerk

under that subparagraph, any request made under this subsection

may be served at the address for the filing of a tax return or protest

with the appropriate taxing authority of that governmental unit.’’.

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SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

(a) IN GENERAL.—Subchapter I of chapter 5 of title 11, United

States Code, is amended by adding at the end the following:

‘‘§ 511. Rate of interest on tax claims

‘‘(a) If any provision of this title requires the payment of interest

on a tax claim or on an administrative expense tax, or the payment

of interest to enable a creditor to receive the present value of the allowed amount of a tax claim, the rate of interest shall be the rate

determined under applicable nonbankruptcy law.

‘‘(b) In the case of taxes paid under a confirmed plan under this

title, the rate of interest shall be determined as of the calendar

month in which the plan is confirmed.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter 5

of title 11, United States Code, is amended by inserting after the

item relating to section 510 the following:

‘‘511. Rate of interest on tax claims.’’.

SEC. 705. PRIORITY OF TAX CLAIMS.

Section 507(a)(8) of title 11, United States Code, is amended—

(1) in subparagraph (A)—

(A) in the matter preceding clause (i), by inserting ‘‘for

a taxable year ending on or before the date of filing of the

petition’’ after ‘‘gross receipts’’;

(B) in clause (i), by striking ‘‘for a taxable year ending

on or before the date of filing of the petition’’; and

(C) by striking clause (ii) and inserting the following:

‘‘(ii) assessed within 240 days before the date of the

filing of the petition, exclusive of—

‘‘(I) any time during which an offer in compromise with respect to that tax was pending or in

effect during that 240-day period, plus 30 days;

and

‘‘(II) any time during which a stay of proceedings against collections was in effect in a prior

case under this title during that 240-day period;

plus 90 days.’’; and

(2) by adding at the end the following:

‘‘An otherwise applicable time period specified in this paragraph shall be suspended for (i) any period during which a governmental unit is prohibited under applicable nonbankruptcy

law from collecting a tax as a result of a request by the debtor

for a hearing and an appeal of any collection action taken or

proposed against the debtor, plus 90 days; plus (ii) any time

during which the stay of proceedings was in effect in a prior

case under this title or during which collection was precluded

by the existence of 1 or more confirmed plans under this title,

plus 90 days.’’.

SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

Section 507(a)(8)(B) of title 11, United States Code, is amended

by striking ‘‘assessed’’ and inserting ‘‘incurred’’.

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SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 13.

Section 1328(a)(2) of title 11, United States Code, as amended

by section 314 of this Act, is amended by striking ‘‘paragraph’’ and

inserting ‘‘section 507(a)(8)(C) or in paragraph (1)(B), (1)(C),’’.

SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 11.

Section 1141(d) of title 11, United States Code, as amended by

this Act, is amended by adding at the end the following:

‘‘(6) Notwithstanding paragraph (1), the confirmation of a plan

does not discharge a debtor that is a corporation from any debt described in section 523(a)(2) or for a tax or customs duty with respect

to which the debtor—

‘‘(A) made a fraudulent return; or

‘‘(B) willfully attempted in any manner to evade or defeat

that tax or duty.’’.

SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO PREPETITION

TAXES.

Section 362(a)(8) of title 11, United States Code, is amended by

striking ‘‘the debtor’’ and inserting ‘‘a corporate debtor’s tax liability

for a taxable period the bankruptcy court may determine or concerning an individual debtor’s tax liability for a taxable period ending before the order for relief under this title’’.

SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.

Section 1129(a)(9) of title 11, United States Code, is amended—

(1) in subparagraph (B), by striking ‘‘and’’ at the end;

(2) in subparagraph (C), by striking ‘‘deferred cash payments,’’ and all that follows through the end of the subparagraph, and inserting ‘‘regular installment payments in cash—

‘‘(i) of a total value, as of the effective date of the

plan, equal to the allowed amount of such claim;

‘‘(ii) over a period ending not later than 5 years

after the date of the entry of the order for relief under

section 301, 302, or 303; and

‘‘(iii) in a manner not less favorable than the most

favored nonpriority unsecured claim provided for in

the plan (other than cash payments made to a class of

creditors under section 1122(b)); and’’; and

(3) by adding at the end the following:

‘‘(D) with respect to a secured claim which would otherwise meet the description of an unsecured claim of a governmental unit under section 507(a)(8), but for the secured

status of that claim, the holder of that claim will receive on

account of that claim, cash payments, in the same manner

and over the same period, as prescribed in subparagraph

(C).’’.

SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

Section 545(2) of title 11, United States Code, is amended by inserting before the semicolon at the end the following: ‘‘, except in any

case in which a purchaser is a purchaser described in section 6323

of the Internal Revenue Code of 1986, or in any other similar provision of State or local law’’.

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SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.

(a) PAYMENT OF TAXES REQUIRED.—Section 960 of title 28,

United States Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘Any’’; and

(2) by adding at the end the following:

‘‘(b) A tax under subsection (a) shall be paid on or before the

due date of the tax under applicable nonbankruptcy law, unless—

‘‘(1) the tax is a property tax secured by a lien against property that is abandoned within a reasonable period of time after

the lien attaches by the trustee of a bankruptcy estate under section 554 of title 11; or

‘‘(2) payment of the tax is excused under a specific provision

of title 11.

‘‘(c) In a case pending under chapter 7 of title 11, payment of

a tax may be deferred until final distribution is made under section

726 of title 11, if—

‘‘(1) the tax was not incurred by a trustee duly appointed

under chapter 7 of title 11; or

‘‘(2) before the due date of the tax, an order of the court

makes a finding of probable insufficiency of funds of the estate

to pay in full the administrative expenses allowed under section

503(b) of title 11 that have the same priority in distribution

under section 726(b) of title 11 as the priority of that tax.’’.

(b) PAYMENT OF AD VALOREM TAXES REQUIRED.—Section

503(b)(1)(B)(i) of title 11, United States Code, is amended by inserting ‘‘whether secured or unsecured, including property taxes for

which liability is in rem, in personam, or both,’’ before ‘‘except’’.

(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE EXPENSE TAXES

ELIMINATED.—Section 503(b)(1) of title 11, United States Code, is

amended—

(1) in subparagraph (B), by striking ‘‘and’’ at the end;

(2) in subparagraph (C), by adding ‘‘and’’ at the end; and

(3) by adding at the end the following:

‘‘(D) notwithstanding the requirements of subsection (a), a

governmental unit shall not be required to file a request for the

payment of an expense described in subparagraph (B) or (C), as

a condition of its being an allowed administrative expense;’’.

(d) PAYMENT OF TAXES AND FEES AS SECURED CLAIMS.—Section 506 of title 11, United States Code, is amended—

(1) in subsection (b), by inserting ‘‘or State statute’’ after

‘‘agreement’’; and

(2) in subsection (c), by inserting ‘‘, including the payment

of all ad valorem property taxes with respect to the property’’ before the period at the end.

SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

Section 726(a)(1) of title 11, United States Code, is amended by

striking ‘‘before the date on which the trustee commences distribution under this section;’’ and inserting the following: ‘‘on or before

the earlier of—

‘‘(A) the date that is 10 days after the mailing to creditors of the summary of the trustee’s final report; or

‘‘(B) the date on which the trustee commences final distribution under this section;’’.

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SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

Section 523(a) of title 11, United States Code, as amended by

this Act, is amended—

(1) in paragraph (1)(B)—

(A) in the matter preceding clause (i), by inserting ‘‘or

equivalent report or notice,’’ after ‘‘a return,’’;

(B) in clause (i), by inserting ‘‘or given’’ after ‘‘filed’’;

and

(C) in clause (ii)—

(i) by inserting ‘‘or given’’ after ‘‘filed’’; and

(ii) by inserting ‘‘, report, or notice’’ after ‘‘return’’;

and

(2) by adding at the end the following:

‘‘For purposes of this subsection, the term ‘return’ means a return

that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements). Such term includes a return

prepared pursuant to section 6020(a) of the Internal Revenue Code

of 1986, or similar State or local law, or a written stipulation to a

judgment or a final order entered by a nonbankruptcy tribunal, but

does not include a return made pursuant to section 6020(b) of the

Internal Revenue Code of 1986, or a similar State or local law.’’.

SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UNPAID TAXES.

Section 505(b)(2) of title 11, United States Code, as amended by

this Act, is amended by inserting ‘‘the estate,’’ after ‘‘misrepresentation,’’.

SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 13 PLANS.

(a) FILING OF PREPETITION TAX RETURNS REQUIRED FOR PLAN

CONFIRMATION.—Section 1325(a) of title 11, United States Code, as

amended by this Act, is amended by adding at the end the following:

‘‘(9) the debtor has filed all applicable Federal, State, and

local tax returns as required by section 1308.’’.

(b) ADDITIONAL TIME PERMITTED FOR FILING TAX RETURNS.—

(1) IN GENERAL.—Subchapter I of chapter 13 of title 11,

United States Code, is amended by adding at the end the following:

‘‘§ 1308. Filing of prepetition tax returns

‘‘(a) Not later than the day before the date on which the meeting

of the creditors is first scheduled to be held under section 341(a),

if the debtor was required to file a tax return under applicable nonbankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year

period ending on the date of the filing of the petition.

‘‘(b)(1) Subject to paragraph (2), if the tax returns required by

subsection (a) have not been filed by the date on which the meeting

of creditors is first scheduled to be held under section 341(a), the

trustee may hold open that meeting for a reasonable period of time

to allow the debtor an additional period of time to file any unfiled

returns, but such additional period of time shall not extend

beyond—

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‘‘(A) for any return that is past due as of the date of the

filing of the petition, the date that is 120 days after the date

of that meeting; or

‘‘(B) for any return that is not past due as of the date of

the filing of the petition, the later of—

‘‘(i) the date that is 120 days after the date of that

meeting; or

‘‘(ii) the date on which the return is due under the last

automatic extension of time for filing that return to which

the debtor is entitled, and for which request is timely made,

in accordance with applicable nonbankruptcy law.

‘‘(2) Upon notice and hearing, and order entered before the tolling of any applicable filing period determined under this subsection,

if the debtor demonstrates by a preponderance of the evidence that

the failure to file a return as required under this subsection is attributable to circumstances beyond the control of the debtor, the

court may extend the filing period established by the trustee under

this subsection for—

‘‘(A) a period of not more than 30 days for returns described in paragraph (1); and

‘‘(B) a period not to extend after the applicable extended

due date for a return described in paragraph (2).

‘‘(c) For purposes of this section, the term ‘return’ includes a return prepared pursuant to subsection (a) or (b) of section 6020 of the

Internal Revenue Code of 1986, or a similar State or local law, or

a written stipulation to a judgment or a final order entered by a

nonbankruptcy tribunal.’’.

(2) CONFORMING AMENDMENT.—The table of sections at the

beginning of chapter 13 of title 11, United States Code, is

amended by inserting after the item relating to section 1307 the

following:

‘‘1308. Filing of prepetition tax returns.’’.

(c) DISMISSAL OR CONVERSION ON FAILURE TO COMPLY.—Section 1307 of title 11, United States Code, is amended—

(1) by redesignating subsections (e) and (f) as subsections

(f) and (g), respectively; and

(2) by inserting after subsection (d) the following:

‘‘(e) Upon the failure of the debtor to file a tax return under section 1308, on request of a party in interest or the United States

trustee and after notice and a hearing, the court shall dismiss a

case or convert a case under this chapter to a case under chapter

7 of this title, whichever is in the best interest of the creditors and

the estate.’’.

(d) TIMELY FILED CLAIMS.—Section 502(b)(9) of title 11, United

States Code, is amended by inserting before the period at the end

the following ‘‘, and except that in a case under chapter 13, a claim

of a governmental unit for a tax with respect to a return filed under

section 1308 shall be timely if the claim is filed on or before the date

that is 60 days after the date on which such return was filed as required’’.

(e) RULES FOR OBJECTIONS TO CLAIMS AND TO CONFIRMATION.—It is the sense of Congress that the Advisory Committee on

Bankruptcy Rules of the Judicial Conference of the United States

should, as soon as practicable after the date of enactment of this

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Act, propose for adoption amended Federal Rules of Bankruptcy

Procedure which provide that—

(1) notwithstanding the provisions of Rule 3015(f), in cases

under chapter 13 of title 11, United States Code, an objection

to the confirmation of a plan filed by a governmental unit on

or before the date that is 60 days after the date on which the

debtor files all tax returns required under sections 1308 and

1325(a)(7) of title 11, United States Code, shall be treated for

all purposes as if such objection had been timely filed before

such confirmation; and

(2) in addition to the provisions of Rule 3007, in a case

under chapter 13 of title 11, United States Code, no objection

to a tax with respect to which a return is required to be filed

under section 1308 of title 11, United States Code, shall be filed

until such return has been filed as required.

SEC. 717. STANDARDS FOR TAX DISCLOSURE.

Section 1125(a)(1) of title 11, United States Code, is amended—

(1) by inserting ‘‘including a discussion of the potential material Federal tax consequences of the plan to the debtor, any

successor to the debtor, and a hypothetical investor typical of

the holders of claims or interests in the case,’’ after ‘‘records’’;

and

(2) by striking ‘‘a hypothetical reasonable investor typical of

holders of claims or interests’’ and inserting ‘‘such a hypothetical investor’’.

SEC. 718. SETOFF OF TAX REFUNDS.

Section 362(b) of title 11, United States Code, is amended by inserting after paragraph (26), as added by this Act, the following:

‘‘(27) under subsection (a), of the setoff under applicable

nonbankruptcy law of an income tax refund, by a governmental

unit, with respect to a taxable period that ended before the

order for relief against an income tax liability for a taxable period that also ended before the order for relief, except that in

any case in which the setoff of an income tax refund is not permitted under applicable nonbankruptcy law because of a pending action to determine the amount or legality of a tax liability,

the governmental unit may hold the refund pending the resolution of the action, unless the court, upon motion of the trustee

and after notice and hearing, grants the taxing authority adequate protection (within the meaning of section 361) for the secured claim of that authority in the setoff under section

506(a);’’.

SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREATMENT OF

STATE AND LOCAL TAXES.

(a) IN GENERAL.—Section 346 of title 11, United States Code,

is amended to read as follows:

‘‘§ 346. Special provisions related to the treatment of state

and local taxes

‘‘(a) Whenever the Internal Revenue Code of 1986 provides that

a separate taxable estate or entity is created in a case concerning

a debtor under this title, and the income, gain, loss, deductions, and

credits of such estate shall be taxed to or claimed by the estate, a

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separate taxable estate is also created for purposes of any State and

local law imposing a tax on or measured by income and such income, gain, loss, deductions, and credits shall be taxed to or

claimed by the estate and may not be taxed to or claimed by the

debtor. The preceding sentence shall not apply if the case is dismissed. The trustee shall make tax returns of income required under

any such State or local law.

‘‘(b) Whenever the Internal Revenue Code of 1986 provides that

no separate taxable estate shall be created in a case concerning a

debtor under this title, and the income, gain, loss, deductions, and

credits of an estate shall be taxed to or claimed by the debtor, such

income, gain, loss, deductions, and credits shall be taxed to or

claimed by the debtor under a State or local law imposing a tax on

or measured by income and may not be taxed to or claimed by the

estate. The trustee shall make such tax returns of income of corporations and of partnerships as are required under any State or local

law, but with respect to partnerships, shall make said returns only

to the extent such returns are also required to be made under such

Code. The estate shall be liable for any tax imposed on such corporation or partnership, but not for any tax imposed on partners or

members.

‘‘(c) With respect to a partnership or any entity treated as a

partnership under a State or local law imposing a tax on or measured by income that is a debtor in a case under this title, any gain

or loss resulting from a distribution of property from such partnership, or any distributive share of any income, gain, loss, deduction,

or credit of a partner or member that is distributed, or considered

distributed, from such partnership, after the commencement of the

case, is gain, loss, income, deduction, or credit, as the case may be,

of the partner or member, and if such partner or member is a debtor

in a case under this title, shall be subject to tax in accordance with

subsection (a) or (b).

‘‘(d) For purposes of any State or local law imposing a tax on

or measured by income, the taxable period of a debtor in a case

under this title shall terminate only if and to the extent that the taxable period of such debtor terminates under the Internal Revenue

Code of 1986.

‘‘(e) The estate in any case described in subsection (a) shall use

the same accounting method as the debtor used immediately before

the commencement of the case, if such method of accounting complies with applicable nonbankruptcy tax law.

‘‘(f) For purposes of any State or local law imposing a tax on

or measured by income, a transfer of property from the debtor to the

estate or from the estate to the debtor shall not be treated as a disposition for purposes of any provision assigning tax consequences to

a disposition, except to the extent that such transfer is treated as a

disposition under the Internal Revenue Code of 1986.

‘‘(g) Whenever a tax is imposed pursuant to a State or local law

imposing a tax on or measured by income pursuant to subsection (a)

or (b), such tax shall be imposed at rates generally applicable to the

same types of entities under such State or local law.

‘‘(h) The trustee shall withhold from any payment of claims for

wages, salaries, commissions, dividends, interest, or other payments,

or collect, any amount required to be withheld or collected under apVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00101 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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plicable State or local tax law, and shall pay such withheld or collected amount to the appropriate governmental unit at the time and

in the manner required by such tax law, and with the same priority

as the claim from which such amount was withheld or collected was

paid.

‘‘(i)(1) To the extent that any State or local law imposing a tax

on or measured by income provides for the carryover of any tax attribute from one taxable period to a subsequent taxable period, the

estate shall succeed to such tax attribute in any case in which such

estate is subject to tax under subsection (a).

‘‘(2) After such a case is closed or dismissed, the debtor shall

succeed to any tax attribute to which the estate succeeded under

paragraph (1) to the extent consistent with the Internal Revenue

Code of 1986.

‘‘(3) The estate may carry back any loss or tax attribute to a taxable period of the debtor that ended before the order for relief under

this title to the extent that—

‘‘(A) applicable State or local tax law provides for a

carryback in the case of the debtor; and

‘‘(B) the same or a similar tax attribute may be carried

back by the estate to such a taxable period of the debtor under

the Internal Revenue Code of 1986.

‘‘(j)(1) For purposes of any State or local law imposing a tax on

or measured by income, income is not realized by the estate, the

debtor, or a successor to the debtor by reason of discharge of indebtedness in a case under this title, except to the extent, if any, that

such income is subject to tax under the Internal Revenue Code of

1986.

‘‘(2) Whenever the Internal Revenue Code of 1986 provides that

the amount excluded from gross income in respect of the discharge

of indebtedness in a case under this title shall be applied to reduce

the tax attributes of the debtor or the estate, a similar reduction

shall be made under any State or local law imposing a tax on or

measured by income to the extent such State or local law recognizes

such attributes. Such State or local law may also provide for the reduction of other attributes to the extent that the full amount of income from the discharge of indebtedness has not been applied.

‘‘(k)(1) Except as provided in this section and section 505, the

time and manner of filing tax returns and the items of income, gain,

loss, deduction, and credit of any taxpayer shall be determined

under applicable nonbankruptcy law.

‘‘(2) For Federal tax purposes, the provisions of this section are

subject to the Internal Revenue Code of 1986 and other applicable

Federal nonbankruptcy law.’’.

(b) CONFORMING AMENDMENTS.—

(1) Section 728 of title 11, United States Code, is repealed.

(2) Section 1146 of title 11, United States Code, is

amended—

(A) by striking subsections (a) and (b); and

(B) by redesignating subsections (c) and (d) as subsections (a) and (b), respectively.

(3) Section 1231 of title 11, United States Code, is

amended—

(A) by striking subsections (a) and (b); and

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(B) by redesignating subsections (c) and (d) as subsections (a) and (b), respectively.

SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX RETURNS.

Section 521 of title 11, United States Code, as amended by this

Act, is amended by adding at the end the following:

‘‘(k)(1) Notwithstanding any other provision of this title, if the

debtor fails to file a tax return that becomes due after the commencement of the case or to properly obtain an extension of the due

date for filing such return, the taxing authority may request that the

court enter an order converting or dismissing the case.

‘‘(2) If the debtor does not file the required return or obtain the

extension referred to in paragraph (1) within 90 days after a request

is filed by the taxing authority under that paragraph, the court

shall convert or dismiss the case, whichever is in the best interests

of creditors and the estate.’’.

TITLE VIII—ANCILLARY AND OTHER

CROSS-BORDER CASES

SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED

STATES CODE.

(a) IN GENERAL.—Title 11, United States Code, is amended by

inserting after chapter 13 the following:

‘‘CHAPTER 15—ANCILLARY AND OTHER 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.

‘‘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.

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‘‘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.

‘‘§ 1501. Purpose and scope of application

‘‘(a) The purpose of this chapter is to incorporate the Model Law

on Cross-Border Insolvency so as to provide effective mechanisms for

dealing with cases of cross-border insolvency with the objectives of—

‘‘(1) cooperation between—

‘‘(A) United States courts, United States trustees, trustees, examiners, debtors, and debtors in possession; and

‘‘(B) the courts and other competent authorities of foreign countries involved in cross-border insolvency cases;

‘‘(2) greater legal certainty for trade and investment;

‘‘(3) fair and efficient administration of cross-border insolvencies that protects the interests of all creditors, and other interested entities, including the debtor;

‘‘(4) protection and maximization of the value of the debtor’s assets; and

‘‘(5) facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

‘‘(b) This chapter applies where—

‘‘(1) assistance is sought in the United States by a foreign

court or a foreign representative in connection with a foreign

proceeding;

‘‘(2) assistance is sought in a foreign country in connection

with a case under this title;

‘‘(3) a foreign proceeding and a case under this title with

respect to the same debtor are taking place concurrently; or

‘‘(4) creditors or other interested persons in a foreign country have an interest in requesting the commencement of, or participating in, a case or proceeding under this title.

‘‘(c) This chapter does not apply to—

‘‘(1) a proceeding concerning an entity, other than a foreign

insurance company, identified by exclusion in section 109(b);

‘‘(2) an individual, or to an individual and such individual’s spouse, who have debts within the limits specified in section 109(e) and who are citizens of the United States or aliens

lawfully admitted for permanent residence in the United States;

or

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‘‘(3) an entity subject to a proceeding under the Securities

Investor Protection Act of 1970, a stockbroker subject to subchapter III of chapter 7 of this title, or a commodity broker subject to subchapter IV of chapter 7 of this title.

‘‘(d) The court may not grant relief under this chapter with respect to any deposit, escrow, trust fund, or other security required

or permitted under any applicable State insurance law or regulation

for the benefit of claim holders in the United States.

‘‘SUBCHAPTER I—GENERAL PROVISIONS

‘‘§ 1502. Definitions

‘‘For the purposes of this chapter, the term—

‘‘(1) ‘debtor’ means an entity that is the subject of a foreign

proceeding;

‘‘(2) ‘establishment’ means any place of operations where

the debtor carries out a nontransitory economic activity;

‘‘(3) ‘foreign court’ means a judicial or other authority competent to control or supervise a foreign proceeding;

‘‘(4) ‘foreign main proceeding’ means a foreign proceeding

taking place in the country where the debtor has the center of

its main interests;

‘‘(5) ‘foreign nonmain proceeding’ means a foreign proceeding, other than a foreign main proceeding, taking place in

a country where the debtor has an establishment;

‘‘(6) ‘trustee’ includes a trustee, a debtor in possession in a

case under any chapter of this title, or a debtor under chapter

9 of this title;

‘‘(7) ‘recognition’ means the entry of an order granting recognition of a foreign main proceeding or foreign nonmain proceeding under this chapter; and

‘‘(8) ‘within the territorial jurisdiction of the United States’,

when used with reference to property of a debtor, refers to tangible property located within the territory of the United States

and intangible property deemed under applicable nonbankruptcy law to be located within that territory, including any

property subject to attachment or garnishment that may properly be seized or garnished by an action in a Federal or State

court in the United States.

‘‘§ 1503. International obligations of the United States

‘‘To the extent that this chapter conflicts with an obligation of

the United States arising out of any treaty or other form of agreement to which it is a party with one or more other countries, the

requirements of the treaty or agreement prevail.

‘‘§ 1504. Commencement of ancillary case

‘‘A case under this chapter is commenced by the filing of a petition for recognition of a foreign proceeding under section 1515.

‘‘§ 1505. Authorization to act in a foreign country

‘‘A trustee or another entity (including an examiner) may be authorized by the court to act in a foreign country on behalf of an estate created under section 541. An entity authorized to act under

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this section may act in any way permitted by the applicable foreign

law.

‘‘§ 1506. Public policy exception

‘‘Nothing in this chapter prevents the court from refusing to

take an action governed by this chapter if the action would be manifestly contrary to the public policy of the United States.

‘‘§ 1507. Additional assistance

‘‘(a) Subject to the specific limitations stated elsewhere in this

chapter the court, if recognition is granted, may provide additional

assistance to a foreign representative under this title or under other

laws of the United States.

‘‘(b) In determining whether to provide additional assistance

under this title or under other laws of the United States, the court

shall consider whether such additional assistance, consistent with

the principles of comity, will reasonably assure—

‘‘(1) just treatment of all holders of claims against or interests in the debtor’s property;

‘‘(2) protection of claim holders in the United States against

prejudice and inconvenience in the processing of claims in such

foreign proceeding;

‘‘(3) prevention of preferential or fraudulent dispositions of

property of the debtor;

‘‘(4) distribution of proceeds of the debtor’s property substantially in accordance with the order prescribed by this title;

and

‘‘(5) if appropriate, the provision of an opportunity for a

fresh start for the individual that such foreign proceeding concerns.

‘‘§ 1508. Interpretation

‘‘In interpreting this chapter, the court shall consider its international origin, and the need to promote an application of this

chapter that is consistent with the application of similar statutes

adopted by foreign jurisdictions.

‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES

AND CREDITORS TO THE COURT

‘‘§ 1509. Right of direct access

‘‘(a) A foreign representative may commence a case under section 1504 by filing directly with the court a petition for recognition

of a foreign proceeding under section 1515.

‘‘(b) If the court grants recognition under section 1515, and subject to any limitations that the court may impose consistent with the

policy of this chapter—

‘‘(1) the foreign representative has the capacity to sue and

be sued in a court in the United States;

‘‘(2) the foreign representative may apply directly to a court

in the United States for appropriate relief in that court; and

‘‘(3) a court in the United States shall grant comity or cooperation to the foreign representative.

107

‘‘(c) A request for comity or cooperation by a foreign representative in a court in the United States other than the court which

granted recognition shall be accompanied by a certified copy of an

order granting recognition under section 1517.

‘‘(d) If the court denies recognition under this chapter, the court

may issue any appropriate order necessary to prevent the foreign

representative from obtaining comity or cooperation from courts in

the United States.

‘‘(e) Whether or not the court grants recognition, and subject to

sections 306 and 1510, a foreign representative is subject to applicable nonbankruptcy law.

‘‘(f) Notwithstanding any other provision of this section, the failure of a foreign representative to commence a case or to obtain recognition under this chapter does not affect any right the foreign representative may have to sue in a court in the United States to collect

or recover a claim which is the property of the debtor.

‘‘§ 1510. Limited jurisdiction

‘‘The sole fact that a foreign representative files a petition under

section 1515 does not subject the foreign representative to the jurisdiction of any court in the United States for any other purpose.

‘‘§ 1511. Commencement of case under section 301 or 303

‘‘(a) Upon recognition, a foreign representative may commence—

‘‘(1) an involuntary case under section 303; or

‘‘(2) a voluntary case under section 301 or 302, if the foreign proceeding is a foreign main proceeding.

‘‘(b) The petition commencing a case under subsection (a) must

be accompanied by a certified copy of an order granting recognition.

The court where the petition for recognition has been filed must be

advised of the foreign representative’s intent to commence a case

under subsection (a) prior to such commencement.

‘‘§ 1512. Participation of a foreign representative in a case

under this title

‘‘Upon recognition of a foreign proceeding, the foreign representative in the recognized proceeding is entitled to participate as a

party in interest in a case regarding the debtor under this title.

‘‘§ 1513. Access of foreign creditors to a case under this title

‘‘(a) Foreign creditors have the same rights regarding the commencement of, and participation in, a case under this title as domestic creditors.

‘‘(b)(1) Subsection (a) does not change or codify present law as

to the priority of claims under section 507 or 726 of this title, except

that the claim of a foreign creditor under those sections shall not

be given a lower priority than that of general unsecured claims

without priority solely because the holder of such claim is a foreign

creditor.

‘‘(2)(A) Subsection (a) and paragraph (1) do not change or codify present law as to the allowability of foreign revenue claims or

other foreign public law claims in a proceeding under this title.

‘‘(B) Allowance and priority as to a foreign tax claim or other

foreign public law claim shall be governed by any applicable tax

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treaty of the United States, under the conditions and circumstances

specified therein.

‘‘§ 1514. Notification to foreign creditors concerning a case

under this title

‘‘(a) Whenever in a case under this title notice is to be given to

creditors generally or to any class or category of creditors, such notice shall also be given to the known creditors generally, or to creditors in the notified class or category, that do not have addresses in

the United States. The court may order that appropriate steps be

taken with a view to notifying any creditor whose address is not yet

known.

‘‘(b) Such notification to creditors with foreign addresses described in subsection (a) shall be given individually, unless the

court considers that, under the circumstances, some other form of

notification would be more appropriate. No letter or other formality

is required.

‘‘(c) When a notification of commencement of a case is to be

given to foreign creditors, the notification shall—

‘‘(1) indicate the time period for filing proofs of claim and

specify the place for their filing;

‘‘(2) indicate whether secured creditors need to file their

proofs of claim; and

‘‘(3) contain any other information required to be included

in such a notification to creditors under this title and the orders

of the court.

‘‘(d) Any rule of procedure or order of the court as to notice or

the filing of a claim shall provide such additional time to creditors

with foreign addresses as is reasonable under the circumstances.

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN

PROCEEDING AND RELIEF

‘‘§ 1515. Application for recognition

‘‘(a) A foreign representative applies to the court for recognition

of the foreign proceeding in which the foreign representative has

been appointed by filing a petition for recognition.

‘‘(b) A petition for recognition shall be accompanied by—

‘‘(1) a certified copy of the decision commencing the foreign

proceeding and appointing the foreign representative;

‘‘(2) a certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or

‘‘(3) in the absence of evidence referred to in paragraphs (1)

and (2), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative.

‘‘(c) A petition for recognition shall also be accompanied by a

statement identifying all foreign proceedings with respect to the

debtor that are known to the foreign representative.

‘‘(d) The documents referred to in paragraphs (1) and (2) of subsection (b) shall be translated into English. The court may require

a translation into English of additional documents.

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‘‘§ 1516. Presumptions concerning recognition

‘‘(a) If the decision or certificate referred to in section 1515(b)

indicates that the foreign proceeding is a foreign proceeding (as defined in section 101) and that the person or body is a foreign representative (as defined in section 101), the court is entitled to so presume.

‘‘(b) The court is entitled to presume that documents submitted

in support of the petition for recognition are authentic, whether or

not they have been legalized.

‘‘(c) In the absence of evidence to the contrary, the debtor’s registered office, or habitual residence in the case of an individual, is

presumed to be the center of the debtor’s main interests.

‘‘§ 1517. Order granting recognition

‘‘(a) Subject to section 1506, after notice and a hearing, an

order recognizing a foreign proceeding shall be entered if—

‘‘(1) the foreign proceeding for which recognition is sought

is a foreign main proceeding or foreign nonmain proceeding

within the meaning of section 1502;

‘‘(2) the foreign representative applying for recognition is a

person or body as defined in section 101; and

‘‘(3) the petition meets the requirements of section 1515.

‘‘(b) The foreign proceeding shall be recognized—

‘‘(1) as a foreign main proceeding if it is taking place in the

country where the debtor has the center of its main interests; or

‘‘(2) as a foreign nonmain proceeding if the debtor has an

establishment within the meaning of section 1502 in the foreign

country where the proceeding is pending.

‘‘(c) A petition for recognition of a foreign proceeding shall be

decided upon at the earliest possible time. Entry of an order recognizing a foreign proceeding constitutes recognition under this chapter.

‘‘(d) The provisions of this subchapter do not prevent modification or termination of recognition if it is shown that the grounds for

granting it were fully or partially lacking or have ceased to exist,

but in considering such action the court shall give due weight to

possible prejudice to parties that have relied upon the order granting recognition. The case under this chapter may be closed in the

manner prescribed under section 350.

‘‘§ 1518. Subsequent information

‘‘From the time of filing the petition for recognition of the foreign proceeding, the foreign representative shall file with the court

promptly a notice of change of status concerning—

‘‘(1) any substantial change in the status of the foreign proceeding or the status of the foreign representative’s appointment;

and

‘‘(2) any other foreign proceeding regarding the debtor that

becomes known to the foreign representative.

‘‘§ 1519. Relief that may be granted upon filing petition for

recognition

‘‘(a) From the time of filing a petition for recognition until the

court rules on the petition, the court may, at the request of the forVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00109 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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eign representative, where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a

provisional nature, including—

‘‘(1) staying execution against the debtor’s assets;

‘‘(2) entrusting the administration or realization of all or

part of the debtor’s assets located in the United States to the

foreign representative or another person authorized by the court,

including an examiner, in order to protect and preserve the

value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy; and

‘‘(3) any relief referred to in paragraph (3), (4), or (7) of section 1521(a).

‘‘(b) Unless extended under section 1521(a)(6), the relief granted

under this section terminates when the petition for recognition is

granted.

‘‘(c) It is a ground for denial of relief under this section that

such relief would interfere with the administration of a foreign

main proceeding.

‘‘(d) The court may not enjoin a police or regulatory act of a

governmental unit, including a criminal action or proceeding, under

this section.

‘‘(e) The standards, procedures, and limitations applicable to an

injunction shall apply to relief under this section.

‘‘(f) The exercise of rights not subject to the stay arising under

section 362(a) pursuant to paragraph (6), (7), (17), or (28) of section

362(b) or pursuant to section 362(l) shall not be stayed by any order

of a court or administrative agency in any proceeding under this

chapter.

‘‘§ 1520. Effects of recognition of a foreign main proceeding

‘‘(a) Upon recognition of a foreign proceeding that is a foreign

main proceeding—

‘‘(1) sections 361 and 362 apply with respect to the debtor

and that property of the debtor that is within the territorial jurisdiction of the United States;

‘‘(2) sections 363, 549, and 552 of this title apply to a transfer of an interest of the debtor in property that is within the territorial jurisdiction of the United States to the same extent that

the sections would apply to property of an estate;

‘‘(3) unless the court orders otherwise, the foreign representative may operate the debtor’s business and may exercise the

rights and powers of a trustee under and to the extent provided

by sections 363 and 552; and

‘‘(4) section 552 applies to property of the debtor that is

within the territorial jurisdiction of the United States.

‘‘(b) Subsection (a) does not affect the right to commence an individual action or proceeding in a foreign country to the extent necessary to preserve a claim against the debtor.

‘‘(c) Subsection (a) does not affect the right of a foreign representative or an entity to file a petition commencing a case under

this title or the right of any party to file claims or take other proper

actions in such a case.

111

‘‘§ 1521. Relief that may be granted upon recognition

‘‘(a) Upon recognition of a foreign proceeding, whether main or

nonmain, where necessary to effectuate the purpose of this chapter

and to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative,

grant any appropriate relief, including—

‘‘(1) staying the commencement or continuation of an individual action or proceeding concerning the debtor’s assets,

rights, obligations or liabilities to the extent they have not been

stayed under section 1520(a);

‘‘(2) staying execution against the debtor’s assets to the extent it has not been stayed under section 1520(a);

‘‘(3) suspending the right to transfer, encumber or otherwise

dispose of any assets of the debtor to the extent this right has

not been suspended under section 1520(a);

‘‘(4) providing for the examination of witnesses, the taking

of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities;

‘‘(5) entrusting the administration or realization of all or

part of the debtor’s assets within the territorial jurisdiction of

the United States to the foreign representative or another person, including an examiner, authorized by the court;

‘‘(6) extending relief granted under section 1519(a); and

‘‘(7) granting any additional relief that may be available to

a trustee, except for relief available under sections 522, 544,

545, 547, 548, 550, and 724(a).

‘‘(b) Upon recognition of a foreign proceeding, whether main or

nonmain, the court may, at the request of the foreign representative,

entrust the distribution of all or part of the debtor’s assets located

in the United States to the foreign representative or another person,

including an examiner, authorized by the court, provided that the

court is satisfied that the interests of creditors in the United States

are sufficiently protected.

‘‘(c) In granting relief under this section to a representative of

a foreign nonmain proceeding, the court must be satisfied that the

relief relates to assets that, under the law of the United States,

should be administered in the foreign nonmain proceeding or concerns information required in that proceeding.

‘‘(d) The court may not enjoin a police or regulatory act of a

governmental unit, including a criminal action or proceeding, under

this section.

‘‘(e) The standards, procedures, and limitations applicable to an

injunction shall apply to relief under paragraphs (1), (2), (3), and

(6) of subsection (a).

‘‘(f) The exercise of rights not subject to the stay arising under

section 362(a) pursuant to paragraph (6), (7), (17), or (28) of section

362(b) or pursuant to section 362(l) shall not be stayed by any order

of a court or administrative agency in any proceeding under this

chapter.

‘‘§ 1522. Protection of creditors and other interested persons

‘‘(a) The court may grant relief under section 1519 or 1521, or

may modify or terminate relief under subsection (c), only if the inVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00111 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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terests of the creditors and other interested entities, including the

debtor, are sufficiently protected.

‘‘(b) The court may subject relief granted under section 1519 or

1521, or the operation of the debtor’s business under section

1520(a)(3) of this title, to conditions it considers appropriate, including the giving of security or the filing of a bond.

‘‘(c) The court may, at the request of the foreign representative

or an entity affected by relief granted under section 1519 or 1521,

or at its own motion, modify or terminate such relief.

‘‘(d) Section 1104(d) shall apply to the appointment of an examiner under this chapter. Any examiner shall comply with the qualification requirements imposed on a trustee by section 322.

‘‘§ 1523. Actions to avoid acts detrimental to creditors

‘‘(a) Upon recognition of a foreign proceeding, the foreign representative has standing in a case concerning the debtor pending

under another chapter of this title to initiate actions under sections

522, 544, 545, 547, 548, 550, 553, and 724(a).

‘‘(b) When the foreign proceeding is a foreign nonmain proceeding, the court must be satisfied that an action under subsection

(a) relates to assets that, under United States law, should be administered in the foreign nonmain proceeding.

‘‘§ 1524. Intervention by a foreign representative

‘‘Upon recognition of a foreign proceeding, the foreign representative may intervene in any proceedings in a State or Federal court

in the United States in which the debtor is a party.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS

AND FOREIGN REPRESENTATIVES

‘‘§ 1525. Cooperation and direct communication between the

court and foreign courts or foreign representatives

‘‘(a) Consistent with section 1501, the court shall cooperate to

the maximum extent possible with foreign courts or foreign representatives, either directly or through the trustee.

‘‘(b) The court is entitled to communicate directly with, or to request information or assistance directly from, foreign courts or foreign representatives, subject to the rights of parties in interest to notice and participation.

‘‘§ 1526. Cooperation and direct communication between the

trustee and foreign courts or foreign representatives

‘‘(a) Consistent with section 1501, the trustee or other person,

including an examiner, authorized by the court, shall, subject to the

supervision of the court, cooperate to the maximum extent possible

with foreign courts or foreign representatives.

‘‘(b) The trustee or other person, including an examiner, authorized by the court is entitled, subject to the supervision of the court,

to communicate directly with foreign courts or foreign representatives.

113

‘‘§ 1527. Forms of cooperation

‘‘Cooperation referred to in sections 1525 and 1526 may be implemented by any appropriate means, including—

‘‘(1) appointment of a person or body, including an examiner, to act at the direction of the court;

‘‘(2) communication of information by any means considered appropriate by the court;

‘‘(3) coordination of the administration and supervision of

the debtor’s assets and affairs;

‘‘(4) approval or implementation of agreements concerning

the coordination of proceedings; and

‘‘(5) coordination of concurrent proceedings regarding the

same debtor.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘§ 1528. Commencement of a case under this title after recognition of a foreign main proceeding

‘‘After recognition of a foreign main proceeding, a case under

another chapter of this title may be commenced only if the debtor

has assets in the United States. The effects of such case shall be restricted to the assets of the debtor that are within the territorial jurisdiction of the United States and, to the extent necessary to implement cooperation and coordination under sections 1525, 1526, and

1527, to other assets of the debtor that are within the jurisdiction

of the court under sections 541(a) of this title, and 1334(e) of title

28, to the extent that such other assets are not subject to the jurisdiction and control of a foreign proceeding that has been recognized

under this chapter.

‘‘§ 1529. Coordination of a case under this title and a foreign

proceeding

‘‘If a foreign proceeding and a case under another chapter of

this title are taking place concurrently regarding the same debtor,

the court shall seek cooperation and coordination under sections

1525, 1526, and 1527, and the following shall apply:

‘‘(1) If the case in the United States is taking place at the

time the petition for recognition of the foreign proceeding is

filed—

‘‘(A) any relief granted under sections 1519 or 1521

must be consistent with the relief granted in the case in the

United States; and

‘‘(B) even if the foreign proceeding is recognized as a

foreign main proceeding, section 1520 does not apply.

‘‘(2) If a case in the United States under this title commences after recognition, or after the filing of the petition for

recognition, of the foreign proceeding—

‘‘(A) any relief in effect under sections 1519 or 1521

shall be reviewed by the court and shall be modified or terminated if inconsistent with the case in the United States;

and

‘‘(B) if the foreign proceeding is a foreign main proceeding, the stay and suspension referred to in section

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1520(a) shall be modified or terminated if inconsistent with

the relief granted in the case in the United States.

‘‘(3) In granting, extending, or modifying relief granted to

a representative of a foreign nonmain proceeding, the court

must be satisfied that the relief relates to assets that, under the

laws of the United States, should be administered in the foreign

nonmain proceeding or concerns information required in that

proceeding.

‘‘(4) In achieving cooperation and coordination under sections 1528 and 1529, the court may grant any of the relief authorized under section 305.

‘‘§ 1530. Coordination of more than 1 foreign proceeding

‘‘In matters referred to in section 1501, with respect to more

than 1 foreign proceeding regarding the debtor, the court shall seek

cooperation and coordination under sections 1525, 1526, and 1527,

and the following shall apply:

‘‘(1) Any relief granted under section 1519 or 1521 to a representative of a foreign nonmain proceeding after recognition of

a foreign main proceeding must be consistent with the foreign

main proceeding.

‘‘(2) If a foreign main proceeding is recognized after recognition, or after the filing of a petition for recognition, of a foreign nonmain proceeding, any relief in effect under section 1519

or 1521 shall be reviewed by the court and shall be modified

or terminated if inconsistent with the foreign main proceeding.

‘‘(3) If, after recognition of a foreign nonmain proceeding,

another foreign nonmain proceeding is recognized, the court

shall grant, modify, or terminate relief for the purpose of facilitating coordination of the proceedings.

‘‘§ 1531. Presumption of insolvency based on recognition of a

foreign main proceeding

‘‘In the absence of evidence to the contrary, recognition of a foreign main proceeding is, for the purpose of commencing a proceeding under section 303, proof that the debtor is generally not

paying its debts as such debts become due.

‘‘§ 1532. Rule of payment in concurrent proceedings

‘‘Without prejudice to secured claims or rights in rem, a creditor

who has received payment with respect to its claim in a foreign proceeding pursuant to a law relating to insolvency may not receive a

payment for the same claim in a case under any other chapter of

this title regarding the debtor, so long as the payment to other creditors of the same class is proportionately less than the payment the

creditor has already received.’’.

(b) CLERICAL AMENDMENT.—The table of chapters for title 11,

United States Code, is amended by inserting after the item relating

to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases .............................................. 1501’’.

SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, UNITED STATES

CODE.

(a) APPLICABILITY OF CHAPTERS.—Section 103 of title 11,

United States Code, is amended—

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(1) in subsection (a), by inserting before the period the following: ‘‘, and this chapter, sections 307, 362(l), 555 through

557, and 559 through 562 apply in a case under chapter 15’’;

and

(2) by adding at the end the following:

‘‘(j) Chapter 15 applies only in a case under such chapter, except that—

‘‘(1) sections 1505, 1513, and 1514 apply in all cases under

this title; and

‘‘(2) section 1509 applies whether or not a case under this

title is pending.’’.

(b) DEFINITIONS.—Section 101 of title 11, United States Code,

is amended by striking paragraphs (23) and (24) and inserting the

following:

‘‘(23) ‘foreign proceeding’ means a collective judicial or administrative proceeding in a foreign country, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the

debtor are subject to control or supervision by a foreign court,

for the purpose of reorganization or liquidation;

‘‘(24) ‘foreign representative’ means a person or body, including a person or body appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or to act

as a representative of the foreign proceeding;’’.

(c) AMENDMENTS TO TITLE 28, UNITED STATES CODE.—

(1) PROCEDURES.—Section 157(b)(2) of title 28, United

States Code, is amended—

(A) in subparagraph (N), by striking ‘‘and’’ at the end;

(B) in subparagraph (O), by striking the period at the

end and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(P) recognition of foreign proceedings and other matters

under chapter 15 of title 11.’’.

(2) BANKRUPTCY CASES AND PROCEEDINGS.—Section 1334(c)

of title 28, United States Code, is amended by striking ‘‘Nothing

in’’ and inserting ‘‘Except with respect to a case under chapter

15 of title 11, nothing in’’.

(3) DUTIES OF TRUSTEES.—Section 586(a)(3) of title 28,

United States Code, is amended by striking ‘‘or 13’’ and inserting ‘‘13, or 15,’’.

(4) VENUE OF CASES ANCILLARY TO FOREIGN PROCEEDINGS.—Section 1410 of title 28, United States Code, is

amended to read as follows:

‘‘§ 1410. Venue of cases ancillary to foreign proceedings

‘‘A case under chapter 15 of title 11 may be commenced in the

district court for the district—

‘‘(1) in which the debtor has its principal place of business

or principal assets in the United States;

‘‘(2) if the debtor does not have a place of business or assets

in the United States, in which there is pending against the

debtor an action or proceeding in a Federal or State court; or

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‘‘(3) in a case other than those specified in paragraph (1)

or (2), in which venue will be consistent with the interests of

justice and the convenience of the parties, having regard to the

relief sought by the foreign representative.’’.

(d) OTHER SECTIONS OF TITLE 11.—

(1) Section 109(b)(3) of title 11, United States Code, is

amended to read as follows:

‘‘(3)(A) a foreign insurance company, engaged in such business in the United States; or

‘‘(B) a foreign bank, savings bank, cooperative bank, savings and loan association, building and loan association, or

credit union, that has a branch or agency (as defined in section

1(b) of the International Banking Act of 1978 (12 U.S.C. 3101)

in the United States.’’.

(2) Section 303(k) of title 11, United States Code, is repealed.

(3)(A) Section 304 of title 11, United States Code, is repealed.

(B) The table of sections at the beginning of chapter 3 of

title 11, United States Code, is amended by striking the item relating to section 304.

(C) Section 306 of title 11, United States Code, is amended

by striking ‘‘, 304,’’ each place it appears.

(4) Section 305(a)(2) of title 11, United States Code, is

amended to read as follows:

‘‘(2)(A) a petition under section 1515 of this title for recognition of a foreign proceeding has been granted; and

‘‘(B) the purposes of chapter 15 of this title would be best

served by such dismissal or suspension.’’.

(5) Section 508 of title 11, United States Code, is

amended—

(A) by striking subsection (a); and

(B) in subsection (b), by striking ‘‘(b)’’.

TITLE IX—FINANCIAL CONTRACT

PROVISIONS

SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS

OR RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

(a) DEFINITION OF QUALIFIED FINANCIAL CONTRACT.—Section

11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(8)(D)(i)) is amended by inserting ‘‘, resolution, or order’’

after ‘‘any similar agreement that the Corporation determines by

regulation’’.

(b) DEFINITION OF SECURITIES CONTRACT.—Section

11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(8)(D)(ii)) is amended to read as follows:

‘‘(ii) SECURITIES CONTRACT.—The term ‘securities

contract’—

‘‘(I) means a contract for the purchase, sale, or

loan of a security, a certificate of deposit, a mortgage loan, or any interest in a mortgage loan, a

group or index of securities, certificates of deposit,

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or mortgage loans or interests therein (including

any interest therein or based on the value thereof)

or any option on any of the foregoing, including

any option to purchase or sell any such security,

certificate of deposit, loan, interest, group or index,

or option;

‘‘(II) does not include any purchase, sale, or repurchase obligation under a participation in a

commercial mortgage loan unless the Corporation

determines by regulation, resolution, or order to include any such agreement within the meaning of

such term;

‘‘(III) means any option entered into on a national securities exchange relating to foreign currencies;

‘‘(IV) means the guarantee by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests

therein (including any interest therein or based on

the value thereof) or option on any of the foregoing,

including any option to purchase or sell any such

security, certificate of deposit, loan, interest, group

or index or option;

‘‘(V) means any margin loan;

‘‘(VI) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;

‘‘(VII) means any combination of the agreements or transactions referred to in this clause;

‘‘(VIII) means any option to enter into any

agreement or transaction referred to in this clause;

‘‘(IX) means a master agreement that provides

for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master

agreement, without regard to whether the master

agreement provides for an agreement or transaction that is not a securities contract under this

clause, except that the master agreement shall be

considered to be a securities contract under this

clause only with respect to each agreement or

transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII),

or (VIII); and

‘‘(X) means any security agreement or arrangement or other credit enhancement related to any

agreement or transaction referred to in this

clause.’’.

(c) DEFINITION OF COMMODITY CONTRACT.—Section

11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(8)(D)(iii)) is amended to read as follows:

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‘‘(iii) COMMODITY CONTRACT.—The term ‘commodity contract’ means—

‘‘(I) with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the

rules of, a contract market or board of trade;

‘‘(II) with respect to a foreign futures commission merchant, a foreign future;

‘‘(III) with respect to a leverage transaction

merchant, a leverage transaction;

‘‘(IV) with respect to a clearing organization, a

contract for the purchase or sale of a commodity

for future delivery on, or subject to the rules of, a

contract market or board of trade that is cleared

by such clearing organization, or commodity option traded on, or subject to the rules of, a contract

market or board of trade that is cleared by such

clearing organization;

‘‘(V) with respect to a commodity options dealer, a commodity option;

‘‘(VI) any other agreement or transaction that

is similar to any agreement or transaction referred

to in this clause;

‘‘(VII) any combination of the agreements or

transactions referred to in this clause;

‘‘(VIII) any option to enter into any agreement

or transaction referred to in this clause;

‘‘(IX) a master agreement that provides for an

agreement or transaction referred to in subclause

(I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master

agreement, without regard to whether the master

agreement provides for an agreement or transaction that is not a commodity contract under this

clause, except that the master agreement shall be

considered to be a commodity contract under this

clause only with respect to each agreement or

transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI),

(VII), or (VIII); or

‘‘(X) any security agreement or arrangement or

other credit enhancement related to any agreement

or transaction referred to in this clause.’’.

(d) DEFINITION OF FORWARD CONTRACT.—Section 11(e)(8)(D)(iv)

of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is

amended to read as follows:

‘‘(iv) FORWARD CONTRACT.—The term ‘forward contract’ means—

‘‘(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right,

or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with

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a maturity date more than 2 days after the date

the contract is entered into, including, a repurchase transaction, reverse repurchase transaction,

consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction,

unallocated transaction, or any other similar

agreement;

‘‘(II) any combination of agreements or transactions referred to in subclauses (I) and (III);

‘‘(III) any option to enter into any agreement or

transaction referred to in subclause (I) or (II);

‘‘(IV) a master agreement that provides for an

agreement or transaction referred to in subclauses

(I), (II), or (III), together with all supplements to

any such master agreement, without regard to

whether the master agreement provides for an

agreement or transaction that is not a forward

contract under this clause, except that the master

agreement shall be considered to be a forward contract under this clause only with respect to each

agreement or transaction under the master agreement that is referred to in subclause (I), (II), or

(III); or

‘‘(V) any security agreement or arrangement or

other credit enhancement related to any agreement

or transaction referred to in subclause (I), (II),

(III), or (IV).’’.

(e) DEFINITION OF REPURCHASE AGREEMENT.—Section

11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(8)(D)(v)) is amended to read as follows:

‘‘(v) REPURCHASE AGREEMENT.—The term ‘repurchase agreement’ (which definition also applies to a reverse repurchase agreement)—

‘‘(I) means an agreement, including related

terms, which provides for the transfer of one or

more certificates of deposit, mortgage-related securities (as such term is defined in the Securities Exchange Act of 1934), mortgage loans, interests in

mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities or securities that are direct obligations of, or that are fully guaranteed by, the

United States or any agency of the United States

against the transfer of funds by the transferee of

such certificates of deposit, eligible bankers’ acceptances, securities, loans, or interests with a simultaneous agreement by such transferee to transfer to

the transferor thereof certificates of deposit, eligible

bankers’ acceptances, securities, loans, or interests

as described above, at a date certain not later than

1 year after such transfers or on demand, against

the transfer of funds, or any other similar agreement;

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‘‘(II) does not include any repurchase obligation under a participation in a commercial mortgage loan unless the Corporation determines by

regulation, resolution, or order to include any such

participation within the meaning of such term;

‘‘(III) means any combination of agreements or

transactions referred to in subclauses (I) and (IV);

‘‘(IV) means any option to enter into any agreement or transaction referred to in subclause (I) or

(III);

‘‘(V) means a master agreement that provides

for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for

an agreement or transaction that is not a repurchase agreement under this clause, except that the

master agreement shall be considered to be a repurchase agreement under this subclause only

with respect to each agreement or transaction

under the master agreement that is referred to in

subclause (I), (III), or (IV); and

‘‘(VI) means any security agreement or arrangement or other credit enhancement related to

any agreement or transaction referred to in subclause (I), (III), (IV), or (V).

For purposes of this clause, the term ‘qualified foreign

government security’ means a security that is a direct

obligation of, or that is fully guaranteed by, the central

government of a member of the Organization for Economic Cooperation and Development (as determined by

regulation or order adopted by the appropriate Federal

banking authority).’’.

(f) DEFINITION OF SWAP AGREEMENT.—Section 11(e)(8)(D)(vi) of

the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is

amended to read as follows:

‘‘(vi) SWAP AGREEMENT.—The term ‘swap agreement’ means—

‘‘(I) any agreement, including the terms and

conditions incorporated by reference in any such

agreement, which is an interest rate swap, option,

future, or forward agreement, including a rate

floor, rate cap, rate collar, cross-currency rate

swap, and basis swap; a spot, same day-tomorrow,

tomorrow-next, forward, or other foreign exchange

or precious metals agreement; a currency swap, option, future, or forward agreement; an equity index

or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or

forward agreement; a credit spread or credit swap,

option, future, or forward agreement; a commodity

index or commodity swap, option, future, or forward agreement; or a weather swap, weather derivative, or weather option;

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‘‘(II) any agreement or transaction similar to

any other agreement or transaction referred to in

this clause that is presently, or in the future becomes, regularly entered into in the swap market

(including terms and conditions incorporated by

reference in such agreement) and that is a forward, swap, future, or option on one or more rates,

currencies, commodities, equity securities or other

equity instruments, debt securities or other debt instruments, or economic indices or measures of economic risk or value;

‘‘(III) any combination of agreements or transactions referred to in this clause;

‘‘(IV) any option to enter into any agreement or

transaction referred to in this clause;

‘‘(V) a master agreement that provides for an

agreement or transaction referred to in subclause

(I), (II), (III), or (IV), together with all supplements

to any such master agreement, without regard to

whether the master agreement contains an agreement or transaction that is not a swap agreement

under this clause, except that the master agreement shall be considered to be a swap agreement

under this clause only with respect to each agreement or transaction under the master agreement

that is referred to in subclause (I), (II), (III), or

(IV); and

‘‘(VI) any security agreement or arrangement

or other credit enhancement related to any agreements or transactions referred to in subparagraph

(I), (II), (III), (IV), or (V).

Such term is applicable for purposes of this title only

and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other statute,

regulation, or rule, including the Securities Act of

1933, the Securities Exchange Act of 1934, the Public

Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940,

the Investment Advisers Act of 1940, the Securities Investor Protection Act of 1970, the Commodity Exchange

Act, and the regulations promulgated by the Securities

and Exchange Commission or the Commodity Futures

Trading Commission.’’.

(g) DEFINITION OF TRANSFER.—Section 11(e)(8)(D)(viii) of the

Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is

amended to read as follows:

‘‘(viii) TRANSFER.—The term ‘transfer’ means every

mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with

property or with an interest in property, including retention of title as a security interest and foreclosure of

the depository institutions’s equity of redemption.’’.

122

(h) TREATMENT OF QUALIFIED FINANCIAL CONTRACTS.—Section

11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8))

is amended—

(1) in subparagraph (A)—

(A) by striking ‘‘paragraph (10)’’ and inserting ‘‘paragraphs (9) and (10)’’;

(B) in clause (i), by striking ‘‘to cause the termination

or liquidation’’ and inserting ‘‘such person has to cause the

termination, liquidation, or acceleration’’; and

(C) by striking clause (ii) and inserting the following:

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one

or more qualified financial contracts described in

clause (i);’’; and

(2) in subparagraph (E), by striking clause (ii) and inserting the following:

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one

or more qualified financial contracts described in

clause (i);’’.

(i) AVOIDANCE OF TRANSFERS.—Section 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended

by inserting ‘‘section 5242 of the Revised Statutes of the United

States (12 U.S.C. 91) or any other Federal or State law relating to

the avoidance of preferential or fraudulent transfers,’’ before ‘‘the

Corporation’’.

SEC. 902. AUTHORITY OF THE CORPORATION WITH RESPECT TO

FAILED AND FAILING INSTITUTIONS.

(a) IN GENERAL.—Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amended—

(1) in subparagraph (E), by striking ‘‘other than paragraph

(12) of this subsection, subsection (d)(9)’’ and inserting ‘‘other

than subsections (d)(9) and (e)(10)’’; and

(2) by adding at the end the following new subparagraphs:

‘‘(F) CLARIFICATION.—No provision of law shall be construed as limiting the right or power of the Corporation, or

authorizing any court or agency to limit or delay, in any

manner, the right or power of the Corporation to transfer

any qualified financial contract in accordance with paragraphs (9) and (10) of this subsection or to disaffirm or repudiate any such contract in accordance with subsection

(e)(1) of this section.

‘‘(G) WALKAWAY CLAUSES NOT EFFECTIVE.—

‘‘(i) IN GENERAL.—Notwithstanding the provisions

of subparagraphs (A) and (E), and sections 403 and

404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause shall be

enforceable in a qualified financial contract of an insured depository institution in default.

‘‘(ii) WALKAWAY CLAUSE DEFINED.—For purposes of

this subparagraph, the term ‘walkaway clause’ means

a provision in a qualified financial contract that, after

calculation of a value of a party’s position or an

amount due to or from 1 of the parties in accordance

123

with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does

not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in

part solely because of such party’s status as a nondefaulting party.’’.

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section

11(e)(12)(A) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(12)(A)) is amended by inserting ‘‘or the exercise of rights or

powers by’’ after ‘‘the appointment of’’.

SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS.

(a) TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS TO FINAN- CIAL INSTITUTIONS.—Section 11(e)(9) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as follows:

‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS.— ‘‘(A) IN GENERAL.—In making any transfer of assets or

liabilities of a depository institution in default which includes any qualified financial contract, the conservator or

receiver for such depository institution shall either—

‘‘(i) transfer to one financial institution, other than

a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian

has been appointed or which is otherwise the subject of

a bankruptcy or insolvency proceeding—

‘‘(I) all qualified financial contracts between

any person or any affiliate of such person and the

depository institution in default;

‘‘(II) all claims of such person or any affiliate

of such person against such depository institution

under any such contract (other than any claim

which, under the terms of any such contract, is

subordinated to the claims of general unsecured

creditors of such institution);

‘‘(III) all claims of such depository institution

against such person or any affiliate of such person

under any such contract; and

‘‘(IV) all property securing or any other credit

enhancement for any contract described in subclause (I) or any claim described in subclause (II)

or (III) under any such contract; or

‘‘(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and

any affiliate of such person).

‘‘(B) TRANSFER TO FOREIGN BANK, FOREIGN FINANCIAL

INSTITUTION, OR BRANCH OR AGENCY OF A FOREIGN BANK

OR FINANCIAL INSTITUTION.—In transferring any qualified

financial contract and related claims and property under

subparagraph (A)(i), the conservator or receiver for the depository institution shall not make such transfer to a foreign bank, financial institution organized under the laws of

a foreign country, or a branch or agency of a foreign bank

or financial institution unless, under the law applicable to

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such bank, financial institution, branch or agency, to the

qualified financial contracts, and to any netting contract,

any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts, the contractual rights of the parties to such qualified

financial contracts, netting contracts, security agreements

or arrangements, or other credit enhancements are enforceable substantially to the same extent as permitted under

this section.

‘‘(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES

OF A CLEARING ORGANIZATION.—In the event that a conservator or receiver transfers any qualified financial contract

and related claims, property, and credit enhancements pursuant to subparagraph (A)(i) and such contract is subject

to the rules of a clearing organization, the clearing organization shall not be required to accept the transferee as a

member by virtue of the transfer.

‘‘(D) DEFINITION.—For purposes of this paragraph, the

term ‘financial institution’ means a broker or dealer, a depository institution, a futures commission merchant, or any

other institution, as determined by the Corporation by regulation to be a financial institution.’’.

(b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is amended in the material

immediately following clause (ii) by striking ‘‘the conservator’’ and

all that follows through the period and inserting the following: ‘‘the

conservator or receiver shall notify any person who is a party to any

such contract of such transfer by 5:00 p.m. (eastern time) on the

business day following the date of the appointment of the receiver

in the case of a receivership, or the business day following such

transfer in the case of a conservatorship.’’.

(c) RIGHTS AGAINST RECEIVER AND TREATMENT OF BRIDGE

BANKS.—Section 11(e)(10) of the Federal Deposit Insurance Act (12

U.S.C. 1821(e)(10)) is amended—

(1) by redesignating subparagraph (B) as subparagraph

(D); and

(2) by inserting after subparagraph (A) the following new

subparagraphs:

‘‘(B) CERTAIN RIGHTS NOT ENFORCEABLE.—

‘‘(i) RECEIVERSHIP.—A person who is a party to a

qualified financial contract with an insured depository

institution may not exercise any right that such person

has to terminate, liquidate, or net such contract under

paragraph (8)(A) of this subsection or section 403 or

404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental

to the appointment of a receiver for the depository institution (or the insolvency or financial condition of the

depository institution for which the receiver has been

appointed)—

‘‘(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of

the receiver; or

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‘‘(II) after the person has received notice that

the contract has been transferred pursuant to

paragraph (9)(A).

‘‘(ii) CONSERVATORSHIP.—A person who is a party

to a qualified financial contract with an insured depository institution may not exercise any right that such

person has to terminate, liquidate, or net such contract

under paragraph (8)(E) of this subsection or sections

403 or 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely by reason of or incidental to the appointment of a conservator for the depository institution (or the insolvency or financial condition of the depository institution for which the conservator has been appointed).

‘‘(iii) NOTICE.—For purposes of this paragraph, the

Corporation as receiver or conservator of an insured

depository institution shall be deemed to have notified

a person who is a party to a qualified financial contract with such depository institution if the Corporation has taken steps reasonably calculated to provide

notice to such person by the time specified in subparagraph (A).

‘‘(C) TREATMENT OF BRIDGE BANKS.—The following institutions shall not be considered to be a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or

which is otherwise the subject of a bankruptcy or insolvency

proceeding for purposes of paragraph (9):

‘‘(i) A bridge bank.

‘‘(ii) A depository institution organized by the Corporation, for which a conservator is appointed either—

‘‘(I) immediately upon the organization of the

institution; or

‘‘(II) at the time of a purchase and assumption

transaction between the depository institution and

the Corporation as receiver for a depository institution in default.’’.

SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.

Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)) is amended—

(1) by redesignating paragraphs (11) through (15) as paragraphs (12) through (16), respectively; and

(2) by inserting after paragraph (10) the following new

paragraph:

‘‘(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In exercising the rights of disaffirmance or

repudiation of a conservator or receiver with respect to any

qualified financial contract to which an insured depository institution is a party, the conservator or receiver for such institution shall either—

‘‘(A) disaffirm or repudiate all qualified financial contracts between—

‘‘(i) any person or any affiliate of such person; and

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‘‘(ii) the depository institution in default; or

‘‘(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect

to such person or any affiliate of such person).’’.

SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12

U.S.C. 1821(e)(8)(D)(vii)) is amended to read as follows:

‘‘(vii) TREATMENT OF MASTER AGREEMENT AS ONE

AGREEMENT.—Any master agreement for any contract

or agreement described in any preceding clause of this

subparagraph (or any master agreement for such master agreement or agreements), together with all supplements to such master agreement, shall be treated as a

single agreement and a single qualified financial contract. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are

themselves qualified financial contracts.’’.

SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.

(a) DEFINITIONS.—Section 402 of the Federal Deposit Insurance

Corporation Improvement Act of 1991 (12 U.S.C. 4402) is

amended—

(1) in paragraph (2)—

(A) in subparagraph (A)(ii), by inserting before the

semicolon ‘‘, or is exempt from such registration by order of

the Securities and Exchange Commission’’; and

(B) in subparagraph (B), by inserting before the period

‘‘or that has been granted an exemption under section

4(c)(1) of the Commodity Exchange Act’’;

(2) in paragraph (6)—

(A) by redesignating subparagraphs (B) through (D) as

subparagraphs (C) through (E), respectively;

(B) by inserting after subparagraph (A) the following

new subparagraph:

‘‘(B) an uninsured national bank or an uninsured State

bank that is a member of the Federal Reserve System, if the

national bank or State member bank is not eligible to make

application to become an insured bank under section 5 of

the Federal Deposit Insurance Act;’’; and

(C) by amending subparagraph (C) (as redesignated) to

read as follows:

‘‘(C) a branch or agency of a foreign bank, a foreign

bank and any branch or agency of the foreign bank, or the

foreign bank that established the branch or agency, as

those terms are defined in section 1(b) of the International

Banking Act of 1978;’’;

(3) in paragraph (11), by inserting before the period ‘‘and

any other clearing organization with which such clearing organization has a netting contract’’;

(4) by amending paragraph (14)(A)(i) to read as follows:

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‘‘(i) means a contract or agreement between 2 or

more financial institutions, clearing organizations, or

members that provides for netting present or future

payment obligations or payment entitlements (including liquidation or closeout values relating to such obligations or entitlements) among the parties to the agreement; and’’; and

(5) by adding at the end the following new paragraph:

‘‘(15) PAYMENT.—The term ‘payment’ means a payment of

United States dollars, another currency, or a composite currency, and a noncash delivery, including a payment or delivery

to liquidate an unmatured obligation.’’.

(b) ENFORCEABILITY OF BILATERAL NETTING CONTRACTS.—Section 403 of the Federal Deposit Insurance Corporation Improvement

Act of 1991 (12 U.S.C. 4403) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) GENERAL RULE.—Notwithstanding any other provision of

State or Federal law (other than paragraphs (8)(E), (8)(F), and

(10)(B) of section 11(e) of the Federal Deposit Insurance Act or any

order authorized under section 5(b)(2) of the Securities Investor Protection Act of 1970), the covered contractual payment obligations

and the covered contractual payment entitlements between any 2 financial institutions shall be netted in accordance with, and subject

to the conditions of, the terms of any applicable netting contract (except as provided in section 561(b)(2) of title 11, United States

Code).’’; and

(2) by adding at the end the following new subsection:

‘‘(f) ENFORCEABILITY OF SECURITY AGREEMENTS.—The provisions of any security agreement or arrangement or other credit enhancement related to one or more netting contracts between any 2

financial institutions shall be enforceable in accordance with their

terms (except as provided in section 561(b)(2) of title 11, United

States Code), and shall not be stayed, avoided, or otherwise limited

by any State or Federal law (other than paragraphs (8)(E), (8)(F),

and (10)(B) of section 11(e) of the Federal Deposit Insurance Act

and section 5(b)(2) of the Securities Investor Protection Act of

1970).’’.

(c) ENFORCEABILITY OF CLEARING ORGANIZATION NETTING CONTRACTS.—Section 404 of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (12 U.S.C. 4404) is amended—

(1) by striking subsection (a) and inserting the following:

‘‘(a) GENERAL RULE.—Notwithstanding any other provision of

State or Federal law (other than paragraphs (8)(E), (8)(F), and

(10)(B) of section 11(e) of the Federal Deposit Insurance Act and any

order authorized under section 5(b)(2) of the Securities Investor Protection Act of 1970), the covered contractual payment obligations

and the covered contractual payment entitlements of a member of a

clearing organization to and from all other members of a clearing

organization shall be netted in accordance with and subject to the

conditions of any applicable netting contract (except as provided in

section 561(b)(2) of title 11, United States Code).’’; and

(2) by adding at the end the following new subsection:

‘‘(h) ENFORCEABILITY OF SECURITY AGREEMENTS.—The provisions of any security agreement or arrangement or other credit enVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00127 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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hancement related to one or more netting contracts between any 2

members of a clearing organization shall be enforceable in accordance with their terms (except as provided in section 561(b)(2) of title

11, United States Code), and shall not be stayed, avoided, or otherwise limited by any State or Federal law (other than paragraphs

(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit Insurance Act and section 5(b)(2) of the Securities Investor Protection

Act of 1970).’’.

(d) ENFORCEABILITY OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND UNINSURED FEDERAL BRANCHES AND AGENCIES.—The Federal Deposit Insurance Corporation Improvement Act

of 1991 (12 U.S.C. 4401 et seq.) is amended—

(1) by redesignating section 407 as section 408; and

(2) by inserting after section 406 the following new section:

‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL

BANKS AND UNINSURED FEDERAL BRANCHES AND AGENCIES.

‘‘(a) IN GENERAL.—Notwithstanding any other provision of law,

paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal Deposit Insurance Act shall apply to an uninsured national bank or

uninsured Federal branch or Federal agency, except that for such

purpose—

‘‘(1) any reference to the ‘Corporation as receiver’ or ‘the receiver or the Corporation’ shall refer to the receiver of an uninsured national bank or uninsured Federal branch or Federal

agency appointed by the Comptroller of the Currency;

‘‘(2) any reference to the ‘Corporation’ (other than in section

11(e)(8)(D) of such Act), the ‘Corporation, whether acting as

such or as conservator or receiver’, a ‘receiver’, or a ‘conservator’

shall refer to the receiver or conservator of an uninsured national bank or uninsured Federal branch or Federal agency appointed by the Comptroller of the Currency; and

‘‘(3) any reference to an ‘insured depository institution’ or

‘depository institution’ shall refer to an uninsured national

bank or an uninsured Federal branch or Federal agency.

‘‘(b) LIABILITY.—The liability of a receiver or conservator of an

uninsured national bank or uninsured Federal branch or agency

shall be determined in the same manner and subject to the same

limitations that apply to receivers and conservators of insured depository institutions under section 11(e) of the Federal Deposit Insurance Act.

‘‘(c) REGULATORY AUTHORITY.—

‘‘(1) IN GENERAL.—The Comptroller of the Currency, in consultation with the Federal Deposit Insurance Corporation, may

promulgate regulations to implement this section.

‘‘(2) SPECIFIC REQUIREMENT.—In promulgating regulations

to implement this section, the Comptroller of the Currency shall

ensure that the regulations generally are consistent with the

regulations and policies of the Federal Deposit Insurance Corporation adopted pursuant to the Federal Deposit Insurance

Act.

‘‘(d) DEFINITIONS.—For purposes of this section, the terms ‘Federal branch’, ‘Federal agency’, and ‘foreign bank’ have the same

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meanings as in section 1(b) of the International Banking Act of

1978.’’.

SEC. 907. BANKRUPTCY CODE AMENDMENTS.

(a) DEFINITIONS OF FORWARD CONTRACT, REPURCHASE AGREE- MENT, SECURITIES CLEARING AGENCY, SWAP AGREEMENT, COM- MODITY CONTRACT, AND SECURITIES CONTRACT.—Title 11, United

States Code, is amended—

(1) in section 101—

(A) in paragraph (25)—

(i) by striking ‘‘means a contract’’ and inserting

‘‘means—

‘‘(A) a contract’’;

(ii) by striking ‘‘, or any combination thereof or option thereon;’’ and inserting ‘‘, or any other similar

agreement;’’; and

(iii) by adding at the end the following:

‘‘(B) any combination of agreements or transactions referred to in subparagraphs (A) and (C);

‘‘(C) any option to enter into an agreement or transaction referred to in subparagraph (A) or (B);

‘‘(D) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), or

(C), together with all supplements to any such master

agreement, without regard to whether such master agreement provides for an agreement or transaction that is not

a forward contract under this paragraph, except that such

master agreement shall be considered to be a forward contract under this paragraph only with respect to each agreement or transaction under such master agreement that is

referred to in subparagraph (A), (B), or (C); or

‘‘(E) any security agreement or arrangement, or other

credit enhancement related to any agreement or transaction

referred to in subparagraph (A), (B), (C), or (D), but not to

exceed the actual value of such contract on the date of the

filing of the petition;’’;

(B) in paragraph (46), by striking ‘‘on any day during

the period beginning 90 days before the date of’’ and inserting ‘‘at any time before’’;

(C) by amending paragraph (47) to read as follows:

‘‘(47) ‘repurchase agreement’ (which definition also applies

to a reverse repurchase agreement)—

‘‘(A) means—

‘‘(i) an agreement, including related terms, which

provides for the transfer of one or more certificates of

deposit, mortgage related securities (as defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage related securities or

mortgage loans, eligible bankers’ acceptances, qualified

foreign government securities (defined as a security

that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development), or securities that are direct obligations of, or

that are fully guaranteed by, the United States or any

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agency of the United States against the transfer of

funds by the transferee of such certificates of deposit,

eligible bankers’ acceptances, securities, loans, or interests, with a simultaneous agreement by such transferee

to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptance, securities, loans, or

interests of the kind described in this clause, at a date

certain not later than 1 year after such transfer or on

demand, against the transfer of funds;

‘‘(ii) any combination of agreements or transactions

referred to in clauses (i) and (iii);

‘‘(iii) an option to enter into an agreement or transaction referred to in clause (i) or (ii);

‘‘(iv) a master agreement that provides for an

agreement or transaction referred to in clause (i), (ii),

or (iii), together with all supplements to any such master agreement, without regard to whether such master

agreement provides for an agreement or transaction

that is not a repurchase agreement under this paragraph, except that such master agreement shall be considered to be a repurchase agreement under this paragraph only with respect to each agreement or transaction under the master agreement that is referred to

in clause (i), (ii), or (iii); or

‘‘(v) any security agreement or arrangement or

other credit enhancement related to any agreement or

transaction referred to in clause (i), (ii), (iii), or (iv),

but not to exceed the actual value of such contract on

the date of the filing of the petition; and

‘‘(B) does not include a repurchase obligation under a

participation in a commercial mortgage loan;’’;

(D) in paragraph (48), by inserting ‘‘, or exempt from

such registration under such section pursuant to an order

of the Securities and Exchange Commission,’’ after ‘‘1934’’;

and

(E) by amending paragraph (53B) to read as follows:

‘‘(53B) ‘swap agreement’—

‘‘(A) means—

‘‘(i) any agreement, including the terms and conditions incorporated by reference in such agreement,

which is an interest rate swap, option, future, or forward agreement, including—

‘‘(I) a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap;

‘‘(II) a spot, same day-tomorrow, tomorrownext, forward, or other foreign exchange or precious metals agreement;

‘‘(III) a currency swap, option, future, or forward agreement;

‘‘(IV) an equity index or an equity swap, option, future, or forward agreement;

‘‘(V) a debt index or a debt swap, option, future, or forward agreement;

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‘‘(VI) a credit spread or a credit swap, option,

future, or forward agreement;

‘‘(VII) a commodity index or a commodity

swap, option, future, or forward agreement; or

‘‘(VIII) a weather swap, weather derivative, or

weather option;

‘‘(ii) any agreement or transaction similar to any

other agreement or transaction referred to in this paragraph that—

‘‘(I) is presently, or in the future becomes, regularly entered into in the swap market (including

terms and conditions incorporated by reference

therein); and

‘‘(II) is a forward, swap, future, or option on

one or more rates, currencies, commodities, equity

securities, or other equity instruments, debt securities or other debt instruments, or economic indices

or measures of economic risk or value;

‘‘(iii) any combination of agreements or transactions referred to in this subparagraph;

‘‘(iv) any option to enter into an agreement or

transaction referred to in this subparagraph;

‘‘(v) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii),

or (iv), together with all supplements to any such master agreement, and without regard to whether the master agreement contains an agreement or transaction

that is not a swap agreement under this paragraph, except that the master agreement shall be considered to

be a swap agreement under this paragraph only with

respect to each agreement or transaction under the

master agreement that is referred to in clause (i), (ii),

(iii), or (iv); or

‘‘(vi) any security agreement or arrangement or

other credit enhancement related to any agreements or

transactions referred to in clause (i) through (v), but do

not to exceed the actual value of such contract on the

date of the filing of the petition; and

‘‘(B) is applicable for purposes of this title only, and

shall not be construed or applied so as to challenge or affect

the characterization, definition, or treatment of any swap

agreement under any other statute, regulation, or rule, including the Securities Act of 1933, the Securities Exchange

Act of 1934, the Public Utility Holding Company Act of

1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the

Securities Investor Protection Act of 1970, the Commodity

Exchange Act, and the regulations prescribed by the Securities and Exchange Commission or the Commodity Futures

Trading Commission.’’;

(2) in section 741(7), by striking paragraph (7) and inserting the following:

‘‘(7) ‘securities contract’—

‘‘(A) means—

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‘‘(i) a contract for the purchase, sale, or loan of a

security, a certificate of deposit, a mortgage loan or any

interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including an interest therein or based on

the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security,

certificate of deposit, loan, interest, group or index, or

option;

‘‘(ii) any option entered into on a national securities exchange relating to foreign currencies;

‘‘(iii) the guarantee by or to any securities clearing

agency of a settlement of cash, securities, certificates of

deposit, mortgage loans or interests therein, group or

index of securities, or mortgage loans or interests therein (including any interest therein or based on the value

thereof), or option on any of the foregoing, including an

option to purchase or sell any such security, certificate

of deposit, loan, interest, group or index, or option;

‘‘(iv) any margin loan;

‘‘(v) any other agreement or transaction that is

similar to an agreement or transaction referred to in

this subparagraph;

‘‘(vi) any combination of the agreements or transactions referred to in this subparagraph;

‘‘(vii) any option to enter into any agreement or

transaction referred to in this subparagraph;

‘‘(viii) a master agreement that provides for an

agreement or transaction referred to in clause (i), (ii),

(iii), (iv), (v), (vi), or (vii), together with all supplements

to any such master agreement, without regard to

whether the master agreement provides for an agreement or transaction that is not a securities contract

under this subparagraph, except that such master

agreement shall be considered to be a securities contract under this subparagraph only with respect to

each agreement or transaction under such master

agreement that is referred to in clause (i), (ii), (iii), (iv),

(v), (vi), or (vii); or

‘‘(ix) any security agreement or arrangement or

other credit enhancement, related to any agreement or

transaction referred to in this subparagraph, but not to

exceed the actual value of such contract on the date of

the filing of the petition; and

‘‘(B) does not include any purchase, sale, or repurchase

obligation under a participation in a commercial mortgage

loan.’’; and

(3) in section 761(4)—

(A) by striking ‘‘or’’ at the end of subparagraph (D);

and

(B) by adding at the end the following:

‘‘(F) any other agreement or transaction that is similar

to an agreement or transaction referred to in this paragraph;

133

‘‘(G) any combination of the agreements or transactions

referred to in this paragraph;

‘‘(H) any option to enter into an agreement or transaction referred to in this paragraph;

‘‘(I) a master agreement that provides for an agreement

or transaction referred to in subparagraph (A), (B), (C), (D),

(E), (F), (G), or (H), together with all supplements to such

master agreement, without regard to whether the master

agreement provides for an agreement or transaction that is

not a commodity contract under this paragraph, except that

the master agreement shall be considered to be a commodity contract under this paragraph only with respect to

each agreement or transaction under the master agreement

that is referred to in subparagraph (A), (B), (C), (D), (E),

(F), (G), or (H); or

‘‘(J) any security agreement or arrangement or other

credit enhancement related to any agreement or transaction

referred to in this paragraph, but not to exceed the actual

value of such contract on the date of the filing of the petition;’’.

(b) DEFINITIONS OF FINANCIAL INSTITUTION, FINANCIAL PARTICIPANT, AND FORWARD CONTRACT MERCHANT.—Section 101 of title

11, United States Code, is amended—

(1) by striking paragraph (22) and inserting the following:

‘‘(22) ‘financial institution’ means—

‘‘(A) a Federal reserve bank, or an entity (domestic or

foreign) that is a commercial or savings bank, industrial

savings bank, savings and loan association, trust company,

or receiver or conservator for such entity and, when any

such Federal reserve bank, receiver, conservator or entity is

acting as agent or custodian for a customer in connection

with a securities contract, as defined in section 741, such

customer; or

‘‘(B) in connection with a securities contract, as defined

in section 741, an investment company registered under the

Investment Company Act of 1940;’’;

(2) by inserting after paragraph (22) the following:

‘‘(22A) ‘financial participant’ means an entity that, at the

time it enters into a securities contract, commodity contract, or

forward contract, or at the time of the filing of the petition, has

one or more agreements or transactions described in paragraph

(1), (2), (3), (4), (5), or (6) of section 561(a) with the debtor or

any other entity (other than an affiliate) of a total gross dollar

value of not less than $1,000,000,000 in notional or actual principal amount outstanding on any day during the previous 15-

month period, or has gross mark-to-market positions of not less

than $100,000,000 (aggregated across counterparties) in one or

more such agreements or transactions with the debtor or any

other entity (other than an affiliate) on any day during the previous 15-month period;’’; and

(3) by striking paragraph (26) and inserting the following:

‘‘(26) ‘forward contract merchant’ means a Federal reserve

bank, or an entity, the business of which consists in whole or

in part of entering into forward contracts as or with merchants

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or in a commodity, as defined or in section 761 or any similar

good, article, service, right, or interest which is presently or in

the future becomes the subject of dealing in the forward contract trade;’’.

(c) DEFINITION OF MASTER NETTING AGREEMENT AND MASTER

NETTING AGREEMENT PARTICIPANT.—Section 101 of title 11, United

States Code, is amended by inserting after paragraph (38) the following new paragraphs:

‘‘(38A) ‘master netting agreement’—

‘‘(A) means an agreement providing for the exercise of

rights, including rights of netting, setoff, liquidation, termination, acceleration, or closeout, under or in connection

with one or more contracts that are described in any one

or more of paragraphs (1) through (5) of section 561(a), or

any security agreement or arrangement or other credit enhancement related to one or more of the foregoing; and

‘‘(B) if the agreement contains provisions relating to

agreements or transactions that are not contracts described

in paragraphs (1) through (5) of section 561(a), shall be

deemed to be a master netting agreement only with respect

to those agreements or transactions that are described in

any one or more of paragraphs (1) through (5) of section

561(a);

‘‘(38B) ‘master netting agreement participant’ means an entity that, at any time before the filing of the petition, is a party

to an outstanding master netting agreement with the debtor;’’.

(d) SWAP AGREEMENTS, SECURITIES CONTRACTS, COMMODITY

CONTRACTS, FORWARD CONTRACTS, REPURCHASE AGREEMENTS, AND

MASTER NETTING AGREEMENTS UNDER THE AUTOMATIC-STAY.—

(1) IN GENERAL.—Section 362(b) of title 11, United States

Code, as amended by this Act, is amended—

(A) in paragraph (6), by inserting ‘‘, pledged to, and

under the control of,’’ after ‘‘held by’’;

(B) in paragraph (7), by inserting ‘‘, pledged to, and

under the control of,’’ after ‘‘held by’’;

(C) by striking paragraph (17) and inserting the following:

‘‘(17) under subsection (a), of the setoff by a swap participant of a mutual debt and claim under or in connection with

one or more swap agreements that constitutes the setoff of a

claim against the debtor for any payment or other transfer of

property due from the debtor under or in connection with any

swap agreement against any payment due to the debtor from

the swap participant under or in connection with any swap

agreement or against cash, securities, or other property held by,

pledged to, and under the control of, or due from such swap

participant to margin, guarantee, secure, or settle any swap

agreement;’’; and

(D) by inserting after paragraph (27), as added by this

Act, the following new paragraph:

‘‘(28) under subsection (a), of the setoff by a master netting

agreement participant of a mutual debt and claim under or in

connection with one or more master netting agreements or any

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stitutes the setoff of a claim against the debtor for any payment

or other transfer of property due from the debtor under or in

connection with such agreements or any contract or agreement

subject to such agreements against any payment due to the

debtor from such master netting agreement participant under or

in connection with such agreements or any contract or agreement subject to such agreements or against cash, securities, or

other property held by, pledged to, and under the control of, or

due from such master netting agreement participant to margin,

guarantee, secure, or settle such agreements or any contract or

agreement subject to such agreements, to the extent that such

participant is eligible to exercise such offset rights under paragraph (6), (7), or (17) for each individual contract covered by

the master netting agreement in issue; or’’.

(2) LIMITATION.—Section 362 of title 11, United States

Code, as amended by this Act, is amended by adding at the end

the following:

‘‘(l) LIMITATION.—The exercise of rights not subject to the stay

arising under subsection (a) pursuant to paragraph (6), (7), (17), or

(28) of subsection (b) shall not be stayed by any order of a court or

administrative agency in any proceeding under this title.’’.

(e) LIMITATION OF AVOIDANCE POWERS UNDER MASTER NETTING AGREEMENT.—Section 546 of title 11, United States Code, as

amended by this Act, is amended—

(1) in subsection (g) (as added by section 103 of Public Law

101–311)—

(A) by striking ‘‘under a swap agreement’’; and

(B) by striking ‘‘in connection with a swap agreement’’

and inserting ‘‘under or in connection with any swap agreement’’; and

(2) by adding at the end the following:

‘‘(k) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and

548(b) the trustee may not avoid a transfer made by or to a master

netting agreement participant under or in connection with any master netting agreement or any individual contract covered thereby

that is made before the commencement of the case, except under section 548(a)(1)(A) and except to the extent that the trustee could otherwise avoid such a transfer made under an individual contract

covered by such master netting agreement.’’.

(f) FRAUDULENT TRANSFERS OF MASTER NETTING AGREEMENTS.—Section 548(d)(2) of title 11, United States Code, is

amended—

(1) in subparagraph (C), by striking ‘‘and’’ at the end;

(2) in subparagraph (D), by striking the period and inserting ‘‘; and’’; and

(3) by adding at the end the following new subparagraph:

‘‘(E) a master netting agreement participant that receives a

transfer in connection with a master netting agreement or any

individual contract covered thereby takes for value to the extent

of such transfer, except that, with respect to a transfer under

any individual contract covered thereby, to the extent that such

master netting agreement participant otherwise did not take (or

is otherwise not deemed to have taken) such transfer for value.’’.

136

(g) TERMINATION OR ACCELERATION OF SECURITIES CONTRACTS.—Section 555 of title 11, United States Code, is amended—

(1) by amending the section heading to read as follows:

‘‘§ 555. Contractual right to liquidate, terminate, or accelerate a securities contract’’;

and

(2) in the first sentence, by striking ‘‘liquidation’’ and inserting ‘‘liquidation, termination, or acceleration’’.

(h) TERMINATION OR ACCELERATION OF COMMODITIES OR FORWARD CONTRACTS.—Section 556 of title 11, United States Code, is

amended—

(1) by amending the section heading to read as follows:

‘‘§ 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract’’;

and

(2) in the first sentence, by striking ‘‘liquidation’’ and inserting ‘‘liquidation, termination, or acceleration’’.

(i) TERMINATION OR ACCELERATION OF REPURCHASE AGREEMENTS.—Section 559 of title 11, United States Code, is amended—

(1) by amending the section heading to read as follows:

‘‘§ 559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement’’;

and

(2) in the first sentence, by striking ‘‘liquidation’’ and inserting ‘‘liquidation, termination, or acceleration’’.

(j) LIQUIDATION, TERMINATION, OR ACCELERATION OF SWAP

AGREEMENTS.—Section 560 of title 11, United States Code, is

amended—

(1) by amending the section heading to read as follows:

‘‘§ 560. Contractual right to liquidate, terminate, or accelerate a swap agreement’’;

(2) in the first sentence, by striking ‘‘termination of a swap

agreement’’ and inserting ‘‘liquidation, termination, or acceleration of one or more swap agreements’’; and

(3) by striking ‘‘in connection with any swap agreement’’

and inserting ‘‘in connection with the termination, liquidation,

or acceleration of one or more swap agreements’’.

(k) LIQUIDATION, TERMINATION, ACCELERATION, OR OFFSET

UNDER A MASTER NETTING AGREEMENT AND ACROSS CONTRACTS.—

(1) IN GENERAL.—Title 11, United States Code, is amended

by inserting after section 560 the following:

‘‘§ 561. Contractual right to terminate, liquidate, accelerate,

or offset under a master netting agreement and

across contracts

‘‘(a) IN GENERAL.—Subject to subsection (b), the exercise of any

contractual right, because of a condition of the kind specified in section 365(e)(1), to cause the termination, liquidation, or acceleration

of or to offset or net termination values, payment amounts, or other

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transfer obligations arising under or in connection with one or more

(or the termination, liquidation, or acceleration of one or more)—

‘‘(1) securities contracts, as defined in section 741(7);

‘‘(2) commodity contracts, as defined in section 761(4);

‘‘(3) forward contracts;

‘‘(4) repurchase agreements;

‘‘(5) swap agreements; or

‘‘(6) master netting agreements,

shall not be stayed, avoided, or otherwise limited by operation of

any provision of this title or by any order of a court or administrative agency in any proceeding under this title.

‘‘(b) EXCEPTION.—

‘‘(1) IN GENERAL.—A party may exercise a contractual right

described in subsection (a) to terminate, liquidate, or accelerate

only to the extent that such party could exercise such a right

under section 555, 556, 559, or 560 for each individual contract

covered by the master netting agreement in issue.

‘‘(2) COMMODITY BROKERS.—If a debtor is a commodity

broker subject to subchapter IV of chapter 7—

‘‘(A) a party may not net or offset an obligation to the

debtor arising under, or in connection with, a commodity

contract against any claim arising under, or in connection

with, other instruments, contracts, or agreements listed in

subsection (a) except to the extent that the party has positive net equity in the commodity accounts at the debtor, as

calculated under that subchapter IV; and

‘‘(B) another commodity broker may not net or offset an

obligation to the debtor arising under, or in connection

with, a commodity contract entered into or held on behalf

of a customer of the debtor against any claim arising

under, or in connection with, other instruments, contracts,

or agreements listed in subsection (a).

‘‘(3) CONSTRUCTION.—No provision of subparagraph (A) or

(B) of paragraph (2) shall prohibit the offset of claims and obligations that arise under—

‘‘(A) a cross-margining agreement that has been approved by the Commodity Futures Trading Commission or

submitted to the Commodity Futures Trading Commission

under section 5(a)(12)(A) of the Commodity Exchange Act

and has been approved; or

‘‘(B) any other netting agreement between a clearing organization, as defined in section 761, and another entity

that has been approved by the Commodity Futures Trading

Commission.

‘‘(c) DEFINITION.—As used in this section, the term ‘contractual

right’ includes a right set forth in a rule or bylaw of a national securities exchange, a national securities association, or a securities

clearing agency, a right set forth in a bylaw of a clearing organization or contract market or in a resolution of the governing board

thereof, and a right, whether or not evidenced in writing, arising

under common law, under law merchant, or by reason of normal

business practice.

‘‘(d) CASES ANCILLARY TO FOREIGN PROCEEDINGS.—Any provisions of this title relating to securities contracts, commodity conVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00137 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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tracts, forward contracts, repurchase agreements, swap agreements,

or master netting agreements shall apply in a case under chapter

15 of this title, so that enforcement of contractual provisions of such

contracts and agreements in accordance with their terms will not be

stayed or otherwise limited by operation of any provision of this title

or by order of a court in any case under this title, and to limit

avoidance powers to the same extent as in a proceeding under chapter 7 or 11 of this title (such enforcement not to be limited based

on the presence or absence of assets of the debtor in the United

States).’’.

(2) CONFORMING AMENDMENT.—The table of sections for chapter

5 of title 11, United States Code, is amended by inserting after the

item relating to section 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a master

netting agreement and across contracts.

(l) COMMODITY BROKER LIQUIDATIONS.—Title 11, United States

Code, is amended by inserting after 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

‘‘Notwithstanding any other provision of this title, the exercise

of rights by a forward contract merchant, commodity broker, stockbroker, financial institution, financial participant, securities clearing agency, swap participant, repo participant, or master netting

agreement participant under this title shall not affect the priority of

any unsecured claim it may have after the exercise of such rights.’’.

(m) STOCKBROKER LIQUIDATIONS.—Title 11, United States

Code, is amended by inserting after section 752 the following:

‘‘§ 753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial

institutions, securities clearing agencies, swap participants, repo participants, and master netting

agreement participants

‘‘Notwithstanding any other provision of this title, the exercise

of rights by a forward contract merchant, commodity broker, stockbroker, financial institution, securities clearing agency, swap participant, repo participant, financial participant, or master netting

agreement participant under this title shall not affect the priority of

any unsecured claim it may have after the exercise of such rights.’’.

(n) SETOFF.—Section 553 of title 11, United States Code, is

amended—

(1) in subsection (a)(3)(C), by inserting before the period the

following: ‘‘(except for a setoff of a kind described in section

362(b)(6), 362(b)(7), 362(b)(17), 362(b)(28), 555, 556, 559, 560,

or 561 of this title)’’; and

(2) in subsection (b)(1), by striking ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 362(b)(28), 555, 556, 559, 560, 561’’.

(o) SECURITIES CONTRACTS, COMMODITY CONTRACTS, AND FORWARD CONTRACTS.—Title 11, United States Code, is amended—

139

(1) in section 362(b)(6), by striking ‘‘financial institutions,’’

each place such term appears and inserting ‘‘financial institution, financial participant,’’;

(2) in section 546(e), by inserting ‘‘financial participant,’’

after ‘‘financial institution,’’;

(3) in section 548(d)(2)(B), by inserting ‘‘financial participant,’’ after ‘‘financial institution,’’;

(4) in section 555—

(A) by inserting ‘‘financial participant,’’ after ‘‘financial

institution,’’; and

(B) by inserting before the period at the end ‘‘, a right

set forth in a bylaw of a clearing organization or contract

market or in a resolution of the governing board thereof,

and a right, whether or not in writing, arising under common law, under law merchant, or by reason of normal business practice’’; and

(5) in section 556, by inserting ‘‘, financial participant,’’

after ‘‘commodity broker’’.

(p) CONFORMING AMENDMENTS.—Title 11, United States Code,

is amended—

(1) in the table of sections for chapter 5—

(A) by amending the items relating to sections 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.’’;

and

(B) by amending the items relating to sections 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.’’;

and

(2) in the table of sections for chapter 7—

(A) by inserting after the item relating to section 766

the following:

‘‘767. Commodity broker liquidation and forward contract merchants, commodity

brokers, stockbrokers, financial institutions, securities clearing agencies,

swap participants, repo participants, and master netting agreement participants.’’;

and

(B) by inserting after the item relating to section 752

the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers,

stockbrokers, financial institutions, securities clearing agencies, swap

participants, repo participants, and master netting agreement participants.’’.

SEC. 908. RECORDKEEPING REQUIREMENTS.

Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C.

1821(e)(8)) is amended by adding at the end the following new subparagraph:

‘‘(H) RECORDKEEPING REQUIREMENTS.—The Corporation, in consultation with the appropriate Federal banking

agencies, may prescribe regulations requiring more detailed

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recordkeeping with respect to qualified financial contracts

(including market valuations) by insured depository institutions.’’.

SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.

Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C.

1823(e)(2)) is amended to read as follows:

‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.—An agreement to provide for the lawful

collateralization of—

‘‘(A) deposits of, or other credit extension by, a Federal,

State, or local governmental entity, or of any depositor referred to in section 11(a)(2), including an agreement to provide collateral in lieu of a surety bond;

‘‘(B) bankruptcy estate funds pursuant to section

345(b)(2) of title 11, United States Code;

‘‘(C) extensions of credit, including any overdraft, from

a Federal reserve bank or Federal home loan bank; or

‘‘(D) one or more qualified financial contracts, as defined in section 11(e)(8)(D),

shall not be deemed invalid pursuant to paragraph (1)(B) solely

because such agreement was not executed contemporaneously

with the acquisition of the collateral or because of pledges, delivery, or substitution of the collateral made in accordance with

such agreement.’’.

SEC. 910. DAMAGE MEASURE.

(a) IN GENERAL.—Title 11, United States Code, is amended—

(1) by inserting after section 561, as added by this Act, the

following:

‘‘§ 562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase agreements, or master

netting agreements

‘‘If the trustee rejects a swap agreement, securities contract (as

defined in section 741), forward contract, commodity contract (as

defined in section 761), repurchase agreement, or master netting

agreement pursuant to section 365(a), or if a forward contract merchant, stockbroker, financial institution, securities clearing agency,

repo participant, financial participant, master netting agreement

participant, or swap participant liquidates, terminates, or accelerates such contract or agreement, damages shall be measured as of

the earlier of—

‘‘(1) the date of such rejection; or

‘‘(2) the date of such liquidation, termination, or acceleration.’’; and

(2) in the table of sections for chapter 5, by inserting after

the item relating to section 561 (as added by this Act) the following:

‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase agreements, or master

netting agreements.’’.

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(b) CLAIMS ARISING FROM REJECTION.—Section 502(g) of title

11, United States Code, is amended—

(1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and

(2) by adding at the end the following:

‘‘(2) A claim for damages calculated in accordance with section

562 of this title shall be allowed under subsection (a), (b), or (c), or

disallowed under subsection (d) or (e), as if such claim had arisen

before the date of the filing of the petition.’’.

SEC. 911. SIPC STAY.

Section 5(b)(2) of the Securities Investor Protection Act of 1970

(15 U.S.C. 78eee(b)(2)) is amended by adding at the end the following new subparagraph:

‘‘(C) EXCEPTION FROM STAY.—

‘‘(i) Notwithstanding section 362 of title 11, United

States Code, neither the filing of an application under

subsection (a)(3) nor any order or decree obtained by

SIPC from the court shall operate as a stay of any contractual rights of a creditor to liquidate, terminate, or

accelerate a securities contract, commodity contract,

forward contract, repurchase agreement, swap agreement, or master netting agreement, as those terms are

defined in sections 101 and 741 of title 11, United

States Code, to offset or net termination values, payment amounts, or other transfer obligations arising

under or in connection with one or more of such contracts or agreements, or to foreclose on any cash collateral pledged by the debtor, whether or not with respect

to one or more of such contracts or agreements.

‘‘(ii) Notwithstanding clause (i), such application,

order, or decree may operate as a stay of the foreclosure

on, or disposition of, securities collateral pledged by the

debtor, whether or not with respect to one or more of

such contracts or agreements, securities sold by the

debtor under a repurchase agreement, or securities lent

under a securities lending agreement.

‘‘(iii) As used in this subparagraph, the term ‘contractual right’ includes a right set forth in a rule or

bylaw of a national securities exchange, a national securities association, or a securities clearing agency, a

right set forth in a bylaw of a clearing organization or

contract market or in a resolution of the governing

board thereof, and a right, whether or not in writing,

arising under common law, under law merchant, or by

reason of normal business practice.’’.

SEC. 912. ASSET-BACKED SECURITIZATIONS.

Section 541 of title 11, United States Code, is amended—

(1) in subsection (b), by inserting after paragraph (7), as

added by this Act, the following:

‘‘(8) any eligible asset (or proceeds thereof), to the extent

that such eligible asset was transferred by the debtor, before the

date of commencement of the case, to an eligible entity in connection with an asset-backed securitization, except to the extent

such asset (or proceeds or value thereof) may be recovered by the

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trustee under section 550 by virtue of avoidance under section

548(a);’’; and

(2) by adding at the end the following new subsection:

‘‘(f) For purposes of this section—

‘‘(1) the term ‘asset-backed securitization’ means a transaction in which eligible assets transferred to an eligible entity

are used as the source of payment on securities, including, without limitation, all securities issued by governmental units, at

least one class or tranche of which was rated investment grade

by one or more nationally recognized securities rating organizations, when the securities were initially issued by an issuer;

‘‘(2) the term ‘eligible asset’ means—

‘‘(A) financial assets (including interests therein and

proceeds thereof), either fixed or revolving, whether or not

the same are in existence as of the date of the transfer, including residential and commercial mortgage loans, consumer receivables, trade receivables, assets of governmental

units, including payment obligations relating to taxes, receipts, fines, tickets, and other sources of revenue, and lease

receivables, that, by their terms, convert into cash within a

finite time period, plus any residual interest in property

subject to receivables included in such financial assets plus

any rights or other assets designed to assure the servicing

or timely distribution of proceeds to security holders;

‘‘(B) cash; and

‘‘(C) securities, including without limitation, all securities issued by governmental units;

‘‘(3) the term ‘eligible entity’ means—

‘‘(A) an issuer; or

‘‘(B) a trust, corporation, partnership, governmental

unit, limited liability company (including a single member

limited liability company), or other entity engaged exclusively in the business of acquiring and transferring eligible

assets directly or indirectly to an issuer and taking actions

ancillary thereto;

‘‘(4) the term ‘issuer’ means a trust, corporation, partnership, or other entity engaged exclusively in the business of acquiring and holding eligible assets, issuing securities backed by

eligible assets, and taking actions ancillary thereto; and

‘‘(5) the term ‘transferred’ means the debtor, under a written agreement, represented and warranted that eligible assets

were sold, contributed, or otherwise conveyed with the intention

of removing them from the estate of the debtor pursuant to subsection (b)(8) (whether or not reference is made to this title or

any section hereof), irrespective and without limitation of—

‘‘(A) whether the debtor directly or indirectly obtained

or held an interest in the issuer or in any securities issued

by the issuer;

‘‘(B) whether the debtor had an obligation to repurchase or to service or supervise the servicing of all or any

portion of such eligible assets; or

‘‘(C) the characterization of such sale, contribution, or

other conveyance for tax, accounting, regulatory reporting,

or other purposes.’’.

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SEC. 913. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

(a) EFFECTIVE DATE.—This title shall take effect on the date of

enactment of this Act.

(b) APPLICATION OF AMENDMENTS.—The amendments made by

this title shall apply with respect to cases commenced or appointments made under any Federal or State law after the date of enactment of this Act, but shall not apply with respect to cases commenced or appointments made under any Federal or State law before the date of enactment of this Act.

TITLE X—PROTECTION OF FAMILY

FARMERS

SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12.

(a) REENACTMENT.—

(1) IN GENERAL.—Chapter 12 of title 11, United States

Code, as reenacted by section 149 of division C of the Omnibus

Consolidated and Emergency Supplemental Appropriations Act,

1999 (Public Law 105–277), and amended by this Act, is reenacted.

(2) EFFECTIVE DATE.—Subsection (a) shall take effect on

July 1, 2000.

(b) CONFORMING AMENDMENT.—Section 302 of the Bankruptcy,

Judges, United States Trustees, and Family Farmer Bankruptcy Act

of 1986 (28 U.S.C. 581 note) is amended by striking subsection (f).

SEC. 1002. DEBT LIMIT INCREASE.

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

adding at the end the following:

‘‘(4) The dollar amount in section 101(18) shall be adjusted at

the same times and in the same manner as the dollar amounts in

paragraph (1) of this subsection, beginning with the adjustment to

be made on April 1, 2001.’’.

SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL UNITS.

(a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 11, United

States Code, is amended to read as follows:

‘‘(2) provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507,

unless—

‘‘(A) the claim is a claim owed to a governmental unit

that arises as a result of the sale, transfer, exchange, or

other disposition of any farm asset used in the debtor’s

farming operation, in which case the claim shall be treated

as an unsecured claim that is not entitled to priority under

section 507, but the debt shall be treated in such manner

only if the debtor receives a discharge; or

‘‘(B) the holder of a particular claim agrees to a different treatment of that claim;’’.

(b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) of title 11,

United States Code, as so designated by this Act, is amended by

striking ‘‘a State or local governmental unit’’ and inserting ‘‘any

governmental unit’’.

144

TITLE XI—HEALTH CARE AND

EMPLOYEE BENEFITS

SEC. 1101. DEFINITIONS.

(a) HEALTH CARE BUSINESS DEFINED.—Section 101 of title 11,

United States Code, is amended—

(1) by redesignating paragraph (27A), as added by this Act,

as paragraph (27B); and

(2) by inserting after paragraph (27) the following:

‘‘(27A) ‘health care business’—

‘‘(A) means any public or private entity (without regard

to whether that entity is organized for profit or not for profit) that is primarily engaged in offering to the general public facilities and services for—

‘‘(i) the diagnosis or treatment of injury, deformity,

or disease; and

‘‘(ii) surgical, drug treatment, psychiatric, or obstetric care; and

‘‘(B) includes—

‘‘(i) any—

‘‘(I) general or specialized hospital;

‘‘(II) ancillary ambulatory, emergency, or surgical treatment facility;

‘‘(III) hospice;

‘‘(IV) home health agency; and

‘‘(V) other health care institution that is similar to an entity referred to in subclause (I), (II),

(III), or (IV); and

‘‘(ii) any long-term care facility, including any—

‘‘(I) skilled nursing facility;

‘‘(II) intermediate care facility;

‘‘(III) assisted living facility;

‘‘(IV) home for the aged;

‘‘(V) domiciliary care facility; and

‘‘(VI) health care institution that is related to

a facility referred to in subclause (I), (II), (III),

(IV), or (V), if that institution is primarily engaged

in offering room, board, laundry, or personal assistance with activities of daily living and

incidentals to activities of daily living;’’.

(b) PATIENT AND PATIENT RECORDS DEFINED.—Section 101 of

title 11, United States Code, is amended by inserting after paragraph (40) the following:

‘‘(40A) ‘patient’ means any person who obtains or receives

services from a health care business;

‘‘(40B) ‘patient records’ means any written document relating to a patient or a record recorded in a magnetic, optical, or

other form of electronic medium;’’.

(c) RULE OF CONSTRUCTION.—The amendments made by subsection (a) of this section shall not affect the interpretation of section

109(b) of title 11, United States Code.

145

SEC. 1102. DISPOSAL OF PATIENT RECORDS.

(a) IN GENERAL.—Subchapter III of chapter 3 of title 11, United

States Code, is amended by adding at the end the following:

‘‘§ 351. Disposal of patient records

‘‘If a health care business commences a case under chapter 7,

9, or 11, and the trustee does not have a sufficient amount of funds

to pay for the storage of patient records in the manner required

under applicable Federal or State law, the following requirements

shall apply:

‘‘(1) The trustee shall—

‘‘(A) promptly publish notice, in 1 or more appropriate

newspapers, that if patient records are not claimed by the

patient or an insurance provider (if applicable law permits

the insurance provider to make that claim) by the date that

is 365 days after the date of that notification, the trustee

will destroy the patient records; and

‘‘(B) during the first 180 days of the 365-day period described in subparagraph (A), promptly attempt to notify directly each patient that is the subject of the patient records

and appropriate insurance carrier concerning the patient

records by mailing to the last known address of that patient, or a family member or contact person for that patient,

and to the appropriate insurance carrier an appropriate notice regarding the claiming or disposing of patient records.

‘‘(2) If, after providing the notification under paragraph (1),

patient records are not claimed during the 365-day period described under that paragraph, the trustee shall mail, by certified mail, at the end of such 365-day period a written request

to each appropriate Federal agency to request permission from

that agency to deposit the patient records with that agency, except that no Federal agency is required to accept patient records

under this paragraph.

‘‘(3) If, following the 365-day period described in paragraph

(2) and after providing the notification under paragraph (1),

patient records are not claimed by a patient or insurance provider, or request is not granted by a Federal agency to deposit

such records with that agency, the trustee shall destroy those

records by—

‘‘(A) if the records are written, shredding or burning

the records; or

‘‘(B) if the records are magnetic, optical, or other electronic records, by otherwise destroying those records so that

those records cannot be retrieved.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter 3

of title 11, United States Code, is amended by inserting after the

item relating to section 350 the following:

‘‘351. Disposal of patient records.’’.

SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF CLOSING

A HEALTH CARE BUSINESS AND OTHER ADMINISTRATIVE

EXPENSES.

Section 503(b) of title 11, United States Code, as amended by

this Act, is amended by adding at the end the following:

146

‘‘(8) the actual, necessary costs and expenses of closing a

health care business incurred by a trustee or by a Federal agency (as that term is defined in section 551(1) of title 5) or a department or agency of a State or political subdivision thereof,

including any cost or expense incurred—

‘‘(A) in disposing of patient records in accordance with

section 351; or

‘‘(B) in connection with transferring patients from the

health care business that is in the process of being closed

to another health care business;

‘‘(9) with respect to a nonresidential real property lease previously assumed under section 365, and subsequently rejected,

a sum equal to all monetary obligations due, excluding those

arising from or related to a failure to operate or penalty provisions, for the period of 2 years following the later of the rejection date or date of actual turnover of the premises, without reduction or setoff for any reason whatsoever except for sums actually received or to be received from a nondebtor, and the

claim for remaining sums due for the balance of the term of the

lease shall be a claim under section 502(b)(6); and’’.

SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT ADVOCATE.

(a) IN GENERAL.—

(1) APPOINTMENT OF OMBUDSMAN.—Subchapter II of chapter 3 of title 11, United States Code, is amended by inserting

after section 331 the following:

‘‘§ 332. Appointment of ombudsman

‘‘(a) IN GENERAL.—

‘‘(1) AUTHORITY TO APPOINT.—Not later than 30 days after

a case is commenced by a health care business under chapter

7, 9, or 11, the court shall order the appointment of an ombudsman to monitor the quality of patient care to represent the interests of the patients of the health care business, unless the court

finds that the appointment of the ombudsman is not necessary

for the protection of patients under the specific facts of the case.

‘‘(2) QUALIFICATIONS.—If the court orders the appointment

of an ombudsman, the United States trustee shall appoint 1

disinterested person, other than the United States trustee, to

serve as an ombudsman, including a person who is serving as

a State Long-Term Care Ombudsman appointed under title III

or VII of the Older Americans Act of 1965 (42 U.S.C. 3021 et

seq., 3058 et seq.).

‘‘(b) DUTIES.—An ombudsman appointed under subsection (a)

shall—

‘‘(1) monitor the quality of patient care, to the extent necessary under the circumstances, including interviewing patients

and physicians;

‘‘(2) not later than 60 days after the date of appointment,

and not less frequently than every 60 days thereafter, report to

the court, at a hearing or in writing, regarding the quality of

patient care at the health care business involved; and

‘‘(3) if the ombudsman determines that the quality of patient care is declining significantly or is otherwise being materiVerDate 11-MAY-2000 20:43 Oct 12, 2000 Jkt 067197 PO 00000 Frm 00146 Fmt 6601 Sfmt 6603 E:\HR\OC\HR970.XXX pfrm01 PsN: HR970
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ally compromised, notify the court by motion or written report,

with notice to appropriate parties in interest, immediately upon

making that determination.

‘‘(c) CONFIDENTIALITY.—An ombudsman shall maintain any information obtained by the ombudsman under this section that relates to patients (including information relating to patient records)

as confidential information. The ombudsman may not review confidential patient records, unless the court provides prior approval,

with restrictions on the ombudsman to protect the confidentiality of

patient records.’’.

(2) CLERICAL AMENDMENT.—The table of sections for chapter 3 of title 11, United States Code, is amended by inserting

after the item relating to section 331 the following:

‘‘332. Appointment of ombudsman.’’.

(b) COMPENSATION OF OMBUDSMAN.—Section 330(a)(1) of title

11, United States Code, is amended—

(1) in the matter proceeding subparagraph (A), by inserting

‘‘an ombudsman appointed under section 331, or’’ before ‘‘a professional person’’; and

(2) in subparagraph (A), by inserting ‘‘ombudsman,’’ before

‘‘professional person’’.

SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO TRANSFER

PATIENTS.

(a) IN GENERAL.—Section 704(a) of title 11, United States Code,

as amended by this Act, is amended by adding at the end the following:

‘‘(11) use all reasonable and best efforts to transfer patients

from a health care business that is in the process of being

closed to an appropriate health care business that—

‘‘(A) is in the vicinity of the health care business that

is closing;

‘‘(B) provides the patient with services that are substantially similar to those provided by the health care business that is in the process of being closed; and

‘‘(C) maintains a reasonable quality of care.’’.

(b) CONFORMING AMENDMENT.—Section 1106(a)(1) of title 11,

United States Code, is amended by striking ‘‘sections 704(2), 704(5),

704(7), 704(8), and 704(9)’’ and inserting ‘‘paragraphs (2), (5), (7),

(8), (9), and (11) of section 704(a)’’.

SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION NOT SUBJECT

TO AUTOMATIC STAY.

Section 362(b) of title 11, United States Code, is amended by inserting after paragraph (28), as added by this Act, the following:

‘‘(29) under subsection (a), of the exclusion by the Secretary

of Health and Human Services of the debtor from participation

in the medicare program or any other Federal health care program (as defined in section 1128B(f) of the Social Security Act

(42 U.S.C. 1320a–7b(f)) pursuant to title XI of such Act (42

U.S.C. 1301 et seq.) or title XVIII of such Act (42 U.S.C. 1395

et seq.).’’.

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TITLE XII—TECHNICAL AMENDMENTS

SEC. 1201. DEFINITIONS.

Section 101 of title 11, United States Code, as amended by this

Act, is amended—

(1) by striking ‘‘In this title—’’ and inserting ‘‘In this title

the following definitions shall apply:’’;

(2) in each paragraph, by inserting ‘‘The term’’ after the

paragraph designation;

(3) in paragraph (35)(B), by striking ‘‘paragraphs (21B)

and (33)(A)’’ and inserting ‘‘paragraphs (23) and (35)’’;

(4) in each of paragraphs (35A) and (38), by striking ‘‘;

and’’ at the end and inserting a period;

(5) in paragraph (51B)—

(A) by inserting ‘‘who is not a family farmer’’ after

‘‘debtor’’ the first place it appears; and

(B) by striking ‘‘thereto having aggregate’’ and all that

follows through the end of the paragraph;

(6) by striking paragraph (54) and inserting the following:

‘‘(54) The term ‘transfer’ means—

‘‘(A) the creation of a lien;

‘‘(B) the retention of title as a security interest;

‘‘(C) the foreclosure of a debtor’s equity of redemption;

or

‘‘(D) each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting

with—

‘‘(i) property; or

‘‘(ii) an interest in property.’’; and

(7) in each of paragraphs (1) through (35), in each of paragraphs (36) and (37), and in each of paragraphs (40) through

(55), by striking the semicolon at the end and inserting a period.

SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

Section 104 of title 11, United States Code, as amended by section 322 of this Act, is amended by inserting ‘‘522(f)(3),’’ after

‘‘522(d),’’ each place it appears.

SEC. 1203. EXTENSION OF TIME.

Section 108(c)(2) of title 11, United States Code, is amended by

striking ‘‘922’’ and all that follows through ‘‘or’’, and inserting ‘‘922,

1201, or’’.

SEC. 1204. TECHNICAL AMENDMENTS.

Title 11, United States Code, is amended—

(1) in section 109(b)(2), by striking ‘‘subsection (c) or (d) of’’;

and

(2) in section 552(b)(1), by striking ‘‘product’’ each place it

appears and inserting ‘‘products’’.

SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR FRAUDULENTLY PREPARE BANKRUPTCY PETITIONS.

Section 110(j)(4) of title 11, United States Code, as so designated by this Act, is amended by striking ‘‘attorney’s’’ and inserting ‘‘attorneys’ ’’.

149

SEC. 1206. LIMITATION ON COMPENSATION OF PROFESSIONAL PERSONS.

Section 328(a) of title 11, United States Code, is amended by

inserting ‘‘on a fixed or percentage fee basis,’’ after ‘‘hourly basis,’’.

SEC. 1207. EFFECT OF CONVERSION.

Section 348(f)(2) of title 11, United States Code, is amended by

inserting ‘‘of the estate’’ after ‘‘property’’ the first place it appears.

SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

Section 503(b)(4) of title 11, United States Code, is amended by

inserting ‘‘subparagraph (A), (B), (C), (D), or (E) of’’ before ‘‘paragraph (3)’’.

SEC. 1209. EXCEPTIONS TO DISCHARGE.

Section 523 of title 11, United States Code, as amended by this

Act, is amended—

(1) by transferring paragraph (15), as added by section

304(e) of Public Law 103–394 (108 Stat. 4133), so as to insert

such paragraph after subsection (a)(14);

(2) in subsection (a)(9), by striking ‘‘motor vehicle’’ and inserting ‘‘motor vehicle, vessel, or aircraft’’; and

(3) in subsection (e), by striking ‘‘a insured’’ and inserting

‘‘an insured’’.

SEC. 1210. EFFECT OF DISCHARGE.

Section 524(a)(3) of title 11, United States Code, is amended by

striking ‘‘section 523’’ and all that follows through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1), or 1328(a)(1), or that’’.

SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREATMENT.

Section 525(c) of title 11, United States Code, is amended—

(1) in paragraph (1), by inserting ‘‘student’’ before ‘‘grant’’

the second place it appears; and

(2) in paragraph (2), by striking ‘‘the program operated

under part B, D, or E of’’ and inserting ‘‘any program operated

under’’.

SEC. 1212. PROPERTY OF THE ESTATE.

Section 541(b)(4)(B)(ii) of title 11, United States Code, is

amended by inserting ‘‘365 or’’ before ‘‘542’’.

SEC. 1213. PREFERENCES.

(a) IN GENERAL.—Section 547 of title 11, United States Code,

as amended by this Act, is amended—

(1) in subsection (b), by striking ‘‘subsection (c)’’ and inserting ‘‘subsections (c) and (i)’’; and

(2) by adding at the end the following:

‘‘(i) If the trustee avoids under subsection (b) a transfer made

between 90 days and 1 year before the date of the filing of the petition, by the debtor to an entity that is not an insider for the benefit

of a creditor that is an insider, such transfer shall be considered to

be avoided under this section only with respect to the creditor that

is an insider.’’.

(b) APPLICABILITY.—The amendments made by this section shall

apply to any case that is pending or commenced on or after the date

of enactment of this Act.

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SEC. 1214. POSTPETITION TRANSACTIONS.

Section 549(c) of title 11, United States Code, is amended—

(1) by inserting ‘‘an interest in’’ after ‘‘transfer of’’ each

place it appears;

(2) by striking ‘‘such property’’ and inserting ‘‘such real

property’’; and

(3) by striking ‘‘the interest’’ and inserting ‘‘such interest’’.

SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE.

Section 726(b) of title 11, United States Code, is amended by

striking ‘‘1009,’’.

SEC. 1216. GENERAL PROVISIONS.

Section 901(a) of title 11, United States Code, as amended by

this Act, is amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’.

SEC. 1217. ABANDONMENT OF RAILROAD LINE.

Section 1170(e)(1) of title 11, United States Code, is amended

by striking ‘‘section 11347’’ and inserting ‘‘section 11326(a)’’.

SEC. 1218. CONTENTS OF PLAN.

Section 1172(c)(1) of title 11, United States Code, is amended

by striking ‘‘section 11347’’ and inserting ‘‘section 11326(a)’’.

SEC. 1219. DISCHARGE UNDER CHAPTER 12.

Subsections (a) and (c) of section 1228 of title 11, United States

Code, are amended by striking ‘‘1222(b)(10)’’ each place it appears

and inserting ‘‘1222(b)(9)’’.

SEC. 1220. BANKRUPTCY CASES AND PROCEEDINGS.

Section 1334(d) of title 28, United States Code, is amended—

(1) by striking ‘‘made under this subsection’’ and inserting

‘‘made under subsection (c)’’; and

(2) by striking ‘‘This subsection’’ and inserting ‘‘Subsection

(c) and this subsection’’.

SEC. 1221. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.

Section 156(a) of title 18, United States Code, is amended—

(1) in the first undesignated paragraph—

(A) by inserting ‘‘(1) the term’’ before ‘‘ ‘bankruptcy’’;

and

(B) by striking the period at the end and inserting ‘‘;

and’’; and

(2) in the second undesignated paragraph—

(A) by inserting ‘‘(2) the term’’ before ‘‘ ‘document’’; and

(B) by striking ‘‘this title’’ and inserting ‘‘title 11’’.

SEC. 1222. TRANSFERS MADE BY NONPROFIT CHARITABLE CORPORATIONS.

(a) SALE OF PROPERTY OF ESTATE.—Section 363(d) of title 11,

United States Code, is amended by striking ‘‘only’’ and all that follows through the end of the subsection and inserting ‘‘only—

‘‘(1) in accordance with applicable nonbankruptcy law that

governs the transfer of property by a corporation or trust that

is not a moneyed, business, or commercial corporation or trust;

and

‘‘(2) to the extent not inconsistent with any relief granted

under subsection (c), (d), (e), or (f) of section 362.’’.

151

(b) CONFIRMATION OF PLAN FOR REORGANIZATION.—Section

1129(a) of title 11, United States Code, as amended by this Act, is

amended by adding at the end the following:

‘‘(16) All transfers of property of the plan shall be made in

accordance with any applicable provisions of nonbankruptcy

law that govern the transfer of property by a corporation or

trust that is not a moneyed, business, or commercial corporation or trust.’’.

(c) TRANSFER OF PROPERTY.—Section 541 of title 11, United

States Code, as amended by this Act, is amended by adding at the

end the following:

‘‘(g) Notwithstanding any other provision of this title, property

that is held by a debtor that is a corporation described in section

501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax

under section 501(a) of such Code may be transferred to an entity

that is not such a corporation, but only under the same conditions

as would apply if the debtor had not filed a case under this title.’’.

(d) APPLICABILITY.—The amendments made by this section

shall apply to a case pending under title 11, United States Code,

on the date of enactment of this Act, or filed under that title on or

after that date of enactment, except that the court shall not confirm

a plan under chapter 11 of title 11, United States Code, without

considering whether this section would substantially affect the

rights of a party in interest who first acquired rights with respect

to the debtor after the date of the petition. The parties who may appear and be heard in a proceeding under this section include the attorney general of the State in which the debtor is incorporated, was

formed, or does business.

(e) RULE OF CONSTRUCTION.—Nothing in this section shall be

construed to require the court in which a case under chapter 11 of

title 11, United States Code, is pending to remand or refer any proceeding, issue, or controversy to any other court or to require the approval of any other court for the transfer of property.

SEC. 1223. PROTECTION OF VALID PURCHASE MONEY SECURITY INTERESTS.

Section 547(c)(3)(B) of title 11, United States Code, is amended

by striking ‘‘20’’ and inserting ‘‘30’’.

SEC. 1224. EXTENSIONS.

Section 302(d)(3) of the Bankruptcy, Judges, United States

Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.

581 note) is amended—

(1) in subparagraph (A), in the matter following clause (ii),

by striking ‘‘or October 1, 2002, whichever occurs first’’; and

(2) in subparagraph (F)—

(A) in clause (i)—

(i) in subclause (II), by striking ‘‘or October 1,

2002, whichever occurs first’’; and

(ii) in the matter following subclause (II), by striking ‘‘October 1, 2003, or’’; and

(B) in clause (ii), in the matter following subclause

(II)—

(i) by striking ‘‘before October 1, 2003, or’’; and

(ii) by striking ‘‘, whichever occurs first’’.

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SEC. 1225. BANKRUPTCY JUDGESHIPS.

(a) SHORT TITLE.—This section may be cited as the ‘‘Bankruptcy Judgeship Act of 2000’’.

(b) TEMPORARY JUDGESHIPS.—

(1) APPOINTMENTS.—The following judgeship positions

shall be filled in the manner prescribed in section 152(a)(1) of

title 28, United States Code, for the appointment of bankruptcy

judges provided for in section 152(a)(2) of such title:

(A) One additional bankruptcy judgeship for the eastern district of California.

(B) Four additional bankruptcy judgeships for the central district of California.

(C) One additional bankruptcy judgeship for the district of Delaware.

(D) Two additional bankruptcy judgeships for the

southern district of Florida.

(E) One additional bankruptcy judgeship for the southern district of Georgia.

(F) Two additional bankruptcy judgeships for the district of Maryland.

(G) One additional bankruptcy judgeship for the eastern district of Michigan.

(H) One additional bankruptcy judgeship for the southern district of Mississippi.

(I) One additional bankruptcy judgeship for the district

of New Jersey.

(J) One additional bankruptcy judgeship for the eastern district of New York.

(K) One additional bankruptcy judgeship for the northern district of New York.

(L) One additional bankruptcy judgeship for the southern district of New York.

(M) One additional bankruptcy judgeship for the eastern district of North Carolina.

(N) One additional bankruptcy judgeship for the eastern district of Pennsylvania.

(O) One additional bankruptcy judgeship for the middle district of Pennsylvania.

(P) One additional bankruptcy judgeship for the district of Puerto Rico.

(Q) One additional bankruptcy judgeship for the western district of Tennessee.

(R) One additional bankruptcy judgeship for the eastern district of Virginia.

(2) VACANCIES.—The first vacancy occurring in the office of

a bankruptcy judge in each of the judicial districts set forth in

paragraph (1) shall not be filled if the vacancy—

(A) results from the death, retirement, resignation, or

removal of a bankruptcy judge; and

(B) occurs 5 years or more after the appointment date

of a bankruptcy judge appointed under paragraph (1).

(c) EXTENSIONS.—

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trict of Delaware, the district of Puerto Rico, the district of

South Carolina, and the eastern district of Tennessee under

paragraphs (1), (3), (7), (8), and (9) of section 3(a) of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note) are extended

until the first vacancy occurring in the office of a bankruptcy

judge in the applicable district resulting from the death, retirement, resignation, or removal of a bankruptcy judge and

occurring—

(A) 8 years or more after November 8, 1993, with respect to the northern district of Alabama;

(B) 10 years or more after October 28, 1993, with respect to the district of Delaware;

(C) 8 years or more after August 29, 1994, with respect

to the district of Puerto Rico;

(D) 8 years or more after June 27, 1994, with respect

to the district of South Carolina; and

(E) 8 years or more after November 23, 1993, with respect to the eastern district of Tennessee.

(2) APPLICABILITY OF OTHER PROVISIONS.—All other provisions of section 3 of the Bankruptcy Judgeship Act of 1992 (28

U.S.C. 152 note) remain applicable to temporary judgeship positions referred to in this subsection.

(d) TECHNICAL AMENDMENTS.—Section 152(a) of title 28,

United States Code, is amended—

(1) in paragraph (1), by striking the first sentence and inserting the following: ‘‘Each bankruptcy judge to be appointed

for a judicial district, as provided in paragraph (2), shall be

appointed by the United States court of appeals for the circuit

in which such district is located.’’; and

(2) in paragraph (2)—

(A) in the item relating to the middle district of Georgia, by striking ‘‘2’’ and inserting ‘‘3’’; and

(B) in the collective item relating to the middle and

southern districts of Georgia, by striking ‘‘Middle and

Southern . . . . . . 1’’.

(e) EFFECTIVE DATE.—The amendments made by this section

shall take effect on the date of enactment of this Act.

SEC. 1226. COMPENSATING TRUSTEES.

Section 1326 of title 11, United States Code, is amended—

(1) in subsection (b)—

(A) in paragraph (1), by striking ‘‘and’’;

(B) in paragraph (2), by striking the period at the end

and inserting ‘‘; and’’; and

(C) by adding at the end the following:

‘‘(3) if a chapter 7 trustee has been allowed compensation

due to the conversion or dismissal of the debtor’s prior case pursuant to section 707(b), and some portion of that compensation

remains unpaid in a case converted to this chapter or in the

case dismissed under section 707(b) and refiled under this

chapter, the amount of any such unpaid compensation, which

shall be paid monthly—

‘‘(A) by prorating such amount over the remaining duration of the plan; and

‘‘(B) by monthly payments not to exceed the greater of—

154

‘‘(i) $25; or

‘‘(ii) the amount payable to unsecured nonpriority

creditors, as provided by the plan, multiplied by 5 percent, and the result divided by the number of months

in the plan.’’; and

(2) by adding at the end the following:

‘‘(d) Notwithstanding any other provision of this title—

‘‘(1) compensation referred to in subsection (b)(3) is payable

and may be collected by the trustee under that paragraph, even

if such amount has been discharged in a prior proceeding

under this title; and

‘‘(2) such compensation is payable in a case under this

chapter only to the extent permitted by subsection (b)(3).’’.

SEC. 1227. AMENDMENT TO SECTION 362 OF TITLE 11, UNITED STATES

CODE.

Section 362(b)(18) of title 11, United States Code, is amended

to read as follows:

‘‘(18) under subsection (a) of the creation or perfection of a

statutory lien for an ad valorem property tax, or a special tax

or special assessment on real property whether or not ad valorem, imposed by a governmental unit, if such tax or assessment

comes due after the filing of the petition;’’.

SEC. 1228. JUDICIAL EDUCATION.

The Director of the Federal Judicial Center, in consultation

with the Director of the Executive Office for United States Trustees,

shall develop materials and conduct such training as may be useful

to courts in implementing this Act and the amendments made by

this Act, including the requirements relating to the means test and

reaffirmations under section 707(b) of title 11, United States Code,

as amended by this Act.

SEC. 1229. RECLAMATION.

(a) RIGHTS AND POWERS OF THE TRUSTEE.—Section 546(c) of

title 11, United States Code, is amended to read as follows:

‘‘(c)(1) Except as provided in subsection (d) of this section and

subsection (c) of section 507, and subject to the prior rights of holders of security interests in such goods or the proceeds thereof, the

rights and powers of the trustee under sections 544(a), 545, 547,

and 549 are subject to the right of a seller of goods that has sold

goods to the debtor, in the ordinary course of such seller’s business,

to reclaim such goods if the debtor has received such goods while

insolvent, not later than 45 days after the date of the commencement

of a case under this title, but such seller may not reclaim such

goods unless such seller demands in writing reclamation of such

goods—

‘‘(A) not later than 45 days after the date of receipt of such

goods by the debtor; or

‘‘(B) not later than 20 days after the date of commencement

of the case, if the 45-day period expires after the commencement

of the case.

‘‘(2) If a seller of goods fails to provide notice in the manner described in paragraph (1), the seller still may assert the rights contained in section 503(b)(7).’’.

155

(b) ADMINISTRATIVE EXPENSES.—Section 503(b) of title 11,

United States Code, as amended by this Act, is amended by adding

at the end the following:

‘‘(10) the value of any goods received by the debtor not later

than 20 days after the date of commencement of a case under

this title in which the goods have been sold to the debtor in the

ordinary course of such debtor’s business.’’.

SEC. 1230. PROVIDING REQUESTED TAX DOCUMENTS TO THE COURT.

(a) CHAPTER 7 CASES.—The court shall not grant a discharge

in the case of an individual seeking bankruptcy under chapter 7 of

title 11, United States Code, unless requested tax documents have

been provided to the court.

(b) CHAPTER 11 AND CHAPTER 13 CASES.—The court shall not

confirm a plan of reorganization in the case of an individual under

chapter 11 or 13 of title 11, United States Code, unless requested

tax documents have been filed with the court.

(c) DOCUMENT RETENTION.—The court shall destroy documents

submitted in support of a bankruptcy claim not sooner than 3 years

after the date of the conclusion of a bankruptcy case filed by an individual under chapter 7, 11, or 13 of title 11, United States Code.

In the event of a pending audit or enforcement action, the court may

extend the time for destruction of such requested tax documents.

SEC. 1231. ENCOURAGING CREDITWORTHINESS.

(a) SENSE OF THE CONGRESS.—It is the sense of the Congress

that—

(1) certain lenders may sometimes offer credit to consumers

indiscriminately, without taking steps to ensure that consumers

are capable of repaying the resulting debt, and in a manner

which may encourage certain consumers to accumulate additional debt; and

(2) resulting consumer debt may increasingly be a major

contributing factor to consumer insolvency.

(b) STUDY REQUIRED.—The Board of Governors of the Federal

Reserve System (hereafter in this section referred to as the ‘‘Board’’)

shall conduct a study of—

(1) consumer credit industry practices of soliciting and extending credit—

(A) indiscriminately;

(B) without taking steps to ensure that consumers are

capable of repaying the resulting debt; and

(C) in a manner that encourages consumers to accumulate additional debt; and

(2) the effects of such practices on consumer debt and insolvency.

(c) REPORT AND REGULATIONS.—Not later than 12 months after

the date of enactment of this Act, the Board—

(1) shall make public a report on its findings with respect

to the indiscriminate solicitation and extension of credit by the

credit industry;

(2) may issue regulations that would require additional

disclosures to consumers; and

(3) may take any other actions, consistent with its existing

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sponsible industrywide practices and to prevent resulting consumer debt and insolvency.

SEC. 1232. PROPERTY NO LONGER SUBJECT TO REDEMPTION.

Section 541(b) of title 11, United States Code, is amended by inserting after paragraph (8), as added by this Act, the following:

‘‘(9) subject to subchapter III of chapter 5, any interest of

the debtor in property where the debtor pledged or sold tangible

personal property (other than securities or written or printed

evidences of indebtedness or title) as collateral for a loan or advance of money given by a person licensed under law to make

such loans or advances, where—

‘‘(A) the tangible personal property is in the possession

of the pledgee or transferee;

‘‘(B) the debtor has no obligation to repay the money,

redeem the collateral, or buy back the property at a stipulated price; and

‘‘(C) neither the debtor nor the trustee have exercised

any right to redeem provided under the contract or State

law, in a timely manner as provided under State law and

section 108(b) of this title; or’’.

SEC. 1233. TRUSTEES.

(a) SUSPENSION AND TERMINATION OF PANEL TRUSTEES AND

STANDING TRUSTEES.—Section 586(d) of title 28, United States

Code, is amended—

(1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

(2) by adding at the end the following:

‘‘(2) A trustee whose appointment under subsection (a)(1) or

under subsection (b) is terminated or who ceases to be assigned to

cases filed under title 11, United States Code, may obtain judicial

review of the final agency decision by commencing an action in the

United States district court for the district for which the panel to

which the trustee is appointed under subsection (a)(1), or in the

United States district court for the district in which the trustee is

appointed under subsection (b) resides, after first exhausting all

available administrative remedies, which if the trustee so elects,

shall also include an administrative hearing on the record. Unless

the trustee elects to have an administrative hearing on the record,

the trustee shall be deemed to have exhausted all administrative

remedies for purposes of this paragraph if the agency fails to make

a final agency decision within 90 days after the trustee requests administrative remedies. The Attorney General shall prescribe procedures to implement this paragraph. The decision of the agency shall

be affirmed by the district court unless it is unreasonable and without cause based on the administrative record before the agency.’’.

(b) EXPENSES OF STANDING TRUSTEES.—Section 586(e) of title

28, United States Code, is amended by adding at the end the following:

‘‘(3) After first exhausting all available administrative remedies,

an individual appointed under subsection (b) may obtain judicial

review of final agency action to deny a claim of actual, necessary

expenses under this subsection by commencing an action in the

United States district court in the district where the individual resides. The decision of the agency shall be affirmed by the district

157

court unless it is unreasonable and without cause based upon the

administrative record before the agency.

‘‘(4) The Attorney General shall prescribe procedures to implement this subsection.’’.

SEC. 1234. BANKRUPTCY FORMS.

Section 2075 of title 28, United States Code, is amended by

adding at the end the following:

‘‘The bankruptcy rules promulgated under this section shall prescribe a form for the statement required under section 707(b)(2)(C)

of title 11 and may provide general rules on the content of such

statement.’’.

SEC. 1235. EXPEDITED APPEALS OF BANKRUPTCY CASES TO COURTS

OF APPEALS.

(a) IN GENERAL.—Section 158 of title 28, United States Code,

is amended—

(1) by striking subsection (d) and inserting the following:

‘‘(d)(1) In a case in which the appeal is heard by the district

court, the judgment, decision, order, or decree of the bankruptcy

judge shall be deemed a judgment, decision, order, or decree of the

district court entered 31 days after such appeal is filed with the district court, unless not later than 30 days after such appeal is filed

with the district court—

‘‘(A) the district court—

‘‘(i) files a decision on the appeal from the judgment,

decision, order, or decree of the bankruptcy judge; or

‘‘(ii) enters an order extending such 30-day period for

cause upon motion of a party or upon the court’s own motion; or

‘‘(B) all parties to the appeal file written consent that the

district court may retain such appeal until it enters a decision.

‘‘(2) For the purpose of this subsection, an appeal shall be considered filed with the district court on the date on which the notice

of appeal is filed, except that in a case in which the appeal is heard

by the district court because a party has made an election under

subsection (c)(1)(B), the appeal shall be considered filed with the

district court on the date on which such election is made.

‘‘(e) The courts of appeals shall have jurisdiction of appeals

from—

‘‘(1) all final judgments, decisions, orders, and decrees of

district courts entered under subsection (a);

‘‘(2) all final judgments, decisions, orders, and decrees of

bankruptcy appellate panels entered under subsection (b); and

‘‘(3) all judgments, decisions, orders, and decrees of district

courts entered under subsection (d) to the extent that such judgments, decisions, orders, and decrees would be reviewable by a

district court under subsection (a).

‘‘(f) In accordance with rules prescribed by the Supreme Court

of the United States under sections 2072 through 2077, the court of

appeals may, in its discretion, exercise jurisdiction over an appeal

from an interlocutory judgment, decision, order, or decree under

subsection (e)(3).’’.

(b) TECHNICAL AND CONFORMING AMENDMENTS.—

158

(1) Section 305(c) of title 11, United States Code, is amended by striking ‘‘section 158(d)’’ and inserting ‘‘subsection (e) or

(f) of section 158’’.

(2) Section 1334(d) of title 28, United States Code, is

amended by striking ‘‘section 158(d)’’ and inserting ‘‘subsection

(e) or (f) of section 158’’.

(3) Section 1452(b) of title 28, United States Code, is

amended by striking ‘‘section 158(d)’’ and inserting ‘‘subsection

(e) or (f) of section 158’’.

SEC. 1236. EXEMPTIONS.

Section 522(g)(2) of title 11, United States Code, is amended by

striking ‘‘subsection (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’.

TITLE XIII—CONSUMER CREDIT

DISCLOSURE

SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END CREDIT

PLAN.

(a) MINIMUM PAYMENT DISCLOSURES.—Section 127(b) of the

Truth in Lending Act (15 U.S.C. 1637(b)) is amended by adding at

the end the following:

‘‘(11)(A) In the case of an open end credit plan that requires

a minimum monthly payment of not more than 4 percent of the

balance on which finance charges are accruing, the following

statement, located on the front of the billing statement, disclosed clearly and conspicuously: ‘Minimum Payment Warning:

Making only the minimum payment will increase the interest

you pay and the time it takes to repay your balance. For example, making only the typical 2% minimum monthly payment on

a balance of $1,000 at an interest rate of 17% would take 88

months to repay the balance in full. For an estimate of the time

it would take to repay your balance, making only minimum

payments, call this toll-free number: llllll.’ (the blank

space to be filled in by the creditor).

‘‘(B) In the case of an open end credit plan that requires a

minimum monthly payment of more than 4 percent of the balance on which finance charges are accruing, the following statement, in a prominent location on the front of the billing statement, disclosed clearly and conspicuously: ‘Minimum Payment

Warning: Making only the required minimum payment will increase the interest you pay and the time it takes to repay your

balance. Making a typical 5% minimum monthly payment on a

balance of $300 at an interest rate of 17% would take 24

months to repay the balance in full. For an estimate of the time

it would take to repay your balance, making only minimum

monthly payments, call this toll-free number: llllll.’ (the

blank space to be filled in by the creditor).

‘‘(C) Notwithstanding subparagraphs (A) and (B), in the

case of a creditor with respect to which compliance with this

title is enforced by the Federal Trade Commission, the following

statement, in a prominent location on the front of the billing

statement, disclosed clearly and conspicuously: ‘Minimum Payment Warning: Making only the required minimum payment

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will increase the interest you pay and the time it takes to repay

your balance. For example, making only the typical 5% minimum monthly payment on a balance of $300 at an interest rate

of 17% would take 24 months to repay the balance in full. For

an estimate of the time it would take to repay your balance,

making only minimum monthly payments, call the Federal

Trade Commission at this toll-free number: llllll.’ (the

blank space to be filled in by the creditor). A creditor who is

subject to this subparagraph shall not be subject to subparagraph (A) or (B).

‘‘(D) Notwithstanding subparagraph (A), (B), or (C), in

complying with any such subparagraph, a creditor may substitute an example based on an interest rate that is greater than

17 percent. Any creditor that is subject to subparagraph (B)

may elect to provide the disclosure required under subparagraph (A) in lieu of the disclosure required under subparagraph

(B).

‘‘(E) The Board shall, by rule, periodically recalculate, as

necessary, the interest rate and repayment period under subparagraphs (A), (B), and (C).

‘‘(F)(i) The toll-free telephone number disclosed by a creditor or the Federal Trade Commission under subparagraph (A),

(B), or (G), as appropriate, may be a toll-free telephone number

established and maintained by the creditor or the Federal

Trade Commission, as appropriate, or may be a toll-free telephone number established and maintained by a third party for

use by the creditor or multiple creditors or the Federal Trade

Commission, as appropriate. The toll-free telephone number

may connect consumers to an automated device through which

consumers may obtain information described in subparagraph

(A), (B), or (C), by inputting information using a touch-tone

telephone or similar device, if consumers whose telephones are

not equipped to use such automated device are provided the opportunity to be connected to an individual from whom the information described in subparagraph (A), (B), or (C), as applicable, may be obtained. A person that receives a request for information described in subparagraph (A), (B), or (C) from an obligor through the toll-free telephone number disclosed under subparagraph (A), (B), or (C), as applicable, shall disclose in response to such request only the information set forth in the

table promulgated by the Board under subparagraph (H)(i).

‘‘(ii)(I) The Board shall establish and maintain for a period

not to exceed 24 months following the effective date of the Bankruptcy Reform Act of 2000, a toll-free telephone number, or provide a toll-free telephone number established and maintained

by a third party, for use by creditors that are depository institutions (as defined in section 3 of the Federal Deposit Insurance

Act), including a Federal credit union or State credit union (as

defined in section 101 of the Federal Credit Union Act (12

U.S.C. 1752)), with total assets not exceeding $250,000,000. The

toll-free telephone number may connect consumers to an automated device through which consumers may obtain information

described in subparagraph (A) or (B), as applicable, by

inputting information using a touch-tone telephone or similar

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device, if consumers whose telephones are not equipped to use

such automated device are provided the opportunity to be connected to an individual from whom the information described

in subparagraph (A) or (B), as applicable, may be obtained. A

person that receives a request for information described in subparagraph (A) or (B) from an obligor through the toll-free telephone number disclosed under subparagraph (A) or (B), as applicable, shall disclose in response to such request only the information set forth in the table promulgated by the Board

under subparagraph (H)(i). The dollar amount contained in

this subclause shall be adjusted according to an indexing mechanism established by the Board.

‘‘(II) Not later than 6 months prior to the expiration of the

24-month period referenced in subclause (I), the Board shall

submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking and Financial Services of the House of Representatives a report on the

program described in subclause (I).

‘‘(G) The Federal Trade Commission shall establish and

maintain a toll-free number for the purpose of providing to consumers the information required to be disclosed under subparagraph (C).

‘‘(H) The Board shall—

‘‘(i) establish a detailed table illustrating the approximate number of months that it would take to repay an outstanding balance if a consumer pays only the required minimum monthly payments and if no other advances are

made, which table shall clearly present standardized information to be used to disclose the information required to be

disclosed under subparagraph (A), (B), or (C), as applicable;

‘‘(ii) establish the table required under clause (i) by

assuming—

‘‘(I) a significant number of different annual percentage rates;

‘‘(II) a significant number of different account balances;

‘‘(III) a significant number of different minimum

payment amounts; and

‘‘(IV) that only minimum monthly payments are

made and no additional extensions of credit are obtained; and

‘‘(iii) promulgate regulations that provide instructional

guidance regarding the manner in which the information

contained in the table established under clause (i) should

be used in responding to the request of an obligor for any

information required to be disclosed under subparagraph

(A), (B), or (C).

‘‘(I) The disclosure requirements of this paragraph do not

apply to any charge card account, the primary purpose of which

is to require payment of charges in full each month.

‘‘(J) A creditor that maintains a toll-free telephone number

for the purpose of providing customers with the actual number

of months that it will take to repay the customer’s outstanding

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balance is not subject to the requirements of subparagraph (A)

or (B).

‘‘(K) A creditor that maintains a toll-free telephone number

for the purpose of providing customers with the actual number

of months that it will take to repay an outstanding balance

shall include the following statement on each billing statement:

‘Making only the minimum payment will increase the interest

you pay and the time it takes to repay your balance. For more

information, call this toll-free number: llll.’ (the blank

space to be filled in by the creditor).’’.

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board of Governors of the Federal

Reserve System (hereafter in this title referred to as the

‘‘Board’’) shall promulgate regulations implementing the requirements of section 127(b)(11) of the Truth in Lending Act, as

added by subsection (a) of this section.

(2) EFFECTIVE DATE.—Section 127(b)(11) of the Truth in

Lending Act, as added by subsection (a) of this section, and the

regulations issued under paragraph (1) of this subsection shall

not take effect until the later of—

(A) 18 months after the date of enactment of this Act;

or

(B) 12 months after the publication of such final regulations by the Board.

(c) STUDY OF FINANCIAL DISCLOSURES.—

(1) IN GENERAL.—The Board may conduct a study to determine the types of information available to potential borrowers

from consumer credit lending institutions regarding factors

qualifying potential borrowers for credit, repayment requirements, and the consequences of default.

(2) FACTORS FOR CONSIDERATION.—In conducting a study

under paragraph (1), the Board should, in consultation with

the other Federal banking agencies (as defined in section 3 of

the Federal Deposit Insurance Act), the National Credit Union

Administration, and the Federal Trade Commission, consider

the extent to which—

(A) consumers, in establishing new credit arrangements, are aware of their existing payment obligations, the

need to consider those obligations in deciding to take on

new credit, and how taking on excessive credit can result

in financial difficulty;

(B) minimum periodic payment features offered in connection with open end credit plans impact consumer default

rates;

(C) consumers make only the required minimum payment under open end credit plans;

(D) consumers are aware that making only required

minimum payments will increase the cost and repayment

period of an open end credit obligation; and

(E) the availability of low minimum payment options

is a cause of consumers experiencing financial difficulty.

(3) REPORT TO CONGRESS.—Findings of the Board in connection with any study conducted under this subsection shall be

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ommendations for legislative initiatives, if any, of the Board,

based on its findings.

SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY A DWELLING.

(a) OPEN END CREDIT EXTENSIONS.— (1) CREDIT APPLICATIONS.—Section 127A(a)(13) of the

Truth in Lending Act (15 U.S.C. 1637a(a)(13)) is amended—

(A) by striking ‘‘CONSULTATION OF TAX ADVISER.—A

statement that the’’ and inserting the following: ‘‘TAX DE- DUCTIBILITY.—A statement that—

‘‘(A) the’’; and

(B) by striking the period at the end and inserting the

following: ‘‘; and

‘‘(B) in any case in which the extension of credit exceeds

the fair market value (as defined under the Internal Revenue Code of 1986) of the dwelling, the interest on the portion of the credit extension that is greater than the fair

market value of the dwelling is not tax deductible for Federal income tax purposes.’’.

(2) CREDIT ADVERTISEMENTS.—Section 147(b) of the Truth

in Lending Act (15 U.S.C. 1665b(b)) is amended—

(A) by striking ‘‘If any’’ and inserting the following:

‘‘(1) IN GENERAL.—If any’’; and

(B) by adding at the end the following:

‘‘(2) CREDIT IN EXCESS OF FAIR MARKET VALUE.—Each advertisement described in subsection (a) that relates to an extension of credit that may exceed the fair market value of the

dwelling, and which advertisement is disseminated in paper

form to the public or through the Internet, as opposed to by

radio or television, shall include a clear and conspicuous statement that—

‘‘(A) the interest on the portion of the credit extension

that is greater than the fair market value of the dwelling

is not tax deductible for Federal income tax purposes; and

‘‘(B) the consumer should consult a tax adviser for further information regarding the deductibility of interest and

charges.’’.

(b) NON-OPEN END CREDIT EXTENSIONS.—

(1) CREDIT APPLICATIONS.—Section 128 of the Truth in

Lending Act (15 U.S.C. 1638) is amended—

(A) in subsection (a), by adding at the end the following:

‘‘(15) In the case of a consumer credit transaction that is secured by the principal dwelling of the consumer, in which the

extension of credit may exceed the fair market value of the

dwelling, a clear and conspicuous statement that—

‘‘(A) the interest on the portion of the credit extension

that is greater than the fair market value of the dwelling

is not tax deductible for Federal income tax purposes; and

‘‘(B) the consumer should consult a tax adviser for further information regarding the deductibility of interest and

charges.’’; and

(B) in subsection (b), by adding at the end the following:

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‘‘(3) In the case of a credit transaction described in paragraph

(15) of subsection (a), disclosures required by that paragraph shall

be made to the consumer at the time of application for such extension of credit.’’.

(2) CREDIT ADVERTISEMENTS.—Section 144 of the Truth in

Lending Act (15 U.S.C. 1664) is amended by adding at the end

the following:

‘‘(e) Each advertisement to which this section applies that relates to a consumer credit transaction that is secured by the principal dwelling of a consumer in which the extension of credit may

exceed the fair market value of the dwelling, and which advertisement is disseminated in paper form to the public or through the

Internet, as opposed to by radio or television, shall clearly and conspicuously state that—

‘‘(1) the interest on the portion of the credit extension that

is greater than the fair market value of the dwelling is not tax

deductible for Federal income tax purposes; and

‘‘(2) the consumer should consult a tax adviser for further

information regarding the deductibility of interest and

charges.’’.

(c) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations

implementing the amendments made by this section.

(2) EFFECTIVE DATE.—Regulations issued under paragraph

(1) shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act;

or

(B) 12 months after the date of publication of such

final regulations by the Board.

SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY RATES’’.

(a) INTRODUCTORY RATE DISCLOSURES.—Section 127(c) of the

Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding at

the end the following:

‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRODUCTORY

RATES’.—

‘‘(A) IN GENERAL.—Except as provided in subparagraph

(B), an application or solicitation to open a credit card account and all promotional materials accompanying such

application or solicitation for which a disclosure is required

under paragraph (1), and that offers a temporary annual

percentage rate of interest, shall—

‘‘(i) use the term ‘introductory’ in immediate proximity to each listing of the temporary annual percentage rate applicable to such account, which term shall

appear clearly and conspicuously;

‘‘(ii) if the annual percentage rate of interest that

will apply after the end of the temporary rate period

will be a fixed rate, state in a clear and conspicuous

manner in a prominent location closely proximate to

the first listing of the temporary annual percentage

rate (other than a listing of the temporary annual percentage rate in the tabular format described in section

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riod will end and the annual percentage rate that will

apply after the end of the introductory period; and

‘‘(iii) if the annual percentage rate that will apply

after the end of the temporary rate period will vary in

accordance with an index, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing in the tabular format

prescribed by section 122(c)), the time period in which

the introductory period will end and the rate that will

apply after that, based on an annual percentage rate

that was in effect within 60 days before the date of

mailing the application or solicitation.

‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of subparagraph (A) do not apply with respect to any listing of a temporary annual percentage rate on an envelope or other enclosure in which an application or solicitation to open a

credit card account is mailed.

‘‘(C) CONDITIONS FOR INTRODUCTORY RATES.—An application or solicitation to open a credit card account for

which a disclosure is required under paragraph (1), and

that offers a temporary annual percentage rate of interest

shall, if that rate of interest is revocable under any circumstance or upon any event, clearly and conspicuously

disclose, in a prominent manner on or with such application or solicitation—

‘‘(i) a general description of the circumstances that

may result in the revocation of the temporary annual

percentage rate; and

‘‘(ii) if the annual percentage rate that will apply

upon the revocation of the temporary annual percentage rate—

‘‘(I) will be a fixed rate, the annual percentage

rate that will apply upon the revocation of the temporary annual percentage rate; or

‘‘(II) will vary in accordance with an index,

the rate that will apply after the temporary rate,

based on an annual percentage rate that was in effect within 60 days before the date of mailing the

application or solicitation.

‘‘(D) DEFINITIONS.—In this paragraph—

‘‘(i) the terms ‘temporary annual percentage rate of

interest’ and ‘temporary annual percentage rate’ mean

any rate of interest applicable to a credit card account

for an introductory period of less than 1 year, if that

rate is less than an annual percentage rate that was in

effect within 60 days before the date of mailing the application or solicitation; and

‘‘(ii) the term ‘introductory period’ means the maximum time period for which the temporary annual percentage rate may be applicable.

‘‘(E) RELATION TO OTHER DISCLOSURE REQUIREMENTS.—Nothing in this paragraph may be construed to

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quired by paragraph (1) or any other provision of this subsection.’’.

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations

implementing the requirements of section 127(c)(6) of the Truth

in Lending Act, as added by this section.

(2) EFFECTIVE DATE.—Section 127(c)(6) of the Truth in

Lending Act, as added by this section, and regulations issued

under paragraph (1) of this subsection shall not take effect until

the later of—

(A) 12 months after the date of enactment of this Act;

or

(B) 12 months after the date of publication of such

final regulations by the Board.

SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.

(a) INTERNET-BASED APPLICATIONS AND SOLICITATIONS.—Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is

amended by adding at the end the following:

‘‘(7) INTERNET-BASED APPLICATIONS AND SOLICITATIONS.—

‘‘(A) IN GENERAL.—In any solicitation to open a credit

card account for any person under an open end consumer

credit plan using the Internet or other interactive computer

service, the person making the solicitation shall clearly and

conspicuously disclose—

‘‘(i) the information described in subparagraphs

(A) and (B) of paragraph (1); and

‘‘(ii) the information described in paragraph (6).

‘‘(B) FORM OF DISCLOSURE.—The disclosures required

by subparagraph (A) shall be—

‘‘(i) readily accessible to consumers in close proximity to the solicitation to open a credit card account;

and

‘‘(ii) updated regularly to reflect the current policies, terms, and fee amounts applicable to the credit

card account.

‘‘(C) DEFINITIONS.—For purposes of this paragraph—

‘‘(i) the term ‘Internet’ means the international

computer network of both Federal and non-Federal

interoperable packet switched data networks; and

‘‘(ii) the term ‘interactive computer service’ means

any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically

a service or system that provides access to the Internet

and such systems operated or services offered by libraries or educational institutions.’’.

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations

implementing the requirements of section 127(c)(7) of the Truth

in Lending Act, as added by this section.

(2) EFFECTIVE DATE.—The amendment made by subsection

(a) and the regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

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(A) 12 months after the date of enactment of this Act;

or

(B) 12 months after the date of publication of such

final regulations by the Board.

SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT DEADLINES

AND PENALTIES.

(a) DISCLOSURES RELATED TO LATE PAYMENT DEADLINES AND

PENALTIES.—Section 127(b) of the Truth in Lending Act (15 U.S.C.

1637(b)) is amended by adding at the end the following:

‘‘(12) If a late payment fee is to be imposed due to the failure of the obligor to make payment on or before a required payment due date, the following shall be stated clearly and conspicuously on the billing statement:

‘‘(A) The date on which that payment is due or, if different, the earliest date on which a late payment fee may

be charged.

‘‘(B) The amount of the late payment fee to be imposed

if payment is made after such date.’’.

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations

implementing the requirements of section 127(b)(12) of the

Truth in Lending Act, as added by this section.

(2) EFFECTIVE DATE.—The amendment made by subsection

(a) and regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act;

or

(B) 12 months after the date of publication of such

final regulations by the Board.

SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO

INCUR FINANCE CHARGES.

(a) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR

FINANCE CHARGES.—Section 127 of the Truth in Lending Act (15

U.S.C. 1637) is amended by adding at the end the following:

‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR

FINANCE CHARGES.—A creditor of an account under an open end

consumer credit plan may not terminate an account prior to its expiration date solely because the consumer has not incurred finance

charges on the account. Nothing in this subsection shall prohibit a

creditor from terminating an account for inactivity in 3 or more

consecutive months.’’.

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations

implementing the requirements of section 127(h) of the Truth in

Lending Act, as added by this section.

(2) EFFECTIVE DATE.—The amendment made by subsection

(a) and regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act;

or

(B) 12 months after the date of publication of such

final regulations by the Board.

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SEC. 1307. DUAL USE DEBIT CARD.

(a) REPORT.—The Board may conduct a study of, and present

to Congress a report containing its analysis of, consumer protections

under existing law to limit the liability of consumers for unauthorized use of a debit card or similar access device. Such report, if submitted, shall include recommendations for legislative initiatives, if

any, of the Board, based on its findings.

(b) CONSIDERATIONS.—In preparing a report under subsection

(a), the Board may include—

(1) the extent to which section 909 of the Electronic Fund

Transfer Act (15 U.S.C. 1693g), as in effect at the time of the

report, and the implementing regulations promulgated by the

Board to carry out that section provide adequate unauthorized

use liability protection for consumers;

(2) the extent to which any voluntary industry rules have

enhanced or may enhance the level of protection afforded consumers in connection with such unauthorized use liability; and

(3) whether amendments to the Electronic Fund Transfer

Act (15 U.S.C. 1693 et seq.), or revisions to regulations promulgated by the Board to carry out that Act, are necessary to further address adequate protection for consumers concerning unauthorized use liability.

SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO

DEPENDENT STUDENTS.

(a) STUDY.—

(1) IN GENERAL.—The Board shall conduct a study regarding the impact that the extension of credit described in paragraph (2) has on the rate of bankruptcy cases filed under title

11, United States Code.

(2) EXTENSION OF CREDIT.—The extension of credit described in this paragraph is the extension of credit to individuals who are—

(A) claimed as dependents for purposes of the Internal

Revenue Code of 1986; and

(B) enrolled within 1 year of successfully completing all

required secondary education requirements and on a fulltime basis, in postsecondary educational institutions.

(b) REPORT.—Not later than 1 year after the date of enactment

of this Act, the Board shall submit to the Senate and the House of

Representatives a report summarizing the results of the study conducted under subsection (a).

SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS.

(a) REGULATIONS.—Not later than 6 months after the date of

enactment of this Act, the Board, in consultation with the other Federal banking agencies (as defined in section 3 of the Federal Deposit

Insurance Act), the National Credit Union Administration Board,

and the Federal Trade Commission, shall promulgate regulations to

provide guidance regarding the meaning of the term ‘‘clear and conspicuous’’, as used in subparagraphs (A), (B), and (C) of section

127(b)(11) and clauses (ii) and (iii) of section 127(c)(6)(A) of the

Truth in Lending Act.

(b) EXAMPLES.—Regulations promulgated under subsection (a)

shall include examples of clear and conspicuous model disclosures

168

for the purposes of disclosures required by the provisions of the

Truth in Lending Act referred to in subsection (a).

(c) STANDARDS.—In promulgating regulations under this section, the Board shall ensure that the clear and conspicuous standard required for disclosures made under the provisions of the Truth

in Lending Act referred to in subsection (a) can be implemented in

a manner which results in disclosures which are reasonably understandable and designed to call attention to the nature and significance of the information in the notice.

SEC. 1310. ENFORCEMENT OF CERTAIN FOREIGN JUDGMENTS

BARRED.

(a) IN GENERAL.—Notwithstanding any other provision of law

or contract, a court within the United States shall not recognize or

enforce any judgment rendered in a foreign court if, by clear and

convincing evidence, the court in which recognition or enforcement

of the judgment is sought determines that the judgment gives effect

to any purported right or interest derived, directly or indirectly,

from any fraudulent misrepresentation or fraudulent omission that

occurred in the United States during the period beginning on January 1, 1975, and ending on December 31, 1993.

(b) EXCEPTION.—Subsection (a) shall not prevent recognition or

enforcement of a judgment rendered in a foreign court if the foreign

tribunal rendering judgment giving effect to the right or interest

concerned determines that no fraudulent misrepresentation or

fraudulent omission described in subsection (a) occurred.

TITLE XIV—GENERAL EFFECTIVE DATE;

APPLICATION OF AMENDMENTS

SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

(a) EFFECTIVE DATE.—Except as otherwise provided in this Act,

this Act and the amendments made by this Act shall take effect 180

days after the date of enactment of this Act.

(b) APPLICATION OF AMENDMENTS.—Except as otherwise provided in this Act, the amendments made by this Act shall not apply

with respect to cases commenced under title 11, United States Code,

before the effective date of this Act.

HENRY HYDE,

GEORGE W. GEKAS,

DICK ARMEY,

Managers on the Part of the House.

JESSE HELMS,

RICHARD G. LUGAR,

ROD GRAMS,

JOE BIDEN,

Managers on the Part of the Senate.

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