S 3186 IS
106th CONGRESS
2d Session
S. 3186
To amend title 11, United States Code, and for other
purposes.
IN THE SENATE OF THE UNITED STATES
October 11 (legislative day, SEPTEMBER 22), 2000
Mr. GRASSLEY (for himself, Mr. TORRICELLI, Mr. HATCH, and Mr. BIDEN)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary
A BILL
To amend title 11, United States Code, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Bankruptcy Reform Act of
2000'.
(b) TABLE OF CONTENTS- The table of contents for this Act is as
follows:
Sec. 100. Short title; references; table of contents.
TITLE I--NEEDS-BASED BANKRUPTCY
Sec. 102. Dismissal or conversion.
Sec. 103. Sense of Congress and study.
Sec. 104. Notice of alternatives.
Sec. 105. Debtor financial management training test program.
Sec. 106. Credit counseling.
Sec. 107. Schedules of reasonable and necessary expenses.
TITLE II--ENHANCED CONSUMER PROTECTION
Subtitle A--Penalties for Abusive Creditor Practices
Sec. 201. Promotion of alternative dispute resolution.
Sec. 202. Effect of discharge.
Sec. 203. Discouraging abuse of reaffirmation practices.
Subtitle B--Priority Child Support
Sec. 211. Definition of domestic support obligation.
Sec. 212. Priorities for claims for domestic support obligations.
Sec. 213. Requirements to obtain confirmation and discharge in cases
involving domestic support obligations.
Sec. 214. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 215. Nondischargeability of certain debts for alimony, maintenance,
and support.
Sec. 216. Continued liability of property.
Sec. 217. Protection of domestic support claims against preferential
transfer motions.
Sec. 218. Disposable income defined.
Sec. 219. Collection of child support.
Sec. 220. Nondischargeability of certain educational benefits and
loans.
Subtitle C--Other Consumer Protections
Sec. 221. Amendments to discourage abusive bankruptcy filings.
Sec. 222. Sense of Congress.
Sec. 223. Additional amendments to title 11, United States Code.
Sec. 224. Protection of retirement savings in bankruptcy.
Sec. 225. Protection of education savings in bankruptcy.
Sec. 227. Restrictions on debt relief agencies.
Sec. 229. Requirements for debt relief agencies.
TITLE III--DISCOURAGING BANKRUPTCY ABUSE
Sec. 301. Reinforcement of the fresh start.
Sec. 302. Discouraging bad faith repeat filings.
Sec. 303. Curbing abusive filings.
Sec. 304. Debtor retention of personal property security.
Sec. 305. Relief from the automatic stay when the debtor does not
complete intended surrender of consumer debt collateral.
Sec. 306. Giving secured creditors fair treatment in chapter 13.
Sec. 307. Domiciliary requirements for exemptions.
Sec. 308. Residency requirement for homestead exemption.
Sec. 309. Protecting secured creditors in chapter 13 cases.
Sec. 310. Limitation on luxury goods.
Sec. 311. Automatic stay.
Sec. 312. Extension of period between bankruptcy discharges.
Sec. 313. Definition of household goods and antiques.
Sec. 314. Debt incurred to pay nondischargeable debts.
Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases.
Sec. 316. Dismissal for failure to timely file schedules or provide
required information.
Sec. 317. Adequate time to prepare for hearing on confirmation of the
plan.
Sec. 318. Chapter 13 plans to have a 5-year duration in certain
cases.
Sec. 319. Sense of Congress regarding expansion of rule 9011 of the
Federal Rules of Bankruptcy Procedure.
Sec. 320. Prompt relief from stay in individual cases.
Sec. 321. Chapter 11 cases filed by individuals.
Sec. 323. Excluding employee benefit plan participant contributions and
other property from the estate.
Sec. 324. Exclusive jurisdiction in matters involving bankruptcy
professionals.
Sec. 325. United States trustee program filing fee increase.
Sec. 326. Sharing of compensation.
Sec. 327. Fair valuation of collateral.
Sec. 328. Defaults based on nonmonetary obligations.
TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS
Subtitle A--General Business Bankruptcy Provisions
Sec. 401. Adequate protection for investors.
Sec. 402. Meetings of creditors and equity security holders.
Sec. 403. Protection of refinance of security interest.
Sec. 404. Executory contracts and unexpired leases.
Sec. 405. Creditors and equity security holders committees.
Sec. 406. Amendment to section 546 of title 11, United States
Code.
Sec. 407. Amendments to section 330(a) of title 11, United States
Code.
Sec. 408. Postpetition disclosure and solicitation.
Sec. 410. Venue of certain proceedings.
Sec. 411. Period for filing plan under chapter 11.
Sec. 412. Fees arising from certain ownership interests.
Sec. 413. Creditor representation at first meeting of creditors.
Sec. 414. Definition of disinterested person.
Sec. 415. Factors for compensation of professional persons.
Sec. 416. Appointment of elected trustee.
Sec. 417. Utility service.
Sec. 418. Bankruptcy fees.
Sec. 419. More complete information regarding assets of the
estate.
Subtitle B--Small Business Bankruptcy Provisions
Sec. 431. Flexible rules for disclosure statement and plan.
Sec. 433. Standard form disclosure statement and plan.
Sec. 434. Uniform national reporting requirements.
Sec. 435. Uniform reporting rules and forms for small business
cases.
Sec. 436. Duties in small business cases.
Sec. 437. Plan filing and confirmation deadlines.
Sec. 438. Plan confirmation deadline.
Sec. 439. Duties of the United States trustee.
Sec. 440. Scheduling conferences.
Sec. 441. Serial filer provisions.
Sec. 442. Expanded grounds for dismissal or conversion and appointment
of trustee.
Sec. 443. Study of operation of title 11, United States Code, with
respect to small businesses.
Sec. 444. Payment of interest.
Sec. 445. Priority for administrative expenses.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.
TITLE VI--BANKRUPTCY DATA
Sec. 601. Improved bankruptcy statistics.
Sec. 602. Uniform rules for the collection of bankruptcy data.
Sec. 603. Audit procedures.
Sec. 604. Sense of Congress regarding availability of bankruptcy
data.
TITLE VII--BANKRUPTCY TAX PROVISIONS
Sec. 701. Treatment of certain liens.
Sec. 702. Treatment of fuel tax claims.
Sec. 703. Notice of request for a determination of taxes.
Sec. 704. Rate of interest on tax claims.
Sec. 705. Priority of tax claims.
Sec. 706. Priority property taxes incurred.
Sec. 707. No discharge of fraudulent taxes in chapter 13.
Sec. 708. No discharge of fraudulent taxes in chapter 11.
Sec. 709. Stay of tax proceedings limited to prepetition taxes.
Sec. 710. Periodic payment of taxes in chapter 11 cases.
Sec. 711. Avoidance of statutory tax liens prohibited.
Sec. 712. Payment of taxes in the conduct of business.
Sec. 713. Tardily filed priority tax claims.
Sec. 714. Income tax returns prepared by tax authorities.
Sec. 715. Discharge of the estate's liability for unpaid taxes.
Sec. 716. Requirement to file tax returns to confirm chapter 13
plans.
Sec. 717. Standards for tax disclosure.
Sec. 718. Setoff of tax refunds.
Sec. 719. Special provisions related to the treatment of State and local
taxes.
Sec. 720. Dismissal for failure to timely file tax returns.
TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES
Sec. 801. Amendment to add chapter 15 to title 11, United States
Code.
Sec. 802. Other amendments to titles 11 and 28, United States
Code.
TITLE IX--FINANCIAL CONTRACT PROVISIONS
Sec. 901. Treatment of certain agreements by conservators or receivers
of insured depository institutions.
Sec. 902. Authority of the corporation with respect to failed and
failing institutions.
Sec. 903. Amendments relating to transfers of qualified financial
contracts.
Sec. 904. Amendments relating to disaffirmance or repudiation of
qualified financial contracts.
Sec. 905. Clarifying amendment relating to master agreements.
Sec. 906. Federal Deposit Insurance Corporation Improvement Act of
1991.
Sec. 907. Bankruptcy Code amendments.
Sec. 908. Recordkeeping requirements.
Sec. 909. Exemptions from contemporaneous execution requirement.
Sec. 910. Damage measure.
Sec. 912. Asset-backed securitizations.
Sec. 913. Effective date; application of amendments.
TITLE X--PROTECTION OF FAMILY FARMERS
Sec. 1001. Permanent reenactment of chapter 12.
Sec. 1002. Debt limit increase.
Sec. 1003. Certain claims owed to governmental units.
TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS
Sec. 1102. Disposal of patient records.
Sec. 1103. Administrative expense claim for costs of closing a health
care business and other administrative expenses.
Sec. 1104. Appointment of ombudsman to act as patient advocate.
Sec. 1105. Debtor in possession; duty of trustee to transfer
patients.
Sec. 1106. Exclusion from program participation not subject to automatic
stay.
TITLE XII--TECHNICAL AMENDMENTS
Sec. 1202. Adjustment of dollar amounts.
Sec. 1203. Extension of time.
Sec. 1204. Technical amendments.
Sec. 1205. Penalty for persons who negligently or fraudulently prepare
bankruptcy petitions.
Sec. 1206. Limitation on compensation of professional persons.
Sec. 1207. Effect of conversion.
Sec. 1208. Allowance of administrative expenses.
Sec. 1209. Exceptions to discharge.
Sec. 1210. Effect of discharge.
Sec. 1211. Protection against discriminatory treatment.
Sec. 1212. Property of the estate.
Sec. 1214. Postpetition transactions.
Sec. 1215. Disposition of property of the estate.
Sec. 1216. General provisions.
Sec. 1217. Abandonment of railroad line.
Sec. 1218. Contents of plan.
Sec. 1219. Discharge under chapter 12.
Sec. 1220. Bankruptcy cases and proceedings.
Sec. 1221. Knowing disregard of bankruptcy law or rule.
Sec. 1222. Transfers made by nonprofit charitable corporations.
Sec. 1223. Protection of valid purchase money security interests.
Sec. 1225. Bankruptcy judgeships.
Sec. 1226. Compensating trustees.
Sec. 1227. Amendment to section 362 of title 11, United States
Code.
Sec. 1228. Judicial education.
Sec. 1230. Providing requested tax documents to the court.
Sec. 1231. Encouraging creditworthiness.
Sec. 1232. Property no longer subject to redemption.
Sec. 1234. Bankruptcy forms.
Sec. 1235. Expedited appeals of bankruptcy cases to courts of
appeals.
TITLE XIII--CONSUMER CREDIT DISCLOSURE
Sec. 1301. Enhanced disclosures under an open end credit plan.
Sec. 1302. Enhanced disclosure for credit extensions secured by a
dwelling.
Sec. 1303. Disclosures related to `introductory rates'.
Sec. 1304. Internet-based credit card solicitations.
Sec. 1305. Disclosures related to late payment deadlines and
penalties.
Sec. 1306. Prohibition on certain actions for failure to incur finance
charges.
Sec. 1307. Dual use debit card.
Sec. 1308. Study of bankruptcy impact of credit extended to dependent
students.
Sec. 1309. Clarification of clear and conspicuous.
Sec. 1310. Enforcement of certain foreign judgments barred.
TITLE XIV--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
Sec. 1401. Effective date; application of amendments.
TITLE I--NEEDS-BASED BANKRUPTCY
SEC. 101. CONVERSION.
Section 706(c) of title 11, United States Code, is amended by inserting
`or consents to' after `requests'.
SEC. 102. DISMISSAL OR CONVERSION.
(a) IN GENERAL- Section 707 of title 11, United States Code, is
amended--
(1) by striking the section heading and inserting the following:
`Sec. 707. Dismissal of a case or conversion to a case under chapter 11 or
13';
(A) by inserting `(1)' after `(b)';
(B) in paragraph (1), as redesignated by subparagraph (A) of this
paragraph--
(i) in the first sentence--
(I) by striking `but not at the request or suggestion of' and
inserting `trustee, bankruptcy administrator, or';
(II) by inserting `, or, with the debtor's consent, convert such a
case to a case under chapter 11 or 13 of this title,' after `consumer
debts'; and
(III) by striking `a substantial abuse' and inserting `an abuse';
and
(ii) by striking the next to last sentence; and
(C) by adding at the end the following:
`(2)(A)(i) In considering under paragraph (1) whether the granting of
relief would be an abuse of the provisions of this chapter, the court shall
presume abuse exists if the debtor's current monthly income reduced by the
amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60
is not less than the lesser of--
`(I) 25 percent of the debtor's nonpriority unsecured claims in the
case, or $6,000, whichever is greater; or
`(ii)(I) The debtor's monthly expenses shall be the debtor's applicable
monthly expense amounts specified under the National Standards and Local
Standards, and the debtor's actual monthly expenses for the categories
specified as Other Necessary Expenses issued by the Internal Revenue Service
for the area in which the debtor resides, as in effect on the date of the
entry of the order for relief, for the debtor, the dependents of the
debtor,
and the spouse of the debtor in a joint case, if the spouse is not otherwise
a dependent. Notwithstanding any other provision of this clause, the monthly
expenses of the debtor shall not include any payments for debts. In addition,
the debtor's monthly expenses shall include the debtor's reasonably necessary
expenses incurred to maintain the safety of the debtor and the family of the
debtor from family violence as identified under section 309 of the Family
Violence Prevention and Services Act (42 U.S.C. 10408), or other applicable
Federal law. The expenses included in the debtor's monthly expenses described in
the preceding sentence shall be kept confidential by the court. In addition, if
it is demonstrated that it is reasonable and necessary, the debtor's monthly
expenses may also include an additional allowance for food and clothing of up to
5 percent of the food and clothing categories as specified by the National
Standards issued by the Internal Revenue Service.
`(II) In addition, the debtor's monthly expenses may include, if
applicable, the continuation of actual expenses paid by the debtor that are
reasonable and necessary for care and support of an elderly, chronically ill,
or disabled household member or member of the debtor's immediate family
(including parents, grandparents, and siblings of the debtor, the dependents
of the debtor, and the spouse of the debtor in a joint case) who is not a
dependent and who is unable to pay for such reasonable and necessary
expenses.
`(III) In addition, for a debtor eligible for chapter 13, the debtor's
monthly expenses may include the actual administrative expenses of
administering a chapter 13 plan for the district in which the debtor resides,
up to an amount of 10 percent of the projected plan payments, as determined
under schedules issued by the Executive Office for United States Trustees.
`(IV) In addition, the debtor's monthly expenses may include the actual
expenses for each dependent child under the age of 18 years up to $1,500 per
year per child to attend a private elementary or secondary school, if the
debtor provides documentation of such expenses and a detailed explanation of
why such expenses are reasonable and necessary.
`(iii) The debtor's average monthly payments on account of secured debts
shall be calculated as--
`(aa) the total of all amounts scheduled as contractually due to
secured creditors in each month of the 60 months following the date of the
petition; and
`(bb) any additional payments to secured creditors necessary for the
debtor, in filing a plan under chapter 13 of this title, to maintain
possession of the debtor's primary residence, motor vehicle, or other
property necessary for the support of the debtor and the debtor's
dependents, that serves as collateral for secured debts; divided
by
`(iv) The debtor's expenses for payment of all priority claims (including
priority child support and alimony claims) shall be calculated as--
`(I) the total amount of debts entitled to priority; divided by
`(B)(i) In any proceeding brought under this subsection, the presumption
of abuse may only be rebutted by demonstrating special circumstances that
justify additional expenses or adjustments of current monthly income for which
there is no reasonable alternative.
`(ii) In order to establish special circumstances, the debtor shall be
required to--
`(I) itemize each additional expense or adjustment of income; and
`(aa) documentation for such expense or adjustment to income;
and
`(bb) a detailed explanation of the special circumstances that make
such expenses or adjustment to income necessary and reasonable.
`(iii) The debtor shall attest under oath to the accuracy of any
information provided to demonstrate that additional expenses or adjustments to
income are required.
`(iv) The presumption of abuse may only be rebutted if the additional
expenses or adjustments to income referred to in clause (i) cause the product
of the debtor's current monthly income reduced by the amounts determined under
clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be
less than the lesser of--
`(I) 25 percent of the debtor's nonpriority unsecured claims, or $6,000,
whichever is greater; or
`(C) As part of the schedule of current income and expenditures required
under section 521, the debtor shall include a statement of the debtor's
current monthly income, and the calculations that determine whether a
presumption arises under subparagraph (A)(i), that shows how each such amount
is calculated.
`(3) In considering under paragraph (1) whether the granting of relief
would be an abuse of the provisions of this chapter in a case in which the
presumption in subparagraph (A)(i) of such paragraph does not apply or has
been rebutted, the court shall consider--
`(A) whether the debtor filed the petition in bad faith; or
`(B) the totality of the circumstances (including whether the debtor
seeks to reject a personal services contract and the financial need for such
rejection as sought by the debtor) of the debtor's financial situation
demonstrates abuse.
`(4)(A) The court shall order the counsel for the debtor to reimburse the
trustee for all reasonable costs in prosecuting a motion brought under section
707(b), including reasonable attorneys' fees, if--
`(i) a trustee appointed under section 586(a)(1) of title 28 or from a
panel of private trustees maintained by the bankruptcy administrator brings
a motion for dismissal or conversion under this subsection; and
`(I) grants that motion; and
`(II) finds that the action of the counsel for the debtor in filing
under this chapter violated rule 9011 of the Federal Rules of Bankruptcy
Procedure.
`(B) If the court finds that the attorney for the debtor violated rule
9011 of the Federal Rules of Bankruptcy Procedure, at a minimum, the court
shall order--
`(i) the assessment of an appropriate civil penalty against the counsel
for the debtor; and
`(ii) the payment of the civil penalty to the trustee, the United States
trustee, or the bankruptcy administrator.
`(C) In the case of a petition, pleading, or written motion, the signature
of an attorney shall constitute a certification that the attorney has--
`(i) performed a reasonable investigation into the circumstances that
gave rise to the petition, pleading, or written motion; and
`(ii) determined that the petition, pleading, or written motion--
`(I) is well grounded in fact; and
`(II) is warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law and does not
constitute an abuse under paragraph (1).
`(D) The signature of an attorney on the petition shall constitute a
certification that the attorney has no knowledge after an inquiry that the
information in the schedules filed with such petition is incorrect.
`(5)(A) Except as provided in subparagraph (B) and subject to paragraph
(6), the court may award a debtor all reasonable costs (including reasonable
attorneys' fees) in contesting a motion brought by a party in interest (other
than a trustee, United States trustee, or bankruptcy administrator) under this
subsection if--
`(i) the court does not grant the motion; and
`(ii) the court finds that--
`(I) the position of the party that brought the motion violated rule
9011 of the Federal Rules of Bankruptcy Procedure; or
`(II) the party brought the motion solely for the purpose of coercing
a debtor into waiving a right guaranteed to the debtor under this
title.
`(B) A small business that has a claim of an aggregate amount less than
$1,000 shall not be subject to subparagraph (A)(ii)(I).
`(C) For purposes of this paragraph--
`(i) the term `small business' means an unincorporated business,
partnership, corporation, association, or organization that--
`(I) has less than 25 full-time employees as determined on the date
the motion is filed; and
`(II) is engaged in commercial or business activity; and
`(ii) the number of employees of a wholly owned subsidiary of a
corporation includes the employees of--
`(I) a parent corporation; and
`(II) any other subsidiary corporation of the parent
corporation.
`(6) Only the judge, United States trustee, or bankruptcy administrator
may bring a motion under section 707(b), if the current monthly income of the
debtor, or in a joint case, the debtor and the debtor's spouse, as of the date
of the order for relief, when multiplied by 12, is equal to or less than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(B) in the case of a debtor in a household of 2, 3, or 4 individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the Census;
or
`(C) in the case of a debtor in a household exceeding 4 individuals, the
highest median family income of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the Census, plus $525 per
month for each individual in excess of 4.
`(7) No judge, United States trustee, panel trustee, bankruptcy
administrator or other party in interest may bring a motion under paragraph
(2), if the current monthly income of the debtor and the debtor's spouse
combined, as of the date of the order for relief when multiplied by 12, is
equal to or less than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(B) in the case of a debtor in a household of 2, 3, or 4 individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the Census;
or
`(C) in the case of a debtor in a household exceeding 4 individuals, the
highest median family income of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the Census, plus $525 per
month for each individual in excess of 4.'.
(b) DEFINITION- Section 101 of title 11, United States Code, is amended by
inserting after paragraph (10) the following:
`(10A) `current monthly income'--
`(A) means the average monthly income from all sources which the
debtor, or in a joint case, the debtor and the debtor's spouse, receive
without regard to whether the income is taxable income, derived during the
6-month period preceding the date of determination; and
`(B) includes any amount paid by any entity other than the debtor (or,
in a joint case, the debtor and the debtor's spouse), on a regular basis
to the household expenses of the debtor or the debtor's dependents (and,
in a joint case, the debtor's spouse if not otherwise a dependent), but
excludes benefits received under the Social Security Act and payments to
victims of war crimes or crimes against humanity on account of their
status as victims of such crimes;'.
(c) UNITED STATES TRUSTEE AND BANKRUPTCY ADMINISTRATOR DUTIES- Section 704
of title 11, United States Code, is amended--
(1) by inserting `(a)' before `The trustee shall--'; and
(2) by adding at the end the following:
`(b)(1) With respect to an individual debtor under this chapter--
`(A) the United States trustee or bankruptcy administrator shall review
all materials filed by the debtor and, not later than 10 days after the date
of the first meeting of creditors, file with the court a statement as to
whether the debtor's case would be presumed to be an abuse under section
707(b); and
`(B) not later than 5 days after receiving a statement under
subparagraph (A), the court shall provide a copy of the statement to all
creditors.
`(2) The United States trustee or bankruptcy administrator shall, not
later than 30 days after the date of filing a statement under paragraph (1),
either file a motion to dismiss or convert under section 707(b) or file a
statement setting forth the reasons the United States trustee or bankruptcy
administrator does not believe that such a motion would be appropriate, if the
United States trustee or bankruptcy administrator determines that the debtor's
case should be presumed to be an abuse under section 707(b) and the product of
the debtor's current monthly income, multiplied by 12 is not less than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census; or
`(B) in the case of a debtor in a household of 2 or more individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the
Census.
`(3) In any case in which a motion to dismiss or convert, or a statement
is required to be filed by this subsection, the United States trustee or
bankruptcy administrator may decline to file a motion to dismiss or convert
pursuant to section 704(b)(2) if the product of the debtor's current monthly
income multiplied by 12 exceeds 100 percent, but does not exceed 150 percent
of--
`(A)(i) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census; or
`(ii) in the case of a debtor in a household of 2 or more individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the Census;
and
`(B) the product of the debtor's current monthly income, reduced by the
amounts determined under section 707(b)(2)(A)(ii) (except for the amount
calculated under the other necessary expenses standard issued by the
Internal Revenue Service) and clauses (iii) and (iv) of section
707(b)(2)(A), multiplied by 60 is less than the lesser of--
`(i) 25 percent of the debtor's nonpriority unsecured claims in the
case or $6,000, whichever is greater; or
(d) NOTICE- Section 342 of title 11, United States Code, is amended by
adding at the end the following:
`(d) In an individual case under chapter 7 in which the presumption of
abuse is triggered under section 707(b), the clerk shall give written notice
to all creditors not later than 10 days after the date of the filing of the
petition that the presumption of abuse has been triggered.'.
(e) NONLIMITATION OF INFORMATION- Nothing in this title shall limit the
ability of a creditor to provide information to a judge (except for
information communicated ex parte, unless otherwise permitted by applicable
law), United States trustee, bankruptcy administrator or trustee.
(f) DISMISSAL FOR CERTAIN CRIMES- Section 707 of title 11, United States
Code, as amended by this section, is amended by adding at the end the
following:
`(c)(1) In this subsection--
`(A) the term `crime of violence' has the meaning given that term in
section 16 of title 18; and
`(B) the term `drug trafficking crime' has the meaning given that term
in section 924(c)(2) of title 18.
`(2) Except as provided in paragraph (3), after notice and a hearing, the
court, on a motion by the victim of a crime of violence or a drug trafficking
crime, may when it is in the best interest of the victims dismiss a voluntary
case filed by an individual debtor under this chapter if that individual was
convicted of that crime.
`(3) The court may not dismiss a case under paragraph (2) if the debtor
establishes by a preponderance of the evidence that the filing of a case under
this chapter is necessary to satisfy a claim for a domestic support
obligation.'.
(g) CONFIRMATION OF PLAN- Section 1325(a) of title 11, United States Code,
is amended--
(1) in paragraph (5), by striking `and' at the end;
(2) in paragraph (6), by striking the period and inserting a semicolon;
and
(3) by adding at the end the following:
`(7) the action of the debtor in filing the petition was in good
faith;'.
(h) APPLICABILITY OF MEANS TEST TO CHAPTER 13- Section 1325(b) of title
11, United States Code, is amended--
(1) in paragraph (1)(B), by inserting `to unsecured creditors' after `to
make payments'; and
(2) by striking paragraph (2) and inserting the following:
`(2) For purposes of this subsection, the term `disposable income' means
current monthly income received by the debtor (other than child support
payments, foster care payments, or disability payments for a dependent child
made in accordance with applicable nonbankruptcy law to the extent
reasonably necessary to be expended for such child) less amounts reasonably
necessary to be expended--
`(A) for the maintenance or support of the debtor or a dependent of
the debtor or for a domestic support obligation that first becomes payable
after the date the petition is filed and for charitable contributions
(that meet the definition of `charitable contribution' under section
548(d)(3) to a qualified religious or charitable entity or organization
(as that term is defined in section 548(d)(4)) in an amount not to exceed
15 percent of gross income of the debtor for the year in which the
contributions are made; and
`(B) if the debtor is engaged in business, for the payment of
expenditures necessary for the continuation, preservation, and operation
of such business.
`(3) Amounts reasonably necessary to be expended under paragraph (2)
shall be determined in accordance with subparagraphs (A) and (B) of section
707(b)(2), if the debtor has current monthly income, when multiplied by 12,
greater than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(B) in the case of a debtor in a household of 2, 3, or 4 individuals,
the highest median family income of the applicable State for a family of
the same number or fewer individuals last reported by the Bureau of the
Census; or
`(C) in the case of a debtor in a household exceeding 4 individuals,
the highest median family income of the applicable State for a family of 4
or fewer individuals last reported by the Bureau of the Census, plus $525
per month for each individual in excess of 4.'.
(i) CLERICAL AMENDMENT- The table of sections for chapter 7 of title 11,
United States Code, is amended by striking the item relating to section 707
and inserting the following:
`707. Dismissal of a case or conversion to a case under chapter 11 or
13.'.
SEC. 103. SENSE OF CONGRESS AND STUDY.
(a) SENSE OF CONGRESS- It is the sense of Congress that the Secretary of
the Treasury has the authority to alter the Internal Revenue Service standards
established to set guidelines for repayment plans as needed to accommodate
their use under section 707(b) of title 11, United States Code.
(1) IN GENERAL- Not later than 2 years after the date of enactment of
this Act, the Director of the Executive Office for United States Trustees
shall submit a report to the Committee on the Judiciary of the Senate and
the Committee on the Judiciary of the House of Representatives containing
the findings of the Director regarding the utilization of Internal Revenue
Service standards for determining--
(A) the current monthly expenses of a debtor under section 707(b) of
title 11, United States Code; and
(B) the impact that the application of such standards has had on
debtors and on the bankruptcy courts.
(2) RECOMMENDATION- The report under paragraph (1) may include
recommendations for amendments to title 11, United States Code, that are
consistent with the findings of the Director under paragraph (1).
SEC. 104. NOTICE OF ALTERNATIVES.
Section 342(b) of title 11, United States Code, is amended to read as
follows:
`(b) Before the commencement of a case under this title by an individual
whose debts are primarily consumer debts, the clerk shall give to such
individual written notice containing--
`(1) a brief description of--
`(A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and
costs of proceeding under each of those chapters; and
`(B) the types of services available from credit counseling agencies;
and
`(2) statements specifying that--
`(A) a person who knowingly and fraudulently conceals assets or makes
a false oath or statement under penalty of perjury in connection with a
bankruptcy case shall be subject to fine, imprisonment, or both;
and
`(B) all information supplied by a debtor in connection with a
bankruptcy case is subject to examination by the Attorney
General.'.
SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.
(a) DEVELOPMENT OF FINANCIAL MANAGEMENT AND TRAINING CURRICULUM AND
MATERIALS- The Director of the Executive Office for United States Trustees (in
this section referred to as the `Director') shall consult with a wide range of
individuals who are experts in the field of debtor education, including
trustees who are appointed under chapter 13 of title 11, United States Code,
and who operate financial management education programs for debtors, and shall
develop a financial management training curriculum and materials that can be
used to educate individual debtors on how to better manage their finances.
(1) SELECTION OF DISTRICTS- The Director shall select 6 judicial
districts of the United States in which to test the effectiveness of the
financial management training curriculum and materials developed under
subsection (a).
(2) USE- For an 18-month period beginning not later than 270 days after
the date of enactment of this Act, such curriculum and materials shall be,
for the 6 judicial districts selected under paragraph (1), used as the
instructional course concerning personal financial management for purposes
of section 111 of title 11, United States Code.
(1) IN GENERAL- During the 18-month period referred to in subsection
(b), the Director shall evaluate the effectiveness of--
(A) the financial management training curriculum and materials
developed under subsection (a); and
(B) a sample of existing consumer education programs such as those
described in the Report of the National Bankruptcy Review Commission
(October 20, 1997) that are representative of consumer education programs
carried out by the credit industry, by trustees serving under chapter 13
of title 11, United States Code, and by consumer counseling
groups.
(2) REPORT- Not later than 3 months after concluding such evaluation,
the Director shall submit a report to the Speaker of the House of
Representatives and the President pro tempore of the Senate, for referral to
the appropriate committees of the Congress, containing the findings of the
Director regarding the effectiveness of such curriculum, such materials, and
such programs and their costs.
SEC. 106. CREDIT COUNSELING.
(a) WHO MAY BE A DEBTOR- Section 109 of title 11, United States Code, is
amended by adding at the end the following:
`(h)(1) Subject to paragraphs (2) and (3), and notwithstanding any other
provision of this section, an individual may not be a debtor under this title
unless that individual has, during the 180-day period preceding the date of
filing of the petition of that individual, received from an approved nonprofit
budget and credit counseling agency described in section 111(a) an individual
or group briefing (including a briefing conducted by telephone or on the
Internet) that outlined the opportunities for available credit counseling and
assisted that individual in performing a related budget analysis.
`(2)(A) Paragraph (1) shall not apply with respect to a debtor who resides
in a district for which the United States trustee or bankruptcy administrator
of the bankruptcy court of that district determines that the approved
nonprofit budget and credit counseling agencies for that district are not
reasonably able to provide adequate services to the additional individuals who
would otherwise seek credit counseling from that agency by reason of the
requirements of paragraph (1).
`(B) Each United States trustee or bankruptcy administrator that makes a
determination described in subparagraph (A) shall review that determination
not later than 1 year after the date of that determination, and not less
frequently than every year thereafter. Notwithstanding the preceding sentence,
a nonprofit budget and credit counseling service may be disapproved by the
United States trustee or bankruptcy administrator at any time.
`(3)(A) Subject to subparagraph (B), the requirements of paragraph (1)
shall not apply with respect to a debtor who submits to the court a
certification that--
`(i) describes exigent circumstances that merit a waiver of the
requirements of paragraph (1);
`(ii) states that the debtor requested credit counseling services from
an approved nonprofit budget and credit counseling agency, but was unable to
obtain the services referred to in paragraph (1) during the 5-day period
beginning on the date on which the debtor made that request; and
`(iii) is satisfactory to the court.
`(B) With respect to a debtor, an exemption under subparagraph (A) shall
cease to apply to that debtor on the date on which the debtor meets the
requirements of paragraph (1), but in no case may the exemption apply to that
debtor after the date that is 30 days after the debtor files a petition,
except that the court, for cause, may order an additional 15 days.'.
(b) CHAPTER 7 DISCHARGE- Section 727(a) of title 11, United States Code,
is amended--
(1) in paragraph (9), by striking `or' at the end;
(2) in paragraph (10), by striking the period and inserting `; or';
and
(3) by adding at the end the following:
`(11) after the filing of the petition, the debtor failed to complete an
instructional course concerning personal financial management described in
section 111.
`(12)(A) Paragraph (11) shall not apply with respect to a debtor who
resides in a district for which the United States trustee or bankruptcy
administrator of that district determines that the approved instructional
courses are not adequate to service the additional individuals required to
complete such instructional courses under this section.
`(B) Each United States trustee or bankruptcy administrator that makes a
determination described in subparagraph (A) shall review that determination
not later than 1 year after the date of that determination, and not less
frequently than every year thereafter.'.
(c) CHAPTER 13 DISCHARGE- Section 1328 of title 11, United States Code, is
amended by adding at the end the following:
`(g) The court shall not grant a discharge under this section to a debtor,
unless after filing a petition the debtor has completed an instructional
course concerning personal financial management described in section 111.
`(h) Subsection (g) shall not apply with respect to a debtor who resides
in a district for which the United States trustee or bankruptcy administrator
of the bankruptcy court of that district determines that the approved
instructional courses are not adequate to service the additional individuals
who would be required to complete the instructional course by reason of the
requirements of this section.
`(i) Each United States trustee or bankruptcy administrator that makes a
determination described in subsection (h) shall review that determination not
later than 1 year after the date of that determination, and not less
frequently than every year thereafter.'.
(d) DEBTOR'S DUTIES- Section 521 of title 11, United States Code, is
amended--
(1) by inserting `(a)' before `The debtor shall--'; and
(2) by adding at the end the following:
`(b) In addition to the requirements under subsection (a), an individual
debtor shall file with the court--
`(1) a certificate from the approved nonprofit budget and credit
counseling agency that provided the debtor services under section 109(h)
describing the services provided to the debtor; and
`(2) a copy of the debt repayment plan, if any, developed under section
109(h) through the approved nonprofit budget and credit counseling agency
referred to in paragraph (1).'.
(1) IN GENERAL- Chapter 1 of title 11, United States Code, is amended by
adding at the end the following:
`Sec. 111. Credit counseling services; financial management instructional
courses
`(a) The clerk of each district shall maintain a publicly available list
of--
`(1) credit counseling agencies that provide 1 or more programs
described in section 109(h) currently approved by the United States trustee
or the bankruptcy administrator for the district, as applicable; and
`(2) instructional courses concerning personal financial management
currently approved by the United States trustee or the bankruptcy
administrator for the district, as applicable.
`(b) The United States trustee or bankruptcy administrator shall only
approve a credit counseling agency or instructional course concerning personal
financial management as follows:
`(1) The United States trustee or bankruptcy administrator shall have
thoroughly reviewed the qualifications of the credit counseling agency or of
the provider of the instructional course under the standards set forth in
this section, and the programs or instructional courses which will be
offered by such agency or provider, and may require an agency or provider of
an instructional course which has sought approval to provide information
with respect to such review.
`(2) The United States trustee or bankruptcy administrator shall have
determined that the credit counseling agency or course of instruction fully
satisfies the applicable standards set forth in this section.
`(3) When an agency or course of instruction is initially approved, such
approval shall be for a probationary period not to exceed 6 months. An
agency or course of instruction is initially approved if it did not appear
on the approved list for the district under subsection (a) immediately prior
to approval.
`(4) At the conclusion of the probationary period under paragraph (3),
the United States trustee or bankruptcy administrator may only approve for
an additional 1-year period, and for successive 1-year periods thereafter,
any agency or course of instruction which has demonstrated during the
probationary or subsequent period that such agency or course of
instruction--
`(A) has met the standards set forth under this section during such
period; and
`(B) can satisfy such standards in the future.
`(5) Not later than 30 days after any final decision under paragraph
(4), that occurs either after the expiration of the initial probationary
period, or after any 2-year period thereafter, an interested person may seek
judicial review of such decision in the appropriate United States District
Court.
`(c)(1) The United States trustee or bankruptcy administrator shall only
approve a credit counseling agency that demonstrates that it will provide
qualified counselors, maintain adequate provision for safekeeping and payment
of client funds, provide adequate counseling with respect to client credit
problems, and deal responsibly and effectively with other matters as relate to
the quality, effectiveness, and financial security of such programs.
`(2) To be approved by the United States trustee or bankruptcy
administrator, a credit counseling agency shall, at a minimum--
`(A) be a nonprofit budget and credit counseling agency, the majority of
the board of directors of which--
`(i) are not employed by the agency; and
`(ii) will not directly or indirectly benefit financially from the
outcome of a credit counseling session;
`(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 clients, including funding sources,
counselor qualifications, possible impact on credit reports, and any costs
of such program that will be paid by the debtor and how such costs will be
paid;
`(E) provide adequate counseling with respect to client credit problems
that includes an analysis of their current situation, what brought them to
that financial status, and how they can develop a plan to handle the problem
without incurring negative amortization of their debts;
`(F) provide trained counselors who receive no commissions or bonuses
based on the counseling session outcome, and who have adequate experience,
and have been adequately trained to provide counseling services to
individuals in financial difficulty, including the matters described in
subparagraph (E);
`(G) demonstrate adequate experience and background in providing credit
counseling; and
`(H) have adequate financial resources to provide continuing support
services for budgeting plans over the life of any repayment plan.
`(d) The United States trustee or bankruptcy administrator 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 minimum--
`(A) trained personnel with adequate experience and training in
providing effective instruction and services;
`(B) learning materials and teaching methodologies designed to assist
debtors in understanding personal financial management and that are
consistent with stated objectives directly related to the goals of such
course of instruction;
`(C) adequate facilities situated in reasonably convenient locations
at which such course of instruction is offered, except that such
facilities may include the provision of such course of instruction or
program by telephone or through the Internet, if the course of instruction
or program is effective; and
`(D) the preparation and retention of reasonable records (which shall
include the debtor's bankruptcy case number) to permit evaluation of the
effectiveness of such course of instruction or program, including any
evaluation of satisfaction of course of instruction or program
requirements for each debtor attending such course of instruction or
program, which shall be available for inspection and evaluation by the
Executive Office for United States Trustees, the United States trustee,
bankruptcy administrator, or chief bankruptcy judge for the district in
which such course of instruction or program is offered; and
`(2) for any 1-year period if the provider thereof has demonstrated that
the course meets the standards of paragraph (1) and, in addition--
`(A) has been effective in assisting a substantial number of debtors
to understand personal financial management; and
`(B) is otherwise likely to increase substantially debtor
understanding of personal financial management.
`(e) The District Court may, at any time, investigate the qualifications
of a credit counseling agency referred to in subsection (a), and request
production of documents to ensure the integrity and effectiveness of such
credit counseling agencies. The District Court may, at any time, remove from
the approved list under subsection (a) a credit counseling agency upon finding
such agency does not meet the qualifications of subsection (b).
`(f) The United States trustee or bankruptcy administrator shall notify
the clerk that a 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 credit counseling service may provide to a credit reporting
agency information concerning whether an individual debtor has received or
sought instruction concerning personal financial management from the credit
counseling service.
`(2) A credit counseling service that willfully or negligently fails to
comply with any requirement 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 debtor as a result of the
violation; and
`(B) any court costs or reasonable attorneys' fees (as determined by the
court) incurred in an action to recover those damages.'.
(2) CLERICAL AMENDMENT- The table of sections for chapter 1 of title 11,
United States Code, is amended by adding at the end the following:
`111. Credit counseling services; financial management instructional
courses.'.
(f) LIMITATION- Section 362 of title 11, United States Code, is amended by
adding at the end the following:
`(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 administrative 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 RESOLUTION.
(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 section based in whole on unsecured consumer
debts by not more than 20 percent of the claim, if--
`(A) the claim was filed by a creditor who unreasonably refused to
negotiate a reasonable alternative repayment schedule proposed by an
approved credit counseling agency described in section 111 acting on behalf
of the debtor;
`(B) the offer of the debtor under subparagraph (A)--
`(i) was made at least 60 days before 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 consider the debtor's
proposal; and
`(B) the proposed alternative repayment schedule was made prior to
expiration of the 60-day period 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 plan between the debtor and any creditor of
the debtor created by an approved credit counseling 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 payments received under a
plan confirmed under this title (including a plan of reorganization confirmed
under chapter 11 of this title), unless the plan is dismissed, in default, or
the creditor has not received payments required to be made under the plan in
the manner required by the plan (including crediting the amounts required
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 injunction 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 business 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 PRACTICES.
(a) IN GENERAL- Section 524 of title 11, United States Code, as amended by
this Act, is amended--
(1) in subsection (c), by striking paragraph (2) and inserting the
following:
`(2) the debtor received the disclosures described in subsection (k) at
or before the time at which the debtor signed the agreement;';
(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 paragraph, together with the agreement, statement, declaration, motion
and order described, respectively, in paragraphs (4) through (8), and shall be
the only disclosures required in connection with the reaffirmation.
`(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 paragraphs (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 disclosures:';
`(B) Under the heading `Summary of Reaffirmation Agreement', the
statement: `This Summary is made pursuant to the requirements of the
Bankruptcy Code';
`(C) The `Amount Reaffirmed', using that term, which shall be--
`(i) the total amount which the debtor agrees to reaffirm,
and
`(ii) the total of any other fees or cost accrued as of the date of
the disclosure statement.
`(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 open end
credit as defined under the Truth in Lending Act (15 U.S.C. 1601 et seq.),
then--
`(I) the annual percentage rate determined under paragraphs (5) and
(6) of section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)(5)
and (6)), as applicable, as disclosed to the debtor in the most recent
periodic statement prior to the agreement or, if no such periodic
statement has been provided 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 the debtor, or to the extent this
annual percentage rate is not readily available or not applicable,
then
`(II) the simple interest rate applicable 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
interest rate applicable to each such balance, identifying the amount of
each such balance included in the amount reaffirmed, or
`(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under subclause (I) and the simple interest rate
under subclause (II);
`(ii) if, at the time the petition is filed, the debt is closed end
credit as defined under the Truth in Lending Act (15 U.S.C. 1601 et seq.),
then--
`(I) the annual percentage rate under section 128(a)(4) of the Truth
in Lending Act (15 U.S.C. 1638(a)(4)), as disclosed to the debtor in the
most recent disclosure statement given the debtor prior to the
reaffirmation agreement with respect to the debt, or, if no such
disclosure statement was provided the debtor, the annual percentage rate
as it would have been so disclosed at the time the disclosure statement
is given the debtor, or to the extent this annual percentage rate is not
readily available or not applicable, then
`(II) the simple interest rate applicable to the amount reaffirmed
as of the date the disclosure statement is given the debtor, or if
different simple interest rates apply to different balances, the simple
interest rate applicable to each such balance, identifying the amount of
such balance included in the amount reaffirmed, or
`(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under (I) and the simple interest rate under
(II).
`(F) If the underlying debt transaction was disclosed as a variable rate
transaction on the most recent disclosure given under the Truth in Lending
Act (15 U.S.C. 1601 et seq.), 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 interest 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 asserted over some or all of the obligations
you are reaffirming and listing the items and their original purchase price
that are subject to the asserted security interest, or if not a
purchase-money security interest then listing by items or types and the
original amount of the loan.
`(H) At the election of the creditor, a statement of the repayment
schedule using 1 or a combination of the following--
`(i) by making the statement: `Your first payment in the amount of
$XXX is due on XXX but the future payment amount may be
different. Consult your reaffirmation 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 payment schedule will be:', and
describing the repayment schedule with the number, amount and due dates or
period of payments scheduled to repay the obligations reaffirmed to the
extent then known by the disclosing party; or
`(iii) by describing the debtor's repayment obligations with
reasonable specificity to the extent 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 reaffirmation or what the law requires, talk to the attorney who helped
you negotiate this agreement. If you don't have an attorney helping you, the
judge will explain the effect of your reaffirmation when the reaffirmation
hearing 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 carefully. 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 the
reaffirmation agreement, the attorney must have signed the certification in
Part C.
`4. If you were not represented by an attorney during the negotiation of
the reaffirmation agreement, 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 separate 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 the
reaffirmation agreement, your reaffirmation agreement becomes effective upon
filing with the court unless the reaffirmation is presumed to be an undue
hardship as explained in Part D.
`7. If you were not represented by an attorney during the negotiation of
the reaffirmation agreement, it will not be effective unless the court
approves 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 review your agreement. The bankruptcy court must approve the agreement
as consistent with your best interests, except that no court approval is
required if the agreement is for a consumer debt secured by a mortgage, deed
of trust, security deed or other lien on your real property, like your
home.
`Your right to rescind a reaffirmation. You may rescind (cancel) your
reaffirmation at any time before the bankruptcy court enters a discharge order
or within 60 days after the agreement is filed with the court, whichever is
longer. To rescind or cancel, you must notify the creditor that the agreement
is 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. That means that if you default on your reaffirmed debt after your
bankruptcy 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 agreement or applicable law to change the terms of the
agreement in the future under certain conditions.
`Are you required to enter into a reaffirmation agreement by any law? No,
you are not required to reaffirm a debt by any law. Only agree to reaffirm a
debt if it is in your best interest. Be sure you can afford the payments 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 subsection (m)(2), numbered
paragraph 6 in the disclosures required by clause (i) of this subparagraph
shall read as follows:
`6. If you were represented by an attorney during the negotiation of the
reaffirmation agreement, your reaffirmation agreement becomes effective upon
filing with the court.'.
`(4) The form of reaffirmation agreement required under this paragraph
shall consist of the following:
`Part B: Reaffirmation Agreement. I/we agree to reaffirm the obligations
arising under the credit agreement described below.
`Brief description of credit agreement:
`Description of any changes to the credit agreement made as part of this
reaffirmation agreement:
`Co-borrower, if also reaffirming:
`Date of creditor acceptance:'.
`(5)(A) The declaration shall consist of the following:
`Part C: Certification by Debtor's Attorney (If Any).
`I hereby certify that (1) this agreement represents a fully informed and
voluntary agreement by the debtor(s); (2) this agreement does not impose an
undue hardship on the debtor or any dependent of the debtor; and (3) I have
fully advised the debtor of the legal effect and consequences of this
agreement and any default under this agreement.
`Signature of Debtor's Attorney: Date:'.
`(B) In the case of reaffirmations in which a presumption of undue
hardship has been established, the certification shall state that in the
opinion of the attorney, the debtor is able to make the payment.
`(C) In the case of a reaffirmation agreement under subsection (m)(2),
subparagraph (B) is not applicable.
`(6)(A) The statement in support of reaffirmation agreement, which the
debtor shall sign and date prior to filing with the court, shall consist of
the following:
`Part D: Debtor's Statement in Support of Reaffirmation Agreement.
`1. I believe this agreement will not impose an undue hardship on my
dependents or me. I can afford to make the payments on the reaffirmed debt
because my monthly income (take home pay plus any other income received) is
$XXX, and my actual current monthly expenses including monthly payments
on post-bankruptcy debt and other reaffirmation agreements total $XXX,
leaving $XXX to make the required payments on this reaffirmed debt. I
understand that if my income less my monthly expenses does not leave enough to
make the payments, this reaffirmation agreement is presumed to be an undue
hardship on me and must be reviewed by the court. However, this presumption
may be overcome if I explain
to the satisfaction of the court how I can afford to make the payments here:
XXX.
`2. I received a copy of the Reaffirmation Disclosure Statement in Part A
and a completed and signed reaffirmation agreement.'.
`(B) Where the debtor is represented by counsel and is reaffirming a debt
owed to a creditor defined in section 19(b)(1)(A)(iv) of the Federal Reserve
Act (12 U.S.C. 461(b)(1)(A)(iv)), the statement of support of the
reaffirmation agreement, which the debtor shall sign and date prior to filing
with the court, shall consist of the following:
`I believe this agreement is in my financial interest. I can afford to
make the payments on the reaffirmed debt. I received a copy of the
Reaffirmation Disclosure Statement in Part A and a completed and signed
reaffirmation agreement.'
`(7) The motion, which may be used if approval of the agreement by the
court is required in order for it to be effective and shall be signed and
dated by the moving party, shall consist of the following:
`Part E: Motion for Court Approval (To be completed only where debtor is
not represented by an attorney.). I (we), the debtor, affirm the following to
be true and correct:
`I am not represented by an attorney in connection with this reaffirmation
agreement.
`I believe this agreement is in my best interest based on the income and
expenses I have disclosed in my Statement in Support of this reaffirmation
agreement above, and because (provide any additional relevant reasons the
court should consider):
`Therefore, I ask the court for an order approving this reaffirmation
agreement.'.
`(8) The court order, which may be used to approve a reaffirmation, shall
consist of the following:
`Court Order: The court grants the debtor's motion and approves the
reaffirmation agreement described above.'.
`(9) Subsection (a)(2) does not operate as an injunction against an act by
a creditor that is the holder of a secured claim, if--
`(A) such creditor retains a security interest in real property that is
the debtor's principal residence;
`(B) such act is in the ordinary course of business between the creditor
and the debtor; and
`(C) 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.
`(l) Notwithstanding any other provision of this title:
`(1) A creditor may accept payments from a debtor before and after the
filing of a reaffirmation agreement with the court.
`(2) A creditor may accept payments from a debtor under a reaffirmation
agreement which the creditor believes in good faith to be effective.
`(3) The requirements of subsections (c)(2) and (k) shall be satisfied
if disclosures required under those subsections are given in good
faith.
`(m)(1) Until 60 days after a reaffirmation agreement is filed with the
court (or such additional period as the court, after notice and hearing and
for cause, orders before the expiration of such period), it shall be presumed
that the reaffirmation agreement is an undue hardship on the debtor if the
debtor's monthly income less the debtor's monthly expenses as shown on the
debtor's completed and signed statement in support of the reaffirmation
agreement required under subsection (k)(6)(A) is less than the scheduled
payments on the reaffirmed debt. This presumption shall be reviewed by the
court. The presumption may be rebutted in writing by the debtor if the
statement includes an explanation which identifies additional sources of funds
to make the payments as agreed upon under the terms of the reaffirmation
agreement. If the presumption is not rebutted to the satisfaction of the
court, the court may disapprove the agreement. No agreement shall be
disapproved without notice and hearing to the debtor and creditor and such
hearing shall be concluded before the entry of the debtor's discharge.
`(2) This subsection does not apply to reaffirmation agreements where the
creditor is a credit union, as defined in section 19(b)(1)(A)(iv) of the
Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(iv)).'.
(1) IN GENERAL- Chapter 9 of title 18, United States Code, is amended by
adding at the end the following:
`Sec. 158. Designation of United States attorneys and agents of the Federal
Bureau of Investigation to address abusive reaffirmations of debt and materially
fraudulent statements in bankruptcy schedules
`(a) IN GENERAL- The Attorney General of the United States shall designate
the individuals described in subsection (b) to have primary responsibility in
carrying out enforcement activities in addressing violations of section 152 or
157 relating to abusive reaffirmations of debt. In addition to addressing the
violations referred to in the preceding sentence, the individuals described
under subsection (b) shall address violations of section 152 or 157 relating
to materially fraudulent statements in bankruptcy schedules that are
intentionally false or intentionally misleading.
`(b) UNITED STATES DISTRICT ATTORNEYS AND AGENTS OF THE FEDERAL BUREAU OF
INVESTIGATION--The individuals referred to in subsection (a) are--
`(1) a United States attorney for each judicial district of the United
States; and
`(2) an agent of the Federal Bureau of Investigation (within the meaning
of section 3107) for each field office of the Federal Bureau of
Investigation.
`(c) BANKRUPTCY INVESTIGATIONS- Each United States attorney designated
under this section shall, in addition to any other responsibilities, have
primary responsibility for carrying out the duties of a United States attorney
under section 3057.
`(d) BANKRUPTCY PROCEDURES- The bankruptcy courts shall establish
procedures for referring any case which may contain a materially fraudulent
statement in a bankruptcy schedule to the individuals designated under this
section.'.
(2) CLERICAL AMENDMENT- The analysis for chapter 9 of title 18, United
States Code, is amended by adding at the end the following:
`158. Designation of United States attorneys and agents of the Federal
Bureau of Investigation to address abusive reaffirmations of debt and
materially fraudulent statements in bankruptcy schedules.'.
Subtitle B--Priority Child Support
SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.
Section 101 of title 11, United States Code, is amended--
(1) by striking paragraph (12A); and
(2) by inserting after paragraph (14) the following:
`(14A) `domestic support obligation' means a debt that accrues before or
after the entry of an order for relief under this title, including interest
that accrues on that debt as provided under applicable nonbankruptcy law
notwithstanding any other provision of this title, that is--
`(A) owed to or recoverable by--
`(i) a spouse, former spouse, or child of the debtor or such child's
parent, legal guardian, or responsible relative; or
`(ii) a governmental unit;
`(B) in the nature of alimony, maintenance, or support (including
assistance provided by a governmental unit) of such spouse, former spouse,
or child of the debtor or such child's parent, without regard to whether
such debt is expressly so designated;
`(C) established or subject to establishment before or after entry of
an order for relief under this title, by reason of applicable provisions
of--
`(i) a separation agreement, divorce decree, or property settlement
agreement;
`(ii) an order of a court of record; or
`(iii) a determination made in accordance with applicable
nonbankruptcy law by a governmental unit; and
`(D) not assigned to a nongovernmental entity, unless that obligation
is assigned voluntarily by the spouse, former spouse, child, or parent,
legal guardian, or responsible relative of the child for the purpose of
collecting the debt;'.
SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT OBLIGATIONS.
Section 507(a) of title 11, United States Code, is amended--
(1) by striking paragraph (7);
(2) by redesignating paragraphs (1) through (6) as paragraphs (2)
through (7), respectively;
(3) in paragraph (2), as redesignated, by striking `First' and inserting
`Second';
(4) in paragraph (3), as redesignated, by striking `Second' and
inserting `Third';
(5) in paragraph (4), as redesignated--
(A) by striking `Third' and inserting `Fourth'; and
(B) by striking the semicolon at the end and inserting a
period;
(6) in paragraph (5), as redesignated, by striking `Fourth' and
inserting `Fifth';
(7) in paragraph (6), as redesignated, by striking `Fifth' and inserting
`Sixth';
(8) in paragraph (7), as redesignated, by striking `Sixth' and inserting
`Seventh'; and
(9) by inserting before paragraph (2), as redesignated, the
following:
`(A) Allowed unsecured claims for domestic support obligations that,
as of the date of the filing of the petition, are owed to or recoverable
by a spouse, former spouse, or child of the debtor, or the parent, legal
guardian, or responsible relative of such child, without regard to whether
the claim is filed by such person or is filed by a governmental unit on
behalf of that person, on the condition that funds received under this
paragraph by a governmental unit under this title after the date of filing
of the petition shall be applied and distributed in accordance with
applicable nonbankruptcy law.
`(B) Subject to claims under subparagraph (A), allowed unsecured
claims for domestic support obligations that, as of the date the petition
was filed are assigned by a spouse, former spouse, child of the debtor, or
such child's parent, legal guardian, or responsible relative to a
governmental unit (unless such obligation is assigned voluntarily by the
spouse, former spouse, child, parent, legal guardian, or responsible
relative of the child for the purpose of collecting the debt) or are owed
directly to or recoverable by a government unit under applicable
nonbankruptcy law, on the condition that funds received under this
paragraph by a governmental unit under this title after the date of filing
of the petition be applied and distributed in accordance with applicable
nonbankruptcy law.'.
SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE IN CASES
INVOLVING DOMESTIC SUPPORT OBLIGATIONS.
Title 11, United States Code, is amended--
(1) in section 1129(a), by adding at the end the following:
`(14) If the debtor is required by a judicial or administrative order or
statute to pay a domestic support obligation, the debtor has paid all
amounts payable under such order or statute for such obligation that first
become payable after the date on which the petition is filed.';
(A) in paragraph (8), by striking `or' at the end;
(B) in paragraph (9), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(10) failure of the debtor to pay any domestic support obligation that
first becomes payable after the date on which the petition is filed.';
(A) in paragraph (2), by striking `and' at the end;
(B) in paragraph (3), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(4) notwithstanding any other provision of this section, a plan may
provide for less than full payment of all amounts owed for a claim entitled
to priority under section 507(a)(1)(B) only if the plan provides that all of
the debtor's projected disposable income for a 5-year period, beginning on
the date that the first payment is due under the plan, will be applied to
make payments under the plan.';
(A) by redesignating paragraph (11) as paragraph (12); and
(B) by inserting after paragraph (10) the following:
`(11) provide for the payment of interest accruing after the date of the
filing of the petition on unsecured claims that are nondischargeable under
section 1328(a), except that such interest may be paid only to the extent
that the debtor has disposable income available to pay such interest after
making provision for full payment of all allowed claims;';
(A) in paragraph (5), by striking `and' at the end;
(B) in paragraph (6), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(7) if the debtor is required by a judicial or administrative order or
statute to pay a domestic support obligation, the debtor has paid all
amounts payable under such order for such obligation that first become
payable after the date on which the petition is filed.';
(6) in section 1228(a), in the matter preceding paragraph (1), by
inserting `, and in the case of a debtor who is required by a judicial or
administrative order to pay a domestic support obligation, after such debtor
certifies that all amounts payable under such order or statute that are due
on or before the date of the certification (including amounts due before the
petition was filed, but only to the extent provided for in the plan) have
been paid' after `completion by the debtor of all payments under the
plan';
(A) in paragraph (9), by striking `or' at the end;
(B) in paragraph (10), by striking the period at the end and inserting
`; or'; and
(C) by adding at the end the following:
`(11) failure of the debtor to pay any domestic support obligation that
first becomes payable after the date on which the petition is filed.';
(A) in paragraph (2), by striking `and' at the end;
(B) in paragraph (3), by striking the period at the end and inserting
`; and'; and
(C) by adding in the end the following:
`(4) notwithstanding any other provision of this section, a plan may
provide for less than full payment of all amounts owed for a claim entitled
to priority under section 507(a)(1)(B) only if the plan provides that all of
the debtor's projected disposable income for a 5-year period beginning on
the date that the first payment is due under the plan will be applied to
make payments under the plan.';
(A) in paragraph (9), by striking `; and' and inserting a
semicolon;
(B) by redesignating paragraph (10) as paragraph (11); and
(C) inserting after paragraph (9) the following:
`(10) provide for the payment of interest accruing after the date of the
filing of the petition on unsecured claims that are nondischargeable under
section 1328(a), except that such interest may be paid only to the extent
that the debtor has disposable income available to pay such interest after
making provision for full payment of all allowed claims; and';
(10) in section 1325(a) (as amended by this Act), by adding at the end
the following:
`(8) the debtor is required by a judicial or administrative order or
statute to pay a domestic support obligation, the debtor has paid all
amounts payable under such order or statute for such obligation that first
becomes payable after the date on which the petition is filed; and';
(11) in section 1328(a), in the matter preceding paragraph (1), by
inserting `, and in the case of a debtor who is required by a judicial or
administrative order to pay a domestic support obligation, after such debtor
certifies that all amounts payable under such order or statute that are due
on or before the date of the certification (including amounts due before the
petition was filed, but only to the extent provided for in the plan) have
been paid' after `completion by the debtor of all payments under the
plan'.
SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION
PROCEEDINGS.
Section 362(b) of title 11, United States Code, is amended by striking
paragraph (2) and inserting the following:
`(2) under subsection (a)--
`(A) of the commencement or continuation of a civil action or
proceeding--
`(i) for the establishment of paternity;
`(ii) for the establishment or modification of an order for domestic
support obligations;
`(iii) concerning child custody or visitation;
`(iv) for the dissolution of a marriage, except to the extent that
such proceeding seeks to determine the division of property that is
property of the estate; or
`(v) regarding domestic violence;
`(B) the collection of a domestic support obligation from property
that is not property of the estate;
`(C) with respect to the withholding of income that is property of the
estate or property of the debtor for payment of a domestic support
obligation under a judicial or administrative order;
`(D) the withholding, suspension, or restriction of drivers' licenses,
professional and occupational licenses, and recreational licenses under
State law, as specified in section 466(a)(16) of the Social Security Act
(42 U.S.C. 666(a)(16));
`(E) the reporting of overdue support owed by a parent to any consumer
reporting agency as specified in section 466(a)(7) of the Social Security
Act (42 U.S.C. 666(a)(7));
`(F) the interception of tax refunds, as specified in sections 464 and
466(a)(3) of the Social Security Act (42 U.S.C. 664 and 666(a)(3)) or
under an analogous State law; or
`(G) the enforcement of medical obligations as specified under title
IV of the Social Security Act (42 U.S.C. 601 et seq.);'.
SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, MAINTENANCE, AND
SUPPORT.
Section 523 of title 11, United States Code, is amended--
(A) by striking paragraph (5) and inserting the following:
`(5) for a domestic support obligation;';
(i) by inserting `to a spouse, former spouse, or child of the debtor
and' before `not of the kind';
(ii) by inserting `or' after `court of record,'; and
(iii) by striking `unless--' and all that follows through the end of
the paragraph and inserting a semicolon; and
(C) by striking paragraph (18); and
(2) in subsection (c), by striking `(6), or (15)' each place it appears
and inserting `or (6)'.
SEC. 216. CONTINUED LIABILITY OF PROPERTY.
Section 522 of title 11, United States Code, is amended--
(1) in subsection (c), by striking paragraph (1) and inserting the
following:
`(1) a debt of a kind specified in paragraph (1) or (5) of section
523(a) (in which case, notwithstanding any provision of applicable
nonbankruptcy law to the contrary, such property shall be liable for a debt
of a kind specified in section 523(a)(5));';
(2) in subsection (f)(1)(A), by striking the dash and all that follows
through the end of the subparagraph and inserting `of a kind that is
specified in section 523(a)(5); or'; and
(3) in subsection (g)(2), by striking `subsection (f)(2)' and inserting
`subsection (f)(1)(B)'.
SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST PREFERENTIAL
TRANSFER MOTIONS.
Section 547(c)(7) of title 11, United States Code, is amended to read as
follows:
`(7) to the extent such transfer was a bona fide payment of a debt for a
domestic support obligation;'.
SEC. 218. DISPOSABLE INCOME DEFINED.
(a) CONFIRMATION OF PLAN UNDER CHAPTER 12- Section 1225(b)(2)(A) of title
11, United States Code, is amended by inserting `or for a domestic support
obligation that first becomes payable after the date on which the petition is
filed' after `dependent of the debtor'.
(b) CONFIRMATION OF PLAN UNDER CHAPTER 13- Section 1325(b)(2)(A) of title
11, United States Code, is amended by inserting `or for a domestic support
obligation that first becomes payable after the date on which the petition is
filed' after `dependent of the debtor'.
SEC. 219. COLLECTION OF CHILD SUPPORT.
(a) DUTIES OF TRUSTEE UNDER CHAPTER 7- Section 704 of title 11, United
States Code, as amended by this Act, is amended--
(A) in paragraph (8), by striking `and' at the end;
(B) in paragraph (9), by striking the period and inserting a
semicolon; and
(C) by adding at the end the following:
`(10) if, with respect to an individual debtor, there is a claim for a
domestic support obligation, provide the applicable notification specified
in subsection (c); and'; and
(2) by adding at the end the following:
`(c)(1) In any case described in subsection (a)(10), the trustee
shall--
`(A)(i) notify in writing the holder of the claim of the right of that
holder to use the services of a State child support enforcement agency
established under sections 464 and 466 of the Social Security Act (42 U.S.C.
664, 666) for the State in which the holder resides for assistance in
collecting child support during and after the bankruptcy procedures;
`(ii) include in the notice under this paragraph the address and
telephone number of the child support enforcement agency; and
`(iii) include in the notice an explanation of the rights of the holder
of the claim to payment of the claim under this chapter; and
`(B)(i) notify in writing the State child support agency of the State in
which the holder of the claim resides of the claim;
`(ii) include in the notice under this paragraph the name, address, and
telephone number of the holder of the claim; and
`(iii) at such time as the debtor is granted a discharge under section
727, notify the holder of that claim and the State child support agency of
the State in which that holder resides of--
`(I) the granting of the discharge;
`(II) the last recent known address of the debtor;
`(III) the last recent known name and address of the debtor's
employer; and
`(IV) with respect to the debtor's case, the name of each creditor
that holds a claim that--
`(aa) is not discharged under paragraph (2), (4), or (14A) of
section 523(a); or
`(bb) was reaffirmed by the debtor under section 524(c).
`(2)(A) A holder of a claim or a State child support agency may request
from a creditor described in paragraph (1)(B)(iii)(IV) the last known address
of the debtor.
`(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request
made under subparagraph (A) shall not be liable to the debtor or any other
person by reason of making that disclosure.'.
(b) DUTIES OF TRUSTEE UNDER CHAPTER 11- Section 1106 of title 11, United
States Code, is amended--
(A) in paragraph (6), by striking `and' at the end;
(B) in paragraph (7), by striking the period and inserting `; and';
and
(C) by adding at the end the following:
`(8) if, with respect to an individual debtor, there is a claim for a
domestic support obligation, provide the applicable notification specified
in subsection (c).'; and
(2) by adding at the end the following:
`(c)(1) In any case described in subsection (a)(7), the trustee shall--
`(A)(i) notify in writing the holder of the claim of the right of that
holder to use the services of a State child support enforcement agency
established under sections 464 and 466 of the Social Security Act (42 U.S.C.
664, 666) for the State in which the holder resides; and
`(ii) include in the notice under this paragraph the address and
telephone number of the child support enforcement agency; and
`(B)(i) notify, in writing, the State child support agency (of the State
in which the holder of the claim resides) of the claim;
`(ii) include in the notice under this paragraph the name, address, and
telephone number of the holder of the claim; and
`(iii) at such time as the debtor is granted a discharge under section
1141, notify the holder of the claim and the State child support agency of
the State in which that holder resides of--
`(I) the granting of the discharge;
`(II) the last recent known address of the debtor;
`(III) the last recent known name and address of the debtor's
employer; and
`(IV) with respect to the debtor's case, the name of each creditor
that holds a claim that--
`(aa) is not discharged under paragraph (2), (3), or (14) of section
523(a); or
`(bb) was reaffirmed by the debtor under section 524(c).
`(2)(A) A holder of a claim or a State child support agency may request
from a creditor described in paragraph (1)(B)(iii)(IV) the last known address
of the debtor.
`(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request
made under subparagraph (A) shall not be liable to the debtor or any other
person by reason of making that disclosure.'.
(c) DUTIES OF TRUSTEE UNDER CHAPTER 12- Section 1202 of title 11, United
States Code, is amended--
(A) in paragraph (4), by striking `and' at the end;
(B) in paragraph (5), by striking the period and inserting `; and';
and
(C) by adding at the end the following:
`(6) if, with respect to an individual debtor, there is a claim for a
domestic support obligation, provide the applicable notification specified
in subsection (c).'; and
(2) by adding at the end the following:
`(c)(1) In any case described in subsection (b)(6), the trustee shall--
`(A)(i) notify in writing the holder of the claim of the right of that
holder to use the services of a State child support enforcement agency
established under sections 464 and 466 of the Social Security Act (42 U.S.C.
664, 666) for the State in which the holder resides; and
`(ii) include in the notice under this paragraph the address and
telephone number of the child support enforcement agency; and
`(B)(i) notify, in writing, the State child support agency (of the State
in which the holder of the claim resides) of the claim;
`(ii) include in the notice under this paragraph the name, address, and
telephone number of the holder of the claim; and
`(iii) at such time as the debtor is granted a discharge under section
1228, notify the holder of the claim and the State child support agency of
the State in which that holder resides of--
`(I) the granting of the discharge;
`(II) the last recent known address of the debtor;
`(III) the last recent known name and address of the debtor's
employer; and
`(IV) with respect to the debtor's case, the name of each creditor
that holds a claim that--
`(aa) is not discharged under paragraph (2), (4), or (14) of section
523(a); or
`(bb) was reaffirmed by the debtor under section 524(c).
`(2)(A) A holder of a claim or a State child support agency may request
from a creditor described in paragraph (1)(B)(iii)(IV) the last known address
of the debtor.
`(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request
made under subparagraph (A) shall not be liable to the debtor or any other
person by reason of making that disclosure.'.
(d) DUTIES OF TRUSTEE UNDER CHAPTER 13- Section 1302 of title 11, United
States Code, is amended--
(A) in paragraph (4), by striking `and' at the end;
(B) in paragraph (5), by striking the period and inserting `; and';
and
(C) by adding at the end the following:
`(6) if, with respect to an individual debtor, there is a claim for a
domestic support obligation, provide the applicable notification specified
in subsection (d).'; and
(2) by adding at the end the following:
`(d)(1) In any case described in subsection (b)(6), the trustee shall--
`(A)(i) notify in writing the holder of the claim of the right of that
holder to use the services of a State child support enforcement agency
established under sections 464 and 466 of the Social Security Act (42 U.S.C.
664, 666) for the State in which the holder resides; and
`(ii) include in the notice under this paragraph the address and
telephone number of the child support enforcement agency; and
`(B)(i) notify in writing the State child support agency of the State in
which the holder of the claim resides of the claim;
`(ii) include in the notice under this paragraph the name, address, and
telephone number of the holder of the claim; and
`(iii) at such time as the debtor is granted a discharge under section
1328, notify the holder of the claim and the State child support agency of
the State in which that holder resides of--
`(I) the granting of the discharge;
`(II) the last recent known address of the debtor;
`(III) the last recent known name and address of the debtor's
employer; and
`(IV) with respect to the debtor's case, the name of each creditor
that holds a claim that--
`(aa) is not discharged under paragraph (2), (4), or (14) of section
523(a); or
`(bb) was reaffirmed by the debtor under section 524(c).
`(2)(A) A holder of a claim or a State child support agency may request
from a creditor described in paragraph (1)(B)(iii)(IV) the last known address
of the debtor.
`(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request
made under subparagraph (A) shall not be liable to the debtor or any other
person by reason of making that disclosure.'.
SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS AND
LOANS.
Section 523(a) of title 11, United States Code, is amended by striking
paragraph (8) and inserting the following:
`(8) unless excepting such debt from discharge under this paragraph
would impose an undue hardship on the debtor and the debtor's dependents,
for--
`(A)(i) an educational benefit overpayment or loan made, insured, or
guaranteed by a governmental unit, or made under any program funded in
whole or in part by a governmental unit or nonprofit institution;
or
`(ii) an obligation to repay funds received as an educational benefit,
scholarship, or stipend; or
`(B) any other educational loan that is a qualified education loan, as
that term is defined in section 221(e)(1) of the Internal Revenue Code of
1986, incurred by an individual debtor;'.
Subtitle C--Other Consumer Protections
SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANKRUPTCY FILINGS.
Section 110 of title 11, United States Code, is amended--
(1) in subsection (a)(1), by striking `a person, other than an attorney
or an employee of an attorney' and inserting `the attorney for the debtor or
an employee of such attorney under the direct supervision of such
attorney';
(A) in paragraph (1), by adding at the end the following: `If a
bankruptcy petition preparer is not an individual, then an officer,
principal, responsible person, or partner of the preparer shall be
required to--
`(A) sign the document for filing; and
`(B) print on the document the name and address of that officer,
principal, responsible person or partner.'; and
(B) by striking paragraph (2) and inserting the following:
`(2)(A) Before preparing any document for filing or accepting any fees
from a debtor, the bankruptcy petition preparer shall provide to the debtor a
written notice to debtors concerning bankruptcy petition preparers, which
shall be on an official form issued by the Judicial Conference of the United
States.
`(B) The notice under subparagraph (A)--
`(i) shall inform the debtor in simple language that a bankruptcy
petition preparer is not an attorney and may not practice law or give legal
advice;
`(ii) may contain a description of examples of legal advice that a
bankruptcy petition preparer is not authorized to give, in addition to any
advice that the preparer may not give by reason of subsection (e)(2);
and
`(bb) the bankruptcy petition preparer, under penalty of perjury;
and
`(II) be filed with any document for filing.';
(i) by striking `(2) For purposes' and inserting `(2)(A) Subject to
subparagraph (B), for purposes'; and
(ii) by adding at the end the following:
`(B) If a bankruptcy petition preparer is not an individual, the
identifying number of the bankruptcy petition preparer shall be the Social
Security account number of the officer, principal, responsible person, or
partner of the preparer.'; and
(B) by striking paragraph (3);
(A) by striking `(d)(1)' and inserting `(d)'; and
(B) by striking paragraph (2);
(A) by striking paragraph (2); and
(B) by adding at the end the following:
`(2)(A) A bankruptcy petition preparer may not offer a potential
bankruptcy debtor any legal advice, including any legal advice described in
subparagraph (B).
`(B) The legal advice referred to in subparagraph (A) includes advising
the debtor--
`(I) to file a petition under this title; or
`(II) commencing a case under chapter 7, 11, 12, or 13 is
appropriate;
`(ii) whether the debtor's debts will be eliminated or discharged in a
case under this title;
`(iii) whether the debtor will be able to retain the debtor's home, car,
or other property after commencing a case under this title;
`(I) the tax consequences of a case brought under this title;
or
`(II) the dischargeability of tax claims;
`(v) whether the debtor may or should promise to repay debts to a
creditor or enter into a reaffirmation agreement with a creditor to reaffirm
a debt;
`(vi) concerning how to characterize the nature of the debtor's
interests in property or the debtor's debts; or
`(vii) concerning bankruptcy procedures and rights.';
(A) by striking `(f)(1)' and inserting `(f)'; and
(B) by striking paragraph (2);
(A) by striking `(g)(1)' and inserting `(g)'; and
(B) by striking paragraph (2);
(A) by redesignating paragraphs (1) through (4) as paragraphs (2)
through (5), respectively;
(B) by inserting before paragraph (2), as redesignated, the
following:
`(1) The Supreme Court may promulgate rules under section 2075 of title
28, or the Judicial Conference of the United States may prescribe guidelines,
for setting a maximum allowable fee chargeable by a bankruptcy petition
preparer. A bankruptcy petition preparer shall notify the debtor of any such
maximum amount before preparing any document for filing for a debtor or
accepting any fee from the debtor.';
(C) in paragraph (2), as redesignated--
(i) by striking `Within 10 days after the date of filing a petition,
a bankruptcy petition preparer shall file a' and inserting
`A';
(ii) by inserting `by the bankruptcy petition preparer shall be
filed together with the petition,' after `perjury'; and
(iii) by adding at the end the following: `If rules or guidelines
setting a maximum fee for services have been promulgated or prescribed
under paragraph (1), the declaration under this paragraph shall include
a certification that the bankruptcy petition preparer complied with the
notification requirement under paragraph (1).';
(D) by striking paragraph (3), as redesignated, and inserting the
following:
`(3)(A) The court shall disallow and order the immediate turnover to the
bankruptcy trustee any fee referred to in paragraph (2) found to be in
excess of the value of any services--
`(i) rendered by the preparer during the 12-month period immediately
preceding the date of filing of the petition; or
`(ii) found to be in violation of any rule or guideline promulgated or
prescribed under paragraph (1).
`(B) All fees charged by a bankruptcy petition preparer may be forfeited
in any case in which the bankruptcy petition preparer fails to comply with
this subsection or subsection (b), (c), (d), (e), (f), or (g).
`(C) An individual may exempt any funds recovered under this paragraph
under section 522(b).'; and
(E) in paragraph (4), as redesignated, by striking `or the United
States trustee' and inserting `the United States trustee, the bankruptcy
administrator, or the court, on the initiative of the court,';
(9) in subsection (i)(1), by striking the matter preceding subparagraph
(A) and inserting the following:
`(i)(1) If a bankruptcy petition preparer violates this section or commits
any act that the court finds to be fraudulent, unfair, or deceptive, on motion
of the debtor, trustee, United States trustee, or bankruptcy administrator,
and after the court holds a hearing with respect to that violation or act, the
court shall order the bankruptcy petition preparer to pay to the debtor--';
(i) in subparagraph (A)(i)(I), by striking `a violation of which
subjects a person to criminal penalty';
(ii) in subparagraph (B)--
(I) by striking `or has not paid a penalty' and inserting `has not
paid a penalty'; and
(II) by inserting `or failed to disgorge all fees ordered by the
court' after `a penalty imposed under this section,';
(B) by redesignating paragraph (3) as paragraph (4); and
(C) by inserting after paragraph (2) the following:
`(3) The court, as part of its contempt power, may enjoin a bankruptcy
petition preparer that has failed to comply with a previous order issued under
this section. The injunction under this paragraph may be issued upon motion of
the court, the trustee, the United States trustee, or the bankruptcy
administrator.'; and
(11) by adding at the end the following:
`(l)(1) A bankruptcy petition preparer who fails to comply with any
provision of subsection (b), (c), (d), (e), (f), (g), or (h) may be fined not
more than $500 for each such failure.
`(2) The court shall triple the amount of a fine assessed under paragraph
(1) in any case in which the court finds that a bankruptcy petition
preparer--
`(A) advised the debtor to exclude assets or income that should have
been included on applicable schedules;
`(B) advised the debtor to use a false Social Security account
number;
`(C) failed to inform the debtor that the debtor was filing for relief
under this title; or
`(D) prepared a document for filing in a manner that failed to disclose
the identity of the preparer.
`(3) The debtor, the trustee, a creditor, the United States trustee, or
the bankruptcy administrator may file a motion for an order imposing a fine on
the bankruptcy petition preparer for each violation of this section.
`(4)(A) Fines imposed under this subsection in judicial districts served
by United States trustees shall be paid to the United States trustee, who
shall deposit an amount equal to such fines in a special account of the United
States Trustee System Fund referred to in section 586(e)(2) of title 28.
Amounts deposited under this subparagraph shall be available to fund the
enforcement of this section on a national basis.
`(B) Fines imposed under this subsection in judicial districts served by
bankruptcy administrators shall be deposited as offsetting receipts to the
fund established under section 1931 of title 28, and shall remain available
until expended to reimburse any appropriation for the amount paid out of such
appropriation for expenses of the operation and maintenance of the courts of
the United States.'.
SEC. 222. SENSE OF CONGRESS.
It is the sense of Congress that States should develop curricula relating
to the subject of personal finance, designed for use in elementary and
secondary schools.
SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES CODE.
Section 507(a) of title 11, United States Code, is amended by inserting
after paragraph (9) the following:
`(10) Tenth, allowed claims for death or personal injuries resulting
from the operation of a motor vehicle or vessel if such operation was
unlawful because the debtor was intoxicated from using alcohol, a drug, or
another substance.'.
SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.
(a) IN GENERAL- Section 522 of title 11, United States Code, is
amended--
(i) in subparagraph (A), by striking `and' at the end;
(ii) in subparagraph (B), by striking the period at the end and
inserting `; and';
(iii) by adding at the end the following:
`(C) retirement funds to the extent that those funds are in a fund or
account that is exempt from taxation under section 401, 403, 408, 408A, 414,
457, or 501(a) of the Internal Revenue Code of 1986.'; and
(iv) by striking `(2)(A) any property' and inserting:
`(3) Property listed in this paragraph is--
(B) by striking paragraph (1) and inserting:
`(2) Property listed in this paragraph is property that is specified under
subsection (d), unless the State law that is applicable to the debtor under
paragraph (3)(A) specifically does not so authorize.';
(C) by striking `(b) Notwithstanding' and inserting `(b)(1)
Notwithstanding';
(D) by striking `paragraph (2)' each place it appears and inserting
`paragraph (3)';
(E) by striking `paragraph (1)' each place it appears and inserting
`paragraph (2)';
(F) by striking `Such property is--'; and
(G) by adding at the end the following:
`(4) For purposes of paragraph (3)(C) and subsection (d)(12), the
following shall apply:
`(A) If the retirement funds are in a retirement fund that has received
a favorable determination under section 7805 of the Internal Revenue Code of
1986, and that determination is in effect as of the date of the commencement
of the case under section 301, 302, or 303 of this title, those funds shall
be presumed to be exempt from the estate.
`(B) If the retirement funds are in a retirement fund that has not
received a favorable determination under such section 7805, those funds are
exempt from the estate if the debtor demonstrates that--
`(i) no prior determination to the contrary has been made by a court
or the Internal Revenue Service; and
`(ii)(I) the retirement fund is in substantial compliance with the
applicable requirements of the Internal Revenue Code of 1986; or
`(II) the retirement fund fails to be in substantial compliance with
the applicable requirements of the Internal Revenue Code of 1986 and the
debtor is not materially responsible for that failure.
`(C) A direct transfer of retirement funds from 1 fund or account that
is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or
501(a) of the Internal Revenue Code of 1986, under section 401(a)(31) of the
Internal Revenue Code of 1986, or otherwise, shall not cease to qualify for
exemption under paragraph (3)(C) or subsection (d)(12) by reason of that
direct transfer.
`(D)(i) Any distribution that qualifies as an eligible rollover
distribution within the meaning of section 402(c) of the Internal Revenue
Code of 1986 or that is described in clause (ii) shall not cease to
qualify for exemption under paragraph (3)(C) or subsection (d)(12) by reason
of that distribution.
`(ii) A distribution described in this clause is an amount that--
`(I) has been distributed from a fund or account that is exempt from
taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986; and
`(II) to the extent allowed by law, is deposited in such a fund or
account not later than 60 days after the distribution of that amount.';
and
(A) in the matter preceding paragraph (1), by striking `subsection
(b)(1)' and inserting `subsection (b)(2)'; and
(B) by adding at the end the following:
`(12) Retirement funds to the extent that those funds are in a fund or
account that is exempt from taxation under section 401, 403, 408, 408A, 414,
457, or 501(a) of the Internal Revenue Code of 1986.'.
(b) AUTOMATIC STAY- Section 362(b) of title 11, United States Code, is
amended--
(1) in paragraph (17), by striking `or' at the end;
(2) in paragraph (18), by striking the period and inserting a
semicolon;
(3) by inserting after paragraph (18) the following:
`(19) under subsection (a), of withholding of income from a debtor's
wages and collection of amounts withheld, under the debtor's agreement
authorizing that withholding and collection for the benefit of a pension,
profit-sharing, stock bonus, or other plan established under section 401,
403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986,
that is sponsored by the employer of the debtor, or an affiliate, successor,
or predecessor of such employer--
`(A) to the extent that the amounts withheld and collected are used
solely for payments relating to a loan from a plan that satisfies the
requirements of section 408(b)(1) of the Employee Retirement Income
Security Act of 1974 or is subject to section 72(p) of the Internal
Revenue Code of 1986; or
`(B) in the case of a loan from a thrift savings plan described in
subchapter III of chapter 84 of title 5, that satisfies the requirements
of section 8433(g) of such title;'; and
(4) by adding at the end of the flush material at the end of the
subsection, the following: `Nothing in paragraph (19) may be construed to
provide that any loan made under a governmental plan under section 414(d),
or a contract or account under section 403(b) of the Internal Revenue Code
of 1986 constitutes a claim or a debt under this title.'.
(c) EXCEPTIONS TO DISCHARGE- Section 523(a) of title 11, United States
Code, as amended by this Act, is amended by adding at the end the
following:
`(18) owed to a pension, profit-sharing, stock bonus, or other plan
established under section 401, 403, 408, 408A, 414, 457, or 501(c) of the
Internal Revenue Code of 1986, under--
`(A) a loan permitted under section 408(b)(1) of the Employee
Retirement Income Security Act of 1974, or subject to section 72(p) of the
Internal Revenue Code of 1986; or
`(B) a loan from the thrift savings plan described in subchapter III
of chapter 84 of title 5, that satisfies the requirements of section
8433(g) of such title.
Nothing in paragraph (18) may be construed to provide that any loan made
under a governmental plan under section 414(d), or a contract or account
under section 403(b), of the Internal Revenue Code of 1986 constitutes a
claim or a debt under this title.'.
(d) PLAN CONTENTS- Section 1322 of title 11, United States Code, is
amended by adding at the end the following:
`(f) A plan may not materially alter the terms of a loan described in
section 362(b)(19) and any amounts required to repay such loan shall not
constitute `disposable income' under section 1325.'.
(e) ASSET LIMITATION- Section 522 of title 11, United States Code, is
amended by adding at the end the following:
`(n) For assets in individual retirement accounts described in section 408
or 408A of the Internal Revenue Code of 1986, other than a simplified employee
pension under section 408(k) of that Code or a simple retirement account under
section 408(p) of that Code, the aggregate value of such assets exempted under
this section, without regard to amounts attributable to rollover contributions
under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the
Internal Revenue Code of 1986, and earnings thereon, shall not exceed
$1,000,000 (which amount shall be adjusted as provided in section 104 of this
title) in a case filed by an individual debtor, except that such amount may be
increased if the interests of justice so require.'.
SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANKRUPTCY.
(a) EXCLUSIONS- Section 541 of title 11, United States Code, is
amended--
(A) in paragraph (4), by striking `or' at the end;
(B) by redesignating paragraph (5) as paragraph (10); and
(C) by inserting after paragraph (4) the following:
`(5) funds placed in an education individual retirement account (as
defined in section 530(b)(1) of the Internal Revenue Code of 1986) not later
than 365 days before the date of filing of the petition, but--
`(A) only if the designated beneficiary of such account was a son,
daughter, stepson, stepdaughter, grandchild, or step-grandchild of the
debtor for the taxable year for which funds were placed in such
account;
`(B) only to the extent that such funds--
`(i) are not pledged or promised to any entity in connection with
any extension of credit; and
`(ii) are not excess contributions (as described in section 4973(e)
of the Internal Revenue Code of 1986); and
`(C) in the case of funds placed in all such accounts having the same
designated beneficiary not earlier than 720 days nor later than 365 days
before such date, only so much of such funds as does not exceed
$5,000;
`(6) funds used to purchase a tuition credit or certificate or
contributed to an account in accordance with section 529(b)(1)(A) of the
Internal Revenue Code of 1986 under a qualified State tuition program (as
defined in section 529(b)(1) of such Code) not later than 365 days before
the date of filing of the petition, but--
`(A) only if the designated beneficiary of the amounts paid or
contributed to such tuition program was a son, daughter, stepson,
stepdaughter, grandchild, or step-grandchild of the debtor for the taxable
year for which funds were paid or contributed;
`(B) with respect to the aggregate amount paid or contributed to such
program having the same designated beneficiary, only so much of such
amount as does not exceed the total contributions permitted under section
529(b)(7) of such Code with respect to such beneficiary, as adjusted
beginning on the date of the filing of the petition by the annual increase
or decrease (rounded to the nearest tenth of 1 percent) in the education
expenditure category of the Consumer Price Index prepared by the
Department of Labor; and
`(C) in the case of funds paid or contributed to such program having
the same designated beneficiary not earlier than 720 days nor later than
365 days before such date, only so much of such funds as does not exceed
$5,000;'; and
(2) by adding at the end the following:
`(e) In determining whether any of the relationships specified in
paragraph (5)(A) or (6)(A) of subsection (b) exists, a legally adopted child
of an individual (and a child who is a member of an individual's household, if
placed with such individual by an authorized placement agency for legal
adoption by such individual), or a foster child of an individual (if such
child has as the child's principal place of abode the home of the debtor and
is a member of the debtor's household) shall be treated as a child of such
individual by blood.'.
(b) DEBTOR'S DUTIES- Section 521 of title 11, United States Code, as
amended by this Act, is amended by adding at the end the following:
`(c) In addition to meeting the requirements under subsection (a), a
debtor shall file with the court a record of any interest that a debtor has in
an education individual retirement account (as defined in section 530(b)(1) of
the Internal Revenue Code of 1986) or under a qualified State tuition program
(as defined in section 529(b)(1) of such Code).'.
SEC. 226. DEFINITIONS.
(a) DEFINITIONS- Section 101 of title 11, United States Code, is
amended--
(1) by inserting after paragraph (2) the following:
`(3) `assisted person' means any person whose debts consist primarily of
consumer debts and whose non-exempt assets are less than $150,000;';
(2) by inserting after paragraph (4) the following:
`(4A) `bankruptcy assistance' means any goods or services sold or
otherwise provided to an assisted person with the express or implied purpose
of providing information, advice, counsel, document preparation, or filing,
or attendance at a creditors' meeting or appearing in a proceeding on behalf
of another or providing legal representation with respect to a case or
proceeding under this title;'; and
(3) by inserting after paragraph (12) the following:
`(12A) `debt relief agency' means any person who provides any bankruptcy
assistance to an assisted person in return for the payment of money or other
valuable consideration, or who is a bankruptcy petition preparer under
section 110, but does not include--
`(A) any person that is an officer, director, employee or agent of
that person;
`(B) a nonprofit organization which is exempt from taxation under
section 501(c)(3) of the Internal Revenue Code of 1986;
`(C) a creditor of the person, to the extent that the creditor is
assisting the person to restructure any debt owed by the person to the
creditor;
`(D) a depository institution (as defined in section 3 of the Federal
Deposit Insurance Act) or any Federal credit union or State credit union
(as those terms are defined in section 101 of the Federal Credit Union
Act), or any affiliate or subsidiary of such a depository institution or
credit union; or
`(E) an author, publisher, distributor, or seller of works subject to
copyright protection under title 17, when acting in such
capacity.'.
(b) CONFORMING AMENDMENT- Section 104(b)(1) of title 11, United States
Code, is amended by inserting `101(3),' after `sections'.
SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.
(a) ENFORCEMENT- Subchapter II of chapter 5 of title 11, United States
Code, is amended by adding at the end the following:
`Sec. 526. Restrictions on debt relief agencies
`(a) A debt relief agency shall not--
`(1) fail to perform any service that such agency informed an assisted
person or prospective assisted person it would provide in connection with a
case or proceeding under this title;
`(2) make any statement, or counsel or advise any assisted person or
prospective assisted person to
make a statement in a document filed in a case or proceeding under this
title, that is untrue and misleading, or that upon the exercise of reasonable
care, should have been known by such agency to be untrue or misleading;
`(3) misrepresent to any assisted person or prospective assisted person,
directly or indirectly, affirmatively or by material omission, with respect
to--
`(i) the services that such agency will provide to such person;
or
`(ii) the benefits and risks that may result if such person becomes a
debtor in a case under this title; or
`(4) advise an assisted person or prospective assisted person to incur
more debt in contemplation of such person filing a case under this title or
to pay an attorney or bankruptcy petition preparer fee or charge for
services performed as part of preparing for or representing a debtor in a
case under this title.
`(b) Any waiver by any assisted person of any protection or right provided
under this section shall not be enforceable against the debtor by any Federal
or State court or any other person, but may be enforced against a debt relief
agency.
`(c)(1) Any contract for bankruptcy assistance between a debt relief
agency and an assisted person that does not comply with the material
requirements of this section, section 527, or section 528 shall be void and
may not be enforced by any Federal or State court or by any other person,
other than such assisted person.
`(2) Any debt relief agency shall be liable to an assisted person in the
amount of any fees or charges in connection with providing bankruptcy
assistance to such person that such debt relief agency has received, for
actual damages, and for reasonable attorneys' fees and costs if such agency is
found, after notice and hearing, to have--
`(A) intentionally or negligently failed to comply with any provision of
this section, section 527, or section 528 with respect to a case or
proceeding under this title for such assisted person;
`(B) provided bankruptcy assistance to an assisted person in a case or
proceeding under this title that is dismissed or converted to a case under
another chapter of this title because of such agency's intentional or
negligent failure to file any required document including those specified in
section 521; or
`(C) intentionally or negligently disregarded the material requirements
of this title or the Federal Rules of Bankruptcy Procedure applicable to
such agency.
`(3) In addition to such other remedies as are provided under State law,
whenever the chief law enforcement officer of a State, or an official or
agency designated by a State, has reason to believe that any person has
violated or is violating this section, the State--
`(A) may bring an action to enjoin such violation;
`(B) may bring an action on behalf of its residents to recover the
actual damages of assisted persons arising from such violation, including
any liability under paragraph (2); and
`(C) in the case of any successful action under subparagraph (A) or (B),
shall be awarded the costs of the action and reasonable attorney fees as
determined by the court.
`(4) The United States District Court for any district located in the
State shall have concurrent jurisdiction of any action under subparagraph (A)
or (B) of paragraph (3).
`(5) Notwithstanding any other provision of Federal law and in addition to
any other remedy provided under Federal or State law, if the court, on its own
motion or on motion of the United States trustee or the debtor, finds that a
person intentionally violated this section, or engaged in a clear and
consistent pattern or practice of violating this section, the court may--
`(A) enjoin the violation of such section; or
`(B) impose an appropriate civil penalty against such person.'.
`(d) No provision of this section, section 527, or section 528 shall--
`(1) annul, alter, affect, or exempt any person subject to such sections
from complying with any law of any State except to the extent that such law
is inconsistent with those sections, and then only to the extent of the
inconsistency; or
`(2) be deemed to limit or curtail the authority or ability--
`(A) of a State or subdivision or instrumentality thereof, to
determine and enforce qualifications for the practice of law under the
laws of that State; or
`(B) of a Federal court to determine and enforce the qualifications
for the practice of law before that court.'.
(b) CONFORMING AMENDMENT- The table of sections for chapter 5 of title 11,
United States Code, is amended by inserting before the item relating to
section 527, the following:
`526. Debt relief enforcement.'.
SEC. 228. DISCLOSURES.
(a) DISCLOSURES- Subchapter II of chapter 5 of title 11, United States
Code, as amended by this Act, is amended by adding at the end the
following:
`Sec. 527. Disclosures
`(a) A debt relief agency providing bankruptcy assistance to an assisted
person shall provide--
`(1) the written notice required under section 342(b)(1) of this title;
and
`(2) to the extent not covered in the written notice described in
paragraph (1), and not later than 3 business days after the first date on
which a debt relief agency first offers to provide any bankruptcy assistance
services to an assisted person, a clear and conspicuous written notice
advising assisted persons that--
`(A) all information that the assisted person is required to provide
with a petition and thereafter during a case under this title is required
to be complete, accurate, and truthful;
`(B) all assets and all liabilities are required to be completely and
accurately disclosed in the documents filed to commence the case, and the
replacement value of each asset as defined in section 506 of this title
must be stated in those documents where requested after reasonable inquiry
to establish such value;
`(C) current monthly income, the amounts specified in section
707(b)(2), and, in a case under chapter 13, disposable income (determined
in accordance with section 707(b)(2)), are required to be stated after
reasonable inquiry; and
`(D) information that an assisted person provides during their case
may be audited pursuant to this title, and that failure to provide such
information may result in dismissal of the proceeding under this title or
other sanction including, in some instances, criminal sanctions.
`(b) A debt relief agency providing bankruptcy assistance to an assisted
person shall provide each assisted person at the same time as the notices
required under subsection (a)(1) with the following statement, to the extent
applicable, or one substantially similar. The statement shall be clear and
conspicuous and shall be in a single document separate from other documents or
notices provided to the assisted person:
`IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN
ATTORNEY OR BANKRUPTCY PETITION PREPARER.
`If you decide to seek bankruptcy relief, you can represent yourself, you
can hire an attorney to represent you, or you can get help in some localities
from a bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES
AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT
SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU
AND HOW MUCH IT WILL COST. Ask to see the contract before you hire anyone.
`The following information helps you understand what must be done in a
routine bankruptcy case to help you evaluate how much service you need.
Although bankruptcy can be complex, many cases are routine.
`Before filing a bankruptcy case, either you or your attorney should
analyze your eligibility for different forms of debt relief made available by
the Bankruptcy Code and which form of relief is most likely to be beneficial
for you. Be sure you understand the relief you can obtain and its limitations.
To file a bankruptcy case, documents called a Petition, Schedules and
Statement of Financial Affairs, as well as in some cases a Statement of
Intention need to be prepared correctly and filed with the bankruptcy court.
You will have to pay a filing fee to the bankruptcy court. Once your case
starts, you will have to attend the required first meeting of creditors where
you may be questioned by a court official called a `trustee' and by
creditors.
`If you choose to file a chapter 7 case, you may be asked by a creditor to
reaffirm a debt. You may want help deciding whether to do so and a creditor is
not permitted to coerce you into reaffirming your debts.
`If you choose to file a chapter 13 case in which you repay your creditors
what you can afford over 3 to 5 years, you may also want help with preparing
your chapter 13 plan and with the confirmation hearing on your plan which will
be before a bankruptcy judge.
`If you select another type of relief under the Bankruptcy Code other than
chapter 7 or chapter 13, you will want to find out what needs to be done from
someone familiar with that type of relief.
`Your bankruptcy case may also involve litigation. You are generally
permitted to represent yourself in litigation in bankruptcy court, but only
attorneys, not bankruptcy petition preparers, can give you legal advice.'.
`(c) Except to the extent the debt relief agency provides the required
information itself after reasonably diligent inquiry of the assisted person or
others so as to obtain such information reasonably accurately for inclusion on
the petition, schedules or statement of financial affairs, a debt relief
agency providing bankruptcy assistance to an assisted person, to the extent
permitted by nonbankruptcy law, shall provide each assisted person at the time
required for the notice required under subsection (a)(1) reasonably sufficient
information (which shall be provided in a clear and conspicuous writing) to
the assisted person on how to provide all the information the assisted person
is required to provide under this title pursuant to section 521,
including--
`(1) how to value assets at replacement value, determine current monthly
income, the amounts specified in section 707(b)(2)) and, in a chapter 13
case, how to determine disposable income in accordance with section
707(b)(2) and related calculations;
`(2) how to complete the list of creditors, including how to determine
what amount is owed and what address for the creditor should be shown;
and
`(3) how to determine what property is exempt and how to value exempt
property at replacement value as defined in section 506 of this title.
`(d) A debt relief agency shall maintain a copy of the notices required
under subsection (a) of this section for 2 years after the date on which the
notice is given the assisted person.'.
(b) CONFORMING AMENDMENT- The table of sections for chapter 5 of title 11,
United States Code, as amended by this Act, is amended by inserting after the
item relating to section 526 the following:
SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.
(a) ENFORCEMENT- Subchapter II of chapter 5 of title 11, United States
Code, as amended by this Act, is amended by adding at the end the
following:
`Sec. 528. Requirements for debt relief agencies
`(a) A debt relief agency shall--
`(1) not later than 5 business days after the first date such agency
provides any bankruptcy assistance services to an assisted person, but prior
to such assisted person's petition under this title being filed, execute a
written contract with such assisted person that explains clearly and
conspicuously--
`(A) the services such agency will provide to such assisted person;
and
`(B) the fees or charges for such services for such services, and the
terms of payment;
`(2) provide the assisted person with a copy of the fully executed and
completed contract;
`(3) clearly and conspicuously disclose in any advertisement of
bankruptcy assistance services or of the benefits of bankruptcy directed to
the general public (whether in general media, seminars or specific mailings,
telephonic or electronic messages, or otherwise) that the services or
benefits are with respect to bankruptcy relief under this title; and
`(4) clearly and conspicuously using the following statement: `We are a
debt relief agency. We help people file for bankruptcy relief under the
Bankruptcy Code.' or a substantially similar statement.
`(b)(1) An advertisement of bankruptcy assistance services or of the
benefits of bankruptcy directed to the general public includes--
`(A) descriptions of bankruptcy assistance in connection with a chapter
13 plan whether or not chapter 13 is specifically mentioned in such
advertisement; and
`(B) statements such as `federally supervised repayment plan' or
`Federal debt restructuring help' or other similar statements that could
lead a reasonable consumer to believe that debt counseling was being offered
when in fact the services were directed to providing bankruptcy assistance
with a chapter 13 plan or other form of bankruptcy relief under this
title.
`(2) An advertisement, directed to the general public, indicating that the
debt relief agency provides assistance with respect to credit defaults,
mortgage foreclosures, eviction proceedings, excessive debt, debt collection
pressure, or inability to pay any consumer debt shall--
`(A) disclose clearly and conspicuously in such advertisement that the
assistance may involve bankruptcy relief under this title; and
`(B) include the following statement: `We are a debt relief agency. We
help people file for bankruptcy relief under the Bankruptcy Code,' or a
substantially similar statement.'.
(b) CONFORMING AMENDMENT- The table of sections for chapter 5 of title 11,
United States Code, as amended by this Act, is amended by inserting after the
item relating to section 527, the following:
`528. Debtor's bill of rights.'.
SEC. 230. GAO STUDY.
(a) STUDY- Not later than 270 days after the date of enactment of this
Act, the Comptroller General of the United States shall conduct a study of the
feasibility, effectiveness, and cost of requiring trustees appointed under
title 11, United States Code, or the bankruptcy courts, to provide to the
Office of Child Support Enforcement promptly after the commencement of cases
by individual debtors under such title, the names and social security numbers
of such debtors for the purposes of allowing such Office to determine whether
such debtors have outstanding obligations for child support (as determined on
the basis of information in the Federal Case Registry or other national
database).
(b) REPORT- Not later than 300 days after the date of enactment of this
Act, the Comptroller General shall submit to the President pro tempore of the
Senate and the Speaker of the House of Representatives a report containing the
results of the study required by subsection (a).
TITLE III--DISCOURAGING BANKRUPTCY ABUSE
SEC. 301. REINFORCEMENT OF THE FRESH START.
Section 523(a)(17) of title 11, United States Code, is amended--
(1) by striking `by a court' and inserting `on a prisoner by any
court',
(2) by striking `section 1915(b) or (f)' and inserting `subsection (b)
or (f)(2) of section 1915', and
(3) by inserting `(or a similar non-Federal law)' after `title 28' each
place it appears.
SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.
Section 362(c) of title 11, United States Code, is amended--
(1) in paragraph (1), by striking `and' at the end;
(2) in paragraph (2), by striking the period at the end and inserting a
semicolon; and
(3) by adding at the end the following:
`(3) if a single or joint case is filed by or against an individual
debtor under chapter 7, 11, or 13, and if a single or joint case of the
debtor was pending within the preceding 1-year period but was dismissed,
other than a case refiled under a chapter other than chapter 7 after
dismissal under section 707(b)--
`(A) the stay under subsection (a) with respect to any action taken
with respect to a debt or property securing such debt or with respect to
any lease shall terminate with respect to the debtor on the 30th day after
the filing of the later case;
`(B) upon motion by a party in interest for continuation of the
automatic stay and upon notice and a hearing, the court may extend the
stay in particular cases as to any or all creditors (subject to such
conditions or limitations as the court may then impose) after notice and a
hearing completed before the expiration of the 30-day period only if the
party in interest demonstrates that the filing of the later case is in
good faith as to the creditors to be stayed; and
`(C) for purposes of subparagraph (B), a case is presumptively filed
not in good faith (but such presumption may be rebutted by clear and
convincing evidence to the contrary)--
`(i) as to all creditors, if--
`(I) more than 1 previous case under any of chapter 7, 11, or 13
in which the individual was a debtor was pending within the preceding
1-year period;
`(II) a previous case under any of chapter 7, 11, or 13 in which
the individual was a debtor was dismissed
within such 1-year period, after the debtor failed to--
`(aa) file or amend the petition or other documents as required by
this title or the court without substantial excuse (but mere inadvertence or
negligence shall not be a substantial excuse unless the dismissal was caused by
the negligence of the debtor's attorney);
`(bb) provide adequate protection as ordered by the court;
or
`(cc) perform the terms of a plan confirmed by the court; or
`(III) there has not been a substantial change in the financial or
personal affairs of the debtor since the dismissal of the next most
previous case under chapter 7, 11, or 13 or any other reason to
conclude that the later case will be concluded--
`(aa) if a case under chapter 7, with a discharge; or
`(bb) if a case under chapter 11 or 13, with a confirmed plan which
will be fully performed; and
`(ii) as to any creditor that commenced an action under subsection
(d) in a previous case in which the individual was a debtor if, as of
the date of dismissal of such case, that action was still pending or had
been resolved by terminating, conditioning, or limiting the stay as to
actions of such creditor; and
`(4)(A)(i) if a single or joint case is filed by or against an
individual debtor under this title, and if 2 or more single or joint cases
of the debtor were pending within the previous year but were dismissed,
other than a case refiled under section 707(b), the stay under subsection
(a) shall not go into effect upon the filing of the later case; and
`(ii) on request of a party in interest, the court shall promptly enter
an order confirming that no stay is in effect;
`(B) if, within 30 days after the filing of the later case, a party in
interest requests the court may order the stay to take effect in the case as
to any or all creditors (subject to such conditions or limitations as the
court may impose), after notice and hearing, only if the party in interest
demonstrates that the filing of the later case is in good faith as to the
creditors to be stayed;
`(C) a stay imposed under subparagraph (B) shall be effective on the
date of entry of the order allowing the stay to go into effect; and
`(D) for purposes of subparagraph (B), a case is presumptively not filed
in good faith (but such presumption may be rebutted by clear and convincing
evidence to the contrary)--
`(i) as to all creditors if--
`(I) 2 or more previous cases under this title in which the
individual was a debtor were pending within the 1-year
period;
`(II) a previous case under this title in which the individual was a
debtor was dismissed within the time period stated in this paragraph
after the debtor failed to file or amend the petition or other documents
as required by this title or the court without substantial excuse (but
mere inadvertence or negligence shall not be substantial excuse unless
the dismissal was caused by the negligence of the debtor's attorney),
failed to pay adequate protection as ordered by the court, or failed to
perform the terms of a plan confirmed by the court; or
`(III) there has not been a substantial change in the financial or
personal affairs of the debtor since the dismissal of the next most
previous case under this title, or any other reason to conclude that the
later case will not be concluded, if a case under chapter 7, with a
discharge, and if a case under chapter 11 or 13, with a confirmed plan
that will be fully performed; or
`(ii) as to any creditor that commenced an action under subsection (d)
in a previous case in which the individual was a debtor if, as of the date
of dismissal of such case, such action was still pending or had been
resolved by terminating, conditioning, or limiting the stay as to action
of such creditor.'.
SEC. 303. CURBING ABUSIVE FILINGS.
(a) IN GENERAL- Section 362(d) of title 11, United States Code, is
amended--
(1) in paragraph (2), by striking `or' at the end;
(2) in paragraph (3), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(4) with respect to a stay of an act against real property under
subsection (a), by a creditor whose claim is secured by an interest in such
real estate, if the court finds that the filing of the bankruptcy petition
was part of a scheme to delay, hinder, and defraud creditors that involved
either--
`(A) transfer of all or part ownership of, or other interest in, the
real property without the consent of the secured creditor or court
approval; or
`(B) multiple bankruptcy filings affecting the real property.
If recorded in compliance with applicable State laws governing notices of
interests or liens in real property, an order entered under this subsection
shall be binding in any other case under this title purporting to affect the
real property filed not later than 2 years after the date of entry of such
order by the court, except that a debtor in a subsequent case may move for
relief from such order based upon changed circumstances or for good cause
shown, after notice and a hearing. Any Federal, State, or local governmental
unit that accepts notices of interests or liens in real property shall accept
any certified copy of an order described in this subsection for indexing and
recording.'.
(b) AUTOMATIC STAY- Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (19), as added by this Act, the
following:
`(20) under subsection (a), of any act to enforce any lien against or
security interest in real property following the entry of an order under
section 362(d)(4) as to that property in any prior bankruptcy case for a
period of 2 years after entry of such an order, except that the debtor, in a
subsequent case, may move the court for relief from such order based upon
changed circumstances or for other good cause shown, after notice and a
hearing;
`(21) under subsection (a), of any act to enforce any lien against or
security interest in real property--
`(A) if the debtor is ineligible under section 109(g) to be a debtor
in a bankruptcy case; or
`(B) if the bankruptcy case was filed in violation of a bankruptcy
court order in a prior bankruptcy case prohibiting the debtor from being a
debtor in another bankruptcy case;'.
SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.
Title 11, United States Code, is amended--
(1) in section 521(a) (as so designated by this Act)--
(A) in paragraph (4), by striking `, and' at the end and inserting a
semicolon;
(B) in paragraph (5), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(6) in an individual case under chapter 7 of this title, not retain
possession of personal property as to which a creditor has an allowed claim
for the purchase price secured in whole or in part by an interest in that
personal property unless, in the case of an individual debtor, the debtor,
not later than 45 days after the first meeting of creditors under section
341(a), either--
`(A) enters into an agreement with the creditor pursuant to section
524(c) of this title with respect to the claim secured by such property;
or
`(B) redeems such property from the security interest pursuant to
section 722 of this title.
If the debtor fails to so act within the 45-day period referred to in
paragraph (6), the stay under section 362(a) of this title is terminated with
respect to the personal property of the estate or of the debtor which is
affected, such property shall no longer be property of the estate, and the
creditor may take whatever action as to such property as is permitted by
applicable nonbankruptcy law, unless the court determines on the motion of the
trustee brought before the expiration of such 45-day period, and after notice
and a hearing, that such property is of consequential value or benefit to the
estate, orders appropriate adequate protection of the creditor's interest, and
orders the debtor to deliver any collateral in the debtor's possession to the
trustee.'; and
(2) in section 722, by inserting `in full at the time of redemption'
before the period at the end.
SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES NOT COMPLETE
INTENDED SURRENDER OF CONSUMER DEBT COLLATERAL.
Title 11, United States Code, is amended--
(A) in subsection (c), by striking `(e), and (f)' inserting `(e), (f),
and (h)';
(B) by redesignating subsection (h) as subsection (k); and
(C) by inserting after subsection (g) the following:
`(h)(1) In an individual case under chapter 7, 11, or 13, the stay
provided by subsection (a) is terminated with respect to personal property of
the estate or of the debtor securing in whole or in part a claim, or subject
to an unexpired lease, and such personal property shall no longer be property
of the estate if the debtor fails within the applicable time set by section
521(a)(2) of this title--
`(A) to file timely any statement of intention required under section
521(a)(2) of this title with respect to that property or to indicate in that
statement that the debtor will either surrender the property or retain it
and, if retaining it, either redeem the property pursuant to section 722 of
this title, reaffirm the debt it secures pursuant to section 524(c) of this
title, or assume the unexpired lease pursuant to section 365(p) of this
title if the trustee does not do so, as applicable; and
`(B) to take timely the action specified in that statement of intention,
as it may be amended before expiration of the period for taking action,
unless the statement of intention specifies reaffirmation and the creditor
refuses to reaffirm on the original contract terms.
`(2) Paragraph (1) does not apply if the court determines, on the motion
of the trustee filed before the expiration of the applicable time set by
section 521(a)(2), after notice and a hearing, that such property is of
consequential value or benefit to the estate, and orders appropriate adequate
protection of the creditor's interest, and orders the debtor to deliver any
collateral in the debtor's possession to the trustee. If the court does not so
determine, the stay provided by subsection (a) shall terminate upon the
conclusion of the proceeding on the motion.'; and
(A) in subsection (a)(2), as so designated by this Act, by striking
`consumer';
(B) in subsection (a)(2)(B), as so designated by this Act--
(i) by striking `forty-five days after the filing of a notice of
intent under this section' and inserting `30 days after the first date
set for the meeting of creditors under section 341(a) of this title';
and
(ii) by striking `forty-five day' and inserting
`30-day';
(C) in subsection (a)(2)(C), as so designated by this Act, by
inserting `, except as provided in section 362(h) of this title' before
the semicolon; and
(D) by adding at the end the following:
`(d) If the debtor fails timely to take the action specified in subsection
(a)(6) of this section, or in paragraphs (1) and (2) of section 362(h) of this
title, with respect to property which a lessor or bailor owns and has leased,
rented, or bailed to the debtor or as to which a creditor holds a security
interest not otherwise voidable under section 522(f), 544, 545, 547, 548, or
549 of this title, nothing in this title shall prevent or limit the operation
of a provision in the underlying lease or agreement which has the effect of
placing the debtor in default under such lease or agreement by reason of the
occurrence, pendency, or existence of a proceeding under this title or the
insolvency of the debtor. Nothing in this subsection shall be deemed
to justify limiting such a provision in any other circumstance.'.
SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.
(a) IN GENERAL- Section 1325(a)(5)(B)(i) of title 11, United States Code,
is amended to read as follows:
`(i) the plan provides that--
`(I) the holder of such claim retain the lien securing such claim
until the earlier of--
`(aa) the payment of the underlying debt determined under
nonbankruptcy law; or
`(bb) discharge under section 1328; and
`(II) if the case under this chapter is dismissed or converted
without completion of the plan, such lien shall also be retained by such
holder to the extent recognized by applicable nonbankruptcy law;
and'.
(b) RESTORING THE FOUNDATION FOR SECURED CREDIT- Section 1325(a) of title
11, United States Code, is amended by adding at the end the following flush
sentence:
`For purposes of paragraph (5), section 506 shall not apply to a claim
described in that paragraph if the creditor has a purchase money security
interest securing the debt that is the subject of the claim, the debt was
incurred within the 5-year period preceding the filing of the petition, and
the collateral for that debt consists of a motor vehicle (as defined in
section 30102 of title 49) acquired for the personal use of the debtor, or if
collateral for that debt consists of any other thing of value, if the debt was
incurred during the 1-year period preceding that filing.'.
(c) DEFINITIONS- Section 101 of title 11, United States Code, as amended
by this Act, is amended--
(1) by inserting after paragraph (13) the following:
`(13A) `debtor's principal residence'--
`(A) means a residential structure, including incidental property,
without regard to whether that structure is attached to real property;
and
`(B) includes an individual condominium or cooperative unit, a mobile
or manufactured home, or trailer;'; and
(2) by inserting after paragraph (27), the following:
`(27A) `incidental property' means, with respect to a debtor's principal
residence--
`(A) property commonly conveyed with a principal residence in the area
where the real estate is located;
`(B) all easements, rights, appurtenances, fixtures, rents, royalties,
mineral rights, oil or gas rights or profits, water rights, escrow funds,
or insurance proceeds; and
`(C) all replacements or additions;'.
SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.
Section 522(b)(3)(A) of title 11, United States Code, as so designated by
this Act, is amended--
(1) by striking `180 days' and inserting `730 days'; and
(2) by striking `, or for a longer portion of such 180-day period than
in any other place' and inserting `or if the debtor's domicile has not been
located at a single State for such 730-day period, the place in which the
debtor's domicile was located for 180 days immediately preceding the 730-day
period or for a longer portion of such 180-day period than in any other
place'.
SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EXEMPTION.
Section 522 of title 11, United States Code, is amended--
(1) in subsection (b)(3)(A), as so designated by this Act, by inserting
`subject to subsections (o) and (p),' before `any property'; and
(2) by adding at the end the following:
`(o) For purposes of subsection (b)(3)(A), and notwithstanding subsection
(a), the value of an interest in--
`(1) real or personal property that the debtor or a dependent of the
debtor uses as a residence;
`(2) a cooperative that owns property that the debtor or a dependent of
the debtor uses as a residence; or
`(3) a burial plot for the debtor or a dependent of the debtor;
shall be reduced to the extent that such value is attributable to any
portion of any property that the debtor disposed of in the 7-year period
ending on the date of the filing of the petition with the intent to hinder,
delay, or defraud a creditor and that the debtor could not exempt, or that
portion that the debtor could not exempt, under subsection (b), if on such
date the debtor had held the property so disposed of.'.
SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 13 CASES.
(a) STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13- Section 348(f)(1) of
title 11, United States Code, is amended--
(1) in subparagraph (A), by striking `and' at the end;
(2) in subparagraph (B)--
(A) by striking `in the converted case, with allowed secured claims'
and inserting `only in a case converted to a case under chapter 11 or 12,
but not in a case converted to a case under chapter 7, with allowed
secured claims in cases under chapters 11 and 12'; and
(B) by striking the period and inserting `; and'; and
(3) by adding at the end the following:
`(C) with respect to cases converted from chapter 13--
`(i) the claim of any creditor holding security as of the date of the
petition shall continue to be secured by that security unless the full
amount of such claim determined under applicable nonbankruptcy law has
been paid in full as of the date of conversion, notwithstanding any
valuation or determination of the amount
of an allowed secured claim made for the purposes of the chapter 13
proceeding; and
`(ii) unless a prebankruptcy default has been fully cured under the
plan at the time of conversion, in any proceeding under this title or
otherwise, the default shall have the effect given under applicable
nonbankruptcy law.'.
(b) GIVING DEBTORS THE ABILITY TO KEEP LEASED PERSONAL PROPERTY BY
ASSUMPTION- Section 365 of title 11, United States Code, is amended by adding
at the end the following:
`(p)(1) If a lease of personal property is rejected or not timely assumed
by the trustee under subsection (d), the leased property is no longer property
of the estate and the stay under section 362(a) is automatically
terminated.
`(2)(A) In the case of an individual under chapter 7, the debtor may
notify the creditor in writing that the debtor desires to assume the lease.
Upon being so notified, the creditor may, at its option, notify the debtor
that it is willing to have the lease assumed by the debtor and may condition
such assumption on cure of any outstanding default on terms set by the
contract.
`(B) If, not later than 30 days after notice is provided under
subparagraph (A), the debtor notifies the lessor in writing that the lease is
assumed, the liability under the lease will be assumed by the debtor and not
by the estate.
`(C) The stay under section 362 and the injunction under section 524(a)(2)
shall not be violated by notification of the debtor and negotiation of cure
under this subsection.
`(3) In a case under chapter 11 in which the debtor is an individual and
in a case under chapter 13, if the debtor is the lessee with respect to
personal property and the lease is not assumed in the plan confirmed by the
court, the lease is deemed rejected as of the conclusion of the hearing on
confirmation. If the lease is rejected, the stay under section 362 and any
stay under section 1301 is automatically terminated with respect to the
property subject to the lease.'.
(c) ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY SECURED
CREDITORS-
(1) CONFIRMATION OF PLAN- Section 1325(a)(5)(B) of title 11, United
States Code, is amended--
(A) in clause (i), by striking `and' at the end;
(B) in clause (ii), by striking `or' at the end and inserting `and';
and
(C) by adding at the end the following:
`(I) property to be distributed pursuant to this subsection is in
the form of periodic payments, such payments shall be in equal monthly
amounts; and
`(II) the holder of the claim is secured by personal property, the
amount of such payments shall not be less than an amount sufficient to
provide to the holder of such claim adequate protection during the
period of the plan; or'.
(2) PAYMENTS- Section 1326(a) of title 11, United States Code, is
amended to read as follows:
`(a)(1) Unless the court orders otherwise, the debtor shall commence
making payments not later than 30 days after the date of the filing of the
plan or the order for relief, whichever is earlier, in the amount--
`(A) proposed by the plan to the trustee;
`(B) scheduled in a lease of personal property directly to the lessor
for that portion of the obligation that becomes due after the order for
relief, reducing the payments under subparagraph (A) by the amount so paid
and providing the trustee with evidence of such payment, including the
amount and date of payment; and
`(C) that provides adequate protection directly to a creditor holding an
allowed claim secured by personal property to the extent the claim is
attributable to the purchase of such property by the debtor for that portion
of the obligation that becomes due after the order for relief, reducing the
payments under subparagraph (A) by the amount so paid and providing the
trustee with evidence of such payment, including the amount and date of
payment.
`(2) A payment made under paragraph (1)(A) shall be retained by the
trustee until confirmation or denial of confirmation. If a plan is confirmed,
the trustee shall distribute any such payment in accordance with the plan as
soon as is practicable. If a plan is not confirmed, the trustee shall return
any such payments not previously paid and not yet due and owing to creditors
pursuant to paragraph (3) to the debtor, after deducting any unpaid claim
allowed under section 503(b).
`(3) Subject to section 363, the court may, upon notice and a hearing,
modify, increase, or reduce the payments required under this subsection
pending confirmation of a plan.
`(4) Not later than 60 days after the date of filing of a case under this
chapter, a debtor retaining possession of personal property subject to a lease
or securing a claim attributable in whole or in part to the purchase price of
such property shall provide the lessor or secured creditor reasonable evidence
of the maintenance of any required insurance coverage with respect to the use
or ownership of such property and continue to do so for so long as the debtor
retains possession of such property.'.
SEC. 310. LIMITATION ON LUXURY GOODS.
Section 523(a)(2)(C) of title 11, United States Code, is amended to read
as follows:
`(C)(i) for purposes of subparagraph (A)--
`(I) consumer debts owed to a single creditor and aggregating more
than $250 for luxury goods or services incurred by an individual debtor on
or within 90 days before the order for relief under this title are
presumed to be nondischargeable; and
`(II) cash advances aggregating more than $750 that are extensions of
consumer credit under an open end credit plan obtained by an individual
debtor on or within 70 days before the order for relief under this title,
are presumed to be nondischargeable; and
`(ii) for purposes of this subparagraph--
`(I) the term `extension of credit under an open end credit plan'
means an extension of credit under an open end credit plan, within the
meaning of the Consumer Credit Protection Act (15 U.S.C. 1601 et
seq.);
`(II) the term `open end credit plan' has the meaning given that term
under section 103 of Consumer Credit Protection Act (15 U.S.C. 1602);
and
`(III) the term `luxury goods or services' does not include goods or
services reasonably necessary for the support or maintenance of the debtor
or a dependent of the debtor.'.
SEC. 311. AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, is amended by inserting
after paragraph (21), as added by this Act, the following:
`(22) under subsection (a)(3), of the continuation of any eviction,
unlawful detainer action, or similar proceeding by a lessor against a debtor
involving residential real property in which the debtor resides as a tenant
under a rental agreement;
`(23) under subsection (a)(3), of the commencement of any eviction,
unlawful detainer action, or similar proceeding by a lessor against a debtor
involving residential real property in which the debtor resides as a tenant
under a rental agreement that has terminated under the lease agreement or
applicable State law;
`(24) under subsection (a)(3), of eviction actions based on endangerment
to property or person or the use of illegal drugs;
`(25) under subsection (a) of any transfer that is not avoidable under
section 544 and that is not avoidable under section 549;'.
SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY DISCHARGES.
Title 11, United States Code, is amended--
(1) in section 727(a)(8), by striking `six' and inserting `8'; and
(2) in section 1328, by inserting after subsection (e) the
following:
`(f) Notwithstanding subsections (a) and (b), the court shall not grant a
discharge of all debts provided for by the plan or disallowed under section
502 if the debtor has received a discharge in any case filed under this title
within 5 years before the order for relief under this chapter.'.
SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND ANTIQUES.
(a) DEFINITION- Section 522(f) of title 11, United States Code, is amended
by adding at the end the following:
`(4)(A) Subject to subparagraph (B), for purposes of paragraph (1)(B), the
term `household goods' means--
`(xi) educational materials and educational equipment primarily for the
use of minor dependent children of the debtor, but only 1 personal computer
only if used primarily for the education or entertainment of such minor
children;
`(xii) medical equipment and supplies;
`(xiii) furniture exclusively for the use of minor children, or elderly
or disabled dependents of the debtor; and
`(xiv) personal effects (including the toys and hobby equipment of minor
dependent children and wedding rings) of the debtor and the dependents of
the debtor.
`(B) The term `household goods' does not include--
`(i) works of art (unless by or of the debtor or the dependents of the
debtor);
`(ii) electronic entertainment equipment (except 1 television, 1 radio,
and 1 VCR);
`(iii) items acquired as antiques;
`(iv) jewelry (except wedding rings); and
`(v) a computer (except as otherwise provided for in this section),
motor vehicle (including a tractor or lawn tractor), boat, or a motorized
recreational device, conveyance, vehicle, watercraft, or aircraft.'.
(b) STUDY- Not later than 2 years after the date of enactment of this Act,
the Director of the Executive Office for United States Trustees shall submit a
report to the Committee on the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives containing its findings
regarding utilization of the definition of household goods, as defined in
section 522(f)(4) of title 11, United States Code, as added by this section,
with respect to the avoidance of nonpossessory, nonpurchase money security
interests in household goods under section 522(f)(1)(B) of title 11, United
States Code, and the impact that section 522(f)(4) of that title, as added by
this section, has had on debtors and on the bankruptcy courts. Such report may
include recommendations for amendments to section 522(f)(4) of title 11,
United States Code, consistent with the Director's findings.
SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE DEBTS.
(a) IN GENERAL- Section 523(a) of title 11, United States Code, is amended
by inserting after paragraph (14) the following:
`(14A) incurred to pay a tax to a governmental unit, other than the
United States, that would be nondischargeable under paragraph (1);'.
(b) DISCHARGE UNDER CHAPTER 13- Section 1328(a) of title 11, United States
Code, is amended by striking paragraphs (1) through (3) and inserting the
following:
`(1) provided for under section 1322(b)(5);
`(2) of the kind specified in paragraph (2), (3), (4), (5), (8), or (9)
of section 523(a);
`(3) for restitution, or a criminal fine, included in a sentence on the
debtor's conviction of a crime; or
`(4) for restitution, or damages, awarded in a civil action against the
debtor as a result of willful or malicious injury by the debtor that caused
personal injury to an individual or the death of an individual.'.
SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 AND 13 CASES.
(a) NOTICE- Section 342 of title 11, United States Code, as amended by
this Act, is amended--
(A) by inserting `(1)' after `(c)';
(B) by striking `, but the failure of such notice to contain such
information shall not invalidate the legal effect of such notice';
and
(C) by adding at the end the following:
`(2) If, within the 90 days prior to the date of the filing of a
petition in a voluntary case, the creditor supplied the debtor in at least 2
communications sent to the debtor with the current account number of the
debtor and the address at which the creditor wishes to receive
correspondence, then the debtor shall send any notice required under this
title to the address provided by the creditor and such notice shall include
the account number. In the event the creditor would be in violation of
applicable nonbankruptcy law by sending any such communication within such
90-day period and if the creditor supplied the debtor in the last 2
communications with the current account number of the debtor and the address
at which the creditor wishes to receive correspondence, then the debtor
shall send any notice required under this title to the address provided by
the creditor and such notice shall include the account number.'; and
(2) by adding at the end the following:
`(e) At any time, a creditor, in a case of an individual debtor under
chapter 7 or 13, may file with the court and serve on the debtor a notice of
the address to be used to notify the creditor in that case. Five days after
receipt of such notice, if the court or the debtor is required to give the
creditor notice, such notice shall be given at that address.
`(f) An entity may file with the court a notice stating its address for
notice in cases under chapters 7 and 13. After 30 days following the filing of
such notice, any notice in any case filed under chapter 7 or 13 given by the
court shall be to that address unless specific notice is given under
subsection (e) with respect to a particular case.
`(g)(1) Notice given to a creditor other than as provided in this section
shall not be effective notice until that notice has been brought to the
attention of the creditor. If the creditor designates a person or department
to be responsible for receiving notices concerning bankruptcy cases and
establishes reasonable procedures so that bankruptcy notices received by the
creditor are to be delivered to such department or person, notice shall not be
considered to have been brought to the attention of the creditor until
received by such person or department.
`(2) No sanction under section 362(k) or any other sanction that a court
may impose on account of violations of the stay under section 362(a) or
failure to comply with section 542 or 543 may be imposed on any action of the
creditor unless the action takes place after the creditor has received notice
of the commencement of the case effective under this section.'.
(b) DEBTOR'S DUTIES- Section 521 of title 11, United States Code, as
amended by this Act, is amended--
(1) in subsection (a), as so designated by this Act, by striking
paragraph (1) and inserting the following:
`(A) a list of creditors; and
`(B) unless the court orders otherwise--
`(i) a schedule of assets and liabilities;
`(ii) a schedule of current income and current
expenditures;
`(iii) a statement of the debtor's financial affairs and, if
applicable, a certificate--
`(I) of an attorney whose name is on the petition as the attorney
for the debtor or any bankruptcy petition preparer signing the
petition under section 110(b)(1) indicating that such attorney or
bankruptcy petition preparer delivered to the debtor any notice
required by section 342(b); or
`(II) if no attorney for the debtor is indicated and no bankruptcy
petition preparer signed the petition, of the debtor that such notice
was obtained and read by the debtor;
`(iv) copies of all payment advices or other evidence of payment, if
any, received by the debtor from any employer of the debtor in the
period 60 days before the filing of the petition;
`(v) a statement of the amount of monthly net income, itemized to
show how the amount is calculated; and
`(vi) a statement disclosing any reasonably anticipated increase in
income or expenditures over the 12-month period following the date of
filing;'; and
(2) by adding at the end the following:
`(e)(1) At any time, a creditor, in the case of an individual under
chapter 7 or 13, may file with the court notice that the creditor requests the
petition, schedules, and a statement of affairs filed by the debtor in the
case, and the court shall make those documents available to the creditor who
requests those documents.
`(2)(A) The debtor shall provide either a tax return or transcript at the
election of the debtor, for the latest taxable period prior to filing for
which a tax return has been or should have been filed, to the trustee, not
later than 7 days before the date first set for the first meeting of
creditors, or the case shall be dismissed, unless the debtor demonstrates that
the failure to file a return as required is due to circumstances beyond the
control of the debtor.
`(B) If a creditor has requested a tax return or transcript referred to in
subparagraph (A), the debtor shall
provide such tax return or transcript to the requesting creditor at the time
the debtor provides the tax return or transcript to the trustee, or the case
shall be dismissed, unless the debtor demonstrates that the debtor is unable to
provide such information due to circumstances beyond the control of the debtor.
`(3)(A) At any time, a creditor in a case under chapter 13 may file with
the court notice that the creditor requests the plan filed by the debtor in
the case.
`(B) The court shall make such plan available to the creditor who request
such plan--
`(i) at a reasonable cost; and
`(ii) not later than 5 days after such request.
`(f) An individual debtor in a case under chapter 7, 11, or 13 shall file
with the court at the request of any party in interest--
`(1) at the time filed with the taxing authority, all tax returns
required under applicable law, including any schedules or attachments, with
respect to the period from the commencement of the case until such time as
the case is closed;
`(2) at the time filed with the taxing authority, all tax returns
required under applicable law, including any schedules or attachments, that
were not filed with the taxing authority when the schedules under subsection
(a)(1) were filed with respect to the period that is 3 years before the
order of relief;
`(3) any amendments to any of the tax returns, including schedules or
attachments, described in paragraph (1) or (2); and
`(4) in a case under chapter 13, a statement subject to the penalties of
perjury by the debtor of the debtor's income and expenditures in the
preceding tax year and monthly income, that shows how the amounts are
calculated--
`(A) beginning on the date that is the later of 90 days after the
close of the debtor's tax year or 1 year after the order for relief,
unless a plan has been confirmed; and
`(B) thereafter, on or before the date that is 45 days before each
anniversary of the confirmation of the plan until the case is
closed.
`(g)(1) A statement referred to in subsection (f)(4) shall disclose--
`(A) the amount and sources of income of the debtor;
`(B) the identity of any person responsible with the debtor for the
support of any dependent of the debtor; and
`(C) the identity of any person who contributed, and the amount
contributed, to the household in which the debtor resides.
`(2) The tax returns, amendments, and statement of income and expenditures
described in subsection (e)(2)(A) and subsection (f) shall be available to the
United States trustee, any bankruptcy administrator, any trustee, and any
party in interest for inspection and copying, subject to the requirements of
subsection (h).
`(h)(1) Not later than 180 days after the date of enactment of the
Bankruptcy Reform Act of 2000, the Director of the Administrative Office of
the United States Courts shall establish procedures for safeguarding the
confidentiality of any tax information required to be provided under this
section.
`(2) The procedures under paragraph (1) shall include restrictions on
creditor access to tax information that is required to be provided under this
section.
`(3) Not later than 1 year and 180 days after the date of enactment of the
Bankruptcy Reform Act of 2000, the Director of the Administrative Office of
the United States Courts shall prepare and submit to Congress a report
that--
`(A) assesses the effectiveness of the procedures under paragraph (1);
and
`(B) if appropriate, includes proposed legislation to--
`(i) further protect the confidentiality of tax information;
and
`(ii) provide penalties for the improper use by any person of the tax
information required to be provided under this section.
`(i) If requested by the United States trustee or a trustee serving in the
case, the debtor shall provide--
`(1) a document that establishes the identity of the debtor, including a
driver's license, passport, or other document that contains a photograph of
the debtor; and
`(2) such other personal identifying information relating to the debtor
that establishes the identity of the debtor.'.
SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR PROVIDE REQUIRED
INFORMATION.
Section 521 of title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
`(j)(1) Notwithstanding section 707(a), and subject to paragraph (2), if
an individual debtor in a voluntary case under chapter 7 or 13 fails to file
all of the information required under subsection (a)(1) within 45 days after
the filing of the petition commencing the case, the case shall be
automatically dismissed effective on the 46th day after the filing of the
petition.
`(2) With respect to a case described in paragraph (1), any party in
interest may request the court to enter an order dismissing the case. If
requested, the court shall enter an order of dismissal not later than 5 days
after such request.
`(3) Upon request of the debtor made within 45 days after the filing of
the petition commencing a case described in paragraph (1), the court may allow
the debtor an additional period of not to exceed 45 days to file the
information required under subsection (a)(1) if the court finds justification
for extending the period for the filing.'.
SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE
PLAN.
Section 1324 of title 11, United States Code, is amended--
(1) by striking `After' and inserting the following:
`(a) Except as provided in subsection (b) and after'; and
(2) by adding at the end the following:
`(b) The hearing on confirmation of the plan may be held not earlier than
20 days and not later than 45
days after the date of the meeting of creditors under section 341(a).'.
SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN CERTAIN CASES.
Title 11, United States Code, is amended--
(1) by amending section 1322(d) to read as follows:
`(d)(1) If the current monthly income of the debtor and the debtor's
spouse combined, when multiplied by 12, is not less than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(B) in the case of a debtor in a household of 2, 3, or 4 individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the Census;
or
`(C) in the case of a debtor in a household exceeding 4 individuals, the
highest median family income of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the Census, plus $525 per
month for each individual in excess of 4,
the plan may not provide for payments over a period that is longer than 5
years.
`(2) If the current monthly income of the debtor and the debtor's spouse
combined, when multiplied by 12, is less than--
`(A) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(B) in the case of a debtor in a household of 2, 3, or 4 individuals,
the highest median family income of the applicable State for a family of the
same number or fewer individuals last reported by the Bureau of the Census;
or
`(C) in the case of a debtor in a household exceeding 4 individuals, the
highest median family income of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the Census, plus $525 per
month for each individual in excess of 4,
the plan may not provide for payments over a period that is longer than 3
years, unless the court, for cause, approves a longer period, but the court
may not approve a period that is longer than 5 years.';
(2) in section 1325(b)(1)(B), by striking `three-year period' and
inserting `applicable commitment period'; and
(3) in section 1325(b), as amended by this Act, by adding at the end the
following:
`(4) For purposes of this subsection, the `applicable commitment
period'--
`(A) subject to subparagraph (B), shall be--
`(ii) not less than 5 years, if the current monthly income of the
debtor and the debtor's spouse combined, when multiplied by 12, is not
less than--
`(I) in the case of a debtor in a household of 1 person, the median
family income of the applicable State for 1 earner last reported by the
Bureau of the Census;
`(II) in the case of a debtor in a household of 2, 3, or 4
individuals, the highest median family income of the applicable State
for a family of the same number or fewer individuals last reported by
the Bureau of the Census; or
`(III) in the case of a debtor in a household exceeding 4
individuals, the highest median family income of the applicable State
for a family of 4 or fewer individuals last reported by the Bureau of
the Census, plus $525 per month for each individual in excess of 4;
and
`(B) may be less than 3 or 5 years, whichever is applicable under
subparagraph (A), but only if the plan provides for payment in full of all
allowed unsecured claims over a shorter period.'; and
(4) in section 1329(c), by striking `three years' and inserting `the
applicable commitment period under section 1325(b)(1)(B)'.
SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF RULE 9011 OF THE FEDERAL
RULES OF BANKRUPTCY PROCEDURE.
It is the sense of Congress that rule 9011 of the Federal Rules of
Bankruptcy Procedure (11 U.S.C. App.) should be modified to include a
requirement that all documents (including schedules), signed and unsigned,
submitted to the court or to a trustee by debtors who represent themselves and
debtors who are represented by an attorney be submitted only after the debtor
or the debtor's attorney has made reasonable inquiry to verify that the
information contained in such documents is--
(1) well grounded in fact; and
(2) warranted by existing law or a good-faith argument for the
extension, modification, or reversal of existing law.
SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.
Section 362(e) of title 11, United States Code, is amended--
(1) by inserting `(1)' after `(e)'; and
(2) by adding at the end the following:
`(2) Notwithstanding paragraph (1), in the case of an individual filing
under chapter 7, 11, or 13, the stay under subsection (a) shall terminate on
the date that is 60 days after a request is made by a party in interest under
subsection (d), unless--
`(A) a final decision is rendered by the court during the 60-day period
beginning on the date of the request; or
`(B) that 60-day period is extended--
`(i) by agreement of all parties in interest; or
`(ii) by the court for such specific period of time as the court finds
is required for good cause, as described in findings made by the
court.'.
SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.
(a) PROPERTY OF THE ESTATE-
(1) IN GENERAL- Subchapter I of chapter 11 of title 11, United States
Code, is amended by adding at the end the following:
`Sec. 1115. Property of the estate
`(a) In a case concerning an individual debtor, property of the estate
includes, in addition to the property specified in section 541--
`(1) all property of the kind specified in section 541 that the debtor
acquires after the commencement of the case but before the case is closed,
dismissed, or converted to a case under chapter 7, 12, or 13, whichever
occurs first; and
`(2) earnings from services performed by the debtor after the
commencement of the case but before the case is closed, dismissed, or
converted to a case under chapter 7, 12, or 13, whichever occurs
first.'.
`(b) Except as provided in section 1104 or a confirmed plan or order
confirming a plan, the debtor shall remain in possession of all property of
the estate.'.
(2) CLERICAL AMENDMENT- The table of sections for chapter 11 of title
11, United States Code, is amended by adding at the end of the matter
relating to subchapter I the following:
`1115. Property of the estate.'.
(b) CONTENTS OF PLAN- Section 1123(a) of title 11, United States Code, is
amended--
(1) in paragraph (6), by striking `and' at the end;
(2) in paragraph (7), by striking the period and inserting `; and';
and
(3) by adding at the end the following:
`(8) in a case concerning an individual, provide for the payment to
creditors through the plan of all or such portion of earnings from personal
services performed by the debtor after the commencement of the case or other
future income of the debtor as is necessary for the execution of the
plan.'.
(c) CONFIRMATION OF PLAN-
(1) REQUIREMENTS RELATING TO VALUE OF PROPERTY- Section 1129(a) of title
11, United States Code, is amended by adding at the end the following:
`(15) In a case concerning an individual in which the holder of an
allowed unsecured claim objects to the confirmation of the plan--
`(A) the value of the property to be distributed under the plan on
account of such claim is, as of the effective date of the plan, not less
than the amount of such claim; or
`(B) the value of the property to be distributed under the plan is not
less than the debtor's projected disposable income (as that term is
defined in section 1325(b)(2)) to be received during the 5-year period
beginning on the date that the first payment is due under the plan, or
during the term of the plan, whichever is longer.'.
(2) REQUIREMENT RELATING TO INTERESTS IN PROPERTY- Section
1129(b)(2)(B)(ii) of title 11, United States Code, is amended by inserting
before the period at the end the following: `, except that in a case
concerning an individual, the debtor may retain property included in the
estate under section 1115, subject to the requirements of subsection
(a)(14)'.
(d) EFFECT OF CONFIRMATION--Section 1141(d) of title 11, United States
Code, is amended--
(1) in paragraph (2), by striking `The confirmation of a plan does not
discharge an individual debtor' and inserting `A discharge under this
chapter does not discharge a debtor'; and
(2) by adding at the end the following:
`(5) In a case concerning an individual--
`(A) except as otherwise ordered for cause shown, the discharge is not
effective until completion of all payments under the plan; and
`(B) at any time after the confirmation of the plan and after notice and
a hearing, the court may grant a discharge to a debtor that has not
completed payments under the plan only if--
`(i) for each allowed unsecured claim, the value, as of the effective
date of the plan, of property actually distributed under the plan on
account of that claim is not less than the amount that would have been
paid on such claim if the estate of the debtor had been liquidated under
chapter 7 of this title on such date; and
`(ii) modification of the plan under 1127 of this title is not
practicable.'.
(e) MODIFICATION OF PLAN- Section 1127 of title 11, United States Code, is
amended by adding at the end the following:
`(e) In a case concerning an individual, the plan may be modified at any
time after confirmation of the plan but before the completion of payments
under the plan, whether or not the plan has been substantially consummated,
upon request of the debtor, the trustee, the United States trustee, or the
holder of an allowed unsecured claim, to--
`(1) increase or reduce the amount of payments on claims of a particular
class provided for by the plan;
`(2) extend or reduce the time period for such payments; or
`(3) alter the amount of the distribution to a creditor whose claim is
provided for by the plan to the extent necessary to take account of any
payment of such claim made other than under the plan.
`(f)(1) Sections 1121 through 1128 of this title and the requirements of
section 1129 of this title apply to any modification under subsection (a).
`(2) The plan, as modified, shall become the plan only after there has
been disclosure under section 1125, as the court may direct, notice and a
hearing, and such modification is approved.'.
SEC. 322. LIMITATION.
(a) EXEMPTIONS- Section 522 of title 11, United States Code, as amended by
this Act, is amended by adding at the end the following:
`(p)(1) Except as provided in paragraph (2) of this subsection and
sections 544 and 548 of this title, as a result of electing under subsection
(b)(3)(A) to exempt
property under State or local law, a debtor may not exempt any amount of
interest that was acquired by the debtor during the 2-year period preceding the
filing of the petition which exceeds in the aggregate $100,000 in value in--
`(A) real or personal property that the debtor or a dependent of the
debtor uses as a residence;
`(B) a cooperative that owns property that the debtor or a dependent of
the debtor uses as a residence; or
`(C) a burial plot for the debtor or a dependent of the debtor.
`(2)(A) The limitation under paragraph (1) shall not apply to an exemption
claimed under subsection (b)(3)(A) by a family farmer for the principal
residence of that farmer.
`(B) For purposes of paragraph (1), any amount of such interest does not
include any interest transferred from a debtor's previous principal residence
(which was acquired prior to the beginning of the 2-year period) into the
debtor's current principal residence, where the debtor's previous and current
residences are located in the same State.'.
(b) ADJUSTMENT OF DOLLAR AMOUNTS- Section 104(b) of title 11, United
States Code, is amended--
(1) in paragraph (1), by striking `522(d),' and inserting `522(d),
522(n), 522(p),'; and
(2) in paragraph (3), by striking `522(d),' and inserting `522(d),
522(n), 522(p),'.
SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT CONTRIBUTIONS AND
OTHER PROPERTY FROM THE ESTATE.
(a) IN GENERAL- Section 541(b) of title 11, United States Code, is amended
by inserting after paragraph (6), as added by this Act, the following:
`(A) withheld by an employer from the wages of employees for payment
as contributions to--
`(i) an employee benefit plan subject to title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) or under
an employee benefit plan which is a governmental plan under section
414(d) of the Internal Revenue Code of 1986, a deferred compensation
plan under section 457 of the Internal Revenue Code of 1986, or a
tax-deferred annuity under section 403(b) of the Internal Revenue Code
of 1986, except that amount shall not constitute disposable income, as
defined in section 1325(b)(2) of this title; or
`(ii) a health insurance plan regulated by State law whether or not
subject to such title; or
`(B) received by the employer from employees for payment as
contributions to--
`(i) an employee benefit plan subject to title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) or under
an employee benefit plan which is a governmental plan under section
414(d) of the Internal Revenue Code of 1986, a deferred compensation
plan under section 457 of the Internal Revenue Code of 1986, or a
tax-deferred annuity under section 403(b) of the Internal Revenue Code
of 1986, except that amount shall not constitute disposable income, as
defined in section 1325(b)(2) of this title; or
`(ii) a health insurance plan regulated by State law whether or not
subject to such title;'.
(b) APPLICATION OF AMENDMENT- The amendments made by this section shall
not apply to cases commenced under title 11, United States Code, before the
expiration of the 180-day period beginning on the date of enactment of this
Act.
SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLVING BANKRUPTCY
PROFESSIONALS.
(a) IN GENERAL- Section 1334 of title 28, United States Code, is
amended--
(1) in subsection (b), by striking `Notwithstanding' and inserting
`Except as provided in subsection (e)(2), and notwithstanding'; and
(2) by striking subsection (e) and inserting the following:
`(e) The district court in which a case under title 11 is commenced or is
pending shall have exclusive jurisdiction--
`(1) of all the property, wherever located, of the debtor as of the date
of commencement of such case, and of property of the estate; and
`(2) over all claims or causes of action that involve construction of
section 327 of title 11, United States Code, or rules relating to disclosure
requirements under section 327.'.
(b) APPLICABILITY- This section shall only apply to cases filed after the
date of enactment of this Act.
SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE.
(a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE 11, UNITED STATES CODE- Section
1930(a) of title 28, United States Code, is amended by striking paragraph (1)
and inserting the following:
`(1) For a case commenced--
`(A) under chapter 7 of title 11, $160; or
`(B) under chapter 13 of title 11, $150.'.
(b) UNITED STATES TRUSTEE SYSTEM FUND- Section 589a(b) of title 28, United
States Code, is amended--
(1) by striking paragraph (1) and inserting the following:
`(1)(A) 40.63 percent of the fees collected under section 1930(a)(1)(A)
of this title in cases commenced under chapter 7 of title 11; and
`(B) 70.00 percent of the fees collected under section 1930(a)(1)(B) of
this title in cases commenced under chapter 13 of title 11;';
(2) in paragraph (2), by striking `one-half' and inserting
`three-fourths'; and
(3) in paragraph (4), by striking `one-half' and inserting `100
percent'.
(c) COLLECTION AND DEPOSIT OF MISCELLANEOUS BANKRUPTCY FEES- Section
406(b) of the Judiciary Appropriations Act, 1990 (28 U.S.C. 1931 note) is
amended by striking `pursuant to 28 U.S.C. section 1930(b) and 30.76 per
centum of the fees hereafter collected under 28 U.S.C. section 1930(a)(1) and
25 percent of the fees hereafter collected under 28 U.S.C. section 1930(a)(3)
shall be deposited as offsetting receipts to the fund established under 28
U.S.C. section 1931' and inserting `under section 1930(b) of title 28, United
States Code, and 31.25 percent of the fees collected under section
1930(a)(1)(A) of that title, 30.00 percent of the fees collected under section
1930(a)(1)(B) of that title, and 25 percent of the fees collected under
section 1930(a)(3) of that title shall be deposited as offsetting receipts to
the fund established under section 1931 of that title'.
SEC. 326. SHARING OF COMPENSATION.
Section 504 of title 11, United States Code, is amended by adding at the
end the following:
`(c) This section shall not apply with respect to sharing, or agreeing to
share, compensation with a bona fide public service attorney referral program
that operates in accordance with non-Federal law regulating attorney referral
services and with rules of professional responsibility applicable to attorney
acceptance of referrals.'.
SEC. 327. FAIR VALUATION OF COLLATERAL.
Section 506(a) of title 11, United States Code, is amended by--
(1) inserting `(1)' after `(a)'; and
(2) by adding at the end the following:
`(2) In the case of an individual debtor under chapters 7 and 13, such
value with respect to personal property securing an allowed claim shall be
determined based on the replacement value of such property as of the date of
filing the petition without deduction for costs of sale or marketing. With
respect to property acquired for personal, family, or household purpose,
replacement value shall mean the price a retail merchant would charge for
property of that kind considering the age and condition of the property at the
time value is determined.'.
SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.
(a) EXECUTORY CONTRACTS AND UNEXPIRED LEASES- Section 365 of title 11,
United States Code, is amended--
(A) in paragraph (1)(A), by striking the semicolon at the end and
inserting the following: `other than a default that is a breach of a
provision relating to the satisfaction of any provision (other than a
penalty rate or penalty provision) relating to a default arising from any
failure to perform nonmonetary obligations under an unexpired lease of
real property, if it is impossible for the trustee to cure such default by
performing nonmonetary acts at and after the time of assumption, except
that if such default arises from a failure to operate in accordance with a
nonresidential real property lease, then such default shall be cured by
performance at and after the time of assumption in accordance with such
lease, and pecuniary losses resulting from such default shall be
compensated in accordance with the provisions of paragraph (b)(l);';
and
(B) in paragraph (2)(D), by striking `penalty rate or provision' and
inserting `penalty rate or penalty provision';
(A) in paragraph (2), by inserting `or' at the end;
(B) in paragraph (3), by striking `; or' at the end and inserting a
period; and
(C) by striking paragraph (4);
(A) by striking paragraphs (5) through (9); and
(B) by redesignating paragraph (10) as paragraph (5); and
(4) in subsection (f)(1) by striking `; except that' and all that
follows through the end of the paragraph and inserting a period.
(b) IMPAIRMENT OF CLAIMS OR INTERESTS- Section 1124(2) of title 11, United
States Code, is amended--
(1) in subparagraph (A), by inserting `or of a kind that section
365(b)(2) of this title expressly does not require to be cured' before the
semicolon at the end;
(2) in subparagraph (C), by striking `and' at the end;
(3) by redesignating subparagraph (D) as subparagraph (E); and
(4) by inserting after subparagraph (C) the following:
`(D) if such claim or such interest arises from any failure to perform
a nonmonetary obligation, other than a default arising from failure to
operate a non-residential real property lease subject to section
365(b)(1)(A), compensates the holder of such claim or such interest (other
than the debtor or an insider) for any actual pecuniary loss incurred by
such holder as a result of such failure; and'.
TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS
Subtitle A--General Business Bankruptcy Provisions
SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.
(a) DEFINITION- Section 101 of title 11, United States Code, as amended by
this Act, is amended by inserting after paragraph (48) the following:
`(48A) `securities self regulatory organization' means either a
securities association registered with the Securities and Exchange
Commission under section 15A of the Securities Exchange Act of 1934 (15
U.S.C. 78o-3) or a national securities exchange registered with the
Securities and Exchange Commission under section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f);'.
(b) AUTOMATIC STAY- Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (25), as added by this Act, the
following:
`(26) under subsection (a), of--
`(A) the commencement or continuation of an investigation or action by
a securities self regulatory organization to enforce such organization's
regulatory power;
`(B) the enforcement of an order or decision, other than for monetary
sanctions, obtained in an action by the securities self regulatory
organization to enforce such organization's regulatory power; or
`(C) any act taken by the securities self regulatory organization to
delist, delete, or refuse to permit quotation of any stock that does not
meet applicable regulatory requirements;'.
SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.
Section 341 of title 11, United States Code, is amended by adding at the
end the following:
`(e) Notwithstanding subsections (a) and (b), the court, on the request of
a party in interest and after notice and a hearing, for cause may order that
the United States trustee not convene a meeting of creditors or equity
security holders if the debtor has filed a plan as to which the debtor
solicited acceptances prior to the commencement of the case.'.
SEC. 403. PROTECTION OF REFINANCE OF SECURITY INTEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2) of title 11, United
States Code, are each amended by striking `10' each place it appears and
inserting `30'.
SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
(a) IN GENERAL- Section 365(d)(4) of title 11, United States Code, is
amended to read as follows:
`(4)(A) Subject to subparagraph (B), in any case under any chapter of this
title, an unexpired lease of nonresidential real property under which the
debtor is the lessee shall be deemed rejected, and the trustee shall
immediately surrender that nonresidential real property to the lessor, if the
trustee does not assume or reject the unexpired lease by the earlier of--
`(i) the date that is 120 days after the date of the order for relief;
or
`(ii) the date of the entry of an order confirming a plan.
`(B)(i) The court may extend the period determined under subparagraph (A),
prior to the expiration of the 120-day period, for 90 days upon motion of the
trustee or lessor for cause.
`(ii) If the court grants an extension under clause (i), the court may
grant a subsequent extension only upon prior written consent of the lessor in
each instance.'.
(b) EXCEPTION- Section 365(f)(1) of title 11, United States Code, is
amended by striking `subsection' the first place it appears and inserting
`subsections (b) and'.
SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.
(a) APPOINTMENT- Section 1102(a) of title 11, United States Code, is
amended by adding at the end the following:
`(4) On request of a party in interest and after notice and a hearing, the
court may order the United States trustee to change the membership of a
committee appointed under this subsection, if the court determines that the
change is necessary to ensure adequate representation of creditors or equity
security holders. The court may order the United States trustee to increase
the number of members of a committee to include a creditor that is a small
business concern (as described in section 3(a)(1) of the Small Business Act
(15 U.S.C. 632(a)(1))), if the court determines that the creditor holds claims
(of the kind represented by the committee) the aggregate amount of which, in
comparison to the annual gross revenue of that creditor, is disproportionately
large.'.
(b) INFORMATION- Section 1102(b) of title 11, United States Code, is
amended by adding at the end the following:
`(3) A committee appointed under subsection (a) shall--
`(A) provide access to information for creditors who--
`(i) hold claims of the kind represented by that committee;
and
`(ii) are not appointed to the committee;
`(B) solicit and receive comments from the creditors described in
subparagraph (A); and
`(C) be subject to a court order that compels any additional report or
disclosure to be made to the creditors described in subparagraph
(A).'.
SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES CODE.
Section 546 of title 11, United States Code, is amended--
(1) by redesignating the second subsection designated as subsection (g)
(as added by section 222(a) of Public Law 103-394) as subsection (i);
and
(2) by adding at the end the following:
`(j)(1) Notwithstanding paragraphs (2) and (3) of section 545, the trustee
may not avoid a warehouseman's lien for storage, transportation, or other
costs incidental to the storage and handling of goods.
`(2) The prohibition under paragraph (1) shall be applied in a manner
consistent with any applicable State statute that is similar to section 7-209
of the Uniform Commercial Code, as in effect on the date of enactment of the
Bankruptcy Reform Act of 2000, or any successor thereto.'.
SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11, UNITED STATES CODE.
Section 330(a) of title 11, United States Code, is amended--
(A) by striking `(A) In' and inserting `In'; and
(B) by inserting `to an examiner, trustee under chapter 11, or
professional person' after `awarded'; and
(2) by adding at the end the following:
`(7) In determining the amount of reasonable compensation to be awarded
to a trustee, the court
shall treat such compensation as a commission, based on section 326 of this
title.'.
SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.
Section 1125 of title 11, United States Code, is amended by adding at the
end the following:
`(g) Notwithstanding subsection (b), an acceptance or rejection of the
plan may be solicited from a holder of a claim or interest if such
solicitation complies with applicable nonbankruptcy law and if such holder was
solicited before the commencement of the case in a manner complying with
applicable nonbankruptcy law.'.
SEC. 409. PREFERENCES.
Section 547(c) of title 11, United States Code, is amended--
(1) by striking paragraph (2) and inserting the following:
`(2) to the extent that such transfer was in payment of a debt incurred
by the debtor in the ordinary course of business or financial affairs of the
debtor and the transferee, and such transfer was--
`(A) made in the ordinary course of business or financial affairs of
the debtor and the transferee; or
`(B) made according to ordinary business terms;';
(2) in paragraph (8), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(9) if, in a case filed by a debtor whose debts are not primarily
consumer debts, the aggregate value of all property that constitutes or is
affected by such transfer is less than $5,000.'.
SEC. 410. VENUE OF CERTAIN PROCEEDINGS.
Section 1409(b) of title 28, United States Code, is amended by inserting
`, or a nonconsumer debt against a noninsider of less than $10,000,' after
`$5,000'.
SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.
Section 1121(d) of title 11, United States Code, is amended--
(1) by striking `On' and inserting `(1) Subject to paragraph (2), on';
and
(2) by adding at the end the following:
`(2)(A) The 120-day period specified in paragraph (1) may not be extended
beyond a date that is 18 months after the date of the order for relief under
this chapter.
`(B) The 180-day period specified in paragraph (1) may not be extended
beyond a date that is 20 months after the date of the order for relief under
this chapter.'.
SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.
Section 523(a)(16) of title 11, United States Code, is amended--
(1) by striking `dwelling' the first place it appears;
(2) by striking `ownership or' and inserting `ownership,';
(3) by striking `housing' the first place it appears; and
(4) by striking `but only' and all that follows through `such period'
and inserting `or a lot in a homeowners association, for as long as the
debtor or the trustee has a legal, equitable, or possessory ownership
interest in such unit, such corporation, or such lot,'.
SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.
Section 341(c) of title 11, United States Code, is amended by inserting at
the end the following: `Notwithstanding any local court rule, provision of a
State constitution, any other Federal or State law that is not a bankruptcy
law, or other requirement that representation at the meeting of creditors
under subsection (a) be by an attorney, a creditor holding a consumer debt or
any representative of the creditor (which may include an entity or an employee
of an entity and may be a representative for more than 1 creditor) shall be
permitted to appear at and participate in the meeting of creditors in a case
under chapter 7 or 13, either alone or in conjunction with an attorney for the
creditor. Nothing in this subsection shall be construed to require any
creditor to be represented by an attorney at any meeting of creditors.'.
SEC. 414. DEFINITION OF DISINTERESTED PERSON.
Section 101(14) of title 11, United States Code, is amended to read as
follows:
`(14) `disinterested person' means a person that--
`(A) is not a creditor, an equity security holder, or an
insider;
`(B) is not and was not, within 2 years before the date of the filing
of the petition, a director, officer, or employee of the debtor;
and
`(C) does not have an interest materially adverse to the interest of
the estate or of any class of creditors or equity security holders, by
reason of any direct or indirect relationship to, connection with, or
interest in, the debtor, or for any other reason;'.
SEC. 415. FACTORS FOR COMPENSATION OF PROFESSIONAL PERSONS.
Section 330(a)(3) of title 11, United States Code, as amended by this Act,
is amended--
(1) in subparagraph (D), by striking `and' at the end;
(2) by redesignating subparagraph (E) as subparagraph (F); and
(3) by inserting after subparagraph (D) the following:
`(E) with respect to a professional person, whether the person is
board certified or otherwise has demonstrated skill and experience in the
bankruptcy field; and'.
SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.
Section 1104(b) of title 11, United States Code, is amended--
(1) by inserting `(1)' after `(b)'; and
(2) by adding at the end the following:
`(2)(A) If an eligible, disinterested trustee is elected at a meeting of
creditors under paragraph (1), the United States trustee shall file a report
certifying that election.
`(B) Upon the filing of a report under subparagraph (A)--
`(i) the trustee elected under paragraph (1) shall be considered to have
been selected and appointed for purposes of this section; and
`(ii) the service of any trustee appointed under subsection (d) shall
terminate.
`(C) In the case of any dispute arising out of an election described in
subparagraph (A), the court shall resolve the dispute.'.
SEC. 417. UTILITY SERVICE.
Section 366 of title 11, United States Code, is amended--
(1) in subsection (a), by striking `subsection (b)' and inserting
`subsections (b) and (c)'; and
(2) by adding at the end the following:
`(c)(1)(A) For purposes of this subsection, the term `assurance of
payment' means--
`(ii) a letter of credit;
`(iii) a certificate of deposit;
`(v) a prepayment of utility consumption; or
`(vi) another form of security that is mutually agreed on between the
utility and the debtor or the trustee.
`(B) For purposes of this subsection an administrative expense priority
shall not constitute an assurance of payment.
`(2) Subject to paragraphs (3) through (5), with respect to a case filed
under chapter 11, a utility referred to in subsection (a) may alter, refuse,
or discontinue utility service, if during the 30-day period beginning on the
date of filing of the petition, the utility does not receive from the debtor
or the trustee adequate assurance of payment for utility service that is
satisfactory to the utility.
`(3)(A) On request of a party in interest and after notice and a hearing,
the court may order modification of the amount of an assurance of payment
under paragraph (2).
`(B) In making a determination under this paragraph whether an assurance
of payment is adequate, the court may not consider--
`(i) the absence of security before the date of filing of the
petition;
`(ii) the payment by the debtor of charges for utility service in a
timely manner before the date of filing of the petition; or
`(iii) the availability of an administrative expense priority.
`(4) Notwithstanding any other provision of law, with respect to a case
subject to this subsection, a utility may recover or set off against a
security deposit provided to the utility by the debtor before the date of
filing of the petition without notice or order of the court.'.
SEC. 418. BANKRUPTCY FEES.
Section 1930 of title 28, United States Code, is amended--
(1) in subsection (a), by striking `Notwithstanding section 1915 of this
title, the' and inserting `The'; and
(2) by adding at the end the following:
`(f)(1) Under the procedures prescribed by the Judicial Conference of the
United States, the district court or the bankruptcy court may waive the filing
fee in a case under chapter 7 of title 11 for an individual if the court
determines that such debtor has income less than 150 percent of the income
official poverty line (as defined by the Office of Management and Budget, and
revised annually in accordance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of the size involved and is
unable to pay that fee in installments. For purposes of this paragraph, the
term `filing fee' means the filing required by subsection (a), or any other
fee prescribed by the Judicial Conference under subsections (b) and (c) that
is payable to the clerk upon the commencement of a case under chapter 7.
`(2) The district court or the bankruptcy court may waive for such debtors
other fees prescribed under subsections (b) and (c).
`(3) This subsection does not restrict the district court or the
bankruptcy court from waiving, in accordance with Judicial Conference policy,
fees prescribed under this section for other debtors and creditors.'.
SEC. 419. MORE COMPLETE INFORMATION REGARDING ASSETS OF THE ESTATE.
(1) DISCLOSURE- The Advisory Committee on Bankruptcy Rules of the
Judicial Conference of the United States, after consideration of the views
of the Director of the Executive Office for United States Trustees, shall
propose for adoption amended Federal Rules of Bankruptcy Procedure and
Official Bankruptcy Forms directing debtors under chapter 11 of title 11,
United States Code, to disclose the information described in paragraph (2)
by filing and serving periodic financial and other reports designed to
provide such information.
(2) INFORMATION- The information referred to in paragraph (1) is the
value, operations, and profitability of any closely held corporation,
partnership, or of any other entity in which the debtor holds a substantial
or controlling interest.
(b) PURPOSE- The purpose of the rules and reports under subsection (a)
shall be to assist parties in interest taking steps to ensure that the
debtor's interest in any entity referred to in subsection (a)(2) is used for
the payment of allowed claims against debtor.
Subtitle B--Small Business Bankruptcy Provisions
SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.
Section 1125 of title 11, United States Code, is amended--
(1) in subsection (a)(1), by inserting before the semicolon `and in
determining whether a disclosure statement provides adequate information,
the court shall consider the complexity of the case, the benefit of
additional information to creditors and other parties in interest, and the
cost of providing additional information'; and
(2) by striking subsection (f), and inserting the following:
`(f) Notwithstanding subsection (b), in a small business case--
`(1) the court may determine that the plan itself provides adequate
information and that a separate disclosure statement is not necessary;
`(2) the court may approve a disclosure statement submitted on standard
forms approved by the court or adopted under section 2075 of title 28;
and
`(3)(A) the court may conditionally approve a disclosure statement
subject to final approval after notice and a hearing;
`(B) acceptances and rejections of a plan may be solicited based on a
conditionally approved disclosure statement if the debtor provides adequate
information to each holder of a claim or interest that is solicited, but a
conditionally approved disclosure statement shall be mailed not later than
20 days before the date of the hearing on confirmation of the plan;
and
`(C) the hearing on the disclosure statement may be combined with the
hearing on confirmation of a plan.'.
SEC. 432. DEFINITIONS.
(a) DEFINITIONS- Section 101 of title 11, United States Code, as amended
by this Act, is amended by striking paragraph (51C) and inserting the
following:
`(51C) `small business case' means a case filed under chapter 11 of this
title in which the debtor is a small business debtor;
`(51D) `small business debtor'--
`(A) subject to subparagraph (B), means a person engaged in commercial
or business activities (including any affiliate of such person that is
also a debtor under this title and excluding a person whose primary
activity is the business of owning or operating real property or
activities incidental thereto) that has aggregate noncontingent,
liquidated secured and unsecured debts as of the date of the petition or
the order for relief in an amount not more than $3,000,000 (excluding
debts owed to 1 or more affiliates or insiders) for a case in which the
United States trustee has not appointed under section 1102(a)(1) a
committee of unsecured creditors or where the court has determined that
the committee of unsecured creditors is not sufficiently active and
representative to provide effective oversight of the debtor; and
`(B) does not include any member of a group of affiliated debtors that
has aggregate noncontingent liquidated secured and unsecured debts in an
amount greater than $3,000,000 (excluding debt owed to 1 or more
affiliates or insiders);'.
(b) CONFORMING AMENDMENT- Section 1102(a)(3) of title 11, United States
Code, is amended by inserting `debtor' after `small business'.
SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.
Within a reasonable period of time after the date of enactment of this
Act, the Advisory Committee on Bankruptcy Rules of the Judicial Conference of
the United States shall propose for adoption standard form disclosure
statements and plans of reorganization for small business debtors (as defined
in section 101 of title 11, United States Code, as amended by this Act),
designed to achieve a practical balance between--
(1) the reasonable needs of the courts, the United States trustee,
creditors, and other parties in interest for reasonably complete
information; and
(2) economy and simplicity for debtors.
SEC. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS.
(1) IN GENERAL- Chapter 3 of title 11, United States Code, is amended by
inserting after section 307 the following:
`Sec. 308. Debtor reporting requirements
`(a) For purposes of this section, the term `profitability' means, with
respect to a debtor, the amount of money that the debtor has earned or lost
during current and recent fiscal periods.
`(b) A small business debtor shall file periodic financial and other
reports containing information including--
`(1) the debtor's profitability;
`(2) reasonable approximations of the debtor's projected cash receipts
and cash disbursements over a reasonable period;
`(3) comparisons of actual cash receipts and disbursements with
projections in prior reports;
`(4)(A) whether the debtor is--
`(i) in compliance in all material respects with postpetition
requirements imposed by this title and the Federal Rules of Bankruptcy
Procedure; and
`(ii) timely filing tax returns and other required government filings
and paying taxes and other administrative claims when due;
`(B) if the debtor is not in compliance with the requirements referred
to in subparagraph (A)(i) or filing tax returns and other required
government filings and making the payments referred to in subparagraph
(A)(ii), what the failures are and how, at what cost, and when the debtor
intends to remedy such failures; and
`(C) such other matters as are in the best interests of the debtor and
creditors, and in the public interest in fair and efficient procedures under
chapter 11 of this title.'.
(2) CLERICAL AMENDMENT- The table of sections for chapter 3 of title 11,
United States Code, is amended by inserting after the item relating to
section 307 the following:
`308. Debtor reporting requirements.'.
(b) EFFECTIVE DATE- The amendments made by subsection (a) shall take
effect 60 days after the date on which rules are prescribed under section 2075
of title 28, United States Code, to establish forms to be used to comply with
section 308 of title 11, United States Code, as added by subsection (a).
SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR SMALL BUSINESS CASES.
(a) PROPOSAL OF RULES AND FORMS- The Advisory Committee on Bankruptcy
Rules of the Judicial Conference of the United States shall propose for
adoption amended Federal Rules of Bankruptcy Procedure and Official Bankruptcy
Forms to be used by small business debtors to file periodic financial and
other reports containing information, including information relating to--
(1) the debtor's profitability;
(2) the debtor's cash receipts and disbursements; and
(3) whether the debtor is timely filing tax returns and paying taxes and
other administrative claims when due.
(b) PURPOSE- The rules and forms proposed under subsection (a) shall be
designed to achieve a practical balance among--
(1) the reasonable needs of the bankruptcy court, the United States
trustee, creditors, and other parties in interest for reasonably complete
information;
(2) the small business debtor's interest that required reports be easy
and inexpensive to complete; and
(3) the interest of all parties that the required reports help the small
business debtor to understand the small business debtor's financial
condition and plan the small business debtor's future.
SEC. 436. DUTIES IN SMALL BUSINESS CASES.
(a) DUTIES IN CHAPTER 11 CASES- Subchapter I of title 11, United States
Code, as amended by this Act, is amended by adding at the end the
following:
`Sec. 1116. Duties of trustee or debtor in possession in small business
cases
`In a small business case, a trustee or the debtor in possession, in
addition to the duties provided in this title and as otherwise required by
law, shall--
`(1) append to the voluntary petition or, in an involuntary case, file
not later than 7 days after the date of the order for relief--
`(A) its most recent balance sheet, statement of operations, cash-flow
statement, Federal income tax return; or
`(B) a statement made under penalty of perjury that no balance sheet,
statement of operations, or cash-flow statement has been prepared and no
Federal tax return has been filed;
`(2) attend, through its senior management personnel and counsel,
meetings scheduled by the court or the United States trustee, including
initial debtor interviews, scheduling conferences, and meetings of creditors
convened under section 341 unless the court waives that requirement after
notice and hearing, upon a finding of extraordinary and compelling
circumstances;
`(3) timely file all schedules and statements of financial affairs,
unless the court, after notice and a hearing, grants an extension, which
shall not extend such time period to a date later than 30 days after the
date of the order for relief, absent extraordinary and compelling
circumstances;
`(4) file all postpetition financial and other reports required by the
Federal Rules of Bankruptcy Procedure or by local rule of the district
court;
`(5) subject to section 363(c)(2), maintain insurance customary and
appropriate to the industry;
`(6)(A) timely file tax returns and other required government filings;
and
`(B) subject to section 363(c)(2), timely pay all administrative expense
tax claims, except those being contested by appropriate proceedings being
diligently prosecuted; and
`(7) allow the United States trustee, or a designated representative of
the United States trustee, to inspect the debtor's business premises, books,
and records at reasonable times, after reasonable prior written notice,
unless notice is waived by the debtor.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 11 of title 11,
United States Code, is amended by adding at the end of the matter relating to
subchapter I the following:
`1116. Duties of trustee or debtor in possession in small business
cases.'.
SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.
Section 1121 of title 11, United States Code, is amended by striking
subsection (e) and inserting the following:
`(e) In a small business case--
`(1) only the debtor may file a plan until after 180 days after the date
of the order for relief, unless that period is--
`(A) extended as provided by this subsection, after notice and
hearing; or
`(B) the court, for cause, orders otherwise;
`(2) the plan, and any necessary disclosure statement, shall be filed
not later than 300 days after the date of the order for relief; and
`(3) the time periods specified in paragraphs (1) and (2), and the time
fixed in section 1129(e), within which the plan shall be confirmed, may be
extended only if--
`(A) the debtor, after providing notice to parties in interest
(including the United States trustee), demonstrates by a preponderance of
the evidence that it is more likely than not that the court will confirm a
plan within a reasonable period of time;
`(B) a new deadline is imposed at the time the extension is granted;
and
`(C) the order extending time is signed before the existing deadline
has expired.'.
SEC. 438. PLAN CONFIRMATION DEADLINE.
Section 1129 of title 11, United States Code, is amended by adding at the
end the following:
`(e) In a small business case, the plan shall be confirmed not later than
175 days after the date of the order for relief, unless such 175-day period is
extended as provided in section 1121(e)(3).'.
SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.
Section 586(a) of title 28, United States Code, is amended--
(A) in subparagraph (G), by striking `and' at the end;
(B) by redesignating subparagraph (H) as subparagraph (I);
and
(C) by inserting after subparagraph (G) the following:
`(H) in small business cases (as defined in section 101 of title 11),
performing the additional duties specified in title 11 pertaining to such
cases; and';
(2) in paragraph (5), by striking `and' at the end;
(3) in paragraph (6), by striking the period at the end and inserting a
semicolon; and
(4) by adding at the end the following:
`(7) in each of such small business cases--
`(A) conduct an initial debtor interview as soon as practicable after
the entry of order for relief but before the first meeting scheduled under
section 341(a) of title 11, at which time the United States trustee
shall--
`(i) begin to investigate the debtor's viability;
`(ii) inquire about the debtor's business plan;
`(iii) explain the debtor's obligations to file monthly operating
reports and other required reports;
`(iv) attempt to develop an agreed scheduling order; and
`(v) inform the debtor of other obligations;
`(B) if determined to be appropriate and advisable, visit the
appropriate business premises of the debtor and ascertain the state of the
debtor's books and records and verify that the debtor has filed its tax
returns; and
`(C) review and monitor diligently the debtor's activities, to
identify as promptly as possible whether the debtor will be unable to
confirm a plan; and
`(8) in any case in which the United States trustee finds material
grounds for any relief under section 1112 of title 11, the United States
trustee shall apply promptly after making that finding to the court for
relief.'.
SEC. 440. SCHEDULING CONFERENCES.
Section 105(d) of title 11, United States Code, is amended--
(1) in the matter preceding paragraph (1), by striking `, may';
and
(2) by striking paragraph (1) and inserting the following:
`(1) shall hold such status conferences as are necessary to further the
expeditious and economical resolution of the case; and'.
SEC. 441. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, as amended by this Act is
amended--
(1) in subsection (k), as redesignated by this Act--
(A) by striking `An' and inserting `(1) Except as provided in
paragraph (2), an'; and
(B) by adding at the end the following:
`(2) If such violation is based on an action taken by an entity in the
good faith belief that subsection (h) applies to the debtor, the recovery
under paragraph (1) of this subsection against such entity shall be limited to
actual damages.'; and
(2) by adding at the end the following:
`(l)(1) Except as provided in paragraph (2) of this subsection, the
provisions of subsection (a) do not apply in a case in which the debtor--
`(A) is a debtor in a small business case pending at the time the
petition is filed;
`(B) was a debtor in a small business case that was dismissed for any
reason by an order that became final in the 2-year period ending on the date
of the order for relief entered with respect to the petition;
`(C) was a debtor in a small business case in which a plan was confirmed
in the 2-year period ending on the date of the order for relief entered with
respect to the petition; or
`(D) is an entity that has succeeded to substantially all of the assets
or business of a small business debtor described in subparagraph (A), (B),
or (C).
`(2) This subsection does not apply--
`(A) to an involuntary case involving no collusion by the debtor with
creditors; or
`(B) to the filing of a petition if--
`(i) the debtor proves by a preponderance of the evidence that the
filing of that petition resulted from circumstances beyond the control of
the debtor not foreseeable at the time the case then pending was filed;
and
`(ii) it is more likely than not that the court will confirm a
feasible plan, but not a liquidating plan, within a reasonable period of
time.'.
SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND APPOINTMENT OF
TRUSTEE.
(a) EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION- Section 1112 of title
11, United States Code, is amended by striking subsection (b) and inserting
the following:
`(b)(1) Except as provided in paragraph (2) of this subsection, subsection
(c) of this section, and section 1104(a)(3), on request of a party in
interest, and after notice and a hearing, the court shall convert a case under
this chapter to a case under chapter 7 or dismiss a case under this chapter,
whichever is in the best interest of creditors and the estate, if the movant
establishes cause.
`(2) The relief provided in paragraph (1) shall not be granted if the
debtor or another party in interest objects and establishes by a preponderance
of the evidence that--
`(A) a plan with a reasonable possibility of being confirmed will be
filed within a reasonable period of time; and
`(B) the grounds include an act or omission of the debtor--
`(i) for which there exists a reasonable justification for the act or
omission; and
`(ii) that will be cured within a reasonable period of time fixed by
the court.
`(3) The court shall commence the hearing on any motion under this
subsection not later than 30 days after filing of the motion, and shall decide
the motion not later than 15 days after commencement of the hearing, unless
the movant expressly consents to a continuance for a specific period of time
or compelling circumstances prevent the court from meeting the time limits
established by this paragraph.
`(4) For purposes of this subsection, the term `cause' includes--
`(A) substantial or continuing loss to or diminution of the
estate;
`(B) gross mismanagement of the estate;
`(C) failure to maintain appropriate insurance that poses a risk to the
estate or to the public;
`(D) unauthorized use of cash collateral harmful to 1 or more
creditors;
`(E) failure to comply with an order of the court;
`(F) repeated failure timely to satisfy any filing or reporting
requirement established by this title or by any rule applicable to a case
under this chapter;
`(G) failure to attend the meeting of creditors convened under section
341(a) or an examination ordered under rule 2004 of the Federal Rules of
Bankruptcy Procedure;
`(H) failure timely to provide information or attend meetings reasonably
requested by the United States trustee or the bankruptcy
administrator;
`(I) failure timely to pay taxes due after the date of the order for
relief or to file tax returns due after the order for relief;
`(J) failure to file a disclosure statement, or to file or confirm a
plan, within the time fixed by this title or by order of the court;
`(K) failure to pay any fees or charges required under chapter 123 of
title 28;
`(L) revocation of an order of confirmation under section 1144;
`(M) inability to effectuate substantial consummation of a confirmed
plan;
`(N) material default by the debtor with respect to a confirmed
plan;
`(O) termination of a confirmed plan by reason of the occurrence of a
condition specified in the plan; and
`(P) failure of the debtor to pay any domestic support obligation that
first becomes payable after the date on which the petition is filed.
`(5) The court shall commence the hearing on any motion under this
subsection not later than 30 days after filing of the motion, and shall decide
the motion not later than 15 days after commencement of the hearing, unless
the movant expressly consents to a continuance for a specific period of time
or compelling circumstances prevent the court from meeting the time limits
established by this paragraph.'.
(b) ADDITIONAL GROUNDS FOR APPOINTMENT OF TRUSTEE- Section 1104(a) of
title 11, United States Code, is amended--
(1) in paragraph (1), by striking `or' at the end;
(2) in paragraph (2), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(3) if grounds exist to convert or dismiss the case under section 1112,
but the court determines that the appointment of a trustee or an examiner is
in the best interests of creditors and the estate.'.
SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED STATES CODE, WITH RESPECT
TO SMALL BUSINESSES.
Not later than 2 years after the date of enactment of this Act, the
Administrator of the Small Business Administration, in consultation with the
Attorney General, the Director of the Administrative Office of United States
Trustees, and the Director of the Administrative Office of the United States
Courts, shall--
(1) conduct a study to determine--
(A) the internal and external factors that cause small businesses,
especially sole proprietorships, to become debtors in cases under title
11, United States Code, and that cause certain small businesses to
successfully complete cases under chapter 11 of such title; and
(B) how Federal laws relating to bankruptcy may be made more effective
and efficient in assisting small businesses to remain viable; and
(2) submit to the President pro tempore of the Senate and the Speaker of
the House of Representatives a report summarizing that study.
SEC. 444. PAYMENT OF INTEREST.
Section 362(d)(3) of title 11, United States Code, is amended--
(1) by inserting `or 30 days after the court determines that the debtor
is subject to this paragraph, whichever is later' after `90-day period)';
and
(2) by striking subparagraph (B) and inserting the following:
`(B) the debtor has commenced monthly payments that--
`(i) may, in the debtor's sole discretion, notwithstanding section
363(c)(2), be made from rents or other income generated before or after
the commencement of the case by or from the property to each creditor
whose claim is secured by such real estate (other than a claim secured
by a judgment lien or by an unmatured statutory lien); and
`(ii) are in an amount equal to interest at the then applicable
nondefault contract rate of interest on the value of the creditor's
interest in the real estate; or'.
SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.
Section 503(b) of title 11, United States Code, is amended--
(1) in paragraph (5), by striking `and' at the end;
(2) in paragraph (6), by striking the period at the end and inserting a
semicolon; and
(3) by adding at the end the following:
`(7) with respect to a nonresidential real property lease previously
assumed under section 365, and subsequently rejected, a sum equal to all
monetary obligations due, excluding those arising from or relating to a
failure to operate or penalty provisions, for the period of 2 years
following the later of the rejection date or the date of actual turnover of
the premises, without reduction or setoff for any reason whatsoever except
for sums actually received or to be received from a nondebtor, and the claim
for remaining sums due for the balance of the term of the lease shall be a
claim under section 502(b)(6);'.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.
(a) TECHNICAL AMENDMENT RELATING TO MUNICIPALITIES- Section 921(d) of
title 11, United States Code, is amended by inserting `notwithstanding section
301(b)' before the period at the end.
(b) CONFORMING AMENDMENT- Section 301 of title 11, United States Code, is
amended--
(1) by inserting `(a)' before `A voluntary'; and
(2) by striking the last sentence and inserting the following:
`(b) The commencement of a voluntary case under a chapter of this title
constitutes an order for relief under such chapter.'.
SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.
Section 901(a) of title 11, United States Code, is amended--
(1) by inserting `555, 556,' after `553,'; and
(2) by inserting `559, 560, 561, 562' after `557,'.
TITLE VI--BANKRUPTCY DATA
SEC. 601. IMPROVED BANKRUPTCY STATISTICS.
(a) IN GENERAL- Chapter 6 of title 28, United States Code, is amended by
adding at the end the following:
`Sec. 159. Bankruptcy statistics
`(a) The clerk of each district shall collect statistics regarding
individual debtors with primarily consumer debts seeking relief under chapters
7, 11, and 13 of title 11. Those statistics shall be on a standardized form
prescribed by the Director of the Administrative Office of the United States
Courts (referred to in this section as the `Director').
`(b) The Director shall--
`(1) compile the statistics referred to in subsection (a);
`(2) make the statistics available to the public; and
`(3) not later than October 31, 2002, and annually thereafter, prepare,
and submit to Congress a report concerning the information collected under
subsection (a) that contains an analysis of the information.
`(c) The compilation required under subsection (b) shall--
`(1) be itemized, by chapter, with respect to title 11;
`(2) be presented in the aggregate and for each district; and
`(3) include information concerning--
`(A) the total assets and total liabilities of the debtors described
in subsection (a), and in each category of assets and liabilities, as
reported in the schedules prescribed pursuant to section 2075 of this
title and filed by those debtors;
`(B) the current monthly income, average income, and average expenses
of those debtors as reported on the schedules and statements that each
such debtor files under sections 521 and 1322 of title 11;
`(C) the aggregate amount of debt discharged in the reporting period,
determined as the difference between the total amount of debt and
obligations of a debtor reported on the schedules and the amount of such
debt reported in categories which are predominantly
nondischargeable;
`(D) the average period of time between the filing of the petition and
the closing of the case;
`(E) for the reporting period--
`(i) the number of cases in which a reaffirmation was filed;
and
`(ii)(I) the total number of reaffirmations filed;
`(II) of those cases in which a reaffirmation was filed, the number
of cases in which the debtor was not represented by an attorney;
and
`(III) of those cases in which a reaffirmation was filed, the number
of cases in which the reaffirmation was approved by the
court;
`(F) with respect to cases filed under chapter 13 of title 11, for the
reporting period--
`(i)(I) the number of cases in which a final order was entered
determining the value of property securing a claim in an amount less
than the amount of the claim; and
`(II) the number of final orders determining the value of property
securing a claim issued;
`(ii) the number of cases dismissed, the number of cases dismissed
for failure to make payments under the plan, the number of cases refiled
after dismissal, and the number of cases in which the plan was
completed, separately itemized with respect to the number of
modifications made before completion of the plan, if any;
and
`(iii) the number of cases in which the debtor filed another case
during the 6-year period preceding the filing;
`(G) the number of cases in which creditors were fined for misconduct
and any amount of punitive damages awarded by the court for creditor
misconduct; and
`(H) the number of cases in which sanctions under rule 9011 of the
Federal Rules of Bankruptcy Procedure were imposed against debtor's
counsel or damages awarded under such Rule.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 6 of title 28,
United States Code, is amended by adding at the end the following:
`159. Bankruptcy statistics.'.
(c) EFFECTIVE DATE- The amendments made by this section shall take effect
18 months after the date of enactment of this Act.
SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY DATA.
(a) AMENDMENT- Chapter 39 of title 28, United States Code, is amended by
adding at the end the following:
`Sec. 589b. Bankruptcy data
`(a) RULES- The Attorney General shall, within a reasonable time after the
effective date of this section, issue rules requiring uniform forms for (and
from time to time thereafter to appropriately modify and approve)--
`(1) final reports by trustees in cases under chapters 7, 12, and 13 of
title 11; and
`(2) periodic reports by debtors in possession or trustees, as the case
may be, in cases under chapter 11 of title 11.
`(b) REPORTS- Each report referred to in subsection (a) shall be designed
(and the requirements as to place and manner of filing shall be established)
so as to facilitate compilation of data and maximum possible access of the
public, both by physical inspection at one or more central filing locations,
and by electronic access through the Internet or other appropriate media.
`(c) REQUIRED INFORMATION- The information required to be filed in the
reports referred to in subsection (b) shall be that which is in the best
interests of debtors and creditors, and in the public interest in reasonable
and adequate information to evaluate the efficiency and practicality of the
Federal bankruptcy system. In issuing rules proposing the forms referred to in
subsection (a), the Attorney General shall strike the best achievable
practical balance between--
`(1) the reasonable needs of the public for information about the
operational results of the Federal bankruptcy system;
`(2) economy, simplicity, and lack of undue burden on persons with a
duty to file reports; and
`(3) appropriate privacy concerns and safeguards.
`(d) FINAL REPORTS- Final reports proposed for adoption by trustees under
chapters 7, 12, and 13 of title 11 shall, in addition to such other matters as
are required by law or as the Attorney General in the discretion of the
Attorney General, shall propose, include with respect to a case under such
title--
`(1) information about the length of time the case was pending;
`(4) receipts and disbursements of the estate;
`(5) expenses of administration, including for use under section 707(b),
actual costs of administering cases under chapter 13 of title 11;
`(8) distributions to claimants and claims discharged without
payment,
in each case by appropriate category and, in cases under chapters 12 and
13 of title 11, date of confirmation of the plan, each modification thereto,
and defaults by the debtor in performance under the plan.
`(e) PERIODIC REPORTS- Periodic reports proposed for adoption by trustees
or debtors in possession under chapter 11 of title 11 shall, in addition to
such other matters as are required by law or as the Attorney General, in the
discretion of the Attorney General, shall propose, include--
`(1) information about the standard industry classification, published
by the Department of Commerce, for the businesses conducted by the
debtor;
`(2) length of time the case has been pending;
`(3) number of full-time employees as of the date of the order for
relief and at the end of each reporting period since the case was
filed;
`(4) cash receipts, cash disbursements and profitability of the debtor
for the most recent period and cumulatively since the date of the order for
relief;
`(5) compliance with title 11, whether or not tax returns and tax
payments since the date of the order for relief have been timely filed and
made;
`(6) all professional fees approved by the court in the case for the
most recent period and cumulatively since the date of the order for relief
(separately reported, for the professional fees incurred by or on behalf of
the debtor, between those that would have been incurred absent a bankruptcy
case and those not); and
`(7) plans of reorganization filed and confirmed and, with respect
thereto, by class, the recoveries of the holders, expressed in aggregate
dollar values and, in the case of claims, as a percentage of total claims of
the class allowed.'.
(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter
39 of title 28, United States Code, is amended by adding at the end the
following:
`589b. Bankruptcy data.'.
SEC. 603. AUDIT PROCEDURES.
(1) ESTABLISHMENT OF PROCEDURES- The Attorney General (in judicial
districts served by United States trustees) and the Judicial Conference of
the United States (in judicial districts served by bankruptcy
administrators) shall establish procedures to determine the accuracy,
veracity, and completeness of petitions, schedules, and other information
which the debtor is required to provide under sections 521 and 1322 of title
11, and, if applicable, section 111 of title 11, in individual cases filed
under chapter 7 or 13 of such title. Such audits shall be in accordance with
generally accepted auditing standards and performed by independent certified
public accountants or independent licensed public accountants, provided that
the Attorney General and the Judicial Conference, as appropriate, may
develop alternative auditing standards not later than 2 years after the date
of enactment of this Act.
(2) PROCEDURES- Those procedures required by paragraph (1) shall--
(A) establish a method of selecting appropriate qualified persons to
contract to perform those audits;
(B) establish a method of randomly selecting cases to be audited,
except that not less than 1 out of every 250 cases in each Federal
judicial district shall be selected for audit;
(C) require audits for schedules of income and expenses which reflect
greater than average variances from the statistical norm of the district
in which the schedules were filed if those variances occur by reason of
higher income or higher expenses than the statistical norm of the district
in which the schedules were filed; and
(D) establish procedures for providing, not less frequently than
annually, public information concerning the aggregate results of such
audits including the percentage of cases, by district, in which a material
misstatement of income or expenditures is reported.
(b) AMENDMENTS- Section 586 of title 28, United States Code, is
amended--
(1) in subsection (a), by striking paragraph (6) and inserting the
following:
`(6) make such reports as the Attorney General directs, including the
results of audits performed under section 603(a) of the Bankruptcy Reform
Act of 2000; and'; and
(2) by adding at the end the following:
`(f)(1) The United States trustee for each district is authorized to
contract with auditors to perform audits in cases designated by the United
States trustee, in accordance with the procedures established under section
603(a) of the Bankruptcy Reform Act of 2000.
`(2)(A) The report of each audit referred to in paragraph (1) shall be
filed with the court and transmitted to the United States trustee. Each report
shall clearly and conspicuously specify any material misstatement of income or
expenditures or of assets identified by the person performing the audit. In
any case in which a material misstatement of income or expenditures or of
assets has
been reported, the clerk of the bankruptcy court shall give notice of the
misstatement to the creditors in the case.
`(B) If a material misstatement of income or expenditures or of assets is
reported, the United States trustee shall--
`(i) report the material misstatement, if appropriate, to the United
States Attorney pursuant to section 3057 of title 18; and
`(ii) if advisable, take appropriate action, including but not limited
to commencing an adversary proceeding to revoke the debtor's discharge
pursuant to section 727(d) of title 11.'.
(c) AMENDMENTS TO SECTION 521 OF TITLE 11, U.S.C- Section 521(a) of title
11, United States Code, as so designated by this Act, is amended in each of
paragraphs (3) and (4) by inserting `or an auditor appointed under section
586(f) of title 28' after `serving in the case'.
(d) AMENDMENTS TO SECTION 727 OF TITLE 11, U.S.C- Section 727(d) of title
11, United States Code, is amended--
(1) in paragraph (2), by striking `or' at the end;
(2) in paragraph (3), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(4) the debtor has failed to explain satisfactorily--
`(A) a material misstatement in an audit referred to in section 586(f)
of title 28; or
`(B) a failure to make available for inspection all necessary
accounts, papers, documents, financial records, files, and all other
papers, things, or property belonging to the debtor that are requested for
an audit referred to in section 586(f) of title 28.'.
(e) EFFECTIVE DATE- The amendments made by this section shall take effect
18 months after the date of enactment of this Act.
SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY DATA.
It is the sense of Congress that--
(1) the national policy of the United States should be that all data
held by bankruptcy clerks in electronic form, to the extent such data
reflects only public records (as defined in section 107 of title 11, United
States Code), should be released in a usable electronic form in bulk to the
public, subject to such appropriate privacy concerns and safeguards as
Congress and the Judicial Conference of the United States may determine;
and
(2) there should be established a bankruptcy data system in
which--
(A) a single set of data definitions and forms are used to collect
data nationwide; and
(B) data for any particular bankruptcy case are aggregated in the same
electronic record.
TITLE VII--BANKRUPTCY TAX PROVISIONS
SEC. 701. TREATMENT OF CERTAIN LIENS.
(a) TREATMENT OF CERTAIN LIENS- Section 724 of title 11, United States
Code, is amended--
(1) in subsection (b), in the matter preceding paragraph (1), by
inserting `(other than to the extent that there is a properly perfected
unavoidable tax lien arising in connection with an ad valorem tax on real or
personal property of the estate)' after `under this title';
(2) in subsection (b)(2), by inserting `(except that such expenses,
other than claims for wages, salaries, or commissions which arise after the
filing of a petition, shall be limited to expenses incurred under chapter 7
of this title and shall not include expenses incurred under chapter 11 of
this title)' after `507(a)(1)'; and
(3) by adding at the end the following:
`(e) Before subordinating a tax lien on real or personal property of the
estate, the trustee shall--
`(1) exhaust the unencumbered assets of the estate; and
`(2) in a manner consistent with section 506(c), recover from property
securing an allowed secured claim the reasonable, necessary costs and
expenses of preserving or disposing of that property.
`(f) Notwithstanding the exclusion of ad valorem tax liens under this
section and subject to the requirements of subsection (e), the following may
be paid from property of the estate which secures a tax lien, or the proceeds
of such property:
`(1) Claims for wages, salaries, and commissions that are entitled to
priority under section 507(a)(4).
`(2) Claims for contributions to an employee benefit plan entitled to
priority under section 507(a)(5).'.
(b) DETERMINATION OF TAX LIABILITY- Section 505(a)(2) 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 amount or legality of any amount arising in connection with an
ad valorem tax on real or personal property of the estate, if the applicable
period for contesting or redetermining that amount under any law (other than
a bankruptcy law) has expired.'.
SEC. 702. TREATMENT OF FUEL TAX CLAIMS.
Section 501 of title 11, United States Code, is amended by adding at the
end the following:
`(e) A claim arising from the liability of a debtor for fuel use tax
assessed consistent with the requirements of section 31705 of title 49 may be
filed by the base jurisdiction designated pursuant to the International Fuel
Tax Agreement and, if so filed, shall be allowed as a single claim.'.
SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.
Section 505(b) of title 11, United States Code, is amended--
(1) in the first sentence, by inserting `at the address and in the
manner designated in paragraph (1)' after `determination of such tax';
(2) by striking `(1) upon payment' and inserting `(A) upon
payment';
(3) by striking `(A) such governmental unit' and inserting `(i) such
governmental unit';
(4) by striking `(B) such governmental unit' and inserting `(ii) such
governmental unit';
(5) by striking `(2) upon payment' and inserting `(B) upon
payment';
(6) by striking `(3) upon payment' and inserting `(C) upon
payment';
(7) by striking `(b)' and inserting `(2)'; and
(8) by inserting before paragraph (2), as so designated, the
following:
`(b)(1)(A) The clerk of each district shall maintain a listing under which
a Federal, State, or local governmental unit responsible for the collection of
taxes within the district may--
`(i) designate an address for service of requests under this subsection;
and
`(ii) describe where further information concerning additional
requirements for filing such requests may be found.
`(B) If a governmental unit referred to in subparagraph (A) does not
designate an address and provide that address to the clerk under that
subparagraph, any request made under this subsection may be served at the
address for the filing of a tax return or protest with the appropriate taxing
authority of that governmental unit.'.
SEC. 704. RATE OF INTEREST ON TAX CLAIMS.
(a) IN GENERAL- Subchapter I of chapter 5 of title 11, United States Code,
is amended by adding at the end the following:
`Sec. 511. Rate of interest on tax claims
`(a) If any provision of this title requires the payment of interest on a
tax claim or on an administrative expense tax, or the payment of interest to
enable a creditor to receive the present value of the allowed amount of a tax
claim, the rate of interest shall be the rate determined under applicable
nonbankruptcy law.
`(b) In the case of taxes paid under a confirmed plan under this title,
the rate of interest shall be determined as of the calendar month in which the
plan is confirmed.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 5 of title 11,
United States Code, is amended by inserting after the item relating to section
510 the following:
`511. Rate of interest on tax claims.'.
SEC. 705. PRIORITY OF TAX CLAIMS.
Section 507(a)(8) of title 11, United States Code, is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by inserting `for a taxable
year ending on or before the date of filing of the petition' after `gross
receipts';
(B) in clause (i), by striking `for a taxable year ending on or before
the date of filing of the petition'; and
(C) by striking clause (ii) and inserting the following:
`(ii) assessed within 240 days before the date of the filing of the
petition, exclusive of--
`(I) any time during which an offer in compromise with respect to
that tax was pending or in effect during that 240-day period, plus 30
days; and
`(II) any time during which a stay of proceedings against
collections was in effect in a prior case under this title during that
240-day period; plus 90 days.'; and
(2) by adding at the end the following:
`An otherwise applicable time period specified in this paragraph shall
be suspended for (i) any period during which a governmental unit is
prohibited under applicable nonbankruptcy law from collecting a tax as a
result of a request by the debtor for a hearing and an appeal of any
collection action taken or proposed against the debtor, plus 90 days; plus
(ii) any time during which the stay of proceedings was in effect in a prior
case under this title or during which collection was precluded by the
existence of 1 or more confirmed plans under this title, plus 90
days.'.
SEC. 706. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code, is amended by
striking `assessed' and inserting `incurred'.
SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 13.
Section 1328(a)(2) of title 11, United States Code, as amended by section
314 of this Act, is amended by striking `paragraph' and inserting `section
507(a)(8)(C) or in paragraph (1)(B), (1)(C),'.
SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 11.
Section 1141(d) of title 11, United States Code, as amended by this Act,
is amended by adding at the end the following:
`(6) Notwithstanding paragraph (1), the confirmation of a plan does not
discharge a debtor that is a corporation from any debt described in section
523(a)(2) or for a tax or customs duty with respect to which the debtor--
`(A) made a fraudulent return; or
`(B) willfully attempted in any manner to evade or defeat that tax or
duty.'.
SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO PREPETITION TAXES.
Section 362(a)(8) of title 11, United States Code, is amended by striking
`the debtor' and inserting `a corporate debtor's tax liability for a taxable
period the bankruptcy court may determine or concerning an individual debtor's
tax liability for a taxable period ending before the order for relief under
this title'.
SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.
Section 1129(a)(9) of title 11, United States Code, is amended--
(1) in subparagraph (B), by striking `and' at the end;
(2) in subparagraph (C), by striking `deferred cash payments,' and all
that follows through the end of the subparagraph, and inserting `regular
installment payments in cash--
`(i) of a total value, as of the effective date of the plan, equal
to the allowed amount of such claim;
`(ii) over a period ending not later than 5 years after the date of
the entry of the order for relief under section 301, 302, or 303;
and
`(iii) in a manner not less favorable than the most favored
nonpriority unsecured claim provided for in the plan (other than cash
payments made to a class of creditors under section 1122(b)); and';
and
(3) by adding at the end the following:
`(D) with respect to a secured claim which would otherwise meet the
description of an unsecured claim of a governmental unit under section
507(a)(8), but for the secured status of that claim, the holder of that
claim will receive on account of that claim, cash payments, in the same
manner and over the same period, as prescribed in subparagraph
(C).'.
SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.
Section 545(2) of title 11, United States Code, is amended by inserting
before the semicolon at the end the following: `, except in any case in which
a purchaser is a purchaser described in section 6323 of the Internal Revenue
Code of 1986, or in any other similar provision of State or local law'.
SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.
(a) PAYMENT OF TAXES REQUIRED- Section 960 of title 28, United States
Code, is amended--
(1) by inserting `(a)' before `Any'; and
(2) by adding at the end the following:
`(b) A tax under subsection (a) shall be paid on or before the due date of
the tax under applicable nonbankruptcy law, unless--
`(1) the tax is a property tax secured by a lien against property that
is abandoned within a reasonable period of time after the lien attaches by
the trustee of a bankruptcy estate under section 554 of title 11; or
`(2) payment of the tax is excused under a specific provision of title
11.
`(c) In a case pending under chapter 7 of title 11, payment of a tax may
be deferred until final distribution is made under section 726 of title 11,
if--
`(1) the tax was not incurred by a trustee duly appointed under chapter
7 of title 11; or
`(2) before the due date of the tax, an order of the court makes a
finding of probable insufficiency of funds of the estate to pay in full the
administrative expenses allowed under section 503(b) of title 11 that have
the same priority in distribution under section 726(b) of title 11 as the
priority of that tax.'.
(b) PAYMENT OF AD VALOREM TAXES REQUIRED- Section 503(b)(1)(B)(i) of title
11, United States Code, is amended by inserting `whether secured or unsecured,
including property taxes for which liability is in rem, in personam, or both,'
before `except'.
(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE EXPENSE TAXES ELIMINATED-
Section 503(b)(1) of title 11, United States Code, is amended--
(1) in subparagraph (B), by striking `and' at the end;
(2) in subparagraph (C), by adding `and' at the end; and
(3) by adding at the end the following:
`(D) notwithstanding the requirements of subsection (a), a governmental
unit shall not be required to file a request for the payment of an expense
described in subparagraph (B) or (C), as a condition of its being an allowed
administrative expense;'.
(d) PAYMENT OF TAXES AND FEES AS SECURED CLAIMS- Section 506 of title 11,
United States Code, is amended--
(1) in subsection (b), by inserting `or State statute' after
`agreement'; and
(2) in subsection (c), by inserting `, including the payment of all ad
valorem property taxes with respect to the property' before the period at
the end.
SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.
Section 726(a)(1) of title 11, United States Code, is amended by striking
`before the date on which the trustee commences distribution under this
section;' and inserting the following: `on or before the earlier of--
`(A) the date that is 10 days after the mailing to creditors of the
summary of the trustee's final report; or
`(B) the date on which the trustee commences final distribution under
this section;'.
SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.
Section 523(a) of title 11, United States Code, as amended by this Act, is
amended--
(1) in paragraph (1)(B)--
(A) in the matter preceding clause (i), by inserting `or equivalent
report or notice,' after `a return,';
(B) in clause (i), by inserting `or given' after `filed'; and
(i) by inserting `or given' after `filed'; and
(ii) by inserting `, report, or notice' after `return';
and
(2) by adding at the end the following:
`For purposes of this subsection, the term `return' means a return that
satisfies the requirements of applicable nonbankruptcy law (including
applicable filing requirements). Such term includes a return prepared pursuant
to section 6020(a) of the Internal Revenue Code of 1986, or similar State or
local law, or a written stipulation to a judgment or a final order entered by
a nonbankruptcy tribunal, but does not include a return made pursuant to
section 6020(b) of the Internal Revenue Code of 1986, or a similar State or
local law.'.
SEC. 715. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID TAXES.
Section 505(b)(2) of title 11, United States Code, as amended by this Act,
is amended by inserting `the estate,' after `misrepresentation,'.
SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 13 PLANS.
(a) FILING OF PREPETITION TAX RETURNS REQUIRED FOR PLAN CONFIRMATION-
Section 1325(a) of title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
`(9) the debtor has filed all applicable Federal, State, and local tax
returns as required by section 1308.'.
(b) ADDITIONAL TIME PERMITTED FOR FILING TAX RETURNS-
(1) IN GENERAL- Subchapter I of chapter 13 of title 11, United States
Code, is amended by adding at the end the following:
`Sec. 1308. Filing of prepetition tax returns
`(a) Not later than the day before the date on which the meeting of the
creditors is first scheduled to be held under section 341(a), if the debtor
was required to file a tax return under applicable nonbankruptcy law, the
debtor shall file with appropriate tax authorities all tax returns for all
taxable periods ending during the 4-year period ending on the date of the
filing of the petition.
`(b)(1) Subject to paragraph (2), if the tax returns required by
subsection (a) have not been filed by the date on which the meeting of
creditors is first scheduled to be held under section 341(a), the trustee may
hold open that meeting for a reasonable period of time to allow the debtor an
additional period of time to file any unfiled returns, but such additional
period of time shall not extend beyond--
`(A) for any return that is past due as of the date of the filing of the
petition, the date that is 120 days after the date of that meeting; or
`(B) for any return that is not past due as of the date of the filing of
the petition, the later of--
`(i) the date that is 120 days after the date of that meeting;
or
`(ii) the date on which the return is due under the last automatic
extension of time for filing that return to which the debtor is entitled,
and for which request is timely made, in accordance with applicable
nonbankruptcy law.
`(2) Upon notice and hearing, and order entered before the tolling of any
applicable filing period determined under this subsection, if the debtor
demonstrates by a preponderance of the evidence that the failure to file a
return as required under this subsection is attributable to circumstances
beyond the control of the debtor, the court may extend the filing period
established by the trustee under this subsection for--
`(A) a period of not more than 30 days for returns described in
paragraph (1); and
`(B) a period not to extend after the applicable extended due date for a
return described in paragraph (2).
`(c) For purposes of this section, the term `return' includes a return
prepared pursuant to subsection (a) or (b) of section 6020 of the Internal
Revenue Code of 1986, or a similar State or local law, or a written
stipulation to a judgment or a final order entered by a nonbankruptcy
tribunal.'.
(2) CONFORMING AMENDMENT- The table of sections at the beginning of
chapter 13 of title 11, United States Code, is amended by inserting after
the item relating to section 1307 the following:
`1308. Filing of prepetition tax returns.'.
(c) DISMISSAL OR CONVERSION ON FAILURE TO COMPLY- Section 1307 of title
11, United States Code, is amended--
(1) by redesignating subsections (e) and (f) as subsections (f) and (g),
respectively; and
(2) by inserting after subsection (d) the following:
`(e) Upon the failure of the debtor to file a tax return under section
1308, on request of a party in interest or the United States trustee and after
notice and a hearing, the court shall dismiss a case or convert a case under
this chapter to a case under chapter 7 of this title, whichever is in the best
interest of the creditors and the estate.'.
(d) TIMELY FILED CLAIMS- Section 502(b)(9) of title 11, United States
Code, is amended by inserting before the period at the end the following `,
and except that in a case under chapter 13, a claim of a governmental unit for
a tax with respect to a return filed under section 1308 shall be timely if the
claim is filed on or before the date that is 60 days after the date on which
such return was filed as required'.
(e) RULES FOR OBJECTIONS TO CLAIMS AND TO CONFIRMATION- It is the sense of
Congress that the Advisory Committee on Bankruptcy Rules of the Judicial
Conference of the United States should, as soon as practicable after the date
of enactment of this Act, propose for adoption amended Federal Rules of
Bankruptcy Procedure which provide that--
(1) notwithstanding the provisions of Rule 3015(f), in cases under
chapter 13 of title 11, United States Code, an objection to the confirmation
of a plan filed by a governmental unit on or before the date that is 60 days
after the date on which the debtor files all tax returns required under
sections 1308 and 1325(a)(7) of title 11, United States Code, shall be
treated for all purposes as if such objection had been timely filed before
such confirmation; and
(2) in addition to the provisions of Rule 3007, in a case under chapter
13 of title 11, United States Code, no objection to a tax with respect to
which a return is required to be filed under section 1308 of title 11,
United States Code, shall be filed until such return has been filed as
required.
SEC. 717. STANDARDS FOR TAX DISCLOSURE.
Section 1125(a)(1) of title 11, United States Code, is amended--
(1) by inserting `including a discussion of the potential material
Federal tax consequences of the plan to the debtor, any successor to the
debtor, and a hypothetical investor typical of the holders of claims or
interests in the case,' after `records'; and
(2) by striking `a hypothetical reasonable investor typical of holders
of claims or interests' and inserting `such a hypothetical investor'.
SEC. 718. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, is amended by inserting
after paragraph (26), as added by this Act, the following:
`(27) under subsection (a), of the setoff under applicable nonbankruptcy
law of an income tax refund, by a governmental unit, with respect to a
taxable period that ended before the order for relief against an income tax
liability for a taxable period that also ended before the order for relief,
except that in any case in which the setoff of an income tax refund is not
permitted under applicable nonbankruptcy law because of a pending action to
determine the amount or legality of a tax liability, the governmental unit
may hold the refund pending the resolution of the action, unless the court,
upon motion of the trustee and after notice and hearing, grants the taxing
authority adequate protection (within the meaning of section 361) for the
secured claim of that authority in the setoff under section 506(a);'.
SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREATMENT OF STATE AND LOCAL
TAXES.
(a) IN GENERAL- Section 346 of title 11, United States Code, is amended to
read as follows:
`Sec. 346. Special provisions related to the treatment of state and local
taxes
`(a) Whenever the Internal Revenue Code of 1986 provides that a separate
taxable estate or entity is created in a case concerning a debtor under this
title, and the income, gain, loss, deductions, and credits of such estate
shall be taxed to or claimed by the estate, a separate taxable estate is also
created for purposes of any State and local law imposing a tax on or measured
by income and such income, gain, loss, deductions, and credits shall be taxed
to or claimed by the estate and may not be taxed to or claimed by the debtor.
The preceding sentence shall not apply if the case is dismissed. The trustee
shall make tax returns of income required under any such State or local
law.
`(b) Whenever the Internal Revenue Code of 1986 provides that no separate
taxable estate shall be created in a case concerning a debtor under this
title, and the income, gain, loss, deductions, and credits of an estate shall
be taxed to or claimed by the debtor, such income, gain, loss, deductions, and
credits shall be taxed to or claimed by the debtor under a State or local law
imposing a tax on or measured by income and may not be taxed to or claimed by
the estate. The trustee shall make such tax returns of income of corporations
and of partnerships as are required under any State or local law, but with
respect to partnerships, shall make said returns only to the extent such
returns are also required to be made under such Code. The estate shall be
liable for any tax imposed on such corporation or partnership, but not for any
tax imposed on partners or members.
`(c) With respect to a partnership or any entity treated as a partnership
under a State or local law imposing a tax on or measured by income that is a
debtor in a case under this title, any gain or loss resulting from a
distribution of property from such partnership, or any distributive share of
any income, gain, loss, deduction, or credit of a partner or member that is
distributed, or considered distributed, from such partnership, after the
commencement of the case, is gain, loss, income, deduction, or credit, as the
case may be, of the partner or member, and if such partner or member is a
debtor in a case under this title, shall be subject to tax in accordance with
subsection (a) or (b).
`(d) For purposes of any State or local law imposing a tax on or measured
by income, the taxable period of a debtor in a case under this title shall
terminate only if and to the extent that the taxable period of such debtor
terminates under the Internal Revenue Code of 1986.
`(e) The estate in any case described in subsection (a) shall use the same
accounting method as the debtor used immediately before the commencement of
the case, if such method of accounting complies with applicable nonbankruptcy
tax law.
`(f) For purposes of any State or local law imposing a tax on or measured
by income, a transfer of property from the debtor to the estate or from the
estate to the debtor shall not be treated as a disposition for purposes of any
provision assigning tax consequences to a disposition, except to the extent
that such transfer is treated as a disposition under the Internal Revenue Code
of 1986.
`(g) Whenever a tax is imposed pursuant to a State or local law imposing a
tax on or measured by income pursuant to subsection (a) or (b), such tax shall
be imposed at rates generally applicable to the same types of entities under
such State or local law.
`(h) The trustee shall withhold from any payment of claims for wages,
salaries, commissions, dividends, interest, or other payments, or collect, any
amount required to be withheld or collected under applicable State or local
tax law, and shall pay such withheld or collected amount to the appropriate
governmental unit at the time and in the manner required by such tax law, and
with the same priority as the claim from which such amount was withheld or
collected was paid.
`(i)(1) To the extent that any State or local law imposing a tax on or
measured by income provides for the carryover of any tax attribute from one
taxable period to a subsequent taxable period, the estate shall succeed to
such tax attribute in any case in which such estate is subject to tax under
subsection (a).
`(2) After such a case is closed or dismissed, the debtor shall succeed to
any tax attribute to which the estate succeeded under paragraph (1) to the
extent consistent with the Internal Revenue Code of 1986.
`(3) The estate may carry back any loss or tax attribute to a taxable
period of the debtor that ended before the order for relief under this title
to the extent that--
`(A) applicable State or local tax law provides for a carryback in the
case of the debtor; and
`(B) the same or a similar tax attribute may be carried back by the
estate to such a taxable period of the debtor under the Internal Revenue
Code of 1986.
`(j)(1) For purposes of any State or local law imposing a tax on or
measured by income, income is not realized by the estate, the debtor, or a
successor to the debtor by reason of discharge of indebtedness in a case under
this title, except to the extent, if any, that such income is subject to tax
under the Internal Revenue Code of 1986.
`(2) Whenever the Internal Revenue Code of 1986 provides that the amount
excluded from gross income in respect of the discharge of indebtedness in a
case under this title shall be applied to reduce the tax attributes of the
debtor or the estate, a similar reduction shall be made under any State or
local law imposing a tax on or measured by income to the extent such State or
local law recognizes such attributes. Such State or local law may also provide
for the reduction of other attributes to the extent that the full amount of
income from the discharge of indebtedness has not been applied.
`(k)(1) Except as provided in this section and section 505, the time and
manner of filing tax returns and the items of income, gain, loss, deduction,
and credit of any taxpayer shall be determined under applicable nonbankruptcy
law.
`(2) For Federal tax purposes, the provisions of this section are subject
to the Internal Revenue Code of 1986 and other applicable Federal
nonbankruptcy law.'.
(b) CONFORMING AMENDMENTS-
(1) Section 728 of title 11, United States Code, is repealed.
(2) Section 1146 of title 11, United States Code, is amended--
(A) by striking subsections (a) and (b); and
(B) by redesignating subsections (c) and (d) as subsections (a) and
(b), respectively.
(3) Section 1231 of title 11, United States Code, is amended--
(A) by striking subsections (a) and (b); and
(B) by redesignating subsections (c) and (d) as subsections (a) and
(b), respectively.
SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX RETURNS.
Section 521 of title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
`(k)(1) Notwithstanding any other provision of this title, if the debtor
fails to file a tax return that becomes due after the commencement of the case
or to properly obtain an extension of the due date for filing such return, the
taxing authority may request that the court enter an order converting or
dismissing the case.
`(2) If the debtor does not file the required return or obtain the
extension referred to in paragraph (1) within 90 days after a request is filed
by the taxing authority under that paragraph, the court shall convert or
dismiss the case, whichever is in the best interests of creditors and the
estate.'.
TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES
SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED STATES CODE.
(a) IN GENERAL- Title 11, United States Code, is amended by inserting
after chapter 13 the following:
`CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES
`Sec.
`1501. Purpose and scope of application.
`SUBCHAPTER I--GENERAL PROVISIONS
`1503. International obligations of the United States.
`1504. Commencement of ancillary case.
`1505. Authorization to act in a foreign country.
`1506. Public policy exception.
`1507. Additional assistance.
`SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
`1509. Right of direct access.
`1510. Limited jurisdiction.
`1511. Commencement of case under section 301 or 303.
`1512. Participation of a foreign representative in a case under this
title.
`1513. Access of foreign creditors to a case under this title.
`1514. Notification to foreign creditors concerning a case under this
title.
`SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
`1515. Application for recognition.
`1516. Presumptions concerning recognition.
`1517. Order granting recognition.
`1518. Subsequent information.
`1519. Relief that may be granted upon filing petition for
recognition.
`1520. Effects of recognition of a foreign main proceeding.
`1521. Relief that may be granted upon recognition.
`1522. Protection of creditors and other interested persons.
`1523. Actions to avoid acts detrimental to creditors.
`1524. Intervention by a foreign representative.
`SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
`1525. Cooperation and direct communication between the court and
foreign courts or foreign representatives.
`1526. Cooperation and direct communication between the trustee and
foreign courts or foreign representatives.
`1527. Forms of cooperation.
`SUBCHAPTER V--CONCURRENT PROCEEDINGS
`1528. Commencement of a case under this title after recognition of a
foreign main proceeding.
`1529. Coordination of a case under this title and a foreign
proceeding.
`1530. Coordination of more than 1 foreign proceeding.
`1531. Presumption of insolvency based on recognition of a foreign main
proceeding.
`1532. Rule of payment in concurrent proceedings.
`Sec. 1501. Purpose and scope of application
`(a) The purpose of this chapter is to incorporate the Model Law on
Cross-Border Insolvency so as to provide effective mechanisms for dealing with
cases of cross-border insolvency with the objectives of--
`(1) cooperation between--
`(A) United States courts, United States trustees, trustees,
examiners, debtors, and debtors in possession; and
`(B) the courts and other competent authorities of foreign countries
involved in cross-border insolvency cases;
`(2) greater legal certainty for trade and investment;
`(3) fair and efficient administration of cross-border insolvencies that
protects the interests of all creditors, and other interested entities,
including the debtor;
`(4) protection and maximization of the value of the debtor's assets;
and
`(5) facilitation of the rescue of financially troubled businesses,
thereby protecting investment and preserving employment.
`(b) This chapter applies where--
`(1) assistance is sought in the United States by a foreign court or a
foreign representative in connection with a foreign proceeding;
`(2) assistance is sought in a foreign country in connection with a case
under this title;
`(3) a foreign proceeding and a case under this title with respect to
the same debtor are taking place concurrently; or
`(4) creditors or other interested persons in a foreign country have an
interest in requesting the commencement of, or participating in, a case or
proceeding under this title.
`(c) This chapter does not apply to--
`(1) a proceeding concerning an entity, other than a foreign insurance
company, identified by exclusion in section 109(b);
`(2) an individual, or to an individual and such individual's spouse,
who have debts within the limits specified in section 109(e) and who are
citizens of the United States or aliens lawfully admitted for permanent
residence in the United States; or
`(3) an entity subject to a proceeding under the Securities Investor
Protection Act of 1970, a stockbroker subject to subchapter III of chapter 7
of this title, or a commodity broker subject to subchapter IV of chapter 7
of this title.
`(d) The court may not grant relief under this chapter with respect to any
deposit, escrow, trust fund, or other security required or permitted under any
applicable State insurance law or regulation for the benefit of claim holders
in the United States.
`SUBCHAPTER I--GENERAL PROVISIONS
`Sec. 1502. Definitions
`For the purposes of this chapter, the term--
`(1) `debtor' means an entity that is the subject of a foreign
proceeding;
`(2) `establishment' means any place of operations where the debtor
carries out a nontransitory economic activity;
`(3) `foreign court' means a judicial or other authority competent to
control or supervise a foreign proceeding;
`(4) `foreign main proceeding' means a foreign proceeding taking place
in the country where the debtor has the center of its main interests;
`(5) `foreign nonmain proceeding' means a foreign proceeding, other than
a foreign main proceeding, taking place in a country where the debtor has an
establishment;
`(6) `trustee' includes a trustee, a debtor in possession in a case
under any chapter of this title, or a debtor under chapter 9 of this
title;
`(7) `recognition' means the entry of an order granting recognition of a
foreign main proceeding or foreign nonmain proceeding under this chapter;
and
`(8) `within the territorial jurisdiction of the United States', when
used with reference to property of a debtor, refers to tangible property
located within the territory of the United States and intangible property
deemed under applicable nonbankruptcy law to be located within that
territory, including any property subject to attachment or garnishment that
may properly be seized or garnished by an action in a Federal or State court
in the United States.
`Sec. 1503. International obligations of the United States
`To the extent that this chapter conflicts with an obligation of the
United States arising out of any treaty or other form of agreement to which it
is a party with one or more other countries, the requirements of the treaty or
agreement prevail.
`Sec. 1504. Commencement of ancillary case
`A case under this chapter is commenced by the filing of a petition for
recognition of a foreign proceeding under section 1515.
`Sec. 1505. Authorization to act in a foreign country
`A trustee or another entity (including an examiner) may be authorized by
the court to act in a foreign country on behalf of an estate created under
section 541. An entity authorized to act under this section may act in any way
permitted by the applicable foreign law.
`Sec. 1506. Public policy exception
`Nothing in this chapter prevents the court from refusing to take an
action governed by this chapter if the action would be manifestly contrary to
the public policy of the United States.
`Sec. 1507. Additional assistance
`(a) Subject to the specific limitations stated elsewhere in this chapter
the court, if recognition is granted, may provide additional assistance to a
foreign representative under this title or under other laws of the United
States.
`(b) In determining whether to provide additional assistance under this
title or under other laws of the United States, the court shall consider
whether such additional assistance, consistent with the principles of comity,
will reasonably assure--
`(1) just treatment of all holders of claims against or interests in the
debtor's property;
`(2) protection of claim holders in the United States against prejudice
and inconvenience in the processing of claims in such foreign
proceeding;
`(3) prevention of preferential or fraudulent dispositions of property
of the debtor;
`(4) distribution of proceeds of the debtor's property substantially in
accordance with the order prescribed by this title; and
`(5) if appropriate, the provision of an opportunity for a fresh start
for the individual that such foreign proceeding concerns.
`Sec. 1508. Interpretation
`In interpreting this chapter, the court shall consider its international
origin, and the need to promote an application of this chapter that is
consistent with the application of similar statutes adopted by foreign
jurisdictions.
`SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
`Sec. 1509. Right of direct access
`(a) A foreign representative may commence a case under section 1504 by
filing directly with the court a petition for recognition of a foreign
proceeding under section 1515.
`(b) If the court grants recognition under section 1515, and subject to
any limitations that the court may impose consistent with the policy of this
chapter--
`(1) the foreign representative has the capacity to sue and be sued in a
court in the United States;
`(2) the foreign representative may apply directly to a court in the
United States for appropriate relief in that court; and
`(3) a court in the United States shall grant comity or cooperation to
the foreign representative.
`(c) A request for comity or cooperation by a foreign representative in a
court in the United States other than the court which granted recognition
shall be accompanied by a certified copy of an order granting recognition
under section 1517.
`(d) If the court denies recognition under this chapter, the court may
issue any appropriate order necessary to prevent the foreign representative
from obtaining comity or cooperation from courts in the United States.
`(e) Whether or not the court grants recognition, and subject to sections
306 and 1510, a foreign representative is subject to applicable nonbankruptcy
law.
`(f) Notwithstanding any other provision of this section, the failure of a
foreign representative to commence a case or to obtain recognition under this
chapter does not affect any right the foreign representative may have to sue
in a court in the United States to collect or recover a claim which is the
property of the debtor.
`Sec. 1510. Limited jurisdiction
`The sole fact that a foreign representative files a petition under
section 1515 does not subject the foreign representative to the jurisdiction
of any court in the United States for any other purpose.
`Sec. 1511. Commencement of case under section 301 or 303
`(a) Upon recognition, a foreign representative may commence--
`(1) an involuntary case under section 303; or
`(2) a voluntary case under section 301 or 302, if the foreign
proceeding is a foreign main proceeding.
`(b) The petition commencing a case under subsection (a) must be
accompanied by a certified copy of an order granting recognition. The court
where the petition for recognition has been filed must be advised of the
foreign representative's intent to commence a case under subsection (a) prior
to such commencement.
`Sec. 1512. Participation of a foreign representative in a case under this
title
`Upon recognition of a foreign proceeding, the foreign representative in
the recognized proceeding is entitled to participate as a party in interest in
a case regarding the debtor under this title.
`Sec. 1513. Access of foreign creditors to a case under this title
`(a) Foreign creditors have the same rights regarding the commencement of,
and participation in, a case under this title as domestic creditors.
`(b)(1) Subsection (a) does not change or codify present law as to the
priority of claims under section 507 or 726 of this title, except that the
claim of a foreign creditor under those sections shall not be given a lower
priority than that of general unsecured claims without priority solely because
the holder of such claim is a foreign creditor.
`(2)(A) Subsection (a) and paragraph (1) do not change or codify present
law as to the allowability of foreign revenue claims or other foreign public
law claims in a proceeding under this title.
`(B) Allowance and priority as to a foreign tax claim or other foreign
public law claim shall be governed by any applicable tax treaty of the United
States, under the conditions and circumstances specified therein.
`Sec. 1514. Notification to foreign creditors concerning a case under this
title
`(a) Whenever in a case under this title notice is to be given to
creditors generally or to any class or category of creditors, such notice
shall also be given to the known creditors generally, or to creditors in the
notified class or category, that do not have addresses in the United States.
The court may order that appropriate steps be taken with a view to notifying
any creditor whose address is not yet known.
`(b) Such notification to creditors with foreign addresses described in
subsection (a) shall be given individually, unless the court considers that,
under the circumstances, some other form of notification would be more
appropriate. No letter or other formality is required.
`(c) When a notification of commencement of a case is to be given to
foreign creditors, the notification shall--
`(1) indicate the time period for filing proofs of claim and specify the
place for their filing;
`(2) indicate whether secured creditors need to file their proofs of
claim; and
`(3) contain any other information required to be included in such a
notification to creditors under this title and the orders of the
court.
`(d) Any rule of procedure or order of the court as to notice or the
filing of a claim shall provide such additional time to creditors with foreign
addresses as is reasonable under the circumstances.
`SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
`Sec. 1515. Application for recognition
`(a) A foreign representative applies to the court for recognition of the
foreign proceeding in which the foreign representative has been appointed by
filing a petition for recognition.
`(b) A petition for recognition shall be accompanied by--
`(1) a certified copy of the decision commencing the foreign proceeding
and appointing the foreign representative;
`(2) a certificate from the foreign court affirming the existence of the
foreign proceeding and of the appointment of the foreign representative;
or
`(3) in the absence of evidence referred to in paragraphs (1) and (2),
any other evidence acceptable to the court of the existence of the foreign
proceeding and of the appointment of the foreign representative.
`(c) A petition for recognition shall also be accompanied by a statement
identifying all foreign proceedings with respect to the debtor that are known
to the foreign representative.
`(d) The documents referred to in paragraphs (1) and (2) of subsection (b)
shall be translated into English. The court may require a translation into
English of additional documents.
`Sec. 1516. Presumptions concerning recognition
`(a) If the decision or certificate referred to in section 1515(b)
indicates that the foreign proceeding is a foreign proceeding (as defined in
section 101) and that the person or body is a foreign representative (as
defined in section 101), the court is entitled to so presume.
`(b) The court is entitled to presume that documents submitted in support
of the petition for recognition are authentic, whether or not they have been
legalized.
`(c) In the absence of evidence to the contrary, the debtor's registered
office, or habitual residence in the case of an individual, is presumed to be
the center of the debtor's main interests.
`Sec. 1517. Order granting recognition
`(a) Subject to section 1506, after notice and a hearing, an order
recognizing a foreign proceeding shall be entered if--
`(1) the foreign proceeding for which recognition is sought is a foreign
main proceeding or foreign nonmain proceeding within the meaning of section
1502;
`(2) the foreign representative applying for recognition is a person or
body as defined in section 101; and
`(3) the petition meets the requirements of section 1515.
`(b) The foreign proceeding shall be recognized--
`(1) as a foreign main proceeding if it is taking place in the country
where the debtor has the center of its main interests; or
`(2) as a foreign nonmain proceeding if the debtor has an establishment
within the meaning of section 1502 in the foreign country where the
proceeding is pending.
`(c) A petition for recognition of a foreign proceeding shall be decided
upon at the earliest possible time. Entry of an order recognizing a foreign
proceeding constitutes recognition under this chapter.
`(d) The provisions of this subchapter do not prevent modification or
termination of recognition if it is shown that the grounds for granting it
were fully or partially lacking or have ceased to exist, but in considering
such action the court shall give due weight to possible prejudice to parties
that have relied upon the order granting recognition. The case under this
chapter may be closed in the manner prescribed under section 350.
`Sec. 1518. Subsequent information
`From the time of filing the petition for recognition of the foreign
proceeding, the foreign representative shall file with the court promptly a
notice of change of status concerning--
`(1) any substantial change in the status of the foreign proceeding or
the status of the foreign representative's appointment; and
`(2) any other foreign proceeding regarding the debtor that becomes
known to the foreign representative.
`Sec. 1519. Relief that may be granted upon filing petition for
recognition
`(a) From the time of filing a petition for recognition until the court
rules on the petition, the court may, at the request of the foreign
representative, where relief is urgently needed to protect the assets of the
debtor or the interests of the creditors, grant relief of a provisional
nature, including--
`(1) staying execution against the debtor's assets;
`(2) entrusting the administration or realization of all or part of the
debtor's assets located in the United States to the foreign representative
or another person authorized by the court, including an examiner, in order
to protect and preserve the value of assets that, by their nature or because
of other circumstances, are perishable, susceptible to devaluation or
otherwise in jeopardy; and
`(3) any relief referred to in paragraph (3), (4), or (7) of section
1521(a).
`(b) Unless extended under section 1521(a)(6), the relief granted under
this section terminates when the petition for recognition is granted.
`(c) It is a ground for denial of relief under this section that such
relief would interfere with the administration of a foreign main
proceeding.
`(d) The court may not enjoin a police or regulatory act of a governmental
unit, including a criminal action or proceeding, under this section.
`(e) The standards, procedures, and limitations applicable to an
injunction shall apply to relief under this section.
`(f) The exercise of rights not subject to the stay arising under section
362(a) pursuant to paragraph (6), (7), (17), or (28) of section 362(b) or
pursuant to section 362(l) shall not be stayed by any order of a court or
administrative agency in any proceeding under this chapter.
`Sec. 1520. Effects of recognition of a foreign main proceeding
`(a) Upon recognition of a foreign proceeding that is a foreign main
proceeding--
`(1) sections 361 and 362 apply with respect to the debtor and that
property of the debtor that is within the territorial jurisdiction of the
United States;
`(2) sections 363, 549, and 552 of this title apply to a transfer of an
interest of the debtor in property that is within the territorial
jurisdiction of the United States to the same extent that the sections would
apply to property of an estate;
`(3) unless the court orders otherwise, the foreign representative may
operate the debtor's business and may exercise the rights and powers of a
trustee under and to the extent provided by sections 363 and 552; and
`(4) section 552 applies to property of the debtor that is within the
territorial jurisdiction of the United States.
`(b) Subsection (a) does not affect the right to commence an individual
action or proceeding in a foreign country to the extent necessary to preserve
a claim against the debtor.
`(c) Subsection (a) does not affect the right of a foreign representative
or an entity to file a petition commencing a case under this title or the
right of any party to file claims or take other proper actions in such a
case.
`Sec. 1521. Relief that may be granted upon recognition
`(a) Upon recognition of a foreign proceeding, whether main or nonmain,
where necessary to effectuate the purpose of this chapter and to protect the
assets of the
debtor or the interests of the creditors, the court may, at the request of
the foreign representative, grant any appropriate relief, including--
`(1) staying the commencement or continuation of an individual action or
proceeding concerning the debtor's assets, rights, obligations or
liabilities to the extent they have not been stayed under section
1520(a);
`(2) staying execution against the debtor's assets to the extent it has
not been stayed under section 1520(a);
`(3) suspending the right to transfer, encumber or otherwise dispose of
any assets of the debtor to the extent this right has not been suspended
under section 1520(a);
`(4) providing for the examination of witnesses, the taking of evidence
or the delivery of information concerning the debtor's assets, affairs,
rights, obligations or liabilities;
`(5) entrusting the administration or realization of all or part of the
debtor's assets within the territorial jurisdiction of the United States to
the foreign representative or another person, including an examiner,
authorized by the court;
`(6) extending relief granted under section 1519(a); and
`(7) granting any additional relief that may be available to a trustee,
except for relief available under sections 522, 544, 545, 547, 548, 550, and
724(a).
`(b) Upon recognition of a foreign proceeding, whether main or nonmain,
the court may, at the request of the foreign representative, entrust the
distribution of all or part of the debtor's assets located in the United
States to the foreign representative or another person, including an examiner,
authorized by the court, provided that the court is satisfied that the
interests of creditors in the United States are sufficiently protected.
`(c) In granting relief under this section to a representative of a
foreign nonmain proceeding, the court must be satisfied that the relief
relates to assets that, under the law of the United States, should be
administered in the foreign nonmain proceeding or concerns information
required in that proceeding.
`(d) The court may not enjoin a police or regulatory act of a governmental
unit, including a criminal action or proceeding, under this section.
`(e) The standards, procedures, and limitations applicable to an
injunction shall apply to relief under paragraphs (1), (2), (3), and (6) of
subsection (a).
`(f) The exercise of rights not subject to the stay arising under section
362(a) pursuant to paragraph (6), (7), (17), or (28) of section 362(b) or
pursuant to section 362(l) shall not be stayed by any order of a court or
administrative agency in any proceeding under this chapter.
`Sec. 1522. Protection of creditors and other interested persons
`(a) The court may grant relief under section 1519 or 1521, or may modify
or terminate relief under subsection (c), only if the interests of the
creditors and other interested entities, including the debtor, are
sufficiently protected.
`(b) The court may subject relief granted under section 1519 or 1521, or
the operation of the debtor's business under section 1520(a)(3) of this title,
to conditions it considers appropriate, including the giving of security or
the filing of a bond.
`(c) The court may, at the request of the foreign representative or an
entity affected by relief granted under section 1519 or 1521, or at its own
motion, modify or terminate such relief.
`(d) Section 1104(d) shall apply to the appointment of an examiner under
this chapter. Any examiner shall comply with the qualification requirements
imposed on a trustee by section 322.
`Sec. 1523. Actions to avoid acts detrimental to creditors
`(a) Upon recognition of a foreign proceeding, the foreign representative
has standing in a case concerning the debtor pending under another chapter of
this title to initiate actions under sections 522, 544, 545, 547, 548, 550,
553, and 724(a).
`(b) When the foreign proceeding is a foreign nonmain proceeding, the
court must be satisfied that an action under subsection (a) relates to assets
that, under United States law, should be administered in the foreign nonmain
proceeding.
`Sec. 1524. Intervention by a foreign representative
`Upon recognition of a foreign proceeding, the foreign representative may
intervene in any proceedings in a State or Federal court in the United States
in which the debtor is a party.
`SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
`Sec. 1525. Cooperation and direct communication between the court and
foreign courts or foreign representatives
`(a) Consistent with section 1501, the court shall cooperate to the
maximum extent possible with foreign courts or foreign representatives, either
directly or through the trustee.
`(b) The court is entitled to communicate directly with, or to request
information or assistance directly from, foreign courts or foreign
representatives, subject to the rights of parties in interest to notice and
participation.
`Sec. 1526. Cooperation and direct communication between the trustee and
foreign courts or foreign representatives
`(a) Consistent with section 1501, the trustee or other person, including
an examiner, authorized by the court, shall, subject to the supervision of the
court, cooperate to the maximum extent possible with foreign courts or foreign
representatives.
`(b) The trustee or other person, including an examiner, authorized by the
court is entitled, subject to the supervision of the court, to communicate
directly with foreign courts or foreign representatives.
`Sec. 1527. Forms of cooperation
`Cooperation referred to in sections 1525 and 1526 may be implemented by
any appropriate means, including--
`(1) appointment of a person or body, including an examiner, to act at
the direction of the court;
`(2) communication of information by any means considered appropriate by
the court;
`(3) coordination of the administration and supervision of the debtor's
assets and affairs;
`(4) approval or implementation of agreements concerning the
coordination of proceedings; and
`(5) coordination of concurrent proceedings regarding the same
debtor.
`SUBCHAPTER V--CONCURRENT PROCEEDINGS
`Sec. 1528. Commencement of a case under this title after recognition of a
foreign main proceeding
`After recognition of a foreign main proceeding, a case under another
chapter of this title may be commenced only if the debtor has assets in the
United States. The effects of such case shall be restricted to the assets of
the debtor that are within the territorial jurisdiction of the United States
and, to the extent necessary to implement cooperation and coordination under
sections 1525, 1526, and 1527, to other assets of the debtor that are within
the jurisdiction of the court under sections 541(a) of this title, and 1334(e)
of title 28, to the extent that such other assets are not subject to the
jurisdiction and control of a foreign proceeding that has been recognized
under this chapter.
`Sec. 1529. Coordination of a case under this title and a foreign
proceeding
`If a foreign proceeding and a case under another chapter of this title
are taking place concurrently regarding the same debtor, the court shall seek
cooperation and coordination under sections 1525, 1526, and 1527, and the
following shall apply:
`(1) If the case in the United States is taking place at the time the
petition for recognition of the foreign proceeding is filed--
`(A) any relief granted under sections 1519 or 1521 must be consistent
with the relief granted in the case in the United States; and
`(B) even if the foreign proceeding is recognized as a foreign main
proceeding, section 1520 does not apply.
`(2) If a case in the United States under this title commences after
recognition, or after the filing of the petition for recognition, of the
foreign proceeding--
`(A) any relief in effect under sections 1519 or 1521 shall be
reviewed by the court and shall be modified or terminated if inconsistent
with the case in the United States; and
`(B) if the foreign proceeding is a foreign main proceeding, the stay
and suspension referred to in section 1520(a) shall be modified or
terminated if inconsistent with the relief granted in the case in the
United States.
`(3) In granting, extending, or modifying relief granted to a
representative of a foreign nonmain proceeding, the court must be satisfied
that the relief relates to assets that, under the laws of the United States,
should be administered in the foreign nonmain proceeding or concerns
information required in that proceeding.
`(4) In achieving cooperation and coordination under sections 1528 and
1529, the court may grant any of the relief authorized under section
305.
`Sec. 1530. Coordination of more than 1 foreign proceeding
`In matters referred to in section 1501, with respect to more than 1
foreign proceeding regarding the debtor, the court shall seek cooperation and
coordination under sections 1525, 1526, and 1527, and the following shall
apply:
`(1) Any relief granted under section 1519 or 1521 to a representative
of a foreign nonmain proceeding after recognition of a foreign main
proceeding must be consistent with the foreign main proceeding.
`(2) If a foreign main proceeding is recognized after recognition, or
after the filing of a petition for recognition, of a foreign nonmain
proceeding, any relief in effect under section 1519 or 1521 shall be
reviewed by the court and shall be modified or terminated if inconsistent
with the foreign main proceeding.
`(3) If, after recognition of a foreign nonmain proceeding, another
foreign nonmain proceeding is recognized, the court shall grant, modify, or
terminate relief for the purpose of facilitating coordination of the
proceedings.
`Sec. 1531. Presumption of insolvency based on recognition of a foreign main
proceeding
`In the absence of evidence to the contrary, recognition of a foreign main
proceeding is, for the purpose of commencing a proceeding under section 303,
proof that the debtor is generally not paying its debts as such debts become
due.
`Sec. 1532. Rule of payment in concurrent proceedings
`Without prejudice to secured claims or rights in rem, a creditor who has
received payment with respect to its claim in a foreign proceeding pursuant to
a law relating to insolvency may not receive a payment for the same claim in a
case under any other chapter of this title regarding the debtor, so long as
the payment to other creditors of the same class is proportionately less than
the payment the creditor has already received.'.
(b) CLERICAL AMENDMENT- The table of chapters for title 11, United States
Code, is amended by inserting after the item relating to chapter 13 the
following:
1501'.
SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, UNITED STATES CODE.
(a) APPLICABILITY OF CHAPTERS- Section 103 of title 11, United States
Code, is amended--
(1) in subsection (a), by inserting before the period the following: `,
and this chapter, sections 307, 362(l), 555 through 557, and 559 through 562
apply in a case under chapter 15'; and
(2) by adding at the end the following:
`(j) Chapter 15 applies only in a case under such chapter, except
that--
`(1) sections 1505, 1513, and 1514 apply in all cases under this title;
and
`(2) section 1509 applies whether or not a case under this title is
pending.'.
(b) DEFINITIONS- Section 101 of title 11, United States Code, is amended
by striking paragraphs (23) and (24) and inserting the following:
`(23) `foreign proceeding' means a collective judicial or administrative
proceeding in a foreign country, including an interim proceeding, under a
law relating to insolvency or adjustment of debt in which proceeding the
assets and affairs of the debtor are subject to control or supervision by a
foreign court, for the purpose of reorganization or liquidation;
`(24) `foreign representative' means a person or body, including a
person or body appointed on an interim basis, authorized in a foreign
proceeding to administer the reorganization or the liquidation of the
debtor's assets or affairs or to act as a representative of the foreign
proceeding;'.
(c) AMENDMENTS TO TITLE 28, UNITED STATES CODE-
(1) PROCEDURES- Section 157(b)(2) of title 28, United States Code, is
amended--
(A) in subparagraph (N), by striking `and' at the end;
(B) in subparagraph (O), by striking the period at the end and
inserting `; and'; and
(C) by adding at the end the following:
`(P) recognition of foreign proceedings and other matters under chapter
15 of title 11.'.
(2) BANKRUPTCY CASES AND PROCEEDINGS- Section 1334(c) of title 28,
United States Code, is amended by striking `Nothing in' and inserting
`Except with respect to a case under chapter 15 of title 11, nothing
in'.
(3) DUTIES OF TRUSTEES- Section 586(a)(3) of title 28, United States
Code, is amended by striking `or 13' and inserting `13, or 15,'.
(4) VENUE OF CASES ANCILLARY TO FOREIGN PROCEEDINGS- Section 1410 of
title 28, United States Code, is amended to read as follows:
`Sec. 1410. Venue of cases ancillary to foreign proceedings
`A case under chapter 15 of title 11 may be commenced in the district
court for the district--
`(1) in which the debtor has its principal place of business or
principal assets in the United States;
`(2) if the debtor does not have a place of business or assets in the
United States, in which there is pending against the debtor an action or
proceeding in a Federal or State court; or
`(3) in a case other than those specified in paragraph (1) or (2), in
which venue will be consistent with the interests of justice and the
convenience of the parties, having regard to the relief sought by the
foreign representative.'.
(d) OTHER SECTIONS OF TITLE 11-
(1) Section 109(b)(3) of title 11, United States Code, is amended to
read as follows:
`(3)(A) a foreign insurance company, engaged in such business in the
United States; or
`(B) a foreign bank, savings bank, cooperative bank, savings and loan
association, building and loan association, or credit union, that has a
branch or agency (as defined in section 1(b) of the International Banking
Act of 1978 (12 U.S.C. 3101) in the United States.'.
(2) Section 303(k) of title 11, United States Code, is repealed.
(3)(A) Section 304 of title 11, United States Code, is repealed.
(B) The table of sections at the beginning of chapter 3 of title 11,
United States Code, is amended by striking the item relating to section
304.
(C) Section 306 of title 11, United States Code, is amended by striking
`, 304,' each place it appears.
(4) Section 305(a)(2) of title 11, United States Code, is amended to
read as follows:
`(2)(A) a petition under section 1515 of this title for recognition of a
foreign proceeding has been granted; and
`(B) the purposes of chapter 15 of this title would be best served by
such dismissal or suspension.'.
(5) Section 508 of title 11, United States Code, is amended--
(A) by striking subsection (a); and
(B) in subsection (b), by striking `(b)'.
TITLE IX--FINANCIAL CONTRACT PROVISIONS
SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR RECEIVERS OF
INSURED DEPOSITORY INSTITUTIONS.
(a) DEFINITION OF QUALIFIED FINANCIAL CONTRACT- Section 11(e)(8)(D)(i) of
the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(i)) is amended by
inserting `, resolution, or order' after `any similar agreement that the
Corporation determines by regulation'.
(b) DEFINITION OF SECURITIES CONTRACT- Section 11(e)(8)(D)(ii) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(ii)) is amended to read
as follows:
`(ii) SECURITIES CONTRACT- The term `securities
contract'--
`(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any interest
in a mortgage loan, a group or index of securities, certificates of
deposit, or mortgage loans or interests therein (including any
interest therein or based on the value thereof) or any option on any
of the foregoing, including any option to purchase or sell any such
security, certificate of deposit, loan, interest, group or index, or
option;
`(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage loan unless
the Corporation determines by regulation, resolution, or order to
include any such agreement within the meaning of such
term;
`(III) means any option entered into on a national securities
exchange relating to foreign currencies;
`(IV) means the guarantee by or to any securities clearing agency
of any settlement of cash, securities, certificates of deposit,
mortgage loans or interests therein, group or index of securities,
certificates of deposit, or mortgage loans or interests therein
(including any interest therein or based on the value thereof) or
option on any of the foregoing, including any option to purchase or
sell any such security, certificate of deposit, loan, interest, group
or index or option;
`(V) means any margin loan;
`(VI) means any other agreement or transaction that is similar to
any agreement or transaction referred to in this
clause;
`(VII) means any combination of the agreements or transactions
referred to in this clause;
`(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
`(IX) means a master agreement that provides for an agreement or
transaction referred to in subclause (I), (III), (IV), (V), (VI),
(VII), or
(VIII), together with all supplements to any such master agreement, without
regard to whether the master agreement provides for an agreement or transaction
that is not a securities contract under this clause, except that the master
agreement shall be considered to be a securities contract under this clause only
with respect to each agreement or transaction under the master agreement that is
referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII); and
`(X) means any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred to in
this clause.'.
(c) DEFINITION OF COMMODITY CONTRACT- Section 11(e)(8)(D)(iii) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iii)) is amended to
read as follows:
`(iii) COMMODITY CONTRACT- The term `commodity contract'
means--
`(I) with respect to a futures commission merchant, a contract for
the purchase or sale of a commodity for future delivery on, or subject
to the rules of, a contract market or board of trade;
`(II) with respect to a foreign futures commission merchant, a
foreign future;
`(III) with respect to a leverage transaction merchant, a leverage
transaction;
`(IV) with respect to a clearing organization, a contract for the
purchase or sale of a commodity for future delivery on, or subject to
the rules of, a contract market or board of trade that is cleared by
such clearing organization, or commodity option traded on, or subject
to the rules of, a contract market or board of trade that is cleared
by such clearing organization;
`(V) with respect to a commodity options dealer, a commodity
option;
`(VI) any other agreement or transaction that is similar to any
agreement or transaction referred to in this clause;
`(VII) any combination of the agreements or transactions referred
to in this clause;
`(VIII) any option to enter into any agreement or transaction
referred to in this clause;
`(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII), together with all supplements to any such
master agreement, without regard to whether the master agreement
provides for an agreement or transaction that is not a commodity
contract under this clause, except that the master agreement shall be
considered to be a commodity contract under this clause only with
respect to each agreement or transaction under the master agreement
that is referred to in subclause (I), (II), (III), (IV), (V), (VI),
(VII), or (VIII); or
`(X) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred to in
this clause.'.
(d) DEFINITION OF FORWARD CONTRACT- Section 11(e)(8)(D)(iv) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(iv)) is amended to read as
follows:
`(iv) FORWARD CONTRACT- The term `forward contract'
means--
`(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar good,
article, service, right, or interest which is presently or in the
future becomes the subject of dealing in the forward contract trade,
or product or byproduct thereof, with a maturity date more than 2 days
after the date the contract is entered into, including, a repurchase
transaction, reverse repurchase transaction, consignment, lease, swap,
hedge transaction, deposit, loan, option, allocated transaction,
unallocated transaction, or any other similar
agreement;
`(II) any combination of agreements or transactions referred to in
subclauses (I) and (III);
`(III) any option to enter into any agreement or transaction
referred to in subclause (I) or (II);
`(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III), together
with all supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or transaction
that is not a forward contract under this clause, except that the
master agreement shall be considered to be a forward contract under
this clause only with respect to each agreement or transaction under
the
master agreement that is referred to in subclause (I), (II), or (III); or
`(V) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred to in
subclause (I), (II), (III), or (IV).'.
(e) DEFINITION OF REPURCHASE AGREEMENT- Section 11(e)(8)(D)(v) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read
as follows:
`(v) REPURCHASE AGREEMENT- The term `repurchase agreement' (which
definition also applies to a reverse repurchase agreement)--
`(I) means an agreement, including related terms, which provides
for the transfer of one or more certificates of deposit,
mortgage-related securities (as such term is defined in the Securities
Exchange Act of 1934), mortgage loans, interests in mortgage-related
securities or mortgage loans, eligible bankers' acceptances, qualified
foreign government securities or securities that are direct
obligations of, or that are fully guaranteed by, the United States or
any agency of the United States against the transfer of funds by the
transferee of such certificates of deposit, eligible bankers'
acceptances, securities, loans, or interests with a simultaneous
agreement by such transferee to transfer to the transferor thereof
certificates of deposit, eligible bankers' acceptances, securities,
loans, or interests as described above, at a date certain not later
than 1 year after such transfers or on demand, against the transfer of
funds, or any other similar agreement;
`(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan unless the Corporation
determines by regulation, resolution, or order to include any such
participation within the meaning of such term;
`(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
`(IV) means any option to enter into any agreement or transaction
referred to in subclause (I) or (III);
`(V) means a master agreement that provides for an agreement or
transaction referred to in subclause (I), (III), or (IV), together
with all supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or transaction
that is not a repurchase agreement under this clause, except that the
master agreement shall be considered to be a repurchase agreement
under this subclause only with respect to each agreement or
transaction under the master agreement that is referred to in
subclause (I), (III), or (IV); and
`(VI) means any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred to in
subclause (I), (III), (IV), or (V).
For purposes of this clause, the term `qualified foreign government
security' means a security that is a direct obligation of, or that is
fully guaranteed by, the central government of a member of the
Organization for Economic Cooperation and Development (as determined by
regulation or order adopted by the appropriate Federal banking
authority).'.
(f) DEFINITION OF SWAP AGREEMENT- Section 11(e)(8)(D)(vi) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as
follows:
`(vi) SWAP AGREEMENT- The term `swap agreement' means--
`(I) any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is an interest
rate swap, option, future, or forward agreement, including a rate
floor, rate cap, rate collar, cross-currency rate swap, and basis
swap; a spot, same day-tomorrow, tomorrow-next, forward, or other
foreign exchange or precious metals agreement; a currency swap,
option, future, or forward agreement; an equity index or equity swap,
option, future, or forward agreement; a debt index or debt swap,
option, future, or forward agreement; a credit spread or credit swap,
option, future, or forward agreement; a commodity index or commodity
swap, option, future, or forward agreement; or a weather swap, weather
derivative, or weather option;
`(II) any agreement or transaction similar to any other agreement
or transaction referred to in this clause that is presently, or in the
future becomes, regularly entered into in the swap market (including
terms and conditions incorporated by reference in such agreement) and
that is a forward, swap, future, or option on one or more rates,
currencies, commodities, equity securities or other equity
instruments, debt securities or other debt instruments, or economic
indices or measures of economic risk or value;
`(III) any combination of agreements or transactions referred to
in this clause;
`(IV) any option to enter into any agreement or transaction
referred to in this clause;
`(V) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), or (IV),
together with all supplements to any such master agreement, without
regard to whether the master agreement contains an agreement or
transaction that is not a swap agreement under this clause, except
that the master agreement shall be considered to be a swap agreement
under this clause only with respect to each agreement or transaction
under the master agreement that is referred to in subclause (I), (II),
(III), or (IV); and
`(VI) any security agreement or arrangement or other credit
enhancement related to any agreements or transactions referred to in
subparagraph (I), (II), (III), (IV), or (V).
Such term is applicable for purposes of this title only and shall
not be construed or applied so as to challenge or affect the
characterization, definition, or treatment of any swap agreement under
any other statute, regulation, or rule, including the Securities Act of
1933, the Securities Exchange Act of 1934, the Public Utility Holding
Company Act of 1935, the Trust Indenture Act of 1939, the Investment
Company Act of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act, and the
regulations promulgated by the Securities and Exchange Commission or the
Commodity Futures Trading Commission.'.
(g) DEFINITION OF TRANSFER- Section 11(e)(8)(D)(viii) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as
follows:
`(viii) TRANSFER- The term `transfer' means every mode, direct or
indirect, absolute or conditional, voluntary or involuntary, of
disposing of or parting with property or with an interest in property,
including retention of title as a security interest and foreclosure of
the depository institutions's equity of redemption.'.
(h) TREATMENT OF QUALIFIED FINANCIAL CONTRACTS- Section 11(e)(8) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
(1) in subparagraph (A)--
(A) by striking `paragraph (10)' and inserting `paragraphs (9) and
(10)';
(B) in clause (i), by striking `to cause the termination or
liquidation' and inserting `such person has to cause the termination,
liquidation, or acceleration'; and
(C) by striking clause (ii) and inserting the following:
`(ii) any right under any security agreement or arrangement or other
credit enhancement related to one or more qualified financial contracts
described in clause (i);'; and
(2) in subparagraph (E), by striking clause (ii) and inserting the
following:
`(ii) any right under any security agreement or arrangement or other
credit enhancement related to one or more qualified financial contracts
described in clause (i);'.
(i) AVOIDANCE OF TRANSFERS- Section 11(e)(8)(C)(i) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting `section
5242 of the Revised Statutes of the United States (12 U.S.C. 91) or any other
Federal or State law relating to the avoidance of preferential or fraudulent
transfers,' before `the Corporation'.
SEC. 902. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND FAILING
INSTITUTIONS.
(a) IN GENERAL- Section 11(e)(8) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)) is amended--
(1) in subparagraph (E), by striking `other than paragraph (12) of this
subsection, subsection (d)(9)' and inserting `other than subsections (d)(9)
and (e)(10)'; and
(2) by adding at the end the following new subparagraphs:
`(F) CLARIFICATION- No provision of law shall be construed as limiting
the right or power of the Corporation, or authorizing any court or agency
to limit or delay, in any manner, the right or power of the Corporation to
transfer any qualified financial contract in accordance with paragraphs
(9) and (10) of this subsection or to disaffirm or repudiate any such
contract in accordance with subsection (e)(1) of this section.
`(G) WALKAWAY CLAUSES NOT EFFECTIVE-
`(i) IN GENERAL- Notwithstanding the provisions of subparagraphs (A)
and (E), and sections 403 and 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991, no walkaway clause shall be
enforceable in a qualified financial contract of an insured depository
institution in default.
`(ii) WALKAWAY CLAUSE DEFINED- For purposes of this subparagraph,
the term `walkaway clause' means a provision in a qualified financial
contract that, after calculation of a value of a party's position or an
amount due to or from 1 of the parties in accordance with its terms upon
termination, liquidation, or acceleration of the qualified financial
contract, either does not create a payment obligation of a party or
extinguishes a payment obligation of a party in whole or in part solely
because of such party's status as a nondefaulting party.'.
(b) TECHNICAL AND CONFORMING AMENDMENT- Section 11(e)(12)(A) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(12)(A)) is amended by
inserting `or the exercise of rights or powers by' after `the appointment
of'.
SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL
CONTRACTS.
(a) TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS TO FINANCIAL INSTITUTIONS-
Section 11(e)(9) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(9))
is amended to read as follows:
`(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS-
`(A) IN GENERAL- In making any transfer of assets or liabilities of a
depository institution in default which includes any qualified financial
contract, the conservator or receiver for such depository institution
shall either--
`(i) transfer to one financial institution, other than a financial
institution for which a conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed or which is otherwise the
subject of a bankruptcy or insolvency proceeding--
`(I) all qualified financial contracts between any person or any
affiliate of such person and the depository institution in
default;
`(II) all claims of such person or any affiliate of such person
against such depository institution under any such contract (other
than any claim which, under the terms of any such contract, is
subordinated to the claims of general unsecured creditors of such
institution);
`(III) all claims of such depository institution against such
person or any affiliate of such person under any such contract;
and
`(IV) all property securing or any other credit enhancement for
any contract described in subclause (I) or any claim described in
subclause (II) or (III) under any such contract; or
`(ii) transfer none of the qualified financial contracts, claims,
property or other credit enhancement referred to in clause (i) (with
respect to such person and any affiliate of such person).
`(B) TRANSFER TO FOREIGN BANK, FOREIGN FINANCIAL INSTITUTION, OR
BRANCH OR AGENCY OF A FOREIGN BANK OR FINANCIAL INSTITUTION- In
transferring any qualified financial contract and related claims and
property under subparagraph (A)(i), the conservator or receiver for the
depository institution shall not make such transfer to a foreign bank,
financial institution organized under the laws of a foreign country, or a
branch or agency of a foreign bank or financial institution unless, under
the law applicable to such bank, financial institution, branch or agency,
to the qualified financial contracts, and to any netting contract, any
security agreement or arrangement or other credit enhancement related to
one or more qualified financial contracts, the contractual rights of the
parties to such qualified financial contracts, netting contracts, security
agreements or arrangements, or other credit enhancements are enforceable
substantially to the same extent as permitted under this section.
`(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES OF A CLEARING
ORGANIZATION- In the event that a conservator or receiver transfers any
qualified financial contract and related claims, property, and credit
enhancements pursuant to subparagraph (A)(i) and such contract is subject
to the rules of a clearing organization, the clearing organization shall
not be required to accept the transferee as a member by virtue of the
transfer.
`(D) DEFINITION- For purposes of this paragraph, the term `financial
institution' means a broker or dealer, a depository institution, a futures
commission merchant, or any other institution, as determined by the
Corporation by regulation to be a financial institution.'.
(b) NOTICE TO QUALIFIED FINANCIAL CONTRACT COUNTERPARTIES- Section
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A))
is amended in the material immediately following clause (ii) by striking `the
conservator' and all that follows through the period and inserting the
following: `the conservator or receiver shall notify any person who is a party
to any such contract of such transfer by 5:00 p.m. (eastern time) on the
business day following the date of the appointment of the receiver in the case
of a receivership, or the business day following such transfer in the case of
a conservatorship.'.
(c) RIGHTS AGAINST RECEIVER AND TREATMENT OF BRIDGE BANKS- Section
11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)) is
amended--
(1) by redesignating subparagraph (B) as subparagraph (D); and
(2) by inserting after subparagraph (A) the following new
subparagraphs:
`(B) CERTAIN RIGHTS NOT ENFORCEABLE-
`(i) RECEIVERSHIP- A person who is a party to a qualified financial
contract with an insured depository institution may not exercise any
right that such person has to terminate, liquidate, or net such contract
under paragraph (8)(A) of this subsection or section 403 or 404 of the
Federal Deposit Insurance Corporation Improvement Act of 1991, solely by
reason of or incidental to the appointment of a receiver for the
depository institution (or the insolvency or financial condition of the
depository institution for which the receiver has been
appointed)--
`(I) until 5:00 p.m. (eastern time) on the business day following
the date of the appointment of the receiver; or
`(II) after the person has received notice that the contract has
been transferred pursuant to paragraph (9)(A).
`(ii) CONSERVATORSHIP- A person who is a party to a qualified
financial contract with an insured depository institution
may not exercise any right that such person has to terminate, liquidate, or
net such contract under paragraph (8)(E) of this subsection or sections 403 or
404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, solely
by reason of or incidental to the appointment of a conservator for the
depository institution (or the insolvency or financial condition of the
depository institution for which the conservator has been appointed).
`(iii) NOTICE- For purposes of this paragraph, the Corporation as
receiver or conservator of an insured depository institution shall be
deemed to have notified a person who is a party to a qualified financial
contract with such depository institution if the Corporation has taken
steps reasonably calculated to provide notice to such person by the time
specified in subparagraph (A).
`(C) TREATMENT OF BRIDGE BANKS- The following institutions shall not
be considered to be a financial institution for which a conservator,
receiver, trustee in bankruptcy, or other legal custodian has been
appointed or which is otherwise the subject of a bankruptcy or insolvency
proceeding for purposes of paragraph (9):
`(ii) A depository institution organized by the Corporation, for
which a conservator is appointed either--
`(I) immediately upon the organization of the institution;
or
`(II) at the time of a purchase and assumption transaction between
the depository institution and the Corporation as receiver for a
depository institution in default.'.
SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF QUALIFIED
FINANCIAL CONTRACTS.
Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is
amended--
(1) by redesignating paragraphs (11) through (15) as paragraphs (12)
through (16), respectively; and
(2) by inserting after paragraph (10) the following new paragraph:
`(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS- In
exercising the rights of disaffirmance or repudiation of a conservator or
receiver with respect to any qualified financial contract to which an
insured depository institution is a party, the conservator or receiver for
such institution shall either--
`(A) disaffirm or repudiate all qualified financial contracts
between--
`(i) any person or any affiliate of such person; and
`(ii) the depository institution in default; or
`(B) disaffirm or repudiate none of the qualified financial contracts
referred to in subparagraph (A) (with respect to such person or any
affiliate of such person).'.
SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.
Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(vii)) is amended to read as follows:
`(vii) TREATMENT OF MASTER AGREEMENT AS ONE AGREEMENT- Any master
agreement for any contract or agreement described in any preceding
clause of this subparagraph (or any master agreement for such master
agreement or agreements), together with all supplements to such master
agreement, shall be treated as a single agreement and a single qualified
financial contract. If a master agreement contains provisions relating
to agreements or transactions that are not themselves qualified
financial contracts, the master agreement shall be deemed to be a
qualified financial contract only with respect to those transactions
that are themselves qualified financial contracts.'.
SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF
1991.
(a) DEFINITIONS- Section 402 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4402) is amended--
(A) in subparagraph (A)(ii), by inserting before the semicolon `, or
is exempt from such registration by order of the Securities and Exchange
Commission'; and
(B) in subparagraph (B), by inserting before the period `or that has
been granted an exemption under section 4(c)(1) of the Commodity Exchange
Act';
(A) by redesignating subparagraphs (B) through (D) as subparagraphs
(C) through (E), respectively;
(B) by inserting after subparagraph (A) the following new
subparagraph:
`(B) an uninsured national bank or an uninsured State bank that is a
member of the Federal Reserve System, if the national bank or State member
bank is not eligible to make application to become an insured bank under
section 5 of the Federal Deposit Insurance Act;'; and
(C) by amending subparagraph (C) (as redesignated) to read as
follows:
`(C) a branch or agency of a foreign bank, a foreign bank and any
branch or agency of the foreign bank, or the foreign bank that established
the branch or agency, as those terms are defined in section 1(b) of the
International Banking Act of 1978;';
(3) in paragraph (11), by inserting before the period `and any other
clearing organization with which such clearing organization has a netting
contract';
(4) by amending paragraph (14)(A)(i) to read as follows:
`(i) means a contract or agreement between 2 or more financial
institutions, clearing organizations, or members that provides for
netting present or future payment obligations or payment entitlements
(including liquidation or closeout values relating to such obligations
or entitlements) among the parties to the agreement; and';
and
(5) by adding at the end the following new paragraph:
`(15) PAYMENT- The term `payment' means a payment of United States
dollars, another currency, or a composite currency, and a noncash delivery,
including a payment or delivery to liquidate an unmatured
obligation.'.
(b) ENFORCEABILITY OF BILATERAL NETTING CONTRACTS- Section 403 of the
Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4403)
is amended--
(1) by striking subsection (a) and inserting the following:
`(a) GENERAL RULE- Notwithstanding any other provision of State or Federal
law (other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the
Federal Deposit Insurance Act or any order authorized under section 5(b)(2) of
the Securities Investor Protection Act of 1970), the covered contractual
payment obligations and the covered contractual payment entitlements between
any 2 financial institutions shall be netted in accordance with, and subject
to the conditions of, the terms of any applicable netting contract (except as
provided in section 561(b)(2) of title 11, United States Code).'; and
(2) by adding at the end the following new subsection:
`(f) ENFORCEABILITY OF SECURITY AGREEMENTS- The provisions of any security
agreement or arrangement or other credit enhancement related to one or more
netting contracts between any 2 financial institutions shall be enforceable in
accordance with their terms (except as provided in section 561(b)(2) of title
11, United States Code), and shall not be stayed, avoided, or otherwise
limited by any State or Federal law (other than paragraphs (8)(E), (8)(F), and
(10)(B) of section 11(e) of the Federal Deposit Insurance Act and section
5(b)(2) of the Securities Investor Protection Act of 1970).'.
(c) ENFORCEABILITY OF CLEARING ORGANIZATION NETTING CONTRACTS- Section 404
of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4404) is amended--
(1) by striking subsection (a) and inserting the following:
`(a) GENERAL RULE- Notwithstanding any other provision of State or Federal
law (other than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the
Federal Deposit Insurance Act and any order authorized under section 5(b)(2)
of the Securities Investor Protection Act of 1970), the covered contractual
payment obligations and the covered contractual payment entitlements of a
member of a clearing organization to and from all other members of a clearing
organization shall be netted in accordance with and subject to the conditions
of any applicable netting contract (except as provided in section 561(b)(2) of
title 11, United States Code).'; and
(2) by adding at the end the following new subsection:
`(h) ENFORCEABILITY OF SECURITY AGREEMENTS- The provisions of any security
agreement or arrangement or other credit enhancement related to one or more
netting contracts between any 2 members of a clearing organization shall be
enforceable in accordance with their terms (except as provided in section
561(b)(2) of title 11, United States Code), and shall not be stayed, avoided,
or otherwise limited by any State or Federal law (other than paragraphs
(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit Insurance
Act and section 5(b)(2) of the Securities Investor Protection Act of
1970).'.
(d) ENFORCEABILITY OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND
UNINSURED FEDERAL BRANCHES AND AGENCIES- The Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4401 et seq.) is amended--
(1) by redesignating section 407 as section 408; and
(2) by inserting after section 406 the following new section:
`SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND
UNINSURED FEDERAL BRANCHES AND AGENCIES.
`(a) IN GENERAL- Notwithstanding any other provision of law, paragraphs
(8), (9), (10), and (11) of section 11(e) of the Federal Deposit Insurance Act
shall apply to an uninsured national bank or uninsured Federal branch or
Federal agency, except that for such purpose--
`(1) any reference to the `Corporation as receiver' or `the receiver or
the Corporation' shall refer to the receiver of an uninsured national bank
or uninsured Federal branch or Federal agency appointed by the Comptroller
of the Currency;
`(2) any reference to the `Corporation' (other than in section
11(e)(8)(D) of such Act), the `Corporation, whether acting as such or as
conservator or receiver', a `receiver', or a `conservator' shall refer to
the receiver or conservator of an uninsured national bank or uninsured
Federal branch or Federal agency appointed by the Comptroller of the
Currency; and
`(3) any reference to an `insured depository institution' or `depository
institution' shall refer to an uninsured national bank or an uninsured
Federal branch or Federal agency.
`(b) LIABILITY- The liability of a receiver or conservator of an uninsured
national bank or uninsured Federal branch or agency shall be determined in the
same manner and subject to the same limitations that apply to receivers and
conservators of insured depository institutions under section 11(e) of the
Federal Deposit Insurance Act.
`(c) REGULATORY AUTHORITY-
`(1) IN GENERAL- The Comptroller of the Currency, in consultation with
the Federal Deposit Insurance Corporation, may promulgate regulations to
implement this section.
`(2) SPECIFIC REQUIREMENT- In promulgating regulations to implement this
section, the Comptroller of the Currency shall ensure that the regulations
generally are consistent with the regulations and policies of the Federal
Deposit Insurance Corporation adopted pursuant to the Federal Deposit
Insurance Act.
`(d) DEFINITIONS- For purposes of this section, the terms `Federal
branch', `Federal agency', and `foreign bank' have the same meanings as in
section 1(b) of the International Banking Act of 1978.'.
SEC. 907. BANKRUPTCY CODE AMENDMENTS.
(a) DEFINITIONS OF FORWARD CONTRACT, REPURCHASE AGREEMENT, SECURITIES
CLEARING AGENCY, SWAP AGREEMENT, COMMODITY CONTRACT, AND SECURITIES CONTRACT-
Title 11, United States Code, is amended--
(i) by striking `means a contract' and inserting
`means--
(ii) by striking `, or any combination thereof or option thereon;'
and inserting `, or any other similar agreement;'; and
(iii) by adding at the end the following:
`(B) any combination of agreements or transactions referred to in
subparagraphs (A) and (C);
`(C) any option to enter into an agreement or transaction referred to
in subparagraph (A) or (B);
`(D) a master agreement that provides for an agreement or transaction
referred to in subparagraph (A), (B), or (C), together with all
supplements to any such master agreement, without regard to whether such
master agreement provides for an agreement or transaction that is not a
forward contract under this paragraph, except that such master agreement
shall be considered to be a forward contract under this paragraph only
with respect to each agreement or transaction under such master agreement
that is referred to in subparagraph (A), (B), or (C); or
`(E) any security agreement or arrangement, or other credit
enhancement related to any agreement or transaction referred to in
subparagraph (A), (B), (C), or (D), but not to exceed the actual value of
such contract on the date of the filing of the petition;';
(B) in paragraph (46), by striking `on any day during the period
beginning 90 days before the date of' and inserting `at any time
before';
(C) by amending paragraph (47) to read as follows:
`(47) `repurchase agreement' (which definition also applies to a reverse
repurchase agreement)--
`(i) an agreement, including related terms, which provides for the
transfer of one or more certificates of deposit, mortgage related
securities (as defined in section 3 of the Securities Exchange Act of
1934), mortgage loans, interests in mortgage related securities or
mortgage loans, eligible bankers' acceptances, qualified foreign
government securities (defined as a security that is a direct obligation
of, or that is fully guaranteed by, the central government of a member
of the Organization for Economic Cooperation and Development), or
securities that are direct obligations of, or that are fully guaranteed
by, the United States or any agency of the United States against the
transfer of funds by the transferee of such certificates of deposit,
eligible bankers' acceptances, securities, loans, or interests, with a
simultaneous agreement by such transferee to transfer to the transferor
thereof certificates of deposit, eligible bankers' acceptance,
securities, loans, or interests of the kind described in this clause, at
a date certain not later than 1 year after such transfer or on demand,
against the transfer of funds;
`(ii) any combination of agreements or transactions referred to in
clauses (i) and (iii);
`(iii) an option to enter into an agreement or transaction referred
to in clause (i) or (ii);
`(iv) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), or (iii), together with all
supplements to any such master agreement, without regard to whether such
master agreement provides for an agreement or transaction that is not a
repurchase agreement under this paragraph, except that such master
agreement shall be considered to be a repurchase agreement under this
paragraph only with respect to each agreement or transaction under the
master agreement that is referred to in clause (i), (ii), or (iii);
or
`(v) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred to in
clause (i), (ii), (iii), or (iv), but not to exceed the actual value of
such contract on the date of the filing of the petition; and
`(B) does not include a repurchase obligation under a participation in
a commercial mortgage loan;';
(D) in paragraph (48), by inserting `, or exempt from such
registration under such section pursuant to an order of the Securities and
Exchange Commission,' after `1934'; and
(E) by amending paragraph (53B) to read as follows:
`(53B) `swap agreement'--
`(i) any agreement, including the terms and conditions incorporated
by reference in such agreement, which is an interest rate swap, option,
future, or forward agreement, including--
`(I) a rate floor, rate cap, rate collar, cross-currency rate
swap, and basis swap;
`(II) a spot, same day-tomorrow, tomorrow-next, forward, or other
foreign exchange or precious metals agreement;
`(III) a currency swap, option, future, or forward
agreement;
`(IV) an equity index or an equity swap, option, future, or
forward agreement;
`(V) a debt index or a debt swap, option, future, or forward
agreement;
`(VI) a credit spread or a credit swap, option, future, or forward
agreement;
`(VII) a commodity index or a commodity swap, option, future, or
forward agreement; or
`(VIII) a weather swap, weather derivative, or weather
option;
`(ii) any agreement or transaction similar to any other agreement or
transaction referred to in this paragraph that--
`(I) is presently, or in the future becomes, regularly entered
into in the swap market (including terms and conditions incorporated
by reference therein); and
`(II) is a forward, swap, future, or option on one or more rates,
currencies, commodities, equity securities, or other equity
instruments, debt securities or other debt instruments, or economic
indices or measures of economic risk or value;
`(iii) any combination of agreements or transactions referred to in
this subparagraph;
`(iv) any option to enter into an agreement or transaction referred
to in this subparagraph;
`(v) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), (iii), or (iv), together
with all supplements to any such master agreement, and without regard to
whether the master agreement contains an agreement or transaction that
is not a swap agreement under this paragraph, except that the master
agreement shall be considered to be a swap agreement under this
paragraph only with respect to each agreement or transaction under the
master agreement that is referred to in clause (i), (ii), (iii), or
(iv); or
`(vi) any security agreement or arrangement or other credit
enhancement related to any agreements or transactions referred to in
clause (i) through (v), but do not to exceed the actual value of such
contract on the date of the filing of the petition; and
`(B) is applicable for purposes of this title only, and shall not be
construed or applied so as to challenge or affect the characterization,
definition, or treatment of any swap agreement under any other statute,
regulation, or rule, including the Securities Act of 1933, the Securities
Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the
Trust Indenture Act of 1939, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Securities Investor Protection Act of
1970, the Commodity Exchange Act, and the regulations prescribed by the
Securities and Exchange Commission or the Commodity Futures Trading
Commission.';
(2) in section 741(7), by striking paragraph (7) and inserting the
following:
`(7) `securities contract'--
`(i) a contract for the purchase, sale, or loan of a security, a
certificate of deposit, a mortgage loan or any interest in a mortgage
loan, a group or index of securities, certificates of deposit, or
mortgage loans or interests therein (including an interest therein or
based on the value thereof), or option on any of the foregoing,
including an option to purchase or sell any such security, certificate
of deposit, loan, interest, group or index, or option;
`(ii) any option entered into on a national securities exchange
relating to foreign currencies;
`(iii) the guarantee by or to any securities clearing agency of a
settlement of cash, securities, certificates of deposit, mortgage loans
or interests therein, group or index of securities, or mortgage loans or
interests therein (including any interest therein or based on the value
thereof), or option on any of the foregoing, including an option to
purchase or sell any such security, certificate of deposit, loan,
interest, group or index, or option;
`(v) any other agreement or transaction that is similar to an
agreement or
transaction referred to in this subparagraph;
`(vi) any combination of the agreements or transactions referred to
in this subparagraph;
`(vii) any option to enter into any agreement or transaction
referred to in this subparagraph;
`(viii) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), (iii), (iv), (v), (vi), or
(vii), together with all supplements to any such master agreement,
without regard to whether the master agreement provides for an agreement
or transaction that is not a securities contract under this
subparagraph, except that such master agreement shall be considered to
be a securities contract under this subparagraph only with respect to
each agreement or transaction under such master agreement that is
referred to in clause (i), (ii), (iii), (iv), (v), (vi), or (vii);
or
`(ix) any security agreement or arrangement or other credit
enhancement, related to any agreement or transaction referred to in this
subparagraph, but not to exceed the actual value of such contract on the
date of the filing of the petition; and
`(B) does not include any purchase, sale, or repurchase obligation
under a participation in a commercial mortgage loan.'; and
(A) by striking `or' at the end of subparagraph (D); and
(B) by adding at the end the following:
`(F) any other agreement or transaction that is similar to an
agreement or transaction referred to in this paragraph;
`(G) any combination of the agreements or transactions referred to in
this paragraph;
`(H) any option to enter into an agreement or transaction referred to
in this paragraph;
`(I) a master agreement that provides for an agreement or transaction
referred to in subparagraph (A), (B), (C), (D), (E), (F), (G), or (H),
together with all supplements to such master agreement, without regard to
whether the master agreement provides for an agreement or transaction that
is not a commodity contract under this paragraph, except that the master
agreement shall be considered to be a commodity contract under this
paragraph only with respect to each agreement or transaction under the
master agreement that is referred to in subparagraph (A), (B), (C), (D),
(E), (F), (G), or (H); or
`(J) any security agreement or arrangement or other credit enhancement
related to any agreement or transaction referred to in this paragraph, but
not to exceed the actual value of such contract on the date of the filing
of the petition;'.
(b) DEFINITIONS OF FINANCIAL INSTITUTION, FINANCIAL PARTICIPANT, AND
FORWARD CONTRACT MERCHANT- 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 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 contract, as defined in section 741, such customer; or
`(B) in connection with a securities contract, as defined in section
741, an investment company registered under the Investment Company Act of
1940;';
(2) by inserting after paragraph (22) the following:
`(22A) `financial participant' means an entity that, at the time it
enters into a securities contract, commodity contract, or forward contract,
or at the time of the filing of the petition, has one or more agreements or
transactions 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 previous 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 affiliate)
on any day during the previous 15-month period;'; 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 or in a commodity, as defined or in
section 761 or any similar good, article, service, right, or interest which
is presently 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- Section 101 of title 11, United States Code, is amended by
inserting after paragraph (38) the following new paragraphs:
`(38A) `master netting agreement'--
`(A) means an agreement providing for the exercise of rights,
including rights of netting, setoff, liquidation, termination,
acceleration, or closeout, 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 arrangement or other credit
enhancement related to one 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 respect 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;'.
(d) SWAP AGREEMENTS, SECURITIES CONTRACTS, COMMODITY CONTRACTS, FORWARD
CONTRACTS, REPURCHASE AGREEMENTS, AND MASTER NETTING AGREEMENTS UNDER THE
AUTOMATIC-STAY-
(1) IN GENERAL- Section 362(b) of title 11, United States Code, as
amended by this Act, is amended--
(A) in paragraph (6), by inserting `, pledged to, and under the
control of,' after `held by';
(B) in paragraph (7), by inserting `, pledged to, and under the
control of,' after `held by';
(C) by striking paragraph (17) and inserting the following:
`(17) under subsection (a), of the setoff by a swap 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 participant under or in connection with any swap agreement or
against cash, securities, or other property held by, pledged to, and under
the control of, or due from such swap participant to margin, guarantee,
secure, or settle any swap agreement;'; and
(D) by inserting after paragraph (27), as added by this Act, the
following new paragraph:
`(28) 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 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 such agreements 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, and 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 exercise
such offset rights under paragraph (6), (7), or (17) for each individual
contract covered by the master netting agreement in issue; or'.
(2) LIMITATION- Section 362 of title 11, United States Code, as amended
by this Act, is amended by adding at the end the following:
`(l) LIMITATION- The exercise of rights not subject to the stay arising
under subsection (a) pursuant to paragraph (6), (7), (17), or (28) 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, as amended by this Act, is amended--
(1) in subsection (g) (as added by section 103 of Public Law
101-311)--
(A) by striking `under a swap agreement'; and
(B) by striking `in connection with a swap agreement' and inserting
`under or in connection with any swap agreement'; and
(2) by adding at the end the following:
`(k) 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
participant 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 netting 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 subparagraph:
`(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 transfer, except that,
with respect to a transfer under any individual contract covered thereby, to
the extent that such master netting agreement participant otherwise 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:
`Sec. 555. Contractual right to liquidate, terminate, or accelerate a
securities contract';
(2) in the first sentence, by striking `liquidation' and inserting
`liquidation, termination, or acceleration'.
(h) TERMINATION OR ACCELERATION OF COMMODITIES OR FORWARD CONTRACTS-
Section 556 of title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
`Sec. 556. Contractual right to liquidate, terminate, or accelerate a
commodities contract or forward contract';
(2) in the first sentence, by striking `liquidation' and inserting
`liquidation, termination, or acceleration'.
(i) TERMINATION OR ACCELERATION OF REPURCHASE AGREEMENTS- Section 559 of
title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
`Sec. 559. Contractual right to liquidate, terminate, or accelerate a
repurchase agreement';
(2) in the first sentence, by striking `liquidation' and inserting
`liquidation, termination, or acceleration'.
(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:
`Sec. 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'; and
(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'.
(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:
`Sec. 561. Contractual right to terminate, liquidate, accelerate, or offset
under a master netting agreement and across contracts
`(a) IN GENERAL- Subject to subsection (b), the exercise of any
contractual right, because of a condition of the kind specified in section
365(e)(1), to cause the termination, liquidation, or acceleration of or to
offset or net termination values, payment amounts, or other transfer
obligations arising under or in connection with one or more (or the
termination, 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);
`(4) repurchase agreements;
`(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any
provision of this title or by any order of a court or administrative agency in
any proceeding under this title.
`(1) IN GENERAL- A party may exercise a contractual right described in
subsection (a) to terminate, liquidate, or accelerate only to the extent
that such party could exercise such a right under section 555, 556, 559, or
560 for each individual contract covered by the master netting agreement in
issue.
`(2) COMMODITY BROKERS- If a debtor is a commodity broker subject to
subchapter 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 against any claim
arising under, or in connection with, other instruments, contracts, 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
calculated under that subchapter IV; and
`(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 against any
claim arising under, or in connection with, other instruments, contracts,
or agreements listed in subsection (a).
`(3) CONSTRUCTION- No provision of subparagraph (A) or (B) of paragraph
(2) shall prohibit the offset of claims and obligations that arise
under--
`(A) a cross-margining agreement that has been approved by the
Commodity Futures Trading Commission or submitted to the Commodity Futures
Trading Commission under section 5(a)(12)(A) of the Commodity Exchange Act
and has been approved; or
`(B) any other netting agreement between a clearing organization, as
defined in section 761, and another entity that has been approved by the
Commodity Futures Trading Commission.
`(c) DEFINITION- As used in this section, the term `contractual right'
includes a right set forth in a rule or bylaw of a national securities
exchange, a national securities association, or a securities clearing agency,
a right set forth in a bylaw of a clearing organization or contract market 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
reason of normal business practice.
`(d) CASES ANCILLARY TO FOREIGN PROCEEDINGS- Any provisions of this title
relating to securities contracts, commodity contracts, forward contracts,
repurchase agreements, swap agreements, or master netting agreements shall
apply in a case under chapter 15 of this title, 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
provision of this title or by order of a court in any case under 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.
(l) COMMODITY BROKER LIQUIDATIONS- Title 11, United States Code, is
amended by inserting after section 766 the following:
`Sec. 767. Commodity broker liquidation and forward contract merchants,
commodity brokers, stockbrokers, financial institutions, financial participants,
securities clearing agencies, swap participants, repo participants, and master
netting agreement participants
`Notwithstanding any other provision of this title, the exercise of rights
by a forward contract merchant, commodity broker, stockbroker, financial
institution, financial participant, securities clearing agency, swap
participant, repo participant, or master netting agreement participant under
this title shall not affect the priority of 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:
`Sec. 753. Stockbroker liquidation and forward contract merchants, commodity
brokers, stockbrokers, financial institutions, 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, securities clearing agency, swap participant, repo participant,
financial participant, or master netting agreement participant 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)(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)(28), 555, 556, 559, 560, or 561 of this
title)'; and
(2) in subsection (b)(1), by striking `362(b)(14),' and inserting
`362(b)(17), 362(b)(28), 555, 556, 559, 560, 561'.
(o) SECURITIES CONTRACTS, COMMODITY CONTRACTS, 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 inserting `financial institution, financial
participant,';
(2) in section 546(e), by inserting `financial participant,' after
`financial institution,';
(3) in section 548(d)(2)(B), by inserting `financial participant,' after
`financial institution,';
(A) by inserting `financial participant,' after `financial
institution,'; and
(B) by inserting before the period at the end `, a right set forth in
a bylaw of a clearing organization or contract market 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'; and
(5) in section 556, by inserting `, financial participant,' after
`commodity broker'.
(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 sections 555 and 556 to read as
follows:
`555. Contractual right to liquidate, terminate, or accelerate a
securities contract.
`556. Contractual right to liquidate, terminate, or accelerate a
commodities contract or forward contract.';
(B) by amending the items relating to sections 559 and 560 to read as
follows:
`559. Contractual right to liquidate, terminate, or accelerate a
repurchase agreement.
`560. Contractual right to liquidate, terminate, or accelerate a swap
agreement.';
(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,
commodity brokers, stockbrokers, financial institutions, securities clearing
agencies, swap participants, repo participants, and master netting agreement
participants.';
(B) by inserting after the item relating to section 752 the
following:
`753. Stockbroker liquidation and forward contract merchants, commodity
brokers, stockbrokers, financial institutions, securities clearing agencies,
swap participants, repo participants, 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 appropriate Federal banking agencies, may prescribe regulations
requiring more detailed recordkeeping with respect to qualified financial
contracts (including market valuations) by insured depository
institutions.'.
SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT.
Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1823(e)(2)) is amended to read as follows:
`(2) EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION REQUIREMENT- An agreement
to provide for the lawful collateralization of--
`(A) deposits of, or other credit extension by, a Federal, State, or
local governmental entity, or of any depositor referred to in section
11(a)(2), including an agreement to provide collateral 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 Federal home loan bank; or
`(D) one or more qualified financial contracts, as defined in section
11(e)(8)(D),
shall not be deemed invalid pursuant to paragraph (1)(B) solely because
such agreement was not executed contemporaneously with the acquisition of
the collateral or because of pledges, delivery, or substitution of the
collateral made in accordance with such agreement.'.
SEC. 910. DAMAGE MEASURE.
(a) IN GENERAL- Title 11, United States Code, is amended--
(1) by inserting after section 561, as added by this Act, the
following:
`Sec. 562. Damage measure in connection with swap agreements, securities
contracts, forward contracts, commodity contracts, repurchase agreements, or
master netting agreements
`If the trustee rejects a swap agreement, securities contract (as defined
in section 741), forward contract, commodity contract (as defined in section
761), repurchase agreement, or master netting agreement pursuant to section
365(a), or if a forward contract merchant, stockbroker, financial institution,
securities clearing agency, repo participant, financial participant, master
netting agreement participant, or swap participant liquidates, terminates, or
accelerates such contract or agreement, damages shall be measured as of the
earlier of--
`(1) the date of such rejection; or
`(2) the date of such liquidation, termination, or acceleration.';
and
(2) in the table of sections for chapter 5, by inserting after the item
relating to section 561 (as added by this Act) the following:
`562. Damage measure in connection with swap agreements, securities
contracts, forward contracts, commodity contracts, repurchase agreements, or
master netting agreements.'.
(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 subsection (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 securities contract, commodity contract, forward contract,
repurchase agreement, swap agreement, or master netting agreement, as
those terms are defined in sections 101 and 741 of title 11, United
States Code, to offset or net termination values, payment amounts, or
other transfer obligations arising under or in connection with one or
more of such contracts or agreements, or to foreclose on any cash
collateral pledged by the debtor, whether or not with respect to one or
more of such contracts or agreements.
`(ii) Notwithstanding clause (i), such application, order, or decree
may operate as a stay of the foreclosure on, or disposition 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 repurchase 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 national securities
exchange, a national securities association, or a securities clearing
agency, a right set forth in a bylaw of a clearing organization or
contract market 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.'.
SEC. 912. ASSET-BACKED SECURITIZATIONS.
Section 541 of title 11, United States Code, is amended--
(1) in subsection (b), by inserting after paragraph (7), as added by
this Act, the following:
`(8) any eligible asset (or proceeds thereof), to the extent that such
eligible asset was transferred by the debtor, before the date of
commencement of the case, to an eligible entity in connection with an
asset-backed securitization, except to the extent such asset (or proceeds or
value thereof) may be recovered by the trustee under section 550 by virtue
of avoidance under section 548(a);'; and
(2) by adding at the end the following new subsection:
`(f) For purposes of this section--
`(1) the term `asset-backed securitization' means a transaction in which
eligible assets transferred to an eligible entity are used as the source of
payment on securities, including, without limitation, all securities issued
by governmental units, at least one class or tranche of which was rated
investment grade by one or more nationally recognized securities rating
organizations, when the securities were initially issued by an issuer;
`(2) the term `eligible asset' means--
`(A) financial assets (including interests therein and proceeds
thereof), either fixed or revolving, whether or not the same are in
existence as of the date of the transfer, including residential and
commercial mortgage loans, consumer receivables, trade receivables, assets
of governmental units, including payment obligations relating to taxes,
receipts, fines, tickets, and other sources of revenue, and lease
receivables, that, by their terms, convert into cash within a finite time
period, plus any residual interest in property subject to receivables
included in such financial assets plus any rights or other assets designed
to assure the servicing or timely distribution of proceeds to security
holders;
`(C) securities, including without limitation, all securities issued
by governmental units;
`(3) the term `eligible entity' means--
`(B) a trust, corporation, partnership, governmental unit, limited
liability company (including a single member limited liability company),
or other entity engaged exclusively in the business of acquiring and
transferring eligible assets directly or indirectly to an issuer and
taking actions ancillary thereto;
`(4) the term `issuer' means a trust, corporation, partnership, or other
entity engaged exclusively in the business of acquiring and holding eligible
assets, issuing securities backed by eligible assets, and taking actions
ancillary thereto; and
`(5) the term `transferred' means the debtor, under a written agreement,
represented and warranted that eligible assets were sold, contributed, or
otherwise conveyed with the intention of removing them from the estate of
the debtor pursuant to subsection (b)(8) (whether or not reference is made
to this title or any section hereof), irrespective and without limitation
of--
`(A) whether the debtor directly or indirectly obtained or held an
interest in the issuer or in any securities issued by the issuer;
`(B) whether the debtor had an obligation to repurchase or to service
or supervise the servicing of all or any portion of such eligible assets;
or
`(C) the characterization of such sale, contribution, or other
conveyance for tax, accounting, regulatory reporting, or other
purposes.'.
SEC. 913. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) EFFECTIVE DATE- This title shall take effect on the date of enactment
of this Act.
(b) APPLICATION OF AMENDMENTS- The amendments made by this title shall
apply with respect to cases commenced or appointments made under any Federal
or State law after the date of enactment of this Act, but shall not apply with
respect to cases commenced or appointments made under any Federal or State law
before the date of enactment of this Act.
TITLE X--PROTECTION OF FAMILY FARMERS
SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12.
(1) IN GENERAL- Chapter 12 of title 11, United States Code, as reenacted
by section 149 of division C of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999 (Public Law 105-277), and amended by
this Act, is reenacted.
(2) EFFECTIVE DATE- Subsection (a) shall take effect on July 1,
2000.
(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).
SEC. 1002. DEBT LIMIT INCREASE.
Section 104(b) of title 11, United States Code, is amended by adding at
the end the following:
`(4) The dollar amount in section 101(18) shall be adjusted at the same
times and in the same manner as the dollar amounts in paragraph (1) of this
subsection, beginning with the adjustment to be made on April 1, 2001.'.
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 governmental unit that arises as a
result of the sale, transfer, exchange, or other disposition of any farm
asset used in the debtor's farming operation, 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 receives 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 this Act, is amended by striking `a State or local
governmental unit' and inserting `any governmental unit'.
TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS
SEC. 1101. DEFINITIONS.
(a) HEALTH CARE BUSINESS DEFINED- Section 101 of title 11, United States
Code, is amended--
(1) by redesignating paragraph (27A), as added by this Act, as paragraph
(27B); and
(2) by inserting after paragraph (27) the following:
`(27A) `health care business'--
`(A) means any public or private entity (without regard to whether
that entity is organized for profit or not for profit) that is primarily
engaged in offering to the general public facilities and services
for--
`(i) the diagnosis or treatment of injury, deformity, or disease;
and
`(ii) surgical, drug treatment, psychiatric, or obstetric care;
and
`(I) general or specialized hospital;
`(II) ancillary ambulatory, emergency, or surgical treatment
facility;
`(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, including any--
`(I) skilled nursing facility;
`(II) intermediate care facility;
`(III) assisted living facility;
`(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 in offering room, board, laundry, or
personal assistance with activities of daily living and incidentals to
activities 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 document relating to a
patient or a record recorded in a magnetic, optical, or other form of
electronic medium;'.
(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:
`Sec. 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 sufficient amount of funds to pay for the storage
of patient records in the manner required under applicable Federal or State
law, the following requirements shall apply:
`(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 insurance provider to make that
claim) by the date that is 365 days after the date of that notification,
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 last known address of
that patient, or a family member or contact person for that patient, and
to the appropriate insurance carrier an appropriate notice regarding the
claiming or disposing of patient records.
`(2) If, after providing the notification under paragraph (1), patient
records are not claimed during the 365-day period described under that
paragraph, 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 permission from that agency to deposit the patient records with that
agency, except that no Federal agency is required to accept patient records
under this paragraph.
`(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 destroying those records so that those records
cannot be retrieved.'.
(b) CLERICAL AMENDMENT- The table of sections for chapter 3 of title 11,
United States Code, is amended by inserting after the item relating to section
350 the following:
`351. Disposal of patient records.'.
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 this Act, 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 that term is
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 accordance with section 351;
or
`(B) in connection with transferring patients from the health care
business that is in the process of being closed to another health care
business;
`(9) with respect to a nonresidential real property lease previously
assumed under section 365, and subsequently rejected, a sum equal to all
monetary obligations due, excluding those arising from or related to a
failure to operate or penalty provisions, for the period of 2 years
following the later of the rejection date or date of actual turnover of the
premises, without reduction or setoff for any reason whatsoever except for
sums actually received or to be received from a nondebtor, and the claim for
remaining sums due for the balance of the term of the lease shall be a claim
under section 502(b)(6); and'.
SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT ADVOCATE.
(1) APPOINTMENT OF OMBUDSMAN- Subchapter II of chapter 3 of title 11,
United States Code, is amended by inserting after section 331 the
following:
`Sec. 332. Appointment of ombudsman
`(1) AUTHORITY TO APPOINT- Not later than 30 days after a case is
commenced by a health care business under chapter 7, 9, or 11, the court
shall order the appointment of an ombudsman to monitor the quality of
patient care to represent the interests of the patients of the health care
business, unless the court finds that the appointment of the ombudsman is
not necessary for the protection of patients under the specific facts of the
case.
`(2) QUALIFICATIONS- If the court orders the appointment of an
ombudsman, the United States trustee shall appoint 1 disinterested person,
other than the United States trustee, to serve as an ombudsman, including a
person who is serving as a State Long-Term Care Ombudsman appointed under
title III or VII of the Older Americans Act of 1965 (42 U.S.C. 3021 et seq.,
3058 et seq.).
`(b) DUTIES- An ombudsman appointed under subsection (a) shall--
`(1) monitor the quality of patient care, to the extent necessary under
the circumstances, including interviewing patients and physicians;
`(2) not later than 60 days after the date of appointment, and not less
frequently than every 60 days thereafter, report to the court, at a hearing
or in writing, regarding the quality of patient care at the health care
business involved; and
`(3) if the ombudsman determines that the quality of patient care is
declining significantly or is otherwise being materially compromised, notify
the court by motion or written report, with notice to appropriate parties in
interest, immediately upon making that determination.
`(c) CONFIDENTIALITY- An ombudsman shall maintain any information obtained
by the ombudsman under this section that relates to patients (including
information relating to patient records) as confidential information. The
ombudsman may not review confidential patient records, unless the court
provides prior approval, with restrictions on the ombudsman to protect the
confidentiality of patient records.'.
(2) CLERICAL AMENDMENT- The table of sections for chapter 3 of title 11,
United States Code, is amended by inserting after the item relating to
section 331 the following:
`332. Appointment of ombudsman.'.
(b) COMPENSATION OF OMBUDSMAN- Section 330(a)(1) of title 11, United
States Code, is amended--
(1) in the matter proceeding subparagraph (A), by inserting `an
ombudsman appointed under section 331, 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 this Act, is amended by adding at the end the following:
`(11) 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 process of
being closed; and
`(C) maintains a reasonable quality of care.'.
(b) CONFORMING AMENDMENT- Section 1106(a)(1) of title 11, United States
Code, is amended by striking `sections 704(2), 704(5), 704(7), 704(8), and
704(9)' and inserting `paragraphs (2), (5), (7), (8), (9), and (11) of section
704(a)'.
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 (28), as added by this Act, the following:
`(29) under subsection (a), of the exclusion by the Secretary of Health
and Human Services of the debtor from participation in the medicare program
or any other Federal health care program (as defined in section 1128B(f) of
the Social Security Act (42 U.S.C. 1320a-7b(f)) pursuant to title XI of such
Act (42 U.S.C. 1301 et seq.) or title XVIII of such Act (42 U.S.C. 1395 et
seq.).'.
TITLE XII--TECHNICAL AMENDMENTS
SEC. 1201. DEFINITIONS.
Section 101 of title 11, United States Code, as 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) and (38), by striking `; and' at the end
and inserting a period;
(A) by inserting `who is not a family farmer' after `debtor' the first
place it appears; and
(B) by striking `thereto having aggregate' and all that follows
through the end of the paragraph;
(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 interest;
`(C) the foreclosure of a debtor's equity of redemption; or
`(D) each mode, direct or indirect, absolute or conditional, voluntary
or involuntary, of disposing of or parting with--
`(ii) an interest in property.'; and
(7) in each of paragraphs (1) through (35), in each of paragraphs (36)
and (37), and in each of paragraphs (40) through (55), by striking the
semicolon at the end and inserting a period.
SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.
Section 104 of title 11, United States Code, as amended by section 322 of
this Act, 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 PETITIONS.
Section 110(j)(4) of title 11, United States Code, as so designated by
this Act, is amended by striking `attorney's' and inserting `attorneys'.
SEC. 1206. LIMITATION ON COMPENSATION OF PROFESSIONAL PERSONS.
Section 328(a) of title 11, United States Code, is amended by inserting
`on a fixed or percentage fee basis,' after `hourly basis,'.
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 this Act, 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
subsection (a)(14);
(2) in subsection (a)(9), by striking `motor vehicle' and inserting
`motor vehicle, vessel, or aircraft'; 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'.
SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREATMENT.
Section 525(c) of title 11, United States Code, is amended--
(1) in paragraph (1), by inserting `student' before `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
this Act, 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 avoided under this section
only with respect to the creditor that is an insider.'.
(b) APPLICABILITY- The amendments made by this section shall apply to any
case that is pending or commenced 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, as amended by this Act, 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)'.
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. DISCHARGE UNDER CHAPTER 12.
Subsections (a) and (c) of section 1228 of title 11, United States Code,
are amended by striking `1222(b)(10)' each place it appears and inserting
`1222(b)(9)'.
SEC. 1220. 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. 1221. 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'.
SEC. 1222. 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 subsection and inserting `only--
`(1) in accordance with applicable nonbankruptcy law that governs the
transfer of property by a corporation or trust that is not a moneyed,
business, or commercial corporation or trust; and
`(2) to the extent not inconsistent with any relief granted under
subsection (c), (d), (e), or (f) of section 362.'.
(b) CONFIRMATION OF PLAN FOR REORGANIZATION- Section 1129(a) of title 11,
United States Code, as amended by this Act, is amended by adding at the end
the following:
`(16) All transfers of property of the plan shall be made in accordance
with any applicable provisions 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 this Act, is amended by adding at the end the following:
`(g) Notwithstanding any other provision of this title, property that is
held by a debtor that is a corporation described 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 section 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 controversy to
any other court or to require the approval of any other court for the transfer
of property.
SEC. 1223. PROTECTION OF VALID PURCHASE MONEY SECURITY INTERESTS.
Section 547(c)(3)(B) of title 11, United States Code, is amended by
striking `20' and inserting `30'.
SEC. 1224. EXTENSIONS.
Section 302(d)(3) of the Bankruptcy, Judges, United States Trustees, and
Family Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is amended--
(1) in subparagraph (A), in the matter following clause (ii), by
striking `or October 1, 2002, whichever occurs first'; and
(2) in subparagraph (F)--
(i) in subclause (II), by striking `or October 1, 2002, whichever
occurs first'; and
(ii) in the matter following subclause (II), by striking `October 1,
2003, or'; and
(B) in clause (ii), in the matter following subclause (II)--
(i) by striking `before October 1, 2003, or'; and
(ii) by striking `, whichever occurs first'.
SEC. 1225. BANKRUPTCY JUDGESHIPS.
(a) SHORT TITLE- This section may be cited as the `Bankruptcy Judgeship
Act of 2000'.
(b) TEMPORARY JUDGESHIPS-
(1) APPOINTMENTS- The following judgeship positions shall be filled 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 judgeship for the eastern district of
California.
(B) Four additional bankruptcy judgeships for the central district of
California.
(C) One additional bankruptcy judgeship for the district of
Delaware.
(D) Two additional bankruptcy judgeships for the southern district of
Florida.
(E) One additional bankruptcy judgeship for the southern district of
Georgia.
(F) Two additional bankruptcy judgeships for the district of
Maryland.
(G) One additional bankruptcy judgeship for the eastern district of
Michigan.
(H) One additional bankruptcy judgeship for the southern district of
Mississippi.
(I) One additional bankruptcy judgeship for the district of New
Jersey.
(J) One additional bankruptcy judgeship for the eastern district of
New York.
(K) One additional bankruptcy judgeship for the northern district of
New York.
(L) One additional bankruptcy judgeship for the southern district of
New York.
(M) One additional bankruptcy judgeship for the eastern district of
North Carolina.
(N) One additional bankruptcy judgeship for the eastern district of
Pennsylvania.
(O) One additional bankruptcy judgeship for the middle district of
Pennsylvania.
(P) One additional bankruptcy judgeship for the district of Puerto
Rico.
(Q) One additional bankruptcy judgeship for the western district of
Tennessee.
(R) One additional bankruptcy judgeship for the eastern district of
Virginia.
(2) VACANCIES- The first vacancy occurring in the office of a bankruptcy
judge in each of the judicial districts set forth in paragraph (1) shall not
be filled if the vacancy--
(A) results from the death, retirement, resignation, or removal of a
bankruptcy judge; and
(B) occurs 5 years or more after the appointment date of a bankruptcy
judge appointed under paragraph (1).
(1) IN GENERAL- The temporary bankruptcy judgeship positions authorized
for the northern district of Alabama, the district of Delaware, the district
of Puerto Rico, the district of South Carolina, and the eastern district of
Tennessee under paragraphs (1), (3), (7), (8), and (9) of section 3(a) of
the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note) are extended until
the first vacancy occurring in the office of a bankruptcy judge in the
applicable district resulting from the death, retirement, resignation, or
removal of a bankruptcy judge and occurring--
(A) 8 years or more after November 8, 1993, with respect to the
northern district of Alabama;
(B) 10 years or more after October 28, 1993, with respect to the
district of Delaware;
(C) 8 years or more after August 29, 1994, with respect to the
district of Puerto Rico;
(D) 8 years or more after June 27, 1994, with respect to the district
of South Carolina; and
(E) 8 years or more after November 23, 1993, with respect to the
eastern district of Tennessee.
(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 temporary judgeship positions 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 sentence and inserting the
following: `Each bankruptcy judge to be appointed for a judicial district,
as provided in paragraph (2), shall be appointed by the United States court
of appeals for the circuit in which such district is located.'; and
(A) in the item relating to the middle district 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'.
(e) EFFECTIVE DATE- The amendments made by this section shall take effect
on the date of enactment of this Act.
SEC. 1226. COMPENSATING TRUSTEES.
Section 1326 of title 11, United States Code, is amended--
(A) in paragraph (1), by striking `and';
(B) in paragraph (2), by striking the period 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 unpaid 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--
`(ii) the amount payable to unsecured nonpriority creditors, as
provided by the plan, multiplied by 5 percent, and the result 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. 1227. 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;'.
SEC. 1228. JUDICIAL EDUCATION.
The Director of the Federal Judicial Center, in consultation with the
Director of the Executive Office for United States Trustees, shall develop
materials and conduct such training as may be useful to courts in implementing
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. 1229. RECLAMATION.
(a) RIGHTS AND POWERS OF THE TRUSTEE- Section 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 business, to reclaim such goods if the debtor
has received such goods while insolvent, not later than 45 days after the date
of the commencement of a case under this title, but such seller may not
reclaim such goods unless such seller demands in writing reclamation of such
goods--
`(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 expires 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)(7).'.
(b) ADMINISTRATIVE EXPENSES- Section 503(b) of title 11, United States
Code, as amended by this Act, is amended by adding at the end the
following:
`(10) the value of any goods received by the debtor not later than 20
days after the date of commencement 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. 1230. 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 bankruptcy 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 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 destroy documents submitted in
support of a bankruptcy claim not sooner than 3 years after the date of the
conclusion 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
requested tax documents.
SEC. 1231. 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 encourage 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 referred to as the `Board') shall conduct a study
of--
(1) consumer credit industry practices of soliciting and extending
credit--
(B) without taking steps to ensure that consumers are capable of
repaying the resulting debt; and
(C) in a manner that encourages consumers 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
practices and to prevent resulting consumer debt and insolvency.
SEC. 1232. PROPERTY NO LONGER SUBJECT TO REDEMPTION.
Section 541(b) of title 11, United States Code, is amended by inserting
after paragraph (8), as added by this Act, the following:
`(9) 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 indebtedness or
title) as collateral for a loan or advance 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 section 108(b) of this title; or'.
SEC. 1233. TRUSTEES.
(a) SUSPENSION AND TERMINATION OF PANEL TRUSTEES AND STANDING TRUSTEES-
Section 586(d) of title 28, United States Code, is amended--
(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
decision by commencing an action in the
United States district court for the district for which the panel to which
the trustee is appointed under subsection (a)(1), or in the United States
district court 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 administrative
hearing on the record. Unless the trustee elects to have an administrative
hearing on the record, the trustee 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 paragraph. 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 agency.'.
(b) EXPENSES OF STANDING TRUSTEES- Section 586(e) of title 28, United
States Code, is amended by adding at the end the following:
`(3) After first exhausting all available administrative 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
subsection by commencing an action in the United States district court in the
district where the individual resides. 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. 1234. 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. 1235. EXPEDITED APPEALS OF BANKRUPTCY CASES TO COURTS OF APPEALS.
(a) IN GENERAL- Section 158 of title 28, United States Code, is
amended--
(1) by striking subsection (d) and inserting the following:
`(d)(1) In a case in which the appeal is heard by the district court, the
judgment, decision, order, or decree of the bankruptcy judge shall be deemed a
judgment, decision, order, or decree of the district court entered 31 days
after such appeal is filed with the district court, unless not later than 30
days after such appeal is filed with the district court--
`(A) the district court--
`(i) files a decision on the appeal from the judgment, decision,
order, or decree of the bankruptcy judge; or
`(ii) enters an order extending such 30-day period for cause upon
motion of a party or upon the court's own motion; or
`(B) all parties to the appeal file written consent that the district
court may retain such appeal until it enters a decision.
`(2) For the purpose of this subsection, an appeal shall be considered
filed with the district court on the date on which the notice of appeal is
filed, except that in a case in which the appeal is heard by the district
court because a party has made an election under subsection (c)(1)(B), the
appeal shall be considered filed with the district court on the date on which
such election is made.
`(e) The courts of appeals shall have jurisdiction of appeals from--
`(1) all final judgments, decisions, orders, and decrees of district
courts entered under subsection (a);
`(2) all final judgments, decisions, orders, and decrees of bankruptcy
appellate panels entered under subsection (b); and
`(3) all judgments, decisions, orders, and decrees of district courts
entered under subsection (d) to the extent that such judgments, decisions,
orders, and decrees would be reviewable by a district court under subsection
(a).
`(f) In accordance with rules prescribed by the Supreme Court of the
United States under sections 2072 through 2077, the court of appeals may, in
its discretion, exercise jurisdiction over an appeal from an interlocutory
judgment, decision, order, or decree under subsection (e)(3).'.
(b) TECHNICAL AND CONFORMING AMENDMENTS-
(1) Section 305(c) of title 11, United States Code, is amended by
striking `section 158(d)' and inserting `subsection (e) or (f) of section
158'.
(2) Section 1334(d) of title 28, United States Code, is amended by
striking `section 158(d)' and inserting `subsection (e) or (f) of section
158'.
(3) Section 1452(b) of title 28, United States Code, is amended by
striking `section 158(d)' and inserting `subsection (e) or (f) of section
158'.
SEC. 1236. EXEMPTIONS.
Section 522(g)(2) of title 11, United States Code, is amended by striking
`subsection (f)(2)' and inserting `subsection (f)(1)(B)'.
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:
`(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, located 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:
XXXXXX.' (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 statement, disclosed clearly and conspicuously:
`Minimum Payment Warning: Making only the required minimum payment will
increase the interest you pay and the time it takes to repay your balance.
Making a 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: XXXXXX.' (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 statement, disclosed clearly and conspicuously:
`Minimum Payment Warning: Making only the required minimum payment will
increase the interest you pay and the time it takes to repay your balance.
For example, 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: XXXXXX.' (the blank space to be filled in by
the creditor). A creditor who 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
interest rate that is greater than 17 percent. Any creditor that is subject
to subparagraph (B) may elect to provide the disclosure required under
subparagraph (A) in lieu of the disclosure required under subparagraph
(B).
`(E) The Board shall, by rule, periodically recalculate, as necessary,
the interest rate and repayment 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
appropriate, may be a toll-free telephone number established 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 appropriate. The toll-free telephone number may connect consumers to an
automated device through which consumers may obtain information described in
subparagraph (A), (B), or (C), by inputting information using a touch-tone
telephone or similar device, if consumers whose telephones are not equipped
to use such automated device are provided the opportunity 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 described in subparagraph (A), (B), or (C) from an obligor
through the toll-free telephone number disclosed under subparagraph (A),
(B), or (C), as applicable, shall disclose in response to such request only
the information set forth in the table promulgated 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 Reform Act
of 2000, 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 Insurance Act), including a Federal credit union or State credit
union (as defined in section 101 of the Federal Credit Union Act (12 U.S.C.
1752)), with total assets not exceeding $250,000,000. The toll-free
telephone number 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 telephone or similar
device, if consumers whose telephones are not equipped to use such automated
device 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 information described
in subparagraph (A) or (B) from an obligor through the toll-free telephone
number disclosed under subparagraph (A) or (B), as applicable, 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 expiration of the 24-month
period referenced in subclause (I), the Board shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee on
Banking and Financial Services of the House of Representatives a report on
the program described in subclause (I).
`(G) The Federal Trade Commission shall establish and maintain a
toll-free number for the purpose of providing to consumers the information
required to be disclosed under subparagraph (C).
`(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 standardized information to be
used to disclose the information required to be disclosed under
subparagraph (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 different minimum payment amounts;
and
`(IV) that only minimum monthly payments are made and no additional
extensions of credit are obtained; and
`(iii) promulgate regulations that provide instructional guidance
regarding the manner in which the information contained in the table
established under clause (i) should be used in responding to the request
of an obligor for any information required to be disclosed under
subparagraph (A), (B), or (C).
`(I) The disclosure requirements of this paragraph 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 telephone number for the
purpose of providing customers 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 telephone number for the
purpose of providing customers with the actual number of months that it will
take to repay an outstanding balance shall include the following statement
on each billing statement: `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: XXXX.' (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
regulations 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
institutions regarding factors qualifying potential borrowers for credit,
repayment requirements, and the consequences of default.
(2) FACTORS FOR CONSIDERATION- In conducting a study under paragraph
(1), the Board should, in consultation with the other Federal banking
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 payment obligations, the need to consider those obligations
in deciding to take on new credit, and how taking on excessive credit can
result in financial 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 credit
obligation; and
(E) the availability of low minimum payment options is a cause of
consumers experiencing 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 legislative initiatives, if
any, of the Board, based on its findings.
SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS 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 statement
that--
(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 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 deductible
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
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 deductible
for Federal income tax purposes; and
`(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 amended--
(A) in subsection (a), by adding at the end the following:
`(15) In the case of a consumer credit transaction 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 deductible
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 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 secured 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 conspicuously state that--
`(1) the interest on the portion of the credit extension 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.
(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 publication 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
promotional materials accompanying such application or solicitation for
which a disclosure is required under paragraph (1), and that offers a
temporary annual percentage rate of interest, shall--
`(i) use the term `introductory' in immediate proximity to each
listing of the temporary annual percentage rate applicable to such
account, which term shall appear 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 introductory 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 temporary rate period will vary in accordance with an index,
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 in the tabular format prescribed by section
122(c)), the time period in which the introductory period will end 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 solicitation.
`(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 manner on or with such application or solicitation--
`(i) a general description of the circumstances that may result in
the revocation of the temporary annual percentage rate; and
`(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 annual 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 annual percentage rate
that was in effect within 60 days before the date of mailing the
application or solicitation.
`(D) DEFINITIONS- In this paragraph--
`(i) the terms `temporary annual percentage 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 application or
solicitation; and
`(ii) the term `introductory period' means the maximum time period
for which 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 paragraph (1) or any other provision of this
subsection.'.
(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 publication of such final regulations
by the Board.
SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.
(a) INTERNET-BASED APPLICATIONS AND 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:
`(7) INTERNET-BASED APPLICATIONS AND 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 subparagraphs (A) and (B) of
paragraph (1); and
`(ii) the information described in paragraph (6).
`(B) FORM OF DISCLOSURE- The disclosures 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 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, including
specifically a service or system that provides access to the Internet
and such systems operated or services offered by libraries 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 publication of such final regulations
by the Board.
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 billing
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 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 publication of such final regulations
by the Board.
SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR FINANCE
CHARGES.
(a) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE 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 FAILURE TO INCUR FINANCE CHARGES-
A creditor of an account under an open end consumer credit plan may not
terminate an account prior to its expiration date solely because 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 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 publication 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 Electronic Fund Transfer Act
(15 U.S.C. 1693g), as in effect at the time of the report, and the
implementing 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 protection 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 revisions to regulations promulgated by the Board to carry
out that Act, are necessary to further address adequate protection for
consumers concerning unauthorized use liability.
SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO DEPENDENT
STUDENTS.
(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 requirements and on a full-time basis, in
postsecondary educational institutions.
(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
summarizing 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 consultation 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 conspicuous 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 conspicuous standard required for disclosures
made under the provisions of the Truth in Lending Act referred to in
subsection (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.
SEC. 1310. ENFORCEMENT OF CERTAIN FOREIGN JUDGMENTS BARRED.
(a) IN GENERAL- Notwithstanding any other provision of law or contract, a
court within the United States shall not recognize or enforce any judgment
rendered in a foreign court if, by clear and convincing evidence, the court in
which recognition or enforcement of the judgment is sought determines that the
judgment gives effect to any purported right or interest derived, directly or
indirectly, from any fraudulent misrepresentation or fraudulent omission that
occurred in the United States during the period beginning on January 1, 1975,
and ending on December 31, 1993.
(b) EXCEPTION- Subsection (a) shall not prevent recognition or enforcement
of a judgment rendered in a foreign court if the foreign tribunal rendering
judgment giving effect to the right or interest concerned determines that no
fraudulent misrepresentation or fraudulent omission described in subsection
(a) occurred.
TITLE XIV--GENERAL EFFECTIVE DATE; APPLICATION OF
AMENDMENTS
SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(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- Except as otherwise provided in this Act,
the amendments 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.
END