363
respect to each agreement or transaction under 
the master agreement that is referred to in sub-
paragraph (A), (B), (C), (D), (E), (F), (G), or 
(H); or 
‘‘(J) any security agreement or arrange-
ment or other credit enhancement related to 
any agreement or transaction referred to in this 
paragraph, including any guarantee or reim-
bursement obligation by or to a commodity 
broker or financial participant in connection 
with any agreement or transaction referred to 
in this paragraph, but not to exceed the dam-
ages in connection with any such agreement or 
transaction, measured in accordance with sec-
tion 562 of this title;’’. 
(b) DEFINITIONS OF FINANCIAL INSTITUTION, FI-
NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER-
CHANT.—Section 101 of title 11, United States Code, is 
amended—
(1) by striking paragraph (22) and inserting 
the following: 
‘‘(22) ‘financial institution’ means—
‘‘(A) a Federal reserve bank, or an entity 
(domestic or foreign) that is a commercial or 
savings bank, industrial savings bank, savings
364
and loan association, trust company, or receiver 
or conservator for such entity and, when any 
such Federal reserve bank, receiver, conservator 
or entity is acting as agent or custodian for a 
customer in connection with a securities con-
tract (as defined in section 741) such customer; 
or 
‘‘(B) in connection with a securities con-
tract (as defined in section 741) an investment 
company registered under the Investment Com-
pany Act of 1940;’’; 
(2) by inserting after paragraph (22) the fol-
lowing: 
‘‘(22A) ‘financial participant’ means—
‘‘(A) an entity that, at the time it enters 
into a securities contract, commodity contract, 
swap agreement, repurchase agreement, or for-
ward contract, or at the time of the filing of the 
petition, has one or more agreements or trans-
actions described in paragraph (1), (2), (3), (4), 
(5), or (6) of section 561(a) with the debtor or 
any other entity (other than an affiliate) of a 
total gross dollar value of not less than 
$1,000,000,000 in notional or actual principal 
amount outstanding on any day during the pre-
365
vious 15-month period, or has gross mark-to-
market positions of not less than $100,000,000 
(aggregated across counterparties) in one or 
more such agreements or transactions with the 
debtor or any other entity (other than an affil-
iate) on any day during the previous 15-month 
period; or 
‘‘(B) a clearing organization (as defined in 
section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991);’’; and 
(3) by striking paragraph (26) and inserting 
the following: 
‘‘(26) ‘forward contract merchant’ means a 
Federal reserve bank, or an entity the business of 
which consists in whole or in part of entering into 
forward contracts as or with merchants in a com-
modity (as defined in section 761) or any similar 
good, article, service, right, or interest which is pres-
ently or in the future becomes the subject of dealing 
in the forward contract trade;’’. 
(c) DEFINITION OF MASTER NETTING AGREEMENT 
AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec-
tion 101 of title 11, United States Code, is amended by 
inserting after paragraph (38) the following new para-
graphs:
366
‘‘(38A) ‘master netting agreement’—
‘‘(A) means an agreement providing for 
the exercise of rights, including rights of net-
ting, setoff, liquidation, termination, accelera-
tion, or close out, under or in connection with 
one or more contracts that are described in any 
one or more of paragraphs (1) through (5) of 
section 561(a), or any security agreement or ar-
rangement or other credit enhancement related 
to one or more of the foregoing, including any 
guarantee or reimbursement obligation related 
to 1 or more of the foregoing; and 
‘‘(B) if the agreement contains provisions 
relating to agreements or transactions that are 
not contracts described in paragraphs (1) 
through (5) of section 561(a), shall be deemed 
to be a master netting agreement only with re-
spect to those agreements or transactions that 
are described in any one or more of paragraphs 
(1) through (5) of section 561(a); 
‘‘(38B) ‘master netting agreement participant’ 
means an entity that, at any time before the filing 
of the petition, is a party to an outstanding master 
netting agreement with the debtor;’’.
367
(d) SWAP AGREEMENTS, SECURITIES CONTRACTS, 
COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR-
CHASE AGREEMENTS, AND MASTER NETTING AGREE-
MENTS UNDER THE AUTOMATIC-STAY.—
(1) IN GENERAL.—Section 362(b) of title 11, 
United States Code, as amended by sections 224, 
303, 311, 401, and 718, is amended—
(A) 
in 
paragraph 
(6), 
by 
inserting
‘‘, pledged to, under the control of,’’ after ‘‘held 
by’’; 
(B) 
in 
paragraph 
(7), 
by 
inserting
‘‘, pledged to, under the control of,’’ after ‘‘held 
by’’; 
(C) by striking paragraph (17) and insert-
ing the following: 
‘‘(17) under subsection (a), of the setoff by a 
swap participant or financial participant of a mutual 
debt and claim under or in connection with one or 
more swap agreements that constitutes the setoff of 
a claim against the debtor for any payment or other 
transfer of property due from the debtor under or in 
connection with any swap agreement against any 
payment due to the debtor from the swap partici-
pant or financial participant under or in connection 
with any swap agreement or against cash, securities,
368
or other property held by, pledged to, under the con-
trol of, or due from such swap participant or finan-
cial participant to margin, guarantee, secure, or set-
tle any swap agreement;’’; and 
(D) by inserting after paragraph (26) the 
following: 
‘‘(27) under subsection (a), of the setoff by a 
master netting agreement participant of a mutual 
debt and claim under or in connection with one or 
more master netting agreements or any contract or 
agreement subject to such agreements that con-
stitutes the setoff of a claim against the debtor for 
any payment or other transfer of property due from 
the debtor under or in connection with such agree-
ments or any contract or agreement subject to such 
agreements against any payment due to the debtor 
from such master netting agreement participant 
under or in connection with such agreements or any 
contract or agreement subject to such agreements or 
against cash, securities, or other property held by, 
pledged to, under the control of, or due from such 
master netting agreement participant to margin, 
guarantee, secure, or settle such agreements or any 
contract or agreement subject to such agreements, 
to the extent that such participant is eligible to exer-
369
cise such offset rights under paragraph (6), (7), or 
(17) for each individual contract covered by the mas-
ter netting agreement in issue.’’. 
(2) LIMITATION.—Section 362 of title 11, 
United States Code, as amended by sections 106, 
305, 311, and 441, is amended by adding at the end 
the following: 
‘‘(o) The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), 
(7), (17), or (27) of subsection (b) shall not be stayed 
by any order of a court or administrative agency in any 
proceeding under this title.’’. 
(e) LIMITATION
OF AVOIDANCE POWERS UNDER 
MASTER NETTING AGREEMENT.—Section 546 of title 11, 
United States Code, is amended—
(1) in subsection (g) (as added by section 103 
of Public Law 101–311)—
(A) by striking ‘‘under a swap agreement’’; 
(B) by striking ‘‘in connection with a swap 
agreement’’ and inserting ‘‘under or in connec-
tion with any swap agreement’’; and 
(C) by inserting ‘‘or financial participant’’ 
after ‘‘swap participant’’ each place such term 
appears; and 
(2) by adding at the end the following:
370
‘‘(j) Notwithstanding sections 544, 545, 547, 
548(a)(1)(B), and 548(b) the trustee may not avoid a 
transfer made by or to a master netting agreement partici-
pant under or in connection with any master netting 
agreement or any individual contract covered thereby that 
is made before the commencement of the case, except 
under section 548(a)(1)(A) and except to the extent that 
the trustee could otherwise avoid such a transfer made 
under an individual contract covered by such master net-
ting agreement.’’. 
(f) FRAUDULENT TRANSFERS OF MASTER NETTING 
AGREEMENTS.—Section 548(d)(2) of title 11, United 
States Code, is amended—
(1) in subparagraph (C), by striking ‘‘and’’ at 
the end; 
(2) in subparagraph (D), by striking the period 
and inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(E) a master netting agreement participant 
that receives a transfer in connection with a master 
netting agreement or any individual contract covered 
thereby takes for value to the extent of such trans-
fer, except that, with respect to a transfer under any 
individual contract covered thereby, to the extent
371
that such master netting agreement participant oth-
erwise did not take (or is otherwise not deemed to 
have taken) such transfer for value.’’. 
(g) TERMINATION OR ACCELERATION OF SECURITIES 
CONTRACTS.—Section 555 of title 11, United States Code, 
is amended—
(1) by amending the section heading to read as 
follows: 
‘‘§ 555. Contractual right to liquidate, terminate, or 
accelerate a securities contract’’; 
and 
(2) 
in 
the 
first 
sentence, 
by 
striking 
‘‘liquidation’’ and inserting ‘‘liquidation, termi-
nation, or acceleration’’. 
(h) TERMINATION OR ACCELERATION OF COMMOD-
ITIES OR FORWARD CONTRACTS.—Section 556 of title 11, 
United States Code, is amended—
(1) by amending the section heading to read as 
follows: 
‘‘§ 556. Contractual right to liquidate, terminate, or 
accelerate a commodities contract or for-
ward contract’’; 
(2) 
in 
the 
first 
sentence, 
by 
striking 
‘‘liquidation’’ and inserting ‘‘liquidation, termi-
nation, or acceleration’’; and
372
(3) in the second sentence, by striking ‘‘As 
used’’ and all that follows through ‘‘right,’’ and in-
serting ‘‘As used in this section, the term 
‘contractual right’ includes a right set forth in a rule 
or bylaw of a derivatives clearing organization (as 
defined in the Commodity Exchange Act), a multi-
lateral clearing organization (as defined in the Fed-
eral Deposit Insurance Corporation Improvement 
Act of 1991), a national securities exchange, a na-
tional securities association, a securities clearing 
agency, a contract market designated under the 
Commodity Exchange Act, a derivatives transaction 
execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the 
Commodity Exchange Act) or in a resolution of the 
governing board thereof and a right,’’. 
(i) TERMINATION
OR ACCELERATION
OF REPUR-
CHASE AGREEMENTS.—Section 559 of title 11, United 
States Code, is amended—
(1) by amending the section heading to read as 
follows:
373
‘‘§ 559. Contractual right to liquidate, terminate, or 
accelerate a repurchase agreement’’; 
(2) 
in 
the 
first 
sentence, 
by 
striking 
‘‘liquidation’’ and inserting ‘‘liquidation, termi-
nation, or acceleration’’; and 
(3) in the third sentence, by striking ‘‘As used’’ 
and all that follows through ‘‘right,’’ and inserting 
‘‘As used in this section, the term ‘contractual right’ 
includes a right set forth in a rule or bylaw of a de-
rivatives clearing organization (as defined in the 
Commodity Exchange Act), a multilateral clearing 
organization (as defined in the Federal Deposit In-
surance Corporation Improvement Act of 1991), a 
national securities exchange, a national securities as-
sociation, a securities clearing agency, a contract 
market designated under the Commodity Exchange 
Act, a derivatives transaction execution facility reg-
istered under the Commodity Exchange Act, or a 
board of trade (as defined in the Commodity Ex-
change Act) or in a resolution of the governing 
board thereof and a right,’’. 
(j) LIQUIDATION, TERMINATION, OR ACCELERATION 
OF SWAP AGREEMENTS.—Section 560 of title 11, United 
States Code, is amended—
(1) by amending the section heading to read as 
follows:
374
‘‘§ 560. Contractual right to liquidate, terminate, or 
accelerate a swap agreement’’; 
(2) 
in 
the 
first 
sentence, 
by 
striking 
‘‘termination of a swap agreement’’ and inserting 
‘‘liquidation, termination, or acceleration of one or 
more swap agreements’’; 
(3) by striking ‘‘in connection with any swap 
agreement’’ and inserting ‘‘in connection with the 
termination, liquidation, or acceleration of one or 
more swap agreements’’; and 
(4) in the second sentence, by striking ‘‘As 
used’’ and all that follows through ‘‘right,’’ and in-
serting ‘‘As used in this section, the term 
‘contractual right’ includes a right set forth in a rule 
or bylaw of a derivatives clearing organization (as 
defined in the Commodity Exchange Act), a multi-
lateral clearing organization (as defined in the Fed-
eral Deposit Insurance Corporation Improvement 
Act of 1991), a national securities exchange, a na-
tional securities association, a securities clearing 
agency, a contract market designated under the 
Commodity Exchange Act, a derivatives transaction 
execution facility registered under the Commodity 
Exchange Act, or a board of trade (as defined in the 
Commodity Exchange Act) or in a resolution of the 
governing board thereof and a right,’’.
375
(k) LIQUIDATION, TERMINATION, ACCELERATION, OR 
OFFSET UNDER A MASTER NETTING AGREEMENT AND 
ACROSS CONTRACTS.—
(1) IN
GENERAL.—Title 11, United States 
Code, is amended by inserting after section 560 the 
following: 
‘‘§ 561. Contractual right to terminate, liquidate, ac-
celerate, or offset under a master netting 
agreement and across contracts; pro-
ceedings under chapter 15
‘‘(a) Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind speci-
fied in section 365(e)(1), to cause the termination, liquida-
tion, or acceleration of or to offset or net termination val-
ues, payment amounts, or other transfer obligations aris-
ing under or in connection with one or more (or the termi-
nation, liquidation, or acceleration of one or more)—
‘‘(1) securities contracts, as defined in section 
741(7); 
‘‘(2) commodity contracts, as defined in section 
761(4); 
‘‘(3) forward contracts; 
‘‘(4) repurchase agreements; 
‘‘(5) swap agreements; or 
‘‘(6) master netting agreements,
376
shall not be stayed, avoided, or otherwise limited by oper-
ation of any provision of this title or by any order of a 
court or administrative agency in any proceeding under 
this title. 
‘‘(b)(1) A party may exercise a contractual right de-
scribed in subsection (a) to terminate, liquidate, or accel-
erate only to the extent that such party could exercise such 
a right under section 555, 556, 559, or 560 for each indi-
vidual contract covered by the master netting agreement 
in issue. 
‘‘(2) If a debtor is a commodity broker subject to sub-
chapter IV of chapter 7—
‘‘(A) a party may not net or offset an obligation 
to the debtor arising under, or in connection with, 
a commodity contract traded on or subject to the 
rules of a contract market designated under the 
Commodity Exchange Act or a derivatives trans-
action execution facility registered under the Com-
modity Exchange Act against any claim arising 
under, or in connection with, other instruments, con-
tracts, or agreements listed in subsection (a) except 
to the extent that the party has positive net equity 
in the commodity accounts at the debtor, as cal-
culated under such subchapter; and
377
‘‘(B) another commodity broker may not net or 
offset an obligation to the debtor arising under, or 
in connection with, a commodity contract entered 
into or held on behalf of a customer of the debtor 
and traded on or subject to the rules of a contract 
market designated under the Commodity Exchange 
Act or a derivatives transaction execution facility 
registered under the Commodity Exchange Act 
against any claim arising under, or in connection 
with, other instruments, contracts, or agreements 
listed in subsection (a). 
‘‘(3) No provision of subparagraph (A) or (B) of 
paragraph (2) shall prohibit the offset of claims and obli-
gations that arise under—
‘‘(A) a cross-margining agreement or similar 
arrangement that has been approved by the Com-
modity Futures Trading Commission or submitted 
to the Commodity Futures Trading Commission 
under paragraph (1) or (2) of section 5c(c) of the 
Commodity Exchange Act and has not been abro-
gated or rendered ineffective by the Commodity Fu-
tures Trading Commission; or 
‘‘(B) any other netting agreement between a 
clearing organization (as defined in section 761) and
378
another entity that has been approved by the Com-
modity Futures Trading Commission. 
‘‘(c) As used in this section, the term ‘contractual 
right’ includes a right set forth in a rule or bylaw of a 
derivatives clearing organization (as defined in the Com-
modity Exchange Act), a multilateral clearing organiza-
tion (as defined in the Federal Deposit Insurance Cor-
poration Improvement Act of 1991), a national securities 
exchange, a national securities association, a securities 
clearing agency, a contract market designated under the 
Commodity Exchange Act, a derivatives transaction execu-
tion facility registered under the Commodity Exchange 
Act, or a board of trade (as defined in the Commodity 
Exchange Act) or in a resolution of the governing board 
thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by rea-
son of normal business practice. 
‘‘(d) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repur-
chase agreements, swap agreements, or master netting 
agreements shall apply in a case under chapter 15, so that 
enforcement of contractual provisions of such contracts 
and agreements in accordance with their terms will not 
be stayed or otherwise limited by operation of any provi-
sion of this title or by order of a court in any case under
379
this title, and to limit avoidance powers to the same extent 
as in a proceeding under chapter 7 or 11 of this title (such 
enforcement not to be limited based on the presence or 
absence of assets of the debtor in the United States).’’. 
(2) CONFORMING AMENDMENT.—The table of 
sections for chapter 5 of title 11, United States 
Code, is amended by inserting after the item relating 
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.’’.
(l) COMMODITY BROKER LIQUIDATIONS.—Title 11, 
United States Code, is amended by inserting after section 
766 the following:
‘‘§ 767. Commodity broker liquidation and forward 
contract merchants, commodity brokers, 
stockbrokers, financial institutions, fi-
nancial participants, securities clearing 
agencies, swap participants, repo partici-
pants, and master netting agreement par-
ticipants 
‘‘Notwithstanding any other provision of this title, 
the exercise of rights by a forward contract merchant, 
commodity broker, stockbroker, financial institution, fi-
nancial participant, securities clearing agency, swap par-
ticipant, repo participant, or master netting agreement 
participant under this title shall not affect the priority of
380
any unsecured claim it may have after the exercise of such 
rights.’’. 
(m) 
STOCKBROKER
LIQUIDATIONS.—Title 
11, 
United States Code, is amended by inserting after section 
752 the following: 
‘‘§ 753. Stockbroker liquidation and forward contract 
merchants, commodity brokers, stock-
brokers, financial institutions, financial 
participants, securities clearing agencies, 
swap participants, repo participants, and 
master netting agreement participants 
‘‘Notwithstanding any other provision of this title, 
the exercise of rights by a forward contract merchant, 
commodity broker, stockbroker, financial institution, secu-
rities clearing agency, swap participant, repo participant, 
financial participant, or master netting agreement partici-
pant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such 
rights.’’. 
(n) SETOFF.—Section 553 of title 11, United States 
Code, is amended—
(1) in subsection (a)(2)(B)(ii), by inserting be-
fore the semicolon the following: ‘‘(except for a 
setoff of a kind described in section 362(b)(6),
381
362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 
560, or 561)’’; 
(2) in subsection (a)(3)(C), by inserting before 
the period the following: ‘‘(except for a setoff of a 
kind described in section 362(b)(6), 362(b)(7), 
362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561 
of this title)’’; and 
(3) 
in 
subsection 
(b)(1), 
by 
striking 
‘‘362(b)(14),’’ 
and 
inserting 
‘‘362(b)(17), 
362(b)(27), 555, 556, 559, 560, 561,’’. 
(o) SECURITIES
CONTRACTS, COMMODITY
CON-
TRACTS, AND FORWARD CONTRACTS.—Title 11, United 
States Code, is amended—
(1) in section 362(b)(6), by striking ‘‘financial 
institutions,’’ each place such term appears and in-
serting ‘‘financial institution, financial participant,’’; 
(2) in sections 362(b)(7) and 546(f), by insert-
ing ‘‘or financial participant’’ after ‘‘repo partici-
pant’’ each place such term appears; 
(3) in section 546(e), by inserting ‘‘financial 
participant,’’ after ‘‘financial institution,’’; 
(4) in section 548(d)(2)(B), by inserting 
‘‘financial participant,’’ after ‘‘financial institution,’’; 
(5) in section 548(d)(2)(C), by inserting ‘‘or fi-
nancial participant’’ after ‘‘repo participant’’;
382
(6) in section 548(d)(2)(D), by inserting ‘‘or fi-
nancial participant’’ after ‘‘swap participant’’; 
(7) in section 555—
(A) by inserting ‘‘financial participant,’’ 
after ‘‘financial institution,’’; and 
(B) by striking the second sentence and in-
serting the following: ‘‘As used in this section, 
the term ‘contractual right’ includes a right set 
forth in a rule or bylaw of a derivatives clearing 
organization (as defined in the Commodity Ex-
change Act), a multilateral clearing organiza-
tion (as defined in the Federal Deposit Insur-
ance Corporation Improvement Act of 1991), a 
national securities exchange, a national securi-
ties association, a securities clearing agency, a 
contract market designated under the Com-
modity Exchange Act, a derivatives transaction 
execution facility registered under the Com-
modity Exchange Act, or a board of trade (as 
defined in the Commodity Exchange Act), or in 
a resolution of the governing board thereof, and 
a right, whether or not in writing, arising under 
common law, under law merchant, or by reason 
of normal business practice’’;
383
(8) in section 556, by inserting ‘‘, financial par-
ticipant,’’ after ‘‘commodity broker’’; 
(9) in section 559, by inserting ‘‘or financial 
participant’’ after ‘‘repo participant’’ each place 
such term appears; and 
(10) in section 560, by inserting ‘‘or financial 
participant’’ after ‘‘swap participant’’. 
(p) CONFORMING AMENDMENTS.—Title 11, United 
States Code, is amended—
(1) in the table of sections for chapter 5—
(A) by amending the items relating to sec-
tions 555 and 556 to read as follows:
‘‘555. Contractual right to liquidate, terminate, or accelerate a securities con-
tract. 
‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities con-
tract or forward contract.’’;
and 
(B) by amending the items relating to sec-
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 agree-
ment.’’;
and 
(2) in the table of sections for chapter 7—
(A) by inserting after the item relating to 
section 766 the following:
‘‘767. Commodity broker liquidation and forward contract merchants, com-
modity brokers, stockbrokers, financial institutions, financial 
participants, securities clearing agencies, swap participants, 
repo participants, and master netting agreement participants.’’;
384
and 
(B) by inserting after the item relating to 
section 752 the following:
‘‘753. Stockbroker liquidation and forward contract merchants, commodity bro-
kers, stockbrokers, financial institutions, financial participants, 
securities clearing agencies, swap participants, repo partici-
pants, and master netting agreement participants.’’.
SEC. 908. RECORDKEEPING REQUIREMENTS. 
Section 11(e)(8) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(e)(8)) is amended by adding at the 
end the following new subparagraph: 
‘‘(H) RECORDKEEPING REQUIREMENTS.—
The Corporation, in consultation with the ap-
propriate Federal banking agencies, may pre-
scribe regulations requiring more detailed rec-
ordkeeping by any insured depository institu-
tion with respect to qualified financial contracts 
(including market valuations) only if such in-
sured depository institution is in a troubled 
condition (as such term is defined by the Cor-
poration pursuant to section 32).’’. 
SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECU-
TION REQUIREMENT. 
Section 13(e)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1823(e)(2)) is amended to read as follows:
385
‘‘(2) EXEMPTIONS
FROM
CONTEMPORANEOUS 
EXECUTION REQUIREMENT.—An agreement to pro-
vide for the lawful collateralization of—
‘‘(A) deposits of, or other credit extension 
by, a Federal, State, or local governmental enti-
ty, or of any depositor referred to in section 
11(a)(2), including an agreement to provide col-
lateral in lieu of a surety bond; 
‘‘(B) bankruptcy estate funds pursuant to 
section 345(b)(2) of title 11, United States 
Code; 
‘‘(C) extensions of credit, including any 
overdraft, from a Federal reserve bank or Fed-
eral home loan bank; or 
‘‘(D) one or more qualified financial con-
tracts, as defined in section 11(e)(8)(D),
shall not be deemed invalid pursuant to paragraph 
(1)(B) solely because such agreement was not exe-
cuted contemporaneously with the acquisition of the 
collateral or because of pledges, delivery, or substi-
tution of the collateral made in accordance with such 
agreement.’’. 
SEC. 910. DAMAGE MEASURE. 
(a) IN GENERAL.—Title 11, United States Code, is 
amended—
386
(1) by inserting after section 561, as added by 
section 907, the following: 
‘‘§ 562. Timing of damage measurement in connection 
with swap agreements, securities con-
tracts, forward contracts, commodity con-
tracts, repurchase agreements, and mas-
ter netting agreements 
‘‘(a) If the trustee rejects a swap agreement, securi-
ties contract (as defined in section 741), forward contract, 
commodity contract (as defined in section 761), repur-
chase agreement, or master netting agreement pursuant 
to section 365(a), or if a forward contract merchant, 
stockbroker, financial institution, securities clearing agen-
cy, repo participant, financial participant, master netting 
agreement participant, or swap participant liquidates, ter-
minates, or accelerates such contract or agreement, dam-
ages shall be measured as of the earlier of—
‘‘(1) the date of such rejection; or 
‘‘(2) the date or dates of such liquidation, ter-
mination, or acceleration. 
‘‘(b) If there are not any commercially reasonable de-
terminants of value as of any date referred to in para-
graph (1) or (2) of subsection (a), damages shall be meas-
ured as of the earliest subsequent date or dates on which 
there are commercially reasonable determinants of value.
387
‘‘(c) For the purposes of subsection (b), if damages 
are not measured as of the date or dates of rejection, liq-
uidation, termination, or acceleration, and the forward 
contract merchant, stockbroker, financial institution, secu-
rities clearing agency, repo participant, financial partici-
pant, master netting agreement participant, or swap par-
ticipant or the trustee objects to the timing of the meas-
urement of damages—
‘‘(1) the trustee, in the case of an objection by 
a forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo partici-
pant, financial participant, master netting agree-
ment participant, or swap participant; or 
‘‘(2) the forward contract merchant, stock-
broker, financial institution, securities clearing agen-
cy, repo participant, financial participant, master 
netting agreement participant, or swap participant, 
in the case of an objection by the trustee, 
has the burden of proving that there were no commercially 
reasonable determinants of value as of such date or 
dates.’’; and 
(2) in the table of sections for chapter 5, by in-
serting after the item relating to section 561 (as 
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.’’.
388
(b) CLAIMS ARISING FROM REJECTION.—Section 
502(g) of title 11, United States Code, is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and 
(2) by adding at the end the following: 
‘‘(2) A claim for damages calculated in accordance 
with section 562 of this title shall be allowed under sub-
section (a), (b), or (c), or disallowed under subsection (d) 
or (e), as if such claim had arisen before the date of the 
filing of the petition.’’. 
SEC. 911. SIPC STAY. 
Section 5(b)(2) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) EXCEPTION FROM STAY.—
‘‘(i) Notwithstanding section 362 of 
title 11, United States Code, neither the 
filing of an application under subsection 
(a)(3) nor any order or decree obtained by 
SIPC from the court shall operate as a 
stay of any contractual rights of a creditor 
to liquidate, terminate, or accelerate a se-
curities contract, commodity contract, for-
ward contract, repurchase agreement, swap 
agreement, or master netting agreement, 
as those terms are defined in sections 101,
389
741, and 761 of title 11, United States 
Code, to offset or net termination values, 
payment amounts, or other transfer obliga-
tions arising under or in connection with 
one or more of such contracts or agree-
ments, or to foreclose on any cash collat-
eral pledged by the debtor, whether or not 
with respect to one or more of such con-
tracts or agreements. 
‘‘(ii) Notwithstanding clause (i), such 
application, order, or decree may operate 
as a stay of the foreclosure on, or disposi-
tion of, securities collateral pledged by the 
debtor, whether or not with respect to one 
or more of such contracts or agreements, 
securities sold by the debtor under a repur-
chase agreement, or securities lent under a 
securities lending agreement. 
‘‘(iii) As used in this subparagraph, 
the term ‘contractual right’ includes a 
right set forth in a rule or bylaw of a na-
tional securities exchange, a national secu-
rities association, or a securities clearing 
agency, a right set forth in a bylaw of a 
clearing organization or contract market or
390
in a resolution of the governing board 
thereof, and a right, whether or not in 
writing, arising under common law, under 
law merchant, or by reason of normal busi-
ness practice.’’.
TITLE X—PROTECTION OF FAM-
ILY FARMERS AND FAMILY 
FISHERMEN 
SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12. 
(a) REENACTMENT.—
(1) IN
GENERAL.—Chapter 12 of title 11, 
United States Code, as reenacted by section 149 of 
division C of the Omnibus Consolidated and Emer-
gency Supplemental 
Appropriations 
Act, 
1999 
(Public Law 105–277), is hereby reenacted, and as 
here reenacted is amended by this Act. 
(2) EFFECTIVE
DATE.—Subsection (a) shall 
take effect on the date of the enactment of this Act. 
(b) CONFORMING AMENDMENT.—Section 302 of the 
Bankruptcy Judges, United States Trustees, and Family 
Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is 
amended by striking subsection (f).
391
SEC. 1002. DEBT LIMIT INCREASE. 
Section 104(b) of title 11, United States Code, as 
amended by section 226, is amended by inserting 
‘‘101(18),’’ after ‘‘101(3),’’ each place it appears. 
SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL 
UNITS. 
(a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 
11, United States Code, is amended to read as follows: 
‘‘(2) provide for the full payment, in deferred 
cash payments, of all claims entitled to priority 
under section 507, unless—
‘‘(A) the claim is a claim owed to a govern-
mental unit that arises as a result of the sale, 
transfer, exchange, or other disposition of any 
farm asset used in the debtor’s farming oper-
ation, in which case the claim shall be treated 
as an unsecured claim that is not entitled to 
priority under section 507, but the debt shall be 
treated in such manner only if the debtor re-
ceives a discharge; or 
‘‘(B) the holder of a particular claim 
agrees to a different treatment of that claim;’’. 
(b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) 
of title 11, United States Code, as so designated by section 
719, is amended by striking ‘‘a State or local govern-
mental unit’’ and inserting ‘‘any governmental unit’’.
392
(c) EFFECTIVE DATE; APPLICATION
OF AMEND-
MENTS.—This section and the amendments made by this 
section shall take effect on the date of the enactment of 
this Act and shall not apply with respect to cases com-
menced under title 11 of the United States Code before 
such date.
SEC. 1004. DEFINITION OF FAMILY FARMER. 
Section 101(18) of title 11, United States Code, is 
amended—
(1) in subparagraph (A)—
(A) by striking ‘‘$1,500,000’’ and inserting 
‘‘$3,237,000’’; and 
(B) by striking ‘‘80’’ and inserting ‘‘50’’; 
and 
(2) in subparagraph (B)(ii)—
(A) by striking ‘‘$1,500,000’’ and inserting 
‘‘$3,237,000’’; and 
(B) by striking ‘‘80’’ and inserting ‘‘50’’.
SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY 
FARMER AND SPOUSE RECEIVE OVER 50 PER-
CENT OF INCOME FROM FARMING OPER-
ATION IN YEAR PRIOR TO BANKRUPTCY. 
Section 101(18)(A) of title 11, United States Code, 
is amended by striking ‘‘for the taxable year preceding the 
taxable year’’ and inserting the following:
393
‘‘for—
‘‘(i) the taxable year preceding; or 
‘‘(ii) each of the 2d and 3d taxable years 
preceding; 
the taxable year’’.
SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 
DISPOSABLE INCOME. 
(a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of 
title 11, United States Code, is amended—
(1) in subparagraph (A) by striking ‘‘or’’ at the 
end; 
(2) in subparagraph (B) by striking the period 
at the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(C) the value of the property to be distributed 
under the plan in the 3-year period, or such longer 
period as the court may approve under section 
1222(c), beginning on the date that the first dis-
tribution is due under the plan is not less than the 
debtor’s projected disposable income for such pe-
riod.’’. 
(b) MODIFICATION OF PLAN.—Section 1229 of title 
11, United States Code, is amended by adding at the end 
the following: 
‘‘(d) A plan may not be modified under this section—
394
‘‘(1) to increase the amount of any payment 
due before the plan as modified becomes the plan; 
‘‘(2) by anyone except the debtor, based on an 
increase in the debtor’s disposable income, to in-
crease the amount of payments to unsecured credi-
tors required for a particular month so that the ag-
gregate of such payments exceeds the debtor’s dis-
posable income for such month; or 
‘‘(3) in the last year of the plan by anyone ex-
cept the debtor, to require payments that would 
leave the debtor with insufficient funds to carry on 
the farming operation after the plan is completed.’’.
SEC. 1007. FAMILY FISHERMEN. 
(a) DEFINITIONS.—Section 101 of title 11, United 
States Code, is amended—
(1) by inserting after paragraph (7) the fol-
lowing: 
‘‘(7A) ‘commercial fishing operation’ means—
‘‘(A) the catching or harvesting of fish, 
shrimp, lobsters, urchins, seaweed, shellfish, or 
other aquatic species or products of such spe-
cies; or 
‘‘(B) for purposes of section 109 and chap-
ter 12, aquaculture activities consisting of rais-
395
ing for market any species or product described 
in subparagraph (A); 
‘‘(7B) ‘commercial fishing vessel’ means a ves-
sel used by a family fisherman to carry out a com-
mercial fishing operation;’’; and 
(2) by inserting after paragraph (19) the fol-
lowing: 
‘‘(19A) ‘family fisherman’ means—
‘‘(A) an individual or individual and spouse 
engaged in a commercial fishing operation—
‘‘(i) whose aggregate debts do not ex-
ceed $1,500,000 and not less than 80 per-
cent of whose aggregate noncontingent, liq-
uidated debts (excluding a debt for the 
principal residence of such individual or 
such individual and spouse, unless such 
debt arises out of a commercial fishing op-
eration), on the date the case is filed, arise 
out of a commercial fishing operation 
owned or operated by such individual or 
such individual and spouse; and 
‘‘(ii) who receive from such commer-
cial fishing operation more than 50 percent 
of such individual’s or such individual’s 
and spouse’s gross income for the taxable
396
year preceding the taxable year in which 
the case concerning such individual or such 
individual and spouse was filed; or 
‘‘(B) a corporation or partnership—
‘‘(i) in which more than 50 percent of 
the outstanding stock or equity is held 
by—
‘‘(I) 1 family that conducts the 
commercial fishing operation; or 
‘‘(II) 1 family and the relatives 
of the members of such family, and 
such family or such relatives conduct 
the commercial fishing operation; and 
‘‘(ii)(I) more than 80 percent of the 
value of its assets consists of assets related 
to the commercial fishing operation; 
‘‘(II) its aggregate debts do not ex-
ceed $1,500,000 and not less than 80 per-
cent of its aggregate noncontingent, liq-
uidated debts (excluding a debt for 1 
dwelling which is owned by such corpora-
tion or partnership and which a share-
holder or partner maintains as a principal 
residence, unless such debt arises out of a 
commercial fishing operation), on the date
397
the case is filed, arise out of a commercial 
fishing operation owned or operated by 
such corporation or such partnership; and 
‘‘(III) if such corporation issues stock, 
such stock is not publicly traded; 
‘‘(19B) ‘family fisherman with regular annual 
income’ means a family fisherman whose annual in-
come is sufficiently stable and regular to enable such 
family fisherman to make payments under a plan 
under chapter 12 of this title;’’. 
(b) WHO MAY BE A DEBTOR.—Section 109(f) of title 
11, United States Code, is amended by inserting ‘‘or fam-
ily fisherman’’ after ‘‘family farmer’’. 
(c) CHAPTER 12.—Chapter 12 of title 11, United 
States Code, is amended—
(1) in the chapter heading, by inserting ‘‘OR 
FISHERMAN’’ after ‘‘FAMILY FARMER’’; 
(2) in section 1203, by inserting ‘‘or commer-
cial fishing operation’’ after ‘‘farm’’; and 
(3) in section 1206, by striking ‘‘if the property 
is farmland or farm equipment’’ and inserting ‘‘if 
the property is farmland, farm equipment, or prop-
erty used to carry out a commercial fishing oper-
ation (including a commercial fishing vessel)’’.
398
(d) CLERICAL AMENDMENT.—In the table of chap-
ters for title 11, United States Code, the item relating to 
chapter 12, is amended to read as follows:
‘‘12. Adjustments of Debts of a Family Farmer or Family 
Fisherman with Regular Annual Income ..... 1201’’.
(e) Applicability.—Nothing in this section shall 
change, affect, or amend the Fishery Conservation and 
Management Act of 1976 (16 U.S.C. 1801, et seq.). 
TITLE XI—HEALTH CARE AND 
EMPLOYEE BENEFITS 
SEC. 1101. DEFINITIONS. 
(a) HEALTH CARE BUSINESS DEFINED.—Section 
101 of title 11, United States Code, as amended by section 
306, is amended—
(1) by redesignating paragraph (27A) as para-
graph (27B); and 
(2) by inserting after paragraph (27) the fol-
lowing: 
‘‘(27A) ‘health care business’—
‘‘(A) means any public or private entity 
(without regard to whether that entity is orga-
nized for profit or not for profit) that is pri-
marily engaged in offering to the general public 
facilities and services for—
‘‘(i) the diagnosis or treatment of in-
jury, deformity, or disease; and
399
‘‘(ii) surgical, drug treatment, psy-
chiatric, or obstetric care; and 
‘‘(B) includes—
‘‘(i) any—
‘‘(I) general or specialized hos-
pital; 
‘‘(II) ancillary ambulatory, emer-
gency, or surgical treatment facility; 
‘‘(III) hospice; 
‘‘(IV) home health agency; and 
‘‘(V) other health care institution 
that is similar to an entity referred to 
in subclause (I), (II), (III), or (IV); 
and 
‘‘(ii) any long-term care facility, in-
cluding any—
‘‘(I) skilled nursing facility; 
‘‘(II) intermediate care facility; 
‘‘(III) assisted living facility; 
‘‘(IV) home for the aged; 
‘‘(V) domiciliary care facility; and 
‘‘(VI) health care institution that 
is related to a facility referred to in 
subclause (I), (II), (III), (IV), or (V), 
if that institution is primarily engaged
400
in offering room, board, laundry, or 
personal assistance with activities of 
daily living and incidentals to activi-
ties of daily living;’’. 
(b) PATIENT AND PATIENT RECORDS DEFINED.—
Section 101 of title 11, United States Code, is amended 
by inserting after paragraph (40) the following: 
‘‘(40A) ‘patient’ means any person who obtains 
or receives services from a health care business; 
‘‘(40B) ‘patient records’ means any written doc-
ument relating to a patient or a record recorded in 
a magnetic, optical, or other form of electronic me-
dium;’’. 
(c) RULE
OF CONSTRUCTION.—The amendments 
made by subsection (a) of this section shall not affect the 
interpretation of section 109(b) of title 11, United States 
Code. 
SEC. 1102. DISPOSAL OF PATIENT RECORDS. 
(a) IN GENERAL.—Subchapter III of chapter 3 of 
title 11, United States Code, is amended by adding at the 
end the following: 
‘‘§ 351. Disposal of patient records 
‘‘If a health care business commences a case under 
chapter 7, 9, or 11, and the trustee does not have a suffi-
cient amount of funds to pay for the storage of patient
401
records in the manner required under applicable Federal 
or State law, the following requirements shall apply: 
‘‘(1) The trustee shall—
‘‘(A) promptly publish notice, in 1 or more 
appropriate newspapers, that if patient records 
are not claimed by the patient or an insurance 
provider (if applicable law permits the insur-
ance provider to make that claim) by the date 
that is 365 days after the date of that notifica-
tion, the trustee will destroy the patient 
records; and 
‘‘(B) during the first 180 days of the 365-
day period described in subparagraph (A), 
promptly attempt to notify directly each patient 
that is the subject of the patient records and 
appropriate insurance carrier concerning the 
patient records by mailing to the most recent 
known address of that patient, or a family 
member or contact person for that patient, and 
to the appropriate insurance carrier an appro-
priate notice regarding the claiming or dis-
posing of patient records. 
‘‘(2) If, after providing the notification under 
paragraph (1), patient records are not claimed dur-
ing the 365-day period described under that para-
402
graph, the trustee shall mail, by certified mail, at 
the end of such 365-day period a written request to 
each appropriate Federal agency to request permis-
sion from that agency to deposit the patient records 
with that agency, except that no Federal agency is 
required to accept patient records under this para-
graph. 
‘‘(3) If, following the 365-day period described 
in paragraph (2) and after providing the notification 
under paragraph (1), patient records are not claimed 
by a patient or insurance provider, or request is not 
granted by a Federal agency to deposit such records 
with that agency, the trustee shall destroy those 
records by—
‘‘(A) if the records are written, shredding 
or burning the records; or 
‘‘(B) if the records are magnetic, optical, 
or other electronic records, by otherwise de-
stroying those records so that those records 
cannot be retrieved.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter III of chapter 3 of title 11, United States 
Code, is amended by adding at the end the following:
‘‘351. Disposal of patient records.’’.
403
SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS 
OF CLOSING A HEALTH CARE BUSINESS AND 
OTHER ADMINISTRATIVE EXPENSES. 
Section 503(b) of title 11, United States Code, as 
amended by section 445, is amended by adding at the end 
the following: 
‘‘(8) the actual, necessary costs and expenses of 
closing a health care business incurred by a trustee 
or by a Federal agency (as defined in section 551(1) 
of title 5) or a department or agency of a State or 
political subdivision thereof, including any cost or 
expense incurred—
‘‘(A) in disposing of patient records in ac-
cordance with section 351; or 
‘‘(B) in connection with transferring pa-
tients from the health care business that is in 
the process of being closed to another health 
care business; and’’.
SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA-
TIENT ADVOCATE. 
(a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.—
(1) APPOINTMENT OF OMBUDSMAN.—Title 11, 
United States Code, as amended by section 232, is 
amended by inserting after section 332 the fol-
lowing:
404
‘‘§ 333. Appointment of patient care ombudsman 
‘‘(a)(1) If the debtor in a case under chapter 7, 9, 
or 11 is a health care business, the court shall order, not 
later than 30 days after the commencement of the case, 
the appointment of an ombudsman to monitor the quality 
of patient care and to represent the interests of the pa-
tients of the health care business unless the court finds 
that the appointment of such ombudsman is not necessary 
for the protection of patients under the specific facts of 
the case. 
‘‘(2)(A) If the court orders the appointment of an 
ombudsman under paragraph (1), the United States trust-
ee shall appoint 1 disinterested person (other than the 
United States trustee) to serve as such ombudsman. 
‘‘(B) If the debtor is a health care business that pro-
vides long-term care, then the United States trustee may 
appoint the State Long-Term Care Ombudsman appointed 
under the Older Americans Act of 1965 for the State in 
which the case is pending to serve as the ombudsman re-
quired by paragraph (1). 
‘‘(C) If the United States trustee does not appoint 
a State Long-Term Care Ombudsman under subpara-
graph (B), the court shall notify the State Long-Term 
Care Ombudsman appointed under the Older Americans 
Act of 1965 for the State in which the case is pending,
405
of the name and address of the person who is appointed 
under subparagraph (A). 
‘‘(b) An ombudsman appointed under subsection (a) 
shall—
‘‘(1) monitor the quality of patient care pro-
vided to patients of the debtor, to the extent nec-
essary under the circumstances, including inter-
viewing patients and physicians; 
‘‘(2) not later than 60 days after the date of 
appointment, and not less frequently than at 60-day 
intervals thereafter, report to the court, at a hearing 
or in writing, regarding the quality of patient care 
provided to patients of the debtor; and 
‘‘(3) if such ombudsman determines that the 
quality of patient care provided to patients of the 
debtor is declining significantly or is otherwise being 
materially compromised, file with the court a motion 
or a written report, with notice to the parties in in-
terest immediately upon making such determination. 
‘‘(c)(1) An ombudsman appointed under subsection 
(a) shall maintain any information obtained by such om-
budsman under this section that relates to patients 
(including information relating to patient records) as con-
fidential information. Such ombudsman may not review 
confidential patient records unless the court approves such
406
review in advance and imposes restrictions on such om-
budsman to protect the confidentiality of such records. 
‘‘(2) An ombudsman appointed under subsection 
(a)(2)(B) shall have access to patient records consistent 
with authority of such ombudsman under the Older Amer-
icans Act of 1965 and under non-Federal laws governing 
the State Long-Term Care Ombudsman program.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter II of chapter 3 of title 11, 
United States Code, as amended by section 232, is 
amended by adding at the end the following:
‘‘333. Appointment of ombudsman.’’.
(b) 
COMPENSATION
OF
OMBUDSMAN.—Section 
330(a)(1) of title 11, United States Code, is amended—
(1) in the matter preceding subparagraph (A), 
by inserting ‘‘an ombudsman appointed under sec-
tion 333, or’’ before ‘‘a professional person’’; and 
(2) 
in 
subparagraph 
(A), 
by 
inserting 
‘‘ombudsman,’’ before ‘‘professional person’’. 
SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO 
TRANSFER PATIENTS. 
(a) IN GENERAL.—Section 704(a) of title 11, United 
States Code, as amended by sections 102, 219, and 446, 
is amended by adding at the end the following:
407
‘‘(12) use all reasonable and best efforts to 
transfer patients from a health care business that is 
in the process of being closed to an appropriate 
health care business that—
‘‘(A) is in the vicinity of the health care 
business that is closing; 
‘‘(B) provides the patient with services 
that are substantially similar to those provided 
by the health care business that is in the proc-
ess of being closed; and 
‘‘(C) maintains a reasonable quality of 
care.’’. 
(b) CONFORMING AMENDMENT.—Section 1106(a)(1) 
of title 11, United States Code, as amended by section 
446, is amended by striking ‘‘and (11)’’ and inserting 
‘‘(11), and (12)’’. 
SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION 
NOT SUBJECT TO AUTOMATIC STAY. 
Section 362(b) of title 11, United States Code, is 
amended by inserting after paragraph (27), as amended 
by sections 224, 303, 311, 401, 718, and 907, the fol-
lowing: 
‘‘(28) under subsection (a), of the exclusion by 
the Secretary of Health and Human Services of the 
debtor from participation in the medicare program
408
or any other Federal health care program (as de-
fined in section 1128B(f) of the Social Security Act 
pursuant to title XI of such Act or title XVIII of 
such Act.’’. 
TITLE XII—TECHNICAL 
AMENDMENTS 
SEC. 1201. DEFINITIONS. 
Section 101 of title 11, United States Code, as here-
inbefore amended by this Act, is amended—
(1) by striking ‘‘In this title—’’ and inserting 
‘‘In this title the following definitions shall apply:’’; 
(2) in each paragraph, by inserting ‘‘The term’’ 
after the paragraph designation; 
(3) 
in 
paragraph 
(35)(B), 
by 
striking 
‘‘paragraphs (21B) and (33)(A)’’ and inserting 
‘‘paragraphs (23) and (35)’’; 
(4) in each of paragraphs (35A), (38), and 
(54A), by striking ‘‘; and’’ at the end and inserting 
a period; 
(5) in paragraph (51B)—
(A) by inserting ‘‘who is not a family farm-
er’’ after ‘‘debtor’’ the first place it appears; 
and
409
(B) by striking ‘‘thereto having aggregate’’ 
and all that follows through the end of the 
paragraph and inserting a semicolon; 
(6) by striking paragraph (54) and inserting 
the following: 
‘‘(54) The term ‘transfer’ means—
‘‘(A) the creation of a lien; 
‘‘(B) the retention of title as a security in-
terest; 
‘‘(C) the foreclosure of a debtor’s equity of 
redemption; or 
‘‘(D) each mode, direct or indirect, abso-
lute or conditional, voluntary or involuntary, of 
disposing of or parting with—
‘‘(i) property; or 
‘‘(ii) an interest in property;’’; 
(7) by indenting the left margin of paragraph 
(54A) 2 ems to the right; and 
(8) in each of paragraphs (1) through (35), in 
each of paragraphs (36), (37), (38A), (38B) and 
(39A), and in each of paragraphs (40) through (55), 
by striking the semicolon at the end and inserting a 
period.
410
SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS. 
Section 104 of title 11, United States Code, is 
amended by inserting ‘‘522(f)(3),’’ after ‘‘522(d),’’ each 
place it appears. 
SEC. 1203. EXTENSION OF TIME. 
Section 108(c)(2) of title 11, United States Code, is 
amended by striking ‘‘922’’ and all that follows through 
‘‘or’’, and inserting ‘‘922, 1201, or’’. 
SEC. 1204. TECHNICAL AMENDMENTS. 
Title 11, United States Code, is amended—
(1) in section 109(b)(2), by striking ‘‘subsection 
(c) or (d) of’’; and 
(2) in section 552(b)(1), by striking ‘‘product’’ 
each place it appears and inserting ‘‘products’’. 
SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 
FRAUDULENTLY PREPARE BANKRUPTCY PE-
TITIONS. 
Section 110(j)(4) of title 11, United States Code, as 
so redesignated by section 221, is amended by striking 
‘‘attorney’s’’ and inserting ‘‘attorneys’ ’’. 
SEC. 1206. LIMITATION ON COMPENSATION OF PROFES-
SIONAL PERSONS. 
Section 328(a) of title 11, United States Code, is 
amended by inserting ‘‘on a fixed or percentage fee basis,’’ 
after ‘‘hourly basis,’’.
411
SEC. 1207. EFFECT OF CONVERSION. 
Section 348(f)(2) of title 11, United States Code, is 
amended by inserting ‘‘of the estate’’ after ‘‘property’’ the 
first place it appears. 
SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES. 
Section 503(b)(4) of title 11, United States Code, is 
amended by inserting ‘‘subparagraph (A), (B), (C), (D), 
or (E) of’’ before ‘‘paragraph (3)’’. 
SEC. 1209. EXCEPTIONS TO DISCHARGE. 
Section 523 of title 11, United States Code, as 
amended by sections 215 and 314, is amended—
(1) by transferring paragraph (15), as added by 
section 304(e) of Public Law 103–394 (108 Stat. 
4133), so as to insert such paragraph after sub-
section (a)(14A); 
(2) in subsection (a)(9), by striking ‘‘motor ve-
hicle’’ and inserting ‘‘motor vehicle, vessel, or air-
craft’’; and 
(3) in subsection (e), by striking ‘‘a insured’’ 
and inserting ‘‘an insured’’. 
SEC. 1210. EFFECT OF DISCHARGE. 
Section 524(a)(3) of title 11, United States Code, is 
amended by striking ‘‘section 523’’ and all that follows 
through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1), 
or 1328(a)(1), or that’’.
412
SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREAT-
MENT. 
Section 525(c) of title 11, United States Code, is 
amended—
(1) in paragraph (1), by inserting ‘‘student’’ be-
fore ‘‘grant’’ the second place it appears; and 
(2) in paragraph (2), by striking ‘‘the program 
operated under part B, D, or E of’’ and inserting 
‘‘any program operated under’’. 
SEC. 1212. PROPERTY OF THE ESTATE. 
Section 541(b)(4)(B)(ii) of title 11, United States 
Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’. 
SEC. 1213. PREFERENCES. 
(a) IN GENERAL.—Section 547 of title 11, United 
States Code, as amended by section 201, is amended—
(1) in subsection (b), by striking ‘‘subsection 
(c)’’ and inserting ‘‘subsections (c) and (i)’’; and 
(2) by adding at the end the following: 
‘‘(i) If the trustee avoids under subsection (b) a 
transfer made between 90 days and 1 year before the date 
of the filing of the petition, by the debtor to an entity 
that is not an insider for the benefit of a creditor that 
is an insider, such transfer shall be considered to be avoid-
ed under this section only with respect to the creditor that 
is an insider.’’.
413
(b) APPLICABILITY.—The amendments made by this 
section shall apply to any case that is pending or com-
menced on or after the date of enactment of this Act. 
SEC. 1214. POSTPETITION TRANSACTIONS. 
Section 549(c) of title 11, United States Code, is 
amended—
(1) by inserting ‘‘an interest in’’ after ‘‘transfer 
of’’ each place it appears; 
(2) by striking ‘‘such property’’ and inserting 
‘‘such real property’’; and 
(3) by striking ‘‘the interest’’ and inserting 
‘‘such interest’’. 
SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE. 
Section 726(b) of title 11, United States Code, is 
amended by striking ‘‘1009,’’. 
SEC. 1216. GENERAL PROVISIONS. 
Section 901(a) of title 11, United States Code, is 
amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’. 
SEC. 1217. ABANDONMENT OF RAILROAD LINE. 
Section 1170(e)(1) of title 11, United States Code, 
is amended by striking ‘‘section 11347’’ and inserting 
‘‘section 11326(a)’’.
414
SEC. 1218. CONTENTS OF PLAN. 
Section 1172(c)(1) of title 11, United States Code, 
is amended by striking ‘‘section 11347’’ and inserting 
‘‘section 11326(a)’’. 
SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS. 
Section 1334(d) of title 28, United States Code, is 
amended—
(1) by striking ‘‘made under this subsection’’ 
and inserting ‘‘made under subsection (c)’’; and 
(2) by striking ‘‘This subsection’’ and inserting 
‘‘Subsection (c) and this subsection’’. 
SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR 
RULE. 
Section 156(a) of title 18, United States Code, is 
amended—
(1) in the first undesignated paragraph—
(A) by inserting ‘‘(1) the term’’ before 
‘‘ ‘bankruptcy’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(2) in the second undesignated paragraph—
(A) by inserting ‘‘(2) the term’’ before 
‘‘ ‘document’’; and 
(B) by striking ‘‘this title’’ and inserting 
‘‘title 11’’.
415
SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 
CORPORATIONS. 
(a) SALE OF PROPERTY OF ESTATE.—Section 363(d) 
of title 11, United States Code, is amended by striking 
‘‘only’’ and all that follows through the end of the sub-
section and inserting ‘‘only—
‘‘(1) in accordance with applicable nonbank-
ruptcy law that governs the transfer of property by 
a corporation or trust that is not a moneyed, busi-
ness, or commercial corporation or trust; and 
‘‘(2) to the extent not inconsistent with any re-
lief granted under subsection (c), (d), (e), or (f) of 
section 362.’’. 
(b) CONFIRMATION
OF PLAN
FOR REORGANIZA-
TION.—Section 1129(a) of title 11, United States Code, 
as amended by sections 213, 321, and 331, is amended 
by adding at the end the following: 
‘‘(17) All transfers of property of the plan shall 
be made in accordance with any applicable provi-
sions of nonbankruptcy law that govern the transfer 
of property by a corporation or trust that is not a 
moneyed, business, or commercial corporation or 
trust.’’. 
(c) TRANSFER OF PROPERTY.—Section 541 of title 
11, United States Code, as amended by section 225, is 
amended by adding at the end the following:
416
‘‘(f) Notwithstanding any other provision of this title, 
property that is held by a debtor that is a corporation de-
scribed in section 501(c)(3) of the Internal Revenue Code 
of 1986 and exempt from tax under section 501(a) of such 
Code may be transferred to an entity that is not such a 
corporation, but only under the same conditions as would 
apply if the debtor had not filed a case under this title.’’. 
(d) APPLICABILITY.—The amendments made by this 
section shall apply to a case pending under title 11, United 
States Code, on the date of enactment of this Act, or filed 
under that title on or after that date of enactment, except 
that the court shall not confirm a plan under chapter 11 
of title 11, United States Code, without considering 
whether this section would substantially affect the rights 
of a party in interest who first acquired rights with respect 
to the debtor after the date of the petition. The parties 
who may appear and be heard in a proceeding under this 
section include the attorney general of the State in which 
the debtor is incorporated, was formed, or does business. 
(e) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to require the court in which a 
case under chapter 11 of title 11, United States Code, is 
pending to remand or refer any proceeding, issue, or con-
troversy to any other court or to require the approval of 
any other court for the transfer of property.
417
SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SE-
CURITY INTERESTS. 
Section 547(c)(3)(B) of title 11, United States Code, 
is amended by striking ‘‘20’’ and inserting ‘‘30’’.
SEC. 1223. BANKRUPTCY JUDGESHIPS. 
(a) SHORT TITLE.—This section may be cited as the 
‘‘Bankruptcy Judgeship Act of 2002’’. 
(b) TEMPORARY JUDGESHIPS.—
(1) APPOINTMENTS.—The following bankruptcy 
judges shall be appointed in the manner prescribed 
in section 152(a)(1) of title 28, United States Code, 
for the appointment of bankruptcy judges provided 
for in section 152(a)(2) of such title: 
(A) One additional bankruptcy judge for 
the eastern district of California. 
(B) Three additional bankruptcy judges for 
the central district of California. 
(C) Four additional bankruptcy judges for 
the district of Delaware. 
(D) Two additional bankruptcy judges for 
the southern district of Florida. 
(E) One additional bankruptcy judge for 
the southern district of Georgia. 
(F) Three additional bankruptcy judges for 
the district of Maryland.
418
(G) One additional bankruptcy judge for 
the eastern district of Michigan. 
(H) One additional bankruptcy judge for 
the southern district of Mississippi. 
(I) One additional bankruptcy judge for 
the district of New Jersey. 
(J) One additional bankruptcy judge for 
the eastern district of New York. 
(K) One additional bankruptcy judge for 
the northern district of New York. 
(L) One additional bankruptcy judge for 
the southern district of New York. 
(M) One additional bankruptcy judge for 
the eastern district of North Carolina. 
(N) One additional bankruptcy judge for 
the eastern district of Pennsylvania. 
(O) One additional bankruptcy judge for 
the middle district of Pennsylvania. 
(P) One additional bankruptcy judge for 
the district of Puerto Rico. 
(Q) One additional bankruptcy judge for 
the western district of Tennessee. 
(R) One additional bankruptcy judge for 
the eastern district of Virginia.
419
(S) One additional bankruptcy judge for 
the district of South Carolina. 
(T) One additional bankruptcy judge for 
the district of Nevada. 
(2) VACANCIES.—
(A) DISTRICTS
WITH
SINGLE
APPOINT-
MENTS.—Except as provided in subparagraphs 
(B), (C), (D), and (E), the first vacancy occur-
ring in the office of bankruptcy judge in each 
of the judicial districts set forth in paragraph 
(1)—
(i) occurring 5 years or more after the 
appointment date of the bankruptcy judge 
appointed under paragraph (1) to such of-
fice; and 
(ii) resulting from the death, retire-
ment, resignation, or removal of a bank-
ruptcy judge; 
shall not be filled. 
(B) CENTRAL DISTRICT OF CALIFORNIA.—
The 1st, 2d, and 3d vacancies in the office of 
bankruptcy judge in the central district of Cali-
fornia—
(i) occurring 5 years or more after the 
respective 1st, 2d, and 3d appointment
420
dates of the bankruptcy judges appointed 
under paragraph (1)(B); and 
(ii) resulting from the death, retire-
ment, resignation, or removal of a bank-
ruptcy judge; 
shall not be filled. 
(C) DISTRICT
OF
DELAWARE.—The 1st, 
2d, 3d, and 4th vacancies in the office of bank-
ruptcy judge in the district of Delaware—
(i) occurring 5 years or more after the 
respective 
1st, 
2d, 
3d, 
and 
4th 
appointment dates of the bankruptcy 
judges appointed under paragraph (1)(F); 
and 
(ii) resulting from the death, retire-
ment, resignation, or removal of a bank-
ruptcy judge; 
shall not be filled. 
(D) SOUTHERN DISTRICT OF FLORIDA.—
The 1st and 2d vacancies in the office of bank-
ruptcy judge in the southern district of Flor-
ida—
(i) occurring 5 years or more after the 
respective 1st and 2d appointment dates of
421
the bankruptcy judges appointed under 
paragraph (1)(D); and 
(ii) resulting from the death, retire-
ment, resignation, or removal of a bank-
ruptcy judge; 
shall not be filled. 
(E) DISTRICT
OF
MARYLAND.—The 1st, 
2d, and 3d vacancies in the office of bankruptcy 
judge in the district of Maryland—
(i) occurring 5 years or more after the 
respective 1st, 2d, and 3d appointment 
dates of the bankruptcy judges appointed 
under paragraph (1)(F); and 
(ii) resulting from the death, retire-
ment, resignation, or removal of a bank-
ruptcy judge; 
shall not be filled. 
(c) EXTENSIONS.—
(1) IN
GENERAL.—The temporary office of 
bankruptcy judges authorized for the northern dis-
trict of Alabama, the district of Delaware, the dis-
trict of Puerto Rico, and the eastern district of Ten-
nessee under paragraphs (1), (3), (7), and (9) of 
section 3(a) of the Bankruptcy Judgeship Act of 
1992 (28 U.S.C. 152 note) are extended until the
422
first vacancy occurring in the office of a bankruptcy 
judge in the applicable district resulting from the 
death, retirement, resignation, or removal of a bank-
ruptcy judge and occurring 5 years after the date of 
the enactment of this Act. 
(2) APPLICABILITY OF OTHER PROVISIONS.—
All other provisions of section 3 of the Bankruptcy 
Judgeship Act of 1992 (28 U.S.C. 152 note) remain 
applicable to the temporary office of bankruptcy 
judges referred to in this subsection. 
(d) TECHNICAL AMENDMENTS.—Section 152(a) of 
title 28, United States Code, is amended—
(1) in paragraph (1), by striking the first sen-
tence and inserting the following: ‘‘Each bankruptcy 
judge to be appointed for a judicial district, as pro-
vided in paragraph (2), shall be appointed by the 
court of appeals of the United States for the circuit 
in which such district is located.’’; and 
(2) in paragraph (2)—
(A) in the item relating to the middle dis-
trict of Georgia, by striking ‘‘2’’ and inserting 
‘‘3’’; and 
(B) in the collective item relating to the 
middle and southern districts of Georgia, by 
striking ‘‘Middle and Southern . . . . . . 1’’.
423
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 1224. COMPENSATING TRUSTEES. 
Section 1326 of title 11, United States Code, is 
amended—
(1) in subsection (b)—
(A) in paragraph (1), by striking ‘‘and’’; 
(B) in paragraph (2), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(3) if a chapter 7 trustee has been allowed 
compensation due to the conversion or dismissal of 
the debtor’s prior case pursuant to section 707(b), 
and some portion of that compensation remains un-
paid in a case converted to this chapter or in the 
case dismissed under section 707(b) and refiled 
under this chapter, the amount of any such unpaid 
compensation, which shall be paid monthly—
‘‘(A) by prorating such amount over the 
remaining duration of the plan; and 
‘‘(B) by monthly payments not to exceed 
the greater of—
‘‘(i) $25; or
424
‘‘(ii) the amount payable to unsecured 
nonpriority creditors, as provided by the 
plan, multiplied by 5 percent, and the re-
sult divided by the number of months in 
the plan.’’; and 
(2) by adding at the end the following: 
‘‘(d) Notwithstanding any other provision of this 
title—
‘‘(1) compensation referred to in subsection 
(b)(3) is payable and may be collected by the trustee 
under that paragraph, even if such amount has been 
discharged in a prior proceeding under this title; and 
‘‘(2) such compensation is payable in a case 
under this chapter only to the extent permitted by 
subsection (b)(3).’’. 
SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, 
UNITED STATES CODE. 
Section 362(b)(18) of title 11, United States Code, 
is amended to read as follows: 
‘‘(18) under subsection (a) of the creation or 
perfection of a statutory lien for an ad valorem 
property tax, or a special tax or special assessment 
on real property whether or not ad valorem, imposed 
by a governmental unit, if such tax or assessment 
comes due after the filing of the petition;’’.
425
SEC. 1226. JUDICIAL EDUCATION. 
The Director of the Federal Judicial Center, in con-
sultation with the Director of the Executive Office for 
United States Trustees, shall develop materials and con-
duct such training as may be useful to courts in imple-
menting this Act and the amendments made by this Act, 
including the requirements relating to the means test and 
reaffirmations under section 707(b) of title 11, United 
States Code, as amended by this Act. 
SEC. 1227. RECLAMATION. 
(a) RIGHTS AND POWERS OF THE TRUSTEE.—Sec-
tion 546(c) of title 11, United States Code, is amended 
to read as follows: 
‘‘(c)(1) Except as provided in subsection (d) of this 
section and subsection (c) of section 507, and subject to 
the prior rights of holders of security interests in such 
goods or the proceeds thereof, the rights and powers of 
the trustee under sections 544(a), 545, 547, and 549 are 
subject to the right of a seller of goods that has sold goods 
to the debtor, in the ordinary course of such seller’s busi-
ness, to reclaim such goods if the debtor has received such 
goods while insolvent, within 45 days before the date of 
the commencement of a case under this title, but such sell-
er may not reclaim such goods unless such seller demands 
in writing reclamation of such goods—
426
‘‘(A) not later than 45 days after the date of 
receipt of such goods by the debtor; or 
‘‘(B) not later than 20 days after the date of 
commencement of the case, if the 45-day period ex-
pires after the commencement of the case. 
‘‘(2) If a seller of goods fails to provide notice in the 
manner described in paragraph (1), the seller still may 
assert the rights contained in section 503(b)(9).’’. 
(b) ADMINISTRATIVE EXPENSES.—Section 503(b) of 
title 11, United States Code, as amended by sections 445 
and 1103, is amended by adding at the end the following: 
‘‘(9) the value of any goods received by the 
debtor within 20 days before the date of commence-
ment of a case under this title in which the goods 
have been sold to the debtor in the ordinary course 
of such debtor’s business.’’. 
SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO 
THE COURT. 
(a) CHAPTER 7 CASES.—The court shall not grant 
a discharge in the case of an individual seeking bank-
ruptcy under chapter 7 of title 11, United States Code, 
unless requested tax documents have been provided to the 
court. 
(b) CHAPTER 11 AND CHAPTER 13 CASES.—The 
court shall not confirm a plan of reorganization in the case
427
of an individual under chapter 11 or 13 of title 11, United 
States Code, unless requested tax documents have been 
filed with the court. 
(c) DOCUMENT RETENTION.—The court shall de-
stroy documents submitted in support of a bankruptcy 
claim not sooner than 3 years after the date of the conclu-
sion of a bankruptcy case filed by an individual under 
chapter 7, 11, or 13 of title 11, United States Code. In 
the event of a pending audit or enforcement action, the 
court may extend the time for destruction of such re-
quested tax documents. 
SEC. 1229. ENCOURAGING CREDITWORTHINESS. 
(a) SENSE OF THE CONGRESS.—It is the sense of the 
Congress that—
(1) certain lenders may sometimes offer credit 
to consumers indiscriminately, without taking steps 
to ensure that consumers are capable of repaying 
the resulting debt, and in a manner which may en-
courage certain consumers to accumulate additional 
debt; and 
(2) resulting consumer debt may increasingly be 
a major contributing factor to consumer insolvency. 
(b) STUDY REQUIRED.—The Board of Governors of 
the Federal Reserve System (hereafter in this section re-
ferred to as the ‘‘Board’’) shall conduct a study of—
428
(1) consumer credit industry practices of solic-
iting and extending credit—
(A) indiscriminately; 
(B) without taking steps to ensure that 
consumers are capable of repaying the resulting 
debt; and 
(C) in a manner that encourages con-
sumers to accumulate additional debt; and 
(2) the effects of such practices on consumer 
debt and insolvency. 
(c) REPORT AND REGULATIONS.—Not later than 12 
months after the date of enactment of this Act, the 
Board—
(1) shall make public a report on its findings 
with respect to the indiscriminate solicitation and 
extension of credit by the credit industry; 
(2) may issue regulations that would require 
additional disclosures to consumers; and 
(3) may take any other actions, consistent with 
its existing statutory authority, that the Board finds 
necessary to ensure responsible industrywide prac-
tices and to prevent resulting consumer debt and in-
solvency.
429
SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMP-
TION. 
Section 541(b) of title 11, United States Code, as 
amended by sections 225 and 323, is amended by adding 
at the end the following: 
‘‘(8) subject to subchapter III of chapter 5, any 
interest of the debtor in property where the debtor 
pledged or sold tangible personal property (other 
than securities or written or printed evidences of in-
debtedness or title) as collateral for a loan or ad-
vance of money given by a person licensed under law 
to make such loans or advances, where—
‘‘(A) the tangible personal property is in 
the possession of the pledgee or transferee; 
‘‘(B) the debtor has no obligation to repay 
the money, redeem the collateral, or buy back 
the property at a stipulated price; and 
‘‘(C) neither the debtor nor the trustee 
have exercised any right to redeem provided 
under the contract or State law, in a timely 
manner as provided under State law and sec-
tion 108(b) of this title; or’’. 
SEC. 1231. TRUSTEES. 
(a) SUSPENSION
AND
TERMINATION
OF
PANEL 
TRUSTEES AND STANDING TRUSTEES.—Section 586(d) of 
title 28, United States Code, is amended—
430
(1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 
(2) by adding at the end the following: 
‘‘(2) A trustee whose appointment under subsection 
(a)(1) or under subsection (b) is terminated or who ceases 
to be assigned to cases filed under title 11, United States 
Code, may obtain judicial review of the final agency deci-
sion by commencing an action in the district court of the 
United States for the district for which the panel to which 
the trustee is appointed under subsection (a)(1), or in the 
district court of the United States for the district in which 
the trustee is appointed under subsection (b) resides, after 
first exhausting all available administrative remedies, 
which if the trustee so elects, shall also include an admin-
istrative hearing on the record. Unless the trustee elects 
to have an administrative hearing on the record, the trust-
ee shall be deemed to have exhausted all administrative 
remedies for purposes of this paragraph if the agency fails 
to make a final agency decision within 90 days after the 
trustee requests administrative remedies. The Attorney 
General shall prescribe procedures to implement this para-
graph. The decision of the agency shall be affirmed by 
the district court unless it is unreasonable and without 
cause based on the administrative record before the agen-
cy.’’.
431
(b) EXPENSES OF STANDING TRUSTEES.—Section 
586(e) of title 28, United States Code, is amended by add-
ing at the end the following: 
‘‘(3) After first exhausting all available administra-
tive remedies, an individual appointed under subsection 
(b) may obtain judicial review of final agency action to 
deny a claim of actual, necessary expenses under this sub-
section by commencing an action in the district court of 
the United States for the district where the individual re-
sides. The decision of the agency shall be affirmed by the 
district court unless it is unreasonable and without cause 
based upon the administrative record before the agency. 
‘‘(4) The Attorney General shall prescribe procedures 
to implement this subsection.’’. 
SEC. 1232. BANKRUPTCY FORMS. 
Section 2075 of title 28, United States Code, is 
amended by adding at the end the following: 
‘‘The bankruptcy rules promulgated under this section 
shall prescribe a form for the statement required under 
section 707(b)(2)(C) of title 11 and may provide general 
rules on the content of such statement.’’.
SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO 
COURTS OF APPEALS. 
(a) APPEALS.—Section 158 of title 28, United States 
Code, is amended—
432
(1) in subsection (c)(1), by striking ‘‘Subject to 
subsection (b),’’ and inserting ‘‘Subject to sub-
sections (b) and (d)(2),’’; and 
(2) in subsection (d)—
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 
(B) by adding at the end the following: 
‘‘(2)(A) The appropriate court of appeals shall have 
jurisdiction of appeals described in the first sentence of 
subsection (a) if the bankruptcy court, the district court, 
or the bankruptcy appellate panel involved, acting on its 
own motion or on the request of a party to the judgment, 
order, or decree described in such first sentence, or all the 
appellants and appellees (if any) acting jointly, certify 
that—
‘‘(i) the judgment, order, or decree involves a 
question of law as to which there is no controlling 
decision of the court of appeals for the circuit or of 
the Supreme Court of the United States, or involves 
a matter of public importance; 
‘‘(ii) the judgment, order, or decree involves a 
question of law requiring resolution of conflicting de-
cisions; or 
‘‘(iii) an immediate appeal from the judgment, 
order, or decree may materially advance the progress
433
of the case or proceeding in which the appeal is 
taken; 
and if the court of appeals authorizes the direct appeal 
of the judgment, order, or decree. 
‘‘(B) If the bankruptcy court, the district court, or 
the bankruptcy appellate panel—
‘‘(i) on its own motion or on the request of a 
party, determines that a circumstance specified in 
clause (i), (ii), or (iii) of subparagraph (A) exists; or 
‘‘(ii) receives a request made by a majority of 
the appellants and a majority of appellees (if any) 
to make the certification described in subparagraph 
(A); 
then the bankruptcy court, the district court, or the bank-
ruptcy appellate panel shall make the certification de-
scribed in subparagraph (A). 
‘‘(C) The parties may supplement the certification 
with a short statement of the basis for the certification. 
‘‘(D) An appeal under this paragraph does not stay 
any proceeding of the bankruptcy court, the district court, 
or the bankruptcy appellate panel from which the appeal 
is taken, unless the respective bankruptcy court, district 
court, or bankruptcy appellate panel, or the court of ap-
peals in which the appeal in pending, issues a stay of such 
proceeding pending the appeal.
434
‘‘(E) Any request under subparagraph (B) for certifi-
cation shall be made not later than 60 days after the entry 
of the judgment, order, or decree.’’. 
(b) PROCEDURAL RULES.—
(1) TEMPORARY APPLICATION.—A provision of 
this subsection shall apply to appeals under section 
158(d)(2) of title 28, United States Code, until a 
rule of practice and procedure relating to such provi-
sion and such appeals is promulgated or amended 
under chapter 131 of such title. 
(2) CERTIFICATION.—A district court, a bank-
ruptcy court, or a bankruptcy appellate panel may 
make a certification under section 158(d)(2) of title 
28, United States Code, only with respect to matters 
pending in the respective bankruptcy court, district 
court, or bankruptcy appellate panel. 
(3) PROCEDURE.—Subject to any other provi-
sion of this subsection, an appeal authorized by the 
court of appeals under section 158(d)(2)(A) of title 
28, United States Code, shall be taken in the man-
ner prescribed in subdivisions (a)(1), (b), (c), and 
(d) of rule 5 of the Federal Rules of Appellate Pro-
cedure. For purposes of subdivision (a)(1) of rule 
5—
435
(A) a reference in such subdivision to a 
district court shall be deemed to include a ref-
erence to a bankruptcy court and a bankruptcy 
appellate panel, as appropriate; 
(B) a reference in such subdivision to the 
parties requesting permission to appeal to be 
served with the petition shall be deemed to in-
clude a reference to the parties to the judg-
ment, order, or decree from which the appeal is 
taken. 
(4) FILING OF PETITION WITH ATTACHMENT.—
A petition requesting permission to appeal, that is 
based on a certification made under subparagraph 
(A) or (B) of section 158(d)(2) shall—
(A) be filed with the circuit clerk not later 
than 10 days after the certification is entered 
on the docket of the bankruptcy court, the dis-
trict court, or the bankruptcy appellate panel 
from which the appeal is taken; and 
(B) have attached a copy of such certifi-
cation. 
(5) REFERENCES IN RULE 5.—For purposes of 
rule 5 of the Federal Rules of Appellate Proce-
dure—
436
(A) a reference in such rule to a district 
court shall be deemed to include a reference to 
a bankruptcy court and to a bankruptcy appel-
late panel; and 
(B) a reference in such rule to a district 
clerk shall be deemed to include a reference to 
a clerk of a bankruptcy court and to a clerk of 
a bankruptcy appellate panel. 
(6) APPLICATION
OF
RULES.—The Federal 
Rules of Appellate Procedure shall apply in the 
courts of appeals with respect to appeals authorized 
under section 158(d)(2)(A), to the extent relevant 
and as if such appeals were taken from final judg-
ments, orders, or decrees of the district courts or 
bankruptcy appellate panels exercising appellate ju-
risdiction under subsection (a) or (b) of section 158 
of title 28, United States Code.
SEC. 1234. INVOLUNTARY CASES. 
(a) AMENDMENTS.—Section 303 of title 11, United 
States Code, is amended—
(1) in subsection (b)(1), by—
(A) inserting ‘‘as to liability or amount’’ 
after ‘‘bona fide dispute’’; and
437
(B) striking ‘‘if such claims’’ and inserting 
‘‘if such noncontingent, undisputed claims’’; 
and 
(2) in subsection (h)(1), by inserting ‘‘as to li-
ability or amount’’ before the semicolon at the end. 
(b) EFFECTIVE DATE; APPLICATION
OF AMEND-
MENTS.—This section and the amendments made by this 
section shall take effect on the date of the enactment of 
this Act and shall apply with respect to cases commenced 
under title 11 of the United States Code before, on, and 
after such date. 
SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES 
AS NONDISCHARGEABLE DEBT. 
Section 523(a) of title 11, United States Code, as 
amended by section 314, is amended by inserting after 
paragraph (14A) the following: 
‘‘(14B) incurred to pay fines or penalties im-
posed under Federal election law;’’. 
TITLE XIII—CONSUMER CREDIT 
DISCLOSURE 
SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END 
CREDIT PLAN. 
(a) MINIMUM
PAYMENT
DISCLOSURES.—Section 
127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) 
is amended by adding at the end the following:
438
‘‘(11)(A) In the case of an open end credit plan 
that requires a minimum monthly payment of not 
more than 4 percent of the balance on which finance 
charges are accruing, the following statement, lo-
cated on the front of the billing statement, disclosed 
clearly and conspicuously: ‘Minimum Payment 
Warning: Making only the minimum payment will 
increase the interest you pay and the time it takes 
to repay your balance. For example, making only the 
typical 2 % minimum monthly payment on a balance 
of $1,000 at an interest rate of 17 % would take 88 
months to repay the balance in full. For an estimate 
of the time it would take to repay your balance, 
making only minimum payments, call this toll-free 
number: llllll.’ (the blank space to be 
filled in by the creditor). 
‘‘(B) In the case of an open end credit plan 
that requires a minimum monthly payment of more 
than 4 percent of the balance on which finance 
charges are accruing, the following statement, in a 
prominent location on the front of the billing state-
ment, disclosed clearly and conspicuously: ‘Minimum 
Payment Warning: Making only the required min-
imum payment will increase the interest you pay and 
the time it takes to repay your balance. Making a
439
typical 5% minimum monthly payment on a balance 
of $300 at an interest rate of 17% would take 24 
months to repay the balance in full. For an estimate 
of the time it would take to repay your balance, 
making only minimum monthly payments, call this 
toll-free number: llllll.’ (the blank space to 
be filled in by the creditor). 
‘‘(C) Notwithstanding subparagraphs (A) and 
(B), in the case of a creditor with respect to which 
compliance with this title is enforced by the Federal 
Trade Commission, the following statement, in a 
prominent location on the front of the billing state-
ment, disclosed clearly and conspicuously: ‘Minimum 
Payment Warning: Making only the required min-
imum payment will increase the interest you pay and 
the time it takes to repay your balance. For exam-
ple, making only the typical 5% minimum monthly 
payment on a balance of $300 at an interest rate of 
17% would take 24 months to repay the balance in 
full. For an estimate of the time it would take to 
repay your balance, making only minimum monthly 
payments, call the Federal Trade Commission at 
this toll-free number: llllll.’ (the blank 
space to be filled in by the creditor). A creditor who
440
is subject to this subparagraph shall not be subject 
to subparagraph (A) or (B). 
‘‘(D) Notwithstanding subparagraph (A), (B), 
or (C), in complying with any such subparagraph, a 
creditor may substitute an example based on an in-
terest rate that is greater than 17 percent. Any 
creditor that is subject to subparagraph (B) may 
elect to provide the disclosure required under sub-
paragraph (A) in lieu of the disclosure required 
under subparagraph (B). 
‘‘(E) The Board shall, by rule, periodically re-
calculate, as necessary, the interest rate and repay-
ment period under subparagraphs (A), (B), and (C). 
‘‘(F)(i) The toll-free telephone number disclosed 
by a creditor or the Federal Trade Commission 
under subparagraph (A), (B), or (G), as appro-
priate, may be a toll-free telephone number estab-
lished and maintained by the creditor or the Federal 
Trade Commission, as appropriate, or may be a toll-
free telephone number established and maintained 
by a third party for use by the creditor or multiple 
creditors or the Federal Trade Commission, as ap-
propriate. The toll-free telephone number may con-
nect consumers to an automated device through 
which consumers may obtain information described
441
in subparagraph (A), (B), or (C), by inputting infor-
mation using a touch-tone telephone or similar de-
vice, if consumers whose telephones are not equipped 
to use such automated device are provided the op-
portunity to be connected to an individual from 
whom the information described in subparagraph 
(A), (B), or (C), as applicable, may be obtained. A 
person that receives a request for information de-
scribed in subparagraph (A), (B), or (C) from an ob-
ligor through the toll-free telephone number dis-
closed under subparagraph (A), (B), or (C), as ap-
plicable, shall disclose in response to such request 
only the information set forth in the table promul-
gated by the Board under subparagraph (H)(i). 
‘‘(ii)(I) The Board shall establish and maintain 
for a period not to exceed 24 months following the 
effective date of the Bankruptcy Abuse Prevention 
and Consumer Protection Act of 2002, a toll-free 
telephone number, or provide a toll-free telephone 
number established and maintained by a third party, 
for use by creditors that are depository institutions 
(as defined in section 3 of the Federal Deposit In-
surance Act), including a Federal credit union or 
State credit union (as defined in section 101 of the 
Federal Credit Union Act, with total assets not ex-
442
ceeding $250,000,000. The toll-free telephone num-
ber may connect consumers to an automated device 
through which consumers may obtain information 
described in subparagraph (A) or (B), as applicable, 
by inputting information using a touch-tone tele-
phone or similar device, if consumers whose tele-
phones are not equipped to use such automated de-
vice are provided the opportunity to be connected to 
an individual from whom the information described 
in subparagraph (A) or (B), as applicable, may be 
obtained. A person that receives a request for infor-
mation described in subparagraph (A) or (B) from 
an obligor through the toll-free telephone number 
disclosed under subparagraph (A) or (B), as applica-
ble, shall disclose in response to such request only 
the information set forth in the table promulgated 
by the Board under subparagraph (H)(i). The dollar 
amount contained in this subclause shall be adjusted 
according to an indexing mechanism established by 
the Board. 
‘‘(II) Not later than 6 months prior to the expi-
ration of the 24-month period referenced in sub-
clause (I), the Board shall submit to the Committee 
on Banking, Housing, and Urban Affairs of the Sen-
ate and the Committee on Financial Services of the
443
House of Representatives a report on the program 
described in subclause (I). 
‘‘(G) The Federal Trade Commission shall es-
tablish and maintain a toll-free number for the pur-
pose of providing to consumers the information re-
quired to be disclosed under subparagraph (C). 
‘‘(H) The Board shall— 
‘‘(i) establish a detailed table illustrating 
the approximate number of months that it 
would take to repay an outstanding balance if 
a consumer pays only the required minimum 
monthly payments and if no other advances are 
made, which table shall clearly present stand-
ardized information to be used to disclose the 
information required to be disclosed under sub-
paragraph (A), (B), or (C), as applicable; 
‘‘(ii) establish the table required under 
clause (i) by assuming—
‘‘(I) a significant number of different 
annual percentage rates; 
‘‘(II) a significant number of different 
account balances; 
‘‘(III) a significant number of dif-
ferent minimum payment amounts; and
444
‘‘(IV) that only minimum monthly 
payments are made and no additional ex-
tensions of credit are obtained; and 
‘‘(iii) promulgate regulations that provide 
instructional guidance regarding the manner in 
which the information contained in the table es-
tablished under clause (i) should be used in re-
sponding to the request of an obligor for any 
information required to be disclosed under sub-
paragraph (A), (B), or (C). 
‘‘(I) The disclosure requirements of this para-
graph do not apply to any charge card account, the 
primary purpose of which is to require payment of 
charges in full each month. 
‘‘(J) A creditor that maintains a toll-free tele-
phone number for the purpose of providing cus-
tomers with the actual number of months that it will 
take to repay the customer’s outstanding balance is 
not subject to the requirements of subparagraph (A) 
or (B). 
‘‘(K) A creditor that maintains a toll-free tele-
phone number for the purpose of providing cus-
tomers with the actual number of months that it will 
take to repay an outstanding balance shall include 
the following statement on each billing statement:
445
‘Making only the minimum payment will increase 
the interest you pay and the time it takes to repay 
your balance. For more information, call this toll-
free number: llll.’ (the blank space to be filled 
in by the creditor).’’. 
(b) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board of Governors of 
the Federal Reserve System (hereafter in this title 
referred to as the ‘‘Board’’) shall promulgate regula-
tions implementing the requirements of section 
127(b)(11) of the Truth in Lending Act, as added 
by subsection (a) of this section. 
(2) EFFECTIVE DATE.—Section 127(b)(11) of 
the Truth in Lending Act, as added by subsection 
(a) of this section, and the regulations issued under 
paragraph (1) of this subsection shall not take effect 
until the later of—
(A) 18 months after the date of enactment 
of this Act; or 
(B) 12 months after the publication of 
such final regulations by the Board. 
(c) STUDY OF FINANCIAL DISCLOSURES.—
(1) IN GENERAL.—The Board may conduct a 
study to determine the types of information available 
to potential borrowers from consumer credit lending
446
institutions regarding factors qualifying potential 
borrowers for credit, repayment requirements, and 
the consequences of default. 
(2) FACTORS
FOR
CONSIDERATION.—In con-
ducting a study under paragraph (1), the Board 
should, in consultation with the other Federal bank-
ing agencies (as defined in section 3 of the Federal 
Deposit Insurance Act), the National Credit Union 
Administration, and the Federal Trade Commission, 
consider the extent to which—
(A) consumers, in establishing new credit 
arrangements, are aware of their existing pay-
ment obligations, the need to consider those ob-
ligations in deciding to take on new credit, and 
how taking on excessive credit can result in fi-
nancial difficulty; 
(B) minimum periodic payment features 
offered in connection with open end credit plans 
impact consumer default rates; 
(C) consumers make only the required 
minimum payment under open end credit plans; 
(D) consumers are aware that making only 
required minimum payments will increase the 
cost and repayment period of an open end cred-
it obligation; and
447
(E) the availability of low minimum pay-
ment options is a cause of consumers experi-
encing financial difficulty. 
(3) REPORT TO CONGRESS.—Findings of the 
Board in connection with any study conducted under 
this subsection shall be submitted to Congress. Such 
report shall also include recommendations for legis-
lative initiatives, if any, of the Board, based on its 
findings. 
SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTEN-
SIONS SECURED BY A DWELLING. 
(a) OPEN END CREDIT EXTENSIONS.—
(1) 
CREDIT
APPLICATIONS.—Section 
127A(a)(13) of the Truth in Lending Act (15 
U.S.C. 1637a(a)(13)) is amended—
(A) by striking ‘‘CONSULTATION OF TAX 
ADVISER.—A statement that the’’ and inserting 
the following: ‘‘TAX DEDUCTIBILITY.—A state-
ment that—
‘‘(A) the’’; and 
(B) by striking the period at the end and 
inserting the following: ‘‘; and 
‘‘(B) in any case in which the extension of 
credit exceeds the fair market value (as defined 
under the Internal Revenue Code of 1986) of
448
the dwelling, the interest on the portion of the 
credit extension that is greater than the fair 
market value of the dwelling is not tax deduct-
ible for Federal income tax purposes.’’. 
(2) CREDIT ADVERTISEMENTS.—Section 147(b) 
of the Truth in Lending Act (15 U.S.C. 1665b(b)) 
is amended—
(A) by striking ‘‘If any’’ and inserting the 
following: 
‘‘(1) IN GENERAL.—If any’’; and 
(B) by adding at the end the following: 
‘‘(2) CREDIT
IN
EXCESS
OF
FAIR
MARKET 
VALUE.—Each advertisement described in subsection 
(a) that relates to an extension of credit that may 
exceed the fair market value of the dwelling, and 
which advertisement is disseminated in paper form 
to the public or through the Internet, as opposed to 
by radio or television, shall include a clear and con-
spicuous statement that—
‘‘(A) the interest on the portion of the 
credit extension that is greater than the fair 
market value of the dwelling is not tax deduct-
ible for Federal income tax purposes; and
449
‘‘(B) the consumer should consult a tax 
adviser for further information regarding the 
deductibility of interest and charges.’’. 
(b) NON-OPEN END CREDIT EXTENSIONS.—
(1) CREDIT APPLICATIONS.—Section 128 of the 
Truth in Lending Act (15 U.S.C. 1638) is amend-
ed—
(A) in subsection (a), by adding at the end 
the following: 
‘‘(15) In the case of a consumer credit trans-
action that is secured by the principal dwelling of 
the consumer, in which the extension of credit may 
exceed the fair market value of the dwelling, a clear 
and conspicuous statement that—
‘‘(A) the interest on the portion of the 
credit extension that is greater than the fair 
market value of the dwelling is not tax deduct-
ible for Federal income tax purposes; and 
‘‘(B) the consumer should consult a tax 
adviser for further information regarding the 
deductibility of interest and charges.’’; and 
(B) in subsection (b), by adding at the end 
the following: 
‘‘(3) In the case of a credit transaction described in 
paragraph (15) of subsection (a), disclosures required by
450
that paragraph shall be made to the consumer at the time 
of application for such extension of credit.’’. 
(2) CREDIT ADVERTISEMENTS.—Section 144 of 
the Truth in Lending Act (15 U.S.C. 1664) is 
amended by adding at the end the following: 
‘‘(e) Each advertisement to which this section applies 
that relates to a consumer credit transaction that is se-
cured by the principal dwelling of a consumer in which 
the extension of credit may exceed the fair market value 
of the dwelling, and which advertisement is disseminated 
in paper form to the public or through the Internet, as 
opposed to by radio or television, shall clearly and con-
spicuously state that—
‘‘(1) the interest on the portion of the credit ex-
tension that is greater than the fair market value of 
the dwelling is not tax deductible for Federal income 
tax purposes; and 
‘‘(2) the consumer should consult a tax adviser 
for further information regarding the deductibility of 
interest and charges.’’. 
(c) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board shall promulgate 
regulations implementing the amendments made by 
this section.
451
(2) 
EFFECTIVE
DATE.—Regulations 
issued 
under paragraph (1) shall not take effect until the 
later of— 
(A) 12 months after the date of enactment 
of this Act; or 
(B) 12 months after the date of publica-
tion of such final regulations by the Board. 
SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY 
RATES’’. 
(a) INTRODUCTORY RATE DISCLOSURES.—Section 
127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 
is amended by adding at the end the following: 
‘‘(6) 
ADDITIONAL
NOTICE
CONCERNING 
‘INTRODUCTORY RATES’.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), an application or solicitation 
to open a credit card account and all pro-
motional materials accompanying such applica-
tion or solicitation for which a disclosure is re-
quired under paragraph (1), and that offers a 
temporary annual percentage rate of interest, 
shall—
‘‘(i) use the term ‘introductory’ in im-
mediate proximity to each listing of the 
temporary annual percentage rate applica-
452
ble to such account, which term shall ap-
pear clearly and conspicuously; 
‘‘(ii) if the annual percentage rate of 
interest that will apply after the end of the 
temporary rate period will be a fixed rate, 
state in a clear and conspicuous manner in 
a prominent location closely proximate to 
the first listing of the temporary annual 
percentage rate (other than a listing of the 
temporary annual percentage rate in the 
tabular 
format 
described 
in 
section 
122(c)), the time period in which the intro-
ductory period will end and the annual 
percentage rate that will apply after the 
end of the introductory period; and 
‘‘(iii) if the annual percentage rate 
that will apply after the end of the tem-
porary rate period will vary in accordance 
with an index, state in a clear and con-
spicuous manner in a prominent location 
closely proximate to the first listing of the 
temporary annual percentage rate (other 
than a listing in the tabular format pre-
scribed by section 122(c)), the time period 
in which the introductory period will end
453
and the rate that will apply after that, 
based on an annual percentage rate that 
was in effect within 60 days before the 
date of mailing the application or solicita-
tion. 
‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of 
subparagraph (A) do not apply with respect to 
any listing of a temporary annual percentage 
rate on an envelope or other enclosure in which 
an application or solicitation to open a credit 
card account is mailed. 
‘‘(C) CONDITIONS
FOR
INTRODUCTORY 
RATES.—An application or solicitation to open 
a credit card account for which a disclosure is 
required under paragraph (1), and that offers a 
temporary annual percentage rate of interest 
shall, if that rate of interest is revocable under 
any circumstance or upon any event, clearly 
and conspicuously disclose, in a prominent man-
ner on or with such application or solicitation—
‘‘(i) a general description of the cir-
cumstances that may result in the revoca-
tion of the temporary annual percentage 
rate; and
454
‘‘(ii) if the annual percentage rate 
that will apply upon the revocation of the 
temporary annual percentage rate—
‘‘(I) will be a fixed rate, the an-
nual percentage rate that will apply 
upon the revocation of the temporary 
annual percentage rate; or 
‘‘(II) will vary in accordance with 
an index, the rate that will apply after 
the temporary rate, based on an an-
nual percentage rate that was in ef-
fect within 60 days before the date of 
mailing the application or solicitation. 
‘‘(D) DEFINITIONS.—In this paragraph—
‘‘(i) the terms ‘temporary annual per-
centage rate of interest’ and ‘temporary 
annual percentage rate’ mean any rate of 
interest applicable to a credit card account 
for an introductory period of less than 1 
year, if that rate is less than an annual 
percentage rate that was in effect within 
60 days before the date of mailing the ap-
plication or solicitation; and 
‘‘(ii) the term ‘introductory period’ 
means the maximum time period for which
455
the temporary annual percentage rate may 
be applicable. 
‘‘(E) RELATION
TO
OTHER
DISCLOSURE 
REQUIREMENTS.—Nothing in this paragraph 
may be construed to supersede subsection (a) of 
section 122, or any disclosure required by para-
graph (1) or any other provision of this sub-
section.’’. 
(b) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board shall promulgate 
regulations implementing the requirements of section 
127(c)(6) of the Truth in Lending Act, as added by 
this section. 
(2) EFFECTIVE
DATE.—Section 127(c)(6) of 
the Truth in Lending Act, as added by this section, 
and regulations issued under paragraph (1) of this 
subsection shall not take effect until the later of—
(A) 12 months after the date of enactment 
of this Act; or 
(B) 12 months after the date of publica-
tion of such final regulations by the Board. 
SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS. 
(a) 
INTERNET-BASED
SOLICITATIONS.—Section 
127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) 
is amended by adding at the end the following:
456
‘‘(7) INTERNET-BASED SOLICITATIONS.—
‘‘(A) IN GENERAL.—In any solicitation to 
open a credit card account for any person under 
an open end consumer credit plan using the 
Internet or other interactive computer service, 
the person making the solicitation shall clearly 
and conspicuously disclose—
‘‘(i) the information described in sub-
paragraphs (A) and (B) of paragraph (1); 
and 
‘‘(ii) the information described in 
paragraph (6). 
‘‘(B) FORM OF DISCLOSURE.—The disclo-
sures required by subparagraph (A) shall be—
‘‘(i) readily accessible to consumers in 
close proximity to the solicitation to open 
a credit card account; and 
‘‘(ii) updated regularly to reflect the 
current policies, terms, and fee amounts 
applicable to the credit card account. 
‘‘(C) DEFINITIONS.—For purposes of this 
paragraph—
‘‘(i) the term ‘Internet’ means the 
international computer network of both
457
Federal and non-Federal interoperable 
packet switched data networks; and 
‘‘(ii) the term ‘interactive computer 
service’ means any information service, 
system, or access software provider that 
provides or enables computer access by 
multiple users to a computer server, in-
cluding specifically a service or system that 
provides access to the Internet and such 
systems operated or services offered by li-
braries or educational institutions.’’. 
(b) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board shall promulgate 
regulations implementing the requirements of section 
127(c)(7) of the Truth in Lending Act, as added by 
this section. 
(2) EFFECTIVE DATE.—The amendment made 
by subsection (a) and the regulations issued under 
paragraph (1) of this subsection shall not take effect 
until the later of—
(A) 12 months after the date of enactment 
of this Act; or 
(B) 12 months after the date of publica-
tion of such final regulations by the Board.
458
SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT 
DEADLINES AND PENALTIES. 
(a) DISCLOSURES RELATED
TO LATE PAYMENT 
DEADLINES
AND PENALTIES.—Section 127(b) of the 
Truth in Lending Act (15 U.S.C. 1637(b)) is amended 
by adding at the end the following: 
‘‘(12) If a late payment fee is to be imposed 
due to the failure of the obligor to make payment on 
or before a required payment due date, the following 
shall be stated clearly and conspicuously on the bill-
ing statement: 
‘‘(A) The date on which that payment is 
due or, if different, the earliest date on which 
a late payment fee may be charged. 
‘‘(B) The amount of the late payment fee 
to be imposed if payment is made after such 
date.’’. 
(b) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board shall promulgate 
regulations implementing the requirements of section 
127(b)(12) of the Truth in Lending Act, as added 
by this section. 
(2) EFFECTIVE DATE.—The amendment made 
by subsection (a) and regulations issued under para-
graph (1) of this subsection shall not take effect 
until the later of—
459
(A) 12 months after the date of enactment 
of this Act; or 
(B) 12 months after the date of publica-
tion of such final regulations by the Board. 
SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAIL-
URE TO INCUR FINANCE CHARGES. 
(a) PROHIBITION ON CERTAIN ACTIONS FOR FAIL-
URE TO INCUR FINANCE CHARGES.—Section 127 of the 
Truth in Lending Act (15 U.S.C. 1637) is amended by 
adding at the end the following: 
‘‘(h) PROHIBITION ON CERTAIN ACTIONS FOR FAIL-
URE TO INCUR FINANCE CHARGES.—A creditor of an ac-
count under an open end consumer credit plan may not 
terminate an account prior to its expiration date solely be-
cause the consumer has not incurred finance charges on 
the account. Nothing in this subsection shall prohibit a 
creditor from terminating an account for inactivity in 3 
or more consecutive months.’’. 
(b) REGULATORY IMPLEMENTATION.—
(1) IN GENERAL.—The Board shall promulgate 
regulations implementing the requirements of section 
127(h) of the Truth in Lending Act, as added by 
this section. 
(2) EFFECTIVE DATE.—The amendment made 
by subsection (a) and regulations issued under para-
460
graph (1) of this subsection shall not take effect 
until the later of—
(A) 12 months after the date of enactment 
of this Act; or 
(B) 12 months after the date of publica-
tion of such final regulations by the Board. 
SEC. 1307. DUAL USE DEBIT CARD. 
(a) REPORT.—The Board may conduct a study of, 
and present to Congress a report containing its analysis 
of, consumer protections under existing law to limit the 
liability of consumers for unauthorized use of a debit card 
or similar access device. Such report, if submitted, shall 
include recommendations for legislative initiatives, if any, 
of the Board, based on its findings. 
(b) CONSIDERATIONS.—In preparing a report under 
subsection (a), the Board may include—
(1) the extent to which section 909 of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693g), as in 
effect at the time of the report, and the imple-
menting regulations promulgated by the Board to 
carry out that section provide adequate unauthorized 
use liability protection for consumers; 
(2) the extent to which any voluntary industry 
rules have enhanced or may enhance the level of pro-
461
tection afforded consumers in connection with such 
unauthorized use liability; and 
(3) whether amendments to the Electronic 
Fund Transfer Act (15 U.S.C. 1693 et seq.), or re-
visions to regulations promulgated by the Board to 
carry out that Act, are necessary to further address 
adequate protection for consumers concerning unau-
thorized use liability. 
SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX-
TENDED TO DEPENDENT STUDENTS. 
(a) STUDY.—
(1) IN GENERAL.—The Board shall conduct a 
study regarding the impact that the extension of 
credit described in paragraph (2) has on the rate of 
bankruptcy cases filed under title 11, United States 
Code. 
(2) EXTENSION OF CREDIT.—The extension of 
credit described in this paragraph is the extension of 
credit to individuals who are—
(A) claimed as dependents for purposes of 
the Internal Revenue Code of 1986; and 
(B) enrolled within 1 year of successfully 
completing all required secondary education re-
quirements and on a full-time basis, in postsec-
ondary educational institutions.
462
(b) REPORT.—Not later than 1 year after the date 
of enactment of this Act, the Board shall submit to the 
Senate and the House of Representatives a report summa-
rizing the results of the study conducted under subsection 
(a). 
SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS. 
(a) REGULATIONS.—Not later than 6 months after 
the date of enactment of this Act, the Board, in consulta-
tion with the other Federal banking agencies (as defined 
in section 3 of the Federal Deposit Insurance Act), the 
National Credit Union Administration Board, and the 
Federal Trade Commission, shall promulgate regulations 
to provide guidance regarding the meaning of the term 
‘‘clear and conspicuous’’, as used in subparagraphs (A), 
(B), and (C) of section 127(b)(11) and clauses (ii) and 
(iii) of section 127(c)(6)(A) of the Truth in Lending Act. 
(b) EXAMPLES.—Regulations promulgated under 
subsection (a) shall include examples of clear and con-
spicuous model disclosures for the purposes of disclosures 
required by the provisions of the Truth in Lending Act 
referred to in subsection (a). 
(c) STANDARDS.—In promulgating regulations under 
this section, the Board shall ensure that the clear and con-
spicuous standard required for disclosures made under the 
provisions of the Truth in Lending Act referred to in sub-
463
section (a) can be implemented in a manner which results 
in disclosures which are reasonably understandable and 
designed to call attention to the nature and significance 
of the information in the notice. 
TITLE 
XIV—GENERAL 
EFFEC-
TIVE DATE; APPLICATION OF 
AMENDMENTS 
SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMEND-
MENTS. 
(a) EFFECTIVE DATE.—Except as otherwise provided 
in this Act, this Act and the amendments made by this 
Act shall take effect 180 days after the date of enactment 
of this Act. 
(b) APPLICATION OF AMENDMENTS.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this Act and paragraph (2), the amend-
ments made by this Act shall not apply with respect 
to cases commenced under title 11, United States 
Code, before the effective date of this Act. 
(2) CERTAIN
LIMITATIONS
APPLICABLE
TO 
DEBTORS.—The amendments made by sections 308, 
322, and 330 shall apply with respect to cases com-
menced under title 11, United States Code, on or 
after the date of the enactment of this Act.
Æ