II 111th CONGRESS 1st Session S. 257 IN THE SENATE OF THE UNITED STATES January 15, 2009 Mr. Whitehouse (for himself and Mr. Durbin) 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, to disallow certain claims resulting from high cost credit debts, and for other purposes.

1.

Short title

This Act may be cited as the Consumer Credit Fairness Act.

2.

Effects of high cost credit on bankruptcy proceedings

(a)

Definitions

Section 101 of title 11, United States Code, is amended— (1)by redesignating paragraph (27B) as paragraph (27C); and (2)by inserting after paragraph (27A) the following: (27B)The term high cost consumer credit transaction means an extension of credit by a creditor (as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602(f))), resulting in a consumer debt that has an applicable annual percentage rate (as determined in accordance with section 107(a) of the Truth in Lending Act (15 U.S.C. 1606(a)), and including costs and fees incurred in connection with the extension of such credit) that exceeds, at any time while the credit is outstanding, the lesser of— (A)the sum of 15 percent and the yield on United States Treasury securities having a 30-year period of maturity; or (B)36 percent. . (b)

Disallowance of claims

Section 502 of title 11, United States Code, is amended by adding at the end the following: (l)Notwithstanding subsections (a) and (b) of this section, the court shall disallow any claim arising from a high cost consumer credit transaction for the purpose of distribution under this title. .

3.

Exclusion

Section 707(b) of title 11, United States Code, is amended by adding at the end the following: (8)Paragraph (2) shall not apply in the case of a debtor who has any debts arising from a high cost consumer credit transaction. .