```

[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1301 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1301

    To amend title 11, United States Code, to provide for consumer 
             bankruptcy protection, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 21, 1997

  Mr. Grassley (for himself and Mr. Durbin) 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, to provide for consumer 
             bankruptcy protection, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Bankruptcy Reform Act of 
1997''.

                    TITLE I--NEEDS BASED BANKRUPTCY

SEC. 101. CONVERSION.

    Section 706(c) of title 11, United States Code, is amended by 
striking ``13''.

SEC. 102. DISMISSAL OR CONVERSION.

    (a) In General.--Section 707 of title 11, United States Code, is 
amended--
            (1) by striking the section heading and inserting the 
        following:
``Sec. 707. Dismissal of a case or conversion to a case under chapter 
              13'';
        and
            (2) in subsection (b)--
                    (A) by inserting ``(1)'' after ``(b)''; and
                    (B) in paragraph (1), as redesignated by 
                subparagraph (A) of this paragraph--
                            (i) in the first sentence--
                                    (I) by striking ``, but not at the 
                                request or suggestion of a party in 
                                interest,'';
                                    (II) by inserting ``, or, with the 
                                debtor's consent, convert such a case 
                                to a case under chapter 13 of this 
                                title,'' after ``consumer debts''; and
                                    (III) by striking ``substantial 
                                abuse'' and inserting ``abuse''; and
                            (ii) by striking the last sentence and 
                        inserting the following:
    ``(2) In considering under paragraph (1) whether the granting of 
relief would be an abuse of the provisions of this chapter, the court 
shall consider whether--
            ``(A) under section 1325(b)(1) of this title, on the basis 
        of the current income of the debtor, the debtor could pay an 
        amount greater than or equal to 20 percent of unsecured claims 
        that are not considered to be priority claims (as determined 
        under subchapter I of chapter 5 of this title);
            ``(B) the debtor filed a petition for the relief in bad 
        faith; and
            ``(C)(i) the debtor made good-faith efforts, before the 
        filing of the petition, to negotiate an alternative repayment 
        schedule or to use alternative methods of dispute resolution; 
        and
            ``(ii) if the debtor made efforts described in clause (i), 
        the creditors of that debtor unreasonably refused to engage in 
        the alternative methods of dispute resolution or to negotiate 
        an alternative repayment schedule.
    ``(3)(A) If a panel trustee appointed under section 586(a)(1) of 
title 28 brings a motion for dismissal or conversion under this 
subsection and the court grants that motion, the court shall order the 
counsel for the debtor, if the debtor is represented by counsel, to 
reimburse the trustee for all reasonable costs in prosecuting the 
motion, including reasonable attorneys' fees.
    ``(B) If the court finds that the attorney for the debtor violated 
Rule 9011, at a minimum, the court shall order--
            ``(i) the assessment of an appropriate civil penalty 
        against the counsel for the debtor; and
            ``(ii) the payment of the civil penalty to the panel 
        trustee or the United States trustee.
    ``(C) In the case of a petition referred to in subparagraph (B), 
the signature of an attorney shall constitute a certificate that the 
attorney has--
            ``(i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition; and
            ``(ii) determined that the petition--
                    ``(I) is well grounded in fact; and
                    ``(II) is warranted by existing law or a good faith 
                argument for the extension, modification, or reversal 
                of existing law and does not constitute an abuse under 
                paragraph (1) of this subsection.
    ``(4) The court shall award a debtor all reasonable costs in 
contesting a motion brought by a party in interest under this 
subsection (including reasonable attorneys' fees and actual damages in 
an amount not less than $5,000) if--
            ``(A) the court does not grant the motion; and
            ``(B) the court finds that--
                    ``(i) the position of the party that brought the 
                motion was not substantially justified; or
                    ``(ii) the party brought the motion solely for the 
                purpose of coercing a debtor into waiving a right 
                guaranteed to the debtor under this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 7 of title 11, United States Code, is amended by striking the 
item relating to section 707 and inserting the following:

``707. Dismissal of a case or conversion to a case under chapter 13.''.

        TITLE II--ENHANCED PROCEDURAL PROTECTIONS FOR CONSUMERS

SEC. 201. ALLOWANCE OF CLAIMS OR INTERESTS.

    Section 502 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(k)(1) The court shall award the debtor reasonable attorneys' 
fees and costs if, after an objection is filed by a debtor, the court--
            ``(A) disallows the claim; or
            ``(B) reduces the claim by an amount greater than 5 percent 
        of the amount of the initial claim filed by a party in 
        interest.
    ``(2) If the court finds that the position of a claimant under this 
section is not substantially justified, the court shall, in addition to 
awarding a debtor reasonable attorneys' fees and costs under paragraph 
(1), award additional punitive damages in the amount of $5,000.''.

SEC. 202. EXCEPTIONS TO DISCHARGE.

    Section 523 of title 11, United States Code, is amended to read as 
follows:
    ``(d)(1) If a creditor requests a determination of dischargeability 
of a consumer debt under this section and that debt is discharged, the 
court shall award the debtor reasonable attorneys' fees and costs.
    ``(2) In addition to making an award to a debtor under paragraph 
(1), if the court finds that the position of a creditor in a proceeding 
covered under this section is not substantially justified, the court 
shall, in addition to making an award of reasonable attorneys' fees and 
costs under paragraph (1), award an amount equal to the greater of--
            ``(A)(i) the amount of actual damages; multiplied by
            ``(ii) 3; or
            ``(B) $5,000.''.

SEC. 203. EFFECT OF DISCHARGE.

    Section 524 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(i) The failure of a creditor to credit payments received under a 
plan confirmed under this title (including a plan of reorganization 
confirmed under chapter 11 of this title) in the manner required by the 
plan (including crediting the amounts required under the plan) shall 
constitute a violation of an injunction under subsection (a)(2).
    ``(j)(1) Except as provided in paragraph (2), a creditor may not 
charge a debtor, or the account of a debtor, for attorneys' fees or 
costs for work performed in connection with a case brought under this 
title.
    ``(2) Any charge made by a creditor in violation of this subsection 
shall constitute a violation of an injunction under subsection (a)(2).
    ``(k) An individual who is injured by the failure of a creditor to 
comply with the requirements for a reaffirmation agreement under 
subsections (c) and (d), or by any willful violation of the injunction 
under subsection (a)(2), shall be entitled to recover--
            ``(1) the greater of--
                    ``(A)(i) the amount of actual damages; multiplied 
                by
                    ``(ii) 3; or
                    ``(B) $5,000; and
            ``(2) costs and attorneys' fees.''.

SEC. 204. AUTOMATIC STAY.

    Section 362(h) of title 11, United States Code, is amended to read 
as follows:
    ``(h)(1) An individual who is injured by any willful violation of a 
stay provided in this section shall be entitled to recover--
            ``(A) the greater of--
                    ``(i)(I) the amount of actual damages; multiplied 
                by
                    ``(II) 3; or
                    ``(ii) $5,000; and
            ``(B) costs and attorneys' fees.
    ``(2) In addition to recovering actual damages, costs, and 
attorneys' fees under paragraph (1), an individual described in 
paragraph (1) may recover punitive damages in appropriate 
circumstances.''.

SEC. 205. WHO MAY BE A DEBTOR.

    Section 727 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(F)(1) In any case in which a creditor files a motion to deny 
relief to a debtor under this section and that motion is denied or 
withdrawn, the court shall award the debtor reasonable attorneys' fees 
and costs.
    ``(2) If the court finds that the position of a party filing a 
motion under this section is not substantially justified, the court 
shall assess against the creditor for payment to the debtor a payment 
in an amount equal to the greater of--
            ``(A)(i) the amount of actual damages; multiplied by
            ``(ii) 3; or
            ``(B) $5,000.''.

  TITLE III--IMPROVED PROCEDURES FOR EFFICIENT ADMINISTRATION OF THE 
                           BANKRUPTCY SYSTEM

SEC. 301. NOTICE OF ALTERNATIVES.

    (a) In General.--Section 342 of title 11, United States Code, is 
amended by striking subsection (b) and inserting the following:
    ``(b) Before the commencement of a case under this title by an 
individual whose debts are primarily consumer debts, that individual 
shall be given or obtain (as required in section 521(a)(1), as part of 
the certification process under subchapter 1 of chapter 5 of this 
title) a written notice prescribed by the United States trustee for the 
district in which the petition is filed pursuant to section 586 of 
title 28. The notice shall contain the following:
            ``(1) A brief description of chapters 7, 11, 12, and 13 of 
        this title and the general purpose, benefits, and costs of 
        proceeding under each of those chapters.
            ``(2) A brief description of services that may be available 
        to that individual from an independent nonprofit debt 
        counseling service.
            ``(3)(A) The name, address, and telephone number of each 
        nonprofit debt counseling service with an office located in the 
        district in which the petition is filed, if any.
            ``(B) Any nonprofit debt counseling service described in 
        subparagraph (A) that has registered with the clerk of the 
        bankruptcy court on or before December 10 of the preceding year 
        shall be included in the list referred to in that clause, 
        unless the chief bankruptcy judge of the district involved, 
        after giving notice to the debt counseling service and the 
        United States trustee and opportunity for a hearing, orders, 
        for good cause, that a particular debt counseling service shall 
        not be so listed.''; and
    (b) Debtor's Duties.--Section 521 of title 11, United States Code, 
is amended--
            (1) by inserting ``(a)'' before ``The debtor shall--'';
            (2) by striking paragraph (1) and inserting the following:
            ``(1) file--
                    ``(A) a list of creditors; and
                    ``(B) unless the court orders otherwise--
                            ``(i) a schedule of assets and liabilities;
                            ``(ii) a schedule of current income and 
                        current expenditures;
                            ``(iii) a statement of the debtor's 
                        financial affairs and, if applicable, a 
                        certificate--
                                    ``(I) of an attorney whose name is 
                                on the petition as the attorney for the 
                                debtor or any bankruptcy petition 
                                preparer signing the petition pursuant 
                                to section 110(b)(1) of this title 
                                indicating that such attorney or 
                                bankruptcy petition preparer delivered 
                                to the debtor any notice required by 
                                section 342(b) of this title; or
                                    ``(II) if no attorney for the 
                                debtor is indicated and no bankruptcy 
                                petition preparer signed the petition, 
                                of the debtor that such notice was 
                                obtained and read by the debtor;
                            ``(iv) copies of any Federal tax returns, 
                        including any schedules or attachments, filed 
                        by the debtor for the 3-year period preceding 
                        the order for relief;
                            ``(v) copies of all payment advices or 
                        other evidence of payment, if any, received by 
                        the debtor from any employer of the debtor in 
                        the period 60 days prior to the filing of the 
                        petition;
                            ``(vi) a statement of the amount of 
                        projected monthly net income, itemized to show 
                        how calculated;
                            ``(vii) if applicable, any statement under 
                        paragraphs (3) and (4) of section 109(h); and
                            ``(viii) a statement disclosing any 
                        reasonably anticipated increase in income or 
                        expenditures over the 12-month period following 
                        the date of filing;''; and
            (3) by adding at the end the following:
    ``(b)(1) At any time, a creditor, in the case of an individual 
under chapter 7 or 13, may file with the court notice that the creditor 
requests the petition, schedules, and a statement of affairs filed by 
the debtor in the case and the court shall make those documents 
available to the creditor who requests those documents.
    ``(2) At any time, a creditor, in a case under chapter 13, may file 
with the court notice that the creditor requests the plan filed by the 
debtor in the case and the court shall make that plan available to the 
creditor who requests that plan.
    ``(c) An individual debtor in a case under chapter 7 or 13 shall 
file with the court--
            ``(1) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, with respect 
        to the period from the commencement of the case until such time 
        as the case is closed;
            ``(2) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, that were not 
        filed with the taxing authority when the schedules under 
        subsection (a)(1) were filed with respect to the period that is 
        3 years before the order for relief;
            ``(3) any amendments to any of the tax returns, including 
        schedules or attachments, described in paragraph (1) or (2); 
        and
            ``(4) in a case under chapter 13, a statement subject to 
        the penalties of perjury by the debtor of the debtor's income 
        and expenditures in the preceding tax year and monthly income, 
        that shows how the amounts are calculated--
                    ``(A) beginning on the date that is the later of 90 
                days after the close of the debtor's tax year or 1 year 
                after the order for relief, unless a plan has been 
                confirmed; and
                    ``(B) thereafter on or before the date that is 45 
                days before each anniversary of the confirmation of the 
                plan until the case is closed.
    ``(d)(1) A statement referred to in subsection (c)(4) shall 
disclose--
            ``(A) the amount and sources of income of the debtor;
            ``(B) the identity of any persons responsible with the 
        debtor for the support of any dependents of the debtor; and
            ``(C) any persons who contributed and the amount 
        contributed to the household in which the debtor resides.
    ``(2) The tax returns, amendments, and statement of income and 
expenditures described in paragraph (1) shall be available to the 
United States trustee, any bankruptcy administrator, any trustee, and 
any party in interest for inspection and copying.''.
    (c) Title 28.--Section 586(a) of title 28, United States Code, is 
amended--
            (1) in paragraph (5) by striking ``and'' at the end;
            (2) in paragraph (6) by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(7) on or before January 1 of each calendar year, and 
        also not later than 30 days after any change in the nonprofit 
        debt counseling services registered with the bankruptcy court, 
        prescribe and make available on request the notice described in 
        section 342(b)(3) of title 11 for each district included in the 
        region.''.

SEC. 302. FAIR TREATMENT OF SECURED CREDITORS UNDER CHAPTER 13.

    Section 1325(a)(5)(B)(i) of title 11, United States Code, is 
amended to read as follows:
                    ``(B)(i) the plan provides that the holder of such 
                claim retain the lien securing such claim until the 
                debt that is the subject of the claim is fully paid 
                for, as provided under the plan; and''.

SEC. 303. DISCOURAGEMENT OF BAD FAITH REPEAT FILINGS.

    Section 362 of title 11, United States Code, is amended--
            (1) in subsection (c)--
                    (A) by inserting ``(1)'' before ``Except as'';
                    (B) by striking ``(1) the stay'' and inserting 
                ``(A) the stay'';
                    (C) by striking ``(2) the stay'' and inserting 
                ``(B) the stay'';
                    (D) by striking ``(A) the time'' and inserting 
                ``(i) the time''; and
                    (E) by striking ``(B) the time'' and inserting 
                ``(ii) the time''; and
            (2) by adding at the end the following:
    ``(2) Except as provided in subsections (d) through (f), the stay 
under subsection (a) with respect to any action taken with respect to a 
debt or property securing such debt or with respect to any lease shall 
terminate with respect to the debtor on the 30th day after the filing 
of the later case if--
            ``(A) a single or joint case is filed by or against an 
        individual debtor under chapter 7, 11, or 13; and
            ``(B) a single or joint case of that debtor (other than a 
        case refiled under a chapter other than chapter 7 after 
        dismissal under section 707(b) of this title) was pending 
        during the preceding year but was dismissed.
    ``(3) If a party in interest so requests, the court may extend the 
stay in a particular case with respect to 1 or more creditors (subject 
to such conditions or limitations as the court may impose) after 
providing notice and a hearing completed before the expiration of the 
30-day period described in paragraph (2) only if the party in interest 
demonstrates that the filing of the later case is in good faith with 
respect to the creditors to be stayed.
    ``(4) A case shall be presumed to have not been filed in good faith 
(except that such presumption may be rebutted by clear and convincing 
evidence to the contrary)--
            ``(A) with respect to the creditors involved, if--
                    ``(i) more than 1 previous case under any of 
                chapters 7, 11, or 13 of this title in which the 
                individual was a debtor was pending during the 1-year 
                period described in paragraph (1);
                    ``(ii) a previous case under any of chapters 7, 11, 
                or 13 of this title in which the individual was a 
                debtor was dismissed within the period specified in 
                paragraph (2) after--
                            ``(I) the debtor, after having received 
                        from the court a request to do so, failed to 
                        file or amend the petition or other documents 
                        as required by this title; or
                            ``(II) the debtor, without substantial 
                        excuse, failed to perform the terms of a plan 
                        that was confirmed by the court; or
                    ``(iii)(I) during the period commencing with the 
                dismissal of the next most previous case under chapter 
                7, 11, or 13 there has not been a substantial change in 
                the financial or personal affairs of the debtor;
                    ``(II) if the case is a chapter 7 case, there is no 
                other reason to conclude that the later case will be 
                concluded with a discharge; or
                    ``(III) if the case is a chapter 11 or 13 case, 
                there is not a confirmed plan that will be fully 
                performed; and
            ``(B) with respect to any creditor that commenced an action 
        under subsection (d) in a previous case in which the individual 
        was a debtor, if, as of the date of dismissal of that case, 
        that action was still pending or had been resolved by 
        terminating, conditioning, or limiting the stay with respect to 
        actions of that creditor.
    ``(5)(A) If a request is made for relief from the stay under 
subsection (a) with respect to real or personal property of any kind, 
and the request is granted in whole or in part, the court may, in 
addition to making any other order under this subsection, order that 
the relief so granted shall be in rem either--
            ``(i) for a definite period of not less than 1 year; or
            ``(ii) indefinitely.
    ``(B)(i) After an order is issued under subparagraph (A), the stay 
under subsection (a) shall not apply to any property subject to such an 
in rem order in any case of the debtor.
    ``(ii) If an in rem order issued under subparagraph (A) so 
provides, the stay shall, in addition to being inapplicable to the 
debtor involved, not apply with respect to an entity under this title 
if--
                    ``(I) the entity had reason to know of the order at 
                the time that the entity obtained an interest in the 
                property affected; or
                    ``(II) the entity was notified of the commencement 
                of the proceeding for relief from the stay, and at the 
                time of the notification, no case in which the entity 
                was a debtor was pending.
    ``(6) For purposes of this section, a case is pending during the 
period beginning with the issuance of the order for relief and ending 
at such time as the case involved is closed.''.

SEC. 304. TIMELY FILING AND CONFIRMATION OF PLANS UNDER CHAPTER 13.

    (a) Filing of Plan.--Section 1321 of title 11, United States Code, 
is amended to read as follows:
``Sec. 1321. Filing of plan
    ``The debtor shall file a plan not later than 90 days after the 
order for relief under this chapter, except that the court may extend 
such period if the need for an extension is attributable to 
circumstances for which the debtor should not justly be held 
accountable.''.
    (b) Confirmation of Hearing.--Section 1324 of title 11, United 
States Code, is amended by adding at the end the following: ``That 
hearing shall be held not later than 45 days after the filing of the 
plan, unless the court, after providing notice and a hearing, orders 
otherwise.''.

SEC. 305. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY PROTECTS 
              THE DEBTOR.

    Section 1301(b) of title 11, United States Code, is amended--
            (1) by inserting ``(1)'' after ``(b)''; and
            (2) by adding at the end the following:
    ``(2)(A) Notwithstanding subsection (c) and except as provided in 
subparagraph (B), in any case in which the debtor did not receive the 
consideration for the claim held by a creditor, the stay provided by 
subsection (a) shall apply to that creditor for a period not to exceed 
30 days beginning on the date of the order for relief, to the extent 
the creditor proceeds against--
            ``(i) the individual that received that consideration; or
            ``(ii) property not in the possession of the debtor that 
        secures that claim.
    ``(B) In any case described in subparagraph (A), a creditor may not 
proceed against an individual described in subparagraph (A)(i) or 
property described in subparagraph (A)(ii), if the debtor who did not 
receive consideration for the property that is the subject of the claim 
is able to demonstrate that the receipt of the property was not part of 
a scheme to defraud or hinder any creditor.
    ``(3) Notwithstanding subsection (c), the stay provided by 
subsection (a) shall terminate as of the date of confirmation of the 
plan, in any case in which the plan of the debtor provides that the 
debtor's interest in personal property subject to a lease with respect 
to which the debtor is the lessee will be surrendered or abandoned or 
no payments will be made under the plan on account of the debtor's 
obligations under the lease.''.

SEC. 306. IMPROVED BANKRUPTCY STATISTICS.

    (a) Amendment.--Chapter 6 of part I of title 28, United States 
Code, is amended by adding at the end the following:
``Sec. 159. Bankruptcy statistics
    ``(a) The clerk of each district shall compile statistics regarding 
individual debtors with primarily consumer debts seeking relief under 
chapters 7, 11, and 13 of title 11. Those statistics shall be in a form 
prescribed by the Director of the Administrative Office of the United 
States Courts (referred to in this section as the `Office').
    ``(b) The Director shall--
            ``(1) compile the statistics referred to in subsection (a);
            ``(2) make the statistics available to the public; and
            ``(3) not later than October 31, 1998, and annually 
        thereafter, prepare, and submit to Congress a report concerning 
        the information collected under subsection (a) that contains an 
        analysis of the information.
    ``(c) The compilation required under subsection (b) shall--
            ``(1) be itemized, by chapter, with respect to title 11;
            ``(2) be presented in the aggregate and for each district; 
        and
            ``(3) include information concerning--
                    ``(A) the total assets and total liabilities of the 
                debtors described in subsection (a), and in each 
                category of assets and liabilities, as reported in the 
                schedules prescribed pursuant to section 2075 of this 
                title and filed by those debtors;
                    ``(B) the current total monthly income, projected 
                monthly net income, and average income and average 
                expenses of those debtors as reported on the schedules 
                and statements that each such debtor files under 
                sections 111, 521, and 1322 of title 11;
                    ``(C) the aggregate amount of debt discharged in 
                the reporting period, determined as the difference 
                between the total amount of debt and obligations of a 
                debtor reported on the schedules and the amount of such 
                debt reported in categories which are predominantly 
                nondischargeable;
                    ``(D) the average period of time between the filing 
                of the petition and the closing of the case;
                    ``(E) for the reporting period--
                            ``(i) the number of cases in which a 
                        reaffirmation was filed; and
                            ``(ii)(I) the total number of 
                        reaffirmations filed;
                            ``(II) of those cases in which a 
                        reaffirmation was filed, the number in which 
                        the debtor was not represented by an attorney; 
                        and
                            ``(III) of those cases, the number of cases 
                        in which the reaffirmation was approved by the 
                        court;
                    ``(F) with respect to cases filed under chapter 13 
                of title 11, for the reporting period--
                            ``(i)(I) the number of cases in which a 
                        final order was entered determining the value 
                        of property securing a claim in an amount less 
                        than the amount of the claim; and
                            ``(II) the number of final orders 
                        determining the value of property securing a 
                        claim issued;
                            ``(ii) the number of cases dismissed for 
                        failure to make payments under the plan; and
                            ``(iii) the number of cases in which the 
                        debtor filed another case within the 6 years 
                        previous to the filing; and
                    ``(G) the extent of creditor misconduct and any 
                amount of punitive damages awarded by the court for 
                creditor misconduct.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 6 of title 28, United States Code, is amended by adding at the 
end the following:

``159. Bankruptcy statistics.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 307. AUDIT PROCEDURES.

    (a) Amendment.--Section 586 of title 28, United States Code, is 
amended--
            (1) in subsection (a), as amended by section 301 of this 
        Act, by striking paragraph (6) and inserting the following:
            ``(6) make such reports as the Attorney General directs, 
        including the results of audits performed under subsection (f); 
        and''; and
            (2) by adding at the end the following:
    ``(f)(1)(A) The Attorney General shall establish procedures for the 
auditing of the accuracy and completeness of petitions, schedules, and 
other information which the debtor is required to provide under 
sections 521 and 1322 of title 11, and, if applicable, section 111 of 
title 11, in individual cases filed under chapter 7 or 13 of such 
title.
    ``(B) The audits described in subparagraph (A) shall be made in 
accordance with generally accepted auditing standards and performed by 
independent certified public accountants or independent licensed public 
accountants. Those procedures shall--
            ``(i) establish a method of selecting appropriate qualified 
        persons to contract with the United States trustee to perform 
        those audits;
            ``(ii) establish a method of randomly selecting cases to be 
        audited according to generally accepted auditing standards, 
        except that not less than 1 out of every 50 cases in each 
        Federal judicial district shall be selected for audit;
            ``(iii) require audits for schedules of income and expenses 
        which reflect greater than average variances from the 
        statistical norm of the district in which the schedules were 
        filed; and
            ``(iv) establish procedures for--
                    ``(I) reporting the results of those audits and any 
                material misstatement of income, expenditures, or 
                assets of a debtor to the Attorney General, the United 
                States Attorney and the court, as appropriate;
                    ``(II) providing, not less frequently than 
                annually, public information concerning the aggregate 
                results of such audits including the percentage of 
                cases, by district, in which a material misstatement of 
                income or expenditures is reported; and
                    ``(III) fully funding those audits, including 
                procedures requiring each debtor with sufficient 
                available income or assets to contribute to the payment 
                for those audits, as an administrative expense or 
                otherwise.
    ``(2) The United States trustee for each district is authorized to 
contract with auditors to perform audits in cases designated by the 
United States trustee according to the procedures established under 
paragraph (1) of this subsection.
    ``(3) According to procedures established under paragraph (1), upon 
request of a duly appointed auditor, the debtor shall cause the 
accounts, papers, documents, financial records, files and all other 
papers, things, or property belonging to the debtor as the auditor 
requests and that are reasonably necessary to facilitate the audit to 
be made available for inspection and copying.
    ``(4)(A) The report of each audit conducted under this subsection 
shall be filed with the court, the Attorney General, and the United 
States Attorney, as required under procedures established by the 
Attorney General under paragraph (1).
    ``(B) If a material misstatement of income or expenditures or of 
assets is reported under subparagraph (A), a statement specifying that 
misstatement shall be filed with the court and the United States 
trustee shall--
            ``(i) give notice thereof to the creditors in the case; and
            ``(ii) in an appropriate case, in the opinion of the United 
        States trustee, that requires investigation with respect to 
        possible criminal violations, the United States Attorney for 
        the district.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 308. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.

    Section 341(c) of title 11, United States Code, is amended by 
inserting after the first sentence the following: ``Notwithstanding any 
local court rule, provision of a State constitution, any other Federal 
or State law that is not a bankruptcy law, or other requirement that 
representation at the meeting of creditors under subsection (a) be by 
an attorney, a creditor holding a consumer debt or any representative 
of the creditor (which may include an entity or an employee of an 
entity and may be a representative for more than one creditor) shall be 
permitted to appear at and participate in the meeting of creditors in a 
case under chapter 7 or 13, either alone or in conjunction with an 
attorney for the creditor. Nothing in this subsection shall be 
construed to require any creditor to be represented by an attorney at 
any meeting of creditors.''.

SEC. 309. FAIR NOTICE FOR CREDITORS IN CHAPTER 7 AND 13 CASES.

    Section 342 of title 11, United States Code, is amended--
            (1) in subsection (c)--
                    (A) by striking ``, but the failure of such notice 
                to contain such information shall not invalidate the 
                legal effect of such notice''; and
                    (B) by adding at the end the following:
    ``(d)(1) If the credit agreement between the debtor and the 
creditor or the last communication before the filing of the petition in 
a voluntary case from the creditor to a debtor who is an individual 
states an account number of the debtor that is the current account 
number of the debtor with respect to any debt held by the creditor 
against the debtor, the debtor shall include that account number in any 
notice to the creditor required to be given under this title.
    ``(2) If the creditor has specified to the debtor, in the last 
communication before the filing of the petition, an address at which 
the creditor wishes to receive correspondence regarding the debtor's 
account, any notice to the creditor required to be given by the debtor 
under this title shall be given at such address.
    ``(3) For purposes of this section, the term `notice' shall 
include--
            ``(A) any correspondence from the debtor to the creditor 
        after the commencement of the case;
            ``(B) any statement of the debtor's intention under section 
        521(a)(2) of this title;
            ``(C) notice of the commencement of any proceeding in the 
        case to which the creditor is a party; and
            ``(D) any notice of a hearing under section 1324 of this 
        title.
    ``(e)(1) At any time, a creditor, in a case of an individual under 
chapter 7 or 13, may file with the court and serve on the debtor a 
notice of the address to be used to notify the creditor in that case.
    ``(2) If the court or the debtor is required to give the creditor 
notice, 5 days after receipt of the notice under paragraph (1), that 
notice shall be given at that address.
    ``(f) An entity may file with the court a notice stating its 
address for notice in cases under chapter 7 or 13. After the date that 
is 30 days following the filing of that notice, any notice in any case 
filed under chapter 7 or 13 given by the court shall be to that address 
unless specific notice is given under subsection (e) with respect to a 
particular case.
    ``(g)(1) Notice given to a creditor other than as provided in this 
section shall not be effective notice until that notice has been 
brought to the attention of the creditor.
    ``(2) If the creditor has designated a person or department to be 
responsible for receiving notices concerning bankruptcy cases and has 
established reasonable procedures so that bankruptcy notices received 
by the creditor will be delivered to that department or person, notice 
shall not be brought to the attention of the creditor until that notice 
is received by that person or department.''.

SEC. 310. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.

    Section 348(f)(1) of title 11, United States Code, is amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B)--
                    (A) by striking ``in the converted case, with 
                allowed secured claims'' and inserting ``only in a case 
                converted to chapter 11 or 12 but not in a case 
                converted to chapter 7, with allowed secured claims in 
                cases under chapters 11 and 12''; and
                    (B) by striking the period and inserting ``; and''; 
                and
            (3) by adding at the end the following:
            ``(C) with respect to cases converted from chapter 13, the 
        claim of any creditor holding security as of the date of the 
        petition shall continue to be secured by that security unless 
        the full amount of that claim determined under applicable 
        nonbankruptcy law has been paid in full as of the date of 
        conversion, notwithstanding any valuation or determination of 
        the amount of an allowed secured claim made for the purposes of 
        the chapter 13 proceeding.''.

SEC. 311. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

    Section 362(e) of title 11, United States Code, is amended--
            (1) by inserting ``(1)'' after ``(e); and
            (2) by adding at the end the following:
    ``(2) Notwithstanding paragraph (1), in the case of an individual 
filing under chapter 7, 11, or 13, the stay under subsection (a) shall 
terminate on the date that is 60 days after a request is made by a 
party in interest under subsection (d), unless--
            ``(A) a final decision is rendered by the court during the 
        60-day period beginning on the date of the request; or
            ``(B) that 60-day period is extended--
                    ``(i) by agreement of all parties in interest; or
                    ``(ii) by the court for such specific period of 
                time as the court finds is required for good cause.''.

SEC. 312. DISMISSAL FOR FAILURE TO FILE SCHEDULES TIMELY OR PROVIDE 
              REQUIRED INFORMATION.

    Section 707 of title 11, United States Code, as amended by section 
102 of this Act, is further amended by adding at the end the following:
    ``(c)(1) Notwithstanding subsection (a), and subject to paragraph 
(2), if an individual debtor in a voluntary case under chapter 7 or 13 
fails to file all of the information required under section 521(a)(1) 
of this title within 45 days after the filing of the petition 
commencing the case, the case shall be automatically dismissed 
effective on the 46th day after the filing of the petition.
    ``(2) With respect to a case described in paragraph (1), any party 
in interest may request the court to enter an order dismissing the 
case. The court shall, if so requested, enter an order of dismissal not 
later than 5 days after that request.
    ``(3) Upon request of the debtor made within 45 days after the 
filing of the petition commencing a case described in paragraph (1), 
the court may allow the debtor an additional period of not to exceed 20 
days to file the information required under section 521(a)(1) of this 
title if the court finds justification for extending the period for the 
filing.''.

SEC. 313. ADEQUATE TIME FOR PREPARATION FOR A HEARING ON CONFIRMATION 
              OF THE PLAN.

    Section 1324 of title 11, United States Code, is amended--
            (1) by striking ``After'' and inserting the following:
    ``(a) Except as provided in subsection (b) and after''; and
            (2) by adding at the end the following:
    ``(b) If not later than 5 days after receiving notice of a hearing 
on confirmation of the plan, a creditor objects to the confirmation of 
the plan, the hearing on confirmation of the plan may be held no 
earlier than 20 days after the first meeting of creditors under section 
341(a) of this title.''.

                    TITLE IV--TECHNICAL CORRECTIONS

SEC. 401. DEFINITIONS.

    Section 101 of title 11, United States Code, is amended--
            (1) by striking ``In this title--'' and inserting ``In this 
        title:'';
            (2) in each paragraph, by inserting ``The term'' after the 
        paragraph designation;
            (3) in paragraph (35)(B), by striking ``paragraphs (21B) 
        and (33)(A)'' and inserting ``paragraphs (23) and (35)'';
            (4) in each of paragraphs (35A) and (38), by striking ``; 
        and'' at the end and inserting a period;
            (5) in paragraph (51B)--
                    (A) by inserting ``who is not a family farmer'' 
                after ``debtor'' the first place it appears; and
                    (B) by striking ``thereto having aggregate'' and 
                all that follows through the end of the paragraph;
            (6) by amending paragraph (54) to read as follows:
            ``(54) The term `transfer' means--
                    ``(A) the creation of a lien;
                    ``(B) the retention of title as a security 
                interest;
                    ``(C) the foreclosure of a debtor's equity of 
                redemption; or
                    ``(D) each mode, direct or indirect absolute or 
                conditional, voluntary or involuntary, of disposing of 
                or parting with property or with an interest in 
                property;'';
            (7) in each of paragraphs (1) through (35), in each of 
        paragraphs (36) and (37), and in each of paragraphs (40) 
        through (55) (including paragraph (54), as added by paragraph 
        (6) of this section), by striking the semicolon at the end and 
        inserting a period; and
            (8) by redesignating paragraphs (4) through (55) in 
        entirely numerical sequence, so as to result in numerical 
        paragraph designations of (4) through (68).

SEC. 402. ADJUSTMENT OF DOLLAR AMOUNTS.

    Section 104 of title 11, United States Code, is amended by 
inserting ``522(f)(3),'' after ``522(d),'' each place it appears.

SEC. 403. EXTENSION OF TIME.

    Section 108(c)(2) of title 11, United States Code, is amended by 
striking ``922'' and all that follows through ``or'', and inserting 
``922, 1201, or''.

SEC. 404. WHO MAY BE A DEBTOR.

    Section 109(b)(2) of title 11, United States Code, is amended by 
striking ``subsection (c) or (d) of''.

SEC. 405. PENALTY FOR PERSONS WHO NEGLIGENTLY OR FRAUDULENTLY PREPARE 
              BANKRUPTCY PETITIONS.

    Section 110(j)(3) of title 11, United States Code, is amended by 
striking ``attorney's'' and inserting ``attorneys' ''.

SEC. 406. LIMITATION ON COMPENSATION OF PROFESSIONAL PERSONS.

    Section 328(a) of title 11, United States Code, is amended by 
inserting ``on a fixed or percentage fee basis,'' after ``hourly 
basis,''.

SEC. 407. SPECIAL TAX PROVISIONS.

    Section 346(g)(1)(C) of title 11, United States Code, is amended by 
striking ``, except'' and all that follows through ``1986''.

SEC. 408. EFFECT OF CONVERSION.

    Section 348(f)(2) of title 11, United States Code, is amended by 
inserting ``of the estate'' after ``property'' the first place it 
appears.

SEC. 409. AUTOMATIC STAY.

    Section 362(b) of title 11, United States Code, is amended--
            (1) in paragraph (17), by striking ``or'' at the end;
            (2) in paragraph (18), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following:
            ``(19) under subsection (a) of this section of any transfer 
        that is not avoidable under section 544 and that is not 
        avoidable under section 549.''.

SEC. 410. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

    Section 365 of title 11, United States Code, is amended--
            (1) in subsection (b)(2)--
                    (A) in subparagraph (C), by striking ``or'' at the 
                end; and
                    (B) by striking subparagraph (D) and inserting the 
                following:
                    ``(D) the satisfaction of any penalty rate or 
                penalty provision relating to a default arising from a 
                failure to perform nonmonetary obligations under an 
                executory contract or under an unexpired lease of real 
                or personal property;
                    ``(E) the satisfaction of any provision (other than 
                a penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an unexpired lease of real property, 
                if it is impossible for the trustee to cure such 
                default by performing nonmonetary acts at and after the 
                time of assumption; or
                    ``(F) the satisfaction of any provision (other than 
                a penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an executory contract, if it is 
                impossible for the trustee to cure such default by 
                performing nonmonetary acts at and after the time of 
                assumption and if the court determines, based on the 
                equities of the case, that paragraph (1) should not 
                apply with respect to such default.'';
            (2) in subsection (c)--
                    (A) in paragraph (2), by adding ``or'' at the end;
                    (B) in paragraph (3), by striking ``or'' at the end 
                and inserting a period; and
                    (C) by striking paragraph (4);
            (3) in subsection (d)--
                    (A) by striking paragraphs (5) through (9); and
                    (B) by redesignating paragraph (10) as paragraph 
                (5); and
            (4) in subsection (f)(1), by striking ``; except that'' and 
        all that follows through the end of the paragraph and inserting 
        a period.

SEC. 411. AMENDMENT TO TABLE OF SECTIONS.

    The table of sections for chapter 5 of title 11, United States 
Code, is amended by striking the item relating to section 556 and 
inserting the following:

``556. Contractual right to liquidate a commodities contract or forward 
                            contract.''.

SEC. 412. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

    Section 503(b)(4) of title 11, United States Code, is amended by 
inserting ``subparagraph (A), (B), (C), (D), or (E) of'' before 
``paragraph (3)''.

SEC. 413. PRIORITIES.

    Section 507(a) of title 11, United States Code, is amended--
            (1) in paragraph (3)(B), by striking the semicolon at the 
        end and inserting a period; and
            (2) in paragraph (7), by inserting ``unsecured'' after 
        ``allowed''.

SEC. 414. EXEMPTIONS.

    Section 522 of title 11, United States Code, is amended--
            (1) in subsection (f)(1)(A)(ii)(II)--
                    (A) by striking ``includes a liability designated 
                as'' and inserting ``is for a liability that is 
                designated as, and is actually in the nature of,''; and
                    (B) by striking ``, unless'' and all that follows 
                through ``support,''; and
            (2) in subsection (g)(2), by striking ``subsection (f)(2)'' 
        and inserting ``subsection (f)(1)(B)''.

SEC. 415. EXCEPTIONS TO DISCHARGE.

    Section 523 of title 11, United States Code, is amended--
            (1) in subsection (a)(3), by striking ``or (6)'' each place 
        it appears and inserting ``(6), or (15)'';
            (2) as amended by section 304(e) of Public Law 103-394 (108 
        Stat. 4133), in paragraph (15)--
                    (A) by inserting ``or'' after the semicolon at the 
                end; and
                    (B) by transferring such paragraph so as to insert 
                it after paragraph (14) of subsection (a);
            (3) in paragraph (9), by inserting ``, watercraft, or 
        aircraft'' after ``motor vehicle'';
            (4) in subsection (a)(15), as so redesignated by paragraph 
        (2) of this subsection, by inserting ``to a spouse, former 
        spouse, or child of the debtor and'' after ``(15)'';
            (5) in subsection (a)(17)--
                    (A) by striking ``by a court'' and inserting ``on a 
                prisoner by any court'';
                    (B) by striking ``section 1915 (b) or (f)'' and 
                inserting ``subsection (b) or (f)(2) of section 1915''; 
                and
                    (C) by inserting ``(or a similar non-Federal law)'' 
                after ``title 28'' each place it appears; and
            (6) in subsection (e), by striking ``a insured'' and 
        inserting ``an insured''.

SEC. 416. EFFECT OF DISCHARGE.

    Section 524(a)(3) of title 11, United States Code, is amended by 
striking ``section 523'' and all that follows through ``or that'' and 
inserting ``section 523, 1228(a)(1), or 1328(a)(1) of this title, or 
that''.

SEC. 417. PROTECTION AGAINST DISCRIMINATORY TREATMENT.

    Section 525(c) of title 11, United States Code, is amended--
            (1) in paragraph (1), by inserting ``student'' before 
        ``grant'' the second place it appears; and
            (2) in paragraph (2), by striking ``the program operated 
        under part B, D, or E of'' and inserting ``any program operated 
        under''.

SEC. 418. PROPERTY OF THE ESTATE.

    Section 541(b) of title 11, United States Code, is amended--
            (1) in paragraph (4)--
                    (A) in subparagraph (B)(ii), by inserting ``365 
                or'' before ``542''; and
                    (B) by adding ``or'' at the end.

SEC. 419. LIMITATIONS ON AVOIDING POWERS.

    Section 546 of title 11, United States Code, is amended by 
redesignating the second subsection (g) (as added by section 222(a) of 
the Bankruptcy Reform Act of 1994; 108 Stat. 4129) as subsection (h).

SEC. 420. PREFERENCES.

    Section 547 of title 11, United States Code, is amended--
            (1) in subsection (b), by striking ``subsection (c)'' and 
        inserting ``subsections (c) and (i)''; and
            (2) by adding at the end the following:
    ``(i) If the trustee avoids under subsection (b) a security 
interest given between 90 days and 1 year before the date of the filing 
of the petition, by the debtor to an entity that is not an insider for 
the benefit of a creditor that is an insider, such security interest 
shall be considered to be avoided under this section only with respect 
to the creditor that is an insider.''.

SEC. 421. POSTPETITION TRANSACTIONS.

    Section 549(c) of title 11, United States Code, is amended--
            (1) by inserting ``an interest in'' after ``transfer of'';
            (2) by striking ``such property'' and inserting ``such real 
        property''; and
            (3) by striking ``the interest'' and inserting ``such 
        interest''.

SEC. 422. TECHNICAL AMENDMENT.

    Section 552(b)(1) of title 11, United States Code, is amended by 
striking ``product'' each place it appears and inserting ``products''.

SEC. 423. SETOFF.

    Section 553(b)(1) of title 11, United States Code, is amended by 
striking ``362(b)(14)'' and inserting ``362(b)(17)''.

SEC. 424. DISPOSITION OF PROPERTY OF THE ESTATE.

    Section 726(b) of title 11, United States Code, is amended by 
striking ``1009,''.

SEC. 425. GENERAL PROVISIONS.

    Section 901(a) of title 11, United States Code, is amended by 
inserting ``1123(d),'' after ``1123(b),''.

SEC. 426. APPOINTMENT OF ELECTED TRUSTEE.

    Section 1104(b) of title 11, United States Code, is amended--
            (1) by inserting ``(1)'' after ``(b)''; and
            (2) by adding at the end the following new paragraph:
    ``(2)(A) If an eligible, disinterested trustee is elected at a 
meeting of creditors under paragraph (1), the United States trustee 
shall file a report certifying that election. Upon the filing of a 
report under the preceding sentence--
            ``(i) the trustee elected under paragraph (1) shall be 
        considered to have been selected and appointed for purposes of 
        this section; and
            ``(ii) the service of any trustee appointed under 
        subsection (d) shall terminate.
    ``(B) In the case of any dispute arising out of an election under 
subparagraph (A), the court shall resolve the dispute.''.

SEC. 427. ABANDONMENT OF RAILROAD LINE.

    Section 1170(e)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 428. CONTENTS OF PLAN.

    Section 1172(c)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 429. DISCHARGE UNDER CHAPTER 12.

    Subsections (a) and (c) of section 1228 of title 11, United States 
Code, are amended by striking ``1222(b)(10)'' each place it appears and 
inserting ``1222(b)(9)''.

SEC. 430. CONTENTS OF PLAN.

    Section 1322 of title 11, United States Code, is amended--
            (1) in subsection (b), by striking ``(c)'' and inserting 
        ``(d)''; and
            (2) in subsection (e), by striking ``default, shall'' and 
        inserting ``default shall''.

SEC. 431. DISCHARGE UNDER CHAPTER 13.

    Paragraphs (1) through (3) of section 1328(a) of title 11, United 
States Code, are amended to read as follows:
            ``(1) provided for under section 1322(b)(5) of this title;
            ``(2) of the kind specified in paragraph (5), (8), or (9) 
        of section 523(a) of this title; or
            ``(3) for restitution, or a criminal fine, included in a 
        sentence on the debtor's conviction of a crime.''.

SEC. 432. EXTENSIONS.

    Section 302(d)(3) of the Bankruptcy, Judges, United States 
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) 
is amended--
            (1) in subparagraph (A), in the matter following clause 
        (ii), by striking ``October 1, 2002'' and inserting ``October 
        1, 2012''; and
            (2) in subparagraph (F)--
                    (A) in clause (i)--
                            (i) in subclause (II), by striking 
                        ``October 1, 2002'' and inserting ``October 1, 
                        2012''; and
                            (ii) in the matter following subclause 
                        (II), by striking ``October 1, 2003'' and 
                        inserting ``October 1, 2013''; and
                    (B) in clause (ii), in the matter following 
                subclause (II), by striking ``October 1, 2003'' and 
                inserting ``October 1, 2013''.

SEC. 433. BANKRUPTCY CASES AND PROCEEDINGS.

    Section 1334(d) of title 28, United States Code, is amended--
            (1) by striking ``made under this subsection'' and 
        inserting ``made under subsection (c)''; and
            (2) by striking ``This subsection'' and inserting 
        ``Subsection (c) and this subsection''.

SEC. 434. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.

    Section 156(a) of title 18, United States Code, is amended--
            (1) in the first undesignated paragraph--
                    (A) by inserting ``(1) the term'' before 
                ```bankruptcy''; and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (2) in the second undesignated paragraph--
                    (A) by inserting ``(2) the term'' before 
                ```document''; and
                    (B) by striking ``this title'' and inserting 
                ``title 11''.

SEC. 435. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this 
title and the amendments made by this title shall take effect on the 
date of enactment of this Act.
    (b) Application of Amendments.--The amendments made by this title 
shall apply only with respect to cases commenced under title 11, United 
States Code, on or after the date of enactment of this Act.
                                 <all>
```