108TH CONGRESS

1ST SESSION H. R. 975

AN ACT

To amend title 11 of the United States Code, and

for other purposes.

108TH CONGRESS

1ST SESSION H. R. 975

AN ACT

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 agreement practices.

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

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

Subtitle B—Priority Child Support

Sec. 211. Definition of domestic support obligation.

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

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

domestic support obligations.

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

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

support.

Sec. 216. Continued liability of property.

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

motions.

Sec. 218. Disposable income defined.

Sec. 219. Collection of child support.

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

Subtitle C—Other Consumer Protections

Sec. 221. Amendments to discourage abusive bankruptcy filings.
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Sec. 222. Sense of Congress.

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

Sec. 224. Protection of retirement savings in bankruptcy.

Sec. 225. Protection of education savings in bankruptcy.

Sec. 226. Definitions.

Sec. 227. Restrictions on debt relief agencies.

Sec. 228. Disclosures.

Sec. 229. Requirements for debt relief agencies.

Sec. 230. GAO study.

Sec. 231. Protection of personally identifiable information.

Sec. 232. Consumer privacy ombudsman.

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

TITLE III—DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.

Sec. 302. Discouraging bad faith repeat filings.

Sec. 303. Curbing abusive filings.

Sec. 304. Debtor retention of personal property security.

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

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

Sec. 307. Domiciliary requirements for exemptions.

Sec. 308. Reduction of homestead exemption for fraud.

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

Sec. 310. Limitation on luxury goods.

Sec. 311. Automatic stay.

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

Sec. 403. Protection of refinance of security interest.

Sec. 404. Executory contracts and unexpired leases.

Sec. 405. Creditors and equity security holders committees.

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

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

Sec. 408. Postpetition disclosure and solicitation.

Sec. 409. Preferences.

Sec. 410. Venue of certain proceedings.

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

Sec. 412. Fees arising from certain ownership interests.

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

Sec. 414. Definition of disinterested person.

Sec. 415. Factors for compensation of professional persons.

Sec. 416. Appointment of elected trustee.

Sec. 417. Utility service.

Sec. 418. Bankruptcy fees.

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

Subtitle B—Small Business Bankruptcy Provisions

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

Sec. 432. Definitions.

Sec. 433. Standard form disclosure statement and plan.

Sec. 434. Uniform national reporting requirements.

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

Sec. 436. Duties in small business cases.

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.
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Sec. 702. Treatment of fuel tax claims.

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

Sec. 704. Rate of interest on tax claims.

Sec. 705. Priority of tax claims.

Sec. 706. Priority property taxes incurred.

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

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

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

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

Sec. 711. Avoidance of statutory tax liens prohibited.

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

Sec. 713. Tardily filed priority tax claims.

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

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

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

Sec. 717. Standards for tax disclosure.

Sec. 718. Setoff of tax refunds.

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

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

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASES

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

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

TITLE IX—FINANCIAL CONTRACT PROVISIONS

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

Sec. 902. Authority of the FDIC and NCUAB 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
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Sec. 1101. Definitions.

Sec. 1102. Disposal of patient records.

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

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

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

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

TITLE XII—TECHNICAL AMENDMENTS

Sec. 1201. Definitions.

Sec. 1202. Adjustment of dollar amounts.

Sec. 1203. Extension of time.

Sec. 1204. Technical amendments.

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

Sec. 1206. Limitation on compensation of professional persons.

Sec. 1207. Effect of conversion.

Sec. 1208. Allowance of administrative expenses.

Sec. 1209. Exceptions to discharge.

Sec. 1210. Effect of discharge.

Sec. 1211. Protection against discriminatory treatment.

Sec. 1212. Property of the estate.

Sec. 1213. Preferences.

Sec. 1214. Postpetition transactions.

Sec. 1215. Disposition of property of the estate.

Sec. 1216. General provisions.

Sec. 1217. Abandonment of railroad line.

Sec. 1218. Contents of plan.

Sec. 1219. 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.

TITLE XV—PREVENTING CORPORATE BANKRUPTCY ABUSE

Sec. 1501. Employee wage and benefit priorities.

Sec. 1502. Fraudulent transfers and obligations.

Sec. 1503. Payment of insurance benefits to retired employees.

Sec. 1504. 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—
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1 (I) by striking ‘‘but not at the re2 quest or suggestion of’’ and inserting

3 ‘‘trustee (or bankruptcy adminis4 trator, if any), or’’;

5 (II) by inserting ‘‘, or, with the

6 debtor’s consent, convert such a case

7 to a case under chapter 11 or 13 of

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

9 and

10 (III) by striking ‘‘a substantial

11 abuse’’ and inserting ‘‘an abuse’’; and

12 (ii) by striking the next to last sen13 tence; and

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

15 ‘‘(2)(A)(i) In considering under paragraph (1) wheth16 er the granting of relief would be an abuse of the provi17 sions of this chapter, the court shall presume abuse exists

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

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

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

21 ‘‘(I) 25 percent of the debtor’s nonpriority un22 secured claims in the case, or $6,000, whichever is

23 greater; or

24 ‘‘(II) $10,000.
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1 ‘‘(ii)(I) The debtor’s monthly expenses shall be the

2 debtor’s applicable monthly expense amounts specified

3 under the National Standards and Local Standards, and

4 the debtor’s actual monthly expenses for the categories

5 specified as Other Necessary Expenses issued by the In6 ternal Revenue Service for the area in which the debtor

7 resides, as in effect on the date of the order for relief,

8 for the debtor, the dependents of the debtor, and the

9 spouse of the debtor in a joint case, if the spouse is not

10 otherwise a dependent. Notwithstanding any other provi11 sion of this clause, the monthly expenses of the debtor

12 shall not include any payments for debts. In addition, the

13 debtor’s monthly expenses shall include the debtor’s rea14 sonably necessary expenses incurred to maintain the safe15 ty of the debtor and the family of the debtor from family

16 violence as identified under section 309 of the Family Vio17 lence Prevention and Services Act, or other applicable

18 Federal law. The expenses included in the debtor’s month19 ly expenses described in the preceding sentence shall be

20 kept confidential by the court. In addition, if it is dem21 onstrated that it is reasonable and necessary, the debtor’s

22 monthly expenses may also include an additional allowance

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

24 clothing categories as specified by the National Standards

25 issued by the Internal Revenue Service.
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1 ‘‘(II) In addition, the debtor’s monthly expenses may

2 include, if applicable, the continuation of actual expenses

3 paid by the debtor that are reasonable and necessary for

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

5 household member or member of the debtor’s immediate

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

7 and grandchildren of the debtor, the dependents of the

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

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

10 reasonable and necessary expenses.

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

12 13, the debtor’s monthly expenses may include the actual

13 administrative expenses of administering a chapter 13

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

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

16 determined under schedules issued by the Executive Office

17 for United States Trustees.

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

19 include the actual expenses for each dependent child less

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

21 child, to attend a private or public elementary or sec22 ondary school if the debtor provides documentation of such

23 expenses and a detailed explanation of why such expenses

24 are reasonable and necessary, and why such expenses are

25 not already accounted for in the National Standards,
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1 Local Standards, or Other Necessary Expenses referred

2 to in subclause (I).

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

4 include an allowance for housing and utilities, in excess

5 of the allowance specified by the Local Standards for

6 housing and utilities issued by the Internal Revenue Serv7 ice, based on the actual expenses for home energy costs

8 if the debtor provides documentation of such actual ex9 penses and demonstrates that such actual expenses are

10 reasonable and necessary.

11 ‘‘(iii) The debtor’s average monthly payments on ac12 count of secured debts shall be calculated as the sum of—

13 ‘‘(I) the total of all amounts scheduled as con14 tractually due to secured creditors in each month of

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

16 ‘‘(II) any additional payments to secured credi17 tors necessary for the debtor, in filing a plan under

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

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

20 property necessary for the support of the debtor and

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

22 secured debts;

23 divided by 60.

24 ‘‘(iv) The debtor’s expenses for payment of all pri25 ority claims (including priority child support and alimony
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1 claims) shall be calculated as the total amount of debts

2 entitled to priority, divided by 60.

3 ‘‘(B)(i) In any proceeding brought under this sub4 section, the presumption of abuse may only be rebutted

5 by demonstrating special circumstances that justify addi6 tional expenses or adjustments of current monthly income

7 for which there is no reasonable alternative.

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

9 debtor shall be required to itemize each additional expense

10 or adjustment of income and to provide—

11 ‘‘(I) documentation for such expense or adjust12 ment to income; and

13 ‘‘(II) a detailed explanation of the special cir14 cumstances that make such expenses or adjustment

15 to income necessary and reasonable.

16 ‘‘(iii) The debtor shall attest under oath to the accu17 racy of any information provided to demonstrate that ad18 ditional expenses or adjustments to income are required.

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

20 if the additional expenses or adjustments to income re21 ferred to in clause (i) cause the product of the debtor’s

22 current monthly income reduced by the amounts deter23 mined under clauses (ii), (iii), and (iv) of subparagraph

24 (A) when multiplied by 60 to be less than the lesser of—
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1 ‘‘(I) 25 percent of the debtor’s nonpriority un2 secured claims, or $6,000, whichever is greater; or

3 ‘‘(II) $10,000.

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

5 expenditures required under section 521, the debtor shall

6 include a statement of the debtor’s current monthly in7 come, and the calculations that determine whether a pre8 sumption arises under subparagraph (A)(i), that show how

9 each such amount is calculated.

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

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

12 this chapter in a case in which the presumption in sub13 paragraph (A)(i) of such paragraph does not arise or is

14 rebutted, the court shall consider—

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

16 bad faith; or

17 ‘‘(B) the totality of the circumstances (includ18 ing whether the debtor seeks to reject a personal

19 services contract and the financial need for such re20 jection as sought by the debtor) of the debtor’s fi21 nancial situation demonstrates abuse.

22 ‘‘(4)(A) The court, on its own initiative or on the mo23 tion of a party in interest, in accordance with the proce24 dures described in rule 9011 of the Federal Rules of

25 Bankruptcy Procedure, may order the attorney for the
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1 debtor to reimburse the trustee for all reasonable costs

2 in prosecuting a motion filed under section 707(b), includ3 ing reasonable attorneys’ fees, if—

4 ‘‘(i) a trustee files a motion for dismissal or

5 conversion under this subsection; and

6 ‘‘(ii) the court—

7 ‘‘(I) grants such motion; and

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

9 for the debtor in filing under this chapter vio10 lated rule 9011 of the Federal Rules of Bank11 ruptcy Procedure.

12 ‘‘(B) If the court finds that the attorney for the debt13 or violated rule 9011 of the Federal Rules of Bankruptcy

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

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

16 may order—

17 ‘‘(i) the assessment of an appropriate civil pen18 alty against the attorney for the debtor; and

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

20 trustee, the United States trustee (or the bank21 ruptcy administrator, if any).

22 ‘‘(C) The signature of an attorney on a petition,

23 pleading, or written motion shall constitute a certification

24 that the attorney has—
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1 ‘‘(i) performed a reasonable investigation into

2 the circumstances that gave rise to the petition,

3 pleading, or written motion; and

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

5 written motion—

6 ‘‘(I) is well grounded in fact; and

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

8 good faith argument for the extension, modi9 fication, or reversal of existing law and does not

10 constitute an abuse under paragraph (1).

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

12 shall constitute a certification that the attorney has no

13 knowledge after an inquiry that the information in the

14 schedules filed with such petition is incorrect.

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

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

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

18 the procedures described in rule 9011 of the Federal Rules

19 of Bankruptcy Procedure, may award a debtor all reason20 able costs (including reasonable attorneys’ fees) in con21 testing a motion filed by a party in interest (other than

22 a trustee or United States trustee (or bankruptcy adminis23 trator, if any)) under this subsection if—

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

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

2 motion violated rule 9011 of the Federal Rules

3 of Bankruptcy Procedure; or

4 ‘‘(II) the attorney (if any) who filed the

5 motion did not comply with the requirements of

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

7 motion was made solely for the purpose of co8 ercing a debtor into waiving a right guaranteed

9 to the debtor under this title.

10 ‘‘(B) A small business that has a claim of an aggre11 gate amount less than $1,000 shall not be subject to sub12 paragraph (A)(ii)(I).

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

14 ‘‘(i) the term ‘small business’ means an unin15 corporated business, partnership, corporation, asso16 ciation, or organization that—

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

18 as determined on the date on which the motion

19 is filed; and

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

21 activity; and

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

23 owned subsidiary of a corporation includes the em24 ployees of—

25 ‘‘(I) a parent corporation; and
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1 ‘‘(II) any other subsidiary corporation of

2 the parent corporation.

3 ‘‘(6) Only the judge or United States trustee (or

4 bankruptcy administrator, if any) may file a motion under

5 section 707(b), if the current monthly income of the debt6 or, or in a joint case, the debtor and the debtor’s spouse,

7 as of the date of the order for relief, when multiplied by

8 12, is equal to or less than—

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

10 1 person, the median family income of the applicable

11 State for 1 earner;

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

13 2, 3, or 4 individuals, the highest median family in14 come of the applicable State for a family of the same

15 number or fewer individuals; or

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

19 fewer individuals, plus $525 per month for each in20 dividual in excess of 4.

21 ‘‘(7)(A) No judge, United States trustee (or bank22 ruptcy administrator, if any), trustee, or other party in

23 interest may file a motion under paragraph (2) if the cur24 rent monthly income of the debtor and the debtor’s spouse
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1 combined, as of the date of the order for relief when multi2 plied by 12, is equal to or less than—

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

4 1 person, the median family income of the applicable

5 State for 1 earner;

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

7 2, 3, or 4 individuals, the highest median family in8 come of the applicable State for a family of the same

9 number or fewer individuals; or

10 ‘‘(iii) in the case of a debtor in a household ex11 ceeding 4 individuals, the highest median family in12 come of the applicable State for a family of 4 or

13 fewer individuals, plus $525 per month for each in14 dividual in excess of 4.

15 ‘‘(B) In a case that is not a joint case, current month16 ly income of the debtor’s spouse shall not be considered

17 for purposes of subparagraph (A) if—

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

19 separated under applicable nonbankruptcy law; or

20 ‘‘(II) the debtor and the debtor’s spouse are liv21 ing separate and apart, other than for the purpose

22 of evading subparagraph (A); and

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

24 of perjury—
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1 ‘‘(I) specifying that the debtor meets the

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

3 (i); and

4 ‘‘(II) disclosing the aggregate, or best esti5 mate of the aggregate, amount of any cash or

6 money payments received from the debtor’s

7 spouse attributed to the debtor’s current

8 monthly income.’’.

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

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

11 the following:

12 ‘‘(10A) ‘current monthly income’—

13 ‘‘(A) means the average monthly income

14 from all sources that the debtor receives (or in

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

16 receive) without regard to whether such income

17 is taxable income, derived during the 6-month

18 period ending on—

19 ‘‘(i) the last day of the calendar

20 month immediately preceding the date of

21 the commencement of the case if the debt22 or files the schedule of current income re23 quired by section 521(a)(1)(B)(ii); or

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

25 is determined by the court for purposes of
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1 this title if the debtor does not file the

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

4 ‘‘(B) includes any amount paid by any en5 tity other than the debtor (or in a joint case the

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

7 basis for the household expenses of the debtor

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

9 the debtor’s spouse if not otherwise a depend10 ent), but excludes benefits received under the

11 Social Security Act, payments to victims of war

12 crimes or crimes against humanity on account

13 of their status as victims of such crimes, and

14 payments to victims of international terrorism

15 (as defined in section 2331 of title 18) or do16 mestic terrorism (as defined in section 2331 of

17 title 18) on account of their status as victims

18 of such terrorism;’’.

19 (c) UNITED STATES TRUSTEE AND BANKRUPTCY

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

21 States Code, is amended—

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

23 shall—’’; and

24 (2) by adding at the end the following:
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1 ‘‘(b)(1) With respect to a debtor who is an individual

2 in a case under this chapter—

3 ‘‘(A) the United States trustee (or the bank4 ruptcy administrator, if any) shall review all mate5 rials filed by the debtor and, not later than 10 days

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

7 with the court a statement as to whether the debt8 or’s case would be presumed to be an abuse under

9 section 707(b); and

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

11 statement under subparagraph (A), the court shall

12 provide a copy of the statement to all creditors.

13 ‘‘(2) The United States trustee (or bankruptcy ad14 ministrator, if any) shall, not later than 30 days after the

15 date of filing a statement under paragraph (1), either file

16 a motion to dismiss or convert under section 707(b) or

17 file a statement setting forth the reasons the United

18 States trustee (or the bankruptcy administrator, if any)

19 does not consider such a motion to be appropriate, if the

20 United States trustee (or the bankruptcy administrator,

21 if any) determines that the debtor’s case should be pre22 sumed to be an abuse under section 707(b) and the prod23 uct of the debtor’s current monthly income, multiplied by

24 12 is not less than—
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1 ‘‘(A) 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; or

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

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

7 number or fewer individuals.’’.

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

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

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

11 the debtor is an individual and in which the presumption

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

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

14 the date of the filing of the petition that the presumption

15 of abuse has arisen.’’.

16 (e) NONLIMITATION OF INFORMATION.—Nothing in

17 this title shall limit the ability of a creditor to provide in18 formation to a judge (except for information commu19 nicated ex parte, unless otherwise permitted by applicable

20 law), United States trustee (or bankruptcy administrator,

21 if any), or trustee.

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

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

24 the end the following:

25 ‘‘(c)(1) In this subsection—
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1 ‘‘(A) the term ‘crime of violence’ has the mean2 ing given such term in section 16 of title 18; and

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

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

5 18.

6 ‘‘(2) Except as provided in paragraph (3), after no7 tice and a hearing, the court, on a motion by the victim

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

9 when it is in the best interest of the victim dismiss a vol10 untary case filed under this chapter by a debtor who is

11 an individual if such individual was convicted of such

12 crime.

13 ‘‘(3) The court may not dismiss a case under para14 graph (2) if the debtor establishes by a preponderance of

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

16 is necessary to satisfy a claim for a domestic support obli17 gation.’’.

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

19 title 11, United States Code, is amended—

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

21 end;

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

23 inserting a semicolon; and

24 (3) by inserting after paragraph (6) the fol25 lowing:
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1 ‘‘(7) the action of the debtor in filing the peti2 tion was in good faith;’’.

3 (h) APPLICABILITY OF MEANS TEST TO CHAPTER

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

5 amended—

6 (1) in paragraph (1)(B), by inserting ‘‘to unse7 cured creditors’’ after ‘‘to make payments’’; and

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

9 following:

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

11 ‘disposable income’ means current monthly income

12 received by the debtor (other than child support pay13 ments, foster care payments, or disability payments

14 for a dependent child made in accordance with appli15 cable nonbankruptcy law to the extent reasonably

16 necessary to be expended for such child) less

17 amounts reasonably necessary to be expended—

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

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

20 a domestic support obligation, that first be21 comes payable after the date the petition is

22 filed; and

23 ‘‘(ii) for charitable contributions (that

24 meet the definition of ‘charitable contribution’

25 under section 548(d)(3) to a qualified religious
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1 or charitable entity or organization (as defined

2 in section 548(d)(4)) in an amount not to ex3 ceed 15 percent of gross income of the debtor

4 for the year in which the contributions are

5 made; and

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

7 for the payment of expenditures necessary for

8 the continuation, preservation, and operation of

9 such business.

10 ‘‘(3) Amounts reasonably necessary to be ex11 pended under paragraph (2) shall be determined in

12 accordance with subparagraphs (A) and (B) of sec13 tion 707(b)(2), if the debtor has current monthly in14 come, when multiplied by 12, greater than—

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

16 of 1 person, the median family income of the

17 applicable State for 1 earner;

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

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

20 family income of the applicable State for a fam21 ily of the same number or fewer individuals; or

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

23 exceeding 4 individuals, the highest median

24 family income of the applicable State for a fam-
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1 ily of 4 or fewer individuals, plus $525 per

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

3 (i) SPECIAL ALLOWANCE FOR HEALTH INSUR4 ANCE.—Section 1329(a) of title 11, United States Code,

5 is amended—

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

7 end;

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

9 the end and inserting ‘‘; or’’; and

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

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

12 by the actual amount expended by the debtor to pur13 chase health insurance for the debtor (and for any

14 dependent of the debtor if such dependent does not

15 otherwise have health insurance coverage) if the

16 debtor documents the cost of such insurance and

17 demonstrates that—

18 ‘‘(A) such expenses are reasonable and

19 necessary;

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

21 health insurance, the amount is not materially

22 larger than the cost the debtor previously paid

23 or the cost necessary to maintain the lapsed

24 policy; or
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1 ‘‘(ii) if the debtor did not have health in2 surance, the amount is not materially larger

3 than the reasonable cost that would be incurred

4 by a debtor who purchases health insurance,

5 who has similar income, expenses, age, and

6 health status, and who lives in the same geo7 graphical location with the same number of de8 pendents who do not otherwise have health in9 surance coverage; and

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

11 for purposes of determining disposable income

12 under section 1325(b) of this title;

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

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

15 (j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section

16 104(b) of title 11, United States Code, is amended by

17 striking ‘‘and 523(a)(2)(C)’’ each place it appears and in18 serting ‘‘523(a)(2)(C), 707(b), and 1325(b)(3)’’.

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

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

21 by inserting after paragraph (39) the following:

22 ‘‘(39A) ‘median family income’ means for any

23 year—
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1 ‘‘(A) the median family income both cal2 culated and reported by the Bureau of the Cen3 sus in the then most recent year; and

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

5 the then current year, adjusted annually after

6 such most recent year until the next year in

7 which median family income is both calculated

8 and reported by the Bureau of the Census, to

9 reflect the percentage change in the Consumer

10 Price Index for All Urban Consumers during

11 the period of years occurring after such most

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

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

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

15 by striking the item relating to section 707 and inserting

16 the following:

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

17 SEC. 103. SENSE OF CONGRESS AND STUDY.

18 (a) SENSE OF CONGRESS.—It is the sense of Con19 gress that the Secretary of the Treasury has the authority

20 to alter the Internal Revenue Service standards estab21 lished to set guidelines for repayment plans as needed to

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

23 United States Code.

24 (b) STUDY.—
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1 (1) IN GENERAL.—Not later than 2 years after

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

3 the Executive Office for United States Trustees shall

4 submit a report to the Committee on the Judiciary

5 of the Senate and the Committee on the Judiciary

6 of the House of Representatives containing the find7 ings of the Director regarding the utilization of In8 ternal Revenue Service standards for determining—

9 (A) the current monthly expenses of a

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

11 States Code; and

12 (B) the impact that the application of such

13 standards has had on debtors and on the bank14 ruptcy courts.

15 (2) RECOMMENDATION.—The report under

16 paragraph (1) may include recommendations for

17 amendments to title 11, United States Code, that

18 are consistent with the findings of the Director

19 under paragraph (1).

20 SEC. 104. NOTICE OF ALTERNATIVES.

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

22 amended to read as follows:

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

24 title by an individual whose debts are primarily consumer
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1 debts, the clerk shall give to such individual written notice

2 containing—

3 ‘‘(1) a brief description of—

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

5 general purpose, benefits, and costs of pro6 ceeding under each of those chapters; and

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

8 credit counseling agencies; and

9 ‘‘(2) statements specifying that—

10 ‘‘(A) a person who knowingly and fraudu11 lently conceals assets or makes a false oath or

12 statement under penalty of perjury in connec13 tion with a case under this title shall be subject

14 to fine, imprisonment, or both; and

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

16 in connection with a case under this title is sub17 ject to examination by the Attorney General.’’.

18 SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING

19 TEST PROGRAM.

20 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

21 AND TRAINING CURRICULUM AND MATERIALS.—The Di22 rector of the Executive Office for United States Trustees

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

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

25 field of debtor education, including trustees who serve in
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1 cases under chapter 13 of title 11, United States Code,

2 and who operate financial management education pro3 grams for debtors, and shall develop a financial manage4 ment training curriculum and materials that can be used

5 to educate debtors who are individuals on how to better

6 manage their finances.

7 (b) TEST.—

8 (1) SELECTION OF DISTRICTS.—The Director

9 shall select 6 judicial districts of the United States

10 in which to test the effectiveness of the financial

11 management training curriculum and materials de12 veloped under subsection (a).

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

14 not later than 270 days after the date of the enact15 ment of this Act, such curriculum and materials

16 shall be, for the 6 judicial districts selected under

17 paragraph (1), used as the instructional course con18 cerning personal financial management for purposes

19 of section 111 of title 11, United States Code.

20 (c) EVALUATION.—

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

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

23 evaluate the effectiveness of—
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1 (A) the financial management training cur2 riculum and materials developed under sub3 section (a); and

4 (B) a sample of existing consumer edu5 cation programs such as those described in the

6 Report of the National Bankruptcy Review

7 Commission (October 20, 1997) that are rep8 resentative of consumer education programs

9 carried out by the credit industry, by trustees

10 serving under chapter 13 of title 11, United

11 States Code, and by consumer counseling

12 groups.

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

14 concluding such evaluation, the Director shall sub15 mit a report to the Speaker of the House of Rep16 resentatives and the President pro tempore of the

17 Senate, for referral to the appropriate committees of

18 the Congress, containing the findings of the Director

19 regarding the effectiveness of such curriculum, such

20 materials, and such programs and their costs.

21 SEC. 106. CREDIT COUNSELING.

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

23 11, United States Code, is amended by adding at the end

24 the following:
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1 ‘‘(h)(1) Subject to paragraphs (2) and (3), and not2 withstanding any other provision of this section, an indi3 vidual may not be a debtor under this title unless such

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

5 date of filing of the petition by such individual, received

6 from an approved nonprofit budget and credit counseling

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

8 briefing (including a briefing conducted by telephone or

9 on the Internet) that outlined the opportunities for avail10 able credit counseling and assisted such individual in per11 forming a related budget analysis.

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

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

14 States trustee (or the bankruptcy administrator, if any)

15 determines that the approved nonprofit budget and credit

16 counseling agencies for such district are not reasonably

17 able to provide adequate services to the additional individ18 uals who would otherwise seek credit counseling from such

19 agencies by reason of the requirements of paragraph (1).

20 ‘‘(B) The United States trustee (or the bankruptcy

21 administrator, if any) who makes a determination de22 scribed in subparagraph (A) shall review such determina23 tion not later than 1 year after the date of such deter24 mination, and not less frequently than annually thereafter.

25 Notwithstanding the preceding sentence, a nonprofit
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1 budget and credit counseling agency may be disapproved

2 by the United States trustee (or the bankruptcy adminis3 trator, if any) at any time.

4 ‘‘(3)(A) Subject to subparagraph (B), the require5 ments of paragraph (1) shall not apply with respect to

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

7 ‘‘(i) describes exigent circumstances that merit

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

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

10 counseling services from an approved nonprofit

11 budget and credit counseling agency, but was unable

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

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

14 which the debtor made that request; and

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

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

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

18 the date on which the debtor meets the requirements of

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

20 to that debtor after the date that is 30 days after the debt21 or files a petition, except that the court, for cause, may

22 order an additional 15 days.’’.

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

24 11, United States Code, is amended—
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1 (1) in paragraph (9), by striking ‘‘or’’ at the

2 end;

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

4 and inserting ‘‘; or’’; and

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

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

7 to complete an instructional course concerning per8 sonal financial management described in section

9 111, except that this paragraph shall not apply with

10 respect to a debtor who resides in a district for

11 which the United States trustee (or the bankruptcy

12 administrator, if any) determines that the approved

13 instructional courses are not adequate to service the

14 additional individuals who would otherwise be re15 quired to complete such instructional courses under

16 this section (The United States trustee (or the bank17 ruptcy administrator, if any) who makes a deter18 mination described in this paragraph shall review

19 such determination not later than 1 year after the

20 date of such determination, and not less frequently

21 than annually thereafter.).’’.

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

23 11, United States Code, is amended by adding at the end

24 the following:
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1 ‘‘(g)(1) The court shall not grant a discharge under

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

3 debtor has completed an instructional course concerning

4 personal financial management described in section 111.

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

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

7 States trustee (or the bankruptcy administrator, if any)

8 determines that the approved instructional courses are not

9 adequate to service the additional individuals who would

10 otherwise be required to complete such instructional

11 course by reason of the requirements of paragraph (1).

12 ‘‘(3) The United States trustee (or the bankruptcy

13 administrator, if any) who makes a determination de14 scribed in paragraph (2) shall review such determination

15 not later than 1 year after the date of such determination,

16 and not less frequently than annually thereafter.’’.

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

18 United States Code, is amended—

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

20 shall—’’; and

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

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

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

24 court—
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1 ‘‘(1) a certificate from the approved nonprofit

2 budget and credit counseling agency that provided

3 the debtor services under section 109(h) describing

4 the services provided to the debtor; and

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

6 developed under section 109(h) through the ap7 proved nonprofit budget and credit counseling agen8 cy referred to in paragraph (1).’’.

9 (e) GENERAL PROVISIONS.—

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

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

12 following:

13 ‘‘§ 111. Nonprofit budget and credit counseling agen14 cies; financial management instructional

15 courses

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

17 of—

18 ‘‘(1) nonprofit budget and credit counseling

19 agencies that provide 1 or more services described in

20 section 109(h) currently approved by the United

21 States trustee (or the bankruptcy administrator, if

22 any); and

23 ‘‘(2) instructional courses concerning personal

24 financial management currently approved by the
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1 United States trustee (or the bankruptcy adminis2 trator, if any), as applicable.

3 ‘‘(b) The United States trustee (or bankruptcy ad4 ministrator, if any) shall only approve a nonprofit budget

5 and credit counseling agency or an instructional course

6 concerning personal financial management as follows:

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

8 administrator, if any) shall have thoroughly reviewed

9 the qualifications of the nonprofit budget and credit

10 counseling agency or of the provider of the instruc11 tional course under the standards set forth in this

12 section, and the services or instructional courses

13 that will be offered by such agency or such provider,

14 and may require such agency or such provider that

15 has sought approval to provide information with re16 spect to such review.

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

18 administrator, if any) shall have determined that

19 such agency or such instructional course fully satis20 fies the applicable standards set forth in this section.

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

22 agency or instructional course did not appear on the

23 approved list for the district under subsection (a)

24 immediately before approval under this section, ap25 proval under this subsection of such agency or such
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1 instructional course shall be for a probationary pe2 riod not to exceed 6 months.

3 ‘‘(4) At the conclusion of the applicable proba4 tionary period under paragraph (3), the United

5 States trustee (or bankruptcy administrator, if any)

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

7 and for successive 1-year periods thereafter, an

8 agency or instructional course that has dem9 onstrated during the probationary or applicable sub10 sequent period of approval 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), an interested person

18 may seek judicial review of such decision in the ap19 propriate district court of the United States.

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

21 administrator, if any) shall only approve a nonprofit budg22 et and credit counseling agency that demonstrates that it

23 will provide qualified counselors, maintain adequate provi24 sion for safekeeping and payment of client funds, provide

25 adequate counseling with respect to client credit problems,
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1 and deal responsibly and effectively with other matters re2 lating to the quality, effectiveness, and financial security

3 of the services it provides.

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

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

6 and credit counseling agency shall, at a minimum—

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

8 which—

9 ‘‘(i) are not employed by such agency; and

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

11 financially from the outcome of the counseling

12 services provided by such agency;

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

14 charge a reasonable fee, and provide services without

15 regard to ability to pay the fee;

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

17 client funds, including an annual audit of the trust

18 accounts and appropriate employee bonding;

19 ‘‘(D) provide full disclosures to a client, includ20 ing funding sources, counselor qualifications, pos21 sible impact on credit reports, and any costs of such

22 program that will be paid by such client and how

23 such costs will be paid;

24 ‘‘(E) provide adequate counseling with respect

25 to a client’s credit problems that includes an anal-
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1 ysis of such client’s current financial condition, fac2 tors that caused such financial condition, and how

3 such client can develop a plan to respond to the

4 problems without incurring negative amortization of

5 debt;

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

7 commissions or bonuses based on the outcome of the

8 counseling services provided by such agency, and

9 who have adequate experience, and have been ade10 quately trained to provide counseling services to in11 dividuals in financial difficulty, including the mat12 ters described in subparagraph (E);

13 ‘‘(G) demonstrate adequate experience and

14 background in providing credit counseling; and

15 ‘‘(H) have adequate financial resources to pro16 vide continuing support services for budgeting plans

17 over the life of any repayment plan.

18 ‘‘(d) The United States trustee (or the bankruptcy

19 administrator, if any) shall only approve an instructional

20 course concerning personal financial management—

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

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

23 minimum—
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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 by telephone or through the Inter15 net, if such instructional course is effective; and

16 ‘‘(D) the preparation and retention of rea17 sonable records (which shall include the debt18 or’s bankruptcy case number) to permit evalua19 tion of the effectiveness of such instructional

20 course, including any evaluation of satisfaction

21 of instructional course requirements for each

22 debtor attending such instructional course,

23 which shall be available for inspection and eval24 uation by the Executive Office for United

25 States Trustees, the United States trustee (or
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1 the bankruptcy administrator, if any), or the

2 chief bankruptcy judge for the district in which

3 such instructional course is offered; and

4 ‘‘(2) for any 1-year period if the provider there5 of has demonstrated that the course meets the

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

7 ‘‘(A) has been effective in assisting a sub8 stantial number of debtors to understand per9 sonal financial management; and

10 ‘‘(B) is otherwise likely to increase sub11 stantially the debtor’s understanding of per12 sonal financial management.

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

14 the qualifications of a nonprofit budget and credit coun15 seling agency referred to in subsection (a), and request

16 production of documents to ensure the integrity and effec17 tiveness of such agency. The district court may, at any

18 time, remove from the approved list under subsection (a)

19 a nonprofit budget and credit counseling agency upon

20 finding such agency does not meet the qualifications of

21 subsection (b).

22 ‘‘(f) The United States trustee (or the bankruptcy ad23 ministrator, if any) shall notify the clerk that a nonprofit

24 budget and credit counseling agency or an instructional
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1 course is no longer approved, in which case the clerk shall

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

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

4 agency may provide to a credit reporting agency informa5 tion concerning whether a debtor has received or sought

6 instruction concerning personal financial management

7 from such agency.

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

9 that willfully or negligently fails to comply with any re10 quirement under this title with respect to a debtor shall

11 be liable for damages 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. Nonprofit budget and 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,
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1 for purposes of subsection (c)(3), any subsequent case

2 commenced by the debtor under any such chapter shall

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

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

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

6 automatic stay has been terminated.’’.

7 SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY

8 EXPENSES.

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

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

11 Executive Office for United States Trustees shall, not

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

13 Act, issue schedules of reasonable and necessary adminis14 trative expenses of administering a chapter 13 plan for

15 each judicial district of the United States.

16 TITLE II—ENHANCED

17 CONSUMER PROTECTION

18 Subtitle A—Penalties for Abusive

19 Creditor Practices

20 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU21 TION.

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

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

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

2 after a hearing, may reduce a claim filed under this sec3 tion based in whole on an unsecured consumer debt by

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

5 ‘‘(A) the claim was filed by a creditor who un6 reasonably refused to negotiate a reasonable alter7 native repayment schedule proposed on behalf of the

8 debtor by an approved nonprofit budget and credit

9 counseling agency described in section 111;

10 ‘‘(B) the offer of the debtor under subpara11 graph (A)—

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

13 date of the filing of the petition; and

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

15 percent of the amount of the debt over a period

16 not to exceed the repayment period of the loan,

17 or a reasonable extension thereof; and

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

19 repayment schedule is nondischargeable.

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

21 clear and convincing evidence, that—

22 ‘‘(A) the creditor unreasonably refused to con23 sider the debtor’s proposal; and
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1 ‘‘(B) the proposed alternative repayment sched2 ule was made prior to expiration of the 60-day pe3 riod specified in paragraph (1)(B)(i).’’.

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

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

6 end the following:

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

8 transfer was made as a part of an alternative repayment

9 schedule between the debtor and any creditor of the debtor

10 created by an approved nonprofit budget and credit coun11 seling agency.’’.

12 SEC. 202. EFFECT OF DISCHARGE.

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

14 amended by adding at the end the following:

15 ‘‘(i) The willful failure of a creditor to credit pay16 ments received under a plan confirmed under this title,

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

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

19 required to be made under the plan in the manner re20 quired by the plan (including crediting the amounts re21 quired under the plan), shall constitute a violation of an

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

23 to collect and failure to credit payments in the manner

24 required by the plan caused material injury to the debtor.
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1 ‘‘(j) Subsection (a)(2) does not operate as an injunc2 tion against an act by a creditor that is the holder of a

3 secured claim, if—

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

5 real property that is the principal residence of the

6 debtor;

7 ‘‘(2) such act is in the ordinary course of busi8 ness between the creditor and the debtor; and

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

10 periodic payments associated with a valid security

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

12 the lien.’’.

13 SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION

14 AGREEMENT PRACTICES.

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

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

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

18 and inserting the following:

19 ‘‘(2) the debtor received the disclosures de20 scribed in subsection (k) at or before the time at

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

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

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

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

25 in paragraph (3), completed as required in that para-
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1 graph, together with the agreement specified in subsection

2 (c), statement, declaration, motion and order described,

3 respectively, in paragraphs (4) through (8), and shall be

4 the only disclosures required in connection with entering

5 into such agreement.

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

7 made clearly and conspicuously and in writing. The terms

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

9 be disclosed more conspicuously than other terms, data or

10 information provided in connection with this disclosure,

11 except that the phrases ‘Before agreeing to reaffirm a

12 debt, review these important disclosures’ and ‘Summary

13 of Reaffirmation Agreement’ may be equally conspicuous.

14 Disclosures may be made in a different order and may

15 use terminology different from that set forth in para16 graphs (2) through (8), except that the terms ‘Amount

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

18 where indicated.

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

20 paragraph shall consist of the following:

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

22 to reaffirm a debt, review these important disclo23 sures:’;

24 ‘‘(B) Under the heading ‘Summary of Reaffir25 mation Agreement’, the statement: ‘This Summary
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1 is made pursuant to the requirements of the Bank2 ruptcy Code’;

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

4 term, which shall be—

5 ‘‘(i) the total amount of debt that the debt6 or agrees to reaffirm by entering into an agree7 ment of the kind specified in subsection (c), and

8 ‘‘(ii) the total of any fees and costs ac9 crued as of the date of the disclosure statement,

10 related to such total amount.

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

12 ‘Amount Reaffirmed’, the statements—

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

14 to reaffirm’; and

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

16 you to pay additional amounts which may come

17 due after the date of this disclosure. Consult

18 your credit agreement.’.

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

20 term, which shall be disclosed as—

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

22 debt is an extension of credit under an open

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

24 end credit plan’ are defined in section 103 of

25 the Truth in Lending Act, then—
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1 ‘‘(I) the annual percentage rate deter2 mined under paragraphs (5) and (6) of

3 section 127(b) of the Truth in Lending

4 Act, as applicable, as disclosed to the debt5 or in the most recent periodic statement

6 prior to entering into an agreement of the

7 kind specified in subsection (c) or, if no

8 such periodic statement has been given to

9 the debtor during the prior 6 months, the

10 annual percentage rate as it would have

11 been so disclosed at the time the disclosure

12 statement is given to the debtor, or to the

13 extent this annual percentage rate is not

14 readily available or not applicable, then

15 ‘‘(II) the simple interest rate applica16 ble to the amount reaffirmed as of the date

17 the disclosure statement is given to the

18 debtor, or if different simple interest rates

19 apply to different balances, the simple in20 terest rate applicable to each such balance,

21 identifying the amount of each such

22 balance included in the amount reaffirmed,

23 or

24 ‘‘(III) if the entity making the disclo25 sure elects, to disclose the annual percent-
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1 age rate under subclause (I) and the sim2 ple interest rate under subclause (II);

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

4 debt is an extension of credit other than under

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

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

7 103 of the Truth in Lending Act, then—

8 ‘‘(I) the annual percentage rate under

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

10 Act, as disclosed to the debtor in the most

11 recent disclosure statement given to the

12 debtor prior to the entering into an agree13 ment of the kind specified in subsection (c)

14 with respect to the debt, or, if no such dis15 closure statement was given to the debtor,

16 the annual percentage rate as it would

17 have been so disclosed at the time the dis18 closure statement is given to the debtor, or

19 to the extent this annual percentage rate is

20 not readily available or not applicable, then

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

23 the disclosure statement is given to the

24 debtor, or if different simple interest rates

25 apply to different balances, the simple in-
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•HR 975 EH

1 terest rate applicable to each such balance,

2 identifying the amount of such balance in3 cluded in the amount reaffirmed, or

4 ‘‘(III) if the entity making the disclo5 sure elects, to disclose the annual percent6 age rate under (I) and the simple interest

7 rate under (II).

8 ‘‘(F) If the underlying debt transaction was dis9 closed as a variable rate transaction on the most re10 cent disclosure given under the Truth in Lending

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

12 be a variable interest rate which changes from time

13 to time, so that the annual percentage rate disclosed

14 here may be higher or lower.’.

15 ‘‘(G) If the debt is secured by a security inter16 est which has not been waived in whole or in part

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

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

19 a security interest or lien in goods or property is as20 serted over some or all of the debts the debtor is re21 affirming and listing the items and their original

22 purchase price that are subject to the asserted secu23 rity interest, or if not a purchase-money security in24 terest then listing by items or types and the original

25 amount of the loan.
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1 ‘‘(H) At the election of the creditor, a state2 ment of the repayment schedule using 1 or a com3 bination of the following—

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

5 payment in the amount of $lll is due on

6 lll but the future payment amount may be

7 different. Consult your reaffirmation agreement

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

9 the amount of the first payment and the due

10 date of that payment in the places provided;

11 ‘‘(ii) by making the statement: ‘Your pay12 ment schedule will be:’, and describing the re13 payment schedule with the number, amount,

14 and due dates or period of payments scheduled

15 to repay the debts reaffirmed to the extent then

16 known by the disclosing party; or

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

18 obligations with reasonable specificity to the ex19 tent then known by the disclosing party.

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

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

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

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

24 you what might occur if the law permits the creditor

25 to take the action. If you have questions about your
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1 reaffirming a debt or what the law requires, consult

2 with the attorney who helped you negotiate this

3 agreement reaffirming a debt. If you don’t have an

4 attorney helping you, the judge will explain the ef5 fect of your reaffirming a debt when the hearing on

6 the reaffirmation agreement is held.’.

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

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

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

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

11 completed, the reaffirmation agreement is not effective,

12 even though you have signed it.

13 ‘‘ ‘1. Read the disclosures in this Part A care14 fully. Consider the decision to reaffirm carefully.

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

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

17 agreement you and your creditor agree on).

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

19 can afford to make the payments you are agreeing

20 to make and have received a copy of the disclosure

21 statement and a completed and signed reaffirmation

22 agreement.

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

24 during the negotiation of your reaffirmation agree-
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1 ment, the attorney must have signed the certification

2 in Part C.

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

4 during the negotiation of your reaffirmation agree5 ment, you must have completed and signed Part E.

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

7 filed with the court by you or your creditor. If a sep8 arate reaffirmation agreement (other than the one in

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

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

11 during the negotiation of your reaffirmation agree12 ment, your reaffirmation agreement becomes effec13 tive upon filing with the court unless the reaffirma14 tion is presumed to be an undue hardship as ex15 plained in Part D.

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

17 during the negotiation of your reaffirmation agree18 ment, it will not be effective unless the court ap19 proves it. The court will notify you of the hearing on

20 your reaffirmation agreement. You must attend this

21 hearing in bankruptcy court where the judge will re22 view your reaffirmation agreement. The bankruptcy

23 court must approve your reaffirmation agreement as

24 consistent with your best interests, except that no

25 court approval is required if your reaffirmation
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1 agreement is for a consumer debt secured by a mort2 gage, deed of trust, security deed, or other lien on

3 your real property, like your home.

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

5 agreement. You may rescind (cancel) your reaffirmation

6 agreement at any time before the bankruptcy court enters

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

8 period that begins on the date your reaffirmation agree9 ment is filed with the court, whichever occurs later. To

10 rescind (cancel) your reaffirmation agreement, you must

11 notify the creditor that your reaffirmation agreement is

12 rescinded (or canceled).

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

14 A reaffirmed debt remains your personal legal obligation.

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

16 that if you default on your reaffirmed debt after your

17 bankruptcy case is over, your creditor may be able to take

18 your property or your wages. Otherwise, your obligations

19 will be determined by the reaffirmation agreement which

20 may have changed the terms of the original agreement.

21 For example, if you are reaffirming an open end credit

22 agreement, the creditor may be permitted by that agree23 ment or applicable law to change the terms of that agree24 ment in the future under certain conditions.
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1 ‘‘ ‘Are you required to enter into a reaffirmation

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

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

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

7 lien? Your bankruptcy discharge does not eliminate any

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

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

10 Even if you do not reaffirm and your personal liability

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

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

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

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

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

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

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

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

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

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

23 shall read as follows:

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

25 during the negotiation of your reaffirmation agree-
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1 ment, your reaffirmation agreement becomes effec2 tive upon filing with the court.’.

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

4 paragraph shall consist of the following:

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

6 reaffirm the debts arising under the credit agreement de7 scribed below.

8 ‘‘ ‘Brief description of credit agreement:

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

10 made as part of this reaffirmation agreement:

11 ‘‘ ‘Signature: Date:

12 ‘‘ ‘Borrower:

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

14 ‘‘ ‘Accepted by creditor:

15 ‘‘ ‘Date of creditor acceptance:’.

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

17 ‘‘(A) The following certification:

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

19 Any).

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

21 a fully informed and voluntary agreement by the debtor;

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

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

24 fully advised the debtor of the legal effect and con-
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1 sequences of this agreement and any default under this

2 agreement.

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

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

5 been established with respect to such agreement,

6 such certification shall state that in the opinion of

7 the attorney, the debtor is able to make the pay8 ment.

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

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

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

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

13 the court, shall consist of the following:

14 ‘‘ ‘Part D: Debtor’s Statement in Support of Reaffir15 mation Agreement.

16 ‘‘ ‘1. I believe this reaffirmation agreement will not

17 impose an undue hardship on my dependents or me. I can

18 afford to make the payments on the reaffirmed debt be19 cause my monthly income (take home pay plus any other

20 income received) is $lll, and my actual current

21 monthly expenses including monthly payments on post22 bankruptcy debt and other reaffirmation agreements total

23 $lll, leaving $lll to make the required payments

24 on this reaffirmed debt. I understand that if my income

25 less my monthly expenses does not leave enough to make
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1 the payments, this reaffirmation agreement is presumed

2 to be an undue hardship on me and must be reviewed by

3 the court. However, this presumption may be overcome if

4 I explain to the satisfaction of the court how I can afford

5 to make the payments here: lll.

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

7 Statement in Part A and a completed and signed reaffir8 mation agreement.’.

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

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

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

12 statement of support of the reaffirmation agreement,

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

14 the court, shall consist of the following:

15 ‘‘ ‘I believe this reaffirmation agreement is in my fi16 nancial interest. I can afford to make the payments on

17 the reaffirmed debt. I received a copy of the Reaffirmation

18 Disclosure Statement in Part A and a completed and

19 signed reaffirmation agreement.’.

20 ‘‘(7) The motion that may be used if approval of such

21 agreement by the court is required in order for it to be

22 effective, shall be signed and dated by the movant and

23 shall consist of the following:

24 ‘‘ ‘Part E: Motion for Court Approval (To be com25 pleted only if the debtor is not represented by an attor-
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1 ney.). I (we), the debtor(s), affirm the following to be true

2 and correct:

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

4 with this reaffirmation agreement.

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

6 interest based on the income and expenses I have disclosed

7 in my Statement in Support of this reaffirmation agree8 ment, and because (provide any additional relevant rea9 sons the court should consider):

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

11 this reaffirmation agreement.’.

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

13 such agreement, shall consist of the following:

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

15 and approves the reaffirmation agreement described

16 above.’.

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

18 the following shall apply:

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

20 debtor before and after the filing of an agreement of

21 the kind specified in subsection (c) with the court.

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

23 debtor under such agreement that the creditor be24 lieves in good faith to be effective.
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1 ‘‘(3) The requirements of subsections (c)(2) and

2 (k) shall be satisfied if disclosures required under

3 those subsections are given in good faith.

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

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

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

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

8 it shall be presumed that such agreement is an undue

9 hardship on the debtor if the debtor’s monthly income less

10 the debtor’s monthly expenses as shown on the debtor’s

11 completed and signed statement in support of such agree12 ment required under subsection (k)(6)(A) is less than the

13 scheduled payments on the reaffirmed debt. This pre14 sumption shall be reviewed by the court. The presumption

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

16 includes an explanation that identifies additional sources

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

18 terms of such agreement. If the presumption is not rebut19 ted to the satisfaction of the court, the court may dis20 approve such agreement. No agreement shall be dis21 approved without notice and a hearing to the debtor and

22 creditor, and such hearing shall be concluded before the

23 entry of the debtor’s discharge.
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1 ‘‘(2) This subsection does not apply to reaffirmation

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

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

4 (b) LAW ENFORCEMENT.—

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

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

7 following:

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

9 agents of the Federal Bureau of Inves10 tigation to address abusive reaffirma11 tions of debt and materially fraudulent

12 statements in bankruptcy schedules

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

14 United States shall designate the individuals described in

15 subsection (b) to have primary responsibility in carrying

16 out enforcement activities in addressing violations of sec17 tion 152 or 157 relating to abusive reaffirmations of debt.

18 In addition to addressing the violations referred to in the

19 preceding sentence, the individuals described under sub20 section (b) shall address violations of section 152 or 157

21 relating to materially fraudulent statements in bankruptcy

22 schedules that are intentionally false or intentionally mis23 leading.
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1 ‘‘(b) UNITED STATES ATTORNEYS AND AGENTS OF

2 THE FEDERAL BUREAU OF INVESTIGATION.—The indi3 viduals referred to in subsection (a) are—

4 ‘‘(1) the United States attorney for each judi5 cial district of the United States; and

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

8 of Investigation.

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

10 States attorney designated under this section shall, in ad11 dition to any other responsibilities, have primary responsi12 bility for carrying out the duties of a United States attor13 ney under section 3057.

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

15 courts shall establish procedures for referring any case

16 that may contain a materially fraudulent statement in a

17 bankruptcy schedule to the individuals designated under

18 this section.’’.

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

21 is amended by adding at the end the following:

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

of Investigation to address abusive reaffirmations of debt and

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

2 SALE OF PREDATORY LOANS.

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

4 amended—

5 (1) by redesignating subsection (o) as sub6 section (p), and

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

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

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

12 a consumer credit contract (as defined in section 433.1

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

14 1, 2002), as amended from time to time), and if such in15 terest is purchased through a sale under this section, then

16 such person shall remain subject to all claims and defenses

17 that are related to such consumer credit transaction or

18 such consumer credit contract, to the same extent as such

19 person would be subject to such claims and defenses of

20 the consumer had such interest been purchased at a sale

21 not under this section.’’.

22 SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION

23 AGREEMENT PROCESS.

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

25 States shall conduct a study of the reaffirmation agree26 ment process that occurs under title 11 of the United
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1 States Code, to determine the overall treatment of con2 sumers within the context of such process, and shall in3 clude in such study consideration of—

4 (1) the policies and activities of creditors with

5 respect to reaffirmation agreements; and

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

7 consistently informed of their rights pursuant to

8 such title.

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

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

11 Comptroller General shall submit to the President pro

12 tempore of the Senate and the Speaker of the House of

13 Representatives a report on the results of the study con14 ducted under subsection (a), together with recommenda15 tions for legislation (if any) to address any abusive or co16 ercive tactics found in connection with the reaffirmation

17 agreement process that occurs under title 11 of the United

18 States Code.

19 Subtitle B—Priority Child Support

20 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA21 TION.

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

23 amended—

24 (1) by striking paragraph (12A); and
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1 (2) by inserting after paragraph (14) the fol2 lowing:

3 ‘‘(14A) ‘domestic support obligation’ means a

4 debt that accrues before or after the date of the

5 order for relief in a case under this title, including

6 interest that accrues on that debt as provided under

7 applicable nonbankruptcy law notwithstanding any

8 other provision of this title, that is—

9 ‘‘(A) owed to or recoverable by—

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

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

12 guardian, or responsible relative; or

13 ‘‘(ii) a governmental unit;

14 ‘‘(B) in the nature of alimony, mainte15 nance, or support (including assistance provided

16 by a governmental unit) of such spouse, former

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

18 parent, without regard to whether such debt is

19 expressly so designated;

20 ‘‘(C) established or subject to establish21 ment before or after the date of the order for

22 relief in a case under this title, by reason of ap23 plicable provisions of—

24 ‘‘(i) a separation agreement, divorce

25 decree, or property settlement agreement;
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1 ‘‘(ii) an order of a court of record; or

2 ‘‘(iii) a determination made in accord3 ance with applicable nonbankruptcy law by

4 a governmental unit; and

5 ‘‘(D) not assigned to a nongovernmental

6 entity, unless that obligation is assigned volun7 tarily by the spouse, former spouse, child of the

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

9 or responsible relative for the purpose of col10 lecting the debt;’’.

11 SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP12 PORT OBLIGATIONS.

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

14 amended—

15 (1) by striking paragraph (7);

16 (2) by redesignating paragraphs (1) through

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

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

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

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

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

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

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

24 ‘‘Fourth’’; and
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1 (B) by striking the semicolon at the end

2 and inserting a period;

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

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

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

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

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

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

9 (9) by inserting before paragraph (2), as so re10 designated, the following:

11 ‘‘(1) First:

12 ‘‘(A) Allowed unsecured claims for domes13 tic support obligations that, as of the date of

14 the filing of the petition in a case under this

15 title, are owed to or recoverable by a spouse,

16 former spouse, or child of the debtor, or such

17 child’s parent, legal guardian, or responsible

18 relative, without regard to whether the claim is

19 filed by such person or is filed by a govern20 mental unit on behalf of such person, on the

21 condition that funds received under this para22 graph by a governmental unit under this title

23 after the date of the filing of the petition shall

24 be applied and distributed in accordance with

25 applicable nonbankruptcy law.
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1 ‘‘(B) Subject to claims under subpara2 graph (A), allowed unsecured claims for domes3 tic support obligations that, as of the date of

4 the filing of the petition, are assigned by a

5 spouse, former spouse, child of the debtor, or

6 such child’s parent, legal guardian, or respon7 sible relative to a governmental unit (unless

8 such obligation is assigned voluntarily by the

9 spouse, former spouse, child, parent, legal

10 guardian, or responsible relative of the child for

11 the purpose of collecting the debt) or are owed

12 directly to or recoverable by a governmental

13 unit under applicable nonbankruptcy law, on

14 the condition that funds received under this

15 paragraph by a governmental unit under this

16 title after the date of the filing of the petition

17 be applied and distributed in accordance with

18 applicable nonbankruptcy law.

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

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

21 1302, the administrative expenses of the trustee

22 allowed under paragraphs (1)(A), (2), and (6)

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

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

25 the extent that the trustee administers assets
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1 that are otherwise available for the payment of

2 such claims.’’.

3 SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND

4 DISCHARGE IN CASES INVOLVING DOMESTIC

5 SUPPORT OBLIGATIONS.

6 Title 11, United States Code, is amended—

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

8 following:

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

10 administrative order, or by statute, to pay a domes11 tic support obligation, the debtor has paid all

12 amounts payable under such order or such statute

13 for such obligation that first become payable after

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

15 (2) in section 1208(c)—

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

17 the end;

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

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

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

22 support obligation that first becomes payable after

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

24 (3) in section 1222(a)—
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1 (A) in paragraph (2), by striking ‘‘and’’ at

2 the end;

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

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

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

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

10 provides that all of the debtor’s projected disposable

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

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

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

14 (4) in section 1222(b)—

15 (A) by redesignating paragraph (11) as

16 paragraph (12); and

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

18 following:

19 ‘‘(11) provide for the payment of interest accru20 ing after the date of the filing of the petition on un21 secured claims that are nondischargeable under sec22 tion 1228(a), except that such interest may be paid

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

25 provision for full payment of all allowed claims;’’;
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1 (5) in section 1225(a)—

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

3 the end;

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

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

7 ‘‘(7) the debtor has paid all amounts that are

8 required to be paid under a domestic support obliga9 tion and that first become payable after the date of

10 the filing of the petition if the debtor is required by

11 a judicial or administrative order, or by statute, to

12 pay such domestic support obligation.’’;

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

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

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

17 obligation, after such debtor certifies that all

18 amounts payable under such order or such statute

19 that are due on or before the date of the certifi20 cation (including amounts due before the petition

21 was filed, but only to the extent provided for by the

22 plan) have been paid’’ after ‘‘completion by the debt23 or of all payments under the plan’’;

24 (7) in section 1307(c)—
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1 (A) in paragraph (9), by striking ‘‘or’’ at

2 the end;

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

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

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

7 support obligation that first becomes payable after

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

9 (8) in section 1322(a)—

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

11 the end;

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

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

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

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

19 provides that all of the debtor’s projected disposable

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

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

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

23 (9) in section 1322(b)—

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

25 and inserting a semicolon;
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1 (B) by redesignating paragraph (10) as

2 paragraph (11); and

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

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

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

11 provision for full payment of all allowed claims;

12 and’’;

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

14 102, by inserting after paragraph (7) the following:

15 ‘‘(8) the debtor has paid all amounts that are

16 required to be paid under a domestic support obliga17 tion and that first become payable after the date of

18 the filing of the petition if the debtor is required by

19 a judicial or administrative order, or by statute, to

20 pay such domestic support obligation; and’’;

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

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

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

25 obligation, after such debtor certifies that all
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1 amounts payable under such order or such statute

2 that are due on or before the date of the certifi3 cation (including amounts due before the petition

4 was filed, but only to the extent provided for by the

5 plan) have been paid’’ after ‘‘completion by the debt6 or of all payments under the plan’’.

7 SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC

8 SUPPORT OBLIGATION PROCEEDINGS.

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

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

12 ‘‘(2) under subsection (a)—

13 ‘‘(A) of the commencement or continuation

14 of a civil action or proceeding—

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

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

18 obligations;

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

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

22 except to the extent that such proceeding

23 seeks to determine the division of property

24 that is property of the estate; or

25 ‘‘(v) regarding domestic violence;
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1 ‘‘(B) of the collection of a domestic sup2 port obligation from property that is not prop3 erty of the estate;

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

6 of the debtor for payment of a domestic support

7 obligation under a judicial or administrative

8 order or a statute;

9 ‘‘(D) of the withholding, suspension, or re10 striction of a driver’s license, a professional or

11 occupational license, or a recreational license,

12 under State law, as specified in section

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

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

15 owed by a parent to any consumer reporting

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

17 Social Security Act;

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

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

20 Social Security Act or under an analogous State

21 law; or

22 ‘‘(G) of the enforcement of a medical obli23 gation, as specified under title IV of the Social

24 Security Act;’’.
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1 SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR

2 ALIMONY, MAINTENANCE, AND SUPPORT.

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

4 amended—

5 (1) in subsection (a)—

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

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

9 (B) by striking paragraph (18);

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

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

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

13 103–394 (108 Stat. 4133)—

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

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

16 of the kind’’;

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

18 record,’’; and

19 (C) by striking ‘‘unless—’’ and all that fol20 lows through the end of the paragraph and in21 serting a semicolon.

22 SEC. 216. CONTINUED LIABILITY OF PROPERTY.

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

24 amended—

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

26 and inserting the following:
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1 ‘‘(1) a debt of a kind specified in paragraph (1)

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

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

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

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

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

9 section 523(a)(5); or’’; and

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

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

12 SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS

13 AGAINST PREFERENTIAL TRANSFER MO14 TIONS.

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

16 amended to read as follows:

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

18 payment of a debt for a domestic support obliga19 tion;’’.

20 SEC. 218. DISPOSABLE INCOME DEFINED.

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

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

23 obligation that first becomes payable after the date of the

24 filing of the petition’’ after ‘‘dependent of the debtor’’.
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1 SEC. 219. COLLECTION OF CHILD SUPPORT.

2 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec3 tion 704 of title 11, United States Code, as amended by

4 section 102, is amended—

5 (1) in subsection (a)—

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

7 the end;

8 (B) in paragraph (9), by striking the pe9 riod and inserting a semicolon; and

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

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

12 claim for a domestic support obligation, provide the

13 applicable notice specified in subsection (c); and’’;

14 and

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

16 ‘‘(c)(1) In a case described in subsection (a)(10) to

17 which subsection (a)(10) applies, the trustee shall—

18 ‘‘(A)(i) provide written notice to the holder of

19 the claim described in subsection (a)(10) of such

20 claim and of the right of such holder to use the serv21 ices of the State child support enforcement agency

22 established under sections 464 and 466 of the Social

23 Security Act for the State in which such holder re24 sides, for assistance in collecting child support dur25 ing and after the case under this title;
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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; and

4 ‘‘(iii) include in the notice provided under

5 clause (i) an explanation of the rights of such holder

6 to payment of such claim under this chapter;

7 ‘‘(B)(i) provide written notice to such State

8 child support enforcement agency of such claim; and

9 ‘‘(ii) include in the notice provided under clause

10 (i) the name, address, and telephone number of such

11 holder; and

12 ‘‘(C) at such time as the debtor is granted a

13 discharge under section 727, provide written notice

14 to such holder and to such State child support en15 forcement agency of—

16 ‘‘(i) the granting of the discharge;

17 ‘‘(ii) the last recent known address of the

18 debtor;

19 ‘‘(iii) the last recent known name and ad20 dress of the debtor’s employer; and

21 ‘‘(iv) the name of each creditor that holds

22 a claim that—

23 ‘‘(I) is not discharged under para24 graph (2), (4), or (14A) of section 523(a);

25 or
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1 ‘‘(II) was reaffirmed by the debtor

2 under section 524(c).

3 ‘‘(2)(A) The holder of a claim described in subsection

4 (a)(10) or the State child support enforcement agency of

5 the State in which such holder resides may request from

6 a creditor described in paragraph (1)(C)(iv) the last

7 known address of the debtor.

8 ‘‘(B) Notwithstanding any other provision of law, a

9 creditor that makes a disclosure of a last known address

10 of a debtor in connection with a request made under sub11 paragraph (A) shall not be liable by reason of making such

12 disclosure.’’.

13 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—

14 Section 1106 of title 11, United States Code, is

15 amended—

16 (1) in subsection (a)—

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

18 the end;

19 (B) in paragraph (7), by striking the pe20 riod and inserting ‘‘; and’’; and

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

22 ‘‘(8) if with respect to the debtor there is a

23 claim for a domestic support obligation, provide the

24 applicable notice specified in subsection (c).’’; and

25 (2) by adding at the end the following:
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1 ‘‘(c)(1) In a case described in subsection (a)(8) to

2 which subsection (a)(8) applies, the trustee shall—

3 ‘‘(A)(i) provide written notice to the holder of

4 the claim described in subsection (a)(8) of such

5 claim and of the right of such holder to use the serv6 ices of the State child support enforcement agency

7 established under sections 464 and 466 of the Social

8 Security Act for the State in which such holder re9 sides, for assistance in collecting child support dur10 ing and after the case under this title; and

11 ‘‘(ii) include in the notice required by clause (i)

12 the address and telephone number of such State

13 child support enforcement agency;

14 ‘‘(B)(i) provide written notice to such State

15 child support enforcement agency of such claim; and

16 ‘‘(ii) include in the notice required by clause (i)

17 the name, address, and telephone number of such

18 holder; and

19 ‘‘(C) at such time as the debtor is granted a

20 discharge under section 1141, provide written notice

21 to such holder and to such State child support en22 forcement agency of—

23 ‘‘(i) the granting of the discharge;

24 ‘‘(ii) the last recent known address of the

25 debtor;
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1 ‘‘(iii) the last recent known name and ad2 dress of the debtor’s employer; and

3 ‘‘(iv) the name of each creditor that holds

4 a claim that—

5 ‘‘(I) is not discharged under para6 graph (2), (4), or (14A) of section 523(a);

7 or

8 ‘‘(II) was reaffirmed by the debtor

9 under section 524(c).

10 ‘‘(2)(A) The holder of a claim described in subsection

11 (a)(8) or the State child enforcement support agency of

12 the State in which such holder resides may request from

13 a creditor described in paragraph (1)(C)(iv) the last

14 known address of the debtor.

15 ‘‘(B) Notwithstanding any other provision of law, a

16 creditor that makes a disclosure of a last known address

17 of a debtor in connection with a request made under sub18 paragraph (A) shall not be liable by reason of making such

19 disclosure.’’.

20 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—

21 Section 1202 of title 11, United States Code, is

22 amended—

23 (1) in subsection (b)—

24 (A) in paragraph (4), by striking ‘‘and’’ at

25 the end;
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1 (B) in paragraph (5), by striking the pe2 riod and inserting ‘‘; and’’; and

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

4 ‘‘(6) if with respect to the debtor there is a

5 claim for a domestic support obligation, provide the

6 applicable notice specified in subsection (c).’’; and

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

8 ‘‘(c)(1) In a case described in subsection (b)(6) to

9 which subsection (b)(6) applies, the trustee shall—

10 ‘‘(A)(i) provide written notice to the holder of

11 the claim described in subsection (b)(6) of such

12 claim and of the right of such holder to use the serv13 ices of the State child support enforcement agency

14 established under sections 464 and 466 of the Social

15 Security Act for the State in which such holder re16 sides, for assistance in collecting child support dur17 ing and after the case under this title; and

18 ‘‘(ii) include in the notice provided under clause

19 (i) the address and telephone number of such State

20 child support enforcement agency;

21 ‘‘(B)(i) provide written notice to such State

22 child support enforcement agency of such claim; and

23 ‘‘(ii) include in the notice provided under clause

24 (i) the name, address, and telephone number of such

25 holder; and
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1 ‘‘(C) at such time as the debtor is granted a

2 discharge under section 1228, provide written notice

3 to such holder and to such State child support en4 forcement agency of—

5 ‘‘(i) the granting of the discharge;

6 ‘‘(ii) the last recent known address of the

7 debtor;

8 ‘‘(iii) the last recent known name and ad9 dress of the debtor’s employer; and

10 ‘‘(iv) the name of each creditor that holds

11 a claim that—

12 ‘‘(I) is not discharged under para13 graph (2), (4), or (14A) of section 523(a);

14 or

15 ‘‘(II) was reaffirmed by the debtor

16 under section 524(c).

17 ‘‘(2)(A) The holder of a claim described in subsection

18 (b)(6) or the State child support enforcement agency of

19 the State in which such holder resides may request from

20 a creditor described in paragraph (1)(C)(iv) the last

21 known address of the debtor.

22 ‘‘(B) Notwithstanding any other provision of law, a

23 creditor that makes a disclosure of a last known address

24 of a debtor in connection with a request made under sub-
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1 paragraph (A) shall not be liable by reason of making that

2 disclosure.’’.

3 (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—

4 Section 1302 of title 11, United States Code, is

5 amended—

6 (1) in subsection (b)—

7 (A) in paragraph (4), by striking ‘‘and’’ at

8 the end;

9 (B) in paragraph (5), by striking the pe10 riod and inserting ‘‘; and’’; and

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

12 ‘‘(6) if with respect to the debtor there is a

13 claim for a domestic support obligation, provide the

14 applicable notice specified in subsection (d).’’; and

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

16 ‘‘(d)(1) In a case described in subsection (b)(6) to

17 which subsection (b)(6) applies, the trustee shall—

18 ‘‘(A)(i) provide written notice to the holder of

19 the claim described in subsection (b)(6) of such

20 claim and of the right of such holder to use the serv21 ices of the State child support enforcement agency

22 established under sections 464 and 466 of the Social

23 Security Act for the State in which such holder re24 sides, for assistance in collecting child support dur25 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 1328, 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) or (4) of section 523(a); or

22 ‘‘(II) was reaffirmed by the debtor

23 under section 524(c).

24 ‘‘(2)(A) The holder of a claim described in subsection

25 (b)(6) or the State child support enforcement agency of
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1 the State in which such holder resides may request from

2 a creditor described in paragraph (1)(C)(iv) the last

3 known address of the debtor.

4 ‘‘(B) Notwithstanding any other provision of law, a

5 creditor that makes a disclosure of a last known address

6 of a debtor in connection with a request made under sub7 paragraph (A) shall not be liable by reason of making that

8 disclosure.’’.

9 SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDU10 CATIONAL BENEFITS AND LOANS.

11 Section 523(a) of title 11, United States Code, is

12 amended by striking paragraph (8) and inserting the fol13 lowing:

14 ‘‘(8) unless excepting such debt from discharge

15 under this paragraph would impose an undue hard16 ship on the debtor and the debtor’s dependents,

17 for—

18 ‘‘(A)(i) an educational benefit overpayment

19 or loan made, insured, or guaranteed by a gov20 ernmental unit, or made under any program

21 funded in whole or in part by a governmental

22 unit or nonprofit institution; or

23 ‘‘(ii) an obligation to repay funds received

24 as an educational benefit, scholarship, or sti25 pend; or
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1 ‘‘(B) any other educational loan that is a

2 qualified education loan, as defined in section

3 221(d)(1) of the Internal Revenue Code of

4 1986, incurred by a debtor who is an indi5 vidual;’’.

6 Subtitle C—Other Consumer

7 Protections

8 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK9 RUPTCY FILINGS.

10 Section 110 of title 11, United States Code, is

11 amended—

12 (1) in subsection (a)(1), by striking ‘‘or an em13 ployee of an attorney’’ and inserting ‘‘for the debtor

14 or an employee of such attorney under the direct su15 pervision of such attorney’’;

16 (2) in subsection (b)—

17 (A) in paragraph (1), by adding at the end

18 the following: ‘‘If a bankruptcy petition pre19 parer is not an individual, then an officer, prin20 cipal, responsible person, or partner of the

21 bankruptcy petition preparer shall be required

22 to—

23 ‘‘(A) sign the document for filing; and
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1 ‘‘(B) print on the document the name and ad2 dress of that officer, principal, responsible person, or

3 partner.’’; and

4 (B) by striking paragraph (2) and insert5 ing the following:

6 ‘‘(2)(A) Before preparing any document for filing or

7 accepting any fees from a debtor, the bankruptcy petition

8 preparer shall provide to the debtor a written notice which

9 shall be on an official form prescribed by the Judicial Con10 ference of the United States in accordance with rule 9009

11 of the Federal Rules of Bankruptcy Procedure.

12 ‘‘(B) The notice under subparagraph (A)—

13 ‘‘(i) shall inform the debtor in simple language

14 that a bankruptcy petition preparer is not an attor15 ney and may not practice law or give legal advice;

16 ‘‘(ii) may contain a description of examples of

17 legal advice that a bankruptcy petition preparer is

18 not authorized to give, in addition to any advice that

19 the preparer may not give by reason of subsection

20 (e)(2); and

21 ‘‘(iii) shall—

22 ‘‘(I) be signed by the debtor and, under

23 penalty of perjury, by the bankruptcy petition

24 preparer; and
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1 ‘‘(II) be filed with any document for fil2 ing.’’;

3 (3) in subsection (c)—

4 (A) in paragraph (2)—

5 (i) by striking ‘‘(2) For purposes’’ and

6 inserting ‘‘(2)(A) Subject to subparagraph

7 (B), for purposes’’; and

8 (ii) by adding at the end the fol9 lowing:

10 ‘‘(B) If a bankruptcy petition preparer is not an indi11 vidual, the identifying number of the bankruptcy petition

12 preparer shall be the Social Security account number of

13 the officer, principal, responsible person, or partner of the

14 bankruptcy petition preparer.’’; and

15 (B) by striking paragraph (3);

16 (4) in subsection (d)—

17 (A) by striking ‘‘(d)(1)’’ and inserting

18 ‘‘(d)’’; and

19 (B) by striking paragraph (2);

20 (5) in subsection (e)—

21 (A) by striking paragraph (2); and

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

23 ‘‘(2)(A) A bankruptcy petition preparer may not offer

24 a potential bankruptcy debtor any legal advice, including

25 any legal advice described in subparagraph (B).
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1 ‘‘(B) The legal advice referred to in subparagraph

2 (A) includes advising the debtor—

3 ‘‘(i) whether—

4 ‘‘(I) to file a petition under this title; or

5 ‘‘(II) commencing a case under chapter 7,

6 11, 12, or 13 is appropriate;

7 ‘‘(ii) whether the debtor’s debts will be dis8 charged in a case under this title;

9 ‘‘(iii) whether the debtor will be able to retain

10 the debtor’s home, car, or other property after com11 mencing a case under this title;

12 ‘‘(iv) concerning—

13 ‘‘(I) the tax consequences of a case

14 brought under this title; or

15 ‘‘(II) the dischargeability of tax claims;

16 ‘‘(v) whether the debtor may or should promise

17 to repay debts to a creditor or enter into a reaffir18 mation agreement with a creditor to reaffirm a debt;

19 ‘‘(vi) concerning how to characterize the nature

20 of the debtor’s interests in property or the debtor’s

21 debts; or

22 ‘‘(vii) concerning bankruptcy procedures and

23 rights.’’;

24 (6) in subsection (f)—
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1 (A) by striking ‘‘(f)(1)’’ and inserting

2 ‘‘(f)’’; and

3 (B) by striking paragraph (2);

4 (7) in subsection (g)—

5 (A) by striking ‘‘(g)(1)’’ and inserting

6 ‘‘(g)’’; and

7 (B) by striking paragraph (2);

8 (8) in subsection (h)—

9 (A) by redesignating paragraphs (1)

10 through (4) as paragraphs (2) through (5), re11 spectively;

12 (B) by inserting before paragraph (2), as

13 so redesignated, the following:

14 ‘‘(1) The Supreme Court may promulgate rules under

15 section 2075 of title 28, or the Judicial Conference of the

16 United States may prescribe guidelines, for setting a max17 imum allowable fee chargeable by a bankruptcy petition

18 preparer. A bankruptcy petition preparer shall notify the

19 debtor of any such maximum amount before preparing any

20 document for filing for a debtor or accepting any fee from

21 the debtor.’’;

22 (C) in paragraph (2), as so redesignated—

23 (i) by striking ‘‘Within 10 days after

24 the date of the filing of a petition, a bank-
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1 ruptcy petition preparer shall file a’’ and

2 inserting ‘‘A’’;

3 (ii) by inserting ‘‘by the bankruptcy

4 petition preparer shall be filed together

5 with the petition,’’ after ‘‘perjury’’; and

6 (iii) by adding at the end the fol7 lowing: ‘‘If rules or guidelines setting a

8 maximum fee for services have been pro9 mulgated or prescribed under paragraph

10 (1), the declaration under this paragraph

11 shall include a certification that the bank12 ruptcy petition preparer complied with the

13 notification requirement under paragraph

14 (1).’’;

15 (D) by striking paragraph (3), as so redes16 ignated, and inserting the following:

17 ‘‘(3)(A) The court shall disallow and order the imme18 diate turnover to the bankruptcy trustee any fee referred

19 to in paragraph (2) found to be in excess of the value

20 of any services—

21 ‘‘(i) rendered by the bankruptcy petition pre22 parer during the 12-month period immediately pre23 ceding the date of the filing of the petition; or
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1 ‘‘(ii) found to be in violation of any rule or

2 guideline promulgated or prescribed under para3 graph (1).

4 ‘‘(B) All fees charged by a bankruptcy petition pre5 parer may be forfeited in any case in which the bankruptcy

6 petition preparer fails to comply with this subsection or

7 subsection (b), (c), (d), (e), (f), or (g).

8 ‘‘(C) An individual may exempt any funds recovered

9 under this paragraph under section 522(b).’’; and

10 (E) in paragraph (4), as so redesignated,

11 by striking ‘‘or the United States trustee’’ and

12 inserting ‘‘the United States trustee (or the

13 bankruptcy administrator, if any) or the court,

14 on the initiative of the court,’’;

15 (9) in subsection (i)(1), by striking the matter

16 preceding subparagraph (A) and inserting the fol17 lowing:

18 ‘‘(i)(1) If a bankruptcy petition preparer violates this

19 section or commits any act that the court finds to be

20 fraudulent, unfair, or deceptive, on the motion of the debt21 or, trustee, United States trustee (or the bankruptcy ad22 ministrator, if any), and after notice and a hearing, the

23 court shall order the bankruptcy petition preparer to pay

24 to the debtor—’’;

25 (10) in subsection (j)—
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1 (A) in paragraph (2)—

2 (i) in subparagraph (A)(i)(I), by strik3 ing ‘‘a violation of which subjects a person

4 to criminal penalty’’;

5 (ii) in subparagraph (B)—

6 (I) by striking ‘‘or has not paid

7 a penalty’’ and inserting ‘‘has not

8 paid a penalty’’; and

9 (II) by inserting ‘‘or failed to dis10 gorge all fees ordered by the court’’

11 after ‘‘a penalty imposed under this

12 section,’’;

13 (B) by redesignating paragraph (3) as

14 paragraph (4); and

15 (C) by inserting after paragraph (2) the

16 following:

17 ‘‘(3) The court, as part of its contempt power, may

18 enjoin a bankruptcy petition preparer that has failed to

19 comply with a previous order issued under this section.

20 The injunction under this paragraph may be issued on the

21 motion of the court, the trustee, or the United States

22 trustee (or the bankruptcy administrator, if any).’’; and

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

24 ‘‘(l)(1) A bankruptcy petition preparer who fails to

25 comply with any provision of subsection (b), (c), (d), (e),
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1 (f), (g), or (h) may be fined not more than $500 for each

2 such failure.

3 ‘‘(2) The court shall triple the amount of a fine as4 sessed under paragraph (1) in any case in which the court

5 finds that a bankruptcy petition preparer—

6 ‘‘(A) advised the debtor to exclude assets or in7 come that should have been included on applicable

8 schedules;

9 ‘‘(B) advised the debtor to use a false Social

10 Security account number;

11 ‘‘(C) failed to inform the debtor that the debtor

12 was filing for relief under this title; or

13 ‘‘(D) prepared a document for filing in a man14 ner that failed to disclose the identity of the bank15 ruptcy petition preparer.

16 ‘‘(3) A debtor, trustee, creditor, or United States

17 trustee (or the bankruptcy administrator, if any) may file

18 a motion for an order imposing a fine on the bankruptcy

19 petition preparer for any violation of this section.

20 ‘‘(4)(A) Fines imposed under this subsection in judi21 cial districts served by United States trustees shall be paid

22 to the United States trustee, who shall deposit an amount

23 equal to such fines in a special account of the United

24 States Trustee System Fund referred to in section

25 586(e)(2) of title 28. Amounts deposited under this sub-
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1 paragraph shall be available to fund the enforcement of

2 this section on a national basis.

3 ‘‘(B) Fines imposed under this subsection in judicial

4 districts served by bankruptcy administrators shall be de5 posited as offsetting receipts to the fund established under

6 section 1931 of title 28, and shall remain available until

7 expended to reimburse any appropriation for the amount

8 paid out of such appropriation for expenses of the oper9 ation and maintenance of the courts of the United

10 States.’’.

11 SEC. 222. SENSE OF CONGRESS.

12 It is the sense of Congress that States should develop

13 curricula relating to the subject of personal finance, de14 signed for use in elementary and secondary schools.

15 SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED

16 STATES CODE.

17 Section 507(a) of title 11, United States Code, as

18 amended by section 212, is amended by inserting after

19 paragraph (9) the following:

20 ‘‘(10) Tenth, allowed claims for death or per21 sonal injury resulting from the operation of a motor

22 vehicle or vessel if such operation was unlawful be23 cause the debtor was intoxicated from using alcohol,

24 a drug, or another substance.’’.
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1 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK2 RUPTCY.

3 (a) IN GENERAL.—Section 522 of title 11, United

4 States Code, is amended—

5 (1) in subsection (b)—

6 (A) in paragraph (2)—

7 (i) in subparagraph (A), by striking

8 ‘‘and’’ at the end;

9 (ii) in subparagraph (B), by striking

10 the period at the end and inserting ‘‘;

11 and’’;

12 (iii) by adding at the end the fol13 lowing:

14 ‘‘(C) retirement funds to the extent that those

15 funds are in a fund or account that is exempt from

16 taxation under section 401, 403, 408, 408A, 414,

17 457, or 501(a) of the Internal Revenue Code of

18 1986.’’; and

19 (iv) by striking ‘‘(2)(A) any property’’

20 and inserting:

21 ‘‘(3) Property listed in this paragraph is—

22 ‘‘(A) any property’’;

23 (B) by striking paragraph (1) and insert24 ing:

25 ‘‘(2) Property listed in this paragraph is property

26 that is specified under subsection (d), unless the State law
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1 that is applicable to the debtor under paragraph (3)(A)

2 specifically does not so authorize.’’;

3 (C) by striking ‘‘(b) Notwithstanding’’ and

4 inserting ‘‘(b)(1) Notwithstanding’’;

5 (D) by striking ‘‘paragraph (2)’’ each place

6 it appears and inserting ‘‘paragraph (3)’’;

7 (E) by striking ‘‘paragraph (1)’’ each place

8 it appears and inserting ‘‘paragraph (2)’’;

9 (F) by striking ‘‘Such property is—’’; and

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

11 ‘‘(4) For purposes of paragraph (3)(C) and sub12 section (d)(12), the following shall apply:

13 ‘‘(A) If the retirement funds are in a retirement

14 fund that has received a favorable determination

15 under section 7805 of the Internal Revenue Code of

16 1986, and that determination is in effect as of the

17 date of the filing of the petition in a case under this

18 title, those funds shall be presumed to be exempt

19 from the estate.

20 ‘‘(B) If the retirement funds are in a retirement

21 fund that has not received a favorable determination

22 under such section 7805, those funds are exempt

23 from the estate if the debtor demonstrates that—
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1 ‘‘(i) no prior determination to the contrary

2 has been made by a court or the Internal Rev3 enue Service; and

4 ‘‘(ii)(I) the retirement fund is in substan5 tial compliance with the applicable requirements

6 of the Internal Revenue Code of 1986; or

7 ‘‘(II) the retirement fund fails to be in

8 substantial compliance with the applicable re9 quirements of the Internal Revenue Code of

10 1986 and the debtor is not materially respon11 sible for that failure.

12 ‘‘(C) A direct transfer of retirement funds from

13 1 fund or account that is exempt from taxation

14 under section 401, 403, 408, 408A, 414, 457, or

15 501(a) of the Internal Revenue Code of 1986, under

16 section 401(a)(31) of the Internal Revenue Code of

17 1986, or otherwise, shall not cease to qualify for ex18 emption under paragraph (3)(C) or subsection

19 (d)(12) by reason of such direct transfer.

20 ‘‘(D)(i) Any distribution that qualifies as an eli21 gible rollover distribution within the meaning of sec22 tion 402(c) of the Internal Revenue Code of 1986 or

23 that is described in clause (ii) shall not cease to

24 qualify for exemption under paragraph (3)(C) or

25 subsection (d)(12) by reason of such distribution.
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1 ‘‘(ii) A distribution described in this clause is

2 an amount that—

3 ‘‘(I) has been distributed from a fund or

4 account that is exempt from taxation under sec5 tion 401, 403, 408, 408A, 414, 457, or 501(a)

6 of the Internal Revenue Code of 1986; and

7 ‘‘(II) to the extent allowed by law, is de8 posited in such a fund or account not later than

9 60 days after the distribution of such amount.’’;

10 and

11 (2) in subsection (d)—

12 (A) in the matter preceding paragraph (1),

13 by striking ‘‘subsection (b)(1)’’ and inserting

14 ‘‘subsection (b)(2)’’; and

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

16 ‘‘(12) 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.’’.

21 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

22 United States Code, is amended—

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

24 end;
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1 (2) in paragraph (18), by striking the period

2 and inserting a semicolon; and

3 (3) by inserting after paragraph (18) the fol4 lowing:

5 ‘‘(19) under subsection (a), of withholding of

6 income from a debtor’s wages and collection of

7 amounts withheld, under the debtor’s agreement au8 thorizing that withholding and collection for the ben9 efit of a pension, profit-sharing, stock bonus, or

10 other plan established under section 401, 403, 408,

11 408A, 414, 457, or 501(c) of the Internal Revenue

12 Code of 1986, that is sponsored by the employer of

13 the debtor, or an affiliate, successor, or predecessor

14 of such employer—

15 ‘‘(A) to the extent that the amounts with16 held and collected are used solely for payments

17 relating to a loan from a plan under section

18 408(b)(1) of the Employee Retirement Income

19 Security Act of 1974 or is subject to section

20 72(p) of the Internal Revenue Code of 1986; or

21 ‘‘(B) a loan from a thrift savings plan per22 mitted under subchapter III of chapter 84 of

23 title 5, that satisfies the requirements of section

24 8433(g) of such title;
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1 but nothing in this paragraph may be construed to

2 provide that any loan made under a governmental

3 plan under section 414(d), or a contract or account

4 under section 403(b), of the Internal Revenue Code

5 of 1986 constitutes a claim or a debt under this

6 title;’’.

7 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of

8 title 11, United States Code, as amended by section 215,

9 is amended by inserting after paragraph (17) the fol10 lowing:

11 ‘‘(18) owed to a pension, profit-sharing, stock

12 bonus, or other plan established under section 401,

13 403, 408, 408A, 414, 457, or 501(c) of the Internal

14 Revenue Code of 1986, under—

15 ‘‘(A) a loan permitted under section

16 408(b)(1) of the Employee Retirement Income

17 Security Act of 1974, or subject to section

18 72(p) of the Internal Revenue Code of 1986; or

19 ‘‘(B) a loan from a thrift savings plan per20 mitted under 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; or’’.

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 such Code or a simple retirement

19 account under section 408(p) of such 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 the filing of the petition

22 in a case under this title, but—

23 ‘‘(A) only if the designated beneficiary of

24 such account was a child, stepchild, grandchild,

25 or stepgrandchild of the debtor for the taxable
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1 year for which funds were placed in such ac2 count;

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 the

21 filing of the petition in a case under this title, but—

22 ‘‘(A) only if the designated beneficiary of

23 the amounts paid or contributed to such tuition

24 program was a child, stepchild, grandchild, or
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1 stepgrandchild of the debtor for the taxable

2 year for which funds 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 in a case under this title by the an11 nual increase or decrease (rounded to the near12 est tenth of 1 percent) in the education expend13 iture category of the Consumer Price Index pre14 pared by the Department 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

18 include—

19 ‘‘(A) any person who is an officer, director,

20 employee, or agent of a person who provides

21 such assistance or of the bankruptcy petition

22 preparer;

23 ‘‘(B) a nonprofit organization that is ex24 empt from taxation under section 501(c)(3) of

25 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 ‘‘(A) the services that such agency will pro15 vide to such person; or

16 ‘‘(B) 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 attorneys’ fees as deter21 mined by the court.

22 ‘‘(4) The district courts of the United States for dis23 tricts 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); 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 must be stated in those

8 documents where requested after reasonable in9 quiry 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 of this title, disposable income

13 (determined in accordance with section

14 707(b)(2)), are required to be stated after rea15 sonable inquiry; 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 a criminal sanction.

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) the following statement, to the extent appli-
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1 cable, or one substantially similar. The statement shall be

2 clear and conspicuous and shall be in a single document

3 separate from other documents or notices provided to the

4 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 available under 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. A creditor is not permitted

15 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 should be done from someone famil24 iar 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.

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

2 conspicuously—

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 account numbers of such debtors for the purposes of

13 allowing such Office to determine whether such debtors

14 have outstanding obligations for child support (as deter15 mined on the basis of information in the Federal Case

16 Registry or 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), the court shall order the United States

18 trustee to appoint, not later than 5 days before the com19 mencement of the hearing, 1 disinterested person (other

20 than the United States trustee) to serve as the consumer

21 privacy ombudsman in the case and shall require that no22 tice of such hearing be timely given to such ombudsman.

23 ‘‘(b) The consumer privacy ombudsman may appear

24 and be heard at such hearing and shall provide to the

25 court information to assist the court in its consideration
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1 of the facts, circumstances, and conditions of the proposed

2 sale or lease of personally identifiable information under

3 section 363(b)(1)(B). Such information may include pres4 entation of—

5 ‘‘(1) the debtor’s privacy policy;

6 ‘‘(2) the potential losses or gains of privacy to

7 consumers if such sale or such lease is approved by

8 the court;

9 ‘‘(3) the potential costs or benefits to con10 sumers if such sale or such lease is approved by the

11 court; and

12 ‘‘(4) the potential alternatives that would miti13 gate potential privacy losses or potential costs to

14 consumers.

15 ‘‘(c) A consumer privacy ombudsman shall not dis16 close any personally identifiable information obtained by

17 the ombudsman under this title.’’.

18 (b) COMPENSATION OF CONSUMER PRIVACY OM19 BUDSMAN.—Section 330(a)(1) of title 11, United States

20 Code, is amended in the matter preceding subparagraph

21 (A), by inserting ‘‘a consumer privacy ombudsman ap22 pointed under section 332,’’ before ‘‘an examiner’’.

23 (c) CONFORMING AMENDMENT.—The table of sec24 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) serving

18 under section 586(f) of title 28, in the case. The court,

19 the United States trustee, the trustee, and such auditor

20 shall not disclose the name of such minor child maintained

21 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’’ after ‘‘section’’.

6 TITLE III —DISCOURAGING

7 BANKRUPTCY ABUSE

8 SEC. 301. TECHNICAL AMENDMENTS.

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 the entry of the

19 order allowing the stay to go into effect; and

20 ‘‘(D) for purposes of subparagraph (B), a case

21 is presumptively filed not 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 such 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 property, if the court finds that the filing of the pe23 tition was part of a scheme to delay, hinder, and de24 fraud creditors that involved either—
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1 ‘‘(A) transfer of all or part ownership of,

2 or other interest in, such real property without

3 the consent of the secured creditor or court ap4 proval; or

5 ‘‘(B) multiple bankruptcy filings affecting

6 such 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 paragraph (4) shall be binding in any

10 other case under this title purporting to affect such real

11 property filed not later than 2 years after the date of the

12 entry of such order by the court, except that a debtor in

13 a subsequent case under this title may move for relief from

14 such order based upon changed circumstances or for good

15 cause shown, after notice and a hearing. Any Federal,

16 State, or local governmental unit that accepts notices of

17 interests or liens in real property shall accept any certified

18 copy of an order described in this subsection for indexing

19 and recording.’’.

20 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

21 United States Code, as amended by section 224, is amend22 ed by inserting after paragraph (19), the following:

23 ‘‘(20) under subsection (a), of any act to en24 force any lien against or security interest in real

25 property following entry of the order under sub-
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1 section (d)(4) as to such real property in any prior

2 case under this title, for a period of 2 years after

3 the date of the entry of such an order, except that

4 the debtor, in a subsequent case under this title,

5 may move for relief from such order based upon

6 changed circumstances or for other good cause

7 shown, after notice and a hearing;

8 ‘‘(21) under subsection (a), of any act to en9 force any lien against or security interest in real

10 property—

11 ‘‘(A) if the debtor is ineligible under sec12 tion 109(g) to be a debtor in a case under this

13 title; or

14 ‘‘(B) if the case under this title was filed

15 in violation of a bankruptcy court order in a

16 prior case under this title prohibiting the debtor

17 from being a debtor in another case under this

18 title;’’.

19 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY

20 SECURITY.

21 Title 11, United States Code, is amended—

22 (1) in section 521(a), as so designated by sec23 tion 106—

24 (A) in paragraph (4), by striking ‘‘, and’’

25 at the end and inserting a semicolon;
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1 (B) in paragraph (5), by striking the pe2 riod at the end and inserting ‘‘; and’’; and

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

4 ‘‘(6) in a case under chapter 7 of this title in

5 which the debtor is an individual, not retain posses6 sion of personal property as to which a creditor has

7 an allowed claim for the purchase price secured in

8 whole or in part by an interest in such personal

9 property unless the debtor, not later than 45 days

10 after the first meeting of creditors under section

11 341(a), either—

12 ‘‘(A) enters into an agreement with the

13 creditor pursuant to section 524(c) with respect

14 to the claim secured by such property; or

15 ‘‘(B) redeems such property from the secu16 rity interest pursuant to section 722.

17 If the debtor fails to so act within the 45-day period re18 ferred to in paragraph (6), the stay under section 362(a)

19 is terminated with respect to the personal property of the

20 estate or of the debtor which is affected, such property

21 shall no longer be property of the estate, and the creditor

22 may take whatever action as to such property as is per23 mitted by applicable nonbankruptcy law, unless the court

24 determines on the motion of the trustee filed before the

25 expiration of such 45-day period, and after notice and a
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1 hearing, that such property is of consequential value or

2 benefit to the estate, orders appropriate adequate protec3 tion of the creditor’s interest, and orders the debtor to

4 deliver any collateral in the debtor’s possession to the

5 trustee.’’; and

6 (2) in section 722, by inserting ‘‘in full at the

7 time of redemption’’ before the period at the end.

8 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE

9 DEBTOR DOES NOT COMPLETE INTENDED

10 SURRENDER OF CONSUMER DEBT COLLAT11 ERAL.

12 Title 11, United States Code, is amended—

13 (1) in section 362, as amended by section

14 106—

15 (A) in subsection (c), by striking ‘‘(e), and

16 (f)’’ and inserting ‘‘(e), (f), and (h)’’;

17 (B) by redesignating subsection (h) as sub18 section (k) and transferring such subsection so

19 as to insert it after subjection (j) as added by

20 section 106; and

21 (C) by inserting after subsection (g) the

22 following:

23 ‘‘(h)(1) In a case in which the debtor is an individual,

24 the stay provided by subsection (a) is terminated with re25 spect to personal property of the estate or of the debtor
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1 securing in whole or in part a claim, or subject to an unex2 pired lease, and such personal property shall no longer be

3 property of the estate if the debtor fails within the applica4 ble time set by section 521(a)(2)—

5 ‘‘(A) to file timely any statement of intention

6 required under section 521(a)(2) with respect to

7 such personal property or to indicate in such state8 ment that the debtor will either surrender such per9 sonal property or retain it and, if retaining such per10 sonal property, either redeem such personal property

11 pursuant to section 722, enter into an agreement of

12 the kind specified in section 524(c) applicable to the

13 debt secured by such personal property, or assume

14 such unexpired lease pursuant to section 365(p) if

15 the trustee does not do so, as applicable; and

16 ‘‘(B) to take timely the action specified in such

17 statement, as it may be amended before expiration

18 of the period for taking action, unless such state19 ment specifies the debtor’s intention to reaffirm such

20 debt on the original contract terms and the creditor

21 refuses to agree to the reaffirmation on such terms.

22 ‘‘(2) Paragraph (1) does not apply if the court deter23 mines, on the motion of the trustee filed before the expira24 tion of the applicable time set by section 521(a)(2), after

25 notice and a hearing, that such personal property is of
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1 consequential value or benefit to the estate, and orders

2 appropriate adequate protection of the creditor’s interest,

3 and orders the debtor to deliver any collateral in the debt4 or’s possession to the trustee. If the court does not so de5 termine, the stay provided by subsection (a) shall termi6 nate upon the conclusion of the hearing on the motion.’’;

7 and

8 (2) in section 521, as amended by sections 106

9 and 225—

10 (A) in subsection (a)(2) by striking ‘‘con11 sumer’’;

12 (B) in subsection (a)(2)(B)—

13 (i) by striking ‘‘forty-five days after

14 the filing of a notice of intent under this

15 section’’ and inserting ‘‘30 days after the

16 first date set for the meeting of creditors

17 under section 341(a)’’; and

18 (ii) by striking ‘‘forty-five day’’ and

19 inserting ‘‘30-day’’;

20 (C) in subsection (a)(2)(C) by inserting ‘‘,

21 except as provided in section 362(h)’’ before the

22 semicolon; and

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

24 ‘‘(d) If the debtor fails timely to take the action speci25 fied in subsection (a)(6) of this section, or in paragraphs
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1 (1) and (2) of section 362(h), with respect to property

2 which a lessor or bailor owns and has leased, rented, or

3 bailed to the debtor or as to which a creditor holds a secu4 rity interest not otherwise voidable under section 522(f),

5 544, 545, 547, 548, or 549, nothing in this title shall pre6 vent or limit the operation of a provision in the underlying

7 lease or agreement that has the effect of placing the debt8 or in default under such lease or agreement by reason of

9 the occurrence, pendency, or existence of a proceeding

10 under this title or the insolvency of the debtor. Nothing

11 in this subsection shall be deemed to justify limiting such

12 a provision in any other circumstance.’’.

13 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT

14 IN CHAPTER 13.

15 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title

16 11, United States Code, is amended to read as follows:

17 ‘‘(i) the plan provides that—

18 ‘‘(I) the holder of such claim retain

19 the lien securing such claim until the ear20 lier of—

21 ‘‘(aa) the payment of the under22 lying debt determined under nonbank23 ruptcy law; or

24 ‘‘(bb) discharge under section

25 1328; and
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1 ‘‘(II) if the case under this chapter is

2 dismissed or converted without completion

3 of the plan, such lien shall also be retained

4 by such holder to the extent recognized by

5 applicable nonbankruptcy law; and’’.

6 (b) RESTORING THE FOUNDATION FOR SECURED

7 CREDIT.—Section 1325(a) of title 11, United States Code,

8 is amended by adding at the end the following:

9 ‘‘For purposes of paragraph (5), section 506 shall not

10 apply to a claim described in that paragraph if the creditor

11 has a purchase money security interest securing the debt

12 that is the subject of the claim, the debt was incurred

13 within the 910-day preceding the date of the filing of the

14 petition, and the collateral for that debt consists of a

15 motor vehicle (as defined in section 30102 of title 49) ac16 quired for the personal use of the debtor, or if collateral

17 for that debt consists of any other thing of value, if the

18 debt was incurred during the 1-year period preceding that

19 filing.’’.

20 (c) DEFINITIONS.—Section 101 of title 11, United

21 States Code, is amended—

22 (1) by inserting after paragraph (13) the fol23 lowing:

24 ‘‘(13A) ‘debtor’s principal residence’—
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1 ‘‘(A) means a residential structure, includ2 ing incidental property, without regard to

3 whether that structure is attached to real prop4 erty; and

5 ‘‘(B) includes an individual condominium

6 or cooperative unit, a mobile or manufactured

7 home, or trailer;’’; and

8 (2) by inserting after paragraph (27), the fol9 lowing:

10 ‘‘(27A) ‘incidental property’ means, with re11 spect to a debtor’s principal residence—

12 ‘‘(A) property commonly conveyed with a

13 principal residence in the area where the real

14 property is located;

15 ‘‘(B) all easements, rights, appurtenances,

16 fixtures, rents, royalties, mineral rights, oil or

17 gas rights or profits, water rights, escrow

18 funds, or insurance proceeds; and

19 ‘‘(C) all replacements or additions;’’.

20 SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

21 Section 522(b)(3) of title 11, United States Code, as

22 so designated by section 106, is amended—

23 (1) in subparagraph (A)—

24 (A) by striking ‘‘180 days’’ and inserting

25 ‘‘730 days’’; and
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1 (B) by striking ‘‘, or for a longer portion

2 of such 180-day period than in any other place’’

3 and inserting ‘‘or if the debtor’s domicile has

4 not been located at a single State for such 730-

5 day period, the place in which the debtor’s

6 domicile was located for 180 days immediately

7 preceding the 730-day period or for a longer

8 portion of such 180-day period than in any

9 other place’’; and

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

11 ‘‘If the effect of the domiciliary requirement under sub12 paragraph (A) is to render the debtor ineligible for any

13 exemption, the debtor may elect to exempt property that

14 is specified under subsection (d).’’.

15 SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR

16 FRAUD.

17 Section 522 of title 11, United States Code, as

18 amended by section 224, is amended—

19 (1) in subsection (b)(3)(A), as so designated by

20 this Act, by inserting ‘‘subject to subsections (o) and

21 (p),’’ before ‘‘any property’’; and

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

23 ‘‘(o) For purposes of subsection (b)(3)(A), and not24 withstanding subsection (a), the value of an interest in—
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1 ‘‘(1) real or personal property that the debtor

2 or a dependent of the debtor uses as a residence;

3 ‘‘(2) a cooperative that owns property that the

4 debtor or a dependent of the debtor uses as a resi5 dence;

6 ‘‘(3) a burial plot for the debtor or a dependent

7 of the debtor; or

8 ‘‘(4) real or personal property that the debtor

9 or a dependent of the debtor claims as a homestead;

10 shall be reduced to the extent that such value is attrib11 utable to any portion of any property that the debtor dis12 posed of in the 10-year period ending on the date of the

13 filing of the petition with the intent to hinder, delay, or

14 defraud a creditor and that the debtor could not exempt,

15 or that portion that the debtor could not exempt, under

16 subsection (b), if on such date the debtor had held the

17 property so disposed of.’’.

18 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER

19 13 CASES.

20 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP21 TER 13.—Section 348(f)(1) of title 11, United States

22 Code, is amended—

23 (1) in subparagraph (A), by striking ‘‘and’’ at

24 the end;

25 (2) in subparagraph (B)—
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1 (A) by striking ‘‘in the converted case,

2 with allowed secured claims’’ and inserting

3 ‘‘only in a case converted to a case under chap4 ter 11 or 12, but not in a case converted to a

5 case under chapter 7, with allowed secured

6 claims in cases under chapters 11 and 12’’; and

7 (B) by striking the period and inserting ‘‘;

8 and’’; and

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

10 ‘‘(C) with respect to cases converted from chap11 ter 13—

12 ‘‘(i) the claim of any creditor holding secu13 rity as of the date of the petition shall continue

14 to be secured by that security unless the full

15 amount of such claim determined under appli16 cable nonbankruptcy law has been paid in full

17 as of the date of conversion, notwithstanding

18 any valuation or determination of the amount

19 of an allowed secured claim made for the pur20 poses of the case under chapter 13; and

21 ‘‘(ii) unless a prebankruptcy default has

22 been fully cured under the plan at the time of

23 conversion, in any proceeding under this title or

24 otherwise, the default shall have the effect given

25 under applicable nonbankruptcy law.’’.
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1 (b) GIVING DEBTORS THE ABILITY TO KEEP

2 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section

3 365 of title 11, United States Code, is amended by adding

4 at the end the following:

5 ‘‘(p)(1) If a lease of personal property is rejected or

6 not timely assumed by the trustee under subsection (d),

7 the leased property is no longer property of the estate and

8 the stay under section 362(a) is automatically terminated.

9 ‘‘(2)(A) If the debtor in a case under chapter 7 is

10 an individual, the debtor may notify the creditor in writing

11 that the debtor desires to assume the lease. Upon being

12 so notified, the creditor may, at its option, notify the debt13 or that it is willing to have the lease assumed by the debt14 or and may condition such assumption on cure of any out15 standing default on terms set by the contract.

16 ‘‘(B) If, not later than 30 days after notice is pro17 vided under subparagraph (A), the debtor notifies the les18 sor in writing that the lease is assumed, the liability under

19 the lease will be assumed by the debtor and not by the

20 estate.

21 ‘‘(C) The stay under section 362 and the injunction

22 under section 524(a)(2) shall not be violated by notifica23 tion of the debtor and negotiation of cure under this sub24 section.
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1 ‘‘(3) In a case under chapter 11 in which the debtor

2 is an individual and in a case under chapter 13, if the

3 debtor is the lessee with respect to personal property and

4 the lease is not assumed in the plan confirmed by the

5 court, the lease is deemed rejected as of the conclusion

6 of the hearing on confirmation. If the lease is rejected,

7 the stay under section 362 and any stay under section

8 1301 is automatically terminated with respect to the prop9 erty subject to the lease.’’.

10 (c) ADEQUATE PROTECTION OF LESSORS AND PUR11 CHASE MONEY SECURED CREDITORS.—

12 (1) CONFIRMATION OF PLAN.—Section

13 1325(a)(5)(B) of title 11, United States Code, as

14 amended by section 306, is amended—

15 (A) in clause (i), by striking ‘‘and’’ at the

16 end;

17 (B) in clause (ii), by striking ‘‘or’’ at the

18 end and inserting ‘‘and’’; and

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

20 ‘‘(iii) if—

21 ‘‘(I) property to be distributed pursu22 ant to this subsection is in the form of

23 periodic payments, such payments shall be

24 in equal monthly amounts; and
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1 ‘‘(II) the holder of the claim is se2 cured by personal property, the amount of

3 such payments shall not be less than an

4 amount sufficient to provide to the holder

5 of such claim adequate protection during

6 the period of the plan; or’’.

7 (2) PAYMENTS.—Section 1326(a) of title 11,

8 United States Code, is amended to read as follows:

9 ‘‘(a)(1) Unless the court orders otherwise, the debtor

10 shall commence making payments not later than 30 days

11 after the date of the filing of the plan or the order for

12 relief, whichever is earlier, in the amount—

13 ‘‘(A) proposed by the plan to the trustee;

14 ‘‘(B) scheduled in a lease of personal property

15 directly to the lessor for that portion of the obliga16 tion that becomes due after the order for relief, re17 ducing the payments under subparagraph (A) by the

18 amount so paid and providing the trustee with evi19 dence of such payment, including the amount and

20 date of payment; and

21 ‘‘(C) that provides adequate protection directly

22 to a creditor holding an allowed claim secured by

23 personal property to the extent the claim is attrib24 utable to the purchase of such property by the debt25 or for that portion of the obligation that becomes
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1 due after the order for relief, reducing the payments

2 under subparagraph (A) by the amount so paid and

3 providing the trustee with evidence of such payment,

4 including the amount and date of payment.

5 ‘‘(2) A payment made under paragraph (1)(A) shall

6 be retained by the trustee until confirmation or denial of

7 confirmation. If a plan is confirmed, the trustee shall dis8 tribute any such payment in accordance with the plan as

9 soon as is practicable. If a plan is not confirmed, the trust10 ee shall return any such payments not previously paid and

11 not yet due and owing to creditors pursuant to paragraph

12 (3) to the debtor, after deducting any unpaid claim al13 lowed under section 503(b).

14 ‘‘(3) Subject to section 363, the court may, upon no15 tice and a hearing, modify, increase, or reduce the pay16 ments required under this subsection pending confirma17 tion of a plan.

18 ‘‘(4) Not later than 60 days after the date of filing

19 of a case under this chapter, a debtor retaining possession

20 of personal property subject to a lease or securing a claim

21 attributable in whole or in part to the purchase price of

22 such property shall provide the lessor or secured creditor

23 reasonable evidence of the maintenance of any required

24 insurance coverage with respect to the use or ownership
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1 of such property and continue to do so for so long as the

2 debtor retains possession of such property.’’.

3 SEC. 310. LIMITATION ON LUXURY GOODS.

4 Section 523(a)(2)(C) of title 11, United States Code,

5 is amended to read as follows:

6 ‘‘(C)(i) for purposes of subparagraph

7 (A)—

8 ‘‘(I) consumer debts owed to a single

9 creditor and aggregating more than $500

10 for luxury goods or services incurred by an

11 individual debtor on or within 90 days be12 fore the order for relief under this title are

13 presumed to be nondischargeable; and

14 ‘‘(II) cash advances aggregating more

15 than $750 that are extensions of consumer

16 credit under an open end credit plan ob17 tained by an individual debtor on or within

18 70 days before the order for relief under

19 this title, are presumed to be non20 dischargeable; and

21 ‘‘(ii) for purposes of this subparagraph—

22 ‘‘(I) the terms ‘consumer’, ‘credit’,

23 and ‘open end credit plan’ have the same

24 meanings as in section 103 of the Truth in

25 Lending Act; and
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1 ‘‘(II) the term ‘luxury goods or serv2 ices’ does not include goods or services rea3 sonably necessary for the support or main4 tenance of the debtor or a dependent of the

5 debtor.’’.

6 SEC. 311. AUTOMATIC STAY.

7 (a) IN GENERAL.—Section 362(b) of title 11, United

8 States Code, as amended by sections 224 and 303, is

9 amended by inserting after paragraph (21), the following:

10 ‘‘(22) subject to subsection (n), under sub11 section (a)(3), of the continuation of any eviction,

12 unlawful detainer action, or similar proceeding by a

13 lessor against a debtor involving residential property

14 in which the debtor resides as a tenant under a lease

15 or rental agreement and with respect to which the

16 lessor has obtained before the date of the filing of

17 the bankruptcy petition, a judgment for possession

18 of such property against the debtor;

19 ‘‘(23) subject to subsection (o), under sub20 section (a)(3), of an eviction action that seeks pos21 session of the residential property in which the debt22 or resides as a tenant under a lease or rental agree23 ment based on endangerment of such property or

24 the illegal use of controlled substances on such prop25 erty, but only if the lessor files with the court, and
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1 serves upon the debtor, a certification under penalty

2 of perjury that such an eviction action has been

3 filed, or that the debtor, during the 30-day period

4 preceding the date of the filing of the certification,

5 has endangered property or illegally used or allowed

6 to be used a controlled substance on the property;

7 ‘‘(24) under subsection (a), of any transfer that

8 is not avoidable under section 544 and that is not

9 avoidable under section 549;’’.

10 (b) LIMITATIONS.—Section 362 of title 11, United

11 States Code, as amended by sections 106 and 305, is

12 amended by adding at the end the following:

13 ‘‘(l)(1) Except as otherwise provided in this sub14 section, subsection (b)(22) shall apply on the date that

15 is 30 days after the date on which the bankruptcy petition

16 is filed, if the debtor files with the petition and serves upon

17 the lessor a certification under penalty of perjury that—

18 ‘‘(A) under nonbankruptcy law applicable in the

19 jurisdiction, there are circumstances under which the

20 debtor would be permitted to cure the entire mone21 tary default that gave rise to the judgment for pos22 session, after that judgment for possession was en23 tered; and

24 ‘‘(B) the debtor (or an adult dependent of the

25 debtor) has deposited with the clerk of the court,
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1 any rent that would become due during the 30-day

2 period after the filing of the bankruptcy petition.

3 ‘‘(2) If, within the 30-day period after the filing of

4 the bankruptcy petition, the debtor (or an adult dependent

5 of the debtor) complies with paragraph (1) and files with

6 the court and serves upon the lessor a further certification

7 under penalty of perjury that the debtor (or an adult de8 pendent of the debtor) has cured, under nonbankrupcty

9 law applicable in the jurisdiction, the entire monetary de10 fault that gave rise to the judgment under which posses11 sion is sought by the lessor, subsection (b)(22) shall not

12 apply, unless ordered to apply by the court under para13 graph (3).

14 ‘‘(3)(A) If the lessor files an objection to any certifi15 cation filed by the debtor under paragraph (1) or (2), and

16 serves such objection upon the debtor, the court shall hold

17 a hearing within 10 days after the filing and service of

18 such objection to determine if the certification filed by the

19 debtor under paragraph (1) or (2) is true.

20 ‘‘(B) If the court upholds the objection of the lessor

21 filed under subparagraph (A)—

22 ‘‘(i) subsection (b)(22) shall apply immediately

23 and relief from the stay provided under subsection

24 (a)(3) shall not be required to enable the lessor to
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1 complete the process to recover full possession of the

2 property; and

3 ‘‘(ii) the clerk of the court shall immediately

4 serve upon the lessor and the debtor a certified copy

5 of the court’s order upholding the lessor’s objection.

6 ‘‘(4) If a debtor, in accordance with paragraph (5),

7 indicates on the petition that there was a judgment for

8 possession of the residential rental property in which the

9 debtor resides and does not file a certification under para10 graph (1) or (2)—

11 ‘‘(A) subsection (b)(22) shall apply immediately

12 upon failure to file such certification, and relief from

13 the stay provided under subsection (a)(3) shall not

14 be required to enable the lessor to complete the

15 process to recover full possession of the property;

16 and

17 ‘‘(B) the clerk of the court shall immediately

18 serve upon the lessor and the debtor a certified copy

19 of the docket indicating the absence of a filed certifi20 cation and the applicability of the exception to the

21 stay under subsection (b)(22).

22 ‘‘(5)(A) Where a judgment for possession of residen23 tial property in which the debtor resides as a tenant under

24 a lease or rental agreement has been obtained by the les25 sor, the debtor shall so indicate on the bankruptcy petition
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1 and shall provide the name and address of the lessor that

2 obtained that pre-petition judgment on the petition and

3 on any certification filed under this subsection.

4 ‘‘(B) The form of certification filed with the petition,

5 as specified in this subsection, shall provide for the debtor

6 to certify, and the debtor shall certify—

7 ‘‘(i) whether a judgment for possession of resi8 dential rental housing in which the debtor resides

9 has been obtained against the debtor before the date

10 of the filing of the petition; and

11 ‘‘(ii) whether the debtor is claiming under para12 graph (1) that under nonbankruptcy law applicable

13 in the jurisdiction, there are circumstances under

14 which the debtor would be permitted to cure the en15 tire monetary default that gave rise to the judgment

16 for possession, after that judgment of possession was

17 entered, and has made the appropriate deposit with

18 the court.

19 ‘‘(C) The standard forms (electronic and otherwise)

20 used in a bankruptcy proceeding shall be amended to re21 flect the requirements of this subsection.

22 ‘‘(D) The clerk of the court shall arrange for the

23 prompt transmittal of the rent deposited in accordance

24 with paragraph (1)(B) to the lessor.
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1 ‘‘(m)(1) Except as otherwise provided in this sub2 section, subsection (b)(23) shall apply on the date that

3 is 15 days after the date on which the lessor files and

4 serves a certification described in subsection (b)(23).

5 ‘‘(2)(A) If the debtor files with the court an objection

6 to the truth or legal sufficiency of the certification de7 scribed in subsection (b)(23) and serves such objection

8 upon the lessor, subsection (b)(23) shall not apply, unless

9 ordered to apply by the court under this subsection.

10 ‘‘(B) If the debtor files and serves the objection under

11 subparagraph (A), the court shall hold a hearing within

12 10 days after the filing and service of such objection to

13 determine if the situation giving rise to the lessor’s certifi14 cation under paragraph (1) existed or has been remedied.

15 ‘‘(C) If the debtor can demonstrate to the satisfaction

16 of the court that the situation giving rise to the lessor’s

17 certification under paragraph (1) did not exist or has been

18 remedied, the stay provided under subsection (a)(3) shall

19 remain in effect until the termination of the stay under

20 this section.

21 ‘‘(D) If the debtor cannot demonstrate to the satis22 faction of the court that the situation giving rise to the

23 lessor’s certification under paragraph (1) did not exist or

24 has been remedied—
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1 ‘‘(i) relief from the stay provided under sub2 section (a)(3) shall not be required to enable the les3 sor to proceed with the eviction; and

4 ‘‘(ii) the clerk of the court shall immediately

5 serve upon the lessor and the debtor a certified copy

6 of the court’s order upholding the lessor’s certifi7 cation.

8 ‘‘(3) If the debtor fails to file, within 15 days, an

9 objection under paragraph (2)(A)—

10 ‘‘(A) subsection (b)(23) shall apply immediately

11 upon such failure and relief from the stay provided

12 under subsection (a)(3) shall not be required to en13 able the lessor to complete the process to recover full

14 possession of the property; and

15 ‘‘(B) the clerk of the court shall immediately

16 serve upon the lessor and the debtor a certified copy

17 of the docket indicating such failure.’’.

18 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY

19 DISCHARGES.

20 Title 11, United States Code, is amended—

21 (1) in section 727(a)(8), by striking ‘‘six’’ and

22 inserting ‘‘8’’; and

23 (2) in section 1328, by inserting after sub24 section (e) the following:
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1 ‘‘(f) Notwithstanding subsections (a) and (b), the

2 court shall not grant a discharge of all debts provided for

3 in the plan or disallowed under section 502, if the debtor

4 has received a discharge—

5 ‘‘(1) in a case filed under chapter 7, 11, or 12

6 of this title during the 4-year period preceding the

7 date of the order for relief under this chapter, or

8 ‘‘(2) in a case filed under chapter 13 of this

9 title during the 2-year period preceding the date of

10 such order.’’.

11 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN12 TIQUES.

13 (a) DEFINITION.—Section 522(f) of title 11, United

14 States Code, is amended by adding at the end the fol15 lowing:

16 ‘‘(4)(A) Subject to subparagraph (B), for purposes

17 of paragraph (1)(B), the term ‘household goods’ means—

18 ‘‘(i) clothing;

19 ‘‘(ii) furniture;

20 ‘‘(iii) appliances;

21 ‘‘(iv) 1 radio;

22 ‘‘(v) 1 television;

23 ‘‘(vi) 1 VCR;

24 ‘‘(vii) linens;

25 ‘‘(viii) china;
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1 ‘‘(ix) crockery;

2 ‘‘(x) kitchenware;

3 ‘‘(xi) educational materials and educational

4 equipment primarily for the use of minor dependent

5 children of the debtor;

6 (xii) medical equipment and supplies;

7 ‘‘(xiii) furniture exclusively for the use of minor

8 children, or elderly or disabled dependents of the

9 debtor;

10 ‘‘(xiv) personal effects (including the toys and

11 hobby equipment of minor dependent children and

12 wedding rings) of the debtor and the dependents of

13 the debtor; and

14 ‘‘(xv) 1 personal computer and related equip15 ment.

16 ‘‘(B) The term ‘household goods’ does not include—

17 ‘‘(i) works of art (unless by or of the debtor, or

18 any relative of the debtor);

19 ‘‘(ii) electronic entertainment equipment with a

20 fair market value of more than $500 in the aggre21 gate (except 1 television, 1 radio, and 1 VCR);

22 ‘‘(iii) items acquired as antiques with a fair

23 market value of more than $500 in the aggregate;
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1 ‘‘(iv) jewelry with a fair market value of more

2 than $500 in the aggregate (except wedding rings);

3 and

4 ‘‘(v) a computer (except as otherwise provided

5 for in this section), motor vehicle (including a trac6 tor or lawn tractor), boat, or a motorized rec7 reational device, conveyance, vehicle, watercraft, or

8 aircraft.’’.

9 (b) STUDY.—Not later than 2 years after the date

10 of enactment of this Act, the Director of the Executive

11 Office for United States Trustees shall submit a report

12 to the Committee on the Judiciary of the Senate and the

13 Committee on the Judiciary of the House of Representa14 tives containing its findings regarding utilization of the

15 definition of household goods, as defined in section

16 522(f)(4) of title 11, United States Code, as added by sub17 section (a), with respect to the avoidance of nonpossessory,

18 nonpurchase money security interests in household goods

19 under section 522(f)(1)(B) of title 11, United States Code,

20 and the impact such section 522(f)(4) has had on debtors

21 and on the bankruptcy courts. Such report may include

22 recommendations for amendments to such section

23 522(f)(4) consistent with the Director’s findings.
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1 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE

2 DEBTS.

3 (a) IN GENERAL.—Section 523(a) of title 11, United

4 States Code, is amended by inserting after paragraph (14)

5 the following:

6 ‘‘(14A) incurred to pay a tax to a governmental

7 unit, other than the United States, that would be

8 nondischargeable under paragraph (1);’’.

9 (b) DISCHARGE UNDER CHAPTER 13.—Section

10 1328(a) of title 11, United States Code, is amended by

11 striking paragraphs (1) through (3) and inserting the fol12 lowing:

13 ‘‘(1) provided for under section 1322(b)(5);

14 ‘‘(2) of the kind specified in paragraph (2), (3),

15 (4), (5), (8), or (9) of section 523(a);

16 ‘‘(3) for restitution, or a criminal fine, included

17 in a sentence on the debtor’s conviction of a crime;

18 or

19 ‘‘(4) for restitution, or damages, awarded in a

20 civil action against the debtor as a result of willful

21 or malicious injury by the debtor that caused per22 sonal injury to an individual or the death of an indi23 vidual.’’.
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1 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7

2 AND 13 CASES.

3 (a) NOTICE.—Section 342 of title 11, United States

4 Code, as amended by section 102, is amended—

5 (1) in subsection (c)—

6 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’;

7 (B) by striking ‘‘, but the failure of such

8 notice to contain such information shall not in9 validate the legal effect of such notice’’; and

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

11 ‘‘(2)(A) If, within the 90 days before the commence12 ment of a voluntary case, a creditor supplies the debtor

13 in at least 2 communications sent to the debtor with the

14 current account number of the debtor and the address at

15 which such creditor requests to receive correspondence,

16 then any notice required by this title to be sent by the

17 debtor to such creditor shall be sent to such address and

18 shall include such account number.

19 ‘‘(B) If a creditor would be in violation of applicable

20 nonbankruptcy law by sending any such communication

21 within such 90-day period and if such creditor supplies

22 the debtor in the last 2 communications with the current

23 account number of the debtor and the address at which

24 such creditor requests to receive correspondence, then any

25 notice required by this title to be sent by the debtor to
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1 such creditor shall be sent to such address and shall in2 clude such account number.’’; and

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

4 ‘‘(e)(1) In a case under chapter 7 or 13 of this title

5 of a debtor who is an individual, a creditor at any time

6 may both file with the court and serve on the debtor a

7 notice of address to be used to provide notice in such case

8 to such creditor.

9 ‘‘(2) Any notice in such case required to be provided

10 to such creditor by the debtor or the court later than 5

11 days after the court and the debtor receive such creditor’s

12 notice of address, shall be provided to such address.

13 ‘‘(f)(1) An entity may file with any bankruptcy court

14 a notice of address to be used by all the bankruptcy courts

15 or by particular bankruptcy courts, as so specified by such

16 entity at the time such notice is filed, to provide notice

17 to such entity in all cases under chapters 7 and 13 pend18 ing in the courts with respect to which such notice is filed,

19 in which such entity is a creditor.

20 ‘‘(2) In any case filed under chapter 7 or 13, any

21 notice required to be provided by a court with respect to

22 which a notice is filed under paragraph (1), to such entity

23 later than 30 days after the filing of such notice under

24 paragraph (1) shall be provided to such address unless

25 with respect to a particular case a different address is
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1 specified in a notice filed and served in accordance with

2 subsection (e).

3 ‘‘(3) A notice filed under paragraph (1) may be with4 drawn by such entity.

5 ‘‘(g)(1) Notice provided to a creditor by the debtor

6 or the court other than in accordance with this section

7 (excluding this subsection) shall not be effective notice

8 until such notice is brought to the attention of such cred9 itor. If such creditor designates a person or an organiza10 tional subdivision of such creditor to be responsible for

11 receiving notices under this title and establishes reason12 able procedures so that such notices receivable by such

13 creditor are to be delivered to such person or such subdivi14 sion, then a notice provided to such creditor other than

15 in accordance with this section (excluding this subsection)

16 shall not be considered to have been brought to the atten17 tion of such creditor until such notice is received by such

18 person or such subdivision.

19 ‘‘(2) A monetary penalty may not be imposed on a

20 creditor for a violation of a stay in effect under section

21 362(a) (including a monetary penalty imposed under sec22 tion 362(k)) or for failure to comply with section 542 or

23 543 unless the conduct that is the basis of such violation

24 or of such failure occurs after such creditor receives notice

25 effective under this section of the order for relief.’’.
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1 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

2 United States Code, as amended by sections 106, 225, and

3 305, is amended—

4 (1) in subsection (a), as so designated by sec5 tion 106, by amending paragraph (1) to read as fol6 lows:

7 ‘‘(1) file—

8 ‘‘(A) a list of creditors; and

9 ‘‘(B) unless the court orders otherwise—

10 ‘‘(i) a schedule of assets and liabil11 ities;

12 ‘‘(ii) a schedule of current income and

13 current expenditures;

14 ‘‘(iii) a statement of the debtor’s fi15 nancial affairs and, if section 342(b) ap16 plies, a certificate—

17 ‘‘(I) of an attorney whose name

18 is indicated on the petition as the at19 torney for the debtor, or a bankruptcy

20 petition preparer signing the petition

21 under section 110(b)(1), indicating

22 that such attorney or the bankruptcy

23 petition preparer delivered to the

24 debtor the notice required by section

25 342(b); or
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1 ‘‘(II) if no attorney is so indi2 cated, and no bankruptcy petition pre3 parer signed the petition, of the debt4 or that such notice was received and

5 read by the debtor;

6 ‘‘(iv) copies of all payment advices or

7 other evidence of payment received within

8 60 days before the date of the filing of the

9 petition, by the debtor from any employer

10 of the debtor;

11 ‘‘(v) a statement of the amount of

12 monthly net income, itemized to show how

13 the amount is calculated; and

14 ‘‘(vi) a statement disclosing any rea15 sonably anticipated increase in income or

16 expenditures over the 12-month period fol17 lowing the date of the filing of the peti18 tion;’’; and

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

20 ‘‘(e)(1) If the debtor in a case under chapter 7 or

21 13 is an individual and if a creditor files with the court

22 at any time a request to receive a copy of the petition,

23 schedules, and statement of financial affairs filed by the

24 debtor, then the court shall make such petition, such

25 schedules, and such statement available to such creditor.
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1 ‘‘(2)(A) The debtor shall provide—

2 ‘‘(i) not later than 7 days before the date first

3 set for the first meeting of creditors, to the trustee

4 a copy of the Federal income tax return required

5 under applicable law (or at the election of the debt6 or, a transcript of such return) for the most recent

7 tax year ending immediately before the commence8 ment of the case and for which a Federal income tax

9 return was filed; and

10 ‘‘(ii) at the same time the debtor complies with

11 clause (i), a copy of such return (or if elected under

12 clause (i), such transcript) to any creditor that time13 ly requests such copy.

14 ‘‘(B) If the debtor fails to comply with clause (i) or

15 (ii) of subparagraph (A), the court shall dismiss the case

16 unless the debtor demonstrates that the failure to so com17 ply is due to circumstances beyond the control of the debt18 or.

19 ‘‘(C) If a creditor requests a copy of such tax return

20 or such transcript and if the debtor fails to provide a copy

21 of such tax return or such transcript to such creditor at

22 the time the debtor provides such tax return or such tran23 script to the trustee, then the court shall dismiss the case

24 unless the debtor demonstrates that the failure to provide
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1 a copy of such tax return or such transcript is due to cir2 cumstances beyond the control of the debtor.

3 ‘‘(3) If a creditor in a case under chapter 13 files

4 with the court at any time a request to receive a copy

5 of the plan filed by the debtor, then the court shall make

6 available to such creditor a copy of the plan—

7 ‘‘(A) at a reasonable cost; and

8 ‘‘(B) not later than 5 days after such request

9 is filed.

10 ‘‘(f) At the request of the court, the United States

11 trustee, or any party in interest in a case under chapter

12 7, 11, or 13, a debtor who is an individual shall file with

13 the court—

14 ‘‘(1) at the same time filed with the taxing au15 thority, a copy of each Federal income tax return re16 quired under applicable law (or at the election of the

17 debtor, a transcript of such tax return) with respect

18 to each tax year of the debtor ending while the case

19 is pending under such chapter;

20 ‘‘(2) at the same time filed with the taxing au21 thority, each Federal income tax return required

22 under applicable law (or at the election of the debt23 or, a transcript of such tax return) that had not

24 been filed with such authority as of the date of the

25 commencement of the case and that was subse-
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1 quently filed for any tax year of the debtor ending

2 in the 3-year period ending on the date of the com3 mencement of the case;

4 ‘‘(3) a copy of each amendment to any Federal

5 income tax return or transcript filed with the court

6 under paragraph (1) or (2); and

7 ‘‘(4) in a case under chapter 13—

8 ‘‘(A) on the date that is either 90 days

9 after the end of such tax year or 1 year after

10 the date of the commencement of the case,

11 whichever is later, if a plan is not confirmed be12 fore such later date; and

13 ‘‘(B) annually after the plan is confirmed

14 and until the case is closed, not later than the

15 date that is 45 days before the anniversary of

16 the confirmation of the plan;

17 a statement, under penalty of perjury, of the income

18 and expenditures of the debtor during the tax year

19 of the debtor most recently concluded before such

20 statement is filed under this paragraph, and of the

21 monthly income of the debtor, that shows how in22 come, expenditures, and monthly income are cal23 culated.

24 ‘‘(g)(1) A statement referred to in subsection (f)(4)

25 shall disclose—
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1 ‘‘(A) the amount and sources of the income of

2 the debtor;

3 ‘‘(B) the identity of any person responsible with

4 the debtor for the support of any dependent of the

5 debtor; and

6 ‘‘(C) the identity of any person who contrib7 uted, and the amount contributed, to the household

8 in which the debtor resides.

9 ‘‘(2) The tax returns, amendments, and statement of

10 income and expenditures described in subsections

11 (e)(2)(A) and (f) shall be available to the United States

12 trustee (or the bankruptcy administrator, if any), the

13 trustee, and any party in interest for inspection and copy14 ing, subject to the requirements of section 315(c) of the

15 Bankruptcy Abuse Prevention and Consumer Protection

16 Act of 2003.

17 ‘‘(h) If requested by the United States trustee or by

18 the trustee, the debtor shall provide—

19 ‘‘(1) a document that establishes the identity of

20 the debtor, including a driver’s license, passport, or

21 other document that contains a photograph of the

22 debtor; or

23 ‘‘(2) such other personal identifying information

24 relating to the debtor that establishes the identity of

25 the debtor.’’.
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1 (c)(1) Not later than 180 days after the date of the

2 enactment of this Act, the Director of the Administrative

3 Office of the United States Courts shall establish proce4 dures for safeguarding the confidentiality of any tax infor5 mation required to be provided under this section.

6 (2) The procedures under paragraph (1) shall include

7 restrictions on creditor access to tax information that is

8 required to be provided under this section.

9 (3) Not later than 540 days after the date of enact10 ment of this Act, the Director of the Administrative Office

11 of the United States Courts shall prepare and submit to

12 the President pro tempore of the Senate and the Speaker

13 of the House of Representatives a report that—

14 (A) assesses the effectiveness of the procedures

15 established under paragraph (1); and

16 (B) if appropriate, includes proposed legislation

17 to—

18 (i) further protect the confidentiality of tax

19 information; and

20 (ii) provide penalties for the improper use

21 by any person of the tax information required

22 to be provided under this section.
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1 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED2 ULES OR PROVIDE REQUIRED INFORMATION.

3 Section 521 of title 11, United States Code, as

4 amended by sections 106, 225, 305, and 315, is amended

5 by adding at the end the following:

6 ‘‘(i)(1) Subject to paragraphs (2) and (4) and not7 withstanding section 707(a), if an individual debtor in a

8 voluntary case under chapter 7 or 13 fails to file all of

9 the information required under subsection (a)(1) within

10 45 days after the date of the filing of the petition, the

11 case shall be automatically dismissed effective on the 46th

12 day after the date of the filing of the petition.

13 ‘‘(2) Subject to paragraph (4) and with respect to

14 a case described in paragraph (1), any party in interest

15 may request the court to enter an order dismissing the

16 case. If requested, the court shall enter an order of dis17 missal not later than 5 days after such request.

18 ‘‘(3) Subject to paragraph (4) and upon request of

19 the debtor made within 45 days after the date of the filing

20 of the petition described in paragraph (1), the court may

21 allow the debtor an additional period of not to exceed 45

22 days to file the information required under subsection

23 (a)(1) if the court finds justification for extending the pe24 riod for the filing.

25 ‘‘(4) Notwithstanding any other provision of this sub26 section, on the motion of the trustee filed before the expi-
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1 ration of the applicable period of time specified in para2 graph (1), (2), or (3), and after notice and a hearing, the

3 court may decline to dismiss the case if the court finds

4 that the debtor attempted in good faith to file all the infor5 mation required by subsection (a)(1)(B)(iv) and that the

6 best interests of creditors would be served by administra7 tion of the case.’’.

8 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON

9 CONFIRMATION OF THE PLAN.

10 Section 1324 of title 11, United States Code, is

11 amended—

12 (1) by striking ‘‘After’’ and inserting the fol13 lowing:

14 ‘‘(a) Except as provided in subsection (b) and after’’;

15 and

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

17 ‘‘(b) The hearing on confirmation of the plan may

18 be held not earlier than 20 days and not later than 45

19 days after the date of the meeting of creditors under sec20 tion 341(a), unless the court determines that it would be

21 in the best interests of the creditors and the estate to hold

22 such hearing at an earlier date and there is no objection

23 to such earlier date.’’.
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1 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION

2 IN CERTAIN CASES.

3 Title 11, United States Code, is amended—

4 (1) by amending section 1322(d) to read as fol5 lows:

6 ‘‘(d)(1) If the current monthly income of the debtor

7 and the debtor’s spouse combined, when multiplied by 12,

8 is not less than—

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

10 1 person, the median family income of the applicable

11 State for 1 earner;

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

13 2, 3, or 4 individuals, the highest median family in14 come of the applicable State for a family of the same

15 number or fewer individuals; or

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

19 fewer individuals, plus $525 per month for each in20 dividual in excess of 4,

21 the plan may not provide for payments over a period that

22 is longer than 5 years.

23 ‘‘(2) If the current monthly income of the debtor and

24 the debtor’s spouse combined, when multiplied by 12, is

25 less than—
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1 ‘‘(A) 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 ‘‘(B) 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 ‘‘(C) 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 the plan may not provide for payments over a period that

14 is longer than 3 years, unless the court, for cause, ap15 proves a longer period, but the court may not approve a

16 period that is longer than 5 years.’’;

17 (2) in section 1325(b)(1)(B), by striking

18 ‘‘three-year period’’ and inserting ‘‘applicable com19 mitment period’’; and

20 (3) in section 1325(b), as amended by section

21 102, by adding at the end the following:

22 ‘‘(4) For purposes of this subsection, the ‘applicable

23 commitment period’—

24 ‘‘(A) subject to subparagraph (B), shall be—

25 ‘‘(i) 3 years; or
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1 ‘‘(ii) not less than 5 years, if the current

2 monthly income of the debtor and the debtor’s

3 spouse combined, when multiplied by 12, is not

4 less than—

5 ‘‘(I) in the case of a debtor in a

6 household of 1 person, the median family

7 income of the applicable State for 1 earn8 er;

9 ‘‘(II) in the case of a debtor in a

10 household of 2, 3, or 4 individuals, the

11 highest median family income of the appli12 cable State for a family of the same num13 ber or fewer individuals; or

14 ‘‘(III) in the case of a debtor in a

15 household exceeding 4 individuals, the

16 highest median family income of the appli17 cable State for a family of 4 or fewer indi18 viduals, plus $525 per month for each indi19 vidual in excess of 4; and

20 ‘‘(B) may be less than 3 or 5 years, whichever

21 is applicable under subparagraph (A), but only if the

22 plan provides for payment in full of all allowed unse23 cured claims over a shorter period.’’; and
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1 (4) in section 1329(c), by striking ‘‘three

2 years’’ and inserting ‘‘the applicable commitment pe3 riod under section 1325(b)(1)(B)’’.

4 SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF

5 RULE 9011 OF THE FEDERAL RULES OF BANK6 RUPTCY PROCEDURE.

7 It is the sense of Congress that rule 9011 of the Fed8 eral Rules of Bankruptcy Procedure (11 U.S.C. App.)

9 should be modified to include a requirement that all docu10 ments (including schedules), signed and unsigned, sub11 mitted to the court or to a trustee by debtors who rep12 resent themselves and debtors who are represented by at13 torneys be submitted only after the debtors or the debtors’

14 attorneys have made reasonable inquiry to verify that the

15 information contained in such documents is—

16 (1) well grounded in fact; and

17 (2) warranted by existing law or a good faith

18 argument for the extension, modification, or reversal

19 of existing law.

20 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL

21 CASES.

22 Section 362(e) of title 11, United States Code, is

23 amended—

24 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

25 (2) by adding at the end the following:
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1 ‘‘(2) Notwithstanding paragraph (1), in a case under

2 chapter 7, 11, or 13 in which the debtor is an individual,

3 the stay under subsection (a) shall terminate on the date

4 that is 60 days after a request is made by a party in inter5 est under subsection (d), unless—

6 ‘‘(A) a final decision is rendered by the court

7 during the 60-day period beginning on the date of

8 the request; or

9 ‘‘(B) such 60-day period is extended—

10 ‘‘(i) by agreement of all parties in interest;

11 or

12 ‘‘(ii) by the court for such specific period

13 of time as the court finds is required for good

14 cause, as described in findings made by the

15 court.’’.

16 SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.

17 (a) PROPERTY OF THE ESTATE.—

18 (1) IN GENERAL.—Subchapter I of chapter 11

19 of title 11, United States Code, is amended by add20 ing at the end the following:

21 ‘‘§ 1115. Property of the estate

22 ‘‘(a) In a case in which the debtor is an individual,

23 property of the estate includes, in addition to the property

24 specified in section 541—
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1 ‘‘(1) all property of the kind specified in section

2 541 that the debtor acquires after the commence3 ment of the case but before the case is closed, dis4 missed, or converted to a case under chapter 7, 12,

5 or 13, whichever occurs first; and

6 ‘‘(2) earnings from services performed by the

7 debtor after the commencement of the case but be8 fore the case is closed, dismissed, or converted to a

9 case under chapter 7, 12, or 13, whichever occurs

10 first.

11 ‘‘(b) Except as provided in section 1104 or a con12 firmed plan or order confirming a plan, the debtor shall

13 remain in possession of all property of the estate.’’.

14 (2) CLERICAL AMENDMENT.—The table of sec15 tions for subchapter I of chapter 11 of title 11,

16 United States Code, is amended by adding at the

17 end the following:

‘‘1115. Property of the estate.’’.

18 (b) CONTENTS OF PLAN.—Section 1123(a) of title

19 11, United States Code, is amended—

20 (1) in paragraph (6), by striking ‘‘and’’ at the

21 end;

22 (2) in paragraph (7), by striking the period and

23 inserting ‘‘; and’’; and

24 (3) by adding at the end the following:
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1 ‘‘(8) in a case in which the debtor is an indi2 vidual, provide for the payment to creditors under

3 the plan of all or such portion of earnings from per4 sonal services performed by the debtor after the

5 commencement of the case or other future income of

6 the debtor as is necessary for the execution of the

7 plan.’’.

8 (c) CONFIRMATION OF PLAN.—

9 (1) REQUIREMENTS RELATING TO VALUE OF

10 PROPERTY.—Section 1129(a) of title 11, United

11 States Code, as amended by section 213, is amended

12 by adding at the end the following:

13 ‘‘(15) In a case in which the debtor is an indi14 vidual and in which the holder of an allowed unse15 cured claim objects to the confirmation of the plan—

16 ‘‘(A) the value, as of the effective date of

17 the plan, of the property to be distributed

18 under the plan on account of such claim is not

19 less than the amount of such claim; or

20 ‘‘(B) the value of the property to be dis21 tributed under the plan is not less than the pro22 jected disposable income of the debtor (as de23 fined in section 1325(b)(2)) to be received dur24 ing the 5-year period beginning on the date that

25 the first payment is due under the plan, or dur-
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1 ing the period for which the plan provides pay2 ments, whichever is longer.’’.

3 (2) REQUIREMENT RELATING TO INTERESTS IN

4 PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11,

5 United States Code, is amended by inserting before

6 the period at the end the following: ‘‘, except that

7 in a case in which the debtor is an individual, the

8 debtor may retain property included in the estate

9 under section 1115, subject to the requirements of

10 subsection (a)(14) of this section’’.

11 (d) EFFECT OF CONFIRMATION.—Section 1141(d) of

12 title 11, United States Code, is amended—

13 (1) in paragraph (2), by striking ‘‘The con14 firmation of a plan does not discharge an individual

15 debtor’’ and inserting ‘‘A discharge under this chap16 ter does not discharge a debtor who is an indi17 vidual’’; and

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

19 ‘‘(5) In a case in which the debtor is an individual—

20 ‘‘(A) unless after notice and a hearing the court

21 orders otherwise for cause, confirmation of the plan

22 does not discharge any debt provided for in the plan

23 until the court grants a discharge on completion of

24 all payments under the plan;
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1 ‘‘(B) at any time after the confirmation of the

2 plan, and after notice and a hearing, the court may

3 grant a discharge to the debtor who has not com4 pleted payments under the plan if—

5 ‘‘(i) the value, as of the effective date of

6 the plan, of property actually distributed under

7 the plan on account of each allowed unsecured

8 claim is not less than the amount that would

9 have been paid on such claim if the estate of

10 the debtor had been liquidated under chapter 7

11 on such date; and

12 ‘‘(ii) modification of the plan under section

13 1127 is not practicable; and’’.

14 (e) MODIFICATION OF PLAN.—Section 1127 of title

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

16 the following:

17 ‘‘(e) If the debtor is an individual, the plan may be

18 modified at any time after confirmation of the plan but

19 before the completion of payments under the plan, whether

20 or not the plan has been substantially consummated, upon

21 request of the debtor, the trustee, the United States trust22 ee, or the holder of an allowed unsecured claim, to—

23 ‘‘(1) increase or reduce the amount of payments

24 on claims of a particular class provided for by the

25 plan;
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1 ‘‘(2) extend or reduce the time period for such

2 payments; or

3 ‘‘(3) alter the amount of the distribution to a

4 creditor whose claim is provided for by the plan to

5 the extent necessary to take account of any payment

6 of such claim made other than under the plan.

7 ‘‘(f)(1) Sections 1121 through 1128 and the require8 ments of section 1129 apply to any modification under

9 subsection (a).

10 ‘‘(2) The plan, as modified, shall become the plan

11 only after there has been disclosure under section 1125

12 as the court may direct, notice and a hearing, and such

13 modification is approved.’’.

14 SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION.

15 (a) EXEMPTIONS.—Section 522 of title 11, United

16 States Code, as amended by sections 224 and 308, is

17 amended by adding at the end the following:

18 ‘‘(p)(1) Except as provided in paragraph (2) of this

19 subsection and sections 544 and 548, as a result of elect20 ing under subsection (b)(3)(A) to exempt property under

21 State or local law, a debtor may not exempt any amount

22 of interest that was acquired by the debtor during the

23 1215-day period preceding the date of the filing of the

24 petition that exceeds in the aggregate $125,000 in value

25 in—
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1 ‘‘(A) real or personal property that the debtor

2 or a dependent of the debtor uses as a residence;

3 ‘‘(B) a cooperative that owns property that the

4 debtor or a dependent of the debtor uses as a resi5 dence;

6 ‘‘(C) a burial plot for the debtor or a dependent

7 of the debtor; or

8 ‘‘(D) real or personal property that the debtor

9 or dependent of the debtor claims as a homestead.

10 ‘‘(2)(A) The limitation under paragraph (1) shall not

11 apply to an exemption claimed under subsection (b)(3)(A)

12 by a family farmer for the principal residence of such

13 farmer.

14 ‘‘(B) For purposes of paragraph (1), any amount of

15 such interest does not include any interest transferred

16 from a debtor’s previous principal residence (which was

17 acquired prior to the beginning of such 1215-day period)

18 into the debtor’s current principal residence, if the debt19 or’s previous and current residences are located in the

20 same State.

21 ‘‘(q)(1) As a result of electing under subsection

22 (b)(3)(A) to exempt property under State or local law, a

23 debtor may not exempt any amount of an interest in prop24 erty described in subparagraphs (A), (B), (C), and (D)
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1 of subsection (p)(1) which exceeds in the aggregate

2 $125,000 if—

3 ‘‘(A) the court determines, after notice and a

4 hearing, that the debtor has been convicted of a fel5 ony (as defined in section 3156 of title 18), which

6 under the circumstances, demonstrates that the fil7 ing of the case was an abuse of the provisions of this

8 title; or

9 ‘‘(B) the debtor owes a debt arising from—

10 ‘‘(i) any violation of the Federal securities

11 laws (as defined in section 3(a)(47) of the Secu12 rities Exchange Act of 1934), any State securi13 ties laws, or any regulation or order issued

14 under Federal securities laws or State securities

15 laws;

16 ‘‘(ii) fraud, deceit, or manipulation in a fi17 duciary capacity or in connection with the pur18 chase or sale of any security registered under

19 section 12 or 15(d) of the Securities Exchange

20 Act of 1934 or under section 6 of the Securities

21 Act of 1933;

22 ‘‘(iii) any civil remedy under section 1964

23 of title 18; or

24 ‘‘(iv) any criminal act, intentional tort, or

25 willful or reckless misconduct that caused seri-
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1 ous physical injury or death to another indi2 vidual in the preceding 5 years.

3 ‘‘(2) Paragraph (1) shall not apply to the extent the

4 amount of an interest in property described in subpara5 graphs (A), (B), (C), and (D) of subsection (p)(1) is rea6 sonably necessary for the support of the debtor and any

7 dependent of the debtor.’’.

8 (b) ADJUSTMENT OF DOLLAR AMOUNTS.—Para9 graphs (1) and (2) of section 104(b) of title 11, United

10 States Code, as amended by section 224, are amended by

11 inserting ‘‘522(p), 522(q),’’ after ‘‘522(n),’’.

12 SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI13 PANT CONTRIBUTIONS AND OTHER PROP14 ERTY FROM THE ESTATE.

15 Section 541(b) of title 11, United States Code, as

16 amended by section 225, is amended by adding after para17 graph (6), as added by section 225(a)(1)(C), the following:

18 ‘‘(7) any amount—

19 ‘‘(A) withheld by an employer from the

20 wages of employees for payment as

21 contributions—

22 ‘‘(i) to—

23 ‘‘(I) an employee benefit plan

24 that is subject to title I of the Em25 ployee Retirement Income Security
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1 Act of 1974 or under an employee

2 benefit plan which is a governmental

3 plan under section 414(d) of the In4 ternal Revenue Code of 1986;

5 ‘‘(II) a deferred compensation

6 plan under section 457 of the Internal

7 Revenue Code of 1986; or

8 ‘‘(III) a tax-deferred annuity

9 under section 403(b) of the Internal

10 Revenue Code of 1986;

11 except that such amount under this sub12 paragraph shall not constitute disposable

13 income as defined in section 1325(b)(2); or

14 ‘‘(ii) to a health insurance plan regu15 lated by State law whether or not subject

16 to such title; or

17 ‘‘(B) received by an employer from employ18 ees for payment as contributions—

19 ‘‘(i) to—

20 ‘‘(I) an employee benefit plan

21 that is subject to title I of the Em22 ployee Retirement Income Security

23 Act of 1974 or under an employee

24 benefit plan which is a governmental
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1 plan under section 414(d) of the In2 ternal Revenue Code of 1986;

3 ‘‘(II) a deferred compensation

4 plan under section 457 of the Internal

5 Revenue Code of 1986; or

6 ‘‘(III) a tax-deferred annuity

7 under section 403(b) of the Internal

8 Revenue Code of 1986;

9 except that such amount under this sub10 paragraph shall not constitute disposable

11 income, as defined in section 1325(b)(2);

12 or

13 ‘‘(ii) to a health insurance plan regu14 lated by State law whether or not subject

15 to such title;’’.

16 SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV17 ING BANKRUPTCY PROFESSIONALS.

18 (a) IN GENERAL.—Section 1334 of title 28, United

19 States Code, is amended—

20 (1) in subsection (b), by striking ‘‘Notwith21 standing’’ and inserting ‘‘Except as provided in sub22 section (e)(2), and notwithstanding’’; and

23 (2) by striking subsection (e) and inserting the

24 following:
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1 ‘‘(e) The district court in which a case under title

2 11 is commenced or is pending shall have exclusive

3 jurisdiction—

4 ‘‘(1) of all the property, wherever located, of the

5 debtor as of the commencement of such case, and of

6 property of the estate; and

7 ‘‘(2) over all claims or causes of action that in8 volve construction of section 327 of title 11, United

9 States Code, or rules relating to disclosure require10 ments under section 327.’’.

11 (b) APPLICABILITY.—This section shall only apply to

12 cases filed after the date of enactment of this Act.

13 SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE

14 INCREASE.

15 (a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE

16 11, UNITED STATES CODE.—Section 1930(a) of title 28,

17 United States Code, is amended by striking paragraph (1)

18 and inserting the following:

19 ‘‘(1) For a case commenced—

20 ‘‘(A) under chapter 7 of title 11, $160; or

21 ‘‘(B) under chapter 13 of title 11, $150.’’.

22 (b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec23 tion 589a(b) of title 28, United States Code, is amended—

24 (1) by striking paragraph (1) and inserting the

25 following:
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1 ‘‘(1)(A) 40.63 percent of the fees collected

2 under section 1930(a)(1)(A) of this title in cases

3 commenced under chapter 7 of title 11; and

4 ‘‘(B) 70.00 percent of the fees collected under

5 section 1930(a)(1)(B) of this title in cases com6 menced under chapter 13 of title 11;’’;

7 (2) in paragraph (2), by striking ‘‘one-half’’

8 and inserting ‘‘three-fourths’’; and

9 (3) in paragraph (4), by striking ‘‘one-half’’

10 and inserting ‘‘100 percent’’.

11 (c) COLLECTION AND DEPOSIT OF MISCELLANEOUS

12 BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap13 propriations Act, 1990 (28 U.S.C. 1931 note) is amended

14 by striking ‘‘pursuant to 28 U.S.C. section 1930(b)’’ and

15 all that follows through ‘‘28 U.S.C. section 1931’’ and in16 serting ‘‘under section 1930(b) of title 28, United States

17 Code, and 31.25 percent of the fees collected under section

18 1930(a)(1)(A) of that title, 30.00 percent of the fees col19 lected under section 1930(a)(1)(B) of that title, and 25

20 percent of the fees collected under section 1930(a)(3) of

21 that title shall be deposited as offsetting receipts to the

22 fund established under section 1931 of that title’’.

23 SEC. 326. SHARING OF COMPENSATION.

24 Section 504 of title 11, United States Code, is

25 amended by adding at the end the following:
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1 ‘‘(c) This section shall not apply with respect to shar2 ing, or agreeing to share, compensation with a bona fide

3 public service attorney referral program that operates in

4 accordance with non-Federal law regulating attorney re5 ferral services and with rules of professional responsibility

6 applicable to attorney acceptance of referrals.’’.

7 SEC. 327. FAIR VALUATION OF COLLATERAL.

8 Section 506(a) of title 11, United States Code, is

9 amended by—

10 (1) inserting ‘‘(1)’’ after ‘‘(a)’’; and

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

12 ‘‘(2) If the debtor is an individual in a case under

13 chapter 7 or 13, such value with respect to personal prop14 erty securing an allowed claim shall be determined based

15 on the replacement value of such property as of the date

16 of the filing of the petition without deduction for costs

17 of sale or marketing. With respect to property acquired

18 for personal, family, or household purposes, replacement

19 value shall mean the price a retail merchant would charge

20 for property of that kind considering the age and condition

21 of the property at the time value is determined.’’.
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1 SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA2 TIONS.

3 (a) EXECUTORY CONTRACTS AND UNEXPIRED

4 LEASES.—Section 365 of title 11, United States Code, is

5 amended—

6 (1) in subsection (b)—

7 (A) in paragraph (1)(A), by striking the

8 semicolon at the end and inserting the fol9 lowing: ‘‘other than a default that is a breach

10 of a provision relating to the satisfaction of any

11 provision (other than a penalty rate or penalty

12 provision) relating to a default arising from any

13 failure to perform nonmonetary obligations

14 under an unexpired lease of real property, if it

15 is impossible for the trustee to cure such de16 fault by performing nonmonetary acts at and

17 after the time of assumption, except that if

18 such default arises from a failure to operate in

19 accordance with a nonresidential real property

20 lease, then such default shall be cured by per21 formance at and after the time of assumption

22 in accordance with such lease, and pecuniary

23 losses resulting from such default shall be com24 pensated in accordance with the provisions of

25 this paragraph;’’; and
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1 (B) in paragraph (2)(D), by striking ‘‘pen2 alty rate or provision’’ and inserting ‘‘penalty

3 rate or penalty provision’’;

4 (2) in subsection (c)—

5 (A) in paragraph (2), by inserting ‘‘or’’ at

6 the end;

7 (B) in paragraph (3), by striking ‘‘; or’’ at

8 the end and inserting a period; and

9 (C) by striking paragraph (4);

10 (3) in subsection (d)—

11 (A) by striking paragraphs (5) through

12 (9); and

13 (B) by redesignating paragraph (10) as

14 paragraph (5); and

15 (4) in subsection (f)(1) by striking ‘‘; except

16 that’’ and all that follows through the end of the

17 paragraph and inserting a period.

18 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec19 tion 1124(2) of title 11, United States Code, is

20 amended—

21 (1) in subparagraph (A), by inserting ‘‘or of a

22 kind that section 365(b)(2) expressly does not re23 quire to be cured’’ before the semicolon at the end;

24 (2) in subparagraph (C), by striking ‘‘and’’ at

25 the end;
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1 (3) by redesignating subparagraph (D) as sub2 paragraph (E); and

3 (4) by inserting after subparagraph (C) the fol4 lowing:

5 ‘‘(D) if such claim or such interest arises

6 from any failure to perform a nonmonetary ob7 ligation, other than a default arising from fail8 ure to operate a nonresidential real property

9 lease subject to section 365(b)(1)(A), com10 pensates the holder of such claim or such inter11 est (other than the debtor or an insider) for any

12 actual pecuniary loss incurred by such holder as

13 a result of such failure; and’’.

14 SEC. 329. CLARIFICATION OF POSTPETITION WAGES AND

15 BENEFITS.

16 Section 503(b)(1)(A) of title 11, United States Code,

17 is amended to read as follows:

18 ‘‘(A) the actual, necessary costs and expenses of pre19 serving the estate including—

20 ‘‘(i) wages, salaries, and commissions for

21 services rendered after the commencement of

22 the case; and

23 ‘‘(ii) wages and benefits awarded pursuant

24 to a judicial proceeding or a proceeding of the

25 National Labor Relations Board as back pay
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1 attributable to any period of time occurring

2 after commencement of the case under this

3 title, as a result of a violation of Federal or

4 State law by the debtor, without regard to the

5 time of the occurrence of unlawful conduct on

6 which such award is based or to whether any

7 services were rendered, if the court determines

8 that payment of wages and benefits by reason

9 of the operation of this clause will not substan10 tially increase the probability of layoff or termi11 nation of current employees, or of nonpayment

12 of domestic support obligations, during the case

13 under this title;’’.

14 SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF

15 CERTAIN PROCEEDINGS.

16 (a) CHAPTER 7.—Section 727(a) of title 11, United

17 States Code, as amended by section 106, is amended—

18 (1) in paragraph (10), by striking ‘‘or’’ at the

19 end;

20 (2) in paragraph (11) by striking the period at

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

22 (3) by inserting after paragraph (11) the fol23 lowing:

24 ‘‘(12) the court after notice and a hearing held

25 not more than 10 days before the date of the entry
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1 of the order granting the discharge finds that there

2 is reasonable cause to believe that—

3 ‘‘(A) section 522(q)(1) may be applicable

4 to the debtor; and

5 ‘‘(B) there is pending any proceeding in

6 which the debtor may be found guilty of a fel7 ony of the kind described in section

8 522(q)(1)(A) or liable for a debt of the kind de9 scribed in section 522(q)(1)(B).’’.

10 (b) CHAPTER 11.—Section 1141(d) of title 11,

11 United States Code, as amended by section 321, is amend12 ed by adding at the end the following:

13 ‘‘(C) unless after notice and a hearing held not

14 more than 10 days before the date of the entry of

15 the order granting the discharge, the court finds

16 that there is no reasonable cause to believe that—

17 ‘‘(i) section 522(q)(1) may be applicable to

18 the debtor; and

19 ‘‘(ii) there is pending any proceeding in

20 which the debtor may be found guilty of a fel21 ony of the kind described in section

22 522(q)(1)(A) or liable for a debt of the kind de23 scribed in section 522(q)(1)(B).’’.

24 (c) CHAPTER 12.—Section 1228 of title 11, United

25 States Code, is amended—
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1 (1) in subsection (a) by striking ‘‘As’’ and in2 serting ‘‘Subject to subsection (d), as’’,

3 (2) in subsection (b) by striking ‘‘At’’ and in4 serting ‘‘Subject to subsection (d), at’’, and

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

6 ‘‘(f) The court may not grant a discharge under this

7 chapter unless the court after notice and a hearing held

8 not more than 10 days before the date of the entry of

9 the order granting the discharge finds that there is no rea10 sonable cause to believe that—

11 ‘‘(1) section 522(q)(1) may be applicable to the

12 debtor; and

13 ‘‘(2) there is pending any proceeding in which

14 the debtor may be found guilty of a felony of the

15 kind described in section 522(q)(1)(A) or liable for

16 a debt of the kind described in section

17 522(q)(1)(B).’’.

18 (d) CHAPTER 13.—Section 1328 of title 11, United

19 States Code, as amended by section 106, is amended—

20 (1) in subsection (a) by striking ‘‘As’’ and in21 serting ‘‘Subject to subsection (d), as’’,

22 (2) in subsection (b) by striking ‘‘At’’ and in23 serting ‘‘Subject to subsection (d), at’’, and

24 (3) by adding at the end the following:
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1 ‘‘(h) The court may not grant a discharge under this

2 chapter unless the court after notice and a hearing held

3 not more than 10 days before the date of the entry of

4 the order granting the discharge finds that there is no rea5 sonable cause to believe that—

6 ‘‘(1) section 522(q)(1) may be applicable to the

7 debtor; and

8 ‘‘(2) there is pending any proceeding in which

9 the debtor may be found guilty of a felony of the

10 kind described in section 522(q)(1)(A) or liable for

11 a debt of the kind described in section

12 522(q)(1)(B).’’.

13 TITLE IV—GENERAL AND SMALL

14 BUSINESS BANKRUPTCY PRO15 VISIONS

16 Subtitle A—General Business

17 Bankruptcy Provisions

18 SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.

19 (a) DEFINITION.—Section 101 of title 11, United

20 States Code, is amended by inserting after paragraph (48)

21 the following:

22 ‘‘(48A) ‘securities self regulatory organization’

23 means either a securities association registered with

24 the Securities and Exchange Commission under sec25 tion 15A of the Securities Exchange Act of 1934 or
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1 a national securities exchange registered with the

2 Securities and Exchange Commission under section

3 6 of the Securities Exchange Act of 1934;’’.

4 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

5 United States Code, as amended by sections 224, 303, and

6 311, is amended by inserting after paragraph (24) the fol7 lowing:

8 ‘‘(25) under subsection (a), of—

9 ‘‘(A) the commencement or continuation of

10 an investigation or action by a securities self

11 regulatory organization to enforce such organi12 zation’s regulatory power;

13 ‘‘(B) the enforcement of an order or deci14 sion, other than for monetary sanctions, ob15 tained in an action by such securities self regu16 latory organization to enforce such organiza17 tion’s regulatory power; or

18 ‘‘(C) any act taken by such securities self

19 regulatory organization to delist, delete, or

20 refuse to permit quotation of any stock that

21 does not meet applicable regulatory require22 ments;’’.
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1 SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY

2 HOLDERS.

3 Section 341 of title 11, United States Code, is

4 amended by adding at the end the following:

5 ‘‘(e) Notwithstanding subsections (a) and (b), the

6 court, on the request of a party in interest and after notice

7 and a hearing, for cause may order that the United States

8 trustee not convene a meeting of creditors or equity secu9 rity holders if the debtor has filed a plan as to which the

10 debtor solicited acceptances prior to the commencement

11 of the case.’’.

12 SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN13 TEREST.

14 Subparagraphs (A), (B), and (C) of section 547(e)(2)

15 of title 11, United States Code, are each amended by strik16 ing ‘‘10’’ each place it appears and inserting ‘‘30’’.

17 SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED

18 LEASES.

19 (a) IN GENERAL.—Section 365(d)(4) of title 11,

20 United States Code, is amended to read as follows:

21 ‘‘(4)(A) Subject to subparagraph (B), an unexpired

22 lease of nonresidential real property under which the debt23 or is the lessee shall be deemed rejected, and the trustee

24 shall immediately surrender that nonresidential real prop25 erty to the lessor, if the trustee does not assume or reject

26 the unexpired lease by the earlier of—
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1 ‘‘(i) the date that is 120 days after the date of

2 the order for relief; or

3 ‘‘(ii) the date of the entry of an order con4 firming a plan.

5 ‘‘(B)(i) The court may extend the period determined

6 under subparagraph (A), prior to the expiration of the

7 120-day period, for 90 days on the motion of the trustee

8 or lessor for cause.

9 ‘‘(ii) If the court grants an extension under clause

10 (i), the court may grant a subsequent extension only upon

11 prior written consent of the lessor in each instance.’’.

12 (b) EXCEPTION.—Section 365(f)(1) of title 11,

13 United States Code, is amended by striking ‘‘subsection’’

14 the first place it appears and inserting ‘‘subsections (b)

15 and’’.

16 SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS

17 COMMITTEES.

18 (a) APPOINTMENT.—Section 1102(a) of title 11,

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

20 following:

21 ‘‘(4) On request of a party in interest and after notice

22 and a hearing, the court may order the United States

23 trustee to change the membership of a committee ap24 pointed under this subsection, if the court determines that

25 the change is necessary to ensure adequate representation
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1 of creditors or equity security holders. The court may

2 order the United States trustee to increase the number

3 of members of a committee to include a creditor that is

4 a small business concern (as described in section 3(a)(1)

5 of the Small Business Act), if the court determines that

6 the creditor holds claims (of the kind represented by the

7 committee) the aggregate amount of which, in comparison

8 to the annual gross revenue of that creditor, is dispropor9 tionately large.’’.

10 (b) INFORMATION.—Section 1102(b) of title 11,

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

12 following:

13 ‘‘(3) A committee appointed under subsection (a)

14 shall—

15 ‘‘(A) provide access to information for creditors

16 who—

17 ‘‘(i) hold claims of the kind represented by

18 that committee; and

19 ‘‘(ii) are not appointed to the committee;

20 ‘‘(B) solicit and receive comments from the

21 creditors described in subparagraph (A); and

22 ‘‘(C) be subject to a court order that compels

23 any additional report or disclosure to be made to the

24 creditors described in subparagraph (A).’’.
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1 SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11,

2 UNITED STATES CODE.

3 Section 546 of title 11, United States Code, is

4 amended—

5 (1) by redesignating the second subsection (g)

6 (as added by section 222(a) of Public Law 103–394)

7 as subsection (h);

8 (2) in subsection (h), as so redesignated, by in9 serting ‘‘and subject to the prior rights of holders of

10 security interests in such goods or the proceeds of

11 such goods’’ after ‘‘consent of a creditor’’; and

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

13 ‘‘(i)(1) Notwithstanding paragraphs (2) and (3) of

14 section 545, the trustee may not avoid a warehouseman’s

15 lien for storage, transportation, or other costs incidental

16 to the storage and handling of goods.

17 ‘‘(2) The prohibition under paragraph (1) shall be ap18 plied in a manner consistent with any State statute appli19 cable to such lien that is similar to section 7–209 of the

20 Uniform Commercial Code, as in effect on the date of en21 actment of the Bankruptcy Abuse Prevention and Con22 sumer Protection Act of 2003, or any successor to such

23 section 7–209.’’.
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1 SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11,

2 UNITED STATES CODE.

3 Section 330(a) of title 11, United States Code, is

4 amended—

5 (1) in paragraph (3)—

6 (A) by striking ‘‘(A) In’’ and inserting

7 ‘‘In’’; and

8 (B) by inserting ‘‘to an examiner, trustee

9 under chapter 11, or professional person’’ after

10 ‘‘awarded’’; and

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

12 ‘‘(7) In determining the amount of reasonable com13 pensation to be awarded to a trustee, the court shall treat

14 such compensation as a commission, based on section

15 326.’’.

16 SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.

17 Section 1125 of title 11, United States Code, is

18 amended by adding at the end the following:

19 ‘‘(g) Notwithstanding subsection (b), an acceptance

20 or rejection of the plan may be solicited from a holder

21 of a claim or interest if such solicitation complies with ap22 plicable nonbankruptcy law and if such holder was solic23 ited before the commencement of the case in a manner

24 complying with applicable nonbankruptcy law.’’.
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1 SEC. 409. PREFERENCES.

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

3 amended—

4 (1) by striking paragraph (2) and inserting the

5 following:

6 ‘‘(2) to the extent that such transfer was in

7 payment of a debt incurred by the debtor in the or8 dinary course of business or financial affairs of the

9 debtor and the transferee, and such transfer was—

10 ‘‘(A) made in the ordinary course of busi11 ness or financial affairs of the debtor and the

12 transferee; or

13 ‘‘(B) made according to ordinary business

14 terms;’’;

15 (2) in paragraph (8), by striking the period at

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

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

18 ‘‘(9) if, in a case filed by a debtor whose debts

19 are not primarily consumer debts, the aggregate

20 value of all property that constitutes or is affected

21 by such transfer is less than $5,000.’’.

22 SEC. 410. VENUE OF CERTAIN PROCEEDINGS.

23 Section 1409(b) of title 28, United States Code, is

24 amended by inserting ‘‘, or a debt (excluding a consumer

25 debt) against a noninsider of less than $10,000,’’ after

26 ‘‘$5,000’’.
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1 SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

2 Section 1121(d) of title 11, United States Code, is

3 amended—

4 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject

5 to paragraph (2), on’’; and

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

7 ‘‘(2)(A) The 120-day period specified in paragraph

8 (1) may not be extended beyond a date that is 18 months

9 after the date of the order for relief under this chapter.

10 ‘‘(B) The 180-day period specified in paragraph (1)

11 may not be extended beyond a date that is 20 months after

12 the date of the order for relief under this chapter.’’.

13 SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN14 TERESTS.

15 Section 523(a)(16) of title 11, United States Code,

16 is amended—

17 (1) by striking ‘‘dwelling’’ the first place it ap18 pears;

19 (2) by striking ‘‘ownership or’’ and inserting

20 ‘‘ownership,’’;

21 (3) by striking ‘‘housing’’ the first place it ap22 pears; and

23 (4) by striking ‘‘but only’’ and all that follows

24 through ‘‘such period,’’ and inserting ‘‘or a lot in a

25 homeowners association, for as long as the debtor or

26 the trustee has a legal, equitable, or possessory own-
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1 ership interest in such unit, such corporation, or

2 such lot,’’.

3 SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING

4 OF CREDITORS.

5 Section 341(c) of title 11, United States Code, is

6 amended by inserting at the end the following: ‘‘Notwith7 standing any local court rule, provision of a State constitu8 tion, any other Federal or State law that is not a bank9 ruptcy law, or other requirement that representation at

10 the meeting of creditors under subsection (a) be by an at11 torney, a creditor holding a consumer debt or any rep12 resentative of the creditor (which may include an entity

13 or an employee of an entity and may be a representative

14 for more than 1 creditor) shall be permitted to appear at

15 and participate in the meeting of creditors in a case under

16 chapter 7 or 13, either alone or in conjunction with an

17 attorney for the creditor. Nothing in this subsection shall

18 be construed to require any creditor to be represented by

19 an attorney at any meeting of creditors.’’.

20 SEC. 414. DEFINITION OF DISINTERESTED PERSON.

21 Section 101(14) of title 11, United States Code, is

22 amended to read as follows:

23 ‘‘(14) ‘disinterested person’ means a person

24 that—
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1 ‘‘(A) is not a creditor, an equity security

2 holder, or an insider;

3 ‘‘(B) is not and was not, within 2 years be4 fore the date of the filing of the petition, a di5 rector, officer, or employee of the debtor; and

6 ‘‘(C) does not have an interest materially

7 adverse to the interest of the estate or of any

8 class of creditors or equity security holders, by

9 reason of any direct or indirect relationship to,

10 connection with, or interest in, the debtor, or

11 for any other reason;’’.

12 SEC. 415. FACTORS FOR COMPENSATION OF PROFES13 SIONAL PERSONS.

14 Section 330(a)(3) of title 11, United States Code, is

15 amended—

16 (1) in subparagraph (D), by striking ‘‘and’’ at

17 the end;

18 (2) by redesignating subparagraph (E) as sub19 paragraph (F); and

20 (3) by inserting after subparagraph (D) the fol21 lowing:

22 ‘‘(E) with respect to a professional person,

23 whether the person is board certified or otherwise

24 has demonstrated skill and experience in the bank25 ruptcy field; and’’.
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1 SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.

2 Section 1104(b) of title 11, United States Code, is

3 amended—

4 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

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

6 ‘‘(2)(A) If an eligible, disinterested trustee is elected

7 at a meeting of creditors under paragraph (1), the United

8 States trustee shall file a report certifying that election.

9 ‘‘(B) Upon the filing of a report under subparagraph

10 (A)—

11 ‘‘(i) the trustee elected under paragraph (1)

12 shall be considered to have been selected and ap13 pointed for purposes of this section; and

14 ‘‘(ii) the service of any trustee appointed under

15 subsection (d) shall terminate.

16 ‘‘(C) The court shall resolve any dispute arising out

17 of an election described in subparagraph (A).’’.

18 SEC. 417. UTILITY SERVICE.

19 Section 366 of title 11, United States Code, is

20 amended—

21 (1) in subsection (a), by striking ‘‘subsection

22 (b)’’ and inserting ‘‘subsections (b) and (c)’’; and

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

24 ‘‘(c)(1)(A) For purposes of this subsection, the term

25 ‘assurance of payment’ means—

26 ‘‘(i) a cash deposit;
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1 ‘‘(ii) a letter of credit;

2 ‘‘(iii) a certificate of deposit;

3 ‘‘(iv) a surety bond;

4 ‘‘(v) a prepayment of utility consumption; or

5 ‘‘(vi) another form of security that is mutually

6 agreed on between the utility and the debtor or the

7 trustee.

8 ‘‘(B) For purposes of this subsection an administra9 tive expense priority shall not constitute an assurance of

10 payment.

11 ‘‘(2) Subject to paragraphs (3) and (4), with respect

12 to a case filed under chapter 11, a utility referred to in

13 subsection (a) may alter, refuse, or discontinue utility

14 service, if during the 30-day period beginning on the date

15 of the filing of the petition, the utility does not receive

16 from the debtor or the trustee adequate assurance of pay17 ment for utility service that is satisfactory to the utility.

18 ‘‘(3)(A) On request of a party in interest and after

19 notice and a hearing, the court may order modification

20 of the amount of an assurance of payment under para21 graph (2).

22 ‘‘(B) In making a determination under this para23 graph whether an assurance of payment is adequate, the

24 court may not consider—
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1 ‘‘(i) the absence of security before the date of

2 the filing of the petition;

3 ‘‘(ii) the payment by the debtor of charges for

4 utility service in a timely manner before the date of

5 the filing of the petition; or

6 ‘‘(iii) the availability of an administrative ex7 pense priority.

8 ‘‘(4) Notwithstanding any other provision of law, with

9 respect to a case subject to this subsection, a utility may

10 recover or set off against a security deposit provided to

11 the utility by the debtor before the date of the filing of

12 the petition without notice or order of the court.’’.

13 SEC. 418. BANKRUPTCY FEES.

14 Section 1930 of title 28, United States Code, is

15 amended—

16 (1) in subsection (a), by striking ‘‘Notwith17 standing section 1915 of this title, the’’ and insert18 ing ‘‘The’’; and

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

20 ‘‘(f)(1) Under the procedures prescribed by the Judi21 cial Conference of the United States, the district court or

22 the bankruptcy court may waive the filing fee in a case

23 under chapter 7 of title 11 for an individual if the court

24 determines that such individual has income less than 150

25 percent of the income official poverty line (as defined by
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1 the Office of Management and Budget, and revised annu2 ally in accordance with section 673(2) of the Omnibus

3 Budget Reconciliation Act of 1981) applicable to a family

4 of the size involved and is unable to pay that fee in install5 ments. For purposes of this paragraph, the term ‘filing

6 fee’ means the filing required by subsection (a), or any

7 other fee prescribed by the Judicial Conference under sub8 sections (b) and (c) that is payable to the clerk upon the

9 commencement of a case under chapter 7.

10 ‘‘(2) The district court or the bankruptcy court may

11 waive for such debtors other fees prescribed under sub12 sections (b) and (c).

13 ‘‘(3) This subsection does not restrict the district

14 court or the bankruptcy court from waiving, in accordance

15 with Judicial Conference policy, fees prescribed under this

16 section for other debtors and creditors.’’.

17 SEC. 419. MORE COMPLETE INFORMATION REGARDING AS18 SETS OF THE ESTATE.

19 (a) IN GENERAL.—

20 (1) DISCLOSURE.—The Judicial Conference of

21 the United States, in accordance with section 2075

22 of title 28 of the United States Code and after con23 sideration of the views of the Director of the Execu24 tive Office for United States Trustees, shall propose

25 amended Federal Rules of Bankruptcy Procedure
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1 and in accordance with rule 9009 of the Federal

2 Rules of Bankruptcy Procedure shall prescribe offi3 cial bankruptcy forms directing debtors under chap4 ter 11 of title 11 of United States Code, to disclose

5 the information described in paragraph (2) by filing

6 and serving periodic financial and other reports de7 signed to provide such information.

8 (2) INFORMATION.—The information referred

9 to in paragraph (1) is the value, operations, and

10 profitability of any closely held corporation, partner11 ship, or of any other entity in which the debtor holds

12 a substantial or controlling interest.

13 (b) PURPOSE.—The purpose of the rules and reports

14 under subsection (a) shall be to assist parties in interest

15 taking steps to ensure that the debtor’s interest in any

16 entity referred to in subsection (a)(2) is used for the pay17 ment of allowed claims against debtor.

18 Subtitle B—Small Business

19 Bankruptcy Provisions

20 SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

21 AND PLAN.

22 Section 1125 of title 11, United States Code, is

23 amended—

24 (1) in subsection (a)(1), by inserting before the

25 semicolon ‘‘and in determining whether a disclosure
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1 statement provides adequate information, the court

2 shall consider the complexity of the case, the benefit

3 of additional information to creditors and other par4 ties in interest, and the cost of providing additional

5 information’’; and

6 (2) by striking subsection (f), and inserting the

7 following:

8 ‘‘(f) Notwithstanding subsection (b), in a small busi9 ness case—

10 ‘‘(1) the court may determine that the plan

11 itself provides adequate information and that a sepa12 rate disclosure statement is not necessary;

13 ‘‘(2) the court may approve a disclosure state14 ment submitted on standard forms approved by the

15 court or adopted under section 2075 of title 28; and

16 ‘‘(3)(A) the court may conditionally approve a

17 disclosure statement subject to final approval after

18 notice and a hearing;

19 ‘‘(B) acceptances and rejections of a plan may

20 be solicited based on a conditionally approved disclo21 sure statement if the debtor provides adequate infor22 mation to each holder of a claim or interest that is

23 solicited, but a conditionally approved disclosure

24 statement shall be mailed not later than 25 days be-
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1 fore the date of the hearing on confirmation of the

2 plan; and

3 ‘‘(C) the hearing on the disclosure statement

4 may be combined with the hearing on confirmation

5 of a plan.’’.

6 SEC. 432. DEFINITIONS.

7 (a) DEFINITIONS.—Section 101 of title 11, United

8 States Code, is amended by striking paragraph (51C) and

9 inserting the following:

10 ‘‘(51C) ‘small business case’ means a case filed

11 under chapter 11 of this title in which the debtor is

12 a small business debtor;

13 ‘‘(51D) ‘small business debtor’—

14 ‘‘(A) subject to subparagraph (B), means a

15 person engaged in commercial or business ac16 tivities (including any affiliate of such person

17 that is also a debtor under this title and exclud18 ing a person whose primary activity is the busi19 ness of owning or operating real property or ac20 tivities incidental thereto) that has aggregate

21 noncontingent liquidated secured and unsecured

22 debts as of the date of the petition or the date

23 of the order for relief in an amount not more

24 than $2,000,000 (excluding debts owed to 1 or

25 more affiliates or insiders) for a case in which
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1 the United States trustee has not appointed

2 under section 1102(a)(1) a committee of unse3 cured creditors or where the court has deter4 mined that the committee of unsecured credi5 tors is not sufficiently active and representative

6 to provide effective oversight of the debtor; and

7 ‘‘(B) does not include any member of a

8 group of affiliated debtors that has aggregate

9 noncontingent liquidated secured and unsecured

10 debts in an amount greater than $2,000,000

11 (excluding debt owed to 1 or more affiliates or

12 insiders);’’.

13 (b) CONFORMING AMENDMENT.—Section 1102(a)(3)

14 of title 11, United States Code, is amended by inserting

15 ‘‘debtor’’ after ‘‘small business’’.

16 (c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section

17 104(b) of title 11, United States Code, as amended by

18 section 226, is amended by inserting ‘‘101(51D),’’ after

19 ‘‘101(3),’’ each place it appears.

20 SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND

21 PLAN.

22 Within a reasonable period of time after the date of

23 enactment of this Act, the Judicial Conference of the

24 United States shall prescribe in accordance with rule 9009

25 of the Federal Rules of Bankruptcy Procedure official
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1 standard form disclosure statements and plans of reorga2 nization for small business debtors (as defined in section

3 101 of title 11, United States Code, as amended by this

4 Act), designed to achieve a practical balance between—

5 (1) the reasonable needs of the courts, the

6 United States trustee, creditors, and other parties in

7 interest for reasonably complete information; and

8 (2) economy and simplicity for debtors.

9 SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE10 MENTS.

11 (a) REPORTING REQUIRED.—

12 (1) IN GENERAL.—Chapter 3 of title 11, United

13 States Code, is amended by inserting after section

14 307 the following:

15 ‘‘§ 308. Debtor reporting requirements

16 ‘‘(a) For purposes of this section, the term ‘profit17 ability’ means, with respect to a debtor, the amount of

18 money that the debtor has earned or lost during current

19 and recent fiscal periods.

20 ‘‘(b) A small business debtor shall file periodic finan21 cial and other reports containing information including—

22 ‘‘(1) the debtor’s profitability;

23 ‘‘(2) reasonable approximations of the debtor’s

24 projected cash receipts and cash disbursements over

25 a reasonable period;
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1 ‘‘(3) comparisons of actual cash receipts and

2 disbursements with projections in prior reports;

3 ‘‘(4)(A) whether the debtor is—

4 ‘‘(i) in compliance in all material respects

5 with postpetition requirements imposed by this

6 title and the Federal Rules of Bankruptcy Pro7 cedure; and

8 ‘‘(ii) timely filing tax returns and other re9 quired government filings and paying taxes and

10 other administrative expenses when due;

11 ‘‘(B) if the debtor is not in compliance with the

12 requirements referred to in subparagraph (A)(i) or

13 filing tax returns and other required government fil14 ings and making the payments referred to in sub15 paragraph (A)(ii), what the failures are and how, at

16 what cost, and when the debtor intends to remedy

17 such failures; and

18 ‘‘(C) such other matters as are in the best in19 terests of the debtor and creditors, and in the public

20 interest in fair and efficient procedures under chap21 ter 11 of this title.’’.

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for chapter 3 of title 11, United States Code,

24 is amended by inserting after the item relating to

25 section 307 the following:

‘‘308. Debtor reporting requirements.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall take effect 60 days after the date on

3 which rules are prescribed under section 2075 of title 28,

4 United States Code, to establish forms to be used to com5 ply with section 308 of title 11, United States Code, as

6 added by subsection (a).

7 SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR

8 SMALL BUSINESS CASES.

9 (a) PROPOSAL OF RULES AND FORMS.—The Judicial

10 Conference of the United States shall propose in accord11 ance with section 2073 of title 28 of the United States

12 Code amended Federal Rules of Bankruptcy Procedure,

13 and shall prescribe in accordance with rule 9009 of the

14 Federal Rules of Bankruptcy Procedure official bank15 ruptcy forms, directing small business debtors to file peri16 odic financial and other reports containing information,

17 including information relating to—

18 (1) the debtor’s profitability;

19 (2) the debtor’s cash receipts and disburse20 ments; and

21 (3) whether the debtor is timely filing tax re22 turns and paying taxes and other administrative ex23 penses when due.
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1 (b) PURPOSE.—The rules and forms proposed under

2 subsection (a) shall be designed to achieve a practical

3 balance among—

4 (1) the reasonable needs of the bankruptcy

5 court, the United States trustee, creditors, and other

6 parties in interest for reasonably complete informa7 tion;

8 (2) a small business debtor’s interest that re9 quired reports be easy and inexpensive to complete;

10 and

11 (3) the interest of all parties that the required

12 reports help such debtor to understand such debtor’s

13 financial condition and plan the such debtor’s fu14 ture.

15 SEC. 436. DUTIES IN SMALL BUSINESS CASES.

16 (a) DUTIES IN CHAPTER 11 CASES.—Subchapter I

17 of chapter 11 of title 11, United States Code, as amended

18 by section 321, is amended by adding at the end the fol19 lowing:

20 ‘‘§ 1116. Duties of trustee or debtor in possession in

21 small business cases

22 ‘‘In a small business case, a trustee or the debtor in

23 possession, in addition to the duties provided in this title

24 and as otherwise required by law, shall—
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1 ‘‘(1) append to the voluntary petition or, in an

2 involuntary case, file not later than 7 days after the

3 date of the order for relief—

4 ‘‘(A) its most recent balance sheet, state5 ment of operations, cash-flow statement, Fed6 eral income tax return; or

7 ‘‘(B) a statement made under penalty of

8 perjury that no balance sheet, statement of op9 erations, or cash-flow statement has been pre10 pared and no Federal tax return has been filed;

11 ‘‘(2) attend, through its senior management

12 personnel and counsel, meetings scheduled by the

13 court or the United States trustee, including initial

14 debtor interviews, scheduling conferences, and meet15 ings of creditors convened under section 341 unless

16 the court, after notice and a hearing, waives that re17 quirement upon a finding of extraordinary and com18 pelling circumstances;

19 ‘‘(3) timely file all schedules and statements of

20 financial affairs, unless the court, after notice and a

21 hearing, grants an extension, which shall not extend

22 such time period to a date later than 30 days after

23 the date of the order for relief, absent extraordinary

24 and compelling circumstances;
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1 ‘‘(4) file all postpetition financial and other re2 ports required by the Federal Rules of Bankruptcy

3 Procedure or by local rule of the district court;

4 ‘‘(5) subject to section 363(c)(2), maintain in5 surance customary and appropriate to the industry;

6 ‘‘(6)(A) timely file tax returns and other re7 quired government filings; and

8 ‘‘(B) subject to section 363(c)(2), timely pay all

9 taxes entitled to administrative expense priority ex10 cept those being contested by appropriate pro11 ceedings being diligently prosecuted; and

12 ‘‘(7) allow the United States trustee, or a des13 ignated representative of the United States trustee,

14 to inspect the debtor’s business premises, books, and

15 records at reasonable times, after reasonable prior

16 written notice, unless notice is waived by the debt17 or.’’.

18 (b) CLERICAL AMENDMENT.—The table of sections

19 for chapter 11 of title 11, United States Code, as amended

20 by section 321, is amended by inserting after the item re21 lating to section 1115 the following:

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.

22 SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.

23 Section 1121 of title 11, United States Code, is

24 amended by striking subsection (e) and inserting the fol25 lowing:
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1 ‘‘(e) In a small business case—

2 ‘‘(1) only the debtor may file a plan until after

3 180 days after the date of the order for relief, unless

4 that period is—

5 ‘‘(A) extended as provided by this sub6 section, after notice and a hearing; or

7 ‘‘(B) the court, for cause, orders otherwise;

8 ‘‘(2) the plan and a disclosure statement (if

9 any) shall be filed not later than 300 days after the

10 date of the order for relief; and

11 ‘‘(3) the time periods specified in paragraphs

12 (1) and (2), and the time fixed in section 1129(e)

13 within which the plan shall be confirmed, may be ex14 tended only if—

15 ‘‘(A) the debtor, after providing notice to

16 parties in interest (including the United States

17 trustee), demonstrates by a preponderance of

18 the evidence that it is more likely than not that

19 the court will confirm a plan within a reason20 able period of time;

21 ‘‘(B) a new deadline is imposed at the time

22 the extension is granted; and

23 ‘‘(C) the order extending time is signed be24 fore the existing deadline has expired.’’.
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1 SEC. 438. PLAN CONFIRMATION DEADLINE.

2 Section 1129 of title 11, United States Code, is

3 amended by adding at the end the following:

4 ‘‘(e) In a small business case, the court shall confirm

5 a plan that complies with the applicable provisions of this

6 title and that is filed in accordance with section 1121(e)

7 not later than 45 days after the plan is filed unless the

8 time for confirmation is extended in accordance with sec9 tion 1121(e)(3).’’.

10 SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.

11 Section 586(a) of title 28, United States Code, is

12 amended—

13 (1) in paragraph (3)—

14 (A) in subparagraph (G), by striking

15 ‘‘and’’ at the end;

16 (B) by redesignating subparagraph (H) as

17 subparagraph (I); and

18 (C) by inserting after subparagraph (G)

19 the following:

20 ‘‘(H) in small business cases (as defined in

21 section 101 of title 11), performing the addi22 tional duties specified in title 11 pertaining to

23 such cases; and’’;

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

25 end;
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1 (3) in paragraph (6), by striking the period at

2 the end and inserting a semicolon; and

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

4 ‘‘(7) in each of such small business cases—

5 ‘‘(A) conduct an initial debtor interview as

6 soon as practicable after the date of the order

7 for relief but before the first meeting scheduled

8 under section 341(a) of title 11, at which time

9 the United States trustee shall—

10 ‘‘(i) begin to investigate the debtor’s

11 viability;

12 ‘‘(ii) inquire about the debtor’s busi13 ness plan;

14 ‘‘(iii) explain the debtor’s obligations

15 to file monthly operating reports and other

16 required reports;

17 ‘‘(iv) attempt to develop an agreed

18 scheduling order; and

19 ‘‘(v) inform the debtor of other obliga20 tions;

21 ‘‘(B) if determined to be appropriate and

22 advisable, visit the appropriate business prem23 ises of the debtor, ascertain the state of the

24 debtor’s books and records, and verify that the

25 debtor has filed its tax returns; and
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1 ‘‘(C) review and monitor diligently the

2 debtor’s activities, to identify as promptly as

3 possible whether the debtor will be unable to

4 confirm a plan; and

5 ‘‘(8) in any case in which the United States

6 trustee finds material grounds for any relief under

7 section 1112 of title 11, the United States trustee

8 shall apply promptly after making that finding to

9 the court for relief.’’.

10 SEC. 440. SCHEDULING CONFERENCES.

11 Section 105(d) of title 11, United States Code, is

12 amended—

13 (1) in the matter preceding paragraph (1), by

14 striking ‘‘, may’’; and

15 (2) by striking paragraph (1) and inserting the

16 following:

17 ‘‘(1) shall hold such status conferences as are

18 necessary to further the expeditious and economical

19 resolution of the case; and’’.

20 SEC. 441. SERIAL FILER PROVISIONS.

21 Section 362 of title 11, United States Code, as

22 amended by sections 106, 305, and 311, is amended—

23 (1) in subsection (k), as so redesignated by sec24 tion 305—
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1 (A) by striking ‘‘An’’ and inserting ‘‘(1)

2 Except as provided in paragraph (2), an’’; and

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

4 ‘‘(2) If such violation is based on an action taken by

5 an entity in the good faith belief that subsection (h) ap6 plies to the debtor, the recovery under paragraph (1) of

7 this subsection against such entity shall be limited to ac8 tual damages.’’; and

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

10 ‘‘(n)(1) Except as provided in paragraph (2), sub11 section (a) does not apply in a case in which the debtor—

12 ‘‘(A) is a debtor in a small business case pend13 ing at the time the petition is filed;

14 ‘‘(B) was a debtor in a small business case that

15 was dismissed for any reason by an order that be16 came final in the 2-year period ending on the date

17 of the order for relief entered with respect to the pe18 tition;

19 ‘‘(C) was a debtor in a small business case in

20 which a plan was confirmed in the 2-year period

21 ending on the date of the order for relief entered

22 with respect to the petition; or

23 ‘‘(D) is an entity that has acquired substan24 tially all of the assets or business of a small business

25 debtor described in subparagraph (A), (B), or (C),
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1 unless such entity establishes by a preponderance of

2 the evidence that such entity acquired substantially

3 all of the assets or business of such small business

4 debtor in good faith and not for the purpose of evad5 ing this paragraph.

6 ‘‘(2) Paragraph (1) does not apply—

7 ‘‘(A) to an involuntary case involving no collu8 sion by the debtor with creditors; or

9 ‘‘(B) to the filing of a petition if—

10 ‘‘(i) the debtor proves by a preponderance

11 of the evidence that the filing of the petition re12 sulted from circumstances beyond the control of

13 the debtor not foreseeable at the time the case

14 then pending was filed; and

15 ‘‘(ii) it is more likely than not that the

16 court will confirm a feasible plan, but not a liq17 uidating plan, within a reasonable period of

18 time.’’.

19 SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON20 VERSION AND APPOINTMENT OF TRUSTEE.

21 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON22 VERSION.—Section 1112 of title 11, United States Code,

23 is amended by striking subsection (b) and inserting the

24 following:
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1 ‘‘(b)(1) Except as provided in paragraph (2) of this

2 subsection, subsection (c) of this section, and section

3 1104(a)(3), on request of a party in interest, and after

4 notice and a hearing, absent unusual circumstances spe5 cifically identified by the court that establish that the re6 quested conversion or dismissal is not in the best interests

7 of creditors and the estate, the court shall convert a case

8 under this chapter to a case under chapter 7 or dismiss

9 a case under this chapter, whichever is in the best inter10 ests of creditors and the estate, if the movant establishes

11 cause.

12 ‘‘(2) The relief provided in paragraph (1) shall not

13 be granted absent unusual circumstances specifically iden14 tified by the court that establish that such relief is not

15 in the best interests of creditors and the estate, if the

16 debtor or another party in interest objects and establishes

17 that—

18 ‘‘(A) there is a reasonable likelihood that a plan

19 will be confirmed within the timeframes established

20 in sections 1121(e) and 1129(e) of this title, or if

21 such sections do not apply, within a reasonable pe22 riod of time; and

23 ‘‘(B) the grounds for granting such relief in24 clude an act or omission of the debtor other than

25 under paragraph (4)(A)—
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1 ‘‘(i) for which there exists a reasonable

2 justification for the act or omission; and

3 ‘‘(ii) that will be cured within a reasonable

4 period of time fixed by the court.

5 ‘‘(3) The court shall commence the hearing on a mo6 tion under this subsection not later than 30 days after

7 filing of the motion, and shall decide the motion not later

8 than 15 days after commencement of such hearing, unless

9 the movant expressly consents to a continuance for a spe10 cific period of time or compelling circumstances prevent

11 the court from meeting the time limits established by this

12 paragraph.

13 ‘‘(4) For purposes of this subsection, the term ‘cause’

14 includes—

15 ‘‘(A) substantial or continuing loss to or dimi16 nution of the estate and the absence of a reasonable

17 likelihood of rehabilitation;

18 ‘‘(B) gross mismanagement of the estate;

19 ‘‘(C) failure to maintain appropriate insurance

20 that poses a risk to the estate or to the public;

21 ‘‘(D) unauthorized use of cash collateral sub22 stantially harmful to 1 or more creditors;

23 ‘‘(E) failure to comply with an order of the

24 court;
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1 ‘‘(F) unexcused failure to satisfy timely any fil2 ing or reporting requirement established by this title

3 or by any rule applicable to a case under this chap4 ter;

5 ‘‘(G) failure to attend the meeting of creditors

6 convened under section 341(a) or an examination or7 dered under rule 2004 of the Federal Rules of

8 Bankruptcy Procedure without good cause shown by

9 the debtor;

10 ‘‘(H) failure timely to provide information or

11 attend meetings reasonably requested by the United

12 States trustee (or the bankruptcy administrator, if

13 any);

14 ‘‘(I) failure timely to pay taxes owed after the

15 date of the order for relief or to file tax returns due

16 after the date of the order for relief;

17 ‘‘(J) failure to file a disclosure statement, or to

18 file or confirm a plan, within the time fixed by this

19 title or by order of the court;

20 ‘‘(K) failure to pay any fees or charges required

21 under chapter 123 of title 28;

22 ‘‘(L) revocation of an order of confirmation

23 under section 1144;

24 ‘‘(M) inability to effectuate substantial con25 summation of a confirmed plan;
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1 ‘‘(N) material default by the debtor with re2 spect to a confirmed plan;

3 ‘‘(O) termination of a confirmed plan by reason

4 of the occurrence of a condition specified in the plan;

5 and

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

7 support obligation that first becomes payable after

8 the date of the filing of the petition.

9 ‘‘(5) The court shall commence the hearing on a mo10 tion under this subsection not later than 30 days after

11 filing of the motion, and shall decide the motion not later

12 than 15 days after commencement of such hearing, unless

13 the movant expressly consents to a continuance for a spe14 cific period of time or compelling circumstances prevent

15 the court from meeting the time limits established by this

16 paragraph.’’.

17 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

18 TRUSTEE.—Section 1104(a) of title 11, United States

19 Code, is amended—

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

21 end;

22 (2) in paragraph (2), by striking the period at

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

24 (3) by adding at the end the following:
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1 ‘‘(3) if grounds exist to convert or dismiss the

2 case under section 1112, but the court determines

3 that the appointment of a trustee or an examiner is

4 in the best interests of creditors and the estate.’’.

5 SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED

6 STATES CODE, WITH RESPECT TO SMALL

7 BUSINESSES.

8 Not later than 2 years after the date of enactment

9 of this Act, the Administrator of the Small Business Ad10 ministration, in consultation with the Attorney General,

11 the Director of the Executive Office for United States

12 Trustees, and the Director of the Administrative Office

13 of the United States Courts, shall—

14 (1) conduct a study to determine—

15 (A) the internal and external factors that

16 cause small businesses, especially sole propri17 etorships, to become debtors in cases under title

18 11, United States Code, and that cause certain

19 small businesses to successfully complete cases

20 under chapter 11 of such title; and

21 (B) how Federal laws relating to bank22 ruptcy may be made more effective and efficient

23 in assisting small businesses to remain viable;

24 and
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1 (2) submit to the President pro tempore of the

2 Senate and the Speaker of the House of Representa3 tives a report summarizing that study.

4 SEC. 444. PAYMENT OF INTEREST.

5 Section 362(d)(3) of title 11, United States Code, is

6 amended—

7 (1) by inserting ‘‘or 30 days after the court de8 termines that the debtor is subject to this para9 graph, whichever is later’’ after ‘‘90-day period)’’;

10 and

11 (2) by striking subparagraph (B) and inserting

12 the following:

13 ‘‘(B) the debtor has commenced monthly

14 payments that—

15 ‘‘(i) may, in the debtor’s sole discre16 tion, notwithstanding section 363(c)(2), be

17 made from rents or other income generated

18 before or after the commencement of the

19 case by or from the property to each cred20 itor whose claim is secured by such real es21 tate (other than a claim secured by a judg22 ment lien or by an unmatured statutory

23 lien); and

24 ‘‘(ii) are in an amount equal to inter25 est at the then applicable nondefault con-
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1 tract rate of interest on the value of the

2 creditor’s interest in the real estate; or’’.

3 SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.

4 Section 503(b) of title 11, United States Code, is

5 amended—

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

7 end;

8 (2) in paragraph (6), by striking the period at

9 the end and inserting a semicolon; and

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

11 ‘‘(7) with respect to a nonresidential real prop12 erty lease previously assumed under section 365,

13 and subsequently rejected, a sum equal to all mone14 tary obligations due, excluding those arising from or

15 relating to a failure to operate or a penalty provi16 sion, for the period of 2 years following the later of

17 the rejection date or the date of actual turnover of

18 the premises, without reduction or setoff for any

19 reason whatsoever except for sums actually received

20 or to be received from an entity other than the debt21 or, and the claim for remaining sums due for the

22 balance of the term of the lease shall be a claim

23 under section 502(b)(6);’’.
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1 SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A

2 PLAN ADMINISTRATOR OF AN EMPLOYEE

3 BENEFIT PLAN.

4 (a) IN GENERAL.—Section 521(a) of title 11, United

5 States Code, as amended by sections 106 and 304, is

6 amended—

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

8 end;

9 (2) in paragraph (6), by striking the period at

10 the end and inserting ‘‘; and’’; and

11 (3) by adding after paragraph (6) the following:

12 ‘‘(7) unless a trustee is serving in the case, con13 tinue to perform the obligations required of the ad14 ministrator (as defined in section 3 of the Employee

15 Retirement Income Security Act of 1974) of an em16 ployee benefit plan if at the time of the commence17 ment of the case the debtor (or any entity des18 ignated by the debtor) served as such adminis19 trator.’’.

20 (b) DUTIES OF TRUSTEES.—Section 704(a) of title

21 11, United States Code, as amended by sections 102 and

22 219, is amended—

23 (1) in paragraph (10), by striking ‘‘and’’ at the

24 end; and

25 (2) by adding at the end the following:
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1 ‘‘(11) if, at the time of the commencement of

2 the case, the debtor (or any entity designated by the

3 debtor) served as the administrator (as defined in

4 section 3 of the Employee Retirement Income Secu5 rity Act of 1974) of an employee benefit plan, con6 tinue to perform the obligations required of the ad7 ministrator; and’’.

8 (c) CONFORMING AMENDMENT.—Section 1106(a)(1)

9 of title 11, United States Code, is amended to read as

10 follows:

11 ‘‘(1) perform the duties of the trustee, as speci12 fied in paragraphs (2), (5), (7), (8), (9), (10), and

13 (11) of section 704;’’.

14 SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EM15 PLOYEES.

16 Section 1114(d) of title 11, United States Code, is

17 amended—

18 (1) by striking ‘‘appoint’’ and inserting ‘‘order

19 the appointment of’’, and

20 (2) by adding at the end the following: ‘‘The

21 United States trustee shall appoint any such com22 mittee.’’.
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1 TITLE V—MUNICIPAL

2 BANKRUPTCY PROVISIONS

3 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI4 TION.

5 (a) TECHNICAL AMENDMENT RELATING TO MUNICI6 PALITIES.—Section 921(d) of title 11, United States

7 Code, is amended by inserting ‘‘notwithstanding section

8 301(b)’’ before the period at the end.

9 (b) CONFORMING AMENDMENT.—Section 301 of title

10 11, United States Code, is amended—

11 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;

12 and

13 (2) by striking the last sentence and inserting

14 the following:

15 ‘‘(b) The commencement of a voluntary case under

16 a chapter of this title constitutes an order for relief under

17 such chapter.’’.

18 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO

19 CHAPTER 9.

20 Section 901(a) of title 11, United States Code, is

21 amended—

22 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

23 (2) by inserting ‘‘559, 560, 561, 562,’’ after

24 ‘‘557,’’.
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1 TITLE VI—BANKRUPTCY DATA

2 SEC. 601. IMPROVED BANKRUPTCY STATISTICS.

3 (a) IN GENERAL.—Chapter 6 of title 28, United

4 States Code, is amended by adding at the end the fol5 lowing:

6 ‘‘§ 159. Bankruptcy statistics

7 ‘‘(a) The clerk of the district court, or the clerk of

8 the bankruptcy court if one is certified pursuant to section

9 156(b) of this title, shall collect statistics regarding debt10 ors who are individuals with primarily consumer debts

11 seeking relief under chapters 7, 11, and 13 of title 11.

12 Those statistics shall be in a standardized format pre13 scribed by the Director of the Administrative Office of the

14 United States Courts (referred to in this section as the

15 ‘Director’).

16 ‘‘(b) The Director shall—

17 ‘‘(1) compile the statistics referred to in sub18 section (a);

19 ‘‘(2) make the statistics available to the public;

20 and

21 ‘‘(3) not later than July 1, 2006, and annually

22 thereafter, prepare, and submit to Congress a report

23 concerning the information collected under sub24 section (a) that contains an analysis of the informa25 tion.
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1 ‘‘(c) The compilation required under subsection (b)

2 shall—

3 ‘‘(1) be itemized, by chapter, with respect to

4 title 11;

5 ‘‘(2) be presented in the aggregate and for each

6 district; and

7 ‘‘(3) include information concerning—

8 ‘‘(A) the total assets and total liabilities of

9 the debtors described in subsection (a), and in

10 each category of assets and liabilities, as re11 ported in the schedules prescribed pursuant to

12 section 2075 of this title and filed by debtors;

13 ‘‘(B) the current monthly income, average

14 income, and average expenses of debtors as re15 ported on the schedules and statements that

16 each such debtor files under sections 521 and

17 1322 of title 11;

18 ‘‘(C) the aggregate amount of debt dis19 charged in cases filed during the reporting pe20 riod, determined as the difference between the

21 total amount of debt and obligations of a debtor

22 reported on the schedules and the amount of

23 such debt reported in categories which are pre24 dominantly nondischargeable;
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1 ‘‘(D) the average period of time between

2 the date of the filing of the petition and the

3 closing of the case for cases closed during the

4 reporting period;

5 ‘‘(E) for cases closed during the reporting

6 period—

7 ‘‘(i) the number of cases in which a

8 reaffirmation agreement was filed; and

9 ‘‘(ii)(I) the total number of reaffirma10 tion agreements filed;

11 ‘‘(II) of those cases in which a reaffir12 mation agreement was filed, the number of

13 cases in which the debtor was not rep14 resented by an attorney; and

15 ‘‘(III) of those cases in which a reaf16 firmation agreement was filed, the number

17 of cases in which the reaffirmation agree18 ment was approved by the court;

19 ‘‘(F) with respect to cases filed under

20 chapter 13 of title 11, for the reporting

21 period—

22 ‘‘(i)(I) the number of cases in which a

23 final order was entered determining the

24 value of property securing a claim in an
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1 amount less than the amount of the claim;

2 and

3 ‘‘(II) the number of final orders en4 tered determining the value of property se5 curing a claim;

6 ‘‘(ii) the number of cases dismissed,

7 the number of cases dismissed for failure

8 to make payments under the plan, the

9 number of cases refiled after dismissal,

10 and the number of cases in which the plan

11 was completed, separately itemized with re12 spect to the number of modifications made

13 before completion of the plan, if any; and

14 ‘‘(iii) the number of cases in which

15 the debtor filed another case during the 6-

16 year period preceding the filing;

17 ‘‘(G) the number of cases in which credi18 tors were fined for misconduct and any amount

19 of punitive damages awarded by the court for

20 creditor misconduct; and

21 ‘‘(H) the number of cases in which sanc22 tions under rule 9011 of the Federal Rules of

23 Bankruptcy Procedure were imposed against

24 debtor’s attorney or damages awarded under

25 such Rule.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 6 of title 28, United States Code, is amended

3 by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect 18 months after the date of

6 enactment of this Act.

7 SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK8 RUPTCY DATA.

9 (a) AMENDMENT.—Chapter 39 of title 28, United

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

12 ‘‘§ 589b. Bankruptcy data

13 ‘‘(a) RULES.—The Attorney General shall, within a

14 reasonable time after the effective date of this section,

15 issue rules requiring uniform forms for (and from time

16 to time thereafter to appropriately modify and approve)—

17 ‘‘(1) final reports by trustees in cases under

18 chapters 7, 12, and 13 of title 11; and

19 ‘‘(2) periodic reports by debtors in possession or

20 trustees in cases under chapter 11 of title 11.

21 ‘‘(b) REPORTS.—Each report referred to in sub22 section (a) shall be designed (and the requirements as to

23 place and manner of filing shall be established) so as to

24 facilitate compilation of data and maximum possible ac25 cess of the public, both by physical inspection at one or
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1 more central filing locations, and by electronic access

2 through the Internet or other appropriate media.

3 ‘‘(c) REQUIRED INFORMATION.—The information re4 quired to be filed in the reports referred to in subsection

5 (b) shall be that which is in the best interests of debtors

6 and creditors, and in the public interest in reasonable and

7 adequate information to evaluate the efficiency and practi8 cality of the Federal bankruptcy system. In issuing rules

9 proposing the forms referred to in subsection (a), the At10 torney General shall strike the best achievable practical

11 balance between—

12 ‘‘(1) the reasonable needs of the public for in13 formation about the operational results of the Fed14 eral bankruptcy system;

15 ‘‘(2) economy, simplicity, and lack of undue

16 burden on persons with a duty to file reports; and

17 ‘‘(3) appropriate privacy concerns and safe18 guards.

19 ‘‘(d) FINAL REPORTS.—The uniform forms for final

20 reports required under subsection (a) for use by trustees

21 under chapters 7, 12, and 13 of title 11 shall, in addition

22 to such other matters as are required by law or as the

23 Attorney General in the discretion of the Attorney General

24 shall propose, include with respect to a case under such

25 title—
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1 ‘‘(1) information about the length of time the

2 case was pending;

3 ‘‘(2) assets abandoned;

4 ‘‘(3) assets exempted;

5 ‘‘(4) receipts and disbursements of the estate;

6 ‘‘(5) expenses of administration, including for

7 use under section 707(b), actual costs of admin8 istering cases under chapter 13 of title 11;

9 ‘‘(6) claims asserted;

10 ‘‘(7) claims allowed; and

11 ‘‘(8) distributions to claimants and claims dis12 charged without payment,

13 in each case by appropriate category and, in cases under

14 chapters 12 and 13 of title 11, date of confirmation of

15 the plan, each modification thereto, and defaults by the

16 debtor in performance under the plan.

17 ‘‘(e) PERIODIC REPORTS.—The uniform forms for

18 periodic reports required under subsection (a) for use by

19 trustees or debtors in possession under chapter 11 of title

20 11 shall, in addition to such other matters as are required

21 by law or as the Attorney General in the discretion of the

22 Attorney General shall propose, include—

23 ‘‘(1) information about the industry classifica24 tion, published by the Department of Commerce, for

25 the businesses conducted by the debtor;
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1 ‘‘(2) length of time the case has been pending;

2 ‘‘(3) number of full-time employees as of the

3 date of the order for relief and at the end of each

4 reporting period since the case was filed;

5 ‘‘(4) cash receipts, cash disbursements and

6 profitability of the debtor for the most recent period

7 and cumulatively since the date of the order for re8 lief;

9 ‘‘(5) compliance with title 11, whether or not

10 tax returns and tax payments since the date of the

11 order for relief have been timely filed and made;

12 ‘‘(6) all professional fees approved by the court

13 in the case for the most recent period and cumula14 tively since the date of the order for relief (sepa15 rately reported, for the professional fees incurred by

16 or on behalf of the debtor, between those that would

17 have been incurred absent a bankruptcy case and

18 those not); and

19 ‘‘(7) plans of reorganization filed and confirmed

20 and, with respect thereto, by class, the recoveries of

21 the holders, expressed in aggregate dollar values

22 and, in the case of claims, as a percentage of total

23 claims of the class allowed.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 39 of title 28, United States Code, is amended

3 by adding at the end the following:

‘‘589b. Bankruptcy data.’’.

4 SEC. 603. AUDIT PROCEDURES.

5 (a) IN GENERAL.—

6 (1) ESTABLISHMENT OF PROCEDURES.—The

7 Attorney General (in judicial districts served by

8 United States trustees) and the Judicial Conference

9 of the United States (in judicial districts served by

10 bankruptcy administrators) shall establish proce11 dures to determine the accuracy, veracity, and com12 pleteness of petitions, schedules, and other informa13 tion that the debtor is required to provide under sec14 tions 521 and 1322 of title 11, United States Code,

15 and, if applicable, section 111 of such title, in cases

16 filed under chapter 7 or 13 of such title in which the

17 debtor is an individual. Such audits shall be in ac18 cordance with generally accepted auditing standards

19 and performed by independent certified public ac20 countants or independent licensed public account21 ants, provided that the Attorney General and the

22 Judicial Conference, as appropriate, may develop al23 ternative auditing standards not later than 2 years

24 after the date of enactment of this Act.
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1 (2) PROCEDURES.—Those procedures required

2 by paragraph (1) shall—

3 (A) establish a method of selecting appro4 priate qualified persons to contract to perform

5 those audits;

6 (B) establish a method of randomly select7 ing cases to be audited, except that not less

8 than 1 out of every 250 cases in each Federal

9 judicial district shall be selected for audit;

10 (C) require audits of schedules of income

11 and expenses that reflect greater than average

12 variances from the statistical norm of the dis13 trict in which the schedules were filed if those

14 variances occur by reason of higher income or

15 higher expenses than the statistical norm of the

16 district in which the schedules were filed; and

17 (D) establish procedures for providing, not

18 less frequently than annually, public informa19 tion concerning the aggregate results of such

20 audits including the percentage of cases, by dis21 trict, in which a material misstatement of in22 come or expenditures is reported.

23 (b) AMENDMENTS.—Section 586 of title 28, United

24 States Code, is amended—
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1 (1) in subsection (a), by striking paragraph (6)

2 and inserting the following:

3 ‘‘(6) make such reports as the Attorney General

4 directs, including the results of audits performed

5 under section 603(a) of the Bankruptcy Abuse Pre6 vention and Consumer Protection Act of 2003;’’; and

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

8 ‘‘(f)(1) The United States trustee for each district is

9 authorized to contract with auditors to perform audits in

10 cases designated by the United States trustee, in accord11 ance with the procedures established under section 603(a)

12 of the Bankruptcy Abuse Prevention and Consumer Pro13 tection Act of 2003.

14 ‘‘(2)(A) The report of each audit referred to in para15 graph (1) shall be filed with the court and transmitted

16 to the United States trustee. Each report shall clearly and

17 conspicuously specify any material misstatement of income

18 or expenditures or of assets identified by the person per19 forming the audit. In any case in which a material

20 misstatement of income or expenditures or of assets has

21 been reported, the clerk of the district court (or the clerk

22 of the bankruptcy court if one is certified under section

23 156(b) of this title) shall give notice of the misstatement

24 to the creditors in the case.
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1 ‘‘(B) If a material misstatement of income or expend2 itures or of assets is reported, the United States trustee

3 shall—

4 ‘‘(i) report the material misstatement, if appro5 priate, to the United States Attorney pursuant to

6 section 3057 of title 18; and

7 ‘‘(ii) if advisable, take appropriate action, in8 cluding but not limited to commencing an adversary

9 proceeding to revoke the debtor’s discharge pursuant

10 to section 727(d) of title 11.’’.

11 (c) AMENDMENTS TO SECTION 521 OF TITLE 11,

12 U.S.C.—Section 521(a) of title 11, United States Code,

13 as so designated by section 106, is amended in each of

14 paragraphs (3) and (4) by inserting ‘‘or an auditor serving

15 under section 586(f) of title 28’’ after ‘‘serving in the

16 case’’.

17 (d) AMENDMENTS TO SECTION 727 OF TITLE 11,

18 U.S.C.—Section 727(d) of title 11, United States Code,

19 is amended—

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

21 end;

22 (2) in paragraph (3), by striking the period at

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

24 (3) by adding at the end the following:
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1 ‘‘(4) the debtor has failed to explain

2 satisfactorily—

3 ‘‘(A) a material misstatement in an audit

4 referred to in section 586(f) of title 28; or

5 ‘‘(B) a failure to make available for inspec6 tion all necessary accounts, papers, documents,

7 financial records, files, and all other papers,

8 things, or property belonging to the debtor that

9 are requested for an audit referred to in section

10 586(f) of title 28.’’.

11 (e) 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. 604. SENSE OF CONGRESS REGARDING AVAILABILITY

15 OF BANKRUPTCY DATA.

16 It is the sense of Congress that—

17 (1) the national policy of the United States

18 should be that all data held by bankruptcy clerks in

19 electronic form, to the extent such data reflects only

20 public records (as defined in section 107 of title 11,

21 United States Code), should be released in a usable

22 electronic form in bulk to the public, subject to such

23 appropriate privacy concerns and safeguards as Con24 gress and the Judicial Conference of the United

25 States may determine; and
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1 (2) there should be established a bankruptcy

2 data system in which—

3 (A) a single set of data definitions and

4 forms are used to collect data nationwide; and

5 (B) data for any particular bankruptcy

6 case are aggregated in the same electronic

7 record.

8 TITLE VII—BANKRUPTCY TAX

9 PROVISIONS

10 SEC. 701. TREATMENT OF CERTAIN LIENS.

11 (a) TREATMENT OF CERTAIN LIENS.—Section 724

12 of title 11, United States Code, is amended—

13 (1) in subsection (b), in the matter preceding

14 paragraph (1), by inserting ‘‘(other than to the ex15 tent that there is a properly perfected unavoidable

16 tax lien arising in connection with an ad valorem tax

17 on real or personal property of the estate)’’ after

18 ‘‘under this title’’;

19 (2) in subsection (b)(2), by inserting ‘‘(except

20 that such expenses, other than claims for wages, sal21 aries, or commissions that arise after the date of the

22 filing of the petition, shall be limited to expenses in23 curred under chapter 7 of this title and shall not in24 clude expenses incurred under chapter 11 of this

25 title)’’ after ‘‘507(a)(1)’’; and
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1 (3) by adding at the end the following:

2 ‘‘(e) Before subordinating a tax lien on real or per3 sonal property of the estate, the trustee shall—

4 ‘‘(1) exhaust the unencumbered assets of the

5 estate; and

6 ‘‘(2) in a manner consistent with section

7 506(c), recover from property securing an allowed

8 secured claim the reasonable, necessary costs and

9 expenses of preserving or disposing of such property.

10 ‘‘(f) Notwithstanding the exclusion of ad valorem tax

11 liens under this section and subject to the requirements

12 of subsection (e), the following may be paid from property

13 of the estate which secures a tax lien, or the proceeds of

14 such property:

15 ‘‘(1) Claims for wages, salaries, and commis16 sions that are entitled to priority under section

17 507(a)(4).

18 ‘‘(2) Claims for contributions to an employee

19 benefit plan entitled to priority under section

20 507(a)(5).’’.

21 (b) DETERMINATION OF TAX LIABILITY.—Section

22 505(a)(2) of title 11, United States Code, is amended—

23 (1) in subparagraph (A), by striking ‘‘or’’ at

24 the end;
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1 (2) in subparagraph (B), by striking the period

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

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

4 ‘‘(C) the amount or legality of any amount aris5 ing in connection with an ad valorem tax on real or

6 personal property of the estate, if the applicable pe7 riod for contesting or redetermining that amount

8 under any law (other than a bankruptcy law) has ex9 pired.’’.

10 SEC. 702. TREATMENT OF FUEL TAX CLAIMS.

11 Section 501 of title 11, United States Code, is

12 amended by adding at the end the following:

13 ‘‘(e) A claim arising from the liability of a debtor for

14 fuel use tax assessed consistent with the requirements of

15 section 31705 of title 49 may be filed by the base jurisdic16 tion designated pursuant to the International Fuel Tax

17 Agreement (as defined in section 31701 of title 49) and,

18 if so filed, shall be allowed as a single claim.’’.

19 SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF

20 TAXES.

21 Section 505(b) of title 11, United States Code, is

22 amended—

23 (1) in the first sentence, by inserting ‘‘at the

24 address and in the manner designated in paragraph

25 (1)’’ after ‘‘determination of such tax’’;
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1 (2) by striking ‘‘(1) upon payment’’ and insert2 ing ‘‘(A) upon payment’’;

3 (3) by striking ‘‘(A) such governmental unit’’

4 and inserting ‘‘(i) such governmental unit’’;

5 (4) by striking ‘‘(B) such governmental unit’’

6 and inserting ‘‘(ii) such governmental unit’’;

7 (5) by striking ‘‘(2) upon payment’’ and insert8 ing ‘‘(B) upon payment’’;

9 (6) by striking ‘‘(3) upon payment’’ and insert10 ing ‘‘(C) upon payment’’;

11 (7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and

12 (8) by inserting before paragraph (2), as so

13 designated, the following:

14 ‘‘(b)(1)(A) The clerk shall maintain a list under

15 which a Federal, State, or local governmental unit respon16 sible for the collection of taxes within the district may—

17 ‘‘(i) designate an address for service of requests

18 under this subsection; and

19 ‘‘(ii) describe where further information con20 cerning additional requirements for filing such re21 quests may be found.

22 ‘‘(B) If such governmental unit does not designate

23 an address and provide such address to the clerk under

24 subparagraph (A), any request made under this subsection

25 may be served at the address for the filing of a tax return
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1 or protest with the appropriate taxing authority of such

2 governmental unit.’’.

3 SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

4 (a) IN GENERAL.—Subchapter I of chapter 5 of title

5 11, United States Code, is amended by adding at the end

6 the following:

7 ‘‘§ 511. Rate of interest on tax claims

8 ‘‘(a) If any provision of this title requires the pay9 ment of interest on a tax claim or on an administrative

10 expense tax, or the payment of interest to enable a creditor

11 to receive the present value of the allowed amount of a

12 tax claim, the rate of interest shall be the rate determined

13 under applicable nonbankruptcy law.

14 ‘‘(b) In the case of taxes paid under a confirmed plan

15 under this title, the rate of interest shall be determined

16 as of the calendar month in which the plan is confirmed.’’.

17 (b) CLERICAL AMENDMENT.—The table of sections

18 for subchapter I of chapter 5 of title 11, United States

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

‘‘511. Rate of interest on tax claims.’’.

20 SEC. 705. PRIORITY OF TAX CLAIMS.

21 Section 507(a)(8) of title 11, United States Code, is

22 amended—

23 (1) in subparagraph (A)—

24 (A) in the matter preceding clause (i), by

25 inserting ‘‘for a taxable year ending on or be-
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1 fore the date of the filing of the petition’’ after

2 ‘‘gross receipts’’;

3 (B) in clause (i), by striking ‘‘for a taxable

4 year ending on or before the date of the filing

5 of the petition’’; and

6 (C) by striking clause (ii) and inserting the

7 following:

8 ‘‘(ii) assessed within 240 days before

9 the date of the filing of the petition, exclu10 sive of—

11 ‘‘(I) any time during which an

12 offer in compromise with respect to

13 that tax was pending or in effect dur14 ing that 240-day period, plus 30 days;

15 and

16 ‘‘(II) any time during which a

17 stay of proceedings against collections

18 was in effect in a prior case under

19 this title during that 240-day period,

20 plus 90 days.’’; and

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

22 ‘‘An otherwise applicable time period specified in

23 this paragraph shall be suspended for any period

24 during which a governmental unit is prohibited

25 under applicable nonbankruptcy law from collecting
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1 a tax as a result of a request by the debtor for a

2 hearing and an appeal of any collection action taken

3 or proposed against the debtor, plus 90 days; plus

4 any time during which the stay of proceedings was

5 in effect in a prior case under this title or during

6 which collection was precluded by the existence of 1

7 or more confirmed plans under this title, plus 90

8 days.’’.

9 SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

10 Section 507(a)(8)(B) of title 11, United States Code,

11 is amended by striking ‘‘assessed’’ and inserting ‘‘in12 curred’’.

13 SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP14 TER 13.

15 Section 1328(a)(2) of title 11, United States Code,

16 as amended by section 314, is amended by striking ‘‘para17 graph’’ and inserting ‘‘section 507(a)(8)(C) or in para18 graph (1)(B), (1)(C),’’.

19 SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP20 TER 11.

21 Section 1141(d) of title 11, United States Code, as

22 amended by sections 321 and 330, is amended by adding

23 at the end the following:
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1 ‘‘(6) Notwithstanding paragraph (1), the confirma2 tion of a plan does not discharge a debtor that is a cor3 poration from any debt—

4 ‘‘(A) of a kind specified in paragraph (2)(A) or

5 (2)(B) of section 523(a) that is owed to a domestic

6 governmental unit, or owed to a person as the result

7 of an action filed under subchapter III of chapter 37

8 of title 31 or any similar State statute; or

9 ‘‘(B) for a tax or customs duty with respect to

10 which the debtor—

11 ‘‘(i) made a fraudulent return; or

12 ‘‘(ii) willfully attempted in any manner to

13 evade or to defeat such tax or such customs

14 duty.’’.

15 SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO

16 PREPETITION TAXES.

17 Section 362(a)(8) of title 11, United States Code, is

18 amended by striking ‘‘the debtor’’ and inserting ‘‘a cor19 porate debtor’s tax liability for a taxable period the bank20 ruptcy court may determine or concerning the tax liability

21 of a debtor who is an individual for a taxable period end22 ing before the date of the order for relief under this title’’.
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1 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

2 CASES.

3 Section 1129(a)(9) of title 11, United States Code,

4 is amended—

5 (1) in subparagraph (B), by striking ‘‘and’’ at

6 the end;

7 (2) in subparagraph (C), by striking ‘‘deferred

8 cash payments,’’ and all that follows through the

9 end of the subparagraph, and inserting ‘‘regular in10 stallment payments in cash—

11 ‘‘(i) of a total value, as of the effective

12 date of the plan, equal to the allowed

13 amount of such claim;

14 ‘‘(ii) over a period ending not later

15 than 5 years after the date of the order for

16 relief under section 301, 302, or 303; and

17 ‘‘(iii) in a manner not less favorable

18 than the most favored nonpriority unse19 cured claim provided for by the plan (other

20 than cash payments made to a class of

21 creditors under section 1122(b)); and’’;

22 and

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

24 ‘‘(D) with respect to a secured claim which

25 would otherwise meet the description of an un26 secured claim of a governmental unit under sec-
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1 tion 507(a)(8), but for the secured status of

2 that claim, the holder of that claim will receive

3 on account of that claim, cash payments, in the

4 same manner and over the same period, as pre5 scribed in subparagraph (C).’’.

6 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB7 ITED.

8 Section 545(2) of title 11, United States Code, is

9 amended by inserting before the semicolon at the end the

10 following: ‘‘, except in any case in which a purchaser is

11 a purchaser described in section 6323 of the Internal Rev12 enue Code of 1986, or in any other similar provision of

13 State or local law’’.

14 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI15 NESS.

16 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

17 title 28, United States Code, is amended—

18 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and

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

20 ‘‘(b) A tax under subsection (a) shall be paid on or

21 before the due date of the tax under applicable nonbank22 ruptcy law, unless—

23 ‘‘(1) the tax is a property tax secured by a lien

24 against property that is abandoned under section

25 554 of title 11, within a reasonable period of time
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1 after the lien attaches, by the trustee in a case

2 under title 11; or

3 ‘‘(2) payment of the tax is excused under a spe4 cific provision of title 11.

5 ‘‘(c) In a case pending under chapter 7 of title 11,

6 payment of a tax may be deferred until final distribution

7 is made under section 726 of title 11, if—

8 ‘‘(1) the tax was not incurred by a trustee duly

9 appointed under chapter 7 of title 11; or

10 ‘‘(2) before the due date of the tax, an order of

11 the court makes a finding of probable insufficiency

12 of funds of the estate to pay in full the administra13 tive expenses allowed under section 503(b) of title

14 11 that have the same priority in distribution under

15 section 726(b) of title 11 as the priority of that

16 tax.’’.

17 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

18 Section 503(b)(1)(B)(i) of title 11, United States Code,

19 is amended by inserting ‘‘whether secured or unsecured,

20 including property taxes for which liability is in rem, in

21 personam, or both,’’ before ‘‘except’’.

22 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

23 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of

24 title 11, United States Code, is amended—
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1 (1) in subparagraph (B), by striking ‘‘and’’ at

2 the end;

3 (2) in subparagraph (C), by adding ‘‘and’’ at

4 the end; and

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

6 ‘‘(D) notwithstanding the requirements of sub7 section (a), a governmental unit shall not be re8 quired to file a request for the payment of an ex9 pense described in subparagraph (B) or (C), as a

10 condition of its being an allowed administrative ex11 pense;’’.

12 (d) PAYMENT OF TAXES AND FEES AS SECURED

13 CLAIMS.—Section 506 of title 11, United States Code, is

14 amended—

15 (1) in subsection (b), by inserting ‘‘or State

16 statute’’ after ‘‘agreement’’; and

17 (2) in subsection (c), by inserting ‘‘, including

18 the payment of all ad valorem property taxes with

19 respect to the property’’ before the period at the

20 end.

21 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

22 Section 726(a)(1) of title 11, United States Code, is

23 amended by striking ‘‘before the date on which the trustee

24 commences distribution under this section;’’ and inserting

25 the following: ‘‘on or before the earlier of—
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1 ‘‘(A) the date that is 10 days after the

2 mailing to creditors of the summary of the

3 trustee’s final report; or

4 ‘‘(B) the date on which the trustee com5 mences final distribution under this section;’’.

6 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU7 THORITIES.

8 Section 523(a) of title 11, United States Code, as

9 amended by sections 215 and 224, is amended—

10 (1) in paragraph (1)(B)—

11 (A) in the matter preceding clause (i), by

12 inserting ‘‘or equivalent report or notice,’’ after

13 ‘‘a return,’’;

14 (B) in clause (i), by inserting ‘‘or given’’

15 after ‘‘filed’’; and

16 (C) in clause (ii)—

17 (i) by inserting ‘‘or given’’ after

18 ‘‘filed’’; and

19 (ii) by inserting ‘‘, report, or notice’’

20 after ‘‘return’’; and

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

22 ‘‘For purposes of this subsection, the term ‘return’ means

23 a return that satisfies the requirements of applicable non24 bankruptcy law (including applicable filing requirements).

25 Such term includes a return prepared pursuant to section
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1 6020(a) of the Internal Revenue Code of 1986, or similar

2 State or local law, or a written stipulation to a judgment

3 or a final order entered by a nonbankruptcy tribunal, but

4 does not include a return made pursuant to section

5 6020(b) of the Internal Revenue Code of 1986, or a simi6 lar State or local law.’’.

7 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN8 PAID TAXES.

9 Section 505(b)(2) of title 11, United States Code, as

10 amended by section 703, is amended by inserting ‘‘the es11 tate,’’ after ‘‘misrepresentation,’’.

12 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON13 FIRM CHAPTER 13 PLANS.

14 (a) FILING OF PREPETITION TAX RETURNS RE15 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of

16 title 11, United States Code, as amended by sections 102,

17 213, and 306, is amended by inserting after paragraph

18 (8) the following:

19 ‘‘(9) the debtor has filed all applicable Federal,

20 State, and local tax returns as required by section

21 1308.’’.

22 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

23 RETURNS.—
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1 (1) IN GENERAL.—Subchapter I of chapter 13

2 of title 11, United States Code, is amended by add3 ing at the end the following:

4 ‘‘§ 1308. Filing of prepetition tax returns

5 ‘‘(a) Not later than the day before the date on which

6 the meeting of the creditors is first scheduled to be held

7 under section 341(a), if the debtor was required to file

8 a tax return under applicable nonbankruptcy law, the

9 debtor shall file with appropriate tax authorities all tax

10 returns for all taxable periods ending during the 4-year

11 period ending on the date of the filing of the petition.

12 ‘‘(b)(1) Subject to paragraph (2), if the tax returns

13 required by subsection (a) have not been filed by the date

14 on which the meeting of creditors is first scheduled to be

15 held under section 341(a), the trustee may hold open that

16 meeting for a reasonable period of time to allow the debtor

17 an additional period of time to file any unfiled returns,

18 but such additional period of time shall not extend

19 beyond—

20 ‘‘(A) for any return that is past due as of the

21 date of the filing of the petition, the date that is 120

22 days after the date of that meeting; or

23 ‘‘(B) for any return that is not past due as of

24 the date of the filing of the petition, the later of—
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1 ‘‘(i) the date that is 120 days after the

2 date of that meeting; or

3 ‘‘(ii) the date on which the return is due

4 under the last automatic extension of time for

5 filing that return to which the debtor is enti6 tled, and for which request is timely made, in

7 accordance with applicable nonbankruptcy law.

8 ‘‘(2) After notice and a hearing, and order entered

9 before the tolling of any applicable filing period deter10 mined under this subsection, if the debtor demonstrates

11 by a preponderance of the evidence that the failure to file

12 a return as required under this subsection is attributable

13 to circumstances beyond the control of the debtor, the

14 court may extend the filing period established by the trust15 ee under this subsection for—

16 ‘‘(A) a period of not more than 30 days for re17 turns described in paragraph (1); and

18 ‘‘(B) a period not to extend after the applicable

19 extended due date for a return described in para20 graph (2).

21 ‘‘(c) For purposes of this section, the term ‘return’

22 includes a return prepared pursuant to subsection (a) or

23 (b) of section 6020 of the Internal Revenue Code of 1986,

24 or a similar State or local law, or a written stipulation
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1 to a judgment or a final order entered by a nonbankruptcy

2 tribunal.’’.

3 (2) CONFORMING AMENDMENT.—The table of

4 sections for subchapter I of chapter 13 of title 11,

5 United States Code, is amended by adding at the

6 end the following:

‘‘1308. Filing of prepetition tax returns.’’.

7 (c) DISMISSAL OR CONVERSION ON FAILURE TO

8 COMPLY.—Section 1307 of title 11, United States Code,

9 is amended—

10 (1) by redesignating subsections (e) and (f) as

11 subsections (f) and (g), respectively; and

12 (2) by inserting after subsection (d) the fol13 lowing:

14 ‘‘(e) Upon the failure of the debtor to file a tax return

15 under section 1308, on request of a party in interest or

16 the United States trustee and after notice and a hearing,

17 the court shall dismiss a case or convert a case under this

18 chapter to a case under chapter 7 of this title, whichever

19 is in the best interest of the creditors and the estate.’’.

20 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of

21 title 11, United States Code, is amended by inserting be22 fore the period at the end the following: ‘‘, and except that

23 in a case under chapter 13, a claim of a governmental

24 unit for a tax with respect to a return filed under section

25 1308 shall be timely if the claim is filed on or before the
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1 date that is 60 days after the date on which such return

2 was filed as required’’.

3 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

4 CONFIRMATION.—It is the sense of Congress that the Ju5 dicial Conference of the United States should, as soon as

6 practicable after the date of enactment of this Act, pro7 pose amended Federal Rules of Bankruptcy Procedure

8 that provide—

9 (1) notwithstanding the provisions of Rule

10 3015(f), in cases under chapter 13 of title 11,

11 United States Code, that an objection to the con12 firmation of a plan filed by a governmental unit on

13 or before the date that is 60 days after the date on

14 which the debtor files all tax returns required under

15 sections 1308 and 1325(a)(7) of title 11, United

16 States Code, shall be treated for all purposes as if

17 such objection had been timely filed before such con18 firmation; and

19 (2) in addition to the provisions of Rule 3007,

20 in a case under chapter 13 of title 11, United States

21 Code, that no objection to a claim for a tax with re22 spect to which a return is required to be filed under

23 section 1308 of title 11, United States Code, shall

24 be filed until such return has been filed as required.
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1 SEC. 717. STANDARDS FOR TAX DISCLOSURE.

2 Section 1125(a)(1) of title 11, United States Code,

3 is amended—

4 (1) by inserting ‘‘including a discussion of the

5 potential material Federal tax consequences of the

6 plan to the debtor, any successor to the debtor, and

7 a hypothetical investor typical of the holders of

8 claims or interests in the case,’’ after ‘‘records,’’;

9 and

10 (2) by striking ‘‘a hypothetical reasonable inves11 tor typical of holders of claims or interests’’ and in12 serting ‘‘such a hypothetical investor’’.

13 SEC. 718. SETOFF OF TAX REFUNDS.

14 Section 362(b) of title 11, United States Code, as

15 amended by sections 224, 303, 311, and 401, is amended

16 by inserting after paragraph (25) the following:

17 ‘‘(26) under subsection (a), of the setoff under

18 applicable nonbankruptcy law of an income tax re19 fund, by a governmental unit, with respect to a tax20 able period that ended before the date of the order

21 for relief against an income tax liability for a taxable

22 period that also ended before the date of the order

23 for relief, except that in any case in which the setoff

24 of an income tax refund is not permitted under ap25 plicable nonbankruptcy law because of a pending ac26 tion to determine the amount or legality of a tax li-
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1 ability, the governmental unit may hold the refund

2 pending the resolution of the action, unless the

3 court, on the motion of the trustee and after notice

4 and a hearing, grants the taxing authority adequate

5 protection (within the meaning of section 361) for

6 the secured claim of such authority in the setoff

7 under section 506(a);’’.

8 SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT9 MENT OF STATE AND LOCAL TAXES.

10 (a) IN GENERAL.—

11 (1) SPECIAL PROVISIONS.—Section 346 of title

12 11, United States Code, is amended to read as fol13 lows:

14 ‘‘§ 346. Special provisions related to the treatment of

15 State and local taxes

16 ‘‘(a) Whenever the Internal Revenue Code of 1986

17 provides that a separate taxable estate or entity is created

18 in a case concerning a debtor under this title, and the in19 come, gain, loss, deductions, and credits of such estate

20 shall be taxed to or claimed by the estate, a separate tax21 able estate is also created for purposes of any State and

22 local law imposing a tax on or measured by income and

23 such income, gain, loss, deductions, and credits shall be

24 taxed to or claimed by the estate and may not be taxed

25 to or claimed by the debtor. The preceding sentence shall
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1 not apply if the case is dismissed. The trustee shall make

2 tax returns of income required under any such State or

3 local law.

4 ‘‘(b) Whenever the Internal Revenue Code of 1986

5 provides that no separate taxable estate shall be created

6 in a case concerning a debtor under this title, and the in7 come, gain, loss, deductions, and credits of an estate shall

8 be taxed to or claimed by the debtor, such income, gain,

9 loss, deductions, and credits shall be taxed to or claimed

10 by the debtor under a State or local law imposing a tax

11 on or measured by income and may not be taxed to or

12 claimed by the estate. The trustee shall make such tax

13 returns of income of corporations and of partnerships as

14 are required under any State or local law, but with respect

15 to partnerships, shall make such returns only to the extent

16 such returns are also required to be made under such

17 Code. The estate shall be liable for any tax imposed on

18 such corporation or partnership, but not for any tax im19 posed on partners or members.

20 ‘‘(c) With respect to a partnership or any entity treat21 ed as a partnership under a State or local law imposing

22 a tax on or measured by income that is a debtor in a case

23 under this title, any gain or loss resulting from a distribu24 tion of property from such partnership, or any distributive

25 share of any income, gain, loss, deduction, or credit of a
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1 partner or member that is distributed, or considered dis2 tributed, from such partnership, after the commencement

3 of the case, is gain, loss, income, deduction, or credit, as

4 the case may be, of the partner or member, and if such

5 partner or member is a debtor in a case under this title,

6 shall be subject to tax in accordance with subsection (a)

7 or (b).

8 ‘‘(d) For purposes of any State or local law imposing

9 a tax on or measured by income, the taxable period of

10 a debtor in a case under this title shall terminate only

11 if and to the extent that the taxable period of such debtor

12 terminates under the Internal Revenue Code of 1986.

13 ‘‘(e) The estate in any case described in subsection

14 (a) shall use the same accounting method as the debtor

15 used immediately before the commencement of the case,

16 if such method of accounting complies with applicable non17 bankruptcy tax law.

18 ‘‘(f) For purposes of any State or local law imposing

19 a tax on or measured by income, a transfer of property

20 from the debtor to the estate or from the estate to the

21 debtor shall not be treated as a disposition for purposes

22 of any provision assigning tax consequences to a disposi23 tion, except to the extent that such transfer is treated as

24 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 date of the order for relief under this title to the extent

4 that—

5 ‘‘(A) applicable State or local tax law provides

6 for a carryback in the case of the debtor; and

7 ‘‘(B) the same or a similar tax attribute may be

8 carried back by the estate to such a taxable period

9 of the debtor under the Internal Revenue Code of

10 1986.

11 ‘‘(j)(1) For purposes of any State or local law impos12 ing a tax on or measured by income, income is not realized

13 by the estate, the debtor, or a successor to the debtor by

14 reason of discharge of indebtedness in a case under this

15 title, except to the extent, if any, that such income is sub16 ject to tax under the Internal Revenue Code of 1986.

17 ‘‘(2) Whenever the Internal Revenue Code of 1986

18 provides that the amount excluded from gross income in

19 respect of the discharge of indebtedness in a case under

20 this title shall be applied to reduce the tax attributes of

21 the debtor or the estate, a similar reduction shall be made

22 under any State or local law imposing a tax on or meas23 ured by income to the extent such State or local law recog24 nizes such attributes. Such State or local law may also

25 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 ‘‘(j)(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 pending

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 pending in the country where the debtor

3 has the center of its main interests;

4 ‘‘(5) ‘foreign nonmain proceeding’ means a for5 eign proceeding, other than a foreign main pro6 ceeding, pending in a country where the debtor has

7 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, except that the claim of a foreign creditor under

21 those sections shall not be given a lower priority than that

22 of general unsecured claims without priority solely because

23 the holder of such claim is a foreign creditor.

24 ‘‘(2)(A) Subsection (a) and paragraph (1) do not

25 change or codify present law as to the allowability of for-
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1 eign revenue claims or other foreign public law claims in

2 a proceeding under this title.

3 ‘‘(B) Allowance and priority as to a foreign tax claim

4 or other foreign public law claim shall be governed by any

5 applicable tax treaty of the United States, under the con6 ditions and circumstances specified therein.

7 ‘‘§ 1514. Notification to foreign creditors concerning a

8 case under this title

9 ‘‘(a) Whenever in a case under this title notice is to

10 be given to creditors generally or to any class or category

11 of creditors, such notice shall also be given to the known

12 creditors generally, or to creditors in the notified class or

13 category, that do not have addresses in the United States.

14 The court may order that appropriate steps be taken with

15 a view to notifying any creditor whose address is not yet

16 known.

17 ‘‘(b) Such notification to creditors with foreign ad18 dresses described in subsection (a) shall be given individ19 ually, unless the court considers that, under the cir20 cumstances, some other form of notification would be

21 more appropriate. No letter or other formality is required.

22 ‘‘(c) When a notification of commencement of a case

23 is to be given to foreign creditors, such notification shall—
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1 ‘‘(1) indicate the time period for filing proofs of

2 claim and specify the place for filing such proofs of

3 claim;

4 ‘‘(2) indicate whether secured creditors need to

5 file proofs of claim; and

6 ‘‘(3) contain any other information required to

7 be included in such notification to creditors under

8 this title and the orders of the court.

9 ‘‘(d) Any rule of procedure or order of the court as

10 to notice or the filing of a proof of claim shall provide

11 such additional time to creditors with foreign addresses

12 as is reasonable under the circumstances.

13 ‘‘SUBCHAPTER III—RECOGNITION OF A

14 FOREIGN PROCEEDING AND RELIEF

15 ‘‘§ 1515. Application for recognition

16 ‘‘(a) A foreign representative applies to the court for

17 recognition of a foreign proceeding in which the foreign

18 representative has been appointed by filing a petition for

19 recognition.

20 ‘‘(b) A petition for recognition shall be accompanied

21 by—

22 ‘‘(1) a certified copy of the decision com23 mencing such foreign proceeding and appointing the

24 foreign representative;
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1 ‘‘(2) a certificate from the foreign court affirm2 ing the existence of such 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 such foreign

7 proceeding and of the appointment of the foreign

8 representative.

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) such 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) Such foreign proceeding shall be recognized—

18 ‘‘(1) as a foreign main proceeding if it is pend19 ing 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. A case under this chapter may be closed in the

12 manner prescribed under section 350.

13 ‘‘§ 1518. Subsequent information

14 ‘‘From the time of filing the petition for recognition

15 of a 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

19 such foreign proceeding or the status of the foreign

20 representative’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 the property of the debtor that is

18 within the territorial jurisdiction of the United

19 States;

20 ‘‘(2) sections 363, 549, and 552 apply to a

21 transfer of an interest of the debtor in property that

22 is within the territorial jurisdiction of the United

23 States to the same extent that the sections would

24 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), to conditions it considers

11 appropriate, including the giving of security or the filing

12 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 a foreign proceeding is a foreign nonmain

2 proceeding, the court must be satisfied that an action

3 under subsection (a) relates to assets that, under United

4 States law, should be administered in the foreign nonmain

5 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 a foreign

19 court or a foreign representative, 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 a foreign court or a foreign representative, subject to the

24 rights of a party 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 a foreign court

8 or a foreign representative.

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 a for12 eign court or a foreign representative.

13 ‘‘§ 1527. Forms of cooperation

14 ‘‘Cooperation referred to in sections 1525 and 1526

15 may be implemented by any appropriate means,

16 including—

17 ‘‘(1) appointment of a person or body, including

18 an examiner, to act at the direction of the court;

19 ‘‘(2) communication of information by any

20 means considered appropriate by the court;

21 ‘‘(3) coordination of the administration and su22 pervision of the debtor’s assets and affairs;

23 ‘‘(4) approval or implementation of agreements

24 concerning the coordination of proceedings; and

25 ‘‘(5) coordination of concurrent proceedings re26 garding the same debtor.
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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 pending concurrently regarding

22 the same debtor, the court shall seek cooperation and co23 ordination under sections 1525, 1526, and 1527, and the

24 following shall apply:
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1 ‘‘(1) If the case in the United States pending

2 at the time the petition for recognition of such for3 eign 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) section 1520 does not apply even if

8 such foreign proceeding is recognized as a for9 eign main proceeding.

10 ‘‘(2) If a case in the United States under this

11 title commences after recognition, or after the date

12 of the filing of the petition for recognition, of such

13 foreign proceeding—

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 such 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 such 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

20 and other matters under chapter 15 of title

21 11.’’.

22 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

23 Section 1334(c) of title 28, United States Code, is

24 amended by striking ‘‘Nothing in’’ and inserting
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1 ‘‘Except with respect to a case under chapter 15 of

2 title 11, nothing in’’.

3 (3) DUTIES OF TRUSTEES.—Section 586(a)(3)

4 of title 28, United States Code, is amended by strik5 ing ‘‘or 13’’ and inserting ‘‘13, or 15’’.

6 (4) VENUE OF CASES ANCILLARY TO FOREIGN

7 PROCEEDINGS.—Section 1410 of title 28, United

8 States Code, is amended to read as follows:

9 ‘‘§ 1410. Venue of cases ancillary to foreign pro10 ceedings

11 ‘‘A case under chapter 15 of title 11 may be com12 menced in the district court of the United States for the

13 district—

14 ‘‘(1) in which the debtor has its principal place

15 of business or principal assets in the United States;

16 ‘‘(2) if the debtor does not have a place of busi17 ness or assets in the United States, in which there

18 is pending against the debtor an action or pro19 ceeding in a Federal or State court; or

20 ‘‘(3) in a case other than those specified in

21 paragraph (1) or (2), in which venue will be con22 sistent with the interests of justice and the conven23 ience of the parties, having regard to the relief

24 sought by the foreign representative.’’.
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1 (d) OTHER SECTIONS OF TITLE 11.—Title 11 of the

2 United States Code is amended—

3 (1) in section 109(b), by striking paragraph (3)

4 and inserting the following:

5 ‘‘(3)(A) a foreign insurance company, engaged

6 in such business in the United States; or

7 ‘‘(B) a foreign bank, savings bank, cooperative

8 bank, savings and loan association, building and

9 loan association, or credit union, that has a branch

10 or agency (as defined in section 1(b) of the Inter11 national Banking Act of 1978 in the United

12 States.’’;

13 (2) in section 303, by striking subsection (k);

14 (3) by striking section 304;

15 (4) in the table of sections for chapter 3 by

16 striking the item relating to section 304;

17 (5) in section 306 by striking ‘‘, 304,’’ each

18 place it appears;

19 (6) in section 305(a) by striking paragraph (2)

20 and inserting the following:

21 ‘‘(2)(A) a petition under section 1515 for rec22 ognition of a foreign proceeding has been granted;

23 and
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1 ‘‘(B) the purposes of chapter 15 of this title

2 would be best served by such dismissal or suspen3 sion.’’; and

4 (7) in section 508—

5 (A) by striking subsection (a); and

6 (B) in subsection (b), by striking ‘‘(b)’’.

7 TITLE IX—FINANCIAL

8 CONTRACT PROVISIONS

9 SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON10 SERVATORS OR RECEIVERS OF INSURED DE11 POSITORY INSTITUTIONS.

12 (a) DEFINITION OF QUALIFIED FINANCIAL CON13 TRACT.—

14 (1) FDIC-INSURED DEPOSITORY INSTITU15 TIONS.—Section 11(e)(8)(D) of the Federal Deposit

16 Insurance Act (12 U.S.C. 1821(e)(8)(D)) is

17 amended—

18 (A) by striking ‘‘subsection—’’ and insert19 ing ‘‘subsection, the following definitions shall

20 apply:’’; and

21 (B) in clause (i), by inserting ‘‘, resolution,

22 or order’’ after ‘‘any similar agreement that the

23 Corporation determines by regulation’’.
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1 (2) INSURED CREDIT UNIONS.—Section

2 207(c)(8)(D) of the Federal Credit Union Act (12

3 U.S.C. 1787(c)(8)(D)) is amended—

4 (A) by striking ‘‘subsection—’’ and insert5 ing ‘‘subsection, the following definitions shall

6 apply:’’; and

7 (B) in clause (i), by inserting ‘‘, resolution,

8 or order’’ after ‘‘any similar agreement that the

9 Board determines by regulation’’.

10 (b) DEFINITION OF SECURITIES CONTRACT.—

11 (1) FDIC-INSURED DEPOSITORY INSTITU12 TIONS.—Section 11(e)(8)(D)(ii) of the Federal De13 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is

14 amended to read as follows:

15 ‘‘(ii) SECURITIES CONTRACT.—The

16 term ‘securities contract’—

17 ‘‘(I) means a contract for the

18 purchase, sale, or loan of a security, a

19 certificate of deposit, a mortgage loan,

20 or any interest in a mortgage loan, a

21 group or index of securities, certifi22 cates of deposit, or mortgage loans or

23 interests therein (including any inter24 est therein or based on the value

25 thereof) or any option on any of the
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1 foregoing, including any option to

2 purchase or sell any such security,

3 certificate of deposit, mortgage loan,

4 interest, group or index, or option,

5 and including any repurchase or re6 verse repurchase transaction on any

7 such security, certificate of deposit,

8 mortgage loan, interest, group or

9 index, or option;

10 ‘‘(II) does not include any pur11 chase, sale, or repurchase obligation

12 under a participation in a commercial

13 mortgage loan unless the Corporation

14 determines by regulation, resolution,

15 or order to include any such agree16 ment within the meaning of such

17 term;

18 ‘‘(III) means any option entered

19 into on a national securities exchange

20 relating to foreign currencies;

21 ‘‘(IV) means the guarantee by or

22 to any securities clearing agency of

23 any settlement of cash, securities, cer24 tificates of deposit, mortgage loans or

25 interests therein, group or index of se-
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1 curities, certificates of deposit, or

2 mortgage loans or interests therein

3 (including any interest therein or

4 based on the value thereof) or option

5 on any of the foregoing, including any

6 option to purchase or sell any such se7 curity, certificate of deposit, mortgage

8 loan, interest, group or index, or op9 tion;

10 ‘‘(V) means any margin loan;

11 ‘‘(VI) means any other agree12 ment or transaction that is similar to

13 any agreement or transaction referred

14 to in this clause;

15 ‘‘(VII) means any combination of

16 the agreements or transactions re17 ferred to in this clause;

18 ‘‘(VIII) means any option to

19 enter into any agreement or trans20 action referred to in this clause;

21 ‘‘(IX) means a master agreement

22 that provides for an agreement or

23 transaction referred to in subclause

24 (I), (III), (IV), (V), (VI), (VII), or

25 (VIII), together with all supplements
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1 to any such master agreement, with2 out regard to whether the master

3 agreement provides for an agreement

4 or transaction that is not a securities

5 contract under this clause, except that

6 the master agreement shall be consid7 ered to be a securities contract under

8 this clause only with respect to each

9 agreement or transaction under the

10 master agreement that is referred to

11 in subclause (I), (III), (IV), (V), (VI),

12 (VII), or (VIII); and

13 ‘‘(X) means any security agree14 ment or arrangement or other credit

15 enhancement related to any agree16 ment or transaction referred to in this

17 clause, including any guarantee or re18 imbursement obligation in connection

19 with any agreement or transaction re20 ferred to in this clause.’’.

21 (2) INSURED CREDIT UNIONS.—Section

22 207(c)(8)(D)(ii) of the Federal Credit Union Act

23 (12 U.S.C. 1787(c)(8)(D)(ii)) is amended to read as

24 follows:
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1 ‘‘(ii) SECURITIES CONTRACT.—The

2 term ‘securities contract’—

3 ‘‘(I) means a contract for the

4 purchase, sale, or loan of a security, a

5 certificate of deposit, a mortgage loan,

6 or any interest in a mortgage loan, a

7 group or index of securities, certifi8 cates of deposit, or mortgage loans or

9 interests therein (including any inter10 est therein or based on the value

11 thereof) or any option on any of the

12 foregoing, including any option to

13 purchase or sell any such security,

14 certificate of deposit, mortgage loan,

15 interest, group or index, or option,

16 and including any repurchase or re17 verse repurchase transaction on any

18 such security, certificate of deposit,

19 mortgage loan, interest, group or

20 index, or option;

21 ‘‘(II) does not include any pur22 chase, sale, or repurchase obligation

23 under a participation in a commercial

24 mortgage loan unless the Board deter25 mines by regulation, resolution, or
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1 order to include any such agreement

2 within the meaning of such term;

3 ‘‘(III) means any option entered

4 into on a national securities exchange

5 relating to foreign currencies;

6 ‘‘(IV) means the guarantee by or

7 to any securities clearing agency of

8 any settlement of cash, securities, cer9 tificates of deposit, mortgage loans or

10 interests therein, group or index of se11 curities, certificates of deposit, or

12 mortgage loans or interests therein

13 (including any interest therein or

14 based on the value thereof) or option

15 on any of the foregoing, including any

16 option to purchase or sell any such se17 curity, certificate of deposit, mortgage

18 loan, interest, group or index, or op19 tion;

20 ‘‘(V) means any margin loan;

21 ‘‘(VI) means any other agree22 ment or transaction that is similar to

23 any agreement or transaction referred

24 to in this clause;
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1 ‘‘(VII) means any combination of

2 the agreements or transactions re3 ferred to in this clause;

4 ‘‘(VIII) means any option to

5 enter into any agreement or trans6 action referred to in this clause;

7 ‘‘(IX) means a master agreement

8 that provides for an agreement or

9 transaction referred to in subclause

10 (I), (III), (IV), (V), (VI), (VII), or

11 (VIII), together with all supplements

12 to any such master agreement, with13 out regard to whether the master

14 agreement provides for an agreement

15 or transaction that is not a securities

16 contract under this clause, except that

17 the master agreement shall be consid18 ered to be a securities contract under

19 this clause only with respect to each

20 agreement or transaction under the

21 master agreement that is referred to

22 in subclause (I), (III), (IV), (V), (VI),

23 (VII), or (VIII); and

24 ‘‘(X) means any security agree25 ment or arrangement or other credit
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•HR 975 EH

1 enhancement related to any agree2 ment or transaction referred to in this

3 clause, including any guarantee or re4 imbursement obligation in connection

5 with any agreement or transaction re6 ferred to in this clause.’’.

7 (c) DEFINITION OF COMMODITY CONTRACT.—

8 (1) FDIC-INSURED DEPOSITORY INSTITU9 TIONS.—Section 11(e)(8)(D)(iii) of the Federal De10 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is

11 amended to read as follows:

12 ‘‘(iii) COMMODITY CONTRACT.—The

13 term ‘commodity contract’ means—

14 ‘‘(I) with respect to a futures

15 commission merchant, a contract for

16 the purchase or sale of a commodity

17 for future delivery on, or subject to

18 the rules of, a contract market or

19 board of trade;

20 ‘‘(II) with respect to a foreign fu21 tures commission merchant, a foreign

22 future;

23 ‘‘(III) with respect to a leverage

24 transaction merchant, a leverage

25 transaction;
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1 ‘‘(IV) with respect to a clearing

2 organization, a contract for the pur3 chase or sale of a commodity for fu4 ture delivery on, or subject to the

5 rules of, a contract market or board

6 of trade that is cleared by such clear7 ing organization, or commodity option

8 traded on, or subject to the rules of,

9 a contract market or board of trade

10 that is cleared by such clearing orga11 nization;

12 ‘‘(V) with respect to a commodity

13 options dealer, a commodity option;

14 ‘‘(VI) any other agreement or

15 transaction that is similar to any

16 agreement or transaction referred to

17 in this clause;

18 ‘‘(VII) any combination of the

19 agreements or transactions referred to

20 in this clause;

21 ‘‘(VIII) any option to enter into

22 any agreement or transaction referred

23 to in this clause;

24 ‘‘(IX) a master agreement that

25 provides for an agreement or trans-
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•HR 975 EH

1 action referred to in subclause (I),

2 (II), (III), (IV), (V), (VI), (VII), or

3 (VIII), together with all supplements

4 to any such master agreement, with5 out regard to whether the master

6 agreement provides for an agreement

7 or transaction that is not a com8 modity contract under this clause, ex9 cept that the master agreement shall

10 be considered to be a commodity con11 tract under this clause only with re12 spect to each agreement or trans13 action under the master agreement

14 that is referred to in subclause (I),

15 (II), (III), (IV), (V), (VI), (VII), or

16 (VIII); or

17 ‘‘(X) any security agreement or

18 arrangement or other credit enhance19 ment related to any agreement or

20 transaction referred to in this clause,

21 including any guarantee or reimburse22 ment obligation in connection with

23 any agreement or transaction referred

24 to in this clause.’’.
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•HR 975 EH

1 (2) INSURED CREDIT UNIONS.—Section

2 207(c)(8)(D)(iii) of the Federal Credit Union Act

3 (12 U.S.C. 1787(c)(8)(D)(iii)) is amended to read as

4 follows:

5 ‘‘(iii) COMMODITY CONTRACT.—The

6 term ‘commodity contract’ means—

7 ‘‘(I) with respect to a futures

8 commission merchant, a contract for

9 the purchase or sale of a commodity

10 for future delivery on, or subject to

11 the rules of, a contract market or

12 board of trade;

13 ‘‘(II) with respect to a foreign fu14 tures commission merchant, a foreign

15 future;

16 ‘‘(III) with respect to a leverage

17 transaction merchant, a leverage

18 transaction;

19 ‘‘(IV) with respect to a clearing

20 organization, a contract for the pur21 chase or sale of a commodity for fu22 ture delivery on, or subject to the

23 rules of, a contract market or board

24 of trade that is cleared by such clear25 ing organization, or commodity option
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•HR 975 EH

1 traded on, or subject to the rules of,

2 a contract market or board of trade

3 that is cleared by suchclearing organi4 zation;

5 ‘‘(V) with respect to a commodity

6 options dealer, a commodity option;

7 ‘‘(VI) any other agreement or

8 transaction that is similar to any

9 agreement or transaction referred to

10 in this clause;

11 ‘‘(VII) any combination of the

12 agreements or transactions referred to

13 in this clause;

14 ‘‘(VIII) any option to enter into

15 any agreement or transaction referred

16 to in this clause;

17 ‘‘(IX) a master agreement that

18 provides for an agreement or trans19 action referred to in subclause (I),

20 (II), (III), (IV), (V), (VI), (VII), or

21 (VIII), together with all supplements

22 to any such master agreement, with23 out regard to whether the master

24 agreement provides for an agreement

25 or transaction that is not a com-
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•HR 975 EH

1 modity contract under this clause, ex2 cept that the master agreement shall

3 be considered to be a commodity con4 tract under this clause only with re5 spect to each agreement or trans6 action under the master agreement

7 that is referred to in subclause (I),

8 (II), (III), (IV), (V), (VI), (VII), or

9 (VIII); or

10 ‘‘(X) any security agreement or

11 arrangement or other credit enhance12 ment related to any agreement or

13 transaction referred to in this clause,

14 including any guarantee or reimburse15 ment obligation in connection with

16 any agreement or transaction referred

17 to in this clause.’’.

18 (d) DEFINITION OF FORWARD CONTRACT.—

19 (1) FDIC-INSURED DEPOSITORY INSTITU20 TIONS.—Section 11(e)(8)(D)(iv) of the Federal De21 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is

22 amended to read as follows:

23 ‘‘(iv) FORWARD CONTRACT.—The

24 term ‘forward contract’ means—
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•HR 975 EH

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 EH

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 (2) INSURED CREDIT UNIONS.—Section

24 207(c)(8)(D)(iv) of the Federal Credit Union Act
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•HR 975 EH

1 (12 U.S.C. 1787(c)(8)(D)(iv)) is amended to read as

2 follows:

3 ‘‘(iv) FORWARD CONTRACT.—The

4 term ‘forward contract’ means—

5 ‘‘(I) a contract (other than a

6 commodity contract) for the purchase,

7 sale, or transfer of a commodity or

8 any similar good, article, service,

9 right, or interest which is presently or

10 in the future becomes the subject of

11 dealing in the forward contract trade,

12 or product or byproduct thereof, with

13 a maturity date more than 2 days

14 after the date the contract is entered

15 into, including, a repurchase trans16 action, reverse repurchase transaction,

17 consignment, lease, swap, hedge

18 transaction, deposit, loan, option, allo19 cated transaction, unallocated trans20 action, or any other similar agree21 ment;

22 ‘‘(II) any combination of agree23 ments or transactions referred to in

24 subclauses (I) and (III);
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•HR 975 EH

1 ‘‘(III) any option to enter into

2 any agreement or transaction referred

3 to in subclause (I) or (II);

4 ‘‘(IV) a master agreement that

5 provides for an agreement or trans6 action referred to in subclauses (I),

7 (II), or (III), together with all supple8 ments to any such master agreement,

9 without regard to whether the master

10 agreement provides for an agreement

11 or transaction that is not a forward

12 contract under this clause, except that

13 the master agreement shall be consid14 ered to be a forward contract under

15 this clause only with respect to each

16 agreement or transaction under the

17 master agreement that is referred to

18 in subclause (I), (II), or (III); or

19 ‘‘(V) any security agreement or

20 arrangement or other credit enhance21 ment related to any agreement or

22 transaction referred to in subclause

23 (I), (II), (III), or (IV), including any

24 guarantee or reimbursement obliga25 tion in connection with any agreement
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•HR 975 EH

1 or transaction referred to in any such

2 subclause.’’.

3 (e) DEFINITION OF REPURCHASE AGREEMENT.—

4 (1) FDIC-INSURED DEPOSITORY INSTITU5 TIONS.—Section 11(e)(8)(D)(v) of the Federal De6 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is

7 amended to read as follows:

8 ‘‘(v) REPURCHASE AGREEMENT.—The

9 term ‘repurchase agreement’ (which defini10 tion also applies to a reverse repurchase

11 agreement)—

12 ‘‘(I) means an agreement, includ13 ing related terms, which provides for

14 the transfer of one or more certifi15 cates of deposit, mortgage-related se16 curities (as such term is defined in

17 the Securities Exchange Act of 1934),

18 mortgage loans, interests in mortgage19 related securities or mortgage loans,

20 eligible bankers’ acceptances, qualified

21 foreign government securities or secu22 rities that are direct obligations of, or

23 that are fully guaranteed by, the

24 United States or any agency of the

25 United States against the transfer of
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•HR 975 EH

1 funds by the transferee of such certifi2 cates of deposit, eligible bankers’ ac3 ceptances, securities, mortgage loans,

4 or interests with a simultaneous

5 agreement by such transferee to

6 transfer to the transferor thereof cer7 tificates of deposit, eligible bankers’

8 acceptances, securities, mortgage

9 loans, or interests as described above,

10 at a date certain not later than 1 year

11 after such transfers or on demand,

12 against the transfer of funds, or any

13 other similar agreement;

14 ‘‘(II) does not include any repur15 chase obligation under a participation

16 in a commercial mortgage loan unless

17 the Corporation determines by regula18 tion, resolution, or order to include

19 any such participation within the

20 meaning of such term;

21 ‘‘(III) means any combination of

22 agreements or transactions referred to

23 in subclauses (I) and (IV);
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•HR 975 EH

1 ‘‘(IV) means any option to enter

2 into any agreement or transaction re3 ferred to in subclause (I) or (III);

4 ‘‘(V) means a master agreement

5 that provides for an agreement or

6 transaction referred to in subclause

7 (I), (III), or (IV), together with all

8 supplements to any such master

9 agreement, without regard to whether

10 the master agreement provides for an

11 agreement or transaction that is not a

12 repurchase agreement under this

13 clause, except that the master agree14 ment shall be considered to be a re15 purchase agreement under this sub16 clause only with respect to each agree17 ment or transaction under the master

18 agreement that is referred to in sub19 clause (I), (III), or (IV); and

20 ‘‘(VI) means any security agree21 ment or arrangement or other credit

22 enhancement related to any agree23 ment or transaction referred to in

24 subclause (I), (III), (IV), or (V), in25 cluding any guarantee or reimburse-
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•HR 975 EH

1 ment obligation in connection with

2 any agreement or transaction referred

3 to in any such subclause.

4 For purposes of this clause, the term

5 ‘qualified foreign government security’

6 means a security that is a direct obligation

7 of, or that is fully guaranteed by, the cen8 tral government of a member of the Orga9 nization for Economic Cooperation and

10 Development (as determined by regulation

11 or order adopted by the appropriate Fed12 eral banking authority).’’.

13 (2) INSURED CREDIT UNIONS.—Section

14 207(c)(8)(D)(v) of the Federal Credit Union Act (12

15 U.S.C. 1787(c)(8)(D)(v)) is amended to read as fol16 lows:

17 ‘‘(v) REPURCHASE AGREEMENT.—The

18 term ‘repurchase agreement’ (which defini19 tion also applies to a reverse repurchase

20 agreement)—

21 ‘‘(I) means an agreement, includ22 ing related terms, which provides for

23 the transfer of one or more certifi24 cates of deposit, mortgage-related se25 curities (as such term is defined in
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•HR 975 EH

1 the Securities Exchange Act of 1934),

2 mortgage loans, interests in mortgage3 related securities or mortgage loans,

4 eligible bankers’ acceptances, qualified

5 foreign government securities or secu6 rities that are direct obligations of, or

7 that are fully guaranteed by, the

8 United States or any agency of the

9 United States against the transfer of

10 funds by the transferee of such certifi11 cates of deposit, eligible bankers’ ac12 ceptances, securities, mortgage loans,

13 or interests with a simultaneous

14 agreement by such transferee to

15 transfer to the transferor thereof cer16 tificates of deposit, eligible bankers’

17 acceptances, securities, mortgage

18 loans, or interests as described above,

19 at a date certain not later than 1 year

20 after such transfers or on demand,

21 against the transfer of funds, or any

22 other similar agreement;

23 ‘‘(II) does not include any repur24 chase obligation under a participation

25 in a commercial mortgage loan unless
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1 the Board determines by regulation,

2 resolution, or order to include any

3 such participation within the meaning

4 of such term;

5 ‘‘(III) means any combination of

6 agreements or transactions referred to

7 in subclauses (I) and (IV);

8 ‘‘(IV) means any option to enter

9 into any agreement or transaction re10 ferred to in subclause (I) or (III);

11 ‘‘(V) means a master agreement

12 that provides for an agreement or

13 transaction referred to in subclause

14 (I), (III), or (IV), together with all

15 supplements to any such master

16 agreement, without regard to whether

17 the master agreement provides for an

18 agreement or transaction that is not a

19 repurchase agreement under this

20 clause, except that the master agree21 ment shall be considered to be a re22 purchase agreement under this sub23 clause only with respect to each agree24 ment or transaction under the master
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1 agreement that is referred to in sub2 clause (I), (III), or (IV); and

3 ‘‘(VI) means any security agree4 ment or arrangement or other credit

5 enhancement related to any agree6 ment or transaction referred to in

7 subclause (I), (III), (IV), or (V), in8 cluding any guarantee or reimburse9 ment obligation in connection with

10 any agreement or transaction referred

11 to in any such subclause.

12 For purposes of this clause, the term

13 ‘qualified foreign government security’

14 means a security that is a direct obligation

15 of, or that is fully guaranteed by, the cen16 tral government of a member of the Orga17 nization for Economic Cooperation and

18 Development (as determined by regulation

19 or order adopted by the appropriate Fed20 eral banking authority).’’.

21 (f) DEFINITION OF SWAP AGREEMENT.—

22 (1) FDIC-INSURED DEPOSITORY INSTITU23 TIONS.—Section 11(e)(8)(D)(vi) of the Federal De24 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is

25 amended to read as follows:
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•HR 975 EH

1 ‘‘(vi) SWAP AGREEMENT.—The term

2 ‘swap agreement’ means—

3 ‘‘(I) any agreement, including the

4 terms and conditions incorporated by

5 reference in any such agreement,

6 which is an interest rate swap, option,

7 future, or forward agreement, includ8 ing a rate floor, rate cap, rate collar,

9 cross-currency rate swap, and basis

10 swap; a spot, same day-tomorrow, to11 morrow-next, forward, or other for12 eign exchange or precious metals

13 agreement; a currency swap, option,

14 future, or forward agreement; an eq15 uity index or equity swap, option, fu16 ture, or forward agreement; a debt

17 index or debt swap, option, future, or

18 forward agreement; a total return,

19 credit spread or credit swap, option,

20 future, or forward agreement; a com21 modity index or commodity swap, op22 tion, future, or forward agreement; or

23 a weather swap, weather derivative, or

24 weather option;
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1 ‘‘(II) any agreement or trans2 action that is similar to any other

3 agreement or transaction referred to

4 in this clause and that is of a type

5 that has been, is presently, or in the

6 future becomes, the subject of recur7 rent dealings in the swap markets (in8 cluding terms and conditions incor9 porated by reference in such agree10 ment) and that is a forward, swap, fu11 ture, or option on one or more rates,

12 currencies, commodities, equity securi13 ties or other equity instruments, debt

14 securities or other debt instruments,

15 quantitative measures associated with

16 an occurrence, extent of an occur17 rence, or contingency associated with

18 a financial, commercial, or economic

19 consequence, or economic or financial

20 indices or measures of economic or fi21 nancial risk or value;

22 ‘‘(III) any combination of agree23 ments or transactions referred to in

24 this clause;
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1 ‘‘(IV) any option to enter into

2 any agreement or transaction referred

3 to in this clause;

4 ‘‘(V) a master agreement that

5 provides for an agreement or trans6 action referred to in subclause (I),

7 (II), (III), or (IV), together with all

8 supplements to any such master

9 agreement, without regard to whether

10 the master agreement contains an

11 agreement or transaction that is not a

12 swap agreement under this clause, ex13 cept that the master agreement shall

14 be considered to be a swap agreement

15 under this clause only with respect to

16 each agreement or transaction under

17 the master agreement that is referred

18 to in subclause (I), (II), (III), or (IV);

19 and

20 ‘‘(VI) any security agreement or

21 arrangement or other credit enhance22 ment related to any agreements or

23 transactions referred to in subclause

24 (I), (II), (III), (IV), or (V), including

25 any guarantee or reimbursement obli-
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1 gation in connection with any agree2 ment or transaction referred to in any

3 such subclause.

4 Such term is applicable for purposes of

5 this subsection only and shall not be con6 strued or applied so as to challenge or af7 fect the characterization, definition, or

8 treatment of any swap agreement under

9 any other statute, regulation, or rule, in10 cluding the Securities Act of 1933, the Se11 curities Exchange Act of 1934, the Public

12 Utility Holding Company Act of 1935, the

13 Trust Indenture Act of 1939, the Invest14 ment Company Act of 1940, the Invest15 ment Advisers Act of 1940, the Securities

16 Investor Protection Act of 1970, the Com17 modity Exchange Act, the Gramm-Leach18 Bliley Act, and the Legal Certainty for

19 Bank Products Act of 2000.’’.

20 (2) INSURED CREDIT UNIONS.—Section

21 207(c)(8)(D) of the Federal Credit Union Act (12

22 U.S.C. 1787(c)(8)(D)) is amended by adding at the

23 end the following new clause:

24 ‘‘(vi) SWAP AGREEMENT.—The term

25 ‘swap agreement’ means—
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1 ‘‘(I) any agreement, including the

2 terms and conditions incorporated by

3 reference in any such agreement,

4 which is an interest rate swap, option,

5 future, or forward agreement, includ6 ing a rate floor, rate cap, rate collar,

7 cross-currency rate swap, and basis

8 swap; a spot, same day-tomorrow, to9 morrow-next, forward, or other for10 eign exchange or precious metals

11 agreement; a currency swap, option,

12 future, or forward agreement; an eq13 uity index or equity swap, option, fu14 ture, or forward agreement; a debt

15 index or debt swap, option, future, or

16 forward agreement; a total return,

17 credit spread or credit swap, option,

18 future, or forward agreement; a com19 modity index or commodity swap, op20 tion, future, or forward agreement; or

21 a weather swap, weather derivative, or

22 weather option;

23 ‘‘(II) any agreement or trans24 action that is similar to any other

25 agreement or transaction referred to
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•HR 975 EH

1 in this clause and that is of a type

2 that has been, is presently, or in the

3 future becomes, the subject of recur4 rent dealings in the swap markets (in5 cluding terms and conditions incor6 porated by reference in such agree7 ment) and that is a forward,

8 swap,future, or option on one or more

9 rates, currencies, commodities, equity

10 securities or other equity instruments,

11 debt securities or other debt instru12 ments, quantitative measures associ13 ated with an occurrence, extent of an

14 occurrence, or contingency associated

15 with a financial, commercial, or eco16 nomic consequence, or economic or fi17 nancial indices or measures of eco18 nomic or financial risk or value;

19 ‘‘(III) any combination of agree20 ments or transactions referred to in

21 this clause;

22 ‘‘(IV) any option to enter into

23 any agreement or transaction referred

24 to in this clause;
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1 ‘‘(V) a master agreement that

2 provides for an agreement or trans3 action referred to in subclause (I),

4 (II), (III), or (IV), together with all

5 supplements to any such master

6 agreement, without regard to whether

7 the master agreement contains an

8 agreement or transaction that is not a

9 swap agreement under this clause, ex10 cept that the master agreement shall

11 be considered to be a swap agreement

12 under this clause only with respect to

13 each agreement or transaction under

14 the master agreement that is referred

15 to in subclause (I), (II), (III), or (IV);

16 and

17 ‘‘(VI) any security agreement or

18 arrangement or other credit enhance19 ment related to any agreements or

20 transactions referred to in subclause

21 (I), (II), (III), (IV), or (V), including

22 any guarantee or reimbursement obli23 gation in connection with any agree24 ment or transaction referred to in any

25 such subclause.
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1 Such term is applicable for purposes of

2 this subsection only and shall not be con3 strued or applied so as to challenge or af4 fect the characterization, definition, or

5 treatment of any swap agreement under

6 any other statute, regulation, or rule, in7 cluding the Securities Act of 1933, the Se8 curities Exchange Act of 1934, the Public

9 Utility Holding Company Act of 1935, the

10 Trust Indenture Act of 1939, the Invest11 ment Company Act of 1940, the Invest12 ment Advisers Act of 1940, the Securities

13 Investor Protection Act of 1970, the Com14 modity Exchange Act, the Gramm-Leach15 Bliley Act, and the Legal Certainty for

16 Bank Products Act of 2000.’’.

17 (g) DEFINITION OF TRANSFER.—

18 (1) FDIC-INSURED DEPOSITORY INSTITU19 TIONS.—Section 11(e)(8)(D)(viii) of the Federal De20 posit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii))

21 is amended to read as follows:

22 ‘‘(viii) TRANSFER.—The term ‘trans23 fer’ means every mode, direct or indirect,

24 absolute or conditional, voluntary or invol25 untary, of disposing of or parting with
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1 property or with an interest in property,

2 including retention of title as a security in3 terest and foreclosure of the depository in4 stitution’s equity of redemption.’’.

5 (2) INSURED CREDIT UNIONS.—Section

6 207(c)(8)(D) of the Federal Credit Union Act (12

7 U.S.C. 1787(c)(8)(D)) (as amended by subsection

8 (f) of this section) is amended by adding at the end

9 the following new clause:

10 ‘‘(viii) TRANSFER.—The term ‘trans11 fer’ means every mode, direct or indirect,

12 absolute or conditional, voluntary or invol13 untary, of disposing of or parting with

14 property or with an interest in property,

15 including retention of title as a security in16 terest and foreclosure of the depository in17 stitution’s equity of redemption.’’.

18 (h) TREATMENT OF QUALIFIED FINANCIAL CON19 TRACTS.—

20 (1) FDIC-INSURED DEPOSITORY INSTITU21 TIONS.—Section 11(e)(8) of the Federal Deposit In22 surance Act (12 U.S.C. 1821(e)(8)) is amended—

23 (A) in subparagraph (A)—

24 (i) by striking ‘‘paragraph (10)’’ and

25 inserting ‘‘paragraphs (9) and (10)’’;
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1 (ii) in clause (i), by striking ‘‘to cause

2 the termination or liquidation’’ and insert3 ing ‘‘such person has to cause the termi4 nation, liquidation, or acceleration’’; and

5 (iii) by striking clause (ii) and insert6 ing the following new clause:

7 ‘‘(ii) any right under any security

8 agreement or arrangement or other credit

9 enhancement related to one or more quali10 fied financial contracts described in clause

11 (i);’’; and

12 (B) in subparagraph (E), by striking

13 clause (ii) and inserting the following:

14 ‘‘(ii) any right under any security

15 agreement or arrangement or other credit

16 enhancement related to one or more quali17 fied financial contracts described in clause

18 (i);’’.

19 (2) INSURED CREDIT UNIONS.—Section

20 207(c)(8) of the Federal Credit Union Act (12

21 U.S.C. 1787(c)(8)) is amended—

22 (A) in subparagraph (A)—

23 (i) by striking ‘‘paragraph (12)’’ and

24 inserting ‘‘paragraphs (9) and (10)’’;
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1 (ii) in clause (i), by striking ‘‘to cause

2 the termination or liquidation’’ and insert3 ing ‘‘such person has to cause the termi4 nation, liquidation, or acceleration’’; and

5 (iii) by striking clause (ii) and insert6 ing the following new clause:

7 ‘‘(ii) any right under any security

8 agreement or arrangement or other credit

9 enhancement related to 1 or more qualified

10 financial contracts described in clause

11 (i);’’; and

12 (B) in subparagraph (E), by striking

13 clause (ii) and inserting the following new

14 clause:

15 ‘‘(ii) any right under any security

16 agreement or arrangement or other credit

17 enhancement related to 1 or more qualified

18 financial contracts described in clause

19 (i);’’.

20 (i) AVOIDANCE OF TRANSFERS.—

21 (1) FDIC-INSURED DEPOSITORY INSTITU22 TIONS.—Section 11(e)(8)(C)(i) of the Federal De23 posit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is

24 amended by inserting ‘‘section 5242 of the Revised

25 Statutes of the United States or any other Federal
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1 or State law relating to the avoidance of preferential

2 or fraudulent transfers,’’ before ‘‘the Corporation’’.

3 (2) INSURED CREDIT UNIONS.—Section

4 207(c)(8)(C)(i) of the Federal Credit Union Act (12

5 U.S.C. 1787(c)(8)(C)(i)) is amended by inserting

6 ‘‘section 5242 of the Revised Statutes of the United

7 States or any other Federal or State law relating to

8 the avoidance of preferential or fraudulent trans9 fers,’’ before ‘‘the Board’’.

10 SEC. 902. AUTHORITY OF THE FDIC AND NCUAB WITH RE11 SPECT TO FAILED AND FAILING INSTITU12 TIONS.

13 (a) FEDERAL DEPOSIT INSURANCE CORPORATION.—

14 (1) IN GENERAL.—Section 11(e)(8) of the Fed15 eral Deposit Insurance Act (12 U.S.C. 1821(e)(8))

16 is amended—

17 (A) in subparagraph (E), by striking

18 ‘‘other than paragraph (12) of this subsection,

19 subsection (d)(9)’’ and inserting ‘‘other than

20 subsections (d)(9) and (e)(10)’’; and

21 (B) by adding at the end the following new

22 subparagraphs:

23 ‘‘(F) CLARIFICATION.—No provision of law

24 shall be construed as limiting the right or

25 power of the Corporation, or authorizing any
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1 court or agency to limit or delay, in any man2 ner, the right or power of the Corporation to

3 transfer any qualified financial contract in ac4 cordance with paragraphs (9) and (10) of this

5 subsection or to disaffirm or repudiate any such

6 contract in accordance with subsection (e)(1) of

7 this section.

8 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC9 TIVE.—

10 ‘‘(i) IN GENERAL.—Notwithstanding

11 the provisions of subparagraphs (A) and

12 (E), and sections 403 and 404 of the Fed13 eral Deposit Insurance Corporation Im14 provement Act of 1991, no walkaway

15 clause shall be enforceable in a qualified fi16 nancial contract of an insured depository

17 institution in default.

18 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

19 For purposes of this subparagraph, the

20 term ‘walkaway clause’ means a provision

21 in a qualified financial contract that, after

22 calculation of a value of a party’s position

23 or an amount due to or from 1 of the par24 ties in accordance with its terms upon ter25 mination, liquidation, or acceleration of the
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1 qualified financial contract, either does not

2 create a payment obligation of a party or

3 extinguishes a payment obligation of a

4 party in whole or in part solely because of

5 such party’s status as a nondefaulting

6 party.’’.

7 (2) TECHNICAL AND CONFORMING AMEND8 MENT.—Section 11(e)(12)(A) of the Federal Deposit

9 Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amend10 ed by inserting ‘‘or the exercise of rights or powers

11 by’’ after ‘‘the appointment of’’.

12 (b) NATIONAL CREDIT UNION ADMINISTRATION

13 BOARD.—

14 (1) IN GENERAL.—Section 207(c)(8) of the

15 Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is

16 amended—

17 (A) in subparagraph (E) (as amended by

18 section 901(h)), by striking ‘‘other than para19 graph (12) of this subsection, subsection

20 (b)(9)’’ and inserting ‘‘other than subsections

21 (b)(9) and (c)(10)’’; and

22 (B) by adding at the end the following new

23 subparagraphs:

24 ‘‘(F) CLARIFICATION.—No provision of law

25 shall be construed as limiting the right or
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1 power of the Board, or authorizing any court or

2 agency to limit or delay, in any manner, the

3 right or power of the Board to transfer any

4 qualified financial contract in accordance with

5 paragraphs (9) and (10) of this subsection or to

6 disaffirm or repudiate any such contract in ac7 cordance with subsection (c)(1) of this section.

8 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC9 TIVE.—

10 ‘‘(i) IN GENERAL.—Notwithstanding

11 the provisions of subparagraphs (A) and

12 (E), and sections 403 and 404 of the Fed13 eral Deposit Insurance Corporation Im14 provement Act of 1991, no walkaway

15 clause shall be enforceable in a qualified fi16 nancial contract of an insured credit union

17 in default.

18 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

19 For purposes of this subparagraph, the

20 term ‘walkaway clause’ means a provision

21 in a qualified financial contract that, after

22 calculation of a value of a party’s position

23 or an amount due to or from 1 of the par24 ties in accordance with its terms upon ter25 mination, liquidation, or acceleration of the
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•HR 975 EH

1 qualified financial contract, either does not

2 create a payment obligation of a party or

3 extinguishes a payment obligation of a

4 party in whole or in part solely because of

5 such party’s status as a nondefaulting

6 party.’’.

7 (2) TECHNICAL AND CONFORMING AMEND8 MENT.—Section 207(c)(12)(A) of the Federal Credit

9 Union Act (12 U.S.C. 1787(c)(12)(A)) is amended

10 by inserting ‘‘or the exercise of rights or powers by’’

11 after ‘‘the appointment of’’.

12 SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF

13 QUALIFIED FINANCIAL CONTRACTS.

14 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

15 (1) TRANSFERS OF QUALIFIED FINANCIAL

16 CONTRACTS TO FINANCIAL INSTITUTIONS.—Section

17 11(e)(9) of the Federal Deposit Insurance Act (12

18 U.S.C. 1821(e)(9)) is amended to read as follows:

19 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON20 TRACTS.—

21 ‘‘(A) IN GENERAL.—In making any trans22 fer of assets or liabilities of a depository institu23 tion in default which includes any qualified fi24 nancial contract, the conservator or receiver for

25 such depository institution shall either—
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1 ‘‘(i) transfer to one financial institu2 tion, other than a financial institution for

3 which a conservator, receiver, trustee in

4 bankruptcy, or other legal custodian has

5 been appointed or which is otherwise the

6 subject of a bankruptcy or insolvency

7 proceeding—

8 ‘‘(I) all qualified financial con9 tracts between any person or any af10 filiate of such person and the deposi11 tory institution in default;

12 ‘‘(II) all claims of such person or

13 any affiliate of such person against

14 such depository institution under any

15 such contract (other than any claim

16 which, under the terms of any such

17 contract, is subordinated to the claims

18 of general unsecured creditors of such

19 institution);

20 ‘‘(III) all claims of such deposi21 tory institution against such person or

22 any affiliate of such person under any

23 such contract; and

24 ‘‘(IV) all property securing or

25 any other credit enhancement for any
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•HR 975 EH

1 contract described in subclause (I) or

2 any claim described in subclause (II)

3 or (III) under any such contract; or

4 ‘‘(ii) transfer none of the qualified fi5 nancial contracts, claims, property or other

6 credit enhancement referred to in clause (i)

7 (with respect to such person and any affil8 iate of such person).

9 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR10 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

11 AGENCY OF A FOREIGN BANK OR FINANCIAL IN12 STITUTION.—In transferring any qualified fi13 nancial contracts and related claims and prop14 erty under subparagraph (A)(i), the conservator

15 or receiver for the depository institution shall

16 not make such transfer to a foreign bank, fi17 nancial institution organized under the laws of

18 a foreign country, or a branch or agency of a

19 foreign bank or financial institution unless,

20 under the law applicable to such bank, financial

21 institution, branch or agency, to the qualified

22 financial contracts, and to any netting contract,

23 any security agreement or arrangement or other

24 credit enhancement related to one or more

25 qualified financial contracts, the contractual
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1 rights of the parties to such qualified financial

2 contracts, netting contracts, security agree3 ments or arrangements, or other credit en4 hancements are enforceable substantially to the

5 same extent as permitted under this section.

6 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

7 TO THE RULES OF A CLEARING ORGANIZA8 TION.—In the event that a conservator or re9 ceiver transfers any qualified financial contract

10 and related claims, property, and credit en11 hancements pursuant to subparagraph (A)(i)

12 and such contract is cleared by or subject to the

13 rules of a clearing organization, the clearing or14 ganization shall not be required to accept the

15 transferee as a member by virtue of the trans16 fer.

17 ‘‘(D) DEFINITIONS.—For purposes of this

18 paragraph, the term ‘financial institution’

19 means a broker or dealer, a depository institu20 tion, a futures commission merchant, or any

21 other institution, as determined by the Corpora22 tion by regulation to be a financial institution,

23 and the term ‘clearing organization’ has the

24 same meaning as in section 402 of the Federal
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1 Deposit Insurance Corporation Improvement

2 Act of 1991.’’.

3 (2) NOTICE TO QUALIFIED FINANCIAL CON4 TRACT COUNTERPARTIES.—Section 11(e)(10)(A) of

5 the Federal Deposit Insurance Act (12 U.S.C.

6 1821(e)(10)(A)) is amended in the material imme7 diately following clause (ii) by striking ‘‘the conser8 vator’’ and all that follows through the period and

9 inserting the following: ‘‘the conservator or receiver

10 shall notify any person who is a party to any such

11 contract of such transfer by 5:00 p.m. (eastern time)

12 on the business day following the date of the ap13 pointment of the receiver in the case of a receiver14 ship, or the business day following such transfer in

15 the case of a conservatorship.’’.

16 (3) RIGHTS AGAINST RECEIVER AND CONSER17 VATOR AND TREATMENT OF BRIDGE BANKS.—Sec18 tion 11(e)(10) of the Federal Deposit Insurance Act

19 (12 U.S.C. 1821(e)(10)) is amended—

20 (A) by redesignating subparagraph (B) as

21 subparagraph (D); and

22 (B) by inserting after subparagraph (A)

23 the following new subparagraphs:

24 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE25 ABLE.—
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1 ‘‘(i) RECEIVERSHIP.—A person who is

2 a party to a qualified financial contract

3 with an insured depository institution may

4 not exercise any right that such person has

5 to terminate, liquidate, or net such con6 tract under paragraph (8)(A) of this sub7 section or section 403 or 404 of the Fed8 eral Deposit Insurance Corporation Im9 provement Act of 1991, solely by reason of

10 or incidental to the appointment of a re11 ceiver for the depository institution (or the

12 insolvency or financial condition of the de13 pository institution for which the receiver

14 has been appointed)—

15 ‘‘(I) until 5:00 p.m. (eastern

16 time) on the business day following

17 the date of the appointment of the re18 ceiver; or

19 ‘‘(II) after the person has re20 ceived notice that the contract has

21 been transferred pursuant to para22 graph (9)(A).

23 ‘‘(ii) CONSERVATORSHIP.—A person

24 who is a party to a qualified financial con25 tract with an insured depository institution
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1 may not exercise any right that such per2 son has to terminate, liquidate, or net such

3 contract under paragraph (8)(E) of this

4 subsection or section 403 or 404 of the

5 Federal Deposit Insurance Corporation

6 Improvement Act of 1991, solely by reason

7 of or incidental to the appointment of a

8 conservator for the depository institution

9 (or the insolvency or financial condition of

10 the depository institution for which the

11 conservator has been appointed).

12 ‘‘(iii) NOTICE.—For purposes of this

13 paragraph, the Corporation as receiver or

14 conservator of an insured depository insti15 tution shall be deemed to have notified a

16 person who is a party to a qualified finan17 cial contract with such depository institu18 tion if the Corporation has taken steps

19 reasonably calculated to provide notice to

20 such person by the time specified in sub21 paragraph (A).

22 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

23 The following institutions shall not be consid24 ered to be a financial institution for which a

25 conservator, receiver, trustee in bankruptcy, or
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1 other legal custodian has been appointed or

2 which is otherwise the subject of a bankruptcy

3 or insolvency proceeding for purposes of para4 graph (9):

5 ‘‘(i) A bridge bank.

6 ‘‘(ii) A depository institution orga7 nized by the Corporation, for which a con8 servator is appointed either—

9 ‘‘(I) immediately upon the orga10 nization of the institution; or

11 ‘‘(II) at the time of a purchase

12 and assumption transaction between

13 the depository institution and the Cor14 poration as receiver for a depository

15 institution in default.’’.

16 (b) INSURED CREDIT UNIONS.—

17 (1) TRANSFERS OF QUALIFIED FINANCIAL CON18 TRACTS TO FINANCIAL INSTITUTIONS.—Section

19 207(c)(9) of the Federal Credit Union Act (12

20 U.S.C. 1787(c)(9)) is amended to read as follows:

21 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON22 TRACTS.—

23 ‘‘(A) IN GENERAL.—In making any trans24 fer of assets or liabilities of a credit union in

25 default which includes any qualified financial
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1 contract, the conservator or liquidating agent

2 for such credit union shall either—

3 ‘‘(i) transfer to 1 financial institution,

4 other than a financial institution for which

5 a conservator, receiver, trustee in bank6 ruptcy, or other legal custodian has been

7 appointed or which is otherwise the subject

8 of a bankruptcy or insolvency proceeding—

9 ‘‘(I) all qualified financial con10 tracts between any person or any af11 filiate of such person and the credit

12 union in default;

13 ‘‘(II) all claims of such person or

14 any affiliate of such person against

15 such credit union under any such con16 tract (other than any claim which,

17 under the terms of any such contract,

18 is subordinated to the claims of gen19 eral unsecured creditors of such credit

20 union);

21 ‘‘(III) all claims of such credit

22 union against such person or any af23 filiate of such person under any such

24 contract; and
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1 ‘‘(IV) all property securing or

2 any other credit enhancement for any

3 contract described in subclause (I) or

4 any claim described in subclause (II)

5 or (III) under any such contract; or

6 ‘‘(ii) transfer none of the qualified fi7 nancial contracts, claims, property or other

8 credit enhancement referred to in clause (i)

9 (with respect to such person and any affil10 iate of such person).

11 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR12 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

13 AGENCY OF A FOREIGN BANK OR FINANCIAL IN14 STITUTION.—In transferring any qualified fi15 nancial contracts and related claims and prop16 erty under subparagraph (A)(i), the conservator

17 or liquidating agent for the credit union shall

18 not make such transfer to a foreign bank, fi19 nancial institution organized under the laws of

20 a foreign country, or a branch or agency of a

21 foreign bank or financial institution unless,

22 under the law applicable to such bank, financial

23 institution, branch or agency, to the qualified

24 financial contracts, and to any netting contract,

25 any security agreement or arrangement or other
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1 credit enhancement related to 1 or more quali2 fied financial contracts, the contractual rights

3 of the parties to such qualified financial con4 tracts, netting contracts, security agreements or

5 arrangements, or other credit enhancements are

6 enforceable substantially to the same extent as

7 permitted under this section.

8 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT

9 TO THE RULES OF A CLEARING ORGANIZA10 TION.—In the event that a conservator or liqui11 dating agent transfers any qualified financial

12 contract and related claims, property, and cred13 it enhancements pursuant to subparagraph

14 (A)(i) and such contract is cleared by or subject

15 to the rules of a clearing organization, the

16 clearing organization shall not be required to

17 accept the transferee as a member by virtue of

18 the transfer.

19 ‘‘(D) DEFINITIONS.—For purposes of this

20 paragraph—

21 ‘‘(i) the term ‘financial institution’

22 means a broker or dealer, a depository in23 stitution, a futures commission merchant,

24 a credit union, or any other institution, as
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1 determined by the Board by regulation to

2 be a financial institution; and

3 ‘‘(ii) the term ‘clearing organization’

4 has the same meaning as in section 402 of

5 the Federal Deposit Insurance Corporation

6 Improvement Act of 1991.’’.

7 (2) NOTICE TO QUALIFIED FINANCIAL CON8 TRACT COUNTERPARTIES.—Section 207(c)(10)(A) of

9 the Federal Credit Union Act (12 U.S.C.

10 1787(c)(10)(A)) is amended in the material imme11 diately following clause (ii) by striking ‘‘the conser12 vator’’ and all that follows through the period and

13 inserting the following: ‘‘the conservator or liqui14 dating agent shall notify any person who is a party

15 to any such contract of such transfer by 5:00 p.m.

16 (eastern time) on the business day following the date

17 of the appointment of the liquidating agent in the

18 case of a liquidation, or the business day following

19 such transfer in the case of a conservatorship.’’.

20 (3) RIGHTS AGAINST LIQUIDATING AGENT AND

21 CONSERVATOR AND TREATMENT OF BRIDGE

22 BANKS.—Section 207(c)(10) of the Federal Credit

23 Union Act (12 U.S.C. 1787(c)(10)) is amended—

24 (A) by redesignating subparagraph (B) as

25 subparagraph (D); and
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1 (B) by inserting after subparagraph (A)

2 the following new subparagraphs:

3 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE4 ABLE.—

5 ‘‘(i) LIQUIDATION.—A person who is

6 a party to a qualified financial contract

7 with an insured credit union may not exer8 cise any right that such person has to ter9 minate, liquidate, or net such contract

10 under paragraph (8)(A) of this subsection

11 or section 403 or 404 of the Federal De12 posit Insurance Corporation Improvement

13 Act of 1991, solely by reason of or inci14 dental to the appointment of a liquidating

15 agent for the credit union institution (or

16 the insolvency or financial condition of the

17 credit union for which the liquidating

18 agent has been appointed)—

19 ‘‘(I) until 5:00 p.m. (eastern

20 time) on the business day following

21 the date of the appointment of the liq22 uidating agent; or

23 ‘‘(II) after the person has re24 ceived notice that the contract has
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1 been transferred pursuant to para2 graph (9)(A).

3 ‘‘(ii) CONSERVATORSHIP.—A person

4 who is a party to a qualified financial con5 tract with an insured credit union may not

6 exercise any right that such person has to

7 terminate, liquidate, or net such contract

8 under paragraph (8)(E) of this subsection

9 or section 403 or 404 of the Federal De10 posit Insurance Corporation Improvement

11 Act of 1991, solely by reason of or inci12 dental to the appointment of a conservator

13 for the credit union or the insolvency or fi14 nancial condition of the credit union for

15 which the conservator has been appointed).

16 ‘‘(iii) NOTICE.—For purposes of this

17 paragraph, the Board as conservator or

18 liquidating agent of an insured credit

19 union shall be deemed to have notified a

20 person who is a party to a qualified finan21 cial contract with such credit union if the

22 Board has taken steps reasonably cal23 culated to provide notice to such person by

24 the time specified in subparagraph (A).
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1 ‘‘(C) TREATMENT OF BRIDGE BANKS.—

2 The following institutions shall not be consid3 ered to be a financial institution for which a

4 conservator, receiver, trustee in bankruptcy, or

5 other legal custodian has been appointed or

6 which is otherwise the subject of a bankruptcy

7 or insolvency proceeding for purposes of para8 graph (9):

9 ‘‘(i) A bridge bank.

10 ‘‘(ii) A credit union organized by the

11 Board, for which a conservator is ap12 pointed either—

13 ‘‘(I) immediately upon the orga14 nization of the credit union; or

15 ‘‘(II) at the time of a purchase

16 and assumption transaction between

17 the credit union and the Board as re18 ceiver for a credit union in default.’’.

19 SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR

20 REPUDIATION OF QUALIFIED FINANCIAL

21 CONTRACTS.

22 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

23 Section 11(e) of the Federal Deposit Insurance Act (12

24 U.S.C. 1821(e)) is amended—
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1 (1) by redesignating paragraphs (11) through

2 (15) as paragraphs (12) through (16), respectively;

3 (2) by inserting after paragraph (10) the fol4 lowing new paragraph:

5 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

6 QUALIFIED FINANCIAL CONTRACTS.—In exercising

7 the rights of disaffirmance or repudiation of a con8 servator or receiver with respect to any qualified fi9 nancial contract to which an insured depository in10 stitution is a party, the conservator or receiver for

11 such institution shall either—

12 ‘‘(A) disaffirm or repudiate all qualified fi13 nancial contracts between—

14 ‘‘(i) any person or any affiliate of

15 such person; and

16 ‘‘(ii) the depository institution in de17 fault; or

18 ‘‘(B) disaffirm or repudiate none of the

19 qualified financial contracts referred to in sub20 paragraph (A) (with respect to such person or

21 any affiliate of such person).’’; and

22 (3) by adding at the end the following new

23 paragraph:

24 ‘‘(17) SAVINGS CLAUSE.—The meanings of

25 terms used in this subsection are applicable for pur-
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1 poses of this subsection only, and shall not be con2 strued or applied so as to challenge or affect the

3 characterization, definition, or treatment of any

4 similar terms under any other statute, regulation, or

5 rule, including the Gramm-Leach-Bliley Act, the

6 Legal Certainty for Bank Products Act of 2000, the

7 securities laws (as that term is defined in section

8 3(a)(47) of the Securities Exchange Act of 1934),

9 and the Commodity Exchange Act.’’.

10 (b) INSURED CREDIT UNIONS.—Section 207(c) of

11 the Federal Credit Union Act (12 U.S.C. 1787(c)) is

12 amended—

13 (1) by redesignating paragraphs (11), (12), and

14 (13) as paragraphs (12), (13), and (14), respec15 tively;

16 (2) by inserting after paragraph (10) the fol17 lowing new paragraph:

18 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

19 QUALIFIED FINANCIAL CONTRACTS.—In exercising

20 the rights of disaffirmance or repudiation of a con21 servator or liquidating agent with respect to any

22 qualified financial contract to which an insured cred23 it union is a party, the conservator or liquidating

24 agent for such credit union shall either—
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1 ‘‘(A) disaffirm or repudiate all qualified fi2 nancial contracts between—

3 ‘‘(i) any person or any affiliate of

4 such person; and

5 ‘‘(ii) the credit union in default; or

6 ‘‘(B) disaffirm or repudiate none of the

7 qualified financial contracts referred to in sub8 paragraph (A) (with respect to such person or

9 any affiliate of such person).’’; and

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

11 paragraph:

12 ‘‘(15) SAVINGS CLAUSE.—The meanings of

13 terms used in this subsection are applicable for pur14 poses of this subsection only, and shall not be con15 strued or applied so as to challenge or affect the

16 characterization, definition, or treatment of any

17 similar terms under any other statute, regulation, or

18 rule, including the Gramm-Leach-Bliley Act, the

19 Legal Certainty for Bank Products Act of 2000, the

20 securities laws (as that term is defined in section

21 (a)(47) of the Securities Exchange Act of 1934),

22 and the Commodity Exchange Act.’’.
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1 SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER

2 AGREEMENTS.

3 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

4 Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance

5 Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as

6 follows:

7 ‘‘(vii) TREATMENT OF MASTER

8 AGREEMENT AS ONE AGREEMENT.—Any

9 master agreement for any contract or

10 agreement described in any preceding

11 clause of this subparagraph (or any master

12 agreement for such master agreement or

13 agreements), together with all supplements

14 to such master agreement, shall be treated

15 as a single agreement and a single quali16 fied financial contract. If a master agree17 ment contains provisions relating to agree18 ments or transactions that are not them19 selves qualified financial contracts, the

20 master agreement shall be deemed to be a

21 qualified financial contract only with re22 spect to those transactions that are them23 selves qualified financial contracts.’’.

24 (b) INSURED CREDIT UNIONS.—Section

25 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C.
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1 1787(c)(8)(D)) is amended by inserting after clause (vi)

2 (as added by section 901(f)) the following new clause:

3 ‘‘(vii) TREATMENT OF MASTER

4 AGREEMENT AS ONE AGREEMENT.—Any

5 master agreement for any contract or

6 agreement described in any preceding

7 clause of this subparagraph (or any master

8 agreement for such master agreement or

9 agreements), together with all supplements

10 to such master agreement, shall be treated

11 as a single agreement and a single quali12 fied financial contract. If a master agree13 ment contains provisions relating to agree14 ments or transactions that are not them15 selves qualified financial contracts, the

16 master agreement shall be deemed to be a

17 qualified financial contract only with re18 spect to those transactions that are them19 selves qualified financial contracts.’’.

20 SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION

21 IMPROVEMENT ACT OF 1991.

22 (a) DEFINITIONS.—Section 402 of the Federal De23 posit Insurance Corporation Improvement Act of 1991 (12

24 U.S.C. 4402) is amended—

25 (1) in paragraph (2)—
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1 (A) in subparagraph (A)(ii), by inserting

2 before the semicolon ‘‘, or is exempt from such

3 registration by order of the Securities and Ex4 change Commission’’; and

5 (B) in subparagraph (B), by inserting be6 fore the period ‘‘, that has been granted an ex7 emption under section 4(c)(1) of the Com8 modity Exchange Act, or that is a multilateral

9 clearing organization (as defined in section 408

10 of this Act)’’;

11 (2) in paragraph (6)—

12 (A) by redesignating subparagraphs (B)

13 through (D) as subparagraphs (C) through (E),

14 respectively;

15 (B) by inserting after subparagraph (A)

16 the following new subparagraph:

17 ‘‘(B) an uninsured national bank or an un18 insured State bank that is a member of the

19 Federal Reserve System, if the national bank or

20 State member bank is not eligible to make ap21 plication to become an insured bank under sec22 tion 5 of the Federal Deposit Insurance Act;’’;

23 and

24 (C) by amending subparagraph (C), so re25 designated, to read as follows:
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1 ‘‘(C) a branch or agency of a foreign bank,

2 a foreign bank and any branch or agency of the

3 foreign bank, or the foreign bank that estab4 lished the branch or agency, as those terms are

5 defined in section 1(b) of the International

6 Banking Act of 1978;’’;

7 (3) in paragraph (11), by inserting before the

8 period ‘‘and any other clearing organization with

9 which such clearing organization has a netting con10 tract’’;

11 (4) by amending paragraph (14)(A)(i) to read

12 as follows:

13 ‘‘(i) means a contract or agreement

14 between 2 or more financial institutions,

15 clearing organizations, or members that

16 provides for netting present or future pay17 ment obligations or payment entitlements

18 (including liquidation or close out values

19 relating to such obligations or entitle20 ments) among the parties to the agree21 ment; and’’; and

22 (5) by adding at the end the following new

23 paragraph:

24 ‘‘(15) PAYMENT.—The term ‘payment’ means a

25 payment of United States dollars, another currency,
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1 or a composite currency, and a noncash delivery, in2 cluding a payment or delivery to liquidate an

3 unmatured obligation.’’.

4 (b) ENFORCEABILITY OF BILATERAL NETTING CON5 TRACTS.—Section 403 of the Federal Deposit Insurance

6 Corporation Improvement Act of 1991 (12 U.S.C. 4403)

7 is amended—

8 (1) by striking subsection (a) and inserting the

9 following:

10 ‘‘(a) GENERAL RULE.—Notwithstanding any other

11 provision of State or Federal law (other than paragraphs

12 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

13 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and

14 (10)(B) of section 207(c) of the Federal Credit Union Act,

15 or any order authorized under section 5(b)(2) of the Secu16 rities Investor Protection Act of 1970), the covered con17 tractual payment obligations and the covered contractual

18 payment entitlements between any 2 financial institutions

19 shall be netted in accordance with, and subject to the con20 ditions of, the terms of any applicable netting contract (ex21 cept as provided in section 561(b)(2) of title 11, United

22 States Code).’’; and

23 (2) by adding at the end the following new sub24 section:
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1 ‘‘(f) ENFORCEABILITY OF SECURITY AGREE2 MENTS.—The provisions of any security agreement or ar3 rangement or other credit enhancement related to one or

4 more netting contracts between any 2 financial institu5 tions shall be enforceable in accordance with their terms

6 (except as provided in section 561(b)(2) of title 11, United

7 States Code), and shall not be stayed, avoided, or other8 wise limited by any State or Federal law (other than para9 graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the

10 Federal Deposit Insurance Act, paragraphs (8)(E),

11 (8)(F), and (10)(B) of section 207(c) of the Federal Cred12 it Union Act, and section 5(b)(2) of the Securities Investor

13 Protection Act of 1970).’’.

14 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

15 NETTING CONTRACTS.—Section 404 of the Federal De16 posit Insurance Corporation Improvement Act of 1991 (12

17 U.S.C. 4404) is amended—

18 (1) by striking subsection (a) and inserting the

19 following:

20 ‘‘(a) GENERAL RULE.—Notwithstanding any other

21 provision of State or Federal law (other than paragraphs

22 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

23 Deposit Insurance Act, paragraphs (8)(E), (8)(F), and

24 (10)(B) of section 207(c) of the Federal Credit Union Act,

25 and any order authorized under section 5(b)(2) of the Se-
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1 curities Investor Protection Act of 1970), the covered con2 tractual payment obligations and the covered contractual

3 payment entitlements of a member of a clearing organiza4 tion to and from all other members of a clearing organiza5 tion shall be netted in accordance with and subject to the

6 conditions of any applicable netting contract (except as

7 provided in section 561(b)(2) of title 11, United States

8 Code).’’; and

9 (2) by adding at the end the following new sub10 section:

11 ‘‘(h) ENFORCEABILITY OF SECURITY AGREE12 MENTS.—The provisions of any security agreement or ar13 rangement or other credit enhancement related to one or

14 more netting contracts between any 2 members of a clear15 ing organization shall be enforceable in accordance with

16 their terms (except as provided in section 561(b)(2) of

17 title 11, United States Code), and shall not be stayed,

18 avoided, or otherwise limited by any State or Federal law

19 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec20 tion 11(e) of the Federal Deposit Insurance Act, para21 graphs (8)(E), (8)(F), and (10)(B) of section 207(c) of

22 the Federal Credit Union Act, and section 5(b)(2) of the

23 Securities Investor Protection Act of 1970).’’.

24 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN25 SURED NATIONAL BANKS, UNINSURED FEDERAL
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1 BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE

2 MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The

3 Federal Deposit Insurance Corporation Improvement Act

4 of 1991 (12 U.S.C. 4401 et seq.) is amended—

5 (1) by redesignating section 407 as section

6 407A; and

7 (2) by inserting after section 406 the following

8 new section:

9 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED

10 NATIONAL BANKS, UNINSURED FEDERAL

11 BRANCHES AND AGENCIES, CERTAIN UNIN12 SURED STATE MEMBER BANKS, AND EDGE

13 ACT CORPORATIONS.

14 ‘‘(a) IN GENERAL.—Notwithstanding any other pro15 vision of law, paragraphs (8), (9), (10), and (11) of section

16 11(e) of the Federal Deposit Insurance Act shall apply

17 to an uninsured national bank or uninsured Federal

18 branch or Federal agency, a corporation chartered under

19 section 25A of the Federal Reserve Act, or an uninsured

20 State member bank which operates, or operates as, a mul21 tilateral clearing organization pursuant to section 409 of

22 this Act, except that for such purpose—

23 ‘‘(1) any reference to the ‘Corporation as re24 ceiver’ or ‘the receiver or the Corporation’ shall refer

25 to the receiver appointed by the Comptroller of the
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1 Currency in the case of an uninsured national bank

2 or uninsured Federal branch or agency, or to the re3 ceiver appointed by the Board of Governors of the

4 Federal Reserve System in the case of a corporation

5 chartered under section 25A of the Federal Reserve

6 Act or an uninsured State member bank;

7 ‘‘(2) any reference to the ‘Corporation’ (other

8 than in section 11(e)(8)(D) of such Act), the ‘Cor9 poration, whether acting as such or as conservator

10 or receiver’, a ‘receiver’, or a ‘conservator’ shall refer

11 to the receiver or conservator appointed by the

12 Comptroller of the Currency in the case of an unin13 sured national bank or uninsured Federal branch or

14 agency, or to the receiver or conservator appointed

15 by the Board of Governors of the Federal Reserve

16 System in the case of a corporation chartered under

17 section 25A of the Federal Reserve Act or an unin18 sured State member bank; and

19 ‘‘(3) any reference to an ‘insured depository in20 stitution’ or ‘depository institution’ shall refer to an

21 uninsured national bank, an uninsured Federal

22 branch or Federal agency, a corporation chartered

23 under section 25A of the Federal Reserve Act, or an

24 uninsured State member bank which operates, or op-
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1 erates as, a multilateral clearing organization pursu2 ant to section 409 of this Act.

3 ‘‘(b) LIABILITY.—The liability of a receiver or conser4 vator of an uninsured national bank, uninsured Federal

5 branch or agency, a corporation chartered under section

6 25A of the Federal Reserve Act, or an uninsured State

7 member bank which operates, or operates as, a multilat8 eral clearing organization pursuant to section 409 of this

9 Act, shall be determined in the same manner and subject

10 to the same limitations that apply to receivers and con11 servators of insured depository institutions under section

12 11(e) of the Federal Deposit Insurance Act.

13 ‘‘(c) REGULATORY AUTHORITY.—

14 ‘‘(1) IN GENERAL.—The Comptroller of the

15 Currency in the case of an uninsured national bank

16 or uninsured Federal branch or agency and the

17 Board of Governors of the Federal Reserve System

18 in the case of a corporation chartered under section

19 25A of the Federal Reserve Act, or an uninsured

20 State member bank that operates, or operates as, a

21 multilateral clearing organization pursuant to sec22 tion 409 of this Act, in consultation with the Fed23 eral Deposit Insurance Corporation, may each pro24 mulgate regulations solely to implement this section.
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1 ‘‘(2) SPECIFIC REQUIREMENT.—In promul2 gating regulations, limited solely to implementing

3 paragraphs (8), (9), (10), and (11) of section 11(e)

4 of the Federal Deposit Insurance Act, the Comp5 troller of the Currency and the Board of Governors

6 of the Federal Reserve System each shall ensure

7 that the regulations generally are consistent with the

8 regulations and policies of the Federal Deposit In9 surance Corporation adopted pursuant to the Fed10 eral Deposit Insurance Act.

11 ‘‘(d) DEFINITIONS.—For purposes of this section, the

12 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign

13 bank’ have the same meanings as in section 1(b) of the

14 International Banking Act of 1978.’’.

15 SEC. 907. BANKRUPTCY LAW AMENDMENTS.

16 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR17 CHASE AGREEMENT, SECURITIES CLEARING AGENCY,

18 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU19 RITIES CONTRACT.—Title 11, United States Code, is

20 amended—

21 (1) in section 101—

22 (A) in paragraph (25)—

23 (i) by striking ‘‘means a contract’’

24 and inserting ‘‘means—

25 ‘‘(A) a contract’’;
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1 (ii) by striking ‘‘, or any combination

2 thereof or option thereon;’’ and inserting

3 ‘‘, or any other similar agreement;’’; and

4 (iii) by adding at the end the fol5 lowing:

6 ‘‘(B) any combination of agreements or

7 transactions referred to in subparagraphs (A)

8 and (C);

9 ‘‘(C) any option to enter into an agreement

10 or transaction referred to in subparagraph (A)

11 or (B);

12 ‘‘(D) a master agreement that provides for

13 an agreement or transaction referred to in sub14 paragraph (A), (B), or (C), together with all

15 supplements to any such master agreement,

16 without regard to whether such master agree17 ment provides for an agreement or transaction

18 that is not a forward contract under this para19 graph, except that such master agreement shall

20 be considered to be a forward contract under

21 this paragraph only with respect to each agree22 ment or transaction under such master agree23 ment that is referred to in subparagraph (A),

24 (B), or (C); or
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1 ‘‘(E) any security agreement or arrange2 ment, or other credit enhancement related to

3 any agreement or transaction referred to in

4 subparagraph (A), (B), (C), or (D), including

5 any guarantee or reimbursement obligation by

6 or to a forward contract merchant or financial

7 participant in connection with any agreement or

8 transaction referred to in any such subpara9 graph, but not to exceed the damages in con10 nection with any such agreement or transaction,

11 measured in accordance with section 562;’’;

12 (B) in paragraph (46), by striking ‘‘on any

13 day during the period beginning 90 days before

14 the date of’’ and inserting ‘‘at any time before’’;

15 (C) by amending paragraph (47) to read

16 as follows:

17 ‘‘(47) ‘repurchase agreement’ (which definition

18 also applies to a reverse repurchase agreement)—

19 ‘‘(A) means—

20 ‘‘(i) an agreement, including related

21 terms, which provides for the transfer of

22 one or more certificates of deposit, mort23 gage related securities (as defined in sec24 tion 3 of the Securities Exchange Act of

25 1934), mortgage loans, interests in mort-
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1 gage related securities or mortgage loans,

2 eligible bankers’ acceptances, qualified for3 eign government securities (defined as a

4 security that is a direct obligation of, or

5 that is fully guaranteed by, the central

6 government of a member of the Organiza7 tion for Economic Cooperation and Devel8 opment), or securities that are direct obli9 gations of, or that are fully guaranteed by,

10 the United States or any agency of the

11 United States against the transfer of funds

12 by the transferee of such certificates of de13 posit, eligible bankers’ acceptances, securi14 ties, mortgage loans, or interests, with a

15 simultaneous agreement by such transferee

16 to transfer to the transferor thereof certifi17 cates of deposit, eligible bankers’ accept18 ance, securities, mortgage loans, or inter19 ests of the kind described in this clause, at

20 a date certain not later than 1 year after

21 such transfer or on demand, against the

22 transfer of funds;

23 ‘‘(ii) any combination of agreements

24 or transactions referred to in clauses (i)

25 and (iii);
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1 ‘‘(iii) an option to enter into an agree2 ment or transaction referred to in clause

3 (i) or (ii);

4 ‘‘(iv) a master agreement that pro5 vides for an agreement or transaction re6 ferred to in clause (i), (ii), or (iii), together

7 with all supplements to any such master

8 agreement, without regard to whether such

9 master agreement provides for an agree10 ment or transaction that is not a repur11 chase agreement under this paragraph, ex12 cept that such master agreement shall be

13 considered to be a repurchase agreement

14 under this paragraph only with respect to

15 each agreement or transaction under the

16 master agreement that is referred to in

17 clause (i), (ii), or (iii); or

18 ‘‘(v) any security agreement or ar19 rangement or other credit enhancement re20 lated to any agreement or transaction re21 ferred to in clause (i), (ii), (iii), or (iv), in22 cluding any guarantee or reimbursement

23 obligation by or to a repo participant or fi24 nancial participant in connection with any

25 agreement or transaction referred to in
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1 any such clause, but not to exceed the

2 damages in connection with any such

3 agreement or transaction, measured in ac4 cordance with section 562 of this title; and

5 ‘‘(B) does not include a repurchase obliga6 tion under a participation in a commercial

7 mortgage loan;’’;

8 (D) in paragraph (48), by inserting ‘‘, or

9 exempt from such registration under such sec10 tion pursuant to an order of the Securities and

11 Exchange Commission,’’ after ‘‘1934’’; and

12 (E) by amending paragraph (53B) to read

13 as follows:

14 ‘‘(53B) ‘swap agreement’—

15 ‘‘(A) means—

16 ‘‘(i) any agreement, including the

17 terms and conditions incorporated by ref18 erence in such agreement, which is—

19 ‘‘(I) an interest rate swap, op20 tion, future, or forward agreement, in21 cluding a rate floor, rate cap, rate col22 lar, cross-currency rate swap, and

23 basis swap;

24 ‘‘(II) a spot, same day-tomorrow,

25 tomorrow-next, forward, or other for-
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1 eign exchange or precious metals

2 agreement;

3 ‘‘(III) a currency swap, option,

4 future, or forward agreement;

5 ‘‘(IV) an equity index or equity

6 swap, option, future, or forward

7 agreement;

8 ‘‘(V) a debt index or debt swap,

9 option, future, or forward agreement;

10 ‘‘(VI) a total return, credit

11 spread or credit swap, option, future,

12 or forward agreement;

13 ‘‘(VII) a commodity index or a

14 commodity swap, option, future, or

15 forward agreement; or

16 ‘‘(VIII) a weather swap, weather

17 derivative, or weather option;

18 ‘‘(ii) any agreement or transaction

19 that is similar to any other agreement or

20 transaction referred to in this paragraph

21 and that—

22 ‘‘(I) is of a type that has been, is

23 presently, or in the future becomes,

24 the subject of recurrent dealings in

25 the swap markets (including terms
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1 and conditions incorporated by ref2 erence therein); and

3 ‘‘(II) is a forward, swap, future,

4 or option on one or more rates, cur5 rencies, commodities, equity securities,

6 or other equity instruments, debt se7 curities or other debt instruments,

8 quantitative measures associated with

9 an occurrence, extent of an occur10 rence, or contingency associated with

11 a financial, commercial, or economic

12 consequence, or economic or financial

13 indices or measures of economic or fi14 nancial risk or value;

15 ‘‘(iii) any combination of agreements

16 or transactions referred to in this subpara17 graph;

18 ‘‘(iv) any option to enter into an

19 agreement or transaction referred to in

20 this subparagraph;

21 ‘‘(v) a master agreement that provides

22 for an agreement or transaction referred to

23 in clause (i), (ii), (iii), or (iv), together

24 with all supplements to any such master

25 agreement, and without regard to whether
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1 the master agreement contains an agree2 ment or transaction that is not a swap

3 agreement under this paragraph, except

4 that the master agreement shall be consid5 ered to be a swap agreement under this

6 paragraph only with respect to each agree7 ment or transaction under the master

8 agreement that is referred to in clause (i),

9 (ii), (iii), or (iv); or

10 ‘‘(vi) any security agreement or ar11 rangement or other credit enhancement re12 lated to any agreements or transactions re13 ferred to in clause (i) through (v), includ14 ing any guarantee or reimbursement obli15 gation by or to a swap 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; and

22 ‘‘(B) is applicable for purposes of this title

23 only, and shall not be construed or applied so

24 as to challenge or affect the characterization,

25 definition, or treatment of any swap agreement
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1 under any other statute, regulation, or rule, in2 cluding the Securities Act of 1933, the Securi3 ties Exchange Act of 1934, the Public Utility

4 Holding Company Act of 1935, the Trust In5 denture Act of 1939, the Investment Company

6 Act of 1940, the Investment Advisers Act of

7 1940, the Securities Investor Protection Act of

8 1970, the Commodity Exchange Act, the

9 Gramm-Leach-Bliley Act, and the Legal Cer10 tainty for Bank Products Act of 2000;’’;

11 (2) in section 741(7), by striking paragraph (7)

12 and inserting the following:

13 ‘‘(7) ‘securities contract’—

14 ‘‘(A) means—

15 ‘‘(i) a contract for the purchase, sale,

16 or loan of a security, a certificate of de17 posit, a mortgage loan or any interest in a

18 mortgage loan, a group or index of securi19 ties, certificates of deposit, or mortgage

20 loans or interests therein (including an in21 terest therein or based on the value there22 of), or option on any of the foregoing, in23 cluding an option to purchase or sell any

24 such security, certificate of deposit, mort25 gage loan, interest, group or index, or op-
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1 tion, and including any repurchase or re2 verse repurchase transaction on any such

3 security, certificate of deposit, mortgage

4 loan, interest, group or index, or option;

5 ‘‘(ii) any option entered into on a na6 tional securities exchange relating to for7 eign currencies;

8 ‘‘(iii) the guarantee by or to any secu9 rities clearing agency of a settlement of

10 cash, securities, certificates of deposit,

11 mortgage loans or interests therein, group

12 or index of securities, or mortgage loans or

13 interests therein (including any interest

14 therein or based on the value thereof), or

15 option on any of the foregoing, including

16 an option to purchase or sell any such se17 curity, certificate of deposit, mortgage

18 loan, interest, group or index, or option;

19 ‘‘(iv) any margin loan;

20 ‘‘(v) any other agreement or trans21 action that is similar to an agreement or

22 transaction referred to in this subpara23 graph;
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1 ‘‘(vi) any combination of the agree2 ments or transactions referred to in this

3 subparagraph;

4 ‘‘(vii) any option to enter into any

5 agreement or transaction referred to in

6 this subparagraph;

7 ‘‘(viii) a master agreement that pro8 vides for an agreement or transaction re9 ferred to in clause (i), (ii), (iii), (iv), (v),

10 (vi), or (vii), together with all supplements

11 to any such master agreement, without re12 gard to whether the master agreement pro13 vides for an agreement or transaction that

14 is not a securities contract under this sub15 paragraph, except that such master agree16 ment shall be considered to be a securities

17 contract under this subparagraph only with

18 respect to each agreement or transaction

19 under such master agreement that is re20 ferred to in clause (i), (ii), (iii), (iv), (v),

21 (vi), or (vii); or

22 ‘‘(ix) any security agreement or ar23 rangement or other credit enhancement re24 lated to any agreement or transaction re25 ferred to in this subparagraph, including
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1 any guarantee or reimbursement obligation

2 by or to a stockbroker, securities clearing

3 agency, financial institution, or financial

4 participant in connection with any agree5 ment or transaction referred to in this sub6 paragraph, but not to exceed the damages

7 in connection with any such agreement or

8 transaction, measured in accordance with

9 section 562; and

10 ‘‘(B) does not include any purchase, sale,

11 or repurchase obligation under a participation

12 in a commercial mortgage loan;’’; and

13 (3) in section 761(4)—

14 (A) by striking ‘‘or’’ at the end of subpara15 graph (D); and

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

17 ‘‘(F) any other agreement or transaction

18 that is similar to an agreement or transaction

19 referred to in this paragraph;

20 ‘‘(G) any combination of the agreements or

21 transactions referred to in this paragraph;

22 ‘‘(H) any option to enter into an agree23 ment or transaction referred to in this para24 graph;
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1 ‘‘(I) a master agreement that provides for

2 an agreement or transaction referred to in sub3 paragraph (A), (B), (C), (D), (E), (F), (G), or

4 (H), together with all supplements to such mas5 ter agreement, without regard to whether the

6 master agreement provides for an agreement or

7 transaction that is not a commodity contract

8 under this paragraph, except that the master

9 agreement shall be considered to be a com10 modity contract under this paragraph only with

11 respect to each agreement or transaction under

12 the master agreement that is referred to in sub13 paragraph (A), (B), (C), (D), (E), (F), (G), or

14 (H); or

15 ‘‘(J) any security agreement or arrange16 ment or other credit enhancement related to

17 any agreement or transaction referred to in this

18 paragraph, including any guarantee or reim19 bursement obligation by or to a commodity

20 broker or financial participant in connection

21 with any agreement or transaction referred to

22 in this paragraph, but not to exceed the dam23 ages in connection with any such agreement or

24 transaction, measured in accordance with sec25 tion 562;’’.
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1 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI2 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER3 CHANT.—Section 101 of title 11, United States Code, is

4 amended—

5 (1) by striking paragraph (22) and inserting

6 the following:

7 ‘‘(22) ‘financial institution’ means—

8 ‘‘(A) a Federal reserve bank, or an entity

9 (domestic or foreign) that is a commercial or

10 savings bank, industrial savings bank, savings

11 and loan association, trust company, federally12 insured credit union, or receiver, liquidating

13 agent, or conservator for such entity and, when

14 any such Federal reserve bank, receiver, liqui15 dating agent, conservator or entity is acting as

16 agent or custodian for a customer in connection

17 with a securities contract (as defined in section

18 741) such customer; or

19 ‘‘(B) in connection with a securities con20 tract (as defined in section 741) an investment

21 company registered under the Investment Com22 pany Act of 1940;’’;

23 (2) by inserting after paragraph (22) the fol24 lowing:

25 ‘‘(22A) ‘financial participant’ means—
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1 ‘‘(A) an entity that, at the time it enters

2 into a securities contract, commodity contract,

3 swap agreement, repurchase agreement, or for4 ward contract, or at the time of the date of the

5 filing of the petition, has one or more agree6 ments or transactions described in paragraph

7 (1), (2), (3), (4), (5), or (6) of section 561(a)

8 with the debtor or any other entity (other than

9 an affiliate) of a total gross dollar value of not

10 less than $1,000,000,000 in notional or actual

11 principal amount outstanding on any day dur12 ing the previous 15-month period, or has gross

13 mark-to-market positions of not less than

14 $100,000,000 (aggregated across

15 counterparties) in one or more such agreements

16 or transactions with the debtor or any other en17 tity (other than an affiliate) on any day during

18 the previous 15-month period; or

19 ‘‘(B) a clearing organization (as defined in

20 section 402 of the Federal Deposit Insurance

21 Corporation Improvement Act of 1991);’’; and

22 (3) by striking paragraph (26) and inserting

23 the following:

24 ‘‘(26) ‘forward contract merchant’ means a

25 Federal reserve bank, or an entity the business of
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1 which consists in whole or in part of entering into

2 forward contracts as or with merchants in a com3 modity (as defined in section 761) or any similar

4 good, article, service, right, or interest which is pres5 ently or in the future becomes the subject of dealing

6 in the forward contract trade;’’.

7 (c) DEFINITION OF MASTER NETTING AGREEMENT

8 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec9 tion 101 of title 11, United States Code, is amended by

10 inserting after paragraph (38) the following new para11 graphs:

12 ‘‘(38A) ‘master netting agreement’—

13 ‘‘(A) means an agreement providing for

14 the exercise of rights, including rights of net15 ting, setoff, liquidation, termination, accelera16 tion, or close out, under or in connection with

17 one or more contracts that are described in any

18 one or more of paragraphs (1) through (5) of

19 section 561(a), or any security agreement or ar20 rangement or other credit enhancement related

21 to one or more of the foregoing, including any

22 guarantee or reimbursement obligation related

23 to 1 or more of the foregoing; and

24 ‘‘(B) if the agreement contains provisions

25 relating to agreements or transactions that are
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1 not contracts described in paragraphs (1)

2 through (5) of section 561(a), shall be deemed

3 to be a master netting agreement only with re4 spect to those agreements or transactions that

5 are described in any one or more of paragraphs

6 (1) through (5) of section 561(a);

7 ‘‘(38B) ‘master netting agreement participant’

8 means an entity that, at any time before the date of

9 the filing of the petition, is a party to an out10 standing master netting agreement with the debt11 or;’’.

12 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

13 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR14 CHASE AGREEMENTS, AND MASTER NETTING AGREE15 MENTS UNDER THE AUTOMATIC-STAY.—

16 (1) IN GENERAL.—Section 362(b) of title 11,

17 United States Code, as amended by sections 224,

18 303, 311, 401, and 718, is amended—

19 (A) in paragraph (6), by inserting ‘‘,

20 pledged to, under the control of,’’ after ‘‘held

21 by’’;

22 (B) in paragraph (7), by inserting ‘‘,

23 pledged to, under the control of,’’ after ‘‘held

24 by’’;
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1 (C) by striking paragraph (17) and insert2 ing the following:

3 ‘‘(17) under subsection (a), of the setoff by a

4 swap participant or financial participant of a mutual

5 debt and claim under or in connection with one or

6 more swap agreements that constitutes the setoff of

7 a claim against the debtor for any payment or other

8 transfer of property due from the debtor under or in

9 connection with any swap agreement against any

10 payment due to the debtor from the swap partici11 pant or financial participant under or in connection

12 with any swap agreement or against cash, securities,

13 or other property held by, pledged to, under the con14 trol of, or due from such swap participant or finan15 cial participant to margin, guarantee, secure, or set16 tle any swap agreement;’’; and

17 (D) by inserting after paragraph (26) the

18 following:

19 ‘‘(27) under subsection (a), of the setoff by a

20 master netting agreement participant of a mutual

21 debt and claim under or in connection with one or

22 more master netting agreements or any contract or

23 agreement subject to such agreements that con24 stitutes the setoff of a claim against the debtor for

25 any payment or other transfer of property due from
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1 the debtor under or in connection with such agree2 ments or any contract or agreement subject to such

3 agreements against any payment due to the debtor

4 from such master netting agreement participant

5 under or in connection with such agreements or any

6 contract or agreement subject to such agreements or

7 against cash, securities, or other property held by,

8 pledged to, under the control of, or due from such

9 master netting agreement participant to margin,

10 guarantee, secure, or settle such agreements or any

11 contract or agreement subject to such agreements,

12 to the extent that such participant is eligible to exer13 cise such offset rights under paragraph (6), (7), or

14 (17) for each individual contract covered by the mas15 ter netting agreement in issue; and’’.

16 (2) LIMITATION.—Section 362 of title 11,

17 United States Code, as amended by sections 106,

18 305, 311, and 441, is amended by adding at the end

19 the following:

20 ‘‘(o) The exercise of rights not subject to the stay

21 arising under subsection (a) pursuant to paragraph (6),

22 (7), (17), or (27) of subsection (b) shall not be stayed

23 by any order of a court or administrative agency in any

24 proceeding under this title.’’.
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1 (e) LIMITATION OF AVOIDANCE POWERS UNDER

2 MASTER NETTING AGREEMENT.—Section 546 of title 11,

3 United States Code, is amended—

4 (1) in subsection (g) (as added by section 103

5 of Public Law 101–311)—

6 (A) by striking ‘‘under a swap agreement’’;

7 (B) by striking ‘‘in connection with a swap

8 agreement’’ and inserting ‘‘under or in connec9 tion with any swap agreement’’; and

10 (C) by inserting ‘‘or financial participant’’

11 after ‘‘swap participant’’; and

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

13 ‘‘(j) Notwithstanding sections 544, 545, 547,

14 548(a)(1)(B), and 548(b) the trustee may not avoid a

15 transfer made by or to a master netting agreement partici16 pant under or in connection with any master netting

17 agreement or any individual contract covered thereby that

18 is made before the commencement of the case, except

19 under section 548(a)(1)(A) and except to the extent that

20 the trustee could otherwise avoid such a transfer made

21 under an individual contract covered by such master net22 ting agreement.’’.

23 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

24 AGREEMENTS.—Section 548(d)(2) of title 11, United

25 States Code, is amended—
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1 (1) in subparagraph (C), by striking ‘‘and’’ at

2 the end;

3 (2) in subparagraph (D), by striking the period

4 and inserting ‘‘; and’’; and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(E) a master netting agreement participant

8 that receives a transfer in connection with a master

9 netting agreement or any individual contract covered

10 thereby takes for value to the extent of such trans11 fer, except that, with respect to a transfer under any

12 individual contract covered thereby, to the extent

13 that such master netting agreement participant oth14 erwise did not take (or is otherwise not deemed to

15 have taken) such transfer for value.’’.

16 (g) TERMINATION OR ACCELERATION OF SECURITIES

17 CONTRACTS.—Section 555 of title 11, United States Code,

18 is amended—

19 (1) by amending the section heading to read as

20 follows:

21 ‘‘§ 555. Contractual right to liquidate, terminate, or

22 accelerate a securities contract’’;

23 and
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1 (2) in the first sentence, by striking ‘‘liquida2 tion’’ and inserting ‘‘liquidation, termination, or ac3 celeration’’.

4 (h) TERMINATION OR ACCELERATION OF COMMOD5 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

6 United States Code, is amended—

7 (1) by amending the section heading to read as

8 follows:

9 ‘‘§ 556. Contractual right to liquidate, terminate, or

10 accelerate a commodities contract or for11 ward contract’’;

12 (2) in the first sentence, by striking ‘‘liquida13 tion’’ and inserting ‘‘liquidation, termination, or ac14 celeration’’; and

15 (3) in the second sentence, by striking ‘‘As

16 used’’ and all that follows through ‘‘right,’’ and in17 serting ‘‘As used in this section, the term ‘contrac18 tual right’ includes a right set forth in a rule or

19 bylaw of a derivatives clearing organization (as de20 fined in the Commodity Exchange Act), a multilat21 eral clearing organization (as defined in the Federal

22 Deposit Insurance Corporation Improvement Act of

23 1991), a national securities exchange, a national se24 curities association, a securities clearing agency, a

25 contract market designated under the Commodity
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1 Exchange Act, a derivatives transaction execution

2 facility registered under the Commodity Exchange

3 Act, or a board of trade (as defined in the Com4 modity Exchange Act) or in a resolution of the gov5 erning board thereof and a right,’’.

6 (i) TERMINATION OR ACCELERATION OF REPUR7 CHASE AGREEMENTS.—Section 559 of title 11, United

8 States Code, is amended—

9 (1) by amending the section heading to read as

10 follows:

11 ‘‘§ 559. Contractual right to liquidate, terminate, or

12 accelerate a repurchase agreement’’;

13 (2) in the first sentence, by striking ‘‘liquida14 tion’’ and inserting ‘‘liquidation, termination, or ac15 celeration’’; and

16 (3) in the third sentence, by striking ‘‘As used’’

17 and all that follows through ‘‘right,’’ and inserting

18 ‘‘As used in this section, the term ‘contractual right’

19 includes a right set forth in a rule or bylaw of a de20 rivatives clearing organization (as defined in the

21 Commodity Exchange Act), a multilateral clearing

22 organization (as defined in the Federal Deposit In23 surance Corporation Improvement Act of 1991), a

24 national securities exchange, a national securities as25 sociation, a securities clearing agency, a contract
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1 market designated under the Commodity Exchange

2 Act, a derivatives transaction execution facility reg3 istered under the Commodity Exchange Act, or a

4 board of trade (as defined in the Commodity Ex5 change Act) or in a resolution of the governing

6 board thereof and a right,’’.

7 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

8 OF SWAP AGREEMENTS.—Section 560 of title 11, United

9 States Code, is amended—

10 (1) by amending the section heading to read as

11 follows:

12 ‘‘§ 560. Contractual right to liquidate, terminate, or

13 accelerate a swap agreement’’;

14 (2) in the first sentence, by striking ‘‘termi15 nation of a swap agreement’’ and inserting ‘‘liquida16 tion, termination, or acceleration of one or more

17 swap agreements’’;

18 (3) by striking ‘‘in connection with any swap

19 agreement’’ and inserting ‘‘in connection with the

20 termination, liquidation, or acceleration of one or

21 more swap agreements’’; and

22 (4) in the second sentence, by striking ‘‘As

23 used’’ and all that follows through ‘‘right,’’ and in24 serting ‘‘As used in this section, the term ‘contrac25 tual right’ includes a right set forth in a rule or
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1 bylaw of a derivatives clearing organization (as de2 fined in the Commodity Exchange Act), a multilat3 eral clearing organization (as defined in the Federal

4 Deposit Insurance Corporation Improvement Act of

5 1991), a national securities exchange, a national se6 curities association, a securities clearing agency, a

7 contract market designated under the Commodity

8 Exchange Act, a derivatives transaction execution

9 facility registered under the Commodity Exchange

10 Act, or a board of trade (as defined in the Com11 modity Exchange Act) or in a resolution of the gov12 erning board thereof and a right,’’.

13 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

14 OFFSET UNDER A MASTER NETTING AGREEMENT AND

15 ACROSS CONTRACTS.—

16 (1) IN GENERAL.—Title 11, United States

17 Code, is amended by inserting after section 560 the

18 following:

19 ‘‘§ 561. Contractual right to terminate, liquidate, ac20 celerate, or offset under a master netting

21 agreement and across contracts; pro22 ceedings under chapter 15

23 ‘‘(a) Subject to subsection (b), the exercise of any

24 contractual right, because of a condition of the kind speci25 fied in section 365(e)(1), to cause the termination, liquida-
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1 tion, or acceleration of or to offset or net termination val2 ues, payment amounts, or other transfer obligations aris3 ing under or in connection with one or more (or the termi4 nation, liquidation, or acceleration of one or more)—

5 ‘‘(1) securities contracts, as defined in section

6 741(7);

7 ‘‘(2) commodity contracts, as defined in section

8 761(4);

9 ‘‘(3) forward contracts;

10 ‘‘(4) repurchase agreements;

11 ‘‘(5) swap agreements; or

12 ‘‘(6) master netting agreements,

13 shall not be stayed, avoided, or otherwise limited by oper14 ation of any provision of this title or by any order of a

15 court or administrative agency in any proceeding under

16 this title.

17 ‘‘(b)(1) A party may exercise a contractual right de18 scribed in subsection (a) to terminate, liquidate, or accel19 erate only to the extent that such party could exercise such

20 a right under section 555, 556, 559, or 560 for each indi21 vidual contract covered by the master netting agreement

22 in issue.

23 ‘‘(2) If a debtor is a commodity broker subject to sub24 chapter IV of chapter 7—
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1 ‘‘(A) a party may not net or offset an obligation

2 to the debtor arising under, or in connection with,

3 a commodity contract traded on or subject to the

4 rules of a contract market designated under the

5 Commodity Exchange Act or a derivatives trans6 action execution facility registered under the Com7 modity Exchange Act against any claim arising

8 under, or in connection with, other instruments, con9 tracts, or agreements listed in subsection (a) except

10 to the extent that the party has positive net equity

11 in the commodity accounts at the debtor, as cal12 culated under such subchapter; and

13 ‘‘(B) another commodity broker may not net or

14 offset an obligation to the debtor arising under, or

15 in connection with, a commodity contract entered

16 into or held on behalf of a customer of the debtor

17 and traded on or subject to the rules of a contract

18 market designated under the Commodity Exchange

19 Act or a derivatives transaction execution facility

20 registered under the Commodity Exchange Act

21 against any claim arising under, or in connection

22 with, other instruments, contracts, or agreements

23 listed in subsection (a).
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1 ‘‘(3) No provision of subparagraph (A) or (B) of

2 paragraph (2) shall prohibit the offset of claims and obli3 gations that arise under—

4 ‘‘(A) a cross-margining agreement or similar

5 arrangement that has been approved by the Com6 modity Futures Trading Commission or submitted

7 to the Commodity Futures Trading Commission

8 under paragraph (1) or (2) of section 5c(c) of the

9 Commodity Exchange Act and has not been abro10 gated or rendered ineffective by the Commodity Fu11 tures Trading Commission; or

12 ‘‘(B) any other netting agreement between a

13 clearing organization (as defined in section 761) and

14 another entity that has been approved by the Com15 modity Futures Trading Commission.

16 ‘‘(c) As used in this section, the term ‘contractual

17 right’ includes a right set forth in a rule or bylaw of a

18 derivatives clearing organization (as defined in the Com19 modity Exchange Act), a multilateral clearing organiza20 tion (as defined in the Federal Deposit Insurance Cor21 poration Improvement Act of 1991), a national securities

22 exchange, a national securities association, a securities

23 clearing agency, a contract market designated under the

24 Commodity Exchange Act, a derivatives transaction execu25 tion facility registered under the Commodity Exchange
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1 Act, or a board of trade (as defined in the Commodity

2 Exchange Act) or in a resolution of the governing board

3 thereof, and a right, whether or not evidenced in writing,

4 arising under common law, under law merchant, or by rea5 son of normal business practice.

6 ‘‘(d) Any provisions of this title relating to securities

7 contracts, commodity contracts, forward contracts, repur8 chase agreements, swap agreements, or master netting

9 agreements shall apply in a case under chapter 15, so that

10 enforcement of contractual provisions of such contracts

11 and agreements in accordance with their terms will not

12 be stayed or otherwise limited by operation of any provi13 sion of this title or by order of a court in any case under

14 this title, and to limit avoidance powers to the same extent

15 as in a proceeding under chapter 7 or 11 of this title (such

16 enforcement not to be limited based on the presence or

17 absence of assets of the debtor in the United States).’’.

18 (2) CONFORMING AMENDMENT.—The table of

19 sections for chapter 5 of title 11, United States

20 Code, is amended by inserting after the item relating

21 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.’’.

22 (l) COMMODITY BROKER LIQUIDATIONS.—Title 11,

23 United States Code, is amended by inserting after section

24 766 the following:
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1 ‘‘§ 767. Commodity broker liquidation and forward

2 contract merchants, commodity brokers,

3 stockbrokers, financial institutions, fi4 nancial participants, securities clearing

5 agencies, swap participants, repo partici6 pants, and master netting agreement par7 ticipants

8 ‘‘Notwithstanding any other provision of this title,

9 the exercise of rights by a forward contract merchant,

10 commodity broker, stockbroker, financial institution, fi11 nancial participant, securities clearing agency, swap par12 ticipant, repo participant, or master netting agreement

13 participant under this title shall not affect the priority of

14 any unsecured claim it may have after the exercise of such

15 rights.’’.

16 (m) STOCKBROKER LIQUIDATIONS.—Title 11,

17 United States Code, is amended by inserting after section

18 752 the following:

19 ‘‘§ 753. Stockbroker liquidation and forward contract

20 merchants, commodity brokers, stock21 brokers, financial institutions, financial

22 participants, securities clearing agencies,

23 swap participants, repo participants, and

24 master netting agreement participants

25 ‘‘Notwithstanding any other provision of this title,

26 the exercise of rights by a forward contract merchant,
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1 commodity broker, stockbroker, financial institution, fi2 nancial participant, securities clearing agency, swap par3 ticipant, repo participant, or master netting agreement

4 participant under this title shall not affect the priority of

5 any unsecured claim it may have after the exercise of such

6 rights.’’.

7 (n) SETOFF.—Section 553 of title 11, United States

8 Code, is amended—

9 (1) in subsection (a)(2)(B)(ii), by inserting be10 fore the semicolon the following: ‘‘(except for a

11 setoff of a kind described in section 362(b)(6),

12 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559,

13 560, or 561)’’;

14 (2) in subsection (a)(3)(C), by inserting before

15 the period the following: ‘‘(except for a setoff of a

16 kind described in section 362(b)(6), 362(b)(7),

17 362(b)(17), 362(b)(27), 555, 556, 559, 560, or

18 561)’’; and

19 (3) in subsection (b)(1), by striking

20 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17),

21 362(b)(27), 555, 556, 559, 560, 561,’’.

22 (o) SECURITIES CONTRACTS, COMMODITY CON23 TRACTS, AND FORWARD CONTRACTS.—Title 11, United

24 States Code, is amended—
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1 (1) in section 362(b)(6), by striking ‘‘financial

2 institutions,’’ each place such term appears and in3 serting ‘‘financial institution, financial participant,’’;

4 (2) in sections 362(b)(7) and 546(f), by insert5 ing ‘‘or financial participant’’ after ‘‘repo partici6 pant’’ each place such term appears;

7 (3) in section 546(e), by inserting ‘‘financial

8 participant,’’ after ‘‘financial institution,’’;

9 (4) in section 548(d)(2)(B), by inserting ‘‘fi10 nancial participant,’’ after ‘‘financial institution,’’;

11 (5) in section 548(d)(2)(C), by inserting ‘‘or fi12 nancial participant’’ after ‘‘repo participant’’;

13 (6) in section 548(d)(2)(D), by inserting ‘‘or fi14 nancial participant’’ after ‘‘swap participant’’;

15 (7) in section 555—

16 (A) by inserting ‘‘financial participant,’’

17 after ‘‘financial institution,’’; and

18 (B) by striking the second sentence and in19 serting the following: ‘‘As used in this section,

20 the term ‘contractual right’ includes a right set

21 forth in a rule or bylaw of a derivatives clearing

22 organization (as defined in the Commodity Ex23 change Act), a multilateral clearing organiza24 tion (as defined in the Federal Deposit Insur25 ance Corporation Improvement Act of 1991), a
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1 national securities exchange, a national securi2 ties association, a securities clearing agency, a

3 contract market designated under the Com4 modity Exchange Act, a derivatives transaction

5 execution facility registered under the Com6 modity Exchange Act, or a board of trade (as

7 defined in the Commodity Exchange Act), or in

8 a resolution of the governing board thereof, and

9 a right, whether or not in writing, arising under

10 common law, under law merchant, or by reason

11 of normal business practice.’’;

12 (8) in section 556, by inserting ‘‘, financial par13 ticipant,’’ after ‘‘commodity broker’’;

14 (9) in section 559, by inserting ‘‘or financial

15 participant’’ after ‘‘repo participant’’ each place

16 such term appears; and

17 (10) in section 560, by inserting ‘‘or financial

18 participant’’ after ‘‘swap participant’’.

19 (p) CONFORMING AMENDMENTS.—Title 11, United

20 States Code, is amended—

21 (1) in the table of sections for chapter 5—

22 (A) by amending the items relating to sec23 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.’’;
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1 and

2 (B) by amending the items relating to sec3 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.’’;

4 and

5 (2) in the table of sections for chapter 7—

6 (A) by inserting after the item relating to

7 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.’’;

8 and

9 (B) by inserting after the item relating to

10 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.’’.

11 SEC. 908. RECORDKEEPING REQUIREMENTS.

12 (a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

13 Section 11(e)(8) of the Federal Deposit Insurance Act (12

14 U.S.C. 1821(e)(8)) is amended by adding at the end the

15 following new subparagraph:

16 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

17 The Corporation, in consultation with the ap18 propriate Federal banking agencies, may pre19 scribe regulations requiring more detailed rec-
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1 ordkeeping by any insured depository institu2 tion with respect to qualified financial contracts

3 (including market valuations) only if such in4 sured depository institution is in a troubled

5 condition (as such term is defined by the Cor6 poration pursuant to section 32).’’.

7 (b) INSURED CREDIT UNIONS.—Section 207(c)(8) of

8 the Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is

9 amended by adding at the end the following new subpara10 graph:

11 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

12 The Board, in consultation with the appropriate

13 Federal banking agencies, may prescribe regula14 tions requiring more detailed recordkeeping by

15 any insured credit union with respect to quali16 fied financial contracts (including market valu17 ations) only if such insured credit union is in

18 a troubled condition (as such term is defined by

19 the Board pursuant to section 212).’’.

20 SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU21 TION REQUIREMENT.

22 Section 13(e)(2) of the Federal Deposit Insurance

23 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 shall be allowed under subsection (a), (b),

7 or (c), or disallowed under subsection (d) or (e), as if such

8 claim had arisen before the date of the filing of the peti9 tion.’’.

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, as amended by section 213, is

9 amended to read as follows:

10 ‘‘(2) provide for the full payment, in deferred

11 cash payments, of all claims entitled to priority

12 under section 507, unless—

13 ‘‘(A) the claim is a claim owed to a govern14 mental unit that arises as a result of the sale,

15 transfer, exchange, or other disposition of any

16 farm asset used in the debtor’s farming oper17 ation, in which case the claim shall be treated

18 as an unsecured claim that is not entitled to

19 priority under section 507, but the debt shall be

20 treated in such manner only if the debtor re21 ceives a discharge; or

22 ‘‘(B) the holder of a particular claim

23 agrees to a different treatment of that claim;’’.

24 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(b)

25 of title 11, United States Code, as so designated by section
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1 719, is amended by striking ‘‘a State or local govern2 mental unit’’ and inserting ‘‘any governmental unit’’.

3 (c) EFFECTIVE DATE; APPLICATION OF AMEND4 MENTS.—This section and the amendments made by this

5 section shall take effect on the date of the enactment of

6 this Act and shall not apply with respect to cases com7 menced under title 11 of the United States Code before

8 such date.

9 SEC. 1004. DEFINITION OF FAMILY FARMER.

10 Section 101(18) of title 11, United States Code, is

11 amended—

12 (1) in subparagraph (A)—

13 (A) by striking ‘‘$1,500,000’’ and inserting

14 ‘‘$3,237,000’’; and

15 (B) by striking ‘‘80’’ and inserting ‘‘50’’;

16 and

17 (2) in subparagraph (B)(ii)—

18 (A) by striking ‘‘$1,500,000’’ and inserting

19 ‘‘$3,237,000’’; and

20 (B) by striking ‘‘80’’ and inserting ‘‘50’’.
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1 SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY

2 FARMER AND SPOUSE RECEIVE OVER 50 PER3 CENT OF INCOME FROM FARMING OPER4 ATION IN YEAR PRIOR TO BANKRUPTCY.

5 Section 101(18)(A) of title 11, United States Code,

6 is amended by striking ‘‘for the taxable year preceding the

7 taxable year’’ and inserting the following:

8 ‘‘for—

9 ‘‘(i) the taxable year preceding; or

10 ‘‘(ii) each of the 2d and 3d taxable

11 years preceding;

12 the taxable year’’.

13 SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF

14 DISPOSABLE INCOME.

15 (a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of

16 title 11, United States Code, is amended—

17 (1) in subparagraph (A) by striking ‘‘or’’ at the

18 end;

19 (2) in subparagraph (B) by striking the period

20 at the end and inserting ‘‘; or’’; and

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

22 ‘‘(C) the value of the property to be distributed

23 under the plan in the 3-year period, or such longer

24 period as the court may approve under section

25 1222(c), beginning on the date that the first dis26 tribution is due under the plan is not less than the
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1 debtor’s projected disposable income for such pe2 riod.’’.

3 (b) MODIFICATION OF PLAN.—Section 1229 of title

4 11, United States Code, is amended by adding at the end

5 the following:

6 ‘‘(d) A plan may not be modified under this section—

7 ‘‘(1) to increase the amount of any payment

8 due before the plan as modified becomes the plan;

9 ‘‘(2) by anyone except the debtor, based on an

10 increase in the debtor’s disposable income, to in11 crease the amount of payments to unsecured credi12 tors required for a particular month so that the ag13 gregate of such payments exceeds the debtor’s dis14 posable income for such month; or

15 ‘‘(3) in the last year of the plan by anyone ex16 cept the debtor, to require payments that would

17 leave the debtor with insufficient funds to carry on

18 the farming operation after the plan is completed.’’.

19 SEC. 1007. FAMILY FISHERMEN.

20 (a) DEFINITIONS.—Section 101 of title 11, United

21 States Code, is amended—

22 (1) by inserting after paragraph (7) the fol23 lowing:

24 ‘‘(7A) ‘commercial fishing operation’ means—
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1 ‘‘(A) the catching or harvesting of fish,

2 shrimp, lobsters, urchins, seaweed, shellfish, or

3 other aquatic species or products of such spe4 cies; or

5 ‘‘(B) for purposes of section 109 and chap6 ter 12, aquaculture activities consisting of rais7 ing for market any species or product described

8 in subparagraph (A);

9 ‘‘(7B) ‘commercial fishing vessel’ means a ves10 sel used by a family fisherman to carry out a com11 mercial fishing operation;’’; and

12 (2) by inserting after paragraph (19) the fol13 lowing:

14 ‘‘(19A) ‘family fisherman’ means—

15 ‘‘(A) an individual or individual and spouse

16 engaged in a commercial fishing operation—

17 ‘‘(i) whose aggregate debts do not ex18 ceed $1,500,000 and not less than 80 per19 cent of whose aggregate noncontingent, liq20 uidated debts (excluding a debt for the

21 principal residence of such individual or

22 such individual and spouse, unless such

23 debt arises out of a commercial fishing op24 eration), on the date the case is filed, arise

25 out of a commercial fishing operation
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1 owned or operated by such individual or

2 such individual and spouse; and

3 ‘‘(ii) who receive from such commer4 cial fishing operation more than 50 percent

5 of such individual’s or such individual’s

6 and spouse’s gross income for the taxable

7 year preceding the taxable year in which

8 the case concerning such individual or such

9 individual and spouse was filed; or

10 ‘‘(B) a corporation or partnership—

11 ‘‘(i) in which more than 50 percent of

12 the outstanding stock or equity is held

13 by—

14 ‘‘(I) 1 family that conducts the

15 commercial fishing operation; or

16 ‘‘(II) 1 family and the relatives

17 of the members of such family, and

18 such family or such relatives conduct

19 the commercial fishing operation; and

20 ‘‘(ii)(I) more than 80 percent of the

21 value of its assets consists of assets related

22 to the commercial fishing operation;

23 ‘‘(II) its aggregate debts do not ex24 ceed $1,500,000 and not less than 80 per25 cent of its aggregate noncontingent, liq-
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1 uidated debts (excluding a debt for 1

2 dwelling which is owned by such corpora3 tion or partnership and which a share4 holder or partner maintains as a principal

5 residence, unless such debt arises out of a

6 commercial fishing operation), on the date

7 the case is filed, arise out of a commercial

8 fishing operation owned or operated by

9 such corporation or such partnership; and

10 ‘‘(III) if such corporation issues stock,

11 such stock is not publicly traded;

12 ‘‘(19B) ‘family fisherman with regular annual

13 income’ means a family fisherman whose annual in14 come is sufficiently stable and regular to enable such

15 family fisherman to make payments under a plan

16 under chapter 12 of this title;’’.

17 (b) WHO MAY BE A DEBTOR.—Section 109(f) of title

18 11, United States Code, is amended by inserting ‘‘or fam19 ily fisherman’’ after ‘‘family farmer’’.

20 (c) CHAPTER 12.—Chapter 12 of title 11, United

21 States Code, is amended—

22 (1) in the chapter heading, by inserting ‘‘OR

23 FISHERMAN’’ after ‘‘FAMILY FARMER’’;

24 (2) in section 1203, by inserting ‘‘or commer25 cial fishing operation’’ after ‘‘farm’’; and
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1 (3) in section 1206, by striking ‘‘if the property

2 is farmland or farm equipment’’ and inserting ‘‘if

3 the property is farmland, farm equipment, or prop4 erty used to carry out a commercial fishing oper5 ation (including a commercial fishing vessel)’’.

6 (d) CLERICAL AMENDMENT.—In the table of chap7 ters for title 11, United States Code, the item relating to

8 chapter 12, is amended to read as follows:

‘‘12. Adjustments of Debts of a Family Farmer or Family

Fisherman with Regular Annual Income ..... 1201’’.

9 (e) APPLICABILITY.—Nothing in this section shall

10 change, affect, or amend the Fishery Conservation and

11 Management Act of 1976 (16 U.S.C. 1801 et seq.).

12 TITLE XI—HEALTH CARE AND

13 EMPLOYEE BENEFITS

14 SEC. 1101. DEFINITIONS.

15 (a) HEALTH CARE BUSINESS DEFINED.—Section

16 101 of title 11, United States Code, as amended by section

17 306, is amended—

18 (1) by redesignating paragraph (27A) as para19 graph (27B); and

20 (2) by inserting after paragraph (27) the fol21 lowing:

22 ‘‘(27A) ‘health care business’—

23 ‘‘(A) means any public or private entity

24 (without regard to whether that entity is orga-
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1 nized for profit or not for profit) that is pri2 marily engaged in offering to the general public

3 facilities and services for—

4 ‘‘(i) the diagnosis or treatment of in5 jury, deformity, or disease; and

6 ‘‘(ii) surgical, drug treatment, psy7 chiatric, or obstetric care; and

8 ‘‘(B) includes—

9 ‘‘(i) any—

10 ‘‘(I) general or specialized hos11 pital;

12 ‘‘(II) ancillary ambulatory, emer13 gency, or surgical treatment facility;

14 ‘‘(III) hospice;

15 ‘‘(IV) home health agency; and

16 ‘‘(V) other health care institution

17 that is similar to an entity referred to

18 in subclause (I), (II), (III), or (IV);

19 and

20 ‘‘(ii) any long-term care facility, in21 cluding any—

22 ‘‘(I) skilled nursing facility;

23 ‘‘(II) intermediate care facility;

24 ‘‘(III) assisted living facility;

25 ‘‘(IV) home for the aged;
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1 ‘‘(V) domiciliary care facility; and

2 ‘‘(VI) health care institution that

3 is related to a facility referred to in

4 subclause (I), (II), (III), (IV), or (V),

5 if that institution is primarily engaged

6 in offering room, board, laundry, or

7 personal assistance with activities of

8 daily living and incidentals to activi9 ties of daily living;’’.

10 (b) PATIENT AND PATIENT RECORDS DEFINED.—

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

12 by inserting after paragraph (40) the following:

13 ‘‘(40A) ‘patient’ means any individual who ob14 tains or receives services from a health care busi15 ness;

16 ‘‘(40B) ‘patient records’ means any written doc17 ument relating to a patient or a record recorded in

18 a magnetic, optical, or other form of electronic me19 dium;’’.

20 (c) RULE OF CONSTRUCTION.—The amendments

21 made by subsection (a) of this section shall not affect the

22 interpretation of section 109(b) of title 11, United States

23 Code.
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1 SEC. 1102. DISPOSAL OF PATIENT RECORDS.

2 (a) IN GENERAL.—Subchapter III of chapter 3 of

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

4 end the following:

5 ‘‘§ 351. Disposal of patient records

6 ‘‘If a health care business commences a case under

7 chapter 7, 9, or 11, and the trustee does not have a suffi8 cient amount of funds to pay for the storage of patient

9 records in the manner required under applicable Federal

10 or State law, the following requirements shall apply:

11 ‘‘(1) The trustee shall—

12 ‘‘(A) promptly publish notice, in 1 or more

13 appropriate newspapers, that if patient records

14 are not claimed by the patient or an insurance

15 provider (if applicable law permits the insur16 ance provider to make that claim) by the date

17 that is 365 days after the date of that notifica18 tion, the trustee will destroy the patient

19 records; and

20 ‘‘(B) during the first 180 days of the 365-

21 day period described in subparagraph (A),

22 promptly attempt to notify directly each patient

23 that is the subject of the patient records and

24 appropriate insurance carrier concerning the

25 patient records by mailing to the most recent

26 known address of that patient, or a family
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1 member or contact person for that patient, and

2 to the appropriate insurance carrier an appro3 priate notice regarding the claiming or dis4 posing of patient records.

5 ‘‘(2) If, after providing the notification under

6 paragraph (1), patient records are not claimed dur7 ing the 365-day period described under that para8 graph, the trustee shall mail, by certified mail, at

9 the end of such 365-day period a written request to

10 each appropriate Federal agency to request permis11 sion from that agency to deposit the patient records

12 with that agency, except that no Federal agency is

13 required to accept patient records under this para14 graph.

15 ‘‘(3) If, following the 365-day period described

16 in paragraph (2) and after providing the notification

17 under paragraph (1), patient records are not claimed

18 by a patient or insurance provider, or request is not

19 granted by a Federal agency to deposit such records

20 with that agency, the trustee shall destroy those

21 records by—

22 ‘‘(A) if the records are written, shredding

23 or burning the records; or

24 ‘‘(B) if the records are magnetic, optical,

25 or other electronic records, by otherwise de-
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1 stroying those records so that those records

2 cannot be retrieved.’’.

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

4 for subchapter III of chapter 3 of title 11, United States

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

‘‘351. Disposal of patient records.’’.

6 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS

7 OF CLOSING A HEALTH CARE BUSINESS AND

8 OTHER ADMINISTRATIVE EXPENSES.

9 Section 503(b) of title 11, United States Code, as

10 amended by section 445, is amended by adding at the end

11 the following:

12 ‘‘(8) the actual, necessary costs and expenses of

13 closing a health care business incurred by a trustee

14 or by a Federal agency (as defined in section 551(1)

15 of title 5) or a department or agency of a State or

16 political subdivision thereof, including any cost or

17 expense incurred—

18 ‘‘(A) in disposing of patient records in ac19 cordance with section 351; or

20 ‘‘(B) in connection with transferring pa21 tients from the health care business that is in

22 the process of being closed to another health

23 care business; and’’.
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1 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA2 TIENT ADVOCATE.

3 (a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.—

4 (1) APPOINTMENT OF OMBUDSMAN.—Title 11,

5 United States Code, as amended by section 232, is

6 amended by inserting after section 332 the fol7 lowing:

8 ‘‘§ 333. Appointment of patient care ombudsman

9 ‘‘(a)(1) If the debtor in a case under chapter 7, 9,

10 or 11 is a health care business, the court shall order, not

11 later than 30 days after the commencement of the case,

12 the appointment of an ombudsman to monitor the quality

13 of patient care and to represent the interests of the pa14 tients of the health care business unless the court finds

15 that the appointment of such ombudsman is not necessary

16 for the protection of patients under the specific facts of

17 the case.

18 ‘‘(2)(A) If the court orders the appointment of an

19 ombudsman under paragraph (1), the United States trust20 ee shall appoint 1 disinterested person (other than the

21 United States trustee) to serve as such ombudsman.

22 ‘‘(B) If the debtor is a health care business that pro23 vides long-term care, then the United States trustee may

24 appoint the State Long-Term Care Ombudsman appointed

25 under the Older Americans Act of 1965 for the State in
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1 which the case is pending to serve as the ombudsman re2 quired by paragraph (1).

3 ‘‘(C) If the United States trustee does not appoint

4 a State Long-Term Care Ombudsman under subpara5 graph (B), the court shall notify the State Long-Term

6 Care Ombudsman appointed under the Older Americans

7 Act of 1965 for the State in which the case is pending,

8 of the name and address of the person who is appointed

9 under subparagraph (A).

10 ‘‘(b) An ombudsman appointed under subsection (a)

11 shall—

12 ‘‘(1) monitor the quality of patient care pro13 vided to patients of the debtor, to the extent nec14 essary under the circumstances, including inter15 viewing patients and physicians;

16 ‘‘(2) not later than 60 days after the date of

17 appointment, and not less frequently than at 60-day

18 intervals thereafter, report to the court after notice

19 to the parties in interest, at a hearing or in writing,

20 regarding the quality of patient care provided to pa21 tients of the debtor; and

22 ‘‘(3) if such ombudsman determines that the

23 quality of patient care provided to patients of the

24 debtor is declining significantly or is otherwise being

25 materially compromised, file with the court a motion
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1 or a written report, with notice to the parties in in2 terest immediately upon making such determination.

3 ‘‘(c)(1) An ombudsman appointed under subsection

4 (a) shall maintain any information obtained by such om5 budsman under this section that relates to patients (in6 cluding information relating to patient records) as con7 fidential information. Such ombudsman may not review

8 confidential patient records unless the court approves such

9 review in advance and imposes restrictions on such om10 budsman to protect the confidentiality of such records.

11 ‘‘(2) An ombudsman appointed under subsection

12 (a)(2)(B) shall have access to patient records consistent

13 with authority of such ombudsman under the Older Amer14 icans Act of 1965 and under non-Federal laws governing

15 the State Long-Term Care Ombudsman program.’’.

16 (2) CLERICAL AMENDMENT.—The table of sec17 tions for subchapter II of chapter 3 of title 11,

18 United States Code, as amended by section 232, is

19 amended by adding at the end the following:

‘‘333. Appointment of ombudsman.’’.

20 (b) COMPENSATION OF OMBUDSMAN.—Section

21 330(a)(1) of title 11, United States Code, is amended—

22 (1) in the matter preceding subparagraph (A),

23 by inserting ‘‘an ombudsman appointed under sec24 tion 333, or’’ before ‘‘a professional person’’; and
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1 (2) in subparagraph (A), by inserting ‘‘ombuds2 man,’’ before ‘‘professional person’’.

3 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO

4 TRANSFER PATIENTS.

5 (a) IN GENERAL.—Section 704(a) of title 11, United

6 States Code, as amended by sections 102, 219, and 446,

7 is amended by adding at the end the following:

8 ‘‘(12) use all reasonable and best efforts to

9 transfer patients from a health care business that is

10 in the process of being closed to an appropriate

11 health care business that—

12 ‘‘(A) is in the vicinity of the health care

13 business that is closing;

14 ‘‘(B) provides the patient with services

15 that are substantially similar to those provided

16 by the health care business that is in the proc17 ess of being closed; and

18 ‘‘(C) maintains a reasonable quality of

19 care.’’.

20 (b) CONFORMING AMENDMENT.—Section 1106(a)(1)

21 of title 11, United States Code, as amended by section

22 446, is amended by striking ‘‘and (11)’’ and inserting

23 ‘‘(11), and (12)’’.
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1 SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION

2 NOT SUBJECT TO AUTOMATIC STAY.

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

4 amended by inserting after paragraph (27), as amended

5 by sections 224, 303, 311, 401, 718, and 907, the fol6 lowing:

7 ‘‘(28) under subsection (a), of the exclusion by

8 the Secretary of Health and Human Services of the

9 debtor from participation in the medicare program

10 or any other Federal health care program (as de11 fined in section 1128B(f) of the Social Security Act

12 pursuant to title XI or XVIII of such Act).’’.

13 TITLE XII—TECHNICAL

14 AMENDMENTS

15 SEC. 1201. DEFINITIONS.

16 Section 101 of title 11, United States Code, as here17 inbefore amended by this Act, is amended—

18 (1) by striking ‘‘In this title—’’ and inserting

19 ‘‘In this title the following definitions shall apply:’’;

20 (2) in each paragraph, by inserting ‘‘The term’’

21 after the paragraph designation;

22 (3) in paragraph (35)(B), by striking ‘‘para23 graphs (21B) and (33)(A)’’ and inserting ‘‘para24 graphs (23) and (35)’’;
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1 (4) in each of paragraphs (35A), (38), and

2 (54A), by striking ‘‘; and’’ at the end and inserting

3 a period;

4 (5) in paragraph (51B)—

5 (A) by inserting ‘‘who is not a family farm6 er’’ after ‘‘debtor’’ the first place it appears;

7 and

8 (B) by striking ‘‘thereto having aggregate’’

9 and all that follows through the end of the

10 paragraph and inserting a semicolon;

11 (6) by striking paragraph (54) and inserting

12 the following:

13 ‘‘(54) The term ‘transfer’ means—

14 ‘‘(A) the creation of a lien;

15 ‘‘(B) the retention of title as a security in16 terest;

17 ‘‘(C) the foreclosure of a debtor’s equity of

18 redemption; or

19 ‘‘(D) each mode, direct or indirect, abso20 lute or conditional, voluntary or involuntary, of

21 disposing of or parting with—

22 ‘‘(i) property; or

23 ‘‘(ii) an interest in property;’’;

24 (7) by indenting the left margin of paragraph

25 (54A) 2 ems to the right; and
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1 (8) in each of paragraphs (1) through (35), in

2 each of paragraphs (36), (37), (38A), (38B) and

3 (39A), and in each of paragraphs (40) through (55),

4 by striking the semicolon at the end and inserting a

5 period.

6 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

7 Section 104 of title 11, United States Code, is

8 amended by inserting ‘‘522(f)(3),’’ after ‘‘522(d),’’ each

9 place it appears.

10 SEC. 1203. EXTENSION OF TIME.

11 Section 108(c)(2) of title 11, United States Code, is

12 amended by striking ‘‘922’’ and all that follows through

13 ‘‘or’’, and inserting ‘‘922, 1201, or’’.

14 SEC. 1204. TECHNICAL AMENDMENTS.

15 Title 11, United States Code, is amended—

16 (1) in section 109(b)(2), by striking ‘‘subsection

17 (c) or (d) of’’; and

18 (2) in section 552(b)(1), by striking ‘‘product’’

19 each place it appears and inserting ‘‘products’’.

20 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR

21 FRAUDULENTLY PREPARE BANKRUPTCY PE22 TITIONS.

23 Section 110(j)(4) of title 11, United States Code, as

24 so redesignated by section 221, is amended by striking

25 ‘‘attorney’s’’ and inserting ‘‘attorneys’ ’’.
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1 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES2 SIONAL PERSONS.

3 Section 328(a) of title 11, United States Code, is

4 amended by inserting ‘‘on a fixed or percentage fee basis,’’

5 after ‘‘hourly basis,’’.

6 SEC. 1207. EFFECT OF CONVERSION.

7 Section 348(f)(2) of title 11, United States Code, is

8 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the

9 first place it appears.

10 SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

11 Section 503(b)(4) of title 11, United States Code, is

12 amended by inserting ‘‘subparagraph (A), (B), (C), (D),

13 or (E) of’’ before ‘‘paragraph (3)’’.

14 SEC. 1209. EXCEPTIONS TO DISCHARGE.

15 Section 523 of title 11, United States Code, as

16 amended by sections 215 and 314, is amended—

17 (1) by transferring paragraph (15), as added by

18 section 304(e) of Public Law 103–394 (108 Stat.

19 4133), so as to insert such paragraph after sub20 section (a)(14A);

21 (2) in subsection (a)(9), by striking ‘‘motor ve22 hicle’’ and inserting ‘‘motor vehicle, vessel, or air23 craft’’; and

24 (3) in subsection (e), by striking ‘‘a insured’’

25 and inserting ‘‘an insured’’.
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1 SEC. 1210. EFFECT OF DISCHARGE.

2 Section 524(a)(3) of title 11, United States Code, is

3 amended by striking ‘‘section 523’’ and all that follows

4 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1),

5 or 1328(a)(1), or that’’.

6 SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT.

8 Section 525(c) of title 11, United States Code, is

9 amended—

10 (1) in paragraph (1), by inserting ‘‘student’’ be11 fore ‘‘grant’’ the second place it appears; and

12 (2) in paragraph (2), by striking ‘‘the program

13 operated under part B, D, or E of’’ and inserting

14 ‘‘any program operated under’’.

15 SEC. 1212. PROPERTY OF THE ESTATE.

16 Section 541(b)(4)(B)(ii) of title 11, United States

17 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’.

18 SEC. 1213. PREFERENCES.

19 (a) IN GENERAL.—Section 547 of title 11, United

20 States Code, as amended by section 201, is amended—

21 (1) in subsection (b), by striking ‘‘subsection

22 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and

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

24 ‘‘(i) If the trustee avoids under subsection (b) a

25 transfer made between 90 days and 1 year before the date

26 of the filing of the petition, by the debtor to an entity
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1 that is not an insider for the benefit of a creditor that

2 is an insider, such transfer shall be considered to be avoid3 ed under this section only with respect to the creditor that

4 is an insider.’’.

5 (b) APPLICABILITY.—The amendments made by this

6 section shall apply to any case that is pending or com7 menced on or after the date of enactment of this Act.

8 SEC. 1214. POSTPETITION TRANSACTIONS.

9 Section 549(c) of title 11, United States Code, is

10 amended—

11 (1) by inserting ‘‘an interest in’’ after ‘‘transfer

12 of’’ each place it appears;

13 (2) by striking ‘‘such property’’ and inserting

14 ‘‘such real property’’; and

15 (3) by striking ‘‘the interest’’ and inserting

16 ‘‘such interest’’.

17 SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE.

18 Section 726(b) of title 11, United States Code, is

19 amended by striking ‘‘1009,’’.

20 SEC. 1216. GENERAL PROVISIONS.

21 Section 901(a) of title 11, United States Code, is

22 amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’.
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1 SEC. 1217. ABANDONMENT OF RAILROAD LINE.

2 Section 1170(e)(1) of title 11, United States Code,

3 is amended by striking ‘‘section 11347’’ and inserting

4 ‘‘section 11326(a)’’.

5 SEC. 1218. CONTENTS OF PLAN.

6 Section 1172(c)(1) of title 11, United States Code,

7 is amended by striking ‘‘section 11347’’ and inserting

8 ‘‘section 11326(a)’’.

9 SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS.

10 Section 1334(d) of title 28, United States Code, is

11 amended—

12 (1) by striking ‘‘made under this subsection’’

13 and inserting ‘‘made under subsection (c)’’; and

14 (2) by striking ‘‘This subsection’’ and inserting

15 ‘‘Subsection (c) and this subsection’’.

16 SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR

17 RULE.

18 Section 156(a) of title 18, United States Code, is

19 amended—

20 (1) in the first undesignated paragraph—

21 (A) by inserting ‘‘(1) the term’’ before

22 ‘‘ ‘bankruptcy’’; and

23 (B) by striking the period at the end and

24 inserting ‘‘; and’’; and

25 (2) in the second undesignated paragraph—
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1 (A) by inserting ‘‘(2) the term’’ before

2 ‘‘ ‘document’’; and

3 (B) by striking ‘‘this title’’ and inserting

4 ‘‘title 11’’.

5 SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE

6 CORPORATIONS.

7 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d)

8 of title 11, United States Code, is amended by striking

9 ‘‘only’’ and all that follows through the end of the sub10 section and inserting ‘‘only—

11 ‘‘(1) in accordance with applicable nonbank12 ruptcy law that governs the transfer of property by

13 a corporation or trust that is not a moneyed, busi14 ness, or commercial corporation or trust; and

15 ‘‘(2) to the extent not inconsistent with any re16 lief granted under subsection (c), (d), (e), or (f) of

17 section 362.’’.

18 (b) CONFIRMATION OF PLAN OF REORGANIZA19 TION.—Section 1129(a) of title 11, United States Code,

20 as amended by sections 213 and 321, is amended by add21 ing at the end the following:

22 ‘‘(16) All transfers of property of the plan shall

23 be made in accordance with any applicable provi24 sions of nonbankruptcy law that govern the transfer

25 of property by a corporation or trust that is not a
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1 moneyed, business, or commercial corporation or

2 trust.’’.

3 (c) TRANSFER OF PROPERTY.—Section 541 of title

4 11, United States Code, as amended by section 225, is

5 amended by adding at the end the following:

6 ‘‘(f) Notwithstanding any other provision of this title,

7 property that is held by a debtor that is a corporation de8 scribed in section 501(c)(3) of the Internal Revenue Code

9 of 1986 and exempt from tax under section 501(a) of such

10 Code may be transferred to an entity that is not such a

11 corporation, but only under the same conditions as would

12 apply if the debtor had not filed a case under this title.’’.

13 (d) APPLICABILITY.—The amendments made by this

14 section shall apply to a case pending under title 11, United

15 States Code, on the date of enactment of this Act, or filed

16 under that title on or after that date of enactment, except

17 that the court shall not confirm a plan under chapter 11

18 of title 11, United States Code, without considering

19 whether this section would substantially affect the rights

20 of a party in interest who first acquired rights with respect

21 to the debtor after the date of the filing of the petition.

22 The parties who may appear and be heard in a proceeding

23 under this section include the attorney general of the State

24 in which the debtor is incorporated, was formed, or does

25 business.
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1 (e) RULE OF CONSTRUCTION.—Nothing in this sec2 tion shall be construed to require the court in which a

3 case under chapter 11 of title 11, United States Code, is

4 pending to remand or refer any proceeding, issue, or con5 troversy to any other court or to require the approval of

6 any other court for the transfer of property.

7 SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SE8 CURITY INTERESTS.

9 Section 547(c)(3)(B) of title 11, United States Code,

10 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

11 SEC. 1223. BANKRUPTCY JUDGESHIPS.

12 (a) SHORT TITLE.—This section may be cited as the

13 ‘‘Bankruptcy Judgeship Act of 2003’’.

14 (b) TEMPORARY JUDGESHIPS.—

15 (1) APPOINTMENTS.—The following bankruptcy

16 judges shall be appointed in the manner prescribed

17 in section 152(a)(1) of title 28, United States Code,

18 for the appointment of bankruptcy judges provided

19 for in section 152(a)(2) of such title:

20 (A) One additional bankruptcy judge for

21 the eastern district of California.

22 (B) Three additional bankruptcy judges for

23 the central district of California.

24 (C) Four additional bankruptcy judges for

25 the district of Delaware.
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1 (D) Two additional bankruptcy judges for

2 the southern district of Florida.

3 (E) One additional bankruptcy judge for

4 the southern district of Georgia.

5 (F) Three additional bankruptcy judges for

6 the district of Maryland.

7 (G) One additional bankruptcy judge for

8 the eastern district of Michigan.

9 (H) One additional bankruptcy judge for

10 the southern district of Mississippi.

11 (I) One additional bankruptcy judge for

12 the district of New Jersey.

13 (J) One additional bankruptcy judge for

14 the eastern district of New York.

15 (K) One additional bankruptcy judge for

16 the northern district of New York.

17 (L) One additional bankruptcy judge for

18 the southern district of New York.

19 (M) One additional bankruptcy judge for

20 the eastern district of North Carolina.

21 (N) One additional bankruptcy judge for

22 the eastern district of Pennsylvania.

23 (O) One additional bankruptcy judge for

24 the middle district of Pennsylvania.
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1 (P) One additional bankruptcy judge for

2 the district of Puerto Rico.

3 (Q) One additional bankruptcy judge for

4 the western district of Tennessee.

5 (R) One additional bankruptcy judge for

6 the eastern district of Virginia.

7 (S) One additional bankruptcy judge for

8 the district of South Carolina.

9 (T) One additional bankruptcy judge for

10 the district of Nevada.

11 (2) VACANCIES.—

12 (A) DISTRICTS WITH SINGLE APPOINT13 MENTS.—Except as provided in subparagraphs

14 (B), (C), (D), and (E), the first vacancy occur15 ring in the office of bankruptcy judge in each

16 of the judicial districts set forth in paragraph

17 (1)—

18 (i) occurring 5 years or more after the

19 appointment date of the bankruptcy judge

20 appointed under paragraph (1) to such of21 fice; and

22 (ii) resulting from the death, retire23 ment, resignation, or removal of a bank24 ruptcy judge;

25 shall not be filled.
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1 (B) CENTRAL DISTRICT OF CALIFORNIA.—

2 The 1st, 2d, and 3d vacancies in the office of

3 bankruptcy judge in the central district of

4 California—

5 (i) occurring 5 years or more after the

6 respective 1st, 2d, and 3d appointment

7 dates of the bankruptcy judges appointed

8 under paragraph (1)(B); and

9 (ii) resulting from the death, retire10 ment, resignation, or removal of a bank11 ruptcy judge;

12 shall not be filled.

13 (C) DISTRICT OF DELAWARE.—The 1st,

14 2d, 3d, and 4th vacancies in the office of bank15 ruptcy judge in the district of Delaware—

16 (i) occurring 5 years or more after the

17 respective 1st, 2d, 3d, and 4th appoint18 ment dates of the bankruptcy judges ap19 pointed under paragraph (1)(F); and

20 (ii) resulting from the death, retire21 ment, resignation, or removal of a bank22 ruptcy judge;

23 shall not be filled.

24 (D) SOUTHERN DISTRICT OF FLORIDA.—

25 The 1st and 2d vacancies in the office of bank-
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1 ruptcy judge in the southern district of

2 Florida—

3 (i) occurring 5 years or more after the

4 respective 1st and 2d appointment dates of

5 the bankruptcy judges appointed under

6 paragraph (1)(D); and

7 (ii) resulting from the death, retire8 ment, resignation, or removal of a bank9 ruptcy judge;

10 shall not be filled.

11 (E) DISTRICT OF MARYLAND.—The 1st,

12 2d, and 3d vacancies in the office of bankruptcy

13 judge in the district of Maryland—

14 (i) occurring 5 years or more after the

15 respective 1st, 2d, and 3d appointment

16 dates of the bankruptcy judges appointed

17 under paragraph (1)(F); and

18 (ii) resulting from the death, retire19 ment, resignation, or removal of a bank20 ruptcy judge;

21 shall not be filled.

22 (c) EXTENSIONS.—

23 (1) IN GENERAL.—The temporary office of

24 bankruptcy judges authorized for the northern dis25 trict of Alabama, the district of Delaware, the dis-
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1 trict of Puerto Rico, and the eastern district of Ten2 nessee under paragraphs (1), (3), (7), and (9) of

3 section 3(a) of the Bankruptcy Judgeship Act of

4 1992 (28 U.S.C. 152 note) are extended until the

5 first vacancy occurring in the office of a bankruptcy

6 judge in the applicable district resulting from the

7 death, retirement, resignation, or removal of a bank8 ruptcy judge and occurring 5 years after the date of

9 the enactment of this Act.

10 (2) APPLICABILITY OF OTHER PROVISIONS.—

11 All other provisions of section 3 of the Bankruptcy

12 Judgeship Act of 1992 (28 U.S.C. 152 note) remain

13 applicable to the temporary office of bankruptcy

14 judges referred to in this subsection.

15 (d) TECHNICAL AMENDMENTS.—Section 152(a) of

16 title 28, United States Code, is amended—

17 (1) in paragraph (1), by striking the first sen18 tence and inserting the following: ‘‘Each bankruptcy

19 judge to be appointed for a judicial district, as pro20 vided in paragraph (2), shall be appointed by the

21 court of appeals of the United States for the circuit

22 in which such district is located.’’; and

23 (2) in paragraph (2)—
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1 (A) in the item relating to the middle dis2 trict of Georgia, by striking ‘‘2’’ and inserting

3 ‘‘3’’; and

4 (B) in the collective item relating to the

5 middle and southern districts of Georgia, by

6 striking ‘‘Middle and Southern . . . . . . 1’’.

7 (e) EFFECTIVE DATE.—The amendments made by

8 this section shall take effect on the date of the enactment

9 of this Act.

10 SEC. 1224. COMPENSATING TRUSTEES.

11 Section 1326 of title 11, United States Code, is

12 amended—

13 (1) in subsection (b)—

14 (A) in paragraph (1), by striking ‘‘and’’;

15 (B) in paragraph (2), by striking the pe16 riod at the end and inserting ‘‘; and’’; and

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

18 ‘‘(3) if a chapter 7 trustee has been allowed

19 compensation due to the conversion or dismissal of

20 the debtor’s prior case pursuant to section 707(b),

21 and some portion of that compensation remains un22 paid in a case converted to this chapter or in the

23 case dismissed under section 707(b) and refiled

24 under this chapter, the amount of any such unpaid

25 compensation, which shall be paid monthly—
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1 ‘‘(A) by prorating such amount over the

2 remaining duration of the plan; and

3 ‘‘(B) by monthly payments not to exceed

4 the greater of—

5 ‘‘(i) $25; or

6 ‘‘(ii) the amount payable to unsecured

7 nonpriority creditors, as provided by the

8 plan, multiplied by 5 percent, and the re9 sult divided by the number of months in

10 the plan.’’; and

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

12 ‘‘(d) Notwithstanding any other provision of this

13 title—

14 ‘‘(1) compensation referred to in subsection

15 (b)(3) is payable and may be collected by the trustee

16 under that paragraph, even if such amount has been

17 discharged in a prior case under this title; and

18 ‘‘(2) such compensation is payable in a case

19 under this chapter only to the extent permitted by

20 subsection (b)(3).’’.

21 SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11,

22 UNITED STATES CODE.

23 Section 362(b)(18) of title 11, United States Code,

24 is amended to read as follows:
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1 ‘‘(18) under subsection (a) of the creation or

2 perfection of a statutory lien for an ad valorem

3 property tax, or a special tax or special assessment

4 on real property whether or not ad valorem, imposed

5 by a governmental unit, if such tax or assessment

6 comes due after the date of the filing of the peti7 tion;’’.

8 SEC. 1226. JUDICIAL EDUCATION.

9 The Director of the Federal Judicial Center, in con10 sultation with the Director of the Executive Office for

11 United States Trustees, shall develop materials and con12 duct such training as may be useful to courts in imple13 menting this Act and the amendments made by this Act,

14 including the requirements relating to the means test

15 under section 707(b), and reaffirmation agreements under

16 section 524, of title 11 of the United States Code, as

17 amended by this Act.

18 SEC. 1227. RECLAMATION.

19 (a) RIGHTS AND POWERS OF THE TRUSTEE.—Sec20 tion 546(c) of title 11, United States Code, is amended

21 to read as follows:

22 ‘‘(c)(1) Except as provided in subsection (d) of this

23 section and in section 507(c), and subject to the prior

24 rights of a holder of a security interest in such goods or

25 the proceeds thereof, the rights and powers of the trustee
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1 under sections 544(a), 545, 547, and 549 are subject to

2 the right of a seller of goods that has sold goods to the

3 debtor, in the ordinary course of such seller’s business,

4 to reclaim such goods if the debtor has received such goods

5 while insolvent, within 45 days before the date of the com6 mencement of a case under this title, but such seller may

7 not reclaim such goods unless such seller demands in writ8 ing reclamation of such goods—

9 ‘‘(A) not later than 45 days after the date of

10 receipt of such goods by the debtor; or

11 ‘‘(B) not later than 20 days after the date of

12 commencement of the case, if the 45-day period ex13 pires after the commencement of the case.

14 ‘‘(2) If a seller of goods fails to provide notice in the

15 manner described in paragraph (1), the seller still may

16 assert the rights contained in section 503(b)(9).’’.

17 (b) ADMINISTRATIVE EXPENSES.—Section 503(b) of

18 title 11, United States Code, as amended by sections 445

19 and 1103, is amended by adding at the end the following:

20 ‘‘(9) the value of any goods received by the

21 debtor within 20 days before the date of commence22 ment of a case under this title in which the goods

23 have been sold to the debtor in the ordinary course

24 of such debtor’s business.’’.
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1 SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO

2 THE COURT.

3 (a) CHAPTER 7 CASES.—The court shall not grant

4 a discharge in the case of an individual who is a debtor

5 in a case under chapter 7 of title 11, United States Code,

6 unless requested tax documents have been provided to the

7 court.

8 (b) CHAPTER 11 AND CHAPTER 13 CASES.—The

9 court shall not confirm a plan of reorganization in the case

10 of an individual under chapter 11 or 13 of title 11, United

11 States Code, unless requested tax documents have been

12 filed with the court.

13 (c) DOCUMENT RETENTION.—The court shall de14 stroy documents submitted in support of a bankruptcy

15 claim not sooner than 3 years after the date of the conclu16 sion of a case filed by an individual under chapter 7, 11,

17 or 13 of title 11, United States Code. In the event of a

18 pending audit or enforcement action, the court may extend

19 the time for destruction of such requested tax documents.

20 SEC. 1229. ENCOURAGING CREDITWORTHINESS.

21 (a) SENSE OF THE CONGRESS.—It is the sense of the

22 Congress that—

23 (1) certain lenders may sometimes offer credit

24 to consumers indiscriminately, without taking steps

25 to ensure that consumers are capable of repaying

26 the resulting debt, and in a manner which may en-
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1 courage certain consumers to accumulate additional

2 debt; and

3 (2) resulting consumer debt may increasingly be

4 a major contributing factor to consumer insolvency.

5 (b) STUDY REQUIRED.—The Board of Governors of

6 the Federal Reserve System (hereafter in this section re7 ferred to as the ‘‘Board’’) shall conduct a study of—

8 (1) consumer credit industry practices of solic9 iting and extending credit—

10 (A) indiscriminately;

11 (B) without taking steps to ensure that

12 consumers are capable of repaying the resulting

13 debt; and

14 (C) in a manner that encourages con15 sumers to accumulate additional debt; and

16 (2) the effects of such practices on consumer

17 debt and insolvency.

18 (c) REPORT AND REGULATIONS.—Not later than 12

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

20 Board—

21 (1) shall make public a report on its findings

22 with respect to the indiscriminate solicitation and

23 extension of credit by the credit industry;

24 (2) may issue regulations that would require

25 additional disclosures to consumers; and
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1 (3) may take any other actions, consistent with

2 its existing statutory authority, that the Board finds

3 necessary to ensure responsible industrywide prac4 tices and to prevent resulting consumer debt and in5 solvency.

6 SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMP7 TION.

8 Section 541(b) of title 11, United States Code, as

9 amended by sections 225 and 323, is amended by adding

10 after paragraph (7), as added by section 323, the fol11 lowing:

12 ‘‘(8) subject to subchapter III of chapter 5, any

13 interest of the debtor in property where the debtor

14 pledged or sold tangible personal property (other

15 than securities or written or printed evidences of in16 debtedness or title) as collateral for a loan or ad17 vance of money given by a person licensed under law

18 to make such loans or advances, where—

19 ‘‘(A) the tangible personal property is in

20 the possession of the pledgee or transferee;

21 ‘‘(B) the debtor has no obligation to repay

22 the money, redeem the collateral, or buy back

23 the property at a stipulated price; and

24 ‘‘(C) neither the debtor nor the trustee

25 have exercised any right to redeem provided
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1 under the contract or State law, in a timely

2 manner as provided under State law and sec3 tion 108(b); or’’.

4 SEC. 1231. TRUSTEES.

5 (a) SUSPENSION AND TERMINATION OF PANEL

6 TRUSTEES AND STANDING TRUSTEES.—Section 586(d) of

7 title 28, United States Code, is amended—

8 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

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

10 ‘‘(2) A trustee whose appointment under subsection

11 (a)(1) or under subsection (b) is terminated or who ceases

12 to be assigned to cases filed under title 11, United States

13 Code, may obtain judicial review of the final agency deci14 sion by commencing an action in the district court of the

15 United States for the district for which the panel to which

16 the trustee is appointed under subsection (a)(1), or in the

17 district court of the United States for the district in which

18 the trustee is appointed under subsection (b) resides, after

19 first exhausting all available administrative remedies,

20 which if the trustee so elects, shall also include an admin21 istrative hearing on the record. Unless the trustee elects

22 to have an administrative hearing on the record, the trust23 ee shall be deemed to have exhausted all administrative

24 remedies for purposes of this paragraph if the agency fails

25 to make a final agency decision within 90 days after the
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1 trustee requests administrative remedies. The Attorney

2 General shall prescribe procedures to implement this para3 graph. The decision of the agency shall be affirmed by

4 the district court unless it is unreasonable and without

5 cause based on the administrative record before the agen6 cy.’’.

7 (b) EXPENSES OF STANDING TRUSTEES.—Section

8 586(e) of title 28, United States Code, is amended by add9 ing at the end the following:

10 ‘‘(3) After first exhausting all available administra11 tive remedies, an individual appointed under subsection

12 (b) may obtain judicial review of final agency action to

13 deny a claim of actual, necessary expenses under this sub14 section by commencing an action in the district court of

15 the United States for the district where the individual re16 sides. The decision of the agency shall be affirmed by the

17 district court unless it is unreasonable and without cause

18 based upon the administrative record before the agency.

19 ‘‘(4) The Attorney General shall prescribe procedures

20 to implement this subsection.’’.

21 SEC. 1232. BANKRUPTCY FORMS.

22 Section 2075 of title 28, United States Code, is

23 amended by adding at the end the following:

24 ‘‘The bankruptcy rules promulgated under this sec25 tion shall prescribe a form for the statement required
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1 under section 707(b)(2)(C) of title 11 and may provide

2 general rules on the content of such statement.’’.

3 SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO

4 COURTS OF APPEALS.

5 (a) APPEALS.—Section 158 of title 28, United States

6 Code, is amended—

7 (1) in subsection (c)(1), by striking ‘‘Subject to

8 subsection (b),’’ and inserting ‘‘Subject to sub9 sections (b) and (d)(2),’’; and

10 (2) in subsection (d)—

11 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

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

13 ‘‘(2)(A) The appropriate court of appeals shall have

14 jurisdiction of appeals described in the first sentence of

15 subsection (a) if the bankruptcy court, the district court,

16 or the bankruptcy appellate panel involved, acting on its

17 own motion or on the request of a party to the judgment,

18 order, or decree described in such first sentence, or all the

19 appellants and appellees (if any) acting jointly, certify

20 that—

21 ‘‘(i) the judgment, order, or decree involves a

22 question of law as to which there is no controlling

23 decision of the court of appeals for the circuit or of

24 the Supreme Court of the United States, or involves

25 a matter of public importance;
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1 ‘‘(ii) the judgment, order, or decree involves a

2 question of law requiring resolution of conflicting de3 cisions; or

4 ‘‘(iii) an immediate appeal from the judgment,

5 order, or decree may materially advance the progress

6 of the case or proceeding in which the appeal is

7 taken;

8 and if the court of appeals authorizes the direct appeal

9 of the judgment, order, or decree.

10 ‘‘(B) If the bankruptcy court, the district court, or

11 the bankruptcy appellate panel—

12 ‘‘(i) on its own motion or on the request of a

13 party, determines that a circumstance specified in

14 clause (i), (ii), or (iii) of subparagraph (A) exists; or

15 ‘‘(ii) receives a request made by a majority of

16 the appellants and a majority of appellees (if any)

17 to make the certification described in subparagraph

18 (A);

19 then the bankruptcy court, the district court, or the bank20 ruptcy appellate panel shall make the certification de21 scribed in subparagraph (A).

22 ‘‘(C) The parties may supplement the certification

23 with a short statement of the basis for the certification.

24 ‘‘(D) An appeal under this paragraph does not stay

25 any proceeding of the bankruptcy court, the district court,
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1 or the bankruptcy appellate panel from which the appeal

2 is taken, unless the respective bankruptcy court, district

3 court, or bankruptcy appellate panel, or the court of ap4 peals in which the appeal in pending, issues a stay of such

5 proceeding pending the appeal.

6 ‘‘(E) Any request under subparagraph (B) for certifi7 cation shall be made not later than 60 days after the entry

8 of the judgment, order, or decree.’’.

9 (b) PROCEDURAL RULES.—

10 (1) TEMPORARY APPLICATION.—A provision of

11 this subsection shall apply to appeals under section

12 158(d)(2) of title 28, United States Code, until a

13 rule of practice and procedure relating to such provi14 sion and such appeals is promulgated or amended

15 under chapter 131 of such title.

16 (2) CERTIFICATION.—A district court, a bank17 ruptcy court, or a bankruptcy appellate panel may

18 make a certification under section 158(d)(2) of title

19 28, United States Code, only with respect to matters

20 pending in the respective bankruptcy court, district

21 court, or bankruptcy appellate panel.

22 (3) PROCEDURE.—Subject to any other provi23 sion of this subsection, an appeal authorized by the

24 court of appeals under section 158(d)(2)(A) of title

25 28, United States Code, shall be taken in the man-
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1 ner prescribed in subdivisions (a)(1), (b), (c), and

2 (d) of rule 5 of the Federal Rules of Appellate Pro3 cedure. For purposes of subdivision (a)(1) of rule

4 5—

5 (A) a reference in such subdivision to a

6 district court shall be deemed to include a ref7 erence to a bankruptcy court and a bankruptcy

8 appellate panel, as appropriate; and

9 (B) a reference in such subdivision to the

10 parties requesting permission to appeal to be

11 served with the petition shall be deemed to in12 clude a reference to the parties to the judg13 ment, order, or decree from which the appeal is

14 taken.

15 (4) FILING OF PETITION WITH ATTACHMENT.—

16 A petition requesting permission to appeal, that is

17 based on a certification made under subparagraph

18 (A) or (B) of section 158(d)(2) shall—

19 (A) be filed with the circuit clerk not later

20 than 10 days after the certification is entered

21 on the docket of the bankruptcy court, the dis22 trict court, or the bankruptcy appellate panel

23 from which the appeal is taken; and

24 (B) have attached a copy of such certifi25 cation.
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1 (5) REFERENCES IN RULE 5.—For purposes of

2 rule 5 of the Federal Rules of Appellate

3 Procedure—

4 (A) a reference in such rule to a district

5 court shall be deemed to include a reference to

6 a bankruptcy court and to a bankruptcy appel7 late panel; and

8 (B) a reference in such rule to a district

9 clerk shall be deemed to include a reference to

10 a clerk of a bankruptcy court and to a clerk of

11 a bankruptcy appellate panel.

12 (6) APPLICATION OF RULES.—The Federal

13 Rules of Appellate Procedure shall apply in the

14 courts of appeals with respect to appeals authorized

15 under section 158(d)(2)(A), to the extent relevant

16 and as if such appeals were taken from final judg17 ments, orders, or decrees of the district courts or

18 bankruptcy appellate panels exercising appellate ju19 risdiction under subsection (a) or (b) of section 158

20 of title 28, United States Code.

21 SEC. 1234. INVOLUNTARY CASES.

22 (a) AMENDMENTS.—Section 303 of title 11, United

23 States Code, is amended—

24 (1) in subsection (b)(1), by—
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1 (A) inserting ‘‘as to liability or amount’’

2 after ‘‘bona fide dispute’’; and

3 (B) striking ‘‘if such claims’’ and inserting

4 ‘‘if such noncontingent, undisputed claims’’;

5 and

6 (2) in subsection (h)(1), by inserting ‘‘as to li7 ability or amount’’ before the semicolon at the end.

8 (b) EFFECTIVE DATE; APPLICATION OF AMEND9 MENTS.—This section and the amendments made by this

10 section shall take effect on the date of the enactment of

11 this Act and shall apply with respect to cases commenced

12 under title 11 of the United States Code before, on, and

13 after such date.

14 SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES

15 AS NONDISCHARGEABLE DEBT.

16 Section 523(a) of title 11, United States Code, as

17 amended by section 314, is amended by inserting after

18 paragraph (14A) the following:

19 ‘‘(14B) incurred to pay fines or penalties im20 posed under Federal election law;’’.
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1 TITLE XIII—CONSUMER CREDIT

2 DISCLOSURE

3 SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END

4 CREDIT PLAN.

5 (a) MINIMUM PAYMENT DISCLOSURES.—Section

6 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b))

7 is amended by adding at the end the following:

8 ‘‘(11)(A) In the case of an open end credit plan

9 that requires a minimum monthly payment of not

10 more than 4 percent of the balance on which finance

11 charges are accruing, the following statement, lo12 cated on the front of the billing statement, disclosed

13 clearly and conspicuously: ‘Minimum Payment

14 Warning: Making only the minimum payment will

15 increase the interest you pay and the time it takes

16 to repay your balance. For example, making only the

17 typical 2% minimum monthly payment on a balance

18 of $1,000 at an interest rate of 17% would take 88

19 months to repay the balance in full. For an estimate

20 of the time it would take to repay your balance,

21 making only minimum payments, call this toll-free

22 number: llllll.’ (the blank space to be

23 filled in by the creditor).

24 ‘‘(B) In the case of an open end credit plan

25 that requires a minimum monthly payment of more
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1 than 4 percent of the balance on which finance

2 charges are accruing, the following statement, in a

3 prominent location on the front of the billing state4 ment, disclosed clearly and conspicuously: ‘Minimum

5 Payment Warning: Making only the required min6 imum payment will increase the interest you pay and

7 the time it takes to repay your balance. Making a

8 typical 5% minimum monthly payment on a balance

9 of $300 at an interest rate of 17% would take 24

10 months to repay the balance in full. For an estimate

11 of the time it would take to repay your balance,

12 making only minimum monthly payments, call this

13 toll-free number: llllll.’ (the blank space to

14 be filled in by the creditor).

15 ‘‘(C) Notwithstanding subparagraphs (A) and

16 (B), in the case of a creditor with respect to which

17 compliance with this title is enforced by the Federal

18 Trade Commission, the following statement, in a

19 prominent location on the front of the billing state20 ment, disclosed clearly and conspicuously: ‘Minimum

21 Payment Warning: Making only the required min22 imum payment will increase the interest you pay and

23 the time it takes to repay your balance. For exam24 ple, making only the typical 5% minimum monthly

25 payment on a balance of $300 at an interest rate of
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1 17% would take 24 months to repay the balance in

2 full. For an estimate of the time it would take to

3 repay your balance, making only minimum monthly

4 payments, call the Federal Trade Commission at

5 this toll-free number: llllll.’ (the blank

6 space to be filled in by the creditor). A creditor who

7 is subject to this subparagraph shall not be subject

8 to subparagraph (A) or (B).

9 ‘‘(D) Notwithstanding subparagraph (A), (B),

10 or (C), in complying with any such subparagraph, a

11 creditor may substitute an example based on an in12 terest rate that is greater than 17 percent. Any

13 creditor that is subject to subparagraph (B) may

14 elect to provide the disclosure required under sub15 paragraph (A) in lieu of the disclosure required

16 under subparagraph (B).

17 ‘‘(E) The Board shall, by rule, periodically re18 calculate, as necessary, the interest rate and repay19 ment period under subparagraphs (A), (B), and (C).

20 ‘‘(F)(i) The toll-free telephone number disclosed

21 by a creditor or the Federal Trade Commission

22 under subparagraph (A), (B), or (G), as appro23 priate, may be a toll-free telephone number estab24 lished and maintained by the creditor or the Federal

25 Trade Commission, as appropriate, or may be a toll-
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1 free telephone number established and maintained

2 by a third party for use by the creditor or multiple

3 creditors or the Federal Trade Commission, as ap4 propriate. The toll-free telephone number may con5 nect consumers to an automated device through

6 which consumers may obtain information described

7 in subparagraph (A), (B), or (C), by inputting infor8 mation using a touch-tone telephone or similar de9 vice, if consumers whose telephones are not equipped

10 to use such automated device are provided the op11 portunity to be connected to an individual from

12 whom the information described in subparagraph

13 (A), (B), or (C), as applicable, may be obtained. A

14 person that receives a request for information de15 scribed in subparagraph (A), (B), or (C) from an ob16 ligor through the toll-free telephone number dis17 closed under subparagraph (A), (B), or (C), as ap18 plicable, shall disclose in response to such request

19 only the information set forth in the table promul20 gated by the Board under subparagraph (H)(i).

21 ‘‘(ii)(I) The Board shall establish and maintain

22 for a period not to exceed 24 months following the

23 effective date of the Bankruptcy Abuse Prevention

24 and Consumer Protection Act of 2003, a toll-free

25 telephone number, or provide a toll-free telephone
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1 number established and maintained by a third party,

2 for use by creditors that are depository institutions

3 (as defined in section 3 of the Federal Deposit In4 surance Act), including a Federal credit union or

5 State credit union (as defined in section 101 of the

6 Federal Credit Union Act), with total assets not ex7 ceeding $250,000,000. The toll-free telephone num8 ber may connect consumers to an automated device

9 through which consumers may obtain information

10 described in subparagraph (A) or (B), as applicable,

11 by inputting information using a touch-tone tele12 phone or similar device, if consumers whose tele13 phones are not equipped to use such automated de14 vice are provided the opportunity to be connected to

15 an individual from whom the information described

16 in subparagraph (A) or (B), as applicable, may be

17 obtained. A person that receives a request for infor18 mation described in subparagraph (A) or (B) from

19 an obligor through the toll-free telephone number

20 disclosed under subparagraph (A) or (B), as applica21 ble, shall disclose in response to such request only

22 the information set forth in the table promulgated

23 by the Board under subparagraph (H)(i). The dollar

24 amount contained in this subclause shall be adjusted
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1 according to an indexing mechanism established by

2 the Board.

3 ‘‘(II) Not later than 6 months prior to the expi4 ration of the 24-month period referenced in sub5 clause (I), the Board shall submit to the Committee

6 on Banking, Housing, and Urban Affairs of the Sen7 ate and the Committee on Financial Services of the

8 House of Representatives a report on the program

9 described in subclause (I).

10 ‘‘(G) The Federal Trade Commission shall es11 tablish and maintain a toll-free number for the pur12 pose of providing to consumers the information re13 quired to be disclosed under subparagraph (C).

14 ‘‘(H) The Board shall—

15 ‘‘(i) establish a detailed table illustrating

16 the approximate number of months that it

17 would take to repay an outstanding balance if

18 a consumer pays only the required minimum

19 monthly payments and if no other advances are

20 made, which table shall clearly present stand21 ardized information to be used to disclose the

22 information required to be disclosed under sub23 paragraph (A), (B), or (C), as applicable;

24 ‘‘(ii) establish the table required under

25 clause (i) by assuming—
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1 ‘‘(I) a significant number of different

2 annual percentage rates;

3 ‘‘(II) a significant number of different

4 account balances;

5 ‘‘(III) a significant number of dif6 ferent minimum payment amounts; and

7 ‘‘(IV) that only minimum monthly

8 payments are made and no additional ex9 tensions of credit are obtained; and

10 ‘‘(iii) promulgate regulations that provide

11 instructional guidance regarding the manner in

12 which the information contained in the table es13 tablished under clause (i) should be used in re14 sponding to the request of an obligor for any

15 information required to be disclosed under sub16 paragraph (A), (B), or (C).

17 ‘‘(I) The disclosure requirements of this para18 graph do not apply to any charge card account, the

19 primary purpose of which is to require payment of

20 charges in full each month.

21 ‘‘(J) A creditor that maintains a toll-free tele22 phone number for the purpose of providing cus23 tomers with the actual number of months that it will

24 take to repay the customer’s outstanding balance is
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1 not subject to the requirements of subparagraph (A)

2 or (B).

3 ‘‘(K) A creditor that maintains a toll-free tele4 phone number for the purpose of providing cus5 tomers with the actual number of months that it will

6 take to repay an outstanding balance shall include

7 the following statement on each billing statement:

8 ‘Making only the minimum payment will increase

9 the interest you pay and the time it takes to repay

10 your balance. For more information, call this toll11 free number: llll.’ (the blank space to be filled

12 in by the creditor).’’.

13 (b) REGULATORY IMPLEMENTATION.—

14 (1) IN GENERAL.—The Board of Governors of

15 the Federal Reserve System (hereafter in this title

16 referred to as the ‘‘Board’’) shall promulgate regula17 tions implementing the requirements of section

18 127(b)(11) of the Truth in Lending Act, as added

19 by subsection (a) of this section.

20 (2) EFFECTIVE DATE.—Section 127(b)(11) of

21 the Truth in Lending Act, as added by subsection

22 (a) of this section, and the regulations issued under

23 paragraph (1) of this subsection shall not take effect

24 until the later of—
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1 (A) 18 months after the date of enactment

2 of this Act; or

3 (B) 12 months after the publication of

4 such final regulations by the Board.

5 (c) STUDY OF FINANCIAL DISCLOSURES.—

6 (1) IN GENERAL.—The Board may conduct a

7 study to determine the types of information available

8 to potential borrowers from consumer credit lending

9 institutions regarding factors qualifying potential

10 borrowers for credit, repayment requirements, and

11 the consequences of default.

12 (2) FACTORS FOR CONSIDERATION.—In con13 ducting a study under paragraph (1), the Board

14 should, in consultation with the other Federal bank15 ing agencies (as defined in section 3 of the Federal

16 Deposit Insurance Act), the National Credit Union

17 Administration, and the Federal Trade Commission,

18 consider the extent to which—

19 (A) consumers, in establishing new credit

20 arrangements, are aware of their existing pay21 ment obligations, the need to consider those ob22 ligations in deciding to take on new credit, and

23 how taking on excessive credit can result in fi24 nancial difficulty;
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1 (B) minimum periodic payment features

2 offered in connection with open end credit plans

3 impact consumer default rates;

4 (C) consumers make only the required

5 minimum payment under open end credit plans;

6 (D) consumers are aware that making only

7 required minimum payments will increase the

8 cost and repayment period of an open end cred9 it obligation; and

10 (E) the availability of low minimum pay11 ment options is a cause of consumers experi12 encing financial difficulty.

13 (3) REPORT TO CONGRESS.—Findings of the

14 Board in connection with any study conducted under

15 this subsection shall be submitted to Congress. Such

16 report shall also include recommendations for legis17 lative initiatives, if any, of the Board, based on its

18 findings.

19 SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN20 SIONS SECURED BY A DWELLING.

21 (a) OPEN END CREDIT EXTENSIONS.—

22 (1) CREDIT APPLICATIONS.—Section

23 127A(a)(13) of the Truth in Lending Act (15

24 U.S.C. 1637a(a)(13)) is amended—
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1 (A) by striking ‘‘CONSULTATION OF TAX

2 ADVISER.—A statement that the’’ and inserting

3 the following: ‘‘TAX DEDUCTIBILITY.—A state4 ment that—

5 ‘‘(A) the’’; and

6 (B) by striking the period at the end and

7 inserting the following: ‘‘; and

8 ‘‘(B) in any case in which the extension of

9 credit exceeds the fair market value (as defined

10 under the Internal Revenue Code of 1986) of

11 the dwelling, the interest on the portion of the

12 credit extension that is greater than the fair

13 market value of the dwelling is not tax deduct14 ible for Federal income tax purposes.’’.

15 (2) CREDIT ADVERTISEMENTS.—Section 147(b)

16 of the Truth in Lending Act (15 U.S.C. 1665b(b))

17 is amended—

18 (A) by striking ‘‘If any’’ and inserting the

19 following:

20 ‘‘(1) IN GENERAL.—If any’’; and

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

22 ‘‘(2) CREDIT IN EXCESS OF FAIR MARKET

23 VALUE.—Each advertisement described in subsection

24 (a) that relates to an extension of credit that may

25 exceed the fair market value of the dwelling, and
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1 which advertisement is disseminated in paper form

2 to the public or through the Internet, as opposed to

3 by radio or television, shall include a clear and con4 spicuous statement that—

5 ‘‘(A) the interest on the portion of the

6 credit extension that is greater than the fair

7 market value of the dwelling is not tax deduct8 ible for Federal income tax purposes; and

9 ‘‘(B) the consumer should consult a tax

10 adviser for further information regarding the

11 deductibility of interest and charges.’’.

12 (b) NON-OPEN END CREDIT EXTENSIONS.—

13 (1) CREDIT APPLICATIONS.—Section 128 of the

14 Truth in Lending Act (15 U.S.C. 1638) is

15 amended—

16 (A) in subsection (a), by adding at the end

17 the following:

18 ‘‘(15) In the case of a consumer credit trans19 action that is secured by the principal dwelling of

20 the consumer, in which the extension of credit may

21 exceed the fair market value of the dwelling, a clear

22 and conspicuous statement that—

23 ‘‘(A) the interest on the portion of the

24 credit extension that is greater than the fair
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1 market value of the dwelling is not tax deduct2 ible for Federal income tax purposes; and

3 ‘‘(B) the consumer should consult a tax

4 adviser for further information regarding the

5 deductibility of interest and charges.’’; and

6 (B) in subsection (b), by adding at the end

7 the following:

8 ‘‘(3) In the case of a credit transaction described in

9 paragraph (15) of subsection (a), disclosures required by

10 that paragraph shall be made to the consumer at the time

11 of application for such extension of credit.’’.

12 (2) CREDIT ADVERTISEMENTS.—Section 144 of

13 the Truth in Lending Act (15 U.S.C. 1664) is

14 amended by adding at the end the following:

15 ‘‘(e) Each advertisement to which this section applies

16 that relates to a consumer credit transaction that is se17 cured by the principal dwelling of a consumer in which

18 the extension of credit may exceed the fair market value

19 of the dwelling, and which advertisement is disseminated

20 in paper form to the public or through the Internet, as

21 opposed to by radio or television, shall clearly and con22 spicuously state that—

23 ‘‘(1) the interest on the portion of the credit ex24 tension that is greater than the fair market value of
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1 the dwelling is not tax deductible for Federal income

2 tax purposes; and

3 ‘‘(2) the consumer should consult a tax adviser

4 for further information regarding the deductibility of

5 interest and charges.’’.

6 (c) REGULATORY IMPLEMENTATION.—

7 (1) IN GENERAL.—The Board shall promulgate

8 regulations implementing the amendments made by

9 this section.

10 (2) EFFECTIVE DATE.—Regulations issued

11 under paragraph (1) shall not take effect until the

12 later of—

13 (A) 12 months after the date of enactment

14 of this Act; or

15 (B) 12 months after the date of publica16 tion of such final regulations by the Board.

17 SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY

18 RATES’’.

19 (a) INTRODUCTORY RATE DISCLOSURES.—Section

20 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c))

21 is amended by adding at the end the following:

22 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRO23 DUCTORY RATES’.—

24 ‘‘(A) IN GENERAL.—Except as provided in

25 subparagraph (B), an application or solicitation
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1 to open a credit card account and all pro2 motional materials accompanying such applica3 tion or solicitation for which a disclosure is re4 quired under paragraph (1), and that offers a

5 temporary annual percentage rate of interest,

6 shall—

7 ‘‘(i) use the term ‘introductory’ in im8 mediate proximity to each listing of the

9 temporary annual percentage rate applica10 ble to such account, which term shall ap11 pear clearly and conspicuously;

12 ‘‘(ii) if the annual percentage rate of

13 interest that will apply after the end of the

14 temporary rate period will be a fixed rate,

15 state in a clear and conspicuous manner in

16 a prominent location closely proximate to

17 the first listing of the temporary annual

18 percentage rate (other than a listing of the

19 temporary annual percentage rate in the

20 tabular format described in section

21 122(c)), the time period in which the intro22 ductory period will end and the annual

23 percentage rate that will apply after the

24 end of the introductory period; and
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1 ‘‘(iii) if the annual percentage rate

2 that will apply after the end of the tem3 porary rate period will vary in accordance

4 with an index, state in a clear and con5 spicuous manner in a prominent location

6 closely proximate to the first listing of the

7 temporary annual percentage rate (other

8 than a listing in the tabular format pre9 scribed by section 122(c)), the time period

10 in which the introductory period will end

11 and the rate that will apply after that,

12 based on an annual percentage rate that

13 was in effect within 60 days before the

14 date of mailing the application or solicita15 tion.

16 ‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of

17 subparagraph (A) do not apply with respect to

18 any listing of a temporary annual percentage

19 rate on an envelope or other enclosure in which

20 an application or solicitation to open a credit

21 card account is mailed.

22 ‘‘(C) CONDITIONS FOR INTRODUCTORY

23 RATES.—An application or solicitation to open

24 a credit card account for which a disclosure is

25 required under paragraph (1), and that offers a
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1 temporary annual percentage rate of interest

2 shall, if that rate of interest is revocable under

3 any circumstance or upon any event, clearly

4 and conspicuously disclose, in a prominent man5 ner on or with such application or solicitation—

6 ‘‘(i) a general description of the cir7 cumstances that may result in the revoca8 tion of the temporary annual percentage

9 rate; and

10 ‘‘(ii) if the annual percentage rate

11 that will apply upon the revocation of the

12 temporary annual percentage rate—

13 ‘‘(I) will be a fixed rate, the an14 nual percentage rate that will apply

15 upon the revocation of the temporary

16 annual percentage rate; or

17 ‘‘(II) will vary in accordance with

18 an index, the rate that will apply after

19 the temporary rate, based on an an20 nual percentage rate that was in ef21 fect within 60 days before the date of

22 mailing the application or solicitation.

23 ‘‘(D) DEFINITIONS.—In this paragraph—

24 ‘‘(i) the terms ‘temporary annual per25 centage rate of interest’ and ‘temporary
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1 annual percentage rate’ mean any rate of

2 interest applicable to a credit card account

3 for an introductory period of less than 1

4 year, if that rate is less than an annual

5 percentage rate that was in effect within

6 60 days before the date of mailing the ap7 plication or solicitation; and

8 ‘‘(ii) the term ‘introductory period’

9 means the maximum time period for which

10 the temporary annual percentage rate may

11 be applicable.

12 ‘‘(E) RELATION TO OTHER DISCLOSURE

13 REQUIREMENTS.—Nothing in this paragraph

14 may be construed to supersede subsection (a) of

15 section 122, or any disclosure required by para16 graph (1) or any other provision of this sub17 section.’’.

18 (b) REGULATORY IMPLEMENTATION.—

19 (1) IN GENERAL.—The Board shall promulgate

20 regulations implementing the requirements of section

21 127(c)(6) of the Truth in Lending Act, as added by

22 this section.

23 (2) EFFECTIVE DATE.—Section 127(c)(6) of

24 the Truth in Lending Act, as added by this section,
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1 and regulations issued under paragraph (1) of this

2 subsection shall not take effect until the later of—

3 (A) 12 months after the date of enactment

4 of this Act; or

5 (B) 12 months after the date of publica6 tion of such final regulations by the Board.

7 SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.

8 (a) INTERNET-BASED SOLICITATIONS.—Section

9 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c))

10 is amended by adding at the end the following:

11 ‘‘(7) INTERNET-BASED SOLICITATIONS.—

12 ‘‘(A) IN GENERAL.—In any solicitation to

13 open a credit card account for any person under

14 an open end consumer credit plan using the

15 Internet or other interactive computer service,

16 the person making the solicitation shall clearly

17 and conspicuously disclose—

18 ‘‘(i) the information described in sub19 paragraphs (A) and (B) of paragraph (1);

20 and

21 ‘‘(ii) the information described in

22 paragraph (6).

23 ‘‘(B) FORM OF DISCLOSURE.—The disclo24 sures required by subparagraph (A) shall be—
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1 ‘‘(i) readily accessible to consumers in

2 close proximity to the solicitation to open

3 a credit card account; and

4 ‘‘(ii) updated regularly to reflect the

5 current policies, terms, and fee amounts

6 applicable to the credit card account.

7 ‘‘(C) DEFINITIONS.—For purposes of this

8 paragraph—

9 ‘‘(i) the term ‘Internet’ means the

10 international computer network of both

11 Federal and non-Federal interoperable

12 packet switched data networks; and

13 ‘‘(ii) the term ‘interactive computer

14 service’ means any information service,

15 system, or access software provider that

16 provides or enables computer access by

17 multiple users to a computer server, in18 cluding specifically a service or system that

19 provides access to the Internet and such

20 systems operated or services offered by li21 braries or educational institutions.’’.

22 (b) REGULATORY IMPLEMENTATION.—

23 (1) IN GENERAL.—The Board shall promulgate

24 regulations implementing the requirements of section
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1 127(c)(7) of the Truth in Lending Act, as added by

2 this section.

3 (2) EFFECTIVE DATE.—The amendment made

4 by subsection (a) and the regulations issued under

5 paragraph (1) of this subsection shall not take effect

6 until the later of—

7 (A) 12 months after the date of enactment

8 of this Act; or

9 (B) 12 months after the date of publica10 tion of such final regulations by the Board.

11 SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT

12 DEADLINES AND PENALTIES.

13 (a) DISCLOSURES RELATED TO LATE PAYMENT

14 DEADLINES AND PENALTIES.—Section 127(b) of the

15 Truth in Lending Act (15 U.S.C. 1637(b)) is amended

16 by adding at the end the following:

17 ‘‘(12) If a late payment fee is to be imposed

18 due to the failure of the obligor to make payment on

19 or before a required payment due date, the following

20 shall be stated clearly and conspicuously on the bill21 ing statement:

22 ‘‘(A) The date on which that payment is

23 due or, if different, the earliest date on which

24 a late payment fee may be charged.
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1 ‘‘(B) The amount of the late payment fee

2 to be imposed if payment is made after such

3 date.’’.

4 (b) REGULATORY IMPLEMENTATION.—

5 (1) IN GENERAL.—The Board shall promulgate

6 regulations implementing the requirements of section

7 127(b)(12) of the Truth in Lending Act, as added

8 by this section.

9 (2) EFFECTIVE DATE.—The amendment made

10 by subsection (a) and regulations issued under para11 graph (1) of this subsection shall not take effect

12 until the later of—

13 (A) 12 months after the date of enactment

14 of this Act; or

15 (B) 12 months after the date of publica16 tion of such final regulations by the Board.

17 SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL18 URE TO INCUR FINANCE CHARGES.

19 (a) PROHIBITION ON CERTAIN ACTIONS FOR FAIL20 URE TO INCUR FINANCE CHARGES.—Section 127 of the

21 Truth in Lending Act (15 U.S.C. 1637) is amended by

22 adding at the end the following:

23 ‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAIL24 URE TO INCUR FINANCE CHARGES.—A creditor of an ac25 count under an open end consumer credit plan may not
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1 terminate an account prior to its expiration date solely be2 cause the consumer has not incurred finance charges on

3 the account. Nothing in this subsection shall prohibit a

4 creditor from terminating an account for inactivity in 3

5 or more consecutive months.’’.

6 (b) REGULATORY IMPLEMENTATION.—

7 (1) IN GENERAL.—The Board shall promulgate

8 regulations implementing the requirements of section

9 127(h) of the Truth in Lending Act, as added by

10 this section.

11 (2) EFFECTIVE DATE.—The amendment made

12 by subsection (a) and regulations issued under para13 graph (1) of this subsection shall not take effect

14 until the later of—

15 (A) 12 months after the date of enactment

16 of this Act; or

17 (B) 12 months after the date of publica18 tion of such final regulations by the Board.

19 SEC. 1307. DUAL USE DEBIT CARD.

20 (a) REPORT.—The Board may conduct a study of,

21 and present to Congress a report containing its analysis

22 of, consumer protections under existing law to limit the

23 liability of consumers for unauthorized use of a debit card

24 or similar access device. Such report, if submitted, shall
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1 include recommendations for legislative initiatives, if any,

2 of the Board, based on its findings.

3 (b) CONSIDERATIONS.—In preparing a report under

4 subsection (a), the Board may include—

5 (1) the extent to which section 909 of the Elec6 tronic Fund Transfer Act (15 U.S.C. 1693g), as in

7 effect at the time of the report, and the imple8 menting regulations promulgated by the Board to

9 carry out that section provide adequate unauthorized

10 use liability protection for consumers;

11 (2) the extent to which any voluntary industry

12 rules have enhanced or may enhance the level of pro13 tection afforded consumers in connection with such

14 unauthorized use liability; and

15 (3) whether amendments to the Electronic

16 Fund Transfer Act (15 U.S.C. 1693 et seq.), or re17 visions to regulations promulgated by the Board to

18 carry out that Act, are necessary to further address

19 adequate protection for consumers concerning unau20 thorized use liability.

21 SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX22 TENDED TO DEPENDENT STUDENTS.

23 (a) STUDY.—

24 (1) IN GENERAL.—The Board shall conduct a

25 study regarding the impact that the extension of
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1 credit described in paragraph (2) has on the rate of

2 cases filed under title 11 of the United States Code.

3 (2) EXTENSION OF CREDIT.—The extension of

4 credit described in this paragraph is the extension of

5 credit to individuals who are—

6 (A) claimed as dependents for purposes of

7 the Internal Revenue Code of 1986; and

8 (B) enrolled within 1 year of successfully

9 completing all required secondary education re10 quirements and on a full-time basis, in postsec11 ondary educational institutions.

12 (b) REPORT.—Not later than 1 year after the date

13 of enactment of this Act, the Board shall submit to the

14 Senate and the House of Representatives a report summa15 rizing the results of the study conducted under subsection

16 (a).

17 SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS.

18 (a) REGULATIONS.—Not later than 6 months after

19 the date of enactment of this Act, the Board, in consulta20 tion with the other Federal banking agencies (as defined

21 in section 3 of the Federal Deposit Insurance Act), the

22 National Credit Union Administration Board, and the

23 Federal Trade Commission, shall promulgate regulations

24 to provide guidance regarding the meaning of the term

25 ‘‘clear and conspicuous’’, as used in subparagraphs (A),
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1 (B), and (C) of section 127(b)(11) and clauses (ii) and

2 (iii) of section 127(c)(6)(A) of the Truth in Lending Act.

3 (b) EXAMPLES.—Regulations promulgated under

4 subsection (a) shall include examples of clear and con5 spicuous model disclosures for the purposes of disclosures

6 required by the provisions of the Truth in Lending Act

7 referred to in subsection (a).

8 (c) STANDARDS.—In promulgating regulations under

9 this section, the Board shall ensure that the clear and con10 spicuous standard required for disclosures made under the

11 provisions of the Truth in Lending Act referred to in sub12 section (a) can be implemented in a manner which results

13 in disclosures which are reasonably understandable and

14 designed to call attention to the nature and significance

15 of the information in the notice.

16 TITLE XIV—GENERAL EFFEC17 TIVE DATE; APPLICATION OF

18 AMENDMENTS

19 SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMEND20 MENTS.

21 (a) EFFECTIVE DATE.—Except as otherwise provided

22 in this Act, this Act and the amendments made by this

23 Act shall take effect 180 days after the date of enactment

24 of this Act.

25 (b) APPLICATION OF AMENDMENTS.—
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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this Act and paragraph (2), the amend3 ments made by this Act shall not apply with respect

4 to cases commenced under title 11, United States

5 Code, before the effective date of this Act.

6 (2) CERTAIN LIMITATIONS APPLICABLE TO

7 DEBTORS.—The amendments made by sections 308,

8 322, and 330 shall apply with respect to cases com9 menced under title 11, United States Code, on or

10 after the date of the enactment of this Act.

11 TITLE XV—PREVENTING COR12 PORATE BANKRUPTCY ABUSE

13 SEC. 1501. EMPLOYEE WAGE AND BENEFIT PRIORITIES.

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

15 amended—

16 (1) in paragraph (3) by striking ‘‘90’’ and in17 serting ‘‘180’’, and

18 (2) in paragraphs (3) and (4) by striking

19 ‘‘$4,000’’ and inserting ‘‘$10,000’’.

20 SEC. 1502. FRAUDULENT TRANSFERS AND OBLIGATIONS.

21 Section 548 of title 11, United States Code, is

22 amended—

23 (1) in subsections (a) and (b) by striking ‘‘one

24 year’’ and inserting ‘‘2 years’’,

25 (2) in subsection (a)—
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1 (A) by inserting ‘‘(including any transfer

2 to or for the benefit of an insider under an em3 ployment contract)’’ after ‘‘transfer’’ the 1st

4 place it appears, and

5 (B) by inserting ‘‘(including any obligation

6 to or for the benefit of an insider under an em7 ployment contract)’’ after ‘‘obligation’’ the 1st

8 place it appears, and

9 (3) in subsection (a)(1)(B)(ii)—

10 (A) in subclause (II) by striking ‘‘or’’ at

11 the end,

12 (B) in subclause (III) by striking the pe13 riod at the end and inserting ‘‘; or’’, and

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

15 ‘‘(IV) made such transfer to or for the benefit

16 of an insider, or incurred such obligation to or for

17 the benefit of an insider, under an employment con18 tract and not in the ordinary course of business.’’.

19 SEC. 1503. PAYMENT OF INSURANCE BENEFITS TO RETIRED

20 EMPLOYEES.

21 Section 1114 of title 11, United States Code, is

22 amended—

23 (1) by redesignating subsection (l) as subsection

24 (m), and
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1 (2) by inserting after subsection (k) the fol2 lowing:

3 ‘‘(l) If the debtor, during the 180-day period ending

4 on the date of the filing of the petition—

5 ‘‘(1) modified retiree benefits; and

6 ‘‘(2) was insolvent on the date such benefits

7 were modified;

8 the court, on motion of a party in interest, and after notice

9 and a hearing, shall issue an order reinstating as of the

10 date the modification was made, such benefits as in effect

11 immediately before such date unless the court finds that

12 the balance of the equities clearly favors such modifica13 tion.’’.

14 SEC. 1504. EFFECTIVE DATE; APPLICATION OF AMEND15 MENTS.

16 (a) EFFECTIVE DATE.—Except as provided in sub17 section (b), this Act and the amendments made by this

18 Act shall take effect on the date of the enactment of this

19 Act.

20 (b) APPLICATION OF AMENDMENTS.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), the amendments made by this Act shall

23 apply only with respect to cases commenced under

24 title 11 of the United States Code on or after the

25 date of the enactment of this Act.
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1 (2) AVOIDANCE PERIOD.—The amendment

2 made by section 3(1) shall apply only with respect

3 to cases commenced under title 11 of the United

4 States Code more than 1 year after the date of the

5 enactment of this Act.

Passed the House of Representatives March 19,

2003.

Attest:

Clerk.