I
105TH CONGRESS
2D SESSION
H. R. 3801
To amend title 11 of the United States Code to modify the application
of chapter 7 relating to liquidation cases.
IN THE HOUSE OF REPRESENTATIVES
MAY 6, 1998
Mr. ANDREWS introduced the following bill; which was referred to the
Committee on the Judiciary
A BILL
To amend title 11 of the United States Code to modify
the application of chapter 7 relating to liquidation cases.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. NEEDS-BASED BANKRUPTCY.
Title 11 of the United States Code is amended—
(1) in section 101—
(A) by inserting after paragraph (10) the
following:
‘‘(10A) ‘current monthly total income’ means
the average monthly income derived from all sources
that the debtor, or in a joint case the debtor and the
immediately preceding the date of the filing of the
petition, or for a longer portion of such 180-day pe-
riod than in any other place.’’;
(2) in section 104(b)(1) by striking ‘‘109(e)’’
and inserting ‘‘subsections (b), (e), and (h) of sec-
tion 109’’;
(3) in section 109(b)—
(A) in paragraph (2) by striking ‘‘or’’ at
the end;
(B) in paragraph (3) by striking the period
and inserting ‘‘; or’’; and
(C) by adding at the end the following:
‘‘(4) an individual, or in a joint case an individ-
ual and such individual’s spouse, who have income
available to pay creditors as determined under sub-
section (h) and whose additional expenses estab-
lished under subsection (h)(4) are less than 10 per-
cent of current monthly total income.’’;
(4) by adding at the end of section 109 the fol-
lowing:
‘‘(h)(1) An individual, or in a joint case an individual
and such individual’s spouse, have income available to pay
creditors if the individual, or in a joint case the individual
and the individual’s spouse combined, as of the date of
the order for relief, have—
‘‘(A) current monthly total income exceeding 75
percent of the State median family income for a
family of equal size or, in the case of a household
of 1 individual, or exceeding 75 percent of the State
median household income for 1 earner, as of the
date of the order for relief;
‘‘(B) projected monthly net income exceeding
$50; and
‘‘(C) projected monthly net income sufficient to
repay 20 percent or more of unsecured nonpriority
claims during a 5-year repayment plan.
‘‘(2) Projected monthly net income shall be sufficient
under paragraph (1)(C) if, when multiplied by 60 months,
such income is not less than 20 percent of the total
amount scheduled as payable to unsecured nonpriority
creditors.
‘‘(3) For purposes of this subsection, ‘projected
monthly net income’ means current monthly total income
less the sum of—
‘‘(A) the expense allowances under the applica-
ble National Standards, Local Standards and Other
Necessary Expenses allowance (excluding payments
for debts) for the debtor, the debtor’s dependents,
and in a joint case the debtor’s spouse the depend-
ents of the debtor’s spouse, in the area in which the
debtor resides as determined under the Internal Rev-
enue Service financial analysis for expenses, as in ef-
fect on the date of the order for relief;
‘‘(B) the average monthly payment on account
of secured creditors, which shall be calculated as the
total of all amounts scheduled as contractually pay-
able to secured creditors in each month of the 60
months following the date of the petition by the
debtor, or in a joint case by the debtor and the debt-
or’s spouse combined, and dividing that total by 60
months; and
‘‘(C) the average monthly payment on account
of priority creditors, which shall be calculated as the
total amount of debts entitled to priority, reasonably
estimated by the debtor as of the date of the peti-
tion, and dividing that total by 60 months.
‘‘(4) If the debtor establishes extraordinary cir-
cumstances that require allowance for additional expenses,
projected monthly net income for purposes of this sub-
section shall be the amount calculated under paragraph
(3) less such additional expenses as such extraordinary
circumstances require.
‘‘(A) This paragraph shall not apply unless the
debtor files with the petition—
‘‘(i) a written statement that this para-
graph applies in determining the debtor’s eligi-
bility for relief under chapter 7 of this title;
‘‘(ii) a list itemizing each additional ex-
pense which exceeds the expenses allowances
provided under paragraph (3)(A);
‘‘(iii) a detailed description of the extraor-
dinary circumstances that explains why each of
the additional expenses itemized under subpara-
graph (II) requires allowance; and
‘‘(iv) a sworn statement signed by the
debtor and, if the debtor is represented by
counsel, by the debtor’s attorney, that the infor-
mation required under this paragraph is true
and correct.
‘‘(B)(i) Until the trustee or any party in inter-
est objects to the debtor’s statement that this para-
graph applies and the court rejects or modifies the
debtor’s statement, the projected monthly net in-
come in the debtor’s statement shall be the projected
monthly net income for the purposes of this sub-
section.
‘‘(ii) If an objection is filed with the court not
later than 60 days after the debtor has provided all
the information required under subsections (a)(1)
and (c)(1)(A) of section 521 of this title, the court,
after notice and hearing, shall determine whether
such extraordinary circumstances exist and shall es-
tablish the amount of the additional expense allow-
ance, if any. The burden of disproving such extraor-
dinary circumstances shall be on the objector.
‘‘(5) If a party in interest files a motion, or makes
an objection, to cause the dismissal or conversion of a case
under chapter 7 on the ground that an individual may not
be a debtor, or in a joint case that an individual and such
individual’s spouse may not be debtors, under such chap-
ter and fails to prevail on the motion or the objection, such
party shall pay to the debtor or debtors, a reasonable at-
torney’s fee and costs incurred by the debtor or debtors
in opposing the motion or the objection.’’;
(5) in section 704—
(A) by striking ‘‘and’’ at the end of para-
graph (8);
(B) by striking the period at the end of
paragraph (9) and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(10) with respect to an individual debtor, re-
view all materials provided by the debtor under sub-
sections (a)(1) and (c)(1) of section 521, investigate
and verify the debtor’s projected monthly net income
and not later than 30 days after the order for relief
under this chapter, file a report with the court as to
whether the debtor may be a debtor under this chap-
ter.’’;
(6) in section 1302(b)—
(A) in paragraph (1)—
(i) by striking ‘‘704(7) and’’ and in-
serting ‘‘704(7),’’; and
(ii) by inserting ‘‘and 704(10)’’ after
‘‘704(9)’’; and
(B) in paragraph (4) by striking ‘‘and’’ at
the end;
(C) in paragraph (5) by striking the period
and inserting a semicolon; and
(D) by adding at the end the following:
‘‘(6) investigate and verify the debtor’s monthly
net income and other information provided by the
debtor pursuant to sections 521 and 1322, and pur-
suant to section 111 if applicable; and
‘‘(7) file annual reports with the court, with
copies to holders of claims under the plan, as to
whether a modification of the amount paid creditors
under the plan is appropriate because of changes in
the debtor’s monthly net income.’’.
SEC. 2. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) EFFECTIVE DATE.—Except as provided in sub-
section (b), this Act and the amendments made by this
Act shall take effect on the date of the enactment of this
Act.
(b) APPLICATION OF AMENDMENTS.—The amend-
ments made by this Act shall apply only with respect to
cases commenced under title 11 of the United States Code
on or after the date of the enactment of this Act.
Æ