II

106TH CONGRESS

2D SESSION S. 3186

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

IN THE SENATE OF THE UNITED STATES

OCTOBER 11 (legislative day, SEPTEMBER 22), 2000

Mr. GRASSLEY (for himself, Mr. TORRICELLI, Mr. HATCH, and Mr. BIDEN)

introduced the following bill; which was read twice and referred to the

Committee on the Judiciary

A BILL

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

purposes.

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

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

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

6 ‘‘Bankruptcy Reform Act of 2000’’.

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

8 this Act is as follows:

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

TITLE I—NEEDS-BASED BANKRUPTCY

Sec. 101. Conversion.
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Sec. 102. Dismissal or conversion.

Sec. 103. Sense of Congress and study.

Sec. 104. Notice of alternatives.

Sec. 105. Debtor financial management training test program.

Sec. 106. Credit counseling.

Sec. 107. Schedules of reasonable and necessary expenses.

TITLE II—ENHANCED CONSUMER PROTECTION

Subtitle A—Penalties for Abusive Creditor Practices

Sec. 201. Promotion of alternative dispute resolution.

Sec. 202. Effect of discharge.

Sec. 203. Discouraging abuse of reaffirmation practices.

Subtitle B—Priority Child Support

Sec. 211. Definition of domestic support obligation.

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

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

domestic support obligations.

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

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

support.

Sec. 216. Continued liability of property.

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

motions.

Sec. 218. Disposable income defined.

Sec. 219. Collection of child support.

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

Subtitle C—Other Consumer Protections

Sec. 221. Amendments to discourage abusive bankruptcy filings.

Sec. 222. Sense of Congress.

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

Sec. 224. Protection of retirement savings in bankruptcy.

Sec. 225. Protection of education savings in bankruptcy.

Sec. 226. Definitions.

Sec. 227. Restrictions on debt relief agencies.

Sec. 228. Disclosures.

Sec. 229. Requirements for debt relief agencies.

Sec. 230. GAO study.

TITLE III—DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.

Sec. 302. Discouraging bad faith repeat filings.

Sec. 303. Curbing abusive filings.

Sec. 304. Debtor retention of personal property security.

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

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

Sec. 307. Domiciliary requirements for exemptions.

Sec. 308. Residency requirement for homestead exemption.

Sec. 309. Protecting secured creditors in chapter 13 cases.
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Sec. 310. Limitation on luxury goods.

Sec. 311. Automatic stay.

Sec. 312. Extension of period between bankruptcy discharges.

Sec. 313. Definition of household goods and antiques.

Sec. 314. Debt incurred to pay nondischargeable debts.

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

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

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

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

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

Rules of Bankruptcy Procedure.

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

Sec. 321. Chapter 11 cases filed by individuals.

Sec. 322. Limitation.

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

property from the estate.

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

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

Sec. 326. Sharing of compensation.

Sec. 327. Fair valuation of collateral.

Sec. 328. Defaults based on nonmonetary obligations.

TITLE IV—GENERAL AND SMALL BUSINESS BANKRUPTCY

PROVISIONS

Subtitle A—General Business Bankruptcy Provisions

Sec. 401. Adequate protection for investors.

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

Sec. 403. Protection of refinance of security interest.

Sec. 404. Executory contracts and unexpired leases.

Sec. 405. Creditors and equity security holders committees.

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

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

Sec. 408. Postpetition disclosure and solicitation.

Sec. 409. Preferences.

Sec. 410. Venue of certain proceedings.

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

Sec. 412. Fees arising from certain ownership interests.

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

Sec. 414. Definition of disinterested person.

Sec. 415. Factors for compensation of professional persons.

Sec. 416. Appointment of elected trustee.

Sec. 417. Utility service.

Sec. 418. Bankruptcy fees.

Sec. 419. More complete information regarding assets of the estate.

Subtitle B—Small Business Bankruptcy Provisions

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

Sec. 432. Definitions.

Sec. 433. Standard form disclosure statement and plan.

Sec. 434. Uniform national reporting requirements.

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

Sec. 436. Duties in small business cases.
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Sec. 437. Plan filing and confirmation deadlines.

Sec. 438. Plan confirmation deadline.

Sec. 439. Duties of the United States trustee.

Sec. 440. Scheduling conferences.

Sec. 441. Serial filer provisions.

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

trustee.

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

small businesses.

Sec. 444. Payment of interest.

Sec. 445. Priority for administrative expenses.

TITLE V—MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.

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

TITLE VI—BANKRUPTCY DATA

Sec. 601. Improved bankruptcy statistics.

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

Sec. 603. Audit procedures.

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

TITLE VII—BANKRUPTCY TAX PROVISIONS

Sec. 701. Treatment of certain liens.

Sec. 702. Treatment of fuel tax claims.

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

Sec. 704. Rate of interest on tax claims.

Sec. 705. Priority of tax claims.

Sec. 706. Priority property taxes incurred.

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

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

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

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

Sec. 711. Avoidance of statutory tax liens prohibited.

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

Sec. 713. Tardily filed priority tax claims.

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

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

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

Sec. 717. Standards for tax disclosure.

Sec. 718. Setoff of tax refunds.

Sec. 719. Special provisions related to the treatment of State and local taxes.

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

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASES

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

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

TITLE IX—FINANCIAL CONTRACT PROVISIONS

Sec. 901. Treatment of certain agreements by conservators or receivers of insured depository institutions.
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Sec. 902. Authority of the corporation with respect to failed and failing institutions.

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

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

Sec. 905. Clarifying amendment relating to master agreements.

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

Sec. 907. Bankruptcy Code amendments.

Sec. 908. Recordkeeping requirements.

Sec. 909. Exemptions from contemporaneous execution requirement.

Sec. 910. Damage measure.

Sec. 911. SIPC stay.

Sec. 912. Asset-backed securitizations.

Sec. 913. Effective date; application of amendments.

TITLE X—PROTECTION OF FAMILY FARMERS

Sec. 1001. Permanent reenactment of chapter 12.

Sec. 1002. Debt limit increase.

Sec. 1003. Certain claims owed to governmental units.

TITLE XI—HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 1101. Definitions.

Sec. 1102. Disposal of patient records.

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

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

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

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

TITLE XII—TECHNICAL AMENDMENTS

Sec. 1201. Definitions.

Sec. 1202. Adjustment of dollar amounts.

Sec. 1203. Extension of time.

Sec. 1204. Technical amendments.

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

Sec. 1206. Limitation on compensation of professional persons.

Sec. 1207. Effect of conversion.

Sec. 1208. Allowance of administrative expenses.

Sec. 1209. Exceptions to discharge.

Sec. 1210. Effect of discharge.

Sec. 1211. Protection against discriminatory treatment.

Sec. 1212. Property of the estate.

Sec. 1213. Preferences.

Sec. 1214. Postpetition transactions.

Sec. 1215. Disposition of property of the estate.

Sec. 1216. General provisions.

Sec. 1217. Abandonment of railroad line.

Sec. 1218. Contents of plan.

Sec. 1219. Discharge under chapter 12.

Sec. 1220. Bankruptcy cases and proceedings.

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

Sec. 1222. Transfers made by nonprofit charitable corporations.
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Sec. 1223. Protection of valid purchase money security interests.

Sec. 1224. Extensions.

Sec. 1225. Bankruptcy judgeships.

Sec. 1226. Compensating trustees.

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

Sec. 1228. Judicial education.

Sec. 1229. Reclamation.

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

Sec. 1231. Encouraging creditworthiness.

Sec. 1232. Property no longer subject to redemption.

Sec. 1233. Trustees.

Sec. 1234. Bankruptcy forms.

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

Sec. 1236. Exemptions.

TITLE XIII—CONSUMER CREDIT DISCLOSURE

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

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

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

Sec. 1304. Internet-based credit card solicitations.

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

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

Sec. 1307. Dual use debit card.

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

Sec. 1309. Clarification of clear and conspicuous.

Sec. 1310. Enforcement of certain foreign judgments barred.

TITLE XIV—GENERAL EFFECTIVE DATE; APPLICATION OF

AMENDMENTS

Sec. 1401. Effective date; application of amendments.

1 TITLE I—NEEDS-BASED

2 BANKRUPTCY

3 SEC. 101. CONVERSION.

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

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

6 SEC. 102. DISMISSAL OR CONVERSION.

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

8 States Code, is amended—

9 (1) by striking the section heading and insert10 ing the following:
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1 ‘‘§ 707. Dismissal of a case or conversion to a case

2 under chapter 11 or 13’’;

3 and

4 (2) in subsection (b)—

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

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

7 subparagraph (A) of this paragraph—

8 (i) in the first sentence—

9 (I) by striking ‘‘but not at the re10 quest or suggestion of’’ and inserting

11 ‘‘trustee, bankruptcy administrator,

12 or’’;

13 (II) by inserting ‘‘, or, with the

14 debtor’s consent, convert such a case

15 to a case under chapter 11 or 13 of

16 this title,’’ after ‘‘consumer debts’’;

17 and

18 (III) by striking ‘‘a substantial

19 abuse’’ and inserting ‘‘an abuse’’; and

20 (ii) by striking the next to last sen21 tence; and

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

23 ‘‘(2)(A)(i) In considering under paragraph (1) wheth24 er the granting of relief would be an abuse of the provi25 sions of this chapter, the court shall presume abuse exists

26 if the debtor’s current monthly income reduced by the
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1 amounts determined under clauses (ii), (iii), and (iv), and

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

3 ‘‘(I) 25 percent of the debtor’s nonpriority un4 secured claims in the case, or $6,000, whichever is

5 greater; or

6 ‘‘(II) $10,000.

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

8 debtor’s applicable monthly expense amounts specified

9 under the National Standards and Local Standards, and

10 the debtor’s actual monthly expenses for the categories

11 specified as Other Necessary Expenses issued by the In12 ternal Revenue Service for the area in which the debtor

13 resides, as in effect on the date of the entry of the order

14 for relief, for the debtor, the dependents of the debtor,

15 and the spouse of the debtor in a joint case, if the spouse

16 is not otherwise a dependent. Notwithstanding any other

17 provision of this clause, the monthly expenses of the debt18 or shall not include any payments for debts. In addition,

19 the debtor’s monthly expenses shall include the debtor’s

20 reasonably necessary expenses incurred to maintain the

21 safety of the debtor and the family of the debtor from fam22 ily violence as identified under section 309 of the Family

23 Violence Prevention and Services Act (42 U.S.C. 10408),

24 or other applicable Federal law. The expenses included in

25 the debtor’s monthly expenses described in the preceding
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1 sentence shall be kept confidential by the court. In addi2 tion, if it is demonstrated that it is reasonable and nec3 essary, the debtor’s monthly expenses may also include an

4 additional allowance for food and clothing of up to 5 per5 cent of the food and clothing categories as specified by

6 the National Standards issued by the Internal Revenue

7 Service.

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

9 include, if applicable, the continuation of actual expenses

10 paid by the debtor that are reasonable and necessary for

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

12 household member or member of the debtor’s immediate

13 family (including parents, grandparents, and siblings of

14 the debtor, the dependents of the debtor, and the spouse

15 of the debtor in a joint case) who is not a dependent and

16 who is unable to pay for such reasonable and necessary

17 expenses.

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

19 13, the debtor’s monthly expenses may include the actual

20 administrative expenses of administering a chapter 13

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

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

23 determined under schedules issued by the Executive Office

24 for United States Trustees.
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1 ‘‘(IV) In addition, the debtor’s monthly expenses may

2 include the actual expenses for each dependent child under

3 the age of 18 years up to $1,500 per year per child to

4 attend a private elementary or secondary school, if the

5 debtor provides documentation of such expenses and a de6 tailed explanation of why such expenses are reasonable

7 and necessary.

8 ‘‘(iii) The debtor’s average monthly payments on ac9 count of secured debts shall be calculated as—

10 ‘‘(I) the sum of—

11 ‘‘(aa) the total of all amounts scheduled as

12 contractually due to secured creditors in each

13 month of the 60 months following the date of

14 the petition; and

15 ‘‘(bb) any additional payments to secured

16 creditors necessary for the debtor, in filing a

17 plan under chapter 13 of this title, to maintain

18 possession of the debtor’s primary residence,

19 motor vehicle, or other property necessary for

20 the support of the debtor and the debtor’s de21 pendents, that serves as collateral for secured

22 debts; divided by

23 ‘‘(II) 60.
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1 ‘‘(iv) The debtor’s expenses for payment of all pri2 ority claims (including priority child support and alimony

3 claims) shall be calculated as—

4 ‘‘(I) the total amount of debts entitled to pri5 ority; divided by

6 ‘‘(II) 60.

7 ‘‘(B)(i) In any proceeding brought under this sub8 section, the presumption of abuse may only be rebutted

9 by demonstrating special circumstances that justify addi10 tional expenses or adjustments of current monthly income

11 for which there is no reasonable alternative.

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

13 debtor shall be required to—

14 ‘‘(I) itemize each additional expense or adjust15 ment of income; and

16 ‘‘(II) provide—

17 ‘‘(aa) documentation for such expense or

18 adjustment to income; and

19 ‘‘(bb) a detailed explanation of the special

20 circumstances that make such expenses or ad21 justment to income necessary and reasonable.

22 ‘‘(iii) The debtor shall attest under oath to the accu23 racy of any information provided to demonstrate that ad24 ditional expenses or adjustments to income are required.
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1 ‘‘(iv) The presumption of abuse may only be rebutted

2 if the additional expenses or adjustments to income re3 ferred to in clause (i) cause the product of the debtor’s

4 current monthly income reduced by the amounts deter5 mined under clauses (ii), (iii), and (iv) of subparagraph

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

7 ‘‘(I) 25 percent of the debtor’s nonpriority un8 secured claims, or $6,000, whichever is greater; or

9 ‘‘(II) $10,000.

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

11 expenditures required under section 521, the debtor shall

12 include a statement of the debtor’s current monthly in13 come, and the calculations that determine whether a pre14 sumption arises under subparagraph (A)(i), that shows

15 how each such amount is calculated.

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

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

18 this chapter in a case in which the presumption in sub19 paragraph (A)(i) of such paragraph does not apply or has

20 been rebutted, the court shall consider—

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

22 bad faith; or

23 ‘‘(B) the totality of the circumstances (includ24 ing whether the debtor seeks to reject a personal

25 services contract and the financial need for such re-
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1 jection as sought by the debtor) of the debtor’s fi2 nancial situation demonstrates abuse.

3 ‘‘(4)(A) The court shall order the counsel for the

4 debtor to reimburse the trustee for all reasonable costs

5 in prosecuting a motion brought under section 707(b), in6 cluding reasonable attorneys’ fees, if—

7 ‘‘(i) a trustee appointed under section 586(a)(1)

8 of title 28 or from a panel of private trustees main9 tained by the bankruptcy administrator brings a mo10 tion for dismissal or conversion under this sub11 section; and

12 ‘‘(ii) the court—

13 ‘‘(I) grants that motion; and

14 ‘‘(II) finds that the action of the counsel

15 for the debtor in filing under this chapter vio16 lated rule 9011 of the Federal Rules of Bank17 ruptcy Procedure.

18 ‘‘(B) If the court finds that the attorney for the debt19 or violated rule 9011 of the Federal Rules of Bankruptcy

20 Procedure, at a minimum, the court shall order—

21 ‘‘(i) the assessment of an appropriate civil pen22 alty against the counsel for the debtor; and

23 ‘‘(ii) the payment of the civil penalty to the

24 trustee, the United States trustee, or the bankruptcy

25 administrator.
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1 ‘‘(C) In the case of a petition, pleading, or written

2 motion, the signature of an attorney shall constitute a cer3 tification that the attorney has—

4 ‘‘(i) performed a reasonable investigation into

5 the circumstances that gave rise to the petition,

6 pleading, or written motion; and

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

8 written motion—

9 ‘‘(I) is well grounded in fact; and

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

11 good faith argument for the extension, modi12 fication, or reversal of existing law and does not

13 constitute an abuse under paragraph (1).

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

15 shall constitute a certification that the attorney has no

16 knowledge after an inquiry that the information in the

17 schedules filed with such petition is incorrect.

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

19 subject to paragraph (6), the court may award a debtor

20 all reasonable costs (including reasonable attorneys’ fees)

21 in contesting a motion brought by a party in interest

22 (other than a trustee, United States trustee, or bank23 ruptcy administrator) under this subsection if—

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

25 ‘‘(ii) the court finds that—
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1 ‘‘(I) the position of the party that brought

2 the motion violated rule 9011 of the Federal

3 Rules of Bankruptcy Procedure; or

4 ‘‘(II) the party brought the motion solely

5 for the purpose of coercing a debtor into

6 waiving a right guaranteed to the debtor under

7 this title.

8 ‘‘(B) A small business that has a claim of an aggre9 gate amount less than $1,000 shall not be subject to sub10 paragraph (A)(ii)(I).

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

12 ‘‘(i) the term ‘small business’ means an unin13 corporated business, partnership, corporation, asso14 ciation, or organization that—

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

16 as determined on the date the motion is filed;

17 and

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

19 activity; and

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

21 owned subsidiary of a corporation includes the em22 ployees of—

23 ‘‘(I) a parent corporation; and

24 ‘‘(II) any other subsidiary corporation of

25 the parent corporation.
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1 ‘‘(6) Only the judge, United States trustee, or bank2 ruptcy administrator may bring a motion under section

3 707(b), if the current monthly income of the debtor, or

4 in a joint case, the debtor and the debtor’s spouse, as of

5 the date of the order for relief, when multiplied by 12,

6 is equal to or less than—

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

8 1 person, the median family income of the applicable

9 State for 1 earner last reported by the Bureau of

10 the Census;

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

12 2, 3, or 4 individuals, the highest median family in13 come of the applicable State for a family of the same

14 number or fewer individuals last reported by the Bu15 reau of the Census; or

16 ‘‘(C) in the case of a debtor in a household ex17 ceeding 4 individuals, the highest median family in18 come of the applicable State for a family of 4 or

19 fewer individuals last reported by the Bureau of the

20 Census, plus $525 per month for each individual in

21 excess of 4.

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

23 bankruptcy administrator or other party in interest may

24 bring a motion under paragraph (2), if the current month25 ly income of the debtor and the debtor’s spouse combined,
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1 as of the date of the order for relief when multiplied by

2 12, is equal to or less than—

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

4 1 person, the median family income of the applicable

5 State for 1 earner last reported by the Bureau of

6 the Census;

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

8 2, 3, or 4 individuals, the highest median family in9 come of the applicable State for a family of the same

10 number or fewer individuals last reported by the Bu11 reau of the Census; or

12 ‘‘(C) in the case of a debtor in a household ex13 ceeding 4 individuals, the highest median family in14 come of the applicable State for a family of 4 or

15 fewer individuals last reported by the Bureau of the

16 Census, plus $525 per month for each individual in

17 excess of 4.’’.

18 (b) DEFINITION.—Section 101 of title 11, United

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

20 the following:

21 ‘‘(10A) ‘current monthly income’—

22 ‘‘(A) means the average monthly income

23 from all sources which the debtor, or in a joint

24 case, the debtor and the debtor’s spouse, receive

25 without regard to whether the income is taxable
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1 income, derived during the 6-month period pre2 ceding the date of determination; and

3 ‘‘(B) includes any amount paid by any en4 tity other than the debtor (or, in a joint case,

5 the debtor and the debtor’s spouse), on a reg6 ular basis to the household expenses of the

7 debtor or the debtor’s dependents (and, in a

8 joint case, the debtor’s spouse if not otherwise

9 a dependent), but excludes benefits received

10 under the Social Security Act and payments to

11 victims of war crimes or crimes against human12 ity on account of their status as victims of such

13 crimes;’’.

14 (c) UNITED STATES TRUSTEE AND BANKRUPTCY

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

16 States Code, is amended—

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

18 shall—’’; and

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

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

21 this chapter—

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

23 administrator shall review all materials filed by the

24 debtor and, not later than 10 days after the date of

25 the first meeting of creditors, file with the court a
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1 statement as to whether the debtor’s case would be

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

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

4 statement under subparagraph (A), the court shall

5 provide a copy of the statement to all creditors.

6 ‘‘(2) The United States trustee or bankruptcy admin7 istrator shall, not later than 30 days after the date of fil8 ing a statement under paragraph (1), either file a motion

9 to dismiss or convert under section 707(b) or file a state10 ment setting forth the reasons the United States trustee

11 or bankruptcy administrator does not believe that such a

12 motion would be appropriate, if the United States trustee

13 or bankruptcy administrator determines that the debtor’s

14 case should be presumed to be an abuse under section

15 707(b) and the product of the debtor’s current monthly

16 income, multiplied by 12 is not less than—

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

18 1 person, the median family income of the applicable

19 State for 1 earner last reported by the Bureau of

20 the Census; or

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

22 2 or more individuals, the highest median family in23 come of the applicable State for a family of the same

24 number or fewer individuals last reported by the Bu25 reau of the Census.
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1 ‘‘(3) In any case in which a motion to dismiss or con2 vert, or a statement is required to be filed by this sub3 section, the United States trustee or bankruptcy adminis4 trator may decline to file a motion to dismiss or convert

5 pursuant to section 704(b)(2) if the product of the debt6 or’s current monthly income multiplied by 12 exceeds 100

7 percent, but does not exceed 150 percent of—

8 ‘‘(A)(i) in the case of a debtor in a household

9 of 1 person, the median family income of the appli10 cable State for 1 earner last reported by the Bureau

11 of the Census; or

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

13 2 or more individuals, the highest median family in14 come of the applicable State for a family of the same

15 number or fewer individuals last reported by the Bu16 reau of the Census; and

17 ‘‘(B) the product of the debtor’s current month18 ly income, reduced by the amounts determined under

19 section 707(b)(2)(A)(ii) (except for the amount cal20 culated under the other necessary expenses standard

21 issued by the Internal Revenue Service) and clauses

22 (iii) and (iv) of section 707(b)(2)(A), multiplied by

23 60 is less than the lesser of—
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1 ‘‘(i) 25 percent of the debtor’s nonpriority

2 unsecured claims in the case or $6,000, which3 ever is greater; or

4 ‘‘(ii) $10,000.’’.

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

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

7 ‘‘(d) In an individual case under chapter 7 in which

8 the presumption of abuse is triggered under section

9 707(b), the clerk shall give written notice to all creditors

10 not later than 10 days after the date of the filing of the

11 petition that the presumption of abuse has been trig12 gered.’’.

13 (e) NONLIMITATION OF INFORMATION.—Nothing in

14 this title shall limit the ability of a creditor to provide in15 formation to a judge (except for information commu16 nicated ex parte, unless otherwise permitted by applicable

17 law), United States trustee, bankruptcy administrator or

18 trustee.

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

20 of title 11, United States Code, as amended by this sec21 tion, is amended by adding at the end the following:

22 ‘‘(c)(1) In this subsection—

23 ‘‘(A) the term ‘crime of violence’ has the mean24 ing given that term in section 16 of title 18; and
22

•S 3186 IS

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

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

3 18.

4 ‘‘(2) Except as provided in paragraph (3), after no5 tice and a hearing, the court, on a motion by the victim

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

7 when it is in the best interest of the victims dismiss a

8 voluntary case filed by an individual debtor under this

9 chapter if that individual was convicted of that crime.

10 ‘‘(3) The court may not dismiss a case under para11 graph (2) if the debtor establishes by a preponderance of

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

13 is necessary to satisfy a claim for a domestic support obli14 gation.’’.

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

16 title 11, United States Code, is amended—

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

18 end;

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

20 inserting a semicolon; and

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

22 ‘‘(7) the action of the debtor in filing the peti23 tion was in good faith;’’.
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1 (h) APPLICABILITY OF MEANS TEST TO CHAPTER

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

3 amended—

4 (1) in paragraph (1)(B), by inserting ‘‘to unse5 cured creditors’’ after ‘‘to make payments’’; and

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

7 following:

8 ‘‘(2) For purposes of this subsection, the term

9 ‘disposable income’ means current monthly income

10 received by the debtor (other than child support pay11 ments, foster care payments, or disability payments

12 for a dependent child made in accordance with appli13 cable nonbankruptcy law to the extent reasonably

14 necessary to be expended for such child) less

15 amounts reasonably necessary to be expended—

16 ‘‘(A) for the maintenance or support of the

17 debtor or a dependent of the debtor or for a do18 mestic support obligation that first becomes

19 payable after the date the petition is filed and

20 for charitable contributions (that meet the defi21 nition of ‘charitable contribution’ under section

22 548(d)(3) to a qualified religious or charitable

23 entity or organization (as that term is defined

24 in section 548(d)(4)) in an amount not to ex25 ceed 15 percent of gross income of the debtor
24

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1 for the year in which the contributions are

2 made; and

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

4 for the payment of expenditures necessary for

5 the continuation, preservation, and operation of

6 such business.

7 ‘‘(3) Amounts reasonably necessary to be ex8 pended under paragraph (2) shall be determined in

9 accordance with subparagraphs (A) and (B) of sec10 tion 707(b)(2), if the debtor has current monthly in11 come, when multiplied by 12, greater than—

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

13 of 1 person, the median family income of the

14 applicable State for 1 earner last reported by

15 the Bureau of the Census;

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

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

18 family income of the applicable State for a fam19 ily of the same number or fewer individuals last

20 reported by the Bureau of the Census; or

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

22 exceeding 4 individuals, the highest median

23 family income of the applicable State for a fam24 ily of 4 or fewer individuals last reported by the
25

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1 Bureau of the Census, plus $525 per month for

2 each individual in excess of 4.’’.

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

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

5 by striking the item relating to section 707 and inserting

6 the following:

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

7 SEC. 103. SENSE OF CONGRESS AND STUDY.

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

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

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

13 United States Code.

14 (b) STUDY.—

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

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

17 the Executive Office for United States Trustees shall

18 submit a report to the Committee on the Judiciary

19 of the Senate and the Committee on the Judiciary

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

23 (A) the current monthly expenses of a

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

25 States Code; and
26

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1 (B) the impact that the application of such

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

4 (2) RECOMMENDATION.—The report under

5 paragraph (1) may include recommendations for

6 amendments to title 11, United States Code, that

7 are consistent with the findings of the Director

8 under paragraph (1).

9 SEC. 104. NOTICE OF ALTERNATIVES.

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

11 amended to read as follows:

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

13 title by an individual whose debts are primarily consumer

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

15 containing—

16 ‘‘(1) a brief description of—

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

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

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

21 credit counseling agencies; and

22 ‘‘(2) statements specifying that—

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

25 statement under penalty of perjury in connec-
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1 tion with a bankruptcy case shall be subject to

2 fine, imprisonment, or both; and

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

4 in connection with a bankruptcy case is subject

5 to examination by the Attorney General.’’.

6 SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING

7 TEST PROGRAM.

8 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

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

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

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

13 field of debtor education, including trustees who are ap14 pointed under chapter 13 of title 11, United States Code,

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

18 to educate individual debtors on how to better manage

19 their finances.

20 (b) TEST.—

21 (1) SELECTION OF DISTRICTS.—The Director

22 shall select 6 judicial districts of the United States

23 in which to test the effectiveness of the financial

24 management training curriculum and materials de25 veloped under subsection (a).
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1 (2) USE.—For an 18-month period beginning

2 not later than 270 days after the date of enactment

3 of this Act, such curriculum and materials shall be,

4 for the 6 judicial districts selected under paragraph

5 (1), used as the instructional course concerning per6 sonal financial management for purposes of section

7 111 of title 11, United States Code.

8 (c) EVALUATION.—

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

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

11 evaluate the effectiveness of—

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

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

17 Report of the National Bankruptcy Review

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

20 carried out by the credit industry, by trustees

21 serving under chapter 13 of title 11, United

22 States Code, and by consumer counseling

23 groups.

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

25 concluding such evaluation, the Director shall sub-
29

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

3 Senate, for referral to the appropriate committees of

4 the Congress, containing the findings of the Director

5 regarding the effectiveness of such curriculum, such

6 materials, and such programs and their costs.

7 SEC. 106. CREDIT COUNSELING.

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

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

10 the following:

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

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

15 date of filing of the petition of that individual, received

16 from an approved nonprofit budget and credit counseling

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

18 briefing (including a briefing conducted by telephone or

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

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

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

24 States trustee or bankruptcy administrator of the bank25 ruptcy court of that district determines that the approved
30

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1 nonprofit budget and credit counseling agencies for that

2 district are not reasonably able to provide adequate serv3 ices to the additional individuals who would otherwise seek

4 credit counseling from that agency by reason of the re5 quirements of paragraph (1).

6 ‘‘(B) Each United States trustee or bankruptcy ad7 ministrator that makes a determination described in sub8 paragraph (A) shall review that determination not later

9 than 1 year after the date of that determination, and not

10 less frequently than every year thereafter. Notwith11 standing the preceding sentence, a nonprofit budget and

12 credit counseling service may be disapproved by the

13 United States trustee or bankruptcy administrator at any

14 time.

15 ‘‘(3)(A) Subject to subparagraph (B), the require16 ments of paragraph (1) shall not apply with respect to

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

18 ‘‘(i) describes exigent circumstances that merit

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

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

21 counseling services from an approved nonprofit

22 budget and credit counseling agency, but was unable

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

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

25 which the debtor made that request; and
31

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1 ‘‘(iii) is satisfactory to the court.

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

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

4 the date on which the debtor meets the requirements of

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

6 to that debtor after the date that is 30 days after the debt7 or files a petition, except that the court, for cause, may

8 order an additional 15 days.’’.

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

10 11, United States Code, is amended—

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

12 end;

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

14 and inserting ‘‘; or’’; and

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

16 ‘‘(11) after the filing of the petition, the debtor

17 failed to complete an instructional course concerning

18 personal financial management described in section

19 111.

20 ‘‘(12)(A) Paragraph (11) shall not apply with

21 respect to a debtor who resides in a district for

22 which the United States trustee or bankruptcy ad23 ministrator of that district determines that the ap24 proved instructional courses are not adequate to
32

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1 service the additional individuals required to com2 plete such instructional courses under this section.

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

4 administrator that makes a determination described

5 in subparagraph (A) shall review that determination

6 not later than 1 year after the date of that deter7 mination, and not less frequently than every year

8 thereafter.’’.

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

10 11, United States Code, is amended by adding at the end

11 the following:

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

13 section to a debtor, unless after filing a petition the debtor

14 has completed an instructional course concerning personal

15 financial management described in section 111.

16 ‘‘(h) Subsection (g) shall not apply with respect to

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

18 States trustee or bankruptcy administrator of the bank19 ruptcy court of that district determines that the approved

20 instructional courses are not adequate to service the addi21 tional individuals who would be required to complete the

22 instructional course by reason of the requirements of this

23 section.

24 ‘‘(i) Each United States trustee or bankruptcy ad25 ministrator that makes a determination described in sub-
33

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1 section (h) shall review that determination not later than

2 1 year after the date of that determination, and not less

3 frequently than every year thereafter.’’.

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

5 United States Code, is amended—

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

7 shall—’’; and

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

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

10 (a), an individual debtor shall file with the court—

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

12 budget and credit counseling agency that provided

13 the debtor services under section 109(h) describing

14 the services provided to the debtor; and

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

16 developed under section 109(h) through the ap17 proved nonprofit budget and credit counseling agen18 cy referred to in paragraph (1).’’.

19 (e) GENERAL PROVISIONS.—

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

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

22 following:
34

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1 ‘‘§ 111. Credit counseling services; financial manage2 ment instructional courses

3 ‘‘(a) The clerk of each district shall maintain a pub4 licly available list of—

5 ‘‘(1) credit counseling agencies that provide 1

6 or more programs described in section 109(h) cur7 rently approved by the United States trustee or the

8 bankruptcy administrator for the district, as applica9 ble; and

10 ‘‘(2) instructional courses concerning personal

11 financial management currently approved by the

12 United States trustee or the bankruptcy adminis13 trator for the district, as applicable.

14 ‘‘(b) The United States trustee or bankruptcy admin15 istrator shall only approve a credit counseling agency or

16 instructional course concerning personal financial manage17 ment as follows:

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

19 administrator shall have thoroughly reviewed the

20 qualifications of the credit counseling agency or of

21 the provider of the instructional course under the

22 standards set forth in this section, and the programs

23 or instructional courses which will be offered by such

24 agency or provider, and may require an agency or

25 provider of an instructional course which has sought
35

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1 approval to provide information with respect to such

2 review.

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

4 administrator shall have determined that the credit

5 counseling agency or course of instruction fully sat6 isfies the applicable standards set forth in this sec7 tion.

8 ‘‘(3) When an agency or course of instruction

9 is initially approved, such approval shall be for a

10 probationary period not to exceed 6 months. An

11 agency or course of instruction is initially approved

12 if it did not appear on the approved list for the dis13 trict under subsection (a) immediately prior to ap14 proval.

15 ‘‘(4) At the conclusion of the probationary pe16 riod under paragraph (3), the United States trustee

17 or bankruptcy administrator may only approve for

18 an additional 1-year period, and for successive 1-

19 year periods thereafter, any agency or course of in20 struction which has demonstrated during the proba21 tionary or subsequent period that such agency or

22 course of instruction—

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

24 this section during such period; and
36

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1 ‘‘(B) can satisfy such standards in the fu2 ture.

3 ‘‘(5) Not later than 30 days after any final de4 cision under paragraph (4), that occurs either after

5 the expiration of the initial probationary period, or

6 after any 2-year period thereafter, an interested per7 son may seek judicial review of such decision in the

8 appropriate United States District Court.

9 ‘‘(c)(1) The United States trustee or bankruptcy ad10 ministrator shall only approve a credit counseling agency

11 that demonstrates that it will provide qualified counselors,

12 maintain adequate provision for safekeeping and payment

13 of client funds, provide adequate counseling with respect

14 to client credit problems, and deal responsibly and effec15 tively with other matters as relate to the quality, effective16 ness, and financial security of such programs.

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

18 bankruptcy administrator, a credit counseling agency

19 shall, at a minimum—

20 ‘‘(A) be a nonprofit budget and credit coun21 seling agency, the majority of the board of directors

22 of which—

23 ‘‘(i) are not employed by the agency; and
37

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

2 financially from the outcome of a credit coun3 seling session;

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

5 charge a reasonable fee, and provide services without

6 regard to ability to pay the fee;

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

8 client funds, including an annual audit of the trust

9 accounts and appropriate employee bonding;

10 ‘‘(D) provide full disclosures to clients, includ11 ing funding sources, counselor qualifications, pos12 sible impact on credit reports, and any costs of such

13 program that will be paid by the debtor and how

14 such costs will be paid;

15 ‘‘(E) provide adequate counseling with respect

16 to client credit problems that includes an analysis of

17 their current situation, what brought them to that

18 financial status, and how they can develop a plan to

19 handle the problem without incurring negative amor20 tization of their debts;

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

22 commissions or bonuses based on the counseling ses23 sion outcome, and who have adequate experience,

24 and have been adequately trained to provide coun25 seling services to individuals in financial difficulty,
38

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1 including the matters described in subparagraph

2 (E);

3 ‘‘(G) demonstrate adequate experience and

4 background in providing credit counseling; and

5 ‘‘(H) have adequate financial resources to pro6 vide continuing support services for budgeting plans

7 over the life of any repayment plan.

8 ‘‘(d) The United States trustee or bankruptcy admin9 istrator shall only approve an instructional course con10 cerning personal financial management—

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

12 subsection (b)(3) if the course will provide at a

13 minimum—

14 ‘‘(A) trained personnel with adequate expe15 rience and training in providing effective in16 struction and services;

17 ‘‘(B) learning materials and teaching

18 methodologies designed to assist debtors in un19 derstanding personal financial management and

20 that are consistent with stated objectives di21 rectly related to the goals of such course of in22 struction;

23 ‘‘(C) adequate facilities situated in reason24 ably convenient locations at which such course

25 of instruction is offered, except that such facili-
39

•S 3186 IS

1 ties may include the provision of such course of

2 instruction or program by telephone or through

3 the Internet, if the course of instruction or pro4 gram is effective; and

5 ‘‘(D) the preparation and retention of rea6 sonable records (which shall include the debt7 or’s bankruptcy case number) to permit evalua8 tion of the effectiveness of such course of in9 struction or program, including any evaluation

10 of satisfaction of course of instruction or pro11 gram requirements for each debtor attending

12 such course of instruction or program, which

13 shall be available for inspection and evaluation

14 by the Executive Office for United States

15 Trustees, the United States trustee, bankruptcy

16 administrator, or chief bankruptcy judge for the

17 district in which such course of instruction or

18 program is offered; and

19 ‘‘(2) for any 1-year period if the provider there20 of has demonstrated that the course meets the

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

22 ‘‘(A) has been effective in assisting a sub23 stantial number of debtors to understand per24 sonal financial management; and
40

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1 ‘‘(B) is otherwise likely to increase sub2 stantially debtor understanding of personal fi3 nancial management.

4 ‘‘(e) The District Court may, at any time, investigate

5 the qualifications of a credit counseling agency referred

6 to in subsection (a), and request production of documents

7 to ensure the integrity and effectiveness of such credit

8 counseling agencies. The District Court may, at any time,

9 remove from the approved list under subsection (a) a cred10 it counseling agency upon finding such agency does not

11 meet the qualifications of subsection (b).

12 ‘‘(f) The United States trustee or bankruptcy admin13 istrator shall notify the clerk that a credit counseling

14 agency or an instructional course is no longer approved,

15 in which case the clerk shall remove it from the list main16 tained under subsection (a).

17 ‘‘(g)(1) No credit counseling service may provide to

18 a credit reporting agency information concerning whether

19 an individual debtor has received or sought instruction

20 concerning personal financial management from the credit

21 counseling service.

22 ‘‘(2) A credit counseling service that willfully or neg23 ligently fails to comply with any requirement under this

24 title with respect to a debtor shall be liable for damages

25 in an amount equal to the sum of—
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•S 3186 IS

1 ‘‘(A) any actual damages sustained by the debt2 or as a result of the violation; and

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

4 fees (as determined by the court) incurred in an ac5 tion to recover those damages.’’.

6 (2) CLERICAL AMENDMENT.—The table of sec7 tions for chapter 1 of title 11, United States Code,

8 is amended by adding at the end the following:

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

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

10 States Code, is amended by adding at the end the fol11 lowing:

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

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

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

15 commenced by the debtor under any such chapter shall

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

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

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

19 automatic stay has been terminated.’’.

20 SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY

21 EXPENSES.

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

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

24 Executive Office for United States Trustees shall, not

25 later than 180 days after the date of enactment of this
42

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1 Act, issue schedules of reasonable and necessary adminis2 trative expenses of administering a chapter 13 plan for

3 each judicial district of the United States.

4 TITLE II—ENHANCED

5 CONSUMER PROTECTION

6 Subtitle A—Penalties for Abusive

7 Creditor Practices

8 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU9 TION.

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

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

12 following:

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

14 after a hearing, may reduce a claim filed under this sec15 tion based in whole on unsecured consumer debts by not

16 more than 20 percent of the claim, if—

17 ‘‘(A) the claim was filed by a creditor who un18 reasonably refused to negotiate a reasonable alter19 native repayment schedule proposed by an approved

20 credit counseling agency described in section 111

21 acting on behalf of the debtor;

22 ‘‘(B) the offer of the debtor under subpara23 graph (A)—

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

25 filing of the petition; and
43

•S 3186 IS

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

2 percent of the amount of the debt over a period

3 not to exceed the repayment period of the loan,

4 or a reasonable extension thereof; and

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

6 repayment schedule is nondischargeable.

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

8 clear and convincing evidence, that—

9 ‘‘(A) the creditor unreasonably refused to con10 sider the debtor’s proposal; and

11 ‘‘(B) the proposed alternative repayment sched12 ule was made prior to expiration of the 60-day pe13 riod specified in paragraph (1)(B)(i).’’.

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

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

16 end the following:

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

18 transfer was made as a part of an alternative repayment

19 plan between the debtor and any creditor of the debtor

20 created by an approved credit counseling agency.’’.

21 SEC. 202. EFFECT OF DISCHARGE.

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

23 amended by adding at the end the following:

24 ‘‘(i) The willful failure of a creditor to credit pay25 ments received under a plan confirmed under this title (in-
44

•S 3186 IS

1 cluding a plan of reorganization confirmed under chapter

2 11 of this title), unless the plan is dismissed, in default,

3 or the creditor has not received payments required to be

4 made under the plan in the manner required by the plan

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

6 shall constitute a violation of an injunction under sub7 section (a)(2) if the act of the creditor to collect and fail8 ure to credit payments in the manner required by the plan

9 caused material injury to the debtor.

10 ‘‘(j) Subsection (a)(2) does not operate as an injunc11 tion against an act by a creditor that is the holder of a

12 secured claim, if—

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

14 real property that is the principal residence of the

15 debtor;

16 ‘‘(2) such act is in the ordinary course of busi17 ness between the creditor and the debtor; and

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

19 periodic payments associated with a valid security

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

21 the lien.’’.

22 SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION

23 PRACTICES.

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

25 States Code, as amended by this Act, is amended—
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1 (1) in subsection (c), by striking paragraph (2)

2 and inserting the following:

3 ‘‘(2) the debtor received the disclosures de4 scribed in subsection (k) at or before the time at

5 which the debtor signed the agreement;’’;

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

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

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

9 in paragraph (3), completed as required in that para10 graph, together with the agreement, statement, declara11 tion, motion and order described, respectively, in para12 graphs (4) through (8), and shall be the only disclosures

13 required in connection with the reaffirmation.

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

15 made clearly and conspicuously and in writing. The terms

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

17 be disclosed more conspicuously than other terms, data or

18 information provided in connection with this disclosure,

19 except that the phrases ‘Before agreeing to reaffirm a

20 debt, review these important disclosures’ and ‘Summary

21 of Reaffirmation Agreement’ may be equally conspicuous.

22 Disclosures may be made in a different order and may

23 use terminology different from that set forth in para24 graphs (2) through (8), except that the terms ‘Amount
46

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

2 where indicated.

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

4 paragraph shall consist of the following:

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

6 to reaffirm a debt, review these important disclo7 sures:’;

8 ‘‘(B) Under the heading ‘Summary of Reaffir9 mation Agreement’, the statement: ‘This Summary

10 is made pursuant to the requirements of the Bank11 ruptcy Code’;

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

13 term, which shall be—

14 ‘‘(i) the total amount which the debtor

15 agrees to reaffirm, and

16 ‘‘(ii) the total of any other fees or cost ac17 crued as of the date of the disclosure statement.

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

19 ‘Amount Reaffirmed’, the statements—

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

21 to reaffirm’; and

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

23 you to pay additional amounts which may come

24 due after the date of this disclosure. Consult

25 your credit agreement.’.
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1 ‘‘(E) The ‘Annual Percentage Rate’, using that

2 term, which shall be disclosed as—

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

4 debt is open end credit as defined under the

5 Truth in Lending Act (15 U.S.C. 1601 et seq.),

6 then—

7 ‘‘(I) the annual percentage rate deter8 mined under paragraphs (5) and (6) of

9 section 127(b) of the Truth in Lending Act

10 (15 U.S.C. 1637(b)(5) and (6)), as appli11 cable, as disclosed to the debtor in the

12 most recent periodic statement prior to the

13 agreement or, if no such periodic state14 ment has been provided the debtor during

15 the prior 6 months, the annual percentage

16 rate as it would have been so disclosed at

17 the time the disclosure statement is given

18 the debtor, or to the extent this annual

19 percentage rate is not readily available or

20 not applicable, then

21 ‘‘(II) the simple interest rate applica22 ble to the amount reaffirmed as of the date

23 the disclosure statement is given to the

24 debtor, or if different simple interest rates

25 apply to different balances, the simple in-
48

•S 3186 IS

1 terest rate applicable to each such balance,

2 identifying the amount of each such bal3 ance included in the amount reaffirmed, or

4 ‘‘(III) if the entity making the disclo5 sure elects, to disclose the annual percent6 age rate under subclause (I) and the sim7 ple interest rate under subclause (II);

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

9 debt is closed end credit as defined under the

10 Truth in Lending Act (15 U.S.C. 1601 et seq.),

11 then—

12 ‘‘(I) the annual percentage rate under

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

14 Act (15 U.S.C. 1638(a)(4)), as disclosed to

15 the debtor in the most recent disclosure

16 statement given the debtor prior to the re17 affirmation agreement with respect to the

18 debt, or, if no such disclosure statement

19 was provided the debtor, the annual per20 centage rate as it would have been so dis21 closed at the time the disclosure statement

22 is given the debtor, or to the extent this

23 annual percentage rate is not readily avail24 able or not applicable, then
49

•S 3186 IS

1 ‘‘(II) the simple interest rate applica2 ble to the amount reaffirmed as of the date

3 the disclosure statement is given the debt4 or, or if different simple interest rates

5 apply to different balances, the simple in6 terest rate applicable to each such balance,

7 identifying the amount of such balance in8 cluded in the amount reaffirmed, or

9 ‘‘(III) if the entity making the disclo10 sure elects, to disclose the annual percent11 age rate under (I) and the simple interest

12 rate under (II).

13 ‘‘(F) If the underlying debt transaction was dis14 closed as a variable rate transaction on the most re15 cent disclosure given under the Truth in Lending

16 Act (15 U.S.C. 1601 et seq.), by stating ‘The inter17 est rate on your loan may be a variable interest rate

18 which changes from time to time, so that the annual

19 percentage rate disclosed here may be higher or

20 lower.’.

21 ‘‘(G) If the debt is secured by a security inter22 est which has not been waived in whole or in part

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

24 court at the time of the disclosure, by disclosing that

25 a security interest or lien in goods or property is as-
50

•S 3186 IS

1 serted over some or all of the obligations you are re2 affirming and listing the items and their original

3 purchase price that are subject to the asserted secu4 rity interest, or if not a purchase-money security in5 terest then listing by items or types and the original

6 amount of the loan.

7 ‘‘(H) At the election of the creditor, a state8 ment of the repayment schedule using 1 or a com9 bination of the following—

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

11 payment in the amount of $lll is due on

12 lll but the future payment amount may be

13 different. Consult your reaffirmation or credit

14 agreement, as applicable.’, and stating the

15 amount of the first payment and the due date

16 of that payment in the places provided;

17 ‘‘(ii) by making the statement: ‘Your pay18 ment schedule will be:’, and describing the re19 payment schedule with the number, amount and

20 due dates or period of payments scheduled to

21 repay the obligations reaffirmed to the extent

22 then known by the disclosing party; or

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

24 obligations with reasonable specificity to the ex25 tent then known by the disclosing party.
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•S 3186 IS

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

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

3 not use the word ‘may’ to give the creditor specific

4 permission. The word ‘may’ is used to tell you what

5 might occur if the law permits the creditor to take

6 the action. If you have questions about your reaffir7 mation or what the law requires, talk to the attorney

8 who helped you negotiate this agreement. If you

9 don’t have an attorney helping you, the judge will

10 explain the effect of your reaffirmation when the re11 affirmation hearing is held.’.

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

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

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

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

16 completed, the reaffirmation agreement is not effective,

17 even though you have signed it.

18 ‘‘ ‘1. Read the disclosures in this Part A care19 fully. Consider the decision to reaffirm carefully.

20 Then, if you want to reaffirm, sign the reaffirmation

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

22 agreement you and your creditor agree on).

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

24 can afford to make the payments you are agreeing

25 to make and have received a copy of the disclosure
52

•S 3186 IS

1 statement and a completed and signed reaffirmation

2 agreement.

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

4 during the negotiation of the reaffirmation agree5 ment, the attorney must have signed the certification

6 in Part C.

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

8 during the negotiation of the reaffirmation agree9 ment, you must have completed and signed Part E.

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

11 filed with the court by you or your creditor. If a sep12 arate reaffirmation agreement (other than the one in

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

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

15 during the negotiation of the reaffirmation agree16 ment, your reaffirmation agreement becomes effec17 tive upon filing with the court unless the reaffirma18 tion is presumed to be an undue hardship as ex19 plained in Part D.

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

21 during the negotiation of the reaffirmation agree22 ment, it will not be effective unless the court ap23 proves it. The court will notify you of the hearing on

24 your reaffirmation agreement. You must attend this

25 hearing in bankruptcy court where the judge will re-
53

•S 3186 IS

1 view your agreement. The bankruptcy court must

2 approve the agreement as consistent with your best

3 interests, except that no court approval is required

4 if the agreement is for a consumer debt secured by

5 a mortgage, deed of trust, security deed or other lien

6 on your real property, like your home.

7 ‘‘ ‘Your right to rescind a reaffirmation. You may re8 scind (cancel) your reaffirmation at any time before the

9 bankruptcy court enters a discharge order or within 60

10 days after the agreement is filed with the court, whichever

11 is longer. To rescind or cancel, you must notify the cred12 itor that the agreement is canceled.

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

14 A reaffirmed debt remains your personal legal obligation.

15 It is not discharged in your bankruptcy. That means that

16 if you default on your reaffirmed debt after your bank17 ruptcy is over, your creditor may be able to take your

18 property or your wages. Otherwise, your obligations will

19 be determined by the reaffirmation agreement which may

20 have changed the terms of the original agreement. For ex21 ample, if you are reaffirming an open end credit agree22 ment, the creditor may be permitted by that agreement

23 or applicable law to change the terms of the agreement

24 in the future under certain conditions.
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•S 3186 IS

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

2 agreement by any law? No, you are not required to reaf3 firm a debt by any law. Only agree to reaffirm a debt if

4 it is in your best interest. Be sure you can afford the pay5 ments you agree to make.

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

7 lien? Your bankruptcy discharge does not eliminate any

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

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

10 Even if you do not reaffirm and your personal liability

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

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

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

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

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

16 be able to redeem the item rather than reaffirm the debt.

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

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

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

20 ‘‘(ii) In the case of a reaffirmation under sub21 section (m)(2), numbered paragraph 6 in the disclo22 sures required by clause (i) of this subparagraph

23 shall read as follows:

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

25 during the negotiation of the reaffirmation agree-
55

•S 3186 IS

1 ment, your reaffirmation agreement becomes effec2 tive upon filing with the court.’.

3 ‘‘(4) The form of reaffirmation agreement required

4 under this paragraph shall consist of the following:

5 ‘‘ ‘Part B: Reaffirmation Agreement. I/we agree to re6 affirm the obligations arising under the credit agreement

7 described below.

8 ‘‘ ‘Brief description of credit agreement:

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

10 made as part of this reaffirmation agreement:

11 ‘‘ ‘Signature: Date:

12 ‘‘ ‘Borrower:

13 ‘‘ ‘Co-borrower, if also reaffirming:

14 ‘‘ ‘Accepted by creditor:

15 ‘‘ ‘Date of creditor acceptance:’.

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

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

18 Any).

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

20 a fully informed and voluntary agreement by the debtor(s);

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

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

23 fully advised the debtor of the legal effect and con24 sequences of this agreement and any default under this

25 agreement.
56

•S 3186 IS

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

2 ‘‘(B) In the case of reaffirmations in which a pre3 sumption of undue hardship has been established, the cer4 tification shall state that in the opinion of the attorney,

5 the debtor is able to make the payment.

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

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

8 ‘‘(6)(A) The statement in support of reaffirmation

9 agreement, which the debtor shall sign and date prior to

10 filing with the court, shall consist of the following:

11 ‘‘ ‘Part D: Debtor’s Statement in Support of Reaffir12 mation Agreement.

13 ‘‘ ‘1. I believe this agreement will not impose an

14 undue hardship on my dependents or me. I can afford to

15 make the payments on the reaffirmed debt because my

16 monthly income (take home pay plus any other income re17 ceived) is $lll, and my actual current monthly ex18 penses including monthly payments on post-bankruptcy

19 debt and other reaffirmation agreements total $lll,

20 leaving $lll to make the required payments on this

21 reaffirmed debt. I understand that if my income less my

22 monthly expenses does not leave enough to make the pay23 ments, this reaffirmation agreement is presumed to be an

24 undue hardship on me and must be reviewed by the court.

25 However, this presumption may be overcome if I explain
57

•S 3186 IS

1 to the satisfaction of the court how I can afford to make

2 the payments here: lll.

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

4 Statement in Part A and a completed and signed reaffir5 mation agreement.’.

6 ‘‘(B) Where the debtor is represented by counsel and

7 is reaffirming a debt owed to a creditor defined in section

8 19(b)(1)(A)(iv) of the Federal Reserve Act (12 U.S.C.

9 461(b)(1)(A)(iv)), the statement of support of the reaffir10 mation agreement, which the debtor shall sign and date

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

12 ‘‘ ‘I believe this agreement is in my financial interest.

13 I can afford to make the payments on the reaffirmed debt.

14 I received a copy of the Reaffirmation Disclosure State15 ment in Part A and a completed and signed reaffirmation

16 agreement.’

17 ‘‘(7) The motion, which may be used if approval of

18 the agreement by the court is required in order for it to

19 be effective and shall be signed and dated by the moving

20 party, shall consist of the following:

21 ‘‘ ‘Part E: Motion for Court Approval (To be com22 pleted only where debtor is not represented by an attor23 ney.). I (we), the debtor, affirm the following to be true

24 and correct:
58

•S 3186 IS

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

2 with this reaffirmation agreement.

3 ‘‘ ‘I believe this agreement is in my best interest

4 based on the income and expenses I have disclosed in my

5 Statement in Support of this reaffirmation agreement

6 above, and because (provide any additional relevant rea7 sons the court should consider):

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

9 this reaffirmation agreement.’.

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

11 a reaffirmation, shall consist of the following:

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

13 and approves the reaffirmation agreement described

14 above.’.

15 ‘‘(9) Subsection (a)(2) does not operate as an injunc16 tion against an act by a creditor that is the holder of a

17 secured claim, if—

18 ‘‘(A) such creditor retains a security interest in

19 real property that is the debtor’s principal residence;

20 ‘‘(B) such act is in the ordinary course of busi21 ness between the creditor and the debtor; and

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

23 periodic payments associated with a valid security

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

25 the lien.
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•S 3186 IS

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

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

3 debtor before and after the filing of a reaffirmation

4 agreement with the court.

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

6 debtor under a reaffirmation agreement which the

7 creditor believes in good faith to be effective.

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

9 (k) shall be satisfied if disclosures required under

10 those subsections are given in good faith.

11 ‘‘(m)(1) Until 60 days after a reaffirmation agree12 ment is filed with the court (or such additional period as

13 the court, after notice and hearing and for cause, orders

14 before the expiration of such period), it shall be presumed

15 that the reaffirmation agreement is an undue hardship on

16 the debtor if the debtor’s monthly income less the debtor’s

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

18 signed statement in support of the reaffirmation agree19 ment required under subsection (k)(6)(A) is less than the

20 scheduled payments on the reaffirmed debt. This pre21 sumption shall be reviewed by the court. The presumption

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

23 includes an explanation which identifies additional sources

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

25 terms of the reaffirmation agreement. If the presumption
60

•S 3186 IS

1 is not rebutted to the satisfaction of the court, the court

2 may disapprove the agreement. No agreement shall be dis3 approved without notice and hearing to the debtor and

4 creditor and such hearing shall be concluded before the

5 entry of the debtor’s discharge.

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

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

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

9 U.S.C. 461(b)(1)(A)(iv)).’’.

10 (b) LAW ENFORCEMENT.—

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

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

13 following:

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

15 agents of the Federal Bureau of Inves16 tigation to address abusive reaffirma17 tions of debt and materially fraudulent

18 statements in bankruptcy schedules

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

20 United States shall designate the individuals described in

21 subsection (b) to have primary responsibility in carrying

22 out enforcement activities in addressing violations of sec23 tion 152 or 157 relating to abusive reaffirmations of debt.

24 In addition to addressing the violations referred to in the

25 preceding sentence, the individuals described under sub-
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•S 3186 IS

1 section (b) shall address violations of section 152 or 157

2 relating to materially fraudulent statements in bankruptcy

3 schedules that are intentionally false or intentionally mis4 leading.

5 ‘‘(b) UNITED STATES DISTRICT ATTORNEYS AND

6 AGENTS OF THE FEDERAL BUREAU OF INVESTIGATION—

7 The individuals referred to in subsection (a) are—

8 ‘‘(1) a United States attorney for each judicial

9 district of the United States; and

10 ‘‘(2) an agent of the Federal Bureau of Inves11 tigation (within the meaning of section 3107) for

12 each field office of the Federal Bureau of Investiga13 tion.

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

15 States attorney designated under this section shall, in ad16 dition to any other responsibilities, have primary responsi17 bility for carrying out the duties of a United States attor18 ney under section 3057.

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

20 courts shall establish procedures for referring any case

21 which may contain a materially fraudulent statement in

22 a bankruptcy schedule to the individuals designated under

23 this section.’’.
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•S 3186 IS

1 (2) CLERICAL AMENDMENT.—The analysis for

2 chapter 9 of title 18, United States Code, is amend3 ed by adding at the end the following:

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

of Investigation to address abusive reaffirmations of debt and

materially fraudulent statements in bankruptcy schedules.’’.

4 Subtitle B—Priority Child Support

5 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA6 TION.

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

8 amended—

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

10 (2) by inserting after paragraph (14) the fol11 lowing:

12 ‘‘(14A) ‘domestic support obligation’ means a

13 debt that accrues before or after the entry of an

14 order for relief under this title, including interest

15 that accrues on that debt as provided under applica16 ble nonbankruptcy law notwithstanding any other

17 provision of this title, that is—

18 ‘‘(A) owed to or recoverable by—

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

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

21 guardian, or responsible relative; or

22 ‘‘(ii) a governmental unit;

23 ‘‘(B) in the nature of alimony, mainte24 nance, or support (including assistance provided
63

•S 3186 IS

1 by a governmental unit) of such spouse, former

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

3 parent, without regard to whether such debt is

4 expressly so designated;

5 ‘‘(C) established or subject to establish6 ment before or after entry of an order for relief

7 under this title, by reason of applicable provi8 sions of—

9 ‘‘(i) a separation agreement, divorce

10 decree, or property settlement agreement;

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

12 ‘‘(iii) a determination made in accord13 ance with applicable nonbankruptcy law by

14 a governmental unit; and

15 ‘‘(D) not assigned to a nongovernmental

16 entity, unless that obligation is assigned volun17 tarily by the spouse, former spouse, child, or

18 parent, legal guardian, or responsible relative of

19 the child for the purpose of collecting the

20 debt;’’.

21 SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP22 PORT OBLIGATIONS.

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

24 amended—

25 (1) by striking paragraph (7);
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•S 3186 IS

1 (2) by redesignating paragraphs (1) through

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

3 (3) in paragraph (2), as redesignated, by strik4 ing ‘‘First’’ and inserting ‘‘Second’’;

5 (4) in paragraph (3), as redesignated, by strik6 ing ‘‘Second’’ and inserting ‘‘Third’’;

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

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

9 ‘‘Fourth’’; and

10 (B) by striking the semicolon at the end

11 and inserting a period;

12 (6) in paragraph (5), as redesignated, by strik13 ing ‘‘Fourth’’ and inserting ‘‘Fifth’’;

14 (7) in paragraph (6), as redesignated, by strik15 ing ‘‘Fifth’’ and inserting ‘‘Sixth’’;

16 (8) in paragraph (7), as redesignated, by strik17 ing ‘‘Sixth’’ and inserting ‘‘Seventh’’; and

18 (9) by inserting before paragraph (2), as redes19 ignated, the following:

20 ‘‘(1) First:

21 ‘‘(A) Allowed unsecured claims for domes22 tic support obligations that, as of the date of

23 the filing of the petition, are owed to or recover24 able by a spouse, former spouse, or child of the

25 debtor, or the parent, legal guardian, or respon-
65

•S 3186 IS

1 sible relative of such child, without regard to

2 whether the claim is filed by such person or is

3 filed by a governmental unit on behalf of that

4 person, on the condition that funds received

5 under this paragraph by a governmental unit

6 under this title after the date of filing of the pe7 tition shall be applied and distributed in accord8 ance with applicable nonbankruptcy law.

9 ‘‘(B) Subject to claims under subpara10 graph (A), allowed unsecured claims for domes11 tic support obligations that, as of the date the

12 petition was filed are assigned by a spouse,

13 former spouse, child of the debtor, or such

14 child’s parent, legal guardian, or responsible

15 relative to a governmental unit (unless such ob16 ligation is assigned voluntarily by the spouse,

17 former spouse, child, parent, legal guardian, or

18 responsible relative of the child for the purpose

19 of collecting the debt) or are owed directly to or

20 recoverable by a government unit under applica21 ble nonbankruptcy law, on the condition that

22 funds received under this paragraph by a gov23 ernmental unit under this title after the date of

24 filing of the petition be applied and distributed
66

•S 3186 IS

1 in accordance with applicable nonbankruptcy

2 law.’’.

3 SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND

4 DISCHARGE IN CASES INVOLVING DOMESTIC

5 SUPPORT OBLIGATIONS.

6 Title 11, United States Code, is amended—

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

8 following:

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

10 administrative order or statute to pay a domestic

11 support obligation, the debtor has paid all amounts

12 payable under such order or statute for such obliga13 tion that first become payable after the date on

14 which the petition is filed.’’;

15 (2) in section 1208(c)—

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

17 the end;

18 (B) in paragraph (9), by striking the pe19 riod at the end and inserting ‘‘; and’’; and

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

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

22 support obligation that first becomes payable after

23 the date on which the petition is filed.’’;

24 (3) in section 1222(a)—
67

•S 3186 IS

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

2 the end;

3 (B) in paragraph (3), by striking the pe4 riod at the end and inserting ‘‘; and’’; and

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

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

7 section, a plan may provide for less than full pay8 ment of all amounts owed for a claim entitled to pri9 ority under section 507(a)(1)(B) only if the plan

10 provides that all of the debtor’s projected disposable

11 income for a 5-year period, beginning on the date

12 that the first payment is due under the plan, will be

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

14 (4) in section 1222(b)—

15 (A) by redesignating paragraph (11) as

16 paragraph (12); and

17 (B) by inserting after paragraph (10) the

18 following:

19 ‘‘(11) provide for the payment of interest accru20 ing after the date of the filing of the petition on un21 secured claims that are nondischargeable under sec22 tion 1328(a), except that such interest may be paid

23 only to the extent that the debtor has disposable in24 come available to pay such interest after making

25 provision for full payment of all allowed claims;’’;
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•S 3186 IS

1 (5) in section 1225(a)—

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

3 the end;

4 (B) in paragraph (6), by striking the pe5 riod at the end and inserting ‘‘; and’’; and

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

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

8 administrative order or statute to pay a domestic

9 support obligation, the debtor has paid all amounts

10 payable under such order for such obligation that

11 first become payable after the date on which the pe12 tition is filed.’’;

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

14 paragraph (1), by inserting ‘‘, and in the case of a

15 debtor who is required by a judicial or administra16 tive order to pay a domestic support obligation, after

17 such debtor certifies that all amounts payable under

18 such order or statute that are due on or before the

19 date of the certification (including amounts due be20 fore the petition was filed, but only to the extent

21 provided for in the plan) have been paid’’ after

22 ‘‘completion by the debtor of all payments under the

23 plan’’;

24 (7) in section 1307(c)—
69

•S 3186 IS

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

2 the end;

3 (B) in paragraph (10), by striking the pe4 riod at the end and inserting ‘‘; or’’; and

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

6 ‘‘(11) failure of the debtor to pay any domestic

7 support obligation that first becomes payable after

8 the date on which the petition is filed.’’;

9 (8) in section 1322(a)—

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

11 the end;

12 (B) in paragraph (3), by striking the pe13 riod at the end and inserting ‘‘; and’’; and

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

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

16 section, a plan may provide for less than full pay17 ment of all amounts owed for a claim entitled to pri18 ority under section 507(a)(1)(B) only if the plan

19 provides that all of the debtor’s projected disposable

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

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

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

23 (9) in section 1322(b)—

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

25 and inserting a semicolon;
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•S 3186 IS

1 (B) by redesignating paragraph (10) as

2 paragraph (11); and

3 (C) inserting after paragraph (9) the fol4 lowing:

5 ‘‘(10) provide for the payment of interest accru6 ing after the date of the filing of the petition on un7 secured claims that are nondischargeable under sec8 tion 1328(a), except that such interest may be paid

9 only to the extent that the debtor has disposable in10 come available to pay such interest after making

11 provision for full payment of all allowed claims;

12 and’’;

13 (10) in section 1325(a) (as amended by this

14 Act), by adding at the end the following:

15 ‘‘(8) the debtor is required by a judicial or ad16 ministrative order or statute to pay a domestic sup17 port obligation, the debtor has paid all amounts pay18 able under such order or statute for such obligation

19 that first becomes payable after the date on which

20 the petition is filed; and’’;

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

22 paragraph (1), by inserting ‘‘, and in the case of a

23 debtor who is required by a judicial or administra24 tive order to pay a domestic support obligation, after

25 such debtor certifies that all amounts payable under
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•S 3186 IS

1 such order or statute that are due on or before the

2 date of the certification (including amounts due be3 fore the petition was filed, but only to the extent

4 provided for in the plan) have been paid’’ after

5 ‘‘completion by the debtor of all payments under the

6 plan’’.

7 SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC

8 SUPPORT OBLIGATION PROCEEDINGS.

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

10 amended by striking paragraph (2) and inserting the fol11 lowing:

12 ‘‘(2) under subsection (a)—

13 ‘‘(A) of the commencement or continuation

14 of a civil action or proceeding—

15 ‘‘(i) for the establishment of paternity;

16 ‘‘(ii) for the establishment or modi17 fication of an order for domestic support

18 obligations;

19 ‘‘(iii) concerning child custody or visi20 tation;

21 ‘‘(iv) for the dissolution of a marriage,

22 except to the extent that such proceeding

23 seeks to determine the division of property

24 that is property of the estate; or

25 ‘‘(v) regarding domestic violence;
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•S 3186 IS

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

2 obligation from property that is not property of

3 the estate;

4 ‘‘(C) with respect to the withholding of in5 come that is property of the estate or property

6 of the debtor for payment of a domestic support

7 obligation under a judicial or administrative

8 order;

9 ‘‘(D) the withholding, suspension, or re10 striction of drivers’ licenses, professional and

11 occupational licenses, and recreational licenses

12 under State law, as specified in section

13 466(a)(16) of the Social Security Act (42

14 U.S.C. 666(a)(16));

15 ‘‘(E) the reporting of overdue support

16 owed by a parent to any consumer reporting

17 agency as specified in section 466(a)(7) of the

18 Social Security Act (42 U.S.C. 666(a)(7));

19 ‘‘(F) the interception of tax refunds, as

20 specified in sections 464 and 466(a)(3) of the

21 Social Security Act (42 U.S.C. 664 and

22 666(a)(3)) or under an analogous State law; or

23 ‘‘(G) the enforcement of medical obliga24 tions as specified under title IV of the Social

25 Security Act (42 U.S.C. 601 et seq.);’’.
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1 SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR

2 ALIMONY, MAINTENANCE, AND SUPPORT.

3 Section 523 of title 11, United States Code, is

4 amended—

5 (1) in subsection (a)—

6 (A) by striking paragraph (5) and insert7 ing the following:

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

9 (B) in paragraph (15)—

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

11 spouse, or child of the debtor and’’ before

12 ‘‘not of the kind’’;

13 (ii) by inserting ‘‘or’’ after ‘‘court of

14 record,’’; and

15 (iii) by striking ‘‘unless—’’ and all

16 that follows through the end of the para17 graph and inserting a semicolon; and

18 (C) by striking paragraph (18); and

19 (2) in subsection (c), by striking ‘‘(6), or (15)’’

20 each place it appears and inserting ‘‘or (6)’’.

21 SEC. 216. CONTINUED LIABILITY OF PROPERTY.

22 Section 522 of title 11, United States Code, is

23 amended—

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

25 and inserting the following:
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•S 3186 IS

1 ‘‘(1) a debt of a kind specified in paragraph (1)

2 or (5) of section 523(a) (in which case, notwith3 standing any provision of applicable nonbankruptcy

4 law to the contrary, such property shall be liable for

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

6 (2) in subsection (f)(1)(A), by striking the dash

7 and all that follows through the end of the subpara8 graph and inserting ‘‘of a kind that is specified in

9 section 523(a)(5); or’’; and

10 (3) in subsection (g)(2), by striking ‘‘subsection

11 (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’.

12 SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS

13 AGAINST PREFERENTIAL TRANSFER MO14 TIONS.

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

16 amended to read as follows:

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

18 payment of a debt for a domestic support obliga19 tion;’’.

20 SEC. 218. DISPOSABLE INCOME DEFINED.

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

22 Section 1225(b)(2)(A) of title 11, United States Code, is

23 amended by inserting ‘‘or for a domestic support obliga24 tion that first becomes payable after the date on which

25 the petition is filed’’ after ‘‘dependent of the debtor’’.
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•S 3186 IS

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

2 Section 1325(b)(2)(A) of title 11, United States Code, is

3 amended by inserting ‘‘or for a domestic support obliga4 tion that first becomes payable after the date on which

5 the petition is filed’’ after ‘‘dependent of the debtor’’.

6 SEC. 219. COLLECTION OF CHILD SUPPORT.

7 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec8 tion 704 of title 11, United States Code, as amended by

9 this Act, is amended—

10 (1) in subsection (a)—

11 (A) in paragraph (8), by striking ‘‘and’’ at

12 the end;

13 (B) in paragraph (9), by striking the pe14 riod and inserting a semicolon; and

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

16 ‘‘(10) if, with respect to an individual debtor,

17 there is a claim for a domestic support obligation,

18 provide the applicable notification specified in sub19 section (c); and’’; and

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

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

22 the trustee shall—

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

24 of the right of that holder to use the services of a

25 State child support enforcement agency established
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•S 3186 IS

1 under sections 464 and 466 of the Social Security

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

3 holder resides for assistance in collecting child sup4 port during and after the bankruptcy procedures;

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

6 the address and telephone number of the child sup7 port enforcement agency; and

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

9 rights of the holder of the claim to payment of the

10 claim under this chapter; and

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

12 agency of the State in which the holder of the claim

13 resides of the claim;

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

15 the name, address, and telephone number of the

16 holder of the claim; and

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

18 discharge under section 727, notify the holder of

19 that claim and the State child support agency of the

20 State in which that holder resides of—

21 ‘‘(I) the granting of the discharge;

22 ‘‘(II) the last recent known address of the

23 debtor;

24 ‘‘(III) the last recent known name and ad25 dress of the debtor’s employer; and
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•S 3186 IS

1 ‘‘(IV) with respect to the debtor’s case, the

2 name of each creditor that holds a claim that—

3 ‘‘(aa) is not discharged under para4 graph (2), (4), or (14A) of section 523(a);

5 or

6 ‘‘(bb) was reaffirmed by the debtor

7 under section 524(c).

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

9 agency may request from a creditor described in para10 graph (1)(B)(iii)(IV) the last known address of the debtor.

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

12 creditor that makes a disclosure of a last known address

13 of a debtor in connection with a request made under sub14 paragraph (A) shall not be liable to the debtor or any

15 other person by reason of making that disclosure.’’.

16 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—

17 Section 1106 of title 11, United States Code, is

18 amended—

19 (1) in subsection (a)—

20 (A) in paragraph (6), by striking ‘‘and’’ at

21 the end;

22 (B) in paragraph (7), by striking the pe23 riod and inserting ‘‘; and’’; and

24 (C) by adding at the end the following:
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•S 3186 IS

1 ‘‘(8) if, with respect to an individual debtor,

2 there is a claim for a domestic support obligation,

3 provide the applicable notification specified in sub4 section (c).’’; and

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

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

7 trustee shall—

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

9 of the right of that holder to use the services of a

10 State child support enforcement agency established

11 under sections 464 and 466 of the Social Security

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

13 holder resides; and

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

15 the address and telephone number of the child sup16 port enforcement agency; and

17 ‘‘(B)(i) notify, in writing, the State child sup18 port agency (of the State in which the holder of the

19 claim resides) of the claim;

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

21 the name, address, and telephone number of the

22 holder of the claim; and

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

24 discharge under section 1141, notify the holder of
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•S 3186 IS

1 the claim and the State child support agency of the

2 State in which that holder resides of—

3 ‘‘(I) the granting of the discharge;

4 ‘‘(II) the last recent known address of the

5 debtor;

6 ‘‘(III) the last recent known name and ad7 dress of the debtor’s employer; and

8 ‘‘(IV) with respect to the debtor’s case, the

9 name of each creditor that holds a claim that—

10 ‘‘(aa) is not discharged under para11 graph (2), (3), or (14) of section 523(a);

12 or

13 ‘‘(bb) was reaffirmed by the debtor

14 under section 524(c).

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

16 agency may request from a creditor described in para17 graph (1)(B)(iii)(IV) the last known address of the debtor.

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

19 creditor that makes a disclosure of a last known address

20 of a debtor in connection with a request made under sub21 paragraph (A) shall not be liable to the debtor or any

22 other person by reason of making that disclosure.’’.

23 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—

24 Section 1202 of title 11, United States Code, is

25 amended—
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•S 3186 IS

1 (1) in subsection (b)—

2 (A) in paragraph (4), by striking ‘‘and’’ at

3 the end;

4 (B) in paragraph (5), by striking the pe5 riod and inserting ‘‘; and’’; and

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

7 ‘‘(6) if, with respect to an individual debtor,

8 there is a claim for a domestic support obligation,

9 provide the applicable notification specified in sub10 section (c).’’; and

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

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

13 trustee shall—

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

15 of the right of that holder to use the services of a

16 State child support enforcement agency established

17 under sections 464 and 466 of the Social Security

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

19 holder resides; and

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

21 the address and telephone number of the child sup22 port enforcement agency; and

23 ‘‘(B)(i) notify, in writing, the State child sup24 port agency (of the State in which the holder of the

25 claim resides) of the claim;
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•S 3186 IS

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

2 the name, address, and telephone number of the

3 holder of the claim; and

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

5 discharge under section 1228, notify the holder of

6 the claim and the State child support agency of the

7 State in which that holder resides of—

8 ‘‘(I) the granting of the discharge;

9 ‘‘(II) the last recent known address of the

10 debtor;

11 ‘‘(III) the last recent known name and ad12 dress of the debtor’s employer; and

13 ‘‘(IV) with respect to the debtor’s case, the

14 name of each creditor that holds a claim that—

15 ‘‘(aa) is not discharged under para16 graph (2), (4), or (14) of section 523(a);

17 or

18 ‘‘(bb) was reaffirmed by the debtor

19 under section 524(c).

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

21 agency may request from a creditor described in para22 graph (1)(B)(iii)(IV) the last known address of the debtor.

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

24 creditor that makes a disclosure of a last known address

25 of a debtor in connection with a request made under sub-
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•S 3186 IS

1 paragraph (A) shall not be liable to the debtor or any

2 other person by reason of making that disclosure.’’.

3 (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—

4 Section 1302 of title 11, United States Code, is

5 amended—

6 (1) in subsection (b)—

7 (A) in paragraph (4), by striking ‘‘and’’ at

8 the end;

9 (B) in paragraph (5), by striking the pe10 riod and inserting ‘‘; and’’; and

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

12 ‘‘(6) if, with respect to an individual debtor,

13 there is a claim for a domestic support obligation,

14 provide the applicable notification specified in sub15 section (d).’’; and

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

17 ‘‘(d)(1) In any case described in subsection (b)(6),

18 the trustee shall—

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

20 of the right of that holder to use the services of a

21 State child support enforcement agency established

22 under sections 464 and 466 of the Social Security

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

24 holder resides; and
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•S 3186 IS

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

2 the address and telephone number of the child sup3 port enforcement agency; and

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

5 agency of the State in which the holder of the claim

6 resides of the claim;

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

8 the name, address, and telephone number of the

9 holder of the claim; and

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

11 discharge under section 1328, notify the holder of

12 the claim and the State child support agency of the

13 State in which that holder resides of—

14 ‘‘(I) the granting of the discharge;

15 ‘‘(II) the last recent known address of the

16 debtor;

17 ‘‘(III) the last recent known name and ad18 dress of the debtor’s employer; and

19 ‘‘(IV) with respect to the debtor’s case, the

20 name of each creditor that holds a claim that—

21 ‘‘(aa) is not discharged under para22 graph (2), (4), or (14) of section 523(a);

23 or

24 ‘‘(bb) was reaffirmed by the debtor

25 under section 524(c).
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•S 3186 IS

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

2 agency may request from a creditor described in para3 graph (1)(B)(iii)(IV) the last known address of the debtor.

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

5 creditor that makes a disclosure of a last known address

6 of a debtor in connection with a request made under sub7 paragraph (A) shall not be liable to the debtor or any

8 other person by reason of making that disclosure.’’.

9 SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDU10 CATIONAL BENEFITS AND LOANS.

11 Section 523(a) of title 11, United States Code, is

12 amended by striking paragraph (8) and inserting the fol13 lowing:

14 ‘‘(8) unless excepting such debt from discharge

15 under this paragraph would impose an undue hard16 ship on the debtor and the debtor’s dependents,

17 for—

18 ‘‘(A)(i) an educational benefit overpayment

19 or loan made, insured, or guaranteed by a gov20 ernmental unit, or made under any program

21 funded in whole or in part by a governmental

22 unit or nonprofit institution; or

23 ‘‘(ii) an obligation to repay funds received

24 as an educational benefit, scholarship, or sti25 pend; or
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•S 3186 IS

1 ‘‘(B) any other educational loan that is a

2 qualified education loan, as that term is defined

3 in section 221(e)(1) of the Internal Revenue

4 Code of 1986, incurred by an individual debt5 or;’’.

6 Subtitle C—Other Consumer

7 Protections

8 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK9 RUPTCY FILINGS.

10 Section 110 of title 11, United States Code, is

11 amended—

12 (1) in subsection (a)(1), by striking ‘‘a person,

13 other than an attorney or an employee of an attor14 ney’’ and inserting ‘‘the attorney for the debtor or

15 an employee of such attorney under the direct super16 vision of such attorney’’;

17 (2) in subsection (b)—

18 (A) in paragraph (1), by adding at the end

19 the following: ‘‘If a bankruptcy petition pre20 parer is not an individual, then an officer, prin21 cipal, responsible person, or partner of the pre22 parer shall be required to—

23 ‘‘(A) sign the document for filing; and
86

•S 3186 IS

1 ‘‘(B) print on the document the name and ad2 dress of that officer, principal, responsible person or

3 partner.’’; and

4 (B) by striking paragraph (2) and insert5 ing the following:

6 ‘‘(2)(A) Before preparing any document for filing or

7 accepting any fees from a debtor, the bankruptcy petition

8 preparer shall provide to the debtor a written notice to

9 debtors concerning bankruptcy petition preparers, which

10 shall be on an official form issued by the Judicial Con11 ference of the United States.

12 ‘‘(B) The notice under subparagraph (A)—

13 ‘‘(i) shall inform the debtor in simple language

14 that a bankruptcy petition preparer is not an attor15 ney and may not practice law or give legal advice;

16 ‘‘(ii) may contain a description of examples of

17 legal advice that a bankruptcy petition preparer is

18 not authorized to give, in addition to any advice that

19 the preparer may not give by reason of subsection

20 (e)(2); and

21 ‘‘(iii) shall—

22 ‘‘(I) be signed by—

23 ‘‘(aa) the debtor; and

24 ‘‘(bb) the bankruptcy petition pre25 parer, under penalty of perjury; and
87

•S 3186 IS

1 ‘‘(II) be filed with any document for fil2 ing.’’;

3 (3) in subsection (c)—

4 (A) in paragraph (2)—

5 (i) by striking ‘‘(2) For purposes’’ and

6 inserting ‘‘(2)(A) Subject to subparagraph

7 (B), for purposes’’; and

8 (ii) by adding at the end the fol9 lowing:

10 ‘‘(B) If a bankruptcy petition preparer is not an indi11 vidual, the identifying number of the bankruptcy petition

12 preparer shall be the Social Security account number of

13 the officer, principal, responsible person, or partner of the

14 preparer.’’; and

15 (B) by striking paragraph (3);

16 (4) in subsection (d)—

17 (A) by striking ‘‘(d)(1)’’ and inserting

18 ‘‘(d)’’; and

19 (B) by striking paragraph (2);

20 (5) in subsection (e)—

21 (A) by striking paragraph (2); and

22 (B) by adding at the end the following:

23 ‘‘(2)(A) A bankruptcy petition preparer may not offer

24 a potential bankruptcy debtor any legal advice, including

25 any legal advice described in subparagraph (B).
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•S 3186 IS

1 ‘‘(B) The legal advice referred to in subparagraph

2 (A) includes advising the debtor—

3 ‘‘(i) whether—

4 ‘‘(I) to file a petition under this title; or

5 ‘‘(II) commencing a case under chapter 7,

6 11, 12, or 13 is appropriate;

7 ‘‘(ii) whether the debtor’s debts will be elimi8 nated or discharged in a case under this title;

9 ‘‘(iii) whether the debtor will be able to retain

10 the debtor’s home, car, or other property after com11 mencing a case under this title;

12 ‘‘(iv) concerning—

13 ‘‘(I) the tax consequences of a case

14 brought under this title; or

15 ‘‘(II) the dischargeability of tax claims;

16 ‘‘(v) whether the debtor may or should promise

17 to repay debts to a creditor or enter into a reaffir18 mation agreement with a creditor to reaffirm a debt;

19 ‘‘(vi) concerning how to characterize the nature

20 of the debtor’s interests in property or the debtor’s

21 debts; or

22 ‘‘(vii) concerning bankruptcy procedures and

23 rights.’’;

24 (6) in subsection (f)—
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•S 3186 IS

1 (A) by striking ‘‘(f)(1)’’ and inserting

2 ‘‘(f)’’; and

3 (B) by striking paragraph (2);

4 (7) in subsection (g)—

5 (A) by striking ‘‘(g)(1)’’ and inserting

6 ‘‘(g)’’; and

7 (B) by striking paragraph (2);

8 (8) in subsection (h)—

9 (A) by redesignating paragraphs (1)

10 through (4) as paragraphs (2) through (5), re11 spectively;

12 (B) by inserting before paragraph (2), as

13 redesignated, the following:

14 ‘‘(1) The Supreme Court may promulgate rules under

15 section 2075 of title 28, or the Judicial Conference of the

16 United States may prescribe guidelines, for setting a max17 imum allowable fee chargeable by a bankruptcy petition

18 preparer. A bankruptcy petition preparer shall notify the

19 debtor of any such maximum amount before preparing any

20 document for filing for a debtor or accepting any fee from

21 the debtor.’’;

22 (C) in paragraph (2), as redesignated—

23 (i) by striking ‘‘Within 10 days after

24 the date of filing a petition, a bankruptcy
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•S 3186 IS

1 petition preparer shall file a’’ and inserting

2 ‘‘A’’;

3 (ii) by inserting ‘‘by the bankruptcy

4 petition preparer shall be filed together

5 with the petition,’’ after ‘‘perjury’’; and

6 (iii) by adding at the end the fol7 lowing: ‘‘If rules or guidelines setting a

8 maximum fee for services have been pro9 mulgated or prescribed under paragraph

10 (1), the declaration under this paragraph

11 shall include a certification that the bank12 ruptcy petition preparer complied with the

13 notification requirement under paragraph

14 (1).’’;

15 (D) by striking paragraph (3), as redesig16 nated, and inserting the following:

17 ‘‘(3)(A) The court shall disallow and order the

18 immediate turnover to the bankruptcy trustee any

19 fee referred to in paragraph (2) found to be in ex20 cess of the value of any services—

21 ‘‘(i) rendered by the preparer during the

22 12-month period immediately preceding the

23 date of filing of the petition; or
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•S 3186 IS

1 ‘‘(ii) found to be in violation of any rule or

2 guideline promulgated or prescribed under

3 paragraph (1).

4 ‘‘(B) All fees charged by a bankruptcy petition

5 preparer may be forfeited in any case in which the

6 bankruptcy petition preparer fails to comply with

7 this subsection or subsection (b), (c), (d), (e), (f), or

8 (g).

9 ‘‘(C) An individual may exempt any funds re10 covered under this paragraph under section

11 522(b).’’; and

12 (E) in paragraph (4), as redesignated, by

13 striking ‘‘or the United States trustee’’ and in14 serting ‘‘the United States trustee, the bank15 ruptcy administrator, or the court, on the ini16 tiative of the court,’’;

17 (9) in subsection (i)(1), by striking the matter

18 preceding subparagraph (A) and inserting the fol19 lowing:

20 ‘‘(i)(1) If a bankruptcy petition preparer violates this

21 section or commits any act that the court finds to be

22 fraudulent, unfair, or deceptive, on motion of the debtor,

23 trustee, United States trustee, or bankruptcy adminis24 trator, and after the court holds a hearing with respect
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•S 3186 IS

1 to that violation or act, the court shall order the bank2 ruptcy petition preparer to pay to the debtor—’’;

3 (10) in subsection (j)—

4 (A) in paragraph (2)—

5 (i) in subparagraph (A)(i)(I), by strik6 ing ‘‘a violation of which subjects a person

7 to criminal penalty’’;

8 (ii) in subparagraph (B)—

9 (I) by striking ‘‘or has not paid

10 a penalty’’ and inserting ‘‘has not

11 paid a penalty’’; and

12 (II) by inserting ‘‘or failed to dis13 gorge all fees ordered by the court’’

14 after ‘‘a penalty imposed under this

15 section,’’;

16 (B) by redesignating paragraph (3) as

17 paragraph (4); and

18 (C) by inserting after paragraph (2) the

19 following:

20 ‘‘(3) The court, as part of its contempt power, may

21 enjoin a bankruptcy petition preparer that has failed to

22 comply with a previous order issued under this section.

23 The injunction under this paragraph may be issued upon

24 motion of the court, the trustee, the United States trustee,

25 or the bankruptcy administrator.’’; and
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1 (11) by adding at the end the following:

2 ‘‘(l)(1) A bankruptcy petition preparer who fails to

3 comply with any provision of subsection (b), (c), (d), (e),

4 (f), (g), or (h) may be fined not more than $500 for each

5 such failure.

6 ‘‘(2) The court shall triple the amount of a fine as7 sessed under paragraph (1) in any case in which the court

8 finds that a bankruptcy petition preparer—

9 ‘‘(A) advised the debtor to exclude assets or in10 come that should have been included on applicable

11 schedules;

12 ‘‘(B) advised the debtor to use a false Social

13 Security account number;

14 ‘‘(C) failed to inform the debtor that the debtor

15 was filing for relief under this title; or

16 ‘‘(D) prepared a document for filing in a man17 ner that failed to disclose the identity of the pre18 parer.

19 ‘‘(3) The debtor, the trustee, a creditor, the United

20 States trustee, or the bankruptcy administrator may file

21 a motion for an order imposing a fine on the bankruptcy

22 petition preparer for each violation of this section.

23 ‘‘(4)(A) Fines imposed under this subsection in judi24 cial districts served by United States trustees shall be paid

25 to the United States trustee, who shall deposit an amount
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•S 3186 IS

1 equal to such fines in a special account of the United

2 States Trustee System Fund referred to in section

3 586(e)(2) of title 28. Amounts deposited under this sub4 paragraph shall be available to fund the enforcement of

5 this section on a national basis.

6 ‘‘(B) Fines imposed under this subsection in judicial

7 districts served by bankruptcy administrators shall be de8 posited as offsetting receipts to the fund established under

9 section 1931 of title 28, and shall remain available until

10 expended to reimburse any appropriation for the amount

11 paid out of such appropriation for expenses of the oper12 ation and maintenance of the courts of the United

13 States.’’.

14 SEC. 222. SENSE OF CONGRESS.

15 It is the sense of Congress that States should develop

16 curricula relating to the subject of personal finance, de17 signed for use in elementary and secondary schools.

18 SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED

19 STATES CODE.

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

21 amended by inserting after paragraph (9) the following:

22 ‘‘(10) Tenth, allowed claims for death or per23 sonal injuries resulting from the operation of a

24 motor vehicle or vessel if such operation was unlaw-
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•S 3186 IS

1 ful because the debtor was intoxicated from using al2 cohol, a drug, or another substance.’’.

3 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK4 RUPTCY.

5 (a) IN GENERAL.—Section 522 of title 11, United

6 States Code, is amended—

7 (1) in subsection (b)—

8 (A) in paragraph (2)—

9 (i) in subparagraph (A), by striking

10 ‘‘and’’ at the end;

11 (ii) in subparagraph (B), by striking

12 the period at the end and inserting ‘‘;

13 and’’;

14 (iii) by adding at the end the fol15 lowing:

16 ‘‘(C) retirement funds to the extent that those

17 funds are in a fund or account that is exempt from

18 taxation under section 401, 403, 408, 408A, 414,

19 457, or 501(a) of the Internal Revenue Code of

20 1986.’’; and

21 (iv) by striking ‘‘(2)(A) any property’’

22 and inserting:

23 ‘‘(3) Property listed in this paragraph is—

24 ‘‘(A) any property’’;
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1 (B) by striking paragraph (1) and insert2 ing:

3 ‘‘(2) Property listed in this paragraph is property

4 that is specified under subsection (d), unless the State law

5 that is applicable to the debtor under paragraph (3)(A)

6 specifically does not so authorize.’’;

7 (C) by striking ‘‘(b) Notwithstanding’’ and

8 inserting ‘‘(b)(1) Notwithstanding’’;

9 (D) by striking ‘‘paragraph (2)’’ each place

10 it appears and inserting ‘‘paragraph (3)’’;

11 (E) by striking ‘‘paragraph (1)’’ each place

12 it appears and inserting ‘‘paragraph (2)’’;

13 (F) by striking ‘‘Such property is—’’; and

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

15 ‘‘(4) For purposes of paragraph (3)(C) and sub16 section (d)(12), the following shall apply:

17 ‘‘(A) If the retirement funds are in a retirement

18 fund that has received a favorable determination

19 under section 7805 of the Internal Revenue Code of

20 1986, and that determination is in effect as of the

21 date of the commencement of the case under section

22 301, 302, or 303 of this title, those funds shall be

23 presumed to be exempt from the estate.

24 ‘‘(B) If the retirement funds are in a retirement

25 fund that has not received a favorable determination
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1 under such section 7805, those funds are exempt

2 from the estate if the debtor demonstrates that—

3 ‘‘(i) no prior determination to the contrary

4 has been made by a court or the Internal Rev5 enue Service; and

6 ‘‘(ii)(I) the retirement fund is in substan7 tial compliance with the applicable requirements

8 of the Internal Revenue Code of 1986; or

9 ‘‘(II) the retirement fund fails to be in

10 substantial compliance with the applicable re11 quirements of the Internal Revenue Code of

12 1986 and the debtor is not materially respon13 sible for that failure.

14 ‘‘(C) A direct transfer of retirement funds from

15 1 fund or account that is exempt from taxation

16 under section 401, 403, 408, 408A, 414, 457, or

17 501(a) of the Internal Revenue Code of 1986, under

18 section 401(a)(31) of the Internal Revenue Code of

19 1986, or otherwise, shall not cease to qualify for ex20 emption under paragraph (3)(C) or subsection

21 (d)(12) by reason of that direct transfer.

22 ‘‘(D)(i) Any distribution that qualifies as an eli23 gible rollover distribution within the meaning of sec24 tion 402(c) of the Internal Revenue Code of 1986 or

25 that is described in clause (ii) shall not cease to
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1 qualify for exemption under paragraph (3)(C) or

2 subsection (d)(12) by reason of that distribution.

3 ‘‘(ii) A distribution described in this clause is

4 an amount that—

5 ‘‘(I) has been distributed from a fund or

6 account that is exempt from taxation under sec7 tion 401, 403, 408, 408A, 414, 457, or 501(a)

8 of the Internal Revenue Code of 1986; and

9 ‘‘(II) to the extent allowed by law, is de10 posited in such a fund or account not later than

11 60 days after the distribution of that amount.’’;

12 and

13 (2) in subsection (d)—

14 (A) in the matter preceding paragraph (1),

15 by striking ‘‘subsection (b)(1)’’ and inserting

16 ‘‘subsection (b)(2)’’; and

17 (B) by adding at the end the following:

18 ‘‘(12) Retirement funds to the extent that those

19 funds are in a fund or account that is exempt from tax20 ation under section 401, 403, 408, 408A, 414, 457, or

21 501(a) of the Internal Revenue Code of 1986.’’.

22 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

23 United States Code, is amended—

24 (1) in paragraph (17), by striking ‘‘or’’ at the

25 end;
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1 (2) in paragraph (18), by striking the period

2 and inserting a semicolon;

3 (3) by inserting after paragraph (18) the fol4 lowing:

5 ‘‘(19) under subsection (a), of withholding of

6 income from a debtor’s wages and collection of

7 amounts withheld, under the debtor’s agreement au8 thorizing that withholding and collection for the ben9 efit of a pension, profit-sharing, stock bonus, or

10 other plan established under section 401, 403, 408,

11 408A, 414, 457, or 501(a) of the Internal Revenue

12 Code of 1986, that is sponsored by the employer of

13 the debtor, or an affiliate, successor, or predecessor

14 of such employer—

15 ‘‘(A) to the extent that the amounts with16 held and collected are used solely for payments

17 relating to a loan from a plan that satisfies the

18 requirements of section 408(b)(1) of the Em19 ployee Retirement Income Security Act of 1974

20 or is subject to section 72(p) of the Internal

21 Revenue Code of 1986; or

22 ‘‘(B) in the case of a loan from a thrift

23 savings plan described in subchapter III of

24 chapter 84 of title 5, that satisfies the require25 ments of section 8433(g) of such title;’’; and
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1 (4) by adding at the end of the flush material

2 at the end of the subsection, the following: ‘‘Nothing

3 in paragraph (19) may be construed to provide that

4 any loan made under a governmental plan under

5 section 414(d), or a contract or account under sec6 tion 403(b) of the Internal Revenue Code of 1986

7 constitutes a claim or a debt under this title.’’.

8 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of

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

10 amended by adding at the end the following:

11 ‘‘(18) owed to a pension, profit-sharing, stock

12 bonus, or other plan established under section 401,

13 403, 408, 408A, 414, 457, or 501(c) of the Internal

14 Revenue Code of 1986, under—

15 ‘‘(A) a loan permitted under section

16 408(b)(1) of the Employee Retirement Income

17 Security Act of 1974, or subject to section

18 72(p) of the Internal Revenue Code of 1986; or

19 ‘‘(B) a loan from the thrift savings plan

20 described in subchapter III of chapter 84 of

21 title 5, that satisfies the requirements of section

22 8433(g) of such title.

23 Nothing in paragraph (18) may be construed to pro24 vide that any loan made under a governmental plan

25 under section 414(d), or a contract or account under
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1 section 403(b), of the Internal Revenue Code of

2 1986 constitutes a claim or a debt under this title.’’.

3 (d) PLAN CONTENTS.—Section 1322 of title 11,

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

5 following:

6 ‘‘(f) A plan may not materially alter the terms of a

7 loan described in section 362(b)(19) and any amounts re8 quired to repay such loan shall not constitute ‘disposable

9 income’ under section 1325.’’.

10 (e) ASSET LIMITATION.—Section 522 of title 11,

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

12 following:

13 ‘‘(n) For assets in individual retirement accounts de14 scribed in section 408 or 408A of the Internal Revenue

15 Code of 1986, other than a simplified employee pension

16 under section 408(k) of that Code or a simple retirement

17 account under section 408(p) of that Code, the aggregate

18 value of such assets exempted under this section, without

19 regard to amounts attributable to rollover contributions

20 under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and

21 403(b)(8) of the Internal Revenue Code of 1986, and

22 earnings thereon, shall not exceed $1,000,000 (which

23 amount shall be adjusted as provided in section 104 of

24 this title) in a case filed by an individual debtor, except
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1 that such amount may be increased if the interests of jus2 tice so require.’’.

3 SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK4 RUPTCY.

5 (a) EXCLUSIONS.—Section 541 of title 11, United

6 States Code, is amended—

7 (1) in subsection (b)—

8 (A) in paragraph (4), by striking ‘‘or’’ at

9 the end;

10 (B) by redesignating paragraph (5) as

11 paragraph (10); and

12 (C) by inserting after paragraph (4) the

13 following:

14 ‘‘(5) funds placed in an education individual re15 tirement account (as defined in section 530(b)(1) of

16 the Internal Revenue Code of 1986) not later than

17 365 days before the date of filing of the petition,

18 but—

19 ‘‘(A) only if the designated beneficiary of

20 such account was a son, daughter, stepson,

21 stepdaughter, grandchild, or step-grandchild of

22 the debtor for the taxable year for which funds

23 were placed in such account;

24 ‘‘(B) only to the extent that such funds—
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1 ‘‘(i) are not pledged or promised to

2 any entity in connection with any extension

3 of credit; and

4 ‘‘(ii) are not excess contributions (as

5 described in section 4973(e) of the Internal

6 Revenue Code of 1986); and

7 ‘‘(C) in the case of funds placed in all such

8 accounts having the same designated bene9 ficiary not earlier than 720 days nor later than

10 365 days before such date, only so much of

11 such funds as does not exceed $5,000;

12 ‘‘(6) funds used to purchase a tuition credit or

13 certificate or contributed to an account in accord14 ance with section 529(b)(1)(A) of the Internal Rev15 enue Code of 1986 under a qualified State tuition

16 program (as defined in section 529(b)(1) of such

17 Code) not later than 365 days before the date of fil18 ing of the petition, but—

19 ‘‘(A) only if the designated beneficiary of

20 the amounts paid or contributed to such tuition

21 program was a son, daughter, stepson, step22 daughter, grandchild, or step-grandchild of the

23 debtor for the taxable year for which funds

24 were paid or contributed;
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1 ‘‘(B) with respect to the aggregate amount

2 paid or contributed to such program having the

3 same designated beneficiary, only so much of

4 such amount as does not exceed the total con5 tributions permitted under section 529(b)(7) of

6 such Code with respect to such beneficiary, as

7 adjusted beginning on the date of the filing of

8 the petition by the annual increase or decrease

9 (rounded to the nearest tenth of 1 percent) in

10 the education expenditure category of the Con11 sumer Price Index prepared by the Department

12 of Labor; and

13 ‘‘(C) in the case of funds paid or contrib14 uted to such program having the same des15 ignated beneficiary not earlier than 720 days

16 nor later than 365 days before such date, only

17 so much of such funds as does not exceed

18 $5,000;’’; and

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

20 ‘‘(e) In determining whether any of the relationships

21 specified in paragraph (5)(A) or (6)(A) of subsection (b)

22 exists, a legally adopted child of an individual (and a child

23 who is a member of an individual’s household, if placed

24 with such individual by an authorized placement agency

25 for legal adoption by such individual), or a foster child
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1 of an individual (if such child has as the child’s principal

2 place of abode the home of the debtor and is a member

3 of the debtor’s household) shall be treated as a child of

4 such individual by blood.’’.

5 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

6 United States Code, as amended by this Act, is amended

7 by adding at the end the following:

8 ‘‘(c) In addition to meeting the requirements under

9 subsection (a), a debtor shall file with the court a record

10 of any interest that a debtor has in an education individual

11 retirement account (as defined in section 530(b)(1) of the

12 Internal Revenue Code of 1986) or under a qualified State

13 tuition program (as defined in section 529(b)(1) of such

14 Code).’’.

15 SEC. 226. DEFINITIONS.

16 (a) DEFINITIONS.—Section 101 of title 11, United

17 States Code, is amended—

18 (1) by inserting after paragraph (2) the fol19 lowing:

20 ‘‘(3) ‘assisted person’ means any person whose

21 debts consist primarily of consumer debts and whose

22 non-exempt assets are less than $150,000;’’;

23 (2) by inserting after paragraph (4) the fol24 lowing:
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1 ‘‘(4A) ‘bankruptcy assistance’ means any goods

2 or services sold or otherwise provided to an assisted

3 person with the express or implied purpose of pro4 viding information, advice, counsel, document prepa5 ration, or filing, or attendance at a creditors’ meet6 ing or appearing in a proceeding on behalf of an7 other or providing legal representation with respect

8 to a case or proceeding under this title;’’; and

9 (3) by inserting after paragraph (12) the fol10 lowing:

11 ‘‘(12A) ‘debt relief agency’ means any person

12 who provides any bankruptcy assistance to an as13 sisted person in return for the payment of money or

14 other valuable consideration, or who is a bankruptcy

15 petition preparer under section 110, but does not

16 include—

17 ‘‘(A) any person that is an officer, director,

18 employee or agent of that person;

19 ‘‘(B) a nonprofit organization which is ex20 empt from taxation under section 501(c)(3) of

21 the Internal Revenue Code of 1986;

22 ‘‘(C) a creditor of the person, to the extent

23 that the creditor is assisting the person to re24 structure any debt owed by the person to the

25 creditor;
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1 ‘‘(D) a depository institution (as defined in

2 section 3 of the Federal Deposit Insurance Act)

3 or any Federal credit union or State credit

4 union (as those terms are defined in section

5 101 of the Federal Credit Union Act), or any

6 affiliate or subsidiary of such a depository insti7 tution or credit union; or

8 ‘‘(E) an author, publisher, distributor, or

9 seller of works subject to copyright protection

10 under title 17, when acting in such capacity.’’.

11 (b) CONFORMING AMENDMENT.—Section 104(b)(1)

12 of title 11, United States Code, is amended by inserting

13 ‘‘101(3),’’ after ‘‘sections’’.

14 SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

15 (a) ENFORCEMENT.—Subchapter II of chapter 5 of

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

17 end the following:

18 ‘‘§ 526. Restrictions on debt relief agencies

19 ‘‘(a) A debt relief agency shall not—

20 ‘‘(1) fail to perform any service that such agen21 cy informed an assisted person or prospective as22 sisted person it would provide in connection with a

23 case or proceeding under this title;

24 ‘‘(2) make any statement, or counsel or advise

25 any assisted person or prospective assisted person to
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1 make a statement in a document filed in a case or

2 proceeding under this title, that is untrue and mis3 leading, or that upon the exercise of reasonable care,

4 should have been known by such agency to be untrue

5 or misleading;

6 ‘‘(3) misrepresent to any assisted person or pro7 spective assisted person, directly or indirectly, af8 firmatively or by material omission, with respect

9 to—

10 ‘‘(i) the services that such agency will pro11 vide to such person; or

12 ‘‘(ii) the benefits and risks that may result

13 if such person becomes a debtor in a case under

14 this title; or

15 ‘‘(4) advise an assisted person or prospective

16 assisted person to incur more debt in contemplation

17 of such person filing a case under this title or to pay

18 an attorney or bankruptcy petition preparer fee or

19 charge for services performed as part of preparing

20 for or representing a debtor in a case under this

21 title.

22 ‘‘(b) Any waiver by any assisted person of any protec23 tion or right provided under this section shall not be en24 forceable against the debtor by any Federal or State court
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1 or any other person, but may be enforced against a debt

2 relief agency.

3 ‘‘(c)(1) Any contract for bankruptcy assistance be4 tween a debt relief agency and an assisted person that

5 does not comply with the material requirements of this

6 section, section 527, or section 528 shall be void and may

7 not be enforced by any Federal or State court or by any

8 other person, other than such assisted person.

9 ‘‘(2) Any debt relief agency shall be liable to an as10 sisted person in the amount of any fees or charges in con11 nection with providing bankruptcy assistance to such per12 son that such debt relief agency has received, for actual

13 damages, and for reasonable attorneys’ fees and costs if

14 such agency is found, after notice and hearing, to have—

15 ‘‘(A) intentionally or negligently failed to com16 ply with any provision of this section, section 527,

17 or section 528 with respect to a case or proceeding

18 under this title for such assisted person;

19 ‘‘(B) provided bankruptcy assistance to an as20 sisted person in a case or proceeding under this title

21 that is dismissed or converted to a case under an22 other chapter of this title because of such agency’s

23 intentional or negligent failure to file any required

24 document including those specified in section 521; or
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1 ‘‘(C) intentionally or negligently disregarded the

2 material requirements of this title or the Federal

3 Rules of Bankruptcy Procedure applicable to such

4 agency.

5 ‘‘(3) In addition to such other remedies as are pro6 vided under State law, whenever the chief law enforcement

7 officer of a State, or an official or agency designated by

8 a State, has reason to believe that any person has violated

9 or is violating this section, the State—

10 ‘‘(A) may bring an action to enjoin such viola11 tion;

12 ‘‘(B) may bring an action on behalf of its resi13 dents to recover the actual damages of assisted per14 sons arising from such violation, including any liabil15 ity under paragraph (2); and

16 ‘‘(C) in the case of any successful action under

17 subparagraph (A) or (B), shall be awarded the costs

18 of the action and reasonable attorney fees as deter19 mined by the court.

20 ‘‘(4) The United States District Court for any district

21 located in the State shall have concurrent jurisdiction of

22 any action under subparagraph (A) or (B) of paragraph

23 (3).

24 ‘‘(5) Notwithstanding any other provision of Federal

25 law and in addition to any other remedy provided under
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1 Federal or State law, if the court, on its own motion or

2 on motion of the United States trustee or the debtor, finds

3 that a person intentionally violated this section, or en4 gaged in a clear and consistent pattern or practice of vio5 lating this section, the court may—

6 ‘‘(A) enjoin the violation of such section; or

7 ‘‘(B) impose an appropriate civil penalty

8 against such person.’’.

9 ‘‘(d) No provision of this section, section 527, or sec10 tion 528 shall—

11 ‘‘(1) annul, alter, affect, or exempt any person

12 subject to such sections from complying with any

13 law of any State except to the extent that such law

14 is inconsistent with those sections, and then only to

15 the extent of the inconsistency; or

16 ‘‘(2) be deemed to limit or curtail the authority

17 or ability—

18 ‘‘(A) of a State or subdivision or instru19 mentality thereof, to determine and enforce

20 qualifications for the practice of law under the

21 laws of that State; or

22 ‘‘(B) of a Federal court to determine and

23 enforce the qualifications for the practice of law

24 before that court.’’.
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1 (b) CONFORMING AMENDMENT.—The table of sec2 tions for chapter 5 of title 11, United States Code, is

3 amended by inserting before the item relating to section

4 527, the following:

‘‘526. Debt relief enforcement.’’.

5 SEC. 228. DISCLOSURES.

6 (a) DISCLOSURES.—Subchapter II of chapter 5 of

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

8 amended by adding at the end the following:

9 ‘‘§ 527. Disclosures

10 ‘‘(a) A debt relief agency providing bankruptcy assist11 ance to an assisted person shall provide—

12 ‘‘(1) the written notice required under section

13 342(b)(1) of this title; and

14 ‘‘(2) to the extent not covered in the written no15 tice described in paragraph (1), and not later than

16 3 business days after the first date on which a debt

17 relief agency first offers to provide any bankruptcy

18 assistance services to an assisted person, a clear and

19 conspicuous written notice advising assisted persons

20 that—

21 ‘‘(A) all information that the assisted per22 son is required to provide with a petition and

23 thereafter during a case under this title is re24 quired to be complete, accurate, and truthful;
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1 ‘‘(B) all assets and all liabilities are re2 quired to be completely and accurately disclosed

3 in the documents filed to commence the case,

4 and the replacement value of each asset as de5 fined in section 506 of this title must be stated

6 in those documents where requested after rea7 sonable inquiry to establish such value;

8 ‘‘(C) current monthly income, the amounts

9 specified in section 707(b)(2), and, in a case

10 under chapter 13, disposable income (deter11 mined in accordance with section 707(b)(2)),

12 are required to be stated after reasonable in13 quiry; and

14 ‘‘(D) information that an assisted person

15 provides during their case may be audited pur16 suant to this title, and that failure to provide

17 such information may result in dismissal of the

18 proceeding under this title or other sanction in19 cluding, in some instances, criminal sanctions.

20 ‘‘(b) A debt relief agency providing bankruptcy assist21 ance to an assisted person shall provide each assisted per22 son at the same time as the notices required under sub23 section (a)(1) with the following statement, to the extent

24 applicable, or one substantially similar. The statement

25 shall be clear and conspicuous and shall be in a single
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1 document separate from other documents or notices pro2 vided to the assisted person:

3 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK4 RUPTCY ASSISTANCE SERVICES FROM AN AT5 TORNEY OR BANKRUPTCY PETITION PRE6 PARER.

7 ‘‘ ‘If you decide to seek bankruptcy relief, you can

8 represent yourself, you can hire an attorney to represent

9 you, or you can get help in some localities from a bank10 ruptcy petition preparer who is not an attorney. THE

11 LAW REQUIRES AN ATTORNEY OR BANKRUPTCY

12 PETITION PREPARER TO GIVE YOU A WRITTEN

13 CONTRACT SPECIFYING WHAT THE ATTORNEY

14 OR BANKRUPTCY PETITION PREPARER WILL DO

15 FOR YOU AND HOW MUCH IT WILL COST. Ask to

16 see the contract before you hire anyone.

17 ‘‘ ‘The following information helps you understand

18 what must be done in a routine bankruptcy case to help

19 you evaluate how much service you need. Although bank20 ruptcy can be complex, many cases are routine.

21 ‘‘ ‘Before filing a bankruptcy case, either you or your

22 attorney should analyze your eligibility for different forms

23 of debt relief made available by the Bankruptcy Code and

24 which form of relief is most likely to be beneficial for you.

25 Be sure you understand the relief you can obtain and its
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1 limitations. To file a bankruptcy case, documents called

2 a Petition, Schedules and Statement of Financial Affairs,

3 as well as in some cases a Statement of Intention need

4 to be prepared correctly and filed with the bankruptcy

5 court. You will have to pay a filing fee to the bankruptcy

6 court. Once your case starts, you will have to attend the

7 required first meeting of creditors where you may be ques8 tioned by a court official called a ‘trustee’ and by credi9 tors.

10 ‘‘ ‘If you choose to file a chapter 7 case, you may

11 be asked by a creditor to reaffirm a debt. You may want

12 help deciding whether to do so and a creditor is not per13 mitted to coerce you into reaffirming your debts.

14 ‘‘ ‘If you choose to file a chapter 13 case in which

15 you repay your creditors what you can afford over 3 to

16 5 years, you may also want help with preparing your chap17 ter 13 plan and with the confirmation hearing on your

18 plan which will be before a bankruptcy judge.

19 ‘‘ ‘If you select another type of relief under the Bank20 ruptcy Code other than chapter 7 or chapter 13, you will

21 want to find out what needs to be done from someone fa22 miliar with that type of relief.

23 ‘‘ ‘Your bankruptcy case may also involve litigation.

24 You are generally permitted to represent yourself in litiga-
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1 tion in bankruptcy court, but only attorneys, not bank2 ruptcy petition preparers, can give you legal advice.’.

3 ‘‘(c) Except to the extent the debt relief agency pro4 vides the required information itself after reasonably dili5 gent inquiry of the assisted person or others so as to ob6 tain such information reasonably accurately for inclusion

7 on the petition, schedules or statement of financial affairs,

8 a debt relief agency providing bankruptcy assistance to an

9 assisted person, to the extent permitted by nonbankruptcy

10 law, shall provide each assisted person at the time re11 quired for the notice required under subsection (a)(1) rea12 sonably sufficient information (which shall be provided in

13 a clear and conspicuous writing) to the assisted person

14 on how to provide all the information the assisted person

15 is required to provide under this title pursuant to section

16 521, including—

17 ‘‘(1) how to value assets at replacement value,

18 determine current monthly income, the amounts

19 specified in section 707(b)(2)) and, in a chapter 13

20 case, how to determine disposable income in accord21 ance with section 707(b)(2) and related calculations;

22 ‘‘(2) how to complete the list of creditors, in23 cluding how to determine what amount is owed and

24 what address for the creditor should be shown; and
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1 ‘‘(3) how to determine what property is exempt

2 and how to value exempt property at replacement

3 value as defined in section 506 of this title.

4 ‘‘(d) A debt relief agency shall maintain a copy of

5 the notices required under subsection (a) of this section

6 for 2 years after the date on which the notice is given

7 the assisted person.’’.

8 (b) CONFORMING AMENDMENT.—The table of sec9 tions for chapter 5 of title 11, United States Code, as

10 amended by this Act, is amended by inserting after the

11 item relating to section 526 the following:

‘‘527. Disclosures.’’.

12 SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.

13 (a) ENFORCEMENT.—Subchapter II of chapter 5 of

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

15 amended by adding at the end the following:

16 ‘‘§ 528. Requirements for debt relief agencies

17 ‘‘(a) A debt relief agency shall—

18 ‘‘(1) not later than 5 business days after the

19 first date such agency provides any bankruptcy as20 sistance services to an assisted person, but prior to

21 such assisted person’s petition under this title being

22 filed, execute a written contract with such assisted

23 person that explains clearly and conspicuously—

24 ‘‘(A) the services such agency will provide

25 to such assisted person; and
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1 ‘‘(B) the fees or charges for such services

2 for such services, and the terms of payment;

3 ‘‘(2) provide the assisted person with a copy of

4 the fully executed and completed contract;

5 ‘‘(3) clearly and conspicuously disclose in any

6 advertisement of bankruptcy assistance services or of

7 the benefits of bankruptcy directed to the general

8 public (whether in general media, seminars or spe9 cific mailings, telephonic or electronic messages, or

10 otherwise) that the services or benefits are with re11 spect to bankruptcy relief under this title; and

12 ‘‘(4) clearly and conspicuously using the fol13 lowing statement: ‘We are a debt relief agency. We

14 help people file for bankruptcy relief under the

15 Bankruptcy Code.’ or a substantially similar state16 ment.

17 ‘‘(b)(1) An advertisement of bankruptcy assistance

18 services or of the benefits of bankruptcy directed to the

19 general public includes—

20 ‘‘(A) descriptions of bankruptcy assistance in

21 connection with a chapter 13 plan whether or not

22 chapter 13 is specifically mentioned in such adver23 tisement; and

24 ‘‘(B) statements such as ‘federally supervised

25 repayment plan’ or ‘Federal debt restructuring help’
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1 or other similar statements that could lead a reason2 able consumer to believe that debt counseling was

3 being offered when in fact the services were directed

4 to providing bankruptcy assistance with a chapter

5 13 plan or other form of bankruptcy relief under

6 this title.

7 ‘‘(2) An advertisement, directed to the general public,

8 indicating that the debt relief agency provides assistance

9 with respect to credit defaults, mortgage foreclosures, evic10 tion proceedings, excessive debt, debt collection pressure,

11 or inability to pay any consumer debt shall—

12 ‘‘(A) disclose clearly and conspicuously in such

13 advertisement that the assistance may involve bank14 ruptcy relief under this title; and

15 ‘‘(B) include the following statement: ‘We are a

16 debt relief agency. We help people file for bank17 ruptcy relief under the Bankruptcy Code,’ or a sub18 stantially similar statement.’’.

19 (b) CONFORMING AMENDMENT.—The table of sec20 tions for chapter 5 of title 11, United States Code, as

21 amended by this Act, is amended by inserting after the

22 item relating to section 527, the following:

‘‘528. Debtor’s bill of rights.’’.

23 SEC. 230. GAO STUDY.

24 (a) STUDY.—Not later than 270 days after the date

25 of enactment of this Act, the Comptroller General of the
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1 United States shall conduct a study of the feasibility, ef2 fectiveness, and cost of requiring trustees appointed under

3 title 11, United States Code, or the bankruptcy courts,

4 to provide to the Office of Child Support Enforcement

5 promptly after the commencement of cases by individual

6 debtors under such title, the names and social security

7 numbers of such debtors for the purposes of allowing such

8 Office to determine whether such debtors have out9 standing obligations for child support (as determined on

10 the basis of information in the Federal Case Registry or

11 other national database).

12 (b) REPORT.—Not later than 300 days after the date

13 of enactment of this Act, the Comptroller General shall

14 submit to the President pro tempore of the Senate and

15 the Speaker of the House of Representatives a report con16 taining the results of the study required by subsection (a).

17 TITLE III—DISCOURAGING

18 BANKRUPTCY ABUSE

19 SEC. 301. REINFORCEMENT OF THE FRESH START.

20 Section 523(a)(17) of title 11, United States Code,

21 is amended—

22 (1) by striking ‘‘by a court’’ and inserting ‘‘on

23 a prisoner by any court’’,
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1 (2) by striking ‘‘section 1915(b) or (f)’’ and in2 serting ‘‘subsection (b) or (f)(2) of section 1915’’,

3 and

4 (3) by inserting ‘‘(or a similar non-Federal

5 law)’’ after ‘‘title 28’’ each place it appears.

6 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.

7 Section 362(c) of title 11, United States Code, is

8 amended—

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

10 end;

11 (2) in paragraph (2), by striking the period at

12 the end and inserting a semicolon; and

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

14 ‘‘(3) if a single or joint case is filed by or

15 against an individual debtor under chapter 7, 11, or

16 13, and if a single or joint case of the debtor was

17 pending within the preceding 1-year period but was

18 dismissed, other than a case refiled under a chapter

19 other than chapter 7 after dismissal under section

20 707(b)—

21 ‘‘(A) the stay under subsection (a) with re22 spect to any action taken with respect to a debt

23 or property securing such debt or with respect

24 to any lease shall terminate with respect to the
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1 debtor on the 30th day after the filing of the

2 later case;

3 ‘‘(B) upon motion by a party in interest

4 for continuation of the automatic stay and upon

5 notice and a hearing, the court may extend the

6 stay in particular cases as to any or all credi7 tors (subject to such conditions or limitations

8 as the court may then impose) after notice and

9 a hearing completed before the expiration of the

10 30-day period only if the party in interest dem11 onstrates that the filing of the later case is in

12 good faith as to the creditors to be stayed; and

13 ‘‘(C) for purposes of subparagraph (B), a

14 case is presumptively filed not in good faith

15 (but such presumption may be rebutted by clear

16 and convincing evidence to the contrary)—

17 ‘‘(i) as to all creditors, if—

18 ‘‘(I) more than 1 previous case

19 under any of chapter 7, 11, or 13 in

20 which the individual was a debtor was

21 pending within the preceding 1-year

22 period;

23 ‘‘(II) a previous case under any

24 of chapter 7, 11, or 13 in which the

25 individual was a debtor was dismissed
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1 within such 1-year period, after the

2 debtor failed to—

3 ‘‘(aa) file or amend the peti4 tion or other documents as re5 quired by this title or the court

6 without substantial excuse (but

7 mere inadvertence or negligence

8 shall not be a substantial excuse

9 unless the dismissal was caused

10 by the negligence of the debtor’s

11 attorney);

12 ‘‘(bb) provide adequate pro13 tection as ordered by the court;

14 or

15 ‘‘(cc) perform the terms of a

16 plan confirmed by the court; or

17 ‘‘(III) there has not been a sub18 stantial change in the financial or per19 sonal affairs of the debtor since the

20 dismissal of the next most previous

21 case under chapter 7, 11, or 13 or

22 any other reason to conclude that the

23 later case will be concluded—

24 ‘‘(aa) if a case under chap25 ter 7, with a discharge; or
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1 ‘‘(bb) if a case under chap2 ter 11 or 13, with a confirmed

3 plan which will be fully per4 formed; and

5 ‘‘(ii) as to any creditor that com6 menced an action under subsection (d) in

7 a previous case in which the individual was

8 a debtor if, as of the date of dismissal of

9 such case, that action was still pending or

10 had been resolved by terminating, condi11 tioning, or limiting the stay as to actions

12 of such creditor; and

13 ‘‘(4)(A)(i) if a single or joint case is filed by or

14 against an individual debtor under this title, and if

15 2 or more single or joint cases of the debtor were

16 pending within the previous year but were dismissed,

17 other than a case refiled under section 707(b), the

18 stay under subsection (a) shall not go into effect

19 upon the filing of the later case; and

20 ‘‘(ii) on request of a party in interest, the court

21 shall promptly enter an order confirming that no

22 stay is in effect;

23 ‘‘(B) if, within 30 days after the filing of the

24 later case, a party in interest requests the court may

25 order the stay to take effect in the case as to any
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1 or all creditors (subject to such conditions or limita2 tions as the court may impose), after notice and

3 hearing, only if the party in interest demonstrates

4 that the filing of the later case is in good faith as

5 to the creditors to be stayed;

6 ‘‘(C) a stay imposed under subparagraph (B)

7 shall be effective on the date of entry of the order

8 allowing the stay to go into effect; and

9 ‘‘(D) for purposes of subparagraph (B), a case

10 is presumptively not filed in good faith (but such

11 presumption may be rebutted by clear and con12 vincing evidence to the contrary)—

13 ‘‘(i) as to all creditors if—

14 ‘‘(I) 2 or more previous cases under

15 this title in which the individual was a

16 debtor were pending within the 1-year pe17 riod;

18 ‘‘(II) a previous case under this title

19 in which the individual was a debtor was

20 dismissed within the time period stated in

21 this paragraph after the debtor failed to

22 file or amend the petition or other docu23 ments as required by this title or the court

24 without substantial excuse (but mere inad25 vertence or negligence shall not be sub-
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1 stantial excuse unless the dismissal was

2 caused by the negligence of the debtor’s at3 torney), failed to pay adequate protection

4 as ordered by the court, or failed to per5 form the terms of a plan confirmed by the

6 court; or

7 ‘‘(III) there has not been a substan8 tial change in the financial or personal af9 fairs of the debtor since the dismissal of

10 the next most previous case under this

11 title, or any other reason to conclude that

12 the later case will not be concluded, if a

13 case under chapter 7, with a discharge,

14 and if a case under chapter 11 or 13, with

15 a confirmed plan that will be fully per16 formed; or

17 ‘‘(ii) as to any creditor that commenced an

18 action under subsection (d) in a previous case

19 in which the individual was a debtor if, as of

20 the date of dismissal of such case, such action

21 was still pending or had been resolved by termi22 nating, conditioning, or limiting the stay as to

23 action of such creditor.’’.
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1 SEC. 303. CURBING ABUSIVE FILINGS.

2 (a) IN GENERAL.—Section 362(d) of title 11, United

3 States Code, is amended—

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

5 end;

6 (2) in paragraph (3), by striking the period at

7 the end and inserting ‘‘; or’’; and

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

9 ‘‘(4) with respect to a stay of an act against

10 real property under subsection (a), by a creditor

11 whose claim is secured by an interest in such real

12 estate, if the court finds that the filing of the bank13 ruptcy petition was part of a scheme to delay,

14 hinder, and defraud creditors that involved either—

15 ‘‘(A) transfer of all or part ownership of,

16 or other interest in, the real property without

17 the consent of the secured creditor or court ap18 proval; or

19 ‘‘(B) multiple bankruptcy filings affecting

20 the real property.

21 If recorded in compliance with applicable State laws gov22 erning notices of interests or liens in real property, an

23 order entered under this subsection shall be binding in any

24 other case under this title purporting to affect the real

25 property filed not later than 2 years after the date of entry

26 of such order by the court, except that a debtor in a subse-
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1 quent case may move for relief from such order based

2 upon changed circumstances or for good cause shown,

3 after notice and a hearing. Any Federal, State, or local

4 governmental unit that accepts notices of interests or liens

5 in real property shall accept any certified copy of an order

6 described in this subsection for indexing and recording.’’.

7 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

8 United States Code, is amended by inserting after para9 graph (19), as added by this Act, the following:

10 ‘‘(20) under subsection (a), of any act to en11 force any lien against or security interest in real

12 property following the entry of an order under sec13 tion 362(d)(4) as to that property in any prior bank14 ruptcy case for a period of 2 years after entry of

15 such an order, except that the debtor, in a subse16 quent case, may move the court for relief from such

17 order based upon changed circumstances or for

18 other good cause shown, after notice and a hearing;

19 ‘‘(21) under subsection (a), of any act to en20 force any lien against or security interest in real

21 property—

22 ‘‘(A) if the debtor is ineligible under sec23 tion 109(g) to be a debtor in a bankruptcy case;

24 or
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1 ‘‘(B) if the bankruptcy case was filed in

2 violation of a bankruptcy court order in a prior

3 bankruptcy case prohibiting the debtor from

4 being a debtor in another bankruptcy case;’’.

5 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY

6 SECURITY.

7 Title 11, United States Code, is amended—

8 (1) in section 521(a) (as so designated by this

9 Act)—

10 (A) in paragraph (4), by striking ‘‘, and’’

11 at the end and inserting a semicolon;

12 (B) in paragraph (5), by striking the pe13 riod at the end and inserting ‘‘; and’’; and

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

15 ‘‘(6) in an individual case under chapter 7 of

16 this title, not retain possession of personal property

17 as to which a creditor has an allowed claim for the

18 purchase price secured in whole or in part by an in19 terest in that personal property unless, in the case

20 of an individual debtor, the debtor, not later than 45

21 days after the first meeting of creditors under sec22 tion 341(a), either—

23 ‘‘(A) enters into an agreement with the

24 creditor pursuant to section 524(c) of this title
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1 with respect to the claim secured by such prop2 erty; or

3 ‘‘(B) redeems such property from the secu4 rity interest pursuant to section 722 of this

5 title.

6 If the debtor fails to so act within the 45-day period re7 ferred to in paragraph (6), the stay under section 362(a)

8 of this title is terminated with respect to the personal

9 property of the estate or of the debtor which is affected,

10 such property shall no longer be property of the estate,

11 and the creditor may take whatever action as to such prop12 erty as is permitted by applicable nonbankruptcy law, un13 less the court determines on the motion of the trustee

14 brought before the expiration of such 45-day period, and

15 after notice and a hearing, that such property is of con16 sequential value or benefit to the estate, orders appro17 priate adequate protection of the creditor’s interest, and

18 orders the debtor to deliver any collateral in the debtor’s

19 possession to the trustee.’’; and

20 (2) in section 722, by inserting ‘‘in full at the

21 time of redemption’’ before the period at the end.
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1 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE

2 DEBTOR DOES NOT COMPLETE INTENDED

3 SURRENDER OF CONSUMER DEBT COLLAT4 ERAL.

5 Title 11, United States Code, is amended—

6 (1) in section 362—

7 (A) in subsection (c), by striking ‘‘(e), and

8 (f)’’ inserting ‘‘(e), (f), and (h)’’;

9 (B) by redesignating subsection (h) as sub10 section (k); and

11 (C) by inserting after subsection (g) the

12 following:

13 ‘‘(h)(1) In an individual case under chapter 7, 11,

14 or 13, the stay provided by subsection (a) is terminated

15 with respect to personal property of the estate or of the

16 debtor securing in whole or in part a claim, or subject

17 to an unexpired lease, and such personal property shall

18 no longer be property of the estate if the debtor fails with19 in the applicable time set by section 521(a)(2) of this

20 title—

21 ‘‘(A) to file timely any statement of intention

22 required under section 521(a)(2) of this title with

23 respect to that property or to indicate in that state24 ment that the debtor will either surrender the prop25 erty or retain it and, if retaining it, either redeem

26 the property pursuant to section 722 of this title, re-
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1 affirm the debt it secures pursuant to section 524(c)

2 of this title, or assume the unexpired lease pursuant

3 to section 365(p) of this title if the trustee does not

4 do so, as applicable; and

5 ‘‘(B) to take timely the action specified in that

6 statement of intention, as it may be amended before

7 expiration of the period for taking action, unless the

8 statement of intention specifies reaffirmation and

9 the creditor refuses to reaffirm on the original con10 tract terms.

11 ‘‘(2) Paragraph (1) does not apply if the court deter12 mines, on the motion of the trustee filed before the expira13 tion of the applicable time set by section 521(a)(2), after

14 notice and a hearing, that such property is of consequen15 tial value or benefit to the estate, and orders appropriate

16 adequate protection of the creditor’s interest, and orders

17 the debtor to deliver any collateral in the debtor’s posses18 sion to the trustee. If the court does not so determine,

19 the stay provided by subsection (a) shall terminate upon

20 the conclusion of the proceeding on the motion.’’; and

21 (2) in section 521—

22 (A) in subsection (a)(2), as so designated

23 by this Act, by striking ‘‘consumer’’;

24 (B) in subsection (a)(2)(B), as so des25 ignated by this Act—
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1 (i) by striking ‘‘forty-five days after

2 the filing of a notice of intent under this

3 section’’ and inserting ‘‘30 days after the

4 first date set for the meeting of creditors

5 under section 341(a) of this title’’; and

6 (ii) by striking ‘‘forty-five day’’ and

7 inserting ‘‘30-day’’;

8 (C) in subsection (a)(2)(C), as so des9 ignated by this Act, by inserting ‘‘, except as

10 provided in section 362(h) of this title’’ before

11 the semicolon; and

12 (D) by adding at the end the following:

13 ‘‘(d) If the debtor fails timely to take the action speci14 fied in subsection (a)(6) of this section, or in paragraphs

15 (1) and (2) of section 362(h) of this title, with respect

16 to property which a lessor or bailor owns and has leased,

17 rented, or bailed to the debtor or as to which a creditor

18 holds a security interest not otherwise voidable under sec19 tion 522(f), 544, 545, 547, 548, or 549 of this title, noth20 ing in this title shall prevent or limit the operation of a

21 provision in the underlying lease or agreement which has

22 the effect of placing the debtor in default under such lease

23 or agreement by reason of the occurrence, pendency, or

24 existence of a proceeding under this title or the insolvency

25 of the debtor. Nothing in this subsection shall be deemed
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1 to justify limiting such a provision in any other cir2 cumstance.’’.

3 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT

4 IN CHAPTER 13.

5 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title

6 11, United States Code, is amended to read as follows:

7 ‘‘(i) the plan provides that—

8 ‘‘(I) the holder of such claim retain

9 the lien securing such claim until the ear10 lier of—

11 ‘‘(aa) the payment of the under12 lying debt determined under nonbank13 ruptcy law; or

14 ‘‘(bb) discharge under section

15 1328; and

16 ‘‘(II) if the case under this chapter is

17 dismissed or converted without completion

18 of the plan, such lien shall also be retained

19 by such holder to the extent recognized by

20 applicable nonbankruptcy law; and’’.

21 (b) RESTORING THE FOUNDATION FOR SECURED

22 CREDIT.—Section 1325(a) of title 11, United States Code,

23 is amended by adding at the end the following flush sen24 tence:
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•S 3186 IS

1 ‘‘For purposes of paragraph (5), section 506 shall not

2 apply to a claim described in that paragraph if the creditor

3 has a purchase money security interest securing the debt

4 that is the subject of the claim, the debt was incurred

5 within the 5-year period preceding the filing of the peti6 tion, and the collateral for that debt consists of a motor

7 vehicle (as defined in section 30102 of title 49) acquired

8 for the personal use of the debtor, or if collateral for that

9 debt consists of any other thing of value, if the debt was

10 incurred during the 1-year period preceding that filing.’’.

11 (c) DEFINITIONS.—Section 101 of title 11, United

12 States Code, as amended by this Act, is amended—

13 (1) by inserting after paragraph (13) the fol14 lowing:

15 ‘‘(13A) ‘debtor’s principal residence’—

16 ‘‘(A) means a residential structure, includ17 ing incidental property, without regard to

18 whether that structure is attached to real prop19 erty; and

20 ‘‘(B) includes an individual condominium

21 or cooperative unit, a mobile or manufactured

22 home, or trailer;’’; and

23 (2) by inserting after paragraph (27), the fol24 lowing:
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•S 3186 IS

1 ‘‘(27A) ‘incidental property’ means, with re2 spect to a debtor’s principal residence—

3 ‘‘(A) property commonly conveyed with a

4 principal residence in the area where the real

5 estate is located;

6 ‘‘(B) all easements, rights, appurtenances,

7 fixtures, rents, royalties, mineral rights, oil or

8 gas rights or profits, water rights, escrow

9 funds, or insurance proceeds; and

10 ‘‘(C) all replacements or additions;’’.

11 SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

12 Section 522(b)(3)(A) of title 11, United States Code,

13 as so designated by this Act, is amended—

14 (1) by striking ‘‘180 days’’ and inserting ‘‘730

15 days’’; and

16 (2) by striking ‘‘, or for a longer portion of

17 such 180-day period than in any other place’’ and

18 inserting ‘‘or if the debtor’s domicile has not been

19 located at a single State for such 730-day period,

20 the place in which the debtor’s domicile was located

21 for 180 days immediately preceding the 730-day pe22 riod or for a longer portion of such 180-day period

23 than in any other place’’.
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1 SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EX2 EMPTION.

3 Section 522 of title 11, United States Code, is

4 amended—

5 (1) in subsection (b)(3)(A), as so designated by

6 this Act, by inserting ‘‘subject to subsections (o) and

7 (p),’’ before ‘‘any property’’; and

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

9 ‘‘(o) For purposes of subsection (b)(3)(A), and not10 withstanding subsection (a), the value of an interest in—

11 ‘‘(1) real or personal property that the debtor

12 or a dependent of the debtor uses as a residence;

13 ‘‘(2) a cooperative that owns property that the

14 debtor or a dependent of the debtor uses as a resi15 dence; or

16 ‘‘(3) a burial plot for the debtor or a dependent

17 of the debtor;

18 shall be reduced to the extent that such value is attrib19 utable to any portion of any property that the debtor dis20 posed of in the 7-year period ending on the date of the

21 filing of the petition with the intent to hinder, delay, or

22 defraud a creditor and that the debtor could not exempt,

23 or that portion that the debtor could not exempt, under

24 subsection (b), if on such date the debtor had held the

25 property so disposed of.’’.
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1 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER

2 13 CASES.

3 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP4 TER 13.—Section 348(f)(1) of title 11, United States

5 Code, is amended—

6 (1) in subparagraph (A), by striking ‘‘and’’ at

7 the end;

8 (2) in subparagraph (B)—

9 (A) by striking ‘‘in the converted case,

10 with allowed secured claims’’ and inserting

11 ‘‘only in a case converted to a case under chap12 ter 11 or 12, but not in a case converted to a

13 case under chapter 7, with allowed secured

14 claims in cases under chapters 11 and 12’’; and

15 (B) by striking the period and inserting ‘‘;

16 and’’; and

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

18 ‘‘(C) with respect to cases converted from chap19 ter 13—

20 ‘‘(i) the claim of any creditor holding secu21 rity as of the date of the petition shall continue

22 to be secured by that security unless the full

23 amount of such claim determined under appli24 cable nonbankruptcy law has been paid in full

25 as of the date of conversion, notwithstanding

26 any valuation or determination of the amount
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1 of an allowed secured claim made for the pur2 poses of the chapter 13 proceeding; and

3 ‘‘(ii) unless a prebankruptcy default has

4 been fully cured under the plan at the time of

5 conversion, in any proceeding under this title or

6 otherwise, the default shall have the effect given

7 under applicable nonbankruptcy law.’’.

8 (b) GIVING DEBTORS THE ABILITY TO KEEP

9 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section

10 365 of title 11, United States Code, is amended by adding

11 at the end the following:

12 ‘‘(p)(1) If a lease of personal property is rejected or

13 not timely assumed by the trustee under subsection (d),

14 the leased property is no longer property of the estate and

15 the stay under section 362(a) is automatically terminated.

16 ‘‘(2)(A) In the case of an individual under chapter

17 7, the debtor may notify the creditor in writing that the

18 debtor desires to assume the lease. Upon being so notified,

19 the creditor may, at its option, notify the debtor that it

20 is willing to have the lease assumed by the debtor and

21 may condition such assumption on cure of any outstanding

22 default on terms set by the contract.

23 ‘‘(B) If, not later than 30 days after notice is pro24 vided under subparagraph (A), the debtor notifies the les25 sor in writing that the lease is assumed, the liability under
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•S 3186 IS

1 the lease will be assumed by the debtor and not by the

2 estate.

3 ‘‘(C) The stay under section 362 and the injunction

4 under section 524(a)(2) shall not be violated by notifica5 tion of the debtor and negotiation of cure under this sub6 section.

7 ‘‘(3) In a case under chapter 11 in which the debtor

8 is an individual and in a case under chapter 13, if the

9 debtor is the lessee with respect to personal property and

10 the lease is not assumed in the plan confirmed by the

11 court, the lease is deemed rejected as of the conclusion

12 of the hearing on confirmation. If the lease is rejected,

13 the stay under section 362 and any stay under section

14 1301 is automatically terminated with respect to the prop15 erty subject to the lease.’’.

16 (c) ADEQUATE PROTECTION OF LESSORS AND PUR17 CHASE MONEY SECURED CREDITORS.—

18 (1) CONFIRMATION OF PLAN.—Section

19 1325(a)(5)(B) of title 11, United States Code, is

20 amended—

21 (A) in clause (i), by striking ‘‘and’’ at the

22 end;

23 (B) in clause (ii), by striking ‘‘or’’ at the

24 end and inserting ‘‘and’’; and

25 (C) by adding at the end the following:
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1 ‘‘(iii) if—

2 ‘‘(I) property to be distributed

3 pursuant to this subsection is in the

4 form of periodic payments, such pay5 ments shall be in equal monthly

6 amounts; and

7 ‘‘(II) the holder of the claim is

8 secured by personal property, the

9 amount of such payments shall not be

10 less than an amount sufficient to pro11 vide to the holder of such claim ade12 quate protection during the period of

13 the plan; or’’.

14 (2) PAYMENTS.—Section 1326(a) of title 11,

15 United States Code, is amended to read as follows:

16 ‘‘(a)(1) Unless the court orders otherwise, the debtor

17 shall commence making payments not later than 30 days

18 after the date of the filing of the plan or the order for

19 relief, whichever is earlier, in the amount—

20 ‘‘(A) proposed by the plan to the trustee;

21 ‘‘(B) scheduled in a lease of personal property

22 directly to the lessor for that portion of the obliga23 tion that becomes due after the order for relief, re24 ducing the payments under subparagraph (A) by the

25 amount so paid and providing the trustee with evi-
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•S 3186 IS

1 dence of such payment, including the amount and

2 date of payment; and

3 ‘‘(C) that provides adequate protection directly

4 to a creditor holding an allowed claim secured by

5 personal property to the extent the claim is attrib6 utable to the purchase of such property by the debt7 or for that portion of the obligation that becomes

8 due after the order for relief, reducing the payments

9 under subparagraph (A) by the amount so paid and

10 providing the trustee with evidence of such payment,

11 including the amount and date of payment.

12 ‘‘(2) A payment made under paragraph (1)(A) shall

13 be retained by the trustee until confirmation or denial of

14 confirmation. If a plan is confirmed, the trustee shall dis15 tribute any such payment in accordance with the plan as

16 soon as is practicable. If a plan is not confirmed, the trust17 ee shall return any such payments not previously paid and

18 not yet due and owing to creditors pursuant to paragraph

19 (3) to the debtor, after deducting any unpaid claim al20 lowed under section 503(b).

21 ‘‘(3) Subject to section 363, the court may, upon no22 tice and a hearing, modify, increase, or reduce the pay23 ments required under this subsection pending confirma24 tion of a plan.
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1 ‘‘(4) Not later than 60 days after the date of filing

2 of a case under this chapter, a debtor retaining possession

3 of personal property subject to a lease or securing a claim

4 attributable in whole or in part to the purchase price of

5 such property shall provide the lessor or secured creditor

6 reasonable evidence of the maintenance of any required

7 insurance coverage with respect to the use or ownership

8 of such property and continue to do so for so long as the

9 debtor retains possession of such property.’’.

10 SEC. 310. LIMITATION ON LUXURY GOODS.

11 Section 523(a)(2)(C) of title 11, United States Code,

12 is amended to read as follows:

13 ‘‘(C)(i) for purposes of subparagraph (A)—

14 ‘‘(I) consumer debts owed to a single cred15 itor and aggregating more than $250 for luxury

16 goods or services incurred by an individual

17 debtor on or within 90 days before the order for

18 relief under this title are presumed to be non19 dischargeable; and

20 ‘‘(II) cash advances aggregating more than

21 $750 that are extensions of consumer credit

22 under an open end credit plan obtained by an

23 individual debtor on or within 70 days before

24 the order for relief under this title, are pre25 sumed to be nondischargeable; and
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•S 3186 IS

1 ‘‘(ii) for purposes of this subparagraph—

2 ‘‘(I) the term ‘extension of credit under an

3 open end credit plan’ means an extension of

4 credit under an open end credit plan, within the

5 meaning of the Consumer Credit Protection Act

6 (15 U.S.C. 1601 et seq.);

7 ‘‘(II) the term ‘open end credit plan’ has

8 the meaning given that term under section 103

9 of Consumer Credit Protection Act (15 U.S.C.

10 1602); and

11 ‘‘(III) the term ‘luxury goods or services’

12 does not include goods or services reasonably

13 necessary for the support or maintenance of the

14 debtor or a dependent of the debtor.’’.

15 SEC. 311. AUTOMATIC STAY.

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

17 amended by inserting after paragraph (21), as added by

18 this Act, the following:

19 ‘‘(22) under subsection (a)(3), of the continu20 ation of any eviction, unlawful detainer action, or

21 similar proceeding by a lessor against a debtor in22 volving residential real property in which the debtor

23 resides as a tenant under a rental agreement;

24 ‘‘(23) under subsection (a)(3), of the com25 mencement of any eviction, unlawful detainer action,
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•S 3186 IS

1 or similar proceeding by a lessor against a debtor in2 volving residential real property in which the debtor

3 resides as a tenant under a rental agreement that

4 has terminated under the lease agreement or appli5 cable State law;

6 ‘‘(24) under subsection (a)(3), of eviction ac7 tions based on endangerment to property or person

8 or the use of illegal drugs;

9 ‘‘(25) under subsection (a) of any transfer that

10 is not avoidable under section 544 and that is not

11 avoidable under section 549;’’.

12 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY

13 DISCHARGES.

14 Title 11, United States Code, is amended—

15 (1) in section 727(a)(8), by striking ‘‘six’’ and

16 inserting ‘‘8’’; and

17 (2) in section 1328, by inserting after sub18 section (e) the following:

19 ‘‘(f) Notwithstanding subsections (a) and (b), the

20 court shall not grant a discharge of all debts provided for

21 by the plan or disallowed under section 502 if the debtor

22 has received a discharge in any case filed under this title

23 within 5 years before the order for relief under this chap24 ter.’’.
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1 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN2 TIQUES.

3 (a) DEFINITION.—Section 522(f) of title 11, United

4 States Code, is amended by adding at the end the fol5 lowing:

6 ‘‘(4)(A) Subject to subparagraph (B), for purposes

7 of paragraph (1)(B), the term ‘household goods’ means—

8 ‘‘(i) clothing;

9 ‘‘(ii) furniture;

10 ‘‘(iii) appliances;

11 ‘‘(iv) 1 radio;

12 ‘‘(v) 1 television;

13 ‘‘(vi) 1 VCR;

14 ‘‘(vii) linens;

15 ‘‘(viii) china;

16 ‘‘(ix) crockery;

17 ‘‘(x) kitchenware;

18 ‘‘(xi) educational materials and educational

19 equipment primarily for the use of minor dependent

20 children of the debtor, but only 1 personal computer

21 only if used primarily for the education or entertain22 ment of such minor children;

23 ‘‘(xii) medical equipment and supplies;

24 ‘‘(xiii) furniture exclusively for the use of minor

25 children, or elderly or disabled dependents of the

26 debtor; and
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1 ‘‘(xiv) personal effects (including the toys and

2 hobby equipment of minor dependent children and

3 wedding rings) of the debtor and the dependents of

4 the debtor.

5 ‘‘(B) The term ‘household goods’ does not include—

6 ‘‘(i) works of art (unless by or of the debtor or

7 the dependents of the debtor);

8 ‘‘(ii) electronic entertainment equipment (except

9 1 television, 1 radio, and 1 VCR);

10 ‘‘(iii) items acquired as antiques;

11 ‘‘(iv) jewelry (except wedding rings); and

12 ‘‘(v) a computer (except as otherwise provided

13 for in this section), motor vehicle (including a trac14 tor or lawn tractor), boat, or a motorized rec15 reational device, conveyance, vehicle, watercraft, or

16 aircraft.’’.

17 (b) STUDY.—Not later than 2 years after the date

18 of enactment of this Act, the Director of the Executive

19 Office for United States Trustees shall submit a report

20 to the Committee on the Judiciary of the Senate and the

21 Committee on the Judiciary of the House of Representa22 tives containing its findings regarding utilization of the

23 definition of household goods, as defined in section

24 522(f)(4) of title 11, United States Code, as added by this

25 section, with respect to the avoidance of nonpossessory,
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1 nonpurchase money security interests in household goods

2 under section 522(f)(1)(B) of title 11, United States Code,

3 and the impact that section 522(f)(4) of that title, as

4 added by this section, has had on debtors and on the bank5 ruptcy courts. Such report may include recommendations

6 for amendments to section 522(f)(4) of title 11, United

7 States Code, consistent with the Director’s findings.

8 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE

9 DEBTS.

10 (a) IN GENERAL.—Section 523(a) of title 11, United

11 States Code, is amended by inserting after paragraph (14)

12 the following:

13 ‘‘(14A) incurred to pay a tax to a governmental

14 unit, other than the United States, that would be

15 nondischargeable under paragraph (1);’’.

16 (b) DISCHARGE UNDER CHAPTER 13.—Section

17 1328(a) of title 11, United States Code, is amended by

18 striking paragraphs (1) through (3) and inserting the fol19 lowing:

20 ‘‘(1) provided for under section 1322(b)(5);

21 ‘‘(2) of the kind specified in paragraph (2), (3),

22 (4), (5), (8), or (9) of section 523(a);

23 ‘‘(3) for restitution, or a criminal fine, included

24 in a sentence on the debtor’s conviction of a crime;

25 or
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1 ‘‘(4) for restitution, or damages, awarded in a

2 civil action against the debtor as a result of willful

3 or malicious injury by the debtor that caused per4 sonal injury to an individual or the death of an indi5 vidual.’’.

6 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7

7 AND 13 CASES.

8 (a) NOTICE.—Section 342 of title 11, United States

9 Code, as amended by this Act, is amended—

10 (1) in subsection (c)—

11 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’;

12 (B) by striking ‘‘, but the failure of such

13 notice to contain such information shall not in14 validate the legal effect of such notice’’; and

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

16 ‘‘(2) If, within the 90 days prior to the date of

17 the filing of a petition in a voluntary case, the cred18 itor supplied the debtor in at least 2 communications

19 sent to the debtor with the current account number

20 of the debtor and the address at which the creditor

21 wishes to receive correspondence, then the debtor

22 shall send any notice required under this title to the

23 address provided by the creditor and such notice

24 shall include the account number. In the event the

25 creditor would be in violation of applicable nonbank-
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1 ruptcy law by sending any such communication with2 in such 90-day period and if the creditor supplied

3 the debtor in the last 2 communications with the

4 current account number of the debtor and the ad5 dress at which the creditor wishes to receive cor6 respondence, then the debtor shall send any notice

7 required under this title to the address provided by

8 the creditor and such notice shall include the ac9 count number.’’; and

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

11 ‘‘(e) At any time, a creditor, in a case of an individual

12 debtor under chapter 7 or 13, may file with the court and

13 serve on the debtor a notice of the address to be used to

14 notify the creditor in that case. Five days after receipt

15 of such notice, if the court or the debtor is required to

16 give the creditor notice, such notice shall be given at that

17 address.

18 ‘‘(f) An entity may file with the court a notice stating

19 its address for notice in cases under chapters 7 and 13.

20 After 30 days following the filing of such notice, any notice

21 in any case filed under chapter 7 or 13 given by the court

22 shall be to that address unless specific notice is given

23 under subsection (e) with respect to a particular case.

24 ‘‘(g)(1) Notice given to a creditor other than as pro25 vided in this section shall not be effective notice until that
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1 notice has been brought to the attention of the creditor.

2 If the creditor designates a person or department to be

3 responsible for receiving notices concerning bankruptcy

4 cases and establishes reasonable procedures so that bank5 ruptcy notices received by the creditor are to be delivered

6 to such department or person, notice shall not be consid7 ered to have been brought to the attention of the creditor

8 until received by such person or department.

9 ‘‘(2) No sanction under section 362(k) or any other

10 sanction that a court may impose on account of violations

11 of the stay under section 362(a) or failure to comply with

12 section 542 or 543 may be imposed on any action of the

13 creditor unless the action takes place after the creditor

14 has received notice of the commencement of the case effec15 tive under this section.’’.

16 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

17 United States Code, as amended by this Act, is

18 amended—

19 (1) in subsection (a), as so designated by this

20 Act, by striking paragraph (1) and inserting the fol21 lowing:

22 ‘‘(1) file—

23 ‘‘(A) a list of creditors; and

24 ‘‘(B) unless the court orders otherwise—
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1 ‘‘(i) a schedule of assets and liabil2 ities;

3 ‘‘(ii) a schedule of current income and

4 current expenditures;

5 ‘‘(iii) a statement of the debtor’s fi6 nancial affairs and, if applicable, a

7 certificate—

8 ‘‘(I) of an attorney whose name

9 is on the petition as the attorney for

10 the debtor or any bankruptcy petition

11 preparer signing the petition under

12 section 110(b)(1) indicating that such

13 attorney or bankruptcy petition pre14 parer delivered to the debtor any no15 tice required by section 342(b); or

16 ‘‘(II) if no attorney for the debt17 or is indicated and no bankruptcy pe18 tition preparer signed the petition, of

19 the debtor that such notice was ob20 tained and read by the debtor;

21 ‘‘(iv) copies of all payment advices or

22 other evidence of payment, if any, received

23 by the debtor from any employer of the

24 debtor in the period 60 days before the fil25 ing of the petition;
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1 ‘‘(v) a statement of the amount of

2 monthly net income, itemized to show how

3 the amount is calculated; and

4 ‘‘(vi) a statement disclosing any rea5 sonably anticipated increase in income or

6 expenditures over the 12-month period fol7 lowing the date of filing;’’; and

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

9 ‘‘(e)(1) At any time, a creditor, in the case of an indi10 vidual under chapter 7 or 13, may file with the court no11 tice that the creditor requests the petition, schedules, and

12 a statement of affairs filed by the debtor in the case, and

13 the court shall make those documents available to the

14 creditor who requests those documents.

15 ‘‘(2)(A) The debtor shall provide either a tax return

16 or transcript at the election of the debtor, for the latest

17 taxable period prior to filing for which a tax return has

18 been or should have been filed, to the trustee, not later

19 than 7 days before the date first set for the first meeting

20 of creditors, or the case shall be dismissed, unless the

21 debtor demonstrates that the failure to file a return as

22 required is due to circumstances beyond the control of the

23 debtor.

24 ‘‘(B) If a creditor has requested a tax return or tran25 script referred to in subparagraph (A), the debtor shall
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1 provide such tax return or transcript to the requesting

2 creditor at the time the debtor provides the tax return or

3 transcript to the trustee, or the case shall be dismissed,

4 unless the debtor demonstrates that the debtor is unable

5 to provide such information due to circumstances beyond

6 the control of the debtor.

7 ‘‘(3)(A) At any time, a creditor in a case under chap8 ter 13 may file with the court notice that the creditor re9 quests the plan filed by the debtor in the case.

10 ‘‘(B) The court shall make such plan available to the

11 creditor who request such plan—

12 ‘‘(i) at a reasonable cost; and

13 ‘‘(ii) not later than 5 days after such request.

14 ‘‘(f) An individual debtor in a case under chapter 7,

15 11, or 13 shall file with the court at the request of any

16 party in interest—

17 ‘‘(1) at the time filed with the taxing authority,

18 all tax returns required under applicable law, includ19 ing any schedules or attachments, with respect to

20 the period from the commencement of the case until

21 such time as the case is closed;

22 ‘‘(2) at the time filed with the taxing authority,

23 all tax returns required under applicable law, includ24 ing any schedules or attachments, that were not

25 filed with the taxing authority when the schedules
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1 under subsection (a)(1) were filed with respect to

2 the period that is 3 years before the order of relief;

3 ‘‘(3) any amendments to any of the tax returns,

4 including schedules or attachments, described in

5 paragraph (1) or (2); and

6 ‘‘(4) in a case under chapter 13, a statement

7 subject to the penalties of perjury by the debtor of

8 the debtor’s income and expenditures in the pre9 ceding tax year and monthly income, that shows how

10 the amounts are calculated—

11 ‘‘(A) beginning on the date that is the

12 later of 90 days after the close of the debtor’s

13 tax year or 1 year after the order for relief, un14 less a plan has been confirmed; and

15 ‘‘(B) thereafter, on or before the date that

16 is 45 days before each anniversary of the con17 firmation of the plan until the case is closed.

18 ‘‘(g)(1) A statement referred to in subsection (f)(4)

19 shall disclose—

20 ‘‘(A) the amount and sources of income of the

21 debtor;

22 ‘‘(B) the identity of any person responsible with

23 the debtor for the support of any dependent of the

24 debtor; and
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1 ‘‘(C) the identity of any person who contrib2 uted, and the amount contributed, to the household

3 in which the debtor resides.

4 ‘‘(2) The tax returns, amendments, and statement of

5 income and expenditures described in subsection (e)(2)(A)

6 and subsection (f) shall be available to the United States

7 trustee, any bankruptcy administrator, any trustee, and

8 any party in interest for inspection and copying, subject

9 to the requirements of subsection (h).

10 ‘‘(h)(1) Not later than 180 days after the date of en11 actment of the Bankruptcy Reform Act of 2000, the Di12 rector of the Administrative Office of the United States

13 Courts shall establish procedures for safeguarding the con14 fidentiality of any tax information required to be provided

15 under this section.

16 ‘‘(2) The procedures under paragraph (1) shall in17 clude restrictions on creditor access to tax information

18 that is required to be provided under this section.

19 ‘‘(3) Not later than 1 year and 180 days after the

20 date of enactment of the Bankruptcy Reform Act of 2000,

21 the Director of the Administrative Office of the United

22 States Courts shall prepare and submit to Congress a re23 port that—

24 ‘‘(A) assesses the effectiveness of the proce25 dures under paragraph (1); and
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1 ‘‘(B) if appropriate, includes proposed legisla2 tion to—

3 ‘‘(i) further protect the confidentiality of

4 tax information; and

5 ‘‘(ii) provide penalties for the improper use

6 by any person of the tax information required

7 to be provided under this section.

8 ‘‘(i) If requested by the United States trustee or a

9 trustee serving in the case, the debtor shall provide—

10 ‘‘(1) a document that establishes the identity of

11 the debtor, including a driver’s license, passport, or

12 other document that contains a photograph of the

13 debtor; and

14 ‘‘(2) such other personal identifying information

15 relating to the debtor that establishes the identity of

16 the debtor.’’.

17 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED18 ULES OR PROVIDE REQUIRED INFORMATION.

19 Section 521 of title 11, United States Code, as

20 amended by this Act, is amended by adding at the end

21 the following:

22 ‘‘(j)(1) Notwithstanding section 707(a), and subject

23 to paragraph (2), if an individual debtor in a voluntary

24 case under chapter 7 or 13 fails to file all of the informa25 tion required under subsection (a)(1) within 45 days after
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1 the filing of the petition commencing the case, the case

2 shall be automatically dismissed effective on the 46th day

3 after the filing of the petition.

4 ‘‘(2) With respect to a case described in paragraph

5 (1), any party in interest may request the court to enter

6 an order dismissing the case. If requested, the court shall

7 enter an order of dismissal not later than 5 days after

8 such request.

9 ‘‘(3) Upon request of the debtor made within 45 days

10 after the filing of the petition commencing a case de11 scribed in paragraph (1), the court may allow the debtor

12 an additional period of not to exceed 45 days to file the

13 information required under subsection (a)(1) if the court

14 finds justification for extending the period for the filing.’’.

15 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON

16 CONFIRMATION OF THE PLAN.

17 Section 1324 of title 11, United States Code, is

18 amended—

19 (1) by striking ‘‘After’’ and inserting the fol20 lowing:

21 ‘‘(a) Except as provided in subsection (b) and after’’;

22 and

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

24 ‘‘(b) The hearing on confirmation of the plan may

25 be held not earlier than 20 days and not later than 45
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1 days after the date of the meeting of creditors under sec2 tion 341(a).’’.

3 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION

4 IN CERTAIN CASES.

5 Title 11, United States Code, is amended—

6 (1) by amending section 1322(d) to read as fol7 lows:

8 ‘‘(d)(1) If the current monthly income of the debtor

9 and the debtor’s spouse combined, when multiplied by 12,

10 is not less than—

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

12 1 person, the median family income of the applicable

13 State for 1 earner last reported by the Bureau of

14 the Census;

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

16 2, 3, or 4 individuals, the highest median family in17 come of the applicable State for a family of the same

18 number or fewer individuals last reported by the Bu19 reau of the Census; or

20 ‘‘(C) in the case of a debtor in a household ex21 ceeding 4 individuals, the highest median family in22 come of the applicable State for a family of 4 or

23 fewer individuals last reported by the Bureau of the

24 Census, plus $525 per month for each individual in

25 excess of 4,
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1 the plan may not provide for payments over a period that

2 is longer than 5 years.

3 ‘‘(2) If the current monthly income of the debtor and

4 the debtor’s spouse combined, when multiplied by 12, is

5 less than—

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

7 1 person, the median family income of the applicable

8 State for 1 earner last reported by the Bureau of

9 the Census;

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

11 2, 3, or 4 individuals, the highest median family in12 come of the applicable State for a family of the same

13 number or fewer individuals last reported by the Bu14 reau of the Census; or

15 ‘‘(C) in the case of a debtor in a household ex16 ceeding 4 individuals, the highest median family in17 come of the applicable State for a family of 4 or

18 fewer individuals last reported by the Bureau of the

19 Census, plus $525 per month for each individual in

20 excess of 4,

21 the plan may not provide for payments over a period that

22 is longer than 3 years, unless the court, for cause, ap23 proves a longer period, but the court may not approve a

24 period that is longer than 5 years.’’;
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1 (2) in section 1325(b)(1)(B), by striking

2 ‘‘three-year period’’ and inserting ‘‘applicable com3 mitment period’’; and

4 (3) in section 1325(b), as amended by this Act,

5 by adding at the end the following:

6 ‘‘(4) For purposes of this subsection, the ‘applicable com7 mitment period’—

8 ‘‘(A) subject to subparagraph (B), shall be—

9 ‘‘(i) 3 years; or

10 ‘‘(ii) not less than 5 years, if the current

11 monthly income of the debtor and the debtor’s

12 spouse combined, when multiplied by 12, is not

13 less than—

14 ‘‘(I) in the case of a debtor in a

15 household of 1 person, the median family

16 income of the applicable State for 1 earner

17 last reported by the Bureau of the Census;

18 ‘‘(II) in the case of a debtor in a

19 household of 2, 3, or 4 individuals, the

20 highest median family income of the appli21 cable State for a family of the same num22 ber or fewer individuals last reported by

23 the Bureau of the Census; or

24 ‘‘(III) in the case of a debtor in a

25 household exceeding 4 individuals, the
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1 highest median family income of the appli2 cable State for a family of 4 or fewer indi3 viduals last reported by the Bureau of the

4 Census, plus $525 per month for each in5 dividual in excess of 4; and

6 ‘‘(B) may be less than 3 or 5 years, whichever

7 is applicable under subparagraph (A), but only if the

8 plan provides for payment in full of all allowed unse9 cured claims over a shorter period.’’; and

10 (4) in section 1329(c), by striking ‘‘three

11 years’’ and inserting ‘‘the applicable commitment pe12 riod under section 1325(b)(1)(B)’’.

13 SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF

14 RULE 9011 OF THE FEDERAL RULES OF BANK15 RUPTCY PROCEDURE.

16 It is the sense of Congress that rule 9011 of the Fed17 eral Rules of Bankruptcy Procedure (11 U.S.C. App.)

18 should be modified to include a requirement that all docu19 ments (including schedules), signed and unsigned, sub20 mitted to the court or to a trustee by debtors who rep21 resent themselves and debtors who are represented by an

22 attorney be submitted only after the debtor or the debtor’s

23 attorney has made reasonable inquiry to verify that the

24 information contained in such documents is—

25 (1) well grounded in fact; and
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1 (2) warranted by existing law or a good-faith

2 argument for the extension, modification, or reversal

3 of existing law.

4 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL

5 CASES.

6 Section 362(e) of title 11, United States Code, is

7 amended—

8 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

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

10 ‘‘(2) Notwithstanding paragraph (1), in the case of

11 an individual filing under chapter 7, 11, or 13, the stay

12 under subsection (a) shall terminate on the date that is

13 60 days after a request is made by a party in interest

14 under subsection (d), unless—

15 ‘‘(A) a final decision is rendered by the court

16 during the 60-day period beginning on the date of

17 the request; or

18 ‘‘(B) that 60-day period is extended—

19 ‘‘(i) by agreement of all parties in interest;

20 or

21 ‘‘(ii) by the court for such specific period

22 of time as the court finds is required for good

23 cause, as described in findings made by the

24 court.’’.
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1 SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.

2 (a) PROPERTY OF THE ESTATE.—

3 (1) IN GENERAL.—Subchapter I of chapter 11

4 of title 11, United States Code, is amended by add5 ing at the end the following:

6 ‘‘§ 1115. Property of the estate

7 ‘‘(a) In a case concerning an individual debtor, prop8 erty of the estate includes, in addition to the property

9 specified in section 541—

10 ‘‘(1) all property of the kind specified in section

11 541 that the debtor acquires after the commence12 ment of the case but before the case is closed, dis13 missed, or converted to a case under chapter 7, 12,

14 or 13, whichever occurs first; and

15 ‘‘(2) earnings from services performed by the

16 debtor after the commencement of the case but be17 fore the case is closed, dismissed, or converted to a

18 case under chapter 7, 12, or 13, whichever occurs

19 first.’’.

20 ‘‘(b) Except as provided in section 1104 or a con21 firmed plan or order confirming a plan, the debtor shall

22 remain in possession of all property of the estate.’’.

23 (2) CLERICAL AMENDMENT.—The table of sec24 tions for chapter 11 of title 11, United States Code,
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1 is amended by adding at the end of the matter relat2 ing to subchapter I the following:

‘‘1115. Property of the estate.’’.

3 (b) CONTENTS OF PLAN.—Section 1123(a) of title

4 11, United States Code, is amended—

5 (1) in paragraph (6), by striking ‘‘and’’ at the

6 end;

7 (2) in paragraph (7), by striking the period and

8 inserting ‘‘; and’’; and

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

10 ‘‘(8) in a case concerning an individual, provide

11 for the payment to creditors through the plan of all

12 or such portion of earnings from personal services

13 performed by the debtor after the commencement of

14 the case or other future income of the debtor as is

15 necessary for the execution of the plan.’’.

16 (c) CONFIRMATION OF PLAN.—

17 (1) REQUIREMENTS RELATING TO VALUE OF

18 PROPERTY.—Section 1129(a) of title 11, United

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

20 following:

21 ‘‘(15) In a case concerning an individual in

22 which the holder of an allowed unsecured claim ob23 jects to the confirmation of the plan—

24 ‘‘(A) the value of the property to be dis25 tributed under the plan on account of such
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1 claim is, as of the effective date of the plan, not

2 less than the amount of such claim; or

3 ‘‘(B) the value of the property to be dis4 tributed under the plan is not less than the

5 debtor’s projected disposable income (as that

6 term is defined in section 1325(b)(2)) to be re7 ceived during the 5-year period beginning on

8 the date that the first payment is due under the

9 plan, or during the term of the plan, whichever

10 is longer.’’.

11 (2) REQUIREMENT RELATING TO INTERESTS IN

12 PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11,

13 United States Code, is amended by inserting before

14 the period at the end the following: ‘‘, except that

15 in a case concerning an individual, the debtor may

16 retain property included in the estate under section

17 1115, subject to the requirements of subsection

18 (a)(14)’’.

19 (d) EFFECT OF CONFIRMATION—Section 1141(d) of

20 title 11, United States Code, is amended—

21 (1) in paragraph (2), by striking ‘‘The con22 firmation of a plan does not discharge an individual

23 debtor’’ and inserting ‘‘A discharge under this chap24 ter does not discharge a debtor’’; and

25 (2) by adding at the end the following:
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1 ‘‘(5) In a case concerning an individual—

2 ‘‘(A) except as otherwise ordered for cause

3 shown, the discharge is not effective until completion

4 of all payments under the plan; and

5 ‘‘(B) at any time after the confirmation of the

6 plan and after notice and a hearing, the court may

7 grant a discharge to a debtor that has not completed

8 payments under the plan only if—

9 ‘‘(i) for each allowed unsecured claim, the

10 value, as of the effective date of the plan, of

11 property actually distributed under the plan on

12 account of that claim is not less than the

13 amount that would have been paid on such

14 claim if the estate of the debtor had been liq15 uidated under chapter 7 of this title on such

16 date; and

17 ‘‘(ii) modification of the plan under 1127

18 of this title is not practicable.’’.

19 (e) MODIFICATION OF PLAN.—Section 1127 of title

20 11, United States Code, is amended by adding at the end

21 the following:

22 ‘‘(e) In a case concerning an individual, the plan may

23 be modified at any time after confirmation of the plan but

24 before the completion of payments under the plan, whether

25 or not the plan has been substantially consummated, upon
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1 request of the debtor, the trustee, the United States trust2 ee, or the holder of an allowed unsecured claim, to—

3 ‘‘(1) increase or reduce the amount of payments

4 on claims of a particular class provided for by the

5 plan;

6 ‘‘(2) extend or reduce the time period for such

7 payments; or

8 ‘‘(3) alter the amount of the distribution to a

9 creditor whose claim is provided for by the plan to

10 the extent necessary to take account of any payment

11 of such claim made other than under the plan.

12 ‘‘(f)(1) Sections 1121 through 1128 of this title and

13 the requirements of section 1129 of this title apply to any

14 modification under subsection (a).

15 ‘‘(2) The plan, as modified, shall become the plan

16 only after there has been disclosure under section 1125,

17 as the court may direct, notice and a hearing, and such

18 modification is approved.’’.

19 SEC. 322. LIMITATION.

20 (a) EXEMPTIONS.—Section 522 of title 11, United

21 States Code, as amended by this Act, is amended by add22 ing at the end the following:

23 ‘‘(p)(1) Except as provided in paragraph (2) of this

24 subsection and sections 544 and 548 of this title, as a

25 result of electing under subsection (b)(3)(A) to exempt
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1 property under State or local law, a debtor may not ex2 empt any amount of interest that was acquired by the

3 debtor during the 2-year period preceding the filing of the

4 petition which exceeds in the aggregate $100,000 in value

5 in—

6 ‘‘(A) real or personal property that the debtor

7 or a dependent of the debtor uses as a residence;

8 ‘‘(B) a cooperative that owns property that the

9 debtor or a dependent of the debtor uses as a resi10 dence; or

11 ‘‘(C) a burial plot for the debtor or a dependent

12 of the debtor.

13 ‘‘(2)(A) The limitation under paragraph (1) shall not

14 apply to an exemption claimed under subsection (b)(3)(A)

15 by a family farmer for the principal residence of that

16 farmer.

17 ‘‘(B) For purposes of paragraph (1), any amount of

18 such interest does not include any interest transferred

19 from a debtor’s previous principal residence (which was

20 acquired prior to the beginning of the 2-year period) into

21 the debtor’s current principal residence, where the debt22 or’s previous and current residences are located in the

23 same State.’’.

24 (b) ADJUSTMENT OF DOLLAR AMOUNTS.—Section

25 104(b) of title 11, United States Code, is amended—
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1 (1) in paragraph (1), by striking ‘‘522(d),’’ and

2 inserting ‘‘522(d), 522(n), 522(p),’’; and

3 (2) in paragraph (3), by striking ‘‘522(d),’’ and

4 inserting ‘‘522(d), 522(n), 522(p),’’.

5 SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI6 PANT CONTRIBUTIONS AND OTHER PROP7 ERTY FROM THE ESTATE.

8 (a) IN GENERAL.—Section 541(b) of title 11, United

9 States Code, is amended by inserting after paragraph (6),

10 as added by this Act, the following:

11 ‘‘(7) any amount—

12 ‘‘(A) withheld by an employer from the

13 wages of employees for payment as contribu14 tions to—

15 ‘‘(i) an employee benefit plan subject

16 to title I of the Employee Retirement In17 come Security Act of 1974 (29 U.S.C.

18 1001 et seq.) or under an employee benefit

19 plan which is a governmental plan under

20 section 414(d) of the Internal Revenue

21 Code of 1986, a deferred compensation

22 plan under section 457 of the Internal

23 Revenue Code of 1986, or a tax-deferred

24 annuity under section 403(b) of the Inter25 nal Revenue Code of 1986, except that
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1 amount shall not constitute disposable in2 come, as defined in section 1325(b)(2) of

3 this title; or

4 ‘‘(ii) a health insurance plan regulated

5 by State law whether or not subject to

6 such title; or

7 ‘‘(B) received by the employer from em8 ployees for payment as contributions to—

9 ‘‘(i) an employee benefit plan subject

10 to title I of the Employee Retirement In11 come Security Act of 1974 (29 U.S.C.

12 1001 et seq.) or under an employee benefit

13 plan which is a governmental plan under

14 section 414(d) of the Internal Revenue

15 Code of 1986, a deferred compensation

16 plan under section 457 of the Internal

17 Revenue Code of 1986, or a tax-deferred

18 annuity under section 403(b) of the Inter19 nal Revenue Code of 1986, except that

20 amount shall not constitute disposable in21 come, as defined in section 1325(b)(2) of

22 this title; or

23 ‘‘(ii) a health insurance plan regulated

24 by State law whether or not subject to

25 such title;’’.
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1 (b) APPLICATION OF AMENDMENT.—The amend2 ments made by this section shall not apply to cases com3 menced under title 11, United States Code, before the ex4 piration of the 180-day period beginning on the date of

5 enactment of this Act.

6 SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV7 ING BANKRUPTCY PROFESSIONALS.

8 (a) IN GENERAL.—Section 1334 of title 28, United

9 States Code, is amended—

10 (1) in subsection (b), by striking ‘‘Notwith11 standing’’ and inserting ‘‘Except as provided in sub12 section (e)(2), and notwithstanding’’; and

13 (2) by striking subsection (e) and inserting the

14 following:

15 ‘‘(e) The district court in which a case under title

16 11 is commenced or is pending shall have exclusive

17 jurisdiction—

18 ‘‘(1) of all the property, wherever located, of the

19 debtor as of the date of commencement of such case,

20 and of property of the estate; and

21 ‘‘(2) over all claims or causes of action that in22 volve construction of section 327 of title 11, United

23 States Code, or rules relating to disclosure require24 ments under section 327.’’.
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1 (b) APPLICABILITY.—This section shall only apply to

2 cases filed after the date of enactment of this Act.

3 SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE

4 INCREASE.

5 (a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE 11,

6 UNITED STATES CODE.—Section 1930(a) of title 28,

7 United States Code, is amended by striking paragraph (1)

8 and inserting the following:

9 ‘‘(1) For a case commenced—

10 ‘‘(A) under chapter 7 of title 11, $160; or

11 ‘‘(B) under chapter 13 of title 11, $150.’’.

12 (b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec13 tion 589a(b) of title 28, United States Code, is amended—

14 (1) by striking paragraph (1) and inserting the

15 following:

16 ‘‘(1)(A) 40.63 percent of the fees collected

17 under section 1930(a)(1)(A) of this title in cases

18 commenced under chapter 7 of title 11; and

19 ‘‘(B) 70.00 percent of the fees collected under

20 section 1930(a)(1)(B) of this title in cases com21 menced under chapter 13 of title 11;’’;

22 (2) in paragraph (2), by striking ‘‘one-half’’

23 and inserting ‘‘three-fourths’’; and

24 (3) in paragraph (4), by striking ‘‘one-half’’

25 and inserting ‘‘100 percent’’.
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1 (c) COLLECTION AND DEPOSIT OF MISCELLANEOUS

2 BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap3 propriations Act, 1990 (28 U.S.C. 1931 note) is amended

4 by striking ‘‘pursuant to 28 U.S.C. section 1930(b) and

5 30.76 per centum of the fees hereafter collected under 28

6 U.S.C. section 1930(a)(1) and 25 percent of the fees here7 after collected under 28 U.S.C. section 1930(a)(3) shall

8 be deposited as offsetting receipts to the fund established

9 under 28 U.S.C. section 1931’’ and inserting ‘‘under sec10 tion 1930(b) of title 28, United States Code, and 31.25

11 percent of the fees collected under section 1930(a)(1)(A)

12 of that title, 30.00 percent of the fees collected under sec13 tion 1930(a)(1)(B) of that title, and 25 percent of the fees

14 collected under section 1930(a)(3) of that title shall be

15 deposited as offsetting receipts to the fund established

16 under section 1931 of that title’’.

17 SEC. 326. SHARING OF COMPENSATION.

18 Section 504 of title 11, United States Code, is

19 amended by adding at the end the following:

20 ‘‘(c) This section shall not apply with respect to shar21 ing, or agreeing to share, compensation with a bona fide

22 public service attorney referral program that operates in

23 accordance with non-Federal law regulating attorney re24 ferral services and with rules of professional responsibility

25 applicable to attorney acceptance of referrals.’’.
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1 SEC. 327. FAIR VALUATION OF COLLATERAL.

2 Section 506(a) of title 11, United States Code, is

3 amended by—

4 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; and

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

6 ‘‘(2) In the case of an individual debtor under chap7 ters 7 and 13, such value with respect to personal property

8 securing an allowed claim shall be determined based on

9 the replacement value of such property as of the date of

10 filing the petition without deduction for costs of sale or

11 marketing. With respect to property acquired for personal,

12 family, or household purpose, replacement value shall

13 mean the price a retail merchant would charge for prop14 erty of that kind considering the age and condition of the

15 property at the time value is determined.’’.

16 SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA17 TIONS.

18 (a) EXECUTORY CONTRACTS AND UNEXPIRED

19 LEASES.—Section 365 of title 11, United States Code, is

20 amended—

21 (1) in subsection (b)—

22 (A) in paragraph (1)(A), by striking the

23 semicolon at the end and inserting the fol24 lowing: ‘‘other than a default that is a breach

25 of a provision relating to the satisfaction of any

26 provision (other than a penalty rate or penalty
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1 provision) relating to a default arising from any

2 failure to perform nonmonetary obligations

3 under an unexpired lease of real property, if it

4 is impossible for the trustee to cure such de5 fault by performing nonmonetary acts at and

6 after the time of assumption, except that if

7 such default arises from a failure to operate in

8 accordance with a nonresidential real property

9 lease, then such default shall be cured by per10 formance at and after the time of assumption

11 in accordance with such lease, and pecuniary

12 losses resulting from such default shall be com13 pensated in accordance with the provisions of

14 paragraph (b)(l);’’; and

15 (B) in paragraph (2)(D), by striking ‘‘pen16 alty rate or provision’’ and inserting ‘‘penalty

17 rate or penalty provision’’;

18 (2) in subsection (c)—

19 (A) in paragraph (2), by inserting ‘‘or’’ at

20 the end;

21 (B) in paragraph (3), by striking ‘‘; or’’ at

22 the end and inserting a period; and

23 (C) by striking paragraph (4);

24 (3) in subsection (d)—
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1 (A) by striking paragraphs (5) through

2 (9); and

3 (B) by redesignating paragraph (10) as

4 paragraph (5); and

5 (4) in subsection (f)(1) by striking ‘‘; except

6 that’’ and all that follows through the end of the

7 paragraph and inserting a period.

8 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec9 tion 1124(2) of title 11, United States Code, is

10 amended—

11 (1) in subparagraph (A), by inserting ‘‘or of a

12 kind that section 365(b)(2) of this title expressly

13 does not require to be cured’’ before the semicolon

14 at the end;

15 (2) in subparagraph (C), by striking ‘‘and’’ at

16 the end;

17 (3) by redesignating subparagraph (D) as sub18 paragraph (E); and

19 (4) by inserting after subparagraph (C) the fol20 lowing:

21 ‘‘(D) if such claim or such interest arises

22 from any failure to perform a nonmonetary ob23 ligation, other than a default arising from fail24 ure to operate a non-residential real property

25 lease subject to section 365(b)(1)(A), com-
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1 pensates the holder of such claim or such inter2 est (other than the debtor or an insider) for any

3 actual pecuniary loss incurred by such holder as

4 a result of such failure; and’’.

5 TITLE IV—GENERAL AND SMALL

6 BUSINESS BANKRUPTCY PRO7 VISIONS

8 Subtitle A—General Business

9 Bankruptcy Provisions

10 SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.

11 (a) DEFINITION.—Section 101 of title 11, United

12 States Code, as amended by this Act, is amended by in13 serting after paragraph (48) the following:

14 ‘‘(48A) ‘securities self regulatory organization’

15 means either a securities association registered with

16 the Securities and Exchange Commission under sec17 tion 15A of the Securities Exchange Act of 1934 (15

18 U.S.C. 78o–3) or a national securities exchange reg19 istered with the Securities and Exchange Commis20 sion under section 6 of the Securities Exchange Act

21 of 1934 (15 U.S.C. 78f);’’.

22 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

23 United States Code, is amended by inserting after para24 graph (25), as added by this Act, the following:

25 ‘‘(26) under subsection (a), of—
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1 ‘‘(A) the commencement or continuation of

2 an investigation or action by a securities self

3 regulatory organization to enforce such organi4 zation’s regulatory power;

5 ‘‘(B) the enforcement of an order or deci6 sion, other than for monetary sanctions, ob7 tained in an action by the securities self regu8 latory organization to enforce such organiza9 tion’s regulatory power; or

10 ‘‘(C) any act taken by the securities self

11 regulatory organization to delist, delete, or

12 refuse to permit quotation of any stock that

13 does not meet applicable regulatory require14 ments;’’.

15 SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY

16 HOLDERS.

17 Section 341 of title 11, United States Code, is

18 amended by adding at the end the following:

19 ‘‘(e) Notwithstanding subsections (a) and (b), the

20 court, on the request of a party in interest and after notice

21 and a hearing, for cause may order that the United States

22 trustee not convene a meeting of creditors or equity secu23 rity holders if the debtor has filed a plan as to which the

24 debtor solicited acceptances prior to the commencement

25 of the case.’’.
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1 SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN2 TEREST.

3 Subparagraphs (A), (B), and (C) of section 547(e)(2)

4 of title 11, United States Code, are each amended by strik5 ing ‘‘10’’ each place it appears and inserting ‘‘30’’.

6 SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED

7 LEASES.

8 (a) IN GENERAL.—Section 365(d)(4) of title 11,

9 United States Code, is amended to read as follows:

10 ‘‘(4)(A) Subject to subparagraph (B), in any case

11 under any chapter of this title, an unexpired lease of non12 residential real property under which the debtor is the les13 see shall be deemed rejected, and the trustee shall imme14 diately surrender that nonresidential real property to the

15 lessor, if the trustee does not assume or reject the unex16 pired lease by the earlier of—

17 ‘‘(i) the date that is 120 days after the date of

18 the order for relief; or

19 ‘‘(ii) the date of the entry of an order con20 firming a plan.

21 ‘‘(B)(i) The court may extend the period determined

22 under subparagraph (A), prior to the expiration of the

23 120-day period, for 90 days upon motion of the trustee

24 or lessor for cause.
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1 ‘‘(ii) If the court grants an extension under clause

2 (i), the court may grant a subsequent extension only upon

3 prior written consent of the lessor in each instance.’’.

4 (b) EXCEPTION.—Section 365(f)(1) of title 11,

5 United States Code, is amended by striking ‘‘subsection’’

6 the first place it appears and inserting ‘‘subsections (b)

7 and’’.

8 SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS

9 COMMITTEES.

10 (a) APPOINTMENT.—Section 1102(a) of title 11,

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

12 following:

13 ‘‘(4) On request of a party in interest and after notice

14 and a hearing, the court may order the United States

15 trustee to change the membership of a committee ap16 pointed under this subsection, if the court determines that

17 the change is necessary to ensure adequate representation

18 of creditors or equity security holders. The court may

19 order the United States trustee to increase the number

20 of members of a committee to include a creditor that is

21 a small business concern (as described in section 3(a)(1)

22 of the Small Business Act (15 U.S.C. 632(a)(1))), if the

23 court determines that the creditor holds claims (of the

24 kind represented by the committee) the aggregate amount
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1 of which, in comparison to the annual gross revenue of

2 that creditor, is disproportionately large.’’.

3 (b) INFORMATION.—Section 1102(b) of title 11,

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

5 following:

6 ‘‘(3) A committee appointed under subsection (a)

7 shall—

8 ‘‘(A) provide access to information for creditors

9 who—

10 ‘‘(i) hold claims of the kind represented by

11 that committee; and

12 ‘‘(ii) are not appointed to the committee;

13 ‘‘(B) solicit and receive comments from the

14 creditors described in subparagraph (A); and

15 ‘‘(C) be subject to a court order that compels

16 any additional report or disclosure to be made to the

17 creditors described in subparagraph (A).’’.

18 SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11,

19 UNITED STATES CODE.

20 Section 546 of title 11, United States Code, is

21 amended—

22 (1) by redesignating the second subsection des23 ignated as subsection (g) (as added by section

24 222(a) of Public Law 103–394) as subsection (i);

25 and
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1 (2) by adding at the end the following:

2 ‘‘(j)(1) Notwithstanding paragraphs (2) and (3) of

3 section 545, the trustee may not avoid a warehouseman’s

4 lien for storage, transportation, or other costs incidental

5 to the storage and handling of goods.

6 ‘‘(2) The prohibition under paragraph (1) shall be ap7 plied in a manner consistent with any applicable State

8 statute that is similar to section 7–209 of the Uniform

9 Commercial Code, as in effect on the date of enactment

10 of the Bankruptcy Reform Act of 2000, or any successor

11 thereto.’’.

12 SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11,

13 UNITED STATES CODE.

14 Section 330(a) of title 11, United States Code, is

15 amended—

16 (1) in paragraph (3)—

17 (A) by striking ‘‘(A) In’’ and inserting

18 ‘‘In’’; and

19 (B) by inserting ‘‘to an examiner, trustee

20 under chapter 11, or professional person’’ after

21 ‘‘awarded’’; and

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

23 ‘‘(7) In determining the amount of reasonable

24 compensation to be awarded to a trustee, the court
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1 shall treat such compensation as a commission,

2 based on section 326 of this title.’’.

3 SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.

4 Section 1125 of title 11, United States Code, is

5 amended by adding at the end the following:

6 ‘‘(g) Notwithstanding subsection (b), an acceptance

7 or rejection of the plan may be solicited from a holder

8 of a claim or interest if such solicitation complies with ap9 plicable nonbankruptcy law and if such holder was solic10 ited before the commencement of the case in a manner

11 complying with applicable nonbankruptcy law.’’.

12 SEC. 409. PREFERENCES.

13 Section 547(c) of title 11, United States Code, is

14 amended—

15 (1) by striking paragraph (2) and inserting the

16 following:

17 ‘‘(2) to the extent that such transfer was in

18 payment of a debt incurred by the debtor in the or19 dinary course of business or financial affairs of the

20 debtor and the transferee, and such transfer was—

21 ‘‘(A) made in the ordinary course of busi22 ness or financial affairs of the debtor and the

23 transferee; or

24 ‘‘(B) made according to ordinary business

25 terms;’’;
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1 (2) in paragraph (8), by striking the period at

2 the end and inserting ‘‘; or’’; and

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

4 ‘‘(9) if, in a case filed by a debtor whose debts

5 are not primarily consumer debts, the aggregate

6 value of all property that constitutes or is affected

7 by such transfer is less than $5,000.’’.

8 SEC. 410. VENUE OF CERTAIN PROCEEDINGS.

9 Section 1409(b) of title 28, United States Code, is

10 amended by inserting ‘‘, or a nonconsumer debt against

11 a noninsider of less than $10,000,’’ after ‘‘$5,000’’.

12 SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

13 Section 1121(d) of title 11, United States Code, is

14 amended—

15 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject

16 to paragraph (2), on’’; and

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

18 ‘‘(2)(A) The 120-day period specified in paragraph

19 (1) may not be extended beyond a date that is 18 months

20 after the date of the order for relief under this chapter.

21 ‘‘(B) The 180-day period specified in paragraph (1)

22 may not be extended beyond a date that is 20 months after

23 the date of the order for relief under this chapter.’’.
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1 SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN2 TERESTS.

3 Section 523(a)(16) of title 11, United States Code,

4 is amended—

5 (1) by striking ‘‘dwelling’’ the first place it ap6 pears;

7 (2) by striking ‘‘ownership or’’ and inserting

8 ‘‘ownership,’’;

9 (3) by striking ‘‘housing’’ the first place it ap10 pears; and

11 (4) by striking ‘‘but only’’ and all that follows

12 through ‘‘such period’’ and inserting ‘‘or a lot in a

13 homeowners association, for as long as the debtor or

14 the trustee has a legal, equitable, or possessory own15 ership interest in such unit, such corporation, or

16 such lot,’’.

17 SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING

18 OF CREDITORS.

19 Section 341(c) of title 11, United States Code, is

20 amended by inserting at the end the following: ‘‘Notwith21 standing any local court rule, provision of a State constitu22 tion, any other Federal or State law that is not a bank23 ruptcy law, or other requirement that representation at

24 the meeting of creditors under subsection (a) be by an at25 torney, a creditor holding a consumer debt or any rep26 resentative of the creditor (which may include an entity
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1 or an employee of an entity and may be a representative

2 for more than 1 creditor) shall be permitted to appear at

3 and participate in the meeting of creditors in a case under

4 chapter 7 or 13, either alone or in conjunction with an

5 attorney for the creditor. Nothing in this subsection shall

6 be construed to require any creditor to be represented by

7 an attorney at any meeting of creditors.’’.

8 SEC. 414. DEFINITION OF DISINTERESTED PERSON.

9 Section 101(14) of title 11, United States Code, is

10 amended to read as follows:

11 ‘‘(14) ‘disinterested person’ means a person

12 that—

13 ‘‘(A) is not a creditor, an equity security

14 holder, or an insider;

15 ‘‘(B) is not and was not, within 2 years be16 fore the date of the filing of the petition, a di17 rector, officer, or employee of the debtor; and

18 ‘‘(C) does not have an interest materially

19 adverse to the interest of the estate or of any

20 class of creditors or equity security holders, by

21 reason of any direct or indirect relationship to,

22 connection with, or interest in, the debtor, or

23 for any other reason;’’.
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1 SEC. 415. FACTORS FOR COMPENSATION OF PROFES2 SIONAL PERSONS.

3 Section 330(a)(3) of title 11, United States Code, as

4 amended by this Act, is amended—

5 (1) in subparagraph (D), by striking ‘‘and’’ at

6 the end;

7 (2) by redesignating subparagraph (E) as sub8 paragraph (F); and

9 (3) by inserting after subparagraph (D) the fol10 lowing:

11 ‘‘(E) with respect to a professional person,

12 whether the person is board certified or other13 wise has demonstrated skill and experience in

14 the bankruptcy field; and’’.

15 SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.

16 Section 1104(b) of title 11, United States Code, is

17 amended—

18 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

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

20 ‘‘(2)(A) If an eligible, disinterested trustee is elected

21 at a meeting of creditors under paragraph (1), the United

22 States trustee shall file a report certifying that election.

23 ‘‘(B) Upon the filing of a report under subparagraph

24 (A)—
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1 ‘‘(i) the trustee elected under paragraph (1)

2 shall be considered to have been selected and ap3 pointed for purposes of this section; and

4 ‘‘(ii) the service of any trustee appointed under

5 subsection (d) shall terminate.

6 ‘‘(C) In the case of any dispute arising out of an elec7 tion described in subparagraph (A), the court shall resolve

8 the dispute.’’.

9 SEC. 417. UTILITY SERVICE.

10 Section 366 of title 11, United States Code, is

11 amended—

12 (1) in subsection (a), by striking ‘‘subsection

13 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

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

15 ‘‘(c)(1)(A) For purposes of this subsection, the term

16 ‘assurance of payment’ means—

17 ‘‘(i) a cash deposit;

18 ‘‘(ii) a letter of credit;

19 ‘‘(iii) a certificate of deposit;

20 ‘‘(iv) a surety bond;

21 ‘‘(v) a prepayment of utility consumption; or

22 ‘‘(vi) another form of security that is mutually

23 agreed on between the utility and the debtor or the

24 trustee.
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1 ‘‘(B) For purposes of this subsection an administra2 tive expense priority shall not constitute an assurance of

3 payment.

4 ‘‘(2) Subject to paragraphs (3) through (5), with re5 spect to a case filed under chapter 11, a utility referred

6 to in subsection (a) may alter, refuse, or discontinue util7 ity service, if during the 30-day period beginning on the

8 date of filing of the petition, the utility does not receive

9 from the debtor or the trustee adequate assurance of pay10 ment for utility service that is satisfactory to the utility.

11 ‘‘(3)(A) On request of a party in interest and after

12 notice and a hearing, the court may order modification

13 of the amount of an assurance of payment under para14 graph (2).

15 ‘‘(B) In making a determination under this para16 graph whether an assurance of payment is adequate, the

17 court may not consider—

18 ‘‘(i) the absence of security before the date of

19 filing of the petition;

20 ‘‘(ii) the payment by the debtor of charges for

21 utility service in a timely manner before the date of

22 filing of the petition; or

23 ‘‘(iii) the availability of an administrative ex24 pense priority.
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1 ‘‘(4) Notwithstanding any other provision of law, with

2 respect to a case subject to this subsection, a utility may

3 recover or set off against a security deposit provided to

4 the utility by the debtor before the date of filing of the

5 petition without notice or order of the court.’’.

6 SEC. 418. BANKRUPTCY FEES.

7 Section 1930 of title 28, United States Code, is

8 amended—

9 (1) in subsection (a), by striking ‘‘Notwith10 standing section 1915 of this title, the’’ and insert11 ing ‘‘The’’; and

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

13 ‘‘(f)(1) Under the procedures prescribed by the Judi14 cial Conference of the United States, the district court or

15 the bankruptcy court may waive the filing fee in a case

16 under chapter 7 of title 11 for an individual if the court

17 determines that such debtor has income less than 150 per18 cent of the income official poverty line (as defined by the

19 Office of Management and Budget, and revised annually

20 in accordance with section 673(2) of the Omnibus Budget

21 Reconciliation Act of 1981) applicable to a family of the

22 size involved and is unable to pay that fee in installments.

23 For purposes of this paragraph, the term ‘‘filing fee’’

24 means the filing required by subsection (a), or any other

25 fee prescribed by the Judicial Conference under sub-
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1 sections (b) and (c) that is payable to the clerk upon the

2 commencement of a case under chapter 7.

3 ‘‘(2) The district court or the bankruptcy court may

4 waive for such debtors other fees prescribed under sub5 sections (b) and (c).

6 ‘‘(3) This subsection does not restrict the district

7 court or the bankruptcy court from waiving, in accordance

8 with Judicial Conference policy, fees prescribed under this

9 section for other debtors and creditors.’’.

10 SEC. 419. MORE COMPLETE INFORMATION REGARDING AS11 SETS OF THE ESTATE.

12 (a) IN GENERAL.—

13 (1) DISCLOSURE.—The Advisory Committee on

14 Bankruptcy Rules of the Judicial Conference of the

15 United States, after consideration of the views of the

16 Director of the Executive Office for United States

17 Trustees, shall propose for adoption amended Fed18 eral Rules of Bankruptcy Procedure and Official

19 Bankruptcy Forms directing debtors under chapter

20 11 of title 11, United States Code, to disclose the

21 information described in paragraph (2) by filing and

22 serving periodic financial and other reports designed

23 to provide such information.

24 (2) INFORMATION.—The information referred

25 to in paragraph (1) is the value, operations, and
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1 profitability of any closely held corporation, partner2 ship, or of any other entity in which the debtor holds

3 a substantial or controlling interest.

4 (b) PURPOSE.—The purpose of the rules and reports

5 under subsection (a) shall be to assist parties in interest

6 taking steps to ensure that the debtor’s interest in any

7 entity referred to in subsection (a)(2) is used for the pay8 ment of allowed claims against debtor.

9 Subtitle B—Small Business

10 Bankruptcy Provisions

11 SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

12 AND PLAN.

13 Section 1125 of title 11, United States Code, is

14 amended—

15 (1) in subsection (a)(1), by inserting before the

16 semicolon ‘‘and in determining whether a disclosure

17 statement provides adequate information, the court

18 shall consider the complexity of the case, the benefit

19 of additional information to creditors and other par20 ties in interest, and the cost of providing additional

21 information’’; and

22 (2) by striking subsection (f), and inserting the

23 following:

24 ‘‘(f) Notwithstanding subsection (b), in a small busi25 ness case—
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1 ‘‘(1) the court may determine that the plan

2 itself provides adequate information and that a sepa3 rate disclosure statement is not necessary;

4 ‘‘(2) the court may approve a disclosure state5 ment submitted on standard forms approved by the

6 court or adopted under section 2075 of title 28; and

7 ‘‘(3)(A) the court may conditionally approve a

8 disclosure statement subject to final approval after

9 notice and a hearing;

10 ‘‘(B) acceptances and rejections of a plan may

11 be solicited based on a conditionally approved disclo12 sure statement if the debtor provides adequate infor13 mation to each holder of a claim or interest that is

14 solicited, but a conditionally approved disclosure

15 statement shall be mailed not later than 20 days be16 fore the date of the hearing on confirmation of the

17 plan; and

18 ‘‘(C) the hearing on the disclosure statement

19 may be combined with the hearing on confirmation

20 of a plan.’’.

21 SEC. 432. DEFINITIONS.

22 (a) DEFINITIONS.—Section 101 of title 11, United

23 States Code, as amended by this Act, is amended by strik24 ing paragraph (51C) and inserting the following:
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1 ‘‘(51C) ‘small business case’ means a case filed

2 under chapter 11 of this title in which the debtor is

3 a small business debtor;

4 ‘‘(51D) ‘small business debtor’—

5 ‘‘(A) subject to subparagraph (B), means a

6 person engaged in commercial or business ac7 tivities (including any affiliate of such person

8 that is also a debtor under this title and exclud9 ing a person whose primary activity is the busi10 ness of owning or operating real property or ac11 tivities incidental thereto) that has aggregate

12 noncontingent, liquidated secured and unse13 cured debts as of the date of the petition or the

14 order for relief in an amount not more than

15 $3,000,000 (excluding debts owed to 1 or more

16 affiliates or insiders) for a case in which the

17 United States trustee has not appointed under

18 section 1102(a)(1) a committee of unsecured

19 creditors or where the court has determined

20 that the committee of unsecured creditors is not

21 sufficiently active and representative to provide

22 effective oversight of the debtor; and

23 ‘‘(B) does not include any member of a

24 group of affiliated debtors that has aggregate

25 noncontingent liquidated secured and unsecured
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•S 3186 IS

1 debts in an amount greater than $3,000,000

2 (excluding debt owed to 1 or more affiliates or

3 insiders);’’.

4 (b) CONFORMING AMENDMENT.—Section 1102(a)(3)

5 of title 11, United States Code, is amended by inserting

6 ‘‘debtor’’ after ‘‘small business’’.

7 SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND

8 PLAN.

9 Within a reasonable period of time after the date of

10 enactment of this Act, the Advisory Committee on Bank11 ruptcy Rules of the Judicial Conference of the United

12 States shall propose for adoption standard form disclosure

13 statements and plans of reorganization for small business

14 debtors (as defined in section 101 of title 11, United

15 States Code, as amended by this Act), designed to achieve

16 a practical balance between—

17 (1) the reasonable needs of the courts, the

18 United States trustee, creditors, and other parties in

19 interest for reasonably complete information; and

20 (2) economy and simplicity for debtors.

21 SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE22 MENTS.

23 (a) REPORTING REQUIRED.—
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•S 3186 IS

1 (1) IN GENERAL.—Chapter 3 of title 11, United

2 States Code, is amended by inserting after section

3 307 the following:

4 ‘‘§ 308. Debtor reporting requirements

5 ‘‘(a) For purposes of this section, the term ‘profit6 ability’ means, with respect to a debtor, the amount of

7 money that the debtor has earned or lost during current

8 and recent fiscal periods.

9 ‘‘(b) A small business debtor shall file periodic finan10 cial and other reports containing information including—

11 ‘‘(1) the debtor’s profitability;

12 ‘‘(2) reasonable approximations of the debtor’s

13 projected cash receipts and cash disbursements over

14 a reasonable period;

15 ‘‘(3) comparisons of actual cash receipts and

16 disbursements with projections in prior reports;

17 ‘‘(4)(A) whether the debtor is—

18 ‘‘(i) in compliance in all material respects

19 with postpetition requirements imposed by this

20 title and the Federal Rules of Bankruptcy Pro21 cedure; and

22 ‘‘(ii) timely filing tax returns and other re23 quired government filings and paying taxes and

24 other administrative claims when due;
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•S 3186 IS

1 ‘‘(B) if the debtor is not in compliance with the

2 requirements referred to in subparagraph (A)(i) or

3 filing tax returns and other required government fil4 ings and making the payments referred to in sub5 paragraph (A)(ii), what the failures are and how, at

6 what cost, and when the debtor intends to remedy

7 such failures; and

8 ‘‘(C) such other matters as are in the best in9 terests of the debtor and creditors, and in the public

10 interest in fair and efficient procedures under chap11 ter 11 of this title.’’.

12 (2) CLERICAL AMENDMENT.—The table of sec13 tions for chapter 3 of title 11, United States Code,

14 is amended by inserting after the item relating to

15 section 307 the following:

‘‘308. Debtor reporting requirements.’’.

16 (b) EFFECTIVE DATE.—The amendments made by

17 subsection (a) shall take effect 60 days after the date on

18 which rules are prescribed under section 2075 of title 28,

19 United States Code, to establish forms to be used to com20 ply with section 308 of title 11, United States Code, as

21 added by subsection (a).

22 SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR

23 SMALL BUSINESS CASES.

24 (a) PROPOSAL OF RULES AND FORMS.—The Advi25 sory Committee on Bankruptcy Rules of the Judicial Con-
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•S 3186 IS

1 ference of the United States shall propose for adoption

2 amended Federal Rules of Bankruptcy Procedure and Of3 ficial Bankruptcy Forms to be used by small business

4 debtors to file periodic financial and other reports con5 taining information, including information relating to—

6 (1) the debtor’s profitability;

7 (2) the debtor’s cash receipts and disburse8 ments; and

9 (3) whether the debtor is timely filing tax re10 turns and paying taxes and other administrative

11 claims when due.

12 (b) PURPOSE.—The rules and forms proposed under

13 subsection (a) shall be designed to achieve a practical bal14 ance among—

15 (1) the reasonable needs of the bankruptcy

16 court, the United States trustee, creditors, and other

17 parties in interest for reasonably complete informa18 tion;

19 (2) the small business debtor’s interest that re20 quired reports be easy and inexpensive to complete;

21 and

22 (3) the interest of all parties that the required

23 reports help the small business debtor to understand

24 the small business debtor’s financial condition and

25 plan the small business debtor’s future.
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1 SEC. 436. DUTIES IN SMALL BUSINESS CASES.

2 (a) DUTIES IN CHAPTER 11 CASES.—Subchapter I

3 of title 11, United States Code, as amended by this Act,

4 is amended by adding at the end the following:

5 ‘‘§ 1116. Duties of trustee or debtor in possession in

6 small business cases

7 ‘‘In a small business case, a trustee or the debtor in

8 possession, in addition to the duties provided in this title

9 and as otherwise required by law, shall—

10 ‘‘(1) append to the voluntary petition or, in an

11 involuntary case, file not later than 7 days after the

12 date of the order for relief—

13 ‘‘(A) its most recent balance sheet, state14 ment of operations, cash-flow statement, Fed15 eral income tax return; or

16 ‘‘(B) a statement made under penalty of

17 perjury that no balance sheet, statement of op18 erations, or cash-flow statement has been pre19 pared and no Federal tax return has been filed;

20 ‘‘(2) attend, through its senior management

21 personnel and counsel, meetings scheduled by the

22 court or the United States trustee, including initial

23 debtor interviews, scheduling conferences, and meet24 ings of creditors convened under section 341 unless

25 the court waives that requirement after notice and
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•S 3186 IS

1 hearing, upon a finding of extraordinary and com2 pelling circumstances;

3 ‘‘(3) timely file all schedules and statements of

4 financial affairs, unless the court, after notice and a

5 hearing, grants an extension, which shall not extend

6 such time period to a date later than 30 days after

7 the date of the order for relief, absent extraordinary

8 and compelling circumstances;

9 ‘‘(4) file all postpetition financial and other re10 ports required by the Federal Rules of Bankruptcy

11 Procedure or by local rule of the district court;

12 ‘‘(5) subject to section 363(c)(2), maintain in13 surance customary and appropriate to the industry;

14 ‘‘(6)(A) timely file tax returns and other re15 quired government filings; and

16 ‘‘(B) subject to section 363(c)(2), timely pay all

17 administrative expense tax claims, except those

18 being contested by appropriate proceedings being

19 diligently prosecuted; and

20 ‘‘(7) allow the United States trustee, or a des21 ignated representative of the United States trustee,

22 to inspect the debtor’s business premises, books, and

23 records at reasonable times, after reasonable prior

24 written notice, unless notice is waived by the debt25 or.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 11 of title 11, United States Code, is amended

3 by adding at the end of the matter relating to subchapter

4 I the following:

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.

5 SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.

6 Section 1121 of title 11, United States Code, is

7 amended by striking subsection (e) and inserting the fol8 lowing:

9 ‘‘(e) In a small business case—

10 ‘‘(1) only the debtor may file a plan until after

11 180 days after the date of the order for relief, unless

12 that period is—

13 ‘‘(A) extended as provided by this sub14 section, after notice and hearing; or

15 ‘‘(B) the court, for cause, orders otherwise;

16 ‘‘(2) the plan, and any necessary disclosure

17 statement, shall be filed not later than 300 days

18 after the date of the order for relief; and

19 ‘‘(3) the time periods specified in paragraphs

20 (1) and (2), and the time fixed in section 1129(e),

21 within which the plan shall be confirmed, may be ex22 tended only if—

23 ‘‘(A) the debtor, after providing notice to

24 parties in interest (including the United States

25 trustee), demonstrates by a preponderance of
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•S 3186 IS

1 the evidence that it is more likely than not that

2 the court will confirm a plan within a reason3 able period of time;

4 ‘‘(B) a new deadline is imposed at the time

5 the extension is granted; and

6 ‘‘(C) the order extending time is signed be7 fore the existing deadline has expired.’’.

8 SEC. 438. PLAN CONFIRMATION DEADLINE.

9 Section 1129 of title 11, United States Code, is

10 amended by adding at the end the following:

11 ‘‘(e) In a small business case, the plan shall be con12 firmed not later than 175 days after the date of the order

13 for relief, unless such 175-day period is extended as pro14 vided in section 1121(e)(3).’’.

15 SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.

16 Section 586(a) of title 28, United States Code, is

17 amended—

18 (1) in paragraph (3)—

19 (A) in subparagraph (G), by striking

20 ‘‘and’’ at the end;

21 (B) by redesignating subparagraph (H) as

22 subparagraph (I); and

23 (C) by inserting after subparagraph (G)

24 the following:
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•S 3186 IS

1 ‘‘(H) in small business cases (as defined in

2 section 101 of title 11), performing the addi3 tional duties specified in title 11 pertaining to

4 such cases; and’’;

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

6 end;

7 (3) in paragraph (6), by striking the period at

8 the end and inserting a semicolon; and

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

10 ‘‘(7) in each of such small business cases—

11 ‘‘(A) conduct an initial debtor interview as

12 soon as practicable after the entry of order for

13 relief but before the first meeting scheduled

14 under section 341(a) of title 11, at which time

15 the United States trustee shall—

16 ‘‘(i) begin to investigate the debtor’s

17 viability;

18 ‘‘(ii) inquire about the debtor’s busi19 ness plan;

20 ‘‘(iii) explain the debtor’s obligations

21 to file monthly operating reports and other

22 required reports;

23 ‘‘(iv) attempt to develop an agreed

24 scheduling order; and
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•S 3186 IS

1 ‘‘(v) inform the debtor of other obliga2 tions;

3 ‘‘(B) if determined to be appropriate and

4 advisable, visit the appropriate business prem5 ises of the debtor and ascertain the state of the

6 debtor’s books and records and verify that the

7 debtor has filed its tax returns; and

8 ‘‘(C) review and monitor diligently the

9 debtor’s activities, to identify as promptly as

10 possible whether the debtor will be unable to

11 confirm a plan; and

12 ‘‘(8) in any case in which the United States

13 trustee finds material grounds for any relief under

14 section 1112 of title 11, the United States trustee

15 shall apply promptly after making that finding to

16 the court for relief.’’.

17 SEC. 440. SCHEDULING CONFERENCES.

18 Section 105(d) of title 11, United States Code, is

19 amended—

20 (1) in the matter preceding paragraph (1), by

21 striking ‘‘, may’’; and

22 (2) by striking paragraph (1) and inserting the

23 following:
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•S 3186 IS

1 ‘‘(1) shall hold such status conferences as are

2 necessary to further the expeditious and economical

3 resolution of the case; and’’.

4 SEC. 441. SERIAL FILER PROVISIONS.

5 Section 362 of title 11, United States Code, as

6 amended by this Act is amended—

7 (1) in subsection (k), as redesignated by this

8 Act—

9 (A) by striking ‘‘An’’ and inserting ‘‘(1)

10 Except as provided in paragraph (2), an’’; and

11 (B) by adding at the end the following:

12 ‘‘(2) If such violation is based on an action taken by

13 an entity in the good faith belief that subsection (h) ap14 plies to the debtor, the recovery under paragraph (1) of

15 this subsection against such entity shall be limited to ac16 tual damages.’’; and

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

18 ‘‘(l)(1) Except as provided in paragraph (2) of this

19 subsection, the provisions of subsection (a) do not apply

20 in a case in which the debtor—

21 ‘‘(A) is a debtor in a small business case pend22 ing at the time the petition is filed;

23 ‘‘(B) was a debtor in a small business case that

24 was dismissed for any reason by an order that be25 came final in the 2-year period ending on the date
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•S 3186 IS

1 of the order for relief entered with respect to the pe2 tition;

3 ‘‘(C) was a debtor in a small business case in

4 which a plan was confirmed in the 2-year period

5 ending on the date of the order for relief entered

6 with respect to the petition; or

7 ‘‘(D) is an entity that has succeeded to sub8 stantially all of the assets or business of a small

9 business debtor described in subparagraph (A), (B),

10 or (C).

11 ‘‘(2) This subsection does not apply—

12 ‘‘(A) to an involuntary case involving no collu13 sion by the debtor with creditors; or

14 ‘‘(B) to the filing of a petition if—

15 ‘‘(i) the debtor proves by a preponderance

16 of the evidence that the filing of that petition

17 resulted from circumstances beyond the control

18 of the debtor not foreseeable at the time the

19 case then pending was filed; and

20 ‘‘(ii) it is more likely than not that the

21 court will confirm a feasible plan, but not a liq22 uidating plan, within a reasonable period of

23 time.’’.
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•S 3186 IS

1 SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON2 VERSION AND APPOINTMENT OF TRUSTEE.

3 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON4 VERSION.—Section 1112 of title 11, United States Code,

5 is amended by striking subsection (b) and inserting the

6 following:

7 ‘‘(b)(1) Except as provided in paragraph (2) of this

8 subsection, subsection (c) of this section, and section

9 1104(a)(3), on request of a party in interest, and after

10 notice and a hearing, the court shall convert a case under

11 this chapter to a case under chapter 7 or dismiss a case

12 under this chapter, whichever is in the best interest of

13 creditors and the estate, if the movant establishes cause.

14 ‘‘(2) The relief provided in paragraph (1) shall not

15 be granted if the debtor or another party in interest ob16 jects and establishes by a preponderance of the evidence

17 that—

18 ‘‘(A) a plan with a reasonable possibility of

19 being confirmed will be filed within a reasonable pe20 riod of time; and

21 ‘‘(B) the grounds include an act or omission of

22 the debtor—

23 ‘‘(i) for which there exists a reasonable

24 justification for the act or omission; and

25 ‘‘(ii) that will be cured within a reasonable

26 period of time fixed by the court.
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•S 3186 IS

1 ‘‘(3) The court shall commence the hearing on any

2 motion under this subsection not later than 30 days after

3 filing of the motion, and shall decide the motion not later

4 than 15 days after commencement of the hearing, unless

5 the movant expressly consents to a continuance for a spe6 cific period of time or compelling circumstances prevent

7 the court from meeting the time limits established by this

8 paragraph.

9 ‘‘(4) For purposes of this subsection, the term ‘cause’

10 includes—

11 ‘‘(A) substantial or continuing loss to or dimi12 nution of the estate;

13 ‘‘(B) gross mismanagement of the estate;

14 ‘‘(C) failure to maintain appropriate insurance

15 that poses a risk to the estate or to the public;

16 ‘‘(D) unauthorized use of cash collateral harm17 ful to 1 or more creditors;

18 ‘‘(E) failure to comply with an order of the

19 court;

20 ‘‘(F) repeated failure timely to satisfy any filing

21 or reporting requirement established by this title or

22 by any rule applicable to a case under this chapter;

23 ‘‘(G) failure to attend the meeting of creditors

24 convened under section 341(a) or an examination or-
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•S 3186 IS

1 dered under rule 2004 of the Federal Rules of

2 Bankruptcy Procedure;

3 ‘‘(H) failure timely to provide information or

4 attend meetings reasonably requested by the United

5 States trustee or the bankruptcy administrator;

6 ‘‘(I) failure timely to pay taxes due after the

7 date of the order for relief or to file tax returns due

8 after the order for relief;

9 ‘‘(J) failure to file a disclosure statement, or to

10 file or confirm a plan, within the time fixed by this

11 title or by order of the court;

12 ‘‘(K) failure to pay any fees or charges required

13 under chapter 123 of title 28;

14 ‘‘(L) revocation of an order of confirmation

15 under section 1144;

16 ‘‘(M) inability to effectuate substantial con17 summation of a confirmed plan;

18 ‘‘(N) material default by the debtor with re19 spect to a confirmed plan;

20 ‘‘(O) termination of a confirmed plan by reason

21 of the occurrence of a condition specified in the plan;

22 and

23 ‘‘(P) failure of the debtor to pay any domestic

24 support obligation that first becomes payable after

25 the date on which the petition is filed.
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•S 3186 IS

1 ‘‘(5) The court shall commence the hearing on any

2 motion under this subsection not later than 30 days after

3 filing of the motion, and shall decide the motion not later

4 than 15 days after commencement of the hearing, unless

5 the movant expressly consents to a continuance for a spe6 cific period of time or compelling circumstances prevent

7 the court from meeting the time limits established by this

8 paragraph.’’.

9 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

10 TRUSTEE.—Section 1104(a) of title 11, United States

11 Code, is amended—

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

13 end;

14 (2) in paragraph (2), by striking the period at

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

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

17 ‘‘(3) if grounds exist to convert or dismiss the

18 case under section 1112, but the court determines

19 that the appointment of a trustee or an examiner is

20 in the best interests of creditors and the estate.’’.

21 SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED

22 STATES CODE, WITH RESPECT TO SMALL

23 BUSINESSES.

24 Not later than 2 years after the date of enactment

25 of this Act, the Administrator of the Small Business Ad-
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•S 3186 IS

1 ministration, in consultation with the Attorney General,

2 the Director of the Administrative Office of United States

3 Trustees, and the Director of the Administrative Office

4 of the United States Courts, shall—

5 (1) conduct a study to determine—

6 (A) the internal and external factors that

7 cause small businesses, especially sole propri8 etorships, to become debtors in cases under title

9 11, United States Code, and that cause certain

10 small businesses to successfully complete cases

11 under chapter 11 of such title; and

12 (B) how Federal laws relating to bank13 ruptcy may be made more effective and efficient

14 in assisting small businesses to remain viable;

15 and

16 (2) submit to the President pro tempore of the

17 Senate and the Speaker of the House of Representa18 tives a report summarizing that study.

19 SEC. 444. PAYMENT OF INTEREST.

20 Section 362(d)(3) of title 11, United States Code, is

21 amended—

22 (1) by inserting ‘‘or 30 days after the court de23 termines that the debtor is subject to this para24 graph, whichever is later’’ after ‘‘90-day period)’’;

25 and
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•S 3186 IS

1 (2) by striking subparagraph (B) and inserting

2 the following:

3 ‘‘(B) the debtor has commenced monthly

4 payments that—

5 ‘‘(i) may, in the debtor’s sole discre6 tion, notwithstanding section 363(c)(2), be

7 made from rents or other income generated

8 before or after the commencement of the

9 case by or from the property to each cred10 itor whose claim is secured by such real es11 tate (other than a claim secured by a judg12 ment lien or by an unmatured statutory

13 lien); and

14 ‘‘(ii) are in an amount equal to inter15 est at the then applicable nondefault con16 tract rate of interest on the value of the

17 creditor’s interest in the real estate; or’’.

18 SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.

19 Section 503(b) of title 11, United States Code, is

20 amended—

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

22 end;

23 (2) in paragraph (6), by striking the period at

24 the end and inserting a semicolon; and

25 (3) by adding at the end the following:
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•S 3186 IS

1 ‘‘(7) with respect to a nonresidential real prop2 erty lease previously assumed under section 365,

3 and subsequently rejected, a sum equal to all mone4 tary obligations due, excluding those arising from or

5 relating to a failure to operate or penalty provisions,

6 for the period of 2 years following the later of the

7 rejection date or the date of actual turnover of the

8 premises, without reduction or setoff for any reason

9 whatsoever except for sums actually received or to be

10 received from a nondebtor, and the claim for remain11 ing sums due for the balance of the term of the lease

12 shall be a claim under section 502(b)(6);’’.

13 TITLE V—MUNICIPAL

14 BANKRUPTCY PROVISIONS

15 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI16 TION.

17 (a) TECHNICAL AMENDMENT RELATING TO MUNICI18 PALITIES.—Section 921(d) of title 11, United States

19 Code, is amended by inserting ‘‘notwithstanding section

20 301(b)’’ before the period at the end.

21 (b) CONFORMING AMENDMENT.—Section 301 of title

22 11, United States Code, is amended—

23 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;

24 and
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•S 3186 IS

1 (2) by striking the last sentence and inserting

2 the following:

3 ‘‘(b) The commencement of a voluntary case under

4 a chapter of this title constitutes an order for relief under

5 such chapter.’’.

6 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP7 TER 9.

8 Section 901(a) of title 11, United States Code, is

9 amended—

10 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

11 (2) by inserting ‘‘559, 560, 561, 562’’ after

12 ‘‘557,’’.

13 TITLE VI—BANKRUPTCY DATA

14 SEC. 601. IMPROVED BANKRUPTCY STATISTICS.

15 (a) IN GENERAL.—Chapter 6 of title 28, United

16 States Code, is amended by adding at the end the fol17 lowing:

18 ‘‘§ 159. Bankruptcy statistics

19 ‘‘(a) The clerk of each district shall collect statistics

20 regarding individual debtors with primarily consumer

21 debts seeking relief under chapters 7, 11, and 13 of title

22 11. Those statistics shall be on a standardized form pre23 scribed by the Director of the Administrative Office of the

24 United States Courts (referred to in this section as the

25 ‘Director’).
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•S 3186 IS

1 ‘‘(b) The Director shall—

2 ‘‘(1) compile the statistics referred to in sub3 section (a);

4 ‘‘(2) make the statistics available to the public;

5 and

6 ‘‘(3) not later than October 31, 2002, and an7 nually thereafter, prepare, and submit to Congress a

8 report concerning the information collected under

9 subsection (a) that contains an analysis of the infor10 mation.

11 ‘‘(c) The compilation required under subsection (b)

12 shall—

13 ‘‘(1) be itemized, by chapter, with respect to

14 title 11;

15 ‘‘(2) be presented in the aggregate and for each

16 district; and

17 ‘‘(3) include information concerning—

18 ‘‘(A) the total assets and total liabilities of

19 the debtors described in subsection (a), and in

20 each category of assets and liabilities, as re21 ported in the schedules prescribed pursuant to

22 section 2075 of this title and filed by those

23 debtors;

24 ‘‘(B) the current monthly income, average

25 income, and average expenses of those debtors
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•S 3186 IS

1 as reported on the schedules and statements

2 that each such debtor files under sections 521

3 and 1322 of title 11;

4 ‘‘(C) the aggregate amount of debt dis5 charged in the reporting period, determined as

6 the difference between the total amount of debt

7 and obligations of a debtor reported on the

8 schedules and the amount of such debt reported

9 in categories which are predominantly non10 dischargeable;

11 ‘‘(D) the average period of time between

12 the filing of the petition and the closing of the

13 case;

14 ‘‘(E) for the reporting period—

15 ‘‘(i) the number of cases in which a

16 reaffirmation was filed; and

17 ‘‘(ii)(I) the total number of reaffirma18 tions filed;

19 ‘‘(II) of those cases in which a reaffir20 mation was filed, the number of cases in

21 which the debtor was not represented by

22 an attorney; and

23 ‘‘(III) of those cases in which a reaf24 firmation was filed, the number of cases in
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•S 3186 IS

1 which the reaffirmation was approved by

2 the court;

3 ‘‘(F) with respect to cases filed under

4 chapter 13 of title 11, for the reporting

5 period—

6 ‘‘(i)(I) the number of cases in which a

7 final order was entered determining the

8 value of property securing a claim in an

9 amount less than the amount of the claim;

10 and

11 ‘‘(II) the number of final orders deter12 mining the value of property securing a

13 claim issued;

14 ‘‘(ii) the number of cases dismissed,

15 the number of cases dismissed for failure

16 to make payments under the plan, the

17 number of cases refiled after dismissal,

18 and the number of cases in which the plan

19 was completed, separately itemized with re20 spect to the number of modifications made

21 before completion of the plan, if any; and

22 ‘‘(iii) the number of cases in which

23 the debtor filed another case during the 6-

24 year period preceding the filing;
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•S 3186 IS

1 ‘‘(G) the number of cases in which credi2 tors were fined for misconduct and any amount

3 of punitive damages awarded by the court for

4 creditor misconduct; and

5 ‘‘(H) the number of cases in which sanc6 tions under rule 9011 of the Federal Rules of

7 Bankruptcy Procedure were imposed against

8 debtor’s counsel or damages awarded under

9 such Rule.’’.

10 (b) CLERICAL AMENDMENT.—The table of sections

11 for chapter 6 of title 28, United States Code, is amended

12 by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall take effect 18 months after the date of

15 enactment of this Act.

16 SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK17 RUPTCY DATA.

18 (a) AMENDMENT.—Chapter 39 of title 28, United

19 States Code, is amended by adding at the end the fol20 lowing:

21 ‘‘§ 589b. Bankruptcy data

22 ‘‘(a) RULES.—The Attorney General shall, within a

23 reasonable time after the effective date of this section,

24 issue rules requiring uniform forms for (and from time

25 to time thereafter to appropriately modify and approve)—
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1 ‘‘(1) final reports by trustees in cases under

2 chapters 7, 12, and 13 of title 11; and

3 ‘‘(2) periodic reports by debtors in possession or

4 trustees, as the case may be, in cases under chapter

5 11 of title 11.

6 ‘‘(b) REPORTS.—Each report referred to in sub7 section (a) shall be designed (and the requirements as to

8 place and manner of filing shall be established) so as to

9 facilitate compilation of data and maximum possible ac10 cess of the public, both by physical inspection at one or

11 more central filing locations, and by electronic access

12 through the Internet or other appropriate media.

13 ‘‘(c) REQUIRED INFORMATION.—The information re14 quired to be filed in the reports referred to in subsection

15 (b) shall be that which is in the best interests of debtors

16 and creditors, and in the public interest in reasonable and

17 adequate information to evaluate the efficiency and practi18 cality of the Federal bankruptcy system. In issuing rules

19 proposing the forms referred to in subsection (a), the At20 torney General shall strike the best achievable practical

21 balance between—

22 ‘‘(1) the reasonable needs of the public for in23 formation about the operational results of the Fed24 eral bankruptcy system;
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1 ‘‘(2) economy, simplicity, and lack of undue

2 burden on persons with a duty to file reports; and

3 ‘‘(3) appropriate privacy concerns and safe4 guards.

5 ‘‘(d) FINAL REPORTS.—Final reports proposed for

6 adoption by trustees under chapters 7, 12, and 13 of title

7 11 shall, in addition to such other matters as are required

8 by law or as the Attorney General in the discretion of the

9 Attorney General, shall propose, include with respect to

10 a case under such title—

11 ‘‘(1) information about the length of time the

12 case was pending;

13 ‘‘(2) assets abandoned;

14 ‘‘(3) assets exempted;

15 ‘‘(4) receipts and disbursements of the estate;

16 ‘‘(5) expenses of administration, including for

17 use under section 707(b), actual costs of admin18 istering cases under chapter 13 of title 11;

19 ‘‘(6) claims asserted;

20 ‘‘(7) claims allowed; and

21 ‘‘(8) distributions to claimants and claims dis22 charged without payment,

23 in each case by appropriate category and, in cases under

24 chapters 12 and 13 of title 11, date of confirmation of
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1 the plan, each modification thereto, and defaults by the

2 debtor in performance under the plan.

3 ‘‘(e) PERIODIC REPORTS.—Periodic reports proposed

4 for adoption by trustees or debtors in possession under

5 chapter 11 of title 11 shall, in addition to such other mat6 ters as are required by law or as the Attorney General,

7 in the discretion of the Attorney General, shall propose,

8 include—

9 ‘‘(1) information about the standard industry

10 classification, published by the Department of Com11 merce, for the businesses conducted by the debtor;

12 ‘‘(2) length of time the case has been pending;

13 ‘‘(3) number of full-time employees as of the

14 date of the order for relief and at the end of each

15 reporting period since the case was filed;

16 ‘‘(4) cash receipts, cash disbursements and

17 profitability of the debtor for the most recent period

18 and cumulatively since the date of the order for re19 lief;

20 ‘‘(5) compliance with title 11, whether or not

21 tax returns and tax payments since the date of the

22 order for relief have been timely filed and made;

23 ‘‘(6) all professional fees approved by the court

24 in the case for the most recent period and cumula25 tively since the date of the order for relief (sepa-
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1 rately reported, for the professional fees incurred by

2 or on behalf of the debtor, between those that would

3 have been incurred absent a bankruptcy case and

4 those not); and

5 ‘‘(7) plans of reorganization filed and confirmed

6 and, with respect thereto, by class, the recoveries of

7 the holders, expressed in aggregate dollar values

8 and, in the case of claims, as a percentage of total

9 claims of the class allowed.’’.

10 (b) CLERICAL AMENDMENT.—The table of sections

11 at the beginning of chapter 39 of title 28, United States

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

‘‘589b. Bankruptcy data.’’.

13 SEC. 603. AUDIT PROCEDURES.

14 (a) IN GENERAL.—

15 (1) ESTABLISHMENT OF PROCEDURES.—The

16 Attorney General (in judicial districts served by

17 United States trustees) and the Judicial Conference

18 of the United States (in judicial districts served by

19 bankruptcy administrators) shall establish proce20 dures to determine the accuracy, veracity, and com21 pleteness of petitions, schedules, and other informa22 tion which the debtor is required to provide under

23 sections 521 and 1322 of title 11, and, if applicable,

24 section 111 of title 11, in individual cases filed

25 under chapter 7 or 13 of such title. Such audits
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1 shall be in accordance with generally accepted audit2 ing standards and performed by independent cer3 tified public accountants or independent licensed

4 public accountants, provided that the Attorney Gen5 eral and the Judicial Conference, as appropriate,

6 may develop alternative auditing standards not later

7 than 2 years after the date of enactment of this Act.

8 (2) PROCEDURES.—Those procedures required

9 by paragraph (1) shall—

10 (A) establish a method of selecting appro11 priate qualified persons to contract to perform

12 those audits;

13 (B) establish a method of randomly select14 ing cases to be audited, except that not less

15 than 1 out of every 250 cases in each Federal

16 judicial district shall be selected for audit;

17 (C) require audits for schedules of income

18 and expenses which reflect greater than average

19 variances from the statistical norm of the dis20 trict in which the schedules were filed if those

21 variances occur by reason of higher income or

22 higher expenses than the statistical norm of the

23 district in which the schedules were filed; and

24 (D) establish procedures for providing, not

25 less frequently than annually, public informa-
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1 tion concerning the aggregate results of such

2 audits including the percentage of cases, by dis3 trict, in which a material misstatement of in4 come or expenditures is reported.

5 (b) AMENDMENTS.—Section 586 of title 28, United

6 States Code, is amended—

7 (1) in subsection (a), by striking paragraph (6)

8 and inserting the following:

9 ‘‘(6) make such reports as the Attorney General

10 directs, including the results of audits performed

11 under section 603(a) of the Bankruptcy Reform Act

12 of 2000; and’’; and

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

14 ‘‘(f)(1) The United States trustee for each district is

15 authorized to contract with auditors to perform audits in

16 cases designated by the United States trustee, in accord17 ance with the procedures established under section 603(a)

18 of the Bankruptcy Reform Act of 2000.

19 ‘‘(2)(A) The report of each audit referred to in para20 graph (1) shall be filed with the court and transmitted

21 to the United States trustee. Each report shall clearly and

22 conspicuously specify any material misstatement of income

23 or expenditures or of assets identified by the person per24 forming the audit. In any case in which a material

25 misstatement of income or expenditures or of assets has
226

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1 been reported, the clerk of the bankruptcy court shall give

2 notice of the misstatement to the creditors in the case.

3 ‘‘(B) If a material misstatement of income or expend4 itures or of assets is reported, the United States trustee

5 shall—

6 ‘‘(i) report the material misstatement, if appro7 priate, to the United States Attorney pursuant to

8 section 3057 of title 18; and

9 ‘‘(ii) if advisable, take appropriate action, in10 cluding but not limited to commencing an adversary

11 proceeding to revoke the debtor’s discharge pursuant

12 to section 727(d) of title 11.’’.

13 (c) AMENDMENTS TO SECTION 521 OF TITLE 11,

14 U.S.C.—Section 521(a) of title 11, United States Code,

15 as so designated by this Act, is amended in each of para16 graphs (3) and (4) by inserting ‘‘or an auditor appointed

17 under section 586(f) of title 28’’ after ‘‘serving in the

18 case’’.

19 (d) AMENDMENTS TO SECTION 727 OF TITLE 11,

20 U.S.C.—Section 727(d) of title 11, United States Code,

21 is amended—

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

23 end;

24 (2) in paragraph (3), by striking the period at

25 the end and inserting ‘‘; or’’; and
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1 (3) by adding at the end the following:

2 ‘‘(4) the debtor has failed to explain

3 satisfactorily—

4 ‘‘(A) a material misstatement in an audit

5 referred to in section 586(f) of title 28; or

6 ‘‘(B) a failure to make available for inspec7 tion all necessary accounts, papers, documents,

8 financial records, files, and all other papers,

9 things, or property belonging to the debtor that

10 are requested for an audit referred to in section

11 586(f) of title 28.’’.

12 (e) EFFECTIVE DATE.—The amendments made by

13 this section shall take effect 18 months after the date of

14 enactment of this Act.

15 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY

16 OF BANKRUPTCY DATA.

17 It is the sense of Congress that—

18 (1) the national policy of the United States

19 should be that all data held by bankruptcy clerks in

20 electronic form, to the extent such data reflects only

21 public records (as defined in section 107 of title 11,

22 United States Code), should be released in a usable

23 electronic form in bulk to the public, subject to such

24 appropriate privacy concerns and safeguards as Con-
228

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1 gress and the Judicial Conference of the United

2 States may determine; and

3 (2) there should be established a bankruptcy

4 data system in which—

5 (A) a single set of data definitions and

6 forms are used to collect data nationwide; and

7 (B) data for any particular bankruptcy

8 case are aggregated in the same electronic

9 record.

10 TITLE VII—BANKRUPTCY TAX

11 PROVISIONS

12 SEC. 701. TREATMENT OF CERTAIN LIENS.

13 (a) TREATMENT OF CERTAIN LIENS.—Section 724

14 of title 11, United States Code, is amended—

15 (1) in subsection (b), in the matter preceding

16 paragraph (1), by inserting ‘‘(other than to the ex17 tent that there is a properly perfected unavoidable

18 tax lien arising in connection with an ad valorem tax

19 on real or personal property of the estate)’’ after

20 ‘‘under this title’’;

21 (2) in subsection (b)(2), by inserting ‘‘(except

22 that such expenses, other than claims for wages, sal23 aries, or commissions which arise after the filing of

24 a petition, shall be limited to expenses incurred

25 under chapter 7 of this title and shall not include ex-
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1 penses incurred under chapter 11 of this title)’’ after

2 ‘‘507(a)(1)’’; and

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

4 ‘‘(e) Before subordinating a tax lien on real or per5 sonal property of the estate, the trustee shall—

6 ‘‘(1) exhaust the unencumbered assets of the

7 estate; and

8 ‘‘(2) in a manner consistent with section

9 506(c), recover from property securing an allowed

10 secured claim the reasonable, necessary costs and

11 expenses of preserving or disposing of that property.

12 ‘‘(f) Notwithstanding the exclusion of ad valorem tax

13 liens under this section and subject to the requirements

14 of subsection (e), the following may be paid from property

15 of the estate which secures a tax lien, or the proceeds of

16 such property:

17 ‘‘(1) Claims for wages, salaries, and commis18 sions that are entitled to priority under section

19 507(a)(4).

20 ‘‘(2) Claims for contributions to an employee

21 benefit plan entitled to priority under section

22 507(a)(5).’’.

23 (b) DETERMINATION OF TAX LIABILITY.—Section

24 505(a)(2) of title 11, United States Code, is amended—
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1 (1) in subparagraph (A), by striking ‘‘or’’ at

2 the end;

3 (2) in subparagraph (B), by striking the period

4 at the end and inserting ‘‘; or’’; and

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

6 ‘‘(C) the amount or legality of any amount aris7 ing in connection with an ad valorem tax on real or

8 personal property of the estate, if the applicable pe9 riod for contesting or redetermining that amount

10 under any law (other than a bankruptcy law) has ex11 pired.’’.

12 SEC. 702. TREATMENT OF FUEL TAX CLAIMS.

13 Section 501 of title 11, United States Code, is

14 amended by adding at the end the following:

15 ‘‘(e) A claim arising from the liability of a debtor for

16 fuel use tax assessed consistent with the requirements of

17 section 31705 of title 49 may be filed by the base jurisdic18 tion designated pursuant to the International Fuel Tax

19 Agreement and, if so filed, shall be allowed as a single

20 claim.’’.

21 SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF

22 TAXES.

23 Section 505(b) of title 11, United States Code, is

24 amended—
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1 (1) in the first sentence, by inserting ‘‘at the

2 address and in the manner designated in paragraph

3 (1)’’ after ‘‘determination of such tax’’;

4 (2) by striking ‘‘(1) upon payment’’ and insert5 ing ‘‘(A) upon payment’’;

6 (3) by striking ‘‘(A) such governmental unit’’

7 and inserting ‘‘(i) such governmental unit’’;

8 (4) by striking ‘‘(B) such governmental unit’’

9 and inserting ‘‘(ii) such governmental unit’’;

10 (5) by striking ‘‘(2) upon payment’’ and insert11 ing ‘‘(B) upon payment’’;

12 (6) by striking ‘‘(3) upon payment’’ and insert13 ing ‘‘(C) upon payment’’;

14 (7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and

15 (8) by inserting before paragraph (2), as so

16 designated, the following:

17 ‘‘(b)(1)(A) The clerk of each district shall maintain

18 a listing under which a Federal, State, or local govern19 mental unit responsible for the collection of taxes within

20 the district may—

21 ‘‘(i) designate an address for service of requests

22 under this subsection; and

23 ‘‘(ii) describe where further information con24 cerning additional requirements for filing such re25 quests may be found.
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1 ‘‘(B) If a governmental unit referred to in subpara2 graph (A) does not designate an address and provide that

3 address to the clerk under that subparagraph, any request

4 made under this subsection may be served at the address

5 for the filing of a tax return or protest with the appro6 priate taxing authority of that governmental unit.’’.

7 SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

8 (a) IN GENERAL.—Subchapter I of chapter 5 of title

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

10 the following:

11 ‘‘§ 511. Rate of interest on tax claims

12 ‘‘(a) If any provision of this title requires the pay13 ment of interest on a tax claim or on an administrative

14 expense tax, or the payment of interest to enable a creditor

15 to receive the present value of the allowed amount of a

16 tax claim, the rate of interest shall be the rate determined

17 under applicable nonbankruptcy law.

18 ‘‘(b) In the case of taxes paid under a confirmed plan

19 under this title, the rate of interest shall be determined

20 as of the calendar month in which the plan is confirmed.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for chapter 5 of title 11, United States Code, is amended

23 by inserting after the item relating to section 510 the fol24 lowing:

‘‘511. Rate of interest on tax claims.’’.
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1 SEC. 705. PRIORITY OF TAX CLAIMS.

2 Section 507(a)(8) of title 11, United States Code, is

3 amended—

4 (1) in subparagraph (A)—

5 (A) in the matter preceding clause (i), by

6 inserting ‘‘for a taxable year ending on or be7 fore the date of filing of the petition’’ after

8 ‘‘gross receipts’’;

9 (B) in clause (i), by striking ‘‘for a taxable

10 year ending on or before the date of filing of

11 the petition’’; and

12 (C) by striking clause (ii) and inserting the

13 following:

14 ‘‘(ii) assessed within 240 days before

15 the date of the filing of the petition, exclu16 sive of—

17 ‘‘(I) any time during which an

18 offer in compromise with respect to

19 that tax was pending or in effect dur20 ing that 240-day period, plus 30 days;

21 and

22 ‘‘(II) any time during which a

23 stay of proceedings against collections

24 was in effect in a prior case under

25 this title during that 240-day period;

26 plus 90 days.’’; and
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1 (2) by adding at the end the following:

2 ‘‘An otherwise applicable time period specified in

3 this paragraph shall be suspended for (i) any period

4 during which a governmental unit is prohibited

5 under applicable nonbankruptcy law from collecting

6 a tax as a result of a request by the debtor for a

7 hearing and an appeal of any collection action taken

8 or proposed against the debtor, plus 90 days; plus

9 (ii) any time during which the stay of proceedings

10 was in effect in a prior case under this title or dur11 ing which collection was precluded by the existence

12 of 1 or more confirmed plans under this title, plus

13 90 days.’’.

14 SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

15 Section 507(a)(8)(B) of title 11, United States Code,

16 is amended by striking ‘‘assessed’’ and inserting ‘‘in17 curred’’.

18 SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP19 TER 13.

20 Section 1328(a)(2) of title 11, United States Code,

21 as amended by section 314 of this Act, is amended by

22 striking ‘‘paragraph’’ and inserting ‘‘section 507(a)(8)(C)

23 or in paragraph (1)(B), (1)(C),’’.
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1 SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP2 TER 11.

3 Section 1141(d) of title 11, United States Code, as

4 amended by this Act, is amended by adding at the end

5 the following:

6 ‘‘(6) Notwithstanding paragraph (1), the confirma7 tion of a plan does not discharge a debtor that is a cor8 poration from any debt described in section 523(a)(2) or

9 for a tax or customs duty with respect to which the

10 debtor—

11 ‘‘(A) made a fraudulent return; or

12 ‘‘(B) willfully attempted in any manner to

13 evade or defeat that tax or duty.’’.

14 SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO

15 PREPETITION TAXES.

16 Section 362(a)(8) of title 11, United States Code, is

17 amended by striking ‘‘the debtor’’ and inserting ‘‘a cor18 porate debtor’s tax liability for a taxable period the bank19 ruptcy court may determine or concerning an individual

20 debtor’s tax liability for a taxable period ending before the

21 order for relief under this title’’.

22 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

23 CASES.

24 Section 1129(a)(9) of title 11, United States Code,

25 is amended—
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1 (1) in subparagraph (B), by striking ‘‘and’’ at

2 the end;

3 (2) in subparagraph (C), by striking ‘‘deferred

4 cash payments,’’ and all that follows through the

5 end of the subparagraph, and inserting ‘‘regular in6 stallment payments in cash—

7 ‘‘(i) of a total value, as of the effective

8 date of the plan, equal to the allowed

9 amount of such claim;

10 ‘‘(ii) over a period ending not later

11 than 5 years after the date of the entry of

12 the order for relief under section 301, 302,

13 or 303; and

14 ‘‘(iii) in a manner not less favorable

15 than the most favored nonpriority unse16 cured claim provided for in the plan (other

17 than cash payments made to a class of

18 creditors under section 1122(b)); and’’;

19 and

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

21 ‘‘(D) with respect to a secured claim which

22 would otherwise meet the description of an un23 secured claim of a governmental unit under sec24 tion 507(a)(8), but for the secured status of

25 that claim, the holder of that claim will receive
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•S 3186 IS

1 on account of that claim, cash payments, in the

2 same manner and over the same period, as pre3 scribed in subparagraph (C).’’.

4 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB5 ITED.

6 Section 545(2) of title 11, United States Code, is

7 amended by inserting before the semicolon at the end the

8 following: ‘‘, except in any case in which a purchaser is

9 a purchaser described in section 6323 of the Internal Rev10 enue Code of 1986, or in any other similar provision of

11 State or local law’’.

12 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI13 NESS.

14 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

15 title 28, United States Code, is amended—

16 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and

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

18 ‘‘(b) A tax under subsection (a) shall be paid on or

19 before the due date of the tax under applicable nonbank20 ruptcy law, unless—

21 ‘‘(1) the tax is a property tax secured by a lien

22 against property that is abandoned within a reason23 able period of time after the lien attaches by the

24 trustee of a bankruptcy estate under section 554 of

25 title 11; or
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1 ‘‘(2) payment of the tax is excused under a spe2 cific provision of title 11.

3 ‘‘(c) In a case pending under chapter 7 of title 11,

4 payment of a tax may be deferred until final distribution

5 is made under section 726 of title 11, if—

6 ‘‘(1) the tax was not incurred by a trustee duly

7 appointed under chapter 7 of title 11; or

8 ‘‘(2) before the due date of the tax, an order of

9 the court makes a finding of probable insufficiency

10 of funds of the estate to pay in full the administra11 tive expenses allowed under section 503(b) of title

12 11 that have the same priority in distribution under

13 section 726(b) of title 11 as the priority of that

14 tax.’’.

15 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

16 Section 503(b)(1)(B)(i) of title 11, United States Code,

17 is amended by inserting ‘‘whether secured or unsecured,

18 including property taxes for which liability is in rem, in

19 personam, or both,’’ before ‘‘except’’.

20 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

21 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of

22 title 11, United States Code, is amended—

23 (1) in subparagraph (B), by striking ‘‘and’’ at

24 the end;
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1 (2) in subparagraph (C), by adding ‘‘and’’ at

2 the end; and

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

4 ‘‘(D) notwithstanding the requirements of sub5 section (a), a governmental unit shall not be re6 quired to file a request for the payment of an ex7 pense described in subparagraph (B) or (C), as a

8 condition of its being an allowed administrative ex9 pense;’’.

10 (d) PAYMENT OF TAXES AND FEES AS SECURED

11 CLAIMS.—Section 506 of title 11, United States Code, is

12 amended—

13 (1) in subsection (b), by inserting ‘‘or State

14 statute’’ after ‘‘agreement’’; and

15 (2) in subsection (c), by inserting ‘‘, including

16 the payment of all ad valorem property taxes with

17 respect to the property’’ before the period at the

18 end.

19 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

20 Section 726(a)(1) of title 11, United States Code, is

21 amended by striking ‘‘before the date on which the trustee

22 commences distribution under this section;’’ and inserting

23 the following: ‘‘on or before the earlier of—
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1 ‘‘(A) the date that is 10 days after the

2 mailing to creditors of the summary of the

3 trustee’s final report; or

4 ‘‘(B) the date on which the trustee com5 mences final distribution under this section;’’.

6 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU7 THORITIES.

8 Section 523(a) of title 11, United States Code, as

9 amended by this Act, is amended—

10 (1) in paragraph (1)(B)—

11 (A) in the matter preceding clause (i), by

12 inserting ‘‘or equivalent report or notice,’’ after

13 ‘‘a return,’’;

14 (B) in clause (i), by inserting ‘‘or given’’

15 after ‘‘filed’’; and

16 (C) in clause (ii)—

17 (i) by inserting ‘‘or given’’ after

18 ‘‘filed’’; and

19 (ii) by inserting ‘‘, report, or notice’’

20 after ‘‘return’’; and

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

22 ‘‘For purposes of this subsection, the term ‘return’ means

23 a return that satisfies the requirements of applicable non24 bankruptcy law (including applicable filing requirements).

25 Such term includes a return prepared pursuant to section
241

•S 3186 IS

1 6020(a) of the Internal Revenue Code of 1986, or similar

2 State or local law, or a written stipulation to a judgment

3 or a final order entered by a nonbankruptcy tribunal, but

4 does not include a return made pursuant to section

5 6020(b) of the Internal Revenue Code of 1986, or a simi6 lar State or local law.’’.

7 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN8 PAID TAXES.

9 Section 505(b)(2) of title 11, United States Code, as

10 amended by this Act, is amended by inserting ‘‘the es11 tate,’’ after ‘‘misrepresentation,’’.

12 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON13 FIRM CHAPTER 13 PLANS.

14 (a) FILING OF PREPETITION TAX RETURNS RE15 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of

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

17 amended by adding at the end the following:

18 ‘‘(9) the debtor has filed all applicable Federal,

19 State, and local tax returns as required by section

20 1308.’’.

21 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

22 RETURNS.—

23 (1) IN GENERAL.—Subchapter I of chapter 13

24 of title 11, United States Code, is amended by add25 ing at the end the following:
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1 ‘‘§ 1308. Filing of prepetition tax returns

2 ‘‘(a) Not later than the day before the date on which

3 the meeting of the creditors is first scheduled to be held

4 under section 341(a), if the debtor was required to file

5 a tax return under applicable nonbankruptcy law, the

6 debtor shall file with appropriate tax authorities all tax

7 returns for all taxable periods ending during the 4-year

8 period ending on the date of the filing of the petition.

9 ‘‘(b)(1) Subject to paragraph (2), if the tax returns

10 required by subsection (a) have not been filed by the date

11 on which the meeting of creditors is first scheduled to be

12 held under section 341(a), the trustee may hold open that

13 meeting for a reasonable period of time to allow the debtor

14 an additional period of time to file any unfiled returns,

15 but such additional period of time shall not extend

16 beyond—

17 ‘‘(A) for any return that is past due as of the

18 date of the filing of the petition, the date that is 120

19 days after the date of that meeting; or

20 ‘‘(B) for any return that is not past due as of

21 the date of the filing of the petition, the later of—

22 ‘‘(i) the date that is 120 days after the

23 date of that meeting; or

24 ‘‘(ii) the date on which the return is due

25 under the last automatic extension of time for

26 filing that return to which the debtor is enti-
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1 tled, and for which request is timely made, in

2 accordance with applicable nonbankruptcy law.

3 ‘‘(2) Upon notice and hearing, and order entered be4 fore the tolling of any applicable filing period determined

5 under this subsection, if the debtor demonstrates by a pre6 ponderance of the evidence that the failure to file a return

7 as required under this subsection is attributable to cir8 cumstances beyond the control of the debtor, the court

9 may extend the filing period established by the trustee

10 under this subsection for—

11 ‘‘(A) a period of not more than 30 days for re12 turns described in paragraph (1); and

13 ‘‘(B) a period not to extend after the applicable

14 extended due date for a return described in para15 graph (2).

16 ‘‘(c) For purposes of this section, the term ‘return’

17 includes a return prepared pursuant to subsection (a) or

18 (b) of section 6020 of the Internal Revenue Code of 1986,

19 or a similar State or local law, or a written stipulation

20 to a judgment or a final order entered by a nonbankruptcy

21 tribunal.’’.

22 (2) CONFORMING AMENDMENT.—The table of

23 sections at the beginning of chapter 13 of title 11,

24 United States Code, is amended by inserting after

25 the item relating to section 1307 the following:

‘‘1308. Filing of prepetition tax returns.’’.
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•S 3186 IS

1 (c) DISMISSAL OR CONVERSION ON FAILURE TO

2 COMPLY.—Section 1307 of title 11, United States Code,

3 is amended—

4 (1) by redesignating subsections (e) and (f) as

5 subsections (f) and (g), respectively; and

6 (2) by inserting after subsection (d) the fol7 lowing:

8 ‘‘(e) Upon the failure of the debtor to file a tax return

9 under section 1308, on request of a party in interest or

10 the United States trustee and after notice and a hearing,

11 the court shall dismiss a case or convert a case under this

12 chapter to a case under chapter 7 of this title, whichever

13 is in the best interest of the creditors and the estate.’’.

14 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of

15 title 11, United States Code, is amended by inserting be16 fore the period at the end the following ‘‘, and except that

17 in a case under chapter 13, a claim of a governmental

18 unit for a tax with respect to a return filed under section

19 1308 shall be timely if the claim is filed on or before the

20 date that is 60 days after the date on which such return

21 was filed as required’’.

22 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

23 CONFIRMATION.—It is the sense of Congress that the Ad24 visory Committee on Bankruptcy Rules of the Judicial

25 Conference of the United States should, as soon as prac-
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•S 3186 IS

1 ticable after the date of enactment of this Act, propose

2 for adoption amended Federal Rules of Bankruptcy Proce3 dure which provide that—

4 (1) notwithstanding the provisions of Rule

5 3015(f), in cases under chapter 13 of title 11,

6 United States Code, an objection to the confirmation

7 of a plan filed by a governmental unit on or before

8 the date that is 60 days after the date on which the

9 debtor files all tax returns required under sections

10 1308 and 1325(a)(7) of title 11, United States

11 Code, shall be treated for all purposes as if such ob12 jection had been timely filed before such confirma13 tion; and

14 (2) in addition to the provisions of Rule 3007,

15 in a case under chapter 13 of title 11, United States

16 Code, no objection to a tax with respect to which a

17 return is required to be filed under section 1308 of

18 title 11, United States Code, shall be filed until such

19 return has been filed as required.

20 SEC. 717. STANDARDS FOR TAX DISCLOSURE.

21 Section 1125(a)(1) of title 11, United States Code,

22 is amended—

23 (1) by inserting ‘‘including a discussion of the

24 potential material Federal tax consequences of the

25 plan to the debtor, any successor to the debtor, and
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•S 3186 IS

1 a hypothetical investor typical of the holders of

2 claims or interests in the case,’’ after ‘‘records’’; and

3 (2) by striking ‘‘a hypothetical reasonable inves4 tor typical of holders of claims or interests’’ and in5 serting ‘‘such a hypothetical investor’’.

6 SEC. 718. SETOFF OF TAX REFUNDS.

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

8 amended by inserting after paragraph (26), as added by

9 this Act, the following:

10 ‘‘(27) under subsection (a), of the setoff under

11 applicable nonbankruptcy law of an income tax re12 fund, by a governmental unit, with respect to a tax13 able period that ended before the order for relief

14 against an income tax liability for a taxable period

15 that also ended before the order for relief, except

16 that in any case in which the setoff of an income tax

17 refund is not permitted under applicable nonbank18 ruptcy law because of a pending action to determine

19 the amount or legality of a tax liability, the govern20 mental unit may hold the refund pending the resolu21 tion of the action, unless the court, upon motion of

22 the trustee and after notice and hearing, grants the

23 taxing authority adequate protection (within the

24 meaning of section 361) for the secured claim of

25 that authority in the setoff under section 506(a);’’.
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•S 3186 IS

1 SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT2 MENT OF STATE AND LOCAL TAXES.

3 (a) IN GENERAL.—Section 346 of title 11, United

4 States Code, is amended to read as follows:

5 ‘‘§ 346. Special provisions related to the treatment of

6 state and local taxes

7 ‘‘(a) Whenever the Internal Revenue Code of 1986

8 provides that a separate taxable estate or entity is created

9 in a case concerning a debtor under this title, and the in10 come, gain, loss, deductions, and credits of such estate

11 shall be taxed to or claimed by the estate, a separate tax12 able estate is also created for purposes of any State and

13 local law imposing a tax on or measured by income and

14 such income, gain, loss, deductions, and credits shall be

15 taxed to or claimed by the estate and may not be taxed

16 to or claimed by the debtor. The preceding sentence shall

17 not apply if the case is dismissed. The trustee shall make

18 tax returns of income required under any such State or

19 local law.

20 ‘‘(b) Whenever the Internal Revenue Code of 1986

21 provides that no separate taxable estate shall be created

22 in a case concerning a debtor under this title, and the in23 come, gain, loss, deductions, and credits of an estate shall

24 be taxed to or claimed by the debtor, such income, gain,

25 loss, deductions, and credits shall be taxed to or claimed

26 by the debtor under a State or local law imposing a tax
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•S 3186 IS

1 on or measured by income and may not be taxed to or

2 claimed by the estate. The trustee shall make such tax

3 returns of income of corporations and of partnerships as

4 are required under any State or local law, but with respect

5 to partnerships, shall make said returns only to the extent

6 such returns are also required to be made under such

7 Code. The estate shall be liable for any tax imposed on

8 such corporation or partnership, but not for any tax im9 posed on partners or members.

10 ‘‘(c) With respect to a partnership or any entity treat11 ed as a partnership under a State or local law imposing

12 a tax on or measured by income that is a debtor in a case

13 under this title, any gain or loss resulting from a distribu14 tion of property from such partnership, or any distributive

15 share of any income, gain, loss, deduction, or credit of a

16 partner or member that is distributed, or considered dis17 tributed, from such partnership, after the commencement

18 of the case, is gain, loss, income, deduction, or credit, as

19 the case may be, of the partner or member, and if such

20 partner or member is a debtor in a case under this title,

21 shall be subject to tax in accordance with subsection (a)

22 or (b).

23 ‘‘(d) For purposes of any State or local law imposing

24 a tax on or measured by income, the taxable period of

25 a debtor in a case under this title shall terminate only
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•S 3186 IS

1 if and to the extent that the taxable period of such debtor

2 terminates under the Internal Revenue Code of 1986.

3 ‘‘(e) The estate in any case described in subsection

4 (a) shall use the same accounting method as the debtor

5 used immediately before the commencement of the case,

6 if such method of accounting complies with applicable non7 bankruptcy tax law.

8 ‘‘(f) For purposes of any State or local law imposing

9 a tax on or measured by income, a transfer of property

10 from the debtor to the estate or from the estate to the

11 debtor shall not be treated as a disposition for purposes

12 of any provision assigning tax consequences to a disposi13 tion, except to the extent that such transfer is treated as

14 a disposition under the Internal Revenue Code of 1986.

15 ‘‘(g) Whenever a tax is imposed pursuant to a State

16 or local law imposing a tax on or measured by income pur17 suant to subsection (a) or (b), such tax shall be imposed

18 at rates generally applicable to the same types of entities

19 under such State or local law.

20 ‘‘(h) The trustee shall withhold from any payment of

21 claims for wages, salaries, commissions, dividends, inter22 est, or other payments, or collect, any amount required

23 to be withheld or collected under applicable State or local

24 tax law, and shall pay such withheld or collected amount

25 to the appropriate governmental unit at the time and in
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•S 3186 IS

1 the manner required by such tax law, and with the same

2 priority as the claim from which such amount was with3 held or collected was paid.

4 ‘‘(i)(1) To the extent that any State or local law im5 posing a tax on or measured by income provides for the

6 carryover of any tax attribute from one taxable period to

7 a subsequent taxable period, the estate shall succeed to

8 such tax attribute in any case in which such estate is sub9 ject to tax under subsection (a).

10 ‘‘(2) After such a case is closed or dismissed, the

11 debtor shall succeed to any tax attribute to which the es12 tate succeeded under paragraph (1) to the extent con13 sistent with the Internal Revenue Code of 1986.

14 ‘‘(3) The estate may carry back any loss or tax at15 tribute to a taxable period of the debtor that ended before

16 the order for relief under this title to the extent that—

17 ‘‘(A) applicable State or local tax law provides

18 for a carryback in the case of the debtor; and

19 ‘‘(B) the same or a similar tax attribute may be

20 carried back by the estate to such a taxable period

21 of the debtor under the Internal Revenue Code of

22 1986.

23 ‘‘(j)(1) For purposes of any State or local law impos24 ing a tax on or measured by income, income is not realized

25 by the estate, the debtor, or a successor to the debtor by
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•S 3186 IS

1 reason of discharge of indebtedness in a case under this

2 title, except to the extent, if any, that such income is sub3 ject to tax under the Internal Revenue Code of 1986.

4 ‘‘(2) Whenever the Internal Revenue Code of 1986

5 provides that the amount excluded from gross income in

6 respect of the discharge of indebtedness in a case under

7 this title shall be applied to reduce the tax attributes of

8 the debtor or the estate, a similar reduction shall be made

9 under any State or local law imposing a tax on or meas10 ured by income to the extent such State or local law recog11 nizes such attributes. Such State or local law may also

12 provide for the reduction of other attributes to the extent

13 that the full amount of income from the discharge of in14 debtedness has not been applied.

15 ‘‘(k)(1) Except as provided in this section and section

16 505, the time and manner of filing tax returns and the

17 items of income, gain, loss, deduction, and credit of any

18 taxpayer shall be determined under applicable nonbank19 ruptcy law.

20 ‘‘(2) For Federal tax purposes, the provisions of this

21 section are subject to the Internal Revenue Code of 1986

22 and other applicable Federal nonbankruptcy law.’’.

23 (b) CONFORMING AMENDMENTS.—

24 (1) Section 728 of title 11, United States Code,

25 is repealed.
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•S 3186 IS

1 (2) Section 1146 of title 11, United States

2 Code, is amended—

3 (A) by striking subsections (a) and (b);

4 and

5 (B) by redesignating subsections (c) and

6 (d) as subsections (a) and (b), respectively.

7 (3) Section 1231 of title 11, United States

8 Code, is amended—

9 (A) by striking subsections (a) and (b);

10 and

11 (B) by redesignating subsections (c) and

12 (d) as subsections (a) and (b), respectively.

13 SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX

14 RETURNS.

15 Section 521 of title 11, United States Code, as

16 amended by this Act, is amended by adding at the end

17 the following:

18 ‘‘(k)(1) Notwithstanding any other provision of this

19 title, if the debtor fails to file a tax return that becomes

20 due after the commencement of the case or to properly

21 obtain an extension of the due date for filing such return,

22 the taxing authority may request that the court enter an

23 order converting or dismissing the case.

24 ‘‘(2) If the debtor does not file the required return

25 or obtain the extension referred to in paragraph (1) within
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•S 3186 IS

1 90 days after a request is filed by the taxing authority

2 under that paragraph, the court shall convert or dismiss

3 the case, whichever is in the best interests of creditors and

4 the estate.’’.

5 TITLE VIII—ANCILLARY AND

6 OTHER CROSS-BORDER CASES

7 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,

8 UNITED STATES CODE.

9 (a) IN GENERAL.—Title 11, United States Code, is

10 amended by inserting after chapter 13 the following:

11 ‘‘CHAPTER 15—ANCILLARY AND OTHER

12 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.
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•S 3186 IS

‘‘1519. Relief that may be granted upon filing petition for recognition.

‘‘1520. Effects of recognition of a foreign main proceeding.

‘‘1521. Relief that may be granted upon recognition.

‘‘1522. Protection of creditors and other interested persons.

‘‘1523. Actions to avoid acts detrimental to creditors.

‘‘1524. Intervention by a foreign representative.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND

FOREIGN REPRESENTATIVES

‘‘1525. Cooperation and direct communication between the court and foreign

courts or foreign representatives.

‘‘1526. Cooperation and direct communication between the trustee and foreign

courts or foreign representatives.

‘‘1527. Forms of cooperation.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘1528. Commencement of a case under this title after recognition of a foreign

main proceeding.

‘‘1529. Coordination of a case under this title and a foreign proceeding.

‘‘1530. Coordination of more than 1 foreign proceeding.

‘‘1531. Presumption of insolvency based on recognition of a foreign main proceeding.

‘‘1532. Rule of payment in concurrent proceedings.

1 ‘‘§ 1501. Purpose and scope of application

2 ‘‘(a) The purpose of this chapter is to incorporate the

3 Model Law on Cross-Border Insolvency so as to provide

4 effective mechanisms for dealing with cases of cross-bor5 der insolvency with the objectives of—

6 ‘‘(1) cooperation between—

7 ‘‘(A) United States courts, United States

8 trustees, trustees, examiners, debtors, and debt9 ors in possession; and

10 ‘‘(B) the courts and other competent au11 thorities of foreign countries involved in cross12 border insolvency cases;

13 ‘‘(2) greater legal certainty for trade and in14 vestment;
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•S 3186 IS

1 ‘‘(3) fair and efficient administration of cross2 border insolvencies that protects the interests of all

3 creditors, and other interested entities, including the

4 debtor;

5 ‘‘(4) protection and maximization of the value

6 of the debtor’s assets; and

7 ‘‘(5) facilitation of the rescue of financially

8 troubled businesses, thereby protecting investment

9 and preserving employment.

10 ‘‘(b) This chapter applies where—

11 ‘‘(1) assistance is sought in the United States

12 by a foreign court or a foreign representative in con13 nection with a foreign proceeding;

14 ‘‘(2) assistance is sought in a foreign country in

15 connection with a case under this title;

16 ‘‘(3) a foreign proceeding and a case under this

17 title with respect to the same debtor are taking place

18 concurrently; or

19 ‘‘(4) creditors or other interested persons in a

20 foreign country have an interest in requesting the

21 commencement of, or participating in, a case or pro22 ceeding under this title.

23 ‘‘(c) This chapter does not apply to—
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1 ‘‘(1) a proceeding concerning an entity, other

2 than a foreign insurance company, identified by ex3 clusion in section 109(b);

4 ‘‘(2) an individual, or to an individual and such

5 individual’s spouse, who have debts within the limits

6 specified in section 109(e) and who are citizens of

7 the United States or aliens lawfully admitted for

8 permanent residence in the United States; or

9 ‘‘(3) an entity subject to a proceeding under the

10 Securities Investor Protection Act of 1970, a stock11 broker subject to subchapter III of chapter 7 of this

12 title, or a commodity broker subject to subchapter

13 IV of chapter 7 of this title.

14 ‘‘(d) The court may not grant relief under this chap15 ter with respect to any deposit, escrow, trust fund, or

16 other security required or permitted under any applicable

17 State insurance law or regulation for the benefit of claim

18 holders in the United States.

19 ‘‘SUBCHAPTER I—GENERAL PROVISIONS

20 ‘‘§ 1502. Definitions

21 ‘‘For the purposes of this chapter, the term—

22 ‘‘(1) ‘debtor’ means an entity that is the subject

23 of a foreign proceeding;
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•S 3186 IS

1 ‘‘(2) ‘establishment’ means any place of oper2 ations where the debtor carries out a nontransitory

3 economic activity;

4 ‘‘(3) ‘foreign court’ means a judicial or other

5 authority competent to control or supervise a foreign

6 proceeding;

7 ‘‘(4) ‘foreign main proceeding’ means a foreign

8 proceeding taking place in the country where the

9 debtor has the center of its main interests;

10 ‘‘(5) ‘foreign nonmain proceeding’ means a for11 eign proceeding, other than a foreign main pro12 ceeding, taking place in a country where the debtor

13 has an establishment;

14 ‘‘(6) ‘trustee’ includes a trustee, a debtor in

15 possession in a case under any chapter of this title,

16 or a debtor under chapter 9 of this title;

17 ‘‘(7) ‘recognition’ means the entry of an order

18 granting recognition of a foreign main proceeding or

19 foreign nonmain proceeding under this chapter; and

20 ‘‘(8) ‘within the territorial jurisdiction of the

21 United States’, when used with reference to property

22 of a debtor, refers to tangible property located with23 in the territory of the United States and intangible

24 property deemed under applicable nonbankruptcy

25 law to be located within that territory, including any
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•S 3186 IS

1 property subject to attachment or garnishment that

2 may properly be seized or garnished by an action in

3 a Federal or State court in the United States.

4 ‘‘§ 1503. International obligations of the United States

5 ‘‘To the extent that this chapter conflicts with an ob6 ligation of the United States arising out of any treaty or

7 other form of agreement to which it is a party with one

8 or more other countries, the requirements of the treaty

9 or agreement prevail.

10 ‘‘§ 1504. Commencement of ancillary case

11 ‘‘A case under this chapter is commenced by the filing

12 of a petition for recognition of a foreign proceeding under

13 section 1515.

14 ‘‘§ 1505. Authorization to act in a foreign country

15 ‘‘A trustee or another entity (including an examiner)

16 may be authorized by the court to act in a foreign country

17 on behalf of an estate created under section 541. An entity

18 authorized to act under this section may act in any way

19 permitted by the applicable foreign law.

20 ‘‘§ 1506. Public policy exception

21 ‘‘Nothing in this chapter prevents the court from re22 fusing to take an action governed by this chapter if the

23 action would be manifestly contrary to the public policy

24 of the United States.
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•S 3186 IS

1 ‘‘§ 1507. Additional assistance

2 ‘‘(a) Subject to the specific limitations stated else3 where in this chapter the court, if recognition is granted,

4 may provide additional assistance to a foreign representa5 tive under this title or under other laws of the United

6 States.

7 ‘‘(b) In determining whether to provide additional as8 sistance under this title or under other laws of the United

9 States, the court shall consider whether such additional

10 assistance, consistent with the principles of comity, will

11 reasonably assure—

12 ‘‘(1) just treatment of all holders of claims

13 against or interests in the debtor’s property;

14 ‘‘(2) protection of claim holders in the United

15 States against prejudice and inconvenience in the

16 processing of claims in such foreign proceeding;

17 ‘‘(3) prevention of preferential or fraudulent

18 dispositions of property of the debtor;

19 ‘‘(4) distribution of proceeds of the debtor’s

20 property substantially in accordance with the order

21 prescribed by this title; and

22 ‘‘(5) if appropriate, the provision of an oppor23 tunity for a fresh start for the individual that such

24 foreign proceeding concerns.
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1 ‘‘§ 1508. Interpretation

2 ‘‘In interpreting this chapter, the court shall consider

3 its international origin, and the need to promote an appli4 cation of this chapter that is consistent with the applica5 tion of similar statutes adopted by foreign jurisdictions.

6 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP7 RESENTATIVES AND CREDITORS TO THE

8 COURT

9 ‘‘§ 1509. Right of direct access

10 ‘‘(a) A foreign representative may commence a case

11 under section 1504 by filing directly with the court a peti12 tion for recognition of a foreign proceeding under section

13 1515.

14 ‘‘(b) If the court grants recognition under section

15 1515, and subject to any limitations that the court may

16 impose consistent with the policy of this chapter—

17 ‘‘(1) the foreign representative has the capacity

18 to sue and be sued in a court in the United States;

19 ‘‘(2) the foreign representative may apply di20 rectly to a court in the United States for appropriate

21 relief in that court; and

22 ‘‘(3) a court in the United States shall grant

23 comity or cooperation to the foreign representative.

24 ‘‘(c) A request for comity or cooperation by a foreign

25 representative in a court in the United States other than

26 the court which granted recognition shall be accompanied
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•S 3186 IS

1 by a certified copy of an order granting recognition under

2 section 1517.

3 ‘‘(d) If the court denies recognition under this chap4 ter, the court may issue any appropriate order necessary

5 to prevent the foreign representative from obtaining com6 ity or cooperation from courts in the United States.

7 ‘‘(e) Whether or not the court grants recognition, and

8 subject to sections 306 and 1510, a foreign representative

9 is subject to applicable nonbankruptcy law.

10 ‘‘(f) Notwithstanding any other provision of this sec11 tion, the failure of a foreign representative to commence

12 a case or to obtain recognition under this chapter does

13 not affect any right the foreign representative may have

14 to sue in a court in the United States to collect or recover

15 a claim which is the property of the debtor.

16 ‘‘§ 1510. Limited jurisdiction

17 ‘‘The sole fact that a foreign representative files a

18 petition under section 1515 does not subject the foreign

19 representative to the jurisdiction of any court in the

20 United States for any other purpose.

21 ‘‘§ 1511. Commencement of case under section 301 or

22 303

23 ‘‘(a) Upon recognition, a foreign representative may

24 commence—

25 ‘‘(1) an involuntary case under section 303; or
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•S 3186 IS

1 ‘‘(2) a voluntary case under section 301 or 302,

2 if the foreign proceeding is a foreign main pro3 ceeding.

4 ‘‘(b) The petition commencing a case under sub5 section (a) must be accompanied by a certified copy of

6 an order granting recognition. The court where the peti7 tion for recognition has been filed must be advised of the

8 foreign representative’s intent to commence a case under

9 subsection (a) prior to such commencement.

10 ‘‘§ 1512. Participation of a foreign representative in a

11 case under this title

12 ‘‘Upon recognition of a foreign proceeding, the for13 eign representative in the recognized proceeding is entitled

14 to participate as a party in interest in a case regarding

15 the debtor under this title.

16 ‘‘§ 1513. Access of foreign creditors to a case under

17 this title

18 ‘‘(a) Foreign creditors have the same rights regarding

19 the commencement of, and participation in, a case under

20 this title as domestic creditors.

21 ‘‘(b)(1) Subsection (a) does not change or codify

22 present law as to the priority of claims under section 507

23 or 726 of this title, except that the claim of a foreign cred24 itor under those sections shall not be given a lower priority

25 than that of general unsecured claims without priority
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•S 3186 IS

1 solely because the holder of such claim is a foreign cred2 itor.

3 ‘‘(2)(A) Subsection (a) and paragraph (1) do not

4 change or codify present law as to the allowability of for5 eign revenue claims or other foreign public law claims in

6 a proceeding under this title.

7 ‘‘(B) Allowance and priority as to a foreign tax claim

8 or other foreign public law claim shall be governed by any

9 applicable tax treaty of the United States, under the con10 ditions and circumstances specified therein.

11 ‘‘§ 1514. Notification to foreign creditors concerning a

12 case under this title

13 ‘‘(a) Whenever in a case under this title notice is to

14 be given to creditors generally or to any class or category

15 of creditors, such notice shall also be given to the known

16 creditors generally, or to creditors in the notified class or

17 category, that do not have addresses in the United States.

18 The court may order that appropriate steps be taken with

19 a view to notifying any creditor whose address is not yet

20 known.

21 ‘‘(b) Such notification to creditors with foreign ad22 dresses described in subsection (a) shall be given individ23 ually, unless the court considers that, under the cir24 cumstances, some other form of notification would be

25 more appropriate. No letter or other formality is required.
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•S 3186 IS

1 ‘‘(c) When a notification of commencement of a case

2 is to be given to foreign creditors, the notification shall—

3 ‘‘(1) indicate the time period for filing proofs of

4 claim and specify the place for their filing;

5 ‘‘(2) indicate whether secured creditors need to

6 file their proofs of claim; and

7 ‘‘(3) contain any other information required to

8 be included in such a notification to creditors under

9 this title and the orders of the court.

10 ‘‘(d) Any rule of procedure or order of the court as

11 to notice or the filing of a claim shall provide such addi12 tional time to creditors with foreign addresses as is rea13 sonable under the circumstances.

14 ‘‘SUBCHAPTER III—RECOGNITION OF A

15 FOREIGN PROCEEDING AND RELIEF

16 ‘‘§ 1515. Application for recognition

17 ‘‘(a) A foreign representative applies to the court for

18 recognition of the foreign proceeding in which the foreign

19 representative has been appointed by filing a petition for

20 recognition.

21 ‘‘(b) A petition for recognition shall be accompanied

22 by—

23 ‘‘(1) a certified copy of the decision com24 mencing the foreign proceeding and appointing the

25 foreign representative;
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•S 3186 IS

1 ‘‘(2) a certificate from the foreign court affirm2 ing the existence of the foreign proceeding and of

3 the appointment of the foreign representative; or

4 ‘‘(3) in the absence of evidence referred to in

5 paragraphs (1) and (2), any other evidence accept6 able to the court of the existence of the foreign pro7 ceeding and of the appointment of the foreign rep8 resentative.

9 ‘‘(c) A petition for recognition shall also be accom10 panied by a statement identifying all foreign proceedings

11 with respect to the debtor that are known to the foreign

12 representative.

13 ‘‘(d) The documents referred to in paragraphs (1)

14 and (2) of subsection (b) shall be translated into English.

15 The court may require a translation into English of addi16 tional documents.

17 ‘‘§ 1516. Presumptions concerning recognition

18 ‘‘(a) If the decision or certificate referred to in section

19 1515(b) indicates that the foreign proceeding is a foreign

20 proceeding (as defined in section 101) and that the person

21 or body is a foreign representative (as defined in section

22 101), the court is entitled to so presume.

23 ‘‘(b) The court is entitled to presume that documents

24 submitted in support of the petition for recognition are

25 authentic, whether or not they have been legalized.
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•S 3186 IS

1 ‘‘(c) In the absence of evidence to the contrary, the

2 debtor’s registered office, or habitual residence in the case

3 of an individual, is presumed to be the center of the debt4 or’s main interests.

5 ‘‘§ 1517. Order granting recognition

6 ‘‘(a) Subject to section 1506, after notice and a hear7 ing, an order recognizing a foreign proceeding shall be en8 tered if—

9 ‘‘(1) the foreign proceeding for which recogni10 tion is sought is a foreign main proceeding or for11 eign nonmain proceeding within the meaning of sec12 tion 1502;

13 ‘‘(2) the foreign representative applying for rec14 ognition is a person or body as defined in section

15 101; and

16 ‘‘(3) the petition meets the requirements of sec17 tion 1515.

18 ‘‘(b) The foreign proceeding shall be recognized—

19 ‘‘(1) as a foreign main proceeding if it is taking

20 place in the country where the debtor has the center

21 of its main interests; or

22 ‘‘(2) as a foreign nonmain proceeding if the

23 debtor has an establishment within the meaning of

24 section 1502 in the foreign country where the pro25 ceeding is pending.
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•S 3186 IS

1 ‘‘(c) A petition for recognition of a foreign proceeding

2 shall be decided upon at the earliest possible time. Entry

3 of an order recognizing a foreign proceeding constitutes

4 recognition under this chapter.

5 ‘‘(d) The provisions of this subchapter do not prevent

6 modification or termination of recognition if it is shown

7 that the grounds for granting it were fully or partially

8 lacking or have ceased to exist, but in considering such

9 action the court shall give due weight to possible prejudice

10 to parties that have relied upon the order granting rec11 ognition. The case under this chapter may be closed in

12 the manner prescribed under section 350.

13 ‘‘§ 1518. Subsequent information

14 ‘‘From the time of filing the petition for recognition

15 of the foreign proceeding, the foreign representative shall

16 file with the court promptly a notice of change of status

17 concerning—

18 ‘‘(1) any substantial change in the status of the

19 foreign proceeding or the status of the foreign rep20 resentative’s appointment; and

21 ‘‘(2) any other foreign proceeding regarding the

22 debtor that becomes known to the foreign represent23 ative.
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•S 3186 IS

1 ‘‘§ 1519. Relief that may be granted upon filing peti2 tion for recognition

3 ‘‘(a) From the time of filing a petition for recognition

4 until the court rules on the petition, the court may, at

5 the request of the foreign representative, where relief is

6 urgently needed to protect the assets of the debtor or the

7 interests of the creditors, grant relief of a provisional na8 ture, including—

9 ‘‘(1) staying execution against the debtor’s as10 sets;

11 ‘‘(2) entrusting the administration or realiza12 tion of all or part of the debtor’s assets located in

13 the United States to the foreign representative or

14 another person authorized by the court, including an

15 examiner, in order to protect and preserve the value

16 of assets that, by their nature or because of other

17 circumstances, are perishable, susceptible to devalu18 ation or otherwise in jeopardy; and

19 ‘‘(3) any relief referred to in paragraph (3),

20 (4), or (7) of section 1521(a).

21 ‘‘(b) Unless extended under section 1521(a)(6), the

22 relief granted under this section terminates when the peti23 tion for recognition is granted.

24 ‘‘(c) It is a ground for denial of relief under this sec25 tion that such relief would interfere with the administra26 tion of a foreign main proceeding.
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•S 3186 IS

1 ‘‘(d) The court may not enjoin a police or regulatory

2 act of a governmental unit, including a criminal action or

3 proceeding, under this section.

4 ‘‘(e) The standards, procedures, and limitations ap5 plicable to an injunction shall apply to relief under this

6 section.

7 ‘‘(f) The exercise of rights not subject to the stay

8 arising under section 362(a) pursuant to paragraph (6),

9 (7), (17), or (28) of section 362(b) or pursuant to section

10 362(l) shall not be stayed by any order of a court or ad11 ministrative agency in any proceeding under this chapter.

12 ‘‘§ 1520. Effects of recognition of a foreign main pro13 ceeding

14 ‘‘(a) Upon recognition of a foreign proceeding that

15 is a foreign main proceeding—

16 ‘‘(1) sections 361 and 362 apply with respect to

17 the debtor and that property of the debtor that is

18 within the territorial jurisdiction of the United

19 States;

20 ‘‘(2) sections 363, 549, and 552 of this title

21 apply to a transfer of an interest of the debtor in

22 property that is within the territorial jurisdiction of

23 the United States to the same extent that the sec24 tions would apply to property of an estate;
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•S 3186 IS

1 ‘‘(3) unless the court orders otherwise, the for2 eign representative may operate the debtor’s busi3 ness and may exercise the rights and powers of a

4 trustee under and to the extent provided by sections

5 363 and 552; and

6 ‘‘(4) section 552 applies to property of the debt7 or that is within the territorial jurisdiction of the

8 United States.

9 ‘‘(b) Subsection (a) does not affect the right to com10 mence an individual action or proceeding in a foreign

11 country to the extent necessary to preserve a claim against

12 the debtor.

13 ‘‘(c) Subsection (a) does not affect the right of a for14 eign representative or an entity to file a petition com15 mencing a case under this title or the right of any party

16 to file claims or take other proper actions in such a case.

17 ‘‘§ 1521. Relief that may be granted upon recognition

18 ‘‘(a) Upon recognition of a foreign proceeding, wheth19 er main or nonmain, where necessary to effectuate the

20 purpose of this chapter and to protect the assets of the

21 debtor or the interests of the creditors, the court may, at

22 the request of the foreign representative, grant any appro23 priate relief, including—

24 ‘‘(1) staying the commencement or continuation

25 of an individual action or proceeding concerning the
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•S 3186 IS

1 debtor’s assets, rights, obligations or liabilities to the

2 extent they have not been stayed under section

3 1520(a);

4 ‘‘(2) staying execution against the debtor’s as5 sets to the extent it has not been stayed under sec6 tion 1520(a);

7 ‘‘(3) suspending the right to transfer, encumber

8 or otherwise dispose of any assets of the debtor to

9 the extent this right has not been suspended under

10 section 1520(a);

11 ‘‘(4) providing for the examination of witnesses,

12 the taking of evidence or the delivery of information

13 concerning the debtor’s assets, affairs, rights, obliga14 tions or liabilities;

15 ‘‘(5) entrusting the administration or realiza16 tion of all or part of the debtor’s assets within the

17 territorial jurisdiction of the United States to the

18 foreign representative or another person, including

19 an examiner, authorized by the court;

20 ‘‘(6) extending relief granted under section

21 1519(a); and

22 ‘‘(7) granting any additional relief that may be

23 available to a trustee, except for relief available

24 under sections 522, 544, 545, 547, 548, 550, and

25 724(a).
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•S 3186 IS

1 ‘‘(b) Upon recognition of a foreign proceeding, wheth2 er main or nonmain, the court may, at the request of the

3 foreign representative, entrust the distribution of all or

4 part of the debtor’s assets located in the United States

5 to the foreign representative or another person, including

6 an examiner, authorized by the court, provided that the

7 court is satisfied that the interests of creditors in the

8 United States are sufficiently protected.

9 ‘‘(c) In granting relief under this section to a rep10 resentative of a foreign nonmain proceeding, the court

11 must be satisfied that the relief relates to assets that,

12 under the law of the United States, should be adminis13 tered in the foreign nonmain proceeding or concerns infor14 mation required in that proceeding.

15 ‘‘(d) The court may not enjoin a police or regulatory

16 act of a governmental unit, including a criminal action or

17 proceeding, under this section.

18 ‘‘(e) The standards, procedures, and limitations ap19 plicable to an injunction shall apply to relief under para20 graphs (1), (2), (3), and (6) of subsection (a).

21 ‘‘(f) The exercise of rights not subject to the stay

22 arising under section 362(a) pursuant to paragraph (6),

23 (7), (17), or (28) of section 362(b) or pursuant to section

24 362(l) shall not be stayed by any order of a court or ad25 ministrative agency in any proceeding under this chapter.
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•S 3186 IS

1 ‘‘§ 1522. Protection of creditors and other interested

2 persons

3 ‘‘(a) The court may grant relief under section 1519

4 or 1521, or may modify or terminate relief under sub5 section (c), only if the interests of the creditors and other

6 interested entities, including the debtor, are sufficiently

7 protected.

8 ‘‘(b) The court may subject relief granted under sec9 tion 1519 or 1521, or the operation of the debtor’s busi10 ness under section 1520(a)(3) of this title, to conditions

11 it considers appropriate, including the giving of security

12 or the filing of a bond.

13 ‘‘(c) The court may, at the request of the foreign rep14 resentative or an entity affected by relief granted under

15 section 1519 or 1521, or at its own motion, modify or

16 terminate such relief.

17 ‘‘(d) Section 1104(d) shall apply to the appointment

18 of an examiner under this chapter. Any examiner shall

19 comply with the qualification requirements imposed on a

20 trustee by section 322.

21 ‘‘§ 1523. Actions to avoid acts detrimental to creditors

22 ‘‘(a) Upon recognition of a foreign proceeding, the

23 foreign representative has standing in a case concerning

24 the debtor pending under another chapter of this title to

25 initiate actions under sections 522, 544, 545, 547, 548,

26 550, 553, and 724(a).
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•S 3186 IS

1 ‘‘(b) When the foreign proceeding is a foreign

2 nonmain proceeding, the court must be satisfied that an

3 action under subsection (a) relates to assets that, under

4 United States law, should be administered in the foreign

5 nonmain proceeding.

6 ‘‘§ 1524. Intervention by a foreign representative

7 ‘‘Upon recognition of a foreign proceeding, the for8 eign representative may intervene in any proceedings in

9 a State or Federal court in the United States in which

10 the debtor is a party.

11 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR12 EIGN COURTS AND FOREIGN REPRESENTA13 TIVES

14 ‘‘§ 1525. Cooperation and direct communication be15 tween the court and foreign courts or for16 eign representatives

17 ‘‘(a) Consistent with section 1501, the court shall co18 operate to the maximum extent possible with foreign

19 courts or foreign representatives, either directly or

20 through the trustee.

21 ‘‘(b) The court is entitled to communicate directly

22 with, or to request information or assistance directly from,

23 foreign courts or foreign representatives, subject to the

24 rights of parties in interest to notice and participation.
275

•S 3186 IS

1 ‘‘§ 1526. Cooperation and direct communication be2 tween the trustee and foreign courts or

3 foreign representatives

4 ‘‘(a) Consistent with section 1501, the trustee or

5 other person, including an examiner, authorized by the

6 court, shall, subject to the supervision of the court, cooper7 ate to the maximum extent possible with foreign courts

8 or foreign representatives.

9 ‘‘(b) The trustee or other person, including an exam10 iner, authorized by the court is entitled, subject to the su11 pervision of the court, to communicate directly with for12 eign courts or foreign representatives.

13 ‘‘§ 1527. Forms of cooperation

14 ‘‘Cooperation referred to in sections 1525 and 1526

15 may be implemented by any appropriate means,

16 including—

17 ‘‘(1) appointment of a person or body, including

18 an examiner, to act at the direction of the court;

19 ‘‘(2) communication of information by any

20 means considered appropriate by the court;

21 ‘‘(3) coordination of the administration and su22 pervision of the debtor’s assets and affairs;

23 ‘‘(4) approval or implementation of agreements

24 concerning the coordination of proceedings; and

25 ‘‘(5) coordination of concurrent proceedings re26 garding the same debtor.
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•S 3186 IS

1 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

2 ‘‘§ 1528. Commencement of a case under this title

3 after recognition of a foreign main pro4 ceeding

5 ‘‘After recognition of a foreign main proceeding, a

6 case under another chapter of this title may be commenced

7 only if the debtor has assets in the United States. The

8 effects of such case shall be restricted to the assets of the

9 debtor that are within the territorial jurisdiction of the

10 United States and, to the extent necessary to implement

11 cooperation and coordination under sections 1525, 1526,

12 and 1527, to other assets of the debtor that are within

13 the jurisdiction of the court under sections 541(a) of this

14 title, and 1334(e) of title 28, to the extent that such other

15 assets are not subject to the jurisdiction and control of

16 a foreign proceeding that has been recognized under this

17 chapter.

18 ‘‘§ 1529. Coordination of a case under this title and a

19 foreign proceeding

20 ‘‘If a foreign proceeding and a case under another

21 chapter of this title are taking place concurrently regard22 ing the same debtor, the court shall seek cooperation and

23 coordination under sections 1525, 1526, and 1527, and

24 the following shall apply:
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•S 3186 IS

1 ‘‘(1) If the case in the United States is taking

2 place at the time the petition for recognition of the

3 foreign proceeding is filed—

4 ‘‘(A) any relief granted under sections

5 1519 or 1521 must be consistent with the relief

6 granted in the case in the United States; and

7 ‘‘(B) even if the foreign proceeding is rec8 ognized as a foreign main proceeding, section

9 1520 does not apply.

10 ‘‘(2) If a case in the United States under this

11 title commences after recognition, or after the filing

12 of the petition for recognition, of the foreign

13 proceeding—

14 ‘‘(A) any relief in effect under sections

15 1519 or 1521 shall be reviewed by the court

16 and shall be modified or terminated if incon17 sistent with the case in the United States; and

18 ‘‘(B) if the foreign proceeding is a foreign

19 main proceeding, the stay and suspension re20 ferred to in section 1520(a) shall be modified or

21 terminated if inconsistent with the relief grant22 ed in the case in the United States.

23 ‘‘(3) In granting, extending, or modifying relief

24 granted to a representative of a foreign nonmain

25 proceeding, the court must be satisfied that the re-
278

•S 3186 IS

1 lief relates to assets that, under the laws of the

2 United States, should be administered in the foreign

3 nonmain proceeding or concerns information re4 quired in that proceeding.

5 ‘‘(4) In achieving cooperation and coordination

6 under sections 1528 and 1529, the court may grant

7 any of the relief authorized under section 305.

8 ‘‘§ 1530. Coordination of more than 1 foreign pro9 ceeding

10 ‘‘In matters referred to in section 1501, with respect

11 to more than 1 foreign proceeding regarding the debtor,

12 the court shall seek cooperation and coordination under

13 sections 1525, 1526, and 1527, and the following shall

14 apply:

15 ‘‘(1) Any relief granted under section 1519 or

16 1521 to a representative of a foreign nonmain pro17 ceeding after recognition of a foreign main pro18 ceeding must be consistent with the foreign main

19 proceeding.

20 ‘‘(2) If a foreign main proceeding is recognized

21 after recognition, or after the filing of a petition for

22 recognition, of a foreign nonmain proceeding, any

23 relief in effect under section 1519 or 1521 shall be

24 reviewed by the court and shall be modified or termi-
279

•S 3186 IS

1 nated if inconsistent with the foreign main pro2 ceeding.

3 ‘‘(3) If, after recognition of a foreign nonmain

4 proceeding, another foreign nonmain proceeding is

5 recognized, the court shall grant, modify, or termi6 nate relief for the purpose of facilitating coordina7 tion of the proceedings.

8 ‘‘§ 1531. Presumption of insolvency based on recogni9 tion of a foreign main proceeding

10 ‘‘In the absence of evidence to the contrary, recogni11 tion of a foreign main proceeding is, for the purpose of

12 commencing a proceeding under section 303, proof that

13 the debtor is generally not paying its debts as such debts

14 become due.

15 ‘‘§ 1532. Rule of payment in concurrent proceedings

16 ‘‘Without prejudice to secured claims or rights in

17 rem, a creditor who has received payment with respect to

18 its claim in a foreign proceeding pursuant to a law relating

19 to insolvency may not receive a payment for the same

20 claim in a case under any other chapter of this title re21 garding the debtor, so long as the payment to other credi22 tors of the same class is proportionately less than the pay23 ment the creditor has already received.’’.
280

•S 3186 IS

1 (b) CLERICAL AMENDMENT.—The table of chapters

2 for title 11, United States Code, is amended by inserting

3 after the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’.

4 SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28,

5 UNITED STATES CODE.

6 (a) APPLICABILITY OF CHAPTERS.—Section 103 of

7 title 11, United States Code, is amended—

8 (1) in subsection (a), by inserting before the pe9 riod the following: ‘‘, and this chapter, sections 307,

10 362(l), 555 through 557, and 559 through 562

11 apply in a case under chapter 15’’; and

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

13 ‘‘(j) Chapter 15 applies only in a case under such

14 chapter, except that—

15 ‘‘(1) sections 1505, 1513, and 1514 apply in all

16 cases under this title; and

17 ‘‘(2) section 1509 applies whether or not a case

18 under this title is pending.’’.

19 (b) DEFINITIONS.—Section 101 of title 11, United

20 States Code, is amended by striking paragraphs (23) and

21 (24) and inserting the following:

22 ‘‘(23) ‘foreign proceeding’ means a collective ju23 dicial or administrative proceeding in a foreign coun24 try, including an interim proceeding, under a law re25 lating to insolvency or adjustment of debt in which
281

•S 3186 IS

1 proceeding the assets and affairs of the debtor are

2 subject to control or supervision by a foreign court,

3 for the purpose of reorganization or liquidation;

4 ‘‘(24) ‘foreign representative’ means a person

5 or body, including a person or body appointed on an

6 interim basis, authorized in a foreign proceeding to

7 administer the reorganization or the liquidation of

8 the debtor’s assets or affairs or to act as a rep9 resentative of the foreign proceeding;’’.

10 (c) AMENDMENTS TO TITLE 28, UNITED STATES

11 CODE.—

12 (1) PROCEDURES.—Section 157(b)(2) of title

13 28, United States Code, is amended—

14 (A) in subparagraph (N), by striking

15 ‘‘and’’ at the end;

16 (B) in subparagraph (O), by striking the

17 period at the end and inserting ‘‘; and’’; and

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

19 ‘‘(P) recognition of foreign proceedings and

20 other matters under chapter 15 of title 11.’’.

21 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

22 Section 1334(c) of title 28, United States Code, is

23 amended by striking ‘‘Nothing in’’ and inserting

24 ‘‘Except with respect to a case under chapter 15 of

25 title 11, nothing in’’.
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•S 3186 IS

1 (3) DUTIES OF TRUSTEES.—Section 586(a)(3)

2 of title 28, United States Code, is amended by strik3 ing ‘‘or 13’’ and inserting ‘‘13, or 15,’’.

4 (4) VENUE OF CASES ANCILLARY TO FOREIGN

5 PROCEEDINGS.—Section 1410 of title 28, United

6 States Code, is amended to read as follows:

7 ‘‘§ 1410. Venue of cases ancillary to foreign pro8 ceedings

9 ‘‘A case under chapter 15 of title 11 may be com10 menced in the district court for the district—

11 ‘‘(1) in which the debtor has its principal place

12 of business or principal assets in the United States;

13 ‘‘(2) if the debtor does not have a place of busi14 ness or assets in the United States, in which there

15 is pending against the debtor an action or pro16 ceeding in a Federal or State court; or

17 ‘‘(3) in a case other than those specified in

18 paragraph (1) or (2), in which venue will be con19 sistent with the interests of justice and the conven20 ience of the parties, having regard to the relief

21 sought by the foreign representative.’’.

22 (d) OTHER SECTIONS OF TITLE 11.—

23 (1) Section 109(b)(3) of title 11, United States

24 Code, is amended to read as follows:
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•S 3186 IS

1 ‘‘(3)(A) a foreign insurance company, engaged

2 in such business in the United States; or

3 ‘‘(B) a foreign bank, savings bank, cooperative

4 bank, savings and loan association, building and

5 loan association, or credit union, that has a branch

6 or agency (as defined in section 1(b) of the Inter7 national Banking Act of 1978 (12 U.S.C. 3101) in

8 the United States.’’.

9 (2) Section 303(k) of title 11, United States

10 Code, is repealed.

11 (3)(A) Section 304 of title 11, United States

12 Code, is repealed.

13 (B) The table of sections at the beginning of

14 chapter 3 of title 11, United States Code, is amend15 ed by striking the item relating to section 304.

16 (C) Section 306 of title 11, United States Code,

17 is amended by striking ‘‘, 304,’’ each place it ap18 pears.

19 (4) Section 305(a)(2) of title 11, United States

20 Code, is amended to read as follows:

21 ‘‘(2)(A) a petition under section 1515 of this

22 title for recognition of a foreign proceeding has been

23 granted; and
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•S 3186 IS

1 ‘‘(B) the purposes of chapter 15 of this title

2 would be best served by such dismissal or suspen3 sion.’’.

4 (5) Section 508 of title 11, United States Code,

5 is amended—

6 (A) by striking subsection (a); and

7 (B) in subsection (b), by striking ‘‘(b)’’.

8 TITLE IX—FINANCIAL

9 CONTRACT PROVISIONS

10 SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON11 SERVATORS OR RECEIVERS OF INSURED DE12 POSITORY INSTITUTIONS.

13 (a) DEFINITION OF QUALIFIED FINANCIAL CON14 TRACT.—Section 11(e)(8)(D)(i) of the Federal Deposit In15 surance Act (12 U.S.C. 1821(e)(8)(D)(i)) is amended by

16 inserting ‘‘, resolution, or order’’ after ‘‘any similar agree17 ment that the Corporation determines by regulation’’.

18 (b) DEFINITION OF SECURITIES CONTRACT.—Sec19 tion 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act

20 (12 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as fol21 lows:

22 ‘‘(ii) SECURITIES CONTRACT.—The

23 term ‘securities contract’—

24 ‘‘(I) means a contract for the

25 purchase, sale, or loan of a security, a
285

•S 3186 IS

1 certificate of deposit, a mortgage loan,

2 or any interest in a mortgage loan, a

3 group or index of securities, certifi4 cates of deposit, or mortgage loans or

5 interests therein (including any inter6 est therein or based on the value

7 thereof) or any option on any of the

8 foregoing, including any option to

9 purchase or sell any such security,

10 certificate of deposit, loan, interest,

11 group or index, or option;

12 ‘‘(II) does not include any pur13 chase, sale, or repurchase obligation

14 under a participation in a commercial

15 mortgage loan unless the Corporation

16 determines by regulation, resolution,

17 or order to include any such agree18 ment within the meaning of such

19 term;

20 ‘‘(III) means any option entered

21 into on a national securities exchange

22 relating to foreign currencies;

23 ‘‘(IV) means the guarantee by or

24 to any securities clearing agency of

25 any settlement of cash, securities, cer-
286

•S 3186 IS

1 tificates of deposit, mortgage loans or

2 interests therein, group or index of se3 curities, certificates of deposit, or

4 mortgage loans or interests therein

5 (including any interest therein or

6 based on the value thereof) or option

7 on any of the foregoing, including any

8 option to purchase or sell any such se9 curity, certificate of deposit, loan, in10 terest, group or index or option;

11 ‘‘(V) means any margin loan;

12 ‘‘(VI) means any other agree13 ment or transaction that is similar to

14 any agreement or transaction referred

15 to in this clause;

16 ‘‘(VII) means any combination of

17 the agreements or transactions re18 ferred to in this clause;

19 ‘‘(VIII) means any option to

20 enter into any agreement or trans21 action referred to in this clause;

22 ‘‘(IX) means a master agreement

23 that provides for an agreement or

24 transaction referred to in subclause

25 (I), (III), (IV), (V), (VI), (VII), or
287

•S 3186 IS

1 (VIII), together with all supplements

2 to any such master agreement, with3 out regard to whether the master

4 agreement provides for an agreement

5 or transaction that is not a securities

6 contract under this clause, except that

7 the master agreement shall be consid8 ered to be a securities contract under

9 this clause only with respect to each

10 agreement or transaction under the

11 master agreement that is referred to

12 in subclause (I), (III), (IV), (V), (VI),

13 (VII), or (VIII); and

14 ‘‘(X) means any security agree15 ment or arrangement or other credit

16 enhancement related to any agree17 ment or transaction referred to in this

18 clause.’’.

19 (c) DEFINITION OF COMMODITY CONTRACT.—Sec20 tion 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act

21 (12 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as fol22 lows:

23 ‘‘(iii) COMMODITY CONTRACT.—The

24 term ‘commodity contract’ means—
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•S 3186 IS

1 ‘‘(I) with respect to a futures

2 commission merchant, a contract for

3 the purchase or sale of a commodity

4 for future delivery on, or subject to

5 the rules of, a contract market or

6 board of trade;

7 ‘‘(II) with respect to a foreign fu8 tures commission merchant, a foreign

9 future;

10 ‘‘(III) with respect to a leverage

11 transaction merchant, a leverage

12 transaction;

13 ‘‘(IV) with respect to a clearing

14 organization, a contract for the pur15 chase or sale of a commodity for fu16 ture delivery on, or subject to the

17 rules of, a contract market or board

18 of trade that is cleared by such clear19 ing organization, or commodity option

20 traded on, or subject to the rules of,

21 a contract market or board of trade

22 that is cleared by such clearing orga23 nization;

24 ‘‘(V) with respect to a commodity

25 options dealer, a commodity option;
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•S 3186 IS

1 ‘‘(VI) any other agreement or

2 transaction that is similar to any

3 agreement or transaction referred to

4 in this clause;

5 ‘‘(VII) any combination of the

6 agreements or transactions referred to

7 in this clause;

8 ‘‘(VIII) any option to enter into

9 any agreement or transaction referred

10 to in this clause;

11 ‘‘(IX) a master agreement that

12 provides for an agreement or trans13 action referred to in subclause (I),

14 (II), (III), (IV), (V), (VI), (VII), or

15 (VIII), together with all supplements

16 to any such master agreement, with17 out regard to whether the master

18 agreement provides for an agreement

19 or transaction that is not a com20 modity contract under this clause, ex21 cept that the master agreement shall

22 be considered to be a commodity con23 tract under this clause only with re24 spect to each agreement or trans25 action under the master agreement
290

•S 3186 IS

1 that is referred to in subclause (I),

2 (II), (III), (IV), (V), (VI), (VII), or

3 (VIII); or

4 ‘‘(X) any security agreement or

5 arrangement or other credit enhance6 ment related to any agreement or

7 transaction referred to in this

8 clause.’’.

9 (d) DEFINITION OF FORWARD CONTRACT.—Section

10 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12

11 U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:

12 ‘‘(iv) FORWARD CONTRACT.—The

13 term ‘forward contract’ means—

14 ‘‘(I) a contract (other than a

15 commodity contract) for the purchase,

16 sale, or transfer of a commodity or

17 any similar good, article, service,

18 right, or interest which is presently or

19 in the future becomes the subject of

20 dealing in the forward contract trade,

21 or product or byproduct thereof, with

22 a maturity date more than 2 days

23 after the date the contract is entered

24 into, including, a repurchase trans25 action, reverse repurchase transaction,
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•S 3186 IS

1 consignment, lease, swap, hedge

2 transaction, deposit, loan, option, allo3 cated transaction, unallocated trans4 action, or any other similar agree5 ment;

6 ‘‘(II) any combination of agree7 ments or transactions referred to in

8 subclauses (I) and (III);

9 ‘‘(III) any option to enter into

10 any agreement or transaction referred

11 to in subclause (I) or (II);

12 ‘‘(IV) a master agreement that

13 provides for an agreement or trans14 action referred to in subclauses (I),

15 (II), or (III), together with all supple16 ments to any such master agreement,

17 without regard to whether the master

18 agreement provides for an agreement

19 or transaction that is not a forward

20 contract under this clause, except that

21 the master agreement shall be consid22 ered to be a forward contract under

23 this clause only with respect to each

24 agreement or transaction under the
292

•S 3186 IS

1 master agreement that is referred to

2 in subclause (I), (II), or (III); or

3 ‘‘(V) any security agreement or

4 arrangement or other credit enhance5 ment related to any agreement or

6 transaction referred to in subclause

7 (I), (II), (III), or (IV).’’.

8 (e) DEFINITION OF REPURCHASE AGREEMENT.—

9 Section 11(e)(8)(D)(v) of the Federal Deposit Insurance

10 Act (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as

11 follows:

12 ‘‘(v) REPURCHASE AGREEMENT.—The

13 term ‘repurchase agreement’ (which defini14 tion also applies to a reverse repurchase

15 agreement)—

16 ‘‘(I) means an agreement, includ17 ing related terms, which provides for

18 the transfer of one or more certifi19 cates of deposit, mortgage-related se20 curities (as such term is defined in

21 the Securities Exchange Act of 1934),

22 mortgage loans, interests in mortgage23 related securities or mortgage loans,

24 eligible bankers’ acceptances, qualified

25 foreign government securities or secu-
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•S 3186 IS

1 rities that are direct obligations of, or

2 that are fully guaranteed by, the

3 United States or any agency of the

4 United States against the transfer of

5 funds by the transferee of such certifi6 cates of deposit, eligible bankers’ ac7 ceptances, securities, loans, or inter8 ests with a simultaneous agreement

9 by such transferee to transfer to the

10 transferor thereof certificates of de11 posit, eligible bankers’ acceptances,

12 securities, loans, or interests as de13 scribed above, at a date certain not

14 later than 1 year after such transfers

15 or on demand, against the transfer of

16 funds, or any other similar agreement;

17 ‘‘(II) does not include any repur18 chase obligation under a participation

19 in a commercial mortgage loan unless

20 the Corporation determines by regula21 tion, resolution, or order to include

22 any such participation within the

23 meaning of such term;
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•S 3186 IS

1 ‘‘(III) means any combination of

2 agreements or transactions referred to

3 in subclauses (I) and (IV);

4 ‘‘(IV) means any option to enter

5 into any agreement or transaction re6 ferred to in subclause (I) or (III);

7 ‘‘(V) means a master agreement

8 that provides for an agreement or

9 transaction referred to in subclause

10 (I), (III), or (IV), together with all

11 supplements to any such master

12 agreement, without regard to whether

13 the master agreement provides for an

14 agreement or transaction that is not a

15 repurchase agreement under this

16 clause, except that the master agree17 ment shall be considered to be a re18 purchase agreement under this sub19 clause only with respect to each agree20 ment or transaction under the master

21 agreement that is referred to in sub22 clause (I), (III), or (IV); and

23 ‘‘(VI) means any security agree24 ment or arrangement or other credit

25 enhancement related to any agree-
295

•S 3186 IS

1 ment or transaction referred to in

2 subclause (I), (III), (IV), or (V).

3 For purposes of this clause, the term

4 ‘qualified foreign government security’

5 means a security that is a direct obligation

6 of, or that is fully guaranteed by, the cen7 tral government of a member of the Orga8 nization for Economic Cooperation and

9 Development (as determined by regulation

10 or order adopted by the appropriate Fed11 eral banking authority).’’.

12 (f) DEFINITION OF SWAP AGREEMENT.—Section

13 11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12

14 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows:

15 ‘‘(vi) SWAP AGREEMENT.—The term

16 ‘swap agreement’ means—

17 ‘‘(I) any agreement, including the

18 terms and conditions incorporated by

19 reference in any such agreement,

20 which is an interest rate swap, option,

21 future, or forward agreement, includ22 ing a rate floor, rate cap, rate collar,

23 cross-currency rate swap, and basis

24 swap; a spot, same day-tomorrow, to25 morrow-next, forward, or other for-
296

•S 3186 IS

1 eign exchange or precious metals

2 agreement; a currency swap, option,

3 future, or forward agreement; an eq4 uity index or equity swap, option, fu5 ture, or forward agreement; a debt

6 index or debt swap, option, future, or

7 forward agreement; a credit spread or

8 credit swap, option, future, or forward

9 agreement; a commodity index or

10 commodity swap, option, future, or

11 forward agreement; or a weather

12 swap, weather derivative, or weather

13 option;

14 ‘‘(II) any agreement or trans15 action similar to any other agreement

16 or transaction referred to in this

17 clause that is presently, or in the fu18 ture becomes, regularly entered into

19 in the swap market (including terms

20 and conditions incorporated by ref21 erence in such agreement) and that is

22 a forward, swap, future, or option on

23 one or more rates, currencies, com24 modities, equity securities or other eq25 uity instruments, debt securities or
297

•S 3186 IS

1 other debt instruments, or economic

2 indices or measures of economic risk

3 or value;

4 ‘‘(III) any combination of agree5 ments or transactions referred to in

6 this clause;

7 ‘‘(IV) any option to enter into

8 any agreement or transaction referred

9 to in this clause;

10 ‘‘(V) a master agreement that

11 provides for an agreement or trans12 action referred to in subclause (I),

13 (II), (III), or (IV), together with all

14 supplements to any such master

15 agreement, without regard to whether

16 the master agreement contains an

17 agreement or transaction that is not a

18 swap agreement under this clause, ex19 cept that the master agreement shall

20 be considered to be a swap agreement

21 under this clause only with respect to

22 each agreement or transaction under

23 the master agreement that is referred

24 to in subclause (I), (II), (III), or (IV);

25 and
298

•S 3186 IS

1 ‘‘(VI) any security agreement or

2 arrangement or other credit enhance3 ment related to any agreements or

4 transactions referred to in subpara5 graph (I), (II), (III), (IV), or (V).

6 Such term is applicable for purposes of

7 this title only and shall not be construed or

8 applied so as to challenge or affect the

9 characterization, definition, or treatment of

10 any swap agreement under any other stat11 ute, regulation, or rule, including the Secu12 rities Act of 1933, the Securities Exchange

13 Act of 1934, the Public Utility Holding

14 Company Act of 1935, the Trust Indenture

15 Act of 1939, the Investment Company Act

16 of 1940, the Investment Advisers Act of

17 1940, the Securities Investor Protection

18 Act of 1970, the Commodity Exchange

19 Act, and the regulations promulgated by

20 the Securities and Exchange Commission

21 or the Commodity Futures Trading Com22 mission.’’.

23 (g) DEFINITION OF TRANSFER.—Section

24 11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12

25 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows:
299

•S 3186 IS

1 ‘‘(viii) TRANSFER.—The term ‘trans2 fer’ means every mode, direct or indirect,

3 absolute or conditional, voluntary or invol4 untary, of disposing of or parting with

5 property or with an interest in property,

6 including retention of title as a security in7 terest and foreclosure of the depository

8 institutions’s equity of redemption.’’.

9 (h) TREATMENT OF QUALIFIED FINANCIAL CON10 TRACTS.—Section 11(e)(8) of the Federal Deposit Insur11 ance Act (12 U.S.C. 1821(e)(8)) is amended—

12 (1) in subparagraph (A)—

13 (A) by striking ‘‘paragraph (10)’’ and in14 serting ‘‘paragraphs (9) and (10)’’;

15 (B) in clause (i), by striking ‘‘to cause the

16 termination or liquidation’’ and inserting ‘‘such

17 person has to cause the termination, liquida18 tion, or acceleration’’; and

19 (C) by striking clause (ii) and inserting the

20 following:

21 ‘‘(ii) any right under any security

22 agreement or arrangement or other credit

23 enhancement related to one or more quali24 fied financial contracts described in clause

25 (i);’’; and
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•S 3186 IS

1 (2) in subparagraph (E), by striking clause (ii)

2 and inserting the following:

3 ‘‘(ii) any right under any security

4 agreement or arrangement or other credit

5 enhancement related to one or more quali6 fied financial contracts described in clause

7 (i);’’.

8 (i) AVOIDANCE OF TRANSFERS.—Section

9 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12

10 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section

11 5242 of the Revised Statutes of the United States (12

12 U.S.C. 91) or any other Federal or State law relating to

13 the avoidance of preferential or fraudulent transfers,’’ be14 fore ‘‘the Corporation’’.

15 SEC. 902. AUTHORITY OF THE CORPORATION WITH RE16 SPECT TO FAILED AND FAILING INSTITU17 TIONS.

18 (a) IN GENERAL.—Section 11(e)(8) of the Federal

19 Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is

20 amended—

21 (1) in subparagraph (E), by striking ‘‘other

22 than paragraph (12) of this subsection, subsection

23 (d)(9)’’ and inserting ‘‘other than subsections (d)(9)

24 and (e)(10)’’; and
301

•S 3186 IS

1 (2) by adding at the end the following new sub2 paragraphs:

3 ‘‘(F) CLARIFICATION.—No provision of law

4 shall be construed as limiting the right or

5 power of the Corporation, or authorizing any

6 court or agency to limit or delay, in any man7 ner, the right or power of the Corporation to

8 transfer any qualified financial contract in ac9 cordance with paragraphs (9) and (10) of this

10 subsection or to disaffirm or repudiate any such

11 contract in accordance with subsection (e)(1) of

12 this section.

13 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC14 TIVE.—

15 ‘‘(i) IN GENERAL.—Notwithstanding

16 the provisions of subparagraphs (A) and

17 (E), and sections 403 and 404 of the Fed18 eral Deposit Insurance Corporation Im19 provement Act of 1991, no walkaway

20 clause shall be enforceable in a qualified fi21 nancial contract of an insured depository

22 institution in default.

23 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

24 For purposes of this subparagraph, the

25 term ‘walkaway clause’ means a provision
302

•S 3186 IS

1 in a qualified financial contract that, after

2 calculation of a value of a party’s position

3 or an amount due to or from 1 of the par4 ties in accordance with its terms upon ter5 mination, liquidation, or acceleration of the

6 qualified financial contract, either does not

7 create a payment obligation of a party or

8 extinguishes a payment obligation of a

9 party in whole or in part solely because of

10 such party’s status as a nondefaulting

11 party.’’.

12 (b) TECHNICAL AND CONFORMING AMENDMENT.—

13 Section 11(e)(12)(A) of the Federal Deposit Insurance

14 Act (12 U.S.C. 1821(e)(12)(A)) is amended by inserting

15 ‘‘or the exercise of rights or powers by’’ after ‘‘the ap16 pointment of’’.

17 SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF

18 QUALIFIED FINANCIAL CONTRACTS.

19 (a) TRANSFERS OF QUALIFIED FINANCIAL CON20 TRACTS TO FINANCIAL INSTITUTIONS.—Section 11(e)(9)

21 of the Federal Deposit Insurance Act (12 U.S.C.

22 1821(e)(9)) is amended to read as follows:

23 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON24 TRACTS.—
303

•S 3186 IS

1 ‘‘(A) IN GENERAL.—In making any trans2 fer of assets or liabilities of a depository institu3 tion in default which includes any qualified fi4 nancial contract, the conservator or receiver for

5 such depository institution shall either—

6 ‘‘(i) transfer to one financial institu7 tion, other than a financial institution for

8 which a conservator, receiver, trustee in

9 bankruptcy, or other legal custodian has

10 been appointed or which is otherwise the

11 subject of a bankruptcy or insolvency

12 proceeding—

13 ‘‘(I) all qualified financial con14 tracts between any person or any af15 filiate of such person and the deposi16 tory institution in default;

17 ‘‘(II) all claims of such person or

18 any affiliate of such person against

19 such depository institution under any

20 such contract (other than any claim

21 which, under the terms of any such

22 contract, is subordinated to the claims

23 of general unsecured creditors of such

24 institution);
304

•S 3186 IS

1 ‘‘(III) all claims of such deposi2 tory institution against such person or

3 any affiliate of such person under any

4 such contract; and

5 ‘‘(IV) all property securing or

6 any other credit enhancement for any

7 contract described in subclause (I) or

8 any claim described in subclause (II)

9 or (III) under any such contract; or

10 ‘‘(ii) transfer none of the qualified fi11 nancial contracts, claims, property or other

12 credit enhancement referred to in clause (i)

13 (with respect to such person and any affil14 iate of such person).

15 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR16 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

17 AGENCY OF A FOREIGN BANK OR FINANCIAL IN18 STITUTION.—In transferring any qualified fi19 nancial contract and related claims and prop20 erty under subparagraph (A)(i), the conservator

21 or receiver for the depository institution shall

22 not make such transfer to a foreign bank, fi23 nancial institution organized under the laws of

24 a foreign country, or a branch or agency of a

25 foreign bank or financial institution unless,
305

•S 3186 IS

1 under the law applicable to such bank, financial

2 institution, branch or agency, to the qualified

3 financial contracts, and to any netting contract,

4 any security agreement or arrangement or other

5 credit enhancement related to one or more

6 qualified financial contracts, the contractual

7 rights of the parties to such qualified financial

8 contracts, netting contracts, security agree9 ments or arrangements, or other credit en10 hancements are enforceable substantially to the

11 same extent as permitted under this section.

12 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

13 TO THE RULES OF A CLEARING ORGANIZA14 TION.—In the event that a conservator or re15 ceiver transfers any qualified financial contract

16 and related claims, property, and credit en17 hancements pursuant to subparagraph (A)(i)

18 and such contract is subject to the rules of a

19 clearing organization, the clearing organization

20 shall not be required to accept the transferee as

21 a member by virtue of the transfer.

22 ‘‘(D) DEFINITION.—For purposes of this

23 paragraph, the term ‘financial institution’

24 means a broker or dealer, a depository institu25 tion, a futures commission merchant, or any
306

•S 3186 IS

1 other institution, as determined by the Corpora2 tion by regulation to be a financial institution.’’.

3 (b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

4 COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal

5 Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is

6 amended in the material immediately following clause (ii)

7 by striking ‘‘the conservator’’ and all that follows through

8 the period and inserting the following: ‘‘the conservator

9 or receiver shall notify any person who is a party to any

10 such contract of such transfer by 5:00 p.m. (eastern time)

11 on the business day following the date of the appointment

12 of the receiver in the case of a receivership, or the business

13 day following such transfer in the case of a conservator14 ship.’’.

15 (c) RIGHTS AGAINST RECEIVER AND TREATMENT OF

16 BRIDGE BANKS.—Section 11(e)(10) of the Federal De17 posit Insurance Act (12 U.S.C. 1821(e)(10)) is

18 amended—

19 (1) by redesignating subparagraph (B) as sub20 paragraph (D); and

21 (2) by inserting after subparagraph (A) the fol22 lowing new subparagraphs:

23 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE24 ABLE.—
307

•S 3186 IS

1 ‘‘(i) RECEIVERSHIP.—A person who is

2 a party to a qualified financial contract

3 with an insured depository institution may

4 not exercise any right that such person has

5 to terminate, liquidate, or net such con6 tract under paragraph (8)(A) of this sub7 section or section 403 or 404 of the Fed8 eral Deposit Insurance Corporation Im9 provement Act of 1991, solely by reason of

10 or incidental to the appointment of a re11 ceiver for the depository institution (or the

12 insolvency or financial condition of the de13 pository institution for which the receiver

14 has been appointed)—

15 ‘‘(I) until 5:00 p.m. (eastern

16 time) on the business day following

17 the date of the appointment of the re18 ceiver; or

19 ‘‘(II) after the person has re20 ceived notice that the contract has

21 been transferred pursuant to para22 graph (9)(A).

23 ‘‘(ii) CONSERVATORSHIP.—A person

24 who is a party to a qualified financial con25 tract with an insured depository institution
308

•S 3186 IS

1 may not exercise any right that such per2 son has to terminate, liquidate, or net such

3 contract under paragraph (8)(E) of this

4 subsection or sections 403 or 404 of the

5 Federal Deposit Insurance Corporation

6 Improvement Act of 1991, solely by reason

7 of or incidental to the appointment of a

8 conservator for the depository institution

9 (or the insolvency or financial condition of

10 the depository institution for which the

11 conservator has been appointed).

12 ‘‘(iii) NOTICE.—For purposes of this

13 paragraph, the Corporation as receiver or

14 conservator of an insured depository insti15 tution shall be deemed to have notified a

16 person who is a party to a qualified finan17 cial contract with such depository institu18 tion if the Corporation has taken steps

19 reasonably calculated to provide notice to

20 such person by the time specified in sub21 paragraph (A).

22 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

23 The following institutions shall not be consid24 ered to be a financial institution for which a

25 conservator, receiver, trustee in bankruptcy, or
309

•S 3186 IS

1 other legal custodian has been appointed or

2 which is otherwise the subject of a bankruptcy

3 or insolvency proceeding for purposes of para4 graph (9):

5 ‘‘(i) A bridge bank.

6 ‘‘(ii) A depository institution orga7 nized by the Corporation, for which a con8 servator is appointed either—

9 ‘‘(I) immediately upon the orga10 nization of the institution; or

11 ‘‘(II) at the time of a purchase

12 and assumption transaction between

13 the depository institution and the Cor14 poration as receiver for a depository

15 institution in default.’’.

16 SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR

17 REPUDIATION OF QUALIFIED FINANCIAL

18 CONTRACTS.

19 Section 11(e) of the Federal Deposit Insurance Act

20 (12 U.S.C. 1821(e)) is amended—

21 (1) by redesignating paragraphs (11) through

22 (15) as paragraphs (12) through (16), respectively;

23 and

24 (2) by inserting after paragraph (10) the fol25 lowing new paragraph:
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•S 3186 IS

1 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

2 QUALIFIED FINANCIAL CONTRACTS.—In exercising

3 the rights of disaffirmance or repudiation of a con4 servator or receiver with respect to any qualified fi5 nancial contract to which an insured depository in6 stitution is a party, the conservator or receiver for

7 such institution shall either—

8 ‘‘(A) disaffirm or repudiate all qualified fi9 nancial contracts between—

10 ‘‘(i) any person or any affiliate of

11 such person; and

12 ‘‘(ii) the depository institution in de13 fault; or

14 ‘‘(B) disaffirm or repudiate none of the

15 qualified financial contracts referred to in sub16 paragraph (A) (with respect to such person or

17 any affiliate of such person).’’.

18 SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER

19 AGREEMENTS.

20 Section 11(e)(8)(D)(vii) of the Federal Deposit In21 surance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to

22 read as follows:

23 ‘‘(vii) TREATMENT OF MASTER

24 AGREEMENT AS ONE AGREEMENT.—Any

25 master agreement for any contract or
311

•S 3186 IS

1 agreement described in any preceding

2 clause of this subparagraph (or any master

3 agreement for such master agreement or

4 agreements), together with all supplements

5 to such master agreement, shall be treated

6 as a single agreement and a single quali7 fied financial contract. If a master agree8 ment contains provisions relating to agree9 ments or transactions that are not them10 selves qualified financial contracts, the

11 master agreement shall be deemed to be a

12 qualified financial contract only with re13 spect to those transactions that are them14 selves qualified financial contracts.’’.

15 SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION

16 IMPROVEMENT ACT OF 1991.

17 (a) DEFINITIONS.—Section 402 of the Federal De18 posit Insurance Corporation Improvement Act of 1991 (12

19 U.S.C. 4402) is amended—

20 (1) in paragraph (2)—

21 (A) in subparagraph (A)(ii), by inserting

22 before the semicolon ‘‘, or is exempt from such

23 registration by order of the Securities and Ex24 change Commission’’; and
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•S 3186 IS

1 (B) in subparagraph (B), by inserting be2 fore the period ‘‘or that has been granted an

3 exemption under section 4(c)(1) of the Com4 modity Exchange Act’’;

5 (2) in paragraph (6)—

6 (A) by redesignating subparagraphs (B)

7 through (D) as subparagraphs (C) through (E),

8 respectively;

9 (B) by inserting after subparagraph (A)

10 the following new subparagraph:

11 ‘‘(B) an uninsured national bank or an un12 insured State bank that is a member of the

13 Federal Reserve System, if the national bank or

14 State member bank is not eligible to make ap15 plication to become an insured bank under sec16 tion 5 of the Federal Deposit Insurance Act;’’;

17 and

18 (C) by amending subparagraph (C) (as re19 designated) to read as follows:

20 ‘‘(C) a branch or agency of a foreign bank,

21 a foreign bank and any branch or agency of the

22 foreign bank, or the foreign bank that estab23 lished the branch or agency, as those terms are

24 defined in section 1(b) of the International

25 Banking Act of 1978;’’;
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•S 3186 IS

1 (3) in paragraph (11), by inserting before the

2 period ‘‘and any other clearing organization with

3 which such clearing organization has a netting con4 tract’’;

5 (4) by amending paragraph (14)(A)(i) to read

6 as follows:

7 ‘‘(i) means a contract or agreement

8 between 2 or more financial institutions,

9 clearing organizations, or members that

10 provides for netting present or future pay11 ment obligations or payment entitlements

12 (including liquidation or closeout values re13 lating to such obligations or entitlements)

14 among the parties to the agreement; and’’;

15 and

16 (5) by adding at the end the following new

17 paragraph:

18 ‘‘(15) PAYMENT.—The term ‘payment’ means a

19 payment of United States dollars, another currency,

20 or a composite currency, and a noncash delivery, in21 cluding a payment or delivery to liquidate an

22 unmatured obligation.’’.

23 (b) ENFORCEABILITY OF BILATERAL NETTING CON24 TRACTS.—Section 403 of the Federal Deposit Insurance
314

•S 3186 IS

1 Corporation Improvement Act of 1991 (12 U.S.C. 4403)

2 is amended—

3 (1) by striking subsection (a) and inserting the

4 following:

5 ‘‘(a) GENERAL RULE.—Notwithstanding any other

6 provision of State or Federal law (other than paragraphs

7 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

8 Deposit Insurance Act or any order authorized under sec9 tion 5(b)(2) of the Securities Investor Protection Act of

10 1970), the covered contractual payment obligations and

11 the covered contractual payment entitlements between any

12 2 financial institutions shall be netted in accordance with,

13 and subject to the conditions of, the terms of any applica14 ble netting contract (except as provided in section

15 561(b)(2) of title 11, United States Code).’’; and

16 (2) by adding at the end the following new sub17 section:

18 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE19 MENTS.—The provisions of any security agreement or ar20 rangement or other credit enhancement related to one or

21 more netting contracts between any 2 financial institu22 tions shall be enforceable in accordance with their terms

23 (except as provided in section 561(b)(2) of title 11, United

24 States Code), and shall not be stayed, avoided, or other25 wise limited by any State or Federal law (other than para-
315

•S 3186 IS

1 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the

2 Federal Deposit Insurance Act and section 5(b)(2) of the

3 Securities Investor Protection Act of 1970).’’.

4 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

5 NETTING CONTRACTS.—Section 404 of the Federal De6 posit Insurance Corporation Improvement Act of 1991 (12

7 U.S.C. 4404) is amended—

8 (1) by striking subsection (a) and inserting the

9 following:

10 ‘‘(a) GENERAL RULE.—Notwithstanding any other

11 provision of State or Federal law (other than paragraphs

12 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

13 Deposit Insurance Act and any order authorized under

14 section 5(b)(2) of the Securities Investor Protection Act

15 of 1970), the covered contractual payment obligations and

16 the covered contractual payment entitlements of a member

17 of a clearing organization to and from all other members

18 of a clearing organization shall be netted in accordance

19 with and subject to the conditions of any applicable net20 ting contract (except as provided in section 561(b)(2) of

21 title 11, United States Code).’’; and

22 (2) by adding at the end the following new sub23 section:

24 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE25 MENTS.—The provisions of any security agreement or ar-
316

•S 3186 IS

1 rangement or other credit enhancement related to one or

2 more netting contracts between any 2 members of a clear3 ing organization shall be enforceable in accordance with

4 their terms (except as provided in section 561(b)(2) of

5 title 11, United States Code), and shall not be stayed,

6 avoided, or otherwise limited by any State or Federal law

7 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec8 tion 11(e) of the Federal Deposit Insurance Act and sec9 tion 5(b)(2) of the Securities Investor Protection Act of

10 1970).’’.

11 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN12 SURED NATIONAL BANKS AND UNINSURED FEDERAL

13 BRANCHES AND AGENCIES.—The Federal Deposit Insur14 ance Corporation Improvement Act of 1991 (12 U.S.C.

15 4401 et seq.) is amended—

16 (1) by redesignating section 407 as section 408;

17 and

18 (2) by inserting after section 406 the following

19 new section:

20 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED

21 NATIONAL BANKS AND UNINSURED FEDERAL

22 BRANCHES AND AGENCIES.

23 ‘‘(a) IN GENERAL.—Notwithstanding any other pro24 vision of law, paragraphs (8), (9), (10), and (11) of section

25 11(e) of the Federal Deposit Insurance Act shall apply
317

•S 3186 IS

1 to an uninsured national bank or uninsured Federal

2 branch or Federal agency, except that for such purpose—

3 ‘‘(1) any reference to the ‘Corporation as re4 ceiver’ or ‘the receiver or the Corporation’ shall refer

5 to the receiver of an uninsured national bank or un6 insured Federal branch or Federal agency appointed

7 by the Comptroller of the Currency;

8 ‘‘(2) any reference to the ‘Corporation’ (other

9 than in section 11(e)(8)(D) of such Act), the ‘Cor10 poration, whether acting as such or as conservator

11 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer

12 to the receiver or conservator of an uninsured na13 tional bank or uninsured Federal branch or Federal

14 agency appointed by the Comptroller of the Cur15 rency; and

16 ‘‘(3) any reference to an ‘insured depository in17 stitution’ or ‘depository institution’ shall refer to an

18 uninsured national bank or an uninsured Federal

19 branch or Federal agency.

20 ‘‘(b) LIABILITY.—The liability of a receiver or conser21 vator of an uninsured national bank or uninsured Federal

22 branch or agency shall be determined in the same manner

23 and subject to the same limitations that apply to receivers

24 and conservators of insured depository institutions under

25 section 11(e) of the Federal Deposit Insurance Act.
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•S 3186 IS

1 ‘‘(c) REGULATORY AUTHORITY.—

2 ‘‘(1) IN GENERAL.—The Comptroller of the

3 Currency, in consultation with the Federal Deposit

4 Insurance Corporation, may promulgate regulations

5 to implement this section.

6 ‘‘(2) SPECIFIC REQUIREMENT.—In promul7 gating regulations to implement this section, the

8 Comptroller of the Currency shall ensure that the

9 regulations generally are consistent with the regula10 tions and policies of the Federal Deposit Insurance

11 Corporation adopted pursuant to the Federal De12 posit Insurance Act.

13 ‘‘(d) DEFINITIONS.—For purposes of this section, the

14 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign

15 bank’ have the same meanings as in section 1(b) of the

16 International Banking Act of 1978.’’.

17 SEC. 907. BANKRUPTCY CODE AMENDMENTS.

18 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR19 CHASE AGREEMENT, SECURITIES CLEARING AGENCY,

20 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU21 RITIES CONTRACT.—Title 11, United States Code, is

22 amended—

23 (1) in section 101—

24 (A) in paragraph (25)—
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•S 3186 IS

1 (i) by striking ‘‘means a contract’’

2 and inserting ‘‘means—

3 ‘‘(A) a contract’’;

4 (ii) by striking ‘‘, or any combination

5 thereof or option thereon;’’ and inserting

6 ‘‘, or any other similar agreement;’’; and

7 (iii) by adding at the end the fol8 lowing:

9 ‘‘(B) any combination of agreements or

10 transactions referred to in subparagraphs (A)

11 and (C);

12 ‘‘(C) any option to enter into an agreement

13 or transaction referred to in subparagraph (A)

14 or (B);

15 ‘‘(D) a master agreement that provides for

16 an agreement or transaction referred to in sub17 paragraph (A), (B), or (C), together with all

18 supplements to any such master agreement,

19 without regard to whether such master agree20 ment provides for an agreement or transaction

21 that is not a forward contract under this para22 graph, except that such master agreement shall

23 be considered to be a forward contract under

24 this paragraph only with respect to each agree25 ment or transaction under such master agree-
320

•S 3186 IS

1 ment that is referred to in subparagraph (A),

2 (B), or (C); or

3 ‘‘(E) any security agreement or arrange4 ment, or other credit enhancement related to

5 any agreement or transaction referred to in

6 subparagraph (A), (B), (C), or (D), but not to

7 exceed the actual value of such contract on the

8 date of the filing of the petition;’’;

9 (B) in paragraph (46), by striking ‘‘on any

10 day during the period beginning 90 days before

11 the date of’’ and inserting ‘‘at any time before’’;

12 (C) by amending paragraph (47) to read

13 as follows:

14 ‘‘(47) ‘repurchase agreement’ (which definition

15 also applies to a reverse repurchase agreement)—

16 ‘‘(A) means—

17 ‘‘(i) an agreement, including related

18 terms, which provides for the transfer of

19 one or more certificates of deposit, mort20 gage related securities (as defined in sec21 tion 3 of the Securities Exchange Act of

22 1934), mortgage loans, interests in mort23 gage related securities or mortgage loans,

24 eligible bankers’ acceptances, qualified for25 eign government securities (defined as a
321

•S 3186 IS

1 security that is a direct obligation of, or

2 that is fully guaranteed by, the central

3 government of a member of the Organiza4 tion for Economic Cooperation and Devel5 opment), or securities that are direct obli6 gations of, or that are fully guaranteed by,

7 the United States or any agency of the

8 United States against the transfer of funds

9 by the transferee of such certificates of de10 posit, eligible bankers’ acceptances, securi11 ties, loans, or interests, with a simulta12 neous agreement by such transferee to

13 transfer to the transferor thereof certifi14 cates of deposit, eligible bankers’ accept15 ance, securities, loans, or interests of the

16 kind described in this clause, at a date cer17 tain not later than 1 year after such trans18 fer or on demand, against the transfer of

19 funds;

20 ‘‘(ii) any combination of agreements

21 or transactions referred to in clauses (i)

22 and (iii);

23 ‘‘(iii) an option to enter into an agree24 ment or transaction referred to in clause

25 (i) or (ii);
322

•S 3186 IS

1 ‘‘(iv) a master agreement that pro2 vides for an agreement or transaction re3 ferred to in clause (i), (ii), or (iii), together

4 with all supplements to any such master

5 agreement, without regard to whether such

6 master agreement provides for an agree7 ment or transaction that is not a repur8 chase agreement under this paragraph, ex9 cept that such master agreement shall be

10 considered to be a repurchase agreement

11 under this paragraph only with respect to

12 each agreement or transaction under the

13 master agreement that is referred to in

14 clause (i), (ii), or (iii); or

15 ‘‘(v) any security agreement or ar16 rangement or other credit enhancement re17 lated to any agreement or transaction re18 ferred to in clause (i), (ii), (iii), or (iv), but

19 not to exceed the actual value of such con20 tract on the date of the filing of the peti21 tion; and

22 ‘‘(B) does not include a repurchase obliga23 tion under a participation in a commercial

24 mortgage loan;’’;
323

•S 3186 IS

1 (D) in paragraph (48), by inserting ‘‘, or

2 exempt from such registration under such sec3 tion pursuant to an order of the Securities and

4 Exchange Commission,’’ after ‘‘1934’’; and

5 (E) by amending paragraph (53B) to read

6 as follows:

7 ‘‘(53B) ‘swap agreement’—

8 ‘‘(A) means—

9 ‘‘(i) any agreement, including the

10 terms and conditions incorporated by ref11 erence in such agreement, which is an in12 terest rate swap, option, future, or forward

13 agreement, including—

14 ‘‘(I) a rate floor, rate cap, rate

15 collar, cross-currency rate swap, and

16 basis swap;

17 ‘‘(II) a spot, same day-tomorrow,

18 tomorrow-next, forward, or other for19 eign exchange or precious metals

20 agreement;

21 ‘‘(III) a currency swap, option,

22 future, or forward agreement;

23 ‘‘(IV) an equity index or an eq24 uity swap, option, future, or forward

25 agreement;
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•S 3186 IS

1 ‘‘(V) a debt index or a debt swap,

2 option, future, or forward agreement;

3 ‘‘(VI) a credit spread or a credit

4 swap, option, future, or forward

5 agreement;

6 ‘‘(VII) a commodity index or a

7 commodity swap, option, future, or

8 forward agreement; or

9 ‘‘(VIII) a weather swap, weather

10 derivative, or weather option;

11 ‘‘(ii) any agreement or transaction

12 similar to any other agreement or trans13 action referred to in this paragraph that—

14 ‘‘(I) is presently, or in the future

15 becomes, regularly entered into in the

16 swap market (including terms and

17 conditions incorporated by reference

18 therein); and

19 ‘‘(II) is a forward, swap, future,

20 or option on one or more rates, cur21 rencies, commodities, equity securities,

22 or other equity instruments, debt se23 curities or other debt instruments, or

24 economic indices or measures of eco25 nomic risk or value;
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•S 3186 IS

1 ‘‘(iii) any combination of agreements

2 or transactions referred to in this subpara3 graph;

4 ‘‘(iv) any option to enter into an

5 agreement or transaction referred to in

6 this subparagraph;

7 ‘‘(v) a master agreement that provides

8 for an agreement or transaction referred to

9 in clause (i), (ii), (iii), or (iv), together

10 with all supplements to any such master

11 agreement, and without regard to whether

12 the master agreement contains an agree13 ment or transaction that is not a swap

14 agreement under this paragraph, except

15 that the master agreement shall be consid16 ered to be a swap agreement under this

17 paragraph only with respect to each agree18 ment or transaction under the master

19 agreement that is referred to in clause (i),

20 (ii), (iii), or (iv); or

21 ‘‘(vi) any security agreement or ar22 rangement or other credit enhancement re23 lated to any agreements or transactions re24 ferred to in clause (i) through (v), but do

25 not to exceed the actual value of such con-
326

•S 3186 IS

1 tract on the date of the filing of the peti2 tion; and

3 ‘‘(B) is applicable for purposes of this title

4 only, and shall not be construed or applied so

5 as to challenge or affect the characterization,

6 definition, or treatment of any swap agreement

7 under any other statute, regulation, or rule, in8 cluding the Securities Act of 1933, the Securi9 ties Exchange Act of 1934, the Public Utility

10 Holding Company Act of 1935, the Trust In11 denture Act of 1939, the Investment Company

12 Act of 1940, the Investment Advisers Act of

13 1940, the Securities Investor Protection Act of

14 1970, the Commodity Exchange Act, and the

15 regulations prescribed by the Securities and Ex16 change Commission or the Commodity Futures

17 Trading Commission.’’;

18 (2) in section 741(7), by striking paragraph (7)

19 and inserting the following:

20 ‘‘(7) ‘securities contract’—

21 ‘‘(A) means—

22 ‘‘(i) a contract for the purchase, sale,

23 or loan of a security, a certificate of de24 posit, a mortgage loan or any interest in a

25 mortgage loan, a group or index of securi-
327

•S 3186 IS

1 ties, certificates of deposit, or mortgage

2 loans or interests therein (including an in3 terest therein or based on the value there4 of), or option on any of the foregoing, in5 cluding an option to purchase or sell any

6 such security, certificate of deposit, loan,

7 interest, group or index, or option;

8 ‘‘(ii) any option entered into on a na9 tional securities exchange relating to for10 eign currencies;

11 ‘‘(iii) the guarantee by or to any secu12 rities clearing agency of a settlement of

13 cash, securities, certificates of deposit,

14 mortgage loans or interests therein, group

15 or index of securities, or mortgage loans or

16 interests therein (including any interest

17 therein or based on the value thereof), or

18 option on any of the foregoing, including

19 an option to purchase or sell any such se20 curity, certificate of deposit, loan, interest,

21 group or index, or option;

22 ‘‘(iv) any margin loan;

23 ‘‘(v) any other agreement or trans24 action that is similar to an agreement or
328

•S 3186 IS

1 transaction referred to in this subpara2 graph;

3 ‘‘(vi) any combination of the agree4 ments or transactions referred to in this

5 subparagraph;

6 ‘‘(vii) any option to enter into any

7 agreement or transaction referred to in

8 this subparagraph;

9 ‘‘(viii) a master agreement that pro10 vides for an agreement or transaction re11 ferred to in clause (i), (ii), (iii), (iv), (v),

12 (vi), or (vii), together with all supplements

13 to any such master agreement, without re14 gard to whether the master agreement pro15 vides for an agreement or transaction that

16 is not a securities contract under this sub17 paragraph, except that such master agree18 ment shall be considered to be a securities

19 contract under this subparagraph only with

20 respect to each agreement or transaction

21 under such master agreement that is re22 ferred to in clause (i), (ii), (iii), (iv), (v),

23 (vi), or (vii); or

24 ‘‘(ix) any security agreement or ar25 rangement or other credit enhancement,
329

•S 3186 IS

1 related to any agreement or transaction re2 ferred to in this subparagraph, but not to

3 exceed the actual value of such contract on

4 the date of the filing of the petition; and

5 ‘‘(B) does not include any purchase, sale,

6 or repurchase obligation under a participation

7 in a commercial mortgage loan.’’; and

8 (3) in section 761(4)—

9 (A) by striking ‘‘or’’ at the end of subpara10 graph (D); and

11 (B) by adding at the end the following:

12 ‘‘(F) any other agreement or transaction

13 that is similar to an agreement or transaction

14 referred to in this paragraph;

15 ‘‘(G) any combination of the agreements or

16 transactions referred to in this paragraph;

17 ‘‘(H) any option to enter into an agree18 ment or transaction referred to in this para19 graph;

20 ‘‘(I) a master agreement that provides for

21 an agreement or transaction referred to in sub22 paragraph (A), (B), (C), (D), (E), (F), (G), or

23 (H), together with all supplements to such mas24 ter agreement, without regard to whether the

25 master agreement provides for an agreement or
330

•S 3186 IS

1 transaction that is not a commodity contract

2 under this paragraph, except that the master

3 agreement shall be considered to be a com4 modity contract under this paragraph only with

5 respect to each agreement or transaction under

6 the master agreement that is referred to in sub7 paragraph (A), (B), (C), (D), (E), (F), (G), or

8 (H); or

9 ‘‘(J) any security agreement or arrange10 ment or other credit enhancement related to

11 any agreement or transaction referred to in this

12 paragraph, but not to exceed the actual value of

13 such contract on the date of the filing of the pe14 tition;’’.

15 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI16 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER17 CHANT.—Section 101 of title 11, United States Code, is

18 amended—

19 (1) by striking paragraph (22) and inserting

20 the following:

21 ‘‘(22) ‘financial institution’ means—

22 ‘‘(A) a Federal reserve bank, or an entity

23 (domestic or foreign) that is a commercial or

24 savings bank, industrial savings bank, savings

25 and loan association, trust company, or receiver
331

•S 3186 IS

1 or conservator for such entity and, when any

2 such Federal reserve bank, receiver, conservator

3 or entity is acting as agent or custodian for a

4 customer in connection with a securities con5 tract, as defined in section 741, such customer;

6 or

7 ‘‘(B) in connection with a securities con8 tract, as defined in section 741, an investment

9 company registered under the Investment Com10 pany Act of 1940;’’;

11 (2) by inserting after paragraph (22) the fol12 lowing:

13 ‘‘(22A) ‘financial participant’ means an entity

14 that, at the time it enters into a securities contract,

15 commodity contract, or forward contract, or at the

16 time of the filing of the petition, has one or more

17 agreements or transactions described in paragraph

18 (1), (2), (3), (4), (5), or (6) of section 561(a) with

19 the debtor or any other entity (other than an affil20 iate) of a total gross dollar value of not less than

21 $1,000,000,000 in notional or actual principal

22 amount outstanding on any day during the previous

23 15-month period, or has gross mark-to-market posi24 tions of not less than $100,000,000 (aggregated

25 across counterparties) in one or more such agree-
332

•S 3186 IS

1 ments or transactions with the debtor or any other

2 entity (other than an affiliate) on any day during

3 the previous 15-month period;’’; and

4 (3) by striking paragraph (26) and inserting

5 the following:

6 ‘‘(26) ‘forward contract merchant’ means a

7 Federal reserve bank, or an entity, the business of

8 which consists in whole or in part of entering into

9 forward contracts as or with merchants or in a com10 modity, as defined or in section 761 or any similar

11 good, article, service, right, or interest which is pres12 ently or in the future becomes the subject of dealing

13 in the forward contract trade;’’.

14 (c) DEFINITION OF MASTER NETTING AGREEMENT

15 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec16 tion 101 of title 11, United States Code, is amended by

17 inserting after paragraph (38) the following new para18 graphs:

19 ‘‘(38A) ‘master netting agreement’—

20 ‘‘(A) means an agreement providing for

21 the exercise of rights, including rights of net22 ting, setoff, liquidation, termination, accelera23 tion, or closeout, under or in connection with

24 one or more contracts that are described in any

25 one or more of paragraphs (1) through (5) of
333

•S 3186 IS

1 section 561(a), or any security agreement or ar2 rangement or other credit enhancement related

3 to one or more of the foregoing; and

4 ‘‘(B) if the agreement contains provisions

5 relating to agreements or transactions that are

6 not contracts described in paragraphs (1)

7 through (5) of section 561(a), shall be deemed

8 to be a master netting agreement only with re9 spect to those agreements or transactions that

10 are described in any one or more of paragraphs

11 (1) through (5) of section 561(a);

12 ‘‘(38B) ‘master netting agreement participant’

13 means an entity that, at any time before the filing

14 of the petition, is a party to an outstanding master

15 netting agreement with the debtor;’’.

16 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

17 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR18 CHASE AGREEMENTS, AND MASTER NETTING AGREE19 MENTS UNDER THE AUTOMATIC-STAY.—

20 (1) IN GENERAL.—Section 362(b) of title 11,

21 United States Code, as amended by this Act, is

22 amended—

23 (A) in paragraph (6), by inserting ‘‘,

24 pledged to, and under the control of,’’ after

25 ‘‘held by’’;
334

•S 3186 IS

1 (B) in paragraph (7), by inserting ‘‘,

2 pledged to, and under the control of,’’ after

3 ‘‘held by’’;

4 (C) by striking paragraph (17) and insert5 ing the following:

6 ‘‘(17) under subsection (a), of the setoff by a

7 swap participant of a mutual debt and claim under

8 or in connection with one or more swap agreements

9 that constitutes the setoff of a claim against the

10 debtor for any payment or other transfer of property

11 due from the debtor under or in connection with any

12 swap agreement against any payment due to the

13 debtor from the swap participant under or in con14 nection with any swap agreement or against cash,

15 securities, or other property held by, pledged to, and

16 under the control of, or due from such swap partici17 pant to margin, guarantee, secure, or settle any

18 swap agreement;’’; and

19 (D) by inserting after paragraph (27), as

20 added by this Act, the following new paragraph:

21 ‘‘(28) under subsection (a), of the setoff by a

22 master netting agreement participant of a mutual

23 debt and claim under or in connection with one or

24 more master netting agreements or any contract or

25 agreement subject to such agreements that con-
335

•S 3186 IS

1 stitutes the setoff of a claim against the debtor for

2 any payment or other transfer of property due from

3 the debtor under or in connection with such agree4 ments or any contract or agreement subject to such

5 agreements against any payment due to the debtor

6 from such master netting agreement participant

7 under or in connection with such agreements or any

8 contract or agreement subject to such agreements or

9 against cash, securities, or other property held by,

10 pledged to, and under the control of, or due from

11 such master netting agreement participant to mar12 gin, guarantee, secure, or settle such agreements or

13 any contract or agreement subject to such agree14 ments, to the extent that such participant is eligible

15 to exercise such offset rights under paragraph (6),

16 (7), or (17) for each individual contract covered by

17 the master netting agreement in issue; or’’.

18 (2) LIMITATION.—Section 362 of title 11,

19 United States Code, as amended by this Act, is

20 amended by adding at the end the following:

21 ‘‘(l) LIMITATION.—The exercise of rights not subject

22 to the stay arising under subsection (a) pursuant to para23 graph (6), (7), (17), or (28) of subsection (b) shall not

24 be stayed by any order of a court or administrative agency

25 in any proceeding under this title.’’.
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•S 3186 IS

1 (e) LIMITATION OF AVOIDANCE POWERS UNDER

2 MASTER NETTING AGREEMENT.—Section 546 of title 11,

3 United States Code, as amended by this Act, is

4 amended—

5 (1) in subsection (g) (as added by section 103

6 of Public Law 101–311)—

7 (A) by striking ‘‘under a swap agreement’’;

8 and

9 (B) by striking ‘‘in connection with a swap

10 agreement’’ and inserting ‘‘under or in connec11 tion with any swap agreement’’; and

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

13 ‘‘(k) Notwithstanding sections 544, 545, 547,

14 548(a)(1)(B), and 548(b) the trustee may not avoid a

15 transfer made by or to a master netting agreement partici16 pant under or in connection with any master netting

17 agreement or any individual contract covered thereby that

18 is made before the commencement of the case, except

19 under section 548(a)(1)(A) and except to the extent that

20 the trustee could otherwise avoid such a transfer made

21 under an individual contract covered by such master net22 ting agreement.’’.

23 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

24 AGREEMENTS.—Section 548(d)(2) of title 11, United

25 States Code, is amended—
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•S 3186 IS

1 (1) in subparagraph (C), by striking ‘‘and’’ at

2 the end;

3 (2) in subparagraph (D), by striking the period

4 and inserting ‘‘; and’’; and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(E) a master netting agreement participant

8 that receives a transfer in connection with a master

9 netting agreement or any individual contract covered

10 thereby takes for value to the extent of such trans11 fer, except that, with respect to a transfer under any

12 individual contract covered thereby, to the extent

13 that such master netting agreement participant oth14 erwise did not take (or is otherwise not deemed to

15 have taken) such transfer for value.’’.

16 (g) TERMINATION OR ACCELERATION OF SECURITIES

17 CONTRACTS.—Section 555 of title 11, United States Code,

18 is amended—

19 (1) by amending the section heading to read as

20 follows:

21 ‘‘§ 555. Contractual right to liquidate, terminate, or

22 accelerate a securities contract’’;

23 and
338

•S 3186 IS

1 (2) in the first sentence, by striking ‘‘liquida2 tion’’ and inserting ‘‘liquidation, termination, or ac3 celeration’’.

4 (h) TERMINATION OR ACCELERATION OF COMMOD5 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

6 United States Code, is amended—

7 (1) by amending the section heading to read as

8 follows:

9 ‘‘§ 556. Contractual right to liquidate, terminate, or

10 accelerate a commodities contract or for11 ward contract’’;

12 and

13 (2) in the first sentence, by striking ‘‘liquida14 tion’’ and inserting ‘‘liquidation, termination, or ac15 celeration’’.

16 (i) TERMINATION OR ACCELERATION OF REPUR17 CHASE AGREEMENTS.—Section 559 of title 11, United

18 States Code, is amended—

19 (1) by amending the section heading to read as

20 follows:

21 ‘‘§ 559. Contractual right to liquidate, terminate, or

22 accelerate a repurchase agreement’’;

23 and
339

•S 3186 IS

1 (2) in the first sentence, by striking ‘‘liquida2 tion’’ and inserting ‘‘liquidation, termination, or ac3 celeration’’.

4 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

5 OF SWAP AGREEMENTS.—Section 560 of title 11, United

6 States Code, is amended—

7 (1) by amending the section heading to read as

8 follows:

9 ‘‘§ 560. Contractual right to liquidate, terminate, or

10 accelerate a swap agreement’’;

11 (2) in the first sentence, by striking ‘‘termi12 nation of a swap agreement’’ and inserting ‘‘liquida13 tion, termination, or acceleration of one or more

14 swap agreements’’; and

15 (3) by striking ‘‘in connection with any swap

16 agreement’’ and inserting ‘‘in connection with the

17 termination, liquidation, or acceleration of one or

18 more swap agreements’’.

19 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

20 OFFSET UNDER A MASTER NETTING AGREEMENT AND

21 ACROSS CONTRACTS.—

22 (1) IN GENERAL.—Title 11, United States

23 Code, is amended by inserting after section 560 the

24 following:
340

•S 3186 IS

1 ‘‘§ 561. Contractual right to terminate, liquidate, ac2 celerate, or offset under a master netting

3 agreement and across contracts

4 ‘‘(a) IN GENERAL.—Subject to subsection (b), the ex5 ercise of any contractual right, because of a condition of

6 the kind specified in section 365(e)(1), to cause the termi7 nation, liquidation, or acceleration of or to offset or net

8 termination values, payment amounts, or other transfer

9 obligations arising under or in connection with one or

10 more (or the termination, liquidation, or acceleration of

11 one or more)—

12 ‘‘(1) securities contracts, as defined in section

13 741(7);

14 ‘‘(2) commodity contracts, as defined in section

15 761(4);

16 ‘‘(3) forward contracts;

17 ‘‘(4) repurchase agreements;

18 ‘‘(5) swap agreements; or

19 ‘‘(6) master netting agreements,

20 shall not be stayed, avoided, or otherwise limited by oper21 ation of any provision of this title or by any order of a

22 court or administrative agency in any proceeding under

23 this title.

24 ‘‘(b) EXCEPTION.—

25 ‘‘(1) IN GENERAL.—A party may exercise a

26 contractual right described in subsection (a) to ter-
341

•S 3186 IS

1 minate, liquidate, or accelerate only to the extent

2 that such party could exercise such a right under

3 section 555, 556, 559, or 560 for each individual

4 contract covered by the master netting agreement in

5 issue.

6 ‘‘(2) COMMODITY BROKERS.—If a debtor is a

7 commodity broker subject to subchapter IV of chap8 ter 7—

9 ‘‘(A) a party may not net or offset an obli10 gation to the debtor arising under, or in con11 nection with, a commodity contract against any

12 claim arising under, or in connection with,

13 other instruments, contracts, or agreements

14 listed in subsection (a) except to the extent that

15 the party has positive net equity in the com16 modity accounts at the debtor, as calculated

17 under that subchapter IV; and

18 ‘‘(B) another commodity broker may not

19 net or offset an obligation to the debtor arising

20 under, or in connection with, a commodity con21 tract entered into or held on behalf of a cus22 tomer of the debtor against any claim arising

23 under, or in connection with, other instruments,

24 contracts, or agreements listed in subsection

25 (a).
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•S 3186 IS

1 ‘‘(3) CONSTRUCTION.—No provision of sub2 paragraph (A) or (B) of paragraph (2) shall prohibit

3 the offset of claims and obligations that arise

4 under—

5 ‘‘(A) a cross-margining agreement that has

6 been approved by the Commodity Futures

7 Trading Commission or submitted to the Com8 modity Futures Trading Commission under sec9 tion 5(a)(12)(A) of the Commodity Exchange

10 Act and has been approved; or

11 ‘‘(B) any other netting agreement between

12 a clearing organization, as defined in section

13 761, and another entity that has been approved

14 by the Commodity Futures Trading Commis15 sion.

16 ‘‘(c) DEFINITION.—As used in this section, the term

17 ‘contractual right’ includes a right set forth in a rule or

18 bylaw of a national securities exchange, a national securi19 ties association, or a securities clearing agency, a right

20 set forth in a bylaw of a clearing organization or contract

21 market or in a resolution of the governing board thereof,

22 and a right, whether or not evidenced in writing, arising

23 under common law, under law merchant, or by reason of

24 normal business practice.
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•S 3186 IS

1 ‘‘(d) CASES ANCILLARY TO FOREIGN PRO2 CEEDINGS.—Any provisions of this title relating to securi3 ties contracts, commodity contracts, forward contracts, re4 purchase agreements, swap agreements, or master netting

5 agreements shall apply in a case under chapter 15 of this

6 title, so that enforcement of contractual provisions of such

7 contracts and agreements in accordance with their terms

8 will not be stayed or otherwise limited by operation of any

9 provision of this title or by order of a court in any case

10 under this title, and to limit avoidance powers to the same

11 extent as in a proceeding under chapter 7 or 11 of this

12 title (such enforcement not to be limited based on the

13 presence or absence of assets of the debtor in the United

14 States).’’.

15 (2) CONFORMING AMENDMENT.—The table of sec16 tions for chapter 5 of title 11, United States Code, is

17 amended by inserting after the item relating to section

18 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a

master netting agreement and across contracts.

19 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11,

20 United States Code, is amended by inserting after section

21 766 the following:
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•S 3186 IS

1 ‘‘§ 767. Commodity broker liquidation and forward

2 contract merchants, commodity brokers,

3 stockbrokers, financial institutions, fi4 nancial participants, securities clearing

5 agencies, swap participants, repo partici6 pants, and master netting agreement par7 ticipants

8 ‘‘Notwithstanding any other provision of this title,

9 the exercise of rights by a forward contract merchant,

10 commodity broker, stockbroker, financial institution, fi11 nancial participant, securities clearing agency, swap par12 ticipant, repo participant, or master netting agreement

13 participant under this title shall not affect the priority of

14 any unsecured claim it may have after the exercise of such

15 rights.’’.

16 (m) STOCKBROKER LIQUIDATIONS.—Title 11,

17 United States Code, is amended by inserting after section

18 752 the following:

19 ‘‘§ 753. Stockbroker liquidation and forward contract

20 merchants, commodity brokers, stock21 brokers, financial institutions, securities

22 clearing agencies, swap participants,

23 repo participants, and master netting

24 agreement participants

25 ‘‘Notwithstanding any other provision of this title,

26 the exercise of rights by a forward contract merchant,
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•S 3186 IS

1 commodity broker, stockbroker, financial institution, secu2 rities clearing agency, swap participant, repo participant,

3 financial participant, or master netting agreement partici4 pant under this title shall not affect the priority of any

5 unsecured claim it may have after the exercise of such

6 rights.’’.

7 (n) SETOFF.—Section 553 of title 11, United States

8 Code, is amended—

9 (1) in subsection (a)(3)(C), by inserting before

10 the period the following: ‘‘(except for a setoff of a

11 kind described in section 362(b)(6), 362(b)(7),

12 362(b)(17), 362(b)(28), 555, 556, 559, 560, or 561

13 of this title)’’; and

14 (2) in subsection (b)(1), by striking

15 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17),

16 362(b)(28), 555, 556, 559, 560, 561’’.

17 (o) SECURITIES CONTRACTS, COMMODITY CON18 TRACTS, AND FORWARD CONTRACTS.—Title 11, United

19 States Code, is amended—

20 (1) in section 362(b)(6), by striking ‘‘financial

21 institutions,’’ each place such term appears and in22 serting ‘‘financial institution, financial participant,’’;

23 (2) in section 546(e), by inserting ‘‘financial

24 participant,’’ after ‘‘financial institution,’’;
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1 (3) in section 548(d)(2)(B), by inserting ‘‘fi2 nancial participant,’’ after ‘‘financial institution,’’;

3 (4) in section 555—

4 (A) by inserting ‘‘financial participant,’’

5 after ‘‘financial institution,’’; and

6 (B) by inserting before the period at the

7 end ‘‘, a right set forth in a bylaw of a clearing

8 organization or contract market or in a resolu9 tion of the governing board thereof, and a right,

10 whether or not in writing, arising under com11 mon law, under law merchant, or by reason of

12 normal business practice’’; and

13 (5) in section 556, by inserting ‘‘, financial par14 ticipant,’’ after ‘‘commodity broker’’.

15 (p) CONFORMING AMENDMENTS.—Title 11, United

16 States Code, is amended—

17 (1) in the table of sections for chapter 5—

18 (A) by amending the items relating to sec19 tions 555 and 556 to read as follows:

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

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’;

20 and

21 (B) by amending the items relating to sec22 tions 559 and 560 to read as follows:

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

agreement.
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‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’;

1 and

2 (2) in the table of sections for chapter 7—

3 (A) by inserting after the item relating to

4 section 766 the following:

‘‘767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities

clearing agencies, swap participants, repo participants, and

master netting agreement participants.’’;

5 and

6 (B) by inserting after the item relating to

7 section 752 the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing

agencies, swap participants, repo participants, and master netting agreement participants.’’.

8 SEC. 908. RECORDKEEPING REQUIREMENTS.

9 Section 11(e)(8) of the Federal Deposit Insurance

10 Act (12 U.S.C. 1821(e)(8)) is amended by adding at the

11 end the following new subparagraph:

12 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

13 The Corporation, in consultation with the ap14 propriate Federal banking agencies, may pre15 scribe regulations requiring more detailed rec16 ordkeeping with respect to qualified financial

17 contracts (including market valuations) by in18 sured depository institutions.’’.
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1 SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU2 TION REQUIREMENT.

3 Section 13(e)(2) of the Federal Deposit Insurance

4 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows:

5 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

6 EXECUTION REQUIREMENT.—An agreement to pro7 vide for the lawful collateralization of—

8 ‘‘(A) deposits of, or other credit extension

9 by, a Federal, State, or local governmental enti10 ty, or of any depositor referred to in section

11 11(a)(2), including an agreement to provide col12 lateral in lieu of a surety bond;

13 ‘‘(B) bankruptcy estate funds pursuant to

14 section 345(b)(2) of title 11, United States

15 Code;

16 ‘‘(C) extensions of credit, including any

17 overdraft, from a Federal reserve bank or Fed18 eral home loan bank; or

19 ‘‘(D) one or more qualified financial con20 tracts, as defined in section 11(e)(8)(D),

21 shall not be deemed invalid pursuant to paragraph

22 (1)(B) solely because such agreement was not exe23 cuted contemporaneously with the acquisition of the

24 collateral or because of pledges, delivery, or substi25 tution of the collateral made in accordance with such

26 agreement.’’.
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1 SEC. 910. DAMAGE MEASURE.

2 (a) IN GENERAL.—Title 11, United States Code, is

3 amended—

4 (1) by inserting after section 561, as added by

5 this Act, the following:

6 ‘‘§ 562. Damage measure in connection with swap

7 agreements, securities contracts, forward

8 contracts, commodity contracts, repur9 chase agreements, or master netting

10 agreements

11 ‘‘If the trustee rejects a swap agreement, securities

12 contract (as defined in section 741), forward contract,

13 commodity contract (as defined in section 761), repur14 chase agreement, or master netting agreement pursuant

15 to section 365(a), or if a forward contract merchant,

16 stockbroker, financial institution, securities clearing agen17 cy, repo participant, financial participant, master netting

18 agreement participant, or swap participant liquidates, ter19 minates, or accelerates such contract or agreement, dam20 ages shall be measured as of the earlier of—

21 ‘‘(1) the date of such rejection; or

22 ‘‘(2) the date of such liquidation, termination,

23 or acceleration.’’; and

24 (2) in the table of sections for chapter 5, by in25 serting after the item relating to section 561 (as

26 added by this Act) the following:
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‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase

agreements, or master netting agreements.’’.

1 (b) CLAIMS ARISING FROM REJECTION.—Section

2 502(g) of title 11, United States Code, is amended—

3 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and

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

5 ‘‘(2) A claim for damages calculated in accordance

6 with section 562 of this title shall be allowed under sub7 section (a), (b), or (c), or disallowed under subsection (d)

8 or (e), as if such claim had arisen before the date of the

9 filing of the petition.’’.

10 SEC. 911. SIPC STAY.

11 Section 5(b)(2) of the Securities Investor Protection

12 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding

13 at the end the following new subparagraph:

14 ‘‘(C) EXCEPTION FROM STAY.—

15 ‘‘(i) Notwithstanding section 362 of

16 title 11, United States Code, neither the

17 filing of an application under subsection

18 (a)(3) nor any order or decree obtained by

19 SIPC from the court shall operate as a

20 stay of any contractual rights of a creditor

21 to liquidate, terminate, or accelerate a se22 curities contract, commodity contract, for23 ward contract, repurchase agreement, swap

24 agreement, or master netting agreement,
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1 as those terms are defined in sections 101

2 and 741 of title 11, United States Code, to

3 offset or net termination values, payment

4 amounts, or other transfer obligations aris5 ing under or in connection with one or

6 more of such contracts or agreements, or

7 to foreclose on any cash collateral pledged

8 by the debtor, whether or not with respect

9 to one or more of such contracts or agree10 ments.

11 ‘‘(ii) Notwithstanding clause (i), such

12 application, order, or decree may operate

13 as a stay of the foreclosure on, or disposi14 tion of, securities collateral pledged by the

15 debtor, whether or not with respect to one

16 or more of such contracts or agreements,

17 securities sold by the debtor under a repur18 chase agreement, or securities lent under a

19 securities lending agreement.

20 ‘‘(iii) As used in this subparagraph,

21 the term ‘contractual right’ includes a

22 right set forth in a rule or bylaw of a na23 tional securities exchange, a national secu24 rities association, or a securities clearing

25 agency, a right set forth in a bylaw of a
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1 clearing organization or contract market or

2 in a resolution of the governing board

3 thereof, and a right, whether or not in

4 writing, arising under common law, under

5 law merchant, or by reason of normal busi6 ness practice.’’.

7 SEC. 912. ASSET-BACKED SECURITIZATIONS.

8 Section 541 of title 11, United States Code, is

9 amended—

10 (1) in subsection (b), by inserting after para11 graph (7), as added by this Act, the following:

12 ‘‘(8) any eligible asset (or proceeds thereof), to

13 the extent that such eligible asset was transferred by

14 the debtor, before the date of commencement of the

15 case, to an eligible entity in connection with an

16 asset-backed securitization, except to the extent such

17 asset (or proceeds or value thereof) may be recov18 ered by the trustee under section 550 by virtue of

19 avoidance under section 548(a);’’; and

20 (2) by adding at the end the following new sub21 section:

22 ‘‘(f) For purposes of this section—

23 ‘‘(1) the term ‘asset-backed securitization’

24 means a transaction in which eligible assets trans25 ferred to an eligible entity are used as the source of
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1 payment on securities, including, without limitation,

2 all securities issued by governmental units, at least

3 one class or tranche of which was rated investment

4 grade by one or more nationally recognized securities

5 rating organizations, when the securities were ini6 tially issued by an issuer;

7 ‘‘(2) the term ‘eligible asset’ means—

8 ‘‘(A) financial assets (including interests

9 therein and proceeds thereof), either fixed or re10 volving, whether or not the same are in exist11 ence as of the date of the transfer, including

12 residential and commercial mortgage loans, con13 sumer receivables, trade receivables, assets of

14 governmental units, including payment obliga15 tions relating to taxes, receipts, fines, tickets,

16 and other sources of revenue, and lease receiv17 ables, that, by their terms, convert into cash

18 within a finite time period, plus any residual in19 terest in property subject to receivables in20 cluded in such financial assets plus any rights

21 or other assets designed to assure the servicing

22 or timely distribution of proceeds to security

23 holders;

24 ‘‘(B) cash; and
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1 ‘‘(C) securities, including without limita2 tion, all securities issued by governmental units;

3 ‘‘(3) the term ‘eligible entity’ means—

4 ‘‘(A) an issuer; or

5 ‘‘(B) a trust, corporation, partnership, gov6 ernmental unit, limited liability company (in7 cluding a single member limited liability com8 pany), or other entity engaged exclusively in the

9 business of acquiring and transferring eligible

10 assets directly or indirectly to an issuer and

11 taking actions ancillary thereto;

12 ‘‘(4) the term ‘issuer’ means a trust, corpora13 tion, partnership, or other entity engaged exclusively

14 in the business of acquiring and holding eligible as15 sets, issuing securities backed by eligible assets, and

16 taking actions ancillary thereto; and

17 ‘‘(5) the term ‘transferred’ means the debtor,

18 under a written agreement, represented and war19 ranted that eligible assets were sold, contributed, or

20 otherwise conveyed with the intention of removing

21 them from the estate of the debtor pursuant to sub22 section (b)(8) (whether or not reference is made to

23 this title or any section hereof), irrespective and

24 without limitation of—
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1 ‘‘(A) whether the debtor directly or indi2 rectly obtained or held an interest in the issuer

3 or in any securities issued by the issuer;

4 ‘‘(B) whether the debtor had an obligation

5 to repurchase or to service or supervise the

6 servicing of all or any portion of such eligible

7 assets; or

8 ‘‘(C) the characterization of such sale, con9 tribution, or other conveyance for tax, account10 ing, regulatory reporting, or other purposes.’’.

11 SEC. 913. EFFECTIVE DATE; APPLICATION OF AMEND12 MENTS.

13 (a) EFFECTIVE DATE.—This title shall take effect on

14 the date of enactment of this Act.

15 (b) APPLICATION OF AMENDMENTS.—The amend16 ments made by this title shall apply with respect to cases

17 commenced or appointments made under any Federal or

18 State law after the date of enactment of this Act, but shall

19 not apply with respect to cases commenced or appoint20 ments made under any Federal or State law before the

21 date of enactment of this Act.

22 TITLE X—PROTECTION OF

23 FAMILY FARMERS

24 SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12.

25 (a) REENACTMENT.—
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1 (1) IN GENERAL.—Chapter 12 of title 11,

2 United States Code, as reenacted by section 149 of

3 division C of the Omnibus Consolidated and Emer4 gency Supplemental Appropriations Act, 1999 (Pub5 lic Law 105–277), and amended by this Act, is reen6 acted.

7 (2) EFFECTIVE DATE.—Subsection (a) shall

8 take effect on July 1, 2000.

9 (b) CONFORMING AMENDMENT.—Section 302 of the

10 Bankruptcy, Judges, United States Trustees, and Family

11 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is

12 amended by striking subsection (f).

13 SEC. 1002. DEBT LIMIT INCREASE.

14 Section 104(b) of title 11, United States Code, is

15 amended by adding at the end the following:

16 ‘‘(4) The dollar amount in section 101(18) shall be

17 adjusted at the same times and in the same manner as

18 the dollar amounts in paragraph (1) of this subsection,

19 beginning with the adjustment to be made on April 1,

20 2001.’’.

21 SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL

22 UNITS.

23 (a) CONTENTS OF PLAN.—Section 1222(a)(2) of title

24 11, United States Code, is amended to read as follows:
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1 ‘‘(2) provide for the full payment, in deferred

2 cash payments, of all claims entitled to priority

3 under section 507, unless—

4 ‘‘(A) the claim is a claim owed to a govern5 mental unit that arises as a result of the sale,

6 transfer, exchange, or other disposition of any

7 farm asset used in the debtor’s farming oper8 ation, in which case the claim shall be treated

9 as an unsecured claim that is not entitled to

10 priority under section 507, but the debt shall be

11 treated in such manner only if the debtor re12 ceives a discharge; or

13 ‘‘(B) the holder of a particular claim

14 agrees to a different treatment of that claim;’’.

15 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(b)

16 of title 11, United States Code, as so designated by this

17 Act, is amended by striking ‘‘a State or local governmental

18 unit’’ and inserting ‘‘any governmental unit’’.

19 TITLE XI—HEALTH CARE AND

20 EMPLOYEE BENEFITS

21 SEC. 1101. DEFINITIONS.

22 (a) HEALTH CARE BUSINESS DEFINED.—Section

23 101 of title 11, United States Code, is amended—

24 (1) by redesignating paragraph (27A), as added

25 by this Act, as paragraph (27B); and
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1 (2) by inserting after paragraph (27) the fol2 lowing:

3 ‘‘(27A) ‘health care business’—

4 ‘‘(A) means any public or private entity

5 (without regard to whether that entity is orga6 nized for profit or not for profit) that is pri7 marily engaged in offering to the general public

8 facilities and services for—

9 ‘‘(i) the diagnosis or treatment of in10 jury, deformity, or disease; and

11 ‘‘(ii) surgical, drug treatment, psy12 chiatric, or obstetric care; and

13 ‘‘(B) includes—

14 ‘‘(i) any—

15 ‘‘(I) general or specialized hos16 pital;

17 ‘‘(II) ancillary ambulatory, emer18 gency, or surgical treatment facility;

19 ‘‘(III) hospice;

20 ‘‘(IV) home health agency; and

21 ‘‘(V) other health care institution

22 that is similar to an entity referred to

23 in subclause (I), (II), (III), or (IV);

24 and
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1 ‘‘(ii) any long-term care facility, in2 cluding any—

3 ‘‘(I) skilled nursing facility;

4 ‘‘(II) intermediate care facility;

5 ‘‘(III) assisted living facility;

6 ‘‘(IV) home for the aged;

7 ‘‘(V) domiciliary care facility; and

8 ‘‘(VI) health care institution that

9 is related to a facility referred to in

10 subclause (I), (II), (III), (IV), or (V),

11 if that institution is primarily engaged

12 in offering room, board, laundry, or

13 personal assistance with activities of

14 daily living and incidentals to activi15 ties of daily living;’’.

16 (b) PATIENT AND PATIENT RECORDS DEFINED.—

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

18 by inserting after paragraph (40) the following:

19 ‘‘(40A) ‘patient’ means any person who obtains

20 or receives services from a health care business;

21 ‘‘(40B) ‘patient records’ means any written doc22 ument relating to a patient or a record recorded in

23 a magnetic, optical, or other form of electronic me24 dium;’’.
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1 (c) RULE OF CONSTRUCTION.—The amendments

2 made by subsection (a) of this section shall not affect the

3 interpretation of section 109(b) of title 11, United States

4 Code.

5 SEC. 1102. DISPOSAL OF PATIENT RECORDS.

6 (a) IN GENERAL.—Subchapter III of chapter 3 of

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

8 end the following:

9 ‘‘§ 351. Disposal of patient records

10 ‘‘If a health care business commences a case under

11 chapter 7, 9, or 11, and the trustee does not have a suffi12 cient amount of funds to pay for the storage of patient

13 records in the manner required under applicable Federal

14 or State law, the following requirements shall apply:

15 ‘‘(1) The trustee shall—

16 ‘‘(A) promptly publish notice, in 1 or more

17 appropriate newspapers, that if patient records

18 are not claimed by the patient or an insurance

19 provider (if applicable law permits the insur20 ance provider to make that claim) by the date

21 that is 365 days after the date of that notifica22 tion, the trustee will destroy the patient

23 records; and

24 ‘‘(B) during the first 180 days of the 365-

25 day period described in subparagraph (A),
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1 promptly attempt to notify directly each patient

2 that is the subject of the patient records and

3 appropriate insurance carrier concerning the

4 patient records by mailing to the last known ad5 dress of that patient, or a family member or

6 contact person for that patient, and to the ap7 propriate insurance carrier an appropriate no8 tice regarding the claiming or disposing of pa9 tient records.

10 ‘‘(2) If, after providing the notification under

11 paragraph (1), patient records are not claimed dur12 ing the 365-day period described under that para13 graph, the trustee shall mail, by certified mail, at

14 the end of such 365-day period a written request to

15 each appropriate Federal agency to request permis16 sion from that agency to deposit the patient records

17 with that agency, except that no Federal agency is

18 required to accept patient records under this para19 graph.

20 ‘‘(3) If, following the 365-day period described

21 in paragraph (2) and after providing the notification

22 under paragraph (1), patient records are not claimed

23 by a patient or insurance provider, or request is not

24 granted by a Federal agency to deposit such records
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1 with that agency, the trustee shall destroy those

2 records by—

3 ‘‘(A) if the records are written, shredding

4 or burning the records; or

5 ‘‘(B) if the records are magnetic, optical,

6 or other electronic records, by otherwise de7 stroying those records so that those records

8 cannot be retrieved.’’.

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for chapter 3 of title 11, United States Code, is amended

11 by inserting after the item relating to section 350 the fol12 lowing:

‘‘351. Disposal of patient records.’’.

13 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS

14 OF CLOSING A HEALTH CARE BUSINESS AND

15 OTHER ADMINISTRATIVE EXPENSES.

16 Section 503(b) of title 11, United States Code, as

17 amended by this Act, is amended by adding at the end

18 the following:

19 ‘‘(8) the actual, necessary costs and expenses of

20 closing a health care business incurred by a trustee

21 or by a Federal agency (as that term is defined in

22 section 551(1) of title 5) or a department or agency

23 of a State or political subdivision thereof, including

24 any cost or expense incurred—
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1 ‘‘(A) in disposing of patient records in ac2 cordance with section 351; or

3 ‘‘(B) in connection with transferring pa4 tients from the health care business that is in

5 the process of being closed to another health

6 care business;

7 ‘‘(9) with respect to a nonresidential real prop8 erty lease previously assumed under section 365,

9 and subsequently rejected, a sum equal to all mone10 tary obligations due, excluding those arising from or

11 related to a failure to operate or penalty provisions,

12 for the period of 2 years following the later of the

13 rejection date or date of actual turnover of the

14 premises, without reduction or setoff for any reason

15 whatsoever except for sums actually received or to be

16 received from a nondebtor, and the claim for remain17 ing sums due for the balance of the term of the lease

18 shall be a claim under section 502(b)(6); and’’.

19 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA20 TIENT ADVOCATE.

21 (a) IN GENERAL.—

22 (1) APPOINTMENT OF OMBUDSMAN.—Sub23 chapter II of chapter 3 of title 11, United States

24 Code, is amended by inserting after section 331 the

25 following:
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1 ‘‘§ 332. Appointment of ombudsman

2 ‘‘(a) IN GENERAL.—

3 ‘‘(1) AUTHORITY TO APPOINT.—Not later than

4 30 days after a case is commenced by a health care

5 business under chapter 7, 9, or 11, the court shall

6 order the appointment of an ombudsman to monitor

7 the quality of patient care to represent the interests

8 of the patients of the health care business, unless

9 the court finds that the appointment of the ombuds10 man is not necessary for the protection of patients

11 under the specific facts of the case.

12 ‘‘(2) QUALIFICATIONS.—If the court orders the

13 appointment of an ombudsman, the United States

14 trustee shall appoint 1 disinterested person, other

15 than the United States trustee, to serve as an om16 budsman, including a person who is serving as a

17 State Long-Term Care Ombudsman appointed under

18 title III or VII of the Older Americans Act of 1965

19 (42 U.S.C. 3021 et seq., 3058 et seq.).

20 ‘‘(b) DUTIES.—An ombudsman appointed under sub21 section (a) shall—

22 ‘‘(1) monitor the quality of patient care, to the

23 extent necessary under the circumstances, including

24 interviewing patients and physicians;

25 ‘‘(2) not later than 60 days after the date of

26 appointment, and not less frequently than every 60
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1 days thereafter, report to the court, at a hearing or

2 in writing, regarding the quality of patient care at

3 the health care business involved; and

4 ‘‘(3) if the ombudsman determines that the

5 quality of patient care is declining significantly or is

6 otherwise being materially compromised, notify the

7 court by motion or written report, with notice to ap8 propriate parties in interest, immediately upon mak9 ing that determination.

10 ‘‘(c) CONFIDENTIALITY.—An ombudsman shall main11 tain any information obtained by the ombudsman under

12 this section that relates to patients (including information

13 relating to patient records) as confidential information.

14 The ombudsman may not review confidential patient

15 records, unless the court provides prior approval, with re16 strictions on the ombudsman to protect the confidentiality

17 of patient records.’’.

18 (2) CLERICAL AMENDMENT.—The table of sec19 tions for chapter 3 of title 11, United States Code,

20 is amended by inserting after the item relating to

21 section 331 the following:

‘‘332. Appointment of ombudsman.’’.

22 (b) COMPENSATION OF OMBUDSMAN.—Section

23 330(a)(1) of title 11, United States Code, is amended—
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1 (1) in the matter proceeding subparagraph (A),

2 by inserting ‘‘an ombudsman appointed under sec3 tion 331, or’’ before ‘‘a professional person’’; and

4 (2) in subparagraph (A), by inserting ‘‘ombuds5 man,’’ before ‘‘professional person’’.

6 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO

7 TRANSFER PATIENTS.

8 (a) IN GENERAL.—Section 704(a) of title 11, United

9 States Code, as amended by this Act, is amended by add10 ing at the end the following:

11 ‘‘(11) use all reasonable and best efforts to

12 transfer patients from a health care business that is

13 in the process of being closed to an appropriate

14 health care business that—

15 ‘‘(A) is in the vicinity of the health care

16 business that is closing;

17 ‘‘(B) provides the patient with services

18 that are substantially similar to those provided

19 by the health care business that is in the proc20 ess of being closed; and

21 ‘‘(C) maintains a reasonable quality of

22 care.’’.

23 (b) CONFORMING AMENDMENT.—Section 1106(a)(1)

24 of title 11, United States Code, is amended by striking

25 ‘‘sections 704(2), 704(5), 704(7), 704(8), and 704(9)’’
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1 and inserting ‘‘paragraphs (2), (5), (7), (8), (9), and (11)

2 of section 704(a)’’.

3 SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION

4 NOT SUBJECT TO AUTOMATIC STAY.

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

6 amended by inserting after paragraph (28), as added by

7 this Act, the following:

8 ‘‘(29) under subsection (a), of the exclusion by

9 the Secretary of Health and Human Services of the

10 debtor from participation in the medicare program

11 or any other Federal health care program (as de12 fined in section 1128B(f) of the Social Security Act

13 (42 U.S.C. 1320a–7b(f)) pursuant to title XI of

14 such Act (42 U.S.C. 1301 et seq.) or title XVIII of

15 such Act (42 U.S.C. 1395 et seq.).’’.

16 TITLE XII—TECHNICAL

17 AMENDMENTS

18 SEC. 1201. DEFINITIONS.

19 Section 101 of title 11, United States Code, as

20 amended by this Act, is amended—

21 (1) by striking ‘‘In this title—’’ and inserting

22 ‘‘In this title the following definitions shall apply:’’;

23 (2) in each paragraph, by inserting ‘‘The term’’

24 after the paragraph designation;
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1 (3) in paragraph (35)(B), by striking ‘‘para2 graphs (21B) and (33)(A)’’ and inserting ‘‘para3 graphs (23) and (35)’’;

4 (4) in each of paragraphs (35A) and (38), by

5 striking ‘‘; and’’ at the end and inserting a period;

6 (5) in paragraph (51B)—

7 (A) by inserting ‘‘who is not a family farm8 er’’ after ‘‘debtor’’ the first place it appears;

9 and

10 (B) by striking ‘‘thereto having aggregate’’

11 and all that follows through the end of the

12 paragraph;

13 (6) by striking paragraph (54) and inserting

14 the following:

15 ‘‘(54) The term ‘transfer’ means—

16 ‘‘(A) the creation of a lien;

17 ‘‘(B) the retention of title as a security in18 terest;

19 ‘‘(C) the foreclosure of a debtor’s equity of

20 redemption; or

21 ‘‘(D) each mode, direct or indirect, abso22 lute or conditional, voluntary or involuntary, of

23 disposing of or parting with—

24 ‘‘(i) property; or

25 ‘‘(ii) an interest in property.’’; and
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1 (7) in each of paragraphs (1) through (35), in

2 each of paragraphs (36) and (37), and in each of

3 paragraphs (40) through (55), by striking the semi4 colon at the end and inserting a period.

5 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

6 Section 104 of title 11, United States Code, as

7 amended by section 322 of this Act, is amended by insert8 ing ‘‘522(f)(3),’’ after ‘‘522(d),’’ each place it appears.

9 SEC. 1203. EXTENSION OF TIME.

10 Section 108(c)(2) of title 11, United States Code, is

11 amended by striking ‘‘922’’ and all that follows through

12 ‘‘or’’, and inserting ‘‘922, 1201, or’’.

13 SEC. 1204. TECHNICAL AMENDMENTS.

14 Title 11, United States Code, is amended—

15 (1) in section 109(b)(2), by striking ‘‘subsection

16 (c) or (d) of’’; and

17 (2) in section 552(b)(1), by striking ‘‘product’’

18 each place it appears and inserting ‘‘products’’.

19 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR

20 FRAUDULENTLY PREPARE BANKRUPTCY PE21 TITIONS.

22 Section 110(j)(4) of title 11, United States Code, as

23 so designated by this Act, is amended by striking ‘‘attor24 ney’s’’ and inserting ‘‘attorneys’ ’’.
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1 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES2 SIONAL PERSONS.

3 Section 328(a) of title 11, United States Code, is

4 amended by inserting ‘‘on a fixed or percentage fee basis,’’

5 after ‘‘hourly basis,’’.

6 SEC. 1207. EFFECT OF CONVERSION.

7 Section 348(f)(2) of title 11, United States Code, is

8 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the

9 first place it appears.

10 SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

11 Section 503(b)(4) of title 11, United States Code, is

12 amended by inserting ‘‘subparagraph (A), (B), (C), (D),

13 or (E) of’’ before ‘‘paragraph (3)’’.

14 SEC. 1209. EXCEPTIONS TO DISCHARGE.

15 Section 523 of title 11, United States Code, as

16 amended by this Act, is amended—

17 (1) by transferring paragraph (15), as added by

18 section 304(e) of Public Law 103–394 (108 Stat.

19 4133), so as to insert such paragraph after sub20 section (a)(14);

21 (2) in subsection (a)(9), by striking ‘‘motor ve22 hicle’’ and inserting ‘‘motor vehicle, vessel, or air23 craft’’; and

24 (3) in subsection (e), by striking ‘‘a insured’’

25 and inserting ‘‘an insured’’.
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1 SEC. 1210. EFFECT OF DISCHARGE.

2 Section 524(a)(3) of title 11, United States Code, is

3 amended by striking ‘‘section 523’’ and all that follows

4 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1),

5 or 1328(a)(1), or that’’.

6 SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT.

8 Section 525(c) of title 11, United States Code, is

9 amended—

10 (1) in paragraph (1), by inserting ‘‘student’’ be11 fore ‘‘grant’’ the second place it appears; and

12 (2) in paragraph (2), by striking ‘‘the program

13 operated under part B, D, or E of’’ and inserting

14 ‘‘any program operated under’’.

15 SEC. 1212. PROPERTY OF THE ESTATE.

16 Section 541(b)(4)(B)(ii) of title 11, United States

17 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’.

18 SEC. 1213. PREFERENCES.

19 (a) IN GENERAL.—Section 547 of title 11, United

20 States Code, as amended by this Act, is amended—

21 (1) in subsection (b), by striking ‘‘subsection

22 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and

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

24 ‘‘(i) If the trustee avoids under subsection (b) a

25 transfer made between 90 days and 1 year before the date

26 of the filing of the petition, by the debtor to an entity
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1 that is not an insider for the benefit of a creditor that

2 is an insider, such transfer shall be considered to be avoid3 ed under this section only with respect to the creditor that

4 is an insider.’’.

5 (b) APPLICABILITY.—The amendments made by this

6 section shall apply to any case that is pending or com7 menced on or after the date of enactment of this Act.

8 SEC. 1214. POSTPETITION TRANSACTIONS.

9 Section 549(c) of title 11, United States Code, is

10 amended—

11 (1) by inserting ‘‘an interest in’’ after ‘‘transfer

12 of’’ each place it appears;

13 (2) by striking ‘‘such property’’ and inserting

14 ‘‘such real property’’; and

15 (3) by striking ‘‘the interest’’ and inserting

16 ‘‘such interest’’.

17 SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE.

18 Section 726(b) of title 11, United States Code, is

19 amended by striking ‘‘1009,’’.

20 SEC. 1216. GENERAL PROVISIONS.

21 Section 901(a) of title 11, United States Code, as

22 amended by this Act, is amended by inserting ‘‘1123(d),’’

23 after ‘‘1123(b),’’.
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1 SEC. 1217. ABANDONMENT OF RAILROAD LINE.

2 Section 1170(e)(1) of title 11, United States Code,

3 is amended by striking ‘‘section 11347’’ and inserting

4 ‘‘section 11326(a)’’.

5 SEC. 1218. CONTENTS OF PLAN.

6 Section 1172(c)(1) of title 11, United States Code,

7 is amended by striking ‘‘section 11347’’ and inserting

8 ‘‘section 11326(a)’’.

9 SEC. 1219. DISCHARGE UNDER CHAPTER 12.

10 Subsections (a) and (c) of section 1228 of title 11,

11 United States Code, are amended by striking

12 ‘‘1222(b)(10)’’ each place it appears and inserting

13 ‘‘1222(b)(9)’’.

14 SEC. 1220. BANKRUPTCY CASES AND PROCEEDINGS.

15 Section 1334(d) of title 28, United States Code, is

16 amended—

17 (1) by striking ‘‘made under this subsection’’

18 and inserting ‘‘made under subsection (c)’’; and

19 (2) by striking ‘‘This subsection’’ and inserting

20 ‘‘Subsection (c) and this subsection’’.

21 SEC. 1221. KNOWING DISREGARD OF BANKRUPTCY LAW OR

22 RULE.

23 Section 156(a) of title 18, United States Code, is

24 amended—

25 (1) in the first undesignated paragraph—
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1 (A) by inserting ‘‘(1) the term’’ before

2 ‘‘ ‘bankruptcy’’; and

3 (B) by striking the period at the end and

4 inserting ‘‘; and’’; and

5 (2) in the second undesignated paragraph—

6 (A) by inserting ‘‘(2) the term’’ before

7 ‘‘ ‘document’’; and

8 (B) by striking ‘‘this title’’ and inserting

9 ‘‘title 11’’.

10 SEC. 1222. TRANSFERS MADE BY NONPROFIT CHARITABLE

11 CORPORATIONS.

12 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d)

13 of title 11, United States Code, is amended by striking

14 ‘‘only’’ and all that follows through the end of the sub15 section and inserting ‘‘only—

16 ‘‘(1) in accordance with applicable nonbank17 ruptcy law that governs the transfer of property by

18 a corporation or trust that is not a moneyed, busi19 ness, or commercial corporation or trust; and

20 ‘‘(2) to the extent not inconsistent with any re21 lief granted under subsection (c), (d), (e), or (f) of

22 section 362.’’.

23 (b) CONFIRMATION OF PLAN FOR REORGANIZA24 TION.—Section 1129(a) of title 11, United States Code,
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1 as amended by this Act, is amended by adding at the end

2 the following:

3 ‘‘(16) All transfers of property of the plan shall

4 be made in accordance with any applicable provi5 sions of nonbankruptcy law that govern the transfer

6 of property by a corporation or trust that is not a

7 moneyed, business, or commercial corporation or

8 trust.’’.

9 (c) TRANSFER OF PROPERTY.—Section 541 of title

10 11, United States Code, as amended by this Act, is

11 amended by adding at the end the following:

12 ‘‘(g) Notwithstanding any other provision of this title,

13 property that is held by a debtor that is a corporation de14 scribed in section 501(c)(3) of the Internal Revenue Code

15 of 1986 and exempt from tax under section 501(a) of such

16 Code may be transferred to an entity that is not such a

17 corporation, but only under the same conditions as would

18 apply if the debtor had not filed a case under this title.’’.

19 (d) APPLICABILITY.—The amendments made by this

20 section shall apply to a case pending under title 11, United

21 States Code, on the date of enactment of this Act, or filed

22 under that title on or after that date of enactment, except

23 that the court shall not confirm a plan under chapter 11

24 of title 11, United States Code, without considering

25 whether this section would substantially affect the rights
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1 of a party in interest who first acquired rights with respect

2 to the debtor after the date of the petition. The parties

3 who may appear and be heard in a proceeding under this

4 section include the attorney general of the State in which

5 the debtor is incorporated, was formed, or does business.

6 (e) RULE OF CONSTRUCTION.—Nothing in this sec7 tion shall be construed to require the court in which a

8 case under chapter 11 of title 11, United States Code, is

9 pending to remand or refer any proceeding, issue, or con10 troversy to any other court or to require the approval of

11 any other court for the transfer of property.

12 SEC. 1223. PROTECTION OF VALID PURCHASE MONEY SE13 CURITY INTERESTS.

14 Section 547(c)(3)(B) of title 11, United States Code,

15 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

16 SEC. 1224. EXTENSIONS.

17 Section 302(d)(3) of the Bankruptcy, Judges, United

18 States Trustees, and Family Farmer Bankruptcy Act of

19 1986 (28 U.S.C. 581 note) is amended—

20 (1) in subparagraph (A), in the matter fol21 lowing clause (ii), by striking ‘‘or October 1, 2002,

22 whichever occurs first’’; and

23 (2) in subparagraph (F)—

24 (A) in clause (i)—
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1 (i) in subclause (II), by striking ‘‘or

2 October 1, 2002, whichever occurs first’’;

3 and

4 (ii) in the matter following subclause

5 (II), by striking ‘‘October 1, 2003, or’’;

6 and

7 (B) in clause (ii), in the matter following

8 subclause (II)—

9 (i) by striking ‘‘before October 1,

10 2003, or’’; and

11 (ii) by striking ‘‘, whichever occurs

12 first’’.

13 SEC. 1225. BANKRUPTCY JUDGESHIPS.

14 (a) SHORT TITLE.—This section may be cited as the

15 ‘‘Bankruptcy Judgeship Act of 2000’’.

16 (b) TEMPORARY JUDGESHIPS.—

17 (1) APPOINTMENTS.—The following judgeship

18 positions shall be filled in the manner prescribed in

19 section 152(a)(1) of title 28, United States Code, for

20 the appointment of bankruptcy judges provided for

21 in section 152(a)(2) of such title:

22 (A) One additional bankruptcy judgeship

23 for the eastern district of California.

24 (B) Four additional bankruptcy judgeships

25 for the central district of California.
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1 (C) One additional bankruptcy judgeship

2 for the district of Delaware.

3 (D) Two additional bankruptcy judgeships

4 for the southern district of Florida.

5 (E) One additional bankruptcy judgeship

6 for the southern district of Georgia.

7 (F) Two additional bankruptcy judgeships

8 for the district of Maryland.

9 (G) One additional bankruptcy judgeship

10 for the eastern district of Michigan.

11 (H) One additional bankruptcy judgeship

12 for the southern district of Mississippi.

13 (I) One additional bankruptcy judgeship

14 for the district of New Jersey.

15 (J) One additional bankruptcy judgeship

16 for the eastern district of New York.

17 (K) One additional bankruptcy judgeship

18 for the northern district of New York.

19 (L) One additional bankruptcy judgeship

20 for the southern district of New York.

21 (M) One additional bankruptcy judgeship

22 for the eastern district of North Carolina.

23 (N) One additional bankruptcy judgeship

24 for the eastern district of Pennsylvania.
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1 (O) One additional bankruptcy judgeship

2 for the middle district of Pennsylvania.

3 (P) One additional bankruptcy judgeship

4 for the district of Puerto Rico.

5 (Q) One additional bankruptcy judgeship

6 for the western district of Tennessee.

7 (R) One additional bankruptcy judgeship

8 for the eastern district of Virginia.

9 (2) VACANCIES.—The first vacancy occurring in

10 the office of a bankruptcy judge in each of the judi11 cial districts set forth in paragraph (1) shall not be

12 filled if the vacancy—

13 (A) results from the death, retirement, res14 ignation, or removal of a bankruptcy judge; and

15 (B) occurs 5 years or more after the ap16 pointment date of a bankruptcy judge ap17 pointed under paragraph (1).

18 (c) EXTENSIONS.—

19 (1) IN GENERAL.—The temporary bankruptcy

20 judgeship positions authorized for the northern dis21 trict of Alabama, the district of Delaware, the dis22 trict of Puerto Rico, the district of South Carolina,

23 and the eastern district of Tennessee under para24 graphs (1), (3), (7), (8), and (9) of section 3(a) of

25 the Bankruptcy Judgeship Act of 1992 (28 U.S.C.
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1 152 note) are extended until the first vacancy occur2 ring in the office of a bankruptcy judge in the appli3 cable district resulting from the death, retirement,

4 resignation, or removal of a bankruptcy judge and

5 occurring—

6 (A) 8 years or more after November 8,

7 1993, with respect to the northern district of

8 Alabama;

9 (B) 10 years or more after October 28,

10 1993, with respect to the district of Delaware;

11 (C) 8 years or more after August 29,

12 1994, with respect to the district of Puerto

13 Rico;

14 (D) 8 years or more after June 27, 1994,

15 with respect to the district of South Carolina;

16 and

17 (E) 8 years or more after November 23,

18 1993, with respect to the eastern district of

19 Tennessee.

20 (2) APPLICABILITY OF OTHER PROVISIONS.—

21 All other provisions of section 3 of the Bankruptcy

22 Judgeship Act of 1992 (28 U.S.C. 152 note) remain

23 applicable to temporary judgeship positions referred

24 to in this subsection.
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1 (d) TECHNICAL AMENDMENTS.—Section 152(a) of

2 title 28, United States Code, is amended—

3 (1) in paragraph (1), by striking the first sen4 tence and inserting the following: ‘‘Each bankruptcy

5 judge to be appointed for a judicial district, as pro6 vided in paragraph (2), shall be appointed by the

7 United States court of appeals for the circuit in

8 which such district is located.’’; and

9 (2) in paragraph (2)—

10 (A) in the item relating to the middle dis11 trict of Georgia, by striking ‘‘2’’ and inserting

12 ‘‘3’’; and

13 (B) in the collective item relating to the

14 middle and southern districts of Georgia, by

15 striking ‘‘Middle and Southern . . . . . . 1’’.

16 (e) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect on the date of enactment of

18 this Act.

19 SEC. 1226. COMPENSATING TRUSTEES.

20 Section 1326 of title 11, United States Code, is

21 amended—

22 (1) in subsection (b)—

23 (A) in paragraph (1), by striking ‘‘and’’;

24 (B) in paragraph (2), by striking the pe25 riod at the end and inserting ‘‘; and’’; and
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1 (C) by adding at the end the following:

2 ‘‘(3) if a chapter 7 trustee has been allowed

3 compensation due to the conversion or dismissal of

4 the debtor’s prior case pursuant to section 707(b),

5 and some portion of that compensation remains un6 paid in a case converted to this chapter or in the

7 case dismissed under section 707(b) and refiled

8 under this chapter, the amount of any such unpaid

9 compensation, which shall be paid monthly—

10 ‘‘(A) by prorating such amount over the

11 remaining duration of the plan; and

12 ‘‘(B) by monthly payments not to exceed

13 the greater of—

14 ‘‘(i) $25; or

15 ‘‘(ii) the amount payable to unsecured

16 nonpriority creditors, as provided by the

17 plan, multiplied by 5 percent, and the re18 sult divided by the number of months in

19 the plan.’’; and

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

21 ‘‘(d) Notwithstanding any other provision of this

22 title—

23 ‘‘(1) compensation referred to in subsection

24 (b)(3) is payable and may be collected by the trustee
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1 under that paragraph, even if such amount has been

2 discharged in a prior proceeding under this title; and

3 ‘‘(2) such compensation is payable in a case

4 under this chapter only to the extent permitted by

5 subsection (b)(3).’’.

6 SEC. 1227. AMENDMENT TO SECTION 362 OF TITLE 11,

7 UNITED STATES CODE.

8 Section 362(b)(18) of title 11, United States Code,

9 is amended to read as follows:

10 ‘‘(18) under subsection (a) of the creation or

11 perfection of a statutory lien for an ad valorem

12 property tax, or a special tax or special assessment

13 on real property whether or not ad valorem, imposed

14 by a governmental unit, if such tax or assessment

15 comes due after the filing of the petition;’’.

16 SEC. 1228. JUDICIAL EDUCATION.

17 The Director of the Federal Judicial Center, in con18 sultation with the Director of the Executive Office for

19 United States Trustees, shall develop materials and con20 duct such training as may be useful to courts in imple21 menting this Act and the amendments made by this Act,

22 including the requirements relating to the means test and

23 reaffirmations under section 707(b) of title 11, United

24 States Code, as amended by this Act.
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1 SEC. 1229. RECLAMATION.

2 (a) RIGHTS AND POWERS OF THE TRUSTEE.—Sec3 tion 546(c) of title 11, United States Code, is amended

4 to read as follows:

5 ‘‘(c)(1) Except as provided in subsection (d) of this

6 section and subsection (c) of section 507, and subject to

7 the prior rights of holders of security interests in such

8 goods or the proceeds thereof, the rights and powers of

9 the trustee under sections 544(a), 545, 547, and 549 are

10 subject to the right of a seller of goods that has sold goods

11 to the debtor, in the ordinary course of such seller’s busi12 ness, to reclaim such goods if the debtor has received such

13 goods while insolvent, not later than 45 days after the date

14 of the commencement of a case under this title, but such

15 seller may not reclaim such goods unless such seller de16 mands in writing reclamation of such goods—

17 ‘‘(A) not later than 45 days after the date of

18 receipt of such goods by the debtor; or

19 ‘‘(B) not later than 20 days after the date of

20 commencement of the case, if the 45-day period ex21 pires after the commencement of the case.

22 ‘‘(2) If a seller of goods fails to provide notice in the

23 manner described in paragraph (1), the seller still may

24 assert the rights contained in section 503(b)(7).’’.
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1 (b) ADMINISTRATIVE EXPENSES.—Section 503(b) of

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

3 amended by adding at the end the following:

4 ‘‘(10) the value of any goods received by the

5 debtor not later than 20 days after the date of com6 mencement of a case under this title in which the

7 goods have been sold to the debtor in the ordinary

8 course of such debtor’s business.’’.

9 SEC. 1230. PROVIDING REQUESTED TAX DOCUMENTS TO

10 THE COURT.

11 (a) CHAPTER 7 CASES.—The court shall not grant

12 a discharge in the case of an individual seeking bank13 ruptcy under chapter 7 of title 11, United States Code,

14 unless requested tax documents have been provided to the

15 court.

16 (b) CHAPTER 11 AND CHAPTER 13 CASES.—The

17 court shall not confirm a plan of reorganization in the case

18 of an individual under chapter 11 or 13 of title 11, United

19 States Code, unless requested tax documents have been

20 filed with the court.

21 (c) DOCUMENT RETENTION.—The court shall de22 stroy documents submitted in support of a bankruptcy

23 claim not sooner than 3 years after the date of the conclu24 sion of a bankruptcy case filed by an individual under

25 chapter 7, 11, or 13 of title 11, United States Code. In
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1 the event of a pending audit or enforcement action, the

2 court may extend the time for destruction of such re3 quested tax documents.

4 SEC. 1231. ENCOURAGING CREDITWORTHINESS.

5 (a) SENSE OF THE CONGRESS.—It is the sense of the

6 Congress that—

7 (1) certain lenders may sometimes offer credit

8 to consumers indiscriminately, without taking steps

9 to ensure that consumers are capable of repaying

10 the resulting debt, and in a manner which may en11 courage certain consumers to accumulate additional

12 debt; and

13 (2) resulting consumer debt may increasingly be

14 a major contributing factor to consumer insolvency.

15 (b) STUDY REQUIRED.—The Board of Governors of

16 the Federal Reserve System (hereafter in this section re17 ferred to as the ‘‘Board’’) shall conduct a study of—

18 (1) consumer credit industry practices of solic19 iting and extending credit—

20 (A) indiscriminately;

21 (B) without taking steps to ensure that

22 consumers are capable of repaying the resulting

23 debt; and

24 (C) in a manner that encourages con25 sumers to accumulate additional debt; and
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1 (2) the effects of such practices on consumer

2 debt and insolvency.

3 (c) REPORT AND REGULATIONS.—Not later than 12

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

5 Board—

6 (1) shall make public a report on its findings

7 with respect to the indiscriminate solicitation and

8 extension of credit by the credit industry;

9 (2) may issue regulations that would require

10 additional disclosures to consumers; and

11 (3) may take any other actions, consistent with

12 its existing statutory authority, that the Board finds

13 necessary to ensure responsible industrywide prac14 tices and to prevent resulting consumer debt and in15 solvency.

16 SEC. 1232. PROPERTY NO LONGER SUBJECT TO REDEMP17 TION.

18 Section 541(b) of title 11, United States Code, is

19 amended by inserting after paragraph (8), as added by

20 this Act, the following:

21 ‘‘(9) subject to subchapter III of chapter 5, any

22 interest of the debtor in property where the debtor

23 pledged or sold tangible personal property (other

24 than securities or written or printed evidences of in25 debtedness or title) as collateral for a loan or ad-
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1 vance of money given by a person licensed under law

2 to make such loans or advances, where—

3 ‘‘(A) the tangible personal property is in

4 the possession of the pledgee or transferee;

5 ‘‘(B) the debtor has no obligation to repay

6 the money, redeem the collateral, or buy back

7 the property at a stipulated price; and

8 ‘‘(C) neither the debtor nor the trustee

9 have exercised any right to redeem provided

10 under the contract or State law, in a timely

11 manner as provided under State law and sec12 tion 108(b) of this title; or’’.

13 SEC. 1233. TRUSTEES.

14 (a) SUSPENSION AND TERMINATION OF PANEL

15 TRUSTEES AND STANDING TRUSTEES.—Section 586(d) of

16 title 28, United States Code, is amended—

17 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

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

19 ‘‘(2) A trustee whose appointment under subsection

20 (a)(1) or under subsection (b) is terminated or who ceases

21 to be assigned to cases filed under title 11, United States

22 Code, may obtain judicial review of the final agency deci23 sion by commencing an action in the United States district

24 court for the district for which the panel to which the

25 trustee is appointed under subsection (a)(1), or in the
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1 United States district court for the district in which the

2 trustee is appointed under subsection (b) resides, after

3 first exhausting all available administrative remedies,

4 which if the trustee so elects, shall also include an admin5 istrative hearing on the record. Unless the trustee elects

6 to have an administrative hearing on the record, the trust7 ee shall be deemed to have exhausted all administrative

8 remedies for purposes of this paragraph if the agency fails

9 to make a final agency decision within 90 days after the

10 trustee requests administrative remedies. The Attorney

11 General shall prescribe procedures to implement this para12 graph. The decision of the agency shall be affirmed by

13 the district court unless it is unreasonable and without

14 cause based on the administrative record before the agen15 cy.’’.

16 (b) EXPENSES OF STANDING TRUSTEES.—Section

17 586(e) of title 28, United States Code, is amended by add18 ing at the end the following:

19 ‘‘(3) After first exhausting all available administra20 tive remedies, an individual appointed under subsection

21 (b) may obtain judicial review of final agency action to

22 deny a claim of actual, necessary expenses under this sub23 section by commencing an action in the United States dis24 trict court in the district where the individual resides. The

25 decision of the agency shall be affirmed by the district
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1 court unless it is unreasonable and without cause based

2 upon the administrative record before the agency.

3 ‘‘(4) The Attorney General shall prescribe procedures

4 to implement this subsection.’’.

5 SEC. 1234. BANKRUPTCY FORMS.

6 Section 2075 of title 28, United States Code, is

7 amended by adding at the end the following:

8 ‘‘The bankruptcy rules promulgated under this section

9 shall prescribe a form for the statement required under

10 section 707(b)(2)(C) of title 11 and may provide general

11 rules on the content of such statement.’’.

12 SEC. 1235. EXPEDITED APPEALS OF BANKRUPTCY CASES

13 TO COURTS OF APPEALS.

14 (a) IN GENERAL.—Section 158 of title 28, United

15 States Code, is amended—

16 (1) by striking subsection (d) and inserting the

17 following:

18 ‘‘(d)(1) In a case in which the appeal is heard by the

19 district court, the judgment, decision, order, or decree of

20 the bankruptcy judge shall be deemed a judgment, deci21 sion, order, or decree of the district court entered 31 days

22 after such appeal is filed with the district court, unless

23 not later than 30 days after such appeal is filed with the

24 district court—

25 ‘‘(A) the district court—
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1 ‘‘(i) files a decision on the appeal from the

2 judgment, decision, order, or decree of the

3 bankruptcy judge; or

4 ‘‘(ii) enters an order extending such 30-day

5 period for cause upon motion of a party or

6 upon the court’s own motion; or

7 ‘‘(B) all parties to the appeal file written con8 sent that the district court may retain such appeal

9 until it enters a decision.

10 ‘‘(2) For the purpose of this subsection, an appeal

11 shall be considered filed with the district court on the date

12 on which the notice of appeal is filed, except that in a

13 case in which the appeal is heard by the district court be14 cause a party has made an election under subsection

15 (c)(1)(B), the appeal shall be considered filed with the dis16 trict court on the date on which such election is made.

17 ‘‘(e) The courts of appeals shall have jurisdiction of

18 appeals from—

19 ‘‘(1) all final judgments, decisions, orders, and

20 decrees of district courts entered under subsection

21 (a);

22 ‘‘(2) all final judgments, decisions, orders, and

23 decrees of bankruptcy appellate panels entered under

24 subsection (b); and
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1 ‘‘(3) all judgments, decisions, orders, and de2 crees of district courts entered under subsection (d)

3 to the extent that such judgments, decisions, orders,

4 and decrees would be reviewable by a district court

5 under subsection (a).

6 ‘‘(f) In accordance with rules prescribed by the Su7 preme Court of the United States under sections 2072

8 through 2077, the court of appeals may, in its discretion,

9 exercise jurisdiction over an appeal from an interlocutory

10 judgment, decision, order, or decree under subsection

11 (e)(3).’’.

12 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

13 (1) Section 305(c) of title 11, United States

14 Code, is amended by striking ‘‘section 158(d)’’ and

15 inserting ‘‘subsection (e) or (f) of section 158’’.

16 (2) Section 1334(d) of title 28, United States

17 Code, is amended by striking ‘‘section 158(d)’’ and

18 inserting ‘‘subsection (e) or (f) of section 158’’.

19 (3) Section 1452(b) of title 28, United States

20 Code, is amended by striking ‘‘section 158(d)’’ and

21 inserting ‘‘subsection (e) or (f) of section 158’’.

22 SEC. 1236. EXEMPTIONS.

23 Section 522(g)(2) of title 11, United States Code, is

24 amended by striking ‘‘subsection (f)(2)’’ and inserting

25 ‘‘subsection (f)(1)(B)’’.
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1 TITLE XIII—CONSUMER CREDIT

2 DISCLOSURE

3 SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END

4 CREDIT PLAN.

5 (a) MINIMUM PAYMENT DISCLOSURES.—Section

6 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b))

7 is amended by adding at the end the following:

8 ‘‘(11)(A) In the case of an open end credit plan

9 that requires a minimum monthly payment of not

10 more than 4 percent of the balance on which finance

11 charges are accruing, the following statement, lo12 cated on the front of the billing statement, disclosed

13 clearly and conspicuously: ‘Minimum Payment

14 Warning: Making only the minimum payment will

15 increase the interest you pay and the time it takes

16 to repay your balance. For example, making only the

17 typical 2% minimum monthly payment on a balance

18 of $1,000 at an interest rate of 17% would take 88

19 months to repay the balance in full. For an estimate

20 of the time it would take to repay your balance,

21 making only minimum payments, call this toll-free

22 number: llllll.’ (the blank space to be

23 filled in by the creditor).

24 ‘‘(B) In the case of an open end credit plan

25 that requires a minimum monthly payment of more
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1 than 4 percent of the balance on which finance

2 charges are accruing, the following statement, in a

3 prominent location on the front of the billing state4 ment, disclosed clearly and conspicuously: ‘Minimum

5 Payment Warning: Making only the required min6 imum payment will increase the interest you pay and

7 the time it takes to repay your balance. Making a

8 typical 5% minimum monthly payment on a balance

9 of $300 at an interest rate of 17% would take 24

10 months to repay the balance in full. For an estimate

11 of the time it would take to repay your balance,

12 making only minimum monthly payments, call this

13 toll-free number: llllll.’ (the blank space to

14 be filled in by the creditor).

15 ‘‘(C) Notwithstanding subparagraphs (A) and

16 (B), in the case of a creditor with respect to which

17 compliance with this title is enforced by the Federal

18 Trade Commission, the following statement, in a

19 prominent location on the front of the billing state20 ment, disclosed clearly and conspicuously: ‘Minimum

21 Payment Warning: Making only the required min22 imum payment will increase the interest you pay and

23 the time it takes to repay your balance. For exam24 ple, making only the typical 5% minimum monthly

25 payment on a balance of $300 at an interest rate of
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1 17% would take 24 months to repay the balance in

2 full. For an estimate of the time it would take to

3 repay your balance, making only minimum monthly

4 payments, call the Federal Trade Commission at

5 this toll-free number: llllll.’ (the blank

6 space to be filled in by the creditor). A creditor who

7 is subject to this subparagraph shall not be subject

8 to subparagraph (A) or (B).

9 ‘‘(D) Notwithstanding subparagraph (A), (B),

10 or (C), in complying with any such subparagraph, a

11 creditor may substitute an example based on an in12 terest rate that is greater than 17 percent. Any

13 creditor that is subject to subparagraph (B) may

14 elect to provide the disclosure required under sub15 paragraph (A) in lieu of the disclosure required

16 under subparagraph (B).

17 ‘‘(E) The Board shall, by rule, periodically re18 calculate, as necessary, the interest rate and repay19 ment period under subparagraphs (A), (B), and (C).

20 ‘‘(F)(i) The toll-free telephone number disclosed

21 by a creditor or the Federal Trade Commission

22 under subparagraph (A), (B), or (G), as appro23 priate, may be a toll-free telephone number estab24 lished and maintained by the creditor or the Federal

25 Trade Commission, as appropriate, or may be a toll-
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•S 3186 IS

1 free telephone number established and maintained

2 by a third party for use by the creditor or multiple

3 creditors or the Federal Trade Commission, as ap4 propriate. The toll-free telephone number may con5 nect consumers to an automated device through

6 which consumers may obtain information described

7 in subparagraph (A), (B), or (C), by inputting infor8 mation using a touch-tone telephone or similar de9 vice, if consumers whose telephones are not equipped

10 to use such automated device are provided the op11 portunity to be connected to an individual from

12 whom the information described in subparagraph

13 (A), (B), or (C), as applicable, may be obtained. A

14 person that receives a request for information de15 scribed in subparagraph (A), (B), or (C) from an ob16 ligor through the toll-free telephone number dis17 closed under subparagraph (A), (B), or (C), as ap18 plicable, shall disclose in response to such request

19 only the information set forth in the table promul20 gated by the Board under subparagraph (H)(i).

21 ‘‘(ii)(I) The Board shall establish and maintain

22 for a period not to exceed 24 months following the

23 effective date of the Bankruptcy Reform Act of

24 2000, a toll-free telephone number, or provide a toll25 free telephone number established and maintained
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1 by a third party, for use by creditors that are depos2 itory institutions (as defined in section 3 of the Fed3 eral Deposit Insurance Act), including a Federal

4 credit union or State credit union (as defined in sec5 tion 101 of the Federal Credit Union Act (12 U.S.C.

6 1752)), with total assets not exceeding

7 $250,000,000. The toll-free telephone number may

8 connect consumers to an automated device through

9 which consumers may obtain information described

10 in subparagraph (A) or (B), as applicable, by

11 inputting information using a touch-tone telephone

12 or similar device, if consumers whose telephones are

13 not equipped to use such automated device are pro14 vided the opportunity to be connected to an indi15 vidual from whom the information described in sub16 paragraph (A) or (B), as applicable, may be ob17 tained. A person that receives a request for informa18 tion described in subparagraph (A) or (B) from an

19 obligor through the toll-free telephone number dis20 closed under subparagraph (A) or (B), as applicable,

21 shall disclose in response to such request only the in22 formation set forth in the table promulgated by the

23 Board under subparagraph (H)(i). The dollar

24 amount contained in this subclause shall be adjusted
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1 according to an indexing mechanism established by

2 the Board.

3 ‘‘(II) Not later than 6 months prior to the expi4 ration of the 24-month period referenced in sub5 clause (I), the Board shall submit to the Committee

6 on Banking, Housing, and Urban Affairs of the Sen7 ate and the Committee on Banking and Financial

8 Services of the House of Representatives a report on

9 the program described in subclause (I).

10 ‘‘(G) The Federal Trade Commission shall es11 tablish and maintain a toll-free number for the pur12 pose of providing to consumers the information re13 quired to be disclosed under subparagraph (C).

14 ‘‘(H) The Board shall—

15 ‘‘(i) establish a detailed table illustrating

16 the approximate number of months that it

17 would take to repay an outstanding balance if

18 a consumer pays only the required minimum

19 monthly payments and if no other advances are

20 made, which table shall clearly present stand21 ardized information to be used to disclose the

22 information required to be disclosed under sub23 paragraph (A), (B), or (C), as applicable;

24 ‘‘(ii) establish the table required under

25 clause (i) by assuming—
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1 ‘‘(I) a significant number of different

2 annual percentage rates;

3 ‘‘(II) a significant number of different

4 account balances;

5 ‘‘(III) a significant number of dif6 ferent minimum payment amounts; and

7 ‘‘(IV) that only minimum monthly

8 payments are made and no additional ex9 tensions of credit are obtained; and

10 ‘‘(iii) promulgate regulations that provide

11 instructional guidance regarding the manner in

12 which the information contained in the table es13 tablished under clause (i) should be used in re14 sponding to the request of an obligor for any

15 information required to be disclosed under sub16 paragraph (A), (B), or (C).

17 ‘‘(I) The disclosure requirements of this para18 graph do not apply to any charge card account, the

19 primary purpose of which is to require payment of

20 charges in full each month.

21 ‘‘(J) A creditor that maintains a toll-free tele22 phone number for the purpose of providing cus23 tomers with the actual number of months that it will

24 take to repay the customer’s outstanding balance is
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1 not subject to the requirements of subparagraph (A)

2 or (B).

3 ‘‘(K) A creditor that maintains a toll-free tele4 phone number for the purpose of providing cus5 tomers with the actual number of months that it will

6 take to repay an outstanding balance shall include

7 the following statement on each billing statement:

8 ‘Making only the minimum payment will increase

9 the interest you pay and the time it takes to repay

10 your balance. For more information, call this toll11 free number: llll.’ (the blank space to be filled

12 in by the creditor).’’.

13 (b) REGULATORY IMPLEMENTATION.—

14 (1) IN GENERAL.—The Board of Governors of

15 the Federal Reserve System (hereafter in this title

16 referred to as the ‘‘Board’’) shall promulgate regula17 tions implementing the requirements of section

18 127(b)(11) of the Truth in Lending Act, as added

19 by subsection (a) of this section.

20 (2) EFFECTIVE DATE.—Section 127(b)(11) of

21 the Truth in Lending Act, as added by subsection

22 (a) of this section, and the regulations issued under

23 paragraph (1) of this subsection shall not take effect

24 until the later of—
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1 (A) 18 months after the date of enactment

2 of this Act; or

3 (B) 12 months after the publication of

4 such final regulations by the Board.

5 (c) STUDY OF FINANCIAL DISCLOSURES.—

6 (1) IN GENERAL.—The Board may conduct a

7 study to determine the types of information available

8 to potential borrowers from consumer credit lending

9 institutions regarding factors qualifying potential

10 borrowers for credit, repayment requirements, and

11 the consequences of default.

12 (2) FACTORS FOR CONSIDERATION.—In con13 ducting a study under paragraph (1), the Board

14 should, in consultation with the other Federal bank15 ing agencies (as defined in section 3 of the Federal

16 Deposit Insurance Act), the National Credit Union

17 Administration, and the Federal Trade Commission,

18 consider the extent to which—

19 (A) consumers, in establishing new credit

20 arrangements, are aware of their existing pay21 ment obligations, the need to consider those ob22 ligations in deciding to take on new credit, and

23 how taking on excessive credit can result in fi24 nancial difficulty;
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1 (B) minimum periodic payment features

2 offered in connection with open end credit plans

3 impact consumer default rates;

4 (C) consumers make only the required

5 minimum payment under open end credit plans;

6 (D) consumers are aware that making only

7 required minimum payments will increase the

8 cost and repayment period of an open end cred9 it obligation; and

10 (E) the availability of low minimum pay11 ment options is a cause of consumers experi12 encing financial difficulty.

13 (3) REPORT TO CONGRESS.—Findings of the

14 Board in connection with any study conducted under

15 this subsection shall be submitted to Congress. Such

16 report shall also include recommendations for legis17 lative initiatives, if any, of the Board, based on its

18 findings.

19 SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN20 SIONS SECURED BY A DWELLING.

21 (a) OPEN END CREDIT EXTENSIONS.—

22 (1) CREDIT APPLICATIONS.—Section

23 127A(a)(13) of the Truth in Lending Act (15

24 U.S.C. 1637a(a)(13)) is amended—
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1 (A) by striking ‘‘CONSULTATION OF TAX

2 ADVISER.—A statement that the’’ and inserting

3 the following: ‘‘TAX DEDUCTIBILITY.—A state4 ment that—

5 ‘‘(A) the’’; and

6 (B) by striking the period at the end and

7 inserting the following: ‘‘; and

8 ‘‘(B) in any case in which the extension of

9 credit exceeds the fair market value (as defined

10 under the Internal Revenue Code of 1986) of

11 the dwelling, the interest on the portion of the

12 credit extension that is greater than the fair

13 market value of the dwelling is not tax deduct14 ible for Federal income tax purposes.’’.

15 (2) CREDIT ADVERTISEMENTS.—Section 147(b)

16 of the Truth in Lending Act (15 U.S.C. 1665b(b))

17 is amended—

18 (A) by striking ‘‘If any’’ and inserting the

19 following:

20 ‘‘(1) IN GENERAL.—If any’’; and

21 (B) by adding at the end the following:

22 ‘‘(2) CREDIT IN EXCESS OF FAIR MARKET

23 VALUE.—Each advertisement described in subsection

24 (a) that relates to an extension of credit that may

25 exceed the fair market value of the dwelling, and
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•S 3186 IS

1 which advertisement is disseminated in paper form

2 to the public or through the Internet, as opposed

3 to by radio or television, shall include a clear and

4 conspicuous statement that—

5 ‘‘(A) the interest on the portion of the

6 credit extension that is greater than the fair

7 market value of the dwelling is not tax deduct8 ible for Federal income tax purposes; and

9 ‘‘(B) the consumer should consult a tax

10 adviser for further information regarding the

11 deductibility of interest and charges.’’.

12 (b) NON-OPEN END CREDIT EXTENSIONS.—

13 (1) CREDIT APPLICATIONS.—Section 128 of the

14 Truth in Lending Act (15 U.S.C. 1638) is

15 amended—

16 (A) in subsection (a), by adding at the end

17 the following:

18 ‘‘(15) In the case of a consumer credit trans19 action that is secured by the principal dwelling of

20 the consumer, in which the extension of credit may

21 exceed the fair market value of the dwelling, a clear

22 and conspicuous statement that—

23 ‘‘(A) the interest on the portion of the

24 credit extension that is greater than the fair
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•S 3186 IS

1 market value of the dwelling is not tax deduct2 ible for Federal income tax purposes; and

3 ‘‘(B) the consumer should consult a tax

4 adviser for further information regarding the

5 deductibility of interest and charges.’’; and

6 (B) in subsection (b), by adding at the end

7 the following:

8 ‘‘(3) In the case of a credit transaction described in

9 paragraph (15) of subsection (a), disclosures required by

10 that paragraph shall be made to the consumer at the time

11 of application for such extension of credit.’’.

12 (2) CREDIT ADVERTISEMENTS.—Section 144 of

13 the Truth in Lending Act (15 U.S.C. 1664) is

14 amended by adding at the end the following:

15 ‘‘(e) Each advertisement to which this section applies

16 that relates to a consumer credit transaction that is se17 cured by the principal dwelling of a consumer in which

18 the extension of credit may exceed the fair market value

19 of the dwelling, and which advertisement is disseminated

20 in paper form to the public or through the Internet, as

21 opposed to by radio or television, shall clearly and con22 spicuously state that—

23 ‘‘(1) the interest on the portion of the credit ex24 tension that is greater than the fair market value of
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•S 3186 IS

1 the dwelling is not tax deductible for Federal income

2 tax purposes; and

3 ‘‘(2) the consumer should consult a tax adviser

4 for further information regarding the deductibility of

5 interest and charges.’’.

6 (c) REGULATORY IMPLEMENTATION.—

7 (1) IN GENERAL.—The Board shall promulgate

8 regulations implementing the amendments made by

9 this section.

10 (2) EFFECTIVE DATE.—Regulations issued

11 under paragraph (1) shall not take effect until the

12 later of—

13 (A) 12 months after the date of enactment

14 of this Act; or

15 (B) 12 months after the date of publica16 tion of such final regulations by the Board.

17 SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY

18 RATES’’.

19 (a) INTRODUCTORY RATE DISCLOSURES.—Section

20 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c))

21 is amended by adding at the end the following:

22 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRO23 DUCTORY RATES’.—

24 ‘‘(A) IN GENERAL.—Except as provided in

25 subparagraph (B), an application or solicitation
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•S 3186 IS

1 to open a credit card account and all pro2 motional materials accompanying such applica3 tion or solicitation for which a disclosure is re4 quired under paragraph (1), and that offers a

5 temporary annual percentage rate of interest,

6 shall—

7 ‘‘(i) use the term ‘introductory’ in im8 mediate proximity to each listing of the

9 temporary annual percentage rate applica10 ble to such account, which term shall ap11 pear clearly and conspicuously;

12 ‘‘(ii) if the annual percentage rate of

13 interest that will apply after the end of the

14 temporary rate period will be a fixed rate,

15 state in a clear and conspicuous manner in

16 a prominent location closely proximate to

17 the first listing of the temporary annual

18 percentage rate (other than a listing of the

19 temporary annual percentage rate in the

20 tabular format described in section

21 122(c)), the time period in which the intro22 ductory period will end and the annual

23 percentage rate that will apply after the

24 end of the introductory period; and
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1 ‘‘(iii) if the annual percentage rate

2 that will apply after the end of the tem3 porary rate period will vary in accordance

4 with an index, state in a clear and con5 spicuous manner in a prominent location

6 closely proximate to the first listing of the

7 temporary annual percentage rate (other

8 than a listing in the tabular format pre9 scribed by section 122(c)), the time period

10 in which the introductory period will end

11 and the rate that will apply after that,

12 based on an annual percentage rate that

13 was in effect within 60 days before the

14 date of mailing the application or solicita15 tion.

16 ‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of

17 subparagraph (A) do not apply with respect to

18 any listing of a temporary annual percentage

19 rate on an envelope or other enclosure in which

20 an application or solicitation to open a credit

21 card account is mailed.

22 ‘‘(C) CONDITIONS FOR INTRODUCTORY

23 RATES.—An application or solicitation to open

24 a credit card account for which a disclosure is

25 required under paragraph (1), and that offers a
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•S 3186 IS

1 temporary annual percentage rate of interest

2 shall, if that rate of interest is revocable under

3 any circumstance or upon any event, clearly

4 and conspicuously disclose, in a prominent man5 ner on or with such application or solicitation—

6 ‘‘(i) a general description of the cir7 cumstances that may result in the revoca8 tion of the temporary annual percentage

9 rate; and

10 ‘‘(ii) if the annual percentage rate

11 that will apply upon the revocation of the

12 temporary annual percentage rate—

13 ‘‘(I) will be a fixed rate, the an14 nual percentage rate that will apply

15 upon the revocation of the temporary

16 annual percentage rate; or

17 ‘‘(II) will vary in accordance with

18 an index, the rate that will apply after

19 the temporary rate, based on an an20 nual percentage rate that was in ef21 fect within 60 days before the date of

22 mailing the application or solicitation.

23 ‘‘(D) DEFINITIONS.—In this paragraph—

24 ‘‘(i) the terms ‘temporary annual per25 centage rate of interest’ and ‘temporary
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•S 3186 IS

1 annual percentage rate’ mean any rate of

2 interest applicable to a credit card account

3 for an introductory period of less than 1

4 year, if that rate is less than an annual

5 percentage rate that was in effect within

6 60 days before the date of mailing the ap7 plication or solicitation; and

8 ‘‘(ii) the term ‘introductory period’

9 means the maximum time period for which

10 the temporary annual percentage rate may

11 be applicable.

12 ‘‘(E) RELATION TO OTHER DISCLOSURE

13 REQUIREMENTS.—Nothing in this paragraph

14 may be construed to supersede subsection (a) of

15 section 122, or any disclosure required by para16 graph (1) or any other provision of this sub17 section.’’.

18 (b) REGULATORY IMPLEMENTATION.—

19 (1) IN GENERAL.—The Board shall promulgate

20 regulations implementing the requirements of section

21 127(c)(6) of the Truth in Lending Act, as added by

22 this section.

23 (2) EFFECTIVE DATE.—Section 127(c)(6) of

24 the Truth in Lending Act, as added by this section,
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1 and regulations issued under paragraph (1) of this

2 subsection shall not take effect until the later of—

3 (A) 12 months after the date of enactment

4 of this Act; or

5 (B) 12 months after the date of publica6 tion of such final regulations by the Board.

7 SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.

8 (a) INTERNET-BASED APPLICATIONS AND SOLICITA9 TIONS.—Section 127(c) of the Truth in Lending Act (15

10 U.S.C. 1637(c)) is amended by adding at the end the fol11 lowing:

12 ‘‘(7) INTERNET-BASED APPLICATIONS AND SO13 LICITATIONS.—

14 ‘‘(A) IN GENERAL.—In any solicitation to

15 open a credit card account for any person under

16 an open end consumer credit plan using the

17 Internet or other interactive computer service,

18 the person making the solicitation shall clearly

19 and conspicuously disclose—

20 ‘‘(i) the information described in sub21 paragraphs (A) and (B) of paragraph (1);

22 and

23 ‘‘(ii) the information described in

24 paragraph (6).
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1 ‘‘(B) FORM OF DISCLOSURE.—The disclo2 sures required by subparagraph (A) shall be—

3 ‘‘(i) readily accessible to consumers in

4 close proximity to the solicitation to open

5 a credit card account; and

6 ‘‘(ii) updated regularly to reflect the

7 current policies, terms, and fee amounts

8 applicable to the credit card account.

9 ‘‘(C) DEFINITIONS.—For purposes of this

10 paragraph—

11 ‘‘(i) the term ‘Internet’ means the

12 international computer network of both

13 Federal and non-Federal interoperable

14 packet switched data networks; and

15 ‘‘(ii) the term ‘interactive computer

16 service’ means any information service,

17 system, or access software provider that

18 provides or enables computer access by

19 multiple users to a computer server, in20 cluding specifically a service or system that

21 provides access to the Internet and such

22 systems operated or services offered by li23 braries or educational institutions.’’.

24 (b) REGULATORY IMPLEMENTATION.—
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•S 3186 IS

1 (1) IN GENERAL.—The Board shall promulgate

2 regulations implementing the requirements of section

3 127(c)(7) of the Truth in Lending Act, as added by

4 this section.

5 (2) EFFECTIVE DATE.—The amendment made

6 by subsection (a) and the regulations issued under

7 paragraph (1) of this subsection shall not take effect

8 until the later of—

9 (A) 12 months after the date of enactment

10 of this Act; or

11 (B) 12 months after the date of publica12 tion of such final regulations by the Board.

13 SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT

14 DEADLINES AND PENALTIES.

15 (a) DISCLOSURES RELATED TO LATE PAYMENT

16 DEADLINES AND PENALTIES.—Section 127(b) of the

17 Truth in Lending Act (15 U.S.C. 1637(b)) is amended

18 by adding at the end the following:

19 ‘‘(12) If a late payment fee is to be imposed

20 due to the failure of the obligor to make payment on

21 or before a required payment due date, the following

22 shall be stated clearly and conspicuously on the bill23 ing statement:
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1 ‘‘(A) The date on which that payment is

2 due or, if different, the earliest date on which

3 a late payment fee may be charged.

4 ‘‘(B) The amount of the late payment fee

5 to be imposed if payment is made after such

6 date.’’.

7 (b) REGULATORY IMPLEMENTATION.—

8 (1) IN GENERAL.—The Board shall promulgate

9 regulations implementing the requirements of section

10 127(b)(12) of the Truth in Lending Act, as added

11 by this section.

12 (2) EFFECTIVE DATE.—The amendment made

13 by subsection (a) and regulations issued under para14 graph (1) of this subsection shall not take effect

15 until the later of—

16 (A) 12 months after the date of enactment

17 of this Act; or

18 (B) 12 months after the date of publica19 tion of such final regulations by the Board.

20 SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL21 URE TO INCUR FINANCE CHARGES.

22 (a) PROHIBITION ON CERTAIN ACTIONS FOR FAIL23 URE TO INCUR FINANCE CHARGES.—Section 127 of the

24 Truth in Lending Act (15 U.S.C. 1637) is amended by

25 adding at the end the following:
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•S 3186 IS

1 ‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAIL2 URE TO INCUR FINANCE CHARGES.—A creditor of an ac3 count under an open end consumer credit plan may not

4 terminate an account prior to its expiration date solely be5 cause the consumer has not incurred finance charges on

6 the account. Nothing in this subsection shall prohibit a

7 creditor from terminating an account for inactivity in 3

8 or more consecutive months.’’.

9 (b) REGULATORY IMPLEMENTATION.—

10 (1) IN GENERAL.—The Board shall promulgate

11 regulations implementing the requirements of section

12 127(h) of the Truth in Lending Act, as added by

13 this section.

14 (2) EFFECTIVE DATE.—The amendment made

15 by subsection (a) and regulations issued under para16 graph (1) of this subsection shall not take effect

17 until the later of—

18 (A) 12 months after the date of enactment

19 of this Act; or

20 (B) 12 months after the date of publica21 tion of such final regulations by the Board.

22 SEC. 1307. DUAL USE DEBIT CARD.

23 (a) REPORT.—The Board may conduct a study of,

24 and present to Congress a report containing its analysis

25 of, consumer protections under existing law to limit the
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•S 3186 IS

1 liability of consumers for unauthorized use of a debit card

2 or similar access device. Such report, if submitted, shall

3 include recommendations for legislative initiatives, if any,

4 of the Board, based on its findings.

5 (b) CONSIDERATIONS.—In preparing a report under

6 subsection (a), the Board may include—

7 (1) the extent to which section 909 of the Elec8 tronic Fund Transfer Act (15 U.S.C. 1693g), as in

9 effect at the time of the report, and the imple10 menting regulations promulgated by the Board to

11 carry out that section provide adequate unauthorized

12 use liability protection for consumers;

13 (2) the extent to which any voluntary industry

14 rules have enhanced or may enhance the level of pro15 tection afforded consumers in connection with such

16 unauthorized use liability; and

17 (3) whether amendments to the Electronic

18 Fund Transfer Act (15 U.S.C. 1693 et seq.), or re19 visions to regulations promulgated by the Board to

20 carry out that Act, are necessary to further address

21 adequate protection for consumers concerning unau22 thorized use liability.

23 SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX24 TENDED TO DEPENDENT STUDENTS.

25 (a) STUDY.—
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1 (1) IN GENERAL.—The Board shall conduct a

2 study regarding the impact that the extension of

3 credit described in paragraph (2) has on the rate of

4 bankruptcy cases filed under title 11, United States

5 Code.

6 (2) EXTENSION OF CREDIT.—The extension of

7 credit described in this paragraph is the extension of

8 credit to individuals who are—

9 (A) claimed as dependents for purposes of

10 the Internal Revenue Code of 1986; and

11 (B) enrolled within 1 year of successfully

12 completing all required secondary education re13 quirements and on a full-time basis, in postsec14 ondary educational institutions.

15 (b) REPORT.—Not later than 1 year after the date

16 of enactment of this Act, the Board shall submit to the

17 Senate and the House of Representatives a report summa18 rizing the results of the study conducted under subsection

19 (a).

20 SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS.

21 (a) REGULATIONS.—Not later than 6 months after

22 the date of enactment of this Act, the Board, in consulta23 tion with the other Federal banking agencies (as defined

24 in section 3 of the Federal Deposit Insurance Act), the

25 National Credit Union Administration Board, and the
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1 Federal Trade Commission, shall promulgate regulations

2 to provide guidance regarding the meaning of the term

3 ‘‘clear and conspicuous’’, as used in subparagraphs (A),

4 (B), and (C) of section 127(b)(11) and clauses (ii) and

5 (iii) of section 127(c)(6)(A) of the Truth in Lending Act.

6 (b) EXAMPLES.—Regulations promulgated under

7 subsection (a) shall include examples of clear and con8 spicuous model disclosures for the purposes of disclosures

9 required by the provisions of the Truth in Lending Act

10 referred to in subsection (a).

11 (c) STANDARDS.—In promulgating regulations under

12 this section, the Board shall ensure that the clear and con13 spicuous standard required for disclosures made under the

14 provisions of the Truth in Lending Act referred to in sub15 section (a) can be implemented in a manner which results

16 in disclosures which are reasonably understandable and

17 designed to call attention to the nature and significance

18 of the information in the notice.

19 SEC. 1310. ENFORCEMENT OF CERTAIN FOREIGN JUDG20 MENTS BARRED.

21 (a) IN GENERAL.—Notwithstanding any other provi22 sion of law or contract, a court within the United States

23 shall not recognize or enforce any judgment rendered in

24 a foreign court if, by clear and convincing evidence, the

25 court in which recognition or enforcement of the judgment
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1 is sought determines that the judgment gives effect to any

2 purported right or interest derived, directly or indirectly,

3 from any fraudulent misrepresentation or fraudulent omis4 sion that occurred in the United States during the period

5 beginning on January 1, 1975, and ending on December

6 31, 1993.

7 (b) EXCEPTION.—Subsection (a) shall not prevent

8 recognition or enforcement of a judgment rendered in a

9 foreign court if the foreign tribunal rendering judgment

10 giving effect to the right or interest concerned determines

11 that no fraudulent misrepresentation or fraudulent omis12 sion described in subsection (a) occurred.

13 TITLE XIV—GENERAL EFFEC14 TIVE DATE; APPLICATION OF

15 AMENDMENTS

16 SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMEND17 MENTS.

18 (a) EFFECTIVE DATE.—Except as otherwise provided

19 in this Act, this Act and the amendments made by this

20 Act shall take effect 180 days after the date of enactment

21 of this Act.

22 (b) APPLICATION OF AMENDMENTS.—Except as oth23 erwise provided in this Act, the amendments made by this

24 Act shall not apply with respect to cases commenced under
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1 title 11, United States Code, before the effective date of

2 this Act.

Æ