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[House Report 107-3]
[From the U.S. Government Publishing Office]

107th Congress                                              Rept. 107-3
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1
_______________________________________________________________________

                                     

    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                               __________

                              R E P O R T

                                 of the

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                              to accompany

                                H.R. 333

                             together with

                            DISSENTING VIEWS

 February 26, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed
                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
89-000                     WASHINGTON : 2001

107th Congress                                              Rept. 107-3
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                                _______
                                

 February 26, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 333]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 333) amending title 11, United States Code, and for 
other purposes, having considered the same, report favorably 
thereon with amendments and recommend that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     3
Hearings.........................................................    15
Committee Consideration..........................................    16
Votes of the Committee...........................................    16
Committee Oversight Findings.....................................    23
Performance Goals and Objectives.................................    24
New Budget Authority and Tax Expenditures........................    24
Committee Cost Estimate..........................................    24
Committee Jurisdiction Letters...................................    25
Constitutional Authority Statement...............................    26
Preemption of State Law..........................................    26
Section-by-Section Analysis and Discussion.......................    27
Changes in Existing Law Made by the Bill, as Reported............   118
Markup Transcript................................................   300
Dissenting Views.................................................   455
Additional Dissenting Views......................................   488

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:

    Page 174, line 5, strike ``30.76'' and insert ``33.87''.

    Page 316, strike line 16 and insert the following:

            (1) by redesignating section 407 as 407A;

    Beginning on page 330, strike line 19 and all that follows 
through line 10 on page 331 (and make such technical and 
conforming changes as may be appropriate).

    Page 356, beginning on line 5, strike ``and amended by this 
Act, is reenacted.'' and insert ``is hereby reenacted, and as 
here reenacted is amended by this Act.''.

    Page 356, line 20, strike ``2001'' and insert ``2004''.

    Page 368, line 4, strike ``and (38)'' and insert ``, (38), 
and (54A)''.

    Page 380, strike lines 19 through 21, and insert the 
following:

    (e) Effective Dates.--(1) Except as provided in paragraph 
(2), this section and the amendments made by this section shall 
take effect on the date of the enactment of this Act.
    (2) With respect to the temporary bankruptcy judgeship 
authorized for the district of South Carolina under paragraph 
(8) of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 
note), subsection (c)(1) as it applies to the extension 
specified in subparagraph (D) of such subsection shall take 
effect immediately before December 31, 2000.

                             The Amendment

    H.R. 333, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2001, was ordered reported with an amendment. 
The amendment made conforming revisions to the bill.

                          Purpose and Summary

    H.R. 333, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2001, is a comprehensive package of reform 
measures pertaining to both consumer and business bankruptcy 
cases. The purpose of the bill is to improve bankruptcy law and 
practice by restoring personal responsibility and integrity in 
the bankruptcy system and by ensuring that the system is fair 
for both debtors and creditors.
    The heart of H.R. 333's consumer bankruptcy reforms is the 
implementation of an income/expense screening mechanism 
(``needs-based bankruptcy relief'') to ensure that debtors 
repay creditors the maximum they can afford. In addition to 
implementing needs-based bankruptcy relief, H.R. 333 institutes 
a panoply of other consumer bankruptcy reforms. These include 
new eligibility standards for bankruptcy relief, additional 
financial disclosure requirements for consumer debtors, and 
enhanced responsibilities for those charged with administering 
consumer bankruptcy cases. H.R. 333, likewise, institutes 
significant consumer protection reforms, including mandatory 
credit counseling requirements, required disclosures in 
connection with certain credit transactions, and protections 
against abusive practices with respect to reaffirmation 
agreements.
    The bill also includes extensive reforms pertinent to 
business bankruptcies. Many of these provisions are intended to 
heighten administrative scrutiny and judicial oversight of 
small business bankruptcy cases. In addition, the bill includes 
provisions designed to reduce systemic risk in the financial 
marketplace and clarify the treatment of tax claims in 
bankruptcy cases. H.R. 333 also creates a new form of 
bankruptcy relief for transnational insolvencies and includes 
provisions regarding family farmer debtors and health care 
providers.

                Background and Need for the Legislation

    Congressman George W. Gekas (for himself and 56 original 
cosponsors) introduced H.R. 333 on January 31, 2001. H.R. 333 
is the product of more than 3 years of Congressional 
consideration of bankruptcy reform legislation. As introduced, 
H.R. 333 is virtually identical to the conference report on 
H.R. 2415,\1\ the Gekas-Grassley Bankruptcy Reform Act of 2000, 
which passed the House by voice vote on October 12, 2000,\2\ 
and passed the Senate on December 7, 2000 by a vote of 70 to 
28.\3\ On December 19, 2000, the conference report was pocket-
vetoed by President Clinton.
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    \1\ H. Rep. No. 106-970 (2000). The only differences are H.R. 333's 
title and the deletion of section 1224 (pertaining to the Bankruptcy 
Administrator Program) from the conference report, as this provision 
was enacted into law. Federal Courts Improvement Act of 2000, Pub. L. 
No. 106-518, Sec. 501, 114 Stat. 2410, 2422 (2000).
    \2\ 146 Cong. Rec. H9840 (daily ed. Oct. 12, 2000)
    \3\ 146 Cong. Rec. S11730 (daily ed. Dec. 7, 2000). On October 19, 
2000, the Senate, by a vote of 89 to 0, agreed to a motion to proceed 
to consideration of the conference report on H.R. 2415. 146 Cong. Rec. 
S10770 (daily ed. Oct. 19, 2000). A further motion to proceed was 
agreed to in the Senate on October 27, 2000 by a vote of 87 to 1. 146 
Cong. Rec. S11205 (daily ed. Oct. 27, 2000). After a cloture motion 
failed by a vote of 53 to 30 on November 1, 2000, Senate Majority 
Leader Trent Lott moved to reconsider the vote. 146 Cong. Rec. S11450 
(daily ed. Nov. 1, 2000). On December 5, 2000, the Senate agreed to a 
cloture motion by a vote of 67 to 31 and passed the conference report 2 
days later. 146 Cong. Rec. S11553 (daily ed. Dec. 5, 2000).
---------------------------------------------------------------------------
    Support for bankruptcy reform legislation in the last two 
Congresses has been overwhelming and bipartisan. In the 105th 
Congress, for example, the House passed both H.R. 3150, the 
Bankruptcy Reform Act of 1998, and the conference report on 
that bill by a veto-proof margins.\4\ In the last Congress, the 
House passed H.R. 833, the predecessor to H.R. 2415, by a veto-
proof margin of 313 to 108.\5\ Bankruptcy reform legislation 
has also enjoyed broad bipartisan support in the Senate.\6\
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    \4\ 144 Cong. Rec. H4442 (daily ed. June 10, 1998) (vote on final 
passage of H.R. 3150 was 306 to 118); 144 Cong. Rec. H10239-40 (daily 
ed. Oct. 9, 1998) (vote on final passage of the conference report on 
H.R. 3150 was 300 to 125).
    \5\ 145 Cong. Rec. H2771 (daily ed. May 5, 1999).
    \6\ On February 2, 2000, H.R. 833 was laid before the Senate by 
unanimous consent. The Senate struck all of H.R. 833's language after 
its enacting clause and substituted the text of S. 625, as amended. 
H.R. 833, as amended, was then passed by the Senate in lieu of S. 625 
by a recorded vote of 83 to 14. 146 Cong. Rec. S255 (daily ed. Feb. 2, 
2000).
---------------------------------------------------------------------------
    The Judiciary Committee commenced its consideration of 
bankruptcy reform early in 105th Congress. On April 16, 1997, 
the Subcommittee on Commercial and Administrative Law conducted 
a hearing on the operation of the bankruptcy system that was 
combined with a status report from the National Bankruptcy 
Review Commission.\7\ This would be the first of 17 hearings on 
bankruptcy reform over the ensuing 4 years.\8\ Ten of these 
hearings were devoted solely to consideration of H.R. 333 and 
its predecessors, H.R. 3150 (the Bankruptcy Reform Act of 1998) 
and H.R. 833 (the Bankruptcy Reform Act of 1999). Over the 
course of these hearings, nearly 130 witnesses, representing 
nearly every major constituency in the bankruptcy community, 
testified. With regard to H.R. 833 alone, testimony was 
received from 69 witnesses, representing 23 organizations, with 
additional material submitted by other groups. In fact, the 
subcommittee's inaugural hearing on H.R. 833 was held jointly 
with the Senate Subcommittee on Administrative Oversight and 
the Courts on March 11, 1999.\9\ This marked the first time in 
more than 60 years that a bicameral hearing was held on the 
subject of bankruptcy reform.\10\
---------------------------------------------------------------------------
    \7\ Operation of the Bankruptcy System and Status Report from the 
National Bankruptcy Review Commission: Hearing Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary, 
105th Cong. (1997).
    \8\ The dates and subject matters of these hearings were as 
follows:

      April 16, 1997--Hearing on the operation of the bankruptcy 
      system and status report from the National Bankruptcy 
---------------------------------------------------------------------------
      Review Commission.

      April 30, 1997--Hearing on H.R. 764, ``Bankruptcy 
      Amendments of 1997,'' and H.R. 120, ``Bankruptcy Law 
      Technical Corrections Act of 1997.''

      October 9, 1997--Hearing on H.R. 2592, ``Private Trustee 
      Reform Act of 1997'' and review of post-confirmation fees 
      in chapter 11 cases.

      November 13, 1997--Hearing on the Report of the National 
      Bankruptcy Review Commission.

      February 12, 1998--Hearing on H.R. 2604, ``Religious 
      Liberty and Charitable Donation Protection Act of 1997.''

      March 10-11, 18-19, 1998--Hearings on H.R. 3150, 
      ``Bankruptcy Reform Act of 1998,'' H.R. 3146, ``Consumer 
      Lenders and Borrowers Bankruptcy Accountability Act of 
      1998,'' and H.R. 2500, ``Responsible Borrower Protection 
      Bankruptcy Act.''

      March 11-12, 18-19, 1999--Hearings on H.R. 833, 
      ``Bankruptcy Reform Act of 1999.''

      November 2, 1999--Joint oversight hearing on additional 
      bankruptcy judgeship needs.

      April 11, 2000--Oversight hearing on the limits on 
      regulatory powers under the Bankruptcy Code.''

      February 7-8, 2001--Hearings on H.R. 333, the ``Bankruptcy 
      Abuse Prevention and Consumer Protection Act of 2001.''
---------------------------------------------------------------------------
    \9\ Representatives on behalf of the Commercial Law League of 
America, the Credit Union National Association, MBNA America Bank, 
N.A., National Retail Federation, and the National Consumer Law Center 
also testified. Some of the nation's leading jurists and academics 
presented testimony as well. Bankruptcy Reform: Joint Hearing Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary and the Subcomm. on Administrative Oversight and the 
Courts of the Senate Comm. on the Judiciary, 106th Cong. (1999).
    \10\ Senators testifying at the hearing included Charles Grassley 
(R-Iowa), Joseph Biden (D-Del.) and Christopher Dodd (D-Conn.). House 
Members included Jim Moran (D-Va.), Pete Sessions (R-Texas) and Nick 
Smith (R-Mich.). Id. The March 16, 1999 hearing provided an opportunity 
for the subcommittee to hear divergent historical perspectives of 
consumer bankruptcy reform. Specific topics included an analysis of the 
history and significance of the ``fresh start'' discharge under 
American bankruptcy law, the impact of the Bankruptcy Reform Act of 
1978, the historical underpinnings of needs-based bankruptcy relief, 
and how bankruptcy affects the rights of creditors. Another panel 
examined the need for consumer bankruptcy reform from various 
perspectives. Bankruptcy Reform Act of 1999 (Pt. I): Hearing before the 
Subcomm. on Commercial and Administrative Law of the House Comm. on the 
Judiciary, 106th Cong. (1999).
    At its third hearing, on March 17, 1999, the subcommittee heard 
from many of the major organizations in the bankruptcy community, 
including the American Bankruptcy Institute, the American Financial 
Services Association, the National Association of Consumer Bankruptcy 
Attorneys, the National Bankruptcy Conference, the National Consumer 
Bankruptcy Coalition, the National Governors' Association, and the 
National Retail Federation, on the topic of consumer bankruptcy reform. 
A separate panel was devoted to judicial and administrative aspects of 
consumer bankruptcy reform. The hearing concluded with a statistical 
analysis of the needs-based reforms in H.R. 833. Bankruptcy Reform Act 
of 1999 (Pt. II): Hearing before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary, 106th Cong. 
(1999).
    The fourth and final hearing on H.R. 833 was held on March 18, 
1999. One panel focused on the treatment of domestic support 
obligations under the bill. Another panel offered various perspectives 
on business bankruptcy reform provisions in the bill from some of the 
major organizations in the bankruptcy community, including the AFL-CIO, 
American Bankers Association, American Bar Association/Business 
Bankruptcy Section, Commercial Law League of America, National 
Association of Credit Managers, and the Office of Chief Counsel for 
Advocacy at the Small Business Administration. The final panel examined 
a variety of other provisions in H.R. 833, including the treatment of 
tax claims in bankruptcy cases, international insolvencies, financial 
contracts, and chapter 12 (family farmer bankruptcy relief). Bankruptcy 
Reform Act of 1999 (Pt. III): Hearing before the Subcomm. on Commercial 
and Administrative Law of the House Comm. on the Judiciary, 106th Cong. 
(1999).
---------------------------------------------------------------------------
    It is also important to note that H.R. 333 is the product 
of extensive negotiation and compromise. Shortly after its 
predecessor, H.R. 833, was passed by the Senate last year, 
Members of the House and Senate, together with their staffs, 
spent nearly 7 months engaged in what was initially an informal 
conference to reconcile differences between the House and 
Senate passed versions of this bill. The product of these 
exhaustive efforts was the conference report on H.R. 2415, 
which is virtually identical to H.R. 333.
Consumer Bankruptcy
    Overview. With respect to its consumer provisions, H.R. 333 
responds to several significant developments. One of these 
developments was the exponential increase in consumer 
bankruptcy filings and the losses associated with these 
filings. Based on data released by the Administrative Office of 
the United States Courts, bankruptcy filings increased by more 
than 72 percent between 1994 and 1998.\11\ For the first time 
in our nation's history, bankruptcy filings exceeded one 
million in 1996.\12\ In calendar year 1997 alone, bankruptcy 
filings increased by more than 19 percent over the prior year. 
By 1998, the number of bankruptcy filings, according to the 
Administrative Office, reached an ``all-time high'' of more 
than 1.4 million cases.\13\ Although the most recent reporting 
periods indicate that filings have somewhat decreased, the 
Administrative Office states that they ``remain well above the 
one million mark.'' \14\ Paradoxically, this dramatic increase 
in bankruptcy filing rates has occurred during a period when 
the economy was generally robust, with relatively low 
unemployment and high consumer confidence.\15\
---------------------------------------------------------------------------
    \11\ Administrative Office for United States Courts News Release, 
Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000).
    \12\ Administrative Office for United States Courts News Release, 
Increase in Bankruptcy Filings Slowed in Calendar Year 1998, at 1 (Mar. 
1, 1999).
    \13\ Id.
    \14\ Administrative Office for United States Courts News Release, 
Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000). 
For example, the number of bankruptcy cases filed in fiscal year 2000 
exceeded 1.3 million. Id.
    \15\ See, e.g., Congressional Budget Office, Personal Bankruptcy: A 
Literature Review (Sept. 2000); Bankruptcy Reform: Joint Hearing Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary and the Subcomm. on Administrative Oversight and the 
Courts of the Senate Comm. on the Judiciary, 106th Cong. 97 (1999); 
Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before the 
Subcomm. on Commercial and Administrative Law of the House Comm. on the 
Judiciary, 105th Cong. 141 (1998).
---------------------------------------------------------------------------
    Coupled with this development was the release of a study 
estimating that financial losses attributable to bankruptcy 
filings in 1997 exceeded $44 billion.\16\ The committee 
received testimony in the last Congress stating that this 
figure, when amortized on a daily basis, amounts to a loss of 
``at least $110 million every day.'' \17\ Various other 
studies, which thereafter became available, concluded that some 
bankruptcy debtors can, in fact, repay a significant portion of 
their debts.\18\
---------------------------------------------------------------------------
    \16\ Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary, 105th Cong. 147 (1998).
    \17\ Bankruptcy Reform: Joint Hearing Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary 
and the Subcomm. on Administrative Oversight and the Courts of the 
Senate Comm. on the Judiciary, 106th Cong. 26 (1999). This estimated 
loss has been calculated to be $400 per household. Id.
    \18\ See, e.g., Bankruptcy Reform Act of 1999 (Part II): Hearing on 
H.R. 833 Before the Subcomm. on Commercial and Administrative Law of 
the House Comm. on the Judiciary, 106th Cong. 298 (1999) (statement of 
Thomas S. Neubig, Ernst & Young LLP--Policy Economics and Quantitative 
Analysis Group, concluding that ``large numbers of 1997 U.S. chapter 7 
filers had the ability to repay large portions of their debts''); Id. 
at 228-29 (statement of Michael E. Staten, Credit Research Center, 
concluding that ``about 25 percent of chapter 7 debtors could have 
repaid at least 30 percent of their non-housing debts over a 5-year 
repayment plan, after accounting for monthly expenses and housing 
payments'' and that ``[a]bout 5 percent of chapter 7 filers appeared 
capable of repaying all of their non-housing debt over a 5-year plan,'' 
although these ``calculations assumed income would remain unchanged 
relative to expenses over the 5 years''); Marianne B. Culhane & 
Michaela M. White, Taking the New Consumer Bankruptcy Model for a Test 
Drive: Means-Testing Real Chapter 7 Debtors, 7 Am. Bankr. L. J. 27, 31 
(1999) (concluding that 3.6% of sampled debtors ``emerged as apparent 
can-pays'').
---------------------------------------------------------------------------
    The consumer bankruptcy provisions of H.R. 333 address the 
needs of creditors as well as debtors. With respect to the 
interests of creditors, this legislation responds to many of 
the factors contributing to the increase in consumer bankruptcy 
filings, such as lack of personal financial accountability,\19\ 
the proliferation of serial filings, and the absence of 
effective oversight to eliminate abuse in the system. The 
bill's debtor protections consist of provisions allowing 
debtors to exempt certain education IRA plans, fortifying the 
Bankruptcy Code's exemptions for certain retirement pension 
funds, enhancing the professionalism standards for attorneys 
and others who assist consumer debtors with their bankruptcy 
cases, ensuring that debtors receive notice of alternatives to 
bankruptcy relief, requiring debtors to participate in debt 
repayment programs, and instituting a pilot program to study 
the effectiveness of consumer financial management programs.
---------------------------------------------------------------------------
    \19\ As one academic explained:

      [S]hoplifting is wrong; bankruptcy is also a moral act. 
      Bankruptcy is a moral as well as an economic act. There is 
      a conscious decision not to keep one's promises. It is a 
      decision not to reciprocate a benefit received, a good deed 
      done on the promise that you will reciprocate. Promise-
      keeping and reciprocity are the foundation of an economy 
---------------------------------------------------------------------------
      and healthy civil society.

Bankruptcy Reform: Joint Hearing Before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary and the Subcomm. 
on Administrative Oversight and the Courts of the Senate Comm. on the 
Judiciary, 106th Cong. (1999) 98 (statement of Prof. Todd Zywicki).
    Consumer creditor protections: needs-based reforms. Chapter 
7 is a form of bankruptcy relief where an individual debtor 
receives an immediate unconditional discharge of personal 
liability for certain debts in exchange for turning over his or 
her nonexempt assets to a bankruptcy trustee for liquidation 
and distribution to creditors.\20\ This ``unconditional 
discharge'' in chapter 7 contrasts with the ``conditional 
discharge'' provisions of chapter 13, under which a debtor 
commits to repay some portion of his or her financial 
obligations in exchange for retaining nonexempt assets and 
receiving a broader discharge of debt than is available under 
chapter 7.
---------------------------------------------------------------------------
    \20\ Under the Bankruptcy Code, only an individual may obtain a 
chapter 7 discharge. Thus, a corporation is not eligible to receive a 
discharge under chapter 7. 11 U.S.C. Sec. 727(a)(1).
---------------------------------------------------------------------------
    Allowing consumer debtors in financial distress to choose 
voluntarily an ``unconditional discharge'' has been a part of 
American bankruptcy law since the enactment of the Bankruptcy 
Act of 1898.\21\ The rationale of an unconditional discharge 
was explained by Congress more than 100 years ago:
---------------------------------------------------------------------------
    \21\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978).

        [W]hen an honest man is hopelessly down financially, 
        nothing is gained for the public by keeping him down, 
        but, on the contrary, the public good will be promoted 
        by having his assets distributed ratably as far as they 
        will go among his creditors and letting him start 
        anew.\22\
---------------------------------------------------------------------------
    \22\ H.R. Rep. No. 55-65, at 43 (1897).

    The heart of H.R. 333's consumer bankruptcy reforms is the 
implementation of a needs-based screening mechanism, which uses 
the debtor's income and expenses to assess repayment ability. 
The concept of needs-based bankruptcy relief has long been 
debated in the United States. In 1932, President Herbert 
Hoover, for instance, recommended to the Congress the 
---------------------------------------------------------------------------
following:

        The discretion of the courts in granting or refusing 
        discharges should be broadened, and they should be 
        authorized to postpone discharges for a time and 
        require bankrupts, during the period of suspension, to 
        make some satisfaction out of after-acquired property 
        as a condition to the granting of a full discharge.\23\
---------------------------------------------------------------------------
    \23\ President's Special Message to the Congress on Reform of 
Judicial Procedure, 69 Pub. Papers 83, 90 (Feb. 29, 1932).

    Congressional recognition of needs-based relief has been 
gradual. In 1938, chapter XIII (the predecessor to chapter 13 
of the Bankruptcy Code) was enacted as a purely voluntary form 
of bankruptcy relief that allowed a debtor to voluntarily 
propose a plan to repay creditors out of future earnings.\24\ 
Over the ensuing years, there continued to be repeated 
expressions of support for and opposition to needs-based 
bankruptcy reform.\25\ The Bankruptcy Reform Act of 1978,\26\ 
however, retained the principle that a debtor's decision to 
choose relief premised on repayment to creditors had to be 
``completely voluntary.'' \27\
---------------------------------------------------------------------------
    \24\ Chandler Act of 1938, 52 Stat. 840 (1938); Bankruptcy Reform 
Act of 1999 (Part II): Hearing on H.R. 833 Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary, 
106th Cong. 100 (1999) (statement of Prof. Lawrence P. King).
    \25\ See, e.g., Report of the Commission on the Bankruptcy Laws of 
the United States--July 1973, H.R. Doc. No. 93 137, pt. I, at 158 
(1973) (observing that ``proposals have been made to Congress from time 
to time that a debtor able to obtain relief under chapter XIII 
[predecessor of chapter 13] should be denied relief in straight 
bankruptcy''); Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm. 
No. 4 of the House Committee on the Judiciary, 90th Cong. (1967). 
Organizations that testified before Congress in 1967 in support of such 
reform included the American Bar Association, the American Bankers 
Association, the Chamber of Commerce of the United States, Credit Union 
National Association, Inc., the National Federation of Independent 
Businesses, and the American Industrial Bankers Association. Id. The 
Commission on the Bankruptcy Laws of the United States, while 
supporting the concept that repayment plans should be ``fostered,'' 
nevertheless concluded in 1973 that ``forced participation by a debtor 
in a plan requiring contributions out of future income has so little 
prospect for success that it should not be adopted as a feature of the 
bankruptcy system.'' Id. at 159.
    \26\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    \27\ H.R. Rep. No. 95-595, at 120 (1977) (observing that ``[t]he 
thirteenth amendment prohibits involuntary servitude'' and suggesting 
that ``a mandatory chapter 13, by forcing an individual to work for 
creditors, would violate this prohibition'').
---------------------------------------------------------------------------
    Although as originally enacted, the Bankruptcy Code 
provided that a chapter 7 case could only be dismissed for 
``cause,'' the Code was in 1984 amended to permit the court to 
dismiss a chapter 7 case for ``substantial abuse.'' \28\ This 
provision, codified in section 707(b) of the Bankruptcy 
Code,\29\ was added ``as part of a package of consumer credit 
amendments designed to reduce perceived abuses in the use of 
chapter 7.'' \30\ It was intended to respond ``to concerns that 
some debtors who could easily pay their creditors might resort 
to chapter 7 to avoid their obligations.'' \31\ In 1986, 
section 707(b) was further amended to allow a United States 
trustee (a Department of Justice official) to move for 
dismissal.\32\
---------------------------------------------------------------------------
    \28\ Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. 
L. No. 98-353, 98 Stat. 333.
    \29\ 11 U.S.C. Sec. 707(b).
    \30\ 6 Lawrence P. King et al., Collier on Bankruptcy para. 
707.LH[2], at 707-30 (15th ed. rev. 2000).
    \31\ Id. para. 707.04, at 707-15.
    \32\ Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986, Pub. L. No. 99-554, 100 Stat. 3008.
---------------------------------------------------------------------------
    Under current practice, section 707(b) motions are 
infrequently made for several reasons. First, neither the court 
nor the United States trustee is required to make these 
motions, even in cases evidencing obvious abuse of the 
bankruptcy system. Second, other parties in interest, such as 
chapter 7 trustees and creditors, are prohibited from filing 
these motions. In fact, section 707(b) provides that a motion 
under that provision may not even be made ``at the request or 
suggestion of any party in interest.'' \33\ Third, the standard 
for dismissal--substantial abuse--is inherently vague, which 
has lead to its disparate interpretation and application by the 
bankruptcy bench.\34\ Some courts, for example, hold that a 
debtor's ability to repay a significant portion of his or her 
debts out of future income constitutes substantial abuse and 
therefore is cause for dismissal; \35\ others require some 
evidence of moral turpitude.\36\ A fourth reason militating 
against filing section 707(b) motions is that the Bankruptcy 
Code codifies a presumption that favors granting a debtor a 
discharge.\37\
---------------------------------------------------------------------------
    \33\ 11 U.S.C. Sec. 707(b).
    \34\ See, e.g., David White, Disorder in the Court: Section 707(b) 
of the Bankruptcy Code, 1995-96 Ann. Survey of Bankr. L. 333, 355 
(1996) (noting that the courts ``have taken divergent views in an 
attempt to define the term'' and have resorted to ``a variety of 
methods'' in applying it to specific cases).
    \35\ See, e.g., In re Kelly , 841 F.2d 908, 913-14 (9th Cir. 1988) 
(observing that the ``principal factor to be considered in determining 
substantial abuse is the debtor's ability to repay debts for which a 
discharge is sought'').
    \36\ See, e.g., In re Braley, 103 B.R. 758 (Bankr. E.D. Va. 1989), 
aff'd, 110 B.R. 211 (E.D. Va. 1990). Notwithstanding the fact that the 
debtors in Braley had disposable monthly income of nearly $2,700, the 
bankruptcy court did not dismiss the case for substantial abuse. Id. at 
760. The court concluded, ``Based upon this legislative history, we are 
persuaded that no future income tests exists in 707(b) and if it did, 
as a finding of fact, the Braley family has insufficient future income 
to merit barring the door in light of the circumstances of this Navy 
family.'' Id. at 762.
    \37\ Section 707(b) of the Bankruptcy Code mandates that ``[t]here 
shall be a presumption in favor of granting the relief requested by the 
debtor.'' 11 U.S.C. Sec. 707(b).
---------------------------------------------------------------------------
    Over the course of its hearings in the last two Congresses, 
the committee received testimony explaining that if needs-based 
reforms and other measures were implemented, the rate of 
repayment to creditors would increase as more debtors are 
shifted into chapter 13 (a form of bankruptcy relief where the 
debtor commits to repay a portion or all of his debts in 
exchange for receiving a broad discharge of debt) as opposed to 
chapter 7 (a form of bankruptcy relief where the debtor 
receives an immediate discharge of personal liability on 
certain debts in exchange for turning over his or her nonexempt 
assets to the bankruptcy trustee for distribution to 
creditors).
    Section 102 implements the act's needs-based bankruptcy 
reforms. Subsection (a) amends section 707(b) of the Bankruptcy 
Code to permit a court, on its own motion, or on motion of the 
United States trustee, private trustee, bankruptcy 
administrator, or party in interest, to dismiss a chapter 7 
case for abuse if it was filed by an individual debtor whose 
debts are primarily consumer debts. Alternatively, section 
102(a) permits a chapter 7 case to be converted to a case under 
chapter 11 or chapter 13 on consent of the debtor.
    In addition, section 102(a) replaces the current law's 
presumption in favor of the debtor with a mandatory presumption 
of abuse that is triggered under certain conditions. Section 
102(a) requires a court to presume that abuse exists if the 
amount of the debtor's income remaining, after certain expenses 
and other specified amounts are deducted from the debtor's 
current monthly income (a defined term),\38\ when multiplied by 
60, exceeds the lower of the following: (1) 25 percent of the 
debtor's nonpriority unsecured claims, or $6000 (whichever is 
greater); or (2) $10,000. In addition to other specified 
expenses,\39\ the debtor's monthly expenses--exclusive of any 
payments for debts (unless otherwise permitted)--must be the 
applicable monthly amounts set forth in the Internal Revenue 
Service Financial Analysis Handbook as Necessary Expenses under 
the National and Local Standards categories and the debtor's 
actual monthly expenditures for items categorized as Other 
Necessary Expenses. For purposes of this provision, the 
expenses include those of the debtor, the debtor's dependents, 
and the debtor's spouse, if not otherwise a dependent. For 
purposes of determining whether the mandatory presumption of 
abuse applies under the needs-based test, section 102(a) 
permits the debtor to deduct certain other liabilities.
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    \38\ Section 102(b) defines ``current monthly income'' as the 
average monthly income from all sources that the debtor receives (or, 
in a joint case, the debtor and the debtor's spouse receive), without 
regard to whether it is taxable income, in the 6-month period preceding 
the date of determination. It includes any amount paid on a regular 
basis by any entity (other than the debtor or, in a joint case, the 
debtor and the debtor's spouse) 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. It excludes Social Security Act benefits 
and payments to victims of war crimes or crimes against humanity on 
account of their status as victims of such crimes.
    \39\ Section 102(a) mandates that the debtor's monthly expenses 
also include reasonably necessary expenses incurred to maintain the 
safety of the debtor and the debtor's family from family violence as 
identified in section 309 of the Family Violence Prevention and 
Services Act or other applicable law. In addition, the debtor may 
deduct up to an additional 5 percent of the food and clothing expense 
allowances under the National Standards category, if demonstrated to be 
reasonable and necessary.
    Other liabilities that may be deducted include the debtor's average 
monthly payments on account of secured debts, calculated as the total 
of all amounts scheduled as contractually due over the 60-month period 
following the filing of the bankruptcy, divided by 60 months. This 
amount may include any additional payments to secured creditors that a 
chapter 13 debtor must make to retain possession of a primary 
residence, motor vehicle, or other property necessary for the support 
of the debtor and the debtor's dependents. With respect to claims and 
expenses entitled to priority under section 507 of the Bankruptcy Code, 
section 102(a) specifies that the debtor may deduct payments for these 
obligations, calculated as the total amount of all priority debts, 
divided by 60. If applicable, the debtor may deduct the following 
additional expenses:

      (1) the continuation of actual expenses paid by the debtor 
      that are reasonable and necessary for the care and support 
      of an elderly, chronically ill, or disabled household 
      member or member of the debtor's immediate family who is 
---------------------------------------------------------------------------
      unable to pay such expenses;

      (2) the actual administrative expenses (including 
      reasonable attorneys' fees) of administering a chapter 13 
      plan for the district in which the debtor resides, up to 10 
      percent of projected plan payments, as determined under 
      schedules issued by the Executive Office for United States 
      Trustees; and

      (3) 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 
      documents these expenses and provides a detailed 
      explanation of why they are reasonable and necessary.
    The mandatory presumption of abuse may only be rebutted if: 
(1) the debtor demonstrates special circumstances that justify 
any additional expense or adjustment to the debtor's current 
monthly income for which there is no reasonable alternative; 
and (2) such additional expense or income adjustment causes the 
debtor's current monthly income (reduced by various amounts) 
when multiplied by 60 to be less than the lesser of either (i) 
25 percent of the debtor's nonpriority unsecured claims, or 
$6,000 (whichever is greater), or (ii) $10,000.\40\
---------------------------------------------------------------------------
    \40\ The debtor must itemize and provide documentation of each 
additional expense or income adjustment and an explanation of the 
special circumstances that make such expense or income adjustment 
reasonable and necessary. In addition, the debtor must attest under 
oath to the accuracy of any information provided to demonstrate that 
such additional expenses or adjustments to income are required.
---------------------------------------------------------------------------
    Where the mandatory presumption of abuse does not apply or 
has been rebutted, the court, in order to determine whether the 
granting of relief under chapter 7 would be an abuse of such 
chapter, must consider: (1) whether the debtor filed the 
chapter 7 case in bad faith; or (2) whether the totality of 
circumstances of the debtor's financial situation (including 
whether the debtor seeks to reject a personal services contract 
and the financial need for such rejection) demonstrates abuse.
    Should a court grant a section 707(b) motion made by a 
trustee and find that the action of debtor's counsel in filing 
the chapter 7 case violated Federal Rule of Bankruptcy 
Procedure 9011, section 102(a) mandates that the court order 
the attorney to reimburse the trustee for all reasonable costs 
in prosecuting the motion, including reasonable attorneys' 
fees. In addition, the court must assess an appropriate civil 
penalty, payable to the private trustee, bankruptcy 
administrator, or the United States trustee.\41\
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    \41\ Section 102(a) specifies that the signature of an attorney on 
a bankruptcy petition, pleading, or written motion constitutes a 
certification that the attorney has (1) performed a reasonable 
investigation into the circumstances giving rise to such petition, 
pleading or motion; and (2) determined that the document is well 
grounded in fact or 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 section 707(b)(1) of the Bankruptcy Code. 
Pursuant to section 102(a), the signature of an attorney on a 
bankruptcy petition constitutes a certification that the attorney has 
no knowledge after an inquiry that the information in the schedules 
filed with such petition is incorrect.
---------------------------------------------------------------------------
    Two types of ``safe harbors'' are recognized under section 
102(a). One provides that only a judge, United States trustee, 
bankruptcy administrator, or private trustee may bring a motion 
under section 707(b) of the Bankruptcy Code if the chapter 7 
debtor's income (or in a joint case, the income of debtor and 
the debtor's spouse) does not exceed the State median family 
income for a family of equal or lesser size (adjusted for 
larger sized families), or the State median family income for 
one earner in the case of a one-person household. The second 
safe harbor provides that no motion under section 707(b)(2) 
(dismissal based on the debtor's ability to repay) may be filed 
by a judge, United States trustee, bankruptcy administrator, 
private trustee, or other party in interest if the debtor and 
the debtor's spouse combined have income that does not exceed 
the State median family income for a family of equal or lesser 
size (adjusted for larger sized families), or the State median 
family income for one earner in the case of a one-person 
household.
    Provisions of the bill that are directed to other forms of 
abuse include Section 102(f), which amends section 707 of the 
Bankruptcy Code to provide that a court may dismiss a chapter 7 
case filed by an individual debtor convicted of a crime of 
violence (as defined in 18 U.S.C. Sec. 16), or a drug 
trafficking crime (as defined in 18 U.S.C. Sec. 924(c)(2)) on 
motion of the victim, under certain circumstances. Section 
102(g) amends section 1325(a) of the Bankruptcy Code to require 
the court to find, as a condition of confirmation, that the 
debtor filed the chapter 13 case in good faith.
    Protections for creditors--in general. H.R. 333 contains a 
broad range of reforms to provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claims, are not adversely impacted. The bill 
accomplishes this goal by: (1) ensuring that creditors receive 
proper and timely notice of important events and proceedings in 
a bankruptcy case; (2) prohibiting abusive serial filings and 
extending the period between successive discharges; (3) 
implementing various provisions designed to improve the 
accuracy of the information contained in debtors' schedules, 
statements of financial affairs, and other documents; and (4) 
limiting abusive use of homestead exemptions. It also clarifies 
that creditors holding consumer debts may participate without 
counsel at the section 341 meeting of creditors (which provides 
an opportunity for creditors to examine the debtor under oath).
    Protection of family support obligations. Domestic support 
claimants receive a broad spectrum of special protections under 
H.R. 333. According to one law enforcement official who 
testified before this committee earlier this year:

        It is my opinion, and the opinion of every professional 
        support collector with whom I have discussed the issue, 
        that the support amendments contained in Sections 211 
        through 219 of H.R. 333 will enhance substantially the 
        enforcement of support obligations against debtors in 
        bankruptcy. These enhancements will also result in a 
        more efficient and economical use of attorney and court 
        resources.\42\
---------------------------------------------------------------------------
    \42\ Bankruptcy Abuse Prevention and Consumer Protection Act of 
2001: Hearing Before the Subcomm. on Commercial and Administrative Law 
of the House Comm. on the Judiciary, 107th Cong.____(2001) (statement 
of Philip L. Strauss on behalf of the California District Attorneys 
Association and the California Family Support Council).

    The bill creates a uniform and expanded definition of 
domestic support obligations to include debts that accrue both 
before or after a bankruptcy case is filed. H.R. 333 accords 
the highest payment priority for these debts and gives new 
priority treatment to certain claims assigned to governmental 
units by a spouse, former spouse, child of the debtor, or 
parent of a child. In addition, the bill mandates that a 
chapter 13 or chapter 11 debtor must be current on postpetition 
domestic support obligations to confirm a plan of 
reorganization. The same obligation is imposed as a 
prerequisite for a chapter 13 debtor to receive a discharge. To 
facilitate the domestic support collection efforts by 
governmental units, H.R. 333 creates various exceptions to 
automatic stay provisions of the Bankruptcy Code (which enjoin 
many forms of creditor collection activities). It also broadens 
the categories of nondischargeable family support obligations 
with the result that these debts will not be extinguished at 
the end of the bankruptcy process. H.R. 333, in addition, 
mandates that spousal and child support claimants as well as 
State child support agencies receive specified information and 
notices relevant to pending bankruptcy cases.
    Protections for secured creditors. H.R. 333 gives secured 
creditors a broad variety of enhanced protections. These 
include a prohibition against bifurcating a secured debt 
incurred within the 5-year period preceding the filing of a 
bankruptcy case if the debt is secured by a purchase money 
security interest in a motor vehicle acquired for the debtor's 
personal use. Where the collateral consists of any other type 
of property having value, H.R. 333 prohibits bifurcation of 
specified secured debts if incurred during the 1-year period 
preceding the filing of the bankruptcy case. The bill clarifies 
current law to specify that the value of a claim secured by 
personal property is the replacement value of such property 
without deduction for the secured creditor's costs of sale or 
marketing. In addition, the bill terminates the automatic stay 
with respect to personal property if the debtor does not timely 
reaffirm the underlying obligation or redeem the property. H.R. 
333 also specifies that a secured claimant retains its lien in 
a chapter 13 case until the underlying debt is paid or the 
debtor receives a discharge.
    Protections for unsecured creditors. H.R. 333 contains 
various reforms tailored to remedy certain types of fraud and 
abuse within the present bankruptcy system. For example, the 
bill substantially limits a debtor's ability to file successive 
bankruptcy cases. It also addresses abusive practices by 
consumer debtors who, for example, knowingly load up with 
credit card purchases or recklessly obtain cash advances and 
then file for bankruptcy relief. In addition, H.R. 333 prevents 
the discharge of debts based on fraud, embezzlement, and 
malicious injury in a chapter 13 case.
    Protections for lessors. With respect to the interests of 
lessors, H.R. 333 requires chapter 13 debtors to remain current 
on their personal property leases and provide proof of adequate 
insurance. The bill specifies that a lessor may condition 
assumption of a personal property lease on cure of any 
outstanding default and it provides that a lessor is not 
required to permit such assumption. The bill also addresses a 
problem faced by thousands of small landlords across the nation 
whose tenants file for bankruptcy relief solely for the purpose 
of staying pending eviction proceedings so that they can live 
``rent free.''
    Consumer debtor protections. The bill's consumer 
protections include provisions strengthening the 
professionalism standards for attorneys and others who assist 
consumer debtors with their bankruptcy cases. H.R. 333 mandates 
that certain services and specified notices be provided to 
consumers by professionals and others who render bankruptcy 
assistance. To ensure compliance with these provisions, the 
bill institutes various enforcement mechanisms.
    In addition, H.R. 333 amends the Truth in Lending Act to 
require certain credit card solicitations, monthly billing 
statements, and related materials to include important 
disclosures and explanatory statements regarding introductory 
interest rates and minimum payments, among other matters. These 
additional disclosures are intended to give debtors important 
information to enable them to better manage their financial 
affairs.
    Reforms aimed to help debtors understand their rights and 
obligations with respect to reaffirmation agreements are also 
included in the legislation. To enforce these protections, for 
example, H.R. 333 requires the Attorney General to designate a 
U.S. Attorney for each judicial district and a FBI agent for 
each field office to have primary law enforcement 
responsibility regarding abusive reaffirmation practices.
    In addition, the legislation substantially expands a 
debtor's ability to exempt certain tax-qualified retirement 
accounts and pensions. It also creates a new provision that 
allows a consumer debtor to exempt certain education IRA and 
State tuition plans for his or her child's postsecondary 
education from the claims of creditors.
    Most importantly, H.R. 333 requires debtors to participate 
in credit counseling programs before filing for bankruptcy 
relief (unless special circumstances do not permit such 
participation). The legislation's credit counseling provisions 
are intended to give consumers in financial distress an 
opportunity to learn about the consequences of bankruptcy--such 
as the potentially devastating effect it can have on their 
credit rating--and guidance about how to manage their finances, 
so that they can avoid future financial difficulties.
    Other debtor protections include expanded notice 
requirements for consumers. Under the bill, individuals with 
primarily consumer debts must receive notice of alternatives to 
bankruptcy relief before they file for bankruptcy and it 
requires them to be informed of other matters pertaining to the 
integrity of the bankruptcy system. The legislation also 
permits certain filing fees and related charges to be waived, 
in appropriate cases, for individuals who lack the ability to 
pay these costs.
    Business Bankruptcy. H.R. 333 contains a comprehensive set 
of reforms pertinent to business bankruptcies. They include 
provisions addressing the special problems presented by small 
business bankruptcies and single asset real estate debtors as 
well as provisions dealing with business bankruptcy cases in 
general. H.R. 333 establishes a new form of bankruptcy relief 
for transnational insolvencies that is intended to promote 
international comity and greater certainty. It also includes 
provisions concerning the treatment of certain financial 
contracts under the banking laws as well as under the 
Bankruptcy Code. H.R. 333 responds to the special needs of 
family farmers by making chapter 12 of the Bankruptcy Code (a 
form of bankruptcy relief available only to eligible family 
farmers) permanent.
    Small business/single asset real estate debtors. Most 
chapter 11 cases are filed by small business debtors. Although 
the Bankruptcy Code envisions that creditors should play a 
major role in the oversight of chapter 11 cases, this often 
does not occur with respect to small business debtors. The main 
reason is that creditors in these smaller cases do not have 
claims large enough to warrant the time and money to 
participate actively in these cases. The resulting lack of 
creditor oversight creates a greater need for the United States 
trustee to monitor these cases closely. Nevertheless, the 
monitoring of these debtors by United States trustees varies 
throughout the nation.
    H.R. 333 addresses the special problems presented by small 
business cases by instituting a variety of time frames and 
enforcement mechanisms designed to weed out small business 
debtors who are not likely to reorganize. It also requires 
these cases to be more actively monitored by United States 
trustees and the bankruptcy courts. The small business and 
single asset real estate provisions of H.R. 333 are largely 
derived from consensus recommendations of the National 
Bankruptcy Review Commission.\43\ These provisions have also 
received broad support from many in the business community.\44\
---------------------------------------------------------------------------
    \43\ See generally Report of the National Bankruptcy Review 
Commission, at 303-706 (Oct. 20, 1997).
    \44\ See, e.g., Bankruptcy Abuse Prevention and Consumer Protection 
Act of 2001: Hearing Before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary, 107th 
Cong.____(2001) (statement of R. Bruce Josten on behalf of the U.S. 
Chamber of Commerce).
---------------------------------------------------------------------------
    With regard to the Bankruptcy Code's treatment of single 
asset real estate debtors, H.R. 333 makes several amendments. 
First, it eliminates the monetary cap from the single asset 
real estate debtor definition. Second, it makes these debtors 
subject to the bill's small business reforms. Third, H.R. 333 
amends the automatic stay provisions by permitting a single 
asset real estate debtor to make requisite interest payments 
out of rents or other proceeds generated by the real property.
    Financial contracts. H.R. 333 contains a series of 
provisions pertaining to the treatment of certain financial 
transactions under the Bankruptcy Code and relevant banking 
laws. These provisions are intended to reduce ``systemic risk'' 
in the banking system and financial marketplace. To minimize 
the risk of disruption when parties to these transactions 
become bankrupt or insolvent, the bill amends provisions of the 
banking and investment laws, as well as the Bankruptcy Code, 
applicable to certain types of financial transactions.\45\ In 
addition to the Bankruptcy Code, the bill amends the Federal 
Deposit Insurance Act; Financial Institutions Reform, Recovery 
and Enforcement Act of 1989; Federal Deposit Insurance 
Corporation Improvement Act of 1991; Federal Reserve Act; and 
Securities Investor Protection Act of 1971.
---------------------------------------------------------------------------
    \45\ The report on H.R. 4393, a bill substantially similar to title 
X of H.R. 833 that was introduced in the 106th Congress by Banking and 
Financial Services Committee Chair James Leach (R-Iowa), explained as 
follows:

      Systemic risk is the risk that the failure of a firm or 
      disruption of a market or settlement system will cause 
      widespread difficulties at other firms, in other market 
      segments or in the financial system as a whole. If 
      participants in certain financial activities are unable to 
      enforce their rights to terminate financial contracts with 
      an insolvent entity in a timely manner, or to offset or net 
      their various contractual obligations, the resulting 
      uncertainty and potential lack of liquidity could increase 
---------------------------------------------------------------------------
      the risk of an inter-market disruption.

H. Rep. No. 105-688, Part 1, at 2 (1998).
    Many of these provisions are derived from recommendations 
issued by a presidential interagency working group \46\ and 
revisions espoused by the financial industry. Other provisions 
would treat certain asset-backed securitizations as valid 
transfers and limit the authority of a court or administrative 
agency to enjoin certain actions.
---------------------------------------------------------------------------
    \46\ The Working Group's members included representatives from the 
Commodity Futures Trading Commission, the Federal Deposit Insurance 
Corporation, the Board of Governors of the Federal Reserve System, the 
Federal Reserve Bank of New York, the Securities and Exchange 
Commission, and the Department of the Treasury, including the Office of 
the Comptroller of the Currency. Id. at 1.
---------------------------------------------------------------------------
    Transnational insolvencies. In response to the increasing 
globalization of business dealings and operations, the bill 
establishes a separate chapter under the Bankruptcy Code 
devoted to transnational insolvencies. These provisions are 
intended to provide greater legal certainty for trade and 
investment as well as to provide for the fair and efficient 
administration of these cases.
    Health care providers. H.R. 333 adds a provision to the 
Bankruptcy Code specifying requirements for the disposal of 
patient records in a chapter 7, 9, or 11 case of a health care 
business where the trustee lacks sufficient funds to pay for 
the storage of such records in accordance with applicable 
Federal or State law. These requirements are intended to 
protect the privacy and confidentiality of a patient's medical 
records when they are in the custody of a health care business 
in bankruptcy.
    In addition, the bill includes a provision according 
administrative expense priority to the actual, necessary costs 
and expenses of closing a health care business (including the 
disposal of patient records or transferral of patients) 
incurred by a trustee, Federal agency, or a department or 
agency of a State. It also requires the court to order the 
appointment of an ombudsman within 30 days after the 
commencement of a chapter 7, 9 or 11 case by a health care 
provider, unless the court finds that such appointment is not 
necessary for the protection of patients under the specific 
facts of the case. The ombudsman is responsible for monitoring 
the quality of patient care and to represent the interests of 
the patients. Other provisions include the requirement that a 
bankruptcy trustee use all reasonable and best efforts to 
transfer patients from a health care business that is being 
closed to an appropriate alternative facility that meets 
certain specified criteria.
    Other Provisions Having General Impact. H.R. 333 contains 
several provisions having general impact with respect to 
bankruptcy law and practice. For example, it requires the 
Executive Office for United States Trustees to compile various 
statistics regarding chapter 7, 11 and 13 cases and to make 
these data available to the public. Other general provisions 
include allowing compensation to be shared with bona fide 
public service attorney referral programs, and mandating that a 
bankruptcy court conduct scheduling conferences in bankruptcy 
cases if necessary to further the expeditious and economical 
resolution of such cases.
    The bill makes several revisions to the Bankruptcy Code's 
preference provisions. Under H.R. 333, a defendant in a 
preference action may establish that the transfer was made in 
the ordinary course of the debtor's financial affairs or 
business, or that the transfer was made in accordance with 
ordinary business terms. The bill also establishes a threshold 
amount as a prerequisite to the commencement of a preferential 
transfer proceeding. In addition, H.R. 333 amends the venue 
provisions for preferential transfer actions. A preferential 
transfer action in the amount of $10,000 or less would have to 
be filed in the district where the defendant resides. 
Currently, this amount is fixed at $1,000.

                                Hearings

    The committee held 2 days of hearings on H.R. 333 on 
February 7 and 8, 2001. Testimony was received from eight 
witnesses, representing seven organizations. During the course 
of the first hearing, the committee received testimony from 
Kenneth Beine on behalf of the Credit Union National 
Association who explained how the current bankruptcy system 
impacts small businesses and non-profits. The committee also 
received testimony from R. Bruce Josten on behalf of the U.S. 
Chamber of Commerce who described the current consumer 
bankruptcy law's adverse impact on businesses. In addition, the 
committee heard from Phillip Strauss, a professional with more 
than 25 years of experience in child support enforcement. 
Speaking on behalf of the California District Attorneys 
Association and the California Family Support Council, Mr. 
Strauss described the ways in which H.R. 333 would help ensure 
payment of these obligations. George Wallace, the final witness 
appeared on behalf of The Coalition for Responsible Bankruptcy 
Laws. He explained the differences between the version of the 
bill as reported by the committee in the 106th Congress and 
H.R. 333.
    The second day of hearings provided a different 
perspective. The witnesses included Charles Trapp, who was a 
former chapter 7 debtor. He was joined by Ralph Mabey, who 
appeared on behalf of the National Bankruptcy Conference and 
Professor Karen Gross of New York Law School. The final witness 
was Damon Silvers, who testified on behalf of the AFL-CIO. 
Although each of these witnesses acknowledged that H.R. 333 did 
make needed improvements to current bankruptcy law, they 
questioned the efficacy of certain provisions of the bill.

                        Committee Consideration

    On February 14, 2001, the committee met in open session and 
ordered favorably reported the bill H.R. 333 with amendment by 
a recorded vote of 19 to 8, a quorum being present.

                         Votes of the Committee

    1. An amendment offered by Mr. Conyers and Ms. Waters to 
create an exception to the nondischargeability of certain 
specified debts if the debtor's ability to pay domestic support 
obligations is impaired by such limitation on the debtor's 
discharge. Defeated 10 to 14.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Smith (TX)
Mr. Lofgren                         Mr. Goodlatte
Ms. Jackson Lee                     Mr. Chabot
Ms. Waters                          Mr. Barr
Mr. Meehan                          Mr. Hutchinson
Mr. Delahunt                        Mr. Cannon
Mr. Baldwin                         Mr. Graham
Mr. Weiner                          Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart

    2. An amendment offered by Mr. Watt to specify that the 
terms ``cash advances'' and ``extensions of consumer credit 
under an open end credit plan'' do not include expenditures 
reasonably necessary for the support or maintenance of the 
debtor or a dependent of the debtor with respect to determining 
the dischargeability of these debts. Defeated 8 to 15.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Smith (TX)
Mr. Lofgren                         Mr. Gallegly
Ms. Jackson Lee                     Mr. Goodlatte
Ms. Waters                          Mr. Chabot
Mr. Weiner                          Mr. Barr
Mr. Schiff                          Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart

    3. An amendment offered by Mr. Conyers (1) to permit the 
extension of certain time periods pertaining to the assumption 
and rejection of unexpired leases of nonresidential real 
property, the filing of chapter 11 plans of reorganization and 
the obtaining of acceptances, the provision of adequate 
assurance of payment for utility service in a chapter 11 case, 
the performance of specified duties of trustees and debtors in 
possession in small business cases, and plan filing and 
confirmation in small business cases; and (2) to create an 
exception to the exclusion of asset-backed securitizations as 
property of the estate in section 912. Defeated 6 to 18.

        AYES                          NAYS
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Jackson Lee                     Mr. Smith (TX)
Ms. Waters                          Mr. Gallegly
Mr. Weiner                          Mr. Goodlatte
Mr. Schiff                          Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    4. An amendment offered by Mr. Nadler to make specified 
debts relating to violations of law concerning certain health 
care facilities and the provision of health services 
nondischargeable. Defeated 9 to 20.

        AYES                          NAYS
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Mr. Lofgren                         Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Gallegly
Ms. Waters                          Mr. Goodlatte
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Barr
Mr. Schiff                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    5. An amendment offered by Ms. Jackson Lee to prohibit a 
creditor in a bankruptcy case from asserting any claim if the 
creditor failed to comply with certain requirements of the 
Consumer Credit Protection Act for the amount of the debt that 
a debtor incurred on a credit card issued in violation of such 
requirements. Defeated 6 to 18.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Jackson Lee                     Mr. Coble
Ms. Waters                          Mr. Smith (TX)
Ms. Baldwin                         Mr. Gallegly
Mr. Schiff                          Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart
                                    Mr. Flake

    6. An amendment offered by Mr. Watt to an amendment by Ms. 
Waters to exempt certain debtors from specified filing 
requirements. Defeated 9 to 13.

        AYES                          NAYS
Mr. Scarborough                     Mr. Sensenbrenner
Mr. Conyers                         Mr. Gekas
Mr. Frank                           Mr. Coble
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Chabot
Ms. Waters                          Mr. Hutchinson
Mr. Delahunt                        Mr. Bachus
Ms. Baldwin                         Mr. Hostettler
Mr. Schiff                          Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    7. An amendment offered by Ms. Waters to provide that the 
exceptions to the automatic stay do not apply to certain types 
of debtors. Defeated 9 to 13.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Frank                           Mr. Gekas
Mr. Scott                           Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Chabot
Ms. Waters                          Mr. Barr
Mr. Meehan                          Mr. Hutchinson
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Mr. Bachus
Mr. Schiff                          Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart

    8. An amendment offered by Mr. Meehan to require the 
applicable State median income amount specified in sections 102 
(needs-based reforms) and 318 (duration of chapter 13 plans) to 
be adjusted, under certain circumstances, to reflect the 
percentage change in the Consumer Price Index for All Urban 
Consumers for each subsequent year during which median income 
is not reported by the Bureau of the Census. Defeated 9 to 13.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Frank                           Mr. Gekas
Mr. Scott                           Mr. Smith (TX)
Mr. Watt                            Mr. Barr
Ms. Jackson Lee                     Mr. Hutchinson
Mr. Meehan                          Mr. Graham
Mr. Delahunt                        Mr. Bachus
Ms. Baldwin                         Mr. Scarborough
Mr. Schiff                          Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart
                                    Mr. Flake

    9. An amendment offered by Mr. Delahunt to eliminate the 2-
year reachback period applicable to the exemption limitation in 
section 322 and to increase the exemption amount to $500,000. 
Defeated 6 to 18.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Mr. Delahunt                        Mr. Smith (TX)
Ms. Baldwin                         Mr. Chabot
Mr. Schiff                          Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake
                                    Ms. Jackson Lee
                                    Mr. Wexler

    10. An amendment offered by Ms. Baldwin to accord 
administrative expense priority under section 503(b)(1)(A) of 
the Bankruptcy Code to wages and benefits attributable to any 
period of time after a bankruptcy case is filed as a result of 
the debtor's violation of Federal or State law, without regard 
to when the original unlawful act occurred or to whether any 
services were rendered. Defeated 3 to 15.

        AYES                          NAYS
Mr. Watt                            Mr. Sensenbrenner
Ms. Baldwin                         Mr. Gekas
Mr. Schiff                          Mr. Coble
                                    Mr. Smith (TX)
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    11. An amendment offered by Ms. Baldwin to expand the 
Bankruptcy Code's definition of ``family farmer''. Defeated 4 
to 13.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Baldwin                         Mr. Coble
Mr. Schiff                          Mr. Smith (TX)
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    12. An amendment offered by Mr. Schiff to amend a safe 
harbor provision in section 102 with respect to the treatment 
of spousal income. Defeated 5 to 13.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Ms. Baldwin                         Mr. Chabot
Mr. Schiff                          Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    13. An amendment offered by Mr. Schiff to require the 
Comptroller General of the United States to study and file a 
report containing the results of the study to determine any 
effect that H.R. 333 has on the ability of a parent to pay 
child support or the ability of a parent to collect child 
support. Defeated 5 to 16.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Ms. Baldwin                         Mr. Smith (TX)
Mr. Schiff                          Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    14. Part one of an amendment offered by Mr. Sensenbrenner, 
which conforms the fee allocation percentage in section 325 
with that specified under Section 406(b) of the Judiciary 
Appropriations Act, as amended. Passed 22 to 0.

        AYES                          NAYS
Mr. Sensenbrenner
Mr. Gekas
Mr. Smith (TX)
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Baldwin
Mr. Schiff

    15. Part two of an amendment by Mr. Sensenbrenner to 
conform a statutory cross reference necessitated by the 
enactment of the Commodity Futures Modernization Act of 2000. 
Passed 21 to 0.

        AYES                          NAYS
Mr. Sensenbrenner
Mr. Gekas
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Baldwin
Mr. Schiff

    16. Motion to move the previous question. Passed 18 to 5.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Scott
Mr. Coble                           Mr. Watt
Mr. Goodlatte                       Ms. Baldwin
Mr. Chabot                          Mr. Schiff
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler

    17. Motion to table the motion to reconsider the vote 
ordering the previous question. Passed 18 to 7.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Nadler
Mr. Coble                           Mr. Scott
Mr. Smith (TX)                      Mr. Watt
Mr. Goodlatte                       Ms. Jackson Lee
Mr. Chabot                          Ms. Baldwin
Mr. Barr                            Mr. Schiff
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake

    18. Motion to report favorably H.R. 333, as amended. Passed 
19 to 8.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Nadler
Mr. Coble                           Mr. Scott
Mr. Smith (TX)                      Mr. Watt
Mr. Goodlatte                       Ms. Jackson Lee
Mr. Chabot                          Ms. Waters
Mr. Barr                            Ms. Baldwin
Mr. Hutchinson                      Mr. Schiff
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Boucher

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                    Performance Goals and Objectives

    The bill is intended to improve the bankruptcy system by 
deterring abuse, setting enhanced standards for bankruptcy 
professionals, and streamlining case administration.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

                        Committee Cost Estimate

    The estimate of the Congressional Budget Office (CBO) was 
not available at the time of the filing of this report. In 
compliance with clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the committee believes that the bill 
will have a budget effect for fiscal year 2001 and subsequent 
years comparable to that projected by the CBO for H.R. 833, the 
Bankruptcy Reform Act of 1999, a bill substantively similar to 
H.R. 333 that was passed by the House during the 106th 
Congress, with some differences. Although H.R. 333 and H.R. 833 
both authorize the extension of five existing temporary 
bankruptcy judgeships, H.R. 333 authorizes 23 new temporary 
bankruptcy judges (five more than H.R. 833). With salaries and 
benefits considered as mandatory costs, the committee estimates 
that these costs may approximate $ 14 million a year over 5 
years. The committee believes that this provision is necessary 
to facilitate the improvements proposed by the legislation and 
will enhance the efficiency of the system.
    As indicated, H.R. 333 is substantially similar to H.R. 
833. In a letter dated May 5, 1999, the CBO prepared an initial 
Federal cost estimate and an assessment of H.R. 833's impact on 
state, local, and tribal governments. \1\ In that cost 
estimate, the CBO stated that implementing H.R. 833 would 
``cost $333 million over the 2000-2004 period--$322 million in 
discretionary spending, subject to appropriation of the 
necessary funds''. In addition, the CBO observed that because 
H.R. 833 would have decreased ``receipts by about $4 million 
over the next 5 years,'' the bill would have affected direct 
spending and governmental receipts and pay-as-you-go procedures 
would apply. With regard to the Unfunded Mandates Reform Act 
(UMRA), the CBO noted that H.R. 833 contained an 
intergovernmental mandate, but that the bill's ``costs would be 
insignificant and would not exceed the threshold established in 
that act ($50 million in 1996, adjusted annually for 
inflation).'' As to new private-sector mandates (as defined in 
UMRA) that H.R. 833 would impose on bankruptcy attorneys, 
creditors, and credit and charge-card companies, CBO estimated 
that the costs of these mandates would exceed the $100 million 
(in 1996 dollars) threshold established in UMRA. ``Overall,'' 
the CBO expected that ``enacting this bill would benefit state 
and local governments by enhancing their ability to collect 
outstanding obligations in bankruptcy cases.''
---------------------------------------------------------------------------
    \1\ 145 Cong. Rec. H2656 (daily ed. May 5, 1999).
---------------------------------------------------------------------------
    The committee notes that H.R. 333 could result in some 
increased discretionary expenditures with regard to such 
matters integral to the reforms proposed as: a debtor financial 
management training test program; mandatory case auditing; and 
the compilation and publication of bankruptcy data and 
statistics as well as other provisions. However, costs related 
to some of these expenditures, such as increased auditing, are 
subject to appropriations and likely to be offset by enhanced 
collections resulting from greater protections accorded to 
Federal taxing authorities in Title VII of H.R. 333, as 
amended.

                     Committee Jurisdiction Letters

                     House Committee on Financial Services,
                                 Washington, DC, February 21, 2001.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Jim: On February 14, 2001, the Committee on the 
Judiciary ordered reported H.R. 333, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001. As you know, 
the Committee on Financial Services was granted an additional 
referral upon the bill's introduction pursuant to the 
Committee's jurisdiction under Rule X of the Rules of the House 
of Representatives over banks and banking, credit, and 
securities and exchanges.
    Because of your willingness to consult with the Committee 
on Financial Services regarding this matter, your continuing 
support for our requested changes, and the need to move this 
legislation expeditiously, I will waive consideration of the 
bill by the Financial Services Committee. By agreeing to waive 
its consideration of the bill, the Financial Services Committee 
does not waive its jurisdiction over H.R. 333. In addition, the 
Committee on Financial Services reserves its authority to seek 
conferees on any provisions of the bill that are within the 
Financial Services Committee's jurisdiction during any House-
Senate conference that may be convened on this legislation. I 
ask your commitment to support any request by the Committee on 
Financial Services for conferees on H.R. 333 or related 
legislation.
    I request that you include this letter and your response as 
part of your committee's report on the bill and the 
Congressional Record during consideration of the legislation on 
the House floor.
    Thank you for your attention to these matters.
            Sincerely,
                                Michael G. Oxley, Chairman.

MGO/hnh

cc:
        The Honorable J. Dennis Hastert, Speaker
        The Honorable John J. LaFalce
        The Honorable Spencer Baccus
        The Honorable Richard H. Baker
        The Honorable Charles W. Johnson, III, Parliamentarian

                        Committee on the Judiciary,
                                  House of Representatives,
                                 Washington, DC, February 22, 2001.
Hon. Michael G. Oxley, Chairman,
House Committee on Financial Services,
Washington, DC.
    Dear Mike: This letter responds to your letter dated 
February 21, 2001, concerning H.R. 333, the ``Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001'' which was 
favorably reported by the House Committee on the Judiciary on 
February 14, 2001.
    I agree that the bill contains matters within the Financial 
Services Committee's jurisdiction and appreciate your 
willingness to be discharged from further consideration of H.R. 
333 so that we may proceed to the floor.
    Pursuant to your request, a copy of your letter and this 
letter will be included in the report of the Committee on the 
Judiciary on H.R. 333.
            Sincerely,
                     F. James Sensenbrenner, Jr., Chairman.

cc:
        The Honorable J. Dennis Hastert
        The Honorable John Conyers, Jr.
        The Honorable John J. LaFalce
        The Honorable Charles W. Johnson, III

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, section 8, clauses 3 and 4 of 
the Constitution.

                        Preemption of State Law

    Pursuant to section 423(e) of the Congressional Budget and 
Impoundment Act, the committee states that the following 
provisions of H.R. 333 may preempt state law to the extent 
described herein.
    Section 219(b) provides that, notwithstanding any other 
provision of law, a creditor who discloses a debtor's last 
known address in connection with such request is not liable to 
the debtor or any other person by reason of making that 
disclosure.
    Section 227 contains provisions delineating the 
responsibilities that a ``debt relief agency'' must perform 
with respect to an ``assisted person'' and specifies the 
procedures for their enforcement. Section 227(a), in pertinent 
part, states that ``[n]o provision of this section, section 
527, or section 528 shall . . . 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[.]''
    Section 417 permits a utility to recover or set off against 
a security deposit provided prepetition by the debtor to the 
utility without notice or court order, notwithstanding any 
other provision of law.
    Section 906 includes a number of provisions pertaining to 
the enforceability of certain bilateral netting contracts and 
clearing organization netting contracts, notwithstanding any 
other provision of state law.
    Section 1310(a) provides that notwithstanding any other 
provision of law or contract, a court within the United States 
shall not recognize or enforce certain judgments rendered by 
foreign courts under specified circumstances.

               Section-by-Section Analysis and Discussion

Section 1. Short Title; References; Table of Contents
    The title of the bill is the Bankruptcy Abuse Prevention 
and Consumer Protection Act of 2001 (hereinafter the ``Act'').

                    TITLE I. NEEDS-BASED BANKRUPTCY

Section 101. Conversion
    Section 101 amends section 706(c) of the Bankruptcy Code to 
allow a chapter 7 case to be converted to a case under chapter 
12 or chapter 13 on consent of the debtor.
Section 102. Dismissal or conversion
    Section 102 implements the Act's needs-based bankruptcy 
reforms. Subsection (a) amends section 707(b) of the Bankruptcy 
Code to permit a court, on its own motion, or on motion of the 
United States trustee, trustee, bankruptcy administrator, or 
party in interest, to dismiss on the basis of abuse a chapter 7 
case filed by an individual debtor whose debts are primarily 
consumer debts. Alternatively, it permits the United States 
trustee, trustee, bankruptcy administrator, or party in 
interest to seek conversion of a chapter 7 case to a case under 
chapter 11 or chapter 13 on consent of the debtor. Under 
current law, only the court or the United States Trustee may 
seek dismissal of a chapter 7 case under section 707(b) for 
substantial abuse.
    In addition, section 102(a) replaces the current law's 
presumption in favor of the debtor with a mandatory presumption 
of abuse that is triggered under certain conditions. Section 
102(a) requires a court to presume that abuse exists if the 
amount remaining, after certain expenses and other specified 
amounts are deducted from the debtor's current monthly income 
(a defined term), when multiplied by 60, exceeds (1) 25 percent 
of the debtor's nonpriority unsecured claims, or $6000 
(whichever is greater); or (2) $10,000, whichever is lower. 
Under section 102(a), the debtor's monthly expenses--exclusive 
of any payments for debts (unless otherwise permitted)--must be 
the applicable monthly amounts set forth in the Internal 
Revenue Service Financial Analysis Handbook as Necessary 
Expenses under the National and Local Standards categories and 
the debtor's actual monthly expenditures for items categorized 
as Other Necessary Expenses in the Internal Revenue Service 
Financial Analysis Handbook. For purposes of this provision, 
the expenses include those of the debtor, the debtor's 
dependents, and the debtor's spouse, if not otherwise a 
dependent.
    Section 102(a) mandates that the debtor's monthly expenses 
include reasonably necessary expenses incurred to maintain the 
safety of the debtor and the debtor's family from family 
violence as identified in section 309 of the Family Violence 
Prevention and Services Act or other applicable law. In 
addition, the debtor may deduct up to an additional 5 percent 
of the food and clothing expense allowances under the National 
Standards category, if demonstrated to be reasonable and 
necessary.
    For purposes of determining whether the mandatory 
presumption of abuse applies under the needs-based test, 
section 102(a) permits the debtor to deduct certain other 
liabilities. These include the debtor's average monthly 
payments on account of secured debts, calculated as the total 
of all amounts scheduled as contractually due over the 60-month 
period following the filing of the bankruptcy, divided by 60 
months. This amount may include any additional payments to 
secured creditors that a chapter 13 debtor must make to retain 
possession of a primary residence, motor vehicle, or other 
property necessary for the support of the debtor and the 
debtor's dependents. With respect to claims and expenses 
entitled to priority under section 507 of the Bankruptcy Code, 
section 102(a) specifies that the debtor may deduct payments 
for these obligations, calculated as the total amount of all 
priority debts, divided by 60. If applicable, the debtor may 
deduct the following additional expenses:

        (1) the continuation of actual expenses paid by the 
        debtor that are reasonable and necessary for the care 
        and support of an elderly, chronically ill, or disabled 
        household member or member of the debtor's immediate 
        family who is unable to pay such expenses;
        (2) the actual administrative expenses (including 
        reasonable attorneys' fees) of administering a chapter 
        13 plan for the district in which the debtor resides, 
        up to 10 percent of projected plan payments, as 
        determined under schedules issued by the Executive 
        Office for United States Trustees; and
        (3) 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 documents these expenses and provides a detailed 
        explanation of why they are reasonable and necessary.

    The mandatory presumption of abuse may only be rebutted if 
(1) the debtor demonstrates special circumstances that justify 
any additional expense or adjustment to the debtor's current 
monthly income for which there is no reasonable alternative; 
and (2) such additional expense or income adjustment causes the 
debtor's current monthly income (reduced by various amounts) 
when multiplied by 60 to be less than the lesser of either (i) 
25 percent of the debtor's nonpriority unsecured claims, or 
$6,000 (whichever is greater), or (ii) $10,000. The debtor must 
itemize and provide documentation of each additional expense or 
income adjustment and an explanation of the special 
circumstances that make such expense or income adjustment 
reasonable and necessary. In addition, the debtor must attest 
under oath to the accuracy of any information provided to 
demonstrate that such additional expenses or adjustments to 
income are required.
    Section 102(a) specifies that the debtor file a statement 
of current monthly income and the calculations that determine 
whether a presumption arises under this provision as part of 
the schedules that the debtor must file pursuant to section 521 
of the Bankruptcy Code. The statement must also explain how 
each amount is calculated.
    Where the mandatory presumption of abuse does not apply or 
has been rebutted, the court, in order to determine whether the 
granting of relief under chapter 7 would be an abuse of such 
chapter, must consider (1) whether the debtor filed the chapter 
7 case in bad faith; or (2) whether the totality of 
circumstances of the debtor's financial situation (including 
whether the debtor seeks to reject a personal services contract 
and the financial need for such rejection) demonstrates abuse.
    Should a court grant a section 707(b) motion made by a 
trustee and find that the action of debtor's counsel in filing 
the chapter 7 case violated Federal Rule of Bankruptcy 
Procedure 9011, section 102(a) mandates that the court order 
the attorney to reimburse the trustee for all reasonable costs 
in prosecuting the motion, including reasonable attorneys' 
fees. In addition, if the court finds that the debtor's 
attorney violated rule 9011, the court, at a minimum, must 
assess an appropriate civil penalty, payable to the trustee, 
bankruptcy administrator, or the United States trustee.
    Section 102(a) specifies that the signature of an attorney 
on a bankruptcy petition, pleading, or written motion 
constitutes a certification that the attorney has (1) performed 
a reasonable investigation into the circumstances giving rise 
to such petition, pleading or motion; and (2) determined that 
the document is well grounded in fact or 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 section 707(b)(1) of the Bankruptcy Code. Pursuant to 
section 102(a), the signature of an attorney on a bankruptcy 
petition constitutes a certification that the attorney has no 
knowledge after an inquiry that the information in the 
schedules filed with such petition is incorrect.
    A court may award a debtor all reasonable costs, including 
reasonable attorneys' fees, incurred by the debtor in 
successfully contesting a section 707(b) motion brought by a 
party in interest (other than a trustee, United States trustee 
or bankruptcy administrator) if the court finds that either (1) 
the action of the party in filing the motion violated rule 9011 
or (2) the party filed the motion solely for the purpose of 
coercing the debtor into waiving a right guaranteed to the 
debtor under the Bankruptcy Code. An exception with respect to 
the rule 9011 ground applies to a small business having an 
aggregate claim of less than $1,000. For purposes of this 
provision, a small business is defined as an unincorporated 
business, partnership, corporation, association, or 
organization with less than 25 full-time employees that is 
engaged in commercial or business activity. The number of 
employees of a wholly-owned subsidiary of a corporation 
includes the employees of the subsidiary's parent corporation 
and any other subsidiary corporation of the parent corporation.
    Two forms of ``safe harbors'' are recognized under section 
102(a). One provides that only a judge, United States trustee, 
bankruptcy administrator, or trustee may bring a motion under 
section 707(b) of the Bankruptcy Code if the chapter 7 debtor's 
income (or in a joint case, the income of debtor and the 
debtor's spouse) does not exceed the State median family income 
for a family of equal or lesser size (adjusted for larger sized 
families), or the State median family income for one earner in 
the case of a one-person household. The second safe harbor 
provides that no motion under section 707(b)(2) may be filed by 
a judge, United States trustee, bankruptcy administrator, 
trustee, or other party in interest if the debtor and the 
debtor's spouse combined have income that does not exceed the 
State median family income for a family of equal or lesser size 
(adjusted for larger sized families), or the State median 
family income for one earner in the case of a one-person 
household.
    Section 102(b) defines ``current monthly income'' as the 
average monthly income from all sources that the debtor 
receives (or, in a joint case, the debtor and the debtor's 
spouse receive), without regard to whether it is taxable 
income, in the 6-month period preceding the date of 
determination. It includes any amount paid on a regular basis 
by any entity (other than the debtor or, in a joint case, the 
debtor and the debtor's spouse) 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. It excludes 
Social Security Act benefits and payments to victims of war 
crimes or crimes against humanity on account of their status as 
victims of such crimes.
    Section 102(c) amends section 704 to require the United 
States trustee or bankruptcy administrator to review all 
materials filed by an individual chapter 7 debtor and to file 
with the court not later than 10 days after the date of the 
first meeting of creditors a statement as to whether or not the 
case should be presumed to be an abuse under section 707(b). 
The court, in turn, must provide a copy of such statement 
within 5 days of its filing to all creditors.
    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 debtor's current monthly 
income is not less than the applicable State median income, 
such United States trustee or bankruptcy administrator must 
file within 30 days after the filing of the statement 
(described in the preceding paragraph) either a (1) motion to 
dismiss or convert the case under section 707(b); or (2) a 
statement setting forth the reasons why such a motion is not 
appropriate. In a case where a motion to dismiss or convert or 
a statement is required to be filed under section 704(b)(2), 
the United States trustee or bankruptcy administrator may 
decline to file such a motion if (1) the debtor's current 
monthly income (when multiplied by 12) exceeds 100 percent, but 
does not exceed 150 percent of the applicable State median 
income; and (2) after subtracting certain deductions, the 
debtor's remaining income when multiplied by 60 is 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.
    Section 102(d) amends section 342 of the Bankruptcy Code to 
require the clerk to give written notice to all creditors not 
later than 10 days after the filing of a chapter 7 case in 
which the presumption of abuse applies. It is anticipated that 
the Judicial Conference of the United States will develop an 
official form to implement this provision.
    Section 102(e) specifies that no provision of the 
Bankruptcy Code shall limit the ability of a creditor to supply 
information to a judge (except for information communicated ex 
parte, unless otherwise permitted by applicable law), United 
States trustee, bankruptcy administrator, or trustee.
    Section 102(f) amends section 707 of the Bankruptcy Code to 
provide that a court may dismiss a chapter 7 case filed by an 
individual debtor convicted of a crime of violence (as defined 
in 18 U.S.C. Sec. 16), or a drug trafficking crime (as defined 
in 18 U.S.C. Sec. 924(c)(2)) on motion of the victim, if 
dismissal is in the best interest of such victim. The court, 
however, may not dismiss a case under this provision if the 
debtor establishes by a preponderance of the evidence that the 
filing of the chapter 7 case is necessary to satisfy a domestic 
support obligation.
    Section 102(g) amends section 1325(a) of the Bankruptcy 
Code to require the court to find, as a condition of 
confirmation, that the debtor filed the chapter 13 case in good 
faith.
    Section 102(h) amends section 1325(b) of the Bankruptcy 
Code to revise the definition of disposable income. As revised, 
the term means current monthly income received by the debtor 
(exclusive of 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 for (1) the maintenance or 
support of the debtor or dependent of the debtor; (2) a 
domestic support obligation that first becomes due after the 
petition is filed; (3) certain charitable contributions; and 
(4) if the debtor is engaged in business, the payment of 
expenditures necessary for the continuation, preservation, and 
operation of such business. If the debtor's income exceeds the 
applicable State median income threshold, then the expenses of 
the debtor under this provision are determined in accordance 
with section 707(b)(2)(A) and (B), which specifies what monthly 
expenses a debtor may claim.
    Section 102(i) makes a clerical amendment to the table of 
sections.
Section 103. Sense of Congress and study
    Section 103(a) states that it is the sense of Congress that 
the Secretary of the Treasury has the authority to alter the 
Internal Revenue Service expense standards established to set 
guidelines for repayment plans as needed to accommodate their 
use under section 707(b) of the Bankruptcy Code.
    Section 103(b) requires the Director of the Executive 
Office for United States Trustees to submit a report, not later 
than 2 years from the enactment date of the Act, containing 
findings with regard to the use of the Internal Revenue Service 
expense standards for determining a debtor's current monthly 
expenses under section 707(b) of the Bankruptcy Code and the 
impact that these standards have on debtors and the bankruptcy 
courts. The report may include recommendations for amendments 
to the Bankruptcy Code consistent with the Director's findings.
Section 104. Notice of alternatives
    Section 104 amends section 342(b) of the Bankruptcy Code to 
require the clerk to give an individual with primarily consumer 
debts--before he or she files for bankruptcy relief--notice of 
the following:

        (1) a brief description of the various forms of 
        bankruptcy relief, including an explanation of the 
        general purpose, benefits, and costs of proceeding 
        under each form of relief;
        (2) a brief description of the services available from 
        credit counseling agencies;
        (3) a statement explaining that a person who knowingly 
        and fraudulently conceals assets or makes a false oath 
        or statement under penalty of perjury shall be subject 
        to fine, imprisonment, or both; and
        (4) a statement explaining that all information 
        supplied by a debtor in connection with the case is 
        subject to examination by the Attorney General.
Section 105. Debtor financial management training test program
    Section 105(a) requires the Director of the Executive 
Office for United States trustees to (1) consult with debtor 
education experts and others who operate financial management 
education programs; and (2) develop a financial management 
training curriculum and materials to teach individual debtors 
how to manage their personal finances better.
    Section 105(b) requires the Director to select six judicial 
districts to test the effectiveness of such curriculum and 
materials for an 18-month period beginning not later than 270 
days after the Act's enactment date. The curriculum and 
materials shall be used in these six districts as the personal 
financial management instructional course required by section 
111 of the Bankruptcy Code, as added by the Act.
    Section 105(c) requires the Director to evaluate the 
effectiveness of the curriculum and materials as well as to 
assess the effectiveness of a sample of existing consumer 
education programs (such as those described in the Report of 
the National Bankruptcy Review Commission) that are 
representative of consumer education programs sponsored by the 
credit industry, chapter 13 trustees, and consumer counseling 
groups. Not later than 3 months after concluding such 
evaluation, the Director must submit a report on the 
effectiveness and cost of such curriculum, materials, and 
programs.
Section 106. Credit counseling
    Section 106(a) amends section 109 of the Bankruptcy Code to 
require, as a condition for eligibility to be a debtor, that an 
individual receive credit counseling within the 180-day period 
preceding the filing of a bankruptcy case by such individual. 
The credit counseling must be provided by an approved nonprofit 
budget and credit counseling agency consisting of either an 
individual or group briefing (which may include a briefing 
conducted telephonically or via the Internet) that outlines 
opportunities for available credit counseling and assists the 
individual in performing a budget analysis.
    The determination by the United States trustee or 
bankruptcy administrator with regard to whether approved 
nonprofit budget and credit counseling agencies in that 
district are not reasonably able to provide adequate services 
must be reviewed annually. The United States trustee or 
bankruptcy administrator, however, may disapprove a nonprofit 
budget and credit counseling service at any time.
    The mandatory credit counseling requirement does not apply 
if the debtor resides in a district where the United States 
trustee or bankruptcy administrator determines that the 
approved nonprofit budget and credit counseling agencies in 
that district are not reasonably able to provide adequate 
services.
    In addition, this requirement does not apply if the debtor 
files a certification that: (1) describes exigent circumstances 
meriting a waiver of this requirement; (2) states that the 
debtor requested credit counseling services from an approved 
nonprofit budget and credit counseling agency, but was unable 
to obtain such services within the 5-day period beginning on 
the date the debtor made the request; and (3) is satisfactory 
to the court. This exemption terminates when the debtor meets 
the requirements for credit counseling participation, but not 
longer than 30 days after the case is filed, unless the court, 
for cause, extends this period for an additional 15 days.
    Section 106(b) amends section 727(a) of the Bankruptcy Code 
to provide that a chapter 7 debtor's discharge must be denied 
if the debtor fails to complete a personal financial management 
instructional course after the filing of the bankruptcy case. 
This provision, however, does not apply if the debtor resides 
in a district where the United States trustee or bankruptcy 
administrator has determined that the approved instructional 
courses in that district are not adequate. Such determination 
must be reviewed annually by the United States trustee or 
bankruptcy administrator.
    Section 106(c) amends section 1328 of the Bankruptcy Code 
to add a chapter 13 debtor's failure to complete an 
instructional course concerning personal financial management 
as a ground for denying a discharge, unless the debtor resides 
in a district where the United States trustee or bankruptcy 
administrator has determined that the approved instructional 
courses in that district are not adequate. Such determination 
must be reviewed annually by the United States trustee or 
bankruptcy administrator.
    Section 106(d) amends section 521 of the Bankruptcy Code to 
mandate that an individual debtor file with the court a 
certificate from the approved nonprofit budget and credit 
counseling agency that rendered the requisite services 
described under section 109(h), as added by this act. The 
debtor must file a copy of the repayment plan, if any, that was 
developed by the agency together with the certificate, which 
must describe the services rendered.
    Section 106(e) adds a new provision to the Bankruptcy Code 
requiring the clerk for each district to maintain for the 
public's use a list of approved (1) credit counseling agencies 
that provide the services described in section 109(h) of the 
Bankruptcy Code, as added by this Act; and (2) personal 
financial management instructional courses. Under this 
provision, the United States trustee or bankruptcy 
administrator may only approve a credit counseling agency or 
personal financial management instructional course that 
satisfies certain specified criteria. If such agency or 
instruction course is approved, the approval may only be for a 
probationary period of up to 6 months. At the conclusion of the 
probationary period, the United States trustee or bankruptcy 
administrator may only approve such agency or instructional 
course for an additional 1-year period and thereafter for 
successive 1-year periods. Within 30 days after any final 
decision occurring 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.
    In addition, section 106(e) provides that the United States 
district court may, at any time, investigate the qualifications 
of a credit counseling agency and request it to produce 
documents to ensure the agency's integrity and effectiveness. 
The district court may remove a credit counseling agency from 
the approved list that does not meet the specified 
qualifications. Section 106(e) prohibits a credit counseling 
agency from providing information as to whether an individual 
debtor has received or sought personal financial management 
instruction from such agency to a credit reporting entity.
    A credit counseling agency that willfully or negligently 
fails to comply with any requirement under the Bankruptcy Code 
with respect to a debtor shall be liable to the debtor for 
damages in an amount equal to (1) actual damages sustained by 
the debtor as a result of the violation and (2) any court costs 
or reasonable attorneys' fees incurred to recover such damages.
    Section 106(f) amends section 362 of the Bankruptcy Code in 
two respects. First, it provides that if a chapter 7, 11, or 13 
case is dismissed due to the creation of a debt repayment plan, 
the presumption under section 362(c)(2) shall not apply to any 
subsequent bankruptcy case commenced by the debtor. Second, it 
directs that the court, on request of a party in interest, must 
issue an order under section 362(c) confirming that the 
automatic stay has terminated.
Section 107. Schedules of reasonable and necessary expenses
    Section 107 requires the Director of the Executive Office 
for United States Trustees to issue schedules of reasonable and 
necessary administrative expenses (including reasonable 
attorneys' fees) relating to the administration of a chapter 13 
plan for each judicial district.

                 TITLE II. ENHANCED CONSUMER PROTECTION

          SUBTITLE A. PENALTIES FOR ABUSIVE CREDITOR PRACTICES

Section 201. Promotion of alternative dispute resolution
    Section 201(a) amends section 502 of the Bankruptcy Code to 
permit the court, after a hearing on motion of the debtor, to 
reduce a wholly unsecured consumer claim by up to 20 percent if 
the debtor can establish by clear and convincing evidence that 
the claim was filed by a creditor who unreasonably refused to 
negotiate a reasonable alternative repayment schedule proposed 
by an approved credit counseling agency on behalf of the 
debtor. The debtor must also establish by clear and convincing 
evidence that the offer was made at least 60 days before the 
filing of the petition. In addition, the offer must have 
provided for payment of at least 60 percent of the amount of 
the claim over a period not exceeding the loan's repayment 
period, or a reasonable extension thereof. Further, no part of 
the claim under the alternative repayment schedule may be 
nondischargeable.
    Section 201(b) amends section 547 of the Bankruptcy Code to 
prohibit the avoidance as a preferential transfer a payment by 
a debtor to a creditor pursuant to an alternative repayment 
plan created by an approved credit counseling agency.
Section 202. Effect of discharge
    Section 202 amends section 524 of the Bankruptcy Code in 
two respects. First, it makes the willful failure of a creditor 
to credit payments received under a confirmed chapter 11, 12, 
or 13 plan a violation of the discharge injunction if the 
creditor's action to collect and failure to credit payments 
caused material injury to the debtor. This provision does not 
apply if the plan is dismissed or in default, or where the 
creditor did not receive payments pursuant to the plan.
    Second, section 202 amends section 524 of the Bankruptcy 
Code to provide that the discharge injunction does not apply to 
an act by a creditor having a claim secured by an interest in 
real property that is the debtor's principal residence if such 
act is (1) in the ordinary course of business between the 
creditor and the debtor; and (2) limited to seeking or 
obtaining periodic payments associated with a valid security 
interest in lieu of the creditor pursuing in rem relief to 
enforce the underlying lien.
Section 203. Discouraging abuse of reaffirmation practices
    Section 203 consists of a comprehensive overhaul of the law 
applicable to reaffirmation agreements. Section 203(a) mandates 
the provision of certain specified disclosures, which are the 
only disclosures required in connection with a reaffirmation 
agreement. These disclosures must be in written form and be 
made clearly and conspicuously. In addition, the disclosure 
statement must include certain advisories and explanations. At 
the election of the creditor, the disclosure statement may 
include a repayment schedule. If the debtor is represented by 
counsel, section 203(a) mandates that the attorney file a 
certification stating, inter alia, that the agreement 
represents a fully informed and voluntary agreement by the 
debtor, that the agreement does not impose an undue hardship on 
the debtor or any dependent of the debtor, and that the 
attorney advised the debtor of the legal effect and 
consequences of such agreement. Where the presumption of undue 
hardship applies, the attorney must also certify that it is his 
or her opinion that the debtor is able to make the payments 
required under the reaffirmation agreement. Further, the debtor 
must submit a statement setting forth the debtor's monthly 
income and expenditures. If the debtor is represented by 
counsel and the debt being reaffirmed is owed to a credit 
union, a modified version of this statement may be used.
    Notwithstanding any other provision of the Bankruptcy Code, 
section 203(a) permits a creditor to (1) accept payments from a 
debtor before and after the filing of a reaffirmation agreement 
with the court; and (2) accept payments from a debtor pursuant 
to a reaffirmation agreement that the creditor believes in good 
faith to be effective. It further provides that certain 
specified disclosure requirements shall be satisfied if such 
disclosures are given in good faith.
    If the amount of the scheduled payment due on the 
reaffirmed debt (as disclosed in the debtor's statement) is 
greater than the debtor's available income, it is presumed for 
60 days from the date on which the reaffirmation agreement is 
filed with the court that the agreement presents an undue 
hardship. Section 203(a) requires the court to review such 
presumption, which can be rebutted if the debtor identifies in 
writing additional sources of funds that would enable the 
debtor to make the required payments on the reaffirmed debt. If 
the presumption is not rebutted to the satisfaction of the 
court, the court may disapprove the reaffirmation agreement. No 
reaffirmation agreement may be disapproved without notice and 
hearing to the debtor and creditor. The hearing must be 
concluded before the entry of the debtor's discharge. The 
requirements set forth in this paragraph do not apply to 
reaffirmation agreements where the creditor is a credit union, 
as defined.
    Section 203(b) requires the Attorney General to designate a 
U.S. attorney for each judicial district and an Federal Bureau 
of Investigation agent for each field office to have primary 
law enforcement responsibility for violations of sections 152 
and 157 of title 18 of the United States Code with respect to 
abusive reaffirmation agreements and materially fraudulent 
statements in bankruptcy schedules that are intentionally false 
or misleading. The U.S. attorney designated under this 
provision has primary responsibility with respect to bankruptcy 
investigations under section 3057 of title 18, United States 
Code. The bankruptcy courts must establish procedures for 
referring any case in which a materially fraudulent bankruptcy 
schedule has been filed. The provision also makes a clerical 
amendment to the table of sections in title 18.

                   SUBTITLE B. PRIORITY CHILD SUPPORT

Section 211. Definition of domestic support obligation
    Section 211 amends section 101 of the Bankruptcy Code to 
define a domestic support obligation as a debt that accrues 
pre- or postpetition (including interest that accrues pursuant 
to applicable nonbankruptcy law) and is owed to or recoverable 
by a spouse, former spouse, or child of the debtor, or that 
child's parent or legal guardian, or a responsible relative. It 
also includes a debt owed to or recoverable by a governmental 
unit. To qualify as a domestic support obligation, the debt 
must be in the nature of alimony, maintenance, or support, 
without regard to whether such debt is expressly so designated. 
It must be established or subject to establishment either pre- 
or postpetition pursuant to a: (i) 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. It does not apply to a debt assigned to a nongovernmental 
entity, unless it was assigned voluntarily by the spouse, 
former spouse, child, or parent solely for the purpose of 
collecting the debt.
Section 212. Priorities for claims for domestic support obligations
    Section 212 amends 507(a) of the Bankruptcy Code to make 
domestic support obligations 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 or filed 
by a governmental unit on behalf of such person payable before 
all other expenses and claims, including expenses of 
administration from the assets of a bankruptcy estate. Within 
this priority, allowed claims for domestic support obligations 
filed by a governmental unit must be paid on the condition that 
funds received by such unit under this provision be applied and 
distributed in accordance with nonbankruptcy law. Remaining 
funds may be used to pay a domestic support obligation assigned 
to a governmental unit (unless such obligation is assigned 
voluntarily by a spouse, former spouse, child, parent, legal 
guardian, or responsible relative of the child for the purpose 
of collecting the debt) or owed directly to such entity if the 
funds are applied and distributed in accordance with applicable 
nonbankruptcy law.
Section 213. Requirements to obtain confirmation and discharge in cases 
        involving domestic support obligations
    Section 213(1) amends section 1129(a) of the Bankruptcy 
Code to mandate the payment of certain postpetition domestic 
support obligations as a condition of confirmation in a chapter 
11 case. Section 213(2) amends section 1208(c) of the 
Bankruptcy Code to provide that the failure of a chapter 12 
debtor to pay a postpetition domestic support obligation 
constitutes cause for conversion or dismissal of the debtor's 
case. Section 213(3) amends section 1222(a) of the Bankruptcy 
Code to permit a chapter 12 debtor to propose a plan that 
provides for less than full payment of all amounts owed for a 
claim entitled to priority under section 507(a)(1)(B) if all of 
the debtor's projected disposable income for a 5-year period is 
applied to make payments under the plan. Section 213(4) amends 
section 1222(b) of the Bankruptcy Code to permit a chapter 12 
debtor, pursuant to a plan, to pay postpetition interest on 
claims that are nondischargeable under Section 1328(a), but 
only to the extent that the debtor has disposable income 
available to pay such interest after payment of all allowed 
claims. Section 213(5) amends section 1225(a) of the Bankruptcy 
Code to require a chapter 12 debtor to be current with certain 
postpetition domestic support obligations as a condition of 
confirmation. Section 213(6) amends section 1228(a) to 
condition the granting of a chapter 12 discharge on the 
debtor's payment of certain postpetition domestic support 
obligations. Section 213(7) amends section 1307 of the 
Bankruptcy Code to add nonpayment of a postpetition domestic 
support obligation as a ground for conversion or dismissal of a 
chapter 13 case. Section 213(8) amends section 1322(a) to 
permit a chapter 13 debtor, pursuant to a plan, to pay less 
than the full amount of a claim entitled to priority under 
section 507(a)(1)(B) if the plan provides that all of the 
debtor's projected disposable income over a 5-year period will 
be applied to make payments under the plan. Section 213(9) 
amends section 1322(b) to permit a chapter 13 debtor, pursuant 
to a plan, to pay postpetition interest on claims that are 
nondischargeable under section 1328(a), but only to the extent 
that the debtor has disposable income available to pay such 
interest after payment of all allowed claims. Section 213(10) 
amends section 1325(a) of the Bankruptcy Code to require, as a 
condition of confirmation, that a chapter 13 debtor pay certain 
postpetition domestic support obligations. Section 213(11) 
amends section 1328(a) of the Bankruptcy Code to condition the 
granting of a chapter 13 discharge on the debtor's payment of 
certain postpetition domestic support obligations.
Section 214. Exceptions to automatic stay in domestic support 
        proceedings
    Section 214 amends section 362(b) of the Bankruptcy Code to 
except from the automatic stay actions or proceedings 
pertaining to child custody and visitation, domestic violence, 
and marriage dissolution to the extent that they do not pertain 
to property determinations concerning property of the estate. 
In addition, section 214 amends section 362(b) to except from 
the automatic stay the withholding, suspension, or restriction 
of a driver's license, or a professional, occupational or 
recreational license under State law pursuant to section 
466(a)(16) of the Social Security Act. Further, section 214 
excepts from the automatic stay the reporting of overdue 
support owed by a parent to any consumer reporting agency 
pursuant to section 466(a)(7) of the Social Security Act; the 
interception of tax refunds as authorized by sections 464 and 
466(a)(3) of the Social Security Act; and the enforcement of 
medical obligations as specified under title IV of the Social 
Security Act.
Section 215. Nondischargeability of certain debts for alimony, 
        maintenance, and support
    Section 215 amends section 523(a)(5) of the Bankruptcy Code 
to provide that a ``domestic support obligation'' (as defined 
in section 211 of the Act) is nondischargeable. With respect to 
obligations that are not domestic support obligations, but 
incurred in connection with a divorce or separation or related 
action, section 215 provides that these obligations are also 
nondischargeable irrespective of the debtor's inability to pay 
such debts. In addition, section 215 amends section 523(c) of 
the Bankruptcy Code to delete the reference to section 
523(a)(15).
Section 216. Continued liability of property
    Section 216 amends section 522(c) of the Bankruptcy Code to 
make exempt property liable for nondischargeable domestic 
support obligations notwithstanding any contrary provision of 
applicable nonbankruptcy law. It also makes a conforming 
amendment to section 522(f)(1)(A) of the Bankruptcy Code and 
corrects an erroneous statutory reference in section 522(g)(2).
Section 217. Protection of domestic support claims against preferential 
        transfer motions
    Section 217 makes a conforming amendment to section 
547(c)(7) of the Bankruptcy Code, which provides that a bona 
fide payment of a debt for a domestic support obligation may 
not be avoided as a preferential transfer.
Section 218. Disposable income defined
    Section 218(a) amends section 1225(b)(2)(A) of the 
Bankruptcy Code to provide that disposable income in a chapter 
12 case does not include payments for postpetition domestic 
support obligations.
    Section 218(b) amends section 1325(b)(2)(A) of the 
Bankruptcy Code to provide that disposable income in a chapter 
13 case does not include payments for postpetition domestic 
support obligations.
Section 219. Collection of child support
    Section 219 amends sections 704, 1106, 1202, and 1302 of 
the Bankruptcy Code to require trustees in chapter 7, 11, 12, 
and 13 cases to provide certain types of notices to child 
support claimants and governmental enforcement agencies. First, 
the trustee must notify the claimant in writing of the right to 
use the services of a State child support enforcement agency 
established under sections 464 and 466 of the Social Security 
Act in the State where the claimant resides and include the 
agency's address and telephone number. The notice must also 
explain the claimant's right to payment under the applicable 
chapter of the Bankruptcy Code. Second, the trustee must 
provide written notice to the governmental enforcement agency 
of the name, address, and telephone number of the child support 
claimant. Third, the trustee must notify both the child support 
claimant and the State agency that the debtor was granted a 
discharge as well as supply them with the debtor's last known 
address, the last known name and address of the debtor's 
employer, and the name of each creditor holding a debt that is 
not discharged under section 523(a)(2), (4) or (14A), or 
holding a debt that is reaffirmed pursuant to section 524 of 
the Bankruptcy Code. If a child support claimant or State 
agency is not able to locate the debtor, such claimant or 
agency may request such information from a creditor holding a 
debt that is not discharged under section 523(a)(2), (4) or 
(14A) or that is reaffirmed pursuant to section 524 of the 
Bankruptcy Code. Section 219, in addition, provides that, 
notwithstanding any other provision of law, a creditor who 
discloses a debtor's last known address in connection with such 
request is not liable to the debtor or any other person by 
reason of making that disclosure.
Section 220. Nondischargeability of certain educational benefits and 
        loans
    Section 220 amends section 523(a)(8) of the Bankruptcy Code 
to provide that a debt for a qualified education loan (as 
defined in section 221(e)(1) of the Internal Revenue Code) is 
nondischargeable, unless excepting such debt from discharge 
would impose an undue hardship on the debtor and the debtor's 
dependents.

                 SUBTITLE C. OTHER CONSUMER PROTECTIONS

Section 221. Amendments to discourage abusive bankruptcy filings
    Section 221 makes a series of amendments to section 110 of 
the Bankruptcy Code. First, it clarifies the definition of a 
bankruptcy petition preparer with respect to persons under the 
direct supervision of an attorney. Second, it amends 
subsections (b)(1) and (c)(2) of section 110 to provide that if 
a bankruptcy petition preparer is not an individual, then an 
officer, principal, responsible person, or partner of the 
preparer must sign certain documents filed in connection with 
the bankruptcy case as well as state the person's name and 
address on such documents. Third, it requires a bankruptcy 
petition preparer to give the debtor written notice explaining 
that the preparer is not an attorney and may not practice law 
or give legal advice. The notice may include examples of legal 
advice that a preparer may not provide. The notice, which must 
be signed by the preparer under penalty of perjury and the 
debtor, is required to be filed with any document for filing. 
Fourth, it requires the Supreme Court to promulgate rules or 
the Judicial Conference of the United States to issue 
guidelines for setting maximum fees. Fifth, it specifies that 
the bankruptcy petition preparer file a declaration certifying 
that the preparer complied with the notification requirements 
concerning the preparer's fees. Sixth, it requires the court to 
order the turnover of specified fees for services rendered 
within 12 months of the filing if such fees violate any rule or 
guideline. Seventh, it allows a debtor to exempt fees recovered 
under this provision pursuant to section 522(b) of the 
Bankruptcy Code. Eighth, it specifically authorizes the court 
to enjoin a bankruptcy petition preparer who has failed to 
comply with a prior order issued under section 110. Ninth, it 
generally revises section 110's penalty provisions and 
specifies that the penalties are to be paid to a special fund 
of the United States trustee to pay for enforcement of this 
provision.
Section 222. Sense of Congress
    Section 222 expresses the sense of Congress that the States 
should develop personal finance curricula for use in elementary 
and secondary schools.
Section 223. Additional amendments to title 11, United States Code
    Section 223 amends section 507(a) to add a tenth-level 
priority for claims based on death or personal injuries 
resulting from the debtor's operation of a motor vehicle or 
vessel while intoxicated.
Section 224. Protection of retirement savings in bankruptcy
    Section 224(a) amends section 522 to permit a debtor to 
exempt certain retirement funds to the extent that those monies 
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 and that have received a favorable 
determination pursuant to Internal Revenue Code section 7805. 
If the retirement monies are in a retirement fund that has not 
received a favorable determination, those monies are exempt if 
the debtor demonstrates that no prior unfavorable determination 
has been made by a court or the Internal Revenue Service, and 
the retirement fund is in substantial compliance with the 
applicable requirements of the Internal Revenue Code. If the 
retirement fund fails to be in substantial compliance with 
applicable law, the debtor may claim the retirement funds as 
exempt if the debtor is not materially responsible for such 
failure. This section also applies to certain direct transfers 
and rollover distributions. In addition, this provision ensures 
that the specified retirement funds are exempt under State as 
well as Federal law.
    Section 224(b) amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the withholding of income 
from a debtor's wages pursuant to an agreement authorizing such 
withholding for the benefit of a pension, profit-sharing, stock 
bonus, or other employer-sponsored plan established under 
Internal Revenue Code section 401, 403, 408, 408A, 414, 457, or 
501(a) to the extent that the amounts withheld are used solely 
to repay a loan from a plan as authorized by section 408(b)(1) 
of the Employee Retirement Income Security Act of 1974 or that 
they are subject to Internal Revenue Code section 72(p). The 
exception also applies to certain thrift savings plan loans.
    Section 224(c) amends section 523(a) of the Bankruptcy Code 
to except from discharge any amount owed by the debtor to a 
pension, profit-sharing, stock bonus, or other plan established 
under Internal Revenue Code section 401, 403, 408, 408A, 414, 
457, or 501(c) under a loan authorized under section 408(b)(1) 
of the Employee Retirement Income Security Act of 1974 or 
subject to Internal Revenue Code section 72(p). The exception 
also pertains to a loan from a thrift savings plan made under a 
governmental plan pursuant to section 414(d) or a contract or 
account under section 403(b) of the Internal Revenue Code.
    Section 224(d) amends section 1322 of the Bankruptcy Code 
to provide that a chapter 13 plan may not materially alter the 
terms of a loan owed to a pension, profit-sharing, stock bonus, 
or other plan established under the Internal Revenue Code 
section 401, 403, 408, 408A, 414, 457, or 501(a). In addition, 
it specifies that any amounts required to repay such loan shall 
not constitute ``disposable income'' under section 1325 of the 
Bankruptcy Code.
    Section 224(e) amends section 522 of the Bankruptcy Code to 
impose a $1 million cap (periodically adjusted pursuant to 
section 104 of the Bankruptcy Code to reflect changes in the 
Consumer Price Index) on the value of the debtor's interest in 
an individual retirement account established under either 
section 408 or 408A of the Internal Revenue Code (other than a 
simplified employee pension account under section 408(k) or a 
simple retirement account under section 408(p) of the Internal 
Revenue Code) that a debtor may claim as exempt property. This 
limit applies without regard to amounts attributable to 
rollover contributions made pursuant to section 402(c), 
402(e)(6), 403(a)(4), 403(a)(5), or 403(b)(8) of the Internal 
Revenue Code and earnings thereon. The cap may be increased if 
required in the interest of justice.
Section 225. Protection of education savings in bankruptcy
    Section 225(a) amends section 541 of the Bankruptcy Code to 
provide that funds placed not less than 365 days before the 
filing of the bankruptcy case in a education individual 
retirement account are not property of the estate if certain 
criteria are met. First, the designated beneficiary of such 
account must be a child, stepchild, grandchild or step-
grandchild of the debtor for the taxable year during which 
funds were placed in the account. A legally adopted child or a 
foster child, under certain circumstances, may also qualify as 
a designated beneficiary. Second, such funds may not be pledged 
or promised to an entity in connection with any extension of 
credit and they may not be excess contributions (as described 
in section 4973(e) of the Internal Revenue Code). Third, a 
$5,000 cap applies to funds deposited between 720 days and 365 
days before the filing date. Similar criteria apply with 
respect to funds used to purchase a tuition credit or 
certificate or to funds contributed to a qualified State 
tuition plan under section 529(b)(1)(A) of the Internal Revenue 
Code.
    Section 225(b) requires a debtor to file with the court a 
record of any interest that the debtor has in an education 
individual retirement account or qualified State tuition 
program.
Section 226. Definitions
    Section 226(a) amends section 101 of the Bankruptcy Code to 
add certain definitions with respect to debt relief agencies. 
Section 226(a)(1) defines an ``assisted person'' as a person 
whose debts consist primarily of consumer debts and whose 
nonexempt assets are less than $150,000. Section 226(a)(2) 
defines ``bankruptcy assistance'' as any goods or services sold 
or otherwise provided with the express or implied purpose of 
giving information, advice, or counsel; preparing documents for 
filing; or attending a meeting of creditors pursuant to section 
341; appearing in a proceeding on behalf of a person; or 
providing legal representation with respect to a case or 
proceeding under the Bankruptcy Code. Section 226(a)(3) defines 
a ``debt relief agency'' as any person (including a bankruptcy 
petition preparer) who provides bankruptcy assistance to an 
assisted person in return for the payment of money or other 
valuable consideration. The definition does not include a 
section 501(c)(3) nonprofit organization, depository 
institution, or Federal credit union which provides assistance 
with respect to restructuring debts. In addition, the 
definition does not apply to an author, publisher, distributor, 
or seller of works subject to copyright protection under title 
17 of the United States Code when acting in such capacity.
    Section 226(b) amends section 104(B)(1) of the Bankruptcy 
Code to permit the monetary amount set forth in the definition 
of an ``assisted person'' to be automatically adjusted to 
reflect the change in the Consumer Price Index.
Section 227. Restrictions on debt relief agencies
    Section 227 creates a new provision in the Bankruptcy Code 
to prohibit a debt relief agency from engaging in certain 
activities. First, section 227 bars the agency from failing to 
perform any service that it informed an assisted person would 
be provided. Second, this provision prohibits a debt relief 
agency from advising an assisted person to make an untrue or 
misleading statement. Third, it prohibits a debt relief agency 
from misrepresenting the services it provides and the benefits 
that an assisted person may receive as a result of bankruptcy. 
Fourth, section 227 bans a debt relief agency from advising an 
assisted person or prospective assisted person to incur 
additional debt in contemplation of filing for bankruptcy 
relief or for the purpose of paying fees for services rendered 
by an attorney or petition preparer in connection with the 
bankruptcy case. Any waiver by an assisted person of the 
protections under this provision are unenforceable, except 
against a debt relief agency.
    In addition, section 227 imposes penalties for the 
violation of section 526, 527 or 528 of the Bankruptcy Code (as 
enacted by this Act). First, any contract between a debt relief 
agency and an assisted person that does not comply with these 
provisions is void and may not be enforced by any State or 
Federal court or by any person, except an assisted person. 
Second, a debt relief agency is liable to an assisted person, 
under certain circumstances, for any fees or charges paid by 
such person to the agency, actual damages, and reasonable 
attorneys' fees and costs. A chief law enforcement officer of a 
State having reason to believe that a person has violated or is 
violating section 526 may seek to have such violation enjoined 
and recover actual damages arising from such violation. Third, 
section 227 provides that the United States district court has 
concurrent jurisdiction of certain actions under section 526. 
Fourth, section 227 provides that sections 526, 527 and 528 
preempt inconsistent State law. In addition, it provides that 
these provisions do not limit or curtail the authority of a 
Federal court, a State, or a subdivision or instrumentality of 
a State, to determine and enforce qualifications for the 
practice of law before the Federal court or under the laws of 
that State.
Section 228. Disclosures
    Section 228 mandates that a debt relief agency provide 
certain written notices to an assisted person. These include 
the notice required under section 342(b)(1), as amended by this 
Act, as well as a notice advising that: (1) all information the 
assisted person provides in connection with the case must be 
complete, accurate and truthful; (2) all assets and liabilities 
must be completely and accurately disclosed in the documents 
filed to commence the case, including the replacement value of 
each asset (if required) after reasonable inquiry to establish 
such value; (3) current monthly income, monthly expenses and, 
in a chapter 13 case, disposable income must be stated after 
reasonable inquiry; and (4) information an assisted person 
provides may be audited and that the failure to provide such 
information may result in dismissal of the case or other 
sanction including, in some instances, criminal sanctions. In 
addition, the agency must supply certain specified advisories 
and explanations regarding the bankruptcy process. Further, 
this provision requires the agency to advise an assisted person 
(to the extent permitted under nonbankruptcy law) concerning 
asset valuation, the calculation of disposable income, and the 
determination of exempt property.
Section 229. Requirements for debt relief agencies
    Section 229 requires a debt relief agency--not later than 
five business days after the first date on which it provides 
any bankruptcy assistance services to an assisted person (but 
prior to such assisted person's petition being filed)--to 
execute a written contract with the assisted person specifying 
clearly and conspicuously the services the agency will provide, 
the basis on which fees will be charged for such services, and 
the terms of payment. The assisted person must be given a copy 
of the fully executed and completed contract in a form the 
person can retain. The debt relief agency must include certain 
specified mandatory statements in any advertisement of 
bankruptcy assistance services or regarding the benefits of 
bankruptcy that is directed to the general public whether 
through the general media, seminars, specific mailings, 
telephonic or electronic messages, or otherwise.
Section 230. GAO study
    Section 230 directs the Comptroller General of the United 
States to conduct a study of and to report on the feasibility, 
efficacy and cost of requiring a trustee to supply certain 
specified information about a debtor's bankruptcy case to the 
Office of Child Support Enforcement for the purpose of 
determining whether a debtor has outstanding child support 
obligations.

                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

Section 301. Reinforcement of the fresh start
    Section 301 makes a clarifying amendment to section 
523(a)(17) of the Bankruptcy Code concerning the 
dischargeability of court fees incurred by prisoners. Section 
523(a)(17) was added to the Bankruptcy Code by the Omnibus 
Consolidated Rescissions and Appropriations Act of 1996 \1\ to 
except from discharge the filing fees and related costs and 
expenses assessed by a court in a civil case or appeal. Because 
of a drafting error, however, this provision might be construed 
to apply to filing fees, costs or expenses incurred by any 
debtor, not solely by those who are prisoners. The amendment 
eliminates the ambiguity and makes other conforming changes to 
narrow its application in accordance with its original intent.
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    \1\ Pub. L. No. 104-134, Section 804(b) (1996).
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Section 302. Discouraging bad faith repeat filings
    Section 302(a) amends section 362(c) of the Bankruptcy Code 
to terminate the automatic stay within 30 days in a chapter 7, 
11, or 13 case filed by or against an individual if such 
individual was a debtor in a previously dismissed case pending 
within the preceding 1-year period. The provision does not 
apply to a case refiled under a chapter other than chapter 7 
after dismissal of the prior chapter 7 case pursuant to section 
707(b) of the Bankruptcy Code. Upon motion of a party in 
interest, the court may continue the stay after notice and a 
hearing completed prior to the expiration of the 30-day period 
if such party demonstrates that the latter case was filed in 
good faith as to the creditors who are stayed by the filing. 
For purposes of this provision, a case is presumptively not 
filed in good faith as to all creditors if:

        (1) more than one bankruptcy case under chapter 7, 11 
        or 13 was previously filed by the debtor within the 
        preceding 1-year period;
        (2) the prior chapter 7, 11, or 13 case of the debtor 
        was dismissed within the preceding year for the 
        debtor's failure to (a) file or amend without 
        substantial excuse a document required under the 
        Bankruptcy Code or the court, (b) provide adequate 
        protection ordered by the court, or (c) perform the 
        terms of a confirmed plan; or
        (3) there has been no substantial change in the 
        debtor's financial or personal affairs since the 
        dismissal of the prior case, or there is no reason to 
        conclude that the pending case will conclude either 
        with a discharge (if a chapter 7 case) or confirmation 
        (if a chapter 11 or 13 case).

    In addition, a case is presumptively deemed filed not in 
good faith as to any creditor who obtained relief from the 
automatic stay in the prior case or sought such relief in the 
prior case and such action was pending at the time of the prior 
case's dismissal. The presumption may be rebutted by clear and 
convincing evidence. A similar presumption applies if two or 
more bankruptcy cases were pending in the 1-year preceding the 
filing of the pending case.
Section 303. Curbing abusive filings
    Section 303(a) amends section 362(d) of the Bankruptcy Code 
to add a new ground for relief from the automatic stay. It 
provides that cause for relief from the automatic stay may be 
established for a creditor whose claim is secured by an 
interest in real estate, if the court finds that the filing of 
the bankruptcy case was part of a scheme to delay, hinder and 
defraud creditors that involved either (a) a transfer of all or 
part of an ownership interest in real property without such 
creditor's consent or without court approval; or (b) multiple 
bankruptcy filings affecting the real property. If recorded in 
compliance with applicable State law governing notice of an 
interest in or a lien on real property, an order entered under 
this provision is binding in any other bankruptcy case for 2 
years from the date of entry of such order. A debtor in a 
subsequent case may move for relief based upon changed 
circumstances or for good cause shown after notice and a 
hearing. Section 303(a) further provides that any Federal, 
State or local governmental unit that accepts a notice of 
interest or a lien in real property, must accept a certified 
copy of an order entered under this provision.
    Section 303(b) amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay an act to enforce any lien 
against or security interest in real property within 2 years 
following the entry of an order entered under section 
362(d)(4). A debtor, in a subsequent case, may move for relief 
from such order based upon changed circumstances or for other 
good cause shown after notice and a hearing. Section 303(b) 
also provides that the automatic stay does not apply in a case 
where the debtor (a) is ineligible to be a debtor in a 
bankruptcy case pursuant to section 109(g) of the Bankruptcy 
Code; or (b) filed the bankruptcy case in violation of an order 
issued in a prior bankruptcy case prohibiting the debtor from 
being a debtor in a subsequent bankruptcy case.
Section 304. Debtor retention of personal property security
    Section 304(1) amends section 521(a) of the Bankruptcy Code 
to provide that an individual who is a chapter 7 debtor may not 
retain possession of personal property securing, in whole or in 
part, a purchase money security interest unless the debtor, 
within 45 days after the first meeting of creditors, enters 
into a reaffirmation agreement with the creditor, or redeems 
the property. If the debtor fails to so act within the 
prescribed period, the property is not subject to the automatic 
stay and is no longer property of the estate. An exception 
applies if the court: (a) determines on motion of the trustee 
filed before the expiration of the 45-day period that the 
property has consequential value or would benefit the 
bankruptcy estate; (b) orders adequate protection of the 
creditor's interest; and (c) directs the debtor to deliver any 
collateral in the debtor's possession.
    Section 304(2) amends section 722 to clarify that a chapter 
7 debtor must pay the redemption value in a lump sum payment at 
the time of redemption.
Section 305. Relief from the automatic stay when the debtor does not 
        complete intended surrender of consumer debt collateral
    Section 305(1) amends section 362 of the Bankruptcy Code to 
terminate the automatic stay with respect to personal property 
of the estate or of the debtor in a chapter 7, 11, or 13 case 
that secures a claim (in whole or in part) or is subject to an 
unexpired lease if the debtor fails to:

        (1) file timely a statement of intention as required 
        by section 521(a)(2) of the Bankruptcy Code with 
        respect to such property;
        (2) indicate in such statement whether the property 
        will be surrendered or retained, and if retained, 
        whether the debtor will redeem the property or reaffirm 
        the debt, or assume an unexpired lease, if the trustee 
        does not; and
        (3) undertake timely the actions specified in such 
        statement of intention, unless the statement specifies 
        reaffirmation and the creditor refuses to enter into 
        the reaffirmation agreement on the original contract 
        terms.

In addition to terminating the automatic stay, this provision 
renders such property no longer property of the estate. An 
exception pertains where the court determines, on the motion of 
the trustee made prior to the expiration of the applicable time 
period under section 521(a)(2), and after notice and a hearing, 
that such property is of consequential value or benefit to the 
estate, orders adequate protection of the creditor's interest, 
and directs the debtor to deliver any collateral in the 
debtor's possession.
    Section 305(2) amends section 521 of the Bankruptcy Code to 
make the requirement to file a statement of intention 
applicable to all secured debts, not just secured consumer 
debts. In addition, it requires the debtor to effectuate his or 
her stated intention within 30 days from the first date set for 
the meeting of creditors. If the debtor fails to timely 
undertake certain specified actions with respect to property 
that a lessor or bailor owns and has leased, rented or bailed 
to the debtor, or in which a creditor has a security interest 
(not otherwise avoidable under section 522(f), 544, 545, 547, 
548 or 549 of the Bankruptcy Code), then nothing in the 
Bankruptcy Code shall prevent or limit the operation of a 
provision in a lease or agreement that places the debtor in 
default by reason of the debtor's bankruptcy or insolvency.
Section 306. Giving secured creditors fair treatment in chapter 13
    Section 306(a) amends section 1325(a)(5)(B)(i) of the 
Bankruptcy Code to require--as a condition of confirmation--
that a chapter 13 plan provide that a secured creditor retain 
its lien until the earlier of when the underlying debt is paid 
or the debtor receives a discharge. If the case is dismissed or 
converted prior to completion of the plan, the secured creditor 
is entitled to retain its lien to the extent recognized under 
applicable nonbankruptcy law.
    Section 306(b) amends section 1325(a) of the Bankruptcy 
Code to provide that section 506 of the Code does not apply to 
a debt incurred within the 5-year period preceding the filing 
of the bankruptcy case if the debt is secured by a purchase 
money security interest in a motor vehicle acquired for the 
personal use of the debtor. Where the collateral consists of 
any other type of property having value, section 306(b) 
provides that section 506 of the Bankruptcy Code does not apply 
if the debt was incurred during the 1-year period preceding the 
filing of the bankruptcy case.
    Section 306(c)(1) adds to section 101 of the Bankruptcy 
Code a definition of the term, ``debtor's principal 
residence,'' which it defines as a residential structure 
(including incidental property) whether or not such structure 
is attached to real property. The definition includes an 
individual condominium or cooperative unit as well as a mobile 
or manufactured home, and a trailer. Section 306(c)(2) defines 
``incidental property'' as property commonly conveyed with a 
principal residence in the area where the residence is located. 
The term includes all easements, rights, appurtenances, 
fixtures, rents, royalties, mineral rights, oil or gas rights 
or profits, water rights, escrow funds, and insurance proceeds. 
Further, the term includes all replacements and additions.
Section 307. Domiciliary requirements for exemptions
    Section 307 amends 522(b)(2)(A) of the Bankruptcy Code to 
extend the time that a debtor must be domiciled in a State 
before he or she may claim that State's exemptions. If the 
debtor's domicile was not located in a single State for the 
730-day period, then the State where the debtor was domiciled 
in the 180-day period preceding the 730-day period (or the 
longer portion of such 180-day period) controls.
Section 308. Residency requirements for homestead exemption
    Section 308 amends section 522 of the Bankruptcy Code to 
reduce the value of a debtor's interest in the following 
property that may be claimed as exempt under certain 
circumstances: (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. Where 
nonexempt property is converted to the above-specified exempt 
property within the 7-year period preceding the filing of the 
bankruptcy case, the exemption must be reduced to the extent 
such value was acquired with the intent to hinder, delay or 
defraud a creditor.
Section 309. Protection secured creditors in chapter 13 cases
    Section 309(a) amends section 348(f)(1) of the Bankruptcy 
Code to specify that valuations of property and allowed secured 
claims in a chapter 13 case only apply if the case is 
subsequently converted to one under chapter 11 or 12. If the 
chapter 13 case is converted to one under chapter 7, then the 
creditor holding security as of the petition date shall 
continue to be secured unless its claim was paid in full as of 
the conversion date. In addition, unless a prebankruptcy 
default has been fully cured at the time of conversion, then 
the default in any bankruptcy proceeding shall have the effect 
given under applicable nonbankruptcy law.
    Section 309(b) amends section 365 of the Bankruptcy Code to 
provide that if a lease of personal property is rejected or not 
timely assumed by the trustee, the leased property is no longer 
property of the estate and the automatic stay under section 362 
is terminated. With regard to a chapter 7 case of an individual 
debtor, the debtor may notify the creditor in writing of his or 
her desire to assume the lease. Upon being so notified, the 
creditor may, at its option, inform the debtor that it is 
willing to have the lease assumed and condition such assumption 
on cure of any outstanding default on terms set by the 
contract. If within 30 days after such notice the debtor 
notifies the lessor in writing that the lease is assumed, the 
debtor (not the bankruptcy estate) assumes the liability under 
the lease. Section 309(b) provides that the automatic stay of 
section 362 and the discharge injunction of section 524 are not 
violated if the creditor notifies the debtor and negotiates a 
cure under section 365(p)(2) (as codified by this Act).
    In an individual chapter 11 or 13 case where the debtor is 
the lessee with respect to personal property and the lease is 
not assumed in the confirmed plan, the lease is deemed rejected 
as of the conclusion of the confirmation hearing. If the lease 
is rejected, the automatic stay under section 362 as well as 
the chapter 13 codebtor stay under section 1301 are 
automatically terminated with respect to such property.
    Section 309(c)(1) amends section 1325(a)(5)(B) of the 
Bankruptcy Code to require that periodic payments pursuant to a 
chapter 13 plan with respect to a secured claim be made in 
equal monthly installments and that the amount of such payments 
shall not be less than the amount sufficient to provide 
adequate protection to the holder of such claim.
    Section 309(c)(2) amends section 1326(a) of the Bankruptcy 
Code to require a chapter 13 debtor to commence making payments 
within 30 days after the filing of the plan or the order for 
relief, whichever is earlier. The amount of such payment must 
be the amount proposed in the plan, scheduled in a personal 
property lease for that portion of the obligation that becomes 
due postpetition (which amount shall reduce the payment 
required to be made to such lessor pursuant to the plan), and 
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 (which 
amount shall reduce the payment required to be made to such 
secured creditor pursuant to the plan). Payments made pursuant 
to a plan must be retained by the chapter 13 trustee until 
confirmation or denial of confirmation. Section 309(c)(2) 
provides that if the plan is confirmed, the trustee must 
distribute payments received from the debtor as soon as 
practicable in accordance with the plan. If the plan is not 
confirmed, the trustee must return to the debtor payments not 
yet due and owing to creditors. Pending confirmation and 
subject to section 363, the court, after notice and a hearing, 
may modify the payments required under this provision. Section 
309(c)(2) requires the debtor, within 60 days following the 
filing of the bankruptcy case, to provide reasonable evidence 
of any required insurance coverage with respect to the use or 
ownership of leased personal property or property securing, in 
whole or in part, a purchase money security interest.
Section 310. Limitation on luxury goods
    Section 310 amends section 523(a)(2)(C) of the Bankruptcy 
Code to establish a presumption that consumer debts owed to a 
single creditor and aggregating more than $250 for luxury goods 
or services incurred by an individual debtor within 90 days 
before the order for relief are nondischargeable. With respect 
to cash advances aggregating more than $750 that are extensions 
of consumer credit under an open-end credit plan obtained by an 
individual debtor within 70 days prepetition, section 310 
establishes a presumption that these debts are 
nondischargeable. 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. In addition, ``an extension of consumer credit under an 
open-end credit plan'' has the same meaning as it has under the 
Consumer Credit Protection Act.
Section 311. Automatic stay
    Section 311 amends section 362(b) of the Bankruptcy Code to 
except the following proceedings from the automatic stay:

        (1) the continuation of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor resides as a tenant under a rental 
        agreement;
        (2) the commencement of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor resides as a tenant under a rental 
        agreement that has terminated pursuant to the lease 
        agreement or applicable State law; and
        (3) an eviction action based on endangerment to 
        property or person, or the use of illegal drugs.

    Section 311 also excepts from the automatic stay a transfer 
that is not avoidable under section 544 and that is not 
avoidable under section 549 of the Bankruptcy Code. This 
amendment responds to a 1997 Ninth Circuit case,\2\ in which 
two purchase money lenders (without knowledge that the debtor 
had recently filed an undisclosed chapter 11 case that was 
later converted to chapter 7), funded the debtor's acquisition 
of an apartment complex and recorded their purchase-money deed 
of trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
to include the ``creation of a lien.'' This amendment gives 
expression to a widely held understanding that a transfer 
includes the creation of a lien.
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    \2\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir. 
1997). The bankruptcy trustee sought to avoid the lien created by the 
lenders' deed of trust by asserting that the deed was an unauthorized, 
postpetition transfer under section 549(a) of the Bankruptcy Code. The 
lenders claimed that the voluntary transfer to them was a transfer of 
real property to good faith purchasers for value, which thereby 
excepted it, under section 549(c) of the Bankruptcy Code, from 
avoidance. The bankruptcy court held that: the postpetition recordation 
of the lenders' deed of trust was without authorization under the 
Bankruptcy Code or by the court and was therefore avoidable under 
section 549(a) and that the lenders did not qualify under the section 
549(c) exception as good faith purchasers of real property for value. 
The District Court subsequently affirmed the bankruptcy court's ruling 
granting the trustee the authority to avoid the lenders' lien. 
McConville v. David Margen and Lawton Associates (In re McConville), 
No. C 94-3308, 1994 U.S. Dist. LEXIS 18095 (N.D. Cal. Dec. 14, 1994). 
On appeal, the lower court's decision in McConville was initially 
affirmed. Thompson v. Margen (In re McConville), 84 F.3d 340 (9th Cir. 
1996). The Ninth Circuit, however, subsequently issued an amended 
opinion, also affirming the lower court, Thompson v. Margen (In re 
McConville), 97 F.3d 316 (9th Cir. 1996), and finally issued an opinion 
withdrawing its prior opinion and deciding the case on other grounds. 
It held that by obtaining secured credit from the lenders after filing 
but before the appointment of a trustee, the debtors violated their 
fiduciary responsibility to their creditors. Thompson v. Margen (In re 
McConville), 110 F.3d 47 (9th Cir. 1997).
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Section 312. Extension of period between bankruptcy discharges
    Section 312(1) amends section 727(a)(8) of the Bankruptcy 
Code to extend the period before which a chapter 7 debtor may 
receive a subsequent chapter 7 discharge from six to 8 years. 
Section 312(2) amends section 1328 to prohibit the issuance of 
a discharge in a subsequent chapter 13 case if the debtor 
received a discharge in a prior bankruptcy case within 5 years 
preceding the filing of the subsequent chapter 13 case.
Section 313. Definition of household goods and antiques
    Section 313(a) amends section 522(f) of the Bankruptcy Code 
to codify a modified version of the Federal Trade Commission's 
definition of ``household goods'' for purposes of the avoidance 
of a nonpossessory, nonpurchase money lien in such property. 
Section 313(b) requires the Director of the Executive Office 
for United States Trustees to prepare a report containing 
findings with respect to the use of this definition under 
section 522(f)(4). The report may include recommendations for 
amendments to section 522(f)(4).
Section 314. Debt incurred to pay nondischargeable debts
    Section 314(a) amends section 523(a) of the Bankruptcy Code 
to make a debt incurred to pay a nondischargeable tax owed to a 
governmental unit (other than a tax owed to the United States) 
nondischargeable as well.
    Section 314(b) amends section 1328(a) of the Bankruptcy 
Code to make the following additional debts nondischargeable in 
a chapter 13 case:

        (1) debts for money, property, services, or extensions 
        of credit obtained through fraud or by a false 
        statement in writing under section 523(a)(2)(A) and (B) 
        of the Bankruptcy Code;
        (2) consumer debts owed to a single creditor that 
        aggregate to more than $250 for luxury goods or 
        services incurred by an individual debtor within 90 
        days before the filing of the bankruptcy case, and cash 
        advances aggregating more than $750 that are extensions 
        of consumer credit obtained by a debtor under an open-
        end credit plan within 70 days before the order for 
        relief under section 523(a)(2)(C) (as amended by this 
        Act);
        (3) pursuant to section 523(a)(3) of the Bankruptcy 
        Code, debts that require timely request for a 
        dischargeability determination, if the creditor lacks 
        notice or does not have actual knowledge of the case in 
        time to make such request;
        (4) debts resulting from fraud or defalcation by the 
        debtor acting as a fiduciary under section 523(a)(4) of 
        the Bankruptcy Code;
        (5) debts for restitution or damages, awarded in a 
        civil action against the debtor as a result of willful 
        or malicious conduct by the debtor that caused personal 
        injury to an individual or the death of an individual.
Section 315. Giving creditors fair notice in chapters 7 and 13 cases
    Section 315(a) amends section 342 of the Bankruptcy Code in 
several respects. First, it deletes the provision specifying 
that the failure of a notice to include certain information 
required to be given by a debtor to a creditor does not 
invalidate the notice's legal effect. Second, it mandates that 
a debtor send any notice required under the Bankruptcy Code to 
the address specified by the creditor and to include on such 
notice the account number, if within 90 days prior to the date 
that the debtor filed for bankruptcy relief the creditor sent 
at least two communications to the debtor specifying such 
account number and address. If the creditor would be in 
violation of applicable nonbankruptcy law by sending any such 
communication during this time period, then the debtor must 
send the notice to the address provided by the creditor stated 
in the last two communications containing the creditor's 
address and such notice shall include the current account 
number. Third, it permits a creditor in a chapter 7 or 13 case 
of an individual debtor to file with the court and serve on the 
debtor the address to be used to notify such creditor in that 
case. Five days after receipt of such notice, the court or 
debtor must use the address so specified for noticing such 
creditor. Fourth, section 315(a) specifies that if an entity 
files a notice with the court stating an address to be used 
generally in chapter 7 and chapter 13 cases, this address must 
be used by the court for such cases within 30 days following 
the filing of such notice. Fifth, it provides that any notice 
shall not be effective until it has been brought to the 
creditor's attention. If the creditor has designated an entity 
to be responsible for receiving notices concerning bankruptcy 
cases and has established reasonable procedures so that these 
notices will be delivered to such entity, a notice will not be 
deemed to have been received by the creditor until it has been 
received by such entity. Sixth, it prohibits the imposition of 
any sanction for violation of the automatic stay or for the 
failure to comply with the Bankruptcy Code's turnover 
provisions in sections 542 and 543 if a creditor has not 
received proper notice.
    Section 315(b)(1) amends section 521 to require the debtor 
to file a certificate executed by the debtor's attorney or 
bankruptcy petition preparer stating that the attorney or 
preparer supplied the debtor with the notice required under 
section 342(b) (as amended by this Act). If the debtor is pro 
se and did not use the services of a bankruptcy petition 
preparer, then the debtor must sign a certificate stating that 
he or she obtained and read such notice. In addition, the 
debtor must file:
    (1) copies of all payment advices or other evidence of 
payment from any employer within 60 days preceding the 
bankruptcy filing;
    (2) a statement of the amount of monthly net income, 
itemized to show how such amount is calculated; and
    (3) a statement disclosing any reasonably anticipated 
increase in income or expenditures in the 12-month period 
following the date of filing.
    Upon request of a creditor, section 315(b)(2) requires the 
court to make the petition, schedules, and statement of 
financial affairs of an individual who is a chapter 7 or 
chapter 13 debtor available to such creditor. In addition, it 
requires the debtor to provide either a copy of his or her tax 
return or transcript (at the election of the debtor) for the 
latest taxable period prior to the filing of the bankruptcy 
case 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. The debtor's failure to 
comply requires dismissal of the case unless the debtor 
demonstrates that such failure was due to circumstances beyond 
the debtor's control. If a creditor has requested a copy of the 
tax return or transcript, the debtor must provide such document 
to the creditor at the time the debtor supplies the return or 
transcript to the trustee. Should the debtor fail to comply 
with this requirement, the case must be dismissed, unless the 
debtor demonstrates that such failure is due to circumstances 
beyond the debtor's control. A creditor in a chapter 13 case 
may, at any time, file a notice with the court requesting a 
copy of the plan. The court must supply a copy of the chapter 
13 plan at a reasonable cost not later than 5 days after such 
request.
    At the time filed with the taxing authority, an individual 
debtor in a case under chapter 7, 11 or 13 must file copies of 
tax returns (including any schedules or attachments) with the 
court at the request of any party in interest during the 
pendency of the case. This requirement pertains to all tax 
returns (including any schedules or attachments) that were not 
filed for the 3-year period preceding the date on which the 
order for relief was entered. In addition, the debtor must file 
copies of any amendments to such tax returns.
    In a chapter 13 case, the debtor must file a statement, 
under penalty of perjury, of income and expenditures in the 
preceding tax year and monthly income showing how the amounts 
were calculated. The statement must be filed 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. Thereafter, the statement must be filed on or 
before the date that is 45 days before the anniversary date of 
the plan's confirmation, until the case is closed. The 
statement must disclose the amount and sources of the debtor's 
income, the identity of any persons responsible with the debtor 
for the support of the debtor's dependents, the identity of any 
persons who contributed to the debtor's household expenses, and 
the amount of any such contributions.
    Section 315(b)(2) mandates that the tax returns, amendments 
thereto, and the statement of income and expenditures of an 
individual who is a chapter 7 or chapter 13 debtor be made 
available to the United States trustee or bankruptcy 
administrator, the trustee, and any party in interest for 
inspection and copying, subject to procedures established by 
the Director of the Administrative Office for United States 
Courts within 180 days from the Act's enactment date. The 
procedures must safeguard the confidentiality of any tax 
information required under this provision and include 
restrictions on creditor access to such information. In 
addition, the Director must, within 1 year and 180 days from 
the Act's enactment date, prepare and submit to the Congress a 
report that assesses the effectiveness of such procedures and, 
if appropriate, includes recommendations for legislation to 
further protect the confidentiality of such tax information and 
to impose penalties for its improper use.
    If requested by the United States trustee or trustee, the 
debtor must provide a document establishing the debtor's 
identity, which may include a driver's license, passport, or 
other document containing a photograph of the debtor, and such 
other personal identifying information relating to the debtor.
Section 316. Dismissal for failure to timely file schedules or provide 
        required information
    Section 316 amends section 521 of the Bankruptcy Code to 
provide that if an individual debtor in a voluntary chapter 7 
or chapter 13 case fails to file all of the information 
required under section 521(a)(1) within 45 days of the date on 
which the case is filed, the case must be automatically 
dismissed, effective on the 46th day. The 45-day period may be 
extended for an additional 45-day period providing the debtor 
requests such extension prior to the expiration of the original 
45-day period and the court finds justification for such 
extension. Upon request of a party in interest, the court must 
enter an order of dismissal within 5 days of such request.
Section 317. Adequate time to prepare for hearing on confirmation of 
        the plan
    Section 317 amends section 1324 of the Bankruptcy Code to 
require the chapter 13 confirmation hearing to be held not 
earlier than 20 days following the first date set for the 
meeting of creditors and not later than 45 days from this date.
Section 318. Chapter 13 plans to have a 5-year duration in certain 
        cases
    Section 318(1) amends section 1322(d) to specify that a 
chapter 13 plan may not provide for payments over a period that 
is longer than 5 years if the current monthly income of the 
debtor and the debtor's spouse (when multiplied by 12) is not 
less than the applicable State median family income last 
reported by the Census Bureau for a family of equal or lesser 
size. For a household of one person, the income threshold is 
the applicable State median family income for one earner. 
Section 318(1) adjusts the income threshold for households with 
more than four individuals. If the income of the debtor and the 
debtor's spouse fall below this threshold, then the duration of 
the plan may not be longer than 3 years, unless the court, for 
cause, approves a longer period up to 5 years. Section 318(2), 
(3), and (4) make conforming amendments to section 1325(b) and 
1329(c) of the Bankruptcy Code.
Section 319. Sense of Congress regarding expansion of rule 9011 of the 
        Federal Rules of Bankruptcy Procedure
    Section 319 expresses a sense of the Congress that rule 
9011 of the Federal Rules of Bankruptcy Procedure be modified 
to require that all signed and unsigned documents, including 
schedules, supplied to the court or the trustee by a debtor 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 well grounded in fact and 
warranted by existing law or a good faith argument for the 
extension, modification, or reversal of existing law.
Section 320. Prompt relief from stay in individual cases
    Section 320 amends section 362(e) of the Bankruptcy Code to 
terminate the automatic stay in a chapter 7, 11 or 13 case of 
an individual debtor within 60 days following a request for 
relief from the stay, unless the bankruptcy court renders a 
final decision prior to the expiration of the 60-day time 
period, such period is extended pursuant to agreement of all 
parties in interest, or a specific extension of time is 
required for good cause as described in findings made by the 
court.
Section 321. Chapter 11 cases filed by individuals
    Section 321(a)(1) creates a new provision under chapter 11 
of the Bankruptcy Code specifying that property of the estate 
of an individual debtor includes, in addition to that 
identified in section 541 of the Bankruptcy Code, all property 
of the kind described in section 541 that the debtor acquires 
after 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). In addition, it includes earnings 
from services performed by the debtor after commencement of the 
case, but before the case is closed, dismissed or converted to 
a case under chapter 7, 12 or 13. Except as provided in section 
1104 of the Bankruptcy Code or the order confirming a chapter 
11 plan, section 321(a) provides that the debtor remains in 
possession of all property of the estate.
    Section 321(b) amends section 1123 to require the chapter 
11 plan of an individual debtor to provide for the payment to 
creditors of all or such portion of the debtor's earnings from 
personal services performed after commencement of the case or 
other future income that is necessary for the plan's execution.
    Section 321(c) amends section 1129(a) to include an 
additional requirement for confirmation in a chapter 11 case of 
an individual debtor upon objection to confirmation by a holder 
of an allowed unsecured claim. In such instance, the value of 
property to be distributed under the plan (1) on account of 
such claim, as of the plan's effective date, must not be less 
than the amount of such claim; or (2) is not less than the 
debtor's projected disposable income (as 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 plan's term, whichever is longer. Section 321(c) 
also amends section 1129(b)(2)(B)(ii) of the Bankruptcy Code to 
provide that an individual chapter 11 debtor may retain 
property included in the estate under section 1115 (as codified 
by the Act), subject to section 1129(a)(14).
    Section 321(d)(1) amends section 1141(d) to provide that 
debts under section 523 of the Bankruptcy Code are 
nondischargeable in a chapter 11 case. Section 321(d)(2) 
provides that in the chapter 11 case of an individual debtor, 
the debtor is not discharged until all plan payments have been 
made. The court may grant a hardship discharge if the value of 
property actually distributed under the plan--as of the plan's 
effective date--is not less than the amount that would have 
been available for distribution if the case was liquidated 
under chapter 7 on such date, and modification of the plan is 
not practicable.
    Section 321(e) amends section 1127 to permit a plan in a 
chapter 11 case of an individual debtor to be modified 
postconfirmation for the purpose of increasing or reducing the 
amount of payments, extending or reducing the time period for 
such payments, or altering the amount of distribution to a 
creditor whose claim is provided for by the plan. Such 
modification may be made at any time on request of the debtor, 
trustee, United States trustee, or holder of an allowed 
unsecured claim, if the plan has not been substantially 
consummated. The provision specifies that sections 1121 through 
1129 apply to such modification. In addition, it provides that 
the modified plan shall become the confirmed plan only if: (a) 
there has been disclosure pursuant to section 1125 (as the 
court directs); (b) notice and a hearing; and (c) such 
modification is approved.
Section 322. Limitation
    Section 322(a) amends section 522 of the Bankruptcy Code to 
impose an aggregate monetary limitation of $100,000, subject to 
sections 544 and 548, on the value of property that the debtor 
may claim as exempt under State or local law pursuant to 
section 522(b)(3)(A) under certain circumstances. The monetary 
cap applies if the debtor acquired such property within the 2-
year period preceding the filing of the petition and the 
property consists of any of the following: (a) real or personal 
property of the debtor or that a dependent of the debtor uses 
as a residence; (b) an interest in a cooperative that owns 
property, which the debtor or the debtor's dependent uses as a 
residence; or (c) a burial plot for the debtor or the debtor's 
dependent. This limitation does not apply to a principal 
residence claimed as exempt by a family farmer. In addition, 
the limitation does not apply to any interest transferred from 
a debtor's principal residence (which was acquired prior to the 
beginning of the 2-year period) to the debtor's current 
principal residence, if both the previous and current 
residences are located in the same State.
    Section 322(b) makes the monetary limitation set forth in 
section 322(a) subject to automatic adjustment pursuant to 
section 104 of the Bankruptcy Code.
    Section 323. Excluding employee benefit plan participant 
contributions and other property from the estate
    Section 323(a) amends section 541(b) of the Bankruptcy Code 
to exclude as property of the estate funds withheld or received 
by an employer from its employees' wages for payment as 
contributions to specified employee retirement plans, deferred 
compensation plans, and tax-deferred annuities. Such 
contributions do not constitute disposable income as defined in 
section 1325(b)(2) of the Bankruptcy Code. Section 323(a) also 
excludes as property of the estate funds withheld by an 
employer from the wages of its employees for payment as 
contributions to health insurance plans regulated by State law.
    Section 323(b) specifies that the amendments made by this 
provision do not apply to bankruptcy cases commenced prior to 
the expiration of the 180-day period beginning on the Act's 
enactment date.
Section 324. Exclusive jurisdiction in matters involving bankruptcy 
        professionals
    Section 324 amends section 1334 of title 28 of the United 
State Code to give a district court exclusive jurisdiction of 
all claims or causes of action involving the construction of 
section 327 of the Bankruptcy Code and rules relating to 
disclosure requirements under such provision.
Section 325. United States Trustee Program filing fee increase
    Section 325(a) amends section 1930(a) of title 28 of the 
United States Code to increase the filing fees for chapter 7 
and chapter 13 cases respectively to $160 and $150. Subsections 
325(b) and (c) amend section 589a of title 28 of the United 
States Code and section 406(b) of the Judiciary Appropriations 
Act of 1990 to increase the percentage of the fees collected 
under section 1930 of title 28 of the United States Code that 
are paid to the United States Trustee System Fund.
Section 326. Sharing of compensation
    Section 326 amends section 504 of the Bankruptcy Code to 
create a limited exception to the prohibition against fee 
sharing. The provision allows the sharing of compensation with 
bona fide public service attorney referral programs that 
operate in accordance with non-federal law regulating attorney 
referral services and with professional responsibility rules 
applicable to attorney acceptance of referrals.
Section 327. Fair valuation of collateral
    Section 327 amends section 506(a) to provide that the value 
of an allowed claim secured by personal property that is an 
asset in an individual debtor's chapter 7 or chapter 13 case is 
determined based on the replacement value of such property as 
of the filing date of the bankruptcy case without deduction for 
costs of sale or marketing. With respect to property acquired 
for personal, family, or household purposes, replacement value 
is the price a retail merchant would charge for property of 
that kind considering the age and condition of the property at 
the time its value is determined.
Section 328. Defaults based on nonmonetary obligations
    Section 328(a)(1) amends section 365(b) to provide that a 
trustee does not have to cure a default that is a breach of a 
provision (other than a penalty rate or penalty provision) 
relating to a default arising from any failure to perform a 
nonmonetary obligation under an unexpired lease of real 
property, if it is impossible for the trustee to cure the 
default by performing such nonmonetary act at and after the 
time of assumption. If the default arises from a failure to 
operate in accordance with a nonresidential real property 
lease, the default must be cured by performance at and after 
the time of assumption in accordance with the lease. Pecuniary 
losses resulting from such default must be compensated pursuant 
to section 365(b)(1). In addition, section 328(a)(1) amends 
section 365(b)(2)(D) to clarify that it applies to penalty 
provisions.
    Section 328(a)(2) through (4) make technical revisions to 
section 365(c), (d) and (f) by deleting language that is no 
longer effective pursuant to the Rail Safety Enforcement and 
Review Act.\3\
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    \3\ Pub. L. No. 102-365.
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    Section 328(b) amends section 1124(2)(A) of the Bankruptcy 
Code to clarify that a claim is not impaired if section 
365(b)(2) (as amended by this Act) expressly does not require a 
default with respect to such claim to be cured. In addition, it 
provides that any claim or interest that arises from the 
failure to perform a nonmonetary obligation (other than a 
default arising from the failure to operate a nonresidential 
real property lease subject to section 365(b)(1)(A)), is 
impaired unless the holder of such claim or interest (other 
than the debtor or an insider) is compensated for any actual 
pecuniary loss incurred by the holder as a result of such 
failure.

       TITLE IV. GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

           SUBTITLE A. GENERAL BUSINESS BANKRUPTCY PROVISIONS

Section 401. Adequate protection for investors
    Section 401(a) amends section 101 of the Bankruptcy Code to 
define ``securities self regulatory organization'' as a 
securities association or national securities exchange 
registered with the Securities and Exchange Commission.
    Section 401(b) amends section 362 of the Bankruptcy Code to 
except from the automatic stay certain enforcement actions by a 
securities self regulatory organization.
Section 402. Meetings of creditors and equity security holders
    Section 402 amends section 341 of the Bankruptcy Code to 
permit a court, on request of a party in interest and after 
notice and a hearing, to order the United States trustee to not 
convene a meeting of creditors or equity security holders if a 
chapter 11 debtor has filed a plan for which the debtor 
solicited acceptances prior to the commencement of the case.
Section 403. Protection of refinance of security interest
    Section 403 amends section 547(e)(2) of the Bankruptcy Code 
to increase the perfection period from 10 to 30 days for the 
purpose of determining whether such transfer is an avoidable 
preferential transfer.
Section 404. Executory contracts and unexpired leases
    Section 404(a) amends section 365(d)(4) of the Bankruptcy 
Code to establish more finite deadlines by which an unexpired 
lease of nonresidential real property must be assumed or 
rejected. It provides that such lease shall be deemed rejected 
if the trustee fails to assume it by the earlier of 120 days 
after the date of the order for relief or the date on which an 
order of confirmation is entered. The court may extend this 
time period for an additional 90 days on motion of the trustee 
or lessor for cause. If such extension is granted, the court 
may permit a subsequent extension only upon the lessor's 
written consent.
    Section 404(b) amends section 365(f)(1) to make a trustee's 
authority to assign an executory contract or unexpired lease 
subject to section 365(b), amended by the Act.
Section 405. Creditors and equity security holders committees
    Section 405(a) amends section 1102(a)(2) to permit, after 
notice and a hearing, a bankruptcy court, on its own motion or 
on motion of a party in interest, to order a change in a 
committee's membership to ensure adequate representation of 
parties in a case. In addition, it specifies that the court may 
direct the United States trustee to increase the membership of 
a committee for the purpose of including a small business 
concern if the court determines that such creditor's claim is 
of the kind represented by the committee and that, in the 
aggregate, is disproportionately large when compared to the 
creditor's annual gross revenue.
    Section 405(b) requires the committee to allow creditors 
having claims of the kind represented by the committee access 
to information. In addition, the committee must solicit and 
receive comments from these creditors and, pursuant to court 
order, make additional reports or disclosures available to 
them.
Section 406. Amendment to section 546 of title 11, United States Code
    Section 406(1) corrects an erroneous subsection designation 
in section 546 of the Bankruptcy Code. Section 406(2) amends 
section 546 to provide that a trustee may not avoid a warehouse 
lien for storage, transportation, or other costs incidental to 
the storage and handling of goods. In addition, it specifies 
that this prohibition must be applied in a manner consistent 
with any applicable State statute that is similar to section 7-
209 of the Uniform Commercial Code.
Section 407. Amendments to section 330(a) of title 11, United States 
        Code
    Section 407 amends section 330(a)(3) of the Bankruptcy Code 
to clarify that this provision applies to examiners, chapter 11 
trustees, and professional persons. This section also amends 
section 330(a) to add a provision that requires a court, in 
determining the amount of reasonable compensation to award to a 
trustee, to treat such compensation as a commission pursuant to 
section 326 of the Bankruptcy Code.
Section 408. Postpetition disclosure and solicitation
    Section 408 amends section 1125 of the Bankruptcy Code to 
permit an acceptance or rejection of a chapter 11 plan to be 
solicited from the holder of a claim or interest if the holder 
was solicited before the commencement of the case in a manner 
that complied with applicable nonbankruptcy law.
Section 409. Preferences
    Section 409(1) amends section 547(c)(2) of the Bankruptcy 
Code to provide that a trustee may not avoid a transfer to the 
extent the transfer was in payment of a debt incurred by the 
debtor in the ordinary course of the business or financial 
affairs of the debtor and the transferee and such transfer was 
either made (1) in the ordinary course of the debtor's 
financial affairs or business, or (2) in accordance with 
ordinary business terms. Present law requires the recipient of 
a preferential transfer to establish both of these grounds in 
order to sustain a defense to a preferential transfer 
proceeding. In a case that does not have primarily consumer 
debts, section 409 provides that a transfer may not be avoided 
if the aggregate amount of all property constituting or 
affected by the transfer is less than $5,000.
Section 410. Venue of certain proceedings
    Section 410 amends section 1409(b) of title 28 of the 
United States Code to provide that a preferential transfer 
action in the amount of $10,000 or less must be filed in the 
district where the defendant resides. This amount is presently 
fixed at $1,000.
Section 411. Period for filing plan under chapter 11
    Section 411 amends section 1121(d) of the Bankruptcy Code 
to mandate that a chapter 11 debtor's exclusive period for 
filing a plan may not be extended beyond a date that is 18 
months after the order for relief. In addition, it provides 
that the debtor's exclusive period for obtaining acceptances of 
the plan may not be extended beyond 20 months after the order 
for relief.
Section 412. Fees arising from certain ownership interests
    Section 412 amends section 523(a)(16) of the Bankruptcy 
Code to broaden the protections accorded to community 
associations with respect to fees or assessments arising from 
the debtor's interest in a condominium, cooperative or 
homeowners' association. Irrespective of whether or not the 
debtor physically occupies such property, any fees or 
assessments that accrue during the period the debtor or the 
trustee has a legal, equitable, or possessory ownership 
interest in such property are nondischargeable.
Section 413. Creditor representation at first meeting of creditors
    Section 413 amends section 341(c) of the Bankruptcy Code to 
permit a creditor holding a consumer debt or any representative 
of such creditor to appear and participate at the meeting of 
creditors in chapter 7 and chapter 13 cases either alone or in 
conjunction with an attorney. In addition, the provision 
clarifies that it cannot be construed to require a creditor to 
be represented by counsel at any meeting of creditors.
Section 414. Definition of disinterested person
    Section 414 amends section 101(14) of the Bankruptcy Code 
to eliminate the requirement that an investment banker be a 
disinterested person.
Section 415. Factors for compensation of professional persons
    Section 415 amends section 330(a)(3) of the Bankruptcy Code 
to permit the court to consider, in awarding compensation, 
whether the person is board certified or otherwise has 
demonstrated skill and experience in the practice of bankruptcy 
law.
Section 416. Appointment of elected trustee
    Section 416 refines existing law by clarifying the 
procedure for the election of a private trustee in a chapter 11 
case. Section 1104(b) of the Bankruptcy Code permits creditors 
to elect an eligible, disinterested person to serve as the 
trustee in the case, provided certain conditions are met. 
Section 416 adds a provision to section 1104(b) requiring the 
United States trustee to file a report certifying the election 
of a chapter 11 trustee. Upon the filing of the report, the 
elected trustee is deemed to be selected and appointed for 
purposes of section 1104 and the service of any prior trustee 
appointed in the case is terminated. Section 416 also clarifies 
that the court shall resolve any dispute arising out of a 
chapter 11 trustee election.
Section 417. Utility service
    Section 417 amends section 366 of the Bankruptcy Code to 
provide that assurance of payment, for purposes of this 
provision, includes a cash deposit, letter of credit, 
certificate of deposit, surety bond, prepayment of utility 
consumption, or other form of security that is mutually agreed 
upon by the debtor or trustee and the utility. It also 
specifies that an administrative expense priority does not 
constitute an assurance of payment.
    With respect to chapter 11 cases, section 417 permits a 
utility to refuse or discontinue service if it does not receive 
adequate assurance of payment within 30 days of the filing of 
the petition that is satisfactory to the utility. The court, 
upon request of a party in interest, may modify the amount of 
this payment after notice and a hearing. In determining the 
adequacy of such payment, section 417 prevents a court from 
taking into consideration (1) the absence of security before 
the case was filed; (2) the debtor's timely payment of utility 
service charges before the case was filed; or (3) the 
availability of an administrative expense priority. 
Notwithstanding any other provision of law, section 417 permits 
a utility to recover or set off against a security deposit 
provided prepetition by the debtor to the utility without 
notice or court order.
Section 418. Bankruptcy fees
    Section 418 amends section 1930 of title 28 of the United 
States Code to permit a district court or a bankruptcy court, 
pursuant to procedures prescribed by the Judicial Conference of 
the United States, to waive the chapter 7 filing fee for an 
individual and certain other fees under subsections (b) and (c) 
of section 1930 if such individual's income is less than 150 
percent of the official poverty level (as defined by the Office 
of Management and Budget) and the individual is unable to pay 
such fee in installments. Section 418 also clarifies that 
section 1930, as amended, does not prevent a district or 
bankruptcy court from waiving other fees for creditors and 
debtors, if in accordance with Judicial Conference policy.
Section 419. More complete information regarding assets of the estate
    Section 419 requires the Advisory Committee on Bankruptcy 
Rules, after consideration of the views of the Director of the 
Executive Office for United States Trustees, to propose 
official rules and forms directing chapter 11 debtors to 
disclose information concerning the value, operations, and 
profitability of any closely held corporation, partnership, or 
other entity in which the debtor holds a substantial or 
controlling interest. This provision is intended to ensure that 
the debtor's interest in any of these entities is used for the 
payment of allowed claims against the debtor.

            SUBTITLE B. SMALL BUSINESS BANKRUPTCY PROVISIONS

Section 431. Flexible rules for disclosure statement and plan
    Section 431 is intended to streamline the disclosure 
statement process and to provide for more flexibility. Section 
431(1) amends section 1125(a)(1) of the Bankruptcy Code to 
require a bankruptcy court, in determining whether a disclosure 
statement supplies adequate information, to consider the 
complexity of the case, the benefit of additional information 
to creditors and other parties in interest, and the cost of 
providing such additional information.
    With regard to a small business case, section 431(2) amends 
section 1125(f) to provide that if the plan itself supplies 
adequate information, a separate disclosure statement may not 
be required. In addition, it provides that the court may 
approve a disclosure statement submitted on standard forms 
approved by the court or adopted under section 2075 of title 28 
of the United States Code. Further, section 431(2) provides 
that the court may conditionally approve a disclosure 
statement, subject to final approval after notice and a 
hearing, and allow the debtor to solicit acceptances of the 
plan based on such disclosure statement. The hearing on the 
disclosure statement may be combined with the confirmation 
hearing.
Section 432. Definitions
    Section 432 amends section 101 of the Bankruptcy Code to 
define a ``small business case'' as a chapter 11 case in which 
the debtor is a small business debtor. This provision, in turn, 
defines a ``small business debtor'' as a person (including 
affiliates that are also debtors, but excluding a person whose 
primary activity is the business of owning or operating real 
property or activities incidental thereto) having 
noncontingent, liquidated secured and unsecured debts of less 
than $3 million in the aggregate (excluding debts owed to 
affiliates or insiders of the debtor) as of the commencement of 
the case. This definition applies only in a case where the 
United States trustee has not appointed a creditors' committee 
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. 
The definition does not apply to any member of a group of 
affiliated debtors that has aggregate noncontingent, liquidated 
secured and unsecured debts in excess of $3 million (excluding 
debts owed to one or more affiliates or insiders).
Section 433. Standard form disclosure statement and plan
    Section 433 requires the Advisory Committee on Bankruptcy 
Rules of the Judicial Conference of the United States to 
propose for adoption standard form disclosure statements and 
plans for small business debtors. The provision directs that 
the forms be designed to achieve a practical balance between 
the needs of the court, case administrators, and other parties 
in interest to have reasonably complete information as well as 
the small business debtor's needs for economy and simplicity.
Section 434. Uniform national reporting requirements
    Section 434(a) adds a new provision to the Bankruptcy Code 
imposing additional reporting requirements for small business 
debtors. It requires a small business debtor to file periodic 
financial reports and other documents containing the following 
information with respect to the debtor's business operations: 
(a) profitability; (b) reasonable approximations of projected 
cash receipts and disbursements; (c) comparisons of actual cash 
receipts and disbursements with projections in prior reports; 
(d) whether the debtor is complying with postpetition 
requirements pursuant to the Bankruptcy Code and Federal Rules 
of Bankruptcy Procedure; and (5) whether the debtor is timely 
filing tax returns, paying taxes and other administrative 
expenses when due, and making other required government 
filings. In addition, the debtor must report on such other 
matters that are in the best interests of the debtor and the 
creditors and in the public interest.
    If the debtor is not in compliance with any postpetition 
requirements pursuant to the Bankruptcy Code and Federal Rules 
of Bankruptcy Procedure, or is not filing tax returns, paying 
taxes and other administrative expenses when due, or making 
other required government filings, the debtor must report: (a) 
what the failures are; (b) how they will be cured; (c) the cost 
of their cure; and (d) when they will be cured.
    Section 434(b) specifies that the effective date of this 
provision is 60 days after the date on which the rules required 
under this provision are promulgated.
Section 435. Uniform reporting rules and forms for small business cases
    Section 435(a) mandates that the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States propose official rules and forms with respect to the 
periodic financial reports and other information that a small 
business debtor must file concerning its profitability, cash 
receipts and disbursements, filing of its tax returns, and 
payment of its taxes and other administrative expenses.
    Section 435(b) requires the rules and forms to achieve a 
practical balance between the need for reasonably complete 
information by the bankruptcy court, United States trustee, 
creditors and other parties in interest; and the small business 
debtor's interest in having such forms be easy and inexpensive 
to complete. The forms should also be designed to help the 
small business debtor to understand its financial condition and 
plan its future.
Section 436. Duties in small business cases
    Section 436 adds a provision to chapter 11 intended to 
implement greater administrative controls over such cases. The 
provision requires a chapter 11 trustee or debtor to:

        (1) file with a voluntary petition (or in an 
        involuntary case, within 7 days from the date of the 
        order for relief) the debtor's most recent financial 
        statements (including a balance sheet, statement of 
        operations, cash flow statement, and Federal income tax 
        return) or a statement explaining why such information 
        is not available;
        (2) attend, through its senior management personnel 
        and counsel, meetings scheduled by the bankruptcy court 
        or the United States trustee (including the initial 
        debtor interview and meeting of creditors pursuant to 
        section 341 of the Bankruptcy Code), unless the court 
        waives this requirement after notice and a hearing upon 
        a finding of extraordinary and compelling 
        circumstances;
        (3) timely file all requisite schedules and the 
        statement of financial affairs, unless the court, after 
        notice and a hearing, grants an extension of up to 30 
        days from the order of relief, absent extraordinary and 
        compelling circumstances;
        (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) maintain insurance that is customary and 
        appropriate for the industry, subject to section 
        363(c)(2);
        (6) timely file tax returns and make other required 
        government filings;
        (7) timely pay all administrative expense taxes 
        (except for certain contested claims), subject to 
        section 363(c)(2); and
        (8) permit the United States trustee to inspect the 
        debtor's business premises, books, and records at 
        reasonable hours after appropriate prior written 
        notice, unless notice is waived by the debtor.
Section 437. Plan filing and confirmation deadlines
    Section 437 amends section 1121(e) of the Bankruptcy Code 
with respect to the period of time within which a small 
business debtor must file and confirm a plan of reorganization. 
It provides that a small business debtor's exclusive period to 
file a plan is 180 days from the date of the order for relief, 
unless the period is extended after notice and a hearing, or 
the court, for cause, orders otherwise. It further provides 
that a small business debtor must file a plan and any 
disclosure statement not later than 300 days after the order 
for relief. These time periods may be extended only if (a) the 
debtor, after providing notice to parties in interest, 
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 granting such 
extension is signed before the expiration of the existing 
deadline.
Section 438. Plan confirmation deadline
    Section 438 amends section 1129 of the Bankruptcy Code to 
require that a plan in a small business case be confirmed not 
later than 175 days from the date of the order for relief, 
unless this period is extended pursuant to section 1121(e)(3) 
(as added by section 437 of the Act).
Section 439. Duties of the United States trustee
    Section 439 amends section 586(a) of title 28 of the United 
States Code to require the United States trustee to perform the 
following additional duties with respect to small business 
debtors:

        (1) conduct an initial debtor interview before the 
        meeting of creditors for the purpose of (a) 
        investigating the debtor's viability, (b) inquiring 
        about the debtor's business plan, (c) explaining the 
        debtor's obligation to file monthly operating reports, 
        (d) attempting to obtain an agreed scheduling order 
        setting various time frames (such as the date for 
        filing a plan and effecting confirmation), and (e) 
        informing the debtor of other obligations;
        (2) if determined to be appropriate and advisable, 
        inspect the debtor's business premises for the purpose 
        of reviewing the debtor's books and records and 
        verifying that the debtor has filed its tax returns;
        (3) review and monitor diligently the debtor's 
        activities to determine as promptly as possible whether 
        the debtor will be unable to confirm a plan; and
        (4) promptly apply to the court for relief in any case 
        in which the United States trustee finds material 
        grounds for dismissal or conversion of the case.
Section 440. Scheduling conferences
    Section 440 amends section 105(d) to mandate that a 
bankruptcy court hold status conferences as necessary to 
further the expeditious and economical resolution of a 
bankruptcy case.
Section 441. Serial filer provisions
    Section 441(1) amends section 362 of the Bankruptcy Code to 
provide that a court may award only actual damages for a 
violation of the automatic stay committed by an entity in the 
good faith belief that subsection (h) of section 362 (as added 
by this Act) applies to the debtor.
    Section 441(2) adds a new subsection to section 362 of the 
Bankruptcy Code specifying that the automatic stay does not 
apply where the chapter 11 debtor:

        (1)  is a debtor in a small business case pending at 
        the time the petition is filed;
        (2) was a debtor in a small business case dismissed 
        for any reason pursuant to an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered in the pending case;
        (3) was a debtor in small business case in which a 
        plan was confirmed in the 2-year period ending on the 
        date of the order for relief entered in the pending 
        case; or
        (4) is an entity that has succeeded to substantially 
        all of the assets or business of a small business 
        debtor as described above.
    An exception to this provision applies to a chapter 11 case 
that is commenced involuntarily and involves no collusion 
between the debtor and the petitioning creditors. Also, it does 
not apply if the debtor proves by a preponderance of the 
evidence that (a) the filing of the subsequent case resulted 
from circumstances beyond the debtor's control and which were 
not foreseeable at the time the prior case was filed; and (b) 
it is more likely than not that the court will confirm a 
feasible plan of reorganization (but not a liquidating plan) 
within a reasonable time.
Section 442. Expanded grounds for dismissal or conversion and 
        appointment of trustee
    Section 442(a) amends section 1112(b) of the Bankruptcy 
Code to mandate that the court convert or dismiss a chapter 11 
case or appoint a trustee (whichever is in the best interests 
of creditors and the estate) if the movant establishes cause. 
An exception applies if: (a) the debtor or a party in interest 
objects and establishes by a preponderance of the evidence that 
a plan having a reasonable possibility of being confirmed will 
be filed within a reasonable period of time; and (b) the 
grounds include an act or omission for which there exists a 
reasonable justification for such act or omission and that will 
be cured within a reasonable period of time. The court must 
commence the hearing on a section 1112(b) motion within 30 days 
of its filing and decide the motion not later than 15 days 
after commencement of the hearing unless the movant expressly 
consents to a continuance for a specified period of time or 
compelling circumstances prevent the court from meeting these 
time limits.
    The term ``cause'' under section 1112(b), as amended by 
this provision, includes the following:

         (1) substantial or continuing loss to or diminution 
        of the estate;
         (2) gross mismanagement of the estate;
         (3) failure to maintain appropriate insurance that 
        poses a material risk to the estate or the public;
         (4) unauthorized use of cash collateral that is 
        harmful to one or more creditors;
         (5) failure to comply with a court order;
         (6) repeated failure to timely satisfy any filing or 
        reporting requirement under the Bankruptcy Code or 
        applicable rule;
         (7) failure to attend the section 341 meeting of 
        creditors or an examination pursuant to rule 2004 of 
        the Federal Rules of Bankruptcy Procedure;
         (8) failure to timely provide information or to 
        attend meetings reasonably requested by the United 
        States trustee or bankruptcy administrator;
         (9) failure to timely pay postpetition taxes or file 
        tax returns due postpetition;
        (10) failure to file a disclosure statement or to 
        confirm a plan within the time fixed by the Bankruptcy 
        Code or pursuant to court order;
        (11) failure to pay any requisite fees or charges 
        under chapter 123 of title 28 of the United States 
        Code;
        (12) revocation of a confirmation order;
        (13) inability to effectuate substantial consummation 
        of a confirmed plan;
        (14) material default by the debtor with respect to a 
        confirmed plan;
        (15) termination of a plan by reason of the occurrence 
        of a condition specified in the plan; and
        (16) the debtor's failure to pay any domestic support 
        obligation that first becomes payable postpetition.

Section 442(a) requires the court to commence the hearing under 
section 1112(b) within 30 days of the filing of the motion and 
specifies that the court must decide the motion within 15 days 
after commencement of the hearing, unless the movant consents 
to a longer period or compelling circumstances prevent the 
court from meeting the specified time limits.
    Section 442(b) creates additional grounds for the 
appointment of a chapter 11 trustee under section 1104(a). It 
provides that should the bankruptcy court determine cause 
exists to convert or dismiss a chapter 11 case, it may appoint 
a trustee or examiner if in the best interests of creditors and 
the bankruptcy estate.
Section 443. Study of operation of title 11, United States Code, with 
        respect to small businesses
    Section 443 directs the Administrator of the Small Business 
Administration, in consultation with the Attorney General, the 
Director of the Executive Office for United States Trustees, 
and the Director of the Administrative Office of the United 
States Courts, to conduct a study to determine:

        (1) the internal and external factors that cause small 
        businesses (particularly sole proprietorships) to seek 
        bankruptcy relief and the factors that cause small 
        businesses to successfully complete their chapter 11 
        cases; and
        (2) how the bankruptcy laws may be made more effective 
        and efficient in assisting small business to remain 
        viable.
Section 444. Payment of interest
    Section 444(1) amends section 362(d)(3) of the Bankruptcy 
Code to require a court to grant relief from the automatic stay 
within 30 days after it determines that a single asset real 
estate debtor is subject to this provision. Section 444(2) 
amends section 362(d)(3)(B) to specify that relief from the 
automatic stay shall be granted unless the single asset real 
estate debtor has commenced making monthly payments to each 
creditor secured by the debtor's real property (other than a 
claim secured by a judgment lien or unmatured statutory lien) 
in an amount equal to the interest at the then applicable 
nondefault contract rate of interest on the value of the 
creditor's interest in the real estate. It allows a debtor in 
its sole discretion to make the requisite interest payments out 
of rents or other proceeds generated by the real property.
Section 445. Priority of administrative expenses
    Section 445 amends section 503(b) of the Bankruptcy Code to 
add a new administrative expense priority for a nonresidential 
real property lease that is assumed under section 365 and then 
subsequently rejected. The amount of the priority is the sum of 
all monetary obligations due under the lease (excluding 
penalties and obligations arising from or relating to a failure 
to operate) for the 2-year period following the rejection date 
or actual turnover of the premises (whichever is later), 
without reduction or setoff for any reason, except for sums 
actually received or to be received from a nondebtor. Any 
remaining sums due for the balance of the term of the lease is 
treated as a claim under section 502(b)(6) of the Bankruptcy 
Code.

                TITLE V. MUNICIPAL BANKRUPTCY PROVISIONS

Section 501. Petition and proceedings related to petition
    Section 501 amends sections 921(d) and 301 of the 
Bankruptcy Code to clarify that the court must enter the order 
for relief in a chapter 9 case.
Section 502. Applicability of other sections to chapter 9
    Section 502 amends section 901 of the Bankruptcy Code to 
make the following sections applicable to chapter 9 cases:

        (1) section 555 (contractual right to liquidate, 
        terminate or accelerate a securities contract);
        (2) section 556 (contractual right to liquidate, 
        terminate or accelerate a commodities or forward 
        contract);
        (3) section 559 (contractual right to liquidate, 
        terminate or accelerate a repurchase agreement);
        (4) section 560 (contractual right to liquidate, 
        terminate or accelerate a swap agreement);
        (5) section 561 (contractual right to liquidate, 
        terminate, accelerate, or offset under a master netting 
        agreement and across contracts); and
        (6) section 562 (damage measure in connection with 
        swap agreements, securities contracts, forward 
        contracts, commodity contracts, repurchase agreements, 
        or master netting agreement).

                       TITLE VI. BANKRUPTCY DATA

Section 601. Improved bankruptcy statistics
    Section 601 amends chapter 6 of title 28 of the United 
States Code to require the clerk for each district to collect 
certain statistics for chapter 7, 11, and 13 cases in a 
standardized form prescribed by the Director of the 
Administrative Office of the United States Courts and to make 
this information available to the public. In addition, section 
601 requires the Director to prepare an annual report and 
analysis for Congress concerning the information collected. The 
statistics must be itemized by chapter of the Bankruptcy Code 
and be presented in the aggregate for each district. The 
specific categories of information that must be gathered 
include the following:

        (1) scheduled total assets and liabilities by 
        category;
        (2) the debtors' current monthly income, average 
        income, and average expenses;
        (3) the aggregate amount of debts discharged during 
        the reporting period based on the difference between 
        the total amount of scheduled debts and by categories 
        that are predominantly nondischargeable;
        (4) the average time between the filing of the 
        bankruptcy case and the closing of the case;
        (5) the number of cases in which reaffirmation 
        agreements were filed, the total number of 
        reaffirmation agreements filed, the number of cases in 
        which the debtor was pro se and a reaffirmation 
        agreement was filed, and the number of cases in which 
        the reaffirmation agreement was approved by the court;
        (6) for chapter 13 cases, information on the number of 
        (a) orders determining the value of secured property in 
        an amount less than the amount of the secured claim, 
        (b) final orders that determined the value of property 
        securing a claim, (c) cases dismissed, (d) cases 
        dismissed for failure to make payments under the plan, 
        (e) cases refiled after dismissal, (f) cases in which 
        the plan was completed (separately itemized with 
        respect to the number of modifications made before 
        completion of the plan, and (g) cases in which the 
        debtor had previously sought bankruptcy relief within 
        the 6 years preceding the filing of the present case;
        (7) the number of cases in which creditors were fined 
        for misconduct and the amount of any punitive damages 
        awarded for creditor misconduct; and
        (8) the number of cases in which sanctions under rule 
        9011 of the Federal Rules of Bankruptcy Procedure were 
        imposed against a debtor's counsel and the damages 
        awarded under this rule.

Section 601 provides that the amendments in this provision take 
effect 18 months after the date of enactment of this Act.
Section 602. Uniform rules for the collection of bankruptcy data
    Section 602 amends chapter 39 of title 28 of the United 
States Code to add a provision requiring the Attorney General 
to promulgate rules mandating the establishment of uniform 
forms for final reports in chapter 7, 12 and 13 cases and 
periodic reports in chapter 11 cases. It also specifies that 
these reports be designed to facilitate compilation of data and 
to provide maximum public access by physical inspection at one 
or more central filing locations and by electronic access 
through the Internet or other appropriate media. The 
information should enable an evaluation of the efficiency and 
practicality of the Federal bankruptcy system. In issuing 
rules, the Attorney General must consider: (a) the reasonable 
needs of the public for information about the Federal 
bankruptcy system; (b) the economy, simplicity, and lack of 
undue burden on persons obligated to file the reports; and (c) 
appropriate privacy concerns and safeguards. Section 602 
provides that final reports by trustees in chapter 7, 12, and 
13 cases include the following information:

        (1) the length of time the case was pending;
        (2) assets abandoned;
        (3) assets exempted;
        (4) receipts and disbursements of the estate;
        (5) administrative expenses, including those 
        associated with section 707(b) of the Bankruptcy Code, 
        and the actual costs of administering chapter 13 cases;
        (6) claims asserted;
        (7) claims allowed; and
        (8) distributions to claimants and claims discharged 
        without payment.

    With regard to chapter 11 cases, section 602 provides that 
periodic reports include the following information regarding:

        (1) the standard industry classification for 
        businesses conducted by the debtor, as published by the 
        Department of Commerce;
        (2) the length of time that the case was pending;
        (3) the number of full-time employees as of the date 
        of the order for relief and at the end of each 
        reporting period;
        (4) cash receipts, cash disbursements, and 
        profitability of the debtor for the most recent period 
        and cumulatively from the date of the order for relief;
        (5) the debtor's compliance with the Bankruptcy Code, 
        including whether tax returns have been filed and taxes 
        have been paid;
        (6) professional fees approved by the court for the 
        most recent period and cumulatively from the date of 
        the order for relief; and
        (7) plans filed and confirmed, including the aggregate 
        recoveries of holders by class and as a percentage of 
        total claims of an allowed class.
Section 603. Audit procedures
    Section 603(a)(1) requires the Attorney General (for 
judicial districts served by United States trustees) and the 
Judicial Conference of the United States (for judicial 
districts served by bankruptcy administrators) to establish 
procedures to determine the accuracy, veracity, and 
completeness of petitions, schedules and other information 
filed by debtors pursuant to sections 111, 521 and 1322 of the 
Bankruptcy Code. Section 603(a)(1) requires the audits to be 
conducted in accordance with generally accepted auditing 
standards and performed by independent certified public 
accountants or independent licensed public accountants. It 
permits the Attorney General and the Judicial Conference to 
develop alternative auditing standards not later than 2 years 
after the date of enactment of this Act.
Section 603(a)(2) requires these procedures to:

        (1) establish a method of selecting appropriate 
        qualified contractors to perform these audits;
        (2) establish a method of randomly selecting cases for 
        audit, and that a minimum of at least one case out of 
        every 250 cases be selected for audit;
        (3) require audits in cases where the schedules of 
        income and expenses reflect greater than average 
        variances from the statistical norm for the district if 
        they occur by reason of higher income or higher 
        expenses than the statistical norm in which the 
        schedules were filed; and
        (4) require the aggregate results of such audits, 
        including the percentage of cases by district in which 
        a material misstatement of income or expenditures is 
        reported, to be made available to the public on an 
        annual basis.

    Section 603(b) amends section 586 of title 28 of the United 
States Code to require the United States trustee to submit 
reports as directed by the Attorney General, including the 
results of audits performed under section 603(a). In addition, 
it authorizes the United States trustee to contract with 
auditors to perform the audits specified in this provision. 
Further, it requires the report of each audit to be filed with 
the court and transmitted to the United States trustee. The 
report must specify material misstatements of income, 
expenditures or assets. In a case where a material misstatement 
has been reported, the clerk must provide notice of such 
misstatement to creditors and the United States trustee must 
report it to the United States Attorney, if appropriate, for 
possible criminal prosecution. If advisable, the United States 
trustee must also take appropriate action, such as revoking the 
debtor's discharge.
    Section 603(c) amends section 521 of the Bankruptcy Code to 
make it a duty of the debtor to cooperate with an auditor.
    Section 603(d) amends section 727 of the Bankruptcy Code to 
add, as a ground for revocation of a chapter 7 discharge the 
debtor's failure to: (a) satisfactorily explain a material 
misstatement discovered as the result of an audit pursuant to 
this provision; or (b) make available for inspection all 
necessary documents or property belonging to the debtor that 
are requested in connection with such audit.
    Section 603(e) provides that the amendments made by this 
provision take effect 18 months after the Act's enactment date.
Section 604. Sense of Congress regarding availability of bankruptcy 
        data
    Section 604 expresses a sense of Congress that it is a 
national policy of the United States that all data collected by 
bankruptcy clerks in electronic form (to the extent such data 
relates to public records pursuant to section 107 of the 
Bankruptcy Code) should be made available to the public in a 
useable electronic form in bulk, subject to appropriate privacy 
concerns and safeguards as determined by the Judicial 
Conference of the United States. It also states that a uniform 
bankruptcy data system should be established that uses a single 
set of data definitions and forms to collect such data and that 
data for any particular bankruptcy case should be aggregated in 
electronic format.

                  TITLE VII--BANKRUPTCY TAX PROVISIONS

Section 701. Treatment of certain tax liens
    Section 701(a) makes several amendments to section 724 of 
the Bankruptcy Code to provide greater protection for holders 
of ad valorem tax liens on real or personal property of the 
estate. Many school boards obtain liens on real property to 
ensure collection of unpaid ad valorem taxes. Under current 
law, local governments are sometimes unable to collect these 
taxes despite the presence of a lien because they may be 
subordinated to certain claims and expenses as a result of 
section 724. Section 701(a) is intended to protect the holders 
of these tax liens from, among other things, erosion of their 
claims' status by expenses incurred under chapter 11 of the 
Bankruptcy Code. Pursuant to section 701(a), subordination of 
ad valorem tax liens is still possible under section 724(b), 
but limited to the payment of: (a) claims incurred under 
chapter 7 for wages, salaries, or commissions (but not expenses 
incurred under chapter 11); (b) claims for wages, salaries, and 
commissions entitled to priority under section 507(a)(4); and 
(c)claims for contributions to employee benefit plans entitled 
to priority under section 507(a)(5). Before a tax lien on real 
or personal property may be subordinated pursuant to section 
724, the chapter 7 trustee must exhaust all other unencumbered 
estate assets and, consistent with section 506, recover 
reasonably necessary costs and expenses of preserving or 
disposing of such property.
    Section 701(b) amends section 505(a)(2) of the Bankruptcy 
Code to prevent a bankruptcy court from determining the amount 
or legality of an ad valorem tax on real or personal property 
if the applicable period for contesting or redetermining the 
amount of the claim under nonbankruptcy law has expired.
Section 702. Treatment of fuel tax claims
    Section 702 amends section 501 of the Bankruptcy Code to 
simplify the process for filing of claims by States for certain 
fuel taxes. Rather than requiring all States to file a claim 
for these taxes (as is the case under current law), section 702 
permits the designated ``base jurisdiction'' under the 
International Fuel Tax Agreement to file a claim on behalf of 
all States, which would then be allowed as a single claim.
Section 703. Notice of request for a determination of taxes
    Under current law, debtors may request that the 
governmental unit determine administrative tax liabilities in 
order to receive a discharge of those liabilities. There are no 
requirements as to the content or form of such notice to the 
government. Section 703 amends section 505(b) of the Bankruptcy 
Code to require bankruptcy court clerks to maintain a list of 
addresses designated by governmental units for service of 
section 505 requests. In addition, the list may also include 
additional information concerning filing requires so specified 
by such governmental units. If a governmental entity does not 
designate an address and provide that address to the bankruptcy 
court clerk, any request made under section 505(b) of the 
Bankruptcy Code may be served at the address of the appropriate 
taxing authority of that governmental unit.
Section 704. Rate of interest on tax claims
    Under current law, there is no uniform rate of interest 
applicable to tax claims. As a result, the bankruptcy courts 
have used varying standards to determine the applicable rate. 
Section 704 amends the Bankruptcy Code to add section 511 for 
the purpose of simplifying the interest rate calculation. It 
provides that for all tax claims (federal, State, and local), 
including administrative expense taxes, the interest rate shall 
be determined in accordance with applicable nonbankruptcy law. 
With respect to taxes paid under a confirmed plan, the rate of 
interest is determined as of the calendar month in which the 
plan is confirmed.
Section 705. Priority of tax claims
    Under current law, a tax claim is entitled to be treated as 
a priority claim if it arises within certain specified time 
periods. In the case of income taxes, a priority arises, among 
other time periods, if the tax return was due within 3 years of 
the filing of the bankruptcy petition or if the assessment of 
the tax was made within 240 days of the filing of the petition. 
The 240-day period is tolled during the time that an offer in 
compromise is pending (plus 30 days). Though the statute is 
silent, most courts have also held that the 3-year and 240-day 
time periods are tolled during the pendency of a previous 
bankruptcy case. Section 705 amends section 507(a)(8) of the 
Bankruptcy Code to codify the rule tolling priority periods 
during the pendency of a previous bankruptcy case during that 
240-day period together with an additional 90 days. It also 
includes tolling provisions to adjust for the collection due 
process rights provided by the Internal Revenue Service 
Restructuring and Reform Act of 1998. During any period in 
which the government is prohibited from collecting a tax as a 
result of a request by the debtor for a hearing and an appeal 
of any collection action taken against the debtor, the priority 
is tolled, plus 90 days. Also, during any time in which there 
was a stay of proceedings in a prior bankruptcy case or 
collection of an income tax was precluded by a confirmed 
bankruptcy plan, the priority is tolled, plus 90 days.
Section 706. Priority property taxes incurred
    Under current law, many provisions of the Bankruptcy Code 
are keyed to the word ``assessed.'' While this term has an 
accepted meaning in the Federal system, it is not used in many 
State and local statutes and has created some confusion. To 
eliminate this problem with respect to real property taxes, 
section 706 amends section 507(a)(8)(B) of the Bankruptcy Code 
by replacing the word ``assessed'' with ``incurred''.
Section 707. No discharge of fraudulent taxes in chapter 13
    Under current law, a debtor's ability to discharge tax 
debts varies depending on whether the debtor is in chapter 7 or 
chapter 13. Under chapter 7, taxes from a return due within 3 
years of the petition date, taxes assessed within 240 days, or 
taxes related to an unfiled return or false return are not 
dischargeable. Chapter 13, on the other hand, allows these 
obligations to be discharged. Section 707 amends section 
1328(a)(2) to prohibit the discharge of tax claims described in 
section 523(a)(1)(B) and (C) as well as claims for a tax 
required to be collected or withheld and for which the debtor 
is liable in whatever capacity pursuant to section 
507(a)(8)(C).
Section 708. No discharge of fraudulent taxes in chapter 11
    Under current law, the confirmation of a chapter 11 plan 
discharges the debtor from most debts. Section 708 amends 
section 1141(d) of the Bankruptcy Code to except from discharge 
in a corporate chapter 11 case a debt described in section 
523(a)(2) of the Bankruptcy Code (e.g., debts for money, 
property or services obtain by false pretenses, false 
representation or actual fraud, other than a statement 
respecting the debtor's or an insider's financial condition). 
In addition, a tax or customs duty with respect to which the 
debtor made a fraudulent tax return or willfully attempted in 
any manner to evade or defeat such tax is rendered 
nondischargeable in a chapter 11 case of a corporate debtor.
Section 709. Stay of tax proceedings limited to prepetition taxes
    Under current law, the filing of a petition for relief 
under the Bankruptcy Code activates an automatic stay that 
enjoins the commencement or continuation of a case in the 
Federal tax court. This rule was arguably extended in Halpern 
v. Commissioner, 96 T.C. 895 (1991), which held that the tax 
court did not have jurisdiction to hear a case involving a 
postpetition year. To address this issue, section 709 amends 
section 362(a)(8) of the Bankruptcy Code to specify that the 
automatic stay is limited to an individual debtor's prepetition 
taxes (taxes incurred before entering bankruptcy). The 
amendment clarifies that the automatic stay does not apply to 
an individual debtor's postpetition taxes. In addition, section 
709 allows the bankruptcy court to determine whether the 
automatic stay applies to the postpetition tax liabilities of a 
corporate debtor.
Section 710. Periodic payment of taxes in chapter 11 cases
    Section 710 amends section 1129(a)(9) of the Bankruptcy 
Code to provide that the allowed amount of priority tax claims 
(as of the plan's effective date) must be paid in regular cash 
installments within 5 years from the entry of the order for 
relief. The manner of payment may not be less favorable than 
that accorded the most favored nonpriority unsecured class of 
claims under section 1122(b).
Section 711. Avoidance of statutory liens prohibited
    The Internal Revenue Code gives special protections to 
certain purchasers of securities and motor vehicles 
notwithstanding the existence of a filed tax lien. Section 711 
amends section 545(2) of the Bankruptcy Code to prevent 
trustees from using these special protections to avoid an 
otherwise valid lien. Specifically, it prevents the avoidance 
of unperfected liens against a bona fide purchaser, if the 
purchaser qualifies as such under section 6323 of the Internal 
Revenue Code or a similar provision under State or local law.
Section 712. Payment of taxes in the conduct of business
    Although current law generally requires trustees and 
receivers to pay taxes in the ordinary course of the debtor's 
business, the payment of administrative expenses must first be 
authorized by the court. Section 712(a) amends section 960 of 
title 28 of the United States Code to clarify that postpetition 
taxes in the ordinary course of business must be paid on or 
before when such tax is due under applicable nonbankruptcy law, 
with certain exceptions. This requirement does not apply if the 
obligation is a property tax secured by a lien against property 
that is abandoned under section 554 within a reasonable time 
after the lien attaches. In addition, the requirement does not 
pertain where the payment is excused under the Bankruptcy Code. 
With respect to chapter 7 cases, section 712(a) provides that 
the payment of a tax may be deferred until final distribution 
pursuant to section 726 if the tax was not incurred by a 
chapter 7 trustee or the court, prior to the due date of the 
tax, finds that the estate has insufficient funds to pay all 
administrative expenses in full.
    Section 712(b) amends section 503(b)(1)(B)(i) of the 
Bankruptcy Code to clarify that this provision applies to 
secured as well as unsecured tax claims, including property 
taxes based on liability that is in rem, in personam or both.
    Section 712(c) amends section 503(b)(1) to exempt a 
governmental unit from the requirement to file a request for 
payment of an administrative expense.
    Section 712(d)(1) amends section 506(b) to provide that to 
the extent that an allowed claim is oversecured, the holder is 
entitled to interest and any reasonable fees, costs, or charges 
provided for under State law. Section 712(d)(2), in turn, 
amends section 506(c) to permit a trustee to recover from a 
secured creditor the payment of all ad valorem property taxes.
Section 713. Tardily filed priority tax claims
    Section 713 amends section 726(a)(1) of the Bankruptcy Code 
to require a tax claim to be filed either before the trustee 
commences distribution or 10 days following the mailing to 
creditors of the summary of the trustee's final report, 
whichever is earlier, in order for the claim to be entitled to 
distribution as an unsecured claim.
Section 714. Income tax returns prepared by tax authorities
    Section 714 amends section 523(a) of the Bankruptcy Code to 
provide that a return filed on behalf of a taxpayer who has 
provided information sufficient to complete a return 
constitutes filing a return (and the debt can be discharged), 
but that a return filed on behalf of a taxpayer based on 
information the Secretary obtains through testimony or 
otherwise does not constitute filing a return (and the debt 
cannot be discharged).
Section 715. Discharge of the estate's liability for unpaid taxes
    Under the Bankruptcy Code, a debtor may request a prompt 
audit to determine postpetition tax liabilities. If the 
government does not make a determination or request an 
extension of time to audit, then the debtor's determination of 
taxes will be final. Several court cases have held that while 
this protects the debtor and the trustee, it does not 
necessarily protect the estate. Section 715 amends section 
505(b) of the Bankruptcy Code to clarify that the estate is 
also protected if the government does not request an audit of 
the debtor's tax returns. Therefore, if the government does not 
make a determination of the debtor's postpetition tax 
liabilities or request extension of time to audit, then the 
estate's liability for unpaid taxes is discharged.
Section 716. Requirement to file tax returns to confirm chapter 13 
        plans
    Under current law, a debtor may enjoy the benefits of 
chapter 13 even if delinquent in the filing of tax returns. In 
response to this problem, section 716(a) amends section 1325(a) 
of the Bankruptcy Code to require a chapter 13 debtor file all 
applicable Federal, State, and local tax returns as a condition 
of confirmation pursuant to section 1308, as added by section 
716(b).
    Section 716(b) adds a new provision to chapter 13 requiring 
a chapter 13 debtor to be current on the filing of tax returns 
for the 4-year period preceding the filing of the case. If the 
returns are not filed by the date on which the meeting of 
creditors is first scheduled, the trustee may hold open that 
meeting for a reasonable period of time to allow the debtor to 
file any unfiled returns. The additional period of time may not 
extend beyond 120 days after the date of the meeting of the 
creditors or beyond the date on which the return is due under 
the last automatic extension of time for filing. The debtor, 
however, may obtain an extension of time from the court if the 
debtor demonstrates by a preponderance of the evidence that the 
failure to file was attributable to circumstances beyond the 
debtor's control.
    Section 716(c) amends section 1307 of the Bankruptcy Code 
to provide that if a chapter 13 debtor fails to file a tax 
return as required by section 1308, the court must dismiss the 
case or convert it to one under chapter 7 (whichever is in the 
best interests of creditors and the estate) on request of a 
party in interest or the United States trustee after notice and 
a hearing.
    Section 716(d) amends section 502(b)(9) of the Bankruptcy 
Code to provide that in a chapter 13 case, a governmental 
unit's tax claim based on a return filed under section 1308 
shall be deemed to be timely filed if the claim is filed within 
60 days from the date on which such return is filed.
    Section 716(e) states the sense of the Congress that the 
Advisory Committee on Bankruptcy Rules of the Judicial 
Conference of the United States should propose for adoption 
official rules with respect an objection by a governmental unit 
to confirmation of a chapter 13 plan when such claim pertains 
to a tax return filed pursuant section 1308.
Section 717. Standards for tax disclosure
    Before a chapter 11 plan may be submitted to creditors and 
stockholders for a vote, the plan proponent must file a 
disclosure statement that provides adequate information to 
holders of claims and interests so they can make a decision as 
to whether or not to vote in favor of the plan. As the tax 
consequences of a plan can have a significant impact on the 
debtor's reorganization prospects, section 717 amends section 
1125(a) of the Bankruptcy Code to require that a chapter 11 
disclosure statement discuss the plan's potential material 
Federal tax consequences to the debtor and to a hypothetical 
investor that is representative of the claimants and interest 
holders in the case.
Section 718. Setoff of tax refunds
    Under current law, the filing of a bankruptcy petition 
automatically stays the setoff of a prepetition tax refund 
against a prepetition tax obligation unless the bankruptcy 
court approves the setoff. Interest and penalties that may 
continue to accrue may also be nondischargeable pursuant to 
section 523(a)(1) of the Bankruptcy Code and cause individual 
debtors undue hardship. Section 718 amends section 362(b) of 
the Bankruptcy Code to create an exception to the automatic 
stay whereby such setoff could occur without court order unless 
it would not be permitted under applicable nonbankruptcy law 
because of a pending action to determine the amount or legality 
of the tax liability. In that circumstance, the governmental 
authority may hold the refund pending resolution of the action, 
unless the court, on motion of the trustee and after notice and 
a hearing, grants the taxing authority adequate protection 
pursuant to section 361.
Section 719. Special provisions related to the treatment of State and 
        local taxes
    Section 719 conforms State and local income tax 
administrative issues to the Internal Revenue Code. For 
example, under Federal law, a bankruptcy petitioner filing on 
March 5 has two tax years--January 1 to March 4, and March 5 to 
December 31. Under the Bankruptcy Code, however, State and 
local tax years are divided differently--January 1 to March 5, 
and March 6 to December 31. Section 719 requires the States to 
follow the Federal convention.
    It conforms State and local tax administration to the 
Internal Revenue Code in the following areas: division of tax 
liabilities and responsibilities between the estate and the 
debtor, tax consequences with respect to partnerships and 
transfers of property, and the taxable period of a debtor. 
Section 719 does not conform State and local tax rates to 
Federal tax rates.
Section 720. Dismissal for failure to timely file tax returns
    Under existing law, there is no definitive rule with 
respect to whether a bankruptcy court may dismiss a bankruptcy 
case if the debtor fails to file returns for taxes incurred 
postpetition. Section 720 amends section 521 of the Bankruptcy 
Code to allow a taxing authority to request that the court 
dismiss or convert a bankruptcy case if the debtor fails to 
file a postpetition tax return or obtain an extension. If the 
debtor does not file the required return or obtain the 
extension within 90 days from the time of the request by the 
taxing authority to file the return, the court must convert or 
dismiss the case, whichever is in the best interest of 
creditors and the estate.

           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

    Title VIII of H.R. 833 adds a new chapter to the Bankruptcy 
Code for transnational bankruptcy cases. This incorporates the 
Model Law on Cross-Border Insolvency to encourage cooperation 
between the United States and foreign countries with respect to 
transnational insolvency cases. Title VIII is intended to 
provide greater legal certainty for trade and investment as 
well as to provide for the fair and efficient administration of 
cross-border insolvencies, which protects the interests of 
creditors and other interested parties, including the debtor. 
In addition, it serves to protect and maximize the value of the 
debtor's assets.
Section 801. Amendment to add chapter 15 to title 11, United States 
        Code
    Section 801 introduces chapter 15 to the Bankruptcy Code, 
which is the Model Law on Cross-Border Insolvency (``Model 
Law'') promulgated by the United Nations Commission on 
International Trade Law (``UNCITRAL'') at its Thirtieth Session 
on May 12-30, 1997.\4\ Cases brought under chapter 15 are 
intended to be ancillary to cases brought in a debtor's home 
country, unless a full United States bankruptcy case is brought 
under another chapter. Even if a full case is brought, the 
court may decide under section 305 to stay or dismiss the 
United States case under the other chapter and limit the United 
States' role to an ancillary case under this chapter.\5\ If the 
full case is not dismissed, it will be subject to the 
provisions of this chapter governing cooperation, communication 
and coordination with the foreign courts and representatives. 
In any case, an order granting recognition is required as a 
prerequisite to the use of sections 301 and 303 by a foreign 
representative.
---------------------------------------------------------------------------
    \4\ The text of the Model Law and the Report of UNCITRAL on its 
adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17) 
(``Report''). That Report and the Guide to Enactment of the UNCITRAL 
Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th 
Sess. U.N. Doc. A/CN.9/442 (1997) (``Guide''), which was discussed in 
the negotiations leading to the Model Law and published by UNCITRAL as 
an aid to enacting countries, should be consulted for guidance as to 
the meaning and purpose of its provisions. The development of the 
provisions in the negotiations at UNCITRAL, in which the United States 
was an active participant, is recounted in the interim reports of the 
Working Group that are cited in the Report.
    \5\ See section 1529 and commentary.
---------------------------------------------------------------------------
Section 1501. Purpose and scope of application
    Section 1501 combines the Preamble to the Model Law 
(subsection (1)) with its article 1 (subsections (2) and (3)) 
\6\. It largely follows the language of the Model Law and fills 
in blanks with appropriate United States references. However, 
it adds in subsection (3) an exclusion of certain natural 
persons who may be considered ordinary consumers. Although the 
consumer exclusion is not in the text of the Model Law, the 
discussions at UNCITRAL recognized that some such exclusion 
would be necessary in countries like the United States where 
there are special provisions for consumer debtors in the 
insolvency laws.\7\
---------------------------------------------------------------------------
    \6\ Guide at 16-19.
    \7\ See id. at 18, para. 60; 19 para. 66.
---------------------------------------------------------------------------
    The reference to section 109(e) essentially defines 
``consumer debtors'' for purposes of the exclusion by 
incorporating the debt limitations of that section, but not its 
requirement of regular income. The exclusion adds a requirement 
that the debtor or debtor couple be citizens or long-term legal 
residents of the United States. This ensures that residents of 
other countries will not be able to manipulate this exclusion 
to avoid recognition of foreign proceedings in their home 
countries or elsewhere.
    The first exclusion in subsection (c) constitutes, for the 
United States, the exclusion provided in article 1, subsection 
(2), of the Model Law.\8\ Foreign representatives of foreign 
proceedings which are excluded from the scope of chapter 15 may 
seek comity from courts other than the bankruptcy court since 
the limitations of section 1509(b)(2) and (3) would not apply 
to them.
---------------------------------------------------------------------------
    \8\ Id. at 17.
---------------------------------------------------------------------------
    The reference to section 109(b) interpolates into chapter 
15 the entities governed by specialized insolvency regimes 
under United States law which are currently excluded from 
liquidation proceedings under title 11. Section 1501 contains 
an exception to the section 109(b) exclusions so that foreign 
proceedings of foreign insurance companies are eligible for 
recognition and relief under chapter 15 as they had been under 
section 304. However, section 1501(d) has the effect of leaving 
to State regulation any deposit, escrow, trust fund or the like 
posted by a foreign insurer under State law.
Section 1502. Definitions
    ``Debtor'' is given a special definition for this chapter. 
That definition does not come from the Model Law but is 
necessary to eliminate the need to refer repeatedly to ``the 
same debtor as in the foreign proceeding.'' With certain 
exceptions, the term ``person'' used in the Model Law has been 
replaced with ``entity,'' which is defined broadly in section 
101(15) to include natural persons and various legal entities, 
thus matching the intended breadth of the term ``person'' in 
the Model Law. The exceptions include contexts in which a 
natural person is intended and those in which the Model Law 
language already refers to both persons and entities other than 
persons. The definition of ``trustee'' for this chapter ensures 
that debtors in possession and debtors, as well as trustees, 
are included in the term.\9\
---------------------------------------------------------------------------
    \9\ See section 1505.
---------------------------------------------------------------------------
    The definition of ``within the territorial jurisdiction of 
the United States'' in subsection (7) is not taken from the 
Model Law. It has been added because the United States, like 
some other countries, asserts insolvency jurisdiction over 
property outside its territorial limits under appropriate 
circumstances. Thus a limiting phrase is useful where the Model 
Law and this chapter intend to refer only to property within 
the territory of the enacting State. In addition, a definition 
of ``recognition'' supplements the Model Law definitions and 
merely simplifies drafting of various other sections of chapter 
15.
    Two key definitions of ``foreign proceeding'' and ``foreign 
representative,'' are found in sections 101(23) and (24), which 
have been amended consistent with Model Law article 2.\10\ The 
definitions of ``establishment,'' ``foreign court,'' ``foreign 
main proceeding,'' and ``foreign non-main proceeding'' have 
been taken from Model Law article 2, with only minor language 
variations necessary to comport with United States terminology. 
Additionally, defined terms have been placed in alphabetical 
order.\11\ In order to be recognized as a foreign non-main 
proceeding, the debtor must at least have an establishment in 
that foreign country.\12\
---------------------------------------------------------------------------
    \10\ Guide at 19-21, para.para. 67-68.
    \11\ See Guide at 19, (Model Law) 21 para. 75 (concerning 
establishment); 21 para. 74 (concerning foreign court); 21 para.para. 
72, 73 and 75 (concerning foreign main and non-main proceedings).
    \12\ See id. at 21, para. 75.
---------------------------------------------------------------------------
Section 1503. International obligations of the United States
    This section is taken exactly from the Model Law with only 
minor adaptations of terminology.\13\ Although this section 
makes an international obligation prevail over chapter 15, the 
courts will attempt to read the Model Law and the international 
obligation so as not to conflict, especially if the 
international obligation addresses a subject matter less 
directly related than the Model Law to a case before the court.
---------------------------------------------------------------------------
    \13\ See id. at 22, Art. 3.
---------------------------------------------------------------------------
Section 1504. Commencement of ancillary case
    Article 4 of the Model Law is designed for designation of 
the competent court which will exercise jurisdiction under the 
Model Law. In United States law, section 1334(a) of title 28 
gives exclusive jurisdiction to the district courts in a 
``case'' under this title.\14\ Therefore, since the competent 
court has been determined in title 28, this section instead 
provides that a petition for recognition commences a ``case,'' 
an approach that also invokes a number of other useful 
procedural provisions. In addition, a new subsection (P) to 
section 157 of title 28 makes cases under this chapter part of 
the core jurisdiction of bankruptcy courts when referred to 
them by the district courts, thus completing the designation of 
the competent court. Finally, the particular bankruptcy court 
that will rule on the petition is determined pursuant to a 
revised section 1410 of title 28 governing venue and 
transfer.\15\
---------------------------------------------------------------------------
    \14\ See id. at 23, Art. 4.
    \15\ New section 1410 of title 28 provides as follows:

      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 or enforcement 
      of judgment in a Federal or State court; or
      (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.
    The title ``ancillary'' in this section and in the title of 
this chapter emphasizes the United States policy in favor of a 
general rule that countries other than the home country of the 
debtor, where a main proceeding would be brought, should 
usually act through ancillary proceedings in aid of the main 
proceedings, in preference to a system of full bankruptcies 
(often called ``secondary'' proceedings) in each State where 
assets are found. Under the Model Law, notwithstanding the 
recognition of a foreign main proceeding, full bankruptcy cases 
are permitted in each country (see sections 1528 and 1529). In 
the United States, the court will have the power to suspend or 
dismiss such cases where appropriate under section 305.
Section 1505. Authorization to act in a foreign country
    The language in this section varies from the wording of 
article 5 of the Model Law as necessary to comport with United 
States law and terminology. The slight alteration to the 
language in the last sentence is meant to emphasize that the 
identification of the trustee or other entity entitled to act 
is under United States law, while the scope of actions that may 
be taken by the trustee or other entity under foreign law is 
limited by the foreign law.\16\
---------------------------------------------------------------------------
    \16\ See Guide at 24.
---------------------------------------------------------------------------
    The related amendment to section 586(a)(3) of title 28 
makes acting pursuant to authorization under this section an 
additional power of a trustee or debtor in possession. While 
the Model Law automatically authorizes an administrator to act 
abroad, this section requires all trustees and debtors to 
obtain court approval before acting abroad. That requirement is 
a change from the language of the Model Law, but one that is 
purely internal to United States law.\17\ Its main purpose is 
to ensure that the court has knowledge and control of possibly 
expensive activities, but it will have the collateral benefit 
of providing further assurance to foreign courts that the 
United States debtor or representative is under judicial 
authority and supervision. This requirement means that the 
first-day orders in reorganization cases should include 
authorization to act under this section where appropriate.
---------------------------------------------------------------------------
    \17\ See id. at 24, Art. 5.
---------------------------------------------------------------------------
    This section also contemplates the designation of an 
examiner or other natural person to act for the estate in one 
or more foreign countries where appropriate. One instance might 
be a case in which the designated person had a special 
expertise relevant to that assignment. Another might be where 
the foreign court would be more comfortable with a designated 
person than with an entity like a debtor in possession. Either 
are to be recognized under the Model Law.\18\
---------------------------------------------------------------------------
    \18\ See id. at 23-24, para. 82.
---------------------------------------------------------------------------
Section 1506. Public policy exception
    This provision follows the Model Law article 5 exactly, is 
standard in UNCITRAL texts, and has been narrowly interpreted 
on a consistent basis in courts around the world. The word 
``manifestly'' in international usage restricts the public 
policy exception to the most fundamental policies of the United 
States.\19\
---------------------------------------------------------------------------
    \19\ See id. at 25.
---------------------------------------------------------------------------
Section 1507. Additional assistance
    Subsection (1) follows the language of Model Law article 
7.\20\ Subsection (2) makes the authority for additional relief 
(beyond that permitted under sections 1519-1521, below) subject 
to the conditions for relief heretofore specified in United 
States law under section 304, which is repealed. This section 
is intended to permit the further development of international 
cooperation begun under section 304, but is not to be the basis 
for denying or limiting relief otherwise available under this 
chapter. The additional assistance is made conditional upon the 
court's consideration of the factors set forth in the current 
subsection 304(c) in a context of a reasonable balancing of 
interests following current case law. The references to 
``estate'' in section 304 have been changed to refer to the 
debtor's property, because many foreign systems do not create 
an estate in insolvency proceedings of the sort recognized 
under this chapter. Although the case law construing section 
304 makes it clear that comity is the central consideration, 
its physical placement as one of six factors in subsection (c) 
of section 304 is misleading, since those factors are 
essentially elements of the grounds for granting comity. 
Therefore, in subsection (2) of this section, comity is raised 
to the introductory language to make it clear that it is the 
central concept to be addressed.\21\
---------------------------------------------------------------------------
    \20\ Id. at 26.
    \21\ Id.
---------------------------------------------------------------------------
Section 1508. Interpretation
    This provision follows conceptually Model Law article 8 and 
is a standard one in recent UNCITRAL treaties and model laws. 
Language changes were made to express the concepts more clearly 
in United States vernacular.\22\ Interpretation of this chapter 
on a uniform basis will be aided by reference to the Guide and 
the Reports cited therein, which explain the reasons for the 
terms used and often cite their origins as well. Uniform 
interpretation will also be aided by reference to CLOUT, the 
UNCITRAL Case Law On Uniform Texts, which is a service of 
UNCITRAL. CLOUT receives reports from national reporters all 
over the world concerning court decisions interpreting 
treaties, model laws, and other text promulgated by UNCITRAL. 
Not only are these sources persuasive, but they are important 
to the crucial goal of uniformity of interpretation. To the 
extent that the United States courts rely on these sources, 
their decisions will more likely be regarded as persuasive 
elsewhere.
---------------------------------------------------------------------------
    \22\ Id. at 26, para. 91.
---------------------------------------------------------------------------
Section 1509. Right of direct access
    This section implements the purpose of article 9 of the 
Model Law, enabling a foreign representative to commence a case 
under this chapter by filing a petition directly with the court 
without preliminary formalities that may delay or prevent 
relief. It varies the language to fit United States procedural 
requirements and it imposes recognition of the foreign 
proceeding as a condition to further rights and duties of the 
foreign representative. If recognition is granted, the foreign 
representative will have full capacity under United States law 
(subsection (b)(1)), may request such relief in a State or 
Federal court other than the bankruptcy court (subsection 
(b)(2)), and may be granted comity or cooperation by such non-
bankruptcy court (subsection (b)(3) and (c)). Subsections 
(b)(2), (b)(3), and (c) make it clear that chapter 15 is 
intended to be the exclusive door to ancillary assistance to 
foreign proceedings. The goal is to concentrate control of 
these questions in one court. That goal is important in a 
Federal system like that of the United States with many 
different courts, State and Federal, that may have pending 
actions involving the debtor or the debtor's property. This 
section, therefore, completes for the United States the work of 
article 4 of the Model Law (``competent court'') as well as 
article 9.\23\
---------------------------------------------------------------------------
    \23\ See id. at 23, Art. 4, para.para. 79-83; 27 Art. 9, para. 93.
---------------------------------------------------------------------------
    Although a petition under current section 304 is the proper 
method for achieving deference by a United States court to a 
foreign insolvency under present law, some cases in State and 
Federal courts under current law have granted comity suspension 
or dismissal of cases involving foreign proceedings without 
requiring a section 304 petition or even referring to the 
requirements of that section. Even if the result is correct in 
a particular case, the procedure is undesirable, because there 
is room for abuse of comity. Parties would be free to avoid the 
requirements of this chapter and the expert scrutiny of the 
bankruptcy court by applying directly to a State or Federal 
court unfamiliar with the statutory requirements. Such an 
application could be made after denial of a petition under this 
chapter. This section concentrates the recognition and 
deference process in one United States court, ensures against 
abuse, and empowers a court that will be fully informed of the 
current status of all foreign proceedings involving the 
debtor.\24\
---------------------------------------------------------------------------
    \24\ See id. at 27, Art. 9; 34-35, Art. 15 and para.para. 116-119; 
39-40, Art. 18, para.para. 133-134; see also sections 1515(3), 1518.
---------------------------------------------------------------------------
    Subsection (d) has been added to ensure that a foreign 
representative cannot seek relief in courts in the United 
States after being denied recognition by the court under this 
chapter. Subsection (e) makes activities in the United States 
by a foreign representative subject to applicable United States 
law, just as 28 U.S.C. section 959 does for a domestic trustee 
in bankruptcy.\25\ Subsection (f) provides a limited exception 
to the prior recognition requirement so that collection of a 
claim which is property of the debtor, for example an account 
receivable, by a foreign representative may proceed without 
commencement of a case or recognition under this chapter.
---------------------------------------------------------------------------
    \25\ Id. at 27, para. 93.
---------------------------------------------------------------------------
Section 1510. Limited jurisdiction
    Section 1510, article 10 of the Model Law, is modeled on 
section 306 of the Bankruptcy Code. Although the language 
referring to conditional relief in section 306 is not included, 
the court has the power under section 1522 to attach 
appropriate conditions to any relief it may grant. 
Nevertheless, the authority in section 1522 is not intended to 
permit the imposition of jurisdiction over the foreign 
representative beyond the boundaries of the case under this 
chapter and any related actions the foreign representative may 
take, such as commencing a case under another chapter of this 
title.
Section 1511. Commencement of case under section 301 or 303
    This section follows the intent of article 11 of the Model 
Law, but adds language that conforms to United States law or 
that is otherwise necessary in the United States given its many 
bankruptcy court districts and the importance of full 
information and coordination among them.\26\ Article 11 does 
not distinguish between voluntary and involuntary proceedings, 
but seems to have implicitly assumed an involuntary 
proceeding.\27\ Subsection 1(a)(2) goes farther and permits a 
voluntary filing, with its much simpler requirements, if the 
foreign proceeding that has been recognized is a main 
proceeding.
---------------------------------------------------------------------------
    \26\ See id. at 28, Art. 11.
    \27\ Id. at 38, para.para. 97-99.
---------------------------------------------------------------------------
Section 1512. Participation of a foreign representative in a case under 
        this title
    This section follows article 12 of the Model Law with a 
slight alteration to tie into United States procedural 
terminology.\28\ The effect of this section is to make the 
recognized foreign representative a party in interest in any 
pending or later commenced United States bankruptcy case.\29\ 
Throughout this chapter, the word ``case'' has been substituted 
for the word ``proceeding'' in the Model Law when referring to 
cases under the United States Bankruptcy Code, to conform to 
United States usage.
---------------------------------------------------------------------------
    \28\ Id. at 29, Art. 12.
    \29\ Id. at 29, para.para. 10-102.
---------------------------------------------------------------------------
Section 1513. Access of foreign creditors to a case under this title
    This section mandates nondiscriminatory or ``national'' 
treatment for foreign creditors, except as provided in 
subsection (b) and section 1514. It follows the intent of Model 
Law article 13, but the language required alteration to fit 
into the Bankruptcy Code.\30\ The law as to priority for 
foreign claims that fit within a class given priority treatment 
under section 507 (for example, foreign employees or spouses) 
is unsettled. This section permits the continued development of 
case law on that subject and its general principle of national 
treatment should be an important factor to be considered. At a 
minimum, under this section, foreign claims must receive the 
treatment given to general unsecured claims without priority, 
unless they are in a class of claims in which domestic 
creditors would also be subordinated.\31\ The Model Law allows 
for an exception to the policy of nondiscrimination as to 
foreign revenue and other public law claims.\32\ Such claims 
(such as tax and Social Security claims) have been denied 
enforcement in the United States traditionally, inside and 
outside of bankruptcy. The Bankruptcy Code is silent on this 
point, so the rule is purely a matter of traditional case law. 
It is not clear if this policy should be maintained or 
modified, so this section leaves it to developing case law. It 
also allows the Department of the Treasury to negotiate 
reciprocal arrangements with our tax treaty partners in this 
regard, although it does not mandate any restriction of the 
evolution of case law pending such negotiations.
---------------------------------------------------------------------------
    \30\ Id. at 30, para. 103.
    \31\ See id. at 30, para. 104.
    \32\ See id. at 31, para. 105.
---------------------------------------------------------------------------
Section 1514. Notification of foreign creditors concerning a case under 
        title 11
    This section ensures that foreign creditors receive proper 
notice of cases in the United States.\33\ As a ``foreign 
creditor'' is not a defined term, foreign addresses are used as 
the distinguishing factor. The Federal Rules of Bankruptcy 
Procedure (``Rules'') should be amended to conform to the 
requirements of this section, including a special form for 
initial notice to such creditors. In particular, the Rules must 
provide for additional time for such creditors to file proofs 
of claim where appropriate and must provide for the court to 
make specific orders in that regard in proper circumstances. 
The notice must specify that secured claims must be asserted, 
because in many countries such claims are not affected by an 
insolvency proceeding and need not be filed.\34\ Of course, if 
a foreign creditor has made an appropriate request for notice, 
it will receive notices in every instance where notices would 
be sent to other creditors who have made such requests. 
Subsection (d) replaces the reference to ``a reasonable time 
period'' in Model Law article 14(3)(a).\35\ It makes clear that 
the Rules, local rules, and court orders must make appropriate 
adjustments in time periods and bar dates so that foreign 
creditors have a reasonable time within which to receive notice 
or take an action.
---------------------------------------------------------------------------
    \33\ See Model Law, Art. 14; Guide at 31-32, para.para. 106-109.
    \34\ Guide at 33, para. 111.
    \35\ Id. at 31, Art. 14(3)(a).
---------------------------------------------------------------------------
Section 1515. Application for recognition of a foreign proceeding
    This section follows article 15 of the Model Law with minor 
changes.\36\ The rules will require amendment to provide forms 
for some or all of the documents mentioned in this section, to 
make necessary additions to rules 1000 and 2002 to facilitate 
appropriate notices of the hearing on the petition for 
recognition, and to require filing of lists of creditors and 
other interested persons who should receive notices. Throughout 
the Model Law, the question of notice procedure is left to the 
law of the enacting State.\37\
---------------------------------------------------------------------------
    \36\ Id. at 33.
    \37\ See id. at 36, para. 121.
---------------------------------------------------------------------------
Section 1516. Presumptions concerning recognition
    This section follows article 16 of the Model Law with minor 
changes.\38\ Although sections 1515 and 1516 are designed to 
make recognition as simple and expedient as possible, the court 
may hear proof on any element stated. The ultimate burden as to 
each element is on the foreign representative, although the 
court is entitled to shift the burden to the extent indicated 
in section 1516. The word ``proof'' in subsection (3) has been 
changed to ``evidence'' to make it clearer using United States 
terminology that the ultimate burden is on the foreign 
representative.\39\ ``Registered office'' is the term used in 
the Model Law to refer to the place of incorporation or the 
equivalent for an entity that is not a natural person.\40\ The 
presumption that the place of the registered office is also the 
center of the debtor's main interest is included for speed and 
convenience of proof where there is no serious controversy.
---------------------------------------------------------------------------
    \38\ Id. at 36
    \39\ Id. at 36, Art. 16(3).
    \40\ Id.
---------------------------------------------------------------------------
Section 1517. Order granting recognition
    This section closely follows article 17 of the Model Law, 
with a few exceptions.\41\ The decision to grant recognition is 
not dependent upon any findings about the nature of the foreign 
proceedings of the sort previously mandated by section 304(c) 
of the Bankruptcy Code. The requirements of this section, which 
incorporates the definitions in section 1502 and sections 
101(23) and (24), are all that must be fulfilled to attain 
recognition. Reciprocity was specifically suggested as a 
requirement for recognition on more than one occasion in the 
negotiations that resulted in the Model Law. It was rejected by 
overwhelming consensus each time. The United States was one of 
the leading countries opposing the inclusion of a reciprocity 
requirement.\42\ In this regard, the Model Law conforms to 
section 304, which has no such requirement.
---------------------------------------------------------------------------
    \41\ Id. at 37.
    \42\ Report of the working group on Insolvency Law on the work of 
its Twentieth Session (Vienna, 7-18 October 1996), at 6, para.para. 16-
20.
---------------------------------------------------------------------------
    The drafters of the Model Law understood that only a main 
proceeding or a non-main proceeding meeting the standards of 
section 1502 (that is, one brought where the debtor has an 
establishment) were entitled to recognition under this section. 
The Model Law has been slightly modified to make this point 
clear by referring to the section 1502 definition of main and 
non-main proceedings, as well as to the general definition of a 
foreign proceeding in section 101(23). Naturally, a petition 
under section 1515 must show that proceeding is a main or a 
qualifying non-main proceeding in order to win recognition 
under this section.
    Consistent with the position of various civil law 
representatives in the drafting of the Model Law, recognition 
creates a status with the effects set forth in section 1520, so 
those effects are not viewed as orders to be modified, as are 
orders granting relief under sections 1519 and 1521. Subsection 
(4) states the grounds for modifying or terminating 
recognition. On the other hand, the effects of recognition 
(found in section 1520 and including an automatic stay) are 
subject to modification under section 362(d), made applicable 
by section 1520(2), which permits relief from the automatic 
stay of section 1520 for cause.
    Paragraph 1(d) of section 17 of the Model Law has been 
omitted as an unnecessary requirement for United States 
purposes, because a petition submitted to the wrong court will 
be dismissed or transferred under other provisions of United 
States law.\43\ The reference to section 350 refers to the 
routine closing of a case that has been completed and will 
invoke requirements including a final report from the foreign 
representative in such form as the rules may provide or a court 
may order.\44\
---------------------------------------------------------------------------
    \43\ Guide at 37, Art. 17(1)(d).
    \44\ Id.
---------------------------------------------------------------------------
Section 1518. Subsequent information
    This section follows the Model Law, except to eliminate the 
word ``same'' which is rendered unnecessary by the definition 
of ``debtor'' in section 1502 and to provide for a formal 
document to be filed with the court.\45\ Judges in several 
jurisdictions, including the United States, have reported a 
need for a requirement of complete and candid reports to the 
court of all proceedings, worldwide, involving the debtor. This 
section will ensure that such information is provided to the 
court on a timely basis. Any failure to comply with this 
section will be subject to the sanctions available to the court 
for violations of the statute. The section leaves to the rules 
the form of the required notice and related questions of notice 
to parties in interest, the time for filing, and the like.
---------------------------------------------------------------------------
    \45\ Id. at 39-40, para.para. 133, 134.
---------------------------------------------------------------------------
Section 1519. Relief may be granted upon petition for recognition of a 
        foreign proceeding
    This section generally follows article 19 of the Model 
Law.\46\ The bankruptcy court will have jurisdiction to grant 
emergency relief under rule 7065 pending a hearing on the 
petition for recognition. This section does not expand or 
reduce the scope of section 105 as determined by cases under 
section 105 nor does it modify the sweep of sections 555 to 
560. Subsection (d) precludes injunctive relief against police 
and regulatory action under section 1519, leaving section 105 
as the only avenue to such relief. Subsection (e) makes clear 
that this section contemplates injunctive relief and that such 
relief is subject to specific rules and a body of 
jurisprudence. Subsection (f) was added to complement 
amendments to the Bankruptcy Code provisions dealing with 
financial contracts.
---------------------------------------------------------------------------
    \46\ Id. at 40.
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Section 1520. Effects of recognition of a foreign main proceeding
    In general, this chapter sets forth all the relief that is 
available as a matter of right based upon recognition 
hereunder, although additional assistance may be provided under 
section 1507 and this chapter have no effect on any relief 
currently available under section 105. The stay created by 
article 20 of the Model Law is imported to chapter 15 from 
existing provisions of the Code. Subsection (a)(1) combines 
subsections 1(a) and (b) of article 20 of the Model Law, 
because section 362 imposes the restrictions required by those 
two subsections and additional restrictions as well.\47\
---------------------------------------------------------------------------
    \47\ Id. at 42, Art. 20 1(a), (b).
---------------------------------------------------------------------------
    Subsections (a)(2) and (4) apply the Bankruptcy Code 
sections that impose the restrictions called for by subsection 
1(c) of the Model Law. In both cases, the provisions are 
broader and more complete than those contemplated by the Model 
Law, but include all the restraints the Model Law provisions 
would impose.\48\ As the foreign proceeding may or may not 
create an ``estate'' similar to that created in cases under 
this title, the restraints are applicable to actions against 
the debtor under section 362(a) and with respect to the 
property of the debtor under the remaining sections. The only 
property covered by this section is property within the 
territorial jurisdiction of the United States as defined in 
section 1502. To achieve effects on property of the debtor 
which is not within the territorial jurisdiction of the United 
States, the foreign representative would have to commence a 
case under another chapter of this title.
---------------------------------------------------------------------------
    \48\ Id. at 42, 45.
---------------------------------------------------------------------------
    By applying sections 361 and 362, subsection (a) makes 
applicable the United States exceptions and limitations to the 
restraints imposed on creditors, debtors, and other in a case 
under this title, as stated in article 20(2) of the Model 
Law.\49\ It also introduces the concept of adequate protection 
provided in sections 362 and 363. These exceptions and 
limitations include those set forth in sections 362(b), (c) and 
(d). As one result, the court has the power to terminate the 
stay pursuant to section 362(d), for cause, including a failure 
of adequate protection.\50\
---------------------------------------------------------------------------
    \49\ Id. at 42, Art. 20(2); 44, para.para. 148, 150.
    \50\ Id. at 42, Art. 20(3); 44-45, para.para. 151 152.
---------------------------------------------------------------------------
    Subsection (a)(2), by its reference to sections 363 and 552 
adds to the powers of a foreign representative of a foreign 
main proceeding an automatic right to operate the debtor's 
business and exercise the power of a trustee under sections 363 
and 542, unless the court orders otherwise. A foreign 
representative of a foreign main proceeding may need to 
continue a business operation to maintain value and granting 
that authority automatically will eliminate the risk of delay. 
If the court is uncomfortable about this authority in a 
particular situation it can ``order otherwise'' as part of the 
order granting recognition.
    Two special exceptions to the automatic stay are embodied 
in subsections (b) and (c). To preserve a claim in certain 
foreign countries, it may be necessary to commence an action. 
Subsection (b) permits the commencement of such an action, but 
would not allow for its further prosecution. Subsection (c) 
provides that there is no stay of the commencement of a full 
United States bankruptcy case. This essentially provides an 
escape hatch through which any entity, including the foreign 
representative, can flee into a full case. The full case, 
however, will remain subject to subchapters IV and V on 
cooperation and coordination of proceedings and to section 305 
providing for stay or dismissal. Section 108 of the Bankruptcy 
Code provides the tolling protection intended by Model Law 
article 20(3), so no exception is necessary as to claims that 
might be extinguished under United States law.\51\
---------------------------------------------------------------------------
    \51\ Id.
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Section 1521. Relief that may be granted upon recognition of a foreign 
        proceeding
    This section follows article 21 of the Model Law, with 
detailed changes to fit United States law.\52\ The exceptions 
in subsection (a)(7) relate to avoiding powers. The foreign 
representative's status as to such powers is governed by 
section 1523 below. The avoiding power in section 549 and the 
exceptions to that power are covered by section 1520(a)(2). The 
word ``adequately'' in the Model Law, articles 21(2) and 22(1), 
has been changed to ``sufficiently'' in sections 1521(b) and 
1522(a) to avoid confusion with a very specialized legal term 
in United States bankruptcy, ``adequate protection.'' \53\ 
Subsection (c) is designed to limit relief to assets having 
some direct connection with a non-main proceeding, for example 
where they were part of an operating division in the 
jurisdiction of the non-main proceeding when they were 
fraudulently conveyed and then brought to the United 
States.\54\ Subsections (d), (e) and (f) are identical to those 
same subsections of section 1519. This section does not expand 
or reduce the scope of relief currently available in ancillary 
cases under sections 105 and 304 nor does it modify the sweep 
of sections 555 through 560.
---------------------------------------------------------------------------
    \52\ Id. at 45-46, Art. 21.
    \53\ Id. at 46, Art. 21(2); 47, Art. 22(1).
    \54\ See id. at 46-47, para.para. 158, 160.
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Section 1522. Protection of creditors and other interested persons
    This section follows article 22 of the Model Law with 
changes for United States usage and references to relevant 
Bankruptcy Code sections.\55\ It gives the bankruptcy court 
broad latitude to mold relief to circumstances, including 
appropriate responses if it is shown that the foreign 
proceeding is seriously and unjustifiably injuring United 
States creditors. For response to a showing that the conditions 
necessary to recognition did not actually exist or have ceased 
to exist, see section 1517. Concerning the change of 
``adequately'' in the Model Law to ``sufficiently'' in this 
section, see section 1521. Subsection (d) is new and simply 
makes clear that an examiner appointed in a case under chapter 
15 shall be subject to certain duties and bonding requirements 
based on those imposed on trustees and examiners under other 
chapters of this title.
---------------------------------------------------------------------------
    \55\ Id. at 47.
---------------------------------------------------------------------------
Section 1523. Actions to avoid acts detrimental to creditors
    This section follows article 23 of the Model Law, with 
wording to fit it within procedure under this title.\56\ It 
confers standing on a recognized foreign representative to 
assert an avoidance action but only in a pending case under 
another chapter of this title. The Model Law is not clear about 
whether it would grant standing in a recognized foreign 
proceeding if no full case were pending. This limitation 
reflects concerns raised by the United States delegation during 
the UNCITRAL debates that a simple grant of standing to bring 
avoidance actions neglects to address very difficult choice of 
law and forum issues. This limited grant of standing in section 
1523 does not create or establish any legal right of avoidance 
nor does it create or imply any legal rules with respect to the 
choice of applicable law as to the avoidance of any transfer of 
obligation.\57\ The courts will determine the nature and extent 
of any such action and what national law may be applicable to 
such action.
---------------------------------------------------------------------------
    \56\ Id. at 48-49.
    \57\ See id. at 49, para. 166.
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Section 1524. Intervention by a foreign representative
    The wording is the same as the Model Law, except for a few 
clarifying words.\58\ This section gives the foreign 
representative whose foreign proceeding has been recognized the 
right to intervene in United States cases, State or Federal, 
where the debtor is a party. Recognition being an act under 
Federal bankruptcy law, it must take effect in State as well as 
Federal courts. This section does not require substituting the 
foreign representative for the debtor, although that result may 
be appropriate in some circumstances.
---------------------------------------------------------------------------
    \58\ Id. at 49.
---------------------------------------------------------------------------
Section 1525. Cooperation and direct communication between the court 
        and foreign courts or foreign representatives
    The wording is almost exactly that of the Model Law.\59\ 
The right of courts to communicate with other courts in 
worldwide insolvency cases is of central importance. This 
section authorizes courts to do so. This right must be 
exercised, however, with due regard to the rights of the 
parties. Guidelines for such communications are left to the 
Federal rules of bankruptcy procedure.
---------------------------------------------------------------------------
    \59\ Id. at 50.
---------------------------------------------------------------------------
Section 1526. Cooperation and direct communication between the trustee 
        and foreign courts or foreign representatives
    This section follows the Model Law almost exactly.\60\ The 
language in Model Law article 26 concerning the trustee's 
function was eliminated as unnecessary because always implied 
under United States law. The section authorizes the trustee, 
including a debtor in possession, to cooperate with other 
proceedings. Subsection (3) is not taken from the Model Law but 
is added so that any examiner appointed under this chapter will 
be designated by the United States trustee and will be bonded.
---------------------------------------------------------------------------
    \60\ Id. at 51.
---------------------------------------------------------------------------
Section 1527. Forms of cooperation
    This section follows the Model Law exactly.\61\ United 
States bankruptcy courts have already engaged in most of the 
forms of cooperation mentioned here, but they now have explicit 
statutory authorization for acts like the approval of protocols 
of the sort used in cases.\62\
---------------------------------------------------------------------------
    \61\ Guide at 51, 53.
    \62\ See e.g., Gitlin v. Societe Generale, Barclays Bank (In re 
Maxwell Communication Corp.), 93 F.2d 1036 (2d Cir. 1996).
---------------------------------------------------------------------------
Section 1528. Commencement of a case under title 11 after recognition 
        of a foreign main proceeding
    This section follows the Model Law, with specifics of 
United States law replacing the general clause at the end to 
cover assets normally included within the jurisdiction of the 
United States courts in bankruptcy cases, except where assets 
are subject to the jurisdiction of another recognized 
proceeding.\63\ In a full bankruptcy case, the United States 
bankruptcy court generally has jurisdiction over assets outside 
the United States. Here that jurisdiction is limited where 
those assets are controlled by another recognized proceeding, 
if it is a main proceeding.
---------------------------------------------------------------------------
    \63\ Guide at 54-55.
---------------------------------------------------------------------------
    The court may use section 305 of this title to dismiss, 
stay, or limit a case as necessary to promote cooperation and 
coordination in a cross-border case. In addition, although the 
jurisdictional limitation applies only to United States 
bankruptcy cases commenced after recognition of a foreign 
proceeding, the court has ample authority under the next 
section and section 305 to exercise its discretion to dismiss, 
stay, or limit a United States case filed after a petition for 
recognition of a foreign main proceeding has been filed but 
before it has been approved, if recognition is ultimately 
granted.
Section 1529. Coordination of a case under title 11 and a foreign 
        proceeding
    This section follows the Model Law almost exactly, but 
subsection (4) adds a reference to section 305 to make it clear 
the bankruptcy court may continue to use that section, as under 
present law, to dismiss or suspend a United States case as part 
of coordination and cooperation with foreign proceedings.\64\ 
This provision is consistent with United States policy to act 
ancillary to a foreign main proceeding whenever possible.
---------------------------------------------------------------------------
    \64\ Id. at 55-56.
---------------------------------------------------------------------------
Section 1530. Coordination of more than one foreign proceeding
    This section follows exactly article 30 of the Model 
Law.\65\ It ensures that a foreign main proceeding will be 
given primacy in the United States, consistent with the overall 
approach of the United States favoring assistance to foreign 
main proceedings.
---------------------------------------------------------------------------
    \65\ Id. at 57.
---------------------------------------------------------------------------
Section 1531. Presumption of insolvency based on recognition of a 
        foreign main proceeding
    This section follows the Model Law exactly, inserting a 
reference to the standard for an involuntary case under this 
title.\66\ Where an insolvency proceeding has begun in the home 
country of the debtor, and in the absence of contrary evidence, 
the foreign representative should not have to make a new 
showing that the debtor is in the sort of financial distress 
requiring a collective judicial remedy. The word ``proof'' here 
means ``presumption.'' The presumption does not arise for any 
purpose outside this section.
---------------------------------------------------------------------------
    \66\ Id. at 58.
---------------------------------------------------------------------------
Section 1532. Rule of payment in concurrent proceeding
    This section follows the Model Law exactly and is very 
similar to prior section 508(a), which is repealed. The Model 
Law language is somewhat clearer and broader than the 
equivalent language of prior section 508(a).\67\
---------------------------------------------------------------------------
    \67\ Id. at 59.
---------------------------------------------------------------------------
Section 802. Other amendments to titles 11 and 28, United States Code
    Section 802(a) amends section 103 of the Bankruptcy Code to 
clarify the provisions of the Code that apply to chapter 15 and 
to specify which portions of chapter 15 apply in cases under 
other chapters of title 11. Section 802(b) amends the 
Bankruptcy Code's definitions of foreign proceeding and foreign 
representative in section 101. The new definitions are nearly 
identical to those contained in the Model Law but add to the 
phrase ``under a law relating to insolvency'' the words ``or 
debt adjustment.'' This addition emphasizes that the scope of 
the Model Law and chapter 15 is not limited to proceedings 
involving only debtors which are technically insolvent, but 
broadly includes all proceedings involving debtors in severe 
financial distress, so long as those proceedings also meet the 
other criteria of section 101(24).\68\
---------------------------------------------------------------------------
    \68\ Id. at 51-52, 71.
---------------------------------------------------------------------------
    Section 802(c) amends section 157(b)(2) of title 28 to 
provide that proceedings under chapter 15 will be core 
proceedings while other amendments to title 28 provide that the 
United States trustee's standing extends to cases under chapter 
15 and that the United States trustee's duties include acting 
in chapter 15 cases. Although the United States will continue 
to assert worldwide jurisdiction over property of a domestic or 
foreign debtor in a full bankruptcy case under chapters 7 and 
13 of this title, subject to deference to foreign proceedings 
under chapter 15 and section 305, the situation is different in 
a case commenced under chapter 15. There the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
    Section 802(d) amends section 109 of the Bankruptcy Code to 
permit recognition of foreign proceedings involving foreign 
insurance companies and involving foreign banks which do not 
have a branch or agency in the United States (as defined in 12 
U.S.C. Sec. 3101). While a foreign bank not subject to United 
States regulation will be eligible for chapter 15 as a 
consequence of the amendment to section 109, section 303 
prohibits the commencement of a full involuntary case against 
such a foreign bank unless the bank is a debtor in a foreign 
proceeding.
    While section 304 is repealed and replaced by chapter 15, 
access to the jurisprudence which developed under section 304 
is preserved in the context of new section 1507. On deciding 
whether to grant the Additional Assistance contemplated by 
section 1507, the court must consider the same factors that had 
been imposed by former section 304. The venue provisions for 
cases ancillary to foreign proceedings have been amended to 
provide a hierarchy of choices beginning with principal place 
of business in the United States, if any. If there is no 
principal place of business in the United States, but there is 
litigation against a debtor, then the district in which the 
litigation is pending would be the appropriate venue. In any 
other case, venue must be determined with reference to the 
interests of justice and the convenience of the parties.

              TITLE IX--FINANCIAL CONTRACT PROVISIONS \69\
---------------------------------------------------------------------------

    \69\ Title IX is substantively very similar to H.R. 1161, the 
Financial Contract Netting Improvement Act of 1999, a bill that was 
introduced in the 106th Congress. Accordingly, the text explaining 
title IX is derived from the report accompanying this bill. See H.R. 
Rep. No. 106-834, Pt.1 (2000).
---------------------------------------------------------------------------
Section 901. Treatment of certain agreements by conservators or 
        receivers of insured depository institutions
    Subsections (a) through (f) amend the Federal Deposit 
Insurance Act's (FDIA) definitions of ``qualified financial 
contract'' (QFC), ``securities contract,'' ``commodity 
contract,'' ``forward contract,'' ``repurchase agreement'' and 
``swap agreement'' to make them consistent with the definitions 
in the Bankruptcy Code, as amended by this Act.
    Subsection (b) amends the definition of ``securities 
contract'' to encompass options on securities and margin loans. 
The inclusion of ``margin loans'' in the definition is intended 
to encompass only those loans commonly known in the securities 
industry as ``margin loans'' and does not include other loans 
utilizing securities as collateral, however documented. 
Subsection (b) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract,'' the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (e) amends the definition of a ``repurchase 
agreement'' to codify the substance of the Federal Deposit 
Insurance Corporation's (FDIC) 1995 regulation defining 
repurchase agreement to include those on qualified foreign 
government securities.\70\ The term ``qualified foreign 
government securities'' is defined to include those that are 
direct obligations of, or fully guaranteed by, central 
governments of members of the Organization for Economic 
Cooperation and Development (OECD). Subsection (e) reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. Any risk presented by this modification is 
addressed by limiting it to those issued or guaranteed by OECD 
member States. Subsection (e), like subsection (b) for 
``securities contracts,'' specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' However, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain 1 year or less 
after such transfer would constitute a ``repurchase 
agreement.''
---------------------------------------------------------------------------
    \70\ See 12 C.F.R. ' 360.5.
---------------------------------------------------------------------------
    Subsection (f) amends the definition of ``swap agreement'' 
to include 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, 
spread, future, or forward agreement; a debt index or debt 
swap, option, future, or forward agreement; a 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 a weather option.'' This 
amendment would achieve contractual netting across economically 
similar over-the-counter products that can be terminated and 
closed out on a mark-to-market basis.
    Traditional commercial and lending arrangements, or other 
non-financial market transactions, such as commercial, 
residential or consumer loans, cannot be treated as ``swaps'' 
under either the FDIA or the Bankruptcy Code because the 
parties purport to document or label the transactions as ``swap 
agreements.'' In addition, these definitions apply only for 
purposes of the FDIA and the Bankruptcy Code. These 
definitions, and the characterization of a certain transaction 
as a ``swap agreement,'' are not intended to effect the 
characterization, definition, or treatment of any instruments 
under any other statute, regulation, or rule including, but not 
limited to, the statutes, regulations or rules enumerated in 
subsection (f).
    Subsection (g) amends the FDIA by adding a definition for 
``transfer,'' which is a key term used in the FDIA, to ensure 
that it is broadly construed to encompass dispositions of 
property or interests in property. The definition tracks that 
in section 101 of the Bankruptcy Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
FDIA. This subsection (h) also clarifies that the FDIA 
expressly protects rights under security agreements, 
arrangements or other credit enhancement related to one or more 
qualified financial contracts (QFCs). An example of a security 
arrangement is a right of set off, and examples of other credit 
enhancements are letters of credit, guarantees, reimbursement 
obligations and other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
State law relating to the avoidance of preferential or 
fraudulent transfers (including the anti-preference provision 
of the National Bank Act) can be invoked to avoid a transfer 
made in connection with any QFC of an insured depository 
institution in conservatorship or receivership, absent actual 
fraudulent intent on the part of the transferee.
Section 902. Authority of the corporation with respect to failed and 
        failing institutions
    Section 203 provides that no provision of law, including 
the Federal Deposit Insurance Corporation Improvement Act 
(FDICIA), shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. Section 902, as well as other 
provisions in the Act, clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFCs.
    In addition, section 902 denies enforcement to ``walkaway'' 
clauses in QFCs. A walkaway clause is defined as a provision 
that, after calculation of a value of a party's position or an 
amount due to or from one of the parties upon termination, 
liquidation or acceleration of the QFC, 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 non-defaulting party.
Section 903. Amendments relating to transfers of qualified financial 
        contracts
    Subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfers of QFCs to 
``financial institutions'' as defined in FDICIA or in 
regulations. This provision allows the FDIC to transfer QFCs to 
a non-depository financial institution, provided the 
institution is not subject to bankruptcy or insolvency 
proceedings. The new FDIA provision specifies that when the 
FDIC transfers QFCs that are subject to the rules of a 
particular clearing organization, the transfer will not require 
the clearing organization to accept the transferee as a member 
of the organization. This provision gives the FDIC flexibility 
in resolving QFCs subject to the rules of a clearing 
organization, while preserving the ability of such 
organizations to enforce appropriate risk reducing membership 
requirements. The new FDIA provision also permits transfers to 
an eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person if, following the 
transfer, the contractual rights of the parties would be 
enforceable substantially to the same extent as under the FDIA.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as receiver or following the date of such transfer 
by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties to terminate or liquidate 
a QFC before the expiration of the time period provided by the 
FDIA during which the FDIC may repudiate or transfer a QFC in a 
conservatorship or receivership. Subsection (c) provides that a 
party may not terminate a QFC based solely on the appointment 
of the FDIC as receiver until 5:00 p.m. (Eastern Time) on the 
business day following the appointment of the receiver or after 
the person has received notice of a transfer under FDIA section 
11(d)(9), or based solely on the appointment of the FDIC as 
conservator, notwithstanding the provisions of FDICIA. This 
provides the FDIC with an opportunity to undertake an orderly 
resolution of the insured depository institution. The amendment 
also prohibits the enforcement of rights of termination or 
liquidation that are based solely on the ``financial 
condition'' of the depository institution in receivership or 
conservatorship. For example, termination based on a cross-
default provision in a QFC that is triggered upon a default 
under another contract could be stayed if such other default 
was caused by an acceleration of amounts due under that other 
contract, and such acceleration was based solely on the 
appointment of a conservator or receiver for that depository 
institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit 
rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. However, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver. The 
amendment allows the FDIC to meet its obligation to provide 
notice to parties to transferred QFCs by taking steps 
reasonably calculated to provide notice to such parties by the 
required time. This is consistent with the existing policy 
statement on QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.
Section 904. Amendments relating to disaffirmance or repudiation of 
        qualified financial contracts
    Section 904 limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.
Section 905. Clarifying amendment relating to master agreements
    Section 905 states that a master agreement for one or more 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements or swap agreements will be treated as a 
single QFC under the FDIA. This provision ensures that cross-
product netting pursuant to a master agreement will be 
enforceable under the FDIA. Cross-product netting permits a 
wide variety of financial transactions between two parties to 
be netted, thereby maximizing the present and potential future 
risk-reducing benefits of the netting arrangement between the 
parties. Express recognition of the enforceability of such 
cross-product master agreements furthers the policy of 
increasing legal certainty and reducing systemic risks in the 
case of an insolvency of a large financial participant. Similar 
Bankruptcy Code clarifications to recognize cross-product 
netting both under a master agreement and in the absence of a 
master agreement are described below.
Section 906. Federal Deposit Insurance Corporation Improvement Act of 
        1991.
    Subsection (a)(1) amends the definition of ``clearing 
organization'' to include clearinghouses that are subject to 
exemptions pursuant to orders of the SEC or the CFTC.
    The FDICIA provides that a netting arrangement will be 
enforced pursuant to its terms, notwithstanding the failure of 
a party to the agreement. However, the current netting 
provisions of FDICIA limit this protection to ``financial 
institutions,'' which include depository institutions. 
Subsection (a)(2) amends the FDICIA definition of covered 
institutions to include (i) uninsured national and State member 
banks, irrespective of their eligibility for deposit insurance 
and (ii) foreign banks (including the foreign bank and its 
branches or agencies as a combined group, or only the foreign 
bank parent of a branch or agency). The Federal Reserve Board 
already has by regulation included certain foreign banks in the 
definition of a ``financial institution'' for purposes of 
FDICIA and the latter change will statutorily extend the 
protections of FDICIA to ensure that U.S. financial 
organizations participating in netting agreements with foreign 
banks are covered by the Act, thereby enhancing the safety and 
soundness of these arrangements.
    Subsection (a)(3) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(4) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. However, many of 
these agreements, particularly netting arrangements covering 
positions taken in foreign exchange dealings, are governed by 
the laws of a foreign country. This subsection broadens the 
definition of ``netting contract'' to include those agreements 
governed by foreign law, and preserves the FDICIA requirement 
that a netting contract is not invalid under or precluded by 
Federal law.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members. First, the termination 
provisions of netting contracts will not be enforceable based 
solely on (i) the appointment of a conservator for an insolvent 
depository institution under the FDIA or (ii) the appointment 
of a receiver for such institution under the FDIA, if such 
receiver transfers or repudiates QFCs in accordance with the 
FDIA and gives notice of a transfer by 5:00 p.m. on the 
business day following the appointment of a receiver. This 
change is made to confirm the FDIC's flexibility to transfer or 
repudiate the QFCs of an insolvent depository institution in 
accordance with the terms of the FDIA. This modification also 
provides important legal certainty regarding the treatment of 
QFCs under the FDIA, because the current relationship between 
the FDIA and FDICIA is unclear. The second exception provides 
that FDICIA does not override a stay order under the Securities 
Investor Protection Act (SIPA) with respect to foreclosure on 
securities (but not cash) collateral of a debtor (section 911 
makes a conforming change to SIPA). There is also an exception 
relating to insolvent commodity brokers. Subsection (a)(5) adds 
a new definition of ``payment'' to FDICIA.
    Subsections (b) and (c) also clarify that a security 
agreement or other credit enhancement related to a netting 
contract is enforceable to the same extent as the underlying 
netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks or uninsured Federal branches or 
agencies that are placed in receivership or conservatorship 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with uninsured national banks or 
uninsured Federal branches or agencies will have the same 
rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for an uninsured national bank or uninsured Federal 
branch or agency to those provisions that address QFCs in 
section 1821(e)(8), (9), (10), and (11) of title 12 of the 
United States Code.
    While the amendment would apply the same rules to uninsured 
national banks and Federal branches and agencies that apply to 
insured institutions, the provision would not change the rules 
that apply to insured institutions. Nothing in this section 
would amend the International Banking Act, the Federal Deposit 
Insurance Act, the National Bank Act, or other statutory 
provisions with respect to receiverships of insured national 
banks or Federal branches.
Section 907. Bankruptcy Code amendments
    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform them 
with the amendments to the FDIA contained in subsections (e) 
and (f) of section 901. In connection with the definition of 
``repurchase agreement,'' the term ``qualified foreign 
government securities'' is defined to include securities that 
are direct obligations of, or fully guaranteed by, central 
governments of members of the Organization for Economic 
Cooperation and Development (OECD). This language reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. Any risk presented by this modification is 
addressed by limiting it to those obligating or guaranteed by 
OECD member States. Subsection (a)(1) specifies that repurchase 
obligations under a participation in an commercial mortgage 
loan do not make the participation agreement a ``repurchase 
agreement.'' Such repurchase obligations embedded in 
participations in commercial loans (such as recourse 
obligations) do not constitute a ``repurchase agreement.'' 
However, a repurchase agreement involving the transfer of 
participations in commercial mortgage loans with a simultaneous 
agreement to repurchase the participation on demand or at a 
date certain 1 year or less after such transfer would 
constitute a ``repurchase agreement.'' The amendments to the 
definition of ``repurchase agreement'' are not intended to 
affect the interpretation of the definition of ``securities 
contract.''
    The definition of ``swap agreement,'' in conjunction with 
the addition of ``spot foreign exchange transactions'' that was 
added to the definition in 1994, will achieve contractual 
netting across economically similar over-the-counter products 
that can be terminated and closed out on a mark-to-market 
basis. The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. For that reason, the phrase ``or any 
other similar agreement'' was included in the definition. To 
clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include any agreement or transaction 
similar to any other agreement or transaction referred to in 
subsection (a)(1) that is presently, or in the future becomes, 
regularly entered into in the swap market and 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. However, traditional 
commercial and lending arrangements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under either the 
FDIA or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
Subsection (a)(1) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that section. The definition also includes any 
security agreement or arrangement, or other credit enhancement, 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the Bankruptcy Code and the FDIA. Similar 
changes are made in the definitions of ``forward contract,'' 
``commodity contract'' and ``repurchase agreement.'' An example 
of a security arrangement is a right of setoff; examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``commodity 
contract,'' respectively, to conform them to the definitions in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts. Subsection (a)(2), like the amendments to 
the FDIA, amends the definition of ``securities contract'' to 
encompass options on securities and margin loans. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans'' and does not include other loans utilizing 
securities as collateral, however documented. Subsection (a)(2) 
also specifies that purchase, sale and repurchase obligations 
under a participation in a commercial mortgage loan do not 
constitute ``securities contracts.'' While a contract for the 
purchase or sale or a participation may constitute a 
``securities contract,'' the purchase, sale or repurchase 
obligation embedded in a participation agreement does not make 
that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definition of 
``forward contract merchant'' and also adds a new definition of 
``financial participant'' to limit the potential impact of 
insolvencies upon other major market participants. These 
definitions will allow such market participants to close-out 
and net agreements with insolvent entities under sections 
362(b)(6), 546, 548, 555, and 556 even if the creditor could 
not qualify as, for example, a commodity broker. The new 
subsection preserves the limitations of the right to close-out 
and net such contracts, in most cases, to entities who qualify 
under the Bankruptcy Code's counter party limitations. However, 
where the counter party has transactions with a total gross 
dollar value of at least $1 billion in notional principal 
amount outstanding on any day during the previous 15-month 
period, or has gross mark-to-market positions of at least $100 
million (aggregated across counter parties) in one or more 
agreements or transactions on any day during the previous 15-
month period, the new subsection and corresponding amendments 
would permit it to exercise netting rights irrespective of its 
inability otherwise to satisfy those counter party limitations. 
This change will help prevent systemic impacts upon the markets 
from a single failure.
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements or 
(ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions). A ``master netting agreement participant'' is 
any entity that is a party to an outstanding master netting 
agreement with a debtor before the filing of a bankruptcy 
petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the reference to ``setoff'' in this 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against, obligations to return 
collateral securing swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This section of the Act also clarifies the 
limitations on a trustee's power to avoid transfers made under 
swap agreements.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under sections 546 and 548(d).
    Subsections (g), (h), (i), and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is consistent with the current 
treatment of rights under swap agreements pursuant to section 
560 of the Bankruptcy Code. With respect to sections 555, 556, 
559, 560 and 561 of the Bankruptcy Code, it is intended that 
the normal business practice in the event of a default of a 
party based on bankruptcy or insolvency is to terminate, 
liquidate or accelerate securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements with the bankrupt or 
insolvent party. The protection of netting and offset rights in 
sections 560 and 561 is in addition to the protections afforded 
in subsections 362(b)(6), (b)(7), (b)(17) and (b)(32). For 
example, cross-product netting will be protected from the 
automatic stay under section 561 even in the absence of a 
master netting agreement. Sections 561(b)(2) and (3) limit the 
exercise of contractual rights to net or to offset obligations 
where one leg of the obligations sought to be netted relates to 
commodity contracts. Under subsection (b)(2), netting or offset 
is not permitted if the obligations are not mutual. This means, 
for example, that proprietary obligations cannot be netted or 
offset against obligations held for, or on behalf of, some 
other party. Even if the obligations are mutual, under 
subsection (b)(3) netting or offset is not permitted in a 
commodity broker bankruptcy if the party seeking to net or to 
offset has no positive net equity in the commodity account at 
the debtor. Subsections (b)(2) and (b)(3) limit the depletion 
of assets available for distribution to customers of commodity 
brokers. This is consistent with the principle of subchapter IV 
of chapter 7 of the Bankruptcy Code, which gives priority to 
customer claims in the bankruptcy of a commodity broker.
    Under this provision, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the Section In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counter party of netting or set off 
rights in connection with QFCs would be enforceable under the 
FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all cases and proceedings under the Bankruptcy Code) will 
apply in a chapter 9 case. Although sections 555, 556, 559, and 
560 provide that they apply in any case or proceeding under the 
Bankruptcy Code, this subsection makes a technical amendment in 
chapter 9 to clarify the applicability of these provisions.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a section 304 
proceeding ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) amend those provisions in the 
Bankruptcy Code concerning the liquidation of commodity brokers 
and stockbrokers. Subchapter III of chapter 7 of the Bankruptcy 
Code details specific rules for the liquidation of 
stockbrokers. Subchapter IV of chapter 7 of the Bankruptcy Code 
and regulations of the CFTC detail specific rules for the 
liquidation of commodity brokers. These authorities are 
designed to protect customers and customer property of an 
insolvent stockbroker or commodity broker.
    Subsections (n) and (o) clarify the rights of parties to 
commodity contracts, securities contracts, forward contracts, 
swap agreements, repurchase agreements and master netting 
agreements with an insolvent commodity broker or stockbroker. 
They ensure that non-customers will not defeat the priority 
scheme of subchapter III or IV priority by gaining access to 
assets held in segregated customer accounts. The subsections 
also clarify that the exercise of termination and netting 
rights will not otherwise affect customer property or 
distributions by the trustee of the insolvent commodity broker 
or stockbroker after the exercise of such rights.
    Subsection (p) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of setoff rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements cannot be avoided as a 
preference. This subsection also adds setoff of the kinds 
described in sections 555, 556, 559, 560, and 561 of the 
Bankruptcy Code to the types of set off excepted from section 
553(b).
Section 908. Recordkeeping requirements
    Section 908 amends section 11(e)(8) of the FDIA to 
explicitly authorize the FDIC, in consultation with appropriate 
Federal banking agencies, to prescribe regulations on 
recordkeeping with respect to QFCs. Adequate recordkeeping for 
such transactions is essential to effective risk management and 
to the reduction of systemic risk permitted by the orderly 
resolution of depository institutions utilizing QFCs.
Section 909. Exemptions from contemporaneous execution requirement
    Section 909 amends section 13(e)(2) of the FDIA to provide 
that an agreement for the collateralization of governmental 
deposits, bankruptcy estate funds, Federal Reserve Bank or 
Federal Home Loan Bank extensions of credit or one or more QFCs 
shall not be deemed invalid solely because such agreement was 
not entered into contemporaneously with the acquisition of the 
collateral or because of pledges, delivery or substitution of 
the collateral made in accordance with such agreement. The 
amendment codifies portions of policy statements issued by the 
FDIC regarding the application of section 13(e), which codifies 
the ``Oench Duhme'' doctrine. With respect to QFCs, this 
codification recognizes that QFCs often are subject to 
collateral and other security arrangements that may require 
posting and return of collateral on an ongoing basis based on 
the mark-to-market values of the collateralized transactions. 
The codification of only portions of the existing FDIC policy 
statements on these and related issues should not give rise to 
any negative implication regarding the continued validity of 
these policy statements.
Section 910. Damage measure
    Section 910 adds a new section 562 to the Bankruptcy Code 
providing that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement be calculated as of the 
earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement. New section 562 
provides important legal certainty and makes the Bankruptcy 
Code consistent with the current provisions related to the 
timing of the calculation of damages under QFCs in the FDIA.
Section 911. SIPC stay
    Section 911 amends SIPA to provide that an order or decree 
issued pursuant to SIPA shall not operate as a stay of any 
right of liquidation, termination, acceleration, offset or 
netting under one or more securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements or master netting agreements (as defined in the 
Bankruptcy Code and including rights of foreclosure on 
collateral), except that such order or decree may stay any 
right to foreclose on securities (but not cash) collateral 
pledged by the debtor or sold by the debtor under a repurchase 
agreement (a corresponding amendment to FDICIA is made by the 
Act). A creditor that was stayed in exercising rights against 
securities collateral would be entitled to post-insolvency 
interest to the extent of the collateral.
Section 912. Asset-backed securitizations
    Section 912 amends section 541 of the Bankruptcy Code to 
provide that certain assets transferred to an eligible entity 
in connection with an asset-backed securitization generally 
will not be included within the bankruptcy estate of the 
debtor. This provision recognizes that a valid transfer of such 
assets to an ``eligible entity,'' generally eliminates the 
debtor's legal or equitable interests in those assets. 
Accordingly, subject to the avoidance powers in section 548(a), 
the transfer will be treated as a sale of those assets not 
subject to avoidance.
Section 913. Effective date; application of amendments
    Section 913(a) provides that title IX become effective on 
the Act's date of enactment. Section 913(b) provides that the 
amendments made by the Act shall not apply with respect to 
cases commenced, or to conservator and receiver appointments 
made before the date of enactment.

                 TITLE X--PROTECTION OF FAMILY FARMERS

Section 1001. Permanent reenactment of chapter 12
    Section 1001(a) reenacts chapter 12 of the Bankruptcy Code 
and provides that such reenactment takes effect on July 1, 
2000. Section 1001(b) makes a conforming amendment to section 
302 of the Bankruptcy, Judges, United States Trustees, and 
Family Farmer Bankruptcy Act of 1986.
Section 1002. Debt limit increase
    Section 1002 amends section 104(b) of the Bankruptcy Code 
to provide for annual or biannual adjustments of the debt limit 
for family farmers beginning on April 1, 2004.
Section 1003. Certain claims owed to governmental units
    Section 1003(a) amends section 1222(a) of the Bankruptcy 
Code to require a chapter 12 plan provide for payment in full 
of all claims entitled to priority under section 507, unless 
the claim is owed to a governmental unit arising from the sale 
or exchange of any farm asset. If the claim falls within this 
exception, it is treated as an unsecured claim and the 
underlying debt is treated the same if the debtor receives a 
discharge or the holder of a claim agrees to a different 
treatment of that claim. Section 1003(b) amends section 1231(b) 
of the Bankruptcy Code to have it apply to any governmental 
unit.

               TITLE XI--HEATH CARE AND EMPLOYEE BENEFITS

Section 1101. Definitions
    Section 1101(a) amends section 101 of the Bankruptcy Code 
to add a definition of the term ``health care business.'' A 
health care business is defined as any public or private entity 
(without regard as to whether the entity is organized for 
profit or not for profit) that is primarily engaged in offering 
to the general public facilities and services for certain 
specified purposes. Section 1101(b) amends section 101 of the 
Bankruptcy Code to define ``patient'' and ``patient records.'' 
Section 1101(c) clarifies that the amendments implemented by 
section 1101(a) are not intended to affect the interpretation 
of section 109(b) of the Bankruptcy Code concerning an entity's 
eligibility to be a chapter 7 debtor.
Section 1102. Disposal of patient records
    Section 1102 adds a provision to chapter 3 of the 
Bankruptcy Code specifying requirements for the disposal of 
patient records in a chapter 7, 9, or 11 case of a health care 
business where the trustee lacks sufficient funds to pay for 
the storage of such records in accordance with applicable 
Federal or State law. The requirements chiefly consist of 
providing notice to the affected patients and specifying the 
method of disposal for unclaimed records. These requirements 
are intended to protect the privacy and confidentiality of a 
patient's medical records when they are in the custody of a 
health care business in bankruptcy.
Section 1103. Administrative expense claim for costs of closing a 
        health care business and other administrative expenses
    Section 1103 amends section 503(b) of the Bankruptcy Code 
to provide that the actual, necessary costs and expenses of 
closing a health care business (including the disposal of 
patient records or transferral of patients) incurred by a 
trustee, Federal agency, or a department or agency of a State 
are allowed administrative expenses.
    With respect to a nonresidential real property lease 
previously assumed under section 365 and then subsequently 
rejected, section 1103 amends section 503(b) to provide that 
the sum of all monetary obligations due (excluding those 
arising from or related to a failure to operate or penalty 
provisions) for the 2-year period following the later of the 
rejection date or date of actual turnover of the premises 
(without reduction or setoff for any reason, except for sums 
actually received or to be received from a nondebtor) are 
allowed administrative expenses under section 503(b) of the 
Bankruptcy Code. The claim for remaining sums due for the 
balance of the lease's term shall be treated as a claim under 
section 502(b)(6).
Section 1104. Appointment of ombudsman to act as patient advocate
    Section 1104(a) adds a provision to chapter 3 of the 
Bankruptcy Code requiring the court to order the appointment of 
an ombudsman within 30 days after the commencement of a chapter 
7, 9 or 11 case by a health care provider, unless the court 
finds that such appointment is not necessary for the protection 
of patients under the specific facts of the case. Section 
1104(a) requires the ombudsman to be a disinterested person. 
Pursuant to this provision, the ombudsman is responsible for 
monitoring the quality of patient care and to represent the 
interests of the patients. Within 60 days after his or her 
appointment, the ombudsman must report to the court at a 
hearing or in writing on the quality of patient care at the 
health care business. Subsequent reports are due not less 
frequently than every 60 days thereafter. If the ombudsman 
determines that the quality of patient care is declining 
significantly or is otherwise being materially compromised, the 
ombudsman must immediately notify the court by motion or 
written report (on notice to appropriate parties in interest). 
Section 1104(a) specifies that the ombudsman must maintain any 
information he or she obtains relating to patients as 
confidential. The ombudsman may not review confidential patient 
records unless the court provides prior approval, with 
restrictions to protect the confidentiality of such records.
    Section 1104(b) amends section 330(a)(1) of the Bankruptcy 
Code to authorize the payment of reasonable compensation to an 
ombudsman.
Section 1105. Debtor in possession; duty of trustee to transfer 
        patients
    Section 1105 amends section 704 of the Bankruptcy Code to 
require a chapter 7 trustee, chapter 11 trustee, or a chapter 
11 debtor in possession to use all reasonable and best efforts 
to transfer patients from a health care business that is being 
closed to an appropriate health care business. The transferee 
health care business should be in the vicinity of the 
transferor health care business, provide the patient with 
services that are substantially similar to those provided by 
the transferor health care business, and maintain a reasonable 
quality of care.
Section 1106. Exclusion from program participation not subject to 
        automatic stay
    Section 1106 amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the exclusion by the 
Secretary of Health and Human Services of a debtor from 
participation in the Medicare program or other specified 
Federal health care programs.

                    TITLE XII--TECHNICAL AMENDMENTS

Section 1201. Definitions
    Section 1201 amends the definitions contained in section 
101 of the Bankruptcy Code. Paragraphs (1), (2), (4), and (7) 
of section 1201 make technical changes to section 101 to 
convert each definition into a sentence (thereby facilitating 
future amendments to the separate paragraphs) and to 
redesignate the definitions in correct and completely numerical 
sequence. Paragraph (3) of section 1101 makes necessary and 
conforming amendments to cross references to the newly 
redesignated definitions.
    Paragraph (5) of section 1201 concerns single asset real 
estate debtors. A single asset real estate chapter 11 case 
presents special concerns. As the name implies, the principal 
asset in this type of case consists of some form of real 
estate, such as undeveloped land. Typically, the form of 
ownership of a single asset real estate debtor is a corporation 
or limited partnership. The largest creditor in a single asset 
real estate case is typically the secured lender who advanced 
the funds to the debtor to acquire the real property. Often, a 
single asset real estate debtor resorts to filing for 
bankruptcy relief for the sole purpose of staying an impending 
foreclosure proceeding or sale commenced by the secured lender. 
Foreclosure actions are filed when the debtor lacks sufficient 
cash flow to service the debt and maintain the property. Taxing 
authorities may also have liens against the property. Based on 
the nature of its principal asset, a single asset real estate 
debtor often has few, if any, unsecured creditors. If unsecured 
creditors exist, they may have only nominal claims against the 
single asset real estate debtor. Depending on the nature and 
ownership of any business operating on the debtor's real 
property, the debtor may have few, if any, employees. 
Accordingly, there may be little interest on behalf of 
unsecured creditors in a single asset real estate case to serve 
on a creditors' committee.
    In 1994, the Bankruptcy Code was amended to accord special 
treatment for a single asset real estate debtor. It defined 
this type of debtor as a bankruptcy estate comprised of a 
single piece of real property or project, other than 
residential real property with fewer than four residential 
units. The property or project must generate substantially all 
of the debtor's gross income. A debtor that conducts 
substantial business on the property beyond that relating to 
its operation is excluded from this definition. In addition, 
the definition fixed a monetary cap. To qualify as a single 
asset real estate debtor, the debtor could not have 
noncontingent, liquidated secured debts in excess of $4 
million.\71\ Subparagraph (5)(A) amends the definition of 
``single asset real estate'' to exclude family farmers from 
this definition. Paragraph (5)(B) amends section 101(51B) of 
the Bankruptcy Code to eliminate the $4 million debt limitation 
on single asset real estate. The present $4 million cap 
prevents the use of the expedited relief procedure in many 
commercial property reorganizations, and effectively provides 
an opportunity for a number of debtors to abusively file for 
bankruptcy in order to obtain the protection of the automatic 
stay against their creditors. As a result of this amendment, 
creditors in more cases will be able to obtain the expedited 
relief from the automatic stay which is made available under 
section 362(d)(3) of the Bankruptcy Code.
---------------------------------------------------------------------------
    \71\ See 11 U.S.C. Sec. 101(51B).
---------------------------------------------------------------------------
    Paragraph (6) of section 1201, together with section 1214, 
respond to a 1997 Ninth Circuit case,\72\ in which two purchase 
money lenders (without knowledge that the debtor had recently 
filed an undisclosed chapter 11 case that was subsequently 
converted to chapter 7), funded the debtor's acquisition of an 
apartment complex and recorded their purchase-money deed of 
trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
in section 101(54) of the Bankruptcy Code to include the 
``creation of a lien.'' This amendment gives expression to a 
widely held understanding since the enactment of the Bankruptcy 
Reform Act of 1978,\73\ that is, a transfer includes the 
creation of a lien.
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    \72\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir.), 
cert. denied 522 U.S. 966 (1997). The bankruptcy trustee sought to 
avoid the lien created by the lenders' deed of trust by asserting that 
the deed was an unauthorized, postpetition transfer under section 
549(a) of the Bankruptcy Code. The lenders claimed that the voluntary 
transfer to them was a transfer of real property to good faith 
purchasers for value, which was thereby excepted it, under section 
549(c) of the Bankruptcy Code, from avoidance. The bankruptcy court 
held that the postpetition recordation of the lenders' deed of trust 
was without authorization under the Bankruptcy Code or by the court and 
was therefore avoidable under section 549(a), and that the lenders did 
not qualify under the section 549(c) exception as good faith purchasers 
of real property for value. The District Court subsequently affirmed 
the bankruptcy court's ruling granting the trustee the authority to 
avoid the lenders' lien. In re McConville, D.C. No. CV 94 03308 FMS 
(N.D. Cal.1994). On appeal, the lower court's decision in McConville 
was initially affirmed. The Ninth Circuit, however, subsequently issued 
an amended opinion, also affirming the lower court, and finally issued 
an opinion withdrawing its prior opinion and deciding the case on other 
grounds. It held that by obtaining secured credit from the lenders, 
after filing but before the appointment of a trustee, the debtors 
violated their fiduciary responsibility to their creditors.
    \73\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
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Section 1202. Adjustment of dollar amounts
    Section 1202 corrects an omission in section 104(b) of the 
Bankruptcy Code to include a reference to section 522(f)(3).
Section 1203. Extension of time
    Section 1203 makes a technical amendment to correct a 
reference error described in amendment notes contained in the 
United States Code. As specified in the amendment note relating 
to subsection (c)(2) of section 108 of the Bankruptcy Code, the 
amendment made by section 257(b)(2)(B) of Public Law 99-554 
could not be executed as stated.
Section 1204. Technical amendments
    Section 1204 makes technical amendments to sections 
109(b)(2) (to strike an statutory cross reference), 541(b)(2) 
(to add ``or'' to the end of this provision), and 522(b)(1) (to 
replace ``product'' with ``products'').
Section 1205. Penalty for persons who negligently or fraudulently 
        prepare bankruptcy petitions
    Section 1205 amends section 110(j)(4) of the Bankruptcy 
Code to change the reference to attorneys from the singular 
possessive to the plural possessive.
Section 1206. Limitation on compensation of professional persons
    Section 328(a) of the Bankruptcy Code provides that a 
trustee or a creditors' and equity security holders' committee 
may, with court approval, obtain the services of a professional 
person on any reasonable terms and conditions of employment, 
including on a retainer, on an hourly basis, or on a contingent 
fee basis. Section 1206 amends section 328(a) to include 
compensation ``on a fixed or percentage fee basis'' in addition 
to the other specified forms of reimbursement.
Section 1207. Effect of conversion
    Section 1207 makes a technical correction in section 
348(f)(2) of the Bankruptcy Code to clarify that the first 
reference to property, like the subsequent reference to 
property, is a reference to property of the estate.
Section 1208. Allowance of administrative expenses
    Section 1208 amends section 503(b)(4) of the Bankruptcy 
Code to limit the types of compensable professional services 
rendered by an attorney or accountant that can qualify as 
administrative expenses in a bankruptcy case. Expenses for 
attorneys or accountants incurred by individual members of 
creditors' or equity security holders' committees are not 
recoverable, but expenses incurred for such professional 
services incurred by such committees themselves would be.
Section 1209. Exceptions to discharge
    Section 1209 of the bill amends section 523(a) of the 
Bankruptcy Code to correct a technical error in the placement 
of paragraph (15), which was added to section 523 by section 
304(e)(1) of the Bankruptcy Reform Act of 1994. This provision 
also amends section 523(a)(9), which makes nondischargeable any 
debt resulting from death or personal injury arising from the 
debtor's unlawful operation of a motor vehicle while 
intoxicated, to add ``watercraft, or aircraft'' after ``motor 
vehicle.'' Neither additional term should be defined or 
included as a ``motor vehicle'' in section 523(a)(9) and each 
is intended to comprise unpowered as well as motor-powered 
craft. Congress previously made the policy judgment that the 
equities of persons injured by drunk drivers outweigh the 
responsible debtor's interest in a fresh start, and here 
clarifies that the policy applies not only on land but also on 
the water and in the air. Viewed from a practical standpoint, 
this provision closes a loophole that gives intoxicated 
watercraft and aircraft operators preferred treatment over 
intoxicated motor vehicle drivers and denies victims of alcohol 
and drug related boat and plane accidents the same rights 
accorded to automobile accident victims under current law. 
Finally, this section amends corrects a grammatical error in 
section 523(e).
Section 1210. Effect of discharge
    Section 1210 makes technical amendments to correct errors 
in section 524(a)(3) of the Bankruptcy Code caused by section 
257(o)(2) of Public Law 99-554 and section 501(d)(14)(A) of 
Public Law 103-394.\74\
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    \74\ For a description of these errors, see the appropriate 
footnote and amendment notes in the United States Code.
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Section 1211. Protection against discriminatory treatment
    Section 1211 conforms a reference to its antecedent 
reference in section 525(c) of the Bankruptcy Code. The 
omission of ``student'' before ``grant'' in the second place it 
appears in section 525(c) made possible the interpretation that 
a broader limitation on lender discretion was intended, so that 
no loan could be denied because of a prior bankruptcy if the 
lending institution was in the business of making student 
loans. Section 1211 is intended to make clear that lenders 
involved in making government guaranteed or insured student 
loans are not barred by this Bankruptcy Code provision from 
denying other types of loans based on an applicant's bankruptcy 
history; only student loans and grants, therefore, cannot be 
denied under section 525(c) because of a prior bankruptcy.
Section 1212. Property of the estate
    Production payments are royalties tied to the production of 
a certain volume or value of oil or gas, determined without 
regard to production costs. They typically would be paid by an 
oil or gas operator to the owner of the underlying property on 
which the oil or gas is found. Under section 541(b)(4)(B)(ii) 
of the Bankruptcy Code, added by the Bankruptcy Reform Act of 
1994, production payments are generally excluded from the 
debtor's estate, provided they could be included only by virtue 
of section 542 of the Bankruptcy Code, which relates generally 
to the obligation of those holding property which belongs in 
the estate to turn it over to the trustee. Section 1212 adds to 
this proviso a reference to section 365 of the Bankruptcy Code, 
which authorizes the trustee to assume or reject an executory 
contract or unexpired lease. It thereby clarifies the original 
Congressional intent to generally exclude production payments 
from the debtor's estate.
Section 1213. Preferences
    Section 547 of the Bankruptcy Code authorizes a trustee to 
avoid a preferential payment made to a creditor by a debtor 
within 90 days of filing, whether the creditor is an insider or 
an outsider. Because of the concern that a corporate insider 
(such as an officer or directors who is a creditor of his or 
her own corporation has an unfair advantage over outside 
creditors, section 547 also authorizes a trustee to avoid a 
preferential payment made to an insider creditor between 90 
days and 1 year before filing. Several recent cases, including 
DePrizio,\75\ allowed the trustee to ``reach-back'' and avoid a 
transfer to a noninsider creditor which fell within the 90-day 
to 1-year time frame if an insider benefitted from the transfer 
in some way. This had the effect of discouraging lenders from 
obtaining loan guarantees, lest transfers to the lender be 
vulnerable to recapture by reason of the debtor's insider 
relationship with the loan guarantor. Section 202 of the 
Bankruptcy Reform Act of 1994 addressed the DePrizio problem by 
inserting a new section 550(c) into the Bankruptcy Code to 
prevent avoidance or recovery from a noninsider creditor during 
the 90-day to 1-year period even though the transfer to the 
noninsider benefitted an insider creditor. The 1994 amendments, 
however, failed to make a corresponding amendment to section 
547, which deals with the avoidance of preferential transfers. 
As a result, a trustee could still utilize section 547 to avoid 
a preferential lien given to a noninsider bank, more than 90 
days but less than 1 year before bankruptcy, if the transfer 
benefitted an insider guarantor of the debtor's debt. 
Accordingly, section 1213 makes a perfecting amendment to 
section 547 to provide that if the trustee avoids a transfer 
given by the debtor to a noninsider for the benefit of an 
insider creditor between 90 days and 1 year before filing, that 
avoidance is valid only with respect to the insider creditor. 
Thus both the previous amendment to section 550 and the 
perfecting amendment to section 547 protect the noninsider from 
the avoiding powers of the trustee exercised with respect to 
transfers made during the 90-day to 1 year pre-filing period.
---------------------------------------------------------------------------
    \75\ Levit v. Ingersoll Rand Fin. Corp., 874 F.2d 1186 (7th Cir. 
1989); see, e.g., Ray v. City Bank and Trust Co. (In re C-L Cartage 
Co.), 899 F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing 
Corp. v. Lowrey (In re Robinson Bros. Drilling, Inc.), 892 F.2d 850 
(10th Cir. 1989).
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Section 1214. Postpetition transactions
    Section 1214 amends section 549(c) of the Bankruptcy Code 
to clarify its application to an interest in real property. 
This amendment should be construed in conjunction with section 
1201 of the Act.
Section 1215. Disposition of property of the estate
    Section 1215 of the bill amends section 726(b) of the 
Bankruptcy Code to strike an erroneous reference to a 
nonexistent section.\76\
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    \76\ For a description of the error, see the appropriate footnote 
and amendment notes in the United States Code.
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Section 1216. General provisions
    Section 1216 amends section 901(a) of the Bankruptcy Code 
to correct an omission in a list of sections applicable to 
cases under chapter 9 of title 11 of the United States Code.
Section 1217. Abandonment of railroad line
    Section 1217 amends section 1170(e)(1) of the Bankruptcy 
Code to reflect the fact that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.
Section 1218. Contents of plan
    Section 1218 amends section 1172(c)(1) of the Bankruptcy 
Code to reflect the fact that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.
Section 1219. Discharge under chapter 12
    Section 1219 amends section 1228 of the Bankruptcy Code, 
dealing with discharge under chapter 12, to correct erroneous 
references.
Section 1220. Bankruptcy cases and proceedings
    Section 1220 amends section 1334(d) of title 28 of the 
United States Code to correct erroneous references.\77\
---------------------------------------------------------------------------
    \77\ For a description of the errors, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------
Section 1221. Knowing disregard of bankruptcy law or rule
    This section amends section 156(a) of title 18 of the 
United States Code to make stylistic changes and correct a 
reference to the Bankruptcy Code.
Section 1222. Transfers made by nonprofit charitable corporations
    Section 1222 amends section 363(d) of the Bankruptcy Code 
to restrict the authority of a trustee to use, sell, or lease 
property by a nonprofit corporation or trust. First, the use, 
sell or lease must be in accordance with applicable 
nonbankruptcy law and to the extent it is not inconsistent with 
any relief granted under certain specified provisions of 
section 362 of the Bankruptcy Code concerning the applicability 
of the automatic stay. Second, section 1222 imposes similar 
restrictions with regard to plan confirmation requirements for 
chapter 11 cases. Third, it amends section 541 of the 
Bankruptcy Code to provide that any property of a bankruptcy 
estate in which the debtor is a nonprofit corporation (as 
described in certain provisions of the Internal Revenue Code) 
may not be transferred to an entity that is not a corporation, 
but only under the same conditions that would apply if the 
debtor was not in bankruptcy. The amendments made by this 
section apply to cases pending on the date of enactment or to 
cases filed after such date. Section 1222 provides that a court 
may not confirm a plan without considering whether this 
provision would substantially affect the rights of a party in 
interest who first acquired rights with respect to the debtor 
postpetition. Nothing in this provision may be construed to 
require the court 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.
Section 1223. Protection of valid purchase money security interests
    Section 1223 extends the applicable perfection period for a 
security interest in property of the debtor in section 
547(c)(3)(B) of the Bankruptcy Code from 20 to 30 days.
Section 1224. Bankruptcy judgeships
    The substantial increase in bankruptcy case filings clearly 
creates a need for additional bankruptcy judgeships. In the 
105th Congress, the House responded to this need by passing 
H.R. 1596, which would have created additional permanent and 
temporary bankruptcy judgeships and extended an existing 
temporary position. Section 1224 generally incorporates H.R. 
1596 as it passed the House with provisions extending five 
existing temporary judgeships.
Section 1225. Compensating trustees
    Section 1225 amends section 1326 of the Bankruptcy Code to 
provide that if a chapter 7 trustee has been allowed 
compensation as a result of the conversion or dismissal of the 
debtor's prior case pursuant to section 707(b) and some portion 
of that compensation remains unpaid, the amount of any such 
unpaid compensation must be repaid in the debtor's subsequent 
chapter 13 case. This payment must be prorated over the term of 
the plan and paid on a monthly basis. The amount of the monthly 
payment may not to exceed the greater of $25 or 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 of the plan.
Section 1226. Amendment to section 362 of title 11, United States Code
    Section 1226 amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the creation or perfection of 
a statutory lien for an ad valorem property tax or for a 
special tax or special assessment on real property (whether or 
not ad valorem) that is imposed by a governmental unit, if such 
tax or assessment becomes due after the filing of the petition.
Section 1227. Judicial education
    Section 1227 requires the Director of the Federal Judicial 
Center, in consultation with the Director of the Executive 
Office for United States Trustees, to develop materials and 
conduct training as may be useful to the courts in implementing 
this Act, including the needs-based reforms under section 
707(b) (as amended by this Act) and amendments pertaining to 
reaffirmation agreements.
Section 1228. Reclamation
    Section 1228(a) amends section 546 of the Bankruptcy Code 
to provide that the rights of a trustee under sections 544(a), 
545, 547, and 549 are subject to the right of a seller of goods 
to reclaim goods sold in the ordinary course of business to the 
debtor if (1) the debtor received these goods while insolvent, 
and (2) written demand for reclamation of the goods is made not 
later than 45 days after their receipt by the debtor or within 
20 days after the commencement of the bankruptcy case. This 
provision specifies, however, that it is subject to sections 
546(d) and 507(c) as well as the prior rights of holders of 
security interests in such goods or the proceeds thereof. If 
the seller fails to provide the notice described in this 
provision, such seller may still assert the rights specified in 
section 503(b)(7).
    Section 1228(b) amends section 503(b) to provide that the 
value of any goods received by a debtor not later than 20 days 
after the commencement of a bankruptcy case in which the goods 
have been sold to the debtor in the ordinary course of the 
debtor's business is an allowed administrative expense.
Section 1229. Providing requested tax documents to the court
    Section 1229(a) provides that the court may not grant a 
discharge to an individual in a case under chapter 7 unless 
requested tax documents have been provided to the court. 
Section 1229(b) similarly provides that the court may not 
confirm a chapter 11 or 13 plan unless requested tax documents 
have been filed with the court. Section 1229(c) directs the 
court to 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 debtor under 
chapter 7, 11 or 13. In the event of a pending audit or 
enforcement action, the court may extend the time for 
destruction of such requested tax documents.
Section 1230. Encouraging creditworthiness
    Section 1230(a) expresses the sense of the Congress that 
lenders may sometimes offer credit to consumers 
indiscriminately and that resulting consumer debt may be a 
major contributing factor leading to consumer insolvency.
    Section 1230(b) directs the Board of Governors of the 
Federal Reserve System (Board) to study certain consumer credit 
industry solicitation and credit granting practices as well as 
the effect of such practices on consumer debt and insolvency. 
The specified practices involve the solicitation and extension 
of credit on an indiscriminate basis that encourages consumers 
to accumulate additional debt and where the lender fails to 
ensure that the consumer borrower is capable of repaying the 
debt.
    Section 1230(c) requires the study described in subsection 
(b) to be prepared within 12 months from the date of the Act's 
enactment. This provision authorizes the Board to issue 
regulations requiring additional disclosures to consumers and 
permits it to undertake any other actions consistent with its 
statutory authority, which are necessary to ensure responsible 
industry practices and to prevent resulting consumer debt and 
insolvency.
Section 1231. Property no longer subject to redemption
    Section 1231 amends section 541(b) of the Bankruptcy Code 
to provide that, under certain circumstances, an interest of 
the debtor in tangible personal property (other than 
securities, or written or printed evidences of indebtedness or 
title) that the debtor pledged or sold as collateral for a loan 
or advance of money given by a person licensed under law to 
make such loan or advance is not property of the estate. 
Subject to subchapter III of chapter 5 of the Bankruptcy Code, 
the provision applies where (a) the 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 the Bankruptcy 
Code.
Section 1232. Trustees
    Section 1232 establishes a series of procedural protections 
for chapter 7 and chapter 13 trustees concerning final agency 
decisions relating to trustee appointments and future case 
assignments. Section 1232(a) amends section 586(d) of title 28 
of the United States Code to allow a chapter 7 or chapter 13 
trustee to obtain judicial review of such decisions by 
commencing an action in the United States district court after 
the trustee exhausts all available administrative remedies. 
Unless the trustee elects an administrative hearing on the 
record, the trustee is deemed to have exhausted all 
administrative remedies under this provision if the agency 
fails to make a final agency decision within 90 days after the 
trustee requests an administrative remedy. Section 1232(a) 
requires the Attorney General to promulgate procedures to 
implement this provision. It further provides that the agency's 
decision must be affirmed by the district court unless it is 
unreasonable and without cause based on the administrative 
record before the agency.
    Section 1232(b) amends section 586(e) of title 28 of the 
United States Code to permit a chapter 13 trustee to obtain 
judicial review of certain final agency actions relating to 
claims for actual, necessary expenses under section 586(e). The 
trustee may commence an action in the United States district 
court where the trustee resides. The agency's decision must be 
affirmed by the district court unless it is unreasonable and 
without cause based on the administrative record before the 
agency. It directs the Attorney General to prescribe procedures 
to implement this provision.
Section 1233. Bankruptcy forms
    Section 1233 amends section 2075 of title 28 of the United 
States Code to require the bankruptcy rules promulgated under 
this provision to prescribe a form for the statement specified 
under section 707(b)(2)(C) of the Bankruptcy Code and to 
provide general rules on the content of such statement.
Section 1234. Expedited appeals of bankruptcy cases to courts of 
        appeals
    Currently, appeals from decisions rendered by the 
bankruptcy court are either heard by the district court or a 
bankruptcy appellate panel. In addition to the time and cost 
factors attendant to the present appellate system, decisions 
rendered by a district court as an appellate court are not 
binding and lack stare decisis value.
    To address these problems, section 1234(a) amends section 
158(d) of title 28 of the United States Code to deem a 
judgment, decision, order, or decree of a bankruptcy judge to 
be a judgment, decision, order, or decree of the district court 
entered 31 days after an appeal of such judgment, decision, 
order or decree is filed with the district court, unless 
certain factors apply. These factors are (a) the district court 
issues a decision on the appeal within 30 days after such 
appeal is filed or enters an order extending the 30-day period 
for cause upon motion of a party or by the court sua sponte; or 
(b) all parties to the appeal file written consent that the 
district court may retain such appeal until it enters a 
decision. For purposes of this provision, section 1234(a) 
provides that an appeal is considered filed with the district 
court on the date on which the notice of appeal is filed, 
except in a case where a party has made an election that the 
appeal be heard by the district court. If the appellant so 
elects, then the appeal is considered filed with the district 
court on the date such election is made.
    Section 1234(a) provides that the courts of appeals shall 
have jurisdiction of appeals from (1) all final judgments, 
decisions, orders, and decrees of district courts entered under 
section 158(a); (2) all final judgments, decisions, orders, and 
decrees of bankruptcy appellate panels entered under section 
158(b); (3) all judgments, decisions, orders, and decrees of 
district courts entered under section 158(d) (as amended by 
this Act) to the extent they are reviewable by a district court 
pursuant to section 158(a). Section 1234(a) further provides 
that the court of appeals may use its discretion, in accordance 
with rules prescribed by the Supreme Court, to exercise 
jurisdiction over an appeal from an interlocutory judgment, 
decision, order, or decree under section 158(e)(3) (as added by 
this Act).
    Section 1234(b) makes technical and conforming amendments 
to implement this provision.
Section 1235. Exemptions
    Section 1235 makes a conforming amendment to section 
522(g)(2) of the Bankruptcy Code.

                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

Section 1301. Enhanced disclosures under an open end credit plan
    Section 1301(a) amends section 127(b) of the Truth in 
Lending Act to mandate the inclusion of certain specified 
disclosures in billing statements with respect to various open 
end credit plans. In general, these statements must contain an 
example of the time it would take to repay a stated balance at 
a specified interest rate. In addition, they must warn the 
borrower that making only the minimum payment will increase the 
amount of interest that must be paid and the time it takes to 
repay the balance. Further, a toll-free telephone number must 
be provided where the borrower can obtain an estimate of the 
time it would take to repay the balance if only minimum 
payments are made. With respect to a creditor whose compliance 
with title 15 of the United States Code is enforced by the 
Federal Trade Commission (FTC), the billing statement must 
advise the borrower to contact the FTC at a toll-free telephone 
number to obtain an estimate of the time it would take to repay 
the borrower's balance. Section 1401(a) permits the creditor to 
substitute an example based on a higher interest rate. As 
necessary, the provision requires the Board of Governors of the 
Federal Reserve System (``Board''), to periodically recalculate 
by rule the interest rate and repayment periods specified in 
Section 1401(a). With respect to the toll-free telephone 
number, section 1401(a) permits a third party to establish and 
maintain it. Under certain circumstances, the toll-free number 
may connect callers to an automated device.
    For a period not to exceed 24 months from the effective 
date of the Act, the Board is required to establish and 
maintain 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 or State credit union (as defined in 
section 101 of the Federal Credit Union Act), with total assets 
not exceeding $250 million. Not later than 6 months prior to 
the expiration of the 24-month period, the Board must submit a 
report on this program 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.
    In addition, section 1301(a) requires the Board to 
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 month payments and if 
no other advances are made. The table should reflect a 
significant number of different annual percentage rates, and 
account balances, minimum payment amounts. The Board must also 
promulgate regulations providing instructional guidance 
regarding the manner in which the information contained in the 
tables should be used to respond to a request by an obligor 
under this provision. Section 1401(a) provides that the 
disclosure requirements of this provision are inapplicable to 
any charge card account where the primary purpose of which is 
to require payment of charges in full each month.
    Section 1301(b)(1) requires the Board to promulgate 
regulations implementing section 1301(a)'s amendments to 
section127. Section 1301(b)(2) specifies that the effective 
date of the amendments under subsection (a) and the regulations 
required under this provision shall not take effect until the 
later of 18 months after the date of enactment of this Act or 
12 months after the publication of final regulations by the 
Board.
    Section 1301(c) authorizes the Board to 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. The provision 
specifies the factors that should be considered. The findings 
of such study must be submitted to Congress and include 
recommendations for legislative initiatives, based on the 
Board's findings.
Section 1302. Enhanced disclosure for credit extensions secured by a 
        dwelling
    Section 1302(a)(1) amends section 127A(a)(13) of the Truth 
in Lending Act to require a statement in any case in which the 
extension of credit exceeds the fair market value of a dwelling 
specifying that 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.
    Section 1302(a)(2) amends section 147(b) of the Truth in 
Lending Act to require an advertisement relating to an 
extension of credit that may exceed the fair market value of a 
dwelling and such advertisement is disseminated in paper form 
to the public or through the Internet (as opposed to 
dissemination by radio or television) to include a specified 
statement. The statement must disclose that 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 that the consumer should consult a tax 
advisor for further information regarding the deductibility of 
interest and charges.
    With respect to non-open end credit extensions, section 
1302(b)(1) amends section 128 of the Truth in Lending Act to 
require that a consumer receive a specified statement at the 
time he or she applies for credit with respect to a consumer 
credit transaction secured by the consumer's principal dwelling 
and where the credit extension may exceed the fair market value 
of the dwelling must contain a specified statement. The 
statement must disclose that the interest on the portion of the 
credit extension that exceeds the dwelling's fair market value 
is not tax deductible for Federal income tax purposes and that 
the consumer should consult a tax advisor for further 
information regarding the deductibility of interest and 
charges.
    Section 1302(b)(2) requires certain advertisements 
disseminated in paper form to the public or through the 
Internet that relate to a consumer credit transaction secured 
by a consumer's principal dwelling where the extension of 
credit may exceed the dwelling's fair market value to contain 
specified statements. These statements advise that 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 that the consumer should 
consult a tax advisor for further information regarding the 
deductibility of interest and charges.
    Section 1302(c)(1) requires the Board to promulgate 
regulations implementing the amendments effectuated by section 
1402. Section 1302(c)(2) provides that the these regulations 
shall not take effect until the later of 12 months following 
the Act's enactment date or 12 months after the date of 
publication of such final regulations by the Board.
Section 1303. Disclosures related to ``introductory rates''
    Section 1303(a) amends section 127(c) of the Truth in 
Lending Act by adding a provision add further requirements for 
applications, solicitations and related materials that are 
subject to section 127(c)(1). With respect to an application or 
solicitation to open a credit card account and all promotional 
materials accompanying such application or solicitation 
involving an ``introductory rate'' offer, such materials must 
do the following if they offer a temporary annual percentage 
rate of interest:

        (1) use the term ``introductory'' in immediate 
        proximity to each listing of the temporary annual 
        percentage interest rate applicable to such account;
        (2) if the annual percentage interest rate that will 
        apply after the end of the temporary rate period will 
        be a fixed rate, the time period in which the 
        introductory period will end and the annual percentage 
        rate that will apply after the end of the introductory 
        period must be clearly and conspicuously stated in a 
        prominent location closely proximate to the first 
        listing of the temporary annual percentage rate;
        (3) if the annual percentage rate that will apply 
        after the end of the temporary rate period will vary in 
        accordance with an index, 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 60 days before the date of mailing 
        of the application or solicitation must be clearly and 
        conspicuously stated in a prominent location closely 
        proximate to the first listing of the temporary annual 
        percentage rate.

    The second and third provisions described above 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.
    With respect to an application or solicitation to open a 
credit card account for which disclosure is required pursuant 
to section 127(c)(1), section 1303(a) specifies that certain 
statements be made if the rate of interest is revocable under 
any circumstance or upon any event. The statements must be 
clearly and conspicuously appear in a prominent manner on or 
with the application or solicitation. The disclosures include a 
general description of the circumstances that may result in the 
revocation of the temporary annual percentage rate and an 
explanation of the type of interest rate that will apply upon 
revocation of the temporary rate.
    To implement this provision, section 1303(b) amends section 
127(c) to define various relevant terms and requires the Board 
to promulgate regulations. The provision does not become 
effective until the earlier of 12 months after the Act's 
enactment date or 12 months after the date of public of such 
final regulations.
Section 1304. Internet-based credit card solicitations
    Section 1304(a) amends section 127(c) of the Truth in 
Lending Act to require any solicitation to open a credit card 
account for an open end consumer credit plan through the 
Internet or other interactive computer service to clearly and 
conspicuously include the disclosures required under section 
127(c)(1)(A) and (B). It also specifies that the disclosure 
required pursuant to section 127(c)(1)(A) be readily accessible 
to consumers in close proximity to the solicitation and be 
updated regularly to reflect current policies, terms, and fee 
amounts applicable to the credit card account. Section 1304(a) 
defines terms relevant to the Internet.
    Section 1304(b) requires the Board to promulgate 
regulations implementing this provision. It also provides that 
the amendments effectuated by section 1404 do not take effect 
until the later of 12 months after the Act's enactment date or 
12 months after the date of publication of such regulations.
Section 1305. Disclosures related to late payment deadlines and 
        penalties
    Section 1305(a) amends section 127(b) of the Truth in 
Lending Act to provide that if a late payment fee is to be 
imposed due to the obligor's failure to make payment on or 
before a required payment due date, the billing statement must 
specify the date on which that payment is due (or if different 
the earliest date on which a late payment fee may be charged) 
and the amount of the late payment fee to be imposed if payment 
is made after such date.
    Section 1305(b) requires the Board to promulgate 
regulations implementing this provision. The amendments 
effectuated by this provision and the regulations promulgated 
thereunder shall not take effect until the later of 12 months 
after the Act's enactment date or 12 months after the date of 
publication of the regulations.
Section 1306. Prohibition on certain actions for failure to incur 
        finance charges
    Section 1306(a) amends section 127 to add a provision 
prohibiting a creditor of an open end consumer credit plan from 
terminating an account prior to its expiration date solely 
because the consumer has not incurred finance charges on the 
account. The provision does not prevent the creditor from 
terminating such account for inactivity for three or more 
consecutive months.
    Section 1306(b) requires the Board to promulgate 
regulations implementing the amendments effectuated by section 
1306(a) and provides that they do not become effective until 
the later of 12 months after the Act's enactment date or 12 
months after the date of publication of such final regulations.
Section 1307. Dual use credit card
    Section 1307(a) provides that the Board may conduct a study 
and submit a report to Congress 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. The report must include recommendations for 
legislative initiatives, if any, based on its findings.
    Section 1307(b) provides that the Board, in preparing its 
report, may include analysis of section 909 of the Electronic 
Fund Transfer Act to the extent this provision is in effect at 
the time of the report and the implementing regulations. In 
addition, the analysis may pertain to whether any voluntary 
industry rules have enhanced or may enhance the level of 
protection afforded consumers in connection with such 
unauthorized use liability and whether amendments to the 
Electronic Fund Transfer Act or implementing regulations are 
necessary to further address adequate protection for consumers 
concerning unauthorized use liability.
Section 1308. Study of bankruptcy impact of credit extended to 
        dependent students
    Section 1308 directs the Board of Governors of the Federal 
Reserve to study the impact that the extension of credit to 
dependents (defined under the Internal Revenue Code of 1986) 
who are enrolled in postsecondary educational institutions has 
on the rate of bankruptcy cases filed. The report must be 
submitted to the Senate and House of Representatives no later 
than 1 year from the Act's enactment date.
Section 1309. Clarification of clear and conspicuous
    Section 1309(a) requires the Board (in consultation with 
other Federal banking agencies, the National Credit Union 
Administration Board, and the Federal Trade Commission) to 
promulgate regulations not later than 6 months after the Act's 
enactment date to provide guidance on the meaning of the term 
``clear and conspicuous'' as it is used in section 
127(b)(11)(A), (B) and (C) and section 127(c)(6)(A)(ii) and 
(iii) of the Truth in Lending Act.
    Section 1309(b) provides that regulations promulgated under 
section 1309(a) shall include examples of clear and conspicuous 
model disclosures for the purposes of disclosures required 
under the Truth in Lending Act provisions set forth therein.
    Section 1309(c) requires the Board, in promulgating 
regulations under this provision, to ensure that the clear and 
conspicuous standard required for disclosures made under the 
Truth in Lending Act provisions set forth in section 1309(a) 
can be implemented in a manner that results in disclosures 
which are reasonably understandable and designed to call 
attention to the nature and significance of the information in 
the notice.
Section 1310. Enforcement of certain foreign judgements barred
    Section 1310(a) provides that 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 and fraudulent omission that 
occurred in the United States during the period beginning on 
January 1, 1975, and ending on December 31, 1993.
    Section 1310(b) provides that section 1310(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 section 1310(a) occurred.

      TITLE XIV. GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Section 1401. Effective date; application of amendments
    Section 1401(a) states that the Act shall take effect 180 
days after the date of enactment, unless otherwise specified in 
this Act.
    Section 1401(b) provides that the amendments made by this 
Act shall not apply with respect to cases commenced under the 
Bankruptcy Code before the Act's effective date, unless other 
specified in this Act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE

                          TITLE 11--BANKRUPTCY

Chap.                                                               Sec.

      General Provisions.............................................101
     * * * * * * *
      Ancillary and Other Cross-Border Cases........................1501

                     CHAPTER 1--GENERAL PROVISIONS

Sec.
101.  Definitions.
     * * * * * * *
111.  Credit counseling services; financial management instructional 
          courses.

Sec. 101. Definitions

    [In this title--] In this title the following definitions 
shall apply:
            (1) The term ``accountant'' means accountant 
        authorized under applicable law to practice public 
        accounting, and includes professional accounting 
        association, corporation, or partnership, if so 
        authorized[;].
            (2) The term ``affiliate'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (D) entity that operates the business or 
                substantially all of the property of the debtor 
                under a lease or operating agreement[;].
            (3) The term ``assisted person'' means any person 
        whose debts consist primarily of consumer debts and 
        whose non-exempt assets are less than $150,000.
            (4) The term ``attorney'' means attorney, 
        professional law association, corporation, or 
        partnership, authorized under applicable law to 
        practice law[;].
            (4A) The term ``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.
            (5) The term ``claim'' means--
                    (A) * * *
                    (B) right to an equitable remedy for breach 
                of performance if such breach gives rise to a 
                right to payment, whether or not such right to 
                an equitable remedy is reduced to judgment, 
                fixed, contingent, matured, unmatured, 
                disputed, undisputed, secured, or unsecured[;].
            (6) The term ``commodity broker'' means futures 
        commission merchant, foreign futures commission 
        merchant, clearing organization, leverage transaction 
        merchant, or commodity options dealer, as defined in 
        section 761 of this title, with respect to which there 
        is a customer, as defined in section 761 of this 
        title[;].
            (7) The term ``community claim'' means claim that 
        arose before the commencement of the case concerning 
        the debtor for which property of the kind specified in 
        section 541(a)(2) of this title is liable, whether or 
        not there is any such property at the time of the 
        commencement of the case[;].
            (8) The term ``consumer debt'' means debt incurred 
        by an individual primarily for a personal, family, or 
        household purpose[;].
            (9) The term ``corporation''--
                    (A) * * *
                    (B) does not include limited 
                partnership[;].
            (10) The term ``creditor'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) entity that has a community claim[;].
            (10A) The term ``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.
            (11) The term ``custodian'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) trustee, receiver, or agent under 
                applicable law, or under a contract, that is 
                appointed or authorized to take charge of 
                property of the debtor for the purpose of 
                enforcing a lien against such property, or for 
                the purpose of general administration of such 
                property for the benefit of the debtor's 
                creditors[;].
            (12) The term ``debt'' means liability on a 
        claim[;].
            [(12A) ``debt for child support'' means a debt of a 
        kind specified in section 523(a)(5) of this title for 
        maintenance or support of a child of the debtor;]
            (12A) The term ``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.
            (13) The term ``debtor'' means person or 
        municipality concerning which a case under this title 
        has been commenced[;].
            (13A) The term ``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.
            [(14) ``disinterested person'' means person that--
                    [(A) is not a creditor, an equity security 
                holder, or an insider;
                    [(B) is not and was not an investment 
                banker for any outstanding security of the 
                debtor;
                    [(C) has not been, within three years 
                before the date of the filing of the petition, 
                an investment banker for a security of the 
                debtor, or an attorney for such an investment 
                banker in connection with the offer, sale, or 
                issuance of a security of the debtor;
                    [(D) is not and was not, within two years 
                before the date of the filing of the petition, 
                a director, officer, or employee of the debtor 
                or of an investment banker specified in 
                subparagraph (B) or (C) of this paragraph; and
                    [(E) 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 an investment banker 
                specified in subparagraph (B) or (C) of this 
                paragraph, or for any other reason;]
            (14) The term ``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.
            (14A) The term ``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.
            (15) The term ``entity'' includes person, estate, 
        trust, governmental unit, and United States trustee[;].
            (16) The term ``equity security'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) warrant or right, other than a right to 
                convert, to purchase, sell, or subscribe to a 
                share, security, or interest of a kind 
                specified in subparagraph (A) or (B) of this 
                paragraph[;].
            (17) The term ``equity security holder'' means 
        holder of an equity security of the debtor[;].
            (18) The term ``family farmer'' means--
                    (A) * * *
                    (B) corporation or partnership in which 
                more than 50 percent of the outstanding stock 
                or equity is held by one family, or by one 
                family and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                            (i) * * *

           *       *       *       *       *       *       *

                            (iii) if such corporation issues 
                        stock, such stock is not publicly 
                        traded[;].
            (19) The term ``family farmer with regular annual 
        income'' means family farmer whose annual income is 
        sufficiently stable and regular to enable such family 
        farmer to make payments under a plan under chapter 12 
        of this title[;].
            (20) The term ``farmer'' means (except when such 
        term appears in the term ``family farmer'') person that 
        received more than 80 percent of such person's gross 
        income during the taxable year of such person 
        immediately preceding the taxable year of such person 
        during which the case under this title concerning such 
        person was commenced from a farming operation owned or 
        operated by such person[;].
            (21) The term ``farming operation'' includes 
        farming, tillage of the soil, dairy farming, ranching, 
        production or raising of crops, poultry, or livestock, 
        and production of poultry or livestock products in an 
        unmanufactured state[;].
            (21A) The term ``farmout agreement'' means a 
        written agreement in which--
                    (A) * * *
                    (B) such other entity (either directly or 
                through its agents or its assigns), as 
                consideration, agrees to perform drilling, 
                reworking, recompleting, testing, or similar or 
                related operations, to develop or produce 
                liquid or gaseous hydrocarbons on the 
                property[;].
            (21B) The term ``Federal depository institutions 
        regulatory agency'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (D) with respect to any insured depository 
                institution for which the Federal Deposit 
                Insurance Corporation has been appointed 
                conservator or receiver, the Federal Deposit 
                Insurance Corporation[;].
            (22) The term the term ``financial institution''--
                    (A) * * *
                    (B) includes any person described in 
                subparagraph (A) which operates, or operates 
                as, a multilateral clearing organization 
                pursuant to section 409 of the Federal Deposit 
                Insurance Corporation Improvement Act of 
                1991[;].
            (22A) The term ``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.
            [(23) ``foreign proceeding'' means proceeding, 
        whether judicial or administrative and whether or not 
        under bankruptcy law, in a foreign country in which the 
        debtor's domicile, residence, principal place of 
        business, or principal assets were located at the 
        commencement of such proceeding, for the purpose of 
        liquidating an estate, adjusting debts by composition, 
        extension, or discharge, or effecting a reorganization;
            [(24) ``foreign representative'' means duly 
        selected trustee, administrator, or other 
        representative of an estate in a foreign proceeding;]
            (23) The term ``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) The term ``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.
            (25) The term ``forward contract'' [means a 
        contract] means--
                    (A) a contract (other than a commodity 
                contract) for the purchase, sale, or transfer 
                of a commodity, as defined in section 761(8) of 
                this title, 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 a maturity date more 
                than two days after the date the contract is 
                entered into, including, but not limited to, a 
                repurchase transaction, reverse repurchase 
                transaction, consignment, lease, swap, hedge 
                transaction, deposit, loan, option, allocated 
                transaction, unallocated transaction[, or any 
                combination thereof or option thereon;], or any 
                other similar agreement;
                    (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.
            [(26) ``forward contract merchant'' means a person 
        whose business consists in whole or in part of entering 
        into forward contracts as or with merchants in a 
        commodity, as defined in section 761(8) of this title, 
        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;]
            (26) The term ``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 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.
            (27) The term ``governmental unit'' means United 
        States; State; Commonwealth; District; Territory; 
        municipality; foreign state; department, agency, or 
        instrumentality of the United States (but not a United 
        States trustee while serving as a trustee in a case 
        under this title), a State, a Commonwealth, a District, 
        a Territory, a municipality, or a foreign state; or 
        other foreign or domestic government[;].
            (27A) The term ``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.
            (27B) The term ``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.
            (28) The term ``indenture'' means mortgage, deed of 
        trust, or indenture, under which there is outstanding a 
        security, other than a voting-trust certificate, 
        constituting a claim against the debtor, a claim 
        secured by a lien on any of the debtor's property, or 
        an equity security of the debtor[;].
            (29) The term ``indenture trustee'' means trustee 
        under an indenture[;].
            (30) The term ``individual with regular income'' 
        means individual whose income is sufficiently stable 
        and regular to enable such individual to make payments 
        under a plan under chapter 13 of this title, other than 
        a stockbroker or a commodity broker[;].
            (31) The term ``insider'' includes--
                    (A) * * *

           *       *       *       *       *       *       *

                    (F) managing agent of the debtor[;].
            (32) The term ``insolvent'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) with reference to a municipality, 
                financial condition such that the municipality 
                is--
                            (i) generally not paying its debts 
                        as they become due unless such debts 
                        are the subject of a bona fide dispute; 
                        or
                            (ii) unable to pay its debts as 
                        they become due[;].
            (33) The term ``institution-affiliated party''--
                    (A) * * *
                    (B) with respect to an insured credit 
                union, has the meaning given it in section 
                206(r) of the Federal Credit Union Act[;].
            (34) The term ``insured credit union'' has the 
        meaning given it in section 101(7) of the Federal 
        Credit Union Act[;].
            (35) The term ``insured depository institution''--
                    (A) has the meaning given it in section 
                3(c)(2) of the Federal Deposit Insurance Act; 
                and
                    (B) includes an insured credit union 
                (except in the case of [paragraphs (21B) and 
                (33)(A)] paragraphs (23) and (35) of this 
                subsection)[;].
            (35A) The term ``intellectual property'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (F) mask work protected under chapter 9 of 
                title 17;
        to the extent protected by applicable nonbankruptcy 
        law[; and].
            (36) The term ``judicial lien'' means lien obtained 
        by judgment, levy, sequestration, or other legal or 
        equitable process or proceeding[;].
            (37) The term ``lien'' means charge against or 
        interest in property to secure payment of a debt or 
        performance of an obligation[;].
            (38) The term ``margin payment'' means, for 
        purposes of the forward contract provisions of this 
        title, payment or deposit of cash, a security or other 
        property, that is commonly known in the forward 
        contract trade as original margin, initial margin, 
        maintenance margin, or variation margin, including 
        mark-to-market payments, or variation payments[; and].
            (38A) The term ``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) The term ``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;
            (39) The term ``mask work'' has the meaning given 
        it in section 901(a)(2) of title 17.
            (40) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State[;].
            (40A) The term ``patient'' means any person who 
        obtains or receives services from a health care 
        business.
            (40B) The term ``patient records'' means any 
        written document relating to a patient or a record 
        recorded in a magnetic, optical, or other form of 
        electronic medium.
            (41) The term ``person'' includes individual, 
        partnership, and corporation, but does not include 
        governmental unit, except that a governmental unit 
        that--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) is the legal or beneficial owner of an 
                asset of--
                            (i) an employee pension benefit 
                        plan that is a governmental plan, as 
                        defined in section 414(d) of the 
                        Internal Revenue Code of 1986; or
                            (ii) an eligible deferred 
                        compensation plan, as defined in 
                        section 457(b) of the Internal Revenue 
                        Code of 1986;
        shall be considered, for purposes of section 1102 of 
        this title, to be a person with respect to such asset 
        or such benefit[;].
            (42) The term ``petition'' means petition filed 
        under section 301, 302, 303, or 304 of this title, as 
        the case may be, commencing a case under this title[;].
            (42A) The term ``production payment'' means a term 
        overriding royalty satisfiable in cash or in kind--
                    (A) contingent on the production of a 
                liquid or gaseous hydrocarbon from particular 
                real property; and
                    (B) from a specified volume, or a specified 
                value, from the liquid or gaseous hydrocarbon 
                produced from such property, and determined 
                without regard to production costs[;].
            (43) The term ``purchaser'' means transferee of a 
        voluntary transfer, and includes immediate or mediate 
        transferee of such a transferee[;].
            (44) The term ``railroad'' means common carrier by 
        railroad engaged in the transportation of individuals 
        or property or owner of trackage facilities leased by 
        such a common carrier[;].
            (45) The term ``relative'' means individual related 
        by affinity or consanguinity within the third degree as 
        determined by the common law, or individual in a step 
        or adoptive relationship within such third degree[;].
            (46) The term ``repo participant'' means an entity 
        that, [on any day during the period beginning 90 days 
        before the date of] at any time before the filing of 
        the petition, has an outstanding repurchase agreement 
        with the debtor[;].
            [(47) ``repurchase agreement'' (which definition 
        also applies to a reverse repurchase agreement) means 
        an agreement, including related terms, which provides 
        for the transfer of certificates of deposit, eligible 
        bankers' acceptances, or securities that are direct 
        obligations of, or that are fully guaranteed as to 
        principal and interest 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, or securities 
        with a simultaneous agreement by such transferee to 
        transfer to the transferor thereof certificates of 
        deposit, eligible bankers' acceptances, or securities 
        as described above, at a date certain not later than 
        one year after such transfers or on demand, against the 
        transfer of funds;]
            (47) The term ``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 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.
            (48) The term ``securities clearing agency'' means 
        person that is registered as a clearing agency under 
        section 17A of the Securities Exchange Act of 1934 or 
        exempt from such registration under such section 
        pursuant to an order of the Securities and Exchange 
        Commission, or whose business is confined to the 
        performance of functions of a clearing agency with 
        respect to exempted securities, as defined in section 
        3(a)(12) of such Act for the purposes of such section 
        17A[;].
            (48A) The term ``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).
            (49) The term ``security''--
                    (A) * * *

           *       *       *       *       *       *       *

                    (B) does not include--
                            (i) * * *

           *       *       *       *       *       *       *

                            (vii) debt or evidence of 
                        indebtedness for goods sold and 
                        delivered or services rendered[;].
            (50) The term ``security agreement'' means 
        agreement that creates or provides for a security 
        interest[;].
            (51) The term ``security interest'' means lien 
        created by an agreement[;].
            (51A) The term ``settlement payment'' means, for 
        purposes of the forward contract provisions of this 
        title, a preliminary settlement payment, a partial 
        settlement payment, an interim settlement payment, a 
        settlement payment on account, a final settlement 
        payment, a net settlement payment, or any other similar 
        payment commonly used in the forward contract trade[;].
            (51B) The term ``single asset real estate'' means 
        real property constituting a single property or 
        project, other than residential real property with 
        fewer than 4 residential units, which generates 
        substantially all of the gross income of a debtor who 
        is not a family farmer and on which no substantial 
        business is being conducted by a debtor other than the 
        business of operating the real property and activities 
        incidental [thereto having aggregate noncontingent, 
        liquidated secured debts in an amount no more than 
        $4,000,000;]
            [(51C) ``small business'' means a person engaged in 
        commercial or business activities (but does not include 
        a person whose primary activity is the business of 
        owning or operating real property and activities 
        incidental thereto) whose aggregate noncontingent 
        liquidated secured and unsecured debts as of the date 
        of the petition do not exceed $2,000,000;]
            (51C) The term ``small business case'' means a case 
        filed under chapter 11 of this title in which the 
        debtor is a small business debtor.
            (51D) The term ``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).
            (52) The term ``State'' includes the District of 
        Columbia and Puerto Rico, except for the purpose of 
        defining who may be a debtor under chapter 9 of this 
        title[;].
            (53) The term ``statutory lien'' means lien arising 
        solely by force of a statute on specified circumstances 
        or conditions, or lien of distress for rent, whether or 
        not statutory, but does not include security interest 
        or judicial lien, whether or not such interest or lien 
        is provided by or is dependent on a statute and whether 
        or not such interest or lien is made fully effective by 
        statute[;].
            (53A) The term ``stockbroker'' means person--
                    (A) * * *
                    (B) that is engaged in the business of 
                effecting transactions in securities--
                            (i) * * *
                            (ii) with members of the general 
                        public, from or for such person's own 
                        account[;].
            [(53B) ``swap agreement'' means--
                    [(A) an agreement (including terms and 
                conditions incorporated by reference therein) 
                which is a rate swap agreement, basis swap, 
                forward rate agreement, commodity swap, 
                interest rate option, forward foreign exchange 
                agreement, spot foreign exchange agreement, 
                rate cap agreement, rate floor agreement, rate 
                collar agreement, currency swap agreement, 
                cross-currency rate swap agreement, currency 
                option, any other similar agreement (including 
                any option to enter into any of the foregoing);
                    [(B) any combination of the foregoing; or
                    [(C) a master agreement for any of the 
                foregoing together with all supplements;]
            (53B) The term ``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, tomorrow-next, 
                                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;
                                    (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 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.
            (53C) The term ``swap participant'' means an entity 
        that, at any time before the filing of the petition, 
        has an outstanding swap a greement with the debtor[;].
            (56A) The term ``term overriding royalty'' means an 
        interest in liquid or gaseous hydrocarbons in place or 
        to be produced from particular real property that 
        entitles the owner thereof to a share of production, or 
        the value thereof, for a term limited by time, 
        quantity, or value realized[;].
            (53D) The term ``timeshare plan'' means and shall 
        include that interest purchased in any arrangement, 
        plan, scheme, or similar device, but not including 
        exchange programs, whether by membership, agreement, 
        tenancy in common, sale, lease, deed, rental agreement, 
        license, right to use agreement, or by any other means, 
        whereby a purchaser, in exchange for consideration, 
        receives a right to use accommodations, facilities, or 
        recreational sites, whether improved or unimproved, for 
        a specific period of time less than a full year during 
        any given year, but not necessarily for consecutive 
        years, and which extends for a period of more than 
        three years. A ``timeshare interest'' is that interest 
        purchased in a timeshare plan which grants the 
        purchaser the right to use and occupy accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, pursuant to a timeshare plan[;].
            [(54) ``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 
        debtor's equity of redemption;]
            (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.
    (54A) The term the term ``uninsured State member bank'' 
means a State member bank (as defined in section 3 of the 
Federal Deposit Insurance Act) the deposits of which are not 
insured by the Federal Deposit Insurance Corporation[; and].
            (55) The term ``United States'', when used in a 
        geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States[;].

           *       *       *       *       *       *       *

Sec. 103. Applicability of chapters

    (a) Except as provided in section 1161 of this title, 
chapters 1, 3, and 5 of this title apply in a case under 
chapter 7, 11, 12, or 13 of this title, and this chapter, 
sections 307, 362(l), 555 through 557, and 559 through 562 
apply in a case under chapter 15.

           *       *       *       *       *       *       *

    (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.

Sec. 104. Adjustment of dollar amounts

    (a)  * * *
    (b)(1) On April 1, 1998, and at each 3-year interval ending 
on April 1 thereafter, each dollar amount in effect under 
sections 101(3), 109(e), 303(b), 507(a), 522(d), 522(f)(3), 
522(n), 522(p), and 523(a)(2)(C) immediately before such April 
1 shall be adjusted--
            (A)  * * *

           *       *       *       *       *       *       *

    (2) Not later than March 1, 1998, and at each 3-year 
interval ending on March 1 thereafter, the Judicial Conference 
of the United States shall publish in the Federal Register the 
dollar amounts that will become effective on such April 1 under 
sections 109(e), 303(b), 507(a), 522(d), 522(f)(3), and 
523(a)(2)(C) of this title.

           *       *       *       *       *       *       *

    (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, 2004.

Sec. 105. Power of court

    (a)  * * *

           *       *       *       *       *       *       *

    (d) The court, on its own motion or on the request of a 
party in interest[, may]--
            [(1) hold a status conference regarding any case or 
        proceeding under this title after notice to the parties 
        in interest; and]
            (1) shall hold such status conferences as are 
        necessary to further the expeditious and economical 
        resolution of the case; and

           *       *       *       *       *       *       *

Sec. 108. Extension of time

    (a) * * *

           *       *       *       *       *       *       *

    (c) Except as provided in section 524 of this title, if 
applicable nonbankruptcy law, an order entered in a 
nonbankruptcy proceeding, or an agreement fixes a period for 
commencing or continuing a civil action in a court other than a 
bankruptcy court on a claim against the debtor, or against an 
individual with respect to which such individual is protected 
under section 1201 or 1301 of this title, and such period has 
not expired before the date of the filing of the petition, then 
such period does not expire until the later of--
            (1) * * *
            (2) 30 days after notice of the termination or 
        expiration of the stay under section 362, [922, or] 
        922, 1201, or 1301 of this title, as the case may be, 
        with respect to such claim.

Sec. 109. Who may be a debtor

    (a)  * * *
    (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
            (1)  * * *
            (2) a domestic insurance company, bank, savings 
        bank, cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        small business investment company licensed by the Small 
        Business Administration under [subsection (c) or (d) 
        of] section 301 of the Small Business Investment Act of 
        1958, credit union, or industrial bank or similar 
        institution which is an insured bank as defined in 
        section 3(h) of the Federal Deposit Insurance Act; or
            [(3) a foreign insurance company, bank, savings 
        bank, cooperative bank, savings and loan association, 
        building and loan association, homestead association, 
        or credit union, engaged in such business in the United 
        States.]
            (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.

           *       *       *       *       *       *       *

    (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.

Sec. 110. Penalty for persons who negligently or fraudulently prepare 
                    bankruptcy petitions

    (a) In this section--
            (1) ``bankruptcy petition preparer'' means [a 
        person, other than an attorney or an employee of an 
        attorney] the attorney for the debtor or an employee of 
        such attorney under the direct supervision of such 
        attorney, who prepares for compensation a document for 
        filing; and

           *       *       *       *       *       *       *

    (b)(1) A bankruptcy petition preparer who prepares a 
document for filing shall sign the document and print on the 
document the preparer's name and address. 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.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (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.
    (c)(1) * * *
    [(2) For purposes] (2)(A) Subject to subparagraph (B), for 
purposes of this section, the identifying number of a 
bankruptcy petition preparer shall be the Social Security 
account number of each individual who prepared the document or 
assisted in its preparation.
    (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.
    [(3) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    [(d)(1)] (d) A bankruptcy petition preparer shall, not 
later than the time at which a document for filing is presented 
for the debtor's signature, furnish to the debtor a copy of the 
document.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (e)(1) A bankruptcy petition preparer shall not execute any 
document on behalf of a debtor.
    [(2) A bankruptcy petition preparer may be fined not more 
than $500 for each document executed in violation of paragraph 
(1).]
    (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.
    [(f)(1)] (f) A bankruptcy petition preparer shall not use 
the word ``legal'' or any similar term in any advertisements, 
or advertise under any category that includes the word 
``legal'' or any similar term.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (1).]
    [(g)(1)] (g) A bankruptcy petition preparer shall not 
collect or receive any payment from the debtor or on behalf of 
the debtor for the court fees in connection with filing the 
petition.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (1).]
    (h)(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.
    [(1)] (2) Within 10 days after the date of the filing of a 
petition, a bankruptcy petition preparer shall file a 
declaration under penalty of perjury by the bankruptcy petition 
preparer shall be filed together with the petition, disclosing 
any fee received from or on behalf of the debtor within 12 
months immediately prior to the filing of the case, and any 
unpaid fee charged to the debtor. 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).
    [(2) The court shall disallow and order the immediate 
turnover to the bankruptcy trustee of any fee referred to in 
paragraph (1) found to be in excess of the value of services 
rendered for the documents prepared. An individual debtor may 
exempt any funds so recovered under section 522(b).]
            (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).
    [(3)] (4) The debtor, the trustee, a creditor, [or the 
United States trustee] the United States trustee, the 
bankruptcy administrator, or the court, on the initiative of 
the court, may file a motion for an order under paragraph (2).
    [(4)] (5) A bankruptcy petition preparer shall be fined not 
more than $500 for each failure to comply with a court order to 
turn over funds within 30 days of service of such order.
    [(i)(1) If a bankruptcy case or related proceeding is 
dismissed because of the failure to file bankruptcy papers, 
including papers specified in section 521(1) of this title, the 
negligence or intentional disregard of this title or the 
Federal Rules of Bankruptcy Procedure by a bankruptcy petition 
preparer, or if a bankruptcy petition preparer violates this 
section or commits any fraudulent, unfair, or deceptive act, 
the bankruptcy court shall certify that fact to the district 
court, and the district court, on motion of the debtor, the 
trustee, or a creditor and after a hearing, shall order the 
bankruptcy petition preparer to pay to the debtor--]
    (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--
            (A) * * *

           *       *       *       *       *       *       *

    (j)(1)  * * *
    (2)(A) In an action under paragraph (1), if the court finds 
that--
            (i) a bankruptcy petition preparer has--
                    (I) engaged in conduct in violation of this 
                section or of any provision of this title [a 
                violation of which subjects a person to 
                criminal penalty];

           *       *       *       *       *       *       *

    (B) If the court finds that a bankruptcy petition preparer 
has continually engaged in conduct described in subclause (I), 
(II), or (III) of clause (i) and that an injunction prohibiting 
such conduct would not be sufficient to prevent such person's 
interference with the proper administration of this title, [or] 
has not paid a penalty imposed under this section, or failed to 
disgorge all fees ordered by the court the court may enjoin the 
person from acting as a bankruptcy petition preparer.
    (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.
    [(3)] (4) The court shall award to a debtor, trustee, or 
creditor that brings a successful action under this subsection 
reasonable [attorney's] attorneys' fees and costs of the 
action, to be paid by the bankruptcy petition preparer.

           *       *       *       *       *       *       *

    (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. 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 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;
            (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
            (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.

           *       *       *       *       *       *       *

                     CHAPTER 3--CASE ADMINISTRATION

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec.
301.  Voluntary cases.
     * * * * * * *
[304.  Cases ancillary to foreign proceedings.]
     * * * * * * *
308.  Debtor reporting requirements.
     * * * * * * *

                         SUBCHAPTER II--OFFICERS

321.  Eligibility to serve as trustee.
     * * * * * * *
332.  Appointment of ombudsman.
     * * * * * * *

                     SUBCHAPTER III--ADMINISTRATION

341.  Meetings of creditors and equity security holders.
     * * * * * * *
351.  Disposal of patient records.

           *       *       *       *       *       *       *

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec. 301. Voluntary cases

    (a) A voluntary case under a chapter of this title is 
commenced by the filing with the bankruptcy court of a petition 
under such chapter by an entity that may be a debtor under such 
chapter. [The commencement of a voluntary case under a chapter 
of this title constitutes an order for relief under such 
chapter.]
    (b) The commencement of a voluntary case under a chapter of 
this title constitutes an order for relief under such chapter.

           *       *       *       *       *       *       *

Sec. 303. Involuntary cases

    (a) * * *

           *       *       *       *       *       *       *

    [(k) Notwithstanding subsection (a) of this section, an 
involuntary case may be commenced against a foreign bank that 
is not engaged in such business in the United States only under 
chapter 7 of this title and only if a foreign proceeding 
concerning such bank is pending.]

[Sec. 304. Cases ancillary to foreign proceedings

    [(a) A case ancillary to a foreign proceeding is commenced 
by the filing with the bankruptcy court of a petition under 
this section by a foreign representative.
    [(b) Subject to the provisions of subsection (c) of this 
section, if a party in interest does not timely controvert the 
petition, or after trial, the court may--
            [(1) enjoin the commencement or continuation of--
                    [(A) any action against--
                            [(i) a debtor with respect to 
                        property involved in such foreign 
                        proceeding; or
                            [(ii) such property; or
                    [(B) the enforcement of any judgment 
                against the debtor with respect to such 
                property, or any act or the commencement or 
                continuation of any judicial proceeding to 
                create or enforce a lien against the property 
                of such estate;
            [(2) order turnover of the property of such estate, 
        or the proceeds of such property, to such foreign 
        representative; or
            [(3) order other appropriate relief.
    [(c) In determining whether to grant relief under 
subsection (b) of this section, the court shall be guided by 
what will best assure an economical and expeditious 
administration of such estate, consistent with--
            [(1) just treatment of all holders of claims 
        against or interests in such estate;
            [(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 such estate;
            [(4) distribution of proceeds of such estate 
        substantially in accordance with the order prescribed 
        by this title;
            [(5) comity; and
            [(6) if appropriate, the provision of an 
        opportunity for a fresh start for the individual that 
        such foreign proceeding concerns.]

Sec. 305. Abstention

    (a) The court, after notice and a hearing, may dismiss a 
case under this title, or may suspend all proceedings in a case 
under this title, at any time if--
            [(2)(A) there is pending a foreign proceeding; and
            [(B) the factors specified in section 304(c) of 
        this title warrant such dismissal or suspension.]
            (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.

           *       *       *       *       *       *       *

    (c) An order under subsection (a) of this section 
dismissing a case or suspending all proceedings in a case, or a 
decision not so to dismiss or suspend, is not reviewable by 
appeal or otherwise by the court of appeals under [section 
158(d)] subsection (e) or (f) of section 158, 1291, or 1292 of 
title 28 or by the Supreme Court of the United States under 
section 1254 of title 28.

Sec. 306. Limited appearance

    An appearance in a bankruptcy court by a foreign 
representative in connection with a petition or request under 
section 303[, 304,] or 305 of this title does not submit such 
foreign representative to the jurisdiction of any court in the 
United States for any other purpose, but the bankruptcy court 
may condition any order under section 303[, 304,] or 305 of 
this title on compliance by such foreign representative with 
the orders of such bankruptcy court.

           *       *       *       *       *       *       *

Sec. 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.

           *       *       *       *       *       *       *

                        SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *

Sec. 328. Limitation on compensation of professional persons

    (a) The trustee, or a committee appointed under section 
1102 of this title, with the court's approval, may employ or 
authorize the employment of a professional person under section 
327 or 1103 of this title, as the case may be, on any 
reasonable terms and conditions of employment, including on a 
retainer, on an hourly basis, on a fixed or percentage fee 
basis, or on a contingent fee basis. Notwithstanding such terms 
and conditions, the court may allow compensation different from 
the compensation provided under such terms and conditions after 
the conclusion of such employment, if such terms and conditions 
prove to have been improvident in light of developments not 
capable of being anticipated at the time of the fixing of such 
terms and conditions.

           *       *       *       *       *       *       *

Sec. 330. Compensation of officers

    (a)(1) After notice to the parties in interest and the 
United States Trustee and a hearing, and subject to sections 
326, 328, and 329, the court may award to a trustee, an 
examiner, an ombudsman appointed under section 331, or a 
professional person employed under section 327 or 1103--
            (A) reasonable compensation for actual, necessary 
        services rendered by the trustee, examiner, ombudsman, 
        professional person, or attorney and by any 
        paraprofessional person employed by any such person; 
        and

           *       *       *       *       *       *       *

    (3)[(A) In] In determining the amount of reasonable 
compensation to be awarded to an examiner, trustee under 
chapter 11, or professional person, the court shall consider 
the nature, the extent, and the value of such services, taking 
into account all relevant factors, including--
            (A) * * *

           *       *       *       *       *       *       *

            (D) whether the services were performed within a 
        reasonable amount of time commensurate with the 
        complexity, importance, and nature of the problem, 
        issue, or task addressed; [and]
                    (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
            [(E)] (F) whether the compensation is reasonable 
        based on the customary compensation charged by 
        comparably skilled practitioners in cases other than 
        cases under this title.

           *       *       *       *       *       *       *

            (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. 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 materially 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.

           *       *       *       *       *       *       *

                     SUBCHAPTER III--ADMINISTRATION

Sec. 341. Meetings of creditors and equity security holders

    (a)  * * *

           *       *       *       *       *       *       *

    (c) The court may not preside at, and may not attend, any 
meeting under this section including any final meeting of 
creditors. 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.

           *       *       *       *       *       *       *

    (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. 342. Notice

    (a)  * * *
    [(b) Prior to the commencement of a case under this title 
by an individual whose debts are primarily consumer debts, the 
clerk shall give written notice to such individual that 
indicates each chapter of this title under which such 
individual may proceed.]
    (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--
                    (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.
    (c)(1) If notice is required to be given by the debtor to a 
creditor under this title, any rule, any applicable law, or any 
order of the court, such notice shall contain the name, 
address, and taxpayer identification number of the debtor[, but 
the failure of such notice to contain such information shall 
not invalidate the legal effect of such notice].
            (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.
    (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 date of the filing of the petition that the 
presumption of abuse has been triggered.
    (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.

           *       *       *       *       *       *       *

[Sec. 346. Special tax provisions

    [(a) Except to the extent otherwise provided in this 
section, subsections (b), (c), (d), (e), (g), (h), (i), and (j) 
of this section apply notwithstanding any State or local law 
imposing a tax, but subject to the Internal Revenue Code of 
1986.
    [(b)(1) In a case under chapter 7, 12, or 11 of this title 
concerning an individual, any income of the estate may be taxed 
under a State or local law imposing a tax on or measured by 
income only to the estate, and may not be taxed to such 
individual. Except as provided in section 728 of this title, if 
such individual is a partner in a partnership, any gain or loss 
resulting from a distribution of property from such 
partnership, or any distributive share of income, gain, loss, 
deduction, or credit of such individual 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 estate.
    [(2) Except as otherwise provided in this section and in 
section 728 of this title, any income of the estate in such a 
case, and any State or local tax on or measured by such income, 
shall be computed in the same manner as the income and the tax 
of an estate.
    [(3) The estate in such a case shall use the same 
accounting method as the debtor used immediately before the 
commencement of the case.
    [(c)(1) The commencement of a case under this title 
concerning a corporation or a partnership does not effect a 
change in the status of such corporation or partnership for the 
purposes of any State or local law imposing a tax on or 
measured by income. Except as otherwise provided in this 
section and in section 728 of this title, any income of the 
estate in such case may be taxed only as though such case had 
not been commenced.
    [(2) In such a case, except as provided in section 728 of 
this title, the trustee shall make any tax return otherwise 
required by State or local law to be filed by or on behalf of 
such corporation or partnership in the same manner and form as 
such corporation or partnership, as the case may be, is 
required to make such return.
    [(d) In a case under chapter 13 of this title, any income 
of the estate or the debtor may be taxed under a State or local 
law imposing a tax on or measured by income only to the debtor, 
and may not be taxed to the estate.
    [(e) A claim allowed under section 502(f) or 503 of this 
title, other than a claim for a tax that is not otherwise 
deductible or a capital expenditure that is not otherwise 
deductible, is deductible by the entity to which income of the 
estate is taxed unless such claim was deducted by another 
entity, and a deduction for such a claim is deemed to be a 
deduction attributable to a business.
    [(f) 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 applicable 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 was paid.
    [(g)(1) Neither gain nor loss shall be recognized on a 
transfer--
            [(A) by operation of law, of property to the 
        estate;
            [(B) other than a sale, of property from the estate 
        to the debtor; or
            [(C) in a case under chapter 11 or 12 of this title 
        concerning a corporation, of property from the estate 
        to a corporation that is an affiliate participating in 
        a joint plan with the debtor, or that is a successor to 
        the debtor under the plan, except that gain or loss may 
        be recognized to the same extent that such transfer 
        results in the recognition of gain or loss under 
        section 371 of the Internal Revenue Code of 1986.
    [(2) The transferee of a transfer of a kind specified in 
this subsection shall take the property transferred with the 
same character, and with the transferor's basis, as adjusted 
under subsection (j)(5) of this section, and holding period.
    [(h) Notwithstanding sections 728(a) and 1146(a) of this 
title, for the purpose of determining the number of taxable 
periods during which the debtor or the estate may use a loss 
carryover or a loss carryback, the taxable period of the debtor 
during which the case is commenced is deemed not to have been 
terminated by such commencement.
    [(i)(1) In a case under chapter 7, 12, or 11 of this title 
concerning an individual, the estate shall succeed to the 
debtor's tax attributes, including--
            [(A) any investment credit carryover;
            [(B) any recovery exclusion;
            [(C) any loss carryover;
            [(D) any foreign tax credit carryover;
            [(E) any capital loss carryover; and
            [(F) any claim of right.
    [(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) of this subsection but that was 
not utilized by the estate. The debtor may utilize such tax 
attributes as though any applicable time limitations on such 
utilization by the debtor were suspended during the time during 
which the case was pending.
    [(3) In such a case, the estate may carry back any loss of 
the estate to a taxable period of the debtor that ended before 
the order for relief under such chapter the same as the debtor 
could have carried back such loss had the debtor incurred such 
loss and the case under this title had not been commenced, but 
the debtor may not carry back any loss of the debtor from a 
taxable period that ends after such order to any taxable period 
of the debtor that ended before such order until after the case 
is closed.
    [(j)(1) Except as otherwise provided in this subsection, 
income is not realized by the estate, the debtor, or a 
successor to the debtor by reason of forgiveness or discharge 
of indebtedness in a case under this title.
    [(2) For the purposes of any State or local law imposing a 
tax on or measured by income, a deduction with respect to a 
liability may not be allowed for any taxable period during or 
after which such liability is forgiven or discharged under this 
title. In this paragraph, ``a deduction with respect to a 
liability'' includes a capital loss incurred on the disposition 
of a capital asset with respect to a liability that was 
incurred in connection with the acquisition of such asset.
    [(3) Except as provided in paragraph (4) of this 
subsection, for the purpose of any State or local law imposing 
a tax on or measured by income, any net operating loss of an 
individual or corporate debtor, including a net operating loss 
carryover to such debtor, shall be reduced by the amount of 
indebtedness forgiven or discharged in a case under this title, 
except to the extent that such forgiveness or discharge 
resulted in a disallowance under paragraph (2) of this 
subsection.
    [(4) A reduction of a net operating loss or a net operating 
loss carryover under paragraph (3) of this subsection or of 
basis under paragraph (5) of this subsection is not required to 
the extent that the indebtedness of an individual or corporate 
debtor forgiven or discharged--
            [(A) consisted of items of a deductible nature that 
        were not deducted by such debtor; or
            [(B) resulted in an expired net operating loss 
        carryover or other deduction that--
                    [(i) did not offset income for any taxable 
                period; and
                    [(ii) did not contribute to a net operating 
                loss in or a net operating loss carryover to 
                the taxable period during or after which such 
                indebtedness was discharged.
    [(5) For the purposes of a State or local law imposing a 
tax on or measured by income, the basis of the debtor's 
property or of property transferred to an entity required to 
use the debtor's basis in whole or in part shall be reduced by 
the lesser of--
            [(A)(i) the amount by which the indebtedness of the 
        debtor has been forgiven or discharged in a case under 
        this title; minus
            [(ii) the total amount of adjustments made under 
        paragraphs (2) and (3) of this subsection; and
            [(B) the amount by which the total basis of the 
        debtor's assets that were property of the estate before 
        such forgiveness or discharge exceeds the debtor's 
        total liabilities that were liabilities both before and 
        after such forgiveness or discharge.
    [(6) Notwithstanding paragraph (5) of this subsection, 
basis is not required to be reduced to the extent that the 
debtor elects to treat as taxable income, of the taxable period 
in which indebtedness is forgiven or discharged, the amount of 
indebtedness forgiven or discharged that otherwise would be 
applied in reduction of basis under paragraph (5) of this 
subsection.
    [(7) For the purposes of this subsection, indebtedness with 
respect to which an equity security, other than an interest of 
a limited partner in a limited partnership, is issued to the 
creditor to whom such indebtedness was owed, or that is 
forgiven as a contribution to capital by an equity security 
holder other than a limited partner in the debtor, is not 
forgiven or discharged in a case under this title--
            [(A) to any extent that such indebtedness did not 
        consist of items of a deductible nature; or
            [(B) if the issuance of such equity security has 
        the same consequences under a law imposing a tax on or 
        measured by income to such creditor as a payment in 
        cash to such creditor in an amount equal to the fair 
        market value of such equity security, then to the 
        lesser of--
                    [(i) the extent that such issuance has the 
                same such consequences; and
                    [(ii) the extent of such fair market 
                value.]

Sec. 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 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 applicable 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.

           *       *       *       *       *       *       *

Sec. 348. Effect of conversion

    (a)  * * *

           *       *       *       *       *       *       *

    (f)(1) Except as provided in paragraph (2), when a case 
under chapter 13 of this title is converted to a case under 
another chapter under this title--
            (A) property of the estate in the converted case 
        shall consist of property of the estate, as of the date 
        of filing of the petition, that remains in the 
        possession of or is under the control of the debtor on 
        the date of conversion; [and]
            (B) valuations of property and of allowed secured 
        claims in the chapter 13 case shall apply [in the 
        converted case, with allowed secured claims] 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 reduced to the extent that they have been paid in 
        accordance with the chapter 13 plan[.]; and
            (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.
    (2) If the debtor converts a case under chapter 13 of this 
title to a case under another chapter under this title in bad 
faith, the property of the estate in the converted case shall 
consist of the property of the estate as of the date of 
conversion.

           *       *       *       *       *       *       *

Sec. 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.

                 SUBCHAPTER IV--ADMINISTRATIVE POWERS

           *       *       *       *       *       *       *

Sec. 362. Automatic stay

    (a) Except as provided in subsection (b) of this section, a 
petition filed under section 301, 302, or 303 of this title, or 
an application filed under section 5(a)(3) of the Securities 
Investor Protection Act of 1970, operates as a stay, applicable 
to all entities, of--
            (1)  * * *

           *       *       *       *       *       *       *

            (8) the commencement or continuation of a 
        proceeding before the United States Tax Court 
        concerning [the debtor] 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.
    (b) The filing of a petition under section 301, 302, or 303 
of this title, or of an application under section 5(a)(3) of 
the Securities Investor Protection Act of 1970, does not 
operate as a stay--
            (1)  * * *
            [(2) under subsection (a) of this section--
                    [(A) of the commencement or continuation of 
                an action or proceeding for--
                            [(i) the establishment of 
                        paternity; or
                            [(ii) the establishment or 
                        modification of an order for alimony, 
                        maintenance, or support; or
                    [(B) of the collection of alimony, 
                maintenance, or support from property that is 
                not property of the estate;]
            (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 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.);

           *       *       *       *       *       *       *

            (6) under subsection (a) of this section, of the 
        setoff by a commodity broker, forward contract 
        merchant, stockbroker, [financial institutions,] 
        financial institution, financial participant, or 
        securities clearing agency of any mutual debt and claim 
        under or in connection with commodity contracts, as 
        defined in section 761 of this title, forward 
        contracts, or securities contracts, as defined in 
        section 741 of this title, that constitutes the setoff 
        of a claim against the debtor for a margin payment, as 
        defined in section 101, 741, or 761 of this title, or 
        settlement payment, as defined in section 101 or 741 of 
        this title, arising out of commodity contracts, forward 
        contracts, or securities contracts against cash, 
        securities, or other property held by, pledged to, and 
        under the control of, or due from such commodity 
        broker, forward contract merchant, stockbroker, 
        [financial institutions,] financial institution, 
        financial participant, or securities clearing agency to 
        margin, guarantee, secure, or settle commodity 
        contracts, forward contracts, or securities contracts;
            (7) under subsection (a) of this section, of the 
        setoff by a repo participant, of any mutual debt and 
        claim under or in connection with repurchase agreements 
        that constitutes the setoff of a claim against the 
        debtor for a margin payment, as defined in section 741 
        or 761 of this title, or settlement payment, as defined 
        in section 741 of this title, arising out of repurchase 
        agreements against cash, securities, or other property 
        held by, pledged to, and under the control of, or due 
        from such repo participant to margin, guarantee, secure 
        or settle repurchase agreements;

           *       *       *       *       *       *       *

            [(17) under subsection (a) of this section, of the 
        setoff by a swap participant, of any mutual debt and 
        claim under or in connection with any swap agreement 
        that constitutes the setoff of a claim against the 
        debtor for any payment 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 of the debtor held by or 
        due from such swap participant to guarantee, secure or 
        settle any swap agreement; or
            [(18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax imposed by the District of Columbia, or a 
        political subdivision of a State, if such tax comes due 
        after the filing of the petition.]
            (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;
            (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;
            (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;
            (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 
        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;
            (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;
            (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;
            (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);
            (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 contract or agreement 
        subject to such 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 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
            (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.).
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989. 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) Except as provided in subsections (d), [(e), and (f)] 
(e), (f), and (h) of this section--
            (1) the stay of an act against property of the 
        estate under subsection (a) of this section continues 
        until such property is no longer property of the 
        estate; [and]
            (2) the stay of any other act under subsection (a) 
        of this section continues until the earliest of--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) if the case is a case under chapter 7 
                of this title concerning an individual or a 
                case under chapter 9, 11, 12, or 13 of this 
                title, the time a discharge is granted or 
                denied[.];
            (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 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 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.
    (d) On request of a party in interest and after notice and 
a hearing, the court shall grant relief from the stay provided 
under subsection (a) of this section, such as by terminating, 
annulling, modifying, or conditioning such stay--
            (1)  * * *
            (2) with respect to a stay of an act against 
        property under subsection (a) of this section, if--
                    (A) the debtor does not have an equity in 
                such property; and
                    (B) such property is not necessary to an 
                effective reorganization; [or]
            (3) with respect to a stay of an act against single 
        asset real estate under subsection (a), by a creditor 
        whose claim is secured by an interest in such real 
        estate, unless, not later than the date that is 90 days 
        after the entry of the order for relief (or such later 
        date as the court may determine for cause by order 
        entered within that 90-day period) or 30 days after the 
        court determines that the debtor is subject to this 
        paragraph, whichever is later--
                    (A) the debtor has filed a plan of 
                reorganization that has a reasonable 
                possibility of being confirmed within a 
                reasonable time; or
                    [(B) the debtor has commenced monthly 
                payments 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), which payments are in an 
                amount equal to interest at a current fair 
                market rate on the value of the creditor's 
                interest in the real estate.]
                    (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
            (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.
    (e)(1) Thirty days after a request under subsection (d) of 
this section for relief from the stay of any act against 
property of the estate under subsection (a) of this section, 
such stay is terminated with respect to the party in interest 
making such request, unless the court, after notice and a 
hearing, orders such stay continued in effect pending the 
conclusion of, or as a result of, a final hearing and 
determination under subsection (d) of this section. A hearing 
under this subsection may be a preliminary hearing, or may be 
consolidated with the final hearing under subsection (d) of 
this section. The court shall order such stay continued in 
effect pending the conclusion of the final hearing under 
subsection (d) of this section if there is a reasonable 
likelihood that the party opposing relief from such stay will 
prevail at the conclusion of such final hearing. If the hearing 
under this subsection is a preliminary hearing, then such final 
hearing shall be concluded not later than thirty days after the 
conclusion of such preliminary hearing, unless the 30-day 
period is extended with the consent of the parties in interest 
or for a specific time which the court finds is required by 
compelling circumstances.
    (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.

           *       *       *       *       *       *       *

    (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.
    (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.
    [(h) An] (k)(1) Except as provided in paragraph (2), an 
individual injured by any willful violation of a stay provided 
by this section shall recover actual damages, including costs 
and attorneys' fees, and, in appropriate circumstances, may 
recover punitive damages.
    (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.
    (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.
    (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.

Sec. 363. Use, sale, or lease of property

    (a)  * * *

           *       *       *       *       *       *       *

    (d) The trustee may use, sell, or lease property under 
subsection (b) or (c) of this section [only to the extent not 
inconsistent with any relief granted under section 362(c), 
362(d), 362(e), or 362(f) of this title.] 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.

           *       *       *       *       *       *       *

Sec. 365. Executory contracts and unexpired leases

    (a)  * * *
    (b)(1) If there has been a default in an executory contract 
or unexpired lease of the debtor, the trustee may not assume 
such contract or lease unless, at the time of assumption of 
such contract or lease, the trustee--
            (A) cures, or provides adequate assurance that the 
        trustee will promptly cure, such default[;] 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);

           *       *       *       *       *       *       *

    (2) Paragraph (1) of this subsection does not apply to a 
default that is a breach of a provision relating to--
            (A)  * * *

           *       *       *       *       *       *       *

            (D) the satisfaction of any penalty rate or penalty 
        provision relating to a default arising from any 
        failure by the debtor to perform nonmonetary 
        obligations under the executory contract or unexpired 
        lease.

           *       *       *       *       *       *       *

    (c) The trustee may not assume or assign any executory 
contract or unexpired lease of the debtor, whether or not such 
contract or lease prohibits or restricts assignment of rights 
or delegation of duties, if--
            (1) * * *
            (2) such contract is a contract to make a loan, or 
        extend other debt financing or financial 
        accommodations, to or for the benefit of the debtor, or 
        to issue a security of the debtor; or
            (3) such lease is of nonresidential real property 
        and has been terminated under applicable nonbankruptcy 
        law prior to the order for relief[; or].
            [(4) such lease is of nonresidential real property 
        under which the debtor is the lessee of an aircraft 
        terminal or aircraft gate at an airport at which the 
        debtor is the lessee under one or more additional 
        nonresidential leases of an aircraft terminal or 
        aircraft gate and the trustee, in connection with such 
        assumption or assignment, does not assume all such 
        leases or does not assume and assign all of such leases 
        to the same person, except that the trustee may assume 
        or assign less than all of such leases with the airport 
        operator's written consent.]
    (d)(1) * * *

           *       *       *       *       *       *       *

    [(4) Notwithstanding paragraphs (1) and (2), in a case 
under any chapter of this title, if the trustee does not assume 
or reject an unexpired lease of nonresidential real property 
under which the debtor is the lessee within 60 days after the 
date of the order for relief, or within such additional time as 
the court, for cause, within such 60-day period, fixes, then 
such lease is deemed rejected, and the trustee shall 
immediately surrender such nonresidential real property to the 
lessor.]
    (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, 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.
    [(5) Notwithstanding paragraphs (1) and (4) of this 
subsection, in a case under any chapter of this title, if the 
trustee does not assume or reject an unexpired lease of 
nonresidential real property under which the debtor is an 
affected air carrier that is the lessee of an aircraft terminal 
or aircraft gate before the occurrence of a termination event, 
then (unless the court orders the trustee to assume such 
unexpired leases within 5 days after the termination event), at 
the option of the airport operator, such lease is deemed 
rejected 5 days after the occurrence of a termination event and 
the trustee shall immediately surrender possession of the 
premises to the airport operator; except that the lease shall 
not be deemed to be rejected unless the airport operator first 
waives the right to damages related to the rejection. In the 
event that the lease is deemed to be rejected under this 
paragraph, the airport operator shall provide the affected air 
carrier adequate opportunity after the surrender of the 
premises to remove the fixtures and equipment installed by the 
affected air carrier.
    [(6) For the purpose of paragraph (5) of this subsection 
and paragraph (f)(1) of this section, the occurrence of a 
termination event means, with respect to a debtor which is an 
affected air carrier that is the lessee of an aircraft terminal 
or aircraft gate--
            [(A) the entry under section 301 or 302 of this 
        title of an order for relief under chapter 7 of this 
        title;
            [(B) the conversion of a case under any chapter of 
        this title to a case under chapter 7 of this title; or
            [(C) the granting of relief from the stay provided 
        under section 362(a) of this title with respect to 
        aircraft, aircraft engines, propellers, appliances, or 
        spare parts, as defined in section 40102(a) of title 
        49, except for property of the debtor found by the 
        court not to be necessary to an effective 
        reorganization.
    [(7) Any order entered by the court pursuant to paragraph 
(4) extending the period within which the trustee of an 
affected air carrier must assume or reject an unexpired lease 
of nonresidential real property shall be without prejudice to--
            [(A) the right of the trustee to seek further 
        extensions within such additional time period granted 
        by the court pursuant to paragraph (4); and
            [(B) the right of any lessor or any other party in 
        interest to request, at any time, a shortening or 
        termination of the period within which the trustee must 
        assume or reject an unexpired lease of nonresidential 
        real property.
    [(8) The burden of proof for establishing cause for an 
extension by an affected air carrier under paragraph (4) or the 
maintenance of a previously granted extension under paragraph 
(7)(A) and (B) shall at all times remain with the trustee.
    [(9) For purposes of determining cause under paragraph (7) 
with respect to an unexpired lease of nonresidential real 
property between the debtor that is an affected air carrier and 
an airport operator under which such debtor is the lessee of an 
airport terminal or an airport gate, the court shall consider, 
among other relevant factors, whether substantial harm will 
result to the airport operator or airline passengers as a 
result of the extension or the maintenance of a previously 
granted extension. In making the determination of substantial 
harm, the court shall consider, among other relevant factors, 
the level of actual use of the terminals or gates which are the 
subject of the lease, the public interest in actual use of such 
terminals or gates, the existence of competing demands for the 
use of such terminals or gates, the effect of the court's 
extension or termination of the period of time to assume or 
reject the lease on such debtor's ability to successfully 
reorganize under chapter 11 of this title, and whether the 
trustee of the affected air carrier is capable of continuing to 
comply with its obligations under section 365(d)(3) of this 
title.]
    [(10)] (5) The trustee shall timely perform all of the 
obligations of the debtor, except those specified in section 
365(b)(2), first arising from or after 60 days after the order 
for relief in a case under chapter 11 of this title under an 
unexpired lease of personal property (other than personal 
property leased to an individual primarily for personal, 
family, or household purposes), until such lease is assumed or 
rejected notwithstanding section 503(b)(1) of this title, 
unless the court, after notice and a hearing and based on the 
equities of the case, orders otherwise with respect to the 
obligations or timely performance thereof. This subsection 
shall not be deemed to affect the trustee's obligations under 
the provisions of subsection (b) or (f). Acceptance of any such 
performance does not constitute waiver or relinquishment of the 
lessor's rights under such lease or under this title.

           *       *       *       *       *       *       *

    (f)(1) Except as provided in [subsection] subsections (b) 
and (c) of this section, notwithstanding a provision in an 
executory contract or unexpired lease of the debtor, or in 
applicable law, that prohibits, restricts, or conditions the 
assignment of such contract or lease, the trustee may assign 
such contract or lease under paragraph (2) of this subsection[; 
except that the trustee may not assign an unexpired lease of 
nonresidential real property under which the debtor is an 
affected air carrier that is the lessee of an aircraft terminal 
or aircraft gate if there has occurred a termination event.].

           *       *       *       *       *       *       *

    (p)(1) If a lease of personal property is rejected or not 
timely assumed by the trustee under subsection (d), the leased 
property is 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.

Sec. 366. Utility service

    (a) Except as provided in [subsection (b)] subsections (b) 
and (c) of this section, a utility may not alter, refuse, or 
discontinue service to, or discriminate against, the trustee or 
the debtor solely on the basis of the commencement of a case 
under this title or that a debt owed by the debtor to such 
utility for service rendered before the order for relief was 
not paid when due.

           *       *       *       *       *       *       *

    (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.

            CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE

                   SUBCHAPTER I--CREDITORS AND CLAIMS

Sec.
501.  Filing of proofs of claims or interests.
     * * * * * * *
511.  Rate of interest on tax claims.

               SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

521.  Debtor's duties.
     * * * * * * *
526.  Debt relief enforcement.
527.  Disclosures.
528.  Debtor's bill of rights.

                       SUBCHAPTER III--THE ESTATE

541.  Property of the estate.
     * * * * * * *
[555.  Contractual right to liquidate a securities contract.
[556.  Contractual right to liquidate a commodity contract or forward 
          contract.]
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.
     * * * * * * *
[559.  Contractual right to liquidate a repurchase agreement.
[560.  Contractual right to terminate a swap agreement.]
559.  Contractual right to liquidate, terminate, or accelerate a 
          repurchase agreement.
560.  Contractual right to liquidate, terminate, or accelerate a swap 
          agreement.
561.  Contractual right to terminate, liquidate, accelerate, or offset 
          under a master netting agreement and across contracts.
562.  Damage measure in connection with swap agreements, securities 
          contracts, forward contracts, commodity contracts, repurchase 
          agreements, or master netting agreements.

                   SUBCHAPTER I--CREDITORS AND CLAIMS

Sec. 501. Filing of proofs of claims or interests

    (a) * * *

           *       *       *       *       *       *       *

    (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. 502. Allowance of claims or interests

    (a)  * * *
    (b) Except as provided in subsections (e)(2), (f), (g), (h) 
and (i) of this section, if such objection to a claim is made, 
the court, after notice and a hearing, shall determine the 
amount of such claim in lawful currency of the United States as 
of the date of the filing of the petition, and shall allow such 
claim in such amount, except to the extent that--
            (1) * * *

           *       *       *       *       *       *       *

            (9) proof of such claim is not timely filed, except 
        to the extent tardily filed as permitted under 
        paragraph (1), (2), or (3) of section 726(a) of this 
        title or under the Federal Rules of Bankruptcy 
        Procedure, except that a claim of a governmental unit 
        shall be timely filed if it is filed before 180 days 
        after the date of the order for relief or such later 
        time as the Federal Rules of Bankruptcy Procedure may 
        provide, 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.

           *       *       *       *       *       *       *

    (g)(1) A claim arising from the rejection, under section 
365 of this title or under a plan under chapter 9, 11, 12, or 
13 of this title, of an executory contract or unexpired lease 
of the debtor that has not been assumed shall be determined, 
and shall be allowed under subsection (a), (b), or (c) of this 
section or disallowed under subsection (d) or (e) of this 
section, the same as if such claim had arisen before the date 
of the filing of the petition.
    (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.

           *       *       *       *       *       *       *

    (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).

Sec. 503. Allowance of administrative expenses

    (a)  * * *
    (b) After notice and a hearing, there shall be allowed 
administrative expenses, other than claims allowed under 
section 502(f) of this title, including--
            (1)(A) * * *
            (B) any tax--
                    (i) incurred by the estate, whether secured 
                or unsecured, including property taxes for 
                which liability is in rem, in personam, or 
                both, except a tax of a kind specified in 
                section 507(a)(8) of this title; or
                    (ii) attributable to an excessive allowance 
                of a tentative carryback adjustment that the 
                estate received, whether the taxable year to 
                which such adjustment relates ended before or 
                after the commencement of the case; [and]
            (C) any fine, penalty, or reduction in credit 
        relating to a tax of a kind specified in subparagraph 
        (B) of this paragraph; and
            (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;

           *       *       *       *       *       *       *

            (4) reasonable compensation for professional 
        services rendered by an attorney or an accountant of an 
        entity whose expense is allowable under subparagraph 
        (A), (B), (C), (D), or (E) of paragraph (3) of this 
        subsection, based on the time, the nature, the extent, 
        and the value of such services, and the cost of 
        comparable services other than in a case under this 
        title, and reimbursement for actual, necessary expenses 
        incurred by such attorney or accountant;
            (5) reasonable compensation for services rendered 
        by an indenture trustee in making a substantial 
        contribution in a case under chapter 9 or 11 of this 
        title, based on the time, the nature, the extent, and 
        the value of such services, and the cost of comparable 
        services other than in a case under this title; [and]
            (6) the fees and mileage payable under chapter 119 
        of title 28[.];
            (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);
            (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
            (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. 504. Sharing of compensation

    (a)  * * *

           *       *       *       *       *       *       *

    (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. 505. Determination of tax liability

    (a)(1)  * * *
    (2) The court may not so determine--
            (A) the amount or legality of a tax, fine, penalty, 
        or addition to tax if such amount or legality was 
        contested before and adjudicated by a judicial or 
        administrative tribunal of competent jurisdiction 
        before the commencement of the case under this title; 
        [or]
            (B) any right of the estate to a tax refund, before 
        the earlier of--
                    (i) 120 days after the trustee properly 
                requests such refund from the governmental unit 
                from which such refund is claimed; or
                    (ii) a determination by such governmental 
                unit of such request[.]; or
            (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.
    (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.
    [(b)] (2) A trustee may request a determination of any 
unpaid liability of the estate for any tax incurred during the 
administration of the case by submitting a tax return for such 
tax and a request for such a determination to the governmental 
unit charged with responsibility for collection or 
determination of such tax at the address and in the manner 
designated in paragraph (1). Unless such return is fraudulent, 
or contains a material misrepresentation, the estate, the 
trustee, the debtor, and any successor to the debtor are 
discharged from any liability for such tax--
            [(1)] (A) upon payment of the tax shown on such 
        return, if--
                    [(A)] (i) such governmental unit does not 
                notify the trustee, within 60 days after such 
                request, that such return has been selected for 
                examination; or
                    [(B)] (ii) such governmental unit does not 
                complete such an examination and notify the 
                trustee of any tax due, within 180 days after 
                such request or within such additional time as 
                the court, for cause, permits;
            [(2)] (B) upon payment of the tax determined by the 
        court, after notice and a hearing, after completion by 
        such governmental unit of such examination; or
            [(3)] (C) upon payment of the tax determined by 
        such governmental unit to be due.

           *       *       *       *       *       *       *

Sec. 506. Determination of secured status

    (a)(1) An allowed claim of a creditor secured by a lien on 
property in which the estate has an interest, or that is 
subject to setoff under section 553 of this title, is a secured 
claim to the extent of the value of such creditor's interest in 
the estate's interest in such property, or to the extent of the 
amount subject to setoff, as the case may be, and is an 
unsecured claim to the extent that the value of such creditor's 
interest or the amount so subject to setoff is less than the 
amount of such allowed claim. Such value shall be determined in 
light of the purpose of the valuation and of the proposed 
disposition or use of such property, and in conjunction with 
any hearing on such disposition or use or on a plan affecting 
such creditor's interest.
    (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 personal, 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.
    (b) To the extent that an allowed secured claim is secured 
by property the value of which, after any recovery under 
subsection (c) of this section, is greater than the amount of 
such claim, there shall be allowed to the holder of such claim, 
interest on such claim, and any reasonable fees, costs, or 
charges provided for under the agreement or State statute under 
which such claim arose.
    (c) The trustee may recover from property securing an 
allowed secured claim the reasonable, necessary costs and 
expenses of preserving, or disposing of, such property to the 
extent of any benefit to the holder of such claim, including 
the payment of all ad valorem property taxes with respect to 
the property.

           *       *       *       *       *       *       *

Sec. 507. Priorities

    (a) The following expenses and claims have priority in the 
following order:
            (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.
            [(1) First] (2) Second, administrative expenses 
        allowed under section 503(b) of this title, and any 
        fees and charges assessed against the estate under 
        chapter 123 of title 28.
            [(2) Second] (3) Third, unsecured claims allowed 
        under section 502(f) of this title.
            [(3) Third] (4) Fourth, allowed unsecured claims, 
        but only to the extent of $4,000 for each individual or 
        corporation, as the case may be, earned within 90 days 
        before the date of the filing of the petition or the 
        date of the cessation of the debtor's business, 
        whichever occurs first, for--
                    (A) wages, salaries, or commissions, 
                including vacation, severance, and sick leave 
                pay earned by an individual; or
                    (B) sales commissions earned by an 
                individual or by a corporation with only 1 
                employee, acting as an independent contractor 
                in the sale of goods or services for the debtor 
                in the ordinary course of the debtor's business 
                if, and only if, during the 12 months preceding 
                that date, at least 75 percent of the amount 
                that the individual or corporation earned by 
                acting as an independent contractor in the sale 
                of goods or services was earned from the 
                debtor[;].
            [(4) Fourth] (5) Fifth, allowed unsecured claims 
        for contributions to an employee benefit plan--
                    (A) * * *

           *       *       *       *       *       *       *

            [(5) Fifth] (6) Sixth, allowed unsecured claims of 
        persons--
                    (A) * * *

           *       *       *       *       *       *       *

            [(6) Sixth] (7) Seventh, allowed unsecured claims 
        of individuals, to the extent of $1,800 for each such 
        individual, arising from the deposit, before the 
        commencement of the case, of money in connection with 
        the purchase, lease, or rental of property, or the 
        purchase of services, for the personal, family, or 
        household use of such individuals, that were not 
        delivered or provided.
            [(7) Seventh, allowed claims for debts to a spouse, 
        former spouse, or child of the debtor, for alimony to, 
        maintenance for, or support of such spouse or child, in 
        connection with a separation agreement, divorce decree 
        or other order of a court of record, determination made 
        in accordance with State or territorial law by a 
        governmental unit, or property settlement agreement, 
        but not to the extent that such debt--
                    [(A) is assigned to another entity, 
                voluntarily, by operation of law, or otherwise; 
                or
                    [(B) includes a liability designated as 
                alimony, maintenance, or support, unless such 
                liability is actually in the nature of alimony, 
                maintenance or support.]
            (8) Eighth, allowed unsecured claims of 
        governmental units, only to the extent that such claims 
        are for--
                    (A) a tax on or measured by income or gross 
                receipts for a taxable year ending on or before 
                the date of filing of the petition--
                            (i) * * *
                            [(ii) assessed within 240 days, 
                        plus any time plus 30 days during which 
                        an offer in compromise with respect to 
                        such tax that was made within 240 days 
                        after such assessment was pending, 
                        before the date of the filing of the 
                        petition; or]
                            (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.

           *       *       *       *       *       *       *

                    (B) a property tax [assessed] incurred 
                before the commencement of the case and last 
                payable without penalty after one year before 
                the date of the filing of the petition;

           *       *       *       *       *       *       *

        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.

           *       *       *       *       *       *       *

            (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. 508. Effect of distribution other than under this title

    [(a) If a creditor receives, in a foreign proceeding, 
payment of, or a transfer of property on account of, a claim 
that is allowed under this title, such creditor may not receive 
any payment under this title on account of such claim until 
each of the other holders of claims on account of which such 
holders are entitled to share equally with such creditor under 
this title has received payment under this title equal in value 
to the consideration received by such creditor in such foreign 
proceeding.]
    [(b)] If a creditor of a partnership debtor receives, from 
a general partner that is not a debtor in a case under chapter 
7 of this title, payment of, or a transfer of property on 
account of, a claim that is allowed under this title and that 
is not secured by a lien on property of such partner, such 
creditor may not receive any payment under this title on 
account of such claim until each of the other holders of claims 
on account of which such holders are entitled to share equally 
with such creditor under this title has received payment under 
this title equal in value to the consideration received by such 
creditor from such general partner.

           *       *       *       *       *       *       *

Sec. 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.

              SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

Sec. 521. Debtor's duties

    (a) The debtor shall--
            [(1) file a list of creditors, and unless the court 
        orders otherwise, a schedule of assets and liabilities, 
        a schedule of current income and current expenditures, 
        and a statement of the debtor's financial affairs;]
            (1) file--
                    (A) a list of creditors; and
                    (B) unless the court orders otherwise--
                            (i) a schedule of assets and 
                        liabilities;
                            (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;
            (2) if an individual debtor's schedule of assets 
        and liabilities includes [consumer] debts which are 
        secured by property of the estate--
                    (A)  * * *
                    (B) within [forty-five days after the 
                filing of a notice of intent under this 
                section] 30 days after the first date set for 
                the meeting of creditors under section 341(a) 
                of this title, or within such additional time 
                as the court, for cause, within such [forty-
                five day] 30-day period fixes, the debtor shall 
                perform his intention with respect to such 
                property, as specified by subparagraph (A) of 
                this paragraph; and
                    (C) nothing in subparagraphs (A) and (B) of 
                this paragraph shall alter the debtor's or the 
                trustee's rights with regard to such property 
                under this title, except as provided in section 
                362(h) of this title;
            (3) if a trustee is serving in the case or an 
        auditor appointed under section 586(f) of title 28, 
        cooperate with the trustee as necessary to enable the 
        trustee to perform the trustee's duties under this 
        title;
            (4) if a trustee is serving in the case or an 
        auditor appointed under section 586(f) of title 28, 
        surrender to the trustee all property of the estate and 
        any recorded information, including books, documents, 
        records, and papers, relating to property of the 
        estate, whether or not immunity is granted under 
        section 344 of this title[, and];
            (5) appear at the hearing required under section 
        524(d) of this title[.]; and
            (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.
    (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).
    (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).
    (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 insolvency of the debtor. Nothing in this 
subsection shall be deemed to justify limiting such a provision 
in any other circumstance.
    (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--
            (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 Abuse Prevention and Consumer Protection Act 
of 2001, 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 Abuse Prevention and Consumer 
Protection Act of 2001, 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
                    (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.
    (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.
    (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.

Sec. 522. Exemptions

    (a)  * * *
    (b)(1) Notwithstanding section 541 of this title, an 
individual debtor may exempt from property of the estate the 
property listed in either paragraph [(1)] (2) or, in the 
alternative, paragraph [(2)] (3) of this subsection. In joint 
cases filed under section 302 of this title and individual 
cases filed under section 301 or 303 of this title by or 
against debtors who are husband and wife, and whose estates are 
ordered to be jointly administered under Rule 1015(b) of the 
Federal Rules of Bankruptcy Procedure, one debtor may not elect 
to exempt property listed in paragraph [(1)] (2) and the other 
debtor elect to exempt property listed in paragraph [(2)] (3) 
of this subsection. If the parties cannot agree on the 
alternative to be elected, they shall be deemed to elect 
paragraph [(1)] (2), where such election is permitted under the 
law of the jurisdiction where the case is filed. [Such property 
is--
            [(1) property that is specified under subsection 
        (d) of this section, unless the State law that is 
        applicable to the debtor under paragraph (2)(A) of this 
        subsection specifically does not so authorize; or, in 
        the alternative,]
    (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.
    [(2)(A)] (3) Property listed in this paragraph is--
            (A) subject to subsections (o) and (p), any 
        property that is exempt under Federal law, other than 
        subsection (d) of this section, or State or local law 
        that is applicable on the date of the filing of the 
        petition at the place in which the debtor's domicile 
        has been located for the [180] 730 days immediately 
        preceding the date of the filing of the petition[, or 
        for a longer portion of such 180-day period than in any 
        other place] or if the debtor's domicile has not been 
        located at a single State for such 730-day 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; [and]
            (B) any interest in property in which the debtor 
        had, immediately before the commencement of the case, 
        an interest as a tenant by the entirety or joint tenant 
        to the extent that such interest as a tenant by the 
        entirety or joint tenant is exempt from process under 
        applicable nonbankruptcy law[.]; and
            (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.
    (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.
            (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.
    (c) Unless the case is dismissed, property exempted under 
this section is not liable during or after the case for any 
debt of the debtor that arose, or that is determined under 
section 502 of this title as if such debt had arisen, before 
the commencement of the case, except--
            [(1) a debt of a kind specified in section 
        523(a)(1) or 523(a)(5) of this title;]
            (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));

           *       *       *       *       *       *       *

    (d) The following property may be exempted under subsection 
[(b)(1)] (b)(2) of this section:
            (1)  * * *

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

    (f)(1) Notwithstanding any waiver of exemptions but subject 
to paragraph (3), the debtor may avoid the fixing of a lien on 
an interest of the debtor in property to the extent that such 
lien impairs an exemption to which the debtor would have been 
entitled under subsection (b) of this section, if such lien 
is--
            (A) a judicial lien, other than a judicial lien 
        that secures a debt[--
                    [(i) to a spouse, former spouse, or child 
                of the debtor, for alimony to, maintenance for, 
                or support of such spouse or child, in 
                connection with a separation agreement, divorce 
                decree or other order of a court of record, 
                determination made in accordance with State or 
                territorial law by a governmental unit, or 
                property settlement agreement; and
                    [(ii) to the extent that such debt--
                            [(I) is not assigned to another 
                        entity, voluntarily, by operation of 
                        law, or otherwise; and
                            [(II) includes a liability 
                        designated as alimony, maintenance, or 
                        support, unless such liability is 
                        actually in the nature of alimony, 
                        maintenance or support.; or] of a kind 
                        that is specified in section 523(a)(5); 
                        or

           *       *       *       *       *       *       *

    (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
            (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.
    (g) Notwithstanding sections 550 and 551 of this title, the 
debtor may exempt under subsection (b) of this section property 
that the trustee recovers under section 510(c)(2), 542, 543, 
550, 551, or 553 of this title, to the extent that the debtor 
could have exempted such property under subsection (b) of this 
section if such property had not been transferred, if--
            (1)  * * *
            (2) the debtor could have avoided such transfer 
        under subsection [(f)(2)] (f)(1)(B) of this section.

           *       *       *       *       *       *       *

    (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.
    (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.
    (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.

Sec. 523. Exceptions to discharge

    (a) A discharge under section 727, 1141, 1228(a), 1228(b), 
or 1328(b) of this title does not discharge an individual 
debtor from any debt--
            (1) for a tax or a customs duty--
                    (A)  * * *
                    (B) with respect to which a return, or 
                equivalent report or notice, if required--
                            (i) was not filed or given; or
                            (ii) was filed or given after the 
                        date on which such return, report, or 
                        notice was last due, under applicable 
                        law or under any extension, and after 
                        two years before the date of the filing 
                        of the petition; or

           *       *       *       *       *       *       *

            (2) for money, property, services, or an extension, 
        renewal, or refinancing of credit, to the extent 
        obtained by--
                    (A)  * * *

           *       *       *       *       *       *       *

                    [(C) for purposes of subparagraph (A) of 
                this paragraph, consumer debts owed to a single 
                creditor and aggregating more than $1,000 for 
                ``luxury goods or services'' incurred by an 
                individual debtor on or within 60 days before 
                the order for relief under this title, or cash 
                advances aggregating more than $1,000 that are 
                extensions of consumer credit under an open end 
                credit plan obtained by an individual debtor on 
                or within 60 days before the order for relief 
                under this title, are presumed to be 
                nondischargeable; ``luxury goods or services'' 
                do not include goods or services reasonably 
                acquired for the support or maintenance of the 
                debtor or a dependent of the debtor; an 
                extension of consumer credit under an open end 
                credit plan is to be defined for purposes of 
                this subparagraph as it is defined in the 
                Consumer Credit Protection Act;]
            (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.

           *       *       *       *       *       *       *

            [(5) to a spouse, former spouse, or child of the 
        debtor, for alimony to, maintenance for, or support of 
        such spouse or child, in connection with a separation 
        agreement, divorce decree or other order of a court of 
        record, determination made in accordance with State or 
        territorial law by a governmental unit, or property 
        settlement agreement, but not to the extent that--
                    [(A) such debt is assigned to another 
                entity, voluntarily, by operation of law, or 
                otherwise (other than debts assigned pursuant 
                to section 408(a)(3) of the Social Security 
                Act, or any such debt which has been assigned 
                to the Federal Government or to a State or any 
                political subdivision of such State); or
                    [(B) such debt includes a liability 
                designated as alimony, maintenance, or support, 
                unless such liability is actually in the nature 
                of alimony, maintenance, or support;]
            (5) for a domestic support obligation;

           *       *       *       *       *       *       *

            [(8) for 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 for an 
        obligation to repay funds received as an educational 
        benefit, scholarship or stipend, unless excepting such 
        debt from discharge under this paragraph will impose an 
        undue hardship on the debtor and the debtor's 
        dependents;]
            (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
                    (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;
            (9) for death or personal injury caused by the 
        debtor's no, operation of a motor vehicle, vessel, or 
        aircraft if such operation was unlawful because the 
        debtor was intoxicated from using alcohol, a drug, or 
        another substance;

           *       *       *       *       *       *       *

            (14A) incurred to pay a tax to a governmental unit, 
        other than the United States, that would be 
        nondischargeable under paragraph (1);
            (15) not of the kind described in paragraph (5) 
        that is incurred by the debtor in the course of a 
        divorce or separation or in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, a determination made in accordance 
        with State or territorial law by a governmental unit 
        unless--
                    (A) the debtor does not have the ability to 
                pay such debt from income or property of the 
                debtor not reasonably necessary to be expended 
                for the maintenance or support of the debtor or 
                a dependent of the debtor and, if the debtor is 
                engaged in a business, for the payment of 
                expenditures necessary for the continuation, 
                preservation, and operation of such business; 
                or
                    (B) discharging such debt would result in a 
                benefit to the debtor that outweighs the 
                detrimental consequences to a spouse, former 
                spouse, or child of the debtor;
            (16) for a fee or assessment that becomes due and 
        payable after the order for relief to a membership 
        association with respect to the debtor's interest in a 
        [dwelling] unit that has condominium [ownership or] 
        ownership, in a share of a cooperative [housing] 
        corporation, [but only if such fee or assessment is 
        payable for a period during which--
                    [(A) the debtor physically occupied a 
                dwelling unit in the condominium or cooperative 
                project; or
                    [(B) the debtor rented the dwelling unit to 
                a tenant and received payments from the tenant 
                for such period] 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,,
        but nothing in this paragraph shall except from 
        discharge the debt of a debtor for a membership 
        association fee or assessment for a period arising 
        before entry of the order for relief in a pending or 
        subsequent bankruptcy case;
            (17) for a fee imposed [by a court] on a prisoner 
        by any court for the filing of a case, motion, 
        complaint, or appeal, or for other costs and expenses 
        assessed with respect to such filing, regardless of an 
        assertion of poverty by the debtor under [section 
        1915(b) or (f)] subsection (b) or (f)(2) of section 
        1915 of title 28 (or a similar non-Federal law), or the 
        debtor's status as a prisoner, as defined in section 
        1915(h) of title 28 (or a similar non-Federal law); or
            [(18) owed under State law to a State or 
        municipality that is--
                    [(A) in the nature of support, and
                    [(B) enforceable under part D of title IV 
                of the Social Security Act (42 U.S.C. 601 et 
                seq.).]
            (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 subject 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.
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.

           *       *       *       *       *       *       *

    (c)(1) Except as provided in subsection (a)(3)(B) of this 
section, the debtor shall be discharged from a debt of a kind 
specified in paragraph (2), (4), [(6), or (15)] or (6) of 
subsection (a) of this section, unless, on request of the 
creditor to whom such debt is owed, and after notice and a 
hearing, the court determines such debt to be excepted from 
discharge under paragraph (2), (4), [(6), or (15)] or (6), as 
the case may be, of subsection (a) of this section.

           *       *       *       *       *       *       *

    (e) Any institution-affiliated party of [a] an insured 
depository institution shall be considered to be acting in a 
fiduciary capacity with respect to the purposes of subsection 
(a)(4) or (11).
            [(15) not of the kind described in paragraph (5) 
        that is incurred by the debtor in the course of a 
        divorce or separation or in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, a determination made in accordance 
        with State or territorial law by a governmental unit 
        unless--
                    [(A) the debtor does not have the ability 
                to pay such debt from income or property of the 
                debtor not reasonably necessary to be expended 
                for the maintenance or support of the debtor or 
                a dependent of the debtor and, if the debtor is 
                engaged in a business, for the payment of 
                expenditures necessary for the continuation, 
                preservation, and operation of such business; 
                or
                    [(B) discharging such debt would result in 
                a benefit to the debtor that outweighs the 
                detrimental consequences to a spouse, former 
                spouse, or child of the debtor;]

Sec. 524. Effect of discharge

    (a) A discharge in a case under this title--
            (1)  * * *

           *       *       *       *       *       *       *

            (3) operates as an injunction against the 
        commencement or continuation of an action, the 
        employment of process, or an act, to collect or recover 
        from, or offset against, property of the debtor of the 
        kind specified in section 541(a)(2) of this title that 
        is acquired after the commencement of the case, on 
        account of any allowable community claim, except a 
        community claim that is excepted from discharge under 
        [section 523, 1228(a)(1), or 1328(a)(1) of this title, 
        or that] section 523, 1228(a)(1), or 1328(a)(1), or 
        that would be so excepted, determined in accordance 
        with the provisions of sections 523(c) and 523(d) of 
        this title, in a case concerning the debtor's spouse 
        commenced on the date of the filing of the petition in 
        the case concerning the debtor, whether or not 
        discharge of the debt based on such community claim is 
        waived.

           *       *       *       *       *       *       *

    (c) An agreement between a holder of a claim and the 
debtor, the consideration for which, in whole or in part, is 
based on a debt that is dischargeable in a case under this 
title is enforceable only to any extent enforceable under 
applicable nonbankruptcy law, whether or not discharge of such 
debt is waived, only if--
            (1)  * * *
            [(2)(A) such agreement contains a clear and 
        conspicuous statement which advises the debtor that the 
        agreement may be rescinded at any time prior to 
        discharge or within sixty days after such agreement is 
        filed with the court, whichever occurs later, by giving 
        notice of rescission to the holder of such claim; and
            [(B) such agreement contains a clear and 
        conspicuous statement which advises the debtor that 
        such agreement is not required under this title, under 
        nonbankruptcy law, or under any agreement not in 
        accordance with the provisions of this subsection;]
            (2) the debtor received the disclosures described 
        in subsection (k) at or before the time at which the 
        debtor signed the agreement;

           *       *       *       *       *       *       *

    (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.
    (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.
    (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
                    (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 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 purchase-money 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 $______ is due on 
                ______ 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.
            ``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.''.
            (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 $______, and my 
actual current monthly expenses including monthly payments on 
post-bankruptcy debt and other reaffirmation agreements total 
$______, leaving $______ 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: ______.
    ``2. I received a copy of the Reaffirmation Disclosure 
Statement in Part A and a completed and signed reaffirmation 
agreement.''.
    (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 payments 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)).

Sec. 525. Protection against discriminatory treatment

    (a)  * * *

           *       *       *       *       *       *       *

    (c)(1) A governmental unit that operates a student grant or 
loan program and a person engaged in a business that includes 
the making of loans guaranteed or insured under a student loan 
program may not deny a student grant, loan, loan guarantee, or 
loan insurance to a person that is or has been a debtor under 
this title or a bankrupt or debtor under the Bankruptcy Act, or 
another person with whom the debtor or bankrupt has been 
associated, because the debtor or bankrupt is or has been a 
debtor under this title or a bankrupt or debtor under the 
Bankruptcy Act, has been insolvent before the commencement of a 
case under this title or during the pendency of the case but 
before the debtor is granted or denied a discharge, or has not 
paid a debt that is dischargeable in the case under this title 
or that was discharged under the Bankruptcy Act.
    (2) In this section, ``student loan program'' means [the 
program operated under part B, D, or E of] any program operated 
under title IV of the Higher Education Act of 1965 or a similar 
program operated under State or local law.

Sec. 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
                    (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
            (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.

Sec. 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 
                dismissal 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 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.

Sec. 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
            (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.

                       SUBCHAPTER III--THE ESTATE

Sec. 541. Property of the estate

    (a)  * * *
    (b) Property of the estate does not include--
            (1)  * * *

           *       *       *       *       *       *       *

            (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                    (A) * * *
                    (B)(i) the debtor has transferred such 
                interest pursuant to a written conveyance of a 
                production payment to an entity that does not 
                participate in the operation of the property 
                from which such production payment is 
                transferred; and
                    (ii) but for the operation of this 
                paragraph, the estate could include the 
                interest referred to in clause (i) only by 
                virtue of section 365 or 542 of this title; 
                [or]
            (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 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;
            (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;
            (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 trustee under section 550 by virtue of avoidance 
        under section 548(a);
            (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
            [(5)] (10) any interest in cash or cash equivalents 
        that constitute proceeds of a sale by the debtor of a 
        money order that is made--
                    (A) * * *

           *       *       *       *       *       *       *

    (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.
    (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.
    (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.

           *       *       *       *       *       *       *

Sec. 545. Statutory liens

    The trustee may avoid the fixing of a statutory lien on 
property of the debtor to the extent that such lien--
            (1)  * * *
            (2) is not perfected or enforceable at the time of 
        the commencement of the case against a bona fide 
        purchaser that purchases such property at the time of 
        the commencement of the case, whether or not such a 
        purchaser exists, 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;

           *       *       *       *       *       *       *

Sec. 546. Limitations on avoiding powers

    (a)  * * *

           *       *       *       *       *       *       *

    [(c) Except as provided in subsection (d) of this section, 
the rights and powers of a trustee under sections 544(a), 545, 
547, and 549 of this title are subject to any statutory or 
common-law 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, but--
            [(1) such a seller may not reclaim any such goods 
        unless such seller demands in writing reclamation of 
        such goods--
                    [(A) before 10 days after receipt of such 
                goods by the debtor; or
                    [(B) if such 10-day period expires after 
                the commencement of the case, before 20 days 
                after receipt of such goods by the debtor; and
            [(2) the court may deny reclamation to a seller 
        with such a right of reclamation that has made such a 
        demand only if the court--
                    [(A) grants the claim of such a seller 
                priority as a claim of a kind specified in 
                section 503(b) of this title; or
                    [(B) secures such claim by a lien.]
    (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).

           *       *       *       *       *       *       *

    (e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), 
and 548(b) of this title, the trustee may not avoid a transfer 
that is a margin payment, as defined in section 101, 741, or 
761 of this title, or settlement payment, as defined in section 
101 or 741 of this title, made by or to a commodity broker, 
forward contract merchant, stockbroker, financial institution, 
financial participant, or securities clearing agency, that is 
made before the commencement of the case, except under section 
548(a)(1)(A) of this title.

           *       *       *       *       *       *       *

    (g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) 
and 548(b) of this title, the trustee may not avoid a transfer 
[under a swap agreement], made by or to a swap participant, [in 
connection with a swap agreement] under or in connection with 
any swap agreement and that is made before the commencement of 
the case, except under section 548(a)(1)(A) of this title.
    [(g)] (i) Notwithstanding the rights and powers of a 
trustee under sections 544(a), 545, 547, 549, and 553, if the 
court determines on a motion by the trustee made not later than 
120 days after the date of the order for relief in a case under 
chapter 11 of this title and after notice and a hearing, that a 
return is in the best interests of the estate, the debtor, with 
the consent of a creditor, may return goods shipped to the 
debtor by the creditor before the commencement of the case, and 
the creditor may offset the purchase price of such goods 
against any claim of the creditor against the debtor that arose 
before the commencement of the case.
    (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.
    (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 Abuse 
Prevention and Consumer Protection Act of 2001, or any 
successor thereto.
    (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.

Sec. 547. Preferences

    (a)  * * *
    (b) Except as provided in [subsection (c)] subsections (c) 
and (i) of this section, the trustee may avoid any transfer of 
an interest of the debtor in property--
            (1)  * * *

           *       *       *       *       *       *       *

    (c) The trustee may not avoid under this section a 
transfer--
            (1)  * * *
            [(2) to the extent that such transfer was--
                    [(A) in payment of a debt incurred by the 
                debtor in the ordinary course of business or 
                financial affairs of the debtor and the 
                transferee;
                    [(B) made in the ordinary course of 
                business or financial affairs of the debtor and 
                the transferee; and
                    [(C) made according to ordinary business 
                terms;]
            (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;
            (3) that creates a security interest in property 
        acquired by the debtor--
                    (A)  * * *
                    (B) that is perfected on or before [20] 30 
                days after the debtor receives possession of 
                such property;

           *       *       *       *       *       *       *

            [(7) to the extent such transfer was a bona fide 
        payment of a debt to a spouse, former spouse, or child 
        of the debtor, for alimony to, maintenance for, or 
        support of such spouse or child, in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, determination made in accordance 
        with State or territorial law by a governmental unit, 
        or property settlement agreement, but not to the extent 
        that such debt--
                    [(A) is assigned to another entity, 
                voluntarily, by operation of law, or otherwise; 
                or
                    [(B) includes a liability designated as 
                alimony, maintenance, or support, unless such 
                liability is actually in the nature of alimony, 
                maintenance or support; or]
            (7) to the extent such transfer was a bona fide 
        payment of a debt for a domestic support obligation;
            (8) if, in a case filed by an individual debtor 
        whose debts are primarily consumer debts, the aggregate 
        value of all property that constitutes or is affected 
        by such transfer is less than $600[.]; or
            (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.

           *       *       *       *       *       *       *

    (e)(1)  * * *
    (2) For the purposes of this section, except as provided in 
paragraph (3) of this subsection, a transfer is made--
            (A) at the time such transfer takes effect between 
        the transferor and the transferee, if such transfer is 
        perfected at, or within [10] 30 days after, such time, 
        except as provided in subsection (c)(3)(B);
            (B) at the time such transfer is perfected, if such 
        transfer is perfected after such [10] 30 days; or
            (C) immediately before the date of the filing of 
        the petition, if such transfer is not perfected at the 
        later of--
                    (i)  * * *
                    (ii) [10] 30 days after such transfer takes 
                effect between the transferor and the 
                transferee.

           *       *       *       *       *       *       *

    (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.
    (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.

           *       *       *       *       *       *       *

Sec. 548. Fraudulent transfers and obligations

    (a)  * * *

           *       *       *       *       *       *       *

    (d)(1)  * * *
    (2) In this section--
            (A)  * * *
            (B) a commodity broker, forward contract merchant, 
        stockbroker, financial institution, financial 
        participant, or securities clearing agency that 
        receives a margin payment, as defined in section 101, 
        741, or 761 of this title, or settlement payment, as 
        defined in section 101 or 741 of this title, takes for 
        value to the extent of such payment;
            (C) a repo participant that receives a margin 
        payment, as defined in section 741 or 761 of this 
        title, or settlement payment, as defined in section 741 
        of this title, in connection with a repurchase 
        agreement, takes for value to the extent of such 
        payment; [and]
            (D) a swap participant that receives a transfer in 
        connection with a swap agreement takes for value to the 
        extent of such transfer[.]; and
            (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.

           *       *       *       *       *       *       *

Sec. 549. Postpetition transactions

    (a)  * * *

           *       *       *       *       *       *       *

    (c) The trustee may not avoid under subsection (a) of this 
section a transfer of an interest in real property to a good 
faith purchaser without knowledge of the commencement of the 
case and for present fair equivalent value unless a copy or 
notice of the petition was filed, where a transfer of an 
interest in such real property may be recorded to perfect such 
transfer, before such transfer is so perfected that a bona fide 
purchaser of such real property, against whom applicable law 
permits such transfer to be perfected, could not acquire an 
interest that is superior to [the interest] such interest of 
such good faith purchaser. A good faith purchaser without 
knowledge of the commencement of the case and for less than 
present fair equivalent value has a lien on the property 
transferred to the extent of any present value given, unless a 
copy or notice of the petition was so filed before such 
transfer was so perfected.

           *       *       *       *       *       *       *

Sec. 552. Postpetition effect of security interest

    (a)  * * *
    (b)(1) Except as provided in sections 363, 506(c), 522, 
544, 545, 547, and 548 of this title, if the debtor and an 
entity entered into a security agreement before the 
commencement of the case and if the security interest created 
by such security agreement extends to property of the debtor 
acquired before the commencement of the case and to proceeds, 
[product] products, offspring, or profits of such property, 
then such security interest extends to such proceeds, [product] 
products, offspring, or profits acquired by the estate after 
the commencement of the case to the extent provided by such 
security agreement and by applicable nonbankruptcy law, except 
to any extent that the court, after notice and a hearing and 
based on the equities of the case, orders otherwise.

           *       *       *       *       *       *       *

Sec. 553. Setoff

    (a) Except as otherwise provided in this section and in 
sections 362 and 363 of this title, this title does not affect 
any right of a creditor to offset a mutual debt owing by such 
creditor to the debtor that arose before the commencement of 
the case under this title against a claim of such creditor 
against the debtor that arose before the commencement of the 
case, except to the extent that--
            (1)  * * *

           *       *       *       *       *       *       *

            (3) the debt owed to the debtor by such creditor 
        was incurred by such creditor--
                    (A)  * * *

           *       *       *       *       *       *       *

                    (C) for the purpose of obtaining a right of 
                setoff against the debtor (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).
    (b)(1) Except with respect to a setoff of a kind described 
in section 362(b)(6), 362(b)(7), [362(b)(14),] 362(b)(17), 
362(b)(28), 555, 556, 559, 560, 561 365(h), 546(h), or 
365(i)(2) of this title, if a creditor offsets a mutual debt 
owing to the debtor against a claim against the debtor on or 
within 90 days before the date of the filing of the petition, 
then the trustee may recover from such creditor the amount so 
offset to the extent that any insufficiency on the date of such 
setoff is less than the insufficiency on the later of--
            (A)  * * *

           *       *       *       *       *       *       *

[Sec. 555. Contractual right to liquidate a securities contract]

Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract

    The exercise of a contractual right of a stockbroker, 
financial institution, financial participant, or securities 
clearing agency to cause the liquidation, termination, or 
acceleration of a securities contract, as defined in section 
741 of this title, because of a condition of the kind specified 
in section 365(e)(1) of this title shall not be stayed, 
avoided, or otherwise limited by operation of any provision of 
this title or by order of a court or administrative agency in 
any proceeding under this title unless such order is authorized 
under the provisions of the Securities Investor Protection Act 
of 1970 or any statute administered by the Securities and 
Exchange Commission. 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 in writing, arising under common law, under law 
merchant, or by reason of normal business practice.

[Sec. 556. Contractual right to liquidate a commodities contract or 
                    forward contract]

Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract

    The contractual right of a commodity broker, financial 
participant, or forward contract merchant to cause the 
liquidation, termination, or acceleration of a commodity 
contract, as defined in section 761 of this title, or forward 
contract because of a condition of the kind specified in 
section 365(e)(1) of this title, and the right to a variation 
or maintenance margin payment received from a trustee with 
respect to open commodity contracts or forward contracts, shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by the order of a court in any 
proceeding under this title. As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
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.

           *       *       *       *       *       *       *

[Sec. 559. Contractual right to liquidate a repurchase agreement]

Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement

    The exercise of a contractual right of a repo participant 
to cause the liquidation, termination, or acceleration of a 
repurchase agreement because of a condition of the kind 
specified in section 365(e)(1) of this title shall not be 
stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title, 
unless, where the debtor is a stockbroker or securities 
clearing agency, such order is authorized under the provisions 
of the Securities Investor Protection Act of 1970 or any 
statute administered by the Securities and Exchange Commission. 
In the event that a repo participant liquidates one or more 
repurchase agreements with a debtor and under the terms of one 
or more such agreements has agreed to deliver assets subject to 
repurchase agreements to the debtor, any excess of the market 
prices received on liquidation of such assets (or if any such 
assets are not disposed of on the date of liquidation of such 
repurchase agreements, at the prices available at the time of 
liquidation of such repurchase agreements from a generally 
recognized source or the most recent closing bid quotation from 
such a source) over the sum of the stated repurchase prices and 
all expenses in connection with the liquidation of such 
repurchase agreements shall be deemed property of the estate, 
subject to the available rights of setoff. As used in this 
section, the term ``contractual right'' includes a right set 
forth in a rule or bylaw, applicable to each party to the 
repurchase agreement, of a national securities exchange, a 
national securities association, or a securities clearing 
agency, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant or by reason of 
normal business practice.

[Sec. 560. Contractual right to terminate a swap agreement]

Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement

    The exercise of any contractual right of any swap 
participant to cause the [termination of a swap agreement] 
liquidation, termination, or acceleration of one or more swap 
agreements because of a condition of the kind specified in 
section 365(e)(1) of this title or to offset or net out any 
termination values or payment amounts arising under or [in 
connection with any swap agreement] in connection with the 
termination, liquidation, or acceleration of one or more swap 
agreements shall not be stayed, avoided, or otherwise limited 
by operation of any provision of this title or by order of a 
court or administrative agency in any proceeding under this 
title. As used in this section, the term ``contractual right'' 
includes a right, whether or not evidenced in writing, arising 
under common law, under law merchant, or by reason of normal 
business practice.

Sec. 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 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 
contracts, 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).

Sec. 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.

                         CHAPTER 7--LIQUIDATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
701.  Interim trustee.
     * * * * * * *
[707.  Dismissal.]
707.  Dismissal of a case or conversion to a case under chapter 11 or 
          13.
     * * * * * * *

                 SUBCHAPTER III--STOCKBROKER LIQUIDATION

741.  Definitions for this subchapter.
     * * * * * * *
753.  Stockbroker liquidation and forward contract merchants, commodity 
          brokers, stockbrokers, financial institutions, securities 
          clearing agencies, swap participants, repo participants, and 
          master netting agreement participants.

               SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

761.  Definitions for this subchapter.
     * * * * * * *
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.

           *       *       *       *       *       *       *

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *

Sec. 704. Duties of trustee

    (a) The trustee shall--
            (1) * * *

           *       *       *       *       *       *       *

            (8) if the business of the debtor is authorized to 
        be operated, file with the court, with the United 
        States trustee, and with any governmental unit charged 
        with responsibility for collection or determination of 
        any tax arising out of such operation, periodic reports 
        and summaries of the operation of such business, 
        including a statement of receipts and disbursements, 
        and such other information as the United States trustee 
        or the court requires; [and]
            (9) make a final report and file a final account of 
        the administration of the estate with the court and 
        with the United States trustee[.];
            (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
            (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)(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.
    (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.
    (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. 706. Conversion

    (a) * * *

           *       *       *       *       *       *       *

    (c) The court may not convert a case under this chapter to 
a case under chapter 12 or 13 of this title unless the debtor 
requests or consents to such conversion.

           *       *       *       *       *       *       *

[Sec. 707. Dismissal]

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

    (a) * * *
    (b)(1) After notice and a hearing, the court, on its own 
motion or on a motion by the United States trustee, [but not at 
the request or suggestion of] trustee, bankruptcy 
administrator, or any party in interest, may dismiss a case 
filed by an individual debtor under this chapter whose debts 
are primarily consumer debts, or, with the debtor's consent, 
convert such a case to a case under chapter 11 or 13 of this 
title, if it finds that the granting of relief would be [a 
substantial abuse] an abuse of the provisions of this chapter. 
[There shall be a presumption in favor of granting the relief 
requested by the debtor.] In making a determination whether to 
dismiss a case under this section, the court may not take into 
consideration whether a debtor has made, or continues to make, 
charitable contributions (that meet the definition of 
``charitable contribution'' under section 548(d)(3)) to any 
qualified religious or charitable entity or organization (as 
that term is defined in section 548(d)(4)).
    (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 
expenses 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.
    (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--
                    (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.
    (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.
    (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.

           *       *       *       *       *       *       *

SUBCHAPTER II--COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE ESTATE

           *       *       *       *       *       *       *

Sec. 722. Redemption

    An individual debtor may, whether or not the debtor has 
waived the right to redeem under this section, redeem tangible 
personal property intended primarily for personal, family, or 
household use, from a lien securing a dischargeable consumer 
debt, if such property is exempted under section 522 of this 
title or has been abandoned under section 554 of this title, by 
paying the holder of such lien the amount of the allowed 
secured claim of such holder that is secured by such lien in 
full at the time of redemption.

           *       *       *       *       *       *       *

Sec. 724. Treatment of certain liens

    (a) The trustee may avoid a lien that secures a claim of a 
kind specified in section 726(a)(4) of this title.
    (b) Property in which the estate has an interest and that 
is subject to a lien that is not avoidable under this title 
(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) and that 
secures an allowed claim for a tax, or proceeds of such 
property, shall be distributed--
            (1) first, to any holder of an allowed claim 
        secured by a lien on such property that is not 
        avoidable under this title and that is senior to such 
        tax lien;
            (2) second, to any holder of a claim of a kind 
        specified in section 507(a)(1) (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), 507(a)(2), 507(a)(3), 
        507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this 
        title, to the extent of the amount of such allowed tax 
        claim that is secured by such tax lien;

           *       *       *       *       *       *       *

    (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).
            (2) Claims for contributions to an employee benefit 
        plan entitled to priority under section 507(a)(5).

           *       *       *       *       *       *       *

Sec. 726. Distribution of property of the estate

    (a) Except as provided in section 510 of this title, 
property of the estate shall be distributed--
            (1) first, in payment of claims of the kind 
        specified in, and in the order specified in, section 
        507 of this title, proof of which is timely filed under 
        section 501 of this title or tardily filed [before the 
        date on which the trustee commences distribution under 
        this section;] 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;

           *       *       *       *       *       *       *

    (b) Payment on claims of a kind specified in paragraph (1), 
(2), (3), (4), (5), (6), (7), or (8) of section 507(a) of this 
title, or in paragraph (2), (3), (4), or (5) of subsection (a) 
of this section, shall be made pro rata among claims of the 
kind specified in each such particular paragraph, except that 
in a case that has been converted to this chapter under section 
[1009,] 1112, 1208, or 1307 of this title, a claim allowed 
under section 503(b) of this title incurred under this chapter 
after such conversion has priority over a claim allowed under 
section 503(b) of this title incurred under any other chapter 
of this title or under this chapter before such conversion and 
over any expenses of a custodian superseded under section 543 
of this title.

           *       *       *       *       *       *       *

Sec. 727. Discharge

    (a) The court shall grant the debtor a discharge, unless--
            (1) * * *

           *       *       *       *       *       *       *

            (8) the debtor has been granted a discharge under 
        this section, under section 1141 of this title, or 
        under section 14, 371, or 476 of the Bankruptcy Act, in 
        a case commenced within [six] 8 years before the date 
        of the filing of the petition;
            (9) the debtor has been granted a discharge under 
        section 1228 or 1328 of this title, or under section 
        660 or 661 of the Bankruptcy Act, in a case commenced 
        within six years before the date of the filing of the 
        petition, unless payments under the plan in such case 
        totaled at least--
                    (A) 100 percent of the allowed unsecured 
                claims in such case;
                    (B)(i) 70 percent of such claims; and
                    (ii) the plan was proposed by the debtor in 
                good faith, and was the debtor's best effort; 
                [or]
            (10) the court approves a written waiver of 
        discharge executed by the debtor after the order for 
        relief under this chapter[.]; or
            (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.

           *       *       *       *       *       *       *

    (d) On request of the trustee, a creditor, or the United 
States trustee, and after notice and a hearing, the court shall 
revoke a discharge granted under subsection (a) of this section 
if--
            (1) * * *
            (2) the debtor acquired property that is property 
        of the estate, or became entitled to acquire property 
        that would be property of the estate, and knowingly and 
        fraudulently failed to report the acquisition of or 
        entitlement to such property, or to deliver or 
        surrender such property to the trustee; [or]
            (3) the debtor committed an act specified in 
        subsection (a)(6) of this section[.]; or
            (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, 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.

[Sec. 728. Special tax provisions

    [(a) For the purposes of any State or local law imposing a 
tax on or measured by income, the taxable period of a debtor 
that is an individual shall terminate on the date of the order 
for relief under this chapter, unless the case was converted 
under section 1112 or 1208 of this title.
    [(b) Notwithstanding any State or local law imposing a tax 
on or measured by income, the trustee shall make tax returns of 
income for the estate of an individual debtor in a case under 
this chapter or for a debtor that is a corporation in a case 
under this chapter only if such estate or corporation has net 
taxable income for the entire period after the order for relief 
under this chapter during which the case is pending. If such 
entity has such income, or if the debtor is a partnership, then 
the trustee shall make and file a return of income for each 
taxable period during which the case was pending after the 
order for relief under this chapter.
    [(c) If there are pending a case under this chapter 
concerning a partnership and a case under this chapter 
concerning a partner in such partnership, a governmental unit's 
claim for any unpaid liability of such partner for a State or 
local tax on or measured by income, to the extent that such 
liability arose from the inclusion in such partner's taxable 
income of earnings of such partnership that were not withdrawn 
by such partner, is a claim only against such partnership.
    [(d) Notwithstanding section 541 of this title, if there 
are pending a case under this chapter concerning a partnership 
and a case under this chapter concerning a partner in such 
partnership, then any State or local tax refund or reduction of 
tax of such partner that would have otherwise been property of 
the estate of such partner under section 541 of this title--
            [(1) is property of the estate of such partnership 
        to the extent that such tax refund or reduction of tax 
        is fairly apportionable to losses sustained by such 
        partnership and not reimbursed by such partner; and
            [(2) is otherwise property of the estate of such 
        partner.]

                SUBCHAPTER III--STOCKBROKER LIQUIDATION

Sec. 741. Definitions for this subchapter

    In this subchapter--
            (1) * * *

           *       *       *       *       *       *       *

            [(7) ``securities contract'' means contract for the 
        purchase, sale, or loan of a security, including an 
        option for the purchase or sale of a security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any option entered into on a national 
        securities exchange relating to foreign currencies, or 
        the guarantee of any settlement of cash or securities 
        by or to a securities clearing agency;]
            (7) ``securities contract''--
                    (A) means--
                            (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.

           *       *       *       *       *       *       *

Sec. 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.

              SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

Sec. 761. Definitions for this subchapter

    In this subchapter--
            (1) * * *

           *       *       *       *       *       *       *

            (4) ``commodity contract'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (D) with respect to a clearing 
                organization, 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; [or]

           *       *       *       *       *       *       *

                    (F) any other agreement or transaction that 
                is similar to an agreement or transaction 
                referred to in this paragraph;
                    (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;

           *       *       *       *       *       *       *

Sec. 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.

           *       *       *       *       *       *       *

            CHAPTER 9--ADJUSTMENT OF DEBTS OF A MUNICIPALITY

           *       *       *       *       *       *       *

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 901. Applicability of other sections of this title

    (a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 
364(c), 364(d), 364(e), 364(f), 365, 366, 501, 502, 503, 504, 
506, 507(a)(1), 509, 510, 524(a)(1), 524(a)(2), 544, 545, 546, 
547, 548, 549(a), 549(c), 549(d), 550, 551, 552, 553, 555, 556, 
557, 559, 560, 561, 562, 1102, 1103, 1109, 1111(b), 1122, 
1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 
1123(b), 1123(d), 1124, 1125, 1126(a), 1126(b), 1126(c), 
1126(e), 1126(f), 1126(g), 1127(d), 1128, 1129(a)(2), 
1129(a)(3), 1129(a)(6), 1129(a)(8), 1129(a)(10), 1129(b)(1), 
1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of 
this title apply in a case under this chapter.

           *       *       *       *       *       *       *

                     SUBCHAPTER II--ADMINISTRATION

Sec. 921. Petition and proceedings relating to petition

    (a) * * *

           *       *       *       *       *       *       *

    (d) If the petition is not dismissed under subsection (c) 
of this section, the court shall order relief under this 
chapter notwithstanding section 301(b).

           *       *       *       *       *       *       *

                       CHAPTER 11--REORGANIZATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
1101.  Definitions for this chapter.
     * * * * * * *
1115.  Property of the estate.
1116.  Duties of trustee or debtor in possession in small business 
          cases.

           *       *       *       *       *       *       *

Sec. 1102. Creditors' and equity security holders' committees

    (a)(1) * * *

           *       *       *       *       *       *       *

    (3) On request of a party in interest in a case in which 
the debtor is a small business debtor and for cause, the court 
may order that a committee of creditors not be appointed.
    (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)(1) * * *

           *       *       *       *       *       *       *

    (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. 1104. Appointment of trustee or examiner

    (a) At any time after the commencement of the case but 
before confirmation of a plan, on request of a party in 
interest or the United States trustee, and after notice and a 
hearing, the court shall order the appointment of a trustee--
            (1) for cause, including fraud, dishonesty, 
        incompetence, or gross mismanagement of the affairs of 
        the debtor by current management, either before or 
        after the commencement of the case, or similar cause, 
        but not including the number of holders of securities 
        of the debtor or the amount of assets or liabilities of 
        the debtor; [or]
            (2) if such appointment is in the interests of 
        creditors, any equity security holders, and other 
        interests of the estate, without regard to the number 
        of holders of securities of the debtor or the amount of 
        assets or liabilities of the debtor[.]; or
            (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.
    (b)(1) Except as provided in section 1163 of this title, on 
the request of a party in interest made not later than 30 days 
after the court orders the appointment of a trustee under 
subsection (a), the United States trustee shall convene a 
meeting of creditors for the purpose of electing one 
disinterested person to serve as trustee in the case. The 
election of a trustee shall be conducted in the manner provided 
in subsections (a), (b), and (c) of section 702 of this title.
    (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. 1106. Duties of trustee and examiner

    (a) A trustee shall--
            (1) perform the duties of a trustee specified in 
        [sections 704(2), 704(5), 704(7), 704(8), and 704(9)] 
        paragraphs (2), (5), (7), (8), (9), and (11) of section 
        704(a) of this title;

           *       *       *       *       *       *       *

            (6) for any year for which the debtor has not filed 
        a tax return required by law, furnish, without personal 
        liability, such information as may be required by the 
        governmental unit with which such tax return was to be 
        filed, in light of the condition of the debtor's books 
        and records and the availability of such information; 
        [and]
            (7) after confirmation of a plan, file such reports 
        as are necessary or as the court orders[.]; and
            (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).

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

Sec. 1112. Conversion or dismissal

    (a) * * *
    [(b) Except as provided in subsection (c) of this section, 
on request of a party in interest or the United States trustee 
or bankruptcy administrator, and after notice and a hearing, 
the court may convert a case under this chapter to a case under 
chapter 7 of this title or may dismiss a case under this 
chapter, whichever is in the best interest of creditors and the 
estate, for cause, including--
            [(1) continuing loss to or diminution of the estate 
        and absence of a reasonable likelihood of 
        rehabilitation;
            [(2) inability to effectuate a plan;
            [(3) unreasonable delay by the debtor that is 
        prejudicial to creditors;
            [(4) failure to propose a plan under section 1121 
        of this title within any time fixed by the court;
            [(5) denial of confirmation of every proposed plan 
        and denial of a request made for additional time for 
        filing another plan or a modification of a plan;
            [(6) revocation of an order of confirmation under 
        section 1144 of this title, and denial of confirmation 
        of another plan or a modified plan under section 1129 
        of this title;
            [(7) inability to effectuate substantial 
        consummation of a confirmed plan;
            [(8) material default by the debtor with respect to 
        a confirmed plan;
            [(9) termination of a plan by reason of the 
        occurrence of a condition specified in the plan; or
            [(10) nonpayment of any fees or charges required 
        under chapter 123 of title 28.]
    (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.
    (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.

           *       *       *       *       *       *       *

Sec. 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.

Sec. 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;
            (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.

                        SUBCHAPTER II--THE PLAN

Sec. 1121. Who may file a plan

    (a) * * *

           *       *       *       *       *       *       *

    (d) [On] (1) Subject to paragraph (2), on request of a 
party in interest made within the respective periods specified 
in subsections (b) and (c) of this section and after notice and 
a hearing, the court may for cause reduce or increase the 120-
day period or the 180-day period referred to in this section.
    (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.
    (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.
    [(e) In a case in which the debtor is a small business and 
elects to be considered a small business--
            [(1) only the debtor may file a plan until after 
        100 days after the date of the order for relief under 
        this chapter;
            [(2) all plans shall be filed within 160 days after 
        the date of the order for relief; and
            [(3) on request of a party in interest made within 
        the respective periods specified in paragraphs (1) and 
        (2) and after notice and a hearing, the court may--
                    [(A) reduce the 100-day period or the 160-
                day period specified in paragraph (1) or (2) 
                for cause; and
                    [(B) increase the 100-day period specified 
                in paragraph (1) if the debtor shows that the 
                need for an increase is caused by circumstances 
                for which the debtor should not be held 
                accountable.]
    (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. 1123. Contents of plan

    (a) Notwithstanding any otherwise applicable nonbankruptcy 
law, a plan shall--
            (1) * * *

           *       *       *       *       *       *       *

            (6) provide for the inclusion in the charter of the 
        debtor, if the debtor is a corporation, or of any 
        corporation referred to in paragraph (5)(B) or (5)(C) 
        of this subsection, of a provision prohibiting the 
        issuance of nonvoting equity securities, and providing, 
        as to the several classes of securities possessing 
        voting power, an appropriate distribution of such power 
        among such classes, including, in the case of any class 
        of equity securities having a preference over another 
        class of equity securities with respect to dividends, 
        adequate provisions for the election of directors 
        representing such preferred class in the event of 
        default in the payment of such dividends; [and]
            (7) contain only provisions that are consistent 
        with the interests of creditors and equity security 
        holders and with public policy with respect to the 
        manner of selection of any officer, director, or 
        trustee under the plan and any successor to such 
        officer, director, or trustee[.]; and
            (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.

           *       *       *       *       *       *       *

Sec. 1124. Impairment of claims or interests

    Except as provided in section 1123(a)(4) of this title, a 
class of claims or interests is impaired under a plan unless, 
with respect to each claim or interest of such class, the 
plan--
            (1) * * *
            (2) notwithstanding any contractual provision or 
        applicable law that entitles the holder of such claim 
        or interest to demand or receive accelerated payment of 
        such claim or interest after the occurrence of a 
        default--
                    (A) cures any such default that occurred 
                before or after the commencement of the case 
                under this title, other than a default of a 
                kind specified in section 365(b)(2) of this 
                title or of a kind that section 365(b)(2) of 
                this title expressly does not require to be 
                cured;

           *       *       *       *       *       *       *

                    (C) compensates the holder of such claim or 
                interest for any damages incurred as a result 
                of any reasonable reliance by such holder on 
                such contractual provision or such applicable 
                law; [and]
                    (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
                    [(D)] (E) does not otherwise alter the 
                legal, equitable, or contractual rights to 
                which such claim or interest entitles the 
                holder of such claim or interest.

           *       *       *       *       *       *       *

Sec. 1125. Postpetition disclosure and solicitation

    (a) In this section--
            (1) ``adequate information'' means information of a 
        kind, and in sufficient detail, as far as is reasonably 
        practicable in light of the nature and history of the 
        debtor and the condition of the debtor's books and 
        records, 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, that would enable [a hypothetical 
        reasonable investor typical of holders of claims or 
        interests] such a hypothetical investor of the relevant 
        class to make an informed judgment about the plan, but 
        adequate information need not include such information 
        about any other possible or proposed plan and in 
        determining whether a disclosure statement provides 
        adequate information, the court shall consider the 
        complexity of the case, the benefit of additional 
        information to creditors and other parties in interest, 
        and the cost of providing additional information; and

           *       *       *       *       *       *       *

    [(f) Notwithstanding subsection (b), in a case in which the 
debtor has elected under section 1121(e) to be considered a 
small business--
            [(1) the court may conditionally approve a 
        disclosure statement subject to final approval after 
        notice and a hearing;
            [(2) acceptances and rejections of a plan may be 
        solicited based on a conditionally approved disclosure 
        statement as long as 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 at least 10 days prior to the 
        date of the hearing on confirmation of the plan; and
            [(3) a hearing on the disclosure statement may be 
        combined with a hearing on confirmation of a plan.]
    (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.
    (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. 1127. Modification of plan

    (a) * * *

           *       *       *       *       *       *       *

    (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. 1129. Confirmation of plan

    (a) The court shall confirm a plan only if all of the 
following requirements are met:
            (1) * * *

           *       *       *       *       *       *       *

            (9) Except to the extent that the holder of a 
        particular claim has agreed to a different treatment of 
        such claim, the plan provides that--
                    (A) * * *
                    (B) with respect to a class of claims of a 
                kind specified in section 507(a)(3), 507(a)(4), 
                507(a)(5), 507(a)(6), or 507(a)(7) of this 
                title, each holder of a claim of such class 
                will receive--
                            (i) * * *
                            (ii) if such class has not accepted 
                        the plan, cash on the effective date of 
                        the plan equal to the allowed amount of 
                        such claim; [and]
                    (C) with respect to a claim of a kind 
                specified in section 507(a)(8) of this title, 
                the holder of such claim will receive on 
                account of such claim [deferred cash payments, 
                over a period not exceeding six years after the 
                date of assessment of such claim, of a value, 
                as of the effective date of the plan, equal to 
                the allowed amount of such claim.] 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
                    (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).

           *       *       *       *       *       *       *

            (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.
            (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.
            (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.
    (b)(1) * * *
    (2) For the purpose of this subsection, the condition that 
a plan be fair and equitable with respect to a class includes 
the following requirements:
            (A) * * *
            (B) With respect to a class of unsecured claims--
                    (i) * * *
                    (ii) the holder of any claim or interest 
                that is junior to the claims of such class will 
                not receive or retain under the plan on account 
                of such junior claim or interest any property, 
                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).

           *       *       *       *       *       *       *

    (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).

           *       *       *       *       *       *       *

                SUBCHAPTER III--POSTCONFIRMATION MATTERS

Sec. 1141. Effect of confirmation

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *
    (2) [The confirmation of a plan does not discharge an 
individual debtor] A discharge under this chapter does not 
discharge a debtor from any debt excepted from discharge under 
section 523 of this title.

           *       *       *       *       *       *       *

    (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
                    (ii) modification of the plan under 1127 of 
                this title is not practicable.
    (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. 1146. Special tax provisions

    [(a) For the purposes of any State or local law imposing a 
tax on or measured by income, the taxable period of a debtor 
that is an individual shall terminate on the date of the order 
for relief under this chapter, unless the case was converted 
under section 706 of this title.
    [(b) The trustee shall make a State or local tax return of 
income for the estate of an individual debtor in a case under 
this chapter for each taxable period after the order for relief 
under this chapter during which the case is pending.]
    [(c)] (a) The issuance, transfer, or exchange of a 
security, or the making or delivery of an instrument of 
transfer under a plan confirmed under section 1129 of this 
title, may not be taxed under any law imposing a stamp tax or 
similar tax.
    [(d)] (b) The court may authorize the proponent of a plan 
to request a determination, limited to questions of law, by a 
State or local governmental unit charged with responsibility 
for collection or determination of a tax on or measured by 
income, of the tax effects, under section 346 of this title and 
under the law imposing such tax, of the plan. In the event of 
an actual controversy, the court may declare such effects after 
the earlier of--
            (1) the date on which such governmental unit 
        responds to the request under this subsection; or
            (2) 270 days after such request.

           *       *       *       *       *       *       *

Sec. 1170. Abandonment of railroad line

    (a) * * *

           *       *       *       *       *       *       *

    (e)(1) In authorizing any abandonment of a railroad line 
under this section, the court shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *

Sec. 1172. Contents of plan

    (a) * * *

           *       *       *       *       *       *       *

    (c)(1) In approving an application under subsection (b) of 
this section, the Board shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *

CHAPTER 12--ADJUSTMENT OF DEBTS OF A FAMILY FARMER WITH REGULAR ANNUAL 
                                INCOME

           *       *       *       *       *       *       *

         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

Sec. 1202. Trustee

    (a) * * *
    (b) The trustee shall--
            (1) * * *

           *       *       *       *       *       *       *

            (4) ensure that the debtor commences making timely 
        payments required by a confirmed plan; [and]
            (5) if the debtor ceases to be a debtor in 
        possession, perform the duties specified in sections 
        704(8), 1106(a)(1), 1106(a)(2), 1106(a)(6), 1106(a)(7), 
        and 1203[.]; and
            (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).
    (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.

           *       *       *       *       *       *       *

Sec. 1208. Conversion or dismissal

    (a) * * *

           *       *       *       *       *       *       *

    (c) On request of a party in interest, and after notice and 
a hearing, the court may dismiss a case under this chapter for 
cause, including--
            (1) * * *

           *       *       *       *       *       *       *

            (8) termination of a confirmed plan by reason of 
        the occurrence of a condition specified in the plan; 
        [or]
            (9) continuing loss to or diminution of the estate 
        and absence of a reasonable likelihood of 
        rehabilitation[.]; and
            (10) failure of the debtor to pay any domestic 
        support obligation that first becomes payable after the 
        date on which the petition is filed.

           *       *       *       *       *       *       *

                        SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *

Sec. 1222. Contents of plan

    (a) The plan shall--
            (1) * * *
            [(2) provide for the full payment, in deferred cash 
        payments, of all claims entitled to priority under 
        section 507 of this title, unless the holder of a 
        particular claim agrees to a different treatment of 
        such claim; and]
            (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;
            (3) if the plan classifies claims and interests, 
        provide the same treatment for each claim or interest 
        within a particular class unless the holder of a 
        particular claim or interest agrees to less favorable 
        treatment[.]; and
            (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.
    (b) Subject to subsections (a) and (c) of this section, the 
plan may--
            (1) * * *

           *       *       *       *       *       *       *

            (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;
            [(11)] (12) include any other appropriate provision 
        not inconsistent with this title.

           *       *       *       *       *       *       *

Sec. 1225. Confirmation of plan

    (a) Except as provided in subsection (b), the court shall 
confirm a plan if--
            (1) * * *

           *       *       *       *       *       *       *

            (5) with respect to each allowed secured claim 
        provided for by the plan--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) the debtor surrenders the property 
                securing such claim to such holder; [and]
            (6) the debtor will be able to make all payments 
        under the plan and to comply with the plan[.]; and
            (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.
    (b)(1) * * *
    (2) For purposes of this subsection, ``disposable income'' 
means income which is received by the debtor and which is not 
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 on 
        which the petition is filed; or

           *       *       *       *       *       *       *

Sec. 1228. Discharge

    (a) As soon as practicable after completion by the debtor 
of all payments under the plan, 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, other than payments to holders 
of allowed claims provided for under section 1222(b)(5) or 
[1222(b)(10)] 1222(b)(9) of this title, unless the court 
approves a written waiver of discharge executed by the debtor 
after the order for relief under this chapter, the court shall 
grant the debtor a discharge of all debts provided for by the 
plan allowed under section 503 of this title or disallowed 
under section 502 of this title, except any debt--
            (1) provided for under section 1222(b)(5) or 
        [1222(b)(10)] 1222(b)(9) of this title; or
            (2) of the kind specified in section 523(a) of this 
        title.

           *       *       *       *       *       *       *

    (c) A discharge granted under subsection (b) of this 
section discharges the debtor from all unsecured debts provided 
for by the plan or disallowed under section 502 of this title, 
except any debt--
            (1) provided for under section 1222(b)(5) or 
        [1222(b)(10)] 1222(b)(9) of this title; or
            (2) of a kind specified in section 523(a) of this 
        title.

           *       *       *       *       *       *       *

Sec. 1231. Special tax provisions

    [(a) For the purpose of any State or local law imposing a 
tax on or measured by income, the taxable period of a debtor 
that is an individual shall terminate on the date of the order 
for relief under this chapter, unless the case was converted 
under section 706 of this title.
    [(b) The trustee shall make a State or local tax return of 
income for the estate of an individual debtor in a case under 
this chapter for each taxable period after the order for relief 
under this chapter during which the case is pending.]
    [(c)] (a) The issuance, transfer, or exchange of a 
security, or the making or delivery of an instrument of 
transfer under a plan confirmed under section 1225 of this 
title, may not be taxed under any law imposing a stamp tax or 
similar tax.
    [(d)] (b) The court may authorize the proponent of a plan 
to request a determination, limited to questions of law, by [a 
State or local governmental unit] any governmental unit charged 
with responsibility for collection or determination of a tax on 
or measured by income, of the tax effects, under section 346 of 
this title and under the law imposing such tax, of the plan. In 
the event of an actual controversy, the court may declare such 
effects after the earlier of--
            (1) the date on which such governmental unit 
        responds to the request under this subsection; or
            (2) 270 days after such request.

  CHAPTER 13--ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME

         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

Sec.
1301.  Stay of action against codebtor.
     * * * * * * *
1308.  Filing of prepetition tax returns.

           *       *       *       *       *       *       *

         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

           *       *       *       *       *       *       *

Sec. 1302. Trustee

    (a) * * *
    (b) The trustee shall--
            (1) * * *

           *       *       *       *       *       *       *

            (4) advise, other than on legal matters, and assist 
        the debtor in performance under the plan; [and]
            (5) ensure that the debtor commences making timely 
        payments under section 1326 of this title[.]; and
            (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).

           *       *       *       *       *       *       *

    (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. 1307. Conversion or dismissal

    (a) * * *

           *       *       *       *       *       *       *

    (c) Except as provided in subsection (e) of this section, 
on request of a party in interest or the United States trustee 
and after notice and a hearing, the court may convert a case 
under this chapter to a case under chapter 7 of this title, or 
may dismiss a case under this chapter, whichever is in the best 
interests of creditors and the estate, for cause, including--
            (1) * * *

           *       *       *       *       *       *       *

            (9) only on request of the United States trustee, 
        failure of the debtor to file, within fifteen days, or 
        such additional time as the court may allow, after the 
        filing of the petition commencing such case, the 
        information required by paragraph (1) of section 521; 
        [or]
            (10) only on request of the United States trustee, 
        failure to timely file the information required by 
        paragraph (2) of section 521[.]; or
            (11) failure of the debtor to pay any domestic 
        support obligation that first becomes payable after the 
        date on which the petition is filed.
    (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.
    [(e)] (f) The court may not convert a case under this 
chapter to a case under chapter 7, 11, or 12 of this title if 
the debtor is a farmer, unless the debtor requests such 
conversion.
    [(f)] (g) Notwithstanding any other provision of this 
section, a case may not be converted to a case under another 
chapter of this title unless the debtor may be a debtor under 
such chapter.

Sec. 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--
            (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.

                         SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *

Sec. 1322. Contents of plan

    (a) The plan shall--
            (1) * * *
            (2) provide for the full payment, in deferred cash 
        payments, of all claims entitled to priority under 
        section 507 of this title, unless the holder of a 
        particular claim agrees to a different treatment of 
        such claim; [and]
            (3) if the plan classifies claims, provide the same 
        treatment for each claim within a particular class[.]; 
        and
            (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.
    (b) Subject to subsections (a) and (c) of this section, the 
plan may--
            (1) * * *

           *       *       *       *       *       *       *

            (9) provide for the vesting of property of the 
        estate, on confirmation of the plan or at a later time, 
        in the debtor or in any other entity; [and]
            (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)] (11) include any other appropriate provision 
        not inconsistent with this title.

           *       *       *       *       *       *       *

    [(d) The plan may not provide for payments over a period 
that is longer than three years, unless the court, for cause, 
approves a longer period, but the court may not approve a 
period that is longer than five years.]
    (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 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.

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

Sec. 1324. Confirmation hearing

    [After] (a) Except as provided in subsection (b) and after 
notice, the court shall hold a hearing on confirmation of the 
plan. A party in interest may object to confirmation of the 
plan.
    (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. 1325. Confirmation of plan

    (a) Except as provided in subsection (b), the court shall 
confirm a plan if--
            (1) * * *

           *       *       *       *       *       *       *

            (5) with respect to each allowed secured claim 
        provided for by the plan--
                    (A) the holder of such claim has accepted 
                the plan;
                    (B)[(i) the plan provides that the holder 
                of such claim retain the lien securing such 
                claim; and]
                    (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;
                    (ii) the value, as of the effective date of 
                the plan, of property to be distributed under 
                the plan on account of such claim is not less 
                than the allowed amount of such claim; [or] and
                            (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
                    (C) the debtor surrenders the property 
                securing such claim to such holder; [and]
            (6) the debtor will be able to make all payments 
        under the plan and to comply with the plan[.];
            (7) the action of the debtor in filing the petition 
        was in good faith;
            (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
            (9) the debtor has filed all applicable Federal, 
        State, and local tax returns as required by section 
        1308.
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.
    (b)(1) If the trustee or the holder of an allowed unsecured 
claim objects to the confirmation of the plan, then the court 
may not approve the plan unless, as of the effective date of 
the plan--
            (A) the value of the property to be distributed 
        under the plan on account of such claim is not less 
        than the amount of such claim; or
            (B) the plan provides that all of the debtor's 
        projected disposable income to be received in the 
        [three-year period] applicable commitment period 
        beginning on the date that the first payment is due 
        under the plan will be applied to make payments to 
        unsecured creditors under the plan.
    [(2) For purposes of this subsection, ``disposable income'' 
means income which is received by the debtor and which is not 
reasonably necessary to be expended--
            [(A) for the maintenance or support of the debtor 
        or a dependent of the debtor, including 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 the gross income of the debtor 
        for the year in which the contributions are made; and
            [(B) if the debtor is engaged in business, for the 
        payment of expenditures necessary for the continuation, 
        preservation, and operation of such business.]
            (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 on which the petition is 
                filed 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
                    (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.
    (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.

           *       *       *       *       *       *       *

Sec. 1326. Payments

    [(a)(1) Unless the court orders otherwise, the debtor shall 
commence making the payments proposed by a plan within 30 days 
after the plan is filed.
    [(2) A payment made under this subsection shall be retained 
by the trustee until confirmation or denial of confirmation of 
a plan. If a plan is confirmed, the trustee shall distribute 
any such payment in accordance with the plan as soon as 
practicable. If a plan is not confirmed, the trustee shall 
return any such payment to the debtor, after deducting any 
unpaid claim allowed under section 503(b) of this title.]
    (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
            (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.
    (b) Before or at the time of each payment to creditors 
under the plan, there shall be paid--
            (1) any unpaid claim of the kind specified in 
        section 507(a)(1) of this title; [and]
            (2) if a standing trustee appointed under section 
        586(b) of title 28 is serving in the case, the 
        percentage fee fixed for such standing trustee under 
        section 586(e)(1)(B) of title 28[.]; and
            (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--
                            (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.

           *       *       *       *       *       *       *

    (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. 1328. Discharge

    (a) As soon as practicable after completion by the debtor 
of all payments under the plan, 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, unless the court approves a 
written waiver of discharge executed by the debtor after the 
order for relief under this chapter, the court shall grant the 
debtor a discharge of all debts provided for by the plan or 
disallowed under section 502 of this title, except any debt--
            [(1) provided for under section 1322(b)(5) of this 
        title;
            [(2) of the kind specified in paragraph (5), (8), 
        or (9) of section 523(a) of this title; or
            [(3) for restitution, or a criminal fine, included 
        in a sentence on the debtor's conviction of a crime.]
            (1) provided for under section 1322(b)(5);
            (2) of the kind specified in section 507(a)(8)(C) 
        or in paragraph (1)(B), (1)(C), (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.

           *       *       *       *       *       *       *

    (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.
    (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.

Sec. 1329. Modification of plan after confirmation

    (a) * * *

           *       *       *       *       *       *       *

    (c) A plan modified under this section may not provide for 
payments over a period that expires after [three years] the 
applicable commitment period under section 1325(b)(1)(B) after 
the time that the first payment under the original confirmed 
plan was due, unless the court, for cause, approves a longer 
period, but the court may not approve a period that expires 
after five years after such time.

           *       *       *       *       *       *       *

           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.
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.

Sec. 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
            (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

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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 this section may act in any way permitted by the 
applicable foreign law.

Sec. 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.

Sec. 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.

Sec. 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

Sec. 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.
    (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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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 treaty of the United States, under the 
conditions and circumstances specified therein.

Sec. 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

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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.

Sec. 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 foreign 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.

Sec. 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.

Sec. 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 thedebtor 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.

Sec. 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 interests 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.

Sec. 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.

Sec. 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

Sec. 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.

Sec. 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.

Sec. 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

Sec. 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.

Sec. 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 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.

Sec. 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.

Sec. 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.

Sec. 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.
                              ----------                              

                      TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *
                            PART I--CRIMES

           *       *       *       *       *       *       *

                         CHAPTER 9--BANKRUPTCY

Sec.
151.  Definition.
     * * * * * * *
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.

           *       *       *       *       *       *       *

Sec. 156. Knowing disregard of bankruptcy law or rule

    (a) Definitions.--In this section--
            (1) the term ``bankruptcy petition preparer'' means 
        a person, other than the debtor's attorney or an 
        employee of such an attorney, who prepares for 
        compensation a document for filing[.]; and
            (2) the term ``document for filing'' means a 
        petition or any other document prepared for filing by a 
        debtor in a United States bankruptcy court or a United 
        States district court in connection with a case under 
        [this title] title 11.

           *       *       *       *       *       *       *

Sec. 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.

           *       *       *       *       *       *       *

                              ----------                              

                      TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *
                     PART I--ORGANIZATION OF COURTS

           *       *       *       *       *       *       *

                      CHAPTER 6--BANKRUPTCY JUDGES

Sec.
151  Designation of bankruptcy courts.
     * * * * * * *
159.  Bankruptcy statistics.

           *       *       *       *       *       *       *

Sec. 152. Appointment of bankruptcy judges

    (a)(1) [The United States court of appeals for the circuit 
shall appoint bankruptcy judges for the judicial districts 
established in paragraph (2) in such numbers as are established 
in such paragraph.] 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. Such appointments shall be 
made after considering the recommendations of the Judicial 
Conference submitted pursuant to subsection (b). Each 
bankruptcy judge shall be appointed for a term of fourteen 
years, subject to the provisions of subsection (e). However, 
upon the expiration of the term, a bankruptcy judge may, with 
the approval of the judicial council of the circuit, continue 
to perform the duties of the office until the earlier of the 
date which is 180 days after the expiration of the term or the 
date of the appointment of a successor. Bankruptcy judges shall 
serve as judicial officers of the United States district court 
established under Article III of the Constitution.
    (2) The bankruptcy judges appointed pursuant to this 
section shall be appointed for the several judicial districts 
as follows:

                           Districts                             Judges

Alabama:
    Northern..................................................         5
    Middle....................................................         2
    Southern..................................................         2
            *       *       *       *       *       *       *
Georgia:
    Northern..................................................         8
    Middle....................................................     [2] 3
    Southern..................................................         2
    [Middle and Southern......................................        1]

                                                                

           *       *       *       *       *       *       *
Sec. 157. Procedures

    (a) * * *
    (b)(1) Bankruptcy judges may hear and determine all cases 
under title 11 and all core proceedings arising under title 11, 
or arising in a case under title 11, referred under subsection 
(a) of this section, and may enter appropriate orders and 
judgments, subject to review under section 158 of this title.
    (2) Core proceedings include, but are not limited to--
            (A) * * *

           *       *       *       *       *       *       *

            (N) orders approving the sale of property other 
        than property resulting from claims brought by the 
        estate against persons who have not filed claims 
        against the estate; [and]
            (O) other proceedings affecting the liquidation of 
        the assets of the estate or the adjustment of the 
        debtor-creditor or the equity security holder 
        relationship, except personal injury tort or wrongful 
        death claims[.]; and
            (P) recognition of foreign proceedings and other 
        matters under chapter 15 of title 11.

           *       *       *       *       *       *       *

Sec. 158. Appeals

    (a) * * *

           *       *       *       *       *       *       *

    [(d) The courts of appeals shall have jurisdiction of 
appeals from all final decisions, judgments, orders, and 
decrees entered under subsections (a) and (b) of this section.]
    (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).

Sec. 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 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.

           *       *       *       *       *       *       *

                     PART II--DEPARTMENT OF JUSTICE

           *       *       *       *       *       *       *

                   CHAPTER 39--UNITED STATES TRUSTEES

Sec.
581.    United States trustees.
     * * * * * * *
589b.  Bankruptcy data.

           *       *       *       *       *       *       *

Sec. 586. Duties; supervision by Attorney General

    (a) Each United States trustee, within the region for which 
such United States trustee is appointed, shall--
            (1) * * *

           *       *       *       *       *       *       *

            (3) supervise the administration of cases and 
        trustees in cases under chapter 7, 11, 12, [or 13] 13, 
        or 15, of title 11 by, whenever the United States 
        trustee considers it to be appropriate--
                    (A) * * *

           *       *       *       *       *       *       *

                    (G) monitoring the progress of cases under 
                title 11 and taking such actions as the United 
                States trustee deems to be appropriate to 
                prevent undue delay in such progress; [and]
                    (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
                    [(H)] (I) monitoring applications filed 
                under section 327 of title 11 and, whenever the 
                United States trustee deems it to be 
                appropriate, filing with the court comments 
                with respect to the approval of such 
                applications;

           *       *       *       *       *       *       *

            (5) perform the duties prescribed for the United 
        States trustee under title 11 and this title, and such 
        duties consistent with title 11 and this title as the 
        Attorney General may prescribe; [and]
            [(6) make such reports as the Attorney General 
        directs.]
            (6) make such reports as the Attorney General 
        directs, including the results of audits performed 
        under section 603(a) of the Bankruptcy Abuse Prevention 
        and Consumer Protection Act of 2001; and
            (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.

           *       *       *       *       *       *       *

    (d)(1) The Attorney General shall prescribe by rule 
qualifications for membership on the panels established by 
United States trustees under paragraph (a)(1) of this section, 
and qualifications for appointment under subsection (b) of this 
section to serve as standing trustee in cases under chapter 12 
or 13 of title 11. The Attorney General may not require that an 
individual be an attorney in order to qualify for appointment 
under subsection (b) of this section to serve as standing 
trustee in cases under chapter 12 or 13 of title 11.
    (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.
    (e)(1) * * *

           *       *       *       *       *       *       *

    (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 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.
    (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 
Abuse Prevention and Consumer Protection Act of 2001.
    (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.

           *       *       *       *       *       *       *

Sec. 589a. United States Trustee System Fund

    (a) * * *
    (b) For the purpose of recovering the cost of services of 
the United States Trustee System, there shall be deposited as 
offsetting collections to the appropriation ``United States 
Trustee System Fund'', to remain available until expended, the 
following--
            [(1) 27.42 percent of the fees collected under 
        section 1930(a)(1) of this title;]
            (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) [one-half] three-fourths of the fees collected 
        under section 1930(a)(3) of this title;
            (3) one-half of the fees collected under section 
        1930(a)(4) of this title;
            (4) [one-half] 100 percent of the fees collected 
        under section 1930(a)(5) of this title;

           *       *       *       *       *       *       *

Sec. 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--
            (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.

           *       *       *       *       *       *       *

                 PART III--COURT OFFICERS AND EMPLOYEES

           *       *       *       *       *       *       *

    CHAPTER 57--GENERAL PROVISIONS APPLICABLE TO COURT OFFICERS AND 
                               EMPLOYEES

           *       *       *       *       *       *       *

Sec. 960. Tax liability

    (a) Any officers and agents conducting any business under 
authority of a United States court shall be subject to all 
Federal, State and local taxes applicable to such business to 
the same extent as if it were conducted by an individual or 
corporation.
    (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.

           *       *       *       *       *       *       *

                    PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *

               CHAPTER 85--DISTRICT COURTS; JURISDICTION

           *       *       *       *       *       *       *

Sec. 1334. Bankruptcy cases and proceedings

    (a) * * *
    (b) [Notwithstanding] Except as provided in subsection 
(e)(2), and notwithstanding any Act of Congress that confers 
exclusive jurisdiction on a court or courts other than the 
district courts, the district courts shall have original but 
not exclusive jurisdiction of all civil proceedings arising 
under title 11, or arising in or related to cases under title 
11.
    (c)(1) [Nothing in] Except with respect to a case under 
chapter 15 of title 11, nothing in this section prevents a 
district court in the interest of justice, or in the interest 
of comity with State courts or respect for State law, from 
abstaining from hearing a particular proceeding arising under 
title 11 or arising in or related to a case under title 11.

           *       *       *       *       *       *       *

    (d) Any decision to abstain or not to abstain [made under 
this subsection] made under subsection (c) (other than a 
decision not to abstain in a proceeding described in subsection 
(c)(2)) is not reviewable by appeal or otherwise by the court 
of appeals under [section 158(d)] subsection (e) or (f) of 
section 158, 1291, or 1292 of this title or by the Supreme 
Court of the United States under section 1254 of this title. 
[This subsection] Subsection (c) and this subsection shall not 
be construed to limit the applicability of the stay provided 
for by section 362 of title 11, United States Code, as such 
section applies to an action affecting the property of the 
estate in bankruptcy.
    [(e) The district court in which a case under title 11 is 
commenced or is pending shall have exclusive jurisdiction of 
all of the property, wherever located, of the debtor as of the 
commencement of such case, and of property of the estate.]
    (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.

           *       *       *       *       *       *       *

                  CHAPTER 87--DISTRICT COURTS; VENUE

           *       *       *       *       *       *       *

Sec. 1409. Venue of proceedings arising under title 11 or arising in or 
                    related to cases under title 11

    (a) * * *
    (b) Except as provided in subsection (d) of this section, a 
trustee in a case under title 11 may commence a proceeding 
arising in or related to such case to recover a money judgment 
of or property worth less than $1,000 or a consumer debt of 
less than $5,000, or a nonconsumer debt against a noninsider of 
less than $10,000, only in the district court for the district 
in which the defendant resides.

[Sec. 1410. Venue of cases ancillary to foreign proceedings

    [(a) A case under section 304 of title 11 to enjoin the 
commencement or continuation of an action or proceeding in a 
State or Federal court, or the enforcement of a judgment, may 
be commenced only in the district court for the district where 
the State or Federal court sits in which is pending the action 
or proceeding against which the injunction is sought.
    [(b) A case under section 304 of title 11 to enjoin the 
enforcement of a lien against a property, or to require the 
turnover of property of an estate, may be commenced only in the 
district court for the district in which such property is 
found.
    [(c) A case under section 304 of title 11, other than a 
case specified in subsection (a) or (b) of this section, may be 
commenced only in the district court for the district in which 
is located the principal place of business in the United 
States, or the principal assets in the United States, of the 
estate that is the subject of such case.]

Sec. 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
            (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.

           *       *       *       *       *       *       *

CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

           *       *       *       *       *       *       *

Sec. 1452. Removal of claims related to bankruptcy cases

    (a) * * *
    (b) The court to which such claim or cause of action is 
removed may remand such claim or cause of action on any 
equitable ground. An order entered under this subsection 
remanding a claim or cause of action, or a decision to not 
remand, is not reviewable by appeal or otherwise by the court 
of appeals under [section 158(d)] subsection (e) or (f) of 
section 158, 1291, or 1292 of this title or by the Supreme 
Court of the United States under section 1254 of this title.

           *       *       *       *       *       *       *

                      CHAPTER 123--FEES AND COSTS

           *       *       *       *       *       *       *

Sec. 1930. Bankruptcy fees

    (a) [Notwithstanding section 1915 of this title, the] The 
parties commencing a case under title 11 shall pay to the clerk 
of the district court or the clerk of the bankruptcy court, if 
one has been certified pursuant to section 156(b) of this 
title, the following filing fees:
            [(1) For a case commenced under chapter 7 or 13 of 
        title 11, $155.]
            (1) For a case commenced--
                    (A) under chapter 7 of title 11, $160; or
                    (B) under chapter 13 of title 11, $150.

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

                           PART V--PROCEDURE

           *       *       *       *       *       *       *

                     CHAPTER 131 - RULES OF COURTS

           *       *       *       *       *       *       *

Sec. 2075. Bankruptcy rules

    The Supreme Court shall have the power to prescribe by 
general rules, the forms of process, writs, pleadings, and 
motions, and the practice and procedure in cases under title 
11. Such rules shall not abridge, enlarge, or modify any 
substantive right. The Supreme Court shall transmit to Congress 
not later than May 1 of the year in which a rule prescribed 
under this section is to become effective a copy of the 
proposed rule. The rule shall take effect no earlier than 
December 1 of the year in which it is transmitted to Congress 
unless otherwise provided by law. 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.
                              ----------                              

         SECTION 406 OF THE JUDICIARY APPROPRIATIONS ACT, 1990

  Sec. 406. (a)  * * *
  (b) All fees as shall be hereafter collected for any service 
not of a kind described in any of the items enumerated as items 
1 through 7 and as items 9 through 18, as in effect on November 
21, 1989, of the bankruptcy miscellaneous fee schedule 
prescribed by the Judicial Conference of the United States 
[pursuant to 28 U.S.C. section 1930(b) and 33.87 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] 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 and shall remain available to the 
Judiciary until expended to reimburse any appropriation for the 
amount paid out of such appropriation for expenses of the 
Courts of Appeals, District Courts, and other Judicial Services 
and the Administrative Office of the United States Courts. The 
Judicial Conference shall report to the Committees on 
Appropriations of the House of Representatives and the Senate 
on a quarterly basis beginning on the first day of each fiscal 
year regarding the sums deposited in said fund.

           *       *       *       *       *       *       *

                              ----------                              

                     FEDERAL DEPOSIT INSURANCE ACT

           *       *       *       *       *       *       *
    Sec. 11. (a) * * *

           *       *       *       *       *       *       *

    (e) Provisions Relating to Contracts Entered Into Before 
Appointment of Conservator or Receiver.--
            (1) * * *

           *       *       *       *       *       *       *

            (8) Certain qualified financial contracts.--
                    (A) Rights of parties to contracts.--
                Subject to [paragraph (10)] paragraphs (9) and 
                (10) of this subsection and notwithstanding any 
                other provision of this Act (other than 
                subsection (d)(9) of this section and section 
                13(e)), any other Federal law, or the law of 
                any State, no person shall be stayed or 
                prohibited from exercising--
                            (i) any right [to cause the 
                        termination or liquidation] such person 
                        has to cause the termination, 
                        liquidation, or acceleration of any 
                        qualified financial contract with an 
                        insured depository institution which 
                        arises upon the appointment of the 
                        Corporation as receiver for such 
                        institution at any time after such 
                        appointment;
                            [(ii) any right under any security 
                        arrangement relating to any contract or 
                        agreement described in clause (i); or]
                            (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);

           *       *       *       *       *       *       *

                  (C) Certain transfers not avoidable.--
                            (i) In general.--Notwithstanding 
                        paragraph (11), 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, 
                        the Corporation, whether acting as such 
                        or as conservator or receiver of an 
                        insured depository institution, may not 
                        avoid any transfer of money or other 
                        property in connection with any 
                        qualified financial contract with an 
                        insured depository institution.

           *       *       *       *       *       *       *

                    (D) Certain contracts and agreements 
                defined.--For purposes of this subsection--
                            (i) Qualified financial contract.--
                        The term ``qualified financial 
                        contract'' means any securities 
                        contract, commodity contract, forward 
                        contract, repurchase agreement, swap 
                        agreement, and any similar agreement 
                        that the Corporation determines by 
                        regulation, resolution, or order to be 
                        a qualified financial contract for 
                        purposes of this paragraph.
                            [(ii) Securities contract.--The 
                        term ``securities contract''--
                                    [(I) has the meaning given 
                                to such term in section 741 of 
                                title 11, United States Code, 
                                except that the term 
                                ``security'' (as used in such 
                                section) shall be deemed to 
                                include any mortgage loan, any 
                                mortgage-related security (as 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), and any interest in any 
                                mortgage loan or mortgage-
                                related security; and
                                    [(II) does not include any 
                                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) Commodity contract.--The 
                        term ``commodity contract'' has the 
                        meaning given to such term in section 
                        761 of title 11, United States Code.
                            [(iv) Forward contract.--The term 
                        ``forward contract'' has the meaning 
                        given to such term in section 101 of 
                        title 11, United States Code.
                            [(v) Repurchase agreement.--The 
                        term ``repurchase agreement''--
                                    [(I) has the meaning given 
                                to such term in section 101 of 
                                title 11, the United States 
                                Code, except that the items (as 
                                described in such section) 
                                which may be subject to any 
                                such agreement shall be deemed 
                                to include mortgage-related 
                                securities (as such term is 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), any mortgage loan, and 
                                any interest in any mortgage 
                                loan; and
                                    [(II) does not include any 
                                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.
                            [(vi) Swap agreement.--The term 
                        ``swap agreement''--
                                    [(I) means any agreement, 
                                including the terms and 
                                conditions incorporated by 
                                reference in any such 
                                agreement, which is a rate swap 
                                agreement, basis swap, 
                                commodity swap, forward rate 
                                agreement, interest rate 
                                future, interest rate option 
                                purchased, forward foreign 
                                exchange agreement, rate cap 
                                agreement, rate floor 
                                agreement, rate collar 
                                agreement, currency swap 
                                agreement, cross-currency rate 
                                swap agreement, currency 
                                future, or currency option 
                                purchased or any other similar 
                                agreement, and
                                    [(II) includes any 
                                combination of such agreements 
                                and any option to enter into 
                                any such agreement.
                            [(vii) Treatment of master 
                        agreement as 1 swap agreement.--Any 
                        master agreement for any agreements 
                        described in clause (vi)(I) together 
                        with all supplements to such master 
                        agreement shall be treated as 1 swap 
                        agreement.
                            [(viii) Transfer.--The term 
                        ``transfer'' has the meaning given to 
                        such term in section 101 of title 11, 
                        United States Code.]
                            (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, 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.
                            (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.
                            (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 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).
                            (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;
                                    (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).
                            (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;
                                    (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.
                            (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.
                            (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.
                    (E) Certain protections in event of 
                appointment of conservator.--Notwithstanding 
                any other provision of this Act ([other than 
                paragraph (12) of this subsection, subsection 
                (d)(9)] other than subsections (d)(9) and 
                (e)(10) of this section, and section 13(e) of 
                this Act), any other Federal law, or the law of 
                any State, no person shall be stayed or 
                prohibited from exercising--
                            (i) * * *
                            [(ii) any right under any security 
                        arrangement relating to such qualified 
                        financial contracts; or]
                            (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);

           *       *       *       *       *       *       *

                    (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 
                        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.
                    (H) Recordkeeping requirements.--The 
                Corporation, in consultation with the 
                appropriate Federal banking agencies, may 
                prescribe regulations requiring more detailed 
                recordkeeping with respect to qualified 
                financial contracts (including market 
                valuations) by insured depository institutions.
            [(9) Transfer of qualified financial contracts.--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--
                    [(A) transfer to 1 depository institution 
                (other than a depository institution in 
                default)--
                            [(i) all qualified financial 
                        contracts between--
                                    [(I) any person or any 
                                affiliate of such person; and
                                    [(II) 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 any 
                        claim described in clause (ii) or (iii) 
                        under any such contract; or
                    [(B) transfer none of the financial 
                contracts, claims, or property referred to in 
                subparagraph (A) (with respect to such person 
                and any affiliate of such person).]
            (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 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.
            (10) Notification of transfer.--
                    (A) In general.--If--
                            (i) the conservator or receiver for 
                        an insured depository institution in 
                        default makes any transfer of the 
                        assets and liabilities of such 
                        institution; and
                            (ii) the transfer includes any 
                        qualified financial contract,
                [the conservator or receiver shall use such 
                conservator's or receiver's best efforts to 
                notify any person who is a party to any such 
                contract of such transfer by 12:00, noon (local 
                time) on the business day following such 
                transfer.] 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.
                    (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
                                    (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.
                    [(B)] (D) Business day defined.--For 
                purposes of this paragraph, the term ``business 
                day'' means any day other than any Saturday, 
                Sunday, or any day on which either the New York 
                Stock Exchange or the Federal Reserve Bank of 
                New York is closed.
            (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
                            (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).
            [(11)] (12) Certain security interests not 
        avoidable.--No provision of this subsection shall be 
        construed as permitting the avoidance of any legally 
        enforceable or perfected security interest in any of 
        the assets of any depository institution except where 
        such an interest is taken in contemplation of the 
        institution's insolvency or with the intent to hinder, 
        delay, or defraud the institution or the creditors of 
        such institution.
            [(12)] (13) Authority to enforce contracts.--
                    (A) In general.--The conservator or 
                receiver may enforce any contract, other than a 
                director's or officer's liability insurance 
                contract or a depository institution bond, 
                entered into by the depository institution 
                notwithstanding any provision of the contract 
                providing for termination, default, 
                acceleration, or exercise of rights upon, or 
                solely by reason of, insolvency or the 
                appointment of or the exercise of rights or 
                powers by a conservator or receiver.

           *       *       *       *       *       *       *

            [(13)] (14) Exception for federal reserve and 
        federal home loan banks.--No provision of this 
        subsection shall apply with respect to--
                    (A)  * * *

           *       *       *       *       *       *       *

            [(14)] (15) Selling credit card accounts 
        receivable.--
                    (A) * * *

           *       *       *       *       *       *       *

            [(15)] (16) Certain credit card customer lists 
        protected.--
                    (A) * * *

           *       *       *       *       *       *       *

    Sec. 13. (a) * * *

           *       *       *       *       *       *       *

    (e) Agreements Against Interests of Corporation.--
            (1) * * *
            [(2) Public deposits.--An agreement to provide for 
        the lawful collateralization of deposits of a Federal, 
        State, or local governmental entity or of any depositor 
        referred to in section 11(a)(2) shall not be deemed to 
        be invalid pursuant to paragraph (1)(B) solely because 
        such agreement was not executed contemporaneously with 
        the acquisition of the collateral or with any changes 
        in the collateral made in accordance with such 
        agreement.]
            (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.

           *       *       *       *       *       *       *

                              ----------                              

     FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991

           *       *       *       *       *       *       *

                   TITLE IV--MISCELLANEOUS PROVISIONS

               Subtitle A--Payment System Risk Reduction

        CHAPTER 1--BILATERAL AND CLEARING ORGANIZATION NETTING

           *       *       *       *       *       *       *

SEC. 402. DEFINITIONS.

    For purposes of this chapter--
            (1)  * * *

           *       *       *       *       *       *       *

            (2) Clearing organization.--The term ``clearing 
        organization'' means a clearinghouse, clearing 
        association, clearing corporation, or similar 
        organization--
                    (A) that provides clearing, netting, or 
                settlement services for its members and--
                            (i)  * * *
                            (ii) which is registered as a 
                        clearing agency under the Securities 
                        Exchange Act of 1934, or is exempt from 
                        such registration by order of the 
                        Securities and Exchange Commission; or
                    (B) that is registered as a derivatives 
                clearing organization under section 5b of the 
                Commodity Exchange Act or that has been granted 
                an exemption under section 4(c)(1) of the 
                Commodity Exchange Act.

           *       *       *       *       *       *       *

            (6) Depository institution.--The term ``depository 
        institution'' means--
                    (A) a depository institution as defined in 
                section 19(b)(1)(A) of the Federal Reserve Act 
                (other than clause (vii));
                    (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;
                    [(B) a branch or agency as defined in 
                section 1(b) of the International Banking Act 
                of 1978;]
                    (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;
                    [(C)] (D) a corporation chartered under 
                section 25(a) of the Federal Reserve Act; or
                    [(D)] (E) a corporation having an agreement 
                or undertaking with the Board of Governors of 
                the Federal Reserve System under section 25 of 
                the Federal Reserve Act.

           *       *       *       *       *       *       *

            (11) Member.--The term ``member'' means a member of 
        or participant in a clearing organization, and includes 
        the clearing organization and any other clearing 
        organization with which such clearing organization has 
        a netting contract.

           *       *       *       *       *       *       *

            (14) Netting contract.--
                    (A) In general.--The term ``netting 
                contract''--
                            [(i) means a contract or agreement 
                        between 2 or more financial 
                        institutions or members, that--
                                    [(I) is governed by the 
                                laws of the United States, any 
                                State, or any political 
                                subdivision of any State, and
                                    [(II) provides for netting 
                                present or future payment 
                                obligations or payment 
                                entitlements (including 
                                liquidation or close-out values 
                                relating to the obligations or 
                                entitlements) among the parties 
                                to the agreement; and]
                            (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
                            (ii) includes the rules of a 
                        clearing organization.
                    (B) Invalid contracts not included.--The 
                term ``netting contract'' does not include any 
                contract or agreement that is invalid under or 
                precluded by Federal law.
            (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.

SEC. 403. BILATERAL NETTING.

    [(a) General Rule.--Notwithstanding any other provision of 
law, 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.]
    (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).

           *       *       *       *       *       *       *

    (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).

SEC. 404. CLEARING ORGANIZATION NETTING.

    [(a) General Netting Rule.--Notwithstanding any other 
provision of law, the covered contractual payment obligations 
and 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.]
    (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).

           *       *       *       *       *       *       *

    (h) 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 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).

           *       *       *       *       *       *       *

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 meanings as in section 1(b) of the International 
Banking Act of 1978.

SEC. [407.] 407A. NATIONAL EMERGENCIES.

    The provisions of this subtitle may not be construed to 
limit the authority of the President under the Trading With the 
Enemy Act (50 U.S.C. App. 1 et seq.) or the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).

           *       *       *       *       *       *       *

                              ----------                              

      SECTION 5 OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970

SEC. 5. PROTECTION OF CUSTOMERS.

    (a) * * *

           *       *       *       *       *       *       *

    (b) Court Action.--
            (1) * * *
            (2) Jurisdiction and powers of court.--
                    (A) * * *

           *       *       *       *       *       *       *

                    (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.

           *       *       *       *       *       *       *

                              ----------                              

                          TRUTH IN LENDING ACT

           *       *       *       *       *       *       *

                    CHAPTER 2--CREDIT TRANSACTIONS

           *       *       *       *       *       *       *

Sec. 127. Open end consumer credit plans

    (a)  * * *

           *       *       *       *       *       *       *

    (b) The creditor of any account under an open end consumer 
credit plan shall transmit to the obligor, for each billing 
cycle at the end of which there is an outstanding balance in 
that account or with respect to which a finance charge is 
imposed, a statement setting forth each of the following items 
to the extent applicable:
            (1)  * * *

           *       *       *       *       *       *       *

            (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: ____________.'' (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: ____________.'' (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 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: ____________.'' 
        (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 Abuse Prevention and 
        Consumer Protection Act of 2001, 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 
        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 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: ________.'' 
        (the blank space to be filled in by the creditor).
            (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.
    (c) Disclosure in Credit and Charge Card Applications and 
Solicitations.--
            (1)  * * *

           *       *       *       *       *       *       *

            (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 122(c)), the time period in 
                        which the introductory period 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 supersede subsection (a) of 
                section 122, or any disclosure required by 
                paragraph (1) or any other provision of this 
                subsection.
            (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.

           *       *       *       *       *       *       *

    (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.

SEC. 127A.  DISCLOSURE REQUIREMENTS FOR OPEN END CONSUMER CREDIT PLANS 
                    SECURED BY THE CONSUMER'S PRINCIPAL DWELLING.

    (a) Application Disclosures.--In the case of any open end 
consumer credit plan which provides for any extension of credit 
which is secured by the consumer's principal dwelling, the 
creditor shall make the following disclosures in accordance 
with subsection (b):
            (1)  * * *

           *       *       *       *       *       *       *

            (13) Statement regarding [consultation of tax 
        advisor] tax deductibility.--[A statement that the] A 
        statement that--
                    (A) the consumer should consult a tax 
                advisor regarding the deductibility of interest 
                and charges under the plan[.]; 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.

           *       *       *       *       *       *       *

Sec. 128. Consumer credit not under open end credit plans

    (a) For each consumer credit transaction other than under 
an open end credit plan, the creditor shall disclose each of 
the following items, to the extent applicable:
            (1)  * * *

           *       *       *       *       *       *       *

            (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.
    (b)(1)  * * *

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

                     CHAPTER 3--CREDIT ADVERTISING

           *       *       *       *       *       *       *

Sec. 144. Advertising of credit other than open end plans

    (a)  * * *

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

SEC. 147. ADVERTISING OF OPEN END CONSUMER CREDIT PLANS SECURED BY THE 
                    CONSUMER'S PRINCIPAL DWELLING.

    (a)  * * *

           *       *       *       *       *       *       *

    (b) Tax Deductibility.--[If any]
            (1) In general.--If any advertisement described in 
        subsection (a) contains a statement that any interest 
        expense incurred with respect to the plan is or may be 
        tax deductible, the advertisement shall not be 
        misleading with respect to such deductibility.
            (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.

           *       *       *       *       *       *       *

                           Markup Transcript

                            BUSINESS MEETING

                      WEDNESDAY, FEBRUARY 14, 2001

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner (chairman of the committee) presiding.
    Chairman Sensenbrenner. The committee will be in order. The 
Chair notes the presence of a working quorum and, pursuant to 
notice, I now call up the bill H.R. 333, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001, for purposes of 
markup and move its favorable recommendation to the House. 
Without objection, the bill will be considered as read and open 
for amendment at any point. Without objection, the Chair is 
authorized to declare recesses of the committee during 
consideration of the noticed bills. Without objection, all 
members' statements will be included in the appropriate point 
in the record.
    The Chair moves to strike the last word, and recognizes 
himself for 5 minutes.
    Today, we have scheduled for markup two bills, both of 
which have long histories before this committee. H.R. 333, the 
Bankruptcy Abuse Prevention and Consumer Protection Act of 2001 
represents the culmination of more than 3 years of intense and 
incisive consideration by this committee. Over these 3 years, 
the bill has benefitted immensely from the legislative process.
    During the last Congress alone, this committee entertained 
59 amendments over the course of a 5-day markup of H.R. 833, 
which is this bill's predecessor, which included 29 recorded 
votes. Of these amendments, 27 were agreed to. On the floor, 11 
more amendments were considered. Likewise, this bill's 
predecessors on the Senate side also had benefit of an 
extensive and mandatory process. Beginning in November 1999, 
through final passage the following February, more than 250 
amendments were proposed.
    We also need to keep in mind that this bill is the product 
of extensive negotiation and compromise. Shortly after H.R. 
833, as amended, was passed by the Senate last year, members 
and their staffs from both bodies spent nearly 7 months engaged 
in what was initially an informal conference to reconcile 
differences between the bills. The product of these extensive 
negotiations was the conference report that accompanied H.R. 
2415. This legislation was so uncontroversial that it passed 
the House by a voice vote last October. In the Senate, the 
legislation was passed by a veto-proof vote of 70 to 28. But 
for President Clinton's pocket veto in the waning days of the 
last session, the conference report, which is virtually 
identical to H.R. 333, would now be law.
    While I acknowledge that H.R. 333 is not beyond further 
perfection, I am concerned that any further substantive 
amendments to this bill will upset the delicate balance and 
various compromises that have been struck. We must be mindful 
of the fact that the House has registered its unqualified 
support for this bill's progenitors on not just one occasion, 
but four separate times.
    Once we complete the markup of H.R. 333, we will then 
consider H.R. 256 for markup. H.R. 256 reenacts and extends 
chapter 12 of the Bankruptcy Code, a specialized form of 
bankruptcy relief for family farmers. Chapter 12 allows 
eligible family farmers, under the supervision of a bankruptcy 
trustee, to reorganize their debts pursuant to a repayment 
plan. The special attributes of this form of bankruptcy relief 
make it better suited to meet the particularized needs of 
family farmers in financial distress than other forms of 
bankruptcy relief.
    This committee has previously considered and supported the 
extension of chapter 12. In addition, the House, on two 
occasions in the last Congress, passed legislation which would 
have extended chapter 12. Unfortunately, however, the Senate 
did not act on these bills, and chapter 12 expired on July 1, 
2000, as a result. H.R. 256 simply reenacts chapter 12 of the 
Bankruptcy Code, effective retroactively to July 1, 2000. In 
addition, the bill extends this temporary form of bankruptcy 
relief for 11 months, until June 1, 2001. It is important to 
note, however, that H.R. 333 would make chapter 12 a permanent 
form of bankruptcy relief under the Code.
    I now turn to my colleague, the gentleman from Michigan, 
Mr. Conyers, the distinguished ranking member of this 
committee, and ask him if he has any opening remarks. The 
gentleman is recognized for 5 minutes.
    Mr. Conyers. Thank you very much, Mr. Chairman.
    In the spirit of cooperation that has informed the 
Judiciary Committee 107th Congress, I would like to point out 
that both you and I arrived at the same time today here for the 
meeting.
    Chairman Sensenbrenner. And we couldn't be more cooperative 
than that. [Laughter.]
    Mr. Conyers. No, the timing, plus, I have two occasions 
which I got here before you still to my credit. So this intense 
cooperation I hope isn't getting anybody down so soon. I am 
delighted to come to the hearing. We're searching for more of 
our members, some of whom I know have asked to be excused. Mr. 
Delahunt is in another committee.
    But the fact still remains there are a few economic issues 
facing the Congress that are more far-reaching than bankruptcy 
reform. As you all know, more of our citizens come and your 
constituents come into the bankruptcy courts more frequently 
than all of the other Federal courts combined. And at a time of 
record-high consumer debt, our economy slowing, there is no 
doubt that any changes that we make in the Bankruptcy Code will 
have a significant impact on our financial well-being.
    Now, let me say, first and foremost, that I want to 
acknowledge that the bill before us has improved substantially 
over the course of the last two Congresses. I credit that to 
Mr. Gekas, the subcommittee Chair. We modified the means test. 
We've added safe-harbor protections; the bill includes an 
informa pauperis provision, and I commend the majority on this 
committee and the subcommittee chairman for these positive 
improvements. The bill, however, is still flawed, dangerously 
flawed, and I realize that, to me, the best course that those 
of us oppose it should make several focused proposed 
corrections and hope that we can gain a support of a majority 
number of people on this committee.
    The first amendment that I will propose, and hope will be 
favorably considered, deals with the alimony and child support 
because, although we are seeking to enhance the status of 
alimony and child support payments, the problem is that in 
bankruptcy it is impossible to do this if we also enhance the 
status of credit card debt and place it in direct competition 
with alimony and child support payments. And so, members of the 
committee, this is what I seek to correct, precisely. It is 
very important, and I have a proposal that I will shortly offer 
to do that.
    Now, the second thing is dealing with small business 
bankruptcy. We need to make sure that the new requirements are 
rational and that if a deadline cannot be met, for example, 
because of a regulatory process that must take place before the 
plan can be developed, we should give the court discretion to 
waive the deadline. Now, this is not a big, huge item, this is 
a small adjustment that we are asking that be made that will 
have a very large beneficial result.
    And, finally, a couple of technical corrections that in 
calculating the debtor's income in chapter 13, we use actual 
income, not a figure based on a job he no longer has, and that 
lawyers who are bankruptcy petition preparers need not file a 
document stating they are not lawyers.
    And so there you have it. These three proposals, to the 
extent that enough of the members in the committee could reach 
some joinder with me on, I think we may be able to have an even 
better bill than the one that is before us now.
    Thank you.
    Chairman Sensenbrenner. I thank the gentleman from 
Michigan.
    Let me state that in terms of how we are going to proceed 
today, the Chair has noticed a markup for this bill for 
tomorrow morning at 10 o'clock. I think that, given the fact 
that there are no votes tomorrow on the floor of the House, 
members would kind of like to get out of town and go back to 
their districts. However, I would like to be able to wrap this 
up either today or tomorrow. So, with a little bit of 
bipartisan cooperation, perhaps we can get this done today, 
which would eliminate the necessity of having to come back 
tomorrow.
    It is my intention to keep the committee in session until 
about 5:30. Today is Valentine's Day, and I certainly do not 
want to have the Valentines of all of those in the room get 
very angry at this committee during the first markup to keep 
you away from whatever obligations you have arranged for 
yourselves later on tonight. So, if we can work until 5:30, 
with an hour off for lunch, about the time that the votes are 
called on the floor, I think that we will either be able to get 
done or to get almost done and have the ball at least on the 
10-yard line, and I would like to ask the members to be 
cooperative in that respect.
    Without objection, other members' opening statements will 
be placed in the record at this point, and are there any 
amendments?
    Mr. Watt. Mr. Chairman, may I make an inquiry?
    Chairman Sensenbrenner. The gentleman from North Carolina.
    Mr. Watt. Have you all reached some agreement that 
prohibits opening statements by the rest of the members of the 
committee or what----
    Chairman Sensenbrenner. No. No, we have not, Mr. Watt. But, 
you know, let me say that, you know, I have never seen any kind 
of press comment on opening statements by members of the 
committee----
    Mr. Watt. Well, Mr. Chairman, I----
    Chairman Sensenbrenner. I am not going----
    Mr. Watt. With all respect to the chairman, this isn't 
about press. I don't even know that the press is here. This is 
a markup of a bill.
    Chairman Sensenbrenner. If the gentleman wants to move to 
strike the last word, there is no way I can prevent you from 
doing that. But, you know, let me say that if this markup drags 
on, we're going to be here tomorrow, and that's an imposition 
on the other members.
    The gentleman is recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman. I appreciate the 
chairman's indulgence and the committee's indulgence. I will 
just say at the outset, nothing that I do or say today will be 
done or said for any dilatory purpose, but this is a 
legislative body, this is the Judiciary Committee, and this is 
the place that a bill receives consideration in the most detail 
if it is going to be considered at all. I'm not sure I know 
what the implication to read into the chairman's statement 
about press coverage of opening statements. I don't think I 
have given him any reason to think that every time a camera is 
around I've got to be in front of it, but I do think I have 
given the chairman, and other people on this committee, reason 
to understand that if we are going to engage in a serious 
markup of a serious bill that has serious implications for the 
American people, neither Valentine's Day, nor Christmas, nor 
Hanukkah, nor any other excuses, even concerns about the 
necessity of having to return to Washington tomorrow need deter 
that.
    Now, having said that, let me be clear in what I will try 
to do, as I was with Mr. Gekas last year. I start, unlike some 
people who I have heard talk about this issue, with the 
agreement with a number of my colleagues, that the bankruptcy 
law needs to be revised and reformed in many ways. I know that 
there are a number of people who are gaming the bankruptcy 
system, and I don't like it any more than anybody else, 
regardless of their purported philosophical stripes on this 
committee.
    What I am seeking to do is to offer amendments, and I will 
seek to offer amendments. I have a total of 14, and I am going 
to put the chairman on notice about that at this very moment. I 
may or may not offer all of them, but I have 14 of them in my 
file, and every single one of them is designed, from my 
perspective, to make this bill one that I have the capacity to 
vote for. That's what I'm trying to get to. I support 
bankruptcy reform. The bill that has come out of this 
conference, I do not support. And if the bill is not revised, I 
cannot support it, and therefore I cannot follow through on 
what I have said to my colleagues on the committee or my 
constituents at home about what I feel about bankruptcy reform, 
which is that the Bankruptcy Code does need some reform and 
revisions, but I think this bill does not do it, in a number of 
respects, in the best way, and I think this bill, in a number 
of respects, is counterproductive to what it purports to do and 
will make more bankruptcy litigation, more paperwork, more red 
tape, and discourage a number of people from going into chapter 
13 bankruptcies, rather than encouraging more people to get out 
of chapter 7 and into--into 13, as the bill purports to do.
    So, if the chairman has any illusions about, you know, this 
whole--this, for me, this is not about being bipartisan or 
nonbipartisan. I don't know what bills anybody has struck about 
time to consider this bill, but I came here to work, and I will 
be here to work tomorrow, if we are here to work, if it is 
necessary to try to amend the bill in a way that will get it to 
the point where----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Watt [continuing]. At the end of the day, I can 
support----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Watt [continuing]. Or vote against the bill.
    Chairman Sensenbrenner. Are there any amendments?
    Mr. Conyers. I have one.
    Chairman Sensenbrenner. The gentleman from Michigan.
    The clerk will report the amendment.
    Mr. Conyers. The Alimony and Child Support Amendment.
    The Clerk. Amendment to H.R. 333 offered by Mr. Conyers and 
Ms. Waters, page 144, line 14, strike the period----
    Mr. Conyers. I ask unanimous consent the amendment be 
considered as read.
    Chairman Sensenbrenner. Without objection, so ordered. And 
the gentleman is recognized for 5 minutes.
    Mr. Conyers. Members of the committee and Mr. Chairman, I 
offer this amendment on behalf of myself and Representative 
Maxine Waters, and we offer the amendment because of the bill's 
adverse impact on payment of domestic support obligations.
    As is known, the bill increases the amount of funds being 
paid to unsecured creditors, and such payments will often come 
at the expense of other less-aggressive creditors, such as 
women and children owed alimony and child support. This problem 
is by no means insignificant, given that an estimated quarter 
of a million to 325,000 bankruptcy cases involve child support 
and alimony orders during the most recent years. In particular, 
by making significant amounts of credit card debt 
nondischargeable, more of these debts will survive bankruptcy. 
And, of course, outside the bankruptcy court is precisely the 
arena where sophisticated credit card companies have the 
greatest advantages.
    While the bankruptcy court provides a strict set of 
priority and payment rules, generally seeking to provide equal 
treatment of creditors with similar legal rights, State law 
collection is far more akin to survival of the fittest. 
Whichever creditor engages in the most aggressive tactic, be it 
through repeated collection demands and letters cutting off 
access to future credit, garnishment of wages or foreclosure on 
asset is the one most likely to be repaid.
    And that's why the women and children's advocacy groups 
have come out in opposition to the bill. The National Women's 
Law Center has said the child support provisions of the bill 
fail to ensure that the increased rights the bill would give to 
commercial creditors do not come at the--should not come at the 
expense of families owed support. The Governing Council of the 
Family Law Section of the ABA has written that if credit card 
debt is added to the current list of items that are not 
dischargeable after a bankruptcy of a support payer, the 
alimony and child support recipient will be forced to compete 
with the well-organized, well-financed, obscenely profitable 
credit card companies, and it's not a fair fight, and it's one 
that women and children who rely on support will usually lose.
    And so it's not just the advocacy groups who flag the 
problem, the Congressional Research Service, nonpartisan, has 
written that child support and credit card obligations could be 
pitted against each other. Both the domestic creditor and the 
commercial credit card creditor could pursue the debtor and 
attempt to collect from postpetition assets, but not in the 
bankruptcy court.
    So all this amendment does is respond to the problem by 
providing a creditor should not receive any greater protections 
under the bill with regard to luxury good purchases, ATM debt 
or credit card debt used to pay taxes if it would impair the 
debtor's ability to pay alimony and child support. The 
amendment does not--does nothing to impair the present position 
of the creditors. It merely states that before we give that 
greater protection than they now enjoy--than they now enjoy, we 
need to make sure that alimony and child care are protected. 
Surely this is something that most of us can agree is fair and 
makes good sense.
    Thank you.
    [The Amendment to H.R. 333 Offered by Mr. Conyers and Ms. 
Waters follows:]

    Chairman Sensenbrenner. Would the gentleman yield back the 
balance of his time?
    Let the Chair say that the lights on the timer on the desk 
are in the process of being repaired. The timer is working up 
at the chairman's desk. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. I thank the chair.
    One of the answers to the gentleman from Michigan is found 
in his own words, in his opening statement, that to the effect 
that this bill, which he acknowledges is better than the one we 
started with from his point of view, has taken great endeavors 
over the past two terms to establish the primacy of domestic 
support and women's and children's issues and has, in various 
ways and in various provisions, established and reestablished 
the primary consideration of making sure that support payments 
reached their destinations as a priority.
    Therefore, the language that he now employs in these 
amendments, although they go to a different portion of the 
bankruptcy concepts of the 60 days, and 90 days, and 80 days, 
and 70 days, provisions that have been historically cutoff 
marks for bankruptcy, do not, in any way, enhance the situation 
that we've already cured.
    I ask the members to vote no on this amendment, but I have 
asserted to the gentleman from Michigan, so that everyone will 
know, that I am willing again to, between now and the floor 
action on the House--in the House chamber, to review this with 
him, with a view to possibly agreeing on some measure of solace 
to him or compromise even further. I believe that we have 
compromised and negotiated sufficiently to assure the American 
people that the primary obligation of support is preserved.
    Mr. Conyers. Would the gentleman yield for my last comment?
    You see the problem, George, is when both are competing 
equally, they--the mother and the children--are at a 
disadvantage because they don't have the professional law firms 
that regularly handle this. They come in one by one and get 
their socks beat off. And all I am saying is that we ought to 
take that into consideration, since we both profess to be 
concerned about maintaining this stringent rule about 
protecting child support and alimony orders.
    Mr. Gekas. Seizing back my time. The concerns that the 
gentleman has I think are wrapped up in the notion that and the 
fact that support obligations are part of another part of the 
court system in which they take extra pains in support court 
and in domestic court and in all of the penal provisions that 
apply to collection of support. You say that the people are 
without help, that the domestic seekers of support are without 
help. They've got an entire court system that is available to 
them and is imbedded, right from the start, in our system of 
bankruptcy, so that they are protected even by more than an 
ordinary consumer lawyer that might appear for that individual 
to protect one's life, there's an entire system already set up 
to guarantee support flowing to those who will be benefitted by 
it. I ask for a no vote on the amendment.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. Does the gentleman yield back the 
balance of his time?
    Mr. Gekas. I do.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina seek recognition?
    Mr. Watt. I move to strike the last word in support of 
the----
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    I want to rise in support of Mr. Conyers' amendment. Mr. 
Gekas, of course, is right that there is a separate system for 
child support. It is--that separate system was put in place 
because we have placed a premium and value on having a child 
support system, but it doesn't do any good to have a domestic 
court, State court or a child support enforcement mechanism or 
whatever system we have in place to protect and secure the 
obtaining of a judgment for child support if that judgment, if 
that agreement, if that system is not going to be given some 
sanctity above and beyond an automobile loan or some other kind 
of loan that we don't think is as important in the bankruptcy 
context.
    Mr. Gekas is absolutely right that if you are not in the 
bankruptcy court, there is plenty of protection and system to 
try to make sure of that, and the reason for that, of course, 
is that we, we value--that's a reflection of the values that 
State court and even interstate mechanisms have now been put in 
place to guarantee collection of child support, but if we 
undermine that in the bankruptcy court by allowing somebody to 
just go in and declare bankruptcy and then put automobile loans 
and luxury goods up to $250 or whatever we decide is going to 
go into some kind of preferred category, which we are doing 
over and over in this bill, putting more and more things into a 
preferred category, then basically what we've done is set up a 
system where more people, at the end of the day, are competing 
on a preferred basis with child support.
    And this amendment is a clear and unequivocal statement 
that when that occurs, if it occurs, if those other competing 
creditors are going to put domestic support, child support at a 
disadvantage and child support is going to be compromised in 
any way, we want to continue to give it the same value and 
recognition that we have, in fact, given it outside the 
bankruptcy context for good and valid public policy reasons.
    I'm not sure what you can--what the--what the gentleman's 
objection to this language is. He says he supports making sure 
that child support gets paid. That's been all the rhetoric 
throughout this process. I don't know how much clearer you 
could be playing around with the words between now and the 
floor. This is the committee that this bill is supposed to be 
considered and marked up in, and I assure you that if we don't 
put this language in this bill in this committee, it will never 
see the light of day again between now and the floor or on the 
floor.
    If we value child support, then we should support the 
amendment. It does no disadvantage, no harm to any other values 
that are purported to be advanced by this bill. What it says is 
what we have said over and over again in a number of different 
contexts, that child support is our number one priority.
    I yield to Mr. Conyers.
    Mr. Conyers. Thank you for an excellent statement, Mr. 
Watt. What you have said about the urgency of this passing now 
or never is so true that any future negotiations with us, and 
the subcommittee chairman, and to see how things go in Rules, 
and out on the floor and all of that, if this provision isn't 
in now, we all, realistically, know that it's not going to ever 
appear anywhere else again.
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Delahunt. Mr. Chairman?
    Chairman Sensenbrenner. Who seeks recognition?
    Mr. Delahunt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts?
    Mr. Delahunt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Delahunt. I will be very brief. I wanted to associate 
myself with the remarks by the gentleman from North Carolina. 
And I guess my question is what is there, and I would direct it 
to the former Chair of the subcommittee, what is there in the 
language that he objects to at this particular point in time?
    Again, there seems to be rhetoric that would prioritize 
clearly the payment of child support. I think this makes it 
very clear and very unequivocal, and as the gentleman from 
North Carolina stated, it gives it a priority so that it is not 
competing with other priorities that the bill, in large, now 
creates as priorities.
    Mr. Gekas. Does the gentleman want me to yield?
    Mr. Delahunt. No, I'm yielding to the gentleman, in terms 
of responding.
    Mr. Gekas. I might yield an answer to you.
    Mr. Delahunt. I have the time----
    Mr. Gekas. I say----
    Mr. Delahunt. Yes?
    Mr. Gekas. I say to the gentleman that we've already 
established the mechanisms, in and out of bankruptcy, to 
guarantee the primacy of support. When a debtor is about to 
declare bankruptcy, the bankruptcy--the lawyer who will be 
representing or the court that will be representing the spouse 
or the custodial parent will make certain that support is 
forthcoming through the regular channels of support----
    Mr. Delahunt. Outside of the bankruptcy court.
    Mr. Gekas. Yes, as part and as part and parcel----
    Mr. Delahunt. We----
    Mr. Gekas. In fact, our bill, our bill creates the----
    Mr. Delahunt. Reclaiming my time, the avenues that the 
gentleman alludes to outside of the bankruptcy court is when an 
individual who is responsible for child support payment has the 
ability to pay. That has nothing at all to do with bankruptcy, 
whether it be a family court or a criminal court. Those avenues 
are available when an individual is not in bankruptcy. It is 
those particular courts that calculate the level of support. It 
has nothing whatsoever to do with an individual who finds 
himself in bankruptcy. So it really--they are absolutely, 
totally unrelated.
    I yield back to the gentleman.
    Mr. Gekas. The gentleman fails to connect dots here. Here's 
an individual who is under an obligation by another court to 
pay $50 a week support. All of a sudden he decides he is going 
to go bankrupt because of the overwhelming burden of debts 
otherwise accumulated. What in the world does the gentleman 
believe will happen to that support matter, that it dissolves 
in favor of creditors? It stays in place. And throughout the 
bankruptcy proceeding----
    Mr. Delahunt. Reclaiming my time. That support payment 
comes into competition with other priorities that are created 
by the bill before us.
    Mr. Gekas. Well, if that's the problem----
    Mr. Delahunt. I yield to the gentleman from North Carolina.
    Mr. Watt. Let me, let me point out to the members of the 
committee exactly what this is all about. Look at where this 
amendment is proposed to be inserted. It's inserted behind a 
provision dealing with luxury goods. We're spend--we're giving 
priority up to $250 to luxury goods on the same basis that 
we're giving the child support. That's crazy. That is insane. 
We are extending, and that has never been in the bankruptcy 
bill before. I mean, that wasn't the law. We are adding to the 
people that we are giving a preference to under this bill.
    The same section, on page 144, gives priority up to $750 to 
extensions of consumer credit under an open-end credit plan. 
That's money that you get out of an ATM machine. I mean, you 
don't even know what it's going for. Basically, what you said, 
if the bank or you got some money out of an ATM machine, up to 
$750, we're going to give you the same priority that we give to 
children. This is crazy. It is counterproductive to the exact 
objectives that the sponsors and supporters of this bill, and 
why is that? It's because all of these people have come forward 
and said, ``Hey, put us on the gravy train.'' It's kind of like 
this tax bill. They just--this is the train that's moving out, 
and everybody wants priority, and we've given everybody 
priority----
    Chairman Sensenbrenner. The time of the gentleman from 
Massachusetts has expired.
    Mr. Watt [continuing]. Now on the same basis that children 
have priority.
    Chairman Sensenbrenner. The time of the gentleman from 
Massachusetts has expired.
    The question is on the adoption of amendment no. 1 offered 
by the gentleman from Michigan.
    Mr. Conyers. Recorded vote, sir.
    Chairman Sensenbrenner. All of those in favor will signify 
by saying aye, as your names are called; those opposed, no, and 
the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. I----
    The Clerk. Mr. Gekas, aye.
    Pardon me?
    Mr. Gekas. I am here voting no. [Laughter.]
    The Clerk. Mr. Gekas, no. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    [No response.]
    The Clerk. Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye. Mr. Scott?
    [No response.]
    The Clerk. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    Mr. Meehan. Aye.
    The Clerk. Mr. Meehan, aye. Mr. Delahunt?
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt, aye. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    [No response.]
    The Clerk. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there other members who wish to 
cast their votes? The gentlewoman from California?
    The Clerk. Ms. Waters?
    Chairman Sensenbrenner. The gentlewoman from California, 
the clerk did not get your vote. The gentlewoman from 
California?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Chairman Sensenbrenner. The gentleman from Utah?
    Mr. Cannon. No.
    Chairman Sensenbrenner. Are there other members who wish to 
record their vote or to change their votes?
    [No response.]
    Chairman Sensenbrenner. Hearing none, the clerk will 
report.
    The Clerk. Mr. Chairman, there are 10 ayes and 14 nays.
    Chairman Sensenbrenner. The amendment is not agreed to.
    Are there further amendments? The gentleman from Michigan?
    [No response.]
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina.
    Mr. Watt. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Watt. It's Watt No. 4.
    The Clerk. Amendment to H.R. 333 offered by Mr. Watt of 
North Carolina.
    Page 144, after line 14, insert the following [and make 
such technical and conforming changes as may be appropriate]:
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from North Carolina is 
recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    This is not the order that I would plan to offer my 
amendments in, but I think this relates really to the same 
point that the last amendment did and illustrates the point 
that I was trying to make to the members of the committee about 
how this bill has become, in many ways, counterproductive to 
the purposes that many have said that they were setting out to 
achieve.
    On page 143, section 310, of the bill starts to define the 
limitations on luxury goods and other items that basically are 
given priority in a bankruptcy proceeding. It limits to $250 
luxury goods, which I think is appropriate. I don't think it 
ought to be on the same basis as child support, but at least it 
makes some sense to have a limitation, but--and it makes an 
exception at the end for luxury goods that are necessary for 
the support or maintenance of the debtor or a dependent of the 
debtor, which I think is good language. That's all the way over 
on page 144.
    The next part of this, though, talks about cash advances 
aggregating more than $750. That means that up to $750 you get 
the priority if those advances were obtained within 70 days 
before the order for relief is granted, and unfortunately there 
is no similar exemption for that $750 that subordinates it to 
payments for support or maintenance of the debtor or a 
dependent of the debtor because if you look on page 144, lines 
11 through 14, the limitation that subordinates luxury goods up 
to $250 to reasonably necessary support and maintenance of the 
debtor, there is no similar limitation for the $750 that's been 
advanced. Even if I went to the ATM and got the $750 to try to 
pay child support, there is no recognition of that.
    Basically, what the credit card companies have succeeded in 
doing, and I'm not an opponent of credit card companies, I just 
think we've got to be reasonable in the approach we are using 
here, and what this amendment would do is make that $750-credit 
card advance, that cash advance of extension of consumer credit 
under an open-end credit plan subject to the same limitation 
that we have placed on luxury goods if a person can come into 
the bankruptcy court and show that that advance, that credit 
card extension was for the purpose of support and maintenance 
of their children.
    So this further illustrates how we have gotten this whole 
thing out of whack. And if you can't support the general 
language that gets everything subject to providing child 
support for children who need it, at least we ought to make 
luxury goods and these cash advances subject to that child 
support payment.
    And I would, therefore, encourage my colleagues to support 
and vote for this amendment, and I yield back the balance of my 
time.
    [The Amendment to H.R. 333 Offered by Mr. Watt follows:]
    
    

    Chairman Sensenbrenner. The gentleman from Pennsylvania?
    Mr. Gekas. I rise to state my opposition to the amendment.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. Again, it's difficult to explain, I believe, or 
it's my failure, but the current law in these luxury item 
provisions to which the gentleman refers, the current law gives 
primacy to support payments, the current law, which we leave 
untouched, absolutely untouched in our bill. All we do in the 
sections that you are corresponding here is change the amounts 
that would constitute fraud if perpetrated within a certain 
number or period of days before bankruptcy. That's all we do. 
We do not affect the obligation to make sure that those items 
do not include goods or services reasonably acquired for the 
support or maintenance of the debtor or dependent of the 
debtor.
    So the rhetoric which is accused handily by the members of 
the minority as to--or the proponents of this bill is the 
rhetoric that you're using. You're using rhetoric to say, ``Oh, 
my gosh, how can we take support and put it behind luxury 
items?'' That's, that's what is inane.
    Mr. Watt. Would the gentleman yield?
    Mr. Gekas. It's my time.
    Mr. Watt. I'm asking if the gentleman would yield.
    Mr. Gekas. Let me finish my statement.
    I'm saying to you, and I repeat, for the benefit of all of 
the members, we do not, I repeat, we do not harm the current 
law which gives primacy to support payments vis-a-vis the 60--
the prior to bankruptcy period of time, when someone goes to 
the extreme to try to defraud the system, to game the system.
    The gentleman from North Carolina is an opponent of 
individuals who game the system. These provisions are there to 
prevent gaming the system, and they are accompanied by strong 
language that says when they do try to game the system, even if 
they do try to game the system, if they use part of that money, 
which they have gamed, for support payments, then that will not 
be dischargeable.
    So I am saying that this is rhetoric, unaccompanied by 
logic, that you are attending to this provision.
    Mr. Watt. Will the gentleman yield?
    Mr. Gekas. Yes, I'll yield.
    Mr. Watt. I thank the gentleman for yielding.
    First of all, let me clear I have never said that you have 
elevated these things above support payment. What I said is 
that you put them on the same basis. You expanded the number of 
things you put on the same basis as support payment, and in the 
process of doing that, unless you make it clear that if you 
have to come to a choice between these things and support 
payments, that support payments take priority, then you have 
done a disservice to support payments.
    Now, if the gentleman would just look at lines 11 through 
14, where you make luxury goods or services subject to support 
payments. Why is it not logical to make the $750-credit card 
advance subject to the same support payments if they come into 
conflict with each other? Just--that's the only, only time at 
which this would be applicable. Why would you not make that 
same exception for credit card advances? You've made it for 
luxury goods.
    Mr. Gekas. Reclaiming my time. I do not want to venture on 
the same treadmill as the gentleman from North Carolina in 
repeating and repeating what is--happens not to be the case. 
The current law, I repeat, on this luxury items is unaffected. 
It is unaffected except for the numerical figure that is now 
applied in our bill to supplant that which currently exists.
    Therefore, the primacy of support payments, if an 
individual contemplates bankruptcy, so he is going to game the 
system, he immediately goes out and gets cash advances for 
$750. All of a sudden the red light goes up when he files for 
bankruptcy. If he did this within a short period of time before 
filing bankruptcy, it should be disallowed. But on second 
thought, if he used part of that money for support of the 
dependent or the spouse or someone relying on that support, 
then there is no penalty. It does not constitute fraud. That's 
the current law, and all we do is substitute different money 
figures.
    Mr. Nadler. Would the gentleman yield for questions?
    Mr. Gekas. I yield back the balance of my time.
    Mr. Nadler. Would the gentleman yield for questions?
    Mr. Gekas. Yes. Yes, I'll----
    Mr. Nadler. I don't understand what you just said, George.
    If you used part of that for the----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from New York seek recognition?
    Mr. Nadler. Strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Nadler. Mr. Chairman, what this amend--what the bill 
does is to change--what's the time period of it?--is to change 
$1,075 within 60 days to $750 within 70 days. So it's a much 
smaller amount of money. It's $10 a day.
    But second of all what it does is--let me ask a question. 
Let's assume, let's assume that this person is not fraudulent, 
that this person is in very good faith, that this person has a 
dozen different credit card debts at 6- or 7- or 8- or 10-
percent interest or whatever it is, and in an attempt to avoid 
bankruptcy, gets in the mail one of these promotions that says, 
``Consolidate your debts. Join up on First Card, National 
Citibank, for 2.99 percent,'' and he consolidates his debts. He 
takes that credit card, and he takes a thousand dollars on the 
credit card, all of which is existing debt. He transfers it 
from five different credit cards to one just to get a lower 
interest rate.
    It seems to me that he's taking cash advances aggregating, 
that he meets the definition here, and he's presumptively 
fraudulent.
    Mr. Gekas. Would the gentleman yield?
    Mr. Nadler. Yes, I will yield.
    Mr. Gekas. I haven't the slightest idea of what you just 
described in your hypothetical.
    Mr. Nadler. Well, I described it very simply.
    Mr. Gekas. And it's a--what I, for the purpose of this 
debate and for the purpose of getting on with the process of 
this committee, I reassert that the changes that were made in 
the bill with respect to the 70 days prior, 90 days prior and 
so forth, were chiefly monetary in aspect, and they did not 
affect at all the current demand by the language----
    Mr. Nadler. Reclaiming my time. I don't understand, if it 
doesn't affect it, why it's in here. But let me give a better 
example, perhaps, that will be more understandable.
    Seven hundred and fifty dollars in 70 days is about $10 a 
day. So a person who is spending $10 a day on Pampers and baby 
food, and milk for the baby, is presumed to be a fraud--and is 
using a credit card to buy it--is presumed to be having so much 
credit card within that 70 days that he's obviously doing this 
in contemplation of bankruptcy, and it's fraudulent. And, 
frankly, that doesn't make a heck--and then he's got to hire a 
lawyer to defend himself, and it doesn't make a heck of a lot 
of sense to me. I just hope we pass this amendment so this bill 
is a little less egregiously unfair, though still egregiously 
unfair in most of the----
    Mr. Watt. Would the gentleman yield?
    Mr. Nadler. I'll yield.
    Mr. Watt. Let me be clear to Mr. Gekas and to the members 
of the committee. We are not trying to do away with the luxury 
goods exception. We're not trying to do away with the $750. I 
actually think you have--I agree with you. You have moved the 
bill in a good direction. The problem is that what you have 
done, in the process, is put luxury goods up to $250 and $750 
worth of cash advances on the same basis that child support is 
being put if they--and I don't have any problem with that if 
a--if a debtor can pay all three of those things, it's fine.
    But when you come to a fork in a road and that debtor's 
money is not enough to pay but one of those things, all we're 
saying--we're not trying to do away with the language. I mean, 
I didn't move--the amendment doesn't take the language out. All 
it says is when they come into competition with each other, 
child support ought to take priority, and that's exactly what 
you have said in lines 11 through 14 about luxury goods up to 
$250. Why wouldn't the same rationale apply to credit card 
debt?
    Mr. Nadler. Reclaiming my time.
    The key point that the gentleman from Pennsylvania misses 
on this whole question of child support priority, he said again 
a few minutes ago, we give priority to child support. Sure, you 
do, but the priority given in this bill to child support is 
only in bankruptcy court. Once you make these other debts 
nondischargeable, as child support already is, the competition 
for the mother to collect, the competition between the mother 
and the Chemical Bank lawyer to collect between child support 
and nondischargeable debt is after the debt is discharged, you 
are no longer in bankruptcy court. You are in State court, and 
there is no such thing as a priority----
    Chairman Sensenbrenner. The time of the gentleman from New 
York----
    Mr. Nadler [continuing]. In State court----
    Chairman Sensenbrenner [continuing]. Has expired.
    Mr. Nadler. So it's all irrelevant.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from North Carolina, Mr. Watt.
    Those in favor will say aye.
    Those opposed will say no.
    The noes appear to have it.
    Mr. Watt. Mr. Chairman, I request a recorded vote.
    Chairman Sensenbrenner. Roll call is ordered. Those in 
favor of the Watt amendment will vote aye, as your names are 
called; those opposed will vote no, and the clerk will call the 
roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. I am present, voting no. [Laughter.]
    The Clerk. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no. Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    [No response.]
    The Clerk. Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye. Mr. Scott?
    [No response.]
    The Clerk. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    [No response.]
    The Clerk. Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there members in the room who 
wish to record their vote or change their vote?
    The gentleman from California, Mr. Gallegly?
    Mr. Gallegly. No.
    Chairman Sensenbrenner. The gentleman from Alabama, Ms. 
Bachus?
    Mr. Bachus. No.
    Chairman Sensenbrenner. Any further members who wish to 
record their vote or change their vote? If not, the clerk will 
report.
    The Clerk. Mr. Chairman, there are 8 ayes and 15 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments?
    Mr. Conyers. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Michigan, Mr. 
Conyers?
    Mr. Conyers. Mr. Chairman, I'd like to call up my business 
amendment now.
    Chairman Sensenbrenner. Is there a number on your amendment 
so the clerk is----
    Mr. Conyers. No, it's known as the business amendment.
    Chairman Sensenbrenner. The clerk will report the Conyers 
business amendment.
    Mr. Conyers. It's Conyers and Nadler, by the way.
    It's the one that begins, ``Page 181, line 3.'' On the top 
is ``Conyers 002.''
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Mr. Conyers, 
page 181, line 3, strike the close----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentleman from Michigan 
will be recognized for 5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    I'd like to ask unanimous consent to have this amendment 
denominated the Conyers and Nadler amendment.
    Chairman Sensenbrenner. Without objection.
    Mr. Conyers. Thank you.
    Ladies and gentlemen, this amendment amends several 
provisions of the bill that provides for strict new deadlines 
and allows them to be extended where it can be shown that the 
reason for the delay is due to circumstances beyond the 
debtor's control. It also specifies that the new provisions 
exempting asset-backed securities from bankruptcy only apply to 
true sales.
    Now, as it presently stands, the legislation before us 
would completely alter the manner in which small businesses and 
real estate concerns may reorganize under the bankruptcy laws. 
In particular, it imposes a whole host of arbitrary deadlines 
designed to speed up the bankruptcy process. These provisions 
have drawn the strong opposition of the Small Business 
Administration Office of Advocacy and organized labor. The AFL-
CIO has correctly warned that the small business provisions 
will threaten jobs by placing substantial procedural barriers 
in the way of small business's access to the protections of 
chapter 11.
    Now, I've stated before that I agree that we need to 
streamline and expedite small business cases, but what's 
happened again is that in our haste, we have made new 
requirements that are now onerous in their own regard. Thus, if 
the reason a deadline can't be met is because of a regulatory 
process which the bankrupt applicant can't control; for 
example, a hearing on an environmental claim which must take 
place before a plan can be developed, we want to merely give 
the court the discretion to waive the deadline, for goodness 
sake, not a big deal. The last thing we want to do--the last 
thing we want to do is to worsen the current situation the 
applicant is in by forcing businesses to liquidate or layoff 
workers to comply with some arbitrary deadline.
    Now it's one thing to tighten the bankruptcy rule where the 
only parties involved are the borrower and lender, but where 
the changes will harm innocent third parties, namely, employees 
and their families, I think most of us believe we have an 
obligation to give the business a reasonable chance to 
reorganize in bankruptcy. And so I urge the members of the 
committee to join with me and Mr. Nadler in supporting this 
idea of protecting American jobs by giving the court discretion 
to waive the deadline. This is all this amendment is, not a 
horribly big deal. I urge its support and return any time that 
may be remaining.
    [The Amendment to H.R. 333 Offered by Mr. Conyers and Mr. 
Nadler follows:]

    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania rise?
    Mr. Gekas. Move to strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. Mr. Chairman and members, we should recognize 
part of the history of how we arrived at this juncture in 
bankruptcy reform. Several years ago the Congress authorized 
the Commission, the well-known Bankruptcy Commission, to look 
at, particularly to look at the business provisions of the 
current bankruptcy law. They concluded, and it was part of 
Congress's rationale in the first place that the reorganization 
features under chapter 11 were not working. Why? Because there 
was too much delay, too many extensions, too much time granted 
over a period of time guaranteeing the failure of a business 
more than giving it time to resuscitate its business 
activities.
    I repeat, it promoted failure on the part of a business to 
continue to extend times without regard to deadlines of 
established law. So the Bankruptcy Commission, in its wisdom, 
came up with recommendations that said we've got to more 
tightly fit the reorganization features of bankruptcy into time 
tables to allow the business to make certain that it can 
survive by doing X, Y, and Z, in consultation with the 
creditors and with the bankruptcy court so that, although we do 
still allow and have the courts given discretion to extend 
deadlines in some quarters on the whole process, we do not have 
the abject open-ended discretion that led to the failures about 
which the Bankruptcy Commission made so much commentary in 
their recommendations.
    So, for those reasons, mainly the reason that the Conyers 
amendment in this regard takes us back to the time before the 
Bankruptcy Commission looked at this very set of features as 
being a cause of failure of reorganization, we want 
reorganization to work, we want to do it in a speedy and in 
deliberate time, and we want all of the parties involved to 
know what's facing them in the form of time tables so that they 
can make appropriate----
    Mr. Weiner. Would the gentleman yield on that point?
    Mr. Nadler. Mr. Chairman?
    Mr. Weiner. Would the gentleman yield on that point?
    Mr. Gekas. Yes, I'll yield.
    Chairman Sensenbrenner. Which gentleman from New York are 
you yielding to?
    Mr. Gekas. To both of them at the same time. [Laughter.]
    To the gentleman, Mr. Weiner.
    Chairman Sensenbrenner. I'm sorry. I saw the gentleman's 
hand up.
    Mr. Nadler. I was seeking recognition, but not for 
yielding.
    Mr. Weiner. I just want to clarify something that you said 
that is, in fact, not correct.
    In the Conyers amendment, they have to show by clear and 
convincing evidence, it's a new standard that's been inserted, 
that will put quite a burden on the debtor to show that there 
is something beyond his control. I mean, it seems to me that if 
you trust even a modicum of the judgment of the judge in the 
case to be able to take the case that can't be anticipated by 
us here--very often my colleagues on that side talk about us 
setting rules here in Washington that are unnecessarily strict, 
unnecessarily dictatorial and not giving enough discretion to 
localities--it seems to me that Mr. Conyers strikes a balance 
by putting this, this clear and convincing evidence test, into 
his amendment. Doesn't that satisfy your concern about having 
extraneous delays and delays that are simply for the purpose--
--
    Mr. Gekas. Reclaiming my time.
    Mr. Weiner. Certainly, sir.
    Mr. Gekas. I believe it's in the eyes of the beholder. I 
believe that the additional extension of time that you're 
referring to, even with clear and convincing evidence, takes us 
back to the Never-Never Land of never-ending reorganization, 
which the Bankruptcy Commission felt had to come to an end for 
justice in bankruptcy. So I am relying on the tighter set of 
deadlines that seem to be, in a unanimous way, felt would best 
serve the reorganization of bankruptcies.
    I yield back the balance of my time. I yield to the other 
gentleman from New York.
    Mr. Nadler. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Nadler. Thank you, Mr. Chairman. I find it remarkable 
that the gentleman from Pennsylvania is citing the work of that 
lamented Bankruptcy Commission. If the gentleman would 
introduce a bill simply incorporating all of the 
recommendations of that Bankruptcy Commission and nothing else, 
we'd pass that bill unanimously in about 3 minutes. But as you 
know, this bill rejects about 95 percent of what the Bankruptcy 
Commission recommended. The Bankruptcy Commission was against 
means tests, the Bankruptcy Commission rejected everything on 
taxes. The fact is that this is the only thing that this bill 
seems to do that goes along with the Bankruptcy Commission.
    Let me say this: It is a mischaracterization of this 
amendment to talk about abject and open-ended. It's clear and 
convincing evidence, circumstances beyond the debtor's control, 
not foreseeable the date of the order for relief. You don't get 
back into a Never-Never Land of unending reorganization unless 
you assume that all of our judges are incompetent, and I 
certainly wouldn't assume that the judges to be appointed by 
President Bush are all incompetent. Some may be competent.
    The fact is that what this bill seeks to do is to remove 
all discretion from a judge here, and I guarantee you that by 
putting these severe and inflexible deadlines, you are going to 
cause a lot of businesses that could have been reorganized and 
could have been saved, you're going to put them into 
liquidation. And even at the hearing last week, when I asked 
the gentleman, I think his name was Fosten from the Chamber of 
Commerce, the question about wouldn't these provisions of 
inflexible deadlines put more--force more businesses out of 
business and into liquidation, he essentially said, yes, but it 
was worth it because of the balance of other good things in the 
bill, but we can amend the bill. We don't have to balance 
terrible provisions that are going to destroy lots of small 
businesses.
    We may be heading into, I hope not, the President says we 
are, heading into a recession. If we go into a recession, 
you're going to get a lot of small businesses going into 
chapter 11 just in time to meet this provision that will force 
many of them to be liquidated instead of being able to be saved 
and lay off a lot of people. To simply say that if a debtor can 
show, by clear and convincing evidence, which is a high burden 
of proof, that the extension is justified by unforeseen 
circumstances beyond his control and let the judge decide that, 
not the debtor, if he can prove that, that you can get an 
extension, that's reasonable. But, of course, this bill is not 
designed to be reasonable, so I know this amendment is forlorn.
    I withdraw the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Michigan, Mr. Conyers, and the 
gentleman from New York, Mr. Nadler.
    Those in favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it. The noes have it, and the 
amendment----
    Mr. Nadler. Recorded vote, sir.
    Chairman Sensenbrenner. A recorded vote will be ordered. 
The question is on the Conyers-Nadler amendment. Those in favor 
will signify by saying aye, as your names are called; those 
opposed, no, and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no. Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no. Mr. Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, no. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye. Mr. Scott?
    [No response.]
    The Clerk. Mr. Watt?
    [Aye.]
    The Clerk. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    [No response.]
    The Clerk. Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members who 
wish to record their vote?
    The gentleman from California, Mr. Gallegly?
    Mr. Gallegly. No.
    Chairman Sensenbrenner. The gentleman from South Carolina, 
Mr. Graham?
    Mr. Graham. No.
    Chairman Sensenbrenner. Are there any members who wish to 
change their vote? If not--Mr. Jenkins of Tennessee, do you 
wish to record your vote?
    Mr. Jenkins. No.
    Chairman Sensenbrenner. Further members? Clerk will report.
    The Clerk. There are 6 yeas and 18 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? The gentleman from New York, 
Mr. Nadler?
    Mr. Nadler. Mr. Chairman, I have an amendment at the desk, 
No. 001.
    Chairman Sensenbrenner. The clerk will report .001.
    The Clerk. Amendment to H.R. 333 offered by Mr. Nadler, 
page 178, after line 4, insert the following [and make such 
technical----
    Chairman Sensenbrenner. Without objection, the reading of 
the amendment is dispensed with, and the gentleman from New 
York is recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Chairman, I offered this amendment in this committee 
last year, and in the Senate it was offered by Mr. Schumer and 
passed the Senate last year with 80 votes.
    As Senator Hatch pointed out in the confirmation hearings 
on Attorney General Ashcroft a couple of years ago, even 
Senator Ashcroft, former Senator Ashcroft, voted for this 
amendment, for this exact language, not because Senator 
Ashcroft is pro-choice, but because he believes that the law 
must be respected.
    This amendment would deal with an ongoing and highly 
publicized abuse of the Bankruptcy Code involving people who 
violate the legal rights of Americans to receive medical care, 
and intimidate their health care providers and to then file for 
bankruptcy for the express purpose of having the debts incurred 
in judgments of courts because of their torts against people 
seeking interest in these clinics, they then seek to have these 
judgments discharged in bankruptcy.
    There are several cases currently in lengthy and costly 
litigation on this question. In one case, a $107-million 
verdict was rendered in the case of the so-called Nuremberg 
files, which was implicated in the murder, murder of at least 
one doctor.
    Randall Terry has filed for bankruptcy to avoid payment of 
over $1.6 million in legal fines and related fees. He said, ``I 
cannot in good conscience permit the National Organization for 
Women, Planned Parenthood and others who have profited from 
abortion to harass my wife and family and possibly get money 
from me to continue their crusade against unborn life.''
    These are bold words, but as Senator Ashcroft pointed out 
during the hearings, opposing abortion does not give you a 
license to break the law, and it certainly should not translate 
into a license to abuse the Bankruptcy Code to avoid the lawful 
payment of legal judgments awarded by courts to compensate 
victims of deliberate violations of the law.
    Although no debt has actually been discharged, this 
widespread and growing pattern of using bankruptcy to avoid 
payment of judgments in these cases have proved extremely 
burdensome to the individuals who are awarded these judgments 
because their legal rights have been violated.
    The victims have been chasing these lawbreakers through the 
courts for years, going through discovery, being forced to 
engage in further costly litigation, seeking assets and 
litigating in bankruptcy courts across the country. We should 
settle any uncertainty in the law by making clear that the 
Bankruptcy Code cannot be used a shield against judgments for 
these lawbreakers. We make debts for drunk boating accidents 
nondischargeable in this bill, we penalize a parent who uses 
cash advances at the rate of little more than $10 a day to 
purchase necessities for the family, including baby food and 
Pampers, by making those debts nondischargeable.
    I think we should preserve the integrity of the Code and 
take a tremendous burden off our bankruptcy courts and off the 
victims of this wrongdoing with the simple clarification that 
these judgments, awarded by a court for torts, are not 
dischargeable in bankruptcy.
    I yield back.
    [The Amendment to H.R. 333 Offered by Mr. Nadler follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Pennsylvania, 
Mr. Gekas?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. I ask the members to vote no on this amendment. 
The current law in bankruptcy, which we preserve in our reform 
measure, already calls for nondischargeability of debts 
incurred as a result of violence or willful misconduct, such as 
murder, which was referred to by the gentleman, and any other 
kind of willful damage caused at an abortion clinic or any 
other institution, so that willful misconduct and damages, 
willful criminal conduct, so to speak, willful conduct of that 
nature, is already covered by the current law. We gain nothing 
by specifying violence in an abortion clinic, except to allow 
the pro-abortion factions to make a statement, and so we oppose 
the amendment, certifying and asserting that these kinds of 
measures taken by demonstrators at an abortion clinic are 
already covered by our law.
    In addition, the Nadler amendment, if it--and I'm only 
guessing now--if it follows the same language as the Schumer 
amendment----
    Mr. Nadler. It's identical.
    Mr. Gekas. It's identical. Who followed whom, I don't know 
for sure.
    Mr. Nadler. He followed me.
    Mr. Gekas. He followed you, all right. Thank you.
    It goes a little farther and puts in nebulous criteria 
about intent or--let me find the exact language that I'm 
referring to. Actual or potential actions alleging the 
violation of any Federal, State or local statutory or common 
law. You're talking about establishing 20 new courts to 
determine the definition of those particular portions of the 
amendment. It's bad enough to repeat already stated law about 
violence and misconduct, but now you extend it to curious 
language about alleging the violation of any Federal, State or 
local statutory or common law.
    I ask the members to reject this amendment. I yield back 
the balance of my time.
    Mr. Weiner. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from New York, Mr. Weiner, seek recognition?
    Mr. Weiner. Strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Weiner. What the sponsor of the legislation in his 
explanation fails to point out is there is ambiguity or at 
least inasmuch as the bankruptcy law and the bankruptcy courts 
have been a place where people who are guilty of these crimes, 
people who are having or who are--or are being forced to pay 
these civil penalties and other penalties, they are using the 
bankruptcy courts currently to get out from under in a clearly 
stated strategy.
    And I would remind the gentleman, also, that this is not a 
question of your views on a woman's right to choose. In the 
Senate this passed with 80 votes because this is simply a 
question about whether or not someone should be allowed to use 
the bankruptcy courts in an effort to get out from under the 
responsibilities they would otherwise have which, from the 
gentleman's own explanation of this bill for the course of the 
last 2 years, is exactly what he says he seeks to do with this 
bankruptcy reform law, which is to make sure that people that 
have the ability to pay don't use the bankruptcy law as a way 
to get out from paying.
    So all that the Nadler amendment does is seek to clarify 
that, and it's clearly a necessity because it has become a 
strategy of those that violate the clinic access laws to use 
the bankruptcy laws. In jurisdictions throughout this Nation, 
it's been part of their strategy. There is zero harm and a 
great deal of benefit to clearing up the ambiguity that 
apparently exists. You may not see it, I certainly don't see 
it. I believe it's a matter, it's a matter of moral certainty 
and a matter of certainty under the law, but the fact of the 
matter is that bankruptcy courts throughout the Nation are 
having to wrestle with this exact case, and we have an 
opportunity now----
    Mr. Hutchinson. Would the gentleman yield?
    Mr. Weiner [continuing]. To clarify that point.
    Mr. Hutchinson. Would the gentleman yield for a question?
    Mr. Weiner. I would certainly yield.
    Mr. Hutchinson. My experience in having a judgment against 
someone for willful misconduct, I simply filed a petition with 
the court to have that debt nondischargeable because of willful 
misconduct, and the court ruled in my favor, and it is exactly 
what should have happened, and it was very similar to this.
    The current law, as Mr. Gekas indicated, does protect 
against the dischargeability of cases which you cite would 
involve violence against a clinic. And you indicated that it's 
a strategy out there to use the bankruptcy as protection. Are 
there any cases in which an individual had the debt discharged 
by a court which involved violence against a clinic?
    Mr. Weiner. If I can reclaim my time, I think it's 
fascinating that in this amendment the folks in the majority 
party are saying, well, we can trust judges to make the correct 
decisions, and look, this is a ground-ball judgment call that 
they can make. In the last amendment, we didn't even trust the 
judges to make the decisions about whether something was 
outside the control of one of the parties in the case.
    And in answer to your question, yes, it's going on now. You 
know, the people trying to, trying to recover have to go 
through discovery, they have to go through the different 
jurisdictions. This is an opportunity for us to clarify the 
state of the law in a very obvious way, and I would yield to 
Mr. Nadler.
    Mr. Nadler. Thank you.
    Mr. Chairman, first of all, the language from the amendment 
that the gentleman from Pennsylvania wrote that he said was 
vague, et cetera, that's language describing an action. This 
amendment only applies to a judgment order consent decree or 
decree entered in a Federal or State court in various types of 
actions. It's got to be a judgment. You don't have to speculate 
about what it is, number one. It's a judgment or decree.
    Number two, it talks about malicious and willful. Already 
malicious and willful is already nondischargeable. True, but 
you don't have to be malicious and willful to violate the law. 
The law which these people violate makes it prohibited by force 
or threat of force, or by physical obstruction, intentionally 
injures, intimidates or interferes or attempts to injure, 
intimidate or interfere with any person, et cetera. It doesn't 
say it has to be willful or malicious. So you're establishing a 
new standard.
    Number three, right now, yes, there has not been a 
discharge yet, but according to a statement from the hearing 
last year, ``My firm, to date, has expended over 3,200 attorney 
hours in litigating these bankruptcy proceedings, in addition 
to the time spent by local counsel in each jurisdiction and the 
substantial expense of filing fees, service fees, and travel 
around the country. Thus far, after extensive litigation and 
considerable expense, we have won the willful and malicious 
injury issue in four of the bankruptcy courts. Despite these 
victories, enactment of the proposed amendment to the 
Bankruptcy Code is necessary because defendant should not have 
been given the opportunity to litigate the issue of the 
discharge in bankruptcy when they have been judged guilty of 
violating the faith statute, as intended by Congress.''
    In other words, the tort fees, the people who violated the 
law----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the 
gentlewoman from Texas, Ms. Jackson Lee, seek recognition?
    Ms. Jackson Lee. To strike the last word.
    Chairman Sensenbrenner. The gentlewoman is recognized for 5 
minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman.
    Let me just define what I think is the appropriate role of 
this room and this body. Often we are described as problem 
solvers. I hope we can be described as doing no harm.
    The issue that Mr. Nadler raises in his amendment is an 
issue that raises the specter of confusion. Just about 3 years 
ago we sat and listened to a nurse from Birmingham, Alabama, if 
my recollection serves me well, that was horrifically mutilated 
by a bombing incident at an abortion clinic--visibly mutilated, 
emotionally mutilated, the victim of a very terrible and 
devastating crime to this date has not been solved.
    As a basis of study, we can utilize the approach that many 
in the segregated South, Ku Klux Klan, took to avoid 
compensating those whose civil rights they violated. It is well 
known that individuals of this propensity have used the 
bankruptcy courts or have used the concept of bankruptcy to 
suggest that when a judgment has been rendered against them, 
the KKK or them individually, they would not pay.
    It seems to me, Mr. Chairman, and to my colleagues, with an 
80-vote support in the Senate, that it would be beneficial for 
an overhaul of the Bankruptcy Code, of which we are doing, and 
reasonable minds can disagree because I certainly think that 
this is an unnecessary process, an unneeded process, but we are 
in the midst of it, that clarification and specificity is the 
route to go; specificity meaning that it clarifies that you 
cannot utilize the Bankruptcy Code, under H.R. 333, to avoid 
the just judgment rendered against you.
    In my sense, Mr. Chairman, this is doing no harm, based 
upon proceeding evidence and actual incidences where 
organizations have taken to the bankruptcy courts to blatantly 
try to overcome just judgments against them, where they have 
mutilated, where they have violated, where they have destroyed 
the property and the lives of others.
    Now, it seems to me a benign amendment. It does not harm. 
It helps. And I am at a loss as to why the opposition, the 
Republican majority, finds the necessity to oppose 
clarification because if the bankruptcy courts are saying that 
there is potential for confusion, why not narrow the need for 
them to furry around in trying to make a decision, when they 
can turn to what may be potentially a past legislation. This 
looks like it's on the route to be law. Why can't this 
amendment simply clarify that you cannot avoid, you cannot 
negate, you cannot usurp, you cannot ignore, you cannot abuse, 
you cannot utilize the Bankruptcy Code to avoid the just 
judgment rendered against you in an instance of violence 
against clinics?
    And I have yet to hear any argument by the esteemed 
gentleman from Pennsylvania and others that would make any 
sense as to why a simple point of clarification cannot be 
added. Do we need to bring in more mutilated victims? Do we 
need to bring in the relatives of deceased doctors who rightly 
deserve to recover against those who perpetrated the heinous 
crimes of which the lives cannot be brought back? But certainly 
in the scheme of our justice system, some compensation 
obviously is warranted, some monetary penalty. And it is well 
known that the trickery of those who are in their minds 
violently opposed to abortion, violently exercising their 
opposition, that they will likewise use any tactic, which 
includes the bankruptcy code, to avoid the just rendering of 
this heinous act where families and loved ones and those who 
have been violated and abused and frightened and intimidated 
cannot recover.
    This is simple language, the non-dischargeability of debts 
incurred through the commission of violence at clinics, 
supports by an 80-vote margin in the Senate. And I guess I am--
I am--I'm simply at a loss----
    Chairman Sensenbrenner. The woman's time has expired.
    Ms. Jackson Lee [continuing]. That unfortunately the 
bipartisanship----
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Ohio seek recognition?
    Ms. Jackson Lee [continuing]. Has disintegrated. I ask my 
colleagues to support the amendment.
    [The prepared statement of Ms. Jackson Lee follows:]
  Prepared Statement of Hon. Sheila Jackson Lee, a Representative in 
                    Congress from the State of Texas
    Good morning Mr. Chairman, as you know, the issue of bankruptcy 
reform has been a heated topic of debate in this body since the first 
session of the 105th Congress, when shortly before the National 
Bankruptcy Review Commission issued its report recommending changes to 
the current bankruptcy laws; legislation was introduced to dramatically 
change the way in which consumer bankruptcies are administered under 
the U.S. Code, 11 U.S.C. sec. 101 et seq. Both the House and Senate 
enacted different versions of the bill in the second session of the 
105th Congress and a conference report was filed shortly after. The 
House agreed to the conference report version of the bill by a vote of 
300 to 25 on October 9, 1998, but this bill which then, President 
Clinton threatened to veto, was not brought before the Senate for a 
vote prior to adjournment.
    This legislation was again reintroduced in the 106th Congress and 
was passed by voice vote in the House and passed in the Senate by a 
vote of 70 to 28. Then, President Clinton withheld his approval, 
Congress adjourned sine die, and bill was ``pocket'' vetoed.
    Mr. Chairman, in yesterday's hearing, I questioned Philip J. 
Strauss who was representing the California District Attorney's 
Association and the California Family Support Council on the fact that 
H.R. 333 places economically vulnerable women and children who are 
forced into bankruptcy, and those who are owed support by men who file 
for bankruptcy at greater risk by increasing the rights of many 
creditors, including credit card companies, finance companies, auto 
lenders and others over that of the women and children. Mr. Strauss, 
however, appeared shocked at these facts and affirmatively stated that 
women and children's child support payments from former spouses are 
protected because the states collect money from people who owe child 
support and make payments to mothers.
    Mr. Chairman, I was not able to finish my point yesterday, however, 
in the interest of justice for the thousands of women and children who 
will be held hostage by H.R. 333. However, I will correct this gross 
misrepresentation today. While it is true that states collect money 
from people who owe child support to make payments to mothers, H.R. 333 
would effectively bottle this money in the coffers of the state because 
it increases the rights of creditors over these vulnerable women and 
children, and sets up a competition for scarce resources between 
parents and children owed support and commercial creditors both during 
and after bankruptcy. Therefore, single parents facing financial crises 
often caused by divorce, nonpayment of support, loss of a job, 
uninsured medical expenses or domestic violence would find it harder to 
regain their economic stability through the bankruptcy process.
    Mr. Chairman, this fact is not something new whose light has 
recently been cast over the dark future of bankruptcy reform that would 
follow H.R. 333. The fact that H.R. 333 would effectively place women 
and children in a gladiator's arena with creditors to do battle for 
child support money owed by former spouses who file bankruptcy has been 
articulated by national organizations such as the National Women's Law 
Center, the National Association of Consumer Bankruptcy Attorney's, the 
National Organization for Women, a coalition of bankruptcy professors 
and bankruptcy judges and the National Association of Attorney's 
General's to name but a few. How, anyone could argue against the 
drastic effects and hardships that the language in this bill will cause 
on the vulnerable women and children in this country is beyond me.
    I have consistently said that the greatest challenge before us in 
the bankruptcy reform efforts is solving the widely recognized 
inadequacies of the law in the area of consumer bankruptcy. As it has 
always been in the Congress, the key to this process, is, of course, 
successfully balancing the priorities of creditors, who desire a 
general reduction in the amount of debtor filing fraud, and debtors, 
who desire fair and simple access to bankruptcy protections when they 
need them. H.R. 333 does not accomplish this goal.
    Once again, however, the bankruptcy reform bill has been 
introduced, now in the 107th Congress. As with the bills introduced in 
the 105th and 106th Congress's, I cannot in good faith support H.R. 333 
introduced in the 107th Congress, because it:

         will weaken important credit card disclosure 
        provisions that will help ensure consumers understand the debt 
        they are incurring;

         will eliminate protections for reasonable retirement 
        pensions that reflect years of contributions by workers and 
        their employers; and

         will include an anti-consumer provision eliminating 
        existing law protections against inappropriate collection 
        practices when collecting from people who bounce checks.

    For H.R. 333 to accomplish its intended goals, I believe that it 
must include provisions that will:

         ensure families who need Chapter 7 relief are able to 
        get it, including the preservation of appropriate judicial 
        discretion;

         ensure women and children seeking to collect child 
        support from a debtor do not have to compete with other 
        creditors;

         contain adequate protection for families against 
        abusive reaffirmation practices of creditors;

         enhance, not detract from, the viability of Chapter 
        13 plans; and

         require adequate and accurate disclosure of credit 
        repayment terms.

In addition, given the recent turn in the economy, resulting in major 
corporations laying off workers by the thousands, it is even more 
important for Congress to carefully consider the impact of H.R.333.
    Mr. Chairman, colleagues, ladies and gentlemen, I am for bankruptcy 
reform, but I believe that it must be equitable and fair to all 
interested parties. I am for bankruptcy reform that recognizes the 
financial interest at stake for the debtor, his or her family and the 
creditors.
    As I have already mentioned, in assessing bankruptcy reform we must 
balance two key principles. First, debtors must not be allowed to use 
the law to avoid repaying loans when they can actually afford to do so; 
and; Second, debtors should not be forced into serious hardship. 
Efforts to implement these two ideas have been made for a long time. 
The statute of Anne, enacted in 1705, was the first such effort. It 
introduced the idea of the fresh start into our law and punished those 
who abused the bankruptcy with death by hanging. In the bill before us 
today, the sponsors sought to draw the line by separating those who are 
worthy of a fresh start from those who abuse the system, but it is this 
very goal that they have failed to accomplish.
    In reviewing H.R. 333, I was reminded of a hypothetical given by 
Douglas Baird, a law professor at the University of Chicago on H.R. 
333's predecessor's in the 105th and 106th Congress's stating that 
those bankruptcy reform bills would fail to balance the two competing 
goals that are the base of bankruptcy reform. The same is the case with 
H.R. 333 today.
    Professor Baird's hypothetical considers an elderly woman living in 
Florida who returned to the workforce several years after her husband 
became ill and died. She makes $30,000 annually as a secretary and she 
has not taken a vacation in several years. She rents a one-bedroom 
apartment and owes $60,000, much of which stems from medical bills for 
the care of her late husband. Most of the remaining debt consists of 
unpaid credit card bills, most of it spent on household goods and 
groceries. Interest runs at 15%. The widow is behind in her payments, 
collection agencies call at home and at work, and they are threatening 
to garnish her wages.
    The hypothetical then considers a 45-year-old businessman, also 
living in Florida. He works for a large corporation and makes $95,000 a 
year. He previously had his own business but it failed. Though single, 
he lives in a 5-bedroom house worth $500,000. He owes $60,000 in debt 
from his 10 credit cards, which he used to pay for vacations, clothes 
and meals in restaurants. In addition, he is personally liable for 
$200,000 in debt from his failed business venture.
    The current bankruptcy law would allow both the elderly widow and 
the businessman to file Chapter 7 bankruptcy petitions and receive a 
fresh start. However, under H.R. 333, only the businessman would be 
allowed a fresh start because the widow's use of Chapter 7 would be 
presumed abusive. The widow might be eligible for relief under Chapter 
13 but only if she commits all of her income for the next five years to 
the repayment of her debts, apart from monthly living expenses.
    In contrast, under H.R. 333, the businessman will be eligible for 
Chapter 7 relief, and be able to discharge all of his debt and keep his 
house.
    The reform laid out in H.R. 333, will also increase hardship on 
debtors because it toughens the rules for ordinary debtors, most of 
whom declare bankruptcy not out of irresponsibility but because of 
catastrophic medical bills, unemployment or divorce.
    Mr. Chairman, women are the fastest growing and largest group 
filing bankruptcy today. In 1999, over half a million women filed for 
bankruptcy by themselves--more than men filing by themselves or married 
couples. Of this number, over 200,000 women who filed for bankruptcy in 
1999 tried to collect child support or alimony. The domestic support 
provisions of H.R. 333 does not solve the problems faced by women in 
bankruptcy and does nothing address the additional problems it would 
cause to the hundreds of thousands of women forced into bankruptcy each 
year, including the single mothers forced into bankruptcy because they 
are unable to collect child support.
    Furthermore, the National Association of Attorneys General has 
already warned that increasing the claims of partially secured 
creditors as H.R. 333 would do would make it more difficult to collect 
child support because credit card companies would treat all debts as 
secured, resulting in credit card debt being elevated to the same or a 
higher level than domestic support claims, and thus, make it more 
difficult to ensure that debtors are able to satisfy their obligations 
to their spouses and children.
    H.R. 333, also creates a new priority for support debts owed to 
government units over that of a spouse, former spouse or child, which 
must be paid in full in a chapter 13 plan. Mr. Chairman, this bill does 
not provide further protections to vulnerable women and children facing 
creditors, instead, the points I have outlined today show that H.R. 333 
gives priority in many cases to the creditors over the vulnerable women 
and children.
    H.R. 333 also fails in its attempt to encourage chapter 13 filings 
by debtors, resulting in many families who currently save their homes 
and cars through chapter 13 being no longer able to do so. Under 
current law, a chapter 13 case can be filed after a chapter 7 or 13 
discharge, or after a dismissed case. This is important to families who 
might incur large medical expenses a few years after a prior discharge 
or whose chapter 13 plans fail for circumstances beyond their control.
    H.R. 333, however, prohibits a new chapter 7 case within 8 years, 
rather than the current 6 years, after a petition resulting in a prior 
chapter 7 discharge, and a new chapter 13 case within 5 years. 
Furthermore, it is unclear whether the 5 years runs from the prior 
petition or the discharge. If the 5 years begin to run from the prior 
petition, it would mean that a chapter 13 case could be prohibited for 
up to 10 years after a prior chapter 13 petition.
    H.R. 333 will also place many new obstacles in the path of 
bankruptcy debtors, which would decrease access to the system, 
especially for those with the least income, primarily by raising costs. 
for filing motions, defending dischargeability litigation, obtaining 
stays in repeat filings and other added administrative costs in the 
area of several hundred dollars which could be prohibitive for many 
families. This will greatly increase the already significant number of 
consumers who cannot afford attorney representation in bankruptcy and 
who would therefore have only the choices of filing pro se, going to an 
unqualified non-attorney petition preparer, or not filing at all.
    In addition, H.R. 333 not only restricts the circumstances that 
families can file for chapter 13, it also significantly reduces the 
scope of the chapter 13 discharge making many of the debts that are 
currently dischargeable, non-dischargeable under the full compliance 
discharge. This would effectively hurt debtors who can presently pay 
all they can afford.
    Mr. Chairman, many of the provisions that are the base of H.R. 333 
were designed for the sole purpose of reducing bankruptcy debtor filing 
fraud. As I stated at the out-set of my statement, I applaud and 
support this goal. However, the facts at hand tell us decisively that 
this goal will not be achieved under H.R. 333 because it is not 
narrowly tailored and does not provide fair and equal treatment in 
cases like homestead exemption. Furthermore, the goal of curbing 
bankruptcy debtor filing fraud is in serious question due to the sharp 
decline in bankruptcy filings overall. Statistics provided by the VISA 
Bankruptcy Notification Service, which compiles weekly reports on 
bankruptcy filings show a continued sharp decline in the bankruptcy 
rate which dropped by more than 9 % in 1999, continuing to decline at 
an 8% annual rate in the first five months of the year 2000. 
Bankruptcies are now running at a lower level than in 1997, 1998 or 
1999. The per capita growth rate in personal bankruptcies was up by 
25.2% in 1997, up by 3.1 % in 1998, down by 7.9% in 1999 and down by 
7.7% in 2000. In addition, the growth rate in personal bankruptcies was 
up by 26.1% in 1997, up by 4.0% in 1998, down by 7.0% in 1999 and down 
by 6.8% in 2000. In addition to the VISA Bankruptcy Notification 
Service, these numbers are also consistent with those compiled by the 
Chicago Mercantile Exchange in connection with the Quarterly Bankruptcy 
Index contract. These numbers that show a continuing decline in 
bankruptcies supports the view that many of the provisions provided in 
H.R. 333 are unnecessary and counterproductive.
    Mr. Chairman, as elected officials for the American people we must 
protect America's families. Most individuals who file petitions in the 
bankruptcy courts are usually experiencing turbulent times. Financial 
hardship is a serious matter that deserves legislative reform that is 
the product of a deliberative process. This bill, is an extreme bill 
undertaken at the direction of special interest groups. We must protect 
working-class families. We must work to find a viable solution that 
deters abuse of the bankruptcy system while preserving the fresh start 
for discharged debtors. It is ironic that the consumer lending industry 
actively solicits unsuspecting consumers through the mail with terms of 
easy credit, buy now--pay later rhetoric. After addicting debtors to 
this ``financial crack'' lenders are advocating for reform. Of course 
debtors are responsible for financial obligations that they incur; 
however, lenders must assume responsibility for their actions in 
creating the precarious financial crisis we are discussing.
    In the 105th Congress, I served as a member of the Subcommittee on 
Commercial and Administrative law and as a conferee on H.R. 3150, the 
precursor to the bill before us today. As a member of that subcommittee 
in the 105th Congress, I signed onto the dissenting views of the 
accompanied the report from the committee. The dissents' conclusion is 
appropriate in this context:
    For nearly 100 years, Congress has carefully considered the 
bankruptcy laws and legislated on a deliberate and bipartisan basis. In 
the past, Congress has elected also to carefully preserve an insolvency 
system, that provides for a fresh start for honest, hard-working 
debtors, protects ongoing businesses and jobs, and balances the rights 
of and between debtors and creditors.
    Because H.R. 333 departs from these historical principles, and 
tramples on the preservation of the American people, I oppose this 
legislation in the interest of all that is just and fair.
    Thank you.

    Mr. Chabot. Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman from Ohio is 
recognized for 5 minutes.
    Mr. Chabot. Thank you. I won't take all that time, and I'll 
also yield to the gentleman from Georgia, Mr. Barr. But I'd 
just note that I keep hearing the term ``mutilated'' thrown 
around here pretty freely, and there's absolutely no excuse for 
anybody who takes action against a person or any of these 
abhorrent bombings or anything else, it's absolutely 
outrageous. But I'd just note that the little babies who go 
into these abortion facilities come out in a pretty darn 
mutilated state as well. And the language in this particular 
amendment is totally unnecessary. The amendment's unnecessary, 
because malicious and willful tort awards are non-dischargeable 
under existing bankruptcy law. So the amendment is unnecessary 
and----
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Barr. Would the gentleman yield?
    Mr. Chabot. [continuing]. I would urge my colleagues----
    Mr. Barr. Would the gentleman yield?
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Chabot [continuing]. To oppose this amendment. I've 
already indicated I'd yield to the gentleman from Georgia, Mr. 
Barr. I yield.
    Mr. Barr. Thank you. Well, I think we have here the same as 
we had in prior Congresses with the Schumer amendment, which 
essentially is what we're talking about here today. It is 
simply an effort to inject a debate over abortion into a 
bankruptcy bill, Mr. Chairman. This amendment was defeated as 
the red herring that it is previously, and I would ask our 
colleagues, again, based on the eloquent statements made by the 
former chairman of the committee, the subcommittee with 
jurisdiction, as well as the gentleman from Ohio, that this 
amendment is unnecessary. It is simply an effort by pro-
abortion proponents to interject a debate over abortion into a 
bill that has and should have nothing to do with abortion.
    As the gentleman from Ohio indicated, the current 
bankruptcy code makes a debt for willful and malicious injury 
to a person or property non-dischargeable in an individual 
debtor's chapter 7 or chapter 11 bankruptcy case.
    I yield back.
    Mr. Nadler. Would the gentleman from Ohio now yield for a 
question?
    Mr. Chabot. In the interest of time, I'm going to yield 
back the time, and the folks are welcome to get their own time.
    Chairman Sensenbrenner. The gentleman has yielded back his 
time. For what purpose does the gentlewoman from California 
seek recognition?
    Ms. Waters. I move to strike the last word.
    Chairman Sensenbrenner. The gentlewoman is recognized for 5 
minutes.
    Ms. Waters. Mr. Chairman and members----
    Chairman Sensenbrenner. And the machine is working.
    Ms. Waters. [continuing]. I am a bit embarrassed by this 
debate. I'm embarrassed because I recognize that we are in the 
minority and that we are going to lose most of our attempts to 
amend this legislation, and I expect that. But there is a point 
where partisanship should not enter into the debate.
    This amendment is a reasonable amendment that speaks to an 
issue that I don't believe anyone can really, really disagree 
with. The fact of the matter is we can argue all day long about 
when life begins or when does it start, and those debates will 
go on forever. But human beings who are sitting inside that 
clinic, working inside that clinic, are living. They're live 
human beings. It's not debatable whether or not they are put at 
great risk, whether or not they can be killed, whether or not 
they could be harmed, and it has happened. And I suppose it 
will continue to happen.
    And I dare say that I would like to believe that no matter 
what you feel about abortion, that there's not one person here 
on this committee who would support the bombing of a clinic. I 
would like to believe that, no matter what you feel about 
abortion.
    Now, the argument can be made that everybody knows, because 
somewhere in law these obligations are not dischargeable. But 
what harm does it do to send that public policy message right 
from here? Right from here. So it's no question about whether 
or not it's a decision of a--of a judge somewhere down the line 
but, rather, we make it very clear in this law that we are 
passing that you cannot discharge an obligation, a judgment, or 
an order that has been rendered to have someone pay for damages 
incurred because of that kind of an act.
    So I would simply say to you, no matter what you feel, 
again, the person sitting in that clinic, whether you like it 
or not, could be your daughter. It could be your wife. It could 
be your neighbor. And as a woman, I'm terribly offended and 
embarrassed that we have to argue this case, that we have to 
take this time to talk about striking a blow on behalf of 
protection for women, even if you disagree with the decision 
that they have made.
    I would simply ask that we support this amendment. Let's 
not even bring abortion into this argument. It's about whether 
or not we will support or whether or not you will allow public 
policy to roll out of this committee showing that you support a 
criminal who has been judged to have been guilty of an act that 
is so horrendous that it is just hard to imagine.
    So I would ask support for this amendment, and I would 
yield the balance of my time to Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. I will say again, 
since Mr. Chabot apparently didn't hear when it was said 
earlier, yes, malicious and willful torts are not 
dischargeable. But violating the FACE act in a deliberate way 
to harass or intimidate people does not have to be malicious 
and willful, and it is dischargeable, and that is what this 
amendment seeks to get at. That's point one.
    Point two, I will paraphrase Mr. Barr in a different 
context. This amendment is not about abortion. It's about the 
rule of law. The law says you can't intimidate and harass 
people going into a clinic. We didn't bring--we're not trying 
to bring abortion into a bankruptcy bill. Randall Terry and 
Operation Rescue and others who are using the bankruptcy courts 
to try to avoid judgments and fines levied by courts for their 
violation of the law, they brought the bankruptcy code into 
this question.
    Now, maybe ultimately when appellate courts rule on this 
question, they will rule that you--that these things are all 
undischargeable. But we've already had thousands and thousands 
and thousands of hours of litigation in bankruptcy court 
costing millions of dollars. The real purpose of this 
amendment----
    Chairman Sensenbrenner. The gentleman's time has expired.
    For what purpose does the gentleman from Virginia seek 
recognition?
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, I support the amendment and yield 
the balance of my time to the gentleman from New York.
    Mr. Nadler. Thank you.
    This amendment is about eliminating frivolous litigation 
designed to help people--frivolous litigation by people who 
have been adjudged in violation of the law. If you think people 
should be able to violate the law and then engage in thousands 
of hours of litigation over whether to bother paying the fine 
or the judgment, then vote against this amendment. That's what 
this is about. This has nothing to do with willful or 
malicious. That's a red herring raised by a few people. What 
this amendment says is if you violate the FACE law, if the 
court finds that you violated the FACE law--it's not if someone 
thinks you did or your intention. The court finds you violated 
the law and issues a judgment against you and says you should 
pay X dollars, you shouldn't then be able to waste the 
bankruptcy court's time and the victim--the tort victim's money 
and time by a frivolous action in bankruptcy court to avoid 
paying the find or the judgment. That's all this amendment 
says.
    And I hope that Republicans are still opposed to excessive 
and frivolous litigation, which is all this amendment seems 
to--I'm sorry, seeks to curtail.
    I yield back.
    Mr. Scott. I yield back.
    Chairman Sensenbrenner. The question is on the amendment 
number four offered by Mr. Nadler of New York. Those in favor 
will say aye. Opposed, say no.
    The noes appear to have it.
    Mr. Nadler. Roll call.
    Chairman Sensenbrenner. A roll call is requested. The 
question is on the Nadler amendment. Those in favor will say 
aye as your names are called. Those opposed, say no. And the 
clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no.
    Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no.
    Mr. Gallegly?
    Mr. Gallegly. No.
    The Clerk. Mr. Gallegly, no.
    Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no.
    Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no.
    Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no.
    Mr. Jenkins?
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins, no.
    Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no.
    Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no.
    Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, no.
    Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    [No response.]
    The Clerk. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye.
    Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye.
    Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye.
    Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye.
    Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members in the 
room who wish to cast their vote and change their vote? The 
gentleman from Florida?
    The Clerk. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no.
    Chairman Sensenbrenner. Any other additional members. If 
not, the clerk will report.
    The Clerk. Mr. Chairman, there are 9 ayes and 20 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? And for what purpose does the 
gentlewoman from Texas seek recognition?
    Ms. Jackson Lee. Strike the last word, offer an amendment, 
Mr. Chairman.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Ms. Jackson Lee. The amendment is dealing with credit card 
abuse of underage voters, number 6, Jackson Lee.
    Chairman Sensenbrenner. The clerk will report Jackson Lee 
amendment number 6.
    The Clerk. Mr. Chairman, there is no amendment number 6 
here at the desk.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from California seek recognition?
    Ms. Jackson Lee. Excuse me, Mr. Chairman. It's there, 015 
at the top.
    Chairman Sensenbrenner. Has the clerk found the amendment 
that is referred to by the gentlewoman from Texas? The clerk 
will report the amendment.
    The Clerk. Amendment to H.R. 333, offered by Ms. Jackson 
Lee. Page 120, after line 16, insert the following: ``(and make 
such technical and conforming changes''----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentlewoman from Texas is 
recognized for 5 minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman.
    Some years ago there was a very popular movie that had the 
phrase that was very quotable: ``Show me the money.'' Young 
people quoted it, and it got to be sort of a familiar 
Americana, if you will.
    This bill causes reasonable minds to disagree, and I would 
hope in this instance we could get reasonable minds to agree. 
This is a simple amendment that restores the language to 
prevent the language that would protect the abuse of underage 
creditors or users of credit.
    When we debated this over the last two sessions of 
Congress, our interest was--if we could ever find a compromise, 
it was in working with the credit card companies to realize 
that abuse is a two-way street. I offer for the consideration 
of my colleagues the proliferation of mail that comes to all of 
us, and I show one of these constant barrages that comes to 
everyone's mailbox.
    This happens to be Visa Gold, and it says, ``Send for your 
card now.'' Gleaming, bold letters reaching out and screeching 
to the innocent. Send the card now. No restraint, no 
understanding of how you balance a checkbook, but just send me 
the card.
    [The Amendment offered by Ms. Jackson Lee follows:]
    
    
    Ms. Jackson Lee. I would ask, Mr. Chairman, as well to 
submit into the record an article in the USA Today, Tuesday, 
February 13, 2001.
    [The article follows:]
    
    
    Ms. Jackson Lee. The headline said, ``Debt Smothers Young 
Americans: Undergraduates pile on credit cards and debt.'' 
Young people having credit cards in 1998, 67 percent; in 2000, 
now 78 percent. Young people having four or more credit cards 
in 1998, 27 percent; 2000, 32 percent. Average credit card debt 
in 1998, $1,879; the year 2000, $2,748.
    It seems ludicrous, Mr. Chairman, that previous language 
had protection against the abuse of underage creditors, but 
H.R. 333 saw either the light that none of us could see or had 
some vision that others of us did not have, and this language 
is not in it.
    So my amendment is extremely simple and straightforward, 
what it does is it protects the underage creditor from the 
screeching sound of ``take me now.''
    This is a travesty when young people from 18 to 35--and 
obviously 35-year-olds are certainly adults. But it is well 
known that through this credit system and this constant barrage 
from the credit card companies we live from paycheck to 
paycheck, young people using credit cards for restaurant meals 
and high-tech toys, as noted in this article, and a $3,000 debt 
constantly at their doorstep.
    I believe that if we are to do no harm but as well to have 
reasonable minds, assessing the fact that maybe there is a 
recession--we have heard the President talk us into it. We know 
that growth is about 3 percent. Even though the economy is 
rumbling along, we do know that we will have to face some 
organizing of our debt, if you will.
    You have language in this legislation that means testing, 
literally blocking people from getting into the bankruptcy 
court, standing in the wayside, locking the key, and yet every 
single day you have a barrage of credit card mailing to college 
campuses, to young people with first-time jobs, to unemployed 
young people, to unemployed Americans talking about send the 
credit card now. Show me the money.
    And I think it's irresponsible, if we had the credit card 
industry sitting in here and saying give me the benefits but 
don't give me the burdens. Why we can't find an opportunity for 
a meeting of the minds to provide language that protects these 
underage----
    Chairman Sensenbrenner. The gentlewoman's time has expired.
    Ms. Jackson Lee. I would ask my colleagues to be 
reasonable----
    Chairman Sensenbrenner. The gentlewoman----
    Ms. Jackson Lee [continuing]. And support this amendment.
    Chairman Sensenbrenner. The gentlewoman's time has expired.
    For what purpose does the gentleman from Pennsylvania seek 
recognition?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. The amendment at hand is one on which I would 
ask the members to vote no. The--it's a little bit confusing to 
me as to the aim of the lady from Texas. But I have to assert 
that if a creditor violates the existing provisions of the 
Consumer Credit Protection Act, then the claim of that creditor 
falls of its own weight, and the bankruptcy provisions already 
in place and the ones which will be addressed by our bill will 
already impose sanctions on that kind of creditor. So this is a 
simple restatement, it seems to me, of the obvious. A creditor 
who violates the Consumer Credit Protection Act shall not have 
a valid claim against a debtor. Therefore, I ask for a simple 
no to a simple amendment.
    Chairman Sensenbrenner. The question----
    Mr. Gekas. I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
number 5 offered by the gentlewoman from Texas, Ms. Jackson 
Lee. Those in favor will signify by saying aye. Opposed, no.
    Ms. Jackson Lee. Roll call.
    Chairman Sensenbrenner. The noes appear to have it. Roll 
call is requested and ordered. The question is on the adoption 
of the amendment offered by the gentlewoman from Texas, Ms. 
Jackson Lee. Those in favor will, as your names are called, 
answer aye, those opposed, no, and the clerk will call the 
roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no.
    Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no.
    Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no.
    Mr. Jenkins?
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins, no.
    Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no.
    Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no.
    Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, no.
    Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    [No.]
    The Clerk. Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye.
    Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members who 
wish to cast their vote or change their vote? The gentleman 
from California, Mr. Gallegly?
    Mr. Gallegly. No.
    Chairman Sensenbrenner. Any additional members? If not, the 
clerk will report.
    The Clerk. Mr. Chairman, there are 6 ayes and 18 nays.
    Chairman Sensenbrenner. The amendment is not agreed to.
    Are there further amendments?
    Ms. Jackson Lee. Parliamentary inquiry, Mr. Chairman.
    Chairman Sensenbrenner. State your inquiry.
    Ms. Jackson Lee. Mr. Chairman, you noted at the beginning 
of this session, as you began your chairmanship, that you would 
be adhering to the rules. Let me acknowledge the fact that I 
respect your attention to the detail of the rules and will work 
very hard during these next 2 years to do so.
    I do believe, however, in the sense of comity that a hard-
hitting gavel is over the edge----
    Chairman Sensenbrenner. Well----
    Ms. Jackson Lee [continuing]. When someone is finishing 
their sentence. I believe that if we can work with less 
hostility in this room, we can all do a better job. I was 
concluding my sentence and had no intention to disrespect the 
clock. But I would appreciate it--I heard your voice, and I 
would appreciate it if we can work more in comity and with less 
hostility. And I thank the chairman.
    Chairman Sensenbrenner. The gentlewoman was not stating a 
parliamentary inquiry. You know, let me say that the clock runs 
at the same rate for both sides of the aisle.
    Ms. Jackson Lee. I appreciate it, Mr. Chairman, and I will 
do my best to adhere to it.
    Chairman Sensenbrenner. For all members----
    Ms. Jackson Lee. But the heavy-handed gavel does nothing 
but antagonize an already----
    Chairman Sensenbrenner. The gentlewoman----
    Ms. Jackson Lee [continuing]. Antagonized minority.
    Chairman Sensenbrenner [continuing]. From Texas is 
interrupting once again. The machine is operating properly. 
Every member has a yellow light notice when there is 1 minute 
to go. The Chair told the gentlewoman that her time had 
expired----
    Ms. Jackson Lee. And I was completing my sentence, Mr. 
Chairman.
    Chairman Sensenbrenner [continuing]. And she continued--she 
continued speaking, and the Chair will enforce the rules, and 
when the red light goes on, that means----
    Ms. Jackson Lee. And I appreciate it----
    Chairman Sensenbrenner [continuing]. Your time is up. 
That's the way it works----
    Ms. Jackson Lee. Since we have to spend 2 years together, I 
would appreciate it if we could do it in comity. I thank the 
chairman.
    Chairman Sensenbrenner. Okay, and comity means we don't 
interrupt each other.
    For what purpose does the gentlewoman from California----
    Ms. Jackson Lee. I agree, and I would appreciate if you 
wouldn't heavy-handle on this gavel. All you're going to do is 
break the gavel, keep going on and on and on. We can----
    Mr. Scarborough. Regular order, Mr. Chairman.
    Ms. Jackson Lee [continuing]. Work together. We are 
professionals----
    Mr. Scarborough. Regular order, Mr. Chairman. Regular 
order, Mr. Chairman.
    Chairman Sensenbrenner. Would the gentlewoman from Texas 
kindly follow the rules?
    For what purpose does the gentlewoman from California, Ms. 
Waters, seek recognition?
    Ms. Waters. Prior to seeking recognition, I have a 
parliamentary inquiry. Do you wish us--if I may, Mr. Chairman--
to----
    Chairman Sensenbrenner. The gentlewoman will state her 
inquiry.
    Ms. Waters. I have multiple amendments. Do you wish us just 
to take up one so that you can go around----
    Chairman Sensenbrenner. What the----
    Ms. Waters [continuing]. The room? Will you have a second 
round?
    Chairman Sensenbrenner. What the Chair has been doing is he 
has been conferring with the Democratic staff and following 
their advice into which order they wish me to recognize members 
of the minority. So I guess I would say please consult with 
your staff, and which amendment do you wish to offer now? 
Because they told me to recognize you next.
    Ms. Waters. Well, that was not my question. I was inquiring 
whether or not I should do multiple amendments, but I will just 
go ahead. I have an amendment at the desk----
    Chairman Sensenbrenner. Would you like to do them en bloc?
    Ms. Waters. No, I would not. I have an amendment at the 
desk.
    Chairman Sensenbrenner. Which amendment does the 
gentlewoman wish to offer?
    Ms. Waters. It is not numbered. It is--it is referred to 
under section 102, page 12, beginning on line 18.
    Chairman Sensenbrenner. Has the clerk found the proper 
amendment? If so, the clerk will report the amendment.
    The Clerk. Amendment to H.R. 333, offered by Ms. Waters. 
Page 12, beginning on line 18, insert----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentlewoman from California 
will be recognized for 5 minutes.
    [The Amendment offered by Ms. Waters follows:]
    
    

    Ms. Waters. Thank you very much.
    Mr. Chairman and members, this amendment would amend 
section 102, dismissal or conversion, so that debtors who 
establish that their income falls below a specified threshold 
do not have to comply with all of the reporting requirements 
included in the means test. The threshold should be based on 
the Federal income poverty guidelines for the current year.
    The means test is a burdensome test requiring debtors to 
gather a great deal of information for presentation to the 
bankruptcy court. Under proposed section 102, all persons 
filing for bankruptcy would have all of these requirements for 
reporting and documenting monthly expenses, rent, 
transportation, food, clothing, and necessary expenses to 
maintain safety, on and on and on. And it actually requires an 
attorney to be able to put all of this in order for 
presentation.
    We're talking about people who are below the poverty 
guidelines and they can show proof of that, of their income. We 
would simply ask that they not be put in the position of hiring 
an attorney. Not only do they not have the resources to do so, 
we have cut back on legal aid so much until they cannot 
accommodate these kinds of requests, even when people have no 
way of being able to comply with the requirements of bankruptcy 
court.
    So we need to recognize some minimal threshold below which 
debtors do not need to comply with the reporting requirements 
of the means test.
    Specifically, individuals with incomes below the Federal 
poverty guidelines would be exempt. To be below the guidelines 
for 2000, for a family of four, for example, the household 
income must be below $17,000. They are least--people filing in 
that category are least able to afford an attorney to assist 
them in gathering the necessary information.
    So, Mr. Chairman and members, I would ask that we support 
this amendment, give poor people an opportunity to not have to 
comply with these burdensome requirements, not clog up the 
system, and simply give proof of their earnings. And if they 
fall below the poverty guidelines, that should be enough.
    Chairman Sensenbrenner. Does the gentlewoman yield back the 
balance of her time?
    Ms. Waters. I yield back the balance of my time.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. The answer to the gentlelady from California is 
apparent in the language of her proposed amendment. On the one 
hand, she says that the person under the poverty level 
shouldn't have to prove anything, and then in the amendment 
says the debtors who establish that their income falls below 
the Federal income poverty guidelines. So we can only imagine 
that there are just a few ways in which one can establish that 
the income falls below the Federal income poverty.
    One is that the debtor can simply say I'm below the Federal 
income--Federal income poverty guideline, therefore, grant me 
bankruptcy. We can't allow that, can we?
    So the second step is--to establish means to provide income 
tax returns or slips, bank slips, or an array of bills, et 
cetera, or somehow that individual still has to establish. You 
have gone thus far, even in this second step, toward what we 
are attempting to do in this bill, and that is to make certain 
that everyone who comes before the bankruptcy court is entitled 
to relief. It is not a burden in any way on anyone to prove 
that they come within a certain guideline----
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas [continuing]. In the bankruptcy provisions.
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas. And it will become readily available and readily 
recognizable if a person is in a poverty guideline with the 
initial filing that that person----
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas [continuing]. Is entitled to chapter 7 discharge. 
I would yield.
    Ms. Waters. Thank you very much, and in my presentation, I 
attempted to distinguish between establishing and giving simple 
proof. For example, under this section, all persons filing for 
bankruptcy will be required to do the following: they would 
have to show the monthly expenses, rent, transportation, food, 
clothing, and all necessary expenses to maintain safety, actual 
expenses paid for reasonably necessary care to support the 
elderly, chronically ill, the disabled household member, a 
member of debtor's immediate family, actual expenses for each 
dependent child under the age of 18 years, and up to $1,500 per 
year for private--on and on and on.
    What I'm saying to you is if you fell below the poverty 
guideline, you are poor, and you come in and you show proof--
your income tax statement, your payment slips, simple proof of 
how much money you earn, if you fall below the guidelines, that 
you don't put this person in the position of having to go out 
and try and find an attorney to do all of this documentation 
when, in fact, they're poor, they have nothing. And you're 
clogging up bankruptcy court with this, and you're asking them 
to meet certain kind of standards that they can't very well 
meet. I mean, it's--it's about having a little mercy. It's 
about simply recognizing that someone who falls below the 
poverty guidelines should not have to go and gather and try and 
put together all of this documentation. It really doesn't make 
good sense.
    Mr. Gekas. Recovering some of my time here, I simply 
reiterate that it is not a great burden for an individual to 
demonstrate by what we require under this law that they come 
under the median income level, let alone the poverty levels. 
It's not that great a burden.
    As a practical matter, looking at it from a lawyer's 
standpoint, I believe that once the income level is stated and 
proved to be under the median income--forget the poverty for 
just a moment--but it might also be obvious that they're under 
the poverty level, that that ends the case right then and 
there, and that that individual will be accorded the protection 
of chapter 7.
    I ask the members to vote----
    Ms. Waters. Would the gentleman yield? Then you agree with 
me? Are you agreeing that----
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Pennsylvania. Do you yield?
    Mr. Gekas. Yes, I yield. What is the question?
    Ms. Waters. The latter part of your statement was a bit 
confusing. What you--what you said was that if you fall below 
the median or if you are poor that you should not have to do 
anything else to prove or to meet all of the requirements of 
this legislation. Is that what you said?
    Mr. Gekas. I did not say that. I said that the requirements 
that we do place in the bill do not exert a great burden on the 
debtor, and as a practical matter, if the individual is already 
declared and is proved to be under the median----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Gekas [continuing]. Guidelines for the poverty lines, 
they'll be discharged.
    Chairman Sensenbrenner. The question----
    Mr. Watt. For what purpose does the gentleman from North 
Carolina, Mr. Watt, seek recognition?
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Thank you, Mr. Chairman. I'm somewhat frustrated 
because it--it does sound to me like what Ms. Waters and what 
Mr. Gekas are saying puts them on the same side of this issue 
philosophically. Unfortunately, the bill has no exemption from 
all of these onerous paperwork requirements for people who 
clearly fall below the median income.
    Mr. Gekas. Would the gentleman yield?
    Mr. Watt. I'm happy to yield. I hope I can yield to him for 
the purpose of showing me where in this bill, once somebody 
demonstrates they fall below the median income and would be 
exempt from--should be exempt from the rest of the onerous 
provisions, where it says they really are exempt, because I've 
been looking for it and a number of experts in this field have 
looked rigorously for the provision and say that that is a 
serious, serious problem. I can't find it.
    Mr. Gekas. Would the gentleman yield----
    Mr. Watt. People who have testified here who are experts in 
this field can't find it. Not advocates. I'm talking about 
people from the National Bankruptcy Conference, which has 
people from Republicans and Democrats, conservatives and 
liberals, all of them are in this organization. They can't find 
the provision----
    Mr. Gekas. Would the gentleman yield?
    Mr. Watt [continuing]. That you say does this. And maybe 
Ms. Waters' amendment doesn't artfully do it, either. I don't 
know. But if you all agree, I don't know why we're protecting 
the integrity of a bill that doesn't say what you all agree on.
    Mr. Gekas. Would the gentleman yield?
    Mr. Watt. I think the appropriate individual to engage in 
this debate on this particular provision is the gentleman from 
North Carolina, because he very carefully articulated the 
notion and the fact that even a person under the median level, 
or even under the poverty levels, can game the system. That is 
a fact. But----
    Mr. Watt. No, no, but----
    Mr. Gekas. Let me----
    Mr. Watt. Let me just seize back my time here. I'm going to 
yield back to you. But that person then goes--it doesn't go out 
of bankruptcy. They still flip over into another bankruptcy. 
They're not gaming the system. What they are--what they are 
doing--I mean, what if all the parties in the bankruptcy court 
come in and stipulate that this person meets the income, 
there's no controversy about it whatsoever, there's nothing in 
this bill that allows that person to be exempted from filing 
all of these documents, going through all this process. You 
know, and that may be your intent. It sounds like it is. That's 
what I'm saying. But there's nothing in the bill that does 
that, Mr. Gekas, and perhaps Ms. Waters' amendment doesn't do 
it artfully either. But somewhere in this bill that ought to be 
addressed.
    Mr. Scott. Would the gentleman yield?
    Mr. Watt. I'd be happy to--well, I told Mr. Gekas I'd yield 
back to him. He's going to tell me where the provision is, 
maybe.
    Mr. Gekas. It's out there--what I----
    Mr. Watt. Well, I think that's where it is, is out there. 
I'm trying to find it in this bill. It's out there in 
cyberspace somewhere in a notion that you have about equity, 
which Ms. Waters has about equity, which I think everybody on 
this committee has about equity, and all we're saying is 
please, if we--if we found something we agree about, put it in 
the bill.
    Mr. Gekas. Would the gentleman yield?
    Mr. Watt. Yes, sir.
    Mr. Gekas. The current law requires for the purpose of 
making certain that individuals qualify, to have their debts 
discharged, to be able to prove their expenses, their income, 
the whole gamut of things. The current law requires that. So we 
don't change that portion of it.
    If an individual is to be scrutinized to determine whether 
or not they're trying to game the system or somehow to avoid 
their responsibilities to repay some of the debt, it's only a 
necessary and proper requirement to have them list their 
expenses, et cetera. What I'm saying----
    Mr. Watt. But what happens if everybody in the bankruptcy 
agrees that----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Scarborough. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Florida, Mr. Scarborough, seek recognition?
    Mr. Watt. Would Mr. Scarborough yield----
    Mr. Scarborough. To strike----
    Mr. Watt. So I can at least----
    Chairman Sensenbrenner. I'd recognize him first, please. 
For what purpose do you seek recognition?
    Mr. Scarborough. To strike the last word.
    Chairman Sensenbrenner. The gentleman from Florida is 
recognized for 5 minutes.
    Mr. Scarborough. I will yield to you, Mr. Watt, but let me 
yield to you asking you a question, too, because I'm 
sympathetic to Ms. Waters' concern, because I think most of us 
here would be sympathetic, not wanting to strap those that are 
truly impoverished with a lot of these requirements that would 
require an attorney.
    But let me ask you, Mr. Watt or Ms. Waters, just to throw 
this out there, how do we stop, let's say, somebody worth $10 
million or somebody that's making, you know, hundreds of 
thousands of dollars or millions of dollars a year from 1 year 
deciding to report that they made $13,000 in income a year or 
move their money around so they don't game the system? So 
instead of having a single mother with three kids who has run 
up some credit card bills that she can't pay, having somebody 
else game the system?
    Mr. Watt. See, what happens, Mr. Scarborough, is this: This 
bill only takes that person and flips them over into another 
form of bankruptcy. Okay? They've still got to go through all 
of the requirements. You know, if there's some question about 
that, that can be determined in that bankruptcy proceeding, and 
they can come back over--they can be sent back over here. 
That's one of the--one of the concerns we've expressed about 
this bill, is it really doesn't have a provision that kicks 
people back if they've--if they've done it either. But the 
problem is----
    Mr. Scarborough. Reclaiming real quick with one more quick 
question, do you agree with Ms. Waters that there are onerous 
requirements that would require the hiring of an attorney for 
somebody in poverty?
    Mr. Watt. Yes.
    Mr. Scarborough. You can keep talking now and just talk 
about whatever you wanted to talk about.
    Mr. Watt. Oh, I thought you were yielding--you asked me a 
question, and I answered the question.
    Mr. Scarborough. Okay. You want me to take my time back?
    Mr. Watt. That's unusual----
    Mr. Scarborough. Yeah, that is. Okay, Mr. Gekas, do you 
agree with Ms. Waters that--that the requirements are so 
onerous that, let's say, a single mother under the poverty line 
would have to hire an attorney to be able to meet these 
requirements? I'm just curious. I'm not----
    Mr. Gekas. I don't think--yes. If the gentleman would 
yield, I don't think it's going to be absolutely necessary for 
a person under the poverty level to hire a lawyer. I really 
don't. I can be proved otherwise there, but there are many 
other reasons that we require the expenses to be outlined for a 
person claiming poverty or under the median income.
    For instance, the creditor has a right to determine from 
these--these accounts as to whether or not they extended credit 
in the first place on a reasonable basis or were they defrauded 
or were they misled by the debtor when they obtained credit in 
the first place. They're entitled to know that.
    Secondly, in the question of reaffirming--reaffirmation, 
the creditor is required or should know whether or not to give 
this person a chance to reaffirm what these expenses are and 
whether they're regular and proper and necessary. So it's not 
an undue burden for anyone claiming bankruptcy to be able to 
supply these kinds of----
    Ms. Waters. Would the gentleman yield?
    Mr. Gekas [continuing]. This information. That's all I'm 
saying. Philosophically, we agree. And as a practical matter, 
this is the only thing that I was trying to say in accord with 
Ms. Waters, that in the practice of bankruptcy, it may be 
apparent, as Mr. Watt implied in one of his statements, from 
all the circumstances--and everybody agrees that even in a 
recounting of the expenses, which are still a part of the 
record, that we agree that that person should be discharging 
debt. But they'll still be scrutinizing these expenses.
    Mr. Watt. Would the gentleman yield?
    Mr. Scarborough. Well, Ms. Waters, did you ask----
    Ms. Waters. Yes.
    Mr. Scarborough. Ms. Waters?
    Ms. Waters. I--I--you asked the question about whether or 
not you believe it is necessary to hire an attorney, and what 
Mr. Gekas did not answer was all of the requirements that are 
in the bill that have to be addressed by somebody. And when you 
look at these requirements, for documentation, for everything, 
I think you will concur that the average person is unable to do 
it without an attorney and poor people simply don't have the 
resources to do it.
    If he would but read the legislation and look at how it is 
delineated here, I think he cannot--he cannot reasonably 
conclude that this poor person won't need an attorney in order 
to compile all of this documentation, to depreciate, to do a 
lot of things, in order to have an accurate picture.
    So if they're poor and they don't have anything, a family 
of four meeting the poverty guidelines, under $17,000, for 
God's sake, if that's your proof, that's all they have, let 
them go.
    Chairman Sensenbrenner. The time of the gentleman from 
Florida has expired.
    Mr. Delahunt. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts seek----
    Mr. Delahunt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Delahunt. And point out to--to Mr. Scarborough that I 
dare say there are not many on this particular panel, unless 
they have practiced in the bankruptcy courts, that had--would 
have the experience and the ability to fill out what would be--
what be required to fill out.
    In fact, at the only--at one of the hearings that this 
committee had, there was testimony from an individual professor 
from Utah who--I don't know whether I'm accurate in saying 
this, but he is a member of the National Bankruptcy Conference 
that I believe is considered a neutral--a neutral party. And he 
indicated that he agreed with the import of Ms. Waters' 
amendment, that you'd have to have a lawyer.
    In response to a question by Mr. Nadler, he indicated that 
in most cases it would be hundreds of dollars' worth of legal 
fees, but in some cases thousands of dollars' worth of legal 
fees, even when the debtor would qualify for chapter 7.
    Mr. Scarborough. Would the gentleman yield for a second? 
And I think we agree on that point. Let me ask you this very 
quickly, Mr. Delahunt. Looking at Ms. Waters' amendment, let me 
ask you what I asked Mr. Watt. I mean, do you think it's overly 
broad and is susceptible to being gamed by people? We all agree 
with this concept, I think. Most of us do. But are you 
comfortable with this language?
    Mr. Delahunt. I--I just walked in and I haven't read the--
--
    Mr. Scarborough. You don't read any bills, so just--just 
fake it.
    Mr. Delahunt. Well, my guess is, since we're----
    Mr. Watt. Would the gentleman yield?
    Chairman Sensenbrenner. If the Chair can interrupt, the 
author of the amendment has suggested that we might bring this 
amendment to a vote before we break for lunch. The committee 
members can be advised and the gentleman can proceed.
    Mr. Delahunt. And I will be very brief, but I just want to 
direct my comments to my colleagues on the other side, that 
this particular bill as drafted now is a dream for lawyers. If 
you want to make lawyers active and busy and prosperous, reject 
the Watt--reject, rather, the Waters amendment.
    Mr. Watt. Would the gentleman yield?
    Mr. Delahunt. I yield to Mr. Watt.
    Mr. Watt. Let me--and I appreciate you yielding to somebody 
who actually has read the bill and the amendment, because I've 
been looking for this--this phantom cyberspace amend--
provision. I mean, this is a serious problem. And it's even 
more a problem because there's no provision in the bill that 
allows you to get out of this process even if everybody agrees 
that you qualify.
    Now, does--does the Waters language leave something to be 
desired? Yes, it does. But the point I'm making is that if we 
all agree that there's a certain category of cases where it is 
absolutely clear that the person shouldn't be there, that 
they--that they're exempted, why couldn't we come up with some 
language to at least put that exception in the bill to keep 
people from having to go through all of these onerous 
requirements when we all agree that that shouldn't be 
necessary?
    Mr. Scott. Would the gentleman yield?
    Mr. Scarborough. Would the gentleman yield?
    Mr. Watt. And I would say to the gentleman that Ms. Waters' 
amendment----
    Mr. Delahunt. I yield to Mr. Scarborough.
    Mr. Watt [continuing]. Gets a lot closer to where--where 
the gentleman is than the bill does.
    Mr. Delahunt. I yield to Mr. Scarborough.
    Mr. Scarborough. And I thank you. If that's the case, would 
Ms. Waters consider withdrawing the amendment so we could see 
if we couldn't work on language that Mr. Watt and others would 
be more comfortable with and bring it up for a vote later on?
    Ms. Waters. I appreciate the consideration that you're 
giving to this, and if the language is imprecise and does not 
get to satisfying Mr. Gekas and others, I'm very happy to work 
on it.
    Chairman Sensenbrenner. Does the gentlewoman withdraw the 
amendment?
    Mr. Watt. Would the gentleman yield? Would the gentleman 
yield? Let me suggest to him that a better way to proceed, 
since there is nothing in the bill--I mean, it would be--it 
would make more sense on this--on this point to withdraw the 
bill, because Ms. Waters' amendment----
    Mr. Scarborough. Don't push your luck. I'm----
    Mr. Watt. I say that with tongue in cheek. The reason I say 
that is because----
    Chairman Sensenbrenner. The time of gentleman from 
Massachusetts----
    Mr. Watt. I ask unanimous consent for 30 additional 
seconds.
    Chairman Sensenbrenner. Well, there's a vote on. The 
gentleman from Massachusetts is recognized for 30 additional 
seconds.
    Mr. Watt. I just--we ought to put this provision in the 
bill and then continue to work on this provision to clean up 
the language, not just leave the bill alone and hope that 
some--somewhere cyberspace comes in----
    Chairman Sensenbrenner. The gentleman's time has once 
again----
    Ms. Waters. Excuse me. If I may, unanimous consent, if I 
need it, to address the concerns of Mr. Scarborough.
    Chairman Sensenbrenner. Well----
    Ms. Waters. I'd be happy over the lunch break to work with 
him so that we can come back and see if we can have language 
that we agree on.
    Chairman Sensenbrenner. Okay. The committee is recessed 
until 1:30. Members should be present promptly.
    [Whereupon, at 12:27 p.m., the committee was recessed, to 
reconvene at 1:30 p.m., this same day.]
    AFTERNOON SESSION [1:43 p.m.]
    Chairman Sensenbrenner. The committee will be in order. 
Pending at the time the committee recessed earlier today was 
amendment number 6 by the gentlewoman from California, Ms. 
Waters. All those in favor of the Waters amendment will----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina seek recognition? He has already spoken 
once on this amendment.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. Yes?
    Mr. Frank. I seek to strike the last word.
    Chairman Sensenbrenner. The gentleman from Massachusetts is 
recognized----
    Mr. Frank. I yield to the gentleman from North Carolina.
    Chairman Sensenbrenner [continuing]. For 5 minutes.
    Mr. Frank. I yield to the gentleman from North Carolina.
    Mr. Watt. I thank the gentleman for yielding.
    As the chairman is well aware, at the end of the discussion 
we had been talking with Mr. Scarborough about the possibility 
of--of trying to get to some language that everybody could 
agree upon to accomplish what it appeared that both Mr. Gekas 
and Ms. Waters and Mr. Scarborough and apparently a substantial 
majority of the committee agreed to.
    I have some language here. Unfortunately, Ms. Waters is not 
here. Ms. Scar--Mr. Scarborough is not here. And I don't have 
the authority to withdraw Ms. Waters' amendment, but I would 
request that that amendment be deferred until we have a chance 
to----
    Chairman Sensenbrenner. If the gentleman from Massachusetts 
would yield, you know, unfortunately, the rules do not allow us 
to defer amendments. And only the offeror of the amendment can 
have it withdrawn. So I would--the defeat of the Waters 
amendment would not prejudice any other member offering an 
amendment on the same subject that was significantly similar to 
the Waters amendment.
    Mr. Watt. Mr. Chairman, I think in light of that, I mean, 
since we're going to be rigid about this, I would offer my 
amendment, offer this language as an amendment to the Waters 
amendment, if that would be in order.
    Chairman Sensenbrenner. Well, the Chair doesn't know what 
is in this amendment on whether it would be germane or not. But 
the clerk will report the amendment to the amendment.
    The Clerk. An amendment to an amendment to H.R. 333, 
offered by Mr. Watt of California. Page 12, insert after line 
17, ``2(B)(v), a debtor whose current monthly income is equal 
to''----
    Mr. Watt. Mr. Chairman, I ask unanimous consent the 
amendment be considered as read.
    Chairman Sensenbrenner. Without objection.
    [The Amendment offered by Mr. Watt follows:]
    
    

    Mr. Gekas. Mr. Chairman, I reserve the right to object.
    Mr. Frank. Point of order, Mr. Chairman. Isn't it too late, 
the reading having already been completed?
    Chairman Sensenbrenner. No, the reading has not been 
completed, and the Chair hasn't recognized the gentleman for 5 
minutes. You know, that's--that's when reservation of a point 
of order does not become timely.
    Do you reserve the right to object to waiving the reading 
of the amendment, or are you going to reserve a point of order?
    Mr. Gekas. I'm reserving the right to object----
    Chairman Sensenbrenner. Okay.
    Mr. Gekas [continuing]. To a point of order.
    Chairman Sensenbrenner. Well----
    Mr. Gekas. To raise a point of order.
    Mr. Watt. I'll withdraw my motion that the--my unanimous 
consent request and allow the clerk to read.
    Chairman Sensenbrenner. Okay. The clerk will read.
    The Clerk. ``2(B)(v), a debtor whose current monthly income 
is equal to or less than the amount set forth in paragraph 7 
and has been for the 1-year period preceding the date of the 
filing of the petition may, in lieu of the requirements of 
clauses 4 and 5 of section 521(a)(1)(B) and subsections (e), 
(f), and (g) of section 521''----
    Chairman Sensenbrenner. Without objection, further----
    Mr. Watt. I object, Mr. Chairman.
    Chairman Sensenbrenner. If the gentleman from North 
Carolina could allow the Chair to state that the Chair has 
reviewed the amendment and it is germane and a point of order 
wouldn't lie.
    Mr. Watt. Well, I thought he was objecting to the reading, 
in which case, I--you know, I don't--I----
    Chairman Sensenbrenner. We have worked it out on this side 
of the aisle. I'm afraid we haven't worked--the clerk will 
continue to read.
    Mr. Watt. Okay. I'll withdraw--I'll withdraw my objection. 
I thought he was objecting to--to the fact that the amendment 
was not being read.
    Chairman Sensenbrenner. That was not the objection. The 
gentleman from North Carolina is recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    Mr. Chairman and members, at the end of the--before we 
broke for the votes, we had been engaged in a discussion with 
Mr. Scarborough and I thought also with Mr. Gekas about how we 
might satisfy the concern that the--that the system not be 
gamed, but still not require people who met the criteria to get 
out of the bankruptcy--out of chapter 7 and into 13 to go ahead 
and do that without an onerous paperwork burden and legal 
burden, how we could accomplish that, which every--everybody 
seemed to be intent on accomplishing.
    Over the break, our staff has come up with this wording. In 
the haste of things, they indicated that I'm from the State of 
California, and I ask unanimous consent to revise that to make 
it clear that I'm from North Carolina still.
    Chairman Sensenbrenner. Without objection.
    Mr. Watt. But beyond that, I think we have the makings of 
something that would--hopefully would satisfy what I think 
everybody is trying to achieve. And basically what that would 
require is if somebody met the criteria, felt that they met the 
criteria, they could simply file with the court written 
evidence showing their income for a 1-year period before the 
date of the filing of the petition, and file with that a 
declaration under penalty of perjury that the debtor's income 
meets the test of this clause for that period.
    Now, you know, I--I think everybody is trying to achieve 
the same thing. We're working in good faith. And what I would 
like to see, since Ms. Waters hadn't seen this amendment, Mr. 
Scarborough hadn't seen it, but I think all of us are saying 
the same thing, is let's put this amendment in the bill, and if 
we can figure out a better way or if somebody has a problem 
with it, between now and the floor, Mr. Gekas and the chairman 
of this committee have full control over this bill between now 
and the floor, so, I mean, it's not going to be the end of 
their world--although it might be the end of our world if we 
don't get some language in here on this, because as I think Mr. 
Gekas has already acknowledged, except in cyberspace somewhere, 
there is nothing that even when everybody agrees the criteria 
are met, to get somebody exempted from this bill that will get 
you out of court without filing mountains and mountains of 
paper. And that's all we're trying to achieve.
    I yield back.
    Mr. Gekas. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from--the gentleman 
from Pennsylvania.
    Mr. Gekas. Yes, I thank the Chair. I move to strike the 
last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Gekas. I still oppose the amendment because in the 
final analysis the whole purpose of bankruptcy is to allow 
those people who deserve a fresh start to gain that fresh 
start, but the opposite still applies, namely, that those who 
are able to repay even a portion of the debt should be 
compelled to do so. We have to examine that, and that's the 
purpose of the entry-level submission of documentation, et 
cetera, so that the court can be satisfied as to the real 
status of that individual.
    The language of this amendment does not take into account 
the questions of reaffirmation. It does not take into account 
the questions of bad faith, except to say the penalty of 
perjury, et cetera. Well, that's always there. Even under our 
language, that penalty of perjury is still a constant. You're 
not adding anything or showing your toughness or anything like 
that by putting in the penalty of perjury when that already 
exists.
    What we're saying is that it is not a burden, contrary to 
the general thinking of the debate that has thus far been held, 
to ask an individual to show what income is derived, what 
expenses apply to that and so forth. The totality of 
circumstances which the bankruptcy court looks at, a question 
of bad faith, a question of reaffirmation, all of those depend 
upon this full exposition of the--the details of a person's 
financial status.
    Now, having shown why I believe we should vote no, I still, 
contrary John Conyers' peroration of my intentions in the past, 
am willing to--to meet, once this is voted down, I am--you 
don't know what peroration means.
    Mr. Frank. No. If the gentleman would yield, we're just 
afraid you thought you were getting paid per oration, and we 
didn't want you to get into that.
    Mr. Gekas. Peroration. You really don't know what it means, 
then. But I am willing, once this is defeated--I hope it is 
defeated--to again join with Mr. Watt and Mr. Conyers, if he 
deigns to meet with me, having heard my pledge to do so, to try 
to work something out before the floor. But for now I ask the 
members to vote now.
    Mr. Scott. Would the gentleman yield?
    Chairman Sensenbrenner. Does the gentleman yield back the 
balance of his time?
    Mr. Gekas. I do.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Virginia seek recognition?
    Mr. Scott. The gentleman is recognized for 5 minutes.
    Mr. Scott. Mr. Chairman, maybe I'm missing something. I 
thought this reporting that was under paragraph 2 and now is 
under clauses 4 and 5 was for the purpose of determining what 
you could pay under chapter 13. What this says is if you're not 
going to chapter 13 because you are clearly eligible for 
chapter 7, all of that reporting doesn't serve--all of that 
reporting serves no useful purpose. And the question is: If 
there's no purpose to be served with the filing, why should 
anyone have to incur all of the expense of filing it?
    Mr. Gekas. Would the gentleman yield?
    Mr. Scott. I would yield.
    Mr. Gekas. I believe the gentleman is begging the question. 
To look at the items of expense and so forth is to determine 
whether or not that individual is in any way exercising bad 
faith or trying to game the system. And once we look at that, 
it may well be that the solution is to go to chapter 13, or it 
may be to discharge, or it may be to--to not allow discharge. 
There are a lot of options available. But having the evidence 
and the facts before us is a prerequisite.
    Mr. Scott. Reclaiming my time, as I understand it, if you 
are under the median income, are you or are you not entitled to 
file chapter 7? I yield.
    Mr. Gekas. If you would yield again, yes. But not if it is 
determined that the filing has occurred, even with a 
demonstration prima facie that they're under the median income. 
It does not prima facie mean that they are not trying to game 
the system, to use that phrase again. And, therefore, the 
investigation into totality of circumstances could yield a 
rejection of chapter 7, even when the median income is shown--
is shown to be the top level of this person's income.
    Mr. Scott. I yield back.
    Mr. Frank. Mr. Chairman?
    Mr. Hutchinson. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Arkansas, Mr. 
Hutchinson.
    Mr. Hutchinson. I thank the chairman and I move to strike 
the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Hutchinson. The purpose of me seeking this time is to 
make a couple of points and ask some questions. I would agree 
with the gentleman from Florida that there is a legitimate need 
that we all have or desire to minimize the paperwork 
requirement for those people who are below the poverty line, 
those people who are not making sufficient money that they 
could ever repay any of the debts. We don't want them to have 
an onerous burden of--of filing.
    But I'm just relying upon my recollection. I don't know of 
anybody who's filed bankruptcy that hasn't had an attorney 
under the present system. I just went through the University of 
Arkansas Legal Clinic, and under the present system they 
provide legal counsel to indigents who need assistance in 
preparing their petition for bankruptcy. And I know that the 
Legal Services do that to the extent that they can. So under 
the present system, people need assistance, legal assistance.
    Mr. Watt. Would the gentleman yield?
    Mr. Hutchinson. In a moment, because I have some questions 
for you. The--I think it's an admonition to us all that 
whenever Legal Services comes up for funding, we should be 
mindful of that. And so if someone's going to make that point, 
I will join with you in that. I think this is an instance in 
which, you know, if we expect people to have access to the 
bankruptcy court and we're going to put on some burdensome 
filing requirements, we need to adequately fund Legal Services 
so that they can have that assistance.
    But in regard to the amendment that's being offered by the 
gentleman from North Carolina----
    Mr. Watt. Would the gentleman yield so I can respond to 
those two issues that he just raised?
    Mr. Hutchinson. Well----
    Chairman Sensenbrenner. The gentleman from Arkansas has the 
time.
    Mr. Hutchinson. I'd like to--let me ask some questions, 
then I'll give you some time. In your amendment you refer to 
monthly income equal to or less than the amount set forth in 
paragraph 7. I'm not sure where paragraph 7 is. I need some 
assistance as to where that is. Second--let me finish. And, 
secondly, it talks about in the third line, in lieu of the 
requirements of clauses 4 and 5 of section 521(A)(1)(b), I want 
to know what are the burdensome requirements that we're putting 
on that we want to have waived. Obviously, they need to put out 
their income. They need to sign it under oath. So what more are 
we concerned about here?
    Mr. Watt. Would the gentleman yield?
    Mr. Hutchinson. Yes, I would yield.
    Mr. Watt. Okay. First of all, there are a number of debtors 
still who go into bankruptcy court unrepresented. But even if 
that were not the case, I think we, in addition to imposing a 
massive and useless burden on poor debtors, you're--you're 
imposing a tremendous paperwork burden on the bankruptcy courts 
because the documents that you're talking about, the ones that 
are required under paragraph 7, could get voluminous. There's 
no place to store these things. We talked about that last year 
when we--when we debated this bill. It adds to the paperwork 
burden of the court----
    Mr. Hutchinson. Reclaiming my time, I would like to be 
pointed to specifically the paperwork burden. You mentioned 
paragraph 7. Are these tax returns that must be furnished? 
Where are we----
    Mr. Watt. Paragraph 7 is the--is the income criteria that 
triggers you out of chapter 7 into chapter 13. That's what 
paragraph 7 is. The burdensome requirements--let's see if I can 
get somebody to help me with that one so I can--it might take 
me a little bit to zero in on them. They are in paragraph----
    Mr. Hutchinson. Well, in order to move along here, let me 
reclaim the time, and if the gentleman could identify that or 
have some staff person identify those provisions, I'd like to 
be able to examine what is necessary to be waived. But I would 
just--I believe that whatever we do, anyone who goes into 
bankruptcy is going to have to set forth their income, their 
expenses, which is currently under the present system. If 
there's a burden to provide tax returns, many of these people 
are not going to have tax returns and probably have to certify 
they don't have copies of them. And I think it will be a little 
bit more minimal, and regardless, I think you're going to have 
to have legal counsel. And I----
    Mr. Watt. Would the gentleman yield again?
    Mr. Hutchinson. Yes.
    Mr. Watt. First of all, those requirements would be 
applicable if they are going to stay in--if they're going to--
if they're going to stay in chapter 7, as opposed to----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Frank. Mr. Chairman? Mr. Chairman? Mr. Chairman?
    Chairman Sensenbrenner. What purpose does the gentleman 
from Massachusetts----
    Mr. Frank. Strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized.
    Mr. Frank. I yield to the gentleman from North Carolina.
    Mr. Watt. So the purpose of this inquiry is to determine 
whether they are eligible--whether they meet the income 
criteria, and all of these other standards don't relate to the 
income criteria. If you meet the income criteria, you are 
automatically allowed to stay in 7 and--and these things will 
take place anyway. The--the gathering of the information will 
take place anyway in that chapter 7 proceeding. But there's no 
reason to have to file it with the court. Chapter 7 has its own 
set of requirements about what you've got to do and expenses 
and income and the whole scenario, but it does not have the--
the list of steps that are outlined starting--if you--if you 
take a look at page 151, starting with debtor's duties, and you 
keep going--how far does this goes?--157 I think is where all 
this madness finally ends. And what we're saying is if somebody 
clearly meets the income criteria, why are you going to do all 
of this stuff?
    Mr. Delahunt. Would the gentleman yield?
    Mr. Frank. Who asked me to yield? Oh, yes, you're easy.
    Mr. Delahunt. Thank you, Mr. Frank. And I'd like to just 
make these observations for the benefit of my friend from 
Arkansas. At the hearings that have been held during the course 
of the consideration of this particular proposal, the estimates 
of the cost to the taxpayers were an additional $200 to $300 
million over a 5-year period in the implementation because of 
the additional paperwork and burdens that would be imposed, the 
additional trustees, the additional bankruptcy court judges, 
and the personnel. I think that's really important to remember. 
And I don't know if you were here earlier, Asa, but at the--at 
the hearing that we did have, there was testimony from a 
representative of the Bankruptcy Conference that to insist that 
everyone, even an individual who clearly was going to stay in 
7, fill out the necessary--the paperwork that the bill as 
presently constituted would require, would mean additional 
hundreds if not thousands of dollars in legal fees per case. I 
mean, these are monies that could, you know, go to creditors, 
could go to debtors, and wouldn't cost the taxpayers.
    I mean, I think that, you know, the gentleman from North 
Carolina has explained rather clearly the rationale for the--
for this particular amendment. There's nothing--there's nothing 
here that should come as a surprise to anyone, and I think it's 
important.
    Mr. Frank. Let me again yield to the gentleman from North 
Carolina.
    Mr. Watt. Let me just point out to the gentleman from 
Arkansas, if you start at (3)(i) on page 152--I mean, it starts 
before that, but look--take a look at what you--a statement of 
the debtor's financial affairs and, if applicable, a 
certificate of an attorney whose name is on the petition, if no 
attorney for the debtor is indicated and no bankruptcy preparer 
signed the petition of the debtor, such notice was obtained and 
read by the debtor, 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, statement of the amount of monthly income. I 
mean, you just go on and on and on with things that if you have 
all--if you meet the criteria and you are going to stay in 7, 
you ought not have to do that. That's all I'm saying.
    Mr. Frank. Mr. Chairman, I think I've made my point, so I 
yield back.
    Chairman Sensenbrenner. The question is on adoption of the 
amendment of the gentleman from North Carolina, Mr. Watt, to 
the amendment of the gentlewoman from California, Ms. Waters. 
All those in favor will signify by saying aye. Opposed, no? The 
noes appear to have it.
    Mr. Watt. Mr. Chairman, I ask for a roll call vote.
    Chairman Sensenbrenner. A roll call is requested.
    Mr. Watt. My hearing is a little bit different than yours.
    Chairman Sensenbrenner. Those in favor of the Watt 
amendment to the Waters amendment will, as your names are 
called, answer aye, those opposed, no, and the clerk will call 
the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no.
    Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no.
    Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Barr?
    [No response.]
    The Clerk. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, aye.
    Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no.
    Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Mr.--Ms. Hart?
    [No response.]
    The Clerk. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye.
    Mr. Frank?
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye.
    Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt, aye.
    Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members in the 
room who wish to cast their vote or change their vote? The 
gentlewoman Pennsylvania?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Chairman Sensenbrenner. Any other members who wish to cast 
their vote and change their vote? The gentleman from Virginia?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no.
    Chairman Sensenbrenner. Anybody else? If not, the clerk 
will report.
    The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
    Chairman Sensenbrenner. The question now is on the 
amendment offered by the gentlewoman from California, Ms. 
Waters. Those in favor will say aye. Opposed, no? The noes 
appear to have it. The noes have it and the amendment is not 
agreed to.
    Further amendments? The gentleman from Michigan, for what 
purpose do you seek recognition?
    Mr. Conyers. I have an amendment, a technical correction.
    Chairman Sensenbrenner. The clerk will report the Conyers 
technical correction amendment.
    The Clerk. Amendment to H.R. 333, offered by Mr. Conyers. 
Page 13, line 14, strike----
    Mr. Conyers. Mr. Chairman, I ask unanimous consent the 
amendment be considered as read.
    Chairman Sensenbrenner. Without objection, so ordered. The 
gentleman from Michigan is recognized for 5 minutes.
    Mr. Conyers. Thank you very much.
    [The Amendment offered by Mr. Conyers follows:]
    
    
    Mr. Conyers. Members of the committee, this amendment 
provides for two technical corrections, and I think you'll find 
that they are genuine corrections. The first would clarify that 
in calculating the debtor's income in chapter 13 that we should 
use his actual income, not the figure based on a job that he 
had been laid off from. The problem arises because in 
calculating chapter 13 payments the bill uses a defined term 
based on previous income. That definition was meant to apply in 
the chapter 7 means test only, and that's why I think that this 
is a technical correction, that it may not have been intended. 
It was inadvertently brought over into chapter 13 where it 
could also apply to persons with income below the median.
    The second technical amendment clarifies that lawyers who 
are bankruptcy petition preparers need not file a document 
stating that they are not lawyers. As the bill is presently 
written, it does this unusual thing, it states that all 
bankruptcy lawyers or bankruptcy petition preparers, even 
though part of the petition preparer's obligation is to 
disclose that he or she is not a lawyer. The drafters may not 
have intended this result, and I believe that both these 
matters are simple drafting oversights that may be easily 
corrected. I hope that this will enjoy the support of the 
entire committee.
    Chairman Sensenbrenner. Will the gentleman yield back?
    Mr. Conyers. Yes.
    Chairman Sensenbrenner. Gentleman from Pennsylvania, Mr. 
Gekas.
    Mr. Gekas. Mr. Chairman, I seek to strike the last----
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. I believe that the gentleman may intend to 
correct some matters here on a technical basis, but even if he 
is correct, the better way to proceed would be--and I am 
willing to look at, if he is willing to meet with me after this 
session and before we go to the floor--to amend section 221 and 
its definition of ``bankruptcy petition preparer'', rather than 
his immediate aim to try to change the definition of 
``attorney, et cetera.'', or that it incorrectly applies to 
attorneys rather than to non-attorneys. So it is the question 
of the definition of ``bankruptcy petition preparer'' the may 
require some technical amendment. I am willing to ask first 
that the members vote no on this amendment, and then pledge to 
him, to Mr. Conyers, that I will meet with him to try to work 
this out before we go to the floor on the technical changes 
that he seeks.
    Chairman Sensenbrenner. The gentleman yield back?
    Mr. Scott. Mr. Chairman----
    Chairman Sensenbrenner. For what purpose, the gentleman 
from Virginia?
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. I didn't hear the gentleman from Pennsylvania 
comment on the amendment page 23, line 14, on that part of the 
amendment, which is a fairly important part of the amendment, 
and I didn't hear a commitment to try to work that out too.
    Mr. Gekas. Is this the one that has to do with the current 
monthly income you are saying?
    Mr. Scott. Right.
    Mr. Gekas. We have been using the words of art, ``current 
monthly income'', and we believe that serves the purpose of 
what we are trying to do. I am not prepared to accept a 
substitute for that at this juncture.
    Mr. Scott. Well, reclaiming my time, the point that the 
gentleman from Michigan was making was that it makes very 
little sense to calculate what you can pay on your bills if in 
fact that is not your income. If you lost your job, you can't 
calculate what you can pay based on the job that you lost, and 
that is why the words ``projected disposable income.'' If you 
file, knowing that you have lost your job, your projected 
disposable income will be what you actually have available. The 
definition of ``current monthly income'' is calculated as what 
you made the last 6 months, which, in fact, may not be 
realistic.
    Mr. Goodlatte. Would the gentleman yield?
    Mr. Gekas. I would yield.
    Chairman Sensenbrenner. Who has the time? The gentleman 
from Virginia has the time.
    Mr. Scott. I yield to my colleague from Virginia.
    Mr. Goodlatte. I thank the gentleman for yielding. I see 
what you are getting at, but I don't think this change gets us 
there, because it would then read, ``For the purpose of this 
subsection the term 'disposable income' means projected 
disposable income less reasonable amounts necessary to be 
expended.'' But the rest of this section defines what 
disposable income is. This simply sets the benchmark of current 
monthly income less disposable, and there would be 
circumstances where somebody wouldn't be employed and might 
nonetheless still qualify under the provisions of this. And I 
think it needs some more work, but I don't think this language 
gets us there.
    Mr. Scott. I will yield back.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Michigan, Mr. Conyers. Those in 
favor will say aye.
    Opposed, no.
    The noes appear to have it. The noes have it, and the 
amendment is not agreed to.
    For what purpose does he gentlelady from California, Ms. 
Waters, seek recognition?
    Ms. Waters. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment, and is the clerk sure this is the amendment that the 
gentlewoman----
    Ms. Waters. 001.
    Chairman Sensenbrenner. Waters, 001.
    Ms. Waters. Section 311, page 144, line 16, insert 
exceptions to automatic stay. Do you have it?
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333, offered by Ms. Waters, 
page 14, line 16, insert ``(a) Exceptions to Automatic Stay'' 
before----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentlewoman from California 
is recognized for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman and members. 
This would amend section 311, Automatic Stay, that allows 
landlords to evict debtors outside of the bankruptcy court, and 
to continue eviction even after debtors have obtained an 
automatic stay. This would amend the provision to exempt the 
following groups of people: victims of domestic violence, 
elderly persons on fixed incomes, debtors with minor children 
who will fall below the median of the means test. Currently, 
debtors can remain in a property after declaring bankruptcy, so 
long as they can stay current from the date of filing or catch 
up on arrears and stay current. Even if they don't, the 
landlord can seek to evict them, but the landlord must do so 
through the bankruptcy court. This creates an additional burden 
on the landlord, but is viewed as necessary to provide the 
debtor a chance to get on his or her feet.
    The bill proposes allowing evictions through the regular 
eviction process, and permits landlords to proceed with 
evictions that had been started before the debtor filed for 
bankruptcy.
    The provision should be amended to exempt, again, that 
group of persons that I just indicated. And for further 
explanation, the victims of domestic violence are dealing with 
a number of traumas simultaneously. They may need a little 
extra time to reorient themselves and figure out how to manage 
their financial affairs. Elderly persons on fixed incomes also 
require more time to reorganize their finances. They do not 
have the same opportunities for gainful employment at the same 
time they have increased medical costs. Debtors who have minor 
children and who fall below the median specified by the 
proposed legislation should similarly be exempted. Such debtors 
do not have the financial wherewithal to find other housing, 
and an eviction could result in more minor children becoming 
homeless.
    Members, I don't know why we are changing this in this 
bill. In the previous legislation, the landlords had to go 
through the bankruptcy court in order to do the eviction, and 
you are changing that in this legislation, and it will wreak 
havoc on the most vulnerable of our society. And I do believe 
that if we give these automatic stays, that we will not be 
harming landlords in any way, because the people that I am 
trying to protect would still have the responsibility to be 
current, to pay current. And I would ask that you support these 
amendments in the interest of, again, protecting the most 
vulnerable in our society in this bankruptcy bill.
    [The Amendment offered by Ms. Waters follows:]
    
    
    Chairman Sensenbrenner. Will the gentlewoman yield back the 
balance of her time?
    Ms. Waters. Yield back the balance of my time.
    Chairman Sensenbrenner. The gentleman from Pennsylvania, 
Mr. Gekas.
    Mr. Gekas. Yes, I move to strike the last word. It appears 
that the amendment offered by the gentlelady from California, 
in effect, substitutes her versions of people who should have 
the benefit of an automatic stay to the detriment of those 
articulated in section 362(b). In other words, her language 
vitiates, removes, erases what we have put in as combatants to 
the automatic stay in the previous portion of the statute. On 
that basis alone we have to reject the amendment.
    But beyond that, on the philosophical question, her 
amendment would say that without any boundaries that a senior 
citizen, with whom we have total sympathy, and we have worked 
assiduously in many different ways to protect senior citizens 
in every aspect of their lives, this senior citizen could 
remain in a landlord-owned property indefinitely without paying 
rent. Just a moment. The better way it seems to approach these 
societal problems of inadequate assets on the part of senior 
citizens to pay rent, is to provide as fast as we could, 
alternative housing or additional forms of public assistance in 
order to pay the rent, not to find ways and means to allow the 
landlord to go months and months and months on an investment 
that would be jeopardized by allowing a senior citizen or 
anybody else continuing to stay rent free. That is against all 
the tenets of the laws of property and of enterprise and of the 
freedoms that we have in our country, the whole basis of our 
fiscal system, so----
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas. [continuing]. I would ask members to vote no on 
this amendment.
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas. Yes.
    Ms. Waters. Would you please identify the persons that you 
give an automatic stay to in the legislation? Who am I 
replacing that you have already protected? Who am I 
substituting for in the bill?
    Mr. Gekas. It says ``an eviction based on endangerment to 
property or person, or the use of illegal drugs'', just for one 
example.
    Ms. Waters. I beg your pardon?
    Mr. Gekas. Under 311, section 3, just to give you one 
example, ``An eviction action based on endangerment to property 
or person, or the use of illegal drugs.''
    Ms. Waters. That is not what I am talking about at all.
    Mr. Gekas. I know that is not what you intended.
    Ms. Waters. But you are not protecting drug dealers. I 
asked who is it you are protecting?
    Mr. Gekas. The tenants--the property and the tenants from 
the illegal drug----
    Ms. Waters. Well, I am sorry. We are not on the same track 
here.
    Mr. Gekas. That is true.
    Ms. Waters. We are not talking about the same thing.
    Mr. Gekas. That is true.
    Ms. Waters. What I----
    Mr. Scott. Will the gentlelady yield?
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Pennsylvania.
    Mr. Scott. Excuse me.
    Mr. Gekas. Did somebody ask?
    Chairman Sensenbrenner. Does the gentleman yield?
    Mr. Gekas. Yes.
    Mr. Scott. The amendment appears to me to be adding, not 
replacing language. Is that your understanding?
    Mr. Gekas. I think it replaces it.
    Ms. Waters. No.
    Mr. Scott. It says----
    Mr. Gekas. I don't think that was the intent.
    Mr. Scott. No, it adds language. It doesn't replace any 
language, according to the way I read the amendment.
    He thought you were knocking this out.
    Ms. Waters. No, we are not. We are talking about two 
different things.
    Mr. Gekas. That is true.
    Ms. Waters. If the gentleman would yield. If I may, I am 
asking that a particular category of people be protected. I am 
not asking that they be able to stay rent free, and I do not 
want my amendment to be misunderstood that way. I am asking 
that this category of vulnerable persons be granted an 
automatic stay, and that if the landlord wishes to evict, they 
have to go through the bankruptcy court in order to do that. 
And I am additionally saying that these people are responsible 
for paying their rent while they are in bankruptcy.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Gekas. I yield back the balance of my time.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts. 
For what purpose do you seek recognition?
    Mr. Frank. To strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Frank. I join with my colleague from California in 
being puzzled by one of the assertions of the gentleman from 
Pennsylvania. I understood him to say that he objected in part 
to the gentlewoman's amendment because it vitiated, removed and 
excised, which is a pretty powerful triple threat. Even lawyers 
generally only go two words. You used three. But he said that 
it was removing some exceptions that were in there. The 
gentlewoman's amendment clearly says amended by inserting, 
after the last paragraph. So it is hard to see how an amendment 
which consists entirely of an additional set of words, removes, 
vitiates, excises, diminishes, belittles, criticize or 
perorates anything. So I would be glad to yield to the 
gentleman, but I think he may have a point in mind other than 
the one he expressed.
    Mr. Gekas. Would the gentleman yield to the peroration?
    Mr. Frank. With resignation.
    Mr. Gekas. Line 5 of the amendment that is offered by the 
lady says, ``This subsection shall not apply'', meaning all the 
three previous----
    Mr. Frank. But only--oh, in that case then, I understand 
what the gentleman is saying, but I don't think it is what he 
said before. It does not remove exceptions. It does state 
exceptions to them.
    Mr. Gekas. It nullifies them.
    Mr. Frank. No. Only in certain very limited cases, the 
single parent, et cetera, so it does modify the exceptions. But 
I think the gentleman gave the impression, when he spoke, that 
this was going to entirely replace that section. It does say 
that those exceptions in the section wouldn't apply if you had 
these particular categories. So then I think the legitimate 
debate is should you or shouldn't you carve out an exception 
here for the battered spouse or the senior citizen. I yield to 
the gentleman.
    Ms. Waters. Will the gentleman yield?
    Mr. Gekas. In order to vitiate the impression, then I 
repeat, what we are saying here is that what we took careful 
time and effort in the past to put in with regard to reform of 
automatic state provisions, is modified unduly by the----
    Mr. Frank. Okay. Well, let me just say--I haven't--there is 
a policy difference here, and that is okay. I do not think that 
the gentlewoman means any disrespect to the gentleman's care. 
There is a policy difference, and that is what she is trying to 
do. But it does not, as we said, remove it. And let me yield 
now. The gentlewoman from California wanted me to yield to her.
    Ms. Waters. Would the gentleman yield?
    Mr. Frank. Yes.
    Ms. Waters. If it makes it clearer to you, we just looked 
at a way by which we can state it so perhaps it is clearer to 
you. Under line 5----
    Mr. Frank. If the gentlewoman would yield, I would not get 
my hopes up unduly on that particular point. [Laughter.]
    Ms. Waters. This elimination of the automatic stay set 
forth in the subsection shall not apply if the debtor certifies 
in the debtor's petition that the debtor is senior citizen or a 
single parent with minor children whose incomes is less than 
the median income applicable to the debtor, or is a battered 
spouse, and on and on and on. You see what we are saying? I 
want to make sure that you understand that we are not in any 
way eliminating any protections that you think that you have. 
We are not substituting. What we are doing is we are inserting 
this category of vulnerable citizens that we think should be 
protected.
    Mr. Frank. Would the gentlewoman yield? Let me just say I 
think it is clear now that what the gentlewoman would do would 
modify that list, and I think there was a confusion. It 
wouldn't entirely remove it. The list would still be there in 
the original legislation, but the gentlewoman's legislation is 
a modification of that and says the provision he says doesn't 
apply in these limited class of cases.
    Mr. Gekas. If the gentleman would yield?
    Mr. Frank. I yield.
    Mr. Gekas. It means that we have to look at trying to 
accommodate what the lady is trying to do by redrafting this to 
make certain that----
    Mr. Frank. No, I think it is fairly clear.
    Mr. Gekas. Well, if----
    Mr. Frank. I am taking back my time.
    Mr. Gekas. Yes.
    Mr. Frank. We have technical corrections to deal with this. 
What you are talking about here is a policy statement. The 
gentleman's proposal says there are these cases in which the 
automatic stay doesn't apply, et cetera. The gentlewoman has 
proposed a policy modification. I think we understand that. It 
is a modification of the language. The technical wording, as I 
said, that is why we have technical and conforming amendments 
done at the end. I don't think the gentleman's objection to the 
amendment is in fact technical; it is substantive. He does not 
think that there should be exceptions carved out that way. That 
is what we ought to be voting on.
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Virginia seek recognition?
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, I would ask to speak in favor of 
the amendment. We are changing the law in terms of a stay on 
evictions. The Waters' Amendment says that we ought not change 
the law for these--for this category of people, senior 
citizens, single parent with minor children whose income is 
less than the median income. You know, it just seems to me that 
that category of people, if you allow the eviction to go 
forward and not allow the bankruptcy to take place, while they 
may be able in fact to catch up with back rent, you are kicking 
these people out in the street.
    Now, the question is whether or not we want the change of 
the law to apply to them, or whether you want just that 
category. Change the law for everybody else, but not for them. 
The bankruptcy law has been in effect for hundreds of years, 
and it has always been the case that you get a stay of all 
proceedings. If you are going to change that, we are just 
asking, very simply, that you not kick senior citizens out in 
the street under this new law, at least exempt them and single 
parents with minor children, and not kick them out in the 
street, not change the law for them. I yield back.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentlewoman from California, Ms. Waters. Those 
in favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it. Roll call?
    Ms. Waters. Roll call, please.
    Chairman Sensenbrenner. Roll call is ordered. The question 
is on the Waters' Amendment. Those in favor will, as your names 
are called, answer aye. Those opposed, no, and the clerk will 
call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    [No response.]
    The Clerk. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    [No response.]
    The Clerk. Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Frank?
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye. Mr. Berman.
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    [No response.]
    The Clerk. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    Mr. Meehan. Aye.
    The Clerk. Mr. Meehan, aye. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there----
    Mr. Bachus. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Alabama.
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Chairman Sensenbrenner. The gentleman from Indiana.
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Chairman Sensenbrenner. Are there additional members in the 
chamber who wish to record their vote or change their vote? If 
not, the clerk will report.
    The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
    Chairman Sensenbrenner. The amendment is not agreed to. For 
what purposes does the gentleman from Massachusetts, Mr. 
Meehan, seek recognition?
    Mr. Meehan. Mr. Chairman, I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment, and if there are more than one by you, please inform 
the clerk which one you want.
    Mr. Meehan. It's Meehan.002.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333, authored by----
    Mr. Meehan. Mr. Chairman, I ask unanimous consent----
    Chairman Sensenbrenner. Without objection. And the 
gentleman is recognized for 5 minutes.
    Mr. Meehan. Mr. Chairman, I offer this amendment to correct 
what I think is an unintended but nonetheless significant 
problem with the bill's various safe harbors for low-income 
debtors. Under the bill, debtors of certain size households 
were exempt from the chapter 7's mean test, and exempt from 
having IRS expense standards used to judge their proposed 
chapter 13 plans if their incomes are less than the median 
family income of their states last reported by the Bureau of 
Census for a family of the same size as their household.
    The problem is, from what I can see and tell, the Bureau of 
Census currently publishes State by State median family income 
adjusted for variations in family size only once a decade, 
following the decennial census, and based on the data collected 
in that census. The Census Bureau doesn't publish State by 
State median household income on a yearly basis based on the 
annual surveys of 50,000 randomly selected households 
nationwide. But the statistics published on a yearly basis is 
not adjusted for variations in family size.
    In any event, median household income is entirely different 
from median family income. If I am wrong or if someone can 
demonstrate to the contrary, this isn't correct. If I am right, 
and I think I am, this means that the bill's safe harbor 
provisions may become quickly outdated as the years elapse, 
since the once-a-decade publication of the state by state 
median family income figure is adjusted for various variations 
in family size.
    So, basically what my amendment says is the State by State 
median family income figures are counting for variations in 
family size last published by the Bureau of Census, which is 
what the bill sets as a basis for its safe harbors, should be 
indexed for inflation for each year, since their publication 
that the--since their publication that the Census Bureau has 
not published new figures on State by State median family 
income adjusted for these variations in family size. This is 
not an automatic inflation adjustment. Inflation adjustment 
would happen only when the Bureau of Census had not published 
new figures on a yearly basis.
    As I suggested earlier, the Census Bureau does not do 
annual data collection and annual publication of income 
statistics. My understanding is that they could readily State 
by State median family income figures accounting for variations 
in family size on a yearly basis. Now, it would be my hope that 
that is exactly what they would do, but there is no way to be 
assured that they will do it that way. So I think there is an 
adjustment that needs to be made, and I thank the chairman and 
yield back the balance of my time.
    [The Amendment offered by Mr. Meehan follows:]
    
    
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. To strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. Mr. Chairman and members, I ask for a no vote on 
this proposition. We want the record to indicate that when 
these sections were drafted, it was after full consultation, as 
I understand it, by the conferees and those who were helping to 
draft the legislation, led by Senator Torricelli, I might add, 
who had conferences or consultations at least with the Bureau 
of Census to which you have referred, to the Department of 
Labor, to all concerned to craft what could be extrapolated 
finally by way of these statistics to which you refer into use 
in the bankruptcy code. And so we have adopted what seems to be 
a consensus among those people who were drafting it at that 
time. This does not prohibit a review of all of these things 
next year, or with new census figures or amended census figures 
or amended labor standards or anything. But for the time being, 
this represents the best effort of those involved in drafting 
this set of provisions on a bipartisan basis, and with due 
consultation with the entities to which the gentleman has 
referred. I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the----
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts.
    Mr. Frank. To strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Frank. I appreciate the fact that the people who 
originally voted didn't include this, because by definition, if 
they had, it wouldn't have been in order as an amendment. But I 
didn't get the policy reasons why it wasn't included. It would 
seem to me if you agree that there should be an income level 
adjusting it, particularly when we're talking about individuals 
adjusting it for this inflation factor, or to just be routine, 
and other than the fact that they didn't do it, we didn't know 
why they didn't do it. The gentleman said it was on a 
bipartisan basis. Certainly nobody on this side of the 
committee was involved in that decision. So I would yield to 
the gentleman. What is the policy reason for not doing this, I 
mean, other than the fact that you didn't do it? I would yield.
    Mr. Gekas. We understand that the Census Bureau is in the 
ongoing process all the time of filling in the blanks, as it 
were, of bringing in the data to which the gentleman has 
referred. We do not prohibit them from promulgating these 
changes in the Census Bureau that would accommodate what the 
gentleman is referring to.
    Mr. Frank. I yield to the gentleman from Massachusetts.
    Mr. Meehan. I am not suggesting that you don't prohibit 
them from doing it, but the fact is, if that is going to be the 
basis for these safe harbors, they ought to do it every year if 
you want it to be accurate. Presently they do it once every 10 
years, so how are these figures for a family income by the size 
of family, in some cases could be 7, 8, 9-years old, they are 
not really relevant any more. So what you could--all we are 
saying is you put it in the legislation so you either index it 
for inflation or you get the Census Bureau to do it every year, 
if you are going the rely on that for safe harbors.
    Mr. Frank. Let me just add my understanding, and maybe 
there is a question--surely, the Bureau of Labor Statistics, 
that is, the--yes, it is the Department of Labor. So what we 
are saying is those figures are there, and why not update them 
every year when there is a danger in the eighth and ninth year 
of it being too long? And the gentleman says we don't prohibit 
it. Well, we think it is a good idea. It would seem to me non-
prohibition isn't enough. If we think it is a good policy idea, 
why don't we simply incorporate it? I don't understand why it I 
controversial. I yield to the gentleman.
    Mr. Gekas. We don't believe it is controversial. The Census 
Bureau can and does, on a periodic basis, change its figures 
and----
    Mr. Frank. No. The gentleman is contradicting himself. If 
you didn't think it was controversial, you would have accepted 
this a couple of debates ago, and we would have had it. When it 
is offered, as a general--on the principle of saying, ``Well, 
we have no objection to this. We just don't want it in the 
bill, and the Census Bureau can do it if it wants to or not.'' 
We are the policy-making body. We are setting an important 
number here. Leaving it to the discretion of the agency seems 
to me not to be doing our job. I would ask the gentleman from 
Pennsylvania, does he think it would be a bad thing in policy 
terms if this was done every year?
    Mr. Gekas. We do believe that we have the right to and are 
satisfied with relying on the regular work of the Census Bureau 
throughout the 10 years, who will be able to adjust----
    Mr. Frank. Well, the gentleman didn't answer my question.
    Mr. Gekas [continuing]. And they do regularly adjust----
    Mr. Frank. The gentleman didn't answer my question. You 
know, arguing--I have to say, as a general legislative 
principle, when people tell me that they are against an 
amendment solely because it is redundant and unnecessary, I am 
always skeptical, because if it is only unnecessary, it doesn't 
do any harm. And I asked the gentleman does he have any policy 
objection. He is saying, ``Well, the Census Bureau may well do 
this anyway.''
    Mr. Gekas. Not may well, will.
    Mr. Frank. Well, why not put it in the legislation? What 
harm will it do to have it in the legislation if the gentleman 
thinks it is going to happen anyway? And I will yield to him.
    Mr. Gekas. And there is the controversy. You want to 
introduce a controversial amendment to put in solid language, 
when we know that the process agreed to by the Treasury 
Department, the administration, the Census Bureau, all the 
people who were involved in the reform measure, who will 
recognize that the Census Bureau, in its ongoing figure 
creation, will be doing that next year----
    Mr. Frank. Mr. Chairman, I must say, the argument that it 
is a good policy, there is no objection to the policy, but we 
should trust that the Census Bureau would do it anyway, rather 
than write it in, is wholly unpersuasive to me. And I do not--
if the policy of regular adjustment for inflation is not 
controversial, I do not understand why it becomes controversial 
for us to say that we want to reassure that we--we want to 
assure that we do the non-controversial policy.
    Let me say this. I have voted for this bill. I ask for 30 
second, Mr. Chairman. I have voted for this bill in committee 
before. I do think that there is abuse, and I am ready for 
changes, but adopt the posture that your Rembrandt--and not a 
brush stroke of this masterpiece can ever be changed, even if 
people find that there are ways in which it can be improved, 
and you will drive votes away; you will not add votes. I thank 
you, Chairman.
    Chairman Sensenbrenner. The gentleman's time has expired. 
The question is on the----
    Mr. Watt. Mr. Chairman.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina, Mr. Watt, seek recognition?
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognize for 5 
minutes.
    Mr. Watt. I am sorry. I had to be out for a little bit, and 
may have missed part of this, but is Mr. Gekas's contention 
that the Census Bureau can change the bankruptcy bill, even if 
it adopts a cost of living increase?
    Mr. Gekas. Would the gentleman yield?
    Mr. Watt. It wouldn't have any bearing--maybe I am just--I 
got in on the end of the discussion.
    Mr. Gekas. Many of the bureaus in our system of government 
have regular reporting updates of current conditions and a 
variety of our societal needs and institutions. In our bill we 
say, in this particular instance, that for instance, in the 
portion having to do with a household of two, three or four 
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 we are saying that 
that does not mean this is the final set of statistics. ``Last 
reported'' contemplates the ongoing duty of the Census Bureau 
to update all of these statistics. Thus, we incorporate by 
reference, after they promulgate their latest reporting----
    Mr. Watt. So the gentleman's argument is, if we do this, we 
are doing something that the Census Bureau might do anyway?
    Mr. Gekas. Is doing anyway.
    Mr. Watt. And it is redundant?
    Mr. Gekas. Well, yes. That is a peroration. No, but--no, I 
think that states the proposition.
    Mr. Watt. Which set into play the Barney Frank Principle of 
redundancy. I yield, Mr. Meehan.
    Mr. Meehan. The problem is that the Census Bureau only 
updates these figures, the family income based on the size of 
the family, every 10 years. That is when they do it presently. 
So all the amendment says is, is that we should update the 
figures. If you are going to have safe harbor provisions and 
they are going to be 8 years old or 9 years old, that we ought 
to use the most updates information. There is nothing that 
assures that the US Census Bureau is going to change. It is a 
very simple amendment.
    Mr. Watt. Perhaps the gentleman has forgotten that because 
the cost of living has been so modest under the Democratic 
Administration, he has forgotten the times that there was 
runaway inflation under some of the prior administrations.
    Mr. Frank. The gentleman yield to me?
    Mr. Watt. I will yield.
    Mr. Frank. It is very clear. If the Census Bureau did it on 
an annual basis, this amendment would have no effect. This 
amendment would only have an effect if the Census Bureau, for 
some reason, did not promulgate these figures annually. So if 
in fact it works exactly as the gentleman from Pennsylvania 
expects, there is no problem. But if the Census Bureau did not 
promulgate them annually, this would prevent there from being a 
lag in that figure. As someone who supports that concept, I 
cannot for the life of me, understand why there should be any 
substantive objection to this amendment.
    Mr. Watt. I think I understand, Mr. Chairman. Mr. Gekas 
thinks he has a Rembrandt that any brush will clearly make----
    Chairman Sensenbrenner. Moses had a more hard-line attitude 
than Rembrandt did. Will the gentleman yield back?
    Mr. Watt. Moses?
    Chairman Sensenbrenner. Yes. He sent things down in stone 
tablets.
    Mr. Watt. Oh, yeah. Well----
    Mr. Frank. If the gentleman would yield, I am not----
    Mr. Watt. Perhaps he thinks he has a stone tablet then.
    Mr. Frank. If the gentleman would yield, I am not a great 
theologian, but I don't think Moses sent down the tablets; he 
was more the recipient. I don't think Moses ever claimed to be 
the author.
    Chairman Sensenbrenner. I stand corrected. Will the 
gentleman yield back?
    Mr. Watt. I think I will, on that happy note.
    Chairman Sensenbrenner. Okay. The question is on the 
amendment offered by the gentleman from Massachusetts, Mr. 
Meehan. Those in favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it. Roll call is ordered. The 
question is on the Meehan Amendment. Those in favor will, as 
your names are called, vote aye. Those opposed, no. And the 
clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    [No response.]
    The Clerk. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    [No response.]
    The Clerk. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Conyers?
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Frank?
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye. Mr. Berman.
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    Ms. Waters. Aye.
    [No response.]
    The Clerk. Mr. Meehan?
    Mr. Meehan. Aye.
    The Clerk. Mr. Meehan, aye. Mr. Delahunt?
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt, aye. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there members in the chamber 
who wish to record their vote or change their vote? The 
gentleman from Alabama, Mr. Bachus.
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Chairman Sensenbrenner. The gentleman from Indiana, Mr. 
Hostettler.
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Chairman Sensenbrenner. The gentleman from Florida, Mr. 
Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, no.
    Chairman Sensenbrenner. Further members who wish to record 
or change their vote? The gentleman from Arkansas, Mr. 
Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Chairman Sensenbrenner. Anybody else? If not, the clerk 
will report.
    The Clerk. Mr. Chairman, there are 9 ayes and 13 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to. 
Are there further amendments? For what purpose the gentlewoman 
from Texas, Ms. Jackson Lee seek recognition?
    Ms. Jackson Lee. Mr. Chairman, I have an amendment at the 
desk. I think it is known as No. 3. It has .010 at the top.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Ms. Jackson 
Lee. Beginning on page 417, strike line 21 and all that 
follows----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentlewoman from Texas is 
recognized for 5 minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman. I am 
hoping that there can be an opportunity for a rich and 
rewarding discussion on this. First of all, I am gratified that 
the chairman allowed us to have hearings last week, because if 
my recollection serves me well, I believe Mr. Gekas raised an 
issue as well about section 1310, which this amendment 
addresses.
    My concern about this particular provision in the 
legislation is that it was added in conference, and it was not 
in either the House or the Senate bills, and therefore, I think 
it merits a deep consideration. If it stays as it is in H.R. 
333, this provision would have, I believe, a drastic and 
serious impact on the international commerce, on insurance and 
reinsurance placements for American business, and could 
interfere with the states' regulation of the insurance 
industry.
    In addition, international investment organizations, such 
as the US State Department, the US Department of Justice, have 
both declared that such a provision could undermine US efforts 
to enforce US court orders in foreign courts.
    This is sort of a two-way street. If we are to be in the 
international arena, we must give to international businesses 
or businesses other than American businesses, the same 
opportunity and the same grace that we would wish our 
businesses receive in doing international trade.
    I would like to yield to Mr. Gekas and ask his thoughts. I 
would like to have this language eliminated. I know that my 
recollection is that you have an interest in this language not 
being in the bill. I would be willing to have further 
discussions about this. I have this amendment that I am ready 
to move forward, but I wanted to engage you, Mr. Gekas, to see 
whether or not we could work together on this.
    [The Amendment offered by Ms. Jackson Lee follows:]
    
    

    Mr. Gekas. Yes. If the lady----
    Ms. Jackson Lee. I yield to the gentleman.
    Mr. Gekas. All right. I do not--I am not enamored of this 
language, and I intended to, and still intend to follow through 
with attempting to remove it from the final outcome of this 
bill. By way of authorship jealousy or whatever we want to--
pride, I want this bill to remain intact for the time being, 
and therefore, during these proceedings, I will not offer to 
remove it, nor will I support an amendment to remove it. But I 
have had discussions with this with a variety of people, and if 
nothing else happens, I will go before the Rules Committee and 
ask that an amendment to remove this from the bill be made an 
order, so that we can have full debate on it. But I would not 
be loyal to my own concept of keeping this bill intact on the 
one hand and my desire to do something about this provision if 
I didn't approach it in that manner.
    Chairman Sensenbrenner. Will the gentlewoman yield to me?
    Ms. Jackson Lee. Yes, I would be happy to yield to the 
chairman.
    Chairman Sensenbrenner. First of all, I thank the 
gentlewoman for yielding. Let me state that I share the 
gentleman from Pennsylvania's discomfort with the provisions in 
section 1310.
    Ms. Jackson Lee. My discomfort as well.
    Chairman Sensenbrenner. Any your discomfort as well. I am 
informed, however, that if section 1310 is removed here, then 
the Committee on Financial Services will demand a sequential 
referral of this legislation. As I stated at the organization 
meeting of this committee, I will vigorously defend the 
jurisdiction of the Judiciary Committee against all enemies, 
foreign and domestic. [Laughter.]
    Ms. Jackson Lee. I support you, Mr. Chairman.
    Chairman Sensenbrenner. And the enemies of the jurisdiction 
of this committee are more domestic than foreign, and we know 
who they are. Bankruptcy is very clearly within the 
jurisdiction of the Judiciary Committee, and I am not willing 
to have another committee start mucking around in what I think 
everybody in this committee feels is within our jurisdiction. 
If section 1310 stays in, the bill goes to the floor without a 
sequential. What happens out on the floor will be the will of 
the House and not the will of this committee or any other 
committee, but I will join with the gentleman from Pennsylvania 
in seeking to make an amendment to strike section 1310 in order 
on the floor if the gentlewoman will withdraw her amendment at 
this time.
    Ms. Jackson Lee. Mr. Chairman, with that generous offer, 
and I would like to be included as part of the offeror of such 
an amendment to go to the floor, I would be willing to----
    Mr. Scott. Before you do that.
    Ms. Jackson Lee. I will withhold.
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Alabama also 
wants to say something, so--the gentleman from Virginia, go 
ahead.
    Mr. Scott. Before it is stricken, Mr. Chairman, I have an 
additional discomfort. We have a provision in here that 
obviously means something, and no one can explain to us what we 
are voting on, why it is in there, how it got there.
    Chairman Sensenbrenner. The gentlewoman's time has expired. 
For what purpose does the gentleman seek recognition?
    Mr. Scott. Move to strike the last----
    Ms. Jackson Lee. I was going to ask for an additional----
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, we have a provision in the bill 
that obviously means something. It is there for some reason, 
and no one can explain to use what it does or why it got there, 
and I think the gentleman from Alabama--I will yield to him if 
he can explain to us why we ought to vote for the bill with 
that provision in there.
    Mr. Bachus. Let me say this. You are yielding to me?
    Mr. Scott. I yield.
    Mr. Bachus. What this does, this language, which was put in 
in the Senate, only applies to a foreign judgment which is the 
result of fraudulent misrepresentations made in the United 
States to investors. So it is narrowly drawn. And what it says, 
if someone--fraud was practiced on an American citizen here in 
the United States, in getting them to invest. In this case it 
is in a Lloyd's of London underwriting situation, that in the 
bankruptcy proceeding, they would be allowed to assert that 
they were defrauded, that the judgment was a result of fraud.
    Mr. Scott. Well, I would reclaim my time, and I would ask 
the gentleman, why shouldn't this benefit apply to others if it 
is such a good idea, and why is it limited to these years, and 
does it apply to anybody other than those names of Lloyd's of 
London?
    Mr. Bachus. I can't answer that. I can tell you that in my 
mind, as far as what the language does--I mean, if the 
gentleman has another amendment--but in my mind, an American 
citizen who believes they have been defrauded deserves their 
day in court, and I think the long history of bankruptcy is 
that in a proceeding to try to collect a judgment, that they 
can assert fraud. And I think really the provision is more 
consistent than inconsistent with----
    Mr. Scott. I would ask to reclaim my time. I don't see 
anything in this provision that has anything to do with 
bankruptcy. Can you point out to me what this has to do with 
bankruptcy, a proceeding in bankruptcy?
    Mr. Bachus. If it deals with bankruptcy. I mean, I don't--I 
am just simply telling what the----
    Mr. Scott. It doesn't say anything about bankruptcy. I 
reclaim my time.
    Ms. Waters. Mr. Chairman, I cannot hear the gentleman. Can 
he speak into his mike?
    Mr. Scott. Reclaiming my time. It says, ``Notwithstanding 
any provision of law''----
    Mr. Bachus. I don't know whether----
    Chairman Sensenbrenner. Will the gentleman from Alabama 
please speak into the mike, because the gentlewoman from 
California's point is well taken.
    Mr. Scott. ``A court within the United States shall not 
recognize or enforce any judgment rendered in a foreign 
court.'' It doesn't say anything about bankruptcy.
    Mr. Bachus. I am simply saying I am not arguing about that. 
What I am simply saying is the reasoning behind it. You said 
could anyone explain it.
    Ms. Jackson Lee. Will the gentleman yield?
    Mr. Bachus. And I am explaining it by saying that this 
deals with--it is narrowly constructed to deal with simply 
saying you cannot enforce a foreign judgment which was gained 
as a result of a fraudulent misrepresentation made here in the 
United States to an investor, and that that investor would have 
its day in court here.
    Mr. Scott. Well, reclaiming my time, I am a little lost as 
to what it is doing in a bankruptcy bill, but I will yield to 
the gentlelady from Texas.
    Ms. Jackson Lee. I think the gentleman has a sort of struck 
the court of the issue of the amendment that I presented. I 
think that it tampers with state insurance law. It stifles quid 
pro quo of having US judgments enforced, as well as foreign 
judgments enforced. I too was trying to find a relationship to 
the bankruptcy code, and that is why I was offering to say that 
we would do well to have this language stricken as it is not 
relative to this code, but as well, it puts at a second class 
position, judgments that US citizens would want to enforce, 
because of the way it would be implemented. And I would ask 
that we work together for an amendment subsequent to this 
hearing and this markup to have this language addressed and 
removed.
    Chairman Sensenbrenner. Does the gentlewoman want to 
withdraw her amendment at this time?
    Ms. Jackson Lee. Mr. Chairman, can I secure from the--do I 
understand--let me not--do I understand from Mr. Gekas and the 
Chair that we can work together for such an amendment moving to 
the floor, and I would like to work with them?
    Chairman Sensenbrenner. Well, I will give you a commitment 
that the rule that I asked for the Rules Committee to grant 
will allow this amendment to be offered. I have an open mind on 
whether or not personally to support it, but I do believe that 
this issue should be brought to the floor.
    Ms. Jackson Lee. All right. I thank the gentleman. You and 
Mr. Gekas. Mr. Gekas, are you intending to jointly offer it, or 
would you join me, or would you support the amendment that I 
would like to have before Rules Committee?
    Mr. Gekas. I will appear before the Rules Committee with 
the chairman at the appropriate time, and urge that this 
proposition be put up under their consideration to be made an 
order. I will continue, at this juncture, to oppose its 
inclusion subject to whatever I learn between now and then, but 
in either event, I will urge that we have it made an order.
    Chairman Sensenbrenner. Would the gentlewoman care to 
withdraw the amendment at this time?
    Ms. Jackson Lee. And I am not trying to be overly 
persistent, Mr. Chairman. I will withdraw it, but I intend to 
offer such an amendment. I am trying to understand if the 
chairman and the ranking will be supporting the amendment that 
I would be offering to strike the language?
    Chairman Sensenbrenner. The amendment is withdrawn.
    Ms. Jackson Lee. Mr. Chairman, I was asking an inquiry.
    Chairman Sensenbrenner. The gentleman from Massachusetts.
    Ms. Jackson Lee. Mr. Chairman, I am sorry. I was asking an 
inquiry. I was concerned about the amendment that I have 
offered and withdrawn. Is it my understanding that if offered 
in Rules Committee, if I offer it in Rules Committee as it is, 
that I would have the support of the chairman and Mr. Gekas for 
it to move forward?
    Chairman Sensenbrenner. Yes. To have it made an order.
    Ms. Jackson Lee. I understand.
    Chairman Sensenbrenner. That both Mr. Gekas and I have said 
that you would have an opportunity to offer it on the floor.
    Ms. Jackson Lee. I appreciate that, Mr. Chairman.
    Chairman Sensenbrenner. I can't speak for any other member, 
but I can say that I am not sure whether I would support the 
amendment on the floor.
    Ms. Jackson Lee. I understand.
    Chairman Sensenbrenner. But I will protect the 
gentlewoman's right to get a vote on it on the floor.
    Ms. Jackson Lee. And, Mr. Chairman, I withdraw the 
amendment at this time.
    Chairman Sensenbrenner. The amendment is withdrawn.
    Ms. Jackson Lee. Thank you.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts, Mr. Delahunt, seek recognition?
    Mr. Delahunt. Mr. Chairman, I have an amendment at the 
desk. It is labeled Delahunt 004, and ask for its 
consideration.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333, offered by Mr. Delahunt. 
Page 169, line 3, strike ``during the 2-year period.''
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from Massachusetts is 
recognized for 5 minutes.
    Mr. Delahunt. Thank you, Mr. Chairman. This amendment would 
eliminate, in my mind, the most significant loophole in the 
bankruptcy code, by placing a meaningful national cap on the 
so-called homestead exemption. And I say ``meaningful'', Mr. 
Chairman, because $100,000 cap that is currently in the bill is 
conditioned by a series of exemptions that assure that those 
who engage in flagrant abuse of the bankruptcy system by 
sheltering homestead assets can continue to do so. Amendment 
this amendment would extend that cap to $250,000.
    I heard during the hearings the concerns that were 
expressed by the gentleman from Indiana, Mr. Hostettler, and I 
concur with him. And I should emphasize that $250,000 I think 
is most generous, and refers clearly, obviously, to the equity 
that the debtor should have in his or her primary residence.
    But in exchange, it eliminates the exemptions for 
transactions conducted within the 2 years preceding the 
bankruptcy filing, and for that--another condition that I found 
unacceptable, for transactions occurring prior to that time 
within a single state of residency.
    Now, the rationale we had been given for the so-called 
needs-based provisions proposed in H.R. 333, is to eliminate 
abuses of the bankruptcy law, abuses which proponents of the 
legislation have characterized as the use of the bankruptcy 
code as a, quote, unquote, ``financial planning tool.'' I want 
to be clear, I don't necessarily subscribe to that theory. Yet, 
while the bill focuses about whether small debtors can manage 
to pay $20 a month in chapter 13, it leaves untouched the most 
notorious abuse of the consumer bankruptcy system, the 
financial planning strategy, if you will, whereby debtors 
purchase expensive homes in states with unlimited homestead 
exemptions, declare bankruptcy, and continue to enjoy a life of 
luxury, while their creditors get zero or very little.
    Now, if we are truly serious, if we are sincere about 
curtailing abuses, it seems to me that this is the place to 
start. For example, with the owner of the failed Ohio S&L who 
paid off only a fraction of 300 million in bankruptcy claims, 
while keeping his multimillion dollar ranch in Florida, or the 
convicted Wall Street financier, who filed bankruptcy while 
owing some 50 million in debts and fines, but still kept his $5 
million Florida mansion, complete with 11 bedrooms and 21 
baths, or the movie actor, Burt Reynolds, who declared 
bankruptcy in 1996, claiming more than $10 million in debt. 
Burt Reynolds kept a $2.5 million home, appropriately named 
Valhalla, while his creditors received less than 20 cents on 
the dollar.
    If there is ever a case for a national standard, this is 
it. Without a national cap, debtors who live in the 37 States, 
rather, that cap the exemption at $40,000 or less, are free to 
locate to one of the five so-called debtors' paradises and have 
no cap at all.
    If the amendment is adopted, it will have no effect on the 
45, 45 states that cap the exemption at $250,000 or less, but 
it will discourage residents of those jurisdictions from moving 
to one of the 7 States with a higher cap or no cap at all in 
order to take care of this enormous loophole.
    If we are serious about curbing this flagrant abuse of the 
bankruptcy system, my amendment, I would suggest, respectfully, 
is the only way to do it. I urge my colleagues to support it, 
and I would yield back the balance of my time.
    [The Amendment offered by Mr. Delahunt follows:]
    
    
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. Recognized for 5 minutes.
    Mr. Gekas. I have to say that if the gentleman from 
Massachusetts is really interested in curbing abuse in this 
particular segment of bankruptcy law, that he would support our 
bill enthusiastically because otherwise, he is supporting the 
status quo, which the status quo is the one that Burt Reynolds 
is flying high on and these millionaires. There is the abuse, 
the one that we are curbing, by permitting in our language only 
a 2-year period of new residence to qualify for any kind of an 
exemption, therefore, erasing for all time the abuse to which 
the gentleman refers. It is odd to me that he would not be 
clapping with enthusiasm that we have a homestead exemption 
that curbs Burt Reynolds forever. And therefore, I ask for a 
vote no on this provision. There is no question about serious--
--
    Mr. Delahunt. If the gentleman would yield?
    Mr. Gekas. I am not yielding yet, Bill. I will yield to 
you. Don't worry, Bill.
    Mr. Delahunt. Thank you.
    Mr. Gekas. This particular section has been debated and 
redebated and over debated since the beginning of the 
bankruptcy reform effort 5 years ago, and it is always a bone 
of contention.
    We do have to take into consideration States' rights in 
these momentous decisions that we make, and on a political 
basis--I don't mean Republican or Democrat, but on a political 
basis for the purpose of bankruptcy, Texas and Florida are 
important keys to a continued overall broad support of this 
legislation. I acknowledge that. And I was willing to fight for 
originally retention of the current status of homestead 
exemption, but because of the good offices of the members from 
Florida and the members from Texas, who were willing to yield 
on this point, still preserving the overall State homestead 
exemption that they have enjoyed for so long, and which in the 
case of Texas at least is part of their constitution, we 
crafted this reform measure, which amply meets the challenge to 
which the gentleman from Massachusetts refers.
    I urge him to remove the status quo, to get Burt Reynolds 
out of our hair and vote for our bill.
    Mr. Delahunt. If the gentleman will yield, I will get Burt 
Reynolds out of his hair. Will the gentleman yield?
    Mr. Gekas. I yield.
    Mr. Delahunt. I thank the gentleman for yielding, and I 
want to indicate to him that I do respect his acknowledgement 
that this is a political decision based upon the votes of 
members from Florida and Texas, because to be honest, that is 
really all that it is about, no more. To suggest that any 
individual can go to either one of those States and purchase a 
home for any amount of money, pay off any mortgage over a 
period of time, and live there without having the possibility 
of that particular residence being subject to a bankruptcy 
claim, I suggest to you is absolutely outrageous. And folks and 
debtors and creditors from all of the other 45 States in this 
Nation are paying for that particular abuse.
    Now the gentleman talks about states' right, but I am sure 
that the gentleman would also acknowledge that Congress, 
pursuant to the Constitution--I think it's article 1, section 
8, has the authority to mandate uniform bankruptcy laws for 
this country. It is embraced within our Constitution. Now is 
the time to do it. The 2 years that the gentleman refers to 
that is in the current legislation would not in any way hinder 
the sophisticated, astute, deadbeat, scam artist that wanted to 
circumvent the system.
    Mr. Gekas. I yield--I seize back the balance of my time, 
and say anyone who wants to gain the system has a great 
opportunity to do so in every single line of this mammoth bill 
that we are proposing. What we are trying to do is the best we 
can to eliminate or to reduce the number of scams and the 
amount of impact it would have on our economic system. This is 
a good compromise that we have. Florida and Texas are to be 
commended in joining with us in the promulgation of this 
homestead exemption. I ask everybody to vote no on this 
amendment.
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    For what purpose does the gentlewoman from Wisconsin seek 
recognition?
    Ms. Baldwin. Move to strike the last word.
    Chairman Sensenbrenner. The gentlewoman is recognized for 5 
minutes.
    Ms. Baldwin. Yield to the gentleman from Massachusetts, Mr. 
Delahunt.
    Mr. Delahunt. I thank my friend from Wisconsin for 
yielding.
    You know, Mr. Chairman, and I think we really should 
reflect for a moment on what we're doing in terms of this 
particular amendment. As I'm sure most of my colleagues are 
aware, that IRA's, pension dollars are exempt under the 
provisions of H.R. 333, up to $1 million, $1 million. I think 
we can all imagine a scenario where, again, a sophisticated, 
astute, white-collar criminal, because that's really what these 
folks are, could go to one of these States and clearly, with 
the assistance of those who understand the system, purchase a 
primary residence without a mortgage and live very comfortable 
on the income, the income from the $1 million--the interest on 
the income from the $1-million pension asset that's exempted by 
this statute. That, I suggest to you, is just bad. It's bad 
public policy, and at the same time, simultaneously, there are 
other provisions in this bill where we end up chasing people 
who are lucky to be earning $40- or $50,000 a year and have a 
family to support. It is unconscionable, I respectfully 
suggest, and I think it will further, further bring into 
disrepute the bankruptcy system, and we should pass this 
particular amendment and save face.
    Mr. Watt. Will the gentlelady yield, Ms. Baldwin?
    Chairman Sensenbrenner. The time belongs to the gentlelady 
from Wisconsin.
    Mr. Watt. Will the gentlelady yield?
    Ms. Baldwin. Yes.
    Mr. Watt. For the purpose of asking Mr. Delahunt a 
question, we debate this last year or whenever we did this bill 
before, and it's a very difficult issue. I agree with the 
gentleman that we ought to have a national standard, whether 
it's inside the 2 years or outside the 2 years. I'm not sure I 
agree with him that $250,000 is high enough to cover----
    Mr. Delahunt. If the gentleman would yield.
    Mr. Watt. I'm happy to yield. I was going to ask the 
gentleman whether he might entertain increasing that amount to 
$500,000.
    Mr. Delahunt. You know, given the realities, and again, Mr. 
Gekas, I want to acknowledge the fact that he put it out on the 
record, this is a political decision. Of course, I would 
recognize it because I think we're putting ourselves in a 
situation, where the confidence of the American people and the 
integrity of this process is truly at risk when we can pass a 
bill that creates the potential scenario that I just described.
    I'd be happy to entertain that as a motion, if that's an 
amendment offered by the gentleman.
    Mr. Watt. Maybe you should just do it yourself, since 
you're willing to do it. I mean, I'm willing to author it.
    Mr. Delahunt. I'd ask unanimous consent to raise the 
national cap from $250- to $500,000.
    Chairman Sensenbrenner. Without objection, the modification 
to the amendment is agreed to. Hearing none, so ordered.
    Mr. Watt. Would the gentlelady continue to yield?
    Chairman Sensenbrenner. The time belongs to the gentlewoman 
from Wisconsin.
    Mr. Watt. Thank you, Mr. Chairman.
    This is where we are here. We are trying to get people to 
stop abusing the Bankruptcy Code. We're making a concerted 
effort to do that, but it's quite obvious that we have a 
different standard for rich people who abuse the Bankruptcy 
Code than we have for poor people who abuse the Bankruptcy 
Code.
    Now, as I said in the hearing the other day, I have some 
concern about this whole means test provision because I think 
what we are doing with the means test is setting up two 
different systems, two different structures for----
    Chairman Sensenbrenner. The gentlewoman's time has expired.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the 
gentleman----
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman from North Carolina 
is recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman, and I hope not to take 
the 5 minutes.
    I think what we are going to end up with is, in effect, a 
pauper's court for--that handles chapter 7 bankruptcies,a need 
a higher-income bankruptcy court that handles chapter 13 
bankruptcies. We are doing this in the name of getting rid of 
abuse in the system, but we are setting up two bankruptcy 
systems in this country under this bill. And I understand why 
the means test is in the bill. That was a political decision to 
buy support for the bill, but if somebody abuses the bankruptcy 
laws, and we can write a system to ferret out the abuses, and 
that's our objective, we ought to write a bill that does that 
and that ought apply to rich people, it ought to apply to poor 
people.
    Mr. Delahunt. Would the gentleman yield?
    Mr. Watt. I'll yield to the gentleman.
    Mr. Delahunt. I thank the gentleman for yielding.
    You know the gentleman from Pennsylvania talked about 
States' rights. And as he well knows, and as my colleagues on 
the committee know, that the States have been--have their own 
list of exemptions that can vary from the list of Federal 
exemptions, and in some cases, the differences are significant. 
I wonder how the gentleman from Pennsylvania would respond or 
react to a proposal to allow the States, not just simply to 
establish their own standards and their own levels, in terms of 
exemptions of assets, but income. If, for example, the people 
in the Commonwealth of Massachusetts wanted to opt out, I think 
that's the operative term, opt out of the means testing, would 
the gentleman, at that point in time, recognize, would he 
accept that amendment and recognize the right of the people of 
Massachusetts to make that decision, in terms of their debtors, 
the individuals that find themselves in dire financial straits 
through no fault of their own?
    Mr. Gekas. If the gentleman would yield, we've already 
provided that the people of Massachusetts can decide the 
figures of a median income. It's in our bill.
    Mr. Delahunt. I understand that. I understand----
    Mr. Gekas. Every State can do that, and we honor that.
    Mr. Delahunt. No, I'm talking about opting out of the so-
called means test aspect of H.R. 333 and maintain their own 
calculation in terms of whether the debtor should go to--should 
stay in 7 or go to chapter 13.
    Mr. Gekas. I am in the process of trying to complete a 
process by which the Federal bankruptcy laws will be changed to 
try to--to try to minimize the abuses, as the gentleman from 
North Carolina said. We're going to fail in some respects. 
We're always going to have those who could game the system, but 
we're doing the best we can----
    Mr. Delahunt. I understand we're going to have people who 
will always game the system. In fact, there's an interesting 
article, relative to the same use of the language ``gaming the 
system'' back in the 1930's, when concerns were expressed about 
the then-current Bankruptcy Act, but what I'm talking about is 
the gentleman who just moments ago spoke to the issue of 
States' rights in terms of homestead exemptions, willing to 
entertain a motion which would allow the individual States to 
opt out of the so-called means test that's being proposed in 
H.R. 333. I ask, just for the sake of consistency.
    Mr. Gekas. My answer is no, but it's not inconsistent.
    Mr. Watt. Let me just finish the point I'm making. I think 
everybody understands now that this bill sets up a two-tier 
system, and I hope everybody understands that this is not 
really all about people who are abusing the system. Basically, 
we are providing much, much greater protections for rich people 
in this bill----
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Watt [continuing]. Than we are for people who meet 
other criteria.
    Mr. Wexler. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Florida seek recognition?
    Mr. Wexler. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Wexler. Thank you, Mr. Chairman. I will be brief. As 
Mr. Watt has said, this issue was discussed and debated ad 
nauseam last session.
    I just, as a Member of Congress who represents Florida, who 
represents Palm Beach and Broward Counties, the issue of 
homestead protection is as important in my area of the country 
as any other. And I would just like to add that for every one 
scoundrel, for lack of a better word, that seeks to move from 
the Northeast or the Midwest or what have you to Florida to 
protect his or her assets in this million-dollar home that was 
referred to in Florida, and certainly there have been those 
characters, and undeniably there would be some in the future, 
but for every one of those, there are possibly 700/800/1,200/
1,400, I don't know how many hundreds if not thousands of 
people that move to Florida with a moderate amount of savings 
or even a greater than moderate amount of savings, buy a home 
in their sixties or seventies, and then medical catastrophe 
strikes, and the only thing or one of the few things that 
protect them from having to move from their home or sell their 
home is a homestead exemption that was placed in the Florida 
Constitution.
    So, while the depiction is of the scoundrel that's looking 
to escape whatever ills he or she has committed and moves to 
Florida or somewhere else where there's a constitutional, State 
constitutional protection, there are thousands of older people 
and others where economic catastrophe strikes, and that is the 
purpose of this kind of protection.
    Now that does not get to the argument that Mr. Watt raises, 
which is this dual aspect of this bill. Mr. Watt may be 
entirely correct, but even if he is, I don't believe that 
that's a justification for striking from the State of Florida 
those that the citizens of Florida and other States have 
provided for their residence, so that the one asset they have 
can remain their one asset no matter what economic, health or 
other catastrophe may strike.
    Mr. Watt. Will the gentleman yield?
    Mr. Wexler. Certainly.
    Mr. Watt. I just want to point to the gentleman that's the 
very reason that I asked Mr. Delahunt to raise the limit from 
$250- to $500-. I'm still not sure that $500,000 is high 
enough. I agree, but I hope the gentleman will also agree that 
those same kind of medical catastrophes impact just as bad and 
worse on the poor people that we are relegating to a second 
class under this bill, and that's the only point that I'm 
having trouble with her. You know, I have no problem with 
trying to protect legitimate, people who are not gaming the 
bankruptcy system. I thought that's what we were setting out to 
accomplish.
    Mr. Delahunt. If my friend would yield----
    Mr. Watt. And this bill doesn't do that.
    Mr. Wexler. If I could just answer, at least from this one 
member's perspective, I agree with Mr. Watt. And I think in 
each instance, when the opportunity arises to protect those 
citizens in your State and others who are in those situations, 
I vote with you. What I'm asking is, in this instance, in this 
case, this amendment specifically would affect those residents 
of States like Florida, and I'm asking it doesn't help one iota 
that particular person that Mr. Watt is concerned about, and I 
concur with his concern, it doesn't help them one bit if the 
72-year-old in Palm Beach County who just got diagnosed with 
cancer and has now got enormous bills, gets thrown out of their 
home. It doesn't help that person----
    Mr. Delahunt. If my friend would yield.
    Mr. Wexler [continuing]. One bit. Certainly.
    Mr. Delahunt. I certainly wouldn't want to see anyone 
thrown out of their home. And if it would allay the concerns 
you expressed, I'm willing to go to a million dollars just to, 
for once, establish some sort of norm. Clearly----
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Delahunt. I yield.
    Chairman Sensenbrenner. May I use you as a reference in 
case I need to get an auctioneer's license in conducting this 
auction here today? [Laughter.]
    Mr. Delahunt. Well, I definitely would serve as a 
reference----
    Chairman Sensenbrenner. I thank you.
    Mr. Delahunt. And I would suggest this is an auction, Mr. 
Chairman. Thank you.
    Mr. Scarborough. Property is expensive in Palm Beach, a 
million is not enough.
    Chairman Sensenbrenner. Does the gentleman yield back the 
balance of his time?
    Mr. Scarborough. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Florida, Mr. Scarborough, seek recognition?
    Mr. Scarborough. I concur with Mr. Wexler for once. I'm 
keeping my mouth shut. [Laughter.]
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Virginia, Mr. Scott, seek recognition?
    Mr. Scott. I move to strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, we're talking about throwing 
people out in the cold, out of their million-dollar mansions, 
some multi-million-dollar mansions. I remind the committee that 
we just threw poor single parents with children out in the 
street a few minutes ago, just for purposes of reference.
    I'd like to ask the gentleman from Massachusetts, Bill, a 
question. As I understand the present law, your exemption under 
the homestead is limited only by State law and some States it's 
totally unlimited. Under the bill, you keep your State law for 
your unlimited exemptions, limited only by $100,000 for 
everything you've gotten within the last 2 years.
    Mr. Delahunt. That's been amended now to $500,000.
    Mr. Scott. And under your amendment you get to keep all of 
your State homestead exemptions, unlimited, except for an 
aggregate total of $500,000.
    Mr. Delahunt. As it relates just simply to the primary 
residence.
    Mr. Scott. Just simply to the----
    Mr. Delahunt. If the gentleman will continue to yield, as I 
indicated, this is simply a homestead exemption. You know, in 
this bill there is also a provision for a million-dollar 
protection exemption on a pension fund. So combine that with 
the value of equity up to $500,000, and with all due respect to 
my colleagues from Florida and Texas, I dare say no one is 
going to be tossed out on the street.
    Mr. Scott. I would ask the gentleman some States have 
property exempt other than real estate. I don't see where the 
limitation under State and local law is limited in the bill to 
real estate. If you've got other things it may be exempt for 
other reasons, because it just says property under State or 
local law. It doesn't say real estate.
    Mr. Delahunt. Well, again, this amendment is intended to 
refer specifically to the prime--the exemption that is provided 
by most States, in varying degrees of value of equity to the 
primary residence.
    Mr. Bachus. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Alabama seek recognition?
    Mr. Bachus. Mr. Chairman----
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Bachus. Now this amendment, now that it's been amended 
to a half-million dollars, it actually----
    Chairman Sensenbrenner. Could the gentleman speak into the 
mike because we've had some----
    Mr. Bachus. What you're saying is that now you could have a 
half-million-dollar exemption. And before it was a $100,000 
exemption, but you're talking about the legislation----
    Mr. Scott. Two years.
    Mr. Bachus. But that is, the 2-year limitation is designed 
to catch people from making transfers in anticipation of 
bankruptcy.
    Mr. Delahunt. But if the gentleman would yield, what I 
would suggest that if we're serious, first, there should be a 
uniform national standard, but if that's unacceptable, I don't 
think anyone, in fact, I have in another, I have another 
amendment that I will offer at a different point in time, which 
would expand the 2-year look-back provision for transactions to 
5 years because it's clear that those individuals who act most 
egregiously, who, in fact, those high-profile cases that I 
believe really undermine the confidence of the American people 
in the integrity of the system, with the resources available to 
them, their level of sophistication, they can drag it out for 2 
years.
    Mr. Bachus. I understand, but you're actually increasing 
the exemption for these people. You've taken it from $100,000 
to a half million----
    Mr. Delahunt. No.
    Mr. Bachus [continuing]. Which I would think is doing the 
exact opposite of what you're arguing----
    Mr. Delahunt. No, because the $100,000, okay, is subject to 
the 2-year limitation, but does not apply, okay, to 
transactions within the State. So, for example, if you lived in 
one community and wanted to--if--and you wanted to move to 
another community, that limitation would not be applicable.
    Mr. Bachus. I think we're moving in the wrong direction. I 
think this amendment----
    Mr. Delahunt. I concur, but, again, I'm dealing with Mr. 
Gekas----
    Mr. Bachus. I understand you're pointing out----
    Mr. Delahunt. [continuing]. Mr. Gekas said the political 
reality. In some ways, we're I think trying to present a 
picture that this is what it is.
    Mr. Bachus. I understand, but obviously it undermines the 
intent of the bill.
    Chairman Sensenbrenner. Does the gentleman yield back? Does 
the gentleman from Alabama yield back?
    Mr. Bachus. Yes.
    Chairman Sensenbrenner. The question is on the amendment, 
as modified, offered by the gentleman from Massachusetts, Mr. 
Delahunt.
    Those in favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it.
    Mr. Delahunt. Roll call.
    Chairman Sensenbrenner. Roll call is requested.
    Those in favor of the Delahunt amendment, as modified, 
will, as your names are called, answer aye; those opposed, no, 
and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no. Mr. Scarborough?
    Mr. Scarborough. No.
    The Clerk. Mr. Scarborough, no. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. Absolutely no. [Laughter.]
    The Clerk. Mr. Issa, absolutely no. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Pass.
    The Clerk. Ms. Jackson Lee, pass. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt, aye. Mr. Wexler?
    [No response.]
    The Clerk. Mr. Wexler, no. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no.
    Ms. Jackson Lee. How am I recorded, Mr. Chairman?
    Chairman Sensenbrenner. The gentlewoman from Texas, Ms. 
Jackson Lee?
    Ms. Jackson Lee. No.
    Chairman Sensenbrenner. Jackson Lee is a no.
    The Clerk. Jackson Lee, no.
    Chairman Sensenbrenner. Are there other members who wish to 
record or to change their votes? If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 6 ayes and 18 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? For what purpose does the 
gentlewoman from Wisconsin seek recognition?
    Ms. Baldwin. Thank you, Mr. Chairman. I have an amendment 
at the desk, Baldwin 003.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Three?
    Ms. Baldwin. Three.
    The Clerk. Amendment to H.R. 333 offered by Ms. Baldwin.
    Ms. Baldwin. Mr. Chairman, I ask that the amendment be 
considered as read.
    Chairman Sensenbrenner. Without objection, so ordered, and 
the gentlewoman is recognized for 5 minutes.
    Ms. Baldwin. Thank you, Mr. Chairman. I offer this 
amendment on behalf of myself and my colleague from Wisconsin, 
Mr. Kleczka. This amendment was adopted by this committee 
during last year's consideration of bankruptcy legislation in 
the form of H.R. 833. Unfortunately, this provision was not 
ultimately included in the conference report, and therefore was 
not made a part of H.R. 333 that's before us today.
    The amendment is fairly simple. Under the current 
Bankruptcy Code, wages and benefits earned, even after a 
bankruptcy has been initiated, are payable as administrative 
expenses and are accorded first-priority treatment. However, 
this provision of current law has been interpreted by some 
courts to deny any priority treatment of payment awards of back 
pay, which accrues after a bankruptcy is filed, to workers who 
have been discharged in violation of Federal law.
    What this means is that back pay awarded under Federal 
laws, such as whistleblower laws, the Family and Medical Leave 
Act, and Federal Mine Safety Act, the Uniformed Services 
Employment and Reemployment Act are all treated as general, 
unsecured claims in the corporation's bankruptcy. This, of 
course, means that workers who are entitled to back pay or 
other compensation may never actually receive it. I believe 
that awards of back pay, resulting from an employer's violation 
of Federal law, should be treated the same as other wages 
earned after bankruptcy has been initiated, and this amendment 
would do exactly that, making back pay part of the 
administrative expenses in a bankruptcy settlement.
    Mr. Chairman, this loophole in current law should be fixed. 
The amendment would make it more likely that workers who are 
entitled to back pay actually receive it. It would treat back 
pay the same as other wages earned after bankruptcy, which is 
entirely fair.
    Mr. Chairman, if there is no objection, I would like to 
submit a letter from Mr. Kleczka to be made a part of our 
record.
    Chairman Sensenbrenner. Without objection.
    [The letter of Mr. Kleczka follows:]
    
    
    Ms. Baldwin. And I ask the committee's approval of this 
amendment, especially since we did it 2 years ago. I'd like to 
see it happen again.
    Chairman Sensenbrenner. Will the gentlewoman yield back?
    Ms. Baldwin. Yes.
    Chairman Sensenbrenner. The gentleman from Pennsylvania?
    Mr. Gekas. I thank the chair. I move to strike the last 
word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. I would join in the request to have the letter 
from Jerry Kleczka made part of the record. The lady is correct 
that 2 years ago we did adopt this amendment, and we were happy 
with it, but to explain my position here is that, similar to 
some other positions that I've undertaken, I want bankruptcy 
reform to pass. I want this bill to pass.
    We have noted that this particular issue was a point of 
friction when the conference occurred twice now, and we 
succumbed to the entreaties of the other body to remove that 
portion of it because there were some questions on it for the 
rationale that impels us to move ahead in the adoption of this 
bill. So I will again here oppose the amendment, ask the people 
on the committee to reject it, to vote no, but here I extend 
again----
    Ms. Baldwin. Would the gentleman yield?
    Mr. Gekas [continuing]. After I extend to the lady the 
proposition that we, together, will seek out the truth in this 
particular amendment between now and the floor of the House, 
and perhaps confer with our Senate brethren to see where we 
stand on it. I don't know where we stand at the moment. I ask 
for a no vote. I will yield.
    Ms. Baldwin. Will the gentleman yield?
    Mr. Gekas. I'll yield.
    Ms. Baldwin. Thank you. In order to be fruitful in those 
discussions, it certainly would be helpful to me to have some 
light shed on why this particular provision was a point of 
friction in conference; after all, it passed unanimously in 
this committee and this House last time, and with no objection 
it went very smoothly.
    Mr. Gekas. Recalling my time. The moment I learn why the 
friction occurred, I will expose it fully to the lady. I will 
provide a memo and other evidence.
    Ms. Baldwin. In the meantime, I think a favorable vote in 
this committee would strength to our getting back into the 
final version.
    Mr. Gekas. I do believe you believe that. [Laughter.]
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Gekas. I do.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentlewoman from Wisconsin, Ms. Baldwin.
    Those in favor will say aye.
    Opposed no.
    The noes appear to have it.
    Ms. Baldwin. Recorded vote.
    Chairman Sensenbrenner. A roll call is requested and will 
be ordered. The question is on the Baldwin amendment. Those in 
favor will, as your names are called, answer aye; those 
opposed, no, and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no.
    Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    [No response.]
    The Clerk. Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    [No response.]
    The Clerk. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    [No response.]
    The Clerk. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional members in the 
room who wish to record or to change their vote?
    The gentleman from North Carolina, Mr. Coble.
    Mr. Coble. No.
    Chairman Sensenbrenner. The gentleman from Ohio, Mr. 
Chabot.
    Mr. Chabot. No.
    Chairman Sensenbrenner. The gentleman from Florida, Mr. 
Keller.
    Mr. Keller. No.
    Chairman Sensenbrenner. The gentleman from Indiana, Mr. 
Hostettler.
    Mr. Hostettler. No.
    Chairman Sensenbrenner. Further members who wish to record 
or change their vote? If none, the Clerk will report.
    The Clerk. Mr. Chairman, there are 3 ayes and 15 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments? The gentlewoman from 
Wisconsin, Ms. Baldwin.
    Ms. Baldwin. Thank you, Mr. Chairman.
    I have an amendment at the desk. This would be Baldwin 2.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Ms. Baldwin, 
page 357----
    Ms. Baldwin. Mr. Chairman, I ask that the amendment be 
considered as read.
    Chairman Sensenbrenner. Without objection, so ordered, and 
the gentlewoman from Wisconsin is recognized for 5 minutes.
    Ms. Baldwin. Thank you, Mr. Chairman.
    I am pleased to offer this amendment to update the 
definition of ``family farmer'' in the Bankruptcy Code in order 
to permit more farmers to file under chapter 12.
    My amendment does three simple things in order to enable 
more of our family farmers to qualify for chapter 12 bankruptcy 
protections. Those protections, of course, help ensure that 
family farmers will not have to liquidate their farming 
operation, but will be able to continue to keep on with their 
family business.
    First, the amendment will increase from 1.5 million to 3 
million, the amount of aggregate debt that may be accrued by 
the family farmer. This is necessary primarily because we have 
not updated this limit to eligibility under chapter 12 since 
its enactment, and regrettably, many family farmers' debt 
exceeds the current statutory limit.
    Second, the amendment will reduce from 80 percent to 65 
percent the amount of debt that must be related to the farming 
operation. Again, this expanded definition will allow more 
families to keep their farms under chapter 12 rather than 
having to liquidate their farm assets, and this is particularly 
important, for example, when medical debt from injury or 
illness contributes to a bankruptcy filing.
    Finally, under current law, the person or family must earn 
more than 50 percent of gross income from farming in the year 
immediately prior to the filing of the bankruptcy. This 
amendment, instead, would look at one of the last 3 years prior 
to the bankruptcy filing instead of limiting it self to the 
prior year. This change is very important because it is not at 
all unusual for one spouse to work in a non-farm job to secure 
health or other benefits for the entire family and, of course, 
extra income.
    Additionally, in a year prior to declaring bankruptcy, non-
farm income can easily exceed farm-related income since low 
prices such as low milk prices or crop failures can 
dramatically reduce gross income in any given year.
    Looking at one of the 3 years prior to the bankruptcy 
filing will keep true farm families from being denied chapter 
12 protections.
    Thank you, Mr. Chairman, and I hope that we can help farm 
families by approving this amendment. I yield back any 
remaining time.
    [The Amendment offered by Ms. Baldwin follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Pennsylvania, 
Mr. Gekas.
    Mr. Gekas. I rise to speak in opposition to the amendment.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gekas. This, too, as the previous amendment offered by 
the lady from Wisconsin, was the subject, and continues to be 
the subject, of great debate, but the final language that we 
have in our bill is as a result of a well-settled compromise 
and back-and-forth solution to this particular problem.
    The result at conference was to eliminate the extra million 
and a half that the lady is alluding to in her amendment, and, 
thus, we are ready to support the compromise. It seems to fit 
all parties except perhaps the lady from Wisconsin.
    So, rather than upset, again, the delicate balance that we 
have striven so fervently to accomplish, I ask the members to 
vote no, and I will, again, accord the lady the extra 
consultation that we might require to inquire whether or not 
this can be modified at a later stage.
    Chairman Sensenbrenner. The gentleman yield back? The 
gentleman yield back the balance of his time?
    Mr. Gekas. I do.
    Chairman Sensenbrenner. Question is on the amendment 
offered by the gentlewoman from Wisconsin. Those in favor will 
signify by saying aye.
    Opposed, no.
    The no appears to have it. Roll call will be ordered. The 
question is on the Baldwin Amendment No. 13. Those in favor 
will as your names are called answer aye; those opposed, no. 
And the Clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no.
    Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    [No response.]
    The Clerk. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    [No response.]
    The Clerk. Mr. Green?
    [No response.]
    The Clerk. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no.
    Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Additional members who wish to 
record or to change their votes?
    The gentleman from Ohio, Mr. Chabot.
    Mr. Chabot. No.
    Chairman Sensenbrenner. The gentleman from South Carolina, 
Mr. Graham.
    Mr. Graham. No.
    Chairman Sensenbrenner. The gentleman from Georgia, Mr. 
Barr.
    Mr. Barr. No.
    Chairman Sensenbrenner. Anybody else? If not, the Clerk 
will report.
    The Clerk. Mr. Chairman, there are 4 ayes and 13 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Further amendments?
    For what purpose does the gentleman from California, Mr. 
Schiff, seek recognition?
    Mr. Schiff. Reference to amendments at the desk.
    Chairman Sensenbrenner. Will the gentleman tell the Clerk 
which amendment he wishes to have read?
    Mr. Schiff. The first is 004 offered by myself and Ms. 
Waters.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    Mr. Schiff. Amendment to H.R. 333 offered by Mr. Schiff and 
Ms. Waters, page 10, after line 17, insert the following, I-5, 
in addition----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentleman from California 
is recognized for 5 minutes.
    Mr. Schiff. Thank you, Mr. Chairman and members.
    This amendment exempts foster care expenses from the means 
test definition of disposable income. Foster care payments are 
meant to help the family pay for certain expenses related to 
accepting a foster child on a temporary basis, and while foster 
care is specifically addressed in the bill in certain places, 
it is excluded from those expenses exempted from the means 
test.
    There is a very lengthy list of others which are not 
neglected in those sections; for example, care and support of 
the elderly, the chronically ill. We even, for example, exclude 
the expenses for a dependent child up to the age of 18 for 
$1,500 per year per child to attend a private, elementary, or 
secondary school, and I think if we are going to be excluded 
from a debtor's monthly expenses, expenses for up to $1,500 per 
child for a private school, we certainly ought to be excluding 
the expenses related to foster care. This amendment would 
ensure that expenses necessary to care for a foster child are 
included in the list. There are a lot of children, as this 
committee well knows, in foster care, a lot of families that 
have difficulty meeting their financial commitments even with 
the foster care support, and, Mr. Chairman, I would ask that we 
include this amendment and yield back the balance of my time.
    [The Amendment offered by Mr. Shiff and Mrs. Waters 
follows:]

    Chairman Sensenbrenner. The gentleman from Pennsylvania, 
Mr. Gekas.
    Mr. Gekas. I ask for 5 minutes.
    Chairman Sensenbrenner. The gentleman is recognized.
    Mr. Gekas. Move to strike the last word.
    Mr. Chairman and members, I ask the members to vote no on 
this provision. For the gentleman's edification, it is our 
belief and, therefore, we assert that the phraseology that we 
use throughout the sections that are pertinent to his amendment 
cover other necessary expenses, and if that wouldn't be 
enough--we believe it is--to cover the care of foster children, 
the IRS standards that are employed do include foster children 
as well. So I ask for a no vote.
    Mr. Watt. Mr. Chairman, could you yield on that point?
    Chairman Sensenbrenner. Yes.
    Mr. Watt. Could you tell us where that provision is? I 
don't--I know where the other necessary expenses are, but I 
don't see anything in this bill that suggests that a foster 
child is counted as a child in the determination of expenses.
    Mr. Gekas. Naturally, you would not see it because what I 
tried to maintain is that by incorporating by reference the IRS 
standards, as we do in the----
    Mr. Watt. But under IRS standards, is it--I mean, foster 
children are not children either, right?
    Mr. Gekas. Yes, they are.
    Mr. Watt. I don't think so, Mr. Chairman, but----
    Mr. Gekas. That's the--that's the assertion that we have 
made throughout.
    Mr. Watt. Will the gentleman yield?
    Mr. Gekas. Yes.
    Mr. Watt. The gentleman has made a number of assertions 
throughout, a number of which I have disagreed with.
    Mr. Gekas. No question about that,
    Mr. Watt. And this is--this is yet another one.
    Mr. Gekas. No question, and if any of my assertions----
    Mr. Watt. I don't think that's the case.
    Mr. Gekas [continuing]. Can be disproved, we will meet that 
when the time comes. I am not hard-headed about it. I thank the 
gentleman.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on----
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Virginia seek recognition?
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. And I would ask the gentleman from Pennsylvania, 
if we find out that the IRS regulations do not include foster 
children, would it be the intent of the gentleman from 
Pennsylvania to support this amendment somewhere between here--
--
    Mr. Gekas. If we find out that that's not the case, we will 
review it and act accordingly.
    I thank the Chair.
    Mr. Schiff. Will the gentleman yield?
    Mr. Gekas. I yield back the balance of my time.
    Mr. Schiff. Will the gentleman yield?
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Virginia. Only he can yield it.
    The question is on the Schiff amendment.
    Mr. Scott. Wait a minute.
    Mr. Schiff. If the gentleman would yield for a moment?
    Mr. Scott. I yield to the gentleman from California.
    Chairman Sensenbrenner. Okay. The gentleman recaptures his 
time even though the Chair has pushed the button, and go ahead.
    Mr. Schiff. Thank you, Mr. Chairman.
    As I understand it, there are references throughout the 
bill to foster care children, and I think if that is the case, 
then if you omit the reference to foster care in this 
paragraph, you are kind of begging the question about why 
references are made elsewhere and not provided for here. That 
might create a presumption if this ever came to litigation that 
it was intentionally excluded from this section.
    And if, as you suggest, that it is included in the IRS 
regulations, then this would merely be redundant. If not, then 
it would serve a very useful purpose, particularly if it is 
excluded elsewhere and the presumption is that it was 
intentionally excluded from this section.
    Mr. Gekas. Who has the time?
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Virginia.
    Mr. Gekas. Would the gentleman yield?
    Mr. Scott. I yield to the gentleman from Pennsylvania.
    Mr. Gekas. If, as I said, the references are made in other 
portions, the subject matter is so different where we use 
foster children that they do not by virtue of the fact that you 
believe it is not in this particular section make it necessary 
to include this, but rather the subject matter is so different 
than we believe it is already covered as I have stated.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from California, Mr. Schiff. Those in 
favor will signify by saying aye.
    Opposed, no.
    The noes appear to have it. The noes have it, and the 
amendment is not agreed to.
    Are there further amendments?
    For what purpose does the gentleman from California, Mr. 
Schiff, seek recognition?
    Mr. Schiff. Mr. Chairman, Amendment 001.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Mr. Schiff, 
page 17, line 8, strike ``and the debtor's spouse''----
    Chairman Sensenbrenner. Without objection, the amendment 
will be considered as read, and the gentleman from California 
will be recognized for 5 minutes.
    Mr. Schiff. Mr. Chairman and members, this amendment 
provides a safe harbor to exclude a spouse's income from the 
means test.
    Bankruptcy experts tell us that a large percentage of 
bankruptcy filings are the result of family problems, a 
separation, divorce, et cetera. Unfortunately, children often 
suffer under these circumstances, and the way the bill is 
currently drafted, even though the parents might be legally 
separated and one spouse files for bankruptcy, even though that 
spouse has no access to the income of the other spouse and may 
be estranged from the other spouse, the second spouse's income 
is nonetheless included in the means test. This can have a very 
direct and negative impact on the children, among others, in 
that family, and preclude that parent from the relief of 
bankruptcy. This appears to be an oversight in the current bill 
and can be remedied with this amendment.
    I yield back the balance of my time and urge an aye vote on 
the amendment.
    [The Amendment offered by Mr. Schiff follows:]
    
    

    Chairman Sensenbrenner. The gentleman from Pennsylvania, 
Mr. Gekas.
    Mr. Gekas. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized.
    Mr. Gekas. I ask the members to vote no on this amendment, 
but I hasten to say that the gentleman may have struck a cord 
of error here in which, again, we became frozen in time, as it 
were, during the conference to preserve the unity of the bill. 
It may have been an oversight. We are not certain of that.
    We are going to double-check. We are going to ask for a no 
vote. We are going to try to defeat your amendment, and then we 
will consult to see what the future holds for your proposed 
amendment.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Gekas. I yield back.
    Chairman Sensenbrenner. Question?
    Mr. Scott. Mr. Chairman? Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, the gentleman's amendment seems to 
me to make excellent sense. This is the original determination 
of presumption of abuse to determine whether or not a person's 
income is above or below the State median income to determine 
where they go in bankruptcy. It seems to me ridiculous to 
include in that calculation the income of a spouse that may 
have been--may be deserted, may be long gone, someone that you 
don't have any access to their money, and account that income 
to force a person out of chapter 7 into chapter 13 when the 
person filing has very little, if any, income at all. It seems 
to me absolutely ridiculous, and if this markup means anything, 
it seems to me that we would consider the amendment and not put 
everything off until such time as if this markup is 
meaningless.
    Mr. Gekas. If the gentleman would yield?
    Mr. Scott. I will yield.
    Mr. Gekas. I am considering it. I just spoke to the fact 
that I am considering it.
    Mr. Scott. Well, if it is a good amendment, let's adopt it.
    Mr. Gekas. I am asking you to consider my position of 
wanting to double-check, and, therefore, I am asking for a no 
vote. It is not being--I am not being cruel to you, but you are 
trying to be cruel to me. Therefore, I ask for a no vote. I 
pledge to the gentleman that we are going to look at this 
between now and the floor.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Scott. Well, I assume I will yield back. I mean, the 
point of the gentleman has been made, that we are not going to 
consider any amendment however meritorious until he can check 
with whoever.
    I yield back.
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman.
    I have to say that this is extremely frustrating. We got a 
committee here that has--I don't know how many members we got. 
Thirty-seven members, I am told.
    We are told that it is our responsibility to mark up a bill 
and to evaluate arguments for and against it, and, yet, time 
after time after time, we have been told that--and it has been 
demonstrated. In fact, I think Mr. Scarborough's lone vote for 
one amendment today is the sole and only vote from the other 
side for any amendment regardless of how meritorious it is.
    It makes us wonder what it is we are doing here, and then 
if we stay here and try to do our job, then we get accused of 
being dilatory and, you know, trying to draw the--obstructive, 
whatever the words are, and trying to draw the process out, and 
at some point, I am sure somebody is going to get angry because 
tomorrow we are going to be here going through what appears to 
be a charade. It is a charade.
    I don't think I have seen this. I mean, obviously, the 
committee has worked its will throughout all the 8-plus years I 
have been on this committee, but I don't think I have ever seen 
a bill come to our committee and have the person who is 
controlling the bill say over and over again----
    Mr. Gekas. Move to strike that phrase from the record.
    Chairman Sensenbrenner. The gentleman--the gentleman will 
suspend. If the gentleman from Pennsylvania asked that the 
gentleman's words be taken down, the gentleman will----
    Mr. Gekas. Well, no, I have never used that word except in 
conjunction with Boulder. That is the only time I ever used 
that word.
    Chairman Sensenbrenner. With what? Without objection, the 
word ``damn'' will be stricken from the record. Hearing none, 
so ordered, and the gentleman from North Carolina may continue.
    Mr. Watt. There is something offensive to me about being 
told--and I don't think I have ever seen this happen in this 
committee over and over again by the person who is controlling 
the bill; that I don't give a darn how much--I don't give a 
darn how much sense or merit your amendment has. Either I have 
some deal with somebody else or I'm not bright enough myself to 
evaluate what is being proposed, and to have over and over 
again just absolute misrepresentations made about what the 
state of the law is--I mean, I hope you are going to go back 
now, Mr. Gekas, and look at--I finally did get the definition 
of ``child.'' Under the Income Tax Code, it says nothing about 
step--foster children. You know, you just represent stuff as if 
we are just stupid, and you are treating us now as if we are 
stupid and you are right on the verge, I would tell you, of 
getting me to start treating you all the same way.
    Mr. Gekas. Would the gentleman yield for a moment?
    Chairman Sensenbrenner. The time belongs to the gentleman 
from North Carolina.
    Mr. Watt. I am happy to yield to him.
    Mr. Gekas. I have always felt, and I still continue to 
feel--and I think the gentleman will agree that part of the 
legislative process and the committee work is when confronted 
with a provision or a set of words or a comma or other parts of 
a proposed piece of legislation that we pause, we look around, 
we say would you withdraw that amendment or I will accept it on 
the condition that--and we do this constantly. It is part of 
the process, and it is part of the give-and-take. Any illusion 
to the contrary is abusive on your part as to what we are 
trying to do for----
    Mr. Watt. Well, I'm sure we were--I was sure we were going 
to get to the point where this whole process was my fault all 
of a sudden. I had no doubt about that.
    Mr. Gekas. And we're all on the same----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Watt. Okay. Well, I'm getting ready to make it my fault 
now.
    Chairman Sensenbrenner. And the question is on the adoption 
of Schiff Amendment No. 15. Those in favor will say aye.
    Those opposed will say no.
    Chairman Sensenbrenner. The noes appear to have it.
    Mr. Watt. I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote is ordered. The 
question is on Schiff Amendment No. 15. Those in favor will as 
your names are called answer aye; those opposed, no. And the 
Clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no.
    Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    [No response.]
    The Clerk. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no.
    Mr. Bachus?
    [No response.]
    The Clerk. Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    [No response.]
    The Clerk. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. The gentleman from Alabama.
    The Clerk. Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. No.
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Coble.
    Mr. Coble. No.
    Chairman Sensenbrenner. The gentleman from Arkansas.
    The Clerk. Mr. Coble, no.
    Mr. Hutchinson. No.
    The Clerk. Mr. Hutchinson, no.
    Chairman Sensenbrenner. Any further members who wish to 
record or to change their votes? If not, the Clerk will report.
    The Clerk. Mr. Chairman, there are 5 ayes and 13 nays.
    Chairman Sensenbrenner. The amendment is not agreed to.
    Are there further amendments? For what purpose does the 
gentleman from Virginia, Mr. Scott, seek----
    Mr. Scott. Mr. Chairman, I think the gentleman from 
California had one additional amendment.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from California seek recognition?
    Mr. Schiff. Mr. Chairman, at the risk of provoking other 
Boulder Dam good debate, I have one last amendment to offer, 
003.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Mr. Schiff, 
page 19, line 23, strike----
    Chairman Sensenbrenner. Without objection----
    Mr. Watt. I object.
    Mr. Schiff. Mr. Chairman, members, this amendment would----
    Chairman Sensenbrenner. The Clerk will continue to read.
    The Clerk. And insert ``studies,'' page 120, after 16, 
insert the following. C. Study. Not later than 1 year after the 
date of enactment of this act, the Controller General of the 
United States shall conduct a study to determine any effects of 
the bankruptcy bill on the ability of a parent to pay child 
support or the ability of a parent to collect child support. 
This study shall include cases where custodial parents are the 
debtors in bankruptcy cases and where child support obligers 
are the debtors in bankruptcy cases. D. Report. Not later than 
1 year after the date of enactment of this act, the Controller 
General shall submit to the President Pro Tem of the Senate and 
the Speaker of the House of Representatives a report containing 
the results of the study required by Subsection (c).
    Chairman Sensenbrenner. The gentleman from California is 
recognized for 5 minutes.
    [The Amendment offered by Mr. Schiff follows:]
    
    
    Mr. Schiff. Thank you, Mr. Chairman.
    This amendment would authorize the--a study by the GAO to 
determine any effects that the bill will have on an ability of 
a parent to pay child support or an ability of the parent to 
collect child support. Probably the most--one of the most 
significant concerns about the bill is a collateral consequence 
of the bill where those trying to collect child support will be 
placed in either indirect or direct competition with credit 
card companies or others who are in a much stronger position to 
collect on outstanding debts than those that are entitled to 
child support. This amendment would merely require the conduct 
of a study so we can determine after a suitable period of time 
elapses if there has been an adverse impact. I know that the 
author feels that many of the amendments in the bill will help 
those attempting to collect child support, and I think that is 
probably true, but on the whole, I think it is still unclear 
what the impact will be on those who rightfully have a child 
support and have not been able to collect on it. So this would 
give us a good and an objective analysis and help us determine 
whether subsequent legislation as a follow-up would be prudent.
    I will yield back the balance of my time and thank the 
chairman for allowing me to offer the amendment.
    Mr. Gekas. Mr. Chairman, I ask for a no vote.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman.
    Chairman Sensenbrenner. For what purpose do you rise?
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    I suppose the gentleman who is controlling the bill can't 
entertain the notion of a study either or perhaps we don't care 
what impact the bankruptcy laws and the changes we are making 
are going to have on the people of America. Perhaps that is 
what we are saying to the American people today that we don't 
really care about doing our job, that some people have gotten 
together behind closed doors, outside the committee process, 
and worked a deal and that the powerful interests of this 
country are going to proceed regardless of what the people say 
about the equity of the bankruptcy laws of our country.
    Perhaps we are saying we don't care about having two 
systems of bankruptcy in this country, one for the poor and one 
for the rich.
    Perhaps we don't--we are saying to the American people we 
don't care that we are now going to send a resounding message 
that it is all right for rich people to abuse the system, but 
when poor people start to abuse the system, we got to draw 
the--draw the curtains down.
    This is--you know, we--I don't know how we are supposed to 
react here, you know, and I'm sure--I understand you all are 
getting ready to call the question. Call it because we are 
engaged in a charade. At least the question being called will--
will let the American people know that you all don't care about 
the process, but understand sometime during this term, you are 
going to have to consider a bill unless you are going to call 
the question every time. I am going to be here. I am not going 
anywhere. I have no desire to get off the Judiciary Committee. 
I haven't asked to get off the Judiciary Committee. I will be 
here, and if this is the way we are going to conduct the 
business of this committee, let me assure each and every one of 
you now that every time the gavel is rapped, I will be sitting 
right here, and every time you call the previous question, I am 
going to be sitting right here, but between those times, if 
that is the way we are going to conduct the business of this 
committee, then you can expect me to play by those same kind of 
rules, and if you don't understand that, I will say it over 
again because I got two or three more minutes, since I ain't 
got nothing to do but filibuster here.
    Let the word go out right now. If we can't operate and do 
our jobs in this committee, I will not participate in this 
charade that you are playing, and so understand it, and if you 
don't understand it, I think you will before long.
    I yield back.
    Chairman Sensenbrenner. The time of the gentleman has 
expired. The question is on the amendment offered by the 
gentleman from California, Mr. Schiff. Those in favor will 
signify by saying aye; those opposed, no. The noes appear to 
have it.
    Mr. Watt. Record the vote.
    Chairman Sensenbrenner. A recorded vote is ordered. The 
question is on Schiff Amendment No. 16. Those in favor will as 
your names are called answer aye; those oppose, no. And the 
Clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no.
    Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no.
    Mr. Graham?
    Mr. Graham. No.
    The Clerk. Mr. Graham, no.
    Mr. Bachus? Mr. Bachus?
    Mr. Bachus. No.
    The Clerk. Mr. Bachus, no.
    Mr. Scarborough?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no.
    Mr. Green?
    Mr. Green. No.
    The Clerk. Mr. Green, no.
    Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no.
    Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no.
    Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no.
    Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Coble.
    Mr. Coble. No.
    Chairman Sensenbrenner. The gentleman from Arkansas, Mr. 
Hutchinson.
    Mr. Hutchinson. No.
    Chairman Sensenbrenner. Any further members in the room who 
wish to record or to change their votes? If not, the Clerk will 
report.
    The Clerk. Mr. Chairman, there are 5 ayes and 16 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    For what purpose does the gentleman from Alabama wish to 
seek recognition?
    Mr. Bachus. Mr. Chairman, I think that you know that I----
    Chairman Sensenbrenner. Move to strike the last word?
    Mr. Bachus. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Bachus. I think that you know that I am not someone who 
just goes along to get along, and on occasions, I have had my 
differences with proposals on both sides of the aisle.
    However, I do want to say, and I feel constrained to say, 
that I think the conduct of this hearing at least, unless I 
have missed something, has been very orderly. I think it has 
been very business like. We--this hearing, we have moved along. 
We have allowed everyone to have their 5 minutes. We have 
played by the rules. We hadn't bent the rules for anyone. In 
fact, I find it quite refreshing, and I would say to the 
members on the other side of the aisle--and I mean this in all 
sincerity--I must have missed something because I thought that 
we were conducting a very orderly and courteous hearing, and 
the only time that the Chair has intervened is when somebody 
violated the rules.
    Having said that, I want to speak very briefly in favor of 
the need for amendments to the netting and the commercial 
banking, bankruptcy provisions of the act before us. I think it 
is an issue that needs to be addressed. These amendments are 
primarily concerned with the cross-product netting and 
commercial bankruptcy provisions of the bill, and several of 
the amendments have been made necessary by enactment this year 
of the Commodity Futures Modernization Act, but in each case, 
these are issues that are matters of concern not only for this 
committee, but also for the Financial Services mmittee. And as 
a member of both committees, I have a particular interest in 
seeing that these issues are addressed.
    And, Mr. Chairman, I think that these technical and 
confirming amendments will make important improvements to the 
legislation, and I want to say that the chairman of the 
Financial Services Committee, Mr. Oxley, shares my desire to 
see them included.
    So I would simply ask that you work with us and with 
Chairman Oxley to see that these issues are addressed, not that 
a referral is made to Financial Services. We said earlier we 
wanted to avoid that and----
    Chairman Sensenbrenner. Will the gentleman from Alabama 
yield?
    Mr. Bachus. I yield.
    Chairman Sensenbrenner. Let me say that the staff has 
already been working with the staff of the Financial Services 
Committee. I certainly do wish to work in very close 
conjunction with Chairman Oxley to prevent a sequential 
referral of this legislation, and I appreciate the good offices 
of the gentleman from Alabama to accomplish that goal.
    Mr. Bachus. Thank you, and with that, I would like to 
introduce my written statement in that regard and yield back 
the balance of my time.
    Chairman Sensenbrenner. Without objection, the written 
statement will be included as a part of the record.
    [The prepared statement of Mr. Bachus follows:]
Prepared Statement of Hon. Spencer Bachus, a Representative in Congress 
                       from the State of Alabama
    Mr. Chairman, I would just like to take a moment to speak in favor 
of amendments to the Netting Commercial Bankruptcy Provisions in the 
Bankruptcy Reform Act. This is an issue that needs to be addressed.
    There are additional conforming amendments to this legislation that 
I believe we should adopt for several reasons. Some are necessary in 
order to address issues that have been raised by bankruptcy experts, 
and others would improve the legislation by taking into account new 
developments since the legislation was first introduced. In each case, 
these are issues that are matters of concern for both this Committee 
and the Committee on Financial Services. As a member of both 
committees, I have a particular interest in seeing these issues 
addressed.
    These amendments are principally concerned with the cross-product 
netting and commercial bankruptcy provisions of the bill. Several of 
the amendments were made necessary by enactment last year of the 
Commodity Futures Modernization Act.
    Mr. Chairman, I think that these technical and conforming 
amendments will make important improvements in this legislation and I 
believe that the Chairman of the Financial Services Committee, Mr. 
Oxley, shares my desire to see them included.
    Mr. Chairman, I'd like to ask if you would allow me to work with 
you and Chairman Oxley to see that these issues are addressed.
    Thank you.

    Chairman Sensenbrenner. The Chair now recognizes himself 
and has an amendment at the desk, and the Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 333 offered by Mr. 
Sensenbrenner, page 174, line 5, strike ``30.76'' and insert 
``33.87''; page 316, strike line 16 and insert the following, 
one, by redesignating section 407 as 407(a); beginning on page 
330, strike line 19 and all that follows through line 10 on 
page 331 and make such technical and conforming changes as may 
be appropriate; page 356, beginning on line 5, strike ``and 
amendment by this act is reenacted'' and insert ``is hereby 
reenacted and as here reenacted is amended by this act''; page 
356, line 20, strike ``2001'' and insert ``2004''; page 368, 
line 4, strike ``and (38)'' and insert ``(38)'' and ``54A''; 
page 380, strike lines 19 through 21 and insert the following, 
E, effective dates, one, except as provided in paragraph 2, 
this section and the amendments made by this section shall take 
effect on the date of the enactment of this act, two, with 
respect to the temporary bankruptcy judgeship authorized by the 
District of South Carolina under paragraph 8 of the Bankruptcy 
Judgeship Act of 1992, 28 USC 152 Note Subsection (c)(1) as it 
applies to the extension specified in subparagraph (d) of such 
subsection shall take effect immediately before December 31, 
2000.
    [The Amendment offered by Mr. Sensenbrenner follows:]
    
    

    Chairman Sensenbrenner. The Chair recognizes himself for 5 
minutes.
    The amendment makes four types of conforming revisions to 
H.R. 333, and this language has been given to the minority last 
night.
    The first revision pertains to section 325(c) of the bill 
which amends section 406(b) of the Judiciary Appropriations 
Act. The section, however, was amended by Public Law 106-113 
with respect to the stated percentage of fees. The amendment 
simply conforms the percentage figure in the bill to that which 
is specified under current law.
    The second set of revisions consists of a series of 
conforming amendments necessitated by the enactment of the 
Commodity Futures Modernization Act of 2000 on December 21st of 
2000. It is my understanding that those revisions are 
acceptable to the Financial Services Committee, and we look 
forward to continuing cooperation with Chairman Oxley and that 
committee.
    The third set of revisions is necessitated only because of 
the passage of time. The amendment to section 1001 of the bill 
which reenacts chapter 12 of the Bankruptcy Code, it makes it a 
permanent form of bankruptcy relief for family farmers, revises 
the language of this provision to take into account that 
chapter 12 expired as of July 1, 2000. The amendment to section 
1002 which is key to a provision in the Bankruptcy Code that 
requires certain dollar amounts in the Code to be automatically 
adjusted at specified 3-year intervals extends a specified date 
so that the provision does not have a retroactive effect.
    The final revision concerns section 1224 of the bill which 
in pertinent part extends five existing temporary judgeships 
including one in the District of South Carolina. As the term of 
the South Carolina judgeship expired on December 31, 2000, the 
bill would not have its intended effect with respect to that 
judgeship. My amendment simply reinstates the judgment position 
and extends it retroactively.
    And I yield back the balance of my time.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina seek recognition?
    Mr. Watt. Mr. Chairman, I ask for a separate vote on each 
section of the amendment.
    Chairman Sensenbrenner. The Chair says that the gentleman 
is able to do that as a matter of right. However, how does the 
gentleman from North Carolina wish to divide the question?
    Mr. Watt. I wish to divide it the first line, the second 
two lines, the next three lines, the next three lines, the next 
one line, the next two lines, the next two lines, and then all 
of page 2.
    Chairman Sensenbrenner. I don't think that works. The last 
two lines----
    Mr. Watt. I'm sorry. That's--that's right.
    Chairman Sensenbrenner. The last two lines on the bottom of 
page----
    Mr. Watt. The last two lines and all of page 2. I'm sorry.
    Chairman Sensenbrenner. Okay. The question is on the first 
part of the technical amendment which relates to page 174, line 
5. Those in favor will signify by saying aye.
    Opposed, no.
    The ayes have it, and the amendment is----
    Mr. Watt. I ask for a recorded vote.
    Chairman Sensenbrenner. Okay. The Clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    Mr. Smith. Aye.
    The Clerk. Mr. Smith, aye.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    [No response.]
    The Clerk. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Aye? Mr. Bachus, aye.
    Mr. Scarborough?
    Mr. Scarborough. Aye.
    The Clerk. Mr. Scarborough, aye.
    Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye.
    Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye.
    Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff? Mr. Schiff?
    Mr. Schiff. Aye.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Additional members? The gentleman 
from Georgia, Mr. Barr.
    Mr. Barr. No. [Laughter.]
    Aye.
    The Clerk. Mr. Barr, aye.
    Chairman Sensenbrenner. The gentleman from Utah, Mr. 
Cannon.
    Mr. Cannon. Aye.
    Chairman Sensenbrenner. More enlightened.
    The gentleman from Virginia, Mr. Goodlatte.
    Mr. Goodlatte. Aye, aye.
    Chairman Sensenbrenner. Aye, aye.
    Anybody else?
    The Clerk will report.
    The Clerk. Mr. Chairman, there are 22 ayes, no nays.
    Chairman Sensenbrenner. And the--and part one of the 
amendment is agreed to.
    The question is on page two which relates to page 316. 
Those in favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it and----
    Mr. Nadler. I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote will be ordered. 
Those in favor will vote aye. Those opposed will vote no. And 
the Clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye.
    Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Aye.
    Mr. Scarborough?
    Mr. Scarborough. Aye.
    The Clerk. Mr. Scarborough, aye.
    Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye.
    Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler? Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye.
    Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Additional members in the room who 
wish to record or to change their votes? If not, the Clerk will 
report.
    Mr. Goodlatte. Mr. Chairman, have I been recorded?
    Chairman Sensenbrenner. Mr. Goodlatte.
    The Clerk. Mr. Goodlatte, aye.
    Mr. Chairman, there are 21 ayes and no nays.
    Chairman Sensenbrenner. And part two is agreed to.
    The question is now on the adoption of part three of the 
technical amendment which relates to the language beginning on 
page 330.
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from----
    Mr. Nadler. I am not sure if this should be a motion or a 
unanimous consent request that we take the other section of 
this amendment en bloc.
    Mr. Watt. Mr. Chairman, I will withdraw, and Mr. Cannon 
says he has a plane to catch. So I will--I will withdraw my 
request to----
    Chairman Sensenbrenner. Without objection, the question is 
on the remaining parts of the technical amendment. Those in 
favor will signify by saying aye.
    Opposed, no.
    The ayes have it, and the remaining parts of the technical 
amendment are adopted.
    For what purpose does the gentleman from Pennsylvania seek 
recognition?
    Mr. Gekas. Mr. Chairman, I have a motion at the desk.
    [The information referred to follows:]
    
    

  Prepared Statement of Hon. Sheila Jackson Lee, a Representative in 
                    Congress from the State of Texas
    Mr. Chairman, I am submitting this statement to express my 
displeasure and strong opposition to the motion that was presented by 
the Republican Judiciary Committee Leadership to ``move the previous 
question'' which prevented me and other Democrats from offering 
amendments that would improve the bill.
    Mr. Chairman, throughout the day, you and Chairman Gekas stated 
that you supported a number of amendments that were offered to improve 
the Bankruptcy Reform Bill, such as the amendment I offered to strike 
language in the bill that would bar the enforcement of certain foreign 
judgments. You stated however, Mr. Chairman, that while you supported 
my amendment, you would not vote in favor of it during the mark-up 
because you did not want to tamper with the bill. I agreed to withdraw 
this amendment, with assurances from you and Chairman Gekas that you 
would work with me to ensure it is included in the rules to be debated 
on the floor.
    While I appreciate your commitment to protect this amendment for 
debate on the floor, I believe that the work ethic that has been the 
pride of the committee throughout the years was undermined today when 
good amendments that would better the bill were defeated with the 
excuse that the bill should be preserved ``as-is.''
    The political process that the legislative body has followed for 
years promotes the offering of amendments, and the robust debate that 
follows to better craft and reshape legislation to benefit all 
Americans. Mr. Chairman, the Gestapo tactics that were used during the 
mark-up of the bankruptcy bill destroyed not only the minority party 
who sought to improve the bill, but also the American people, whose 
interests we represent.
    Mr. Chairman, I was only allowed to offer 2 amendments to the 
Bankruptcy Reform Bill before the motion was passed to move the 
previous question, which prevented further amendments and further 
debate on this very important bill. Had an opportunity been allowed to 
adequately analyze, debate and amend H.R. 333, I had 8 additional 
crucial amendments to offer to the bill. They may not have been 
accepted, but a true democratic process would have allowed for a robust 
full debate and scrutiny by all interested members of the Judiciary 
Committee. The additional amendments I would have offered are as 
follows:

        1. Lan amendment to include an exception from limitation on 
        ``cramdowns'' for domestic support obligations,

        2. Lan amendment to include an exception from the reaffirmation 
        provisions on ``cramdowns'' for domestic support obligations.

        3. Lan amendment striking the economically biased means test 
        from the bill,

        4. Lan amendment to expand the means test to apply to business 
        debts,

        5. Lamendment to make public school expenses an allowable 
        expense under the means test,

        6. Lan amendment to page 15 line 2 of HR 333 striking (the 
        court) ``may'' and inserting (the court) ``will,'' to make the 
        courts responsibility stronger if creditors bring frivolous 
        actions against creditors,

        7. Lan amendment modifying the burden of proof creditors must 
        shoulder to ``substantially justified,'' to fairly proportion 
        the prima facie case a creditor must prove bring a cause of 
        action against a debtor.

        8. Lan amendment to include disaster relief benefits as a 
        recognizable income in the ``means test,''

    Mr. Chairman, the amendments I would have offered to the 
reaffirmation and limitation provisions of H.R. 333 would have provided 
protection to domestic support for women and children taking them out 
of the field of competition with creditors.
    H.R. 333 places economically vulnerable women and children who are 
forced into bankruptcy, and those who are owed support by men who file 
for bankruptcy at greater risk by increasing the rights of many 
creditors, including credit card companies, finance companies, auto 
lenders and others over that of the women and children. Thousands of 
women and children will be held hostage by H.R. 333 because this bill 
effectively increases the rights of creditors over these vulnerable 
women and children, and sets up a competition for scarce resources 
between parents and children owed support and commercial creditors both 
during and after bankruptcy. Therefore, single parents facing financial 
crises often caused by divorce, nonpayment of support, loss of a job, 
uninsured medical expenses or domestic violence would find it harder to 
regain their economic stability through the bankruptcy process.
    This fact is not something new, whose light has recently been cast 
over the dark future of bankruptcy reform that would follow H.R. 333. 
The fact that H.R. 333 would effectively place women and children in a 
gladiator's arena with creditors to do battle for child support money 
owed by former spouses who file bankruptcy has been articulated by 
national organizations such as the National Women's Law Center, the 
National Association of Consumer Bankruptcy Attorney's, the National 
Organization for Women, a coalition of bankruptcy professors and 
bankruptcy judges and the National Association of Attorney's General's 
to name but a few. How, anyone could argue against the drastic effects 
and hardships that the language in this bill will cause on the 
vulnerable women and children in this country is beyond me.
    I have consistently said that the greatest challenge before us in 
the bankruptcy reform efforts is solving the widely recognized 
inadequacies of the law in the area of consumer bankruptcy. As it has 
always been in the Congress, the key to this process, is, of course, 
successfully balancing the priorities of creditors, who desire a 
general reduction in the amount of debtor filing fraud, and debtors, 
who desire fair and simple access to bankruptcy protections when they 
need them. H.R. 333 does not accomplish this goal.
    I would have also offered an amendment replacing the means-testing 
standard in the legislation with a standard that more accurately 
reflects current law or, better put, least hurts those consumers who 
earnestly need to file for bankruptcy.
    The means-testing standard is inadequate for those who are least 
equipped to conform to such a drastic alteration from current law and 
would be a disaster for middle-income and low-income families in 
America. The principal problem with the means test is that the rigid 
one-size-fits-all test in determining eligibility for Chapter 7 and the 
operation of Chapter 13 will often operate in an arbitrary fashion.
    Access to bankruptcy would be more difficult, especially for low-
income filers without legal assistance. The means test within HR 333 
would make filings more complex, and the IRS formula it incorporates 
discriminates against lower-income individuals and families. The ``safe 
harbor'' provision that is supposed to protect some low-income families 
from the application of the IRS standards will not protect many single 
mothers, because it is based on the combined income of the debtor and 
the debtor's spouse--even if they are separated and the mother who is 
filing for bankruptcy is receiving no support from the non-debtor 
spouse from whom she is separated.
    Mr. Chairman, under my amendment, a more flexible standard would 
have allowed the debtor to have the ability to repay debts from future 
debts, which is not possible under the legislation as written. I think 
such a change in the standard would have been warmly welcomed for 
middle-income and low-income filers.
    Mr. Chairman, I would have also offered an amendment to expand the 
``means test'' to apply to business debts to ensure that business 
debtors are treated as favorably as non-business debtors within the 
framework of the means-testing standard contained in the bill. My 
amendment essentially expands the means-test to apply to business 
debts.
    Let me explain a few of the glaring difficulties with treatment of 
business debtors under HR 333. First, the bill relies upon IRS 
collection standards, which lay out no comprehensive or specific 
standards for the deduction of living expenses. In fact, the bill even 
fails to provide specific guidance concerning the appropriateness of 
deducting part or all of the funds a debtor may expend for items such 
as health care (both medical expenses and health insurance), taxes, and 
accounting and legal fees, among other things.
    The 1973 Commission on Bankruptcy Laws similarly considered and 
rejected industry calls for mandatory Chapter 13s, noting that Congress 
itself rejected similar proposals in 1967, and observed: ``[b]usiness 
debtors are not subject to any limitation on the availability of 
straight bankruptcy relief, including discharge from debts, and it was 
pointed out, quite apart from bankruptcy, business debtors are able to 
incorporate and to limit their liability to their investments in 
corporate assets . . .'' See Report of the Commission on Bankruptcy 
Laws, H.R. Doc. No. 137, Part I, 93rd Congress, 15859 (1973) (citations 
omitted) (emphasis added).
    The bottom line is that business debtors incur a windfall if the 
legislation is not amended. There are several consumer provisions in 
the bill that will exact hardships on all debtors, regardless of income 
level or degree of culpability. This will harm consumers, especially 
low-income filers and place them on an unfair playing field when 
compared to business debtors.
    Mr. Chairman, the approach regarding business and non-debtors 
within HR 333 must be revisited if bankruptcy reform is realized this 
year.
    Mr. Chairman, I would have also offered an amendment to page 10, 
line 14 of H.R. 333 to merely add a debtor's monthly public school 
expenses as an allowable expense under the means test. My amendment 
would put public school expenses at an equal footing with that of 
private school expenses which is already included in the bill.
    The principal problem with the means test is that the rigid one-
size-fits-all test in determining eligibility for Chapter 7 and the 
operation of Chapter 13 will often operate in an arbitrary fashion.
    Access to bankruptcy would be more difficult, especially for low-
income filers who are not able to meet the requirements because they 
cannot list public school expenses as an allowable expense as would 
their private school counterparts. The ``safe harbor'' provision that 
is supposed to protect some low-income families from the application of 
the IRS standards will not protect many single mothers, because it is 
based on the combined income of the debtor and the debtor's spouse--
even if they are separated and the mother who is filing for bankruptcy 
is receiving no support from the non-debtor spouse from whom she is 
separated. As the Committee knows, the majority of low-income families 
send their children to public schools (as opposed to higher-income 
people) because they cannot afford the private school tuition. It would 
seem that if the true intent of this bill were to assist all Americans, 
a provision recognizing public school tuition would have accompanied 
the recognition of private school tuition as an allowable expense under 
the ``means test,'' however, this is not the case.
    Under my amendment, low-income people will have a more flexible 
standard (that is consistent with that of high-income people) that 
would allow the debtor to have a fair opportunity to financial 
recourse, which is not possible under the legislation as written. I 
think such a change in the standard would be warmly welcomed for 
middle-income and low-income filers. We cannot in good conscience allow 
such an unbalanced approach to prevail.
    Mr. Chairman, I would have also offered two amendments that would 
curtail frivolous law suits by creditors against debtors. The first 
amendment would have struck the word ``may'' and insert ``shall'' on 
page 15, line 2, of the bill, and the second amendment would have 
struck the words ``violated'' and all that followed through 
``procedure,'' and insert ``was not substantially justified'' to page 
15, line 10, of the bill.
    Mr. Chairman, these two very important amendments would have given 
American courts direction by specifically mandating that they must act 
strongly against creditors who bring frivolous actions for the sole 
purpose of coercing debtors into payment agreements on the creditors 
terms.
    H.R. 333 currently increases the burden that a debtor must shoulder 
while tearing down the checks that are in place to prevent creditors 
from engaging in abusive practices. Consumer bankruptcy expert Henry 
Somber has stated that the provisions of H.R. 333 increase the 
opportunity for creditors to file the types of abusive fraud complaints 
which have been found by many courts to be baseless and unjustified 
attempts to coerce reaffirmation's by debtors who cannot afford to 
defend them.
    The burden to defend against these actions will fall mainly upon 
low income debtors who are unsophisticated, do not have the time, 
budget flexibility, or attorney advice to defeat such frivolous 
actions.
    My amendment would have given a force of action to the courts by 
placing checks on debtors seeking to abuse the judiciary by filing 
frivolous suits.
    Mr. Chairman, I would have also offered an amendment to include 
``disaster relief'' as a recognizable expense under the ``means test.'' 
Disaster relief is not recognizable as something you can write off in 
HR 333 as income. That is simply ill conceived. We should be able to 
deduct disaster relief as a recognizable expense under the means-test 
because it is just as important as other considerations that were 
placed worked together in the bill.
    This would have restored some fundamental fairness to the 
legislation, particularly when we think of the tragic accidents that 
occur with regular frequency in America.
    Mr. Chairman, if means-testing and other consumer provisions will 
harm low-income and middle-income people, then HR 333 is sure to have 
an undesirable effect on consumers that are victims of disasters. While 
it is unclear whether how such costs will affect the overall bankruptcy 
system, it is clear that excluding disaster assistance from allowable 
expenses under the means-test in HR 333 is an unfortunate and 
unnecessary component of the bill.
    Mr. Chairman, as I stated at the opening of my statement, I believe 
that justice did not prevail during the mark-up of this very important 
bill. The political process and American democracy was trampled on when 
amendments and the robust debate that would have followed to better 
craft and reshape this legislation was prevented. Mr. Chairman, for the 
good of the political process within the Judiciary Committee, the U.S. 
House of Representatives, and the American people, I implore you to 
ensure that this not happen again.
    Mr. Chairman, in closing I reiterate my displeasure and strong 
opposition to the motion that was presented by the Republican Judiciary 
Committee Leadership's to ``move the previous question'' which 
prevented me and other Democrats from offering amendments to improve 
this very important bill.

    Chairman Sensenbrenner. The Clerk will report the motion.
    The Clerk. Motion----
    Mr. Watt. I reserve point of order, Mr. Chairman.
    Chairman Sensenbrenner. The Clerk will report the motion.
    Mr. Watt. I reserve a point of order, Mr. Chairman.
    Chairman Sensenbrenner. As I said, the Clerk will report 
the motion.
    The Clerk. Motion by Mr. Gekas, previous question.
    Chairman Sensenbrenner. Read the--read the motion.
    The Clerk. Mr. Chairman, I move the previous question on 
the bill.
    Chairman Sensenbrenner. The question is on ordering the 
previous question.
    Mr. Nadler. Parliamentary inquiry.
    Chairman Sensenbrenner. The gentleman will state his 
parliamentary inquiry.
    Mr. Nadler. Is the maker of the motion aware there are 
other amendments here to be offered which you would deny the 
opportunity of?
    Chairman Sensenbrenner. That is not a parliamentary 
inquiry.
    Mr. Nadler. It is an inquiry of the----
    Chairman Sensenbrenner. The motion for the previous 
question----
    Mr. Nadler. Mr. Chairman, further parliamentary inquiry.
    Chairman Sensenbrenner. The motion for the previous 
question is----
    Mr. Nadler. Mr. Chairman, parliamentary inquiry.
    Chairman Sensenbrenner. The gentleman from New York State's 
inquiry.
    Mr. Nadler. Can we expect this to be the bipartisanship on 
this committee from now on?
    Chairman Sensenbrenner. That is not----
    Mr. Nadler. Is this the way we are setting off this 
session?
    Chairman Sensenbrenner. That is not--that is not a 
parliamentary inquiry.
    Mr. Nadler. To hobble and silence the minority?
    Chairman Sensenbrenner. That is not a parliamentary 
inquiry.
    Mr. Bachus. Regular order.
    Chairman Sensenbrenner. That is not a parliamentary 
inquiry. The motion is non-debatable. Those in favor of 
ordering the previous question will say aye.
    Opposed, no.
    The ayes appear to have it.
    Mr. Watt. I ask for a recorded vote.
    Chairman Sensenbrenner. The Clerk will call the roll. Those 
in favor of ordering the previous question will as your names 
are called answer aye; opposed, no. And the Clerk will call the 
roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte, aye.
    Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye.
    Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Mr. Scarborough?
    Mr. Scarborough. Aye.
    The Clerk. Mr. Scarborough, aye.
    Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye
    Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no.
    Mr. Scott?
    Mr. Scott. No.
    The Clerk. Mr. Scott, no.
    Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Watt, no.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    [No response.]
    The Clerk. Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Members in the room who wish to 
record or change their vote? The gentleman from North Carolina.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Chairman Sensenbrenner. Other members who wish to record or 
to change their vote? If not, the Clerk will report.
    Mr. Nadler. Mr. Chairman? Mr. Chairman?
    Chairman Sensenbrenner. The----
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. The Chair will recognize the 
gentleman from Michigan to change his vote.
    Mr. Conyers. No.
    Mr. Nadler. Mr. Chairman?
    The Clerk. Mr. Conyers, no.
    Chairman Sensenbrenner. The gentleman from New York.
    Mr. Nadler. I wish to change my vote to aye.
    The Clerk. Mr. Nadler changes his vote to aye.
    Chairman Sensenbrenner. The Clerk will report.
    The Clerk. Mr. Chairman? Mr. Chairman, there are 18 ayes 
and 5 nays.
    Chairman Sensenbrenner. And the previous question is 
ordered----
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from New York seek recognition?
    Mr. Nadler. Move to reconsider the vote by which the motion 
passed.
    Mr. Gekas. Mr. Chairman, I move to lay the motion on the 
table.
    Chairman Sensenbrenner. The question is on tabling the 
motion to reconsider the vote ordering the previous question. 
Those in favor will say--those in favor will as your names are 
called vote aye. Those opposed will vote no, and the Clerk will 
call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Mr. Smith?
    Mr. Smith. Aye.
    The Clerk. Mr. Smith, aye.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte, aye.
    Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye.
    Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Mr. Scarborough?
    Mr. Scarborough. Aye.
    The Clerk. Mr. Scarborough, aye.
    Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye
    Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no.
    Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no.
    Mr. Scott?
    Mr. Scott. No.
    The Clerk. Mr. Scott, no.
    Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Watt, no.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no.
    Ms. Waters?
    [No response.]
    The Clerk. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there any members in the room 
who wish to either record or to change their votes? If not, the 
Clerk will report.
    The Clerk. Mr. Chairman, there are 18 ayes and 7 nays.
    Chairman Sensenbrenner. The motion to table the motion to 
reconsider is agreed----
    Mr. Nadler. Mr. Chairman, could the Clerk report that, 
please? What was that? Repeat that. What was that figure?
    Chairman Sensenbrenner. The Clerk will repeat the----
    The Clerk. Eighteen ayes and 7 nays.
    Chairman Sensenbrenner. And the motion to table the motion 
to reconsider is agreed to.
    The question now occurs on the motion to report the bill 
H.R. 333 favorably as amended.
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. Those in favor----
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
seek recognition? The previous question has been ordered.
    All in favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it.
    Mr. Watt. Mr. Chairman, I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote will be ordered. 
Those in favor of ordering the bill favorably reported will 
signify by saying aye; those opposed, no. And the Clerk will 
call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Mr. Smith?
    Mr. Smith. Aye.
    The Clerk. Mr. Smith, aye.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte, aye.
    Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye.
    Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    [No response.]
    The Clerk. Mr. Scarborough?
    Mr. Scarborough. Aye.
    The Clerk. Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Mr. Hostettler?
    I got you.
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    Mr. Issa. Finally, aye.
    The Clerk. Mr. Issa, aye
    Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no.
    Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    Mr. Boucher. Aye.
    The Clerk. Mr. Boucher, aye.
    Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no.
    Mr. Scott?
    Mr. Scott. No.
    The Clerk. Mr. Scott, no.
    Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Scott--Watt, no.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no.
    Ms. Waters?
    Ms. Waters. No.
    The Clerk. Ms. Waters, no.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there additional members in the 
room who wish to record or to change their votes? If not, the 
Clerk will report.
    The Clerk. Mr. Chairman, there are 19 ayes and 8 nays.
    Chairman Sensenbrenner. And the motion is agreed to. The 
bill is favorably reported.
    Without objection----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner [continuing]. The bill will be 
favorably----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner [continuing]. Reported----
    Mr. Watt. Mr. Chairman, I object.
    Chairman Sensenbrenner. The objection is heard. We will 
take care of that in the Rules Committee.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. Without objection, the chairman has 
authorized to move to go to conference.
    Mr. Watt. I object.
    Mr. Scott. Mr. Chairman? Mr. Chairman, reserving the right 
to object.
    Chairman Sensenbrenner. The objection is heard. The Chair--
the gentleman from Texas, Mr. Smith.
    Mr. Smith. Mr. Chairman, pursuant to----
    Chairman Sensenbrenner. Will you turn your mike on, please?
    Mr. Smith. I'm sorry.
    Mr. Chairman, pursuant to Clause 1 of House Rule 22, I move 
that the chairman be authorized to make such motions in the 
House as may be necessary to go to conference with the Senate 
on H.R. 333.
    Mr. Scott. Mr. Chairman, reserving the right to object.
    Chairman Sensenbrenner. This is a motion. The question is 
on the adoption----
    Mr. Scott. Move to strike the last word.
    Mr. Watt. Mr. Chairman, I move to strike the last word.
    Mr. Scott. Last word on the amendment--on the motion.
    Chairman Sensenbrenner. The gentleman from Virginia.
    Mr. Scott. Mr. Chairman, I oppose the motion because I was 
not able to offer amendments, one of which would have exempted 
from monthly expenses new illnesses or disabilities incurred by 
family members, another--allow making sure that it was the 
trustee to determine private school expenses, another that 
would have limited small businesses exemption from frivolous 
and coercive litigation, another to put renter-own contracts on 
the same level as other installment contracts, a study of the 
effect of this bill on homicide, suicide, and civil 
commitments. A reasonable expense limitation is in the bill at 
10 percent. That is unreasonable, particularly for small 
estates, and, again--and in calculating the--your current 
income to exclude in the last 6 months that receipt of lump 
sum--non-recurring lump sums such as gifts inheritances and 
litigation recoveries. None of these have been considered 
because of the motion to close debate on the previous question, 
and, therefore, I would oppose the motion of the gentleman from 
Texas.
    I yield back.
    Ms. Jackson Lee. Mr. Chairman? Mr. Chairman? Mr. Chairman? 
This way, Mr. Chairman. Look this way. Mr. Chairman?
    Mr. Smith. Mr. Chairman, I would like to withdraw the 
motion.
    Chairman Sensenbrenner. The motion is withdrawn. All 
members will be given 2 days as provided by House Rules in 
which----
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner [continuing]. To submit additional 
dissenting supplemental or minority views.
    We have another bill that----
    Ms. Jackson Lee. Mr. Chairman, can you object at this time 
or is the objection ongoing?
    Chairman Sensenbrenner. For the 2 days that is provided in 
House Rules, it does not require unanimous consent, but does 
have to be stated by the Chair at the time the bill is 
reported.
    Ms. Jackson Lee. And so, Mr. Chairman, for clarification 
sake, understanding the rule, if you want to submit your basis 
for objections, can I submit them in writing into the record?
    Chairman Sensenbrenner. They will be within 2 days. If they 
are submitted within 2 days, every member has the right to 
submit whatever they would like to, and that is printed as a 
part of the committee report.
    Ms. Jackson Lee. Thank you, Mr. Chairman. I would like to 
continue my objection to the bill.
    Chairman Sensenbrenner. Okay. We duly note it.
    Ms. Waters. Mr. Chairman?
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. All members will be given 2 days as 
provided by House Rules in which to submit additional 
dissenting supplemental or minority rules.
    For what purpose does the gentleman from New York seek 
recognition?
    Mr. Nadler. To make a statement, Mr. Chairman.
    Mr. Chairman, this markup session was noticed for 2 days, 
today and tomorrow. I have no objection to shortening it to 1 
day. I would like to go home. But what was done to destroy the 
rights of the minority and the rights of the American people 
that we represent by moving the previous question so that 
amendments could not be offered; amendments, the contents of 
which you don't know.
    One amendment I would have offered would have been to 
correct a technical correction. The way the bankruptcy bill 
reads now in educational loan fraud section, the debts of the 
victims of the fraud are non-dischargeable, but the debts of 
the criminals are dischargeable. That was a simple drafting 
error. I am sure no one meant it. It was upside-down. It should 
have been the other way around. That amendment could not be 
offered.
    I would have offered an amendment to substitute Mr. Gekas' 
language from last year where we had a reasonable definition of 
household goods in last year's bill to the unreasonable 
definition in this year's bill.
    I would have offered an amendment to remove the language in 
this year's bill that was not in last year's bill that we never 
saw until the conference committee that applies all of the non-
discharge provisions of chapter 7 to business bankruptcies in 
chapter 11 with no good reason and with disastrous effects on 
small businesses.
    Now, the fact is in my 8 years of service here, I don't 
recall the previous question having been called in this 
committee except 4 years ago on the same bill, and the chairman 
then was apologetic and said that he was under orders from the 
Speaker to get the bill out by a date certain and we had had 
about 6 or 7 days of markup by then. And he made a promise to 
us to go to the Rules Committee and ask that amendments that 
haven't had a chance be offered because of that motion would be 
made an order on the floor.
    Now, this is the first major bill of the session. The 
majority trampled over the rights of the minority by calling 
the previous question. So we couldn't even offer the 
amendments. I hope this will not happen again. If it does 
happen again, then we are obviously going to have a war in this 
committee, and I hope that won't happen.
    Chairman Sensenbrenner. The Chair will respond to the 
gentleman from New York and others.
    The Chair and the members of this committee have been very 
patient, and we went through 16 amendments that were offered by 
the minority where there was a full and a fair debate.
    We got to the sixteenth amendment, and one of the members 
of the committee objected to the standard motion that an 
amendment be considered as read and open for amendment at any 
point. At that time, the Chair told the minority party staff 
that if this was to be continued, we would move the previous 
question.
    I was informed by the minority party staff that the member 
who objected intended to continue objecting to waiving the 
readings of amendments that were offered. This committee is 
going to do its business. This committee is not going to be 
subjected into dilatory tactics. I would hope that the 
bipartisan olive branch that I as chairman have offered to the 
minority on a lot of procedural things will be reciprocated by 
all of the members of the minority party, and if that is the 
case, we can move on fairly smoothly, but if it is not the 
case, then the majority will have to do its job alone.
    The committee stands adjourned.
    [Whereupon, at 5:13 p.m., the committee was adjourned.]

                            DISSENTING VIEWS

    Although we would support a responsible and balanced 
bankruptcy reform effort that remedies debtor and creditor 
abuses in a balanced manner, we cannot support H.R. 333 in its 
present form. We believe the bill, while modestly improved from 
the legislation reported by the committee last Congress, 
remains flawed. We oppose the bill because it is likely to harm 
low income consumers, women and children reliant on alimony and 
child support, and employees of troubled businesses, among 
other vulnerable groups. The risks that this legislation poses 
are far too grave, particularly at a time when our nation is 
experiencing an economic slowdown, if not an outright 
recession.
    We would also note that the legislation is being brought to 
the floor under a continuing specter of procedural abuse. 
Although 2 days were scheduled for markup, the majority called 
the previous question on the first day, blocking the ability of 
the Democrats to offer more than two-thirds of their proposed 
amendments.\1\ Of the amendments that Democrats did offer, 
every single one, including those proposing only studies or 
curing obvious technical flaws in the bill, were voted down on 
purely partisan lines. This comes on top of the egregious 
breach in procedures last Congress, when the majority inserted 
the bankruptcy bill into a defunct State Department 
authorization conference (H.R. 2415) without the benefit of a 
single meeting of conferees.\2\
---------------------------------------------------------------------------
    \1\ This is the second time in the history of this legislation, 
which is now in its third Congress, that the majority has cut off 
consideration by calling the previous question while Democratic 
amendments were pending at the desk.
    \2\ Notwithstanding a unanimous vote by the House instructing the 
conferees to hold a meeting, the conference report was filed with the 
Rules Committee a few hours after the vote.
---------------------------------------------------------------------------
    H.R. 333 is an omnibus bankruptcy bill that includes titles 
concerning consumer bankruptcy, business bankruptcy, municipal 
bankruptcy, tax, and bankruptcy administration. Although some 
of the bill's titles and provisions are non-controversial and 
stem from recommendations of the congressionally-created 
National Bankruptcy Review Commission (which completed its 2-
year review of the bankruptcy laws in October 1997), provisions 
in the titles relating to consumer and business bankruptcies 
and tax matters constitute a significant and dangerous 
departure from historical bankruptcy procedures.
    The legislation has engendered widespread opposition among 
groups concerned about bankruptcy policy. Groups which have 
opposed, or have expressed serious concerns with, H.R. 333 or 
its predecessor versions, include the following:

        (1) groups concerned about the preservation of jobs 
        and the rights of workers, including the AFL-CIO; the 
        American Federation of State, County, and Municipal 
        Employees; the United Auto Workers; the Union of 
        Needletrades, Industrial and Textile Employees; the 
        Service Employees; the United Steel Workers; and the 
        Teamsters; \3\
---------------------------------------------------------------------------
    \3\ Written statement of Damon Silvers, Office of the General 
Counsel, AFL-CIO, Feb. 8 Hearing on H.R. 333, the ``Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001 before the House Jud. 
Comm., (February 8, 2001)(Hereafter: ``February 8, 2001 Hearing''); 
Letter from Charles M. Loveless, Director of Legislation, AFSCME, to 
Members of Congress (Apr. 19, 1999); Letter from Alan Reuther, 
Legislative Director, UAW, to Members of Congress (Apr. 26, 1999); 
Letter from Ann Hoffman, Legislative Director, UNITE, to the Honorable 
John Conyers, Jr., Ranking Member, House Comm. on the Judiciary (May 4, 
1998).
---------------------------------------------------------------------------
        (2) groups of non-partisan bankruptcy lawyers, judges, 
        and academics, including the Judicial Conference of the 
        United States, National Bankruptcy Conference , the 
        American Bankruptcy Institute, the National Conference 
        of Bankruptcy Judges, the National Association of 
        Chapter 13 Trustees, the National Association of 
        Bankruptcy Trustees, the Commercial Law League of 
        America, the American College of Bankruptcy, and the 
        National Association of Consumer Bankruptcy Attorneys; 
        \4\
---------------------------------------------------------------------------
    \4\ Written statement of Edward R. Becker on behalf of the Judicial 
Conference of the United States, Feb. 8, 2001 Hearing on S. 220, the 
Bankruptcy Reform Act of 2001; statement of Ralph Mabey, National 
Bankruptcy Conference, Feb. 8, 2001 Hearing; written statement of the 
Honorable William Houston Brown, ABI; Hearing on H.R. 833, the 
``Bankruptcy Reform Act of 1999,'' Before the House Subcomm. on 
Commercial and Admin. Law, 106th Cong., 1st Sess. (Mar. 17, 1999) 
[hereinafter, ``March 17, 1999 Hearing'']; (written statement of the 
Honorable Randall J. Newsome, NCBJ; Id. (written statement of Henry E. 
Hildebrand, III, NACTT); Id. (written statement of Robert H. 
Waldschmidt, NABT); Letter from Mark Sheriff, President of the 
Commercial Law League of America, to Members of the House and Senate 
(Feb., 2001); Letter from Raymond L. Shapiro, Chair, American College 
of Bankruptcy, to Members of Congress (Apr. 26, 1999); Letter from 
Norma Hammes, President, NACBA, to Members of Congress (Apr. 26, 1999).
---------------------------------------------------------------------------
        (3) groups concerned about the rights of women, 
        children, seniors, and victims of crimes and torts, 
        including the National Women's Law Center, the National 
        Partnership for Women and Families, the National 
        Organization for Women, the Association for Children 
        for Enforcement of Support, the California Women's Law 
        Center, Mothers Against Drunk Driving, the National 
        Organization for Victim Assistance, the National 
        Abortion and Reproductive Rights Action League, the 
        National Victim Center, the National Council of Senior 
        Citizens, and the Committee to Preserve Social Security 
        and Medicare; \5\ and
---------------------------------------------------------------------------
    \5\ Letter from Patricia Ireland, President, NOW, to the Honorable 
John Conyers, Jr., Ranking Member, House Comm. on the Judiciary (May 
15, 1998); Letter from Geraldine Jensen, President, ACES, to the 
Honorable George W. Gekas, Chair, House Subcomm. on Commercial and 
Admin. Law (Mar. 17, 1999); Letter from Abby J. Leibman, Executive 
Director, California Women's Law Center, to the Honorable Dianne 
Feinstein, Senate Comm. on the Judiciary (Apr. 27, 1998); Letter from 
Karolyn V. Nunnallee, National President, MADD, to Members of Congress 
(Apr. 26, 1999); Letter from Marlene A. Young, Executive Director, 
NOVA, to the Honorable Henry J. Hyde, Chair, House Comm. on the 
Judiciary (Apr. 26, 1999); Letter from David Beatty, Director of Public 
Policy, The National Center for Victims of Crime, to the Honorable 
Jerrold Nadler, Ranking Member, House Subcomm. on Commercial and Admin. 
Law (Apr. 28, 1999); Letter from Dan Schulder, Director Legislation, 
National Council of Senior Citizens, to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (June 9, 
1998); Letter from Martha A. McSteen, President, National Committee to 
Preserve Social Security and Medicare, to the Honorable Jerrold Nadler 
(Feb. 14, 2001); Letter from Deborah Briceland-Betts, Executive 
Director, OWL, to the Honorable Melvin L. Watt, Ranking Member, 
Subcommittee on Commercial and Administrative Law (Feb. 14, 2001).
---------------------------------------------------------------------------
        (4) consumer and civil rights organizations, including 
        the Leadership Conference on Civil Rights, National 
        Consumer Law Center, Consumers Union, the Consumer 
        Federation of America, U.S. Public Interest Research 
        Group, Public Citizen, the Alliance for Justice, and 
        the National Council of Senior Citizens.\6\
---------------------------------------------------------------------------
    \6\ Letter from the Leadership Conference on Civil Rights to 
Members of Congress (Apr. 21, 1999); Letter from Gary Klein, Senior 
Attorney, National Consumer Law Center, to Members of Congress (Apr. 
23, 1999); Press Release of National Consumer Law Center, Consumer 
Federation of America, Consumers Union, and U.S. PIRG (Apr. 19, 1999); 
Press Release of Consumers Union and the Consumers Federation of 
America (Feb. 14, 2001); Letter from Frank Clemente, Legislative 
Director, Public Citizen, to House Comm. on the Judiciary (May 11, 
1998); Letter from Nan Aron, President, Alliance for Justice, to 
Members of the Senate Comm. on the Judiciary (Apr. 23, 1998); Letter 
from Dan Schulder, Director Legislation, National Council of Senior 
Citizens, to the Honorable Jerrold Nadler, Ranking Member, House 
Subcomm. on Commercial and Admin. Law (June 9, 1998).

    Section I of these Dissenting Views describes our concerns 
regarding the lack of empirical justification for the 
legislation. Section II describes concerns with the consumer 
provisions, including, most notably, the means test. Section 
III discusses flaws in the business provisions, and Section IV 
turns to the tax sections of H.R. 333.

                   i. lack of empirical justification

    Close scrutiny of the quantitative evidence concerning the 
causes, costs, and effects of bankruptcy reveals that at best, 
the proponent's empirical justifications are overblown, and at 
worst, they are misstated. H.R. 333's proponents have sought to 
justify the bill's enactment based on claims (1) the United 
States is experiencing a dramatic growth in the number of 
bankruptcy filings, and (2) credit industry-funded studies by 
Professor Michael Staten of Georgetown University's Credit 
Research Center (CRC),\7\ Ernst & Young,\8\ and the WEFA \9\ 
group that purport to demonstrate that the bankruptcy laws 
allow many relatively high income individuals to avoid debts 
they could otherwise pay and that this avoidance imposes 
substantial costs on the economy. However, the vast weight of 
the data and studies contradict the proponents' rationales and 
instead shows that non bankruptcy law factors are the root 
cause of increased bankruptcy filings.
---------------------------------------------------------------------------
    \7\ John M. Barron & Michael E. Staten, Purdue University Credit 
Research Center, Personal Bankruptcy: A Report on Petitioners' Ability 
to Pay (Oct. 1997) (concluding that 5% of chapter 7 debtors could repay 
all of their non-priority, non-housing debt over 5 years, 10% could 
repay at least 78% of such debt, and 25% could repay 30% of their 
debt).
    \8\ Policy Economics and Quantitative Analysis Group, Chapter 7 
Bankruptcy Petitioner's Ability to Repay: Additional Evidence from 
bankruptcy Petition Files, Ernst & Young LLP (Feb. 1998).
    \9\ WEFA Group Resource Planning Service, The Financial Costs of 
Personal Bankruptcy 4 (Feb. 1998) (calculated that ``financial losses 
due to 1997 personal bankruptcies totaled more than $44 billion. . . . 
Unsecured nonpriority losses totaled almost $35 billion in 1997 . . . 
[and] passing such financial losses on to consumers in terms of higher 
prices would cost the average household over $400 annually;'' and that 
the needs based proposal in the bill ``should decrease financial costs 
due to bankruptcy . . . from 8% to 17% annually'').
---------------------------------------------------------------------------
    Analysts with the Congressional Budget Office,\10\ the 
General Accounting Office,\11\ and the Federal Deposit 
Insurance Corporation all have called into question the 
conclusions of studies cited by the bill's supporters. These 
critiques are based on a number of grounds, including numerous 
flaws in the analysis and the assumptions underlying the 
studies. These analyses indicate that the rise in bankruptcies 
is more properly attributable to a number of changes unrelated 
to the bankruptcy laws, such as unexpected medical costs, 
family crises like divorce, loss of high paying full time jobs, 
and most notably, the deregulation of credit card interest 
rates and the dramatic increase in credit card solicitations 
and overall consumer debt.\12\ It also has been shown that the 
average income of persons filing for bankruptcy has declined 
from the 1980's, further contradicting assertions of widespread 
abuse by high-income individuals.\13\
---------------------------------------------------------------------------
    \10\ Kim J. Kowalewski, Evaluations of Three Studies Submitted to 
the National Bankruptcy Review Commission 4 (Oct.6, 1997). Kim 
Kowalewski of the Congressional Budget Office, at the request of the 
National Bankruptcy Review Commission, conducted a review of three 
economic analyses of this question. Kowalewski concluded that a 1996 
VISA study did not support such a conclusion and, in fact, ``because 
the social trends variable is flat during 1995 and early 1996 . . . 
social factors played no role behind the increase in personal 
bankruptcies in that period.''
    \11\ At the request of Senators Charles Grassley and Richard 
Durbin, the General Accounting Office examined the CRC study and found 
five areas of concern: (1) data supplied by the debtors regarding their 
income expenses, and debts and the stability of their income and 
expenses over a 5-year period were not validated, (2) the report did 
not define the universe of debts for which it estimated debtors' 
ability to pay, (3) payments on non-housing debts that debtors stated 
they intended to reaffirm were not included in debtor expenses in 
determining the net income debtors had, (4) the CRC did not account for 
the considerable variation among the 13 locations used in the analysis, 
and (5) a scientific random sampling methodology was not used to select 
the 13 bankruptcy locations or the bankruptcy petitions used in the 
analysis. General Accounting Office, Personal Bankruptcy: The Credit 
Research Center Report on Debtors' Ability to Pay, GAO/GGD-98-47 (Feb. 
1998).
    \12\ The Federal Deposit Insurance Corporation (``FDIC'') contested 
many of assertions made in the above-noted studies. Federal Deposit 
Insurance Corp., Bank Trends (Mar. 1998); Lawrence M. Ausubel, Credit 
Card Defaults, Credit Card Profits, and Bankruptcy, 71 American 
Bankruptcy L.J. 249 (1997). The FDIC observed a strong correlation 
between credit card default rates and personal bankruptcies, both of 
which increased in the 1990's. The FDIC found that, because of and 
following interest rate deregulation in 1978, credit card companies 
became more profitable and credit card lenders were able to extend more 
unsecured credit to less creditworthy borrowers. See also, David A. 
Moss, The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both, 
Spring, American Bkcy L. J, Spring 311 (1999) (review of empirical 
evidence indicates that increased availability of credit, rather than 
declining stigma, are the most likely source of the recent increase in 
bankruptcy filings).
    \13\ American Bankruptcy Institute, 18 ABI Journal 1 (Apr. 1999); 
Lawrence M. Ausubel, University College London, A Self-Correcting 
``Crisis'': The Status of Personal Bankruptcy in 1999 1 (Mar. 10, 
1999).
---------------------------------------------------------------------------
    One of the most revealing studies was performed by the non-
partisan American Bankruptcy Institute, which commissioned 
Professors Marianne B. Culhane and Michaela M. White of the 
Creighton University School of Law to conduct a study a 
comprehensive database of chapter 7 cases.\14\ The study 
estimated that a mere 3.6% of the debtors had sufficient 
income, after deducting allowable living expenses, to pay all 
of their non-housing secured debts, all of their unsecured 
priority debts, and at least 20% of their unsecured nonpriority 
debts. Moreover, in making their calculations, Professors 
Culhane and White assumed that 100% of the debtors in chapter 
13 would complete a 5-year repayment plan even though more than 
two-thirds of voluntary chapter 13 plans currently do not 
complete.
---------------------------------------------------------------------------
    \14\ March 17, 1999 Hearing (written statement of Marianne B. 
Culhane); Marianne B. Culhane & Michaela M. White, Taking the New 
Consumer Bankruptcy Model for a Test Drive: Means-Testing Real Chapter 
7 Debtors (Mar. 8, 1999).
---------------------------------------------------------------------------
    The American Bankruptcy Institute study also showed that, 
while the credit industry estimates it may be eligible recover 
$4 billion under the rigid standards of the means test, 
creditors would receive only $450 million in actual 
collections. The Executive Office of United States Trustees in 
the Justice Department conducted a study that reached similar 
results, estimating that passage of the legislation probably 
would have netted creditors no more than 3% of the $400 per 
household they claim to be losing. These figures indicate that 
the credit industry funded studies may have overstated the 
``problem'' by as much as 500%.
    It is also important to note we have never received any 
evidence that the credit card industry likely would pass on any 
of the ``savings'' from bankruptcy law changes to individual 
consumers. Instead the evidence shows that credit card 
companies, which represent by far the most profitable sector of 
the commercial banking business,\15\ tend to maintain high 
interest rates, even when their own cost of credit 
declines.\16\ The lack of competition in this industry has 
caught even the Justice Department's attention, which has 
brought an antitrust suit against VISA and MasterCard in the 
Southern District of New York.\17\
---------------------------------------------------------------------------
    \15\ In 1993, credit card banks were nearly four times as 
profitable as all commercial banks. Despite the slight decrease in the 
average credit card interest rate, credit card banks remain twice as 
profitable as commercial banks. March 16, 1999 Hearing (written 
statement of the Honorable Joe Lee) (citing Federal Reserve Board, The 
Profitability of Credit Card Operations of Depository Institutions 
(Aug. 1997)).
    \16\ In 1996, Professor James Medoff, the Meyer Kestnbaum Professor 
of Labor and Industry at Harvard University, pointed out that, between 
1980 and 1992, when the Federal funds rate (the interest that banks 
charge for overnight loans) fell from 13.4% to 3.5%, a drop of nearly 
10 percentage points, the average credit card interest rate rose from 
17.3% to 17.8%. Professor Medoff suggests that during the 1980's, when 
interest rates were high, lenders learned a valuable lesson; consumer 
debtors in general pay very little attention to interest rates. March 
16, 1999 Hearing (written statement of the Honorable Joe Lee at 1) 
(citations omitted).
    \17\ Kenneth N. Gilpin, ``Antitrust Suit Filed Against VISA and 
MasterCard,'' N.Y. Times, Oct. 8, 1998, at C1.
---------------------------------------------------------------------------

                        ii. consumer provisions

A. Current Law and Proposed Changes
    Under current law, individuals facing financial difficulty 
may seek a variety of forms of relief under the bankruptcy 
laws, with chapter 7 (liquidation) being by far the most common 
form of relief sought. Under this chapter, debtors are required 
to forfeit all of their property other than their ``exempt'' 
assets (i.e., deemed necessary for the debtor's maintenance, as 
determined under Federal or State law, at the State's option) 
in exchange for receiving a discharge of their unsecured debts. 
Creditors are entitled to receive any net proceeds from the 
sale of the debtor's nonexempt property, subject to the 
statutory priority schedule.\18\ The Bankruptcy Code does not 
permit the discharge of certain debts whose payments are 
considered to be important to society. Some of this debt is of 
the same nature as priority debt (e.g., family support 
obligations and taxes), but the law also excepts from discharge 
debts incurred through the debtor's misconduct, such as debts 
arising from fraud and intentional injuries.\19\
---------------------------------------------------------------------------
    \18\ For example, the costs of administering the estate are 
entitled to the first priority, and payments of alimony, child support, 
and taxes are entitled to later priorities, with general unsecured debt 
entitled to any residual assets left over. 11 U.S.C. Sec. 507(a).
    \19\ 11 U.S.C. Sec. 523(a).
---------------------------------------------------------------------------
    While there are no specific financial criteria for 
determining who may seek chapter 7 relief, Sec. 707(b) of the 
Bankruptcy Code grants the court the discretion to deny relief 
where the filing is found to be a ``substantial abuse.'' \20\ 
Under Sec. 707(b), however, there is a presumption in favor of 
granting relief to the debtor. This stems in part from the 
costs and potential hardships associated with developing 
excessive barriers to chapter 7 eligibility, the belief that 
the ``honest but unfortunate debtor'' \21\ should be entitled 
to a ``fresh start,'' the importance of encouraging risk-taking 
and entrepreneurship, and avoiding situations where it is 
impossible for individuals to escape aggressive creditor 
collection tactics.\22\ Section 707(b) is not the only 
provision in the Bankruptcy Code that prevents individuals from 
misusing chapter 7. For example, creditors may request that 
certain debts be held nondischargeable under Sec. 523(a) or 
that the debtor be denied a discharge altogether under 
Sec. 727.
---------------------------------------------------------------------------
    \20\ The Code does not define the term ``substantial abuse,'' which 
is used in Sec. 707(b), although, some courts have found that the 
ability to pay an appreciable proportion of one's debts over 3 years, 
using future income, could constitute ``substantial abuse.'' See, e.g., 
Fonder v. United States, 974 F.2d 996 (8th Cir. 1992) (debtor could pay 
89% of unsecured debts in 3 years); In re Krohn, 886 F.2d 123 (6th Cir. 
1989) (ability to pay portion of debts from ``ample income'' in excess 
of $80,000 per year); In re Walton, 866 F.2d 981 (8th Cir. 1989) 
(ability to pay two thirds of debts in 3 years).
    \21\ Local Loan v. Hunt, 292 U.S. 234 (1934).
    \22\ There are a number of disincentives to filing for bankruptcy, 
such as the fact that a person filed for a chapter 7 bankruptcy will be 
disclosed on a debtor's credit report, and the law's prohibitions on 
repeat chapter 7 filings for 6 years.
---------------------------------------------------------------------------
    A separate bankruptcy alternative available to individual 
debtors is chapter 13, formerly known as a wage earner's 
plan.\23\ Under chapter 13, a debtor is permitted to retain his 
or her property, but is required to pay to creditors over a 3-5 
year period out of future income at least as much as the 
creditors would have received under a chapter 7 liquidation, 
and is also required to pay all priority debts in full. To 
accomplish this, the debtor must propose a plan, administered 
by a trustee, that pays creditors in full or that devotes the 
debtor's ``disposable income'' after accounting for necessary 
support of the debtor, his or her family, or a business. In 
order to encourage the use of chapter 13 plans, which are 
currently voluntary to the debtor, Congress determined that 
persons who meet their chapter 13 obligations are entitled to a 
broader discharge of their unpaid debts than is available under 
chapter 7. This ``superdischarge'' results in the discharge of 
several types of debt that chapter 7 does not discharge. In 
addition, debtors are permitted to retain property whether or 
not the property is encumbered by liens and the debtor 
committed a prepetition default, so long as the chapter 13 plan 
cures any arrearages. In this manner, debtors can use chapter 
13 to save their homes from foreclosure. In addition, in 
chapter 13 a debtor is permitted to bifurcate a loan on 
personal property, such as an automobile, into secured and 
unsecured portions based on its present value, and treat only 
the secured portion as a secured claim that must be paid in 
full with interest.\24\ Also, chapter 13 plans can provide for 
the payment of priority debts, such as taxes and family support 
obligations, before payment on general unsecured debts.
---------------------------------------------------------------------------
    \23\ The eligibility requirements for chapter 13 may be found in 11 
U.S.C. Sec. 109(e). To be eligible for chapter 13, an individual must 
have regular income and unsecured debts of less than $269,250 and 
secured debts of less than $807,750. These numbers were indexed for 
inflation in April 1998. Individuals who exceed these thresholds may 
reorganize their affairs under chapter 11.
    \24\ This is known as a ``stripdown.'' Specifically, except for 
certain home mortgages, a debtor in chapter 13 may be able to bifurcate 
a debt to a secured creditor, treating only the current value of the 
collateral as secured, even if it is less than the full amount of the 
loan, and treating the remaining debt as unsecured.
---------------------------------------------------------------------------
    H.R. 333 would institute a number of major changes to 
consumer bankruptcy, in general, and chapter 7 and 13 in 
particular, that may reduce the number of bankruptcy filings 
(but will not reduce the number of cases of financial hardship) 
and that are designed to increase pay-outs to non-priority 
unsecured creditors, particularly credit card companies, as 
well as to certain secured lenders, especially those extending 
credit for automobile loans.
            1. Means Testing
    The most far-reaching change, set forth in section 102 of 
the bill, would institute a so-called ``means testing'' 
approach to consumer bankruptcy.\25\ This new standard would 
create a presumption of abuse of the bankruptcy system and deny 
chapter 7 relief to debtors who fail a ``means test.'' The 
means test applies only to debtors with primarily consumer 
debts. The means test in general works as follows:
---------------------------------------------------------------------------
    \25\ Subsection (a) of section 102 amends section 707(b) of the 
Bankruptcy Code to permit a court, on its own motion, or on motion of 
the United States trustee, private trustee, bankruptcy administrator, 
or party in interest, to dismiss a chapter 7 case for abuse if it was 
filed by an individual debtor whose debts are primarily consumer debts.
---------------------------------------------------------------------------
    First, the debtor's ``current monthly income'' is computed. 
This is the average of the debtor(s)' monthly income over the 
last 6 months before the bankruptcy, excluding Social Security 
benefits and war crimes reparations.
    Second, the following are subtracted from the current 
monthly income:

          a. total priority debts divided by 60
          b. the scheduled payments on secured debts over the 
        next 60 months, divided by 60
          c. arrears on secured debts such as mortgages and car 
        payments
          d. monthly expenses permitted by the Internal Revenue 
        Service collection guidelines, with possible 5% 
        increase for food and clothing allowances if 
        demonstrated to be ``reasonable and necessary'', long-
        term care expenses for the elderly or disabled, 
        expenses due to domestic violence, and private school 
        expenses up to $1500 per child annually \26\ if there 
        is an explanation of why they are reasonable and 
        necessary.
---------------------------------------------------------------------------
    \26\ The bill discriminates against public education by failing to 
allow parents to deduct comparable public school expenses (such as for 
enrichment programs, books and the like). Representative Jackson Lee 
had intended to offer an amendment to cure this disparity, but she was 
prevented from offering the amendment when the majority moved the 
previous question.
---------------------------------------------------------------------------
          e. if debtor is eligible for chapter 13, hypothetical 
        administrative expenses for chapter 13, but only up to 
        10% of projected plan payments.

    All of the calculations must be done as part of the 
debtor's schedules. If after deducting the allowed expenses, 
the debtor has enough ``disposable income'' over 60 months to 
pay $10,000 ($166.67 per month) or 25% of the nonpriority 
unsecured debts (unless the disposable income is less than $100 
per month), the debtor is presumed to be abusing chapter 7.
    If a debtor is presumed to be abusing chapter 7, the U.S. 
trustee must move to dismiss or file a report about why no 
motion is filed. Any creditor may also move to dismiss under 
the means test. However, no motion under Sec. 707(b) may be 
filed if the current monthly income of the debtor and the 
debtor's spouse is less than the State median income.\27\ If a 
motion is filed under the means test, the court has little 
discretion to deny it. The presumption of abuse can be overcome 
only if there are ``special circumstances'' that can be 
documented that require adjustment of the debtor's income or 
expenses for which there is ``no reasonable alternative.''
---------------------------------------------------------------------------
    \27\ However, due to a drafting error, the income of the debtor's 
spouse is counted regardless of whether the case is a joint case, and 
even if the spouse is separated and contributing nothing to the 
debtor's household. To address this clear drafting error, 
Representative Schiff offered an amendment to ensure that the spouse's 
income is not counted if the couple is legally separated. 
Representative Gekas voiced his opposition to correcting the error at 
the markup: ``I hasten to say that the gentleman may have struck a cord 
of error here in which, again, we became frozen in time, as it were, 
during the conference to preserve the unity of the bill. It may have 
been an oversight.'' Nevertheless, the amendment was rejected on a 
straight party-line vote.
---------------------------------------------------------------------------
    Although the means test is only applicable above median 
income,\28\ all debtors must complete the means test 
calculations. This gives rise to the possibility that trustees 
or U.S. trustees will bring motions for abuse under 
Sec. 707(b)'s new looser standard (``totality of the 
circumstances'' or ``bad faith'') and use the means test 
calculations to support the argument that the debtor could 
afford to pay creditors, especially since chapter 7 trustees 
could receive compensation under the chapter 13 plan.
---------------------------------------------------------------------------
    \28\ Two forms of ``safe harbors'' are recognized under section 
102(a). One provides that only a judge, United States trustee, 
bankruptcy administrator, or private trustee may bring a motion under 
section 707(b) of the Bankruptcy Code if the chapter 7 debtor's income 
(or in a joint case, the income of debtor and the debtor's spouse) does 
not exceed the State median family income for a family of equal or 
lesser size (adjusted for larger sized families), or the State median 
family income for one earner in the case of a one-person household. The 
second safe harbor provides that no motion under section 707(b)(2) may 
be filed by a judge, United States trustee, bankruptcy administrator, 
private trustee, or other party in interest if the debtor and the 
debtor's spouse combined have income that does not exceed the State 
median family income for a family of equal or lesser size (adjusted for 
larger sized families), or the State median family income for one 
earner in the case of a one-person household.
---------------------------------------------------------------------------
    The bill also converts the Chapter 13 plan requirements for 
debtors with income above the State median into a mandatory 
approach based upon IRS expense standards rather than a 
flexible approach under the current section 1325 to determine 
disposable income. Accordingly, under section 102(h) of the 
bill, debtors would be required to dedicate all of their 
available income to unsecured debt, again after allowing 
deductions for secured and priority debts and living expenses 
per the means test and its IRS collection standards, even if 
the debtor's actual expenses are reasonable but exceed the IRS 
permitted, but arbitrarily-created, expenses.\29\ Although the 
provisions clarifying the means test allow for adjustments in 
currently monthly income and expenses for ``special 
circumstances'' this requires the debtor to file a motion with 
the court, which may be challenged by the trustee or any 
creditor, with the burden of proof lying with the debtor.\30\
---------------------------------------------------------------------------
    \29\ H.R. 333, Sec. 102(h) (proposed amendment to 11 U.S.C. 
Sec. 1325(b)).
    \30\ H.R. 333, Sec. 102 (proposed amendment to 11 U.S.C. Sec. 707).
---------------------------------------------------------------------------
    The bill also goes on for these debtors to calculate the 
means test using expenses over 5 years rather than 3 years. 
This guarantees that, if the means test pushes a debtor into 
chapter 13, the repayment capacity assumptions would force the 
debtor into a 5-year repayment plan. This legislation also 
greatly curtails the broader discharge currently available to 
debtors who have successfully completed a chapter 13 plan, 
eliminating a significant inducement for voluntary debtor 
participation in chapter 13.
            2. Exceptions to Discharge & Loan Bifurcations
    H.R. 333 would make two significant additions to the types 
of debts that a debtor may not discharge under chapters 7 or 13 
and proscribes a debtor's ability to bifurcate a loan into 
secured and unsecured portions based upon the value of the 
collateral.
    Section 310 would allow a creditor to presumptively 
challenge the dischargeability of debts of $250 or more in the 
aggregate (as opposed to $1,075 under current law) or more owed 
to a single creditor for ``luxury goods or services'' incurred 
within 90 days prior to the bankruptcy filing (as opposed to 60 
days under current law).\31\ Additionally, Sec. 310 also makes 
presumptively nondischargeable cash advances aggregating at 
least $750 incurred within 70 days before the order for relief, 
to one or more creditors in an open-ended credit plan. This 
means that, if a debtor uses several cards to purchase basic 
household needs (there is no requirement that these cash 
advances be used for luxury goods) over a 70 day period, even 
if the debt to each creditor is a fraction of the $750 
threshold, all the debts would be nondischargeable. (Current 
law makes cash advances aggregating more than $1075 
nondischargeable if they are incurred more than 90 days before 
the filing.\32\
---------------------------------------------------------------------------
    \31\ H.R. 333, Sec. 310 (proposed amendment to 11 U.S.C. 
Sec. 523(a)(2)(C)).
    \32\ 11 U.S.C. Sec. 523(a)(2)(C).
---------------------------------------------------------------------------
    Section 314 adds another exception to discharge when the 
``debtor incurred the debt to pay a tax to a governmental unit 
that would be nondischargeable.'' \33\ Therefore, regardless of 
the debtor's intent, any debts incurred to pay a 
nondischargeable tax debt--for example, by electronic tax 
filing--would be nondischargeable.\34\
---------------------------------------------------------------------------
    \33\ H.R. 333, Sec. 314 (proposed amendment to 11 U.S.C. 
Sec. 523(a)).
    \34\ H.R. 333, Sec. 315.
---------------------------------------------------------------------------
    Section 306 would also largely eliminate the possibility of 
loan bifurcations in chapter 13 cases. As noted above, under 
current law a debtor is permitted to bifurcate a loan between 
the secured and unsecured portions, and to treat only the 
secured portion as a priority debt. The legislation prevents 
such bifurcations (including with regard to interest and 
penalty provisions) with respect to any loan for the purchase 
of a vehicle in the 5 years before bankruptcy, as well as all 
loans secured by other property incurred within 1 year before 
bankruptcy.
            3. Domestic Support
    Sections 211-219 of the bill make a number of changes to 
current law purportedly intended to enhance the status of child 
support and alimony payments in bankruptcy. These changes are 
presumably being made in an effort to offset the considerable 
criticism the legislation has received from child and spouse 
support advocates. However, the most significant effect is to 
give priority to child support debts assigned to the State.\35\
---------------------------------------------------------------------------
    \35\ Under current law, such debts are non-dischargeable, but are 
not a priority.
---------------------------------------------------------------------------
    Section 211 creates a new definition of ``domestic support 
obligation.'' In addition to applying to debts owed on account 
of child support and alimony, which are largely covered by 
current law, the new definition includes alimony and child 
support debts owed or recoverable to a governmental unit. This 
definition is in turn relevant to new sections of the 
Bankruptcy Code that give certain enhanced rights to the 
holders of domestic support obligations in terms of priorities, 
payments, automatic stay, preferences, and foreclosure.
    Section 212 grants alimony and child care creditors a first 
priority in bankruptcy (they are currently seventh, although 
most of the higher priority debts are seen rarely in consumer 
bankruptcy cases). Section 213 prevents the confirmation of a 
reorganization plan unless the debtor has paid all domestic 
support obligations. Section 214 provides that the automatic 
stay does not prevent legal actions enforcing wage orders for 
domestic support obligations and similar actions. Section 215 
makes nondischargeable all domestic support obligations, 
including obligations owed to government support agencies. 
Section 216 permits nondischargeable domestic support 
obligations to be collected from property--notwithstanding 
State laws making that property exempt from collection or 
attachment--after bankruptcy. Section 217 makes clear that a 
transfer that was a bona fide payment for a domestic support 
obligation will not be considered a fraudulent prepetition 
transfer. Section 218 specifies that alimony and child support 
payments are not included in the definition of disposable 
income in chapter 12 and 13 cases. Finally, section 219 of the 
bill requires chapter 7 and chapter 13 trustees to send written 
notice to recipients of alimony and child support payments, and 
to the local and State child support agencies, notifying them 
that a debtor of such payments has filed for bankruptcy.
            4. Other Anti-Debtor Provisions
    The legislation makes a host of additional changes to the 
consumer provisions of the bankruptcy laws. The majority of the 
provisions are designed to increase creditor pay outs and would 
greatly harm low- and middle-class debtors. As Harvard Law 
Professor Elizabeth Warren writes, the bill ``has more than 120 
pages of amendments affecting consumer cases, and they all head 
in the same direction: They give a few creditor interests more 
opportunities to try to recover from their debtors while they 
reduce the protection for other creditors and debtors.'' \36\ 
Last Congress, Chairman Hyde himself noted that the bill 
contains at least 75 provisions detrimental to debtors and 
favorable to creditors. Among other things, the bill extends 
the period permitted between chapter 7 filings from 6 years 
(under current law) to 8 years; \37\ expands the ability of 
residential landlords to evict tenants without seeking 
permission from the court; \38\ and significantly narrows the 
definition of household goods exempt from repossession in 
bankruptcy.\39\
---------------------------------------------------------------------------
    \36\ March 11, 1999 Hearing (written statement of Professor 
Elizabeth Warren).
    \37\ H.R. 333, Sec. 312.
    \38\ H.R. 333, Sec. 311.
    \39\ H.R. 333, Sec. 313.
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B. Principal Problems with Proposed Changes
            1. H.R. 333's Means Testing is Arbitrary and Unworkable in 
                    Practice
    It is important to recall that the National Bankruptcy 
Review Commission's majority specifically rejected the so-
called ``means testing'' approach,\40\ observing:
---------------------------------------------------------------------------
    \40\ Only two members of the National Bankruptcy Review Commission 
signed onto a dissenting statement supporting the consideration of 
various means testing options. National Bankruptcy Review Commission, 
Final Report: Bankruptcy--The Next Twenty Years (Oct. 20, 1997) 
(Chapter 5, Additional Dissent to Recommendations for Reform of 
Consumer Bankruptcy Law Submitted by the Honorable Edith H. Jones and 
Commissioner James I. Shepard).

        The credit industry has sought means testing 
        consistently for at least 30 years, but Congress has 
        consistently refused to change the basic structure of 
        the consumer bankruptcy laws. . . . Access to chapter 7 
        and to chapter 13, the central feature of the consumer 
        bankruptcy system for nearly 60 years, should be 
        preserved.\41\
---------------------------------------------------------------------------
    \41\ Bankruptcy: The Next Twenty Years, National Bankruptcy Review 
Commission Final Report 90-91 (Oct. 20, 1997).

    The 1973 Commission on Bankruptcy Laws similarly considered 
and rejected industry calls for mandatory chapter 13's, noting 
that Congress had itself rejected similar proposals in 1967, 
---------------------------------------------------------------------------
and observed:

        [B]usiness debtors are not subject to any limitation on 
        the availability of straight bankruptcy relief, 
        including discharge from debts, and it was pointed out 
        that, quite apart from bankruptcy, business debtors are 
        able to incorporate and to limit their liability to 
        their investments in corporate assets. To force 
        unwilling wage earners to devote their future earnings 
        to payment of past debts smacked to some of debt 
        peonage, particularly when business debtors could not 
        be subjected to the same kind of regimen under the 
        Bankruptcy Act. . . . The Commission concluded that 
        forced participation by a debtor in a plan requiring 
        contributions out of future income has so little 
        prospect for success that it should not be adopted as a 
        feature of the bankruptcy system.\42\
---------------------------------------------------------------------------
    \42\ Report of the Commission on Bankruptcy Laws, H.R. Doc. No. 
137, Part I, 93rd Congress, 158-59 (1973) (citation omitted).

    The principal problem with the means test is that the rigid 
one-size-fits-all test used in determining eligibility for 
chapter 7 and the operation of chapter 13 will often operate in 
an arbitrary fashion. Many of these flaws were highlighted last 
Congress by Chairman Hyde when he unsuccessfully sought to 
delete the use of the rigid IRS standards and instead 
substitute a more fact specific test based on the court's 
assessment of the facts and circumstances. First, the bill 
relies upon IRS collection standards, which lay out no 
comprehensive or specific standards for the deduction of living 
expenses. Part of the problem arises from the fact that the IRS 
standards referenced by the bill are not automatic in many 
cases. Although the IRS does set forth national standards for 
some expenses, such as food and clothing,\43\ and local 
standards for expenses such as housing and transportation,\44\ 
it leaves the determination of ``other necessary expenses'' to 
the discretion of the relevant IRS employee.\45\ This means 
that the bill fails to provide specific guidance concerning the 
appropriateness of deducting part or all of the funds a debtor 
may expend for items such as health care (both medical expenses 
and health insurance), taxes, and accounting and legal fees, 
among other items. As a result, the means test could have the 
effect of requiring the payment of unsecured debt before 
allowing for payment of certain necessities such as health 
care.
---------------------------------------------------------------------------
    \43\ IRS Manual Sec. 5323.432.
    \44\ IRS Manual Sec. 5323.433.
    \45\ IRS Manual Sec. 5323.12.
---------------------------------------------------------------------------
    Even more importantly the bill allows the court no 
discretion to take into account the circumstances which led to 
the filing in determine whether abuse should be presumed and 
the debtor forced into a chapter 13 repayment plan. Thus an 
individual facing financial problems because he or she lost her 
job or suffered the death of a spouse is treated in the same 
manner as someone who has deliberately incurred excessive 
debts. Even a person who has incurred large debts because of an 
unexpected health care emergency will be forced into chapter 13 
without any court discretion if he or she has income above the 
applicable State median.
    Moreover, where the IRS has specific local expense 
standards, those standards do not always provide adequately for 
normal expenses. For example, the permitted automobile expense 
in the San Francisco Bay area for two cars is only $373 per 
month, even though most families could barely cover the cost of 
automobile insurance, let alone car payments, gasoline, tolls, 
and insurance under this amount.\46\ Ironically, Congress 
itself has recognized the inadequacy of such collection 
standards. The Internal Revenue Service Restructuring and 
Reform Act of 1998 directs the IRS to ``determine, on the basis 
of the facts and circumstances of each taxpayer, whether the 
use of the schedules . . . is appropriate'' and to ensure that 
they not be used ``to result in the taxpayer not having 
adequate means to provide for basic living expenses.'' \47\
---------------------------------------------------------------------------
    \46\ Hearing on H.R. 3150, the ``Bankruptcy Reform Act of 1998,'' 
Before the House Subcomm. on Commercial and Admin. Law, 105th Cong., 2d 
Sess. (Mar. 10, 1998) (written statement of the Honorable Randall J. 
Newsome, U.S. Bankruptcy Judge, Northern District of California).
    \47\ Internal Revenue Service Restructuring and Reform Act of 1998, 
Pub. L. No. 105-206, Sec. 3462 (1998).
---------------------------------------------------------------------------
    The seemingly arbitrary allowances for such expenses points 
to another problem with the means test under H.R. 333--its bias 
against debtors without secured debts. This is because the bill 
allows all secured debt payments to be deducted from monthly 
income, but limits rental and lease payments to the amount 
permitted by the IRS standards. This means that persons renting 
apartments and leasing cars may not be able to deduct the full 
amount of their housing and transportation costs in bankruptcy, 
while persons with mortgages and automobile debt will be able 
to do so.\48\ There is no legitimate policy rationale for this 
discrepancy, which appears to punish personally-responsible 
individuals who tightened their belts and tried to live 
modestly within their means and nonetheless had to resort to 
bankruptcy.
---------------------------------------------------------------------------
    \48\ Higher income debtors can also easily plan around the means 
test by, for example, purchasing a new expensive car shortly before 
bankruptcy, or deferring tax and child support payments, thereby 
increasing priority claims.
---------------------------------------------------------------------------
    Also, it is important to note that the IRS collection 
standards can change the manner in which the bankruptcy laws 
are applied. The collection standards serve as internal 
guidelines for the IRS; they are not regulations that are 
subject to the Administrative Procedures Act. As such, the IRS 
does not need to provide notice and comment when introducing 
new standards or when changing the existing ones. If the 
bankruptcy law was amended to incorporate the collection 
standards, as H.R. 333 proposes, and IRS were to change the 
collection standards in the future, the alteration in the 
standards would completely change how the Bankruptcy Code is 
applied. In effect, H.R. 333 would delegate authority to the 
IRS to change the Bankruptcy Code.
    It is no answer to assert, as the legislation's proponents 
have done, that the ``glitches'' in the collection standards 
can be resolved through the bill's allowance that ``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.'' \49\ This is a new standard with no 
clear definition. It is unclear how the courts will apply it. 
Establishing ``special circumstances'' will not be simple or 
cost or risk-free. Special circumstances may be established 
only upon a debtor's motion to the court.\50\ It is the 
debtor's burden to show special circumstances. The debtor must 
present detailed documentation for expenses for adjustments to 
income and a detailed explanation of the special circumstances 
which make such expenses or adjustment to income the only 
reasonable alternative for the debtor. These requirements make 
it very difficult for debtors to claim special circumstances, 
since many expenses are paid in cash and cannot be documented. 
This risk provides a tremendous disincentive for debtors to 
claim special circumstances, let alone incur the legal costs 
the debtor himself is required to pay to bring the motion.
---------------------------------------------------------------------------
    \49\ H.R. 333, Sec. 102, (proposed new 11 U.S.C. 
Sec. 707(b)(2)(B)(i)).
    \50\ H.R. 333, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(B)).
---------------------------------------------------------------------------
    There are also several serious interpretive problems caused 
by the drafting of the means test, which combines debt payment 
amounts with IRS allowances. For example, it is not clear 
whether a debtor who has two payments remaining on a secured 
car loan is allowed the IRS car ownership allowance for the 
remaining 58 months. If not, the debtor may have no funds to 
replace a car that is already seven or 8 years old at the 
outset of the 5 year period and is essential for a long commute 
to work. Also, the IRS home ownership allowance includes 
mortgage and utility payments. If a debtor's mortgage payment 
exceeds the IRS allowance, it is not clear whether any amount 
is allowed for utility payments.
    Finally, the current chapter 13 completion rate is less 
than one-third \51\ for voluntary plans which are voluntary and 
with disposable income tests that are less rigid than that 
proposed in this bill. By making chapter 13 the only avenue for 
bankruptcy relief for some individuals and imposing the bill's 
strict income and expense tests, the bill will undoubtedly 
result in an even smaller proportion of successful chapter 13 
plans.
---------------------------------------------------------------------------
    \51\ National Bankruptcy Review Commission, Final Report: 
Bankruptcy--The Next Twenty Years 90-91 (Oct. 20, 1997).
---------------------------------------------------------------------------
            2. Means Testing Will be Costly and Bureaucratic
    The bill's attempt to impose rigid financial criteria on 
debtors' eligibility for chapter 7 and the operation of chapter 
13 will impose substantial new costs on the bankruptcy system--
both the portions paid for by private parties (through payment 
for private chapter 7 and chapter 13 trustees and higher 
attorneys' fees) and the Federal Government (through the 
bankruptcy courts and the U.S. Trustees Program). These costs 
may well exceed the presumed savings under the bill.
    The Congressional Budget Office's evaluation of last 
Congress' version of this legislation indicated that over the 
next 5 years the legislation could cost the private sector over 
$3 billion. The lion's share of the costs would be imposed on 
private trustees who administer bankruptcy estates, providers 
of debt relief counseling services, and attorneys. Much of this 
is attributable to the complexity and paperwork burdens 
associated with the means test.
    In addition, the CBO estimated that the bill's cost to the 
Federal Government would be $333 million over the next 5 years. 
Again, part of this cost estimate derives from implementing the 
complex and paperwork heavy means testing program. Henry E. 
Hildebrand, Chair of the Legislative Committee of the National 
Association of Chapter Thirteen Trustees, highlighted these 
costs when he estimated that:

        Assuming that one out of nine cases filing for chapter 
        7 relief would be contested and further assuming that 
        the contest would require about 2 hours of pretrial 
        preparation and 1 hour of court time, the litigation 
        would require 276,000 additional hours, about 90,000 of 
        which would occupy the court.\52\
---------------------------------------------------------------------------
    \52\ Henry E. Hildebrand, The Hidden Costs of Bankruptcy Reform 2 
(1998)(unpublished manuscript on file with the Committee on the 
Judiciary, minority staff).

    A related concern is the many, many new opportunities for 
litigation and confusion created by the bill. Judge Randall 
Newsome testified on behalf of the National Conference of 
Bankruptcy Judges that at least 16 potential sources of 
litigation are contained in the means testing provisions alone, 
and that another 42 litigation points have been identified in 
the other consumer provisions, noting that ``[t]his is probably 
only the tip of the iceberg.'' \53\
---------------------------------------------------------------------------
    \53\ March 17, 1999 Hearing (written statement of the Honorable 
Randall J. Newsome, President, National Conference of Bankruptcy Judges 
at 1).
---------------------------------------------------------------------------
    Another source of higher costs for the government is the 
requirement that one in every 250 cases in each Federal 
district be randomly audited by independent certified public 
accountants or independent licensed public accountants, at 
taxpayer expense under generally-accepted auditing 
standards.\54\ CBO estimated it will cost the Federal 
Government $58 million over 5 years to effectuate this 
requirement. It is unclear whether such costs will yield any 
comparable benefits. For example, the Honorable William Houston 
Brown, a U.S. Bankruptcy Judge in the Western District of 
Tennessee, testified on behalf of the ABI that the audits 
required ``are likely to be very expensive, and such formal 
audits are likely unnecessary to determine significant 
misstatements in debtors' petitions and schedules.'' \55\
---------------------------------------------------------------------------
    \54\ H.R. 333, Sec. 602.
    \55\ March 17, 1999 Hearing (testimony of the Honorable William 
Houston Brown).
---------------------------------------------------------------------------
            3. Means Testing and the Other Consumer Provisions Will 
                    Harm Low- and Middle-Income People
    a. Concerns Regarding the Means Test It is incorrect to 
assume that the effect of H.R. 333's harmful provisions would 
be limited to individuals seeking bankruptcy relief who earn 
more than the regional median income. First, there are 
numerous, significant flaws in the manner in which State median 
income is calculated. For a variety of reasons the median 
income figure required under H.R. 333 will be outdated and 
understated. The first problem is that the bill states that 
household income is to be based on the most recent Census 
Bureau figures available as of January 1. But as of January 1, 
the Census has information available for only the second year 
prior to the date. Accordingly, during this year, 2001, census 
figures are available for only 1999, not 2000. At times of 
inflation, this 2-year lag could result in a significant 
increase in the number of individuals who are the subject of 
motions to dismiss or convert and who may earn more than the 
outdated median income figure being used. In addition, the 
starting point for the calculation of median income may be 
overstated.
    An even more serious problem derives from the fact that the 
State median income information is currently only published by 
the census bureau once per decade, meaning the median income 
information could be as much as 10 years out of date. This is 
why Representative Meehan offered an amendment to allow for 
upward adjustment of the Census figures to reflect changes in 
the Consumer Price Index. Despite agreement by members of the 
majority with the amendment in principle, Representative Gekas 
opposed the measure, contending that the Census Bureau's 
ability to adjust the figure upward was sufficient to address 
the concern, and the amendment was defeated on a party-line 
vote.
    In addition, Representatives Waters and Watt offered 
amendments designed to relieve individuals in poverty from 
having to demonstrate their median income falls well below the 
threshold in the means test and allowing such individuals to 
avoid the associated paperwork requirements. To ensure that 
this provision would not be abused, Representative Watt 
modified Ms. Waters original amendment to require the debtor to 
declare under penalty of perjury that the debtor's income fell 
below the poverty line for the year preceding the filing. This 
amendment was again defeated on a mostly party line vote, with 
only Rep. Scarborough voting for the amendment--the only 
Republican vote cast during the entire markup for a Democratic 
amendment.
    Another flaw in the median income formula is that the test 
measures a debtor's income based upon how much the debtor 
earned in the 6 months prior to bankruptcy. If the debtor lost 
a good job in month three and has been working at a low-wage 
job ever since, the income from that good job, and help from 
family members, would be counted as if that is what his future 
income would be. The debtor would be expected to pay out of 
income that may no longer exist. Also, the means test will 
pickup a variety of revenue sources--such as disaster 
assistance, and Veterans' benefits--which will result in lower- 
and middle-income individuals being cast as bankruptcy 
``abusers'' with income above the median. Also, due to an 
apparent drafting error, under the definition of ``projected 
income'' used in chapter 13, a debtor is required to use his or 
her previous 6 months income in determining the amount of 
payments he or she can make, regardless of whether or not that 
income stream is still available, even if the debtor's income 
is below the applicable median income.
    In addition, due to the fact that H.R. 333, unlike current 
law, will permit creditors and other parties-in-interest to 
bring motions to dismiss or convert, more aggressive and well-
funded creditors will have extremely wide latitude to use such 
motions as a tool for making bankruptcy an expensive, 
protracted, and contentious process for honest debtors, their 
families, and other creditors. Creditors could use such motions 
as leverage to obtain reaffirmation agreements so that their 
unsecured debts survive bankruptcy.\56\ These threats will not 
be limited to individuals with income above the median.
---------------------------------------------------------------------------
    \56\ It is also important to note that the sanctions against 
creditors who file abusive motions against debtors under Sec. 707(b) 
are weak. The court may grant attorney's fees and costs only under a 
rule 9011 standard or if the motion was brought solely to coerce a 
debtor to waive bankruptcy rights, an almost impossible standard to 
meet. (If the motion was brought both for illegally coercive purposes 
and other purposes, fees would not be awarded.) Moreover, in motions 
brought by small businesses with small claims, no fees are awarded even 
if rule 9011 is violated. H.R. 333, Sec. 102 (proposed amendments to 11 
U.S.C. Sec. 707(b)(2)(B)).
---------------------------------------------------------------------------
    Collectively, provisions forcing large number of 
individuals from chapter 7 into forced repayment plans under 
chapter 13 will have the effect of relegating large numbers of 
otherwise middle-income families into poverty level 
subsistence. This is because they will have no way of avoiding 
their crushing debt load, whether it was derived from a medical 
emergency or irresponsible credit card borrowing aggravated by 
high interest and penalty rates. Such individuals will actually 
be much worse off than other impoverished families because 
their nominal income is higher than the median income level and 
they cannot qualify for programs such as the earned income tax 
credit, school lunch programs, food stamps, or other 
subsistence provided to families with income below the poverty 
level.\57\
---------------------------------------------------------------------------
    \57\ A recent study, by the University of Maryland Department of 
Economics, illuminates the phenomenon of ``informal bankruptcy'', 
whereby debtors, especially those who are difficult to find or those 
with few attachable assets, may choose simply to stop making payments 
altogether and enter the underground economy. Amanda E. Dawsey and 
Lawrence M. Ausubel, Informal Bankruptcy, U. MD. Dept. Econ., Jan. 
2001, at 2. This then puts the burden on the creditors to collect. 
While informal bankruptcy lacks the legal protections afforded by 
(formal) bankruptcy, the incentives of informal bankruptcy cannot be 
underestimated, not the least of which is the lack of any 
administrative or legal costs initially. Importantly, little 
consideration has been given to informal bankruptcy with respect to 
legislation, yet in 1996 some 65.2 % of credit card loans were charged 
off for reasons other than bankruptcy. 1997 Annual Bankruptcy Survey, 
Visa U.S.A. Inc., September 1998.
---------------------------------------------------------------------------
    b. Other Concerns As noted above, the bill grants 
nondischargeable status to a wider range of cash advances and 
debts incurred for so-called luxury goods and debts incurred to 
pay nondischargeable tax debts. These new exceptions from 
discharge obviate many of the benefits that debtors may realize 
from filing for bankruptcy under chapter 7 or 13 and increase 
the opportunity for creditor abuse. In a communication to the 
Congress, the Clinton administration wrote that it is 
``generally inappropriate to make post-bankruptcy credit card 
debt a new category of nondischargeable debt. . . . We remain 
skeptical that the current protections against fraud and debt 
run-up prior to bankruptcy are ineffective and that the 
additional debts made nondischargeable by [the legislation] 
meet the standard of an overriding public purpose.'' \58\
---------------------------------------------------------------------------
    \58\ Letter from Jacob J. Lew, Director, Office of Management and 
Budget, to the Honorable Jerrold Nadler, Ranking Member, House Subcomm. 
on Commercial and Admin. Law 2 (Mar. 23, 1999).
---------------------------------------------------------------------------
    Consumer bankruptcy expert Henry Sommer also has explained 
that such provisions:

        increase the opportunity for creditors to file the 
        types of abusive fraud complaints which have been found 
        by many courts to be baseless and unjustified attempts 
        to coerce reaffirmations by debtors who cannot afford 
        to defend them. The new presumptions of 
        nondischargeability will fall mainly on low income 
        debtors who are unsophisticated, do not have the time, 
        budget flexibility, or attorney advice to plan their 
        bankruptcy cases carefully, have to file on short 
        notice to prevent utility shutoffs or other impending 
        creditor actions and will not have the funds to defend 
        dischargeability complaints.'' \59\
---------------------------------------------------------------------------
    \59\ Hearing on Consumer Bankruptcy Issues in H.R. 3150, the 
``Bankruptcy Reform Act of 1999,'' Before the House Subcomm. on 
Commercial and Admin. Law, 105th Cong., 2d Sess. (Mar. 10, 1998) 
(written statement of Henry J. Sommer).

    The new ban on loan bifurcations for car loans less than 5 
years old will further obviate the possibility of obtaining a 
fresh start through bankruptcy. Many creditors with security 
interests in household goods on credit extended in the year 
before bankruptcy will similarly be able to threaten 
repossession if they are not paid in full. Since an automobile 
depreciates rapidly when it leaves the showroom, it typically 
declines below its value and secured debt by several thousand 
dollars the day after it is bought. In essence, a lender with a 
secured loan which is underwater would be unjustly enriched by 
being able to treat the unsecured portion of that loan as fully 
secured to the detriment of other unsecured creditors. Such a 
prohibition on automobile bifurcation is likely to render many 
chapter 13 plans unfeasible because a debtor may be able to 
repay the entire secured value, but not the entire purchase 
price of the car along with penalties. The provision also 
permits the lender to come out of the bankruptcy in a superior 
position than if it had foreclosed on the loan, the usual rule 
that applies in bankruptcy cases.
    Several other consumer provisions also will exact 
significant hardships on all debtors, regardless of income 
level or degree of culpability. For example, by allowing 
landlords to continue eviction or unlawful detainer actions, 
and exempting them from the automatic stay regardless of the 
circumstances, the bill will force many battered women and 
families with children and seniors out on to the streets, 
without ever having an opportunity to use bankruptcy to catch 
up on their rent.\60\
---------------------------------------------------------------------------
    \60\ Because the bill's automatic stay provision could lead to the 
eviction of low-income individuals who are in bankruptcy, 
Representative Waters offered an amendment that would exempt senior 
citizens or single parents with minor children, either of whose incomes 
fall below the applicable median, and battered spouses, whose physical 
well-being would be threatened if relief from the stay is granted. 
Representative Gekas opposed the amendment, stating that ``her language 
vitiates, removes, erases what we have put in as combatants to the 
automatic stay in the previous portion of the statute.'' On the 
contrary, the amendment did not operate to exempt anyone other than the 
named individuals from the exclusion, and Representative Waters offered 
to clarify her amendment to clarify the point. Nonetheless, the 
amendment was defeated on a party-line vote. Representative Scott had 
intended to offer an amendment to eliminate the automatic stay 
provision entirely, but he was prevented from offering his amendment 
due to the Majority's abrupt termination of the markup.
---------------------------------------------------------------------------
    To cite but a few additional examples of new restrictions 
the bill imposes on consumers, section 106 makes pre-bankruptcy 
credit counseling mandatory regardless of the causes; section 
302 imposes new limits on repeat filing; section 304 prohibits 
``ride through'' of secured claims; section 305 authorizes new 
automatic stay relief for secured creditors or lessors of 
personal property; section 309 allocates all payments made to 
under secured creditors in chapter 13 cases first to the 
unsecured portion of the debt and makes other pro-creditor 
changes; section 312 extends the period between bankruptcy 
filings from six to 8 years; section 313 sets forth a new 
narrower definition of exempt household goods; sections 315 and 
316 impose new notice and tax return filing obligations along 
with mandatory dismissal requirements; section 327 values 
secured claims at higher amounts than current law; section 1230 
denies discharge or plan confirmation for failing to file tax 
returns; and section 1232 includes special protections for pawn 
brokers.
            4. The Consumer Provisions Will Have a Significant, Adverse 
                    Impact on Women, Children, Minorities, and Seniors, 
                    as well as Victims of Crimes and Severe Torts
    a. Women and Children H.R. 333 will have an adverse impact 
upon single mothers and their children, both as debtors and as 
creditors. On the debtor side, the means test will make it far 
more difficult for women to access the bankruptcy system. For 
example, women whose average income was at the median during 
the last 180 days, before the support checks stopped, may be 
denied access to chapter 7 and forced into restrictive chapter 
13 repayment plans. In addition, the bill will also make it 
more difficult for women to hold onto the car they need to get 
to work if it was purchased or used as collateral in the last 5 
years if a creditor claims a security interest in such items. 
The new nondischargeability categories also are problematic--
even if a single mother filing for bankruptcy believes they do 
not apply, it will be more difficult for her to litigate a 
credit card company's claim of nondischargeability.
    On the creditor side, the bill will have a particularly 
adverse impact on the payment of domestic support to women and 
children. The basic problem arises from the fact that 
bankruptcy and insolvency are by definition a zero-sum game. 
There is only so much money available to be divided among the 
creditors. Since H.R. 333 provides new advantages to large 
corporate creditors such as credit card companies, it will work 
to the ultimate disadvantage of single parents with children as 
they come into contact with the bankruptcy system as creditors 
seeking alimony and child support payments. These problems are 
by no means insignificant given that an estimated 243,000-
325,000 bankruptcy cases involved child support and alimony 
orders during the most recent years.\61\
---------------------------------------------------------------------------
    \61\ Teresa Sullivan et al., Consumer Debtors Ten Years Later: A 
Financial Comparison of Consumer Bankrupts 1981-91, 68 AM. BANKRUPTCY 
L.J. 121 (1994).
---------------------------------------------------------------------------
    Under current law, alimony and child support are treated as 
priority debt and are not subject to discharge.\62\ This 
preferential treatment dates from as early as 1903 and is based 
on Congress' determination that the payment of these debts is 
so important to society that it should come ahead of most 
general creditors. Although H.R. 333 does not revoke this 
special treatment, viewed as a whole, the legislation will have 
the effect of diminishing the likelihood of full payment of 
alimony and child support. This arises as a result of several 
features of the bill: its creation of significant new 
categories of nondischargeable debt, provision of additional 
leverage for creditors to obtain reaffirmation of debts, the 
extension of the length and onerousness of chapter 13 plans, 
and the bill's general limitations on the availability of 
chapter 7 relief.
---------------------------------------------------------------------------
    \62\ 11 U.S.C. Sec. Sec. 507(a)(7) & 523(a)(5).
---------------------------------------------------------------------------
    Collectively considered, these changes will help foster an 
environment where unsecured and credit card debt is far more 
likely to compete against alimony and child support obligations 
in the State law collection process post-discharge, where 
bankruptcy priorities have no effect.\63\ As a Congressional 
Research Service Memorandum analyzing predecessor legislation 
concluded under [a predecessor] bill ``child support and credit 
card obligations could be `pitted against' one another. . . . 
Both the domestic creditor and the commercial credit card 
creditor could pursue the debtor and attempt to collect from 
post-petition assets, but not in the bankruptcy court.'' \64\
---------------------------------------------------------------------------
    \63\ As the President of the American Academy of Matrimonial 
Lawyers observed, ``[i]f a Chapter 7 case the nondischargeability of 
the credit card debt will mean that the debtor does not truly have a 
`fresh start' and will be unable to pay all his remaining obligations; 
most specifically, support obligations and potentially a property 
settlement payment. In a Chapter 13 case the credit card debts are 
treated equally with support obligations when devising a payment plan, 
thus the support obligation receives a pro-rate payment only while 
under existing law they have a priority.'' Letter from Charles C. 
Schoenberg to Rep. Gerald Nadler (Feb. 7, 2001).
    \64\ Congressional Research Service, Impact of Consumer Bankruptcy 
Reform Proposals on Child Support Obligations (May 13, 1998).
---------------------------------------------------------------------------
    Of course, outside of the bankruptcy court is precisely the 
arena where sophisticated credit card companies have the 
greatest advantages. While Federal bankruptcy court provides a 
strict set of priority and payment rules and generally seeks to 
provide equal treatment of creditors with similar legal rights, 
State law collection is far more akin to ``survival of the 
fittest.'' Whichever creditor engages in the most aggressive 
tactic--be it through repeated collection demands and letters, 
cutting off access to future credit, garnishment wages or 
foreclose on assets--is most likely to be repaid.
    It is for these reasons that groups concerned about the 
payment of alimony and child support have expressed their 
strong opposition to the bill and its predecessors. Professor 
Karen Gross of New York Law School stated succinctly that ``the 
proposed legislation does not live up to its billing; it fails 
to protect women and children adequately.'' \65\ Joan 
Entmacher, on behalf of the National Women's Law Center, 
testified that ``the child support provisions of the bill fail 
to ensure that the increased rights the bill would give to 
commercial creditors do not come at the expense of families 
owed support.'' \66\ Marshall J. Wolf, , the past Chair of the 
Family Law Section of the American Bar Association recently 
wrote, ``[t]he means testing, credit card nondischargeability, 
reaffirmation provisions, and limits on dischargeability 
features of . . . H.R. 333 will attack these women and children 
by placing disposable funds available to them at further risk. 
The credit card industry, whose debt may be protected from 
discharge by . . . H.R. 333, will not hesitate to attach the 
bank account of a woman whose monetary lifeblood, her child 
support check, is deposited into such an account!'' \67\
---------------------------------------------------------------------------
    \65\ March 18, 1999 Hearing (written statement of Karen Gross, New 
York Law School).
    \66\ Id. (written statement of Joan Entmacher, National Women's Law 
Center).
    \67\ Letter from Marshall J. Wolf to Sen. Edward Kennedy (Feb. 6, 
2001).
---------------------------------------------------------------------------
    Assertions by the legislation's supporters that any 
disadvantages to women and children under H.R. 333 are offset 
by supposedly pro-child support provisions are not persuasive. 
It is useful to recall the context in which these provisions 
were added. First, in the 105th Congress, the bill's proponents 
adamantly denied that the bill created any problems with regard 
to alimony and child support.\68\ Although the proponents have 
now changed course, the child support and alimony provisions 
included do not respond to the provisions in the bill causing 
the problem--namely the provisions limiting the ability of 
struggling, single mothers to file for bankruptcy; enhancing 
the bankruptcy and post-bankruptcy status of credit card debt; 
and making it more difficult for debtors to eliminate debts and 
focus on domestic support obligations. In some instances, the 
new sections are even counterproductive in furthering the goal 
of payment of support obligations to ex-spouses and children.
---------------------------------------------------------------------------
    \68\ Letter from Representative George W. Gekas, et al., to Members 
of Congress (Apr. 29, 1998).
---------------------------------------------------------------------------
    For example, section 211 provides a definition of 
``domestic support obligation'' that includes funds owed to 
government units. If the government is acting as the debt 
collector for a woman or child, this is appropriate; the 
benefits of this inure to women and children directly. However, 
if the government is collecting for its own benefit (say, for 
example, the woman recipient is on welfare and the government 
is collecting arrearages to reimburse State or Federal 
expenditures), then the result may be to put the government 
collection agency in direct competition with single mothers and 
children, particularly in chapter 13.
    Section 212 purportedly increases to first priority from 
seventh priority obligations for domestic support, including 
debts owed to the government. It is misleading to suggest that 
moving up to ``first priority'' to ``seventh priority'' makes a 
significant difference: the debts that have second through 
sixth priorities almost never appear in consumer cases.\69\ 
However, knocking out the first priority for administrative 
expenses incurred by the trustee could have the unintended 
effect of thwarting the original purpose of the provision. 
Putting support claims ahead of administrative expenses in 
priority may prevent trustees from liquidating assets because 
trustees need to use estate funds to liquidate property. If the 
trustee is not assured that the estate can cover the expenses 
of liquidating property, the trustee may have to abandon the 
property back to the debtor, resulting in the domestic support 
obligations receiving no distribution--the opposite of bill's 
intent.\70\
---------------------------------------------------------------------------
    \69\ Those priorities--which would likely apply in less than 1% of 
all cases--deal with debts of grain storage facility operators, debts 
of fishermen, employee wage claims, retail layaway claims, and the 
like. 11 U.S.C. Sec. 507(a).
    \70\ Rep. Waters had planned to offer an amendment on this issue, 
but was prevented because the Majority unilaterally cut off debate.
---------------------------------------------------------------------------
    Section 213, which requires that chapter 13 plans provide 
for child support owed to the State as well as to families 
before the debtor receives any bankruptcy discharge, may reduce 
the likelihood that a feasible plan can be confirmed. When 
combined with the other increased payments that must be made to 
secured creditors under Chapter 13, the requirement that State 
arrears as well as family arrears must be paid in full if the 
plan does not extend to 5 years would make it more difficult 
for a debtor to get a Chapter 13 plan confirmed and 
successfully completed, and could, therefore, adversely affect 
the family.
    Section 214 creates additional exceptions to the automatic 
stay that, like other provisions in the bill, have the 
potential of placing women and children at a disadvantage. 
First, these provisions apply only to income withholding orders 
issued by government agencies under the Social Security Act, 
even though an estimated 40-50% of all child support cases, and 
all alimony-only cases, are enforced privately, not by 
government child support agencies. Second, income withholding 
is helpful only if such orders are placed against debtors with 
regular income. Yet, in 1997, more than four out of ten cases 
in State child support systems across the country lacked a 
support order.\71\
---------------------------------------------------------------------------
    \71\ March 18, 1999 Hearing (written statement of Joan Entmacher, 
National Women's Law Center) (citing U.S. Dept. of Health and Human 
Servs., Office of Child Support Enforcement, Preliminary Data Report: 
Child Support Enforcement FY 1997 (Aug. 1998).
---------------------------------------------------------------------------
    Section 215, which makes all property settlement 
obligations nondischargeable, also could have unintended 
consequences in practice. For example, under this provision, a 
financially-troubled ex-spouse who is owed alimony and child 
support could be forced to compete with another ex-spouse who 
is not in need of support but had a settlement agreement 
dealing with business debts. Alternatively, a financially-needy 
ex-spouse who files for bankruptcy may be left with 
nondischargeable debt owed to her wealthier ex-spouse because 
of a property settlement. Again, the result is the needy spouse 
and child could be placed at a disadvantage by these changes.
    Section 216, which allows domestic support creditors to 
levy otherwise exempt homesteads and other exempt property, 
also does not go far enough. Like the other provisions, it is 
effective only if a single mother goes to the time and expense 
of hiring an attorney to enforce her new rights. It also grants 
State and local governments the right to pursue claims in 
possible competition with the single mother.
    Finally, section 217's insulation of payments to the 
government from preference actions also may hurt an ex-spouse 
and child of the debtor. This is because those funds, which 
were preferentially paid to the government, otherwise may have 
been available for ongoing support payments.
    Representatives Conyers and Waters sought to mitigate these 
concerns when they offered an amendment to section 310 to 
ensure that this new dischargeability for luxury goods and ATM 
cash advances would not apply if these new limitations on 
discharge would impair the debtor's ability to pay domestic 
support obligations. In opposing the amendment, Representative 
Gekas incorrectly asserted that the amendment does not 
``enhance the situation we've already cured.'' On the contrary, 
section 310 would place the single mother seeking money for 
food into direct competition with credit card debt. The 
amendment was defeated on a party-line vote.
    The legislation also totally ignores another very serious 
problem facing women as a result of the Bankruptcy Code--the 
fear that violent and reckless individuals will be able to bomb 
abortion clinics and eliminate their liability from that action 
through the bankruptcy process. Although the current bankruptcy 
laws prevent discharge for ``willful and malicious injuries,'' 
\72\ it is unclear whether this standard applies to a clinic 
bombing where a particular victim was not targeted.\73\ It is 
also unclear whether the law applies to damages resulting for 
barricading clinic entrances. At the same time, notorious 
clinic bomber and ``Operation Rescue'' found Randall Terry has 
specifically filed for bankruptcy in order to void a $1.6 
million judgment he owed to the National Organization for Women 
and Planned Parenthood,\74\ and many of the notorious 
``Nuremberg files'' defendants have filed for bankruptcy.
---------------------------------------------------------------------------
    \72\ 11 U.S.C. Sec. 523(a)(6).
    \73\ Kawaauchau v. Geiger, 523 U.S. 57 (1998) (holding that the 
actor must intend the consequences of the act, injury to someone or 
something, not just the act, itself).
    \74\ Operation Rescue Founder Files for Bankruptcy due to Lawsuits, 
Wash. Post, Nov. 8, 1998, at A29; An Anti-Abortion Leader Files for 
Bankruptcy, N.Y. Times, Nov. 8, 1998, at 45.
---------------------------------------------------------------------------
    No appellate court has considered the issue of 
dischargeability of these debts. However, victims who have 
achieved Federal court judgments for violations of the clinic 
access law have been compelled to chase convicted criminals who 
have deliberately and publicly used the bankruptcy laws to 
avoid payment. According to one representative of a abortion 
clinic violence, it took more than 3,000 hours of attorney time 
to pursue such a claim in bankruptcy court.\75\
---------------------------------------------------------------------------
    \75\ See statement of Maria T. Vullo, Feb. 8, 2001 Hearing on S. 
220, the Bankruptcy Reform Act of 2001 before Sen. Jud. Comm.
---------------------------------------------------------------------------
    We believe it is irresponsible to allow the Bankruptcy Code 
to be used to void debts of this nature committed by violent 
individuals in violation of Federal law. As the National 
Abortion and Reproductive Rights Actions League has written, 
``[d]ebtors whose debts arise from their own clinic violence 
are not honest debtors and should not be able to escape the 
financial liabilities incurred by their illegal conduct.'' \76\ 
Senator Hatch (R-UT) also noted in defending the confirmation 
of the Attorney General, that even a staunch anti-abortion 
advocate such as Senator Ashcroft supported the amendment, 
which passed the Senate by a vote of 80-17.
---------------------------------------------------------------------------
    \76\ Memorandum of NARAL 8 (Mar. 30, 1999).
---------------------------------------------------------------------------
    b. Minorities, Seniors, and Victims of Crimes and Severe 
Torts H.R. 333 will also have a disparate impact upon 
minorities and victims of crimes and torts. The Leadership 
Conference on Civil Rights has warned that, under the 
predecessor legislation, ``African American and Hispanic 
American families, suffering from discrimination in home 
mortgage lending and in housing purchases and facing inequality 
in hiring opportunities, wages, and health insurance coverage 
[will be less able to] turn to bankruptcy to stabilize their 
economic circumstances.'' \77\ We know this because the 
economic struggle for Hispanic American and African American 
homeowners is harder than for any other group. While 68% of 
whites own their own homes, only 44% of African Americans and 
Hispanic Americans own their homes. Both African American and 
Hispanic American families are likely to commit a larger 
fraction of their take-home pay for their mortgages, and their 
homes represent virtually all their family wealth. It is no 
surprise, then, that African American and Hispanic American 
homeowners are six hundred percent more likely to seek 
bankruptcy protection when a period of unemployment or 
uninsured medical loss puts them at risk for losing their 
homes.\78\ Experience has also shown that minorities are also 
particular targets of predatory lenders.
---------------------------------------------------------------------------
    \77\ Letter from LCCR to Members of Congress (Apr. 21, 1999).
    \78\ Id.
---------------------------------------------------------------------------
    Similar concerns have been raised on behalf of seniors, who 
could lose their retirement savings if forced into chapter 13 
plans. The National Council of Senior Citizens has warned that 
legislation of this nature:

        would have a harsh impact on a group of people who are 
        often subject to job loss or catastrophic health costs; 
        instead of ameliorating these problems, this bill will 
        only exacerbate them. . . . Since 1992, more than a 
        million people over the age of 50 have filed for 
        bankruptcy; in 1997, an estimated 280,000 older 
        Americans filed. For them it is particularly hard. If 
        they are forced into prolonged repayment schedules, 
        they may not be able to maintain or accumulate savings 
        for retirement. As you know, approximately two third of 
        voluntary, Chapter 13 workout plans fail, and we 
        believe that retirement savings must be protected for 
        that purpose.\79\
---------------------------------------------------------------------------
    \79\ Letter from Dan Schulder, Director Legislation, National 
Council of Senior Citizens, to the Honorable Jerrold Nadler, Ranking 
Member, House Subcomm. on Commercial and Admin. Law (June 9, 1998).

    With regard to the concerns of victims' groups, it is 
important to note that current law provides for the 
nondischargeability of debts for obligations arising out of 
willful or malicious injury, death or personal injury caused by 
the operation of a motor vehicle, or criminal restitution 
payments.\80\ However, making more credit card debt 
nondischargeable, encouraging more reaffirmations of general 
unsecured debt, and discouraging more financially-troubled 
individuals from seeking debt relief will place these 
individual creditors at a relative disadvantage. As the 
National Organization for Victim Assistance has written, ``more 
exempted creditors with rights to the same finite amount of 
resources means lower payments to all. Inevitably, for victim-
creditors, that means either a smaller return on the 
restitution owed, or a longer period of repayment, or both.'' 
\81\ The National Center for Victims of Crime has similarly 
observed, ``to equate contractual losses of a commercial 
creditor with . . . personal obligations [for victim claims as 
the legislation does] is to belittle their importance and to 
directly reduce the likelihood that crime victims will ever be 
financially restored, despite obtaining an order of restitution 
or a civil judgment.'' \82\ Mothers Against Drunk Driving 
(``MADD'') has also complained that if ``individuals [whose 
lives] have been shattered financially and emotionally by the 
death or serious injury of their family members . . . have to 
compete with credit card debt holders for the limited post-
discharge income of debtors available [as the predecessor 
legislation requires], they may themselves end up in 
bankruptcy.'' \83\ MADD also noted that in contrast to crash 
victims, ``lending institutions have the ability to provide 
some degree of protection to themselves when they issue credit 
cards to individuals and they are in a better financial 
position to absorb losses, which to them is a cost of doing 
business.'' \84\
---------------------------------------------------------------------------
    \80\ 11 U.S.C. Sec. Sec. 523(a)(6), (9), (13).
    \81\ Letter from Marlene A. Young, Executive Director, NOVA, to the 
Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 26, 
1999).
    \82\ Letter from David Beatty, Director of Public Policy, The 
National Center for Victims of Crime, to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (Apr. 28, 
1999).
    \83\ Letter from Karolyn V. Nunnallee, National President, MADD, to 
Members of Congress (Apr. 26, 1999).
    \84\ Id.
---------------------------------------------------------------------------
            5. The Bill Does not Address Abuses of the Bankruptcy 
                    System by Creditors
    Perhaps the bill's most glaring omission is its failure to 
fully address the problem of abusive lending practices. At the 
same time the legislation responds to every conceivable debtor 
excess--whether real or imagined--it largely ignores the 
transgressions of the credit industry. The only significant 
``reform'' with regard to lending industry disclosure is that 
requirement that credit card companies provide the consumer 
with an ``800'' number to call to ascertain payment information 
along with unrealistic examples of credit card debt paydowns 
(which may not reflect the actual situation of the debtor and 
thus prove misleading), and as a series of boilerplate warnings 
regarding real estate loans and teaser rates.\85\
---------------------------------------------------------------------------
    \85\ H.R. 333, Title XIII.
---------------------------------------------------------------------------
    As noted at the outset, the overwhelming weight of 
authority establishes that it is the massive increase in 
consumer debt, not any change in bankruptcy laws, which has 
brought about the increases in consumer filings. Indeed, there 
is an almost perfect correlation between the increasing amount 
of consumer debt and the number of consumer bankruptcy filings. 
For example, between 1993 and 1998, bank credit card loans in 
the United States more than doubled from $223 billion to nearly 
$500 billion, and personal bankruptcy filings increased 
accordingly.\86\ The same basic correlation holds from 1946 
through 1998, as the below chart indicates:
---------------------------------------------------------------------------
    \86\ March 16, 1999 Hearing (written statement of Joe Lee, Charts 
5-6). In 1993, banks issued credit card loans in the amount of $223 
billion; in the same year, there were approximately 900,000 consumer 
bankruptcy filings. Id. (citing the FDIC and the Administrative Office 
of the U.S. Courts). In 1998, banks issued $455 billion in credit card 
loans; that year, there were 1.4 million consumer bankruptcy filings. 
Id.

    Review of this data indicates that the primary factor that 
led to the increase in bankruptcy filings after 1978 was not 
the enactment of the revised bankruptcy laws, but the 
deregulation of credit. The deregulation resulted from the 
Supreme Court decision in Marquette National Bank of 
Minneapolis v. First Omaha Service Corp.,\87\ which held that 
out-of-state banks were not subject to the usury laws of the 
State where the consumer was located. This decision led credit 
card concerns to relocate to States with lax usury laws that 
gave banks the ability to charge exorbitant interest rates in 
all 50 States. Subsequently, other legal changes permitted a 
broad range of new entities to get into the ever-growing, and 
lucrative, credit card business.\88\ Among other things, we 
know that it was this unprecedented increase in high-cost 
credit, not the changed bankruptcy laws, that led to the change 
by virtue of Canada's experience. In Canada, bankruptcy filings 
began to explode in the late 1960's, simultaneous with the 
entry of VISA and MasterCard into that nation and the growth in 
credit card lending. There was no change in Canada's laws that 
could account for the increase.
---------------------------------------------------------------------------
    \87\ 439 U.S. 299 (1978).
    \88\ See March 16, 1999 Hearing (written statement of Joe Lee at 1-
3).
---------------------------------------------------------------------------
    This deregulation of credit and the accompanying explosion 
in credit availability--the number of credit card solicitations 
in 1998 reached 3.5 billion, an increase of 15 percent from the 
prior year \89\--and consumer debt, have been accompanied by a 
wide variety of credit card abuses. For example, solicitations 
of minors and college students are a particular problem. Credit 
card companies purposefully solicit students and other minors 
who have little ability to pay their debts. Illustrative of the 
seriousness with which credit card companies target students is 
the following topic from the 1998 Card Marketing Conference:
---------------------------------------------------------------------------
    \89\ Press Release of the National Consumer Law Center, Consumers 
Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).

        Targeting Teens: ``You Never Forget Your First Card!'' 
        Most teens never forget their first love. Nor do they 
        forget the issuer who dares to accept their 
        application. Their brand loyalty and propensity to 
        spend make consumers in their mid- to late-teens priced 
        prospects for many card issuers.\90\
---------------------------------------------------------------------------
    \90\ Id. (quoting Agenda for Card Marketing Conference ``98 (Nov. 
9-11, 1998)). Between 1990 and 1995, the average student credit card 
debt more than doubled from $900 to $2,100. By 1997, graduate students 
averaged seven cards and carried a total balance of $5,800. That is in 
addition to school loans, which are increasingly being used to pay off 
students' credit card debt. To support average post-college debts and 
other expenses, graduates need to earn more than $38,000--$4,000 more 
than the national average. ``Bankrupt at 24, Susan Carpenter, LA Times 
January 24, 2001.

The credit card tactics are myriad, including offering gifts 
such as mugs, Slinkees, T-shirts, and Frisbees.\91\ Campus 
groups managing credit card tables receive large cash payments 
from credit card companies.\92\ Such tactics apparently work, 
as 61% of students responsible for their own bills have 
indicated that they received credit cards at college.\93\ Some 
colleges have become so fed up with card marketing practices 
that they banned the credit card companies from their campus 
\94\--although they cannot stop mail solicitations.
---------------------------------------------------------------------------
    \91\ Id.
    \92\ Id.
    \93\ U.S. Public Interest Research Group, The Campus Credit Card 
Trap: Results of a PIRG Survey of College Students and Credit Cards 
(Sept. 1998).
    \94\ Press Release of the National Consumer Law Center, Consumers 
Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).
---------------------------------------------------------------------------
    To make matters worse, credit card companies even go so far 
as to solicit business from the developmentally disabled.\95\ 
One developmentally-disabled man, aged 35, has the reading and 
mathematic skills of a second-grader and an annual income of 
$7,000 from Social Security disability benefits; nevertheless, 
he has thirteen credit cards, generating a debt of $11,745.\96\ 
When his counselor asked the bank to lower his credit limit to 
$500, his limit was instead raised to $4,900.\97\ Credit card 
companies have no answer for how this occurs other than to say 
that they screen all applicants to ensure they can handle the 
risk; \98\ clearly, however, credit card companies have not 
been doing a sufficient job of screening their applicants. 
Unfortunately, H.R. 333 does nothing to meaningfully discourage 
any of these practices.
---------------------------------------------------------------------------
    \95\ Dan Herbeck, Where Credit Isn't Due: Developmentally-Disable 
Become Victims, Buffalo News, Apr. 7, 1998, at 1A.
    \96\ Id.
    \97\ Id.
    \98\ Id.
---------------------------------------------------------------------------
    The bill also ignores the problem of credit card companies 
lending to individuals with already substantial debts and 
little prospect of repayment. Gary Klein of the National 
Consumer Law Center noted ``offering additional credit . . . to 
families already struggling to pay their debts hurts not only 
borrowers, but also the borrowers' honest creditors if the new 
credit pushes the family over the edge. Similarly, failure by 
one creditor to seriously consider payment arrangements outside 
bankruptcy for families facing hardship may lead to a 
bankruptcy filing which affects all creditors.'' \99\ One 
credit card company goes so far as to solicit debt counselors 
and offers them $10 for each chapter 7 client who requests a 
VISA card.\100\
---------------------------------------------------------------------------
    \99\ March 11, 1999 Hearing (written statement of Gary Klein, 
National Consumer Law Center).
    \100\ Letter from American Bankruptcy Service to Michael Schwartz 
(Dec. 18, 1998).
---------------------------------------------------------------------------
    A particularly pernicious credit card practice occurs in 
the so-called ``subprime'' market, where lenders seek out 
riskier borrowers and offer home equity financing at loan to 
value ratios in excess of 100%. Another lending abuse targets 
low income and minority neighborhoods with ``serial'' 
refinancing loans that carry high interest rates and other 
onerous terms.\101\ In essence this causes poor individuals to 
place their homes at risk in order to finance their credit card 
purchases.
---------------------------------------------------------------------------
    \101\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, AFL-CIO, n.9 (citing Debra Nussbaum, ``Lenders Laud the Value 
of Home Sweet Equity,'' N.Y. Times, Mar. 22, 1998, Sec. 3 at 10; 
Richard W. Stevenson, ``How Serial Refinancings Can Rob Equity,'' N.Y. 
Times, Mar. 22, 1998, Sec. 3 at 10. See also Julia Patterson Forrester, 
``Mortgaging the American Dream: A critical Evaluation of the Federal 
Government's Promotion of Home Equity Financing,'' 69 Tulane L. Rev. 
373 (1994))).
---------------------------------------------------------------------------
    These problems are compounded by the fact that credit card 
companies fail to disclose clearly on their account statements 
the total amount and total time it would take to pay off 
balances if only the minimum amount due was paid each month. 
Unlike mortgage loans and car loans, credit card loans do not 
disclose the amortization rates or the total interest that will 
be paid if the cardholder makes only the minimum monthly 
payment. As a result, using a typical minimum monthly payment 
rate on a credit card, it could take 34 years to pay off a 
$2,500 loan, and total payments would exceed 300 percent of the 
original principle. This is why many lenders encourage minimum 
payments that do not pay down the loan.
    Finally, the legislation fails to address adequately the 
problem of abuse in the area of reaffirmation agreements, by 
for example, banning their use with respect to unsecured and 
dischargeable loans. Although it requires lengthy and confusing 
``disclosures'' intended to assure that debtors entering into a 
reaffirmation agreement understand all aspects of signing the 
agreement, it allows creditors to refuse to disgorge funds 
received even in many cases of illegality and exempts credit 
unions from all the disclosure requirements and from any 
restrictions on unduly burdensome reaffirmations. This failing 
is especially glaring in view of the fact that the bill will 
provide numerous opportunities for creditors to coerce 
reaffirmations making the provisions of this bill, which will 
render it more difficult to obtain effective remedies against 
abusive creditors like Sears, even less defensible.\102\
---------------------------------------------------------------------------
    \102\ See Leslie Kaufman, Sears to Pay Fine of $60 Million in 
Bankruptcy Fraud Lawsuit, N.Y. Times, Feb. 10, 1999, at C2.
---------------------------------------------------------------------------

                        III. BUSINESS PROVISIONS

    Under current law, businesses may use chapter 11 of the 
Bankruptcy Code in an effort to obtain relief from the 
creditors while they seek to develop a plan to reorder their 
affairs and pay as much of their debts as their operations will 
allow. Under this chapter, businesses obtain an ``automatic 
stay,'' which forestalls creditor collection efforts. During 
this time period, debtors have an opportunity to examine their 
contracts and leases and determine which ones to assume and 
which ones to reject (with rejection leading to a claim for 
damages). Debtors are subject to a number of requirements 
during this period, such as the formation of creditor 
committees and various ongoing financial disclosures.
    The goal of chapter 11 is to determine whether there is 
ongoing business value that can be preserved to pay off 
creditors while maintaining as many jobs and contractual 
relationships as possible. To this end, the debtor is given an 
exclusive 120-day period (unless lengthened or shortened for 
cause) in which to develop a reorganization plan that satisfies 
a host of statutory requirements and convince a majority of the 
creditors that the plan is in their best interests and is 
preferable to a liquidation ``fire sale.''
    In 1994, Congress enacted two exceptions to the general 
rules of chapter 11. The first related to ``small businesses,'' 
defined as entities engaged in commercial or business 
activities whose aggregate debts do not exceed $2 million. 
Debtors that voluntarily elect to be treated as small 
businesses are permitted to dispense with creditor committees, 
receive only a 100-day plan exclusivity period, and are 
entitled to more flexible provisions for disclosure and 
solicitation for acceptances of their proposed reorganization 
plan. In 1994, Congress also developed a special set of rules 
applicable to ``single asset real estate,'' generally defined 
as cases in which the principal asset is a single piece of real 
estate subject to debt of no more than $4 million. In cases 
falling within this definition, secured creditors are permitted 
to foreclose on their collateral unless the debtor files a 
reorganization plan which is likely to be confirmed or 
commences payment on the secured loan within a 90-day period. 
This exception to chapter 11 procedures was justified on the 
grounds that single asset real estate cases were seen as 
essentially private two-party loan disputes, which did not 
implicate ongoing businesses or jobs.
A. General Business Concerns
    The business provisions of the bill would effectuate a 
number of changes in the manner in which corporations, 
partnerships and other business entities are permitted to 
reorganize their financial affairs. Groups such as the AFL-CIO 
and the National Bankruptcy Conference have raised numerous 
concerns regarding the business titles of the legislation and 
their likely negative impact on financially troubled 
businesses, particularly during an economic downturn as we are 
presently experiencing. These include concerns about the 
expansion of remedies available to secured creditors in the 
transportation industry; \103\ the imposition of mandatory 
deadlines for extensions of ``exclusivity''; \104\ amendments 
regarding asset securitization limiting the assets available to 
a debtor during a bankruptcy case; \105\ limits on repeat 
filings for troubled small businesses,\106\ and provisions 
giving utility companies an enhanced position in 
bankruptcy.\107\ In general, the AFL-CIO has warned:
---------------------------------------------------------------------------
    \103\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, AFL-CIO); March 17, 1999 Hearing (written statement of Kenneth 
Klee, National Bankruptcy Conference).
    \104\ H.R. 333, Sec. 411.
    \105\ H.R. 333, Sec. 912.
    \106\ H.R. 333, Sec. 441.
    \107\ H.R. 333, Sec. 417.

        When this committee last considered by matter in 1999, 
        our economy was going through an unprecedented period 
        of growth and prosperity. Today, we are in far more 
        uncertain times, and large employers throughout the 
        United State are seeking the protection of the 
        bankruptcy laws. Ten major steelmakers have filed for 
        bankruptcy since 1998. Already 10,000 jobs have been 
        lost at these firms alone during this period. Since 
        September 1, 2000, major retail, apparel and textile 
        firms, paper manufacturers and airlines have filed 
        under Chapter 11--firms such as LTV and Wheeling-
        Pittsburgh Steel, Pillowtex, Bradlees, Montgomery Ward, 
        TWA, Owens-Corning and Armstrong Industries. Hundred of 
        thousands of jobs and the economic future of 
        communities all across America directly depend on these 
        firms being able to successfully reorganize. While the 
        reasons for each bankruptcy are unique to the firm and 
        the industry, such as these firms' futures depends on 
        the successful functions of the business bankruptcy 
        system. In these circumstances, America's working 
        families cannot be exposed to the risks of H.R. 333, a 
        one-sided, ill-considered revision of the bankruptcy 
        code.\108\
---------------------------------------------------------------------------
    \108\ Feb. 8, 2001 Hearing (written statement of Damon Silvers, 
Associate General Counsel, AFL-CIO).

    Similar concerns relate to the power of creditors who lease 
retail property. Section 404 grants lessors of commercial 
property the ability to coerce debtor-tenants into deciding 
prematurely whether to assume or reject a lease. In a retail 
insolvency, a debtor may need to wait beyond the 210-day 
period--120 days with the ability to gain a 90-day extension 
upon a motion for cause and with the lessor's consent--until 
the holiday season is complete to determine which locations 
have a realistic chance to succeed; a trustee or debtor in 
possession may decide to assume and reject some of the leases 
based upon this practical experience. If the trustee or debtor 
in possession assumes a nonresidential lease in chapter 11, and 
the case subsequently converts to chapter 7, under the bill, 
the rent due for a 1-year period following rejection of the 
lease becomes an administrative expense for compensation, 
gaining priority over all other unsecured claims and limiting 
the opportunity for other unsecured creditors to receive 
compensation. By giving the lessor veto power at the end of 210 
days, as the bill now does, the legislation would have the 
effect of giving a single creditor inordinate bargaining power 
among creditors and with the debtor.
    Another significant problem stems from language added in 
last year's conference which vastly expands the opportunity of 
creditors to assert that their debt is nondischargebable in a 
corporate reorganization. Section 321(d) of the bill subjects 
corporations to the same exceptions to discharge rules as 
individuals are under section 523 of the Bankruptcy Code. The 
section 523 exceptions to discharge were drafted with 
individuals, not corporations, in mind, and many of the 
provisions involve matters--such as specific intent--which are 
not appropriate for a large business. The changes made by 
section 321(d) could have the effect of making it much more 
difficult for companies to be able to restructure debts 
involving, for example, liability actions where fraud may be 
alleged. In turn, this would make reorganization far more 
difficult, costing many innocent workers their jobs.
B. Small Business Provisions
    With respect to small business, H.R. 333 would expand the 
definition of covered small business to those companies having 
debts of less than $3 million,\109\ subsuming more than 80% of 
all chapter 11 cases.\110\ It would also make the small 
business requirements mandatory (rather than optional) and 
mandate the operation of numerous additional requirements on 
debtors.\111\ For example, under H.R. 333, small business 
debtors would be required to provide balance sheets, statements 
of operations, cash-flow statements, and income tax returns 
within 3 days after filing a bankruptcy petition, the time 
period the debtor has the exclusive right to file a plan of 
reorganization would be modified (to 180 days without the 
possibility of extension), and the standards for being able to 
seek an extension of this time period would be substantially 
narrowed.\112\
---------------------------------------------------------------------------
    \109\ H.R. 333, Sec. 432 (proposed amendment to 11 U.S.C. 
Sec. 101(51D)).
    \110\ See March 18, 1999 Hearing (written statement of Jere W. 
Glover, Chief Counsel for Advocacy, SBA).
    \111\ H.R. 333, Sec. 436 (proposed 11 U.S.C. Sec. 1116).
    \112\ H.R. 333, Sec. 437 (proposed amendment to 11 U.S.C. 
Sec. 1121(e)).
---------------------------------------------------------------------------
    It is for these reasons that both the AFL-CIO and a number 
of other organizations representing both debtor and creditor 
interests are opposed to, or have serious concerns with, the 
small business provisions of the bill. The AFL-CIO testified:

        The Bankruptcy Code already contains several provisions 
        applicable to small businesses. These are principally 
        designed to streamline the bankruptcy process for less 
        complex cases, and apply on a voluntary basis to 
        businesses with debts not exceeding $2 million. In 
        sharp contrast, the proposed amendments in H.R. 333 are 
        mandatory, anti-reorganization and hostile to small 
        business. They would add strict time limits and 
        extensive mandatory requirements for filing and 
        confirming a reorganization plan. Chapter 11 cases 
        could be converted or dismissed from bankruptcy 
        altogether for failure to meet these and other new 
        requirements. Harsh new rules limiting subsequent 
        bankruptcy filings are also proposed, despite the lack 
        of any credible evidence that ``serial filing'' is a 
        problem among business bankruptcies. As burdensome as 
        these new strictures would be, they are made more 
        onerous by severely limiting the court's exercise of 
        discretion to manage these cases. Rules for obtaining 
        relief from these provisions create a high burden for 
        the debtor and would curtail the court's authority to 
        meet the exigencies of a particular case.\113\
---------------------------------------------------------------------------
    \113\ Feb. 8, 2001 Hearing (written statement of Damon Silvers, 
Associate General Counsel, AFL-CIO).

    It is important to recall that Congress has previously 
enacted laws that have made it far more difficult for debtors 
to unduly delay filing a plan of reorganization, and these 
appear to have had a salutary effect. The proposed rigid 
deadline in the bill go much farther and will undoubtedly work 
to detriment of debtors involved in complex reorganizations and 
force unnecessary liquidations and job losses. In turn, these 
changes will lead to the premature liquidation of small 
businesses with the attendant loss of jobs.
C. Single-Asset Real Estate Provisions
    A similar concern relates to single-asset real estate 
(``SARE'') debtors. The legislation would significantly expand 
the definition of SARE by eliminating the $4 million debt cap 
pursuant to a ``technical correction'' in section 1201(5) of 
Title XIII of H.R. 333, would take in SARE bankruptcies below 
that cap and treat them as small businesses.
    As a result of these changes, a much wider range of real 
estate operations would be required to conform with the SARE 
and small business requirements when they seek to reorganize, 
notwithstanding the fact that those requirements were drafted 
with a much smaller and simpler entity in mind. Large operating 
entities such as Rockefeller Center, as well as hotels and 
nursing homes or any business with a significant real estate 
component, could be considered SARE and put back on the track 
set forth in Sec. 362(d)(3) of the Bankruptcy Code. It would 
also create new incentives for lenders to require that all of 
their real estate borrowers place their holdings in the single 
asset form in order to avoid ordinary bankruptcy rules in the 
future. The AFL-CIO noted, ``the significant limiting factor in 
the application of these rules has been the $4 million cap. 
[Eliminating] the cap would place a wide variety of properties 
. . . at risk of foreclosure and threaten jobs at these 
properties. Absent rules that specifically exclude properties 
housing significant business enterprises, there should be no 
expansion in the definition of single asset real estate 
debtor.'' \114\
---------------------------------------------------------------------------
    \114\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, Associate General Counsel, AFL-CIO).
---------------------------------------------------------------------------
    By design, the SARE changes will ``broaden[] the scope of 
single asset real estate debtors subject to rules which 
increase the threat of disruptive summary foreclosures of 
commercial property.'' \115\ This, in turn, would likely lead 
to significant job losses. Even if a hotel or nursing home 
remains in existence, the new owner would not necessarily be 
required to honor any previously negotiated collective-
bargaining agreements applicable to employees at the facility. 
In the case of a large real estate operation, premature 
foreclosure could also allow the new owner to terminate many 
leases, leading to further job losses to the extent the 
business is relying on these leases.
---------------------------------------------------------------------------
    \115\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO, 
to the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary 
(Apr. 20, 1999).
---------------------------------------------------------------------------

                           IV. TAX PROVISIONS

    The Bankruptcy Code seeks to effectuate a delicate balance 
between the rights of the Internal Revenue Service and State 
tax agencies to the repayment of any taxes, interest, and 
penalties owed them, and the rights of other creditors and the 
ability of individuals and corporations to be financially 
rehabilitated for the benefit of all parties. Title VII of the 
bill, on balance, manifests a strong preference for the IRS and 
other taxing authorities to the detriment of other participants 
in the bankruptcy system. Concerns have been expressed that, 
not only does H.R. 333 generally enhance the rights and 
position of the IRS and State authorities in bankruptcy, but 
the bill grants the IRS certain rights in bankruptcy cases that 
it does not enjoy outside of bankruptcy, and vests the IRS with 
new enforcement powers that ordinary creditors do not posses. 
Of particular concern is the fact that the bill varies in many 
significant respects from the nonpartisan, and often unanimous, 
recommendations of the Bankruptcy Commission and its Tax 
Advisory Committee.
    Arguably one of the bill's most important provisions 
affecting business bankruptcies appears in Section 708 of Title 
VII. This section provides that a corporation will not be 
discharged from a tax or customs duty where the debtor made a 
fraudulent return or willfully attempted to evade or defeat the 
tax or duty. More significantly, by referencing any debt in 
section 523(a)(2) of the Code, the provision could even 
encompass claims that were fraudulently incurred that are not 
tax claims. In its critique of section 708, the National 
Bankruptcy Conference wrote:

        A rule such as the one proposed in Sec. 708 advantages 
        one creditor at the expense of others. It is a recipe 
        for certain mischief, especially in large 
        reorganizations. There is no public policy reason to 
        grant this kind of leverage to some creditors as the 
        purpose in making these assertions transparently will 
        likely be to obtain a better deal that other 
        creditors.\116\
---------------------------------------------------------------------------
    \116\ National Bankruptcy Conference, Report on H.R. 2415, 106th 
Cong., 2d Sess (H. Rept. 106-970) at 16 (2001).

    In addition, Paul Asofsky, who served as the Chair of the 
Task Force on the Tax Recommendations of the National 
Bankruptcy Review Commission of the American Bar Association's 
Tax Section, testifying about predecessor legislation on behalf 
of the American Bar Association's Section on Taxation, observed 
that: ``[T]here are many provisions in this legislation with 
which we agree as a matter of principle, but the specific 
provisions are either ambiguously drafted or cut against the 
grain of the principal proposal, causing us to oppose what 
should be noncontroversial proposals.'' \117\
---------------------------------------------------------------------------
    \117\ March 18, 1999 Hearing (written statement of Paul Asofsky).
---------------------------------------------------------------------------
    Mr. Asofsky provided a somewhat more detailed discussion of 
his concerns in a letter to the subcommittee.\118\ Section 704 
of H.R. 333 provides for a significantly higher uniform 
interest rate to be applied to tax claims in a bankruptcy case. 
The Tax Advisory Committee, which included governmental 
representatives, concluded that the rate for all types of tax 
claims should be the regular tax deficiency rate for Federal 
income tax purposes. The bill, however, provides that the rate 
shall be determined by applicable bankruptcy law. Of greater 
concern, local governments can set their own interest rates, 
many of which are substantially higher than either of the IRS 
rates.\119\
---------------------------------------------------------------------------
    \118\ Letter from Paul Asofsky to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (Feb. 5, 
1999) [hereinafter Asofsky Letter].
    \119\ Id. at 3-4.
---------------------------------------------------------------------------
    Section 707 severely limits the ``superdischarge'' 
available to debtors in chapter 13. It would prevent a debtor 
from discharging tax debts, which is now permitted in chapter 
13, but not in chapter 7. Eliminating the benefit of the 
superdischarge also eliminates the single greatest incentive 
for an individual debtor to choose chapter 13. As Mr. Asofsky 
observed,

        [T]he problem faced by many taxpayers who are 
        delinquent in their obligations is that the IRS 
        standard allowances for installment payment agreements 
        \120\ clearly do not leave many taxpayers with the 
        minimum amounts necessary to provide for basic 
        necessities, and so called ``offers in compromise'' are 
        very difficult to obtain. Thus, for the most desperate 
        of taxpayers, the chapter 13 superdischarge affords a 
        safety net which is the only thing that provides them 
        with the possibility of living somewhat of a normal 
        life in dignity . . . elimination of the chapter 13 
        superdischarge would be devastating to large numbers of 
        unfortunate individual debtors.\121\
---------------------------------------------------------------------------
    \120\ These are the same standards used in the means test in 
section 102 of H.R. 333.
    \121\ Asofsky Letter at 4.

    Section 717 requires disclosure of the tax consequences of 
a chapter 11 plan of reorganization. Although originally an 
uncontroversial idea, the bill adds extra requirements which 
will likely cause confusion and may be impossible for debtors 
to comply with fully. The section now requires ``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 interest in the 
case.'' The use of a vague term such as ``discussion''--
although an improvement over the requirement in the earlier 
version of a ``full discussion''--will likely lead to extensive 
litigation as these statements are scrutinized. In some 
instances, the precise tax consequences of a plan at all levels 
of government, and for a ``typical'' holder of claim, may be 
difficult to produce with great precision.\122\
---------------------------------------------------------------------------
    \122\ Id. at 5-6.
---------------------------------------------------------------------------
    Finally, section 718 requires that a debtor actually have 
commenced an action against the taxing authority to determine 
the amount of a disputed tax before a setoff can be prevented. 
Absent such an action by the debtor, a governmental entity 
generally is free to ``setoff'' any prepetition refund with a 
liability. The Advisory Committee had recommended that such 
setoff should only be permitted in cases where the liability 
was undisputed. The bill goes much further and to the 
disadvantage of the debtor and other, non-governmental 
creditors.

                               CONCLUSION

    For more than 100 years, Congress has carefully considered 
the bankruptcy laws and legislated on a deliberate and 
bipartisan basis. In the past, Congress has elected also to 
preserve carefully an insolvency system that provides a fresh 
start for honest, hard-working debtors, protects on-going 
businesses and jobs, and balances the rights of and between 
debtors and creditors. Because H.R. 333 departs from these 
principles, we respectfully dissent.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   Anthony D. Weiner.
                                   Bobby Scott.
                                   Zoe Lofgren.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Tammy Baldwin.

                      ADDITIONAL DISSENTING VIEWS

    In addition to the concerns raised in the general 
dissenting views, we are disappointed by the committee's 
refusal to put an end to one of the most notorious abuses of 
the bankruptcy system--the ``financial planning'' strategy by 
which debtors purchase expensive homes in states which allow an 
unlimited homestead exemption under 11 U.S.C. Sec. 522 (b) (2) 
(A), declare bankruptcy, and continue to enjoy a life of luxury 
while their creditors get little or nothing.
    During the committee markup, Mr. Delahunt offered an 
amendment to eliminate this abuse--and implement a key 
recommendation of the National Bankruptcy Review Commission 
\1\--by placing a $250,000 national cap on the homestead 
exemption.\2\ At the request of Mr. Watt, Mr. Delahunt sought 
and received unanimous consent to modify his amendment to set 
the cap at $500,000. The amendment thus would have increased 
the cap so as to accommodate every one of the 45 states that 
place a cap on the exemption. But in exchange for this more 
generous dispensation, it sought to remove from the bill two 
loopholes which undercut the cap, effectively ensuring that it 
will have no effect on the activities of the individuals who 
have abused the exemption in the past. These loopholes exempt 
from the cap (1) transactions occurring more than 2 years prior 
to the bankruptcy filing; and (2) transactions occurring within 
the 2-year pre-filing period which transfer equity from one 
principal residence to another principal residence within the 
same state.\3\
---------------------------------------------------------------------------
    \1\ Recommendation 1.2.2 (Homestead Property), Nat'l Bankr. Rev. 
Comm'n, Final Report: Bankruptcy: The Next Twenty Years 125 (1997).
    \2\ During the 106th Congress, Mr. Delahunt offered an amendment at 
the subcommittee markup of H.R. 833 which would have placed a $100,000 
national cap on the homestead exemption. Mr. Watt proposed that the cap 
be set at $250,000, and with this modification the Delahunt amendment 
was agreed to by a vote of 10-2. At full committee, Ms. Jackson-Lee 
offered an amendment to negate the Delahunt-Watt provision to the 
extent that it purports to ``modify or supersede any provision of State 
constitutional law that prohibits forced sale of a homestead for the 
payment of debts.'' Mr. Bryant offered a substitute amendment providing 
that the cap shall not apply in states which ``opt out'' by enacting a 
subsequent statute. After extensive debate, the Bryant amendment was 
agreed to by a vote of 18-15.
    During the 105th Congress, Mr. Delahunt had offered a similar 
amendment at the full committee markup of H.R. 3150 which was agreed to 
by voice vote. However, during floor consideration, the House agreed, 
by a vote of 222-204, to an amendment by Messrs. Gekas, Smith of Texas 
and McCollum, which eliminated the Delahunt provision and put in its 
place a provision that reduced the value of an interest in exempt 
property ``to the extent such value is attributable to any portion of 
any property that the debtor disposed of in the 730-day period ending 
on the date of the filing of the petition, with the intent to hinder, 
delay, or defraud a creditor.'' A version of this provision expanding 
the 730-day period to 7 years has been retained as section 308 of the 
present bill.
    \3\ It is these qualifications which caused the National Bankruptcy 
Conference to criticize the homestead provision that was included in 
the conference report on H.R. 2415 in the 106th Congress and is 
retained in H.R. 333. (``[T]his legislation lacks the straightforward 
solution to this abuse--a dollar cap on the value of the homestead that 
can be shielded in bankruptcy. For this reason, H.R. 2415 does not 
change the outcome of many of the cases that the press has singled out 
as the clearest case of bankruptcy abuse.'') National Bankruptcy 
Conference, Report on H.R. 2415 14-15.
---------------------------------------------------------------------------
    As the bill presently stands, it runs counter to the stated 
goals of bankruptcy reform, perpetuating an abuse so flagrant 
and notorious as to bring the entire system into disrepute. 
Proponents of the ``means test,'' and other provisions included 
in H.R. 333, seek to eliminate what some have characterized as 
the use of the Bankruptcy Code as a ``financial planning 
tool.'' Yet if we are truly serious about reform, we cannot 
confine our attention to those at the bottom of the economic 
ladder.
    Rather, we should start with individuals like Marvin 
Warner, a former ambassador to Switzerland and the owner of a 
failed Ohio Savings & Loan, who paid off only a fraction of 
$300 million in bankruptcy claims while keeping his multi-
million-dollar horse ranch near Ocala, Florida.\4\
---------------------------------------------------------------------------
    \4\ Larry Rohter, Rich Debtors Finding Shelter Under a Populist 
Florida Law, N.Y. Times, July 25, 1993, at A1.
---------------------------------------------------------------------------
    Or Martin A. Siegel, a former Wall Street investment banker 
convicted of insider trading. While facing a $2.75 billion 
civil suit, he bought a $3.25 million, 7,000-square-foot 
beachfront home in Ponte Vedra Beach.\5\
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
    Or former baseball commissioner Bowie Kuhn, whose Manhattan 
law firm went into bankruptcy. After creditors seized his 
weekend house in the Hamptons and were about to attach his $1.2 
million home in Ridgewood, New Jersey, Kuhn acquired a million-
dollar house in Florida with five bedrooms and five baths.\6\
---------------------------------------------------------------------------
    \6\ Id.
---------------------------------------------------------------------------
    Or Dr. Carlos Garcia-Rivera, a Miami physician with no 
malpractice insurance, who was named in four separate 
malpractice actions, filed for bankruptcy protection, and kept 
a $500,000 home with a 100-foot swimming pool.\7\
---------------------------------------------------------------------------
    \7\ David J. Morrow, Key to a Cozier Bankruptcy: Location, 
Location, Location, N.Y. Times, Jan. 7, 1998, at A1.
---------------------------------------------------------------------------
    Or the Dallas developer, Talmadge Wayne Tinsley, who filed 
under chapter 7 after incurring $60 million in debts. Tinsley 
objected to the Texas law that permitted him to keep only one 
acre of his $3.5 million, 3.1-acre magnolia-lined estate. But 
that acre included a five-bedroom, six-and-a-half-bath mansion 
with two studies, a pool and a guest house.\8\
---------------------------------------------------------------------------
    \8\ Id.
---------------------------------------------------------------------------
    Or the movie actor, Burt Reynolds, who declared bankruptcy 
in 1996, claiming more than $10 million in debt. Reynolds kept 
a $2.5 million home--appropriately named ``Valhalla''--while 
his creditors received 20 cents on the dollar.\9\
---------------------------------------------------------------------------
    \9\ Eliot Kleinberg, Reynolds Gets Out from under Bankruptcy, The 
Palm Beach Post, Oct. 8, 1998.
---------------------------------------------------------------------------
    Or Paul Bilzerian, who used Florida's unlimited homestead 
exemption to avoid his creditors. He filed for bankruptcy in 
1991, and filed again last month. He retains his $5 million 
Florida home, and can completely avoid the $200 million in debt 
owed his creditors, including the IRS.\10\
---------------------------------------------------------------------------
    \10\ Written statement of Brady C. Williamson at 6, Hearing on S. 
220 before the Sen. Jud. Comm., Feb. 8, 2001.
---------------------------------------------------------------------------
    The situation in Florida has become so notorious that one 
Miami bankruptcy judge told the New York Times, ``You could 
shelter the Taj Mahal in this state and no one could do 
anything about it.'' \11\ As the Wall Street Journal noted 
recently concerning the Kuhn case, ``the bill that Congress 
will soon send to a welcoming President Bush would make [pre-
bankruptcy planning using the unlimited homestead exemption] 
more diifficult, but that's symbolic. Few people anticipating 
bankruptcy have the cash to pull off that maneuver.\12\
---------------------------------------------------------------------------
    \11\ Judge A. Jay Cristol, quoted in Rohter, supra note 3.
    \12\ David Wessel, A Law's Muddled Course, The Wall Street Journal, 
at 1 (Feb. 22, 2001).
---------------------------------------------------------------------------
    This is a national problem that demands a uniform solution. 
Without a nationwide cap, debtors who live in the 45 states 
that cap the exemption at $200,000 or less are free to relocate 
to one of the five so-called ``debtors' paradises'' that have 
no cap at all.\13\
---------------------------------------------------------------------------
    \13\ The following are the state exemption levels (per household, 
i.e., for joint debtors with two dependents), as of January 1, 2000. In 
18 jurisdictions, the debtor may choose between the state exemption and 
a Federal exemption (currently $16,150 per debtor):

      Unlimited: Florida, Iowa, Kansas, South Dakota, Texas
      $200,000: Minnesota
      $125,000: Nevada
      $100,000: Arizona, Massachusetts, Rhode Island
       $80,000: North Dakota
       $75,000: California, Connecticut, Mississippi, Vermont
       $60,000: New Mexico, Montana
       $54,000: Alaska
       $50,000: Idaho
       $40,000: Wisconsin, Utah (if jointly owned), Washington
       $33,000: Oregon
       $30,000: Colorado, Hawaii, New Hampshire, Virgin Islands
       $20,000: Utah (if individually owned)
       $15,000: Indiana, Louisiana
       $12,500: Maine, Nebraska
       $10,000: New York, North Carolina, South Carolina, Wyoming
        $8,000: Missouri
        $7,500: Illinois, Tennessee
        $6,500: Virginia
        $5,000: Alabama, Delaware, Georgia, Kentucky, Ohio, 
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           $0: District of Columbia, New Jersey

Source: John H. Williamson, Attorney's Handbook on Consumer Bankruptcy 
and Chapter 13 (2000).
    Some have suggested that a Federal cap is a ``violation of 
states' rights.'' \14\ Yet the Bankruptcy Code is a Federal 
statutory scheme, and the system it envisions is one which is 
administered by the Federal courts. To defer to the states on 
such a matter is like legislating a Federal income tax and 
leaving it to the state legislatures to determine what will 
count as a business deduction. Such an arrangement invites 
forum shopping and encourages gross inequities in the treatment 
of debtors who live in different states.
---------------------------------------------------------------------------
    \14\ See, e.g., Letter from 21 members of the Texas Congressional 
Delegation to Chairman Henry Hyde and Ranking Member John Conyers, Jr. 
(Apr. 19, 1999) (on file with the House Judiciary Committee).
---------------------------------------------------------------------------
    It is important to recognize that the proposed Delahunt 
amendment would have no effect whatsoever on the 45 
jurisdictions that currently place their own cap on the 
exemption. But it will discourage residents of those 
jurisdictions from moving to one of the five states with no cap 
at all in order to take advantage of this enormous loophole in 
the law.
    Nor will unscrupulous debtors be unduly hindered by 
provision in section 308 of the bill, which disallows the 
exemption if the individual converted the property within 7 
years of the filing of the petition but only to the extent that 
the nonexempt assets were converted ``with the intent to 
hinder, delay, or defraud a creditor.'' Those already resident 
in a state with no exemption cap are unaffected by the 
limitation except for ``any amount of interest that was 
acquired by the debtor during the 2-year period preceding the 
filing of the petition which exceeds the aggregate $100,000 in 
value.'' \15\ Interests transferred from another in-state 
residence are exempted from that limitation.\16\ And wealthy 
debtors from other states who are sophisticated enough to plan 
ahead can simply wait the 730 days and then file their 
petition. Debtors who have owned their homestead for 2 years or 
more can continue to use it to ``hinder, delay, or defraud'' 
their creditors out of millions of dollars.
---------------------------------------------------------------------------
    \15\ Sec. 322(a).
    \16\ Id.
---------------------------------------------------------------------------
    During the committee debate, some speakers argued that 
these abuses are not common. That is true. We do not suggest 
that they are daily occurrences. But the fact that a particular 
form of misconduct occurs infrequently is not an argument that 
it should be condoned. By condoning these spectacular abuses by 
a handful of wealthy debtors, we bring the fairness and 
rationality of the entire system into disrepute.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Melvin L. Watt.
                                   Anthony D. Weiner.
                                   Barney Frank.
                                   Bobby Scott.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Tammy Baldwin.

                                  

```