[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3146 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3146

  To amend title 11 of the United States Code relating to bankruptcy.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 3, 1998

Mr. Nadler (for himself, Mr. Conyers, and Mr. Hilliard) introduced the 
  following bill; which was referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
  To amend title 11 of the United States Code relating to bankruptcy.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Consumer Lenders 
and Borrowers Bankruptcy Accountability Act of 1998''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Discouraging reckless lending practices.
Sec. 3. Discouraging wage seizures which push people into bankruptcy.
Sec. 4. Stop creditors' abuses of the bankruptcy system.
Sec. 5. Improve debtors' understanding of bankruptcy options and 
                            alternatives.
Sec. 6. Increase incentives for voluntary repayment plans.
Sec. 7. Provide fair property exemptions and prevent high-rollers from 
                            abusing the system.
Sec. 8. Prevent abuse of bankruptcy system by debtors who can afford to 
                            pay their debts.
Sec. 9. Prevent abusive bankruptcy filings.
Sec. 10. Improve accuracy of debtors' bankruptcy schedules.
Sec. 11. Ensure proportionate and fair recoveries for creditors.
Sec. 12. Prevent windfalls for undersecured creditors.
Sec. 13. Reinforce the fresh start.
Sec. 14. Clarifying amendments.
Sec. 15. Applicability of amendments.

SEC. 2. DISCOURAGING RECKLESS LENDING PRACTICES.

    (a) Limiting Claims Arising From Irresponsible Leadership 
Practices.--Section 502(b) of title 11, United States Code, is 
amended--
            (1) in paragraph (8) by striking ``or'' at the end,
            (2) in paragraph (9) by striking the period at the end and 
        inserting a semicolon, and
            (3) by adding at the end the following:
            ``(10) the claim is--
                    ``(A) based upon an extension to an individual of 
                unsecured credit which caused, and which the claimant 
                knew or should have known would cause, the debtor's 
                aggregate unsecured debts to exceed 40 percent of the 
                debtor's annual gross income; or
                    ``(B) based on a secured debt if the creditor has 
                violated section 129(h) of the Truth in Lending Act;
            ``(11) the claim arises from a debt on which the creditor 
        failed or refused to waive interest in an unsuccessful consumer 
        credit counseling plan attempted by the debtor before filing 
        bankruptcy (and the creditor shall bear the burden of proving 
        its waiver of interest in such a plan);
            ``(12) the claim arises from a debt incurred in or adjacent 
        to a gambling facility, or a debt which the creditor knew or 
        should have known was intended to be used by the debtor for 
        gambling purposes;
            ``(13) the claim arises from a consumer debt on which the 
        annual percentage rate for the debt as defined by section 107 
        of the Truth in Lending Act increased by more than 5 percent in 
        the 12-month period ending before the order for relief;
            ``(14) the claim is not secured and arises from a consumer 
        debt on which a billing statement provided by the creditor in 
        the 1-year period ending on the date of the order for relief 
        included an offer to accept a periodic payment which, if made 
        on the due date for that periodic payment and each subsequent 
        due date, would not amortize the principal amount due to the 
        creditor at the then current rate of interest in a period of 
        less than 15 years from the due date of the periodic payment; 
        or
            ``(15) the claim is made by a creditor, its agents, or 
        assignees based on a debt with respect to which the creditor, 
        its agents or assignees engaged in conduct which violated 
        section 805, 806, 807, or 808 of the Fair Credit Reporting Act 
        whether or not such creditor is a debt collector as defined by 
        section 803(6) of such Act. Civil liability against such 
        creditor, agent or assignee under section 813 of such Act shall 
        also be available whether or not such creditor is a debt 
        collector as defined by section 803(6) of such Act.''.
    (b) Clarify the Dischargeability of Credit Card Debt in a Way That 
Places Some Responsibility on Creditors for Irresponsible Lending 
Practices.--
            (1) Requirements.--Section 523(a)(2) of title 11, United 
        States Code, is amended--
                    (A) in subparagraph (B) by striking ``or'' at the 
                end,
                    (B) in subparagraph (C) by striking the period at 
                the end and inserting ``; or'', and
                    (C) by adding at the end the following:
                    ``(D) except as provided in subparagraph (C), 
                consumer debts under an open end credit plan (as 
                defined section 103 of the Truth in Lending Act) are 
                dischargeable unless--
                            ``(i) the creditor establishes the 
                        requirements of subparagraph (B) with respect 
                        to the consumer's credit application; or
                            ``(ii) the creditor establishes actual and 
                        reasonable reliance on an express fraudulent 
                        statement made by the debtor in connection with 
                        an extension of credit in excess of the amount 
                        available under the open end credit plan.''.
            (2) Proof.--Section 523 of title 11, United States Code, is 
        amended by adding at the end the following:
    ``(h) Proof of fraud under this section shall be made by clear and 
convincing evidence.''.

SEC. 3. DISCOURAGING WAGE SEIZURES WHICH PUSH PEOPLE INTO BANKRUPTCY.

    Section 547 of title 11, United States Code, is amended--
            (1) in subsection (e)(3) by adding at the end the 
        following:
``In the case of wages or other income of an individual debtor, a 
transfer of the right to receive such income is not effective until the 
time that the income is to be paid to the debtor.''; and
            (2) by amending subsection (c)(8) to read as follows:
            ``(8) that is a voluntary transfer of property that has an 
        aggregate amount less than $600.''.

SEC. 4. STOP CREDITORS' ABUSES OF THE BANKRUPTCY SYSTEM.

    (a) Sanctions for Creditor Abuses of the Bankruptcy System.--
            (1) Allowance of claims or interests.--Section 502 of title 
        11, United States Code, is amended by adding at the end the 
        following:
    ``(k)(1) If, in a case of an individual debtor, following an 
objection filed by the debtor, a claim (other than a claim for a debt 
for alimony or child support) is disallowed or reduced by an amount 
representing more than 5 percent of the original filed claim or $500, 
whichever is less, the court shall award the debtor reasonable 
attorneys' fees and costs.
    ``(2) If, in a case of an individual debtor, the court finds that 
the position of any claimant with respect to whom an objection is 
timely filed under this section is not substantially justified, the 
court shall also award damages in the amount of $5,000 and may, in 
appropriate circumstances, award punitive damages.''.
            (2) Exceptions to discharge.--Section 523(d) of title 11, 
        United States Code, is amended to read as follows:
    ``(d) If a creditor requests a determination of dischargeability of 
a consumer debt under this section (other than under paragraph (5) or 
(15) of subsection (a)), and such debt is discharged, the court shall 
award to the debtor reasonable attorneys' fees and costs. If the court 
finds that the position of any creditor proceeding under this section 
is not substantially justified, the court shall also award three times 
actual damages (but not less than $5,000) and, may, in appropriate 
circumstances, award punitive damages.''.
            (3) Effect of discharge.--Section 524 of title 11, United 
        States Code, is amended by adding at the end the following:
    ``(i) A creditor's failure to credit payments received under a plan 
confirmed under this title in the manner and amounts required by the 
plan shall be considered to be an act described in subsection (a)(2) 
or, if such failure occurs before the discharge, an act in violation of 
section 362(a) of this title.
    ``(j)(1) A creditor may not charge a debtor or a debtor's account 
for attorney's fees or costs related to work performed in connection 
with a case under this title except to the extent that such fees are 
reasonable under the standards of section 330(a) of this title for 
actual, necessary services rendered, approved by the court, and 
consistent with applicable contracts and nonbankruptcy law.
    ``(2) A charge made in violation of paragraph (1) shall be 
considered to be an act described in subsection (a)(2) or, if such 
charge occurs before the discharge, of section 362(a) of this title.
    ``(k) An individual injured by any willful violation of discharge 
in a case under this title shall recover 3 times actual damages but not 
less than $5,000, plus costs and attorneys' fees, and, in appropriate 
circumstances, may recover punitive damages.''.
            (4) Automatic stay.--Section 362(h) of title 11, United 
        States Code, is amended--
                    (A) by striking ``actual damages, including'' and 
                inserting ``3 times actual damages (but not less than 
                $5,000)'',
                    (B) by inserting ``(1)'' after ``(h)'', and
                    (C) by adding at the end the following:
    ``(2) If the court finds that the position of any creditor filing a 
motion for relief from a stay under this section is not substantially 
justified, the court shall award damages in the amount of 3 times the 
debtor's actual damages (but not less than $5,000) plus costs and 
attorneys' fees.''.
            (5) Eligibility for relief.--Section 109 of title 11, 
        United States Code, is amended by adding at the end the 
        following:
    ``(h) If a creditor files a motion to dismiss a case on the grounds 
that the debtor may not be a debtor under the chapter under which the 
case is pending and if such motion is denied or withdrawn, the court 
shall award the debtor a reasonable attorney's fee and costs. If the 
court finds that the position of any party filing a motion under this 
section is not substantially justified, the court shall award to the 
debtor damages in the amount of 3 times the debtor's actual damages 
incurred in opposing such motion (but not less than $5,000) and, in 
appropriate circumstances, may award punitive damages.''.
    (b) Dismissal.--Section 707 of title 11, United States Code, is 
amended by adding at the end the following:
    ``(c) If a creditor files a motion to dismiss a case under this 
section and such motion is denied or withdrawn, the court shall award 
the debtor a reasonable attorney's fee and costs. If the court finds 
that the position of any party filing a motion under this section is 
not substantially justified, the court shall award to the debtor 
damages in the amount of 3 times the debtor's actual damages (but not 
less than $5,000) and may, in appropriate circumstances, award punitive 
damages.''.
    (c) Prohibit Reaffirmations and Threats of Reposession Against 
Debtors Who Are Current in Their Payments.--
            (1) Effect of discharge.--Section 524 of title 11, United 
        States Code, is amended--
                    (A) in subsection (a)--
                            (i) in paragraph (2) by striking ``and'' at 
                        the end,
                            (ii) in paragraph (3) by striking the 
                        period at the end and inserting ``; and'', and
                            (iii) by adding at the end the following:
            ``(4) operates as an injunction against any act to enforce 
        against property of the debtor any lien to the extent that lien 
        secures any such debt, or to accelerate any such debt, based 
        solely upon the commencement of a case under this title, the 
        insolvency or financial condition of the debtor, or on 
        appointment of or taking possession by a trustee in a case 
        under this title, notwithstanding any provision in an 
        agreement, transfer instrument, or applicable law, whether or 
        not discharge of such debt is waived.'',
                    (B) in subsection (c) by striking ``is 
                enforceable'' the first place it appears and all that 
                follows through the period at the end, and inserting 
                ``is not enforceable, whether or not discharge of such 
                debt is waived.'', and
                    (C) by striking subsection (d).
            (2) Redemption.--Section 722 of title 11, United States 
        Code, is amended--
                    (A) by--
                            (i) striking ``tangible'' and all that 
                        follows through ``use'', and inserting 
                        ``property, other than real property subject to 
                        a security interest'', and
                            (ii) by striking ``dischargeable 
                        consumer'',
                    (B) by inserting ``(a)'' after ``Sec. 722'', and
                    (C) by adding at the end the following:
    ``(b) The debtor may pay the amount necessary to redeem the 
property under subsection (a) of this section in installments over such 
period, and on such terms, as the court may order.''.

SEC. 5. IMPROVE DEBTORS' UNDERSTANDING OF BANKRUPTCY OPTIONS AND 
              ALTERNATIVES.

    Section 521 of title 11, United States Code, is amended by adding 
at the end the following:
            ``(6) With the petition for relief, an individual or joint 
        debtor filing for relief under chapter 7 or chapter 13 shall 
        file a statement acknowledging receipt of an explanation on an 
        Official Form promulgated by the Judicial Conference of the 
        United States of the relief available under both chapters, and 
        of the relief which is provided by private credit counseling 
        agencies. Such an explanation shall also include detailed 
        information regarding the sources of funding for private credit 
        counseling agencies.''.

SEC. 6. INCREASE INCENTIVES FOR VOLUNTARY REPAYMENT PLANS.

    (a) Amendment to Fair Credit Reporting Act.--Section 605(a)(1) of 
the Fair Credit Reporting Act (15 U.S.C. 1681c(a)(1)) is amended to 
read as follows:
    ``(1) Cases under--
            ``(A) chapter 7 or 11 of title 11 of the United States Code 
        that, from the date of entry of the order for relief antedate 
        the report by more than 10 years;
            ``(B) chapter 12 or 13 of title 11 of the United States 
        Code in which a discharge has been entered, that, from the date 
        of entry of the order for relief antedate the report by more 
        than 5 years;
            ``(C) chapter 12 or 13 of title 11 of the United States 
        Code in which a discharge has not been entered, that, from the 
        date of entry of the order for relief antedate the report by 
        more than 10 years; and
            ``(D) when information can no longer be reported based on 
        subparagraph (B), no consumer reporting agency may make any 
        consumer report containing any of the information provided for 
        under paragraphs (1) through (6) which antedates the order for 
        relief in the case covered by subparagraph (B).''.
    (b) Effective Implementation of Chapter 13 Plans.--Section 1325 of 
title 11, United States Code, is amended by adding at the end the 
following:
    ``(d) A court may not require as a condition of confirmation under 
subsection (a)(3), payments to holders of allowed unsecured claims that 
exceed the greater of the amount required under subsection (a)(4) or 
the amount required under subsection (b).''.
    (c) Classification of Claims in Chapter 13.--Section 1322(b)(1) of 
title 11, United States Code, is amended to read as follows:
            ``(1) designate a class or classes of unsecured claims, as 
        provided in section 1122 of this title, but may not 
        discriminate unfairly against any class so designated; however, 
        such plan may designate different treatment for claims for a 
        debt of the debtor if--
                    ``(A) an individual is liable on such debt with the 
                debtor; or
                    ``(B) such debt is of a kind excepted from 
                discharge under section 1328(a) of this title;''.
    (d) 5-Year Chapter 13 Plans.--Section 1322(d) is amended to read as 
follows:
    ``(d) The plan may not provide for payments over a period that is 
longer than 3 years, unless the debtor proposes a longer period, but 
the court may not approve a period that is longer than 5 years.''.
    (e) Valuation of Secured Claim at Confirmation.--Section 1327(a) of 
title 11, United States Code, is amended by adding at the end the 
following:
``If a plan proposes to value property to determine a creditor's 
secured claim pursuant to section 506(a), and the creditor receives 
notice of proposed valuation and confirmation hearing, such value shall 
be established by the confirmed plan, whether or not the holder of the 
claim has filed a proof of claim. If the plan does not so provide, any 
party may obtain a determination of the amount of an allowed secured 
claim, either before or after the confirmation, whether or not the 
holder of the claim has filed a proof of claim.''.
    (f) Protecting Chapter 13 Debtor's Property During Case.--Section 
1306(c) of title 11, United States Code, is amended by adding at the 
end the following:
    ``(c) During the pendency of a chapter 13 case, section 362 shall 
protect property of the estate which has revested in the debtor to the 
same extent as it protects other property of the estate.''.
    (g) Incentives for Consensual Modification of Mortgages.--Section 
1322 of title 11, United States Code, is amended by adding at the end 
the following:
    ``(f) Notwithstanding subsection (b)(2) and applicable 
nonbankruptcy law, the rights of a holder of a secured claim may be 
modified with the consent of the holder of the claim by capitalizing 
the amount of any default, and amortizing any balance over an agreed 
term not less than the existing term of the loan, at an interest rate 
equivalent to or below the interest rate in effect on that claim at the 
time of modification. If a modification agreement is filed with the 
court at the time it is made, relief from the automatic stay shall 
thereafter be granted pursuant to section 362(d)(1) of this title upon 
motion, if the debtor is more than 60 days delinquent pursuant to the 
agreement at the time of the hearing on the motion.''.

SEC. 7. PROVIDE FAIR PROPERTY EXEMPTIONS AND PREVENT HIGH-ROLLERS FROM 
              ABUSING THE SYSTEM.

    (a) Permit Effective Use of Exemptions.--Section 522 of title 11, 
United States Code, is amended by adding at the end the following:
    ``(n) If, in the 1-year period ending on the date of the filing of 
the petition and while the debtor was insolvent, the debtor makes 
property exempt under subsection (b) by converting property to a form 
of property that is exempt in an unlimited amount, such property shall 
not be exempt under this section to the extent that the value of the 
debtor's interest in the property that is converted exceeds $100,000. 
Such conversion shall not otherwise be a basis for denying an exemption 
and shall not be the basis for denying the debtor other relief under 
this title.''.
    (b) Establish a Modest Floor for Exemptions.--Section 522(b)(1) of 
title 11, United States Code, is amended by striking ``unless the State 
law that is applicable to the debtor under paragraph (2)(A) 
specifically does not so authorize''.

SEC. 8. PREVENT ABUSE OF BANKRUPTCY SYSTEM BY DEBTORS WHO CAN AFFORD TO 
              PAY THEIR DEBTS.

    (a) Dismissal.--Section 707(b) of title 11, United States Code, is 
amended--
            (1) by striking ``substantial'',
            (2) by inserting ``(1)'' after ``(b)'', and
            (3) by adding at the end the following:
    ``(2) A case shall be considered to be an abuse of the provisions 
of this chapter if, after providing a reasonable standard of living for 
the debtor and the debtor's dependents that is not excessive, including 
payments on secured debts, nondischargeable debts, priority debts, and 
arrearages on all such debts, the debtor is able to pay the debtor's 
unsecured nonpriority debts as they come due or to pay them in full 
over a 36-month chapter 13 plan, and the court after consideration of 
all the circumstances finds the case to be an abuse of this chapter.
    ``(3) The trustee shall examine the income, expenses and 
circumstances of each debtor whose income exceeds the income set forth 
in paragraph (4) and refer to the United States trustee any case in 
which the debtor is a debtor of the kind described in paragraph (2). 
The United States trustee, in the discretion of the United States 
trustee, may bring a motion under this section.
    ``(4) Notwithstanding any other provision of this subsection, a 
case shall not be considered to be an abuse of the provisions of this 
chapter if the debtor's household income does not exceed $60,000, 
adjusted upward by $5,000 for each household member exceeding 4.
    ``(5) Notwithstanding subsection (b)(1), a creditor may present 
facts pertinent to a finding of abuse to the trustee at the meeting of 
creditors held pursuant to section 341(a) of this title.''.
    (b) Conforming Amendment.--Section 104(b)(1) of title 11, United 
States Code, is amended by inserting ``707(b),'' after 
``523(a)(2)(C)''.

SEC. 9. PREVENT ABUSIVE BANKRUPTCY FILINGS.

    (a) Prevent Abuse of Bankruptcy Filings.--Section 362 of title 11, 
United States Code, is amended by adding at the end the following:
    ``(i)(1) The stay under subsection (a) shall terminate 30 days 
after the order for relief if--
            ``(A) the debtor has filed 2 prior cases within 6-years 
        period ending on the date of the order for relief; and
            ``(B) the debtor has been a debtor in a prior case that was 
        dismissed in the 180-day period ending on the date of the order 
        for relief.
    ``(2)(A) Paragraph (1) shall not apply if the debtor files and 
serves on all secured creditors and real property lessors a motion for 
continuation of the stay and notice of a hearing on that motion and no 
objection to continuation of the stay is filed by such creditor, such 
lessor, or the trustee.
    ``(B) If the debtor files and serves a motion and notice as 
described in subparagraph (A), and such objection is filed timely, the 
court, after notice and a hearing, shall enter an order terminating the 
stay--
            ``(i) with respect to the objecting creditor or the 
        objecting lessor; or
            ``(ii) if the trustee objects, with respect to such 
        creditors and such lessors as the court may order;
unless the debtor proves that there is a reasonable prospect of a 
feasible plan being completed in the case or in a chapter 7 case, there 
is cause for continuing the stay. In deciding the motion the court may 
consider any appropriate factors, including changes in the debtor's 
circumstances, the debtor's efforts in prior cases, the amount of 
arrears, circumstances of the prior cases, the debtor's honesty with 
the court, and differences in chapter 13 plans between the prior cases 
and the current case.
    ``(j)(1) The filing of a petition under section 301 or 302 of this 
title does not operate as a stay under subsection (a) of this section 
if--
            ``(A) the debtor has filed 3 prior cases in the 6-year 
        period ending on the date of the order for relief; and
            ``(B) the debtor has been a debtor in a prior case that was 
        dismissed in the 180-day period ending on the date of the order 
        for relief.
    ``(2) Notwithstanding paragraph (1), the court may on motion of the 
debtor impose a stay of the same scope as that of subsection (a), or of 
a lesser scope, if the debtor proves that there is a reasonable 
prospect of a feasible plan being completed in the case. In deciding 
the motion the court may consider factors including changes in the 
debtor's circumstances, the debtor's efforts in prior cases, the amount 
of arrears, other circumstances in prior cases, the debtor's honesty 
with the court, and differences in chapter 13 plans between the prior 
cases and the current case.
    ``(k)(1) After notice and a hearing, the court may enter an order 
suspending, for a period not to exceed 6 years, the operation of the 
stay provided under subsection (a) with respect to particular real 
property if the debtor transferred, or was the transferee in a transfer 
of, such property, or an interest in such property, to avoid 
foreclosure or eviction. Such an order shall be effective against any 
debtor having actual notice of the order or, if the order is filed in 
an official public record where the title to the property may be 
searched, constructive notice of the order.
    ``(2) Notwithstanding an order entered under paragraph (1), a 
debtor in a case under this title may request the court to impose a 
stay to protect such property, and the court shall grant such stay if 
the debtor--
            ``(A) has an interest in such property that would be 
        adversely affected by the order entered under such paragraph; 
        and
            ``(B) did not participate in a transfer of such property, 
        or an interest in such property, to avoid foreclosure or 
        eviction.''.
    (b) Policing Nonattorney Petition Preparers.--
            (1) Preparation of petitions.--Section 110(a)(1) of title 
        11, United States Code, is amended by inserting ``under the 
        direct active supervision of that attorney'' after ``or an 
        employee of an attorney''.
            (2) Notice.--Section 110(b)(1) of title 11, United States 
        Code, is amended by adding at the end the following:
``Before accepting any fees from the debtor, the bankruptcy petition 
preparer must provide to the debtor a written Notice to Debtors About 
Bankruptcy Petition Preparers, an official form promulgated by the 
Judicial Conference of the United States. Such notice shall inform the 
debtor in simple language that bankruptcy petition preparers are not 
attorneys and cannot practice law or give legal advice. The notice 
shall contain a description of examples of legal advice which 
bankruptcy petition preparers are not authorized to give. A court may 
adopt rules or guidelines setting a maximum fee for typing and 
photocopying bankruptcy petitions and schedules which the court finds 
reasonable for a bankruptcy petition preparer to charge. A Notice to 
Debtors must be signed by the debtor and filed along with any document 
for filing.''.
            (3) Limitation on execution of documents.--Section 
        110(e)(1) of title 11, United States Code, is amended by adding 
        at the end the following:
``Nor shall a bankruptcy petition preparer offer a potential bankruptcy 
debtor any legal advice which shall include the following:
            ``(A) advising the debtor whether to file bankruptcy or 
        whether chapter 7, 11, 12 or 13 is more appropriate for the 
        debtor;
            ``(B) advising the debtor whether the debtor's debts will 
        be eliminated or discharged in a bankruptcy case;
            ``(C) advising the debtor whether the debtor will be able 
        to keep the debtor's home, car, or other property after filing 
        a bankruptcy case;
            ``(D) advising the debtor as to the tax consequences of a 
        bankruptcy or the dischargeability of tax claims;
            ``(E) advising the debtor whether the debtor may or should 
        promise to repay or `reaffirm' debts to creditors;
            ``(F) advising the debtor how to characterize the nature of 
        the debtor's interests in property or the debtor's debts; or
            ``(G) advising the debtor about bankruptcy procedures and 
        rights.''.
            (4) Motions.--Section 110(h)(3) of title 11, United States 
        Code, is amended by inserting before the period at the end the 
        following:
``or may move the court for an order to disgorge fees paid to the 
bankruptcy petition preparer for any violation of this subsection or of 
subsection (b), (c), (d), (e), (f), (g), or (i)''.
            (5) Penalty.--Section 110(h) of title 11, United States 
        Code, is amended by adding at the end the following:
    ``(5) A bankruptcy petition preparer shall be fined not more than 
$500 for each violation of paragraph (h)(1).''.

SEC. 10. IMPROVE ACCURACY OF DEBTORS' BANKRUPTCY SCHEDULES.

    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 at the end and 
        inserting ``; or'', and
            (3) by adding at the end the following:
            ``(11) the debtor intentionally omitted property of the 
        estate from the debtor's schedule of assets, such omission was 
        material, and the debtor would not have been entitled to fully 
        exempt such property if it had been timely listed in the 
        schedules.''.

SEC. 11. ENSURE PROPORTIONATE AND FAIR RECOVERIES FOR CREDITORS.

    (a) Restricting Interest on Interest.--Section 1322(e) of title 11, 
United States Code, is amended by inserting ``, except the satisfaction 
of any penalty rate'' before the period at the end.
    (b) Satisfaction of Secured Claims.--Section 1325(a)(5)(B)(i) is 
amended to read as follows:
                    ``(i) the plan provides that the holder of such 
                claim retain the lien securing such claim until such 
                allowed secured claim is paid, at which time the lien 
                is extinguished;''.
    (c) Adequately Compensate Secured Creditors for Deferred 
Payments.--Section 1325(a)(5)(B) of title 11, United States Code, is 
amended by striking clause (ii) and inserting the following:
                    ``(ii) the value of property to be distributed 
                under the plan on account of such claim is not less 
                than the allowed amount of such claim; and
                    ``(iii) the compensation for delay in payments on 
                allowed secured claims made pursuant to clause (ii) 
                shall be the interest rate paid on 6-month United 
                States treasury bill plus 2 percent or the nondefault 
                interest rate set in the claim's underlying contract, 
                whichever rate is less; or''.

SEC. 12. PREVENT WINDFALLS FOR UNDERSECURED CREDITORS.

    (a) Invalidating Hidden Security Interests and Valueless Household 
Liens.--
            (1) Exempt property.--Section 522(f) of title 11, United 
        States Code, is amended by adding at the end the following:
            ``(4) A lien held by a creditor on an interest of the 
        debtor in any item of household furnishings, household goods, 
        wearing apparel, appliances, books, animals, crops, musical 
        instruments, or jewelry held primarily for the personal, 
        family, or household use of the debtor or a dependent of the 
        debtor shall be void unless--
                    ``(A) the holder of the lien files with the court 
                and serves on the debtor, within 30 days after the 
                meeting of creditors or before the hearing on 
                confirmation of a plan, whichever occurs first, a sworn 
                declaration that the purchase price for the particular 
                item that is subject to such lien exceeded $1,500, and
                    ``(B)(i) the debtor does not timely object to such 
                declaration; or
                    ``(ii)(I) the debtor objects to such declaration; 
                and
                    ``(II) the court finds that the purchase price of 
                the item exceeded $1,500 and that such lien is not 
                avoidable under paragraph (f)(1) of this section.''.
            (2) Conforming amendment.--Section 104(b)(1) of title 11, 
        United States Code, is amended by inserting ``522(f),'' after 
        ``522(d)''.
    (b) Eliminate Unenforceable Tax Liens.--
            (1) Tax liens.--Section 522(c)(2)(B) of title 11, United 
        States Code, is amended by inserting ``and which has not been 
        avoided under this section'' before the period at the end.
            (2) Fixing of liens.--Section 522(f)(1) of title 11, United 
        States Code, is amended by adding at the end the following:
                    ``(C) a tax lien, to the extent that under 
                applicable nonbankruptcy law such lien was 
                unenforceable immediately before the order for relief 
                as to property of the debtor.''.
    (c) Treat Rent-To-Own Transactions as Credit Sales.--
            (1) Definitions.--Section 101 of title 11, United States 
        Code, is amended--
                    (A) by inserting after paragraph (8) the following:
            ``(8A) `consumer good' means an item of personal property 
        (excluding a motor vehicle and a motor home) acquired by an 
        individual primarily for a personal, family, or household 
        purpose;''; and
                    (B) by inserting after paragraph (45) the 
                following:
            ``(45A) `rent-to-own contract' means an agreement, in the 
        form of a terminable lease or bailment of a consumer good, 
        between an individual and an entity regularly engaged in the 
        business of making consumer goods available to individuals 
        under which--
                    ``(A) the lessee or bailee--
                            ``(i) has the right of possession and use 
                        of the consumer good; and
                            ``(ii) has the option to renew the 
                        agreement periodically by making payments 
                        specified in the agreement; and
                    ``(B) the lessor or bailor agrees, orally or in 
                writing, to transfer ownership of the consumer good to 
                the lessee or bailee upon the fulfillment of all 
                obligations of the lessee or bailee for the transfer 
                under the agreement;''.
            (2) Cases under chapter 7.--(A) Subchapter II of chapter 7 
        of title 11, United States Code, is amended by adding at the 
        end the following:
``Sec. 729. Rent-to-own contracts
    ``In a proceeding under this chapter in which the debtor is in 
possession of a consumer good under a rent-to-own contract, the debtor 
and the lessor or bailor shall be accorded the same rights and 
obligations with respect to the consumer good as such lessor or bailor 
would be accorded if the rent-to-own contract had been a purchase 
contract.''.
            (B) The table of sections of chapter 7 of title 11, United 
        States Code, is amended by adding at the end of the items 
        relating to subchapter II the following:

``729. Rent-to-own contracts.''.
            (3) Cases under chapter 13.--(A) Subchapter I of chapter 13 
        of title 11, United States Code, is amended by adding at the 
        end the following:
``Sec. 1308. Rent-to-own contracts
    ``In a proceeding under this chapter in which the debtor is in 
possession of a consumer good under a rent-to-own contract, the debtor 
and the lessor or bailor shall be accorded the same rights and 
obligations with respect to the consumer good as such lessor or bailor 
would be accorded if the rent-to-own contract had been a purchase 
contract.''.
            (B) The table of sections of chapter 13 is amended by 
        adding at the end of the items relating to subchapter I the 
        following:

``1308. Rent-to-own contracts.''.
    (d) Valuation of Property.--The last sentence of section 506(a) of 
title 11, United States Code, is amended to read as follows:
``Such value shall be the liquidation value of the property which shall 
be not more than the cash wholesale value of the property and shall be 
determined in conjunction with any hearing on a plan or after notice 
and a hearing pursuant to any other provision of this title when they 
are paid in full.''.
    (e) Require Proof of Claim.--Section 1327(c) of title 11 is amended 
to read as follows:
    ``(c) Except as otherwise provided in the plan or in the order 
confirming the plan, the property of the estate and the debtor, whether 
or not revested in the debtor under subsection (b), is free and clear 
of--
            ``(1) any claim or interest of any creditor provided for by 
        the plan; and
            ``(2) any lien held by a holder of a secured claim with 
        notice of the case that has not filed a timely proof of claim 
        and served that proof of claim on the debtor and the debtor's 
        attorney, except that a lien which has been duly perfected 
        prior to the petition date and is secured by a claim provided 
        for under section 1322(b)(5) may be so affected only to the 
        extent the plan proposes to cure any default.''.
    (f) Permit Chapter 13 Debtors To Save Homes Encumbered By 
Undersecured Mortgages.--Section 1322(b) of title 11, United States 
Code, is amended--
            (1) by inserting ``purchase money'' after ``only by a'', 
        and
            (2) by adding at the end the following:
            ``(11) provide for payment of allowed secured claims 
        consistent with section 1325(a)(5) of this title, over a period 
        exceeding the period permitted under subsection (d).''.

SEC. 13. REINFORCE THE FRESH START.

    (a) Restoration of an Effective Discharge.--Section 523(a) of title 
11, United States Code, is amended--
            (1) by striking paragraph (14),
            (2) in paragraph (17)--
                    (A) by striking ``by a court'' and inserting ``on a 
                prisoner by any court'',
                    (B) by striking ``section 1915(b) or (f)'' and 
                inserting ``subsection (b) or (f)(2) of section 1915, 
                and
                    (C) by inserting ``(or a similar non-Federal law)'' 
                after ``title 28'' each place it appears, and
            (3) by redesignating paragraphs (15) through (18) as 
        paragraphs (14) through (17), respectively.
    (b) Protection of Retirement Funds in Bankruptcy.--Section 522 of 
title 11, United States Code, is amended--
            (1) in subsection (b)(2) by adding at the end the 
        following:
                    ``(C) retirement funds to the extent exempt from 
                taxation under section 401, 403, 408, 414, 457, or 
                501(a) of the Internal Revenue Code of 1986,'', and
            (2) in subsection (d) by adding at the end the following:
            ``(12) retirement funds to the extent exempt from taxation 
        under 401, 403, 408, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.''.
    (c) Effective Protection for Utility Service in the Wake of 
Deregulation.--Section 366 of title 11, United States Code, is amended 
by adding at the end the following:
    ``(c) For the purposes of this section, the term `utility' includes 
any provider of gas, electric, telephone, telecommunication, cable 
television, satellite communication, water, or sewer service, whether 
or not such service is a regulated monopoly.''.

SEC. 14. CLARIFYING AMENDMENTS.

    (a) Clarifying the Anti-Discrimination Provisions of the Code.--
Section 525 of title 11, United States Code, is amended--
            (1) in subsection (a) by striking ``other similar'', and
            (2) by adding at the end the following:
    ``(d) For purposes of this section, `grant' includes any right, 
benefit or privilege.''.
    (b) Clarifying the Meaning of ``Liquidated''.--Section 101 of title 
11, United States Code, is amended by inserting after paragraph (37) 
the following:
            ``(37A) `liquidated' means readily determinable in a fixed 
        amount and not subject to bona fide dispute;''.
    (c) Clarifying the Meaning of ``Household Goods''.--Section 101 of 
title 11, United States Code, is amended by inserting after paragraph 
(27) the following:
            ``(27A) `household goods' includes tangible personal 
        property normally found in or around a home, but does not 
        include motorized vehicles used for transportation purposes;''.
    (d) Treatment of Leases in Chapter 7 Cases.--Section 365 of title 
11, United States Code, is amended by adding at the end the following:
    ``(p) If a chapter 7 trustee does not assume a lease of personal 
property or of residential property under which an individual debtor is 
the lessee, the lease shall be deemed abandoned to the debtor. Except 
to the extent provided by section 525, the effect of the abandonment 
shall be the following:
            ``(1) The debtor shall have the right to continued 
        possession of the leased property, subject to any grounds for 
        termination of the lease under applicable nonbankruptcy law, 
        including nonpayment of prepetition rent, other than a 
        provision in the lease purporting to modify, condition, or 
        terminate the contract because of bankruptcy, insolvency, the 
        debtor's financial condition, the commencement of a case or the 
        grant of a discharge under this title, or the appointment of a 
        receiver or custodian under nonbankruptcy law.
            ``(2) The lessor may be granted relief from the stay of 
        section 362(a) if the lessor has grounds for termination of the 
        lease as provided in paragraph (1).
            ``(3) Any right of the debtor under nonbankruptcy to cure a 
        default on the lease or to renew the lease shall not be 
        affected by the filing of the case under this title.
            ``(4) The estate shall be relieved of any liability for 
        breach of the lease occurring after abandonment.''.
    (e) Clarifying the Ability To Avoid Certain Liens.--Section 
522(f)(2)(C) is amended by inserting ``to the extent such judgment is a 
lien on property subject to the mortgage'' before the period at the 
end.
    (f) Clarifying Issue Preclusion and Vicarious Liability for 
Nondischargeability Cases.--Section 523 of title 11, United States 
Code, is amended by adding at the end the following:
    ``(f) The issue preclusive effect in a proceeding arising under 
this section of a prior judgment shall be determined according to 
Federal law. A prior default judgment shall not have issue-preclusive 
effect under this section.
    ``(g) A debt shall not be nondischargeable under this section based 
upon the conduct of an individual other than the debtor.''.
    (h) Lien Avoidance.--Section 522(f)(1) of title 11, United States 
Code, is amended by striking ``the fixing of''.
    (i) Chapter 13 Plan Confirmation Cures Defaults.--Section 362(a)(1) 
of title 11, United States Code, is amended by inserting ``, 
rescheduling,'' after ``commencement''.
    (j) Attorneys Fees Review and Approval.--Section 330(a) of title 
11, United States Code, is amended by inserting ``, or to the debtor's 
attorney'' after ``1103''.
    (k) Retirement Loan Repayment.--Section 1325(b)(2) of title 11, 
United States Code, is amended by striking ``For'' and all that follows 
through ``expended--'', and inserting the following: ``For purposes of 
this subsection, `disposable income' means income which is received by 
the debtor (not including income that is withheld from the debtor's 
wages for the repayment of loans from Internal Revenue Code-qualified 
retirement accounts) and which is not reasonably necessary to be 
expended--''.
    (l) Procedure for Claiming Exemptions.--The last sentence of 
section 522(l) is amended to read as follows:
``The debtor's entire interest in each item of property claimed as 
exempt on such list is exempt unless--
            ``(1) the list specifies that there is nonexempt equity in 
        the property; or
            ``(2) a party in interest objects.''.
    (m) Exemption Rights.--Section 522(b)(2) of title 11, United States 
Code, is amended by adding at the end the following:
                    ``(C) To the extent that nonbankruptcy law 
                providing for an exemption requires that such exemption 
                is available only if there is a pending execution on 
                property, such exemption may be claimed under this 
                section regardless of whether there is a money judgment 
                against the debtor or whether a money judgment is being 
                enforced by execution sale or any other procedure.''.

SEC. 15. APPLICABILITY OF AMENDMENTS.

    The amendments made by this Act shall not apply with respect to 
cases commenced under title 11 of the United States Code before the 
date of the enactment of this Act.
                                 <all>