instructional course shall be for a probationary pe-
riod not to exceed 6 months. 
‘‘(4) At the conclusion of the applicable proba-
tionary period under paragraph (3), the United 
States trustee (or bankruptcy administrator, if any) 
may only approve for an additional 1-year period, 
and for successive 1-year periods thereafter, an 
agency or instructional course that has dem-
onstrated during the probationary or applicable sub-
sequent period of approval that such agency or in-
structional course—
‘‘(A) has met the standards set forth under 
this section during such period; and 
‘‘(B) can satisfy such standards in the fu-
ture. 
‘‘(5) Not later than 30 days after any final de-
cision under paragraph (4), an interested person 
may seek judicial review of such decision in the ap-
propriate district court of the United States. 
‘‘(c)(1) The United States trustee (or the bankruptcy 
administrator, if any) shall only approve a nonprofit budg-
et and credit counseling agency that demonstrates that it 
will provide qualified counselors, maintain adequate provi-
sion for safekeeping and payment of client funds, provide 
adequate counseling with respect to client credit problems,
and deal responsibly and effectively with other matters re-
lating to the quality, effectiveness, and financial security 
of the services it provides. 
‘‘(2) To be approved by the United States trustee (or 
the bankruptcy administrator, if any), a nonprofit budget 
and credit counseling agency shall, at a minimum—
‘‘(A) have a board of directors the majority of 
which— 
‘‘(i) are not employed by such agency; and 
‘‘(ii) will not directly or indirectly benefit 
financially from the outcome of the counseling 
services provided by such agency; 
‘‘(B) if a fee is charged for counseling services, 
charge a reasonable fee, and provide services without 
regard to ability to pay the fee; 
‘‘(C) provide for safekeeping and payment of 
client funds, including an annual audit of the trust 
accounts and appropriate employee bonding; 
‘‘(D) provide full disclosures to a client, includ-
ing funding sources, counselor qualifications, pos-
sible impact on credit reports, and any costs of such 
program that will be paid by such client and how 
such costs will be paid; 
‘‘(E) provide adequate counseling with respect 
to a client’s credit problems that includes an anal-
ysis of such client’s current financial condition, fac-
tors that caused such financial condition, and how 
such client can develop a plan to respond to the 
problems without incurring negative amortization of 
debt; 
‘‘(F) provide trained counselors who receive no 
commissions or bonuses based on the outcome of the 
counseling services provided by such agency, and 
who have adequate experience, and have been ade-
quately trained to provide counseling services to in-
dividuals in financial difficulty, including the mat-
ters described in subparagraph (E); 
‘‘(G) demonstrate adequate experience and 
background in providing credit counseling; and 
‘‘(H) have adequate financial resources to pro-
vide continuing support services for budgeting plans 
over the life of any repayment plan. 
‘‘(d) The United States trustee (or the bankruptcy 
administrator, if any) shall only approve an instructional 
course concerning personal financial management—
‘‘(1) for an initial probationary period under 
subsection (b)(3) if the course will provide at a min-
imum—
‘‘(A) trained personnel with adequate expe-
rience and training in providing effective in-
struction and services; 
‘‘(B) learning materials and teaching 
methodologies designed to assist debtors in un-
derstanding personal financial management and 
that are consistent with stated objectives di-
rectly related to the goals of such instructional 
course; 
‘‘(C) adequate facilities situated in reason-
ably convenient locations at which such instruc-
tional course is offered, except that such facili-
ties may include the provision of such instruc-
tional course by telephone or through the Inter-
net, if such instructional course is effective; and 
‘‘(D) the preparation and retention of rea-
sonable records (which shall include the debt-
or’s bankruptcy case number) to permit evalua-
tion of the effectiveness of such instructional 
course, including any evaluation of satisfaction 
of instructional course requirements for each 
debtor attending such instructional course, 
which shall be available for inspection and eval-
uation by the Executive Office for United 
States Trustees, the United States trustee (or
the bankruptcy administrator, if any), or the 
chief bankruptcy judge for the district in which 
such instructional course is offered; and 
‘‘(2) for any 1-year period if the provider there-
of has demonstrated that the course meets the 
standards of paragraph (1) and, in addition—
‘‘(A) has been effective in assisting a sub-
stantial number of debtors to understand per-
sonal financial management; and 
‘‘(B) is otherwise likely to increase sub-
stantially the debtor’s understanding of per-
sonal financial management. 
‘‘(e) The district court may, at any time, investigate 
the qualifications of a nonprofit budget and credit coun-
seling agency referred to in subsection (a), and request 
production of documents to ensure the integrity and effec-
tiveness of such agency. The district court may, at any 
time, remove from the approved list under subsection (a) 
a nonprofit budget and credit counseling agency upon 
finding such agency does not meet the qualifications of 
subsection (b). 
‘‘(f) The United States trustee (or the bankruptcy ad-
ministrator, if any) shall notify the clerk that a nonprofit 
budget and credit counseling agency or an instructional
course is no longer approved, in which case the clerk shall 
remove it from the list maintained under subsection (a). 
‘‘(g)(1) No nonprofit budget and credit counseling 
agency may provide to a credit reporting agency informa-
tion concerning whether a debtor has received or sought 
instruction concerning personal financial management 
from such agency. 
‘‘(2) A nonprofit budget and credit counseling agency 
that willfully or negligently fails to comply with any re-
quirement under this title with respect to a debtor shall 
be liable for damages in an amount equal to the sum of—
‘‘(A) any actual damages sustained by the debt-
or as a result of the violation; and 
‘‘(B) any court costs or reasonable attorneys’ 
fees (as determined by the court) incurred in an ac-
tion to recover those damages.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 1 of title 11, United States Code, 
is amended by adding at the end the following:
‘‘111. Nonprofit budget and credit counseling agencies; financial management 
instructional courses.’’.
(f) LIMITATION.—Section 362 of title 11, United 
States Code, is amended by adding at the end the fol-
lowing: 
‘‘(i) If a case commenced under chapter 7, 11, or 13 
is dismissed due to the creation of a debt repayment plan,
for purposes of subsection (c)(3), any subsequent case 
commenced by the debtor under any such chapter shall 
not be presumed to be filed not in good faith. 
‘‘(j) On request of a party in interest, the court shall 
issue an order under subsection (c) confirming that the 
automatic stay has been terminated.’’. 
SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY 
EXPENSES. 
For purposes of section 707(b) of title 11, United 
States Code, as amended by this Act, the Director of the 
Executive Office for United States Trustees shall, not 
later than 180 days after the date of enactment of this 
Act, issue schedules of reasonable and necessary adminis-
trative expenses of administering a chapter 13 plan for 
each judicial district of the United States. 
TITLE II—ENHANCED 
CONSUMER PROTECTION 
Subtitle A—Penalties for Abusive 
Creditor Practices 
SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU-
TION. 
(a) REDUCTION OF CLAIM.—Section 502 of title 11, 
United States Code, is amended by adding at the end the 
following:
‘‘(k)(1) The court, on the motion of the debtor and 
after a hearing, may reduce a claim filed under this sec-
tion based in whole on an unsecured consumer debt by 
not more than 20 percent of the claim, if—
‘‘(A) the claim was filed by a creditor who un-
reasonably refused to negotiate a reasonable alter-
native repayment schedule proposed on behalf of the 
debtor by an approved nonprofit budget and credit 
counseling agency described in section 111; 
‘‘(B) the offer of the debtor under subpara-
graph (A)—
‘‘(i) was made at least 60 days before the 
date of the filing of the petition; and 
‘‘(ii) provided for payment of at least 60 
percent of the amount of the debt over a period 
not to exceed the repayment period of the loan, 
or a reasonable extension thereof; and 
‘‘(C) no part of the debt under the alternative 
repayment schedule is nondischargeable. 
‘‘(2) The debtor shall have the burden of proving, by 
clear and convincing evidence, that—
‘‘(A) the creditor unreasonably refused to con-
sider the debtor’s proposal; and
‘‘(B) the proposed alternative repayment sched-
ule was made prior to expiration of the 60-day pe-
riod specified in paragraph (1)(B)(i).’’. 
(b) LIMITATION ON AVOIDABILITY.—Section 547 of 
title 11, United States Code, is amended by adding at the 
end the following: 
‘‘(h) The trustee may not avoid a transfer if such 
transfer was made as a part of an alternative repayment 
schedule between the debtor and any creditor of the debtor 
created by an approved nonprofit budget and credit coun-
seling agency.’’. 
SEC. 202. EFFECT OF DISCHARGE. 
Section 524 of title 11, United States Code, is 
amended by adding at the end the following: 
‘‘(i) The willful failure of a creditor to credit pay-
ments received under a plan confirmed under this title, 
unless the order confirming the plan is revoked, the plan 
is in default, or the creditor has not received payments 
required to be made under the plan in the manner re-
quired by the plan (including crediting the amounts re-
quired under the plan), shall constitute a violation of an 
injunction under subsection (a)(2) if the act of the creditor 
to collect and failure to credit payments in the manner 
required by the plan caused material injury to the debtor.
‘‘(j) Subsection (a)(2) does not operate as an injunc-
tion against an act by a creditor that is the holder of a 
secured claim, if—
‘‘(1) such creditor retains a security interest in 
real property that is the principal residence of the 
debtor; 
‘‘(2) such act is in the ordinary course of busi-
ness between the creditor and the debtor; and 
‘‘(3) such act is limited to seeking or obtaining 
periodic payments associated with a valid security 
interest in lieu of pursuit of in rem relief to enforce 
the lien.’’. 
SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION 
AGREEMENT PRACTICES. 
(a) IN GENERAL.—Section 524 of title 11, United 
States Code, as amended section 202, is amended—
(1) in subsection (c), by striking paragraph (2) 
and inserting the following: 
‘‘(2) the debtor received the disclosures de-
scribed in subsection (k) at or before the time at 
which the debtor signed the agreement;’’; and 
(2) by adding at the end the following: 
‘‘(k)(1) The disclosures required under subsection 
(c)(2) shall consist of the disclosure statement described 
in paragraph (3), completed as required in that para-
graph, together with the agreement specified in subsection 
(c), statement, declaration, motion and order described, 
respectively, in paragraphs (4) through (8), and shall be 
the only disclosures required in connection with entering 
into such agreement. 
‘‘(2) Disclosures made under paragraph (1) shall be 
made clearly and conspicuously and in writing. The terms 
‘Amount Reaffirmed’ and ‘Annual Percentage Rate’ shall 
be disclosed more conspicuously than other terms, data or 
information provided in connection with this disclosure, 
except that the phrases ‘Before agreeing to reaffirm a 
debt, review these important disclosures’ and ‘Summary 
of Reaffirmation Agreement’ may be equally conspicuous. 
Disclosures may be made in a different order and may 
use terminology different from that set forth in para-
graphs (2) through (8), except that the terms ‘Amount 
Reaffirmed’ and ‘Annual Percentage Rate’ must be used 
where indicated. 
‘‘(3) The disclosure statement required under this 
paragraph shall consist of the following: 
‘‘(A) The statement: ‘Part A: Before agreeing 
to reaffirm a debt, review these important disclo-
sures:’; 
‘‘(B) Under the heading ‘Summary of Reaffir-
mation Agreement’, the statement: ‘This Summary
is made pursuant to the requirements of the Bank-
ruptcy Code’; 
‘‘(C) The ‘Amount Reaffirmed’, using that 
term, which shall be—
‘‘(i) the total amount of debt that the debt-
or agrees to reaffirm by entering into an agree-
ment of the kind specified in subsection (c), and 
‘‘(ii) the total of any fees and costs ac-
crued as of the date of the disclosure statement, 
related to such total amount. 
‘‘(D) In conjunction with the disclosure of the 
‘Amount Reaffirmed’, the statements—
‘‘(i) ‘The amount of debt you have agreed 
to reaffirm’; and 
‘‘(ii) ‘Your credit agreement may obligate 
you to pay additional amounts which may come 
due after the date of this disclosure. Consult 
your credit agreement.’. 
‘‘(E) The ‘Annual Percentage Rate’, using that 
term, which shall be disclosed as—
‘‘(i) if, at the time the petition is filed, the 
debt is an extension of credit under an open 
end credit plan, as the terms ‘credit’ and ‘open 
end credit plan’ are defined in section 103 of 
the Truth in Lending Act, then—
‘‘(I) the annual percentage rate deter-
mined under paragraphs (5) and (6) of 
section 127(b) of the Truth in Lending 
Act, as applicable, as disclosed to the debt-
or in the most recent periodic statement 
prior to entering into an agreement of the 
kind specified in subsection (c) or, if no 
such periodic statement has been given to 
the debtor during the prior 6 months, the 
annual percentage rate as it would have 
been so disclosed at the time the disclosure 
statement is given to the debtor, or to the 
extent this annual percentage rate is not 
readily available or not applicable, then 
‘‘(II) the simple interest rate applica-
ble to the amount reaffirmed as of the date 
the disclosure statement is given to the 
debtor, or if different simple interest rates 
apply to different balances, the simple in-
terest rate applicable to each such balance, 
identifying the amount of each such bal-
ance included in the amount reaffirmed, or 
‘‘(III) if the entity making the disclo-
sure elects, to disclose the annual percent-
age rate under subclause (I) and the sim-
ple interest rate under subclause (II); or 
‘‘(ii) if, at the time the petition is filed, the 
debt is an extension of credit other than under 
an open end credit plan, as the terms ‘credit’ 
and ‘open end credit plan’ are defined in section 
103 of the Truth in Lending Act, then—
‘‘(I) the annual percentage rate under 
section 128(a)(4) of the Truth in Lending 
Act, as disclosed to the debtor in the most 
recent disclosure statement given to the 
debtor prior to the entering into an agree-
ment of the kind specified in subsection (c) 
with respect to the debt, or, if no such dis-
closure statement was given to the debtor, 
the annual percentage rate as it would 
have been so disclosed at the time the dis-
closure statement is given to the debtor, or 
to the extent this annual percentage rate is 
not readily available or not applicable, then 
‘‘(II) the simple interest rate applica-
ble to the amount reaffirmed as of the date 
the disclosure statement is given to the 
debtor, or if different simple interest rates 
apply to different balances, the simple in-
terest rate applicable to each such balance, 
identifying the amount of such balance in-
cluded in the amount reaffirmed, or 
‘‘(III) if the entity making the disclo-
sure elects, to disclose the annual percent-
age rate under (I) and the simple interest 
rate under (II). 
‘‘(F) If the underlying debt transaction was dis-
closed as a variable rate transaction on the most re-
cent disclosure given under the Truth in Lending 
Act, by stating ‘The interest rate on your loan may 
be a variable interest rate which changes from time 
to time, so that the annual percentage rate disclosed 
here may be higher or lower.’. 
‘‘(G) If the debt is secured by a security inter-
est which has not been waived in whole or in part 
or determined to be void by a final order of the 
court at the time of the disclosure, by disclosing that 
a security interest or lien in goods or property is as-
serted over some or all of the debts the debtor is re-
affirming and listing the items and their original 
purchase price that are subject to the asserted secu-
rity interest, or if not a purchase-money security in-
terest then listing by items or types and the original 
amount of the loan.
‘‘(H) At the election of the creditor, a state-
ment of the repayment schedule using 1 or a com-
bination of the following—
‘‘(i) by making the statement: ‘Your first 
payment in the amount of $lll is due on 
lll but the future payment amount may be 
different. Consult your reaffirmation agreement 
or credit agreement, as applicable.’, and stating 
the amount of the first payment and the due 
date of that payment in the places provided; 
‘‘(ii) by making the statement: ‘Your pay-
ment schedule will be:’, and describing the re-
payment schedule with the number, amount, 
and due dates or period of payments scheduled 
to repay the debts reaffirmed to the extent then 
known by the disclosing party; or 
‘‘(iii) by describing the debtor’s repayment 
obligations with reasonable specificity to the ex-
tent then known by the disclosing party. 
‘‘(I) The following statement: ‘Note: When this 
disclosure refers to what a creditor ‘‘may’’ do, it 
does not use the word ‘‘may’’ to give the creditor 
specific permission. The word ‘‘may’’ is used to tell 
you what might occur if the law permits the creditor 
to take the action. If you have questions about your
reaffirming a debt or what the law requires, consult 
with the attorney who helped you negotiate this 
agreement reaffirming a debt. If you don’t have an 
attorney helping you, the judge will explain the ef-
fect of your reaffirming a debt when the hearing on 
the reaffirmation agreement is held.’. 
‘‘(J)(i) The following additional statements: 
‘‘ ‘Reaffirming a debt is a serious financial decision. 
The law requires you to take certain steps to make sure 
the decision is in your best interest. If these steps are not 
completed, the reaffirmation agreement is not effective, 
even though you have signed it. 
‘‘ ‘1. Read the disclosures in this Part A care-
fully. Consider the decision to reaffirm carefully. 
Then, if you want to reaffirm, sign the reaffirmation 
agreement in Part B (or you may use a separate 
agreement you and your creditor agree on). 
‘‘ ‘2. Complete and sign Part D and be sure you 
can afford to make the payments you are agreeing 
to make and have received a copy of the disclosure 
statement and a completed and signed reaffirmation 
agreement. 
‘‘ ‘3. If you were represented by an attorney 
during the negotiation of your reaffirmation agree-
ment, the attorney must have signed the certification 
in Part C. 
‘‘ ‘4. If you were not represented by an attorney 
during the negotiation of your reaffirmation agree-
ment, you must have completed and signed Part E. 
‘‘ ‘5. The original of this disclosure must be 
filed with the court by you or your creditor. If a sep-
arate reaffirmation agreement (other than the one in 
Part B) has been signed, it must be attached. 
‘‘ ‘6. If you were represented by an attorney 
during the negotiation of your reaffirmation agree-
ment, your reaffirmation agreement becomes effec-
tive upon filing with the court unless the reaffirma-
tion is presumed to be an undue hardship as ex-
plained in Part D. 
‘‘ ‘7. If you were not represented by an attorney 
during the negotiation of your reaffirmation agree-
ment, it will not be effective unless the court ap-
proves it. The court will notify you of the hearing on 
your reaffirmation agreement. You must attend this 
hearing in bankruptcy court where the judge will re-
view your reaffirmation agreement. The bankruptcy 
court must approve your reaffirmation agreement as 
consistent with your best interests, except that no 
court approval is required if your reaffirmation
agreement is for a consumer debt secured by a mort-
gage, deed of trust, security deed, or other lien on 
your real property, like your home. 
‘‘ ‘Your right to rescind (cancel) your reaffirmation 
agreement. You may rescind (cancel) your reaffirmation 
agreement at any time before the bankruptcy court enters 
a discharge order, or before the expiration of the 60-day 
period that begins on the date your reaffirmation agree-
ment is filed with the court, whichever occurs later. To 
rescind (cancel) your reaffirmation agreement, you must 
notify the creditor that your reaffirmation agreement is 
rescinded (or canceled). 
‘‘ ‘What are your obligations if you reaffirm the debt? 
A reaffirmed debt remains your personal legal obligation. 
It is not discharged in your bankruptcy case. That means 
that if you default on your reaffirmed debt after your 
bankruptcy case is over, your creditor may be able to take 
your property or your wages. Otherwise, your obligations 
will be determined by the reaffirmation agreement which 
may have changed the terms of the original agreement. 
For example, if you are reaffirming an open end credit 
agreement, the creditor may be permitted by that agree-
ment or applicable law to change the terms of that agree-
ment in the future under certain conditions.
‘‘ ‘Are you required to enter into a reaffirmation 
agreement by any law? No, you are not required to reaf-
firm a debt by any law. Only agree to reaffirm a debt if 
it is in your best interest. Be sure you can afford the pay-
ments you agree to make. 
‘‘ ‘What if your creditor has a security interest or 
lien? Your bankruptcy discharge does not eliminate any 
lien on your property. A ‘‘lien’’ is often referred to as a 
security interest, deed of trust, mortgage or security deed. 
Even if you do not reaffirm and your personal liability 
on the debt is discharged, because of the lien your creditor 
may still have the right to take the security property if 
you do not pay the debt or default on it. If the lien is 
on an item of personal property that is exempt under your 
State’s law or that the trustee has abandoned, you may 
be able to redeem the item rather than reaffirm the debt. 
To redeem, you make a single payment to the creditor 
equal to the current value of the security property, as 
agreed by the parties or determined by the court.’. 
‘‘(ii) In the case of a reaffirmation under sub-
section (m)(2), numbered paragraph 6 in the disclo-
sures required by clause (i) of this subparagraph 
shall read as follows: 
‘‘ ‘6. If you were represented by an attorney 
during the negotiation of your reaffirmation agree-