[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3801 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3801

 To amend title 11 of the United States Code to modify the application 
              of chapter 7 relating to liquidation cases.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 6, 1998

 Mr. Andrews introduced the following bill; which was referred to the 
                       Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To amend title 11 of the United States Code to modify the application 
              of chapter 7 relating to liquidation cases.

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

SECTION 1. NEEDS-BASED BANKRUPTCY.

    Title 11 of the United States Code is amended--
            (1) in section 101--
                    (A) by inserting after paragraph (10) the 
                following:
            ``(10A) `current monthly total income' means the average 
        monthly income derived from all sources that the debtor, or in 
        a joint case the debtor and the debtor's spouse, receive 
        without regard to whether such income is taxable income, in the 
        180-day period ending on the date the case is commenced, and 
        includes any amount paid by anyone other than the debtor, or in 
        a joint case the debtor and the debtor's spouse, on a regular 
        basis for the household expenses of the debtor or the debtor's 
        dependents, and in a joint case the dependents of the debtor's 
        spouse;''; and
                    (B) by inserting after paragraph (52) the 
                following:
            ``(52A) `State median family income' means the State median 
        family income reported by the Bureau of the Census as of 
        January 1 following the then most recently concluded calendar 
        year for the State in which the debtor's domicile has been 
        located for the 180 days immediately preceding the date of the 
        filing of the petition, or for a longer portion of such 180-day 
        period than in any other place.
            ``(52B) `State median household income for 1 earner' means 
        the State median household for 1 earner income reported by the 
        Bureau of the Census as of January 1 following the then most 
        recently concluded calendar year for the State in which the 
        debtor's domicile has been located for the 180 days immediately 
        preceding the date of the filing of the petition, or for a 
        longer portion of such 180-day period than in any other 
        place.'';
            (2) in section 104(b)(1) by striking ``109(e)'' and 
        inserting ``subsections (b), (e), and (h) of section 109'';
            (3) in section 109(b)--
                    (A) in paragraph (2) by striking ``or'' at the end;
                    (B) in paragraph (3) by striking the period and 
                inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(4) an individual, or in a joint case an individual and 
        such individual's spouse, who have income available to pay 
        creditors as determined under subsection (h) and whose 
        additional expenses established under subsection (h)(4) are 
        less than 10 percent of current monthly total income.'';
            (4) by adding at the end of section 109 the following:
    ``(h)(1) An individual, or in a joint case an individual and such 
individual's spouse, have income available to pay creditors if the 
individual, or in a joint case the individual and the individual's 
spouse combined, as of the date of the order for relief, have--
            ``(A) current monthly total income exceeding 75 percent of 
        the State median family income for a family of equal size or, 
        in the case of a household of 1 individual, or exceeding 75 
        percent of the State median household income for 1 earner, as 
        of the date of the order for relief;
            ``(B) projected monthly net income exceeding $50; and
            ``(C) projected monthly net income sufficient to repay 20 
        percent or more of unsecured nonpriority claims during a 5-year 
        repayment plan.
    ``(2) Projected monthly net income shall be sufficient under 
paragraph (1)(C) if, when multiplied by 60 months, such income is not 
less than 20 percent of the total amount scheduled as payable to 
unsecured nonpriority creditors.
    ``(3) For purposes of this subsection, `projected monthly net 
income' means current monthly total income less the sum of--
            ``(A) the expense allowances under the applicable National 
        Standards, Local Standards and Other Necessary Expenses 
        allowance (excluding payments for debts) for the debtor, the 
        debtor's dependents, and in a joint case the debtor's spouse 
        the dependents of the debtor's spouse, in the area in which the 
        debtor resides as determined under the Internal Revenue Service 
        financial analysis for expenses, as in effect on the date of 
        the order for relief;
            ``(B) the average monthly payment on account of secured 
        creditors, which shall be calculated as the total of all 
        amounts scheduled as contractually payable to secured creditors 
        in each month of the 60 months following the date of the 
        petition by the debtor, or in a joint case by the debtor and 
        the debtor's spouse combined, and dividing that total by 60 
        months; and
            ``(C) the average monthly payment on account of priority 
        creditors, which shall be calculated as the total amount of 
        debts entitled to priority, reasonably estimated by the debtor 
        as of the date of the petition, and dividing that total by 60 
        months.
    ``(4) If the debtor establishes extraordinary circumstances that 
require allowance for additional expenses, projected monthly net income 
for purposes of this subsection shall be the amount calculated under 
paragraph (3) less such additional expenses as such extraordinary 
circumstances require.
            ``(A) This paragraph shall not apply unless the debtor 
        files with the petition--
                    ``(i) a written statement that this paragraph 
                applies in determining the debtor's eligibility for 
                relief under chapter 7 of this title;
                    ``(ii) a list itemizing each additional expense 
                which exceeds the expenses allowances provided under 
                paragraph (3)(A);
                    ``(iii) a detailed description of the extraordinary 
                circumstances that explains why each of the additional 
                expenses itemized under subparagraph (II) requires 
                allowance; and
                    ``(iv) a sworn statement signed by the debtor and, 
                if the debtor is represented by counsel, by the 
                debtor's attorney, that the information required under 
                this paragraph is true and correct.
            ``(B)(i) Until the trustee or any party in interest objects 
        to the debtor's statement that this paragraph applies and the 
        court rejects or modifies the debtor's statement, the projected 
        monthly net income in the debtor's statement shall be the 
        projected monthly net income for the purposes of this 
        subsection.
            ``(ii) If an objection is filed with the court not later 
        than 60 days after the debtor has provided all the information 
        required under subsections (a)(1) and (c)(1)(A) of section 521 
        of this title, the court, after notice and hearing, shall 
        determine whether such extraordinary circumstances exist and 
        shall establish the amount of the additional expense allowance, 
        if any. The burden of disproving such extraordinary 
        circumstances shall be on the objector.
    ``(5) If a party in interest files a motion, or makes an objection, 
to cause the dismissal or conversion of a case under chapter 7 on the 
ground that an individual may not be a debtor, or in a joint case that 
an individual and such individual's spouse may not be debtors, under 
such chapter and fails to prevail on the motion or the objection, such 
party shall pay to the debtor or debtors, a reasonable attorney's fee 
and costs incurred by the debtor or debtors in opposing the motion or 
the objection.'';
            (5) in section 704--
                    (A) by striking ``and'' at the end of paragraph 
                (8);
                    (B) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(10) with respect to an individual debtor, review all 
        materials provided by the debtor under subsections (a)(1) and 
        (c)(1) of section 521, investigate and verify the debtor's 
        projected monthly net income and not later than 30 days after 
        the order for relief under this chapter, file a report with the 
        court as to whether the debtor may be a debtor under this 
        chapter.'';
            (6) in section 1302(b)--
                    (A) in paragraph (1)--
                            (i) by striking ``704(7) and'' and 
                        inserting ``704(7),''; and
                            (ii) by inserting ``and 704(10)'' after 
                        ``704(9)''; and
                    (B) in paragraph (4) by striking ``and'' at the 
                end;
                    (C) in paragraph (5) by striking the period and 
                inserting a semicolon; and
                    (D) by adding at the end the following:
            ``(6) investigate and verify the debtor's monthly net 
        income and other information provided by the debtor pursuant to 
        sections 521 and 1322, and pursuant to section 111 if 
        applicable; and
            ``(7) file annual reports with the court, with copies to 
        holders of claims under the plan, as to whether a modification 
        of the amount paid creditors under the plan is appropriate 
        because of changes in the debtor's monthly net income.''.

SEC. 2. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date of 
the enactment of this Act.
    (b) Application of Amendments.--The amendments made by this Act 
shall apply only with respect to cases commenced under title 11 of the 
United States Code on or after the date of the enactment of this Act.
                                 <all>