[Congressional Record Volume 144, Number 74 (Wednesday, June 10, 1998)]
[House]
[Pages H4343-H4402]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          PERSONAL EXPLANATION

  Mr. GILMAN. Mr. Speaker, During Rollcall Number 216 I was unavoidably 
detained and missed the vote. If I had been present I would have voted 
``aye.''
  The SPEAKER pro tempore. The gentleman from Colorado (Mr. McInnis) is 
recognized for 1 hour.
  Mr. McINNIS. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), 
pending which I yield myself such time as I may consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.
  Mr. Speaker, House Resolution 462 is a structured rule providing for 
consideration of H.R. 3150, the Bankruptcy Reform Act of 1998, a bill 
that will improve bankruptcy practices and restore personal 
responsibility and integrity to the bankruptcy system.
  House Resolution 462 provides for 1 hour of general debate, equally 
divided between the chairman and ranking member of the Committee on the 
Judiciary. The rule also waives section 303(a) of the Congressional 
Budget Act against consideration of the bill.
  Mr. Speaker, the rule provides that the amendment in the nature of a 
substitute recommended by the Committee on the Judiciary now printed in 
the bill be considered as an original bill for the purpose of 
amendment.
  House Resolution 462 provides that the committee amendment in the 
nature of a substitute shall be considered by title and that each title 
shall be considered as read. The rule also waives all points of order 
against the committee amendment in the nature of a substitute. The rule 
provides that no amendment to the committee amendment in the nature of 
a substitute shall be in order except those printed in the Committee on 
Rules report.
  Each amendment may only be offered in the order printed in the 
report, may be offered only by a Member designated in the report, shall 
be considered as read, shall be debatable for the time specified in the 
report, equally divided and controlled by the proponent and an 
opponent, shall not be subject to amendment.
  The rules also waives all points of order against amendments printed 
in the report.
  This rule also allows the Chairman of the Committee of the Whole to 
postpone recorded votes and to reduce to 5 minutes the voting time 
after the first of a series of votes, provided that the first vote is 
not less than 15 minutes.
  This provision will provide a more definite voting schedule and will 
help guarantee the timely completion of this important legislation. 
House Resolution 462 also provides for one motion to recommit with or 
without instructions, as is the right of the minority.
  Mr. Speaker, we face a bankruptcy crisis in America today in which 
the needs of the debtor and the rights of the creditor are no longer in 
any kind of equilibrium. The balance between the debtor and the 
creditor has been lost and reform is clearly necessary. Basically we 
are asking that people assume personal responsibility, that they pay 
their bills when their bills are due, that they not give their word 
when they do not intend to keep their word.
  We need to reestablish and preserve the original balance of the 
bankruptcy code in areas of which it has lost its fairness and 
modernize the sections of the code which have become outdated. H.R. 
3150 achieves these goals.
  When we consider the need for bankruptcy reform, it strikes me that 
we should simply look at some of the more startling statistics. The 
number of bankruptcies has increased more than 400 percent since 1980, 
more than 400 percent since 1980. This year there are expected to be 
more than 1.4 million bankruptcies, more than one bankruptcy in every 
100 American households.
  This extraordinary increase comes during a time of economic 
prosperity, not a period of recession that usually would bring more 
people into the bankruptcy court. Instead the increase is largely due 
to bankruptcies of convenience. Let me repeat that, bankruptcies of 
convenience.
  We have the healthiest economy we have ever faced in the history of 
this country, yet our bankruptcies are exploding. Why? Because it is 
the convenient thing to do. It is the easy street. It is the easy way 
out.
  This increase of bankruptcies of convenience is simply a ploy that is 
used by some people that owe money and

[[Page H4344]]

their bankruptcy attorneys to avoid paying all or most of their debts, 
even though they are financially capable and able to do so.
  Bankruptcy was always intended to be for a person who ran into 
unintended consequences who could not pay their bills to give them a 
new chance on life. Now what we have seen is we have seen that 
overwhelmed by the bankruptcy of convenience. These bankruptcies of 
convenience, initiated, by the way, from abusers of our bankruptcy 
laws, are having a very harmful impact on our Nation's competitiveness. 
The current system is unfair to all people who are fiscally 
responsible, who are penalized in the form of higher prices, credit 
card rates, interest rate increases. In other words, the people who do 
pay their bills have to carry the load for those who do not pay their 
bills.
  To reduce these costs, we must end the widespread abuses of the 
system. This bill is sensitive to the fact that people may lose their 
job, have a medical crisis or they may come upon hard times, real hard 
times, realistic hard times, not artificial hard times. However, what 
we are finding in many cases is that a growing number of people who 
file for bankruptcy relief under Chapter 7 actually have the capability 
to pay at least some of their debts. In fact, a study by Ernst and 
Young showed that 15 percent of the people who filed under Chapter 7 
could have repaid 64 percent of their unsecured debts.
  This bill repairs a system that rewards abuse of the system. In other 
words, the current system rewards one to abuse the system. This bill 
changes that. This bill makes bankruptcy really applicable to those 
people that need it and takes it out of the reach of those people who 
abuse it or use it as convenience.
  At the heart of these reforms is implementation of a needs-based 
mechanism that ensures that those debtors who can afford to repay some 
of their debts simply repay what they can afford to repay. At the same 
time, H.R. 3150 preserves the right of bankruptcy relief for those in 
true financial straits by targeting only those who have the ability to 
repay. Contrary to what we will hear certainly and what I would expect 
today in the floor debate, this bill provides that none of the reforms 
will adversely impact the priority treatment accorded to child support 
claims. That is a critical issue for me. That an important issue for 
me.
  In fact, H.R. 3150 incorporated additional safeguards to enhance the 
existing protections for family support.

                              {time}  1230

  H.R. 3150 represents another example of this Congress's efforts to 
encourage individual responsibility. The Republican Party feels that 
individual responsibility is a basic and fundamental standard that we 
should all accept. The current system promotes fiscal irresponsibility 
and gives people a loophole that encourages mismanagement of individual 
finances. Bankruptcy was designed to serve as a last resort to be 
utilized only in the most desperate circumstances. That is not what is 
happening today. In fact, today we see bankruptcy kind of synonymous 
with the word convenience. We see personal responsibility for some 
reason not politically correct to talk about. With the changes in this 
bill, we will renotify people that they do need to be held accountable 
for their debts that they have accumulated. We will remind them about 
keeping their word. We will remind them to not go out and spend money 
that they do not have. Accept personal responsibility.
  I actually am optimistic that the country is taking a turn, it is 
going back to the fundamentals of this country, basic responsibility, 
strong education, et cetera, et cetera. But any formula you look at for 
the success of this country has to incorporate within its terms 
personal responsibility.
  With regard to the consideration of amendments, the Committee on 
Rules has done its best to accommodate Members who filed amendments 
with the Committee on Rules. We have been more than fair in permitting 
six Democrat amendments, five Republican amendments, and one bipartisan 
amendment. We faced numerous duplicative amendments in the Committee on 
Rules and we did our best in the Committee on Rules to allow a wide 
variance of amendments on a number of key issues. In reviewing the 
amendments provided to the Committee on Rules, we also noted that there 
are those Members who simply do not wish to see any changes in the 
bankruptcy laws. We have some Members that want this to continue to be 
a tool of convenience. We have some Members who for some reason have 
put personal responsibility aside and use this charade of the current 
bankruptcy system as the policy that ought to be in place.
  This rule is a fair rule, Mr. Speaker, and I urge all of my 
colleagues to support it so that we may proceed with general debate and 
consideration of amendments and the merits of this important bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I thank the gentleman from Colorado for 
yielding me the customary 30 minutes, and I yield myself such time as I 
may consume.
  (Ms. SLAUGHTER asked and was given permission to revise and extend 
her remarks.)
  Ms. SLAUGHTER. Mr. Speaker, I rise in strong opposition to this rule. 
I oppose the hasty process this rule embraces, I oppose the breach of 
faith that this rule embodies, and I oppose the damage to America's 
children this rule refuses to address.
  Last year, more than 1 million American families went through 
bankruptcy, leaving millions of creditors without full payment for 
their goods and services. Is the record number of bankruptcies a 
serious problem? Yes. Is this bill a real answer to the problem? No one 
knows. Some claim that it will result in fewer bankruptcies, but others 
believe it is a giveaway to the very creditors whose profligate lending 
may be the chief cause of increased bankruptcies.
  Article I, Section 8 of the United States Constitution requires the 
Congress ``to establish uniform Laws on the subject of Bankruptcies 
throughout the United States.'' Beginning in 1792, the Congress has 
taken this responsibility seriously, carefully weighing creditors' 
rights against a new start for the debtor.
  The precedent is that the House crafts bankruptcy legislation 
carefully, and on a bipartisan basis. At yesterday's Committee on Rules 
hearing, we learned that in 1978, the last time that fundamental 
changes to the bankruptcy code were proposed, a National Bankruptcy 
Commission proposed the outline of the changes, the House held 38 days 
of hearings, and the Senate held 24 days of hearings.
  Compare that careful deliberation with this bill's consideration. 
Again we had recommendations from a National Bankruptcy Commission, but 
this bill ignores them, and in major instances includes ideas expressly 
rejected by the Commission. The House held only 4 days of hearings, and 
the Committee on the Judiciary's markup was so rushed that germane 
amendments offered by committee members were not even considered. In 
fact, the gentleman from Illinois (Mr. Hyde), the committee chairman, 
received unanimous consent to report this bill only after he promised 
to recommend that the bill would be considered on the floor under an 
open rule, so that additional amendments could then be debated.
  Unhappily, today's rule is proof that this House's leadership did not 
follow the recommendation of the gentleman from Illinois. The chairman 
of the Committee on Rules explained to us that the gentleman from 
Illinois did not have enough experience as the chairman to realize that 
he could not make a commitment about floor debate. From my personal 
observation, I would say that in his 23 years in the House and 8 years 
in the Illinois House of Representatives, the gentleman from Illinois 
has proved himself a master of procedure. In reality, the gentleman 
from Illinois' failing is his belief that the Committee on Rules, and 
this House's leadership, would respect him enough to honor his 
recommendation as chairman of the Committee on the Judiciary.
  So instead of the open rule, we have this rule that makes in order 
only 12 of the 40 amendments that were submitted to the committee. Why 
this curtailed consideration? Apparently after months of doing nothing 
on the floor of the House, the House leadership decided that only 6 
hours could be spent

[[Page H4345]]

considering landmark legislation affecting the lives of millions of 
families filing for bankruptcy, and millions of creditors, many of them 
small businesses.
  Mr. Speaker, I oppose this rule because it will not allow us to 
consider amendments which might have cured this bill's flaws, and 
allowed a bipartisan House to support it. I am particularly concerned 
about the 125,000 children who are owed child support from a parent who 
declared bankruptcy.
  In its current form, this bill will have a devastating impact on the 
parents and children who are owed child support and alimony. It will 
take us back to the days when the bankruptcy code gave child support 
and alimony no greater priority than a television set or jewelry 
purchased with a credit card.
  Just 4 years ago, I introduced the Spousal Equity in Bankruptcy 
Amendments to give priority to child and spousal support payments in 
bankruptcy proceedings. That legislation became law as part of the 
Bankruptcy Reform Act of 1994. Thanks to those and other child support 
enforcement reforms, child support collections have increased by 68 
percent since 1992. Nevertheless, we have far to go, as America's 
children are still owed $34 billion a year in child support.
  This bill could reverse the progress we have made in recent years. By 
making large amounts of consumer debt nondischargeable in bankruptcy, 
this bill would place money owed on a credit card at the same level as 
alimony and child support obligations. Under this bill, after a debtor 
goes through bankruptcy proceedings, he or she will still have credit 
card and other types of consumer debt left to pay, and those debts will 
compete with child support and alimony for the limited resources of the 
post-bankruptcy debtor.

  Proponents of the bill claim that they have repaired the damage that 
the bill does to child support. However well intentioned, those repairs 
are only cosmetic. They ignore the reality that, after bankruptcy 
proceedings are over, the bankrupt debtor will be left with additional 
credit card and consumer debt. When aggressive credit card collection 
agencies are calling, it will be easier to pay them than the former 
spouse or the powerless child.
  The Committee on Rules was schizophrenic on the child support issue. 
Some in the majority claimed the problem never existed or had been 
fixed by amendments, and yet had heard testimony from a Member of the 
majority that likened the post-bankruptcy situation to a shark joining 
the sardines. That Member argued that without a procedure for enforcing 
the post-bankruptcy priority that the bill claims to establish, credit 
card companies will greatly overpower the competing claims of children 
needing support. Clearly this issue is not resolved.
  The rule does make in order an amendment by the gentleman from 
Florida (Mr. Shaw) on this subject. But early analysis from bankruptcy 
experts shows the Shaw amendment is unworkable for both creditors and 
those claiming child support. It will inevitably cause children who are 
owed child support to lose the payments that they are owed.
  Several of my colleagues and I tried to offer an effective amendment 
to solve the problems that this bill creates for women and children. 
The amendment we sought to offer would have clarified the status of 
child support and alimony. It would have ensured that child support and 
alimony would be paid before unsecured debt. It would have protected 
against abusive reaffirmation agreements that have an adverse effect on 
a debtor's family. It would have prevented new kinds of credit card and 
consumer debt from being made nondischargeable, and thereby competing 
for the debtor's limited post-bankruptcy funds against child support, 
alimony and other priority payments. It would have provided an 
enforcement mechanism for the bill's protections for child support. 
However, we were not allowed to have our amendment on the floor.
  Mr. Speaker, the bill in its current form is opposed by children's 
rights advocates and women's groups, who are concerned about the damage 
it will do to a family in crisis. It is opposed by victim's rights 
groups, such as Mothers Against Drunk Driving, who are concerned about 
the way the bill will endanger settlements owed to victims of crime; it 
is opposed by consumer groups, such as the Consumer Federation of 
America and Consumers Union; and it is opposed by judges and scholars 
such as the National Conference of Bankruptcy Judges, who are concerned 
about the integrity of the bankruptcy process.
  I support efforts to reform our bankruptcy laws to make debtors 
responsible for the debt they incur and indeed agree that something 
must be done. A full floor debate such as that contemplated by the 
chairman and the Committee on the Judiciary would perhaps have 
addressed many of the problems. But the Committee on Rules chose to 
disregard the Committee on the Judiciary's wishes and forbid the 
offering of the primary amendment to cure its most obvious flaw. We 
should not and cannot allow the bill to turn back the clock on the 
progress we have made in the past few years to ensure that women and 
children in crisis receive the support they are owed.
  Mr. Speaker, I urge my colleagues to oppose this rule. America's 
children are too precious for this Congress to put their future at 
risk. We should not allow an artificially imposed time limit to 
preclude a full discussion of the child support question and the other 
important issues raised in the bill.
  By defeating the rule, we will instruct the Committee on the 
Judiciary to reconsider the bill and its unintended consequences, to 
complete its deliberation on all relevant amendments, and then bring 
the bill back to the full House in a perfected form.
  I also notify my colleagues that I will call for a vote to defeat the 
previous question. If the previous question is defeated, I will offer 
an amendment to the rule to allow the Jackson-Lee, Slaughter, Nadler, 
Blumenauer Family Support Protection amendment to be considered by the 
full House. Our Nation's children deserve at least an hour of time on 
the House floor to discuss whether this bill adequately protects their 
interests. If we could be sure of that protection, many of us could 
support this bill.
  Mr. Speaker, a vote for the previous question and this flawed rule 
means that the House is unwilling to spare an hour to make sure our 
children do not suffer for lack of food, clothing and shelter that 
child support provides. Defeat the previous question and defeat the 
rule.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SOLOMON. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Harrisburg, PA (Mr. Gekas), a member of the committee 
and one of the most distinguished and respected Members of this body.
  Mr. GEKAS. Mr. Speaker, I thank the gentleman for recognizing my 
birthplace and for yielding me the time.
  Mr. Speaker, I rise in support of the rule which does allow for ample 
time to debate the most vital issues that face bankruptcy and 
bankruptcy reform.
  I am a witness to the fact that the chairman of the Committee on 
Rules and the Committee on Rules were eminently fair in the composition 
of the rule which is before us here today, because the chairman and the 
Committee on Rules rejected one or two of my own offerings for 
amendments to be made in order. If anything shows balance on the part 
of the chairman and the committee, it is that the author of the bill 
and the chairman of the relevant subcommittee offered amendments which 
the Committee on Rules rejected. One of them, by the way, I thought was 
going to go automatically accepted by the Committee on Rules which I 
crafted in accommodation to what the gentleman from Massachusetts (Mr. 
Frank) and I had agreed on a certain portion of single asset, an arcane 
portion of the bankruptcy bill. But the point is that a rule which 
allows full debate on the most significant issues facing bankruptcy is 
one that will give us full opportunity to vent all sides of those 
issues.
  If the minority will recall, and the gentleman from New York (Mr. 
Nadler) could, I think, substantiate it, in the Committee on Rules, I 
offered to the chairman and the Committee on Rules that we would be 
happy to allot whatever time is necessary for the substitute measure by 
the minority to be placed for debate in the full question of bankruptcy 
reform. So we support the rule and urge everyone to vote ``yes.''

[[Page H4346]]

  In the meantime, the three main issues that I think will be raised 
during the course of the debate are A, B and C which I just want to 
outline and prepare the Members for a full discussion of them. One is 
the gateway system that we have prepared in H.R. 3150 which tests out 
the debtor's ability to repay some of the debt right at the first 
instance at the application being made for bankruptcy, the original 
means-test system that we have in place. That is one contentious issue. 
The second is, that is raised over and over again, almost to bore me at 
least to tears, is the one that it is the credit card and lenders that 
are at fault for this whole mess that we find ourselves in with 
1,400,000 filings in 1997 and more bankruptcies being recorded every 
day even as we speak, into unheard of numbers. That is another one that 
we meet head-on in our discussion, because we are talking about the 
debtor who comes to bankruptcy. We are not talking about how he got 
there. It could be gambling, it could be divorce, it could be a variety 
of things. So the so-called fault of the lenders, which will be one of 
the attacks made on our bill, will be a second important issue. The 
third is one that is almost preposterous in its formation, having to do 
with somehow that our bankruptcy reform bill militates against support 
obligations for the children. That is simply not the case.

                              {time}  1245

  But to make doubly certain of it, we also have amendments that will 
raise the priority of support payments to No. 1 on the list on the 
bankruptcy to supplement the already existing State and Federal 
statutes that guarantee that support payments will have utmost 
priority.
  With that I reiterate, let us support the rule, let us debate the 
amendments as they appear, and then in the final analysis let us 
support a sweeping change in bankruptcy reform dedicated to the 
proposition that personal responsibility has to be returned to our 
society through a change in the bankruptcy laws.
  Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentleman from 
New York (Mr. Nadler).
  (Mr. NADLER asked and was given permission to revise and extend his 
remarks.)
  Mr. NADLER. Mr. Speaker, as the gentlewoman from New York (Ms. 
Slaughter) mentioned, this bill has been rushed to the floor beyond all 
prudence, and unfortunately we have not been permitted most of the 
important amendments. The House leadership decided that the one thing 
this bill did not need was close scrutiny or open debate, so they 
choose not to allow debate in the most important amendments offered by 
the minority.
  The gentleman from Pennsylvania says the Committee on Rules was fair. 
We gave the Committee on Rules, we told them we had 12 priority 
amendments. One of those 12 was made in order. The American people are 
being cheated because they will not get the open debate and open votes 
on issues affecting the finances of millions of American families that 
they deserve.
  Have credit card companies been lending recklessly? The data 
indicates they have. In fact, every American family's mailbox tells the 
same story. How many pre-approved credit card solicitations have my 
colleagues thrown out last week?
  We had an amendment to eliminate the claims of any lender who 
knowingly pushed the debtor over 40 percent of his annual income in 
unsecured debt. That goes on all the time. It undermines the carefully 
made loans of other creditors. Yet these lenders want the taxpayers to 
help them share in the corrections with responsible collectors. That is 
not right, but we will not be allowed to debate that today.
  We have the amendment that would have eliminated the claims for debt 
incurred at ATM machines inside gambling casinos. Trying to lend 
thousand of dollars to gambling addicts in casinos at 18 to 22 percent 
interest is simply immoral. We know it destroys families and causes 
bankruptcies and leads to other responsible lenders not being paid. Yet 
although the amendment had the support of the Republican chairman of 
the subcommittee of appropriations, the gentleman from Virginia (Mr. 
Wolf) who has been a leader on this issue, we will not be allowed to 
debate this amendment today.
  The gentleman from Massachusetts (Mr. Kennedy) had a series of 
amendments to deal with unscrupulous practices by some lenders, but the 
sponsors of this bill, for all their talk of personal responsibility, 
do not want to debate irresponsible lending practices so we will not 
have an opportunity to debate those amendments.
  The gentleman from Massachusetts (Mr. Delahunt) had an amendment to 
protect the hard-earned benefits paid to our veterans, and the Social 
Security benefits of retirees are paid for but we cannot talk about 
that on the floor today.
  We will not get a chance to debate the amendments sponsored by my 
colleague from New York (Ms. Slaughter) and myself along with the 
gentlewoman from Texas (Ms. Jackson-Lee) the gentlewoman from 
Connecticut (Mrs. Kennelly) and the gentleman from Oregon (Mr. 
Blumenauer) to protect child support collections from the terrible 
effects of this bill because the majority is afraid to have these 
issues come before the American people. Instead we will get another 
sham amendment crafted by the promoters of this legislation which will 
again pretend to fix the problem, the same problem they had first 
denied existed, then proclaim to have fixed in committee and will now 
try to fix again. But we will not be able to debate any real solution.
  I did have an amendment made in order which implements changes 
recommended by the National Bankruptcy Conference of the Small Business 
Administration. The bill threatens to force thousands of small or 
medium-sized businesses into liquidation, out of business, bury the 
jobs, because they will be buried under a mountain of paperwork and 
bureaucratic rules and deadlines that will not apply to big business, 
only to small business. No, this bill's special ruse is small business. 
It will cost jobs and destroy the dreams of small business people.
  How much time do we get to debate the future of small business in 
country? Five minutes on each side. That is all the Republicans think 
small businesses deserve before Congress buries the small businesses. 
But do not worry. The next time the majority wants to kill an 
environmental protection law, they will tell us they are doing it to 
save small business. Before we believe them we should remember what 
they did today.
  I regret that we have not been able to work in a more bipartisan 
basis. I was pleased by the progress of negotiations which the staff 
conducted over several weeks which seem to be yielding a reasonable and 
principled compromise. But unfortunately that good work will not see 
the light of day. One day we were told suddenly the negotiations were 
off and everything we had talked about was off the table.
  We are getting yesterday's news, the same wish list from the credit 
card companies. They have spent a bundle lobbying this one. As my 
colleagues know, the New York Times today says $40 million. I am not so 
naive as to think middle-class families on the brink can compete with a 
$40 million lobbying effort by the Nation's biggest banks and credit 
card companies.
  Mr. Speaker, this is no way to rewrite the code. It is simply 
legislative malpractice. I believe this bill is not ready and the 
record is incomplete.
  Mr. Speaker, I know how to count, and I know the majority has the 
votes to pass this embarrassment today. The minority will do what we 
ought to do, point out the weaknesses in the bill and suggest 
corrections. But I am under no illusions about the outcome. All I can 
observe is that this is a pretty shameful way to celebrate the 
centennial of the Bankruptcy Act, and that if, God forbid through some 
foolishness this bill makes it into law, we will hear a year or 2 from 
now the cries of the thousands and thousands of small businesses and 
middle-income and low-income people who will be buried by this bill, 
and then we will have to start undoing the handiwork we do today.
  Mr. McINNIS. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Dooley).
  Mr. DOOLEY of California. Mr. Speaker, I rise in support of this 
rule, and I rise in support of this bill, H.R. 3150.
  Is it a perfect rule? No. But is it a responsible rule? Yes.
  As my colleagues know, it is time for us to have fundamental reform 
of our

[[Page H4347]]

Nation's bankruptcy, and it should be guided by 3 basic principles: 
restoring responsibility, protecting consumers and then sharing 
fairness. H.R. 3150, which preserves a historic fresh start for those 
who truly need it is a solution.
  Our Nation is witnessing an unsustainable soar in personal 
bankruptcies. Bankruptcies have increased by more than 400 percent 
since 1980 with one more million personal bankruptcies filed in 1996. 
Last year alone, despite a booming economy and low unemployment, a 
record 1.3 million people filed for bankruptcy, more than 1 in every 
100 American households.
  The overwhelming majority of Americans who pay their bills on time 
are the ones who are paying the price for this surge in bankruptcy. It 
takes approximately 33 Americans to pay for one bankruptcy, and 
bankruptcy will cost each American household an estimated $400 per year 
in higher prices for goods and services.
  We must restore a sense of responsibility to our bankruptcy system 
and stop it from becoming a first step rather than a last resort. More 
and more people are choosing bankruptcy as a financial planning tool, 
and responsible Americans are the ones who are forced to pick up the 
tab from those who walk away from their debts.
  Mr. Speaker, 3150 would restore personal responsibility and fairness 
to our bankruptcy system. The bill would amend the bankruptcy code and 
employ a needs-based approach where debtors in need get relief but only 
the relief that they need. Anyone earning an amount equal to or above 
the Nation's median income and are able to pay at least 20 percent of 
his or her unsecured debt over the course of 5 years would be forced to 
comply with Chapter 13 which requires a repayment plan rather than 
Chapter 7. H.R. 3150 provides tremendous flexibility, and in turn it 
needs, allows, the court to consider extraordinary circumstances such 
as medical costs or sudden loss of employment.
  Most Americans agree that the time has come for meaningful and fair 
bankruptcy reform. Please join me in supporting this rule and this 
important piece of legislation so that our bankruptcy system can be 
approved for all Americans.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, I speak as someone who had hoped to support 
a bipartisan measure to deal with a problem of increasing bankruptcies 
in America. But I am disappointed in the result of this bill. 
Specifically this bill would undermine the Texas constitutional 
protection for family homesteads. It is disappointing to me that in a 
Republican-led Congress that has paid a lot of lip service to the 
concept of States' rights, this bill would run roughshod over the 
States' rights and the property rights of Texas and 5 other States: 
Florida, Kansas, Oklahoma, Minnesota and South Dakota.
  Mr. Speaker, there can be no more personal property right that a 
State can try to protect than the right of one's own home, and I am 
deeply disappointed that the leadership in this House refused to 
recognize our 6 States' efforts to protect that important property 
right.
  Let me say also, if this bill is about personal responsibility, it 
misses the mark because nowhere in it do I find any effort to ask 
multibillion dollar credit card companies to face their responsibility 
for having increased consumer debt by billions of dollars through 
unsolicited credit card mailings and through unsolicited increases in 
credit card limits.
  I will finish with a personal note. When my mother, my 74-year-old 
mother, died 5 years ago, I went to her one-bedroom apartment in 
Houston to collect her things and found on the kitchen table letters 
from credit card companies on one hand saying, ``You are 2 to 3 months 
late in your payments,'' and on the other hand on the same table found 
those same credit card companies and others saying, ``Congratulations, 
we're increasing your credit card limit by thousands of dollars.'' I 
believe this bill failed in its responsibility to make not only 
American families but also American corporations face the 
responsibility for the serious problem that has been created.
  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  Well, to my colleague from Texas (Mr. Edwards), I used to be a police 
officer, and I never recall ever being asked to respond to a situation 
where somebody claimed they were forced to use their credit card.
  My colleagues know there is personal responsibility. Of course 
people, as we know, when we buy a car we always have people trying to 
sell us another car, but does that let us say, well, I do not need to 
pay for the car I originally bought because somebody else wants to sell 
me an additional car? I mean, it just does not make logical sense.
  Because of the time restriction, let me go on to a couple other 
points, and, Mr. Speaker, I control the floor. To the previous remarks 
made on the amendments submitted, let us talk about the fairness of the 
Committee on Rules. I think there has been a little misdirection here. 
We had 39 amendments, 39 amendments submitted to the Committee on 
Rules. The chairman of the Committee on Rules has said repeatedly he 
wants to make it as fair as possible, but he also has to manage this 
rule. Of the 39 amendments, 11 Republican amendments, 27 Democratic 
amendments, 12 amendments were made in order.
  Now several of the amendments were repetitive. Of the 12 amendments 
that were made in order, 5 of them were Republican, and by the way the 
Republicans control the majority of this committee, and 6 of them by 
the minority of the committee were made in order for the Democrats. In 
other words the Democrats got one more amendment than the Republicans 
did, and then one bipartisan amendment was made as well.
  The other issue that I think is critical is that the gentleman from 
New York stood up, and frankly I question about some of the whining 
because I think this has been a very, very fair approach. His statement 
was that the Democrats had 12 priority amendments and that the 
Republicans only made one in order. I do not know where he was. I 
thought he was in the committee. Physically he was at the committee 
last night, but that is not what occurred in his presence. In his 
presence what occurred is that the Democrats had 7 priority amendments, 
and we made 3 of them in order, 3 of them. And let me add again that 
the Democrats have one more amendment in order on this bill than do the 
Republicans.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1300

  Ms. SLAUGHTER. Mr. Speaker, I yield 30 seconds to the gentleman from 
Texas (Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, I hope the American people heard the 
gentleman point out on this floor that he does not consider the credit 
card companies in any way responsible for the billions of dollars in 
debt that have been increased, to a large extent because they have sent 
out easy credit cards, unsolicited credit cards, to teenagers and 
senior citizens. According to his philosophy of personal 
responsibility, I guess drug dealers should not be held responsible for 
the drug problem in America, because nobody forced those people in 
America to use drugs. If that is the kind of personal responsibility 
that is behind this bill, I do not want any part of it.
  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I take it from the comments of the gentleman from Texas 
(Mr. Edwards) that he associates small business people, which I have a 
lot in my district, with drug dealers. Is that what the gentleman is 
saying, because they came and charged in the store for some reason, it 
is the store merchant's responsibility? It is the small businessman in 
my district's responsibility if somebody comes in and charges something 
in their store and does not pay for it?
  I would say to the gentleman from Texas (Mr. Edwards), there is a 
time in this country to accept personal responsibility. If you cannot 
afford it, do not buy it; and if you do buy it and you cannot afford 
it, do not blame it on the merchant.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Texas (Ms. Jackson-Lee).

[[Page H4348]]

  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Speaker, nothing needs to be said about 
this bill, other than it is a bankrupt bill and it is bankrupting 
America.
  I stand to oppose this rule for the children of America. 325,000 
bankruptcy filings are based upon child support and alimony payments. 
This rule and this particular legislation disregards the importance of 
protecting our children at risk. What it does is it takes the 
multibillion-dollar credit card companies and it puts them at equal 
level to those parents trying to fight every day to keep their doors 
open and their children alive. Yes, it is just that bad.
  We tried in the Committee on Rules to present to the Republican 
members of the Committee on Rules an amendment, an omnibus child 
support amendment. The gentlewoman from New York (Ms. Slaughter) has 
been a leader on this issue, yet that amendment has been rejected.
  What do they have in its place? Something unsatisfactory. They have 
something that says oh, that is okay. You can put the credit card debt 
equal to the child support. What does that mean? Do you have time to 
sit and make 12 and 15 calls a day, like the multibillion-dollar credit 
card companies, harassing people in order to get payments? No, you do 
not.
  So there is no equality here. We wanted to protect child support and 
alimony payments, so that hard-working Americans could keep their head 
above water.
  Let me tell you what the real issue is, 3 billion contacts every day 
to Americans asking them to take this credit card and this credit card. 
I believe in personal responsibility. I want people to pay their bills, 
and Americans pay their bills. Today they wait when the debt is 125 
percent of income. They do not recklessly go down to the bankruptcy 
courts. In fact, no one throws a party on their neighborhood block when 
they have to go to the bankruptcy court.
  I tell you, this bill should go back to committee, with only five 
hearings. We were promised an open rule in committee, it is on the 
record, yet we did not get one.
  This is a bad rule. Vote it down, vote for Americans, vote for 
working people. This is a bad, bad bill.
  Mr. Speaker, I come to the floor of the House to oppose this rule. 
The function of the House Rules Committee is to examine amendments and 
make germane amendments in order, not to try to defeat the bill in the 
Rules Committee before it reaches the floor. This is a bad way to run 
this House and it undemocratic.
  I appeared, before the Rules Committee with the recommendation that 
four of my amendments to H.R. 3150 be made in order, because I 
seriously question whether this bill, as it is now written, will 
accomplish its goal of reforming our present bankruptcy system without 
causing significant harm to many innocent parties. Sure, I believe that 
the bill in its philosophical approach and legislative function, 
appears to unnecessarily burden the rights of the bankrupt debtor, but 
in the end, my objections to this bill are much deeper than that. As a 
member of the Judiciary Committee's Subcommittee on Commercial and 
Administrative Law, who has dealt with this legislation since its 
inception, I have several serious reasons why I believe there should 
have been more of an inclusive rule for H.R. 3150. This is a bad rule 
and this is not democracy.
  I am not shy to say that Chairman Hyde promised an open rule to the 
Democrats in Committee. That is exactly why the Democrats did not offer 
more amendments in the Judiciary Committee. Then we go to the Rules 
Committee with an assurance that we would get an open and inclusive 
rule and what we have here is a restrictive and exclusive rule. This is 
no way to legislate, no way to make policy, no way to run this house. 
It is bad for collegiality of the House, and most importantly it is bad 
for the country. This is a bad rule . . . and this is not democracy.
  I was prepared to offer an amendment, co-sponsored by Rep. Slaughter 
of New York, a Member of the Rules Committee which would have 
completely corrected certain serious problems in the bill. First of 
all, the amendment would protect child support and alimony payments in 
a Chapter 7 or Chapter 13 bankruptcy proceeding by excluding these 
payments from the definition of ``current monthly income'' in the bill. 
Secondly, the amendment would ensure that all priority payments like 
child support and alimony would be paid before any unsecured creditors, 
whether it is mandated as a part of the means test or as a 
nondischargeable credit card debt in Chapter 7 or in Chapter 13 
repayment plans. Third, the amendment would strike all sections of the 
bill that make unsecured or credit card debt competitive with child 
support and alimony payments. And finally, no presumably 
nondischargeable debt owed to a credit card or credit lending 
institution can be collected if in good faith it is believed that its 
collection would impede upon an individual's ability to meet child 
support or alimony obligations. These provisions, in particular, would 
finally make H.R. 3150, a ``woman and child'' friendly, rather than, a 
``woman and child'' adverse piece of legislation.
  The only amendment allowed to be offered on the floor of the House 
which remotely speaks to child support is the Boucher-Gekas amendment 
which does not accomplish as much as the Jackson-Lee/Slaughter 
amendment. While it moves child support and alimony obligations from 
seventh priority to first priority during the bankruptcy proceedings, 
the child support debts must still compete with the credit card debts, 
or unsecured creditors. Listen to me colleagues, the mothers and 
children must still wait in line for the big corporations to be paid, 
or compete with them since those debts have become non-dischargeable 
debt. This is a bad rule and this is not democracy.
  That is why I am hoping that Members will vote for the Nadler/Meehan/
Berman/Jackson-Lee Substitute amendment because it strikes Section 141 
of the bill which would thereby eliminate new non-dischargeable status 
for these credit card and other debts which would compete with alimony 
and child support. This is bad rule and this is not democracy.
  Now my colleagues, let me tell you a little about the Means Testing 
provision in this bill. It is not a means test, it is just a mean test. 
The bill's mean Means testing would bar anyone earning the nation's 
median income--about $51,000 for a family of four--from using Chapter 7 
proceedings if they could pay off all secured debt, such as a home 
mortgage or car loan, and 20 percent of unsecured debt, such as credit 
card bills, over three to five years.
  I offered an amendment with Chairman Hyde which passed that would 
make the Means testing more fair. This amendment was not made in order 
and not allowed to be offered on the floor. This is a bad rule and this 
is not democracy. First Lady Hillary Rodham Clinton said in a May 7th 
article:

       I have no quarrel with responsible bankruptcy reform, but I 
     do quarrel with aspects of the bill (H.R. 3150) that would 
     force single parents to compete for their child support 
     payments with big banks trying to collect credit card debt. . 
     . Any effort to reform the bankruptcy system must protect the 
     obligations of parents to support their children.

  This is a bad rule, and this is not democracy. I urge my colleagues 
to oppose this rule, and vote ``no'' on the rule for H.R. 3150.
  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it amazes me to hear the gentlewoman from Texas talk in 
such a manner as she does. It takes all responsibility away from the 
person who goes in and purchases the product.
  My question to the gentlewoman would be, has she ever been the 
recipient of a bankruptcy? In other words, has she ever been the 
creditor? I was.
  When I first got out of school, I had my little business. I had three 
small children and my wife. My wife and I were struggling. We rendered 
the service. You know what? The person walked out on us, for a 
bankruptcy of convenience.
  So you can give all these sorry stories and sob stories, but, let me 
tell you, there is the other side of the story. In your statement you 
need to be there and reflect on the other side of the story. And there 
is nothing, nothing wrong with personal responsibility in this country.
  Now, for the second point made by the gentlewoman from Texas about 
the unfairness of this, how it ought to go back for more hearing. Let 
me say, I know the gentlewoman, to her credit, comes to the Committee 
on Rules on a regular basis. This bill has had over 60 witnesses. Every 
interest group I know has testified either in committee or had 
opportunities to testify somewhere in the process of this. This is not 
something that fell out of the sky.
  There are a lot of people out there that are suffering. There are a 
lot of people that are suffering, not because they went and bought 
something they knew they could not afford. There are a lot of people 
who, on good faith on a person's word, sold them something, and the 
person did not keep their word.
  Let me give you an example. Come to my office. I invite the 
gentlewoman

[[Page H4349]]

from Texas to my office, room 215, Cannon Building. You will see a bull 
elk in my office. Do you know where I go got that? I represented a 
woodsman, and this woodsman owed me about $5,000 personally. I loaned 
the money. He never paid me.
  I told him, I said, ``You gave me your word.'' He said, ``I gave you 
my word.'' I said, ``Are you going to declare bankruptcy?'' He said, 
``No, I am going to give you something of value.'' He brought me in 
this bull elk. He kept his word.
  The other issue that is critical, and this is nothing but a 
diversionary tactic, is this child support thing. Let me repeat this 
very quickly. The President of the California Family Support Council 
says, ``H.R. 3150 contains a wish list of provisions which 
substantially enhances our efforts to enforce support obligation during 
the bankruptcy of a support obligor. It closes many of the loopholes 
which currently exist in bankruptcy and which greatly hamper our 
efforts to enforce support,'' speaking of child support, ``debts, when 
a debtor has other creditors who are also seeking participation in the 
distribution of the assets of the debtor's bankruptcy estate.''
  That letter was sent to the chairman. I would be happy after their 
turn to yield a couple of minutes to the gentleman from Pennsylvania 
(Mr. Gekas). I would like the chairman to go into a little more detail 
about that hearing a couple of minutes from now. Let us address that.
  I do not want one diluting the importance of this bill by some 
diversionary tactic by saying, well, this takes away from child 
support. It does not. The rule is fair. We ought to pass the rule and 
pass the bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 30 seconds to the gentlewoman 
from Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentlewoman for 
yielding me time.
  Mr. Speaker, I appreciate the sincerity of the gentleman. But just as 
he has his beliefs, I have my facts. The facts are that the amendments 
do not correct the imbalance between credit card and child support. You 
have to fight the credit card companies to get your child support.
  The other fact is that 60 percent of those who file bankruptcy have 
been unemployed in the last couple of months. We want personal 
responsibility. In fact, we have supported an amendment that would 
study why small businesses go bankrupt or are not being paid.
  This bill needs to go back for hearing so that we can bring forth a 
true bipartisan bill that would answer your concern and truly commit us 
to personal responsibility.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Texas (Mr. Bentsen).
  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I rise against the rule. Once again, it 
appears that the average Members of the House, Republicans and 
Democrats, cannot be trusted to legislate, even though that is what we 
were sworn in to do. The Committee on Rules and the Republican 
leadership of have decided what amendments will be made in order. The 
gentleman from Colorado says the chairman of the Committee on Rules 
needs to have a managed rule so he can manage this bill through.
  I am not sure what the hurry is. I guess because we have to get out 
for another recess. This has been a Congress more of recesses than a 
Congress of action, even on important issues like bankruptcy reform.
  I actually agree with the gentleman on a lot of it. I actually would 
tell the gentleman on his situation, he probably would have done better 
to ask for a promissory note than a bull moose head for his wall. But, 
nonetheless, let us go forward.
  The problem with this bill and the problem with this rule is the 
Republicans for so long, since I have been in Congress, have always 
been talking about returning powers to the States. But this bill in 
sections 181 and 182 preempt State law with respect to the State 
constitutions dealing with homestead, particularly in my home State of 
Texas.
  Let me read a letter from the Governor of Texas, Governor Bush, along 
with the Lt. Governor Bullock and Speaker James E. ``Pete'' Laney. ``We 
strongly oppose Congress' effort to pass this legislation with the 
inclusion of the $100,000 homestead cap. The homestead cap is a clear 
violation of states' rights with regard to State private property laws. 
State and local government participation should be maintained in 
Federal bankruptcy law.''
  Mr. Speaker, I will include the whole letter for the record.
  Mr. Speaker, this is the whole point. Here we are talking about 
returning power to the States on one day, and then the next day we are 
taking it back away from them, whatever is most convenient for whatever 
our goals may be. To rush this legislation through, again, I agree with 
the gentleman on most of this, but for some reason, we cannot trust the 
435 Members of this body to go through, spend the time, debate the 
amendments and bring up various amendments. We can all think. We all 
have the same power, or should have the same power to offer amendments.
  But this leadership, which cannot figure out what direction it is 
going in, has now come up with the rule that mirrors the strategy of 
this leadership, whether it is busting the budget by $22 billion on the 
highway bill, or trying to craft a budget bill that is going nowhere 
fast, and then debating it in the middle of the night, when nobody 
except people in Hawaii would be paying attention.
  Apparently this is just another example of the failed Republican 
leadership that cannot get anything done, and now wants to change the 
bankruptcy laws in the most significant way in the last 20 years, and 
wants to do it with 1 hour of general debate, 12 amendments, 10 minutes 
on what we are going to do with State homestead laws. I think that is 
ridiculous, and it is a real shame for this body to consider this.

                                                   State of Texas,


                                       Office of the Governor,

                                          Austin, TX June 2, 1998.
     Hon. Henry Hyde,
     Chairman, House Judiciary Committee, Washington, DC.
       Dear Chairman Hyde: The House Judiciary Committee and 
     Senate Judiciary Committee have included in their respective 
     bankruptcy reform bills (S. 1301 and HR 3150) an amendment 
     that would place a monetary cap of $100,000 on the amount of 
     homestead equity individuals can protect from bankruptcy 
     foreclosure proceedings. We are writing to express our 
     opposition to the amendment and let you know how greatly it 
     could affect Texas residents.
       The Texas homestead provisions, included in the Texas 
     Constitution, exempt a Texas resident's homestead in the 
     event of a declared bankruptcy and place no monetary 
     restrictions on that property. The Texas law does provide 
     certain restrictions, such as limiting homestead property to 
     one acre in urban area and 200 acres per family in a rural 
     area. By placing a monetary cap of $100,000 on the amount of 
     equity individuals can protect from foreclosure, the 
     amendment to both bankruptcy reform bills would preempt the 
     Texas Constitution.
       We strongly oppose Congress' efforts to pass this 
     legislation with the inclusion of the $100,000 homestead cap 
     amendment. The homestead cap is a clear violation of states' 
     rights with regard to state private property laws. State and 
     local government participation should be maintained in 
     federal bankruptcy law.
       Thank you for your consideration.
           Sincerely,
     George W. Bush,
       Governor.
     Bob Bullock,
       Lt. Governor.
     James E. ``Pete'' Laney,
       Speaker.

  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  The gentleman from Texas, I realize that late nights offend him 
because he would prefer to be at the golf course. But the fact is the 
reason the Republicans run these late nights is because we have got a 
lot of work to do, and the gentleman can participate in that work.
  Second of all, in regards to the gentleman's comment about my bull 
elk head, I would be happy to take a promissory note from the gentleman 
for the amount, because I know he will pay. I know he will not take the 
bankruptcy for convenience.
  I kind of assume the gentleman is going to ask me to yield time. I 
will preempt that and say no, the other side can yield the gentleman 
time if he would like.
  Mr. Speaker, I yield 4 minutes to the gentleman from Pennsylvania 
(Mr. Gekas).

[[Page H4350]]

  Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, while the gentleman from Texas is on his feet, I had 
informed him and reinformed him, as I know the gentleman is aware, that 
an amendment that we intend to offer will satisfy the complaint of the 
Governor of Texas as to the current exemption base that is listed in 
the bill. We are trying to accommodate the State of Texas and the State 
of Florida and others who want to retain their homestead exemption.
  When the question occurs about whether or not our bill treats child 
support cruelly or handsomely, depending on the point of view, I must 
reiterate something that the gentleman from Colorado had begun to 
articulate. The support enforcement communities around the Nation, New 
York, California, Virginia and others, have stated that they are in 
full support of what we are attempting to do in 3150 with respect to 
the privatization of support payments.
  Here is a letter from the California Family Support Council, to which 
the gentleman from Colorado has alluded. We have a letter from the City 
of New York which thanks us for the provisions that we have in 3150 as 
to support, making it easier for them to collect support.
  What is left unsaid in all of this, which I am going to iterate and 
reiterate as often as I can, is that the vast majority, 95 percent, of 
child support issues are raised in a court order situation in which the 
court orders support payments to be made by X, and no matter what 
happens in bankruptcy court or any other court, they are enforced over 
the year with the marshals and the jails and the sheriffs and the 
bailiffs, a whole system to enforce the court orders on support.

                              {time}  1315

  Nothing that we will do over on the bankruptcy side is going to harm 
their ability to enforce support payments. But insofar as, through some 
happenstance, that the child support that escapes the court system that 
is set up to enforce child support leads to consideration of that same 
issue in bankruptcy, we take extra pains to prioritize the support 
payments even in those few cases comparatively that the bankruptcy 
court must deal with with respect to support.
  The amendments that we are going to offer will even go farther and 
set the priority with which no one could quarrel on support.
  Mr. McINNIS. Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 30 seconds to the gentleman of 
Texas (Mr. Bentsen) to explain the allegation he would rather play golf 
at night than work.
  Mr. BENTSEN. Mr. Speaker, first of all, I do not play golf. Second of 
all, I was unaware you could play golf at night. I would in many 
evenings rather be home with my children. But I do not recall the 
gentleman being on the floor at 12:30 in the morning when we were 
debating the Republican budget resolution, because I was here debating 
against the $10 billion cuts my colleagues want to make in veterans 
programs and the cuts they want to make in education. I just wanted to 
clarify that.
  To my colleague, the gentleman from Pennsylvania (Mr. Gekas), and I 
would yield if I had the time, it would be unprecedented, I know, in my 
time in Congress that anybody would yield to the other, is that I do 
want to work with the gentleman, as I said. But the fact is it is 
unprecedented action that my colleagues are taking at preempting State 
homestead laws in this bill. For the record the Governor of Texas has 
said they are for the amendment, but they take no position on the bill.
  Ms. SLAUGHTER. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from Massachusetts (Mr. Frank).
  Mr. FRANK of Massachusetts. Mr. Speaker, as a general supporter of 
this bill, I did want to express my dismay at that attack on the 
gentleman from Texas. That remark about playing golf at night certainly 
does not grant this debate any reasonable weight.
  Mr. McINNIS. Mr. Speaker, will the gentleman yield?
  Mr. FRANK of Massachusetts. No, just as the gentleman, having made 
the attack on the gentleman, would not yield to him, I certainly would 
not yield at this point.
  I do want to say to my colleagues, while I generally like the bill, I 
also wanted some amendments, but they are following the wrong course. 
What we should do, and we can still do it, offer these as amendments to 
the campaign finance bill, because the same Committee on Rules that 
would not allow amendments to the defense bill and shut off reasonable 
amendments to this bill, and I regret that as a supporter, this same 
Committee on Rules has made more amendments in order to the campaign 
finance bill than I think it has made in order for all other bills that 
have come up in this Congress.
  So given what the Committee on Rules has done, the Committee on Rules 
is actually out shopping for nongermane amendments. So while we have to 
do this very important bill in a quick-time operation, Members who, 
like myself, had good amendments to this bill which were germane to 
this bill and were shut out, despite, in some cases, assurances that we 
would get them in, make them nongermane amendments to the campaign 
finance bill.
  Follow this pattern. Go to the Committee on Rules. Make any amendment 
we want to bankruptcy a nongermane amendment to the campaign finance 
bill. Not only will it be made in order, but we will have unlimited 
debate time.
  It does seem to me, when we are judging the seriousness of purpose 
and fairness of procedure, to compare these. Here is the campaign 
finance bill. Here is the bankruptcy bill. The bankruptcy bill is a 
very important bill. It will have a significant impact on this country, 
and I am generally in favor of it.
  But we get amendments killed by the Committee on Rules, presumably on 
the direction of the leadership. We get amendments with only 10 minutes 
to debate. Then we get the campaign finance bill where amendment upon 
amendment, as far as the campaign finance bill is concerned, germane is 
Michael Jackson's brother.
  The whole concept that has always been at the core of the House of 
Representatives that an amendment should be germane to the bill has 
been thrown out the window.
  So I have to say I am particularly dismayed as a supporter of the 
basic concept of this bill to see a rule come forward which does 
violence to fair debate in this particular instance and then makes a 
mockery of it elsewhere. Then the gentleman from Texas is, I think, 
unfairly impugned for complaining about it. So I urge people to vote 
against this rule.
  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, to the gentleman from Massachusetts, let me tell him, 
the golf comment was preceded by a comment from the gentleman from 
Texas regarding recess period and a few other things. He speaks, on 
which is pretty typical with his approach, speaks on one hand for the 
microphone about bipartisanship and cooperation, and I want to help 
you, and then, on the other hand, spends the rest of his time attacking 
the Republican leadership and the Republican efforts to, in this 
particular bill, say, look, it is not wrong in this country to say you 
have to accept personal responsibility. It is not wrong in this country 
to say, if you are going to buy something, you have got to pay for it. 
It is not wrong in this country to say, when you owe somebody money, 
when you gave them your word, your word that you are going to pay for 
it, keep your word and pay your bills.
  It is always this party that feels very strongly when we have 
somebody that comes up in a hardship case, let us say somebody gets a 
cancer, they are uninsured, they are down on their luck. I mean, that 
is what it is designed for.
  But as is typical, the liberals have taken advantage of it, taken 
bankruptcy way beyond what its original intents were, and now we have a 
system of convenience. Look, go ahead, charge everything you want. Take 
every credit card you want. If you are worried about paying your bills, 
file bankruptcy. It does not matter. You are not shamed in the 
community. You do not have to worry about anything. That kind of 
behavior should not go on.
  Mr. Speaker, I reserve the balance of my time.

[[Page H4351]]

  Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Delahunt).
  Mr. DELAHUNT. Mr. Speaker, I thank the gentlewoman from New York for 
yielding to me.
  Mr. Speaker, I guess I want to pick up on that theme of 
responsibility. We are going to hear, I am sure, much about 
responsibility today, personal responsibility.
  But I also wanted to pick up on an observation made by the gentleman 
from New York (Mr. Nadler) in terms of congressional responsibility. 
There is no doubt that this particular proposal has rushed through the 
legislative process, unlike any proposal in my limited experience.
  I dare say, as I talk to colleagues throughout and listen to the 
statements that have been made, there have been fewer hearings on this. 
The rush to bring this proposal to the floor was such that it is 
interesting to read the committee report in terms of the cost estimate. 
I want to take the time to read it. This is the majority report.
  ``The estimate of the Congressional Budget Office was not available 
at the time of this report. The committee believes that the enactment 
of H.R. 3150 will not have a substantial budget effect for the fiscal 
year 1999 and subsequent years.''
  Well, guess what? They were wrong. They were wrong to the tune of 
$300 million over the course of the next 5 years. That is 300 million 
taxpayer dollars.
  As the debate unfolded earlier on the issue surrounding the point of 
order, the ranking member, the gentleman from New York (Mr. Nadler), 
was correct when he said, in terms of the impact of these mandates 
under H.R. 3150 will cost the private sector over $1 billion, over $1 
billion.
  The gentleman from Colorado indicates his concern about private 
mandates. The CBO estimates that the impact on the private sector will 
be in excess of $1 billion over 5 years. But we are in such a rush to 
secure passage of this legislation that the point is bring it to the 
floor, get it done, limit debate.
  This is not responsibility. This is not a responsible legislative 
process. We, too, have a collective responsibility. Let us call it 
congressional responsibility. I urge that the rule be defeated and the 
bill also be defeated.
  Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, to the gentleman from Massachusetts, first of all, as a 
suggestion, I think he has got his, with good intent, but I think his 
facts are wrong. I would suggest that he visit with the gentleman from 
Ohio (Mr. Portman) on our side, and the gentleman can talk to him about 
his concern he has got on unfunded mandates.
  What especially bothers me, though, about the gentleman's comments, 
he talks about, in his short career up here, about how this bill has 
been rushed more than any other bill. I am not sure where the gentleman 
has been. I realize he is busy.
  Let me tell the gentleman, there have been lots of hearings on this 
bill. Let me just read it. With regard to H.R. 3150 alone, the 
subcommittee held four hearings. Over the course of those hearings, 
more than 60 witnesses representing a broad cross-section of interest 
and constituents in the bankruptcy committee testified. Nearly every 
major organization having an interest in reform had an opportunity to 
participate in these hearings.
  Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania 
(Mr. Gekas) if he would just comment about the comments just made by 
the gentleman from Massachusetts how this bill was rushed to the floor, 
no chance for input, and so on and so forth.
  Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding to me.
  Mr. Speaker, I have been amused by listening to the litany of 
criticisms about how we rushed through it. Comparisons were made about 
what happened with the 1978 bill that finally became law.
  Prior to 1978, the opposition is pleased to say, they had 5 years to 
work on a bankruptcy bill that became the bankruptcy bill of 1978. That 
subcommittee and that committee that worked on it for 10, 12, 15 days. 
After 5 years, they still had a markup with new ideas and new proposals 
to consider even through the markup stages of the subcommittee and the 
full committee. So even with the 5 years, they were not ready at the 
final moment to have a final bill, just like we did not.
  We have new ideas, new circumstances occurring all the time. But the 
main themes of this bankruptcy reform bill were born of the 1,400,000 
unexplained filings and our society being drenched in debt of 
individual debtors who, in some cases, could repay some of the debt. We 
believe that enough time has been devoted to it.
  Moreover, even during the time that we had, we had the benefit of the 
Commission report, the Bankruptcy Commission. So we had a body that had 
worked on 2 years' worth of investigation and testimony and hearings on 
the bankruptcy. So we incorporated that.
  All of a sudden, we can see, if the gentleman from Massachusetts will 
acknowledge, we already had, by adopting some of the recommendations of 
the Bankruptcy Commission, 2 years of work put right into 3150. That is 
not speeding up or rushing.
  In addition to that, we had the hearings that the gentleman from 
Colorado has mentioned and the number of witnesses. But beyond that, we 
had tremendously intricate consultations with people in bankruptcy, 
from debt organization standpoint, from consumers standpoint, 
bankruptcy trustees, bankruptcy judges, conferences, Chambers of 
Commerce, you name it, credit unions.
  The credit unions are anxious for the passage of this bill. Their 
whole system is being attacked daily by the number of filings that they 
see within their system. They want this bill passed, and so do we.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from 
North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Speaker, the subject of bankruptcy 
should not be a partisan issue. It never has been in the history of 
this House. It should not be today or in the future. There should be no 
Republican perspective or Democratic perspective on this issue.
  In 1994, Congress established a Commission to study and recommend 
changes to the bankruptcy law. The Commission issued its report last 
October. This bill comes to the floor today without the inclusion of 
the great, great majority of the recommendations of that Commission.

                              {time}  1330

  It comes with this many amendments having been offered before the 
Committee on Rules, a total of 45 proposed amendments, and it comes 
under a rule under which only 12 of those proposed amendments will have 
the benefit of debate in this House.
  These are important proposed amendments that were left out. One 
excludes veterans' and Social Security benefits from the calculation of 
current monthly income for the purposes of bankruptcy or means testing 
under this bill.
  One provides that a residential landlord would be required to seek 
relief from the automatic stay, as are other creditors seeking such 
relief, before being able to move to evict a residential tenant who is 
elderly or disabled or who is a veteran.
  These are important amendments that the Committee on Rules has said 
to this House, we are not going to allow the democratic process to work 
its will. We are going to close off debate.
  Ms. SLAUGHTER. Mr. Speaker, I yield 30 seconds to the gentleman from 
Massachusetts (Mr. Delahunt).
  Mr. DELAHUNT. I think it is important to note, Mr. Speaker, for the 
record, in response to the chairman of the subcommittee, that upon an 
inquiry by me to the chairman of the National Bankruptcy Commission, I 
asked him about necessary data.
  I said, and I am quoting, ``Every commission was frustrated by the 
absence of reliable data dealing with the bankruptcy process. Please 
communicate with the CBO, with the GAO, and get that data before you 
take action.''
  I sent that letter, it was signed by other Members, and we are still 
waiting for that result. But here we are today, on the floor of the 
House without the evidence and the data that is necessary.
  Ms. SLAUGHTER. Mr. Speaker, I yield myself the balance of my time.
  (Ms. SLAUGHTER asked and was given permission to revise and extend 
her remarks and include extraneous material.)

[[Page H4352]]

  The SPEAKER pro tempore (Mr. Duncan). The gentlewoman from New York 
(Ms. Slaughter) is recognized for 30 seconds.
  Ms. SLAUGHTER. I urge Members to vote no on the previous question, 
Mr. Speaker. If the previous question is defeated, I will offer an 
amendment to the rule that will make in order an amendment that will 
improve the bill's provisions that weaken child support, alimony, and 
victims' protections under bankruptcy.
  Mr. Speaker, I urge a no vote on the previous question.
  Mr. Speaker, I include for the Record information on the vote on the 
previous question and other material.
  The material referred to is as follows:

        The Vote on the Previous Question: What It Really Means

       This vote, the vote on whether to order the previous 
     question on a special rule, is not merely a procedural vote. 
     A vote against ordering the previous question is a vote 
     against the Republican majority agenda and a vote to allow 
     the opposition, at least for the moment, to offer an 
     alternative plan. It is a vote about what the House should be 
     debating.
       Mr. Clarence Cannon's Precedents of the House of 
     Representatives, (VI, 308-311) describes the vote on the 
     previous question on the rule as ``a motion to direct or 
     control the consideration of the subject before the House 
     being made by the Member in charge.'' To defeat the previous 
     question is to give the opposition a chance to decide the 
     subject before the House. Cannon cites the Speaker's ruling 
     of January 13, 1920, to the effect that ``the refusal of the 
     House to sustain the demand for the previous question passes 
     the control of the resolution to the opposition'' in order to 
     offer an amendment. On March 15, 1909, a member of the 
     majority party offered a rule resolution. The House defeated 
     the previous question and a member of the opposition rose to 
     a parliamentary inquiry, asking who was entitled to 
     recognition. Speaker Joseph G. Cannon (R-Illinois) said: 
     ``The previous question having been refused, the gentleman 
     from New York, Mr. Fitzgerald, who had asked the gentleman to 
     yield to him for an amendment, is entitled to the first 
     recognition.''
       Because the vote today may look bad for the Republican 
     majority they will say ``the vote on the previous question is 
     simply a vote on whether to proceed to an immediate vote on 
     adopting the resolution * * * [and] has no substantive 
     legislative or policy implications whatsoever. But that is 
     not what they have always said. Listen to the Republican 
     Leadership Manual on the Legislative Process in the United 
     States House of Representatives, (6th edition, page 135). 
     Here's how the Republicans describe the previous question 
     vote in their own manual: ``Although it is generally not 
     possible to amend the rule because the majority Member 
     controlling the time will not yield for the purpose of 
     offering an amendment, the same result may be achieved by 
     voting down the previous question on the rule * * * When the 
     motion for the previous question is defeated, control of the 
     time passes to the Member who led the opposition to ordering 
     the previous question. That Member, because he then controls 
     the time, may offer an amendment to the rule, or yield for 
     the purpose of amendment.''
       Deschler's Procedure in the U.S. House of Representatives, 
     the subchapter titled ``Amending Special Rules'' states: ``a 
     refusal to order the previous question on such a rule [a 
     special rule reported from the Committee on Rules] opens the 
     resolution to amendment and further debate.'' (Chapter 21, 
     section 21.2) Section 21.3 continues: ``Upon rejection of the 
     motion for the previous question on a resolution reported 
     from the Committee on Rules, control shifts to the Member 
     leading the opposition to the previous question, who may 
     offer a proper amendment or motion and who controls the time 
     for debate thereon.''
       The vote on the previous question on a rule does have 
     substantive policy implications. It is the one of the only 
     available tools for those who oppose the Republican 
     majority's agenda to offer an alternative plan.
                                  ____


   Previous Question on H.Res. 462--H.R. 3150--Bankruptcy Reform Act

       At the end of the resolution add the following new 
     sections:
       ``Sec. 2. Notwithstanding any other provision of this 
     resolution, it shall be in order to consider the amendment 
     specified in section 3 of this resolution as though it were 
     after the amendment numbered 11 in House Report 105-573. The 
     amendment may be offered only by Representative Jackson-Lee 
     of Texas or her designee and shall be debatable for 30 
     minutes.
       ``Sec. 3. The amendment described in section 2 is as 
     follows:
       Page 6, line 11, insert the following before the 1st 
     semicolon: ``, but excludes (1) maintenance for or support of 
     a child of the debtor, received by the debtor and (2) current 
     alimony, maintenance, or support paid by the debtor for the 
     benefit of a spouse, former spouse, of child of the debtor'';
       Page 16, after line 25, insert the following (and make such 
     technical and conforming changes as may be appropriate):
       (A) in paragraph (2) by inserting ``before any unsecured 
     claim is paid,'' after ``cash payments'';
       Page 17, strike line 15 and all that follows through 
     ``1326(b);'' on line 24, and insert the following:
       ``(i) that all claims entitled to priority under section 
     507(a)(7) are paid in full before any nonpriority unsecured 
     claim is paid;
       ``(ii) that, to the extent not inconsistent with clause 
     (i), payments to unsecured nonpriority creditors who are not 
     insiders shall equal or exceed $50 per month of the plan;
       ``(iii) that, during the applicable commitment period, the 
     total amount of plan payments on account of unsecured 
     nonpriority claims shall equal the monthly net income of the 
     debtor multiplied by the number of months in the commitment 
     period less payments pursuant to section 1326(b); and
       Page 18, line 14, strike ``(iii)'' and insert ``(iv)''.
       Page 18, line 24, strike ``(iv)'' and insert ``(v)''.
       Page 48, after line 13, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 119B. PROTECTION AGAINST REAFFIRMATION AGREEMENTS 
                   ADVERSELY AFFECTING CHILD SUPPORT.

       Section 524 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(i) Notwithstanding any other provision of this title, an 
     agreement of the kind described in subsection (c) shall be 
     void unless the court determines that such agreement will not 
     have an adverse impact on the ability of the debtor to 
     support a dependent of the debtor.''.
       Page 54, line 15, insert ``, but includes any tangible 
     personal property reasonably necessary for the maintenance or 
     support of a dependent child'' before the semicolon.
       Beginning on page 65, strike line 16 and all that follows 
     through line 25 on page 66 (and make such technical and 
     conforming changes as may be appropriate).
       Page 68, strike lines 8 through 23 (and make such technical 
     and conforming changes as may be appropriate).
       Page 72, strike line 2, and insert the following: at the 
     end and inserting a semicolon; and
       Page 72, strike line 9, and insert the following: port that 
     are due after the date the petition is filed; and
       ``(8) the plan provides that all remaining debts to a 
     spouse, former spouse, or child of the debtor, due before or 
     after the date the petition is filed, for alimony to, 
     maintenance for, or support of such spouse or child, or to a 
     spouse, former spouse, or child of the debtor, to the extent 
     such debt is the result of a property settlement agreement, a 
     hold harmless agreement, or any other type of debt that is 
     not in the nature of alimony, maintenance, or support in 
     connection with or incurred by the debtor in the course of a 
     separation agreement, divorce decree, any modifications 
     thereof, or other order of a court of record, determination 
     made in accordance with State or territorial law by a 
     governmental unit, but not to the extent that such debt is 
     assigned to another entity, voluntarily, by operation of law, 
     or otherwise (other than debts assigned pursuant to section 
     408(a)(3) of the Social Security Act, or such debt that has 
     been assigned to the Federal government, or to a State or 
     political subdivision of such State, or the creditor's 
     attorney) shall be paid before the payment of any other debt 
     provided for in the plan unless the beneficiary of the 
     payment waives the obligation that such payment be made 
     before paying such other debt''.
       Page 75, line 21, insert ``(a)'' before 
     ``Notwithstanding''.
       Page 76, line 12, insert ``and any debt of a kind described 
     in paragraph (6), (9), or (13) of section 523(a) of this 
     title,'' before ``shall''.
       Page 76, line 14, strike ``or (14)'' and insert ``or 
     (19)''.
       Page 76, line 17, strike the close quotation marks and the 
     period at the end.
       Page 76, after line 17, insert the following:
       ``(b)(1) For purposes preserving the priority established 
     in subsection (a), the holder of claim for a debt of a kind 
     described in paragraph (2), (4), or (19) of section 523(a) of 
     this title that is not discharged may not take any action to 
     obtain payment or collection (including engaging in any 
     communication with the debtor or with any person who holds 
     property of the debtor) of such debt if such holder--
       ``(A) knew or should have known that taking such action, or 
     obtaining payment of such debt, would impair the ability of 
     the debtor to pay a debt that has priority under such 
     subsection; or
       ``(B) failed to verify immediately before taking such 
     action, by good faith means designed to identify all debts 
     that have priority under such subsection, that the debtor 
     does not then owe any debt that has priority under subsection 
     (a).
       ``(2) If such holder violates paragraph (1), such holder 
     shall be liable to any person injured by such violation for 
     the sum of $3000, actual damages, and a reasonable attorney's 
     fee.''.

  Mr. McINNIS. Mr. Speaker, I yield myself the balance of my time.
  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Colorado (Mr. McInnis) for 1 minute remaining to close debate.
  Mr. McINNIS. Mr. Speaker, this rule should be passed and it will be 
passed, and then we are going to get to have debate, and that debate is 
all about

[[Page H4353]]

personal responsibility. No matter how the Democrats want to cut it, 
the fact is that it is about personal responsibility, about keeping our 
word, about not buying something if we do not have the money to pay for 
it.
  The previous question vote itself is simply a procedural vote, Mr. 
Speaker, to close the debate on this rule and proceed to a vote on its 
adoption. The vote has no substantive or policy implications 
whatsoever.
  Mr. Speaker, I include for the Record an explanation of the previous 
question.
  The material referred to is as follows:

               The Previous Question Vote: What It Means

       House Rule XVII (``Previous Question'') provides in part 
     that: There shall be a motion for the previous question, 
     which, being ordered by a majority of the Members voting, if 
     a quorum is present, shall have the effect to cut off all 
     debate and bring the House to a direct vote upon the 
     immediate question or questions on which it has been asked or 
     ordered.
       In the case of a special rule or order of business 
     resolution reported from the House Rules Committee, providing 
     for the consideration of a specified legislative measure, the 
     previous question is moved following the one hour of debate 
     allowed for under House Rules.
       The vote on the previous question is simply a procedural 
     vote on whether to proceed to an immediate vote on adopting 
     the resolution that sets the ground rules for debate and 
     amendment on the legislation it would make in order. 
     Therefore, the vote on the previous question has no 
     substantive legislative or policy implications whatsoever.

  Mr. McINNIS. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. SLAUGHTER. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  This will be a 17-minute vote. As previously stated on orders by the 
Speaker, this will be a strictly enforced 17-minute vote.
  Pursuant to clause 5 of rule XV, the Chair will reduce to a minimum 
of 5 minutes the period of time within which a vote by electronic 
device, if ordered, will be taken on the question of agreeing to the 
resolution.
  The vote was taken by electronic device, and there were--yeas 236, 
nays 183, not voting 14, as follows:

                             [Roll No. 217]

                               YEAS--236

     Aderholt
     Archer
     Armey
     Baesler
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Berry
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boucher
     Boyd
     Bryant
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Cramer
     Crane
     Crapo
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Dooley
     Doolittle
     Dreier
     Duncan
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Foley
     Forbes
     Fossella
     Fowler
     Fox
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Greenwood
     Gutknecht
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Livingston
     LoBiondo
     Lucas
     Maloney (CT)
     Manzullo
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Oxley
     Packard
     Pappas
     Parker
     Paul
     Paxon
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Redmond
     Regula
     Riggs
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Royce
     Ryun
     Salmon
     Sanford
     Saxton
     Schaefer, Dan
     Schaffer, Bob
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Solomon
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Talent
     Tauscher
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Traficant
     Upton
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--183

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Fattah
     Fazio
     Filner
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Hinojosa
     Holden
     Hooley
     Hoyer
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson (WI)
     Johnson, E. B.
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kilpatrick
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McHale
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller (CA)
     Minge
     Mink
     Moakley
     Mollohan
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pickett
     Pomeroy
     Poshard
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Stokes
     Strickland
     Stupak
     Tanner
     Taylor (MS)
     Thompson
     Thurman
     Tierney
     Torres
     Towns
     Turner
     Velazquez
     Vento
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Wexler
     Weygand
     Wise
     Woolsey
     Wynn
     Yates

                             NOT VOTING--14

     Bachus
     Berman
     Brady (TX)
     Brown (CA)
     Dunn
     Farr
     Gonzalez
     Goodling
     Houghton
     Inglis
     Klug
     Olver
     Scarborough
     Sensenbrenner

                              {time}  1351

  Mr. YATES and Mr. FROST changed their vote from ``yea'' to ``nay.''
  Mr. HEFLEY changed his vote from ``nay'' to ``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. SLAUGHTER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 251, 
nays 172, not voting 10, as follows:

                             [Roll No. 218]

                               YEAS--251

     Aderholt
     Archer
     Armey
     Bachus
     Baesler
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boucher
     Boyd
     Brady (TX)
     Bryant
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Coble
     Coburn
     Collins
     Combest
     Condit
     Cook
     Cooksey
     Cox
     Cramer
     Crane
     Crapo
     Cubin
     Cunningham
     Danner
     Davis (VA)
     Deal
     DeLay
     Deutsch
     Diaz-Balart
     Dickey

[[Page H4354]]


     Dicks
     Dingell
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Foley
     Forbes
     Fossella
     Fowler
     Fox
     Franks (NJ)
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Greenwood
     Gutknecht
     Hamilton
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kennedy (RI)
     Kim
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Livingston
     LoBiondo
     Lucas
     Maloney (CT)
     Manzullo
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Minge
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Oxley
     Packard
     Pappas
     Parker
     Paul
     Paxon
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Redmond
     Regula
     Riggs
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Royce
     Ryun
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Shimkus
     Shuster
     Sisisky
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Solomon
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Talent
     Tauscher
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Traficant
     Upton
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Young (AK)
     Young (FL)

                               NAYS--172

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baldacci
     Barrett (WI)
     Becerra
     Bentsen
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Brady (PA)
     Brown (OH)
     Capps
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Conyers
     Costello
     Coyne
     Cummings
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dixon
     Doggett
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Fattah
     Fazio
     Filner
     Ford
     Frank (MA)
     Furse
     Gejdenson
     Gephardt
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Hinojosa
     Holden
     Hooley
     Hoyer
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson (WI)
     Johnson, E. B.
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennelly
     Kildee
     Kilpatrick
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McHale
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Mink
     Moakley
     Mollohan
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pickett
     Pomeroy
     Poshard
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schumer
     Scott
     Serrano
     Sherman
     Skaggs
     Skelton
     Slaughter
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Stokes
     Strickland
     Stupak
     Tanner
     Taylor (MS)
     Thompson
     Thurman
     Tierney
     Towns
     Turner
     Velazquez
     Vento
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Wexler
     Weygand
     Wise
     Wolf
     Woolsey
     Wynn
     Yates

                             NOT VOTING--10

     Berman
     Brown (CA)
     Brown (FL)
     Farr
     Gonzalez
     Houghton
     Inglis
     Klug
     Miller (CA)
     Torres

                              {time}  1402

  Mr. SHERMAN changed his vote from ``yea'' to ``nay.''
  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  The SPEAKER pro tempore (Mr. Duncan). Pursuant to House Resolution 
462 and rule XXIII, the Chair declares the House in the Committee of 
the Whole House on the State of the Union for the consideration of the 
bill, H.R. 3150.

                              {time}  1404


                     In the Committee of the Whole

  Accordingly the House resolved itself into the Committee of the Whole 
House on the State of the Union for the consideration of the bill (H.R. 
3150) to amend title 11 of the United States Code, and for other 
purposes, with Mr. Miller of Florida in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Pennsylvania (Mr. Gekas) and the 
gentleman from New York (Mr. Nadler), each will control 30 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).
  Mr. GEKAS. Mr. Chairman, we are about to embark on one of the most 
momentous pieces of legislation that has come to the floor in a long 
time. And to signify the importance of the measure, we significantly 
begin by yielding to the gentleman from Illinois (Mr. Hyde), chairman 
of the Committee on the Judiciary, he being a leader of the committee 
and of the effort that brings us to this point in bankruptcy reform 
legislation.
  Mr. Chairman, I yield such time as he may consume to the gentleman 
from Illinois (Mr. Hyde).
  (Mr. HYDE asked and was given permission to revise and extend his 
remarks.)
  Mr. HYDE. Mr. Chairman, before I talk about the bill in chief, I 
would like to say parenthetically that I am a little disturbed at the 
controversy over whether or not I kept my word in asking for an open 
rule. I did ask for an open rule. It was not formally asked. It was 
down here at the desk to the chairman of the Committee on Rules.
  I did not make a commitment that there would be an open rule because 
that is not my prerogative. That is up to the Committee on Rules. I 
suppose the fact that there were 43 amendments offered at the markup 
was a disincentive to have an open rule, but, nonetheless, I offered to 
use whatever force and effect I would have to get amendments that the 
gentleman from New York (Mr. Nadler) wanted that were serious 
amendments made in order. And, again, unfortunately, because of 
weather, I was in an airplane yesterday afternoon coming from 
Evansville, Indiana by way of Cincinnati, and planes were canceled. I 
was not here. I just hope nobody feels I did not live up to my 
commitment which was to ask for an open rule. I just wanted to state 
that.
  Mr. NADLER. Mr. Chairman, will the gentleman yield?
  Mr. HYDE. I yield to the gentleman from New York.
  Mr. NADLER. Mr. Chairman, I just want to say, I do not doubt for a 
moment the integrity and the word of the gentleman from Illinois, the 
chairman of the committee. I am sure that he did exactly what he 
committed to do and asked the Committee on Rules for an open rule.
  I assume he asked that the priority amendments that we asked for be 
made in order. I just regret that he was not more influential, perhaps, 
with the Committee on Rules and that they did not make more than one 
out of the 12 amendments that we had a priority on in order. I do not 
doubt for a moment nor would I ever cast aspersion on the integrity or 
the good word of the gentleman from Illinois.
  Mr. HYDE. Mr. Chairman, I thank the gentleman very much. I can only 
say, one cannot overestimate my lack of influence with some of the 
institutions around here.
  In any event, I am pleased that the Committee on the Judiciary, after 
a 3-day markup in May, favorably reported bankruptcy reform legislation 
designed to address deficiencies in current bankruptcy processes and 
mitigate adverse impacts of bankruptcy filings. We recognized the 
importance of responding to the many developments since the Bankruptcy 
Code's enactment a generation ago, including a burgeoning bankruptcy 
case load that reached a new high of over 1.4 million filings during 
the 1997 calendar year.
  Last September, our colleague, the gentleman from Florida (Mr. 
McCollum), introduced H.R. 2500, the Responsible Borrower Protection 
Bankruptcy Act, a bill designed in part to implement the concept of 
needs-based bankruptcy.

[[Page H4355]]

  In February the chairman of the Committee on the Judiciary 
Subcommittee on Commercial and Administrative Law, the distinguished 
gentleman from Pennsylvania (Mr. Gekas), built on this approach by 
introducing H.R. 3150, the Bankruptcy Reform Act of 1998.
  H.R. 3150 incorporated, with modifications and additions, most of 
H.R. 2500's consumer bankruptcy provisions while also addressing other 
bankruptcy related subjects.
  Our committee sought to achieve an appropriate balance between debtor 
and creditor rights in endorsing a needs-based bankruptcy process that 
would increase creditor recoveries while offering relief to deserving 
debtors. Those who needed an immediate fresh start would get it, but 
those who could afford to pay a substantial portion of their 
obligations out of future income before getting a fresh start would be 
required to do so.
  Under H.R. 3150 as reported, individuals or couples with income 
levels equaling or exceeding national median figures that take into 
account family size may be ineligible, depending on certain 
calculations, to be chapter 7 debtors. Chapter 7 offers a fresh start, 
without encumbering future income, to individual debtors who are 
prepared to give up all of their nonexempt assets. Those denied access 
to chapter 7 under the pending legislation generally will have the 
option of making payments under a chapter 13 plan for a number of years 
and qualifying for a limited discharge eventually.
  The chapter 7 disqualification is more limited in scope as a result 
of committee action raising the income threshold for disqualification 
from 75 percent to 100 percent of national median income figures.
  The higher cutoff point, endorsed by the committee, addresses a major 
argument of opponents of this legislation that the needs-based formula 
was too harsh in its treatment of people with very limited means.
  Our committee sought to ensure that family support obligations would 
be protected under the reported version of the bill. It adopted an 
amendment that I offered to prevent any dilution of the priority 
treatment accorded claims of spouses, former spouses and children for 
alimony, maintenance, or support, and also adopted four family support 
related amendments offered by the learned gentleman from Virginia (Mr. 
Boucher). Although this legislation was never intended to derogate from 
the preferred treatment of family support obligations under bankruptcy 
law, the Committee on the Judiciary welcomed the opportunity to take 
action emphasizing, in a number of contexts, its firm commitment to 
facilitating the fulfillment of such obligations.
  In addition, as a result of a provision in the manager's amendment, 
the priority in distribution for support related obligations is 
substantially enhanced compared with current law.
  I wish to commend the gentleman from Pennsylvania (Mr. Gekas) for 
introducing H.R. 3150 and conducting important hearings on bankruptcy 
reform in his subcommittee. He is performing, as he does so often, an 
important public service by serving as our floor manager for this bill.
  The remedial legislation before us not only covers consumer issues 
but also addresses business bankruptcy, tax related issues in 
bankruptcy, and transnational bankruptcy. It merits the support of this 
body.
  I hope in the months ahead we will be able to point to bankruptcy 
reform as one of the significant achievements on a bipartisan basis of 
the 105th Congress.
  Mr. GEKAS. Mr. Chairman, H.R. 3150 is one of the most comprehensive 
legislative efforts to reform bankruptcy law and practice in the 20 
years since the enactment of the Bankruptcy Code in 1978. The guiding 
principle of these reforms has been to restore personal responsibility 
and integrity in the bankruptcy system and to ensure that it is fair 
for both debtors and creditors.
  This bill represents the culmination of more than three years of 
careful analysis and review of our nation's current bankruptcy system. 
In the past year, the Subcommittee on Commercial and Administrative 
Law, of which I serve as Chairman, has held nine hearings on various 
aspects of bankruptcy reform. With regard to H.R. 3150 alone, the 
Subcommittee held four hearings. Over the course of those hearings, 
more than 60 witnesses, representing a broad cross-section of interests 
and constituencies in the bankruptcy community, testified. Nearly every 
major organization having an interest in bankruptcy reform had an 
opportunity to participate in these hearings.
  H.R. 3150's reforms pertain to consumer and business bankruptcy law 
and practice, and includes provisions regarding the treatment of tax 
claims and enhanced data collection. H.R. 3150 also establishes a 
separate chapter under the bankruptcy Code devoted to the special 
issues and concerns presented by international insolvencies.
  Why do we need needs-based consumer bankruptcy reform? The answers 
are not only easy, but obvious. Last year, bankruptcy filings topped 
1.4 million and even exceeded the number of people who graduated 
college in that same year. Nevertheless, literally thousands of people 
who have the ability to repay their debts are simply filing for 
bankruptcy relief and walking away from those debts without paying 
their creditors a single penny under the current system.
  Why do we care about creditors? Again, the answer is easy and 
obvious. When they don't get paid, someone suffers a loss. The only way 
they can make up that loss is by passing it along to us--you and me--in 
the form of increased prices and higher interest rates. Besides being 
unfair to those of us who pay our debts, the current consumer 
bankruptcy system at best lacks balance, at worst lacks morality and is 
subject to abuse.

  There are two extreme approaches to bankruptcy relief: No one is 
allowed any bankruptcy relief or bankruptcy relief is granted to anyone 
who requests such relief. Our current system has become dangerously 
close to the latter extreme and the enormous leap in the number of 
bankruptcy cases being filed appear to document that.
  H.R. 3150's needs-based reforms will restore balance to consumer 
bankruptcy law while reducing its potential for abuse. Not only will 
everyone in the bankruptcy system benefit from these reforms, but 
people like us--the corner grocer who extends credit to his neighbors, 
the family who's buying its first home and trying to get the lowest 
rate of interest for financing that purchase, the single mother who's 
applying for credit for the first time--are the ones who will also 
benefit from H.R. 3150.
  H.R. 3150 is our response. It offers a balanced approach to reform 
with regard to consumer as well as business bankruptcy reform. In 
addition, as reported from the Full Committee last month, H.R. 3150 
fully protects the priority treatment accorded to child support claims 
and fully responds to the concerns that some have expressed about this 
issue.
  H.R. 3150 creates a debtor's ``bill of rights'' with regard to the 
services and notice that a consumer should receive from those that 
render assistance in connection with the filing of bankruptcy cases. 
Through misleading advertising and deceptive practices, ``petition 
mills'' deceive consumers about the benefits and detriments of 
bankruptcy. H.R. 3150 responds to this problem by instituting mandatory 
disclosure and advertising requirements as well as enforcement 
mechanisms.
  In all, H.R. 3150 represents a balanced approach to bankruptcy reform 
with the goal of reducing abuse, promoting greater uniformity, and 
restoring public confidence in the integrity of the bankruptcy system.
  I include the following letters of support for H.R. 3150 in the 
Record.

                                            National Federation of


                                         Independent Business,

                                     Washington, DC, June 9, 1998.
     Hon. George Gekas,
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative Gekas: On behalf of the 600,000 small 
     business owners of the National Federation of Independent 
     Business (NFIB), I am writing to urge your support for H.R. 
     3150, the Bankruptcy Reform Act of 1998.
       Small business is concerned, as many are, about the rapid 
     increase of bankruptcy filings over the last several years. 
     Whether their customers are other businesses or individual 
     consumers, small businesses feel the pain to their bottom 
     line when their customers go bankrupt. As an unsecured 
     creditor, most small businesses never even get a chance to 
     get back what they are owed.
       A recent poll found that 77 percent of NFIB members want to 
     make the criteria for declaring bankruptcy more stringent. 
     Small business owners feel current law is in desperate need 
     of reform in order to curb the abuses of the current federal 
     bankruptcy system.
       H.R. 3150 goes a long way to fight the abuses to the 
     bankruptcy system. Most importantly, the legislation strikes 
     a fair balance by giving small business owners more of a 
     chance to get back what is rightfully theirs, while still 
     providing bankruptcy protection to those small businesses who 
     truly need it.
       I urge you to give small business a chance to get what is 
     theirs. Support H.R. 3150, the Bankruptcy Reform Act of 1998.
           Sincerely,

                                                   Dan Danner,

                                                   Vice President,
     Federal Governmental Relations.
                                  ____


                 National Consumer Bankruptcy Coalition


   STATEMENT ON THE HOUSE JUDICIARY COMMITTEE'S PASSAGE OF H.R. 3150

       We are very pleased that the House Judiciary Committee 
     today favorably reported The

[[Page H4356]]

     Bankruptcy Reform Act of 1998 (H.R. 3150), clearing the 
     measure for action by the full House. We also applaud 
     Chairman Hyde and the Committee members for putting to rest 
     any question about the priority status of child support and 
     alimony payments in the bankruptcy process. The amendments 
     adopted by the Committee specifically and categorically state 
     that child support and alimony payments must be given 
     priority in bankruptcy proceedings. There is no greater 
     personal responsibility than meeting one's child support and 
     alimony obligations, and we strongly support these measures 
     to ensure that these payments are in no way affected by this 
     legislation.
       The result is that H.R. 3150 has emerged from the Committee 
     even stronger in terms of personal responsibility and should 
     enjoy strong bipartisan support on the House floor. We urge 
     the full House to act upon this legislation at the earliest 
     opportunity so that sensible, fair bankruptcy reform can be 
     enacted in 1998. We are also pleased that the Senate plans to 
     move forward next week on significant bankruptcy reform 
     legislation.
       H.R. 3150 will restore personal responsibility and fairness 
     to our bankruptcy system. For too long now, our flawed 
     bankruptcy law has provided complete debt relief to 
     individuals who have enough income to repay at least some of 
     what they owe. As a result, the overwhelming majority of 
     Americans who pay their bills on time have been forced to 
     pick up the tab--to the tune of about $400 per household--for 
     those who walk away from their debts. This important 
     legislation will correct this flaw by ensuring that 
     bankruptcy filers receive only the amount of debt relief they 
     need, no more and no less.
         American Bankers Association; American Financial Services 
           Association; America's Community Bankers; Bankruptcy 
           Issues Council; Consumer Bankers Association; Credit 
           Union National Association; Independent Bankers 
           Association of America; National Retail Federation; 
           U.S. Chamber of Commerce.
                                  ____

                                        Chamber of Commerce of the


                                     United States of America,

                                    Washington, DC, March 2, 1998.
     Hon. George Gekas,
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative Gekas: The U.S. Chamber of Commerce--
     the world's largest business federation representing more 
     than three million businesses of every size, sector and 
     region--strongly supports bankruptcy reform legislation, 
     specifically, H.R. 3150, the Bankruptcy Reform Act of 1998. 
     We urge you to support this bankruptcy reform legislation 
     sponsored by Chairman George Gekas, Representatives Bill 
     McCollum, Rick Boucher and James Moran. H.R. 3150 will reform 
     our bankruptcy laws and establish a ``needs-based'' system 
     which aids all Americans who are affected by the abuses and 
     misuses of the current code. The timing of this legislation 
     could not be more critical.
       The number of personal bankruptcy filings, which canceled 
     approximately $40 billion in consumer debt last year, is 
     rising precipitously. Early indications for 1997 suggest that 
     we will see the number rise by 20 percent over the 1996 
     record and the amount of debt canceled rise by 33 percent. 
     Given the strong performance of the economy during the past 
     year, these staggering increases in filings suggest that our 
     bankruptcy system must be reformed. Of course, the consumer 
     debt taken off the books by the bankruptcy system is not 
     really erased--instead, the cost is shifted to third parties 
     such as households and businesses, in the form of higher 
     prices and higher interest rates.
       In addition to the creation of a ``needs-based'' system, 
     the Chamber applauds the efforts by Chairman Gekas, 
     Representatives McCollum, Boucher and Moran in addressing 
     small business and farm bankruptcies, tax collections and 
     single-asset realty cases, as well as inclusion of education-
     related provisions and protections for those who receive 
     inadequate or improper counseling. These efforts could be key 
     in providing the best climate in which small business can 
     prosper.
       We look forward to working with you and your colleagues on 
     passing this legislation in this session of Congress.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____



                                     U.S. Chamber of Commerce,

                                     Washington, DC, June 8, 1998.
       To Members of the U.S. House of Representatives: The U.S. 
     Chamber of Commerce, the world's largest business federation, 
     representing more than three million businesses of every 
     size, sector and region, urges you to support passage of the 
     ``Bankruptcy Reform Act of 1998,'' H.R. 3150. This important 
     bipartisan legislation will reform our bankruptcy laws and 
     establish a ``needs-based'' system that will aid all 
     Americans who are affected by the abuses and misuses of the 
     current code.
       The number of personal bankruptcy filings, which canceled 
     approximately $40 billion in consumer debt last year, is 
     rising precipitously. Early indications for 1997 suggest that 
     we will see the number rise by 20 percent over the 1996 
     record and the amount of debt canceled rise by 33 percent. 
     Given the strong performance of the economy during the past 
     year, these staggering increases in filings indicate that our 
     bankruptcy system must be reformed. The fact is the consumer 
     debt taken off the books by the bankruptcy system is not 
     really erased. Instead, the cost is shifted to third parties 
     such as households and businesses, in the form of higher 
     prices and higher interest rates.
       The U.S. Chamber of Commerce believes that this bill would 
     close a number of loopholes in the law that encourages 
     debtors to take advantage of our current system and avoid 
     paying their debts. The legislation would steer debtors away 
     from the more lenient ``Chapter 7'' filing, back to ``Chapter 
     13,'' where courts establish timely repayment plans for those 
     that are able to repay a portion of their debts. Repeated use 
     of bankruptcy laws to continually walk away from debts would 
     be severely restricted.
       Because of the importance of this legislation to the 
     business community and consumers, we may include votes on or 
     in relation to H.R. 3150 as key votes in the Chamber's annual 
     How They Voted ratings.
           Sincerely,
     R. Bruce Josten.
                                  ____

                                            National Federation of


                                         Independent Business,

                                 Washington, DC, January 30, 1998.
     Hon. George Gekas,
     Chairman, Subcommittee on Commercial and Administrative Law, 
         Committee on Judiciary, U.S. House of Representatives, 
         Washington, DC.
       Dear Chairman Gekas: On behalf of the 600,000 small 
     business owners of the National Federation of Independent 
     Business (NFIB), I applaud your efforts to introduce real 
     bankruptcy reform legislation.
       Small business is concerned, as many are, about the rapid 
     increase of bankruptcy filings over the last several years. 
     Whether their customers are other businesses or individual 
     consumers, small businesses feel the pain to their bottom 
     line when their customers go bankrupt. As an unsecured 
     creditor, most small businesses never even get a chance to 
     get back what they are owed.
       A recent poll found that 77 percent of NFIB members want to 
     put more limits on people's ability to declare bankruptcy. 
     Small business owners feel current law is in need of reform 
     because the federal bankruptcy system has been abused.
       The Bankruptcy Reform Act of 1998 that you and Congressman 
     Moran have authored goes a long way to fight the abuses to 
     the bankruptcy system. It will also give small business 
     owners more of a chance to get what is rightfully theirs, 
     while still providing bankruptcy protection to those who 
     truly need it.
       Thank you for your leadership on this issue. NFIB looks 
     forward to working with you as this issue proceeds through 
     your subcommittee.
           Sincerely,

                                                   Dan Danner,

                                                   Vice President,
     Federal Governmental Relations.
                                  ____

         U.S. Department of Justice, United States Trustee, 
           Northern and Eastern Districts of California and 
           Nevada,
                                  San Francisco, CA, May 11, 1998.
     Representative George W. Gekas,
     U.S. House of Representatives,
     Washington, DC.
       Dear Mr. Gekas: The Small Business Proposal, a component of 
     H.R. 3150, the ``Bankruptcy Reform Act of 1998,'' is not an 
     untested concept and would codify the ``best practices'' of 
     the United States Trustees. Since January 1, 1995, the field 
     offices of Region 17 have conducted Initial Debtor Interviews 
     in every chapter 11 case filed. In advance of the interview, 
     we request the debtor supply detailed financial information 
     to our office. At the interview, we use that information to 
     focus on the debtor's business and work with the debtor to 
     understand what is required to emerge successfully from 
     chapter 11. We continuously monitor the debtor's financial 
     progress during the pendency of the chapter 11 case with 
     particular emphasis on the debtor's continuing viability. The 
     result of this practice is quicker, and more likely 
     successful, reorganization for chapter 11 cases.
       Please contact me if you have any questions.
           Sincerely,
                                            Linda Ekstrom Stanley,
     United States Trustee.
                                  ____

                                              The City of New York


                                               Law Department,

                                     New York, NY, April 15, 1998.
     Hon. George W. Gekas,
     Chairman, House Subcommittee on Commercial and Administrative 
         Law, Rayburn House Office Building, Washington, DC.
       Dear Chairman Gekas: The City of New York (the ``City'') 
     would like to thank you for your leadership in drafting H.R. 
     3150, the Bankruptcy Reform Act of 1998. The legislation will 
     be of great benefit to the City because it will strengthen 
     the ability of local governments to collect ad valorem taxes. 
     As your Subcommittee prepares for consideration of H.R. 3150, 
     I would like to offer my comments and suggestions on key 
     provisions of the legislation.
       The City is especially supportive of ``Title V, Tax 
     Provisions'', which will help ensure that local governments 
     receive more of the tax debt they are owed. Title V will also 
     make the bankruptcy process more predictable and stable for 
     local governments. While these changes will be very 
     beneficial to the City, it is critical that one provision of 
     H.R. 3150 be clarified to avoid unintentionally increasing 
     bankruptcy filings while reducing local government revenue.

[[Page H4357]]

       As drafted, H.R. 3150 proposes a new section, Section 511 
     of the Bankruptcy Code, which provides for an Internal 
     Revenue Code rate of interest on tax claims. This provision 
     is problematic as it does not specifically identify or limit 
     the types of taxes subject to the proposed interest rate. 
     Were this section limited to excise tax claims or tax claims 
     on or measured by income or gross receipts, the City would 
     have minimal objection that the interest rate should be the 
     ``statutory rate'' for such taxes. On the other hand, if the 
     bill defines ``tax'' as including ad valorem taxes, the City 
     would have a very strong objection, as the interest rate 
     would be significantly less than that which is charged by the 
     City, and would, in fact, encourage bankruptcy filings by 
     real property owners in order to obtain this more favorable 
     rate. H.R. 3150 should specifically exclude ad valorem taxes 
     from the definition of ``tax'' under Section 511.
       The City supports the language in the Bankruptcy Reform Act 
     of 1998 that recognizes that ad valorem taxes must be paid 
     ahead of other debts in bankruptcy cases. The City applauds 
     your leadership on this critical revision of Bankruptcy Code 
     Section 724 for the protection of local government budgets. 
     Cities are non-consensual creditors and are in a unique 
     relationship with debtors in bankruptcy. As such, cities 
     should be paid before other creditors in bankruptcy cases.
       The City strongly supports H.R. 3150's revisions to Section 
     505 of the Bankruptcy Code. The legislation would provide 
     that a challenge to real property assessment may occur only 
     if the period of time to contest such tax did not expire by 
     operation of law. Section 505 of the Bankruptcy Code 
     presently allows debtors to challenge any tax covering any 
     period of time unless such tax had been contested and 
     adjudicated prior to the commencement of the bankruptcy case. 
     Thus, taxes may be contested in a bankruptcy proceeding even 
     if the statute of limitations to challenge the taxes had 
     expired under the relevant state law. This Section is 
     patently unfair to taxing authorities. It fosters abuse by 
     debtors who potentially can force a government to litigate 
     taxes which were collected years ago and had not been timely 
     challenged. It leaves municipalities in a fiscally precarious 
     and vulnerable position. There is no legal finality to tax 
     challenges or stability in local government finances. Since 
     there is no statute of limitations as Section 505 of the 
     Bankruptcy Code is presently drafted, the changes made by 
     H.R. 3150 to Section 505 of the Bankruptcy Code are of 
     enormous importance.
       The City supports H.R. 3150's modifications to Section 342 
     of the Bankruptcy Code that would require a debtor to submit 
     necessary information for creditors, such as taxpayer 
     identification numbers, and parcel numbers for blocks and 
     lots, and to list the appropriate department or agency for 
     filing City claims. This information will enable the City to 
     act more efficiently. However, the City would like 
     clarification that governmental units are allowed to 
     designate safe harbor mailing addresses for each department, 
     agency or instrumentality of such governmental units. In 
     addition, the City would like a clarification that ``notice'' 
     to a particular department, agency or instrumentality of a 
     governmental unit shall not constitute ``notice'' to other 
     departments, agencies or instrumentalities of the same 
     governmental unit.
       Thank you again for your leadership on bankruptcy issues. 
     H.R. 3150 can greatly improve the City's ability to collect 
     debts owed by bankruptcy filers which will relieve revenue 
     pressure on all other taxpayers. We appreciate your support 
     for the changes outlined above, and with these clarifications 
     support the prompt passage of H.R. 3150.
           Sincerely,
                                                  Michael D. Hess,
     Corporation Counsel.
                                  ____

         Commonwealth of Virginia, Department of Social Services, 
           Division of Child Support Enforcement
                                       Richmond, VA, June 9, 1998.
     Hon. James P. Moran,
     House of Representatives, Washington, DC.
       Dear Congressman Moran: As Director Nick Young is 
     traveling, I am responding to your request for comments on 
     child support-related portions of H.R. 3150. The inclusion of 
     provisions in H.R. 3150 to improve child support collections 
     when a debtor has filed for protection under the Bankruptcy 
     Code would be very helpful to families in Virginia. 
     Amendments proposed in Section 146 would substantially assist 
     our efforts to enforce child support obligations during the 
     bankruptcy of a child support obligor. Currently, there exist 
     in bankruptcy a number of issues that make enforcement of 
     child support debts difficult when that parent has other 
     creditors also attempting to gain a position in the ranking 
     for distribution of the debtor's bankruptcy estate.
       While we have many valuable tools with which to enforce 
     child support collections, bankruptcy can place the child 
     support debt collection in competition with other creditors. 
     This is not normally the case in the rest of our support 
     enforcement tools; child support takes high precedence. In 
     bankruptcy cases filed under Chapters 12 and 13, we must 
     cease income withholding orders and add the child support 
     debt into all the other financial obligations considered in 
     developing the debtor's plan. This hardly puts children 
     first!
       Congressman Gekas' proposed amendments in section 146 would 
     correct this situation, and ensure ``children first'' in 
     bankruptcy situations where child support is involved. We 
     most certainly believe these amendments are beneficial to 
     Virginia's families and the larger welfare reform initiative 
     across the country.
           Sincerely,
                                                  Bill Brownfield,
     Legislative Coordinator.
                                  ____



                            California Family Support Council,

                                      Sacramento, CA June 4, 1998.
     Hon. George W. Gekas,
     House of Representatives, Washington, DC.
       Dear Chairman Gekas: The California Family Support Council 
     is an organization of district attorneys and other 
     professionals in the State of California who represent the 
     interest of the children of this state in the establishment 
     and collection of support under the federal child support 
     enforcement program (Social Security Act, Title IV-D). As 
     president of the Council I wish to express the gratitude of 
     our members for your inclusion of provisions in H.R. 3150 to 
     improve child support collections when a debtor has filed for 
     protection under the Bankruptcy Code.
       In particular, section 146 of H.R. 3150 contains a 
     veritable ``wish list'' of provisions which substantially 
     enhances our efforts to enforce support obligations during 
     the bankruptcy of a support obligor. It closes many of the 
     ``loopholes'' which currently exist in bankruptcy and which 
     greatly hamper our efforts to enforce support debts when a 
     debtor has other creditors who are also seeking participation 
     in the distribution of the assets of a debtor's bankruptcy 
     estate.
       Congress has already provided many tools which give us an 
     enormous collection advantage over other creditors outside 
     bankruptcy. We can, for example, intercept tax refunds; 
     prosecute for criminal non-support or contempt of court; 
     revoke, suspend or non-renew licenses; obtain income 
     withholding order which, under federal law, have an absolute 
     priority over other creditors' claims (42 U.S.C. 
     Sec. 666(B)(7); obtain penalties against employers who fail 
     to honor income withholding orders; obtain such income 
     withholding orders without leave of court; and obtain 
     security bonds or guarantees for the payment of support. In 
     addition nonpayment of support interstate is a federal crime. 
     All of these collection techniques--and many more--are 
     available at little or no cost to support obligees through 
     the child support enforcement program.
       During bankruptcy, however, many of these remedies must be 
     reconciled with other bankruptcy code provisions which 
     protect the debtor and place support obligees in competition 
     with other creditors. What is worse, in cases filed under 
     Chapters 12 and 13, income withholding must cease and the 
     support debts must be structured to conform to the debtor's 
     plan.
       If the amendments you propose in section 146 of H.R. 3150 
     were enacted, the opposite would be true. Plans could not be 
     confirmed or discharges granted unless all postpetition 
     support payments were made; income withholding would not be 
     affected by the filing of a bankruptcy petition; lingering 
     issues relating to the dischargeability of certain support 
     debts would be clarified; and distinctions between assigned 
     and unassigned support would be eased. In short, your 
     proposed amendments would make the effect of bankruptcy on a 
     child support creditor negligible.
       I have been informed that there is some opposition to H.R. 
     3150 based on the premise that support creditors would be 
     worse off if certain credit car debts were made 
     nondischargeable and credit card creditors and support 
     creditors were in competition for the same post-discharge 
     assets. I can only say that we are in competition with those 
     creditors prior to bankruptcy now. We do not see such debts 
     as impairing our ability to collect support, especially in 
     view of the advantages child support creditors have under 
     current state and federal law as outlined above. Our problems 
     stem not from competition with credit card creditors outside 
     bankruptcy, but from the disadvantages we incur as collectors 
     of support under current bankruptcy law during bankruptcy. 
     Your proposed amendments would give support creditors an 
     enormous advantage over other creditors during bankruptcy and 
     greatly aid us in the discharge of our support enforcement 
     responsibilities.
       I just want you to know that, on behalf of the public child 
     support enforcement community in California, we 
     enthusiastically support your efforts and look forward to the 
     swift enactment of H.R. 3150.
           Yours very truly,
                                                  Jonathan Burris,
     President.
                                  ____



                                               Bank of America

                                San Francisco, CA, March 11, 1998.
     Hon. George W. Gekas,
     House of Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Congressman Gekas: I am writing to urge your support 
     of H.R. 3150, the ``Bankruptcy Reform Act of 1998''.
       Consumer bankruptcy reform is urgently needed to address 
     the recent explosion in the number of personal bankruptcy 
     filings. Last year, for the first time in history, more than 
     1 million personal bankruptcy petitions were filed. It is 
     anticipated that as many as 1.4 million consumers will file 
     for bankruptcy this year. This explosion in filings is most 
     troubling given that it comes at a time when the American 
     economy is strong and unemployment is low.

[[Page H4358]]

       The rise in personal bankruptcies has an undeniable impact 
     on Bank of America. However, it is consumers who are 
     absorbing the heaviest burden. This year, approximately $40 
     billion in consumer debt will be written off as a result of 
     personal bankruptcy filings. These losses translate to 
     approximately $400 for every American household and are 
     passed on to all consumers as higher interest rates and 
     higher prices for goods and services. In effect, the vast 
     majority of consumers who pay their bills on time are picking 
     up the tab for those who do not.
       Our flawed bankruptcy system allows this inequity to 
     continue. The Bankruptcy Code allows individuals to erase all 
     their debts even if they have the ability to repay some 
     portion of them. Not surprisingly, the overwhelming majority 
     of filers--70 percent--choose Chapter 7, which allows 
     virtually all debts to be erased regardless of whether the 
     debtor could repay some of what he or she owes. Recent 
     research shows, in fact, that about 25 percent of Chapter 7 
     filers have the ability to repay their housing debt plus at 
     least one-third of their remaining debts. One in twenty 
     Chapter 7 filers has sufficient income to repay all debts, 
     but receives complete relief anyway.
       H.R. 3150 would change the law to ensure that individuals 
     receive the amount of debt relief they need, no more and no 
     less. It would allow those in the most serious financial 
     difficulty to get the fresh start they need while requiring 
     those with an ability to repay a portion of their debts to do 
     so. It is a sensible solution to a serious problem.
       I urge your support of H.R. 3150. This legislation 
     represents important consumer bankruptcy reform that is 
     necessary to stem the rising costs associated with personal 
     bankruptcies, while making the bankruptcy system more 
     equitable for consumers, creditors and debtors alike.
           Sincerely,
     James G. Jones.
                                  ____



                             National Association of Counties,

                                     Washington, DC, June 8, 1998.
     Hon. George W. Gekas,
     Chairman, Commercial and Administrative Law Subcommittee of 
         the House Judiciary Committee, Rayburn House Office 
         Building, Washington, DC.
       Dear Chairman Gekas: The National Association of Counties 
     (NACo) supports the Bankruptcy Reform Act of 1998 (H.R. 3150) 
     as reported by the Committee on the Judiciary. We urge the 
     House of Representatives to vote for H.R. 3150 when it is 
     considered on the floor.
       NACo particularly is pleased with provisions included in 
     the bill reported by the Committee on the treatment of state 
     and local government tax liens in bankruptcy proceedings. The 
     provisions in H.R. 3150 are very important to states, 
     counties, cities and school districts. The bill would change 
     a number of sections in the Bankruptcy Code that have caused 
     counties to lose millions of dollars in property tax 
     revenues. Counties have to increase taxes, cut programs or 
     find substitute funding to replace this lost revenue as a 
     result of current federal bankruptcy law. We are pleased that 
     the bill contains a majority of the provisions developed and 
     proposed by the National Association of County Treasurers and 
     Finance Officers, an affiliate of NACo.
       If you have any questions about the position of the 
     National Association of Counties, please call Ralph Tabor or 
     our staff at 202-942-4254.
       Thank you for your consideration.
           Sincerely,
                                                   Larry E. Naake,
     Executive Director.
                                  ____



                                      Colorado Counties, Inc.,

                                       Denver, CO, April 29, 1998.
     Hon. George W. Gekas,
     Member, House Judiciary Committee,
     Rayburn House Office Building, Washington, DC.
       Dear Congressman Gekas: On behalf of Colorado's 63 county 
     governments, I am writing to urge your continued support of 
     H.R. 3150 also known as the ``Bankruptcy Reform Act of 
     1998.'' We understand that the House Judiciary Committee will 
     be marking up the legislation in the next week, and we 
     appreciate your leadership in assuring its provisions are 
     considered favorably.
       As you are aware, the National Association of County 
     Treasurers and Finance Officers (NACTFO) has been an active 
     participant in the ongoing discussions related to the 
     priority of ad valorum tax liens in bankruptcy proceedings. 
     The organization previously submitted to you a paper entitled 
     ``Local Government Recommendations for Bankruptcy Code,'' and 
     attended all public hearings of the National Bankruptcy 
     Review Commission.
       As H.R. 3150 is considered in the Judiciary Committee, we 
     encourage you to consider the attached ``Specific 
     Recommendations to Amend H.R. 3150'' dated April 10, 1998, as 
     prepared by The Honorable Ray Valdes, Co-Chair of the 
     Legislative Committee of the National Association of County 
     Treasurers and Finance Officers. The recommendations include 
     a number of provisions that we believe will make H.R. 3150 an 
     even stronger reform measure.
       If you have specific questions regarding the proposal, I 
     encourage you to contact The Honorable Ray Valdes at 
     407.321.1130 or The Honorable Sandy Hume, Boulder County 
     Treasurer, at 303.441.3500.
       Thank you for your consideration.
           Sincerely,
                                                    Peter B. King,
     Director.
                                  ____

         
                                           National Association of


                                        Federal Credit Unions,

                                Washington, DC, February 26, 1998.
     Hon. George W. Gekas,
     Chairman, Commercial and Administrative Law,
     House Judiciary Committee, Washington, DC.
       Dear Chairman Gekas: On behalf of the National Association 
     of Federal Credit Unions (NAFCU), the only national trade 
     association exclusively representing the interests of the 
     nation's federal credit unions, I wish to commend you on your 
     efforts to restore personal responsibility to the bankruptcy 
     system.
       NAFCU believes that the ``Bankruptcy Reform Act of 1998'' 
     (H.R. 3150) will help to ensure that the system is fair for 
     debtors, creditors and consumers. Because of the unique 
     structure of member-owned credit unions all losses suffered 
     by a credit union are passed down through the members in the 
     form of higher loan rates, lower rates on savings and/or more 
     stringent lending criteria. Credit unions take great pride in 
     working with their members who encounter financial 
     difficulties and your legislation is certainly a step in the 
     right direction. NAFCU is pleased to endorse this 
     legislation.
       NAFCU would like the opportunity to testify and share with 
     the Committee the impact bankruptcies have on member-owned 
     cooperative credit unions, and the unique role credit unions 
     can play in assisting those in dire financial straits.
       Thank you for the opportunity to participate in this 
     important effort. Please allow me to extend a special note of 
     appreciation to the members of your staff, especially Dina 
     Ellis, for their assistance and support.
       We look forward to working with you on this and other 
     challenging issues affecting credit unions and your credit 
     union constituents.
           Sincerely,

                                           William J. Donovan,

                                            Senior Vice President,
     Deputy General Counsel.
                                  ____

         National Multi Housing Council and National Apartment 
           Association,
                                 Washington, DC, February 2, 1998.
     Hon. George Gekas,
     Chairman, Commercial and Administrative Law Subcommittee, 
         House of Representatives, Washington, DC.
       Dear Chairman Gekas: On behalf of the National Multi 
     Housing Council (``NMHC'') and the National Apartment 
     Association (``NAA''), I am writing to convey our strong 
     support of your legislation, the ``Bankruptcy Reform Act of 
     1998.''
       NMHC and NAA jointly operate a federal legislative program 
     which provides a unified voice for the private apartment 
     industry. Our combined memberships are engaged in all aspects 
     of the ownership and operation of apartments, including 
     finance, development, construction, and management.
       Bankruptcy filings in the nation continue their upward 
     climb. According to the most recent information from the U.S. 
     Department of Justice's Administrative Office of U.S. Courts, 
     the federal agency which oversees the nation's federal 
     bankruptcy courts, bankruptcy filings during the 12-month 
     period ending September 30, 1997, were highest on record at 
     1,367,364, representing over a 400 percent increase since 
     1980.
       The National Bankruptcy Review Commission has spent 
     considerable time investigating the cause of these bankruptcy 
     filings, and while there is no single answer, it is clear 
     that part of the problem lies in the abuses of the U.S. 
     Bankruptcy Code. NMHC and NAA believe that your legislation 
     will help to stem these abuses and provide a more level 
     playing field between debtors and creditors.
       NMHC and NAA commend you for your leadership in reforming 
     the Code and look forward to working with you during the 
     105th Congress to pass the Bankruptcy Reform Act of 1998.
           Sincerely,
     Scott Belcher.
                                  ____


           [News release from the National Retail Federation]

National Retail Federation Voices Support for Bankruptcy Reform Act of 
                                  1998


bill would stem soaring filings and restore common sense to bankruptcy 
                                  code

       Washington, DC, February 3, 1998--The National Retail 
     Federation, the world's largest retail trade association, 
     today voiced its support for The Bankruptcy Reform Act of 
     1998, calling it a giant first step that puts responsibility 
     and sensibility back into the bankruptcy code.
       ``We applaud Rep. Gekas and his colleagues for their 
     leadership in crafting this common-sense approach to 
     bankruptcy reform,'' said NRF President Tracy Mullin. ``This 
     bill will ensure that those with real need get real relief.''
       The bill, introduced by Reps. George Gekas (R-PA), Thomas 
     Moran (D-VA), Bill McCollum (R-FL) and Rick Boucher (D-VA), 
     addresses what NRF believes are fundamental flaws in the 
     current bankruptcy code: that individuals with the ability to 
     repay their debts are not required to do so, nor is there any 
     mechanism to determine their ability to pay.
       Mullin noted that the number of individuals filing 
     bankruptcy has soared in recent years--up nearly 60 percent 
     in two years--in

[[Page H4359]]

     spite of a growing economy and low unemployment. A recent 
     study also revealed that 25 percent of those filing Chapter 7 
     could repay at least one-third of their debts.
       ``That's just plain wrong,'' she said. ``The bottom line is 
     the costs associated with bankruptcy don't disappear; 
     everyone pays for those who walk away from their debts.''
       Retailers lost billions last year in bankruptcy claims. The 
     growth in bankruptcy filings--particularly Chapter 7 
     filings--costs the average U.S. household an estimated $500 
     in higher prices for goods and services.
       ``The Bankruptcy Reform Act of 1998 is a positive step 
     forward to restoring common sense to the bankruptcy code,'' 
     Mullin concluded.
       The National Retail Federation (NRF) is the world's largest 
     retail trade association with membership that includes the 
     leading department, specialty, discount, mass merchandise and 
     independent stores, as well as 32 national and 50 state 
     associations. NRF members represent an industry that 
     encompasses over 1.4 million U.S. retail establishments, 
     employs more than 20 million people--about 1 in 5 American 
     workers--and registered 1997 sales of $2.5 trillion. NRF's 
     international members operate stores in more than 50 nations.
                                  ____



                                                        Fleet,

                                        Horsham, PA, May 19, 1998.
     Hon. George W. Gekas,
     Rayburn House Office Building,
     Washington, DC.
       Dear Congressman Gekas: On behalf of Fleet Financial Group 
     I urge you to support H.R. 3150, the ``Bankruptcy Reform Act 
     of 1998'' which is scheduled to come to the House floor this 
     week. H.R. 3150 was reported favorably by the Judiciary 
     Committee last week and contains urgently needed reforms to 
     the consumer bankruptcy system. The bill establishes a fair 
     and equitable ``needs'' test that requires those that can 
     afford to repay some or all of their debts to do so.
       Consumer bankruptcy filings exceeded 1.3 million last year, 
     an increase of 20% from 1996 and more than 350% from 1980. 
     Contrary to popular belief, credit cards are not a leading 
     cause. Credit card loans represent only 7% of total US 
     consumer debt and less than 16% for bankrupts. Ninety-six-
     percent of credit card holders pay on-time and only one-
     percent end up in bankruptcy .
       Surveys have found an increasing number of consumers view 
     bankruptcy as an acceptable option with little or no stigma. 
     The 5,000 petitions filed daily cost responsible debtors 
     upwards of $400 per year, or the equivalent of one-month's 
     groceries for a family of four. To protect these families, it 
     is essential that the system be reformed as proposed by H.R. 
     3150.
       Some opponents of this legislation have argued that it 
     raises concerns about child support payments. However, the 
     Judiciary Committee adopted several amendments last week 
     designed to strengthen and clarify the priority given to 
     child support payments in bankruptcy proceeding and to deal 
     effectively with other issues raised. Current federal and 
     state law, as well as H.R. 3150 as reported by the Judiciary 
     Committee, make it clear that child support must be paid 100% 
     before repayment of any unsecured debt, including credit card 
     debt. In fact, the House and Senate both recently passed the 
     Child Support Performance and Incentive Act of 1998 that 
     strengthens current law by increasing penalties for 
     nonpayment of child support. That bill is going to conference 
     and is expected to be signed into law by the President soon.
       Fleet Financial Group urges you to vote YES on H.R. 3150 
     when it comes to the House floor and to reject amendments 
     that weaken the needs test or otherwise undermine this 
     important legislation.
           Sincerely,
                                               Joseph W. Saunders,
     Chairman and CEO.
                                  ____



                                                     Experian,

                                       Orange, CA, April 15, 1998.
     Hon. George W. Gekas,
     Chairman, House Judiciary Subcommittee on Commercial and 
         Administrative Law, House of Representatives, Washington, 
         DC.
       Dear Mr. Chairman: I am writing on behalf of Experian, a 
     leader in the consumer credit reporting industry, to express 
     our support for your bill, H.R. 3150, the Bankruptcy Reform 
     Act of 1998. Your bill represents a balanced approach to 
     restoring personal responsibility to our federal bankruptcy 
     system.
       The proposal to require certain filers to repay at least 
     some of their debt when seeking bankruptcy protection is a 
     commonsense measure. The current bankruptcy system is flawed 
     because it allows debtors that clearly have an ability to 
     repay to walk away from their debts. Credit grantors deserve 
     a chance to work out a payment schedule with consumers who 
     have reasonable incomes.
       At the same time, your proposal ensure that relief will be 
     available for those who truly need bankruptcy protection. In 
     addition, Experian supports the provisions of H.R. 3150 that 
     promote consumer education and encourage debtors to fully 
     explore alternatives to bankruptcy.
       Now is the time for bankruptcy reform. The U.S. economy is 
     stable and unemployment is low. Yet, last year 1.4 million 
     individuals filed for personal bankruptcy, a record number 
     that has more than doubled during the past decade. Personal 
     bankruptcies costs the economy more than $40 billion each 
     year, an amount that translates to about $400 per American 
     family.
       Please continue your leadership on this important reform 
     measure.
           Sincerely,
                                                  D. Van Skilling,
     Chairman and CEO.
                                  ____


   Sent to All Members of the House Judiciary Committee, May 5, 1998

       Dear Representative: We are writing in anticipation of the 
     Committee's consideration of HR 3150, the ``Bankruptcy Reform 
     Act of 1998.'' Our organizations urge the Committee to 
     endorse a provision reported by the Subcommittee on April 23 
     to delete the $4 million cap from the definition of single 
     asset real estate.
       Single asset real estate is a form of real estate financing 
     whereby the owner of a single piece of commercial real estate 
     borrows funds from a lender and gives a mortgage on the 
     property as collateral. The distinguishing feature of this 
     arrangement is that the owner holds the property as an 
     investment and does not conduct any business on the property. 
     Therefore, arguments that this will cost jobs are baseless 
     and erroneous. Rather, bankruptcies that cause property 
     deterioration result in vacant buildings, tax losses to 
     communities, economic decay and significant job losses.
       Congress recognized that single asset entities should 
     receive expedited treatment with the passage of the 
     Bankruptcy Reform Act of 1994. However, during the final 
     hours just prior to passage, a $4 million cap was arbitrarily 
     inserted into the definition of single asset real estate. The 
     presence of the $4 million cap is indefensible because there 
     is no basis in fact, law, or commercial lending practice for 
     the cap. To the contrary, the utility of the single asset 
     provisions in avoiding or shortening futile Chapter 11 
     reorganization proceedings is greater, rather than less, for 
     large properties with more secured debt. Therefore, the $4 
     million cap should be deleted to permit the efficient 
     operation of the single asset provisions and the fulfillment 
     of their purpose.
       Finally, mortgages may be used to fund pensions, annuities 
     and life insurance. They will be at risk in the next downturn 
     of the economic cycle if defaulting single asset real estate 
     owners are permitted to abuse the bankruptcy process.
       For these reasons, we strongly support HR 3150, and 
     specifically, the provision in the bill that would delete the 
     $4 million cap from the definition of single asset real 
     estate.
           Sincerely,
     American Bankers Association.
     American Council of Life Insurance.
     Mortgage Bankers Association of America.
     National Association of Realtors.
     Institute of Real Estate Management.
                                  ____

         


                                                    Household,

                                                     June 8, 1998.
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative: Household International strongly 
     supports passage of HR 3150, the Bankruptcy Reform Act of 
     1998, and we urge your support for the bill when it appears 
     on the floor of the House later this week.
       Household International, headquartered in Illinois with 
     major facilities in California, Nevada and Virginia, is a 
     leading provider of consumer finance and credit card products 
     in the United States, Canada and the United Kingdom. 
     Household Finance Corporation, one of Household's core 
     businesses, is the oldest consumer finance company in the 
     United States. Household Credit Services and Household Retail 
     Services are two of the nation's largest issuers of general 
     purpose and private-label credit cards. Our principal credit 
     card products include the GM card and the AFL-CIO's Union 
     privilege card. Household recently reached agreement to buy 
     Beneficial Corporation and upon completion of that merger 
     will have more than 1000 branches throughout the United 
     States.
       Despite a strong economy, personal bankruptcies are soaring 
     and reached a record 1.3 million in 1997. Bankruptcies cost 
     consumers about $40 billion last year, equal to about $400 
     per family working to pay its bills. HR 3150 does not have as 
     a goal reducing the total number of bankruptcies, but it 
     contains a mechanism to guide some 11% of filers who have the 
     means to pay some of their debts into Chapter 13 bankruptcy 
     where they will work with the court to create a repayment 
     plan to pay a portion of the debts they have run up. 
     Household believes it is only fair that those who can pay 
     some of the debts do so, and according to a poll released by 
     the National Consumer league, 76% of the public agrees that 
     ``individuals should not be allowed to erase all their debts 
     in bankruptcy if they are able to repay a portion of what 
     they owe.''
       Amendments to HR 3150 added at the full Committee mark-up 
     raised the income level for the safe harbor provision of the 
     bill and added protections for children and spouses receiving 
     child support and/or alimony above those in existing law. We 
     believe the bill is fair and needed. Household strongly urges 
     your support for HR 3150.
           Sincerely,
                                                 J. Denis O'Toole,
                             Vice President, Government Relations.

[[Page H4360]]


     
                                  ____
                                                      Mellon Bank,


                                       One Mellon Bank Center,

                                     Pittsburgh, PA, June 8, 1998.
     Hon. George W. Gekas,
     U.S. House of Representatives,
     Washington, DC.
       Dear Congressman Gekas: I am writing to call your attention 
     to a matter that is of vital interest to every bank, savings 
     and loan, credit union and retailer across Pennsylvania. The 
     issue is bankruptcy reform. There is currently a bill in the 
     House that, in our view, addresses this growing problem and 
     injects some common sense reforms into our outdated 
     bankruptcy system. This bill, H.R. 3150, was recently 
     reported out of the House Judiciary Committee and is 
     scheduled for a vote on the floor this week.
       As you know, filings for bankruptcy have skyrocketed in 
     recent years to a point where it has become the option of 
     choice for many who face financial difficulties. While we 
     would never preclude the choice of a Chapter 7 filing for 
     those truly in need of complete debt relief, we do take issue 
     with those who possess the means to repay their debts but 
     instead walk away from their obligations.
       This abuse of the system does have a cost. At Mellon, in 
     fact, we lost, on average, over $75 million in each of the 
     last three years as a result of bankruptcy filings. We are 
     forced to raise the cost of credit for our responsible 
     customers to cover the losses we incur because of bad debt. 
     For retailers, like department stores, losses are covered 
     through higher prices on merchandise. But no matter how the 
     losses are recouped, the end result is the same; people who 
     pay their debts cover the cost of those who do not.
       To correct this worsening problem, we are asking you to 
     endorse ``needs-based'' bankruptcy reform legislation. H.R. 
     3150, we believe, provides a model reform measure for 
     Congress to adopt and we think the ideas presented in this 
     bill warrant your close inspection and your support.
       Please vote ``yes'' on bankruptcy reform.
           Sincerely yours,
                                                Martin G. McGuinn,
     Chairman.
                                  ____



                             Community Associations Institute,

                                                   April 27, 1998.
     Hon. George W. Gekas,
     U.S. House of Representatives,
     Washington, DC.
       Dear Chairman Gekas: On behalf of the 42 million Americans 
     who live in the nation's 205,000 community associations--
     condominium associations, cooperatives and homeowners 
     associations, I would like to thank you for supporting small 
     but important changes to the Federal Bankruptcy Code.
       Your willingness to include our changes in your amendment 
     in the nature of a substitute to H.R. 3150 is greatly 
     appreciated. These changes will obligate owners in homeowners 
     associations, condominium associations and cooperatives who 
     file for bankruptcy to pay association assessment fees as 
     long as they--or their Trustees--maintain an ownership 
     interest in their units. Community association assessments 
     will also not be treated as executory contracts.
       While changes to the Code in 1994 added important 
     provisions dealing with the collection of post-petition 
     assessments in certain condominiums and cooperatives, 
     homeowners associations and commercial condominium 
     associations were inadvertently omitted from the final 
     legislation. Your inclusion of our language in your amendment 
     will expand existing provisions to include homeowners 
     associations and tie the responsibility for post-petition 
     assessments to ownership.
       Without this change, bankrupt owners could continue to 
     avoid their assessment obligations whenever their units are 
     vacant or occupied by people who do not pay rent--while all 
     other association residents are left to pick up the tab.
       Again, thank you for taking notice of the importance of 
     this issue to over 42 million Americans. Please contact me by 
     phone (703-548-8600), fax (703-684-1581) or email 
     ([email protected]) if CAI may be of assistance in any 
     way.
           Sincerely,
                                            Cornelia I. Schneider,
     Issues Manager, Government & Public Affairs.
                                  ____



                                  America's Community Bankers,

                                                     June 9, 1998.
       Dear Representative:  America's Community Bankers (ACB) 
     urges you to support H.R. 3150, which would provide much-
     needed reform for our nation's bankruptcy laws.
       This legislation mandates that debtors who have the ability 
     to repay a portion of their debts be required to do so, 
     introducing the ``needs-based'' concept into the bankruptcy 
     system. Under the ``needs-based'' system, debtors who truly 
     need bankruptcy relief are provided a relatively quick and 
     easy discharge in Chapter 7, while debtors who have the 
     ability to repay are permitted to structure reasonable 
     repayment plans in Chapter 13.
       Further these revisions ensure that residential real estate 
     mortgages cannot be ``crammed down,'' or reduced in priority, 
     in bankruptcy. This rule, articulated by the Supreme Court in 
     the 1993 Nobelman case, provides for fairness and certainty 
     in mortgage-related transactions.
       Moreover, it should be noted that any issues relating to 
     child support and alimony have been resolved by the House 
     Judiciary Committee. While H.R. 3150 did not alter existing 
     law with respect to the priority of child support and alimony 
     payments, the Judiciary Committee did adopt a series of 
     amendments to address this issue. These amendments 
     specifically and categorically provide that child support and 
     alimony payments will be afforded priority over unsecured 
     debts, both during and subsequent to the bankruptcy 
     proceedings. Thus, child support and alimony payments are 
     clearly protected under H.R. 3150.
       H.R. 3150 creates an equitable system that balances the 
     interests of both debtors and creditors. ACB and our members 
     urge you to vote for H.R. 3150 because it will preserve and 
     improve the bankruptcy system for all Americans.
           Sincerely.
                                                  Robert R. Davis,
     Director of Government Relations.
                                  ____

                                      Council for Citizens Against


                                             Government Waste,

                                   Washington, DC, April 17, 1998.
     Hon. George Gekas,
     U.S. House of Representatives,
     Washington, DC
       Dear Representative Gekas: This letter is in response to 
     your request for our opinion on H.R. 3150 (The Bankruptcy 
     Reform Act of 1998). On behalf of the 600,000 members of the 
     Council for Citizens Against Government Waste (CCAGW), I am 
     pleased to support this important legislation. H.R. 3150 
     establishes fair and reasonable bankruptcy guidelines 
     designed to protect debtors, creditors, and consumers while 
     still holding debtors personally accountable.
       In 1997, 1.33 million bankruptcy petitions were filed in 
     this country, erasing an estimated $40 billion in consumer 
     debt, which resulted in increased interest rates, set higher 
     prices and increased layoffs. Each household will pay out an 
     extra $400 this year to account for that consumer debt. H.R. 
     3150 ensures that responsible consumers will no longer be 
     forced to shoulder such a large burden. By establishing a 
     system that determines the amount of financial relief a 
     debtor actually needs and requiring people to repay what they 
     can, H.R. 3150 obligates debtors to take more responsibility 
     for their situation.
       H.R. 3150 also creates a ``Debtor's Bill of Rights'' which 
     requires law firms and other consumer credit agencies to 
     refund the full cost of representing a debtor if they do not 
     adequately inform consumers of their rights and the potential 
     harm bankruptcy can cause. Too often, debtors are not aware 
     of options other than bankruptcy. The ``Debtor's Bill of 
     Rights'' should reduce the amount of bankruptcy claims filed 
     and therefore reduce the total amount of debt passed on to 
     responsible consumers. Additionally, H.R. 3150 establishes a 
     financial management training program that debtors may be 
     required to complete in order to have his or her debts 
     discharged. Educating debtors encourages them to become 
     fiscally responsible and reduces the chance that their 
     financial situation will again become unstable.
       The Bankruptcy Reform Act of 1998 contains numerous 
     provisions which protect all of those involved in a 
     bankruptcy claim: the debtor, the creditor, and all 
     consumers. In this time of economic prosperity, it is 
     important that legislation be enacted that will help those in 
     dire financial situations while protecting responsible 
     consumers who unfairly shoulder the cost of bankruptcies. We 
     encourage your colleagues to support H.R. 3150.
           Sincerely,
                                                 Thomas A. Schatz,
     President.
                                  ____



                                       The Bankers Roundtable,

                                   Washington, DC, April 27, 1998.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary,
     Washington, DC
       Dear Mr. Chairman: The Bankers Roundtable, representing the 
     nation's major banking companies, strongly supports the 
     Bankruptcy Reform Act of 1998, H.R. 3150. As you are aware, 
     studies have shown that the 1.3 million bankruptcies filed in 
     1997 have cost consumers over $40 billion. As a result, U.S. 
     households have had to pay over $400 each in increased annual 
     borrowing costs. A responsible approach to reform, such as 
     H.R. 3150, would benefit the vast majority of Americans who 
     properly use consumer debt as a tool to manage their 
     household finance and repay their debts in a timely manner.
       H.R. 3150's means-test would maintain Chapter 7 discharge 
     of debts for poor or heavily indebted borrowers while 
     requiring those with the capacity to repay all or some of 
     their debts to do so. Further, the bill's other balanced 
     measures to reduce fraud and abuse in bankruptcy filings 
     would aid in ensuring that consumers continue to have access 
     to credit at reasonable and affordable terms and rates.
       Attached please find a copy of the Roundtable's Policy 
     Statement on Consumer Bankruptcy Reform. The Bankers 
     Roundtable asks for your support for H.R. 3150, including the 
     concept of a means-test, and looks forward to working with 
     you on this legislation.
           Sincerely,
                                                 Anthony T. Cluff,
     Executive Director.
                                  ____



                                    National League of Cities,

                                     Washington, DC, June 3, 1998.
     Hon. George W. Gekas,
     U.S. House of Representatives,
     Washington, DC
       Dear Representative Gekas: The National League of Cities 
     (NLC) urges your support in the passage of provisions of the

[[Page H4361]]

     ``Bankruptcy Reform Act of 1998'' (H.R. 3150) that would aid 
     local governments. The inclusion of the Investment in 
     Education Act, as passed by the Senate in November 1997 in 
     H.R. 3150, recognizes the importance of payment of ad valorem 
     taxes to local governments to support education. NLC strongly 
     urges you to support these provisions and the amendments made 
     by the House Judiciary Committee that would strengthen the 
     Investment in Education Act.
       This legislation is very important to local governments 
     because it would change provision of the Bankruptcy Code that 
     have caused local governments to lose millions of dollars in 
     property tax revenues. As you know, property taxes are the 
     bread and butter of the education budget for cities, towns, 
     counties, and school districts.
       Of the provisions included in this bill, it is most 
     important that local governments are able to receive the 
     local statutory interest rate on ad valorem tax claims 
     associated with bankruptcies. Cites and towns are non-
     consensual creditors and are in unique situations with their 
     constituents. In New York City and some New Jersey, Texas, 
     Illinois, and California cities and towns the local interest 
     rate accruing on unpaid taxes should be double the I.R.S. 
     statutory rate. Cities cannot afford to have their interest 
     rate ``crammed down''. Clarifying that the local interest 
     rate should be applied for unpaid ad valorem taxes would put 
     an end to unnecessary favorable treatment for bankruptcy 
     filers who have not paid their property taxes.
       NLC strongly encourages you to pass the Investment in 
     Education provisions in H.R. 3150 this year, to ensure cities 
     and towns, vital revenues for their education budgets. NLC 
     looks forward to working with you towards the passage of 
     bankruptcy legislation. If you have any questions, please, 
     please have your staff contact Kristin Cormier, NLC 
     Legislative Counsel, at (202) 626-3020.
           Sincerely,
                                                    Brian O'Neill,
                            President, Councilman, Phildelphia, PA

  (Mr. NADLER asked and was given permission to revise and extend his 
remarks.)
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, bankruptcy is a dull, boring and technical subject. Not 
many people pay detailed attention to it. And advocating that people 
behave responsibly and pay their debts, if at all possible, is 
attractive and unassailable.

                              {time}  1415

  I know that many people, seduced by that slogan, signed up to support 
this bill. But it was false packaging, an attractive wrapper to 
disguise one of the worst special interest bills we have considered in 
many years.
  When you strip away the veneer and the verbiage, there stands, 
starkly revealed, a bill with one central purpose, to take large sums 
of money from middle- and low-income American families in distress and 
give it to the credit card companies; and, while we are at it, to take 
large sums of money from other creditors and give it to the credit card 
companies. This is a bill of, by, and for the credit card companies 
which have waged a long and expensive campaign for it.
  Who benefits from this bill? The credit card companies. Who gets hurt 
by this bill? Middle- and low-income families who are in over their 
heads in debt because of a medical emergency, a lost job, gambling 
addiction; mothers rearing young children dependent on child support or 
spouse support; crime victims seeking victim's compensation; other 
creditors who cannot afford the high-priced lawyers of the credit card 
companies to compete for the collection and who will have to forgo 
repayment of the $260 million to $1.3 billion the Congressional Budget 
Office says this bill will add to administrative costs and which will 
come out of money to be recovered by the creditors; small business 
owners whose businesses this bill will force into liquidation instead 
of survival; and the taxpayers, who will have to foot the $214 million 
the CBO says this bill will add to the Federal budget.
  Who supports this bill? The credit companies and the big banks. Who 
opposes this bill? The consumer groups, the AFL-CIO, the women's 
groups, the victims' rights organizations, the bankruptcy judges, the 
bankruptcy trustees, the National Bankruptcy Conference, the National 
Association of Chapter 13 Trustees, the National Association of 
Consumer Bankruptcy Attorneys, the Administration; in short, everybody 
who knows the bankruptcy system except the credit card companies and 
the big banks. In fact, this legislation is nothing more than a special 
interest favor to the big credit companies and the big banks. It will 
take American families in terrible economic straits and it will allow 
creditors to harass them with litigation. It will allow MasterCard and 
Visa to snatch child support from struggling families. It will clog our 
courts. It will invade the privacy of families by requiring them to 
make their tax returns public so that banks and other creditors can 
review the most private details of their lives, including medical 
expenses, and it will cost the taxpayers a bundle to collect the 
reckless debts of credit card companies who sent out more than 3 
billion credit card solicitations last year to children, family pets 
and people already in over their heads.
  Why do we need this bill? We have heard a great many extravagant 
claims about the reasons why more than 1.3 million Americans filed for 
bankruptcy last year. The underlying assumption of this legislation 
that millions of Americans are essentially deadbeats using the 
bankruptcy code to cheat unsuspecting and helpless megabanks is quite 
frankly a slander against the American people.
  Mr. Chairman, we have been told that the reason we have increased 
bankruptcy filings is that social mores have changed, that there is no 
longer a stigma associated with bankruptcy, that people use it as a 
first financial planning option instead of as a last resort, that there 
is an easy availability of bankruptcy. But this does not make sense. 
The bankruptcy code does not cause people to go bankrupt. Lack of 
health insurance, downsizing, jobs moving abroad, family 
disintegration, the sort of problems you would hear about if you 
listened to your neighbors, that is what causes bankruptcy. What is 
really scandalous is that instead of dealing with the pressures on 
American families, this Congress chooses to go after the victims. In 
fact, the Committee on the Judiciary received testimony from academics, 
from people like Professor Ausubel of the University of Maryland, 
demonstrating a direct link between deregulation of interest rates, 
increased lending and the increase in bankruptcies. These findings are 
supported by the work of the FDIC and we are waiting for the completion 
of a Congressional Budget Office review of the data which it appears 
will also likely confirm these findings.
  What we have seen is that although real interest rates, the costs 
banks pay for money, have dropped substantially over the last 20 years, 
credit card interest rates, the price American consumers pay to borrow 
money on their credit cards, have remained extraordinarily high. The 
result, credit card operations are now the most profitable of all 
banking operations, up to five times more profitable than noncredit 
card operations. If it were true, as we are told by the supporters of 
this bill, that it is changing social mores, lack of a stigma that are 
getting people to file for bankruptcy when they still can pay their 
debts before they are in over their heads when they would not have done 
so years ago, one would expect that the ratio of debt that people have 
to their income would have gone down, because people are now filing 
when they still can pay their debts, whereas earlier they did not.
  But, in fact, look at this chart. It shows just the opposite. In 
1983, the average debt-to-income ratio of a Chapter 7 filer, someone 
who filed for bankruptcy, was 87 percent. It went up consistently. It 
has doubled. Now it is 164 percent, which means it went up, not down. 
People are twice as deeply in debt today before they file for 
bankruptcy as they were in 1981. They are more desperate. They do not 
file easily. They wait as long as they can.
  In fact, if you look at the rise in bankruptcies and you look at the 
rise in the debt-to-income ratio in people at large and how much debt 
people have which started increasing with the deregulation of credit 
card rates about 20 years ago, you find it tracks almost exactly. Look 
at this. As the debt-to-income ratio goes up, that is what causes the 
bankruptcy filings to go up.
  It is the irresponsible lending by the credit card companies that is 
largely responsible for the increase in bankruptcy filings. In fact, if 
we wanted to do something about this, we should limit that 
irresponsible lending. But unfortunately, that amendment was not made 
in order. We should say that it is an objection to claim, that you 
cannot collect your debt if you lent the money after you knew that the 
person was already in over his head, after he

[[Page H4362]]

already had a debt to income ratio of 40 or 60, draw the line, percent, 
but that unfortunately the Committee on Rules did not make in order.
  We know that credit card lending is very profitable today. In fact, 
if you look at the chart, you see the profitability of credit cards 
versus the profitability of the overall banking system. The overall 
banking system has remained at the same level of profitability for the 
last 25 years. The profitability of the credit card system, however, 
has doubled. We have to bail them out with this bill because they are 
losing some money on bad debts when their profitability is five times 
the profitability of all other parts of the banking system.

  Credit card interest rates have stayed up. The cost of money has gone 
down from 14 percent, reduced by half to 6 percent, but the credit card 
interest rates have gone down from 18 to 16 percent. Then we are told 
that we will save $400 per American family if we pass this bill because 
the credit card companies will lower the interest rates to counter the 
fact that they are getting more money from deadbeats. Look at the 
record. If you believe that, there are a couple of bridges in New York, 
not just the Brooklyn Bridge, that I can sell you for only a couple of 
billion dollars.
  The fact is that car loans have gone down, mortgages have gone down, 
the cost of money has gone down, the credit card interest rates stay up 
and that is why they are so profitable. If we pass this bill, they will 
be even more profitable, but it will not be passed through to the 
consumer by a nickel.
  Having said all that, we agree, there are some people who abuse the 
system. There are people who are filing for Chapter 7 bankruptcy who 
can afford to repay their debts. Let us crack down on them. But that is 
what the Democratic substitute says. Let us crack down on them, but let 
us crack down on them through a reasonable test, a test that really 
looks at their ability to pay.
  The administration in its statement of opposition says:

       The formulaic mechanism in H.R. 3150 will not distinguish 
     accurately those debtors who have the capacity to repay from 
     those that do not have that capacity. A properly structured 
     system would give bankruptcy courts greater discretion to 
     consider the specific circumstances of a debtor in 
     bankruptcy.

  That is what we want to do in this substitute. That is what we did in 
the bill that the committee refused to consider. The fact is if you 
look at the ability to repay, you will want to look at someone's income 
and his expenses, how much is he paying in rent, not as the bill before 
us would say, how much does the Internal Revenue Service think someone 
in the northeastern United States is probably paying for rent. Who 
cares what someone might be paying for rent, the average person. The 
question is how much is he paying for rent, how much is he paying for 
child care, for his medical expenses for his wife or his daughter or 
whatever. A formula does not work. We have to have a human being there, 
a judge, who can take a look at the situation to make a judgment, not a 
computer.
  The majority brags about this bill, that you can put it into a 
computer and the result will be put out, no human discretion, no human 
sympathy, no human understanding and no facts, only theory, from the 
Internal Revenue Service, of all people. That is what this means-based 
test is. Even if you pass the means test, under this bill you will be 
harassed by creditor motions that are not permitted in the law now, by 
the threat of litigation, and it will lead to many people who meet the 
means test having to withdraw their petitions because they cannot 
afford to pay the lawyers to fight the banks' lawyers on these 
frivolous, dilatory motions.
  The other thing this bill does, because its major function is to give 
a lot of money to the credit card companies, is that credit cards jump 
the line. They are going to be nondischargeable in bankruptcy. The 
administration says the bankruptcy code generally makes debts 
nondischargeable only where there is an overriding public purpose as 
with debts for child support and alimony payments, educational loans, 
tax obligations or debts incurred by fraud. What is the overriding 
public policy purpose for skipping the credit cards ahead of the 
secured debtor, ahead of priority debt and making it nondischargeable? 
There is no public policy purpose. What is the public policy purpose 
for saying that in a Chapter 13 workout plan, you cannot confirm the 
plan unless you pay $50, minimum monthly, to the credit card companies? 
So if your ability to repay is $75 a month, $50 goes to the credit card 
companies and $25 is left for everything else.
  Credit cards uber alles. Why? Why should the other creditors take 
second fiddle, creditors who have security interests, creditors who may 
have done more due diligence? And if your ability to repay is $40, less 
than the $50 minimum, they cannot confirm a plan, so you are too rich 
for a Chapter 7 bankruptcy and you are too poor for a Chapter 13 
bankruptcy and you fall right through the cracks. And because the 
purpose of this bill is in these ways, by nondischargeability and a $50 
minimum under Chapter 13, to give the money to the credit card 
companies, it fouls up the child support, it fouls up the victim's 
collection of crime victim's compensation.
  The sponsors of the bill say they fixed it in committee. First they 
denied it. Then they said they fixed it. Now they have an amendment to 
say they fixed it. But all the groups who deal with this, the women's 
groups, the child support groups, the administration, they say those 
fixes are cosmetic, they do not deal with the problem, and they do not.
  What does it do to small business? For reasons I know not, this bill 
adds great paperwork requirements to small businesses, constricts the 
time limits in which they have to do things, adds in effect a mini 
confirmation hearing before the confirmation hearing, all of which will 
result, as the Small Business Administration tells us, in thousands and 
thousands of small businesses that go into Chapter 13 and Chapter 11 
for workouts to restructure their debts, to reorganize and to come out 
of it, retaining the business, retaining their employees, they will not 
be able to meet it, they will liquidate, jobs are gone. Why should we 
do this to small business?
  Finally, this bill is a budget buster. CBO tells us, the 
Congressional Budget Office, it will cost the taxpayers $214 million 
out of the Federal budget, and they tell us it is a private sector 
burden of $260 million to $1.3 billion. That is the effect this bill 
would have.
  In summary, this bill affects negatively everybody except the credit 
card companies and the big banks. The bill is ill-considered, it is not 
ready to move, it is a budget-buster, it takes away the rights of 
debtors, and it will hurt many creditors as it aids the credit card 
companies in their search for greater profits. This bill is unworthy of 
this House and will cause misery to our neighbors and financial 
distress. This bill is in fact morally bankrupt and I urge my 
colleagues to reject it.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume, 
only to say, to repeat as often as possible, that the support 
enforcement agencies of the country are happy with the provisions of 
H.R. 3150 with respect to collection of child support. We will spread 
on the record as we have time and time again letters from the 
California support people, New York and others who are blessedly happy 
with what we are trying to do on support matters.
  Mr. Chairman, I yield 3 minutes to the gentleman from Florida (Mr. 
McCollum).
  (Mr. McCOLLUM asked and was given permission to revise and extend his 
remarks.)
  Mr. McCOLLUM. Mr. Chairman, I thank the gentleman for yielding me 
this time.
  Mr. Chairman, I rise in strong support of this bill. I certainly 
respect the gentleman from New York (Mr. Nadler), but I disagree with a 
lot of his analysis and I want to go through it quickly.
  First of all, we had a $44 billion loss in bankruptcies last year 
alone. We have seen an over 100 percent increase in personal bankruptcy 
filings from 1986 to 1996. And last year, the year in which the economy 
probably did better than any other time in the history of the Nation, 
bankruptcy filings were up some 20 percent in that year alone.

[[Page H4363]]

                              {time}  1430

  We have got a problem in this country, whatever the reason may be. 
Maybe some of that does belong because credit card companies send too 
many notices out to people, but by and large that is not the reason 
that we have the problem. It is because people are not exercising 
individual responsibility because they are not going to a payback plan 
when they could afford to pay back their debts as they once did, at 
least in larger numbers than they do now.
  What our bill has tried to do is to help the consumer. The person who 
is responsible who does have credit card and other debt who does pay 
that debt back, help them to avoid the cost that they are paying 
because of the bad debt people who take advantage of pure bankruptcy 
and do not pay back the debt they are supposed to and could pay back.
  The fact of the matter is that no credit card company or any other 
creditor is going to absorb the losses of the magnitude we are talking 
about. They are going to cost shift. They are going to pass that on. 
They do it in the cost of goods and services, fees and interest rates.
  Will they all come down if we pass this bill? I do not know, but they 
sure as heck are going to go up if the rate of bankruptcies continue to 
climb the way they are now.
  So our bill is a consumer protection bill. It creates a needs-based 
test, and it is a very simple formula. It says to take median family 
income, determine what that is. For a family of four that is about 
$51,000 last year. If they have less than a median family income, they 
can still file plain old vanilla pure bankruptcy under chapter 7, and 
do not worry about the means test and the needs test. But if they have 
over 50,000, they have got to go through this formula. Take monthly 
gross income, deduct from that monthly gross income the amount of 
secure debt payments, how much is being paid on the car. Then deduct 
from that the amount paid for child support, alimony, other court 
ordered support. Then deduct from that the monthly payments for other 
living expenses which are calculated under the Internal Revenue Service 
Code like we do for our taxes, for whatever they are, and if after 
doing that there is left over $50 a month or more and if by applying 
what there is left over they could pay off 20 percent or more of their 
unsecured debt over 5 years, then they have to file chapter 13 or a 
payback plan from a bankruptcy. Still get bankruptcy protection, but 
they have to file the kind where they actually pay back what they owe.
  That is the basic premise of bankruptcy law. People who can afford to 
pay it back ought to be required to pay it back. That is the premise of 
this bill. There is nothing more and nothing less here, and I would 
certainly encourage my colleagues to recognize the fact that whatever 
else they think, this is a simple formula, it is not complicated, it is 
not expensive, it could be done with all the data that goes into 
bankruptcy courts anyway in the first place. We need to put personal 
responsibility back into the system again, and I encourage the adoption 
of this bill in the strongest of terms.
  Mr. Chairman, I thank the gentleman for having yielded this time to 
me.
  Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Virginia (Mr. Boucher).
  Mr. BOUCHER. Mr. Chairman, I want to commend the gentleman from 
Pennsylvania (Mr. Gekas) for bringing H.R. 3150 to the floor today. It 
incorporates the core provisions of H.R. 2500 which the gentleman from 
Florida (Mr. McCollum) and I introduced last year. That measure was 
cosponsored by 185 Members of the House, including 40 Members on this 
side of the aisle, the Democratic side. These core reform measures are 
a part of H.R. 3150, and they truly have bipartisan support.
  A central tenet of the reform is the needs-based test for chapter 7 
that was just described in the statement by the gentleman from Florida 
(Mr. McCollum). That is the complete liquidation provision under the 
bankruptcy law. Under that approach bankruptcy filers who could pay a 
significant amount of their debts would no longer be able to get 
complete liquidation. If they wanted bankruptcy protection, they would 
be required to use chapter 13 and then make whatever payments they 
could afford under a court supervised repayment plan. And the needs-
based reform is essential to this measure that we have before us and to 
achieving genuine bankruptcy reform.
  During the 12-month period that ended on March 31, there were 1.37 
million personal bankruptcy petitions filed across the country, and 
that was an increase of almost 25 percent over the previous year. That 
increase in personal bankruptcy filings occurred during the best 
economy that we have had in this country in decades, and so we would 
have expected exactly the opposite result, fewer bankruptcy filings 
rather than more. And yet in that 1 year period we had a 25 percent 
increase.
  The dramatic increase is caused, I think, by several factors. First 
of all, an attitudinal change among many Americans who no longer view 
bankruptcy as a last resort but view it as a first opportunity and 
treat it today as a financial planning tool and today engage in 
bankruptcies of mere convenience. The bankruptcy system was never 
intended to function that way. The bill before the House would return 
chapter 7 to its intended use by making it available for those who need 
it and requiring that those who can pay their debts, we pay a 
substantial portion of those by filing under chapter 13.
  Mr. Chairman, that change will benefit all consumers of goods and 
services and all responsible borrowers. Today about $44 billion in 
consumer debt is wiped out each year through bankruptcy filings. That 
wipeout of $44 billion in debt carries a hidden tax of about $400 on 
the typical American family. That reflects the higher prices that are 
charged for goods and services by merchants whose debt is wiped out in 
bankruptcy and reflects the higher credit cost, interest charges, that 
are imposed by lenders, many of whose debts are wiped out in bankruptcy 
as well.
  The enactment of H.R. 3150 would significantly lessen that hidden 
charge, and it is my privilege to appear today in support of this 
measure, and I strongly encourage its passage by the House.
  Mr. NADLER. Mr. Chairman, I yield 3\1/2\ minutes to the gentlewoman 
from California (Ms. Lofgren).
  Ms. LOFGREN. Mr. Chairman, as someone who has worked on bankruptcy 
revision as a lawyer in the past, I cannot stand here and say that the 
existing system is perfect. In fact it is not perfect, and there are 
areas in which reform is warranted. However, I do not believe that H.R. 
3150, the bill before us, provides an acceptable answer to the defects 
that currently exist.
  Much has been said about why we are seeing this increase in 
bankruptcy filings. It is clear that part of the reason is the massive 
increase in the amount of unsolicited and unwarranted credit that is 
being promulgated throughout our country.
  Last week my little girl received an unsolicited, preapproved credit 
card application at home. I was of a mind to let her take the card 
since creditors cannot collect against minors in California, but 
instead we ripped it up.
  Because of the problems of this bill, Congress has seen an 
unprecedented response from people who do not ordinarily become 
involved in legislative matters of this kind, including bankruptcy 
judges from all over the United States who have urged us to stop this 
process because of the bill's unintended consequences.
  Much has been said about the impact on women and children, and I 
wanted to note as a member of the Committee on the Judiciary I did 
support the minor amendments made during committee mark-up to try to 
address the issue of child support, but they did not fix the problem. 
In fact, the National Organization for Women wrote after the markup, 
``The Judiciary Committee adopted a number of amendments supposedly to 
cure the problem of having past due child support and alimony 
obligations compete with credit card debts, but careful analysis shows 
these changes are only cosmetic. There are still substantial problems 
with H.R. 3150.''
  I believe that is why 20 women's organizations have contacted us to 
tell us they oppose this bill, including such organizations as the 
American Association of University Women, the Business

[[Page H4364]]

and Professional Women of the United States, Church Women United, the 
Older Women's League and the YWCA of the United States of America.
  There is another issue that I think needs to be raised for those of 
us who come from high cost States, and that is the probably unintended, 
bias against certain parts of our country. Recently I was contacted by 
a bankruptcy attorney in Santa Clara County. This is a lawyer who 
teaches bankruptcy law, who represents creditors in addition to 
debtors, and he says that the nationwide income standard used in the 
qualifications test for chapter 7 would eliminate most residents of 
Santa Clara County, in fact most of urban California, from eligibility 
to file chapter 7.
  Further, if an individual is able to meet the test, the housing 
allowance is a further disadvantage. Urban Americans will no longer be 
able to file for bankruptcy.
  As someone whose family has lost income to someone who filed for 
bankruptcy, I do not like it, I understand that no one likes it, but 
there is a reason for bankruptcy law, and that is so that one can fail 
in America and yet continue to have a life. That is why bankruptcy is 
provided for in our Constitution, and I will quote the CEO of a high-
tech company who said this to me and Chairman Hyde in Los Angeles a 
week ago. ``We innovate in this country because we have the freedom to 
fail. That is what our bankruptcy laws do. Do not change it, do not 
ruin it.''
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I might consume.
  It is interesting; I bring this to the attention of the gentlewoman 
from California who has been in the forefront of expressing concern 
about the support quotient in 3150 wherein the California Family 
Support Council, which I assume is statewide in California, endorses 
enthusiastically the measure 3150 and all that it contains with respect 
to support. I commend that to her reading and ask her to consider 
voting for the bill.
  Mr. Chairman, I yield 3 minutes to the gentleman from Virginia (Mr. 
Moran).
  Mr. MORAN of Virginia. Mr. Chairman, I am a lead sponsor of this 
measure because the bankruptcy system in this country is not serving 
the national interest. What used to be the option of last resort has 
too often become the preferred option of choice, and so a legislative 
fix is vital to distinguish between those who truly need and deserve a 
fresh start and those capable of assuming greater responsibility and 
making good on at least some of what they owe.
  Mr. Chairman, unless steps are taken now to reform the bankruptcy 
system while economic times are good, we will not have the political 
resolve to fix it when the economy is not as strong. Today wages are 
up, unemployment is down, interest rates and inflation are low, but the 
rate of personal bankruptcies has increased dramatically. Last year 
personal bankruptcies rose 20 percent, reaching a record high of 1.4 
million files. Think about it. More people filed for personal 
bankruptcy than graduated from college last year. What does that say 
about our country?
  And while many would like to blame the credit card industry for the 
sharp increase in bankruptcy filings, it is important to note that the 
credit card industry is not the impetus for the current bankruptcy 
crisis. More than 96 percent of credit card holders pay bills as agreed 
to, and only 1 percent ever end up in bankruptcy.
  According to a Federal Reserve Board survey last year credit cards 
account for a mere 3.7 percent of consumer debt, hardly large enough to 
cause the current bankruptcy crisis. While many may still want to 
vilify the shylocks of Shakespeare's day, the credit system of today is 
far more democratized. Creditors today include Main Street merchants 
who often sell products under installment plans, credit unions who 
include most Members of Congress and even State and local governments.
  Mr. Chairman, I have a letter here that I got from Mattress 
Discounters. These people have a customer base that is almost 
exclusively moderate income families who need their purchasing 
installment plan. Now they tell me that they receive almost 3,000 
consumer bankruptcy notifications each month, 36,000 a year, and the 
cost to the company has risen to over $30 million a year. The irony of 
this situation is that the average debtor filing for bankruptcy 
protection has assets exceeding $184,000. But because of this consumer 
bankruptcy, the company had to close 50 stores across the country, and 
that meant the loss of jobs in communities all over the country as well 
as the fact that their customer base of moderate income people does not 
have access to this line of credit.

                              {time}  1445

  People need that, and yet if we don't fix this system, we are 
foreclosing their credit opportunities.
  Mr. Chairman, the key issue is that it is not fair for households who 
pay their debts to pay $400 a year in added expenses to compensate for 
the bad debts of their neighbors who do not pay their debts. I hope 
Members will support this bill.
  Mr. NADLER. Mr. Chairman, I yield two minutes to the gentleman from 
Massachusetts (Mr. Meehan).
  Mr. MEEHAN. Mr. Chairman, I come before the House today as a 
supporter of bankruptcy reform. It will enable creditors to collect 
some debt that is currently being discharged through bankruptcy and 
that would channel debtors who can afford to pay a substantial portion 
of their unsecured debts into Chapter 13 repayment plans.
  Having said that, Mr. Chairman, let me now say that I come before the 
House today in opposition to this bill, H.R. 3150. There is nothing 
inconsistent about supporting pro-creditor bankruptcy reform and 
opposing H.R. 3150. The fact is, you can means test eligibility for 
Chapter 7 without relying on rigid IRS expense standards to evaluate a 
debtor's ability to pay his or her debts. You can means test without 
permitting aggressive creditors to target low and moderate income 
debtors with expensive and protracted and contentious litigation over 
their bankruptcy rights. You can address manipulation of the bankruptcy 
system by high income debtors without simply declaring large amounts of 
credit card debt to be exempt from discharge.
  In short, you can replace H.R. 3150 with the Nadler-Meehan-Berman 
substitute. The result will be a balanced bankruptcy reform that 
enhances creditor recovery without drastically diluting the fresh start 
for financially strapped debtors or impeding alimony and child support 
collection.
  On the other hand, voting yes on an unamended version of H.R. 3150 
would send to the conference committee an unbalanced bill, and the 
Senate wants nothing to do with that and the Clinton Administration 
will veto this bill. That route is dangerous for the most vulnerable 
debtors and dangerous for the prospects of prompt bankruptcy reform.
  I urge my colleagues to do the right thing and support the substitute 
and reject the unamended version, this bill, of H.R. 3150.
  Mr. GEKAS. Mr. Chairman, I yield two minutes to the gentleman from 
Delaware (Mr. Castle).
  (Mr. CASTLE asked and was given permission to revise and extend his 
remarks.)
  Mr. CASTLE. Mr. Chairman, I thank the gentleman very much for 
yielding me time. I join the gentleman in his strong support for H.R. 
3150.
  Mr. Chairman, I must say that hearing these arguments, we need to 
understand that when anybody files for bankruptcy, somebody else has to 
suffer. Generally when you had it up, the entire United States of 
America suffers. We have heard some facts, but I think we need to 
repeat some of these facts as well as to what is happening in 
bankruptcy in the United States today.
  It is incontrovertible in my mind that we are in a bankruptcy crisis 
in this country. Personal bankruptcy's have risen 400 percent since 
1980. Over 1 million people filed for bankruptcy in 1997, which cost 
consumers $40 billion in higher prices and interest rates from the 
debts that was erased. That averages to $400 per household in the 
United States of America. Some studies estimate that 14 responsible 
borrowers are needed to support each irresponsible borrower who files 
for bankruptcy. Those are unbelievable figures in a time of perhaps the 
greatest economic prosperity in the history of the United States of 
America.
  What we have here in this legislation is a very strong first step. 
This is not

[[Page H4365]]

an ultimate solution to the bankruptcy problems. There is wide 
disagreement and too few facts right now for Congress to fashion an 
omnibus bankruptcy reform act that pinpoints exact causes of 
bankruptcy, and we do not know what that is. We need to look whether or 
not it is credit cards, and there may be some evidence of that, or 
gambling or other debts that caused that. But this legislation allows 
us to do it and it strengthens the system.
  First, it establishes a system of data collection in the Federal 
bankruptcy courts to determine who, when, where, why and how people 
file for bankruptcy. We absolutely need to have that information and 
that knowledge. We do not have it today.
  Second, it forces debtors to receive private credit counseling before 
filing for bankruptcy and unloading their debts on American consumers. 
That also is needed. Perhaps people need to be told what they have to 
do.
  Third, it forces people who have the ability, the ability to pay for 
their unsecured debts, to file under Chapter 13 of the bankruptcy code 
and repay their creditors. These are good things. We should do it and 
support this legislation.
  Mr. Chairman, I rise today to express my strong support for H.R. 
3150, the Bankruptcy Reform Act of 1998. The facts are incontrovertible 
that the United States is in a bankruptcy crisis. Personal bankruptcies 
have risen 400 percent since 1980. Over a million people filed for 
bankruptcy in 1997 which cost consumers $40 billion in higher prices 
and interest rates from the debt that was erased. That averages to $400 
per household. Some studies estimate that 14 responsible borrowers are 
needed to support each irresponsible borrower who files for bankruptcy.
  Congressional oversight of this issue is long past due, and I am 
pleased to see that the House Judiciary Committee, through the 
leadership of Representative George Gekas, Chairman Henry Hyde, and 
Representative Rick Boucher, has reported H.R. 3150 as a strong first 
step toward addressing the bankruptcy crisis.
  I say ``strong first step'' because no one should be disillusioned 
that H.R. 3150 is the ultimate solution to the bankruptcy crisis. There 
is wide disagreement and too few facts for Congress to fashion a 
omnibus bankruptcy reform bill that pinpoints the exact causes of 
bankruptcy. Despite evidence that only 1 percent of credit card holders 
file for bankruptcy in any given year, some have suggested that credit 
card companies who overextend credit to irresponsible borrowers are to 
blame. Others point to casinos and gambling institutions as the 
principal cause. Still others blame our culture of consumerism and a 
lack of education about managing money and personal finance. The truth 
is we do not know the cause, but we know the problem is serious.
  Herein lies the strength of H.R. 3150. The bill takes the only steps 
we can all agree on. First, it establishes a system of data collection 
in the Federal bankruptcy courts to determine who, when, where, why and 
how people file for bankruptcy. With this data, Congress in the years 
to come can address the root cause of bankruptcies with wisdom and 
confidence we do not have today.
  Second, it forces debtors to receive private credit counseling before 
filing for bankruptcy and unloading their debts on American consumers.
  Third, it forces people who have the ability to pay more of their 
unsecured debts to file under Chapter 13 of the Bankruptcy Code and 
repay their creditors over 5 years according to a court-approved 
repayment plan. According to the bill's means-testing formula, debtors 
whose income is greater than 100 percent of the national median family 
income must develop a plan to repay their unsecured creditors if they 
have the ability to pay at least 20 percent of their unsecured debt and 
have more than $50 in their pocket each month after paying their 
secured debts (car payments, home mortgage, etc.), priority debts 
(alimony, child support, back taxes, etc.), living expenses.
  A recent Consumers League Poll reports that 76 percent of Americans 
believe that individuals should not be allowed to erase all their debts 
if they are able to repay a portion of what they owe. With such a 
groundswell of support from the American people the choice is simple. A 
vote against H.R. 3150 is a vote for irresponsible debtors and a vote 
against the 14 responsible consumers needed to pay for each bankruptcy 
filed. I urge you to vote in favor of H.R. 3150.
  Mr. NADLER. Mr. Chairman, I yield 5\1/2\ minutes to the gentleman 
from Massachusetts (Mr. Delahunt).
  (Mr. DELAHUNT asked and was given permission to revise and extend his 
remarks.)
  Mr. DELAHUNT. Mr. Chairman, I thank the gentleman for yielding me 
time.
  Mr. Chairman, we have heard a lot today about personal responsibility 
and that individuals must be held accountable. Now, no one disagrees 
with the principles of personal accountability and responsibility. The 
problem, however, with the rhetoric, is that there is no data, no 
evidence, no credible research. The gentleman from Delaware was 
absolutely correct. But there is no information to establish a link 
between the dramatic increase in personal bankruptcy and the change we 
are told that has taken place in people's attitudes about bankruptcy.
  There is an additional issue of accountability and responsibility 
here, but it is one of corporate responsibility. Because while no one 
really knows the cause of the increase in bankruptcy filings, I submit 
it is more likely that the increase is the result of irresponsible 
lending practices by the credit card industry.
  I agree with a noted consultant to the industry itself who stated, 
``The principal factor in the increase of bankruptcies has been the 
dramatic lowering of loan standards over the past five years.''
  A respected Wall Street analyst agreed with him and was quoted 
recently in the Congressional Quarterly. ``The bank and other credit 
card lending institutions brought this problem upon themselves. They 
shot themselves in the foot by using some of the weakest and most 
pitiful loan underwriting techniques that I have ever witnessed.''
  Well, as others have said, we have all experienced the aggressive 
marketing tactics of the credit card industry. More than 3 billion 
solicitations were issued last year, 30 for every family in America.
  Let us talk about responsibility. Let us look at just one of these 
solicitations. It is in the form of a check. It was sent to my 
daughter. Let me highlight some of the comments on the check.
  ``This $2,875 check is real. Your signature on the back is all that 
it takes to turn your live check into cash.''
  Another observation: ``Book a terrific spring break vacation.''
  Another comment: ``Treat yourself, your family or friends.''
  Another statement: ``Need more than $2,875? Just call us if you want 
to make even bigger plans for this spring.''
  There is a p.s. too. ``This offer expires May 18, 1998. Have a 
question about this offer? Just call.'' ``Just call.'' ``For your 
protection, please destroy this check if you decide not to cash it.''
  Is this corporate responsibility? Is this sound responsible lending? 
Well, my daughter is a full-time student who lives at home and has no 
regular income. It is so ironic to hear representatives of the credit 
card companies and others here pontificate about personal 
responsibility.
  You all know from your own personal responsibility that they are 
relentless in their pursuit of customers and profit, and that is good. 
But regardless of the target's age, lack of sophistication, 
vulnerability, and even bad credit history?
  Let me just read a story for you for a moment from the Wall Street 
Journal of March of this year. ``Rick and Christie Fetterhoff of 
Harrisburg, Pennsylvania,'' and I think the Chair of the subcommittee 
is from Pennsylvania, I do not know if he knows this couple, but it has 
been reported, ``have been in Chapter 13 bankruptcy protection since 
November 1995. But within the last several months, they have received, 
among other pitches, $5,000 loan offer checks from Banc One Corporation 
and Capital One Corporation and the promise of $250,000 to $500,000 
from New Century Mortgage Corporation if they would just sign up.
  ``I was going to try to send some in, admits Mrs. Fetterhoff, who has 
more than $160,000 in debt, but I said no, no. It is tempting.'' And 
the credit card industry preaches personal responsibility?
  Now, few in this chamber are sympathetic to that sort of hypocritical 
argument when it comes from the tobacco companies or the liquor 
industry or the gaming interests. Well, we should not let the credit 
card industry get away with it either.
  If this bill becomes law, the result will be the use of hundreds of 
millions of dollars of taxpayer dollars to create a publicly funded 
collection agency to increase the profitability of credit card 
companies. So let us focus on responsibility ourselves and defeat this 
bill.

[[Page H4366]]

  Mr. GEKAS. Mr. Chairman, I yield three minutes to the gentleman from 
New Jersey (Mr. Rothman).
  (Mr. ROTHMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. ROTHMAN. Mr. Chairman, I thank the gentleman from Pennsylvania 
for yielding me time.
  Mr. Chairman, there is something wrong with the following picture. 
Last year, in the midst of our country's greatest economic growth of 
this generation, America saw a record number of bankruptcies, 1.4 
million. This year, as America's economic expansion continues, America 
will set a new record for bankruptcies. But record number of Americans 
are not going broke. They are simply taking advantage of a bankruptcy 
system that encourages people to avoid paying their debts. That is what 
is wrong, and we have to stop those abuses.
  When people who can afford to pay their debts do not, guess who picks 
up the tab? Working and middle class families, because companies charge 
higher prices to make up for those losses.
  We need a bankruptcy system to give truly needy Americans a fresh 
start. But it must be a bankruptcy system with integrity, designed to 
encourage personal responsibility, not to discourage it.
  The new bankruptcy reform bill, H.R. 3150, will do just that. It 
still gives people who cannot afford to pay their debts the ability to 
declare bankruptcy and to get a fresh start. But it will require people 
who can pay back their debts to do so.
  Make no mistake about it. Under this bill, any American who chooses 
to go bankrupt can still go bankrupt. But if the person has the means 
after they pay their child support and alimony, after they pay off 
their secured debts and living expenses, if they still can pay off 20 
percent of their remaining debt, then they should be required to pay 
back that debt. It is simply good personal responsibility.
  Hard-working middle-class taxpayers who play by the rules have a hard 
enough time paying their own bills. They should not have to pay the 
bills of those who run up debts they can afford to repay, but who 
simply choose not to repay the debts.
  When I was practicing law, I worked with a great many small business 
people who were taken advantage of by someone or some company who owed 
them money, but who simply misused and abused the out-of-control 
bankruptcy system to make victims out of those small business people.

                              {time}  1500

  We need to protect the hardworking Americans and consumers who are 
the innocent victims of our present out-of-control bankruptcy system.
  Therefore, I urge my colleagues to support the Bankruptcy Reform Act 
of 1998. It protects our families, it protects our small businesses, 
and it restores some measure of personal responsibility to our out-of-
control U.S. bankruptcy system.
  Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Kelly) with the promise that she will come back later.
  Mrs. KELLY. Mr. Chairman, I thank the gentleman from Pennsylvania for 
yielding to me the time to clarify some very important provisions of 
this legislation.
  Mr. Chairman, I rise today in strong support of H.R. 3150, the 
Bankruptcy Reform Act. Some of my colleagues would have us believe that 
this legislation would undermine alimony and child support. All 
arguments to this effect are pure distortion of the actual language of 
this bill.
  This bankruptcy reform legislation before us today does nothing of 
the sort. In reality, it strengthens the Bankruptcy Code's protections 
for ex-spouses and children.
  I will quote to my colleagues a May 13 nonpartisan Congressional 
Research Service memorandum: ``No provisions in H.R. 3150 would repeal 
the current protections that child support receives. The bill would 
reinforce the legal status of these payments in some ways.''
  H.R. 3150 is quite clear that the child support and alimony must be 
paid first and in their entirety before a single dollar is paid out to 
nonpriority, unsecured creditors. This priority holds even where an ex-
spouse who has the obligation to pay alimony has drawn on an unsecured 
credit line to pay marital obligations.
  As a constant fighter for the rights of ex-spouses to have first 
priority to every cent of assets, I would vehemently oppose any 
legislation that would reduce the ability of women and children to 
receive support payments.
  If people would take the time to read this legislation, they would 
see that H.R. 3150 will benefit, not harm, child support and ex-spousal 
support.
  Members can speak to the possibility that future Congresses may 
change bankruptcy law, but let us keep the debate focused on the 
effects of this bill. H.R. 3150 strengthens the rights of ex-spouses 
and children to receive support before any other creditor.
  Mr. NADLER. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Chairman, the best of all worlds would 
be that this is a distortion, that in fact we could conclude at the end 
of this debate that we were just spewing out words and in fact we could 
vote for H.R. 3150 as the right kind of legislation.
  But might I share with my colleagues some of the facts that are real 
in this issue. We do all need and are committed to personal 
responsibility, each and every one of us. In fact, we teach it to our 
children. The last thing we want to get is a phone call at work saying 
we owe some money.
  But let me share with my colleagues, Mr. Chairman, the real truth of 
the American public. Some years ago, the American public filed 
bankruptcy with only 70 percent debt. Today, the American public waits 
and strains themselves and only files bankruptcy when their debt is 164 
percent of income. That is the average working man and woman who every 
day brings home under $50,000 a year and tries as they may to make ends 
meet.
  This bankruptcy bill kicks them out of the courthouse and tells them, 
off to the curb with you, smother yourselves with debt. You are nothing 
but deadbeats.
  H.R. 3150 could have been a bipartisan bill if we had the opportunity 
to have hearings and documentation of how best to treat this problem. 
There are 3 billion contacts with Americans every day promoting 
utilization of credit over and over again.
  This is why I am against this particular legislation, because 300,000 
people engaged in the bankruptcy filings of 1.3 million are divorcees 
and mothers and custodial parents seeking to get child support and 
alimony.
  It does impact child support and alimony. It is not corrected by any 
of these amendments. Once the bankruptcy proceeding is over, once the 
prioritization has been made, when people have to pay their debts, 
credit card monies are equal to their child support.
  While one is in the bankrupt situation, one is required and is 
responsible for paying both of them. Who has a greater leverage to 
force one to pay? That parent with the child who is trying to get their 
child support payments? Absolutely not. It is the credit card company 
and others who can call over and over and over again.
  I have heard from my constituents in Texas and across this Nation how 
they have lost jobs because of the credit card companies who have 
sought to over and over again be able to repeat to them that they have 
not paid.
  If this bill was the kind of bill that all of us could support, my 
colleagues can rest assured we would be right here, because we believe 
in the American system and the American way of doing what is right, 
making sure that small businesses are protected.
  I support an amendment to study what happens to small businesses when 
they go into bankruptcy. But we have so many groups that are against 
this. We have the Lawyers for Children In America, Federally Employed 
Women, Legal Defense and Education Fund, the American Nurses 
Association, Women United for Action, Women's Policy Center, Church 
Women United. We have the Clearinghouse on Women's Issues, Coalition of 
Labor Union Women.
  This is a bad bill. The administration is against this bill. I simply 
ask, send it back to committee. Let us do what is right for the 
country.

[[Page H4367]]

  I am strongly opposed to H.R. 3150 and I encourage my colleagues to 
also vote against the bill. H.R. 3150 unnecessarily burdens the right 
of bankrupt debtors to have a fresh start by creating a formula which 
forces bankruptcy filers to involuntarily enter Chapter 13 if they meet 
certain arbitrary income qualifications.
  This approach to bankruptcy reform has been opposed by the Executive 
Office of the President, 110 federal Bankruptcy Judges as well as a 
coalition of 57 well respected Bankruptcy Law professors.
  This bill is not about personal responsibility, it is about the 
redirection of bankruptcy filers, to banks, credit card companies and 
credit lending institutions, and in turn, this bill will hurt a lot of 
women and children who are dependent on child and spousal support.
  This bill subordinates the needs of support recipients to credit card 
companies like Master-card and Visa. As the First Lady said in a May 7 
article, ``I have no quarrel with responsible bankruptcy reform, but I 
do quarrel with aspects of this bill that would force single parents to 
compete for their child support payments with big banks trying to 
collect credit card debt.
  I have received numerous letters from my constituents in Houston, who 
are concerned about the effects of this legislation. One such letter is 
from a student graduate supporting a wife on a limited income, worried 
that with new changes in the code, he will not be able to adequately 
support his family. Another is from a debtor whose financial 
responsibilities became overwhelming and is concerned that he will be 
unable to support his children and his ex-wife and pay off his non-
domestic creditors under the new code.
  Any effort to reform the bankruptcy system must protect the 
obligations of parents to support their children. This bill is a new 
and catastrophic threat to our children who rely on child support.
  According to a recent study by the U.S. Department of Health and 
Human Services, between 1978 and 1991, 21-28 percent of poor children 
in America did not receive any child support from their non-custodial 
parent, and child support is an issue critical to the well-being of our 
nation's children. During 1997, an estimated 300,000 bankruptcy cases 
involved child support and alimony orders. In about half these cases, 
women were creditors trying to collect alimony and child support from 
their bankrupt ex-husbands and others. In about half of these cases, 
women were forced to file for bankruptcy themselves as they tried to 
stabilize their post divorce economic condition. In the past five 
years, well over a million women collecting alimony and child support 
have been involved in bankruptcy cases.

  In 1994, one in every four children lived in a family with only one 
parent present in the home. Half of all children in the United States 
spend at least a portion of their childhood in single-parent homes.
  While these figures are truly striking in their own right, we cannot 
begin to truly understand their impact on our nation's children without 
considering the fact that half of the 18.7 million children living in 
single-parent homes in 1994 were poor, and 70 percent of African 
American children growing up in a single parent household lived at or 
below the poverty line. Poor children in single-parent families rely on 
child support from their non-custodial parent as a crucial source of 
income.
  In 1997, I co-sponsored H.R. 2487, the Child Support Incentive Act, 
legislation which reformed the child support incentive payment plan and 
improved state collection performance. And today, I am speaking before 
you because children's access to child support is once again being 
threatened. We need to keep our children a priority.
  According to records from the U.S. Department of Health and Human 
Services, 31 million children are currently owed over 41 billion 
dollars in unpaid child support. When credit card companies and 
children compete for the same money, we know that it is likely that the 
most aggressive and powerful creditors will succeed.
  We must counter this potential disaster to children relying on their 
parent's continued support. We need to maintain the priority of those 
parents seeking to collect owed child support from a bankrupt debtor. 
This can be done without removing the tools needed for credit card 
companies to effectively root out fraudulent debtors. Our children are 
our future and when it comes to paying off debt, children and women 
should come first, and we must remember this when we are voting today.
  Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentleman from Ohio 
(Mr. Chabot). I am glad to do that. The gentleman from Ohio (Mr. 
Chabot) has produced innovative and powerful concepts in the work of 
the Committee on the Judiciary over a period of years, and I am glad to 
have his support on this legislation.
  (Mr. CHABOT asked and was given permission to revise and extend his 
remarks.)
  Mr. CHABOT. Mr. Chairman, I would first like to thank the gentleman 
from Illinois (Mr. Hyde) and the gentleman from Pennsylvania (Mr. 
Gekas) for their hard work and leadership in putting this bipartisan, 
and it clearly is bipartisan, legislation together and moving it forth 
so expeditiously.
  This important legislation will protect consumers and businesses from 
creditors who are capable of paying their debts but who choose to hide 
behind bankruptcy protection instead of paying. In particular, this 
legislation would reestablish the link between one's ability to pay and 
one's ability to discharge debt by instituting a needs-based reform in 
the bankruptcy system.
  In a time of solid economic growth and low inflation and low 
unemployment, it is absolutely astounding that there were a record 1.4 
million consumer bankruptcies in 1997. This represents a sevenfold 
increase in the number of consumer bankruptcies since 1978 when the 
bankruptcy laws were last reformed. These numbers are expected to 
increase even further this year.
  The primary culprit for this dramatic increase in the number of 
consumer bankruptcies is a system that discourages personal 
responsibility. Our current bankruptcy laws often allow those who can 
afford to pay their bills to, instead, declare bankruptcy and walk away 
debt free.
  When someone who can afford to pay their bills does not and they file 
bankruptcy, who pays? We all do. We all pay for it at about $400 a year 
per American family in higher prices; and it is, in essence, a tax on 
the American public, a tax on debt.
  Mr. Chairman, I believe that H.R. 3150 makes significant steps in 
ending this practice, and I hope the President will sign this 
legislation quickly, although one never knows, so that we can give 
hardworking American families protection from those who abuse the 
bankruptcy system and leave others holding the bill. There clearly are 
many instances in which people truly need bankruptcy. But let us stop 
the abuses. That is what this legislation does.
  Mr. NADLER. Mr. Chairman, could I inquire how much time I have 
remaining?
  The CHAIRMAN. The gentleman from New York (Mr. Nadler) has 2 minutes 
remaining, and the gentleman from Pennsylvania (Mr. Gekas) has 3\1/2\ 
minutes remaining.
  Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
California (Mrs. Tauscher), but with the invitation to return to the 
floor later for an additional period of time.
  Mrs. TAUSCHER. Mr. Chairman, I accept the gentleman's invitation.
  Mr. Chairman, I rise to strongly support this legislation to reform 
bankruptcy. This legislation would change bankruptcy laws to promote 
personal responsibility, ensure that more of the people who file for 
bankruptcy repay at least a portion of what they owe.
  If, after accounting for all reasonable household expenses each 
month, the filer has enough money to pay some of his debt, he will be 
required to do so. This fair and reasonable test protects the most 
needy while it insists on repayment by the most irresponsible.
  The stigma that was once attached to bankruptcy has disappeared. The 
growing number of filers indicates that people today are less concerned 
about the social implications of bankruptcy. It is our job to replace 
that social stigma with legislation that fills the gaps in bankruptcy 
law and demands responsible behavior by individuals.
  I urge my colleagues to support this important legislation.
  Mr. GEKAS. Mr. Chairman, I must at the risk of boring the Chair ask 
how much time is remaining.
  The CHAIRMAN. The gentleman from Pennsylvania (Mr. Gekas) has 2\1/2\ 
minutes remaining. The gentleman from New York (Mr. Nadler) has 2 
minutes remaining.
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, everyone should remember that the debate in this House 
today is not over personal responsibility. The debate is not over 
whether people who can pay their debts should pay their debts. Everyone 
agrees to that.
  The debate, Mr. Chairman, is over the measure of the test. That is 
the first debate. Should it be, as the bill

[[Page H4368]]

before us has it, an automatic test with no judge there? Should it be a 
test that looks not at actual expenses and actual facts, but at what 
the Internal Revenue Service says in its guidelines might be the facts, 
not at what your rent is, what your child expenses are, but what the 
Internal Revenue Service says that for an average person in the 
Northeast and Southwest of the country it might be?
  I submit that this bill does not make sense in saying that we are 
going to decide how much someone can afford to pay off on his debts by 
looking at theories as to what his rent might be, what his child 
expenses might be instead of what they actually are. That is the first 
question.
  The second question is that this bill jumps the line. It takes credit 
cards and puts them in preference to other debtors, says you cannot 
have a Chapter 13 plan confirmed unless you can pay $50 minimum for the 
credit cards. It puts it in preference in practical terms over the 
child support, over the victims, over the secured debt. It makes no 
sense except as a reflection of the lobbying and the campaign 
contributions by the banks and the credit card companies; and that is 
not the way we ought to distort the law.
  Mr. Chairman, I would remind my colleagues that every bankruptcy 
association, the Bankruptcy College, the Bankruptcy Institute, the 
trustees, the Chapter 13 trustees, the judges, they all tell us this 
bill should be rethought and makes no sense.
  I would also remind my colleagues the CBO says this is an unfunded 
mandate in the private sector between $260 million and $1.3 billion and 
on the public sector of $214 million.
  I urge my colleague to think better of it and to vote against this 
bill.
  The CHAIRMAN. The time of the gentleman from New York (Mr. Nadler) 
has expired.
  The gentleman from Pennsylvania (Mr. Gekas) has 2\1/2\ minutes 
remaining.
  Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentleman from 
Tennessee (Mr. Bryant), who has been, whether he knows it or not, an 
unofficial consultant to me personally on the issues surrounding 
bankruptcy in all its phases.

                              {time}  1515

  Mr. BRYANT. Mr. Chairman, I thank the chairman for yielding time to 
me.
  Mr. Chairman, on this issue of child support, let me reference a 
letter from the California Family Support Council which speaks directly 
to this point.

       I have been informed that there is some opposition to H.R. 
     3150 based on the premise that support creditors would be 
     worse off if certain credit card debts were made 
     nondischargeable and credit card creditors and support 
     creditors were in competition for the same post-discharge 
     assets.
       I can only say that we are in competition with those 
     creditors prior to bankruptcy now. We do not see debts as 
     impairing our ability to collect support, especially in view 
     of the advantages child support creditors have under current 
     State and Federal laws as outlined above. Our problems stem 
     not from the competition with credit card creditors outside 
     bankruptcy, but from the disadvantages we incur as collectors 
     of support under current bankruptcy law during bankruptcy. 
     Your proposed amendments would give support creditors an 
     enormous advantage over other creditors during bankruptcy and 
     greatly aid us in the discharge of our support enforcement 
     responsibilities.

  Mr. Chairman, I urge support of this bankruptcy reform.
  Mr. GEKAS. Mr. Chairman, I yield the remainder of my time to the 
gentleman from Michigan (Mr. Smith), and he and I will engage in a 
colloquy.
  The CHAIRMAN. The gentleman from Michigan (Mr. Smith) is recognized 
for 1\1/2\ minutes.
  Mr. SMITH of Michigan. Mr. Chairman, I thank the gentleman for his 
efforts to pass comprehensive and common sense bankruptcy reform that 
will greatly benefit our economy and our taxpayers by lowering interest 
rates and increasing availability.
  On a particular issue, many States such as my home State of Michigan 
have experienced a sharp increase in the number of long-term placements 
of children by court order. Tom Robison, the Eaton County, Michigan, 
probate court administrator, tells me that the cost of just one 
placement can be as high as $50,000 per year.
  Federal courts have determined that when parents declare bankruptcy, 
they are currently allowed to discharge the debts owed to that 
particular court and the taxpayer for the costs of this long-term 
placement.
  I introduced H.R. 3711 last April to specifically state in law that 
such expenses of caring for children could not be discharged by 
bankruptcy. I thank the chairman for agreeing to this provision we have 
asked for to make sure that debts owed to the State and municipality or 
State court of proper jurisdiction for this purpose are not 
dischargeable.
  I wanted to clarify, however, that the definition of ``municipality'' 
is meant to include probate courts and other local governmental units 
that have to pay the cost of this care. For that purpose, I would like 
to enter into this colloquy with the distinguished chairman of the 
subcommittee, the gentleman from Pennsylvania (Mr. Gekas).
  Mr. Chairman, I would ask the gentleman from Pennsylvania (Mr. 
Gekas), if the term ``municipality'' as defined by section 101 of the 
Bankruptcy Code includes State courts?
  Mr. GEKAS. Mr. Chairman, will the gentleman yield?
  Mr. SMITH of Michigan. I yield to the gentleman from Pennsylvania.
  Mr. GEKAS. I thank the gentleman, Mr. Chairman, for bringing this 
issue to full debate here on the floor, and this colloquy. I agree that 
that is a correct interpretation of the law, and commend the gentleman 
for bringing the issue as far as it has come. We will work together to 
consider the full ramifications of the issue before conference.
  Mr. SMITH of Michigan. Mr. Chairman, I thank the gentleman.
  Mr. DAVIS of Florida. Mr. Chairman, I rise in support of H.R. 3150, 
the Bankruptcy Reform Act, which, although not perfect, is a strong 
step in the right direction. The principle behind this legislation is 
simple. If you can afford to repay some of your debts, you should be 
required to do so. The fact that in this booming economy there has been 
a meteoric rise in bankruptcy filings is simply unacceptable. Yes, 
there are credit companies which unscrupulously dangle credit in front 
of high-risk consumers; however, the individual must ultimately take 
responsibility for his or her spending habits.
  Protecting the status quo is tantamount to telling all consumers, 
including low and moderate income families struggling hard to pay their 
bills, that they will have to continue to pay for the unpaid debts of 
others, even if those filing for bankruptcy are more affluent and 
actually capable of paying off some of those debts. Last year, a total 
of $44 billion in consumer debt was erased through bankruptcy filings. 
Of course, erasing these debts means transfering that burden to every 
other consumer--a burden which amounts to roughly $400 for every 
American household.
  While I have concerns over certain provisions included in this 
legislation, such as the preemption of my home state's constitution 
with respect to the homestead exemption, I believe it is important to 
move this process forward and work with the Senate to craft a strong 
bi-partisan bankruptcy reform bill which returns a sense of personal 
responsibility to our Nation's bankruptcy system.
  Mr. WOLF. Mr. Chairman. I want to express my extreme disappointment 
with this rule. Representative Nadler had an amendment to this bill 
which was not made in order. That amendment would have eliminated 
bankruptcy claims on debts incurred in or adjacent to gambling 
facilities, or debts that the creditor should have known were intended 
to be used by the debtor for gambling purposes.
  A 1997 SMR Research Corporation study on personal bankruptcy, which I 
will include for the record, examined the high-risk activities which 
contribute to bankruptcy. The report reviewed three serious addiction 
problems in America--drugs, alcohol and gambling--and their effects on 
personal bankruptcies. Of gambling, the report said, ``It now appears 
that gambling may be the single-fastest growing driver of bankruptcy.'' 
It also showed a definite correlation between the presence of gambling 
facilities and a growth in personal bankruptcies.
  The report made a number of recommendations for dealing with the 
rapid increase in personal bankruptcies related to gambling. The first 
was, ``Make it tougher for customers to obtain cash advances at 
gambling casinos.''
  Mr. Chairman, Mr. Nadler's amendment would have been a very important 
step in stemming the tide of gambling-related bankruptcy. But since it 
was not made in order, we have been denied the full and open debate 
that is crucial to better understanding this problem. Therefore, I will 
vote against this rule.

[[Page H4369]]

                  The Personal Bankruptcy Crisis, 1997


            demographics, causes, implications, & solutions

       Wild Growth In Filings: More Bad News Ahead.
       Age, Income, Education, Population Density, & Geography.
       Lawyer Advertising & The Loss Of Stigma.
       Why The Tide Of Financial Catastrophes Is Rising.
       New Ideas To Reduce Bankruptcy Losses.


                       the purpose of this study

       In 1996, SMR Research issued a 56-page study on the causes 
     of wildly rising personal bankruptcy filings. We knew the 
     subject was timely, but little did we imagine the media 
     coverage that would follow.
       The 1996 study was mentioned in major newspapers and 
     magazines across the land, on television, and even became the 
     subject of two stories in the Wall Street Journal.
       Fate is strange. Publicity is nice, but the 1996 study was 
     not exactly a typical SMR production. The explosion in 
     bankruptcies had caused a lot of demand for information from 
     our lending industry clients, especially unsecured lenders. 
     We put together the 56-page piece as a section of our 1996 
     annual credit card market study, and later offered the 
     bankruptcy section by itself to non-credit card issuers.
       Although 56 pages might look big to some folks, it was the 
     shortest research study we have done since 1985. We found 
     ourselves making conclusions in the 1996 study with some 
     statistical backing, but not always definitive proof.
       This study, by contrast, is indeed a standard SMR Research 
     work. The scope is much greater, and allows us to cover the 
     subject completely, with a meaty section on solving (or at 
     least mitigating) the personal bankruptcy dilemma. Where the 
     1996 study focused solely on some of the core causes of 
     bankruptcy, this study covers the full nature of the problem.
       We look at the common misperceptions about bankruptcy and 
     provide the statistics that show why they are such vast over-
     statements. Unemployment is not the primary driver of 
     bankruptcy, nor is the overall consumer debt load. Lender 
     marketing and easy credit also are not the prime cause.
       In fact, there is no single prime cause of bankruptcy. In 
     this study, you'll see coverage of many things that result in 
     bankruptcy, with some quantification of which ones are the 
     worst. The additional space allows us to cover things we 
     couldn't cover last year, like the connection between 
     bankruptcy and gambling--perhaps the fastest-growing problem 
     of all.
       In addition, this study, for the first time we know of, 
     shows the demographics of bankruptcy, using our county-level 
     statistical database that goes back to 1989.
       Regarding solutions to the problem, they are not easy. The 
     bankruptcy spike is based at least in part on serious, 
     intransigent, worsening socio-economic problems. This 
     underlying core puts upward pressure on filings, and the 
     upward pressure really explodes when you throw lawyer 
     advertising and bankruptcy's loss of social stigma into the 
     mix.
       Still, we are quite confident that there are steps 
     available to creditors to help control their own bankruptcy 
     loss exposure. We think the best solution of all may be the 
     most radical, which is for creditors to adopt some of the 
     risk-control techniques of the insurance industry. This would 
     mean using actual geographic loss statistics as a 
     supplemental aid in credit scoring, pricing, and marketing. 
     This material appears starting on Page 157.
       SMR has been following the bankruptcy subject, and has been 
     building its databases of filings, for eight years. After all 
     that time, we finally have created a research study that we 
     believe addresses all the central issues in the bankruptcy 
     crisis.
       We appreciate your patronage and hope you get good value 
     from the research.
                                                    Stu Feldstein,
                                                        President.


               discounted additional copies of this study

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     discount programs.
       We will ship all the additional copies you want at $292.50 
     (85% off the original copy price) as long as supplies last.
       Or, clients can make their own copies of the study on their 
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     decide how many copies you wish to make and call us at 908-
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       Additional copies at discount prices are available only for 
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     resale or distribution outside your company. We appreciate 
     your cooperation. Research of this kind is expensive to 
     undertake, and we must be able to sell enough of it ourselves 
     to continue the work in the future.


                        gambling and bankruptcy

       It now appears that gambling may be the single fastest-
     growing driver of bankruptcy.
       Once limited to Nevada and New Jersey, casino gambling has 
     spread very rapidly through many states. Indian reservation 
     casinos have been one new mode for this growth, and riverboat 
     and coastal gambling boats have added more.
       If you have not been tracking the spread of gambling, you 
     may be in a shock about how pervasive gambling facilities 
     have become.
       Note that in the state of Nevada, there are only 17 
     counties (most of them very large). But across the nation, 
     there are now 298 counties that have at least one major legal 
     gambling facility; a casino, a horse or dog racing track, or 
     a jai alai game. That's the count in one recent guide to U.S. 
     gambling facilities, and it does not include such things as 
     places where state lotteries or bingo parlors are available. 
     The lotteries and bingo parlors tend to involve small-ticket 
     gambling, whereas the other facilities obviously involve the 
     larger dollars per customer.


                  the three additions & changed mores

       When we published our shorter study on the causes of 
     bankruptcy in 1996, we had suspicions about gambling. But we 
     had not yet put together enough solid data and information to 
     make conclusions, therefore we said little about the subject.
       Actually, since we were looking at events that can cause 
     insolvency, we were suspicious in 1996 about all three of the 
     serious addiction problems in America: alcoholism and drug 
     and gambling addiction. We remain suspicious about all three 
     of those problems. But of the three, it's quite clear that 
     gambling is the fastest-growing phenomenon.
       For those who make and supply alcohol, drugs, and gambling, 
     all are very large businesses. But you don't have to be a 
     sociologist to see that societal mores are changing most 
     rapidly on gambling. Over the last 20 years, state 
     governments themselves have entered the gambling business 
     with lotteries. We see no states as yet that have gone into 
     the heroin trade or where the government itself advertises 
     Jim Beam. So, the concept of gambling now has the tacit 
     blessing of government.
       Meanwhile, private entrepreneurs have created dazzling and 
     sophisticated facilities that have eliminated the ``sleaze'' 
     from gambling and turned it into a recreation. Las Vegas is 
     now a city-sized adult theme park with attractions for the 
     kids, too. American Indians, operating on reservations beyond 
     the authority of state laws, have seized on casinos as a new 
     method to generate cash and improve their standard of living. 
     Cruise ships of all sorts have set up table games and slot 
     machines.
       Hard-bitten gamblers of old played poker at tables in a 
     friend's kitchen or sat in cold bleachers to watch the 
     horses. Today's gamblers enjoy the finest food, free drinks, 
     the best entertainment, super-quality hotels, and the widest 
     variety of gambling adventures that have ever been available. 
     And, of course, all of this now happens at places much closer 
     to most of the larger population centers. Gambling can indeed 
     be fun these days--but some smallish percentage of gamblers 
     do develop problems that translate into bankruptcy.


                  statistics, gambling, and bankruptcy

       As in so many aspects of bankruptcy, perfect data related 
     to the gambling problem don't exist. No one has asked all the 
     bankruptcy filers if gambling contributed to their financial 
     problems, and we strongly suspect that if filers were asked 
     that question, many would be too embarrassed to answer 
     honestly.
       But we can look at evidence in many other ways. Recently, 
     for example, we input into our county-level records the 
     numbers of gambling places that exist in each county, if any. 
     We obtained the information, covering more than 800 casinos, 
     race tracks, and jai alai ``frontons'' from the 1997 edition 
     of The Gaming Guide: Where to Play in the US of A, published 
     by Facts on Demand Press of Tempe, AZ. The directory provides 
     street addresses and zip codes for the gaming establishments. 
     We used the zips against SMR's Zip Code/County Matching 
     database to put the right numbers of facilities in the right 
     counties.
       Then, we aggregated the bankruptcy rates of those places 
     and compared them to those of counties that have no gambling 
     at all. The bankruptcy rate was 18% higher in counties with 
     one gambling facility and it was 35% higher in counties with 
     five or more gambling establishments.
       This exercise probably understates the seriousness of the 
     problem, since many counties that have gambling facilities 
     also have very small populations and actually draw their 
     customers from other places.
       So, when we look only at counties with more sizeable 
     resident populations and gambling facilities, we see even 
     greater evidence of the problem.


                           a look at the map

       The effect of gambling on bankruptcy seems quite clear when 
     you look at a map. Among all the counties in Nevada, for 
     instance, we find that the closer you come to Las Vegas and 
     Reno, the higher the bankruptcy rate.
       In New Jersey, casinos are permitted only in Atlantic 
     City--and that's also where the resident population has by 
     far the highest bankruptcy rate. Generally speaking, the 
     closer you come to Atlantic City, the higher the bankruptcy 
     rate in New Jersey. One exception to this rule is Cape May 
     County, just south of Atlantic City, where the bankruptcy 
     rate is not so high. But Cape May also is a big retirement 
     place with a high average age in the population. As shown in 
     our demographics section, high-age populations do not have 
     high bankruptcy rates.
       In California, the two counties with the highest bankruptcy 
     rates are Riverside and San Bernardino. They also happen to 
     be the two counties closest to Las Vegas. The

[[Page H4370]]

     fourth-highest bankruptcy rate in California is in 
     Sacramento County, which is closest to Reno.
       In Connecticut, the map hardly matters. Connecticut is so 
     tiny that everyone has access to the gambling parlors in the 
     middle of the state. This is a state that used to have a 
     bankruptcy rate far below the national average. But Indian 
     casino gambling is now huge and well-entrenched. The smaller 
     of the Indian casinos, the Mohican Sun in Uncasville, boasts 
     3,000 slot machines. In Connecticut, the bankruptcy rate per 
     capita has risen more than twice as fast as the national rate 
     of increase since 1990.


    what the experts say: scope of the problem, and the credit card 
                               connection

       Aside from these observations, we set out this year to 
     interview many of the leading U.S. experts on gambling, 
     gambling addition, and the financial impact of gambling.
       Their studies have suggested, fairly consistently, that 
     more than 20% of compulsive gamblers have filed for 
     bankruptcy as a result of their gambling losses. They also 
     show that upwards of 90% of compulsive gamblers had used 
     their credit card lines to obtain funds for gambline and then 
     lost. The same studies show that problem gamblers have a lot 
     of credit cards on which to draw.
       ``One of the things we know about problem gamblers is that 
     they tend to have lots and lots of credit cards and those 
     credit cards have been maxed out in terms of their credit 
     limits,'' said Rachel Volberg, one of the leading researchers 
     into problem gambling in the U.S. and internationally. 
     Volberg is president of Gemini Research, a consulting firm in 
     Roaring Spring, PA. She is a frequent ``expert witness'' on 
     the problem in state legislative hearings and has done 
     research under contract for various government units in 
     Oregon, Colorado, New York, California, Michigan, 
     Mississippi, Georgia, Louisiana, Iowa, Connecticut, and 
     Canadian provinces.
       Volberg is not the only researcher to note the connection 
     with credit cards. ``It's not unusual for problem gamblers to 
     have eight to 10 credit cards,'' adds Henry Lesieur, 
     professor of criminal justice at the University of Illinois, 
     Normal, another leading authority on compulsive gambling.
       The amount gamblers owe is quite large. According to 
     studies of Gamblers Anonymous members in Illinois conducted 
     in 1993 and 1995 by Lesieur, the median average lifetime 
     gambling debt of those surveyed was $45,000, and the median 
     amount owed at the time they entered GA was $18,000. The 
     median is the midpoint of a list of numbers, with 50% of the 
     numbers being higher and the other 50% being lower.
       However, the mean average debts of problem gamblers were 
     far higher than the median amounts. The mean average lifetime 
     gambling debt of those surveyed was $215,406, with three 
     people saying they owed $1 million or more. The mean debt 
     upon entering GA was $113,640, including one person who said 
     he owed $1 million and another admitting to owing an 
     incredible $7.5 million.
       In another study dated April 1996 by the University of 
     Minnesota Medical School, a survey of problem gamblers in 
     Minnesota found the average lifetime gambling debt was 
     $47,855, although individual amounts ran into the hundreds of 
     thousands of dollars. The median amount was $19,000. Recent 
     debts--those accumulated in the past six months--averaged 
     $10,008, while the median amount was $4,500.
       In late 1995, the Minneapolis Star Tribune examined 105 
     bankruptcy filings made in that city in which it was 
     determined that gambling was a factor. The results of the 
     study appeared in a five-part series that ran in the paper in 
     December 1995.
       The newspaper found that of the $4.2 million of total debt 
     declared by the 105 filers, $1.14 million--or 27%--was 
     comprised of gambling losses. Almost half of the 105 
     filiers--52, to be exact--claimed they had gambling losses. 
     Their average debt was $40,066, which was more than the 
     average annual income of $35,244. The average gambling loss 
     was more than $22,000. Filers carried an average of eight 
     credit cards, although many had 10 or 15 cards and one person 
     had 25. And heavy debts were being carried on each card.


          counties with gambling have higher bankruptcy rates

       Let's return to the county-level data. In the table that 
     follows, we divided up the country amount counties with 
     gambling facilities and those without. The differences in 
     bankruptcy rates between them are striking. It's quite clear 
     that those counties with legal big-ticket gambling have 
     higher bankruptcy rates than those counties that don't have 
     gambling, and those counties with many gambling houses have 
     higher bankruptcy rates than those places with just a few.
       We examined more than 3,100 counties. For the entire United 
     States, the personal bankruptcy filing rate per 1,000 
     population in 1996 was 4.20. But the national rate for 
     purposes of comparison to counties was 4.22 (using 1996 
     bankruptcies divided by 1995 populations; the 1996 county 
     populations were not available when we did this analysis). 
     For the 2,844 counties without gambling, the bankruptcy rate 
     was lower, at 3.96.
       According to The Gaming Guide, there were 298 counties that 
     had legalized gambling within their borders. In these 
     counties, the bankruptcy filing rate in 1996 was 4.67, or 18% 
     higher than for those counties with no gambling. When we 
     subdivide the universe of counties with gambling between 
     those with five or more locations and those with four or 
     less, we learn more. The places with the most gambling 
     facilities have a much higher bankruptcy rate.
       Of the 298 counties with gambling, 275 had only one to four 
     facilities. Their combined 1996 bankruptcy filing rate was 
     4.53 per 1,000 residents, or 14% greater than the 3.96 rate 
     among counties without gambling. However, in the 23 other 
     counties with five or more gambling facilities, the combined 
     bankruptcy rate was 4.33, a whopping 26% higher than the 4.22 
     national bankruptcy rate and 35% higher than at counties with 
     no gambling at all. Many of these counties with 5+ gambline 
     facilities are in Nevada, but most of them are not.

 BANKRUPTCY FILING RATES IN U.S. COUNTIES WITH GAMBLING FACILITIES VERSUS COUNTIES WITH NO GAMING ESTABLISHMENTS
 [Gambling facilities include land, tribal, and boat casinos; dog, horse, and harness race tracks, and jai alai 
                                                    frontons]                                                   
----------------------------------------------------------------------------------------------------------------
                                                                                            1996         1996   
                                                              No. of       Aggregate     bankruptcy  filings per
                                                             counties     population      filings        1000   
----------------------------------------------------------------------------------------------------------------
All Counties with Gaming Facilities......................          298      97,385,935      454,384         4.67
Counties with 5+ Gaming Facilities.......................           23      16,391,661       87,435         5.33
Counties with 1-4 Gaming Facilities......................          275      80,994,274      366,949         4.53
Counties with No Gaming Facilities.......................        2,844     166,526,572      658,724         3.96
All U.S. Counties........................................        3,142     263,912,507    1,113,108         4.22
----------------------------------------------------------------------------------------------------------------

       Again, these data tell only part of the story, since some 
     gambling parlors (especially tribal casinos) are located in 
     thinly populated places and draw almost all their customers 
     from other places.
       So, it's important to also look at more populous areas 
     located very near to gaming facilities. Indeed, not only do 
     many gambling facilities draw from other nearby population 
     centers within the U.S., but in addition there are many legal 
     casinos in several Canadian provinces. These often are 
     located just beyond the U.S. border and cater to American 
     gamblers in the Detroit area, upstate New York, and other 
     northern states.
       Thus, we believe many counties have high bankruptcy rates 
     tied in part to gambling, yet the county doesn't register in 
     our table as a ``gambling'' county. If we included counties 
     contiguous to those places with legalized gambling, we're 
     sure the numbers would show an even stronger correlation 
     between high bankruptcy rates and gambling. The following 
     mini study of the Memphis, TN, area illustrates our point.


       las vegas east: would you believe it's tunica county, ms?

       In the table below, we show the 24 counties in the U.S. 
     with the worst U.S. bankruptcy filing rates in 1996 (10.0 or 
     more filings per thousand residents) and where the population 
     is greater than 25,000.
       A significant number of these worst places share one 
     trait--all are within easy reach of major gambling casinos. 
     This is true of just about all of the counties on the list 
     that are located in Tennessee, Mississippi, and Arkansas.
       Neither Tennessee nor Arkansas has legal casino gambling 
     within its borders. In fact, neither state even has a 
     lottery, for that matter. Yet, several of their biggest 
     counties are located near the 10 major riverboat casinos in 
     Tunica County, MS. Tunica is located in the extreme northwest 
     corner of Mississippi, just south of Memphis, TN. According 
     to The Gaming Guide, Mississippi has the largest amount of 
     ``gaming area''--that is, square feet of casino gambling--in 
     any state outside Nevada. And most of that gaming is centered 
     in Tunica County. Major casinos are also located in the 
     Biloxi-Gulfport area on the Gulf of Mexico.
       The profusion of super-high bankruptcy rates among the 
     counties located near the Mississippi River casinos in Tunica 
     County is quite remarkable. Indeed, the counties in the 
     tristate area within the Memphis metropolitan area have some 
     of the highest personal bankruptcy rates in the nation. We 
     view their close proximity to the Tunica casinos as very 
     meaningful.
       Shelby County, TN, where Memphis is situated, easily had 
     the highest county bankruptcy rate in the nation in 1996, at 
     17.28 per 1,000 population--more than four times the national 
     average. It's also by far the biggest county in terms of 
     population among the most bankrupt counties. Memphis also 
     happens to be the headquarters of Harrah's, one of the 
     biggest casino operators.
       Also on the list of worst counties are two Mississippi 
     counties. DeSoto, with a December 1996 filing rate of 10.65, 
     borders Tunica County. Marshall County, at 11.47, is adjacent 
     to DeSoto. Tunica County itself, the

[[Page H4371]]

     likely source of some of this trouble, has a population of 
     just 8,132 souls, and a bankruptcy rate of just 5.78, less 
     than the state average of 6.16.
       Also high on the list of most bankrupt counties is 
     Crittenden County, AR, at 11.16. It's the county located just 
     across the Mississippi River from Shelby County. Tipton 
     County, TN, at 10.96, is adjacent to Shelby County on the 
     north. Madison County, TN, at 10.73, is located just east of 
     Shelby. But other counties located near Shelby in Tennessee 
     sport high bankruptcy rates, including Haywood, Lauderdale, 
     Fayette, and Crockett, to name a few. These counties don't 
     appear on our list of worst counties because their 
     populations were less than 25,000.
       The Tunica casinos aren't the only ones catering to 
     Tennessee residents. There's also a casino located upriver in 
     Caruthersville, MO, in the state's southeastern panhandle. It 
     may be part of the reason for the 10.56/1,000 bankruptcy rate 
     in Dyer County, TN, which is located just across the river. 
     Also, Gibson County, TN, just east of Dyer, has a bankruptcy 
     filing rate of 10.12. It's worth mentioning that both Dyer 
     and Gibson Counties are also both within a two-hour drive of 
     the Tunica casinos.
       The next table shows that 9 of the 24 U.S. counties with 
     the highest bankruptcy rates in 1996 also were places located 
     very close to three gambling sites.

                               COUNTIES WITH HIGHEST BANKRUPTCY FILING RATES, 1996                              
                                           [Minimum population 25,000]                                          
----------------------------------------------------------------------------------------------------------------
                                                                                                     Filings per
                           County name                              Code    Population    Filings        1000   
----------------------------------------------------------------------------------------------------------------
Shelby County, TN...............................................      \1\      865,058       14,952        17.28
Coffee County, GA...............................................  .......       32,697          432        13.21
Jefferson County, AL............................................  .......      657,827        8,124        12.35
Bibb County, GA.................................................  .......      135,066        1,912        12.33
Troup County, GA................................................  .......       57,882          705        12.18
Walker County, GA...............................................  .......       60,654          705        11.62
Marshall County, MS.............................................      \1\       32,078          368        11.47
Crittenden County, AR...........................................      \1\       49,889          557        11.16
Clayton County, GA..............................................  .......      198,551        2,209        11.13
Liberty County, GA..............................................  .......       58,749          650        11.06
Coweta County, GA...............................................  .......       72,021          789        10.96
Tipton County, TN...............................................      \1\       43,423          476        10.96
Murray County, GA...............................................  .......       30,032          325        10.82
Madison County, TN..............................................      \1\       83,715          898        10.73
Baldwin County, GA..............................................  .......       41,854          448        10.70
DeSoto County, MS...............................................      \1\       83,567          890        10.65
Dyer County, TN.................................................      \2\       35,900          379        10.56
Manassas city, VA...............................................  .......       32,657          333        10.20
Gibson County, TN...............................................      \2\       47,728          483        10.12
Scott County, MS................................................      \3\       25,042          253        10.10
Rhea County, TN.................................................  .......       26,833          271        10.10
Talladega County, AL............................................  .......       76,737          774        10.09
Spalding County, GA.............................................  .......       57,306          575        10.03
Ware County, GA.................................................  .......       35,589          357        10.03
----------------------------------------------------------------------------------------------------------------
Key to Codes: \1\ Located near casinos in Tunica County, MS; \2\ Located near casino in Caruthersville, MO; and 
  \3\ Located near casino in Philadelphia, MS.                                                                  

                             more examples

       Of course, scenarios like this can be seen in other areas 
     of the country. Atlantic County, NJ, is a leading example. It 
     is home to all of that state's legalized gambling casinos, 
     and the 1996 bankruptcy rate was 7.10 filings per 1,000 
     residents. That was 71% higher than the state average 
     bankruptcy rate of 4.16. And most of the time, counties 
     located closest to Atlantic had higher bankruptcy rates than 
     others further away.
       Of course, Atlantic City draws customers from all kinds of 
     places, including many from New York City. Our point is that 
     the resident population in a gambling county has the easiest 
     and most frequent opportunity to use the facilities, 
     therefore we should expect to see some result in the per 
     capita bankruptcy rate.
       Similarly, the 1996 bankruptcy rate in Nevada is more than 
     50% higher than the national average. In Clark County, where 
     Las Vegas is located and where more than half of the state's 
     more than 300 casinos are based, we see the highest 
     bankruptcy rate within the state. Nor is it surprising that 
     the two counties with the highest bankruptcy rates in 
     California are those just across the border from Las Vegas, 
     San Bernardino (7.04) and Riverside (6.77). Those two 
     counties also now have tribal casinos of their own.
       Moving to Maryland, Prince Georges County has by far the 
     highest bankruptcy rate among counties in that state--6.72 
     filings per 1,000 population in 1996, almost 50% higher than 
     the state average of 4.57. By way of comparison, the next 
     highest county bankruptcy rate in Maryland is 5.27, a 
     significantly lower figure. What's going on in Prince 
     Georges?
       The answer is that Prince Georges is the only county in 
     Maryland where casino gambling is legal. Legal casinos are 
     located at charitable organizations, such as Elks and Knights 
     of Columbus halls and volunteer fire departments. These 
     casinos have strict limits on operating hours and betting and 
     don't have the glitz of Las Vegas or Atlantic City, yet they 
     do now exist and the casinos are used. Prince Georges County 
     also has harness racing.


gambling & low-bankruptcy states: would they be even better without it?

       All of the prior information is highly suggestive that 
     gambling influences bankruptcy. Yet, as all the rest of this 
     study shows, there are many other bankruptcy drivers. 
     Therefore, the correlation between bankruptcy and the 
     physical location of gambling facilities is certainly 
     imperfect.
       There are some states, for instance, where there are 
     gambling facilities, yet the bankruptcy rates are reasonably 
     low. These states include South Dakota, Minnesota, and Iowa--
     all located in the moderate bankruptcy ``corridor'' of the 
     upper Midwest.
       It's hard to tell in these areas whether gambling has no 
     effect on bankruptcy, or if, on the other hand, bankruptcy 
     would be even less of a problem without the casinos. The 
     Minnesota university study referenced earlier in this section 
     suggests that bankruptcies in that state are caused at times 
     by gambling.
       Indeed, the notion that gambling is a major negative for 
     bankruptcy in all geographies is supported by information 
     from our interviews and from a lot of local newspaper 
     articles we have reviewed. The actual gambling debts may have 
     become credit card debts prior to the filer entering 
     bankruptcy court, but that doesn't change the cause of the 
     financial trouble. The following material will add more from 
     this review of experts and news articles.


   quantifying the problem: 10 percent of filings might be linked to 
          gambling; 20 percent of problem gamblers go bankrupt

       Articles we studied, often quoting attorneys who specialize 
     in personal bankruptcy, suggested that about 10% of 
     bankruptcy filings are linked to gambling losses. That figure 
     could be higher depending on location. Most of the debt is 
     racked up on credit cards.
       According to the experts on compulsive gambling with whom 
     we talked, no comprehensive national study on problem 
     gambling has been conducted in the U.S. since the early 
     1970s. However, several state studies have been done, all 
     concluding that 20% or more of compulsive gamblers were 
     forced to file for bankruptcy protection because of the 
     losses they had incurred.
       In the April 1996 study of compulsive gamblers in Minnesota 
     conducted by two professors at the University of Minnesota 
     Medical School, the researchers reported that 21% of the 
     people in the study had filed for bankruptcy. In addition, a 
     disturbing 94% said they had at least one gambling-related 
     financial problem in their lifetime. Furthermore, 9 out of 10 
     of the subjects said they had borrowed from banks, credit 
     cards, and loan companies to finance their gambling. And, 77% 
     said they had written bad checks to finance gambling sprees.
       The University of Illinois in Normal conducted two surveys 
     of members of Gamblers Anonymous in 1993 and 1995. The 
     combined results found that 21% had filed for bankruptcy, and 
     that another 17% had been sued for gambling-related debts. 
     Additionally, 16% said their gambling led to divorce--another 
     big driver of bankruptcy filings--and another 10% said it led 
     to separation. Compulsive gamblers also have very high rates 
     of attempted suicides, higher even than for drug addicts, the 
     experts said.
       Rachel Volberg, the Pennsylvania-based compulsive gambling 
     consultant we referenced earlier, told us that a study in 
     Wisconsin had found that 23% of compulsive gamblers had filed 
     for bankruptcy, and that 35% of the gamblers said they had 
     used credit cards for gambling money. She also said a study 
     conducted in the Canadian province of Quebec found that 28% 
     of problem gamblers there had sought bankruptcy protection.
       One of the really scary things about these studies is that 
     they are conducted only with people who had sought out 
     professional help for gambling addiction. So, there may be 
     other problem gamblers at risk, too.
       According to several lawyers specializing in bankruptcy who 
     were quoted in newspaper articles that we studied, 10% to 20% 
     of their clients did so due to gambling debts they couldn't 
     pay. These lawyers were located in

[[Page H4372]]

     areas near casinos, so the 10% to 20% figures probably 
     doesn't hold for the U.S. population at large. Nevertheless, 
     its probably not a stretch to say that at least in those 
     areas near major casinos, gambling-related bankruptcies 
     account for a good 10% to 20% of the filings.


                         the explosion in iowa

       It's also not a stretch to say that the number of people 
     with financial problems stemming from gambling is on the 
     rise, tracking the spread of legalized gambling.
       Tom Coates, executive director of the nonprofit Consumer 
     Credit Counseling Service of Des Moines, IA, told us that 10% 
     to 15% of the people his agency counsels have financial 
     problems ``directly related to gambling.'' That's up 
     dramatically from 2-3% when the agency opened its doors 10 
     years ago, before casino gambling was legalized in Iowa. 
     Coates also told us that his service's business is up 30-40% 
     over a year ago, at a time when Iowa's unemployment rate is 
     at an all-time low and its economy stronger than the nation's 
     at large. He blames gambling for much of the surge.
       Probably, much of what we've reported about problem 
     gamblers will not surprise the experienced credit executive. 
     People with gambling addiction are rather obviously at risk 
     to lose a lot of money. But how many such people exist? And 
     how many gamble occasionally? Let's take a look at the 
     numbers, below.


             2.6 million adults may have a gambling problem

       According to the most recent statistics released by the 
     American Gaming Association, the casino industry's trade 
     group, U.S. households made 154 million visits to casinos in 
     1995. That number was up 23% from the previous year and up an 
     astounding 235% from 1990.
       The AGA said 31% of U.S. households gambled at a casino in 
     1995, up from just 17% in 1990. ``Gaming households,'' as the 
     AGA calls them, also made an average 4.5 trips to casinos in 
     1995, up from 3.9 times the year before and 2.7 in 1990.
       Of course, it is difficult to pinpoint how many of these 
     people have a problem or compulsion--terms that can be a 
     matter of degree or interpretation. Most estimates range from 
     1% of the adult population to as high as 7%.
       The University of Minnesota study estimated that 1% of the 
     state's entire population were ``problem pathological 
     gamblers,'' meaning that they lose control and continue 
     gambling in spite of adverse consequences. If this 1% figure 
     were true for the entire U.S. population, it would represent 
     about 2.7 million people at risk.
       The gaming industry itself says that 2% to 4% of practicing 
     gamblers develop compulsion problems. Since 31% of households 
     gambled at a casino in 1995, the 2% to 4% range would yield 
     numbers very similar to the Minnesota study. (31% of 265 
     million people = 82.15 million 3% = 2.5 million compulsive 
     gamblers.)
       Needless to say, people don't become compulsive gamblers 
     until they're first exposed to gambling. Therefore, the rapid 
     spread of casino gambling right now is a major concern.
       Coates, the credit consultant, told us that Iowa 
     commissioned a study of problem gambling in 1989, two years 
     before the state's first riverboat and Indian casinos opened. 
     In that study, it was estimated that 1.7% of the state's 
     adult population were compulsive gamblers.
       In 1995, by which time many casinos had dotted the state, 
     Iowa did a similar study. Using the same methodology, the 
     second study found that 5.4% of the state's entire adult 
     population--not just the population that gambles--were 
     problem or compulsive gamblers, a more than tripling of the 
     rate in just six years.


                      losing everything is common

       For creditors, another problem with gambling-driven 
     bankruptcy is that it is highly likely to result in total 
     loss.
       Even though most bankruptcy filings will represent near-
     total loss of amounts owed to unsecured creditors, the 
     gambling-driven bankruptcies may be the worst. That's because 
     addicted gamblers tend to ``tap out'' completely on debt and 
     deplete savings, leading them into Chapter 7 liquidation.
       These are logical observations, but also are supported by 
     findings in a July 1996 study conducted in Wisconsin. We 
     reviewed this study.


                    dealing with the gambling issues

       Like so many of the drivers of bankruptcy, gambling is a 
     frustratingly tough problem to solve.
       Casino gambling is spreading rapidly in part because so 
     many people enjoy it. Most gamblers also are responsible and 
     know their limits. People like gambling and most do it 
     safely, so how do you argue against the further spread of 
     casinos?
       The central problem for bankruptcy is that gambling adds 
     another socio-economic minority group to the high-risk mix.
       Bankruptcy is always driven by socio-economic and 
     demographic minority groups. Most people have health 
     insurance, but the 40 million Americans who don't are a large 
     high-credit-risk minority. Most people don't get divorced, 
     but the 10% of adults who are divorced are a sizable at-risk 
     minority. If there also are 2.6 million compulsive gamblers, 
     this is just another high-risk group to throw in--and perhaps 
     the most rapidly growing group. Bankruptcies are rising in 
     part because, when you add up all these at-risk minority 
     groups, you end up with a very large number that's no longer 
     minor.
       Still, we believe that much could be done by active 
     creditors to combat the level of the risk. At the moment, if 
     anything, creditors enable and even encourage the problem 
     gambler to go too far. And some state governments seem even 
     more eager than the casinos themselves to encourage 
     irresponsible gambling behavior--as we'll see in a moment in 
     New Jersey.
       Here are some of out thoughts on combating the gambling/
     bankruptcy problem:
     1. Make it tougher for customers to obtain cash advances at 
     gambling casinos.
       According to the gaming industry itself, more than half of 
     the money that gamblers play with at casinos is not money 
     they brought with them. It is money they obtained inside the 
     casino or close by from automated teller machines, cash 
     advances from credit terminals, and the like.
       ``It is no secret in the casino industry that patrons will 
     continue to play a game until their cash runs out. What some 
     operators have discovered, however, is if a consumer is 
     provided with efficient and easy ways to access cash, often a 
     `last time' player will wager for longer than he or she 
     originally planned,'' states a recent article about cash 
     advances in International Gambling and Wagering Business, a 
     gaming industry monthly magazine. In addition, the article 
     says, ``credit customers tend to be more liberal money-
     users.''
       Credit card issuers have been very accommodating to 
     gamblers, making it easy for them to get their hands on large 
     sums of money very quickly. And it may well be that most of 
     this business is profitable for the card issuers. But that 
     may be changing now. In an era of very rapidly increasing 
     bankruptcies, it does not take long for the net losses from 
     bankruptcy filers to exceed the profits from gamblers who 
     responsibly use their cash advances.
       Here is some admittedly over-simplified card issuer math: 
     Let's hypothesize that 1,000 gamblers have used credit card 
     cash advances to obtain $1,000 each. Total receivables for 
     this group will be $1 million. At a 1.5% return on assets, 
     this $1 million will generate $15,000 of net income.
       But the gaming industry itself says that 2% to 4% of these 
     gamblers have an addiction problem. If the average is 3%, 
     then 3% of the 1,000 gamblers we've just looked at are very 
     high risk. This will be 30 people. If, as the earlier data 
     suggests, 20% of these 30 people will file for bankruptcy, 
     then 6 of the original 1,000 gamblers will wind up in 
     bankruptcy court. Against the $15,000 of net income, what 
     will the loss be from the 6 bankrupt compulsive gamblers? 
     Probably, it will be more than $15,000--or at least close 
     enough to make this little piece of the credit card business 
     insufficiently profitable.
       This tells us that card issuers and the ATM associations 
     they partially control may want to reconsider their placement 
     of so many cash machines in casino hotels. Or, at least, card 
     issuers may need to institute new early warning indicators 
     specific to those locations. The heavy users of casino hotel 
     cash machines should be the ones stopped sooner.
       ``If I were a credit guy, I would check better on the ATM 
     transactions,'' said Edward Looney, executive director of the 
     Council on Compulsive Gambling of New Jersey. ``Banks ought 
     to immediately pick up on someone in trouble. You can tell 
     just from the transactions.'' Coates was quoted in the Des 
     Monies Register newspaper in late 1995 claiming that banking 
     sources told him that eight of the 10 busiest ATMs in Iowa 
     were located at the casinos.
     2. Help defeat actions in states that would make it easier 
     for gamblers to get credit card cash advances on casino 
     floors.
       Here is perhaps the craziest credit risk story yet.
       In New Jersey last September, the state Casino Control 
     Commission passed a regulation that would allow casino 
     patrons to utilize ATM and credit card cash advance machines 
     placed right at the Atlantic City gaming tables.
       Previously, customers had to walk to a different part of 
     the building to use these machines. Under the new proposal, 
     borrowing for blackjack would be faster than ordering a drink 
     from a cocktail waitress. Not even Las Vegas casinos allow 
     this. And, the Atlantic City casinos themselves don't support 
     the measure, which they believe would lead to increased 
     gambling compulsion and would tarnish the industry's 
     reputation.
       In other words, the state government is more eager to push 
     money into the gambler's hands than the casinos who would 
     profit most in the short run. What's wrong with the New 
     Jersey regulators--and why didn't the banking industry 
     object?
       So far, no Atlantic City casino has taken advantage of the 
     rule change, nor is any likely to in the future, said Keith 
     Whyte, director of research at the American Gaming 
     Association, the industry's trade group.
       ``We definitely opposed in principle New Jersey's 
     regulatory rule change that would let casinos put ATM card 
     swipes right at the table. And in fact no casinos are doing 
     that, and none will, I can almost guarantee you.'' Whyte told 
     us. ``It wasn't a casino-initiated thing. Everybody [in the 
     industry] realized that is probably not a step we would want 
     to take.''
       According to Looney, the New Jersey Compulsive Gambling 
     Council chief, not a single credit card or banking industry 
     representative raised any objection to this rule when it

[[Page H4373]]

     was being debated. Yet, Atlantic City has the highest 
     concentration of big casinos outside Las Vegas and serves 
     millions of gamblers per year. You get the feeling no one in 
     the credit community is paying close attention to gambling's 
     effect on bankruptcy.
     3. Maybe cash machines should be move out of the casino 
     hotels entirely.
       Many of the experts we talked to for this study agreed that 
     the worst thing for a compulsive gambler to have is immediate 
     access to cash when he's on a binge. To the extent that banks 
     control or influence where cash machines are placed, it may 
     be time to reconsider their currently wide availability 
     around the casino hotels.
       If the gambler had to walk down the street to get cash, no 
     doubt some would. But some of the people we interviewed 
     strongly contend that the walk itself would impose a 
     ``cooling off' period that would stop some compulsive 
     gambling losses.
       ``It's a vulnerable thing for a compulsive gambler to get 
     credit,'' said Looney of the New Jersey council and himself a 
     recovering gambling addict. ``They will be so focused on 
     their gambling that they will gamble everything they can, 
     including all the credit cards they have in their possession. 
     It is important to have ATM and credit card terminal at least 
     some distance form where gambling actually takes place. To 
     some this might seem a small point, but to those of us who 
     deal with compulsive gamblers, this is huge. For many 
     compulsive gamblers, just being forced to walk a couple of 
     hundred feet away from where the gambling is actually taking 
     place is sufficient time for them to rethink whether they 
     really want to gamble any further. That break from gambling 
     is a crucial time for many.''
     4. Challenge more aggressively those bankruptcy filings where 
     it appears that gambling losses are the main reason why the 
     person is filing.
       Inside the bankruptcy court, at least some folks contend, 
     creditors should be even tougher on gamblers than they 
     already are.
       ``I think lenders should push for slightly different 
     treatment [in bankruptcy court] for someone who has been 
     shown to run up his debts for gambling,'' said Tom Coates, 
     the Des Moines credit counselor. Credit card lenders would 
     not only be helping themselves but doing the problem gambler 
     a favor, too, he noted.
       Coates, who recently testified before the National 
     Bankruptcy Commission, tried to impress on the panel that 
     discharging gambling debts through a bankruptcy filing 
     doesn't do the gambler any good. ``I tried to impress on the 
     Commission that the compulsive, problem gambler is living in 
     a fantasy world and to go ahead and discharge this debt in 
     bankruptcy court continues to propagate this atmosphere of 
     fantasy land. It will abort the recovery process for that 
     individual. The process of recovery is to bring that person 
     our of their fantasy world into the world of reality, and by 
     discharging those debts, none of it seems real to them.''
       Indeed, in a recent article in the St. Louis Post-Dispatch 
     about gambling and bankruptcy, one gambler was quoted 
     counseling another with money troubles: ``Go file bankruptcy. 
     Then you'll have money to gamble with.''
       U.S. credit card issuers should consider lobbying to change 
     U.S. bankruptcy laws to make it illegal for people to 
     discharge gambling debts in bankruptcy court. That is the 
     current law in Australia, according to Henry Lesieur, the 
     University of Illinois professor. Of course, the care issuers 
     would have to be able to prove that a card cash advance was 
     used for gambling purposes, which might often be difficult. 
     On the other hand, if the law were changed, perhaps filers 
     who lie about gambling losses would risk penalties, so at 
     least some might be honest.
     5. Finance research into problem gambling and finance help 
     for compulsive gamblers.
       From time to time, creditors provide funds to all sorts of 
     charitable outfits. If they helped finance research into 
     compulsive gambling, such spending would play a dual role. It 
     would be a public contribution, and it would help creditors 
     learn more about the seriousness of the tie between gambling 
     and bankruptcy.
       Quite a bit of money is spent on alcohol and drug addiction 
     research and rehabilitation. Both of those problems are 
     viewed (at least by some people) as medical. Apparently, the 
     public view toward gambling addiction is quite different. 
     There's no drug involved, and little is spent on research or 
     rehab. Yet, gambling addiction can indeed be viewed as a form 
     of emotional or mental illness--and it's the one addiction 
     that is growing most quickly in its impact on creditors.
       In our research for this study, we found very little new 
     research being conducted on compulsive gambling. The experts 
     we interviewed said that no national survey of compulsive 
     gamblers has been done in more than 20 years; only a handful 
     of studies have been done by various states from time to 
     time. Much of the available research has been done in 
     academia with modest financial support, and it gets little 
     followup attention.
       Card issuers spend millions on sporting events, the 
     Olympics, and even on the Smithsonian museums (Discover 
     Card). These expenditures have a marketing value. A 
     fractional amount diverted to gambling research could have an 
     even better bottom line impact.
  Ms. KILPATRICK. Mr. Chairman, I rise today in strong opposition to 
H.R. 3150, the Bankruptcy Reform Act of 1998. This legislation does 
nothing to address the aggressive marketing of credit cards, home 
equity loans, and other forms of credit to consumers. While we all 
support individual responsibility, this bill makes it even tougher for 
persons to eradicate their debts and get started on a new financial 
slate.
  First of all, I must inform my colleagues that, many, many years ago, 
I had to file for bankruptcy. For me, the debate on the floor today is 
no hypothetical, nor theoretical, exercise. Fortunately, I was able to 
repay my creditors and get back into excellent fiscal standing. But 
having to go through the wringer of bankruptcy has helped me better 
form an opinion on how we can better serve both debtors and creditors. 
H.R. 3150 is not that bill. Among other things, H.R. 3150 includes a 
means-test to determine whether a family can file for bankruptcy 
protection that eliminates debts and gives families a fresh, new 
financial start, commonly referred to as ``Chapter Seven,'' or whether 
the family must enter into a stringent repayment plan, referred to as 
``Chapter 13.'' Most of our constituents who have to file for 
bankruptcy will have this fact listed on their credit report for at 
least seven years. Although a family may have their debts eliminated, 
for the next seven years it is difficult, if not impossible, to rent a 
car, rent a house or apartment, buy a business, or sometimes get a job. 
Having a bankruptcy filing listed on your credit report is tough to 
remove and tough to live with.
  During House Rules Committee consideration of this bill, I offered an 
amendment that was not made part of this debate. My amendment would 
have allowed consumers to keep those electronic entertainment items 
that were purchased three months before the filing of a bankruptcy, and 
has a value of $500.00 or less. Certainly, a person knows at least 
three months in advance of a bankruptcy filing that he or she is in 
severe financial straits. My amendment would have also allowed for the 
disposition to creditors of recently-purchased electronic entertainment 
goods that have a higher value. While my amendment did not recognize 
fax machines or personal computers into this equation, we certainly 
know the volatility of the prices of these electronic goods. A computer 
that was purchased a year ago for $3,000 is now worth less that half 
that. Along those same lines, computers purchased years ago are now 
worth less than $1,000, and in many instances, you cannot even give 
them away. My amendment sets a limit of $500 to be consistent with the 
rest of current bankruptcy law. Unfortunately, it was not accepted by 
the House Rules Committee.
  Bankruptcy is a very personal, dehumanizing, and emotionally draining 
experience. Despite the great strides that our economy, in general, has 
made with record unemployment and a stock market soaring into the 
stratosphere, bankruptcies are hitting all-time highs. It is important 
that we protect consumers and creditors. Unfortunately, the Bankruptcy 
Reform Act of 1998 does not protect consumers or creditors, and the 
wisdom of Congress should prevail in the defeat of this onerous bill.
  Mr. POMEROY. Mr. Chairman, my vote today on behalf of H.R. 3150 is a 
vote to advance the process of bankruptcy reform in this Congress. I 
strongly believe that there is a need to reform our nation's bankruptcy 
laws. Passage of H.R. 3150 will allow bankruptcy reform efforts to 
proceed in the Senate and will move us toward our ultimate goal of 
sensible, responsible bankruptcy reform. I am disappointed that my vote 
does not also represent wholehearted support for the bill before us, 
but I believe that a number of the provisions of H.R. 3150 are flawed 
and must be revisited as the process continues. If these flaws are not 
remedied in our negotiations with the Senate, I will be unable to 
support a final conference agreement.
  My primary concern with H.R. 3150 is that it would endanger the 
payment of child support and alimony by those who have declared 
bankruptcy. While the bill does not directly reduce the priority of 
child support obligations, it does increase the rights of other 
creditors such as credit card lenders, setting up a competition for 
scarce resources between mothers and children owed support and 
commercial credit card companies. Under Chapter 7 proceedings, mothers 
and children entitled to alimony and child support will have to compete 
with new categories of nondischargeable debt. Under Chapter 13 
proceedings, these individuals will have to compete with the required 
$50 monthly payment to non-priority unsecured creditors such as credit 
card companies. I fear that mothers and children will lose out in these 
contests.
  Mr. Chairman, H.R. 3150 appropriately steps up the degree of personal 
responsibility that must be expected from those who engage in reckless 
spending and who seek to misuse the bankruptcy laws to escape the 
consequences of this conduct. I am concerned, however, that this 
legislation does not at the same time step up the degree of 
responsibility that must be expected from the credit card companies who 
today often facilitate this spending through aggressive marketing of

[[Page H4374]]

their cards. While we must ask individuals to be prudent with respect 
to their credit and spending behavior, we must also ask credit card 
companies to be prudent with respect to their lending behavior. These 
companies possess credit histories for those to whom they market and 
they should simply not be extending credit to individuals who they know 
to be financially overextended. I believe we must encourage credit card 
companies to exercise responsibility by making dischargeable credit 
card debt extended under these circumstances.
  Mr. Chairman, it is my sincere hope that these issues will be 
remedied in the Senate and during any conference committee so that this 
Congress can truly achieve the goal of sensible, responsible bankruptcy 
reform.
  Ms. CHRISTIAN-GREEN. Mr. Chairman, I rise today in opposition to H.R. 
3150, the Bankruptcy Reform Act of 1998 because it supports creditors 
at the expense of the interest of women and children.
  My colleagues, the Leadership Conference on Civil Rights in 
commenting on this bill points out, I think quite correctly, that it is 
economic discrimination which is suffered by disadvantaged groups in 
our society that often is the reason why such groups are forced to file 
bankruptcy.
  In the case of women, for example, the cumulative effects of lower 
wages, reduced access to health insurance, the devastating economic 
consequences of divorce and the disproportionate financial strain of 
rearing children alone is often why women heads of households find 
themselves in bankruptcy.
  Additionally, African-Americans and Hispanic families also suffering 
from discrimination in home mortgage lending and housing purchases and 
facing inequity in hiring opportunities, wages, and health insurance 
coverage, also turn to bankruptcy to stabilize their economic 
circumstances and protect the middle class lives they have struggled so 
hard to achieve.
  Mr. Speaker, H.R. 3150 should be opposed because it would have a 
significant negative impact on these groups of economically 
disadvantaged Americans, all to the benefit of the credit industry. It 
is ironic that as the credit industry waged a high-profile campaign to 
rush this bill, which would punish debtors, to the floor of the House, 
total credit card profitability has grown. According to the Federal 
Reserve Board, credit card lending is now twice as profitable as all 
other lending activities.
  H.R. 3150 should also be opposed, Mr. Speaker, because it places in 
jeopardy the ability of women and children who file for bankruptcy to 
receive child support and alimony payments. This will be devastating to 
children and women who rely on child care and alimony.
  As a new member of the Small Business Committee I am particularly 
troubled that the Bankruptcy Reform Act of 1998 would also make it 
difficult for small businesses who are experiencing financial 
difficulties to get a fresh start. The small business provisions of the 
bill will impose massive new legal and paperwork burdens on small 
business and real estate concerns thereby increasing the potential for 
job loss.
  Mr. Speaker, this isn't reform its deform. I urge my colleagues to 
join the Clinton Administration, the AFL-CIO, the National Bankruptcy 
Conference, the Leadership Conference on Civil Rights and countless 
other organizations in opposition to this bill.
  Mr. BARCIA. Mr. Chairman, H.R. 3150, the Bankruptcy Reform Act of 
1998, is not a perfect bill and I have reservations about the specific 
language. However, I am voting for the legislation because I strongly 
believe that people must take responsibility for their financial 
decisions.
  Last year more than 1.33 million households filed for bankruptcy 
which amounted to over $44 billion. And when these consumers file for 
bankruptcy, the rest of us pay for it. We pay in the form of higher 
interest rates. We pay in the form higher credit card fees. We pay 
through a growing number of penalty charges for late payment even when 
the ``late payment'' is more the fault of the postal service than that 
of the consumer. I share my colleagues concerns about giving families a 
new beginning if they incurred debt beyond their control, such as high 
medical costs from an accident or recovery from a disaster. But when 
the reason for financial difficulty is a lack of personal financial 
responsibility and bankruptcy is viewed as an ``easy way out'' then the 
system has failed.
  Our nation's bankruptcy laws play an important and necessary role in 
our society. We must ensure that our bankruptcy system does not 
unintentionally encourage those who can take responsibility for their 
financial obligations not to do so. Such an abuse of our bankruptcy 
laws is fundamentally unfair to those who play by the rules and take 
responsibility for their personal obligations.
  As I said, this is not a perfect bill. As this bill progresses 
through the legislative process I will do all that I can to protect the 
innocent people from being caught up in the system and ensure that 
others are not taking advantage of an easy way out.
  Mr. FILNER. Mr. Chairman, rather than reining in their own policies 
of ``easy credit,'' big banks and credit card companies want to come 
down on families who took their bait, and in many instances, began to 
rely on credit cards to pay for basic living expenses. This legislation 
before us would even allow credit card companies to make tragic victims 
of those who did not even rack up credit card debt--women and children 
who depend on alimony and child support payments to live.
  There are many problems with this bill. The first is a rigid and 
arbitrary means test that would bounce many families into Chapter 13 
without allowing judges to rule on the specifics of their cases, 
exposing their families to the potential of losing their family homes. 
Just as inhumane are the provisions that would make credit card debt 
non-dischargeable. This would place credit card debt on the same plane 
as child support and alimony payments and force women to fight credit 
card companies to maintain their right to receive payments for their 
families' sustenance.
  H.R. 3150 would absolve credit card companies of problems largely of 
their own making. It would turn the bankruptcy system into a debt 
collection agency for credit companies--with taxpayers footing the 
bill! Our families, particularly women and children, deserve the right 
to fair bankruptcy laws, laws interpreted on a case by case basis by 
judges who currently have the power to ensure that children's needs are 
met first while the other debts are being repaid.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the amendment in the nature of a substitute 
printed in the bill shall be considered as an original bill for the 
purpose of amendment under the 5-minute rule by title, and each title 
shall be considered as read.
  No amendment to the committee amendment is in order unless printed in 
the House Report 105-573. Each amendment may be offered only in the 
order specified, may be offered only by a Member designated in the 
report, shall be considered as read, debatable for the time specified 
in the report, equally divided and controlled by the proponent and an 
opponent, shall not be subject to amendment, and shall not be subject 
to a demand for a division of the question.
  The chairman of the Committee of the Whole may postpone a request for 
a recorded vote on any amendment, and may reduce to a minimum of 5 
minutes the time for voting on any postponed question that immediately 
follows another vote, provided that the time for voting on the first 
question shall be a minimum of 15 minutes.
  Mr. GEKAS. Mr. Chairman, I ask unanimous consent that the committee 
amendment in the nature of a substitute be printed in the Record and 
open to amendment at any point.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Pennsylvania?
  There was no objection.
  The text of the committee amendment in the nature of a substitute is 
as follows:

       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 ``Bankruptcy 
     Reform Act of 1998''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs-Based Bankruptcy

Sec. 101. Needs-based bankruptcy.
Sec. 102. Adequate income shall be committed to a plan that pays 
              unsecured creditors.
Sec. 103. Definition of inappropriate use.
Sec. 104. Debtor participation in credit counseling program.

             Subtitle B--Adequate Protections for Consumers

Sec. 111. Notice of alternatives.
Sec. 112. Debtor financial management training test program.
Sec. 113. Definitions.
Sec. 114. Disclosures.
Sec. 115. Debtor's bill of rights.
Sec. 116. Enforcement.
Sec. 117. Sense of the Congress.
Sec. 118. Charitable contributions.
Sec. 119. Reinforce the fresh start.
Sec. 119A. Chapter 11 discharge of debts arising from tobacco-related 
              debts.

         Subtitle C--Adequate Protections for Secured Creditors

Sec. 121. Discouraging bad faith repeat filings.
Sec. 122. Definition of household goods.
Sec. 123. Debtor retention of personal property security.
Sec. 124. Relief from stay when the debtor does not complete intended 
              surrender of consumer debt collateral.

[[Page H4375]]

Sec. 125. Giving secured creditors fair treatment in chapter 13.
Sec. 126. Prompt relief from stay in individual cases.
Sec. 127. Stopping abusive conversions from chapter 13.
Sec. 128. Restraining abusive purchases on secured credit.
Sec. 129. Fair valuation of collateral.
Sec. 130. Protection of holders of claims secured by debtor's principal 
              residence.
Sec. 131. Aircraft equipment and vessels.

        Subtitle D--Adequate Protections for Unsecured Creditors

Sec. 141. Debts incurred to pay nondischargeable debts.
Sec. 142. Credit extensions on the eve of bankruptcy presumed 
              nondischargeable.
Sec. 143. Fraudulent debts are nondischargeable in chapter 13 cases.
Sec. 144. Applying the codebtor stay only when it protects the debtor.
Sec. 145. Credit extensions without a reasonable expectation of 
              repayment made nondischargeable.
Sec. 146. Debts for alimony, maintenance, and support.
Sec. 147. Nondischargeability of certain debts for alimony, 
              maintenance, and support.
Sec. 148. Other exceptions to discharge.
Sec. 149. Fees arising from certain ownership interests.
Sec. 150. Protection of child support and alimony.
Sec. 151. Adequate protection for investors.

              Subtitle E--Adequate Protections for Lessors

Sec. 161. Giving debtors the ability to keep leased personal property 
              by assumption.
Sec. 162. Adequate protection of lessors and purchase money secured 
              creditors.
Sec. 163. Adequate protection for lessors.

  Subtitle F--Bankruptcy Relief Less Frequently Available for Repeat 
                                 Filers

Sec. 171. Extend period between bankruptcy discharges.

                         Subtitle G--Exemptions

Sec. 181. Exemptions.
Sec. 182. Limitation.

                TITLE II--BUSINESS BANKRUPTCY PROVISIONS

                     Subtitle A--General Provisions

Sec. 201. Limitation relating to the use of fee examiners.
Sec. 202. Sharing of compensation.
Sec. 203. Chapter 12 made permanent law.
Sec. 204. Meetings of creditors and equity security holders.
Sec. 205. Creditors' and equity security holders' committees.
Sec. 206. Postpetition disclosure and solicitation.
Sec. 207. Preferences.
Sec. 208. Venue of certain proceedings.
Sec. 209. Period for filing plan under chapter 11.
Sec. 210. Period for filing plan under chapter 12.
Sec. 211. Cases ancillary to foreign proceedings involving foreign 
              insurance companies that are engaged in the business of 
              insurance or reinsurance in the United States.
Sec. 212. Rejection of executory contracts affecting intellectual 
              property rights to recordings of artistic performance.
Sec. 213. Unexpired leases of nonresidential real property.
Sec. 214. Definition of disinterested person.

                    Subtitle B--Specific Provisions

                  Chapter 1--Small Business Bankruptcy

Sec. 231. Definitions.
Sec. 232. Flexible rules for disclosure statement and plan.
Sec. 233. Standard form disclosure statements and plans.
Sec. 234. Uniform national reporting requirements.
Sec. 235. Uniform reporting rules and forms.
Sec. 236. Duties in small business cases.
Sec. 237. Plan filing and confirmation deadlines.
Sec. 238. Plan confirmation deadline.
Sec. 239. Prohibition against extension of time.
Sec. 240. Duties of the United States trustee and bankruptcy 
              administrator.
Sec. 241. Scheduling conferences.
Sec. 242. Serial filer provisions.
Sec. 243. Expanded grounds for dismissal or conversion and appointment 
              of trustee.

                  Chapter 2--Single Asset Real Estate

Sec. 251. Single asset real estate defined.
Sec. 252. Payment of interest.

               TITLE III--MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 301. Petition and proceedings related to petition.

                  TITLE IV--BANKRUPTCY ADMINISTRATION

                     Subtitle A--General Provisions

Sec. 401. Adequate preparation time for creditors before the meeting of 
              creditors in individual cases.
Sec. 402. Creditor representation at first meeting of creditors.
Sec. 403. Filing proofs of claim.
Sec. 404. Audit procedures.
Sec. 405. Giving creditors fair notice in chapter 7 and 13 cases.
Sec. 406. Debtor to provide tax returns and other information.
Sec. 407. Dismissal for failure to file schedules timely or provide 
              required information.
Sec. 408. Adequate time to prepare for hearing on confirmation of the 
              plan.
Sec. 409. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 410. Sense of the Congress regarding expansion of rule 9011 of the 
              Federal Rules of Bankruptcy Procedure.
Sec. 411. Jurisdiction of courts of appeals.
Sec. 412. Establishment of official forms.
Sec. 413. Elimination of certain fees payable in chapter 11 bankruptcy 
              cases.

                      Subtitle B--Data Provisions

Sec. 441. Improved bankruptcy statistics.
Sec. 442. Bankruptcy data.
Sec. 443. Sense of the Congress regarding availability of bankruptcy 
              data.

                        TITLE V--TAX PROVISIONS

Sec. 501. Treatment of certain liens.
Sec. 502. Enforcement of child and spousal support.
Sec. 503. Effective notice to Government.
Sec. 504. Notice of request for a determination of taxes.
Sec. 505. Rate of interest on tax claims.
Sec. 506. Tolling of priority of tax claim time periods.
Sec. 507. Assessment defined.
Sec. 508. Chapter 13 discharge of fraudulent and other taxes.
Sec. 509. Chapter 11 discharge of fraudulent taxes.
Sec. 510. The stay of tax proceedings.
Sec. 511. Periodic payment of taxes in chapter 11 cases.
Sec. 512. The avoidance of statutory tax liens prohibited.
Sec. 513. Payment of taxes in the conduct of business.
Sec. 514. Tardily filed priority tax claims.
Sec. 515. Income tax returns prepared by tax authorities.
Sec. 516. The discharge of the estate's liability for unpaid taxes.
Sec. 517. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 518. Standards for tax disclosure.
Sec. 519. Setoff of tax refunds.

            TITLE VI--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 601. Amendment to add a chapter 6 to title 11, United States Code.
Sec. 602. Amendments to other chapters in title 11, United States Code.

                        TITLE VII--MISCELLANEOUS

Sec. 701. Technical amendments.
Sec. 702. Application of amendments.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs-Based Bankruptcy

     SEC. 101. NEEDS-BASED BANKRUPTCY.

       Title 11, United States Code, is amended--
       (1) in section 101 as follows:
       (A) by inserting after paragraph (10) the following:
       ``(10A) `current monthly total income' means the average 
     monthly income from all sources derived which the debtor, or 
     in a joint case, the debtor and the debtor's spouse, receive 
     without regard to whether it is taxable income, in the six 
     months preceding the date of determination, 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 
     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;''; and
       (B) by inserting after paragraph (40) the following:
       ``(40A) `national median family income' and `national 
     median household income for 1 earner' shall mean during any 
     calendar year, the national median family income and the 
     national median household income for 1 earner which the 
     Bureau of the Census has reported as of January 1 of such 
     calendar year for the most recent previous calendar year;'';
       (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).'';
       (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 of not less than the 
     highest national median family income reported for a family 
     of equal or lesser size or, in the case of a household of 1 
     person, of not less than the national median household income 
     for 1 earner, as of the date of the order for relief;
       ``(B) projected monthly net income greater than $50; and
       ``(C) projected monthly net income sufficient to repay 
     twenty percent or more of unsecured nonpriority claims during 
     a five-year repayment plan.
       ``(2) Projected monthly net income shall be sufficient 
     under paragraph (1)(C) if, when multiplied by 60 months, it 
     equals or exceeds 20 percent of the total amount scheduled as 
     payable to unsecured nonpriority creditors.
       ``(3) `Projected monthly net income' means current monthly 
     total income less--

[[Page H4376]]

       ``(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 if not otherwise a dependent, in the area in which the 
     debtor resides as determined under the Internal Revenue 
     Service financial analysis for expenses in effect as of 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) In the event that the debtor establishes 
     extraordinary circumstances that require allowance for 
     additional expenses or adjustment of current monthly income, 
     projected monthly net income for purposes of this section 
     shall be the amount calculated under paragraph (3) less such 
     additional expenses or income adjustment 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) if adjustment of current monthly income is claimed, 
     an explanation of what income has been lost in the 6 months 
     preceding the date of determination and any replacement 
     income that has been offered or secured, or is expected, and 
     an itemization of such lost and replacement income;
       ``(iii) if allowance for additional expenses is claimed, a 
     list itemizing each additional expense which exceeds the 
     expenses allowances provided under paragraph (3)(A);
       ``(iv) a detailed description of the extraordinary 
     circumstances that explain why each loss of income described 
     under clause (ii) will not be replaced or each additional 
     expense itemized under clause (iii) requires allowance; and
       ``(v) 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) 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 
     section. If an objection is filed with the court within 60 
     days after the debtor has provided all the information 
     required under subsections (a)(1) and (c)(1)(A) of section 
     521, 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 proving such extraordinary circumstances 
     shall be on the debtor.'';
       (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 within 30 days after such 
     materials are so provided--
       ``(A) file a report with the court as to whether the debtor 
     qualifies for relief under this chapter under section 
     109(b)(4); and
       ``(B) if the trustee determines that the debtor does not 
     qualify for such relief, the trustee shall provide a copy of 
     such report to the parties in interest.'';
       (6) in section 1302(b)--
       (A) in paragraph (4) by striking ``and'' at the end;
       (B) in paragraph (5) by striking the period and inserting a 
     semicolon; and
       (C) 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. 102. ADEQUATE INCOME SHALL BE COMMITTED TO A PLAN THAT 
                   PAYS UNSECURED CREDITORS.

       Title 11, United States Code, is amended--
       (1) in section 101 by inserting after paragraph (39) the 
     following:
       ``(39A) `monthly net income' means the amount determined by 
     taking the current monthly total income of the debtor less--
       ``(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 if not otherwise a dependent, in the area in which the 
     debtor resides as determined under the Internal Revenue 
     Service financial analysis for expenses in effect as of the 
     date it is being determined;
       ``(B) the average monthly payment on account of secured 
     creditors, which shall be calculated as of the date of 
     determination as the total of all amounts then remaining to 
     be paid on account of secured claims pursuant to the plan 
     less any of such amounts to be paid from sources other than 
     the debtor's income, divided by the total months remaining of 
     the plan; and
       ``(C) the average monthly payment on account of priority 
     creditors, which shall be calculated as the total of all 
     amounts then remaining to be paid on account of priority 
     claims pursuant to the plan less any of such amounts to be 
     paid from sources other than the debtor's income, divided by 
     the total months remaining of the plan;'';
       (2) in section 104(b)(1) by striking ``and 523(a)(2)(C)'' 
     and inserting ``523(a)(2)(C), and 1325(b)(1)'';
       (3) by adding after section 110 the following:

     ``Sec. 111. Adjustment to monthly net income

       ``(a) Monthly net income for purposes of a plan under 
     chapter 13 of this title shall be adjusted under this section 
     when the debtor's extraordinary circumstances require 
     adjustment as determined herein. Under this section, monthly 
     net income shall be determined by subtracting therefrom such 
     loss of income or additional expenses as the debtor's 
     extraordinary circumstances require as determined under this 
     section. This section shall not apply unless--
       ``(1) the debtor files with the court and, in a case in 
     which a trustee has been appointed, with the trustee at the 
     times required in subsection (b) a statement of extraordinary 
     circumstances as follows--
       ``(A) a written statement that this section applies in 
     determining the debtor's monthly net income;
       ``(B) if applicable, an explanation of what income has been 
     lost in the six months preceding the date of determination 
     and any replacement income which has been secured or is 
     expected, and an itemization of such lost and replacement 
     income;
       ``(C) if applicable, a list itemizing each additional 
     expense which exceeds the expense allowance provided in 
     determining monthly net income under section 101(39A);
       ``(D) if applicable, a detailed description of the 
     extraordinary circumstances which explains why each of the 
     additional expenses itemized under paragraph (C) requires 
     allowance; and
       ``(E) a sworn statement signed by the debtor and, if the 
     debtor is represented by counsel, by the debtor's attorney, 
     of the amount of monthly net income that the debtor has 
     pursuant to this subsection and that the information provided 
     under this subsection is true and correct; and
       ``(2) until the trustee or any party in interest objects to 
     the debtor's request that this section be applied and the 
     court rejects or modifies the debtor's statement, the monthly 
     net income in the debtor's statement shall be the monthly net 
     income for the purposes of the debtor's plan. If an objection 
     is filed with the court within the times provided in 
     subsection (b), the court, after notice and hearing, shall 
     determine whether such extraordinary circumstances asserted 
     by the debtor exist and establish the amount of the loss of 
     income and such additional expense allowance, if any. The 
     burden of proving such extraordinary circumstances and the 
     amount of the loss of income and the additional expense 
     allowance, if any, shall be on the debtor. The court may 
     award to the party that prevails with respect to such 
     objection a reasonable attorney's fee and costs incurred by 
     the prevailing party in connection with such objection if the 
     court finds that the position of the nonprevailing party was 
     not substantially justified, but the court shall not award 
     such fee or such costs if special circumstances make the 
     award unjust.
       ``(b) For the purposes of chapter 13 of this title, the 
     statement of extraordinary circumstances shall be filed with 
     the court and served on the trustee on or before 45 days 
     before each anniversary of the confirmation of the plan in 
     order to be applicable during the next year of the plan. Any 
     objection thereto shall be filed 30 days after the statement 
     is filed with the trustee. Whenever a statement is timely 
     filed with the trustee, the trustee shall give notice to 
     creditors that such statement has been filed and the amount 
     of monthly net income stated therein within 15 days of 
     receipt of the statement.'';
       (4) in section 1322(a)--
       (A) by striking ``and'' at the end of paragraph (2);
       (B) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) state, under penalties of perjury, the amount of 
     monthly net income, which may be as adjusted under section 
     111, if applicable, of this title and the amount of monthly 
     net income which will be paid per month to unsecured 
     nonpriority creditors under the plan.''; and
       (5) by amending section 1325(b)(1)(B) to read as follows:
       ``(B) the plan provides--
       ``(i) that payments to unsecured nonpriority creditors who 
     are not insiders shall equal or exceed $50 in each month of 
     the plan;
       ``(ii) that during the applicable commitment period 
     beginning on the date that the first payment is due under the 
     plan, the total amount of monthly net income received by the 
     debtor shall be paid to unsecured nonpriority creditors under 
     the plan less only payments pursuant to section 1326(b); the 
     `applicable commitment period' shall be not less than 5 years 
     if the debtor's total current monthly income is not less than 
     the highest national median family income reported for a 
     family of equal or lesser size or, in the case of a household 
     of 1 person, is not less than the national median household 
     income for 1 earner, as of the date of confirmation of the 
     plan and shall be not less than 3 years if the debtor's total 
     current monthly income is less than the highest national 
     median family income reported for a family of equal or lesser 
     size or, in the case of a household of 1 person, is less than 
     the national median household income for 1 earner, as of the 
     date of confirmation of the plan;
       ``(iii) that the amount payable to each class of unsecured 
     nonpriority claims under the plan

[[Page H4377]]

     shall be increased or decreased during the plan 
     proportionately to the extent the debtor's monthly net income 
     during the plan increases or decreases as reasonably 
     determined by the trustee, subject to section 111 of this 
     title, no less frequently than as of each anniversary of the 
     confirmation of the plan based on monthly net income as of 45 
     days before such anniversary; and
       ``(iv) nothing in subparagraph (i) or (ii) shall prevent 
     the payment of obligations described in section 507(a)(7) at 
     the times provided for in the plan, and the plan shall 
     specify how payments to other creditors under subparagraph 
     (ii) will be accordingly adjusted.''; and
       (6) by striking section 1325(b)(2).

     SEC. 103. DEFINITION OF INAPPROPRIATE USE.

       Section 707(b) of title 11, United States Code, is amended 
     to read as follows:
       ``(b)(1) After notice and a hearing, the court--
       ``(A) on its own motion or on the motion of the United 
     States trustee or any party in interest, shall dismiss a case 
     filed by an individual debtor under this chapter; or
       ``(B) with the debtor's consent, convert the case to a case 
     under chapter 13 of this title;
     if the court finds that the granting of relief would be an 
     inappropriate use of the provisions of this chapter.
       ``(2) The court shall determine that inappropriate use of 
     the provisions of this chapter exists if--
       ``(A) the debtor is excluded from this chapter pursuant to 
     section 109 of this title; or
       ``(B) the totality of the circumstances of the debtor's 
     financial situation demonstrates such inappropriate use.
       ``(3) In the case of a motion filed by a party in interest 
     other than the trustee or United States trustee under 
     paragraph (1) that is denied by the court, the court shall 
     award against the moving party a reasonable attorney's fee 
     and costs that the debtor incurred in opposing the motion if 
     the court finds that the position of the moving party was not 
     substantially justified, but the court shall not award such 
     fee and costs if special circumstances would make the award 
     unjust.
       ``(4)(A) If a trustee appointed under this title or the 
     United States Trustee files a motion under this subsection 
     and the case is subsequently dismissed or converted to 
     another chapter, the court shall award to such party in 
     interest a reasonable attorney's fee and costs incurred in 
     connection with such motion, payable by the debtor, unless 
     the court finds that awarding such fee and costs would impose 
     an unreasonable hardship on the debtor, considering the 
     debtor's conduct.
       ``(B) The signature of the debtor's attorney on any 
     petition, pleading, motion, or other paper filed with the 
     court in the case of the debtor shall constitute a 
     certificate that the attorney has--
       ``(i) performed a reasonable investigation into the 
     circumstances that gave rise to the petition and its 
     schedules and statement of financial affairs or the pleading, 
     as applicable; and
       ``(ii) determined that the petition and its schedules and 
     statement of financial affairs or the pleading, as 
     applicable, including the choice of this chapter--
       ``(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 inappropriate use of 
     the provisions of this chapter.
       ``(C) If the court finds that the attorney for the debtor 
     signed a paper in violation of subparagraph (B), at a 
     minimum, the court shall order--
       ``(i) the assessment of an appropriate civil penalty 
     against the attorney for the debtor; and
       ``(ii) the payment of the civil penalty to the trustee or 
     the United States Trustee.''.

     SEC. 104. DEBTOR PARTICIPATION IN CREDIT COUNSELING PROGRAM.

       (a) Who May Be a Debtor.--Section 109 of title 11, United 
     States Code, as amended by section 102, is amended by adding 
     at the end the following:
       ``(i)(1) Subject to paragraph (2) and notwithstanding any 
     other provision of this section, an individual may not be a 
     debtor under this title unless such individual has, during 
     the 90-day period preceding the date of filing of the 
     petition, made a good-faith attempt to create a debt 
     repayment plan outside the judicial system for bankruptcy law 
     (commonly referred to as the `bankruptcy system'), through a 
     credit counseling program offered through credit counseling 
     services described in section 342(b)(2) that has been 
     approved by--
       ``(A) the United States trustee; or
       ``(B) the bankruptcy administrator for the district in 
     which the petition is filed.
       ``(2) The United States trustee or bankruptcy administrator 
     may not approve a program for inclusion on the list under 
     paragraph (1) unless the counseling service offering the 
     program offers the program without charge, or at an 
     appropriately reduced charge, if payment of the regular 
     charge would impose a hardship on the debtor or the debtor's 
     dependents.
       ``(3) The United States trustee or bankruptcy administrator 
     shall designate any geographical areas in the United States 
     trustee region or judicial district, as the case may be, as 
     to which the United States trustee or bankruptcy 
     administrator has determined that credit counseling services 
     needed to comply with this subsection are not available or 
     are too geographically remote for debtors residing within the 
     designated geographical areas. The clerk of the bankruptcy 
     court for each judicial district shall maintain a list of the 
     designated areas within the district.
       ``(4) The clerk shall exclude a particular counseling 
     service from the list maintained under section 342(b)(2) of 
     this title if the United States trustee or bankruptcy 
     administrator orders that the counseling service not be 
     included in the list.
       ``(5) The court may waive the requirement specified in 
     paragraph (1) if--
       ``(A) no credit counseling services are available as 
     designated under paragraphs (2) and (3);
       ``(B) the providers of credit counseling services available 
     in the district are unable or unwilling to provide such 
     services to the debtor in a timely manner; or
       ``(C) foreclosure, garnishment, attachment, eviction, levy 
     of execution, or similar claim enforcement procedure that 
     would have deprived the individual of property had commenced 
     before the debtor could complete a good-faith attempt to 
     create such a repayment plan.
       ``(6) A debtor who is subject to the exemption under 
     paragraph (5)(C) shall be required to make a good-faith 
     attempt to create a debt repayment plan outside the judicial 
     system in the manner prescribed in paragraph (1) during the 
     30-day period beginning on the date of filing of the petition 
     of that debtor.
       ``(7) A debtor shall be exempted from the bad faith 
     presumption for repeat filing under section 362(c) of title 
     11 if the case is dismissed due to the creation of a debt 
     repayment plan.
       ``(8) Only the United States trustee may make a motion for 
     dismissal on the ground that the debtor did not comply with 
     this subsection.''.
       (b) Debtor's Duties.--Section 521 of title 11, United 
     States Code, as amended by sections 406 and 407, is amended 
     by adding at the end the following:
       ``(g)(1) In addition to the requirements under subsection 
     (a), an individual debtor shall file with the court--
       ``(A) a certificate from the credit counseling services 
     that provided the debtor services under section 109(i), or a 
     verified statement as to why such attempt was not required 
     under section 109(i) or other substantial evidence of a good-
     faith attempt to create a debt repayment plan outside the 
     bankruptcy system in the manner prescribed in section 109(i); 
     and
       ``(B) a copy of the debt repayment plan, if any, developed 
     under section 109(i) through the credit counseling service 
     referred to in paragraph (1).
       ``(2) Only the United States trustee may make a motion for 
     dismissal on the ground that the debtor did not comply with 
     this subsection.''.

             Subtitle B--Adequate Protections for Consumers

     SEC. 111. NOTICE OF ALTERNATIVES.

       (a) Section 342(b) of title 11, United States Code, is 
     amended to read as follows:
       ``(b)(1) Before the commencement of a case under this title 
     by an individual whose debts are primarily consumer debts, 
     the individual shall be given or obtain (as required to be 
     certified under section 521(a)(1)(B)(viii)) a written notice 
     that is prescribed by the United States trustee for the 
     district in which the petition is filed pursuant to section 
     586 of title 28 and that contains the following:
       ``(A) A brief description of chapters 7, 11, 12 and 13 of 
     this title and the general purpose, benefits, and costs of 
     proceeding under each of such chapters.
       ``(B) A brief description of services that may be available 
     to the individual from an independent nonprofit debt 
     counselling service.
       ``(C) The name, address, and telephone number of each 
     nonprofit debt counselling service (if any)--
       ``(i) with an office located in the district in which the 
     petition is filed; or
       ``(ii) that offers toll-free telephone communication to 
     debtors in such district.
       ``(2) Any such nonprofit debt counselling service that 
     registers with the clerk of the bankruptcy court on or before 
     December 10 of the preceding year shall be included in such 
     list unless the chief bankruptcy judge of the district, after 
     notice to the debt counselling service and the United States 
     trustee and opportunity for a hearing, for good cause, orders 
     that such debt counselling service shall not be so listed.
       ``(3) The clerk shall make such notice available to 
     individuals whose debts are primarily consumer debts.''.
       (b) Section 586(a) of title 28, 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 ``; and''; and
       (3) by adding at the end the following:
       ``(7) on or before January 1 of each calendar year, and 
     also within 30 days of any change in the nonprofit debt 
     counselling services registered with the bankruptcy court, 
     prescribe and make available on request the notice described 
     in section 342(b)(1) of title 11 for each district included 
     in the region.''.

     SEC. 112. 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 of the 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.
       (b) Test--(1) The Director shall select 3 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) For a 1-year period beginning not later than 60 days 
     after the date of the enactment of this Act, such curriculum 
     and materials shall be made available by the Director, 
     directly or indirectly, on request to individual debtors in 
     cases filed in such 1-year period under chapter 7 or 13 of 
     title 11 of the United States Code.

[[Page H4378]]

       (3) The bankruptcy courts in each of such districts may 
     require individual debtors in such cases to undergo such 
     financial management training as a condition to receiving a 
     discharge in such case.
       (c) Evaluation.--(1) During the 1-year 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 of 
     the United States Code, and by consumer counselling groups.
       (2) 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.

     SEC. 113. DEFINITIONS.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (3) the following:
       ``(3A) `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 
     proceeding under this title;''; and
       (3) by inserting after paragraph (12A) the following:
       ``(12B) `debt relief counselling 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 
     pursuant to section 110 of this title, but does not include 
     any person that is any of the following or an officer, 
     director, employee or agent thereof--
       ``(A) any nonprofit organization which is exempt from 
     taxation under section 501(c)(3) of the Internal Revenue Code 
     of 1986;
       ``(B) any creditor of the person to the extent the creditor 
     is assisting the person to restructure any debt owed by the 
     person to the creditor; or
       ``(C) any 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;''.
       (b) Conforming Amendment.--In section 104(b)(1) by 
     inserting ``101(3),'' after ``sections''.

     SEC. 114. DISCLOSURES.

       (a) Disclosures.--Subchapter II of chapter 5 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 526. Disclosures

       ``(a) A debt relief counselling agency providing bankruptcy 
     assistance to an assisted person shall provide the following 
     notices to the assisted person:
       ``(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) of this section and no later than 
     three business days after the first date on which a debt 
     relief counselling agency first offers to provide any 
     bankruptcy assistance services to an assisted person, a clear 
     and conspicuous written notice advising assisted persons of 
     the following--
       ``(A) all information the assisted person is required to 
     provide with a petition and thereafter during a case under 
     this title must be complete, accurate and truthful;
       ``(B) all assets and all liabilities must 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 total income, projected monthly net 
     income and, in a chapter 13 case, monthly net income must be 
     stated after reasonable inquiry; and
       ``(D) that information 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 counselling 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 select a chapter 7 proceeding, you may be asked 
     by a creditor to reaffirm a debt. You may want help deciding 
     whether to do so.
       `` `If you select a chapter 13 proceeding in which you 
     repay your creditors what you can afford over three to seven 
     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 proceeding 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 proceeding.
       `` `Your bankruptcy proceeding may also involve litigation. 
     You are generally permitted to represent yourself in 
     litigation in bankruptcy court, but only attorneys, not 
     bankruptcy petition preparers, can represent you in 
     litigation.'.
       ``(c) Except to the extent the debt relief counselling 
     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 counselling agency providing 
     bankruptcy assistance to an assisted person shall provide 
     each assisted person at the time required for the notice 
     required under subsection (a)(1) reasonably sufficient 
     information (which may be provided orally or 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 total income, projected monthly income and, 
     in a chapter 13 case, net monthly income, 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 counselling agency shall maintain a 
     copy of the notices required under subsection (a) of this 
     section for two years after the later of the date on which 
     the notice is given the assisted person.''.
       (b) Conforming Amendment.--The table of section for chapter 
     5 of title 11, United States Code, is amended by inserting 
     after the item relating to section 525 the following:

``526. Disclosures.''.

     SEC. 115. DEBTOR'S BILL OF RIGHTS.

       (a) Debtor's Bill of Rights.--Subchapter II of chapter 5 of 
     title 11, United States Code, as amended by section 114, is 
     amended by adding at the end the following:

     ``Sec. 527. Debtor's bill of rights

       ``(a) A debt relief counselling agency shall--
       ``(1) no later than three business days after the first 
     date on which a debt relief counselling agency provides any 
     bankruptcy assistance services to an assisted person, execute 
     a written contract with the assisted person specifying 
     clearly and conspicuously the services the agency will 
     provide the assisted person and the basis on which fees or 
     charges will be made for such services and the terms of 
     payment, and give the assisted person a copy of the fully 
     executed and completed contract in a form the person can 
     keep;
       ``(2) 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 
     proceedings under this title, clearly and conspicuously using 
     the following statement: `We are a debt relief counselling 
     agency. We help people file Bankruptcy petitions to obtain 
     relief under the Bankruptcy Code.' or a substantially similar 
     statement. An advertisement shall be of bankruptcy assistance 
     services if it describes or offers bankruptcy assistance with 
     a chapter 13 plan, regardless of whether chapter 13 is 
     specifically mentioned, including such statements as 
     `federally supervised repayment plan' or `Federal debt 
     restructuring help' or other similar statements which would 
     lead a reasonable consumer to believe that help with debts 
     was being offered when in fact in most cases the help 
     available is bankruptcy assistance with a chapter 13 plan; 
     and
       ``(3) if an advertisement directed to the general public 
     indicates that the debt relief counselling agency provides 
     assistance with respect to credit defaults, mortgage 
     foreclosures, lease eviction proceedings, excessive debt, 
     debt collection pressure, or inability to pay any consumer

[[Page H4379]]

     debt, disclose conspicuously in that advertisement that the 
     assistance is with respect to or may involve proceedings 
     under this title, using the following statement: ``We are a 
     debt relief counselling agency. We help people file 
     Bankruptcy petitions to obtain relief under the Bankruptcy 
     Code.'' or a substantially similar statement.
       ``(b) A debt relief counselling agency shall not--
       ``(1) fail to perform any service which the debt relief 
     counseling agency has told the assisted person or prospective 
     assisted person the agency would provide that person in 
     connection with the preparation for or activities during a 
     proceeding under this title;
       ``(2) make any statement, or counsel or advise any assisted 
     person to make any statement in any document filed in a 
     proceeding under this title, which is untrue or misleading or 
     which upon the exercise of reasonable care, should be known 
     by the debt relief counselling agency to be untrue or 
     misleading;
       ``(3) misrepresent to any assisted person or prospective 
     assisted person, directly or indirectly, affirmatively or by 
     material omission, what services the debt relief counselling 
     agency can reasonably expect to provide that person, or the 
     benefits an assisted person may obtain or the difficulties 
     the person may experience if the person seeks relief in a 
     proceeding pursuant to this title; or
       ``(4) advise an assisted person or prospective assisted 
     person to incur more debt in contemplation of that person 
     filing a proceeding under this title or in order 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 proceeding under this title.''.
       (b) Conforming Amendment.--The table of section for chapter 
     5 of title 11, United States Code, as amended by section 114, 
     is amended by inserting after the item relating to section 
     526, the following:

``527. Debtor's bill of rights.''.

     SEC. 116. ENFORCEMENT.

       (a) Enforcement.--Subchapter II of chapter 5 of title 11, 
     United States Code, as amended by sections 114 and 115, is 
     amended by adding at the end the following:

     ``Sec. 528. Debt relief counselling agency enforcement

       ``(a) Assisted Person Waivers Invalid.--Any waiver by any 
     assisted person of any protection or right provided by or 
     under section 526 or 527 of this title shall be void and may 
     not be enforced by any Federal or State court or any other 
     person.
       ``(b) Noncompliance.--
       ``(1) Any contract between a debt relief counselling agency 
     and an assisted person for bankruptcy assistance which does 
     not comply with the requirements of section 526 or 527 of 
     this title shall be treated as void and may not be enforced 
     by any Federal or State court or by any other person.
       ``(2) Any debt relief counselling agency which has been 
     found, after notice and hearing, to have--
       ``(A) failed to comply with any provision of section 526 or 
     527 with respect to a bankruptcy case or related proceeding 
     of an assisted person;
       ``(B) provided bankruptcy assistance to an assisted person 
     in a case or related proceeding which is dismissed or 
     converted in lieu of dismissal under section 707 of this 
     title or because of a failure to file bankruptcy papers, 
     including papers specified in section 521 of this title; or
       ``(C) negligently or intentionally disregarded the 
     requirements of this title or the Federal Rules of Bankruptcy 
     Procedure applicable to such debt relief counselling agency 
     shall be liable to the assisted person in the amount of any 
     fees and charges in connection with providing bankruptcy 
     assistance to such person which the debt relief counselling 
     agency has already been paid on account of that proceeding 
     and if the case has not been closed, the court may in 
     addition require the debt relief counselling agency to 
     continue to provide bankruptcy assistance services in the 
     pending case to the assisted person without further fee or 
     charge or upon such other terms as the court may order.
       ``(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 section 526 or 527 of this title, 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).
       ``(c) Relation to State Law.--This section and sections 526 
     and 527 shall not annul, alter, affect or exempt any person 
     subject to those 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.''.
       (b) Conforming Amendment.--The table of section for chapter 
     5 of title 11, United States Code, as amended by sections 114 
     and 115, is amended by inserting after the item relating to 
     section 527, the following:

``528. Debt relief counselling agency enforcement.''.

     SEC. 117. SENSE OF THE CONGRESS.

       It is the sense of the Congress that States should develop 
     curricula relating to the subject of personal finance, 
     designed for use in elementary and secondary schools.

     SEC. 118. CHARITABLE CONTRIBUTIONS.

       (a) Definitions.--Section 548(d) of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(3) In this section, the term `charitable contribution' 
     means a charitable contribution as defined in section 170(c) 
     of the Internal Revenue Code of 1986, if such contribution--
       ``(A) is made by a natural person; and
       ``(B) consists of--
       ``(i) a financial instrument (as defined in section 
     731(c)(2)(C) of the Internal Revenue Code of 1986); or
       ``(ii) cash.
       ``(4) In this section, the term `qualified religious or 
     charitable entity or organization' means--
       ``(A) an entity described in section 170(c)(1) of the 
     Internal Revenue Code of 1986; or
       ``(B) an entity or organization described in section 
     170(c)(2) of the Internal Revenue Code of 1986.''.
       (b) Treatment of Prepetition Qualified Charitable 
     Contributions.
       (1) In general.--Section 548(a) of title 11, United States 
     Code, is amended--
       (A) by inserting ``(1)'' after ``(a)'';
       (B) by striking ``(1) made'' and inserting ``(A) made'';
       (C) by striking ``(2)(A)'' and inserting ``(B)(i)'';
       (D) by striking ``(B)(i)'' and inserting ``(ii)(I)'';
       (E) by striking ``(ii) was'' and inserting ``(II) was'';
       (F) by striking ``(iii)'' and inserting ``(III)''; and
       (G) by adding at the end the following:
       ``(2) A transfer of a charitable contribution to a 
     qualified religious or charitable entity or organization 
     shall not be considered to be a transfer covered under 
     paragraph (1)(B) in any case in which--
       ``(A) the amount of such contribution does not exceed 15 
     percent of the gross annual income of the debtor for the year 
     in which the transfer of the contribution is made; or
       ``(B) the contribution made by a debtor exceeded the 
     percentage amount of gross annual income specified in 
     subparagraph (A), if the transfer was consistent with the 
     practices of the debtor in making charitable 
     contributions.''.
       (2) Trustee as lien creditor and as successor to certain 
     creditors and purchasers.--Section 544(b) of title 11, United 
     States Code, is amended--
       (A) by striking ``(b) The trustee'' and inserting ``(b)(1) 
     Except as provided in paragraph (2), the trustee''; and
       (B) by adding at the end the following:
       ``(2) Paragraph (1) shall not apply to a transfer of a 
     charitable contribution (as defined in section 548(d)(3) of 
     this title) that is not covered under section 548(a)(1)(B) of 
     this title by reason of section 548(a)(2) of this title. Any 
     claim by any person to recover a transferred contribution 
     described in the preceding sentence under Federal or State 
     law in a Federal or State court shall be preempted by the 
     commencement of the case.''.
       (3) Conforming amendments.--Section 546 of title 11, United 
     States Code, is amended--
       (A) in subsection (e)--
       (i) by striking ``548(a)(2)'' and inserting 
     ``548(a)(1)(B)''; and
       (ii) by striking ``548(a)(1)'' and inserting 
     ``548(a)(1)(A)'';
       (B) in subsection (f)--
       (i) by striking ``548(a)(2)'' and inserting 
     ``548(a)(1)(B)''; and
       (ii) by striking ``548(a)(1)'' and inserting 
     ``548(a)(1)(A)''; and
       (C) in the first subsection (g)--
       (i) by striking ``section 548(a)(1)'' and inserting 
     ``section 548(a)(1)(A)''; and
       (ii) by striking ``548(a)(2)'' and inserting 
     ``548(a)(1)(B)''.
       (c) Treatment of Post-Petition Charitable Contributions 
     Under Chapter 7.--Section 707 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(c) In making a determination whether to dismiss a case 
     under this section, the court may not take into consideration 
     whether a debtor has made, or continues to make, charitable 
     contributions (that meet the definition of `charitable 
     contribution' under section 548(d)(3)) to any qualified 
     religious or charitable entity or organization (as defined in 
     section 548(d)(4)).''.
       (d) Treatment of Post-Petition Charitable Contributions 
     Under Chapter 13.--Section 111 of title 11, United States 
     Code, as added by section 102, is amended by adding at the 
     end the following:
       ``(c) For purposes of subsection (a), charitable 
     contributions (that meet the definition of `charitable 
     contribution' under section 548(d)(3)) to any qualified 
     religious or charitable entity or organization (defined in 
     section 548(d)(4)), but not to exceed 15 percent of the 
     debtor's gross income for the year in which such 
     contributions are made, shall be considered to be additional 
     expenses of the debtor required by extraordinary 
     circumstances.''.
       (e) Rule of Construction.--Nothing in the amendments made 
     by this section is intended to limit the applicability of the 
     Religious Freedom Restoration Act of 1993 (42 U.S.C. 2002bb 
     et seq.).

     SEC. 119. REINFORCE THE FRESH START.

       (a) Restoration of an Effective Discharge.--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

[[Page H4380]]

       (3) by inserting ``(or a similar non-Federal law)'' after 
     ``title 28'' each place it appears.
       (b) Protection of Retirement Funds in Bankruptcy.--Section 
     522 of title 11, United States Code, is amended--
       (1) in subsection (b)(2)--
       (A) in subparagraph (A) by striking ``and'' at the end;
       (B) in subparagraph (B) by striking the period at the end 
     and inserting ``; and''; and
       (C) 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. 119A. CHAPTER 11 DISCHARGE OF DEBTS ARISING FROM 
                   TOBACCO-RELATED DEBTS.

       Section 1141(d) of title 11, United States Code, is amended 
     by adding at the end the following:
       ``(5) The confirmation of a plan does not discharge a 
     debtor that is a corporation from any debt arising from a 
     judicial, administrative, or other action or proceeding that 
     is--
       ``(A) related to the consumption or consumer purchase of a 
     tobacco product; and
       ``(B) based in whole or in part on false pretenses, a false 
     representation, or actual fraud.''.

         Subtitle C--Adequate Protections for Secured Creditors

     SEC. 121. 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 new paragraphs:
       ``(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 that debtor was pending within the previous 
     1-year period but was dismissed, other than a case refiled 
     under a chapter other than chapter 7 after dismissal under 
     section 707(b) of this title, 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 will 
     terminate with respect to the debtor on the 30th day after 
     the filing of the later case. If a party in interest 
     requests, 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. A case is presumptively filed not in good faith (but 
     such presumption may be rebutted by clear and convincing 
     evidence to the contrary)--
       ``(A) as to all creditors if--
       ``(i) more than 1 previous case under any of chapters 7, 
     11, or 13 in which the individual was a debtor was pending 
     within such 1-year period;
       ``(ii) a previous case under any of chapters 7, 11, or 13 
     in which the individual was a debtor was dismissed within 
     such 1-year period, 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 provide 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 any of 
     chapters 7, 11, or 13 of this title, or any other reason to 
     conclude that the later case will be concluded, if a case 
     under chapter 7 of this title, with a discharge, and if a 
     chapter 11 or 13 case, a confirmed plan which will be fully 
     performed;
       ``(B) 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 that case, that 
     action was still pending or had been resolved by terminating, 
     conditioning, or limiting the stay as to actions of that 
     creditor.
       ``(4) 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 that debtor were pending within the 
     previous year but were dismissed, other than a case refiled 
     under section 707(b) of this title, the stay under subsection 
     (a) will not go into effect upon the filing of the later 
     case. On request of a party in interest, the court shall 
     promptly enter an order confirming that no stay is in effect. 
     If a party in interest requests within 30 days of the filing 
     of the later case, 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. A stay imposed 
     pursuant to the preceding sentence will be effective on the 
     date of entry of the order allowing the stay to go into 
     effect. A case is presumptively not filed in good faith (but 
     such presumption may be rebutted by clear and convincing 
     evidence to the contrary)--
       ``(A) 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
       ``(B) 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 that case, that 
     action was still pending or had been resolved by terminating, 
     conditioning, or limiting the stay as to action of that 
     creditor.
       ``(5)(A) If a request is made for relief from the stay 
     under subsection (a) with respect to real or personal 
     property of any kind, and such request is granted in whole or 
     in part, the court may order in addition that the relief so 
     granted shall be in rem either for a definite period not less 
     than 1 year or indefinitely. After the issuance of such an 
     order, the stay under subsection (a) shall not apply to any 
     property subject to such an in rem order in any case of the 
     debtor under this title. If such an order so provides, such 
     stay shall also not apply in any pending or later-filed case 
     of any entity under this title that claims or has an interest 
     in the subject property other than those entities identified 
     in the court's order.
       ``(B) The court shall cause any order entered pursuant to 
     this paragraph with respect to real property to be recorded 
     in the applicable real property records, which recording 
     shall constitute notice to all parties having or claiming an 
     interest in such real property for purpose of this section.
       ``(6) For the purposes of this section, a case is pending 
     from the time of the order for relief until the case is 
     closed.''.

     SEC. 122. DEFINITION OF HOUSEHOLD GOODS.

       Section 101 of title 11, United States Code, is amended by 
     inserting after paragraph (27) the following:
       ``(27A) `household goods' has the meaning given such term 
     in the Trade Regulation Rule on Credit Practices promulgated 
     by the Federal Trade Commission (16 C.F.R. 444.1(i)), as in 
     effect on the effective date of this paragraph;''.

     SEC. 123. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

       Title 11, United States Code, is amended--
       (1) in section 521--
       (A) in paragraph (4) by striking ``and'' at the end;
       (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 takes 
     1 of the following actions within 30 days after the first 
     meeting of creditors under section 341(a)--
       ``(A) enters into a reaffirmation 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 30-day period, the 
     personal property affected 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, and 
     after notice and a hearing, that such property is of 
     consequential value or benefit to the estate.''; and
       (2) in section 722 by inserting ``in full at the time of 
     redemption'' before the period at the end.

     SEC. 124. RELIEF FROM STAY WHEN THE DEBTOR DOES NOT COMPLETE 
                   INTENDED SURRENDER OF CONSUMER DEBT COLLATERAL.

       Title 11, United States Code, is amended as follows--
       (1) in section 362--
       (A) by striking ``(e), and (f)'' in subsection (c) and 
     inserting in lieu thereof ``(e), (f), and (h)''; and
       (B) by redesignating subsection (h) as subsection (i) and 
     by inserting after subsection (g) the following:
       ``(h) In an individual case pursuant to chapter 7, 11, or 
     13 the stay provided by subsection (a) is terminated with 
     respect to property of the estate securing in whole or in 
     part a claim, or subject to an unexpired lease, if the debtor 
     fails within the applicable time set by section 521(a)(2) of 
     this title--
       ``(1) to file timely any statement of intention required 
     under section 521(a)(2) of this title with respect to that 
     property or to indicate therein that the debtor will either 
     surrender the property or retain it and, if retaining it, 
     either redeem the property pursuant to section 722 of

[[Page H4381]]

     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; or
       ``(2) 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;

     unless the court determines on the motion of the trustee, and 
     after notice and a hearing, that such property is of 
     consequential value or benefit to the estate.'';
       (2) in section 521, as amended by sections 104, 406, and 
     407--
       (A) in paragraph (2) by striking ``consumer'';
       (B) in paragraph (2)(B)--
       (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)''; and
       (ii) by striking ``forty-five day'' the second place it 
     appears and inserting ``30-day'';
       (C) in paragraph (2)(C) by inserting ``except as provided 
     in section 362(h)'' before the semicolon; and
       (D) by adding at the end the following:
       ``(h) 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, 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. 125. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 
                   13.

       Section 1325(a)(5)(B)(i) of title 11, United States Code, 
     is amended to read as follows:
       ``(i) the plan provides that the holder of such claim 
     retain the lien securing such claim until the earlier of 
     payment of the underlying debt determined under nonbankruptcy 
     law or discharge under section 1328, and that 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''.

     SEC. 126. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

       Section 362(e) of title 11, United States Code, is amended 
     by inserting at the end the following:

     ``Notwithstanding the foregoing, in the case of an individual 
     filing under chapter 7, 11, or 13, the stay under subsection 
     (a) shall terminate 60 days after a request under subsection 
     (d) of this section, unless--
       ``(1) a final decision is rendered by the court within such 
     60-day period; or
       ``(2) such 60-day period is extended either by agreement of 
     all parties in interest or by the court for a specific time 
     which the court finds is required by compelling 
     circumstances.''.

     SEC. 127. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.

       Section 348(f)(1) of title 11, United States Code, is 
     amended--
       (1) by striking in subparagraph (B) ``in the converted 
     case, with allowed secured claims'' and inserting in lieu 
     thereof ``only in a case converted to chapter 11 or 12 but 
     not in one converted to chapter 7, with allowed secured 
     claims in cases under chapters 11 and 12''; and
       (2) in subparagraph (A) by striking ``and'' at the end;
       (3) in subparagraph (B) by striking the period and 
     inserting ``; and''; and
       (4) by adding at the end the following:
       ``(C) with respect to cases converted from chapter 13, 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 that 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 case under chapter of this title. Unless a 
     prebankruptcy default has been fully cured pursuant to 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.''.

     SEC. 128. RESTRAINING ABUSIVE PURCHASES ON SECURED CREDIT.

       Section 506 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) In an individual case under chapter 7, 11, 12, or 
     13--
       ``(1) subsection (a) shall not apply to an allowed claim to 
     the extent attributable in whole or in part to the purchase 
     price of personal property acquired by the debtor within 180 
     days of the filing of the petition, except for the purpose of 
     applying paragraph (3) of this subsection;
       ``(2) if such allowed claim attributable to the purchase 
     price is secured only by the personal property so acquired, 
     the value of the personal property and the amount of the 
     allowed secured claim shall be the sum of the unpaid 
     principal balance of the purchase price and accrued and 
     unpaid interest and charges at the contract rate;
       ``(3) if such allowed claim attributable to the purchase 
     price is secured by the personal property so acquired and 
     other property, the value of the security may be determined 
     under subsection (a), but the value of the security and the 
     amount of the allowed secured claim shall be not less than 
     the unpaid principal balance of the purchase price of the 
     personal property acquired and unpaid interest and charges at 
     the contract rate; and
       ``(4) in any subsequent case under this title that is filed 
     by or against the debtor in the 2-year period beginning on 
     the date the petition is filed in the original case, the 
     value of the personal property and the amount of the allowed 
     secured claim shall be deemed to be not less than the amount 
     provided under paragraphs (2) and (3).''.

     SEC. 129. FAIR VALUATION OF COLLATERAL.

       Section 506(a) of title 11, United States Code, is amended 
     by adding at the end the following:

     ``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. 130. PROTECTION OF HOLDERS OF CLAIMS SECURED BY DEBTOR'S 
                   PRINCIPAL RESIDENCE.

       Title 11, United States Code, is amended--
       (1) in section 101 by inserting after paragraph (13) the 
     following:
       ``(13A) `debtor's principal residence' means a residential 
     structure including incidental property when the structure 
     contains 1 to 4 units, whether or not that structure is 
     attached to real property, and includes, without limitation, 
     an individual condominium or cooperative unit or mobile or 
     manufactured home or trailer;
       ``(13B) `incidental property' means property incidental to 
     such residence including, without limitation, property 
     commonly conveyed with a principal residence where the real 
     estate is located, window treatments, carpets, appliances and 
     equipment located in the residence, and easements, 
     appurtenances, fixtures, rents, royalties, mineral rights, 
     oil and gas rights, escrow funds and insurance proceeds;'';
       (2) in section 362(b)--
       (A) in paragraph (17) by striking ``or'' at the end 
     thereof;
       (B) in paragraph (18) by striking the period at the end and 
     inserting ``; or''; and
       (C) by inserting after paragraph (18) the following:
       ``(19) under subsection (a), until a prepetition default is 
     cured fully in a case under chapter 13 of this title case by 
     actual payment of all arrears as required by the plan, of the 
     postponement, continuation or other similar delay of a 
     prepetition foreclosure proceeding or sale in accordance with 
     applicable nonbankruptcy law, but nothing herein shall imply 
     that such postponement, continuation or other similar delay 
     is a violation of the stay under subsection (a).''; and
       (3) by amending section 1322(b)(2) to read as follows:
       ``(2) modify the rights of holders of secured claims, other 
     than a claim secured primarily by a security interest in 
     property used as the debtor's principal residence at any time 
     during 180 days prior to the filing of the petition, or of 
     holders of unsecured claims, or leave unaffected the rights 
     of holders of any class of claims;''.

     SEC. 131. AIRCRAFT EQUIPMENT AND VESSELS.

       Section 1110(a)(1) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A) by striking ``that become due on or 
     after the date of the order'';
       (2) in subparagraph (B)--
       (A) in clause (i) by striking ``and'' at the end; and
       (B) in clause (ii)--
       (i) by inserting ``and within such 60-day period'' after 
     ``order''; and
       (ii) in subclause (II) by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(iii) that occurs after the date of the order and such 
     60-day period is cured in accordance with the terms of such 
     security agreement, lease, or conditional sale contract.''.

        Subtitle D--Adequate Protections for Unsecured Creditors

     SEC. 141. DEBTS INCURRED TO PAY NONDISCHARGEABLE DEBTS.

       (a) Priority of Claims for Debts Incurred To Pay 
     Nondischargeable Debts.--Section 507(a) of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(10) Tenth, remaining allowed unsecured claims for debts 
     that are nondischargeable under section 523(a)(19), but which 
     shall be payable under this paragraph in the higher order of 
     priority (if any) as the respective claims paid by incurring 
     such debts.''.
       (b) Nondischargeability of Debts Incurred To Pay 
     Nondischargeable Debts.--Section 523(a) 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 
     ``; or''; and
       (3) by adding at the end the following:
       ``(19) incurred to pay a debt that is nondischargeable 
     under any other paragraph of this subsection.''.

     SEC. 142. CREDIT EXTENSIONS ON THE EVE OF BANKRUPTCY PRESUMED 
                   NONDISCHARGEABLE.

       Section 523(a)(2)(C) of title 11, United States Code, is 
     amended to read as follows:
       ``(C) for purposes of subparagraph (A), consumer debts owed 
     to a single creditor incurred by an individual debtor on or 
     within 90 days before the order for relief under this title 
     are presumed to be nondischargeable, except that such

[[Page H4382]]

     presumption shall not apply to consumer debts owed to a 
     single creditor which are incurred for necessaries and 
     aggregate $250 or less.''.

     SEC. 143. FRAUDULENT DEBTS ARE NONDISCHARGEABLE IN CHAPTER 13 
                   CASES.

       Section 1328(a)(2) of title 11, United States Code, is 
     amended--
       (1) by inserting ``(2), (3)(B), (4),'' after ``paragraph''; 
     and
       (2) by inserting ``(6),'' after ``(5),''.

     SEC. 144. APPLYING THE CODEBTOR STAY ONLY WHEN IT PROTECTS 
                   THE DEBTOR.

       Section 1301(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) When the debtor did not receive the consideration for 
     the claim held by a creditor, the stay provided by subsection 
     (a) does not apply to such creditor, notwithstanding 
     subsection (c), to the extent the creditor proceeds against 
     the individual which received such consideration or against 
     property not in the possession of the debtor which secures 
     such claim, but this subsection shall not apply if the debtor 
     is primarily obligated to pay the creditor in whole or in 
     part with respect to the claim under a legally binding 
     separation agreement, or divorce or dissolution decree, with 
     respect to such individual or the person who has possession 
     of such property.
       ``(3) When the debtor's plan provides that the debtor's 
     interest in personal property subject to a lease as to which 
     the debtor is the lessee will be surrendered or abandoned or 
     no payments will be made under the plan on account of the 
     debtor's obligations under the lease, the stay provided by 
     subsection (a) shall terminate as of the date of confirmation 
     of the plan notwithstanding subsection (c).''.

     SEC. 145. CREDIT EXTENSIONS WITHOUT A REASONABLE EXPECTATION 
                   OF REPAYMENT MADE NONDISCHARGEABLE.

       Section 523(a)(2) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A) by striking ``or actual fraud,'' 
     and inserting ``actual fraud, or use of a credit or charge 
     card or other device to access a credit line without a 
     reasonable expectation or ability to repay unless access to 
     such credit, credit or charge card or other device to access 
     the credit line was extended without an application therefor 
     and reasonable evaluation of the debtor's ability to 
     repay,'', and
       (2) in subparagraph (B)(iv) by striking ``with intent to 
     deceive'' and inserting ``without taking reasonable steps to 
     ensure the accuracy of the statement''.

     SEC. 146. DEBTS FOR ALIMONY, MAINTENANCE, AND SUPPORT.

       (a) Nondischargeability.--Title 11, United States Code, is 
     amended--
       (1) in section 523(a)(18)--
       (A) by inserting ``(including interest)'' after ``law''; 
     and
       (B) in subparagraph (A) by striking ``and'' at the end and 
     inserting ``or''; and
       (2) in section 1328(a)(2) by striking ``or (9)'' and 
     inserting ``(9), or (18)''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, as amended by section 130, is amended--
       (1) in paragraph (19) by striking ``or'' at the end;
       (2) in paragraph (19) by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(20) under subsection (a) with respect to the withholding 
     of income pursuant to an order as specified in section 466(b) 
     of the Social Security Act; or
       ``(21) under subsection (a) with respect to the 
     withholding, suspension, or restriction of drivers' licenses, 
     professional and occupational licenses, and recreational 
     licenses pursuant to State law as specified in section 
     466(a)(15) of the Social Security Act or with respect to the 
     reporting of overdue support owed by an absent parent to any 
     consumer reporting agency as specified in section 466(a)(7) 
     of the Social Security Act.''.
       (c) Continued Liability of Property.--Section 522(c) of 
     title 11, United States Code, is amended by striking 
     ``section 523(a)(1) or 523(a)(5)'' and inserting ``paragraph 
     (1), (5), or (18) of section 523(a)''.
       (d) Priority of Claims.--Section 507(a) of title 11, United 
     States Code, as amended by section 141, is amended--
       (1) in paragraph (10) by striking ``(10) Tenth'' and 
     inserting ``(11) Eleventh'';
       (2) in paragraph (9) by striking ``(9) Ninth'' and 
     inserting ``(10) Tenth'';
       (3) in paragraph (8) by striking ``(8) Eighth '' and 
     inserting ``(9) Ninth''; and
       (4) by inserting after paragraph (7) the following:
       ``(8) Eighth, allowed unsecured claims for debts that are 
     nondischargeable under section 523(a)(18).''.
       (e) Confirmation of Plans.--Title 11 of the 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 to pay alimony to, maintenance for, or 
     support of a spouse, former spouse, or child of the debtor, 
     the debtor has paid all amounts payable under such order for 
     alimony, maintenance, or support that are due after the date 
     the petition is filed.'';
       (2) in section 1225(a)--
       (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) the debtor is required by a judicial or 
     administrative order to pay alimony to, maintenance for, or 
     support of a spouse, former spouse, or child of the debtor, 
     the debtor has paid all amounts payable under such order for 
     alimony, maintenance, or support that are due after the date 
     the petition is filed.''; and
       (3) in section 1325(a)--
       (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 to pay alimony to, maintenance for, or 
     support of a spouse, former spouse, or child of the debtor, 
     the debtor has paid all amounts payable under such order for 
     alimony, maintenance, or support that are due after the date 
     the petition is filed.''.
       (f) Discharge.--Title 11 United States Code is amended--
       (1) in section 1228(a) by inserting ``and only after a 
     debtor who is required by a judicial or administrative order 
     to pay alimony to, maintenance for, or support of a spouse, 
     former spouse, or child of the debtor, certifies that all 
     amounts payable under such order for alimony, maintenance, or 
     support that are due after the date the petition is filed 
     have been paid,'' after ``this title,''; and
       (2) in section 1328(a) by inserting ``and only after a 
     debtor who is required by a judicial or administrative order 
     to pay alimony to, maintenance for, or support of a spouse, 
     former spouse, or child of the debtor, certifies that all 
     amounts payable under such order for alimony, maintenance, or 
     support that are due after the date the petition is filed 
     have been paid,'' after ``plan,'' the 1st place it appears.
       (g) Conforming Amendments.--Section 456(b) of the Social 
     Security Act (42 U.S.C. 656(b)) is amended--
       (1) by inserting ``, including interest,'' after ``Code)'';
       (2) by striking ``and'' and inserting ``or''; and
       (3) by striking ``released by a discharge'' and inserting 
     ``dischargeable''.

     SEC. 147. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 
                   MAINTENANCE, AND SUPPORT.

       Section 523(a)(5) of title 11, United States Code, is 
     amended to read as follows:
       ``(5) to a spouse, former spouse, or child of the debtor 
     for alimony to, maintenance for, or support of such spouse or 
     child, or to a spouse, former spouse, or child of the debtor, 
     to the extent such debt is the result of a property 
     settlement agreement, a hold harmless agreement, or any other 
     type of debt that is not in the nature of alimony, 
     maintenance, or support in connection with or incurred by the 
     debtor in the course of a separation agreement, divorce 
     decree, any modifications thereof, or other order of a court 
     of record, determination made in accordance with State or 
     territorial law by a governmental unit, but not to the extent 
     that such debt is assigned to another entity, voluntarily, by 
     operation of law, or otherwise (other than debts assigned 
     pursuant to section 408(a)(3) of the Social Security Act, or 
     such debt that has been assigned to the Federal government, 
     or to a State or political subdivision of such State, or the 
     creditor's attorney);''.

     SEC. 148. OTHER EXCEPTIONS TO DISCHARGE.

       Section 523 of title 11, United States Code, is amended--
       (1) by striking subsection (a)(15), as added by section 
     304(e)(1) of Public Law 103-394;
       (2) in subsection (a)(7) by inserting ``(including property 
     or funds required to be disgorged)'' after ``penalty''; and
       (3) in subsection (c)(1) by striking ``(6), or (15)'' and 
     inserting ``or (6)''.

     SEC. 149. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

       (a) Exception to Discharge.--Section 523(a)(16) of title 
     11, United States Code, is amended--
       (1) by striking ``dwelling'' the 1st place it appears;
       (2) by striking ``ownership or'' and inserting 
     ``ownership,'';
       (3) by striking ``housing'' the 1st 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,''.
       (b) Executory Contracts.--Section 365 of title 11, United 
     States Code, as amended by section 161, is amended by adding 
     at the end the following:
       ``(q) A debt of a kind described in section 523(a)(16) of 
     this title shall not be considered to be a debt arising from 
     an executory contract.''

     SEC. 150. PROTECTION OF CHILD SUPPORT AND ALIMONY.

       (a) Amendment.--Title 11 of the United States Code, as 
     amended by section 116, is amended by inserting after section 
     528 the following:

     ``Sec. 529. Protection of child support and alimony payments 
       after the discharge

       ``Notwithstanding the provisions of the constitution or law 
     of any State providing a different priority, any debts of the 
     individual who has received a discharge under this title to a 
     spouse, former spouse, or child for alimony to, maintenance 
     for, or support of such spouse or child, in connection with a 
     separation agreement, divorce decree, or other order of a 
     court of record, determination made in accordance with State 
     or territorial law by a governmental unit, or property 
     settlement agreement, but not to the extent that such debt--
       ``(1) is assigned to another entity, voluntarily, by 
     operation of law, or otherwise; or
       ``(2) includes a liability designated as alimony, 
     maintenance, or support, unless such liability is actually in 
     the nature of alimony, maintenance, or support,

     shall have priority in payment and collection over a 
     creditor's claim which is not discharged

[[Page H4383]]

     in the individual's case pursuant to paragraph (2), (4), or 
     (14) of section 523(a) of this title, but such priority shall 
     not affect the priority of any consensual lien, mortgage, or 
     security interest securing such creditor's claim.''.
       (b) Conforming Amendment.--The table of sections of chapter 
     5 of title 11, United States Code, as amended by section 116, 
     is amended by inserting after the item relating to section 
     528 the following:

``529. Protection of child support and alimony.''.

     SEC. 151. ADEQUATE PROTECTION FOR INVESTORS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, 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 pursuant to section 15A of 
     the Securities Exchange Act of 1934 or a national securities 
     exchange registered with the Securities and Exchange 
     Commission pursuant to section 6 of the Securities Exchange 
     Act of 1934;''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, as amended by sections 130 and 146, is amended--
       (1) in paragraph (20) by striking ``or'' at the end;
       (2) in paragraph (21) by striking the period at the end and 
     a inserting ``; or''; and
       (3) by adding at the end the following:
       ``(22) under subsection (a) of this section, of the 
     commencement or continuation of an investigation or action by 
     a securities self regulatory organization to enforce such 
     organization's regulatory power; of 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 of 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.''.

              Subtitle E--Adequate Protections for Lessors

     SEC. 161. 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) of this title is automatically 
     terminated.
       ``(2) 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 lessor. If within 30 days of such notice 
     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. The stay under section 362 of 
     this title and the injunction under section 524(a)(2) of this 
     title shall not be violated by notification of the debtor and 
     negotiation of cure under this subsection.
       ``(3) In a case under chapter 11 of this title in which the 
     debtor is an individual and in a case under chapter 13 of 
     this title, 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 of this title and any 
     stay under section 1301 is automatically terminated with 
     respect to the property subject to the lease.''.

     SEC. 162. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY 
                   SECURED CREDITORS.

       Title 11, United States Code, is amended by adding after 
     section 1307 the following:

     ``Sec. 1307A. Adequate protection in chapter 13 cases

       ``(a)(1) On or before 30 days after the filing of a case 
     under this chapter, the debtor shall make cash payments in 
     the amount described below to any lessor of personal property 
     and to any creditor holding a claim secured by personal 
     property to the extent such claim is attributable to the 
     purchase of such property by the debtor. The debtor or the 
     plan shall continue such payments until the earlier of--
       ``(A) the time at which the creditor begins to receive 
     actual payments under the plan; or
       ``(B) the debtor relinquishes possession of such property 
     to the lessor or creditor, or to any third party acting under 
     claim of right, as applicable.
       ``(2) Such cash payments shall be in the amount of any 
     weekly, biweekly, monthly or other periodic payment scheduled 
     as payable under the contract between the debtor and 
     creditor; shall be paid at the times at which such payments 
     are scheduled to be made; and shall not include any 
     arrearages, penalties, or default or delinquency charges. 
     Such payments shall be deemed to be adequate protection 
     payments under section 362 of this title.
       ``(b) The court may, after notice and hearing, change the 
     amount and timing of the adequate protection payment under 
     subsection (a), but in no event shall it be payable less 
     frequently than monthly or in an amount less than the 
     reasonable depreciation of such property month to month.
       ``(c) Notwithstanding section 1326(b) of this title, if a 
     confirmed plan provides for payments to a creditor or lessor 
     described in subsection (a) and provides that payments to 
     such creditor or lessor under the plan will be deferred until 
     payment of amounts described in section 1326(b) of this 
     title, the payments required hereunder shall nonetheless be 
     continued in addition to plan payments until actual payments 
     to the creditor begin under the plan.
       ``(d) Notwithstanding sections 362, 542, and 543 of this 
     title, a lessor or creditor described in subsection (a) may 
     retain possession of property described in subsection (a) 
     which was obtained rightfully prior to the date of filing of 
     the petition until the first such adequate protection payment 
     is received by the lessor or creditor. Such retention of 
     possession and any acts reasonably related thereto shall not 
     violate the stay imposed under section 362(a) of this title, 
     nor any obligations imposed under section 542 or 543 of this 
     title.
       ``(e) On or before 60 days after the 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 that property 
     shall provide each creditor or lessor 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. 163. ADEQUATE PROTECTION FOR LESSORS.

       Section 362(b)(10) of title 11, United States Code, is 
     amended by striking ``nonresidential''.

  Subtitle F--Bankruptcy Relief Less Frequently Available for Repeat 
                                 Filers

     SEC. 171. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.

       Title 11, United States Code, is amended--
       (1) in section 727(a)(8) by striking ``six'' and inserting 
     ``10''; and
       (2) in section 1328 by adding at the end 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 of this title if the 
     debtor has received a discharge in any case filed under 
     this title within 5 years of the order for relief under 
     this chapter.''.

                         Subtitle G--Exemptions

     SEC. 181. EXEMPTIONS.

       Section 522(b)(2)(A) of title 11, United States Code, is 
     amended--
       (1) by striking ``180'' and inserting ``365''; and
       (2) by striking ``, or for a longer portion of such 180-day 
     period than in any other place''.

     SEC. 182. LIMITATION.

       Section 522 of title 11, United States Code, is amended--
       (1) in subsection (b)(2)(A) by inserting ``subject to 
     subsection (n),'' before ``any property''; and
       (2) by adding at the end the following:
       ``(n)(1) Except as provided in paragraph (2), as a result 
     of electing under subsection (b)(2)(A) to exempt property 
     under State or local law, a debtor may not exempt any 
     interest to the extent that such interest exceeds $100,000 in 
     value, in the aggregate, 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) The limitation under paragraph (1) shall not apply to 
     an exemption claimed under subsection (b)(2)(A) by a family 
     farmer for the principal residence of that farmer.''.

                TITLE II--BUSINESS BANKRUPTCY PROVISIONS

                     Subtitle A--General Provisions

     SEC. 201. LIMITATION RELATING TO THE USE OF FEE EXAMINERS.

       Section 330 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) The court may not appoint any person to examine any 
     request for compensation or reimbursement payable under this 
     section.''.

     SEC. 202. 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. 203. CHAPTER 12 MADE PERMANENT LAW.

       Section 302(f) of the Bankruptcy Judges, United States 
     Trustees, and Family Farmer Bankruptcy Act of 1986 (11 U.S.C. 
     1201 note) is repealed.

     SEC. 204. 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. 205. CREDITORS' AND EQUITY SECURITY HOLDERS' COMMITTEES.

       Section 1102(b) of title 11, United States Code, is amended 
     by adding at the end the following:
       ``(3) The court on its own motion or on request of a party 
     in interest, and after notice and a hearing, may order a 
     change in membership of a committee appointed under 
     subsection (a) if necessary to ensure adequate representation 
     of creditors or of equity security holders.''.

     SEC. 206. POSTPETITION DISCLOSURE AND SOLICITATION.

       Section 1125 of title 11, United States Code, is amended by 
     adding at the end the following:

[[Page H4384]]

       ``(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. 207. PREFERENCES.

       Section 547(c) of title 11, United States Code, is 
     amended--
       (1) by amending paragraph (2) to read as follows:
       ``(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 (7) by striking ``or'' at the end;
       (3) in paragraph (8) by striking the period at the end and 
     inserting ``; or''; and
       (4) 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 
     $5000.''.

     SEC. 208. 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. 209. 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 (1), on''; and
       (2) by adding at the end the following:
       ``(2)(A) Such 120-day period may not be extended beyond a 
     date that is 18 months after the date of the order for relief 
     under this chapter.
       ``(B) Such 180-day period may not be extended beyond a date 
     that is 20 months after the date of the order for relief 
     under this chapter.''.

     SEC. 210. PERIOD FOR FILING PLAN UNDER CHAPTER 12.

       (a) Extension of Period.--Section 1221 of title 11, United 
     States Code, is amended by inserting ``to any period not 
     later than 150 days after the order for relief'' after 
     ``period''.
       (b) Relief From the Stay.--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 property 
     under subsection (a) of a debtor in a case under chapter 12, 
     by a creditor whose claim is secured by an interest in such 
     property, unless the debtor has filed a plan in accordance 
     with section 1221.''.
       (c) Special Treatment of Secured Claims.--(1) Chapter 12 of 
     title 11, United States Code, is amended by inserting after 
     section 1231 the following:

     ``Sec. 1232. Special treatment of secured claims

       ``(a)(1) A claim secured by a lien on property of the 
     estate shall be allowed or disallowed under section 502 of 
     this title the same as if the holder of such claim had 
     recourse against the debtor on account of such claim, whether 
     or not such holder has such recourse, unless--
       ``(A) subject to paragraph (2), the holder of such claim 
     elects to apply subsection (b); or
       ``(B) such holder does not have such recourse, and such 
     property is sold under section 363 of this title or is to be 
     sold under the plan.
       ``(2) A holder of a claim may not elect to apply subsection 
     (b) if--
       ``(A) such claim is of inconsequential value; or
       ``(B) the holder of a claim has recourse against the debtor 
     on account of such claim, and such property is sold under 
     section 363 of this title or is to be sold under the plan.
       ``(b) If such an election is made to apply this subsection, 
     then notwithstanding section 506(a) of this title, such claim 
     is a secured claim to the extent such claim is allowed.''.
       (2) The table of sections of chapter 12 of title 11, United 
     States Code, is amended by inserting after the item relating 
     to section 1231 the following:

``1232. Special treatment of secured claims.''.
       

     SEC. 211. CASES ANCILLARY TO FOREIGN PROCEEDINGS INVOLVING 
                   FOREIGN INSURANCE COMPANIES THAT ARE ENGAGED IN 
                   THE BUSINESS OF INSURANCE OR REINSURANCE IN THE 
                   UNITED STATES.

       Section 304 of title 11, United States Code, is amended--
       (1) in subsection (b) by striking ``provisions of 
     subsection (c)'' and inserting ``subsections (c) and (d)''; 
     and
       (2) by adding at the end the following:
       ``(d) The court may not grant to a foreign representative 
     of the estate of an insurance company that is not organized 
     under the law of a State and that is engaged in the business 
     of insurance, or reinsurance, in the United States relief 
     under subsection (b) with respect to property that is--
       ``(1) a deposit required by a State law relating to 
     insurance or reinsurance;
       ``(2) a multibeneficiary trust required by a State law 
     relating to insurance or reinsurance to protect holders of 
     insurance policies issued in the United States or to protect 
     holders or claimants against such policies; or
       ``(3) a multibeneficiary trust authorized by a State law 
     relating to insurance or reinsurance to allow a person 
     engaged in the business of insurance in the United States--
       ``(A) to cede reinsurance to such an insurance company; and
       ``(B) to treat so ceded reinsurance as an asset, or 
     deduction from liability, in financial statements of such 
     person.''.

     SEC. 212. REJECTION OF EXECUTORY CONTRACTS AFFECTING 
                   INTELLECTUAL PROPERTY RIGHTS TO RECORDINGS OF 
                   ARTISTIC PERFORMANCE.

       Section 365(n) of title 11, United States Code, is amended 
     at the end the following:
       ``(5) The rejection by the trustee of an executory contract 
     affecting the intellectual property rights to recordings of 
     artistic performance shall not in any way diminish or impair 
     any applicable nonbankruptcy law rights to enforce 
     noncompetition provision or provisions regarding the 
     rendering of exclusive services as a performing artist that 
     may be contained in such contracts, except that such 
     enforcement shall be subject to the nondebtor party providing 
     to the debtor notice of an offer to perform the contract 
     under all of its original terms. The rights to enforce such 
     noncompetition or exclusivity provision shall not be treated 
     as claims that can be discharged under this title.''.

     SEC. 213. UNEXPIRED LEASES OF NONRESIDENTIAL REAL PROPERTY.

       Section 365(d)(4) of title 11, United States Code, is 
     amended to read as follows:
       ``(4) In a case under any chapter of this title, if the 
     trustee does not assume or reject an unexpired lease of 
     nonresidential real property under which the debtor is the 
     lessee before the earlier of (A) 120 days after the date of 
     the order for relief, or (B) the entry of an order confirming 
     a plan, then such lease is deemed rejected, and the trustee 
     shall immediately surrender such nonresidential real property 
     to the lessor but in no event shall such time period exceed 
     120 days. Notwithstanding the immediately preceding sentence, 
     and provided no plan has been confirmed, upon debtor's 
     motion, and after notice and a hearing, the court may within 
     such 120-day period extend the 120-day period by a period not 
     to exceed 150 days, contingent upon written consent of the 
     affected lessor or with the approval of the court, and 
     provided trustee has timely performed all post-petition lease 
     obligations, but in no circumstance shall such period extend 
     beyond the earlier of (i) 270 days from the date of the order 
     for relief or (ii) the entry of an order approving a 
     disclosure statement, without the consent of the lessor.''.

     SEC. 214. 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;''.

                    Subtitle B--Specific Provisions

                  CHAPTER 1--SMALL BUSINESS BANKRUPTCY

     SEC. 231. DEFINITIONS.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, 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' means--
       ``(A) a person (including affiliates of such person that 
     are also debtors under this title) 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 $5,000,000 (excluding debts owed to 1 or more 
     affiliates or insiders); or
       ``(B) a debtor of the kind described in paragraph (51B) but 
     without regard to the amount of such debtor's debts;

     except that if a group of affiliated debtors has aggregate 
     noncontingent liquidated secured and unsecured debts greater 
     than $5,000,000 (excluding debt owed to 1 or more affiliates 
     or insiders), then no member of such group is a small 
     business debtor;''.
       (b) Conforming Amendment.--Section 1102(a)(3) of title 11, 
     United States Code, is amended by inserting ``debtor'' after 
     ``small business''.

     SEC. 232. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

       Section 1125(f) of title 11, United States Code, is amended 
     to read as follows:
       ``(f) Notwithstanding subsection (b), in a small business 
     case--
       ``(1) 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;
       ``(2) the court may determine that the plan itself provides 
     adequate information and that a separate disclosure statement 
     is not necessary;
       ``(3) the court may approve a disclosure statement 
     submitted on standard forms approved by the court or adopted 
     pursuant to section 2075 of title 28; and
       ``(4)(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

[[Page H4385]]

     less 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. 233. STANDARD FORM DISCLOSURE STATEMENTS AND PLANS.

       The Advisory Committee on Bankruptcy Rules of the Judicial 
     Conference of the United States shall, within a reasonable 
     period of time after the date of the enactment of this Act, 
     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 or bankruptcy administrator, creditors, and other 
     parties in interest for reasonably complete information; and
       (2) economy and simplicity for debtors.

     SEC. 234. UNIFORM NATIONAL REPORTING REQUIREMENTS.

       (a) Reporting Required.--(1) Title 11 of the United States 
     Code is amended by inserting after section 307 the following:

     ``Sec. 308. Debtor reporting requirements

       ``A small business debtor shall file periodic financial and 
     other reports containing information including--
       ``(1) the debtor's profitability, that is, approximately 
     how much money the debtor has been earning or losing during 
     current and recent fiscal periods;
       ``(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) whether the debtor is--
       ``(A) in compliance in all material respects with 
     postpetition requirements imposed by this title and the 
     Federal Rules of Bankruptcy Procedure; and
       ``(B) timely filing tax returns and paying taxes and other 
     administrative claims when due, and, if not, what the 
     failures are and how, at what cost, and when the debtor 
     intends to remedy such failures; and
       ``(5) 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) The table of sections of 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 pursuant to section 2075, 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. 235. UNIFORM REPORTING RULES AND FORMS.

       After consultation with the Director of the Executive for 
     United States Trustees and with the Judicial Conference of 
     the United States, the Attorney General 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 comply with section 308 of title 
     11, United States Code, as added by section 234 of this Act 
     to achieve a practical balance between--
       (1) the reasonable needs of the courts, the United States 
     trustee or bankruptcy administrator, creditors, and other 
     parties in interest for reasonably complete information; and
       (2) economy and simplicity for debtors in cases under such 
     title.

     SEC. 236. DUTIES IN SMALL BUSINESS CASES.

       (a) Duties in Chapter 11 Cases.--Title 11 of the United 
     States Code is amended by inserting after section 1114 the 
     following:

     ``Sec. 1115. 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 within 3 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 of this title;
       ``(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;
       ``(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
       ``(C) subject to section 363(c)(2), establish 1 or more 
     separate deposit accounts not later than 10 business days 
     after the date of order for relief (or as soon thereafter as 
     possible if all banks contacted decline the business) and 
     deposit therein, not later than 1 business day after receipt 
     thereof, all taxes payable for periods beginning after the 
     date the case is commenced that are collected or withheld by 
     the debtor for governmental units; and
       ``(7) allow the United States trustee or bankruptcy 
     administrator, or its designated representative, 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) Technical Amendment.--The table of sections of chapter 
     11, United States Code, is amended by inserting after the 
     item relating to section 1114 the following:

``1115. Duties of trustee or debtor in possession in small business 
              cases.''.

     SEC. 237. PLAN FILING AND CONFIRMATION DEADLINES.

       Section 1121(e) of title 11, United States Code, is amended 
     to read as follows:
       ``(e) In a small business case--
       ``(1) only the debtor may file a plan until after 90 days 
     after the date of the order for relief, unless shortened on 
     request of a party in interest made during the 90-day period, 
     or unless extended as provided by this subsection, after 
     notice and hearing the court, for cause, orders otherwise;
       ``(2) the plan, and any necessary disclosure statement, 
     shall be filed not later than 90 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) of this title, 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 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. 238. 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 150 days after the date of the order for 
     relief unless such 150-day period is extended as provided in 
     section 1121(e)(3) of this title.''.

     SEC. 239. PROHIBITION AGAINST EXTENSION OF TIME.

       Section 105(d) of title 11, United States Code, is 
     amended--
       (1) in paragraph (2)(B)(vi) by striking the period at the 
     end and inserting ``; and''; and
       (2) by adding at the end the following:
       ``(3) in a small business case, not extend the time periods 
     specified in sections 1121(e) and 1129(e) of this title 
     except as provided in section 1121(e)(3) of this title.''.

     SEC. 240. DUTIES OF THE UNITED STATES TRUSTEE AND BANKRUPTCY 
                   ADMINISTRATOR.

       (a) Duties of the United States Trustee.--Section 586(a) of 
     title 28, United States Code, as amended by section 111, is 
     amended--
       (1) in paragraph (3)--
       (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;'',
       (2) in paragraph (6) by striking ``and'' at the end,
       (3) in paragraph (7) by striking the period at the end and 
     inserting ``; and'', and
       (4) by inserting after paragraph (7) the following:
       ``(8) 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 begin to 
     investigate the debtor's viability, inquire about the 
     debtor's business plan, explain the debtor's obligations to 
     file monthly operating reports and other required reports, 
     attempt to develop an agreed scheduling order, and inform the 
     debtor of other obligations;
       ``(B) when 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;
       ``(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
       ``(D) in cases where the United States trustee finds 
     material grounds for any relief under section 1112 of title 
     11 move the court promptly for relief.''.
       (b) Duties of the Bankruptcy Administrator.--In a small 
     business case (as defined in section 101 of title 11 of the 
     United States Code), the bankruptcy administrator shall 
     perform the duties specified in section 586(a)(6) of title 28 
     of the United States Code.

     SEC. 241. SCHEDULING CONFERENCES.

       Section 105(d) of title 11, United States Code, is 
     amended--
       (1) in the matter preceding paragraph (1) by striking ``, 
     may'';
       (2) by amending paragraph (1) to read as follows:
       ``(1) shall hold such status conferences as are necessary 
     to further the expeditious and economical resolution of the 
     case; and''; and

[[Page H4386]]

       (3) in paragraph (2) by striking ``unless inconsistent with 
     another provision of this title or with applicable Federal 
     Rules of Bankruptcy Procedure,'' and inserting ``may''.

     SEC. 242. SERIAL FILER PROVISIONS.

       Section 362 of title 11, United States Code, is amended--
       (1) in subsection (i) as so redesignated by section 124--
       (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, then recovery under paragraph (1) against such 
     entity shall be limited to actual damages.''; and
       (2) by inserting after subsection (i), as redesignated by 
     section 124, the following:
       ``() The filing of a petition under chapter 11 of this 
     title operates as a stay of the acts described in subsection 
     (a) only in an involuntary case involving no collusion by the 
     debtor with creditors and in which the debtor--
       ``(1) is a debtor in a small business case pending at the 
     time the petition is filed;
       ``(2) was a debtor in a small business case which 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;
       ``(3) 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
       ``(4) 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) unless the debtor 
     proves, by a preponderance of the evidence, that the filing 
     of such petition resulted from circumstances beyond the 
     control of the debtor not foreseeable at the time the case 
     then pending was filed; and that it is more likely than not 
     that the court will confirm a feasible plan, but not a 
     liquidating plan, within a reasonable time.''.

     SEC. 243. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND 
                   APPOINTMENT OF TRUSTEE.

       (a) Expanded Grounds for Dismissal or Conversion.--Section 
     1112(b) of title 11, United States Code, is amended to read 
     as follows:
       ``(b)(1) Except as provided in paragraph (2), in subsection 
     (c), and in section 1104(a)(3) of this title, 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 of this title 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) it is more likely than not that a plan will be 
     confirmed within a time as fixed by this title or by order of 
     the court entered pursuant to section 1121(e)(3), or within a 
     reasonable time if no time has been fixed; and
       ``(B) if the reason is an act or omission of the debtor 
     that--
       ``(i) there exists a reasonable justification for the act 
     or omission; and
       ``(ii) the act or omission will be cured within a 
     reasonable time fixed by the court not to exceed 30 days 
     after the court decides the motion, unless the movant 
     expressly consents to a continuance for a specific period of 
     time, or compelling circumstances beyond the control of the 
     debtor justify an extension.
       ``(3) For purposes of this subsection, 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;
       ``(D) unauthorized use of cash collateral harmful to 1 or 
     more creditors;
       ``(E) failure to comply with an order of the court;
       ``(F) 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) of this title 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;
       ``(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 of this title, and denial of confirmation of another 
     plan or of a modified plan under section 1129 of this title;
       ``(M) inability to effectuate substantial consummation of a 
     confirmed plan;
       ``(N) material default by the debtor with respect to a 
     confirmed plan; and
       ``(O) termination of a plan by reason of the occurrence of 
     a condition specified in the plan.
       ``(4) 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 within 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 of this title, but the court determines that the 
     appointment of a trustee is in the best interests of 
     creditors and the estate.''.

                  CHAPTER 2--SINGLE ASSET REAL ESTATE

     SEC. 251. SINGLE ASSET REAL ESTATE DEFINED.

       Section 101(51B) of title 11, United States Code, is 
     amended to read as follows:
       ``(51B) `single asset real estate' means undeveloped real 
     property or other real property constituting a single 
     property or project, other than residential real property 
     with fewer than 4 residential units, on which is located a 
     single development or project which property or project 
     generates substantially all of the gross income of a debtor 
     and on which no substantial business is being conducted by a 
     debtor, or by a commonly controlled group of entities all of 
     which are concurrently debtors in a case under chapter 11 of 
     this title, other than the business of operating the real 
     property and activities incidental thereto;''.

     SEC. 252. 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 amending subparagraph (B) to read as follows:
       ``(B) the debtor has commenced monthly payments (which 
     payments may, in the debtor's sole discretion, 
     notwithstanding section 363(c)(2) of this title, 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), which payments 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''.

               TITLE III--MUNICIPAL BANKRUPTCY PROVISIONS

     SEC. 301. 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 amending the last sentence to read as follows:
       ``(b) The commencement of a voluntary case under a chapter 
     of this title constitutes an order for relief under such 
     chapter.''.

                  TITLE IV--BANKRUPTCY ADMINISTRATION

                     Subtitle A--General Provisions

     SEC. 401. ADEQUATE PREPARATION TIME FOR CREDITORS BEFORE THE 
                   MEETING OF CREDITORS IN INDIVIDUAL CASES.

       Section 341(a) of title 11, United States Code, is amended 
     by inserting after the first sentence the following: ``If the 
     debtor is an individual in a voluntary case under chapter 7, 
     11, or 13, the meeting of creditors shall not be convened 
     earlier than 60 days (or later than 90 days) after the date 
     of the order for relief, unless the court, after notice and 
     hearing, determines unusual circumstances justify an earlier 
     meeting.''.

     SEC. 402. CREDITOR REPRESENTATION AT FIRST MEETING OF 
                   CREDITORS.

       Section 341(c) of title 11, United States Code, is amended 
     by inserting after the first sentence the following: 
     ``Notwithstanding any local court rule, provision of a State 
     constitution, any other State or Federal nonbankruptcy 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 its representatives (which 
     representatives 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. 403. FILING PROOFS OF CLAIM.

       Section 501 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) In a case under chapter 7 or 13, a proof of claim or 
     interest is deemed filed under this section for any claim or 
     interest that appears in the schedules filed under section 
     521(a)(1) of this title, except a claim or interest that is 
     scheduled as disputed, contingent, or unliquidated.''.

     SEC. 404. AUDIT PROCEDURES.

       (a) Amendment.--Section 586 of title 28, United States 
     Code, as amended by sections 111 and 240, is amended--
       (1) by amending subsection (a)(6) to read as follows:
       ``(6) make such reports as the Attorney General directs, 
     including the results of audits performed under subsection 
     (f),'';
       (2) by inserting at the end the following:
       ``(f)(1) The Attorney General shall establish procedures 
     for the auditing of the accuracy and completeness of 
     petitions, schedules, and other information which the debtor 
     is required to provide under sections 521 and 1322, and, if 
     applicable, section 111, of title 11 in individual cases

[[Page H4387]]

     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. Such procedures 
     shall--
       ``(A) establish a method of selecting appropriate qualified 
     persons to contract with the United States trustee to perform 
     such audits;
       ``(B) establish a method of randomly selecting cases to be 
     audited according to generally accepted audit standards, 
     provided that no less than 1 out of every 100 cases in each 
     Federal judicial district shall be selected for audit;
       ``(C) require audits for schedules of income and expenses 
     which reflect higher than average variances from the 
     statistical norm of the district in which the schedules were 
     filed;
       ``(D) establish procedures for reporting the results of 
     such audits and any material misstatement of income, 
     expenditures or assets of a debtor to the Attorney General, 
     the United States Attorney and the court, as appropriate, and 
     for providing public information no less than annually on the 
     aggregate results of such audits including the percentage of 
     cases, by district, in which a material misstatement of 
     income or expenditures is reported; and
       ``(E) establish procedures for fully funding such audits.
       ``(2) The United States trustee for each district is 
     authorized to contract with auditors to perform audits in 
     cases designated by the United States trustee according to 
     the procedures established under paragraph (1) of this 
     subsection.
       ``(3) According to procedures established under paragraph 
     (1), upon request of a duly appointed auditor, the debtor 
     shall cause the accounts, papers, documents, financial 
     records, files and all other papers, things or property 
     belonging to the debtor as the auditor requests and which are 
     reasonably necessary to facilitate an audit to be made 
     available for inspection and copying.
       ``(4) The report of each such audit shall be filed with the 
     court, the Attorney General, and the United States Attorney, 
     as required under procedures established by the Attorney 
     General under paragraph (1). If a material misstatement of 
     income or expenditures or of assets is reported, a statement 
     specifying such misstatement shall be filed with the court 
     and the United States trustee shall give notice thereof to 
     the creditors in the case and, in an appropriate case, in the 
     opinion of the United States trustee, requires investigation 
     with respect to possible criminal violations, the United 
     States Attorney for the district.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect 18 months after the date of the enactment 
     of this Act.

     SEC. 405. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13 
                   CASES.

       Section 342 of title 11, United States Code, is amended--
       (1) in subsection (c)--
       (A) by striking ``, but the failure of such notice to 
     contain such information shall not invalidate the legal 
     effect of such notice''; and
       (B) by adding the following at the end:
     ``If the credit agreement between the debtor and the creditor 
     or the last communication before the filing of the petition 
     in a voluntary case from the creditor to a debtor who is an 
     individual states an account number of the debtor which is 
     the current account number of the debtor with respect to any 
     debt held by the creditor against the debtor, the debtor 
     shall include such account number in any notice to the 
     creditor required to be given under this title. If the 
     creditor has specified to the debtor an address at which the 
     creditor wishes to receive correspondence regarding the 
     debtor's account, any notice to the creditor required to be 
     given by the debtor under this title shall be given at such 
     address. For the purposes of this section, `notice' shall 
     include, but shall not be limited to, any correspondence from 
     the debtor to the creditor after the commencement of the 
     case, any statement of the debtor's intention under section 
     521(a)(2) of this title, notice of the commencement of any 
     proceeding in the case to which the creditor is a party, and 
     any notice of the hearing under section 1324.'';
       (2) by adding at the end the following:
       ``(d) 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.
       ``(e) 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 (d) with respect to a particular case.
       ``(f) Notice given to a creditor other than as provided in 
     this section shall not be effective notice until it has been 
     brought to the attention of the creditor. If the creditor has 
     designated a person or department to be responsible for 
     receiving notices concerning bankruptcy cases and has 
     established reasonable procedures so that bankruptcy notices 
     received by the creditor will be delivered to such department 
     or person, notice will not be brought to the attention of the 
     creditor until received by such person or department. No 
     sanction under section 362(h) of this title or any other 
     sanction which a court may impose on account of violations of 
     the stay under section 362(a) of this title or failure to 
     comply with section 542 or 543 of this title 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.''.

     SEC. 406. DEBTOR TO PROVIDE TAX RETURNS AND OTHER 
                   INFORMATION.

       Section 521 of title 11, United States Code, is amended--
       (1) by inserting ``(a)'' before ``The'';
       (2) by amending paragraph (1) to read as follows:
       ``(1) file--
       ``(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;
       ``(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 prior to the filing of the 
     petition;
       ``(v) a statement of the amount of projected monthly net 
     income, itemized to show how calculated;
       ``(vi) if applicable, any statement under paragraphs (3) 
     and (4) of section 109(h);
       ``(vii) a statement disclosing any reasonably anticipated 
     increase in income or expenditures over the next 12 months; 
     and
       ``(viii) a certificate, if applicable--

       ``(I) of an attorney whose name is on the petition as the 
     attorney for the debtor, or of any bankruptcy petition 
     preparer who signed the petition pursuant to section 
     110(b)(1) of this title, indicating that such attorney or 
     bankruptcy petition preparer delivered to the debtor any 
     notice required by section 342(b)(1) of this title; 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;''; and

       (3) by adding at the end the following:
       ``(b) 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 notice that the creditor requests the 
     petition, schedules, and statement of financial affairs filed 
     by the debtor in the case. At any time, a creditor in a case 
     under chapter 13 of this title may file with the court and 
     serve on the debtor notice that the creditor requests the 
     plan filed by the debtor in the case. Within 10 days of the 
     first such request in a case under this subsection for the 
     petition, schedules, and statement of financial affairs and 
     the first such request for the plan under this subsection, 
     the debtor shall serve on that creditor a conformed copy of 
     the requested documents or plan and any amendments thereto as 
     of that date, and shall thereafter promptly serve on that 
     creditor at the time filed with the court--
       ``(1) any requested document or plan which is not filed 
     with the court at the time requested; and
       ``(2) any amendment to any requested document or plan.
       ``(c)(1) An individual debtor in a case under chapter 7 or 
     13 shall provide to the United States trustee--
       ``(A) copies of all Federal tax returns (including any 
     schedules and attachments) filed by the debtor for the 3 most 
     recent tax years preceding the order for relief;
       ``(B) at the time the debtor files them with the 
     Commissioner of Internal Revenue, all Federal tax returns 
     (including any schedules and attachments) for the debtor's 
     tax years ending while such case is pending; and
       ``(C) at the time the debtor files them with the 
     Commissioner of Internal Revenue, all amendments to the tax 
     returns (including schedules and attachments) described in 
     subparagraphs (A) and (B).
       ``(2)(A) The United States trustee shall make such Federal 
     tax returns (including schedules, attachments, and 
     amendments) available to any party in interest for inspection 
     and copying not later than 10 days after receiving a request 
     by such party.
       ``(B) If the United States trustee does not comply with 
     subparagraph (A), on the motion of such party, the court 
     shall issue an order compelling the United States trustee to 
     comply with subparagraph (A).
       ``(d) A debtor in a case under chapter 13 of this title 
     shall file, from a time which 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 then been confirmed, and 
     thereafter on or before 45 days before each anniversary of 
     the confirmation of the plan until the case is closed, 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 net income, showing how calculated. Such 
     statement shall disclose the amount and sources of income of 
     the debtor, the identity of any persons responsible with the 
     debtor for the support of any dependents of the debtor, and 
     any persons who contributed and the amount contributed to the 
     household in which the debtor resides. Such tax returns, 
     amendments and statement of income and expenditures shall be 
     available to the United States trustee, any bankruptcy 
     administrator, any trustee and any party in interest for 
     inspection and copying.''.

     SEC. 407. DISMISSAL FOR FAILURE TO FILE SCHEDULES TIMELY OR 
                   PROVIDE REQUIRED INFORMATION.

       Section 521 of title 11, United States Code, as amended by 
     section 406, is amended by adding at the end the following:
       ``(e) Notwithstanding section 707(a) of this title, if an 
     individual debtor in a voluntary case under chapter 7 or 13 
     fails to provide all of the information required under 
     subsections (a)(1) and (c)(1)(A) within 45 days after the 
     filing of the petition, the case shall be automatically 
     dismissed effective on the 46th day after the filing of the 
     petition without the need for any order of court, but any 
     party in interest may request the court to enter an order 
     dismissing the case and the court shall, if so requested, 
     enter an order of dismissal within 5 days of such request. 
     Upon request of the debtor made within 45 days after

[[Page H4388]]

     the filing of the petition, the court may allow the debtor up 
     to an additional 15 days to provide the information required 
     under subsections (a)(1) and (c)(1)(A) if the court finds 
     compelling justification for doing so.
       ``(f) If an individual debtor in a case under chapter 7 or 
     13 fails to perform any of the duties imposed by subsections 
     (b), (c)(1)(B), (c)(1)(C), and (d), any party in interest may 
     request that the court order the debtor to comply. Within 10 
     days of such request the court shall order that the debtor do 
     so within a period of time set by the court no longer than 30 
     days. If the debtor does not comply with that order within 
     the period of time set by the court, the court shall, on 
     request of any party in interest certifying that the debtor 
     has not so complied, enter an order dismissing the case 
     within 5 days of such request.''.

     SEC. 408. 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 meeting of creditors under section 341(a) of this 
     title.''.

     SEC. 409. 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) If the total current monthly income of the debtor and 
     in a joint case, the debtor and the debtor's spouse combined, 
     is not less than the highest national median family income 
     reported for a family of equal or lesser size or, in the case 
     of a household of 1 person, not less than the national median 
     household income for 1 earner, the plan may not provide for 
     payments over a period that is longer than 5 years, unless 
     the court, for cause, approves a longer period, but the court 
     may not approve a period that exceeds 7 years. If the total 
     current monthly income of the debtor or in a joint case, the 
     debtor and the debtor's spouse combined, is less than the 
     highest national median family income reported for a family 
     of equal or lesser size, or in the case of a household of 1 
     person less than the national median household income for 1 
     earner, 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 1329--
       (A) by striking in subsection (c) ``three years'' and 
     inserting ``the applicable commitment period under section 
     1325(b)(1)(B)(ii)'' and by striking ``five years'' and 
     inserting ``maximum duration period''; and
       (B) by inserting at the end of subsection (c) the 
     following:

     ``The maximum duration period shall be 5 years if the total 
     current monthly income of the debtor, and in a joint case, 
     the debtor and the debtor's spouse combined, is not less than 
     the highest national median family income reported for a 
     family of equal or lesser size or, in the case of a household 
     of 1 person, not less than the national median household 
     income for 1 earner, as of the date of the modification and 
     shall be 3 years if the total current monthly income is less 
     than the highest national median family income reported for a 
     family of equal or lesser size or, in the case of a household 
     of 1 person, less than the national median household income 
     for 1 earner as of the date of the modification.''.

     SEC. 410. SENSE OF THE CONGRESS REGARDING EXPANSION OF RULE 
                   9011 OF THE FEDERAL RULES OF BANKRUPTCY 
                   PROCEDURE.

       It is the sense of the 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 well grounded in fact, and is warranted by 
     existing law or a good-faith argument for the extension, 
     modification, or reversal of existing law.

     SEC. 411. JURISDICTION OF COURTS OF APPEALS.

       (a) Jurisdiction.--Title 28 of the United States Code is 
     amended--
       (1) by striking section 158;
       (2) by inserting after section 1292 the following:

     ``Sec. 1293. Bankruptcy appeals

       ``The courts of appeals (other the United States Court of 
     Appeals for the Federal Circuit) shall have jurisdiction of 
     appeals from the following:
       ``(1) Final orders and judgments of bankruptcy courts 
     entered under--
       ``(A) section 157(b) of this title in core proceedings 
     arising under title 11, or arising in or related to a case 
     under title 11; or
       ``(B) section 157(c)(2) of this title in proceedings 
     referred to such courts.
       ``(2) Final orders and judgments of district courts entered 
     under section 157 of this title in--
       ``(A) core proceedings arising under title 11, or arising 
     in or related to a case under title 11; or
       ``(B) proceedings that are not core proceedings, but that 
     are otherwise related to a case under title 11.
       ``(3) Orders and judgments of bankruptcy courts or district 
     courts entered under section 105 of title 11, or the refusal 
     to enter an order or judgment under such section.
       ``(4) Orders of bankruptcy courts or district courts 
     entered under section 1104(a) or 1121(d) of title 11, or the 
     refusal to enter an order under such section.
       ``(5) An interlocutory order of a bankruptcy court or 
     district court entered in a case under title 11, in a 
     proceeding arising under title 11, or in a proceeding arising 
     in or related to a case under title 11, if--
       ``(A) such court is of the opinion that--
       ``(i) such order involves a controlling question of law as 
     to which there is substantial ground for difference of 
     opinion; and
       ``(ii) an immediate appeal from such order may materially 
     advance the ultimate termination of such case or such 
     proceeding; or
       ``(B) the court of appeals that would have jurisdiction of 
     an appeal of a final order entered in such case or such 
     proceeding permits, in its discretion, appeal to be taken 
     from such interlocutory order.''; and
       (3) in--
       (A) the table of sections for chapter 6 by striking the 
     item relating to section 158; and
       (B) the table of sections for chapter 83 by inserting after 
     the item relating to section 1292 the following:

``1293. Bankruptcy appeals.''.

       (b) Conforming Amendments.--(1) Section 305(c) of title 11, 
     the United States Code, is amended by striking ``158(d), 
     1291, or 1292'' and inserting ``1291, 1292, or 1293''.
       (2) Title 28, United States Code, is amended--
       (A) in subsections (b)(1) and (c)(2) of section 157 by 
     striking ``section 158'' and inserting ``section 1293'';
       (B) in section 1334(d) by striking ``158(d), 1291, or 
     1292'' and inserting ``1291, 1292, or 1293''; and
       (C) in section 1452(b) by striking ``158(d), 1291, or 
     1292'' and inserting ``1291, 1292, or 1293''.

     SEC. 412. ESTABLISHMENT OF OFFICIAL FORMS.

       The Judicial Conference of the United States shall 
     establish official forms to facilitate compliance with the 
     amendments made by sections 101 and 102.

     SEC. 413. ELIMINATION OF CERTAIN FEES PAYABLE IN CHAPTER 11 
                   BANKRUPTCY CASES.

       (a) Amendments.--Section 1930(a)(6) of title 28, United 
     States Code, is amended--
       (1) in the 1st sentence by striking ``until the case is 
     converted or dismissed, whichever occurs first'', and
       (2) in the 2d sentence--
       (A) by striking ``The'' and inserting ``Until the plan is 
     confirmed or the case is converted (whichever occurs first) 
     the'', and
       (B) by striking ``less than $300,000;'' and inserting 
     ``less than $300,000. Until the case is converted or 
     dismissed (whichever occurs first and without regard to 
     confirmation of the plan) the fee shall be''.
       (b) Delayed Effective Date.--The amendments made by 
     subsection (a) shall take effect on October 1, 1999.

                      Subtitle B--Data Provisions

     SEC. 441. IMPROVED BANKRUPTCY STATISTICS.

       (a) Amendment.--Title 28, United States Code, is amended by 
     adding after section 158 the following new section:

     ``Sec. 159. Bankruptcy statistics

       ``The Director of the Executive Office for United States 
     Trustees shall compile statistics regarding individual 
     debtors with primarily consumer debts seeking relief under 
     chapters 7, 11, and 13 of title 11. Such statistics shall be 
     in a form prescribed by the Administrative Office of the 
     United States Courts. The Office shall compile such 
     statistics, and make them public, and report annually to the 
     Congress on the information collected, and on its analysis 
     thereof, no later than October 31 of each year. Such 
     compilation shall be itemized by chapter of title 11, shall 
     be presented in the aggregate and for each district, and 
     shall include the following:
       ``(1) Total assets and total liabilities of such debtors, 
     and in each category of assets and liabilities, as reported 
     in the schedules prescribed pursuant to section 2075 of this 
     title and filed by such debtors.
       ``(2) The current total monthly income, projected monthly 
     net income, and average income and average expenses of such 
     debtors as reported on the schedules and statements the 
     debtor has filed under sections 111, 521, and 1322 of title 
     11.
       ``(3) 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.
       ``(4) The average time between the filing of the petition 
     and the closing of the case.
       ``(5) The number of cases in the reporting period in which 
     a reaffirmation was filed and the total number of 
     reaffirmations filed in that period, and of those cases in 
     which a reaffirmation was filed, the number in which the 
     debtor was not represented by an attorney, and of those the 
     number of cases in which the reaffirmation was approved by 
     the court.
       ``(6) With respect to cases filed under chapter 13 of title 
     11--
       ``(A) the number of cases in which a final order was 
     entered determining the value of property securing a claim 
     less than the claim, and the total number of such orders in 
     the reporting period; and
       ``(B) the number of cases dismissed for failure to make 
     payments under the plan.
       ``(7) The number of cases in which the debtor filed another 
     case within the 6 years previous to the filing.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 18 months after the date of the enactment 
     of this Act.

[[Page H4389]]

     SEC. 442. BANKRUPTCY DATA.

       (a) Amendment.--Title 28 of the United States Code is 
     amended by inserting after section 589a 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.--All reports 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 1 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; and
       ``(2) economy, simplicity, and lack of undue burden on 
     persons with a duty to file reports.
       ``(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;
       ``(2) assets abandoned;
       ``(3) assets exempted;
       ``(4) receipts and disbursements of the estate;
       ``(5) expenses of administration;
       ``(6) claims asserted;
       ``(7) claims allowed; and
       ``(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 at the date of the 
     order for relief and at 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, in 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) Technical Amendment.--The table of sections of chapter 
     39 of title 28, United States Code, is amended by adding at 
     the end the following:

``589b. Bankruptcy data.''.

     SEC. 443. SENSE OF THE CONGRESS REGARDING AVAILABILITY OF 
                   BANKRUPTCY DATA.

       It is the sense of the 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 of the 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 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 V--TAX PROVISIONS

     SEC. 501. 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), after ``507(a)(1)'', insert 
     ``(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)''; 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) of this 
     title, 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 
     set forth in this section and subject to the requirements of 
     subsection (e)--
       ``(1) claims for wages, salaries, and commissions that are 
     entitled to priority under section 507(a)(3) of this title; 
     or
       ``(2) claims for contributions to an employee benefit plan 
     entitled to priority under section 507(a)(4) of this title,
     may be paid from property of the estate which secures a tax 
     lien, or the proceeds of such property.''.
       (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. 502. ENFORCEMENT OF CHILD AND SPOUSAL SUPPORT.

       Section 522(c)(1) of title 11, United States Code, is 
     amended by inserting ``, except that, notwithstanding any 
     other Federal law or State law relating to exempted property, 
     exempt property shall be liable for debts of a kind specified 
     in paragraph (1) or (5) of section 523(a) of this title'' 
     before the semicolon at the end.

     SEC. 503. EFFECTIVE NOTICE TO GOVERNMENT.

       (a) Effective Notice to Governmental Units.--Section 342 of 
     title 11, United States Code, as amended by section 405, is 
     amended by adding at the end the following:
       ``(g) If a debtor lists a governmental unit as a creditor 
     in a list or schedule, any notice required to be given by the 
     debtor under this title, any rule, any applicable law, or any 
     order of the court, shall identify the department, agency, or 
     instrumentality through which the debtor is indebted. The 
     debtor shall identify (with information such as a taxpayer 
     identification number, loan, account or contract number, or 
     real estate parcel number, where applicable), and describe 
     the underlying basis for the governmental unit's claim. If 
     the debtor's liability to a governmental unit arises from a 
     debt or obligation owed or incurred by another individual, 
     entity, or organization, or under a different name, the 
     debtor shall identify such individual, entity, organization, 
     or name.
       ``(h) The clerk shall keep and update quarterly, in the 
     form and manner as the Director of the Administrative Office 
     of the United States Courts prescribes, and make available to 
     debtors, a register in which a governmental unit may 
     designate a safe harbor mailing address for service of notice 
     in cases pending in the district. A governmental unit may 
     file a statement with the clerk designating a safe harbor 
     address to which notices are to be sent, unless such 
     governmental unit files a notice of change of address.''.
       (b) Adoption of Rules Providing Notice.--The Advisory 
     Committee on Bankruptcy Rules of the Judicial Conference 
     shall, within a reasonable period of time after the date of 
     the enactment of this Act, propose for adoption enhanced 
     rules for providing notice to State, Federal, and local 
     government units that have regulatory authority over the 
     debtor or which may be creditors in the debtor's case. Such 
     rules shall be reasonably calculated to ensure that notice 
     will reach the representatives of the governmental unit, or 
     subdivision thereof, who will be the proper persons 
     authorized to act upon the notice. At a minimum, the rules 
     should require that the debtor--
       (1) identify in the schedules and the notice, the 
     subdivision, agency, or entity in respect of which such 
     notice should be received;
       (2) provide sufficient information (such as case captions, 
     permit numbers, taxpayer identification numbers, or similar 
     identifying information) to permit the governmental unit or 
     subdivision thereof, entitled to receive such notice, to 
     identify the debtor or the person or entity on behalf of 
     which the debtor is providing notice where the debtor may be 
     a successor in interest or may not be the same as the person 
     or entity which incurred the debt or obligation; and
       (3) identify, in appropriate schedules, served together 
     with the notice, the property in respect of which the claim 
     or regulatory obligation may have arisen, if any, the nature 
     of such claim or regulatory obligation and the purpose for 
     which notice is being given.
       (c) Effect of Failure of Notice.--Section 342 of title 11, 
     United States Code, as amended by subsection (a) and section 
     405, is amended by adding at the end the following:
       ``(i)(1) A notice that does not comply with subsections (d) 
     and (e) shall have no effect unless the debtor demonstrates, 
     by clear and convincing evidence, that timely notice was 
     given in a manner reasonably calculated to satisfy the 
     requirements of this section was given, and that--

[[Page H4390]]

       ``(A) either the notice was timely sent to the safe harbor 
     address provided in the register maintained by the clerk of 
     the district in which the case was pending for such purposes; 
     or
       ``(B) no safe harbor address was provided in such list for 
     the governmental unit and that an officer of the governmental 
     unit who is responsible for the matter or claim had actual 
     knowledge of the case in sufficient time to act.
       ``(2) No sanction under section 362(h) of this title or any 
     other sanction which a court may impose on account of 
     violations of the stay under section 362(a) of this title or 
     failure to comply with section 542 or 543 of this title may 
     be imposed unless the action takes place after notice of the 
     commencement of the case as required by this section has been 
     received.''.

     SEC. 504. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

       Section 505(b) of title 11, United States Code, is amended 
     by striking ``Unless'' at the beginning of the second 
     sentence thereof and inserting ``If the request is made in 
     the manner designated by the governmental unit and unless''.

     SEC. 505. RATE OF INTEREST ON TAX CLAIMS.

       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

       ``Notwithstanding any provision of this title that requires 
     the payment of interest on a claim, if interest is required 
     to be paid on a tax claim, the rate of interest shall be as 
     follows:
       ``(1) In the case of ad valorem tax claims, whether secured 
     or unsecured, other unsecured tax claims where interest is 
     required to be paid under section 726(a)(5) of this title and 
     secured tax claims the rate shall be determined under 
     applicable nonbankruptcy law.
       ``(2) In the case of unsecured claims for taxes arising 
     before the date of the order for relief and paid under a plan 
     of reorganization, the minimum rate of interest to be applied 
     during the period after the filing of the petition shall be 
     the Federal short-term rate rounded to the nearest full 
     percent, determined under section 1274(d) of the Internal 
     Revenue Code of 1986, for the calendar month in which the 
     plan is confirmed, plus 3 percentage points.''.

     SEC. 506. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.

       Section 507(a)(9)(A) of title 11, United States Code, as so 
     redesignated, is amended--
       (1) in clause (i) by inserting after ``petition'' and 
     before the semicolon ``, plus any time, plus 6 months, during 
     which the stay of proceedings was in effect in a prior case 
     under this title''; and
       (2) amend clause (ii) to read as follows:
       ``(ii) assessed within 240 days before the date of the 
     filing of the petition, exclusive of--

       ``(I) any time plus 30 days during which an offer in 
     compromise with respect of such tax, was pending or in effect 
     during such 240-day period;
       ``(II) any time plus 30 days during which an installment 
     agreement with respect of such tax was pending or in effect 
     during such 240-day period, up to 1 year; and
       ``(III) any time plus 6 months during which a stay of 
     proceedings against collections was in effect in a prior case 
     under this title during such 240-day period.''.

     SEC. 507. ASSESSMENT DEFINED.

       (a) Assessment Defined for Priority Purposes.--Section 101 
     of title 11, United States Code, is amended by inserting 
     after paragraph (2) the following:
       ``(3) `assessment'--
       ``(A) for purposes of State and local taxes, means that 
     point in time when all actions required have been taken so 
     that thereafter a taxing authority may commence an action to 
     collect the tax, and
       ``(B) for Federal tax purposes has the meaning given such 
     term in the Internal Revenue Code of 1986;

     and `assessed' and `assessable' shall be interpreted in light 
     of the definition of assessment in this paragraph;''.
       (b) Assessment Defined for the Stay of Proceedings.--
     Section 362(b)(9)(D) of title 11, United States Code, is 
     amended by inserting after ``the making of an assessment'' 
     the following: ``as defined by applicable nonbankruptcy law 
     notwithstanding the definition of an `assessment' elsewhere 
     in this title''.

     SEC. 508. CHAPTER 13 DISCHARGE OF FRAUDULENT AND OTHER TAXES.

       Section 1328(a)(2) of title 11, United States Code, is 
     amended by inserting ``(1),'' after ``paragraph''.

     SEC. 509. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

       Section 1141(d) of title 11, United States Code, as amended 
     by section 119A, is amended by adding at the end the 
     following:
       ``(6) Notwithstanding the provisions of paragraph (1), the 
     confirmation of a plan does not discharge a debtor which is a 
     corporation from any debt for a tax or customs duty with 
     respect to which the debtor made a fraudulent return or 
     willfully attempted in any manner to evade or defeat such 
     tax.''.

     SEC. 510. THE STAY OF TAX PROCEEDINGS.

       (a) The Section 362 Stay Limited to Prepetition Taxes.--
     Section 362(a)(8) of title 11, United States Code, is amended 
     by striking the period at the end and inserting ``, in 
     respect of a tax liability for a taxable period ending before 
     the order for relief.''.
       (b) The Appeal of Tax Court Decisions Permitted.--Section 
     362(b)(9) of title 11, United States Code, is amended--
       (1) in subparagraph (C) by striking ``or'' at the end,
       (2) in subparagraph (D) by striking the period at the end 
     and inserting ``; or'', and
       (3) by adding at the end the following:
       ``(E) the appeal of a decision by a court or administrative 
     tribunal which determines a tax liability of the debtor 
     without regard to whether such determination was made 
     prepetition or postpetition.''.

     SEC. 511. 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; and
       (2) in subparagraph (C)--
       (A) by striking ``deferred cash payments, over a period not 
     exceeding six years after the date of assessment of such 
     claim,'' and inserting ``regular installment payments in 
     cash, but in no case with a balloon provision, and no more 
     than three months apart, beginning no later than the 
     effective date of the plan and ending on the earlier of five 
     years after the petition date or the last date payments are 
     to be made under the plan to unsecured creditors,'';
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following:
       ``(D) with respect to a secured claim which would be 
     described in section 507(a)(8) of this title but for its 
     secured status, the holder of such claim will receive on 
     account of such claim cash payments of not less than is 
     required in subparagraph (C) and over a period no greater 
     than is required in such subparagraph.''.

     SEC. 512. THE AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

       Section 545(2) of title 11, United States Code, is amended 
     by striking the semicolon at the end and inserting ``, except 
     where such purchaser is a purchaser described in section 6323 
     of the Internal Revenue Code of 1986 or similar provision of 
     State or local law;''.

     SEC. 513. 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) Such taxes shall be paid when due in the conduct of 
     such business unless--
       ``(1) the tax is a property tax secured by a lien against 
     property that is abandoned within a reasonable time after the 
     lien attaches, by the trustee of a bankruptcy estate, 
     pursuant to 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, the court has made 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 such tax.''.
       (b) Payment of Ad Valorem Taxes Required.--Section 
     503(b)(1)(B) of title 11, United States Code, is amended in 
     clause (i) by inserting after ``estate,'' and before 
     ``except'' the following: ``whether secured or unsecured, 
     including property taxes for which liability is in rem only, 
     in personam or both,''.
       (c) Request for Payment of Administrative Expense Taxes 
     Eliminated.--Section 503(b)(1) of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(D) notwithstanding the requirements of subsection (a) of 
     this section, a governmental unit shall not be required to 
     file a request for the payment of a claim described in 
     subparagraph (B) or (C);''.
       (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 in respect of the 
     property'' before the period at the end.

     SEC. 514. 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 
     ``on or before the earlier of 10 days after the mailing to 
     creditors of the summary of the trustee's final report or the 
     date on which the trustee commences final distribution under 
     this section''.

     SEC. 515. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

       Section 523(a)(1)(B) of title 11, United States Code, is 
     amended--
       (1) by inserting ``or equivalent report or notice,'' after 
     ``a return,'';
       (2) in clause (i)--
       (A) by inserting ``or given'' after ``filed''; and
       (B) by striking ``or'' at the end;
       (3) in clause (ii)--
       (A) by inserting ``or given'' after ``filed'';
       (B) by inserting ``, report, or notice'' after ``return''; 
     and
       (4) by adding at the end the following:
       ``(iii) for purposes of this subsection, a return--

       ``(I) must satisfy the requirements of applicable 
     nonbankruptcy law, and 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 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 similar State or local law, 
     and
       ``(II) must have been filed in a manner permitted by 
     applicable nonbankruptcy law; or''.

     SEC. 516. THE DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID 
                   TAXES.

       Section 505(b) of title 11, United States Code, is amended 
     in the second sentence by inserting ``the estate,'' after 
     ``misrepresentation,''.

[[Page H4391]]

     SEC. 517. 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 section 146, is amended--
       (1) in paragraph (6) by striking ``and'' at the end;
       (2) in paragraph (7) by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(8) if the debtor has filed all Federal, State, and local 
     tax returns as required by section 1308 of this title.''.
       (b) Additional Time Permitted for Filing Tax Returns.--(1) 
     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) On or before the day prior to the day on which the 
     first meeting of the creditors is convened under section 
     341(a) of this title, the debtor shall have filed with 
     appropriate tax authorities all tax returns for all taxable 
     periods ending in the 6-year period ending on the date of 
     filing of the petition.
       ``(b) If the tax returns required by subsection (a) have 
     not been filed by the date on which the first meeting of 
     creditors is convened under section 341(a) of this title, the 
     trustee may continue such meeting for a reasonable period of 
     time, to allow the debtor additional time to file any unfiled 
     returns, but such additional time shall be no more than--
       ``(1) for returns that are past due as of the date of the 
     filing of the petition, 120 days from such date,
       ``(2) for returns which are not past due as of the date of 
     the filing of the petition, the later of 120 days from such 
     date or the due date for such returns under the last 
     automatic extension of time for filing such returns to which 
     the debtor is entitled, and for which request has been timely 
     made, according to applicable nonbankruptcy law, and
       ``(3) upon notice and hearing, and order entered before the 
     lapse of any deadline fixed according to this subsection, 
     where the debtor demonstrates, by clear and convincing 
     evidence, that the failure to file the returns as required is 
     because of circumstances beyond the control of the debtor, 
     the court may extend the deadlines set by the trustee as 
     provided in this subsection for--
       ``(A) a period of no more than 30 days for returns 
     described in paragraph (1) of this subsection, and
       ``(B) for no more than the period of time ending on the 
     applicable extended due date for the returns described in 
     paragraph (2).
       ``(c) For purposes of this section only, a return includes 
     a return prepared pursuant to section 6020 (a) or (b) of the 
     Internal Revenue Code of 1986 or similar State or local law, 
     or a written stipulation to a judgment entered by a 
     nonbankruptcy tribunal.''.
       (2) The table of sections 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 tax returns 
     under section 1308 of this title, 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 interests of creditors and the 
     estate.''.
       (d) Timely Filed Claims.--Section 502(b)(9) of title 11, 
     United States Code, is amended by striking the period at the 
     end and inserting ``, and except that in a case under chapter 
     13 of this title, a claim of a governmental unit for a tax in 
     respect of a return filed under section 1308 of this title 
     shall be timely if it is filed on or before 60 days after 
     such return or returns were 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 should, within a 
     reasonable period of time after the date of the 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, a 
     governmental unit may object to the confirmation of a plan on 
     or before 60 days after the debtor files all tax returns 
     required under sections 1308 and 1325(a)(7) of title 11, 
     United States Code, 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 in respect of a return required to be 
     filed under such section 1308 shall be filed until such 
     return has been filed as required.

     SEC. 518. STANDARDS FOR TAX DISCLOSURE.

       Section 1125(a) of title 11, United States Code, is amended 
     in paragraph (1)--
       (1) by inserting after ``records,'' the following: 
     ``including a full discussion of the potential material 
     Federal, State, and local tax consequences of the plan to the 
     debtor, any successor to the debtor, and a hypothetical 
     investor domiciled in the State in which the debtor resides 
     or has its principal place of business typical of the holders 
     of claims or interests in the case,'',
       (2) by inserting ``such'' after ``enable'', and
       (3) by striking ``reasonable'' where it appears after 
     ``hypothetical'' and by striking ``typical of holders of 
     claims or interests'' after ``investor''.

     SEC. 519. SETOFF OF TAX REFUNDS.

       Section 362(b) of title 11, United States Code, as amended 
     by sections 130, 146, and 150 is amended--
       (1) in paragraph (21) by striking ``or'',
       (2) in paragraph (22) by striking the period at the end and 
     inserting ``; or'', and
       (3) by inserting after paragraph (22) (as so redesignated) 
     the following:
       ``(23) under subsection (a) of the setoff of an income tax 
     refund, by a governmental unit, in respect of a taxable 
     period which ended before the order for relief against an 
     income tax liability for a taxable period which also ended 
     before the order for relief, unless--
       ``(A) prior to such setoff, an action to determine the 
     amount or legality of such tax liability under section 505(a) 
     was commenced; or
       ``(B) where the setoff of an income tax refund is not 
     permitted 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.''.

            TITLE VI--ANCILLARY AND OTHER CROSS-BORDER CASES

     SEC. 601. AMENDMENT TO ADD A CHAPTER 6 TO TITLE 11, UNITED 
                   STATES CODE.

       (a) In General.--Title 11, United States Code, is amended 
     by inserting after chapter 5 the following:

          ``CHAPTER 6--ANCILLARY AND OTHER CROSS-BORDER CASES

``Sec.
``601. Purpose and scope of application.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``602. Definitions.
``603. International obligations of the United States.
``604. Commencement of ancillary case.
``605. Authorization to act in a foreign country.
``606. Public policy exception.
``607. Additional assistance.
``608. Interpretation.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

``609. Right of direct access.
``610. Limited jurisdiction.
``611. Commencement of bankruptcy case under section 301 or 303.
``612. Participation of a foreign representative in a case under this 
              title.
``613. Access of foreign creditors to a case under this title.
``614. Notification to foreign creditors concerning a case under this 
              title.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

``615. Application for recognition of a foreign proceeding.
``616. Presumptions concerning recognition.
``617. Order recognizing a foreign proceeding.
``618. Subsequent information.
``619. Relief that may be granted upon petition for recognition of a 
              foreign proceeding.
``620. Effects of recognition of a foreign main proceeding.
``621. Relief that may be granted upon recognition of a foreign 
              proceeding.
``622. Protection of creditors and other interested persons.
``623. Actions to avoid acts detrimental to creditors.
``624. Intervention by a foreign representative.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

``625. Cooperation and direct communication between the court and 
              foreign courts or foreign representatives.
``626. Cooperation and direct communication between the trustee and 
              foreign courts or foreign representatives.
``627. Forms of cooperation.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``628. Commencement of a case under this title after recognition of a 
              foreign main proceeding.
``629. Coordination of a case under this title and a foreign 
              proceeding.
``630. Coordination of more than 1 foreign proceeding.
``631. Presumption of insolvency based on recognition of a foreign main 
              proceeding.
``632. Rule of payment in concurrent proceedings.

     ``Sec. 601. 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;

[[Page H4392]]

       ``(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 identified by 
     exclusion in subsection 109(b); or
       ``(2) an individual, or to an individual and such 
     individual's spouse, who have debts within the limits 
     specified in under section 109(e) and who are citizens of the 
     United States or aliens lawfully admitted for permanent 
     residence in the United States.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

     ``Sec. 602. 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 
     chapters 9 or 13 of this title; and
       ``(7) `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. 603. 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 1 or more 
     other countries, the requirements of the treaty or agreement 
     prevail.

     ``Sec. 604. 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 615.

     ``Sec. 605. Authorization to act in a foreign country

       ``A trustee or another entity (including an examiner) 
     authorized by the court 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. 606. 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. 607. Additional assistance

       ``(a) Nothing in this chapter limits the power of the 
     court, upon recognition of a foreign proceeding, to 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. 608. 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. 609. Right of direct access

       ``(a) A foreign representative is entitled to commence a 
     case under section 604 by filing a petition for recognition 
     under section 615, and upon recognition, to apply directly to 
     other Federal and State courts for appropriate relief in 
     those courts.
       ``(b) Upon recognition, and subject to section 610, a 
     foreign representative has the capacity to sue and be sued, 
     and shall be subject to the laws of the United States of 
     general applicability.
       ``(c) Recognition under this chapter is prerequisite to the 
     granting of comity or cooperation to a foreign proceeding in 
     any State or Federal court in the United States. Any request 
     for comity or cooperation in any court shall be accompanied 
     by a sworn statement setting forth whether recognition under 
     section 615 has been sought and the status of any such 
     petition.
       ``(d) Upon denial of recognition under this chapter, the 
     court may issue appropriate orders necessary to prevent an 
     attempt to obtain comity or cooperation from courts in the 
     United States without such recognition.

     ``Sec. 610. Limited jurisdiction

       ``The sole fact that a foreign representative files a 
     petition under sections 615 does not subject the foreign 
     representative to the jurisdiction of any court in the United 
     States for any other purpose.

     ``Sec. 611. Commencement of case under section 301 or 303

       ``(a) Upon filing a petition for 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) 
     of this section must be accompanied by a statement describing 
     the petition for recognition and its current status. 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) of this section prior to such 
     commencement.
       ``(c) A case under subsection (a) shall be dismissed unless 
     recognition is granted.

     ``Sec. 612. Participation of a foreign representative in a 
       case under this title

       ``Upon recognition of a foreign proceeding, the foreign 
     representative in that proceeding is entitled to participate 
     as a party in interest in a case regarding the debtor under 
     this title.

     ``Sec. 613. 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) of this section 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) of this section and paragraph (1) 
     of this subsection 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. 614. 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 
     letters rogatory or other similar 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 pursuant to 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. 615. Application for recognition of a foreign 
       proceeding

       ``(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) must be translated into English. The court 
     may require a translation into English of additional 
     documents.

     ``Sec. 616. Presumptions concerning recognition

       ``(a) If the decision or certificate referred to in section 
     615(b) indicates that the foreign proceeding is a foreign 
     proceeding within the meaning of section 101(23) and that the 
     person or body is a foreign representative within the meaning 
     of

[[Page H4393]]

     section 101(24), 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. 617. Order recognizing a foreign proceeding

       ``(a) Subject to section 606, an order recognizing a 
     foreign proceeding shall be entered if--
       ``(1) the foreign proceeding is a foreign main proceeding 
     or foreign nonmain proceeding within the meaning of section 
     602;
       ``(2) the foreign representative applying for recognition 
     is a person or body within the meaning of section 101(24); 
     and
       ``(3) the petition meets the requirements of section 615.
       ``(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 602 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 shall constitute 
     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 granting of recognition. 
     The case under this chapter may be closed in the manner 
     prescribed for a case under section 350.

     ``Sec. 618. 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. 619. Relief that may be granted upon petition for 
       recognition of a foreign proceeding

       ``(a) From the time of filing a petition for recognition 
     until the petition is decided upon, 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 621(a).
       ``(b) Unless extended under section 621(a)(6), the relief 
     granted under this section terminates when the petition for 
     recognition is decided upon.
       ``(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.

     ``Sec. 620. Effects of recognition of a foreign main 
       proceeding

       ``(a) Upon recognition of a foreign proceeding that is a 
     foreign main proceeding--
       ``(1) section 362 applies with respect to the debtor and 
     that property of the debtor that is within the territorial 
     jurisdiction of the United States; and
       ``(2) transfer, encumbrance, or any other disposition of an 
     interest of the debtor in property within the territorial 
     jurisdiction of the United States is restrained as and to the 
     extent that is provided for property of an estate under 
     sections 363, 549, and 552.
     Unless the court orders otherwise, the foreign representative 
     may operate the debtor's business and may exercise the powers 
     of a trustee under section 549, subject to sections 363 and 
     552.
       ``(b) The scope, and the modification or termination, of 
     the stay and restraints referred to in subsection (a) of this 
     section are subject to the exceptions and limitations 
     provided in subsections (b), (c), and (d) of section 362, 
     subsections (b) and (c) of section 363, and sections 552, 555 
     through 557, 559, and 560.
       ``(c) Subsection (a) of this section does not affect the 
     right to commence individual actions or proceedings in a 
     foreign country to the extent necessary to preserve a claim 
     against the debtor.
       ``(d) Subsection (a) of this section 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. 621. Relief that may be granted upon recognition of a 
       foreign proceeding

       ``(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 
     individual actions or individual proceedings concerning the 
     debtor's assets, rights, obligations or liabilities to the 
     extent they have not been stayed under section 620(a);
       ``(2) staying execution against the debtor's assets to the 
     extent it has not been stayed under section 620(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 620(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 619(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).

     ``Sec. 622. Protection of creditors and other interested 
       persons

       ``(a) In granting or denying relief under section 619 or 
     621, or in modifying or terminating relief under subsection 
     (c) of this section, the court must find that the interests 
     of the creditors and other interested persons or entities, 
     including the debtor, are sufficiently protected.
       ``(b) The court may subject relief granted under section 
     619 or 621 to conditions it considers appropriate.
       ``(c) The court may, at the request of the foreign 
     representative or an entity affected by relief granted under 
     section 619 or 621, or at its own motion, modify or terminate 
     such relief.

     ``Sec. 623. Actions to avoid acts detrimental to creditors

       ``(a) Upon recognition of a foreign proceeding, the foreign 
     representative has standing in a pending case under another 
     chapter of this title to initiate actions under sections 522, 
     544, 545, 547, 548, 550, and 724(a).
       ``(b) When the foreign proceeding is a foreign nonmain 
     proceeding, the court must be satisfied that an action under 
     subsection (a) of this section relates to assets that, under 
     United States law, should be administered in the foreign 
     nonmain proceeding.

     ``Sec. 624. 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. 625. Cooperation and direct communication between the 
       court and foreign courts or foreign representatives

       ``(a) In all matters included within section 601, 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. 626. Cooperation and direct communication between the 
       trustee and foreign courts or foreign representatives

       ``(a) In all matters included in section 601, 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, 
     designated by the court is entitled, subject to the 
     supervision of the court, to communicate directly with 
     foreign courts or foreign representatives.
       ``(c) 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.

[[Page H4394]]

     ``Sec. 627. Forms of cooperation

       ``Cooperation referred to in sections 625 and 626 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. 628. 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 
     that 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 625, 626, and 627, 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. 629. Coordination of a case under this title and a 
       foreign proceeding

       ``Where 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 625, 626, and 627, and the 
     following shall apply:
       ``(1) When 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 619 or 621 must be 
     consistent with the case in the United States; and
       ``(B) even if the foreign proceeding is recognized as a 
     foreign main proceeding, section 620 does not apply.
       ``(2) When 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 619 or 621 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 
     620(a) shall be modified or terminated if inconsistent with 
     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 law 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 628 and 629, the court may grant any of the relief 
     authorized under section 305.

     ``Sec. 630. Coordination of more than 1 foreign proceeding

       ``In matters referred to in section 601, with respect to 
     more than 1 foreign proceeding regarding the debtor, the 
     court shall seek cooperation and coordination under sections 
     625, 626, and 627, and the following shall apply:
       ``(1) Any relief granted under section 619 or 621 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 619 or 621 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. 631. 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.

     ``Sec. 632. 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 5 the following:

``6. Ancillary and Other Cross-Border Cases..................601''.....

     SEC. 602. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11, 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, 555 through 557, 
     559, and 560 apply in a case under chapter 6''; and
       (2) by adding at the end the following:
       ``(j) Chapter 6 applies only in a case under that chapter, 
     except that section 605 applies to trustees and to any other 
     entity authorized by the court, including an examiner, under 
     chapters 7, 11, and 12, to debtors in possession under 
     chapters 11 and 12, and to debtors or trustees under chapters 
     9 and 13 who are authorized to act under section 605.''.
       (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 state, including an 
     interim proceeding, pursuant to a law relating to insolvency 
     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 6 of title 11.''.
       (2) Bankruptcy cases and proceedings.--Section 1334(c)(1) 
     of title 28, United States Code, is amended by striking 
     ``Nothing in'' and inserting ``Except with respect to a case 
     under chapter 6 of title 11, nothing in''.
       (3) Duties of trustees.--Section 586(a)(3) of title 28, 
     United States Code, is amended by inserting ``6,'' after 
     ``chapter''.

                        TITLE VII--MISCELLANEOUS

     SEC. 701. TECHNICAL AMENDMENTS.

       Title 11 of the United States Code is amended--
       (1) in section 109(b)(2) by striking ``subsection (c) or 
     (d) of'';
       (2) in section 541(b)(4) by adding ``or'' at the end; and
       (3) in section 552(b)(1) by striking ``product'' each place 
     it appears and inserting ``products''.

     SEC. 702. 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 after the date of the enactment of this Act.

  The CHAIRMAN. It is now in order to consider amendment No. 1 printed 
in House Report 103-573.


                  Amendment No. 1 Offered by Mr. Gekas

  Mr. GEKAS. Mr. Chairman, pursuant to the rule, I offer the Hyde 
amendment, the so-called manager's amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 printed in House Report 105-573 offered by 
     Mr. Gekas:
       Page 6, line 8, strike ``spouse'' and insert ``spouse,''.
       Page 8, line 13, insert ``, issued by the Internal Revenue 
     Service,'' after ``debts)''.
       Page 8, line 16, strike ``under'' and insert ``by''.
       Page 8, beginning on line 16, strike ``financial analysis 
     for expenses'' and insert ``allowance for such expenses''.
       Page 9, line 10, insert ``total'' after ``monthly''.
       Page 9, line 20, insert ``total'' after ``monthly''.
       Page 9, line 21, strike ``what income'' and insert ``any 
     income that''.
       Page 12, line 15, insert ``chapter 13'' after ``a'' (and 
     make such technical and conforming changes to the table of 
     contents of the bill as may be appropriate).
       Page 13, line 1, insert ``, issued by the Internal Revenue 
     Service,'' after ``debts)''.
       Page 13, line 4, strike ``under'' and insert ``by''.
       Page 13, beginning on line 5, strike ``financial analysis 
     for expenses'' and insert ``allowance for such expenses''.
       Page 13, line 15, strike ``of'' and insert ``under''.
       Page 13, line 22, strike ``of'' and insert ``under''.
       Page 14, line 3, insert ``and'' at the end.
       Page 14, beginning on line 14, strike ``, in a case in 
     which a trustee has been appointed,''.
       Page 14, beginning on line 21, strike ``what income'' and 
     inserting ``any income that''.
       Page 18, line 1, strike ``total current monthly'' and 
     insert ``current monthly total''.
       Page 18, beginning on line 7, strike ``total current 
     monthly'' and insert ``current monthly total''.
       Page 20, line 24, strike ``and'' at the end and insert a 
     comma.
       Page 21, line 1, strike ``its schedules'' and insert 
     ``schedules,''.
       Page 21, beginning on line 3, strike ``and its schedules'' 
     and insert ``schedules,''.
       Page 22, beginning on line 6, strike ``outside'' and all 
     that follows through ``system)'' on line 7.

[[Page H4395]]

       Page 24, line 21, insert ``by the debtor'' after 
     ``statement''.
       Page 25, after line 6, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 105. WHO MAY BE A DEBTOR UNDER CHAPTER 11.

       Section 109(d) of title 11, United States Code, is amended 
     by inserting ``, or a person described in subsection 
     (b)(4)),'' after ``chapter 7''.
       Page 25, line 19, strike ``12'' and insert ``12,''.
       Page 26, line 3, strike ``(i)'' and insert ``(i)(I)''.
       Page 26, line 5, strike ``(ii)'' and insert ``(II)''.
       Page 26, line 6, strike the period at the end and insert 
     ``; and''.
       Page 26, after line 6, insert the following:
       ``(ii) that offers its services to debtors without charge, 
     or at an appropriately reduced charge if payment of any 
     regular charge would impose a hardship on the debtor or a 
     dependent of the debtor.''
       Page 26, line 10, insert ``or on the motion of the United 
     States trustee and'' after ``district''.
       Page 26, beginning on line 11, strike ``the United States 
     trustee and''.
       Page 27, line 21, strike ``60'' and insert ``180''.
       Page 33, line 22, strike ``select a chapter 7 proceeding'' 
     and insert ``choose to file a chapter 7 case''.
       Page 34, line 1, strike ``select a chapter 13 proceeding'' 
     and insert ``choose to file a chapter 13 case''.
       Page 34, line 6, strike ``proceeding'' and insert 
     ``relief''.
       Page 34, line 9, strike ``proceeding'' and insert 
     ``relief''.
       Page 34, line 10, strike ``procceding'' and insert 
     ``case''.
       Page 34, beginning on line 13, strike ``represent you in 
     litigation'' and insert ``give you legal advice''.
       Page 34, line 21, insert ``, to the extent permitted by 
     nonbankruptcy law,''.
       Page 38, line 4, strike ``or'' and insert ``and''.
       Page 41, after line 12, insert the following:
       ``(5) Notwithstanding any other provision of Federal law, 
     if the court, on its own motion or on the motion of the 
     United States trustee, finds that a person intentionally 
     violated section 526 or 527 of this title, or engaged in a 
     clear and consistent pattern or practice of violating section 
     526 or 527 of this title, the court may--
       ``(A) enjoin the violation of such section; or
       ``(B) impose an appropriate civil penalty against such 
     person.''.
       Page 43, line 17, insert ``, together with any other such 
     contribution,'' after ``contribution''.
       Page 46, line 12, strike ``2002bb'' and insert ``2000bb''.
       Page 49, beginning on line 8, strike ``If a party in 
     interest requests'' and insert ``Upon motion by a party in 
     interest for continuation of the automatic stay and upon 
     notice and a hearing''.
       Page 55, line 9, strike ``reaffirmation''.
       Page 56, line 1, insert ``the automatic'' after ``from'' 
     (and make such technical and conforming changes to the table 
     of contents of the bill as may be appropriate).
       Page 59, line 7, insert ``the automatic'' after ``from'' 
     (and make such technical and conforming changes to the table 
     of contents of the bill as may be appropriate).
       Page 59, line 20, insert ``as described in findings made by 
     the court'' after ``circumstances''.
       Page 60, line 12, strike ``cases'' and insert ``a case''.
       Page 64, line 3, strike ``case''.
       Page 66, line 19, insert ``, excluding debts incurred for 
     necessaries that do not exceed $250 in the aggregate,'' after 
     ``creditor''.
       Page 66, beginning on line 22, strike ``, except'' and all 
     that follows through ``less'' on line 25.
       Page 67, line 23, strike ``or divorce or dissolution 
     decree'' and insert ``divorce decree, or other order of a 
     court of record''.
       Page 68, strike lines 8 through 23 (and make such technical 
     and conforming changes as may be appropriate).
       Page 74, strike lines 13 through 15, and insert the 
     following:
       (2) in subsection (a)(7) by inserting ``an order of 
     disgorgement or restitution obtained by a governmental 
     unit,'' after ``such debt is for''; and
       Page 75, line 20, strike ``the''.
       Page 76, line 14, strike ``(14)'' and insert ``(19)''.
       Page 76, in the matter after line 21, insert ``payments 
     after discharge'' after ``alimony''.
       Page 78, after line 2, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 152. HIGHER PRIORITY FOR DEBTS FOR ALIMONY, MAINTENANCE, 
                   AND SUPPORT.

       Section 507(a) of title 11, United States Code, is 
     amended--
       (1) by striking paragraph (7);
       (2) in paragraph (6) by striking ``(6) Sixth'' and 
     inserting ``(7) Seventh'';
       (3) in paragraph (5) by striking ``(5) Fifth'' and 
     inserting ``(6) Sixth'';
       (4) in paragraph (4) by striking ``(4) Fourth'' and 
     inserting ``(5) Fifth'';
       (5) in paragraph (3) by striking ``(3) Third'' and 
     inserting ``(4) Fourth''; and
       (6) by inserting after paragraph (2) the following:
       ``(3) Third, allowed claims for debts to a spouse, former 
     spouse, or child of the debtor for alimony to, maintenance 
     for, or support of such spouse or child, in connection with a 
     separation agreement, divorce decree or other order of a 
     court of record, determination made in accordance with State 
     or territorial law by a governmental unit, or property 
     settlement agreement, but not to the extent that such debt--
       ``(A) is assigned to another entity, voluntarily, by 
     operation of law, or otherwise; or
       ``(B) includes a liability designed as alimony, 
     maintenance, or support, unless such liability is actually in 
     the nature of alimony, maintenance, or support.''.
       Page 83, strike lines 17 through 19, and insert the 
     following:
     apply to--
       ``(A) an exemption claimed under subsection (b)(2)(A) by a 
     family farmer for the principal residence of that farmer; or
       ``(B) an involuntary case.''.
       Page 84, strike lines 8 through 10, and insert the 
     following:
       ``(e) A person appointed to examine a request for 
     compensation or reimbursement payable under this section may 
     not be paid on the basis of the amount of any reduction 
     recommended by such person in the amount or rate of such 
     compensation or such reimbursement.''.
       Page 85, line 16, strike ``(3)'' and insert ``(3)(A)''.
       Page 85, line 16, insert ``, subject to subparagraph (B),'' 
     after ``or''.
       Page 85, line 20, strike the close quotation marks and the 
     period at the end.
       Page 85, after line 20, insert the following:
       ``(B) A request to change the membership of a committee 
     appointed under subsection (a) may be made under subparagraph 
     (A) by a party in interest only after such request is 
     submitted to and denied by the United States trustee.''.
       Beginning on page 90, strike line 24 and all that follows 
     through line 10 on page 91, and insert the following:
       ``(5) Where the court finds that a personal services 
     contract is property of the estate, the trustee may not 
     reject an executory contract for personal services in which 
     advances are paid for the creation of copyrighted sound 
     recordings in the future if a material purpose for commencing 
     a case under this title is to reject such contract, unless, 
     absent such rejection, economic rehabilitation of the 
     debtor's finances, including such contract, cannot be 
     achieved.''.
       Page 91, beginning on line 24, strike ``debtor's motion'' 
     and insert ``motion of the trustee''.
       Page 92, line 4, insert ``the'' after ``provided''.
       Page 92, after line 24, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 215. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.

       (a) Executory Contracts and Unexpired Leases.--Section 365 
     of title 11, United States Code, is amended--
       (1) in subsection (b)--
       (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--
       ``(i) 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; or
       ``(ii) 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 executory contract, if it is impossible for the 
     trustee to cure such default by performing nonmonetary acts 
     at and after the time of assumption and if the court 
     determines, based on the equities of the case, that this 
     subparagraph should not apply with respect to such 
     default;'', and
       (B) by amending paragraph (2)(D) to read as follows:
       ``(D) the satisfaction of any penalty rate or penalty 
     provision relating to a default arising from a failure to 
     perform nonmonetary obligations under an executory contract 
     or under an unexpired lease of real or personal property.'',
       (2) in subsection (c)--
       (A) in paragraph (2) by adding ``or'' at the end,
       (B) in paragraph (3) by striking ``; or'' at the end and 
     inserting a period, and
       (C) by striking paragraph (4),
       (3) in subsection (d)--
       (A) by striking paragraphs (5) through (9), and
       (B) by redesignating paragraph (10) as paragraph(5).
       (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)(1)(A) 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:

[[Page H4396]]

       ``(D) if such claim or such interest arises from any 
     failure to perform a nonmonetary obligation, 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''.
       Page 95, beginning on line 14, strike ``statements and 
     plans'' and insert ``statement and plan'' (and make such 
     technical and conforming changes to the table of contents of 
     the bill as may be appropriate).
       Beginning on page 97, strike line 17 and all that follows 
     through line 6 on page 98, and insert the following (and make 
     such technical and conforming changes as may be appropriate):

     SEC. 235. 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 
     between--
       (1) the reasonable needs of the bankruptcy court, the 
     United States trustee or bankruptcy administrator, 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 its financial 
     condition and plan its future.
       Page 103, line 22, insert ``and'' at the end.
       Page 104, strike lines 3 through 6, and insert the 
     following:
       ``(9) in cases 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 to the 
     court for relief.''.
       Page 105, line 15, strike ``()'' and insert ``(j)''.
       Page 106, line 5, strike ``(C) un-'' and insert ``(C);''.
       Page 106, strike lines 6 through 12, and insert the 
     following:

     unless the debtor proves, by a preponderance of the evidence, 
     that the filing of such petition resulted from circumstances 
     beyond the control of the debtor not foreseeable at the time 
     the case then pending was filed; and that it is more likely 
     than not that the court will confirm a feasible plan, but not 
     a liquidating plan, within a reasonable time.''.
       Page 108, line 24, strike ``, and'' and all that follows 
     through line 2 on page 109, and insert a semicolon.
       Page 112, after line 6, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 302. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

       Section 901 of title 11, United States Code, is amended--
       (1) by inserting ``555, 556,'' after ``553,''; and
       (2) by inserting ``559, 560,'' after ``557,''.
       Page 125, line 8, strike ``total current monthly'' and 
     insert ``current monthly total''.
       Page 125, line 17, strike ``total current monthly'' and 
     insert ``current monthly total''.
       Page 126, beginning on line 11, strike ``total current 
     monthly'' and insert ``current monthly total''.
       Page 126, line 18, strike ``total current monthly'' and 
     insert ``current monthly total''.
       Page 131, line 3, strike ``or dismissed'' and insert ``, 
     dismissed, or closed''.
       Page 131, beginning on line 17, strike ``Such'' and all 
     that follows through ``Courts.'' on line 19.
       Page 131, line 20, insert ``in such form as shall be 
     determined by such Office, in consultation with the 
     Administrative Office of the United States Courts,'' after 
     ``tics,''.
       Page 131, line 19, strike ``Office'' and insert ``Executive 
     Office for United States Trustees''.
       Page 132, line 5, strike ``total current monthly'' and 
     insert ``current monthly total''.
       Page 133, line 16, insert ``uniform rules for the 
     collection of'' after ``SEC. 442.'' (and make such technical 
     and conforming changes to the table of contents of the bill 
     as may be appropriate).
       Page 140, strike lines 6 through 10, and insert the 
     following:
       amended to read as follows:
       ``(1) a debt of a kind specified in paragraph (1) or (5) of 
     section 523(a) of this title, and such property shall be 
     liable for a debt of a kind specified in such paragraph (5) 
     notwithstanding any State law to the contrary;''
       Page 161, line 16, strike ``or'' at the end.
       Page 161, line 21, strike the period at the end and insert 
     ``; or''.
       Page 161, after line 21, insert the following:
       ``(3) an entity subject to a proceeding under the 
     Securities Investor Protection Act, 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.
       Page 164, line 2, strike ``Nothing in this chapter limits 
     the power of'' and insert ``Subject to the specific 
     limitations stated elsewhere in this chapter''.
       Page 165, after line 15, insert the following:
       ``(c) Subject to section 610 of this title, a foreign 
     representative is subject to laws of general application.
       Page 165, line 16, strike ``(c)'' and insert ``(d)''.
       Page 165, beginning on line 17, strike ``proceeding'' and 
     insert ``representative''.
       Page 165, line 19, insert ``by a foreign representative'' 
     after ``cooperation''.
       Page 166. line 5, strike ``sections'' and insert 
     ``section''.
       Page 166, line 10, strike ``filing a petition for''.
       Page 166, strike lines 22 and 23.
       Page 170, line 24, insert ``after notice and a hearing'' 
     after ``606,''.
       Page 177, strike lines 11 through 17, and insert the 
     following:
       ``(a) The court may grant relief under section 619 or 621, 
     or may modify or terminate relief under subsection (c) of 
     this section, only if the interests of the creditors and 
     other interested persons or entities, including the debtor, 
     are sufficiently protected.
       ``(b) The court may subject relief granted under section 
     619 or 621, or the operation of the debtor's business under 
     section 620(a)(2) of this title, to conditions it considers 
     appropriate, including the giving of security or the filing 
     of a bond.
       Page 177, after line 21, insert the following:
       ``(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.
       Page 178, line 19, strike ``In all matters included 
     within'' and insert ``Consistent with''.
       Page 179, line 6, strike ``In all matters included within'' 
     and insert ``Consistent with''.
       Page 179, line 12, strike ``designated'' and insert 
     ``authorized''.
       Page 179, strike lines 15 through 18.
       Page 181, line 8, insert ``the relief granted in'' after 
     ``with''.
       Page 181, line 24, insert ``the relief granted in'' after 
     ``with''.
       Page 186, line 11, strike ``The'' and insert ``Except as 
     otherwise provided in this Act, the''.

  The CHAIRMAN. Pursuant to House Resolution 462, the gentleman from 
Pennsylvania (Mr. Gekas) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I have consulted with the gentleman from New York on 
the purport of the manager's amendment. It has several technical 
amendments that need attention and to which we have agreed, and it puts 
into the Record the concerns that the Justice Department has voiced 
with respect to some of the provisions. We have incorporated those into 
the manager's amendment, and made those known to the gentleman from New 
York and the minority.
  On that, then, we would ask for a vote on the manager's amendment.
  Mr. Chairman, I reserve the balance of my time.
  The CHAIRMAN. Does the gentleman from New York (Mr. Nadler) seek time 
in opposition?
  Mr. NADLER. Yes, I do, Mr. Chairman.
  The CHAIRMAN. The gentleman from New York (Mr. Nadler) is recognized 
for 5 minutes.
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, we do not object to this amendment. I just want to 
point out that, like a number of other amendments, this amendment deals 
with the problem of child support and spouse support, but does not deal 
adequately with it.
  This amendment would raise the priority of support, child and spouse 
support, above several priorities. It would raise it above several 
existing priorities that are rarely relevant in consumer cases. It 
would make it have a higher priority than wages owed by the debtor to 
people, to workers he did not pay, and payments involving grain 
elevators and fishermen.
  It does not change the Chapter 13 payment formula, which still 
requires payment of credit card debt concurrently with child support. 
It does not deal with the larger problems created by other provisions 
of the bill that require payments so great that a Chapter 13 plan may 
be rendered infeasible.
  It also does not deal with ``adequate protection payments'' required 
by Section 320 of the bill that would compete with support at the 
outset of the plan,

[[Page H4397]]

so that the debtor could not devote significant funds to payment of 
even the first priority support claims.
  If such adequate protection payments failed to provide adequate 
protection, in fact, a creditor, such as a credit card creditor, who 
took a security interest in minor household items could argue it was 
entitled to a still higher superpriority under section 507(b).
  So in other words, Mr. Chairman, there is nothing wrong with this 
amendment. It goes a fiftieth of the way towards helping the terrible 
problems this bill puts in the way of adequately collecting child and 
spouse support, but it does not deal with the basic problems. So while 
we have no objection to it and we certainly would not ask for a 
recorded vote, it does not do very much at all.
  Mr. Chairman, I yield back the balance of my time.
  Mr. GEKAS. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Pennsylvania (Mr. Gekas).
  The amendment was agreed to.
  The CHAIRMAN. It is now in order to consider amendment No. 2 printed 
in House Report 105-573.


                 Amendment No. 2 offered by Mr. Nadler

  Mr. NADLER. Mr. Chairman, I offer amendment No. 2.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment 2 printed in House Report 105-573 offered by Mr. 
     Nadler:
       Page 13, strike line 23 and insert the following:
     plan; and
       ``(D) if the debtor is engaged in business, the payment of 
     expenditures necessary for the continuation, preservation, 
     and operation of such business;'';
       
       Beginning on page 93, strike line 5 and all that follows 
     through line 2 on page 94, and insert the following:
       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by redesignating paragraph (51C) as paragraph (51D); 
     and
       (2) by inserting after paragraph (51B) 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;''.
       Beginning on page 98, strike line 7 and all that follows 
     through the matter preceding line 15 on page 100 (and make 
     such technical and conforming changes as may be appropriate).
       Beginning on page 100, strike line 15 and all that follows 
     through line 11 on page 104 (and make such technical and 
     conforming changes as may be appropriate).
       Beginning on page 105, strike line 1 and all that follows 
     through line 12 on page 106 (and make such technical and 
     conforming changes as may be appropriate).
       Beginning on page 106, strike line 13 and all that follows 
     through line 16 on page 109, and insert the following (and 
     make such technical and conforming changes as may be 
     appropriate):

     SEC. 243. ADDITIONAL GROUNDS FOR APPOINTMENT OF TRUSTEE.

       Section 1104(a) of title 11, United States Code,

  The CHAIRMAN. Pursuant to House Resolution 462, the gentleman from 
New York (Mr. Nadler) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from New York (Mr. Nadler).
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  (Mr. NADLER asked and was given permission to revise and extend his 
remarks.)
  Mr. NADLER. Mr. Chairman, this amendment strikes several sections of 
the small business title. We have heard testimony from the National 
Bankruptcy Conference, and we also have received a letter from the 
Small Business Administration that indicates that the bureaucratic 
burdens placed by this bill on small businesses, the short time lines 
for filing many more documents than are necessary for larger 
businesses, the higher standard for getting an extension of the 
automatic stay so that the small business, in order to get an 
extension, would have to pass what amounts to a mini-confirmation 
hearing, a real catch-22, and the inclusion of a new definition of 
single-asset real estate in the definition of small business, so that, 
for example, Rockefeller Center would have to be reorganized under the 
small business rules if it were involved in a bankruptcy, all combine 
to make this title a virtual death sentence for thousands of small 
businesses.
  I know my colleagues on the other side of the aisle like to oppose 
regulations that protect the environment or worker safety by arguing 
they are burdensome on small businesses. We have had several hearings 
this year attacking clean air regulations and attacking regulations to 
keep workers from falling off of roofs, and regulations to keep 
asbestos from being released into the atmosphere.
  At every point we have heard moving speeches about the fate of small 
businesses under these regulations. Some members of the committee have 
opposed increasing our shamefully low minimum wage for the same 
reasons.
  Here is a chance to put our words into action. This small business 
title threatens every small business and independent contractor in 
America. We should strike its most offending sections. The amendment 
restores the current definition of small business to a business of $2 
million. The increase to $5 million would pull in 85 percent of 
businesses into this section, and make it involuntary. It will be 
transforming small business bankruptcy from a safety net for small 
businesses to a tiger cage.
  The amendment strikes the burdensome and costly meeting and filing 
requirements imposed on small businesses for the first time, and it 
also gets the U.S. Trustee out of the business of essentially running a 
small business in Chapter 11. It strikes the definition of monthly net 
income in the bill, and restores the existing definition so that an 
individual debtor in Chapter 13 may continue to use his or her personal 
income for a small business.
  As we may know, many small businesses are either unincorporated or 
are small businesses which the debtor personally guarantees. They end 
up in Chapter 13, not Chapter 11. The bill as written would not allow 
them to use their personal resources to reorganize the business, as 
current law does. This change would kill many small businesses.
  Finally, the amendment restores current law in the appointing of a 
trustee.
  Mr. Chairman, small business is the engine for job growth in America. 
There is not a single Member of this House who has not spoken out in 
defense of small business. That is the right thing to do. But we should 
not move forward with these costly, onerous, and burdensome new rules 
that the Small Business Administration and the National Bankruptcy 
Conference tell us will kill many small businesses unnecessarily, 
instead of letting them be reorganized. We ought to pass this amendment 
so as not to impose these new burdens and this death sentence on 
thousands of small businesses.
  Mr. Chairman, I reserve the balance of my time.
  The CHAIRMAN. Does the gentleman from Pennsylvania (Mr. Gekas) seek 
time in opposition?
  Mr. GEKAS. I rise in opposition to the amendment, Mr. Chairman.
  The CHAIRMAN. The gentleman from Pennsylvania (Mr. Gekas) is 
recognized for 5 minutes.
  Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, in this particular case the gentleman from New York 
(Mr. Nadler) full well knows that the recommendations of the bankruptcy 
commission, which worked 2 years on just this kind of provision, made 
certain recommendations in filing their report late last year.
  It is those provisions, those recommendations, which we have 
incorporated into H.R. 3150, and which themselves have received the 
blessing of the NFIB, and other organizations, such as, and this is 
important, the National Federation of Independent Businesses, NFIB, 
which I mentioned; the American Bankruptcy Institute, the Executive 
Office for United States Trustees, and various bankruptcy judges.
  But more importantly than that, the NFIB language that they employed 
in the letter of support to us says this, and this is a better speech 
than I could make, or any combination of Members could make:

[[Page H4398]]

  ``The legislation,'' and this is the NFIB speaking, the National 
Federation of Independent Business, ``The legislation strikes a fair 
balance by giving small business owners more of a chance to get back 
what is rightfully theirs while still providing bankruptcy protection 
to those small businesses who truly need it.''
  I endorse the NFIB endorsement of the endorsed bill that we now 
endorse, and reendorse by asking for a negative vote on the proposal at 
hand.
  Mr. Chairman, I reserve the balance of my time.
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I am surprised to hear the gentleman from Pennsylvania 
(Mr. Gekas) point out that the National Bankruptcy Review Commission 
supports this. The National Bankruptcy Review Commission rejected the 
central concept of the bill, the so-called means-based testing. But 
that he does not care about.
  Let me simply say this. The Small Business Administration of the 
United States says the provisions of this bill, without this amendment, 
would add

     such substantial additional costs to the reorganization 
     process that many small businesses may forgo reorganization 
     under Chapter 11 and immediately file for Chapter 7 
     liquidation proceedings.

  They would be forced to close their doors, leaving their creditors 
without recourse. The nonbipartisan and widely respected National 
Bankruptcy Conference says,

       These cost-raising changes ultimately could deny tens of 
     thousands of small businesses a meaningful opportunity to 
     restructure that have obligations and continue in business. 
     This would close the door on thousands of businesses that 
     would have been able to reorganize successfully if given the 
     chance.

  The AFL-CIO says,

       The potentially broad reach of these provisions and the 
     manner in which they restrict the workings of the bankruptcy 
     case for these businesses will likely place numerous jobs at 
     risk.

  So the AFL-CIO, the Small Business Administration, and the National 
Bankruptcy Conference, which is probably the greatest expert on this, 
all tell us these provisions which this amendment would strike will 
kill thousands of small businesses by denying them the realistic 
opportunity to reorganize, and forcing them instead to liquidate.
  I urge my colleagues to vote for this amendment so these small 
businesses are not thrown into liquidation, instead of reorganization, 
killing thousands and thousands of jobs.

                              {time}  1530

  Mr. GEKAS. Mr. Chairman, I yield back the balance of my time in 
opposition to the amendment.
  Mr. NADLER. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from New York (Mr. Nadler).
  The question was taken; and the Chairman announced that the noes 
appeared to have it.
  Mr. NADLER. Mr. Chairman, I demand a recorded vote, and pending that, 
I make the point of order that a quorum is not present
  The CHAIRMAN. Pursuant to the rule, further proceedings on the 
amendment offered by the gentleman from New York (Mr. Nadler) will be 
postponed.
  The point of no quorum is considered withdrawn.
  The CHAIRMAN. It is now in order to consider amendment No. 3 printed 
in House Report 105-573. Does any Member seek recognition to offer 
amendment No. 3?


                        Parliamentary Inquiries

  Mr. NADLER. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. NADLER. Mr. Chairman, which amendment are you referring to? The 
Boucher-Gekas amendment?
  The CHAIRMAN. The Delahunt amendment No. 3.
  Mr. NADLER. Mr. Chairman, we will come back to that.
  The CHAIRMAN. According to the rule, amendment No. 3 is now in order 
to be offered by the gentleman from Massachusetts (Mr. Delahunt).
  Mr. NADLER. Mr. Chairman, I have a further parliamentary inquiry. On 
the list that I have, the Boucher-Gekas amendment is next, and then 
Gekas and then Shaw-Camp, Paul, Gekas-McCollum-Smith, Scott, Velazquez, 
Baldacci, and Delahunt is last according to this.
  The CHAIRMAN. According to the rule adopted by the House, it is now 
in order to consider amendment No. 3 to be offered by the gentleman 
from Massachusetts (Mr. Delahunt) or his designee, debatable for 10 
minutes.
  Mr. NADLER. Mr. Chairman, I ask unanimous consent that that amendment 
be considered later when the gentleman from Massachusetts (Mr. 
Delahunt) can come to the floor, because the list we have does not 
indicate that order.
  The CHAIRMAN. The Chair does not have the authority to entertain that 
request in the Committee of the Whole.
  Mr. NADLER. Mr. Chairman, I believe that with unanimous consent, the 
Chair could entertain that request.
  The CHAIRMAN. The Committee of the Whole cannot change the order of 
the amendments as approved under the special order adopted by the 
House.
  Mr. GEKAS. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. GEKAS. Mr. Chairman, if the gentleman from Massachusetts (Mr. 
Delahunt), who was supposed to have an amendment made in order at this 
time, would strike the last word or change the text of the amendment 
that he wishes to offer, could it be made in order in the Committee of 
the Whole?
  The CHAIRMAN. Permission cannot be sought to offer a new amendment. 
Permission might be sought to modify a pending amendment in the 
Committee of the Whole. But the Committee of the Whole is operating 
under the rule adopted earlier in the House.
  If there is no Member here to offer amendment No. 3, the Committee 
will move on to amendment No. 4.
  Mr. GEKAS. Mr. Chairman, I have a further parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. GEKAS. Mr. Chairman, I wish to express to the gentleman from New 
York (Mr. Nadler) that when the time comes that the gentleman from 
Massachusetts (Mr. Delahunt) is prepared to proceed, we will coordinate 
whatever it takes, even a motion to rise, in order to accommodate that 
amendment. So at this point, why do we not proceed?
  Mr. NADLER. Mr. Chairman, I have a further parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. NADLER. Mr. Chairman, I appreciate the cooperation of the 
gentleman from Pennsylvania (Mr. Gekas). My parliamentary inquiry is if 
we go on to the next amendment now, and 10 or 15 or 20 minutes from now 
when the gentleman from Massachusetts arrives, if a motion to rise is 
made, we can then entertain that amendment in the House?
  The CHAIRMAN. At a later time, if the Committee rises and then the 
gentleman seeks permission to offer the amendment, that request could 
be entertained in the full House.
  Mr. NADLER. Mr. Chairman, I appreciate that offer from the 
distinguished gentleman from Pennsylvania, and I think it is a good 
idea, and we should go on to the next amendment now with the 
understanding that when the gentleman from Massachusetts arrives at the 
conclusion of the amendment that we are now discussing, that we move 
that the House rises.
  The CHAIRMAN. It is now in order----
  Mr. NADLER. Mr. Chairman, I am told that I need to move that the 
House rise now.
  The CHAIRMAN. It does not have to be done now.
  Mr. NADLER. Mr. Chairman, it is okay to go to the next amendment 
then, as far as I am concerned.
  The CHAIRMAN. It is now in order to consider amendment No. 4 printed 
in House Report 105-573.


                Amendment No. 4 Offered by Mr. Boucher.

  Mr. BOUCHER. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 4 printed in House Report 105-573 offered by 
     Mr. Boucher: 
       Page 54, line 15, before the semicolon insert the 
     following:

     ``, except that the term shall also include any tangible 
     personal property reasonably

[[Page H4399]]

     necessary for the maintenance and support of a dependent 
     child''.

       Page 66, strike lines 11 through 13 and insert the 
     following:

       ``(19) incurred to pay a debt that is nondischargeable by 
     reason of any other provision of this subsection or section 
     727, 1141, 1228(a), 1228(b), or 1328(b), except for any debt 
     incurred to pay such a nondischargeable debt in any case in 
     which--
       ``(A)(i) the debtor who paid the nondischargeable debt is a 
     single custodial parent who has 1 or more dependent children 
     at the time of the order for relief, or
       ``(ii) there is an allowed claim for alimony to, 
     maintenance for, or support of a spouse, former spouse, or 
     child of the debtor payable under a judicial or 
     administrative order to such spouse or child (but not to any 
     other person) which was unpaid as of the date of the 
     petition; and
       ``(B) the creditor is unable to demonstrate that the debtor 
     intentionally incurred the debt to pay the debt which is 
     nondischargeable;''.

       Page 70, after line 12, insert the following (and make such 
     technical and conforming changes as may be appropriate):

       (1) in the matter preceding paragraph (1) by inserting 
     before the colon the following:

     ``, except that, notwithstanding any other provision of this 
     title, any expense or claim entitled to priority under 
     paragraph (7) shall have first priority over any other 
     expense or claim that has priority under any other provision 
     of this subsection'';

       Page 70, after line 22, insert the following (and make such 
     technical and conforming changes as may be appropriate):

       (e) Contents of Plans.--Section 1322(b)(1) of title 11, 
     United States Code, is amended by striking the semicolon at 
     the end and inserting the following:

     ``and provide for the payment of any claim entitled to 
     priority under section 507(a)(7) of this title before the 
     payment of any other claim entitled to priority under section 
     507(a), notwithstanding the priorities established under 
     section 507(a);''.

  The CHAIRMAN. Pursuant to the rule, the gentleman from Virginia (Mr. 
Boucher), and the gentleman from New York (Mr. Nadler) each will 
control 5 minutes.
  The Chair recognizes the gentleman from Virginia (Mr. Boucher).
  Mr. BOUCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this amendment relates to the priority of child support 
and alimony recipients in association with bankruptcy proceedings.
  During consideration of the bill in the House Judiciary Committee, 
provisions were adopted which not only assured no disadvantage from 
this reform for the recipient of alimony or the recipient of child 
support payments, but which in very significant respects improved that 
person's ability to receive child support and alimony payments in 
comparison to current law.
  For example, the bill provides that unlike current law, Chapter 13 
plans cannot be confirmed unless all child support payments due since 
the bankruptcy filing have been paid. The Chapter 13 plan cannot be 
discharged until all arrearages that were due prior to the filing have 
been paid as well.
  These are very significant improvements with regard to current law 
for the condition of the child support and alimony recipient.
  Another example: Under current law child support and alimony wage 
orders which require that an employer withhold from an employee's 
salary amounts that are due under child support or alimony are stayed 
when a bankruptcy petition is filed under any of the various chapters. 
The bill creates an exemption from this stay for wage orders and 
assures that payment of child support or alimony under them will 
continue.
  A third example: Under current law the property which is exempt under 
State law which is owned by a spouse who owes child support or alimony 
may not be subjected to the other spouse's child support or alimony 
claim after the spouse who owns the property has been discharged in 
bankruptcy. The bill improves upon current law by subjecting that 
exempt property to the child support or alimony claim.
  A fourth example: Under current law a debt one spouse owes to another 
that arises from something other than child support or alimony and is 
incorporated in a separation agreement or divorce decree is 
dischargeable in bankruptcy and may not be enforced against property 
that is exempt under State law. The bill says these debts owed to the 
spouse may never be discharged and may be enforced against exempt 
property.
  In each of these four instances, the situation of the recipient of 
child support or alimony is improved with regard to current law.
  The amendment that I am pleased to be offering now with the gentleman 
from Pennsylvania (Mr. Gekas) makes four additional improvements in 
current law from the standpoint of the child support or alimony 
recipient.
  First, we clearly give the child support or alimony recipient top 
priority to receive payment during the pendency of the bankruptcy 
proceeding. Today, she is seventh behind farmers who have claims 
against grain elevators, fishermen who have claims against wholesalers, 
and others. We, with this amendment, clearly make her the first 
priority.
  The second change we make will require that child support and alimony 
be first in line for payment in Chapter 13 plans. That also is an 
improvement with respect to current law.
  Third, we help the single parent who files for bankruptcy by 
expanding the definition of ``household goods'' to include items that 
are needed in child rearing. Unlike under current law, with this 
amendment she will be able to keep those items.
  We also provide that nonsecured debt which is acquired to pay 
nondischargeable debt, such as taxes, is nondischargeable against 
single parents and debtors who owe child support or alimony only if the 
debt was acquired intentionally to pay nondischargeable debt.
  In each of these four areas we are making improvements with regard to 
current law, better assuring the priority of the child support or 
alimony recipient.
  And because of the changes made in the committee, the various 
organizations around the country numbering several that are responsible 
for aiding child support and alimony recipients and enforcing those 
obligations have endorsed this bill, including the Child Support and 
Family Council of California, the City of New York Law Department, and 
others.
  Mr. Chairman, they understand that the changes that are made in the 
committee, as amplified by these changes on the floor, will actually 
improve the circumstance of the child support or alimony recipient as 
compared to current law.
  Mr. Chairman, I urge the adoption of this amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this, again, is another one of those amendments that 
may do a little good. It is probably harmless, but it does not solve 
any of the fundamental problems.
  For instance, we are told that on the provision of this amendment 
regarding debts incurred to pay nondischargeable debts, it amends 
another of the provisions, creating large categories of new 
nondischargeable debts, mostly credit card debts.
  This amendment, which purports to protect women and children 
dependent on support from the debtor, does nothing to change this 
provision of the bill. Besides being limited only to cases in which 
debtors are single parents or are in arrears on support, it simply 
requires the creditor to show that the debtor ``intentionally'' 
incurred the debt in question. Virtually no debts incurred to pay other 
debts are not incurred intentionally, so the change is meaningless.
  Then we have the provision that states that alimony and support 
claims should be paid before other priority claims in Chapter 13. But 
this does not change the Chapter 13 payment formula, which still 
requires payment of nonpriority credit card debt concurrently with 
support. In other words, the requirement in section 102 that support be 
paid concurrently with credit card debts is not changed at all.
  The amendment does not deal with the larger problems created by other 
provisions that required payments so great that a Chapter 13 plan may 
not be feasible, in which case no creditors may be paid.
  This amendment makes a new section that places child support and 
alimony ahead of all other unsecured priority claims in the 
distribution of the assets in a Chapter 7 case. While this is a worthy 
idea, and I commend the author for this, it will have little effect 
since it is rare, very rare, for any assets at all to be distributed in 
a Chapter 7 case.

[[Page H4400]]

  Also, because the amendment places child support and alimony ahead of 
administrative expenses, like the trustee's commission, we are going to 
have trustees abandoning these assets rather if there are not 
sufficient additional assets to compensate the trustee. The amendment, 
therefore, could cause, and in many cases would cause, women and 
children to receive even less support in some cases.
  In summary, Mr. Chairman, as the administration has said in its 
letter that we received today, and as most of the organizations 
concerned with child support agree, this amendment, the manager's 
amendment, the amendments in committee do not really deal with the 
problem of child support collection.
  Let me just add one comment, since the gentleman referred to the Law 
Department of my own city, the City of New York. The Law Department of 
the City of New York has one concern overriding everything else: 
collecting taxes. That is what they care about, not child support. So I 
do not credit what they say about how this will deal with child 
support. I know the Law Department of my own city only too well.
  Mr. Chairman, I reserve the balance of my time.
  Mr. BOUCHER. Mr. Chairman, I yield the balance of my time to the 
gentleman from Virginia (Mr. Moran).
  Mr. MORAN of Virginia. Mr. Speaker, since the gentleman from New York 
(Mr. Nadler) has chosen to cite the administration's statement of 
policy, let me quote it. ``If debtors truly have the ability to repay a 
portion of their debt, after taking into account all relevant factors, 
including child support and alimony payments, a successful, supervised 
repayment plan under Chapter 13 rules could result in a more reliable 
payment of child support and alimony than would the unsupervised 
situation after Chapter 7 discharge.''

                              {time}  1545

  That is the point of this bill. With the Boucher amendment this 
Statement of Administration Policy is, in effect, an endorsement of 
this bill, certainly as it relates to child support. I thank the 
administration for its good judgment. I would bring this to the 
attention of all the Members of this body.
  Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
  I am constrained to correct what the gentleman from Virginia said a 
moment ago. He quoted half a paragraph. What this paragraph says in the 
statement from the administration is, the formulaic approach in this 
bill, as currently written, could result in moving to Chapter 13 those 
debtors who are likely to fail to complete required repayment plans. 
These debtors would return to Chapter 7 with a diminished ability to 
repay their nondischarged debt, including child support and alimony. 
There are other approaches to limiting access to Chapter 7 that would 
not have this result.
  And they are referring not to the needs-based approach of this bill 
but to the approach of the Democratic substitute.
  Then it continues: If debtors truly have the ability to repay a 
portion of their debt after taking into account all the relevant 
factors, including child support and alimony payments, a successful, 
supervised repayment plan under Chapter 13 could result in a more 
reliable payment, et cetera.
  They are talking about under a different system from this bill, under 
a system such as under the Democratic substitute that we will be 
offering a little later. Frankly, it is not accurate to refer only to 
the second half of the paragraph in saying that.
  The fact remains that the administration and most of the women's 
groups, the NOW, the Children's Defense Fund, the American Association 
of University Women, the YWCA, they all oppose this bill because of the 
problem of child support. They all say that these amendments do not 
solve that problem.
  Having said that, again, I will observe, this is not a terrible 
amendment. I do not think it does much good, but it does not do any 
harm. I will not ask for a vote against it. All I am saying is I do not 
think it solves any problems.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Virginia (Mr. Boucher).
  The amendment was agreed to.
  The CHAIRMAN. It is now in order to consider amendment No. 5 printed 
in House Report 105-573.
  Does any Member wish to offer amendment No. 5?
  It is now in order to consider amendment No. 6 printed in House 
Report 105-573.


                  Amendment No. 6 Offered by Mr. Shaw

  Mr. SHAW. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 6 printed in House Report 105-573 offered by 
     Mr. Shaw:
       Page 76, line 17, insert the following before the 1st 
     period: except with respect to any property of the debtor 
     acquired after the date of the filing of the petition. A 
     creditor that receives a payment, or collects money or 
     property, in satisfaction of all or part of any debt excepted 
     from discharge under paragraph (2), (4), or (14) of section 
     523(a) of this title shall hold such payment, such money, or 
     such property in trust and, not later than 20 days after 
     receiving such payment or collecting such money or property, 
     shall distribute such payment, such money, or such property 
     ratably to individuals who then hold debts entitled to 
     priority under this section. Not later than 5 years after 
     receiving such payment or collecting such money or property, 
     such creditor shall make the distribution required by this 
     section to all individuals whose identity is known to such 
     creditor, or is reasonably ascertainable by such creditor, at 
     the time of distribution.

  The CHAIRMAN. Pursuant to House Resolution 462, the gentleman from 
Florida (Mr. Shaw) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Florida (Mr. Shaw).
       Modification to Amendment No. 6 Offered by Mr. Shaw
  Mr. SHAW. Mr. Chairman, I ask unanimous consent that the amendment be 
modified in the form that I have placed at the desk and which was, just 
a few minutes ago, supplied to each side.
  The CHAIRMAN. The Clerk will report the modification.
  The Clerk read as follows:

  Modification to Amendment No. 6 Offered by Mr. Shaw:
       Page 76, line 17, insert the following before the 1st 
     period: except with respect to any property of the debtor 
     acquired after the date of the filing of the petition. A 
     creditor that receives a payment, or collects money or 
     property, in satisfaction of all or part of any debt excepted 
     from discharge under paragraph (2), (4), or (14) of section 
     523(a) of this title shall, not later than 20 days after 
     receiving such payment or collecting such money or property, 
     distribute such payment, such money, or such property ratably 
     to individuals who then hold debts entitled to priority under 
     section 507(a)(3) of this title. Not later than 2 years after 
     receiving such payment or collecting such money or property, 
     such creditor shall make the distribution required by this 
     section to all individuals whose identify is known to such 
     creditor at the time of distribution.

  Mr. SHAW (during the reading). Mr. Chairman, I ask unanimous consent 
that the modification be considered as read and printed in the Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Florida?
  There was no objection.
  The CHAIRMAN. Is there objection to the modification of the 
amendment?
  Mr. NADLER. Mr. Chairman, I have no objection.
  The CHAIRMAN. Without objection, the modification is agreed to.
  There was no objection.
  (Mr. Shaw asked and was given permission to revise and extend his 
remarks.)
  Mr. SHAW. Mr. Chairman, I yield myself such time as I may consume.
  I rise to offer the Shaw-Camp-English amendment that is central to 
the Committee on Ways and Means' work on the collection of child 
support.
  Under the leadership of the gentleman from Pennsylvania (Mr. Gekas), 
the Committee on the Judiciary has succeeded in not only maintaining 
existing child support priorities but in creating a new priority to 
help custodial mothers who are owed child support after bankruptcy. 
While the legislation creates a post-bankruptcy priority for child 
support, it does not contain a procedure for the enforcement of same.
  We are afraid that credit card companies will outperform mothers, 
especially poor mothers, in securing the father's money, the very money 
that Congress has determined should go first to the mothers and to the 
children.
  Our amendment is really just a perfecting amendment to the amendments

[[Page H4401]]

already adopted by the Committee on the Judiciary. If the credit card 
companies obtain payments from the parents who owe past due child 
support, the companies are required to hold the payments and distribute 
the payments to the custodial mothers if they surface at a later date 
and invoke their legal claim to the money already obtained by the 
companies.
  This amendment would protect the limited number of custodial mothers 
who are owed child support but who are not in the Federal child support 
program and whose children's father was involved in a bankruptcy. These 
mothers and their children are at risk of losing money, and they cannot 
afford to lose this important support.
  This amendment, as modified, varies from the original amendment that 
was made in order by the Committee on Rules. In doing so, I eliminated 
the need of the trust, which was provided in that particular bill, 
which has caused great heartburn, and I think rightfully so, to some of 
the banks and credit card companies that would be holding these 
particular funds. We also reduced from 5 years to 2 years the period of 
time in which these claims have to be made and we also require, as a 
condition for this liability, that they have actual notice of the claim 
of the parent.
  I think this is a very reasonable amendment, and I would urge its 
adoption.
  Mr. Chairman, I reserve the balance of my time.
  The CHAIRMAN. Who seeks time in opposition to the amendment?
  Mr. GEKAS. Mr. Chairman, I rise in opposition to the amendment. I 
rise in opposition to the bill as it is now constructed.
  Mr. NADLER. Mr. Chairman, I rise in opposition.
  The CHAIRMAN. Is the gentleman from Pennsylvania (Mr. Gekas) opposed 
to the amendment offered by the gentleman from Florida (Mr. Shaw)?
  Mr. GEKAS. I am opposed to it in the first instance in the structure 
that it now contains. I am opposed to it. I reserve the right to change 
my mind after I make some remarks for the Record.
  The CHAIRMAN. The gentleman from Pennsylvania (Mr. Gekas) is 
recognized for 5 minutes.


                         Parliamentary Inquiry

  Mr. NADLER. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state it.
  Mr. NADLER. Mr. Chairman, I assume that side of the aisle is not 
going to control 100 percent of the time.
  Mr. GEKAS. Mr. Chairman, I will yield to the gentleman myself if I 
have some time. I will yield to the gentleman from New York.
  Mr. NADLER. Mr. Chairman, is not the normal practice to, in this 
case, to have three people controlling time?
  The CHAIRMAN. The 5 minutes in opposition is controlled by an 
opponent and in this case the gentleman from Pennsylvania (Mr. Gekas) 
is recognized.
  Mr. GEKAS. Mr. Chairman, I am an opponent, and I am going to yield to 
the gentleman from New York, if I have some time left, and I will try 
to reserve some time for him.
  Mr. Chairman, I yield myself such time as I may consume.
  The only reason I oppose the amendment in its original concept, now I 
am being converted slowly but surely to the thrust of the bill, was 
that it was so inflexible. It was too difficult to implement, in our 
judgment. It would cause more trouble than it would solve.
  Now that the language has been improved in which some of the language 
that would have made a credit or a trustee for the support payment has 
been eliminated, I feel a little better about it. So in the final 
context of it, after I yield to the gentleman from New York, I may 
change my mind and agree to the bill or at least not vote against it.
  Mr. Chairman, I yield 2 minutes to the gentleman from New York (Mr. 
Nadler).
  Mr. NADLER. Mr. Chairman, I simply want to point out, this amendment 
originally required that the credit card company that obtained payment 
from a parent who owed past due child support, a nondischargeable debt, 
and they obtained the payment from someone who owed child support, had 
to hold this money in trust for up to 5 years in case they found and 
made due diligent efforts to find the parent owed the child support and 
then turned it over to her.
  The amendment is simply eliminating the due diligence effort and is 
shortening the time period to 2 years, and what it is really doing is 
making a real admission. The admission is that when all is said and 
done, the nondischargeability, making credit card debt 
nondischargeable, as this bill does, makes it impossible in the post-
discharge situation to enforce the child support.
  The change in this amendment recognizes this, because it would be a 
real burden to hold it for 5 years. But why would you want to hold it 
for 5 years? Because the credit card company has gotten to the bank 
first, and they may not know where or who the child support owed the 
custodial parent is. This is just throwing in the towel and admitting 
that we cannot enforce the child support, and there is no point in this 
situation. And there is no point holding the money in trust for 5 years 
so we will only do it for 2 years.
  I do not oppose the amendment, but, again, I think it just 
illustrates that what we are saying about the provision of the bill, 
that making that credit card debt undischargeable makes it impossible, 
makes it very difficult to collect the child support despite all the 
cosmetic amendments that we have heard about.
  Mr. SHAW. Mr. Chairman, I yield 1 minute to the gentleman from 
Michigan (Mr. Camp), coauthor of the amendment.
  Mr. CAMP. Mr. Chairman, I thank the gentleman for yielding me the 
time.
  Mr. Chairman, I rise in support of the Shaw-Camp-English amendment. 
The collection of child support has been central to the work of the 
gentleman from Florida (Mr. Shaw) on the Committee on Ways and Means, 
to all of our work on the Committee on Ways and Means. And the 
gentleman from Florida (Mr. Shaw) and I appreciate the efforts of the 
Committee on the Judiciary in making the collection of child support 
payments the number one priority for debtors in reorganizing their 
debt.
  We should make absolutely sure that kids receive the support they are 
entitled to. Our perfecting amendment would merely require credit card 
companies which obtain payments from debtors who owe past due child 
support to pay custodial parents if they surface at a later date. 
Without this additional protection, parents with children living on 
tight budgets, who cannot afford to bring legal action, may not be able 
to collect the money they desperately need.
  I urge the House to pass this important amendment and ensure that 
children continue to be this Congress's top priority.
  Mr. SHAW. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. English), the other coauthor of the amendment.
  Mr. ENGLISH of Pennsylvania. Mr. Chairman, I rise in strong support 
of the amendment offered by the distinguished chairman of the Committee 
on Ways and Means' Subcommittee on Human Resources that will build on 
efforts initiated in our subcommittee to further strengthen our 
Nation's child support system.
  I appreciate that H.R. 3150 provides for a new Federal priority for 
child support debt. Under our amendment, though, if credit card 
companies obtain payments from parents who owe past due child support, 
the companies are required to distribute the payment to custodial 
mothers, if they surface at a later date, and invoke their legal claim 
to the money already obtained by the companies.
  This amendment will protect approximately 150,000 mothers who are 
owed child support and whose children's father was involved in a 
bankruptcy. In my view, this is a critical part of closing the loop, 
offering additional protection to mothers and their children, and 
making sure that these collections will go forward.
  I hope this amendment will pass with bipartisan support.
  Mr. SHAW. Mr. Chairman, I yield myself such time as I may consume.
  I would urge the passage of this most important amendment. There is 
no greater responsibility that people have in their lives than to take 
care of the children and help support the children

[[Page H4402]]

that they have helped bring into this world. I think it sets the 
priorities right, and this offers a mechanism by which this money can 
be made available for the support of the children.
  Mr. Chairman, I yield back the balance of my time.
  Mr. GEKAS. Mr. Chairman, I yield myself the balance of my time.
  Let me reiterate, the intent and purpose of the Shaw amendment is of 
the highest import, because we have attempted in different ways to 
parallel that intent in language that we have already incorporated 
either in the basic bill or in amendments to that bill.
  All of us are interested in making certain of the priority, highest 
priority for support payments. I still have reservations about the 
workability of the amendment that the gentleman from Florida (Mr. Shaw) 
has offered, but he has now created new language which may make it more 
acceptable.
  I will continue to monitor it between now and the time of conference 
and work with the gentleman from Florida (Mr. Shaw) for even more 
perfect language, for the perfection that he has already accomplished, 
and still reserve the right to work against it if I think it hurts the 
overall concept of the bill.
  In other words, I do not know where I am on the gentleman's 
amendment.
  Mr. SHAW. Mr. Chairman, will the gentleman yield?
  Mr. GEKAS. I yield to the gentleman from Florida.
  Mr. SHAW. Mr. Chairman, I can appreciate the gentleman's position at 
this late date, coming in, particularly, with the new language. But I 
thank him for his consideration of this new language, and I thank him 
for holding fire at this particular time. And also I would like to 
thank the gentleman from New York (Mr. Nadler). I think this is a very, 
very good addition to the bill that is on the floor.

                              {time}  1600

  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Florida (Mr. Shaw).
  The amendment as modified was agreed to.
  Mr. GEKAS. Mr. Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Shaw) having assumed the chair, Mr. Miller of Florida, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 3150) to 
amend title 11 of the United States Code, and for other purposes, had 
come to no resolution thereon.

                          ____________________