IB 

Union Calendar No. 27

108TH CONGRESS 

1ST SESSION H. R. 975

[Report No. 108–40, Part I] 

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

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2003

Mr. SENSENBRENNER (for himself, Mr. BOUCHER, Mr. CANNON, Mr. ANDREWS, Mr. BACHUS, Mr. CASTLE, Mr. CHABOT, Mr. COBLE, Mr. 

CRAMER, Mr. CROWLEY, Mr. DOOLEY of California, Mr. DREIER, Mr. 

ENGLISH, Mr. FEENEY, Mr. FLAKE, Mr. FOLEY, Mr. GOODLATTE, Ms. 

HART, Mr. ISSA, Mr. KELLER, Mr. KENNEDY of Minnesota, Mr. KING

of Iowa, Mr. LUCAS of Kentucky, Mr. MENENDEZ, Mrs. MYRICK, Mr. 

NEY, Mr. OXLEY, Mr. PENCE, Mr. PITTS, Ms. PRYCE of Ohio, Mr. 

ROTHMAN, Mr. ROYCE, Mr. RYUN of Kansas, Mr. SESSIONS, Mr. SMITH

of Washington, Mr. SMITH of Michigan, Mr. TAUZIN, Mr. TERRY, Mr. 

TIBERI, Mr. TOOMEY, Mr. FROST, Mrs. BIGGERT, Mr. REYNOLDS, Mrs. 

NORTHUP, Mr. LATOURETTE, Mrs. TAUSCHER, Ms. EDDIE BERNICE

JOHNSON of Texas, Mr. GIBBONS, Mr. BLUNT, Mr. SIMPSON, and Mr. 

KINGSTON) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Financial 

Services, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

MARCH 18, 2003

Additional sponsors: Mr. SIMMONS, Mr. JENKINS, Mr. PLATTS, Mr. 

NETHERCUTT, Mr. BAKER, Mr. SCHROCK, Mr. RAMSTAD, Mr. SMITH of 

Texas, Mr. COLE, Mr. OTTER, Mr. ROGERS of Michigan, Mr. BROWN of 

South Carolina, Mr. WELLER, Ms. GINNY BROWN-WAITE of Florida, Mr. 

BOEHNER, Mr. HOSTETTLER, Mr. GOODE, Mr. BURTON of Indiana, Mr. 

WAMP, Mr. SOUDER, Mr. REHBERG, Mr. SWEENEY, Mr. UPTON, Mr. 

JANKLOW, Mr. LEWIS of Kentucky, Mr. CANTOR, Mr. HOEKSTRA, Mr. 

FLETCHER, Mr. BONILLA, Mr. BUYER, Mr. AKIN, Mr. BEAUPREZ, Mr. 

DAVIS of Florida, Mr. GARY G. MILLER of California, Mr. DEMINT, Mr. 

LINDER, Ms. HOOLEY of Oregon, Mr. KOLBE, and Mr. BEREUTER
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MARCH 18, 2003

Reported from the Committee on the Judiciary with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

MARCH 18, 2003

Referral to the Committee on Financial Services extended for a period ending 

not later than March 18, 2003

MARCH 18, 2003

Committee on Financial Services discharged; committed to the Committee of 

the Whole House on the State of the Union and ordered to be printed 

[For text of introduced bill, see copy of bill as introduced on February 27, 2003] 

A BILL

To amend title 11 of the 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 Abuse Prevention and Consumer Protection 

7 Act of 2003’’. 

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

9 this Act is as follows:

Sec. 1. Short title; references; table of contents. 

TITLE I—NEEDS-BASED BANKRUPTCY 

Sec. 101. Conversion. 

Sec. 102. Dismissal or conversion. 

Sec. 103. Sense of Congress and study. 

Sec. 104. Notice of alternatives. 

Sec. 105. Debtor financial management training test program. 

Sec. 106. Credit counseling. 

Sec. 107. Schedules of reasonable and necessary expenses. 
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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 agreement practices. 

Sec. 204. Preservation of claims and defenses upon sale of predatory loans. 

Sec. 205. GAO study and report on reaffirmation agreement process. 

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. 

Sec. 231. Protection of personally identifiable information. 

Sec. 232. Consumer privacy ombudsman. 

Sec. 233. Prohibition on disclosure of name of minor children. 

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. Reduction of homestead exemption for fraud. 

Sec. 309. Protecting secured creditors in chapter 13 cases. 

Sec. 310. Limitation on luxury goods. 

Sec. 311. Automatic stay. 
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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. Limitations on homestead exemption. 

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. 

Sec. 329. Clarification of postpetition wages and benefits. 

Sec. 330. Delay of discharge during pendency of certain proceedings. 

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. 

Sec. 446. Duties with respect to a debtor who is a plan administrator of an employee benefit plan. 

Sec. 447. Appointment of committee of retired employees. 

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. 
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TITLE IX—FINANCIAL CONTRACT PROVISIONS 

Sec. 901. Treatment of certain agreements by conservators or receivers of insured 

depository institutions. 

Sec. 902. Authority of the corporation with respect to failed and failing institutions. 

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 law amendments. 

Sec. 908. Recordkeeping requirements. 

Sec. 909. Exemptions from contemporaneous execution requirement. 

Sec. 910. Damage measure. 

Sec. 911. SIPC stay. 

TITLE X—PROTECTION OF FAMILY FARMERS AND FAMILY 

FISHERMEN 

Sec. 1001. Permanent reenactment of chapter 12. 

Sec. 1002. Debt limit increase. 

Sec. 1003. Certain claims owed to governmental units. 

Sec. 1004. Definition of family farmer. 

Sec. 1005. Elimination of requirement that family farmer and spouse receive over 

50 percent of income from farming operation in year prior to 

bankruptcy. 

Sec. 1006. Prohibition of retroactive assessment of disposable income. 

Sec. 1007. Family fishermen. 

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. 
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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. Bankruptcy cases and proceedings. 

Sec. 1220. Knowing disregard of bankruptcy law or rule. 

Sec. 1221. Transfers made by nonprofit charitable corporations. 

Sec. 1222. Protection of valid purchase money security interests. 

Sec. 1223. Bankruptcy Judgeships. 

Sec. 1224. Compensating trustees. 

Sec. 1225. Amendment to section 362 of title 11, United States Code. 

Sec. 1226. Judicial education. 

Sec. 1227. Reclamation. 

Sec. 1228. Providing requested tax documents to the court. 

Sec. 1229. Encouraging creditworthiness. 

Sec. 1230. Property no longer subject to redemption. 

Sec. 1231. Trustees. 

Sec. 1232. Bankruptcy forms. 

Sec. 1233. Direct appeals of bankruptcy matters to courts of appeals. 

Sec. 1234. Involuntary cases. 

Sec. 1235. Federal election law fines and penalties as nondischargeable debt. 

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. 

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—
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1 (1) by striking the section heading and inserting 

2 the following: 

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

4 under chapter 11 or 13’’; 

5 and 

6 (2) in subsection (b)—

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

8 (B) in paragraph (1), as so redesignated by 

9 subparagraph (A) of this paragraph—

10 (i) in the first sentence—

11 (I) by striking ‘‘but not at the re12 quest or suggestion of’’ and inserting 

13 ‘‘trustee (or bankruptcy administrator, 

14 if any), or’’; 

15 (II) by inserting ‘‘, or, with the 

16 debtor’s consent, convert such a case to 

17 a case under chapter 11 or 13 of this 

18 title,’’ after ‘‘consumer debts’’; and 

19 (III) by striking ‘‘a substantial 

20 abuse’’ and inserting ‘‘an abuse’’; and 

21 (ii) by striking the next to last sen22 tence; and 

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

24 ‘‘(2)(A)(i) In considering under paragraph (1) whether 

25 the granting of relief would be an abuse of the provisions 
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1 of this chapter, the court shall presume abuse exists if the 

2 debtor’s current monthly income reduced by the amounts 

3 determined under clauses (ii), (iii), and (iv), and multi4 plied by 60 is not less than the lesser of—

5 ‘‘(I) 25 percent of the debtor’s nonpriority unse6 cured claims in the case, or $6,000, whichever is 

7 greater; or 

8 ‘‘(II) $10,000. 

9 ‘‘(ii)(I) The debtor’s monthly expenses shall be the debt10 or’s applicable monthly expense amounts specified under 

11 the National Standards and Local Standards, and the debt12 or’s actual monthly expenses for the categories specified as 

13 Other Necessary Expenses issued by the Internal Revenue 

14 Service for the area in which the debtor resides, as in effect 

15 on the date of the order for relief, for the debtor, the depend16 ents of the debtor, and the spouse of the debtor in a joint 

17 case, if the spouse is not otherwise a dependent. Notwith18 standing any other provision of this clause, the monthly ex19 penses of the debtor shall not include any payments for 

20 debts. In addition, the debtor’s monthly expenses shall in21 clude the debtor’s reasonably necessary expenses incurred to 

22 maintain the safety of the debtor and the family of the debt23 or from family violence as identified under section 309 of 

24 the Family Violence Prevention and Services Act, or other 

25 applicable Federal law. The expenses included in the debt-
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1 or’s monthly expenses described in the preceding sentence 

2 shall be kept confidential by the court. In addition, if it 

3 is demonstrated that it is reasonable and necessary, the 

4 debtor’s monthly expenses may also include an additional 

5 allowance for food and clothing of up to 5 percent of the 

6 food and clothing categories as specified by the National 

7 Standards issued by the Internal Revenue 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, siblings, children, 

14 and grandchildren of the debtor, the dependents of the debt15 or, and the spouse of the debtor in a joint case who is not 

16 a dependent) and who is unable to pay for such reasonable 

17 and necessary expenses. 

18 ‘‘(III) In addition, for a debtor eligible for chapter 13, 

19 the debtor’s monthly expenses may include the actual ad20 ministrative expenses of administering a chapter 13 plan 

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

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

23 under schedules issued by the Executive Office for United 

24 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 less 

3 than 18 years of age, not to exceed $1,500 per year per 

4 child, to attend a private or public elementary or secondary 

5 school if the debtor provides documentation of such expenses 

6 and a detailed explanation of why such expenses are reason7 able and necessary, and why such expenses are not already 

8 accounted for in the National Standards, Local Standards, 

9 or Other Necessary Expenses referred to in subclause (I).

10 ‘‘(V) In addition, the debtor’s monthly expenses may 

11 include an allowance for housing and utilities, in excess of 

12 the allowance specified by the Local Standards for housing 

13 and utilities issued by the Internal Revenue Service, based 

14 on the actual expenses for home energy costs if the debtor 

15 provides documentation of such actual expenses and dem16 onstrates that such actual expenses are reasonable and nec17 essary.

18 ‘‘(iii) The debtor’s average monthly payments on ac19 count of secured debts shall be calculated as the sum of—

20 ‘‘(I) the total of all amounts scheduled as con21 tractually due to secured creditors in each month of 

22 the 60 months following the date of the petition; and 

23 ‘‘(II) any additional payments to secured credi24 tors necessary for the debtor, in filing a plan under 

25 chapter 13 of this title, to maintain possession of the 
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1 debtor’s primary residence, motor vehicle, or other 

2 property necessary for the support of the debtor and 

3 the debtor’s dependents, that serves as collateral for se4 cured debts; 

5 divided by 60. 

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

7 claims (including priority child support and alimony 

8 claims) shall be calculated as the total amount of debts enti9 tled to priority, divided by 60. 

10 ‘‘(B)(i) In any proceeding brought under this sub11 section, the presumption of abuse may only be rebutted by 

12 demonstrating special circumstances that justify additional 

13 expenses or adjustments of current monthly income for 

14 which there is no reasonable alternative. 

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

16 debtor shall be required to itemize each additional expense 

17 or adjustment of income and to provide—

18 ‘‘(I) documentation for such expense or adjust19 ment to income; and 

20 ‘‘(II) a detailed explanation of the special cir21 cumstances that make such expenses or adjustment to 

22 income necessary and reasonable. 

23 ‘‘(iii) The debtor shall attest under oath to the accu24 racy of any information provided to demonstrate that addi25 tional 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 referred 

3 to in clause (i) cause the product of the debtor’s current 

4 monthly income reduced by the amounts determined under 

5 clauses (ii), (iii), and (iv) of subparagraph (A) when multi6 plied by 60 to be less than the lesser of—

7 ‘‘(I) 25 percent of the debtor’s nonpriority unse8 cured 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 in12 clude a statement of the debtor’s current monthly income, 

13 and the calculations that determine whether a presumption 

14 arises under subparagraph (A)(i), that show how each such 

15 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 subpara19 graph (A)(i) of such paragraph does not arise or is rebutted, 

20 the court shall consider—

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

22 faith; or 

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

24 whether the debtor seeks to reject a personal services 

25 contract and the financial need for such rejection as 
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1 sought by the debtor) of the debtor’s financial situa2 tion demonstrates abuse.

3 ‘‘(4)(A) The court, on its own initiative or on the mo4 tion of a party in interest, in accordance with the proce5 dures described in rule 9011 of the Federal Rules of Bank6 ruptcy Procedure, may order the attorney for the debtor to 

7 reimburse the trustee for all reasonable costs in prosecuting 

8 a motion filed under section 707(b), including reasonable 

9 attorneys’ fees, if—

10 ‘‘(i) a trustee files a motion for dismissal or con11 version under this subsection; and 

12 ‘‘(ii) the court—

13 ‘‘(I) grants such motion; and

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

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 debtor 

19 violated rule 9011 of the Federal Rules of Bankruptcy Pro20 cedure, the court, on its own initiative or on the motion 

21 of a party in interest, in accordance with such procedures, 

22 may order—

23 ‘‘(i) the assessment of an appropriate civil pen24 alty against the attorney for the debtor; and 
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1 ‘‘(ii) the payment of such civil penalty to the 

2 trustee, the United States trustee (or the bankruptcy 

3 administrator, if any). 

4 ‘‘(C) The signature of an attorney on a petition, plead5 ing, or written motion shall constitute a certification that 

6 the attorney has—

7 ‘‘(i) performed a reasonable investigation into 

8 the circumstances that gave rise to the petition, plead9 ing, or written motion; and 

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

11 written motion—

12 ‘‘(I) is well grounded in fact; and 

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

14 good faith argument for the extension, modifica15 tion, or reversal of existing law and does not 

16 constitute an abuse under paragraph (1). 

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

18 constitute a certification that the attorney has no knowledge 

19 after an inquiry that the information in the schedules filed 

20 with such petition is incorrect. 

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

22 subject to paragraph (6), the court, on its own initiative 

23 or on the motion of a party in interest, in accordance with 

24 the procedures described in rule 9011 of the Federal Rules 

25 of Bankruptcy Procedure, may award a debtor all reason-
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1 able costs (including reasonable attorneys’ fees) in con2 testing a motion filed by a party in interest (other than 

3 a trustee or United States trustee (or bankruptcy adminis4 trator, if any)) under this subsection if—

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

6 ‘‘(ii) the court finds that—

7 ‘‘(I) the position of the party that filed the 

8 motion violated rule 9011 of the Federal Rules of 

9 Bankruptcy Procedure; or 

10 ‘‘(II) the attorney (if any) who filed the mo11 tion did not comply with the requirements of 

12 clauses (i) and (ii) of paragraph (4)(C), and the 

13 motion was made solely for the purpose of coerc14 ing a debtor into waiving a right guaranteed to 

15 the debtor under this title. 

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

17 amount less than $1,000 shall not be subject to subpara18 graph (A)(ii)(I). 

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

20 ‘‘(i) the term ‘small business’ means an unincor21 porated business, partnership, corporation, associa22 tion, or organization that—

23 ‘‘(I) has fewer than 25 full-time employees 

24 as determined on the date on which the motion 

25 is filed; and 
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1 ‘‘(II) is engaged in commercial or business 

2 activity; and 

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

4 subsidiary of a corporation includes the employees 

5 of—

6 ‘‘(I) a parent corporation; and 

7 ‘‘(II) any other subsidiary corporation of 

8 the parent corporation. 

9 ‘‘(6) Only the judge or United States trustee (or bank10 ruptcy administrator, if any) may file a motion under sec11 tion 707(b), if the current monthly income of the debtor, 

12 or in a joint case, the debtor and the debtor’s spouse, as 

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

14 is equal to or less than— 

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

16 person, the median family income of the applicable 

17 State for 1 earner; 

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

19 3, or 4 individuals, the highest median family income 

20 of the applicable State for a family of the same num21 ber or fewer individuals; or 

22 ‘‘(C) in the case of a debtor in a household ex23 ceeding 4 individuals, the highest median family in24 come of the applicable State for a family of 4 or fewer 
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1 individuals, plus $525 per month for each individual 

2 in excess of 4.

3 ‘‘(7)(A) No judge, United States trustee (or bankruptcy 

4 administrator, if any), trustee, or other party in interest 

5 may file a motion under paragraph (2) if the current 

6 monthly income of the debtor and the debtor’s spouse com7 bined, as of the date of the order for relief when multiplied 

8 by 12, is equal to or less than—

9 ‘‘(i) in the case of a debtor in a household of 1 

10 person, the median family income of the applicable 

11 State for 1 earner; 

12 ‘‘(ii) in the case of a debtor in a household of 2, 

13 3, or 4 individuals, the highest median family income 

14 of the applicable State for a family of the same num15 ber or fewer individuals; or 

16 ‘‘(iii) 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 fewer 

19 individuals, plus $525 per month for each individual 

20 in excess of 4. 

21 ‘‘(B) In a case that is not a joint case, current monthly 

22 income of the debtor’s spouse shall not be considered for pur23 poses of subparagraph (A) if—

24 ‘‘(i)(I) the debtor and the debtor’s spouse are sep25 arated under applicable nonbankruptcy law; or 
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1 ‘‘(II) the debtor and the debtor’s spouse are liv2 ing separate and apart, other than for the purpose of 

3 evading subparagraph (A); and 

4 ‘‘(ii) the debtor files a statement under penalty 

5 of perjury—

6 ‘‘(I) specifying that the debtor meets the re7 quirement of subclause (I) or (II) of clause (i); 

8 and 

9 ‘‘(II) disclosing the aggregate, or best esti10 mate of the aggregate, amount of any cash or 

11 money payments received from the debtor’s 

12 spouse attributed to the debtor’s current monthly 

13 income.’’.

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

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

16 the following: 

17 ‘‘(10A) ‘current monthly income’—

18 ‘‘(A) means the average monthly income 

19 from all sources that the debtor receives (or in a 

20 joint case the debtor and the debtor’s spouse re21 ceive) without regard to whether such income is 

22 taxable income, derived during the 6-month pe23 riod ending on—

24 ‘‘(i) the last day of the calendar month 

25 immediately preceding the date of the com-
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1 mencement of the case if the debtor files the 

2 schedule of current income required by sec3 tion 521(a)(1)(B)(ii); or 

4 ‘‘(ii) the date on which current income 

5 is determined by the court for purposes of 

6 this title if the debtor does not file the sched7 ule of current income required by section 

8 521(a)(1)(B)(ii); and 

9 ‘‘(B) includes any amount paid by any en10 tity other than the debtor (or in a joint case the 

11 debtor and the debtor’s spouse), on a regular 

12 basis for the household expenses of the debtor or 

13 the debtor’s dependents (and in a joint case the 

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

15 excludes benefits received under the Social Secu16 rity Act, payments to victims of war crimes or 

17 crimes against humanity on account of their sta18 tus as victims of such crimes, and payments to 

19 victims of international terrorism (as defined in 

20 section 2331 of title 18) or domestic terrorism 

21 (as defined in section 2331 of title 18) on ac22 count of their status as victims of such ter23 rorism;’’. 
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1 (c) UNITED STATES TRUSTEE AND BANKRUPTCY AD2 MINISTRATOR DUTIES.—Section 704 of title 11, United 

3 States Code, is amended—

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

5 shall—’’; and 

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

7 ‘‘(b)(1) With respect to a debtor who is an individual 

8 in a case under this chapter—

9 ‘‘(A) the United States trustee (or the bank10 ruptcy administrator, if any) shall review all mate11 rials filed by the debtor and, not later than 10 days 

12 after the date of the first meeting of creditors, file 

13 with the court a statement as to whether the debtor’s 

14 case would be presumed to be an abuse under section 

15 707(b); and

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

17 statement under subparagraph (A), the court shall 

18 provide a copy of the statement to all creditors. 

19 ‘‘(2) The United States trustee (or bankruptcy admin20 istrator, if any) shall, not later than 30 days after the date 

21 of filing a statement under paragraph (1), either file a mo22 tion to dismiss or convert under section 707(b) or file a 

23 statement setting forth the reasons the United States trustee 

24 (or the bankruptcy administrator, if any) does not consider 

25 such a motion to be appropriate, if the United States trustee 
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1 (or the bankruptcy administrator, if any) determines that 

2 the debtor’s case should be presumed to be an abuse under 

3 section 707(b) and the product of the debtor’s current 

4 monthly income, multiplied by 12 is not less than—

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

6 person, the median family income of the applicable 

7 State for 1 earner; or 

8 ‘‘(B) in the case of a debtor in a household of 2 

9 or more individuals, the highest median family in10 come of the applicable State for a family of the same 

11 number or fewer individuals.’’. 

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

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

14 ‘‘(d) In a case under chapter 7 of this title in which 

15 the debtor is an individual and in which the presumption 

16 of abuse arises under section 707(b), the clerk shall give 

17 written notice to all creditors not later than 10 days after 

18 the date of the filing of the petition that the presumption 

19 of abuse has arisen.’’. 

20 (e) NONLIMITATION OF INFORMATION.—Nothing in 

21 this title shall limit the ability of a creditor to provide in22 formation to a judge (except for information communicated 

23 ex parte, unless otherwise permitted by applicable law), 

24 United States trustee (or bankruptcy administrator, if 

25 any), or trustee. 
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1 (f) DISMISSAL FOR CERTAIN CRIMES.—Section 707 of 

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

3 end the following: 

4 ‘‘(c)(1) In this subsection—

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

6 given such term in section 16 of title 18; and 

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

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

9 18. 

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

11 and a hearing, the court, on a motion by the victim of a 

12 crime of violence or a drug trafficking crime, may when 

13 it is in the best interest of the victim dismiss a voluntary 

14 case filed under this chapter by a debtor who is an indi15 vidual if such individual was convicted of such crime. 

16 ‘‘(3) The court may not dismiss a case under para17 graph (2) if the debtor establishes by a preponderance of 

18 the evidence that the filing of a case under this chapter is 

19 necessary to satisfy a claim for a domestic support obliga20 tion.’’. 

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

22 11, United States Code, is amended—

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

24 end; 
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1 (2) in paragraph (6), by striking the period and 

2 inserting a semicolon; and 

3 (3) by inserting after paragraph (6) the fol4 lowing: 

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

6 was in good faith;’’. 

7 (h) APPLICABILITY OF MEANS TEST TO CHAPTER

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

9 amended—

10 (1) in paragraph (1)(B), by inserting ‘‘to unse11 cured creditors’’ after ‘‘to make payments’’; and 

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

13 following: 

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

15 ‘disposable income’ means current monthly income re16 ceived by the debtor (other than child support pay17 ments, foster care payments, or disability payments 

18 for a dependent child made in accordance with appli19 cable nonbankruptcy law to the extent reasonably nec20 essary to be expended for such child) less amounts 

21 reasonably necessary to be expended—

22 ‘‘(A)(i) for the maintenance or support of 

23 the debtor or a dependent of the debtor, or for a 

24 domestic support obligation, that first becomes 

25 payable after the date the petition is filed; and 
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1 ‘‘(ii) for charitable contributions (that meet 

2 the definition of ‘charitable contribution’ under 

3 section 548(d)(3) to a qualified religious or char4 itable entity or organization (as defined in sec5 tion 548(d)(4)) in an amount not to exceed 15 

6 percent of gross income of the debtor for the year 

7 in which the contributions are made; and 

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

9 the payment of expenditures necessary for the 

10 continuation, preservation, and operation of such 

11 business. 

12 ‘‘(3) Amounts reasonably necessary to be ex13 pended under paragraph (2) shall be determined in 

14 accordance with subparagraphs (A) and (B) of section 

15 707(b)(2), if the debtor has current monthly income, 

16 when multiplied by 12, greater than—

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

18 of 1 person, the median family income of the ap19 plicable State for 1 earner; 

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

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

22 family income of the applicable State for a fam23 ily of the same number or fewer individuals; or 

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

25 exceeding 4 individuals, the highest median fam-
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1 ily income of the applicable State for a family 

2 of 4 or fewer individuals, plus $525 per month 

3 for each individual in excess of 4.’’.

4 (i) SPECIAL ALLOWANCE FOR HEALTH INSURANCE.—

5 Section 1329(a) of title 11, United States Code, is amend6 ed—

7 (1) in paragraph (2) by striking ‘‘or’’ at the end; 

8 (2) in paragraph (3) by striking the period at 

9 the end and inserting ‘‘; or’’; and 

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

11 ‘‘(4) reduce amounts to be paid under the plan 

12 by the actual amount expended by the debtor to pur13 chase health insurance for the debtor (and for any de14 pendent of the debtor if such dependent does not other15 wise have health insurance coverage) if the debtor doc16 uments the cost of such insurance and demonstrates 

17 that—

18 ‘‘(A) such expenses are reasonable and nec19 essary; 

20 ‘‘(B)(i) if the debtor previously paid for 

21 health insurance, the amount is not materially 

22 larger than the cost the debtor previously paid or 

23 the cost necessary to maintain the lapsed policy; 

24 or 
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1 ‘‘(ii) if the debtor did not have health insur2 ance, the amount is not materially larger than 

3 the reasonable cost that would be incurred by a 

4 debtor who purchases health insurance, who has 

5 similar income, expenses, age, and health status, 

6 and who lives in the same geographical location 

7 with the same number of dependents who do not 

8 otherwise have health insurance coverage; and 

9 ‘‘(C) the amount is not otherwise allowed 

10 for purposes of determining disposable income 

11 under section 1325(b) of this title;

12 and upon request of any party in interest, files proof 

13 that a health insurance policy was purchased.’’.

14 (j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

15 104(b) of title 11, United States Code, is amended by strik16 ing ‘‘and 523(a)(2)(C)’’ each place it appears and inserting 

17 ‘‘523(a)(2)(C), 707(b), and 1325(b)(3)’’.

18 (k) DEFINITION OF ‘MEDIAN FAMILY INCOME’.—Sec19 tion 101 of title 11, United States Code, is amended by in20 serting after paragraph (39) the following: 

21 ‘‘(39A) ‘median family income’ means for any 

22 year—

23 ‘‘(A) the median family income both cal24 culated and reported by the Bureau of the Census 

25 in the then most recent year; and 
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1 ‘‘(B) if not so calculated and reported in the 

2 then current year, adjusted annually after such 

3 most recent year until the next year in which 

4 median family income is both calculated and re5 ported by the Bureau of the Census, to reflect the 

6 percentage change in the Consumer Price Index 

7 for All Urban Consumers during the period of 

8 years occurring after such most recent year and 

9 before such current year;’’. 

10 (k) CLERICAL AMENDMENT.—The table of sections for 

11 chapter 7 of title 11, United States Code, is amended by 

12 striking the item relating to section 707 and inserting the 

13 following:

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

14 SEC. 103. SENSE OF CONGRESS AND STUDY. 

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

16 that the Secretary of the Treasury has the authority to alter 

17 the Internal Revenue Service standards established to set 

18 guidelines for repayment plans as needed to accommodate 

19 their use under section 707(b) of title 11, United States 

20 Code. 

21 (b) STUDY.—

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

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

24 Executive Office for United States Trustees shall sub25 mit a report to the Committee on the Judiciary of the 
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1 Senate and the Committee on the Judiciary of the 

2 House of Representatives containing the findings of 

3 the Director regarding the utilization of Internal Rev4 enue Service standards for determining—

5 (A) the current monthly expenses of a debtor 

6 under section 707(b) of title 11, United States 

7 Code; and 

8 (B) the impact that the application of such 

9 standards has had on debtors and on the bank10 ruptcy courts. 

11 (2) RECOMMENDATION.—The report under para12 graph (1) may include recommendations for amend13 ments to title 11, United States Code, that are con14 sistent with the findings of the Director under para15 graph (1). 

16 SEC. 104. NOTICE OF ALTERNATIVES. 

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

18 amended to read as follows: 

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

20 by an individual whose debts are primarily consumer debts, 

21 the clerk shall give to such individual written notice con22 taining—

23 ‘‘(1) a brief description of—
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1 ‘‘(A) chapters 7, 11, 12, and 13 and the 

2 general purpose, benefits, and costs of proceeding 

3 under each of those chapters; and 

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

5 credit counseling agencies; and 

6 ‘‘(2) statements specifying that—

7 ‘‘(A) a person who knowingly and fraudu8 lently conceals assets or makes a false oath or 

9 statement under penalty of perjury in connection 

10 with a case under this title shall be subject to 

11 fine, imprisonment, or both; and 

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

13 in connection with a case under this title is sub14 ject to examination by the Attorney General.’’. 

15 SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING 

16 TEST PROGRAM. 

17 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT AND

18 TRAINING CURRICULUM AND MATERIALS.—The Director of 

19 the Executive Office for United States Trustees (in this sec20 tion referred to as the ‘‘Director’’) shall consult with a wide 

21 range of individuals who are experts in the field of debtor 

22 education, including trustees who serve in cases under chap23 ter 13 of title 11, United States Code, and who operate fi24 nancial management education programs for debtors, and 

25 shall develop a financial management training curriculum 
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1 and materials that can be used to educate debtors who are 

2 individuals on how to better manage their finances. 

3 (b) TEST.—

4 (1) SELECTION OF DISTRICTS.—The Director 

5 shall select 6 judicial districts of the United States in 

6 which to test the effectiveness of the financial manage7 ment training curriculum and materials developed 

8 under subsection (a). 

9 (2) USE.—For an 18-month period beginning 

10 not later than 270 days after the date of the enact11 ment of this Act, such curriculum and materials shall 

12 be, for the 6 judicial districts selected under para13 graph (1), used as the instructional course concerning 

14 personal financial management for purposes of sec15 tion 111 of title 11, United States Code. 

16 (c) EVALUATION.—

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

18 referred to in subsection (b), the Director shall evalu19 ate the effectiveness of—

20 (A) the financial management training cur21 riculum and materials developed under sub22 section (a); and 

23 (B) a sample of existing consumer edu24 cation programs such as those described in the 

25 Report of the National Bankruptcy Review Com-
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1 mission (October 20, 1997) that are representa2 tive of consumer education programs carried out 

3 by the credit industry, by trustees serving under 

4 chapter 13 of title 11, United States Code, and 

5 by consumer counseling groups. 

6 (2) REPORT.—Not later than 3 months after con7 cluding such evaluation, the Director shall submit a 

8 report to the Speaker of the House of Representatives 

9 and the President pro tempore of the Senate, for refer10 ral to the appropriate committees of the Congress, 

11 containing the findings of the Director regarding the 

12 effectiveness of such curriculum, such materials, and 

13 such programs and their costs. 

14 SEC. 106. CREDIT COUNSELING. 

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

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

17 following: 

18 ‘‘(h)(1) Subject to paragraphs (2) and (3), and not19 withstanding any other provision of this section, an indi20 vidual may not be a debtor under this title unless such indi21 vidual has, during the 180-day period preceding the date 

22 of filing of the petition by such individual, received from 

23 an approved nonprofit budget and credit counseling agency 

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

25 (including a briefing conducted by telephone or on the 
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1 Internet) that outlined the opportunities for available credit 

2 counseling and assisted such individual in performing a re3 lated budget analysis. 

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

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

6 States trustee (or the bankruptcy administrator, if any) de7 termines that the approved nonprofit budget and credit 

8 counseling agencies for such district are not reasonably able 

9 to provide adequate services to the additional individuals 

10 who would otherwise seek credit counseling from such agen11 cies by reason of the requirements of paragraph (1). 

12 ‘‘(B) The United States trustee (or the bankruptcy ad13 ministrator, if any) who makes a determination described 

14 in subparagraph (A) shall review such determination not 

15 later than 1 year after the date of such determination, and 

16 not less frequently than annually thereafter. Notwith17 standing the preceding sentence, a nonprofit budget and 

18 credit counseling agency may be disapproved by the United 

19 States trustee (or the bankruptcy administrator, if any) at 

20 any time. 

21 ‘‘(3)(A) Subject to subparagraph (B), the requirements 

22 of paragraph (1) shall not apply with respect to a debtor 

23 who submits to the court a certification that—

24 ‘‘(i) describes exigent circumstances that merit a 

25 waiver of the requirements of paragraph (1); 
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1 ‘‘(ii) states that the debtor requested credit coun2 seling services from an approved nonprofit budget 

3 and credit counseling agency, but was unable to ob4 tain the services referred to in paragraph (1) during 

5 the 5-day period beginning on the date on which the 

6 debtor made that request; and 

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

8 ‘‘(B) With respect to a debtor, an exemption under sub9 paragraph (A) shall cease to apply to that debtor on the 

10 date on which the debtor meets the requirements of para11 graph (1), but in no case may the exemption apply to that 

12 debtor after the date that is 30 days after the debtor files 

13 a petition, except that the court, for cause, may order an 

14 additional 15 days.’’.

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

16 11, United States Code, is amended—

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

18 end; 

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

20 and inserting ‘‘; or’’; and 

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

22 ‘‘(11) after filing the petition, the debtor failed 

23 to complete an instructional course concerning per24 sonal financial management described in section 111, 

25 except that this paragraph shall not apply with re-
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1 spect to a debtor who resides in a district for which 

2 the United States trustee (or the bankruptcy adminis3 trator, if any) determines that the approved instruc4 tional courses are not adequate to service the addi5 tional individuals who would otherwise be required to 

6 complete such instructional courses under this section 

7 (The United States trustee (or the bankruptcy admin8 istrator, if any) who makes a determination described 

9 in this paragraph shall review such determination 

10 not later than 1 year after the date of such deter11 mination, and not less frequently than annually 

12 thereafter.).’’. 

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

14 11, United States Code, is amended by adding at the end 

15 the following: 

16 ‘‘(g)(1) The court shall not grant a discharge under 

17 this section to a debtor unless after filing a petition the 

18 debtor has completed an instructional course concerning 

19 personal financial management described in section 111. 

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

21 debtor who resides in a district for which the United States 

22 trustee (or the bankruptcy administrator, if any) deter23 mines that the approved instructional courses are not ade24 quate to service the additional individuals who would other-
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1 wise be required to complete such instructional course by 

2 reason of the requirements of paragraph (1). 

3 ‘‘(3) The United States trustee (or the bankruptcy ad4 ministrator, if any) who makes a determination described 

5 in paragraph (2) shall review such determination not later 

6 than 1 year after the date of such determination, and not 

7 less frequently than annually thereafter.’’. 

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

9 United States Code, is amended—

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

11 ’’; and 

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

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

14 (a), a debtor who is an individual shall file with the court—

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

16 budget and credit counseling agency that provided the 

17 debtor services under section 109(h) describing the 

18 services provided to the debtor; and 

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

20 developed under section 109(h) through the approved 

21 nonprofit budget and credit counseling agency re22 ferred to in paragraph (1).’’. 

23 (e) GENERAL PROVISIONS.—
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1 (1) IN GENERAL.—Chapter 1 of title 11, United 

2 States Code, is amended by adding at the end the fol3 lowing: 

4 ‘‘§ 111. Nonprofit budget and credit counseling agen5 cies; financial management instructional 

6 courses 

7 ‘‘(a) The clerk shall maintain a publicly available list 

8 of—

9 ‘‘(1) nonprofit budget and credit counseling 

10 agencies that provide 1 or more services described in 

11 section 109(h) currently approved by the United 

12 States trustee (or the bankruptcy administrator, if 

13 any); and 

14 ‘‘(2) instructional courses concerning personal fi15 nancial management currently approved by the 

16 United States trustee (or the bankruptcy adminis17 trator, if any), as applicable. 

18 ‘‘(b) The United States trustee (or bankruptcy admin19 istrator, if any) shall only approve a nonprofit budget and 

20 credit counseling agency or an instructional course con21 cerning personal financial management as follows: 

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

23 administrator, if any) shall have thoroughly reviewed 

24 the qualifications of the nonprofit budget and credit 

25 counseling agency or of the provider of the instruc-
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1 tional course under the standards set forth in this sec2 tion, and the services or instructional courses that 

3 will be offered by such agency or such provider, and 

4 may require such agency or such provider that has 

5 sought approval to provide information with respect 

6 to such review. 

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

8 administrator, if any) shall have determined that 

9 such agency or such instructional course fully satisfies 

10 the applicable standards set forth in this section. 

11 ‘‘(3) If a nonprofit budget and credit counseling 

12 agency or instructional course did not appear on the 

13 approved list for the district under subsection (a) im14 mediately before approval under this section, ap15 proval under this subsection of such agency or such 

16 instructional course shall be for a probationary pe17 riod not to exceed 6 months. 

18 ‘‘(4) At the conclusion of the applicable proba19 tionary period under paragraph (3), the United 

20 States trustee (or bankruptcy administrator, if any) 

21 may only approve for an additional 1-year period, 

22 and for successive 1-year periods thereafter, an agency 

23 or instructional course that has demonstrated during 

24 the probationary or applicable subsequent period of 

25 approval that such agency or instructional course—
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1 ‘‘(A) has met the standards set forth under 

2 this section during such period; and 

3 ‘‘(B) can satisfy such standards in the fu4 ture. 

5 ‘‘(5) Not later than 30 days after any final deci6 sion under paragraph (4), an interested person may 

7 seek judicial review of such decision in the appro8 priate district court of the United States. 

9 ‘‘(c)(1) The United States trustee (or the bankruptcy 

10 administrator, if any) shall only approve a nonprofit budg11 et and credit counseling agency that demonstrates that it 

12 will provide qualified counselors, maintain adequate provi13 sion for safekeeping and payment of client funds, provide 

14 adequate counseling with respect to client credit problems, 

15 and deal responsibly and effectively with other matters re16 lating to the quality, effectiveness, and financial security 

17 of the services it provides. 

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

19 the bankruptcy administrator, if any), a nonprofit budget 

20 and credit counseling agency shall, at a minimum—

21 ‘‘(A) have a board of directors the majority of 

22 which— 

23 ‘‘(i) are not employed by such agency; and 
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1 ‘‘(ii) will not directly or indirectly benefit 

2 financially from the outcome of the counseling 

3 services provided by such agency; 

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 cli8 ent funds, including an annual audit of the trust ac9 counts and appropriate employee bonding; 

10 ‘‘(D) provide full disclosures to a client, includ11 ing funding sources, counselor qualifications, possible 

12 impact on credit reports, and any costs of such pro13 gram that will be paid by such client and how such 

14 costs will be paid;

15 ‘‘(E) provide adequate counseling with respect to 

16 a client’s credit problems that includes an analysis of 

17 such client’s current financial condition, factors that 

18 caused such financial condition, and how such client 

19 can develop a plan to respond to the problems without 

20 incurring negative amortization of debt; 

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

22 commissions or bonuses based on the outcome of the 

23 counseling services provided by such agency, and who 

24 have adequate experience, and have been adequately 

25 trained to provide counseling services to individuals 
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1 in financial difficulty, including the matters de2 scribed in subparagraph (E); 

3 ‘‘(G) demonstrate adequate experience and back4 ground 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 the bankruptcy ad9 ministrator, if any) shall only approve an instructional 

10 course concerning personal financial management—

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

12 subsection (b)(3) if the course will provide at a min13 imum—

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

17 ‘‘(B) learning materials and teaching meth18 odologies designed to assist debtors in under19 standing personal financial management and 

20 that are consistent with stated objectives directly 

21 related to the goals of such instructional course; 

22 ‘‘(C) adequate facilities situated in reason23 ably convenient locations at which such instruc24 tional course is offered, except that such facilities 

25 may include the provision of such instructional 
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1 course by telephone or through the Internet, if 

2 such instructional course is effective; and 

3 ‘‘(D) the preparation and retention of rea4 sonable records (which shall include the debtor’s 

5 bankruptcy case number) to permit evaluation of 

6 the effectiveness of such instructional course, in7 cluding any evaluation of satisfaction of instruc8 tional course requirements for each debtor at9 tending such instructional course, which shall be 

10 available for inspection and evaluation by the 

11 Executive Office for United States Trustees, the 

12 United States trustee (or the bankruptcy admin13 istrator, if any), or the chief bankruptcy judge 

14 for the district in which such instructional 

15 course is offered; and 

16 ‘‘(2) for any 1-year period if the provider thereof 

17 has demonstrated that the course meets the standards 

18 of paragraph (1) and, in addition—

19 ‘‘(A) has been effective in assisting a sub20 stantial number of debtors to understand per21 sonal financial management; and 

22 ‘‘(B) is otherwise likely to increase substan23 tially the debtor’s understanding of personal fi24 nancial management. 
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1 ‘‘(e) The district court may, at any time, investigate 

2 the qualifications of a nonprofit budget and credit coun3 seling agency referred to in subsection (a), and request pro4 duction of documents to ensure the integrity and effective5 ness of such agency. The district court may, at any time, 

6 remove from the approved list under subsection (a) a non7 profit budget and credit counseling agency upon finding 

8 such agency does not meet the qualifications of subsection 

9 (b). 

10 ‘‘(f) The United States trustee (or the bankruptcy ad11 ministrator, if any) shall notify the clerk that a nonprofit 

12 budget and credit counseling agency or an instructional 

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

14 remove it from the list maintained under subsection (a). 

15 ‘‘(g)(1) No nonprofit budget and credit counseling 

16 agency may provide to a credit reporting agency informa17 tion concerning whether a debtor has received or sought in18 struction concerning personal financial management from 

19 such agency. 

20 ‘‘(2) A nonprofit budget and credit counseling agency 

21 that willfully or negligently fails to comply with any re22 quirement under this title with respect to a debtor shall be 

23 liable for damages in an amount equal to the sum of—

24 ‘‘(A) any actual damages sustained by the debtor 

25 as a result of the violation; and 
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1 ‘‘(B) any court costs or reasonable attorneys’ fees 

2 (as determined by the court) incurred in an action to 

3 recover those damages.’’. 

4 (2) CLERICAL AMENDMENT.—The table of sec5 tions for chapter 1 of title 11, United States Code, is 

6 amended by adding at the end the following:

‘‘111. Nonprofit budget and credit counseling agencies; financial management instructional courses.’’.

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

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

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

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

11 for purposes of subsection (c)(3), any subsequent case com12 menced by the debtor under any such chapter shall not be 

13 presumed to be filed not in good faith. 

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

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

16 automatic stay has been terminated.’’. 

17 SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY 

18 EXPENSES. 

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

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

21 Executive Office for United States Trustees shall, not later 

22 than 180 days after the date of enactment of this Act, issue 

23 schedules of reasonable and necessary administrative ex-
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1 penses of administering a chapter 13 plan for each judicial 

2 district of the United States. 

3 TITLE II—ENHANCED 

4 CONSUMER PROTECTION 

5 Subtitle A—Penalties for Abusive 

6 Creditor Practices 

7 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU8 TION. 

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

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

11 following: 

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

13 a hearing, may reduce a claim filed under this section based 

14 in whole on an unsecured consumer debt by not more than 

15 20 percent of the claim, if—

16 ‘‘(A) the claim was filed by a creditor who un17 reasonably refused to negotiate a reasonable alter18 native repayment schedule proposed on behalf of the 

19 debtor by an approved nonprofit budget and credit 

20 counseling agency described in section 111; 

21 ‘‘(B) the offer of the debtor under subparagraph 

22 (A)—

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

24 date of the filing of the petition; and 
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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 re6 payment 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 period 

13 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 schedule between the debtor and any creditor of the debtor 

20 created by an approved nonprofit budget and credit coun21 seling agency.’’. 

22 SEC. 202. EFFECT OF DISCHARGE. 

23 Section 524 of title 11, United States Code, is amended 

24 by adding at the end the following: 
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1 ‘‘(i) The willful failure of a creditor to credit payments 

2 received under a plan confirmed under this title, unless the 

3 order confirming the plan is revoked, the plan is in default, 

4 or the creditor has not received payments required to be 

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

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

7 shall constitute a violation of an injunction under sub8 section (a)(2) if the act of the creditor to collect and failure 

9 to credit payments in the manner required by the plan 

10 caused material injury to the debtor. 

11 ‘‘(j) Subsection (a)(2) does not operate as an injunc12 tion against an act by a creditor that is the holder of a 

13 secured claim, if—

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

15 real property that is the principal residence of the 

16 debtor; 

17 ‘‘(2) such act is in the ordinary course of busi18 ness between the creditor and the debtor; and 

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

20 periodic payments associated with a valid security 

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

22 the lien.’’. 
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1 SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION 

2 AGREEMENT PRACTICES. 

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

4 States Code, as amended section 202, is amended—

5 (1) in subsection (c), by striking paragraph (2) 

6 and inserting the following: 

7 ‘‘(2) the debtor received the disclosures described 

8 in subsection (k) at or before the time at which the 

9 debtor signed the agreement;’’; and 

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

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

12 (c)(2) shall consist of the disclosure statement described in 

13 paragraph (3), completed as required in that paragraph, 

14 together with the agreement specified in subsection (c), 

15 statement, declaration, motion and order described, respec16 tively, in paragraphs (4) through (8), and shall be the only 

17 disclosures required in connection with entering into such 

18 agreement. 

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

20 made clearly and conspicuously and in writing. The terms 

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

22 be disclosed more conspicuously than other terms, data or 

23 information provided in connection with this disclosure, ex24 cept that the phrases ‘Before agreeing to reaffirm a debt, 

25 review these important disclosures’ and ‘Summary of Reaf26 firmation Agreement’ may be equally conspicuous. Disclo-
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1 sures may be made in a different order and may use termi2 nology different from that set forth in paragraphs (2) 

3 through (8), except that the terms ‘Amount Reaffirmed’ and 

4 ‘Annual Percentage Rate’ must be used where indicated. 

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

6 paragraph shall consist of the following: 

7 ‘‘(A) The statement: ‘Part A: Before agreeing to 

8 reaffirm a debt, review these important disclosures:’; 

9 ‘‘(B) Under the heading ‘Summary of Reaffir10 mation Agreement’, the statement: ‘This Summary is 

11 made pursuant to the requirements of the Bankruptcy 

12 Code’; 

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

14 which shall be—

15 ‘‘(i) the total amount of debt that the debtor 

16 agrees to reaffirm by entering into an agreement 

17 of the kind specified in subsection (c), and 

18 ‘‘(ii) the total of any fees and costs accrued 

19 as of the date of the disclosure statement, related 

20 to such total amount. 

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

22 ‘Amount Reaffirmed’, the statements—

23 ‘‘(i) ‘The amount of debt you have agreed to 

24 reaffirm’; and 
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1 ‘‘(ii) ‘Your credit agreement may obligate 

2 you to pay additional amounts which may come 

3 due after the date of this disclosure. Consult your 

4 credit agreement.’. 

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

6 term, which shall be disclosed as—

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

8 debt is an extension of credit under an open end 

9 credit plan, as the terms ‘credit’ and ‘open end 

10 credit plan’ are defined in section 103 of the 

11 Truth in Lending Act, then—

12 ‘‘(I) the annual percentage rate deter13 mined under paragraphs (5) and (6) of sec14 tion 127(b) of the Truth in Lending Act, as 

15 applicable, as disclosed to the debtor in the 

16 most recent periodic statement prior to en17 tering into an agreement of the kind speci18 fied in subsection (c) or, if no such periodic 

19 statement has been given to the debtor dur20 ing the prior 6 months, the annual percent21 age rate as it would have been so disclosed 

22 at the time the disclosure statement is given 

23 to the debtor, or to the extent this annual 

24 percentage rate is not readily available or 

25 not applicable, then 
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1 ‘‘(II) the simple interest rate applica2 ble to the amount reaffirmed as of the date 

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

5 to different balances, the simple interest rate 

6 applicable to each such balance, identifying 

7 the amount of each such balance included in 

8 the amount reaffirmed, or 

9 ‘‘(III) if the entity making the disclo10 sure elects, to disclose the annual percentage 

11 rate under subclause (I) and the simple in12 terest rate under subclause (II); 

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

14 debt is an extension of credit other than under 

15 an open end credit plan, as the terms ‘credit’ 

16 and ‘open end credit plan’ are defined in section 

17 103 of the Truth in Lending Act, then—

18 ‘‘(I) the annual percentage rate under 

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

20 Act, as disclosed to the debtor in the most 

21 recent disclosure statement given to the 

22 debtor prior to the entering into an agree23 ment of the kind specified in subsection (c) 

24 with respect to the debt, or, if no such dis25 closure statement was given to the debtor, 
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1 the annual percentage rate as it would have 

2 been so disclosed at the time the disclosure 

3 statement is given to the debtor, or to the 

4 extent this annual percentage rate is not 

5 readily available or not applicable, then 

6 ‘‘(II) the simple interest rate applica7 ble to the amount reaffirmed as of the date 

8 the disclosure statement is given to the debt9 or, or if different simple interest rates apply 

10 to different balances, the simple interest rate 

11 applicable to each such balance, identifying 

12 the amount of such balance included in the 

13 amount reaffirmed, or 

14 ‘‘(III) if the entity making the disclo15 sure elects, to disclose the annual percentage 

16 rate under (I) and the simple interest rate 

17 under (II). 

18 ‘‘(F) If the underlying debt transaction was dis19 closed as a variable rate transaction on the most re20 cent disclosure given under the Truth in Lending Act, 

21 by stating ‘The interest rate on your loan may be a 

22 variable interest rate which changes from time to 

23 time, so that the annual percentage rate disclosed here 

24 may be higher or lower.’. 
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1 ‘‘(G) If the debt is secured by a security interest 

2 which has not been waived in whole or in part or de3 termined to be void by a final order of the court at 

4 the time of the disclosure, by disclosing that a secu5 rity interest or lien in goods or property is asserted 

6 over some or all of the debts the debtor is reaffirming 

7 and listing the items and their original purchase 

8 price that are subject to the asserted security interest, 

9 or if not a purchase-money security interest then list10 ing by items or types and the original amount of the 

11 loan. 

12 ‘‘(H) At the election of the creditor, a statement 

13 of the repayment schedule using 1 or a combination 

14 of the following—

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

16 payment in the amount of $lll is due on 

17 lll but the future payment amount may be 

18 different. Consult your reaffirmation agreement 

19 or credit agreement, as applicable.’, and stating 

20 the amount of the first payment and the due 

21 date of that payment in the places provided; 

22 ‘‘(ii) by making the statement: ‘Your pay23 ment schedule will be:’, and describing the repay24 ment schedule with the number, amount, and due 

25 dates or period of payments scheduled to repay 
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1 the debts reaffirmed to the extent then known by 

2 the disclosing party; or 

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

4 obligations with reasonable specificity to the ex5 tent then known by the disclosing party. 

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

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

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

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

10 might occur if the law permits the creditor to take the 

11 action. If you have questions about your reaffirming 

12 a debt or what the law requires, consult with the at13 torney who helped you negotiate this agreement re14 affirming a debt. If you don’t have an attorney help15 ing you, the judge will explain the effect of your re16 affirming a debt when the hearing on the reaffirma17 tion agreement is held.’.

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

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

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

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

22 completed, the reaffirmation agreement is not effective, even 

23 though you have signed it. 

24 ‘‘ ‘1. Read the disclosures in this Part A care25 fully. Consider the decision to reaffirm carefully. 
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1 Then, if you want to reaffirm, sign the reaffirmation 

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

3 agreement you and your creditor agree on). 

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

5 can afford to make the payments you are agreeing to 

6 make and have received a copy of the disclosure state7 ment and a completed and signed reaffirmation 

8 agreement. 

9 ‘‘ ‘3. If you were represented by an attorney dur10 ing the negotiation of your reaffirmation agreement, 

11 the attorney must have signed the certification in 

12 Part C. 

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

14 during the negotiation of your reaffirmation agree15 ment, you must have completed and signed Part E. 

16 ‘‘ ‘5. The original of this disclosure must be filed 

17 with the court by you or your creditor. If a separate 

18 reaffirmation agreement (other than the one in Part 

19 B) has been signed, it must be attached. 

20 ‘‘ ‘6. If you were represented by an attorney dur21 ing the negotiation of your reaffirmation agreement, 

22 your reaffirmation agreement becomes effective upon 

23 filing with the court unless the reaffirmation is pre24 sumed to be an undue hardship as explained in Part 

25 D. 
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1 ‘‘ ‘7. If you were not represented by an attorney 

2 during the negotiation of your reaffirmation agree3 ment, it will not be effective unless the court approves 

4 it. The court will notify you of the hearing on your 

5 reaffirmation agreement. You must attend this hear6 ing in bankruptcy court where the judge will review 

7 your reaffirmation agreement. The bankruptcy court 

8 must approve your reaffirmation agreement as con9 sistent with your best interests, except that no court 

10 approval is required if your reaffirmation agreement 

11 is for a consumer debt secured by a mortgage, deed 

12 of trust, security deed, or other lien on your real 

13 property, like your home. 

14 ‘‘ ‘Your right to rescind (cancel) your reaffirmation 

15 agreement. You may rescind (cancel) your reaffirmation 

16 agreement at any time before the bankruptcy court enters 

17 a discharge order, or before the expiration of the 60-day 

18 period that begins on the date your reaffirmation agreement 

19 is filed with the court, whichever occurs later. To rescind 

20 (cancel) your reaffirmation agreement, you must notify the 

21 creditor that your reaffirmation agreement is rescinded (or 

22 canceled). 

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

24 A reaffirmed debt remains your personal legal obligation. 

25 It is not discharged in your bankruptcy case. That means 
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1 that if you default on your reaffirmed debt after your bank2 ruptcy case is over, your creditor may be able to take your 

3 property or your wages. Otherwise, your obligations will 

4 be determined by the reaffirmation agreement which may 

5 have changed the terms of the original agreement. For ex6 ample, if you are reaffirming an open end credit agreement, 

7 the creditor may be permitted by that agreement or applica8 ble law to change the terms of that agreement in the future 

9 under certain conditions. 

10 ‘‘ ‘Are you required to enter into a reaffirmation agree11 ment by any law? No, you are not required to reaffirm a 

12 debt by any law. Only agree to reaffirm a debt if it is in 

13 your best interest. Be sure you can afford the payments you 

14 agree to make. 

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

16 Your bankruptcy discharge does not eliminate any lien on 

17 your property. A ‘‘lien’’ is often referred to as a security 

18 interest, deed of trust, mortgage or security deed. Even if 

19 you do not reaffirm and your personal liability on the debt 

20 is discharged, because of the lien your creditor may still 

21 have the right to take the security property if you do not 

22 pay the debt or default on it. If the lien is on an item of 

23 personal property that is exempt under your State’s law 

24 or that the trustee has abandoned, you may be able to re25 deem the item rather than reaffirm the debt. To redeem, 
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1 you make a single payment to the creditor equal to the cur2 rent value of the security property, as agreed by the parties 

3 or determined by the court.’. 

4 ‘‘(ii) In the case of a reaffirmation under sub5 section (m)(2), numbered paragraph 6 in the disclo6 sures required by clause (i) of this subparagraph shall 

7 read as follows: 

8 ‘‘ ‘6. If you were represented by an attorney dur9 ing the negotiation of your reaffirmation agreement, 

10 your reaffirmation agreement becomes effective upon 

11 filing with the court.’. 

12 ‘‘(4) The form of such agreement required under this 

13 paragraph shall consist of the following: 

14 ‘‘ ‘Part B: Reaffirmation Agreement. I (we) agree to 

15 reaffirm the debts arising under the credit agreement de16 scribed below. 

17 ‘‘ ‘Brief description of credit agreement: 

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

19 made as part of this reaffirmation agreement: 

20 ‘‘ ‘Signature: Date: 

21 ‘‘ ‘Borrower: 

22 ‘‘ ‘Co-borrower, if also reaffirming these debts: 

23 ‘‘ ‘Accepted by creditor: 

24 ‘‘ ‘Date of creditor acceptance:’. 

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

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

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

4 a fully informed and voluntary agreement by the debtor; 

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

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

7 fully advised the debtor of the legal effect and consequences 

8 of this agreement and any default under this agreement. 

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

10 ‘‘(B) If a presumption of undue hardship has 

11 been established with respect to such agreement, such 

12 certification shall state that in the opinion of the at13 torney, the debtor is able to make the payment. 

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

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

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

17 which the debtor shall sign and date prior to filing with 

18 the court, shall consist of the following: 

19 ‘‘ ‘Part D: Debtor’s Statement in Support of Reaffir20 mation Agreement. 

21 ‘‘ ‘1. I believe this reaffirmation agreement will not im22 pose an undue hardship on my dependents or me. I can 

23 afford to make the payments on the reaffirmed debt because 

24 my monthly income (take home pay plus any other income 

25 received) is $lll, and my actual current monthly ex-
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1 penses including monthly payments on post-bankruptcy 

2 debt and other reaffirmation agreements total $lll, 

3 leaving $lll to make the required payments on this re4 affirmed debt. I understand that if my income less my 

5 monthly expenses does not leave enough to make the pay6 ments, this reaffirmation agreement is presumed to be an 

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

8 However, this presumption may be overcome if I explain 

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

10 the payments here: lll. 

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

12 Statement in Part A and a completed and signed reaffirma13 tion agreement.’. 

14 ‘‘(B) Where the debtor is represented by an attorney 

15 and is reaffirming a debt owed to a creditor defined in sec16 tion 19(b)(1)(A)(iv) of the Federal Reserve Act, the state17 ment of support of the reaffirmation agreement, which the 

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

19 shall consist of the following: 

20 ‘‘ ‘I believe this reaffirmation agreement is in my fi21 nancial interest. I can afford to make the payments on the 

22 reaffirmed debt. I received a copy of the Reaffirmation Dis23 closure Statement in Part A and a completed and signed 

24 reaffirmation agreement.’. 
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1 ‘‘(7) The motion that may be used if approval of such 

2 agreement by the court is required in order for it to be effec3 tive, shall be signed and dated by the movant and shall 

4 consist of the following: 

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

6 only if the debtor is not represented by an attorney.). I (we), 

7 the debtor(s), affirm the following to be true and correct: 

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

9 with this reaffirmation agreement. 

10 ‘‘ ‘I believe this reaffirmation agreement is in my best 

11 interest based on the income and expenses I have disclosed 

12 in my Statement in Support of this reaffirmation agree13 ment, and because (provide any additional relevant reasons 

14 the court should consider): 

15 ‘‘ ‘Therefore, I ask the court for an order approving this 

16 reaffirmation agreement.’.

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

18 such agreement, shall consist of the following: 

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

20 and approves the reaffirmation agreement described above.’.

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

22 the following shall apply: 

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

24 debtor before and after the filing of an agreement of 

25 the kind specified in subsection (c) with the court. 
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1 ‘‘(2) A creditor may accept payments from a 

2 debtor under such agreement that the creditor believes 

3 in good faith to be effective. 

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

5 (k) shall be satisfied if disclosures required under 

6 those subsections are given in good faith. 

7 ‘‘(m)(1) Until 60 days after an agreement of the kind 

8 specified in subsection (c) is filed with the court (or such 

9 additional period as the court, after notice and a hearing 

10 and for cause, orders before the expiration of such period), 

11 it shall be presumed that such agreement is an undue hard12 ship on the debtor if the debtor’s monthly income less the 

13 debtor’s monthly expenses as shown on the debtor’s com14 pleted and signed statement in support of such agreement 

15 required under subsection (k)(6)(A) is less than the sched16 uled payments on the reaffirmed debt. This presumption 

17 shall be reviewed by the court. The presumption may be 

18 rebutted in writing by the debtor if the statement includes 

19 an explanation that identifies additional sources of funds 

20 to make the payments as agreed upon under the terms of 

21 such agreement. If the presumption is not rebutted to the 

22 satisfaction of the court, the court may disapprove such 

23 agreement. No agreement shall be disapproved without no24 tice and a hearing to the debtor and creditor, and such 
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1 hearing shall be concluded before the entry of the debtor’s 

2 discharge. 

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

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

5 in section 19(b)(1)(A)(iv) of the Federal Reserve Act.’’. 

6 (b) LAW ENFORCEMENT.—

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

8 States Code, is amended by adding at the end the fol9 lowing: 

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

11 agents of the Federal Bureau of Investiga12 tion to address abusive reaffirmations of 

13 debt and materially fraudulent state14 ments in bankruptcy schedules 

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

16 United States shall designate the individuals described in 

17 subsection (b) to have primary responsibility in carrying 

18 out enforcement activities in addressing violations of sec19 tion 152 or 157 relating to abusive reaffirmations of debt. 

20 In addition to addressing the violations referred to in the 

21 preceding sentence, the individuals described under sub22 section (b) shall address violations of section 152 or 157 

23 relating to materially fraudulent statements in bankruptcy 

24 schedules that are intentionally false or intentionally mis25 leading. 
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1 ‘‘(b) UNITED STATES ATTORNEYS AND AGENTS OF

2 THE FEDERAL BUREAU OF INVESTIGATION.—The individ3 uals referred to in subsection (a) are—

4 ‘‘(1) the United States attorney for each judicial 

5 district of the United States; and 

6 ‘‘(2) an agent of the Federal Bureau of Inves7 tigation for each field office of the Federal Bureau of 

8 Investigation. 

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

10 States attorney designated under this section shall, in addi11 tion to any other responsibilities, have primary responsi12 bility for carrying out the duties of a United States attor13 ney under section 3057. 

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

15 courts shall establish procedures for referring any case that 

16 may contain a materially fraudulent statement in a bank17 ruptcy schedule to the individuals designated under this sec18 tion.’’. 

19 (2) CLERICAL AMENDMENT.—The table of sec20 tions for chapter 9 of title 18, United States Code, is 

21 amended by adding at the end the following:

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

of Investigation to address abusive reaffirmations of debt and 

materially fraudulent statements in bankruptcy schedules.’’.
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1 SEC. 204. PRESERVATION OF CLAIMS AND DEFENSES UPON 

2 SALE OF PREDATORY LOANS. 

3 Section 363 of title 11, United States Code, is amend4 ed—

5 (1) by redesignating subsection (o) as subsection 

6 (p), and 

7 (2) by inserting after subsection (n) the fol8 lowing: 

9 ‘‘(o) Notwithstanding subsection (f), if a person pur10 chases any interest in a consumer credit transaction that 

11 is subject to the Truth in Lending Act or any interest in 

12 a consumer credit contract (as defined in section 433.1 of 

13 title 16 of the Code of Federal Regulations (January 1, 

14 2002), as amended from time to time), and if such interest 

15 is purchased through a sale under this section, then such 

16 person shall remain subject to all claims and defenses that 

17 are related to such consumer credit transaction or such con18 sumer credit contract, to the same extent as such person 

19 would be subject to such claims and defenses of the consumer 

20 had such interest been purchased at a sale not under this 

21 section.’’.

22 SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION 

23 AGREEMENT PROCESS. 

24 (a) STUDY.—The Comptroller General of the United 

25 States shall conduct a study of the reaffirmation agreement 

26 process that occurs under title 11 of the United States Code, 
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1 to determine the overall treatment of consumers within the 

2 context of such process, and shall include in such study con3 sideration of—

4 (1) the policies and activities of creditors with 

5 respect to reaffirmation agreements; and 

6 (2) whether consumers are fully, fairly, and con7 sistently informed of their rights pursuant to such 

8 title. 

9 (b) REPORT TO THE CONGRESS.—Not later than 18 

10 months after the date of the enactment of this Act, the 

11 Comptroller General shall submit to the President pro tem12 pore of the Senate and the Speaker of the House of Rep13 resentatives a report on the results of the study conducted 

14 under subsection (a), together with recommendations for 

15 legislation (if any) to address any abusive or coercive tac16 tics found in connection with the reaffirmation agreement 

17 process that occurs under title 11 of the United States Code.

18 Subtitle B—Priority Child Support 

19 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA20 TION. 

21 Section 101 of title 11, United States Code, is amend22 ed—

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

24 (2) by inserting after paragraph (14) the fol25 lowing: 
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1 ‘‘(14A) ‘domestic support obligation’ means a 

2 debt that accrues before or after the date of the order 

3 for relief in a case under this title, including interest 

4 that accrues on that debt as provided under applica5 ble nonbankruptcy law notwithstanding any other 

6 provision of this title, that is—

7 ‘‘(A) owed to or recoverable by—

8 ‘‘(i) a spouse, former spouse, or child of 

9 the debtor or such child’s parent, legal 

10 guardian, or responsible relative; or 

11 ‘‘(ii) a governmental unit; 

12 ‘‘(B) in the nature of alimony, mainte13 nance, or support (including assistance provided 

14 by a governmental unit) of such spouse, former 

15 spouse, or child of the debtor or such child’s par16 ent, without regard to whether such debt is ex17 pressly so designated; 

18 ‘‘(C) established or subject to establishment 

19 before or after the date of the order for relief in 

20 a case under this title, by reason of applicable 

21 provisions of—

22 ‘‘(i) a separation agreement, divorce 

23 decree, or property settlement agreement; 

24 ‘‘(ii) an order of a court of record; or 
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1 ‘‘(iii) a determination made in accord2 ance with applicable nonbankruptcy law by 

3 a governmental unit; and 

4 ‘‘(D) not assigned to a nongovernmental en5 tity, unless that obligation is assigned volun6 tarily by the spouse, former spouse, child of the 

7 debtor, or such child’s parent, legal guardian, or 

8 responsible relative for the purpose of collecting 

9 the debt;’’.

10 SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP11 PORT OBLIGATIONS. 

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

13 amended—

14 (1) by striking paragraph (7); 

15 (2) by redesignating paragraphs (1) through (6) 

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

17 (3) in paragraph (2), as so redesignated, by 

18 striking ‘‘First’’ and inserting ‘‘Second’’;

19 (4) in paragraph (3), as so redesignated, by 

20 striking ‘‘Second’’ and inserting ‘‘Third’’; 

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

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

23 ‘‘Fourth’’; and 

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

25 inserting a period; 
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1 (6) in paragraph (5), as so redesignated, by 

2 striking ‘‘Fourth’’ and inserting ‘‘Fifth’’; 

3 (7) in paragraph (6), as so redesignated, by 

4 striking ‘‘Fifth’’ and inserting ‘‘Sixth’’; 

5 (8) in paragraph (7), as so redesignated, by 

6 striking ‘‘Sixth’’ and inserting ‘‘Seventh’’; and 

7 (9) by inserting before paragraph (2), as so re8 designated, the following: 

9 ‘‘(1) First: 

10 ‘‘(A) Allowed unsecured claims for domestic 

11 support obligations that, as of the date of the fil12 ing of the petition in a case under this title, are 

13 owed to or recoverable by a spouse, former 

14 spouse, or child of the debtor, or such child’s par15 ent, legal guardian, or responsible relative, with16 out regard to whether the claim is filed by such 

17 person or is filed by a governmental unit on be18 half of such person, on the condition that funds 

19 received under this paragraph by a governmental 

20 unit under this title after the date of the filing 

21 of the petition shall be applied and distributed 

22 in accordance with applicable nonbankruptcy 

23 law. 

24 ‘‘(B) Subject to claims under subparagraph 

25 (A), allowed unsecured claims for domestic sup-
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1 port obligations that, as of the date of the filing 

2 of the petition, are assigned by a spouse, former 

3 spouse, child of the debtor, or such child’s parent, 

4 legal guardian, or responsible relative to a gov5 ernmental unit (unless such obligation is as6 signed voluntarily by the spouse, former spouse, 

7 child, parent, legal guardian, or responsible rel8 ative of the child for the purpose of collecting the 

9 debt) or are owed directly to or recoverable by a 

10 governmental unit under applicable nonbank11 ruptcy law, on the condition that funds received 

12 under this paragraph by a governmental unit 

13 under this title after the date of the filing of the 

14 petition be applied and distributed in accord15 ance with applicable nonbankruptcy law. 

16 ‘‘(C) If a trustee is appointed or elected 

17 under section 701, 702, 703, 1104, 1202, or 

18 1302, the administrative expenses of the trustee 

19 allowed under paragraphs (1)(A), (2), and (6) of 

20 section 503(b) shall be paid before payment of 

21 claims under subparagraphs (A) and (B), to the 

22 extent that the trustee administers assets that are 

23 otherwise available for the payment of such 

24 claims.’’. 
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1 SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND 

2 DISCHARGE IN CASES INVOLVING DOMESTIC 

3 SUPPORT OBLIGATIONS. 

4 Title 11, United States Code, is amended—

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

6 following: 

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

8 administrative order, or by statute, to pay a domestic 

9 support obligation, the debtor has paid all amounts 

10 payable under such order or such statute for such ob11 ligation that first become payable after the date of the 

12 filing of the petition.’’; 

13 (2) in section 1208(c)—

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

15 the end; 

16 (B) in paragraph (9), by striking the period 

17 at the end and inserting ‘‘; and’’; and 

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

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

20 support obligation that first becomes payable after the 

21 date of the filing of the petition.’’; 

22 (3) in section 1222(a)—

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

24 the end; 

25 (B) in paragraph (3), by striking the period 

26 at the end and inserting ‘‘; and’’; and 
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1 (C) by adding at the end the following: 

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

3 section, a plan may provide for less than full pay4 ment of all amounts owed for a claim entitled to pri5 ority under section 507(a)(1)(B) only if the plan pro6 vides that all of the debtor’s projected disposable in7 come for a 5-year period beginning on the date that 

8 the first payment is due under the plan will be ap9 plied to make payments under the plan.’’; 

10 (4) in section 1222(b)—

11 (A) by redesignating paragraph (11) as 

12 paragraph (12); and 

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

14 following: 

15 ‘‘(11) provide for the payment of interest accru16 ing after the date of the filing of the petition on unse17 cured claims that are nondischargeable under section 

18 1228(a), except that such interest may be paid only 

19 to the extent that the debtor has disposable income 

20 available to pay such interest after making provision 

21 for full payment of all allowed claims;’’; 

22 (5) in section 1225(a)—

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

24 the end; 
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1 (B) in paragraph (6), by striking the period 

2 at the end and inserting ‘‘; and’’; and 

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

4 ‘‘(7) the debtor has paid all amounts that are re5 quired to be paid under a domestic support obligation 

6 and that first become payable after the date of the fil7 ing of the petition if the debtor is required by a judi8 cial or administrative order, or by statute, to pay 

9 such domestic support obligation.’’; 

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

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

12 debtor who is required by a judicial or administrative 

13 order, or by statute, to pay a domestic support obliga14 tion, after such debtor certifies that all amounts pay15 able under such order or such statute that are due on 

16 or before the date of the certification (including 

17 amounts due before the petition was filed, but only to 

18 the extent provided for by the plan) have been paid’’ 

19 after ‘‘completion by the debtor of all payments under 

20 the plan’’; 

21 (7) in section 1307(c)—

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

23 the end; 

24 (B) in paragraph (10), by striking the pe25 riod at the end and inserting ‘‘; or’’; and 
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1 (C) by adding at the end the following: 

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

3 support obligation that first becomes payable after the 

4 date of the filing of the petition.’’; 

5 (8) in section 1322(a)—

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

7 the end; 

8 (B) in paragraph (3), by striking the period 

9 at the end and inserting ‘‘; and’’; and 

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

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

12 section, a plan may provide for less than full pay13 ment of all amounts owed for a claim entitled to pri14 ority under section 507(a)(1)(B) only if the plan pro15 vides that all of the debtor’s projected disposable in16 come for a 5-year period beginning on the date that 

17 the first payment is due under the plan will be ap18 plied to make payments under the plan.’’;

19 (9) in section 1322(b)—

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

21 and inserting a semicolon; 

22 (B) by redesignating paragraph (10) as 

23 paragraph (11); and 

24 (C) inserting after paragraph (9) the fol25 lowing: 
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1 ‘‘(10) provide for the payment of interest accru2 ing after the date of the filing of the petition on unse3 cured claims that are nondischargeable under section 

4 1328(a), except that such interest may be paid only 

5 to the extent that the debtor has disposable income 

6 available to pay such interest after making provision 

7 for full payment of all allowed claims; and’’; 

8 (10) in section 1325(a), as amended by section 

9 102, by inserting after paragraph (7) the following: 

10 ‘‘(8) the debtor has paid all amounts that are re11 quired to be paid under a domestic support obligation 

12 and that first become payable after the date of the fil13 ing of the petition if the debtor is required by a judi14 cial or administrative order, or by statute, to pay 

15 such domestic support obligation; and’’; 

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

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

18 debtor who is required by a judicial or administrative 

19 order, or by statute, to pay a domestic support obliga20 tion, after such debtor certifies that all amounts pay21 able under such order or such statute that are due on 

22 or before the date of the certification (including 

23 amounts due before the petition was filed, but only to 

24 the extent provided for by the plan) have been paid’’ 
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1 after ‘‘completion by the debtor of all payments under 

2 the plan’’. 

3 SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC 

4 SUPPORT OBLIGATION PROCEEDINGS. 

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

6 amended by striking paragraph (2) and inserting the fol7 lowing: 

8 ‘‘(2) under subsection (a)—

9 ‘‘(A) of the commencement or continuation 

10 of a civil action or proceeding—

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

12 ‘‘(ii) for the establishment or modifica13 tion of an order for domestic support obli14 gations; 

15 ‘‘(iii) concerning child custody or visi16 tation; 

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

18 except to the extent that such proceeding 

19 seeks to determine the division of property 

20 that is property of the estate; or 

21 ‘‘(v) regarding domestic violence; 

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

23 obligation from property that is not property of 

24 the estate; 
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1 ‘‘(C) with respect to the withholding of in2 come that is property of the estate or property of 

3 the debtor for payment of a domestic support ob4 ligation under a judicial or administrative order 

5 or a statute; 

6 ‘‘(D) of the withholding, suspension, or re7 striction of a driver’s license, a professional or 

8 occupational license, or a recreational license, 

9 under State law, as specified in section 

10 466(a)(16) of the Social Security Act; 

11 ‘‘(E) of the reporting of overdue support 

12 owed by a parent to any consumer reporting 

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

14 Social Security Act; 

15 ‘‘(F) of the interception of a tax refund, as 

16 specified in sections 464 and 466(a)(3) of the So17 cial Security Act or under an analogous State 

18 law; or 

19 ‘‘(G) of the enforcement of a medical obliga20 tion, as specified under title IV of the Social Se21 curity Act;’’. 

22 SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR 

23 ALIMONY, MAINTENANCE, AND SUPPORT. 

24 Section 523 of title 11, United States Code, is amend25 ed—
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1 (1) in subsection (a)—

2 (A) by striking paragraph (5) and inserting 

3 the following: 

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

5 (B) by striking paragraph (18); 

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

7 each place it appears and inserting ‘‘or (6)’’; and 

8 (3) in paragraph (15), as added by Public Law 

9 103–394 (108 Stat. 4133)—

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

11 spouse, or child of the debtor and’’ before ‘‘not of 

12 the kind’’; 

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

14 record,’’; and 

15 (C) by striking ‘‘unless—’’ and all that fol16 lows through the end of the paragraph and in17 serting a semicolon. 

18 SEC. 216. CONTINUED LIABILITY OF PROPERTY. 

19 Section 522 of title 11, United States Code, is amend20 ed—

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

22 and inserting the following: 

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

24 or (5) of section 523(a) (in which case, notwith25 standing any provision of applicable nonbankruptcy 
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1 law to the contrary, such property shall be liable for 

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

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

4 and all that follows through the end of the subpara5 graph and inserting ‘‘of a kind that is specified in 

6 section 523(a)(5); or’’; and 

7 (3) in subsection (g)(2), by striking ‘‘subsection 

8 (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’. 

9 SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS 

10 AGAINST PREFERENTIAL TRANSFER MO11 TIONS. 

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

13 amended to read as follows: 

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

15 payment of a debt for a domestic support obliga16 tion;’’. 

17 SEC. 218. DISPOSABLE INCOME DEFINED. 

18 Section 1225(b)(2)(A) of title 11, United States Code, 

19 is amended by inserting ‘‘or for a domestic support obliga20 tion that first becomes payable after the date of the filing 

21 of the petition’’ after ‘‘dependent of the debtor’’.

22 SEC. 219. COLLECTION OF CHILD SUPPORT. 

23 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec24 tion 704 of title 11, United States Code, as amended by 

25 section 102, is amended—
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1 (1) in subsection (a)—

2 (A) in paragraph (8), by striking ‘‘and’’ at 

3 the end; 

4 (B) in paragraph (9), by striking the period 

5 and inserting a semicolon; and 

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

7 ‘‘(10) if with respect to the debtor there is a 

8 claim for a domestic support obligation, provide the 

9 applicable notice specified in subsection (c); and’’; 

10 and 

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

12 ‘‘(c)(1) In a case described in subsection (a)(10) to 

13 which subsection (a)(10) applies, the trustee shall—

14 ‘‘(A)(i) provide written notice to the holder of the 

15 claim described in subsection (a)(10) of such claim 

16 and of the right of such holder to use the services of 

17 the State child support enforcement agency established 

18 under sections 464 and 466 of the Social Security Act 

19 for the State in which such holder resides, for assist20 ance in collecting child support during and after the 

21 case under this title; 

22 ‘‘(ii) include in the notice provided under clause 

23 (i) the address and telephone number of such State 

24 child support enforcement agency; and 
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1 ‘‘(iii) include in the notice provided under clause 

2 (i) an explanation of the rights of such holder to pay3 ment of such claim under this chapter; 

4 ‘‘(B)(i) provide written notice to such State child 

5 support enforcement agency of such claim; and 

6 ‘‘(ii) include in the notice provided under clause 

7 (i) the name, address, and telephone number of such 

8 holder; and 

9 ‘‘(C) at such time as the debtor is granted a dis10 charge under section 727, provide written notice to 

11 such holder and to such State child support enforce12 ment agency of—

13 ‘‘(i) the granting of the discharge; 

14 ‘‘(ii) the last recent known address of the 

15 debtor; 

16 ‘‘(iii) the last recent known name and ad17 dress of the debtor’s employer; and

18 ‘‘(iv) the name of each creditor that holds a 

19 claim that—

20 ‘‘(I) is not discharged under paragraph 

21 (2), (4), or (14A) of section 523(a); or 

22 ‘‘(II) was reaffirmed by the debtor 

23 under section 524(c). 

24 ‘‘(2)(A) The holder of a claim described in subsection 

25 (a)(10) or the State child support enforcement agency of 
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1 the State in which such holder resides may request from 

2 a creditor described in paragraph (1)(C)(iv) the last known 

3 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 by reason of making such 

8 disclosure.’’. 

9 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—Sec10 tion 1106 of title 11, United States Code, is amended—

11 (1) in subsection (a)—

12 (A) in paragraph (6), by striking ‘‘and’’ at 

13 the end; 

14 (B) in paragraph (7), by striking the period 

15 and inserting ‘‘; and’’; and 

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

17 ‘‘(8) if with respect to the debtor there is a claim 

18 for a domestic support obligation, provide the appli19 cable notice specified in subsection (c).’’; and 

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

21 ‘‘(c)(1) In a case described in subsection (a)(8) to 

22 which subsection (a)(8) applies, the trustee shall—

23 ‘‘(A)(i) provide written notice to the holder of the 

24 claim described in subsection (a)(8) of such claim and 

25 of the right of such holder to use the services of the 
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1 State child support enforcement agency established 

2 under sections 464 and 466 of the Social Security Act 

3 for the State in which such holder resides, for assist4 ance in collecting child support during and after the 

5 case under this title; and 

6 ‘‘(ii) include in the notice required by clause (i) 

7 the address and telephone number of such State child 

8 support enforcement agency; 

9 ‘‘(B)(i) provide written notice to such State child 

10 support enforcement agency of such claim; and 

11 ‘‘(ii) include in the notice required by clause (i) 

12 the name, address, and telephone number of such 

13 holder; and 

14 ‘‘(C) at such time as the debtor is granted a dis15 charge under section 1141, provide written notice to 

16 such holder and to such State child support enforce17 ment agency of—

18 ‘‘(i) the granting of the discharge; 

19 ‘‘(ii) the last recent known address of the 

20 debtor; 

21 ‘‘(iii) the last recent known name and ad22 dress of the debtor’s employer; and 

23 ‘‘(iv) the name of each creditor that holds a 

24 claim that—
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1 ‘‘(I) is not discharged under paragraph 

2 (2), (4), or (14A) of section 523(a); or 

3 ‘‘(II) was reaffirmed by the debtor 

4 under section 524(c). 

5 ‘‘(2)(A) The holder of a claim described in subsection 

6 (a)(8) or the State child enforcement support agency of the 

7 State in which such holder resides may request from a cred8 itor described in paragraph (1)(C)(iv) the last known ad9 dress of the debtor. 

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

11 creditor that makes a disclosure of a last known address 

12 of a debtor in connection with a request made under sub13 paragraph (A) shall not be liable by reason of making such 

14 disclosure.’’. 

15 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—Sec16 tion 1202 of title 11, United States Code, is amended—

17 (1) in subsection (b)—

18 (A) in paragraph (4), by striking ‘‘and’’ at 

19 the end; 

20 (B) in paragraph (5), by striking the period 

21 and inserting ‘‘; and’’; and 

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

23 ‘‘(6) if with respect to the debtor there is a claim 

24 for a domestic support obligation, provide the appli25 cable notice specified in subsection (c).’’; and 
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1 (2) by adding at the end the following: 

2 ‘‘(c)(1) In a case described in subsection (b)(6) to 

3 which subsection (b)(6) applies, the trustee shall—

4 ‘‘(A)(i) provide written notice to the holder of the 

5 claim described in subsection (b)(6) of such claim and 

6 of the right of such holder to use the services of the 

7 State child support enforcement agency established 

8 under sections 464 and 466 of the Social Security Act 

9 for the State in which such holder resides, for assist10 ance in collecting child support during and after the 

11 case under this title; and 

12 ‘‘(ii) include in the notice provided under clause 

13 (i) the address and telephone number of such State 

14 child support enforcement agency; 

15 ‘‘(B)(i) provide written notice to such State child 

16 support enforcement agency of such claim; and 

17 ‘‘(ii) include in the notice provided under clause 

18 (i) the name, address, and telephone number of such 

19 holder; and 

20 ‘‘(C) at such time as the debtor is granted a dis21 charge under section 1228, provide written notice to 

22 such holder and to such State child support enforce23 ment agency of—

24 ‘‘(i) the granting of the discharge; 
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1 ‘‘(ii) the last recent known address of the 

2 debtor; 

3 ‘‘(iii) the last recent known name and ad4 dress of the debtor’s employer; and 

5 ‘‘(iv) the name of each creditor that holds a 

6 claim that—

7 ‘‘(I) is not discharged under paragraph 

8 (2), (4), or (14A) of section 523(a); or 

9 ‘‘(II) was reaffirmed by the debtor 

10 under section 524(c). 

11 ‘‘(2)(A) The holder of a claim described in subsection 

12 (b)(6) or the State child support enforcement agency of the 

13 State in which such holder resides may request from a cred14 itor described in paragraph (1)(C)(iv) the last known ad15 dress of the debtor. 

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

17 creditor that makes a disclosure of a last known address 

18 of a debtor in connection with a request made under sub19 paragraph (A) shall not be liable by reason of making that 

20 disclosure.’’. 

21 (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—Sec22 tion 1302 of title 11, United States Code, is amended—

23 (1) in subsection (b)—

24 (A) in paragraph (4), by striking ‘‘and’’ at 

25 the end; 
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1 (B) in paragraph (5), by striking the period 

2 and inserting ‘‘; and’’; and 

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

4 ‘‘(6) if with respect to the debtor there is a claim 

5 for a domestic support obligation, provide the appli6 cable notice specified in subsection (d).’’; and 

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

8 ‘‘(d)(1) In a case described in subsection (b)(6) to 

9 which subsection (b)(6) applies, the trustee shall—

10 ‘‘(A)(i) provide written notice to the holder of the 

11 claim described in subsection (b)(6) of such claim and 

12 of the right of such holder to use the services of the 

13 State child support enforcement agency established 

14 under sections 464 and 466 of the Social Security Act 

15 for the State in which such holder resides, for assist16 ance in collecting child support during and after the 

17 case under this title; and 

18 ‘‘(ii) include in the notice provided under clause 

19 (i) the address and telephone number of such State 

20 child support enforcement agency; 

21 ‘‘(B)(i) provide written notice to such State child 

22 support enforcement agency of such claim; and 

23 ‘‘(ii) include in the notice provided under clause 

24 (i) the name, address, and telephone number of such 

25 holder; and 
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1 ‘‘(C) at such time as the debtor is granted a dis2 charge under section 1328, provide written notice to 

3 such holder and to such State child support enforce4 ment agency of—

5 ‘‘(i) the granting of the discharge; 

6 ‘‘(ii) the last recent known address of the 

7 debtor; 

8 ‘‘(iii) the last recent known name and ad9 dress of the debtor’s employer; and

10 ‘‘(iv) the name of each creditor that holds a 

11 claim that—

12 ‘‘(I) is not discharged under paragraph 

13 (2) or (4) of section 523(a); or 

14 ‘‘(II) was reaffirmed by the debtor 

15 under section 524(c). 

16 ‘‘(2)(A) The holder of a claim described in subsection 

17 (b)(6) or the State child support enforcement agency of the 

18 State in which such holder resides may request from a cred19 itor described in paragraph (1)(C)(iv) the last known ad20 dress of the debtor. 

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

22 creditor that makes a disclosure of a last known address 

23 of a debtor in connection with a request made under sub24 paragraph (A) shall not be liable by reason of making that 

25 disclosure.’’. 
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1 SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDU2 CATIONAL BENEFITS AND LOANS. 

3 Section 523(a) of title 11, United States Code, is 

4 amended by striking paragraph (8) and inserting the fol5 lowing: 

6 ‘‘(8) unless excepting such debt from discharge 

7 under this paragraph would impose an undue hard8 ship on the debtor and the debtor’s dependents, for—

9 ‘‘(A)(i) an educational benefit overpayment 

10 or loan made, insured, or guaranteed by a gov11 ernmental unit, or made under any program 

12 funded in whole or in part by a governmental 

13 unit or nonprofit institution; or 

14 ‘‘(ii) an obligation to repay funds received 

15 as an educational benefit, scholarship, or sti16 pend; or 

17 ‘‘(B) any other educational loan that is a 

18 qualified education loan, as defined in section 

19 221(d)(1) of the Internal Revenue Code of 1986, 

20 incurred by a debtor who is an individual;’’. 

21 Subtitle C—Other Consumer 

22 Protections 

23 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK24 RUPTCY FILINGS. 

25 Section 110 of title 11, United States Code, is amend26 ed—
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1 (1) in subsection (a)(1), by striking ‘‘or an em2 ployee of an attorney’’ and inserting ‘‘for the debtor 

3 or an employee of such attorney under the direct su4 pervision of such attorney’’; 

5 (2) in subsection (b)—

6 (A) in paragraph (1), by adding at the end 

7 the following: ‘‘If a bankruptcy petition preparer 

8 is not an individual, then an officer, principal, 

9 responsible person, or partner of the bankruptcy 

10 petition preparer shall be required to—

11 ‘‘(A) sign the document for filing; and 

12 ‘‘(B) print on the document the name and ad13 dress of that officer, principal, responsible person, or 

14 partner.’’; and 

15 (B) by striking paragraph (2) and inserting 

16 the following: 

17 ‘‘(2)(A) Before preparing any document for filing or 

18 accepting any fees from a debtor, the bankruptcy petition 

19 preparer shall provide to the debtor a written notice which 

20 shall be on an official form prescribed by the Judicial Con21 ference of the United States in accordance with rule 9009 

22 of the Federal Rules of Bankruptcy Procedure. 

23 ‘‘(B) The notice under subparagraph (A)—
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1 ‘‘(i) shall inform the debtor in simple language 

2 that a bankruptcy petition preparer is not an attor3 ney and may not practice law or give legal advice; 

4 ‘‘(ii) may contain a description of examples of 

5 legal advice that a bankruptcy petition preparer is 

6 not authorized to give, in addition to any advice that 

7 the preparer may not give by reason of subsection 

8 (e)(2); and

9 ‘‘(iii) shall—

10 ‘‘(I) be signed by the debtor and, under pen11 alty of perjury, by the bankruptcy petition pre12 parer; and 

13 ‘‘(II) be filed with any document for fil14 ing.’’; 

15 (3) in subsection (c)—

16 (A) in paragraph (2)—

17 (i) by striking ‘‘(2) For purposes’’ and 

18 inserting ‘‘(2)(A) Subject to subparagraph 

19 (B), for purposes’’; and 

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

21 ‘‘(B) If a bankruptcy petition preparer is not an indi22 vidual, the identifying number of the bankruptcy petition 

23 preparer shall be the Social Security account number of the 

24 officer, principal, responsible person, or partner of the 

25 bankruptcy petition preparer.’’; and 
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1 (B) by striking paragraph (3); 

2 (4) in subsection (d)—

3 (A) by striking ‘‘(d)(1)’’ and inserting 

4 ‘‘(d)’’; and 

5 (B) by striking paragraph (2); 

6 (5) in subsection (e)—

7 (A) by striking paragraph (2); and 

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

9 ‘‘(2)(A) A bankruptcy petition preparer may not offer 

10 a potential bankruptcy debtor any legal advice, including 

11 any legal advice described in subparagraph (B). 

12 ‘‘(B) The legal advice referred to in subparagraph (A) 

13 includes advising the debtor—

14 ‘‘(i) whether—

15 ‘‘(I) to file a petition under this title; or 

16 ‘‘(II) commencing a case under chapter 7, 

17 11, 12, or 13 is appropriate; 

18 ‘‘(ii) whether the debtor’s debts will be discharged 

19 in a case under this title; 

20 ‘‘(iii) whether the debtor will be able to retain 

21 the debtor’s home, car, or other property after com22 mencing a case under this title; 

23 ‘‘(iv) concerning—

24 ‘‘(I) the tax consequences of a case brought 

25 under this title; or 
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1 ‘‘(II) the dischargeability of tax claims; 

2 ‘‘(v) whether the debtor may or should promise 

3 to repay debts to a creditor or enter into a reaffirma4 tion agreement with a creditor to reaffirm a debt; 

5 ‘‘(vi) concerning how to characterize the nature 

6 of the debtor’s interests in property or the debtor’s 

7 debts; or 

8 ‘‘(vii) concerning bankruptcy procedures and 

9 rights.’’; 

10 (6) in subsection (f)—

11 (A) by striking ‘‘(f)(1)’’ and inserting ‘‘(f)’’; 

12 and 

13 (B) by striking paragraph (2); 

14 (7) in subsection (g)—

15 (A) by striking ‘‘(g)(1)’’ and inserting 

16 ‘‘(g)’’; and 

17 (B) by striking paragraph (2); 

18 (8) in subsection (h)—

19 (A) by redesignating paragraphs (1) 

20 through (4) as paragraphs (2) through (5), re21 spectively; 

22 (B) by inserting before paragraph (2), as so 

23 redesignated, the following: 

24 ‘‘(1) The Supreme Court may promulgate rules under 

25 section 2075 of title 28, or the Judicial Conference of the 
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1 United States may prescribe guidelines, for setting a max2 imum allowable fee chargeable by a bankruptcy petition 

3 preparer. A bankruptcy petition preparer shall notify the 

4 debtor of any such maximum amount before preparing any 

5 document for filing for a debtor or accepting any fee from 

6 the debtor.’’; 

7 (C) in paragraph (2), as so redesignated— 

8 (i) by striking ‘‘Within 10 days after 

9 the date of the filing of a petition, a bank10 ruptcy petition preparer shall file a’’ and 

11 inserting ‘‘A’’; 

12 (ii) by inserting ‘‘by the bankruptcy 

13 petition preparer shall be filed together with 

14 the petition,’’ after ‘‘perjury’’; and 

15 (iii) by adding at the end the fol16 lowing: ‘‘If rules or guidelines setting a 

17 maximum fee for services have been promul18 gated or prescribed under paragraph (1), 

19 the declaration under this paragraph shall 

20 include a certification that the bankruptcy 

21 petition preparer complied with the notifi22 cation requirement under paragraph (1).’’; 

23 (D) by striking paragraph (3), as so redes24 ignated, and inserting the following: 
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1 ‘‘(3)(A) The court shall disallow and order the imme2 diate turnover to the bankruptcy trustee any fee referred 

3 to in paragraph (2) found to be in excess of the value of 

4 any services—

5 ‘‘(i) rendered by the bankruptcy petition pre6 parer during the 12-month period immediately pre7 ceding the date of the filing of the petition; or 

8 ‘‘(ii) found to be in violation of any rule or 

9 guideline promulgated or prescribed under paragraph 

10 (1). 

11 ‘‘(B) All fees charged by a bankruptcy petition pre12 parer may be forfeited in any case in which the bankruptcy 

13 petition preparer fails to comply with this subsection or 

14 subsection (b), (c), (d), (e), (f), or (g). 

15 ‘‘(C) An individual may exempt any funds recovered 

16 under this paragraph under section 522(b).’’; and 

17 (E) in paragraph (4), as so redesignated, by 

18 striking ‘‘or the United States trustee’’ and in19 serting ‘‘the United States trustee (or the bank20 ruptcy administrator, if any) or the court, on 

21 the initiative of the court,’’; 

22 (9) in subsection (i)(1), by striking the matter 

23 preceding subparagraph (A) and inserting the fol24 lowing: 
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1 ‘‘(i)(1) If a bankruptcy petition preparer violates this 

2 section or commits any act that the court finds to be fraudu3 lent, unfair, or deceptive, on the motion of the debtor, trust4 ee, United States trustee (or the bankruptcy administrator, 

5 if any), and after notice and a hearing, the court shall order 

6 the bankruptcy petition preparer to pay to the debtor—’’; 

7 (10) in subsection (j)—

8 (A) in paragraph (2)—

9 (i) in subparagraph (A)(i)(I), by strik10 ing ‘‘a violation of which subjects a person 

11 to criminal penalty’’; 

12 (ii) in subparagraph (B)—

13 (I) by striking ‘‘or has not paid a 

14 penalty’’ and inserting ‘‘has not paid 

15 a penalty’’; and 

16 (II) by inserting ‘‘or failed to dis17 gorge all fees ordered by the court’’ 

18 after ‘‘a penalty imposed under this 

19 section,’’; 

20 (B) by redesignating paragraph (3) as 

21 paragraph (4); and 

22 (C) by inserting after paragraph (2) the fol23 lowing: 

24 ‘‘(3) The court, as part of its contempt power, may 

25 enjoin a bankruptcy petition preparer that has failed to 
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1 comply with a previous order issued under this section. The 

2 injunction under this paragraph may be issued on the mo3 tion of the court, the trustee, or the United States trustee 

4 (or the bankruptcy administrator, if any).’’; and 

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

6 ‘‘(l)(1) A bankruptcy petition preparer who fails to 

7 comply with any provision of subsection (b), (c), (d), (e), 

8 (f), (g), or (h) may be fined not more than $500 for each 

9 such failure. 

10 ‘‘(2) The court shall triple the amount of a fine as11 sessed under paragraph (1) in any case in which the court 

12 finds that a bankruptcy petition preparer—

13 ‘‘(A) advised the debtor to exclude assets or in14 come that should have been included on applicable 

15 schedules; 

16 ‘‘(B) advised the debtor to use a false Social Se17 curity account number; 

18 ‘‘(C) failed to inform the debtor that the debtor 

19 was filing for relief under this title; or 

20 ‘‘(D) prepared a document for filing in a man21 ner that failed to disclose the identity of the bank22 ruptcy petition preparer. 

23 ‘‘(3) A debtor, trustee, creditor, or United States trust24 ee (or the bankruptcy administrator, if any) may file a mo-
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1 tion for an order imposing a fine on the bankruptcy peti2 tion preparer for any violation of this section. 

3 ‘‘(4)(A) Fines imposed under this subsection in judi4 cial districts served by United States trustees shall be paid 

5 to the United States trustee, who shall deposit an amount 

6 equal to such fines in a special account of the United States 

7 Trustee System Fund referred to in section 586(e)(2) of title 

8 28. Amounts deposited under this subparagraph shall be 

9 available to fund the enforcement of this section on a na10 tional basis. 

11 ‘‘(B) Fines imposed under this subsection in judicial 

12 districts served by bankruptcy administrators shall be de13 posited as offsetting receipts to the fund established under 

14 section 1931 of title 28, and shall remain available until 

15 expended to reimburse any appropriation for the amount 

16 paid out of such appropriation for expenses of the operation 

17 and maintenance of the courts of the United States.’’. 

18 SEC. 222. SENSE OF CONGRESS. 

19 It is the sense of Congress that States should develop 

20 curricula relating to the subject of personal finance, de21 signed for use in elementary and secondary schools. 
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1 SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED 

2 STATES CODE. 

3 Section 507(a) of title 11, United States Code, as 

4 amended by section 212, is amended by inserting after 

5 paragraph (9) the following: 

6 ‘‘(10) Tenth, allowed claims for death or per7 sonal injury resulting from the operation of a motor 

8 vehicle or vessel if such operation was unlawful be9 cause the debtor was intoxicated from using alcohol, 

10 a drug, or another substance.’’. 

11 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK12 RUPTCY. 

13 (a) IN GENERAL.—Section 522 of title 11, United 

14 States Code, is amended—

15 (1) in subsection (b)—

16 (A) in paragraph (2)—

17 (i) in subparagraph (A), by striking 

18 ‘‘and’’ at the end; 

19 (ii) in subparagraph (B), by striking 

20 the period at the end and inserting ‘‘; and’’; 

21 (iii) by adding at the end the fol22 lowing: 

23 ‘‘(C) retirement funds to the extent that those 

24 funds are in a fund or account that is exempt from 

25 taxation under section 401, 403, 408, 408A, 414, 457, 

26 or 501(a) of the Internal Revenue Code of 1986.’’; and 
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1 (iv) by striking ‘‘(2)(A) any property’’ 

2 and inserting: 

3 ‘‘(3) Property listed in this paragraph is—

4 ‘‘(A) any property’’;

5 (B) by striking paragraph (1) and insert6 ing: 

7 ‘‘(2) Property listed in this paragraph is property that 

8 is specified under subsection (d), unless the State law that 

9 is applicable to the debtor under paragraph (3)(A) specifi10 cally does not so authorize.’’; 

11 (C) by striking ‘‘(b) Notwithstanding’’ and 

12 inserting ‘‘(b)(1) Notwithstanding’’; 

13 (D) by striking ‘‘paragraph (2)’’ each place 

14 it appears and inserting ‘‘paragraph (3)’’; 

15 (E) by striking ‘‘paragraph (1)’’ each place 

16 it appears and inserting ‘‘paragraph (2)’’; 

17 (F) by striking ‘‘Such property is—’’; and 

18 (G) by adding at the end the following: 

19 ‘‘(4) For purposes of paragraph (3)(C) and subsection 

20 (d)(12), the following shall apply: 

21 ‘‘(A) If the retirement funds are in a retirement 

22 fund that has received a favorable determination 

23 under section 7805 of the Internal Revenue Code of 

24 1986, and that determination is in effect as of the 

25 date of the filing of the petition in a case under this 
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1 title, those funds shall be presumed to be exempt from 

2 the estate. 

3 ‘‘(B) If the retirement funds are in a retirement 

4 fund that has not received a favorable determination 

5 under such section 7805, those funds are exempt from 

6 the estate if the debtor demonstrates that—

7 ‘‘(i) no prior determination to the contrary 

8 has been made by a court or the Internal Rev9 enue Service; and 

10 ‘‘(ii)(I) the retirement fund is in substan11 tial compliance with the applicable requirements 

12 of the Internal Revenue Code of 1986; or 

13 ‘‘(II) the retirement fund fails to be in sub14 stantial compliance with the applicable require15 ments of the Internal Revenue Code of 1986 and 

16 the debtor is not materially responsible for that 

17 failure. 

18 ‘‘(C) A direct transfer of retirement funds from 

19 1 fund or account that is exempt from taxation under 

20 section 401, 403, 408, 408A, 414, 457, or 501(a) of 

21 the Internal Revenue Code of 1986, under section 

22 401(a)(31) of the Internal Revenue Code of 1986, or 

23 otherwise, shall not cease to qualify for exemption 

24 under paragraph (3)(C) or subsection (d)(12) by rea25 son of such direct transfer. 
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1 ‘‘(D)(i) Any distribution that qualifies as an eli2 gible rollover distribution within the meaning of sec3 tion 402(c) of the Internal Revenue Code of 1986 or 

4 that is described in clause (ii) shall not cease to qual5 ify for exemption under paragraph (3)(C) or sub6 section (d)(12) by reason of such distribution. 

7 ‘‘(ii) A distribution described in this clause is an 

8 amount that—

9 ‘‘(I) has been distributed from a fund or ac10 count that is exempt from taxation under section 

11 401, 403, 408, 408A, 414, 457, or 501(a) of the 

12 Internal Revenue Code of 1986; and 

13 ‘‘(II) to the extent allowed by law, is depos14 ited in such a fund or account not later than 60 

15 days after the distribution of such amount.’’; and 

16 (2) in subsection (d)—

17 (A) in the matter preceding paragraph (1), 

18 by striking ‘‘subsection (b)(1)’’ and inserting 

19 ‘‘subsection (b)(2)’’; and 

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

21 ‘‘(12) Retirement funds to the extent that those 

22 funds are in a fund or account that is exempt from 

23 taxation under section 401, 403, 408, 408A, 414, 457, 

24 or 501(a) of the Internal Revenue Code of 1986.’’. 
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1 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

2 United States Code, is amended—

3 (1) in paragraph (17), by striking ‘‘or’’ at the 

4 end; 

5 (2) in paragraph (18), by striking the period 

6 and inserting a semicolon; and 

7 (3) by inserting after paragraph (18) the fol8 lowing: 

9 ‘‘(19) under subsection (a), of withholding of in10 come from a debtor’s wages and collection of amounts 

11 withheld, under the debtor’s agreement authorizing 

12 that withholding and collection for the benefit of a 

13 pension, profit-sharing, stock bonus, or other plan es14 tablished under section 401, 403, 408, 408A, 414, 457, 

15 or 501(c) of the Internal Revenue Code of 1986, that 

16 is sponsored by the employer of the debtor, or an affil17 iate, successor, or predecessor of such employer—

18 ‘‘(A) to the extent that the amounts withheld 

19 and collected are used solely for payments relat20 ing to a loan from a plan under section 

21 408(b)(1) of the Employee Retirement Income 

22 Security Act of 1974 or is subject to section 

23 72(p) of the Internal Revenue Code of 1986; or 

24 ‘‘(B) a loan from a thrift savings plan per25 mitted under subchapter III of chapter 84 of title 
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1 5, that satisfies the requirements of section 

2 8433(g) of such title; 

3 but nothing in this paragraph may be construed to 

4 provide that any loan made under a governmental 

5 plan under section 414(d), or a contract or account 

6 under section 403(b), of the Internal Revenue Code of 

7 1986 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 section 215, 

10 is amended by inserting after paragraph (17) 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 72(p) 

18 of the Internal Revenue Code of 1986; or 

19 ‘‘(B) a loan from a thrift savings plan per20 mitted under subchapter III of chapter 84 of title 

21 5, that satisfies the requirements of section 

22 8433(g) of such title; 

23 but nothing in this paragraph may be construed to 

24 provide that any loan made under a governmental 

25 plan under section 414(d), or a contract or account 
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1 under section 403(b), of the Internal Revenue Code of 

2 1986 constitutes a claim or a debt under this title; 

3 or’’. 

4 (d) PLAN CONTENTS.—Section 1322 of title 11, United 

5 States Code, is amended by adding at the end the 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.—

11 (1) LIMITATION.—Section 522 of title 11, United 

12 States Code, is amended by adding at the end the fol13 lowing: 

14 ‘‘(n) For assets in individual retirement accounts de15 scribed in section 408 or 408A of the Internal Revenue Code 

16 of 1986, other than a simplified employee pension under 

17 section 408(k) of such Code or a simple retirement account 

18 under section 408(p) of such Code, the aggregate value of 

19 such assets exempted under this section, without regard to 

20 amounts attributable to rollover contributions under section 

21 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the 

22 Internal Revenue Code of 1986, and earnings thereon, shall 

23 not exceed $1,000,000 in a case filed by a debtor who is 

24 an individual, except that such amount may be increased 

25 if the interests of justice so require.’’. 
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1 (2) ADJUSTMENT OF DOLLAR AMOUNTS.—Para2 graphs (1) and (2) of section 104(b) of title 11, 

3 United States Code, are amended by inserting 

4 ‘‘522(n),’’ after ‘‘522(d),’’. 

5 SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK6 RUPTCY. 

7 (a) EXCLUSIONS.—Section 541 of title 11, United 

8 States Code, is amended—

9 (1) in subsection (b)—

10 (A) in paragraph (4), by striking ‘‘or’’ at 

11 the end; 

12 (B) by redesignating paragraph (5) as 

13 paragraph (9); and 

14 (C) by inserting after paragraph (4) the fol15 lowing: 

16 ‘‘(5) funds placed in an education individual re17 tirement account (as defined in section 530(b)(1) of 

18 the Internal Revenue Code of 1986) not later than 

19 365 days before the date of the filing of the petition 

20 in a case under this title, but—

21 ‘‘(A) only if the designated beneficiary of 

22 such account was a child, stepchild, grandchild, 

23 or stepgrandchild of the debtor for the taxable 

24 year for which funds were placed in such ac25 count; 
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1 ‘‘(B) only to the extent that such funds—

2 ‘‘(i) are not pledged or promised to 

3 any entity in connection with any extension 

4 of credit; and 

5 ‘‘(ii) are not excess contributions (as 

6 described in section 4973(e) of the Internal 

7 Revenue Code of 1986); and 

8 ‘‘(C) in the case of funds placed in all such 

9 accounts having the same designated beneficiary 

10 not earlier than 720 days nor later than 365 

11 days before such date, only so much of such 

12 funds as does not exceed $5,000; 

13 ‘‘(6) funds used to purchase a tuition credit or 

14 certificate or contributed to an account in accordance 

15 with section 529(b)(1)(A) of the Internal Revenue 

16 Code of 1986 under a qualified State tuition program 

17 (as defined in section 529(b)(1) of such Code) not 

18 later than 365 days before the date of the filing of the 

19 petition in a case under this title, but—

20 ‘‘(A) only if the designated beneficiary of 

21 the amounts paid or contributed to such tuition 

22 program was a child, stepchild, grandchild, or 

23 stepgrandchild of the debtor for the taxable year 

24 for which funds 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 the 

8 petition in a case under this title by the annual 

9 increase or decrease (rounded to the nearest tenth 

10 of 1 percent) in the education expenditure cat11 egory of the Consumer Price Index prepared by 

12 the Department of Labor; and 

13 ‘‘(C) in the case of funds paid or contrib14 uted to such program having the same designated 

15 beneficiary not earlier than 720 days nor later 

16 than 365 days before such date, only so much of 

17 such funds as does not exceed $5,000;’’; and 

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

19 ‘‘(e) In determining whether any of the relationships 

20 specified in paragraph (5)(A) or (6)(A) of subsection (b) 

21 exists, a legally adopted child of an individual (and a child 

22 who is a member of an individual’s household, if placed 

23 with such individual by an authorized placement agency 

24 for legal adoption by such individual), or a foster child of 

25 an individual (if such child has as the child’s principal 
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1 place of abode the home of the debtor and is a member of 

2 the debtor’s household) shall be treated as a child of such 

3 individual by blood.’’. 

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

5 United States Code, as amended by section 106, is amended 

6 by adding at the end the following: 

7 ‘‘(c) In addition to meeting the requirements under 

8 subsection (a), a debtor shall file with the court a record 

9 of any interest that a debtor has in an education individual 

10 retirement account (as defined in section 530(b)(1) of the 

11 Internal Revenue Code of 1986) or under a qualified State 

12 tuition program (as defined in section 529(b)(1) of such 

13 Code).’’. 

14 SEC. 226. DEFINITIONS. 

15 (a) DEFINITIONS.—Section 101 of title 11, United 

16 States Code, is amended—

17 (1) by inserting after paragraph (2) the fol18 lowing: 

19 ‘‘(3) ‘assisted person’ means any person whose 

20 debts consist primarily of consumer debts and the 

21 value of whose nonexempt property is less than 

22 $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’ meeting 

6 or appearing in a proceeding on behalf of another or 

7 providing legal representation with respect to a case 

8 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 in16 clude—

17 ‘‘(A) any person who is an officer, director, 

18 employee, or agent of a person who provides such 

19 assistance or of the bankruptcy petition pre20 parer; 

21 ‘‘(B) a nonprofit organization that is ex22 empt from taxation under section 501(c)(3) of 

23 the Internal Revenue Code of 1986; 

24 ‘‘(C) a creditor of such assisted person, to 

25 the extent that the creditor is assisting such as-
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1 sisted person to restructure any debt owed by 

2 such assisted person to the creditor; 

3 ‘‘(D) a depository institution (as defined in 

4 section 3 of the Federal Deposit Insurance Act) 

5 or any Federal credit union or State credit 

6 union (as those terms are defined in section 101 

7 of the Federal Credit Union Act), or any affiliate 

8 or subsidiary of such depository institution or 

9 credit union; or 

10 ‘‘(E) an author, publisher, distributor, or 

11 seller of works subject to copyright protection 

12 under title 17, when acting in such capacity.’’. 

13 (b) CONFORMING AMENDMENT.—Section 104(b) of title 

14 11, United States Code, is amended by inserting ‘‘101(3),’’ 

15 after ‘‘sections’’ each place it appears. 

16 SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES. 

17 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

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

19 end the following: 

20 ‘‘§ 526. Restrictions on debt relief agencies 

21 ‘‘(a) A debt relief agency shall not—

22 ‘‘(1) fail to perform any service that such agency 

23 informed an assisted person or prospective assisted 

24 person it would provide in connection with a case or 

25 proceeding under this title; 
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1 ‘‘(2) make any statement, or counsel or advise 

2 any assisted person or prospective assisted person to 

3 make a statement in a document filed in a case or 

4 proceeding under this title, that is untrue and mis5 leading, or that upon the exercise of reasonable care, 

6 should have been known by such agency to be untrue 

7 or misleading; 

8 ‘‘(3) misrepresent to any assisted person or pro9 spective assisted person, directly or indirectly, affirm10 atively or by material omission, with respect to—

11 ‘‘(A) the services that such agency will pro12 vide to such person; or 

13 ‘‘(B) the benefits and risks that may result 

14 if such person becomes a debtor in a case under 

15 this title; or 

16 ‘‘(4) advise an assisted person or prospective as17 sisted person to incur more debt in contemplation of 

18 such person filing a case under this title or to pay 

19 an attorney or bankruptcy petition preparer fee or 

20 charge for services performed as part of preparing for 

21 or representing a debtor in a case under this 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 between 

4 a debt relief agency and an assisted person that does not 

5 comply with the material requirements of this section, sec6 tion 527, or section 528 shall be void and may not be en7 forced by any Federal or State court or by any other person, 

8 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 such 

14 agency is found, after notice and a hearing, to have—

15 ‘‘(A) intentionally or negligently failed to com16 ply with any provision of this section, section 527, or 

17 section 528 with respect to a case or proceeding under 

18 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 another 

22 chapter of this title because of such agency’s inten23 tional or negligent failure to file any required docu24 ment 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 provided 

6 under State law, whenever the chief law enforcement officer 

7 of a State, or an official or agency designated by a State, 

8 has reason to believe that any person has violated or is vio9 lating 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 persons 

14 arising from such violation, including any liability 

15 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 attorneys’ fees as deter19 mined by the court. 

20 ‘‘(4) The district courts of the United States for dis21 tricts located in the State shall have concurrent jurisdiction 

22 of 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 the motion of the United States trustee or the debtor, 

3 finds that a person intentionally violated this section, or 

4 engaged 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 law 

13 of any State except to the extent that such law is in14 consistent with those sections, and then only to the ex15 tent 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 sections 

2 for chapter 5 of title 11, United States Code, is amended 

3 by inserting after the item relating to section 525, the fol4 lowing:

‘‘526. Restrictions on debt relief agencies.’’.

5 SEC. 228. DISCLOSURES. 

6 (a) DISCLOSURES.—Subchapter II of chapter 5 of title 

7 11, United States Code, as amended by section 227, 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); and 

14 ‘‘(2) to the extent not covered in the written no15 tice described in paragraph (1), and not later than 3 

16 business days after the first date on which a debt re17 lief agency first offers to provide any bankruptcy as18 sistance 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, and 

4 the replacement value of each asset as defined in 

5 section 506 must be stated in those documents 

6 where requested after reasonable inquiry to estab7 lish such value; 

8 ‘‘(C) current monthly income, the amounts 

9 specified in section 707(b)(2), and, in a case 

10 under chapter 13 of this title, disposable income 

11 (determined in accordance with section 

12 707(b)(2)), are required to be stated after reason13 able inquiry; 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 case under this title or other sanction, including 

19 a criminal sanction. 

20 ‘‘(b) A debt relief agency providing bankruptcy assist21 ance to an assisted person shall provide each assisted person 

22 at the same time as the notices required under subsection 

23 (a)(1) the following statement, to the extent applicable, or 

24 one substantially similar. The statement shall be clear and 

25 conspicuous and shall be in a single document separate 
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1 from other documents or notices provided to the assisted 

2 person: 

3 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK4 RUPTCY ASSISTANCE SERVICES FROM AN ATTOR5 NEY OR BANKRUPTCY PETITION PREPARER. 

6 ‘‘ ‘If you decide to seek bankruptcy relief, you can rep7 resent yourself, you can hire an attorney to represent you, 

8 or you can get help in some localities from a bankruptcy 

9 petition preparer who is not an attorney. THE LAW RE10 QUIRES AN ATTORNEY OR BANKRUPTCY PETI11 TION PREPARER TO GIVE YOU A WRITTEN CON12 TRACT SPECIFYING WHAT THE ATTORNEY OR 

13 BANKRUPTCY PETITION PREPARER WILL DO FOR 

14 YOU AND HOW MUCH IT WILL COST. Ask to see the 

15 contract before you hire anyone. 

16 ‘‘ ‘The following information helps you understand 

17 what must be done in a routine bankruptcy case to help 

18 you evaluate how much service you need. Although bank19 ruptcy can be complex, many cases are routine. 

20 ‘‘ ‘Before filing a bankruptcy case, either you or your 

21 attorney should analyze your eligibility for different forms 

22 of debt relief available under the Bankruptcy Code and 

23 which form of relief is most likely to be beneficial for you. 

24 Be sure you understand the relief you can obtain and its 

25 limitations. To file a bankruptcy case, documents called a 
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1 Petition, Schedules and Statement of Financial Affairs, as 

2 well as in some cases a Statement of Intention need to be 

3 prepared correctly and filed with the bankruptcy court. You 

4 will have to pay a filing fee to the bankruptcy court. Once 

5 your case starts, you will have to attend the required first 

6 meeting of creditors where you may be questioned by a court 

7 official called a ‘trustee’ and by creditors. 

8 ‘‘ ‘If you choose to file a chapter 7 case, you may be 

9 asked by a creditor to reaffirm a debt. You may want help 

10 deciding whether to do so. A creditor is not permitted to 

11 coerce you into reaffirming your debts. 

12 ‘‘ ‘If you choose to file a chapter 13 case in which you 

13 repay your creditors what you can afford over 3 to 5 years, 

14 you may also want help with preparing your chapter 13 

15 plan and with the confirmation hearing on your plan which 

16 will be before a bankruptcy judge. 

17 ‘‘ ‘If you select another type of relief under the Bank18 ruptcy Code other than chapter 7 or chapter 13, you will 

19 want to find out what should be done from someone familiar 

20 with that type of relief.

21 ‘‘ ‘Your bankruptcy case may also involve litigation. 

22 You are generally permitted to represent yourself in litiga23 tion in bankruptcy court, but only attorneys, not bank24 ruptcy petition preparers, can give you legal advice.’. 
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1 ‘‘(c) Except to the extent the debt relief agency provides 

2 the required information itself after reasonably diligent in3 quiry of the assisted person or others so as to obtain such 

4 information reasonably accurately for inclusion on the peti5 tion, schedules or statement of financial affairs, a debt relief 

6 agency providing bankruptcy assistance to an assisted per7 son, to the extent permitted by nonbankruptcy law, shall 

8 provide each assisted person at the time required for the 

9 notice required under subsection (a)(1) reasonably sufficient 

10 information (which shall be provided in a clear and con11 spicuous writing) to the assisted person on how to provide 

12 all the information the assisted person is required to pro13 vide under this title pursuant to section 521, including—

14 ‘‘(1) how to value assets at replacement value, 

15 determine current monthly income, the amounts spec16 ified in section 707(b)(2) and, in a chapter 13 case, 

17 how to determine disposable income in accordance 

18 with section 707(b)(2) and related calculations; 

19 ‘‘(2) how to complete the list of creditors, includ20 ing how to determine what amount is owed and what 

21 address for the creditor should be shown; and 

22 ‘‘(3) how to determine what property is exempt 

23 and how to value exempt property at replacement 

24 value as defined in section 506. 
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1 ‘‘(d) A debt relief agency shall maintain a copy of the 

2 notices required under subsection (a) of this section for 2 

3 years after the date on which the notice is given the assisted 

4 person.’’. 

5 (b) CONFORMING AMENDMENT.—The table of sections 

6 for chapter 5 of title 11, United States Code, as amended 

7 by section 227, is amended by inserting after the item relat8 ing to section 526 the following:

‘‘527. Disclosures.’’.

9 SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES. 

10 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

11 title 11, United States Code, as amended by sections 227 

12 and 228, is amended by adding at the end the following: 

13 ‘‘§ 528. Requirements for debt relief agencies 

14 ‘‘(a) A debt relief agency shall—

15 ‘‘(1) not later than 5 business days after the first 

16 date on which such agency provides any bankruptcy 

17 assistance services to an assisted person, but prior to 

18 such assisted person’s petition under this title being 

19 filed, execute a written contract with such assisted 

20 person that explains clearly and conspicuously—

21 ‘‘(A) the services such agency will provide to 

22 such assisted person; and 

23 ‘‘(B) the fees or charges for such services, 

24 and the terms of payment; 
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1 ‘‘(2) provide the assisted person with a copy of 

2 the fully executed and completed contract; 

3 ‘‘(3) clearly and conspicuously disclose in any 

4 advertisement of bankruptcy assistance services or of 

5 the benefits of bankruptcy directed to the general pub6 lic (whether in general media, seminars or specific 

7 mailings, telephonic or electronic messages, or other8 wise) that the services or benefits are with respect to 

9 bankruptcy relief under this title; and 

10 ‘‘(4) clearly and conspicuously use the following 

11 statement in such advertisement: ‘We are a debt relief 

12 agency. We help people file for bankruptcy relief 

13 under the Bankruptcy Code.’ or a substantially simi14 lar statement. 

15 ‘‘(b)(1) An advertisement of bankruptcy assistance 

16 services or of the benefits of bankruptcy directed to the gen17 eral public includes—

18 ‘‘(A) descriptions of bankruptcy assistance in 

19 connection with a chapter 13 plan whether or not 

20 chapter 13 is specifically mentioned in such advertise21 ment; and 

22 ‘‘(B) statements such as ‘federally supervised re23 payment plan’ or ‘Federal debt restructuring help’ or 

24 other similar statements that could lead a reasonable 

25 consumer to believe that debt counseling was being of-
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1 fered when in fact the services were directed to pro2 viding bankruptcy assistance with a chapter 13 plan 

3 or other form of bankruptcy relief under this title. 

4 ‘‘(2) An advertisement, directed to the general public, 

5 indicating that the debt relief agency provides assistance 

6 with respect to credit defaults, mortgage foreclosures, evic7 tion proceedings, excessive debt, debt collection pressure, or 

8 inability to pay any consumer debt shall— 

9 ‘‘(A) disclose clearly and conspicuously in such 

10 advertisement that the assistance may involve bank11 ruptcy relief under this title; and 

12 ‘‘(B) include the following statement: ‘We are a 

13 debt relief agency. We help people file for bankruptcy 

14 relief under the Bankruptcy Code.’ or a substantially 

15 similar statement.’’. 

16 (b) CONFORMING AMENDMENT.—The table of sections 

17 for chapter 5 of title 11, United States Code, as amended 

18 by section 227 and 228, is amended by inserting after the 

19 item relating to section 527, the following:

‘‘528. Requirements for debt relief agencies.’’.

20 SEC. 230. GAO STUDY. 

21 (a) STUDY.—Not later than 270 days after the date 

22 of enactment of this Act, the Comptroller General of the 

23 United States shall conduct a study of the feasibility, effec24 tiveness, and cost of requiring trustees appointed under title 

25 11, United States Code, or the bankruptcy courts, to provide 
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1 to the Office of Child Support Enforcement promptly after 

2 the commencement of cases by debtors who are individuals 

3 under such title, the names and social security account 

4 numbers of such debtors for the purposes of allowing such 

5 Office to determine whether such debtors have outstanding 

6 obligations for child support (as determined on the basis 

7 of information in the Federal Case Registry or other na8 tional database). 

9 (b) REPORT.—Not later than 300 days after the date 

10 of enactment of this Act, the Comptroller General shall sub11 mit to the President pro tempore of the Senate and the 

12 Speaker of the House of Representatives a report containing 

13 the results of the study required by subsection (a).

14 SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE IN15 FORMATION. 

16 (a) LIMITATION.—Section 363(b)(1) of title 11, United 

17 States Code, is amended by striking the period at the end 

18 and inserting the following: 

19 ‘‘, except that if the debtor in connection with offering a 

20 product or a service discloses to an individual a policy pro21 hibiting the transfer of personally identifiable information 

22 about individuals to persons that are not affiliated with 

23 the debtor and if such policy is in effect on the date of the 

24 commencement of the case, then the trustee may not sell or 
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1 lease personally identifiable information to any person un2 less—

3 ‘‘(A) such sale or such lease is consistent with 

4 such policy; or 

5 ‘‘(B) after appointment of a consumer privacy 

6 ombudsman in accordance with section 332, and after 

7 notice and a hearing, the court approves such sale or 

8 such lease—

9 ‘‘(i) giving due consideration to the facts, 

10 circumstances, and conditions of such sale or 

11 such lease; and 

12 ‘‘(ii) finding that no showing was made 

13 that such sale or such lease would violate appli14 cable nonbankruptcy law.’’.

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

16 States Code, is amended by inserting after paragraph (41) 

17 the following: 

18 ‘‘(41A) ‘personally identifiable information’ 

19 means—

20 ‘‘(A) if provided by an individual to the 

21 debtor in connection with obtaining a product or 

22 a service from the debtor primarily for personal, 

23 family, or household purposes—

24 ‘‘(i) the first name (or initial) and last 

25 name of such individual, whether given at 
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1 birth or time of adoption, or resulting from 

2 a lawful change of name; 

3 ‘‘(ii) the geographical address of a 

4 physical place of residence of such indi5 vidual; 

6 ‘‘(iii) an electronic address (including 

7 an e-mail address) of such individual; 

8 ‘‘(iv) a telephone number dedicated to 

9 contacting such individual at such physical 

10 place of residence; 

11 ‘‘(v) a social security account number 

12 issued to such individual; or 

13 ‘‘(vi) the account number of a credit 

14 card issued to such individual; or 

15 ‘‘(B) if identified in connection with 1 or 

16 more of the items of information specified in 

17 subparagraph (A)—

18 ‘‘(i) a birth date, the number of a cer19 tificate of birth or adoption, or a place of 

20 birth; or 

21 ‘‘(ii) any other information concerning 

22 an identified individual that, if disclosed, 

23 will result in contacting or identifying such 

24 individual physically or electronically;’’.
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1 SEC. 232. CONSUMER PRIVACY OMBUDSMAN. 

2 (a) CONSUMER PRIVACY OMBUDSMAN.—Title 11 of the 

3 United States Code is amended by inserting after section 

4 331 the following: 

5 ‘‘§ 332. Consumer privacy ombudsman 

6 ‘‘(a) If a hearing is required under section 

7 363(b)(1)(B), the court shall order the United States trustee 

8 to appoint, not later than 5 days before the commencement 

9 of the hearing, 1 disinterested person (other than the United 

10 States trustee) to serve as the consumer privacy ombudsman 

11 in the case and shall require that notice of such hearing 

12 be timely given to such ombudsman. 

13 ‘‘(b) The consumer privacy ombudsman may appear 

14 and be heard at such hearing and shall provide to the court 

15 information to assist the court in its consideration of the 

16 facts, circumstances, and conditions of the proposed sale or 

17 lease of personally identifiable information under section 

18 363(b)(1)(B). Such information may include presentation 

19 of—

20 ‘‘(1) the debtor’s privacy policy; 

21 ‘‘(2) the potential losses or gains of privacy to 

22 consumers if such sale or such lease is approved by 

23 the court; 

24 ‘‘(3) the potential costs or benefits to consumers 

25 if such sale or such lease is approved by the court; 

26 and 
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1 ‘‘(4) the potential alternatives that would miti2 gate potential privacy losses or potential costs to con3 sumers. 

4 ‘‘(c) A consumer privacy ombudsman shall not disclose 

5 any personally identifiable information obtained by the om6 budsman under this title.’’. 

7 (b) COMPENSATION OF CONSUMER PRIVACY OMBUDS8 MAN.—Section 330(a)(1) of title 11, United States Code, is 

9 amended in the matter preceding subparagraph (A), by in10 serting ‘‘a consumer privacy ombudsman appointed under 

11 section 332,’’ before ‘‘an examiner’’. 

12 (c) CONFORMING AMENDMENT.—The table of sections 

13 for subchapter II of chapter 3 of title 11, United States 

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

‘‘332. Consumer privacy ombudsman.’’.

15 SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF 

16 MINOR CHILDREN. 

17 (a) PROHIBITION.—Title 11 of the United States Code, 

18 as amended by section 106, is amended by inserting after 

19 section 111 the following: 

20 ‘‘§ 112. Prohibition on disclosure of name of minor 

21 children 

22 ‘‘The debtor may be required to provide information 

23 regarding a minor child involved in matters under this title 

24 but may not be required to disclose in the public records 

25 in the case the name of such minor child. The debtor may 
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1 be required to disclose the name of such minor child in a 

2 nonpublic record that is maintained by the court and made 

3 available by the court for examination by the United States 

4 trustee, the trustee, and the auditor (if any) serving under 

5 section 586(f) of title 28, in the case. The court, the United 

6 States trustee, the trustee, and such auditor shall not dis7 close the name of such minor child maintained in such non8 public record.’’. 

9 (b) CLERICAL AMENDMENT.—The table of sections for 

10 chapter 1 of title 11, United States Code, as amended by 

11 section 106, is amended by inserting after the item relating 

12 to section 111 the following:

‘‘112. Prohibition on disclosure of name of minor children.’’.

13 (c) CONFORMING AMENDMENT.—Section 107(a) of title 

14 11, United States Code, is amended by inserting ‘‘and sub15 ject to section 112’’ after ‘‘section’’. 

16 TITLE III —DISCOURAGING 

17 BANKRUPTCY ABUSE 

18 SEC. 301. TECHNICAL AMENDMENTS. 

19 Section 523(a)(17) of title 11, United States Code, is 

20 amended—

21 (1) by striking ‘‘by a court’’ and inserting ‘‘on 

22 a prisoner by any court’’; 

23 (2) by striking ‘‘section 1915(b) or (f)’’ and in24 serting ‘‘subsection (b) or (f)(2) of section 1915’’; and 
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1 (3) by inserting ‘‘(or a similar non-Federal 

2 law)’’ after ‘‘title 28’’ each place it appears. 

3 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS. 

4 Section 362(c) of title 11, United States Code, is 

5 amended—

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

7 end; 

8 (2) in paragraph (2), by striking the period at 

9 the end and inserting a semicolon; and 

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

11 ‘‘(3) if a single or joint case is filed by or 

12 against debtor who is an individual in a case under 

13 chapter 7, 11, or 13, and if a single or joint case of 

14 the debtor was pending within the preceding 1-year 

15 period but was dismissed, other than a case refiled 

16 under a chapter other than chapter 7 after dismissal 

17 under section 707(b)—

18 ‘‘(A) the stay under subsection (a) with re19 spect to any action taken with respect to a debt 

20 or property securing such debt or with respect to 

21 any lease shall terminate with respect to the 

22 debtor on the 30th day after the filing of the 

23 later case; 

24 ‘‘(B) on the motion of a party in interest 

25 for continuation of the automatic stay and upon 
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1 notice and a hearing, the court may extend the 

2 stay in particular cases as to any or all creditors 

3 (subject to such conditions or limitations as the 

4 court may then impose) after notice and a hear5 ing completed before the expiration of the 30-day 

6 period only if the party in interest demonstrates 

7 that the filing of the later case is in good faith 

8 as to the creditors to be stayed; and 

9 ‘‘(C) for purposes of subparagraph (B), a 

10 case is presumptively filed not in good faith (but 

11 such presumption may be rebutted by clear and 

12 convincing evidence to the contrary)—

13 ‘‘(i) as to all creditors, if—

14 ‘‘(I) more than 1 previous case 

15 under any of chapters 7, 11, and 13 in 

16 which the individual was a debtor was 

17 pending within the preceding 1-year 

18 period; 

19 ‘‘(II) a previous case under any of 

20 chapters 7, 11, and 13 in which the in21 dividual was a debtor was dismissed 

22 within such 1-year period, after the 

23 debtor failed to—

24 ‘‘(aa) file or amend the peti25 tion or other documents as re-
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1 quired by this title or the court 

2 without substantial excuse (but 

3 mere inadvertence or negligence 

4 shall not be a substantial excuse 

5 unless the dismissal was caused 

6 by the negligence of the debtor’s 

7 attorney); 

8 ‘‘(bb) provide adequate pro9 tection as ordered by the court; or 

10 ‘‘(cc) perform the terms of a 

11 plan confirmed by the court; or 

12 ‘‘(III) there has not been a sub13 stantial change in the financial or per14 sonal affairs of the debtor since the dis15 missal of the next most previous case 

16 under chapter 7, 11, or 13 or any other 

17 reason to conclude that the later case 

18 will be concluded—

19 ‘‘(aa) if a case under chapter 

20 7, with a discharge; or 

21 ‘‘(bb) if a case under chapter 

22 11 or 13, with a confirmed plan 

23 that will be fully performed; and 

24 ‘‘(ii) as to any creditor that com25 menced an action under subsection (d) in a 
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1 previous case in which the individual was 

2 a debtor if, as of the date of dismissal of 

3 such case, that action was still pending or 

4 had been resolved by terminating, condi5 tioning, or limiting the stay as to actions of 

6 such creditor; and 

7 ‘‘(4)(A)(i) if a single or joint case is filed by or 

8 against a debtor who is an individual under this 

9 title, and if 2 or more single or joint cases of the debt10 or were pending within the previous year but were 

11 dismissed, other than a case refiled under section 

12 707(b), the stay under subsection (a) shall not go into 

13 effect upon the filing of the later case; and 

14 ‘‘(ii) on request of a party in interest, the court 

15 shall promptly enter an order confirming that no stay 

16 is in effect; 

17 ‘‘(B) if, within 30 days after the filing of the 

18 later case, a party in interest requests the court may 

19 order the stay to take effect in the case as to any or 

20 all creditors (subject to such conditions or limitations 

21 as the court may impose), after notice and a hearing, 

22 only if the party in interest demonstrates that the fil23 ing of the later case is in good faith as to the creditors 

24 to be stayed; 
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1 ‘‘(C) a stay imposed under subparagraph (B) 

2 shall be effective on the date of the entry of the order 

3 allowing the stay to go into effect; and 

4 ‘‘(D) for purposes of subparagraph (B), a case is 

5 presumptively filed not in good faith (but such pre6 sumption may be rebutted by clear and convincing 

7 evidence to the contrary)—

8 ‘‘(i) as to all creditors if—

9 ‘‘(I) 2 or more previous cases under 

10 this title in which the individual was a 

11 debtor were pending within the 1-year pe12 riod; 

13 ‘‘(II) a previous case under this title in 

14 which the individual was a debtor was dis15 missed within the time period stated in this 

16 paragraph after the debtor failed to file or 

17 amend the petition or other documents as 

18 required by this title or the court without 

19 substantial excuse (but mere inadvertence or 

20 negligence shall not be substantial excuse 

21 unless the dismissal was caused by the neg22 ligence of the debtor’s attorney), failed to 

23 provide adequate protection as ordered by 

24 the court, or failed to perform the terms of 

25 a plan confirmed by the court; or 
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1 ‘‘(III) there has not been a substantial 

2 change in the financial or personal affairs 

3 of the debtor since the dismissal of the next 

4 most previous case under this title, or any 

5 other reason to conclude that the later case 

6 will not be concluded, if a case under chap7 ter 7, with a discharge, and if a case under 

8 chapter 11 or 13, with a confirmed plan 

9 that will be fully performed; or 

10 ‘‘(ii) as to any creditor that commenced an 

11 action under subsection (d) in a previous case in 

12 which the individual was a debtor if, as of the 

13 date of dismissal of such case, such action was 

14 still pending or had been resolved by termi15 nating, conditioning, or limiting the stay as to 

16 such action of such creditor.’’. 

17 SEC. 303. CURBING ABUSIVE FILINGS. 

18 (a) IN GENERAL.—Section 362(d) of title 11, United 

19 States Code, is amended—

20 (1) in paragraph (2), by striking ‘‘or’’ at the 

21 end; 

22 (2) in paragraph (3), by striking the period at 

23 the end and inserting ‘‘; or’’; and 

24 (3) by adding at the end the following: 
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1 ‘‘(4) with respect to a stay of an act against real 

2 property under subsection (a), by a creditor whose 

3 claim is secured by an interest in such real property, 

4 if the court finds that the filing of the petition was 

5 part of a scheme to delay, hinder, and defraud credi6 tors that involved either—

7 ‘‘(A) transfer of all or part ownership of, or 

8 other interest in, such real property without the 

9 consent of the secured creditor or court approval; 

10 or 

11 ‘‘(B) multiple bankruptcy filings affecting 

12 such real property. 

13 If recorded in compliance with applicable State laws gov14 erning notices of interests or liens in real property, an order 

15 entered under paragraph (4) shall be binding in any other 

16 case under this title purporting to affect such real property 

17 filed not later than 2 years after the date of the entry of 

18 such order by the court, except that a debtor in a subsequent 

19 case under this title may move for relief from such order 

20 based upon changed circumstances or for good cause shown, 

21 after notice and a hearing. Any Federal, State, or local gov22 ernmental unit that accepts notices of interests or liens in 

23 real property shall accept any certified copy of an order 

24 described in this subsection for indexing and recording.’’. 
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1 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

2 United States Code, as amended by section 224, is amended 

3 by inserting after paragraph (19), the following: 

4 ‘‘(20) under subsection (a), of any act to enforce 

5 any lien against or security interest in real property 

6 following entry of the order under subsection (d)(4) as 

7 to such real property in any prior case under this 

8 title, for a period of 2 years after the date of the entry 

9 of such an order, except that the debtor, in a subse10 quent case under this title, may move for relief from 

11 such order based upon changed circumstances or for 

12 other good cause shown, after notice and a hearing; 

13 ‘‘(21) under subsection (a), of any act to enforce 

14 any lien against or security interest in real prop15 erty—

16 ‘‘(A) if the debtor is ineligible under section 

17 109(g) to be a debtor in a case under this title; 

18 or 

19 ‘‘(B) if the case under this title was filed in 

20 violation of a bankruptcy court order in a prior 

21 case under this title prohibiting the debtor from 

22 being a debtor in another case under this title;’’. 

23 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY 

24 SECURITY. 

25 Title 11, United States Code, is amended—
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1 (1) in section 521(a), as so designated by section 

2 106—

3 (A) in paragraph (4), by striking ‘‘, and’’ 

4 at the end and inserting a semicolon; 

5 (B) in paragraph (5), by striking the period 

6 at the end and inserting ‘‘; and’’; and 

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

8 ‘‘(6) in a case under chapter 7 of this title in 

9 which the debtor is an individual, not retain posses10 sion of personal property as to which a creditor has 

11 an allowed claim for the purchase price secured in 

12 whole or in part by an interest in such personal 

13 property unless the debtor, not later than 45 days 

14 after the first meeting of creditors under section 

15 341(a), either—

16 ‘‘(A) enters into an agreement with the 

17 creditor pursuant to section 524(c) with respect 

18 to the claim secured by such property; or 

19 ‘‘(B) redeems such property from the secu20 rity interest pursuant to section 722. 

21 If the debtor fails to so act within the 45-day period referred 

22 to in paragraph (6), the stay under section 362(a) is termi23 nated with respect to the personal property of the estate or 

24 of the debtor which is affected, such property shall no longer 

25 be property of the estate, and the creditor may take what-
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1 ever action as to such property as is permitted by applica2 ble nonbankruptcy law, unless the court determines on the 

3 motion of the trustee filed before the expiration of such 45-

4 day period, and after notice and a hearing, that such prop5 erty is of consequential value or benefit to the estate, orders 

6 appropriate adequate protection of the creditor’s interest, 

7 and orders the debtor to deliver any collateral in the debtor’s 

8 possession to the trustee.’’; and 

9 (2) in section 722, by inserting ‘‘in full at the 

10 time of redemption’’ before the period at the end. 

11 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE 

12 DEBTOR DOES NOT COMPLETE INTENDED 

13 SURRENDER OF CONSUMER DEBT COLLAT14 ERAL. 

15 Title 11, United States Code, is amended—

16 (1) in section 362, as amended by section 106—

17 (A) in subsection (c), by striking ‘‘(e), and 

18 (f)’’ and inserting ‘‘(e), (f), and (h)’’; 

19 (B) by redesignating subsection (h) as sub20 section (k) and transferring such subsection so as 

21 to insert it after subjection (j) as added by sec22 tion 106; and 

23 (C) by inserting after subsection (g) the fol24 lowing: 
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1 ‘‘(h)(1) In a case in which the debtor is an individual, 

2 the stay provided by subsection (a) is terminated with re3 spect to personal property of the estate or of the debtor se4 curing in whole or in part a claim, or subject to an unex5 pired lease, and such personal property shall no longer be 

6 property of the estate if the debtor fails within the applica7 ble time set by section 521(a)(2)—

8 ‘‘(A) to file timely any statement of intention re9 quired under section 521(a)(2) with respect to such 

10 personal property or to indicate in such statement 

11 that the debtor will either surrender such personal 

12 property or retain it and, if retaining such personal 

13 property, either redeem such personal property pursu14 ant to section 722, enter into an agreement of the 

15 kind specified in section 524(c) applicable to the debt 

16 secured by such personal property, or assume such 

17 unexpired lease pursuant to section 365(p) if the 

18 trustee does not do so, as applicable; and 

19 ‘‘(B) to take timely the action specified in such 

20 statement, as it may be amended before expiration of 

21 the period for taking action, unless such statement 

22 specifies the debtor’s intention to reaffirm such debt 

23 on the original contract terms and the creditor refuses 

24 to agree to the reaffirmation on such terms. 
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1 ‘‘(2) Paragraph (1) does not apply if the court deter2 mines, on the motion of the trustee filed before the expira3 tion of the applicable time set by section 521(a)(2), after 

4 notice and a hearing, that such personal property is of con5 sequential value or benefit to the estate, and orders appro6 priate adequate protection of the creditor’s interest, and or7 ders the debtor to deliver any collateral in the debtor’s pos8 session to the trustee. If the court does not so determine, 

9 the stay provided by subsection (a) shall terminate upon 

10 the conclusion of the hearing on the motion.’’; and 

11 (2) in section 521, as amended by sections 106 

12 and 225—

13 (A) in subsection (a)(2) by striking ‘‘con14 sumer’’; 

15 (B) in subsection (a)(2)(B)—

16 (i) by striking ‘‘forty-five days after 

17 the filing of a notice of intent under this 

18 section’’ and inserting ‘‘30 days after the 

19 first date set for the meeting of creditors 

20 under section 341(a)’’; and 

21 (ii) by striking ‘‘forty-five day’’ and 

22 inserting ‘‘30-day’’; 

23 (C) in subsection (a)(2)(C) by inserting ‘‘, 

24 except as provided in section 362(h)’’ before the 

25 semicolon; and 
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1 (D) by adding at the end the following: 

2 ‘‘(d) If the debtor fails timely to take the action speci3 fied in subsection (a)(6) of this section, or in paragraphs 

4 (1) and (2) of section 362(h), with respect to property which 

5 a lessor or bailor owns and has leased, rented, or bailed 

6 to the debtor or as to which a creditor holds a security inter7 est not otherwise voidable under section 522(f), 544, 545, 

8 547, 548, or 549, nothing in this title shall prevent or limit 

9 the operation of a provision in the underlying lease or 

10 agreement that has the effect of placing the debtor in default 

11 under such lease or agreement by reason of the occurrence, 

12 pendency, or existence of a proceeding under this title or 

13 the insolvency of the debtor. Nothing in this subsection shall 

14 be deemed to justify limiting such a provision in any other 

15 circumstance.’’. 

16 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT 

17 IN CHAPTER 13. 

18 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title 11, 

19 United States Code, is amended to read as follows: 

20 ‘‘(i) the plan provides that—

21 ‘‘(I) the holder of such claim retain the 

22 lien securing such claim until the earlier 

23 of—
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1 ‘‘(aa) the payment of the under2 lying debt determined under nonbank3 ruptcy law; or 

4 ‘‘(bb) discharge under section 

5 1328; and 

6 ‘‘(II) if the case under this chapter is 

7 dismissed or converted without completion 

8 of the plan, such lien shall also be retained 

9 by such holder to the extent recognized by 

10 applicable nonbankruptcy law; and’’.

11 (b) RESTORING THE FOUNDATION FOR SECURED

12 CREDIT.—Section 1325(a) of title 11, United States Code, 

13 is amended by adding at the end the following: 

14 ‘‘For purposes of paragraph (5), section 506 shall not apply 

15 to a claim described in that paragraph if the creditor has 

16 a purchase money security interest securing the debt that 

17 is the subject of the claim, the debt was incurred within 

18 the 910-day preceding the date of the filing of the petition, 

19 and the collateral for that debt consists of a motor vehicle 

20 (as defined in section 30102 of title 49) acquired for the 

21 personal use of the debtor, or if collateral for that debt con22 sists of any other thing of value, if the debt was incurred 

23 during the 1-year period preceding that filing.’’. 

24 (c) DEFINITIONS.—Section 101 of title 11, United 

25 States Code, is amended—
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1 (1) by inserting after paragraph (13) the fol2 lowing: 

3 ‘‘(13A) ‘debtor’s principal residence’—

4 ‘‘(A) means a residential structure, includ5 ing incidental property, without regard to 

6 whether that structure is attached to real prop7 erty; and 

8 ‘‘(B) includes an individual condominium 

9 or cooperative unit, a mobile or manufactured 

10 home, or trailer;’’; and 

11 (2) by inserting after paragraph (27), the fol12 lowing: 

13 ‘‘(27A) ‘incidental property’ means, with respect 

14 to a debtor’s principal residence—

15 ‘‘(A) property commonly conveyed with a 

16 principal residence in the area where the real 

17 property is located; 

18 ‘‘(B) all easements, rights, appurtenances, 

19 fixtures, rents, royalties, mineral rights, oil or 

20 gas rights or profits, water rights, escrow funds, 

21 or insurance proceeds; and 

22 ‘‘(C) all replacements or additions;’’. 

23 SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS. 

24 Section 522(b)(3) of title 11, United States Code, as 

25 so designated by section 106, is amended—
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1 (1) in subparagraph (A)—

2 (A) by striking ‘‘180 days’’ and inserting 

3 ‘‘730 days’’; and 

4 (B) by striking ‘‘, or for a longer portion of 

5 such 180-day period than in any other place’’ 

6 and inserting ‘‘or if the debtor’s domicile has not 

7 been located at a single State for such 730-day 

8 period, the place in which the debtor’s domicile 

9 was located for 180 days immediately preceding 

10 the 730-day period or for a longer portion of 

11 such 180-day period than in any other place’’; 

12 and 

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

14 ‘‘If the effect of the domiciliary requirement under subpara15 graph (A) is to render the debtor ineligible for any exemp16 tion, the debtor may elect to exempt property that is speci17 fied under subsection (d).’’.

18 SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR 

19 FRAUD. 

20 Section 522 of title 11, United States Code, as amend21 ed by section 224, is amended—

22 (1) in subsection (b)(3)(A), as so designated by 

23 this Act, by inserting ‘‘subject to subsections (o) and 

24 (p),’’ before ‘‘any property’’; and 

25 (2) by adding at the end the following: 
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1 ‘‘(o) For purposes of subsection (b)(3)(A), and notwith2 standing subsection (a), the value of an interest in—

3 ‘‘(1) real or personal property that the debtor or 

4 a dependent of the debtor uses as a residence; 

5 ‘‘(2) a cooperative that owns property that the 

6 debtor or a dependent of the debtor uses as a resi7 dence; 

8 ‘‘(3) a burial plot for the debtor or a dependent 

9 of the debtor; or 

10 ‘‘(4) real or personal property that the debtor or 

11 a dependent of the debtor claims as a homestead; 

12 shall be reduced to the extent that such value is attributable 

13 to any portion of any property that the debtor disposed of 

14 in the 10-year period ending on the date of the filing of 

15 the petition with the intent to hinder, delay, or defraud a 

16 creditor and that the debtor could not exempt, or that por17 tion that the debtor could not exempt, under subsection (b), 

18 if on such date the debtor had held the property so disposed 

19 of.’’. 

20 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 

21 13 CASES. 

22 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAPTER

23 13.—Section 348(f)(1) of title 11, United States Code, is 

24 amended—
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1 (1) in subparagraph (A), by striking ‘‘and’’ at 

2 the end; 

3 (2) in subparagraph (B)—

4 (A) by striking ‘‘in the converted case, with 

5 allowed secured claims’’ and inserting ‘‘only in 

6 a case converted to a case under chapter 11 or 

7 12, but not in a case converted to a case under 

8 chapter 7, with allowed secured claims in cases 

9 under chapters 11 and 12’’; and 

10 (B) by striking the period and inserting ‘‘; 

11 and’’; and 

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

13 ‘‘(C) with respect to cases converted from chapter 

14 13—

15 ‘‘(i) the claim of any creditor holding secu16 rity as of the date of the petition shall continue 

17 to be secured by that security unless the full 

18 amount of such claim determined under applica19 ble nonbankruptcy law has been paid in full as 

20 of the date of conversion, notwithstanding any 

21 valuation or determination of the amount of an 

22 allowed secured claim made for the purposes of 

23 the case under chapter 13; and 

24 ‘‘(ii) unless a prebankruptcy default has 

25 been fully cured under the plan at the time of 
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1 conversion, in any proceeding under this title or 

2 otherwise, the default shall have the effect given 

3 under applicable nonbankruptcy law.’’. 

4 (b) GIVING DEBTORS THE ABILITY TO KEEP LEASED

5 PERSONAL PROPERTY BY ASSUMPTION.—Section 365 of 

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

7 end the following: 

8 ‘‘(p)(1) If a lease of personal property is rejected or 

9 not timely assumed by the trustee under subsection (d), the 

10 leased property is no longer property of the estate and the 

11 stay under section 362(a) is automatically terminated. 

12 ‘‘(2)(A) If the debtor in a case under chapter 7 is an 

13 individual, the debtor may notify the creditor in writing 

14 that the debtor desires to assume the lease. Upon being so 

15 notified, the creditor may, at its option, notify the debtor 

16 that it is willing to have the lease assumed by the debtor 

17 and may condition such assumption on cure of any out18 standing default on terms set by the contract. 

19 ‘‘(B) If, not later than 30 days after notice is provided 

20 under subparagraph (A), the debtor notifies the lessor in 

21 writing that the lease is assumed, the liability under the 

22 lease will be assumed by the debtor and not by the estate. 

23 ‘‘(C) The stay under section 362 and the injunction 

24 under section 524(a)(2) shall not be violated by notification 

25 of the debtor and negotiation of cure under this subsection. 
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1 ‘‘(3) In a case under chapter 11 in which the debtor 

2 is an individual and in a case under chapter 13, if the 

3 debtor is the lessee with respect to personal property and 

4 the lease is not assumed in the plan confirmed by the court, 

5 the lease is deemed rejected as of the conclusion of the hear6 ing on confirmation. If the lease is rejected, the stay under 

7 section 362 and any stay under section 1301 is automati8 cally terminated with respect to the property subject to the 

9 lease.’’. 

10 (c) ADEQUATE PROTECTION OF LESSORS AND PUR11 CHASE MONEY SECURED CREDITORS.—

12 (1) CONFIRMATION OF PLAN.—Section 

13 1325(a)(5)(B) of title 11, United States Code, as 

14 amended by section 306, is amended—

15 (A) in clause (i), by striking ‘‘and’’ at the 

16 end; 

17 (B) in clause (ii), by striking ‘‘or’’ at the 

18 end and inserting ‘‘and’’; and 

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

20 ‘‘(iii) if—

21 ‘‘(I) property to be distributed pursu22 ant to this subsection is in the form of peri23 odic payments, such payments shall be in 

24 equal monthly amounts; and 
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1 ‘‘(II) the holder of the claim is secured 

2 by personal property, the amount of such 

3 payments shall not be less than an amount 

4 sufficient to provide to the holder of such 

5 claim adequate protection during the period 

6 of the plan; or’’. 

7 (2) PAYMENTS.—Section 1326(a) of title 11, 

8 United States Code, is amended to read as follows: 

9 ‘‘(a)(1) Unless the court orders otherwise, the debtor 

10 shall commence making payments not later than 30 days 

11 after the date of the filing of the plan or the order for relief, 

12 whichever is earlier, in the amount—

13 ‘‘(A) proposed by the plan to the trustee; 

14 ‘‘(B) scheduled in a lease of personal property 

15 directly to the lessor for that portion of the obligation 

16 that becomes due after the order for relief, reducing 

17 the payments under subparagraph (A) by the amount 

18 so paid and providing the trustee with evidence of 

19 such payment, including the amount and date of pay20 ment; and 

21 ‘‘(C) that provides adequate protection directly 

22 to a creditor holding an allowed claim secured by per23 sonal property to the extent the claim is attributable 

24 to the purchase of such property by the debtor for that 

25 portion of the obligation that becomes due after the 
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1 order for relief, reducing the payments under sub2 paragraph (A) by the amount so paid and providing 

3 the trustee with evidence of such payment, including 

4 the amount and date of payment. 

5 ‘‘(2) A payment made under paragraph (1)(A) shall 

6 be retained by the trustee until confirmation or denial of 

7 confirmation. If a plan is confirmed, the trustee shall dis8 tribute any such payment in accordance with the plan as 

9 soon as is practicable. If a plan is not confirmed, the trustee 

10 shall return any such payments not previously paid and 

11 not yet due and owing to creditors pursuant to paragraph 

12 (3) to the debtor, after deducting any unpaid claim allowed 

13 under section 503(b). 

14 ‘‘(3) Subject to section 363, the court may, upon notice 

15 and a hearing, modify, increase, or reduce the payments 

16 required under this subsection pending confirmation of a 

17 plan. 

18 ‘‘(4) Not later than 60 days after the date of filing 

19 of a case under this chapter, a debtor retaining possession 

20 of personal property subject to a lease or securing a claim 

21 attributable in whole or in part to the purchase price of 

22 such property shall provide the lessor or secured creditor 

23 reasonable evidence of the maintenance of any required in24 surance coverage with respect to the use or ownership of 
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1 such property and continue to do so for so long as the debtor 

2 retains possession of such property.’’.

3 SEC. 310. LIMITATION ON LUXURY GOODS. 

4 Section 523(a)(2)(C) of title 11, United States Code, 

5 is amended to read as follows: 

6 ‘‘(C)(i) for purposes of subparagraph (A)—

7 ‘‘(I) consumer debts owed to a single 

8 creditor and aggregating more than $500 

9 for luxury goods or services incurred by an 

10 individual debtor on or within 90 days be11 fore the order for relief under this title are 

12 presumed to be nondischargeable; and 

13 ‘‘(II) cash advances aggregating more 

14 than $750 that are extensions of consumer 

15 credit under an open end credit plan ob16 tained by an individual debtor on or within 

17 70 days before the order for relief under this 

18 title, are presumed to be nondischargeable; 

19 and 

20 ‘‘(ii) for purposes of this subparagraph—

21 ‘‘(I) the terms ‘consumer’, ‘credit’, and 

22 ‘open end credit plan’ have the same mean23 ings as in section 103 of the Truth in Lend24 ing Act; and 
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1 ‘‘(II) the term ‘luxury goods or serv2 ices’ does not include goods or services rea3 sonably necessary for the support or main4 tenance of the debtor or a dependent of the 

5 debtor.’’.

6 SEC. 311. AUTOMATIC STAY. 

7 (a) IN GENERAL.—Section 362(b) of title 11, United 

8 States Code, as amended by sections 224 and 303, is amend9 ed by inserting after paragraph (21), the following: 

10 ‘‘(22) subject to subsection (n), under subsection 

11 (a)(3), of the continuation of any eviction, unlawful 

12 detainer action, or similar proceeding by a lessor 

13 against a debtor involving residential property in 

14 which the debtor resides as a tenant under a lease or 

15 rental agreement and with respect to which the lessor 

16 has obtained before the date of the filing of the bank17 ruptcy petition, a judgment for possession of such 

18 property against the debtor; 

19 ‘‘(23) subject to subsection (o), under subsection 

20 (a)(3), of an eviction action that seeks possession of 

21 the residential property in which the debtor resides as 

22 a tenant under a lease or rental agreement based on 

23 endangerment of such property or the illegal use of 

24 controlled substances on such property, but only if the 

25 lessor files with the court, and serves upon the debtor, 
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1 a certification under penalty of perjury that such an 

2 eviction action has been filed, or that the debtor, dur3 ing the 30-day period preceding the date of the filing 

4 of the certification, has endangered property or ille5 gally used or allowed to be used a controlled substance 

6 on the property;

7 ‘‘(24) under subsection (a), of any transfer that 

8 is not avoidable under section 544 and that is not 

9 avoidable under section 549;’’. 

10 (b) LIMITATIONS.—Section 362 of title 11, United 

11 States Code, as amended by sections 106 and 305, is amend12 ed by adding at the end the following: 

13 ‘‘(l)(1) Except as otherwise provided in this subsection, 

14 subsection (b)(22) shall apply on the date that is 30 days 

15 after the date on which the bankruptcy petition is filed, if 

16 the debtor files with the petition and serves upon the lessor 

17 a certification under penalty of perjury that—

18 ‘‘(A) under nonbankruptcy law applicable in the 

19 jurisdiction, there are circumstances under which the 

20 debtor would be permitted to cure the entire monetary 

21 default that gave rise to the judgment for possession, 

22 after that judgment for possession was entered; and 

23 ‘‘(B) the debtor (or an adult dependent of the 

24 debtor) has deposited with the clerk of the court, any 
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1 rent that would become due during the 30-day period 

2 after the filing of the bankruptcy petition. 

3 ‘‘(2) If, within the 30-day period after the filing of 

4 the bankruptcy petition, the debtor (or an adult dependent 

5 of the debtor) complies with paragraph (1) and files with 

6 the court and serves upon the lessor a further certification 

7 under penalty of perjury that the debtor (or an adult de8 pendent of the debtor) has cured, under nonbankrupcty law 

9 applicable in the jurisdiction, the entire monetary default 

10 that gave rise to the judgment under which possession is 

11 sought by the lessor, subsection (b)(22) shall not apply, un12 less ordered to apply by the court under paragraph (3). 

13 ‘‘(3)(A) If the lessor files an objection to any certifi14 cation filed by the debtor under paragraph (1) or (2), and 

15 serves such objection upon the debtor, the court shall hold 

16 a hearing within 10 days after the filing and service of such 

17 objection to determine if the certification filed by the debtor 

18 under paragraph (1) or (2) is true. 

19 ‘‘(B) If the court upholds the objection of the lessor filed 

20 under subparagraph (A)—

21 ‘‘(i) subsection (b)(22) shall apply immediately 

22 and relief from the stay provided under subsection 

23 (a)(3) shall not be required to enable the lessor to 

24 complete the process to recover full possession of the 

25 property; and 
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1 ‘‘(ii) the clerk of the court shall immediately 

2 serve upon the lessor and the debtor a certified copy 

3 of the court’s order upholding the lessor’s objection. 

4 ‘‘(4) If a debtor, in accordance with paragraph (5), 

5 indicates on the petition that there was a judgment for pos6 session of the residential rental property in which the debtor 

7 resides and does not file a certification under paragraph 

8 (1) or (2)—

9 ‘‘(A) subsection (b)(22) shall apply immediately 

10 upon failure to file such certification, and relief from 

11 the stay provided under subsection (a)(3) shall not be 

12 required to enable the lessor to complete the process to 

13 recover full possession of the property; and 

14 ‘‘(B) the clerk of the court shall immediately 

15 serve upon the lessor and the debtor a certified copy 

16 of the docket indicating the absence of a filed certifi17 cation and the applicability of the exception to the 

18 stay under subsection (b)(22). 

19 ‘‘(5)(A) Where a judgment for possession of residential 

20 property in which the debtor resides as a tenant under a 

21 lease or rental agreement has been obtained by the lessor, 

22 the debtor shall so indicate on the bankruptcy petition and 

23 shall provide the name and address of the lessor that ob24 tained that pre-petition judgment on the petition and on 

25 any certification filed under this subsection. 
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1 ‘‘(B) The form of certification filed with the petition, 

2 as specified in this subsection, shall provide for the debtor 

3 to certify, and the debtor shall certify— 

4 ‘‘(i) whether a judgment for possession of resi5 dential rental housing in which the debtor resides has 

6 been obtained against the debtor before the date of the 

7 filing of the petition; and 

8 ‘‘(ii) whether the debtor is claiming under para9 graph (1) that under nonbankruptcy law applicable 

10 in the jurisdiction, there are circumstances under 

11 which the debtor would be permitted to cure the entire 

12 monetary default that gave rise to the judgment for 

13 possession, after that judgment of possession was en14 tered, and has made the appropriate deposit with the 

15 court. 

16 ‘‘(C) The standard forms (electronic and otherwise) 

17 used in a bankruptcy proceeding shall be amended to reflect 

18 the requirements of this subsection. 

19 ‘‘(D) The clerk of the court shall arrange for the 

20 prompt transmittal of the rent deposited in accordance with 

21 paragraph (1)(B) to the lessor. 

22 ‘‘(m)(1) Except as otherwise provided in this sub23 section, subsection (b)(23) shall apply on the date that is 

24 15 days after the date on which the lessor files and serves 

25 a certification described in subsection (b)(23). 
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1 ‘‘(2)(A) If the debtor files with the court an objection 

2 to the truth or legal sufficiency of the certification described 

3 in subsection (b)(23) and serves such objection upon the les4 sor, subsection (b)(23) shall not apply, unless ordered to 

5 apply by the court under this subsection. 

6 ‘‘(B) If the debtor files and serves the objection under 

7 subparagraph (A), the court shall hold a hearing within 

8 10 days after the filing and service of such objection to de9 termine if the situation giving rise to the lessor’s certifi10 cation under paragraph (1) existed or has been remedied. 

11 ‘‘(C) If the debtor can demonstrate to the satisfaction 

12 of the court that the situation giving rise to the lessor’s cer13 tification under paragraph (1) did not exist or has been 

14 remedied, the stay provided under subsection (a)(3) shall 

15 remain in effect until the termination of the stay under this 

16 section. 

17 ‘‘(D) If the debtor cannot demonstrate to the satisfac18 tion of the court that the situation giving rise to the lessor’s 

19 certification under paragraph (1) did not exist or has been 

20 remedied—

21 ‘‘(i) relief from the stay provided under sub22 section (a)(3) shall not be required to enable the lessor 

23 to proceed with the eviction; and 
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1 ‘‘(ii) the clerk of the court shall immediately 

2 serve upon the lessor and the debtor a certified copy 

3 of the court’s order upholding the lessor’s certification. 

4 ‘‘(3) If the debtor fails to file, within 15 days, an objec5 tion under paragraph (2)(A)—

6 ‘‘(A) subsection (b)(23) shall apply immediately 

7 upon such failure and relief from the stay provided 

8 under subsection (a)(3) shall not be required to enable 

9 the lessor to complete the process to recover full posses10 sion of the property; and 

11 ‘‘(B) the clerk of the court shall immediately 

12 serve upon the lessor and the debtor a certified copy 

13 of the docket indicating such failure.’’. 

14 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY 

15 DISCHARGES. 

16 Title 11, United States Code, is amended—

17 (1) in section 727(a)(8), by striking ‘‘six’’ and 

18 inserting ‘‘8’’; and 

19 (2) in section 1328, by inserting after subsection 

20 (e) the following: 

21 ‘‘(f) Notwithstanding subsections (a) and (b), the court 

22 shall not grant a discharge of all debts provided for in the 

23 plan or disallowed under section 502, if the debtor has re24 ceived a discharge—
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1 ‘‘(1) in a case filed under chapter 7, 11, or 12 

2 of this title during the 4-year period preceding the 

3 date of the order for relief under this chapter, or 

4 ‘‘(2) in a case filed under chapter 13 of this title 

5 during the 2-year period preceding the date of such 

6 order.’’. 

7 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN8 TIQUES. 

9 (a) DEFINITION.—Section 522(f) of title 11, United 

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

11 ‘‘(4)(A) Subject to subparagraph (B), for purposes of 

12 paragraph (1)(B), the term ‘household goods’ means—

13 ‘‘(i) clothing; 

14 ‘‘(ii) furniture; 

15 ‘‘(iii) appliances; 

16 ‘‘(iv) 1 radio; 

17 ‘‘(v) 1 television; 

18 ‘‘(vi) 1 VCR; 

19 ‘‘(vii) linens; 

20 ‘‘(viii) china; 

21 ‘‘(ix) crockery; 

22 ‘‘(x) kitchenware; 

23 ‘‘(xi) educational materials and educational 

24 equipment primarily for the use of minor dependent 

25 children of the debtor; 
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1 ‘‘(xii) medical equipment and supplies; 

2 ‘‘(xiii) furniture exclusively for the use of minor 

3 children, or elderly or disabled dependents of the debt4 or; 

5 ‘‘(xiv) personal effects (including the toys and 

6 hobby equipment of minor dependent children and 

7 wedding rings) of the debtor and the dependents of the 

8 debtor; and 

9 ‘‘(xv) 1 personal computer and related equip10 ment. 

11 ‘‘(B) The term ‘household goods’ does not include—

12 ‘‘(i) works of art (unless by or of the debtor, or 

13 any relative of the debtor); 

14 ‘‘(ii) electronic entertainment equipment with a 

15 fair market value of more than $500 in the aggregate 

16 (except 1 television, 1 radio, and 1 VCR); 

17 ‘‘(iii) items acquired as antiques with a fair 

18 market value of more than $500 in the aggregate; 

19 ‘‘(iv) jewelry with a fair market value of more 

20 than $500 in the aggregate (except wedding rings); 

21 and 

22 ‘‘(v) a computer (except as otherwise provided 

23 for in this section), motor vehicle (including a tractor 

24 or lawn tractor), boat, or a motorized recreational de25 vice, conveyance, vehicle, watercraft, or aircraft.’’. 
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1 (b) STUDY.—Not later than 2 years after the date of 

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

3 for United States Trustees shall submit a report to the Com4 mittee on the Judiciary of the Senate and the Committee 

5 on the Judiciary of the House of Representatives containing 

6 its findings regarding utilization of the definition of house7 hold goods, as defined in section 522(f)(4) of title 11, United 

8 States Code, as added by subsection (a), with respect to the 

9 avoidance of nonpossessory, nonpurchase money security 

10 interests in household goods under section 522(f)(1)(B) of 

11 title 11, United States Code, and the impact such section 

12 522(f)(4) has had on debtors and on the bankruptcy courts. 

13 Such report may include recommendations for amendments 

14 to such section 522(f)(4) consistent with the Director’s find15 ings.

16 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE 

17 DEBTS. 

18 (a) IN GENERAL.—Section 523(a) of title 11, United 

19 States Code, is amended by inserting after paragraph (14) 

20 the following: 

21 ‘‘(14A) incurred to pay a tax to a governmental 

22 unit, other than the United States, that would be non23 dischargeable under paragraph (1);’’. 
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1 (b) DISCHARGE UNDER CHAPTER 13.—Section 

2 1328(a) of title 11, United States Code, is amended by strik3 ing paragraphs (1) through (3) and inserting the following: 

4 ‘‘(1) provided for under section 1322(b)(5); 

5 ‘‘(2) of the kind specified in paragraph (2), (3), 

6 (4), (5), (8), or (9) of section 523(a); 

7 ‘‘(3) for restitution, or a criminal fine, included 

8 in a sentence on the debtor’s conviction of a crime; or 

9 ‘‘(4) for restitution, or damages, awarded in a 

10 civil action against the debtor as a result of willful 

11 or malicious injury by the debtor that caused per12 sonal injury to an individual or the death of an indi13 vidual.’’.

14 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 

15 AND 13 CASES. 

16 (a) NOTICE.—Section 342 of title 11, United States 

17 Code, as amended by section 102, is amended—

18 (1) in subsection (c)—

19 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; 

20 (B) by striking ‘‘, but the failure of such no21 tice to contain such information shall not invali22 date the legal effect of such notice’’; and 

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

24 ‘‘(2)(A) If, within the 90 days before the commence25 ment of a voluntary case, a creditor supplies the debtor in 
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1 at least 2 communications sent to the debtor with the cur2 rent account number of the debtor and the address at which 

3 such creditor requests to receive correspondence, then any 

4 notice required by this title to be sent by the debtor to such 

5 creditor shall be sent to such address and shall include such 

6 account number. 

7 ‘‘(B) If a creditor would be in violation of applicable 

8 nonbankruptcy law by sending any such communication 

9 within such 90-day period and if such creditor supplies the 

10 debtor in the last 2 communications with the current ac11 count number of the debtor and the address at which such 

12 creditor requests to receive correspondence, then any notice 

13 required by this title to be sent by the debtor to such creditor 

14 shall be sent to such address and shall include such account 

15 number.’’; and 

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

17 ‘‘(e)(1) In a case under chapter 7 or 13 of this title 

18 of a debtor who is an individual, a creditor at any time 

19 may both file with the court and serve on the debtor a notice 

20 of address to be used to provide notice in such case to such 

21 creditor. 

22 ‘‘(2) Any notice in such case required to be provided 

23 to such creditor by the debtor or the court later than 5 days 

24 after the court and the debtor receive such creditor’s notice 

25 of address, shall be provided to such address.
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1 ‘‘(f)(1) An entity may file with any bankruptcy court 

2 a notice of address to be used by all the bankruptcy courts 

3 or by particular bankruptcy courts, as so specified by such 

4 entity at the time such notice is filed, to provide notice to 

5 such entity in all cases under chapters 7 and 13 pending 

6 in the courts with respect to which such notice is filed, in 

7 which such entity is a creditor. 

8 ‘‘(2) In any case filed under chapter 7 or 13, any no9 tice required to be provided by a court with respect to which 

10 a notice is filed under paragraph (1), to such entity later 

11 than 30 days after the filing of such notice under paragraph 

12 (1) shall be provided to such address unless with respect 

13 to a particular case a different address is specified in a 

14 notice filed and served in accordance with subsection (e). 

15 ‘‘(3) A notice filed under paragraph (1) may be with16 drawn by such entity. 

17 ‘‘(g)(1) Notice provided to a creditor by the debtor or 

18 the court other than in accordance with this section (exclud19 ing this subsection) shall not be effective notice until such 

20 notice is brought to the attention of such creditor. If such 

21 creditor designates a person or an organizational subdivi22 sion of such creditor to be responsible for receiving notices 

23 under this title and establishes reasonable procedures so that 

24 such notices receivable by such creditor are to be delivered 

25 to such person or such subdivision, then a notice provided 
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1 to such creditor other than in accordance with this section 

2 (excluding this subsection) shall not be considered to have 

3 been brought to the attention of such creditor until such no4 tice is received by such person or such subdivision. 

5 ‘‘(2) A monetary penalty may not be imposed on a 

6 creditor for a violation of a stay in effect under section 

7 362(a) (including a monetary penalty imposed under sec8 tion 362(k)) or for failure to comply with section 542 or 

9 543 unless the conduct that is the basis of such violation 

10 or of such failure occurs after such creditor receives notice 

11 effective under this section of the order for relief.’’. 

12 (b) DEBTOR’S DUTIES.—Section 521 of title 11, 

13 United States Code, as amended by sections 106, 225, and 

14 305, is amended—

15 (1) in subsection (a), as so designated by section 

16 106, by amending paragraph (1) to read as follows: 

17 ‘‘(1) file—

18 ‘‘(A) a list of creditors; and 

19 ‘‘(B) unless the court orders otherwise—

20 ‘‘(i) a schedule of assets and liabilities; 

21 ‘‘(ii) a schedule of current income and 

22 current expenditures; 

23 ‘‘(iii) a statement of the debtor’s finan24 cial affairs and, if section 342(b) applies, a 

25 certificate—
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1 ‘‘(I) of an attorney whose name is 

2 indicated on the petition as the attor3 ney for the debtor, or a bankruptcy pe4 tition preparer signing the petition 

5 under section 110(b)(1), indicating 

6 that such attorney or the bankruptcy 

7 petition preparer delivered to the debt8 or the notice required by section 

9 342(b); or 

10 ‘‘(II) if no attorney is so indi11 cated, and no bankruptcy petition pre12 parer signed the petition, of the debtor 

13 that such notice was received and read 

14 by the debtor; 

15 ‘‘(iv) copies of all payment advices or 

16 other evidence of payment received within 

17 60 days before the date of the filing of the 

18 petition, by the debtor from any employer of 

19 the debtor; 

20 ‘‘(v) a statement of the amount of 

21 monthly net income, itemized to show how 

22 the amount is calculated; and 

23 ‘‘(vi) a statement disclosing any rea24 sonably anticipated increase in income or 

25 expenditures over the 12-month period fol-
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1 lowing the date of the filing of the peti2 tion;’’; and 

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

4 ‘‘(e)(1) If the debtor in a case under chapter 7 or 13 

5 is an individual and if a creditor files with the court at 

6 any time a request to receive a copy of the petition, sched7 ules, and statement of financial affairs filed by the debtor, 

8 then the court shall make such petition, such schedules, and 

9 such statement available to such creditor.

10 ‘‘(2)(A) The debtor shall provide—

11 ‘‘(i) not later than 7 days before the date first 

12 set for the first meeting of creditors, to the trustee a 

13 copy of the Federal income tax return required under 

14 applicable law (or at the election of the debtor, a 

15 transcript of such return) for the most recent tax year 

16 ending immediately before the commencement of the 

17 case and for which a Federal income tax return was 

18 filed; and 

19 ‘‘(ii) at the same time the debtor complies with 

20 clause (i), a copy of such return (or if elected under 

21 clause (i), such transcript) to any creditor that timely 

22 requests such copy. 

23 ‘‘(B) If the debtor fails to comply with clause (i) or 

24 (ii) of subparagraph (A), the court shall dismiss the case 
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1 unless the debtor demonstrates that the failure to so comply 

2 is due to circumstances beyond the control of the debtor. 

3 ‘‘(C) If a creditor requests a copy of such tax return 

4 or such transcript and if the debtor fails to provide a copy 

5 of such tax return or such transcript to such creditor at 

6 the time the debtor provides such tax return or such tran7 script to the trustee, then the court shall dismiss the case 

8 unless the debtor demonstrates that the failure to provide 

9 a copy of such tax return or such transcript is due to cir10 cumstances beyond the control of the debtor. 

11 ‘‘(3) If a creditor in a case under chapter 13 files with 

12 the court at any time a request to receive a copy of the 

13 plan filed by the debtor, then the court shall make available 

14 to such creditor a copy of the plan—

15 ‘‘(A) at a reasonable cost; and 

16 ‘‘(B) not later than 5 days after such request is 

17 filed. 

18 ‘‘(f) At the request of the court, the United States trust19 ee, or any party in interest in a case under chapter 7, 11, 

20 or 13, a debtor who is an individual shall file with the 

21 court— 

22 ‘‘(1) at the same time filed with the taxing au23 thority, a copy of each Federal income tax return re24 quired under applicable law (or at the election of the 

25 debtor, a transcript of such tax return) with respect 
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1 to each tax year of the debtor ending while the case 

2 is pending under such chapter; 

3 ‘‘(2) at the same time filed with the taxing au4 thority, each Federal income tax return required 

5 under applicable law (or at the election of the debtor, 

6 a transcript of such tax return) that had not been 

7 filed with such authority as of the date of the com8 mencement of the case and that was subsequently filed 

9 for any tax year of the debtor ending in the 3-year 

10 period ending on the date of the commencement of the 

11 case; 

12 ‘‘(3) a copy of each amendment to any Federal 

13 income tax return or transcript filed with the court 

14 under paragraph (1) or (2); and 

15 ‘‘(4) in a case under chapter 13— 

16 ‘‘(A) on the date that is either 90 days after 

17 the end of such tax year or 1 year after the date 

18 of the commencement of the case, whichever is 

19 later, if a plan is not confirmed before such later 

20 date; and 

21 ‘‘(B) annually after the plan is confirmed 

22 and until the case is closed, not later than the 

23 date that is 45 days before the anniversary of the 

24 confirmation of the plan; 
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1 a statement, under penalty of perjury, of the income 

2 and expenditures of the debtor during the tax year of 

3 the debtor most recently concluded before such state4 ment is filed under this paragraph, and of the month5 ly income of the debtor, that shows how income, ex6 penditures, and monthly income are calculated. 

7 ‘‘(g)(1) A statement referred to in subsection (f)(4) 

8 shall disclose—

9 ‘‘(A) the amount and sources of the income of the 

10 debtor; 

11 ‘‘(B) the identity of any person responsible with 

12 the debtor for the support of any dependent of the 

13 debtor; and 

14 ‘‘(C) the identity of any person who contributed, 

15 and the amount contributed, to the household in 

16 which the debtor resides. 

17 ‘‘(2) The tax returns, amendments, and statement of 

18 income and expenditures described in subsections (e)(2)(A) 

19 and (f) shall be available to the United States trustee (or 

20 the bankruptcy administrator, if any), the trustee, and any 

21 party in interest for inspection and copying, subject to the 

22 requirements of section 315(c) of the Bankruptcy Abuse Pre23 vention and Consumer Protection Act of 2003. 

24 ‘‘(h) If requested by the United States trustee or by 

25 the trustee, the debtor shall provide—
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1 ‘‘(1) a document that establishes the identity of 

2 the debtor, including a driver’s license, passport, or 

3 other document that contains a photograph of the 

4 debtor; or 

5 ‘‘(2) such other personal identifying information 

6 relating to the debtor that establishes the identity of 

7 the debtor.’’. 

8 (c)(1) Not later than 180 days after the date of the 

9 enactment of this Act, the Director of the Administrative 

10 Office of the United States Courts shall establish procedures 

11 for safeguarding the confidentiality of any tax information 

12 required to be provided under this section. 

13 (2) The procedures under paragraph (1) shall include 

14 restrictions on creditor access to tax information that is re15 quired to be provided under this section. 

16 (3) Not later than 540 days after the date of enactment 

17 of this Act, the Director of the Administrative Office of the 

18 United States Courts shall prepare and submit to the Presi19 dent pro tempore of the Senate and the Speaker of the House 

20 of Representatives a report that—

21 (A) assesses the effectiveness of the procedures es22 tablished under paragraph (1); and 

23 (B) if appropriate, includes proposed legislation 

24 to—
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1 (i) further protect the confidentiality of tax 

2 information; and 

3 (ii) provide penalties for the improper use 

4 by any person of the tax information required to 

5 be provided under this section.

6 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED7 ULES OR PROVIDE REQUIRED INFORMATION. 

8 Section 521 of title 11, United States Code, as amend9 ed by sections 106, 225, 305, and 315, is amended by add10 ing at the end the following: 

11 ‘‘(i)(1) Subject to paragraphs (2) and (4) and notwith12 standing section 707(a), if an individual debtor in a vol13 untary case under chapter 7 or 13 fails to file all of the 

14 information required under subsection (a)(1) within 45 

15 days after the date of the filing of the petition, the case 

16 shall be automatically dismissed effective on the 46th day 

17 after the date of the filing of the petition. 

18 ‘‘(2) Subject to paragraph (4) and with respect to a 

19 case described in paragraph (1), any party in interest may 

20 request the court to enter an order dismissing the case. If 

21 requested, the court shall enter an order of dismissal not 

22 later than 5 days after such request. 

23 ‘‘(3) Subject to paragraph (4) and upon request of the 

24 debtor made within 45 days after the date of the filing of 

25 the petition described in paragraph (1), the court may 
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1 allow the debtor an additional period of not to exceed 45 

2 days to file the information required under subsection 

3 (a)(1) if the court finds justification for extending the pe4 riod for the filing. 

5 ‘‘(4) Notwithstanding any other provision of this sub6 section, on the motion of the trustee filed before the expira7 tion of the applicable period of time specified in paragraph 

8 (1), (2), or (3), and after notice and a hearing, the court 

9 may decline to dismiss the case if the court finds that the 

10 debtor attempted in good faith to file all the information 

11 required by subsection (a)(1)(B)(iv) and that the best inter12 ests of creditors would be served by administration of the 

13 case.’’.

14 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON 

15 CONFIRMATION OF THE PLAN. 

16 Section 1324 of title 11, United States Code, is amend17 ed—

18 (1) by striking ‘‘After’’ and inserting the fol19 lowing: 

20 ‘‘(a) Except as provided in subsection (b) and after’’; 

21 and 

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

23 ‘‘(b) The hearing on confirmation of the plan may be 

24 held not earlier than 20 days and not later than 45 days 

25 after the date of the meeting of creditors under section 
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1 341(a), unless the court determines that it would be in the 

2 best interests of the creditors and the estate to hold such 

3 hearing at an earlier date and there is no objection to such 

4 earlier date.’’. 

5 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION 

6 IN CERTAIN CASES. 

7 Title 11, United States Code, is amended—

8 (1) by amending section 1322(d) to read as fol9 lows: 

10 ‘‘(d)(1) If the current monthly income of the debtor 

11 and the debtor’s spouse combined, when multiplied by 12, 

12 is not less than—

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

14 person, the median family income of the applicable 

15 State for 1 earner; 

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

17 3, or 4 individuals, the highest median family income 

18 of the applicable State for a family of the same num19 ber or fewer individuals; 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 fewer 

23 individuals, plus $525 per month for each individual 

24 in 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 less 

5 than—

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

7 person, the median family income of the applicable 

8 State for 1 earner; 

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

10 3, or 4 individuals, the highest median family income 

11 of the applicable State for a family of the same num12 ber or fewer individuals; or 

13 ‘‘(C) in the case of a debtor in a household ex14 ceeding 4 individuals, the highest median family in15 come of the applicable State for a family of 4 or fewer 

16 individuals, plus $525 per month for each individual 

17 in excess of 4, 

18 the plan may not provide for payments over a period that 

19 is longer than 3 years, unless the court, for cause, approves 

20 a longer period, but the court may not approve a period 

21 that is longer than 5 years.’’; 

22 (2) in section 1325(b)(1)(B), by striking ‘‘three23 year period’’ and inserting ‘‘applicable commitment 

24 period’’; and 
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1 (3) in section 1325(b), as amended by section 

2 102, by adding at the end the following: 

3 ‘‘(4) For purposes of this subsection, the ‘applicable 

4 commitment period’—

5 ‘‘(A) subject to subparagraph (B), shall be—

6 ‘‘(i) 3 years; or 

7 ‘‘(ii) not less than 5 years, if the current 

8 monthly income of the debtor and the debtor’s 

9 spouse combined, when multiplied by 12, is not 

10 less than— 

11 ‘‘(I) in the case of a debtor in a house12 hold of 1 person, the median family income 

13 of the applicable State for 1 earner; 

14 ‘‘(II) in the case of a debtor in a 

15 household of 2, 3, or 4 individuals, the high16 est median family income of the applicable 

17 State for a family of the same number or 

18 fewer individuals; or 

19 ‘‘(III) in the case of a debtor in a 

20 household exceeding 4 individuals, the high21 est median family income of the applicable 

22 State for a family of 4 or fewer individuals, 

23 plus $525 per month for each individual in 

24 excess of 4; and 
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1 ‘‘(B) may be less than 3 or 5 years, whichever 

2 is applicable under subparagraph (A), but only if the 

3 plan provides for payment in full of all allowed unse4 cured claims over a shorter period.’’; and 

5 (4) in section 1329(c), by striking ‘‘three years’’ 

6 and inserting ‘‘the applicable commitment period 

7 under section 1325(b)(1)(B)’’. 

8 SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF 

9 RULE 9011 OF THE FEDERAL RULES OF BANK10 RUPTCY PROCEDURE. 

11 It is the sense of Congress that rule 9011 of the Federal 

12 Rules of Bankruptcy Procedure (11 U.S.C. App.) should be 

13 modified to include a requirement that all documents (in14 cluding schedules), signed and unsigned, submitted to the 

15 court or to a trustee by debtors who represent themselves 

16 and debtors who are represented by attorneys be submitted 

17 only after the debtors or the debtors’ attorneys have made 

18 reasonable inquiry to verify that the information contained 

19 in such documents is—

20 (1) well grounded in fact; and 

21 (2) warranted by existing law or a good faith ar22 gument for the extension, modification, or reversal of 

23 existing law. 
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1 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL 

2 CASES. 

3 Section 362(e) of title 11, United States Code, is 

4 amended—

5 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and 

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

7 ‘‘(2) Notwithstanding paragraph (1), in a case under 

8 chapter 7, 11, or 13 in which the debtor is an individual, 

9 the stay under subsection (a) shall terminate on the date 

10 that is 60 days after a request is made by a party in inter11 est under subsection (d), unless—

12 ‘‘(A) a final decision is rendered by the court 

13 during the 60-day period beginning on the date of the 

14 request; or 

15 ‘‘(B) such 60-day period is extended—

16 ‘‘(i) by agreement of all parties in interest; 

17 or 

18 ‘‘(ii) by the court for such specific period of 

19 time as the court finds is required for good 

20 cause, as described in findings made by the 

21 court.’’.

22 SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS. 

23 (a) PROPERTY OF THE ESTATE.—

24 (1) IN GENERAL.—Subchapter I of chapter 11 of 

25 title 11, United States Code, is amended by adding 

26 at the end the following: 
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1 ‘‘§ 1115. Property of the estate 

2 ‘‘(a) In a case in which the debtor is an individual, 

3 property of the estate includes, in addition to the property 

4 specified in section 541—

5 ‘‘(1) all property of the kind specified in section 

6 541 that the debtor acquires after the commencement 

7 of the case but before the case is closed, dismissed, or 

8 converted to a case under chapter 7, 12, or 13, which9 ever occurs first; and 

10 ‘‘(2) earnings from services performed by the 

11 debtor after the commencement of the case but before 

12 the case is closed, dismissed, or converted to a case 

13 under chapter 7, 12, or 13, whichever occurs first.’’. 

14 ‘‘(b) Except as provided in section 1104 or a confirmed 

15 plan or order confirming a plan, the debtor shall remain 

16 in possession of all property of the estate.’’. 

17 (2) CLERICAL AMENDMENT.—The table of sec18 tions for subchapter I of chapter 11 of title 11, United 

19 States Code, is amended by adding at the end the fol20 lowing:

‘‘1115. Property of the estate.’’.

21 (b) CONTENTS OF PLAN.—Section 1123(a) of title 11, 

22 United States Code, is amended—

23 (1) in paragraph (6), by striking ‘‘and’’ at the 

24 end; 
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1 (2) in paragraph (7), by striking the period and 

2 inserting ‘‘; and’’; and 

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

4 ‘‘(8) in a case in which the debtor is an indi5 vidual, provide for the payment to creditors under the 

6 plan of all or such portion of earnings from personal 

7 services performed by the debtor after the commence8 ment of the case or other future income of the debtor 

9 as is necessary for the execution of the plan.’’. 

10 (c) CONFIRMATION OF PLAN.—

11 (1) REQUIREMENTS RELATING TO VALUE OF

12 PROPERTY.—Section 1129(a) of title 11, United 

13 States Code, as amended by section 213, is amended 

14 by adding at the end the following: 

15 ‘‘(15) In a case in which the debtor is an indi16 vidual and in which the holder of an allowed unse17 cured claim objects to the confirmation of the plan—

18 ‘‘(A) the value, as of the effective date of the 

19 plan, of the property to be distributed under the 

20 plan on account of such claim is not less than 

21 the amount of such claim; or 

22 ‘‘(B) the value of the property to be distrib23 uted under the plan is not less than the projected 

24 disposable income of the debtor (as defined in 

25 section 1325(b)(2)) to be received during the 5-
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1 year period beginning on the date that the first 

2 payment is due under the plan, or during the 

3 period for which the plan provides payments, 

4 whichever is longer.’’.

5 (2) REQUIREMENT RELATING TO INTERESTS IN

6 PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11, 

7 United States Code, is amended by inserting before 

8 the period at the end the following: ‘‘, except that in 

9 a case in which the debtor is an individual, the debtor 

10 may retain property included in the estate under sec11 tion 1115, subject to the requirements of subsection 

12 (a)(14) of this section’’.

13 (d) EFFECT OF CONFIRMATION.—Section 1141(d) of 

14 title 11, United States Code, is amended—

15 (1) in paragraph (2), by striking ‘‘The confirma16 tion of a plan does not discharge an individual debt17 or’’ and inserting ‘‘A discharge under this chapter 

18 does not discharge a debtor who is an individual’’; 

19 and 

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

21 ‘‘(5) In a case in which the debtor is an individual—

22 ‘‘(A) unless after notice and a hearing the court 

23 orders otherwise for cause, confirmation of the plan 

24 does not discharge any debt provided for in the plan 
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1 until the court grants a discharge on completion of all 

2 payments under the plan; 

3 ‘‘(B) at any time after the confirmation of the 

4 plan, and after notice and a hearing, the court may 

5 grant a discharge to the debtor who has not completed 

6 payments under the plan if— 

7 ‘‘(i) the value, as of the effective date of the 

8 plan, of property actually distributed under the 

9 plan on account of each allowed unsecured claim 

10 is not less than the amount that would have been 

11 paid on such claim if the estate of the debtor had 

12 been liquidated under chapter 7 on such date; 

13 and 

14 ‘‘(ii) modification of the plan under section 

15 1127 is not practicable; and’’. 

16 (e) MODIFICATION OF PLAN.—Section 1127 of title 11, 

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

18 following: 

19 ‘‘(e) If the debtor is an individual, the plan may be 

20 modified at any time after confirmation of the plan but 

21 before the completion of payments under the plan, whether 

22 or not the plan has been substantially consummated, upon 

23 request of the debtor, the trustee, the United States trustee, 

24 or the holder of an allowed unsecured claim, to—
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1 ‘‘(1) increase or reduce the amount of payments 

2 on claims of a particular class provided for by the 

3 plan; 

4 ‘‘(2) extend or reduce the time period for such 

5 payments; or 

6 ‘‘(3) alter the amount of the distribution to a 

7 creditor whose claim is provided for by the plan to 

8 the extent necessary to take account of any payment 

9 of such claim made other than under the plan. 

10 ‘‘(f)(1) Sections 1121 through 1128 and the require11 ments of section 1129 apply to any modification under sub12 section (a). 

13 ‘‘(2) The plan, as modified, shall become the plan only 

14 after there has been disclosure under section 1125 as the 

15 court may direct, notice and a hearing, and such modifica16 tion is approved.’’.

17 SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION. 

18 (a) EXEMPTIONS.—Section 522 of title 11, United 

19 States Code, as amended by sections 224 and 308, is amend20 ed by adding at the end the following: 

21 ‘‘(p)(1) Except as provided in paragraph (2) of this 

22 subsection and sections 544 and 548, as a result of electing 

23 under subsection (b)(3)(A) to exempt property under State 

24 or local law, a debtor may not exempt any amount of inter25 est that was acquired by the debtor during the 1215-day 
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1 period preceding the date of the filing of the petition that 

2 exceeds in the aggregate $125,000 in value in—

3 ‘‘(A) real or personal property that the debtor or 

4 a dependent of the debtor uses as a residence; 

5 ‘‘(B) a cooperative that owns property that the 

6 debtor or a dependent of the debtor uses as a resi7 dence; 

8 ‘‘(C) a burial plot for the debtor or a dependent 

9 of the debtor; or 

10 ‘‘(D) real or personal property that the debtor or 

11 dependent of the debtor claims as a homestead. 

12 ‘‘(2)(A) The limitation under paragraph (1) shall not 

13 apply to an exemption claimed under subsection (b)(3)(A) 

14 by a family farmer for the principal residence of such farm15 er. 

16 ‘‘(B) For purposes of paragraph (1), any amount of 

17 such interest does not include any interest transferred from 

18 a debtor’s previous principal residence (which was acquired 

19 prior to the beginning of such 1215-day period) into the 

20 debtor’s current principal residence, if the debtor’s previous 

21 and current residences are located in the same State. 

22 ‘‘(q)(1) As a result of electing under subsection 

23 (b)(3)(A) to exempt property under State or local law, a 

24 debtor may not exempt any amount of an interest in prop25 erty described in subparagraphs (A), (B), (C), and (D) of 
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1 subsection (p)(1) which exceeds in the aggregate $125,000 

2 if—

3 ‘‘(A) the court determines, after notice and a 

4 hearing, that the debtor has been convicted of a felony 

5 (as defined in section 3156 of title 18), which under 

6 the circumstances, demonstrates that the filing of the 

7 case was an abuse of the provisions of this title; or 

8 ‘‘(B) the debtor owes a debt arising from—

9 ‘‘(i) any violation of the Federal securities 

10 laws (as defined in section 3(a)(47) of the Secu11 rities Exchange Act of 1934), any State securi12 ties laws, or any regulation or order issued 

13 under Federal securities laws or State securities 

14 laws; 

15 ‘‘(ii) fraud, deceit, or manipulation in a fi16 duciary capacity or in connection with the pur17 chase or sale of any security registered under sec18 tion 12 or 15(d) of the Securities Exchange Act 

19 of 1934 or under section 6 of the Securities Act 

20 of 1933; 

21 ‘‘(iii) any civil remedy under section 1964 

22 of title 18; or 

23 ‘‘(iv) any criminal act, intentional tort, or 

24 willful or reckless misconduct that caused serious 
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1 physical injury or death to another individual 

2 in the preceding 5 years. 

3 ‘‘(2) Paragraph (1) shall not apply to the extent the 

4 amount of an interest in property described in subpara5 graphs (A), (B), (C), and (D) of subsection (p)(1) is reason6 ably necessary for the support of the debtor and any depend7 ent of the debtor.’’. 

8 (b) ADJUSTMENT OF DOLLAR AMOUNTS.—Paragraphs 

9 (1) and (2) of section 104(b) of title 11, United States Code, 

10 as amended by section 224, are amended by inserting 

11 ‘‘522(p), 522(q),’’ after ‘‘522(n),’’.

12 SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI13 PANT CONTRIBUTIONS AND OTHER PROP14 ERTY FROM THE ESTATE. 

15 Section 541(b) of title 11, United States Code, as 

16 amended by section 225, is amended by adding after para17 graph (6), as added by section 225(a)(1)(C), the following: 

18 ‘‘(7) any amount—

19 ‘‘(A) withheld by an employer from the 

20 wages of employees for payment as contribu21 tions— 

22 ‘‘(i) to—

23 ‘‘(I) an employee benefit plan that 

24 is subject to title I of the Employee Re25 tirement Income Security Act of 1974 
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1 or under an employee benefit plan 

2 which is a governmental plan under 

3 section 414(d) of the Internal Revenue 

4 Code of 1986; 

5 ‘‘(II) a deferred compensation 

6 plan under section 457 of the Internal 

7 Revenue Code of 1986; or 

8 ‘‘(III) a tax-deferred annuity 

9 under section 403(b) of the Internal 

10 Revenue Code of 1986; 

11 except that such amount under this sub12 paragraph shall not constitute disposable 

13 income as defined in section 1325(b)(2); or 

14 ‘‘(ii) to a health insurance plan regu15 lated by State law whether or not subject to 

16 such title; or 

17 ‘‘(B) received by an employer from employ18 ees for payment as contributions— 

19 ‘‘(i) to—

20 ‘‘(I) an employee benefit plan that 

21 is subject to title I of the Employee Re22 tirement Income Security Act of 1974 

23 or under an employee benefit plan 

24 which is a governmental plan under 
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1 section 414(d) of the Internal Revenue 

2 Code of 1986; 

3 ‘‘(II) a deferred compensation 

4 plan under section 457 of the Internal 

5 Revenue Code of 1986; or 

6 ‘‘(III) a tax-deferred annuity 

7 under section 403(b) of the Internal 

8 Revenue Code of 1986; 

9 except that such amount under this sub10 paragraph shall not constitute disposable 

11 income, as defined in section 1325(b)(2); or 

12 ‘‘(ii) to a health insurance plan regu13 lated by State law whether or not subject to 

14 such title;’’. 

15 SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV16 ING BANKRUPTCY PROFESSIONALS. 

17 (a) IN GENERAL.—Section 1334 of title 28, United 

18 States Code, is amended—

19 (1) in subsection (b), by striking ‘‘Notwith20 standing’’ and inserting ‘‘Except as provided in sub21 section (e)(2), and notwithstanding’’; and 

22 (2) by striking subsection (e) and inserting the 

23 following: 
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1 ‘‘(e) The district court in which a case under title 11 

2 is commenced or is pending shall have exclusive jurisdic3 tion—

4 ‘‘(1) of all the property, wherever located, of the 

5 debtor as of the commencement of such case, and of 

6 property of the estate; and 

7 ‘‘(2) over all claims or causes of action that in8 volve construction of section 327 of title 11, United 

9 States Code, or rules relating to disclosure require10 ments under section 327.’’. 

11 (b) APPLICABILITY.—This section shall only apply to 

12 cases filed after the date of enactment of this Act. 

13 SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE 

14 INCREASE. 

15 (a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE 11, 

16 UNITED STATES CODE.—Section 1930(a) of title 28, 

17 United States Code, is amended by striking paragraph (1) 

18 and inserting the following: 

19 ‘‘(1) For a case commenced—

20 ‘‘(A) under chapter 7 of title 11, $160; or 

21 ‘‘(B) under chapter 13 of title 11, $150.’’. 

22 (b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec23 tion 589a(b) of title 28, United States Code, is amended—

24 (1) by striking paragraph (1) and inserting the 

25 following: 
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1 ‘‘(1)(A) 40.63 percent of the fees collected under 

2 section 1930(a)(1)(A) of this title in cases commenced 

3 under chapter 7 of title 11; and 

4 ‘‘(B) 70.00 percent of the fees collected under sec5 tion 1930(a)(1)(B) of this title in cases commenced 

6 under chapter 13 of title 11;’’; 

7 (2) in paragraph (2), by striking ‘‘one-half’’ and 

8 inserting ‘‘three-fourths’’; and 

9 (3) in paragraph (4), by striking ‘‘one-half’’ and 

10 inserting ‘‘100 percent’’. 

11 (c) COLLECTION AND DEPOSIT OF MISCELLANEOUS

12 BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap13 propriations Act, 1990 (28 U.S.C. 1931 note) is amended 

14 by striking ‘‘pursuant to 28 U.S.C. section 1930(b)’’ and 

15 all that follows through ‘‘28 U.S.C. section 1931’’ and in16 serting ‘‘under section 1930(b) of title 28, United States 

17 Code, and 31.25 percent of the fees collected under section 

18 1930(a)(1)(A) of that title, 30.00 percent of the fees collected 

19 under section 1930(a)(1)(B) of that title, and 25 percent 

20 of the fees collected under section 1930(a)(3) of that title 

21 shall be deposited as offsetting receipts to the fund estab22 lished under section 1931 of that title’’. 

23 SEC. 326. SHARING OF COMPENSATION. 

24 Section 504 of title 11, United States Code, is amended 

25 by adding at the end the following: 
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1 ‘‘(c) This section shall not apply with respect to shar2 ing, or agreeing to share, compensation with a bona fide 

3 public service attorney referral program that operates in 

4 accordance with non-Federal law regulating attorney refer5 ral services and with rules of professional responsibility ap6 plicable to attorney acceptance of referrals.’’. 

7 SEC. 327. FAIR VALUATION OF COLLATERAL. 

8 Section 506(a) of title 11, United States Code, is 

9 amended by—

10 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; and 

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

12 ‘‘(2) If the debtor is an individual in a case under 

13 chapter 7 or 13, such value with respect to personal prop14 erty securing an allowed claim shall be determined based 

15 on the replacement value of such property as of the date 

16 of the filing of the petition without deduction for costs of 

17 sale or marketing. With respect to property acquired for 

18 personal, family, or household purposes, replacement value 

19 shall mean the price a retail merchant would charge for 

20 property of that kind considering the age and condition of 

21 the property at the time value is determined.’’. 
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1 SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA2 TIONS. 

3 (a) EXECUTORY CONTRACTS AND UNEXPIRED

4 LEASES.—Section 365 of title 11, United States Code, is 

5 amended—

6 (1) in subsection (b)—

7 (A) in paragraph (1)(A), by striking the 

8 semicolon at the end and inserting the following: 

9 ‘‘other than a default that is a breach of a provi10 sion relating to the satisfaction of any provision 

11 (other than a penalty rate or penalty provision) 

12 relating to a default arising from any failure to 

13 perform nonmonetary obligations under an un14 expired lease of real property, if it is impossible 

15 for the trustee to cure such default by performing 

16 nonmonetary acts at and after the time of as17 sumption, except that if such default arises from 

18 a failure to operate in accordance with a non19 residential real property lease, then such default 

20 shall be cured by performance at and after the 

21 time of assumption in accordance with such 

22 lease, and pecuniary losses resulting from such 

23 default shall be compensated in accordance with 

24 the provisions of this paragraph;’’; and 
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1 (B) in paragraph (2)(D), by striking ‘‘pen2 alty rate or provision’’ and inserting ‘‘penalty 

3 rate or penalty provision’’; 

4 (2) in subsection (c)—

5 (A) in paragraph (2), by inserting ‘‘or’’ at 

6 the end; 

7 (B) in paragraph (3), by striking ‘‘; or’’ at 

8 the end and inserting a period; and 

9 (C) by striking paragraph (4); 

10 (3) in subsection (d)—

11 (A) by striking paragraphs (5) through (9); 

12 and 

13 (B) by redesignating paragraph (10) as 

14 paragraph (5); and 

15 (4) in subsection (f)(1) by striking ‘‘; except 

16 that’’ and all that follows through the end of the para17 graph and inserting a period. 

18 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Section 

19 1124(2) of title 11, United States Code, is amended—

20 (1) in subparagraph (A), by inserting ‘‘or of a 

21 kind that section 365(b)(2) expressly does not require 

22 to be cured’’ before the semicolon at the end; 

23 (2) in subparagraph (C), by striking ‘‘and’’ at 

24 the end; 
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1 (3) by redesignating subparagraph (D) as sub2 paragraph (E); and 

3 (4) by inserting after subparagraph (C) the fol4 lowing: 

5 ‘‘(D) if such claim or such interest arises 

6 from any failure to perform a nonmonetary obli7 gation, other than a default arising from failure 

8 to operate a nonresidential real property lease 

9 subject to section 365(b)(1)(A), compensates the 

10 holder of such claim or such interest (other than 

11 the debtor or an insider) for any actual pecu12 niary loss incurred by such holder as a result of 

13 such failure; and’’.

14 SEC. 329. CLARIFICATION OF POSTPETITION WAGES AND 

15 BENEFITS. 

16 Section 503(b)(1)(A) of title 11, United States Code, 

17 is amended to read as follows: 

18 ‘‘(A) the actual, necessary costs and expenses of pre19 serving the estate including—

20 ‘‘(i) wages, salaries, and commissions for 

21 services rendered after the commencement of the 

22 case; and 

23 ‘‘(ii) wages and benefits awarded pursuant 

24 to a judicial proceeding or a proceeding of the 

25 National Labor Relations Board as back pay at-
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1 tributable to any period of time occurring after 

2 commencement of the case under this title, as a 

3 result of a violation of Federal or State law by 

4 the debtor, without regard to the time of the oc5 currence of unlawful conduct on which such 

6 award is based or to whether any services were 

7 rendered, if the court determines that payment of 

8 wages and benefits by reason of the operation of 

9 this clause will not substantially increase the 

10 probability of layoff or termination of current 

11 employees, or of nonpayment of domestic support 

12 obligations, during the case under this title;’’.

13 SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF 

14 CERTAIN PROCEEDINGS. 

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

16 States Code, as amended by section 106, is amended—

17 (1) in paragraph (10), by striking ‘‘or’’ at the 

18 end; 

19 (2) in paragraph (11) by striking the period at 

20 the end and inserting ‘‘; or’’; and 

21 (3) by inserting after paragraph (11) the fol22 lowing: 

23 ‘‘(12) the court after notice and a hearing held 

24 not more than 10 days before the date of the entry of 
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1 the order granting the discharge finds that there is 

2 reasonable cause to believe that—

3 ‘‘(A) section 522(q)(1) may be applicable to 

4 the debtor; and 

5 ‘‘(B) there is pending any proceeding in 

6 which the debtor may be found guilty of a felony 

7 of the kind described in section 522(q)(1)(A) or 

8 liable for a debt of the kind described in section 

9 522(q)(1)(B).’’. 

10 (b) CHAPTER 11.—Section 1141(d) of title 11, United 

11 States Code, as amended by section 321, is amended by add12 ing at the end the following: 

13 ‘‘(C) unless after notice and a hearing held not 

14 more than 10 days before the date of the entry of the 

15 order granting the discharge, the court finds that 

16 there is no reasonable cause to believe that—

17 ‘‘(i) section 522(q)(1) may be applicable to 

18 the debtor; and 

19 ‘‘(ii) there is pending any proceeding in 

20 which the debtor may be found guilty of a felony 

21 of the kind described in section 522(q)(1)(A) or 

22 liable for a debt of the kind described in section 

23 522(q)(1)(B).’’. 

24 (c) CHAPTER 12.—Section 1228 of title 11, United 

25 States Code, is amended—
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1 (1) in subsection (a) by striking ‘‘As’’ and in2 serting ‘‘Subject to subsection (d), as’’, 

3 (2) in subsection (b) by striking ‘‘At’’ and insert4 ing ‘‘Subject to subsection (d), at’’, and 

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

6 ‘‘(f) The court may not grant a discharge under this 

7 chapter unless the court after notice and a hearing held not 

8 more than 10 days before the date of the entry of the order 

9 granting the discharge finds that there is no reasonable 

10 cause to believe that—

11 ‘‘(1) section 522(q)(1) may be applicable to the 

12 debtor; and 

13 ‘‘(2) there is pending any proceeding in which 

14 the debtor may be found guilty of a felony of the kind 

15 described in section 522(q)(1)(A) or liable for a debt 

16 of the kind described in section 522(q)(1)(B).’’. 

17 (d) CHAPTER 13.—Section 1328 of title 11, United 

18 States Code, as amended by section 106, is amended—

19 (1) in subsection (a) by striking ‘‘As’’ and in20 serting ‘‘Subject to subsection (d), as’’, 

21 (2) in subsection (b) by striking ‘‘At’’ and insert22 ing ‘‘Subject to subsection (d), at’’, and 

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

24 ‘‘(h) The court may not grant a discharge under this 

25 chapter unless the court after notice and a hearing held not 
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1 more than 10 days before the date of the entry of the order 

2 granting the discharge finds that there is no reasonable 

3 cause to believe that—

4 ‘‘(1) section 522(q)(1) may be applicable to the 

5 debtor; and 

6 ‘‘(2) there is pending any proceeding in which 

7 the debtor may be found guilty of a felony of the kind 

8 described in section 522(q)(1)(A) or liable for a debt 

9 of the kind described in section 522(q)(1)(B).’’.

10 TITLE IV—GENERAL AND SMALL 

11 BUSINESS BANKRUPTCY PRO12 VISIONS 

13 Subtitle A—General Business 

14 Bankruptcy Provisions 

15 SEC. 401. ADEQUATE PROTECTION FOR INVESTORS. 

16 (a) DEFINITION.—Section 101 of title 11, United 

17 States Code, is amended by inserting after paragraph (48) 

18 the following: 

19 ‘‘(48A) ‘securities self regulatory organization’ 

20 means either a securities association registered with 

21 the Securities and Exchange Commission under sec22 tion 15A of the Securities Exchange Act of 1934 or 

23 a national securities exchange registered with the Se24 curities and Exchange Commission under section 6 of 

25 the Securities Exchange Act of 1934;’’. 
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1 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

2 United States Code, as amended by sections 224, 303, and 

3 311, is amended by inserting after paragraph (24) the fol4 lowing: 

5 ‘‘(25) under subsection (a), of—

6 ‘‘(A) the commencement or continuation of 

7 an investigation or action by a securities self 

8 regulatory organization to enforce such organiza9 tion’s regulatory power; 

10 ‘‘(B) the enforcement of an order or deci11 sion, other than for monetary sanctions, obtained 

12 in an action by such securities self regulatory or13 ganization to enforce such organization’s regu14 latory power; or 

15 ‘‘(C) any act taken by such securities self 

16 regulatory organization to delist, delete, or refuse 

17 to permit quotation of any stock that does not 

18 meet applicable regulatory requirements;’’. 

19 SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY 

20 HOLDERS. 

21 Section 341 of title 11, United States Code, is amended 

22 by adding at the end the following: 

23 ‘‘(e) Notwithstanding subsections (a) and (b), the 

24 court, on the request of a party in interest and after notice 

25 and a hearing, for cause may order that the United States 
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1 trustee not convene a meeting of creditors or equity security 

2 holders if the debtor has filed a plan as to which the debtor 

3 solicited acceptances prior to the commencement of the 

4 case.’’. 

5 SEC. 403. PROTECTION OF REFINANCE OF SECURITY INTER6 EST. 

7 Subparagraphs (A), (B), and (C) of section 547(e)(2) 

8 of title 11, United States Code, are each amended by strik9 ing ‘‘10’’ each place it appears and inserting ‘‘30’’. 

10 SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED 

11 LEASES. 

12 (a) IN GENERAL.—Section 365(d)(4) of title 11, 

13 United States Code, is amended to read as follows: 

14 ‘‘(4)(A) Subject to subparagraph (B), an unexpired 

15 lease of nonresidential real property under which the debtor 

16 is the lessee shall be deemed rejected, and the trustee shall 

17 immediately surrender that nonresidential real property to 

18 the lessor, if the trustee does not assume or reject the unex19 pired lease by the earlier of—

20 ‘‘(i) the date that is 120 days after the date of 

21 the order for relief; or 

22 ‘‘(ii) the date of the entry of an order confirming 

23 a plan. 

24 ‘‘(B)(i) The court may extend the period determined 

25 under subparagraph (A), prior to the expiration of the 120-
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1 day period, for 90 days on the motion of the trustee or lessor 

2 for cause. 

3 ‘‘(ii) If the court grants an extension under clause (i), 

4 the court may grant a subsequent extension only upon prior 

5 written consent of the lessor in each instance.’’. 

6 (b) EXCEPTION.—Section 365(f)(1) of title 11, United 

7 States Code, is amended by striking ‘‘subsection’’ the first 

8 place it appears and inserting ‘‘subsections (b) and’’. 

9 SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS 

10 COMMITTEES. 

11 (a) APPOINTMENT.—Section 1102(a) of title 11, 

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

13 following: 

14 ‘‘(4) On request of a party in interest and after notice 

15 and a hearing, the court may order the United States trust16 ee to change the membership of a committee appointed 

17 under this subsection, if the court determines that the 

18 change is necessary to ensure adequate representation of 

19 creditors or equity security holders. The court may order 

20 the United States trustee to increase the number of members 

21 of a committee to include a creditor that is a small business 

22 concern (as described in section 3(a)(1) of the Small Busi23 ness Act), if the court determines that the creditor holds 

24 claims (of the kind represented by the committee) the aggre-
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1 gate amount of which, in comparison to the annual gross 

2 revenue of that creditor, is disproportionately large.’’. 

3 (b) INFORMATION.—Section 1102(b) of title 11, United 

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

5 ‘‘(3) A committee appointed under subsection (a) 

6 shall—

7 ‘‘(A) provide access to information for creditors 

8 who—

9 ‘‘(i) hold claims of the kind represented by 

10 that committee; and 

11 ‘‘(ii) are not appointed to the committee; 

12 ‘‘(B) solicit and receive comments from the credi13 tors described in subparagraph (A); and 

14 ‘‘(C) be subject to a court order that compels any 

15 additional report or disclosure to be made to the 

16 creditors described in subparagraph (A).’’.

17 SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, 

18 UNITED STATES CODE. 

19 Section 546 of title 11, United States Code, is amend20 ed—

21 (1) by redesignating the second subsection (g) (as 

22 added by section 222(a) of Public Law 103–394) as 

23 subsection (h); 

24 (2) in subsection (h), as so redesignated, by in25 serting ‘‘and subject to the prior rights of holders of 
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1 security interests in such goods or the proceeds of such 

2 goods’’ after ‘‘consent of a creditor’’; and 

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

4 ‘‘(i)(1) Notwithstanding paragraphs (2) and (3) of sec5 tion 545, the trustee may not avoid a warehouseman’s lien 

6 for storage, transportation, or other costs incidental to the 

7 storage and handling of goods. 

8 ‘‘(2) The prohibition under paragraph (1) shall be ap9 plied in a manner consistent with any State statute appli10 cable to such lien that is similar to section 7–209 of the 

11 Uniform Commercial Code, as in effect on the date of enact12 ment of the Bankruptcy Abuse Prevention and Consumer 

13 Protection Act of 2003, or any successor to such section 7–

14 209.’’. 

15 SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11, 

16 UNITED STATES CODE. 

17 Section 330(a) of title 11, United States Code, is 

18 amended—

19 (1) in paragraph (3)—

20 (A) by striking ‘‘(A) In’’ and inserting 

21 ‘‘In’’; and 

22 (B) by inserting ‘‘to an examiner, trustee 

23 under chapter 11, or professional person’’ after 

24 ‘‘awarded’’; and 

25 (2) by adding at the end the following: 
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1 ‘‘(7) In determining the amount of reasonable com2 pensation to be awarded to a trustee, the court shall treat 

3 such compensation as a commission, based on section 326.’’. 

4 SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION. 

5 Section 1125 of title 11, United States Code, is amend6 ed by adding at the end the following: 

7 ‘‘(g) Notwithstanding subsection (b), an acceptance or 

8 rejection of the plan may be solicited from a holder of a 

9 claim or interest if such solicitation complies with applica10 ble nonbankruptcy law and if such holder was solicited be11 fore the commencement of the case in a manner complying 

12 with applicable nonbankruptcy law.’’. 

13 SEC. 409. PREFERENCES. 

14 Section 547(c) of title 11, United States Code, is 

15 amended—

16 (1) by striking paragraph (2) and inserting the 

17 following: 

18 ‘‘(2) to the extent that such transfer was in pay19 ment of a debt incurred by the debtor in the ordinary 

20 course of business or financial affairs of the debtor 

21 and the transferee, and such transfer was—

22 ‘‘(A) made in the ordinary course of busi23 ness or financial affairs of the debtor and the 

24 transferee; or 
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1 ‘‘(B) made according to ordinary business 

2 terms;’’; 

3 (2) in paragraph (8), by striking the period at 

4 the end and inserting ‘‘; or’’; and 

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

6 ‘‘(9) if, in a case filed by a debtor whose debts 

7 are not primarily consumer debts, the aggregate value 

8 of all property that constitutes or is affected by such 

9 transfer is less than $5,000.’’. 

10 SEC. 410. VENUE OF CERTAIN PROCEEDINGS. 

11 Section 1409(b) of title 28, United States Code, is 

12 amended by inserting ‘‘, or a debt (excluding a consumer 

13 debt) against a noninsider of less than $10,000,’’ after 

14 ‘‘$5,000’’. 

15 SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11. 

16 Section 1121(d) of title 11, United States Code, is 

17 amended—

18 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject 

19 to paragraph (2), on’’; and 

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

21 ‘‘(2)(A) The 120-day period specified in paragraph (1) 

22 may not be extended beyond a date that is 18 months after 

23 the date of the order for relief under this chapter. 
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1 ‘‘(B) The 180-day period specified in paragraph (1) 

2 may not be extended beyond a date that is 20 months after 

3 the date of the order for relief under this chapter.’’. 

4 SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP INTER5 ESTS. 

6 Section 523(a)(16) of title 11, United States Code, is 

7 amended—

8 (1) by striking ‘‘dwelling’’ the first place it ap9 pears; 

10 (2) by striking ‘‘ownership or’’ and inserting 

11 ‘‘ownership,’’; 

12 (3) by striking ‘‘housing’’ the first place it ap13 pears; and 

14 (4) by striking ‘‘but only’’ and all that follows 

15 through ‘‘such period,’’ and inserting ‘‘or a lot in a 

16 homeowners association, for as long as the debtor or 

17 the trustee has a legal, equitable, or possessory owner18 ship interest in such unit, such corporation, or such 

19 lot,’’. 

20 SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING 

21 OF CREDITORS. 

22 Section 341(c) of title 11, United States Code, is 

23 amended by inserting at the end the following: ‘‘Notwith24 standing any local court rule, provision of a State constitu25 tion, any other Federal or State law that is not a bank-
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1 ruptcy law, or other requirement that representation at the 

2 meeting of creditors under subsection (a) be by an attorney, 

3 a creditor holding a consumer debt or any representative 

4 of the creditor (which may include an entity or an employee 

5 of an entity and may be a representative for more than 

6 1 creditor) shall be permitted to appear at and participate 

7 in the meeting of creditors in a case under chapter 7 or 

8 13, either alone or in conjunction with an attorney for the 

9 creditor. Nothing in this subsection shall be construed to 

10 require any creditor to be represented by an attorney at 

11 any meeting of creditors.’’. 

12 SEC. 414. DEFINITION OF DISINTERESTED PERSON. 

13 Section 101(14) of title 11, United States Code, is 

14 amended to read as follows: 

15 ‘‘(14) ‘disinterested person’ means a person 

16 that—

17 ‘‘(A) is not a creditor, an equity security 

18 holder, or an insider; 

19 ‘‘(B) is not and was not, within 2 years be20 fore the date of the filing of the petition, a direc21 tor, officer, or employee of the debtor; and 

22 ‘‘(C) does not have an interest materially 

23 adverse to the interest of the estate or of any 

24 class of creditors or equity security holders, by 

25 reason of any direct or indirect relationship to, 
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1 connection with, or interest in, the debtor, or for 

2 any other reason;’’. 

3 SEC. 415. FACTORS FOR COMPENSATION OF PROFESSIONAL 

4 PERSONS. 

5 Section 330(a)(3) of title 11, United States Code, is 

6 amended—

7 (1) in subparagraph (D), by striking ‘‘and’’ at 

8 the end; 

9 (2) by redesignating subparagraph (E) as sub10 paragraph (F); and 

11 (3) by inserting after subparagraph (D) the fol12 lowing: 

13 ‘‘(E) with respect to a professional person, 

14 whether the person is board certified or otherwise has 

15 demonstrated skill and experience in the bankruptcy 

16 field; and’’. 

17 SEC. 416. APPOINTMENT OF ELECTED TRUSTEE. 

18 Section 1104(b) of title 11, United States Code, is 

19 amended—

20 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 

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

22 ‘‘(2)(A) If an eligible, disinterested trustee is elected 

23 at a meeting of creditors under paragraph (1), the United 

24 States trustee shall file a report certifying that election. 
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1 ‘‘(B) Upon the filing of a report under subparagraph 

2 (A)— 

3 ‘‘(i) the trustee elected under paragraph (1) shall 

4 be considered to have been selected and appointed for 

5 purposes of this section; and 

6 ‘‘(ii) the service of any trustee appointed under 

7 subsection (d) shall terminate. 

8 ‘‘(C) The court shall resolve any dispute arising out 

9 of an election described in subparagraph (A).’’. 

10 SEC. 417. UTILITY SERVICE. 

11 Section 366 of title 11, United States Code, is amend12 ed—

13 (1) in subsection (a), by striking ‘‘subsection (b)’’ 

14 and inserting ‘‘subsections (b) and (c)’’; and 

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

16 ‘‘(c)(1)(A) For purposes of this subsection, the term 

17 ‘assurance of payment’ means—

18 ‘‘(i) a cash deposit; 

19 ‘‘(ii) a letter of credit; 

20 ‘‘(iii) a certificate of deposit; 

21 ‘‘(iv) a surety bond; 

22 ‘‘(v) a prepayment of utility consumption; or 

23 ‘‘(vi) another form of security that is mutually 

24 agreed on between the utility and the debtor or the 

25 trustee. 
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1 ‘‘(B) For purposes of this subsection an administrative 

2 expense priority shall not constitute an assurance of pay3 ment. 

4 ‘‘(2) Subject to paragraphs (3) and (4), with respect 

5 to a case filed under chapter 11, a utility referred to in 

6 subsection (a) may alter, refuse, or discontinue utility serv7 ice, if during the 30-day period beginning on the date of 

8 the filing of the petition, the utility does not receive from 

9 the debtor or the trustee adequate assurance of payment for 

10 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 of 

13 the amount of an assurance of payment under paragraph 

14 (2). 

15 ‘‘(B) In making a determination under this paragraph 

16 whether an assurance of payment is adequate, the court 

17 may not consider—

18 ‘‘(i) the absence of security before the date of the 

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 the 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 the 

4 utility by the debtor before the date of the filing of the peti5 tion without notice or order of the court.’’. 

6 SEC. 418. BANKRUPTCY FEES. 

7 Section 1930 of title 28, United States Code, is amend8 ed—

9 (1) in subsection (a), by striking ‘‘Notwith10 standing section 1915 of this title, the’’ and inserting 

11 ‘‘The’’; and 

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

13 ‘‘(f)(1) Under the procedures prescribed by the Judicial 

14 Conference of the United States, the district court or the 

15 bankruptcy court may waive the filing fee in a case under 

16 chapter 7 of title 11 for an individual if the court deter17 mines that such individual 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’ means 

24 the filing required by subsection (a), or any other fee pre25 scribed by the Judicial Conference under subsections (b) 
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1 and (c) that is payable to the clerk upon the commencement 

2 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 court 

7 or the bankruptcy court from waiving, in accordance with 

8 Judicial Conference policy, fees prescribed under this sec9 tion 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 Judicial Conference of 

14 the United States, in accordance with section 2075 of 

15 title 28 of the United States Code and after consider16 ation of the views of the Director of the Executive Of17 fice for United States Trustees, shall propose amended 

18 Federal Rules of Bankruptcy Procedure and in ac19 cordance with rule 9009 of the Federal Rules of Bank20 ruptcy Procedure shall prescribe official bankruptcy 

21 forms directing debtors under chapter 11 of title 11 

22 of United States Code, to disclose the information de23 scribed in paragraph (2) by filing and serving peri24 odic financial and other reports designed to provide 

25 such information. 
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1 (2) INFORMATION.—The information referred to 

2 in paragraph (1) is the value, operations, and profit3 ability of any closely held corporation, partnership, 

4 or of any other entity in which the debtor holds a sub5 stantial or controlling interest. 

6 (b) PURPOSE.—The purpose of the rules and reports 

7 under subsection (a) shall be to assist parties in interest 

8 taking steps to ensure that the debtor’s interest in any enti9 ty referred to in subsection (a)(2) is used for the payment 

10 of allowed claims against debtor. 

11 Subtitle B—Small Business 

12 Bankruptcy Provisions 

13 SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT 

14 AND PLAN. 

15 Section 1125 of title 11, United States Code, is amend16 ed—

17 (1) in subsection (a)(1), by inserting before the 

18 semicolon ‘‘and in determining whether a disclosure 

19 statement provides adequate information, the court 

20 shall consider the complexity of the case, the benefit 

21 of additional information to creditors and other par22 ties in interest, and the cost of providing additional 

23 information’’; and 

24 (2) by striking subsection (f), and inserting the 

25 following: 
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1 ‘‘(f) Notwithstanding subsection (b), in a small busi2 ness case—

3 ‘‘(1) the court may determine that the plan itself 

4 provides adequate information and that a separate 

5 disclosure statement is not necessary; 

6 ‘‘(2) the court may approve a disclosure state7 ment submitted on standard forms approved by the 

8 court or adopted under section 2075 of title 28; and 

9 ‘‘(3)(A) the court may conditionally approve a 

10 disclosure statement subject to final approval after 

11 notice and a hearing; 

12 ‘‘(B) acceptances and rejections of a plan may be 

13 solicited based on a conditionally approved disclosure 

14 statement if the debtor provides adequate information 

15 to each holder of a claim or interest that is solicited, 

16 but a conditionally approved disclosure statement 

17 shall be mailed not later than 25 days before the date 

18 of the hearing on confirmation of the plan; and 

19 ‘‘(C) the hearing on the disclosure statement may 

20 be combined with the hearing on confirmation of a 

21 plan.’’.

22 SEC. 432. DEFINITIONS. 

23 (a) DEFINITIONS.—Section 101 of title 11, United 

24 States Code, is amended by striking paragraph (51C) and 

25 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 activi7 ties (including any affiliate of such person that 

8 is also a debtor under this title and excluding a 

9 person whose primary activity is the business of 

10 owning or operating real property or activities 

11 incidental thereto) that has aggregate noncontin12 gent liquidated secured and unsecured debts as of 

13 the date of the petition or the date of the order 

14 for relief in an amount not more than 

15 $2,000,000 (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 that 

20 the committee of unsecured creditors is not suffi21 ciently active and representative to provide effec22 tive 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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1 debts in an amount greater than $2,000,000 (ex2 cluding debt owed to 1 or more affiliates or in3 siders);’’. 

4 (b) CONFORMING AMENDMENT.—Section 1102(a)(3) of 

5 title 11, United States Code, is amended by inserting ‘‘debt6 or’’ after ‘‘small business’’. 

7 (c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

8 104(b) of title 11, United States Code, as amended by sec9 tion 226, is amended by inserting ‘‘101(51D),’’ after 

10 ‘‘101(3),’’ each place it appears. 

11 SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND 

12 PLAN. 

13 Within a reasonable period of time after the date of 

14 enactment of this Act, the Judicial Conference of the United 

15 States shall prescribe in accordance with rule 9009 of the 

16 Federal Rules of Bankruptcy Procedure official standard 

17 form disclosure statements and plans of reorganization for 

18 small business debtors (as defined in section 101 of title 11, 

19 United States Code, as amended by this Act), designed to 

20 achieve a practical balance between—

21 (1) the reasonable needs of the courts, the United 

22 States trustee, creditors, and other parties in interest 

23 for reasonably complete information; and 

24 (2) economy and simplicity for debtors. 
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1 SEC. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS. 

2 (a) REPORTING REQUIRED.—

3 (1) IN GENERAL.—Chapter 3 of title 11, United 

4 States Code, is amended by inserting after section 307 

5 the following: 

6 ‘‘§ 308. Debtor reporting requirements 

7 ‘‘(a) For purposes of this section, the term ‘profit8 ability’ means, with respect to a debtor, the amount of 

9 money that the debtor has earned or lost during current 

10 and recent fiscal periods. 

11 ‘‘(b) A small business debtor shall file periodic finan12 cial and other reports containing information including—

13 ‘‘(1) the debtor’s profitability; 

14 ‘‘(2) reasonable approximations of the debtor’s 

15 projected cash receipts and cash disbursements over a 

16 reasonable period; 

17 ‘‘(3) comparisons of actual cash receipts and dis18 bursements with projections in prior reports; 

19 ‘‘(4)(A) whether the debtor is—

20 ‘‘(i) in compliance in all material respects 

21 with postpetition requirements imposed by this 

22 title and the Federal Rules of Bankruptcy Proce23 dure; and 

24 ‘‘(ii) timely filing tax returns and other re25 quired government filings and paying taxes and 

26 other administrative expenses when due; 
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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 inter9 ests of the debtor and creditors, and in the public in10 terest in fair and efficient procedures under chapter 

11 11 of this title.’’. 

12 (2) CLERICAL AMENDMENT.—The table of sec13 tions for chapter 3 of title 11, United States Code, is 

14 amended by inserting after the item relating to sec15 tion 307 the following:

‘‘308. Debtor reporting requirements.’’.

16 (b) EFFECTIVE DATE.—The amendments made by sub17 section (a) shall take effect 60 days after the date on which 

18 rules are prescribed under section 2075 of title 28, United 

19 States Code, to establish forms to be used to comply with 

20 section 308 of title 11, United States Code, as added by 

21 subsection (a). 

22 SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR 

23 SMALL BUSINESS CASES. 

24 (a) PROPOSAL OF RULES AND FORMS.—The Judicial 

25 Conference of the United States shall propose in accordance 
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1 with section 2073 of title 28 of the United States Code 

2 amended Federal Rules of Bankruptcy Procedure, and shall 

3 prescribe in accordance with rule 9009 of the Federal Rules 

4 of Bankruptcy Procedure official bankruptcy forms, direct5 ing small business debtors to file periodic financial and 

6 other reports containing information, including informa7 tion relating to—

8 (1) the debtor’s profitability; 

9 (2) the debtor’s cash receipts and disbursements; 

10 and 

11 (3) whether the debtor is timely filing tax re12 turns and paying taxes and other administrative ex13 penses when due. 

14 (b) PURPOSE.—The rules and forms proposed under 

15 subsection (a) shall be designed to achieve a practical bal16 ance among—

17 (1) the reasonable needs of the bankruptcy court, 

18 the United States trustee, creditors, and other parties 

19 in interest for reasonably complete information; 

20 (2) a small business debtor’s interest that re21 quired reports be easy and inexpensive to complete; 

22 and 

23 (3) the interest of all parties that the required re24 ports help such debtor to understand such debtor’s fi25 nancial condition and plan the such debtor’s future. 
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1 SEC. 436. DUTIES IN SMALL BUSINESS CASES. 

2 (a) DUTIES IN CHAPTER 11 CASES.—Subchapter I of 

3 chapter 11 of title 11, United States Code, as amended by 

4 section 321, 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, statement 

14 of operations, cash-flow statement, Federal in15 come tax return; or 

16 ‘‘(B) a statement made under penalty of 

17 perjury that no balance sheet, statement of oper18 ations, or cash-flow statement has been prepared 

19 and no Federal tax return has been filed; 

20 ‘‘(2) attend, through its senior management per21 sonnel and counsel, meetings scheduled by the court or 

22 the United States trustee, including initial debtor 

23 interviews, scheduling conferences, and meetings of 

24 creditors convened under section 341 unless the court, 

25 after notice and a hearing, waives that requirement 
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1 upon a finding of extraordinary and compelling cir2 cumstances; 

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 insur13 ance 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 taxes entitled to administrative expense priority ex18 cept those being contested by appropriate proceedings 

19 being diligently prosecuted; and 

20 ‘‘(7) allow the United States trustee, or a des21 ignated representative of the United States trustee, to 

22 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 debtor.’’. 
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1 (b) CLERICAL AMENDMENT.—The table of sections for 

2 chapter 11 of title 11, United States Code, as amended by 

3 section 321, is amended by inserting after the item relating 

4 to section 1115 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 amend7 ed by striking subsection (e) and inserting the following: 

8 ‘‘(e) In a small business case—

9 ‘‘(1) only the debtor may file a plan until after 

10 180 days after the date of the order for relief, unless 

11 that period is—

12 ‘‘(A) extended as provided by this sub13 section, after notice and a hearing; or 

14 ‘‘(B) the court, for cause, orders otherwise; 

15 ‘‘(2) the plan and a disclosure statement (if any) 

16 shall be filed not later than 300 days after the date 

17 of the order for relief; and 

18 ‘‘(3) the time periods specified in paragraphs (1) 

19 and (2), and the time fixed in section 1129(e) within 

20 which the plan shall be confirmed, may be extended 

21 only if—

22 ‘‘(A) the debtor, after providing notice to 

23 parties in interest (including the United States 

24 trustee), demonstrates by a preponderance of the 

25 evidence that it is more likely than not that the 
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1 court will confirm a plan within a reasonable 

2 period of time; 

3 ‘‘(B) a new deadline is imposed at the time 

4 the extension is granted; and 

5 ‘‘(C) the order extending time is signed be6 fore the existing deadline has expired.’’.

7 SEC. 438. PLAN CONFIRMATION DEADLINE. 

8 Section 1129 of title 11, United States Code, is amend9 ed by adding at the end the following: 

10 ‘‘(e) In a small business case, the court shall confirm 

11 a plan that complies with the applicable provisions of this 

12 title and that is filed in accordance with section 1121(e) 

13 not later than 45 days after the plan is filed unless the 

14 time for confirmation is extended in accordance with sec15 tion 1121(e)(3).’’. 

16 SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE. 

17 Section 586(a) of title 28, United States Code, is 

18 amended—

19 (1) in paragraph (3)—

20 (A) in subparagraph (G), by striking ‘‘and’’ 

21 at the end; 

22 (B) by redesignating subparagraph (H) as 

23 subparagraph (I); and 

24 (C) by inserting after subparagraph (G) the 

25 following: 
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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 date of the order for 

13 relief but before the first meeting scheduled under 

14 section 341(a) of title 11, at which time the 

15 United States trustee shall—

16 ‘‘(i) begin to investigate the debtor’s vi17 ability; 

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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1 ‘‘(v) inform the debtor of other obliga2 tions; 

3 ‘‘(B) if determined to be appropriate and 

4 advisable, visit the appropriate business premises 

5 of the debtor, ascertain the state of the debtor’s 

6 books and records, and verify that the debtor has 

7 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 con11 firm 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 shall 

15 apply promptly after making that finding to the 

16 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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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 amend6 ed by sections 106, 305, and 311, is amended—

7 (1) in subsection (k), as so redesignated by sec8 tion 305—

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) applies 

14 to the debtor, the recovery under paragraph (1) of this sub15 section against such entity shall be limited to actual dam16 ages.’’; and 

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

18 ‘‘(n)(1) Except as provided in paragraph (2), sub19 section (a) does not apply in a case in which the debtor—

20 ‘‘(A) is a debtor in a small business case pending 

21 at the time the petition is filed; 

22 ‘‘(B) was a debtor in a small business case that 

23 was dismissed for any reason by an order that became 

24 final in the 2-year period ending on the date of the 

25 order for relief entered with respect to the petition; 
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1 ‘‘(C) was a debtor in a small business case in 

2 which a plan was confirmed in the 2-year period end3 ing on the date of the order for relief entered with re4 spect to the petition; or 

5 ‘‘(D) is an entity that has acquired substantially 

6 all of the assets or business of a small business debtor 

7 described in subparagraph (A), (B), or (C), unless 

8 such entity establishes by a preponderance of the evi9 dence that such entity acquired substantially all of 

10 the assets or business of such small business debtor in 

11 good faith and not for the purpose of evading this 

12 paragraph. 

13 ‘‘(2) Paragraph (1) does not apply—

14 ‘‘(A) to an involuntary case involving no collu15 sion by the debtor with creditors; or 

16 ‘‘(B) to the filing of a petition if—

17 ‘‘(i) the debtor proves by a preponderance of 

18 the evidence that the filing of the petition re19 sulted from circumstances beyond the control of 

20 the debtor not foreseeable at the time the case 

21 then pending was filed; and 

22 ‘‘(ii) it is more likely than not that the 

23 court will confirm a feasible plan, but not a liq24 uidating plan, within a reasonable period of 

25 time.’’.
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1 SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON2 VERSION AND APPOINTMENT OF TRUSTEE. 

3 (a) EXPANDED GROUNDS FOR DISMISSAL OR CONVER4 SION.—Section 1112 of title 11, United States Code, is 

5 amended by striking subsection (b) and inserting the fol6 lowing: 

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 no10 tice and a hearing, absent unusual circumstances specifi11 cally identified by the court that establish that the requested 

12 conversion or dismissal is not in the best interests of credi13 tors and the estate, the court shall convert a case under this 

14 chapter to a case under chapter 7 or dismiss a case under 

15 this chapter, whichever is in the best interests of creditors 

16 and the estate, if the movant establishes cause. 

17 ‘‘(2) The relief provided in paragraph (1) shall not be 

18 granted absent unusual circumstances specifically identi19 fied by the court that establish that such relief is not in 

20 the best interests of creditors and the estate, if the debtor 

21 or another party in interest objects and establishes that—

22 ‘‘(A) there is a reasonable likelihood that a plan 

23 will be confirmed within the timeframes established in 

24 sections 1121(e) and 1129(e) of this title, or if such 

25 sections do not apply, within a reasonable period of 

26 time; and 
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1 ‘‘(B) the grounds for granting such relief include 

2 an act or omission of the debtor other than under 

3 paragraph (4)(A)—

4 ‘‘(i) for which there exists a reasonable jus5 tification for the act or omission; and 

6 ‘‘(ii) that will be cured within a reasonable 

7 period of time fixed by the court. 

8 ‘‘(3) The court shall commence the hearing on a motion 

9 under this subsection not later than 30 days after filing 

10 of the motion, and shall decide the motion not later than 

11 15 days after commencement of such hearing, unless the 

12 movant expressly consents to a continuance for a specific 

13 period of time or compelling circumstances prevent the 

14 court from meeting the time limits established by this para15 graph. 

16 ‘‘(4) For purposes of this subsection, the term ‘cause’ 

17 includes—

18 ‘‘(A) substantial or continuing loss to or diminu19 tion of the estate and the absence of a reasonable like20 lihood of rehabilitation; 

21 ‘‘(B) gross mismanagement of the estate; 

22 ‘‘(C) failure to maintain appropriate insurance 

23 that poses a risk to the estate or to the public; 

24 ‘‘(D) unauthorized use of cash collateral substan25 tially harmful to 1 or more creditors; 
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1 ‘‘(E) failure to comply with an order of the 

2 court; 

3 ‘‘(F) unexcused failure to satisfy timely any fil4 ing or reporting requirement established by this title 

5 or by any rule applicable to a case under this chap6 ter; 

7 ‘‘(G) failure to attend the meeting of creditors 

8 convened under section 341(a) or an examination or9 dered under rule 2004 of the Federal Rules of Bank10 ruptcy Procedure without good cause shown by the 

11 debtor; 

12 ‘‘(H) failure timely to provide information or at13 tend meetings reasonably requested by the United 

14 States trustee (or the bankruptcy administrator, if 

15 any); 

16 ‘‘(I) failure timely to pay taxes owed after the 

17 date of the order for relief or to file tax returns due 

18 after the date of the order for relief; 

19 ‘‘(J) failure to file a disclosure statement, or to 

20 file or confirm a plan, within the time fixed by this 

21 title or by order of the court; 

22 ‘‘(K) failure to pay any fees or charges required 

23 under chapter 123 of title 28; 

24 ‘‘(L) revocation of an order of confirmation 

25 under section 1144; 
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1 ‘‘(M) inability to effectuate substantial con2 summation of a confirmed plan; 

3 ‘‘(N) material default by the debtor with respect 

4 to a confirmed plan; 

5 ‘‘(O) termination of a confirmed plan by reason 

6 of the occurrence of a condition specified in the plan; 

7 and 

8 ‘‘(P) failure of the debtor to pay any domestic 

9 support obligation that first becomes payable after the 

10 date of the filing of the petition. 

11 ‘‘(5) The court shall commence the hearing on a motion 

12 under this subsection not later than 30 days after filing 

13 of the motion, and shall decide the motion not later than 

14 15 days after commencement of such hearing, unless the 

15 movant expressly consents to a continuance for a specific 

16 period of time or compelling circumstances prevent the 

17 court from meeting the time limits established by this para18 graph.’’. 

19 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

20 TRUSTEE.—Section 1104(a) of title 11, United States Code, 

21 is amended—

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

23 end; 

24 (2) in paragraph (2), 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 ‘‘(3) if grounds exist to convert or dismiss the 

3 case under section 1112, but the court determines that 

4 the appointment of a trustee or an examiner is in the 

5 best interests of creditors and the estate.’’. 

6 SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED 

7 STATES CODE, WITH RESPECT TO SMALL 

8 BUSINESSES. 

9 Not later than 2 years after the date of enactment of 

10 this Act, the Administrator of the Small Business Adminis11 tration, in consultation with the Attorney General, the Di12 rector of the Executive Office for United States Trustees, 

13 and the Director of the Administrative Office of the United 

14 States Courts, shall—

15 (1) conduct a study to determine—

16 (A) the internal and external factors that 

17 cause small businesses, especially sole proprietor18 ships, to become debtors in cases under title 11, 

19 United States Code, and that cause certain small 

20 businesses to successfully complete cases under 

21 chapter 11 of such title; and 

22 (B) how Federal laws relating to bank23 ruptcy may be made more effective and efficient 

24 in assisting small businesses to remain viable; 

25 and 
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1 (2) submit to the President pro tempore of the 

2 Senate and the Speaker of the House of Representa3 tives a report summarizing that study. 

4 SEC. 444. PAYMENT OF INTEREST. 

5 Section 362(d)(3) of title 11, United States Code, is 

6 amended—

7 (1) by inserting ‘‘or 30 days after the court de8 termines that the debtor is subject to this paragraph, 

9 whichever is later’’ after ‘‘90-day period)’’; and 

10 (2) by striking subparagraph (B) and inserting 

11 the following: 

12 ‘‘(B) the debtor has commenced monthly 

13 payments that—

14 ‘‘(i) may, in the debtor’s sole discre15 tion, notwithstanding section 363(c)(2), be 

16 made from rents or other income generated 

17 before or after the commencement of the case 

18 by or from the property to each creditor 

19 whose claim is secured by such real estate 

20 (other than a claim secured by a judgment 

21 lien or by an unmatured statutory lien); 

22 and 

23 ‘‘(ii) are in an amount equal to inter24 est at the then applicable nondefault con-
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1 tract rate of interest on the value of the 

2 creditor’s interest in the real estate; or’’. 

3 SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES. 

4 Section 503(b) of title 11, United States Code, is 

5 amended—

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

7 end; 

8 (2) in paragraph (6), by striking the period at 

9 the end and inserting a semicolon; and 

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

11 ‘‘(7) with respect to a nonresidential real prop12 erty lease previously assumed under section 365, and 

13 subsequently rejected, a sum equal to all monetary ob14 ligations due, excluding those arising from or relating 

15 to a failure to operate or a penalty provision, for the 

16 period of 2 years following the later of the rejection 

17 date or the date of actual turnover of the premises, 

18 without reduction or setoff for any reason whatsoever 

19 except for sums actually received or to be received 

20 from an entity other than the debtor, and the claim 

21 for remaining sums due for the balance of the term 

22 of the lease shall be a claim under section 502(b)(6);’’.
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1 SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A 

2 PLAN ADMINISTRATOR OF AN EMPLOYEE 

3 BENEFIT PLAN. 

4 (a) IN GENERAL.—Section 521(a) of title 11, United 

5 States Code, as amended by sections 106 and 304, is amend6 ed—

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

8 end; 

9 (2) in paragraph (6), by striking the period at 

10 the end and inserting ‘‘; and’’; and 

11 (3) by adding after paragraph (6) the following: 

12 ‘‘(7) unless a trustee is serving in the case, con13 tinue to perform the obligations required of the ad14 ministrator (as defined in section 3 of the Employee 

15 Retirement Income Security Act of 1974) of an em16 ployee benefit plan if at the time of the commence17 ment of the case the debtor (or any entity designated 

18 by the debtor) served as such administrator.’’. 

19 (b) DUTIES OF TRUSTEES.—Section 704(a) of title 11, 

20 United States Code, as amended by sections 102 and 219, 

21 is amended—

22 (1) in paragraph (10), by striking ‘‘and’’ at the 

23 end; and 

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

25 ‘‘(11) if, at the time of the commencement of the 

26 case, the debtor (or any entity designated by the debt-
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1 or) served as the administrator (as defined in section 

2 3 of the Employee Retirement Income Security Act of 

3 1974) of an employee benefit plan, continue to per4 form the obligations required of the administrator; 

5 and’’. 

6 (c) CONFORMING AMENDMENT.—Section 1106(a)(1) of 

7 title 11, United States Code, is amended to read as follows: 

8 ‘‘(1) perform the duties of the trustee, as speci9 fied in paragraphs (2), (5), (7), (8), (9), (10), and 

10 (11) of section 704;’’.

11 SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EM12 PLOYEES. 

13 Section 1114(d) of title 11, United States Code, is 

14 amended—

15 (1) by striking ‘‘appoint’’ and inserting ‘‘order 

16 the appointment of’’, and 

17 (2) by adding at the end the following: ‘‘The 

18 United States trustee shall appoint any such com19 mittee.’’. 

20 TITLE V—MUNICIPAL 

21 BANKRUPTCY PROVISIONS 

22 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI23 TION. 

24 (a) TECHNICAL AMENDMENT RELATING TO MUNICI25 PALITIES.—Section 921(d) of title 11, United States Code, 
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1 is amended by inserting ‘‘notwithstanding section 301(b)’’ 

2 before the period at the end. 

3 (b) CONFORMING AMENDMENT.—Section 301 of title 

4 11, United States Code, is amended—

5 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’; and 

6 (2) by striking the last sentence and inserting 

7 the following: 

8 ‘‘(b) The commencement of a voluntary case under a 

9 chapter of this title constitutes an order for relief under such 

10 chapter.’’. 

11 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 

12 9. 

13 Section 901(a) of title 11, United States Code, is 

14 amended—

15 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 

16 (2) by inserting ‘‘559, 560, 561, 562,’’ after 

17 ‘‘557,’’. 

18 TITLE VI—BANKRUPTCY DATA 

19 SEC. 601. IMPROVED BANKRUPTCY STATISTICS. 

20 (a) IN GENERAL.—Chapter 6 of title 28, United States 

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

22 ‘‘§ 159. Bankruptcy statistics 

23 ‘‘(a) The clerk of the district court, or the clerk of the 

24 bankruptcy court if one is certified pursuant to section 

25 156(b) of this title, shall collect statistics regarding debtors 
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1 who are individuals with primarily consumer debts seeking 

2 relief under chapters 7, 11, and 13 of title 11. Those statis3 tics shall be in a standardized format prescribed by the Di4 rector of the Administrative Office of the United States 

5 Courts (referred to in this section as the ‘Director’). 

6 ‘‘(b) The Director shall—

7 ‘‘(1) compile the statistics referred to in sub8 section (a); 

9 ‘‘(2) make the statistics available to the public; 

10 and 

11 ‘‘(3) not later than July 1, 2006, and annually 

12 thereafter, prepare, and submit to Congress a report 

13 concerning the information collected under subsection 

14 (a) that contains an analysis of the information. 

15 ‘‘(c) The compilation required under subsection (b) 

16 shall—

17 ‘‘(1) be itemized, by chapter, with respect to title 

18 11; 

19 ‘‘(2) be presented in the aggregate and for each 

20 district; and 

21 ‘‘(3) include information concerning—

22 ‘‘(A) the total assets and total liabilities of 

23 the debtors described in subsection (a), and in 

24 each category of assets and liabilities, as re-
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1 ported in the schedules prescribed pursuant to 

2 section 2075 of this title and filed by debtors; 

3 ‘‘(B) the current monthly income, average 

4 income, and average expenses of debtors as re5 ported on the schedules and statements that each 

6 such debtor files under sections 521 and 1322 of 

7 title 11; 

8 ‘‘(C) the aggregate amount of debt dis9 charged in cases filed during the reporting pe10 riod, determined as the difference between the 

11 total amount of debt and obligations of a debtor 

12 reported on the schedules and the amount of such 

13 debt reported in categories which are predomi14 nantly nondischargeable; 

15 ‘‘(D) the average period of time between the 

16 date of the filing of the petition and the closing 

17 of the case for cases closed during the reporting 

18 period; 

19 ‘‘(E) for cases closed during the reporting 

20 period—

21 ‘‘(i) the number of cases in which a re22 affirmation agreement was filed; and 

23 ‘‘(ii)(I) the total number of reaffirma24 tion agreements filed; 
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1 ‘‘(II) of those cases in which a reaffir2 mation agreement was filed, the number of 

3 cases in which the debtor was not rep4 resented by an attorney; and 

5 ‘‘(III) of those cases in which a reaffir6 mation agreement was filed, the number of 

7 cases in which the reaffirmation agreement 

8 was approved by the court;

9 ‘‘(F) with respect to cases filed under chap10 ter 13 of title 11, for the reporting

11 period—

12 ‘‘(i)(I) the number of cases in which a 

13 final order was entered determining the 

14 value of property securing a claim in an 

15 amount less than the amount of the claim; 

16 and 

17 ‘‘(II) the number of final orders en18 tered determining the value of property se19 curing a claim; 

20 ‘‘(ii) the number of cases dismissed, the 

21 number of cases dismissed for failure to 

22 make payments under the plan, the number 

23 of cases refiled after dismissal, and the 

24 number of cases in which the plan was com25 pleted, separately itemized with respect to 
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1 the number of modifications made before 

2 completion of the plan, if any; and 

3 ‘‘(iii) the number of cases in which the 

4 debtor filed another case during the 6-year 

5 period preceding the filing; 

6 ‘‘(G) the number of cases in which creditors 

7 were fined for misconduct and any amount of 

8 punitive damages awarded by the court for cred9 itor misconduct; and 

10 ‘‘(H) the number of cases in which sanc11 tions under rule 9011 of the Federal Rules of 

12 Bankruptcy Procedure were imposed against 

13 debtor’s attorney or damages awarded under 

14 such Rule.’’. 

15 (b) CLERICAL AMENDMENT.—The table of sections for 

16 chapter 6 of title 28, United States Code, is amended by 

17 adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

18 (c) EFFECTIVE DATE.—The amendments made by this 

19 section shall take effect 18 months after the date of enact20 ment of this Act. 

21 SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK22 RUPTCY DATA. 

23 (a) AMENDMENT.—Chapter 39 of title 28, United 

24 States Code, is amended by adding at the end the following: 
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1 ‘‘§ 589b. Bankruptcy data 

2 ‘‘(a) RULES.—The Attorney General shall, within a 

3 reasonable time after the effective date of this section, issue 

4 rules requiring uniform forms for (and from time to time 

5 thereafter to appropriately modify and approve)—

6 ‘‘(1) final reports by trustees in cases under 

7 chapters 7, 12, and 13 of title 11; and 

8 ‘‘(2) periodic reports by debtors in possession or 

9 trustees in cases under chapter 11 of title 11. 

10 ‘‘(b) REPORTS.—Each report referred to in subsection 

11 (a) shall be designed (and the requirements as to place and 

12 manner of filing shall be established) so as to facilitate com13 pilation of data and maximum possible access of the public, 

14 both by physical inspection at one or more central filing 

15 locations, and by electronic access through the Internet or 

16 other appropriate media. 

17 ‘‘(c) REQUIRED INFORMATION.—The information re18 quired to be filed in the reports referred to in subsection 

19 (b) shall be that which is in the best interests of debtors 

20 and creditors, and in the public interest in reasonable and 

21 adequate information to evaluate the efficiency and practi22 cality of the Federal bankruptcy system. In issuing rules 

23 proposing the forms referred to in subsection (a), the Attor24 ney General shall strike the best achievable practical bal25 ance between—
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1 ‘‘(1) the reasonable needs of the public for infor2 mation about the operational results of the Federal 

3 bankruptcy system; 

4 ‘‘(2) economy, simplicity, and lack of undue bur5 den on persons with a duty to file reports; and 

6 ‘‘(3) appropriate privacy concerns and safe7 guards. 

8 ‘‘(d) FINAL REPORTS.—The uniform forms for final 

9 reports required under subsection (a) for use by trustees 

10 under chapters 7, 12, and 13 of title 11 shall, in addition 

11 to such other matters as are required by law or as the Attor12 ney General in the discretion of the Attorney General shall 

13 propose, include with respect to a case under such title—

14 ‘‘(1) information about the length of time the 

15 case was pending; 

16 ‘‘(2) assets abandoned; 

17 ‘‘(3) assets exempted; 

18 ‘‘(4) receipts and disbursements of the estate; 

19 ‘‘(5) expenses of administration, including for 

20 use under section 707(b), actual costs of admin21 istering cases under chapter 13 of title 11; 

22 ‘‘(6) claims asserted; 

23 ‘‘(7) claims allowed; and 

24 ‘‘(8) distributions to claimants and claims dis25 charged without payment, 
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1 in each case by appropriate category and, in cases under 

2 chapters 12 and 13 of title 11, date of confirmation of the 

3 plan, each modification thereto, and defaults by the debtor 

4 in performance under the plan. 

5 ‘‘(e) PERIODIC REPORTS.—The uniform forms for 

6 periodic reports required under subsection (a) for use by 

7 trustees or debtors in possession under chapter 11 of title 

8 11 shall, in addition to such other matters as are required 

9 by law or as the Attorney General in the discretion of the 

10 Attorney General shall propose, include—

11 ‘‘(1) information about the industry classifica12 tion, published by the Department of Commerce, for 

13 the businesses conducted by the debtor; 

14 ‘‘(2) length of time the case has been pending; 

15 ‘‘(3) number of full-time employees as of the date 

16 of the order for relief and at the end of each reporting 

17 period since the case was filed; 

18 ‘‘(4) cash receipts, cash disbursements and prof19 itability of the debtor for the most recent period and 

20 cumulatively since the date of the order for relief; 

21 ‘‘(5) compliance with title 11, whether or not tax 

22 returns and tax payments since the date of the order 

23 for relief have been timely filed and made; 

24 ‘‘(6) all professional fees approved by the court 

25 in the case for the most recent period and cumula-
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1 tively since the date of the order for relief (separately 

2 reported, for the professional fees incurred by or on 

3 behalf of the debtor, between those that would have 

4 been incurred absent a bankruptcy case and those 

5 not); and 

6 ‘‘(7) plans of reorganization filed and confirmed 

7 and, with respect thereto, by class, the recoveries of 

8 the holders, expressed in aggregate dollar values and, 

9 in the case of claims, as a percentage of total claims 

10 of the class allowed.’’. 

11 (b) CLERICAL AMENDMENT.—The table of sections for 

12 chapter 39 of title 28, United States Code, is amended by 

13 adding at the end the following:

‘‘589b. Bankruptcy data.’’.

14 SEC. 603. AUDIT PROCEDURES. 

15 (a) IN GENERAL.—

16 (1) ESTABLISHMENT OF PROCEDURES.—The At17 torney General (in judicial districts served by United 

18 States trustees) and the Judicial Conference of the 

19 United States (in judicial districts served by bank20 ruptcy administrators) shall establish procedures to 

21 determine the accuracy, veracity, and completeness of 

22 petitions, schedules, and other information that the 

23 debtor is required to provide under sections 521 and 

24 1322 of title 11, United States Code, and, if applica25 ble, section 111 of such title, in cases filed under 
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1 chapter 7 or 13 of such title in which the debtor is 

2 an individual. Such audits shall be in accordance 

3 with generally accepted auditing standards and per4 formed by independent certified public accountants or 

5 independent licensed public accountants, provided 

6 that the Attorney General and the Judicial Con7 ference, as appropriate, may develop alternative au8 diting standards not later than 2 years after the date 

9 of enactment of this Act. 

10 (2) PROCEDURES.—Those procedures required by 

11 paragraph (1) shall—

12 (A) establish a method of selecting appro13 priate qualified persons to contract to perform 

14 those audits; 

15 (B) establish a method of randomly select16 ing cases to be audited, except that not less than 

17 1 out of every 250 cases in each Federal judicial 

18 district shall be selected for audit; 

19 (C) require audits of schedules of income 

20 and expenses that reflect greater than average 

21 variances from the statistical norm of the district 

22 in which the schedules were filed if those 

23 variances occur by reason of higher income or 

24 higher expenses than the statistical norm of the 

25 district in which the schedules were filed; and 
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1 (D) establish procedures for providing, not 

2 less frequently than annually, public information 

3 concerning the aggregate results of such audits 

4 including the percentage of cases, by district, in 

5 which a material misstatement of income or ex6 penditures is reported. 

7 (b) AMENDMENTS.—Section 586 of title 28, United 

8 States Code, is amended—

9 (1) in subsection (a), by striking paragraph (6) 

10 and inserting the following: 

11 ‘‘(6) make such reports as the Attorney General 

12 directs, including the results of audits performed 

13 under section 603(a) of the Bankruptcy Abuse Preven14 tion and Consumer Protection Act of 2003;’’; and 

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

16 ‘‘(f)(1) The United States trustee for each district is 

17 authorized to contract with auditors to perform audits in 

18 cases designated by the United States trustee, in accordance 

19 with the procedures established under section 603(a) of the 

20 Bankruptcy Abuse Prevention and Consumer Protection 

21 Act of 2003. 

22 ‘‘(2)(A) The report of each audit referred to in para23 graph (1) shall be filed with the court and transmitted to 

24 the United States trustee. Each report shall clearly and con25 spicuously specify any material misstatement of income or 
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1 expenditures or of assets identified by the person performing 

2 the audit. In any case in which a material misstatement 

3 of income or expenditures or of assets has been reported, 

4 the clerk of the district court (or the clerk of the bankruptcy 

5 court if one is certified under section 156(b) of this title) 

6 shall give notice of the misstatement to the creditors in the 

7 case. 

8 ‘‘(B) If a material misstatement of income or expendi9 tures or of assets is reported, the United States trustee 

10 shall—

11 ‘‘(i) report the material misstatement, if appro12 priate, to the United States Attorney pursuant to sec13 tion 3057 of title 18; and 

14 ‘‘(ii) if advisable, take appropriate action, in15 cluding but not limited to commencing an adversary 

16 proceeding to revoke the debtor’s discharge pursuant 

17 to section 727(d) of title 11.’’. 

18 (c) AMENDMENTS TO SECTION 521 OF TITLE 11, 

19 U.S.C.—Section 521(a) of title 11, United States Code, as 

20 so designated by section 106, is amended in each of para21 graphs (3) and (4) by inserting ‘‘or an auditor serving 

22 under section 586(f) of title 28’’ after ‘‘serving in the case’’. 

23 (d) AMENDMENTS TO SECTION 727 OF TITLE 11, 

24 U.S.C.—Section 727(d) of title 11, United States Code, is 

25 amended—
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1 (1) in paragraph (2), by striking ‘‘or’’ at the 

2 end; 

3 (2) in paragraph (3), by striking the period at 

4 the end and inserting ‘‘; or’’; and 

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

6 ‘‘(4) the debtor has failed to explain satisfac7 torily—

8 ‘‘(A) a material misstatement in an audit 

9 referred to in section 586(f) of title 28; or 

10 ‘‘(B) a failure to make available for inspec11 tion all necessary accounts, papers, documents, 

12 financial records, files, and all other papers, 

13 things, or property belonging to the debtor that 

14 are requested for an audit referred to in section 

15 586(f) of title 28.’’. 

16 (e) EFFECTIVE DATE.—The amendments made by this 

17 section shall take effect 18 months after the date of enact18 ment of this Act. 

19 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY 

20 OF BANKRUPTCY DATA. 

21 It is the sense of Congress that—

22 (1) the national policy of the United States 

23 should be that all data held by bankruptcy clerks in 

24 electronic form, to the extent such data reflects only 

25 public records (as defined in section 107 of title 11, 
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1 United States Code), should be released in a usable 

2 electronic form in bulk to the public, subject to such 

3 appropriate privacy concerns and safeguards as Con4 gress and the Judicial Conference of the United States 

5 may determine; and 

6 (2) there should be established a bankruptcy data 

7 system in which—

8 (A) a single set of data definitions and 

9 forms are used to collect data nationwide; and 

10 (B) data for any particular bankruptcy 

11 case are aggregated in the same electronic record. 

12 TITLE VII—BANKRUPTCY TAX 

13 PROVISIONS 

14 SEC. 701. TREATMENT OF CERTAIN LIENS. 

15 (a) TREATMENT OF CERTAIN LIENS.—Section 724 of 

16 title 11, United States Code, is amended—

17 (1) in subsection (b), in the matter preceding 

18 paragraph (1), by inserting ‘‘(other than to the extent 

19 that there is a properly perfected unavoidable tax lien 

20 arising in connection with an ad valorem tax on real 

21 or personal property of the estate)’’ after ‘‘under this 

22 title’’; 

23 (2) in subsection (b)(2), by inserting ‘‘(except 

24 that such expenses, other than claims for wages, sala25 ries, or commissions that arise after the date of the 
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1 filing of the petition, shall be limited to expenses in2 curred under chapter 7 of this title and shall not in3 clude expenses incurred under chapter 11 of this 

4 title)’’ after ‘‘507(a)(1)’’; and 

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

6 ‘‘(e) Before subordinating a tax lien on real or per7 sonal property of the estate, the trustee shall—

8 ‘‘(1) exhaust the unencumbered assets of the es9 tate; and 

10 ‘‘(2) in a manner consistent with section 506(c), 

11 recover from property securing an allowed secured 

12 claim the reasonable, necessary costs and expenses of 

13 preserving or disposing of such property. 

14 ‘‘(f) Notwithstanding the exclusion of ad valorem tax 

15 liens under this section and subject to the requirements of 

16 subsection (e), the following may be paid from property of 

17 the estate which secures a tax lien, or the proceeds of such 

18 property: 

19 ‘‘(1) Claims for wages, salaries, and commissions 

20 that are entitled to priority under section 507(a)(4). 

21 ‘‘(2) Claims for contributions to an employee 

22 benefit plan entitled to priority under section 

23 507(a)(5).’’. 

24 (b) DETERMINATION OF TAX LIABILITY.—Section 

25 505(a)(2) of title 11, United States Code, is amended— 
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1 (1) in subparagraph (A), by striking ‘‘or’’ at the 

2 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 amended 

14 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 sec17 tion 31705 of title 49 may be filed by the base jurisdiction 

18 designated pursuant to the International Fuel Tax Agree19 ment (as defined in section 31701 of title 49) and, if so 

20 filed, shall be allowed as a single 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 ad2 dress 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 des16 ignated, the following: 

17 ‘‘(b)(1)(A) The clerk shall maintain a list under which 

18 a Federal, State, or local governmental unit responsible for 

19 the collection of taxes within the district may—

20 ‘‘(i) designate an address for service of requests 

21 under this subsection; and 

22 ‘‘(ii) describe where further information con23 cerning additional requirements for filing such re24 quests may be found. 
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1 ‘‘(B) If such governmental unit does not designate an 

2 address and provide such address to the clerk under sub3 paragraph (A), any request made under this subsection 

4 may be served at the address for the filing of a tax return 

5 or protest with the appropriate taxing authority of such 

6 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 payment 

13 of interest on a tax claim or on an administrative expense 

14 tax, or the payment of interest to enable a creditor to receive 

15 the present value of the allowed amount of a tax claim, the 

16 rate of interest shall be the rate determined under applica17 ble 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 as 

20 of the calendar month in which the plan is confirmed.’’. 

21 (b) CLERICAL AMENDMENT.—The table of sections for 

22 subchapter I of chapter 5 of title 11, United States Code, 

23 is amended by adding at the end the following:

‘‘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 before 

7 the date of the filing of the petition’’ after ‘‘gross 

8 receipts’’; 

9 (B) in clause (i), by striking ‘‘for a taxable 

10 year ending on or before the date of the 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 this 

25 title during that 240-day period, plus 

26 90 days.’’; and 
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1 (2) by adding at the end the following: 

2 ‘‘An otherwise applicable time period specified in this 

3 paragraph shall be suspended for any period during 

4 which a governmental unit is prohibited under appli5 cable nonbankruptcy law from collecting a tax as a 

6 result of a request by the debtor for a hearing and an 

7 appeal of any collection action taken or proposed 

8 against the debtor, plus 90 days; plus any time dur9 ing which the stay of proceedings was in effect in a 

10 prior case under this title or during which collection 

11 was precluded by the existence of 1 or more confirmed 

12 plans under this title, plus 90 days.’’. 

13 SEC. 706. PRIORITY PROPERTY TAXES INCURRED. 

14 Section 507(a)(8)(B) of title 11, United States Code, 

15 is amended by striking ‘‘assessed’’ and inserting ‘‘in16 curred’’. 

17 SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP18 TER 13. 

19 Section 1328(a)(2) of title 11, United States Code, as 

20 amended by section 314, is amended by striking ‘‘para21 graph’’ and inserting ‘‘section 507(a)(8)(C) or in para22 graph (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 sections 321 and 330, is amended by adding 

5 at the end the following: 

6 ‘‘(6) Notwithstanding paragraph (1), the confirmation 

7 of a plan does not discharge a debtor that is a corporation 

8 from any debt—

9 ‘‘(A) of a kind specified in paragraph (2)(A) or 

10 (2)(B) of section 523(a) that is owed to a domestic 

11 governmental unit, or owed to a person as the result 

12 of an action filed under subchapter III of chapter 37 

13 of title 31 or any similar State statute; or 

14 ‘‘(B) for a tax or customs duty with respect to 

15 which the debtor—

16 ‘‘(i) made a fraudulent return; or 

17 ‘‘(ii) willfully attempted in any manner to 

18 evade or to defeat such tax or such customs 

19 duty.’’. 

20 SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO 

21 PREPETITION TAXES. 

22 Section 362(a)(8) of title 11, United States Code, is 

23 amended by striking ‘‘the debtor’’ and inserting ‘‘a cor24 porate debtor’s tax liability for a taxable period the bank25 ruptcy court may determine or concerning the tax liability 
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1 of a debtor who is an individual for a taxable period ending 

2 before the date of the order for relief under this title’’. 

3 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 

4 CASES. 

5 Section 1129(a)(9) of title 11, United States Code, is 

6 amended—

7 (1) in subparagraph (B), by striking ‘‘and’’ at 

8 the end; 

9 (2) in subparagraph (C), by striking ‘‘deferred 

10 cash payments,’’ and all that follows through the end 

11 of the subparagraph, and inserting ‘‘regular install12 ment payments in cash—

13 ‘‘(i) of a total value, as of the effective 

14 date of the plan, equal to the allowed 

15 amount of such claim; 

16 ‘‘(ii) over a period ending not later 

17 than 5 years after the date of the order for 

18 relief under section 301, 302, or 303; and 

19 ‘‘(iii) in a manner not less favorable 

20 than the most favored nonpriority unse21 cured claim provided for by the plan (other 

22 than cash payments made to a class of 

23 creditors under section 1122(b)); and’’; and 

24 (3) by adding at the end the following: 
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1 ‘‘(D) with respect to a secured claim which 

2 would otherwise meet the description of an unse3 cured claim of a governmental unit under sec4 tion 507(a)(8), but for the secured status of that 

5 claim, the holder of that claim will receive on ac6 count of that claim, cash payments, in the same 

7 manner and over the same period, as prescribed 

8 in subparagraph (C).’’. 

9 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB10 ITED. 

11 Section 545(2) of title 11, United States Code, is 

12 amended by inserting before the semicolon at the end the 

13 following: ‘‘, except in any case in which a purchaser is 

14 a purchaser described in section 6323 of the Internal Rev15 enue Code of 1986, or in any other similar provision of 

16 State or local law’’. 

17 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI18 NESS. 

19 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of 

20 title 28, United States Code, is amended—

21 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and 

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

23 ‘‘(b) A tax under subsection (a) shall be paid on or 

24 before the due date of the tax under applicable nonbank25 ruptcy law, unless—
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1 ‘‘(1) the tax is a property tax secured by a lien 

2 against property that is abandoned under section 554 

3 of title 11, within a reasonable period of time after 

4 the lien attaches, by the trustee in a case under title 

5 11; or 

6 ‘‘(2) payment of the tax is excused under a spe7 cific provision of title 11. 

8 ‘‘(c) In a case pending under chapter 7 of title 11, 

9 payment of a tax may be deferred until final distribution 

10 is made under section 726 of title 11, if—

11 ‘‘(1) the tax was not incurred by a trustee duly 

12 appointed under chapter 7 of title 11; or 

13 ‘‘(2) before the due date of the tax, an order of 

14 the court makes a finding of probable insufficiency of 

15 funds of the estate to pay in full the administrative 

16 expenses allowed under section 503(b) of title 11 that 

17 have the same priority in distribution under section 

18 726(b) of title 11 as the priority of that tax.’’. 

19 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

20 Section 503(b)(1)(B)(i) of title 11, United States Code, is 

21 amended by inserting ‘‘whether secured or unsecured, in22 cluding property taxes for which liability is in rem, in per23 sonam, or both,’’ before ‘‘except’’. 
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1 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE EX2 PENSE TAXES ELIMINATED.—Section 503(b)(1) of title 11, 

3 United States Code, is amended— 

4 (1) in subparagraph (B), by striking ‘‘and’’ at 

5 the end; 

6 (2) in subparagraph (C), by adding ‘‘and’’ at the 

7 end; and 

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

9 ‘‘(D) notwithstanding the requirements of sub10 section (a), a governmental unit shall not be required 

11 to file a request for the payment of an expense de12 scribed in subparagraph (B) or (C), as a condition of 

13 its being an allowed administrative expense;’’. 

14 (d) PAYMENT OF TAXES AND FEES AS SECURED

15 CLAIMS.—Section 506 of title 11, United States Code, is 

16 amended—

17 (1) in subsection (b), by inserting ‘‘or State stat18 ute’’ after ‘‘agreement’’; and 

19 (2) in subsection (c), by inserting ‘‘, including 

20 the payment of all ad valorem property taxes with re21 spect to the property’’ before the period at the end. 

22 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS. 

23 Section 726(a)(1) of title 11, United States Code, is 

24 amended by striking ‘‘before the date on which the trustee 
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1 commences distribution under this section;’’ and inserting 

2 the following: ‘‘on or before the earlier of—

3 ‘‘(A) the date that is 10 days after the mail4 ing to creditors of the summary of the trustee’s 

5 final report; or 

6 ‘‘(B) the date on which the trustee com7 mences final distribution under this section;’’. 

8 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU9 THORITIES. 

10 Section 523(a) of title 11, United States Code, as 

11 amended by sections 215 and 224, is amended—

12 (1) in paragraph (1)(B)—

13 (A) in the matter preceding clause (i), by 

14 inserting ‘‘or equivalent report or notice,’’ after 

15 ‘‘a return,’’; 

16 (B) in clause (i), by inserting ‘‘or given’’ 

17 after ‘‘filed’’; and 

18 (C) in clause (ii)—

19 (i) by inserting ‘‘or given’’ after 

20 ‘‘filed’’; and 

21 (ii) by inserting ‘‘, report, or notice’’ 

22 after ‘‘return’’; and 

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

24 ‘‘For purposes of this subsection, the term ‘return’ means 

25 a return that satisfies the requirements of applicable non-
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1 bankruptcy law (including applicable filing requirements). 

2 Such term includes a return prepared pursuant to section 

3 6020(a) of the Internal Revenue Code of 1986, or similar 

4 State or local law, or a written stipulation to a judgment 

5 or a final order entered by a nonbankruptcy tribunal, but 

6 does not include a return made pursuant to section 6020(b) 

7 of the Internal Revenue Code of 1986, or a similar State 

8 or local law.’’. 

9 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN10 PAID TAXES. 

11 Section 505(b)(2) of title 11, United States Code, as 

12 amended by section 703, is amended by inserting ‘‘the es13 tate,’’ after ‘‘misrepresentation,’’. 

14 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON15 FIRM CHAPTER 13 PLANS. 

16 (a) FILING OF PREPETITION TAX RETURNS REQUIRED

17 FOR PLAN CONFIRMATION.—Section 1325(a) of title 11, 

18 United States Code, as amended by sections 102, 213, and 

19 306, is amended by inserting after paragraph (8) the fol20 lowing: 

21 ‘‘(9) the debtor has filed all applicable Federal, 

22 State, and local tax returns as required by section 

23 1308.’’. 

24 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

25 RETURNS.—
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1 (1) IN GENERAL.—Subchapter I of chapter 13 of 

2 title 11, United States Code, is amended by adding 

3 at the end the following: 

4 ‘‘§ 1308. Filing of prepetition tax returns 

5 ‘‘(a) Not later than the day before the date on which 

6 the meeting of the creditors is first scheduled to be held 

7 under section 341(a), if the debtor was required to file a 

8 tax return under applicable nonbankruptcy law, the debtor 

9 shall file with appropriate tax authorities all tax returns 

10 for all taxable periods ending during the 4-year period end11 ing on the date of the filing of the petition. 

12 ‘‘(b)(1) Subject to paragraph (2), if the tax returns re13 quired by subsection (a) have not been filed by the date on 

14 which the meeting of creditors is first scheduled to be held 

15 under section 341(a), the trustee may hold open that meet16 ing for a reasonable period of time to allow the debtor an 

17 additional period of time to file any unfiled returns, but 

18 such additional period of time shall not extend beyond—

19 ‘‘(A) for any return that is past due as of the 

20 date of the filing of the petition, the date that is 120 

21 days after the date of that meeting; or 

22 ‘‘(B) for any return that is not past due as of 

23 the date of the filing of the petition, the later of—

24 ‘‘(i) the date that is 120 days after the date 

25 of that meeting; or 
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1 ‘‘(ii) the date on which the return is due 

2 under the last automatic extension of time for 

3 filing that return to which the debtor is entitled, 

4 and for which request is timely made, in accord5 ance with applicable nonbankruptcy law. 

6 ‘‘(2) After notice and a hearing, and order entered be7 fore the tolling of any applicable filing period determined 

8 under this subsection, if the debtor demonstrates by a pre9 ponderance of the evidence that the failure to file a return 

10 as required under this subsection is attributable to cir11 cumstances beyond the control of the debtor, the court may 

12 extend the filing period established by the trustee under this 

13 subsection for—

14 ‘‘(A) a period of not more than 30 days for re15 turns described in paragraph (1); and 

16 ‘‘(B) a period not to extend after the applicable 

17 extended due date for a return described in paragraph 

18 (2). 

19 ‘‘(c) For purposes of this section, the term ‘return’ in20 cludes a return prepared pursuant to subsection (a) or (b) 

21 of section 6020 of the Internal Revenue Code of 1986, or 

22 a similar State or local law, or a written stipulation to 

23 a judgment or a final order entered by a nonbankruptcy 

24 tribunal.’’. 
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1 (2) CONFORMING AMENDMENT.—The table of sec2 tions for subchapter I of chapter 13 of title 11, United 

3 States Code, is amended by adding at the end the fol4 lowing:

‘‘1308. Filing of prepetition tax returns.’’.

5 (c) DISMISSAL OR CONVERSION ON FAILURE TO COM6 PLY.—Section 1307 of title 11, United States Code, is 

7 amended—

8 (1) by redesignating subsections (e) and (f) as 

9 subsections (f) and (g), respectively; and 

10 (2) by inserting after subsection (d) the fol11 lowing: 

12 ‘‘(e) Upon the failure of the debtor to file a tax return 

13 under section 1308, on request of a party in interest or the 

14 United States trustee and after notice and a hearing, the 

15 court shall dismiss a case or convert a case under this chap16 ter to a case under chapter 7 of this title, whichever is in 

17 the best interest of the creditors and the estate.’’. 

18 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of title 

19 11, United States Code, is amended by inserting before the 

20 period at the end the following: ‘‘, and except that in a 

21 case under chapter 13, a claim of a governmental unit for 

22 a tax with respect to a return filed under section 1308 shall 

23 be timely if the claim is filed on or before the date that 

24 is 60 days after the date on which such return was filed 

25 as required’’. 
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1 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO CON2 FIRMATION.—It is the sense of Congress that the Judicial 

3 Conference of the United States should, as soon as prac4 ticable after the date of enactment of this Act, propose 

5 amended Federal Rules of Bankruptcy Procedure that pro6 vide—

7 (1) notwithstanding the provisions of Rule 

8 3015(f), in cases under chapter 13 of title 11, United 

9 States Code, that an objection to the confirmation of 

10 a plan filed by a governmental unit on or before the 

11 date that is 60 days after the date on which the debtor 

12 files all tax returns required under sections 1308 and 

13 1325(a)(7) of title 11, United States Code, shall be 

14 treated for all purposes as if such objection had been 

15 timely filed before such confirmation; and 

16 (2) in addition to the provisions of Rule 3007, 

17 in a case under chapter 13 of title 11, United States 

18 Code, that no objection to a claim for a tax with re19 spect to which a return is required to be filed under 

20 section 1308 of title 11, United States Code, shall be 

21 filed until such return has been filed as required. 

22 SEC. 717. STANDARDS FOR TAX DISCLOSURE. 

23 Section 1125(a)(1) of title 11, United States Code, is 

24 amended—
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1 (1) by inserting ‘‘including a discussion of the 

2 potential material Federal tax consequences of the 

3 plan to the debtor, any successor to the debtor, and 

4 a hypothetical investor typical of the holders of claims 

5 or interests in the case,’’ after ‘‘records,’’; and 

6 (2) by striking ‘‘a hypothetical reasonable inves7 tor typical of holders of claims or interests’’ and in8 serting ‘‘such a hypothetical investor’’. 

9 SEC. 718. SETOFF OF TAX REFUNDS. 

10 Section 362(b) of title 11, United States Code, as 

11 amended by sections 224, 303, 311, and 401, is amended 

12 by inserting after paragraph (25) the following: 

13 ‘‘(26) under subsection (a), of the setoff under 

14 applicable nonbankruptcy law of an income tax re15 fund, by a governmental unit, with respect to a tax16 able period that ended before the date of the order for 

17 relief against an income tax liability for a taxable pe18 riod that also ended before the date of the order for 

19 relief, except that in any case in which the setoff of 

20 an income tax refund is not permitted under applica21 ble nonbankruptcy law because of a pending action to 

22 determine the amount or legality of a tax liability, 

23 the governmental unit may hold the refund pending 

24 the resolution of the action, unless the court, on the 

25 motion of the trustee and after notice and a hearing, 
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1 grants the taxing authority adequate protection 

2 (within the meaning of section 361) for the secured 

3 claim of such authority in the setoff under section 

4 506(a);’’. 

5 SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT6 MENT OF STATE AND LOCAL TAXES. 

7 (a) IN GENERAL.—

8 (1) SPECIAL PROVISIONS.—Section 346 of title 

9 11, United States Code, is amended to read as follows: 

10 ‘‘§ 346. Special provisions related to the treatment of 

11 State and local taxes 

12 ‘‘(a) Whenever the Internal Revenue Code of 1986 pro13 vides that a separate taxable estate or entity is created in 

14 a case concerning a debtor under this title, and the income, 

15 gain, loss, deductions, and credits of such estate shall be 

16 taxed to or claimed by the estate, a separate taxable estate 

17 is also created for purposes of any State and local law im18 posing a tax on or measured by income and such income, 

19 gain, loss, deductions, and credits shall be taxed to or 

20 claimed by the estate and may not be taxed to or claimed 

21 by the debtor. The preceding sentence shall not apply if the 

22 case is dismissed. The trustee shall make tax returns of in23 come required under any such State or local law. 

24 ‘‘(b) Whenever the Internal Revenue Code of 1986 pro25 vides that no separate taxable estate shall be created in a 
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1 case concerning a debtor under this title, and the income, 

2 gain, loss, deductions, and credits of an estate shall be taxed 

3 to or claimed by the debtor, such income, gain, loss, deduc4 tions, and credits shall be taxed to or claimed by the debtor 

5 under a State or local law imposing a tax on or measured 

6 by income and may not be taxed to or claimed by the estate. 

7 The trustee shall make such tax returns of income of cor8 porations and of partnerships as are required under any 

9 State or local law, but with respect to partnerships, shall 

10 make such returns only to the extent such returns are also 

11 required to be made under such Code. The estate shall be 

12 liable for any tax imposed on such corporation or partner13 ship, but not for any tax imposed on partners or members. 

14 ‘‘(c) With respect to a partnership or any entity treat15 ed as a partnership under a State or local law imposing 

16 a tax on or measured by income that is a debtor in a case 

17 under this title, any gain or loss resulting from a distribu18 tion of property from such partnership, or any distributive 

19 share of any income, gain, loss, deduction, or credit of a 

20 partner or member that is distributed, or considered distrib21 uted, from such partnership, after the commencement of the 

22 case, is gain, loss, income, deduction, or credit, as the case 

23 may be, of the partner or member, and if such partner or 

24 member is a debtor in a case under this title, shall be subject 

25 to tax in accordance with subsection (a) or (b). 
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1 ‘‘(d) For purposes of any State or local law imposing 

2 a tax on or measured by income, the taxable period of a 

3 debtor in a case under this title shall terminate only if and 

4 to the extent that the taxable period of such debtor termi5 nates under the Internal Revenue Code of 1986. 

6 ‘‘(e) The estate in any case described in subsection (a) 

7 shall use the same accounting method as the debtor used 

8 immediately before the commencement of the case, if such 

9 method of accounting complies with applicable nonbank10 ruptcy tax law. 

11 ‘‘(f) For purposes of any State or local law imposing 

12 a tax on or measured by income, a transfer of property 

13 from the debtor to the estate or from the estate to the debtor 

14 shall not be treated as a disposition for purposes of any 

15 provision assigning tax consequences to a disposition, ex16 cept to the extent that such transfer is treated as a disposi17 tion under the Internal Revenue Code of 1986. 

18 ‘‘(g) Whenever a tax is imposed pursuant to a State 

19 or local law imposing a tax on or measured by income pur20 suant to subsection (a) or (b), such tax shall be imposed 

21 at rates generally applicable to the same types of entities 

22 under such State or local law. 

23 ‘‘(h) The trustee shall withhold from any payment of 

24 claims for wages, salaries, commissions, dividends, interest, 

25 or other payments, or collect, any amount required to be 
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1 withheld or collected under applicable State or local tax 

2 law, and shall pay such withheld or collected amount to 

3 the appropriate governmental unit at the time and in the 

4 manner required by such tax law, and with the same pri5 ority as the claim from which such amount was withheld 

6 or collected was paid. 

7 ‘‘(i)(1) To the extent that any State or local law im8 posing a tax on or measured by income provides for the 

9 carryover of any tax attribute from one taxable period to 

10 a subsequent taxable period, the estate shall succeed to such 

11 tax attribute in any case in which such estate is subject 

12 to tax under subsection (a). 

13 ‘‘(2) After such a case is closed or dismissed, the debtor 

14 shall succeed to any tax attribute to which the estate suc15 ceeded under paragraph (1) to the extent consistent with 

16 the Internal Revenue Code of 1986. 

17 ‘‘(3) The estate may carry back any loss or tax at18 tribute to a taxable period of the debtor that ended before 

19 the date of the order for relief under this title to the extent 

20 that— 

21 ‘‘(A) applicable State or local tax law provides 

22 for a carryback in the case of the debtor; and 

23 ‘‘(B) the same or a similar tax attribute may be 

24 carried back by the estate to such a taxable period of 

25 the debtor under the Internal Revenue Code of 1986. 
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1 ‘‘(j)(1) For purposes of any State or local law impos2 ing a tax on or measured by income, income is not realized 

3 by the estate, the debtor, or a successor to the debtor by rea4 son of discharge of indebtedness in a case under this title, 

5 except to the extent, if any, that such income is subject to 

6 tax under the Internal Revenue Code of 1986. 

7 ‘‘(2) Whenever the Internal Revenue Code of 1986 pro8 vides that the amount excluded from gross income in respect 

9 of the discharge of indebtedness in a case under this title 

10 shall be applied to reduce the tax attributes of the debtor 

11 or the estate, a similar reduction shall be made under any 

12 State or local law imposing a tax on or measured by income 

13 to the extent such State or local law recognizes such at14 tributes. Such State or local law may also provide for the 

15 reduction of other attributes to the extent that the full 

16 amount of income from the discharge of indebtedness has 

17 not been applied. 

18 ‘‘(k)(1) Except as provided in this section and section 

19 505, the time and manner of filing tax returns and the 

20 items of income, gain, loss, deduction, and credit of any 

21 taxpayer shall be determined under applicable nonbank22 ruptcy law. 

23 ‘‘(2) For Federal tax purposes, the provisions of this 

24 section are subject to the Internal Revenue Code of 1986 

25 and other applicable Federal nonbankruptcy law.’’. 
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for chapter 3 of title 11, United States Code, is 

3 amended by striking the item relating to section 346 

4 and inserting the following:

‘‘346. Special provisions related to the treatment of State and local taxes.’’.

5 (b) CONFORMING AMENDMENTS.—Title 11 of the 

6 United States Code is amended—

7 (1) by striking section 728; 

8 (2) in the table of sections for chapter 7 by strik9 ing the item relating to section 728; 

10 (3) in section 1146—

11 (A) by striking subsections (a) and (b); and 

12 (B) by redesignating subsections (c) and (d) 

13 as subsections (a) and (b), respectively; and 

14 (4) in section 1231—

15 (A) by striking subsections (a) and (b); and 

16 (B) by redesignating subsections (c) and (d) 

17 as subsections (a) and (b), respectively. 

18 SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX RE19 TURNS. 

20 Section 521 of title 11, United States Code, as amend21 ed by sections 106, 225, 305, 315, and 316, is amended by 

22 adding at the end the following: 

23 ‘‘(j)(1) Notwithstanding any other provision of this 

24 title, if the debtor fails to file a tax return that becomes 

25 due after the commencement of the case or to properly ob-
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1 tain an extension of the due date for filing such return, 

2 the taxing authority may request that the court enter an 

3 order converting or dismissing the case. 

4 ‘‘(2) If the debtor does not file the required return or 

5 obtain the extension referred to in paragraph (1) within 

6 90 days after a request is filed by the taxing authority 

7 under that paragraph, the court shall convert or dismiss 

8 the case, whichever is in the best interests of creditors and 

9 the estate.’’. 

10 TITLE VIII—ANCILLARY AND 

11 OTHER CROSS-BORDER CASES 

12 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, 

13 UNITED STATES CODE. 

14 (a) IN GENERAL.—Title 11, United States Code, is 

15 amended by inserting after chapter 13 the following: 

16 ‘‘CHAPTER 15—ANCILLARY AND OTHER 

17 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. 
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‘‘1512. Participation of a foreign representative in a case under this title. 

‘‘1513. Access of foreign creditors to a case under this title. 

‘‘1514. Notification to foreign creditors concerning a case under this title. 

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND 

RELIEF 

‘‘1515. Application for recognition. 

‘‘1516. Presumptions concerning recognition. 

‘‘1517. Order granting recognition. 

‘‘1518. Subsequent information. 

‘‘1519. Relief that may be granted upon filing petition for recognition. 

‘‘1520. Effects of recognition of a foreign main proceeding. 

‘‘1521. Relief that may be granted upon recognition. 

‘‘1522. Protection of creditors and other interested persons. 

‘‘1523. Actions to avoid acts detrimental to creditors. 

‘‘1524. Intervention by a foreign representative. 

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND 

FOREIGN REPRESENTATIVES 

‘‘1525. Cooperation and direct communication between the court and foreign 

courts or foreign representatives. 

‘‘1526. Cooperation and direct communication between the trustee and foreign 

courts or foreign representatives. 

‘‘1527. Forms of cooperation. 

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS 

‘‘1528. Commencement of a case under this title after recognition of a foreign 

main proceeding. 

‘‘1529. Coordination of a case under this title and a foreign proceeding. 

‘‘1530. Coordination of more than 1 foreign proceeding. 

‘‘1531. Presumption of insolvency based on recognition of a foreign main proceeding. 

‘‘1532. Rule of payment in concurrent proceedings.

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 ef4 fective mechanisms for dealing with cases of cross-border in5 solvency with the objectives of—

6 ‘‘(1) cooperation between—

7 ‘‘(A) courts of the United States, United 

8 States trustees, trustees, examiners, debtors, and 

9 debtors in possession; and 
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1 ‘‘(B) the courts and other competent au2 thorities of foreign countries involved in cross3 border insolvency cases; 

4 ‘‘(2) greater legal certainty for trade and invest5 ment; 

6 ‘‘(3) fair and efficient administration of cross7 border insolvencies that protects the interests of all 

8 creditors, and other interested entities, including the 

9 debtor; 

10 ‘‘(4) protection and maximization of the value of 

11 the debtor’s assets; and 

12 ‘‘(5) facilitation of the rescue of financially trou13 bled businesses, thereby protecting investment and 

14 preserving employment. 

15 ‘‘(b) This chapter applies where—

16 ‘‘(1) assistance is sought in the United States by 

17 a foreign court or a foreign representative in connec18 tion with a foreign proceeding; 

19 ‘‘(2) assistance is sought in a foreign country in 

20 connection with a case under this title; 

21 ‘‘(3) a foreign proceeding and a case under this 

22 title with respect to the same debtor are pending con23 currently; or 

24 ‘‘(4) creditors or other interested persons in a 

25 foreign country have an interest in requesting the 
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1 commencement of, or participating in, a case or pro2 ceeding under this title. 

3 ‘‘(c) This chapter does not apply to—

4 ‘‘(1) a proceeding concerning an entity, other 

5 than a foreign insurance company, identified by ex6 clusion in section 109(b); 

7 ‘‘(2) an individual, or to an individual and such 

8 individual’s spouse, who have debts within the limits 

9 specified in section 109(e) and who are citizens of the 

10 United States or aliens lawfully admitted for perma11 nent residence in the United States; or 

12 ‘‘(3) an entity subject to a proceeding under the 

13 Securities Investor Protection Act of 1970, a stock14 broker subject to subchapter III of chapter 7 of this 

15 title, or a commodity broker subject to subchapter IV 

16 of chapter 7 of this title. 

17 ‘‘(d) The court may not grant relief under this chapter 

18 with respect to any deposit, escrow, trust fund, or other se19 curity required or permitted under any applicable State in20 surance law or regulation for the benefit of claim holders 

21 in the United States. 

22 ‘‘SUBCHAPTER I—GENERAL PROVISIONS 

23 ‘‘§ 1502. Definitions 

24 ‘‘For the purposes of this chapter, the term—
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1 ‘‘(1) ‘debtor’ means an entity that is the subject 

2 of a foreign proceeding; 

3 ‘‘(2) ‘establishment’ means any place of oper4 ations where the debtor carries out a nontransitory 

5 economic activity; 

6 ‘‘(3) ‘foreign court’ means a judicial or other au7 thority competent to control or supervise a foreign 

8 proceeding; 

9 ‘‘(4) ‘foreign main proceeding’ means a foreign 

10 proceeding pending in the country where the debtor 

11 has the center of its main interests; 

12 ‘‘(5) ‘foreign nonmain proceeding’ means a for13 eign proceeding, other than a foreign main pro14 ceeding, pending in a country where the debtor has 

15 an establishment; 

16 ‘‘(6) ‘trustee’ includes a trustee, a debtor in pos17 session in a case under any chapter of this title, or 

18 a debtor under chapter 9 of this title; 

19 ‘‘(7) ‘recognition’ means the entry of an order 

20 granting recognition of a foreign main proceeding or 

21 foreign nonmain proceeding under this chapter; and 

22 ‘‘(8) ‘within the territorial jurisdiction of the 

23 United States’, when used with reference to property 

24 of a debtor, refers to tangible property located within 

25 the territory of the United States and intangible 
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1 property deemed under applicable nonbankruptcy law 

2 to be located within that territory, including any 

3 property subject to attachment or garnishment that 

4 may properly be seized or garnished by an action in 

5 a Federal or State court in the United States. 

6 ‘‘§ 1503. International obligations of the United States 

7 ‘‘To the extent that this chapter conflicts with an obli8 gation of the United States arising out of any treaty or 

9 other form of agreement to which it is a party with one 

10 or more other countries, the requirements of the treaty or 

11 agreement prevail. 

12 ‘‘§ 1504. Commencement of ancillary case 

13 ‘‘A case under this chapter is commenced by the filing 

14 of a petition for recognition of a foreign proceeding under 

15 section 1515. 

16 ‘‘§ 1505. Authorization to act in a foreign country 

17 ‘‘A trustee or another entity (including an examiner) 

18 may be authorized by the court to act in a foreign country 

19 on behalf of an estate created under section 541. An entity 

20 authorized to act under this section may act in any way 

21 permitted by the applicable foreign law. 

22 ‘‘§ 1506. Public policy exception 

23 ‘‘Nothing in this chapter prevents the court from refus24 ing to take an action governed by this chapter if the action 
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1 would be manifestly contrary to the public policy of the 

2 United States. 

3 ‘‘§ 1507. Additional assistance 

4 ‘‘(a) Subject to the specific limitations stated elsewhere 

5 in this chapter the court, if recognition is granted, may 

6 provide additional assistance to a foreign representative 

7 under this title or under other laws of the United States. 

8 ‘‘(b) In determining whether to provide additional as9 sistance under this title or under other laws of the United 

10 States, the court shall consider whether such additional as11 sistance, consistent with the principles of comity, will rea12 sonably assure—

13 ‘‘(1) just treatment of all holders of claims 

14 against or interests in the debtor’s property; 

15 ‘‘(2) protection of claim holders in the United 

16 States against prejudice and inconvenience in the 

17 processing of claims in such foreign proceeding; 

18 ‘‘(3) prevention of preferential or fraudulent dis19 positions of property of the debtor; 

20 ‘‘(4) distribution of proceeds of the debtor’s prop21 erty substantially in accordance with the order pre22 scribed by this title; and 

23 ‘‘(5) if appropriate, the provision of an oppor24 tunity for a fresh start for the individual that such 

25 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 application 

5 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 1515, 

15 and subject to any limitations that the court may impose 

16 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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1 by a certified copy of an order granting recognition under 

2 section 1517. 

3 ‘‘(d) If the court denies recognition under this chapter, 

4 the court may issue any appropriate order necessary to pre5 vent the foreign representative from obtaining comity or co6 operation 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 a 

12 case or to obtain recognition under this chapter does not 

13 affect any right the foreign representative may have to sue 

14 in a court in the United States to collect or recover a claim 

15 which is the property of the debtor. 

16 ‘‘§ 1510. Limited jurisdiction 

17 ‘‘The sole fact that a foreign representative files a peti18 tion under section 1515 does not subject the foreign rep19 resentative to the jurisdiction of any court in the United 

20 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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1 ‘‘(2) a voluntary case under section 301 or 302, 

2 if the foreign proceeding is a foreign main proceeding. 

3 ‘‘(b) The petition commencing a case under subsection 

4 (a) must be accompanied by a certified copy of an order 

5 granting recognition. The court where the petition for rec6 ognition has been filed must be advised of the foreign rep7 resentative’s intent to commence a case under subsection (a) 

8 prior to such commencement. 

9 ‘‘§ 1512. Participation of a foreign representative in a 

10 case under this title 

11 ‘‘Upon recognition of a foreign proceeding, the foreign 

12 representative in the recognized proceeding is entitled to 

13 participate as a party in interest in a case regarding the 

14 debtor under this title. 

15 ‘‘§ 1513. Access of foreign creditors to a case under 

16 this title 

17 ‘‘(a) Foreign creditors have the same rights regarding 

18 the commencement of, and participation in, a case under 

19 this title as domestic creditors. 

20 ‘‘(b)(1) Subsection (a) does not change or codify 

21 present law as to the priority of claims under section 507 

22 or 726, except that the claim of a foreign creditor under 

23 those sections shall not be given a lower priority than that 

24 of general unsecured claims without priority solely because 

25 the holder of such claim is a foreign creditor. 
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1 ‘‘(2)(A) Subsection (a) and paragraph (1) do not 

2 change or codify present law as to the allowability of foreign 

3 revenue claims or other foreign public law claims in a pro4 ceeding under this title. 

5 ‘‘(B) Allowance and priority as to a foreign tax claim 

6 or other foreign public law claim shall be governed by any 

7 applicable tax treaty of the United States, under the condi8 tions and circumstances specified therein. 

9 ‘‘§ 1514. Notification to foreign creditors concerning a 

10 case under this title 

11 ‘‘(a) Whenever in a case under this title notice is to 

12 be given to creditors generally or to any class or category 

13 of creditors, such notice shall also be given to the known 

14 creditors generally, or to creditors in the notified class or 

15 category, that do not have addresses in the United States. 

16 The court may order that appropriate steps be taken with 

17 a view to notifying any creditor whose address is not yet 

18 known. 

19 ‘‘(b) Such notification to creditors with foreign ad20 dresses described in subsection (a) shall be given individ21 ually, unless the court considers that, under the cir22 cumstances, some other form of notification would be more 

23 appropriate. No letter or other formality is required. 

24 ‘‘(c) When a notification of commencement of a case 

25 is to be given to foreign creditors, such notification shall—
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1 ‘‘(1) indicate the time period for filing proofs of 

2 claim and specify the place for filing such proofs of 

3 claim; 

4 ‘‘(2) indicate whether secured creditors need to 

5 file proofs of claim; and 

6 ‘‘(3) contain any other information required to 

7 be included in such notification to creditors under 

8 this title and the orders of the court. 

9 ‘‘(d) Any rule of procedure or order of the court as 

10 to notice or the filing of a proof of claim shall provide such 

11 additional time to creditors with foreign addresses as is rea12 sonable under the circumstances. 

13 ‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN 

14 PROCEEDING AND RELIEF 

15 ‘‘§ 1515. Application for recognition 

16 ‘‘(a) A foreign representative applies to the court for 

17 recognition of a foreign proceeding in which the foreign rep18 resentative has been appointed by filing a petition for rec19 ognition. 

20 ‘‘(b) A petition for recognition shall be accompanied 

21 by—

22 ‘‘(1) a certified copy of the decision commencing 

23 such foreign proceeding and appointing the foreign 

24 representative; 
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1 ‘‘(2) a certificate from the foreign court affirm2 ing the existence of such foreign proceeding and of the 

3 appointment of the foreign representative; or 

4 ‘‘(3) in the absence of evidence referred to in 

5 paragraphs (1) and (2), any other evidence acceptable 

6 to the court of the existence of such foreign proceeding 

7 and of the appointment of the foreign representative. 

8 ‘‘(c) A petition for recognition shall also be accom9 panied by a statement identifying all foreign proceedings 

10 with respect to the debtor that are known to the foreign rep11 resentative. 

12 ‘‘(d) The documents referred to in paragraphs (1) and 

13 (2) of subsection (b) shall be translated into English. The 

14 court may require a translation into English of additional 

15 documents. 

16 ‘‘§ 1516. Presumptions concerning recognition 

17 ‘‘(a) If the decision or certificate referred to in section 

18 1515(b) indicates that the foreign proceeding is a foreign 

19 proceeding and that the person or body is a foreign rep20 resentative, the court is entitled to so presume. 

21 ‘‘(b) The court is entitled to presume that documents 

22 submitted in support of the petition for recognition are au23 thentic, whether or not they have been legalized. 

24 ‘‘(c) In the absence of evidence to the contrary, the 

25 debtor’s registered office, or habitual residence in the case 
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1 of an individual, is presumed to be the center of the debtor’s 

2 main interests. 

3 ‘‘§ 1517. Order granting recognition 

4 ‘‘(a) Subject to section 1506, after notice and a hear5 ing, an order recognizing a foreign proceeding shall be en6 tered if—

7 ‘‘(1) such foreign proceeding for which recogni8 tion is sought is a foreign main proceeding or foreign 

9 nonmain proceeding within the meaning of section 

10 1502; 

11 ‘‘(2) the foreign representative applying for rec12 ognition is a person or body; and 

13 ‘‘(3) the petition meets the requirements of sec14 tion 1515. 

15 ‘‘(b) Such foreign proceeding shall be recognized—

16 ‘‘(1) as a foreign main proceeding if it is pend17 ing in the country where the debtor has the center of 

18 its main interests; or 

19 ‘‘(2) as a foreign nonmain proceeding if the debt20 or has an establishment within the meaning of section 

21 1502 in the foreign country where the proceeding is 

22 pending. 

23 ‘‘(c) A petition for recognition of a foreign proceeding 

24 shall be decided upon at the earliest possible time. Entry 
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1 of an order recognizing a foreign proceeding constitutes rec2 ognition under this chapter. 

3 ‘‘(d) The provisions of this subchapter do not prevent 

4 modification or termination of recognition if it is shown 

5 that the grounds for granting it were fully or partially lack6 ing or have ceased to exist, but in considering such action 

7 the court shall give due weight to possible prejudice to par8 ties that have relied upon the order granting recognition. 

9 A case under this chapter may be closed in the manner pre10 scribed under section 350. 

11 ‘‘§ 1518. Subsequent information 

12 ‘‘From the time of filing the petition for recognition 

13 of a foreign proceeding, the foreign representative shall file 

14 with the court promptly a notice of change of status con15 cerning—

16 ‘‘(1) any substantial change in the status of such 

17 foreign proceeding or the status of the foreign rep18 resentative’s appointment; and 

19 ‘‘(2) any other foreign proceeding regarding the 

20 debtor that becomes known to the foreign representa21 tive. 

22 ‘‘§ 1519. Relief that may be granted upon filing peti23 tion for recognition 

24 ‘‘(a) From the time of filing a petition for recognition 

25 until the court rules on the petition, the court may, at the 
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1 request of the foreign representative, where relief is urgently 

2 needed to protect the assets of the debtor or the interests 

3 of the creditors, grant relief of a provisional nature, includ4 ing—

5 ‘‘(1) staying execution against the debtor’s assets; 

6 ‘‘(2) entrusting the administration or realization 

7 of all or part of the debtor’s assets located in the 

8 United States to the foreign representative or another 

9 person authorized by the court, including an exam10 iner, in order to protect and preserve the value of as11 sets that, by their nature or because of other cir12 cumstances, are perishable, susceptible to devaluation 

13 or otherwise in jeopardy; and 

14 ‘‘(3) any relief referred to in paragraph (3), (4), 

15 or (7) of section 1521(a). 

16 ‘‘(b) Unless extended under section 1521(a)(6), the re17 lief granted under this section terminates when the petition 

18 for recognition is granted. 

19 ‘‘(c) It is a ground for denial of relief under this sec20 tion that such relief would interfere with the administration 

21 of a foreign main proceeding. 

22 ‘‘(d) The court may not enjoin a police or regulatory 

23 act of a governmental unit, including a criminal action or 

24 proceeding, under this section. 
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1 ‘‘(e) The standards, procedures, and limitations appli2 cable to an injunction shall apply to relief under this sec3 tion. 

4 ‘‘(f) The exercise of rights not subject to the stay aris5 ing under section 362(a) pursuant to paragraph (6), (7), 

6 (17), or (27) of section 362(b) or pursuant to section 362(n) 

7 shall not be stayed by any order of a court or administra8 tive agency in any proceeding under this chapter. 

9 ‘‘§ 1520. Effects of recognition of a foreign main pro10 ceeding 

11 ‘‘(a) Upon recognition of a foreign proceeding that is 

12 a foreign main proceeding—

13 ‘‘(1) sections 361 and 362 apply with respect to 

14 the debtor and the property of the debtor that is with15 in the territorial jurisdiction of the United States; 

16 ‘‘(2) sections 363, 549, and 552 apply to a trans17 fer of an interest of the debtor in property that is 

18 within the territorial jurisdiction of the United States 

19 to the same extent that the sections would apply to 

20 property of an estate; 

21 ‘‘(3) unless the court orders otherwise, the foreign 

22 representative may operate the debtor’s business and 

23 may exercise the rights and powers of a trustee under 

24 and to the extent provided by sections 363 and 552; 

25 and 
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1 ‘‘(4) section 552 applies to property of the debtor 

2 that is within the territorial jurisdiction of the 

3 United States. 

4 ‘‘(b) Subsection (a) does not affect the right to com5 mence an individual action or proceeding in a foreign 

6 country to the extent necessary to preserve a claim against 

7 the debtor. 

8 ‘‘(c) Subsection (a) does not affect the right of a foreign 

9 representative or an entity to file a petition commencing 

10 a case under this title or the right of any party to file 

11 claims or take other proper actions in such a case. 

12 ‘‘§ 1521. Relief that may be granted upon recognition 

13 ‘‘(a) Upon recognition of a foreign proceeding, whether 

14 main or nonmain, where necessary to effectuate the purpose 

15 of this chapter and to protect the assets of the debtor or 

16 the interests of the creditors, the court may, at the request 

17 of the foreign representative, grant any appropriate relief, 

18 including—

19 ‘‘(1) staying the commencement or continuation 

20 of an individual action or proceeding concerning the 

21 debtor’s assets, rights, obligations or liabilities to the 

22 extent they have not been stayed under section 

23 1520(a); 
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1 ‘‘(2) staying execution against the debtor’s assets 

2 to the extent it has not been stayed under section 

3 1520(a); 

4 ‘‘(3) suspending the right to transfer, encumber 

5 or otherwise dispose of any assets of the debtor to the 

6 extent this right has not been suspended under section 

7 1520(a); 

8 ‘‘(4) providing for the examination of witnesses, 

9 the taking of evidence or the delivery of information 

10 concerning the debtor’s assets, affairs, rights, obliga11 tions or liabilities; 

12 ‘‘(5) entrusting the administration or realization 

13 of all or part of the debtor’s assets within the terri14 torial jurisdiction of the United States to the foreign 

15 representative or another person, including an exam16 iner, authorized by the court; 

17 ‘‘(6) extending relief granted under section 

18 1519(a); and 

19 ‘‘(7) granting any additional relief that may be 

20 available to a trustee, except for relief available under 

21 sections 522, 544, 545, 547, 548, 550, and 724(a). 

22 ‘‘(b) Upon recognition of a foreign proceeding, whether 

23 main or nonmain, the court may, at the request of the for24 eign representative, entrust the distribution of all or part 

25 of the debtor’s assets located in the United States to the for-
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1 eign representative or another person, including an exam2 iner, authorized by the court, provided that the court is sat3 isfied that the interests of creditors in the United States 

4 are sufficiently protected. 

5 ‘‘(c) In granting relief under this section to a rep6 resentative of a foreign nonmain proceeding, the court must 

7 be satisfied that the relief relates to assets that, under the 

8 law of the United States, should be administered in the for9 eign nonmain proceeding or concerns information required 

10 in that proceeding. 

11 ‘‘(d) The court may not enjoin a police or regulatory 

12 act of a governmental unit, including a criminal action or 

13 proceeding, under this section. 

14 ‘‘(e) The standards, procedures, and limitations appli15 cable to an injunction shall apply to relief under para16 graphs (1), (2), (3), and (6) of subsection (a). 

17 ‘‘(f) The exercise of rights not subject to the stay aris18 ing under section 362(a) pursuant to paragraph (6), (7), 

19 (17), or (27) of section 362(b) or pursuant to section 362(n) 

20 shall not be stayed by any order of a court or administra21 tive agency in any proceeding under this chapter. 

22 ‘‘§ 1522. Protection of creditors and other interested 

23 persons 

24 ‘‘(a) The court may grant relief under section 1519 

25 or 1521, or may modify or terminate relief under subsection 
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1 (c), only if the interests of the creditors and other interested 

2 entities, including the debtor, are sufficiently protected. 

3 ‘‘(b) The court may subject relief granted under section 

4 1519 or 1521, or the operation of the debtor’s business under 

5 section 1520(a)(3), to conditions it considers appropriate, 

6 including the giving of security or the filing of a bond. 

7 ‘‘(c) The court may, at the request of the foreign rep8 resentative or an entity affected by relief granted under sec9 tion 1519 or 1521, or at its own motion, modify or termi10 nate such relief. 

11 ‘‘(d) Section 1104(d) shall apply to the appointment 

12 of an examiner under this chapter. Any examiner shall 

13 comply with the qualification requirements imposed on a 

14 trustee by section 322. 

15 ‘‘§ 1523. Actions to avoid acts detrimental to creditors 

16 ‘‘(a) Upon recognition of a foreign proceeding, the for17 eign representative has standing in a case concerning the 

18 debtor pending under another chapter of this title to initiate 

19 actions under sections 522, 544, 545, 547, 548, 550, 553, 

20 and 724(a). 

21 ‘‘(b) When a foreign proceeding is a foreign nonmain 

22 proceeding, the court must be satisfied that an action under 

23 subsection (a) relates to assets that, under United States 

24 law, should be administered in the foreign nonmain pro25 ceeding. 
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1 ‘‘§ 1524. Intervention by a foreign representative 

2 ‘‘Upon recognition of a foreign proceeding, the foreign 

3 representative may intervene in any proceedings in a State 

4 or Federal court in the United States in which the debtor 

5 is a party. 

6 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR7 EIGN COURTS AND FOREIGN REPRESENTA8 TIVES 

9 ‘‘§ 1525. Cooperation and direct communication be10 tween the court and foreign courts or for11 eign representatives 

12 ‘‘(a) Consistent with section 1501, the court shall co13 operate to the maximum extent possible with a foreign court 

14 or a foreign representative, either directly or through the 

15 trustee. 

16 ‘‘(b) The court is entitled to communicate directly 

17 with, or to request information or assistance directly from, 

18 a foreign court or a foreign representative, subject to the 

19 rights of a party in interest to notice and participation. 

20 ‘‘§ 1526. Cooperation and direct communication be21 tween the trustee and foreign courts or 

22 foreign representatives 

23 ‘‘(a) Consistent with section 1501, the trustee or other 

24 person, including an examiner, authorized by the court, 

25 shall, subject to the supervision of the court, cooperate to 
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1 the maximum extent possible with a foreign court or a for2 eign representative. 

3 ‘‘(b) The trustee or other person, including an exam4 iner, authorized by the court is entitled, subject to the super5 vision of the court, to communicate directly with a foreign 

6 court or a foreign representative. 

7 ‘‘§ 1527. Forms of cooperation 

8 ‘‘Cooperation referred to in sections 1525 and 1526 

9 may be implemented by any appropriate means, includ10 ing—

11 ‘‘(1) appointment of a person or body, including 

12 an examiner, to act at the direction of the court; 

13 ‘‘(2) communication of information by any 

14 means considered appropriate by the court; 

15 ‘‘(3) coordination of the administration and su16 pervision of the debtor’s assets and affairs; 

17 ‘‘(4) approval or implementation of agreements 

18 concerning the coordination of proceedings; and 

19 ‘‘(5) coordination of concurrent proceedings re20 garding the same debtor. 

21 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS 

22 ‘‘§ 1528. Commencement of a case under this title after 

23 recognition of a foreign main proceeding 

24 ‘‘After recognition of a foreign main proceeding, a case 

25 under another chapter of this title may be commenced only 
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1 if the debtor has assets in the United States. The effects of 

2 such case shall be restricted to the assets of the debtor that 

3 are within the territorial jurisdiction of the United States 

4 and, to the extent necessary to implement cooperation and 

5 coordination under sections 1525, 1526, and 1527, to other 

6 assets of the debtor that are within the jurisdiction of the 

7 court under sections 541(a) of this title, and 1334(e) of title 

8 28, to the extent that such other assets are not subject to 

9 the jurisdiction and control of a foreign proceeding that has 

10 been recognized under this chapter. 

11 ‘‘§ 1529. Coordination of a case under this title and a 

12 foreign proceeding 

13 ‘‘If a foreign proceeding and a case under another 

14 chapter of this title are pending concurrently regarding the 

15 same debtor, the court shall seek cooperation and coordina16 tion under sections 1525, 1526, and 1527, and the following 

17 shall apply: 

18 ‘‘(1) If the case in the United States pending at 

19 the time the petition for recognition of such foreign 

20 proceeding is filed—

21 ‘‘(A) any relief granted under section 1519 

22 or 1521 must be consistent with the relief grant23 ed in the case in the United States; and 
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1 ‘‘(B) section 1520 does not apply even if 

2 such foreign proceeding is recognized as a foreign 

3 main proceeding. 

4 ‘‘(2) If a case in the United States under this 

5 title commences after recognition, or after the date of 

6 the filing of the petition for recognition, of such for7 eign proceeding—

8 ‘‘(A) any relief in effect under section 1519 

9 or 1521 shall be reviewed by the court and shall 

10 be modified or terminated if inconsistent with 

11 the case in the United States; and 

12 ‘‘(B) if such foreign proceeding is a foreign 

13 main proceeding, the stay and suspension re14 ferred to in section 1520(a) shall be modified or 

15 terminated if inconsistent with the relief granted 

16 in the case in the United States. 

17 ‘‘(3) In granting, extending, or modifying relief 

18 granted to a representative of a foreign nonmain pro19 ceeding, the court must be satisfied that the relief re20 lates to assets that, under the laws of the United 

21 States, should be administered in the foreign nonmain 

22 proceeding or concerns information required in that 

23 proceeding. 
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1 ‘‘(4) In achieving cooperation and coordination 

2 under sections 1528 and 1529, the court may grant 

3 any of the relief authorized under section 305. 

4 ‘‘§ 1530. Coordination of more than 1 foreign pro5 ceeding 

6 ‘‘In matters referred to in section 1501, with respect 

7 to more than 1 foreign proceeding regarding the debtor, the 

8 court shall seek cooperation and coordination under sections 

9 1525, 1526, and 1527, and the following shall apply: 

10 ‘‘(1) Any relief granted under section 1519 or 

11 1521 to a representative of a foreign nonmain pro12 ceeding after recognition of a foreign main proceeding 

13 must be consistent with the foreign main proceeding. 

14 ‘‘(2) If a foreign main proceeding is recognized 

15 after recognition, or after the filing of a petition for 

16 recognition, of a foreign nonmain proceeding, any re17 lief in effect under section 1519 or 1521 shall be re18 viewed by the court and shall be modified or termi19 nated if inconsistent with the foreign main pro20 ceeding. 

21 ‘‘(3) If, after recognition of a foreign nonmain 

22 proceeding, another foreign nonmain proceeding is 

23 recognized, the court shall grant, modify, or terminate 

24 relief for the purpose of facilitating coordination of 

25 the proceedings. 
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1 ‘‘§ 1531. Presumption of insolvency based on recogni2 tion of a foreign main proceeding 

3 ‘‘In the absence of evidence to the contrary, recognition 

4 of a foreign main proceeding is, for the purpose of com5 mencing a proceeding under section 303, proof that the 

6 debtor is generally not paying its debts as such debts become 

7 due. 

8 ‘‘§ 1532. Rule of payment in concurrent proceedings 

9 ‘‘Without prejudice to secured claims or rights in rem, 

10 a creditor who has received payment with respect to its 

11 claim in a foreign proceeding pursuant to a law relating 

12 to insolvency may not receive a payment for the same claim 

13 in a case under any other chapter of this title regarding 

14 the debtor, so long as the payment to other creditors of the 

15 same class is proportionately less than the payment the 

16 creditor has already received.’’. 

17 (b) CLERICAL AMENDMENT.—The table of chapters for 

18 title 11, United States Code, is amended by inserting after 

19 the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................... 1501’’.

20 SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, 

21 UNITED STATES CODE. 

22 (a) APPLICABILITY OF CHAPTERS.—Section 103 of 

23 title 11, United States Code, is amended—

24 (1) in subsection (a), by inserting before the pe25 riod the following: ‘‘, and this chapter, sections 307, 
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1 362(n), 555 through 557, and 559 through 562 apply 

2 in a case under chapter 15’’; and 

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

4 ‘‘(k) Chapter 15 applies only in a case under such 

5 chapter, except that—

6 ‘‘(1) sections 1505, 1513, and 1514 apply in all 

7 cases under this title; and 

8 ‘‘(2) section 1509 applies whether or not a case 

9 under this title is pending.’’. 

10 (b) DEFINITIONS.—Section 101 of title 11, United 

11 States Code, is amended by striking paragraphs (23) and 

12 (24) and inserting the following: 

13 ‘‘(23) ‘foreign proceeding’ means a collective ju14 dicial or administrative proceeding in a foreign coun15 try, including an interim proceeding, under a law re16 lating to insolvency or adjustment of debt in which 

17 proceeding the assets and affairs of the debtor are sub18 ject to control or supervision by a foreign court, for 

19 the purpose of reorganization or liquidation; 

20 ‘‘(24) ‘foreign representative’ means a person or 

21 body, including a person or body appointed on an in22 terim basis, authorized in a foreign proceeding to ad23 minister the reorganization or the liquidation of the 

24 debtor’s assets or affairs or to act as a representative 

25 of such foreign proceeding;’’. 
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1 (c) AMENDMENTS TO TITLE 28, UNITED STATES

2 CODE.—

3 (1) PROCEDURES.—Section 157(b)(2) of title 28, 

4 United States Code, is amended—

5 (A) in subparagraph (N), by striking ‘‘and’’ 

6 at the end; 

7 (B) in subparagraph (O), by striking the 

8 period at the end and inserting ‘‘; and’’; and 

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

10 ‘‘(P) recognition of foreign proceedings and 

11 other matters under chapter 15 of title 11.’’. 

12 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

13 Section 1334(c) of title 28, United States Code, is 

14 amended by striking ‘‘Nothing in’’ and inserting ‘‘Ex15 cept with respect to a case under chapter 15 of title 

16 11, nothing in’’. 

17 (3) DUTIES OF TRUSTEES.—Section 586(a)(3) of 

18 title 28, United States Code, is amended by striking 

19 ‘‘or 13’’ and inserting ‘‘13, or 15’’. 

20 (4) VENUE OF CASES ANCILLARY TO FOREIGN

21 PROCEEDINGS.—Section 1410 of title 28, United 

22 States Code, is amended to read as follows: 
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1 ‘‘§ 1410. Venue of cases ancillary to foreign pro2 ceedings 

3 ‘‘A case under chapter 15 of title 11 may be com4 menced in the district court of the United States for the 

5 district—

6 ‘‘(1) in which the debtor has its principal place 

7 of business or principal assets in the United States; 

8 ‘‘(2) if the debtor does not have a place of busi9 ness or assets in the United States, in which there is 

10 pending against the debtor an action or proceeding in 

11 a Federal or State court; or 

12 ‘‘(3) in a case other than those specified in para13 graph (1) or (2), in which venue will be consistent 

14 with the interests of justice and the convenience of the 

15 parties, having regard to the relief sought by the for16 eign representative.’’. 

17 (d) OTHER SECTIONS OF TITLE 11.—Title 11 of the 

18 United States Code is amended—

19 (1) in section 109(b), by striking paragraph (3) 

20 and inserting the following: 

21 ‘‘(3)(A) a foreign insurance company, engaged 

22 in such business in the United States; or 

23 ‘‘(B) a foreign bank, savings bank, cooperative 

24 bank, savings and loan association, building and loan 

25 association, or credit union, that has a branch or 
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1 agency (as defined in section 1(b) of the International 

2 Banking Act of 1978 in the United States.’’; 

3 (2) in section 303, by striking subsection (k); 

4 (3) by striking section 304; 

5 (4) in the table of sections for chapter 3 by strik6 ing the item relating to section 304; 

7 (5) in section 306 by striking ‘‘, 304,’’ each place 

8 it appears; 

9 (6) in section 305(a) by striking paragraph (2) 

10 and inserting the following: 

11 ‘‘(2)(A) a petition under section 1515 for rec12 ognition of a foreign proceeding has been granted; 

13 and 

14 ‘‘(B) the purposes of chapter 15 of this title 

15 would be best served by such dismissal or suspen16 sion.’’; and 

17 (7) in section 508—

18 (A) by striking subsection (a); and 

19 (B) in subsection (b), by striking ‘‘(b)’’.
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1 TITLE IX—FINANCIAL CONTRACT 

2 PROVISIONS 

3 SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON4 SERVATORS OR RECEIVERS OF INSURED DE5 POSITORY INSTITUTIONS. 

6 (a) DEFINITION OF QUALIFIED FINANCIAL CON7 TRACT.—Section 11(e)(8)(D) of the Federal Deposit Insur8 ance Act (12 U.S.C. 1821(e)(8)(D)) is amended— 

9 (1) by striking ‘‘subsection—’’ and inserting 

10 ‘‘subsection, the following definitions shall apply:’’; 

11 and 

12 (2) in clause (i), by inserting ‘‘, resolution, or 

13 order’’ after ‘‘any similar agreement that the Cor14 poration determines by regulation’’. 

15 (b) DEFINITION OF SECURITIES CONTRACT.—Section 

16 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 

17 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows: 

18 ‘‘(ii) SECURITIES CONTRACT.—The 

19 term ‘securities contract’—

20 ‘‘(I) means a contract for the pur21 chase, sale, or loan of a security, a cer22 tificate of deposit, a mortgage loan, or 

23 any interest in a mortgage loan, a 

24 group or index of securities, certificates 

25 of deposit, or mortgage loans or inter-
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1 ests therein (including any interest 

2 therein or based on the value thereof) 

3 or any option on any of the foregoing, 

4 including any option to purchase or 

5 sell any such security, certificate of de6 posit, mortgage loan, interest, group or 

7 index, or option, and including any re8 purchase or reverse repurchase trans9 action on any such security, certificate 

10 of deposit, mortgage 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, or 

17 order to include any such agreement 

18 within the meaning of such term; 

19 ‘‘(III) means any option entered 

20 into on a national securities exchange 

21 relating to foreign currencies; 

22 ‘‘(IV) means the guarantee by or 

23 to any securities clearing agency of 

24 any settlement of cash, securities, cer25 tificates of deposit, mortgage loans or 
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1 interests therein, group or index of se2 curities, certificates of deposit, or mort3 gage loans or interests therein (includ4 ing any interest therein or based on 

5 the value thereof) or option on any of 

6 the foregoing, including any option to 

7 purchase or sell any such security, cer8 tificate of deposit, mortgage loan, in9 terest, group or index, or option; 

10 ‘‘(V) means any margin loan; 

11 ‘‘(VI) means any other agreement 

12 or transaction that is similar to any 

13 agreement or transaction referred to in 

14 this clause; 

15 ‘‘(VII) means any combination of 

16 the agreements or transactions referred 

17 to in this clause; 

18 ‘‘(VIII) means any option to enter 

19 into any agreement or transaction re20 ferred to in this clause; 

21 ‘‘(IX) means a master agreement 

22 that provides for an agreement or 

23 transaction referred to in subclause (I), 

24 (III), (IV), (V), (VI), (VII), or (VIII), 

25 together with all supplements to any 
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1 such master agreement, without regard 

2 to whether the master agreement pro3 vides for an agreement or transaction 

4 that is not a securities contract under 

5 this clause, except that the master 

6 agreement shall be considered to be a 

7 securities contract under this clause 

8 only with respect to each agreement or 

9 transaction under the master agree10 ment that is referred to in subclause 

11 (I), (III), (IV), (V), (VI), (VII), or 

12 (VIII); and

13 ‘‘(X) means any security agree14 ment or arrangement or other credit 

15 enhancement related to any agreement 

16 or transaction referred to in this 

17 clause, including any guarantee or re18 imbursement obligation in connection 

19 with any agreement or transaction re20 ferred to in this clause.’’. 

21 (c) DEFINITION OF COMMODITY CONTRACT.—Section 

22 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12 

23 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows: 

24 ‘‘(iii) COMMODITY CONTRACT.—The 

25 term ‘commodity contract’ means—
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1 ‘‘(I) with respect to a futures com2 mission merchant, a contract for the 

3 purchase or sale of a commodity for fu4 ture delivery on, or subject to the rules 

5 of, a contract market or board of trade; 

6 ‘‘(II) with respect to a foreign fu7 tures commission merchant, a foreign 

8 future; 

9 ‘‘(III) with respect to a leverage 

10 transaction merchant, a leverage trans11 action; 

12 ‘‘(IV) with respect to a clearing 

13 organization, a contract for the pur14 chase or sale of a commodity for future 

15 delivery on, or subject to the rules of, 

16 a contract market or board of trade 

17 that is cleared by such clearing organi18 zation, or commodity option traded on, 

19 or subject to the rules of, a contract 

20 market or board of trade that is 

21 cleared by such clearing organization; 

22 ‘‘(V) with respect to a commodity 

23 options dealer, a commodity option; 

24 ‘‘(VI) any other agreement or 

25 transaction that is similar to any 
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1 agreement or transaction referred to in 

2 this clause; 

3 ‘‘(VII) any combination of the 

4 agreements or transactions referred to 

5 in this clause; 

6 ‘‘(VIII) any option to enter into 

7 any agreement or transaction referred 

8 to in this clause; 

9 ‘‘(IX) a master agreement that 

10 provides for an agreement or trans11 action referred to in subclause (I), (II), 

12 (III), (IV), (V), (VI), (VII), or (VIII), 

13 together with all supplements to any 

14 such master agreement, without regard 

15 to whether the master agreement pro16 vides for an agreement or transaction 

17 that is not a commodity contract 

18 under this clause, except that the mas19 ter agreement shall be considered to be 

20 a commodity contract under this clause 

21 only with respect to each agreement or 

22 transaction under the master agree23 ment that is referred to in subclause 

24 (I), (II), (III), (IV), (V), (VI), (VII), or 

25 (VIII); or 
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1 ‘‘(X) any security agreement or 

2 arrangement or other credit enhance3 ment related to any agreement or 

4 transaction referred to in this clause, 

5 including any guarantee or reimburse6 ment obligation in connection with 

7 any agreement or transaction referred 

8 to in this 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 term 

13 ‘forward contract’ means—

14 ‘‘(I) a contract (other than a com15 modity contract) for the purchase, sale, 

16 or transfer of a commodity or any 

17 similar good, article, service, right, or 

18 interest which is presently or in the fu19 ture becomes the subject of dealing in 

20 the forward contract trade, or product 

21 or byproduct thereof, with a maturity 

22 date more than 2 days after the date 

23 the contract is entered into, including, 

24 a repurchase transaction, reverse re25 purchase transaction, consignment, 
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1 lease, swap, hedge transaction, deposit, 

2 loan, option, allocated transaction, 

3 unallocated transaction, or any other 

4 similar agreement; 

5 ‘‘(II) any combination of agree6 ments or transactions referred to in 

7 subclauses (I) and (III); 

8 ‘‘(III) any option to enter into 

9 any agreement or transaction referred 

10 to in subclause (I) or (II); 

11 ‘‘(IV) a master agreement that 

12 provides for an agreement or trans13 action referred to in subclauses (I), 

14 (II), or (III), together with all supple15 ments to any such master agreement, 

16 without regard to whether the master 

17 agreement provides for an agreement 

18 or transaction that is not a forward 

19 contract under this clause, except that 

20 the master agreement shall be consid21 ered to be a forward contract under 

22 this clause only with respect to each 

23 agreement or transaction under the 

24 master agreement that is referred to in 

25 subclause (I), (II), or (III); or 
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1 ‘‘(V) any security agreement or 

2 arrangement or other credit enhance3 ment related to any agreement or 

4 transaction referred to in subclause (I), 

5 (II), (III), or (IV), including any 

6 guarantee or reimbursement obligation 

7 in connection with any agreement or 

8 transaction referred to in any such 

9 subclause.’’. 

10 (e) DEFINITION OF REPURCHASE AGREEMENT.—Sec11 tion 11(e)(8)(D)(v) of the Federal Deposit Insurance Act 

12 (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows: 

13 ‘‘(v) REPURCHASE AGREEMENT.—The 

14 term ‘repurchase agreement’ (which defini15 tion also applies to a reverse repurchase 

16 agreement)—

17 ‘‘(I) means an agreement, includ18 ing related terms, which provides for 

19 the transfer of one or more certificates 

20 of deposit, mortgage-related securities 

21 (as such term is defined in the Securi22 ties Exchange Act of 1934), mortgage 

23 loans, interests in mortgage-related se24 curities or mortgage loans, eligible 

25 bankers’ acceptances, qualified foreign 
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1 government securities or securities that 

2 are direct obligations of, or that are 

3 fully guaranteed by, the United States 

4 or any agency of the United States 

5 against the transfer of funds by the 

6 transferee of such certificates of de7 posit, eligible bankers’ acceptances, se8 curities, mortgage loans, or interests 

9 with a simultaneous agreement by such 

10 transferee to transfer to the transferor 

11 thereof certificates of deposit, eligible 

12 bankers’ acceptances, securities, mort13 gage loans, or interests as described 

14 above, at a date certain not later than 

15 1 year after such transfers or on de16 mand, against the transfer of funds, or 

17 any other similar agreement; 

18 ‘‘(II) does not include any repur19 chase obligation under a participation 

20 in a commercial mortgage loan unless 

21 the Corporation determines by regula22 tion, resolution, or order to include 

23 any such participation within the 

24 meaning of such term;
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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 (I), 

10 (III), or (IV), together with all supple11 ments to any such master agreement, 

12 without regard to whether the master 

13 agreement provides for an agreement 

14 or transaction that is not a repurchase 

15 agreement under this clause, except 

16 that the master agreement shall be con17 sidered to be a repurchase agreement 

18 under this subclause only with respect 

19 to each agreement or transaction under 

20 the master agreement that is referred to 

21 in subclause (I), (III), or (IV); and 

22 ‘‘(VI) means any security agree23 ment or arrangement or other credit 

24 enhancement related to any agreement 

25 or transaction referred to in subclause 
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1 (I), (III), (IV), or (V), including any 

2 guarantee or reimbursement obligation 

3 in connection with any agreement or 

4 transaction referred to in any such 

5 subclause. 

6 For purposes of this clause, the term ‘quali7 fied foreign government security’ means a 

8 security that is a direct obligation of, or 

9 that is fully guaranteed by, the central gov10 ernment of a member of the Organization 

11 for Economic Cooperation and Development 

12 (as determined by regulation or order 

13 adopted by the appropriate Federal banking 

14 authority).’’. 

15 (f) DEFINITION OF SWAP AGREEMENT.—Section 

16 11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12 

17 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows: 

18 ‘‘(vi) SWAP AGREEMENT.—The term 

19 ‘swap agreement’ means—

20 ‘‘(I) any agreement, including the 

21 terms and conditions incorporated by 

22 reference in any such agreement, which 

23 is an interest rate swap, option, future, 

24 or forward agreement, including a rate 

25 floor, rate cap, rate collar, cross-cur-
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1 rency rate swap, and basis swap; a 

2 spot, same day-tomorrow, tomorrow3 next, forward, or other foreign ex4 change or precious metals agreement; a 

5 currency swap, option, future, or for6 ward agreement; an equity index or eq7 uity swap, option, future, or forward 

8 agreement; a debt index or debt swap, 

9 option, future, or forward agreement; a 

10 total return, credit spread or credit 

11 swap, option, future, or forward agree12 ment; a commodity index or com13 modity swap, option, future, or for14 ward agreement; or a weather swap, 

15 weather derivative, or weather option; 

16 ‘‘(II) any agreement or trans17 action that is similar to any other 

18 agreement or transaction referred to in 

19 this clause and that is of a type that 

20 has been, is presently, or in the future 

21 becomes, the subject of recurrent deal22 ings in the swap markets (including 

23 terms and conditions incorporated by 

24 reference in such agreement) and that 

25 is a forward, swap, future, or option 
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1 on one or more rates, currencies, com2 modities, equity securities or other eq3 uity instruments, debt securities or 

4 other debt instruments, quantitative 

5 measures associated with an occur6 rence, extent of an occurrence, or con7 tingency associated with a financial, 

8 commercial, or economic consequence, 

9 or economic or financial indices or 

10 measures of economic or financial risk 

11 or value; 

12 ‘‘(III) any combination of agree13 ments or transactions referred to in 

14 this clause; 

15 ‘‘(IV) any option to enter into 

16 any agreement or transaction referred 

17 to in this clause; 

18 ‘‘(V) a master agreement that pro19 vides for an agreement or transaction 

20 referred to in subclause (I), (II), (III), 

21 or (IV), together with all supplements 

22 to any such master agreement, without 

23 regard to whether the master agreement 

24 contains an agreement or transaction 

25 that is not a swap agreement under 
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1 this clause, except that the master 

2 agreement shall be considered to be a 

3 swap agreement under this clause only 

4 with respect to each agreement or 

5 transaction under the master agree6 ment that is referred to in subclause 

7 (I), (II), (III), or (IV); and 

8 ‘‘(VI) any security agreement or 

9 arrangement or other credit enhance10 ment related to any agreements or 

11 transactions referred to in subclause 

12 (I), (II), (III), (IV), or (V), including 

13 any guarantee or reimbursement obli14 gation in connection with any agree15 ment or transaction referred to in any 

16 such subclause. 

17 Such term is applicable for purposes of this 

18 subsection only and shall not be construed 

19 or applied so as to challenge or affect the 

20 characterization, definition, or treatment of 

21 any swap agreement under any other stat22 ute, regulation, or rule, including the Secu23 rities Act of 1933, the Securities Exchange 

24 Act of 1934, the Public Utility Holding 

25 Company Act of 1935, the Trust Indenture 
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1 Act of 1939, the Investment Company Act of 

2 1940, the Investment Advisers Act of 1940, 

3 the Securities Investor Protection Act of 

4 1970, the Commodity Exchange Act, the 

5 Gramm-Leach-Bliley Act, and the Legal 

6 Certainty for Bank Products Act of 2000.’’. 

7 (g) DEFINITION OF TRANSFER.—Section 

8 11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12 

9 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows: 

10 ‘‘(viii) TRANSFER.—The term ‘trans11 fer’ means every mode, direct or indirect, 

12 absolute or conditional, voluntary or invol13 untary, of disposing of or parting with 

14 property or with an interest in property, 

15 including retention of title as a security in16 terest and foreclosure of the depository insti17 tution’s equity of redemption.’’. 

18 (h) TREATMENT OF QUALIFIED FINANCIAL CON19 TRACTS.—Section 11(e)(8) of the Federal Deposit Insurance 

20 Act (12 U.S.C. 1821(e)(8)) is amended—

21 (1) in subparagraph (A)—

22 (A) by striking ‘‘paragraph (10)’’ and in23 serting ‘‘paragraphs (9) and (10)’’; 

24 (B) in clause (i), by striking ‘‘to cause the 

25 termination or liquidation’’ and inserting ‘‘such 
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1 person has to cause the termination, liquidation, 

2 or acceleration’’; and 

3 (C) by striking clause (ii) and inserting the 

4 following: 

5 ‘‘(ii) any right under any security 

6 agreement or arrangement or other credit 

7 enhancement related to one or more quali8 fied financial contracts described in clause 

9 (i);’’; and 

10 (2) in subparagraph (E), by striking clause (ii) 

11 and inserting the following: 

12 ‘‘(ii) any right under any security 

13 agreement or arrangement or other credit 

14 enhancement related to one or more quali15 fied financial contracts described in clause 

16 (i);’’. 

17 (i) AVOIDANCE OF TRANSFERS.—Section 

18 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12 

19 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section 

20 5242 of the Revised Statutes of the United States or any 

21 other Federal or State law relating to the avoidance of pref22 erential or fraudulent transfers,’’ before ‘‘the Corporation’’. 
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1 SEC. 902. AUTHORITY OF THE CORPORATION WITH RE2 SPECT TO FAILED AND FAILING INSTITU3 TIONS. 

4 (a) IN GENERAL.—Section 11(e)(8) of the Federal De5 posit Insurance Act (12 U.S.C. 1821(e)(8)) is amended—

6 (1) in subparagraph (E), by striking ‘‘other than 

7 paragraph (12) of this subsection, subsection (d)(9)’’ 

8 and inserting ‘‘other than subsections (d)(9) and 

9 (e)(10)’’; and 

10 (2) by adding at the end the following new sub11 paragraphs: 

12 ‘‘(F) CLARIFICATION.—No provision of law 

13 shall be construed as limiting the right or power 

14 of the Corporation, or authorizing any court or 

15 agency to limit or delay, in any manner, the 

16 right or power of the Corporation to transfer any 

17 qualified financial contract in accordance with 

18 paragraphs (9) and (10) of this subsection or to 

19 disaffirm or repudiate any such contract in ac20 cordance with subsection (e)(1) of this section. 

21 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC22 TIVE.—

23 ‘‘(i) IN GENERAL.—Notwithstanding 

24 the provisions of subparagraphs (A) and 

25 (E), and sections 403 and 404 of the Fed26 eral Deposit Insurance Corporation Im-
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1 provement Act of 1991, no walkaway clause 

2 shall be enforceable in a qualified financial 

3 contract of an insured depository institu4 tion in default. 

5 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

6 For purposes of this subparagraph, the term 

7 ‘walkaway clause’ means a provision in a 

8 qualified financial contract that, after cal9 culation of a value of a party’s position or 

10 an amount due to or from 1 of the parties 

11 in accordance with its terms upon termi12 nation, liquidation, or acceleration of the 

13 qualified financial contract, either does not 

14 create a payment obligation of a party or 

15 extinguishes a payment obligation of a 

16 party in whole or in part solely because of 

17 such party’s status as a nondefaulting 

18 party.’’. 

19 (b) TECHNICAL AND CONFORMING AMENDMENT.—Sec20 tion 11(e)(12)(A) of the Federal Deposit Insurance Act (12 

21 U.S.C. 1821(e)(12)(A)) is amended by inserting ‘‘or the ex22 ercise of rights or powers by’’ after ‘‘the appointment of’’. 
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1 SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF 

2 QUALIFIED FINANCIAL CONTRACTS. 

3 (a) TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS

4 TO FINANCIAL INSTITUTIONS.—Section 11(e)(9) of the Fed5 eral Deposit Insurance Act (12 U.S.C. 1821(e)(9)) is 

6 amended to read as follows: 

7 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON8 TRACTS.—

9 ‘‘(A) IN GENERAL.—In making any transfer 

10 of assets or liabilities of a depository institution 

11 in default which includes any qualified financial 

12 contract, the conservator or receiver for such de13 pository institution shall either—

14 ‘‘(i) transfer to one financial institu15 tion, other than a financial institution for 

16 which a conservator, receiver, trustee in 

17 bankruptcy, or other legal custodian has 

18 been appointed or which is otherwise the 

19 subject of a bankruptcy or insolvency pro20 ceeding—

21 ‘‘(I) all qualified financial con22 tracts between any person or any affil23 iate of such person and the depository 

24 institution in default; 

25 ‘‘(II) all claims of such person or 

26 any affiliate of such person against 
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1 such depository institution under any 

2 such contract (other than any claim 

3 which, under the terms of any such 

4 contract, is subordinated to the claims 

5 of general unsecured creditors of such 

6 institution); 

7 ‘‘(III) all claims of such deposi8 tory institution against such person or 

9 any affiliate of such person under any 

10 such contract; and 

11 ‘‘(IV) all property securing or any 

12 other credit enhancement for any con13 tract described in subclause (I) or any 

14 claim described in subclause (II) or 

15 (III) under any such contract; or 

16 ‘‘(ii) transfer none of the qualified fi17 nancial contracts, claims, property or other 

18 credit enhancement referred to in clause (i) 

19 (with respect to such person and any affil20 iate of such person).

21 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR22 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

23 AGENCY OF A FOREIGN BANK OR FINANCIAL IN24 STITUTION.—In transferring any qualified fi25 nancial contracts and related claims and prop-
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1 erty under subparagraph (A)(i), the conservator 

2 or receiver for the depository institution shall 

3 not make such transfer to a foreign bank, finan4 cial institution organized under the laws of a 

5 foreign country, or a branch or agency of a for6 eign bank or financial institution unless, under 

7 the law applicable to such bank, financial insti8 tution, branch or agency, to the qualified finan9 cial contracts, and to any netting contract, any 

10 security agreement or arrangement or other cred11 it enhancement related to one or more qualified 

12 financial contracts, the contractual rights of the 

13 parties to such qualified financial contracts, net14 ting contracts, security agreements or arrange15 ments, or other credit enhancements are enforce16 able substantially to the same extent as per17 mitted under this section. 

18 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT TO

19 THE RULES OF A CLEARING ORGANIZATION.—In 

20 the event that a conservator or receiver transfers 

21 any qualified financial contract and related 

22 claims, property, and credit enhancements pur23 suant to subparagraph (A)(i) and such contract 

24 is cleared by or subject to the rules of a clearing 

25 organization, the clearing organization shall not 
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1 be required to accept the transferee as a member 

2 by virtue of the transfer. 

3 ‘‘(D) DEFINITIONS.—For purposes of this 

4 paragraph, the term ‘financial institution’ 

5 means a broker or dealer, a depository institu6 tion, a futures commission merchant, or any 

7 other institution, as determined by the Corpora8 tion by regulation to be a financial institution, 

9 and the term ‘clearing organization’ has the 

10 same meaning as in section 402 of the Federal 

11 Deposit Insurance Corporation Improvement Act 

12 of 1991.’’. 

13 (b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

14 COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal 

15 Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is 

16 amended in the material immediately following clause (ii) 

17 by striking ‘‘the conservator’’ and all that follows through 

18 the period and inserting the following: ‘‘the conservator or 

19 receiver shall notify any person who is a party to any such 

20 contract of such transfer by 5:00 p.m. (eastern time) on the 

21 business day following the date of the appointment of the 

22 receiver in the case of a receivership, or the business day 

23 following such transfer in the case of a conservatorship.’’. 
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1 (c) RIGHTS AGAINST RECEIVER AND TREATMENT OF

2 BRIDGE BANKS.—Section 11(e)(10) of the Federal Deposit 

3 Insurance Act (12 U.S.C. 1821(e)(10)) is amended—

4 (1) by redesignating subparagraph (B) as sub5 paragraph (D); and 

6 (2) by inserting after subparagraph (A) the fol7 lowing new subparagraphs: 

8 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE9 ABLE.—

10 ‘‘(i) RECEIVERSHIP.—A person who is 

11 a party to a qualified financial contract 

12 with an insured depository institution may 

13 not exercise any right that such person has 

14 to terminate, liquidate, or net such contract 

15 under paragraph (8)(A) of this subsection 

16 or section 403 or 404 of the Federal Deposit 

17 Insurance Corporation Improvement Act of 

18 1991, solely by reason of or incidental to the 

19 appointment of a receiver for the depository 

20 institution (or the insolvency or financial 

21 condition of the depository institution for 

22 which the receiver has been appointed)—

23 ‘‘(I) until 5:00 p.m. (eastern time) 

24 on the business day following the date 

25 of the appointment of the receiver; or 
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1 ‘‘(II) after the person has received 

2 notice that the contract has been trans3 ferred pursuant to paragraph (9)(A). 

4 ‘‘(ii) CONSERVATORSHIP.—A person 

5 who is a party to a qualified financial con6 tract with an insured depository institution 

7 may not exercise any right that such person 

8 has to terminate, liquidate, or net such con9 tract under paragraph (8)(E) of this sub10 section or section 403 or 404 of the Federal 

11 Deposit Insurance Corporation Improve12 ment Act of 1991, solely by reason of or in13 cidental to the appointment of a conservator 

14 for the depository institution (or the insol15 vency or financial condition of the deposi16 tory institution for which the conservator 

17 has been appointed). 

18 ‘‘(iii) NOTICE.—For purposes of this 

19 paragraph, the Corporation as receiver or 

20 conservator of an insured depository insti21 tution shall be deemed to have notified a 

22 person who is a party to a qualified finan23 cial contract with such depository institu24 tion if the Corporation has taken steps rea25 sonably calculated to provide notice to such 
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1 person by the time specified in subpara2 graph (A). 

3 ‘‘(C) TREATMENT OF BRIDGE BANKS.—The 

4 following institutions shall not be considered to 

5 be a financial institution for which a conser6 vator, receiver, trustee in bankruptcy, or other 

7 legal custodian has been appointed or which is 

8 otherwise the subject of a bankruptcy or insol9 vency proceeding for purposes of paragraph (9): 

10 ‘‘(i) A bridge bank. 

11 ‘‘(ii) A depository institution orga12 nized by the Corporation, for which a con13 servator is appointed either—

14 ‘‘(I) immediately upon the organi15 zation of the institution; or 

16 ‘‘(II) at the time of a purchase 

17 and assumption transaction between 

18 the depository institution and the Cor19 poration as receiver for a depository 

20 institution in default.’’. 

21 SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR 

22 REPUDIATION OF QUALIFIED FINANCIAL 

23 CONTRACTS. 

24 Section 11(e) of the Federal Deposit Insurance Act (12 

25 U.S.C. 1821(e)) is amended—
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1 (1) by redesignating paragraphs (11) through 

2 (15) as paragraphs (12) through (16), respectively; 

3 (2) by inserting after paragraph (10) the fol4 lowing new paragraph: 

5 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

6 QUALIFIED FINANCIAL CONTRACTS.—In exercising the 

7 rights of disaffirmance or repudiation of a conser8 vator or receiver with respect to any qualified finan9 cial contract to which an insured depository institu10 tion is a party, the conservator or receiver for such 

11 institution shall either—

12 ‘‘(A) disaffirm or repudiate all qualified fi13 nancial contracts between—

14 ‘‘(i) any person or any affiliate of such 

15 person; and 

16 ‘‘(ii) the depository institution in de17 fault; or 

18 ‘‘(B) disaffirm or repudiate none of the 

19 qualified financial contracts referred to in sub20 paragraph (A) (with respect to such person or 

21 any affiliate of such person).’’; and 

22 (3) by adding at the end the following new para23 graph: 

24 ‘‘(17) SAVINGS CLAUSE.—The meanings of terms 

25 used in this subsection are applicable for purposes of 
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1 this subsection only, and shall not be construed or ap2 plied so as to challenge or affect the characterization, 

3 definition, or treatment of any similar terms under 

4 any other statute, regulation, or rule, including the 

5 Gramm-Leach-Bliley Act, the Legal Certainty for 

6 Bank Products Act of 2000, the securities laws (as 

7 that term is defined in section 3(a)(47) of the Securi8 ties Exchange Act of 1934), and the Commodity Ex9 change Act.’’. 

10 SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER 

11 AGREEMENTS. 

12 Section 11(e)(8)(D)(vii) of the Federal Deposit Insur13 ance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read 

14 as follows: 

15 ‘‘(vii) TREATMENT OF MASTER AGREE16 MENT AS ONE AGREEMENT.—Any master 

17 agreement for any contract or agreement de18 scribed in any preceding clause of this sub19 paragraph (or any master agreement for 

20 such master agreement or agreements), to21 gether with all supplements to such master 

22 agreement, shall be treated as a single 

23 agreement and a single qualified financial 

24 contract. If a master agreement contains 

25 provisions relating to agreements or trans-
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1 actions that are not themselves qualified fi2 nancial contracts, the master agreement 

3 shall be deemed to be a qualified financial 

4 contract only with respect to those trans5 actions that are themselves qualified finan6 cial contracts.’’.

7 SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION IM8 PROVEMENT ACT OF 1991. 

9 (a) DEFINITIONS.—Section 402 of the Federal Deposit 

10 Insurance Corporation Improvement Act of 1991 (12 U.S.C. 

11 4402) is amended—

12 (1) in paragraph (2)—

13 (A) in subparagraph (A)(ii), by inserting 

14 before the semicolon ‘‘, or is exempt from such 

15 registration by order of the Securities and Ex16 change Commission’’; and 

17 (B) in subparagraph (B), by inserting be18 fore the period ‘‘, that has been granted an ex19 emption under section 4(c)(1) of the Commodity 

20 Exchange Act, or that is a multilateral clearing 

21 organization (as defined in section 408 of this 

22 Act)’’; 

23 (2) in paragraph (6)—
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1 (A) by redesignating subparagraphs (B) 

2 through (D) as subparagraphs (C) through (E), 

3 respectively; 

4 (B) by inserting after subparagraph (A) the 

5 following new subparagraph: 

6 ‘‘(B) an uninsured national bank or an un7 insured State bank that is a member of the Fed8 eral Reserve System, if the national bank or 

9 State member bank is not eligible to make appli10 cation to become an insured bank under section 

11 5 of the Federal Deposit Insurance Act;’’; and 

12 (C) by amending subparagraph (C), so re13 designated, to read as follows: 

14 ‘‘(C) a branch or agency of a foreign bank, 

15 a foreign bank and any branch or agency of the 

16 foreign bank, or the foreign bank that established 

17 the branch or agency, as those terms are defined 

18 in section 1(b) of the International Banking Act 

19 of 1978;’’; 

20 (3) in paragraph (11), by inserting before the pe21 riod ‘‘and any other clearing organization with which 

22 such clearing organization has a netting contract’’; 

23 (4) by amending paragraph (14)(A)(i) to read as 

24 follows: 
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1 ‘‘(i) means a contract or agreement be2 tween 2 or more financial institutions, 

3 clearing organizations, or members that 

4 provides for netting present or future pay5 ment obligations or payment entitlements 

6 (including liquidation or close out values 

7 relating to such obligations or entitlements) 

8 among the parties to the agreement; and’’; 

9 and 

10 (5) by adding at the end the following new para11 graph: 

12 ‘‘(15) PAYMENT.—The term ‘payment’ means a 

13 payment of United States dollars, another currency, 

14 or a composite currency, and a noncash delivery, in15 cluding a payment or delivery to liquidate an 

16 unmatured obligation.’’. 

17 (b) ENFORCEABILITY OF BILATERAL NETTING CON18 TRACTS.—Section 403 of the Federal Deposit Insurance 

19 Corporation Improvement Act of 1991 (12 U.S.C. 4403) is 

20 amended—

21 (1) by striking subsection (a) and inserting the 

22 following: 

23 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

24 provision of State or Federal law (other than paragraphs 

25 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 
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1 Deposit Insurance Act or any order authorized under sec2 tion 5(b)(2) of the Securities Investor Protection Act of 

3 1970), the covered contractual payment obligations and the 

4 covered contractual payment entitlements between any 2 fi5 nancial institutions shall be netted in accordance with, and 

6 subject to the conditions of, the terms of any applicable net7 ting contract (except as provided in section 561(b)(2) of 

8 title 11, United States Code).’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(f) ENFORCEABILITY OF SECURITY AGREEMENTS.—

12 The provisions of any security agreement or arrangement 

13 or other credit enhancement related to one or more netting 

14 contracts between any 2 financial institutions shall be en15 forceable in accordance with their terms (except as provided 

16 in section 561(b)(2) of title 11, United States Code), and 

17 shall not be stayed, avoided, or otherwise limited by any 

18 State or Federal law (other than paragraphs (8)(E), (8)(F), 

19 and (10)(B) of section 11(e) of the Federal Deposit Insur20 ance Act and section 5(b)(2) of the Securities Investor Pro21 tection Act of 1970).’’. 

22 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

23 NETTING CONTRACTS.—Section 404 of the Federal Deposit 

24 Insurance Corporation Improvement Act of 1991 (12 U.S.C. 

25 4404) is amended—
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1 (1) by striking subsection (a) and inserting the 

2 following: 

3 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

4 provision of State or Federal law (other than paragraphs 

5 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

6 Deposit Insurance Act and any order authorized under sec7 tion 5(b)(2) of the Securities Investor Protection Act of 

8 1970), the covered contractual payment obligations and the 

9 covered contractual payment entitlements of a member of 

10 a clearing organization to and from all other members of 

11 a clearing organization shall be netted in accordance with 

12 and subject to the conditions of any applicable netting con13 tract (except as provided in section 561(b)(2) of title 11, 

14 United States Code).’’; and 

15 (2) by adding at the end the following new sub16 section: 

17 ‘‘(h) ENFORCEABILITY OF SECURITY AGREEMENTS.—

18 The provisions of any security agreement or arrangement 

19 or other credit enhancement related to one or more netting 

20 contracts between any 2 members of a clearing organization 

21 shall be enforceable in accordance with their terms (except 

22 as provided in section 561(b)(2) of title 11, United States 

23 Code), and shall not be stayed, avoided, or otherwise limited 

24 by any State or Federal law (other than paragraphs (8)(E), 

25 (8)(F), and (10)(B) of section 11(e) of the Federal Deposit 
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1 Insurance Act and section 5(b)(2) of the Securities Investor 

2 Protection Act of 1970).’’. 

3 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN4 SURED NATIONAL BANKS, UNINSURED FEDERAL

5 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

6 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The 

7 Federal Deposit Insurance Corporation Improvement Act 

8 of 1991 (12 U.S.C. 4401 et seq.) is amended—

9 (1) by redesignating section 407 as section 407A; 

10 and 

11 (2) by inserting after section 406 the following 

12 new section: 

13 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED 

14 NATIONAL BANKS, UNINSURED FEDERAL 

15 BRANCHES AND AGENCIES, CERTAIN UNIN16 SURED STATE MEMBER BANKS, AND EDGE 

17 ACT CORPORATIONS. 

18 ‘‘(a) IN GENERAL.—Notwithstanding any other provi19 sion of law, paragraphs (8), (9), (10), and (11) of section 

20 11(e) of the Federal Deposit Insurance Act shall apply to 

21 an uninsured national bank or uninsured Federal branch 

22 or Federal agency, a corporation chartered under section 

23 25A of the Federal Reserve Act, or an uninsured State mem24 ber bank which operates, or operates as, a multilateral 
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1 clearing organization pursuant to section 409 of this Act, 

2 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 appointed by the Comptroller of the 

6 Currency in the case of an uninsured national bank 

7 or uninsured Federal branch or agency, or to the re8 ceiver appointed by the Board of Governors of the 

9 Federal Reserve System in the case of a corporation 

10 chartered under section 25A of the Federal Reserve 

11 Act or an uninsured State member bank; 

12 ‘‘(2) any reference to the ‘Corporation’ (other 

13 than in section 11(e)(8)(D) of such Act), the ‘Corpora14 tion, whether acting as such or as conservator or re15 ceiver’, a ‘receiver’, or a ‘conservator’ shall refer to the 

16 receiver or conservator appointed by the Comptroller 

17 of the Currency in the case of an uninsured national 

18 bank or uninsured Federal branch or agency, or to 

19 the receiver or conservator appointed by the Board of 

20 Governors of the Federal Reserve System in the case 

21 of a corporation chartered under section 25A of the 

22 Federal Reserve Act or an uninsured State member 

23 bank; and 

24 ‘‘(3) any reference to an ‘insured depository in25 stitution’ or ‘depository institution’ shall refer to an 
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1 uninsured national bank, an uninsured Federal 

2 branch or Federal agency, a corporation chartered 

3 under section 25A of the Federal Reserve Act, or an 

4 uninsured State member bank which operates, or op5 erates as, a multilateral clearing organization pursu6 ant to section 409 of this Act. 

7 ‘‘(b) LIABILITY.—The liability of a receiver or conser8 vator of an uninsured national bank, uninsured Federal 

9 branch or agency, a corporation chartered under section 

10 25A of the Federal Reserve Act, or an uninsured State mem11 ber bank which operates, or operates as, a multilateral 

12 clearing organization pursuant to section 409 of this Act, 

13 shall be determined in the same manner and subject to the 

14 same limitations that apply to receivers and conservators 

15 of insured depository institutions under section 11(e) of the 

16 Federal Deposit Insurance Act. 

17 ‘‘(c) REGULATORY AUTHORITY.—

18 ‘‘(1) IN GENERAL.—The Comptroller of the Cur19 rency in the case of an uninsured national bank or 

20 uninsured Federal branch or agency and the Board of 

21 Governors of the Federal Reserve System in the case 

22 of a corporation chartered under section 25A of the 

23 Federal Reserve Act, or an uninsured State member 

24 bank that operates, or operates as, a multilateral 

25 clearing organization pursuant to section 409 of this 
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1 Act, in consultation with the Federal Deposit Insur2 ance Corporation, may each promulgate regulations 

3 solely to implement this section. 

4 ‘‘(2) SPECIFIC REQUIREMENT.—In promulgating 

5 regulations, limited solely to implementing para6 graphs (8), (9), (10), and (11) of section 11(e) of the 

7 Federal Deposit Insurance Act, the Comptroller of the 

8 Currency and the Board of Governors of the Federal 

9 Reserve System each shall ensure that the regulations 

10 generally are consistent with the regulations and poli11 cies of the Federal Deposit Insurance Corporation 

12 adopted pursuant to the Federal Deposit Insurance 

13 Act. 

14 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

15 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign bank’ 

16 have the same meanings as in section 1(b) of the Inter17 national Banking Act of 1978.’’. 

18 SEC. 907. BANKRUPTCY LAW AMENDMENTS. 

19 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR20 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, SWAP

21 AGREEMENT, COMMODITY CONTRACT, AND SECURITIES

22 CONTRACT.—Title 11, United States Code, is amended—

23 (1) in section 101—

24 (A) in paragraph (25)—
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1 (i) by striking ‘‘means a contract’’ and 

2 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, with19 out regard to whether such master agreement 

20 provides for an agreement or transaction that is 

21 not a forward contract under this paragraph, ex22 cept that such master agreement shall be consid23 ered to be a forward contract under this para24 graph only with respect to each agreement or 
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1 transaction under such master agreement that is 

2 referred to in subparagraph (A), (B), or (C); or 

3 ‘‘(E) any security agreement or arrange4 ment, or other credit enhancement related to any 

5 agreement or transaction referred to in subpara6 graph (A), (B), (C), or (D), including any guar7 antee or reimbursement obligation by or to a for8 ward contract merchant or financial participant 

9 in connection with any agreement or transaction 

10 referred to in any such subparagraph, but not to 

11 exceed the damages in connection with any such 

12 agreement or transaction, measured in accord13 ance with section 562;’’; 

14 (B) in paragraph (46), by striking ‘‘on any 

15 day during the period beginning 90 days before 

16 the date of’’ and inserting ‘‘at any time before’’; 

17 (C) by amending paragraph (47) to read as 

18 follows: 

19 ‘‘(47) ‘repurchase agreement’ (which definition 

20 also applies to a reverse repurchase agreement)—

21 ‘‘(A) means—

22 ‘‘(i) an agreement, including related 

23 terms, which provides for the transfer of one 

24 or more certificates of deposit, mortgage re25 lated securities (as defined in section 3 of 
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1 the Securities Exchange Act of 1934), mort2 gage loans, interests in mortgage related se3 curities or mortgage loans, eligible bankers’ 

4 acceptances, qualified foreign government 

5 securities (defined as a security that is a di6 rect obligation of, or that is fully guaran7 teed by, the central government of a member 

8 of the Organization for Economic Coopera9 tion and Development), or securities that 

10 are direct obligations of, or that are fully 

11 guaranteed by, the United States or any 

12 agency of the United States against the 

13 transfer of funds by the transferee of such 

14 certificates of deposit, eligible bankers’ ac15 ceptances, securities, mortgage loans, or in16 terests, with a simultaneous agreement by 

17 such transferee to transfer to the transferor 

18 thereof certificates of deposit, eligible bank19 ers’ acceptance, securities, mortgage loans, 

20 or interests of the kind described in this 

21 clause, at a date certain not later than 1 

22 year after such transfer or on demand, 

23 against the transfer of funds; 
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1 ‘‘(ii) any combination of agreements or 

2 transactions referred to in clauses (i) and 

3 (iii); 

4 ‘‘(iii) an option to enter into an agree5 ment or transaction referred to in clause (i) 

6 or (ii); 

7 ‘‘(iv) a master agreement that provides 

8 for an agreement or transaction referred to 

9 in clause (i), (ii), or (iii), together with all 

10 supplements to any such master agreement, 

11 without regard to whether such master 

12 agreement provides for an agreement or 

13 transaction that is not a repurchase agree14 ment under this paragraph, except that 

15 such master agreement shall be considered 

16 to be a repurchase agreement under this 

17 paragraph only with respect to each agree18 ment or transaction under the master agree19 ment that is referred to in clause (i), (ii), 

20 or (iii); or 

21 ‘‘(v) any security agreement or ar22 rangement or other credit enhancement re23 lated to any agreement or transaction re24 ferred to in clause (i), (ii), (iii), or (iv), in25 cluding any guarantee or reimbursement 
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1 obligation by or to a repo participant or fi2 nancial participant in connection with any 

3 agreement or transaction referred to in any 

4 such clause, but not to exceed the damages 

5 in connection with any such agreement or 

6 transaction, measured in accordance with 

7 section 562 of this title; and 

8 ‘‘(B) does not include a repurchase obliga9 tion under a participation in a commercial 

10 mortgage loan;’’; 

11 (D) in paragraph (48), by inserting ‘‘, or 

12 exempt from such registration under such section 

13 pursuant to an order of the Securities and Ex14 change Commission,’’ after ‘‘1934’’; and 

15 (E) by amending paragraph (53B) to read 

16 as follows: 

17 ‘‘(53B) ‘swap agreement’—

18 ‘‘(A) means—

19 ‘‘(i) any agreement, including the 

20 terms and conditions incorporated by ref21 erence in such agreement, which is—

22 ‘‘(I) an interest rate swap, option, 

23 future, or forward agreement, includ24 ing a rate floor, rate cap, rate collar, 
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1 cross-currency rate swap, and basis 

2 swap; 

3 ‘‘(II) a spot, same day-tomorrow, 

4 tomorrow-next, forward, or other for5 eign exchange or precious metals agree6 ment; 

7 ‘‘(III) a currency swap, option, 

8 future, or forward agreement; 

9 ‘‘(IV) an equity index or equity 

10 swap, option, future, or forward agree11 ment;

12 ‘‘(V) a debt index or debt swap, 

13 option, future, or forward agreement; 

14 ‘‘(VI) a total return, credit spread 

15 or credit swap, option, future, or for16 ward agreement; 

17 ‘‘(VII) a commodity index or a 

18 commodity swap, option, future, or 

19 forward agreement; or 

20 ‘‘(VIII) a weather swap, weather 

21 derivative, or weather option; 

22 ‘‘(ii) any agreement or transaction 

23 that is similar to any other agreement or 

24 transaction referred to in this paragraph 

25 and that—
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1 ‘‘(I) is of a type that has been, is 

2 presently, or in the future becomes, the 

3 subject of recurrent dealings in the 

4 swap markets (including terms and 

5 conditions incorporated by reference 

6 therein); and 

7 ‘‘(II) is a forward, swap, future, 

8 or option on one or more rates, cur9 rencies, commodities, equity securities, 

10 or other equity instruments, debt secu11 rities or other debt instruments, quan12 titative measures associated with an 

13 occurrence, extent of an occurrence, or 

14 contingency associated with a finan15 cial, commercial, or economic con16 sequence, or economic or financial in17 dices or measures of economic or finan18 cial risk or value; 

19 ‘‘(iii) any combination of agreements 

20 or transactions referred to in this subpara21 graph; 

22 ‘‘(iv) any option to enter into an 

23 agreement or transaction referred to in this 

24 subparagraph; 
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1 ‘‘(v) a master agreement that provides 

2 for an agreement or transaction referred to 

3 in clause (i), (ii), (iii), or (iv), together 

4 with all supplements to any such master 

5 agreement, and without regard to whether 

6 the master agreement contains an agree7 ment or transaction that is not a swap 

8 agreement under this paragraph, except 

9 that the master agreement shall be consid10 ered to be a swap agreement under this 

11 paragraph only with respect to each agree12 ment or transaction under the master agree13 ment that is referred to in clause (i), (ii), 

14 (iii), or (iv); or 

15 ‘‘(vi) any security agreement or ar16 rangement or other credit enhancement re17 lated to any agreements or transactions re18 ferred to in clause (i) through (v), including 

19 any guarantee or reimbursement obligation 

20 by or to a swap participant or financial 

21 participant in connection with any agree22 ment or transaction referred to in any such 

23 clause, but not to exceed the damages in 

24 connection with any such agreement or 
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1 transaction, measured in accordance with 

2 section 562; and 

3 ‘‘(B) is applicable for purposes of this title 

4 only, and shall not be construed or applied so as 

5 to challenge or affect the characterization, defini6 tion, or treatment of any swap agreement under 

7 any other statute, regulation, or rule, including 

8 the Securities Act of 1933, the Securities Ex9 change Act of 1934, the Public Utility Holding 

10 Company Act of 1935, the Trust Indenture Act 

11 of 1939, the Investment Company Act of 1940, 

12 the Investment Advisers Act of 1940, the Securi13 ties Investor Protection Act of 1970, the Com14 modity Exchange Act, the Gramm-Leach-Bliley 

15 Act, and the Legal Certainty for Bank Products 

16 Act of 2000;’’; 

17 (2) in section 741(7), by striking paragraph (7) 

18 and inserting the following: 

19 ‘‘(7) ‘securities contract’—

20 ‘‘(A) means—

21 ‘‘(i) a contract for the purchase, sale, 

22 or loan of a security, a certificate of deposit, 

23 a mortgage loan or any interest in a mort24 gage loan, a group or index of securities, 

25 certificates of deposit, or mortgage loans or 
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1 interests therein (including an interest 

2 therein or based on the value thereof), or op3 tion on any of the foregoing, including an 

4 option to purchase or sell any such security, 

5 certificate of deposit, mortgage loan, inter6 est, group or index, or option, and includ7 ing any repurchase or reverse repurchase 

8 transaction on any such security, certificate 

9 of deposit, mortgage loan, interest, group or 

10 index, or option; 

11 ‘‘(ii) any option entered into on a na12 tional securities exchange relating to foreign 

13 currencies; 

14 ‘‘(iii) the guarantee by or to any secu15 rities clearing agency of a settlement of 

16 cash, securities, certificates of deposit, mort17 gage loans or interests therein, group or 

18 index of securities, or mortgage loans or in19 terests therein (including any interest there20 in or based on the value thereof), or option 

21 on any of the foregoing, including an option 

22 to purchase or sell any such security, cer23 tificate of deposit, mortgage loan, interest, 

24 group or index, or option; 

25 ‘‘(iv) any margin loan; 
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1 ‘‘(v) any other agreement or trans2 action that is similar to an agreement or 

3 transaction referred to in this subpara4 graph; 

5 ‘‘(vi) any combination of the agree6 ments or transactions referred to in this 

7 subparagraph; 

8 ‘‘(vii) any option to enter into any 

9 agreement or transaction referred to in this 

10 subparagraph; 

11 ‘‘(viii) a master agreement that pro12 vides for an agreement or transaction re13 ferred to in clause (i), (ii), (iii), (iv), (v), 

14 (vi), or (vii), together with all supplements 

15 to any such master agreement, without re16 gard to whether the master agreement pro17 vides for an agreement or transaction that 

18 is not a securities contract under this sub19 paragraph, except that such master agree20 ment shall be considered to be a securities 

21 contract under this subparagraph only with 

22 respect to each agreement or transaction 

23 under such master agreement that is re24 ferred to in clause (i), (ii), (iii), (iv), (v), 

25 (vi), or (vii); or 
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1 ‘‘(ix) any security agreement or ar2 rangement or other credit enhancement re3 lated to any agreement or transaction re4 ferred to in this subparagraph, including 

5 any guarantee or reimbursement obligation 

6 by or to a stockbroker, securities clearing 

7 agency, financial institution, or financial 

8 participant in connection with any agree9 ment or transaction referred to in this sub10 paragraph, but not to exceed the damages in 

11 connection with any such agreement or 

12 transaction, measured in accordance with 

13 section 562; and 

14 ‘‘(B) does not include any purchase, sale, or 

15 repurchase obligation under a participation in a 

16 commercial mortgage loan;’’; and 

17 (3) in section 761(4)—

18 (A) by striking ‘‘or’’ at the end of subpara19 graph (D); and 

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

21 ‘‘(F) any other agreement or transaction 

22 that is similar to an agreement or transaction 

23 referred to in this paragraph; 

24 ‘‘(G) any combination of the agreements or 

25 transactions referred to in this paragraph; 
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1 ‘‘(H) any option to enter into an agreement 

2 or transaction referred to in this paragraph; 

3 ‘‘(I) a master agreement that provides for 

4 an agreement or transaction referred to in sub5 paragraph (A), (B), (C), (D), (E), (F), (G), or 

6 (H), together with all supplements to such mas7 ter agreement, without regard to whether the 

8 master agreement provides for an agreement or 

9 transaction that is not a commodity contract 

10 under this paragraph, except that the master 

11 agreement shall be considered to be a commodity 

12 contract under this paragraph only with respect 

13 to each agreement or transaction under the mas14 ter agreement that is referred to in subparagraph 

15 (A), (B), (C), (D), (E), (F), (G), or (H); or 

16 ‘‘(J) any security agreement or arrange17 ment or other credit enhancement related to any 

18 agreement or transaction referred to in this 

19 paragraph, including any guarantee or reim20 bursement obligation by or to a commodity 

21 broker or financial participant in connection 

22 with any agreement or transaction referred to in 

23 this paragraph, but not to exceed the damages in 

24 connection with any such agreement or trans-
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1 action, measured in accordance with section 

2 562;’’. 

3 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FINAN4 CIAL PARTICIPANT, AND FORWARD CONTRACT MER5 CHANT.—Section 101 of title 11, United States Code, is 

6 amended—

7 (1) by striking paragraph (22) and inserting the 

8 following: 

9 ‘‘(22) ‘financial institution’ means—

10 ‘‘(A) a Federal reserve bank, or an entity 

11 (domestic or foreign) that is a commercial or 

12 savings bank, industrial savings bank, savings 

13 and loan association, trust company, or receiver 

14 or conservator for such entity and, when any 

15 such Federal reserve bank, receiver, conservator 

16 or entity is acting as agent or custodian for a 

17 customer in connection with a securities contract 

18 (as defined in section 741) such customer; or 

19 ‘‘(B) in connection with a securities con20 tract (as defined in section 741) an investment 

21 company registered under the Investment Com22 pany Act of 1940;’’; 

23 (2) by inserting after paragraph (22) the fol24 lowing: 

25 ‘‘(22A) ‘financial participant’ means—
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1 ‘‘(A) an entity that, at the time it enters 

2 into a securities contract, commodity contract, 

3 swap agreement, repurchase agreement, or for4 ward contract, or at the time of the date of the 

5 filing of the petition, has one or more agreements 

6 or transactions described in paragraph (1), (2), 

7 (3), (4), (5), or (6) of section 561(a) with the 

8 debtor or any other entity (other than an affil9 iate) of a total gross dollar value of not less than 

10 $1,000,000,000 in notional or actual principal 

11 amount outstanding on any day during the pre12 vious 15-month period, or has gross mark-to13 market positions of not less than $100,000,000 

14 (aggregated across counterparties) in one or 

15 more such agreements or transactions with the 

16 debtor or any other entity (other than an affil17 iate) on any day during the previous 15-month 

18 period; or 

19 ‘‘(B) a clearing organization (as defined in 

20 section 402 of the Federal Deposit Insurance 

21 Corporation Improvement Act of 1991);’’; and 

22 (3) by striking paragraph (26) and inserting the 

23 following: 

24 ‘‘(26) ‘forward contract merchant’ means a Fed25 eral reserve bank, or an entity the business of which 
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1 consists in whole or in part of entering into forward 

2 contracts as or with merchants in a commodity (as 

3 defined in section 761) or any similar good, article, 

4 service, right, or interest which is presently or in the 

5 future becomes the subject of dealing in the forward 

6 contract trade;’’. 

7 (c) DEFINITION OF MASTER NETTING AGREEMENT

8 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec9 tion 101 of title 11, United States Code, is amended by in10 serting after paragraph (38) the following new paragraphs: 

11 ‘‘(38A) ‘master netting agreement’—

12 ‘‘(A) means an agreement providing for the 

13 exercise of rights, including rights of netting, 

14 setoff, liquidation, termination, acceleration, or 

15 close out, under or in connection with one or 

16 more contracts that are described in any one or 

17 more of paragraphs (1) through (5) of section 

18 561(a), or any security agreement or arrange19 ment or other credit enhancement related to one 

20 or more of the foregoing, including any guar21 antee or reimbursement obligation related to 1 or 

22 more of the foregoing; and 

23 ‘‘(B) if the agreement contains provisions 

24 relating to agreements or transactions that are 

25 not contracts described in paragraphs (1) 
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1 through (5) of section 561(a), shall be deemed to 

2 be a master netting agreement only with respect 

3 to those agreements or transactions that are de4 scribed in any one or more of paragraphs (1) 

5 through (5) of section 561(a); 

6 ‘‘(38B) ‘master netting agreement participant’ 

7 means an entity that, at any time before the date of 

8 the filing of the petition, is a party to an outstanding 

9 master netting agreement with the debtor;’’. 

10 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 

11 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR12 CHASE AGREEMENTS, AND MASTER NETTING AGREEMENTS

13 UNDER THE AUTOMATIC-STAY.—

14 (1) IN GENERAL.—Section 362(b) of title 11, 

15 United States Code, as amended by sections 224, 303, 

16 311, 401, and 718, is amended—

17 (A) in paragraph (6), by inserting ‘‘, 

18 pledged to, under the control of,’’ after ‘‘held by’’; 

19 (B) in paragraph (7), by inserting ‘‘, 

20 pledged to, under the control of,’’ after ‘‘held by’’; 

21 (C) by striking paragraph (17) and insert22 ing the following: 

23 ‘‘(17) under subsection (a), of the setoff by a 

24 swap participant or financial participant of a mu25 tual debt and claim under or in connection with one 
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1 or more swap agreements that constitutes the setoff of 

2 a claim against the debtor for any payment or other 

3 transfer of property due from the debtor under or in 

4 connection with any swap agreement against any 

5 payment due to the debtor from the swap participant 

6 or financial participant under or in connection with 

7 any swap agreement or against cash, securities, or 

8 other property held by, pledged to, under the control 

9 of, or due from such swap participant or financial 

10 participant to margin, guarantee, secure, or settle 

11 any swap agreement;’’; and 

12 (D) by inserting after paragraph (26) the 

13 following: 

14 ‘‘(27) under subsection (a), of the setoff by a 

15 master netting agreement participant of a mutual 

16 debt and claim under or in connection with one or 

17 more master netting agreements or any contract or 

18 agreement subject to such agreements that constitutes 

19 the setoff of a claim against the debtor for any pay20 ment or other transfer of property due from the debtor 

21 under or in connection with such agreements or any 

22 contract or agreement subject to such agreements 

23 against any payment due to the debtor from such 

24 master netting agreement participant under or in 

25 connection with such agreements or any contract or 
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1 agreement subject to such agreements or against cash, 

2 securities, or other property held by, pledged to, under 

3 the control of, or due from such master netting agree4 ment participant to margin, guarantee, secure, or set5 tle such agreements or any contract or agreement sub6 ject to such agreements, to the extent that such partic7 ipant is eligible to exercise such offset rights under 

8 paragraph (6), (7), or (17) for each individual con9 tract covered by the master netting agreement in 

10 issue; and’’. 

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

12 States Code, as amended by sections 106, 305, 311, 

13 and 441, is amended by adding at the end the fol14 lowing: 

15 ‘‘(o) The exercise of rights not subject to the stay aris16 ing under subsection (a) pursuant to paragraph (6), (7), 

17 (17), or (27) of subsection (b) shall not be stayed by any 

18 order of a court or administrative agency in any proceeding 

19 under this title.’’. 

20 (e) LIMITATION OF AVOIDANCE POWERS UNDER MAS21 TER NETTING AGREEMENT.—Section 546 of title 11, United 

22 States Code, is amended—

23 (1) in subsection (g) (as added by section 103 of 

24 Public Law 101–311)—

25 (A) by striking ‘‘under a swap agreement’’; 
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1 (B) by striking ‘‘in connection with a swap 

2 agreement’’ and inserting ‘‘under or in connec3 tion with any swap agreement’’; and 

4 (C) by inserting ‘‘or financial participant’’ 

5 after ‘‘swap participant’’; and 

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

7 ‘‘(j) Notwithstanding sections 544, 545, 547, 

8 548(a)(1)(B), and 548(b) the trustee may not avoid a trans9 fer made by or to a master netting agreement participant 

10 under or in connection with any master netting agreement 

11 or any individual contract covered thereby that is made be12 fore the commencement of the case, except under section 

13 548(a)(1)(A) and except to the extent that the trustee could 

14 otherwise avoid such a transfer made under an individual 

15 contract covered by such master netting agreement.’’. 

16 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

17 AGREEMENTS.—Section 548(d)(2) of title 11, United States 

18 Code, is amended—

19 (1) in subparagraph (C), by striking ‘‘and’’ at 

20 the end; 

21 (2) in subparagraph (D), by striking the period 

22 and inserting ‘‘; and’’; and 

23 (3) by adding at the end the following new sub24 paragraph: 
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1 ‘‘(E) a master netting agreement participant 

2 that receives a transfer in connection with a master 

3 netting agreement or any individual contract covered 

4 thereby takes for value to the extent of such transfer, 

5 except that, with respect to a transfer under any indi6 vidual contract covered thereby, to the extent that 

7 such master netting agreement participant otherwise 

8 did not take (or is otherwise not deemed to have 

9 taken) such transfer for value.’’. 

10 (g) TERMINATION OR ACCELERATION OF SECURITIES

11 CONTRACTS.—Section 555 of title 11, United States Code, 

12 is amended—

13 (1) by amending the section heading to read as 

14 follows: 

15 ‘‘§ 555. Contractual right to liquidate, terminate, or 

16 accelerate a securities contract’’; 

17 and 

18 (2) in the first sentence, by striking ‘‘liquida19 tion’’ and inserting ‘‘liquidation, termination, or ac20 celeration’’. 

21 (h) TERMINATION OR ACCELERATION OF COMMOD22 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 

23 United States Code, is amended—

24 (1) by amending the section heading to read as 

25 follows: 
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1 ‘‘§ 556. Contractual right to liquidate, terminate, or 

2 accelerate a commodities contract or for3 ward contract’’; 

4 (2) in the first sentence, by striking ‘‘liquida5 tion’’ and inserting ‘‘liquidation, termination, or ac6 celeration’’; and 

7 (3) in the second sentence, by striking ‘‘As used’’ 

8 and all that follows through ‘‘right,’’ and inserting 

9 ‘‘As used in this section, the term ‘contractual right’ 

10 includes a right set forth in a rule or bylaw of a de11 rivatives clearing organization (as defined in the 

12 Commodity Exchange Act), a multilateral clearing 

13 organization (as defined in the Federal Deposit In14 surance Corporation Improvement Act of 1991), a na15 tional securities exchange, a national securities asso16 ciation, a securities clearing agency, a contract mar17 ket designated under the Commodity Exchange Act, a 

18 derivatives transaction execution facility registered 

19 under the Commodity Exchange Act, or a board of 

20 trade (as defined in the Commodity Exchange Act) or 

21 in a resolution of the governing board thereof and a 

22 right,’’. 

23 (i) TERMINATION OR ACCELERATION OF REPURCHASE

24 AGREEMENTS.—Section 559 of title 11, United States Code, 

25 is amended—
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1 (1) by amending the section heading to read as 

2 follows: 

3 ‘‘§ 559. Contractual right to liquidate, terminate, or 

4 accelerate a repurchase agreement’’; 

5 (2) in the first sentence, by striking ‘‘liquida6 tion’’ and inserting ‘‘liquidation, termination, or ac7 celeration’’; and 

8 (3) in the third sentence, by striking ‘‘As used’’ 

9 and all that follows through ‘‘right,’’ and inserting 

10 ‘‘As used in this section, the term ‘contractual right’ 

11 includes a right set forth in a rule or bylaw of a de12 rivatives clearing organization (as defined in the 

13 Commodity Exchange Act), a multilateral clearing 

14 organization (as defined in the Federal Deposit In15 surance Corporation Improvement Act of 1991), a na16 tional securities exchange, a national securities asso17 ciation, a securities clearing agency, a contract mar18 ket designated under the Commodity Exchange Act, a 

19 derivatives transaction execution facility registered 

20 under the Commodity Exchange Act, or a board of 

21 trade (as defined in the Commodity Exchange Act) or 

22 in a resolution of the governing board thereof and a 

23 right,’’. 
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1 (j) LIQUIDATION, TERMINATION, OR ACCELERATION OF

2 SWAP AGREEMENTS.—Section 560 of title 11, United States 

3 Code, is amended—

4 (1) by amending the section heading to read as 

5 follows: 

6 ‘‘§ 560. Contractual right to liquidate, terminate, or 

7 accelerate a swap agreement’’; 

8 (2) in the first sentence, by striking ‘‘termi9 nation of a swap agreement’’ and inserting ‘‘liquida10 tion, termination, or acceleration of one or more swap 

11 agreements’’; 

12 (3) by striking ‘‘in connection with any swap 

13 agreement’’ and inserting ‘‘in connection with the ter14 mination, liquidation, or acceleration of one or more 

15 swap agreements’’; and 

16 (4) in the second sentence, by striking ‘‘As used’’ 

17 and all that follows through ‘‘right,’’ and inserting 

18 ‘‘As used in this section, the term ‘contractual right’ 

19 includes a right set forth in a rule or bylaw of a de20 rivatives clearing organization (as defined in the 

21 Commodity Exchange Act), a multilateral clearing 

22 organization (as defined in the Federal Deposit In23 surance Corporation Improvement Act of 1991), a na24 tional securities exchange, a national securities asso25 ciation, a securities clearing agency, a contract mar-
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1 ket designated under the Commodity Exchange Act, a 

2 derivatives transaction execution facility registered 

3 under the Commodity Exchange Act, or a board of 

4 trade (as defined in the Commodity Exchange Act) or 

5 in a resolution of the governing board thereof and a 

6 right,’’. 

7 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

8 OFFSET UNDER A MASTER NETTING AGREEMENT AND

9 ACROSS CONTRACTS.—

10 (1) IN GENERAL.—Title 11, United States Code, 

11 is amended by inserting after section 560 the fol12 lowing: 

13 ‘‘§ 561. Contractual right to terminate, liquidate, ac14 celerate, or offset under a master netting 

15 agreement and across contracts; pro16 ceedings under chapter 15

17 ‘‘(a) Subject to subsection (b), the exercise of any con18 tractual right, because of a condition of the kind specified 

19 in section 365(e)(1), to cause the termination, liquidation, 

20 or acceleration of or to offset or net termination values, pay21 ment amounts, or other transfer obligations arising under 

22 or in connection with one or more (or the termination, liq23 uidation, or acceleration of one or more)—

24 ‘‘(1) securities contracts, as defined in section 

25 741(7); 
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1 ‘‘(2) commodity contracts, as defined in section 

2 761(4); 

3 ‘‘(3) forward contracts; 

4 ‘‘(4) repurchase agreements; 

5 ‘‘(5) swap agreements; or 

6 ‘‘(6) master netting agreements, 

7 shall not be stayed, avoided, or otherwise limited by oper8 ation of any provision of this title or by any order of a 

9 court or administrative agency in any proceeding under 

10 this title. 

11 ‘‘(b)(1) A party may exercise a contractual right de12 scribed in subsection (a) to terminate, liquidate, or accel13 erate only to the extent that such party could exercise such 

14 a right under section 555, 556, 559, or 560 for each indi15 vidual contract covered by the master netting agreement in 

16 issue. 

17 ‘‘(2) If a debtor is a commodity broker subject to sub18 chapter IV of chapter 7—

19 ‘‘(A) a party may not net or offset an obligation 

20 to the debtor arising under, or in connection with, a 

21 commodity contract traded on or subject to the rules 

22 of a contract market designated under the Commodity 

23 Exchange Act or a derivatives transaction execution 

24 facility registered under the Commodity Exchange Act 

25 against any claim arising under, or in connection 
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1 with, other instruments, contracts, or agreements list2 ed in subsection (a) except to the extent that the party 

3 has positive net equity in the commodity accounts at 

4 the debtor, as calculated under such subchapter; and 

5 ‘‘(B) another commodity broker may not net or 

6 offset an obligation to the debtor arising under, or in 

7 connection with, a commodity contract entered into 

8 or held on behalf of a customer of the debtor and trad9 ed on or subject to the rules of a contract market des10 ignated under the Commodity Exchange Act or a de11 rivatives transaction execution facility registered 

12 under the Commodity Exchange Act against any 

13 claim arising under, or in connection with, other in14 struments, contracts, or agreements listed in sub15 section (a). 

16 ‘‘(3) No provision of subparagraph (A) or (B) of para17 graph (2) shall prohibit the offset of claims and obligations 

18 that arise under—

19 ‘‘(A) a cross-margining agreement or similar ar20 rangement that has been approved by the Commodity 

21 Futures Trading Commission or submitted to the 

22 Commodity Futures Trading Commission under 

23 paragraph (1) or (2) of section 5c(c) of the Com24 modity Exchange Act and has not been abrogated or 
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1 rendered ineffective by the Commodity Futures Trad2 ing Commission; or 

3 ‘‘(B) any other netting agreement between a 

4 clearing organization (as defined in section 761) and 

5 another entity that has been approved by the Com6 modity Futures Trading Commission. 

7 ‘‘(c) As used in this section, the term ‘contractual 

8 right’ includes a right set forth in a rule or bylaw of a 

9 derivatives clearing organization (as defined in the Com10 modity Exchange Act), a multilateral clearing organization 

11 (as defined in the Federal Deposit Insurance Corporation 

12 Improvement Act of 1991), a national securities exchange, 

13 a national securities association, a securities clearing agen14 cy, a contract market designated under the Commodity Ex15 change Act, a derivatives transaction execution facility reg16 istered under the Commodity Exchange Act, or a board of 

17 trade (as defined in the Commodity Exchange Act) or in 

18 a resolution of the governing board thereof, and a right, 

19 whether or not evidenced in writing, arising under common 

20 law, under law merchant, or by reason of normal business 

21 practice. 

22 ‘‘(d) Any provisions of this title relating to securities 

23 contracts, commodity contracts, forward contracts, repur24 chase agreements, swap agreements, or master netting 

25 agreements shall apply in a case under chapter 15, so that 
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1 enforcement of contractual provisions of such contracts and 

2 agreements in accordance with their terms will not be 

3 stayed or otherwise limited by operation of any provision 

4 of this title or by order of a court in any case under this 

5 title, and to limit avoidance powers to the same extent as 

6 in a proceeding under chapter 7 or 11 of this title (such 

7 enforcement not to be limited based on the presence or ab8 sence of assets of the debtor in the United States).’’. 

9 (2) CONFORMING AMENDMENT.—The table of sec10 tions for chapter 5 of title 11, United States Code, is 

11 amended by inserting after the item relating to sec12 tion 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a master netting agreement and across contracts; proceedings under 

chapter 15.’’.

13 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 

14 United States Code, is amended by inserting after section 

15 766 the following:

16 ‘‘§ 767. Commodity broker liquidation and forward 

17 contract merchants, commodity brokers, 

18 stockbrokers, financial institutions, fi19 nancial participants, securities clearing 

20 agencies, swap participants, repo partici21 pants, and master netting agreement par22 ticipants 

23 ‘‘Notwithstanding any other provision of this title, the 

24 exercise of rights by a forward contract merchant, com-
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1 modity broker, stockbroker, financial institution, financial 

2 participant, securities clearing agency, swap participant, 

3 repo participant, or master netting agreement participant 

4 under this title shall not affect the priority of any unsecured 

5 claim it may have after the exercise of such rights.’’. 

6 (m) STOCKBROKER LIQUIDATIONS.—Title 11, United 

7 States Code, is amended by inserting after section 752 the 

8 following: 

9 ‘‘§ 753. Stockbroker liquidation and forward contract 

10 merchants, commodity brokers, stock11 brokers, financial institutions, financial 

12 participants, securities clearing agencies, 

13 swap participants, repo participants, and 

14 master netting agreement participants 

15 ‘‘Notwithstanding any other provision of this title, the 

16 exercise of rights by a forward contract merchant, com17 modity broker, stockbroker, financial institution, financial 

18 participant, securities clearing agency, swap participant, 

19 repo participant, or master netting agreement participant 

20 under this title shall not affect the priority of any unsecured 

21 claim it may have after the exercise of such rights.’’. 

22 (n) SETOFF.—Section 553 of title 11, United States 

23 Code, is amended—

24 (1) in subsection (a)(2)(B)(ii), by inserting be25 fore the semicolon the following: ‘‘(except for a setoff 
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1 of a kind described in section 362(b)(6), 362(b)(7), 

2 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561)’’; 

3 (2) in subsection (a)(3)(C), by inserting before 

4 the period the following: ‘‘(except for a setoff of a kind 

5 described in section 362(b)(6), 362(b)(7), 362(b)(17), 

6 362(b)(27), 555, 556, 559, 560, or 561)’’; and 

7 (3) in subsection (b)(1), by striking 

8 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 362(b)(27), 

9 555, 556, 559, 560, 561,’’. 

10 (o) SECURITIES CONTRACTS, COMMODITY CONTRACTS, 

11 AND FORWARD CONTRACTS.—Title 11, United States Code, 

12 is amended—

13 (1) in section 362(b)(6), by striking ‘‘financial 

14 institutions,’’ each place such term appears and in15 serting ‘‘financial institution, financial participant,’’; 

16 (2) in sections 362(b)(7) and 546(f), by inserting 

17 ‘‘or financial participant’’ after ‘‘repo participant’’ 

18 each place such term appears; 

19 (3) in section 546(e), by inserting ‘‘financial 

20 participant,’’ after ‘‘financial institution,’’; 

21 (4) in section 548(d)(2)(B), by inserting ‘‘finan22 cial participant,’’ after ‘‘financial institution,’’; 

23 (5) in section 548(d)(2)(C), by inserting ‘‘or fi24 nancial participant’’ after ‘‘repo participant’’; 
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1 (6) in section 548(d)(2)(D), by inserting ‘‘or fi2 nancial participant’’ after ‘‘swap participant’’; 

3 (7) in section 555—

4 (A) by inserting ‘‘financial participant,’’ 

5 after ‘‘financial institution,’’; and 

6 (B) by striking the second sentence and in7 serting the following: ‘‘As used in this section, 

8 the term ‘contractual right’ includes a right set 

9 forth in a rule or bylaw of a derivatives clearing 

10 organization (as defined in the Commodity Ex11 change Act), a multilateral clearing organization 

12 (as defined in the Federal Deposit Insurance 

13 Corporation Improvement Act of 1991), a na14 tional securities exchange, a national securities 

15 association, a securities clearing agency, a con16 tract market designated under the Commodity 

17 Exchange Act, a derivatives transaction execu18 tion facility registered under the Commodity Ex19 change Act, or a board of trade (as defined in the 

20 Commodity Exchange Act), or in a resolution of 

21 the governing board thereof, and a right, whether 

22 or not in writing, arising under common law, 

23 under law merchant, or by reason of normal 

24 business practice.’’; 
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1 (8) in section 556, by inserting ‘‘, financial par2 ticipant,’’ after ‘‘commodity broker’’; 

3 (9) in section 559, by inserting ‘‘or financial 

4 participant’’ after ‘‘repo participant’’ each place such 

5 term appears; and 

6 (10) in section 560, by inserting ‘‘or financial 

7 participant’’ after ‘‘swap participant’’. 

8 (p) CONFORMING AMENDMENTS.—Title 11, United 

9 States Code, is amended—

10 (1) in the table of sections for chapter 5—

11 (A) by amending the items relating to sec12 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.’’;

13 and 

14 (B) by amending the items relating to sec15 tions 559 and 560 to read as follows:

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

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’;

16 and 

17 (2) in the table of sections for chapter 7—

18 (A) by inserting after the item relating to 

19 section 766 the following:

‘‘767. Commodity broker liquidation and forward contract merchants, commodity 

brokers, stockbrokers, financial institutions, financial participants, securities clearing agencies, swap participants, repo participants, and master netting agreement participants.’’;

20 and 
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1 (B) by inserting after the item relating to 

2 section 752 the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, 

securities clearing agencies, swap participants, repo participants, and master netting agreement participants.’’.

3 SEC. 908. RECORDKEEPING REQUIREMENTS. 

4 Section 11(e)(8) of the Federal Deposit Insurance Act 

5 (12 U.S.C. 1821(e)(8)) is amended by adding at the end 

6 the following new subparagraph: 

7 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

8 The Corporation, in consultation with the appro9 priate Federal banking agencies, may prescribe 

10 regulations requiring more detailed record11 keeping by any insured depository institution 

12 with respect to qualified financial contracts (in13 cluding market valuations) only if such insured 

14 depository institution is in a troubled condition 

15 (as such term is defined by the Corporation pur16 suant to section 32).’’. 

17 SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU18 TION REQUIREMENT. 

19 Section 13(e)(2) of the Federal Deposit Insurance Act 

20 (12 U.S.C. 1823(e)(2)) is amended to read as follows: 

21 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

22 EXECUTION REQUIREMENT.—An agreement to provide 

23 for the lawful collateralization of—
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1 ‘‘(A) deposits of, or other credit extension 

2 by, a Federal, State, or local governmental enti3 ty, or of any depositor referred to in section 

4 11(a)(2), including an agreement to provide col5 lateral in lieu of a surety bond; 

6 ‘‘(B) bankruptcy estate funds pursuant to 

7 section 345(b)(2) of title 11, United States Code; 

8 ‘‘(C) extensions of credit, including any 

9 overdraft, from a Federal reserve bank or Federal 

10 home loan bank; or 

11 ‘‘(D) one or more qualified financial con12 tracts, as defined in section 11(e)(8)(D),

13 shall not be deemed invalid pursuant to paragraph 

14 (1)(B) solely because such agreement was not executed 

15 contemporaneously with the acquisition of the collat16 eral or because of pledges, delivery, or substitution of 

17 the collateral made in accordance with such agree18 ment.’’. 

19 SEC. 910. DAMAGE MEASURE. 

20 (a) IN GENERAL.—Title 11, United States Code, is 

21 amended—

22 (1) by inserting after section 561, as added by 

23 section 907, the following: 
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1 ‘‘§ 562. Timing of damage measurement in connection 

2 with swap agreements, securities con3 tracts, forward contracts, commodity con4 tracts, repurchase agreements, and mas5 ter netting agreements 

6 ‘‘(a) If the trustee rejects a swap agreement, securities 

7 contract (as defined in section 741), forward contract, com8 modity contract (as defined in section 761), repurchase 

9 agreement, or master netting agreement pursuant to section 

10 365(a), or if a forward contract merchant, stockbroker, fi11 nancial institution, securities clearing agency, repo partici12 pant, financial participant, master netting agreement par13 ticipant, or swap participant liquidates, terminates, or ac14 celerates such contract or agreement, damages shall be 

15 measured as of the earlier of—

16 ‘‘(1) the date of such rejection; or 

17 ‘‘(2) the date or dates of such liquidation, termi18 nation, or acceleration. 

19 ‘‘(b) If there are not any commercially reasonable de20 terminants of value as of any date referred to in paragraph 

21 (1) or (2) of subsection (a), damages shall be measured as 

22 of the earliest subsequent date or dates on which there are 

23 commercially reasonable determinants of value. 

24 ‘‘(c) For the purposes of subsection (b), if damages are 

25 not measured as of the date or dates of rejection, liquida26 tion, termination, or acceleration, and the forward contract 
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1 merchant, stockbroker, financial institution, securities 

2 clearing agency, repo participant, financial participant, 

3 master netting agreement participant, or swap participant 

4 or the trustee objects to the timing of the measurement of 

5 damages—

6 ‘‘(1) the trustee, in the case of an objection by a 

7 forward contract merchant, stockbroker, financial in8 stitution, securities clearing agency, repo participant, 

9 financial participant, master netting agreement par10 ticipant, or swap participant; or 

11 ‘‘(2) the forward contract merchant, stockbroker, 

12 financial institution, securities clearing agency, repo 

13 participant, financial participant, master netting 

14 agreement participant, or swap participant, in the 

15 case of an objection by the trustee, 

16 has the burden of proving that there were no commercially 

17 reasonable determinants of value as of such date or dates.’’; 

18 and 

19 (2) in the table of sections for chapter 5, by in20 serting after the item relating to section 561 (as 

21 added by section 907) the following new item:

‘‘562. Timing of damage measure in connection with swap agreements, securities 

contracts, forward contracts, commodity contracts, repurchase 

agreements, or master netting agreements.’’.

22 (b) CLAIMS ARISING FROM REJECTION.—Section 

23 502(g) of title 11, United States Code, is amended—

24 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 
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1 (2) by adding at the end the following: 

2 ‘‘(2) A claim for damages calculated in accordance 

3 with section 562 shall be allowed under subsection (a), (b), 

4 or (c), or disallowed under subsection (d) or (e), as if such 

5 claim had arisen before the date of the filing of the peti6 tion.’’. 

7 SEC. 911. SIPC STAY. 

8 Section 5(b)(2) of the Securities Investor Protection 

9 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 

10 at the end the following new subparagraph: 

11 ‘‘(C) EXCEPTION FROM STAY.—

12 ‘‘(i) Notwithstanding section 362 of 

13 title 11, United States Code, neither the fil14 ing of an application under subsection 

15 (a)(3) nor any order or decree obtained by 

16 SIPC from the court shall operate as a stay 

17 of any contractual rights of a creditor to 

18 liquidate, terminate, or accelerate a securi19 ties contract, commodity contract, forward 

20 contract, repurchase agreement, swap agree21 ment, or master netting agreement, as those 

22 terms are defined in sections 101, 741, and 

23 761 of title 11, United States Code, to offset 

24 or net termination values, payment 

25 amounts, or other transfer obligations aris-
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1 ing under or in connection with one or 

2 more of such contracts or agreements, or to 

3 foreclose on any cash collateral pledged by 

4 the debtor, whether or not with respect to 

5 one or more of such contracts or agreements. 

6 ‘‘(ii) Notwithstanding clause (i), such 

7 application, order, or decree may operate as 

8 a stay of the foreclosure on, or disposition 

9 of, securities collateral pledged by the debt10 or, whether or not with respect to one or 

11 more of such contracts or agreements, secu12 rities sold by the debtor under a repurchase 

13 agreement, or securities lent under a securi14 ties lending agreement. 

15 ‘‘(iii) As used in this subparagraph, 

16 the term ‘contractual right’ includes a right 

17 set forth in a rule or bylaw of a national 

18 securities exchange, a national securities as19 sociation, or a securities clearing agency, a 

20 right set forth in a bylaw of a clearing or21 ganization or contract market or in a reso22 lution of the governing board thereof, and a 

23 right, whether or not in writing, arising 

24 under common law, under law merchant, or 

25 by reason of normal business practice.’’.
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1 TITLE X—PROTECTION OF FAM2 ILY FARMERS AND FAMILY 

3 FISHERMEN 

4 SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12. 

5 (a) REENACTMENT.—

6 (1) IN GENERAL.—Chapter 12 of title 11, United 

7 States Code, as reenacted by section 149 of division 

8 C of the Omnibus Consolidated and Emergency Sup9 plemental Appropriations Act, 1999 (Public Law 

10 105–277), is hereby reenacted, and as here reenacted 

11 is amended by this Act. 

12 (2) EFFECTIVE DATE.—Subsection (a) shall take 

13 effect on the date of the enactment of this Act. 

14 (b) CONFORMING AMENDMENT.—Section 302 of the 

15 Bankruptcy Judges, United States Trustees, and Family 

16 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is 

17 amended by striking subsection (f).

18 SEC. 1002. DEBT LIMIT INCREASE. 

19 Section 104(b) of title 11, United States Code, as 

20 amended by section 226, is amended by inserting 

21 ‘‘101(18),’’ after ‘‘101(3),’’ each place it appears. 
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1 SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL 

2 UNITS. 

3 (a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 

4 11, United States Code, as amended by section 213, is 

5 amended to read as follows: 

6 ‘‘(2) provide for the full payment, in deferred 

7 cash payments, of all claims entitled to priority 

8 under section 507, unless—

9 ‘‘(A) the claim is a claim owed to a govern10 mental unit that arises as a result of the sale, 

11 transfer, exchange, or other disposition of any 

12 farm asset used in the debtor’s farming oper13 ation, in which case the claim shall be treated as 

14 an unsecured claim that is not entitled to pri15 ority under section 507, but the debt shall be 

16 treated in such manner only if the debtor re17 ceives a discharge; or 

18 ‘‘(B) the holder of a particular claim agrees 

19 to a different treatment of that claim;’’. 

20 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) of 

21 title 11, United States Code, as so designated by section 

22 719, is amended by striking ‘‘a State or local governmental 

23 unit’’ and inserting ‘‘any governmental unit’’. 

24 (c) EFFECTIVE DATE; APPLICATION OF AMEND25 MENTS.—This section and the amendments made by this 

26 section shall take effect on the date of the enactment of this 
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1 Act and shall not apply with respect to cases commenced 

2 under title 11 of the United States Code before such date.

3 SEC. 1004. DEFINITION OF FAMILY FARMER. 

4 Section 101(18) of title 11, United States Code, is 

5 amended—

6 (1) in subparagraph (A)—

7 (A) by striking ‘‘$1,500,000’’ and inserting 

8 ‘‘$3,237,000’’; and 

9 (B) by striking ‘‘80’’ and inserting ‘‘50’’; 

10 and 

11 (2) in subparagraph (B)(ii)—

12 (A) by striking ‘‘$1,500,000’’ and inserting 

13 ‘‘$3,237,000’’; and 

14 (B) by striking ‘‘80’’ and inserting ‘‘50’’.

15 SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY 

16 FARMER AND SPOUSE RECEIVE OVER 50 PER17 CENT OF INCOME FROM FARMING OPER18 ATION IN YEAR PRIOR TO BANKRUPTCY. 

19 Section 101(18)(A) of title 11, United States Code, is 

20 amended by striking ‘‘for the taxable year preceding the tax21 able year’’ and inserting the following: 

22 ‘‘for—

23 ‘‘(i) the taxable year preceding; or 

24 ‘‘(ii) each of the 2d and 3d taxable 

25 years preceding; 
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1 the taxable year’’.

2 SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 

3 DISPOSABLE INCOME. 

4 (a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of 

5 title 11, United States Code, is amended—

6 (1) in subparagraph (A) by striking ‘‘or’’ at the 

7 end; 

8 (2) in subparagraph (B) by striking the period 

9 at the end and inserting ‘‘; or’’; and 

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

11 ‘‘(C) the value of the property to be distributed 

12 under the plan in the 3-year period, or such longer 

13 period as the court may approve under section 

14 1222(c), beginning on the date that the first distribu15 tion is due under the plan is not less than the debtor’s 

16 projected disposable income for such period.’’. 

17 (b) MODIFICATION OF PLAN.—Section 1229 of title 11, 

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

19 following: 

20 ‘‘(d) A plan may not be modified under this section—

21 ‘‘(1) to increase the amount of any payment due 

22 before the plan as modified becomes the plan; 

23 ‘‘(2) by anyone except the debtor, based on an in24 crease in the debtor’s disposable income, to increase 

25 the amount of payments to unsecured creditors re-
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1 quired for a particular month so that the aggregate 

2 of such payments exceeds the debtor’s disposable in3 come for such month; or 

4 ‘‘(3) in the last year of the plan by anyone ex5 cept the debtor, to require payments that would leave 

6 the debtor with insufficient funds to carry on the 

7 farming operation after the plan is completed.’’.

8 SEC. 1007. FAMILY FISHERMEN. 

9 (a) DEFINITIONS.—Section 101 of title 11, United 

10 States Code, is amended—

11 (1) by inserting after paragraph (7) the fol12 lowing: 

13 ‘‘(7A) ‘commercial fishing operation’ means—

14 ‘‘(A) the catching or harvesting of fish, 

15 shrimp, lobsters, urchins, seaweed, shellfish, or 

16 other aquatic species or products of such species; 

17 or 

18 ‘‘(B) for purposes of section 109 and chap19 ter 12, aquaculture activities consisting of rais20 ing for market any species or product described 

21 in subparagraph (A); 

22 ‘‘(7B) ‘commercial fishing vessel’ means a vessel 

23 used by a family fisherman to carry out a commer24 cial fishing operation;’’; and 
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1 (2) by inserting after paragraph (19) the fol2 lowing: 

3 ‘‘(19A) ‘family fisherman’ means—

4 ‘‘(A) an individual or individual and 

5 spouse engaged in a commercial fishing oper6 ation—

7 ‘‘(i) whose aggregate debts do not ex8 ceed $1,500,000 and not less than 80 per9 cent of whose aggregate noncontingent, liq10 uidated debts (excluding a debt for the prin11 cipal residence of such individual or such 

12 individual and spouse, unless such debt 

13 arises out of a commercial fishing oper14 ation), on the date the case is filed, arise 

15 out of a commercial fishing operation 

16 owned or operated by such individual or 

17 such individual and spouse; and 

18 ‘‘(ii) who receive from such commercial 

19 fishing operation more than 50 percent of 

20 such individual’s or such individual’s and 

21 spouse’s gross income for the taxable year 

22 preceding the taxable year in which the case 

23 concerning such individual or such indi24 vidual and spouse was filed; or 

25 ‘‘(B) a corporation or partnership—
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1 ‘‘(i) in which more than 50 percent of 

2 the outstanding stock or equity is held by—

3 ‘‘(I) 1 family that conducts the 

4 commercial fishing operation; or 

5 ‘‘(II) 1 family and the relatives of 

6 the members of such family, and such 

7 family or such relatives conduct the 

8 commercial fishing operation; and 

9 ‘‘(ii)(I) more than 80 percent of the 

10 value of its assets consists of assets related 

11 to the commercial fishing operation; 

12 ‘‘(II) its aggregate debts do not exceed 

13 $1,500,000 and not less than 80 percent of 

14 its aggregate noncontingent, liquidated 

15 debts (excluding a debt for 1 dwelling which 

16 is owned by such corporation or partner17 ship and which a shareholder or partner 

18 maintains as a principal residence, unless 

19 such debt arises out of a commercial fishing 

20 operation), on the date the case is filed, 

21 arise out of a commercial fishing operation 

22 owned or operated by such corporation or 

23 such partnership; and 

24 ‘‘(III) if such corporation issues stock, 

25 such stock is not publicly traded; 
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1 ‘‘(19B) ‘family fisherman with regular annual 

2 income’ means a family fisherman whose annual in3 come is sufficiently stable and regular to enable such 

4 family fisherman to make payments under a plan 

5 under chapter 12 of this title;’’. 

6 (b) WHO MAY BE A DEBTOR.—Section 109(f) of title 

7 11, United States Code, is amended by inserting ‘‘or family 

8 fisherman’’ after ‘‘family farmer’’. 

9 (c) CHAPTER 12.—Chapter 12 of title 11, United 

10 States Code, is amended—

11 (1) in the chapter heading, by inserting ‘‘OR 

12 FISHERMAN’’ after ‘‘FAMILY FARMER’’; 

13 (2) in section 1203, by inserting ‘‘or commercial 

14 fishing operation’’ after ‘‘farm’’; and 

15 (3) in section 1206, by striking ‘‘if the property 

16 is farmland or farm equipment’’ and inserting ‘‘if the 

17 property is farmland, farm equipment, or property 

18 used to carry out a commercial fishing operation (in19 cluding a commercial fishing vessel)’’. 

20 (d) CLERICAL AMENDMENT.—In the table of chapters 

21 for title 11, United States Code, the item relating to chapter 

22 12, is amended to read as follows:

‘‘12. Adjustments of Debts of a Family Farmer or Family 

Fisherman with Regular Annual Income ...... 1201’’.
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1 (e) APPLICABILITY.—Nothing in this section shall 

2 change, affect, or amend the Fishery Conservation and 

3 Management Act of 1976 (16 U.S.C. 1801, et seq.). 

4 TITLE XI—HEALTH CARE AND 

5 EMPLOYEE BENEFITS 

6 SEC. 1101. DEFINITIONS. 

7 (a) HEALTH CARE BUSINESS DEFINED.—Section 101 

8 of title 11, United States Code, as amended by section 306, 

9 is amended—

10 (1) by redesignating paragraph (27A) as para11 graph (27B); and 

12 (2) by inserting after paragraph (27) the fol13 lowing: 

14 ‘‘(27A) ‘health care business’—

15 ‘‘(A) means any public or private entity 

16 (without regard to whether that entity is orga17 nized for profit or not for profit) that is pri18 marily engaged in offering to the general public 

19 facilities and services for—

20 ‘‘(i) the diagnosis or treatment of in21 jury, deformity, or disease; and 

22 ‘‘(ii) surgical, drug treatment, psy23 chiatric, or obstetric care; and 

24 ‘‘(B) includes—

25 ‘‘(i) any—
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1 ‘‘(I) general or specialized hos2 pital; 

3 ‘‘(II) ancillary ambulatory, emer4 gency, or surgical treatment facility; 

5 ‘‘(III) hospice; 

6 ‘‘(IV) home health agency; and 

7 ‘‘(V) other health care institution 

8 that is similar to an entity referred to 

9 in subclause (I), (II), (III), or (IV); 

10 and 

11 ‘‘(ii) any long-term care facility, in12 cluding any—

13 ‘‘(I) skilled nursing facility; 

14 ‘‘(II) intermediate care facility; 

15 ‘‘(III) assisted living facility; 

16 ‘‘(IV) home for the aged; 

17 ‘‘(V) domiciliary care facility; 

18 and 

19 ‘‘(VI) health care institution that 

20 is related to a facility referred to in 

21 subclause (I), (II), (III), (IV), or (V), 

22 if that institution is primarily engaged 

23 in offering room, board, laundry, or 

24 personal assistance with activities of 
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1 daily living and incidentals to activi2 ties of daily living;’’. 

3 (b) PATIENT AND PATIENT RECORDS DEFINED.—Sec4 tion 101 of title 11, United States Code, is amended by in5 serting after paragraph (40) the following: 

6 ‘‘(40A) ‘patient’ means any individual who ob7 tains or receives services from a health care business; 

8 ‘‘(40B) ‘patient records’ means any written doc9 ument relating to a patient or a record recorded in 

10 a magnetic, optical, or other form of electronic me11 dium;’’. 

12 (c) RULE OF CONSTRUCTION.—The amendments made 

13 by subsection (a) of this section shall not affect the interpre14 tation of section 109(b) of title 11, United States Code. 

15 SEC. 1102. DISPOSAL OF PATIENT RECORDS. 

16 (a) IN GENERAL.—Subchapter III of chapter 3 of title 

17 11, United States Code, is amended by adding at the end 

18 the following: 

19 ‘‘§ 351. Disposal of patient records 

20 ‘‘If a health care business commences a case under 

21 chapter 7, 9, or 11, and the trustee does not have a sufficient 

22 amount of funds to pay for the storage of patient records 

23 in the manner required under applicable Federal or State 

24 law, the following requirements shall apply: 

25 ‘‘(1) The trustee shall—
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1 ‘‘(A) promptly publish notice, in 1 or more 

2 appropriate newspapers, that if patient records 

3 are not claimed by the patient or an insurance 

4 provider (if applicable law permits the insurance 

5 provider to make that claim) by the date that is 

6 365 days after the date of that notification, the 

7 trustee will destroy the patient records; and 

8 ‘‘(B) during the first 180 days of the 365-

9 day period described in subparagraph (A), 

10 promptly attempt to notify directly each patient 

11 that is the subject of the patient records and ap12 propriate insurance carrier concerning the pa13 tient records by mailing to the most recent 

14 known address of that patient, or a family mem15 ber or contact person for that patient, and to the 

16 appropriate insurance carrier an appropriate 

17 notice regarding the claiming or disposing of pa18 tient records. 

19 ‘‘(2) If, after providing the notification under 

20 paragraph (1), patient records are not claimed dur21 ing the 365-day period described under that para22 graph, the trustee shall mail, by certified mail, at the 

23 end of such 365-day period a written request to each 

24 appropriate Federal agency to request permission 

25 from that agency to deposit the patient records with 
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1 that agency, except that no Federal agency is required 

2 to accept patient records under this paragraph. 

3 ‘‘(3) If, following the 365-day period described in 

4 paragraph (2) and after providing the notification 

5 under paragraph (1), patient records are not claimed 

6 by a patient or insurance provider, or request is not 

7 granted by a Federal agency to deposit such records 

8 with that agency, the trustee shall destroy those 

9 records by—

10 ‘‘(A) if the records are written, shredding or 

11 burning the records; or 

12 ‘‘(B) if the records are magnetic, optical, or 

13 other electronic records, by otherwise destroying 

14 those records so that those records cannot be re15 trieved.’’. 

16 (b) CLERICAL AMENDMENT.—The table of sections for 

17 subchapter III of chapter 3 of title 11, United States Code, 

18 is amended by adding at the end the following:

‘‘351. Disposal of patient records.’’.

19 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF 

20 CLOSING A HEALTH CARE BUSINESS AND 

21 OTHER ADMINISTRATIVE EXPENSES. 

22 Section 503(b) of title 11, United States Code, as 

23 amended by section 445, is amended by adding at the end 

24 the following: 
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1 ‘‘(8) the actual, necessary costs and expenses of 

2 closing a health care business incurred by a trustee or 

3 by a Federal agency (as defined in section 551(1) of 

4 title 5) or a department or agency of a State or polit5 ical subdivision thereof, including any cost or expense 

6 incurred—

7 ‘‘(A) in disposing of patient records in ac8 cordance with section 351; or 

9 ‘‘(B) in connection with transferring pa10 tients from the health care business that is in the 

11 process of being closed to another health care 

12 business; and’’.

13 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA14 TIENT ADVOCATE. 

15 (a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.—

16 (1) APPOINTMENT OF OMBUDSMAN.—Title 11, 

17 United States Code, as amended by section 232, is 

18 amended by inserting after section 332 the following: 

19 ‘‘§ 333. Appointment of patient care ombudsman 

20 ‘‘(a)(1) If the debtor in a case under chapter 7, 9, or 

21 11 is a health care business, the court shall order, not later 

22 than 30 days after the commencement of the case, the ap23 pointment of an ombudsman to monitor the quality of pa24 tient care and to represent the interests of the patients of 

25 the health care business unless the court finds that the ap-
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1 pointment of such ombudsman is not necessary for the pro2 tection of patients under the specific facts of the case. 

3 ‘‘(2)(A) If the court orders the appointment of an om4 budsman under paragraph (1), the United States trustee 

5 shall appoint 1 disinterested person (other than the United 

6 States trustee) to serve as such ombudsman. 

7 ‘‘(B) If the debtor is a health care business that pro8 vides long-term care, then the United States trustee may 

9 appoint the State Long-Term Care Ombudsman appointed 

10 under the Older Americans Act of 1965 for the State in 

11 which the case is pending to serve as the ombudsman re12 quired by paragraph (1). 

13 ‘‘(C) If the United States trustee does not appoint a 

14 State Long-Term Care Ombudsman under subparagraph 

15 (B), the court shall notify the State Long-Term Care Om16 budsman appointed under the Older Americans Act of 1965 

17 for the State in which the case is pending, of the name and 

18 address of the person who is appointed under subparagraph 

19 (A). 

20 ‘‘(b) An ombudsman appointed under subsection (a) 

21 shall—

22 ‘‘(1) monitor the quality of patient care provided 

23 to patients of the debtor, to the extent necessary under 

24 the circumstances, including interviewing patients 

25 and physicians; 
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1 ‘‘(2) not later than 60 days after the date of ap2 pointment, and not less frequently than at 60-day in3 tervals thereafter, report to the court after notice to 

4 the parties in interest, at a hearing or in writing, re5 garding the quality of patient care provided to pa6 tients of the debtor; and 

7 ‘‘(3) if such ombudsman determines that the 

8 quality of patient care provided to patients of the 

9 debtor is declining significantly or is otherwise being 

10 materially compromised, file with the court a motion 

11 or a written report, with notice to the parties in in12 terest immediately upon making such determination. 

13 ‘‘(c)(1) An ombudsman appointed under subsection (a) 

14 shall maintain any information obtained by such ombuds15 man under this section that relates to patients (including 

16 information relating to patient records) as confidential in17 formation. Such ombudsman may not review confidential 

18 patient records unless the court approves such review in ad19 vance and imposes restrictions on such ombudsman to pro20 tect the confidentiality of such records. 

21 ‘‘(2) An ombudsman appointed under subsection 

22 (a)(2)(B) shall have access to patient records consistent 

23 with authority of such ombudsman under the Older Ameri24 cans Act of 1965 and under non-Federal laws governing 

25 the State Long-Term Care Ombudsman program.’’. 
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for subchapter II of chapter 3 of title 11, United 

3 States Code, as amended by section 232, is amended 

4 by adding at the end the following:

‘‘333. Appointment of ombudsman.’’.

5 (b) COMPENSATION OF OMBUDSMAN.—Section 

6 330(a)(1) of title 11, United States Code, is amended—

7 (1) in the matter preceding subparagraph (A), 

8 by inserting ‘‘an ombudsman appointed under section 

9 333, or’’ before ‘‘a professional person’’; and 

10 (2) in subparagraph (A), by inserting ‘‘ombuds11 man,’’ before ‘‘professional person’’. 

12 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO 

13 TRANSFER PATIENTS. 

14 (a) IN GENERAL.—Section 704(a) of title 11, United 

15 States Code, as amended by sections 102, 219, and 446, is 

16 amended by adding at the end the following: 

17 ‘‘(12) use all reasonable and best efforts to trans18 fer patients from a health care business that is in the 

19 process of being closed to an appropriate health care 

20 business that—

21 ‘‘(A) is in the vicinity of the health care 

22 business that is closing; 

23 ‘‘(B) provides the patient with services that 

24 are substantially similar to those provided by the 
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1 health care business that is in the process of 

2 being closed; and 

3 ‘‘(C) maintains a reasonable quality of 

4 care.’’. 

5 (b) CONFORMING AMENDMENT.—Section 1106(a)(1) of 

6 title 11, United States Code, as amended by section 446, 

7 is amended by striking ‘‘and (11)’’ and inserting ‘‘(11), and 

8 (12)’’. 

9 SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION 

10 NOT SUBJECT TO AUTOMATIC STAY. 

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

12 amended by inserting after paragraph (27), as amended by 

13 sections 224, 303, 311, 401, 718, and 907, the following: 

14 ‘‘(28) under subsection (a), of the exclusion by 

15 the Secretary of Health and Human Services of the 

16 debtor from participation in the medicare program or 

17 any other Federal health care program (as defined in 

18 section 1128B(f) of the Social Security Act pursuant 

19 to title XI or XVIII of such Act).’’. 

20 TITLE XII—TECHNICAL 

21 AMENDMENTS 

22 SEC. 1201. DEFINITIONS. 

23 Section 101 of title 11, United States Code, as herein24 before amended by this Act, is amended—
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1 (1) by striking ‘‘In this title—’’ and inserting 

2 ‘‘In this title the following definitions shall apply:’’; 

3 (2) in each paragraph, by inserting ‘‘The term’’ 

4 after the paragraph designation; 

5 (3) in paragraph (35)(B), by striking ‘‘para6 graphs (21B) and (33)(A)’’ and inserting ‘‘para7 graphs (23) and (35)’’; 

8 (4) in each of paragraphs (35A), (38), and 

9 (54A), by striking ‘‘; and’’ at the end and inserting 

10 a period; 

11 (5) in paragraph (51B)—

12 (A) by inserting ‘‘who is not a family farm13 er’’ after ‘‘debtor’’ the first place it appears; and 

14 (B) by striking ‘‘thereto having aggregate’’ 

15 and all that follows through the end of the para16 graph and inserting a semicolon; 

17 (6) by striking paragraph (54) and inserting the 

18 following: 

19 ‘‘(54) The term ‘transfer’ means—

20 ‘‘(A) the creation of a lien; 

21 ‘‘(B) the retention of title as a security in22 terest; 

23 ‘‘(C) the foreclosure of a debtor’s equity of 

24 redemption; or 
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1 ‘‘(D) each mode, direct or indirect, absolute 

2 or conditional, voluntary or involuntary, of dis3 posing of or parting with—

4 ‘‘(i) property; or 

5 ‘‘(ii) an interest in property;’’; 

6 (7) by indenting the left margin of paragraph 

7 (54A) 2 ems to the right; and 

8 (8) in each of paragraphs (1) through (35), in 

9 each of paragraphs (36), (37), (38A), (38B) and 

10 (39A), and in each of paragraphs (40) through (55), 

11 by striking the semicolon at the end and inserting a 

12 period. 

13 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS. 

14 Section 104 of title 11, United States Code, is amended 

15 by inserting ‘‘522(f)(3),’’ after ‘‘522(d),’’ each place it ap16 pears. 

17 SEC. 1203. EXTENSION OF TIME. 

18 Section 108(c)(2) of title 11, United States Code, is 

19 amended by striking ‘‘922’’ and all that follows through 

20 ‘‘or’’, and inserting ‘‘922, 1201, or’’. 

21 SEC. 1204. TECHNICAL AMENDMENTS. 

22 Title 11, United States Code, is amended—

23 (1) in section 109(b)(2), by striking ‘‘subsection 

24 (c) or (d) of’’; and 
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1 (2) in section 552(b)(1), by striking ‘‘product’’ 

2 each place it appears and inserting ‘‘products’’. 

3 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 

4 FRAUDULENTLY PREPARE BANKRUPTCY PE5 TITIONS. 

6 Section 110(j)(4) of title 11, United States Code, as 

7 so redesignated by section 221, is amended by striking ‘‘at8 torney’s’’ and inserting ‘‘attorneys’ ’’. 

9 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES10 SIONAL PERSONS. 

11 Section 328(a) of title 11, United States Code, is 

12 amended by inserting ‘‘on a fixed or percentage fee basis,’’ 

13 after ‘‘hourly basis,’’. 

14 SEC. 1207. EFFECT OF CONVERSION. 

15 Section 348(f)(2) of title 11, United States Code, is 

16 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the 

17 first place it appears. 

18 SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES. 

19 Section 503(b)(4) of title 11, United States Code, is 

20 amended by inserting ‘‘subparagraph (A), (B), (C), (D), or 

21 (E) of’’ before ‘‘paragraph (3)’’. 

22 SEC. 1209. EXCEPTIONS TO DISCHARGE. 

23 Section 523 of title 11, United States Code, as amend24 ed by sections 215 and 314, is amended—
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1 (1) by transferring paragraph (15), as added by 

2 section 304(e) of Public Law 103–394 (108 Stat. 

3 4133), so as to insert such paragraph after subsection 

4 (a)(14A); 

5 (2) in subsection (a)(9), by striking ‘‘motor vehi6 cle’’ and inserting ‘‘motor vehicle, vessel, or aircraft’’; 

7 and 

8 (3) in subsection (e), by striking ‘‘a insured’’ 

9 and inserting ‘‘an insured’’. 

10 SEC. 1210. EFFECT OF DISCHARGE. 

11 Section 524(a)(3) of title 11, United States Code, is 

12 amended by striking ‘‘section 523’’ and all that follows 

13 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1), 

14 or 1328(a)(1), or that’’. 

15 SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT16 MENT. 

17 Section 525(c) of title 11, United States Code, is 

18 amended—

19 (1) in paragraph (1), by inserting ‘‘student’’ be20 fore ‘‘grant’’ the second place it appears; and 

21 (2) in paragraph (2), by striking ‘‘the program 

22 operated under part B, D, or E of’’ and inserting 

23 ‘‘any program operated under’’. 
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1 SEC. 1212. PROPERTY OF THE ESTATE. 

2 Section 541(b)(4)(B)(ii) of title 11, United States 

3 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’. 

4 SEC. 1213. PREFERENCES. 

5 (a) IN GENERAL.—Section 547 of title 11, United 

6 States Code, as amended by section 201, is amended—

7 (1) in subsection (b), by striking ‘‘subsection (c)’’ 

8 and inserting ‘‘subsections (c) and (i)’’; and 

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

10 ‘‘(i) If the trustee avoids under subsection (b) a trans11 fer made between 90 days and 1 year before the date of 

12 the filing of the petition, by the debtor to an entity that 

13 is not an insider for the benefit of a creditor that is an 

14 insider, such transfer shall be considered to be avoided 

15 under this section only with respect to the creditor that is 

16 an insider.’’. 

17 (b) APPLICABILITY.—The amendments made by this 

18 section shall apply to any case that is pending or com19 menced on or after the date of enactment of this Act. 

20 SEC. 1214. POSTPETITION TRANSACTIONS. 

21 Section 549(c) of title 11, United States Code, is 

22 amended—

23 (1) by inserting ‘‘an interest in’’ after ‘‘transfer 

24 of’’ each place it appears; 

25 (2) by striking ‘‘such property’’ and inserting 

26 ‘‘such real property’’; and 
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1 (3) by striking ‘‘the interest’’ and inserting 

2 ‘‘such interest’’. 

3 SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE. 

4 Section 726(b) of title 11, United States Code, is 

5 amended by striking ‘‘1009,’’. 

6 SEC. 1216. GENERAL PROVISIONS. 

7 Section 901(a) of title 11, United States Code, is 

8 amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’. 

9 SEC. 1217. ABANDONMENT OF RAILROAD LINE. 

10 Section 1170(e)(1) of title 11, United States Code, is 

11 amended by striking ‘‘section 11347’’ and inserting ‘‘section 

12 11326(a)’’. 

13 SEC. 1218. CONTENTS OF PLAN. 

14 Section 1172(c)(1) of title 11, United States Code, is 

15 amended by striking ‘‘section 11347’’ and inserting ‘‘section 

16 11326(a)’’. 

17 SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS. 

18 Section 1334(d) of title 28, United States Code, is 

19 amended—

20 (1) by striking ‘‘made under this subsection’’ and 

21 inserting ‘‘made under subsection (c)’’; and 

22 (2) by striking ‘‘This subsection’’ and inserting 

23 ‘‘Subsection (c) and this subsection’’. 
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1 SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR 

2 RULE. 

3 Section 156(a) of title 18, United States Code, is 

4 amended—

5 (1) in the first undesignated paragraph—

6 (A) by inserting ‘‘(1) the term’’ before 

7 ‘‘ ‘bankruptcy’’; and 

8 (B) by striking the period at the end and 

9 inserting ‘‘; and’’; and 

10 (2) in the second undesignated paragraph—

11 (A) by inserting ‘‘(2) the term’’ before ‘‘ ‘doc12 ument’’; and 

13 (B) by striking ‘‘this title’’ and inserting 

14 ‘‘title 11’’. 

15 SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 

16 CORPORATIONS. 

17 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d) 

18 of title 11, United States Code, is amended by striking 

19 ‘‘only’’ and all that follows through the end of the subsection 

20 and inserting ‘‘only—

21 ‘‘(1) in accordance with applicable nonbank22 ruptcy law that governs the transfer of property by 

23 a corporation or trust that is not a moneyed, busi24 ness, or commercial corporation or trust; and 
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1 ‘‘(2) to the extent not inconsistent with any relief 

2 granted under subsection (c), (d), (e), or (f) of section 

3 362.’’. 

4 (b) CONFIRMATION OF PLAN OF REORGANIZATION.—

5 Section 1129(a) of title 11, United States Code, as amended 

6 by sections 213 and 321, is amended by adding at the end 

7 the following: 

8 ‘‘(16) All transfers of property of the plan shall 

9 be made in accordance with any applicable provisions 

10 of nonbankruptcy law that govern the transfer of 

11 property by a corporation or trust that is not a 

12 moneyed, business, or commercial corporation or 

13 trust.’’. 

14 (c) TRANSFER OF PROPERTY.—Section 541 of title 11, 

15 United States Code, as amended by section 225, is amended 

16 by adding at the end the following: 

17 ‘‘(f) Notwithstanding any other provision of this title, 

18 property that is held by a debtor that is a corporation de19 scribed in section 501(c)(3) of the Internal Revenue Code 

20 of 1986 and exempt from tax under section 501(a) of such 

21 Code may be transferred to an entity that is not such a 

22 corporation, but only under the same conditions as would 

23 apply if the debtor had not filed a case under this title.’’. 

24 (d) APPLICABILITY.—The amendments made by this 

25 section shall apply to a case pending under title 11, United 
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1 States Code, on the date of enactment of this Act, or filed 

2 under that title on or after that date of enactment, except 

3 that the court shall not confirm a plan under chapter 11 

4 of title 11, United States Code, without considering whether 

5 this section would substantially affect the rights of a party 

6 in interest who first acquired rights with respect to the debt7 or after the date of the filing of the petition. The parties 

8 who may appear and be heard in a proceeding under this 

9 section include the attorney general of the State in which 

10 the debtor is incorporated, was formed, or does business. 

11 (e) RULE OF CONSTRUCTION.—Nothing in this section 

12 shall be construed to require the court in which a case under 

13 chapter 11 of title 11, United States Code, is pending to 

14 remand or refer any proceeding, issue, or controversy to any 

15 other court or to require the approval of any other court 

16 for the transfer of property. 

17 SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SECU18 RITY INTERESTS. 

19 Section 547(c)(3)(B) of title 11, United States Code, 

20 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

21 SEC. 1223. BANKRUPTCY JUDGESHIPS. 

22 (a) SHORT TITLE.—This section may be cited as the 

23 ‘‘Bankruptcy Judgeship Act of 2003’’. 

24 (b) TEMPORARY JUDGESHIPS.—
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1 (1) APPOINTMENTS.—The following bankruptcy 

2 judges shall be appointed in the manner prescribed in 

3 section 152(a)(1) of title 28, United States Code, for 

4 the appointment of bankruptcy judges provided for in 

5 section 152(a)(2) of such title: 

6 (A) One additional bankruptcy judge for the 

7 eastern district of California. 

8 (B) Three additional bankruptcy judges for 

9 the central district of California. 

10 (C) Four additional bankruptcy judges for 

11 the district of Delaware. 

12 (D) Two additional bankruptcy judges for 

13 the southern district of Florida. 

14 (E) One additional bankruptcy judge for 

15 the southern district of Georgia. 

16 (F) Three additional bankruptcy judges for 

17 the district of Maryland.

18 (G) One additional bankruptcy judge for 

19 the eastern district of Michigan. 

20 (H) One additional bankruptcy judge for 

21 the southern district of Mississippi. 

22 (I) One additional bankruptcy judge for the 

23 district of New Jersey. 

24 (J) One additional bankruptcy judge for the 

25 eastern district of New York. 
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1 (K) One additional bankruptcy judge for 

2 the northern district of New York. 

3 (L) One additional bankruptcy judge for the 

4 southern district of New York. 

5 (M) One additional bankruptcy judge for 

6 the eastern district of North Carolina. 

7 (N) One additional bankruptcy judge for 

8 the eastern district of Pennsylvania. 

9 (O) One additional bankruptcy judge for 

10 the middle district of Pennsylvania. 

11 (P) One additional bankruptcy judge for the 

12 district of Puerto Rico. 

13 (Q) One additional bankruptcy judge for 

14 the western district of Tennessee. 

15 (R) One additional bankruptcy judge for 

16 the eastern district of Virginia. 

17 (S) One additional bankruptcy judge for the 

18 district of South Carolina. 

19 (T) One additional bankruptcy judge for the 

20 district of Nevada. 

21 (2) VACANCIES.—

22 (A) DISTRICTS WITH SINGLE APPOINT23 MENTS.—Except as provided in subparagraphs 

24 (B), (C), (D), and (E), the first vacancy occur25 ring in the office of bankruptcy judge in each of 
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1 the judicial districts set forth in paragraph 

2 (1)—

3 (i) occurring 5 years or more after the 

4 appointment date of the bankruptcy judge 

5 appointed under paragraph (1) to such of6 fice; and 

7 (ii) resulting from the death, retire8 ment, resignation, or removal of a bank9 ruptcy judge; 

10 shall not be filled. 

11 (B) CENTRAL DISTRICT OF CALIFORNIA.—

12 The 1st, 2d, and 3d vacancies in the office of 

13 bankruptcy judge in the central district of Cali14 fornia—

15 (i) occurring 5 years or more after the 

16 respective 1st, 2d, and 3d appointment 

17 dates of the bankruptcy judges appointed 

18 under paragraph (1)(B); and 

19 (ii) resulting from the death, retire20 ment, resignation, or removal of a bank21 ruptcy judge; 

22 shall not be filled. 

23 (C) DISTRICT OF DELAWARE.—The 1st, 2d, 

24 3d, and 4th vacancies in the office of bankruptcy 

25 judge in the district of Delaware—
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1 (i) occurring 5 years or more after the 

2 respective 1st, 2d, 3d, and 4th appointment 

3 dates of the bankruptcy judges appointed 

4 under paragraph (1)(F); and 

5 (ii) resulting from the death, retire6 ment, resignation, or removal of a bank7 ruptcy judge; 

8 shall not be filled. 

9 (D) SOUTHERN DISTRICT OF FLORIDA.—

10 The 1st and 2d vacancies in the office of bank11 ruptcy judge in the southern district of Flor12 ida—

13 (i) occurring 5 years or more after the 

14 respective 1st and 2d appointment dates of 

15 the bankruptcy judges appointed under 

16 paragraph (1)(D); and 

17 (ii) resulting from the death, retire18 ment, resignation, or removal of a bank19 ruptcy judge; 

20 shall not be filled. 

21 (E) DISTRICT OF MARYLAND.—The 1st, 2d, 

22 and 3d vacancies in the office of bankruptcy 

23 judge in the district of Maryland—

24 (i) occurring 5 years or more after the 

25 respective 1st, 2d, and 3d appointment 
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1 dates of the bankruptcy judges appointed 

2 under paragraph (1)(F); and 

3 (ii) resulting from the death, retire4 ment, resignation, or removal of a bank5 ruptcy judge; 

6 shall not be filled. 

7 (c) EXTENSIONS.—

8 (1) IN GENERAL.—The temporary office of bank9 ruptcy judges authorized for the northern district of 

10 Alabama, the district of Delaware, the district of 

11 Puerto Rico, and the eastern district of Tennessee 

12 under paragraphs (1), (3), (7), and (9) of section 3(a) 

13 of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 

14 152 note) are extended until the first vacancy occur15 ring in the office of a bankruptcy judge in the appli16 cable district resulting from the death, retirement, res17 ignation, or removal of a bankruptcy judge and oc18 curring 5 years after the date of the enactment of this 

19 Act. 

20 (2) APPLICABILITY OF OTHER PROVISIONS.—All 

21 other provisions of section 3 of the Bankruptcy Judge22 ship Act of 1992 (28 U.S.C. 152 note) remain appli23 cable to the temporary office of bankruptcy judges re24 ferred to in this subsection. 
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1 (d) TECHNICAL AMENDMENTS.—Section 152(a) of title 

2 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 court of appeals of the United States for the circuit 

8 in 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 this 

17 section shall take effect on the date of the enactment of this 

18 Act. 

19 SEC. 1224. COMPENSATING TRUSTEES. 

20 Section 1326 of title 11, United States Code, is amend21 ed—

22 (1) in subsection (b)—

23 (A) in paragraph (1), by striking ‘‘and’’; 

24 (B) in paragraph (2), by striking the period 

25 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 com3 pensation due to the conversion or dismissal of the 

4 debtor’s prior case pursuant to section 707(b), and 

5 some portion of that compensation remains unpaid in 

6 a case converted to this chapter or in the case dis7 missed under section 707(b) and refiled under this 

8 chapter, the amount of any such unpaid compensa9 tion, which shall be paid monthly—

10 ‘‘(A) by prorating such amount over the re11 maining duration of the plan; and 

12 ‘‘(B) by monthly payments not to exceed the 

13 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 the 

19 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 case 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. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, 

7 UNITED STATES CODE. 

8 Section 362(b)(18) of title 11, United States Code, is 

9 amended to read as follows: 

10 ‘‘(18) under subsection (a) of the creation or per11 fection of a statutory lien for an ad valorem property 

12 tax, or a special tax or special assessment on real 

13 property whether or not ad valorem, imposed by a 

14 governmental unit, if such tax or assessment comes 

15 due after the date of the filing of the petition;’’. 

16 SEC. 1226. 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 conduct 

20 such training as may be useful to courts in implementing 

21 this Act and the amendments made by this Act, including 

22 the requirements relating to the means test under section 

23 707(b), and reaffirmation agreements under section 524, of 

24 title 11 of the United States Code, as amended by this Act. 
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1 SEC. 1227. RECLAMATION. 

2 (a) RIGHTS AND POWERS OF THE TRUSTEE.—Section 

3 546(c) of title 11, United States Code, is amended to read 

4 as follows: 

5 ‘‘(c)(1) Except as provided in subsection (d) of this sec6 tion and in section 507(c), and subject to the prior rights 

7 of a holder of a security interest in such goods or the pro8 ceeds thereof, the rights and powers of the trustee under sec9 tions 544(a), 545, 547, and 549 are subject to the right of 

10 a seller of goods that has sold goods to the debtor, in the 

11 ordinary course of such seller’s business, to reclaim such 

12 goods if the debtor has received such goods while insolvent, 

13 within 45 days before the date of the commencement of a 

14 case under this title, but such seller may not reclaim such 

15 goods unless such seller demands in writing reclamation of 

16 such goods—

17 ‘‘(A) not later than 45 days after the date of re18 ceipt 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 as24 sert the rights contained in section 503(b)(9).’’. 
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1 (b) ADMINISTRATIVE EXPENSES.—Section 503(b) of 

2 title 11, United States Code, as amended by sections 445 

3 and 1103, is amended by adding at the end the following: 

4 ‘‘(9) the value of any goods received by the debtor 

5 within 20 days before the date of commencement of a 

6 case under this title in which the goods have been sold 

7 to the debtor in the ordinary course of such debtor’s 

8 business.’’. 

9 SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO 

10 THE COURT. 

11 (a) CHAPTER 7 CASES.—The court shall not grant a 

12 discharge in the case of an individual who is a debtor in 

13 a case under chapter 7 of title 11, United States Code, un14 less requested tax documents have been provided to the 

15 court. 

16 (b) CHAPTER 11 AND CHAPTER 13 CASES.—The court 

17 shall not confirm a plan of reorganization in the case of 

18 an individual under chapter 11 or 13 of title 11, United 

19 States Code, unless requested tax documents have been filed 

20 with the court. 

21 (c) DOCUMENT RETENTION.—The court shall destroy 

22 documents submitted in support of a bankruptcy claim not 

23 sooner than 3 years after the date of the conclusion of a 

24 case filed by an individual under chapter 7, 11, or 13 of 

25 title 11, United States Code. In the event of a pending audit 
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1 or enforcement action, the court may extend the time for 

2 destruction of such requested tax documents. 

3 SEC. 1229. ENCOURAGING CREDITWORTHINESS. 

4 (a) SENSE OF THE CONGRESS.—It is the sense of the 

5 Congress that—

6 (1) certain lenders may sometimes offer credit to 

7 consumers indiscriminately, without taking steps to 

8 ensure that consumers are capable of repaying the re9 sulting debt, and in a manner which may encourage 

10 certain consumers to accumulate additional debt; and 

11 (2) resulting consumer debt may increasingly be 

12 a major contributing factor to consumer insolvency. 

13 (b) STUDY REQUIRED.—The Board of Governors of the 

14 Federal Reserve System (hereafter in this section referred 

15 to as the ‘‘Board’’) shall conduct a study of—

16 (1) consumer credit industry practices of solic17 iting and extending credit—

18 (A) indiscriminately; 

19 (B) without taking steps to ensure that con20 sumers are capable of repaying the resulting 

21 debt; and 

22 (C) in a manner that encourages consumers 

23 to accumulate additional debt; and 

24 (2) the effects of such practices on consumer debt 

25 and insolvency. 
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1 (c) REPORT AND REGULATIONS.—Not later than 12 

2 months after the date of enactment of this Act, the Board—

3 (1) shall make public a report on its findings 

4 with respect to the indiscriminate solicitation and ex5 tension of credit by the credit industry; 

6 (2) may issue regulations that would require ad7 ditional disclosures to consumers; and 

8 (3) may take any other actions, consistent with 

9 its existing statutory authority, that the Board finds 

10 necessary to ensure responsible industrywide practices 

11 and to prevent resulting consumer debt and insol12 vency. 

13 SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMP14 TION. 

15 Section 541(b) of title 11, United States Code, as 

16 amended by sections 225 and 323, is amended by adding 

17 after paragraph (7), as added by section 323, the following: 

18 ‘‘(8) subject to subchapter III of chapter 5, any 

19 interest of the debtor in property where the debtor 

20 pledged or sold tangible personal property (other than 

21 securities or written or printed evidences of indebted22 ness or title) as collateral for a loan or advance of 

23 money given by a person licensed under law to make 

24 such loans or advances, where—
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1 ‘‘(A) the tangible personal property is in the 

2 possession of the pledgee or transferee; 

3 ‘‘(B) the debtor has no obligation to repay 

4 the money, redeem the collateral, or buy back the 

5 property at a stipulated price; and 

6 ‘‘(C) neither the debtor nor the trustee have 

7 exercised any right to redeem provided under the 

8 contract or State law, in a timely manner as 

9 provided under State law and section 108(b); 

10 or’’. 

11 SEC. 1231. TRUSTEES. 

12 (a) SUSPENSION AND TERMINATION OF PANEL TRUST13 EES AND STANDING TRUSTEES.—Section 586(d) of title 28, 

14 United States Code, is amended— 

15 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

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

17 ‘‘(2) A trustee whose appointment under subsection 

18 (a)(1) or under subsection (b) is terminated or who ceases 

19 to be assigned to cases filed under title 11, United States 

20 Code, may obtain judicial review of the final agency deci21 sion by commencing an action in the district court of the 

22 United States for the district for which the panel to which 

23 the trustee is appointed under subsection (a)(1), or in the 

24 district court of the United States for the district in which 

25 the trustee is appointed under subsection (b) resides, after 
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1 first exhausting all available administrative remedies, 

2 which if the trustee so elects, shall also include an adminis3 trative hearing on the record. Unless the trustee elects to 

4 have an administrative hearing on the record, the trustee 

5 shall be deemed to have exhausted all administrative rem6 edies for purposes of this paragraph if the agency fails to 

7 make a final agency decision within 90 days after the trust8 ee requests administrative remedies. The Attorney General 

9 shall prescribe procedures to implement this paragraph. The 

10 decision of the agency shall be affirmed by the district court 

11 unless it is unreasonable and without cause based on the 

12 administrative record before the agency.’’. 

13 (b) EXPENSES OF STANDING TRUSTEES.—Section 

14 586(e) of title 28, United States Code, is amended by add15 ing at the end the following: 

16 ‘‘(3) After first exhausting all available administrative 

17 remedies, an individual appointed under subsection (b) 

18 may obtain judicial review of final agency action to deny 

19 a claim of actual, necessary expenses under this subsection 

20 by commencing an action in the district court of the United 

21 States for the district where the individual resides. The deci22 sion of the agency shall be affirmed by the district court 

23 unless it is unreasonable and without cause based upon the 

24 administrative record before the agency. 
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1 ‘‘(4) The Attorney General shall prescribe procedures 

2 to implement this subsection.’’. 

3 SEC. 1232. BANKRUPTCY FORMS. 

4 Section 2075 of title 28, United States Code, is amend5 ed by adding at the end the following: 

6 ‘‘The bankruptcy rules promulgated under this section 

7 shall prescribe a form for the statement required under sec8 tion 707(b)(2)(C) of title 11 and may provide general rules 

9 on the content of such statement.’’.

10 SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO 

11 COURTS OF APPEALS. 

12 (a) APPEALS.—Section 158 of title 28, United States 

13 Code, is amended—

14 (1) in subsection (c)(1), by striking ‘‘Subject to 

15 subsection (b),’’ and inserting ‘‘Subject to subsections 

16 (b) and (d)(2),’’; and 

17 (2) in subsection (d)—

18 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

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

20 ‘‘(2)(A) The appropriate court of appeals shall have 

21 jurisdiction of appeals described in the first sentence of sub22 section (a) if the bankruptcy court, the district court, or 

23 the bankruptcy appellate panel involved, acting on its own 

24 motion or on the request of a party to the judgment, order, 
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1 or decree described in such first sentence, or all the appel2 lants and appellees (if any) acting jointly, certify that—

3 ‘‘(i) the judgment, order, or decree involves a 

4 question of law as to which there is no controlling de5 cision of the court of appeals for the circuit or of the 

6 Supreme Court of the United States, or involves a 

7 matter of public importance; 

8 ‘‘(ii) the judgment, order, or decree involves a 

9 question of law requiring resolution of conflicting de10 cisions; or 

11 ‘‘(iii) an immediate appeal from the judgment, 

12 order, or decree may materially advance the progress 

13 of the case or proceeding in which the appeal is taken; 

14 and if the court of appeals authorizes the direct appeal of 

15 the judgment, order, or decree. 

16 ‘‘(B) If the bankruptcy court, the district court, or the 

17 bankruptcy appellate panel—

18 ‘‘(i) on its own motion or on the request of a 

19 party, determines that a circumstance specified in 

20 clause (i), (ii), or (iii) of subparagraph (A) exists; or 

21 ‘‘(ii) receives a request made by a majority of the 

22 appellants and a majority of appellees (if any) to 

23 make the certification described in subparagraph (A); 
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1 then the bankruptcy court, the district court, or the bank2 ruptcy appellate panel shall make the certification described 

3 in subparagraph (A). 

4 ‘‘(C) The parties may supplement the certification 

5 with a short statement of the basis for the certification. 

6 ‘‘(D) An appeal under this paragraph does not stay 

7 any proceeding of the bankruptcy court, the district court, 

8 or the bankruptcy appellate panel from which the appeal 

9 is taken, unless the respective bankruptcy court, district 

10 court, or bankruptcy appellate panel, or the court of appeals 

11 in which the appeal in pending, issues a stay of such pro12 ceeding pending the appeal. 

13 ‘‘(E) Any request under subparagraph (B) for certifi14 cation shall be made not later than 60 days after the entry 

15 of the judgment, order, or decree.’’. 

16 (b) PROCEDURAL RULES.—

17 (1) TEMPORARY APPLICATION.—A provision of 

18 this subsection shall apply to appeals under section 

19 158(d)(2) of title 28, United States Code, until a rule 

20 of practice and procedure relating to such provision 

21 and such appeals is promulgated or amended under 

22 chapter 131 of such title. 

23 (2) CERTIFICATION.—A district court, a bank24 ruptcy court, or a bankruptcy appellate panel may 

25 make a certification under section 158(d)(2) of title 
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1 28, United States Code, only with respect to matters 

2 pending in the respective bankruptcy court, district 

3 court, or bankruptcy appellate panel. 

4 (3) PROCEDURE.—Subject to any other provision 

5 of this subsection, an appeal authorized by the court 

6 of appeals under section 158(d)(2)(A) of title 28, 

7 United States Code, shall be taken in the manner pre8 scribed in subdivisions (a)(1), (b), (c), and (d) of rule 

9 5 of the Federal Rules of Appellate Procedure. For 

10 purposes of subdivision (a)(1) of rule 5—

11 (A) a reference in such subdivision to a dis12 trict court shall be deemed to include a reference 

13 to a bankruptcy court and a bankruptcy appel14 late panel, as appropriate; and 

15 (B) a reference in such subdivision to the 

16 parties requesting permission to appeal to be 

17 served with the petition shall be deemed to in18 clude a reference to the parties to the judgment, 

19 order, or decree from which the appeal is taken. 

20 (4) FILING OF PETITION WITH ATTACHMENT.—A 

21 petition requesting permission to appeal, that is based 

22 on a certification made under subparagraph (A) or 

23 (B) of section 158(d)(2) shall—

24 (A) be filed with the circuit clerk not later 

25 than 10 days after the certification is entered on 
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1 the docket of the bankruptcy court, the district 

2 court, or the bankruptcy appellate panel from 

3 which the appeal is taken; and 

4 (B) have attached a copy of such certifi5 cation. 

6 (5) REFERENCES IN RULE 5.—For purposes of 

7 rule 5 of the Federal Rules of Appellate Procedure—

8 (A) a reference in such rule to a district 

9 court shall be deemed to include a reference to a 

10 bankruptcy court and to a bankruptcy appellate 

11 panel; and 

12 (B) a reference in such rule to a district 

13 clerk shall be deemed to include a reference to a 

14 clerk of a bankruptcy court and to a clerk of a 

15 bankruptcy appellate panel. 

16 (6) APPLICATION OF RULES.—The Federal Rules 

17 of Appellate Procedure shall apply in the courts of 

18 appeals with respect to appeals authorized under sec19 tion 158(d)(2)(A), to the extent relevant and as if 

20 such appeals were taken from final judgments, orders, 

21 or decrees of the district courts or bankruptcy appel22 late panels exercising appellate jurisdiction under 

23 subsection (a) or (b) of section 158 of title 28, United 

24 States Code.
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1 SEC. 1234. INVOLUNTARY CASES. 

2 (a) AMENDMENTS.—Section 303 of title 11, United 

3 States Code, is amended—

4 (1) in subsection (b)(1), by—

5 (A) inserting ‘‘as to liability or amount’’ 

6 after ‘‘bona fide dispute’’; and 

7 (B) striking ‘‘if such claims’’ and inserting 

8 ‘‘if such noncontingent, undisputed claims’’; and 

9 (2) in subsection (h)(1), by inserting ‘‘as to li10 ability or amount’’ before the semicolon at the end. 

11 (b) EFFECTIVE DATE; APPLICATION OF AMEND12 MENTS.—This section and the amendments made by this 

13 section shall take effect on the date of the enactment of this 

14 Act and shall not apply with respect to cases commenced 

15 under title 11 of the United States Code before such date. 

16 SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES 

17 AS NONDISCHARGEABLE DEBT. 

18 Section 523(a) of title 11, United States Code, as 

19 amended by section 314, is amended by inserting after 

20 paragraph (14A) the following: 

21 ‘‘(14B) incurred to pay fines or penalties im22 posed under Federal election law;’’. 
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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, located 

12 on the front of the billing statement, disclosed clearly 

13 and conspicuously: ‘Minimum Payment Warning: 

14 Making only the minimum payment will increase the 

15 interest you pay and the time it takes to repay your 

16 balance. For example, making only the typical 2% 

17 minimum monthly payment on a balance of $1,000 

18 at an interest rate of 17% would take 88 months to 

19 repay the balance in full. For an estimate of the time 

20 it would take to repay your balance, making only 

21 minimum payments, call this toll-free number: 

22 llllll.’ (the blank space to be filled in by the 

23 creditor). 

24 ‘‘(B) In the case of an open end credit plan that 

25 requires a minimum monthly payment of more than 
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1 4 percent of the balance on which finance charges are 

2 accruing, the following statement, in a prominent lo3 cation on the front of the billing statement, disclosed 

4 clearly and conspicuously: ‘Minimum Payment 

5 Warning: Making only the required minimum pay6 ment will increase the interest you pay and the time 

7 it takes to repay your balance. Making a typical 5% 

8 minimum monthly payment on a balance of $300 at 

9 an interest rate of 17% would take 24 months to 

10 repay the balance in full. For an estimate of the time 

11 it would take to repay your balance, making only 

12 minimum monthly payments, call this toll-free num13 ber: llllll.’ (the blank space to be filled in 

14 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 example, 

24 making only the typical 5% minimum monthly pay25 ment on a balance of $300 at an interest rate of 17% 
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1 would take 24 months to repay the balance in full. 

2 For an estimate of the time it would take to repay 

3 your balance, making only minimum monthly pay4 ments, call the Federal Trade Commission at this toll5 free number: llllll.’ (the blank space to be 

6 filled in by the creditor). A creditor who is subject to 

7 this subparagraph shall not be subject to subpara8 graph (A) or (B). 

9 ‘‘(D) Notwithstanding subparagraph (A), (B), or 

10 (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 cred13 itor that is subject to subparagraph (B) may elect to 

14 provide the disclosure required under subparagraph 

15 (A) in lieu of the disclosure required under subpara16 graph (B). 

17 ‘‘(E) The Board shall, by rule, periodically recal18 culate, as necessary, the interest rate and repayment 

19 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 under 

22 subparagraph (A), (B), or (G), as appropriate, may 

23 be a toll-free telephone number established and main24 tained by the creditor or the Federal Trade Commis25 sion, as appropriate, or may be a toll-free telephone 
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1 number established and maintained by a third party 

2 for use by the creditor or multiple creditors or the 

3 Federal Trade Commission, as appropriate. The toll4 free telephone number may connect consumers to an 

5 automated device through which consumers may ob6 tain information described in subparagraph (A), (B), 

7 or (C), by inputting information using a touch-tone 

8 telephone or similar device, if consumers whose tele9 phones are not equipped to use such automated device 

10 are provided the opportunity to be connected to an in11 dividual from whom the information described in sub12 paragraph (A), (B), or (C), as applicable, may be ob13 tained. A person that receives a request for informa14 tion described in subparagraph (A), (B), or (C) from 

15 an obligor through the toll-free telephone number dis16 closed under subparagraph (A), (B), or (C), as appli17 cable, shall disclose in response to such request only 

18 the information set forth in the table promulgated by 

19 the Board under subparagraph (H)(i). 

20 ‘‘(ii)(I) The Board shall establish and maintain 

21 for a period not to exceed 24 months following the ef22 fective date of the Bankruptcy Abuse Prevention and 

23 Consumer Protection Act of 2003, a toll-free telephone 

24 number, or provide a toll-free telephone number estab25 lished and maintained by a third party, for use by 
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1 creditors that are depository institutions (as defined 

2 in section 3 of the Federal Deposit Insurance Act), in3 cluding a Federal credit union or State credit union 

4 (as defined in section 101 of the Federal Credit Union 

5 Act), with total assets not exceeding $250,000,000. 

6 The toll-free telephone number may connect consumers 

7 to an automated device through which consumers may 

8 obtain information described in subparagraph (A) or 

9 (B), as applicable, by inputting information using a 

10 touch-tone telephone or similar device, if consumers 

11 whose telephones are not equipped to use such auto12 mated device are provided the opportunity to be con13 nected to an individual from whom the information 

14 described in subparagraph (A) or (B), as applicable, 

15 may be obtained. A person that receives a request for 

16 information described in subparagraph (A) or (B) 

17 from an obligor through the toll-free telephone number 

18 disclosed under subparagraph (A) or (B), as applica19 ble, shall disclose in response to such request only the 

20 information set forth in the table promulgated by the 

21 Board under subparagraph (H)(i). The dollar amount 

22 contained in this subclause shall be adjusted accord23 ing to an indexing mechanism established by the 

24 Board. 
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1 ‘‘(II) Not later than 6 months prior to the expi2 ration of the 24-month period referenced in subclause 

3 (I), the Board shall submit to the Committee on 

4 Banking, Housing, and Urban Affairs of the Senate 

5 and the Committee on Financial Services of the 

6 House of Representatives a report on the program de7 scribed in subclause (I). 

8 ‘‘(G) The Federal Trade Commission shall estab9 lish and maintain a toll-free number for the purpose 

10 of providing to consumers the information required to 

11 be disclosed under subparagraph (C). 

12 ‘‘(H) The Board shall— 

13 ‘‘(i) establish a detailed table illustrating 

14 the approximate number of months that it would 

15 take to repay an outstanding balance if a con16 sumer pays only the required minimum monthly 

17 payments and if no other advances are made, 

18 which table shall clearly present standardized in19 formation to be used to disclose the information 

20 required to be disclosed under subparagraph (A), 

21 (B), or (C), as applicable; 

22 ‘‘(ii) establish the table required under 

23 clause (i) by assuming—

24 ‘‘(I) a significant number of different 

25 annual percentage rates; 
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1 ‘‘(II) a significant number of different 

2 account balances; 

3 ‘‘(III) a significant number of different 

4 minimum payment amounts; and 

5 ‘‘(IV) that only minimum monthly 

6 payments are made and no additional ex7 tensions of credit are obtained; and 

8 ‘‘(iii) promulgate regulations that provide 

9 instructional guidance regarding the manner in 

10 which the information contained in the table es11 tablished under clause (i) should be used in re12 sponding to the request of an obligor for any in13 formation required to be disclosed under sub14 paragraph (A), (B), or (C). 

15 ‘‘(I) The disclosure requirements of this para16 graph do not apply to any charge card account, the 

17 primary purpose of which is to require payment of 

18 charges in full each month. 

19 ‘‘(J) A creditor that maintains a toll-free tele20 phone number for the purpose of providing customers 

21 with the actual number of months that it will take to 

22 repay the customer’s outstanding balance is not sub23 ject to the requirements of subparagraph (A) or (B). 

24 ‘‘(K) A creditor that maintains a toll-free tele25 phone number for the purpose of providing customers 
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1 with the actual number of months that it will take to 

2 repay an outstanding balance shall include the fol3 lowing statement on each billing statement: ‘Making 

4 only the minimum payment will increase the interest 

5 you pay and the time it takes to repay your balance. 

6 For more information, call this toll-free number: 

7 llll.’ (the blank space to be filled in by the 

8 creditor).’’. 

9 (b) REGULATORY IMPLEMENTATION.—

10 (1) IN GENERAL.—The Board of Governors of the 

11 Federal Reserve System (hereafter in this title re12 ferred to as the ‘‘Board’’) shall promulgate regula13 tions implementing the requirements of section 

14 127(b)(11) of the Truth in Lending Act, as added by 

15 subsection (a) of this section. 

16 (2) EFFECTIVE DATE.—Section 127(b)(11) of the 

17 Truth in Lending Act, as added by subsection (a) of 

18 this section, and the regulations issued under para19 graph (1) of this subsection shall not take effect until 

20 the later of—

21 (A) 18 months after the date of enactment 

22 of this Act; or 

23 (B) 12 months after the publication of such 

24 final regulations by the Board. 

25 (c) STUDY OF FINANCIAL DISCLOSURES.—
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1 (1) IN GENERAL.—The Board may conduct a 

2 study to determine the types of information available 

3 to potential borrowers from consumer credit lending 

4 institutions regarding factors qualifying potential 

5 borrowers for credit, repayment requirements, and the 

6 consequences of default. 

7 (2) FACTORS FOR CONSIDERATION.—In con8 ducting a study under paragraph (1), the Board 

9 should, in consultation with the other Federal bank10 ing agencies (as defined in section 3 of the Federal 

11 Deposit Insurance Act), the National Credit Union 

12 Administration, and the Federal Trade Commission, 

13 consider the extent to which—

14 (A) consumers, in establishing new credit 

15 arrangements, are aware of their existing pay16 ment obligations, the need to consider those obli17 gations in deciding to take on new credit, and 

18 how taking on excessive credit can result in fi19 nancial difficulty; 

20 (B) minimum periodic payment features of21 fered in connection with open end credit plans 

22 impact consumer default rates; 

23 (C) consumers make only the required min24 imum payment under open end credit plans; 
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1 (D) consumers are aware that making only 

2 required minimum payments will increase the 

3 cost and repayment period of an open end credit 

4 obligation; and 

5 (E) the availability of low minimum pay6 ment options is a cause of consumers experi7 encing financial difficulty. 

8 (3) REPORT TO CONGRESS.—Findings of the 

9 Board in connection with any study conducted under 

10 this subsection shall be submitted to Congress. Such 

11 report shall also include recommendations for legisla12 tive initiatives, if any, of the Board, based on its 

13 findings. 

14 SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN15 SIONS SECURED BY A DWELLING. 

16 (a) OPEN END CREDIT EXTENSIONS.—

17 (1) CREDIT APPLICATIONS.—Section 127A(a)(13) 

18 of the Truth in Lending Act (15 U.S.C. 1637a(a)(13)) 

19 is amended—

20 (A) by striking ‘‘CONSULTATION OF TAX AD21 VISER.—A statement that the’’ and inserting the 

22 following: ‘‘TAX DEDUCTIBILITY.—A statement 

23 that—

24 ‘‘(A) the’’; and 
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1 (B) by striking the period at the end and 

2 inserting the following: ‘‘; and 

3 ‘‘(B) in any case in which the extension of 

4 credit exceeds the fair market value (as defined 

5 under the Internal Revenue Code of 1986) of the 

6 dwelling, the interest on the portion of the credit 

7 extension that is greater than the fair market 

8 value of the dwelling is not tax deductible for 

9 Federal income tax purposes.’’. 

10 (2) CREDIT ADVERTISEMENTS.—Section 147(b) 

11 of the Truth in Lending Act (15 U.S.C. 1665b(b)) is 

12 amended—

13 (A) by striking ‘‘If any’’ and inserting the 

14 following: 

15 ‘‘(1) IN GENERAL.—If any’’; and 

16 (B) by adding at the end the following: 

17 ‘‘(2) CREDIT IN EXCESS OF FAIR MARKET

18 VALUE.—Each advertisement described in subsection 

19 (a) that relates to an extension of credit that may ex20 ceed the fair market value of the dwelling, and which 

21 advertisement is disseminated in paper form to the 

22 public or through the Internet, as opposed to by radio 

23 or television, shall include a clear and conspicuous 

24 statement that—
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1 ‘‘(A) the interest on the portion of the credit 

2 extension that is greater than the fair market 

3 value of the dwelling is not tax deductible for 

4 Federal income tax purposes; and 

5 ‘‘(B) the consumer should consult a tax ad6 viser for further information regarding the de7 ductibility of interest and charges.’’. 

8 (b) NON-OPEN END CREDIT EXTENSIONS.—

9 (1) CREDIT APPLICATIONS.—Section 128 of the 

10 Truth in Lending Act (15 U.S.C. 1638) is amended—

11 (A) in subsection (a), by adding at the end 

12 the following: 

13 ‘‘(15) In the case of a consumer credit trans14 action that is secured by the principal dwelling of the 

15 consumer, in which the extension of credit may exceed 

16 the fair market value of the dwelling, a clear and con17 spicuous statement that—

18 ‘‘(A) the interest on the portion of the credit 

19 extension that is greater than the fair market 

20 value of the dwelling is not tax deductible for 

21 Federal income tax purposes; and 

22 ‘‘(B) the consumer should consult a tax ad23 viser for further information regarding the de24 ductibility of interest and charges.’’; and 
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1 (B) in subsection (b), by adding at the end 

2 the following: 

3 ‘‘(3) In the case of a credit transaction described in 

4 paragraph (15) of subsection (a), disclosures required by 

5 that paragraph shall be made to the consumer at the time 

6 of application for such extension of credit.’’. 

7 (2) CREDIT ADVERTISEMENTS.—Section 144 of 

8 the Truth in Lending Act (15 U.S.C. 1664) is amend9 ed by adding at the end the following: 

10 ‘‘(e) Each advertisement to which this section applies 

11 that relates to a consumer credit transaction that is secured 

12 by the principal dwelling of a consumer in which the exten13 sion of credit may exceed the fair market value of the dwell14 ing, and which advertisement is disseminated in paper 

15 form to the public or through the Internet, as opposed to 

16 by radio or television, shall clearly and conspicuously state 

17 that—

18 ‘‘(1) the interest on the portion of the credit ex19 tension that is greater than the fair market value of 

20 the dwelling is not tax deductible for Federal income 

21 tax purposes; and 

22 ‘‘(2) the consumer should consult a tax adviser 

23 for further information regarding the deductibility of 

24 interest and charges.’’. 

25 (c) REGULATORY IMPLEMENTATION.—
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1 (1) IN GENERAL.—The Board shall promulgate 

2 regulations implementing the amendments made by 

3 this section.

4 (2) EFFECTIVE DATE.—Regulations issued under 

5 paragraph (1) shall not take effect until the later of— 

6 (A) 12 months after the date of enactment 

7 of this Act; or 

8 (B) 12 months after the date of publication 

9 of such final regulations by the Board. 

10 SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY 

11 RATES’’. 

12 (a) INTRODUCTORY RATE DISCLOSURES.—Section 

13 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is 

14 amended by adding at the end the following: 

15 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRO16 DUCTORY RATES’.—

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 subparagraph (B), an application or solicitation 

19 to open a credit card account and all pro20 motional materials accompanying such applica21 tion or solicitation for which a disclosure is re22 quired under paragraph (1), and that offers a 

23 temporary annual percentage rate of interest, 

24 shall—
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1 ‘‘(i) use the term ‘introductory’ in im2 mediate proximity to each listing of the 

3 temporary annual percentage rate applica4 ble to such account, which term shall ap5 pear clearly and conspicuously; 

6 ‘‘(ii) if the annual percentage rate of 

7 interest that will apply after the end of the 

8 temporary rate period will be a fixed rate, 

9 state in a clear and conspicuous manner in 

10 a prominent location closely proximate to 

11 the first listing of the temporary annual 

12 percentage rate (other than a listing of the 

13 temporary annual percentage rate in the 

14 tabular format described in section 122(c)), 

15 the time period in which the introductory 

16 period will end and the annual percentage 

17 rate that will apply after the end of the in18 troductory period; and 

19 ‘‘(iii) if the annual percentage rate 

20 that will apply after the end of the tem21 porary rate period will vary in accordance 

22 with an index, state in a clear and con23 spicuous manner in a prominent location 

24 closely proximate to the first listing of the 

25 temporary annual percentage rate (other 
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1 than a listing in the tabular format pre2 scribed by section 122(c)), the time period 

3 in which the introductory period will end 

4 and the rate that will apply after that, 

5 based on an annual percentage rate that 

6 was in effect within 60 days before the date 

7 of mailing the application or solicitation. 

8 ‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of 

9 subparagraph (A) do not apply with respect to 

10 any listing of a temporary annual percentage 

11 rate on an envelope or other enclosure in which 

12 an application or solicitation to open a credit 

13 card account is mailed. 

14 ‘‘(C) CONDITIONS FOR INTRODUCTORY

15 RATES.—An application or solicitation to open a 

16 credit card account for which a disclosure is re17 quired under paragraph (1), and that offers a 

18 temporary annual percentage rate of interest 

19 shall, if that rate of interest is revocable under 

20 any circumstance or upon any event, clearly and 

21 conspicuously disclose, in a prominent manner 

22 on or with such application or solicitation—

23 ‘‘(i) a general description of the cir24 cumstances that may result in the revoca-
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1 tion of the temporary annual percentage 

2 rate; and 

3 ‘‘(ii) if the annual percentage rate that 

4 will apply upon the revocation of the tem5 porary annual percentage rate—

6 ‘‘(I) will be a fixed rate, the an7 nual percentage rate that will apply 

8 upon the revocation of the temporary 

9 annual percentage rate; or 

10 ‘‘(II) will vary in accordance with 

11 an index, the rate that will apply after 

12 the temporary rate, based on an an13 nual percentage rate that was in effect 

14 within 60 days before the date of mail15 ing the application or solicitation. 

16 ‘‘(D) DEFINITIONS.—In this paragraph—

17 ‘‘(i) the terms ‘temporary annual per18 centage rate of interest’ and ‘temporary an19 nual percentage rate’ mean any rate of in20 terest applicable to a credit card account for 

21 an introductory period of less than 1 year, 

22 if that rate is less than an annual percent23 age rate that was in effect within 60 days 

24 before the date of mailing the application or 

25 solicitation; and 
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1 ‘‘(ii) the term ‘introductory period’ 

2 means the maximum time period for which 

3 the temporary annual percentage rate may 

4 be applicable. 

5 ‘‘(E) RELATION TO OTHER DISCLOSURE RE6 QUIREMENTS.—Nothing in this paragraph may 

7 be construed to supersede subsection (a) of sec8 tion 122, or any disclosure required by para9 graph (1) or any other provision of this sub10 section.’’. 

11 (b) REGULATORY IMPLEMENTATION.—

12 (1) IN GENERAL.—The Board shall promulgate 

13 regulations implementing the requirements of section 

14 127(c)(6) of the Truth in Lending Act, as added by 

15 this section. 

16 (2) EFFECTIVE DATE.—Section 127(c)(6) of the 

17 Truth in Lending Act, as added by this section, and 

18 regulations issued under paragraph (1) of this sub19 section shall not take effect until the later of—

20 (A) 12 months after the date of enactment 

21 of this Act; or 

22 (B) 12 months after the date of publication 

23 of such final regulations by the Board. 
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1 SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS. 

2 (a) INTERNET-BASED SOLICITATIONS.—Section 127(c) 

3 of the Truth in Lending Act (15 U.S.C. 1637(c)) is amended 

4 by adding at the end the following: 

5 ‘‘(7) INTERNET-BASED SOLICITATIONS.—

6 ‘‘(A) IN GENERAL.—In any solicitation to 

7 open a credit card account for any person under 

8 an open end consumer credit plan using the 

9 Internet or other interactive computer service, 

10 the person making the solicitation shall clearly 

11 and conspicuously disclose—

12 ‘‘(i) the information described in sub13 paragraphs (A) and (B) of paragraph (1); 

14 and 

15 ‘‘(ii) the information described in 

16 paragraph (6). 

17 ‘‘(B) FORM OF DISCLOSURE.—The disclo18 sures required by subparagraph (A) shall be—

19 ‘‘(i) readily accessible to consumers in 

20 close proximity to the solicitation to open a 

21 credit card account; and 

22 ‘‘(ii) updated regularly to reflect the 

23 current policies, terms, and fee amounts ap24 plicable to the credit card account. 

25 ‘‘(C) DEFINITIONS.—For purposes of this 

26 paragraph—
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1 ‘‘(i) the term ‘Internet’ means the 

2 international computer network of both 

3 Federal and non-Federal interoperable 

4 packet switched data networks; and 

5 ‘‘(ii) the term ‘interactive computer 

6 service’ means any information service, sys7 tem, or access software provider that pro8 vides or enables computer access by multiple 

9 users to a computer server, including spe10 cifically a service or system that provides 

11 access to the Internet and such systems op12 erated or services offered by libraries or edu13 cational institutions.’’. 

14 (b) REGULATORY IMPLEMENTATION.—

15 (1) IN GENERAL.—The Board shall promulgate 

16 regulations implementing the requirements of section 

17 127(c)(7) of the Truth in Lending Act, as added by 

18 this section. 

19 (2) EFFECTIVE DATE.—The amendment made by 

20 subsection (a) and the regulations issued under para21 graph (1) of this subsection shall not take effect until 

22 the later of—

23 (A) 12 months after the date of enactment 

24 of this Act; or 
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1 (B) 12 months after the date of publication 

2 of such final regulations by the Board. 

3 SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT 

4 DEADLINES AND PENALTIES. 

5 (a) DISCLOSURES RELATED TO LATE PAYMENT DEAD6 LINES AND PENALTIES.—Section 127(b) of the Truth in 

7 Lending Act (15 U.S.C. 1637(b)) is amended by adding at 

8 the end the following: 

9 ‘‘(12) If a late payment fee is to be imposed due 

10 to the failure of the obligor to make payment on or 

11 before a required payment due date, the following 

12 shall be stated clearly and conspicuously on the bill13 ing statement: 

14 ‘‘(A) The date on which that payment is 

15 due or, if different, the earliest date on which a 

16 late payment fee may be charged. 

17 ‘‘(B) The amount of the late payment fee to 

18 be imposed if payment is made after such date.’’. 

19 (b) REGULATORY IMPLEMENTATION.—

20 (1) IN GENERAL.—The Board shall promulgate 

21 regulations implementing the requirements of section 

22 127(b)(12) of the Truth in Lending Act, as added by 

23 this section. 

24 (2) EFFECTIVE DATE.—The amendment made by 

25 subsection (a) and regulations issued under para-
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1 graph (1) of this subsection shall not take effect until 

2 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 publication 

6 of such final regulations by the Board. 

7 SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL8 URE TO INCUR FINANCE CHARGES. 

9 (a) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE

10 TO INCUR FINANCE CHARGES.—Section 127 of the Truth 

11 in Lending Act (15 U.S.C. 1637) is amended by adding 

12 at the end the following: 

13 ‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE

14 TO INCUR FINANCE CHARGES.—A creditor of an account 

15 under an open end consumer credit plan may not terminate 

16 an account prior to its expiration date solely because the 

17 consumer has not incurred finance charges on the account. 

18 Nothing in this subsection shall prohibit a creditor from 

19 terminating an account for inactivity in 3 or more consecu20 tive months.’’. 

21 (b) REGULATORY IMPLEMENTATION.—

22 (1) IN GENERAL.—The Board shall promulgate 

23 regulations implementing the requirements of section 

24 127(h) of the Truth in Lending Act, as added by this 

25 section. 
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1 (2) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) and regulations issued under para3 graph (1) of this subsection shall not take effect until 

4 the later of—

5 (A) 12 months after the date of enactment 

6 of this Act; or 

7 (B) 12 months after the date of publication 

8 of such final regulations by the Board. 

9 SEC. 1307. DUAL USE DEBIT CARD. 

10 (a) REPORT.—The Board may conduct a study of, and 

11 present to Congress a report containing its analysis of, con12 sumer protections under existing law to limit the liability 

13 of consumers for unauthorized use of a debit card or similar 

14 access device. Such report, if submitted, shall include rec15 ommendations for legislative initiatives, if any, of the 

16 Board, based on its findings. 

17 (b) CONSIDERATIONS.—In preparing a report under 

18 subsection (a), the Board may include—

19 (1) the extent to which section 909 of the Elec20 tronic Fund Transfer Act (15 U.S.C. 1693g), as in ef21 fect at the time of the report, and the implementing 

22 regulations promulgated by the Board to carry out 

23 that section provide adequate unauthorized use liabil24 ity protection for consumers; 
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1 (2) the extent to which any voluntary industry 

2 rules have enhanced or may enhance the level of pro3 tection afforded consumers in connection with such 

4 unauthorized use liability; and 

5 (3) whether amendments to the Electronic Fund 

6 Transfer Act (15 U.S.C. 1693 et seq.), or revisions to 

7 regulations promulgated by the Board to carry out 

8 that Act, are necessary to further address adequate 

9 protection for consumers concerning unauthorized use 

10 liability. 

11 SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX12 TENDED TO DEPENDENT STUDENTS. 

13 (a) STUDY.—

14 (1) IN GENERAL.—The Board shall conduct a 

15 study regarding the impact that the extension of cred16 it described in paragraph (2) has on the rate of cases 

17 filed under title 11 of the United States Code. 

18 (2) EXTENSION OF CREDIT.—The extension of 

19 credit described in this paragraph is the extension of 

20 credit to individuals who are—

21 (A) claimed as dependents for purposes of 

22 the Internal Revenue Code of 1986; and 

23 (B) enrolled within 1 year of successfully 

24 completing all required secondary education re-
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1 quirements and on a full-time basis, in postsec2 ondary educational institutions. 

3 (b) REPORT.—Not later than 1 year after the date of 

4 enactment of this Act, the Board shall submit to the Senate 

5 and the House of Representatives a report summarizing the 

6 results of the study conducted under subsection (a). 

7 SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS. 

8 (a) REGULATIONS.—Not later than 6 months after the 

9 date of enactment of this Act, the Board, in consultation 

10 with the other Federal banking agencies (as defined in sec11 tion 3 of the Federal Deposit Insurance Act), the National 

12 Credit Union Administration Board, and the Federal 

13 Trade Commission, shall promulgate regulations to provide 

14 guidance regarding the meaning of the term ‘‘clear and con15 spicuous’’, as used in subparagraphs (A), (B), and (C) of 

16 section 127(b)(11) and clauses (ii) and (iii) of section 

17 127(c)(6)(A) of the Truth in Lending Act. 

18 (b) EXAMPLES.—Regulations promulgated under sub19 section (a) shall include examples of clear and conspicuous 

20 model disclosures for the purposes of disclosures required 

21 by the provisions of the Truth in Lending Act referred to 

22 in subsection (a). 

23 (c) STANDARDS.—In promulgating regulations under 

24 this section, the Board shall ensure that the clear and con25 spicuous standard required for disclosures made under the 
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1 provisions of the Truth in Lending Act referred to in sub2 section (a) can be implemented in a manner which results 

3 in disclosures which are reasonably understandable and de4 signed to call attention to the nature and significance of 

5 the information in the notice. 

6 TITLE XIV—GENERAL EFFECTIVE 

7 DATE; APPLICATION OF 

8 AMENDMENTS 

9 SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMEND10 MENTS. 

11 (a) EFFECTIVE DATE.—Except as otherwise provided 

12 in this Act, this Act and the amendments made by this Act 

13 shall take effect 180 days after the date of enactment of this 

14 Act. 

15 (b) APPLICATION OF AMENDMENTS.—

16 (1) IN GENERAL.—Except as otherwise provided 

17 in this Act and paragraph (2), the amendments made 

18 by this Act shall not apply with respect to cases com19 menced under title 11, United States Code, before the 

20 effective date of this Act. 

21 (2) CERTAIN LIMITATIONS APPLICABLE TO DEBT22 ORS.—The amendments made by sections 308, 322, 

23 and 330 shall apply with respect to cases commenced 

24 under title 11, United States Code, on or after the 

25 date of the enactment of this Act. 
Union Calendar No. 27

108TH CONGRESS 

1ST SESSION H. R. 975

[Report No. 108–40, Part I] 

A BILL

To amend title 11 of the United States Code, and 

for other purposes. 

MARCH 18, 2003

Reported from the Committee on the Judiciary with an 

amendment 

MARCH 18, 2003

Referral to the Committee on Financial Services extended 

for a period ending not later than March 18, 2003

MARCH 18, 2003

Committee on Financial Services discharged; committed 

to the Committee of the Whole House on the State of the Union and ordered to be printed