I 

108TH CONGRESS 

1ST SESSION H. R. 975

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 

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,
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1 SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CON2 TENTS. 

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

4 ‘‘Bankruptcy Abuse Prevention and Consumer Protection 

5 Act of 2003’’. 

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

7 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. 

TITLE II—ENHANCED CONSUMER PROTECTION 

Subtitle A—Penalties for Abusive Creditor Practices 

Sec. 201. Promotion of alternative dispute resolution. 

Sec. 202. Effect of discharge. 

Sec. 203. Discouraging abuse of reaffirmation practices. 

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

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

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. 
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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. 

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

Sec. 704. Rate of interest on tax claims. 

Sec. 705. Priority of tax claims. 

Sec. 706. Priority property taxes incurred. 

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

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

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

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

Sec. 711. Avoidance of statutory tax liens prohibited. 

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

Sec. 713. Tardily filed priority tax claims. 

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

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

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

Sec. 717. Standards for tax disclosure. 

Sec. 718. Setoff of tax refunds. 

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

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

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASES 

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

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

TITLE IX—FINANCIAL CONTRACT PROVISIONS 

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

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

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. 
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Sec. 1102. Disposal of patient records. 

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

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

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

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

TITLE XII—TECHNICAL AMENDMENTS 

Sec. 1201. Definitions. 

Sec. 1202. Adjustment of dollar amounts. 

Sec. 1203. Extension of time. 

Sec. 1204. Technical amendments. 

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

Sec. 1206. Limitation on compensation of professional persons. 

Sec. 1207. Effect of conversion. 

Sec. 1208. Allowance of administrative expenses. 

Sec. 1209. Exceptions to discharge. 

Sec. 1210. Effect of discharge. 

Sec. 1211. Protection against discriminatory treatment. 

Sec. 1212. Property of the estate. 

Sec. 1213. Preferences. 

Sec. 1214. Postpetition transactions. 

Sec. 1215. Disposition of property of the estate. 

Sec. 1216. General provisions. 

Sec. 1217. Abandonment of railroad line. 

Sec. 1218. Contents of plan. 

Sec. 1219. 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. 
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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—

9 (1) by striking the section heading and insert10 ing the following: 

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

12 under chapter 11 or 13’’; 

13 and 

14 (2) in subsection (b)—

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

16 (B) in paragraph (1), as so redesignated 

17 by subparagraph (A) of this paragraph—

18 (i) in the first sentence—

19 (I) by striking ‘‘but not at the re20 quest or suggestion of’’ and inserting 
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1 ‘‘trustee, bankruptcy administrator, 

2 or’’; 

3 (II) by inserting ‘‘, or, with the 

4 debtor’s consent, convert such a case 

5 to a case under chapter 11 or 13 of 

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

7 and 

8 (III) by striking ‘‘a substantial 

9 abuse’’ and inserting ‘‘an abuse’’; and 

10 (ii) by striking the next to last sen11 tence; and 

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

13 ‘‘(2)(A)(i) In considering under paragraph (1) wheth14 er the granting of relief would be an abuse of the provi15 sions of this chapter, the court shall presume abuse exists 

16 if the debtor’s current monthly income reduced by the 

17 amounts determined under clauses (ii), (iii), and (iv), and 

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

19 ‘‘(I) 25 percent of the debtor’s nonpriority un20 secured claims in the case, or $6,000, whichever is 

21 greater; or 

22 ‘‘(II) $10,000. 

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

24 debtor’s applicable monthly expense amounts specified 

25 under the National Standards and Local Standards, and 
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1 the debtor’s actual monthly expenses for the categories 

2 specified as Other Necessary Expenses issued by the In3 ternal Revenue Service for the area in which the debtor 

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

5 for relief, for the debtor, the dependents of the debtor, 

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

7 is not otherwise a dependent. Notwithstanding any other 

8 provision of this clause, the monthly expenses of the debt9 or shall not include any payments for debts. In addition, 

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

11 reasonably necessary expenses incurred to maintain the 

12 safety of the debtor and the family of the debtor from fam13 ily violence as identified under section 309 of the Family 

14 Violence Prevention and Services Act, or other applicable 

15 Federal law. The expenses included in the debtor’s month16 ly expenses described in the preceding sentence shall be 

17 kept confidential by the court. In addition, if it is dem18 onstrated that it is reasonable and necessary, the debtor’s 

19 monthly expenses may also include an additional allowance 

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

21 clothing categories as specified by the National Standards 

22 issued by the Internal Revenue Service. 

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

24 include, if applicable, the continuation of actual expenses 

25 paid by the debtor that are reasonable and necessary for 
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1 care and support of an elderly, chronically ill, or disabled 

2 household member or member of the debtor’s immediate 

3 family (including parents, grandparents, siblings, children, 

4 and grandchildren of the debtor, the dependents of the 

5 debtor, and the spouse of the debtor in a joint case who 

6 is not a dependent) and who is unable to pay for such 

7 reasonable and necessary expenses. 

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

9 13, the debtor’s monthly expenses may include the actual 

10 administrative expenses of administering a chapter 13 

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

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

13 determined under schedules issued by the Executive Office 

14 for United States Trustees.

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

16 include the actual expenses for each dependent child less 

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

18 child, to attend a private or public elementary or sec19 ondary school if the debtor provides documentation of such 

20 expenses and a detailed explanation of why such expenses 

21 are reasonable and necessary, and why such expenses are 

22 not already accounted for in the National Standards, 

23 Local Standards, or Other Necessary Expenses referred 

24 to in subclause (I)
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1 ‘‘(V) In addition, the debtor’s monthly expenses may 

2 include an allowance for housing and utilities, in excess 

3 of the allowance specified by the Local Standards for 

4 housing and utilities issued by the Internal Revenue Serv5 ice, based on the actual expenses for home energy costs 

6 if the debtor provides documentation of such actual ex7 penses and demonstrates that such actual expenses are 

8 reasonable and necessary.

9 ‘‘(iii) The debtor’s average monthly payments on ac10 count of secured debts shall be calculated as the sum of—

11 ‘‘(I) the total of all amounts scheduled as con12 tractually due to secured creditors in each month of 

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

14 ‘‘(II) any additional payments to secured credi15 tors necessary for the debtor, in filing a plan under 

16 chapter 13 of this title, to maintain possession of the 

17 debtor’s primary residence, motor vehicle, or other 

18 property necessary for the support of the debtor and 

19 the debtor’s dependents, that serves as collateral for 

20 secured debts; 

21 divided by 60. 

22 ‘‘(iv) The debtor’s expenses for payment of all pri23 ority claims (including priority child support and alimony 

24 claims) shall be calculated as the total amount of debts 

25 entitled to priority, divided by 60. 
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1 ‘‘(B)(i) In any proceeding brought under this sub2 section, the presumption of abuse may only be rebutted 

3 by demonstrating special circumstances that justify addi4 tional expenses or adjustments of current monthly income 

5 for which there is no reasonable alternative. 

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

7 debtor shall be required to itemize each additional expense 

8 or adjustment of income and to provide—

9 ‘‘(I) documentation for such expense or adjust10 ment to income; and 

11 ‘‘(II) a detailed explanation of the special cir12 cumstances that make such expenses or adjustment 

13 to income necessary and reasonable. 

14 ‘‘(iii) The debtor shall attest under oath to the accu15 racy of any information provided to demonstrate that ad16 ditional expenses or adjustments to income are required. 

17 ‘‘(iv) The presumption of abuse may only be rebutted 

18 if the additional expenses or adjustments to income re19 ferred to in clause (i) cause the product of the debtor’s 

20 current monthly income reduced by the amounts deter21 mined under clauses (ii), (iii), and (iv) of subparagraph 

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

23 ‘‘(I) 25 percent of the debtor’s nonpriority un24 secured claims, or $6,000, whichever is greater; or 

25 ‘‘(II) $10,000. 
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1 ‘‘(C) As part of the schedule of current income and 

2 expenditures required under section 521, the debtor shall 

3 include a statement of the debtor’s current monthly in4 come, and the calculations that determine whether a pre5 sumption arises under subparagraph (A)(i), that shows 

6 how each such amount is calculated. 

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

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

9 this chapter in a case in which the presumption in sub10 paragraph (A)(i) of such paragraph does not apply or has 

11 been rebutted, the court shall consider—

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

13 bad faith; or 

14 ‘‘(B) the totality of the circumstances (includ15 ing whether the debtor seeks to reject a personal 

16 services contract and the financial need for such re17 jection as sought by the debtor) of the debtor’s fi18 nancial situation demonstrates abuse.

19 ‘‘(4)(A) The court, on its own initiative or on the mo20 tion of a party in interest, in accordance with the proce21 dures described in rule 9011 of the Federal Rules of 

22 Bankruptcy Procedure, may order the attorney for the 

23 debtor to reimburse the trustee for all reasonable costs 

24 in prosecuting a motion filed under section 707(b), includ25 ing reasonable attorneys’ fees, if—
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1 ‘‘(i) a trustee files a motion for dismissal or 

2 conversion under this subsection; and 

3 ‘‘(ii) the court—

4 ‘‘(I) grants such motion; and 

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

6 for the debtor in filing under this chapter vio7 lated rule 9011 of the Federal Rules of Bank8 ruptcy Procedure. 

9 ‘‘(B) If the court finds that the attorney for the debt10 or violated rule 9011 of the Federal Rules of Bankruptcy 

11 Procedure, the court, on its own initiative or on the motion 

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

13 may order—

14 ‘‘(i) the assessment of an appropriate civil pen15 alty against the attorney for the debtor; and 

16 ‘‘(ii) the payment of such civil penalty to the 

17 trustee, the United States trustee, or the bankruptcy 

18 administrator. 

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

20 motion, the signature of an attorney shall constitute a cer21 tification that the attorney has—

22 ‘‘(i) performed a reasonable investigation into 

23 the circumstances that gave rise to the petition, 

24 pleading, or written motion; and 
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1 ‘‘(ii) determined that the petition, pleading, or 

2 written motion—

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

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

5 good faith argument for the extension, modi6 fication, or reversal of existing law and does not 

7 constitute an abuse under paragraph (1). 

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

9 shall constitute a certification that the attorney has no 

10 knowledge after an inquiry that the information in the 

11 schedules filed with such petition is incorrect. 

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

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

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

15 the procedures described in rule 9011 of the Federal Rules 

16 of Bankruptcy Procedure, may award a debtor all reason17 able costs (including reasonable attorneys’ fees) in con18 testing a motion filed by a party in interest (other than 

19 a trustee, United States trustee, or bankruptcy adminis20 trator) under this subsection if—

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

22 ‘‘(ii) the court finds that—

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

24 motion violated rule 9011 of the Federal Rules 

25 of Bankruptcy Procedure; or 
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1 ‘‘(II) the attorney (if any) who filed the 

2 motion did not comply with the requirements of 

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

4 motion was made solely for the purpose of co5 ercing a debtor into waiving a right guaranteed 

6 to the debtor under this title. 

7 ‘‘(B) A small business that has a claim of an aggre8 gate amount less than $1,000 shall not be subject to sub9 paragraph (A)(ii)(I). 

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

11 ‘‘(i) the term ‘small business’ means an unin12 corporated business, partnership, corporation, asso13 ciation, or organization that—

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

15 as determined on the date on which the motion 

16 is filed; and 

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

18 activity; and 

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

20 owned subsidiary of a corporation includes the em21 ployees of—

22 ‘‘(I) a parent corporation; and 

23 ‘‘(II) any other subsidiary corporation of 

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

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

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

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

6 is equal to or less than— 

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

8 1 person, the median family income of the applicable 

9 State for 1 earner; 

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

11 2, 3, or 4 individuals, the highest median family in12 come of the applicable State for a family of the same 

13 number or fewer individuals; or 

14 ‘‘(C) in the case of a debtor in a household ex15 ceeding 4 individuals, the highest median family in16 come of the applicable State for a family of 4 or 

17 fewer individuals, plus $525 per month for each in18 dividual in excess of 4.

19 ‘‘(7)(A) No judge, United States trustee, trustee, 

20 bankruptcy administrator, or other party in interest may 

21 file a motion under paragraph (2) if the current monthly 

22 income of the debtor and the debtor’s spouse combined, 

23 as of the date of the order for relief when multiplied by 

24 12, is equal to or less than—
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1 ‘‘(i) in the case of a debtor in a household of 

2 1 person, the median family income of the applicable 

3 State for 1 earner; 

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

5 2, 3, or 4 individuals, the highest median family in6 come of the applicable State for a family of the same 

7 number or fewer individuals; or 

8 ‘‘(iii) in the case of a debtor in a household ex9 ceeding 4 individuals, the highest median family in10 come of the applicable State for a family of 4 or 

11 fewer individuals , plus $525 per month for each in12 dividual in excess of 4. 

13 ‘‘(B) In a case that is not a joint case, current month14 ly income of the debtor’s spouse shall not be considered 

15 for purposes of subparagraph (A) if—

16 ‘‘(i)(I) the debtor and the debtor’s spouse are 

17 separated under applicable nonbankruptcy law; or 

18 ‘‘(II) the debtor and the debtor’s spouse are liv19 ing separate and apart, other than for the purpose 

20 of evading subparagraph (A); and 

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

22 of perjury—

23 ‘‘(I) specifying that the debtor meets the 

24 requirement of subclause (I) or (II) of clause 

25 (i); and 
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1 ‘‘(II) disclosing the aggregate, or best esti2 mate of the aggregate, amount of any cash or 

3 money payments received from the debtor’s 

4 spouse attributed to the debtor’s current 

5 monthly income.’’.

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

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

8 the following: 

9 ‘‘(10A) ‘current monthly income’—

10 ‘‘(A) means the average monthly income 

11 from all sources that the debtor receives (or in 

12 a joint case the debtor and the debtor’s spouse 

13 receive) without regard to whether such income 

14 is taxable income, derived during the 6-month 

15 period ending on—

16 ‘‘(i) the last day of the calendar 

17 month immediately preceding the date of 

18 the commencement of the case if the debt19 or files the schedule of current income re20 quired by section 521(a)(1)(B)(ii); or 

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

22 is determined by the court for purposes of 

23 this title if the debtor does not file the 

24 schedule of current income required by sec25 tion 521(a)(1)(B)(ii); and 
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1 ‘‘(B) includes any amount paid by any en2 tity other than the debtor (or in a joint case the 

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

4 basis for the household expenses of the debtor 

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

6 the debtor’s spouse if not otherwise a depend7 ent), but excludes benefits received under the 

8 Social Security Act, payments to victims of war 

9 crimes or crimes against humanity on account 

10 of their status as victims of such crimes, and 

11 payments to victims of international terrorism 

12 (as defined in section 2331 of title 18) or do13 mestic terrorism (as defined in section 2331 of 

14 title 18) on account of their status as victims 

15 of such terrorism;’’. 

16 (c) UNITED STATES TRUSTEE AND BANKRUPTCY

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

18 States Code, is amended—

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

20 shall—’’; and 

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

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

23 in a case under this chapter—

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

25 administrator shall review all materials filed by the 
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1 debtor and, not later than 10 days after the date of 

2 the first meeting of creditors, file with the court a 

3 statement as to whether the debtor’s case would be 

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

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

6 statement under subparagraph (A), the court shall 

7 provide a copy of the statement to all creditors. 

8 ‘‘(2) The United States trustee or bankruptcy admin9 istrator shall, not later than 30 days after the date of fil10 ing a statement under paragraph (1), either file a motion 

11 to dismiss or convert under section 707(b) or file a state12 ment setting forth the reasons the United States trustee 

13 or bankruptcy administrator does not believe that such a 

14 motion would be appropriate, if the United States trustee 

15 or bankruptcy administrator determines that the debtor’s 

16 case should be presumed to be an abuse under section 

17 707(b) and the product of the debtor’s current monthly 

18 income, multiplied by 12 is not less than—

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

20 1 person, the median family income of the applicable 

21 State for 1 earner; or 

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

23 2 or more individuals, the highest median family in24 come of the applicable State for a family of the same 

25 number or fewer individuals .’’. 
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1 (d) NOTICE.—Section 342 of title 11, United States 

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

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

4 the debtor is an individual and in which the presumption 

5 of abuse is triggered under section 707(b), the clerk shall 

6 give written notice to all creditors not later than 10 days 

7 after the date of the filing of the petition that the pre8 sumption of abuse has been triggered.’’. 

9 (e) NONLIMITATION OF INFORMATION.—Nothing in 

10 this title shall limit the ability of a creditor to provide in11 formation to a judge (except for information commu12 nicated ex parte, unless otherwise permitted by applicable 

13 law), United States trustee, bankruptcy administrator or 

14 trustee. 

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

16 of title 11, United States Code, is amended by adding at 

17 the end the following: 

18 ‘‘(c)(1) In this subsection—

19 ‘‘(A) the term ‘crime of violence’ has the mean20 ing given such term in section 16 of title 18; and 

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

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

23 18. 

24 ‘‘(2) Except as provided in paragraph (3), after no25 tice and a hearing, the court, on a motion by the victim 
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1 of a crime of violence or a drug trafficking crime, may 

2 when it is in the best interest of the victim dismiss a vol3 untary case filed under this chapter by a debtor who is 

4 an individual if such individual was convicted of such 

5 crime. 

6 ‘‘(3) The court may not dismiss a case under para7 graph (2) if the debtor establishes by a preponderance of 

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

9 is necessary to satisfy a claim for a domestic support obli10 gation.’’. 

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

12 title 11, United States Code, is amended—

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

14 end; 

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

16 inserting a semicolon; and 

17 (3) by inserting after paragraph (6) the fol18 lowing: 

19 ‘‘(7) the action of the debtor in filing the peti20 tion was in good faith;’’. 

21 (h) APPLICABILITY OF MEANS TEST TO CHAPTER

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

23 amended—

24 (1) in paragraph (1)(B), by inserting ‘‘to unse25 cured creditors’’ after ‘‘to make payments’’; and 
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1 (2) by striking paragraph (2) and inserting the 

2 following: 

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

4 ‘disposable income’ means current monthly income 

5 received by the debtor (other than child support pay6 ments, foster care payments, or disability payments 

7 for a dependent child made in accordance with appli8 cable nonbankruptcy law to the extent reasonably 

9 necessary to be expended for such child) less 

10 amounts reasonably necessary to be expended—

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

12 debtor or a dependent of the debtor or for a do13 mestic support obligation that first becomes 

14 payable after the date the petition is filed and 

15 for charitable contributions (that meet the defi16 nition of ‘charitable contribution’ under section 

17 548(d)(3) to a qualified religious or charitable 

18 entity or organization (as defined in section 

19 548(d)(4)) in an amount not to exceed 15 per20 cent of gross income of the debtor for the year 

21 in which the contributions are made; and 

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

23 for the payment of expenditures necessary for 

24 the continuation, preservation, and operation of 

25 such business. 
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1 ‘‘(3) Amounts reasonably necessary to be ex2 pended under paragraph (2) shall be determined in 

3 accordance with subparagraphs (A) and (B) of sec4 tion 707(b)(2), if the debtor has current monthly in5 come, when multiplied by 12, greater than—

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

7 of 1 person, the median family income of the 

8 applicable State for 1 earner; 

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

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

11 family income of the applicable State for a fam12 ily of the same number or fewer individuals; or 

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

14 exceeding 4 individuals, the highest median 

15 family income of the applicable State for a fam16 ily of 4 or fewer individuals , plus $525 per 

17 month for each individual in excess of 4.’’.

18 (i) SPECIAL ALLOWANCE FOR HEALTH INSUR19 ANCE.—Section 1329(a) of title 11, United States Code, 

20 is amended—

21 (1) in paragraph (2) by striking ‘‘or’’ at the 

22 end; 

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

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

25 (3) by adding at the end the following: 
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1 ‘‘(4) reduce amounts to be paid under the plan 

2 by the actual amount expended by the debtor to pur3 chase health insurance for the debtor (and for any 

4 dependent of the debtor if such dependent does not 

5 otherwise have health insurance coverage) if the 

6 debtor documents the cost of such insurance and 

7 demonstrates that—

8 ‘‘(A) such expenses are reasonable and 

9 necessary; 

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

11 health insurance, the amount is not materially 

12 larger than the cost the debtor previously paid 

13 or the cost necessary to maintain the lapsed 

14 policy; or 

15 ‘‘(ii) if the debtor did not have health in16 surance, the amount is not materially larger 

17 than the reasonable cost that would be incurred 

18 by a debtor who purchases health insurance, 

19 who has similar income, expenses, age, and 

20 health status, and who lives in the same geo21 graphical location with the same number of de22 pendents who do not otherwise have health in23 surance coverage; and 
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1 ‘‘(C) the amount is not otherwise allowed 

2 for purposes of determining disposable income 

3 under section 1325(b) of this title; 

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

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

6 (j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

7 104(b) of title 11, United States Code, is amended by 

8 striking ‘‘and 523(a)(2)(C)’’ each place it appears and in9 serting ‘‘523(a)(2)(C), 707(b), and 1325(b)(3)’’.

10 (k) DEFINITION OF ‘MEDIAN FAMILY INCOME’.—

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

12 by inserting after paragraph (39) the following: 

13 ‘‘(39A) ‘median family income’ means for any 

14 year—

15 ‘‘(A) the median family income both cal16 culated and reported by the Bureau of the Cen17 sus in the then most recent year; and 

18 ‘‘(B) if not so calculated and reported in 

19 the then current year, adjusted annually after 

20 such most recent year until the next year in 

21 which median family income is both calculated 

22 and reported by the Bureau of the Census, to 

23 reflect the percentage change in the Consumer 

24 Price Index for All Urban Consumers during 
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1 the period of years occurring after such most 

2 recent year and before such current year;’’. 

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

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

5 by striking the item relating to section 707 and inserting 

6 the following:

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

7 SEC. 103. SENSE OF CONGRESS AND STUDY. 

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

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

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

13 United States Code. 

14 (b) STUDY.—

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

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

17 the Executive Office for United States Trustees shall 

18 submit a report to the Committee on the Judiciary 

19 of the Senate and the Committee on the Judiciary 

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

23 (A) the current monthly expenses of a 

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

25 States Code; and 
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1 (B) the impact that the application of such 

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

4 (2) RECOMMENDATION.—The report under 

5 paragraph (1) may include recommendations for 

6 amendments to title 11, United States Code, that 

7 are consistent with the findings of the Director 

8 under paragraph (1). 

9 SEC. 104. NOTICE OF ALTERNATIVES. 

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

11 amended to read as follows: 

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

13 title by an individual whose debts are primarily consumer 

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

15 containing—

16 ‘‘(1) a brief description of—

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

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

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

21 credit counseling agencies; and 

22 ‘‘(2) statements specifying that—

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

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

2 fine, imprisonment, or both; and 

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

4 in connection with a bankruptcy case is subject 

5 to examination by the Attorney General.’’. 

6 SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING 

7 TEST PROGRAM. 

8 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

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

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

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

13 field of debtor education, including trustees who serve in 

14 cases under chapter 13 of title 11, United States Code, 

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

18 to educate debtors who are individuals on how to better 

19 manage their finances. 

20 (b) TEST.—

21 (1) SELECTION OF DISTRICTS.—The Director 

22 shall select 6 judicial districts of the United States 

23 in which to test the effectiveness of the financial 

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

2 not later than 270 days after the date of enactment 

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

4 for the 6 judicial districts selected under paragraph 

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

7 111 of title 11, United States Code. 

8 (c) EVALUATION.—

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

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

11 evaluate the effectiveness of—

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

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

17 Report of the National Bankruptcy Review 

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

20 carried out by the credit industry, by trustees 

21 serving under chapter 13 of title 11, United 

22 States Code, and by consumer counseling 

23 groups. 

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

25 concluding such evaluation, the Director shall sub-
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1 mit a report to the Speaker of the House of Rep2 resentatives and the President pro tempore of the 

3 Senate, for referral to the appropriate committees of 

4 the Congress, containing the findings of the Director 

5 regarding the effectiveness of such curriculum, such 

6 materials, and such programs and their costs. 

7 SEC. 106. CREDIT COUNSELING. 

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

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

10 the following: 

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

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

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

16 from an approved nonprofit budget and credit counseling 

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

18 briefing (including a briefing conducted by telephone or 

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

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

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

24 States trustee or bankruptcy administrator of the bank25 ruptcy court of that district determines that the approved 
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1 nonprofit budget and credit counseling agencies for that 

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

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

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

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

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

12 credit counseling agency may be disapproved by the 

13 United States trustee or bankruptcy administrator at any 

14 time. 

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

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

18 ‘‘(i) describes exigent circumstances that merit 

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

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

21 counseling services from an approved nonprofit 

22 budget and credit counseling agency, but was unable 

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

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

25 which the debtor made that request; and 
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1 ‘‘(iii) is satisfactory to the court. 

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

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

4 the date on which the debtor meets the requirements of 

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

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

8 order an additional 15 days.’’.

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

10 11, United States Code, is amended—

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

12 end; 

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

14 and inserting ‘‘; or’’; and 

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

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

17 failed to complete an instructional course concerning 

18 personal financial management described in section 

19 111, except that this paragraph shall not apply with 

20 respect to a debtor who resides in a district for 

21 which the United States trustee or bankruptcy ad22 ministrator of such district determines that the ap23 proved instructional courses are not adequate to 

24 service the additional individuals required to com25 plete such instructional courses under this section 
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1 (Each United States trustee or bankruptcy adminis2 trator who makes a determination described in this 

3 paragraph shall review such determination not later 

4 than 1 year after the date of such determination, 

5 and not less frequently than annually thereafter.).’’. 

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

7 11, United States Code, is amended by adding at the end 

8 the following: 

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

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

11 debtor has completed an instructional course concerning 

12 personal financial management described in section 111. 

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

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

15 States trustee or bankruptcy administrator of such district 

16 determines that the approved instructional courses are not 

17 adequate to service the additional individuals who would 

18 be required to complete such instructional course by rea19 son of the requirements of this section. 

20 ‘‘(3) Each United States trustee or bankruptcy ad21 ministrator who makes a determination described in para22 graph (2) shall review such determination not later than 

23 1 year after the date of such determination, and not less 

24 frequently than annually thereafter.’’. 
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1 (c) CHAPTER 13 DISCHARGE.—Section 1328 of title 

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

3 the following: 

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

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

6 has completed an instructional course concerning personal 

7 financial management described in section 111. 

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

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

10 States trustee or bankruptcy administrator of the bank11 ruptcy court of that district determines that the approved 

12 instructional courses are not adequate to service the addi13 tional individuals who would be required to complete the 

14 instructional course by reason of the requirements of this 

15 section. 

16 ‘‘(i) Each United States trustee or bankruptcy ad17 ministrator that makes a determination described in sub18 section (h) shall review that determination not later than 

19 1 year after the date of that determination, and not less 

20 frequently than every year thereafter.’’. 

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

22 United States Code, is amended—

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

24 shall—’’; and 

25 (2) by adding at the end the following: 
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1 ‘‘(b) In addition to the requirements under subsection 

2 (a), a debtor who is an individual shall file with the 

3 court—

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

5 budget and credit counseling agency that provided 

6 the debtor services under section 109(h) describing 

7 the services provided to the debtor; and 

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

9 developed under section 109(h) through the ap10 proved nonprofit budget and credit counseling agen11 cy referred to in paragraph (1).’’. 

12 (e) GENERAL PROVISIONS.—

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

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

15 following: 

16 ‘‘§ 111. Credit counseling agencies; financial manage17 ment instructional courses 

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

19 of—

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

21 or more programs described in section 109(h) cur22 rently approved by the United States trustee or the 

23 bankruptcy administrator for the district, as applica24 ble; and 
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1 ‘‘(2) instructional courses concerning personal 

2 financial management currently approved by the 

3 United States trustee or the bankruptcy adminis4 trator for the district, as applicable. 

5 ‘‘(b) The United States trustee or bankruptcy admin6 istrator shall only approve a credit counseling agency or 

7 instructional course concerning personal financial manage8 ment as follows: 

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

10 administrator shall have thoroughly reviewed the 

11 qualifications of the credit counseling agency or of 

12 the provider of the instructional course under the 

13 standards set forth in this section, and the programs 

14 or instructional courses which will be offered by such 

15 agency or provider, and may require an agency or 

16 provider of an instructional course which has sought 

17 approval to provide information with respect to such 

18 review. 

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

20 administrator shall have determined that the credit 

21 counseling agency or instructional course fully satis22 fies the applicable standards set forth in this section. 

23 ‘‘(3) When an agency or instructional course is 

24 initially approved, such approval shall be for a pro25 bationary period not to exceed 6 months. An agency 
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1 or instructional course is initially approved if it did 

2 not appear on the approved list for the district 

3 under subsection (a) immediately prior to approval. 

4 ‘‘(4) At the conclusion of the probationary pe5 riod under paragraph (3), the United States trustee 

6 or bankruptcy administrator may only approve for 

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

8 year periods thereafter, any agency or instructional 

9 course which has demonstrated during the proba10 tionary or subsequent period that such agency or in11 structional course—

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

13 this section during such period; and 

14 ‘‘(B) can satisfy such standards in the fu15 ture. 

16 ‘‘(5) Not later than 30 days after any final de17 cision under paragraph (4), that occurs either after 

18 the expiration of the initial probationary period, or 

19 after any 2-year period thereafter, an interested per20 son may seek judicial review of such decision in the 

21 appropriate district court of the United States. 

22 ‘‘(c)(1) The United States trustee or bankruptcy ad23 ministrator shall only approve a credit counseling agency 

24 that demonstrates that it will provide qualified counselors, 

25 maintain adequate provision for safekeeping and payment 
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1 of client funds, provide adequate counseling with respect 

2 to client credit problems, and deal responsibly and effec3 tively with other matters as relate to the quality, effective4 ness, and financial security of such programs. 

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

6 bankruptcy administrator, a credit counseling agency 

7 shall, at a minimum—

8 ‘‘(A) be a nonprofit budget and credit coun9 seling agency, the majority of the board of directors 

10 of which— 

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

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

13 financially from the outcome of a credit coun14 seling session; 

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

16 charge a reasonable fee, and provide services without 

17 regard to ability to pay the fee; 

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

19 client funds, including an annual audit of the trust 

20 accounts and appropriate employee bonding; 

21 ‘‘(D) provide full disclosures to clients, includ22 ing funding sources, counselor qualifications, pos23 sible impact on credit reports, and any costs of such 

24 program that will be paid by the debtor and how 

25 such costs will be paid; 
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1 ‘‘(E) provide adequate counseling with respect 

2 to client credit problems that includes an analysis of 

3 their current situation, what brought them to that 

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

5 handle the problem without incurring negative amor6 tization of their debts; 

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

8 commissions or bonuses based on the counseling ses9 sion outcome, and who have adequate experience, 

10 and have been adequately trained to provide coun11 seling services to individuals in financial difficulty, 

12 including the matters described in subparagraph 

13 (E); 

14 ‘‘(G) demonstrate adequate experience and 

15 background in providing credit counseling; and 

16 ‘‘(H) have adequate financial resources to pro17 vide continuing support services for budgeting plans 

18 over the life of any repayment plan. 

19 ‘‘(d) The United States trustee or bankruptcy admin20 istrator shall only approve an instructional course con21 cerning personal financial management—

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

23 subsection (b)(3) if the course will provide at a min24 imum—
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1 ‘‘(A) trained personnel with adequate expe2 rience and training in providing effective in3 struction and services; 

4 ‘‘(B) learning materials and teaching 

5 methodologies designed to assist debtors in un6 derstanding personal financial management and 

7 that are consistent with stated objectives di8 rectly related to the goals of such instructional 

9 course; 

10 ‘‘(C) adequate facilities situated in reason11 ably convenient locations at which such instruc12 tional course is offered, except that such facili13 ties may include the provision of such instruc14 tional course or program by telephone or 

15 through the Internet, if such instructional 

16 course or program is effective; and 

17 ‘‘(D) the preparation and retention of rea18 sonable records (which shall include the debt19 or’s bankruptcy case number) to permit evalua20 tion of the effectiveness of such instructional 

21 course or program, including any evaluation of 

22 satisfaction of instructional course or program 

23 requirements for each debtor attending such in24 structional course or program, which shall be 

25 available for inspection and evaluation by the 
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1 Executive Office for United States Trustees, 

2 the United States trustee, bankruptcy adminis3 trator, or chief bankruptcy judge for the district 

4 in which such instructional course or program 

5 is offered; and 

6 ‘‘(2) for any 1-year period if the provider there7 of has demonstrated that the course meets the 

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

9 ‘‘(A) has been effective in assisting a sub10 stantial number of debtors to understand per11 sonal financial management; and 

12 ‘‘(B) is otherwise likely to increase sub13 stantially debtor understanding of personal fi14 nancial management. 

15 ‘‘(e) The district court may, at any time, investigate 

16 the qualifications of a credit counseling agency referred 

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

18 to ensure the integrity and effectiveness of such credit 

19 counseling agencies. The district court may, at any time, 

20 remove from the approved list under subsection (a) a cred21 it counseling agency upon finding such agency does not 

22 meet the qualifications of subsection (b). 

23 ‘‘(f) The United States trustee or bankruptcy admin24 istrator shall notify the clerk that a credit counseling 

25 agency or an instructional course is no longer approved, 
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1 in which case the clerk shall remove it from the list main2 tained under subsection (a). 

3 ‘‘(g)(1) No credit counseling agency may provide to 

4 a credit reporting agency information concerning whether 

5 a debtor who has received or sought instruction concerning 

6 personal financial management from the credit counseling 

7 agency. 

8 ‘‘(2) A credit counseling agency that willfully or neg9 ligently fails to comply with any requirement under this 

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

11 in an amount equal to the sum of—

12 ‘‘(A) any actual damages sustained by the debt13 or as a result of the violation; and 

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

15 fees (as determined by the court) incurred in an ac16 tion to recover those damages.’’. 

17 (2) CLERICAL AMENDMENT.—The table of sec18 tions for chapter 1 of title 11, United States Code, 

19 is amended by adding at the end the following:

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

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

21 States Code, is amended by adding at the end the fol22 lowing: 

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

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

25 for purposes of subsection (c)(3), any subsequent case 
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1 commenced by the debtor under any such chapter shall 

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

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

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

5 automatic stay has been terminated.’’. 

6 SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY 

7 EXPENSES. 

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

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

10 Executive Office for United States Trustees shall, not 

11 later than 180 days after the date of enactment of this 

12 Act, issue schedules of reasonable and necessary adminis13 trative expenses of administering a chapter 13 plan for 

14 each judicial district of the United States. 

15 TITLE II—ENHANCED 

16 CONSUMER PROTECTION 

17 Subtitle A—Penalties for Abusive 

18 Creditor Practices 

19 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU20 TION. 

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

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

23 following: 

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

25 after a hearing, may reduce a claim filed under this sec-
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1 tion based in whole on an unsecured consumer debt by 

2 not more than 20 percent of the claim, if—

3 ‘‘(A) the claim was filed by a creditor who un4 reasonably refused to negotiate a reasonable alter5 native repayment schedule proposed by an approved 

6 credit counseling agency described in section 111 

7 acting on behalf of the debtor; 

8 ‘‘(B) the offer of the debtor under subpara9 graph (A)—

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

11 filing of the petition; and 

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

13 percent of the amount of the debt over a period 

14 not to exceed the repayment period of the loan, 

15 or a reasonable extension thereof; and 

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

17 repayment schedule is nondischargeable. 

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

19 clear and convincing evidence, that—

20 ‘‘(A) the creditor unreasonably refused to con21 sider the debtor’s proposal; and 

22 ‘‘(B) the proposed alternative repayment sched23 ule was made prior to expiration of the 60-day pe24 riod specified in paragraph (1)(B)(i).’’. 
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1 (b) LIMITATION ON AVOIDABILITY.—Section 547 of 

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

3 end the following: 

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

5 transfer was made as a part of an alternative repayment 

6 plan between the debtor and any creditor of the debtor 

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

8 SEC. 202. EFFECT OF DISCHARGE. 

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

10 amended by adding at the end the following: 

11 ‘‘(i) The willful failure of a creditor to credit pay12 ments received under a plan confirmed under this title, 

13 unless the order confirming the plan is revoked, the plan 

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

15 required to be made under the plan in the manner re16 quired by the plan (including crediting the amounts re17 quired under the plan), shall constitute a violation of an 

18 injunction under subsection (a)(2) if the act of the creditor 

19 to collect and failure to credit payments in the manner 

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

21 ‘‘(j) Subsection (a)(2) does not operate as an injunc22 tion against an act by a creditor that is the holder of a 

23 secured claim, if—
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1 ‘‘(1) such creditor retains a security interest in 

2 real property that is the principal residence of the 

3 debtor; 

4 ‘‘(2) such act is in the ordinary course of busi5 ness between the creditor and the debtor; and 

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

7 periodic payments associated with a valid security 

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

9 the lien.’’. 

10 SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION 

11 PRACTICES. 

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

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

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

15 and inserting the following: 

16 ‘‘(2) the debtor received the disclosures de17 scribed in subsection (k) at or before the time at 

18 which the debtor signed the agreement;’’; and 

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

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

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

22 in paragraph (3), completed as required in that para23 graph, together with the agreement, statement, declara24 tion, motion and order described, respectively, in para-
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1 graphs (4) through (8), and shall be the only disclosures 

2 required in connection with the reaffirmation. 

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

4 made clearly and conspicuously and in writing. The terms 

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

6 be disclosed more conspicuously than other terms, data or 

7 information provided in connection with this disclosure, 

8 except that the phrases ‘Before agreeing to reaffirm a 

9 debt, review these important disclosures’ and ‘Summary 

10 of Reaffirmation Agreement’ may be equally conspicuous. 

11 Disclosures may be made in a different order and may 

12 use terminology different from that set forth in para13 graphs (2) through (8), except that the terms ‘Amount 

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

15 where indicated. 

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

17 paragraph shall consist of the following: 

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

19 to reaffirm a debt, review these important disclo20 sures:’; 

21 ‘‘(B) Under the heading ‘Summary of Reaffir22 mation Agreement’, the statement: ‘This Summary 

23 is made pursuant to the requirements of the Bank24 ruptcy Code’; 
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1 ‘‘(C) The ‘Amount Reaffirmed’, using that 

2 term, which shall be—

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

4 agrees to reaffirm, and 

5 ‘‘(ii) the total of any other fees or cost ac6 crued as of the date of the disclosure statement. 

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

8 ‘Amount Reaffirmed’, the statements—

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

10 to reaffirm’; and 

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

12 you to pay additional amounts which may come 

13 due after the date of this disclosure. Consult 

14 your credit agreement.’. 

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

16 term, which shall be disclosed as—

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

18 debt is an extension of credit under an open 

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

20 end credit plan’ are defined in section 103 of 

21 the Truth in Lending Act, then—

22 ‘‘(I) the annual percentage rate deter23 mined under paragraphs (5) and (6) of 

24 section 127(b) of the Truth in Lending 

25 Act, as applicable, as disclosed to the debt-
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1 or in the most recent periodic statement 

2 prior to the agreement or, if no such peri3 odic statement has been given to the debt4 or during the prior 6 months, the annual 

5 percentage rate as it would have been so 

6 disclosed at the time the disclosure state7 ment is given to the debtor, or to the ex8 tent this annual percentage rate is not 

9 readily available or not applicable, then 

10 ‘‘(II) the simple interest rate applica11 ble to the amount reaffirmed as of the date 

12 the disclosure statement is given to the 

13 debtor, or if different simple interest rates 

14 apply to different balances, the simple in15 terest rate applicable to each such balance, 

16 identifying the amount of each such bal17 ance included in the amount reaffirmed, or 

18 ‘‘(III) if the entity making the disclo19 sure elects, to disclose the annual percent20 age rate under subclause (I) and the sim21 ple interest rate under subclause (II); 

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

23 debt is an extension of credit other than under 

24 an open end credit plan, as the terms ‘credit’ 
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1 and ‘open end credit plan’ are defined in section 

2 103 of the Truth in Lending Act, then—

3 ‘‘(I) the annual percentage rate under 

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

5 Act, as disclosed to the debtor in the most 

6 recent disclosure statement given to the 

7 debtor prior to the reaffirmation agree8 ment with respect to the debt, or, if no 

9 such disclosure statement was given to the 

10 debtor, the annual percentage rate as it 

11 would have been so disclosed at the time 

12 the disclosure statement is given to the 

13 debtor, or to the extent this annual per14 centage rate is not readily available or not 

15 applicable, then 

16 ‘‘(II) the simple interest rate applica17 ble to the amount reaffirmed as of the date 

18 the disclosure statement is given to the 

19 debtor, or if different simple interest rates 

20 apply to different balances, the simple in21 terest rate applicable to each such balance, 

22 identifying the amount of such balance in23 cluded in the amount reaffirmed, or 

24 ‘‘(III) if the entity making the disclo25 sure elects, to disclose the annual percent-
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1 age rate under (I) and the simple interest 

2 rate under (II). 

3 ‘‘(F) If the underlying debt transaction was dis4 closed as a variable rate transaction on the most re5 cent disclosure given under the Truth in Lending 

6 Act, by stating ‘The interest rate on your loan may 

7 be a variable interest rate which changes from time 

8 to time, so that the annual percentage rate disclosed 

9 here may be higher or lower.’. 

10 ‘‘(G) If the debt is secured by a security inter11 est which has not been waived in whole or in part 

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

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

14 a security interest or lien in goods or property is as15 serted over some or all of the obligations the debtor 

16 is reaffirming and listing the items and their origi17 nal purchase price that are subject to the asserted 

18 security interest, or if not a purchase-money security 

19 interest then listing by items or types and the origi20 nal amount of the loan. 

21 ‘‘(H) At the election of the creditor, a state22 ment of the repayment schedule using 1 or a com23 bination of the following—

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

25 payment in the amount of $lll is due on 
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1 lll but the future payment amount may be 

2 different. Consult your reaffirmation or credit 

3 agreement, as applicable.’, and stating the 

4 amount of the first payment and the due date 

5 of that payment in the places provided; 

6 ‘‘(ii) by making the statement: ‘Your pay7 ment schedule will be:’, and describing the re8 payment schedule with the number, amount and 

9 due dates or period of payments scheduled to 

10 repay the obligations reaffirmed to the extent 

11 then known by the disclosing party; or 

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

13 obligations with reasonable specificity to the ex14 tent then known by the disclosing party. 

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

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

17 does not use the word ‘‘may’’ to give the creditor 

18 specific permission. The word ‘‘may’’ is used to tell 

19 you what might occur if the law permits the creditor 

20 to take the action. If you have questions about your 

21 reaffirmation or what the law requires, talk to the 

22 attorney who helped you negotiate this agreement. If 

23 you don’t have an attorney helping you, the judge 

24 will explain the effect of your reaffirmation when the 

25 reaffirmation hearing is held.’. 
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1 ‘‘(J)(i) The following additional statements: 

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

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

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

5 completed, the reaffirmation agreement is not effective, 

6 even though you have signed it. 

7 ‘‘ ‘1. Read the disclosures in this Part A care8 fully. Consider the decision to reaffirm carefully. 

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

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

11 agreement you and your creditor agree on). 

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

13 can afford to make the payments you are agreeing 

14 to make and have received a copy of the disclosure 

15 statement and a completed and signed reaffirmation 

16 agreement. 

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

18 during the negotiation of the reaffirmation agree19 ment, the attorney must have signed the certification 

20 in Part C. 

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

22 during the negotiation of the reaffirmation agree23 ment, you must have completed and signed Part E. 

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

25 filed with the court by you or your creditor. If a sep-
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1 arate reaffirmation agreement (other than the one in 

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

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

4 during the negotiation of the reaffirmation agree5 ment, your reaffirmation agreement becomes effec6 tive upon filing with the court unless the reaffirma7 tion is presumed to be an undue hardship as ex8 plained in Part D. 

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

10 during the negotiation of the reaffirmation agree11 ment, it will not be effective unless the court ap12 proves it. The court will notify you of the hearing on 

13 your reaffirmation agreement. You must attend this 

14 hearing in bankruptcy court where the judge will re15 view your agreement. The bankruptcy court must 

16 approve the agreement as consistent with your best 

17 interests, except that no court approval is required 

18 if the agreement is for a consumer debt secured by 

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

20 on your real property, like your home. 

21 ‘‘ ‘Your right to rescind a reaffirmation. You may re22 scind (cancel) your reaffirmation at any time before the 

23 bankruptcy court enters a discharge order or within 60 

24 days after the agreement is filed with the court, whichever 
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1 is longer. To rescind or cancel, you must notify the cred2 itor that the agreement is canceled. 

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

4 A reaffirmed debt remains your personal legal obligation. 

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

6 if you default on your reaffirmed debt after your bank7 ruptcy is over, your creditor may be able to take your 

8 property or your wages. Otherwise, your obligations will 

9 be determined by the reaffirmation agreement which may 

10 have changed the terms of the original agreement. For ex11 ample, if you are reaffirming an open end credit agree12 ment, the creditor may be permitted by that agreement 

13 or applicable law to change the terms of the agreement 

14 in the future under certain conditions. 

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

16 agreement by any law? No, you are not required to reaf17 firm a debt by any law. Only agree to reaffirm a debt if 

18 it is in your best interest. Be sure you can afford the pay19 ments you agree to make. 

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

21 lien? Your bankruptcy discharge does not eliminate any 

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

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

24 Even if you do not reaffirm and your personal liability 

25 on the debt is discharged, because of the lien your creditor 
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1 may still have the right to take the security property if 

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

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

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

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

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

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

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

9 ‘‘(ii) In the case of a reaffirmation under sub10 section (m)(2), numbered paragraph 6 in the disclo11 sures required by clause (i) of this subparagraph 

12 shall read as follows: 

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

14 during the negotiation of the reaffirmation agree15 ment, your reaffirmation agreement becomes effec16 tive upon filing with the court.’. 

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

18 under this paragraph shall consist of the following: 

19 ‘‘ ‘Part B: Reaffirmation Agreement. I/we agree to re20 affirm the obligations arising under the credit agreement 

21 described below. 

22 ‘‘ ‘Brief description of credit agreement: 

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

24 made as part of this reaffirmation agreement: 

25 ‘‘ ‘Signature: Date: 
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1 ‘‘ ‘Borrower: 

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

3 ‘‘ ‘Accepted by creditor: 

4 ‘‘ ‘Date of creditor acceptance:’. 

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

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

7 Any). 

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

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

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

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

12 fully advised the debtor of the legal effect and con13 sequences of this agreement and any default under this 

14 agreement. 

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

16 ‘‘(B) In the case of reaffirmations in which a pre17 sumption of undue hardship has been established, the cer18 tification shall state that in the opinion of the attorney, 

19 the debtor is able to make the payment. 

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

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

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

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

24 filing with the court, shall consist of the following: 
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1 ‘‘ ‘Part D: Debtor’s Statement in Support of Reaffir2 mation Agreement. 

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

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

5 make the payments on the reaffirmed debt because my 

6 monthly income (take home pay plus any other income re7 ceived) is $lll, and my actual current monthly ex8 penses including monthly payments on post-bankruptcy 

9 debt and other reaffirmation agreements total $lll, 

10 leaving $lll to make the required payments on this 

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

12 monthly expenses does not leave enough to make the pay13 ments, this reaffirmation agreement is presumed to be an 

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

15 However, this presumption may be overcome if I explain 

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

17 the payments here: lll. 

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

19 Statement in Part A and a completed and signed reaffir20 mation agreement.’. 

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

22 and is reaffirming a debt owed to a creditor defined in 

23 section 19(b)(1)(A)(iv) of the Federal Reserve Act, the 

24 statement of support of the reaffirmation agreement, 
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1 which the debtor shall sign and date prior to filing with 

2 the court, shall consist of the following: 

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

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

5 I received a copy of the Reaffirmation Disclosure State6 ment in Part A and a completed and signed reaffirmation 

7 agreement.’. 

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

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

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

11 party, shall consist of the following: 

12 ‘‘ ‘Part E: Motion for Court Approval (To be com13 pleted only where debtor is not represented by an attor14 ney.). I (we), the debtor, affirm the following to be true 

15 and correct: 

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

17 with this reaffirmation agreement. 

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

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

20 Statement in Support of this reaffirmation agreement 

21 above, and because (provide any additional relevant rea22 sons the court should consider): 

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

24 this reaffirmation agreement.’. 
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1 ‘‘(8) The court order, which may be used to approve 

2 a reaffirmation, shall consist of the following: 

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

4 and approves the reaffirmation agreement described 

5 above.’.

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

7 the following shall apply: 

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

9 debtor before and after the filing of a reaffirmation 

10 agreement with the court. 

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

12 debtor under a reaffirmation agreement which the 

13 creditor believes in good faith to be effective. 

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

15 (k) shall be satisfied if disclosures required under 

16 those subsections are given in good faith. 

17 ‘‘(m)(1) Until 60 days after a reaffirmation agree18 ment is filed with the court (or such additional period as 

19 the court, after notice and a hearing and for cause, orders 

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

21 that the reaffirmation agreement is an undue hardship on 

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

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

24 signed statement in support of the reaffirmation agree25 ment required under subsection (k)(6)(A) is less than the 
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1 scheduled payments on the reaffirmed debt. This pre2 sumption shall be reviewed by the court. The presumption 

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

4 includes an explanation which identifies additional sources 

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

6 terms of the reaffirmation agreement. If the presumption 

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

8 may disapprove the agreement. No agreement shall be dis9 approved without notice and a hearing to the debtor and 

10 creditor and such hearing shall be concluded before the 

11 entry of the debtor’s discharge. 

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

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

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

15 (b) LAW ENFORCEMENT.—

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

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

18 following: 

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

20 agents of the Federal Bureau of Inves21 tigation to address abusive reaffirma22 tions of debt and materially fraudulent 

23 statements in bankruptcy schedules 

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

25 United States shall designate the individuals described in 
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1 subsection (b) to have primary responsibility in carrying 

2 out enforcement activities in addressing violations of sec3 tion 152 or 157 relating to abusive reaffirmations of debt. 

4 In addition to addressing the violations referred to in the 

5 preceding sentence, the individuals described under sub6 section (b) shall address violations of section 152 or 157 

7 relating to materially fraudulent statements in bankruptcy 

8 schedules that are intentionally false or intentionally mis9 leading. 

10 ‘‘(b) UNITED STATES DISTRICT ATTORNEYS AND

11 AGENTS OF THE FEDERAL BUREAU OF INVESTIGA12 TION.—The individuals referred to in subsection (a) are—

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

14 district of the United States; and 

15 ‘‘(2) an agent of the Federal Bureau of Inves16 tigation (within the meaning of section 3107) for 

17 each field office of the Federal Bureau of Investiga18 tion. 

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

20 States attorney designated under this section shall, in ad21 dition to any other responsibilities, have primary responsi22 bility for carrying out the duties of a United States attor23 ney under section 3057. 

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

25 courts shall establish procedures for referring any case 
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1 which may contain a materially fraudulent statement in 

2 a bankruptcy schedule to the individuals designated under 

3 this section.’’. 

4 (2) CLERICAL AMENDMENT.—The analysis for 

5 chapter 9 of title 18, United States Code, is amend6 ed by adding at the end the following:

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

of Investigation to address abusive reaffirmations of debt and 

materially fraudulent statements in bankruptcy schedules.’’.

7 SEC. 204. PRESERVATION OF CLAIMS AND DEFENSES UPON 

8 SALE OF PREDATORY LOANS. 

9 Section 363 of title 11, United States Code, is 

10 amended—

11 (1) by redesignating subsection (o) as sub12 section (p), and 

13 (2) by inserting after subsection (n) the fol14 lowing: 

15 ‘‘(o) Notwithstanding subsection (f), if a person pur16 chases any interest in a consumer credit transaction that 

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

18 a consumer credit contract (as defined in section 433.1 

19 of title 16 of the Code of Federal Regulations (January 

20 1, 2001), as amended from time to time), and if such in21 terest is purchased through a sale under this section, then 

22 such person shall remain subject to all claims and defenses 

23 that are related to such consumer credit transaction or 

24 such consumer credit contract, to the same extent as such 
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1 person would be subject to such claims and defenses of 

2 the consumer had such interest been purchased at a sale 

3 not under this section.’’.

4 SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION 

5 PROCESS. 

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

7 States shall conduct a study of the reaffirmation process 

8 that occurs under title 11 of the United States Code, to 

9 determine the overall treatment of consumers within the 

10 context of such process, and shall include in such study 

11 consideration of—

12 (1) the policies and activities of creditors with 

13 respect to reaffirmation; and 

14 (2) whether consumers are fully, fairly, and 

15 consistently informed of their rights pursuant to 

16 such title. 

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

18 months after the date of enactment of this Act, the Comp19 troller General shall submit to the President pro tempore 

20 of the Senate and the Speaker of the House of Represent21 atives a report on the results of the study conducted under 

22 subsection (a), together with recommendations for legisla23 tion (if any) to address any abusive or coercive tactics 

24 found in connection with the reaffirmation process that 

25 occurs under title 11 of the United States Code.
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1 Subtitle B—Priority Child Support 

2 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA3 TION. 

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

5 amended—

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

7 (2) by inserting after paragraph (14) the fol8 lowing: 

9 ‘‘(14A) ‘domestic support obligation’ means a 

10 debt that accrues before or after the entry of an 

11 order for relief under this title, including interest 

12 that accrues on that debt as provided under applica13 ble nonbankruptcy law notwithstanding any other 

14 provision of this title, that is—

15 ‘‘(A) owed to or recoverable by—

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

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

18 guardian, or responsible relative; or 

19 ‘‘(ii) a governmental unit; 

20 ‘‘(B) in the nature of alimony, mainte21 nance, or support (including assistance provided 

22 by a governmental unit) of such spouse, former 

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

24 parent, without regard to whether such debt is 

25 expressly so designated; 
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1 ‘‘(C) established or subject to establish2 ment before or after entry of an order for relief 

3 under this title, by reason of applicable provi4 sions of—

5 ‘‘(i) a separation agreement, divorce 

6 decree, or property settlement agreement; 

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

8 ‘‘(iii) a determination made in accord9 ance with applicable nonbankruptcy law by 

10 a governmental unit; and 

11 ‘‘(D) not assigned to a nongovernmental 

12 entity, unless that obligation is assigned volun13 tarily by the spouse, former spouse, child, or 

14 parent, legal guardian, or responsible relative of 

15 the child for the purpose of collecting the 

16 debt;’’.

17 SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP18 PORT OBLIGATIONS. 

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

20 amended—

21 (1) by striking paragraph (7); 

22 (2) by redesignating paragraphs (1) through 

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

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

25 striking ‘‘First’’ and inserting ‘‘Second’’; 
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1 (4) in paragraph (3), as so redesignated, by 

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

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

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

5 ‘‘Fourth’’; and 

6 (B) by striking the semicolon at the end 

7 and inserting a period; 

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

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

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

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

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

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

14 (9) by inserting before paragraph (2), as so re15 designated, the following: 

16 ‘‘(1) First: 

17 ‘‘(A) Allowed unsecured claims for domes18 tic support obligations that, as of the date of 

19 the filing of the petition, are owed to or recover20 able by a spouse, former spouse, or child of the 

21 debtor, or the parent, legal guardian, or respon22 sible relative of such child, without regard to 

23 whether the claim is filed by such person or is 

24 filed by a governmental unit on behalf of that 

25 person, on the condition that funds received 
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1 under this paragraph by a governmental unit 

2 under this title after the date of the filing of 

3 the petition shall be applied and distributed in 

4 accordance with applicable nonbankruptcy law. 

5 ‘‘(B) Subject to claims under subpara6 graph (A), allowed unsecured claims for domes7 tic support obligations that, as of the date the 

8 petition was filed are assigned by a spouse, 

9 former spouse, child of the debtor, or such 

10 child’s parent, legal guardian, or responsible 

11 relative to a governmental unit (unless such ob12 ligation is assigned voluntarily by the spouse, 

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

14 responsible relative of the child for the purpose 

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

16 recoverable by a governmental unit under appli17 cable nonbankruptcy law, on the condition that 

18 funds received under this paragraph by a gov19 ernmental unit under this title after the date of 

20 the filing of the petition be applied and distrib21 uted in accordance with applicable nonbank22 ruptcy law. 

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

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

25 1302, the administrative expenses of the trustee 
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1 allowed under paragraphs (1)(A), (2), and (6) 

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

3 of claims under subparagraphs (A) and (B), to 

4 the extent that the trustee administers assets 

5 that are otherwise available for the payment of 

6 such claims.’’. 

7 SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND 

8 DISCHARGE IN CASES INVOLVING DOMESTIC 

9 SUPPORT OBLIGATIONS. 

10 Title 11, United States Code, is amended—

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

12 following: 

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

14 administrative order or statute to pay a domestic 

15 support obligation, the debtor has paid all amounts 

16 payable under such order or statute for such obliga17 tion that first become payable after the date on 

18 which the petition is filed.’’; 

19 (2) in section 1208(c)—

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

21 the end; 

22 (B) in paragraph (9), by striking the pe23 riod at the end and inserting ‘‘; and’’; and 

24 (C) by adding at the end the following: 
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1 ‘‘(10) failure of the debtor to pay any domestic 

2 support obligation that first becomes payable after 

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

4 (3) in section 1222(a)—

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

6 the end; 

7 (B) in paragraph (3), by striking the pe8 riod at the end and inserting ‘‘; and’’; and 

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

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

11 section, a plan may provide for less than full pay12 ment of all amounts owed for a claim entitled to pri13 ority under section 507(a)(1)(B) only if the plan 

14 provides that all of the debtor’s projected disposable 

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

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

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

18 (4) in section 1222(b)—

19 (A) by redesignating paragraph (11) as 

20 paragraph (12); and 

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

22 following: 

23 ‘‘(11) provide for the payment of interest accru24 ing after the date of the filing of the petition on un25 secured claims that are nondischargeable under sec-
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1 tion 1228(a), except that such interest may be paid 

2 only to the extent that the debtor has disposable in3 come available to pay such interest after making 

4 provision for full payment of all allowed claims;’’; 

5 (5) in section 1225(a)—

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

7 the end; 

8 (B) in paragraph (6), by striking the pe9 riod at the end and inserting ‘‘; and’’; and 

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

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

12 administrative order or statute to pay a domestic 

13 support obligation, the debtor has paid all amounts 

14 payable under such order for such obligation that 

15 first become payable after the date on which the pe16 tition is filed.’’; 

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

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

19 debtor who is required by a judicial or administra20 tive order to pay a domestic support obligation, after 

21 such debtor certifies that all amounts payable under 

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

23 date of the certification (including amounts due be24 fore the petition was filed, but only to the extent 

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

2 plan’’; 

3 (7) in section 1307(c)—

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

5 the end; 

6 (B) in paragraph (10), by striking the pe7 riod at the end and inserting ‘‘; or’’; and 

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

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

10 support obligation that first becomes payable after 

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

12 (8) in section 1322(a)—

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

14 the end; 

15 (B) in paragraph (3), by striking the pe16 riod at the end and inserting ‘‘; and’’; and 

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

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

19 section, a plan may provide for less than full pay20 ment of all amounts owed for a claim entitled to pri21 ority under section 507(a)(1)(B) only if the plan 

22 provides that all of the debtor’s projected disposable 

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

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

25 applied to make payments under the plan.’’; 
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1 (9) in section 1322(b)—

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

3 and inserting a semicolon; 

4 (B) by redesignating paragraph (10) as 

5 paragraph (11); and 

6 (C) inserting after paragraph (9) the fol7 lowing: 

8 ‘‘(10) provide for the payment of interest accru9 ing after the date of the filing of the petition on un10 secured claims that are nondischargeable under sec11 tion 1328(a), except that such interest may be paid 

12 only to the extent that the debtor has disposable in13 come available to pay such interest after making 

14 provision for full payment of all allowed claims; 

15 and’’; 

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

17 102, by inserting after paragraph (7) the following: 

18 ‘‘(8) the debtor is required by a judicial or ad19 ministrative order or statute to pay a domestic sup20 port obligation, the debtor has paid all amounts pay21 able under such order or statute for such obligation 

22 that first becomes payable after the date on which 

23 the petition is filed; and’’; 

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

25 paragraph (1), by inserting ‘‘, and in the case of a 
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1 debtor who is required by a judicial or administra2 tive order to pay a domestic support obligation, after 

3 such debtor certifies that all amounts payable under 

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

5 date of the certification (including amounts due be6 fore the petition was filed, but only to the extent 

7 provided for by the plan) have been paid’’ after 

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

9 plan’’. 

10 SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC 

11 SUPPORT OBLIGATION PROCEEDINGS. 

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

13 amended by striking paragraph (2) and inserting the fol14 lowing: 

15 ‘‘(2) under subsection (a)—

16 ‘‘(A) of the commencement or continuation 

17 of a civil action or proceeding—

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

19 ‘‘(ii) for the establishment or modi20 fication of an order for domestic support 

21 obligations; 

22 ‘‘(iii) concerning child custody or visi23 tation; 

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

25 except to the extent that such proceeding 
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1 seeks to determine the division of property 

2 that is property of the estate; or 

3 ‘‘(v) regarding domestic violence; 

4 ‘‘(B) of the collection of a domestic sup5 port obligation from property that is not prop6 erty of the estate; 

7 ‘‘(C) with respect to the withholding of in8 come that is property of the estate or property 

9 of the debtor for payment of a domestic support 

10 obligation under a judicial or administrative 

11 order; 

12 ‘‘(D) of the withholding, suspension, or re13 striction of drivers’ licenses, professional and 

14 occupational licenses, and recreational licenses 

15 under State law, as specified in section 

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

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

18 owed by a parent to any consumer reporting 

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

20 Social Security Act; 

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

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

23 Social Security Act or under an analogous State 

24 law; or 
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1 ‘‘(G) of the enforcement of medical obliga2 tions as specified under title IV of the Social 

3 Security Act;’’. 

4 SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR 

5 ALIMONY, MAINTENANCE, AND SUPPORT. 

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

7 amended—

8 (1) in subsection (a)—

9 (A) by striking paragraph (5) and insert10 ing the following: 

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

12 (B) by striking paragraph (18); 

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

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

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

16 103–394 (108 Stat. 4133)—

17 (A) by inserting ‘‘to a spouse, former 

18 spouse, or child of the debtor and’’ before ‘‘not 

19 of the kind’’; 

20 (B) by inserting ‘‘or’’ after ‘‘court of 

21 record,’’; and 

22 (C) by striking ‘‘unless—’’ and all that fol23 lows through the end of the paragraph and in24 serting a semicolon. 
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1 SEC. 216. CONTINUED LIABILITY OF PROPERTY. 

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

3 amended—

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

5 and inserting the following: 

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

7 or (5) of section 523(a) (in which case, notwith8 standing any provision of applicable nonbankruptcy 

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

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

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

12 and all that follows through the end of the subpara13 graph and inserting ‘‘of a kind that is specified in 

14 section 523(a)(5); or’’; and 

15 (3) in subsection (g)(2), by striking ‘‘subsection 

16 (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’. 

17 SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS 

18 AGAINST PREFERENTIAL TRANSFER MO19 TIONS. 

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

21 amended to read as follows: 

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

23 payment of a debt for a domestic support obliga24 tion;’’. 
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1 SEC. 218. DISPOSABLE INCOME DEFINED. 

2 Section 1225(b)(2)(A) of title 11, United States 

3 Code, is amended by inserting ‘‘or for a domestic support 

4 obligation that first becomes payable after the date on 

5 which the petition is filed’’ after ‘‘dependent of the debt6 or’’.

7 SEC. 219. COLLECTION OF CHILD SUPPORT. 

8 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec9 tion 704 of title 11, United States Code, as amended by 

10 section 102, is amended—

11 (1) in subsection (a)—

12 (A) in paragraph (8), by striking ‘‘and’’ at 

13 the end; 

14 (B) in paragraph (9), by striking the pe15 riod and inserting a semicolon; and 

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

17 ‘‘(10) if with respect to the debtor there is a 

18 claim for a domestic support obligation, provide the 

19 applicable notice specified in subsection (c); and’’; 

20 and 

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

22 ‘‘(c)(1) In a case described in subsection (a)(10) to 

23 which subsection (a)(10) applies, the trustee shall—

24 ‘‘(A)(i) provide written notice to the holder of 

25 the claim described in subsection (a)(10) of such 

26 claim and of the right of such holder to use the serv-
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1 ices of the State child support enforcement agency 

2 established under sections 464 and 466 of the Social 

3 Security Act for the State in which such holder re4 sides, for assistance in collecting child support dur5 ing and after the case under this title; 

6 ‘‘(ii) include in the notice provided under clause 

7 (i) the address and telephone number of such State 

8 child support enforcement agency; and 

9 ‘‘(iii) include in the notice provided under 

10 clause (i) an explanation of the rights of such holder 

11 to payment of such claim under this chapter; 

12 ‘‘(B)(i) provide written notice to such State 

13 child support enforcement agency of such claim; and 

14 ‘‘(ii) include in the notice provided under clause 

15 (i) the name, address, and telephone number of such 

16 holder; and 

17 ‘‘(C) at such time as the debtor is granted a 

18 discharge under section 727, provide written notice 

19 to such holder and to such State child support en20 forcement agency of—

21 ‘‘(i) the granting of the discharge; 

22 ‘‘(ii) the last recent known address of the 

23 debtor; 

24 ‘‘(iii) the last recent known name and ad25 dress of the debtor’s employer; and 
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1 ‘‘(iv) the name of each creditor that holds 

2 a claim that—

3 ‘‘(I) is not discharged under para4 graph (2), (4), or (14A) of section 523(a); 

5 or 

6 ‘‘(II) was reaffirmed by the debtor 

7 under section 524 (c). 

8 ‘‘(2)(A) The holder of a claim described in subsection 

9 (a)(10) or the State child support enforcement agency of 

10 the State in which such holder resides may request from 

11 a creditor described in paragraph (1)(C)(iv) the last 

12 known address of the debtor. 

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

14 creditor that makes a disclosure of a last known address 

15 of a debtor in connection with a request made under sub16 paragraph (A) shall not be liable by reason of making such 

17 disclosure.’’. 

18 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—

19 Section 1106 of title 11, United States Code, is amend20 ed—

21 (1) in subsection (a)—

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

23 the end; 

24 (B) in paragraph (7), by striking the pe25 riod and inserting ‘‘; and’’; and 
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1 (C) by adding at the end the following: 

2 ‘‘(8) if with respect to the debtor there is a 

3 claim for a domestic support obligation, provide the 

4 applicable notice specified in subsection (c).’’; and 

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

6 ‘‘(c)(1) In a case described in subsection (a)(8) to 

7 which subsection (a)(8) applies, the trustee shall—

8 ‘‘(A)(i) provide written notice to the holder of 

9 the claim described in subsection (a)(8) of such 

10 claim and of the right of such holder to use the serv11 ices of the State child support enforcement agency 

12 established under sections 464 and 466 of the Social 

13 Security Act for the State in which such holder re14 sides, for assistance in collecting child support dur15 ing and after the case under this title; and 

16 ‘‘(ii) include in the notice required by clause (i) 

17 the address and telephone number of such State 

18 child support enforcement agency; 

19 ‘‘(B)(i) provide written notice to such State 

20 child support enforcement agency of such claim; and 

21 ‘‘(ii) include in the notice required by clasue (i) 

22 the name, address, and telephone number of such 

23 holder; and 

24 ‘‘(C) at such time as the debtor is granted a 

25 discharge under section 1141, provide written notice 
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1 to such holder of such claim and to such State child 

2 support enforcement agency of—

3 ‘‘(i) the granting of the discharge; 

4 ‘‘(ii) the last recent known address of the 

5 debtor; 

6 ‘‘(iii) the last recent known name and ad7 dress of the debtor’s employer; and 

8 ‘‘(iv) the name of each creditor that holds 

9 a claim that—

10 ‘‘(I) is not discharged under para11 graph (2), (3), or (14A) of section 523(a); 

12 or 

13 ‘‘(II) was reaffirmed by the debtor 

14 under section 524(c). 

15 ‘‘(2)(A) The holder of a claim described in subsection 

16 (a)(8) or the State child enforcement support agency of 

17 the State in which such holder resides may request from 

18 a creditor described in paragraph (1)(C)(iv) the last 

19 known address of the debtor. 

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

21 creditor that makes a disclosure of a last known address 

22 of a debtor in connection with a request made under sub23 paragraph (A) shall not be liable by reason of making such 

24 disclosure.’’. 
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1 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—

2 Section 1202 of title 11, United States Code, is amend3 ed—

4 (1) in subsection (b)—

5 (A) in paragraph (4), by striking ‘‘and’’ at 

6 the end; 

7 (B) in paragraph (5), by striking the pe8 riod and inserting ‘‘; and’’; and 

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

10 ‘‘(6) if with respect to the debtor there is a 

11 claim for a domestic support obligation, provide the 

12 applicable notice specified in subsection (c).’’; and 

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

14 ‘‘(c)(1) In a case described in subsection (b)(6) to 

15 which subsection (b)(6) applies, the trustee shall—

16 ‘‘(A)(i) provide written notice to the holder of 

17 the claim described in subsection (b)(6) of such 

18 claim and of the right of such holder to use the serv19 ices of the State child support enforcement agency 

20 established under sections 464 and 466 of the Social 

21 Security Act for the State in which such holder re22 sides, for assistance in collecting child support dur23 ing and after the case under this title; and 
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1 ‘‘(ii) include in the notice provided under clause 

2 (i) the address and telephone number of such State 

3 child support enforcement agency; 

4 ‘‘(B)(i) provide written notice to such State 

5 child 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 

10 discharge under section 1228, provide written notice 

11 to such holder and to such State child support en12 forcement 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 

19 a claim that—

20 ‘‘(I) is not discharged under para21 graph (2), (4), or (14A) of section 523(a); 

22 or 

23 ‘‘(II) was reaffirmed by the debtor 

24 under section 524(c). 
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1 ‘‘(2)(A) The holder of a claim described in subsection 

2 (b)(6) or the State child support enforcement agency of 

3 the State in which such holder resides may request from 

4 a creditor described in paragraph (1)(C)(iv) the last 

5 known address of the debtor. 

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

7 creditor that makes a disclosure of a last known address 

8 of a debtor in connection with a request made under sub9 paragraph (A) shall not be liable by reason of making that 

10 disclosure.’’. 

11 (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—

12 Section 1302 of title 11, United States Code, is amend13 ed—

14 (1) in subsection (b)—

15 (A) in paragraph (4), by striking ‘‘and’’ at 

16 the end; 

17 (B) in paragraph (5), by striking the pe18 riod and inserting ‘‘; and’’; and 

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

20 ‘‘(6) if with respect to the debtor there is a 

21 claim for a domestic support obligation, provide the 

22 applicable notice specified in subsection (d).’’; and 

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

24 ‘‘(d)(1) In a case described in subsection (b)(6) to 

25 which subsection (b)(6) applies, the trustee shall—
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1 ‘‘(A)(i) provide written notice to the holder of 

2 the claim described in subsection (b)(6) of such 

3 claim and of the right of such holder to use the serv4 ices of the State child support enforcement agency 

5 established under sections 464 and 466 of the Social 

6 Security Act for the State in which such holder re7 sides, for assistance in collecting child support dur8 ing and after the case under this title; and 

9 ‘‘(ii) include in the notice provided under clause 

10 (i) the address and telephone number of such State 

11 child support enforcement agency; 

12 ‘‘(B)(i) provide written notice to such State 

13 child support enforcement agency of such claim; and 

14 ‘‘(ii) include in the notice provided under clause 

15 (i) the name, address, and telephone number of such 

16 holder; and 

17 ‘‘(C) at such time as the debtor is granted a 

18 discharge under section 1328, provide written notice 

19 to such holder and to such State child support en20 forcement agency of—

21 ‘‘(i) the granting of the discharge; 

22 ‘‘(ii) the last recent known address of the 

23 debtor; 

24 ‘‘(iii) the last recent known name and ad25 dress of the debtor’s employer; and 
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1 ‘‘(iv) the name of each creditor that holds 

2 a claim that—

3 ‘‘(I) is not discharged under para4 graph (2) or (4) of section 523(a); or 

5 ‘‘(II) was reaffirmed by the debtor 

6 under section 524(c). 

7 ‘‘(2)(A) The holder of a claim described in subsection 

8 (b)(6) or the State child support enforcement agency of 

9 the State in which such holder resides may request from 

10 a creditor described in paragraph (1)(C)(iv) the last 

11 known address of the debtor. 

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

13 creditor that makes a disclosure of a last known address 

14 of a debtor in connection with a request made under sub15 paragraph (A) shall not be liable by reason of making that 

16 disclosure.’’. 

17 SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDU18 CATIONAL BENEFITS AND LOANS. 

19 Section 523(a) of title 11, United States Code, is 

20 amended by striking paragraph (8) and inserting the fol21 lowing: 

22 ‘‘(8) unless excepting such debt from discharge 

23 under this paragraph would impose an undue hard24 ship on the debtor and the debtor’s dependents, 

25 for—
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1 ‘‘(A)(i) an educational benefit overpayment 

2 or loan made, insured, or guaranteed by a gov3 ernmental unit, or made under any program 

4 funded in whole or in part by a governmental 

5 unit or nonprofit institution; or 

6 ‘‘(ii) an obligation to repay funds received 

7 as an educational benefit, scholarship, or sti8 pend; or 

9 ‘‘(B) any other educational loan that is a 

10 qualified education loan, as defined in section 

11 221(d)(1) of the Internal Revenue Code of 

12 1986, incurred by a debtor who is an indi13 vidual;’’. 

14 Subtitle C—Other Consumer 

15 Protections 

16 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK17 RUPTCY FILINGS. 

18 Section 110 of title 11, United States Code, is 

19 amended—

20 (1) in subsection (a)(1), by striking ‘‘or an em21 ployee of an attorney’’ and inserting ‘‘for the debtor 

22 or an employee of such attorney under the direct su23 pervision of such attorney’’; 

24 (2) in subsection (b)—
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1 (A) in paragraph (1), by adding at the end 

2 the following: ‘‘If a bankruptcy petition pre3 parer is not an individual, then an officer, prin4 cipal, responsible person, or partner of the pre5 parer shall be required to—

6 ‘‘(A) sign the document for filing; and 

7 ‘‘(B) print on the document the name and ad8 dress of that officer, principal, responsible person or 

9 partner.’’; and 

10 (B) by striking paragraph (2) and insert11 ing the following: 

12 ‘‘(2)(A) Before preparing any document for filing or 

13 accepting any fees from a debtor, the bankruptcy petition 

14 preparer shall provide to the debtor a written notice to 

15 debtors concerning bankruptcy petition preparers, which 

16 shall be on an official form issued by the Judicial Con17 ference of the United States. 

18 ‘‘(B) The notice under subparagraph (A)—

19 ‘‘(i) shall inform the debtor in simple language 

20 that a bankruptcy petition preparer is not an attor21 ney and may not practice law or give legal advice; 

22 ‘‘(ii) may contain a description of examples of 

23 legal advice that a bankruptcy petition preparer is 

24 not authorized to give, in addition to any advice that 
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1 the preparer may not give by reason of subsection 

2 (e)(2); and

3 ‘‘(iii) shall—

4 ‘‘(I) be signed by the debtor and, under 

5 penalty of perjury, by the bankruptcy petition 

6 preparer; and 

7 ‘‘(II) be filed with any document for fil8 ing.’’; 

9 (3) in subsection (c)—

10 (A) in paragraph (2)—

11 (i) by striking ‘‘(2) For purposes’’ and 

12 inserting ‘‘(2)(A) Subject to subparagraph 

13 (B), for purposes’’; and 

14 (ii) by adding at the end the fol15 lowing: 

16 ‘‘(B) If a bankruptcy petition preparer is not an indi17 vidual, the identifying number of the bankruptcy petition 

18 preparer shall be the Social Security account number of 

19 the officer, principal, responsible person, or partner of the 

20 preparer.’’; and 

21 (B) by striking paragraph (3); 

22 (4) in subsection (d)—

23 (A) by striking ‘‘(d)(1)’’ and inserting 

24 ‘‘(d)’’; and 

25 (B) by striking paragraph (2); 
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1 (5) in subsection (e)—

2 (A) by striking paragraph (2); and 

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

4 ‘‘(2)(A) A bankruptcy petition preparer may not offer 

5 a potential bankruptcy debtor any legal advice, including 

6 any legal advice described in subparagraph (B). 

7 ‘‘(B) The legal advice referred to in subparagraph 

8 (A) includes advising the debtor—

9 ‘‘(i) whether—

10 ‘‘(I) to file a petition under this title; or 

11 ‘‘(II) commencing a case under chapter 7, 

12 11, 12, or 13 is appropriate; 

13 ‘‘(ii) whether the debtor’s debts will be elimi14 nated or discharged in a case under this title; 

15 ‘‘(iii) whether the debtor will be able to retain 

16 the debtor’s home, car, or other property after com17 mencing a case under this title; 

18 ‘‘(iv) concerning—

19 ‘‘(I) the tax consequences of a case 

20 brought under this title; or 

21 ‘‘(II) the dischargeability of tax claims; 

22 ‘‘(v) whether the debtor may or should promise 

23 to repay debts to a creditor or enter into a reaffir24 mation agreement with a creditor to reaffirm a debt; 
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1 ‘‘(vi) concerning how to characterize the nature 

2 of the debtor’s interests in property or the debtor’s 

3 debts; or 

4 ‘‘(vii) concerning bankruptcy procedures and 

5 rights.’’; 

6 (6) in subsection (f)—

7 (A) by striking ‘‘(f)(1)’’ and inserting 

8 ‘‘(f)’’; and 

9 (B) by striking paragraph (2); 

10 (7) in subsection (g)—

11 (A) by striking ‘‘(g)(1)’’ and inserting 

12 ‘‘(g)’’; and 

13 (B) by striking paragraph (2); 

14 (8) in subsection (h)—

15 (A) by redesignating paragraphs (1) 

16 through (4) as paragraphs (2) through (5), re17 spectively; 

18 (B) by inserting before paragraph (2), as 

19 so redesignated, the following: 

20 ‘‘(1) The Supreme Court may promulgate rules under 

21 section 2075 of title 28, or the Judicial Conference of the 

22 United States may prescribe guidelines, for setting a max23 imum allowable fee chargeable by a bankruptcy petition 

24 preparer. A bankruptcy petition preparer shall notify the 

25 debtor of any such maximum amount before preparing any 
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1 document for filing for a debtor or accepting any fee from 

2 the debtor.’’; 

3 (C) in paragraph (2), as so redesignated— 

4 (i) by striking ‘‘Within 10 days after 

5 the date of filing a petition, a bankruptcy 

6 petition preparer shall file a’’ and inserting 

7 ‘‘A’’; 

8 (ii) by inserting ‘‘by the bankruptcy 

9 petition preparer shall be filed together 

10 with the petition,’’ after ‘‘perjury’’; and 

11 (iii) by adding at the end the fol12 lowing: ‘‘If rules or guidelines setting a 

13 maximum fee for services have been pro14 mulgated or prescribed under paragraph 

15 (1), the declaration under this paragraph 

16 shall include a certification that the bank17 ruptcy petition preparer complied with the 

18 notification requirement under paragraph 

19 (1).’’; 

20 (D) by striking paragraph (3), as so redes21 ignated, and inserting the following: 

22 ‘‘(3)(A) The court shall disallow and order the imme23 diate turnover to the bankruptcy trustee any fee referred 

24 to in paragraph (2) found to be in excess of the value 

25 of any services—
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1 ‘‘(i) rendered by the preparer during the 12-

2 month period immediately preceding the date of fil3 ing of the petition; or 

4 ‘‘(ii) found to be in violation of any rule or 

5 guideline promulgated or prescribed under para6 graph (1). 

7 ‘‘(B) All fees charged by a bankruptcy petition pre8 parer may be forfeited in any case in which the bankruptcy 

9 petition preparer fails to comply with this subsection or 

10 subsection (b), (c), (d), (e), (f), or (g). 

11 ‘‘(C) An individual may exempt any funds recovered 

12 under this paragraph under section 522(b).’’; and 

13 (E) in paragraph (4), as so redesignated, 

14 by striking ‘‘or the United States trustee’’ and 

15 inserting ‘‘the United States trustee, the bank16 ruptcy administrator, or the court, on the ini17 tiative of the court,’’; 

18 (9) in subsection (i)(1), by striking the matter 

19 preceding subparagraph (A) and inserting the fol20 lowing: 

21 ‘‘(i)(1) If a bankruptcy petition preparer violates this 

22 section or commits any act that the court finds to be 

23 fraudulent, unfair, or deceptive, on the motion of the debt24 or, trustee, United States trustee, or bankruptcy adminis25 trator, and after the court holds a hearing with respect 
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1 to that violation or act, the court shall order the bank2 ruptcy petition preparer to pay to the debtor—’’; 

3 (10) in subsection (j)—

4 (A) in paragraph (2)—

5 (i) in subparagraph (A)(i)(I), by strik6 ing ‘‘a violation of which subjects a person 

7 to criminal penalty’’; 

8 (ii) in subparagraph (B)—

9 (I) by striking ‘‘or has not paid 

10 a penalty’’ and inserting ‘‘has not 

11 paid a penalty’’; and 

12 (II) by inserting ‘‘or failed to dis13 gorge all fees ordered by the court’’ 

14 after ‘‘a penalty imposed under this 

15 section,’’; 

16 (B) by redesignating paragraph (3) as 

17 paragraph (4); and 

18 (C) by inserting after paragraph (2) the 

19 following: 

20 ‘‘(3) The court, as part of its contempt power, may 

21 enjoin a bankruptcy petition preparer that has failed to 

22 comply with a previous order issued under this section. 

23 The injunction under this paragraph may be issued on the 

24 motion of the court, the trustee, the United States trustee, 

25 or the bankruptcy administrator.’’; and 
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1 (11) by adding at the end the following: 

2 ‘‘(l)(1) A bankruptcy petition preparer who fails to 

3 comply with any provision of subsection (b), (c), (d), (e), 

4 (f), (g), or (h) may be fined not more than $500 for each 

5 such failure. 

6 ‘‘(2) The court shall triple the amount of a fine as7 sessed under paragraph (1) in any case in which the court 

8 finds that a bankruptcy petition preparer—

9 ‘‘(A) advised the debtor to exclude assets or in10 come that should have been included on applicable 

11 schedules; 

12 ‘‘(B) advised the debtor to use a false Social 

13 Security account number; 

14 ‘‘(C) failed to inform the debtor that the debtor 

15 was filing for relief under this title; or 

16 ‘‘(D) prepared a document for filing in a man17 ner that failed to disclose the identity of the pre18 parer. 

19 ‘‘(3) The debtor, the trustee, a creditor, the United 

20 States trustee, or the bankruptcy administrator may file 

21 a motion for an order imposing a fine on the bankruptcy 

22 petition preparer for each violation of this section. 

23 ‘‘(4)(A) Fines imposed under this subsection in judi24 cial districts served by United States trustees shall be paid 

25 to the United States trustee, who shall deposit an amount 
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1 equal to such fines in a special account of the United 

2 States Trustee System Fund referred to in section 

3 586(e)(2) of title 28. Amounts deposited under this sub4 paragraph shall be available to fund the enforcement of 

5 this section on a national basis. 

6 ‘‘(B) Fines imposed under this subsection in judicial 

7 districts served by bankruptcy administrators shall be de8 posited as offsetting receipts to the fund established under 

9 section 1931 of title 28, and shall remain available until 

10 expended to reimburse any appropriation for the amount 

11 paid out of such appropriation for expenses of the oper12 ation and maintenance of the courts of the United 

13 States.’’. 

14 SEC. 222. SENSE OF CONGRESS. 

15 It is the sense of Congress that States should develop 

16 curricula relating to the subject of personal finance, de17 signed for use in elementary and secondary schools. 

18 SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED 

19 STATES CODE. 

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

21 amended by inserting after paragraph (9) the following: 

22 ‘‘(10) Tenth, allowed claims for death or per23 sonal injuries resulting from the operation of a 

24 motor vehicle or vessel if such operation was unlaw-
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1 ful because the debtor was intoxicated from using al2 cohol, a drug, or another substance.’’. 

3 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK4 RUPTCY. 

5 (a) IN GENERAL.—Section 522 of title 11, United 

6 States Code, is amended—

7 (1) in subsection (b)—

8 (A) in paragraph (2)—

9 (i) in subparagraph (A), by striking 

10 ‘‘and’’ at the end; 

11 (ii) in subparagraph (B), by striking 

12 the period at the end and inserting ‘‘; 

13 and’’; 

14 (iii) by adding at the end the fol15 lowing: 

16 ‘‘(C) retirement funds to the extent that those 

17 funds are in a fund or account that is exempt from 

18 taxation under section 401, 403, 408, 408A, 414, 

19 457, or 501(a) of the Internal Revenue Code of 

20 1986.’’; and 

21 (iv) by striking ‘‘(2)(A) any property’’ 

22 and inserting: 

23 ‘‘(3) Property listed in this paragraph is—

24 ‘‘(A) any property’’; 
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1 (B) by striking paragraph (1) and insert2 ing: 

3 ‘‘(2) Property listed in this paragraph is property 

4 that is specified under subsection (d), unless the State law 

5 that is applicable to the debtor under paragraph (3)(A) 

6 specifically does not so authorize.’’; 

7 (C) by striking ‘‘(b) Notwithstanding’’ and 

8 inserting ‘‘(b)(1) Notwithstanding’’; 

9 (D) by striking ‘‘paragraph (2)’’ each place 

10 it appears and inserting ‘‘paragraph (3)’’; 

11 (E) by striking ‘‘paragraph (1)’’ each place 

12 it appears and inserting ‘‘paragraph (2)’’; 

13 (F) by striking ‘‘Such property is—’’; and 

14 (G) by adding at the end the following: 

15 ‘‘(4) For purposes of paragraph (3)(C) and sub16 section (d)(12), the following shall apply: 

17 ‘‘(A) If the retirement funds are in a retirement 

18 fund that has received a favorable determination 

19 under section 7805 of the Internal Revenue Code of 

20 1986, and that determination is in effect as of the 

21 date of the commencement of the case under section 

22 301, 302, or 303 of this title, those funds shall be 

23 presumed to be exempt from the estate. 

24 ‘‘(B) If the retirement funds are in a retirement 

25 fund that has not received a favorable determination 
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1 under such section 7805, those funds are exempt 

2 from the estate if the debtor demonstrates that—

3 ‘‘(i) no prior determination to the contrary 

4 has been made by a court or the Internal Rev5 enue Service; and 

6 ‘‘(ii)(I) the retirement fund is in substan7 tial compliance with the applicable requirements 

8 of the Internal Revenue Code of 1986; or 

9 ‘‘(II) the retirement fund fails to be in 

10 substantial compliance with the applicable re11 quirements of the Internal Revenue Code of 

12 1986 and the debtor is not materially respon13 sible for that failure. 

14 ‘‘(C) A direct transfer of retirement funds from 

15 1 fund or account that is exempt from taxation 

16 under section 401, 403, 408, 408A, 414, 457, or 

17 501(a) of the Internal Revenue Code of 1986, under 

18 section 401(a)(31) of the Internal Revenue Code of 

19 1986, or otherwise, shall not cease to qualify for ex20 emption under paragraph (3)(C) or subsection 

21 (d)(12) by reason of that direct transfer. 

22 ‘‘(D)(i) Any distribution that qualifies as an eli23 gible rollover distribution within the meaning of sec24 tion 402(c) of the Internal Revenue Code of 1986 or 

25 that is described in clause (ii) shall not cease to 
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1 qualify for exemption under paragraph (3)(C) or 

2 subsection (d)(12) by reason of that distribution. 

3 ‘‘(ii) A distribution described in this clause is 

4 an amount that—

5 ‘‘(I) has been distributed from a fund or 

6 account that is exempt from taxation under sec7 tion 401, 403, 408, 408A, 414, 457, or 501(a) 

8 of the Internal Revenue Code of 1986; and 

9 ‘‘(II) to the extent allowed by law, is de10 posited in such a fund or account not later than 

11 60 days after the distribution of that amount.’’; 

12 and 

13 (2) in subsection (d)—

14 (A) in the matter preceding paragraph (1), 

15 by striking ‘‘subsection (b)(1)’’ and inserting 

16 ‘‘subsection (b)(2)’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(12) Retirement funds to the extent that those 

19 funds are in a fund or account that is exempt from 

20 taxation under section 401, 403, 408, 408A, 414, 

21 457, or 501(a) of the Internal Revenue Code of 

22 1986.’’. 

23 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

24 United States Code, is amended—
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1 (1) in paragraph (17), by striking ‘‘or’’ at the 

2 end; 

3 (2) in paragraph (18), by striking the period 

4 and inserting a semicolon; and 

5 (3) by inserting after paragraph (18) the fol6 lowing: 

7 ‘‘(19) under subsection (a), of withholding of 

8 income from a debtor’s wages and collection of 

9 amounts withheld, under the debtor’s agreement au10 thorizing that withholding and collection for the ben11 efit of a pension, profit-sharing, stock bonus, or 

12 other plan established under section 401, 403, 408, 

13 408A, 414, 457, or 501(c) of the Internal Revenue 

14 Code of 1986, that is sponsored by the employer of 

15 the debtor, or an affiliate, successor, or predecessor 

16 of such employer—

17 ‘‘(A) to the extent that the amounts with18 held and collected are used solely for payments 

19 relating to a loan from a plan that satisfies the 

20 requirements of section 408(b)(1) of the Em21 ployee Retirement Income Security Act of 1974 

22 or is subject to section 72(p) of the Internal 

23 Revenue Code of 1986; or 

24 ‘‘(B) in the case of a loan from a thrift 

25 savings plan described in subchapter III of 
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1 chapter 84 of title 5, that satisfies the require2 ments of section 8433(g) of such title; 

3 but this paragraph may not be construed to provide 

4 that any loan made under a governmental plan 

5 under section 414(d), or a contract or account under 

6 section 403(b) of the Internal Revenue Code of 1986 

7 constitutes a claim or a debt under this title;’’. 

8 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of 

9 title 11, United States Code, as amended by section 215, 

10 is amended by adding at the end the following: 

11 ‘‘(19) owed to a pension, profit-sharing, stock 

12 bonus, or other plan established under section 401, 

13 403, 408, 408A, 414, 457, or 501(c) of the Internal 

14 Revenue Code of 1986, under—

15 ‘‘(A) a loan permitted under section 

16 408(b)(1) of the Employee Retirement Income 

17 Security Act of 1974, or subject to section 

18 72(p) of the Internal Revenue Code of 1986; or 

19 ‘‘(B) a loan from the thrift savings plan 

20 described in subchapter III of chapter 84 of 

21 title 5, that satisfies the requirements of section 

22 8433(g) of such title; 

23 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 

2 of 1986 constitutes a claim or a debt under this 

3 title.’’. 

4 (d) PLAN CONTENTS.—Section 1322 of title 11, 

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

6 following: 

7 ‘‘(f) A plan may not materially alter the terms of a 

8 loan described in section 362(b)(19) and any amounts re9 quired to repay such loan shall not constitute ‘disposable 

10 income’ under section 1325.’’. 

11 (e) ASSET LIMITATION.—

12 (1) LIMITATION.—Section 522 of title 11, 

13 United States Code, is amended by adding at the 

14 end the following: 

15 ‘‘(n) For assets in individual retirement accounts de16 scribed in section 408 or 408A of the Internal Revenue 

17 Code of 1986, other than a simplified employee pension 

18 under section 408(k) of that Code or a simple retirement 

19 account under section 408(p) of that Code, the aggregate 

20 value of such assets exempted under this section, without 

21 regard to amounts attributable to rollover contributions 

22 under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 

23 403(b)(8) of the Internal Revenue Code of 1986, and 

24 earnings thereon, shall not exceed $1,000,000 in a case 

25 filed by a debtor who is an individual, except that such 
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1 amount may be increased if the interests of justice so re2 quire.’’. 

3 (2) ADJUSTMENT OF DOLLAR AMOUNTS.—

4 Paragraphs (1) and (2) of section 104(b) of title 11, 

5 United States Code, are amended by inserting 

6 ‘‘522(n),’’ after ‘‘522(d),’’. 

7 SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK8 RUPTCY. 

9 (a) EXCLUSIONS.—Section 541 of title 11, United 

10 States Code, is amended—

11 (1) in subsection (b)—

12 (A) in paragraph (4), by striking ‘‘or’’ at 

13 the end; 

14 (B) by redesignating paragraph (5) as 

15 paragraph (9); and 

16 (C) by inserting after paragraph (4) the 

17 following: 

18 ‘‘(5) funds placed in an education individual re19 tirement account (as defined in section 530(b)(1) of 

20 the Internal Revenue Code of 1986) not later than 

21 365 days before the date of filing of the petition, 

22 but—

23 ‘‘(A) only if the designated beneficiary of 

24 such account was a son, daughter, stepson, 

25 stepdaughter, grandchild, or step-grandchild of 
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1 the debtor for the taxable year for which funds 

2 were placed in such account; 

3 ‘‘(B) only to the extent that such funds—

4 ‘‘(i) are not pledged or promised to 

5 any entity in connection with any extension 

6 of credit; and 

7 ‘‘(ii) are not excess contributions (as 

8 described in section 4973(e) of the Internal 

9 Revenue Code of 1986); and 

10 ‘‘(C) in the case of funds placed in all such 

11 accounts having the same designated bene12 ficiary not earlier than 720 days nor later than 

13 365 days before such date, only so much of 

14 such funds as does not exceed $5,000; 

15 ‘‘(6) funds used to purchase a tuition credit or 

16 certificate or contributed to an account in accord17 ance with section 529(b)(1)(A) of the Internal Rev18 enue Code of 1986 under a qualified State tuition 

19 program (as defined in section 529(b)(1) of such 

20 Code) not later than 365 days before the date of fil21 ing of the petition, but—

22 ‘‘(A) only if the designated beneficiary of 

23 the amounts paid or contributed to such tuition 

24 program was a son, daughter, stepson, step25 daughter, grandchild, or step-grandchild of the 
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1 debtor for the taxable year for which funds 

2 were paid or contributed; 

3 ‘‘(B) with respect to the aggregate amount 

4 paid or contributed to such program having the 

5 same designated beneficiary, only so much of 

6 such amount as does not exceed the total con7 tributions permitted under section 529(b)(7) of 

8 such Code with respect to such beneficiary, as 

9 adjusted beginning on the date of the filing of 

10 the petition by the annual increase or decrease 

11 (rounded to the nearest tenth of 1 percent) in 

12 the education expenditure category of the Con13 sumer Price Index prepared by the Department 

14 of Labor; and 

15 ‘‘(C) in the case of funds paid or contrib16 uted to such program having the same des17 ignated beneficiary not earlier than 720 days 

18 nor later than 365 days before such date, only 

19 so much of such funds as does not exceed 

20 $5,000;’’; and 

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

22 ‘‘(e) In determining whether any of the relationships 

23 specified in paragraph (5)(A) or (6)(A) of subsection (b) 

24 exists, a legally adopted child of an individual (and a child 

25 who is a member of an individual’s household, if placed 
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1 with such individual by an authorized placement agency 

2 for legal adoption by such individual), or a foster child 

3 of an individual (if such child has as the child’s principal 

4 place of abode the home of the debtor and is a member 

5 of the debtor’s household) shall be treated as a child of 

6 such individual by blood.’’. 

7 (b) DEBTOR’S DUTIES.—Section 521 of title 11, 

8 United States Code, as amended by section 106, is amend9 ed by adding at the end the following: 

10 ‘‘(c) In addition to meeting the requirements under 

11 subsection (a), a debtor shall file with the court a record 

12 of any interest that a debtor has in an education individual 

13 retirement account (as defined in section 530(b)(1) of the 

14 Internal Revenue Code of 1986) or under a qualified State 

15 tuition program (as defined in section 529(b)(1) of such 

16 Code).’’. 

17 SEC. 226. DEFINITIONS. 

18 (a) DEFINITIONS.—Section 101 of title 11, United 

19 States Code, is amended—

20 (1) by inserting after paragraph (2) the fol21 lowing: 

22 ‘‘(3) ‘assisted person’ means any person whose 

23 debts consist primarily of consumer debts and the 

24 value of whose nonexempt property is less than 

25 $150,000;’’; 
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1 (2) by inserting after paragraph (4) the fol2 lowing: 

3 ‘‘(4A) ‘bankruptcy assistance’ means any goods 

4 or services sold or otherwise provided to an assisted 

5 person with the express or implied purpose of pro6 viding information, advice, counsel, document prepa7 ration, or filing, or attendance at a creditors’ meet8 ing or appearing in a proceeding on behalf of an9 other or providing legal representation with respect 

10 to a case or proceeding under this title;’’; and 

11 (3) by inserting after paragraph (12) the fol12 lowing: 

13 ‘‘(12A) ‘debt relief agency’ means any person 

14 who provides any bankruptcy assistance to an as15 sisted person in return for the payment of money or 

16 other valuable consideration, or who is a bankruptcy 

17 petition preparer under section 110, but does not in18 clude—

19 ‘‘(A) any person that is an officer, director, 

20 employee, or agent of a person who provides 

21 such assistance or of such preparer; 

22 ‘‘(B) a nonprofit organization which is ex23 empt from taxation under section 501(c)(3) of 

24 the Internal Revenue Code of 1986; 
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1 ‘‘(C) a creditor of such assisted person, to 

2 the extent that the creditor is assisting such as3 sisted person to restructure any debt owed by 

4 such assisted person to the creditor; 

5 ‘‘(D) a depository institution (as defined in 

6 section 3 of the Federal Deposit Insurance Act) 

7 or any Federal credit union or State credit 

8 union (as those terms are defined in section 

9 101 of the Federal Credit Union Act), or any 

10 affiliate or subsidiary of such depository institu11 tion or credit union; or 

12 ‘‘(E) an author, publisher, distributor, or 

13 seller of works subject to copyright protection 

14 under title 17, when acting in such capacity.’’. 

15 (b) CONFORMING AMENDMENT.—Section 104(b) of 

16 title 11, United States Code, is amended by inserting 

17 ‘‘101(3),’’ after ‘‘sections’’ each place it appears. 

18 SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES. 

19 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

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

21 end the following: 

22 ‘‘§ 526. Restrictions on debt relief agencies 

23 ‘‘(a) A debt relief agency shall not—

24 ‘‘(1) fail to perform any service that such agen25 cy informed an assisted person or prospective as-
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1 sisted person it would provide in connection with a 

2 case or proceeding under this title; 

3 ‘‘(2) make any statement, or counsel or advise 

4 any assisted person or prospective assisted person to 

5 make a statement in a document filed in a case or 

6 proceeding under this title, that is untrue and mis7 leading, or that upon the exercise of reasonable care, 

8 should have been known by such agency to be untrue 

9 or misleading; 

10 ‘‘(3) misrepresent to any assisted person or pro11 spective assisted person, directly or indirectly, af12 firmatively or by material omission, with respect 

13 to—

14 ‘‘(i) the services that such agency will pro15 vide to such person; or 

16 ‘‘(ii) the benefits and risks that may result 

17 if such person becomes a debtor in a case under 

18 this title; or 

19 ‘‘(4) advise an assisted person or prospective 

20 assisted person to incur more debt in contemplation 

21 of such person filing a case under this title or to pay 

22 an attorney or bankruptcy petition preparer fee or 

23 charge for services performed as part of preparing 

24 for or representing a debtor in a case under this 

25 title. 
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1 ‘‘(b) Any waiver by any assisted person of any protec2 tion or right provided under this section shall not be en3 forceable against the debtor by any Federal or State court 

4 or any other person, but may be enforced against a debt 

5 relief agency. 

6 ‘‘(c)(1) Any contract for bankruptcy assistance be7 tween a debt relief agency and an assisted person that 

8 does not comply with the material requirements of this 

9 section, section 527, or section 528 shall be void and may 

10 not be enforced by any Federal or State court or by any 

11 other person, other than such assisted person. 

12 ‘‘(2) Any debt relief agency shall be liable to an as13 sisted person in the amount of any fees or charges in con14 nection with providing bankruptcy assistance to such per15 son that such debt relief agency has received, for actual 

16 damages, and for reasonable attorneys’ fees and costs if 

17 such agency is found, after notice and a hearing, to have—

18 ‘‘(A) intentionally or negligently failed to com19 ply with any provision of this section, section 527, 

20 or section 528 with respect to a case or proceeding 

21 under this title for such assisted person; 

22 ‘‘(B) provided bankruptcy assistance to an as23 sisted person in a case or proceeding under this title 

24 that is dismissed or converted to a case under an25 other chapter of this title because of such agency’s 
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1 intentional or negligent failure to file any required 

2 document including those specified in section 521; or 

3 ‘‘(C) intentionally or negligently disregarded the 

4 material requirements of this title or the Federal 

5 Rules of Bankruptcy Procedure applicable to such 

6 agency. 

7 ‘‘(3) In addition to such other remedies as are pro8 vided under State law, whenever the chief law enforcement 

9 officer of a State, or an official or agency designated by 

10 a State, has reason to believe that any person has violated 

11 or is violating this section, the State—

12 ‘‘(A) may bring an action to enjoin such viola13 tion; 

14 ‘‘(B) may bring an action on behalf of its resi15 dents to recover the actual damages of assisted per16 sons arising from such violation, including any liabil17 ity under paragraph (2); and 

18 ‘‘(C) in the case of any successful action under 

19 subparagraph (A) or (B), shall be awarded the costs 

20 of the action and reasonable attorney fees as deter21 mined by the court. 

22 ‘‘(4) The district court of the United States for any 

23 district located in the State shall have concurrent jurisdic24 tion of any action under subparagraph (A) or (B) of para25 graph (3). 
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1 ‘‘(5) Notwithstanding any other provision of Federal 

2 law and in addition to any other remedy provided under 

3 Federal or State law, if the court, on its own motion or 

4 on the motion of the United States trustee or the debtor, 

5 finds that a person intentionally violated this section, or 

6 engaged in a clear and consistent pattern or practice of 

7 violating this section, the court may—

8 ‘‘(A) enjoin the violation of such section; or 

9 ‘‘(B) impose an appropriate civil penalty 

10 against such person. 

11 ‘‘(d) No provision of this section, section 527, or sec12 tion 528 shall— 

13 ‘‘(1) annul, alter, affect, or exempt any person 

14 subject to such sections from complying with any 

15 law of any State except to the extent that such law 

16 is inconsistent with those sections, and then only to 

17 the extent of the inconsistency; or 

18 ‘‘(2) be deemed to limit or curtail the authority 

19 or ability—

20 ‘‘(A) of a State or subdivision or instru21 mentality thereof, to determine and enforce 

22 qualifications for the practice of law under the 

23 laws of that State; or 
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1 ‘‘(B) of a Federal court to determine and 

2 enforce the qualifications for the practice of law 

3 before that court.’’. 

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for chapter 5 of title 11, United States Code, is 

6 amended by inserting after the item relating to section 

7 525, the following:

‘‘526. Restrictions on debt relief agencies.’’.

8 SEC. 228. DISCLOSURES. 

9 (a) DISCLOSURES.—Subchapter II of chapter 5 of 

10 title 11, United States Code, as amended by section 227, 

11 is amended by adding at the end the following: 

12 ‘‘§ 527. Disclosures 

13 ‘‘(a) A debt relief agency providing bankruptcy assist14 ance to an assisted person shall provide—

15 ‘‘(1) the written notice required under section 

16 342(b)(1) of this title; and 

17 ‘‘(2) to the extent not covered in the written no18 tice described in paragraph (1), and not later than 

19 3 business days after the first date on which a debt 

20 relief agency first offers to provide any bankruptcy 

21 assistance services to an assisted person, a clear and 

22 conspicuous written notice advising assisted persons 

23 that—

24 ‘‘(A) all information that the assisted per25 son is required to provide with a petition and 
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1 thereafter during a case under this title is re2 quired to be complete, accurate, and truthful; 

3 ‘‘(B) all assets and all liabilities are re4 quired to be completely and accurately disclosed 

5 in the documents filed to commence the case, 

6 and the replacement value of each asset as de7 fined in section 506 of this title must be stated 

8 in those documents where requested after rea9 sonable inquiry to establish such value; 

10 ‘‘(C) current monthly income, the amounts 

11 specified in section 707(b)(2), and, in a case 

12 under chapter 13, disposable income (deter13 mined in accordance with section 707(b)(2), are 

14 required to be stated after reasonable inquiry; 

15 and 

16 ‘‘(D) information that an assisted person 

17 provides during their case may be audited pur18 suant to this title, and that failure to provide 

19 such information may result in dismissal of the 

20 case under this title or other sanction including, 

21 in some instances, criminal sanctions. 

22 ‘‘(b) A debt relief agency providing bankruptcy assist23 ance to an assisted person shall provide each assisted per24 son at the same time as the notices required under sub25 section (a)(1) with the following statement, to the extent 
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1 applicable, or one substantially similar. The statement 

2 shall be clear and conspicuous and shall be in a single 

3 document separate from other documents or notices pro4 vided to the assisted person: 

5 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK6 RUPTCY ASSISTANCE SERVICES FROM AN AT7 TORNEY OR BANKRUPTCY PETITION PRE8 PARER. 

9 ‘‘ ‘If you decide to seek bankruptcy relief, you can 

10 represent yourself, you can hire an attorney to represent 

11 you, or you can get help in some localities from a bank12 ruptcy petition preparer who is not an attorney. THE 

13 LAW REQUIRES AN ATTORNEY OR BANKRUPTCY 

14 PETITION PREPARER TO GIVE YOU A WRITTEN 

15 CONTRACT SPECIFYING WHAT THE ATTORNEY 

16 OR BANKRUPTCY PETITION PREPARER WILL DO 

17 FOR YOU AND HOW MUCH IT WILL COST. Ask to 

18 see the contract before you hire anyone. 

19 ‘‘ ‘The following information helps you understand 

20 what must be done in a routine bankruptcy case to help 

21 you evaluate how much service you need. Although bank22 ruptcy can be complex, many cases are routine. 

23 ‘‘ ‘Before filing a bankruptcy case, either you or your 

24 attorney should analyze your eligibility for different forms 

25 of debt relief made available by the Bankruptcy Code and 
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1 which form of relief is most likely to be beneficial for you. 

2 Be sure you understand the relief you can obtain and its 

3 limitations. To file a bankruptcy case, documents called 

4 a Petition, Schedules and Statement of Financial Affairs, 

5 as well as in some cases a Statement of Intention need 

6 to be prepared correctly and filed with the bankruptcy 

7 court. You will have to pay a filing fee to the bankruptcy 

8 court. Once your case starts, you will have to attend the 

9 required first meeting of creditors where you may be ques10 tioned by a court official called a ‘trustee’ and by credi11 tors. 

12 ‘‘ ‘If you choose to file a chapter 7 case, you may 

13 be asked by a creditor to reaffirm a debt. You may want 

14 help deciding whether to do so and a creditor is not per15 mitted to coerce you into reaffirming your debts. 

16 ‘‘ ‘If you choose to file a chapter 13 case in which 

17 you repay your creditors what you can afford over 3 to 

18 5 years, you may also want help with preparing your chap19 ter 13 plan and with the confirmation hearing on your 

20 plan which will be before a bankruptcy judge. 

21 ‘‘ ‘If you select another type of relief under the Bank22 ruptcy Code other than chapter 7 or chapter 13, you will 

23 want to find out what needs to be done from someone fa24 miliar with that type of relief. 
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1 ‘‘ ‘Your bankruptcy case may also involve litigation. 

2 You are generally permitted to represent yourself in litiga3 tion in bankruptcy court, but only attorneys, not bank4 ruptcy petition preparers, can give you legal advice.’. 

5 ‘‘(c) Except to the extent the debt relief agency pro6 vides the required information itself after reasonably dili7 gent inquiry of the assisted person or others so as to ob8 tain such information reasonably accurately for inclusion 

9 on the petition, schedules or statement of financial affairs, 

10 a debt relief agency providing bankruptcy assistance to an 

11 assisted person, to the extent permitted by nonbankruptcy 

12 law, shall provide each assisted person at the time re13 quired for the notice required under subsection (a)(1) rea14 sonably sufficient information (which shall be provided in 

15 a clear and conspicuous writing) to the assisted person 

16 on how to provide all the information the assisted person 

17 is required to provide under this title pursuant to section 

18 521, including—

19 ‘‘(1) how to value assets at replacement value, 

20 determine current monthly income, the amounts 

21 specified in section 707(b)(2) and, in a chapter 13 

22 case, how to determine disposable income in accord23 ance with section 707(b)(2) and related calculations; 
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1 ‘‘(2) how to complete the list of creditors, in2 cluding how to determine what amount is owed and 

3 what address for the creditor should be shown; and 

4 ‘‘(3) how to determine what property is exempt 

5 and how to value exempt property at replacement 

6 value as defined in section 506 of this title. 

7 ‘‘(d) A debt relief agency shall maintain a copy of 

8 the notices required under subsection (a) of this section 

9 for 2 years after the date on which the notice is given 

10 the assisted person.’’. 

11 (b) CONFORMING AMENDMENT.—The table of sec12 tions for chapter 5 of title 11, United States Code, as 

13 amended by section 227, is amended by inserting after the 

14 item relating to section 526 the following:

‘‘527. Disclosures.’’.

15 SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES. 

16 (a) ENFORCEMENT.—Subchapter II of chapter 5 of 

17 title 11, United States Code, as amended by sections 227 

18 and 228, is amended by adding at the end the following: 

19 ‘‘§ 528. Requirements for debt relief agencies 

20 ‘‘(a) A debt relief agency shall—

21 ‘‘(1) not later than 5 business days after the 

22 first date on which such agency provides any bank23 ruptcy assistance services to an assisted person, but 

24 prior to such assisted person’s petition under this 

25 title being filed, execute a written contract with such 
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1 assisted person that explains clearly and conspicu2 ously—

3 ‘‘(A) the services such agency will provide 

4 to such assisted person; and 

5 ‘‘(B) the fees or charges for such services, 

6 and the terms of payment; 

7 ‘‘(2) provide the assisted person with a copy of 

8 the fully executed and completed contract; 

9 ‘‘(3) clearly and conspicuously disclose in any 

10 advertisement of bankruptcy assistance services or of 

11 the benefits of bankruptcy directed to the general 

12 public (whether in general media, seminars or spe13 cific mailings, telephonic or electronic messages, or 

14 otherwise) that the services or benefits are with re15 spect to bankruptcy relief under this title; and 

16 ‘‘(4) clearly and conspicuously use the following 

17 statement in such advertisement: ‘We are a debt re18 lief agency. We help people file for bankruptcy relief 

19 under the Bankruptcy Code.’ or a substantially simi20 lar statement. 

21 ‘‘(b)(1) An advertisement of bankruptcy assistance 

22 services or of the benefits of bankruptcy directed to the 

23 general public includes—

24 ‘‘(A) descriptions of bankruptcy assistance in 

25 connection with a chapter 13 plan whether or not 
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1 chapter 13 is specifically mentioned in such adver2 tisement; and 

3 ‘‘(B) statements such as ‘federally supervised 

4 repayment plan’ or ‘Federal debt restructuring help’ 

5 or other similar statements that could lead a reason6 able consumer to believe that debt counseling was 

7 being offered when in fact the services were directed 

8 to providing bankruptcy assistance with a chapter 

9 13 plan or other form of bankruptcy relief under 

10 this title. 

11 ‘‘(2) An advertisement, directed to the general public, 

12 indicating that the debt relief agency provides assistance 

13 with respect to credit defaults, mortgage foreclosures, evic14 tion proceedings, excessive debt, debt collection pressure, 

15 or inability to pay any consumer debt shall— 

16 ‘‘(A) disclose clearly and conspicuously in such 

17 advertisement that the assistance may involve bank18 ruptcy relief under this title; and 

19 ‘‘(B) include the following statement: ‘We are a 

20 debt relief agency. We help people file for bank21 ruptcy relief under the Bankruptcy Code.’ or a sub22 stantially similar statement.’’. 

23 (b) CONFORMING AMENDMENT.—The table of sec24 tions for chapter 5 of title 11, United States Code, as 
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1 amended by section 227 and 228, is amended by inserting 

2 after the item relating to section 527, the following:

‘‘528. Requirements for debt relief agencies.’’.

3 SEC. 230. GAO STUDY. 

4 (a) STUDY.—Not later than 270 days after the date 

5 of enactment of this Act, the Comptroller General of the 

6 United States shall conduct a study of the feasibility, ef7 fectiveness, and cost of requiring trustees appointed under 

8 title 11, United States Code, or the bankruptcy courts, 

9 to provide to the Office of Child Support Enforcement 

10 promptly after the commencement of cases by debtors who 

11 are individuals under such title, the names and social secu12 rity numbers of such debtors for the purposes of allowing 

13 such Office to determine whether such debtors have out14 standing obligations for child support (as determined on 

15 the basis of information in the Federal Case Registry or 

16 other national database). 

17 (b) REPORT.—Not later than 300 days after the date 

18 of enactment of this Act, the Comptroller General shall 

19 submit to the President pro tempore of the Senate and 

20 the Speaker of the House of Representatives a report con21 taining the results of the study required by subsection (a).
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1 SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE IN2 FORMATION. 

3 (a) LIMITATION.—Section 363(b)(1) of title 11, 

4 United States Code, is amended by striking the period at 

5 the end and inserting the following: 

6 ‘‘, except that if the debtor in connection with offering 

7 a product or a service discloses to an individual a policy 

8 prohibiting the transfer of personally identifiable informa9 tion about individuals to persons that are not affiliated 

10 with the debtor and if such policy is in effect on the date 

11 of the commencement of the case, then the trustee may 

12 not sell or lease personally identifiable information to any 

13 person unless—

14 ‘‘(A) such sale or such lease is consistent with 

15 such policy; or 

16 ‘‘(B) after appointment of a consumer privacy 

17 ombudsman in accordance with section 332, and 

18 after notice and a hearing, the court approves such 

19 sale or such lease—

20 ‘‘(i) giving due consideration to the facts, 

21 circumstances, and conditions of such sale or 

22 such lease; and 

23 ‘‘(ii) finding that no showing was made 

24 that such sale or such lease would violate appli25 cable nonbankruptcy law.’’. 
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1 (b) DEFINITION.—Section 101 of title 11, United 

2 States Code, is amended by inserting after paragraph (41) 

3 the following: 

4 ‘‘(41A) ‘personally identifiable information’ 

5 means—

6 ‘‘(A) if provided by an individual to the 

7 debtor in connection with obtaining a product 

8 or a service from the debtor primarily for per9 sonal, family, or household purposes—

10 ‘‘(i) the first name (or initial) and last 

11 name of such individual, whether given at 

12 birth or time of adoption, or resulting from 

13 a lawful change of name; 

14 ‘‘(ii) the geographical address of a 

15 physical place of residence of such indi16 vidual; 

17 ‘‘(iii) an electronic address (including 

18 an e-mail address) of such individual; 

19 ‘‘(iv) a telephone number dedicated to 

20 contacting such individual at such physical 

21 place of residence; 

22 ‘‘(v) a social security account number 

23 issued to such individual; or 

24 ‘‘(vi) the account number of a credit 

25 card issued to such individual; or 
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1 ‘‘(B) if identified in connection with 1 or 

2 more of the items of information specified in 

3 subparagraph (A)—

4 ‘‘(i) a birth date, the number of a cer5 tificate of birth or adoption, or a place of 

6 birth; or 

7 ‘‘(ii) any other information concerning 

8 an identified individual that, if disclosed, 

9 will result in contacting or identifying such 

10 individual physically or electronically;’’.

11 SEC. 232. CONSUMER PRIVACY OMBUDSMAN. 

12 (a) CONSUMER PRIVACY OMBUDSMAN.—Title 11 of 

13 the United States Code is amended by inserting after sec14 tion 331 the following: 

15 ‘‘§ 332. Consumer privacy ombudsman 

16 ‘‘(a) If a hearing is required under section 

17 363(b)(1)(B) of this title, the court shall order the United 

18 States trustee to appoint, not later than 5 days before the 

19 commencement of the hearing, 1 disinterested person 

20 (other than the United States trustee) to serve as the con21 sumer privacy ombudsman in the case and shall require 

22 that notice of such hearing be timely given to such om23 budsman. 

24 ‘‘(b) The consumer privacy ombudsman may appear 

25 and be heard at such hearing and shall provide to the 
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1 court information to assist the court in its consideration 

2 of the facts, circumstances, and conditions of the proposed 

3 sale or lease of personally identifiable information under 

4 section 363(b)(1)(B) of this title. Such information may 

5 include presentation of—

6 ‘‘(1) the debtor’s privacy policy; 

7 ‘‘(2) the potential losses or gains of privacy to 

8 consumers if such sale or such lease is approved by 

9 the court; 

10 ‘‘(3) the potential costs or benefits to con11 sumers if such sale or such lease is approved by the 

12 court; and 

13 ‘‘(4) the potential alternatives that would miti14 gate potential privacy losses or potential costs to 

15 consumers. 

16 ‘‘(c) A consumer privacy ombudsman shall not dis17 close any personally identifiable information obtained by 

18 the ombudsman under this title.’’. 

19 (b) COMPENSATION OF CONSUMER PRIVACY OM20 BUDSMAN.—Section 330(a)(1) of title 11, United States 

21 Code, is amended in the matter preceding subparagraph 

22 (A), by inserting ‘‘a consumer privacy ombudsman ap23 pointed under section 332,’’ before ‘‘an examiner’’. 

24 (c) CONFORMING AMENDMENT.—The table of sec25 tions for subchapter II of chapter 3 of title 11, United 
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1 States Code, is amended by adding at the end the fol2 lowing:

‘‘332. Consumer privacy ombudsman.’’.

3 SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF 

4 MINOR CHILDREN. 

5 (a) PROHIBITION.—Title 11 of the United States 

6 Code, as amended by section 106, is amended by inserting 

7 after section 111 the following: 

8 ‘‘§ 112. Prohibition on disclosure of name of minor 

9 children 

10 ‘‘The debtor may be required to provide information 

11 regarding a minor child involved in matters under this title 

12 but may not be required to disclose in the public records 

13 in the case the name of such minor child. The debtor may 

14 be required to disclose the name of such minor child in 

15 a nonpublic record that is maintained by the court and 

16 made available by the court for examination by the United 

17 States trustee, the trustee, and the auditor (if any) ap18 pointed under section 586(f) of title 28, in the case. The 

19 court, the United States trustee, the trustee, and such 

20 auditor shall not disclose the name of such minor child 

21 maintained in such nonpublic record.’’. 

22 (b) CLERICAL AMENDMENT.—The table of sections 

23 for chapter 1 of title 11, United States Code, as amended 
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1 by section 106, is amended by inserting after the item re2 lating to section 111 the following:

‘‘112. Prohibition on disclosure of name of minor children.’’.

3 (c) CONFORMING AMENDMENT.—Section 107(a) of 

4 title 11, United States Code, is amended by inserting ‘‘and 

5 subject to section 112 of this title’’ after ‘‘section’’. 

6 TITLE III—DISCOURAGING 

7 BANKRUPTCY ABUSE 

8 SEC. 301. REINFORCEMENT OF THE FRESH START. 

9 Section 523(a)(17) of title 11, United States Code, 

10 is amended—

11 (1) by striking ‘‘by a court’’ and inserting ‘‘on 

12 a prisoner by any court’’; 

13 (2) by striking ‘‘section 1915(b) or (f)’’ and in14 serting ‘‘subsection (b) or (f)(2) of section 1915’’; 

15 and 

16 (3) by inserting ‘‘(or a similar non-Federal 

17 law)’’ after ‘‘title 28’’ each place it appears. 

18 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS. 

19 Section 362(c) of title 11, United States Code, is 

20 amended—

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

22 end; 

23 (2) in paragraph (2), by striking the period at 

24 the end and inserting a semicolon; and 

25 (3) by adding at the end the following: 
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1 ‘‘(3) if a single or joint case is filed by or 

2 against debtor who is an individual in a case under 

3 chapter 7, 11, or 13, and if a single or joint case 

4 of the debtor was pending within the preceding 1-

5 year period but was dismissed, other than a case 

6 refiled under a chapter other than chapter 7 after 

7 dismissal under section 707(b)—

8 ‘‘(A) the stay under subsection (a) with re9 spect to any action taken with respect to a debt 

10 or property securing such debt or with respect 

11 to any lease shall terminate with respect to the 

12 debtor on the 30th day after the filing of the 

13 later case; 

14 ‘‘(B) on the motion of a party in interest 

15 for continuation of the automatic stay and upon 

16 notice and a hearing, the court may extend the 

17 stay in particular cases as to any or all credi18 tors (subject to such conditions or limitations 

19 as the court may then impose) after notice and 

20 a hearing completed before the expiration of the 

21 30-day period only if the party in interest dem22 onstrates that the filing of the later case is in 

23 good faith as to the creditors to be stayed; and 

24 ‘‘(C) for purposes of subparagraph (B), a 

25 case is presumptively filed not in good faith 
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1 (but such presumption may be rebutted by clear 

2 and convincing evidence to the contrary)—

3 ‘‘(i) as to all creditors, if—

4 ‘‘(I) more than 1 previous case 

5 under any of chapters 7, 11, and 13 

6 in which the individual was a debtor 

7 was pending within the preceding 1-

8 year period; 

9 ‘‘(II) a previous case under any 

10 of chapters 7, 11, and 13 in which the 

11 individual was a debtor was dismissed 

12 within such 1-year period, after the 

13 debtor failed to—

14 ‘‘(aa) file or amend the peti15 tion or other documents as re16 quired by this title or the court 

17 without substantial excuse (but 

18 mere inadvertence or negligence 

19 shall not be a substantial excuse 

20 unless the dismissal was caused 

21 by the negligence of the debtor’s 

22 attorney); 

23 ‘‘(bb) provide adequate pro24 tection as ordered by the court; 

25 or 
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1 ‘‘(cc) perform the terms of a 

2 plan confirmed by the court; or 

3 ‘‘(III) there has not been a sub4 stantial change in the financial or per5 sonal affairs of the debtor since the 

6 dismissal of the next most previous 

7 case under chapter 7, 11, or 13 or 

8 any other reason to conclude that the 

9 later case will be concluded—

10 ‘‘(aa) if a case under chap11 ter 7, with a discharge; or 

12 ‘‘(bb) if a case under chap13 ter 11 or 13, with a confirmed 

14 plan that will be fully performed; 

15 and 

16 ‘‘(ii) as to any creditor that com17 menced an action under subsection (d) in 

18 a previous case in which the individual was 

19 a debtor if, as of the date of dismissal of 

20 such case, that action was still pending or 

21 had been resolved by terminating, condi22 tioning, or limiting the stay as to actions 

23 of such creditor; and 

24 ‘‘(4)(A)(i) if a single or joint case is filed by or 

25 against a debtor who is an individual under this 
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1 title, and if 2 or more single or joint cases of the 

2 debtor were pending within the previous year but 

3 were dismissed, other than a case refiled under sec4 tion 707(b), the stay under subsection (a) shall not 

5 go into effect upon the filing of the later case; and 

6 ‘‘(ii) on request of a party in interest, the court 

7 shall promptly enter an order confirming that no 

8 stay is in effect; 

9 ‘‘(B) if, within 30 days after the filing of the 

10 later case, a party in interest requests the court may 

11 order the stay to take effect in the case as to any 

12 or all creditors (subject to such conditions or limita13 tions as the court may impose), after notice and a 

14 hearing, only if the party in interest demonstrates 

15 that the filing of the later case is in good faith as 

16 to the creditors to be stayed; 

17 ‘‘(C) a stay imposed under subparagraph (B) 

18 shall be effective on the date of entry of the order 

19 allowing the stay to go into effect; and 

20 ‘‘(D) for purposes of subparagraph (B), a case 

21 is presumptively not filed in good faith (but such 

22 presumption may be rebutted by clear and con23 vincing evidence to the contrary)—

24 ‘‘(i) as to all creditors if—
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1 ‘‘(I) 2 or more previous cases under 

2 this title in which the individual was a 

3 debtor were pending within the 1-year pe4 riod; 

5 ‘‘(II) a previous case under this title 

6 in which the individual was a debtor was 

7 dismissed within the time period stated in 

8 this paragraph after the debtor failed to 

9 file or amend the petition or other docu10 ments as required by this title or the court 

11 without substantial excuse (but mere inad12 vertence or negligence shall not be sub13 stantial excuse unless the dismissal was 

14 caused by the negligence of the debtor’s at15 torney), failed to provide adequate protec16 tion as ordered by the court, or failed to 

17 perform the terms of a plan confirmed by 

18 the court; or 

19 ‘‘(III) there has not been a substan20 tial change in the financial or personal af21 fairs of the debtor since the dismissal of 

22 the next most previous case under this 

23 title, or any other reason to conclude that 

24 the later case will not be concluded, if a 

25 case under chapter 7, with a discharge, 
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1 and if a case under chapter 11 or 13, with 

2 a confirmed plan that will be fully per3 formed; or 

4 ‘‘(ii) as to any creditor that commenced an 

5 action under subsection (d) in a previous case 

6 in which the individual was a debtor if, as of 

7 the date of dismissal of such case, such action 

8 was still pending or had been resolved by termi9 nating, conditioning, or limiting the stay as to 

10 action of such creditor.’’. 

11 SEC. 303. CURBING ABUSIVE FILINGS. 

12 (a) IN GENERAL.—Section 362(d) of title 11, United 

13 States Code, is amended—

14 (1) in paragraph (2), by striking ‘‘or’’ at the 

15 end; 

16 (2) in paragraph (3), by striking the period at 

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

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

19 ‘‘(4) with respect to a stay of an act against 

20 real property under subsection (a), by a creditor 

21 whose claim is secured by an interest in such real 

22 estate, if the court finds that the filing of the bank23 ruptcy petition was part of a scheme to delay, 

24 hinder, and defraud creditors that involved either—
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1 ‘‘(A) transfer of all or part ownership of, 

2 or other interest in, the real property without 

3 the consent of the secured creditor or court ap4 proval; or 

5 ‘‘(B) multiple bankruptcy filings affecting 

6 the real property. 

7 If recorded in compliance with applicable State laws gov8 erning notices of interests or liens in real property, an 

9 order entered under this subsection shall be binding in any 

10 other case under this title purporting to affect the real 

11 property filed not later than 2 years after the date of entry 

12 of such order by the court, except that a debtor in a subse13 quent case may move for relief from such order based 

14 upon changed circumstances or for good cause shown, 

15 after notice and a hearing. Any Federal, State, or local 

16 governmental unit that accepts notices of interests or liens 

17 in real property shall accept any certified copy of an order 

18 described in this subsection for indexing and recording.’’. 

19 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

20 United States Code, as amended by section 224, is amend21 ed by inserting after paragraph (19), the following: 

22 ‘‘(20) under subsection (a), of any act to en23 force any lien against or security interest in real 

24 property following the entry of an order under sec25 tion 362(d)(4) as to that property in any prior bank-
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1 ruptcy case for a period of 2 years after entry of 

2 such an order, except that the debtor, in a subse3 quent case, may move the court for relief from such 

4 order based upon changed circumstances or for 

5 other good cause shown, after notice and a hearing; 

6 ‘‘(21) under subsection (a), of any act to en7 force any lien against or security interest in real 

8 property—

9 ‘‘(A) if the debtor is ineligible under sec10 tion 109(g) to be a debtor in a bankruptcy case; 

11 or 

12 ‘‘(B) if the bankruptcy case was filed in 

13 violation of a bankruptcy court order in a prior 

14 bankruptcy case prohibiting the debtor from 

15 being a debtor in another bankruptcy case;’’. 

16 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY 

17 SECURITY. 

18 Title 11, United States Code, is amended—

19 (1) in section 521(a), as so designated by sec20 tion 106—

21 (A) in paragraph (4), by striking ‘‘, and’’ 

22 at the end and inserting a semicolon; 

23 (B) in paragraph (5), by striking the pe24 riod at the end and inserting ‘‘; and’’; and 

25 (C) by adding at the end the following: 
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1 ‘‘(6) in a case under chapter 7 of this title in 

2 which the debtor is an individual, not retain posses3 sion of personal property as to which a creditor has 

4 an allowed claim for the purchase price secured in 

5 whole or in part by an interest in that personal 

6 property unless the debtor, not later than 45 days 

7 after the first meeting of creditors under section 

8 341(a), either—

9 ‘‘(A) enters into an agreement with the 

10 creditor pursuant to section 524(c) of this title 

11 with respect to the claim secured by such prop12 erty; or 

13 ‘‘(B) redeems such property from the secu14 rity interest pursuant to section 722 of this 

15 title. 

16 If the debtor fails to so act within the 45-day period re17 ferred to in paragraph (6), the stay under section 362(a) 

18 of this title is terminated with respect to the personal 

19 property of the estate or of the debtor which is affected, 

20 such property shall no longer be property of the estate, 

21 and the creditor may take whatever action as to such prop22 erty as is permitted by applicable nonbankruptcy law, un23 less the court determines on the motion of the trustee 

24 filedbefore the expiration of such 45-day period, and after 

25 notice and a hearing, that such property is of consequen-
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1 tial value or benefit to the estate, orders appropriate ade2 quate protection of the creditor’s interest, and orders the 

3 debtor to deliver any collateral in the debtor’s possession 

4 to the trustee.’’; and 

5 (2) in section 722, by inserting ‘‘in full at the 

6 time of redemption’’ before the period at the end. 

7 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE 

8 DEBTOR DOES NOT COMPLETE INTENDED 

9 SURRENDER OF CONSUMER DEBT COLLAT10 ERAL. 

11 Title 11, United States Code, is amended—

12 (1) in section 362, as amended by section 

13 106—

14 (A) in subsection (c), by striking ‘‘(e), and 

15 (f)’’ and inserting ‘‘(e), (f), and (h)’’; 

16 (B) by redesignating subsection (h) as sub17 section (k) and transferring such subsection so 

18 as to insert it after subjection (j) as added by 

19 section 106; and 

20 (C) by inserting after subsection (g) the 

21 following: 

22 ‘‘(h)(1) In a case in which the debtor is an individual, 

23 the stay provided by subsection (a) is terminated with re24 spect to personal property of the estate or of the debtor 

25 securing in whole or in part a claim, or subject to an unex-
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1 pired lease, and such personal property shall no longer be 

2 property of the estate if the debtor fails within the applica3 ble time set by section 521(a)(2) of this title—

4 ‘‘(A) to file timely any statement of intention 

5 required under section 521(a)(2) of this title with 

6 respect to that property or to indicate in that state7 ment that the debtor will either surrender the prop8 erty or retain it and, if retaining it, either redeem 

9 the property pursuant to section 722 of this title, re10 affirm the debt it secures pursuant to section 524(c) 

11 of this title, or assume the unexpired lease pursuant 

12 to section 365(p) of this title if the trustee does not 

13 do so, as applicable; and 

14 ‘‘(B) to take timely the action specified in that 

15 statement of intention, as it may be amended before 

16 expiration of the period for taking action, unless the 

17 statement of intention specifies reaffirmation and 

18 the creditor refuses to reaffirm on the original con19 tract terms. 

20 ‘‘(2) Paragraph (1) does not apply if the court deter21 mines, on the motion of the trustee filed before the expira22 tion of the applicable time set by section 521(a)(2), after 

23 notice and a hearing, that such property is of consequen24 tial value or benefit to the estate, and orders appropriate 

25 adequate protection of the creditor’s interest, and orders 
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1 the debtor to deliver any collateral in the debtor’s posses2 sion to the trustee. If the court does not so determine, 

3 the stay provided by subsection (a) shall terminate upon 

4 the conclusion of the proceeding on the motion.’’; and 

5 (2) in section 521, as amended by sections 106 

6 and 225—

7 (A) in subsection (a)(2) by striking ‘‘con8 sumer’’; 

9 (B) in subsection (a)(2)(B)—

10 (i) by striking ‘‘forty-five days after 

11 the filing of a notice of intent under this 

12 section’’ and inserting ‘‘30 days after the 

13 first date set for the meeting of creditors 

14 under section 341(a) of this title’’; and 

15 (ii) by striking ‘‘forty-five day’’ and 

16 inserting ‘‘30-day’’; 

17 (C) in subsection (a)(2)(C) by inserting ‘‘, 

18 except as provided in section 362(h) of this 

19 title’’ before the semicolon; and 

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

21 ‘‘(d) If the debtor fails timely to take the action speci22 fied in subsection (a)(6) of this section, or in paragraphs 

23 (1) and (2) of section 362(h) of this title, with respect 

24 to property which a lessor or bailor owns and has leased, 

25 rented, or bailed to the debtor or as to which a creditor 
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1 holds a security interest not otherwise voidable under sec2 tion 522(f), 544, 545, 547, 548, or 549 of this title, noth3 ing in this title shall prevent or limit the operation of a 

4 provision in the underlying lease or agreement which has 

5 the effect of placing the debtor in default under such lease 

6 or agreement by reason of the occurrence, pendency, or 

7 existence of a proceeding under this title or the insolvency 

8 of the debtor. Nothing in this subsection shall be deemed 

9 to justify limiting such a provision in any other cir10 cumstance.’’. 

11 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT 

12 IN CHAPTER 13. 

13 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title 

14 11, United States Code, is amended to read as follows: 

15 ‘‘(i) the plan provides that—

16 ‘‘(I) the holder of such claim retain 

17 the lien securing such claim until the ear18 lier of—

19 ‘‘(aa) the payment of the under20 lying debt determined under nonbank21 ruptcy law; or 

22 ‘‘(bb) discharge under section 

23 1328; and 

24 ‘‘(II) if the case under this chapter is 

25 dismissed or converted without completion 
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1 of the plan, such lien shall also be retained 

2 by such holder to the extent recognized by 

3 applicable nonbankruptcy law; and’’.

4 (b) RESTORING THE FOUNDATION FOR SECURED

5 CREDIT.—Section 1325(a) of title 11, United States Code, 

6 is amended by adding at the end the following: 

7 ‘‘For purposes of paragraph (5), section 506 shall not 

8 apply to a claim described in that paragraph if the creditor 

9 has a purchase money security interest securing the debt 

10 that is the subject of the claim, the debt was incurred 

11 within the 910-day preceding the filing of the petition, and 

12 the collateral for that debt consists of a motor vehicle (as 

13 defined in section 30102 of title 49) acquired for the per14 sonal use of the debtor, or if collateral for that debt con15 sists of any other thing of value, if the debt was incurred 

16 during the 1-year period preceding that filing.’’. 

17 (c) DEFINITIONS.—Section 101 of title 11, United 

18 States Code, is amended—

19 (1) by inserting after paragraph (13) the fol20 lowing: 

21 ‘‘(13A) ‘debtor’s principal residence’—

22 ‘‘(A) means a residential structure, includ23 ing incidental property, without regard to 

24 whether that structure is attached to real prop25 erty; and 
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1 ‘‘(B) includes an individual condominium 

2 or cooperative unit, a mobile or manufactured 

3 home, or trailer;’’; and 

4 (2) by inserting after paragraph (27), the fol5 lowing: 

6 ‘‘(27A) ‘incidental property’ means, with re7 spect to a debtor’s principal residence—

8 ‘‘(A) property commonly conveyed with a 

9 principal residence in the area where the real 

10 estate is located; 

11 ‘‘(B) all easements, rights, appurtenances, 

12 fixtures, rents, royalties, mineral rights, oil or 

13 gas rights or profits, water rights, escrow 

14 funds, or insurance proceeds; and 

15 ‘‘(C) all replacements or additions;’’. 

16 SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS. 

17 Section 522(b)(3) of title 11, United States Code, as 

18 so designated by section 106, is amended—

19 (1) in subparagraph (A)—

20 (A) by striking ‘‘180 days’’ and inserting 

21 ‘‘730 days’’; and 

22 (B) by striking ‘‘, or for a longer portion 

23 of such 180-day period than in any other place’’ 

24 and inserting ‘‘or if the debtor’s domicile has 

25 not been located at a single State for such 730-
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1 day period, the place in which the debtor’s 

2 domicile was located for 180 days immediately 

3 preceding the 730-day period or for a longer 

4 portion of such 180-day period than in any 

5 other place’’; and 

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

7 ‘‘If the effect of the domiciliary requirement under sub8 paragraph (A) is to render the debtor ineligible for any 

9 exemption, the debtor may elect to exempt property that 

10 is specified under subsection (d).’’.

11 SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR 

12 FRAUD. 

13 Section 522 of title 11, United States Code, as 

14 amended by section 224, is amended—

15 (1) in subsection (b)(3)(A), as so designated by 

16 this Act, by inserting ‘‘subject to subsections (o) and 

17 (p),’’ before ‘‘any property’’; and 

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

19 ‘‘(o) For purposes of subsection (b)(3)(A), and not20 withstanding subsection (a), the value of an interest in—

21 ‘‘(1) real or personal property that the debtor 

22 or a dependent of the debtor uses as a residence; 

23 ‘‘(2) a cooperative that owns property that the 

24 debtor or a dependent of the debtor uses as a resi25 dence; 
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1 ‘‘(3) a burial plot for the debtor or a dependent 

2 of the debtor; or 

3 ‘‘(4) real or personal property that the debtor 

4 or a dependent of the debtor claims as a homestead; 

5 shall be reduced to the extent that such value is attrib6 utable to any portion of any property that the debtor dis7 posed of in the 10-year period ending on the date of the 

8 filing of the petition with the intent to hinder, delay, or 

9 defraud a creditor and that the debtor could not exempt, 

10 or that portion that the debtor could not exempt, under 

11 subsection (b), if on such date the debtor had held the 

12 property so disposed of.’’. 

13 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 

14 13 CASES. 

15 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP16 TER 13.—Section 348(f)(1) of title 11, United States 

17 Code, is amended—

18 (1) in subparagraph (A), by striking ‘‘and’’ at 

19 the end; 

20 (2) in subparagraph (B)—

21 (A) by striking ‘‘in the converted case, 

22 with allowed secured claims’’ and inserting 

23 ‘‘only in a case converted to a case under chap24 ter 11 or 12, but not in a case converted to a 
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1 case under chapter 7, with allowed secured 

2 claims in cases under chapters 11 and 12’’; and 

3 (B) by striking the period and inserting ‘‘; 

4 and’’; and 

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

6 ‘‘(C) with respect to cases converted from chap7 ter 13—

8 ‘‘(i) the claim of any creditor holding secu9 rity as of the date of the petition shall continue 

10 to be secured by that security unless the full 

11 amount of such claim determined under appli12 cable nonbankruptcy law has been paid in full 

13 as of the date of conversion, notwithstanding 

14 any valuation or determination of the amount 

15 of an allowed secured claim made for the pur16 poses of the case under chapter 13; and 

17 ‘‘(ii) unless a prebankruptcy default has 

18 been fully cured under the plan at the time of 

19 conversion, in any proceeding under this title or 

20 otherwise, the default shall have the effect given 

21 under applicable nonbankruptcy law.’’. 

22 (b) GIVING DEBTORS THE ABILITY TO KEEP

23 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section 

24 365 of title 11, United States Code, is amended by adding 

25 at the end the following: 
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1 ‘‘(p)(1) If a lease of personal property is rejected or 

2 not timely assumed by the trustee under subsection (d), 

3 the leased property is no longer property of the estate and 

4 the stay under section 362(a) is automatically terminated. 

5 ‘‘(2)(A) If the debtor in a case under chapter 7 is 

6 an individual, the debtor may notify the creditor in writing 

7 that the debtor desires to assume the lease. Upon being 

8 so notified, the creditor may, at its option, notify the debt9 or that it is willing to have the lease assumed by the debt10 or and may condition such assumption on cure of any out11 standing default on terms set by the contract. 

12 ‘‘(B) If, not later than 30 days after notice is pro13 vided under subparagraph (A), the debtor notifies the les14 sor in writing that the lease is assumed, the liability under 

15 the lease will be assumed by the debtor and not by the 

16 estate. 

17 ‘‘(C) The stay under section 362 and the injunction 

18 under section 524(a)(2) shall not be violated by notifica19 tion of the debtor and negotiation of cure under this sub20 section. 

21 ‘‘(3) In a case under chapter 11 in which the debtor 

22 is an individual and in a case under chapter 13, if the 

23 debtor is the lessee with respect to personal property and 

24 the lease is not assumed in the plan confirmed by the 

25 court, the lease is deemed rejected as of the conclusion 
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1 of the hearing on confirmation. If the lease is rejected, 

2 the stay under section 362 and any stay under section 

3 1301 is automatically terminated with respect to the prop4 erty subject to the lease.’’. 

5 (c) ADEQUATE PROTECTION OF LESSORS AND PUR6 CHASE MONEY SECURED CREDITORS.—

7 (1) CONFIRMATION OF PLAN.—Section 

8 1325(a)(5)(B) of title 11, United States Code, as 

9 amended by section 306, is amended—

10 (A) in clause (i), by striking ‘‘and’’ at the 

11 end; 

12 (B) in clause (ii), by striking ‘‘or’’ at the 

13 end and inserting ‘‘and’’; and 

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

15 ‘‘(iii) if—

16 ‘‘(I) property to be distributed pursu17 ant to this subsection is in the form of 

18 periodic payments, such payments shall be 

19 in equal monthly amounts; and 

20 ‘‘(II) the holder of the claim is se21 cured by personal property, the amount of 

22 such payments shall not be less than an 

23 amount sufficient to provide to the holder 

24 of such claim adequate protection during 

25 the period of the plan; or’’. 
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1 (2) PAYMENTS.—Section 1326(a) of title 11, 

2 United States Code, is amended to read as follows: 

3 ‘‘(a)(1) Unless the court orders otherwise, the debtor 

4 shall commence making payments not later than 30 days 

5 after the date of the filing of the plan or the order for 

6 relief, whichever is earlier, in the amount—

7 ‘‘(A) proposed by the plan to the trustee; 

8 ‘‘(B) scheduled in a lease of personal property 

9 directly to the lessor for that portion of the obliga10 tion that becomes due after the order for relief, re11 ducing the payments under subparagraph (A) by the 

12 amount so paid and providing the trustee with evi13 dence of such payment, including the amount and 

14 date of payment; and 

15 ‘‘(C) that provides adequate protection directly 

16 to a creditor holding an allowed claim secured by 

17 personal property to the extent the claim is attrib18 utable to the purchase of such property by the debt19 or for that portion of the obligation that becomes 

20 due after the order for relief, reducing the payments 

21 under subparagraph (A) by the amount so paid and 

22 providing the trustee with evidence of such payment, 

23 including the amount and date of payment. 

24 ‘‘(2) A payment made under paragraph (1)(A) shall 

25 be retained by the trustee until confirmation or denial of 
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1 confirmation. If a plan is confirmed, the trustee shall dis2 tribute any such payment in accordance with the plan as 

3 soon as is practicable. If a plan is not confirmed, the trust4 ee shall return any such payments not previously paid and 

5 not yet due and owing to creditors pursuant to paragraph 

6 (3) to the debtor, after deducting any unpaid claim al7 lowed under section 503(b). 

8 ‘‘(3) Subject to section 363, the court may, upon no9 tice and a hearing, modify, increase, or reduce the pay10 ments required under this subsection pending confirma11 tion of a plan. 

12 ‘‘(4) Not later than 60 days after the date of filing 

13 of a case under this chapter, a debtor retaining possession 

14 of personal property subject to a lease or securing a claim 

15 attributable in whole or in part to the purchase price of 

16 such property shall provide the lessor or secured creditor 

17 reasonable evidence of the maintenance of any required 

18 insurance coverage with respect to the use or ownership 

19 of such property and continue to do so for so long as the 

20 debtor retains possession of such property.’’.

21 SEC. 310. LIMITATION ON LUXURY GOODS. 

22 Section 523(a)(2)(C) of title 11, United States Code, 

23 is amended to read as follows: 

24 ‘‘(C)(i) for purposes of subparagraph 

25 (A)—
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1 ‘‘(I) consumer debts owed to a single 

2 creditor and aggregating more than $500 

3 for luxury goods or services incurred by an 

4 individual debtor on or within 90 days be5 fore the order for relief under this title are 

6 presumed to be nondischargeable; and 

7 ‘‘(II) cash advances aggregating more 

8 than $750 that are extensions of consumer 

9 credit under an open end credit plan ob10 tained by an individual debtor on or within 

11 70 days before the order for relief under 

12 this title, are presumed to be non13 dischargeable; and 

14 ‘‘(ii) for purposes of this subparagraph—

15 ‘‘(I) the terms ‘consumer’, ‘credit’, 

16 and ‘open end credit plan’ have the same 

17 meanings as in section 103 of the Truth in 

18 Lending Act; and 

19 ‘‘(II) the term ‘luxury goods or serv20 ices’ does not include goods or services rea21 sonably necessary for the support or main22 tenance of the debtor or a dependent of the 

23 debtor.’’.
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1 SEC. 311. AUTOMATIC STAY. 

2 (a) IN GENERAL.—Section 362(b) of title 11, United 

3 States Code, as amended by sections 224 and 303, is 

4 amended by inserting after paragraph (21), the following: 

5 ‘‘(22) subject to subsection (n), under sub6 section (a)(3), of the continuation of any eviction, 

7 unlawful detainer action, or similar proceeding by a 

8 lessor against a debtor involving residential property 

9 in which the debtor resides as a tenant under a lease 

10 or rental agreement and with respect to which the 

11 lessor has obtained before the date of the filing of 

12 the bankruptcy petition, a judgment for possession 

13 of such property against the debtor; 

14 ‘‘(23) subject to subsection (o), under sub15 section (a)(3), of an eviction action that seeks pos16 session of the residential property in which the debt17 or resides as a tenant under a lease or rental agree18 ment based on endangerment of such property or 

19 the illegal use of controlled substances on such prop20 erty, but only if the lessor files with the court, and 

21 serves upon the debtor, a certification under penalty 

22 of perjury that such an eviction action has been 

23 filed, or that the debtor, during the 30-day period 

24 preceding the date of the filing of the certification, 

25 has endangered property or illegally used or allowed 

26 to be used a controlled substance on the property;
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1 ‘‘(24) under subsection (a), of any transfer that 

2 is not avoidable under section 544 and that is not 

3 avoidable under section 549;’’. 

4 (b) LIMITATIONS.—Section 362 of title 11, United 

5 States Code, as amended by sections 106 and 305, is 

6 amended by adding at the end the following: 

7 ‘‘(n)(1) Except as otherwise provided in this sub8 section, subsection (b)(22) shall apply on the date that 

9 is 30 days after the date on which the bankruptcy petition 

10 is filed, if the debtor files with the petition and serves upon 

11 the lessor a certification under penalty of perjury that—

12 ‘‘(A) under nonbankruptcy law applicable in the 

13 jurisdiction, there are circumstances under which the 

14 debtor would be permitted to cure the entire mone15 tary default that gave rise to the judgment for pos16 session, after that judgment for possession was en17 tered; and 

18 ‘‘(B) the debtor (or an adult dependent of the 

19 debtor) has deposited with the clerk of the court, 

20 any rent that would become due during the 30-day 

21 period after the filing of the bankruptcy petition. 

22 ‘‘(2) If, within the 30-day period after the filing of 

23 the bankruptcy petition, the debtor (or an adult dependent 

24 of the debtor) complies with paragraph (1) and files with 

25 the court and serves upon the lessor a further certification 
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1 under penalty of perjury that the debtor (or an adult de2 pendent of the debtor) has cured, under nonbankrupcty 

3 law applicable in the jurisdiction, the entire monetary de4 fault that gave rise to the judgment under which posses5 sion is sought by the lessor, subsection (b)(22) shall not 

6 apply, unless ordered to apply by the court under para7 graph (3). 

8 ‘‘(3)(A) If the lessor files an objection to any certifi9 cation filed by the debtor under paragraph (1) or (2), and 

10 serves such objection upon the debtor, the court shall hold 

11 a hearing within 10 days after the filing and service of 

12 such objection to determine if the certification filed by the 

13 debtor under paragraph (1) or (2) is true. 

14 ‘‘(B) If the court upholds the objection of the lessor 

15 filed under subparagraph (A)—

16 ‘‘(i) subsection (b)(22) shall apply immediately 

17 and relief from the stay provided under subsection 

18 (a)(3) shall not be required to enable the lessor to 

19 complete the process to recover full possession of the 

20 property; and 

21 ‘‘(ii) the clerk of the court shall immediately 

22 serve upon the lessor and the debtor a certified copy 

23 of the court’s order upholding the lessor’s objection. 

24 ‘‘(4) If a debtor, in accordance with paragraph (5), 

25 indicates on the petition that there was a judgment for 
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1 possession of the residential rental property in which the 

2 debtor resides and does not file a certification under para3 graph (1) or (2)—

4 ‘‘(A) subsection (b)(22) shall apply immediately 

5 upon failure to file such certification, and relief from 

6 the stay provided under subsection (a)(3) shall not 

7 be required to enable the lessor to complete the 

8 process to recover full possession of the property; 

9 and 

10 ‘‘(B) the clerk of the court shall immediately 

11 serve upon the lessor and the debtor a certified copy 

12 of the docket indicating the absence of a filed certifi13 cation and the applicability of the exception to the 

14 stay under subsection (b)(22). 

15 ‘‘(5)(A) Where a judgment for possession of residen16 tial property in which the debtor resides as a tenant under 

17 a lease or rental agreement has been obtained by the les18 sor, the debtor shall so indicate on the bankruptcy petition 

19 and shall provide the name and address of the lessor that 

20 obtained that pre-petition judgment on the petition and 

21 on any certification filed under this subsection. 

22 ‘‘(B) The form of certification filed with the petition, 

23 as specified in this subsection, shall provide for the debtor 

24 to certify, and the debtor shall certify—
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1 ‘‘(i) whether a judgment for possession of resi2 dential rental housing in which the debtor resides 

3 has been obtained against the debtor before the fil4 ing of the petition; and 

5 ‘‘(ii) whether the debtor is claiming under para6 graph (1) that under nonbankruptcy law applicable 

7 in the jurisdiction, there are circumstances under 

8 which the debtor would be permitted to cure the en9 tire monetary default that gave rise to the judgment 

10 for possession, after that judgment of possession was 

11 entered, and has made the appropriate deposit with 

12 the court. 

13 ‘‘(C) The standard forms (electronic and otherwise) 

14 used in a bankruptcy proceeding shall be amended to re15 flect the requirements of this subsection. 

16 ‘‘(D) The clerk of the court shall arrange for the 

17 prompt transmittal of the rent deposited in accordance 

18 with paragraph (1)(B) to the lessor. 

19 ‘‘(o)(1) Except as otherwise provided in this sub20 section, subsection (b)(23) shall apply on the date that 

21 is 15 days after the date on which the lessor files and 

22 serves a certification described in subsection (b)(23). 

23 ‘‘(2)(A) If the debtor files with the court an objection 

24 to the truth or legal sufficiency of the certification de25 scribed in subsection (b)(23) and serves such objection 
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1 upon the lessor, subsection (b)(23) shall not apply, unless 

2 ordered to apply by the court under this subsection. 

3 ‘‘(B) If the debtor files and serves the objection under 

4 subparagraph (A), the court shall hold a hearing within 

5 10 days after the filing and service of such objection to 

6 determine if the situation giving rise to the lessor’s certifi7 cation under paragraph (1) existed or has been remedied. 

8 ‘‘(C) If the debtor can demonstrate to the satisfaction 

9 of the court that the situation giving rise to the lessor’s 

10 certification under paragraph (1) did not exist or has been 

11 remedied, the stay provided under subsection (a)(3) shall 

12 remain in effect until the termination of the stay under 

13 this section. 

14 ‘‘(D) If the debtor cannot demonstrate to the satis15 faction of the court that the situation giving rise to the 

16 lessor’s certification under paragraph (1) did not exist or 

17 has been remedied—

18 ‘‘(i) relief from the stay provided under sub19 section (a)(3) shall not be required to enable the les20 sor to proceed with the eviction; and 

21 ‘‘(ii) the clerk of the court shall immediately 

22 serve upon the lessor and the debtor a certified copy 

23 of the court’s order upholding the lessor’s certifi24 cation. 
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1 ‘‘(3) If the debtor fails to file, within 15 days, an 

2 objection under paragraph (2)(A)—

3 ‘‘(A) subsection (b)(23) shall apply immediately 

4 upon such failure and relief from the stay provided 

5 under subsection (a)(3) shall not be required to en6 able the lessor to complete the process to recover full 

7 possession of the property; and 

8 ‘‘(B) the clerk of the court shall immediately 

9 serve upon the lessor and the debtor a certified copy 

10 of the docket indicating such failure.’’. 

11 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY 

12 DISCHARGES. 

13 Title 11, United States Code, is amended—

14 (1) in section 727(a)(8), by striking ‘‘six’’ and 

15 inserting ‘‘8’’; and 

16 (2) in section 1328, by inserting after sub17 section (e) the following: 

18 ‘‘(f) Notwithstanding subsections (a) and (b), the 

19 court shall not grant a discharge of all debts provided for 

20 in the plan or disallowed under section 502, if the debtor 

21 has received a discharge—

22 ‘‘(1) in a case filed under chapter 7, 11, or 12 

23 of this title during the 4-year period preceding the 

24 date of the order for relief under this chapter, or 
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1 ‘‘(2) in a case filed under chapter 13 of this 

2 title during the 2-year period preceding the date of 

3 such order.’’. 

4 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN5 TIQUES. 

6 (a) DEFINITION.—Section 522(f) of title 11, United 

7 States Code, is amended by adding at the end the fol8 lowing: 

9 ‘‘(4)(A) Subject to subparagraph (B), for purposes 

10 of paragraph (1)(B), the term ‘household goods’ means—

11 ‘‘(i) clothing; 

12 ‘‘(ii) furniture; 

13 ‘‘(iii) appliances; 

14 ‘‘(iv) 1 radio; 

15 ‘‘(v) 1 television; 

16 ‘‘(vi) 1 VCR; 

17 ‘‘(vii) linens; 

18 ‘‘(viii) china; 

19 ‘‘(ix) crockery; 

20 ‘‘(x) kitchenware; 

21 ‘‘(xi) educational materials and educational 

22 equipment primarily for the use of minor dependent 

23 children of the debtor; 

24 ‘‘(xii) medical equipment and supplies; 
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1 ‘‘(xiii) furniture exclusively for the use of minor 

2 children, or elderly or disabled dependents of the 

3 debtor; 

4 ‘‘(xiv) personal effects (including the toys and 

5 hobby equipment of minor dependent children and 

6 wedding rings) of the debtor and the dependents of 

7 the debtor; and 

8 ‘‘(xv) 1 personal computer and related equip9 ment. 

10 ‘‘(B) The term ‘household goods’ does not include—

11 ‘‘(i) works of art (unless by or of the debtor, or 

12 any relative of the debtor); 

13 ‘‘(ii) electronic entertainment equipment with a 

14 fair market value of more than $500 in the aggre15 gate (except 1 television, 1 radio, and 1 VCR); 

16 ‘‘(iii) items acquired as antiques with a fair 

17 market value of more than $500 in the aggregate; 

18 ‘‘(iv) jewelry with a fair market value of more 

19 than $500 in the aggregate (except wedding rings); 

20 and 

21 ‘‘(v) a computer (except as otherwise provided 

22 for in this section), motor vehicle (including a trac23 tor or lawn tractor), boat, or a motorized rec24 reational device, conveyance, vehicle, watercraft, or 

25 aircraft.’’. 
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1 (b) STUDY.—Not later than 2 years after the date 

2 of enactment of this Act, the Director of the Executive 

3 Office for United States Trustees shall submit a report 

4 to the Committee on the Judiciary of the Senate and the 

5 Committee on the Judiciary of the House of Representa6 tives containing its findings regarding utilization of the 

7 definition of household goods, as defined in section 

8 522(f)(4) of title 11, United States Code, as added by this 

9 section, with respect to the avoidance of nonpossessory, 

10 nonpurchase money security interests in household goods 

11 under section 522(f)(1)(B) of title 11, United States Code, 

12 and the impact that section 522(f)(4) of that title, as 

13 added by this section, has had on debtors and on the bank14 ruptcy courts. Such report may include recommendations 

15 for amendments to section 522(f)(4) of title 11, United 

16 States Code, consistent with the Director’s findings.

17 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE 

18 DEBTS. 

19 (a) IN GENERAL.—Section 523(a) of title 11, United 

20 States Code, is amended by inserting after paragraph (14) 

21 the following: 

22 ‘‘(14A) incurred to pay a tax to a governmental 

23 unit, other than the United States, that would be 

24 nondischargeable 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 

3 striking paragraphs (1) through (3) and inserting the fol4 lowing: 

5 ‘‘(1) provided for under section 1322(b)(5); 

6 ‘‘(2) of the kind specified in paragraph (2), (3), 

7 (4), (5), (8), or (9) of section 523(a); 

8 ‘‘(3) for restitution, or a criminal fine, included 

9 in a sentence on the debtor’s conviction of a crime; 

10 or 

11 ‘‘(4) for restitution, or damages, awarded in a 

12 civil action against the debtor as a result of willful 

13 or malicious injury by the debtor that caused per14 sonal injury to an individual or the death of an indi15 vidual.’’.

16 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 

17 AND 13 CASES. 

18 (a) NOTICE.—Section 342 of title 11, United States 

19 Code, as amended by section 102, is amended—

20 (1) in subsection (c)—

21 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; 

22 (B) by striking ‘‘, but the failure of such 

23 notice to contain such information shall not in24 validate the legal effect of such notice’’; and 

25 (C) by adding at the end the following: 
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1 ‘‘(2)(A) If, within the 90 days before the commence2 ment of a voluntary case, a creditor supplies the debtor 

3 in at least 2 communications sent to the debtor with the 

4 current account number of the debtor and the address at 

5 which such creditor requests to receive correspondence, 

6 then any notice required by this title to be sent by the 

7 debtor to such creditor shall be sent to such address and 

8 shall include such account number. 

9 (B) If a creditor would be in violation of applicable 

10 nonbankruptcy law by sending any such communication 

11 within such 90-day period and if such creditor supplies 

12 the debtor in the last 2 communications with the current 

13 account number of the debtor and the address at which 

14 such creditor requests to receive correspondence, then any 

15 notice required by this title to be sent by the debtor to 

16 such creditor shall be sent to such address and shall in17 clude such account number; and 

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

19 ‘‘(e)(1) In a case under chapter 7 or 13 of this title 

20 of a debtor who is an individual, a creditor at any time 

21 may both file with the court and serve on the debtor a 

22 notice of address to be used to provide notice in such case 

23 to such creditor. 

24 ‘‘(2) Any notice in such case required to be provided 

25 to such creditor by the debtor or the court later than 5 
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1 days after the court and the debtor receive such creditor’s 

2 notice of address, shall be provided to such address.

3 ‘‘(f)(1) An entity may file with any bankruptcy court 

4 a notice of address to be used by all the bankruptcy courts 

5 or by particular bankruptcy courts, as so specified by such 

6 entity at the time such notice is filed, to provide notice 

7 to such entity in all cases under chapters 7 and 13 pend8 ing in the courts with respect to which such notice is filed, 

9 in which such entity is a creditor. 

10 ‘‘(2) In any case filed under chapter 7 or 13, any 

11 notice required to be provided by a court with respect to 

12 which a notice is filed under paragraph (1), to such entity 

13 later than 30 days after the filing of such notice under 

14 paragraph (1) shall be provided to such address unless 

15 with respect to a particular case a different address is 

16 specified in a notice filed and served in accordance with 

17 subsection (e). 

18 ‘‘(3) A notice filed under paragraph (1) may be with19 drawn by such entity. 

20 ‘‘(g)(1) Notice provided to a creditor by the debtor 

21 or the court other than in accordance with this section 

22 (excluding this subsection) shall not be effective notice 

23 until such notice is brought to the attention of such cred24 itor. If such creditor designates a person or an organiza25 tional subdivision of such creditor to be responsible for 
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1 receiving notices under this title and establishes reason2 able procedures so that such notices receivable by such 

3 creditor are to be delivered to such person or such subdivi4 sion, then a notice provided to such creditor other than 

5 in accordance with this section (excluding this subsection) 

6 shall not be considered to have been brought to the atten7 tion of such creditor until such notice is received by such 

8 person or such subdivision. 

9 ‘‘(2) A monetary penalty may not be imposed on a 

10 creditor for a violation of a stay in effect under section 

11 362(a) of this title (including a monetary penalty imposed 

12 under section 362(k) of this title) or for failure to comply 

13 with section 542 or 543 unless the conduct that is the 

14 basis of such violation or of such failure occurs after such 

15 creditor receives notice effective under this section of the 

16 order for relief.’’. 

17 (b) DEBTOR’S DUTIES.—Section 521 of title 11, 

18 United States Code, as amended by sections 106, 225, and 

19 305, is amended—

20 (1) in subsection (a), as so designated by sec21 tion 106, by amending paragraph (1) to read as fol22 lows: 

23 ‘‘(1) file—

24 ‘‘(A) a list of creditors; and 

25 ‘‘(B) unless the court orders otherwise—
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1 ‘‘(i) a schedule of assets and liabil2 ities; 

3 ‘‘(ii) a schedule of current income and 

4 current expenditures; 

5 ‘‘(iii) a statement of the debtor’s fi6 nancial affairs and, if section 342(b) ap7 plies, a certificate—

8 ‘‘(I) of an attorney whose name 

9 is indicated on the petition as the at10 torney for the debtor, or any bank11 ruptcy petition preparer signing the 

12 petition under section 110(b)(1), indi13 cating that such attorney or such 

14 bankruptcy petition preparer delivered 

15 to the debtor the notice required by 

16 section 342(b); or 

17 ‘‘(II) if no attorney is so indi18 cated, and no bankruptcy petition pre19 parer signed the petition, of the debt20 or that such notice was received and 

21 read by the debtor; 

22 ‘‘(iv) copies of all payment advices or 

23 other evidence of payment received within 

24 60 days before the filing of the petition, by 
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1 the debtor from any employer of the debt2 or; 

3 ‘‘(v) a statement of the amount of 

4 monthly net income, itemized to show how 

5 the amount is calculated; and 

6 ‘‘(vi) a statement disclosing any rea7 sonably anticipated increase in income or 

8 expenditures over the 12-month period fol9 lowing the date of the filing of the peti10 tion;’’; and 

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

12 ‘‘(e)(1) If the debtor in a case under chapter 7 or 

13 13 is an individual and if a creditor files with the court 

14 at any time a request to receive a copy of the petition, 

15 schedules, and statement of financial affairs filed by the 

16 debtor, then the court shall make such petition, such 

17 schedules, and such statement available to such creditor.

18 ‘‘(2)(A) The debtor shall provide—

19 ‘‘(i) not later than 7 days before the date first 

20 set for the first meeting of creditors, to the trustee 

21 a copy of the Federal income tax return required 

22 under applicable law (or at the election of the debt23 or, a transcript of such return) for the most recent 

24 tax year ending immediately before the commence-
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1 ment of the case and for which a Federal income tax 

2 return was filed; and 

3 ‘‘(ii) at the same time the debtor complies with 

4 clause (i), a copy of such return (or if elected under 

5 clause (i), such transcript) to any creditor that time6 ly requests such copy. 

7 ‘‘(B) If the debtor fails to comply with clause (i) or 

8 (ii) of subparagraph (A), the court shall dismiss the case 

9 unless the debtor demonstrates that the failure to so com10 ply is due to circumstances beyond the control of the debt11 or. 

12 ‘‘(C) If a creditor requests a copy of such tax return 

13 or such transcript and if the debtor fails to provide a copy 

14 of such tax return or such transcript to such creditor at 

15 the time the debtor provides such tax return or such tran16 script to the trustee, then the court shall dismiss the case 

17 unless the debtor demonstrates that the failure to provide 

18 a copy of such tax return or such transcript is due to cir19 cumstances beyond the control of the debtor. 

20 ‘‘(3) If a creditor in a case under chapter 13 files 

21 with the court at any time a request to receive a copy 

22 of the plan filed by the debtor, then the court shall make 

23 available to such creditor a copy of such plan—

24 ‘‘(A) at a reasonable cost; and 
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1 ‘‘(B) not later than 5 days after such request 

2 is filed. 

3 ‘‘(f) At the request of the court, the United States 

4 trustee, or any party in interest in a case under chapter 

5 7, 11, or 13, a debtor who is an individual shall file with 

6 the court— 

7 ‘‘(1) at the same time filed with the taxing au8 thority, a copy of each Federal income tax return re9 quired under applicable law (or at the election of the 

10 debtor, a transcript of such tax return) with respect 

11 to each tax year of the debtor ending while the case 

12 is pending under such chapter; 

13 ‘‘(2) at the same time filed with the taxing au14 thority, each Federal income tax return required 

15 under applicable law (or at the election of the debt16 or, a transcript of such tax return) that had not 

17 been filed with such authority as of the date of the 

18 commencement of the case and that was subse19 quently filed for any tax year of the debtor ending 

20 in the 3-year period ending on the date of the com21 mencement of the case; 

22 ‘‘(3) a copy of each amendment to any Federal 

23 income tax return or transcript filed with the court 

24 under paragraph (1) or (2); and 

25 ‘‘(4) in a case under chapter 13—
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1 ‘‘(A) on the date that is either 90 days 

2 after the end of such tax year or 1 year after 

3 the date of the commencement of the case, 

4 whichever is later, if a plan is not confirmed be5 fore such later date; and 

6 ‘‘(B) annually after the plan is confirmed 

7 and until the case is closed, not later than the 

8 date that is 45 days before the anniversary of 

9 the confirmation of such plan; 

10 a statement, under penalty of perjury, of the income 

11 and expenditures of the debtor during the tax year 

12 of the debtor most recently concluded before such 

13 statement is filed under this paragraph, and of the 

14 monthly income of the debtor, that shows how in15 come, expenditures, and monthly income are cal16 culated. 

17 ‘‘(g)(1) A statement referred to in subsection (f)(4) 

18 shall disclose—

19 ‘‘(A) the amount and sources of the income of 

20 the debtor; 

21 ‘‘(B) the identity of any person responsible with 

22 the debtor for the support of any dependent of the 

23 debtor; and 
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1 ‘‘(C) the identity of any person who contrib2 uted, and the amount contributed, to the household 

3 in which the debtor resides. 

4 ‘‘(2) The tax returns, amendments, and statement of 

5 income and expenditures described in subsections 

6 (e)(2)(A) and (f) shall be available to the United States 

7 trustee (or the bankruptcy administrator, if any), the 

8 trustee, and any party in interest for inspection and copy9 ing, subject to the requirements of subsection (h). 

10 ‘‘(h)(1) Not later than 180 days after the date of the 

11 enactment of the Bankruptcy Abuse Prevention and Con12 sumer Protection Act of 2003, the Director of the Admin13 istrative Office of the United States Courts shall establish 

14 procedures for safeguarding the confidentiality of any tax 

15 information required to be provided under this section. 

16 ‘‘(2) The procedures under paragraph (1) shall in17 clude restrictions on creditor access to tax information 

18 that is required to be provided under this section. 

19 ‘‘(3) Not later than 540 days after the date of enact20 ment of the Bankruptcy Abuse Prevention and Consumer 

21 Protection Act of 2003, the Director of the Administrative 

22 Office of the United States Courts shall prepare and sub23 mit to the President pro tempore of the Senate and the 

24 Speaker of the House of Representatives a report that—
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1 ‘‘(A) assesses the effectiveness of the proce2 dures established under paragraph (1); and 

3 ‘‘(B) if appropriate, includes proposed legisla4 tion to—

5 ‘‘(i) further protect the confidentiality of 

6 tax information; and 

7 ‘‘(ii) provide penalties for the improper use 

8 by any person of the tax information required 

9 to be provided under this section. 

10 ‘‘(i) If requested by the United States trustee or by 

11 the trustee, the debtor shall provide—

12 ‘‘(1) a document that establishes the identity of 

13 the debtor, including a driver’s license, passport, or 

14 other document that contains a photograph of the 

15 debtor; or 

16 ‘‘(2) such other personal identifying information 

17 relating to the debtor that establishes the identity of 

18 the debtor.’’.

19 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED20 ULES OR PROVIDE REQUIRED INFORMATION. 

21 Section 521 of title 11, United States Code, as 

22 amended by sections 106, 225, 305, and 315, is amended 

23 by adding at the end the following: 

24 ‘‘(j)(1) Subject to paragraphs (2) and (4) and not25 withstanding section 707(a), if an individual debtor in a 
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1 voluntary case under chapter 7 or 13 fails to file all of 

2 the information required under subsection (a)(1) within 

3 45 days after the filing of the petition commencing the 

4 case, the case shall be automatically dismissed effective 

5 on the 46th day after the filing of the petition. 

6 ‘‘(2) Subject to paragraph (4) and with respect to 

7 a case described in paragraph (1), any party in interest 

8 may request the court to enter an order dismissing the 

9 case. If requested, the court shall enter an order of dis10 missal not later than 5 days after such request. 

11 ‘‘(3) Subject to paragraph (4) and upon request of 

12 the debtor made within 45 days after the filing of the peti13 tion commencing a case described in paragraph (1), the 

14 court may allow the debtor an additional period of not to 

15 exceed 45 days to file the information required under sub16 section (a)(1) if the court finds justification for extending 

17 the period for the filing. 

18 ‘‘(4) Notwithstanding any other provision of this sub19 section, on the motion of the trustee filed before the expi20 ration of the applicable period of time specified in para21 graph (1), (2), or (3), and after notice and a hearing, the 

22 court may decline to dismiss the case if the court finds 

23 that the debtor attempted in good faith to file all the infor24 mation required by subsection (a)(1)(B)(iv) and that the 
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1 best interests of creditors would be served by administra2 tion of the case.’’.

3 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON 

4 CONFIRMATION OF THE PLAN. 

5 Section 1324 of title 11, United States Code, is 

6 amended—

7 (1) by striking ‘‘After’’ and inserting the fol8 lowing: 

9 ‘‘(a) Except as provided in subsection (b) and after’’; 

10 and 

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

12 ‘‘(b) The hearing on confirmation of the plan may 

13 be held not earlier than 20 days and not later than 45 

14 days after the date of the meeting of creditors under sec15 tion 341(a), unless the court determines that it would be 

16 in the best interests of the creditors and the estate to hold 

17 such hearing at an earlier date and there is no objection 

18 to such earlier date.’’. 

19 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION 

20 IN CERTAIN CASES. 

21 Title 11, United States Code, is amended—

22 (1) by amending section 1322(d) to read as fol23 lows: 
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1 ‘‘(d)(1) If the current monthly income of the debtor 

2 and the debtor’s spouse combined, when multiplied by 12, 

3 is not less than—

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

5 1 person, the median family income of the applicable 

6 State for 1 earner; 

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

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

10 number or fewer individuals; or 

11 ‘‘(C) in the case of a debtor in a household ex12 ceeding 4 individuals, the highest median family in13 come of the applicable State for a family of 4 or 

14 fewer individuals, plus $525 per month for each in15 dividual in excess of 4, 

16 the plan may not provide for payments over a period that 

17 is longer than 5 years. 

18 ‘‘(2) If the current monthly income of the debtor and 

19 the debtor’s spouse combined, when multiplied by 12, is 

20 less than—

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

22 1 person, the median family income of the applicable 

23 State for 1 earner last; 

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

25 2, 3, or 4 individuals, the highest median family in-
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1 come of the applicable State for a family of the same 

2 number or fewer individuals; or 

3 ‘‘(C) in the case of a debtor in a household ex4 ceeding 4 individuals, the highest median family in5 come of the applicable State for a family of 4 or 

6 fewer individuals , plus $525 per month for each in7 dividual in excess of 4, 

8 the plan may not provide for payments over a period that 

9 is longer than 3 years, unless the court, for cause, ap10 proves a longer period, but the court may not approve a 

11 period that is longer than 5 years.’’; 

12 (2) in section 1325(b)(1)(B), by striking 

13 ‘‘three-year period’’ and inserting ‘‘applicable com14 mitment period’’; and 

15 (3) in section 1325(b), as amended by section 

16 102, by adding at the end the following: 

17 ‘‘(4) For purposes of this subsection, the ‘applicable 

18 commitment period’—

19 ‘‘(A) subject to subparagraph (B), shall be—

20 ‘‘(i) 3 years; or 

21 ‘‘(ii) not less than 5 years, if the current 

22 monthly income of the debtor and the debtor’s 

23 spouse combined, when multiplied by 12, is not 

24 less than—
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1 ‘‘(I) in the case of a debtor in a 

2 household of 1 person, the median family 

3 income of the applicable State for 1 earn4 er; 

5 ‘‘(II) in the case of a debtor in a 

6 household of 2, 3, or 4 individuals, the 

7 highest median family income of the appli8 cable State for a family of the same num9 ber or fewer individuals; or 

10 ‘‘(III) in the case of a debtor in a 

11 household exceeding 4 individuals, the 

12 highest median family income of the appli13 cable State for a family of 4 or fewer indi14 viduals , plus $525 per month for each in15 dividual in excess of 4; and 

16 ‘‘(B) may be less than 3 or 5 years, whichever 

17 is applicable under subparagraph (A), but only if the 

18 plan provides for payment in full of all allowed unse19 cured claims over a shorter period.’’; and 

20 (4) in section 1329(c), by striking ‘‘three 

21 years’’ and inserting ‘‘the applicable commitment pe22 riod under section 1325(b)(1)(B)’’. 
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1 SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF 

2 RULE 9011 OF THE FEDERAL RULES OF BANK3 RUPTCY PROCEDURE. 

4 It is the sense of Congress that rule 9011 of the Fed5 eral Rules of Bankruptcy Procedure (11 U.S.C. App.) 

6 should be modified to include a requirement that all docu7 ments (including schedules), signed and unsigned, sub8 mitted to the court or to a trustee by debtors who rep9 resent themselves and debtors who are represented by at10 torneys be submitted only after the debtors or the debtors’ 

11 attorneys have made reasonable inquiry to verify that the 

12 information contained in such documents is—

13 (1) well grounded in fact; and 

14 (2) warranted by existing law or a good faith 

15 argument for the extension, modification, or reversal 

16 of existing law. 

17 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL 

18 CASES. 

19 Section 362(e) of title 11, United States Code, is 

20 amended—

21 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and 

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

23 ‘‘(2) Notwithstanding paragraph (1), in a case under 

24 chapter 7, 11, or 13 in which the debtor is an individual, 

25 the stay under subsection (a) shall terminate on the date 
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1 that is 60 days after a request is made by a party in inter2 est under subsection (d), unless—

3 ‘‘(A) a final decision is rendered by the court 

4 during the 60-day period beginning on the date of 

5 the request; or 

6 ‘‘(B) that 60-day period is extended—

7 ‘‘(i) by agreement of all parties in interest; 

8 or 

9 ‘‘(ii) by the court for such specific period 

10 of time as the court finds is required for good 

11 cause, as described in findings made by the 

12 court.’’.

13 SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS. 

14 (a) PROPERTY OF THE ESTATE.—

15 (1) IN GENERAL.—Subchapter I of chapter 11 

16 of title 11, United States Code, is amended by add17 ing at the end the following: 

18 ‘‘§ 1115. Property of the estate 

19 ‘‘(a) In a case concerning a debtor who is an indi20 vidual, property of the estate includes, in addition to the 

21 property specified in section 541—

22 ‘‘(1) all property of the kind specified in section 

23 541 that the debtor acquires after the commence24 ment of the case but before the case is closed, dis-
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1 missed, or converted to a case under chapter 7, 12, 

2 or 13, whichever occurs first; and 

3 ‘‘(2) earnings from services performed by the 

4 debtor after the commencement of the case but be5 fore the case is closed, dismissed, or converted to a 

6 case under chapter 7, 12, or 13, whichever occurs 

7 first.’’. 

8 ‘‘(b) Except as provided in section 1104 or a con9 firmed plan or order confirming a plan, the debtor shall 

10 remain in possession of all property of the estate.’’. 

11 (2) CLERICAL AMENDMENT.—The table of sec12 tions for subchapter I of chapter 11 of title 11, 

13 United States Code, is amended by adding at the 

14 end the following:

‘‘1115. Property of the estate.’’.

15 (b) CONTENTS OF PLAN.—Section 1123(a) of title 

16 11, United States Code, is amended—

17 (1) in paragraph (6), by striking ‘‘and’’ at the 

18 end; 

19 (2) in paragraph (7), by striking the period and 

20 inserting ‘‘; and’’; and 

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

22 ‘‘(8) in a case in which the debtor is an indi23 vidual, provide for the payment to creditors under 

24 the plan of all or such portion of earnings from per25 sonal services performed by the debtor after the 
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1 commencement of the case or other future income of 

2 the debtor as is necessary for the execution of the 

3 plan.’’. 

4 (c) CONFIRMATION OF PLAN.—

5 (1) REQUIREMENTS RELATING TO VALUE OF

6 PROPERTY.—Section 1129(a) of title 11, United 

7 States Code, as amended by section 213, is amended 

8 by adding at the end the following: 

9 ‘‘(15) In a case in which the debtor is an indi10 vidual and in which the holder of an allowed unse11 cured claim objects to the confirmation of the plan—

12 ‘‘(A) the value, as of the effective date of 

13 the plan, of the property to be distributed 

14 under the plan on account of such claim is not 

15 less than the amount of such claim; or 

16 ‘‘(B) the value of the property to be dis17 tributed under the plan is not less than the pro18 jected disposable income of the debtor (as de19 fined in section 1325(b)(2)) to be received dur20 ing the 5-year period beginning on the date that 

21 the first payment is due under the plan, or dur22 ing the period for which the plan provides pay23 ments, whichever is longer.’’.

24 (2) REQUIREMENT RELATING TO INTERESTS IN

25 PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11, 
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1 United States Code, is amended by inserting before 

2 the period at the end the following: ‘‘, except that 

3 in a case in which the debtor is an individual, the 

4 debtor may retain property included in the estate 

5 under section 1115, subject to the requirements of 

6 subsection (a)(14) of this section.’’.

7 (d) EFFECT OF CONFIRMATION.—Section 1141(d) of 

8 title 11, United States Code, is amended—

9 (1) in paragraph (2), by striking ‘‘The con10 firmation of a plan does not discharge an individual 

11 debtor’’ and inserting ‘‘A discharge under this chap12 ter does not discharge a debtor who is an indi13 vidual’’; and 

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

15 ‘‘(5) In a case in which the debtor is an individual—

16 ‘‘(A) unless after notice and a hearing the court 

17 orders otherwise for cause, confirmation of the plan 

18 does not discharge any debt provided for in the plan 

19 until the court grants a discharge on completion of 

20 all payments under the plan; 

21 ‘‘(B) at any time after the confirmation of the 

22 plan, and after notice and a hearing, the court may 

23 not grant a discharge to the debtor who has not 

24 completed payments under the plan unless—
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1 ‘‘(i) for each allowed unsecured claim, the 

2 value, as of the effective date of the plan, of 

3 property actually distributed under the plan on 

4 account of that claim is not less than the 

5 amount that would have been paid on such 

6 claim if the estate of the debtor had been liq7 uidated under chapter 7 of this title on such 

8 date; and 

9 ‘‘(ii) modification of the plan under section 

10 1127 of this title is not practicable; and’’. 

11 (e) MODIFICATION OF PLAN.—Section 1127 of title 

12 11, United States Code, is amended by adding at the end 

13 the following: 

14 ‘‘(e) If the debtor is an individual, the plan may be 

15 modified at any time after confirmation of the plan but 

16 before the completion of payments under the plan, whether 

17 or not the plan has been substantially consummated, upon 

18 request of the debtor, the trustee, the United States trust19 ee, or the holder of an allowed unsecured claim, to—

20 ‘‘(1) increase or reduce the amount of payments 

21 on claims of a particular class provided for by the 

22 plan; 

23 ‘‘(2) extend or reduce the time period for such 

24 payments; or 
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1 ‘‘(3) alter the amount of the distribution to a 

2 creditor whose claim is provided for by the plan to 

3 the extent necessary to take account of any payment 

4 of such claim made other than under the plan. 

5 ‘‘(f)(1) Sections 1121 through 1128 of this title and 

6 the requirements of section 1129 of this title apply to any 

7 modification under subsection (a). 

8 ‘‘(2) The plan, as modified, shall become the plan 

9 only after there has been disclosure under section 1125 

10 as the court may direct, notice and a hearing, and such 

11 modification is approved.’’.

12 SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION. 

13 (a) EXEMPTIONS.—Section 522 of title 11, United 

14 States Code, as amended by sections 224 and 308, is 

15 amended by adding at the end the following: 

16 ‘‘(p)(1)Except as provided in paragraph (2) of this 

17 subsection and sections 544 and 548 of this title, as a 

18 result of electing under subsection (b)(3)(A) to exempt 

19 property under State or local law, a debtor may not ex20 empt any amount of interest that was acquired by the 

21 debtor during the 1215-day period preceding the filing of 

22 the petition which exceeds in the aggregate $125,000 in 

23 value in—

24 ‘‘(A) real or personal property that the debtor 

25 or a dependent of the debtor uses as a residence; 
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1 ‘‘(B) a cooperative that owns property that the 

2 debtor or a dependent of the debtor uses as a resi3 dence; 

4 ‘‘(C) a burial plot for the debtor or a dependent 

5 of the debtor; or 

6 ‘‘(D) real or personal property that the debtor 

7 or dependent of the debtor claims as a homestead. 

8 ‘‘(2)(A) The limitation under paragraph (1) shall not 

9 apply to an exemption claimed under subsection (b)(3)(A) 

10 by a family farmer for the principal residence of that 

11 farmer. 

12 ‘‘(B) For purposes of paragraph (1), any amount of 

13 such interest does not include any interest transferred 

14 from a debtor’s previous principal residence (which was 

15 acquired prior to the beginning of such 1215-day period) 

16 into the debtor’s current principal residence, if the debt17 or’s previous and current residences are located in the 

18 same State. 

19 ‘‘(q)(1) As a result of electing under subsection 

20 (b)(3)(A) to exempt property under State or local law, a 

21 debtor may not exempt any amount of an interest in prop22 erty described in subparagraphs (A), (B), and (C) of sub23 section (p) which exceeds in the aggregate $125,000 if—

24 ‘‘(A) the court determines, after notice and a 

25 hearing, that the debtor has been convicted of a fel-
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1 ony (as defined in section 3156 of title 18), which 

2 under the circumstances, demonstrates that the fil3 ing of the case was an abuse of the provisions of this 

4 title; or 

5 ‘‘(B) the debtor owes a debt arising from—

6 ‘‘(i) any violation of the Federal securities 

7 laws (as defined in section 3(a)(47) of the Secu8 rities Exchange Act of 1934), any State securi9 ties laws, or any regulation or order issued 

10 under Federal securities laws or State securities 

11 laws; 

12 ‘‘(ii) fraud, deceit, or manipulation in a fi13 duciary capacity or in connection with the pur14 chase or sale of any security registered under 

15 section 12 or 15(d) of the Securities Exchange 

16 Act of 1934 or under section 6 of the Securities 

17 Act of 1933; 

18 ‘‘(iii) any civil remedy under section 1964 

19 of title 18, United States Code; or 

20 ‘‘(iv) any criminal act, intentional tort, or 

21 willful or reckless misconduct that caused seri22 ous physical injury or death to another indi23 vidual in the preceding 5 years. 

24 ‘‘(2) Paragraph (1) shall not apply to the extent the 

25 amount of an interest in property described in subpara-
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1 graphs (A), (B), and (C) of subsection (p) is reasonably 

2 necessary for the support of the debtor and any dependent 

3 of the debtor.’’. 

4 (b) ADJUSTMENT OF DOLLAR AMOUNTS.—Para5 graphs (1) and (2) of section 104(b) of title 11, United 

6 States Code, as amended by section 224, are amended by 

7 inserting ‘‘522(p), 522(q),’’ after ‘‘522(n),’’.

8 SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI9 PANT CONTRIBUTIONS AND OTHER PROP10 ERTY FROM THE ESTATE. 

11 Section 541(b) of title 11, United States Code, as 

12 amended by section 225, is amended by adding at the end 

13 the following: 

14 ‘‘(7) any amount—

15 ‘‘(A) withheld by an employer from the 

16 wages of employees for payment as contribu17 tions to— 

18 ‘‘(i) an employee benefit plan subject 

19 to title I of the Employee Retirement In20 come Security Act of 1974 or under an 

21 employee benefit plan which is a govern22 mental plan under section 414(d) of the 

23 Internal Revenue Code of 1986, a deferred 

24 compensation plan under section 457 of 

25 the Internal Revenue Code of 1986, or a 
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1 tax-deferred annuity under section 403(b) 

2 of the Internal Revenue Code of 1986, ex3 cept that such amount under this clause 

4 shall not constitute disposable income, as 

5 defined in section 1325(b)(2) of this title; 

6 or 

7 ‘‘(ii) a health insurance plan regulated 

8 by State law whether or not subject to 

9 such title; or 

10 ‘‘(B) received by the employer from em11 ployees for payment as contributions to— 

12 ‘‘(i) an employee benefit plan subject 

13 to title I of the Employee Retirement In14 come Security Act of 1974 or under an 

15 employee benefit plan which is a govern16 mental plan under section 414(d) of the 

17 Internal Revenue Code of 1986, a deferred 

18 compensation plan under section 457 of 

19 the Internal Revenue Code of 1986, or a 

20 tax-deferred annuity under section 403(b) 

21 of the Internal Revenue Code of 1986, ex22 cept that such amount under this clause 

23 shall not constitute disposable income, as 

24 defined in section 1325(b)(2) of this title; 

25 or 
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1 ‘‘(ii) a health insurance plan regulated 

2 by State law whether or not subject to 

3 such title;’’. 

4 SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV5 ING BANKRUPTCY PROFESSIONALS. 

6 (a) IN GENERAL.—Section 1334 of title 28, United 

7 States Code, is amended—

8 (1) in subsection (b), by striking ‘‘Notwith9 standing’’ and inserting ‘‘Except as provided in sub10 section (e)(2), and notwithstanding’’; and 

11 (2) by striking subsection (e) and inserting the 

12 following: 

13 ‘‘(e) The district court in which a case under title 

14 11 is commenced or is pending shall have exclusive juris15 diction—

16 ‘‘(1) of all the property, wherever located, of the 

17 debtor as of the date of commencement of such case, 

18 and of property of the estate; and 

19 ‘‘(2) over all claims or causes of action that in20 volve construction of section 327 of title 11, United 

21 States Code, or rules relating to disclosure require22 ments under section 327.’’. 

23 (b) APPLICABILITY.—This section shall only apply to 

24 cases filed after the date of enactment of this Act. 
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1 SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE 

2 INCREASE. 

3 (a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE

4 11, UNITED STATES CODE.—Section 1930(a) of title 28, 

5 United States Code, is amended by striking paragraph (1) 

6 and inserting the following: 

7 ‘‘(1) For a case commenced—

8 ‘‘(A) under chapter 7 of title 11, $160; or 

9 ‘‘(B) under chapter 13 of title 11, $150.’’. 

10 (b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec11 tion 589a(b) of title 28, United States Code, is amended—

12 (1) by striking paragraph (1) and inserting the 

13 following: 

14 ‘‘(1)(A) 40.63 percent of the fees collected 

15 under section 1930(a)(1)(A) of this title in cases 

16 commenced under chapter 7 of title 11; and 

17 ‘‘(B) 70.00 percent of the fees collected under 

18 section 1930(a)(1)(B) of this title in cases com19 menced under chapter 13 of title 11;’’; 

20 (2) in paragraph (2), by striking ‘‘one-half’’ 

21 and inserting ‘‘three-fourths’’; and 

22 (3) in paragraph (4), by striking ‘‘one-half’’ 

23 and inserting ‘‘100 percent’’. 

24 (c) COLLECTION AND DEPOSIT OF MISCELLANEOUS

25 BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap26 propriations Act, 1990 (28 U.S.C. 1931 note) is amended 
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1 by striking ‘‘pursuant to 28 U.S.C. section 1930(b) and 

2 33.87 per centum of the fees hereafter collected under 28 

3 U.S.C. section 1930(a)(1) and 25 percent of the fees here4 after collected under 28 U.S.C. section 1930(a)(3) shall 

5 be deposited as offsetting receipts to the fund established 

6 under 28 U.S.C. section 1931’’ and inserting ‘‘under sec7 tion 1930(b) of title 28, United States Code, and 31.25 

8 percent of the fees collected under section 1930(a)(1)(A) 

9 of that title, 30.00 percent of the fees collected under sec10 tion 1930(a)(1)(B) of that title, and 25 percent of the fees 

11 collected under section 1930(a)(3) of that title shall be 

12 deposited as offsetting receipts to the fund established 

13 under section 1931 of that title’’. 

14 SEC. 326. SHARING OF COMPENSATION. 

15 Section 504 of title 11, United States Code, is 

16 amended by adding at the end the following: 

17 ‘‘(c) This section shall not apply with respect to shar18 ing, or agreeing to share, compensation with a bona fide 

19 public service attorney referral program that operates in 

20 accordance with non-Federal law regulating attorney re21 ferral services and with rules of professional responsibility 

22 applicable to attorney acceptance of referrals.’’. 

23 SEC. 327. FAIR VALUATION OF COLLATERAL. 

24 Section 506(a) of title 11, United States Code, is 

25 amended by—
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1 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; and 

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

3 ‘‘(2) If the debtor is an individual in a case under 

4 chapter 7 or 13, such value with respect to personal prop5 erty securing an allowed claim shall be determined based 

6 on the replacement value of such property as of the date 

7 of filing the petition without deduction for costs of sale 

8 or marketing. With respect to property acquired for per9 sonal, family, or household purposes, replacement value 

10 shall mean the price a retail merchant would charge for 

11 property of that kind considering the age and condition 

12 of the property at the time value is determined.’’. 

13 SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA14 TIONS. 

15 (a) EXECUTORY CONTRACTS AND UNEXPIRED

16 LEASES.—Section 365 of title 11, United States Code, is 

17 amended—

18 (1) in subsection (b)—

19 (A) in paragraph (1)(A), by striking the 

20 semicolon at the end and inserting the fol21 lowing: ‘‘other than a default that is a breach 

22 of a provision relating to the satisfaction of any 

23 provision (other than a penalty rate or penalty 

24 provision) relating to a default arising from any 

25 failure to perform nonmonetary obligations 
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1 under an unexpired lease of real property, if it 

2 is impossible for the trustee to cure such de3 fault by performing nonmonetary acts at and 

4 after the time of assumption, except that if 

5 such default arises from a failure to operate in 

6 accordance with a nonresidential real property 

7 lease, then such default shall be cured by per8 formance at and after the time of assumption 

9 in accordance with such lease, and pecuniary 

10 losses resulting from such default shall be com11 pensated in accordance with the provisions of 

12 this paragraph;’’; and 

13 (B) in paragraph (2)(D), by striking ‘‘pen14 alty rate or provision’’ and inserting ‘‘penalty 

15 rate or penalty provision’’; 

16 (2) in subsection (c)—

17 (A) in paragraph (2), by inserting ‘‘or’’ at 

18 the end; 

19 (B) in paragraph (3), by striking ‘‘; or’’ at 

20 the end and inserting a period; and 

21 (C) by striking paragraph (4); 

22 (3) in subsection (d)—

23 (A) by striking paragraphs (5) through 

24 (9); and 
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1 (B) by redesignating paragraph (10) as 

2 paragraph (5); and 

3 (4) in subsection (f)(1) by striking ‘‘; except 

4 that’’ and all that follows through the end of the 

5 paragraph and inserting a period. 

6 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec7 tion 1124(2) of title 11, United States Code, is amend8 ed—

9 (1) in subparagraph (A), by inserting ‘‘or of a 

10 kind that section 365(b)(2) of this title expressly 

11 does not require to be cured’’ before the semicolon 

12 at the end; 

13 (2) in subparagraph (C), by striking ‘‘and’’ at 

14 the end; 

15 (3) by redesignating subparagraph (D) as sub16 paragraph (E); and 

17 (4) by inserting after subparagraph (C) the fol18 lowing: 

19 ‘‘(D) if such claim or such interest arises 

20 from any failure to perform a nonmonetary ob21 ligation, other than a default arising from fail22 ure to operate a nonresidential real property 

23 lease subject to section 365(b)(1)(A), com24 pensates the holder of such claim or such inter25 est (other than the debtor or an insider) for any 
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1 actual pecuniary loss incurred by such holder as 

2 a result of such failure; and’’.

3 SEC. 329. CLARIFICATION OF POSTPETITION WAGES AND 

4 BENEFITS. 

5 Section 503(b)(1)(A) of title 11, United States Code, 

6 is amended to read as follows: 

7 ‘‘(A) the actual, necessary costs and expenses of pre8 serving the estate including—

9 ‘‘(i) wages, salaries, or commissions for services 

10 rendered after the commencement of the case; and 

11 ‘‘(ii) wages and benefits awarded pursuant to a 

12 judicial proceeding or a proceeding of the National 

13 Labor Relations Board as back pay attributable to 

14 any period of time occurring after commencement of 

15 the case under this title, as a result of a violation 

16 of Federal or State law by the debtor, without re17 gard to the time of the occurrence of unlawful con18 duct on which such award is based or to whether 

19 any services were rendered, if the court determines 

20 that payment of wages and benefits by reason of the 

21 operation of this clause will not substantially in22 crease the probability of layoff or termination of cur23 rent employees, or of nonpayment of domestic sup24 port obligations, during the case under this title;’’.
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1 SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF 

2 CERTAIN PROCEEDINGS. 

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

4 States Code, as amended by section 106, is amended—

5 (1) in paragraph (10), by striking ‘‘or’’ at the 

6 end; 

7 (2) in paragraph (11) by striking the period at 

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

9 (3) by inserting after paragraph (11) the fol10 lowing: 

11 ‘‘(12) the court after notice and a hearing held 

12 not more than 10 days before the date of entry of 

13 the order granting the discharge finds that there is 

14 reasonable cause to believe that—

15 ‘‘(A) section 522(q)(1) may be applicable 

16 to the debtor; and 

17 ‘‘(B) there is pending any proceeding in 

18 which the debtor may be found guilty of a fel19 ony of the kind described in section 

20 522(q)(1)(A) or liable for a debt of the kind de21 scribed in section 522(q)(1)(B); or’’. 

22 (b) CHAPTER 11.—Section 1141(d) of title 11, 

23 United States Code, as amended by section 321, is amend24 ed by adding at the end the following: 

25 ‘‘(C) unless after notice and a hearing held 

26 not more than 10 days before the date of entry 
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1 of the order granting the discharge, the court 

2 finds that there is no reasonable cause to be3 lieve that—

4 ‘‘(i) section 522(q)(1) may be applica5 ble to the debtor; and 

6 ‘‘(ii) there is pending any proceeding 

7 in which the debtor may be found guilty of 

8 a felony of the kind described in section 

9 522(q)(1)(A) or liable for a debt of the 

10 kind described in section 522(q)(1)(B).’’. 

11 (c) CHAPTER 12.—Section 1228 of title 11, United 

12 States Code, is amended—

13 (1) in subsection (a) by striking ‘‘As’’ and in14 serting ‘‘Subject to subsection (d), as’’, 

15 (2) in subsection (b) by striking ‘‘At’’ and in16 serting ‘‘Subject to subsection (d), at’’, and 

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

18 ‘‘(f) The court may not grant a discharge under this 

19 chapter unless the court after notice and a hearing held 

20 not more than 10 days before the date of entry of the 

21 order granting the discharge finds that there is no reason22 able cause to believe that—

23 ‘‘(1) section 522(q)(1) may be applicable to the 

24 debtor; and 
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1 ‘‘(2) there is pending any proceeding in which 

2 the debtor may be found guilty of a felony of the 

3 kind described in section 522(q)(1)(A) or liable for 

4 a debt of the kind described in section 

5 522(q)(1)(B).’’. 

6 (d) CHAPTER 13.—Section 1328 of title 11, United 

7 States Code, as amended by section 106, is amended—

8 (1) in subsection (a) by striking ‘‘As’’ and in9 serting ‘‘Subject to subsection (d), as’’, 

10 (2) in subsection (b) by striking ‘‘At’’ and in11 serting ‘‘Subject to subsection (d), at’’, and 

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

13 ‘‘(h) The court may not grant a discharge under this 

14 chapter unless the court after notice and a hearing held 

15 not more than 10 days before the date of entry of the 

16 order granting the discharge finds that there is no reason17 able cause to believe that—

18 ‘‘(1) section 522(q)(1) may be applicable to the 

19 debtor; and 

20 ‘‘(2) there is pending any proceeding in which 

21 the debtor may be found guilty of a felony of the 

22 kind described in section 522(q)(1)(A) or liable for 

23 a debt of the kind described in section 

24 522(q)(1)(B).’’.
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1 TITLE IV—GENERAL AND SMALL 

2 BUSINESS BANKRUPTCY PRO3 VISIONS 

4 Subtitle A—General Business 

5 Bankruptcy Provisions 

6 SEC. 401. ADEQUATE PROTECTION FOR INVESTORS. 

7 (a) DEFINITION.—Section 101 of title 11, United 

8 States Code, is amended by inserting after paragraph (48) 

9 the following: 

10 ‘‘(48A) ‘securities self regulatory organization’ 

11 means either a securities association registered with 

12 the Securities and Exchange Commission under sec13 tion 15A of the Securities Exchange Act of 1934 or 

14 a national securities exchange registered with the 

15 Securities and Exchange Commission under section 

16 6 of the Securities Exchange Act of 1934;’’. 

17 (b) AUTOMATIC STAY.—Section 362(b) of title 11, 

18 United States Code, as amended by sections 224, 303, and 

19 311, is amended by inserting after paragraph (24) the fol20 lowing: 

21 ‘‘(25) under subsection (a), of—

22 ‘‘(A) the commencement or continuation of 

23 an investigation or action by a securities self 

24 regulatory organization to enforce such organi25 zation’s regulatory power; 
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1 ‘‘(B) the enforcement of an order or deci2 sion, other than for monetary sanctions, ob3 tained in an action by the securities self regu4 latory organization to enforce such organiza5 tion’s regulatory power; or 

6 ‘‘(C) any act taken by the securities self 

7 regulatory organization to delist, delete, or 

8 refuse to permit quotation of any stock that 

9 does not meet applicable regulatory require10 ments;’’. 

11 SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY 

12 HOLDERS. 

13 Section 341 of title 11, United States Code, is 

14 amended by adding at the end the following: 

15 ‘‘(e) Notwithstanding subsections (a) and (b), the 

16 court, on the request of a party in interest and after notice 

17 and a hearing, for cause may order that the United States 

18 trustee not convene a meeting of creditors or equity secu19 rity holders if the debtor has filed a plan as to which the 

20 debtor solicited acceptances prior to the commencement 

21 of the case.’’. 
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1 SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN2 TEREST. 

3 Subparagraphs (A), (B), and (C) of section 547(e)(2) 

4 of title 11, United States Code, are each amended by strik5 ing ‘‘10’’ each place it appears and inserting ‘‘30’’. 

6 SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED 

7 LEASES. 

8 (a) IN GENERAL.—Section 365(d)(4) of title 11, 

9 United States Code, is amended to read as follows: 

10 ‘‘(4)(A) Subject to subparagraph (B), an unexpired 

11 lease of nonresidential real property under which the debt12 or is the lessee shall be deemed rejected, and the trustee 

13 shall immediately surrender that nonresidential real prop14 erty to the lessor, if the trustee does not assume or reject 

15 the unexpired lease by the earlier of—

16 ‘‘(i) the date that is 120 days after the date of 

17 the order for relief; or 

18 ‘‘(ii) the date of the entry of an order con19 firming a plan. 

20 ‘‘(B)(i) The court may extend the period determined 

21 under subparagraph (A), prior to the expiration of the 

22 120-day period, for 90 days on the motion of the trustee 

23 or lessor for cause. 

24 ‘‘(ii) If the court grants an extension under clause 

25 (i), the court may grant a subsequent extension only upon 

26 prior written consent of the lessor in each instance.’’. 
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1 (b) EXCEPTION.—Section 365(f)(1) of title 11, 

2 United States Code, is amended by striking ‘‘subsection’’ 

3 the first place it appears and inserting ‘‘subsections (b) 

4 and’’. 

5 SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS 

6 COMMITTEES. 

7 (a) APPOINTMENT.—Section 1102(a) of title 11, 

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

9 following: 

10 ‘‘(4) On request of a party in interest and after notice 

11 and a hearing, the court may order the United States 

12 trustee to change the membership of a committee ap13 pointed under this subsection, if the court determines that 

14 the change is necessary to ensure adequate representation 

15 of creditors or equity security holders. The court may 

16 order the United States trustee to increase the number 

17 of members of a committee to include a creditor that is 

18 a small business concern (as described in section 3(a)(1) 

19 of the Small Business Act , if the court determines that 

20 the creditor holds claims (of the kind represented by the 

21 committee) the aggregate amount of which, in comparison 

22 to the annual gross revenue of that creditor, is dispropor23 tionately large.’’. 
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1 (b) INFORMATION.—Section 1102(b) of title 11, 

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

3 following: 

4 ‘‘(3) A committee appointed under subsection (a) 

5 shall—

6 ‘‘(A) provide access to information for creditors 

7 who—

8 ‘‘(i) hold claims of the kind represented by 

9 that committee; and 

10 ‘‘(ii) are not appointed to the committee; 

11 ‘‘(B) solicit and receive comments from the 

12 creditors described in subparagraph (A); and 

13 ‘‘(C) be subject to a court order that compels 

14 any additional report or disclosure to be made to the 

15 creditors described in subparagraph (A).’’.

16 SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, 

17 UNITED STATES CODE. 

18 Section 546 of title 11, United States Code, is 

19 amended—

20 (1) by redesignating the second subsection (g) 

21 (as added by section 222(a) of Public Law 103–394) 

22 as subsection (i); 

23 (2) in subsection (i), as so redesignated, by in24 serting ‘‘and subject to the prior rights of holders of 
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1 security interests in such goods or the proceeds of 

2 such goods’’ after ‘‘consent of a creditor’’; and 

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

4 ‘‘(j)(1) Notwithstanding paragraphs (2) and (3) of 

5 section 545, the trustee may not avoid a warehouseman’s 

6 lien for storage, transportation, or other costs incidental 

7 to the 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 en12 actment of the Bankruptcy Abuse Prevention and Con13 sumer Protection Act of 2003, or any successor to such 

14 section 7–209.’’. 

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 of this title.’’. 

5 SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION. 

6 Section 1125 of title 11, United States Code, is 

7 amended by adding at the end the following: 

8 ‘‘(g) Notwithstanding subsection (b), an acceptance 

9 or rejection of the plan may be solicited from a holder 

10 of a claim or interest if such solicitation complies with ap11 plicable nonbankruptcy law and if such holder was solic12 ited before the commencement of the case in a manner 

13 complying with applicable nonbankruptcy law.’’. 

14 SEC. 409. PREFERENCES. 

15 Section 547(c) of title 11, United States Code, is 

16 amended—

17 (1) by striking paragraph (2) and inserting the 

18 following: 

19 ‘‘(2) to the extent that such transfer was in 

20 payment of a debt incurred by the debtor in the or21 dinary course of business or financial affairs of the 

22 debtor and the transferee, and such transfer was—

23 ‘‘(A) made in the ordinary course of busi24 ness or financial affairs of the debtor and the 

25 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 

8 value of all property that constitutes or is affected 

9 by such 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 nonconsumer debt against 

13 a noninsider of less than $10,000,’’ after ‘‘$5,000’’. 

14 SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11. 

15 Section 1121(d) of title 11, United States Code, is 

16 amended—

17 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject 

18 to paragraph (2), on’’; and 

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

20 ‘‘(2)(A) The 120-day period specified in paragraph 

21 (1) may not be extended beyond a date that is 18 months 

22 after the date of the order for relief under this chapter. 

23 ‘‘(B) The 180-day period specified in paragraph (1) 

24 may not be extended beyond a date that is 20 months after 

25 the date of the order for relief under this chapter.’’. 
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1 SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN2 TERESTS. 

3 Section 523(a)(16) of title 11, United States Code, 

4 is amended—

5 (1) by striking ‘‘dwelling’’ the first place it ap6 pears; 

7 (2) by striking ‘‘ownership or’’ and inserting 

8 ‘‘ownership,’’; 

9 (3) by striking ‘‘housing’’ the first place it ap10 pears; and 

11 (4) by striking ‘‘but only’’ and all that follows 

12 through ‘‘such period,’’ and inserting ‘‘or a lot in a 

13 homeowners association, for as long as the debtor or 

14 the trustee has a legal, equitable, or possessory own15 ership interest in such unit, such corporation, or 

16 such lot,’’. 

17 SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING 

18 OF CREDITORS. 

19 Section 341(c) of title 11, United States Code, is 

20 amended by inserting at the end the following: ‘‘Notwith21 standing any local court rule, provision of a State constitu22 tion, any other Federal or State law that is not a bank23 ruptcy law, or other requirement that representation at 

24 the meeting of creditors under subsection (a) be by an at25 torney, a creditor holding a consumer debt or any rep26 resentative of the creditor (which may include an entity 
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1 or an employee of an entity and may be a representative 

2 for more than 1 creditor) shall be permitted to appear at 

3 and participate in the meeting of creditors in a case under 

4 chapter 7 or 13, either alone or in conjunction with an 

5 attorney for the creditor. Nothing in this subsection shall 

6 be construed to require any creditor to be represented by 

7 an attorney at any meeting of creditors.’’. 

8 SEC. 414. DEFINITION OF DISINTERESTED PERSON. 

9 Section 101(14) of title 11, United States Code, is 

10 amended to read as follows: 

11 ‘‘(14) ‘disinterested person’ means a person 

12 that—

13 ‘‘(A) is not a creditor, an equity security 

14 holder, or an insider; 

15 ‘‘(B) is not and was not, within 2 years be16 fore the date of the filing of the petition, a di17 rector, officer, or employee of the debtor; and 

18 ‘‘(C) does not have an interest materially 

19 adverse to the interest of the estate or of any 

20 class of creditors or equity security holders, by 

21 reason of any direct or indirect relationship to, 

22 connection with, or interest in, the debtor, or 

23 for any other reason;’’. 
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1 SEC. 415. FACTORS FOR COMPENSATION OF PROFES2 SIONAL PERSONS. 

3 Section 330(a)(3) of title 11, United States Code, is 

4 amended—

5 (1) in subparagraph (D), by striking ‘‘and’’ at 

6 the end; 

7 (2) by redesignating subparagraph (E) as sub8 paragraph (F); and 

9 (3) by inserting after subparagraph (D) the fol10 lowing: 

11 ‘‘(E) with respect to a professional person, 

12 whether the person is board certified or otherwise 

13 has demonstrated skill and experience in the bank14 ruptcy field; and’’. 

15 SEC. 416. APPOINTMENT OF ELECTED TRUSTEE. 

16 Section 1104(b) of title 11, United States Code, is 

17 amended—

18 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 

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

20 ‘‘(2)(A) If an eligible, disinterested trustee is elected 

21 at a meeting of creditors under paragraph (1), the United 

22 States trustee shall file a report certifying that election. 

23 ‘‘(B) Upon the filing of a report under subparagraph 

24 (A)—
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1 ‘‘(i) the trustee elected under paragraph (1) 

2 shall be considered to have been selected and ap3 pointed for purposes of this section; and 

4 ‘‘(ii) the service of any trustee appointed under 

5 subsection (d) shall terminate. 

6 ‘‘(C) The court shall resolve any dispute arising out 

7 of an election described in subparagraph (A).’’. 

8 SEC. 417. UTILITY SERVICE. 

9 Section 366 of title 11, United States Code, is 

10 amended—

11 (1) in subsection (a), by striking ‘‘subsection 

12 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and 

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

14 ‘‘(c)(1)(A) For purposes of this subsection, the term 

15 ‘assurance of payment’ means—

16 ‘‘(i) a cash deposit; 

17 ‘‘(ii) a letter of credit; 

18 ‘‘(iii) a certificate of deposit; 

19 ‘‘(iv) a surety bond; 

20 ‘‘(v) a prepayment of utility consumption; or 

21 ‘‘(vi) another form of security that is mutually 

22 agreed on between the utility and the debtor or the 

23 trustee. 
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1 ‘‘(B) For purposes of this subsection an administrative ex2 pense 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 

7 service, if during the 30-day period beginning on the date 

8 of filing of the petition, the utility does not receive from 

9 the debtor or the trustee adequate assurance of payment 

10 for utility service that is satisfactory to the utility. 

11 ‘‘(3)(A) On request of a party in interest and after 

12 notice and a hearing, the court may order modification 

13 of the amount of an assurance of payment under para14 graph (2). 

15 ‘‘(B) In making a determination under this para16 graph whether an assurance of payment is adequate, the 

17 court may not consider—

18 ‘‘(i) the absence of security before the date of 

19 filing of the petition; 

20 ‘‘(ii) the payment by the debtor of charges for 

21 utility service in a timely manner before the date of 

22 filing of the petition; or 

23 ‘‘(iii) the availability of an administrative ex24 pense priority. 
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1 ‘‘(4) Notwithstanding any other provision of law, with 

2 respect to a case subject to this subsection, a utility may 

3 recover or set off against a security deposit provided to 

4 the utility by the debtor before the date of filing of the 

5 petition without notice or order of the court.’’. 

6 SEC. 418. BANKRUPTCY FEES. 

7 Section 1930 of title 28, United States Code, is 

8 amended—

9 (1) in subsection (a), by striking ‘‘Notwith10 standing section 1915 of this title, the’’ and insert11 ing ‘‘The’’; and 

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

13 ‘‘(f)(1) Under the procedures prescribed by the Judi14 cial Conference of the United States, the district court or 

15 the bankruptcy court may waive the filing fee in a case 

16 under chapter 7 of title 11 for an individual if the court 

17 determines that such individual has income less than 150 

18 percent of the income official poverty line (as defined by 

19 the Office of Management and Budget, and revised annu20 ally in accordance with section 673(2) of the Omnibus 

21 Budget Reconciliation Act of 1981) applicable to a family 

22 of the size involved and is unable to pay that fee in install23 ments. For purposes of this paragraph, the term ‘filing 

24 fee’ means the filing required by subsection (a), or any 

25 other fee prescribed by the Judicial Conference under sub-
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1 sections (b) and (c) that is payable to the clerk upon the 

2 commencement of a case under chapter 7. 

3 ‘‘(2) The district court or the bankruptcy court may 

4 waive for such debtors other fees prescribed under sub5 sections (b) and (c). 

6 ‘‘(3) This subsection does not restrict the district 

7 court or the bankruptcy court from waiving, in accordance 

8 with Judicial Conference policy, fees prescribed under this 

9 section for other debtors and creditors.’’. 

10 SEC. 419. MORE COMPLETE INFORMATION REGARDING AS11 SETS OF THE ESTATE. 

12 (a) IN GENERAL.—

13 (1) DISCLOSURE.—The Advisory Committee on 

14 Bankruptcy Rules of the Judicial Conference of the 

15 United States, after consideration of the views of the 

16 Director of the Executive Office for United States 

17 Trustees, shall propose for adoption amended Fed18 eral Rules of Bankruptcy Procedure and Official 

19 Bankruptcy Forms directing debtors under chapter 

20 11 of title 11, United States Code, to disclose the 

21 information described in paragraph (2) by filing and 

22 serving periodic financial and other reports designed 

23 to provide such information. 

24 (2) INFORMATION.—The information referred 

25 to in paragraph (1) is the value, operations, and 
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1 profitability of any closely held corporation, partner2 ship, or of any other entity in which the debtor holds 

3 a substantial or controlling interest. 

4 (b) PURPOSE.—The purpose of the rules and reports 

5 under subsection (a) shall be to assist parties in interest 

6 taking steps to ensure that the debtor’s interest in any 

7 entity referred to in subsection (a)(2) is used for the pay8 ment of allowed claims against debtor. 

9 Subtitle B—Small Business 

10 Bankruptcy Provisions 

11 SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT 

12 AND PLAN. 

13 Section 1125 of title 11, United States Code, is 

14 amended—

15 (1) in subsection (a)(1), by inserting before the 

16 semicolon ‘‘and in determining whether a disclosure 

17 statement provides adequate information, the court 

18 shall consider the complexity of the case, the benefit 

19 of additional information to creditors and other par20 ties in interest, and the cost of providing additional 

21 information’’; and 

22 (2) by striking subsection (f), and inserting the 

23 following: 

24 ‘‘(f) Notwithstanding subsection (b), in a small busi25 ness case—
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1 ‘‘(1) the court may determine that the plan 

2 itself provides adequate information and that a sepa3 rate disclosure statement is not necessary; 

4 ‘‘(2) the court may approve a disclosure state5 ment submitted on standard forms approved by the 

6 court or adopted under section 2075 of title 28; and 

7 ‘‘(3)(A) the court may conditionally approve a 

8 disclosure statement subject to final approval after 

9 notice and a hearing; 

10 ‘‘(B) acceptances and rejections of a plan may 

11 be solicited based on a conditionally approved disclo12 sure statement if the debtor provides adequate infor13 mation to each holder of a claim or interest that is 

14 solicited, but a conditionally approved disclosure 

15 statement shall be mailed not later than 20 days be16 fore the date of the hearing on confirmation of the 

17 plan; and 

18 ‘‘(C) the hearing on the disclosure statement 

19 may be combined with the hearing on confirmation 

20 of a plan.’’.

21 SEC. 432. DEFINITIONS. 

22 (a) DEFINITIONS.—Section 101 of title 11, United 

23 States Code, is amended by striking paragraph (51C) and 

24 inserting the following: 
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1 ‘‘(51C) ‘small business case’ means a case filed 

2 under chapter 11 of this title in which the debtor is 

3 a small business debtor; 

4 ‘‘(51D) ‘small business debtor’—

5 ‘‘(A) subject to subparagraph (B), means a 

6 person engaged in commercial or business ac7 tivities (including any affiliate of such person 

8 that is also a debtor under this title and exclud9 ing a person whose primary activity is the busi10 ness of owning or operating real property or ac11 tivities incidental thereto) that has aggregate 

12 noncontingent, liquidated secured and unse13 cured debts as of the date of the petition or the 

14 order for relief in an amount not more than 

15 $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 

20 that the committee of unsecured creditors is not 

21 sufficiently active and representative to provide 

22 effective oversight of the debtor; and 

23 ‘‘(B) does not include any member of a 

24 group of affiliated debtors that has aggregate 

25 noncontingent liquidated secured and unsecured 
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1 debts in an amount greater than $2,000,000 

2 (excluding debt owed to 1 or more affiliates or 

3 insiders);’’. 

4 (b) CONFORMING AMENDMENT.—Section 1102(a)(3) 

5 of title 11, United States Code, is amended by inserting 

6 ‘‘debtor’’ after ‘‘small business’’. 

7 (c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 

8 104(b) of title 11, United States Code, as amended by 

9 section 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 Advisory Committee on Bank15 ruptcy Rules of the Judicial Conference of the United 

16 States shall propose for adoption standard form disclosure 

17 statements and plans of reorganization for small business 

18 debtors (as defined in section 101 of title 11, United 

19 States Code, as amended by this Act), designed to achieve 

20 a practical balance between—

21 (1) the reasonable needs of the courts, the 

22 United States trustee, creditors, and other parties in 

23 interest for reasonably complete information; and 

24 (2) economy and simplicity for debtors. 
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1 SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE2 MENTS. 

3 (a) REPORTING REQUIRED.—

4 (1) IN GENERAL.—Chapter 3 of title 11, United 

5 States Code, is amended by inserting after section 

6 307 the following: 

7 ‘‘§ 308. Debtor reporting requirements 

8 ‘‘(a) For purposes of this section, the term ‘profit9 ability’ means, with respect to a debtor, the amount of 

10 money that the debtor has earned or lost during current 

11 and recent fiscal periods. 

12 ‘‘(b) A small business debtor shall file periodic finan13 cial and other reports containing information including—

14 ‘‘(1) the debtor’s profitability; 

15 ‘‘(2) reasonable approximations of the debtor’s 

16 projected cash receipts and cash disbursements over 

17 a reasonable period; 

18 ‘‘(3) comparisons of actual cash receipts and 

19 disbursements with projections in prior reports; 

20 ‘‘(4)(A) whether the debtor is—

21 ‘‘(i) in compliance in all material respects 

22 with postpetition requirements imposed by this 

23 title and the Federal Rules of Bankruptcy Pro24 cedure; and 
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1 ‘‘(ii) timely filing tax returns and other re2 quired government filings and paying taxes and 

3 other administrative expenses when due; 

4 ‘‘(B) if the debtor is not in compliance with the 

5 requirements referred to in subparagraph (A)(i) or 

6 filing tax returns and other required government fil7 ings and making the payments referred to in sub8 paragraph (A)(ii), what the failures are and how, at 

9 what cost, and when the debtor intends to remedy 

10 such failures; and 

11 ‘‘(C) such other matters as are in the best in12 terests of the debtor and creditors, and in the public 

13 interest in fair and efficient procedures under chap14 ter 11 of this title.’’. 

15 (2) CLERICAL AMENDMENT.—The table of sec16 tions for chapter 3 of title 11, United States Code, 

17 is amended by inserting after the item relating to 

18 section 307 the following:

‘‘308. Debtor reporting requirements.’’.

19 (b) EFFECTIVE DATE.—The amendments made by 

20 subsection (a) shall take effect 60 days after the date on 

21 which rules are prescribed under section 2075 of title 28, 

22 United States Code, to establish forms to be used to com23 ply with section 308 of title 11, United States Code, as 

24 added by subsection (a). 
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1 SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR 

2 SMALL BUSINESS CASES. 

3 (a) PROPOSAL OF RULES AND FORMS.—The Advi4 sory Committee on Bankruptcy Rules of the Judicial Con5 ference of the United States shall propose for adoption 

6 amended Federal Rules of Bankruptcy Procedure and Of7 ficial Bankruptcy Forms to be used by small business 

8 debtors to file periodic financial and other reports con9 taining information, including information relating to—

10 (1) the debtor’s profitability; 

11 (2) the debtor’s cash receipts and disburse12 ments; and 

13 (3) whether the debtor is timely filing tax re14 turns and paying taxes and other administrative ex15 penses when due. 

16 (b) PURPOSE.—The rules and forms proposed under 

17 subsection (a) shall be designed to achieve a practical bal18 ance among—

19 (1) the reasonable needs of the bankruptcy 

20 court, the United States trustee, creditors, and other 

21 parties in interest for reasonably complete informa22 tion; 

23 (2) the small business debtor’s interest that re24 quired reports be easy and inexpensive to complete; 

25 and 
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1 (3) the interest of all parties that the required 

2 reports help the small business debtor to understand 

3 the small business debtor’s financial condition and 

4 plan the small business debtor’s future. 

5 SEC. 436. DUTIES IN SMALL BUSINESS CASES. 

6 (a) DUTIES IN CHAPTER 11 CASES.—Subchapter I 

7 of chapter 11 of title 11, United States Code, as amended 

8 by section 321, is amended by adding at the end the fol9 lowing: 

10 ‘‘§ 1116. Duties of trustee or debtor in possession in 

11 small business cases 

12 ‘‘In a small business case, a trustee or the debtor in 

13 possession, in addition to the duties provided in this title 

14 and as otherwise required by law, shall—

15 ‘‘(1) append to the voluntary petition or, in an 

16 involuntary case, file not later than 7 days after the 

17 date of the order for relief—

18 ‘‘(A) its most recent balance sheet, state19 ment of operations, cash-flow statement, Fed20 eral income tax return; or 

21 ‘‘(B) a statement made under penalty of 

22 perjury that no balance sheet, statement of op23 erations, or cash-flow statement has been pre24 pared and no Federal tax return has been filed; 
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1 ‘‘(2) attend, through its senior management 

2 personnel and counsel, meetings scheduled by the 

3 court or the United States trustee, including initial 

4 debtor interviews, scheduling conferences, and meet5 ings of creditors convened under section 341 unless 

6 the court waives that requirement after notice and 

7 a hearing, upon a finding of extraordinary and com8 pelling circumstances; 

9 ‘‘(3) timely file all schedules and statements of 

10 financial affairs, unless the court, after notice and a 

11 hearing, grants an extension, which shall not extend 

12 such time period to a date later than 30 days after 

13 the date of the order for relief, absent extraordinary 

14 and compelling circumstances; 

15 ‘‘(4) file all postpetition financial and other re16 ports required by the Federal Rules of Bankruptcy 

17 Procedure or by local rule of the district court; 

18 ‘‘(5) subject to section 363(c)(2), maintain in19 surance customary and appropriate to the industry; 

20 ‘‘(6)(A) timely file tax returns and other re21 quired government filings; and 

22 ‘‘(B) subject to section 363(c)(2), timely pay all 

23 taxes entitled to administrative expense priority ex24 cept those being contested by appropriate pro25 ceedings being diligently prosecuted; and 
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1 ‘‘(7) allow the United States trustee, or a des2 ignated representative of the United States trustee, 

3 to inspect the debtor’s business premises, books, and 

4 records at reasonable times, after reasonable prior 

5 written notice, unless notice is waived by the debt6 or.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for chapter 11 of title 11, United States Code, as amended 

9 by section 321, is amended by inserting after the item re10 lating to section 1115 the following:

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.

11 SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES. 

12 Section 1121 of title 11, United States Code, is 

13 amended by striking subsection (e) and inserting the fol14 lowing: 

15 ‘‘(e) In a small business case—

16 ‘‘(1) only the debtor may file a plan until after 

17 180 days after the date of the order for relief, unless 

18 that period is—

19 ‘‘(A) extended as provided by this sub20 section, after notice and a hearing; or 

21 ‘‘(B) the court, for cause, orders otherwise; 

22 ‘‘(2) the plan, and any necessary disclosure 

23 statement, shall be filed not later than 300 days 

24 after the date of the order for relief; and 
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1 ‘‘(3) the time periods specified in paragraphs 

2 (1) and (2), and the time fixed in section 1129(e) 

3 within which the plan shall be confirmed, may be ex4 tended only if—

5 ‘‘(A) the debtor, after providing notice to 

6 parties in interest (including the United States 

7 trustee), demonstrates by a preponderance of 

8 the evidence that it is more likely than not that 

9 the court will confirm a plan within a reason10 able period of time; 

11 ‘‘(B) a new deadline is imposed at the time 

12 the extension is granted; and 

13 ‘‘(C) the order extending time is signed be14 fore the existing deadline has expired.’’.

15 SEC. 438. PLAN CONFIRMATION DEADLINE. 

16 Section 1129 of title 11, United States Code, is 

17 amended by adding at the end the following: 

18 ‘‘(e) In a small business case, the court shall confirm 

19 a plan that complies with the applicable provisions of this 

20 title and that is filed in accordance with section 1121(e) 

21 not later than 45 days after such plan is filed unless the 

22 time for confirmation is extended in accordance with sec23 tion 1121(e)(3).’’. 
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1 SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE. 

2 Section 586(a) of title 28, United States Code, is 

3 amended—

4 (1) in paragraph (3)—

5 (A) in subparagraph (G), by striking 

6 ‘‘and’’ at the end; 

7 (B) by redesignating subparagraph (H) as 

8 subparagraph (I); and 

9 (C) by inserting after subparagraph (G) 

10 the following: 

11 ‘‘(H) in small business cases (as defined in 

12 section 101 of title 11), performing the addi13 tional duties specified in title 11 pertaining to 

14 such cases; and’’; 

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

16 end; 

17 (3) in paragraph (6), by striking the period at 

18 the end and inserting a semicolon; and 

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

20 ‘‘(7) in each of such small business cases—

21 ‘‘(A) conduct an initial debtor interview as 

22 soon as practicable after the entry of order for 

23 relief but before the first meeting scheduled 

24 under section 341(a) of title 11, at which time 

25 the United States trustee shall— 
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1 ‘‘(i) begin to investigate the debtor’s 

2 viability; 

3 ‘‘(ii) inquire about the debtor’s busi4 ness plan; 

5 ‘‘(iii) explain the debtor’s obligations 

6 to file monthly operating reports and other 

7 required reports; 

8 ‘‘(iv) attempt to develop an agreed 

9 scheduling order; and 

10 ‘‘(v) inform the debtor of other obliga11 tions; 

12 ‘‘(B) if determined to be appropriate and 

13 advisable, visit the appropriate business prem14 ises of the debtor and ascertain the state of the 

15 debtor’s books and records and verify that the 

16 debtor has filed its tax returns; and 

17 ‘‘(C) review and monitor diligently the 

18 debtor’s activities, to identify as promptly as 

19 possible whether the debtor will be unable to 

20 confirm a plan; and 

21 ‘‘(8) in any case in which the United States 

22 trustee finds material grounds for any relief under 

23 section 1112 of title 11, the United States trustee 

24 shall apply promptly after making that finding to 

25 the court for relief.’’. 
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1 SEC. 440. SCHEDULING CONFERENCES. 

2 Section 105(d) of title 11, United States Code, is 

3 amended—

4 (1) in the matter preceding paragraph (1), by 

5 striking ‘‘, may’’; and 

6 (2) by striking paragraph (1) and inserting the 

7 following: 

8 ‘‘(1) shall hold such status conferences as are 

9 necessary to further the expeditious and economical 

10 resolution of the case; and’’.

11 SEC. 441. SERIAL FILER PROVISIONS. 

12 Section 362 of title 11, United States Code, as 

13 amended by sections 106, 305, and 311, is amended—

14 (1) in subsection (k), as so redesignated by sec15 tion 305—

16 (A) by striking ‘‘An’’ and inserting ‘‘(1) 

17 Except as provided in paragraph (2), an’’; and 

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

19 ‘‘(2) If such violation is based on an action taken by 

20 an entity in the good faith belief that subsection (h) ap21 plies to the debtor, the recovery under paragraph (1) of 

22 this subsection against such entity shall be limited to ac23 tual damages.’’; and 

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

25 ‘‘(n)(1) Except as provided in paragraph (2), sub26 section (a) does not apply in a case in which the debtor—
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1 ‘‘(A) is a debtor in a small business case pend2 ing at the time the petition is filed; 

3 ‘‘(B) was a debtor in a small business case that 

4 was dismissed for any reason by an order that be5 came final in the 2-year period ending on the date 

6 of the order for relief entered with respect to the pe7 tition; 

8 ‘‘(C) was a debtor in a small business case in 

9 which a plan was confirmed in the 2-year period 

10 ending on the date of the order for relief entered 

11 with respect to the petition; or 

12 ‘‘(D) is an entity that has acquired substan13 tially all of the assets or business of a small business 

14 debtor described in subparagraph (A), (B), or (C), 

15 unless such entity establishes by a preponderance of 

16 the evidence that such entity acquired substantially 

17 all of the assets or business of such small business 

18 debtor in good faith and not for the purpose of evad19 ing this paragraph. 

20 ‘‘(2) Paragraph (1) does not apply—

21 ‘‘(A) to an involuntary case involving no collu22 sion by the debtor with creditors; or 

23 ‘‘(B) to the filing of a petition if—

24 ‘‘(i) the debtor proves by a preponderance 

25 of the evidence that the filing of that petition 
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1 resulted from circumstances beyond the control 

2 of the debtor not foreseeable at the time the 

3 case then pending was filed; and 

4 ‘‘(ii) it is more likely than not that the 

5 court will confirm a feasible plan, but not a liq6 uidating plan, within a reasonable period of 

7 time.’’.

8 SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON9 VERSION AND APPOINTMENT OF TRUSTEE. 

10 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON11 VERSION.—Section 1112 of title 11, United States Code, 

12 is amended by striking subsection (b) and inserting the 

13 following: 

14 ‘‘(b)(1) Except as provided in paragraph (2) of this 

15 subsection, subsection (c) of this section, and section 

16 1104(a)(3), on request of a party in interest, and after 

17 notice and a hearing, absent unusual circumstances spe18 cifically identified by the court that establish that the re19 quested conversion or dismissal is not in the best interests 

20 of creditors and the estate, the court shall convert a case 

21 under this chapter to a case under chapter 7 or dismiss 

22 a case under this chapter, whichever is in the best inter23 ests of creditors and the estate, if the movant establishes 

24 cause. 
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1 ‘‘(2) The relief provided in paragraph (1) shall not 

2 be granted absent unusual circumstances specifically iden3 tified by the court that establish that such relief is not 

4 in the best interests of creditors and the estate, if the 

5 debtor or another party in interest objects and establishes 

6 that—

7 ‘‘(A) there is a reasonable likelihood that a plan 

8 will be confirmed within the timeframes established 

9 in sections 1121(e) and 1129(e) of this title, or if 

10 such sections do not apply, within a reasonable pe11 riod of time; and 

12 ‘‘(B) the grounds for granting such relief in13 clude an act or omission of the debtor other than 

14 under paragraph (4)(A)—

15 ‘‘(i) for which there exists a reasonable 

16 justification for the act or omission; and 

17 ‘‘(ii) that will be cured within a reasonable 

18 period of time fixed by the court. 

19 ‘‘(3) The court shall commence the hearing on a mo20 tion under this subsection not later than 30 days after 

21 filing of the motion, and shall decide the motion not later 

22 than 15 days after commencement of such hearing, unless 

23 the movant expressly consents to a continuance for a spe24 cific period of time or compelling circumstances prevent 
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1 the court from meeting the time limits established by this 

2 paragraph. 

3 ‘‘(4) For purposes of this subsection, the term ‘cause’ 

4 includes—

5 ‘‘(A) substantial or continuing loss to or dimi6 nution of the estate and the absence of a reasonable 

7 likelihood of rehabilitation; 

8 ‘‘(B) gross mismanagement of the estate; 

9 ‘‘(C) failure to maintain appropriate insurance 

10 that poses a risk to the estate or to the public; 

11 ‘‘(D) unauthorized use of cash collateral sub12 stantially harmful to 1 or more creditors; 

13 ‘‘(E) failure to comply with an order of the 

14 court; 

15 ‘‘(F) unexcused failure to satisfy timely any fil16 ing or reporting requirement established by this title 

17 or by any rule applicable to a case under this chap18 ter; 

19 ‘‘(G) failure to attend the meeting of creditors 

20 convened under section 341(a) or an examination or21 dered under rule 2004 of the Federal Rules of 

22 Bankruptcy Procedure without good cause shown by 

23 the debtor; 
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1 ‘‘(H) failure timely to provide information or 

2 attend meetings reasonably requested by the United 

3 States trustee or the bankruptcy administrator; 

4 ‘‘(I) failure timely to pay taxes owed after the 

5 date of the order for relief or to file tax returns due 

6 after the order for relief; 

7 ‘‘(J) failure to file a disclosure statement, or to 

8 file or confirm a plan, within the time fixed by this 

9 title or by order of the court; 

10 ‘‘(K) failure to pay any fees or charges required 

11 under chapter 123 of title 28; 

12 ‘‘(L) revocation of an order of confirmation 

13 under section 1144; 

14 ‘‘(M) inability to effectuate substantial con15 summation of a confirmed plan; 

16 ‘‘(N) material default by the debtor with re17 spect to a confirmed plan; 

18 ‘‘(O) termination of a confirmed plan by reason 

19 of the occurrence of a condition specified in the plan; 

20 and 

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

22 support obligation that first becomes payable after 

23 the date on which the petition is filed. 

24 ‘‘(5) The court shall commence the hearing on a mo25 tion under this subsection not later than 30 days after 
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1 filing of the motion, and shall decide the motion not later 

2 than 15 days after commencement of such hearing, unless 

3 the movant expressly consents to a continuance for a spe4 cific period of time or compelling circumstances prevent 

5 the court from meeting the time limits established by this 

6 paragraph.’’. 

7 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

8 TRUSTEE.—Section 1104(a) of title 11, United States 

9 Code, is amended—

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

11 end; 

12 (2) in paragraph (2), by striking the period at 

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

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

15 ‘‘(3) if grounds exist to convert or dismiss the 

16 case under section 1112, but the court determines 

17 that the appointment of a trustee or an examiner is 

18 in the best interests of creditors and the estate.’’. 

19 SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED 

20 STATES CODE, WITH RESPECT TO SMALL 

21 BUSINESSES. 

22 Not later than 2 years after the date of enactment 

23 of this Act, the Administrator of the Small Business Ad24 ministration, in consultation with the Attorney General, 

25 the Director of the Executive Office for United States 
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1 Trustees, and the Director of the Administrative Office 

2 of the United States Courts, shall—

3 (1) conduct a study to determine—

4 (A) the internal and external factors that 

5 cause small businesses, especially sole propri6 etorships, to become debtors in cases under title 

7 11, United States Code, and that cause certain 

8 small businesses to successfully complete cases 

9 under chapter 11 of such title; and 

10 (B) how Federal laws relating to bank11 ruptcy may be made more effective and efficient 

12 in assisting small businesses to remain viable; 

13 and 

14 (2) submit to the President pro tempore of the 

15 Senate and the Speaker of the House of Representa16 tives a report summarizing that study. 

17 SEC. 444. PAYMENT OF INTEREST. 

18 Section 362(d)(3) of title 11, United States Code, is 

19 amended—

20 (1) by inserting ‘‘or 30 days after the court de21 termines that the debtor is subject to this para22 graph, whichever is later’’ after ‘‘90-day period)’’; 

23 and 

24 (2) by striking subparagraph (B) and inserting 

25 the following: 
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1 ‘‘(B) the debtor has commenced monthly 

2 payments that—

3 ‘‘(i) may, in the debtor’s sole discre4 tion, notwithstanding section 363(c)(2), be 

5 made from rents or other income generated 

6 before or after the commencement of the 

7 case by or from the property to each cred8 itor whose claim is secured by such real es9 tate (other than a claim secured by a judg10 ment lien or by an unmatured statutory 

11 lien); and 

12 ‘‘(ii) are in an amount equal to inter13 est at the then applicable nondefault con14 tract rate of interest on the value of the 

15 creditor’s interest in the real estate; or’’. 

16 SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES. 

17 Section 503(b) of title 11, United States Code, is 

18 amended—

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

20 end; 

21 (2) in paragraph (6), by striking the period at 

22 the end and inserting a semicolon; and 

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

24 ‘‘(7) with respect to a nonresidential real prop25 erty lease previously assumed under section 365, 
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1 and subsequently rejected, a sum equal to all mone2 tary obligations due, excluding those arising from or 

3 relating to a failure to operate or a penalty provi4 sion, for the period of 2 years following the later of 

5 the rejection date or the date of actual turnover of 

6 the premises, without reduction or setoff for any 

7 reason whatsoever except for sums actually received 

8 or to be received from a nondebtor, and the claim 

9 for remaining sums due for the balance of the term 

10 of the lease shall be a claim under section 

11 502(b)(6);’’.

12 SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A 

13 PLAN ADMINISTRATOR OF AN EMPLOYEE 

14 BENEFIT PLAN. 

15 (a) IN GENERAL.—Section 521(a) of title 11, United 

16 States Code, as amended by section 106, is amended17 (1) in paragraph (4), by striking ‘‘and’’ at the 

18 end; 

19 (2) in paragraph (5), by striking the period at 

20 the end and inserting ‘‘; and’’; and 

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

22 ‘‘(6) unless a trustee is serving in the case, if 

23 at the time of filing the debtor served as the admin24 istrator (as defined in section 3 of the Employee Re25 tirement Income Security Act of 1974 of an em-
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1 ployee benefit plan, continue to perform the obliga2 tions required of the administrator.’’. 

3 (b) DUTIES OF TRUSTEES.—Section 704(a) of title 

4 11, United States Code, as amended by sections 102 and 

5 219, is amended—

6 (1) in paragraph (9), by striking ‘‘and’’ at the 

7 end; 

8 (2) in paragraph (10), by striking the period at 

9 the end; and 

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

11 ‘‘(11) if, at the time of the commencement of 

12 the case, the debtor served as the administrator (as 

13 defined in section 3 of the Employee Retirement In14 come Security Act of 1974) of an employee benefit 

15 plan, continue to perform the obligations required of 

16 the administrator; and’’. 

17 (c) CONFORMING AMENDMENT.—Section 1106(a)(1) 

18 of title 11, United States Code, is amended to read as 

19 follows: 

20 ‘‘(1) perform the duties of the trustee, as speci21 fied in paragraphs (2), (5), (7), (8), (9), (10), and 

22 (11) of section 704;’’.
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1 SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EM2 PLOYEES. 

3 Section 1114(d) of title 11, United States Code, is 

4 amended—

5 (1) by striking ‘‘appoint’’ and inserting ‘‘order 

6 the appointment of’’, and 

7 (2) by adding at the end the following: ‘‘The 

8 United States trustee shall appoint any such com9 mittee.’’. 

10 TITLE V—MUNICIPAL 

11 BANKRUPTCY PROVISIONS 

12 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI13 TION. 

14 (a) TECHNICAL AMENDMENT RELATING TO MUNICI15 PALITIES.—Section 921(d) of title 11, United States 

16 Code, is amended by inserting ‘‘notwithstanding section 

17 301(b)’’ before the period at the end. 

18 (b) CONFORMING AMENDMENT.—Section 301 of title 

19 11, United States Code, is amended—

20 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’; 

21 and 

22 (2) by striking the last sentence and inserting 

23 the following: 

24 ‘‘(b) The commencement of a voluntary case under 

25 a chapter of this title constitutes an order for relief under 

26 such chapter.’’. 
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1 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP2 TER 9. 

3 Section 901(a) of title 11, United States Code, is 

4 amended—

5 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and 

6 (2) by inserting ‘‘559, 560, 561, 562’’ after 

7 ‘‘557,’’. 

8 TITLE VI—BANKRUPTCY DATA 

9 SEC. 601. IMPROVED BANKRUPTCY STATISTICS. 

10 (a) IN GENERAL.—Chapter 6 of title 28, United 

11 States Code, is amended by adding at the end the fol12 lowing: 

13 ‘‘§ 159. Bankruptcy statistics 

14 ‘‘(a) The clerk of the district court, or the clerk of 

15 the bankruptcy court if one is certified pursuant to section 

16 156(b) of this title, shall collect statistics regarding debt17 ors who are individuals with primarily consumer debts 

18 seeking relief under chapters 7, 11, and 13 of title 11. 

19 Those statistics shall be in a standardized format pre20 scribed by the Director of the Administrative Office of the 

21 United States Courts (referred to in this section as the 

22 ‘Director’). 

23 ‘‘(b) The Director shall—

24 ‘‘(1) compile the statistics referred to in sub25 section (a); 
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1 ‘‘(2) make the statistics available to the public; 

2 and 

3 ‘‘(3) not later than June 1, 2005, and annually 

4 thereafter, prepare, and submit to Congress a report 

5 concerning the information collected under sub6 section (a) that contains an analysis of the informa7 tion. 

8 ‘‘(c) The compilation required under subsection (b) 

9 shall—

10 ‘‘(1) be itemized, by chapter, with respect to 

11 title 11; 

12 ‘‘(2) be presented in the aggregate and for each 

13 district; and 

14 ‘‘(3) include information concerning—

15 ‘‘(A) the total assets and total liabilities of 

16 the debtors described in subsection (a), and in 

17 each category of assets and liabilities, as re18 ported in the schedules prescribed pursuant to 

19 section 2075 of this title and filed by those 

20 debtors; 

21 ‘‘(B) the current monthly income, average 

22 income, and average expenses of those debtors 

23 as reported on the schedules and statements 

24 that each such debtor files under sections 521 

25 and 1322 of title 11; 
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1 ‘‘(C) the aggregate amount of debt dis2 charged in cases filed during the reporting pe3 riod, determined as the difference between the 

4 total amount of debt and obligations of a debtor 

5 reported on the schedules and the amount of 

6 such debt reported in categories which are pre7 dominantly nondischargeable; 

8 ‘‘(D) the average period of time between 

9 the filing of the petition and the closing of the 

10 case for cases closed during the reporting pe11 riod; 

12 ‘‘(E) for cases closed during the reporting 

13 period—

14 ‘‘(i) the number of cases in which a 

15 reaffirmation was filed; and 

16 ‘‘(ii)(I) the total number of reaffirma17 tions filed; 

18 ‘‘(II) of those cases in which a reaffir19 mation was filed, the number of cases in 

20 which the debtor was not represented by 

21 an attorney; and 

22 ‘‘(III) of those cases in which a reaf23 firmation was filed, the number of cases in 

24 which the reaffirmation was approved by 

25 the court; 
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1 ‘‘(F) with respect to cases filed under 

2 chapter 13 of title 11, for the reporting pe3 riod—

4 ‘‘(i)(I) the number of cases in which a 

5 final order was entered determining the 

6 value of property securing a claim in an 

7 amount less than the amount of the claim; 

8 and 

9 ‘‘(II) the number of final orders en10 tered determining the value of property se11 curing a claim; 

12 ‘‘(ii) the number of cases dismissed, 

13 the number of cases dismissed for failure 

14 to make payments under the plan, the 

15 number of cases refiled after dismissal, 

16 and the number of cases in which the plan 

17 was completed, separately itemized with re18 spect to the number of modifications made 

19 before completion of the plan, if any; and 

20 ‘‘(iii) the number of cases in which 

21 the debtor filed another case during the 6-

22 year period preceding the filing; 

23 ‘‘(G) the number of cases in which credi24 tors were fined for misconduct and any amount 
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1 of punitive damages awarded by the court for 

2 creditor misconduct; and 

3 ‘‘(H) the number of cases in which sanc4 tions under rule 9011 of the Federal Rules of 

5 Bankruptcy Procedure were imposed against 

6 debtor’s attorney or damages awarded under 

7 such Rule.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for chapter 6 of title 28, United States Code, is amended 

10 by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall take effect 18 months after the date of 

13 enactment of this Act. 

14 SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK15 RUPTCY DATA. 

16 (a) AMENDMENT.—Chapter 39 of title 28, United 

17 States Code, is amended by adding at the end the fol18 lowing: 

19 ‘‘§ 589b. Bankruptcy data 

20 ‘‘(a) RULES.—The Attorney General shall, within a 

21 reasonable time after the effective date of this section, 

22 issue rules requiring uniform forms for (and from time 

23 to time thereafter to appropriately modify and approve)—

24 ‘‘(1) final reports by trustees in cases under 

25 chapters 7, 12, and 13 of title 11; and 
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1 ‘‘(2) periodic reports by debtors in possession or 

2 trustees in cases under chapter 11 of title 11. 

3 ‘‘(b) REPORTS.—Each report referred to in sub4 section (a) shall be designed (and the requirements as to 

5 place and manner of filing shall be established) so as to 

6 facilitate compilation of data and maximum possible ac7 cess of the public, both by physical inspection at one or 

8 more central filing locations, and by electronic access 

9 through the Internet or other appropriate media. 

10 ‘‘(c) REQUIRED INFORMATION.—The information re11 quired to be filed in the reports referred to in subsection 

12 (b) shall be that which is in the best interests of debtors 

13 and creditors, and in the public interest in reasonable and 

14 adequate information to evaluate the efficiency and practi15 cality of the Federal bankruptcy system. In issuing rules 

16 proposing the forms referred to in subsection (a), the At17 torney General shall strike the best achievable practical 

18 balance between—

19 ‘‘(1) the reasonable needs of the public for in20 formation about the operational results of the Fed21 eral bankruptcy system; 

22 ‘‘(2) economy, simplicity, and lack of undue 

23 burden on persons with a duty to file reports; and 

24 ‘‘(3) appropriate privacy concerns and safe25 guards. 
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1 ‘‘(d) FINAL REPORTS.—The uniform forms for final 

2 reports required under subsection (a) for use by trustees 

3 under chapters 7, 12, and 13 of title 11 shall, in addition 

4 to such other matters as are required by law or as the 

5 Attorney General in the discretion of the Attorney General 

6 shall propose, include with respect to a case under such 

7 title—

8 ‘‘(1) information about the length of time the 

9 case was pending; 

10 ‘‘(2) assets abandoned; 

11 ‘‘(3) assets exempted; 

12 ‘‘(4) receipts and disbursements of the estate; 

13 ‘‘(5) expenses of administration, including for 

14 use under section 707(b), actual costs of admin15 istering cases under chapter 13 of title 11; 

16 ‘‘(6) claims asserted; 

17 ‘‘(7) claims allowed; and 

18 ‘‘(8) distributions to claimants and claims dis19 charged without payment, 

20 in each case by appropriate category and, in cases under 

21 chapters 12 and 13 of title 11, date of confirmation of 

22 the plan, each modification thereto, and defaults by the 

23 debtor in performance under the plan. 

24 ‘‘(e) PERIODIC REPORTS.—The uniform forms for 

25 periodic reports required under subsection (a) for use by 
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1 trustees or debtors in possession under chapter 11 of title 

2 11 shall, in addition to such other matters as are required 

3 by law or as the Attorney General in the discretion of the 

4 Attorney General shall propose, include—

5 ‘‘(1) information about the standard industry 

6 classification, published by the Department of Com7 merce, for the businesses conducted by the debtor; 

8 ‘‘(2) length of time the case has been pending; 

9 ‘‘(3) number of full-time employees as of the 

10 date of the order for relief and at the end of each 

11 reporting period since the case was filed; 

12 ‘‘(4) cash receipts, cash disbursements and 

13 profitability of the debtor for the most recent period 

14 and cumulatively since the date of the order for re15 lief; 

16 ‘‘(5) compliance with title 11, whether or not 

17 tax returns and tax payments since the date of the 

18 order for relief have been timely filed and made; 

19 ‘‘(6) all professional fees approved by the court 

20 in the case for the most recent period and cumula21 tively since the date of the order for relief (sepa22 rately reported, for the professional fees incurred by 

23 or on behalf of the debtor, between those that would 

24 have been incurred absent a bankruptcy case and 

25 those not); and 
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1 ‘‘(7) plans of reorganization filed and confirmed 

2 and, with respect thereto, by class, the recoveries of 

3 the holders, expressed in aggregate dollar values 

4 and, in the case of claims, as a percentage of total 

5 claims of the class allowed.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sections 

7 for chapter 39 of title 28, United States Code, is amended 

8 by adding at the end the following:

‘‘589b. Bankruptcy data.’’.

9 SEC. 603. AUDIT PROCEDURES. 

10 (a) IN GENERAL.—

11 (1) ESTABLISHMENT OF PROCEDURES.—The 

12 Attorney General (in judicial districts served by 

13 United States trustees) and the Judicial Conference 

14 of the United States (in judicial districts served by 

15 bankruptcy administrators) shall establish proce16 dures to determine the accuracy, veracity, and com17 pleteness of petitions, schedules, and other informa18 tion which the debtor is required to provide under 

19 sections 521 and 1322 of title 11, United States 

20 Code, and, if applicable, section 111 of such title, in 

21 cases filed under chapter 7 or 13 of such title in 

22 which the debtor is an individual. Such audits shall 

23 be in accordance with generally accepted auditing 

24 standards and performed by independent certified 

25 public accountants or independent licensed public ac-
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1 countants, provided that the Attorney General and 

2 the Judicial Conference, as appropriate, may develop 

3 alternative auditing standards not later than 2 years 

4 after the date of enactment of this Act. 

5 (2) PROCEDURES.—Those procedures required 

6 by paragraph (1) shall—

7 (A) establish a method of selecting appro8 priate qualified persons to contract to perform 

9 those audits; 

10 (B) establish a method of randomly select11 ing cases to be audited, except that not less 

12 than 1 out of every 250 cases in each Federal 

13 judicial district shall be selected for audit; 

14 (C) require audits for schedules of income 

15 and expenses which reflect greater than average 

16 variances from the statistical norm of the dis17 trict in which the schedules were filed if those 

18 variances occur by reason of higher income or 

19 higher expenses than the statistical norm of the 

20 district in which the schedules were filed; and 

21 (D) establish procedures for providing, not 

22 less frequently than annually, public informa23 tion concerning the aggregate results of such 

24 audits including the percentage of cases, by dis-
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1 trict, in which a material misstatement of in2 come or expenditures is reported. 

3 (b) AMENDMENTS.—Section 586 of title 28, United 

4 States Code, is amended—

5 (1) in subsection (a), by striking paragraph (6) 

6 and inserting the following: 

7 ‘‘(6) make such reports as the Attorney General 

8 directs, including the results of audits performed 

9 under section 603(a) of the Bankruptcy Abuse Pre10 vention and Consumer Protection Act of 2003;’’; and 

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

12 ‘‘(f)(1) The United States trustee for each district is 

13 authorized to contract with auditors to perform audits in 

14 cases designated by the United States trustee, in accord15 ance with the procedures established under section 603(a) 

16 of the Bankruptcy Abuse Prevention and Consumer Pro17 tection Act of 2003. 

18 ‘‘(2)(A) The report of each audit referred to in para19 graph (1) shall be filed with the court and transmitted 

20 to the United States trustee. Each report shall clearly and 

21 conspicuously specify any material misstatement of income 

22 or expenditures or of assets identified by the person per23 forming the audit. In any case in which a material 

24 misstatement of income or expenditures or of assets has 

25 been reported, the clerk of the district court (or the clerk 
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1 of the bankruptcy court if one is certified under section 

2 156(b) of this title) shall give notice of the misstatement 

3 to the creditors in the case. 

4 ‘‘(B) If a material misstatement of income or expend5 itures or of assets is reported, the United States trustee 

6 shall—

7 ‘‘(i) report the material misstatement, if appro8 priate, to the United States Attorney pursuant to 

9 section 3057 of title 18; and 

10 ‘‘(ii) if advisable, take appropriate action, in11 cluding but not limited to commencing an adversary 

12 proceeding to revoke the debtor’s discharge pursuant 

13 to section 727(d) of title 11.’’. 

14 (c) AMENDMENTS TO SECTION 521 OF TITLE 11, 

15 U.S.C.—Section 521(a) of title 11, United States Code, 

16 as so designated by section 106, is amended in each of 

17 paragraphs (3) and (4) by inserting ‘‘or an auditor ap18 pointed under section 586(f) of title 28’’ after ‘‘serving 

19 in the case’’. 

20 (d) AMENDMENTS TO SECTION 727 OF TITLE 11, 

21 U.S.C.—Section 727(d) of title 11, United States Code, 

22 is amended—

23 (1) in paragraph (2), by striking ‘‘or’’ at the 

24 end; 
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1 (2) in paragraph (3), by striking the period at 

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

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

4 ‘‘(4) the debtor has failed to explain satisfac5 torily—

6 ‘‘(A) a material misstatement in an audit 

7 referred to in section 586(f) of title 28; or 

8 ‘‘(B) a failure to make available for inspec9 tion all necessary accounts, papers, documents, 

10 financial records, files, and all other papers, 

11 things, or property belonging to the debtor that 

12 are requested for an audit referred to in section 

13 586(f) of title 28.’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall take effect 18 months after the date of 

16 enactment of this Act. 

17 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY 

18 OF BANKRUPTCY DATA. 

19 It is the sense of Congress that—

20 (1) the national policy of the United States 

21 should be that all data held by bankruptcy clerks in 

22 electronic form, to the extent such data reflects only 

23 public records (as defined in section 107 of title 11, 

24 United States Code), should be released in a usable 

25 electronic form in bulk to the public, subject to such 
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1 appropriate privacy concerns and safeguards as Con2 gress and the Judicial Conference of the United 

3 States may determine; and 

4 (2) there should be established a bankruptcy 

5 data system in which—

6 (A) a single set of data definitions and 

7 forms are used to collect data nationwide; and 

8 (B) data for any particular bankruptcy 

9 case are aggregated in the same electronic 

10 record. 

11 TITLE VII—BANKRUPTCY TAX 

12 PROVISIONS 

13 SEC. 701. TREATMENT OF CERTAIN LIENS. 

14 (a) TREATMENT OF CERTAIN LIENS.—Section 724 

15 of title 11, United States Code, is amended—

16 (1) in subsection (b), in the matter preceding 

17 paragraph (1), by inserting ‘‘(other than to the ex18 tent that there is a properly perfected unavoidable 

19 tax lien arising in connection with an ad valorem tax 

20 on real or personal property of the estate)’’ after 

21 ‘‘under this title’’; 

22 (2) in subsection (b)(2), by inserting ‘‘(except 

23 that such expenses, other than claims for wages, sal24 aries, or commissions which arise after the filing of 

25 a petition, shall be limited to expenses incurred 
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1 under chapter 7 of this title and shall not include ex2 penses incurred under chapter 11 of this title)’’ after 

3 ‘‘507(a)(1)’’; and 

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

5 ‘‘(e) Before subordinating a tax lien on real or per6 sonal property of the estate, the trustee shall—

7 ‘‘(1) exhaust the unencumbered assets of the 

8 estate; and 

9 ‘‘(2) in a manner consistent with section 

10 506(c), recover from property securing an allowed 

11 secured claim the reasonable, necessary costs and 

12 expenses of preserving or disposing of that property. 

13 ‘‘(f) Notwithstanding the exclusion of ad valorem tax 

14 liens under this section and subject to the requirements 

15 of subsection (e), the following may be paid from property 

16 of the estate which secures a tax lien, or the proceeds of 

17 such property: 

18 ‘‘(1) Claims for wages, salaries, and commis19 sions that are entitled to priority under section 

20 507(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 

2 the end; 

3 (2) in subparagraph (B), by striking the period 

4 at the end and inserting ‘‘; or’’; and 

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

6 ‘‘(C) the amount or legality of any amount aris7 ing in connection with an ad valorem tax on real or 

8 personal property of the estate, if the applicable pe9 riod for contesting or redetermining that amount 

10 under any law (other than a bankruptcy law) has ex11 pired.’’. 

12 SEC. 702. TREATMENT OF FUEL TAX CLAIMS. 

13 Section 501 of title 11, United States Code, is 

14 amended by adding at the end the following: 

15 ‘‘(e) A claim arising from the liability of a debtor for 

16 fuel use tax assessed consistent with the requirements of 

17 section 31705 of title 49 may be filed by the base jurisdic18 tion designated pursuant to the International Fuel Tax 

19 Agreement (as defined in section 31701 of title 49) and, 

20 if so 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 

2 address and in the manner designated in paragraph 

3 (1)’’ after ‘‘determination of such tax’’; 

4 (2) by striking ‘‘(1) upon payment’’ and insert5 ing ‘‘(A) upon payment’’; 

6 (3) by striking ‘‘(A) such governmental unit’’ 

7 and inserting ‘‘(i) such governmental unit’’; 

8 (4) by striking ‘‘(B) such governmental unit’’ 

9 and inserting ‘‘(ii) such governmental unit’’; 

10 (5) by striking ‘‘(2) upon payment’’ and insert11 ing ‘‘(B) upon payment’’; 

12 (6) by striking ‘‘(3) upon payment’’ and insert13 ing ‘‘(C) upon payment’’; 

14 (7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and 

15 (8) by inserting before paragraph (2), as so 

16 designated, the following: 

17 ‘‘(b)(1)(A) The clerk shall maintain a listing under 

18 which a Federal, State, or local governmental unit respon19 sible for 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 a governmental unit referred to in subpara2 graph (A) does not designate an address and provide that 

3 address to the clerk under that subparagraph, any request 

4 made under this subsection may be served at the address 

5 for the filing of a tax return or protest with the appro6 priate taxing authority of that governmental unit.’’. 

7 SEC. 704. RATE OF INTEREST ON TAX CLAIMS. 

8 (a) IN GENERAL.—Subchapter I of chapter 5 of title 

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

10 the following: 

11 ‘‘§ 511. Rate of interest on tax claims 

12 ‘‘(a) If any provision of this title requires the pay13 ment of interest on a tax claim or on an administrative 

14 expense tax, or the payment of interest to enable a creditor 

15 to receive the present value of the allowed amount of a 

16 tax claim, the rate of interest shall be the rate determined 

17 under applicable nonbankruptcy law. 

18 ‘‘(b) In the case of taxes paid under a confirmed plan 

19 under this title, the rate of interest shall be determined 

20 as of the calendar month in which the plan is confirmed.’’. 

21 (b) CLERICAL AMENDMENT.—The table of sections 

22 for subchapter 1 of chapter 5 of title 11, United States 

23 Code, 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 be7 fore the date of the filing of the petition’’ after 

8 ‘‘gross receipts’’; 

9 (B) in clause (i), by striking ‘‘for a taxable 

10 year ending on or before the date of the filing 

11 of the petition’’; and 

12 (C) by striking clause (ii) and inserting the 

13 following: 

14 ‘‘(ii) assessed within 240 days before 

15 the date of the filing of the petition, exclu16 sive of—

17 ‘‘(I) any time during which an 

18 offer in compromise with respect to 

19 that tax was pending or in effect dur20 ing that 240-day period, plus 30 days; 

21 and 

22 ‘‘(II) any time during which a 

23 stay of proceedings against collections 

24 was in effect in a prior case under 

25 this title during that 240-day period, 

26 plus 90 days.’’; and 
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1 (2) by adding at the end the following: 

2 ‘‘An otherwise applicable time period specified in 

3 this paragraph shall be suspended for any period 

4 during which a governmental unit is prohibited 

5 under applicable nonbankruptcy law from collecting 

6 a tax as a result of a request by the debtor for a 

7 hearing and an appeal of any collection action taken 

8 or proposed against the debtor, plus 90 days; plus 

9 any time during which the stay of proceedings was 

10 in effect in a prior case under this title or during 

11 which collection was precluded by the existence of 1 

12 or more confirmed plans under this title, plus 90 

13 days.’’. 

14 SEC. 706. PRIORITY PROPERTY TAXES INCURRED. 

15 Section 507(a)(8)(B) of title 11, United States Code, 

16 is amended by striking ‘‘assessed’’ and inserting ‘‘in17 curred’’. 

18 SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP19 TER 13. 

20 Section 1328(a)(2) of title 11, United States Code, 

21 as amended by section 314, is amended by striking ‘‘para22 graph’’ and inserting ‘‘section 507(a)(8)(C) or in para23 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 section 321, is amended by adding at the end 

5 the following: 

6 ‘‘(6) Notwithstanding paragraph (1), the confirma7 tion of a plan does not discharge a debtor that is a cor8 poration from any debt—

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 end2 ing before 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, 

6 is 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 

11 end of the subparagraph, and inserting ‘‘regular in12 stallment 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 entry of 

18 the order for relief under section 301, 302, 

19 or 303; and 

20 ‘‘(iii) in a manner not less favorable 

21 than the most favored nonpriority unse22 cured claim provided for by the plan (other 

23 than cash payments made to a class of 

24 creditors under section 1122(b)); and’’; 

25 and 
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1 (3) by adding at the end the following: 

2 ‘‘(D) with respect to a secured claim which 

3 would otherwise meet the description of an un4 secured claim of a governmental unit under sec5 tion 507(a)(8), but for the secured status of 

6 that claim, the holder of that claim will receive 

7 on account of that claim, cash payments, in the 

8 same manner and over the same period, as pre9 scribed in subparagraph (C).’’. 

10 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB11 ITED. 

12 Section 545(2) of title 11, United States Code, is 

13 amended by inserting before the semicolon at the end the 

14 following: ‘‘, except in any case in which a purchaser is 

15 a purchaser described in section 6323 of the Internal Rev16 enue Code of 1986, or in any other similar provision of 

17 State or local law’’. 

18 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI19 NESS. 

20 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of 

21 title 28, United States Code, is amended—

22 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and 

23 (2) by adding at the end the following: 
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1 ‘‘(b) A tax under subsection (a) shall be paid on or 

2 before the due date of the tax under applicable nonbank3 ruptcy law, unless—

4 ‘‘(1) the tax is a property tax secured by a lien 

5 against property that is abandoned within a reason6 able period of time after the lien attaches by the 

7 trustee of a bankruptcy estate under section 554 of 

8 title 11; or 

9 ‘‘(2) payment of the tax is excused under a spe10 cific provision of title 11. 

11 ‘‘(c) In a case pending under chapter 7 of title 11, 

12 payment of a tax may be deferred until final distribution 

13 is made under section 726 of title 11, if—

14 ‘‘(1) the tax was not incurred by a trustee duly 

15 appointed under chapter 7 of title 11; or 

16 ‘‘(2) before the due date of the tax, an order of 

17 the court makes a finding of probable insufficiency 

18 of funds of the estate to pay in full the administra19 tive expenses allowed under section 503(b) of title 

20 11 that have the same priority in distribution under 

21 section 726(b) of title 11 as the priority of that 

22 tax.’’. 

23 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

24 Section 503(b)(1)(B)(i) of title 11, United States Code, 

25 is amended by inserting ‘‘whether secured or unsecured, 
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1 including property taxes for which liability is in rem, in 

2 personam, or both,’’ before ‘‘except’’. 

3 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

4 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of 

5 title 11, United States Code, is amended— 

6 (1) in subparagraph (B), by striking ‘‘and’’ at 

7 the end; 

8 (2) in subparagraph (C), by adding ‘‘and’’ at 

9 the end; and 

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

11 ‘‘(D) notwithstanding the requirements of sub12 section (a), a governmental unit shall not be re13 quired to file a request for the payment of an ex14 pense described in subparagraph (B) or (C), as a 

15 condition of its being an allowed administrative ex16 pense;’’. 

17 (d) PAYMENT OF TAXES AND FEES AS SECURED

18 CLAIMS.—Section 506 of title 11, United States Code, is 

19 amended—

20 (1) in subsection (b), by inserting ‘‘or State 

21 statute’’ after ‘‘agreement’’; and 

22 (2) in subsection (c), by inserting ‘‘, including 

23 the payment of all ad valorem property taxes with 

24 respect to the property’’ before the period at the 

25 end. 
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1 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS. 

2 Section 726(a)(1) of title 11, United States Code, is 

3 amended by striking ‘‘before the date on which the trustee 

4 commences distribution under this section;’’ and inserting 

5 the following: ‘‘on or before the earlier of—

6 ‘‘(A) the date that is 10 days after the 

7 mailing to creditors of the summary of the 

8 trustee’s final report; or 

9 ‘‘(B) the date on which the trustee com10 mences final distribution under this section;’’. 

11 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU12 THORITIES. 

13 Section 523(a) of title 11, United States Code, as 

14 amended by sections 215 and 224, is amended—

15 (1) in paragraph (1)(B)—

16 (A) in the matter preceding clause (i), by 

17 inserting ‘‘or equivalent report or notice,’’ after 

18 ‘‘a return,’’; 

19 (B) in clause (i), by inserting ‘‘or given’’ 

20 after ‘‘filed’’; and 

21 (C) in clause (ii)—

22 (i) by inserting ‘‘or given’’ after 

23 ‘‘filed’’; and 

24 (ii) by inserting ‘‘, report, or notice’’ 

25 after ‘‘return’’; and 

26 (2) by adding at the end the following: 
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1 ‘‘For purposes of this subsection, the term ‘return’ means 

2 a return that satisfies the requirements of applicable non3 bankruptcy law (including applicable filing requirements). 

4 Such term includes a return prepared pursuant to section 

5 6020(a) of the Internal Revenue Code of 1986, or similar 

6 State or local law, or a written stipulation to a judgment 

7 or a final order entered by a nonbankruptcy tribunal, but 

8 does not include a return made pursuant to section 

9 6020(b) of the Internal Revenue Code of 1986, or a simi10 lar State or local law.’’. 

11 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN12 PAID TAXES. 

13 Section 505(b)(2) of title 11, United States Code, as 

14 amended by section 703, is amended by inserting ‘‘the es15 tate,’’ after ‘‘misrepresentation,’’. 

16 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON17 FIRM CHAPTER 13 PLANS. 

18 (a) FILING OF PREPETITION TAX RETURNS RE19 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of 

20 title 11, United States Code, as amended by sections 102, 

21 213, and 306, is amended by inserting after paragraph 

22 (8) the following: 

23 ‘‘(9) the debtor has filed all applicable Federal, 

24 State, and local tax returns as required by section 

25 1308.’’. 
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1 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

2 RETURNS.—

3 (1) IN GENERAL.—Subchapter I of chapter 13 

4 of title 11, United States Code, is amended by add5 ing at the end the following: 

6 ‘‘§ 1308. Filing of prepetition tax returns 

7 ‘‘(a) Not later than the day before the date on which 

8 the meeting of the creditors is first scheduled to be held 

9 under section 341(a), if the debtor was required to file 

10 a tax return under applicable nonbankruptcy law, the 

11 debtor shall file with appropriate tax authorities all tax 

12 returns for all taxable periods ending during the 4-year 

13 period ending on the date of the filing of the petition. 

14 ‘‘(b)(1) Subject to paragraph (2), if the tax returns 

15 required by subsection (a) have not been filed by the date 

16 on which the meeting of creditors is first scheduled to be 

17 held under section 341(a), the trustee may hold open that 

18 meeting for a reasonable period of time to allow the debtor 

19 an additional period of time to file any unfiled returns, 

20 but such additional period of time shall not extend be21 yond—

22 ‘‘(A) for any return that is past due as of the 

23 date of the filing of the petition, the date that is 120 

24 days after the date of that meeting; or 
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1 ‘‘(B) for any return that is not past due as of 

2 the date of the filing of the petition, the later of—

3 ‘‘(i) the date that is 120 days after the 

4 date of that meeting; or 

5 ‘‘(ii) the date on which the return is due 

6 under the last automatic extension of time for 

7 filing that return to which the debtor is enti8 tled, and for which request is timely made, in 

9 accordance with applicable nonbankruptcy law. 

10 ‘‘(2) After notice and a hearing, and order entered 

11 before the tolling of any applicable filing period deter12 mined under this subsection, if the debtor demonstrates 

13 by a preponderance of the evidence that the failure to file 

14 a return as required under this subsection is attributable 

15 to circumstances beyond the control of the debtor, the 

16 court may extend the filing period established by the trust17 ee under this subsection for—

18 ‘‘(A) a period of not more than 30 days for re19 turns described in paragraph (1); and 

20 ‘‘(B) a period not to extend after the applicable 

21 extended due date for a return described in para22 graph (2). 

23 ‘‘(c) For purposes of this section, the term ‘return’ 

24 includes a return prepared pursuant to subsection (a) or 

25 (b) of section 6020 of the Internal Revenue Code of 1986, 
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1 or a similar State or local law, or a written stipulation 

2 to a judgment or a final order entered by a nonbankruptcy 

3 tribunal.’’. 

4 (2) CONFORMING AMENDMENT.—The table of 

5 sections for subchapter I of chapter 13 of title 11, 

6 United States Code, is amended by adding at the 

7 end the following:

‘‘1308. Filing of prepetition tax returns.’’.

8 (c) DISMISSAL OR CONVERSION ON FAILURE TO

9 COMPLY.—Section 1307 of title 11, United States Code, 

10 is amended—

11 (1) by redesignating subsections (e) and (f) as 

12 subsections (f) and (g), respectively; and 

13 (2) by inserting after subsection (d) the fol14 lowing: 

15 ‘‘(e) Upon the failure of the debtor to file a tax return 

16 under section 1308, on request of a party in interest or 

17 the United States trustee and after notice and a hearing, 

18 the court shall dismiss a case or convert a case under this 

19 chapter to a case under chapter 7 of this title, whichever 

20 is in the best interest of the creditors and the estate.’’. 

21 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of 

22 title 11, United States Code, is amended by inserting be23 fore the period at the end the following: ‘‘, and except that 

24 in a case under chapter 13, a claim of a governmental 

25 unit for a tax with respect to a return filed under section 
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1 1308 shall be timely if the claim is filed on or before the 

2 date that is 60 days after the date on which such return 

3 was filed as required’’. 

4 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

5 CONFIRMATION.—It is the sense of Congress that the Ad6 visory Committee on Bankruptcy Rules of the Judicial 

7 Conference of the United States should, as soon as prac8 ticable after the date of enactment of this Act, propose 

9 for adoption amended Federal Rules of Bankruptcy Proce10 dure which provide that—

11 (1) notwithstanding the provisions of Rule 

12 3015(f), in cases under chapter 13 of title 11, 

13 United States Code, an objection to the confirmation 

14 of a plan filed by a governmental unit on or before 

15 the date that is 60 days after the date on which the 

16 debtor files all tax returns required under sections 

17 1308 and 1325(a)(7) of title 11, United States 

18 Code, shall be treated for all purposes as if such ob19 jection had been timely filed before such confirma20 tion; and 

21 (2) in addition to the provisions of Rule 3007, 

22 in a case under chapter 13 of title 11, United States 

23 Code, no objection to a claim for a tax with respect 

24 to which a return is required to be filed under sec-
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1 tion 1308 of title 11, United States Code, shall be 

2 filed until such return has been filed as required. 

3 SEC. 717. STANDARDS FOR TAX DISCLOSURE. 

4 Section 1125(a)(1) of title 11, United States Code, 

5 is amended—

6 (1) by inserting ‘‘including a discussion of the 

7 potential material Federal tax consequences of the 

8 plan to the debtor, any successor to the debtor, and 

9 a hypothetical investor typical of the holders of 

10 claims or interests in the case,’’ after ‘‘records’’; and 

11 (2) by striking ‘‘a hypothetical reasonable inves12 tor typical of holders of claims or interests’’ and in13 serting ‘‘such a hypothetical investor’’. 

14 SEC. 718. SETOFF OF TAX REFUNDS. 

15 Section 362(b) of title 11, United States Code, as 

16 amended by sections 224, 303, 311, and 401, is amended 

17 by inserting after paragraph (25) the following: 

18 ‘‘(26) under subsection (a), of the setoff under 

19 applicable nonbankruptcy law of an income tax re20 fund, by a governmental unit, with respect to a tax21 able period that ended before the order for relief 

22 against an income tax liability for a taxable period 

23 that also ended before the order for relief, except 

24 that in any case in which the setoff of an income tax 

25 refund is not permitted under applicable nonbank-
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1 ruptcy law because of a pending action to determine 

2 the amount or legality of a tax liability, the govern3 mental unit may hold the refund pending the resolu4 tion of the action, unless the court, on the motion 

5 of the trustee and after notice and a hearing, grants 

6 the taxing authority adequate protection (within the 

7 meaning of section 361) for the secured claim of 

8 that authority in the setoff under section 506(a);’’. 

9 SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT10 MENT OF STATE AND LOCAL TAXES. 

11 (a) IN GENERAL.—

12 (1) SPECIAL PROVISIONS.—Section 346 of title 

13 11, United States Code, is amended to read as fol14 lows: 

15 ‘‘§ 346. Special provisions related to the treatment of 

16 State and local taxes 

17 ‘‘(a) Whenever the Internal Revenue Code of 1986 

18 provides that a separate taxable estate or entity is created 

19 in a case concerning a debtor under this title, and the in20 come, gain, loss, deductions, and credits of such estate 

21 shall be taxed to or claimed by the estate, a separate tax22 able estate is also created for purposes of any State and 

23 local law imposing a tax on or measured by income and 

24 such income, gain, loss, deductions, and credits shall be 

25 taxed to or claimed by the estate and may not be taxed 
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1 to or claimed by the debtor. The preceding sentence shall 

2 not apply if the case is dismissed. The trustee shall make 

3 tax returns of income required under any such State or 

4 local law. 

5 ‘‘(b) Whenever the Internal Revenue Code of 1986 

6 provides that no separate taxable estate shall be created 

7 in a case concerning a debtor under this title, and the in8 come, gain, loss, deductions, and credits of an estate shall 

9 be taxed to or claimed by the debtor, such income, gain, 

10 loss, deductions, and credits shall be taxed to or claimed 

11 by the debtor under a State or local law imposing a tax 

12 on or measured by income and may not be taxed to or 

13 claimed by the estate. The trustee shall make such tax 

14 returns of income of corporations and of partnerships as 

15 are required under any State or local law, but with respect 

16 to partnerships, shall make said returns only to the extent 

17 such returns are also required to be made under such 

18 Code. The estate shall be liable for any tax imposed on 

19 such corporation or partnership, but not for any tax im20 posed on partners or members. 

21 ‘‘(c) With respect to a partnership or any entity treat22 ed as a partnership under a State or local law imposing 

23 a tax on or measured by income that is a debtor in a case 

24 under this title, any gain or loss resulting from a distribu25 tion of property from such partnership, or any distributive 
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1 share of any income, gain, loss, deduction, or credit of a 

2 partner or member that is distributed, or considered dis3 tributed, from such partnership, after the commencement 

4 of the case, is gain, loss, income, deduction, or credit, as 

5 the case may be, of the partner or member, and if such 

6 partner or member is a debtor in a case under this title, 

7 shall be subject to tax in accordance with subsection (a) 

8 or (b). 

9 ‘‘(d) For purposes of any State or local law imposing 

10 a tax on or measured by income, the taxable period of 

11 a debtor in a case under this title shall terminate only 

12 if and to the extent that the taxable period of such debtor 

13 terminates under the Internal Revenue Code of 1986. 

14 ‘‘(e) The estate in any case described in subsection 

15 (a) shall use the same accounting method as the debtor 

16 used immediately before the commencement of the case, 

17 if such method of accounting complies with applicable non18 bankruptcy tax law. 

19 ‘‘(f) For purposes of any State or local law imposing 

20 a tax on or measured by income, a transfer of property 

21 from the debtor to the estate or from the estate to the 

22 debtor shall not be treated as a disposition for purposes 

23 of any provision assigning tax consequences to a disposi24 tion, except to the extent that such transfer is treated as 

25 a disposition under the Internal Revenue Code of 1986. 
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1 ‘‘(g) Whenever a tax is imposed pursuant to a State 

2 or local law imposing a tax on or measured by income pur3 suant to subsection (a) or (b), such tax shall be imposed 

4 at rates generally applicable to the same types of entities 

5 under such State or local law. 

6 ‘‘(h) The trustee shall withhold from any payment of 

7 claims for wages, salaries, commissions, dividends, inter8 est, or other payments, or collect, any amount required 

9 to be withheld or collected under applicable State or local 

10 tax law, and shall pay such withheld or collected amount 

11 to the appropriate governmental unit at the time and in 

12 the manner required by such tax law, and with the same 

13 priority as the claim from which such amount was with14 held or collected was paid. 

15 ‘‘(i)(1) To the extent that any State or local law im16 posing a tax on or measured by income provides for the 

17 carryover of any tax attribute from one taxable period to 

18 a subsequent taxable period, the estate shall succeed to 

19 such tax attribute in any case in which such estate is sub20 ject to tax under subsection (a). 

21 ‘‘(2) After such a case is closed or dismissed, the 

22 debtor shall succeed to any tax attribute to which the es23 tate succeeded under paragraph (1) to the extent con24 sistent with the Internal Revenue Code of 1986. 
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1 ‘‘(3) The estate may carry back any loss or tax at2 tribute to a taxable period of the debtor that ended before 

3 the order for relief under this title to the extent that— 

4 ‘‘(A) applicable State or local tax law provides 

5 for a carryback in the case of the debtor; and 

6 ‘‘(B) the same or a similar tax attribute may be 

7 carried back by the estate to such a taxable period 

8 of the debtor under the Internal Revenue Code of 

9 1986. 

10 ‘‘(j)(1) For purposes of any State or local law impos11 ing a tax on or measured by income, income is not realized 

12 by the estate, the debtor, or a successor to the debtor by 

13 reason of discharge of indebtedness in a case under this 

14 title, except to the extent, if any, that such income is sub15 ject to tax under the Internal Revenue Code of 1986. 

16 ‘‘(2) Whenever the Internal Revenue Code of 1986 

17 provides that the amount excluded from gross income in 

18 respect of the discharge of indebtedness in a case under 

19 this title shall be applied to reduce the tax attributes of 

20 the debtor or the estate, a similar reduction shall be made 

21 under any State or local law imposing a tax on or meas22 ured by income to the extent such State or local law recog23 nizes such attributes. Such State or local law may also 

24 provide for the reduction of other attributes to the extent 
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1 that the full amount of income from the discharge of in2 debtedness has not been applied. 

3 ‘‘(k)(1) Except as provided in this section and section 

4 505, the time and manner of filing tax returns and the 

5 items of income, gain, loss, deduction, and credit of any 

6 taxpayer shall be determined under applicable nonbank7 ruptcy law. 

8 ‘‘(2) For Federal tax purposes, the provisions of this 

9 section are subject to the Internal Revenue Code of 1986 

10 and other applicable Federal nonbankruptcy law.’’. 

11 (2) CLERICAL AMENDMENT.—The table of sec12 tions for chapter 3 of title 11, United States Code, 

13 is amended by striking the item relating to section 

14 346 and inserting the following:

‘‘346. Special provisions related to the treatment of State and local taxes.’’.

15 (b) CONFORMING AMENDMENTS.—Title 11 of the 

16 United States Code is amended—

17 (1) by striking section 728; 

18 (2) in the table of sections for chapter 7 by 

19 striking the item relating to section 728; 

20 (3) in section 1146—

21 (A) by striking subsections (a) and (b); 

22 and 

23 (B) by redesignating subsections (c) and 

24 (d) as subsections (a) and (b), respectively; and 

25 (4) in section 1231—
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1 (A) by striking subsections (a) and (b); 

2 and 

3 (B) by redesignating subsections (c) and 

4 (d) as subsections (a) and (b), respectively. 

5 SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX 

6 RETURNS. 

7 Section 521 of title 11, United States Code, as 

8 amended by sections 106, 225, 305, 315, and 316, is 

9 amended by adding at the end the following: 

10 ‘‘(k)(1) Notwithstanding any other provision of this 

11 title, if the debtor fails to file a tax return that becomes 

12 due after the commencement of the case or to properly 

13 obtain an extension of the due date for filing such return, 

14 the taxing authority may request that the court enter an 

15 order converting or dismissing the case. 

16 ‘‘(2) If the debtor does not file the required return 

17 or obtain the extension referred to in paragraph (1) within 

18 90 days after a request is filed by the taxing authority 

19 under that paragraph, the court shall convert or dismiss 

20 the case, whichever is in the best interests of creditors and 

21 the estate.’’. 
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1 TITLE VIII—ANCILLARY AND 

2 OTHER CROSS-BORDER CASES 

3 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, 

4 UNITED STATES CODE. 

5 (a) IN GENERAL.—Title 11, United States Code, is 

6 amended by inserting after chapter 13 the following: 

7 ‘‘CHAPTER 15—ANCILLARY AND OTHER 

8 CROSS-BORDER CASES

‘‘Sec. 

‘‘1501. Purpose and scope of application. 

‘‘SUBCHAPTER I—GENERAL PROVISIONS 

‘‘1502. Definitions. 

‘‘1503. International obligations of the United States. 

‘‘1504. Commencement of ancillary case. 

‘‘1505. Authorization to act in a foreign country. 

‘‘1506. Public policy exception. 

‘‘1507. Additional assistance. 

‘‘1508. Interpretation. 

‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND 

CREDITORS TO THE COURT 

‘‘1509. Right of direct access. 

‘‘1510. Limited jurisdiction. 

‘‘1511. Commencement of case under section 301 or 303. 

‘‘1512. Participation of a foreign representative in a case under this title. 

‘‘1513. Access of foreign creditors to a case under this title. 

‘‘1514. Notification to foreign creditors concerning a case under this title. 

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING 

AND RELIEF 

‘‘1515. Application for recognition. 

‘‘1516. Presumptions concerning recognition. 

‘‘1517. Order granting recognition. 

‘‘1518. Subsequent information. 

‘‘1519. Relief that may be granted upon filing petition for recognition. 

‘‘1520. Effects of recognition of a foreign main proceeding. 

‘‘1521. Relief that may be granted upon recognition. 

‘‘1522. Protection of creditors and other interested persons. 

‘‘1523. Actions to avoid acts detrimental to creditors. 

‘‘1524. Intervention by a foreign representative. 

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND 

FOREIGN REPRESENTATIVES 
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‘‘1525. Cooperation and direct communication between the court and foreign 

courts or foreign representatives. 

‘‘1526. Cooperation and direct communication between the trustee and foreign 

courts or foreign representatives. 

‘‘1527. Forms of cooperation. 

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS 

‘‘1528. Commencement of a case under this title after recognition of a foreign 

main proceeding. 

‘‘1529. Coordination of a case under this title and a foreign proceeding. 

‘‘1530. Coordination of more than 1 foreign proceeding. 

‘‘1531. Presumption of insolvency based on recognition of a foreign main proceeding. 

‘‘1532. Rule of payment in concurrent proceedings.

1 ‘‘§ 1501. Purpose and scope of application 

2 ‘‘(a) The purpose of this chapter is to incorporate the 

3 Model Law on Cross-Border Insolvency so as to provide 

4 effective mechanisms for dealing with cases of cross-bor5 der insolvency with the objectives of—

6 ‘‘(1) cooperation between—

7 ‘‘(A) courts of the United States, United 

8 States trustees, trustees, examiners, debtors, 

9 and debtors in possession; and 

10 ‘‘(B) the courts and other competent au11 thorities of foreign countries involved in cross12 border insolvency cases; 

13 ‘‘(2) greater legal certainty for trade and in14 vestment; 

15 ‘‘(3) fair and efficient administration of cross16 border insolvencies that protects the interests of all 

17 creditors, and other interested entities, including the 

18 debtor; 
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1 ‘‘(4) protection and maximization of the value 

2 of the debtor’s assets; and 

3 ‘‘(5) facilitation of the rescue of financially 

4 troubled businesses, thereby protecting investment 

5 and preserving employment. 

6 ‘‘(b) This chapter applies where—

7 ‘‘(1) assistance is sought in the United States 

8 by a foreign court or a foreign representative in con9 nection with a foreign proceeding; 

10 ‘‘(2) assistance is sought in a foreign country in 

11 connection with a case under this title; 

12 ‘‘(3) a foreign proceeding and a case under this 

13 title with respect to the same debtor are taking place 

14 concurrently; or 

15 ‘‘(4) creditors or other interested persons in a 

16 foreign country have an interest in requesting the 

17 commencement of, or participating in, a case or pro18 ceeding under this title. 

19 ‘‘(c) This chapter does not apply to—

20 ‘‘(1) a proceeding concerning an entity, other 

21 than a foreign insurance company, identified by ex22 clusion in section 109(b); 

23 ‘‘(2) an individual, or to an individual and such 

24 individual’s spouse, who have debts within the limits 

25 specified in section 109(e) and who are citizens of 
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1 the United States or aliens lawfully admitted for 

2 permanent residence in the United States; or 

3 ‘‘(3) an entity subject to a proceeding under the 

4 Securities Investor Protection Act of 1970, a stock5 broker subject to subchapter III of chapter 7 of this 

6 title, or a commodity broker subject to subchapter 

7 IV of chapter 7 of this title. 

8 ‘‘(d) The court may not grant relief under this chap9 ter with respect to any deposit, escrow, trust fund, or 

10 other security required or permitted under any applicable 

11 State insurance law or regulation for the benefit of claim 

12 holders in the United States. 

13 ‘‘SUBCHAPTER I—GENERAL PROVISIONS 

14 ‘‘§ 1502. Definitions 

15 ‘‘For the purposes of this chapter, the term—

16 ‘‘(1) ‘debtor’ means an entity that is the subject 

17 of a foreign proceeding; 

18 ‘‘(2) ‘establishment’ means any place of oper19 ations where the debtor carries out a nontransitory 

20 economic activity; 

21 ‘‘(3) ‘foreign court’ means a judicial or other 

22 authority competent to control or supervise a foreign 

23 proceeding; 
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1 ‘‘(4) ‘foreign main proceeding’ means a foreign 

2 proceeding taking place in the country where the 

3 debtor has the center of its main interests; 

4 ‘‘(5) ‘foreign nonmain proceeding’ means a for5 eign proceeding, other than a foreign main pro6 ceeding, taking place in a country where the debtor 

7 has an establishment; 

8 ‘‘(6) ‘trustee’ includes a trustee, a debtor in 

9 possession in a case under any chapter of this title, 

10 or a debtor under chapter 9 of this title; 

11 ‘‘(7) ‘recognition’ means the entry of an order 

12 granting recognition of a foreign main proceeding or 

13 foreign nonmain proceeding under this chapter; and 

14 ‘‘(8) ‘within the territorial jurisdiction of the 

15 United States’, when used with reference to property 

16 of a debtor, refers to tangible property located with17 in the territory of the United States and intangible 

18 property deemed under applicable nonbankruptcy 

19 law to be located within that territory, including any 

20 property subject to attachment or garnishment that 

21 may properly be seized or garnished by an action in 

22 a Federal or State court in the United States. 

23 ‘‘§ 1503. International obligations of the United States 

24 ‘‘To the extent that this chapter conflicts with an ob25 ligation of the United States arising out of any treaty or 
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1 other form of agreement to which it is a party with one 

2 or more other countries, the requirements of the treaty 

3 or agreement prevail. 

4 ‘‘§ 1504. Commencement of ancillary case 

5 ‘‘A case under this chapter is commenced by the filing 

6 of a petition for recognition of a foreign proceeding under 

7 section 1515. 

8 ‘‘§ 1505. Authorization to act in a foreign country 

9 ‘‘A trustee or another entity (including an examiner) 

10 may be authorized by the court to act in a foreign country 

11 on behalf of an estate created under section 541. An entity 

12 authorized to act under this section may act in any way 

13 permitted by the applicable foreign law. 

14 ‘‘§ 1506. Public policy exception 

15 ‘‘Nothing in this chapter prevents the court from re16 fusing to take an action governed by this chapter if the 

17 action would be manifestly contrary to the public policy 

18 of the United States. 

19 ‘‘§ 1507. Additional assistance 

20 ‘‘(a) Subject to the specific limitations stated else21 where in this chapter the court, if recognition is granted, 

22 may provide additional assistance to a foreign representa23 tive under this title or under other laws of the United 

24 States. 
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1 ‘‘(b) In determining whether to provide additional as2 sistance under this title or under other laws of the United 

3 States, the court shall consider whether such additional 

4 assistance, consistent with the principles of comity, will 

5 reasonably assure—

6 ‘‘(1) just treatment of all holders of claims 

7 against or interests in the debtor’s property; 

8 ‘‘(2) protection of claim holders in the United 

9 States against prejudice and inconvenience in the 

10 processing of claims in such foreign proceeding; 

11 ‘‘(3) prevention of preferential or fraudulent 

12 dispositions of property of the debtor; 

13 ‘‘(4) distribution of proceeds of the debtor’s 

14 property substantially in accordance with the order 

15 prescribed by this title; and 

16 ‘‘(5) if appropriate, the provision of an oppor17 tunity for a fresh start for the individual that such 

18 foreign proceeding concerns. 

19 ‘‘§ 1508. Interpretation 

20 ‘‘In interpreting this chapter, the court shall consider 

21 its international origin, and the need to promote an appli22 cation of this chapter that is consistent with the applica23 tion of similar statutes adopted by foreign jurisdictions. 
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1 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP2 RESENTATIVES AND CREDITORS TO THE 

3 COURT 

4 ‘‘§ 1509. Right of direct access 

5 ‘‘(a) A foreign representative may commence a case 

6 under section 1504 by filing directly with the court a peti7 tion for recognition of a foreign proceeding under section 

8 1515. 

9 ‘‘(b) If the court grants recognition under section 

10 1515, and subject to any limitations that the court may 

11 impose consistent with the policy of this chapter—

12 ‘‘(1) the foreign representative has the capacity 

13 to sue and be sued in a court in the United States; 

14 ‘‘(2) the foreign representative may apply di15 rectly to a court in the United States for appropriate 

16 relief in that court; and 

17 ‘‘(3) a court in the United States shall grant 

18 comity or cooperation to the foreign representative. 

19 ‘‘(c) A request for comity or cooperation by a foreign 

20 representative in a court in the United States other than 

21 the court which granted recognition shall be accompanied 

22 by a certified copy of an order granting recognition under 

23 section 1517. 

24 ‘‘(d) If the court denies recognition under this chap25 ter, the court may issue any appropriate order necessary 
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1 to prevent the foreign representative from obtaining com2 ity or cooperation from courts in the United States. 

3 ‘‘(e) Whether or not the court grants recognition, and 

4 subject to sections 306 and 1510, a foreign representative 

5 is subject to applicable nonbankruptcy law. 

6 ‘‘(f) Notwithstanding any other provision of this sec7 tion, the failure of a foreign representative to commence 

8 a case or to obtain recognition under this chapter does 

9 not affect any right the foreign representative may have 

10 to sue in a court in the United States to collect or recover 

11 a claim which is the property of the debtor. 

12 ‘‘§ 1510. Limited jurisdiction 

13 ‘‘The sole fact that a foreign representative files a 

14 petition under section 1515 does not subject the foreign 

15 representative to the jurisdiction of any court in the 

16 United States for any other purpose. 

17 ‘‘§ 1511. Commencement of case under section 301 or 

18 303

19 ‘‘(a) Upon recognition, a foreign representative may 

20 commence—

21 ‘‘(1) an involuntary case under section 303; or 

22 ‘‘(2) a voluntary case under section 301 or 302, 

23 if the foreign proceeding is a foreign main pro24 ceeding. 
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1 ‘‘(b) The petition commencing a case under sub2 section (a) must be accompanied by a certified copy of 

3 an order granting recognition. The court where the peti4 tion for recognition has been filed must be advised of the 

5 foreign representative’s intent to commence a case under 

6 subsection (a) prior to such commencement. 

7 ‘‘§ 1512. Participation of a foreign representative in a 

8 case under this title 

9 ‘‘Upon recognition of a foreign proceeding, the for10 eign representative in the recognized proceeding is entitled 

11 to participate as a party in interest in a case regarding 

12 the debtor under this title. 

13 ‘‘§ 1513. Access of foreign creditors to a case under 

14 this title 

15 ‘‘(a) Foreign creditors have the same rights regarding 

16 the commencement of, and participation in, a case under 

17 this title as domestic creditors. 

18 ‘‘(b)(1) Subsection (a) does not change or codify 

19 present law as to the priority of claims under section 507 

20 or 726 of this title, except that the claim of a foreign cred21 itor under those sections shall not be given a lower priority 

22 than that of general unsecured claims without priority 

23 solely because the holder of such claim is a foreign cred24 itor. 
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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 for3 eign revenue claims or other foreign public law claims in 

4 a proceeding 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 con8 ditions 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 

23 more 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, the notification shall—
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1 ‘‘(1) indicate the time period for filing proofs of 

2 claim and specify the place for their filing; 

3 ‘‘(2) indicate whether secured creditors need to 

4 file their proofs of claim; and 

5 ‘‘(3) contain any other information required to 

6 be included in such a notification to creditors under 

7 this title and the orders of the court. 

8 ‘‘(d) Any rule of procedure or order of the court as 

9 to notice or the filing of a claim shall provide such addi10 tional time to creditors with foreign addresses as is rea11 sonable under the circumstances. 

12 ‘‘SUBCHAPTER III—RECOGNITION OF A 

13 FOREIGN PROCEEDING AND RELIEF 

14 ‘‘§ 1515. Application for recognition 

15 ‘‘(a) A foreign representative applies to the court for 

16 recognition of the foreign proceeding in which the foreign 

17 representative has been appointed by filing a petition for 

18 recognition. 

19 ‘‘(b) A petition for recognition shall be accompanied 

20 by—

21 ‘‘(1) a certified copy of the decision com22 mencing the foreign proceeding and appointing the 

23 foreign representative; 
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1 ‘‘(2) a certificate from the foreign court affirm2 ing the existence of the foreign proceeding and of 

3 the appointment of the foreign representative; or 

4 ‘‘(3) in the absence of evidence referred to in 

5 paragraphs (1) and (2), any other evidence accept6 able to the court of the existence of the foreign pro7 ceeding and of the appointment of the foreign rep8 resentative. 

9 ‘‘(c) A petition for recognition shall also be accom10 panied by a statement identifying all foreign proceedings 

11 with respect to the debtor that are known to the foreign 

12 representative. 

13 ‘‘(d) The documents referred to in paragraphs (1) 

14 and (2) of subsection (b) shall be translated into English. 

15 The court may require a translation into English of addi16 tional documents. 

17 ‘‘§ 1516. Presumptions concerning recognition 

18 ‘‘(a) If the decision or certificate referred to in section 

19 1515(b) indicates that the foreign proceeding is a foreign 

20 proceeding and that the person or body is a foreign rep21 resentative, the court is entitled to so presume. 

22 ‘‘(b) The court is entitled to presume that documents 

23 submitted in support of the petition for recognition are 

24 authentic, whether or not they have been legalized. 
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1 ‘‘(c) In the absence of evidence to the contrary, the 

2 debtor’s registered office, or habitual residence in the case 

3 of an individual, is presumed to be the center of the debt4 or’s main interests. 

5 ‘‘§ 1517. Order granting recognition 

6 ‘‘(a) Subject to section 1506, after notice and a hear7 ing, an order recognizing a foreign proceeding shall be en8 tered if—

9 ‘‘(1) the foreign proceeding for which recogni10 tion is sought is a foreign main proceeding or for11 eign nonmain proceeding within the meaning of sec12 tion 1502; 

13 ‘‘(2) the foreign representative applying for rec14 ognition is a person or body; and 

15 ‘‘(3) the petition meets the requirements of sec16 tion 1515. 

17 ‘‘(b) The foreign proceeding shall be recognized—

18 ‘‘(1) as a foreign main proceeding if it is taking 

19 place in the country where the debtor has the center 

20 of its main interests; or 

21 ‘‘(2) as a foreign nonmain proceeding if the 

22 debtor has an establishment within the meaning of 

23 section 1502 in the foreign country where the pro24 ceeding is pending. 
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1 ‘‘(c) A petition for recognition of a foreign proceeding 

2 shall be decided upon at the earliest possible time. Entry 

3 of an order recognizing a foreign proceeding constitutes 

4 recognition under this chapter. 

5 ‘‘(d) The provisions of this subchapter do not prevent 

6 modification or termination of recognition if it is shown 

7 that the grounds for granting it were fully or partially 

8 lacking or have ceased to exist, but in considering such 

9 action the court shall give due weight to possible prejudice 

10 to parties that have relied upon the order granting rec11 ognition. The case under this chapter may be closed in 

12 the manner prescribed under section 350. 

13 ‘‘§ 1518. Subsequent information 

14 ‘‘From the time of filing the petition for recognition 

15 of the foreign proceeding, the foreign representative shall 

16 file with the court promptly a notice of change of status 

17 concerning—

18 ‘‘(1) any substantial change in the status of the 

19 foreign proceeding or the status of the foreign rep20 resentative’s appointment; and 

21 ‘‘(2) any other foreign proceeding regarding the 

22 debtor that becomes known to the foreign represent23 ative. 
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1 ‘‘§ 1519. Relief that may be granted upon filing peti2 tion for recognition 

3 ‘‘(a) From the time of filing a petition for recognition 

4 until the court rules on the petition, the court may, at 

5 the request of the foreign representative, where relief is 

6 urgently needed to protect the assets of the debtor or the 

7 interests of the creditors, grant relief of a provisional na8 ture, including—

9 ‘‘(1) staying execution against the debtor’s as10 sets; 

11 ‘‘(2) entrusting the administration or realiza12 tion of all or part of the debtor’s assets located in 

13 the United States to the foreign representative or 

14 another person authorized by the court, including an 

15 examiner, in order to protect and preserve the value 

16 of assets that, by their nature or because of other 

17 circumstances, are perishable, susceptible to devalu18 ation or otherwise in jeopardy; and 

19 ‘‘(3) any relief referred to in paragraph (3), 

20 (4), or (7) of section 1521(a). 

21 ‘‘(b) Unless extended under section 1521(a)(6), the 

22 relief granted under this section terminates when the peti23 tion for recognition is granted. 

24 ‘‘(c) It is a ground for denial of relief under this sec25 tion that such relief would interfere with the administra26 tion of a foreign main proceeding. 
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1 ‘‘(d) The court may not enjoin a police or regulatory 

2 act of a governmental unit, including a criminal action or 

3 proceeding, under this section. 

4 ‘‘(e) The standards, procedures, and limitations ap5 plicable to an injunction shall apply to relief under this 

6 section. 

7 ‘‘(f) The exercise of rights not subject to the stay 

8 arising under section 362(a) pursuant to paragraph (6), 

9 (7), (17), or (27) of section 362(b) or pursuant to section 

10 362(n) shall not be stayed by any order of a court or ad11 ministrative agency in any proceeding under this chapter. 

12 ‘‘§ 1520. Effects of recognition of a foreign main pro13 ceeding 

14 ‘‘(a) Upon recognition of a foreign proceeding that 

15 is a foreign main proceeding—

16 ‘‘(1) sections 361 and 362 apply with respect to 

17 the debtor and that property of the debtor that is 

18 within the territorial jurisdiction of the United 

19 States; 

20 ‘‘(2) sections 363, 549, and 552 of this title 

21 apply to a transfer of an interest of the debtor in 

22 property that is within the territorial jurisdiction of 

23 the United States to the same extent that the sec24 tions would apply to property of an estate; 
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1 ‘‘(3) unless the court orders otherwise, the for2 eign representative may operate the debtor’s busi3 ness and may exercise the rights and powers of a 

4 trustee under and to the extent provided by sections 

5 363 and 552; and 

6 ‘‘(4) section 552 applies to property of the debt7 or that is within the territorial jurisdiction of the 

8 United States. 

9 ‘‘(b) Subsection (a) does not affect the right to com10 mence an individual action or proceeding in a foreign 

11 country to the extent necessary to preserve a claim against 

12 the debtor. 

13 ‘‘(c) Subsection (a) does not affect the right of a for14 eign representative or an entity to file a petition com15 mencing a case under this title or the right of any party 

16 to file claims or take other proper actions in such a case. 

17 ‘‘§ 1521. Relief that may be granted upon recognition 

18 ‘‘(a) Upon recognition of a foreign proceeding, wheth19 er main or nonmain, where necessary to effectuate the 

20 purpose of this chapter and to protect the assets of the 

21 debtor or the interests of the creditors, the court may, at 

22 the request of the foreign representative, grant any appro23 priate relief, including—

24 ‘‘(1) staying the commencement or continuation 

25 of an individual action or proceeding concerning the 
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1 debtor’s assets, rights, obligations or liabilities to the 

2 extent they have not been stayed under section 

3 1520(a); 

4 ‘‘(2) staying execution against the debtor’s as5 sets to the extent it has not been stayed under sec6 tion 1520(a); 

7 ‘‘(3) suspending the right to transfer, encumber 

8 or otherwise dispose of any assets of the debtor to 

9 the extent this right has not been suspended under 

10 section 1520(a); 

11 ‘‘(4) providing for the examination of witnesses, 

12 the taking of evidence or the delivery of information 

13 concerning the debtor’s assets, affairs, rights, obliga14 tions or liabilities; 

15 ‘‘(5) entrusting the administration or realiza16 tion of all or part of the debtor’s assets within the 

17 territorial jurisdiction of the United States to the 

18 foreign representative or another person, including 

19 an examiner, authorized by the court; 

20 ‘‘(6) extending relief granted under section 

21 1519(a); and 

22 ‘‘(7) granting any additional relief that may be 

23 available to a trustee, except for relief available 

24 under sections 522, 544, 545, 547, 548, 550, and 

25 724(a). 
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1 ‘‘(b) Upon recognition of a foreign proceeding, wheth2 er main or nonmain, the court may, at the request of the 

3 foreign representative, entrust the distribution of all or 

4 part of the debtor’s assets located in the United States 

5 to the foreign representative or another person, including 

6 an examiner, authorized by the court, provided that the 

7 court is satisfied that the interests of creditors in the 

8 United States are sufficiently protected. 

9 ‘‘(c) In granting relief under this section to a rep10 resentative of a foreign nonmain proceeding, the court 

11 must be satisfied that the relief relates to assets that, 

12 under the law of the United States, should be adminis13 tered in the foreign nonmain proceeding or concerns infor14 mation required in that proceeding. 

15 ‘‘(d) The court may not enjoin a police or regulatory 

16 act of a governmental unit, including a criminal action or 

17 proceeding, under this section. 

18 ‘‘(e) The standards, procedures, and limitations ap19 plicable to an injunction shall apply to relief under para20 graphs (1), (2), (3), and (6) of subsection (a). 

21 ‘‘(f) The exercise of rights not subject to the stay 

22 arising under section 362(a) pursuant to paragraph (6), 

23 (7), (17), or (27) of section 362(b) or pursuant to section 

24 362(n) shall not be stayed by any order of a court or ad25 ministrative agency in any proceeding under this chapter. 
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1 ‘‘§ 1522. Protection of creditors and other interested 

2 persons 

3 ‘‘(a) The court may grant relief under section 1519 

4 or 1521, or may modify or terminate relief under sub5 section (c), only if the interests of the creditors and other 

6 interested entities, including the debtor, are sufficiently 

7 protected. 

8 ‘‘(b) The court may subject relief granted under sec9 tion 1519 or 1521, or the operation of the debtor’s busi10 ness under section 1520(a)(3) of this title, to conditions 

11 it considers appropriate, including the giving of security 

12 or the filing of a bond. 

13 ‘‘(c) The court may, at the request of the foreign rep14 resentative or an entity affected by relief granted under 

15 section 1519 or 1521, or at its own motion, modify or 

16 terminate such relief. 

17 ‘‘(d) Section 1104(d) shall apply to the appointment 

18 of an examiner under this chapter. Any examiner shall 

19 comply with the qualification requirements imposed on a 

20 trustee by section 322. 

21 ‘‘§ 1523. Actions to avoid acts detrimental to creditors 

22 ‘‘(a) Upon recognition of a foreign proceeding, the 

23 foreign representative has standing in a case concerning 

24 the debtor pending under another chapter of this title to 

25 initiate actions under sections 522, 544, 545, 547, 548, 

26 550, 553, and 724(a). 
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1 ‘‘(b) When the foreign proceeding is a foreign 

2 nonmain proceeding, the court must be satisfied that an 

3 action under subsection (a) relates to assets that, under 

4 United States law, should be administered in the foreign 

5 nonmain proceeding. 

6 ‘‘§ 1524. Intervention by a foreign representative 

7 ‘‘Upon recognition of a foreign proceeding, the for8 eign representative may intervene in any proceedings in 

9 a State or Federal court in the United States in which 

10 the debtor is a party. 

11 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR12 EIGN COURTS AND FOREIGN REPRESENTA13 TIVES 

14 ‘‘§ 1525. Cooperation and direct communication be15 tween the court and foreign courts or for16 eign representatives 

17 ‘‘(a) Consistent with section 1501, the court shall co18 operate to the maximum extent possible with foreign 

19 courts or foreign representatives, either directly or 

20 through the trustee. 

21 ‘‘(b) The court is entitled to communicate directly 

22 with, or to request information or assistance directly from, 

23 foreign courts or foreign representatives, subject to the 

24 rights of parties in interest to notice and participation. 
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1 ‘‘§ 1526. Cooperation and direct communication be2 tween the trustee and foreign courts or 

3 foreign representatives 

4 ‘‘(a) Consistent with section 1501, the trustee or 

5 other person, including an examiner, authorized by the 

6 court, shall, subject to the supervision of the court, cooper7 ate to the maximum extent possible with foreign courts 

8 or foreign representatives. 

9 ‘‘(b) The trustee or other person, including an exam10 iner, authorized by the court is entitled, subject to the su11 pervision of the court, to communicate directly with for12 eign courts or foreign representatives. 

13 ‘‘§ 1527. Forms of cooperation 

14 ‘‘Cooperation referred to in sections 1525 and 1526 

15 may be implemented by any appropriate means, includ16 ing—

17 ‘‘(1) appointment of a person or body, including 

18 an examiner, to act at the direction of the court; 

19 ‘‘(2) communication of information by any 

20 means considered appropriate by the court; 

21 ‘‘(3) coordination of the administration and su22 pervision of the debtor’s assets and affairs; 

23 ‘‘(4) approval or implementation of agreements 

24 concerning the coordination of proceedings; and 

25 ‘‘(5) coordination of concurrent proceedings re26 garding the same debtor. 
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1 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS 

2 ‘‘§ 1528. Commencement of a case under this title 

3 after recognition of a foreign main pro4 ceeding 

5 ‘‘After recognition of a foreign main proceeding, a 

6 case under another chapter of this title may be commenced 

7 only if the debtor has assets in the United States. The 

8 effects of such case shall be restricted to the assets of the 

9 debtor that are within the territorial jurisdiction of the 

10 United States and, to the extent necessary to implement 

11 cooperation and coordination under sections 1525, 1526, 

12 and 1527, to other assets of the debtor that are within 

13 the jurisdiction of the court under sections 541(a) of this 

14 title, and 1334(e) of title 28, to the extent that such other 

15 assets are not subject to the jurisdiction and control of 

16 a foreign proceeding that has been recognized under this 

17 chapter. 

18 ‘‘§ 1529. Coordination of a case under this title and a 

19 foreign proceeding 

20 ‘‘If a foreign proceeding and a case under another 

21 chapter of this title are taking place concurrently regard22 ing the same debtor, the court shall seek cooperation and 

23 coordination under sections 1525, 1526, and 1527, and 

24 the following shall apply: 
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1 ‘‘(1) If the case in the United States is taking 

2 place at the time the petition for recognition of the 

3 foreign proceeding is filed—

4 ‘‘(A) any relief granted under section 1519 

5 or 1521 must be consistent with the relief 

6 granted in the case in the United States; and 

7 ‘‘(B) even if the foreign proceeding is rec8 ognized as a foreign main proceeding, section 

9 1520 does not apply. 

10 ‘‘(2) If a case in the United States under this 

11 title commences after recognition, or after the filing 

12 of the petition for recognition, of the foreign pro13 ceeding—

14 ‘‘(A) any relief in effect under section 

15 1519 or 1521 shall be reviewed by the court 

16 and shall be modified or terminated if incon17 sistent with the case in the United States; and 

18 ‘‘(B) if the foreign proceeding is a foreign 

19 main proceeding, the stay and suspension re20 ferred to in section 1520(a) shall be modified or 

21 terminated if inconsistent with the relief grant22 ed in the case in the United States. 

23 ‘‘(3) In granting, extending, or modifying relief 

24 granted to a representative of a foreign nonmain 

25 proceeding, the court must be satisfied that the re-
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1 lief relates to assets that, under the laws of the 

2 United States, should be administered in the foreign 

3 nonmain proceeding or concerns information re4 quired in that proceeding. 

5 ‘‘(4) In achieving cooperation and coordination 

6 under sections 1528 and 1529, the court may grant 

7 any of the relief authorized under section 305. 

8 ‘‘§ 1530. Coordination of more than 1 foreign pro9 ceeding 

10 ‘‘In matters referred to in section 1501, with respect 

11 to more than 1 foreign proceeding regarding the debtor, 

12 the court shall seek cooperation and coordination under 

13 sections 1525, 1526, and 1527, and the following shall 

14 apply: 

15 ‘‘(1) Any relief granted under section 1519 or 

16 1521 to a representative of a foreign nonmain pro17 ceeding after recognition of a foreign main pro18 ceeding must be consistent with the foreign main 

19 proceeding. 

20 ‘‘(2) If a foreign main proceeding is recognized 

21 after recognition, or after the filing of a petition for 

22 recognition, of a foreign nonmain proceeding, any 

23 relief in effect under section 1519 or 1521 shall be 

24 reviewed by the court and shall be modified or termi-
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1 nated if inconsistent with the foreign main pro2 ceeding. 

3 ‘‘(3) If, after recognition of a foreign nonmain 

4 proceeding, another foreign nonmain proceeding is 

5 recognized, the court shall grant, modify, or termi6 nate relief for the purpose of facilitating coordina7 tion of the proceedings. 

8 ‘‘§ 1531. Presumption of insolvency based on recogni9 tion of a foreign main proceeding 

10 ‘‘In the absence of evidence to the contrary, recogni11 tion of a foreign main proceeding is, for the purpose of 

12 commencing a proceeding under section 303, proof that 

13 the debtor is generally not paying its debts as such debts 

14 become due. 

15 ‘‘§ 1532. Rule of payment in concurrent proceedings 

16 ‘‘Without prejudice to secured claims or rights in 

17 rem, a creditor who has received payment with respect to 

18 its claim in a foreign proceeding pursuant to a law relating 

19 to insolvency may not receive a payment for the same 

20 claim in a case under any other chapter of this title re21 garding the debtor, so long as the payment to other credi22 tors of the same class is proportionately less than the pay23 ment the creditor has already received.’’. 
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1 (b) CLERICAL AMENDMENT.—The table of chapters 

2 for title 11, United States Code, is amended by inserting 

3 after the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’.

4 SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, 

5 UNITED STATES CODE. 

6 (a) APPLICABILITY OF CHAPTERS.—Section 103 of 

7 title 11, United States Code, is amended—

8 (1) in subsection (a), by inserting before the pe9 riod the following: ‘‘, and this chapter, sections 307, 

10 362(n), 555 through 557, and 559 through 562 

11 apply in a case under chapter 15’’; and 

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

13 ‘‘(k) Chapter 15 applies only in a case under such 

14 chapter, except that—

15 ‘‘(1) sections 1505, 1513, and 1514 apply in all 

16 cases under this title; and 

17 ‘‘(2) section 1509 applies whether or not a case 

18 under this title is pending.’’. 

19 (b) DEFINITIONS.—Section 101 of title 11, United 

20 States Code, is amended by striking paragraphs (23) and 

21 (24) and inserting the following: 

22 ‘‘(23) ‘foreign proceeding’ means a collective ju23 dicial or administrative proceeding in a foreign coun24 try, including an interim proceeding, under a law re25 lating to insolvency or adjustment of debt in which 
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1 proceeding the assets and affairs of the debtor are 

2 subject to control or supervision by a foreign court, 

3 for the purpose of reorganization or liquidation; 

4 ‘‘(24) ‘foreign representative’ means a person 

5 or body, including a person or body appointed on an 

6 interim basis, authorized in a foreign proceeding to 

7 administer the reorganization or the liquidation of 

8 the debtor’s assets or affairs or to act as a rep9 resentative of the foreign proceeding;’’. 

10 (c) AMENDMENTS TO TITLE 28, UNITED STATES

11 CODE.—

12 (1) PROCEDURES.—Section 157(b)(2) of title 

13 28, United States Code, is amended—

14 (A) in subparagraph (N), by striking 

15 ‘‘and’’ at the end; 

16 (B) in subparagraph (O), by striking the 

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

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

19 ‘‘(P) recognition of foreign proceedings and 

20 other matters under chapter 15 of title 11.’’. 

21 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

22 Section 1334(c) of title 28, United States Code, is 

23 amended by striking ‘‘Nothing in’’ and inserting 

24 ‘‘Except with respect to a case under chapter 15 of 

25 title 11, nothing in’’. 
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1 (3) DUTIES OF TRUSTEES.—Section 586(a)(3) 

2 of title 28, United States Code, is amended by strik3 ing ‘‘or 13’’ and inserting ‘‘13, or 15’’. 

4 (4) VENUE OF CASES ANCILLARY TO FOREIGN

5 PROCEEDINGS.—Section 1410 of title 28, United 

6 States Code, is amended to read as follows: 

7 ‘‘§ 1410. Venue of cases ancillary to foreign pro8 ceedings 

9 ‘‘A case under chapter 15 of title 11 may be com10 menced in the district court of the United States for the 

11 district—

12 ‘‘(1) in which the debtor has its principal place 

13 of business or principal assets in the United States; 

14 ‘‘(2) if the debtor does not have a place of busi15 ness or assets in the United States, in which there 

16 is pending against the debtor an action or pro17 ceeding in a Federal or State court; or 

18 ‘‘(3) in a case other than those specified in 

19 paragraph (1) or (2), in which venue will be con20 sistent with the interests of justice and the conven21 ience of the parties, having regard to the relief 

22 sought by the foreign representative.’’. 

23 (d) OTHER SECTIONS OF TITLE 11.—Title 11 of the 

24 United States Code is amended—
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1 (1) in section 109(b), by striking paragraph (3) 

2 and inserting the following: 

3 ‘‘(3)(A) a foreign insurance company, engaged 

4 in such business in the United States; or 

5 ‘‘(B) a foreign bank, savings bank, cooperative 

6 bank, savings and loan association, building and 

7 loan association, or credit union, that has a branch 

8 or agency (as defined in section 1(b) of the Inter9 national Banking Act of 1978 in the United 

10 States.’’; 

11 (2) in section 303, by striking subsection (k); 

12 (3) by striking section 304; 

13 (4) in the table of sections for chapter 3 by 

14 striking the item relating to section 304; 

15 (5) in section 306 by striking ‘‘, 304,’’ each 

16 place it appears; 

17 (6) in section 305(a) by striking paragraph (2) 

18 and inserting the following: 

19 ‘‘(2)(A) a petition under section 1515 of this 

20 title for recognition of a foreign proceeding has been 

21 granted; and 

22 ‘‘(B) the purposes of chapter 15 of this title 

23 would be best served by such dismissal or suspen24 sion.’’; and 

25 (7) in section 508—
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1 (A) by striking subsection (a); and 

2 (B) in subsection (b), by striking ‘‘(b)’’.

3 TITLE IX—FINANCIAL 

4 CONTRACT PROVISIONS 

5 SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON6 SERVATORS OR RECEIVERS OF INSURED DE7 POSITORY INSTITUTIONS. 

8 (a) DEFINITION OF QUALIFIED FINANCIAL CON9 TRACT.—Section 11(e)(8)(D) of the Federal Deposit In10 surance Act (12 U.S.C. 1821(e)(8)(D)) is amended— 

11 (1) by striking ‘‘subsection—’’ and inserting 

12 ‘‘subsection, the following definitions shall apply:’’; 

13 and 

14 (2) in clause (i), by inserting ‘‘, resolution, or 

15 order’’ after ‘‘any similar agreement that the Cor16 poration determines by regulation’’. 

17 (b) DEFINITION OF SECURITIES CONTRACT.—Sec18 tion 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act 

19 (12 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as fol20 lows: 

21 ‘‘(ii) SECURITIES CONTRACT.—The 

22 term ‘securities contract’—

23 ‘‘(I) means a contract for the 

24 purchase, sale, or loan of a security, a 

25 certificate of deposit, a mortgage loan, 
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1 or any interest in a mortgage loan, a 

2 group or index of securities, certifi3 cates of deposit, or mortgage loans or 

4 interests therein (including any inter5 est therein or based on the value 

6 thereof) or any option on any of the 

7 foregoing, including any option to 

8 purchase or sell any such security, 

9 certificate of deposit, mortgage loan, 

10 interest, group or index, or option, 

11 and including any repurchase or re12 verse repurchase transaction on any 

13 such security, certificate of deposit, 

14 mortgage loan, interest, group or 

15 index, or option; 

16 ‘‘(II) does not include any pur17 chase, sale, or repurchase obligation 

18 under a participation in a commercial 

19 mortgage loan unless the Corporation 

20 determines by regulation, resolution, 

21 or order to include any such agree22 ment within the meaning of such 

23 term; 
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1 ‘‘(III) means any option entered 

2 into on a national securities exchange 

3 relating to foreign currencies; 

4 ‘‘(IV) means the guarantee by or 

5 to any securities clearing agency of 

6 any settlement of cash, securities, cer7 tificates of deposit, mortgage loans or 

8 interests therein, group or index of se9 curities, certificates of deposit, or 

10 mortgage loans or interests therein 

11 (including any interest therein or 

12 based on the value thereof) or option 

13 on any of the foregoing, including any 

14 option to purchase or sell any such se15 curity, certificate of deposit, mortgage 

16 loan, interest, group or index, or op17 tion; 

18 ‘‘(V) means any margin loan; 

19 ‘‘(VI) means any other agree20 ment or transaction that is similar to 

21 any agreement or transaction referred 

22 to in this clause; 

23 ‘‘(VII) means any combination of 

24 the agreements or transactions re25 ferred to in this clause; 
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1 ‘‘(VIII) means any option to 

2 enter into any agreement or trans3 action referred to in this clause; 

4 ‘‘(IX) means a master agreement 

5 that provides for an agreement or 

6 transaction referred to in subclause 

7 (I), (III), (IV), (V), (VI), (VII), or 

8 (VIII), together with all supplements 

9 to any such master agreement, with10 out regard to whether the master 

11 agreement provides for an agreement 

12 or transaction that is not a securities 

13 contract under this clause, except that 

14 the master agreement shall be consid15 ered to be a securities contract under 

16 this clause only with respect to each 

17 agreement or transaction under the 

18 master agreement that is referred to 

19 in subclause (I), (III), (IV), (V), (VI), 

20 (VII), or (VIII); and

21 ‘‘(X) means any security agree22 ment or arrangement or other credit 

23 enhancement related to any agree24 ment or transaction referred to in this 

25 clause, including any guarantee or re-
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1 imbursement obligation in connection 

2 with any agreement or transaction re3 ferred to in this clause.’’. 

4 (c) DEFINITION OF COMMODITY CONTRACT.—Sec5 tion 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act 

6 (12 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as fol7 lows: 

8 ‘‘(iii) COMMODITY CONTRACT.—The 

9 term ‘commodity contract’ means—

10 ‘‘(I) with respect to a futures 

11 commission merchant, a contract for 

12 the purchase or sale of a commodity 

13 for future delivery on, or subject to 

14 the rules of, a contract market or 

15 board of trade; 

16 ‘‘(II) with respect to a foreign fu17 tures commission merchant, a foreign 

18 future; 

19 ‘‘(III) with respect to a leverage 

20 transaction merchant, a leverage 

21 transaction; 

22 ‘‘(IV) with respect to a clearing 

23 organization, a contract for the pur24 chase or sale of a commodity for fu25 ture delivery on, or subject to the 
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1 rules of, a contract market or board 

2 of trade that is cleared by such clear3 ing organization, or commodity option 

4 traded on, or subject to the rules of, 

5 a contract market or board of trade 

6 that is cleared by such clearing orga7 nization; 

8 ‘‘(V) with respect to a commodity 

9 options dealer, a commodity option; 

10 ‘‘(VI) any other agreement or 

11 transaction that is similar to any 

12 agreement or transaction referred to 

13 in this clause; 

14 ‘‘(VII) any combination of the 

15 agreements or transactions referred to 

16 in this clause; 

17 ‘‘(VIII) any option to enter into 

18 any agreement or transaction referred 

19 to in this clause; 

20 ‘‘(IX) a master agreement that 

21 provides for an agreement or trans22 action referred to in subclause (I), 

23 (II), (III), (IV), (V), (VI), (VII), or 

24 (VIII), together with all supplements 

25 to any such master agreement, with-
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1 out regard to whether the master 

2 agreement provides for an agreement 

3 or transaction that is not a com4 modity contract under this clause, ex5 cept that the master agreement shall 

6 be considered to be a commodity con7 tract under this clause only with re8 spect to each agreement or trans9 action under the master agreement 

10 that is referred to in subclause (I), 

11 (II), (III), (IV), (V), (VI), (VII), or 

12 (VIII); or 

13 ‘‘(X) any security agreement or 

14 arrangement or other credit enhance15 ment related to any agreement or 

16 transaction referred to in this clause, 

17 including any guarantee or reimburse18 ment obligation in connection with 

19 any agreement or transaction referred 

20 to in this clause.’’. 

21 (d) DEFINITION OF FORWARD CONTRACT.—Section 

22 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12 

23 U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows: 

24 ‘‘(iv) FORWARD CONTRACT.—The 

25 term ‘forward contract’ means—
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•HR 975 IH 

1 ‘‘(I) a contract (other than a 

2 commodity contract) for the purchase, 

3 sale, or transfer of a commodity or 

4 any similar good, article, service, 

5 right, or interest which is presently or 

6 in the future becomes the subject of 

7 dealing in the forward contract trade, 

8 or product or byproduct thereof, with 

9 a maturity date more than 2 days 

10 after the date the contract is entered 

11 into, including, a repurchase trans12 action, reverse repurchase transaction, 

13 consignment, lease, swap, hedge 

14 transaction, deposit, loan, option, allo15 cated transaction, unallocated trans16 action, or any other similar agree17 ment; 

18 ‘‘(II) any combination of agree19 ments or transactions referred to in 

20 subclauses (I) and (III); 

21 ‘‘(III) any option to enter into 

22 any agreement or transaction referred 

23 to in subclause (I) or (II); 

24 ‘‘(IV) a master agreement that 

25 provides for an agreement or trans-
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•HR 975 IH 

1 action referred to in subclauses (I), 

2 (II), or (III), together with all supple3 ments to any such master agreement, 

4 without regard to whether the master 

5 agreement provides for an agreement 

6 or transaction that is not a forward 

7 contract under this clause, except that 

8 the master agreement shall be consid9 ered to be a forward contract under 

10 this clause only with respect to each 

11 agreement or transaction under the 

12 master agreement that is referred to 

13 in subclause (I), (II), or (III); or 

14 ‘‘(V) any security agreement or 

15 arrangement or other credit enhance16 ment related to any agreement or 

17 transaction referred to in subclause 

18 (I), (II), (III), or (IV), including any 

19 guarantee or reimbursement obliga20 tion in connection with any agreement 

21 or transaction referred to in any such 

22 subclause.’’. 

23 (e) DEFINITION OF REPURCHASE AGREEMENT.—

24 Section 11(e)(8)(D)(v) of the Federal Deposit Insurance 
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1 Act (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as 

2 follows: 

3 ‘‘(v) REPURCHASE AGREEMENT.—The 

4 term ‘repurchase agreement’ (which defini5 tion also applies to a reverse repurchase 

6 agreement)—

7 ‘‘(I) means an agreement, includ8 ing related terms, which provides for 

9 the transfer of one or more certifi10 cates of deposit, mortgage-related se11 curities (as such term is defined in 

12 the Securities Exchange Act of 1934), 

13 mortgage loans, interests in mortgage14 related securities or mortgage loans, 

15 eligible bankers’ acceptances, qualified 

16 foreign government securities or secu17 rities that are direct obligations of, or 

18 that are fully guaranteed by, the 

19 United States or any agency of the 

20 United States against the transfer of 

21 funds by the transferee of such certifi22 cates of deposit, eligible bankers’ ac23 ceptances, securities, mortgage loans, 

24 or interests with a simultaneous 

25 agreement by such transferee to 
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1 transfer to the transferor thereof cer2 tificates of deposit, eligible bankers’ 

3 acceptances, securities, mortgage 

4 loans, or interests as described above, 

5 at a date certain not later than 1 year 

6 after such transfers or on demand, 

7 against the transfer of funds, or any 

8 other similar agreement; 

9 ‘‘(II) does not include any repur10 chase obligation under a participation 

11 in a commercial mortgage loan unless 

12 the Corporation determines by regula13 tion, resolution, or order to include 

14 any such participation within the 

15 meaning of such term;

16 ‘‘(III) means any combination of 

17 agreements or transactions referred to 

18 in subclauses (I) and (IV); 

19 ‘‘(IV) means any option to enter 

20 into any agreement or transaction re21 ferred to in subclause (I) or (III); 

22 ‘‘(V) means a master agreement 

23 that provides for an agreement or 

24 transaction referred to in subclause 

25 (I), (III), or (IV), together with all 
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1 supplements to any such master 

2 agreement, without regard to whether 

3 the master agreement provides for an 

4 agreement or transaction that is not a 

5 repurchase agreement under this 

6 clause, except that the master agree7 ment shall be considered to be a re8 purchase agreement under this sub9 clause only with respect to each agree10 ment or transaction under the master 

11 agreement that is referred to in sub12 clause (I), (III), or (IV); and 

13 ‘‘(VI) means any security agree14 ment or arrangement or other credit 

15 enhancement related to any agree16 ment or transaction referred to in 

17 subclause (I), (III), (IV), or (V), in18 cluding any guarantee or reimburse19 ment obligation in connection with 

20 any agreement or transaction referred 

21 to in any such subclause. 

22 For purposes of this clause, the term 

23 ‘qualified foreign government security’ 

24 means a security that is a direct obligation 

25 of, or that is fully guaranteed by, the cen-
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1 tral government of a member of the Orga2 nization for Economic Cooperation and 

3 Development (as determined by regulation 

4 or order adopted by the appropriate Fed5 eral banking authority).’’. 

6 (f) DEFINITION OF SWAP AGREEMENT.—Section 

7 11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12 

8 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows: 

9 ‘‘(vi) SWAP AGREEMENT.—The term 

10 ‘swap agreement’ means—

11 ‘‘(I) any agreement, including the 

12 terms and conditions incorporated by 

13 reference in any such agreement, 

14 which is an interest rate swap, option, 

15 future, or forward agreement, includ16 ing a rate floor, rate cap, rate collar, 

17 cross-currency rate swap, and basis 

18 swap; a spot, same day-tomorrow, to19 morrow-next, forward, or other for20 eign exchange or precious metals 

21 agreement; a currency swap, option, 

22 future, or forward agreement; an eq23 uity index or equity swap, option, fu24 ture, or forward agreement; a debt 

25 index or debt swap, option, future, or 
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•HR 975 IH 

1 forward agreement; a total return, 

2 credit spread or credit swap, option, 

3 future, or forward agreement; a com4 modity index or commodity swap, op5 tion, future, or forward agreement; or 

6 a weather swap, weather derivative, or 

7 weather option; 

8 ‘‘(II) any agreement or trans9 action that is similar to any other 

10 agreement or transaction referred to 

11 in this clause and that is of a type 

12 that has been, is presently, or in the 

13 future becomes, the subject of recur14 rent dealings in the swap markets (in15 cluding terms and conditions incor16 porated by reference in such agree17 ment) and that is a forward, swap, fu18 ture, or option on one or more rates, 

19 currencies, commodities, equity securi20 ties or other equity instruments, debt 

21 securities or other debt instruments, 

22 quantitative measures associated with 

23 an occurrence, extent of an occur24 rence, or contingency associated with 

25 a financial, commercial, or economic 
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•HR 975 IH 

1 consequence, or economic or financial 

2 indices or measures of economic or fi3 nancial risk or value; 

4 ‘‘(III) any combination of agree5 ments or transactions referred to in 

6 this clause; 

7 ‘‘(IV) any option to enter into 

8 any agreement or transaction referred 

9 to in this clause; 

10 ‘‘(V) a master agreement that 

11 provides for an agreement or trans12 action referred to in subclause (I), 

13 (II), (III), or (IV), together with all 

14 supplements to any such master 

15 agreement, without regard to whether 

16 the master agreement contains an 

17 agreement or transaction that is not a 

18 swap agreement under this clause, ex19 cept that the master agreement shall 

20 be considered to be a swap agreement 

21 under this clause only with respect to 

22 each agreement or transaction under 

23 the master agreement that is referred 

24 to in subclause (I), (II), (III), or (IV); 

25 and 
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•HR 975 IH 

1 ‘‘(VI) any security agreement or 

2 arrangement or other credit enhance3 ment related to any agreements or 

4 transactions referred to in subclause 

5 (I), (II), (III), (IV), or (V), including 

6 any guarantee or reimbursement obli7 gation in connection with any agree8 ment or transaction referred to in any 

9 such subclause. 

10 Such term is applicable for purposes of 

11 this subsection only and shall not be con12 strued or applied so as to challenge or af13 fect the characterization, definition, or 

14 treatment of any swap agreement under 

15 any other statute, regulation, or rule, in16 cluding the Securities Act of 1933, the Se17 curities Exchange Act of 1934, the Public 

18 Utility Holding Company Act of 1935, the 

19 Trust Indenture Act of 1939, the Invest20 ment Company Act of 1940, the Invest21 ment Advisers Act of 1940, the Securities 

22 Investor Protection Act of 1970, the Com23 modity Exchange Act, the Gramm-Leach24 Bliley Act, and the Legal Certainty for 

25 Bank Products Act of 2000.’’. 
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1 (g) DEFINITION OF TRANSFER.—Section 

2 11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12 

3 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows: 

4 ‘‘(viii) TRANSFER.—The term ‘trans5 fer’ means every mode, direct or indirect, 

6 absolute or conditional, voluntary or invol7 untary, of disposing of or parting with 

8 property or with an interest in property, 

9 including retention of title as a security in10 terest and foreclosure of the depository in11 stitution’s equity of redemption.’’. 

12 (h) TREATMENT OF QUALIFIED FINANCIAL CON13 TRACTS.—Section 11(e)(8) of the Federal Deposit Insur14 ance Act (12 U.S.C. 1821(e)(8)) is amended—

15 (1) in subparagraph (A)—

16 (A) by striking ‘‘paragraph (10)’’ and in17 serting ‘‘paragraphs (9) and (10)’’; 

18 (B) in clause (i), by striking ‘‘to cause the 

19 termination or liquidation’’ and inserting ‘‘such 

20 person has to cause the termination, liquida21 tion, or acceleration’’; and 

22 (C) by striking clause (ii) and inserting the 

23 following: 

24 ‘‘(ii) any right under any security 

25 agreement or arrangement or other credit 
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•HR 975 IH 

1 enhancement related to one or more quali2 fied financial contracts described in clause 

3 (i);’’; and 

4 (2) in subparagraph (E), by striking clause (ii) 

5 and inserting the following: 

6 ‘‘(ii) any right under any security 

7 agreement or arrangement or other credit 

8 enhancement related to one or more quali9 fied financial contracts described in clause 

10 (i);’’. 

11 (i) AVOIDANCE OF TRANSFERS.—Section 

12 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12 

13 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section 

14 5242 of the Revised Statutes of the United States or any 

15 other Federal or State law relating to the avoidance of 

16 preferential or fraudulent transfers,’’ before ‘‘the Corpora17 tion’’. 

18 SEC. 902. AUTHORITY OF THE CORPORATION WITH RE19 SPECT TO FAILED AND FAILING INSTITU20 TIONS. 

21 (a) IN GENERAL.—Section 11(e)(8) of the Federal 

22 Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amend23 ed—

24 (1) in subparagraph (E), by striking ‘‘other 

25 than paragraph (12) of this subsection, subsection 
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•HR 975 IH 

1 (d)(9)’’ and inserting ‘‘other than subsections (d)(9) 

2 and (e)(10)’’; and 

3 (2) by adding at the end the following new sub4 paragraphs: 

5 ‘‘(F) CLARIFICATION.—No provision of law 

6 shall be construed as limiting the right or 

7 power of the Corporation, or authorizing any 

8 court or agency to limit or delay, in any man9 ner, the right or power of the Corporation to 

10 transfer any qualified financial contract in ac11 cordance with paragraphs (9) and (10) of this 

12 subsection or to disaffirm or repudiate any such 

13 contract in accordance with subsection (e)(1) of 

14 this section. 

15 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC16 TIVE.—

17 ‘‘(i) IN GENERAL.—Notwithstanding 

18 the provisions of subparagraphs (A) and 

19 (E), and sections 403 and 404 of the Fed20 eral Deposit Insurance Corporation Im21 provement Act of 1991, no walkaway 

22 clause shall be enforceable in a qualified fi23 nancial contract of an insured depository 

24 institution in default. 
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1 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

2 For purposes of this subparagraph, the 

3 term ‘walkaway clause’ means a provision 

4 in a qualified financial contract that, after 

5 calculation of a value of a party’s position 

6 or an amount due to or from 1 of the par7 ties in accordance with its terms upon ter8 mination, liquidation, or acceleration of the 

9 qualified financial contract, either does not 

10 create a payment obligation of a party or 

11 extinguishes a payment obligation of a 

12 party in whole or in part solely because of 

13 such party’s status as a nondefaulting 

14 party.’’. 

15 (b) TECHNICAL AND CONFORMING AMENDMENT.—

16 Section 11(e)(12)(A) of the Federal Deposit Insurance 

17 Act (12 U.S.C. 1821(e)(12)(A)) is amended by inserting 

18 ‘‘or the exercise of rights or powers by’’ after ‘‘the ap19 pointment of’’. 

20 SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF 

21 QUALIFIED FINANCIAL CONTRACTS. 

22 (a) TRANSFERS OF QUALIFIED FINANCIAL CON23 TRACTS TO FINANCIAL INSTITUTIONS.—Section 11(e)(9) 

24 of the Federal Deposit Insurance Act (12 U.S.C. 

25 1821(e)(9)) is amended to read as follows: 
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•HR 975 IH 

1 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON2 TRACTS.—

3 ‘‘(A) IN GENERAL.—In making any trans4 fer of assets or liabilities of a depository institu5 tion in default which includes any qualified fi6 nancial contract, the conservator or receiver for 

7 such depository institution shall either—

8 ‘‘(i) transfer to one financial institu9 tion, other than a financial institution for 

10 which a conservator, receiver, trustee in 

11 bankruptcy, or other legal custodian has 

12 been appointed or which is otherwise the 

13 subject of a bankruptcy or insolvency pro14 ceeding—

15 ‘‘(I) all qualified financial con16 tracts between any person or any af17 filiate of such person and the deposi18 tory institution in default; 

19 ‘‘(II) all claims of such person or 

20 any affiliate of such person against 

21 such depository institution under any 

22 such contract (other than any claim 

23 which, under the terms of any such 

24 contract, is subordinated to the claims 
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1 of general unsecured creditors of such 

2 institution); 

3 ‘‘(III) all claims of such deposi4 tory institution against such person or 

5 any affiliate of such person under any 

6 such contract; and 

7 ‘‘(IV) all property securing or 

8 any other credit enhancement for any 

9 contract described in subclause (I) or 

10 any claim described in subclause (II) 

11 or (III) under any such contract; or 

12 ‘‘(ii) transfer none of the qualified fi13 nancial contracts, claims, property or other 

14 credit enhancement referred to in clause (i) 

15 (with respect to such person and any affil16 iate of such person).

17 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR18 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

19 AGENCY OF A FOREIGN BANK OR FINANCIAL IN20 STITUTION.—In transferring any qualified fi21 nancial contracts and related claims and prop22 erty under subparagraph (A)(i), the conservator 

23 or receiver for the depository institution shall 

24 not make such transfer to a foreign bank, fi25 nancial institution organized under the laws of 
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1 a foreign country, or a branch or agency of a 

2 foreign bank or financial institution unless, 

3 under the law applicable to such bank, financial 

4 institution, branch or agency, to the qualified 

5 financial contracts, and to any netting contract, 

6 any security agreement or arrangement or other 

7 credit enhancement related to one or more 

8 qualified financial contracts, the contractual 

9 rights of the parties to such qualified financial 

10 contracts, netting contracts, security agree11 ments or arrangements, or other credit en12 hancements are enforceable substantially to the 

13 same extent as permitted under this section. 

14 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

15 TO THE RULES OF A CLEARING ORGANIZA16 TION.—In the event that a conservator or re17 ceiver transfers any qualified financial contract 

18 and related claims, property, and credit en19 hancements pursuant to subparagraph (A)(i) 

20 and such contract is cleared by or subject to the 

21 rules of a clearing organization, the clearing or22 ganization shall not be required to accept the 

23 transferee as a member by virtue of the trans24 fer. 
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1 ‘‘(D) DEFINITIONS.—For purposes of this 

2 paragraph, the term ‘financial institution’ 

3 means a broker or dealer, a depository institu4 tion, a futures commission merchant, or any 

5 other institution, as determined by the Corpora6 tion by regulation to be a financial institution, 

7 and the term ‘clearing organization’ has the 

8 same meaning as in section 402 of the Federal 

9 Deposit Insurance Corporation Improvement 

10 Act of 1991.’’. 

11 (b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

12 COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal 

13 Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is 

14 amended in the material immediately following clause (ii) 

15 by striking ‘‘the conservator’’ and all that follows through 

16 the period and inserting the following: ‘‘the conservator 

17 or receiver shall notify any person who is a party to any 

18 such contract of such transfer by 5:00 p.m. (eastern time) 

19 on the business day following the date of the appointment 

20 of the receiver in the case of a receivership, or the business 

21 day following such transfer in the case of a conservator22 ship.’’. 

23 (c) RIGHTS AGAINST RECEIVER AND TREATMENT OF

24 BRIDGE BANKS.—Section 11(e)(10) of the Federal De-
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1 posit Insurance Act (12 U.S.C. 1821(e)(10)) is amend2 ed—

3 (1) by redesignating subparagraph (B) as sub4 paragraph (D); and 

5 (2) by inserting after subparagraph (A) the fol6 lowing new subparagraphs: 

7 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE8 ABLE.—

9 ‘‘(i) RECEIVERSHIP.—A person who is 

10 a party to a qualified financial contract 

11 with an insured depository institution may 

12 not exercise any right that such person has 

13 to terminate, liquidate, or net such con14 tract under paragraph (8)(A) of this sub15 section or section 403 or 404 of the Fed16 eral Deposit Insurance Corporation Im17 provement Act of 1991, solely by reason of 

18 or incidental to the appointment of a re19 ceiver for the depository institution (or the 

20 insolvency or financial condition of the de21 pository institution for which the receiver 

22 has been appointed)—

23 ‘‘(I) until 5:00 p.m. (eastern 

24 time) on the business day following 
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1 the date of the appointment of the re2 ceiver; or 

3 ‘‘(II) after the person has re4 ceived notice that the contract has 

5 been transferred pursuant to para6 graph (9)(A). 

7 ‘‘(ii) CONSERVATORSHIP.—A person 

8 who is a party to a qualified financial con9 tract with an insured depository institution 

10 may not exercise any right that such per11 son has to terminate, liquidate, or net such 

12 contract under paragraph (8)(E) of this 

13 subsection or section 403 or 404 of the 

14 Federal Deposit Insurance Corporation 

15 Improvement Act of 1991, solely by reason 

16 of or incidental to the appointment of a 

17 conservator for the depository institution 

18 (or the insolvency or financial condition of 

19 the depository institution for which the 

20 conservator has been appointed). 

21 ‘‘(iii) NOTICE.—For purposes of this 

22 paragraph, the Corporation as receiver or 

23 conservator of an insured depository insti24 tution shall be deemed to have notified a 

25 person who is a party to a qualified finan-
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1 cial contract with such depository institu2 tion if the Corporation has taken steps 

3 reasonably calculated to provide notice to 

4 such person by the time specified in sub5 paragraph (A). 

6 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

7 The following institutions shall not be consid8 ered to be a financial institution for which a 

9 conservator, receiver, trustee in bankruptcy, or 

10 other legal custodian has been appointed or 

11 which is otherwise the subject of a bankruptcy 

12 or insolvency proceeding for purposes of para13 graph (9): 

14 ‘‘(i) A bridge bank. 

15 ‘‘(ii) A depository institution orga16 nized by the Corporation, for which a con17 servator is appointed either—

18 ‘‘(I) immediately upon the orga19 nization of the institution; or 

20 ‘‘(II) at the time of a purchase 

21 and assumption transaction between 

22 the depository institution and the Cor23 poration as receiver for a depository 

24 institution in default.’’. 
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1 SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR 

2 REPUDIATION OF QUALIFIED FINANCIAL 

3 CONTRACTS. 

4 Section 11(e) of the Federal Deposit Insurance Act 

5 (12 U.S.C. 1821(e)) is amended—

6 (1) by redesignating paragraphs (11) through 

7 (15) as paragraphs (12) through (16), respectively; 

8 (2) by inserting after paragraph (10) the fol9 lowing new paragraph: 

10 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

11 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

12 the rights of disaffirmance or repudiation of a con13 servator or receiver with respect to any qualified fi14 nancial contract to which an insured depository in15 stitution is a party, the conservator or receiver for 

16 such institution shall either—

17 ‘‘(A) disaffirm or repudiate all qualified fi18 nancial contracts between—

19 ‘‘(i) any person or any affiliate of 

20 such person; and 

21 ‘‘(ii) the depository institution in de22 fault; or 

23 ‘‘(B) disaffirm or repudiate none of the 

24 qualified financial contracts referred to in sub25 paragraph (A) (with respect to such person or 

26 any affiliate of such person).’’; and 
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1 (3) by adding at the end the following new 

2 paragraph: 

3 ‘‘(17) SAVINGS CLAUSE.—The meanings of 

4 terms used in this subsection are applicable for pur5 poses of this subsection only, and shall not be con6 strued or applied so as to challenge or affect the 

7 characterization, definition, or treatment of any 

8 similar terms under any other statute, regulation, or 

9 rule, including the Gramm-Leach-Bliley Act, the 

10 Legal Certainty for Bank Products Act of 2000, the 

11 securities laws (as that term is defined in section 

12 3(a)(47) of the Securities Exchange Act of 1934), 

13 and the Commodity Exchange Act.’’. 

14 SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER 

15 AGREEMENTS. 

16 Section 11(e)(8)(D)(vii) of the Federal Deposit In17 surance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to 

18 read as follows: 

19 ‘‘(vii) TREATMENT OF MASTER

20 AGREEMENT AS ONE AGREEMENT.—Any 

21 master agreement for any contract or 

22 agreement described in any preceding 

23 clause of this subparagraph (or any master 

24 agreement for such master agreement or 

25 agreements), together with all supplements 
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1 to such master agreement, shall be treated 

2 as a single agreement and a single quali3 fied financial contract. If a master agree4 ment contains provisions relating to agree5 ments or transactions that are not them6 selves qualified financial contracts, the 

7 master agreement shall be deemed to be a 

8 qualified financial contract only with re9 spect to those transactions that are them10 selves qualified financial contracts.’’.

11 SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION 

12 IMPROVEMENT ACT OF 1991. 

13 (a) DEFINITIONS.—Section 402 of the Federal De14 posit Insurance Corporation Improvement Act of 1991 (12 

15 U.S.C. 4402) is amended—

16 (1) in paragraph (2)—

17 (A) in subparagraph (A)(ii), by inserting 

18 before the semicolon ‘‘, or is exempt from such 

19 registration by order of the Securities and Ex20 change Commission’’; and 

21 (B) in subparagraph (B), by inserting be22 fore the period ‘‘, that has been granted an ex23 emption under section 4(c)(1) of the Com24 modity Exchange Act, or that is a multilateral 
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1 clearing organization (as defined in section 408 

2 of this Act)’’; 

3 (2) in paragraph (6)—

4 (A) by redesignating subparagraphs (B) 

5 through (D) as subparagraphs (C) through (E), 

6 respectively; 

7 (B) by inserting after subparagraph (A) 

8 the following new subparagraph: 

9 ‘‘(B) an uninsured national bank or an un10 insured State bank that is a member of the 

11 Federal Reserve System, if the national bank or 

12 State member bank is not eligible to make ap13 plication to become an insured bank under sec14 tion 5 of the Federal Deposit Insurance Act;’’; 

15 and 

16 (C) by amending subparagraph (C), so re17 designated, to read as follows: 

18 ‘‘(C) a branch or agency of a foreign bank, 

19 a foreign bank and any branch or agency of the 

20 foreign bank, or the foreign bank that estab21 lished the branch or agency, as those terms are 

22 defined in section 1(b) of the International 

23 Banking Act of 1978;’’; 

24 (3) in paragraph (11), by inserting before the 

25 period ‘‘and any other clearing organization with 
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•HR 975 IH 

1 which such clearing organization has a netting con2 tract’’; 

3 (4) by amending paragraph (14)(A)(i) to read 

4 as follows: 

5 ‘‘(i) means a contract or agreement 

6 between 2 or more financial institutions, 

7 clearing organizations, or members that 

8 provides for netting present or future pay9 ment obligations or payment entitlements 

10 (including liquidation or close out values 

11 relating to such obligations or entitle12 ments) among the parties to the agree13 ment; and’’; and 

14 (5) by adding at the end the following new 

15 paragraph: 

16 ‘‘(15) PAYMENT.—The term ‘payment’ means a 

17 payment of United States dollars, another currency, 

18 or a composite currency, and a noncash delivery, in19 cluding a payment or delivery to liquidate an 

20 unmatured obligation.’’. 

21 (b) ENFORCEABILITY OF BILATERAL NETTING CON22 TRACTS.—Section 403 of the Federal Deposit Insurance 

23 Corporation Improvement Act of 1991 (12 U.S.C. 4403) 

24 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 or any order authorized under sec7 tion 5(b)(2) of the Securities Investor Protection Act of 

8 1970), the covered contractual payment obligations and 

9 the covered contractual payment entitlements between any 

10 2 financial institutions shall be netted in accordance with, 

11 and subject to the conditions of, the terms of any applica12 ble netting contract (except as provided in section 

13 561(b)(2) of title 11, United States Code).’’; and 

14 (2) by adding at the end the following new sub15 section: 

16 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE17 MENTS.—The provisions of any security agreement or ar18 rangement or other credit enhancement related to one or 

19 more netting contracts between any 2 financial institu20 tions shall be enforceable in accordance with their terms 

21 (except as provided in section 561(b)(2) of title 11, United 

22 States Code), and shall not be stayed, avoided, or other23 wise limited by any State or Federal law (other than para24 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the 
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1 Federal Deposit Insurance Act and section 5(b)(2) of the 

2 Securities Investor Protection Act of 1970).’’. 

3 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

4 NETTING CONTRACTS.—Section 404 of the Federal De5 posit Insurance Corporation Improvement Act of 1991 (12 

6 U.S.C. 4404) is amended—

7 (1) by striking subsection (a) and inserting the 

8 following: 

9 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

10 provision of State or Federal law (other than paragraphs 

11 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal 

12 Deposit Insurance Act and any order authorized under 

13 section 5(b)(2) of the Securities Investor Protection Act 

14 of 1970), the covered contractual payment obligations and 

15 the covered contractual payment entitlements of a member 

16 of a clearing organization to and from all other members 

17 of a clearing organization shall be netted in accordance 

18 with and subject to the conditions of any applicable net19 ting contract (except as provided in section 561(b)(2) of 

20 title 11, United States Code).’’; and 

21 (2) by adding at the end the following new sub22 section: 

23 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE24 MENTS.—The provisions of any security agreement or ar25 rangement or other credit enhancement related to one or 
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•HR 975 IH 

1 more netting contracts between any 2 members of a clear2 ing organization shall be enforceable in accordance with 

3 their terms (except as provided in section 561(b)(2) of 

4 title 11, United States Code), and shall not be stayed, 

5 avoided, or otherwise limited by any State or Federal law 

6 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec7 tion 11(e) of the Federal Deposit Insurance Act and sec8 tion 5(b)(2) of the Securities Investor Protection Act of 

9 1970).’’. 

10 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN11 SURED NATIONAL BANKS, UNINSURED FEDERAL

12 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

13 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The 

14 Federal Deposit Insurance Corporation Improvement Act 

15 of 1991 (12 U.S.C. 4401 et seq.) is amended—

16 (1) by redesignating section 407 as section 

17 407A; and 

18 (2) by inserting after section 406 the following 

19 new section: 
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•HR 975 IH 

1 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED 

2 NATIONAL BANKS, UNINSURED FEDERAL 

3 BRANCHES AND AGENCIES, CERTAIN UNIN4 SURED STATE MEMBER BANKS, AND EDGE 

5 ACT CORPORATIONS. 

6 ‘‘(a) IN GENERAL.—Notwithstanding any other pro7 vision of law, paragraphs (8), (9), (10), and (11) of section 

8 11(e) of the Federal Deposit Insurance Act shall apply 

9 to an uninsured national bank or uninsured Federal 

10 branch or Federal agency, a corporation chartered under 

11 section 25A of the Federal Reserve Act, or an uninsured 

12 State member bank which operates, or operates as, a mul13 tilateral clearing organization pursuant to section 409 of 

14 this Act, except that for such purpose—

15 ‘‘(1) any reference to the ‘Corporation as re16 ceiver’ or ‘the receiver or the Corporation’ shall refer 

17 to the receiver appointed by the Comptroller of the 

18 Currency in the case of an uninsured national bank 

19 or uninsured Federal branch or agency, or to the re20 ceiver appointed by the Board of Governors of the 

21 Federal Reserve System in the case of a corporation 

22 chartered under section 25A of the Federal Reserve 

23 Act or an uninsured State member bank; 

24 ‘‘(2) any reference to the ‘Corporation’ (other 

25 than in section 11(e)(8)(D) of such Act), the ‘Cor26 poration, whether acting as such or as conservator 
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•HR 975 IH 

1 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer 

2 to the receiver or conservator appointed by the 

3 Comptroller of the Currency in the case of an unin4 sured national bank or uninsured Federal branch or 

5 agency, or to the receiver or conservator appointed 

6 by the Board of Governors of the Federal Reserve 

7 System in the case of a corporation chartered under 

8 section 25A of the Federal Reserve Act or an unin9 sured State member bank; and 

10 ‘‘(3) any reference to an ‘insured depository in11 stitution’ or ‘depository institution’ shall refer to an 

12 uninsured national bank, an uninsured Federal 

13 branch or Federal agency, a corporation chartered 

14 under section 25A of the Federal Reserve Act, or an 

15 uninsured State member bank which operates, or op16 erates as, a multilateral clearing organization pursu17 ant to section 409 of this Act. 

18 ‘‘(b) LIABILITY.—The liability of a receiver or conser19 vator of an uninsured national bank, uninsured Federal 

20 branch or agency, a corporation chartered under section 

21 25A of the Federal Reserve Act, or an uninsured State 

22 member bank which operates, or operates as, a multilat23 eral clearing organization pursuant to section 409 of this 

24 Act, shall be determined in the same manner and subject 

25 to the same limitations that apply to receivers and con-
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•HR 975 IH 

1 servators of insured depository institutions under section 

2 11(e) of the Federal Deposit Insurance Act. 

3 ‘‘(c) REGULATORY AUTHORITY.—

4 ‘‘(1) IN GENERAL.—The Comptroller of the 

5 Currency in the case of an uninsured national bank 

6 or uninsured Federal branch or agency and the 

7 Board of Governors of the Federal Reserve System 

8 in the case of a corporation chartered under section 

9 25A of the Federal Reserve Act, or an uninsured 

10 State member bank that operates, or operates as, a 

11 multilateral clearing organization pursuant to sec12 tion 409 of this Act, in consultation with the Fed13 eral Deposit Insurance Corporation, may each pro14 mulgate regulations solely to implement this section. 

15 ‘‘(2) SPECIFIC REQUIREMENT.—In promul16 gating regulations, limited solely to implementing 

17 paragraphs (8), (9), (10), and (11) of section 11(e) 

18 of the Federal Deposit Insurance Act, the Comp19 troller of the Currency and the Board of Governors 

20 of the Federal Reserve System each shall ensure 

21 that the regulations generally are consistent with the 

22 regulations and policies of the Federal Deposit In23 surance Corporation adopted pursuant to the Fed24 eral Deposit Insurance Act. 
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•HR 975 IH 

1 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

2 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign 

3 bank’ have the same meanings as in section 1(b) of the 

4 International Banking Act of 1978.’’. 

5 SEC. 907. BANKRUPTCY LAW AMENDMENTS. 

6 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR7 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, 

8 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU9 RITIES CONTRACT.—Title 11, United States Code, is 

10 amended—

11 (1) in section 101—

12 (A) in paragraph (25)—

13 (i) by striking ‘‘means a contract’’ 

14 and inserting ‘‘means—

15 ‘‘(A) a contract’’; 

16 (ii) by striking ‘‘, or any combination 

17 thereof or option thereon;’’ and inserting 

18 ‘‘, or any other similar agreement;’’; and 

19 (iii) by adding at the end the fol20 lowing: 

21 ‘‘(B) any combination of agreements or 

22 transactions referred to in subparagraphs (A) 

23 and (C); 
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•HR 975 IH 

1 ‘‘(C) any option to enter into an agreement 

2 or transaction referred to in subparagraph (A) 

3 or (B); 

4 ‘‘(D) a master agreement that provides for 

5 an agreement or transaction referred to in sub6 paragraph (A), (B), or (C), together with all 

7 supplements to any such master agreement, 

8 without regard to whether such master agree9 ment provides for an agreement or transaction 

10 that is not a forward contract under this para11 graph, except that such master agreement shall 

12 be considered to be a forward contract under 

13 this paragraph only with respect to each agree14 ment or transaction under such master agree15 ment that is referred to in subparagraph (A), 

16 (B), or (C); or 

17 ‘‘(E) any security agreement or arrange18 ment, or other credit enhancement related to 

19 any agreement or transaction referred to in 

20 subparagraph (A), (B), (C), or (D), including 

21 any guarantee or reimbursement obligation by 

22 or to a forward contract merchant or financial 

23 participant in connection with any agreement or 

24 transaction referred to in any such subpara25 graph, but not to exceed the damages in con-
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•HR 975 IH 

1 nection with any such agreement or transaction, 

2 measured in accordance with section 562 of this 

3 title;’’; 

4 (B) in paragraph (46), by striking ‘‘on any 

5 day during the period beginning 90 days before 

6 the date of’’ and inserting ‘‘at any time before’’; 

7 (C) by amending paragraph (47) to read 

8 as follows: 

9 ‘‘(47) ‘repurchase agreement’ (which definition 

10 also applies to a reverse repurchase agreement)—

11 ‘‘(A) means—

12 ‘‘(i) an agreement, including related 

13 terms, which provides for the transfer of 

14 one or more certificates of deposit, mort15 gage related securities (as defined in sec16 tion 3 of the Securities Exchange Act of 

17 1934), mortgage loans, interests in mort18 gage related securities or mortgage loans, 

19 eligible bankers’ acceptances, qualified for20 eign government securities (defined as a 

21 security that is a direct obligation of, or 

22 that is fully guaranteed by, the central 

23 government of a member of the Organiza24 tion for Economic Cooperation and Devel25 opment), or securities that are direct obli-
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•HR 975 IH 

1 gations of, or that are fully guaranteed by, 

2 the United States or any agency of the 

3 United States against the transfer of funds 

4 by the transferee of such certificates of de5 posit, eligible bankers’ acceptances, securi6 ties, mortgage loans, or interests, with a 

7 simultaneous agreement by such transferee 

8 to transfer to the transferor thereof certifi9 cates of deposit, eligible bankers’ accept10 ance, securities, mortgage loans, or inter11 ests of the kind described in this clause, at 

12 a date certain not later than 1 year after 

13 such transfer or on demand, against the 

14 transfer of funds; 

15 ‘‘(ii) any combination of agreements 

16 or transactions referred to in clauses (i) 

17 and (iii); 

18 ‘‘(iii) an option to enter into an agree19 ment or transaction referred to in clause 

20 (i) or (ii); 

21 ‘‘(iv) a master agreement that pro22 vides for an agreement or transaction re23 ferred to in clause (i), (ii), or (iii), together 

24 with all supplements to any such master 

25 agreement, without regard to whether such 
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•HR 975 IH 

1 master agreement provides for an agree2 ment or transaction that is not a repur3 chase agreement under this paragraph, ex4 cept that such master agreement shall be 

5 considered to be a repurchase agreement 

6 under this paragraph only with respect to 

7 each agreement or transaction under the 

8 master agreement that is referred to in 

9 clause (i), (ii), or (iii); or 

10 ‘‘(v) any security agreement or ar11 rangement or other credit enhancement re12 lated to any agreement or transaction re13 ferred to in clause (i), (ii), (iii), or (iv), in14 cluding any guarantee or reimbursement 

15 obligation by or to a repo participant or fi16 nancial participant in connection with any 

17 agreement or transaction referred to in 

18 any such clause, but not to exceed the 

19 damages in connection with any such 

20 agreement or transaction, measured in ac21 cordance with section 562 of this title; and 

22 ‘‘(B) does not include a repurchase obliga23 tion under a participation in a commercial 

24 mortgage loan;’’; 
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•HR 975 IH 

1 (D) in paragraph (48), by inserting ‘‘, or 

2 exempt from such registration under such sec3 tion pursuant to an order of the Securities and 

4 Exchange Commission,’’ after ‘‘1934’’; and 

5 (E) by amending paragraph (53B) to read 

6 as follows: 

7 ‘‘(53B) ‘swap agreement’—

8 ‘‘(A) means—

9 ‘‘(i) any agreement, including the 

10 terms and conditions incorporated by ref11 erence in such agreement, which is—

12 ‘‘(I) an interest rate swap, op13 tion, future, or forward agreement, in14 cluding a rate floor, rate cap, rate col15 lar, cross-currency rate swap, and 

16 basis swap; 

17 ‘‘(II) a spot, same day-tomorrow, 

18 tomorrow-next, forward, or other for19 eign exchange or precious metals 

20 agreement; 

21 ‘‘(III) a currency swap, option, 

22 future, or forward agreement; 

23 ‘‘(IV) an equity index or equity 

24 swap, option, future, or forward 

25 agreement; 
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•HR 975 IH 

1 ‘‘(V) a debt index or debt swap, 

2 option, future, or forward agreement; 

3 ‘‘(VI) a total return, credit 

4 spread or credit swap, option, future, 

5 or forward agreement; 

6 ‘‘(VII) a commodity index or a 

7 commodity swap, option, future, or 

8 forward agreement; or 

9 ‘‘(VIII) a weather swap, weather 

10 derivative, or weather option; 

11 ‘‘(ii) any agreement or transaction 

12 that is similar to any other agreement or 

13 transaction referred to in this paragraph 

14 and that—

15 ‘‘(I) is of a type that has been, is 

16 presently, or in the future becomes, 

17 the subject of recurrent dealings in 

18 the swap markets (including terms 

19 and conditions incorporated by ref20 erence therein); and 

21 ‘‘(II) is a forward, swap, future, 

22 or option on one or more rates, cur23 rencies, commodities, equity securities, 

24 or other equity instruments, debt se25 curities or other debt instruments, 
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•HR 975 IH 

1 quantitative measures associated with 

2 an occurrence, extent of an occur3 rence, or contingency associated with 

4 a financial, commercial, or economic 

5 consequence, or economic or financial 

6 indices or measures of economic or fi7 nancial risk or value; 

8 ‘‘(iii) any combination of agreements 

9 or transactions referred to in this subpara10 graph; 

11 ‘‘(iv) any option to enter into an 

12 agreement or transaction referred to in 

13 this subparagraph; 

14 ‘‘(v) a master agreement that provides 

15 for an agreement or transaction referred to 

16 in clause (i), (ii), (iii), or (iv), together 

17 with all supplements to any such master 

18 agreement, and without regard to whether 

19 the master agreement contains an agree20 ment or transaction that is not a swap 

21 agreement under this paragraph, except 

22 that the master agreement shall be consid23 ered to be a swap agreement under this 

24 paragraph only with respect to each agree25 ment or transaction under the master 
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•HR 975 IH 

1 agreement that is referred to in clause (i), 

2 (ii), (iii), or (iv); or 

3 ‘‘(vi) any security agreement or ar4 rangement or other credit enhancement re5 lated to any agreements or transactions re6 ferred to in clause (i) through (v), includ7 ing any guarantee or reimbursement obli8 gation by or to a swap participant or fi9 nancial participant in connection with any 

10 agreement or transaction referred to in 

11 any such clause, but not to exceed the 

12 damages in connection with any such 

13 agreement or transaction, measured in ac14 cordance with section 562 of this title; and 

15 ‘‘(B) is applicable for purposes of this title 

16 only, and shall not be construed or applied so 

17 as to challenge or affect the characterization, 

18 definition, or treatment of any swap agreement 

19 under any other statute, regulation, or rule, in20 cluding the Securities Act of 1933, the Securi21 ties Exchange Act of 1934, the Public Utility 

22 Holding Company Act of 1935, the Trust In23 denture Act of 1939, the Investment Company 

24 Act of 1940, the Investment Advisers Act of 

25 1940, the Securities Investor Protection Act of 
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•HR 975 IH 

1 1970, the Commodity Exchange Act, the 

2 Gramm-Leach-Bliley Act, and the Legal Cer3 tainty for Bank Products Act of 2000;’’; 

4 (2) in section 741(7), by striking paragraph (7) 

5 and inserting the following: 

6 ‘‘(7) ‘securities contract’—

7 ‘‘(A) means—

8 ‘‘(i) a contract for the purchase, sale, 

9 or loan of a security, a certificate of de10 posit, a mortgage loan or any interest in a 

11 mortgage loan, a group or index of securi12 ties, certificates of deposit, or mortgage 

13 loans or interests therein (including an in14 terest therein or based on the value there15 of), or option on any of the foregoing, in16 cluding an option to purchase or sell any 

17 such security, certificate of deposit, mort18 gage loan, interest, group or index, or op19 tion, and including any repurchase or re20 verse repurchase transaction on any such 

21 security, certificate of deposit, mortgage 

22 loan, interest, group or index, or option; 

23 ‘‘(ii) any option entered into on a na24 tional securities exchange relating to for25 eign currencies; 
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•HR 975 IH 

1 ‘‘(iii) the guarantee by or to any secu2 rities clearing agency of a settlement of 

3 cash, securities, certificates of deposit, 

4 mortgage loans or interests therein, group 

5 or index of securities, or mortgage loans or 

6 interests therein (including any interest 

7 therein or based on the value thereof), or 

8 option on any of the foregoing, including 

9 an option to purchase or sell any such se10 curity, certificate of deposit, mortgage 

11 loan, interest, group or index, or option; 

12 ‘‘(iv) any margin loan; 

13 ‘‘(v) any other agreement or trans14 action that is similar to an agreement or 

15 transaction referred to in this subpara16 graph; 

17 ‘‘(vi) any combination of the agree18 ments or transactions referred to in this 

19 subparagraph; 

20 ‘‘(vii) any option to enter into any 

21 agreement or transaction referred to in 

22 this subparagraph; 

23 ‘‘(viii) a master agreement that pro24 vides for an agreement or transaction re25 ferred to in clause (i), (ii), (iii), (iv), (v), 
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•HR 975 IH 

1 (vi), or (vii), together with all supplements 

2 to any such master agreement, without re3 gard to whether the master agreement pro4 vides for an agreement or transaction that 

5 is not a securities contract under this sub6 paragraph, except that such master agree7 ment shall be considered to be a securities 

8 contract under this subparagraph only with 

9 respect to each agreement or transaction 

10 under such master agreement that is re11 ferred to in clause (i), (ii), (iii), (iv), (v), 

12 (vi), or (vii); or 

13 ‘‘(ix) any security agreement or ar14 rangement or other credit enhancement re15 lated to any agreement or transaction re16 ferred to in this subparagraph, including 

17 any guarantee or reimbursement obligation 

18 by or to a stockbroker, securities clearing 

19 agency, financial institution, or financial 

20 participant in connection with any agree21 ment or transaction referred to in this sub22 paragraph, but not to exceed the damages 

23 in connection with any such agreement or 

24 transaction, measured in accordance with 

25 section 562 of this title; and 
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•HR 975 IH 

1 ‘‘(B) does not include any purchase, sale, 

2 or repurchase obligation under a participation 

3 in a commercial mortgage loan;’’; and 

4 (3) in section 761(4)—

5 (A) by striking ‘‘or’’ at the end of subpara6 graph (D); and 

7 (B) by adding at the end the following: 

8 ‘‘(F) any other agreement or transaction 

9 that is similar to an agreement or transaction 

10 referred to in this paragraph; 

11 ‘‘(G) any combination of the agreements or 

12 transactions referred to in this paragraph; 

13 ‘‘(H) any option to enter into an agree14 ment or transaction referred to in this para15 graph; 

16 ‘‘(I) a master agreement that provides for 

17 an agreement or transaction referred to in sub18 paragraph (A), (B), (C), (D), (E), (F), (G), or 

19 (H), together with all supplements to such mas20 ter agreement, without regard to whether the 

21 master agreement provides for an agreement or 

22 transaction that is not a commodity contract 

23 under this paragraph, except that the master 

24 agreement shall be considered to be a com25 modity contract under this paragraph only with 
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•HR 975 IH 

1 respect to each agreement or transaction under 

2 the master agreement that is referred to in sub3 paragraph (A), (B), (C), (D), (E), (F), (G), or 

4 (H); or 

5 ‘‘(J) any security agreement or arrange6 ment or other credit enhancement related to 

7 any agreement or transaction referred to in this 

8 paragraph, including any guarantee or reim9 bursement obligation by or to a commodity 

10 broker or financial participant in connection 

11 with any agreement or transaction referred to 

12 in this paragraph, but not to exceed the dam13 ages in connection with any such agreement or 

14 transaction, measured in accordance with sec15 tion 562 of this title;’’. 

16 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI17 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER18 CHANT.—Section 101 of title 11, United States Code, is 

19 amended—

20 (1) by striking paragraph (22) and inserting 

21 the following: 

22 ‘‘(22) ‘financial institution’ means—

23 ‘‘(A) a Federal reserve bank, or an entity 

24 (domestic or foreign) that is a commercial or 

25 savings bank, industrial savings bank, savings 
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•HR 975 IH 

1 and loan association, trust company, or receiver 

2 or conservator for such entity and, when any 

3 such Federal reserve bank, receiver, conservator 

4 or entity is acting as agent or custodian for a 

5 customer in connection with a securities con6 tract (as defined in section 741) such customer; 

7 or 

8 ‘‘(B) in connection with a securities con9 tract (as defined in section 741) an investment 

10 company registered under the Investment Com11 pany Act of 1940;’’; 

12 (2) by inserting after paragraph (22) the fol13 lowing: 

14 ‘‘(22A) ‘financial participant’ means—

15 ‘‘(A) an entity that, at the time it enters 

16 into a securities contract, commodity contract, 

17 swap agreement, repurchase agreement, or for18 ward contract, or at the time of the filing of the 

19 petition, has one or more agreements or trans20 actions described in paragraph (1), (2), (3), (4), 

21 (5), or (6) of section 561(a) with the debtor or 

22 any other entity (other than an affiliate) of a 

23 total gross dollar value of not less than 

24 $1,000,000,000 in notional or actual principal 

25 amount outstanding on any day during the pre-
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•HR 975 IH 

1 vious 15-month period, or has gross mark-to2 market positions of not less than $100,000,000 

3 (aggregated across counterparties) in one or 

4 more such agreements or transactions with the 

5 debtor or any other entity (other than an affil6 iate) on any day during the previous 15-month 

7 period; or 

8 ‘‘(B) a clearing organization (as defined in 

9 section 402 of the Federal Deposit Insurance 

10 Corporation Improvement Act of 1991);’’; and 

11 (3) by striking paragraph (26) and inserting 

12 the following: 

13 ‘‘(26) ‘forward contract merchant’ means a 

14 Federal reserve bank, or an entity the business of 

15 which consists in whole or in part of entering into 

16 forward contracts as or with merchants in a com17 modity (as defined in section 761) or any similar 

18 good, article, service, right, or interest which is pres19 ently or in the future becomes the subject of dealing 

20 in the forward contract trade;’’. 

21 (c) DEFINITION OF MASTER NETTING AGREEMENT

22 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec23 tion 101 of title 11, United States Code, is amended by 

24 inserting after paragraph (38) the following new para25 graphs: 
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•HR 975 IH 

1 ‘‘(38A) ‘master netting agreement’—

2 ‘‘(A) means an agreement providing for 

3 the exercise of rights, including rights of net4 ting, setoff, liquidation, termination, accelera5 tion, or close out, under or in connection with 

6 one or more contracts that are described in any 

7 one or more of paragraphs (1) through (5) of 

8 section 561(a), or any security agreement or ar9 rangement or other credit enhancement related 

10 to one or more of the foregoing, including any 

11 guarantee or reimbursement obligation related 

12 to 1 or more of the foregoing; and 

13 ‘‘(B) if the agreement contains provisions 

14 relating to agreements or transactions that are 

15 not contracts described in paragraphs (1) 

16 through (5) of section 561(a), shall be deemed 

17 to be a master netting agreement only with re18 spect to those agreements or transactions that 

19 are described in any one or more of paragraphs 

20 (1) through (5) of section 561(a); 

21 ‘‘(38B) ‘master netting agreement participant’ 

22 means an entity that, at any time before the filing 

23 of the petition, is a party to an outstanding master 

24 netting agreement with the debtor;’’. 
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•HR 975 IH 

1 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 

2 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR3 CHASE AGREEMENTS, AND MASTER NETTING AGREE4 MENTS UNDER THE AUTOMATIC-STAY.—

5 (1) IN GENERAL.—Section 362(b) of title 11, 

6 United States Code, as amended by sections 224, 

7 303, 311, 401, and 718, is amended—

8 (A) in paragraph (6), by inserting

9 ‘‘, pledged to, under the control of,’’ after ‘‘held 

10 by’’; 

11 (B) in paragraph (7), by inserting

12 ‘‘, pledged to, under the control of,’’ after ‘‘held 

13 by’’; 

14 (C) by striking paragraph (17) and insert15 ing the following: 

16 ‘‘(17) under subsection (a), of the setoff by a 

17 swap participant or financial participant of a mutual 

18 debt and claim under or in connection with one or 

19 more swap agreements that constitutes the setoff of 

20 a claim against the debtor for any payment or other 

21 transfer of property due from the debtor under or in 

22 connection with any swap agreement against any 

23 payment due to the debtor from the swap partici24 pant or financial participant under or in connection 

25 with any swap agreement or against cash, securities, 
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1 or other property held by, pledged to, under the con2 trol of, or due from such swap participant or finan3 cial participant to margin, guarantee, secure, or set4 tle any swap agreement;’’; and 

5 (D) by inserting after paragraph (26) the 

6 following: 

7 ‘‘(27) under subsection (a), of the setoff by a 

8 master netting agreement participant of a mutual 

9 debt and claim under or in connection with one or 

10 more master netting agreements or any contract or 

11 agreement subject to such agreements that con12 stitutes the setoff of a claim against the debtor for 

13 any payment or other transfer of property due from 

14 the debtor under or in connection with such agree15 ments or any contract or agreement subject to such 

16 agreements against any payment due to the debtor 

17 from such master netting agreement participant 

18 under or in connection with such agreements or any 

19 contract or agreement subject to such agreements or 

20 against cash, securities, or other property held by, 

21 pledged to, under the control of, or due from such 

22 master netting agreement participant to margin, 

23 guarantee, secure, or settle such agreements or any 

24 contract or agreement subject to such agreements, 

25 to the extent that such participant is eligible to exer-
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1 cise such offset rights under paragraph (6), (7), or 

2 (17) for each individual contract covered by the mas3 ter netting agreement in issue.’’. 

4 (2) LIMITATION.—Section 362 of title 11, 

5 United States Code, as amended by sections 106, 

6 305, 311, and 441, is amended by adding at the end 

7 the following: 

8 ‘‘(o) The exercise of rights not subject to the stay 

9 arising under subsection (a) pursuant to paragraph (6), 

10 (7), (17), or (27) of subsection (b) shall not be stayed 

11 by any order of a court or administrative agency in any 

12 proceeding under this title.’’. 

13 (e) LIMITATION OF AVOIDANCE POWERS UNDER

14 MASTER NETTING AGREEMENT.—Section 546 of title 11, 

15 United States Code, is amended—

16 (1) in subsection (g) (as added by section 103 

17 of Public Law 101–311)—

18 (A) by striking ‘‘under a swap agreement’’; 

19 (B) by striking ‘‘in connection with a swap 

20 agreement’’ and inserting ‘‘under or in connec21 tion with any swap agreement’’; and 

22 (C) by inserting ‘‘or financial participant’’ 

23 after ‘‘swap participant’’ each place such term 

24 appears; and 

25 (2) by adding at the end the following: 
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1 ‘‘(j) Notwithstanding sections 544, 545, 547, 

2 548(a)(1)(B), and 548(b) the trustee may not avoid a 

3 transfer made by or to a master netting agreement partici4 pant under or in connection with any master netting 

5 agreement or any individual contract covered thereby that 

6 is made before the commencement of the case, except 

7 under section 548(a)(1)(A) and except to the extent that 

8 the trustee could otherwise avoid such a transfer made 

9 under an individual contract covered by such master net10 ting agreement.’’. 

11 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

12 AGREEMENTS.—Section 548(d)(2) of title 11, United 

13 States Code, is amended—

14 (1) in subparagraph (C), by striking ‘‘and’’ at 

15 the end; 

16 (2) in subparagraph (D), by striking the period 

17 and inserting ‘‘; and’’; and 

18 (3) by adding at the end the following new sub19 paragraph: 

20 ‘‘(E) a master netting agreement participant 

21 that receives a transfer in connection with a master 

22 netting agreement or any individual contract covered 

23 thereby takes for value to the extent of such trans24 fer, except that, with respect to a transfer under any 

25 individual contract covered thereby, to the extent 
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1 that such master netting agreement participant oth2 erwise did not take (or is otherwise not deemed to 

3 have taken) such transfer for value.’’. 

4 (g) TERMINATION OR ACCELERATION OF SECURITIES

5 CONTRACTS.—Section 555 of title 11, United States Code, 

6 is amended—

7 (1) by amending the section heading to read as 

8 follows: 

9 ‘‘§ 555. Contractual right to liquidate, terminate, or 

10 accelerate a securities contract’’; 

11 and 

12 (2) in the first sentence, by striking ‘‘liquida13 tion’’ and inserting ‘‘liquidation, termination, or ac14 celeration’’. 

15 (h) TERMINATION OR ACCELERATION OF COMMOD16 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 

17 United States Code, is amended—

18 (1) by amending the section heading to read as 

19 follows: 

20 ‘‘§ 556. Contractual right to liquidate, terminate, or 

21 accelerate a commodities contract or for22 ward contract’’; 

23 (2) in the first sentence, by striking ‘‘liquida24 tion’’ and inserting ‘‘liquidation, termination, or ac25 celeration’’; and 
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1 (3) in the second sentence, by striking ‘‘As 

2 used’’ and all that follows through ‘‘right,’’ and in3 serting ‘‘As used in this section, the term ‘contrac4 tual right’ includes a right set forth in a rule or 

5 bylaw of a derivatives clearing organization (as de6 fined in the Commodity Exchange Act), a multilat7 eral clearing organization (as defined in the Federal 

8 Deposit Insurance Corporation Improvement Act of 

9 1991), a national securities exchange, a national se10 curities association, a securities clearing agency, a 

11 contract market designated under the Commodity 

12 Exchange Act, a derivatives transaction execution 

13 facility registered under the Commodity Exchange 

14 Act, or a board of trade (as defined in the Com15 modity Exchange Act) or in a resolution of the gov16 erning board thereof and a right,’’. 

17 (i) TERMINATION OR ACCELERATION OF REPUR18 CHASE AGREEMENTS.—Section 559 of title 11, United 

19 States Code, is amended—

20 (1) by amending the section heading to read as 

21 follows: 
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1 ‘‘§ 559. Contractual right to liquidate, terminate, or 

2 accelerate a repurchase agreement’’; 

3 (2) in the first sentence, by striking ‘‘liquida4 tion’’ and inserting ‘‘liquidation, termination, or ac5 celeration’’; and 

6 (3) in the third sentence, by striking ‘‘As used’’ 

7 and all that follows through ‘‘right,’’ and inserting 

8 ‘‘As used in this section, the term ‘contractual right’ 

9 includes a right set forth in a rule or bylaw of a de10 rivatives clearing organization (as defined in the 

11 Commodity Exchange Act), a multilateral clearing 

12 organization (as defined in the Federal Deposit In13 surance Corporation Improvement Act of 1991), a 

14 national securities exchange, a national securities as15 sociation, a securities clearing agency, a contract 

16 market designated under the Commodity Exchange 

17 Act, a derivatives transaction execution facility reg18 istered under the Commodity Exchange Act, or a 

19 board of trade (as defined in the Commodity Ex20 change Act) or in a resolution of the governing 

21 board thereof and a right,’’. 

22 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

23 OF SWAP AGREEMENTS.—Section 560 of title 11, United 

24 States Code, is amended—

25 (1) by amending the section heading to read as 

26 follows: 
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1 ‘‘§ 560. Contractual right to liquidate, terminate, or 

2 accelerate a swap agreement’’; 

3 (2) in the first sentence, by striking ‘‘termi4 nation of a swap agreement’’ and inserting ‘‘liquida5 tion, termination, or acceleration of one or more 

6 swap agreements’’; 

7 (3) by striking ‘‘in connection with any swap 

8 agreement’’ and inserting ‘‘in connection with the 

9 termination, liquidation, or acceleration of one or 

10 more swap agreements’’; and 

11 (4) in the second sentence, by striking ‘‘As 

12 used’’ and all that follows through ‘‘right,’’ and in13 serting ‘‘As used in this section, the term ‘contrac14 tual right’ includes a right set forth in a rule or 

15 bylaw of a derivatives clearing organization (as de16 fined in the Commodity Exchange Act), a multilat17 eral clearing organization (as defined in the Federal 

18 Deposit Insurance Corporation Improvement Act of 

19 1991), a national securities exchange, a national se20 curities association, a securities clearing agency, a 

21 contract market designated under the Commodity 

22 Exchange Act, a derivatives transaction execution 

23 facility registered under the Commodity Exchange 

24 Act, or a board of trade (as defined in the Com25 modity Exchange Act) or in a resolution of the gov26 erning board thereof and a right,’’. 
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1 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

2 OFFSET UNDER A MASTER NETTING AGREEMENT AND

3 ACROSS CONTRACTS.—

4 (1) IN GENERAL.—Title 11, United States 

5 Code, is amended by inserting after section 560 the 

6 following: 

7 ‘‘§ 561. Contractual right to terminate, liquidate, ac8 celerate, or offset under a master netting 

9 agreement and across contracts; pro10 ceedings under chapter 15

11 ‘‘(a) Subject to subsection (b), the exercise of any 

12 contractual right, because of a condition of the kind speci13 fied in section 365(e)(1), to cause the termination, liquida14 tion, or acceleration of or to offset or net termination val15 ues, payment amounts, or other transfer obligations aris16 ing under or in connection with one or more (or the termi17 nation, liquidation, or acceleration of one or more)—

18 ‘‘(1) securities contracts, as defined in section 

19 741(7); 

20 ‘‘(2) commodity contracts, as defined in section 

21 761(4); 

22 ‘‘(3) forward contracts; 

23 ‘‘(4) repurchase agreements; 

24 ‘‘(5) swap agreements; or 

25 ‘‘(6) master netting agreements, 
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1 shall not be stayed, avoided, or otherwise limited by oper2 ation of any provision of this title or by any order of a 

3 court or administrative agency in any proceeding under 

4 this title. 

5 ‘‘(b)(1) A party may exercise a contractual right de6 scribed in subsection (a) to terminate, liquidate, or accel7 erate only to the extent that such party could exercise such 

8 a right under section 555, 556, 559, or 560 for each indi9 vidual contract covered by the master netting agreement 

10 in issue. 

11 ‘‘(2) If a debtor is a commodity broker subject to sub12 chapter IV of chapter 7—

13 ‘‘(A) a party may not net or offset an obligation 

14 to the debtor arising under, or in connection with, 

15 a commodity contract traded on or subject to the 

16 rules of a contract market designated under the 

17 Commodity Exchange Act or a derivatives trans18 action execution facility registered under the Com19 modity Exchange Act against any claim arising 

20 under, or in connection with, other instruments, con21 tracts, or agreements listed in subsection (a) except 

22 to the extent that the party has positive net equity 

23 in the commodity accounts at the debtor, as cal24 culated under such subchapter; and 
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1 ‘‘(B) another commodity broker may not net or 

2 offset an obligation to the debtor arising under, or 

3 in connection with, a commodity contract entered 

4 into or held on behalf of a customer of the debtor 

5 and traded on or subject to the rules of a contract 

6 market designated under the Commodity Exchange 

7 Act or a derivatives transaction execution facility 

8 registered under the Commodity Exchange Act 

9 against any claim arising under, or in connection 

10 with, other instruments, contracts, or agreements 

11 listed in subsection (a). 

12 ‘‘(3) No provision of subparagraph (A) or (B) of 

13 paragraph (2) shall prohibit the offset of claims and obli14 gations that arise under—

15 ‘‘(A) a cross-margining agreement or similar 

16 arrangement that has been approved by the Com17 modity Futures Trading Commission or submitted 

18 to the Commodity Futures Trading Commission 

19 under paragraph (1) or (2) of section 5c(c) of the 

20 Commodity Exchange Act and has not been abro21 gated or rendered ineffective by the Commodity Fu22 tures Trading Commission; or 

23 ‘‘(B) any other netting agreement between a 

24 clearing organization (as defined in section 761) and 
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1 another entity that has been approved by the Com2 modity Futures Trading Commission. 

3 ‘‘(c) As used in this section, the term ‘contractual 

4 right’ includes a right set forth in a rule or bylaw of a 

5 derivatives clearing organization (as defined in the Com6 modity Exchange Act), a multilateral clearing organiza7 tion (as defined in the Federal Deposit Insurance Cor8 poration Improvement Act of 1991), a national securities 

9 exchange, a national securities association, a securities 

10 clearing agency, a contract market designated under the 

11 Commodity Exchange Act, a derivatives transaction execu12 tion facility registered under the Commodity Exchange 

13 Act, or a board of trade (as defined in the Commodity 

14 Exchange Act) or in a resolution of the governing board 

15 thereof, and a right, whether or not evidenced in writing, 

16 arising under common law, under law merchant, or by rea17 son of normal business practice. 

18 ‘‘(d) Any provisions of this title relating to securities 

19 contracts, commodity contracts, forward contracts, repur20 chase agreements, swap agreements, or master netting 

21 agreements shall apply in a case under chapter 15, so that 

22 enforcement of contractual provisions of such contracts 

23 and agreements in accordance with their terms will not 

24 be stayed or otherwise limited by operation of any provi25 sion of this title or by order of a court in any case under 
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1 this title, and to limit avoidance powers to the same extent 

2 as in a proceeding under chapter 7 or 11 of this title (such 

3 enforcement not to be limited based on the presence or 

4 absence of assets of the debtor in the United States).’’. 

5 (2) CONFORMING AMENDMENT.—The table of 

6 sections for chapter 5 of title 11, United States 

7 Code, is amended by inserting after the item relating 

8 to section 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a 

master netting agreement and across contracts; proceedings 

under chapter 15.’’.

9 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 

10 United States Code, is amended by inserting after section 

11 766 the following:

12 ‘‘§ 767. Commodity broker liquidation and forward 

13 contract merchants, commodity brokers, 

14 stockbrokers, financial institutions, fi15 nancial participants, securities clearing 

16 agencies, swap participants, repo partici17 pants, and master netting agreement par18 ticipants 

19 ‘‘Notwithstanding any other provision of this title, 

20 the exercise of rights by a forward contract merchant, 

21 commodity broker, stockbroker, financial institution, fi22 nancial participant, securities clearing agency, swap par23 ticipant, repo participant, or master netting agreement 

24 participant under this title shall not affect the priority of 
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1 any unsecured claim it may have after the exercise of such 

2 rights.’’. 

3 (m) STOCKBROKER LIQUIDATIONS.—Title 11, 

4 United States Code, is amended by inserting after section 

5 752 the following: 

6 ‘‘§ 753. Stockbroker liquidation and forward contract 

7 merchants, commodity brokers, stock8 brokers, financial institutions, financial 

9 participants, securities clearing agencies, 

10 swap participants, repo participants, and 

11 master netting agreement participants 

12 ‘‘Notwithstanding any other provision of this title, 

13 the exercise of rights by a forward contract merchant, 

14 commodity broker, stockbroker, financial institution, secu15 rities clearing agency, swap participant, repo participant, 

16 financial participant, or master netting agreement partici17 pant under this title shall not affect the priority of any 

18 unsecured claim it may have after the exercise of such 

19 rights.’’. 

20 (n) SETOFF.—Section 553 of title 11, United States 

21 Code, is amended—

22 (1) in subsection (a)(2)(B)(ii), by inserting be23 fore the semicolon the following: ‘‘(except for a 

24 setoff of a kind described in section 362(b)(6), 
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1 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 

2 560, or 561)’’; 

3 (2) in subsection (a)(3)(C), by inserting before 

4 the period the following: ‘‘(except for a setoff of a 

5 kind described in section 362(b)(6), 362(b)(7), 

6 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561 

7 of this title)’’; and 

8 (3) in subsection (b)(1), by striking 

9 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 

10 362(b)(27), 555, 556, 559, 560, 561,’’. 

11 (o) SECURITIES CONTRACTS, COMMODITY CON12 TRACTS, AND FORWARD CONTRACTS.—Title 11, United 

13 States Code, is amended—

14 (1) in section 362(b)(6), by striking ‘‘financial 

15 institutions,’’ each place such term appears and in16 serting ‘‘financial institution, financial participant,’’; 

17 (2) in sections 362(b)(7) and 546(f), by insert18 ing ‘‘or financial participant’’ after ‘‘repo partici19 pant’’ each place such term appears; 

20 (3) in section 546(e), by inserting ‘‘financial 

21 participant,’’ after ‘‘financial institution,’’; 

22 (4) in section 548(d)(2)(B), by inserting ‘‘fi23 nancial participant,’’ after ‘‘financial institution,’’; 

24 (5) in section 548(d)(2)(C), by inserting ‘‘or fi25 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 organiza12 tion (as defined in the Federal Deposit Insur13 ance Corporation Improvement Act of 1991), a 

14 national securities exchange, a national securi15 ties association, a securities clearing agency, a 

16 contract market designated under the Com17 modity Exchange Act, a derivatives transaction 

18 execution facility registered under the Com19 modity Exchange Act, or a board of trade (as 

20 defined in the Commodity Exchange Act), or in 

21 a resolution of the governing board thereof, and 

22 a right, whether or not in writing, arising under 

23 common law, under law merchant, or by reason 

24 of normal 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 

5 such 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.’’;
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1 and 

2 (B) by inserting after the item relating to 

3 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.’’.

4 SEC. 908. RECORDKEEPING REQUIREMENTS. 

5 Section 11(e)(8) of the Federal Deposit Insurance 

6 Act (12 U.S.C. 1821(e)(8)) is amended by adding at the 

7 end the following new subparagraph: 

8 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

9 The Corporation, in consultation with the ap10 propriate Federal banking agencies, may pre11 scribe regulations requiring more detailed rec12 ordkeeping by any insured depository institu13 tion with respect to qualified financial contracts 

14 (including market valuations) only if such in15 sured depository institution is in a troubled 

16 condition (as such term is defined by the Cor17 poration pursuant to section 32).’’. 

18 SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU19 TION REQUIREMENT. 

20 Section 13(e)(2) of the Federal Deposit Insurance 

21 Act (12 U.S.C. 1823(e)(2)) is amended to read as follows: 
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1 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

2 EXECUTION REQUIREMENT.—An agreement to pro3 vide for the lawful collateralization of—

4 ‘‘(A) deposits of, or other credit extension 

5 by, a Federal, State, or local governmental enti6 ty, or of any depositor referred to in section 

7 11(a)(2), including an agreement to provide col8 lateral in lieu of a surety bond; 

9 ‘‘(B) bankruptcy estate funds pursuant to 

10 section 345(b)(2) of title 11, United States 

11 Code; 

12 ‘‘(C) extensions of credit, including any 

13 overdraft, from a Federal reserve bank or Fed14 eral home loan bank; or 

15 ‘‘(D) one or more qualified financial con16 tracts, as defined in section 11(e)(8)(D),

17 shall not be deemed invalid pursuant to paragraph 

18 (1)(B) solely because such agreement was not exe19 cuted contemporaneously with the acquisition of the 

20 collateral or because of pledges, delivery, or substi21 tution of the collateral made in accordance with such 

22 agreement.’’. 

23 SEC. 910. DAMAGE MEASURE. 

24 (a) IN GENERAL.—Title 11, United States Code, is 

25 amended—
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1 (1) by inserting after section 561, as added by 

2 section 907, the following: 

3 ‘‘§ 562. Timing of damage measurement in connection 

4 with swap agreements, securities con5 tracts, forward contracts, commodity con6 tracts, repurchase agreements, and mas7 ter netting agreements 

8 ‘‘(a) If the trustee rejects a swap agreement, securi9 ties contract (as defined in section 741), forward contract, 

10 commodity contract (as defined in section 761), repur11 chase agreement, or master netting agreement pursuant 

12 to section 365(a), or if a forward contract merchant, 

13 stockbroker, financial institution, securities clearing agen14 cy, repo participant, financial participant, master netting 

15 agreement participant, or swap participant liquidates, ter16 minates, or accelerates such contract or agreement, dam17 ages shall be measured as of the earlier of—

18 ‘‘(1) the date of such rejection; or 

19 ‘‘(2) the date or dates of such liquidation, ter20 mination, or acceleration. 

21 ‘‘(b) If there are not any commercially reasonable de22 terminants of value as of any date referred to in para23 graph (1) or (2) of subsection (a), damages shall be meas24 ured as of the earliest subsequent date or dates on which 

25 there are commercially reasonable determinants of value. 
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1 ‘‘(c) For the purposes of subsection (b), if damages 

2 are not measured as of the date or dates of rejection, liq3 uidation, termination, or acceleration, and the forward 

4 contract merchant, stockbroker, financial institution, secu5 rities clearing agency, repo participant, financial partici6 pant, master netting agreement participant, or swap par7 ticipant or the trustee objects to the timing of the meas8 urement of damages—

9 ‘‘(1) the trustee, in the case of an objection by 

10 a forward contract merchant, stockbroker, financial 

11 institution, securities clearing agency, repo partici12 pant, financial participant, master netting agree13 ment participant, or swap participant; or 

14 ‘‘(2) the forward contract merchant, stock15 broker, financial institution, securities clearing agen16 cy, repo participant, financial participant, master 

17 netting agreement participant, or swap participant, 

18 in the case of an objection by the trustee, 

19 has the burden of proving that there were no commercially 

20 reasonable determinants of value as of such date or 

21 dates.’’; and 

22 (2) in the table of sections for chapter 5, by in23 serting after the item relating to section 561 (as 

24 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.’’.
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1 (b) CLAIMS ARISING FROM REJECTION.—Section 

2 502(g) of title 11, United States Code, is amended—

3 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 

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

5 ‘‘(2) A claim for damages calculated in accordance 

6 with section 562 of this title shall be allowed under sub7 section (a), (b), or (c), or disallowed under subsection (d) 

8 or (e), as if such claim had arisen before the date of the 

9 filing of the petition.’’. 

10 SEC. 911. SIPC STAY. 

11 Section 5(b)(2) of the Securities Investor Protection 

12 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 

13 at the end the following new subparagraph: 

14 ‘‘(C) EXCEPTION FROM STAY.—

15 ‘‘(i) Notwithstanding section 362 of 

16 title 11, United States Code, neither the 

17 filing of an application under subsection 

18 (a)(3) nor any order or decree obtained by 

19 SIPC from the court shall operate as a 

20 stay of any contractual rights of a creditor 

21 to liquidate, terminate, or accelerate a se22 curities contract, commodity contract, for23 ward contract, repurchase agreement, swap 

24 agreement, or master netting agreement, 

25 as those terms are defined in sections 101, 
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1 741, and 761 of title 11, United States 

2 Code, to offset or net termination values, 

3 payment amounts, or other transfer obliga4 tions arising under or in connection with 

5 one or more of such contracts or agree6 ments, or to foreclose on any cash collat7 eral pledged by the debtor, whether or not 

8 with respect to one or more of such con9 tracts or agreements. 

10 ‘‘(ii) Notwithstanding clause (i), such 

11 application, order, or decree may operate 

12 as a stay of the foreclosure on, or disposi13 tion of, securities collateral pledged by the 

14 debtor, whether or not with respect to one 

15 or more of such contracts or agreements, 

16 securities sold by the debtor under a repur17 chase agreement, or securities lent under a 

18 securities lending agreement. 

19 ‘‘(iii) As used in this subparagraph, 

20 the term ‘contractual right’ includes a 

21 right set forth in a rule or bylaw of a na22 tional securities exchange, a national secu23 rities association, or a securities clearing 

24 agency, a right set forth in a bylaw of a 

25 clearing organization or contract market or 
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1 in a resolution of the governing board 

2 thereof, and a right, whether or not in 

3 writing, arising under common law, under 

4 law merchant, or by reason of normal busi5 ness practice.’’.

6 TITLE X—PROTECTION OF FAM7 ILY FARMERS AND FAMILY 

8 FISHERMEN 

9 SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12. 

10 (a) REENACTMENT.—

11 (1) IN GENERAL.—Chapter 12 of title 11, 

12 United States Code, as reenacted by section 149 of 

13 division C of the Omnibus Consolidated and Emer14 gency Supplemental Appropriations Act, 1999 (Pub15 lic Law 105–277), is hereby reenacted, and as here 

16 reenacted is amended by this Act. 

17 (2) EFFECTIVE DATE.—Subsection (a) shall 

18 take effect on the date of the enactment of this Act. 

19 (b) CONFORMING AMENDMENT.—Section 302 of the 

20 Bankruptcy Judges, United States Trustees, and Family 

21 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is 

22 amended by striking subsection (f).
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1 SEC. 1002. DEBT LIMIT INCREASE. 

2 Section 104(b) of title 11, United States Code, as 

3 amended by section 226, is amended by inserting 

4 ‘‘101(18),’’ after ‘‘101(3),’’ each place it appears. 

5 SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL 

6 UNITS. 

7 (a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 

8 11, United States Code, is amended to read as follows: 

9 ‘‘(2) provide for the full payment, in deferred 

10 cash payments, of all claims entitled to priority 

11 under section 507, unless—

12 ‘‘(A) the claim is a claim owed to a govern13 mental unit that arises as a result of the sale, 

14 transfer, exchange, or other disposition of any 

15 farm asset used in the debtor’s farming oper16 ation, in which case the claim shall be treated 

17 as an unsecured claim that is not entitled to 

18 priority under section 507, but the debt shall be 

19 treated in such manner only if the debtor re20 ceives a discharge; or 

21 ‘‘(B) the holder of a particular claim 

22 agrees to a different treatment of that claim;’’. 

23 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) 

24 of title 11, United States Code, as so designated by section 

25 719, is amended by striking ‘‘a State or local govern26 mental unit’’ and inserting ‘‘any governmental unit’’. 
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1 (c) EFFECTIVE DATE; APPLICATION OF AMEND2 MENTS.—This section and the amendments made by this 

3 section shall take effect on the date of the enactment of 

4 this Act and shall not apply with respect to cases com5 menced under title 11 of the United States Code before 

6 such date.

7 SEC. 1004. DEFINITION OF FAMILY FARMER. 

8 Section 101(18) of title 11, United States Code, is 

9 amended—

10 (1) in subparagraph (A)—

11 (A) by striking ‘‘$1,500,000’’ and inserting 

12 ‘‘$3,237,000’’; and 

13 (B) by striking ‘‘80’’ and inserting ‘‘50’’; 

14 and 

15 (2) in subparagraph (B)(ii)—

16 (A) by striking ‘‘$1,500,000’’ and inserting 

17 ‘‘$3,237,000’’; and 

18 (B) by striking ‘‘80’’ and inserting ‘‘50’’.

19 SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY 

20 FARMER AND SPOUSE RECEIVE OVER 50 PER21 CENT OF INCOME FROM FARMING OPER22 ATION IN YEAR PRIOR TO BANKRUPTCY. 

23 Section 101(18)(A) of title 11, United States Code, 

24 is amended by striking ‘‘for the taxable year preceding the 

25 taxable year’’ and inserting the following: 
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1 ‘‘for—

2 ‘‘(i) the taxable year preceding; or 

3 ‘‘(ii) each of the 2d and 3d taxable years 

4 preceding; 

5 the taxable year’’.

6 SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 

7 DISPOSABLE INCOME. 

8 (a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of 

9 title 11, United States Code, is amended—

10 (1) in subparagraph (A) by striking ‘‘or’’ at the 

11 end; 

12 (2) in subparagraph (B) by striking the period 

13 at the end and inserting ‘‘; or’’; and 

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

15 ‘‘(C) the value of the property to be distributed 

16 under the plan in the 3-year period, or such longer 

17 period as the court may approve under section 

18 1222(c), beginning on the date that the first dis19 tribution is due under the plan is not less than the 

20 debtor’s projected disposable income for such pe21 riod.’’. 

22 (b) MODIFICATION OF PLAN.—Section 1229 of title 

23 11, United States Code, is amended by adding at the end 

24 the following: 

25 ‘‘(d) A plan may not be modified under this section—
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1 ‘‘(1) to increase the amount of any payment 

2 due before the plan as modified becomes the plan; 

3 ‘‘(2) by anyone except the debtor, based on an 

4 increase in the debtor’s disposable income, to in5 crease the amount of payments to unsecured credi6 tors required for a particular month so that the ag7 gregate of such payments exceeds the debtor’s dis8 posable income for such month; or 

9 ‘‘(3) in the last year of the plan by anyone ex10 cept the debtor, to require payments that would 

11 leave the debtor with insufficient funds to carry on 

12 the farming operation after the plan is completed.’’.

13 SEC. 1007. FAMILY FISHERMEN. 

14 (a) DEFINITIONS.—Section 101 of title 11, United 

15 States Code, is amended—

16 (1) by inserting after paragraph (7) the fol17 lowing: 

18 ‘‘(7A) ‘commercial fishing operation’ means—

19 ‘‘(A) the catching or harvesting of fish, 

20 shrimp, lobsters, urchins, seaweed, shellfish, or 

21 other aquatic species or products of such spe22 cies; or 

23 ‘‘(B) for purposes of section 109 and chap24 ter 12, aquaculture activities consisting of rais-
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1 ing for market any species or product described 

2 in subparagraph (A); 

3 ‘‘(7B) ‘commercial fishing vessel’ means a ves4 sel used by a family fisherman to carry out a com5 mercial fishing operation;’’; and 

6 (2) by inserting after paragraph (19) the fol7 lowing: 

8 ‘‘(19A) ‘family fisherman’ means—

9 ‘‘(A) an individual or individual and spouse 

10 engaged in a commercial fishing operation—

11 ‘‘(i) whose aggregate debts do not ex12 ceed $1,500,000 and not less than 80 per13 cent of whose aggregate noncontingent, liq14 uidated debts (excluding a debt for the 

15 principal residence of such individual or 

16 such individual and spouse, unless such 

17 debt arises out of a commercial fishing op18 eration), on the date the case is filed, arise 

19 out of a commercial fishing operation 

20 owned or operated by such individual or 

21 such individual and spouse; and 

22 ‘‘(ii) who receive from such commer23 cial fishing operation more than 50 percent 

24 of such individual’s or such individual’s 

25 and spouse’s gross income for the taxable 
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1 year preceding the taxable year in which 

2 the case concerning such individual or such 

3 individual and spouse was filed; or 

4 ‘‘(B) a corporation or partnership—

5 ‘‘(i) in which more than 50 percent of 

6 the outstanding stock or equity is held 

7 by—

8 ‘‘(I) 1 family that conducts the 

9 commercial fishing operation; or 

10 ‘‘(II) 1 family and the relatives 

11 of the members of such family, and 

12 such family or such relatives conduct 

13 the commercial fishing operation; and 

14 ‘‘(ii)(I) more than 80 percent of the 

15 value of its assets consists of assets related 

16 to the commercial fishing operation; 

17 ‘‘(II) its aggregate debts do not ex18 ceed $1,500,000 and not less than 80 per19 cent of its aggregate noncontingent, liq20 uidated debts (excluding a debt for 1 

21 dwelling which is owned by such corpora22 tion or partnership and which a share23 holder or partner maintains as a principal 

24 residence, unless such debt arises out of a 

25 commercial fishing operation), on the date 
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1 the case is filed, arise out of a commercial 

2 fishing operation owned or operated by 

3 such corporation or such partnership; and 

4 ‘‘(III) if such corporation issues stock, 

5 such stock is not publicly traded; 

6 ‘‘(19B) ‘family fisherman with regular annual 

7 income’ means a family fisherman whose annual in8 come is sufficiently stable and regular to enable such 

9 family fisherman to make payments under a plan 

10 under chapter 12 of this title;’’. 

11 (b) WHO MAY BE A DEBTOR.—Section 109(f) of title 

12 11, United States Code, is amended by inserting ‘‘or fam13 ily fisherman’’ after ‘‘family farmer’’. 

14 (c) CHAPTER 12.—Chapter 12 of title 11, United 

15 States Code, is amended—

16 (1) in the chapter heading, by inserting ‘‘OR 

17 FISHERMAN’’ after ‘‘FAMILY FARMER’’; 

18 (2) in section 1203, by inserting ‘‘or commer19 cial fishing operation’’ after ‘‘farm’’; and 

20 (3) in section 1206, by striking ‘‘if the property 

21 is farmland or farm equipment’’ and inserting ‘‘if 

22 the property is farmland, farm equipment, or prop23 erty used to carry out a commercial fishing oper24 ation (including a commercial fishing vessel)’’. 
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1 (d) CLERICAL AMENDMENT.—In the table of chap2 ters for title 11, United States Code, the item relating to 

3 chapter 12, is amended to read as follows:

‘‘12. Adjustments of Debts of a Family Farmer or Family 

Fisherman with Regular Annual Income ..... 1201’’.

4 (e) Applicability.—Nothing in this section shall 

5 change, affect, or amend the Fishery Conservation and 

6 Management Act of 1976 (16 U.S.C. 1801, et seq.). 

7 TITLE XI—HEALTH CARE AND 

8 EMPLOYEE BENEFITS 

9 SEC. 1101. DEFINITIONS. 

10 (a) HEALTH CARE BUSINESS DEFINED.—Section 

11 101 of title 11, United States Code, as amended by section 

12 306, is amended—

13 (1) by redesignating paragraph (27A) as para14 graph (27B); and 

15 (2) by inserting after paragraph (27) the fol16 lowing: 

17 ‘‘(27A) ‘health care business’—

18 ‘‘(A) means any public or private entity 

19 (without regard to whether that entity is orga20 nized for profit or not for profit) that is pri21 marily engaged in offering to the general public 

22 facilities and services for—

23 ‘‘(i) the diagnosis or treatment of in24 jury, deformity, or disease; and 
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1 ‘‘(ii) surgical, drug treatment, psy2 chiatric, or obstetric care; and 

3 ‘‘(B) includes—

4 ‘‘(i) any—

5 ‘‘(I) general or specialized hos6 pital; 

7 ‘‘(II) ancillary ambulatory, emer8 gency, or surgical treatment facility; 

9 ‘‘(III) hospice; 

10 ‘‘(IV) home health agency; and 

11 ‘‘(V) other health care institution 

12 that is similar to an entity referred to 

13 in subclause (I), (II), (III), or (IV); 

14 and 

15 ‘‘(ii) any long-term care facility, in16 cluding any—

17 ‘‘(I) skilled nursing facility; 

18 ‘‘(II) intermediate care facility; 

19 ‘‘(III) assisted living facility; 

20 ‘‘(IV) home for the aged; 

21 ‘‘(V) domiciliary care facility; and 

22 ‘‘(VI) health care institution that 

23 is related to a facility referred to in 

24 subclause (I), (II), (III), (IV), or (V), 

25 if that institution is primarily engaged 
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1 in offering room, board, laundry, or 

2 personal assistance with activities of 

3 daily living and incidentals to activi4 ties of daily living;’’. 

5 (b) PATIENT AND PATIENT RECORDS DEFINED.—

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

7 by inserting after paragraph (40) the following: 

8 ‘‘(40A) ‘patient’ means any person who obtains 

9 or receives services from a health care business; 

10 ‘‘(40B) ‘patient records’ means any written doc11 ument relating to a patient or a record recorded in 

12 a magnetic, optical, or other form of electronic me13 dium;’’. 

14 (c) RULE OF CONSTRUCTION.—The amendments 

15 made by subsection (a) of this section shall not affect the 

16 interpretation of section 109(b) of title 11, United States 

17 Code. 

18 SEC. 1102. DISPOSAL OF PATIENT RECORDS. 

19 (a) IN GENERAL.—Subchapter III of chapter 3 of 

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

21 end the following: 

22 ‘‘§ 351. Disposal of patient records 

23 ‘‘If a health care business commences a case under 

24 chapter 7, 9, or 11, and the trustee does not have a suffi25 cient amount of funds to pay for the storage of patient 
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1 records in the manner required under applicable Federal 

2 or State law, the following requirements shall apply: 

3 ‘‘(1) The trustee shall—

4 ‘‘(A) promptly publish notice, in 1 or more 

5 appropriate newspapers, that if patient records 

6 are not claimed by the patient or an insurance 

7 provider (if applicable law permits the insur8 ance provider to make that claim) by the date 

9 that is 365 days after the date of that notifica10 tion, the trustee will destroy the patient 

11 records; and 

12 ‘‘(B) during the first 180 days of the 365-

13 day period described in subparagraph (A), 

14 promptly attempt to notify directly each patient 

15 that is the subject of the patient records and 

16 appropriate insurance carrier concerning the 

17 patient records by mailing to the most recent 

18 known address of that patient, or a family 

19 member or contact person for that patient, and 

20 to the appropriate insurance carrier an appro21 priate notice regarding the claiming or dis22 posing of patient records. 

23 ‘‘(2) If, after providing the notification under 

24 paragraph (1), patient records are not claimed dur25 ing the 365-day period described under that para-
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1 graph, the trustee shall mail, by certified mail, at 

2 the end of such 365-day period a written request to 

3 each appropriate Federal agency to request permis4 sion from that agency to deposit the patient records 

5 with that agency, except that no Federal agency is 

6 required to accept patient records under this para7 graph. 

8 ‘‘(3) If, following the 365-day period described 

9 in paragraph (2) and after providing the notification 

10 under paragraph (1), patient records are not claimed 

11 by a patient or insurance provider, or request is not 

12 granted by a Federal agency to deposit such records 

13 with that agency, the trustee shall destroy those 

14 records by—

15 ‘‘(A) if the records are written, shredding 

16 or burning the records; or 

17 ‘‘(B) if the records are magnetic, optical, 

18 or other electronic records, by otherwise de19 stroying those records so that those records 

20 cannot be retrieved.’’. 

21 (b) CLERICAL AMENDMENT.—The table of sections 

22 for subchapter III of chapter 3 of title 11, United States 

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

‘‘351. Disposal of patient records.’’.
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1 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS 

2 OF CLOSING A HEALTH CARE BUSINESS AND 

3 OTHER ADMINISTRATIVE EXPENSES. 

4 Section 503(b) of title 11, United States Code, as 

5 amended by section 445, is amended by adding at the end 

6 the following: 

7 ‘‘(8) the actual, necessary costs and expenses of 

8 closing a health care business incurred by a trustee 

9 or by a Federal agency (as defined in section 551(1) 

10 of title 5) or a department or agency of a State or 

11 political subdivision thereof, including any cost or 

12 expense incurred—

13 ‘‘(A) in disposing of patient records in ac14 cordance with section 351; or 

15 ‘‘(B) in connection with transferring pa16 tients from the health care business that is in 

17 the process of being closed to another health 

18 care business; and’’.

19 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA20 TIENT ADVOCATE. 

21 (a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.—

22 (1) APPOINTMENT OF OMBUDSMAN.—Title 11, 

23 United States Code, as amended by section 232, is 

24 amended by inserting after section 332 the fol25 lowing: 
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1 ‘‘§ 333. Appointment of patient care ombudsman 

2 ‘‘(a)(1) If the debtor in a case under chapter 7, 9, 

3 or 11 is a health care business, the court shall order, not 

4 later than 30 days after the commencement of the case, 

5 the appointment of an ombudsman to monitor the quality 

6 of patient care and to represent the interests of the pa7 tients of the health care business unless the court finds 

8 that the appointment of such ombudsman is not necessary 

9 for the protection of patients under the specific facts of 

10 the case. 

11 ‘‘(2)(A) If the court orders the appointment of an 

12 ombudsman under paragraph (1), the United States trust13 ee shall appoint 1 disinterested person (other than the 

14 United States trustee) to serve as such ombudsman. 

15 ‘‘(B) If the debtor is a health care business that pro16 vides long-term care, then the United States trustee may 

17 appoint the State Long-Term Care Ombudsman appointed 

18 under the Older Americans Act of 1965 for the State in 

19 which the case is pending to serve as the ombudsman re20 quired by paragraph (1). 

21 ‘‘(C) If the United States trustee does not appoint 

22 a State Long-Term Care Ombudsman under subpara23 graph (B), the court shall notify the State Long-Term 

24 Care Ombudsman appointed under the Older Americans 

25 Act of 1965 for the State in which the case is pending, 
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1 of the name and address of the person who is appointed 

2 under subparagraph (A). 

3 ‘‘(b) An ombudsman appointed under subsection (a) 

4 shall—

5 ‘‘(1) monitor the quality of patient care pro6 vided to patients of the debtor, to the extent nec7 essary under the circumstances, including inter8 viewing patients and physicians; 

9 ‘‘(2) not later than 60 days after the date of 

10 appointment, and not less frequently than at 60-day 

11 intervals thereafter, report to the court, at a hearing 

12 or in writing, regarding the quality of patient care 

13 provided to patients of the debtor; and 

14 ‘‘(3) if such ombudsman determines that the 

15 quality of patient care provided to patients of the 

16 debtor is declining significantly or is otherwise being 

17 materially compromised, file with the court a motion 

18 or a written report, with notice to the parties in in19 terest immediately upon making such determination. 

20 ‘‘(c)(1) An ombudsman appointed under subsection 

21 (a) shall maintain any information obtained by such om22 budsman under this section that relates to patients (in23 cluding information relating to patient records) as con24 fidential information. Such ombudsman may not review 

25 confidential patient records unless the court approves such 
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1 review in advance and imposes restrictions on such om2 budsman to protect the confidentiality of such records. 

3 ‘‘(2) An ombudsman appointed under subsection 

4 (a)(2)(B) shall have access to patient records consistent 

5 with authority of such ombudsman under the Older Amer6 icans Act of 1965 and under non-Federal laws governing 

7 the State Long-Term Care Ombudsman program.’’. 

8 (2) CLERICAL AMENDMENT.—The table of sec9 tions for subchapter II of chapter 3 of title 11, 

10 United States Code, as amended by section 232, is 

11 amended by adding at the end the following:

‘‘333. Appointment of ombudsman.’’.

12 (b) COMPENSATION OF OMBUDSMAN.—Section 

13 330(a)(1) of title 11, United States Code, is amended—

14 (1) in the matter preceding subparagraph (A), 

15 by inserting ‘‘an ombudsman appointed under sec16 tion 333, or’’ before ‘‘a professional person’’; and 

17 (2) in subparagraph (A), by inserting ‘‘ombuds18 man,’’ before ‘‘professional person’’. 

19 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO 

20 TRANSFER PATIENTS. 

21 (a) IN GENERAL.—Section 704(a) of title 11, United 

22 States Code, as amended by sections 102, 219, and 446, 

23 is amended by adding at the end the following: 
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1 ‘‘(12) use all reasonable and best efforts to 

2 transfer patients from a health care business that is 

3 in the process of being closed to an appropriate 

4 health care business that—

5 ‘‘(A) is in the vicinity of the health care 

6 business that is closing; 

7 ‘‘(B) provides the patient with services 

8 that are substantially similar to those provided 

9 by the health care business that is in the proc10 ess of being closed; and 

11 ‘‘(C) maintains a reasonable quality of 

12 care.’’. 

13 (b) CONFORMING AMENDMENT.—Section 1106(a)(1) 

14 of title 11, United States Code, as amended by section 

15 446, is amended by striking ‘‘and (11)’’ and inserting 

16 ‘‘(11), and (12)’’. 

17 SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION 

18 NOT SUBJECT TO AUTOMATIC STAY. 

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

20 amended by inserting after paragraph (27), as amended 

21 by sections 224, 303, 311, 401, 718, and 907, the fol22 lowing: 

23 ‘‘(28) under subsection (a), of the exclusion by 

24 the Secretary of Health and Human Services of the 

25 debtor from participation in the medicare program 
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1 or any other Federal health care program (as de2 fined in section 1128B(f) of the Social Security Act 

3 pursuant to title XI of such Act or title XVIII of 

4 such Act.’’. 

5 TITLE XII—TECHNICAL 

6 AMENDMENTS 

7 SEC. 1201. DEFINITIONS. 

8 Section 101 of title 11, United States Code, as here9 inbefore amended by this Act, is amended—

10 (1) by striking ‘‘In this title—’’ and inserting 

11 ‘‘In this title the following definitions shall apply:’’; 

12 (2) in each paragraph, by inserting ‘‘The term’’ 

13 after the paragraph designation; 

14 (3) in paragraph (35)(B), by striking ‘‘para15 graphs (21B) and (33)(A)’’ and inserting ‘‘para16 graphs (23) and (35)’’; 

17 (4) in each of paragraphs (35A), (38), and 

18 (54A), by striking ‘‘; and’’ at the end and inserting 

19 a period; 

20 (5) in paragraph (51B)—

21 (A) by inserting ‘‘who is not a family farm22 er’’ after ‘‘debtor’’ the first place it appears; 

23 and 
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1 (B) by striking ‘‘thereto having aggregate’’ 

2 and all that follows through the end of the 

3 paragraph and inserting a semicolon; 

4 (6) by striking paragraph (54) and inserting 

5 the following: 

6 ‘‘(54) The term ‘transfer’ means—

7 ‘‘(A) the creation of a lien; 

8 ‘‘(B) the retention of title as a security in9 terest; 

10 ‘‘(C) the foreclosure of a debtor’s equity of 

11 redemption; or 

12 ‘‘(D) each mode, direct or indirect, abso13 lute or conditional, voluntary or involuntary, of 

14 disposing of or parting with—

15 ‘‘(i) property; or 

16 ‘‘(ii) an interest in property;’’; 

17 (7) by indenting the left margin of paragraph 

18 (54A) 2 ems to the right; and 

19 (8) in each of paragraphs (1) through (35), in 

20 each of paragraphs (36), (37), (38A), (38B) and 

21 (39A), and in each of paragraphs (40) through (55), 

22 by striking the semicolon at the end and inserting a 

23 period. 
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1 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS. 

2 Section 104 of title 11, United States Code, is 

3 amended by inserting ‘‘522(f)(3),’’ after ‘‘522(d),’’ each 

4 place it appears. 

5 SEC. 1203. EXTENSION OF TIME. 

6 Section 108(c)(2) of title 11, United States Code, is 

7 amended by striking ‘‘922’’ and all that follows through 

8 ‘‘or’’, and inserting ‘‘922, 1201, or’’. 

9 SEC. 1204. TECHNICAL AMENDMENTS. 

10 Title 11, United States Code, is amended—

11 (1) in section 109(b)(2), by striking ‘‘subsection 

12 (c) or (d) of’’; and 

13 (2) in section 552(b)(1), by striking ‘‘product’’ 

14 each place it appears and inserting ‘‘products’’. 

15 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 

16 FRAUDULENTLY PREPARE BANKRUPTCY PE17 TITIONS. 

18 Section 110(j)(4) of title 11, United States Code, as 

19 so redesignated by section 221, is amended by striking 

20 ‘‘attorney’s’’ and inserting ‘‘attorneys’ ’’. 

21 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES22 SIONAL PERSONS. 

23 Section 328(a) of title 11, United States Code, is 

24 amended by inserting ‘‘on a fixed or percentage fee basis,’’ 

25 after ‘‘hourly basis,’’. 
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1 SEC. 1207. EFFECT OF CONVERSION. 

2 Section 348(f)(2) of title 11, United States Code, is 

3 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the 

4 first place it appears. 

5 SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES. 

6 Section 503(b)(4) of title 11, United States Code, is 

7 amended by inserting ‘‘subparagraph (A), (B), (C), (D), 

8 or (E) of’’ before ‘‘paragraph (3)’’. 

9 SEC. 1209. EXCEPTIONS TO DISCHARGE. 

10 Section 523, and of title 11, United States Code, as 

11 amended by sections 215 and 314, is amended—

12 (1) by transferring paragraph (15), as added by 

13 section 304(e) of Public Law 103–394 (108 Stat. 

14 4133), so as to insert such paragraph after sub15 section (a)(14A); 

16 (2) in subsection (a)(9), by striking ‘‘motor ve17 hicle’’ and inserting ‘‘motor vehicle, vessel, or air18 craft’’; and 

19 (3) in subsection (e), by striking ‘‘a insured’’ 

20 and inserting ‘‘an insured’’. 

21 SEC. 1210. EFFECT OF DISCHARGE. 

22 Section 524(a)(3) of title 11, United States Code, is 

23 amended by striking ‘‘section 523’’ and all that follows 

24 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1), 

25 or 1328(a)(1), or that’’. 
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1 SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT2 MENT. 

3 Section 525(c) of title 11, United States Code, is 

4 amended—

5 (1) in paragraph (1), by inserting ‘‘student’’ be6 fore ‘‘grant’’ the second place it appears; and 

7 (2) in paragraph (2), by striking ‘‘the program 

8 operated under part B, D, or E of’’ and inserting 

9 ‘‘any program operated under’’. 

10 SEC. 1212. PROPERTY OF THE ESTATE. 

11 Section 541(b)(4)(B)(ii) of title 11, United States 

12 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’. 

13 SEC. 1213. PREFERENCES. 

14 (a) IN GENERAL.—Section 547 of title 11, United 

15 States Code, as amended by section 201, is amended—

16 (1) in subsection (b), by striking ‘‘subsection 

17 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and 

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

19 ‘‘(i) If the trustee avoids under subsection (b) a 

20 transfer made between 90 days and 1 year before the date 

21 of the filing of the petition, by the debtor to an entity 

22 that is not an insider for the benefit of a creditor that 

23 is an insider, such transfer shall be considered to be avoid24 ed under this section only with respect to the creditor that 

25 is an insider.’’. 
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1 (b) APPLICABILITY.—The amendments made by this 

2 section shall apply to any case that is pending or com3 menced on or after the date of enactment of this Act. 

4 SEC. 1214. POSTPETITION TRANSACTIONS. 

5 Section 549(c) of title 11, United States Code, is 

6 amended—

7 (1) by inserting ‘‘an interest in’’ after ‘‘transfer 

8 of’’ each place it appears; 

9 (2) by striking ‘‘such property’’ and inserting 

10 ‘‘such real property’’; and 

11 (3) by striking ‘‘the interest’’ and inserting 

12 ‘‘such interest’’. 

13 SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE. 

14 Section 726(b) of title 11, United States Code, is 

15 amended by striking ‘‘1009,’’. 

16 SEC. 1216. GENERAL PROVISIONS. 

17 Section 901(a) of title 11, United States Code, is 

18 amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’. 

19 SEC. 1217. ABANDONMENT OF RAILROAD LINE. 

20 Section 1170(e)(1) of title 11, United States Code, 

21 is amended by striking ‘‘section 11347’’ and inserting 

22 ‘‘section 11326(a)’’. 
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1 SEC. 1218. CONTENTS OF PLAN. 

2 Section 1172(c)(1) of title 11, United States Code, 

3 is amended by striking ‘‘section 11347’’ and inserting 

4 ‘‘section 11326(a)’’. 

5 SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS. 

6 Section 1334(d) of title 28, United States Code, is 

7 amended—

8 (1) by striking ‘‘made under this subsection’’ 

9 and inserting ‘‘made under subsection (c)’’; and 

10 (2) by striking ‘‘This subsection’’ and inserting 

11 ‘‘Subsection (c) and this subsection’’. 

12 SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR 

13 RULE. 

14 Section 156(a) of title 18, United States Code, is 

15 amended—

16 (1) in the first undesignated paragraph—

17 (A) by inserting ‘‘(1) the term’’ before 

18 ‘‘ ‘bankruptcy’’; and 

19 (B) by striking the period at the end and 

20 inserting ‘‘; and’’; and 

21 (2) in the second undesignated paragraph—

22 (A) by inserting ‘‘(2) the term’’ before 

23 ‘‘ ‘document’’; and 

24 (B) by striking ‘‘this title’’ and inserting 

25 ‘‘title 11’’. 
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1 SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 

2 CORPORATIONS. 

3 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d) 

4 of title 11, United States Code, is amended by striking 

5 ‘‘only’’ and all that follows through the end of the sub6 section and inserting ‘‘only—

7 ‘‘(1) in accordance with applicable nonbank8 ruptcy law that governs the transfer of property by 

9 a corporation or trust that is not a moneyed, busi10 ness, or commercial corporation or trust; and 

11 ‘‘(2) to the extent not inconsistent with any re12 lief granted under subsection (c), (d), (e), or (f) of 

13 section 362.’’. 

14 (b) CONFIRMATION OF PLAN FOR REORGANIZA15 TION.—Section 1129(a) of title 11, United States Code, 

16 as amended by sections 213 and 321, is amended by add17 ing at the end the following: 

18 ‘‘(17) All transfers of property of the plan shall 

19 be made in accordance with any applicable provi20 sions of nonbankruptcy law that govern the transfer 

21 of property by a corporation or trust that is not a 

22 moneyed, business, or commercial corporation or 

23 trust.’’. 

24 (c) TRANSFER OF PROPERTY.—Section 541 of title 

25 11, United States Code, as amended by section 225, is 

26 amended by adding at the end the following: 
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1 ‘‘(f) Notwithstanding any other provision of this title, 

2 property that is held by a debtor that is a corporation de3 scribed in section 501(c)(3) of the Internal Revenue Code 

4 of 1986 and exempt from tax under section 501(a) of such 

5 Code may be transferred to an entity that is not such a 

6 corporation, but only under the same conditions as would 

7 apply if the debtor had not filed a case under this title.’’. 

8 (d) APPLICABILITY.—The amendments made by this 

9 section shall apply to a case pending under title 11, United 

10 States Code, on the date of enactment of this Act, or filed 

11 under that title on or after that date of enactment, except 

12 that the court shall not confirm a plan under chapter 11 

13 of title 11, United States Code, without considering 

14 whether this section would substantially affect the rights 

15 of a party in interest who first acquired rights with respect 

16 to the debtor after the date of the petition. The parties 

17 who may appear and be heard in a proceeding under this 

18 section include the attorney general of the State in which 

19 the debtor is incorporated, was formed, or does business. 

20 (e) RULE OF CONSTRUCTION.—Nothing in this sec21 tion shall be construed to require the court in which a 

22 case under chapter 11 of title 11, United States Code, is 

23 pending to remand or refer any proceeding, issue, or con24 troversy to any other court or to require the approval of 

25 any other court for the transfer of property. 
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1 SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SE2 CURITY INTERESTS. 

3 Section 547(c)(3)(B) of title 11, United States Code, 

4 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

5 SEC. 1223. BANKRUPTCY JUDGESHIPS. 

6 (a) SHORT TITLE.—This section may be cited as the 

7 ‘‘Bankruptcy Judgeship Act of 2003’’. 

8 (b) TEMPORARY JUDGESHIPS.—

9 (1) APPOINTMENTS.—The following bankruptcy 

10 judges shall be appointed in the manner prescribed 

11 in section 152(a)(1) of title 28, United States Code, 

12 for the appointment of bankruptcy judges provided 

13 for in section 152(a)(2) of such title: 

14 (A) One additional bankruptcy judge for 

15 the eastern district of California. 

16 (B) Three additional bankruptcy judges for 

17 the central district of California. 

18 (C) Four additional bankruptcy judges for 

19 the district of Delaware. 

20 (D) Two additional bankruptcy judges for 

21 the southern district of Florida. 

22 (E) One additional bankruptcy judge for 

23 the southern district of Georgia. 

24 (F) Three additional bankruptcy judges for 

25 the district of Maryland. 
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1 (G) One additional bankruptcy judge for 

2 the eastern district of Michigan. 

3 (H) One additional bankruptcy judge for 

4 the southern district of Mississippi. 

5 (I) One additional bankruptcy judge for 

6 the district of New Jersey. 

7 (J) One additional bankruptcy judge for 

8 the eastern district of New York. 

9 (K) One additional bankruptcy judge for 

10 the northern district of New York. 

11 (L) One additional bankruptcy judge for 

12 the southern district of New York. 

13 (M) One additional bankruptcy judge for 

14 the eastern district of North Carolina. 

15 (N) One additional bankruptcy judge for 

16 the eastern district of Pennsylvania. 

17 (O) One additional bankruptcy judge for 

18 the middle district of Pennsylvania. 

19 (P) One additional bankruptcy judge for 

20 the district of Puerto Rico. 

21 (Q) One additional bankruptcy judge for 

22 the western district of Tennessee. 

23 (R) One additional bankruptcy judge for 

24 the eastern district of Virginia. 
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1 (S) One additional bankruptcy judge for 

2 the district of South Carolina. 

3 (T) One additional bankruptcy judge for 

4 the district of Nevada. 

5 (2) VACANCIES.—

6 (A) DISTRICTS WITH SINGLE APPOINT7 MENTS.—Except as provided in subparagraphs 

8 (B), (C), (D), and (E), the first vacancy occur9 ring in the office of bankruptcy judge in each 

10 of the judicial districts set forth in paragraph 

11 (1)—

12 (i) occurring 5 years or more after the 

13 appointment date of the bankruptcy judge 

14 appointed under paragraph (1) to such of15 fice; and 

16 (ii) resulting from the death, retire17 ment, resignation, or removal of a bank18 ruptcy judge; 

19 shall not be filled. 

20 (B) CENTRAL DISTRICT OF CALIFORNIA.—

21 The 1st, 2d, and 3d vacancies in the office of 

22 bankruptcy judge in the central district of Cali23 fornia—

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)(B); and 

3 (ii) resulting from the death, retire4 ment, resignation, or removal of a bank5 ruptcy judge; 

6 shall not be filled. 

7 (C) DISTRICT OF DELAWARE.—The 1st, 

8 2d, 3d, and 4th vacancies in the office of bank9 ruptcy judge in the district of Delaware—

10 (i) occurring 5 years or more after the 

11 respective 1st, 2d, 3d, and 4th appoint12 ment dates of the bankruptcy judges ap13 pointed under paragraph (1)(F); and 

14 (ii) resulting from the death, retire15 ment, resignation, or removal of a bank16 ruptcy judge; 

17 shall not be filled. 

18 (D) SOUTHERN DISTRICT OF FLORIDA.—

19 The 1st and 2d vacancies in the office of bank20 ruptcy judge in the southern district of Flor21 ida—

22 (i) occurring 5 years or more after the 

23 respective 1st and 2d appointment dates of 

24 the bankruptcy judges appointed under 

25 paragraph (1)(D); and 
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1 (ii) resulting from the death, retire2 ment, resignation, or removal of a bank3 ruptcy judge; 

4 shall not be filled. 

5 (E) DISTRICT OF MARYLAND.—The 1st, 

6 2d, and 3d vacancies in the office of bankruptcy 

7 judge in the district of Maryland—

8 (i) occurring 5 years or more after the 

9 respective 1st, 2d, and 3d appointment 

10 dates of the bankruptcy judges appointed 

11 under paragraph (1)(F); and 

12 (ii) resulting from the death, retire13 ment, resignation, or removal of a bank14 ruptcy judge; 

15 shall not be filled. 

16 (c) EXTENSIONS.—

17 (1) IN GENERAL.—The temporary office of 

18 bankruptcy judges authorized for the northern dis19 trict of Alabama, the district of Delaware, the dis20 trict of Puerto Rico, and the eastern district of Ten21 nessee under paragraphs (1), (3), (7), and (9) of 

22 section 3(a) of the Bankruptcy Judgeship Act of 

23 1992 (28 U.S.C. 152 note) are extended until the 

24 first vacancy occurring in the office of a bankruptcy 

25 judge in the applicable district resulting from the 
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1 death, retirement, resignation, or removal of a bank2 ruptcy judge and occurring 5 years after the date of 

3 the enactment of this Act. 

4 (2) APPLICABILITY OF OTHER PROVISIONS.—

5 All other provisions of section 3 of the Bankruptcy 

6 Judgeship Act of 1992 (28 U.S.C. 152 note) remain 

7 applicable to the temporary office of bankrupcy 

8 judges referred to in this subsection. 

9 (d) TECHNICAL AMENDMENTS.—Section 152(a) of 

10 title 28, United States Code, is amended—

11 (1) in paragraph (1), by striking the first sen12 tence and inserting the following: ‘‘Each bankruptcy 

13 judge to be appointed for a judicial district, as pro14 vided in paragraph (2), shall be appointed by the 

15 court of appeals of the United States for the circuit 

16 in which such district is located.’’; and 

17 (2) in paragraph (2)—

18 (A) in the item relating to the middle dis19 trict of Georgia, by striking ‘‘2’’ and inserting 

20 ‘‘3’’; and 

21 (B) in the collective item relating to the 

22 middle and southern districts of Georgia, by 

23 striking ‘‘Middle and Southern . . . . . . 1’’. 
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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall take effect on the date of the enactment 

3 of this Act. 

4 SEC. 1224. COMPENSATING TRUSTEES. 

5 Section 1326 of title 11, United States Code, is 

6 amended—

7 (1) in subsection (b)—

8 (A) in paragraph (1), by striking ‘‘and’’; 

9 (B) in paragraph (2), by striking the pe10 riod at the end and inserting ‘‘; and’’; and 

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

12 ‘‘(3) if a chapter 7 trustee has been allowed 

13 compensation due to the conversion or dismissal of 

14 the debtor’s prior case pursuant to section 707(b), 

15 and some portion of that compensation remains un16 paid in a case converted to this chapter or in the 

17 case dismissed under section 707(b) and refiled 

18 under this chapter, the amount of any such unpaid 

19 compensation, which shall be paid monthly—

20 ‘‘(A) by prorating such amount over the 

21 remaining duration of the plan; and 

22 ‘‘(B) by monthly payments not to exceed 

23 the greater of—

24 ‘‘(i) $25; or 
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1 ‘‘(ii) the amount payable to unsecured 

2 nonpriority creditors, as provided by the 

3 plan, multiplied by 5 percent, and the re4 sult divided by the number of months in 

5 the plan.’’; and 

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

7 ‘‘(d) Notwithstanding any other provision of this 

8 title—

9 ‘‘(1) compensation referred to in subsection 

10 (b)(3) is payable and may be collected by the trustee 

11 under that paragraph, even if such amount has been 

12 discharged in a prior proceeding under this title; and 

13 ‘‘(2) such compensation is payable in a case 

14 under this chapter only to the extent permitted by 

15 subsection (b)(3).’’. 

16 SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, 

17 UNITED STATES CODE. 

18 Section 362(b)(18) of title 11, United States Code, 

19 is amended to read as follows: 

20 ‘‘(18) under subsection (a) of the creation or 

21 perfection of a statutory lien for an ad valorem 

22 property tax, or a special tax or special assessment 

23 on real property whether or not ad valorem, imposed 

24 by a governmental unit, if such tax or assessment 

25 comes due after the filing of the petition;’’. 
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1 SEC. 1226. JUDICIAL EDUCATION. 

2 The Director of the Federal Judicial Center, in con3 sultation with the Director of the Executive Office for 

4 United States Trustees, shall develop materials and con5 duct such training as may be useful to courts in imple6 menting this Act and the amendments made by this Act, 

7 including the requirements relating to the means test and 

8 reaffirmations under section 707(b) of title 11, United 

9 States Code, as amended by this Act. 

10 SEC. 1227. RECLAMATION. 

11 (a) RIGHTS AND POWERS OF THE TRUSTEE.—Sec12 tion 546(c) of title 11, United States Code, is amended 

13 to read as follows: 

14 ‘‘(c)(1) Except as provided in subsection (d) of this 

15 section and subsection (c) of section 507, and subject to 

16 the prior rights of holders of security interests in such 

17 goods or the proceeds thereof, the rights and powers of 

18 the trustee under sections 544(a), 545, 547, and 549 are 

19 subject to the right of a seller of goods that has sold goods 

20 to the debtor, in the ordinary course of such seller’s busi21 ness, to reclaim such goods if the debtor has received such 

22 goods while insolvent, within 45 days before the date of 

23 the commencement of a case under this title, but such sell24 er may not reclaim such goods unless such seller demands 

25 in writing reclamation of such goods—
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1 ‘‘(A) not later than 45 days after the date of 

2 receipt of such goods by the debtor; or 

3 ‘‘(B) not later than 20 days after the date of 

4 commencement of the case, if the 45-day period ex5 pires after the commencement of the case. 

6 ‘‘(2) If a seller of goods fails to provide notice in the 

7 manner described in paragraph (1), the seller still may 

8 assert the rights contained in section 503(b)(9).’’. 

9 (b) ADMINISTRATIVE EXPENSES.—Section 503(b) of 

10 title 11, United States Code, as amended by sections 445 

11 and 1103, is amended by adding at the end the following: 

12 ‘‘(9) the value of any goods received by the 

13 debtor within 20 days before the date of commence14 ment of a case under this title in which the goods 

15 have been sold to the debtor in the ordinary course 

16 of such debtor’s business.’’. 

17 SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO 

18 THE COURT. 

19 (a) CHAPTER 7 CASES.—The court shall not grant 

20 a discharge in the case of an individual seeking bank21 ruptcy under chapter 7 of title 11, United States Code, 

22 unless requested tax documents have been provided to the 

23 court. 

24 (b) CHAPTER 11 AND CHAPTER 13 CASES.—The 

25 court shall not confirm a plan of reorganization in the case 
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1 of an individual under chapter 11 or 13 of title 11, United 

2 States Code, unless requested tax documents have been 

3 filed with the court. 

4 (c) DOCUMENT RETENTION.—The court shall de5 stroy documents submitted in support of a bankruptcy 

6 claim not sooner than 3 years after the date of the conclu7 sion of a bankruptcy case filed by an individual under 

8 chapter 7, 11, or 13 of title 11, United States Code. In 

9 the event of a pending audit or enforcement action, the 

10 court may extend the time for destruction of such re11 quested tax documents. 

12 SEC. 1229. ENCOURAGING CREDITWORTHINESS. 

13 (a) SENSE OF THE CONGRESS.—It is the sense of the 

14 Congress that—

15 (1) certain lenders may sometimes offer credit 

16 to consumers indiscriminately, without taking steps 

17 to ensure that consumers are capable of repaying 

18 the resulting debt, and in a manner which may en19 courage certain consumers to accumulate additional 

20 debt; and 

21 (2) resulting consumer debt may increasingly be 

22 a major contributing factor to consumer insolvency. 

23 (b) STUDY REQUIRED.—The Board of Governors of 

24 the Federal Reserve System (hereafter in this section re25 ferred to as the ‘‘Board’’) shall conduct a study of—
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1 (1) consumer credit industry practices of solic2 iting and extending credit—

3 (A) indiscriminately; 

4 (B) without taking steps to ensure that 

5 consumers are capable of repaying the resulting 

6 debt; and 

7 (C) in a manner that encourages con8 sumers to accumulate additional debt; and 

9 (2) the effects of such practices on consumer 

10 debt and insolvency. 

11 (c) REPORT AND REGULATIONS.—Not later than 12 

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

13 Board—

14 (1) shall make public a report on its findings 

15 with respect to the indiscriminate solicitation and 

16 extension of credit by the credit industry; 

17 (2) may issue regulations that would require 

18 additional disclosures to consumers; and 

19 (3) may take any other actions, consistent with 

20 its existing statutory authority, that the Board finds 

21 necessary to ensure responsible industrywide prac22 tices and to prevent resulting consumer debt and in23 solvency. 
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1 SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMP2 TION. 

3 Section 541(b) of title 11, United States Code, as 

4 amended by sections 225 and 323, is amended by adding 

5 at the end the following: 

6 ‘‘(8) subject to subchapter III of chapter 5, any 

7 interest of the debtor in property where the debtor 

8 pledged or sold tangible personal property (other 

9 than securities or written or printed evidences of in10 debtedness or title) as collateral for a loan or ad11 vance of money given by a person licensed under law 

12 to make such loans or advances, where—

13 ‘‘(A) the tangible personal property is in 

14 the possession of the pledgee or transferee; 

15 ‘‘(B) the debtor has no obligation to repay 

16 the money, redeem the collateral, or buy back 

17 the property at a stipulated price; and 

18 ‘‘(C) neither the debtor nor the trustee 

19 have exercised any right to redeem provided 

20 under the contract or State law, in a timely 

21 manner as provided under State law and sec22 tion 108(b) of this title; or’’. 

23 SEC. 1231. TRUSTEES. 

24 (a) SUSPENSION AND TERMINATION OF PANEL

25 TRUSTEES AND STANDING TRUSTEES.—Section 586(d) of 

26 title 28, United States Code, is amended—
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1 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

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

3 ‘‘(2) A trustee whose appointment under subsection 

4 (a)(1) or under subsection (b) is terminated or who ceases 

5 to be assigned to cases filed under title 11, United States 

6 Code, may obtain judicial review of the final agency deci7 sion by commencing an action in the district court of the 

8 United States for the district for which the panel to which 

9 the trustee is appointed under subsection (a)(1), or in the 

10 district court of the United States for the district in which 

11 the trustee is appointed under subsection (b) resides, after 

12 first exhausting all available administrative remedies, 

13 which if the trustee so elects, shall also include an admin14 istrative hearing on the record. Unless the trustee elects 

15 to have an administrative hearing on the record, the trust16 ee shall be deemed to have exhausted all administrative 

17 remedies for purposes of this paragraph if the agency fails 

18 to make a final agency decision within 90 days after the 

19 trustee requests administrative remedies. The Attorney 

20 General shall prescribe procedures to implement this para21 graph. The decision of the agency shall be affirmed by 

22 the district court unless it is unreasonable and without 

23 cause based on the administrative record before the agen24 cy.’’. 
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1 (b) EXPENSES OF STANDING TRUSTEES.—Section 

2 586(e) of title 28, United States Code, is amended by add3 ing at the end the following: 

4 ‘‘(3) After first exhausting all available administra5 tive remedies, an individual appointed under subsection 

6 (b) may obtain judicial review of final agency action to 

7 deny a claim of actual, necessary expenses under this sub8 section by commencing an action in the district court of 

9 the United States for the district where the individual re10 sides. The decision of the agency shall be affirmed by the 

11 district court unless it is unreasonable and without cause 

12 based upon the administrative record before the agency. 

13 ‘‘(4) The Attorney General shall prescribe procedures 

14 to implement this subsection.’’. 

15 SEC. 1232. BANKRUPTCY FORMS. 

16 Section 2075 of title 28, United States Code, is 

17 amended by adding at the end the following: 

18 ‘‘The bankruptcy rules promulgated under this section 

19 shall prescribe a form for the statement required under 

20 section 707(b)(2)(C) of title 11 and may provide general 

21 rules on the content of such statement.’’.

22 SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO 

23 COURTS OF APPEALS. 

24 (a) APPEALS.—Section 158 of title 28, United States 

25 Code, is amended—
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1 (1) in subsection (c)(1), by striking ‘‘Subject to 

2 subsection (b),’’ and inserting ‘‘Subject to sub3 sections (b) and (d)(2),’’; and 

4 (2) in subsection (d)—

5 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

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

7 ‘‘(2)(A) The appropriate court of appeals shall have 

8 jurisdiction of appeals described in the first sentence of 

9 subsection (a) if the bankruptcy court, the district court, 

10 or the bankruptcy appellate panel involved, acting on its 

11 own motion or on the request of a party to the judgment, 

12 order, or decree described in such first sentence, or all the 

13 appellants and appellees (if any) acting jointly, certify 

14 that—

15 ‘‘(i) the judgment, order, or decree involves a 

16 question of law as to which there is no controlling 

17 decision of the court of appeals for the circuit or of 

18 the Supreme Court of the United States, or involves 

19 a matter of public importance; 

20 ‘‘(ii) the judgment, order, or decree involves a 

21 question of law requiring resolution of conflicting de22 cisions; or 

23 ‘‘(iii) an immediate appeal from the judgment, 

24 order, or decree may materially advance the progress 
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1 of the case or proceeding in which the appeal is 

2 taken; 

3 and if the court of appeals authorizes the direct appeal 

4 of the judgment, order, or decree. 

5 ‘‘(B) If the bankruptcy court, the district court, or 

6 the bankruptcy appellate panel—

7 ‘‘(i) on its own motion or on the request of a 

8 party, determines that a circumstance specified in 

9 clause (i), (ii), or (iii) of subparagraph (A) exists; or 

10 ‘‘(ii) receives a request made by a majority of 

11 the appellants and a majority of appellees (if any) 

12 to make the certification described in subparagraph 

13 (A); 

14 then the bankruptcy court, the district court, or the bank15 ruptcy appellate panel shall make the certification de16 scribed in subparagraph (A). 

17 ‘‘(C) The parties may supplement the certification 

18 with a short statement of the basis for the certification. 

19 ‘‘(D) An appeal under this paragraph does not stay 

20 any proceeding of the bankruptcy court, the district court, 

21 or the bankruptcy appellate panel from which the appeal 

22 is taken, unless the respective bankruptcy court, district 

23 court, or bankruptcy appellate panel, or the court of ap24 peals in which the appeal in pending, issues a stay of such 

25 proceeding pending the appeal. 
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1 ‘‘(E) Any request under subparagraph (B) for certifi2 cation shall be made not later than 60 days after the entry 

3 of the judgment, order, or decree.’’. 

4 (b) PROCEDURAL RULES.—

5 (1) TEMPORARY APPLICATION.—A provision of 

6 this subsection shall apply to appeals under section 

7 158(d)(2) of title 28, United States Code, until a 

8 rule of practice and procedure relating to such provi9 sion and such appeals is promulgated or amended 

10 under chapter 131 of such title. 

11 (2) CERTIFICATION.—A district court, a bank12 ruptcy court, or a bankruptcy appellate panel may 

13 make a certification under section 158(d)(2) of title 

14 28, United States Code, only with respect to matters 

15 pending in the respective bankruptcy court, district 

16 court, or bankruptcy appellate panel. 

17 (3) PROCEDURE.—Subject to any other provi18 sion of this subsection, an appeal authorized by the 

19 court of appeals under section 158(d)(2)(A) of title 

20 28, United States Code, shall be taken in the man21 ner prescribed in subdivisions (a)(1), (b), (c), and 

22 (d) of rule 5 of the Federal Rules of Appellate Pro23 cedure. For purposes of subdivision (a)(1) of rule 

24 5—
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1 (A) a reference in such subdivision to a 

2 district court shall be deemed to include a ref3 erence to a bankruptcy court and a bankruptcy 

4 appellate panel, as appropriate; 

5 (B) a reference in such subdivision to the 

6 parties requesting permission to appeal to be 

7 served with the petition shall be deemed to in8 clude a reference to the parties to the judg9 ment, order, or decree from which the appeal is 

10 taken. 

11 (4) FILING OF PETITION WITH ATTACHMENT.—

12 A petition requesting permission to appeal, that is 

13 based on a certification made under subparagraph 

14 (A) or (B) of section 158(d)(2) shall—

15 (A) be filed with the circuit clerk not later 

16 than 10 days after the certification is entered 

17 on the docket of the bankruptcy court, the dis18 trict court, or the bankruptcy appellate panel 

19 from which the appeal is taken; and 

20 (B) have attached a copy of such certifi21 cation. 

22 (5) REFERENCES IN RULE 5.—For purposes of 

23 rule 5 of the Federal Rules of Appellate Proce24 dure—
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1 (A) a reference in such rule to a district 

2 court shall be deemed to include a reference to 

3 a bankruptcy court and to a bankruptcy appel4 late panel; and 

5 (B) a reference in such rule to a district 

6 clerk shall be deemed to include a reference to 

7 a clerk of a bankruptcy court and to a clerk of 

8 a bankruptcy appellate panel. 

9 (6) APPLICATION OF RULES.—The Federal 

10 Rules of Appellate Procedure shall apply in the 

11 courts of appeals with respect to appeals authorized 

12 under section 158(d)(2)(A), to the extent relevant 

13 and as if such appeals were taken from final judg14 ments, orders, or decrees of the district courts or 

15 bankruptcy appellate panels exercising appellate ju16 risdiction under subsection (a) or (b) of section 158 

17 of title 28, United States Code.

18 SEC. 1234. INVOLUNTARY CASES. 

19 (a) AMENDMENTS.—Section 303 of title 11, United 

20 States Code, is amended—

21 (1) in subsection (b)(1), by—

22 (A) inserting ‘‘as to liability or amount’’ 

23 after ‘‘bona fide dispute’’; and 
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1 (B) striking ‘‘if such claims’’ and inserting 

2 ‘‘if such noncontingent, undisputed claims’’; 

3 and 

4 (2) in subsection (h)(1), by inserting ‘‘as to li5 ability or amount’’ before the semicolon at the end. 

6 (b) EFFECTIVE DATE; APPLICATION OF AMEND7 MENTS.—This section and the amendments made by this 

8 section shall take effect on the date of the enactment of 

9 this Act and shall not apply with respect to cases com10 menced under title 11 of the United States Code before 

11 such date. 

12 SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES 

13 AS NONDISCHARGEABLE DEBT. 

14 Section 523(a) of title 11, United States Code, as 

15 amended by section 314, is amended by inserting after 

16 paragraph (14A) the following: 

17 ‘‘(14B) incurred to pay fines or penalties im18 posed under Federal election law;’’. 

19 TITLE XIII—CONSUMER CREDIT 

20 DISCLOSURE 

21 SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END 

22 CREDIT PLAN. 

23 (a) MINIMUM PAYMENT DISCLOSURES.—Section 

24 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) 

25 is amended by adding at the end the following: 
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1 ‘‘(11)(A) In the case of an open end credit plan 

2 that requires a minimum monthly payment of not 

3 more than 4 percent of the balance on which finance 

4 charges are accruing, the following statement, lo5 cated on the front of the billing statement, disclosed 

6 clearly and conspicuously: ‘Minimum Payment 

7 Warning: Making only the minimum payment will 

8 increase the interest you pay and the time it takes 

9 to repay your balance. For example, making only the 

10 typical 2 % minimum monthly payment on a balance 

11 of $1,000 at an interest rate of 17 % would take 88 

12 months to repay the balance in full. For an estimate 

13 of the time it would take to repay your balance, 

14 making only minimum payments, call this toll-free 

15 number: llllll.’ (the blank space to be 

16 filled in by the creditor). 

17 ‘‘(B) In the case of an open end credit plan 

18 that requires a minimum monthly payment of more 

19 than 4 percent of the balance on which finance 

20 charges are accruing, the following statement, in a 

21 prominent location on the front of the billing state22 ment, disclosed clearly and conspicuously: ‘Minimum 

23 Payment Warning: Making only the required min24 imum payment will increase the interest you pay and 

25 the time it takes to repay your balance. Making a 
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1 typical 5% minimum monthly payment on a balance 

2 of $300 at an interest rate of 17% would take 24 

3 months to repay the balance in full. For an estimate 

4 of the time it would take to repay your balance, 

5 making only minimum monthly payments, call this 

6 toll-free number: llllll.’ (the blank space to 

7 be filled in by the creditor). 

8 ‘‘(C) Notwithstanding subparagraphs (A) and 

9 (B), in the case of a creditor with respect to which 

10 compliance with this title is enforced by the Federal 

11 Trade Commission, the following statement, in a 

12 prominent location on the front of the billing state13 ment, disclosed clearly and conspicuously: ‘Minimum 

14 Payment Warning: Making only the required min15 imum payment will increase the interest you pay and 

16 the time it takes to repay your balance. For exam17 ple, making only the typical 5% minimum monthly 

18 payment on a balance of $300 at an interest rate of 

19 17% would take 24 months to repay the balance in 

20 full. For an estimate of the time it would take to 

21 repay your balance, making only minimum monthly 

22 payments, call the Federal Trade Commission at 

23 this toll-free number: llllll.’ (the blank 

24 space to be filled in by the creditor). A creditor who 
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1 is subject to this subparagraph shall not be subject 

2 to subparagraph (A) or (B). 

3 ‘‘(D) Notwithstanding subparagraph (A), (B), 

4 or (C), in complying with any such subparagraph, a 

5 creditor may substitute an example based on an in6 terest rate that is greater than 17 percent. Any 

7 creditor that is subject to subparagraph (B) may 

8 elect to provide the disclosure required under sub9 paragraph (A) in lieu of the disclosure required 

10 under subparagraph (B). 

11 ‘‘(E) The Board shall, by rule, periodically re12 calculate, as necessary, the interest rate and repay13 ment period under subparagraphs (A), (B), and (C). 

14 ‘‘(F)(i) The toll-free telephone number disclosed 

15 by a creditor or the Federal Trade Commission 

16 under subparagraph (A), (B), or (G), as appro17 priate, may be a toll-free telephone number estab18 lished and maintained by the creditor or the Federal 

19 Trade Commission, as appropriate, or may be a toll20 free telephone number established and maintained 

21 by a third party for use by the creditor or multiple 

22 creditors or the Federal Trade Commission, as ap23 propriate. The toll-free telephone number may con24 nect consumers to an automated device through 

25 which consumers may obtain information described 
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1 in subparagraph (A), (B), or (C), by inputting infor2 mation using a touch-tone telephone or similar de3 vice, if consumers whose telephones are not equipped 

4 to use such automated device are provided the op5 portunity to be connected to an individual from 

6 whom the information described in subparagraph 

7 (A), (B), or (C), as applicable, may be obtained. A 

8 person that receives a request for information de9 scribed in subparagraph (A), (B), or (C) from an ob10 ligor through the toll-free telephone number dis11 closed under subparagraph (A), (B), or (C), as ap12 plicable, shall disclose in response to such request 

13 only the information set forth in the table promul14 gated by the Board under subparagraph (H)(i). 

15 ‘‘(ii)(I) The Board shall establish and maintain 

16 for a period not to exceed 24 months following the 

17 effective date of the Bankruptcy Abuse Prevention 

18 and Consumer Protection Act of 2003, a toll-free 

19 telephone number, or provide a toll-free telephone 

20 number established and maintained by a third party, 

21 for use by creditors that are depository institutions 

22 (as defined in section 3 of the Federal Deposit In23 surance Act), including a Federal credit union or 

24 State credit union (as defined in section 101 of the 

25 Federal Credit Union Act, with total assets not ex-
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1 ceeding $250,000,000. The toll-free telephone num2 ber may connect consumers to an automated device 

3 through which consumers may obtain information 

4 described in subparagraph (A) or (B), as applicable, 

5 by inputting information using a touch-tone tele6 phone or similar device, if consumers whose tele7 phones are not equipped to use such automated de8 vice are provided the opportunity to be connected to 

9 an individual from whom the information described 

10 in subparagraph (A) or (B), as applicable, may be 

11 obtained. A person that receives a request for infor12 mation described in subparagraph (A) or (B) from 

13 an obligor through the toll-free telephone number 

14 disclosed under subparagraph (A) or (B), as applica15 ble, shall disclose in response to such request only 

16 the information set forth in the table promulgated 

17 by the Board under subparagraph (H)(i). The dollar 

18 amount contained in this subclause shall be adjusted 

19 according to an indexing mechanism established by 

20 the Board. 

21 ‘‘(II) Not later than 6 months prior to the expi22 ration of the 24-month period referenced in sub23 clause (I), the Board shall submit to the Committee 

24 on Banking, Housing, and Urban Affairs of the Sen25 ate and the Committee on Financial Services of the 
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1 House of Representatives a report on the program 

2 described in subclause (I). 

3 ‘‘(G) The Federal Trade Commission shall es4 tablish and maintain a toll-free number for the pur5 pose of providing to consumers the information re6 quired to be disclosed under subparagraph (C). 

7 ‘‘(H) The Board shall— 

8 ‘‘(i) establish a detailed table illustrating 

9 the approximate number of months that it 

10 would take to repay an outstanding balance if 

11 a consumer pays only the required minimum 

12 monthly payments and if no other advances are 

13 made, which table shall clearly present stand14 ardized information to be used to disclose the 

15 information required to be disclosed under sub16 paragraph (A), (B), or (C), as applicable; 

17 ‘‘(ii) establish the table required under 

18 clause (i) by assuming—

19 ‘‘(I) a significant number of different 

20 annual percentage rates; 

21 ‘‘(II) a significant number of different 

22 account balances; 

23 ‘‘(III) a significant number of dif24 ferent minimum payment amounts; and 
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1 ‘‘(IV) that only minimum monthly 

2 payments are made and no additional ex3 tensions of credit are obtained; and 

4 ‘‘(iii) promulgate regulations that provide 

5 instructional guidance regarding the manner in 

6 which the information contained in the table es7 tablished under clause (i) should be used in re8 sponding to the request of an obligor for any 

9 information required to be disclosed under sub10 paragraph (A), (B), or (C). 

11 ‘‘(I) The disclosure requirements of this para12 graph do not apply to any charge card account, the 

13 primary purpose of which is to require payment of 

14 charges in full each month. 

15 ‘‘(J) A creditor that maintains a toll-free tele16 phone number for the purpose of providing cus17 tomers with the actual number of months that it will 

18 take to repay the customer’s outstanding balance is 

19 not subject to the requirements of subparagraph (A) 

20 or (B). 

21 ‘‘(K) A creditor that maintains a toll-free tele22 phone number for the purpose of providing cus23 tomers with the actual number of months that it will 

24 take to repay an outstanding balance shall include 

25 the following statement on each billing statement: 
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1 ‘Making only the minimum payment will increase 

2 the interest you pay and the time it takes to repay 

3 your balance. For more information, call this toll4 free number: llll.’ (the blank space to be filled 

5 in by the creditor).’’. 

6 (b) REGULATORY IMPLEMENTATION.—

7 (1) IN GENERAL.—The Board of Governors of 

8 the Federal Reserve System (hereafter in this title 

9 referred to as the ‘‘Board’’) shall promulgate regula10 tions implementing the requirements of section 

11 127(b)(11) of the Truth in Lending Act, as added 

12 by subsection (a) of this section. 

13 (2) EFFECTIVE DATE.—Section 127(b)(11) of 

14 the Truth in Lending Act, as added by subsection 

15 (a) of this section, and the regulations issued under 

16 paragraph (1) of this subsection shall not take effect 

17 until the later of—

18 (A) 18 months after the date of enactment 

19 of this Act; or 

20 (B) 12 months after the publication of 

21 such final regulations by the Board. 

22 (c) STUDY OF FINANCIAL DISCLOSURES.—

23 (1) IN GENERAL.—The Board may conduct a 

24 study to determine the types of information available 

25 to potential borrowers from consumer credit lending 
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1 institutions regarding factors qualifying potential 

2 borrowers for credit, repayment requirements, and 

3 the consequences of default. 

4 (2) FACTORS FOR CONSIDERATION.—In con5 ducting a study under paragraph (1), the Board 

6 should, in consultation with the other Federal bank7 ing agencies (as defined in section 3 of the Federal 

8 Deposit Insurance Act), the National Credit Union 

9 Administration, and the Federal Trade Commission, 

10 consider the extent to which—

11 (A) consumers, in establishing new credit 

12 arrangements, are aware of their existing pay13 ment obligations, the need to consider those ob14 ligations in deciding to take on new credit, and 

15 how taking on excessive credit can result in fi16 nancial difficulty; 

17 (B) minimum periodic payment features 

18 offered in connection with open end credit plans 

19 impact consumer default rates; 

20 (C) consumers make only the required 

21 minimum payment under open end credit plans; 

22 (D) consumers are aware that making only 

23 required minimum payments will increase the 

24 cost and repayment period of an open end cred25 it obligation; and 
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1 (E) the availability of low minimum pay2 ment options is a cause of consumers experi3 encing financial difficulty. 

4 (3) REPORT TO CONGRESS.—Findings of the 

5 Board in connection with any study conducted under 

6 this subsection shall be submitted to Congress. Such 

7 report shall also include recommendations for legis8 lative initiatives, if any, of the Board, based on its 

9 findings. 

10 SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN11 SIONS SECURED BY A DWELLING. 

12 (a) OPEN END CREDIT EXTENSIONS.—

13 (1) CREDIT APPLICATIONS.—Section 

14 127A(a)(13) of the Truth in Lending Act (15 

15 U.S.C. 1637a(a)(13)) is amended—

16 (A) by striking ‘‘CONSULTATION OF TAX

17 ADVISER.—A statement that the’’ and inserting 

18 the following: ‘‘TAX DEDUCTIBILITY.—A state19 ment that—

20 ‘‘(A) the’’; and 

21 (B) by striking the period at the end and 

22 inserting the following: ‘‘; and 

23 ‘‘(B) in any case in which the extension of 

24 credit exceeds the fair market value (as defined 

25 under the Internal Revenue Code of 1986) of 
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1 the dwelling, the interest on the portion of the 

2 credit extension that is greater than the fair 

3 market value of the dwelling is not tax deduct4 ible for Federal income tax purposes.’’. 

5 (2) CREDIT ADVERTISEMENTS.—Section 147(b) 

6 of the Truth in Lending Act (15 U.S.C. 1665b(b)) 

7 is amended—

8 (A) by striking ‘‘If any’’ and inserting the 

9 following: 

10 ‘‘(1) IN GENERAL.—If any’’; and 

11 (B) by adding at the end the following: 

12 ‘‘(2) CREDIT IN EXCESS OF FAIR MARKET

13 VALUE.—Each advertisement described in subsection 

14 (a) that relates to an extension of credit that may 

15 exceed the fair market value of the dwelling, and 

16 which advertisement is disseminated in paper form 

17 to the public or through the Internet, as opposed to 

18 by radio or television, shall include a clear and con19 spicuous statement that—

20 ‘‘(A) the interest on the portion of the 

21 credit extension that is greater than the fair 

22 market value of the dwelling is not tax deduct23 ible for Federal income tax purposes; and 
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1 ‘‘(B) the consumer should consult a tax 

2 adviser for further information regarding the 

3 deductibility of interest and charges.’’. 

4 (b) NON-OPEN END CREDIT EXTENSIONS.—

5 (1) CREDIT APPLICATIONS.—Section 128 of the 

6 Truth in Lending Act (15 U.S.C. 1638) is amend7 ed—

8 (A) in subsection (a), by adding at the end 

9 the following: 

10 ‘‘(15) In the case of a consumer credit trans11 action that is secured by the principal dwelling of 

12 the consumer, in which the extension of credit may 

13 exceed the fair market value of the dwelling, a clear 

14 and conspicuous statement that—

15 ‘‘(A) the interest on the portion of the 

16 credit extension that is greater than the fair 

17 market value of the dwelling is not tax deduct18 ible for Federal income tax purposes; and 

19 ‘‘(B) the consumer should consult a tax 

20 adviser for further information regarding the 

21 deductibility of interest and charges.’’; and 

22 (B) in subsection (b), by adding at the end 

23 the following: 

24 ‘‘(3) In the case of a credit transaction described in 

25 paragraph (15) of subsection (a), disclosures required by 
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1 that paragraph shall be made to the consumer at the time 

2 of application for such extension of credit.’’. 

3 (2) CREDIT ADVERTISEMENTS.—Section 144 of 

4 the Truth in Lending Act (15 U.S.C. 1664) is 

5 amended by adding at the end the following: 

6 ‘‘(e) Each advertisement to which this section applies 

7 that relates to a consumer credit transaction that is se8 cured by the principal dwelling of a consumer in which 

9 the extension of credit may exceed the fair market value 

10 of the dwelling, and which advertisement is disseminated 

11 in paper form to the public or through the Internet, as 

12 opposed to by radio or television, shall clearly and con13 spicuously state that—

14 ‘‘(1) the interest on the portion of the credit ex15 tension that is greater than the fair market value of 

16 the dwelling is not tax deductible for Federal income 

17 tax purposes; and 

18 ‘‘(2) the consumer should consult a tax adviser 

19 for further information regarding the deductibility of 

20 interest and charges.’’. 

21 (c) REGULATORY IMPLEMENTATION.—

22 (1) IN GENERAL.—The Board shall promulgate 

23 regulations implementing the amendments made by 

24 this section. 
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1 (2) EFFECTIVE DATE.—Regulations issued 

2 under paragraph (1) shall not take effect until the 

3 later of— 

4 (A) 12 months after the date of enactment 

5 of this Act; or 

6 (B) 12 months after the date of publica7 tion of such final regulations by the Board. 

8 SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY 

9 RATES’’. 

10 (a) INTRODUCTORY RATE DISCLOSURES.—Section 

11 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 

12 is amended by adding at the end the following: 

13 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRO14 DUCTORY RATES’.—

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 subparagraph (B), an application or solicitation 

17 to open a credit card account and all pro18 motional materials accompanying such applica19 tion or solicitation for which a disclosure is re20 quired under paragraph (1), and that offers a 

21 temporary annual percentage rate of interest, 

22 shall—

23 ‘‘(i) use the term ‘introductory’ in im24 mediate proximity to each listing of the 

25 temporary annual percentage rate applica-
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1 ble to such account, which term shall ap2 pear clearly and conspicuously; 

3 ‘‘(ii) if the annual percentage rate of 

4 interest that will apply after the end of the 

5 temporary rate period will be a fixed rate, 

6 state in a clear and conspicuous manner in 

7 a prominent location closely proximate to 

8 the first listing of the temporary annual 

9 percentage rate (other than a listing of the 

10 temporary annual percentage rate in the 

11 tabular format described in section 

12 122(c)), the time period in which the intro13 ductory period will end and the annual 

14 percentage rate that will apply after the 

15 end of the introductory period; and 

16 ‘‘(iii) if the annual percentage rate 

17 that will apply after the end of the tem18 porary rate period will vary in accordance 

19 with an index, state in a clear and con20 spicuous manner in a prominent location 

21 closely proximate to the first listing of the 

22 temporary annual percentage rate (other 

23 than a listing in the tabular format pre24 scribed by section 122(c)), the time period 

25 in which the introductory period will end 
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1 and the rate that will apply after that, 

2 based on an annual percentage rate that 

3 was in effect within 60 days before the 

4 date of mailing the application or solicita5 tion. 

6 ‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of 

7 subparagraph (A) do not apply with respect to 

8 any listing of a temporary annual percentage 

9 rate on an envelope or other enclosure in which 

10 an application or solicitation to open a credit 

11 card account is mailed. 

12 ‘‘(C) CONDITIONS FOR INTRODUCTORY

13 RATES.—An application or solicitation to open 

14 a credit card account for which a disclosure is 

15 required under paragraph (1), and that offers a 

16 temporary annual percentage rate of interest 

17 shall, if that rate of interest is revocable under 

18 any circumstance or upon any event, clearly 

19 and conspicuously disclose, in a prominent man20 ner on or with such application or solicitation—

21 ‘‘(i) a general description of the cir22 cumstances that may result in the revoca23 tion of the temporary annual percentage 

24 rate; and 
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1 ‘‘(ii) if the annual percentage rate 

2 that will apply upon the revocation of the 

3 temporary annual percentage rate—

4 ‘‘(I) will be a fixed rate, the an5 nual percentage rate that will apply 

6 upon the revocation of the temporary 

7 annual percentage rate; or 

8 ‘‘(II) will vary in accordance with 

9 an index, the rate that will apply after 

10 the temporary rate, based on an an11 nual percentage rate that was in ef12 fect within 60 days before the date of 

13 mailing the application or solicitation. 

14 ‘‘(D) DEFINITIONS.—In this paragraph—

15 ‘‘(i) the terms ‘temporary annual per16 centage rate of interest’ and ‘temporary 

17 annual percentage rate’ mean any rate of 

18 interest applicable to a credit card account 

19 for an introductory period of less than 1 

20 year, if that rate is less than an annual 

21 percentage rate that was in effect within 

22 60 days before the date of mailing the ap23 plication or solicitation; and 

24 ‘‘(ii) the term ‘introductory period’ 

25 means the maximum time period for which 
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1 the temporary annual percentage rate may 

2 be applicable. 

3 ‘‘(E) RELATION TO OTHER DISCLOSURE

4 REQUIREMENTS.—Nothing in this paragraph 

5 may be construed to supersede subsection (a) of 

6 section 122, or any disclosure required by para7 graph (1) or any other provision of this sub8 section.’’. 

9 (b) REGULATORY IMPLEMENTATION.—

10 (1) IN GENERAL.—The Board shall promulgate 

11 regulations implementing the requirements of section 

12 127(c)(6) of the Truth in Lending Act, as added by 

13 this section. 

14 (2) EFFECTIVE DATE.—Section 127(c)(6) of 

15 the Truth in Lending Act, as added by this section, 

16 and regulations issued under paragraph (1) of this 

17 subsection shall not take effect until the later of—

18 (A) 12 months after the date of enactment 

19 of this Act; or 

20 (B) 12 months after the date of publica21 tion of such final regulations by the Board. 

22 SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS. 

23 (a) INTERNET-BASED SOLICITATIONS.—Section 

24 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 

25 is amended by adding at the end the following: 
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1 ‘‘(7) INTERNET-BASED SOLICITATIONS.—

2 ‘‘(A) IN GENERAL.—In any solicitation to 

3 open a credit card account for any person under 

4 an open end consumer credit plan using the 

5 Internet or other interactive computer service, 

6 the person making the solicitation shall clearly 

7 and conspicuously disclose—

8 ‘‘(i) the information described in sub9 paragraphs (A) and (B) of paragraph (1); 

10 and 

11 ‘‘(ii) the information described in 

12 paragraph (6). 

13 ‘‘(B) FORM OF DISCLOSURE.—The disclo14 sures required by subparagraph (A) shall be—

15 ‘‘(i) readily accessible to consumers in 

16 close proximity to the solicitation to open 

17 a credit card account; and 

18 ‘‘(ii) updated regularly to reflect the 

19 current policies, terms, and fee amounts 

20 applicable to the credit card account. 

21 ‘‘(C) DEFINITIONS.—For purposes of this 

22 paragraph—

23 ‘‘(i) the term ‘Internet’ means the 

24 international computer network of both 
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1 Federal and non-Federal interoperable 

2 packet switched data networks; and 

3 ‘‘(ii) the term ‘interactive computer 

4 service’ means any information service, 

5 system, or access software provider that 

6 provides or enables computer access by 

7 multiple users to a computer server, in8 cluding specifically a service or system that 

9 provides access to the Internet and such 

10 systems operated or services offered by li11 braries or educational institutions.’’. 

12 (b) REGULATORY IMPLEMENTATION.—

13 (1) IN GENERAL.—The Board shall promulgate 

14 regulations implementing the requirements of section 

15 127(c)(7) of the Truth in Lending Act, as added by 

16 this section. 

17 (2) EFFECTIVE DATE.—The amendment made 

18 by subsection (a) and the regulations issued under 

19 paragraph (1) of this subsection shall not take effect 

20 until the later of—

21 (A) 12 months after the date of enactment 

22 of this Act; or 

23 (B) 12 months after the date of publica24 tion of such final regulations by the Board. 
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1 SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT 

2 DEADLINES AND PENALTIES. 

3 (a) DISCLOSURES RELATED TO LATE PAYMENT

4 DEADLINES AND PENALTIES.—Section 127(b) of the 

5 Truth in Lending Act (15 U.S.C. 1637(b)) is amended 

6 by adding at the end the following: 

7 ‘‘(12) If a late payment fee is to be imposed 

8 due to the failure of the obligor to make payment on 

9 or before a required payment due date, the following 

10 shall be stated clearly and conspicuously on the bill11 ing statement: 

12 ‘‘(A) The date on which that payment is 

13 due or, if different, the earliest date on which 

14 a late payment fee may be charged. 

15 ‘‘(B) The amount of the late payment fee 

16 to be imposed if payment is made after such 

17 date.’’. 

18 (b) REGULATORY IMPLEMENTATION.—

19 (1) IN GENERAL.—The Board shall promulgate 

20 regulations implementing the requirements of section 

21 127(b)(12) of the Truth in Lending Act, as added 

22 by this section. 

23 (2) EFFECTIVE DATE.—The amendment made 

24 by subsection (a) and regulations issued under para25 graph (1) of this subsection shall not take effect 

26 until the later of—
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1 (A) 12 months after the date of enactment 

2 of this Act; or 

3 (B) 12 months after the date of publica4 tion of such final regulations by the Board. 

5 SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL6 URE TO INCUR FINANCE CHARGES. 

7 (a) PROHIBITION ON CERTAIN ACTIONS FOR FAIL8 URE TO INCUR FINANCE CHARGES.—Section 127 of the 

9 Truth in Lending Act (15 U.S.C. 1637) is amended by 

10 adding at the end the following: 

11 ‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAIL12 URE TO INCUR FINANCE CHARGES.—A creditor of an ac13 count under an open end consumer credit plan may not 

14 terminate an account prior to its expiration date solely be15 cause the consumer has not incurred finance charges on 

16 the account. Nothing in this subsection shall prohibit a 

17 creditor from terminating an account for inactivity in 3 

18 or more consecutive months.’’. 

19 (b) REGULATORY IMPLEMENTATION.—

20 (1) IN GENERAL.—The Board shall promulgate 

21 regulations implementing the requirements of section 

22 127(h) of the Truth in Lending Act, as added by 

23 this section. 

24 (2) EFFECTIVE DATE.—The amendment made 

25 by subsection (a) and regulations issued under para-
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1 graph (1) of this subsection shall not take effect 

2 until the later of—

3 (A) 12 months after the date of enactment 

4 of this Act; or 

5 (B) 12 months after the date of publica6 tion of such final regulations by the Board. 

7 SEC. 1307. DUAL USE DEBIT CARD. 

8 (a) REPORT.—The Board may conduct a study of, 

9 and present to Congress a report containing its analysis 

10 of, consumer protections under existing law to limit the 

11 liability of consumers for unauthorized use of a debit card 

12 or similar access device. Such report, if submitted, shall 

13 include recommendations for legislative initiatives, if any, 

14 of the Board, based on its findings. 

15 (b) CONSIDERATIONS.—In preparing a report under 

16 subsection (a), the Board may include—

17 (1) the extent to which section 909 of the Elec18 tronic Fund Transfer Act (15 U.S.C. 1693g), as in 

19 effect at the time of the report, and the imple20 menting regulations promulgated by the Board to 

21 carry out that section provide adequate unauthorized 

22 use liability protection for consumers; 

23 (2) the extent to which any voluntary industry 

24 rules have enhanced or may enhance the level of pro-
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1 tection afforded consumers in connection with such 

2 unauthorized use liability; and 

3 (3) whether amendments to the Electronic 

4 Fund Transfer Act (15 U.S.C. 1693 et seq.), or re5 visions to regulations promulgated by the Board to 

6 carry out that Act, are necessary to further address 

7 adequate protection for consumers concerning unau8 thorized use liability. 

9 SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX10 TENDED TO DEPENDENT STUDENTS. 

11 (a) STUDY.—

12 (1) IN GENERAL.—The Board shall conduct a 

13 study regarding the impact that the extension of 

14 credit described in paragraph (2) has on the rate of 

15 bankruptcy cases filed under title 11, United States 

16 Code. 

17 (2) EXTENSION OF CREDIT.—The extension of 

18 credit described in this paragraph is the extension of 

19 credit to individuals who are—

20 (A) claimed as dependents for purposes of 

21 the Internal Revenue Code of 1986; and 

22 (B) enrolled within 1 year of successfully 

23 completing all required secondary education re24 quirements and on a full-time basis, in postsec25 ondary educational institutions. 
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1 (b) REPORT.—Not later than 1 year after the date 

2 of enactment of this Act, the Board shall submit to the 

3 Senate and the House of Representatives a report summa4 rizing the results of the study conducted under subsection 

5 (a). 

6 SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS. 

7 (a) REGULATIONS.—Not later than 6 months after 

8 the date of enactment of this Act, the Board, in consulta9 tion with the other Federal banking agencies (as defined 

10 in section 3 of the Federal Deposit Insurance Act), the 

11 National Credit Union Administration Board, and the 

12 Federal Trade Commission, shall promulgate regulations 

13 to provide guidance regarding the meaning of the term 

14 ‘‘clear and conspicuous’’, as used in subparagraphs (A), 

15 (B), and (C) of section 127(b)(11) and clauses (ii) and 

16 (iii) of section 127(c)(6)(A) of the Truth in Lending Act. 

17 (b) EXAMPLES.—Regulations promulgated under 

18 subsection (a) shall include examples of clear and con19 spicuous model disclosures for the purposes of disclosures 

20 required by the provisions of the Truth in Lending Act 

21 referred to in subsection (a). 

22 (c) STANDARDS.—In promulgating regulations under 

23 this section, the Board shall ensure that the clear and con24 spicuous standard required for disclosures made under the 

25 provisions of the Truth in Lending Act referred to in sub-
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1 section (a) can be implemented in a manner which results 

2 in disclosures which are reasonably understandable and 

3 designed to call attention to the nature and significance 

4 of the information in the notice. 

5 TITLE XIV—GENERAL EFFEC6 TIVE DATE; APPLICATION OF 

7 AMENDMENTS 

8 SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMEND9 MENTS. 

10 (a) EFFECTIVE DATE.—Except as otherwise provided 

11 in this Act, this Act and the amendments made by this 

12 Act shall take effect 180 days after the date of enactment 

13 of this Act. 

14 (b) APPLICATION OF AMENDMENTS.—

15 (1) IN GENERAL.—Except as otherwise pro16 vided in this Act and paragraph (2), the amend17 ments made by this Act shall not apply with respect 

18 to cases commenced under title 11, United States 

19 Code, before the effective date of this Act. 

20 (2) LIMITATIONS ON HOMESTEAD EXEMP21 TION.—The amendments made by sections 308 and 

22 322 shall apply with respect to cases commenced 

23 under title 11, United States Code, on or after the 

24 date of the enactment of this Act.

Æ