[Congressional Record Volume 145, Number 64 (Wednesday, May 5, 1999)]
[House]
[Pages H2655-H2771]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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BANKRUPTCY REFORM ACT OF 1999
The SPEAKER pro tempore (Mrs. Emerson). Pursuant to House Resolution
158 and rule XVIII, 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. 833.
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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. 833) to amend title 11 of the United States Code, and for further
purposes, with Mr. Nethercutt 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 Michigan (Mr. Conyers) each will control 30 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, the Constitution of the United States guarantees that
bankruptcy shall be available to the citizens of our Nation.
Accordingly, Congresses, ever since the first moment of our new land,
have incorporated into their work special provisions to accommodate
those individuals who find themselves totally engulfed by debt rather
than to submit them to the prison dungeons that were the plight of
people previously prior to the United States.
We, our enlightened forefathers, saw fit to allow the Congress to
evolve in a situation in which a fresh start would be accorded to an
ordinary citizen who cannot meet his obligations; and that is where we
are here today.
We, in a long line of congressional action, re-guarantee the fresh
start to individuals who become so engulfed in debt that there is no
other way except for the Government to discharge their obligations and
to allow them to start all over again. We guarantee that in this bill.
But to balance that situation, we also provide in this bill a
mechanism whereby if those individuals who file for bankruptcy can,
after a careful screening, be placed in a situation where they could
repay some of the debt over a period of years, then this bill
accommodates that and allows people to be moved from Chapter 7, where
they would have gotten that fresh start automatically, to Chapter 13,
where they must work through a plan for repayment of some of the debt
over a period of time.
Now, here is the thing that we must make clear to the opponents of
bankruptcy reform and to the people of our country. We are talking
about a dividing line caused by the median income. We provide that the
median income shall be the dividing line.
In other words, people under the median income in our country who
apply for bankruptcy almost certainly will be accorded almost
automatically the fresh start which their financial circumstances
dictate. But we also said that if the income is over the median income,
then that set of financial circumstances should be more closely
scrutinized to determine if any money can be repaid to this debt that
has been accumulated. That is a very balanced and a fair way to
approach the economic system of our Nation.
And what is that median income? We are talking about a median income
of $51,000 for a family of four is the starting point. So if an
individual with four people in the family is earning $30,000 or $40,000
or $50,000, that fresh start is guaranteed. But if they are earning
$55,000, $60,000, $80,000, $100,000 or beyond, then that set of
finances has to be looked at more closely under the provisions of our
bill to see if anything should be used for repayment of some of the
debt. That is fair. That is proper.
The more we do that, the less burden the rest of the taxpayers have
to bear. Because the taxpayers have to pick up the slack. Consumers at
the retail outlets, at the supermarkets, have to pay more. Interest
rates go up, etc. The more we are able to recoup some of the debt from
the high-income people, the less the burden will be on the rest of the
public.
That is what the clear message is of the bankruptcy reform
legislation which we have before the House today. I ask for an
overwhelming vote in support of the underlying bill.
Mr. Chairman, I include for the Record the following letters:
House of Representatives,
Committee on Commerce,
Washington, DC, May 3, 1999.
Hon. Henry Hyde,
Chairman, Committee on the Judiciary, Rayburn House Office
Building, Washington, DC.
Dear Henry: I am writing with regard to H.R. 833, the
Bankruptcy Reform Act of 1999. As you know, the regulation of
securities and exchanges is a matter committed to the
jurisdiction of the Committee on Commerce pursuant to Rule X
of the Rules of the House of Representatives.
Section 1011 of H.R. 833, as ordered reported (``SIPC
Stay''), amends the Securities Investor Protection Act of
1970 (P.L. 91-598), a statute within the jurisdiction of the
Committee on Commerce. As you will recall, this provision was
originally contained in the Financial Contract Netting
Improvement Act of 1998, introduced in the 105th Congress as
H.R. 4393 and on which the Committee on Commerce received an
additional referral of the bill upon its introduction, as did
the Committee on the Judiciary.
Because of the importance of this legislation, I recognize
your desire to bring it before the House in an expeditious
manner, and I will not exercise the Committee's right to a
sequential referral. By agreeing to waive its consideration
of the bill, however, the Commerce Committee does not waive
its jurisdiction over H.R. 833. In addition, the Commerce
Committee reserves its authority to seek conferees on any
provisions of the bill that are within its jurisdiction
during any House-Senate conference that may be convened on
this legislation. I ask for your commitment to support any
request by the Commerce Committee for conferees on H.R. 833
or similar legislation.
I request that you include this letter and your response as
part of the Record during consideration of the legislation on
the House floor.
Thank you for your attention to these matters. I remain,
Sincerely,
Tom Bliley,
Chairman.
____
House of Representatives,
Committee on the Judiciary,
Washington, DC, May 3, 1999.
Hon. Tom Bliley,
Chairman, Committee on Commerce, House of Representatives,
Rayburn House Office Building, Washington, DC.
Dear Tom: Thank you for your letter regarding your
Committee's jurisdictional interest in H.R. 833, the
Bankruptcy Reform Act of 1999.
I acknowledge your committee's jurisdiction over section
1011 (``SIPC Stay'') of this legislation and appreciate your
cooperation in moving the bill to the House floor
expeditiously. I agree that your decision to forgo further
action on the bill will not prejudice the Commerce Committee
with respect to its jurisdictional prerogatives on this or
similar provisions, and will support your request for
conferees on those provisions within the Committee on the
Commerce's jurisdiction should they be the subject of a
House-Senate conference. I will also include a copy of your
letter and this response in the Congressional Record when the
legislation is considered by the House.
Thank you again for your cooperation.
Sincerely,
Henry J. Hyde,
Chairman.
[[Page H2656]]
____
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 5, 1999.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 833, the
Bankruptcy Reform Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne
S. Mehlman (for federal costs), who can be reached at 226-
2860, Lisa Cash Driskill (for the state and local impact),
who can be reached at 225-3220, and John Harris (for the
private-sector impact), who can be reached at 226-6910.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE, MAY 5, 1999
H.R. 833: Bankruptcy Reform Act of 1999
(As reported by the House Committee on the Judiciary on April 28, 1999)
SUMMARY
H.R. 833 would make many changes and additions to the laws
relating to bankruptcy, including establishing a system of
means-testing for determining eligibility for relief under
chapter 7 of the U.S. bankruptcy code. CBO estimates that
implementing H.R. 833 would cost $333 million over the 2000-
2004 period--$322 million in discretionary spending, subject
to appropriation of the necessary funds, and $11 million in
mandatory spending. CBO also estimates that enacting this
bill would decrease receipts by about $4 million over the
next five years. Because the bill would affect direct
spending and governmental receipts, pay-as-you-go procedures
would apply. Provisions in title VIII also would affect
receipts, but the Joint Committee on Taxation (JCT) has not
completed an estimate of such changes at this time.
H.R. 833 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA), but its costs
would be insignificant and would not exceed the threshold
established in that act ($50 million in 1996, adjusted
annually for inflation). Overall, CBO expects that enacting
this bill would benefit state and local governments by
enhancing their ability to collect outstanding obligations in
bankruptcy cases.
H.R. 833 would impose new private-sector mandates, as
defined in UMRA, on bankruptcy attorneys, creditors, and
credit and charge-card companies. CBO estimates that the
costs of these mandates would exceed the $100 million (in
1996 dollars) threshold established in UMRA.
DESCRIPTION OF THE BILL'S MAJOR PROVISIONS
In addition to establishing means-testing for determining
eligibility for chapter 7 bankruptcy relief, H.R. 833 would:
Require the Executive Office for the United States Trustees
(U.S. Trustees) to establish a test program to educate
debtors on financial management; authorize 18 new temporary
judgeships and extend five existing judgeships in 19 federal
districts; permit courts to waive chapter 7 filing fees and
other fees for debtors who could not pay such fees in
installments; require that at least one out of every 250
bankruptcy cases under chapter 13 or chapter 7 be audited by
an independent certified public accountant; exempt chapter 11
debtors from having to pay certain fees in connection with
their bankruptcy cases; require the Administrative Office of
the United States Courts (AOUSC) to receive and maintain tax
returns for all chapter 7 and chapter 13 debtors; and require
the AOUSC and the U.S. Trustees to collect and publish
certain statistics on bankruptcy cases.
Other provisions would make various changes affecting the
bankruptcy provisions for municipalities and the treatment of
tax liabilities in bankruptcy cases.
estimated cost to the federal government
As shown in the following table, CBO estimates that
implementing H.R. 833 would cost the courts, the AOUSC, and
the U.S. Trustees $24 million in fiscal year 2000 and $322
million over the 2000-2004 period, subject to appropriation
of the necessary funds. In addition, we estimate that
mandatory spending for the salaries and benefits of
bankruptcy judges would increase by less than $500,000 in
2000 and $11 million over the 2000-2004 period. Enacting the
means-testing and fee waiver provisions in title I would
result in a net loss in revenues of about $4 million over the
next five years. The costs of this legislation fall within
budget function 750 (administration of justice).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------
2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Means-Testing (Section 102):
Estimated Authorization Level........................ 4 8 8 8 7
Estimated Outlays.................................... 4 8 8 8 7
Debtor Financial Management Training (Section 104):
Estimated Authorization Level........................ 4 0 0 0 0
Estimated Outlays.................................... 1 3 0 0 0
Additional Judgeships--Support Costs (Section 128):
Estimated Authorization Level........................ (\1\) 6 11 11 12
Estimated Outlays.................................... (\1\) 6 11 11 12
Chapter 7 Filing Fee Waivers (Section 148):
Estimated Authorization Level........................ 2 5 8 13 13
Estimated Outlays.................................... 2 5 8 13 13
Credit Counseling Certification (Section 302):
Estimated Authorization Level........................ 4 3 3 4 4
Estimated Outlays.................................... 2 4 3 4 4
U.S. Trustee Site Visits (Section 410):
Estimated Authorization Level........................ 3 2 2 2 3
Estimated Outlays.................................... 1 4 2 2 3
Audit Procedures (Section 602):
Estimated Authorization Level........................ 0 6 15 18 19
Estimated Outlays.................................... 0 6 15 18 19
Maintenance of Tax Returns (Section 603):
Estimated Authorization Level........................ 3 6 7 9 9
Estimated Outlays.................................... 3 6 7 9 9
Elimination of Quarterly Filing Fees (Section 608):
Estimated Authorization Level........................ 10 10 10 10 10
Estimated Outlays.................................... 10 10 10 10 10
GAO and SBA Studies (Sections 609, 613, 414):
Estimated Authorization Level........................ 1 (\1\) 0 0 0
Estimated Outlays.................................... 1 (\1\) 0 0 0
Compiling and Publishing Data (Sections 701-702):
Estimated Authorization Level........................ 0 5 9 8 8
Estimated Outlays.................................... 0 5 9 8 8
------------------------------------------------------
Total Discretionary Changes:
Estimated Authorization Level........................ 31 51 73 83 85
Estimated Outlays.................................... 24 57 73 83 85
CHANGES IN DIRECT SPENDING
Additional Judgeships (Section 128):
Estimated Budget Authority........................... (\1\) 2 3 3 3
Estimated Outlays.................................... (\1\) 2 3 3 3
CHANGES IN REVENUES \2\
Changes in Filing Fees (Section 102): Estimated Revenues. 0 0 (\1\) 1 1
Chapter 7 Filing Fee Waivers (Section 148): Estimated (\1\) -1 -1 -2 -2
Revenues................................................
------------------------------------------------------
Total Revenue Changes: Estimated Revenues................ (\1\) -1 -1 -1 -1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.
\2\ The Joint Committee on Taxation has not yet completed its review of tax provisions in title VIII.
basis of estimate
For purposes of this estimate, CBO assumes that H.R. 833
will be enacted by October 1, 1999, and that all estimated
authorization amounts will be appropriated for each fiscal
year.
Spending Subject to Appropriation. Most of the estimated
increases in discretionary spending would be required to fund
the additional workload that would be imposed on the U.S.
Trustees. Currently, the U.S. Trustees are funded through the
bankruptcy-related fees collected by the courts. Without
additional statutory authority, these fees
[[Page H2657]]
cannot be increased to cover any expenditures or loss of
offsetting collections that would occur under the bill.
Because the legislation does not provide for such increases
in fees, any additional costs would be subject to the
availability of appropriated funds.
Means-Testing (Section 102). This section would establish a
system of means-testing for determining a debtor's
eligibility for relief under chapter 7. Only those debtors
whose income exceeds the regional median household income
with certain adjustments would be subject to the means test.
Under the means test, if the debtor is expected to have at
least $6,000 over five years (after the deduction of certain
allowable expenses) available to pay nonpriority unsecured
claims, then the debtor would be presumed ineligible for
chapter 7 relief. A debtor who could not demonstrate
``extraordinary circumstances,'' which would cause the
expected disposable income to fall below the threshold, could
file under other chapters of the bankruptcy code.
Although the private trustees would be responsible for
conducting the initial review of a debtor's income and
expenses and filing the majority of motions for dismissal or
conversion, CBO expects that the workload of the U.S.
Trustees would increase under the means-testing provisions.
The U.S. Trustees would provide increased oversight of the
work performed by the private trustees, file additional
motions for dismissal or conversions, and take part in
additional litigation that is expected to occur as the courts
and debtors debate allowable expenses and other related
issues. Although CBO cannot predict the amount of such
litigation, we expect that, during the first few years
following enactment of the bill, the amount of litigation
could be significant, as parties test the new law's
standards. In subsequent years, litigation could begin to
subside as precedents are established. Based on information
from the U.S. Trustees, CBO estimates that the U.S. Trustees
would require about 60 additional attorneys and analysts to
address the increased workload. As a result, CBO estimates
that appropriations of $35 million would be required over the
next five years.
Debtor Financial Management Test Training Program (Section
104). This section would require the U.S. Trustees to
establish a test training program to educate debtors on
financial management. Based on information from the U.S.
Trustees, CBO estimates that about 90,000 debtors would
participate if such a program were administered by the U.S.
Trustees in fiscal year 2001. At a projected cost of about
$40 per debtor, CBO estimates that the U.S. Trustees would
require an appropriation of about $4 million in 2000 to
administer the program.
Addtional Judgeships--Support Costs (Section 128). This
provision would extend five temporary bankruptcy judgeships
and authorize 18 new temporary bankruptcy judgeships for 19
federal judicial districts. Based on information from the
AOUSC, CBO assumes that one-half of the 18 new positions
would be filled by the beginning of fiscal year 2001 and the
other half would be filled by the start of fiscal year 2002.
Also, we anticipate that all five temporary judgeships would
be filled by fiscal year 2002. We expect that discretionary
expenditures associated with each judgeship would average
about $450,000 (in 2000 dollars), after initial costs of
about $50,000. Therefore, CBO estimates that the
administrative support of additional bankruptcy judges would
require an appropriation of less than $500,000 in fiscal
year 2000 and about $40 million over the 2000-2004 period.
(Salaries and benefits for the judges are classified as
mandatory spending, and those costs are described below.)
Chapter 7 Filing Fee Waivers (Section 148). This section
would permit a bankruptcy court or district court to waive
the chapter 7 filing fee and other fees for a debtor who is
unable to pay such fees in installments. Based on information
from the AOUSC, CBO expects that in fiscal year 2000 chapter
7 filing fees would be waived for about 3.5 percent of all
chapter 7 filers and that the percentage waived would
gradually increase to about 10 percent by fiscal year 2003.
The filing fee for a chapter 7 case is $130, and income from
this fee appears in two different places in the budget. Of
the $130, $70 is recorded as part of the offsetting
collections to the U.S. Trustee System Fund and to the AOUSC,
and $15 is recorded as governmental receipts (i.e.,
revenues). the remaining $45 is paid to the private trustee
assigned to the case and does not affect the federal budget.
The AOUSC also collects an additional $30 million in
miscellaneous fees with each chapter 7 filing. Taking into
account how means-testing would reduce filing rates under
chapter 7, CBO estimates that implementing this section would
result in a loss in offsetting collections totaling $41
million over the 2000-2004 period. The loss of offsetting
collections would reduce the amount available for spending by
the U.S. Trustees and the AOUSC. Because this loss of fees
would not be matched by a reduction in workload, additional
appropriations would be required to replaced this projected
loss.
Credit Counseling Certification (Section 302). This section
would require the U.S. Trustees to certify, on an annual
basis, that certain credit counseling services could provide
adequate services to potential debtors. Based on information
from the U.S. Trustees, CBO estimates that the U.S. Trustees
would require additional attorneys and analysts to handle the
additional workload associated with certification. CBO
estimates that enacting this provision would require
appropriations of $18 million over the next five years.
U.S. Trustee Site Visits in Chapter 11 Cases (Section 410).
This section would expand the responsibilities of the U.S.
Trustees in small business bankruptcy cases to include site
visits to inspect the debtor's premises, review records, and
verify that the debtor has filed tax returns. Based on
information from the U.S. Trustees, CBO estimates that
implementing section 410 would require about 20 additional
analysts to conduct over 2,300 site visits each year. CBO
estimates that the U.S. Trustees would require appropriations
of about $12 million over the next five years for the
salaries, benefits, and travel expenses associated with these
additional personnel.
Audit Procedures (Section 602). Beginning 18 months after
enactment, H.R. 833 would require that at least one out of
every 250 bankruptcy cases under chapter 7 and chapter
13, plus other selected cases under those chapters, be
audited by an independent certified public accountant.
Based on information from the U.S. Trustees, CBO estimates
that about 1.3 million cases would be subject to audits in
fiscal year 2001, increasing to about 1.8 million in
fiscal year 2004. CBO assumes that about 0.8 percent of
all cases would be audited and that each audit would cost
about $1,000 (in 2000 dollars.) CBO also expects that the
U.S. Trustees would need about 10 additional analysts and
attorneys to support the follow-up work associated with
the audits. Thus, we estimate that implementing this
provision would require appropriations of $6 million in
fiscal year 2001 and $58 million over the 2000-2004
period.
Maintenance of Tax Returns (Section 603). This section
would require the AOUSC to receive and retain tax returns for
the three most recent years preceding the commencement of the
bankruptcy case for all chapter 7 and chapter 13 debtors
(about 8 million debtors over the 2004-2004 period). CBO
estimates that appropriations of $34 million over the next
five years would be required to store and provide access to
over 20 million tax returns.
Elimination of Quarterly Filing Fees (Section 608). This
section would require chapter 11 debtors whose disbursements
are less than $300,000 to pay quarterly fees only until their
case is converted or their plan is confirmed (whichever
occurs first), beginning on October 1, 1999. Currently, these
debtors pay quarterly fees even after their plan has been
confirmed. These fees are recorded as offsetting collections
to the U.S. Trustee System Fund and are available for
spending from that account. According to the U.S. Trustees,
about 4,000 cases would be affected by this provision each
year and, on average, the government collects about $650 per
quarter per case each year. Thus, by shortening the period
during which fees are paid, the bill would reduce annual fee
collections by about $10 million annually. Because this loss
of offsetting collections would reduce the amount available
for spending by the U.S. Trustees (for overall supervision
and administration of bankruptcy cases), CBO estimates that
the U.S. Trustees would require an appropriation of $10
million in fiscal year 2000 and $50 million over the next
five years to compensate for the loss of quarterly filing
fees.
General Accounting Office (GAO) and Small Business
Administration (SBA) Studies (Sections 609, 613, and 414).
Section 609 would require GAO to conduct a study regarding
the impact that the extension of credit to dependents who are
enrolled in postsecondary educational institutions has on
bankruptcy filing rates. Section 613 would require GAO to
conduct a study regarding the feasibility of requiring
trustees to provide the Office of Child Support Enforcement
information about outstanding child support obligations of
debtors. Section 414 would require the Administrator of SBA,
in consultation with the Attorney General, the U.S. Trustees,
and the AOUSC, to conduct a study on small business
bankruptcy issues. Based on information from GAO and SBA, CBO
estimates that completing the necessary studies would cost
between $500,000 and $1 million in 2000, and less than
$500,000 in 2001.
Compilation and Publication of Bankruptcy Data and
Statistics (Sections 701-702). H.R. 833 would require the
AOUSC to collect data on chapter 7, chapter 11, and chapter
13 cases and the U.S. Trustees to make such information
available to the public. CBO estimates that appropriations of
about $30 million would be required over the 2000-2004 period
to meet these requirements. Of the total estimated cost,
about $24 million would be required for additional legal
clerks, analysts, and data base support. The remainder would
be incurred by the U.S. Trustees for compiling data and
providing Internet access to records pertaining to bankruptcy
cases.
DIRECT SPENDING AND REVENUES
Additional Judgeships (Section 128). CBO estimates that
enacting the means-testing provision (section 102) would
impose some additional workload on the courts. Section 128
would authorize 18 new temporary bankruptcy judgeships and
extend five existing temporary judgeships. Based on
information from the AOUSC and other bankruptcy experts, CBO
expects that the increase in the number of bankruptcy judges
would be sufficient to meet the increased workload. Assuming
that the salary and benefits of a bankruptcy judge would
average about $150,000 a year, CBO estimates that the
mandatory costs associated with the salaries and benefits of
these additional judgeships would be less than $500,000 in
fiscal year 2000 and about $11 million over the 2000-2004
period.
Changes in Filing Fees (Section 102). The means-testing
provision also could affect the
[[Page H2658]]
government's income from bankruptcy filing fees because it
would cause changes in the number and type of bankruptcy
filings. CBO projects that about 5 to 10 percent of all
chapter 7 debtors (about 50,000 to 100,000 cases each year)
could be subject to the means test proposed under this bill.
CBO expects that those debtors who are not successful in
proving ``extraordinary circumstance'' will either convert
their cases to chapter 13 cases or withdraw their petitions
for bankruptcy relief. Under either of these options, CBO
estimates that there would be no significant effect on the
federal budget because there is no fee for converting a case
from chapter 7 to chapter 13, and filing fees are not
refunded to debtors who withdraw their petitions for
bankruptcy relief. Over the long term, CBO estimates that the
federal government could collect additional revenues as more
debtors file directly under chapter 13. (The government
collects an additional $45 for each case filed under chapter
13 instead of chapter 7.) This increase could be partly
offset by those debtors who might refrain from filing for any
type of bankruptcy relief. On balance, CBO estimates that the
means-testing provision would increase revenues by about $1
million beginning in 2003. This provision would have no
effect on offsetting collections because there is no
difference in the amount of offsetting collections
collected under either chapter 7 or chapter 13, and any
loss in collections would be matched by a reduction in
workload.
Chapter 7 Filing Fee Waivers (Section 148). As mentioned
above, this section would permit a bankruptcy court or the
district court to waiver the chapter 7 filing fee and other
fees for a debtor who is unable to pay such fees in
installments. For each chapter 7 case filed, the federal
government collects $15. Taking into account the means-
testing provision and the amount of expected waivers, CBO
estimates that implementing this section would result in a
loss in revenues of $1 million to $2 million a year beginning
in fiscal year 2001.
CBO estimates that the net effect on revenues of
implementing the meanstesting and fee waiver provisions would
be a loss of about $1 million annually beginning in fiscal
year 2001.
Tax Provisions (Title VIII). The provisions in title VIII
of the bill are currently under review by the Joint Committee
on Taxation, and estimates of their effects on revenues will
be provided when they are completed.
PAY-AS-YOU-GO CONSIDERATIONS
The Balanced Budget and Emergency Deficit Control Act sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts. Both the means-testing and waiver of
fees would affect receipts; hence, pay-as-you-go procedures
would apply. The net changes in outlays and governmental
receipts are show in the following table. (JCT is reviewing
title VIII and has not yet completed an estimate of its
effects on receipts.) For the purposes of enforcing pay-as-
you-go procedures, only the effects in the current year, the
budget year, and the succeeding four years are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in million of dollars--
--------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays................................... 0 0 2 3 3 3 3 3 3 2 2
Changes in receipts\1\............................... 0 0 -1 -1 -1 -1 -1 -1 -1 -1 -1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimated impact of means-testing and waiver of fees. JCT has not completed an estimate of changes in receipts for title VIII.
ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS
H.R. 833 contains an intergovernmental mandate as defined
in UMRA. Overall, CBO expects that enacting this bill would
benefit state and local governments by enhancing their
ability to collect outstanding obligations in bankruptcy
cases.
Mandates. Section 106 of the bill would preempt state laws
governing contracts between a debt relief agency and a
debtor, to the extent that they are inconsistent with the
federal requirements set forth in this bill. Such preemptions
are mandates as defined in UMRA. Because the preemption would
not require states to change their laws, CBO estimates the
costs to states of complying with that mandate would not be
significant and would not exceed the threshold established in
UMRA.
Other Impacts. The changes to bankruptcy law in the bill
would affect state and local governments primarily as
creditors and holders of claims for taxes or child support.
In addition, it would change some of the state statutes that
govern which of a debtor's assets are protected from
creditors in a bankruptcy proceeding.
In 1996, a survey of the 50 states conducted by the
Federation of Tax Administrators and the States' Association
of Bankruptcy Attorneys indicated that more than 360,000
taxpayers in bankruptcy owed claims to states totaling about
$4 billion. Of these claims, states reported collecting only
about $234 million. While CBO cannot predict how much more
money might be collected, it is likely that states and local
governments would collect a greater share of future claims
than they would have under current law.
Exemptions. Although bankruptcy is regulated according to
federal statute, states are allowed to provide debtors with
certain exemptions for property, insurance, and other items
that are different from those allowed under the federal
bankruptcy code. (Exempt property remains in possession of
the debtor and is not available to pay off creditors.) In
some states debtors can choose the federal or state
exemption; other states require a debtor to use only the
state exemptions. This bill would place a ceiling of $250,000
on the exemptions for homesteads and create a new exemption
for certain retirement funds and education savings plans.
These exemption standards would apply regardless of the state
policy on exemptions. The new homestead exemption would make
more money available to creditors in some cases, while the
exemptions on retirement and education savings generally
would make less money available. States would be allowed
to set the homestead exemption above the federal ceiling
if they specifically enacted legislation doing so.
Domestic Support Obligations. The bill would significantly
enhance a state's ability to collect domestic support
obligations, including child support. Domestic support
obligations owed to state or local governments would be given
priority over all other claims, except those same obligations
owned to individuals. The bill also would require that filers
under chapters 11 and 13 pay in full all domestic support
obligations owed to government agencies or individuals in
order to receive a discharge of outstanding debts. In
addition, the automatic stay that is triggered by filing
bankruptcy would not apply to domestic support obligations.
Last, the bill would require bankruptcy trustees to notify
individuals with domestic support claims of their right to
use the services of a state child support enforcement agency
and notify the agency that they have done so. The last known
address of the debtors would be a part of the notification.
Tax Payment Plans. The bill would require that payment
plans for tax liabilities be limited to six years and that
payment amounts be regular and proportionate to payments for
other obligations. Under current law, taxing authorities
sometimes face payment plans that include a series of small
payments followed by a large balloon payment near the end of
the planned payment stream. At that point, the debtors often
fail to complete their payments. This provision would require
that taxes be paid at a rate proportionate to those of other
debts. It also would establish interest rates to be applied
to outstanding tax liabilities. Under current law, any
interest charges on outstanding tax liabilities are
determined at the discretion of the bankruptcy judge.
Time Limits on Tax Collection. Under some circumstances, a
tax claim can qualify for priority status, and thus a state
and local government would be more likely to collect the
debt. However, this status is granted only if tax is assessed
within a specific period of time from the date of the filing
for bankruptcy. If that filing is subsequently dismissed and
a new filing is made, the tax claim may lose its priority
status. The bill would allow more time to pass in some
circumstances, thus increasing the likelihood that state or
local tax claims would maintain their priority status.
Taxes and Administrative Expenses. Under current law,
certain expenses can be paid out of funds that would
otherwise be available to pay tax liens on property. The bill
would restrict the use of funds for administrative expenses
to a limited number of circumstances, thereby making it more
likely that funds would remain available to cover tax
obligations.
Tax Return Filing and Government Notification. A number of
provisions in the bill would require debtors to have filed
tax returns, and in some cases to be current in their tax
payments, before a bankruptcy case may continue. Also,
debtors would be required to provide notice to state
authorities in a specific manner when they pursue relief
under bankruptcy law. These provisions would help states
identify potential claims in bankruptcy cases where they may
be owed delinquent taxes.
Priority of Payments. In some circumstances, debtors have
borrowed money or incurred some new obligation that is
dischargeable (able to be written-off at the end of
bankruptcy) to pay for an obligation would not be
dischargeable. This bill would give the new debt the same
priority as the underlying debt. If the underlying debt had a
priority higher than that of state or local tax liabilities,
state and local governments could lose access to some funds.
However, it is possible that the underlying debt could be for
a tax claim, in which case the taxing authority would face no
loss. Because it is unclear what types of nondischargeable
are covered by new debt and the degree to which this new
provision would discourage such activity, CBO can estimate
neither the direction nor the magnitude of the provision's
impact on states and localities.
Single Asset Cases. One provision of the bill would allow
expedited bankruptcy proceeding in certain single asset cases
(usually involving a large office building). State and
[[Page H2659]]
local governments could benefit to the extent that real
property is returned to the tax rolls earlier as a result of
this provision.
Municipal Bankruptcy. The bill would clarify regulations
governing municipal bankruptcy actions and allow
municipalities that have filed for bankruptcy to liquidate
certain financial contracts.
estimated impact on the private sector
H.R. 833 would impose new private-sector mandates on
bankruptcy attorneys, creditors, and credit and charge-card
companies. Bankruptcy attorneys would be required to make
reasonable inquiries to confirm that the information in
documents they submit to the court or the bankruptcy trustee
is wellgrounded in fact. Creditors would be required to make
disclosures in their agreements with debtors and provide
certain notices to courts and to debtors. Credit and charge-
card companies would be required to disclose minimum-payment
plans in new account materials and monthly statements. CBO
estimates that the costs of these mandates would exceed the
$100 million (in 1996 dollars) threshold established in the
UMRA.
Sections 102 and 607 would make bankruptcy attorneys liable
for misleading statements and inaccuracies in schedules and
documents submitted to the court or to the trustee. To avoid
sanctions and potential civil penalties, attorneys would need
to verify the information given to them by their clients
regarding the list of creditors, assets and liabilities, and
income and expenditures. Based on 1,286,000 projected filings
under chapter 7 and chapter 13 and an estimated increase in
attorneys' costs of $150 to $500 per case, CBO estimates that
the costs to attorneys of complying with this requirement
would be between $190 million and $640 million in fiscal year
2000. With the rise in projected filings over the next five
years, annual costs would be $280 million to $940 million for
fiscal year 2004. CBO expects bankruptcy attorneys to pass
increased costs on to debtors, reducing the pool of funds
available to creditors.
H.R. 833 would require a creditor with an unsecured
consumer debt seeking a reaffirmation agreement with a debtor
to notify the debtor of his right to a hearing to determine
whether the agreement is an undue hardship, is in the
debtor's best interest, or is the result of an illegal threat
by the creditor. The bill also would require creditors to
specify to the court and to the debtor the person designated
to receive notices. Because the required disclosure could be
incorporated into existing standard reaffirmation agreements,
and the notice to the court and the debtor would require only
minimal effort, the costs of this requirement would be
relatively small.
The costs of the mandate for credit and charge-card
companies are also expected to be small. H.R. 833 would
require credit and charge-card companies to add a brief
statement regarding the function of the minimum payment
option and disadvantages of making only the minimum payment
each month to the materials provided to consumers opening new
accounts and to all customers' monthly statements. Credit and
charge-card companies also would have to provide customers
with an illustration of the length of time required to pay
off a $500 balance if they make only the minimum required
payment. Firms would be able to add this information to the
materials they currently give to customers.
Estimate prepared by: Federal Costs: Susanne S. Mehlman
(226-2860); Impact on State, Local, and Tribal Governments:
Lisa Cash Driskill (225-3220); Impact on the Private Sector:
John Harris (226-6910).
Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
(Mr. CONYERS asked and was given permission to revise and extend his
remarks.)
Mr. CONYERS. Mr. Chairman, I am delighted to begin immediately by
talking about the means test and other consumer provisions that will
harm middle-income and low-income people.
Because contrary to the assertion of my friend, the gentleman from
Pennsylvania (Mr. Gekas), that this is going to make it better, the
means test is going to make it worse. It is incorrect to assume that
the effect of this bill's harmful provisions would be limited to
individuals seeking bankruptcy relief who earned more than the regional
median income.
First, there are numerous significant flaws in the manner in which
the median income is calculated. For example, the median income figure
required under this bill will be outdated and understated. This is
because the bill states that the household income is to be based on the
most recent census figures available as of January 1. But as of January
1, the census has information available for only the second year prior
to the date.
Accordingly, during this year, 1999, census figures will be available
only for 1997. At times of inflation, this 2-year lag could result,
obviously, in a significant increase in the number of individuals who
are subject to the motions to dismiss or convert and who may earn more
than the outdated median-income figure.
Another flaw in the median-income formula is that the test measures a
debtor's income based on how much the debtor earned 6 months prior to
bankruptcy. If the debtor lost a good job in month three and has been
working at a low-wage job ever since, the income from that good job and
the help from family members would be counted as if that is what his
future income would be.
In addition, this bill, unlike current law, will permit creditors and
other parties and interests to bring motions to dismiss more
aggressively; and well-funded creditors will have extremely wide
latitude to use such motions as a tool for making bankruptcy an
expensive, protracted, contentious process for honest debtors, their
families and other creditors.
Now, the bill is opposed by a growing number of Members of the House
of Representatives for the simple reason this bill is worse than the
bill we voted on in the last Congress; and it is bad for women,
children, working Americans. But the good news, if this is good news
for them in the credit card industry, it is good for the credit card
industry.
This means test is fatally flawed. The legislation attempts to impose
a one-size-fits-all income and expense test based on IRS standards to
determine who is eligible for bankruptcy relief and how much they may
be required to pay their creditors.
The problem is that the formula fails to take into account such
important items as child care payments, health care costs, and the
costs of taking care of ill parents, to name but a few of the glaring
loopholes. The IRS standards are so extreme that they have been
rejected by the Congress and abandoned by the IRS; and, yet, the credit
card companies would have them apply them in bankruptcy.
Now, the denials have been pouring in pretty fast here so far; and
there is going to be a lot of discussion about how the bill is
devastating to children and women reliant on child care and alimony
payments. Repeat: The bill is devastating to children and women reliant
on child care and alimony payments.
On the debtor's side, the legislation makes it far more difficult for
single mothers to access the bankruptcy similar. On the creditor's
side, the bill pits sophisticated credit card creditors in direct
competition with alimony and child support. The attempts to fix this
incorporated into the legislation are not effective and are largely
redundant.
And, third, but not finally, but I am going to stop here, the bill
will also lead to a loss of jobs and collective bargaining rights. The
business provisions of the bill will impose harsh new time deadlines
and massive new legal and paperwork requirements on small businesses
and real estate concerns and, by design, will lead to premature
liquidation of job loss.
This is why the largest collective bargaining organization in America
has asserted that the legislation will restrict the workings of
bankruptcy cases for small businesses and place numerous jobs at risk.
Now, the bill conveniently ignores the real problem of what has
caused more bankruptcies, namely, the problem of credit card abuse. And
is there any colleague here that does not get credit card applications
monthly, weekly, occasionally daily? And, at the same time, the
legislation responds to every conceivable debtor excess, real or
imagined. It gives a complete pass to the transgressions of the credit
card industry.
My colleagues should be on the alert. This Bankruptcy Reform Act
legislation of the 106th Congress will worsen the conditions of those
few people in their district, working people, honest people, who may
need to access this important court. Please remember, this bill is
worse than the bill we had last year.
Mr. Chairman, I reserve the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield 4 minutes to the gentleman from
Virginia (Mr. Boucher).
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
[[Page H2660]]
Mr. BOUCHER. Mr. Chairman, I want to express thanks to the gentleman
from Pennsylvania for yielding me this time.
I am pleased to rise in strong support of the adoption of this much-
needed reform to our Nation's bankruptcy laws.
In an era in which disposable incomes are growing, unemployment rates
are low, and the economy is strong, consumer bankruptcy filings should
be rare. Contrary, however, to this expectation, in 1998, there were
1.4 million personal bankruptcy files, a 40 percent increase from the
1996 figure. In 1996, that figure reached one million for the first
time. And, in 1998, there was a full 95 percent increase in the number
of personal bankruptcy files from 1990.
Bankruptcies of mere convenience are often driving this increase.
Bankruptcy was never meant to be used as a financial planning tool, but
it is increasingly becoming a first stop rather than a last resort, as
many filers who could repay a substantial part of what they owe elect
to use the complete liquidation provisions of Chapter 7 of the
bankruptcy law, wipe out all of their debt, even that portion they
could repay, and seek an entire fresh start.
{time} 1245
Our legislation will direct more filers into Chapter 13 plans and
make sure that those who can afford to repay a substantial part of
their debt are required to do so.
Mr. Chairman, this is a consumer protection measure. The typical
American family pays a hidden tax of $550 every year arising from the
increased costs of credit and the increases in prices for goods and
services occasioned by the discharge in bankruptcy of $50 billion in
consumer debt on an annual basis. By requiring that people who can
repay a substantial part of the debt they owe do so in Chapter 13
plans, we can greatly lessen that hidden tax, and this bill will
accomplish that result.
Another key point needs to be made about the legislation. The alimony
or child support recipient is clearly better off under the terms of
this bill than she is under present law. At the present time she stands
seventh in the rank of priority for the payment of claims in
bankruptcy. She is behind farmers making claims against warehouses and
grain elevators. She is behind fishermen who make claims against their
warehouses.
Under this bill, the child support or alimony recipient will be
elevated to the first priority. She will now stand number one in line
for the payment of bankruptcy claims. And other provisions of the bill
also make it easier for the bankrupt's assets to be paid to her.
The gentleman from Virginia (Mr. Moran) will be offering amendments
today that I will support and I encourage other Members to support,
that will require greater disclosures on credit card statements of the
costs of making the minimum monthly payment. Credit card statements
would have to indicate that the ordinary finance charge on the
outstanding balance would continue to accrue.
The Moran amendment supplements other new consumer protection
measures that are already a part of this bill. For example, credit card
companies will be prohibited from terminating a customer's account
simply because that customer pays his bills on time and therefore does
not accrue finance charges. That is a very appropriate change to make
and is one of many consumer protection measures contained in the bill.
This is a balanced, bipartisan measure which contains new consumer
protections and requires greater debt repayment by those who can afford
to make that repayment. This measure, when considered on the floor of
the House as a conference report last year, obtained the votes of 300
of the Members, clearly demonstrating the broad bipartisan base for
enacting this reform.
I am pleased to be coauthoring this measure with the gentleman from
Pennsylvania, and I want to commend him for his leadership in bringing
this balanced and bipartisan bill to the floor. I am pleased to join
with him in urging its passage by the House.
Mr. CONYERS. Mr. Chairman, I yield myself 1\1/4\ minutes.
I think it is very important that we begin to deal with the alimony
and child support measure head-on. It has been suggested that this is
not a problem or that it has been improved upon. But actually for women
whose average income was at the median during the last 100 days before
the support checks stopped or women whose child care expenses exceeded
IRS standards, they may be denied access to Chapter 7 and forced into a
restrictive Chapter 13 repayment plan.
Secondly, the bill does not exempt child support or foster care
payments from the means test definition of disposable income, and does
not exclude alimony and child support payments received within 6 months
after filing for bankruptcy from the property of the estate.
How can we talk about women and children are okay? This bill is
presently a disaster for single mothers and their children, which
number in the alimony and child support area an estimated 243,000 to
325,000 bankruptcy cases each year. The National Partnership for Women
and Families have told us that the child support enforcement provision
in the bill would not adequately protect parents and children.
Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Virginia
(Mr. Scott) a distinguished member of the Committee on the Judiciary.
Mr. SCOTT. I thank the gentleman for yielding me this time.
Mr. Chairman, this bill overturns centuries of well-established laws
involving bankruptcy and the principle that those who are in financial
ruin can get a fresh start if they pay all they have, with certain
exceptions, to their creditors. Instead, they will be required for
those affected to essentially be in debtor's prison for 5 years. Those
who find themselves financially overwhelmed because of a loss of a job,
illness, business failure, will not get a fresh start. They will have
to pay every dime they have, after food and rent and a few other
expenses, to their creditors.
Now, that is not a fresh start. That is a guarantee that at the end
of 5 years they will be worse off than they started. So if someone is
stuck with bills, maybe a spouse had a business reversal, got sick, a
spouse had joint debts and their other spouse leaves or dies, they will
not get a fresh start. They will get no relief for 5 years.
Now, let us not get misled by this means test where only certain
people are affected by this legislation. All that means is that it is
not a bad bill for everybody, it is just a bad bill for some people.
That does not make it a good bill.
Now, there are some technical problems with the legislation. First of
all, the salary calculation in what you have to pay is based on the
last 6 months. Part of the bankruptcy problem may be caused by the fact
that you lost your job, and that calculation is obviously not
effective. You may be forced to pay more than in fact you have as
income. It includes as income disability benefits or veterans benefits
which if you have another job you will essentially lose in the future,
and it forces spouses to compete with sophisticated creditors for their
child support.
But fundamentally it violates centuries of laws that provide for a
fresh start. I ask that this not happen in a haphazardly drawn bill
that has technical problems and which is opposed by virtually every
group of experts in bankruptcy law. Mr. Chairman, I would ask that we
defeat this bill.
Mr. GEKAS. Mr. Chairman, I am pleased to yield 2\1/2\ minutes to the
gentlewoman from New Jersey (Mrs. Roukema).
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. I thank the gentleman for yielding me this time.
Mr. Chairman, I want to offer my strong support for this legislation.
It goes a long way to correct the problems of bankruptcy. But right now
I want to focus on the issue of child support. I have been a pioneer in
the efforts at reforming child support, and I served on the U.S.
Commission for Interstate Child Support Enforcement.
Over the last 10 years we have done a great deal to enforce child
support and require the legal obligations, to close that enforcement
gap. But in recent years we have learned that bankruptcy is one of the
loopholes that has been used. Contrary to what we have heard before, as
I view this legislation, it is strong and goes a long way toward
[[Page H2661]]
closing the enforcement gap as it relates to the child support
component.
This bill really deals with the issue in a substantive way. It
includes child support payments that are moved up to number one when
determining which debts are paid first in a bankruptcy case. It gives
confirmation and discharge of Chapter 13 plans and makes them
conditional upon the debtor's complete payment of child support. And
there are other issues in here that deal directly with child support.
But I want to particularly distinguish the reform measure that was
led by the gentleman from Florida (Mr. Shaw) and also joined by the
gentlewoman from Texas (Ms. Jackson-Lee), so that there was bipartisan
support for this reform that will require the trustee to notify a
claimant parent of the bankruptcy proceedings.
I will not go into a lot more detail, but it is a strong bill as far
as closing those enforcement gaps. But I do want to commend the
gentleman from Pennsylvania (Mr. Gekas) and thank him for including my
amendment on child support during the markup. That amendment requires
the GAO to study the feasibility of having bankruptcy court trustees
report the names of individuals filing bankruptcy to the Office of
Child Support Enforcement.
This study by the GAO that we are requiring in this legislation, we
in the Congress will use this study to close any remaining loopholes
that may remain that are permitting people to avoid their legal child
support. It will make it criminal, but at the same time we must
remember that it is the children who are being abused and deprived. I
lend my strong support to this and look forward to continuing to work
on the basis of the GAO study.
Mr. Chairman, I rise in strong support of H.R. 833--the Bankruptcy
Reform Act of 1999.
introduction
Consumer bankruptcy reform is an important issue that needs to be
addressed now. In 1997 Americans filed a record of 1.33 million
consumer bankruptcy petitions representing an over 650 percent increase
since 1978. Those who entered into bankruptcy erased an estimated $40
billion in consumer debt. This resulted in a hidden tax of almost $400
per household for families who have to pay monthly bills including
mortgages, student loans, and insurance. It is important to note that
this surge in bankruptcies in the last few years occurred at a time
when the national economy has grown at a strong rate. In fact, between
1986 and 1996, real per capita annual disposable income grew by over 13
percent while personal bankruptcies more than doubled.
Bankruptcy is fast becoming the first stop financial planning tool
rather than a last resort. The purpose of reform is to improve
bankruptcy law and practice by restoring personal responsibility and
integrity in the bankruptcy system but also ensuring that the safety
net of the bankruptcy code is intact for those who need it most. I am a
strong supporter of the consumer bankruptcy reforms contained in the
bill.
child support
What I really want to focus on in today's debate is child support. I
have a long history of standing up for child support enforcement,
having been a pioneer on child support reforms and having served on the
U.S. Commission for Inter-State Child Support Enforcement. It's a
national disgrace that our child support enforcement system continues
to allow so many parents who can afford to pay for their children's
support to shirk these obligations. And despite the reforms the so-
called `enforcement gap'--the difference between how much child support
could be collected and how much child support is collected--has been
estimated at $34 billion!
This legal abuse is a criminal violation as well as neglect of our
children's most basic needs. In addition, the taxpayers are abused
because billions of tax dollars are paid out because these families are
falling onto the welfare roles at alarming rates.
I want to commend the Committee for their attention to child support
components of this problem. I am very pleased that H.R. 833--the
Bankruptcy Reform Act of 1999 strengthens child support enforcement. I
thank Chairman Gekas and the Committee for all their hard work and
their reaching out to diverse groups to form a consensus that the
payment of child support should be protected.
H.R. 833 stregthens Child Support Enforcement by:
Child support payments are moved to NUMBER ONE when determining which
debts are paid first in a bankruptcy case. Currently, child support
payments rank seventh behind such ``priorities'' as attorney's fees.
Confirmation and discharge of Chapter 13 plans are made conditional
upon the debtor's complete payment of child support. This will help
further ensure that child support receives the priority it deserves.
Providing that the automatic stay DOES NOT apply to a state child
support collection agency that is trying to recover child support
payments. I know from speaking with child support advocates in New
Jersey, that this change is a top priority for them to ensure continued
payment of important child support.
I also want to associate myself with an additional provision, that
was added in full Committee, that will require the trustee to notify a
claimant parent of the bankruptcy proceeding. This reform measure was
led by Rep. Clay Shaw and me. This will ensure that claimant parents
are not left out when a debtor parent enters into bankruptcy. It is
important to note that this was dropped from the Conference report last
year. Fortunately with Representative Shaw's leadership and with
Representative Jackson-Lee--Republicans and Democrats providing bi
partisan support.
There are important reforms for any state of New Jersey and for
states across the nation. In fact these provisions are welcomed
improvements that will help make real and positive change.
The current child support obligation for this year in New Jersey is
$767 million. The total child support payments in arrears is $1.3
Billion. Yes, I said $1.3 Billion, of which about $800 million is still
collectible. Bergen county in my district, along with six other New
Jersey counties, make up 53 percent of the total collections.
my amendment
In addition, I am grateful to Chairman Gekas and the Committee for
including my amendment on child support during mark-up. My amendment
requires the GAO to study the feasibility of having Bankruptcy Court
trustees report the names of individuals filing bankruptcy to the
Office of Child Support Enforcement. The names could then be checked
against a national list of court orders for child support. Those found
to have support obligations would have the support obligation listed
among the debts before the Bankruptcy Court and be used to better
facilitate communication between claimant parents, state agencies and
the trustee.
The GAO would have 10 months from the enactment of the legislation to
conduct the study and report to Congress. The study is intended to lead
to effective legislation ensuring that debtor parents cannot use
bankruptcy to escape their child support obligations. In other words,
we want to use this study to close any remaining loopholes that avoid
child support legal obligations.
conclusion
These are important and significant improvements that ensure that
child support enforcement is strengthened. I supported these provisions
last year and plan to support them this year.
It is important to remember that failure to pay child support is not
a victimless crime. The children are the first and most important
victims. We must ensure that these children are taken care of and I
applaud the work of the Committee to this end and will continue my work
on this issue. I urge support for this important legislation.
Mr. CONYERS. Mr. Chairman, I yield myself 45 seconds.
I want to address the gentlewoman from New Jersey, whose concern
about bankruptcy is well-known and remembered from the last Congress. I
read to her the first paragraph of the National Women's Law Center
letter sent to me only 2 weeks ago which says that ``The bankruptcy
bill, H.R. 833, puts economically vulnerable women and children at
greater risk. By increasing the rights of certain debtors, including
credit card companies and secured creditors, the bill would set up a
competition for scarce resources between parents and children owed
child support and commercial creditors both during and after
bankruptcy. And single parents facing financial crises--often caused by
divorce, nonpayment of support, loss of job, uninsured medical expenses
or domestic violence--would find it harder to access the bankruptcy
process and harder, if they got there, to save their homes, cars and
essential household items.''
This is a nonpartisan organization. I urge the Members to carefully
consider what we are doing to our women and children.
Mr. Chairman, I yield such time as he may consume to the
distinguished gentleman from Massachusetts (Mr. Delahunt).
Mr. DELAHUNT. I thank the gentleman for yielding me this time.
Mr. Chairman, we have heard much about personal responsibility during
the course of this debate. We have heard over and over again from
members of the credit card industry that individuals must be held
accountable for
[[Page H2662]]
their behavior and that no longer is there any stigma attached to
bankruptcy.
No one disagrees with the principles of personal accountability and
personal responsibility. The problem is that the rhetoric does not
withstand scrutiny in terms of the evidence supporting a linkage, to
establish a link between the increase in personal bankruptcy filings
and the change we are told has taken place in people's attitudes about
bankruptcy simply does not exist.
{time} 1300
On the eve of the committee markup I finally received from the
Congressional Budget Office a draft of a report which I and other
minority members of the committee requested more than a year ago. It
concludes, and I quote:
At this point, we do not have a clear idea of the benefit
of a needs-based bankruptcy requirement.
It further concludes, and again I am quoting:
Available research on the behavior of personal filings over
time does not paint a clear picture of whether filings
respond to incentives in the bankruptcy law.
In other words, we know very little about the likely consequences of
what we are doing here today. Yet we are proceeding as if the evidence
was clear and compelling.
But do not be misled. This bill will not reduce the number of
bankruptcy filings. Colleagues will not see a substantial difference in
terms of the 1.4 million annual filings.
But there is an issue of responsibility, corporate responsibility,
and I submit that if we insist on responsible lending by the credit
card industry, we will reduce the number of bankruptcy filings. Because
while we do not know the cause of the increase in bankruptcy filings,
no one, no one can legitimately dispute that irresponsible lending
practices are at the very least a contributing factor.
Instead of encouraging responsible use of credit cards and reduction
of credit card debt, many credit card lenders have encouraged card
holders to take on an increasing amount of debts when they can ill
afford it. They have increased interest rates, they have increased fees
on current accounts, they have imposed penalties on consumers who pay
off credit card balances without incurring any interest charges, and we
have all experienced, everyone has experienced, the aggressive
marketing tactics of the credit card industry. Last year alone they
sent out more than 4 billion, that is 4 billion, solicitations, many of
them to students with no credit history whatsoever and consumers
already in debt.
The first exhibit to my right shows one of those solicitations which
went to my own college-aged daughter. It is what is known as a live
loan. I do not know why it is a live loan, but it is called a live
loan, which invited her to cash a negotiable check for $2,875 at 18.9
percent interest. The offer said:
Use the money for whatever you like. No limits, no
restrictions, no questions asked--
and I am quoting from the solicitation.
If my colleagues question the link between these kinds of aggressive
marketing practices and the rising bankruptcy rate, I invite them to
examine the second exhibit to my right. The first panel displays a
credit card offer by First Consumers National Bank, a nationally
chartered credit card bank owned by Spiegel and Eddie Bauer. It says,
and I am quoting:
If you filed a bankruptcy, you can get a fresh start with
this First Consumers National Bank Visa Card today. Your
filed bankruptcy, your filed bankruptcy, qualifies you. No
need to wait for bankruptcy discharge.
That is a quotation.
The second panel also shows a letter sent to bankruptcy attorneys,
and I think it is the third panel, it is the third panel. The third
panel shows a letter to bankruptcy attorneys by a Minnesota company
that calls itself American Bankruptcy Service. The letter seeks to
enlist these attorneys as distributors. Must be like an Amway, an Amway
of bankruptcy services who will market the fresh start card to their
clients. It actually goes so far as to offer them a commission. For
each credit card issued, it promises they will receive $10, 10 bucks if
they can get out there and peddle that card.
Now a balanced bankruptcy bill would address this kind of egregious
conduct. It would demand responsible behavior not only of debtors but
of credit card lenders themselves and particularly those creditors
whose own reckless lending practices have done so much to drive people
into bankruptcy.
But this is not a balanced bill. H.R. 833 does nothing, nothing to
encourage corporate responsibility. In fact, it would reward
irresponsible lending by enhancing the position of credit card
companies relative to other creditors. It would create a vast new
system of means testing that would be implemented at taxpayer expense.
In effect, the bill would turn the bankruptcy system into a public
funded with our tax dollars collection agency to increase the
profitability of the credit card industry.
And what would this all cost the taxpayer? According to the CBO, last
year's bill would have cost $214 million over a 5-year period, but that
does not include some $225 million in administrative costs required to
cover the additional duties assigned to the U.S. trustees under H.R.
833. In other words, almost a half a billion dollars so that the credit
card industry can enhance their bottom line.
This bill is nothing more than a public subsidy for the credit card
industry, Mr. Chairman, and it deserves to be defeated.
Mr. GEKAS. Mr. Chairman, I yield 30 seconds to the gentleman from
Michigan (Mr. Smith).
Mr. SMITH of Michigan. Mr. Chairman, I thank the gentleman for
yielding this time to me, and thank him for his leadership and those on
his committee for bringing a bill before Congress that is going to have
the effect of lowering interest rates and making credit more available.
This bill encourages competition by reducing uncertainty.
Right now, all those credit card companies jack up their interest
rates because their competition is forced to impose high interest rates
to cover the ease of declaring bankruptcy.
Also let me just say that the farm provisions in this bill that
extend indefinitely the provisions of chapter 12 in title 11 for
farmers is very good for the agricultural community.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentlewoman from
New York (Mrs. Kelly).
Mrs. KELLY. Mr. Chairman, I thank the gentleman from Pennsylvania
(Mr. Gekas) for yielding me the time to clarify some very important
provisions in this legislation.
Mr. Chairman, I rise today in strong support for H.R. 833, the
Bankruptcy Reform Act, because it boils down to two words: personal
responsibility. If one assumes a debt, they should do everything in
their power to pay it off. However, a safety net has to remain for
those who legitimately cannot pay their debts. Creditors should be made
whole, if possible.
Some of my colleagues here today are trying to paint the word
creditors to mean faceless financial institutions who are tricking
consumers into assuming debt. They specifically speak of credit card
debt. They unfortunately failed to note that credit card debt in the
United States amounts to only 3.7 percent of all consumer debt.
Furthermore, only 1 percent of credit card accounts end up in
bankruptcy. Of that 1 percent it is estimated that 15 percent of those
accounts can afford to repay some or all of their debt.
The people who are truly being hurt by our current bankruptcy system
are Americans who play by the rules and pay their debts. Bankruptcy
costs the average American family an average per year of $400.
Needs-based bankruptcy reform is well overdue, and that is what H.R.
833 delivers. It is the people who game the system that we have to
stop.
I have heard from my colleague from Virginia (Mr. Moran). He stated
last year more people filed for bankruptcy than graduated from college.
That is a staggering fact.
I am pleased to support H.R. 833's provisions which strengthen the
Bankruptcy Code protections for ex-spouses and children. They have to
be supported.
In the current bankruptcy law, child support and alimony are placed
seventh behind attorney fees as debt obligations. If enacted, this bill
would move child support and alimony payments to first on the list of
debt obligations.
Also under current law, some debtors use the automatic stay to avoid
paying
[[Page H2663]]
child support payments after they file for bankruptcy. H.R. 833 exempts
State child support authorities from the automatic stay, thus insuring
less delay in the proper payment of child support.
I vehemently oppose any legislation that would reduce the ability of
women and children to receive support payments.
H.R. 833 is a good bill that moves us in the right direction, and I
ask my colleagues from both sides of the aisle to join me in support of
this reasonable reform.
Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentleman from
Massachusetts (Mr. Delahunt).
Mr. DELAHUNT. Mr. Chairman, I thank my friend and colleague for
yielding me 30 seconds.
Let us be very, very clear, and I know that most members of the
committee were aware of this, but for the rest of our colleagues:
During one of our hearings there was a panel of nine witnesses,
including representatives of the credit card industry and minority
witnesses. I asked a question and polled each of them, and all nine
unanimously stated that this bill would not lower interest rates.
So that is a red herring, I suggest. The bill should be defeated.
Mr. CONYERS. Mr. Chairman, I yield 5 minutes to the gentleman from
New York (Mr. Nadler).
Mr. NADLER. Mr. Chairman, I wanted to discuss a few things about this
bill: first, the alleged need for it. And I want to stress that even
though I am going to say there is no necessity for this bill, the
Democratic substitute answers the nonexisting problem which they posit.
We are told the need for this bill is that the American people,
especially the American middle class, are a bunch of deadbeats, that
there is a huge increase in bankruptcy filings, which there is, and
that the reason for this huge increase in bankruptcy filings is that we
have changed social mores. There is no more stigma associated with
bankruptcy. People used to be very reluctant to declare bankruptcy. Now
they do it as a financial planning instrument, and they are deadbeats,
and, therefore, we have got to crack down on it because the credit card
companies are not making enough money.
What is the truth of the matter? The truth is that is nonsense. Sure
there are a lot more bankruptcy filings, but why? The figures tell a
very different story.
First of all, if it were true that the reason for the increase in
bankruptcy filings were a change in social mores where people are more
easily going to bankruptcies, then people would be going bankrupt when
they are less in debt, when they are less in trouble. The figures say
differently.
In 1983, before the surge in bankruptcy filings started, the average
person who filed for bankruptcy had debts equal to 74 percent of his
income. If one has that much debt compared to income, they file for
bankruptcy.
Today, the average bankruptcy filer has debts equal to 125 percent of
his income; so people are 50 percent more desperate before they go into
bankruptcy. They are less eager to file, they are more reluctant to
file, they are further in the hole before they file.
So why then do we have such an increase in bankruptcy filings? Here
is the answer:
If we look at society at large, not at just bankruptcy filings but at
society at large, we can find two things. We find the bankruptcy
filings rising, but we also find the household debt burden as a
percentage of income rising right along with it. Look how those two
lines match.
Mr. Chairman, credit card companies, used to be when I was in college
it was hard to get credit. Today they shove it at high school kids.
Today they shove credit cards at people who are already 80 percent of
their income in debt, of their annual income.
{time} 1315
That is the real problem, irresponsible lending by the credit card
companies. More and more credit is being given to people. People are
getting more and more in debt. Just as the debt-to-income ratio rises,
the bankruptcy filing rate rises right in tandem.
By the way, we are told that in 1978 Congress made the bankruptcy
laws easier, and in the early eighties we started seeing an increase in
bankruptcy because the laws are too easy; now we have to crack down.
Look at Canada. Canada has very harsh bankruptcy laws, harsher even
than they want to make our laws in this bill. It has always been very
harsh, and yet they have had the same increase in bankruptcies. We can
date it.
When did it start in Canada, the increase in bankruptcies? In 1968.
Why 1968? That is the year when the Visa card went into Canada, and
they have had the same problems we have had with very harsh bankruptcy
laws.
So this is a myth. The myth that the American middle class are
deadbeats and that we have to crack down and squeeze a little bit more
money out of them when they go bankrupt, it is a myth.
The Democratic substitute does squeeze it, but it squeezes it in a
more rational way.
Let us talk about four things that this bill does. We are told that
we ought to have a means test, needs-based bankruptcy. People should
not simply get a discharge of their debts; they should have to repay if
they can.
I will agree to that. We all agree to that. If people can repay, they
should do so, and there should be a means test to see if they can
repay, but a means test should mean a means test. What is your income?
What are your unavoidable expenses? The difference is how much can
afford to be repaid.
What does this bill do? Does it look at current income, at
anticipated income? No. It looks back at income for 6 months before one
files bankruptcy and assumes that is going to be the income.
It is pretty common in this country today for someone to be making
$50,000, $75,000, $80,000 a year as middle management at IBM or some
other big company, laid off. Now he is making $25,000 at McDonald's or
as a consultant. That is the new underemployment for the middle class,
a consultant.
Well, he is making $25,000. He contracted debts based on an income of
$75,000. Now he goes bankrupt. This bill does not look at his new
income, which is $25,000, or his prospective income which is $25,000.
They look at what his income used to be, $75,000.
Is that fair or rational? Does it make sense? No.
The other half of the means test, what are your expenses? Well, what
is your rent? What is your mortgage payment? Does this means test look
at this? No. It looks at what the IRS thinks in its guidelines the
average mortgage or rent ought to be in the Northeast or the
southwestern United States, in guidelines so harsh the Congress told
IRS to junk them last year, but for bankrupts we are going to do the
same.
So we have to really crack down on the debtors. What about the
dishonest creditor? Sears Roebuck was adjudged to have defrauded
bankrupt people, debtors, $168 million in a class action suit last
year. We cannot let that happen again. Big business crooks have to be
protected, so this bill says no more class action suits. Someone wants
to sue the big malefactor, the big guy who is cheating people of
millions of dollars, they better have a few hundred thousand dollars in
legal fees. One person cannot bring that lawsuit and it cannot be done
for a class. No class action lawsuits; only in bankruptcy and only
against creditors.
Small businesses, this bill murders small businesses. Many small
businesses reorganize in bankruptcy. They get protections from their
creditors. They manage to reorganize, get out of debt, and go on. This
bill imposes such rigid requirements and such time lines on them that
they will liquidate and kill jobs in businesses that could have
survived.
Finally, child support, they claim that this bill saves child
support. No, it does not. It kills child support enforcement. How? Two
ways. Chapter 7, it says that not only are child support payments
nondischargeable, so is credit card debt nondischargeable, so there is
more to compete with mom.
Who is going to collect the debt, mom or the credit card attorney?
They say we will give priority to mom; we will give priority to child
support. Priorities are irrelevant after the discharge.
When someone is not in bankruptcy court anymore, priorities do not
apply,
[[Page H2664]]
and in Chapter 13 they say a person cannot have a Chapter 13 repayment
plan accepted by the court unless all the child support is paid, there
is a plan to pay all the child support. They count as child support
debts owed the government, so if the means test in Chapter 13 says he
can pay enough money to pay the child support to the custodial parent
but not enough to pay the debt he owes to the government, not enough,
cannot do it, cannot confirm a plan, too rich to go bankrupt in Chapter
7, too poor to go bankrupt in Chapter 13, cannot go bankrupt at all,
and she is out there competing with every other debt collector in the
world. What chance does she have?
This bill also hurts farmers. There is no reason for such a harsh,
one-sided bill. The Democratic substitute is a very harsh bill. I
personally would not vote for it if it were a freestanding bill. I
think it is too harsh, but it does everything reasonably that should be
done and does not do some of these terrible things of prohibiting class
actions, murdering child support, having an unfair means test, hurting
small businesses.
That is why the administration will veto the bill. That is why every
union is opposed to it, every consumer group, every professional
bankruptcy group. Anybody who knows anything about bankruptcy in the
profession is opposed to this bill, except for the credit card issuers
and the banks.
So I urge a ``yes'' vote on the Democratic substitute and a ``no''
vote on the bill.
Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentlewoman from
California (Mrs. Tauscher).
Mrs. TAUSCHER. Mr. Chairman, I rise in support of the Bankruptcy
Reform Act because it is based upon a simple principle of personal
responsibility. Those who buy on credit should be required to pay their
bills.
Our current bankruptcy system does not hold people to that standard.
In 1998, a record 1.4 million Americans went to court to have their
debts erased. Some were hard-working Americans who could not afford to
pay their bills and needed bankruptcy protection, but many others took
advantage of a failed bankruptcy system that encourages people to avoid
paying their debts.
When people who cannot pay their debts do not, middle class Americans
pick up the tab because companies charge higher prices to make up for
the losses. Working families in America have a hard enough time paying
their own bills. They should not have to needlessly pay someone else's.
The Bankruptcy Reform Act makes the right changes to the law by
requiring those who can reasonably pay at least 25 percent of their
debt to do so. Lower income Americans who truly cannot get out from
mountains of debt will continue to have an escape hatch.
Mr. Chairman, I urge my colleagues to again stand for the reasonable
principle of personal responsibility and pass this important
legislation.
Mr. GEKAS. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from
New Jersey (Mr. Menendez).
(Mr. MENENDEZ asked and was given permission to revise and extend his
remarks.)
Mr. MENENDEZ. Mr. Chairman, I thank the gentleman from Pennsylvania
(Mr. Gekas) for yielding me this time and for his work on this bill,
along with the gentleman from Virginia (Mr. Boucher) and others.
Mr. Chairman, our bankruptcy system should be a safety net for those
in need, not a financial planning tool for the well-to-do. It is not
fair for the large majority of working men and women who pay their
bills and play by the rules to continue footing the bill and paying the
price for those who abuse the bankruptcy system. It is just not right.
This bill makes sure that those who truly need the safety net of
bankruptcy get it, like those who lose their job or have a medical
emergency or a sick child. This bill protects those people, but it also
makes sure that those higher income people, who can still repay some of
their bills, do so. In my view, that is just basic personal
responsibility.
Under the bill, if the debtor earns less than the median household
monthly income, they can file Chapter 7, have almost all of their debts
erased and be totally unaffected by the needs-based formula. If they
make above the median and their monthly income is great enough to pay
at least $6,000 of the unsecured debt after subtracting actual priority
debts, after subtracting secured debts like their mortgage, after
subtracting actual school tuition for their kids, after subtracting
allowable living expenses based on IRS guidelines, then, yes, they have
a Chapter 13 repayment plan.
Now, that is allowing for a lot of leeway and a lot of protection
before we ask someone to pay back the people they owe.
Our colleagues, the gentleman from Illinois (Mr. Hyde) and the
gentleman from Michigan (Mr. Conyers), who I have a great deal of
respect for, have an amendment to take the IRS living standards out of
the bill and give more discretion to the judges. In my mind, that is a
mistake because it is the unfettered discretion that has made the
bankruptcy laws so unfair.
Under our current rules, a wealthy person can be subject to one
standard for living expenses while the working man or woman is
subjected to another one. I believe our Bankruptcy Code should treat
everyone equally. That is what the formula does.
Worst of all, under our current system children are often the ones
who get shortchanged because their support payments can be stayed
during bankruptcy proceedings, all while their noncustodial parents
continue to enjoy their current standard of living. So this bill ends
that practice and puts child support at the very top priority during
bankruptcy, where it should have been all along.
I urge my colleagues to vote for this bill. Let us bring some
fairness, some justice, some standards, some protection for our
children and some sense to our Bankruptcy Code.
Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentlewoman from
Oregon (Ms. Hooley).
Ms. HOOLEY of Oregon. Mr. Chairman, I thank the gentleman from
Pennsylvania (Mr. Gekas) for his work and for yielding me this time.
Mr. Chairman, I am an original cosponsor of H.R. 833, a bill that
provides common sense bankruptcy reform. It has been said that over the
last 7 years we have had unparalleled economic prosperity and yet the
bankruptcy filings have hit an all-time high. The thing that has
happened is we have had a lot of studies that have also said some of
those people that are filing bankruptcies can afford to pay back some
of that debt.
I am supporting this bill because it ensures those with the ability
to pay that they pay, and those who legitimately need protection from
creditors get it.
I hope Members will keep in mind, and we have heard this number of
$51,000 for a family of four, which is the median income, they are not
even affected by this legislation. If they are making $51,000, they are
not affected by this legislation. For those above that threshold, there
is a sensible means testing that determines whether a debtor should be
able to walk away and not pay anything or at least pay part of their
debt.
Mr. Chairman, this bill encourages personal responsibility, meets its
obligation for children and families and saves American consumers
money. I urge support for this bill.
Mr. GEKAS. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from
New Jersey (Mr. Rothman), a member of the committee.
(Mr. ROTHMAN asked and was given permission to revise and extend his
remarks.)
Mr. ROTHMAN. Mr. Chairman, I thank the gentleman from Pennsylvania
(Mr. Gekas) for yielding me the time.
Mr. Chairman, I rise today in favor of H.R. 833. I believe that this
legislation is important in order to restore integrity to our Nation's
bankruptcy system.
While I believe in the fresh start that bankruptcy provides, and
agree that there are people who legitimately need and deserve its
protections, I am concerned that this last resort is currently being
abused by many people. That is unfair to consumers, to creditors and to
the people who truly need the system.
Also, while I support the bill, I believe that it could have been
made better had we been allowed a floor vote to
[[Page H2665]]
eliminate the provision which allows States to opt out of the homestead
exemption contained in the bill, and I hope that the various State
legislatures who have been given this discretion will do so wisely.
Nevertheless, I support H.R. 833 and wish to make four points today.
First, I believe that there is an urgent need for meaningful reform. It
is just common sense, if someone borrows money from somebody else or
they encourage them to perform some services and they consume the money
or get the benefit of the services, they should pay it back if they
can, because if they do not, everyone else in America pays for being a
deadbeat.
Now, this bill says we do not want the rest of American families to
pick up the tab for those who have avoided paying their just
obligations, even though they could afford to repay all or a portion of
it.
Next, there is a need to create Federal standards. More than 70
percent of the all-time 1.4 million bankruptcies were filed in Chapter
7, which means all their debts are forgiven, even without regards to
income. This says, let us take a look at the regional median income. So
in New Jersey, the State that I come from and represent, if someone
makes $67,000, less than $67,000 for a family of four, they can
discharge all their debts.
{time} 1330
It is only if you make more than $67,000 that the questions start to
be asked: Can you afford to repay a portion of your debt?
There is discretion involved. There are presumptions that you can
afford to repay, but after child support and other legitimate,
important deductions are made, the bankruptcy trustee can still use his
or her judgment to take into account extraordinary circumstances, such
as a decline in income or unexpected medical expenses.
The bill still truly allows those who need a fresh start to get one,
but says in New Jersey if you make over $67,000 a year and can afford
to repay a portion of your debt, you should.
This bill improves the current law also in several ways. It
strengthens protections for vital family support obligations. It
completely protects retirement plan assets from the claims of
creditors, and completely protects savings accounts for post-secondary
college savings accounts, up to $50,000 per child. It adds a whole host
of other new consumer protections.
Therefore, as an original cosponsor of this bill, I urge my
colleagues to vote in favor of this important bankruptcy reform
legislation.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from
Virginia (Mr. Moran), a Member who has been a bulwark in this effort
and a cosponsor right from the beginning.
Mr. MORAN of Virginia. Mr. Chairman, I rise in support of the
Bankruptcy Reform Act. I am a lead sponsor of the measure because the
current system is broken. What was once the option of last resort has
too often become the preferred option of choice. A legislative fix is
necessary to distinguish between those who truly need a fresh start and
those capable of assuming greater responsibility and making good on at
least some of what they owe. It's the fair thing to do.
Mr. Chairman, unless we take the steps now to reform the bankruptcy
system while the economic times are good, we will not have the
political resolve to fix it when the economy is not so strong.
Despite this country's remarkably strong economy, wages are up,
unemployment is down, interest rates and inflation are low--despite the
unparalleled times that we are currently experiencing, the rate of
personal bankruptcy filings has increased dramatically. That does not
make sense, unless the explanation is that the system is broken.
Mr. Chairman, last year bankruptcy filings reached a record high of
more than 1.4 million. That is more than the number of people who
graduated from college last year.
Now we can vilify creditors and lenders, banks and mortgage companies
and credit card companies, particularly credit card companies, and some
of that vilification is deserved. All that unsolicited marketing,
particularly of college students, is too aggressive, it is
inappropriately deceptive, and it is imprudent, and we should not be
condoning it.
But while many would like to blame the credit card industry for the
sharp increase in bankruptcy filings, it is very important to
understand that the statistics indicate that the credit card industry
is not the impetus for the current bankruptcy crisis.
The vast majority of Americans recognize the personal responsibility
they take in using a credit card. More than 96 percent of credit card
holders pay their bills as agreed to, and only 1 percent ever end up in
bankruptcy. Bank credit cards represent less than 16 percent of total
debt on average bankruptcy petitions.
Mr. Chairman, according to a recent Federal Reserve Board survey,
credit cards account for a mere 3.7 percent of consumer debt, hardly
large enough to cause a bankruptcy crisis.
Regardless of how one feels about creditors, the key issue before us
now is that many borrowers capable of repaying some or all of their
obligations are not acting responsibly. Somewhere over the past decade,
since 1990, the integrity of the bankruptcy process has been corrupted
and an important moral principle has been eviscerated. The time-honored
principle of moral responsibility and personal obligation to pay one's
debts has been eroded by the convenience and ease with which one can
discharge his or her obligations. It is unacceptable and unfair to
those who do pay their bills to have to foot the bill for those who do
not.
Mr. Chairman, it is estimated that the majority who do make good on
their debts are having to pay about an average of $400 a year to make
up for the bad debt of those who do not make good on their debts. That
is why this legislation addresses the process. It enables those who
truly need relief to get the relief. It is fair, it is a bipartisan
bill, and it should be passed.
Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentleman from
Washington (Mr. Adam Smith), because if there is anyone who knows about
the economic impact of the bill before us, it is he.
Mr. SMITH of Washington. Mr. Chairman, this issue is all about
personal responsibility, taking responsibility for one's own actions.
In this case, when people do not take responsibility for their own
actions, others have to pay.
We all pay more for everything that we buy because of the costs
companies have to incur to cover those who do not pay their bills, and
in particular, small businesses can be killed by this. If just a couple
of critical creditors do not meet their obligations, small businesses
can go out of business.
We have a responsibility to honor our commitments. I think the worst
message that I have heard in this whole debate is that what is really
to blame is the marketing, that we should blame people for advertising
credit, and it is their fault, it is not the fault of the person who
fell for the marketing campaign, who accepted the obligation, accepted
the money. It is somebody else's fault.
When someone gets a credit card and charges it, they are responsible
for paying it. Who does not know that? Everybody knows that. To say
that it is not the individual's fault who has incurred the debt, but
the person who gave them the credit, sends a terrible message to our
country, that you do not have to be responsible for your own actions.
Second, it hurts those who can responsibly use credit. I got one of
those credit card applications, 10 or 15 of them, when I was in
college. I used one of them and got a credit card and I paid it off
every month. Because of that, it helped me with some financial spending
ability, and helped me establish credit. I would hate to think that
people who can use credit responsibly would be denied it because of
those who cannot.
One final point on the means testing issue. It is criticized that the
means testing is based on your income from the past. First of all, what
else can you base it on, really, except the existing record? But
secondly, that is exactly the way we calculate child support payments,
by your past income.
Just like with child support, in this bill if there is an extenuating
circumstance, if you go from being a $100,000 a year marketer to
somebody working for $5 an hour at McDonald's, you can go to the judge
and have that taken into consideration.
[[Page H2666]]
It is just a misstatement of the facts to say that somehow those
special circumstances are not considered in this bill. They are, just
like they are in calculating child support. I do not think anybody on
the other side of this debate would say that we should only base child
support payments on projected future incomes, as offered by the person
who has to meet the obligation.
The means testing system works, and so does the bill.
Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentleman from
Pennsylvania (Mr. Peterson).
Mr. PETERSON of Pennsylvania. Mr. Chairman, I thank the gentleman for
yielding time to me.
Mr. Chairman, I would also like to congratulate him and all those who
have worked on this legislation. This is one of the most needed pieces
of legislation in the economics of this country.
At a time when we are at an all-time high economically, when our
economy is growing faster than it has ever grown, we end up with the
highest number of bankruptcies, 1.42 million, costing consumers over
$40 billion in the past year. In 1998, more people declared bankruptcy
than graduated from college. That is inconceivable in a country like
this.
Why is that the case? It is because it is so easy. It is because we
have current laws that allow people to choose, well, I guess it would
be easier to go bankrupt, so I will do that. That is not what made this
country strong. When we owe money, when we have debts, it is the
responsibility of each and every one of us to pay those debts, however
long we have to work, how many hours per day, how many days per week,
how much effort is needed to pay our debts.
I was a businessman, a supermarket operator for 26 years. When I am
out in my district, I always say to businessmen, and business is what
makes this country go, that is what makes our employment base; to
independent businessmen I will say, how is business? And they will say,
it is good. But I so often hear the complaint, if it was not for
bankruptcies, I would have had a good year. I had seven bankruptcies
this year and wiped out my total profit picture.
That is happening to small businesses all over the country because
people choose to go bankrupt rather than stay and fight and pay their
bills, as they should have. The American economy is built on financial
responsibility. That is what is different about this country. When we
owe something, we pay it.
Currently, child support and alimony are only accorded seventh
priority. They are going to go to the top of the list in this bill.
That is why H.R. 833 is so well-designed. It put responsibility back,
that when you owe money, you have to pay it. You have to make your very
best effort. Bankruptcy should only be the very last extreme, where you
just cannot physically do it. It is not something that you choose, it
is not a choice you make. Bankruptcy should not be easy, and this bill
changes that.
Mr. CONYERS. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, the distinguished minority leader, the gentleman from
Missouri (Mr. Richard Gephardt) has said that, ``While I support a
balanced approach to bankruptcy reform that places equal responsibility
on both debtors and creditors, I must oppose H.R. 833 because it fails
to strike such a balance.''
In addition, the administration has said repeatedly that they will
veto this bill in its current form. The legislation is opposed by the
National Bankruptcy Conference, the Commercial Law League, the National
Association of Consumer Bankruptcy Attorneys, the National Association
of Bankruptcy Trustees, and the National Association of Chapter 13
Trustees, the AFL, the UAW, AFCSME, UNITE, the Leadership Conference on
Civil Rights, the National Partnership for Women and Families.
Please, let us make certain that we do not move bankruptcy into the
dark ages. Let us reject this bill, send it back to the committee, and
I hope that Members will consider favorably some amendments that could
hopefully improve the bill.
Mr. GEKAS. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, the lines of debate are fairly clear now. We have
insisted all along that our bill is a balanced approach, contrary to
what the gentleman from Michigan (Mr. Conyers) has implied, or is the
implication or the inference gained by the minority leader.
When we consider the fact that we have a safe harbor for low-income
and moderate-income and no-income individuals seeking the benefits of
bankruptcy, on the one side, and on the other side we have the approach
that those individuals in the higher-income brackets, from $50,000 and
up who might have an ability to repay are accorded a mechanism for
recoupment of some of that debt, then we can see that the balance is
what we begin the debate with here in this Chamber.
So when it comes down to the final vote, what the individuals who are
supporting this bill will be finding is a bill that fixes the loose
machinery that now exists in bankruptcy.
Mr. HYDE. Mr. Chairman, I am pleased that the Committee on the
Judiciary, after thorough hearings and markups, completed its
consideration last week of H.R. 833 (the ``Bankruptcy Reform Act of
1999''), and reported the legislation favorably.
We are on the Floor today--relatively early in the 106th Congress--
debating this omnibus bill, because bankruptcy is an important issue on
the national agenda. With this auspicious beginning, I am hopeful the
effort to enact major improvements in our bankruptcy law will reach
fruition this session. Consumer bankruptcy reform is the centerpiece of
H.R. 833, but the bill also addresses business bankruptcy, tax-related
issues in bankruptcy, transnational bankruptcy, and the treatment of
financial contracts.
Bankruptcy reform was a major activity of the Committee on the
Judiciary in the last Congress. In September 1997, 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. In February
1998, the chairman of the Subcommittee on Commercial and Administrative
Law--the 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. Although the House passed an amended
version of H.R. 3150 and later acted favorably on the work product of a
Committee of Conference, the other body did not have time before
adjournment to take action on the Conference Report.
This year my Committee again devoted much attention to bankruptcy
reform. The gentleman from Pennsylvania [Mr. Gekas], who conducted
important hearings on bankruptcy reform in his Subcommittee last year,
deserves commendation for the scope of the testimony his Subcommittee
elicited during four days of hearings this March. Witnesses represented
a wide range of viewpoints.
These hearings were followed by two days of markup in the
Subcommittee on Commercial and Administrative Law and five days of
markup in the Full Committee on the Judiciary. The positive aspect of
returning to a familiar subject was the opportunity to fashion some
improvements as a result of benefitting from the thoughtful insights of
knowledgeable individuals who analyzed earlier versions of the
legislation.
The major objective consumer bankruptcy reform is to achieve an
appropriate balance between debtor and creditor rights that will
increase creditor recoveries while offering relief to deserving
debtors. Those who need an immediate fresh start should get it--but
those who can afford to make significant payments out of future income
should be required to do so.
Under H.R. 833 as reported, individuals or couples with income levels
exceeding adjusted regional median figures that take into account
household size generally will not be able to remain in Chapter 7 if
they can make payments of at least $100.00 per month out of future
income to general unsecured creditors. Chapter 7 offers a financial
fresh start--without encumbering future income--to debtors who are
prepared to give up all of their nonexempt assets. Those who cannot
stay in Chapter 7 as a result of the pending legislation generally will
have the option of participating in a Chapter 13 repayment plan for
five years and qualifying for a limited discharge eventually.
Bankruptcy reform is needed to address deficiencies in current
bankruptcy processes and mitigate adverse impacts of bankruptcy
filings. Congress is responding to the many developments since the
Bankruptcy Code's enactment over a generation ago--including a
burgeoning bankruptcy caseload that now exceeds 1.4 million annual
filings.
[[Page H2667]]
We can seek to reduce financial losses that result from greatly
increased filings while treating debtors and their spouses and children
with compassion. In that regard, I plan to offer an amendment relating
to the living expenses of debtors who will be channeled into five-year
repayment plans.
I am optimistics that the results of my Committee's work and our
actions on the Floor today will be to provide for bankruptcy processes
that increase creditor recoveries and operate fairly. If so, we will be
able to point to an important legislative achievement on a subject of
great economic significance to the American people.
I urge my colleagues, after giving careful consideration to the
amendments we will be debating today, to support passage of H.R. 833.
Shipping Antitrust Hearing Wednesday; Judiciary to Study Competition in
Deregulated Industry
What: Oversight Hearing on ``Antitrust Aspects of the Ocean
Shipping Reform Act of 1998.'' Committee on the Judiciary.
When: Wednesday, May 5, 1999, at 10:00 a.m.
Where: 2141 Rayburn House Office Building.
On May 1, legislation deregulating the ocean shipping
industry went into effect, even as new issues regarding
competitive practices in the industry have arisen. The
justification for the industry's antitrust exemption has been
called into question as it primarily benefits foreign
carriers at the expense of American shippers, while a new
investigation has unearthed alleged anti-competitive activity
of some carriers.
Shipping's continued antitrust exemption poses the questions
. . .
Did the 1998 Ocean Shipping Reform Act strike the right
balance between carriers and non-vessel owning common
carriers (NVOs) in allowing ocean carriers to use
confidential service contracts, but not the NVOs?
Is antitrust immunity still justified in light of the new
environment and the startling findings of anti-competitive
activity made in a recent investigative report on the
industry?
Does it make sense to continue antitrust immunity when it
largely benefits foreign carriers at the expense of American
shippers?
Does the Federal Maritime Commission have adequate
authority to deal with the kinds of practices detailed in the
new report, and what, if any, role can the Justice Department
play?
These hearings will . . .
Allow a complete airing of the issues raised in the
investigation by its author, FMC Commissioner Delmond Won.
Further discuss the competitive issues surrounding the
newly deregulated shipping industry.
Mr. CROWLEY. Mr. Chairman, I rise today in support of H.R. 833, the
``Bankruptcy Reform Act of 1999.''
Mr. Chairman, a record 1.42 million personal bankruptcy filings were
recorded in 1998, rising a staggering 500 percent since 1980. Despite
strong economic growth, low unemployment and rising disposable income,
personal bankruptcies are soaring, costing over $40 billion in the past
year alone. Without serious reform, these trends promise to continue
growing every year, costing consumers and businesses even more money.
The Bankruptcy Reform Act of 1999 is an important piece of
legislation that will start to end the abuse and restore responsibility
to the bankruptcy system. H.R. 833 closes loopholes in current law that
encourages debtors to take advantage of the system and avoid paying
their debts. Too many times debts are wiped out, instead of worked out.
This legislation provides a fair needs based system that takes
debtors' special circumstances into account while assuring that those
who can afford to pay are required to do so.
Additionally, this bill puts the needs of women and children first.
Under current law, child support and alimony payments rank seventh on
the priority lists of payments. Under H.R. 833, child support payments
are raised from seventh to first giving them the long overdue priority
that they need and deserve. In addition, this bill closes various
loopholes in bankruptcy so that filers seeking to delay or evade their
important family obligations, will not be able to do so.
Mr. Chairman, I strongly urge my colleagues support for this
legislation which strikes the appropriate balance between the interests
of consumers, debtors and creditors and will help restore personal
responsibility and fairness to our bankruptcy system.
Mr. PACKARD. Mr. Chairman, I rise in support in H.R. 833, the
Bankruptcy Reform Act of 1999. It is time we revitalize our weak
bankruptcy system, which is supposed to benefit those who need it most.
As the sponsor of bankruptcy reform legislation during the 105th
Congress which protected churches and charities, I strongly endorse the
efforts of my colleagues in crafting the bill we are debating today.
The truth is, our bankruptcy system is seriously flawed. This system
allows individuals who have the ability to pay back a portion of their
debts to declare bankruptcy so American taxpayers can foot the bill for
them. This costs Americans an average of $550 a year in the form of
higher interest rates and increased product prices.
The original reason for people to file bankruptcy was as a last
resort, for those in a dire situation. Unfortunately, bankruptcy has
become a way for some reckless spenders to escape their debts. There
are more people declaring bankruptcy in America each year than what are
graduating from college. This is absurd! H.R. 833 will give this
country a need-based bankruptcy system, not an easy way out for those
who choose to not repay their debts. I firmly believe this legislation
will restore a sense of fairness and personal obligation to our
bankruptcy system.
Finally, I would like to thank Chairman Gekas for his hard work on
this legislation and for working with me to ensure the enforcement of
my legislation, H.R. 2604 from the 105th Congress. The Religious
Liberty and Charitable Donation Protection Act restored the right of
debtors to tithe and give charitably after declaring bankruptcy.
Mr. Chairman, what kind of system are we encouraging if we do not
require people who can pay back even a portion of their debts to do so?
I urge my colleagues to support H.R. 833, and restore a sense of
responsibility to our bankruptcy laws.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I rise in opposition to the
passage of H.R. 833, which restructures, I believe in a negative way,
the way bankruptcy is handled in the United States today.
At the outset let me say, bankruptcy is an important mechanism for
many families and business-owners around the country. For many people
who have filed for Chapter 7 Bankruptcy successfully, Chapter 7 has
provided a ``fresh start'' and eventually helped them get them and
their families on the road to recovery. But it is not a free ride.
Chapter 7 involves liquidation of assets--surely a traumatizing and
unpleasant situation in any person's life.
Chapter 13 is a less dramatic form of bankruptcy that allows
structured repayment. It is an important option for those who have an
income sufficient to eventually pay back debt over an extended period
of time and maintain their current assets.
Chapter 11 bankruptcy is also important. It is the form of bankruptcy
that allows commercial entities to reorganize so that they can satisfy
their creditors.
The increase in the number of bankruptcies over the past few years
tells Congress that we are in desperate need of bankruptcy reform. Or
does it? Perhaps--as many of us Democrats have argued, we ought to be
taking a closer look at banking and lending practices. Perhaps the
problems, on the consumer side, is not that people have found
bankruptcy laws, but rather that credit card companies and other
creditors have flooded our constituency with undeserved credit lines.
Will we ever find out if this is the case? No, because the Committee on
Banking and Financial Services did not look at this bill.
So already, we are working under the assumption that bankruptcy
reform is needed because consumers are abusing the system. This premise
is a dangerous one, and it shows, because this bill is pockmarked with
provisions that give power to credit card companies and collection
agencies--and it does nothing to make creditors responsible for their
own actions. It gives them carte blanche to lend without fear of
reprisal, and creates an atmosphere strikingly similar to the one
surrounding the savings and loan industry in the mid-1980s (following
deregulation).
The Chairman said it himself during our markup of this bill in the
Judiciary Committee when defending an amendment that he had passed. He
said
I have been told with great sincerity that [my amendment]
is a deal breaker. That it is a killer. That some of the
credit card folks will walk away from the bill if it is
passed. I found that a bit much. I asked my staff to give me
a list of what the creditors are getting out of this bill. I
have pages and pages and pages of advantages the creditor
community is getting out of this bill. . . . I was going to
read a list of what the creditors are getting out of this
bill. I won't do it. I assume you know. But there are, I
don't know, 12 or 13 pages of single-spaced print of changes
that benefit the creditors. . . . There ought to be a little
give on the part of the creditor community[,] there doesn't
seem to be.
Even the Chair's cry for a ``little flexibility'' could not be heeded
by the Members of his own party on the Committee. Does that tell us
anything about what is pushing this bill through Congress? Are these
reforms guided by reason, or by solidarity with big lenders?
Who does this bill hurt? Small business-owners, bankruptcy trustees,
women and children. Why women and children? Because it contains
provisions which allow credit card companies to transform their
``investments'' into non-dischargeable debt. This puts women
[[Page H2668]]
and children expecting domestic support on the same footing as credit
card companies--and when both must fight to get the monies that they
deserve, who do you think can afford to pay the better lawyers? Who do
you think will get to those funds first? The credit card companies, of
course. That is why this bill is strongly opposed by the National
Women's Law Center.
But families and children are not the only ones hurt by this bill. It
muddies the structure of the bankruptcy system. It replaces our current
mechanism used to determine whether a debtor may file for Chapter 7 or
Chapter 13 with an IRS ``means test'' that was developed for an
entirely different purpose--collecting taxes. It is this section that
has drawn the ire of consumer groups, women's and children's
organizations, and the Democratic Members of our Committee--and
rightfully so. It is a provision that was never recommended by the
National Bankruptcy Commission, who has been the primary group studying
the bankruptcy system and the need for bankruptcy reform.
Sure, the IRS-developed ``means test'' is easy to use, but does that
make it right? Is it a bright line or a rubber stamp? Is it not our
responsibility to look at where the bright line lies, rather than on
the fact that it is a bright line? Are we allowing form to rule over
substance?
At committee and at rules I offered several amendments that would
have made this a better bill, a bill that would be more responsive to
the needs of all Americans, and not just those that work in glass
towers. I offered amendments that would have protected victims of
managed care disasters and tobacco companies. I offered amendments that
would have protected our seniors that rely on social security as their
primary source of income. I offered amendments that would have allowed
recipients of federal disaster assistance to not be penalized by the
bankruptcy system. How these reasonable amendments were not accepted I
cannot say--but I can say that this bill does not do right by the
American people.
The bill raises more questions than it answers, especially for
America's families. I urge each of you to vote against it, and work
with us to provide meaningful bankruptcy reform that eschews personal
and financial responsibility from both debtors and creditors.
Mr. CRAMER. Mr. Chairman, I rise in support of H.R. 833, the
Bankruptcy Reform Act.
H.R. 833, is a common sense piece of legislation that reforms our
deeply flawed bankruptcy system. Under our current bankruptcy system,
we have seen an increase in bankruptcy filings by more than 400 percent
since 1980. Last year alone, during booming economic times with
historic lows in unemployment, more than 1.4 million Americans filed
for bankruptcy. This is a 3.6 percent increase over the number of
individuals filing for personal bankruptcy in 1997 and an increase of
94.7 percent over 1990 levels. Moreover, 70 percent of these 1.4
million bankruptcies were filed under Chapter 7, the most permissive
and lenient form of bankruptcy. Under Chapter 7, individuals can simply
erase most of their accumulated debt. In effect, the permissiveness of
the current system, while allowing some consumers to escape their
debts, ultimately harms all consumers by forcing industry to charge
higher prices and impose tighter credit.
Clearly, Mr. Chairman, something is wrong with our current bankruptcy
system. Our current system makes it too easy for individuals to compile
huge amounts of debt and then escape responsibility for repaying those
debts. For far too many individuals, bankruptcy has become an easy and
convenient way to skirt their financial obligations rather than an
instrument of last resort.
H.R. 833 reforms this flawed system. H.R. 833 simply says that those
consumers who can afford to pay back their debt should be required to
do so. This bill does this by instituting a means test that requires
those individuals making more than the regional median income, and who
can pay more than $6,000 in debts over five years to file for Chapter
13 bankruptcy, as opposed to Chapter 7. By doing this, the bill
prevents individuals with high incomes from walking away from their
debts. At the same time, the bill continues to provide those
individuals in need of bankruptcy protection with the opportunity to
file for the more lenient Chapter 7 bankruptcy. The bill also attempts
to discourage individuals from repeatedly filing for bankruptcy
protection by terminating the automatic stay against collection of
debts for an individual who files for bankruptcy within one year of
clearing up an earlier bankruptcy.
Mr. Chairman, H.R. 833 is a good bill that cuts down on the blatant
abuse of the current system by instituting several much needed reforms.
This bill restores balance, accountability, and common sense to our
deeply flawed system. Some, I know will argue that the bill is extreme
and will end up harming families who are in desperate need of
bankruptcy relief. But, Mr. Chairman, I believe this bill strikes the
right balance between seeking to protect those in most dire need, while
restoring personal responsibility to our bankruptcy system.
Therefore, Mr. Chairman, I urge my colleagues to support H.R. 833.
Mr. BEREUTER. Mr. Chairman, this Member rises today to express his
support for H.R. 833, the Bankruptcy Reform Act, of which he is an
original cosponsor.
First, this Member would thank the distinguished gentleman from
Pennsylvania [Mr. Gekas], Chairman of the Judiciary Subcommittee on
Commercial and Administrative Law, for introducing this bill. This
Member would also like to express his appreciation to the distinguished
gentleman from Illinois [Mr. Hyde], the Chairman of the Judiciary
Committee, for his efforts in getting this measure to the House Floor
for consideration.
This Member supports the Bankruptcy Reform Act for numerous reasons;
however, the most important reasons include the following:
First, and of preeminent importance to the nation's agriculture
sector, this Member supports the provision in H.R. 833 which
permanently extends Chapter 12 of the Bankruptcy Code for family
farmers. Chapter 12 bankruptcy allows family farmers to reorganize
their debts as compared to liquidating their assets. Chapter 12
bankruptcy has been a viable option for family farmers nationwide. It
has allowed family farmers to reorganize their assets in a manner which
balances the interests of creditors and the future success of the
involved farmer.
If Chapter 12 bankruptcy provisions are not permanently extended for
family farmers, this will have a drastic impact on an agricultural
sector already reeling from low commodity prices. Not only will many
family farmers have to end their operations, but also land values will
likely plunge downward. Such a decrease in land values will affect both
the ability of family farmers to earn a living and the manner in which
banks, making agricultural loans, conduct their lending activities.
This Member has received many contacts from his constituents regarding
the extension of Chapter 12 bankruptcy because of the situation now
being faced by our nation's farm families--although the U.S. economy is
generally healthy, it is clear that agricultural sector is hurting.
Second, this Member supports the provision in H.R. 833 which provides
for a means testing (needs-based) formula when determining whether an
individual should file for Chapter 7 or Chapter 13 bankruptcy. The vast
majority of bankruptcy filers--approximately 70%--choose Chapter 7 of
the Bankruptcy Code, which erases all debts. Some Chapter 7 filers
actually have the capacity to repay some of what they owe, but they
choose Chapter 7 bankruptcy and are able to walk away from these debts.
For example, the stories in which an individual filed for Chapter 7
bankruptcy and then goes out takes a nice vacation and/or buys a new
car are too common. Moreover, the status quo is costing the average
American individual and family in increased costs for consumer goods
and credit because of the amount of debt which is never repaid to
creditors.
As a response to these concerns, the means test of H.R. 833 will help
ensure that high income filers, who could repay some of what they owe,
are required to file Chapter 13 bankruptcy as compared to Chapter 7.
This needs-based system takes a debtor's income, expenses, obligations
and any special circumstances into account when determining whether he
or she has the capacity to repay a portion of their debts. However,
this bill still preserves the right to file bankruptcy, for an
individual or family who legitimately need a ``fresh start'', which was
the original intent behind bankruptcy legislation.
Third, this Member also supports the positive steps that H.R. 833
takes in ensuring that those who owe child support and alimony payments
are not allowed to evade this vital, familial responsibility by filing
bankruptcy. The bill moves child support payments and alimony into the
highest payment priority.
In closing, this Member would encourage his colleagues to support
H.R. 833, the Bankruptcy Reform Act.
Ms. ROYBAL-ALLARD. Mr. Chairman, I rise in opposition to this bill.
I would gladly vote for H.R. 833 if it were a ``balanced and
sensible'' bankruptcy reform bill. Unfortunately, H.R. 833 fails to
include reasonable consumer protections.
Because the closed rule prevented Mr. Delahunt, Mr. Watt, Mr. LaFalce
and I from offering an amendment to ensure that the credit industry
assumes its responsibility for the dramatic rise in consumer debt this
bill allows misleading and coercive practices to continue.
My staff collected credit card solicitations they receive in the
mail. In a matter of weeks, we amassed dozens of solicitations,
offering free cookbooks, calling cards, sweatshirts, and frequent flyer
miles. All promoted low teaser rates in giant print. But you need a
magnifying glass to see the permanent rate, which can jump to 25%.
With these aggressive marketing techniques, fundamental bankruptcy
reform must
[[Page H2669]]
include reasonable consumer protections. Without them, H.R. 833 is a
lost opportunity for this House.
I urge my colleagues to oppose the bill.
The CHAIRMAN pro tempore (Mr. LaHood). All time for general debate
has expired.
Pursuant to the rule, the committee amendment in the nature of a
substitute printed in the bill is considered as an original bill for
the purpose of amendment under the 5-minute rule and is considered as
read.
The text of the committee amendment in the nature of a substitute is
as follows:
H.R. 833
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 1999''.
(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. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Notice of alternatives.
Sec. 104. Debtor financial management training test program.
Subtitle B--Consumer Bankruptcy Protections
Sec. 105. Definitions.
Sec. 106. Enforcement.
Sec. 107. Sense of the congress.
Sec. 108. Discouraging abusive reaffirmation practices.
Sec. 109. Promotion of alternative dispute resolution.
Sec. 110. Enhanced disclosure for credit extensions secured by a
dwelling.
Sec. 111. Dual use debit card.
Sec. 112. Enhanced disclosures under an open-end credit plan.
Sec. 113. Protection of savings earmarked for the postsecondary
education of children.
Sec. 114. Effect of discharge.
Sec. 115. Limiting trustee liability.
Sec. 116. Reinforce the fresh start.
Sec. 117. Discouraging bad faith repeat filings.
Sec. 118. Curbing abusive filings.
Sec. 119. Debtor retention of personal property security.
Sec. 120. Relief from the automatic stay when the debtor does not
complete intended surrender of consumer debt collateral.
Sec. 121. Giving secured creditors fair treatment in chapter 13.
Sec. 122. Restraining abusive purchases on secured credit.
Sec. 123. Fair valuation of collateral.
Sec. 124. Domiciliary requirements for exemptions.
Sec. 125. Restrictions on certain exempt property obtained through
fraud.
Sec. 126. Rolling stock equipment.
Sec. 127. Discharge under chapter 13.
Sec. 128. Bankruptcy judgeships.
Sec. 129. Additional amendments to title 11, United States Code.
Sec. 130. Amendment to section 1325 of title 11, United States Code.
Sec. 131. Application of the codebtor stay only when the stay protects
the debtor.
Sec. 132. Adequate protection for investors.
Sec. 133. Limitation on luxury goods.
Sec. 134. Giving debtors the ability to keep leased personal property
by assumption.
Sec. 135. Adequate protection of lessors and purchase money secured
creditors.
Sec. 136. Automatic stay.
Sec. 137. Extend period between bankruptcy discharges.
Sec. 138. Definition of domestic support obligation.
Sec. 139. Priorities for claims for domestic support obligations.
Sec. 140. Requirements to obtain confirmation and discharge in cases
involving domestic support obligations.
Sec. 141. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 142. Nondischargeability of certain debts for alimony,
maintenance, and support.
Sec. 143. Continued liability of property.
Sec. 144. Protection of domestic support claims against preferential
transfer motions.
Sec. 145. Clarification of meaning of household goods.
Sec. 146. Nondischargeable debts.
Sec. 147. Monetary limitation on certain exempt property.
Sec. 148. Bankruptcy fees.
Sec. 149. Collection of child support.
Sec. 150. Excluding employee benefit plan participant contributions and
other property from the estate.
Sec. 151. Clarification of postpetition wages and benefits.
Sec. 152. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 153. Automatic stay inapplicable to certain proceedings against
the debtor.
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
Sec. 201. Reenactment of chapter 12.
Sec. 202. Meetings of creditors and equity security holders.
Sec. 203. Protection of retirement savings in bankruptcy.
Sec. 204. Protection of refinance of security interest.
Sec. 205. Executory contracts and unexpired leases.
Sec. 206. Creditors and equity security holders committees.
Sec. 207. Amendment to section 546 of title 11, United States Code.
Sec. 208. Limitation.
Sec. 209. Amendment to section 330(a) of title 11, United States Code.
Sec. 210. Postpetition disclosure and solicitation.
Sec. 211. Preferences.
Sec. 212. Venue of certain proceedings.
Sec. 213. Period for filing plan under chapter 11.
Sec. 214. Fees arising from certain ownership interests.
Sec. 215. Claims relating to insurance deposits in cases ancillary to
foreign proceedings.
Sec. 216. Defaults based on nonmonetary obligations.
Sec. 217. Sharing of compensation.
Sec. 218. Priority for administrative expenses.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
Sec. 301. Definition of disinterested person.
Sec. 302. Miscellaneous improvements.
Sec. 303. Extensions.
Sec. 304. Local filing of bankruptcy cases.
Sec. 305. Permitting assumption of contracts.
TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS
Sec. 401. Flexible rules for disclosure Statement and plan.
Sec. 402. Definitions.
Sec. 403. Standard form disclosure Statement and plan.
Sec. 404. Uniform national reporting requirements.
Sec. 405. Uniform reporting rules and forms for small business cases.
Sec. 406. Duties in small business cases.
Sec. 407. Plan filing and confirmation deadlines.
Sec. 408. Plan confirmation deadline.
Sec. 409. Prohibition against extension of time.
Sec. 410. Duties of the United States trustee.
Sec. 411. Scheduling conferences.
Sec. 412. Serial filer provisions.
Sec. 413. Expanded grounds for dismissal or conversion and appointment
of trustee or examiner.
Sec. 414. Study of operation of title 11 of the United States Code with
respect to small businesses.
Sec. 415. Payment of interest.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
Sec. 601. Creditor representation at first meeting of creditors.
Sec. 602. Audit procedures.
Sec. 603. Giving creditors fair notice in chapter 7 and 13 cases.
Sec. 604. Dismissal for failure to timely file schedules or provide
required information.
Sec. 605. Adequate time to prepare for hearing on confirmation of the
plan.
Sec. 606. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 607. Sense of the Congress regarding expansion of rule 9011 of the
Federal Rules of Bankruptcy Procedure.
Sec. 608. Elimination of certain fees payable in chapter 11 bankruptcy
cases.
Sec. 609. Study of bankruptcy impact of credit extended to dependent
students.
Sec. 610. Prompt relief from stay in individual cases.
Sec. 611. Stopping abusive conversions from chapter 13.
Sec. 612. Bankruptcy appeals.
Sec. 613. GAO study.
TITLE VII--BANKRUPTCY DATA
Sec. 701. Improved bankruptcy statistics.
Sec. 702. Uniform rules for the collection of bankruptcy data.
Sec. 703. Sense of the Congress regarding availability of bankruptcy
data.
TITLE VIII--BANKRUPTCY TAX PROVISIONS
Sec. 801. Treatment of certain liens.
Sec. 802. Effective notice to government.
Sec. 803. Notice of request for a determination of taxes.
Sec. 804. Rate of interest on tax claims.
Sec. 805. Tolling of priority of tax claim time periods.
Sec. 806. Priority property taxes incurred.
Sec. 807. Chapter 13 discharge of fraudulent and other taxes.
Sec. 808. Chapter 11 discharge of fraudulent taxes.
Sec. 809. Stay of tax proceedings.
Sec. 810. Periodic payment of taxes in chapter 11 cases.
Sec. 811. Avoidance of statutory tax liens prohibited.
Sec. 812. Payment of taxes in the conduct of business.
Sec. 813. Tardily filed priority tax claims.
Sec. 814. Income tax returns prepared by tax authorities.
Sec. 815. Discharge of the estate's liability for unpaid taxes.
Sec. 816. Requirement to file tax returns to confirm chapter 13 plans.
[[Page H2670]]
Sec. 817. Standards for tax disclosure.
Sec. 818. Setoff of tax refunds.
TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES
Sec. 901. Amendment to add chapter 15 to title 11, United States Code.
Sec. 902. Amendments to other chapters in title 11, United States Code.
TITLE X--FINANCIAL CONTRACT PROVISIONS
Sec. 1001. Treatment of certain agreements by conservators or --
receivers of insured depository institutions.
Sec. 1002. Authority of the corporation with respect to failed and
failing institutions.
Sec. 1003. Amendments relating to transfers of qualified financial
contracts.
Sec. 1004. Amendments relating to disaffirmance or repudiation of
qualified financial contracts.
Sec. 1005. Clarifying amendment relating to master agreements.
Sec. 1006. Federal Deposit Insurance Corporation Improvement Act of
1991.
Sec. 1007. Bankruptcy Code amendments.
Sec. 1008. Recordkeeping requirements.
Sec. 1009. Exemptions from contemporaneous execution ---requirement.
Sec. 1010. Damage measure.
Sec. 1011. Sipc stay.
Sec. 1012. Asset-backed securitizations.
Sec. 1013. Federal Reserve collateral requirements.
Sec. 1014. Effective date; application of ---amendments.
TITLE XI--TECHNICAL CORRECTIONS
Sec. 1101. Definitions.
Sec. 1102. Adjustment of dollar amounts.
Sec. 1103. Extension of time.
Sec. 1104. Technical amendments.
Sec. 1105. Penalty for persons who negligently or fraudulently prepare
bankruptcy petitions.
Sec. 1106. Limitation on compensation of professional persons.
Sec. 1107. Special tax provisions.
Sec. 1108. Effect of conversion.
Sec. 1109. Allowance of administrative expenses.
Sec. 1110. Priorities.
Sec. 1111. Exemptions.
Sec. 1112. Exceptions to discharge.
Sec. 1113. Effect of discharge.
Sec. 1114. Protection against discriminatory treatment.
Sec. 1115. Property of the estate.
Sec. 1116. Preferences.
Sec. 1117. Postpetition transactions.
Sec. 1118. Disposition of property of the estate.
Sec. 1119. General provisions.
Sec. 1120. Appointment of elected trustee.
Sec. 1121. Abandonment of railroad line.
Sec. 1122. Contents of plan.
Sec. 1123. Discharge under chapter 12.
Sec. 1124. Bankruptcy cases and proceedings.
Sec. 1125. Knowing disregard of bankruptcy law or rule.
Sec. 1126. Transfers made by nonprofit charitable corporations.
Sec. 1127. Prohibition on certain actions for failure to incur finance
charges.
Sec. 1128. Protection of valid purchase money security interests.
Sec. 1129. Trustees.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
Sec. 1201. Effective date; application of amendments.
TITLE I--CONSUMER BANKRUPTCY PROVISIONS
Subtitle A--Needs based bankruptcy
SEC. 101. CONVERSION.
Section 706(c) of title 11, United States Code, is amended
by inserting ``or consents to'' after ``requests''.
SEC. 102. DISMISSAL OR CONVERSION.
(a) In General.--Section 707 of title 11, United States
Code, is amended--
(1) by striking the section heading and inserting the
following:
``Sec. 707. Dismissal of a case or conversion to a case under
chapter 13'';
and
(2) in subsection (b)--
(A) by inserting ``(1)'' after ``(b)''; and
(B) in paragraph (1), as redesignated by subparagraph (A)
of this paragraph--
(i) in the first sentence--
(I) by striking ``but not at the request or suggestion of''
and inserting ``the trustee, or'';
(II) by inserting ``, or, with the debtor's consent,
convert such a case to a case under chapter 13 of this
title,'' after ``consumer debts''; and
(III) by striking ``substantial abuse'' and inserting
``abuse''; and
(ii) by striking the second and third sentences and
inserting the following:
``(2)(A)(i) In considering under paragraph (1) whether the
granting of relief would be an abuse of the provisions of
this chapter, the court shall presume abuse exists if the
debtor's current monthly income less estimated administrative
expenses and reasonable attorneys' fees, and amounts set
forth in clauses (ii) for monthly expenses (which shall
include, if applicable, the continuation of actual
expenses of a dependent child under the age of 18 for
tuition, books, and required fees at a private elementary
or secondary school, not exceeding $10,000 per year, which
amount shall be adjusted pursuant to section 104(b)),
(iii) for monthly payments on account of secured debts,
and (iv) for monthly unsecured priority debt payments, and
multiplied by 60 months is not less than $6,000.
``(ii) The debtor's monthly expenses shall be the debtor's
applicable monthly expense amounts specified under the
National Standards and Local Standards, and the debtor's
applicable monthly expenses for the categories specifically
listed as Other Necessary Expenses issued by the Internal
Revenue Service for the area in which the debtor resides, as
in effect on the date of the entry of the order for relief,
for the debtor, the dependents of the debtor, and the spouse
of the debtor in a joint case, if the spouse is not otherwise
a dependent. In addition, if it is demonstrated that it is
reasonable and necessary, the debtor may also subtract an
allowance of up to 5% of the food and clothing categories as
specified by the National Standards issued by the Internal
Revenue Service. Notwithstanding any other provision of this
clause, the debtor's monthly expenses shall not include any
payments for debts.
``(iii) The debtor's average monthly payments on account of
secured debts shall be calculated as the total of all amounts
scheduled as contractually due to secured creditors in each
month of the 60 months following the date of the petition,
and dividing that total by 60 months.
``(iv) The debtor's monthly unsecured priority debt
payments (including payments for priority child support and
alimony claims) shall be calculated as the total amount of
unsecured debts entitled to priority, and dividing the total
by 60 months.
``(v) For the purposes of this subsection, a family or
household shall consist of the debtor, the debtor's spouse,
and the debtor's dependents, but not a legally separated
spouse unless the spouse files a joint case with the debtor.
``(B) In any proceeding brought under this subsection, the
presumption of abuse may be rebutted only by demonstrating
extraordinary circumstances that require additional expenses
or adjustment of current monthly income. In order to
establish extraordinary circumstances, the debtor must
itemize each additional expense or adjustment of income and
provide documentation for such expenses or adjustment of
income and a detailed explanation of the extraordinary
circumstances which make such expenses or adjustment of
income necessary and reasonable. The debtor shall attest
under oath to the accuracy of any information provided to
demonstrate that additional expenses or adjustment to income
are required. The presumption of abuse may be rebutted only
if such additional expenses or adjustments to income cause
the debtor's current monthly income less estimated
administrative expenses and reasonable attorneys' fees, and
the amounts set forth in clauses (ii), (iii), and (iv) of
subparagraph (A) when multiplied by 60 to be less than
$6,000.
``(C) As part of the schedule of current income and
expenditures required under section 521 of this title, the
debtor shall include a statement of the debtor's current
monthly income, and the calculations which determine whether
a presumption arises under subparagraph (A)(i), showing how
each amount is calculated. The bankruptcy rules promulgated
under section 2075 of title 28, United States Code, shall
prescribe a form for such statement and may provide general
rules on its content.
``(D) No judge, United States trustee, panel trustee,
bankruptcy administrator or other party in interest shall
bring a motion under this paragraph if the debtor and the
debtor's spouse combined, as of the date of the order for
relief, have current monthly total income equal to or less
than the regional median household monthly income calculated
on a semiannual basis for a household of equal size. However,
for a household of more than 4 individuals, the median income
shall be that of a household of 4 individuals plus $583 for
each additional member of that household.
``(3) In considering under paragraph (1) whether the
granting of relief would be an abuse of the provisions of
this chapter in a case in which the presumption in paragraph
(2)(A)(i) does not apply or has been rebutted, the court
shall consider--
``(A) whether the debtor filed the petition in bad faith;
or
``(B) the totality of the circumstances (including whether
the debtor seeks to reject a personal services contract and
the financial need for such rejection as sought by the
debtor) of the debtor's financial situation demonstrates
abuse.
``(4)(A) If a panel trustee appointed under section
586(a)(1) of title 28 or bankruptcy administrator brings a
motion for dismissal or conversion under this subsection and
the court grants that motion and finds that the action of the
counsel for the debtor in filing under this chapter violated
Rule 9011, the court shall assess damages which may include
ordering:
``(i) the counsel for the debtor to reimburse the trustee
for all reasonable costs in prosecuting the motion, including
reasonable attorneys' fees.
``(ii) the assessment of an appropriate civil penalty
against the counsel for the debtor; and
``(iii) the payment of the civil penalty to the panel
trustee, bankruptcy administrator or the United States
trustee.
``(B) In the case of a petition filed under sections 301,
302, or 303 of this title and supporting lists, schedules and
documents filed under section 521(a)(1) of this title, the
signature of an attorney on the petition shall constitute a
certificate that the attorney has--
``(i) performed a reasonable investigation into the
circumstances that gave rise to the petition; and
``(ii) determined that the petition, lists, schedules, and
documents--
``(I) are well grounded in fact; and
``(II) are warranted by existing law or a good faith
argument for the extension, modification, or reversal of
existing law and do not constitute an abuse under paragraph
(1) of this subsection.
``(5) The court may award a debtor all reasonable costs in
contesting a motion filed by a party in interest (not
including a trustee or the United States trustee) under this
subsection (including reasonable attorneys' fees) if--
``(A) the court does not grant the motion; and
``(B) the court finds that--
[[Page H2671]]
``(i) the position of the party that brought the motion was
not substantially justified; or
``(ii) the party brought the motion solely for the purpose
of coercing a debtor into waiving a right guaranteed to the
debtor under this title.
``(6) However, only the court, the United States trustee,
or the trustee may file a motion to dismiss or convert a case
under this subsection if the current monthly income of the
debtor and the debtor's spouse combined, as of the date of
the order for relief, when multiplied by 12, is less than the
highest national median family income last reported by the
Bureau of the Census for a family of equal or lesser size, or
in the case of a household of 1 person, the national median
household income for 1 earner. Notwithstanding the foregoing,
the national median family income for a family of more than 4
individuals shall be the national median family income last
reported by the Bureau of the Census for a family of 4
individuals plus $583 for each additional member of the
family.
``(7) 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 that term
is defined in section 548(d)(4)).
``(8) Not later than 3 years after the date of enactment of
the Bankruptcy Reform Act of 1999, the Director of the
Executive Office for United States Trustees shall submit a
report, to the Committee on the Judiciary of the House of
Representatives and the Committee on the Judiciary of the
Senate, containing its findings regarding the utilization of
the Internal Revenue Service standards for determining the
current monthly expenses under section 707(b)(1)(A)(ii) of
title 11, United States Code, of debtors and the impact that
the application of such standards has had on debtors and on
the bankruptcy courts. Such report may include
recommendations for amendments to such title, consistent with
the Director's findings.''.
(b) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) by inserting after paragraph (10) the following:
``(10A) `current monthly 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 180
days 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, but excludes payments to victims of
war crimes or crimes against humanity;''; and
(2) by inserting after paragraph (17) the following:
``(17A) `estimated administrative expenses and reasonable
attorneys' fees' means 10 percent of projected payments under
a chapter 13 plan;''.
(c) Administrative Provisions.--Section 704 of title 11,
United States Code, is amended--
(1) in paragraph (8) by striking ``and'' at the end;
(2) in paragraph (9) by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(10)(A) With respect to an individual debtor, the trustee
shall review all materials filed by the debtor, consider all
information presented at the first meeting of creditors, and
within 10 days after the first meeting of creditors file with
the court a statement as to whether the debtor's case should
be presumed to be an abuse under section 707(b) of this
title. The court shall provide a copy of such statement to
all creditors within 5 days after such statement is filed.
If, based on the filing of such statement with the court, the
trustee determines that the debtor's case should be presumed
to be an abuse under section 707(b) of this title and if the
current monthly income of the debtor and the debtor's spouse
combined, as of the date of the order for relief, when
multiplied by 12, is 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, the national
median household income for 1 earner, then the trustee shall
within 30 days of the filing of such statement, either--
``(i) file a motion to dismiss or convert under section
707(b) of this title; or
``(ii) file a statement setting forth the reasons the
trustee or bankruptcy administrator does not believe that
such a motion would be appropriate.
``(B) Notwithstanding subparagraph (A), for purposes of
this paragraph the national family income for a family of
more than 4 individuals shall be the national median family
income last reported by the Bureau of the Census for a
family of 4 individuals plus $583 for each additional
member of the family.''.
(d) Clerical Amendment.--The table of sections at the
beginning of chapter 7 of title 11, United States Code, is
amended by striking the item relating to section 707 and
inserting the following:
``707. Dismissal of a case or conversion to a case under chapter 13.''.
SEC. 103. NOTICE OF ALTERNATIVES.
Section 342(b) of title 11, United States Code, is amended
to read as follows:
``(b) Before the commencement of a case under this title by
an individual whose debts are primarily consumer debts, the
clerk shall give to such individual written notice
containing--
``(1) a brief description of--
``(A) chapters 7, 11, 12, and 13 and the general purpose,
benefits, and costs of proceeding under each of those
chapters; and
``(B) the types of services available from credit
counseling agencies; and
``(2) statements specifying that--
``(A) a person who knowingly and fraudulently conceals
assets or makes a false oath or statement under penalty of
perjury in connection with a bankruptcy case shall be subject
to fine, imprisonment, or both; and
``(B) all information supplied by a debtor in connection
with a bankruptcy case is subject to examination by the
Attorney General.''.
SEC. 104. 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 6 judicial
districts of the United States in which to test the
effectiveness of the financial management training curriculum
and materials developed under subsection (a).
(2) For a 18-month period beginning not later than 270 days
after the date of the enactment of this Act, such curriculum
and materials shall be, for the 6 judicial districts selected
under paragraph (1), used as the instructional course
concerning personal financial management for purposes of
section 111 of this title.
(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 and their costs.
Subtitle B--Consumer Bankruptcy Protections
SEC. 105. DEFINITIONS.
(a) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) by inserting after paragraph (2) the following:
``(3) `assisted person' means any person whose debts
consist primarily of consumer debts and whose non-exempt
assets are less than $150,000;'';
(2) by inserting after paragraph (4) the following:
``(4A) `bankruptcy assistance' means any goods or services
sold or otherwise provided to an assisted person with the
express or implied purpose of providing information, advice,
counsel, document preparation or filing, or attendance at a
creditors' meeting or appearing in a proceeding on behalf of
another or providing legal representation with respect to a
proceeding under this title;''; and
(3) by inserting after paragraph (12A) the following:
``(12B) `debt relief agency' means any person who provides
any bankruptcy assistance to an assisted person in return for
the payment of money or other valuable consideration, or who
is a bankruptcy petition preparer 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. 106. ENFORCEMENT.
(a) Enforcement.--Subchapter II of chapter 5 of title 11,
United States Code, is amended by adding at the end the
following:
``Sec. 526. Debt relief agency enforcement
``(a) A debt relief agency shall not--
``(1) fail to perform any service which the debt relief
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 and misleading
or which upon the exercise of reasonable care, should be
known by the debt relief agency to be untrue or misleading;
``(3) misrepresent to any assisted person or prospective
assisted person, directly or indirectly, affirmatively or by
material omission,
[[Page H2672]]
what services the debt relief 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) Assisted Person Waivers Invalid.--Any waiver by any
assisted person of any protection or right provided by or
under this section shall not be enforceable against the
debtor by any Federal or State court or any other person, but
may be enforced against a debt relief agency.
``(c) Noncompliance.--
``(1) Any contract between a debt relief agency and an
assisted person for bankruptcy assistance which does not
comply with the material requirements of this section 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 agency shall be liable to an assisted
person in the amount of any fees or charges in connection
with providing bankruptcy assistance to such person which the
debt relief agency has received, for actual damages, and for
reasonable attorneys' fees and costs if the debt relief
agency is found, after notice and hearing, to have--
``(A) intentionally or negligently failed to comply with
any provision of this section with respect to a bankruptcy
case or related proceeding of the assisted person;
``(B) provided bankruptcy assistance to an assisted person
in a case or related proceeding which is dismissed or
converted because of the debt relief agency's intentional or
negligent failure to file bankruptcy papers, including papers
specified in section 521 of this title; or
``(C) intentionally or negligently disregarded the material
requirements of this title or the Federal Rules of Bankruptcy
Procedure applicable to such debt relief agency.
``(3) In addition to such other remedies as are provided
under State law, whenever the chief law enforcement officer
of a State, or an official or agency designated by a State,
has reason to believe that any person has violated or is
violating this section, the State--
``(A) may bring an action to enjoin such violation;
``(B) may bring an action on behalf of its residents to
recover the actual damages of assisted persons arising from
such violation, including any liability under paragraph (2);
and
``(C) in the case of any successful action under
subparagraph (A) or (B), shall be awarded the costs of the
action and reasonable attorney fees as determined by the
court.
``(4) The United States District Court for any district
located in the State shall have concurrent jurisdiction of
any action under subparagraph (A) or (B) of paragraph (3).
``(5) Notwithstanding any other provision of Federal law
and in addition to any other remedy provided under Federal or
State law, if the court, on its own motion or on the motion
of the United States trustee or the debtor, finds that a
person intentionally violated this section, or engaged in a
clear and consistent pattern or practice of violating this
section, the court may--
``(A) enjoin the violation of such section; or
``(B) impose an appropriate civil penalty against such
person.
``(c) Relation to State Law.--This section 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 sections for
chapter 5 of title 11, United States Code, is amended by
inserting after the item relating to section 527, the
following:
``526. Debt relief agency enforcement.''.
SEC. 107. 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. 108. DISCOURAGING ABUSIVE REAFFIRMATION PRACTICES.
Section 524 of title 11, United States Code, is amended--
(1) in subsection (c)--
(A) in paragraph (2)--
(i) in subparagraph (A) by striking ``and'' at the end;
(ii) in subparagraph (B) by adding ``and'' at the end; and
(iii) by adding at the end the following:
``(C) if the consideration for such agreement is based on a
wholly unsecured consumer debt (except for debts owed to
creditors defined in section 461(b)(1)(A)(iv) of title 12,
United States Code), such agreement contains a clear and
conspicuous statement which advises the debtor--
``(i) that the debtor is entitled to a hearing before the
court at which the debtor shall appear in person and at which
the court will decide whether the agreement is an undue
hardship, not in the debtor's best interest, and not the
result of a threat by the creditor to take any action that
cannot be legally taken or that is not intended to be taken;
and
``(ii) that if the debtor is represented by counsel, the
debtor may waive the debtor's right to such a hearing by
signing a statement waiving the hearing, stating that the
debtor is represented by counsel, and identifying such
counsel;''; and
(B) in paragraph (6)(A)--
(i) by striking ``and'' at the end of clause (i);
(ii) by striking the period at the end of clause (ii) and
inserting ``; and''; and
(iii) by adding at the end thereof the following:
``(iii) not entered into by the debtor as the result of a
threat by the creditor to take any action that cannot be
legally taken or that is not intended to be taken.''; and
(2) in the 3d sentence of subsection (d)--
(A) by striking ``of this section'' and inserting a comma;
and
(B) by inserting after ``such agreement'' the following:
``or if the consideration for such agreement is based on a
wholly unsecured consumer debt (except for debts owed to
creditors defined in section 461(b)(1)(A)(iv) of title 12,
United States Code) and the debtor has not waived the
debtor's right to a hearing on the agreement in accordance
with subsection (c)(2)(C) of this section''.
SEC. 109. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.
(a) Reduction of Claim.--Section 502 of title 11, United
States Code, is amended by adding at the end the following:
``(k)(1) The court, on the motion of the debtor and after a
hearing, may reduce a claim filed under this section based
wholly on unsecured consumer debts by not more than 20
percent, if the debtor can prove by clear and convincing
evidence that the claim was filed by a creditor who
unreasonably refused to negotiate a reasonable alternative
repayment schedule proposed by an approved credit counseling
agency acting on behalf of the debtor, and if--
``(A) such offer was made within the period beginning 60
days before the filing of the petition;
``(B) such offer provided for payment of at least 60
percent of the amount of the debt over a period not to exceed
the repayment period of the loan, or a reasonable extension
thereof; and
``(C) no part of the debt under the alternative repayment
schedule is nondischargeable, is entitled to priority under
section 507 of this title, or would be paid a greater
percentage in a chapter 13 proceeding than offered by the
debtor.
``(2) The debtor shall have the burden of proving that the
proposed alternative repayment schedule was made in the 60-
day period specified in subparagraph (A) and that the
creditor unreasonably refused to consider the debtor's
proposal.''.
(b) Limitation on Avoidability.--Section 547 of title 11,
United States Code, is amended by adding at the end the
following:
``(h) The trustee may not avoid a transfer if such transfer
was made as a part of an alternative repayment plan between
the debtor and any creditor of the debtor created by an
approved credit counseling agency.''.
SEC. 110. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED
BY A DWELLING.
(a) Study Required.--During the period beginning 180 days
after the date of enactment of this Act and ending 18 months
after the date of the enactment, the Board of Governors of
the Federal Reserve System (in this section referred to as
the ``Board'') shall conduct a study and submit to Congress a
report (including recommendations for any appropriate
legislation) regarding--
(1) whether a consumer engaging in an open-end credit
transaction (as defined pursuant to section 103 of the Truth
in lending Act) secured by the consumer's principal dwelling
is provided adequate information under Federal law, including
under section 127A of the Truth in Lending Act, regarding the
tax deductibility of interest paid on such transaction; and
(2) whether a consumer engaging in a closed-end credit
transaction (as defined pursuant to section 103 of the Truth
in Lending Act) secured by the consumer's principal dwelling
is provided adequate information regarding the tax
deductibility of interest paid on such transaction.
In conducting such study, the Board shall specifically
consider whether additional disclosures are necessary with
respect to such open-end or closed-end credit transactions in
which the amount of the credit extended exceeds the fair
market value of the dwelling.
(b) Regulations.--If the Board determines that additional
disclosures are necessary in connection with transactions
described in subsection (a), the Board, pursuant to its
authority under the Truth in Lending Act, may promulgate
regulations that would require such additional disclosures.
Any such regulations promulgated by the Board under this
section shall not take effect before the end of the 36-month
period after the date of the enactment of this Act.
SEC. 111. DUAL USE DEBIT CARD.
(a) Study Required.--The Board of Governors of the Federal
Reserve System (in this section referred to as the ``Board'')
shall conduct a study of existing protections provided to
consumers to limit their liability for unauthorized use of a
debit card or similar access device.
(b) Specific Considerations.--In conducting the study
required by subsection (a), the Board shall specifically
consider the following--
(1) the extent to which existing provisions of section 909
of the Electronic Fund Transfer Act and the Board's
implementing regulations provide adequate unauthorized use
liability protection for consumers;
(2) the extent to which any voluntary industry rules have
enhanced the level of protection afforded consumers in
connection with such unauthorized use liability; and
(3) whether amendments to the Electronic Funds Transfer Act
or the Board's implementing regulations thereto are necessary
to provide adequate protection for consumers in this area.
(c) Report and Regulations.--Not later than 2 years after
the date of the enactment of this Act, the Board shall make
public a report on its findings with respect to the adequacy
of existing protections afforded consumers with respect to
[[Page H2673]]
unauthorized-use liability for debit cards and similar access
devices. If the Board determines that such protections are
inadequate, the Board, pursuant to its authority under the
Electronic Funds Transfer Act, may issue regulations to
address such inadequacy. Any regulations issued by the Board
shall not be effective before 36 months after the date of the
enactment of this Act.
SEC. 112. ENHANCED DISCLOSURES UNDER AN OPEN-END CREDIT PLAN.
(a) Initial and Annual Minimum Payment Disclosure.--Section
127(a) of the Truth in Lending Act (15 U.S.C. 1637(a)) is
amended by adding at the end the following:
``(9) In the case of any credit or charge card account
under an open-end consumer credit plan on which a minimum
monthly or periodic payment will be required, other than an
account described in paragraph (8)--
``(A) the following statement: `The minimum payment amount
shown on your billing statement is the smallest payment which
you can make in order to keep the account in good standing.
This payment option is offered as a convenience and you may
make larger payments at any time. Making only the minimum
payment each month will increase the amount of interest you
pay and the length of time it takes to repay your outstanding
balance.';
``(B) if the plan provides that the consumer will be
permitted to forgo making a minimum payment during a
specified billing cycle, a statement, if applicable, that if
the consumer chooses to forgo making the minimum payment,
finance charges will continue to accrue; and
``(C) an example, based on an annual percentage rate and
method for determining minimum periodic payments recently in
effect for that creditor, and a $500 outstanding balance,
showing the estimated minimum periodic payment, and the
estimated period of time it would take to repay the $500
outstanding balance if the consumer paid only the minimum
periodic payment on each monthly or periodic statement and
obtained no additional extensions of credit.
``(10) With respect to one billing cycle per calendar year,
the creditor shall transmit the information required under
paragraph (9) to each consumer to whom the creditor is
required to transit a statement pursuant to subsection (b)
for such billing cycle. The creditor shall also transmit to
such consumer for such cycle a worksheet prescribed by the
Board to assist the consumer in determining the consumer's
household income and debt obligations.''.
(b) Periodic Minimum Payment Disclosures.--Section 127(b)
of the Truth in Lending Act (15 U.S.C. 1637(b)) is amended by
adding at the end the following:
``(11) The following statement: `The minimum payment amount
shown on your billing statement is the smallest payment which
you can make in order to keep the account in good standing.
This payment option is offered as a convenience and you may
make larger payments at any time. Making only the minimum
payment each month will increase the amount of interest you
pay and the length of time it takes to repay your outstanding
balance.' ''.
(c) Enforcement.--Section 127 of the Truth in Lending Act
(15 U.S.C. 1637) is amended by adding at the end the
following:
``(h) In promulgating regulations to implement the
disclosure of an example required under subsection (a)(9)(C)
and (a)(10), the Board shall set forth a model disclosure to
accompany the example stating that the credit features shown
are only an example which does not obligate the creditor, but
is intended to illustrate the approximate length of time it
could take to repay using the assumptions set forth in
subsection (a)(9)(C) without regard to any other factors that
could impact an approximate repayment period, including other
credit features or the consumer's payment or other behavior
with respect to the account. Compliance with the disclosures
required under subsection (a)(9)(C) and (a)(10) shall be
enforced exclusively by the Federal agencies set forth in
section 108.''.
(d) Regulatory Implementation.--The Board of Governors of
the Federal Reserve System (in this section referred to as
the ``Board'') shall promulgate regulations implementing the
amendments made by subsections (a) and (b). Such regulations
shall take effect no earlier than the end of the 36-month
period beginning on the date of the enactment of this Act.
(e) Study Required.--The Board shall conduct a study to
determine whether consumers have adequate information about
borrowing activities which may result in financial problems.
In studying this issue, the Board shall consider the extent
to which--
(1) consumers, in establishing new credit arrangements, are
aware of their existing payment obligations, the need to
consider those obligations in deciding to take on new credit,
and how taking on excessive credit can result in financial
difficulty;
(2) minimum periodic payment features offered in connection
with open-end credit plans impact consumer default rates;
(3) consumers always make only the minimum payment
throughout the life of the plan;
(4) consumers are aware that making only minimum payments
will increase the cost and repayment period of an open-end
loan; and
(5) the availability of low minimum payment options is a
cause of consumers experiencing financial difficulty.
(f) Report to Congress.--Before the end of the 2-year
period beginning on the date of the enactment of this Act,
the Board shall submit to Congress a report containing the
findings of the Board in connection with the study
required under subsection (e).
(g) Regulations.--The Board shall, by regulation
promulgated pursuant to its authority under the Truth in
Lending Act, require additional disclosures to consumers
regarding minimum payment features, including periodic
statement disclosures, if the Board determines that such
disclosures are necessary based on its findings. Any such
regulations promulgated by the Board shall not take effect
earlier than January 1, 2002.
SEC. 113. PROTECTION OF SAVINGS EARMARKED FOR THE
POSTSECONDARY EDUCATION OF CHILDREN.
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) except as provided in paragraph (n), funds placed in
an education individual retirement account (as defined in
section 530(b)(1) of the Internal Revenue Code of 1986) not
less than 365 days before the date of entry of the order of
relief but only to the extent such funds--
``(i) are not pledged or promised to any entity in
connection with any extension of credit; and
``(ii) are not excess contributions (as described in
section 4973(e) of the Internal Revenue Code of 1986).''; and
(2) by adding at the end the following:
``(n) For purposes of subsection (b)(3)(C), funds placed in
an education individual retirement account shall not be
exempt under this subsection--
``(1) unless the designated beneficiary of such account was
a dependent child of the debtor for the taxable year for
which the funds were placed in such account; and
``(2) to the extent such funds exceed--
``(A) $50,000 in the aggregate in all such accounts having
the same designated beneficiary; or
``(B) $100,000 in the aggregate in all such accounts
attributable to all such dependent children of the debtor.''.
SEC. 114. EFFECT OF DISCHARGE.
Section 524 of title 11, United States Code, is amended by
adding at the end the following:
``(i) The willful failure of a creditor to credit payments
received under a plan confirmed under this title (including a
plan of reorganization confirmed under chapter 11 of this
title) in the manner required by the plan (including
crediting the amounts required under the plan) shall
constitute a violation of any injunction under subsection
(a)(2) which has arisen at the time of the failure.
``(j)(1) An individual who is injured by the willful
failure of a creditor to comply with the requirements for a
reaffirmation agreement under subsections (c) and (d), or by
any willful violation of the injunction under subsection
(a)(2), shall be entitled to recover--
``(A) the greater of--
``(i) the amount of actual damages; or
``(ii) $1,000; and
``(B) costs and attorneys' fees.
``(2) An action to recover for a violation specified in
paragraph (1) may not be brought as a class action.''.
SEC. 115. LIMITING TRUSTEE LIABILITY.
(a) Qualification of Trustee.--Section 322 of title 11,
United States Code, is amended--
(1) in subsection (a) by adding at the end the following:
``The trustee in a case under this title is not liable
personally or on such trustee's bond for acts taken within
the scope of the trustee's duties or authority as delineated
by other sections of this title or by order of the court,
except to the extent that the trustee acted with gross
negligence. Gross negligence shall be defined as reckless
indifference or deliberate disregard of the trustee's
fiduciary duty.''; and
(2) in subsection (c) by inserting ``for any acts within
the scope of the trustee's authority defined in subsection
(a)'' before the period at the end.
(b) Role and Capacity of Trustee.--Section 323 of title 11,
United States Code, is amended--
(1) in subsection (b) by inserting at the end the
following: ``in the trustee's official capacity as
representative of the estate'' before the period at the end;
and
(2) by adding at the end the following:
``(c) The trustee in a case under this title may not be
sued, either personally, in a representative capacity, or
against the trustee's bond in favor of the United States--
``(1) for acts taken in furtherance of the trustee's duties
or authority in a case in which the debtor is subsequently
determined to be ineligible for relief under the chapter in
which the trustee was appointed; or
``(2) for the dissemination of statistics and other
information regarding a case or cases, unless the trustee has
actual knowledge that the information is false.
``(d) The trustee in a case under this title may not be
sued in a personal capacity without leave of the bankruptcy
court in which the case is pending.''.
SEC. 116. 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 ``by any
court'',
(2) by striking ``section 1915(b) or (f)'' and inserting
``subsection (b) or (f)(2) of section 1915'', and
(3) by inserting ``(or a similar non-Federal law)'' after
``title 28'' each place it appears.
SEC. 117. 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,
[[Page H2674]]
11, or 13 (other than a case refiled under a chapter other
than chapter 7 after dismisssal under section 707(b) of this
title), and if a single or joint case of the debtor was
pending within the previous 1-year period but was dismissed,
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. Upon motion by a party in interest for continuation of
the automatic stay and upon notice and a hearing, the court
may extend the stay in particular cases as to any or all
creditors (subject to such conditions or limitations as the
court may then impose) after notice and a hearing completed
before the expiration of the 30-day period only if the party
in interest demonstrates that the filing of the later case is
in good faith as to the creditors to be stayed. 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 chapter 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 there is not 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 such case, that
action was still pending or had been resolved by terminating,
conditioning, or limiting the stay as to actions of such
creditor.
``(4) If a single or joint case is filed by or against an
individual debtor under this title (other than a case refiled
under a chapter other than chapter 7 after a dismissal under
section 707(b) of this title), and if 2 or more single or
joint cases of the debtor were pending within the previous
year but were dismissed, 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 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 this title, or
there is not any other reason to conclude that the later case
will 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 such case, such
action was still pending or had been resolved by terminating,
conditioning, or limiting the stay as to action of such
creditor.''.
SEC. 118. CURBING ABUSIVE FILINGS.
(a) In General.--Section 362(d) of title 11, United States
Code, is amended--
(1) in paragraph (2), by striking ``or'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; or''; and
(3) by adding at the end the following:
``(4) with respect to a stay of an act against real
property under subsection (a), by a creditor whose claim is
secured by an interest in such real estate, if the court
finds that the filing of the bankruptcy petition was part of
a scheme to delay, hinder, and defraud creditors that
involved either--
``(A) transfer of all or part ownership of, or other
interest in, the real property without the consent of the
secured creditor or court approval; or
``(B) multiple bankruptcy filings affecting the real
property.
If recorded in compliance with applicable State laws
governing notices of interests or liens in real property, an
order entered pursuant to this subsection shall be binding in
any other case under this title purporting to affect the real
property filed not later than 2 years after that recording,
except that a debtor in a subsequent case may move for relief
from such order based upon changed circumstances or for good
cause shown, after notice and a hearing. Any Federal, State,
or local governmental unit which accepts notices of interests
or liens in real property shall accept any certified copy of
an order described in this subsection for indexing and
recording.''.
(b) Automatic Stay.--Section 362(b) of title 11, United
States Code, is amended--
(1) in paragraph (17), by striking ``or'' at the end;
(2) in paragraph (18) by striking the period at the end and
inserting a semicolon; and
(3) by inserting after paragraph (18) the following:
``(19) under subsection (a), of any act to enforce any lien
against or security interest in real property following the
entry of an order under section 362(d)(4) of this title as to
that property in any prior bankruptcy case for a period of 2
years after entry of such an order. The debtor in a
subsequent case, however, may move the court for relief from
such order based upon changed circumstances or for other good
cause shown (consistent with the standards for good faith in
subsection (c)), after notice and a hearing; or
``(20) under subsection (a), of any act to enforce any lien
against or security interest in real property--
``(A) if the debtor is ineligible under section 109(g) of
this title to be a debtor in a bankruptcy case; or
``(B) if the bankruptcy case was filed in violation of a
bankruptcy court order in a prior bankruptcy case prohibiting
the debtor from being a debtor in another bankruptcy case.''.
SEC. 119. 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 and
inserting a semicolon;
(B) in paragraph (5) by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(6) in an individual case under chapter 7 of this title,
not retain possession of personal property as to which a
creditor has an allowed claim for the purchase price secured
in whole or in part by an interest in that personal property
unless, in the case of an individual debtor, the debtor takes
1 of the following actions within 45 days after the first
meeting of creditors under section 341(a)--
``(A) enters into an agreement with the creditor pursuant
to section 524(c) of this title with respect to the claim
secured by such property; or
``(B) redeems such property from the security interest
pursuant to section 722 of this title.
``If the debtor fails to so act within the 45-day period, the
stay under section 362(a) of this title is terminated with
respect to the personal property of the estate or of the
debtor which is affected, such property shall no longer be
property of the estate, and the creditor may take whatever
action as to such property as is permitted by applicable
nonbankruptcy law, unless the court determines on the motion
of the trustee brought before the expiration of such 45-day
period, and after notice and a hearing, that such property is
of consequential value or benefit to the estate, orders
appropriate adequate protection of the creditor's interest,
and orders the debtor to deliver any collateral in the
debtor's possession to the trustee.''; and
(2) in section 722 by inserting ``in full at the time of
redemption'' before the period at the end.
SEC. 120. RELIEF FROM THE AUTOMATIC 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 personal property of the estate or of the debtor
securing in whole or in part a claim, or subject to an
unexpired lease, and such personal property shall no longer
be property of the estate if the debtor fails within the
applicable time set by section 521(a)(2) of this title--
``(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 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
filed before the expiration of the applicable time set by
section 521(a)(2), and after notice and a hearing, that such
property is of consequential value or benefit to the estate,
orders appropriate adequate protection of the creditor's
[[Page H2675]]
interest, and orders the debtor to deliver any collateral in
the debtor's possession to the trustee. If the court does not
so determine an order, the stay shall terminate upon the
conclusion of the proceeding on the motion.''; and
(2) in section 521, as amended by sections 603 and 604--
(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) of this title''; 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) of this title'' before the semicolon; and
(D) by inserting after subsection (b) the following:
``(c) If the debtor fails timely to take the action
specified in subsection (a)(6) of this section, or in
paragraphs (1) and (2) of section 362(h) of this title, with
respect to property which a lessor or bailor owns and has
leased, rented, or bailed to the debtor or as to which a
creditor holds a security interest not otherwise voidable
under section 522(f), 544, 545, 547, 548, or 549 of this
title, nothing in this title shall prevent or limit the
operation of a provision in the underlying lease or agreement
which has the effect of placing the debtor in default under
such lease or agreement by reason of the occurrence,
pendency, or existence of a proceeding under this title or
the insolvency of the debtor. Nothing in this subsection
shall be deemed to justify limiting such a provision in any
other circumstance.''.
SEC. 121. 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 of this title, 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. 122. 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 5
years 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) less any payments
actually received.''.
SEC. 123. 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. 124. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.
Section 522(b)(2)(A) of title 11, United States Code, is
amended--
(1) by striking ``180'' and inserting ``730''; and
(2) by striking ``, or for a longer portion of such 180-day
period than in any other place'' and inserting ``or if the
debtor's domicile has not been located at a single State for
such 730-day period, the place in which the debtor's domicile
was located for 180 days immediately preceding the 730-day
period or for a longer portion of such 180-day period than in
any other place''.
SEC. 125. RESTRICTIONS ON CERTAIN EXEMPT PROPERTY OBTAINED
THROUGH FRAUD.
Section 522 of title 11, United States Code, as amended by
section 113, is amended--
(1) in subsection (b)(2)(A) by inserting ``subject to
subsection (o),'' before ``any property''; and
(2) by adding at the end the following:
``(o) For purposes of subsection (b)(3)(A) and
notwithstanding subsection (a), the value of an interest in--
``(1) real or personal property that the debtor or a
dependent of the debtor uses as a residence;
``(2) a cooperative that owns property that the debtor or a
dependent of the debtor uses as a residence; or
``(3) a burial plot for the debtor or a dependent of the
debtor;
shall be reduced to the extent such value is attributable to
any portion of any property that the debtor disposed of in
the 730-day period ending of the date of the filing of the
petition, with the intent to hinder, delay, or defraud a
creditor and that the debtor could not exempt, or that
portion that the debtor could not exempt, under subsection
(b) if on such date the debtor had held the property so
disposed of.''.
SEC. 126. ROLLING STOCK EQUIPMENT.
(a) In General.--Section 1168 of title 11, United States
Code, is amended to read as follows:
``Sec. 1168. Rolling stock equipment
``(a)(1) The right of a secured party with a security
interest in or of a lessor or conditional vendor of equipment
described in paragraph (2) to take possession of such
equipment in compliance with an equipment security agreement,
lease, or conditional sale contract, and to enforce any of
its other rights or remedies under such security agreement,
lease, or conditional sale contract, to sell, lease, or
otherwise retain or dispose of such equipment, is not limited
or otherwise affected by any other provision of this title or
by any power of the court, except that the right to take
possession and enforce those other rights and remedies shall
be subject to section 362 of this title, if--
``(A) before the date that is 60 days after the date of
commencement of a case under this chapter, the trustee,
subject to the court's approval, agrees to perform all
obligations of the debtor under such security agreement,
lease, or conditional sale contract; and
``(B) any default, other than a default of a kind described
in section 365(b)(2) of this title, under such security
agreement, lease, or conditional sale contract--
``(i) that occurs before the date of commencement of the
case and is an event of default therewith is cured before the
expiration of such 60-day period;
``(ii) that occurs or becomes an event of default after the
date of commencement of the case and before the expiration of
such 60-day period is cured before the later of--
``(I) the date that is 30 days after the date of the
default or event of the default; or
``(II) the expiration of such 60-day period; and
``(iii) that occurs on or after the expiration of such 60-
day period is cured in accordance with the terms of such
security agreement, lease, or conditional sale contract, if
cure is permitted under that agreement, lease, or conditional
sale contract.
``(2) The equipment described in this paragraph--
``(A) is rolling stock equipment or accessories used on
rolling stock equipment, including superstructures or racks,
that is subject to a security interest granted by, leased to,
or conditionally sold to a debtor; and
``(B) includes all records and documents relating to such
equipment that are required, under the terms of the security
agreement, lease, or conditional sale contract, that is to be
surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
``(3) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is
protected under subsection (a) may agree, subject to the
court's approval, to extend the 60-day period specified in
subsection (a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor,
or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(2), if at any time
after the date of commencement of the case under this chapter
such secured party, lessor, or conditional vendor is entitled
pursuant to subsection (a)(1) to take possession of such
equipment and makes a written demand for such possession of
the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(2), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional
sale contract is an executory contract, shall be deemed
rejected.
``(d) With respect to equipment first placed in service on
or prior to October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated
as a lease for Federal income tax purposes; and
``(2) the term `security interest' means a purchase-money
equipment security interest.
``(e) With respect to equipment first placed in service
after October 22, 1994, for purposes of this section, the
term `rolling stock equipment' includes rolling stock
equipment that is substantially rebuilt and accessories used
on such equipment.''.
(b) Aircraft Equipment and Vessels.--Section 1110 of title
11, United States Code, is amended to read as follows:
[[Page H2676]]
``Sec. 1110. Aircraft equipment and vessels
``(a)(1) Except as provided in paragraph (2) and subject to
subsection (b), the right of a secured party with a security
interest in equipment described in paragraph (3), or of a
lessor or conditional vendor of such equipment, to take
possession of such equipment in compliance with a security
agreement, lease, or conditional sale contract, and to
enforce any of its other rights or remedies, under such
security agreement, lease, or conditional sale contract, to
sell, lease, or otherwise retain or dispose of such
equipment, is not limited or otherwise affected by any other
provision of this title or by any power of the court.
``(2) The right to take possession and to enforce the other
rights and remedies described in paragraph (1) shall be
subject to section 362 of this title if--
``(A) before the date that is 60 days after the date of the
order for relief under this chapter, the trustee, subject to
the approval of the court, agrees to perform all obligations
of the debtor under such security agreement, lease, or
conditional sale contract; and
``(B) any default, other than a default of a kind specified
in section 365(b)(2) of this title, under such security
agreement, lease, or conditional sale contract--
``(i) that occurs before the date of the order is cured
before the expiration of such 60-day period;
``(ii) that occurs after the date of the order and before
the expiration of such 60-day period is cured before the
later of--
``(I) the date that is 30 days after the date of the
default; or
``(II) the expiration of such 60-day period; and
``(iii) that occurs on or after the expiration of such 60-
day period is cured in compliance with the terms of such
security agreement, lease, or conditional sale contract, if a
cure is permitted under that agreement, lease, or contract.
``(3) The equipment described in this paragraph--
``(A) is--
``(i) an aircraft, aircraft engine, propeller, appliance,
or spare part (as defined in section 40102 of title 49) that
is subject to a security interest granted by, leased to, or
conditionally sold to a debtor that, at the time such
transaction is entered into, holds an air carrier operating
certificate issued pursuant to chapter 447 of title 49 for
aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo; or
``(ii) a documented vessel (as defined in section 30101(1)
of title 46) that is subject to a security interest granted
by, leased to, or conditionally sold to a debtor that is a
water carrier that, at the time such transaction is entered
into, holds a certificate of public convenience and necessity
or permit issued by the Department of Transportation; and
``(B) includes all records and documents relating to such
equipment that are required, under the terms of the security
agreement, lease, or conditional sale contract, to be
surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
``(4) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is
protected under subsection (a) may agree, subject to the
approval of the court, to extend the 60-day period specified
in subsection (a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor,
or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(3), if at any time
after the date of the order for relief under this chapter
such secured party, lessor, or conditional vendor is entitled
pursuant to subsection (a)(1) to take possession of such
equipment and makes a written demand for such possession to
the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(3), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional
sale contract is an executory contract, shall be deemed
rejected.
``(d) With respect to equipment first placed in service on
or before October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated
as a lease for Federal income tax purposes; and
``(2) the term `security interest' means a purchase-money
equipment security interest.''.
SEC. 127. DISCHARGE UNDER CHAPTER 13.
Section 1328(a) of title 11, United States Code, is amended
by striking paragraphs (1) through (3) and inserting the
following:
``(1) provided for under section 1322(b)(5) of this title;
``(2) of the kind specified in paragraph (2), (4), (3)(B),
(5), (8), or (9) of section 523(a) of this title;
``(3) for restitution, or a criminal fine, included in a
sentence on the debtor's conviction of a crime; or
``(4) for restitution, or damages, awarded in a civil
action against the debtor as a result of willful or malicious
injury by the debtor that caused personal injury to an
individual or the death of an individual.''.
SEC. 128. BANKRUPTCY JUDGESHIPS.
(a) Short Title.--This section may be cited as the
``Bankruptcy Judgeship Act of 1999''.
(b) Temporary Judgeships.--
(1) Appointments.--The following judgeship positions shall
be filled in the manner prescribed in section 152(a)(1) of
title 28, United States Code, for the appointment of
bankruptcy judges provided for in section 152(a)(2) of
such title:
(A) One additional bankruptcy judgeship for the eastern
district of California.
(B) Four additional bankruptcy judgeships for the central
district of California.
(C) One additional bankruptcy judgeship for the southern
district of Florida.
(D) Two additional bankruptcy judgeships for the district
of Maryland.
(E) One additional bankruptcy judgeship for the eastern
district of Michigan.
(F) One additional bankruptcy judgeship for the southern
district of Mississippi.
(G) One additional bankruptcy judgeship for the district of
New Jersey.
(H) One additional bankruptcy judgeship for the eastern
district of New York.
(I) One additional bankruptcy judgeship for the northern
district of New York.
(J) One additional bankruptcy judgeship for the southern
district of New York.
(K) One additional bankruptcy judgeship for the eastern
district of Pennsylvania.
(L) One additional bankruptcy judgeship for the middle
district of Pennsylvania.
(M) One additional bankruptcy judgeship for the western
district of Tennessee.
(N) One additional bankruptcy judgeship for the eastern
district of Virginia.
(2) Vacancies.--The first vacancy occurring in the office
of a bankruptcy judge in each of the judicial districts set
forth in paragraph (1) that--
(A) results from the death, retirement, resignation, or
removal of a bankruptcy judge; and
(B) occurs 5 years or more after the appointment date of a
bankruptcy judge appointed under paragraph (1);
shall not be filled.
(c) Extensions.--
(1) In general.--The temporary bankruptcy judgeship
positions authorized for the northern district of Alabama,
the district of Delaware, the district of Puerto Rico, the
district of South Carolina, and the eastern district of
Tennessee under section 3(a) (1), (3), (7), (8), and (9) of
the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note) are
extended until the first vacancy occurring in the office of a
bankruptcy judge in the applicable district resulting from
the death, retirement, resignation, or removal of a
bankruptcy judge and occurring--
(A) 8 years or more after November 8, 1993, with respect to
the northern district of Alabama;
(B) 10 years or more after October 28, 1993, with respect
to the district of Delaware;
(C) 8 years or more after August 29, 1994, with respect to
the district of Puerto Rico;
(D) 8 years or more after June 27, 1994, with respect to
the district of South Carolina; and
(E) 8 years or more after November 23, 1993, with respect
to the eastern district of Tennessee.
(2) Applicability of other provisions.--All other
provisions of section 3 of the Bankruptcy Judgeship Act of
1992 remain applicable to such temporary judgeship position.
(d) Technical Amendment.--The first sentence of section
152(a)(1) of title 28, United States Code, is amended to read
as follows: ``Each bankruptcy judge to be appointed for a
judicial district as provided in paragraph (2) shall be
appointed by the United States court of appeals for the
circuit in which such district is located.''.
(e) Travel Expenses of Bankruptcy Judges.--Section 156 of
title 28, United States Code, is amended by adding at the end
the following new subsection:
``(g)(1) In this subsection, the term `travel expenses'--
``(A) means the expenses incurred by a bankruptcy judge for
travel that is not directly related to any case assigned to
such bankruptcy judge; and
``(B) shall not include the travel expenses of a bankruptcy
judge if--
``(i) the payment for the travel expenses is paid by such
bankruptcy judge from the personal funds of such bankruptcy
judge; and
``(ii) such bankruptcy judge does not receive funds
(including reimbursement) from the United States or any other
person or entity for the payment of such travel expenses.
``(2) Each bankruptcy judge shall annually submit the
information required under paragraph (3) to the chief
bankruptcy judge for the district in which the bankruptcy
judge is assigned.
``(3)(A) Each chief bankruptcy judge shall submit an annual
report to the Director of the Administrative Office of the
United States Courts on the travel expenses of each
bankruptcy judge assigned to the applicable district
(including the travel expenses of the chief bankruptcy judge
of such district).
``(B) The annual report under this paragraph shall
include--
``(i) the travel expenses of each bankruptcy judge, with
the name of the bankruptcy judge to whom the travel expenses
apply;
``(ii) a description of the subject matter and purpose of
the travel relating to each travel expense identified under
clause (i), with the name of the bankruptcy judge to whom the
travel applies; and
``(iii) the number of days of each travel described under
clause (ii), with the name of the bankruptcy judge to whom
the travel applies.
``(4)(A) The Director of the Administrative Office of the
United States Courts shall--
``(i) consolidate the reports submitted under paragraph (3)
into a single report; and
``(ii) annually submit such consolidated report to
Congress.
[[Page H2677]]
``(B) The consolidated report submitted under this
paragraph shall include the specific information required
under paragraph (3)(B), including the name of each bankruptcy
judge with respect to clauses (i), (ii), and (iii) of
paragraph (3)(B).''.
SEC. 129. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES
CODE.
Section 507(a) of title 11, United States Code, is amended
by inserting after paragraph (9) the following:
``(10) Tenth, allowed claims for death or personal injuries
resulting from the operation of a motor vehicle or vessel if
such operation was unlawful because the debtor was
intoxicated from using alcohol, a drug or another
substance.''.
SEC. 130. AMENDMENT TO SECTION 1325 OF TITLE 11, UNITED
STATES CODE.
Section 1325(b) of title 11, United States Code, is
amended--
(1) in paragraph (1), by inserting ``to unsecured
creditors'' after ``to make payments'';
(2) in paragraph (2)--
(A) by inserting ``current monthly'' before ``income'';
(B) by striking ``and which is not'' and inserting ``less
amounts'';
(C) by inserting after ``received by the debtor'', ``(other
than child support payments, foster care payments, or
disability payments for a dependent child made in accordance
with applicable nonbankruptcy law and which is reasonably
necessary to be expended)''; and
(D) in subparagraph (A) by inserting after ``dependent of
the debtor'' the following: ``, as determined in accordance
with section 707(b)(2)(A) and if applicable 707(b)(2)(B)''.
SEC. 131. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY
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)(A) Notwithstanding subsection (c) and except as
provided in subparagraph (B), in any case in which the debtor
did not receive the consideration for the claim held by a
creditor, the stay provided by subsection (a) shall apply to
that creditor for a period not to exceed 30 days beginning on
the date of the order for relief, to the extent the creditor
proceeds against--
``(i) the individual that received that consideration; or
``(ii) property not in the possession of the debtor that
secures that claim.
``(B) Notwithstanding subparagraph (A), the stay provided
by subsection (a) shall apply in any case in which the debtor
is primarily obligated to pay the creditor in whole or in
part with respect to a claim described in subparagraph (A)
under a legally binding separation or property settlement
agreement or divorce or dissolution decree with respect to--
``(i) an individual described in subparagraph (A)(i); or
``(ii) property described in subparagraph (A)(ii).
``(3) Notwithstanding subsection (c), the stay provided by
subsection (a) shall terminate as of the date of confirmation
of the plan, in any case in which the plan of the debtor
provides that the debtor's interest in personal property
subject to a lease with respect 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.''.
SEC. 132. 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 section 118, is amended--
(1) in paragraph (19) by striking ``or'' at the end;
(2) in paragraph (20) by striking the period at the end and
a inserting ``; or''; and
(3) by inserting after paragraph (20) the following:
``(21) under subsection (a), 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.''.
SEC. 133. LIMITATION ON LUXURY GOODS.
Section 523(a)(2)(C) of title 11, United States Code, is
amended to read as follows:
``(C)(i) for purposes of subparagraph (A), consumer debts
owed to a single creditor and aggregating more than $250 for
`luxury goods or services' incurred by an individual debtor
on or within 90 days before the order for relief under this
title, or cash advances aggregating more than $250 that are
extensions of consumer credit under an open end credit plan
obtained by an individual debtor on or within 90 days before
the order for relief under this title, are presumed to be
nondischargeable; and
``(ii) for purposes of this subparagraph--
``(I) the term `luxury goods or services' does not include
goods or services reasonably necessary for the support or
maintenance of the debtor or a dependent of the debtor; and
``(II) the term `an extension of consumer credit under an
open end credit plan' has the same meaning such term has for
purposes of the Consumer Credit Protection Act;''.
SEC. 134. 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, at
its option, condition such assumption on cure of any
outstanding default on terms set by the contract. If within
30 days of the notice from the creditor 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) of this title shall
not be violated by notification of the debtor and negotiation
of cure under this subsection. Nothing in this paragraph
shall require a debtor to assume a lease, or a creditor to
permit assumption.
``(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. 135. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY
SECURED CREDITORS.
(a) In General.--Chapter 13 of title 11, United States
Code, is amended by adding after section 1307 the following:
``Sec. 1307A. Adequate protection in chapter 13 cases
``(a)(1)(A) On or before the date that is 30 days after the
filing of a case under this chapter, the debtor shall make
cash payments in an amount determined under paragraph (2),
to--
``(i) any lessor of personal property; and
``(ii) any creditor holding a claim secured by personal
property to the extent that the claim is attributable to the
purchase of that property by the debtor.
``(B) The debtor or the plan shall continue making the
adequate protection payments required under subparagraph (A)
until the earlier of the date on which--
``(i) the creditor begins to receive actual payments under
the plan; or
``(ii) the debtor relinquishes possession of the property
referred to in subparagraph (A) to--
``(I) the lessor or creditor; or
``(II) any third party acting under claim of right, as
applicable.
``(2) The payments referred to in paragraph (1)(A) shall be
the contract amount and shall reduce any amount payable under
section 1326(a) of the title.
``(b)(1) Subject to the limitations under paragraph (2),
the court may, after notice and hearing, change the amount
and timing of the dates of payment of payments made under
subsection (a).
``(2)(A) The payments referred to in paragraph (1) shall be
payable not less frequently than monthly.
``(B) The amount of payments referred to in paragraph (1)
shall not be less than the amount of any weekly, biweekly,
monthly, or other periodic payment scheduled as payable under
the contract between the debtor and creditor.
``(c) Notwithstanding section 1326(b), the payments
referred to in subsection (a)(1)(A) shall be continued in
addition to plan payments under a confirmed plan until actual
payments to the creditor begin under that plan, if the
confirmed plan provides--
``(1) for payments to a creditor or lessor described in
subsection (a)(1); and
``(2) for the deferral of payments to such creditor or
lessor under the plan until the payment of amounts described
in section 1326(b).
``(d) Notwithstanding sections 362, 542, and 543, a lessor
or creditor described in subsection (a) may retain possession
of property described in that subsection that was obtained in
accordance with applicable law before the date of filing of
the petition until the first payment under subsection
(a)(1)(A) is received by the lessor or creditor.
``(e) On or before 60 days after the filling of a case
under this chapter, a debtor retaining possession of personal
property subject to a lease or securing a claim attributable
in whole or in part to the purchase price of such property
shall provide 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.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 13 of title 11, United States Code, is
amended by inserting after the item relating to section 1307
the following:
``1307A. Adequate protection in chapter 13 cases.''.
SEC. 136. AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, as amended
by sections 118 and 132, is amended--
[[Page H2678]]
(1) in paragraph (20), by striking ``or'' at the end;
(2) in paragraph (21), by striking the period at the end
and inserting a semicolon; and
(3) by inserting after paragraph (21) the following:
``(22) under subsection (a) of any transfer that is not
avoidable under section 544 of this title and that is not
avoidable under section 549 of this title;
``(23) under subsection (a)(3), of the continuation of any
eviction, unlawful detainer action, or similar proceeding by
a lessor against a debtor involving residential real property
in which the debtor resides as a tenant under a rental
agreement and the debtor has not paid rent to the lessor
pursuant to the terms of the lease agreement or applicable
State law after the commencement and during the course of the
case;
``(24) under subsection (a)(3), of the commencement or
continuation of any eviction, unlawful detainer action, or
similar proceeding by a lessor against a debtor involving
residential real property in which the debtor resides as a
tenant under a rental agreement that has terminated pursuant
to the lease agreement or applicable State law;
``(25) under subsection (a)(3), of any eviction, unlawful
detainer action, or similar proceeding, if the debtor has
previously filed within the last year and failed to pay post-
petition rent during the course of that case; or
``(26) under subsection (a)(3), of eviction actions based
on endangerment to property or person or the use of illegal
drugs.''.
SEC. 137. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.
Title 11, United States Code, is amended--
(1) in section 727(a)(8) by striking ``six'' and inserting
``8''; and
(2) in section 1328 by 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.''.
SEC. 138. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.
Section 101 of title 11, United States Code, is amended--
(1) by striking paragraph (12A); and
(2) by inserting after paragraph (14) the following:
``(14A) `domestic support obligation' means a debt that
accrues before or after the entry of an order for relief
under this title that is--
``(A) owed to or recoverable by--
``(i) a spouse, former spouse, or child of the debtor or
that child's legal guardian; or
``(ii) a governmental unit;
``(B) in the nature of alimony, maintenance, or support
(including assistance provided by a governmental unit) of
such spouse, former spouse, or child, without regard to
whether such debt is expressly so designated;
``(C) established or subject to establishment before or
after entry of an order for relief under this title, by
reason of applicable provisions of--
``(i) a separation agreement, divorce decree, or property
settlement agreement;
``(ii) an order of a court of record; or
``(iii) a determination made in accordance with applicable
nonbankruptcy law by a governmental unit; and
``(D) not assigned to a nongovernmental entity, unless that
obligation is assigned voluntarily by the spouse, former
spouse, child, or parent solely for the purpose of collecting
the debt.''.
SEC. 139. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT
OBLIGATIONS.
Section 507(a) of title 11, United States Code, is
amended--
(1) by striking paragraph (7);
(2) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively;
(3) in paragraph (2), as redesignated, by striking
``First'' and inserting ``Second'';
(4) in paragraph (3), as redesignated, by striking
``Second'' and inserting ``Third'';
(5) in paragraph (4), as redesignated, by striking
``Third'' and inserting ``Fourth'';
(6) in paragraph (5), as redesignated, by striking
``Fourth'' and inserting ``Fifth'';
(7) in paragraph (6), as redesignated, by striking
``Fifth'' and inserting ``Sixth'';
(8) in paragraph (7), as redesignated, by striking
``Sixth'' and inserting ``Seventh''; and
(9) by inserting before paragraph (2), as redesignated, the
following:
``(1) First, allowed claims for domestic support
obligations to be paid in the following order on the
condition that funds received under this paragraph by a
governmental unit in a case under this title be applied:
``(A) Claims that, as of the date of entry of the order for
relief, are owed directly to a spouse, former spouse, or
child of the debtor, or the parent of such child, without
regard to whether the claim is filed by the spouse, former
spouse, child, or parent, or is filed by a governmental unit
on behalf of that person.
``(B) Claims that, as of the date of entry of the order for
relief, are assigned by a spouse, former spouse, child of the
debtor, or the parent of that child to a governmental unit or
are owed directly to a governmental unit under applicable
nonbankruptcy law.''.
SEC. 140. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE
IN CASES INVOLVING DOMESTIC SUPPORT
OBLIGATIONS.
Title 11, United States Code, is amended--
(1) in section 1129(a), by adding at the end the following:
``(14) If the debtor is required by a judicial or
administrative order or statute to pay a domestic support
obligation, the debtor has paid all amounts payable under
such order or statute for such obligation that become payable
after the date on which the petition is filed.'';
(2) 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 or statute to pay a domestic support
obligation, the debtor has paid all amounts payable under
such order for such obligation that become payable after the
date on which the petition is filed.''; and
(3) in section 1328(a), as amended by section 127, in the
matter preceding paragraph (1), by inserting ``, and with
respect to a debtor who is required by a judicial or
administrative order to pay a domestic support obligation,
certifies that all amounts payable under such order or
statute that are due on or before the date of the
certification (including amounts due before or after the
petition was filed) have been paid'' after ``completion by
the debtor of all payments under the plan''.
SEC. 141. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT
OBLIGATION PROCEEDINGS.
Section 362(b) of title 11, United States Code, as amended
by sections 118, 132, and 136, is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) under subsection (a)--
``(A) of the commencement or continuation of an action or
proceeding for--
``(i) the establishment of paternity; or
``(ii) the establishment or modification of an order for
domestic support obligations; or
``(B) the collection of a domestic support obligation from
property that is not property of the estate;'';
(2) in paragraph (25), by striking ``or'' at the end;
(3) in paragraph (26), by striking the period at the end
and inserting a semicolon; and
(4) by inserting after paragraph (26) the following:
``(27) 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 (42 U.S.C. 666(b)); or
``(28) under subsection (a) with respect to--
``(A) 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)(16) of the Social Security Act (42 U.S.C.
666(a)(16)) 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 (42 U.S.C. 666(a)(7));
``(B) the interception of tax refunds, as specified in
sections 464 and 466(a)(3) of the Social Security Act (42
U.S.C. 664 and 666(a)(3)); or
``(C) the enforcement of medical obligations as specified
under title IV of the Social Security Act (42 U.S.C. 601 et
seq.).''.
SEC. 142. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY,
MAINTENANCE, AND SUPPORT.
Section 523 of title 11, United States Code, is amended--
(1) in subsection (a), by striking paragraph (5) and
inserting the following:
``(5) for a domestic support obligation;'';
(2) in subsection (a)(15)--
(A) by inserting ``or'' after ``court of record,'';
(B) by striking ``unless--'' and all that follows through
``debtor'' the last place it appears; and
(3) in subsection (c), by striking ``(6), or (15)'' each
place it appears and inserting ``or (6)''.
SEC. 143. CONTINUED LIABILITY OF PROPERTY.
Section 522 of title 11, United States Code, is amended--
(1) in subsection (c), by striking paragraph (1) and
inserting the following:
``(1) a debt of a kind specified in paragraph (1) or (5) of
section 523(a) (in which case, notwithstanding any provision
of applicable nonbankruptcy law to the contrary, such
property shall be liable for a debt of a kind specified in
section 523(a)(5);''; and
(2) in subsection (f)(1)(A), by striking the dash and all
that follows through the end of the subparagraph and
inserting ``of a kind that is specified in section 523(a)(5);
or''.
SEC. 144. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST
PREFERENTIAL TRANSFER MOTIONS.
Section 547(c)(7) of title 11, United States Code, is
amended to read as follows:
``(7) to the extent such transfer was a bona fide payment
of a debt for a domestic support obligation; or''.
SEC. 145. CLARIFICATION OF MEANING OF HOUSEHOLD GOODS.
Section 101 of title 11, United States Code, is amended by
inserting after paragraph (27) the following:
``(27A) `household goods' includes tangible personal
property normally found in or around a residence, but does
not include motorized vehicles used for transportation
purposes;''.
SEC. 146. NONDISCHARGEABLE DEBTS.
Section 523(a) of title 11, United States Code, is amended
by inserting after paragraph (14) the following:
``(14A) incurred to pay a debt that is nondischargeable by
reason of section 727, 1141, 1228(a), 1228(b), or 1328(c), or
any other provision of this subsection, if the debtor
incurred the debt to pay such a nondischargeable debt with
the intent to discharge in bankruptcy the newly-created debt,
except that all debts incurred to pay nondischargeable debts,
without regard to intent, are nondischargeable if incurred
within 90 days of the filing of the petition;''.
SEC. 147. MONETARY LIMITATION ON CERTAIN EXEMPT PROPERTY.
Section 522 of title 11, United States Code, as amended by
section 125, is amended--
[[Page H2679]]
(1) in subsection (b)(2)(A) by striking ``subsection (o)''
and inserting ``subsections (o) and (p)'' before ``any
property''; and
(2) by adding at the end the following:
``(p)(1) Except as provided in paragraphs (2) and (3), as a
result of electing under subsection (b)(3)(A) to exempt
property under State or local law, a debtor may not exempt
any interest that exceeds $250,000 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)(3)(A) by a family
farmer for the principal residence of that farmer.
``(3) Paragraph (1) shall not apply to debtors if
applicable State law expressly provides by a statute enacted
after the effective date of this paragraph that such
paragraph shall not apply to debtors.''.
SEC. 148. BANKRUPTCY FEES.
Section 1930 of title 28, United States Code, is amended--
(1) in subsection (a) by striking ``Notwithstanding section
1915 of this title, the'' and inserting ``The''; and
(2) by adding at the end the following:
``(f)(1) Pursuant to procedures prescribed by the Judicial
Conference of the United States, the district court or the
bankruptcy court may waive the filing fee in a case under
chapter 7 of title 11 for an individual debtor who is unable
to pay such fee in installments. For purposes of this
paragraph, the term `filing fee' means the filing fee
required by subsection (a), or any other fee prescribed by
the Judicial Conference under subsections (b) and (c) that is
payable to the clerk upon the commencement of a case under
chapter 7 of title 11.
``(2) The district court or the bankruptcy court may also
waive for such debtors other fees prescribed pursuant to
subsections (b) and (c).
``(3) This subsection does not restrict the district court
or the bankruptcy court from waiving, in accordance with
Judicial Conference policy, fees prescribed pursuant to such
subsections for other debtors and creditors.''.
SEC. 149. COLLECTION OF CHILD SUPPORT.
(a) Duties of Trustee Under Chapter 7.--Section 704 of
title 11, United States Code, as amended by section 102, is
amended--
(1) by inserting ``(a)'' before ``The trustee'',
(2) in paragraph (9) by striking ``and'' at the end,
(3) in paragraph (10) by striking the period and inserting
``; and'', and
(4) by adding at the end the following:
``(11) if, with respect to an individual debtor, there is a
claim for support of a child of the debtor or a custodial
parent of such child entitled to receive priority under
section 507(a)(1) of this title, provide the applicable
notification specified in subsection (b).
``(b)(1) In any case described in subsection (a)(11), the
trustee shall--
``(A)(i) notify in writing the holder of the claim of the
right of such holder to use the services of a State child
support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which the
holder resides; and
``(ii) include in the notice under this paragraph the
address and telephone number of the child support enforcement
agency; and
``(B)(i) notify in writing the State child support agency
of the State in which the holder of the claim resides of the
claim;
``(ii) include in the notice under this paragraph the name,
address, and telephone number of the holder of the claim; and
``(iii) at such time as the debtor is granted a discharge
under section 727 of this title, notify the holder of such
claim and the State child support agency of the State in
which such holder resides of--
``(I) the granting of the discharge;
``(II) the last recent known address of the debtor; and
``(III) with respect to the debtor's case, the name of each
creditor that holds a claim that is not discharged under
paragraph (2), (4), or (14A) of section 523(a) of this title
or that was reaffirmed by the debtor under section 524(c) of
this title.
``(2)(A) If, after receiving a notice under paragraph
(1)(B)(iii), a holder of a claim or a State child support
agency is unable to locate the debtor that is the subject of
the notice, such holder or such agency may request from a
creditor described in paragraph (1)(B)(iii)(III) the last
known address of the debtor.
``(B) Notwithstanding any other provision of law, a
creditor that makes a disclosure of a last known address of a
debtor in connection with a request made under subparagraph
(A) shall not be liable to the debtor or any other person by
reason of making such disclosure.''.
(b) Duties of Trustee Under Chapter 13.--Section 1302 of
title 11, United States Code, is amended--
(1) in subsection (b)--
(A) in paragraph (4) by striking ``and'' at the end,
(B) in paragraph (5) by striking the period and inserting
``; and'', and
(C) by adding at the end the following:
``(6) if, with respect to an individual debtor, there is a
claim for support of a child of the debtor or a custodial
parent of such child entitled to receive priority under
section 507(a)(1) of this title, provide the applicable
notification specified in subsection (d).'', and
(2) by adding at the end the following:
``(d)(1) In any case described in subsection (b)(6), the
trustee shall--
``(A)(i) notify in writing the holder of the claim of the
right of such holder to use the services of a State child
support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which the
holder resides; and
``(ii) include in the notice under this paragraph the
address and telephone number of the child support enforcement
agency; and
``(B)(i) notify in writing the State child support agency
of the State in which the holder of the claim resides of the
claim; and
``(ii) include in the notice under this paragraph the name,
address, and telephone number of the holder of the claim;
``(iii) at such time as the debtor is granted a discharge
under section 1328 of this title, notify the holder of the
claim and the State child support agency of the State in
which such holder resides of--
``(I) the granting of the discharge;
``(II) the last recent known address of the debtor; and
``(III) with respect to the debtor's case, the name of each
creditor that holds a claim that is not discharged under
paragraph (2), (4), or (14A) of section 523(a) of this title
or that was reaffirmed by the debtor under section 524(c) of
this title.
``(2)(A) If, after receiving a notice under paragraph
(1)(B)(iii), a holder of a claim or a State child support
agency is unable to locate the debtor that is the subject of
the notice, such holder or such agency may request from a
creditor described in paragraph (1)(B)(iii) the last known
address of the debtor.
``(B) Notwithstanding any other provision of law, a
creditor that makes a disclosure of a last known address of a
debtor in connection with a request made under subparagraph
(A) shall not be liable to the debtor or any other person by
reason of making such disclosure.''.
SEC. 150. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT
CONTRIBUTIONS AND OTHER PROPERTY FROM THE
ESTATE.
(a) In General.--Section 541(b) of title 11 of the United
States Code is amended--
(1) by striking ``or'' at the end of paragraph (4)(B)(ii);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by inserting after paragraph (5) the following:
``(7) any amount or interest in property to the extent that
an employer has withheld amounts from the wages of employees
for contribution to an employee benefit plan subject to title
I of the Employee Retirement Income Security Act of 1974, or
to the extent that the employer has received amounts as a
result of payments by participants or beneficiaries to an
employer for contribution to an employee benefit plan subject
to title I of the Employee Retirement Income Security Act of
1974.''.
(b) Application of Amendment.--The amendment made by this
section shall not apply to cases commenced under title 11 of
the United States Code before the expiration of the 180-day
period beginning on the date of the enactment of this Act.
SEC. 151. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.
Section 503(b)(1)(A) of title 11, United States Code, is
amended to read as follows:
``(A) the actual, necessary costs and expenses of
preserving the estate, including wages, salaries, or
commissions for services rendered after the commencement of
the case, and wages and benefits attributable to any period
of time after commencement of the case as a result of the
debtor's violation of Federal law, without regard to when the
original unlawful act occurred or to whether any services
were rendered;''.
SEC. 152. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT
OBLIGATION PROCEEDINGS.
Section 362(b)(2) of title 11, United States Code, is
amended--
(1) in subparagraph (A) by striking ``or'' at the end;
(2) in subparagraph (B) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(C) under subsection (a) of--
``(i) the withholding of income for payment of a domestic
support obligation pursuant to a judicial or administrative
order or statute for such obligation that first becomes
payable after the date on which the petition is filed; or
``(ii) the withholding of income for payment of a domestic
support obligation owed directly to the spouse, former spouse
or child of the debtor or the parent of such child, pursuant
to a judicial or administrative order or statute for such
obligation that becomes payable before the date on which the
petition is filed unless the court finds, after notice and
hearing, that such withholding would render the plan
infeasible;''.
SEC. 153. AUTOMATIC STAY INAPPLICABLE TO CERTAIN PROCEEDINGS
AGAINST THE DEBTOR.
Section 362(b)(2) of title 11, United States Code, as
amended by section 153, is amended--
(1) in subparagraph (B) by striking ``or'' at the end;
(2) by inserting after subparagraph (C) the following:
``(D) the commencement or continuation of a proceeding
concerning a child custody or visitation;
``(E) the commencement or continuation of a proceeding
alleging domestic violence; or
``(F) the commencement or continuation of a proceeding
seeking a dissolution of marriage, except to the extent the
proceeding concerns property of the estate;''.
[[Page H2680]]
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
SEC. 201. REENACTMENT OF CHAPTER 12.
(a) Reenactment.--Chapter 12 of title 11 of the United
States Code, as in effect on March 31, 1999, is hereby
reenacted.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on March 31, 1999.
SEC. 202. 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. 203. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.
(a) In General.--Section 522 of title 11, United States
Code, as amended by sections 113, 125, and 147 is amended--
(1) in subsection (b)--
(A) in paragraph (2)--
(i) by striking ``(2)(A)'' and inserting:
``(3) Property listed in this paragraph is--
``(A) subject to subsections (o) and (p),'';
(ii) in subparagraph (B), by striking ``and'' at the end;
(iii) in subparagraph (C), by striking the period at the
end and inserting ``; and''; and
(iv) by adding at the end the following:
``(D) retirement funds to the extent that those funds are
in a fund or account that is exempt from taxation under
section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986.'';
(B) by striking paragraph (1) and inserting:
``(2) Property listed in this paragraph is property that is
specified under subsection (d), unless the State law that is
applicable to the debtor under paragraph (3)(A) specifically
does not so authorize.'';
(C) in the matter preceding paragraph (2)--
(i) by striking ``(b)'' and inserting ``(b)(1)'';
(ii) by striking ``paragraph (2)'' both places it appears
and inserting ``paragraph (3)'';
(iii) by striking ``paragraph (1)'' each place it appears
and inserting ``paragraph (2)''; and
(iv) by striking ``Such property is--''; and
(D) by adding at the end of the subsection the following:
``(4) For purposes of paragraph (3)(D) and subsection
(d)(12), the following shall apply:
``(A) If the retirement funds are in a retirement fund that
has received a favorable determination pursuant to section
7805 of the Internal Revenue Code of 1986, and that
determination is in effect as of the date of the commencement
of the case under section 301, 302, or 303 of this title,
those funds shall be presumed to be exempt from the estate.
``(B) If the retirement funds are in a retirement fund that
has not received a favorable determination pursuant to such
section 7805, those funds are exempt from the estate if the
debtor demonstrates that--
``(i) no prior determination to the contrary has been made
by a court or the Internal Revenue Service; and
``(ii) the retirement fund is in substantial compliance
with the applicable requirements of the Internal Revenue Code
of 1986.
``(C) A direct transfer of retirement funds from 1 fund or
account that is exempt from taxation under section 401, 403,
408, 408A, 414, 457, or 501(a) of the Internal Revenue Code
of 1986, pursuant to section 401(a)(31) of the Internal
Revenue Code of 1986, or otherwise, shall not cease to
qualify for exemption under paragraph (3)(D) or subsection
(d)(12) by reason of that direct transfer.
``(D)(i) Any distribution that qualifies as an eligible
rollover distribution within the meaning of section 402(c) of
the Internal Revenue Code of 1986 or that is described in
clause (ii) shall not cease to qualify for exemption under
paragraph (3)(D) or subsection (d)(12) by reason of that
distribution.
``(ii) A distribution described in this clause is an amount
that--
``(I) has been distributed from a fund or account that is
exempt from taxation under section 401, 403, 408, 408A, 414,
457, or 501(a) of the Internal Revenue Code of 1986; and
``(II) to the extent allowed by law, is deposited in such a
fund or account not later than 60 days after the distribution
of that amount.''; and
(2) in subsection (d)--
(A) in the matter preceding paragraph (1), by striking
``subsection (b)(1)'' and inserting ``subsection (b)(2)'';
and
(B) by adding at the end the following:
``(12) Retirement funds to the extent that those funds are
in a fund or account that is exempt from taxation under
section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986.''.
(b) Automatic Stay.--Section 362(b) of title 11, United
States Code, as amended by sections 118, 132, 136, and 141 is
amended--
(1) in paragraph (27), by striking ``or'' at the end;
(2) in paragraph (28), by striking the period and inserting
``; or'';
(3) by inserting after paragraph (28) the following:
``(29) under subsection (a), of withholding of income from
a debtor's wages and collection of amounts withheld, pursuant
to the debtor's agreement authorizing that withholding and
collection for the benefit of a pension, profit-sharing,
stock bonus, or other plan established under section 401,
403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
Code of 1986 that is sponsored by the employer of the debtor,
or an affiliate, successor, or predecessor of such employer--
``(A) to the extent that the amounts withheld and collected
are used solely for payments relating to a loan from a plan
that satisfies the requirements of section 408(b)(1) of the
Employee Retirement Income Security Act of 1974 or is subject
to section 72(p) of the Internal Revenue Code of 1986; or
``(B) in the case of a loan from a thrift savings plan
described in subchapter III of title 5, that satisfies the
requirements of section 8433(g) of such title.''; and
(4) by adding at the end of the flush material following
paragraph (29) the following: ``Paragraph (29) does not apply
to any amount owed to a plan referred to in that paragraph
that is incurred under a loan made during the 1-year
period preceding the filing of a petition. Nothing in
paragraph (29) may be construed to provide that any loan
made under a governmental plan under section 414(d), or a
contract or account under section 403(b), of the Internal
Revenue Code of 1986 constitutes a claim or a debt under
this title.''.
(c) Exceptions to Discharge.--Section 523(a) of title 11,
United States Code, is amended--
(1) by striking ``or'' at the end of paragraph (17);
(2) by striking the period at the end of paragraph (18) and
inserting ``; or''; and
(3) by adding at the end the following:
``(19) owed to a pension, profit-sharing, stock bonus, or
other plan established under section 401, 403, 408, 408A,
414, 457, or 501(c) of the Internal Revenue Code of 1986,
pursuant to--
``(A) a loan permitted under section 408(b)(1) of the
Employee Retirement Income Security Act of 1974) or subject
to section 72(p) of the Internal Revenue Code of 1986; or
``(B) a loan from the thrift savings plan described in
subchapter III of title 5, that satisfies the requirements of
section 8433(g) of such title.
Paragraph (19) does not apply to any amount owed to a plan
referred to in that paragraph that is incurred under a loan
made during the 1-year period preceding the filing of a
petition. Nothing in paragraph (19) may be construed to
provide that any loan made under a governmental plan under
section 414(d), or a contract or account under section
403(b), of the Internal Revenue Code of 1986 constitutes a
claim or a debt under this title.''.
(d) Plan Contents.--Section 1322 of title 11, United States
Code, is amended by adding at the end the following:
``(f) A plan may not materially alter the terms of a loan
described in section 362(b)(29) of this title.''.
SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2) of
title 11, United States Code, are amended by striking ``10''
each place it appears and inserting ``30''.
SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Section 365(d)(4) of title 11, United States Code, is
amended to read as follows:
``(4)(A) Subject to subparagraph (B), in any case under any
chapter in this title, an unexpired lease of nonresidential
real property under which the debtor is the lessee shall be
deemed rejected, and the trustee shall immediately surrender
such property to the lessor, if the trustee does not assume
or reject the unexpired lease by the earlier of--
``(i) the date that is 120 days after the date of the order
for relief; or
``(ii) the date of the entry of an order confirming a plan.
``(B)(i) The court may extend the period determined under
subparagraph (A) for 120 days upon motion of the trustee or
the lessor for cause.
``(ii) If the court grants an extension under clause (i),
the court may grant a subsequent extension only upon prior
written consent of the lessor.''.
SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.
Section 1102(a)(2) of title 11, United States Code, is
amended by inserting before the first sentence the following:
``On its own motion or on request of a party in interest, and
after notice and hearing, the court may order a change in the
membership of a committee appointed under this subsection, if
the court determines that the change is necessary to ensure
adequate representation of creditors or equity security
holders.''.
SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES
CODE.
Section 546 of title 11, United States Code, is amended by
inserting at the end thereof:
``(i) Notwithstanding section 545 (2) and (3) of this
title, the trustee may not avoid a warehouseman's lien for
storage, transportation or other costs incidental to the
storage and handling of goods, as provided by section 7-209
of the Uniform Commercial Code.''.
SEC. 208. LIMITATION.
Section 546(c)(1)(B) of title 11, United States Code, is
amended by striking ``20'' and inserting ``45''.
SEC. 209. AMENDMENT TO SECTION 330(A) OF TITLE 11, UNITED
STATES CODE.
Section 330(a) of title 11, United States Code, is
amended--
(1) in paragraph (3)--
(A) in subparagraph (A) after ``awarded'', by inserting
``to an examiner, chapter 11 trustee, or professional
person''; and
(B) by redesignating subdivisions (A) through (E) as
clauses (i) through (iv), respectively; and
(2) by adding at the the following:
``(B) In determining the amount of reasonable compensation
to be awarded a trustee, the court shall treat such
compensation as a commission based on the results
achieved.''.
SEC. 210. POSTPETITION DISCLOSURE AND SOLICITATION.
Section 1125 of title 11, United States Code, is amended by
adding at the end the following:
[[Page H2681]]
``(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. 211. 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
$5,000.''.
SEC. 212. 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. 213. 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. 214. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.
Section 523(a)(16) of title 11, United States Code, is
amended--
(1) by striking ``dwelling'' the first place it appears;
(2) by striking ``ownership or'' and inserting
``ownership,'';
(3) by striking ``housing'' the first place it appears; and
(4) by striking ``but only'' and all that follows through
``such period,'', and inserting ``or a lot in a homeowners
association, for as long as the debtor or the trustee has a
legal, equitable, or possessory ownership interest in such
unit, such corporation, or such lot,''.
SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN CASES
ANCILLARY TO FOREIGN PROCEEDINGS.
Section 304 of title 11, United States Code, is amended to
read as follows:
``Sec. 304. Cases ancillary to foreign proceedings
``(a) For purposes of this section--
``(1) the term `domestic insurance company' means a
domestic insurance company, as such term is used in section
109(b)(2);
``(2) the term `foreign insurance company' means a foreign
insurance company, as such term is used in section 109(b)(3);
``(3) the term `United States claimant' means a beneficiary
of any deposit referred to in subsection (b) or any
multibeneficiary trust referred to in subsection (b);
``(4) the term `United States creditor' means, with respect
to a foreign insurance company--
``(A) a United States claimant; or
``(B) any business entity that operates in the United
States and that is a creditor; and
``(5) the term `United States policyholder' means a holder
of an insurance policy issued in the United States.
``(b) The court may not grant relief under chapter 15 of
this title with respect to any deposit, escrow, trust fund,
or other security required or permitted under any applicable
State insurance law or regulation for the benefit of claim
holders in the United States.''.
SEC. 216. 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 (excluding
executory contracts that transfer a right or interest under a
filed or issued patent, copyright, trademark, trade dress, or
trade secret), 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
(excluding executory contracts that transfer a right or
interest under a filed or issued patent, copyright,
trademark, trade dress, or trade secret) 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); and
(4) in subsection (f)(1) by striking ``; except that'' and
all that follows through the end of the paragraph and
inserting a period.
(b) Impairment of Claims or Interests.--Section 1124(2) of
title 11, United States Code, is amended--
(1) in subparagraph (A) by inserting ``or of a kind that
section 365(b)(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:
``(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''.
SEC. 217. 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. 218. PRIORITY FOR ADMINISTRATIVE EXPENSES.
Section 503(b) of title 11, United States Code, is
amended--
(1) by deleting ``and'' at the end of paragraph (5);
(2) by striking the period at the end of paragraph (6) and
inserting ``; and'';
(3) by inserting the following after paragraph (6):
``(7) with respect to a nonresidential real property lease
previously assumed under section 365, and subsequently
rejected, a sum equal to all monetary obligations due,
excluding those arising from or relating to a failure to
operate or penalty provisions, for the period of one year
following the later of the rejection date or date of actual
turnover of the premises, without reduction or setoff for any
reason whatsoever except for sums actually received or to be
received from a nondebtor; and the claim for remaining sums
due for the balance of the term of the lease shall be a claim
under section 502(b)(6).''.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
SEC. 301. DEFINITION OF DISINTERESTED PERSON.
Section 101(14) of title 11, United States Code, is amended
to read as follows:
``(14) `disinterested person' means a person that--
``(A) is not a creditor, an equity security holder, or an
insider;
``(B) is not and was not, within 2 years before the date of
the filing of the petition, a director, officer, or employee
of the debtor; and
``(C) does not have an interest materially adverse to the
interest of the estate or of any class of creditors or equity
security holders, by reason of any direct or indirect
relationship to, connection with, or interest in, the debtor,
or for any other reason;''.
SEC. 302. MISCELLANEOUS IMPROVEMENTS.
(a) Who May Be a Debtor.--Section 109 of title 11, United
States Code, is amended by adding at the end the following:
``(h)(1) Subject to paragraphs (2) and (3) and
notwithstanding any other provision of this section, an
individual may not be a debtor under this title unless that
individual has, during the 90-day period preceding the date
of filing of the petition of that individual, received credit
counseling, including, at a minimum, participation in an
individual or group briefing that outlined the opportunities
for available credit counseling and assisted that individual
in performing an initial budget analysis, through a credit
counseling program (offered through an approved credit
counseling service described in section 111(a)).
``(2)(A) Paragraph (1) shall not apply with respect to a
debtor who resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved credit
counseling services for that district are not reasonably able
to provide adequate services to the additional individuals
who would otherwise seek credit counseling from those
programs by reason of the requirements of paragraph (1).
``(B) Each United States trustee or bankruptcy
administrator that makes a determination described in
subparagraph (A) shall review that determination not later
than one year after the date of that determination, and not
less frequently than every year thereafter.
``(3)(A) Subject to subparagraph (B), the requirements of
paragraph (1) shall not apply with respect to a debtor who
submits to the court a certification that--
[[Page H2682]]
``(i) describes exigent circumstances that merit a waiver
of the requirements of paragraph (1);
``(ii) states that the debtor requested credit counseling
services from an approved credit counseling service, but was
unable to obtain the services referred to in paragraph (1)
during the 5-day period beginning on the date on which the
debtor made that request or that the exigent circumstances
require filing before such 5-day period expires; and
``(iii) is satisfactory to the court.
``(B) With respect to a debtor, an exemption under
subparagraph (A) shall cease to apply to that debtor on the
date on which the debtor meets the requirements of paragraph
(1), but in no case may the exemption apply to that debtor
after the date that is 30 days after the debtor files a
petition.''.
(b) Chapter 7 Discharge.--Section 727(a) of title 11,
United States Code, is amended--
(1) in paragraph (9), by striking ``or'' at the end;
(2) in paragraph (10), by striking the period and inserting
``; or''; and
(3) by adding at the end the following:
``(11) after the filing of the petition, the debtor failed
to complete an instructional course concerning personal
financial management described in section 111 unless the
debtor resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved instructional
courses are not adequate to provide service to the additional
individuals who would be required to compete the
instructional course by reason of the requirements of this
section. Each United States trustee or bankruptcy
administrator that makes such a determination shall review
that determination not later than 1 year after the date of
that determination, and not less frequently than every year
thereafter.''.
(c) Chapter 13 Discharge.--Section 1328 of title 11, United
States Code, as amended by section 137, is amended by adding
at the end the following:
``(g) The court shall not grant a discharge under this
section to a debtor, unless after filing a petition the
debtor has completed an instructional course concerning
personal financial management described in section 111.
``(h) Subsection (g) shall not apply with respect to a
debtor who resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved instructional
courses are not adequate to provide service to the additional
individuals who would be required to complete the
instructional course by reason of the requirements of this
section.
``(i) Each United States trustee or bankruptcy
administrator that makes a determination described in
subsection (h) shall review that determination not later than
1 year after the date of that determination, and not less
frequently than every year thereafter.''.
(d) Debtor's Duties.--Section 521 of title 11, United
States Code, as amended by sections 604 and 120, is amended
by adding at the end the following:
``(d) In addition to the requirements under subsection (a),
an individual debtor shall file with the court--
``(1) a certificate from the credit counseling service that
provided the debtor services under section 109(h); and
``(2) a copy of the debt repayment plan, if any, developed
under section 109(h) through the credit counseling service
referred to in paragraph (1).''.
(e) General Provisions.--
(1) In general.--Chapter 1 of title 11, United States Code,
is amended by adding at the end the following:
``Sec. 111. Credit counseling services; financial management
instructional courses
``The clerk of each district shall maintain a list of
credit counseling services that provide 1 or more programs
described in section 109(h) and a list of instructional
courses concerning personal financial management that have
been approved by--
``(1) the United States trustee; or
``(2) the bankruptcy administrator for the district.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 1 of title 11, United States Code, is
amended by adding at the end the following:
``111. Credit counseling services; financial management instructional
courses.''.
(e) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) 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;'';
(2) by inserting after paragraph (27A), as added by section
318 of this Act, the following:
``(27B) `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;'';
(3) in section 362(b), as amended by sections 117, 118,
132, 136, 141 203, 818, and 1007,--
(A) in paragraph (28) by striking ``or'' at the end
thereof;
(B) in paragraph (29) by striking the period at the end and
inserting ``; or''; and
(C) by inserting after paragraph (29) the following:
``(30) under subsection (a), until a prepetition default is
cured fully in a case under chapter 13 of this title 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
(4) 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;''.
(f) Limitation.--Section 362 of title 11, United States
Code, is amended by adding at the end the following:
``(j) If one case commenced under chapter 7, 11, or 13 of
this title is dismissed due to the creation of a debt
repayment plan administered by a credit counseling agency
approved pursuant to section 111 of this title, then for
purposes of section 362(c)(3) of this title the subsequent
case commenced under any such chapter shall not be presumed
to be filed not in good faith.''.
(g) Return of Goods Shipped.--Section 546(g) of title 11,
United States Code, as added by section 222(a) of Public Law
103-394, is amended to read as follows:
``(h) Notwithstanding the rights and powers of a trustee
under sections 544(a), 545, 547, 549, and 553 of this title,
if the court determines on a motion by the trustee made not
later than 120 days after the date of the order for relief in
a case under chapter 11 of this title and after notice and
hearing, that a return is in the best interests of the
estate, the debtor, with the consent of the creditor, and
subject to the prior rights, if any, of third parties in such
goods, may return goods shipped to the debtor by the creditor
before the commencement of the case, and the creditor may
offset the purchase price of such goods against any claim of
the creditor against the debtor that arose before the
commencement of the case.''.
SEC. 303. EXTENSIONS.
Section 302(d)(3) of the Bankruptcy, Judges, United States
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.
581 note) is amended--
(1) in subparagraph (A), in the matter following clause
(ii), by striking ``or October 1, 2002, whichever occurs
first''; and
(2) in subparagraph (F)--
(A) in clause (i)--
(i) in subclause (II), by striking ``or October 1, 2002,
whichever occurs first''; and
(ii) in the matter following subclause (II), by striking
``October 1, 2003, or''; and
(B) in clause (ii), in the matter following subclause
(II)--
(i) by striking ``before October 1, 2003, or''; and
(ii) by striking ``, whichever occurs first''.
SEC. 304. LOCAL FILING OF BANKRUPTCY CASES.
Section 1408 of title 28, United States Code, is amended--
(1) by striking ``Except'' and inserting ``(a) Except'';
and
(2) by adding at the end the following:
``(b) For the purposes of subsection (a), if the debtor is
a corporation, the domicile and residence of the debtor are
conclusively presumed to be where the debtor's principal
place of business in the United States is located.''.
SEC. 305. PERMITTING ASSUMPTION OF CONTRACTS.
(a) Section 365(c) of title 11, United States Code, is
amended to read as follows:
``(c)(1) The trustee may not assume or assign an executory
contract or unexpired lease of the debtor, whether or not the
contract or lease prohibits or restricts assignment of rights
or delegation of duties, if--
``(A)(i) applicable law excuses a party to the contract or
lease from accepting performance from or rendering
performance to an assignee of the contract or lease, whether
or not the contract or lease prohibits or restricts
assignment of rights or delegation of duties; and
``(ii) the party does not consent to the assumption or
assignment; or
``(B) the contract is a contract to make a loan, or extend
other debt financing or financial accommodations, to or for
the benefit of the debtor, or to issue a security of the
debtor.
``(2) Notwithstanding paragraph (1)(A) and applicable
nonbankruptcy law, in a case under chapter 11 of this title,
a trustee in a case in which a debtor is a corporation, or a
debtor in possession, may assume an executory contract or
unexpired lease of the debtor, whether or not the contract or
lease prohibits or restricts assignment of rights or
delegation of duties.
``(3) The trustee may not assume or assign an unexpired
lease of the debtor of nonresidential real property, whether
or not the contract or lease prohibits or restricts
assignment of rights or delegation of duties, if the lease
has been terminated under applicable nonbankruptcy law before
the order for relief.''.
(b) Section 365(d) of title 11, United States Code, is
amended by striking paragraphs (5), (6), (7), (8), and (9),
and redesignating paragraph (10) as paragraph (5).
(c) Section 365(e) of title 11, United States Code, is
amended to read as follows:
``(e)(1) Notwithstanding a provision in an executory
contract or unexpired lease, or in applicable law, an
executory contract or unexpired lease of the debtor may not
be terminated or modified, and any right or obligation under
such contract or lease may not be terminated or modified, at
any time after the commencement of the case solely because of
a provision in such contract or lease that is conditioned
on--
[[Page H2683]]
``(A) the insolvency or financial condition of the debtor
at any time before the closing of the case;
``(B) the commencement of a case under this title; or
``(C) the appointment of or taking possession by a trustee
in a case under this title or a custodian before such
commencement.
``(2) Paragraph (1) does not apply to an executory contract
or unexpired lease of the debtor if the trustee may not
assume or assign, and the debtor in possession may not
assume, the contract or lease by reason of the provisions of
subsection (c) of this section.''.
(d) Section 365(f)(1) of title 11, United States Code, is
amended by striking the semicolon and all that follows
through ``event''.
TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS
SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.
(a) Section 1125(a)(1) of title 11, United States Code, is
amended by inserting before the semicolon following:
``and in determining whether a disclosure statement provides
adequate information, the court shall consider the complexity
of the case, the benefit of additional information to
creditors and other parties in interest, and the cost of
providing additional information''.
(b) Section 1125(f) of title 11, United States Code, is
amended to read as follows:
``(f) Notwithstanding subsection (b)--
``(1) the court may determine that the plan itself provides
adequate information and that a separate disclosure statement
is not necessary;
``(2) the court may approve a disclosure statement
submitted on standard forms approved by the court or adopted
pursuant to section 2075 of title 28; and
``(3)(A) the court may conditionally approve a disclosure
statement subject to final approval after notice and a
hearing;
``(B) acceptances and rejections of a plan may be solicited
based on a conditionally approved disclosure statement if the
debtor provides adequate information to each holder of a
claim or interest that is solicited, but a conditionally
approved disclosure statement shall be mailed not 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. 402. 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; and
``(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
$4,000,000 (excluding debts owed to 1 or more affiliates or
insiders), except that if a group of affiliated debtors has
aggregate noncontingent liquidated secured and unsecured
debts greater than $4,000,000 (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. 403. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.
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, creditors, and other parties in interest for
reasonably complete information; and
(2) economy and simplicity for debtors.
SEC. 404. 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; and
``(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. 405. 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, 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.
SEC. 406. 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
``(a) 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 responsible individual, meetings
scheduled by the court or the United States trustee,
including initial debtor interviews 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) of this title, maintain
insurance customary and appropriate to the industry;
``(6)(A) timely file tax returns;
``(B) subject to section 363(c)(2) of this title, 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) of this title, 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 or a responsible time set by the court,
all taxes payable for periods beginning after the date the
case is commenced that are collected or withheld by the
debtor for governmental units unless the court waives this
requirement after notice and hearing; and
``(7) allow the United States trustee, 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. 407. 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 a trustee has
been appointed under this chapter, or unless the court, on
request of a party in interest and after notice and hearing,
shortens such time;
``(2) the debtor shall file a plan, and any necessary
disclosure statement, not later than 90 days after the date
of the order for relief, unless the United States Trustee has
appointed under section 1102(a)(1) of this title a committee
of unsecured creditors that the court has determined, before
the 90 days has expired, is sufficiently active and
representative to provide effective oversight of the debtor;
and
``(3) the time periods specified in paragraphs (1) and (2)
of this subsection and the time fixed in section 1129(e) of
this title for confirmation of a plan, may be extended only
as follows:
[[Page H2684]]
``(A) On request of a party in interest made within the
respective periods, and after notice and hearing, the court
may for cause grant one or more extensions, cumulatively not
to exceed 60 days, if the movant establishes--
``(i) that no cause exists to dismiss or convert the case
or appoint a trustee or examiner under subparagraphs (A) (I)
of section 1112(b) of this title; and
``(ii) that there is a reasonable possibility the court
will confirm a plan within a reasonable time;
``(B) On request of a party in interest made within the
respective periods, and after notice and hearing, the court
may for cause grant one or more extensions in excess of those
authorized under subparagraph (A) of this paragraph, if the
movant establishes:
``(i) that no cause exists to dismiss or convert the case
or appoint a trustee or examiner under subparagraphs (A) (I)
of section 1112(b)(3) of this title; and
``(ii) that it is more likely than not that the court will
confirm a plan within a reasonable time; and
``(C) a new deadline shall be imposed whenever an extension
is granted.''.
SEC. 408. 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 debtor shall confirm a
plan not later than 150 days after the date of the order for
relief unless--
``(1) the United States Trustee has appointed, under
section 1102(a)(1) of this title, a committee of unsecured
creditors that the court has determined, before the 150 days
has expired, is sufficiently active and representative to
provide effective oversight of the debtor; or
``(2) such 150-day period is extended as provided in
section 1121(e)(3) of this title.''.
SEC. 409. 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. 410. DUTIES OF THE UNITED STATES TRUSTEE.
(a) Duties of the United States Trustee.--Section 586(a) of
title 28, United States Code, 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 (5) by striking ``and at the end'';
(3) in paragraph (6) by striking the period at the end and
inserting ``; and''; and
(4) by inserting after paragraph (7) the following:
``(7) in each of such small business cases--
``(A) conduct an initial debtor interview as soon as
practicable after the entry of order for relief but before
the first meeting scheduled under section 341(a) of title 11
at which time the United States trustee shall 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; and
``(C) review and monitor diligently the debtor's
activities, to identify as promptly as possible whether the
debtor will be unable to confirm a plan; and
``(8) in 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.''.
SEC. 411. 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
(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. 412. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, as amended by
section 302, is amended--
(1) in subsection (i) as so redesignated by section 122--
(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 (j), as added by section
302, the following:
``(k)(1) Except as provided in paragraph (2) of this
subsection, the provisions of subsection (a) of thissection
shall not apply in a case in which the debtor--
``(A) is a debtor in a case under this title pending at the
time the petition is filed;
``(B) was a debtor in a case under this title 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;
``(C) was a debtor in a case under this title in which a
chapter 11, 12, or 13 plan was confirmed in the 2-year period
ending on the date of the order for relief entered with
respect to the petition; or
``(D) is an entity that has succeeded to substantially all
of the assets or business of a debtor described in
subparagraph (A), (B), or (C).
``(2) This subsection shall not apply--
``(A) to a case initiated by an involuntary petition filed
by a creditor that is not an insider or affiliate of the
debtor; or
``(B) after such time as the debtor, after notice and a
hearing, demonstrates by a preponderance of the evidence,
that the filing of such petition resulted from circumstances
beyond the control of the debtor and not foreseeable at the
time the earlier case was filed; and that it is more likely
than not that the court will confirm a plan, other than a
liquidating plan, within a reasonable time.''.
SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND
APPOINTMENT OF TRUSTEE OR EXAMINER.
(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 paragraphs (2) and (4) of
this subsection, and in subsection (c) of this section, 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, or appoint a trustee or examiner under
section 1104(e) of this title, whichever is in the best
interest of creditors and the estate, if the movant
establishes cause.
``(2) The court may decline to grant the relief specified
in paragraph (1) of this subsection 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 cause 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 insurance that poses a material
risk to the estate or the public;
``(D) unauthorized use of cash collateral harmful to 1 or
more creditors;
``(E) failure to comply with an order of the court;
``(F) 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;
``(H) failure timely to provide information or attend
meetings reasonably requested by the United States trustee or
bankruptcy administrator;
``(I) failure timely to pay taxes due after the date of the
order for relief or to file tax returns due after the order
for relief;
``(J) failure to file a disclosure statement, or to file or
confirm a plan, within the time fixed by this title or by
order of the court;
``(K) failure to pay any fees or charges required under
chapter 123 of title 28;
``(L) revocation of an order of confirmation under section
1144 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 may grant relief under this subsection for
cause as defined in subparagraphs C, F, G, H, or K of
paragraph 3 of this subsection only upon motion of the United
States trustee or bankruptcy administrator or upon the court
s own motion.
``(5) The court shall commence the hearing on any motion
under this subsection not later than 30 days after filing of
the motion, and shall decide the motion 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 or
Examiner.--Section 1104 of title 11, United States Code, is
amended by adding at the end the following:
``(e) If grounds exist to convert or dismiss the case under
section 1112 of this title, the court may instead appoint a
trustee or examiner, if it determines that such appointment
is in the best interests of creditors and the estate.''.
SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE UNITED STATES
CODE WITH RESPECT TO SMALL BUSINESSES.
Not later than 2 years after the date of the enactment of
this Act, the Administrator of the Small Business
Administration, in consultation
[[Page H2685]]
with the Attorney General, the Director of the Administrative
Office of United States Trustees, and the Director of the
Administrative Office of the United States Courts, shall--
(1) conduct a study to determine--
(A) the internal and external factors that cause small
businesses, especially sole proprietorships, to become
debtors in cases under title 11 of the United States Code and
that cause certain small businesses to successfully complete
cases under chapter 11 of such title; and
(B) how Federal laws relating to bankruptcy may be made
more effective and efficient in assisting small businesses to
remain viable; and
(2) submit to the President pro tempore of the Senate and
the Speaker of the House of Representatives a report
summarizing that study.
SEC. 415. 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 V--MUNICIPAL BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.
(a) Technical Amendment Relating to Municipalities.--
Section 921(d) of title 11, United States Code, is amended by
inserting ``notwithstanding section 301(b)'' before the
period at the end.
(b) Conforming Amendment.--Section 301 of title 11, United
States Code, is amended--
(1) by inserting ``(a)'' before ``A voluntary''; and
(2) by 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.''.
SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.
Section 901(a) of title 11, United States Code, is
amended--
(1) by inserting ``555, 556,'' after ``553,''; and
(2) by inserting ``559, 560, 561, 562'' after ``557,''.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
SEC. 601. 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 Federal or State law that is not a
bankruptcy law, or other requirement that representation at
the meeting of creditors under subsection (a) be by an
attorney, a creditor holding a consumer debt or any
representative of the creditor (which may include an entity
or an employee of an entity and may be a representative for
more than one creditor) shall be permitted to appear at and
participate in the meeting of creditors and activities
related thereto 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. 602. AUDIT PROCEDURES.
(a) Amendments.--Section 586 of title 28, United States
Code, is amended--
(1) in subsection (a) by amending striking paragraph (6) to
read as follows:
``(6) make such reports as the Attorney General directs,
including the results of audits performed under subsection
(f); and''; and
(2) by adding at the end the following:
``(f)(1)(A) The Attorney General shall establish procedures
to determine the accuracy, veracity, and completeness of
petitions, schedules, and other information which the debtor
is required to provide under sections 521 and 1322 of title
11, and, if applicable, section 111 of title 11, in
individual cases filed under chapter 7 or 13 of such title.
Such audits shall be in accordance with generally accepted
auditing standards and performed by independent certified
public accountants or independent licensed public
accountants.
``(B) Those procedures shall--
``(i) establish a method of selecting appropriate qualified
persons to contract to perform those audits;
``(ii) establish a method of randomly selecting cases to be
audited, except that not less than 1 out of every 250 cases
in each Federal judicial district shall be selected for
audit;
``(iii) require audits for schedules of income and expenses
which reflect greater than average variances from the
statistical norm of the district in which the schedules were
filed; and
``(iv) establish procedures for providing, not less
frequently than annually, public information concerning the
aggregate results of such audits including the percentage of
cases, by district, in which a material misstatement of
income or expenditures is reported.
``(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).
``(3)(A) The report of each audit conducted under this
subsection shall be filed with the court and transmitted to
the United States trustee. Each report shall clearly and
conspicuously specify any material misstatement of income or
expenditures or of assets identified by the person performing
the audit. In any case where a material misstatement of
income or expenditures or of assets has been reported, the
clerk of the bankruptcy court shall give notice of the
misstatement to the creditors in the case.
``(B) If a material misstatement of income or expenditures
or of assets is reported, the United States trustee shall--
``(i) report the material misstatement, if appropriate, to
the United States Attorney pursuant to section 3057 of title
18, United States Code; and
``(ii) if advisable, take appropriate action, including but
not limited to commencing an adversary proceeding to revoke
the debtor's discharge pursuant to section 727(d) of title
11, United States Code.''.
(b) Amendments to Section 521 of Title 11, U.S.C.--Section
521(a) of title 11, United States Code, as amended by section
603, is amended in paragraphs (3) and (4) by adding ``or an
auditor appointed pursuant to section 586 of title 28, United
States Code'' after ``serving in the case''.
(c) Amendments to Section 727 of Title 11, U.S.C.--Section
727(d) of title 11, United States Code, is amended--
(1) by deleting ``or'' at the end of paragraph (2);
(2) by substituting ``; or'' for the period at the end of
paragraph (3); and
(3) by adding the following at the end the following:
``(4) the debtor has failed to explain satisfactorily--
``(A) a material misstatement in an audit performed
pursuant to section 586(f) of title 28, United States Code;
or
``(B) a failure to make available for inspection all
necessary accounts, papers, documents, financial records,
files, and all other papers, things, or property belonging
to the debtor that are requested for an audit conducted
pursuant to section 586(f) of title 28, United States
Code.''.
(d) Effective Date.--The amendments made by this section
shall take effect 18 months after the date of enactment of
this Act.
SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13
CASES.
(a) Notice.--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 of this
title.'';
(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. After 5 days following
receipt of such notice, any notice the court or the debtor is
required to give the creditor 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.''.
(b) Debtor's Duties.--Section 521 of title 11, United
States Code, as amended by sections 604, 120, and 302, is
amended--
(1) by inserting ``(a)'' before ``The debtor shall--'';
(2) by striking paragraph (1) and inserting the following:
``(1) file--
``(A) a list of creditors; and
``(B) unless the court orders otherwise--
[[Page H2686]]
``(i) a schedule of assets and liabilities;
``(ii) a schedule of current monthly income and current
expenditures prepared in accordance with section 707(b)(2);
``(iii) a statement of the debtor's financial affairs and,
if applicable, a certificate--
``(I) of an attorney whose name is on the petition as the
attorney for the debtor or any bankruptcy petition preparer
signing the petition 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) 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;
``(iv) copies of any Federal tax returns, including any
schedules or attachments, filed by the debtor for the 3-year
period preceding the order for relief;
``(v) 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; and
``(vi) a statement disclosing any reasonably anticipated
increase in income or expenditures over the 12-month period
following the date of filing;'';
(3) by adding at the end the following:
``(e)(1) At any time, a creditor, in the case of an
individual under chapter 7 or 13, may file with the court
notice that the creditor requests the petition, schedules,
and a statement of affairs filed by the debtor in the case
and the court shall make those documents available to the
creditor who requests those documents at a reasonable cost
within 5 business days after such request.
``(2) At any time, a creditor in a case under chapter 13
may file with the court notice that the creditor requests the
plan filed by the debtor in the case, and the court shall
make such plan available to the creditor who requests such
plan at a reasonable cost and not later than 5 days after
such request.
``(f) An individual debtor in a case under chapter 7 or 13
shall file with the court--
``(1) at the time filed with the taxing authority, all tax
returns, including any schedules or attachments, with respect
to the period from the commencement of the case until such
time as the case is closed;
``(2) at the time filed with the taxing authority, all tax
returns, including any schedules or attachments, that were
not filed with the taxing authority when the schedules under
subsection (a)(1) were filed with respect to the period that
is 3 years before the order for relief;
``(3) any amendments to any of the tax returns, including
schedules or attachments, described in paragraph (1) or (2);
and
``(4) in a case under chapter 13, a statement subject to
the penalties of perjury by the debtor of the debtor's
current monthly income and expenditures in the preceding tax
year and current monthly income less expenditures for the
month preceding the statement prepared in accordance with
section 707(b)(2) that shows how the amounts are calculated--
``(A) beginning on the date that is the later of 90 days
after the close of the debtor's tax year or 1 year after the
order for relief, unless a plan has been confirmed; and
``(B) thereafter, on or before the date that is 45 days
before each anniversary of the confirmation of the plan until
the case is closed.
``(g)(1) A statement referred to in subsection (f)(4) shall
disclose--
``(A) the amount and sources of income of the debtor;
``(B) the identity of any persons responsible with the
debtor for the support of any dependents of the debtor; and
``(C) the identity of any persons who contributed, and the
amount contributed, to the household in which the debtor
resides.
``(2) The tax returns, amendments, and statement of income
and expenditures described in paragraph (1) shall be
available to the United States trustee, any bankruptcy
administrator, any trustee, and any party in interest for
inspection and copying, subject to the requirements of
subsection (h).
``(h)(1) Not later than 30 days after the date of enactment
of the Consumer Bankruptcy Reform Act of 1999, the Director
of the Administrative Office of the United States Courts
shall establish procedures for safeguarding the
confidentiality of any tax information required to be
provided under this section.
``(2) The procedures under paragraph (1) shall include
reasonable restrictions on creditor access to tax information
that is required to be provided under this section to verify
creditor identity and to restrict use of the information
except with respect to the case.
``(3) Not later than 1 year after the date of enactment of
the Consumer Bankruptcy Reform Act of 1999, the Director of
the Administrative Office of the United States Courts shall
prepare, and submit to Congress a report that--
``(A) assesses the effectiveness of the procedures under
paragraph (1) to provide timely and sufficient information to
creditors concerning the case; and
``(B) if appropriate, includes proposed legislation--
``(i) to further protect the confidentiality of tax
information or to make it better available to creditors; and
``(ii) to provide penalties for the improper use by any
person of the tax information required to be provided under
this section.
``(i) If requested by the United States trustee or a
trustee serving in the case, the debtor provide a document
that establishes the identity of the debtor, including a
driver's license, passport, or other document that contains a
photograph of the debtor and such other personal identifying
information relating to the debtor that establishes the
identity of the debtor.''.
(c) Section 1324 of title 11, United States Code, is
amended--
(1) by inserting ``(a)'' before ``After''; and
(2) by inserting at the end thereof--
``(c) Whenever a party in interest is given notice of a
hearing on the confirmation or modification of a plan under
this chapter, such notice shall include the information
provided by the debtor on the most recent statement filed
with the court pursuant to section 521(a)(1)(B)(ii) or (f)(4)
of this title.''.
SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR
PROVIDE REQUIRED INFORMATION.
Section 521 of title 11, United States Code, as amended by
section 603 is amended by inserting after subsection (a) the
following:
``(b)(1) Notwithstanding section 707(a) of this title, and
subject to paragraph (2), if an individual debtor in a
voluntary case under chapter 7 or 13 fails to file all of the
information required under subsection (a)(1) within 45 days
after the filing of the petition commencing the case, the
case shall be automatically dismissed effective on the 46th
day after the filing of the petition.
``(2) With respect to a case described in paragraph (1),
any party in interest may request the court to enter an order
dismissing the case. The court shall, if so requested, enter
an order of dismissal not later than 5 days after such
request.
``(3) Upon request of the debtor made within 45 days after
the filing of the petition commencing a case described in
paragraph (1), the court may allow the debtor an additional
period not to exceed 45 days to file the information required
under subsection (a)(1) if the court finds justification for
extending the period for the filing.''.
SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON
CONFIRMATION OF THE PLAN.
(a) Hearing.--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. 606. 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 current monthly income of the debtor and the
debtor's spouse combined, when multiplied by 12, is not less
than the highest national median family income last reported
by the Bureau of the Census 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. If the current monthly income of the
debtor and the debtor's spouse combined, when multiplied by
12, is less than the highest national median family income
for a family of equal or lesser size, or in the case of a
household of 1 person, 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. Notwithstanding
the foregoing, the national median family income for a family
of more than 4 individuals shall be the national median
family income last reported by the Bureau of the Census for a
family of 4 individuals plus $583 for each additional member
of the family.'';
(2) in section 1325(b)(1)(B) as amended by section 130--
(A) by striking ``three year period'' and inserting
``applicable commitment period''; and
(B) by inserting at the end of subparagraph (B) the
following: ``The `applicable commitment period' shall be not
less than 5 years if the current monthly income of the debtor
and the debtor's spouse combined, when multiplied by 12, is
not less than the highest national median family income last
reported by the Bureau of the Census for a family of equal or
lesser size, or in the case of a household of 1 person, the
national median household income for 1 earner.
Notwithstanding the foregoing, the national median family
income for a family of more than 4 individuals shall be the
national median family income last reported by the Bureau of
the Census for a family of 4 individuals plus $583 for each
additional member of the family.''; and
(3) in section 1329--
(A) by striking in subsection (c) ``three years'' and
inserting ``the applicable commitment period under section
1325(b)(1)(B)''; and
(B) by inserting at the end of subsection (c) the
following:
``The duration period shall be 5 years if the current monthly
income of the debtor and the debtor's spouse combined, when
multiplied by 12, is not less than the highest national
median family income last reported by the Bureau of the
Census for a family of equal or lesser size or, in the case
of a household of 1 person, the national median household
income for 1 earner, as of the date of the modification and
shall be 3 years if the current monthly total income of the
debtor and the debtor's spouse combined, when multiplied by
12, is less than the highest national median family income
last reported by the Bureau of the Census 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. Notwithstanding
the foregoing, the national median family income for a family
of more than 4 individuals shall be the national median
family income last reported by the Bureau of the Census
[[Page H2687]]
for a family of 4 individuals plus $583 for each additional
member of the family.''.
SEC. 607. 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. 608. 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, dismissed,
or closed (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.
SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO
DEPENDENT STUDENTS.
Not later than 1 year after the date of the enactment of
this Act, the Comptroller General of the United States
shall--
(1) conduct a study regarding the impact that the extension
of credit to individuals who are--
(A) claimed as dependents for purposes of the Internal
Revenue Code of 1986; and
(B) enrolled in post-secondary educational institutions,
has on the rate of cases filed under title 11 of the United
States Code; and
(2) submit to the Speaker of the House of Representatives
and the President pro tempore of the Senate a report
summarizing such study.
SEC. 610. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.
Section 362(e) of title 11, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(e)''; and
(2) by adding at the end the following:
``(2) Notwithstanding paragraph (1), in the case of an
individual filing under chapter 7, 11, or 13, the stay under
subsection (a) shall terminate on the date that is 60 days
after a request is made by a party in interest under
subsection (d), unless--
``(A) a final decision is rendered by the court during the
60-day period beginning on the date of the request; or
``(B) that 60-day period is extended--
``(i) by agreement of all parties in interest; or
``(ii) by the court for such specific period of time as the
court finds is required by for good cause as described in
findings made by the court.''.
SEC. 611. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.
Section 348(f)(1) of title 11, United States Code, is
amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) in subparagraph (B)--
(A) by striking ``in the converted case, with allowed
secured claims'' and inserting ``only in a case converted to
chapter 11 or 12 but not in a case converted to chapter 7,
with allowed secured claims in cases under chapters 11 and
12''; and
(B) by striking the period and inserting ``; and''; and
(3) by adding at the end the following:
``(C) with respect to cases converted from chapter 13--
``(i) the claim of any creditor holding security as of the
date of the petition shall continue to be secured by that
security unless the full amount of such claim determined
under applicable nonbankruptcy law has been paid in full as
of the date of conversion, notwithstanding any valuation or
determination of the amount of an allowed secured claim made
for the purposes of the chapter 13 proceeding; and
``(ii) unless a prebankruptcy default has been fully cured
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. 612. BANKRUPTCY APPEALS.
Title 28 of the United States Code is amended by inserting
after section 1292 the following:
``Sec. 1293. Bankruptcy appeals
``(a) The courts of appeals (other than the United States
Court of Appeals for the Federal Circuit) shall have
jurisdiction of appeals from the following:
``(1) Final orders and judgments entered by bankruptcy
courts and district courts in cases under title 11, in
proceedings arising under title 11, and in proceedings
arising in or related to a case under title 11, including
final orders in proceedings regarding the automatic stay of
section 362 of title 11.
``(2) Interlocutory orders entered by bankruptcy courts and
district courts granting, continuing, modifying, refusing or
dissolving injunctions, or refusing to dissolve or modify
injunctions in cases under title 11, in proceedings arising
under title 11, and in proceedings arising in or related to a
case under title 11, other than interlocutory orders in
proceedings regarding the automatic stay of section 362 of
title 11.
``(3) Interlocutory orders of bankruptcy courts and
district courts entered under section 1104(a) or 1121(d) of
title 11, or the refusal to enter an order under such
section.
``(4) 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 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.
``(b) Final decisions, judgments, orders, and decrees
entered by a bankruptcy appellate panel under subsection (b)
of this section.
``(c)(1) The judicial council of a circuit may establish a
bankruptcy appellate panel composed of bankruptcy judges in
the circuit who are appointed by the judicial council, which
panel shall exercise the jurisdiction to review orders and
judgments of bankruptcy courts described in paragraphs (1)-
(4) of subsection (a) of this section unless--
``(A) the appellant elects at the time of filing the
appeal; or
``(B) any other party elects, not later than 10 days after
service of the notice of the appeal;
to have such jurisdiction exercised by the court of appeals.
``(2) An appeal to be heard by a bankruptcy appellate panel
under this subsection (b) shall be heard by 3 members of the
bankruptcy appellate panel, provided that a member of such
panel may not hear an appeal originating in the district for
which such member is appointed or designated under section
152 of this title.
``(3) If authorized by the Judicial Conference of the
United States, the judicial councils of 2 or more circuits
may establish a joint bankruptcy appellate panel.''.
SEC. 613. GAO STUDY.
(a) Study.--Not later than 270 days after the date of the
enactment of this Act, the Comptroller General of the United
States shall conduct a study of the feasibility,
effectiveness, and cost of requiring trustees appointed under
title 11 of the United States Code, or the bankruptcy courts,
to provide to the Office of Child Support Enforcement
promptly after the commencement of cases by individual
debtors under such title, the names and social security
numbers of such debtors for the purposes of allowing such
Office to determine whether such debtors have outstanding
obligations for child support (as determined on the basis of
information in the Federal Case Registry or other national
database).
(b) Report.--Not later than 300 days after the date of the
enactment of this Act, the Comptroller General shall submit
to the Speaker of the House of Representatives and the
President pro tempore of the Senate, a report containing the
results of the study required by subsection (a).
TITLE VII--BANKRUPTCY DATA
SEC. 701. IMPROVED BANKRUPTCY STATISTICS.
(a) Amendment.--Chapter 6 of part I of title 28, United
States Code, is amended by adding at the end the following:
``Sec. 159. Bankruptcy statistics
``(a) The clerk of each district shall compile statistics
regarding individual debtors with primarily consumer debts
seeking relief under chapters 7, 11, and 13 of title 11.
Those statistics shall be in a form prescribed by the
Director of the Administrative Office of the United States
Courts (referred to in this section as the `Office').
``(b) The Director shall--
``(1) compile the statistics referred to in subsection (a);
``(2) make the statistics available to the public; and
``(3) not later than October 31, 2000, and annually
thereafter, prepare, and submit to Congress a report
concerning the information collected under subsection (a)
that contains an analysis of the information.
``(c) The compilation required under subsection (b) shall--
``(1) be itemized, by chapter, with respect to title 11;
``(2) be presented in the aggregate and for each district;
and
``(3) include information concerning--
``(A) the total assets and total liabilities of the debtors
described in subsection (a), and in each category of assets
and liabilities, as reported in the schedules prescribed
pursuant to section 2075 of this title and filed by those
debtors;
``(B) the current monthly income, and average income and
average expenses of those debtors as reported on the
schedules and statements that each such debtor files under
sections 521 and 1322 of title 11;
``(C) the aggregate amount of debt discharged in the
reporting period, determined as the difference between the
total amount of debt and obligations of a debtor reported on
the schedules and the amount of such debt reported in
categories which are predominantly nondischargeable;
``(D) the average period of time between the filing of the
petition and the closing of the case;
``(E) for the reporting period--
``(i) the number of cases in which a reaffirmation was
filed; and
``(ii)(I) the total number of reaffirmations filed;
``(II) of those cases in which a reaffirmation was filed,
the number in which the debtor was not represented by an
attorney; and
``(III) of those cases, the number of cases in which the
reaffirmation was approved by the court;
``(F) with respect to cases filed under chapter 13 of title
11, for the reporting period--
``(i)(I) the number of cases in which a final order was
entered determining the value of
[[Page H2688]]
property securing a claim in an amount less than the amount
of the claim; and
``(II) the number of final orders determining the value of
property securing a claim issued;
``(ii) the number of cases dismissed, the number of cases
dismissed for failure to make payments under the plan, the
number of cases refiled after dismissal, and the number of
cases in which the plan was completed, separately itemized
with respect to the number of modifications made before
completion of the plan, if any; and
``(iii) the number of cases in which the debtor filed
another case within the 6 years previous to the filing;
``(G) the number of cases in which creditors were fined for
misconduct and any amount of punitive damages awarded by the
court for creditor misconduct; and
``(H) the number of cases in which sanctions under rule
9011 of the Federal Rules of Bankruptcy Procedure were
imposed against debtor's counsel and damages awarded under
such Rule.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 6 of title 28, United States Code, is
amended by adding at the end the following:
``159. Bankruptcy statistics.''.
(c) Effective Date.--The amendments made by this section
shall take effect 18 months after the date of enactment of
this Act.
SEC. 702. UNIFORM RULES FOR THE COLLECTION OF 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. 703. 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 VIII--BANKRUPTCY TAX PROVISIONS
SEC. 801. 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. 802. EFFECTIVE NOTICE TO GOVERNMENT.
(a) Effective Notice to Governmental Units.--Section 342 of
title 11, United States Code, as amended by section 603, 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;
[[Page H2689]]
(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 section 603 and subsection
(a), is amended by adding at the end the following:
``(i) A notice that does not comply with subsections (d)
and (e) shall not be effective 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--
``(1) 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
``(2) 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.''.
SEC. 803. 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
substantially in the manner designated by the governmental
unit and unless''.
SEC. 804. RATE OF INTEREST ON TAX CLAIMS.
(a) Amendment.--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
``If any provision of this title requires the payment of
interest on a tax claim or requires the payment of interest
to enable a creditor to receive the present value of
the allowed amount of a tax claim, the rate of interest
shall be 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,
secured tax claims, and administrative tax claims paid under
section 503(b)(1) of this title, the rate shall be determined
under applicable nonbankruptcy law.
``(2) In the case of all other tax claims, the minimum rate
of interest 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, plus 3 percentage points.
``(A) In the case of claims for Federal income taxes, such
rate shall be subject to any adjustment that may be required
under section 6621(d) of the Internal Revenue Code of 1986.
``(B) In the case of taxes paid under a confirmed plan or
reorganization, such rate shall be determined as of the
calendar month in which the plan is confirmed.''.
(b) Conforming Amendment.--The table of sections of chapter
5 of title 11, United States Code, is amended by inserting
after the item relating to section 510 the following:
``511. Rate of interest on tax claims.''.
SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.
Section 507(a)(8)(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. 806. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code, is
amended by striking ``assessed'' and inserting ``incurred''.
SEC. 807. 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. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.
Section 1141(d) of title 11, United States Code, 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. 809. STAY OF TAX PROCEEDINGS.
(a) 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) 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. 810. 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. 811. 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. 812. 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. 813. 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. 814. 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''; and
(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
[[Page H2690]]
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. 815. 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,''.
SEC. 816. 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 140, 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, as amended by
section 135, 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 3-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 the 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. 817. 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. 818. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, as amended
by sections 118, 132, 136, and 203, is amended--
(1) in paragraph (29) by striking ``or'';
(2) in paragraph (30) by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (30) the following:
``(31) 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 IX--ANCILLARY AND OTHER CROSS-BORDER CASES
SEC. 901. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED
STATES CODE.
(a) In General.--Title 11, United States Code, is amended
by inserting after chapter 13 the following:
``CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES
``Sec.
``1501. Purpose and scope of application.
``SUBCHAPTER I--GENERAL PROVISIONS
``1502. Definitions.
``1503. International obligations of the United States.
``1504. Commencement of ancillary case.
``1505. Authorization to act in a foreign country.
``1506. Public policy exception.
``1507. Additional assistance.
``1508. Interpretation.
``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
``1509. Right of direct access.
``1510. Limited jurisdiction.
``1511. Commencement of case under section 301 or 303.
``1512. Participation of a foreign representative in a case under this
title.
``1513. Access of foreign creditors to a case under this title.
``1514. Notification to foreign creditors concerning a case under this
title.
``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
``1515. Application for recognition of a foreign proceeding.
``1516. Presumptions concerning recognition.
``1517. Order recognizing a foreign proceeding.
``1518. Subsequent information.
``1519. Relief that may be granted upon petition for recognition of a
foreign proceeding.
``1520. Effects of recognition of a foreign main proceeding.
``1521. Relief that may be granted upon recognition of a foreign
proceeding.
``1522. Protection of creditors and other interested persons.
``1523. Actions to avoid acts detrimental to creditors.
``1524. Intervention by a foreign representative.
``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
``1525. Cooperation and direct communication between the court and
foreign courts or foreign representatives.
``1526. Cooperation and direct communication between the trustee and
foreign courts or foreign representatives.
``1527. Forms of cooperation.
``SUBCHAPTER V--CONCURRENT PROCEEDINGS
``1528. Commencement of a case under this title after recognition of a
foreign main proceeding.
``1529. Coordination of a case under this title and a foreign
proceeding.
``1530. Coordination of more than 1 foreign proceeding.
``1531. Presumption of insolvency based on recognition of a foreign
main proceeding.
``1532. Rule of payment in concurrent proceedings.
``Sec. 1501. Purpose and scope of application
``(a) The purpose of this chapter is to incorporate the
Model Law on Cross-Border Insolvency so as to provide
effective mechanisms for dealing with cases of cross-border
insolvency with the objectives of--
``(1) cooperation between--
``(A) United States courts, United States trustees,
trustees, examiners, debtors, and debtors in possession; and
``(B) the courts and other competent authorities of foreign
countries involved in cross-border insolvency cases;
``(2) greater legal certainty for trade and investment;
[[Page H2691]]
``(3) fair and efficient administration of cross-border
insolvencies that protects the interests of all creditors,
and other interested entities, including the debtor;
``(4) protection and maximization of the value of the
debtor's assets; and
``(5) facilitation of the rescue of financially troubled
businesses, thereby protecting investment and preserving
employment.
``(b) This chapter applies where--
``(1) assistance is sought in the United States by a
foreign court or a foreign representative in connection with
a foreign proceeding;
``(2) assistance is sought in a foreign country in
connection with a case under this title;
``(3) a foreign proceeding and a case under this title with
respect to the same debtor are taking place concurrently; or
``(4) creditors or other interested persons in a foreign
country have an interest in requesting the commencement of,
or participating in, a case or proceeding under this title.
``(c) This chapter does not apply to--
``(1) a proceeding concerning an entity identified by
exclusion in subsection 109(b);
``(2) an individual, or to an individual and such
individual's spouse, who have debts within the limits
specified in section 109(e) and who are citizens of the
United States or aliens lawfully admitted for permanent
residence in the United States; or
``(3) an entity subject to a proceeding under the
Securities Investor Protection Act, 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.
``SUBCHAPTER I--GENERAL PROVISIONS
``Sec. 1502. Definitions
``For the purposes of this chapter, the term--
``(1) `debtor' means an entity that is the subject of a
foreign proceeding;
``(2) `establishment' means any place of operations where
the debtor carries out a nontransitory economic activity;
``(3) `foreign court' means a judicial or other authority
competent to control or supervise a foreign proceeding;
``(4) `foreign main proceeding' means a foreign proceeding
taking place in the country where the debtor has the center
of its main interests;
``(5) `foreign nonmain proceeding' means a foreign
proceeding, other than a foreign main proceeding, taking
place in a country where the debtor has an establishment;
``(6) `trustee' includes a trustee, a debtor in possession
in a case under any chapter of this title, or a debtor under
chapter 9 of this title; 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. 1503. International obligations of the United States
``To the extent that this chapter conflicts with an
obligation of the United States arising out of any treaty or
other form of agreement to which it is a party with 1 or more
other countries, the requirements of the treaty or agreement
prevail.
``Sec. 1504. Commencement of ancillary case
``A case under this chapter is commenced by the filing of a
petition for recognition of a foreign proceeding under
section 1515.
``Sec. 1505. Authorization to act in a foreign country
``A trustee or another entity (including an examiner) may
be authorized by the court to act in a foreign country on
behalf of an estate created under section 541. An entity
authorized to act under this section may act in any way
permitted by the applicable foreign law.
``Sec. 1506. Public policy exception
``Nothing in this chapter prevents the court from refusing
to take an action governed by this chapter if the action
would be manifestly contrary to the public policy of the
United States.
``Sec. 1507. Additional assistance
``(a) Subject to the specific limitations stated elsewhere
in this chapter the court, upon recognition of a foreign
proceeding, the court may provide additional assistance to
a foreign representative under this title or under other
laws of the United States.
``(b) In determining whether to provide additional
assistance under this title or under other laws of the United
States, the court shall consider whether such additional
assistance, consistent with the principles of comity, will
reasonably assure--
``(1) just treatment of all holders of claims against or
interests in the debtor's property;
``(2) protection of claim holders in the United States
against prejudice and inconvenience in the processing of
claims in such foreign proceeding;
``(3) prevention of preferential or fraudulent dispositions
of property of the debtor;
``(4) distribution of proceeds of the debtor's property
substantially in accordance with the order prescribed by this
title; and
``(5) if appropriate, the provision of an opportunity for a
fresh start for the individual that such foreign proceeding
concerns.
``Sec. 1508. Interpretation
``In interpreting this chapter, the court shall consider
its international origin, and the need to promote an
application of this chapter that is consistent with the
application of similar statutes adopted by foreign
jurisdictions.
``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
``Sec. 1509. Right of direct access
``(a) A foreign representative may commence a case under
section 1504 of this title by filing with the court a
petition for recognition of a foreign proceeding under
section 1515 of this title.
``(b) If the court grants recognition under section 1515 of
this title, and subject to any limitations that the court may
impose consistent with the policy of this chapter--
``(1) the foreign representative has the capacity to sue
and be sued in a court in the United States;
``(2) the foreign representative may apply directly to a
court in the United States for appropriate relief in that
court; and
``(3) a court in the United States shall grant comity or
cooperation to the foreign representative.
``(c) A request for comity or cooperation by a foreign
representative in a court in the United States shall be
accompanied by a certified copy of an order granting
recognition under section 1517 of this title.
``(d) If the court denies recognition under this chapter,
the court may issue any appropriate order necessary to
prevent the foreign representative from obtaining comity or
cooperation from courts in the United States.
``(e) Whether or not the court grants recognition, and
subject to sections 306 and 1510 of this title, a foreign
representative is subject to applicable nonbankruptcy law.
``(f) Notwithstanding any other provision of this section,
the failure of a foreign representative to commence a case or
to obtain recognition under this chapter does not affect any
right the foreign representative may have to sue in a court
in the United State to collect or recover a claim which is
the property of the debtor.''.
``Sec. 1510. Limited jurisdiction
``The sole fact that a foreign representative files a
petition under section 1515 does not subject the foreign
representative to the jurisdiction of any court in the United
States for any other purpose.
``Sec. 1511. Commencement of case under section 301 or 303
``(a) Upon recognition, a foreign representative may
commence--
``(1) an involuntary case under section 303; or
``(2) a voluntary case under section 301 or 302, if the
foreign proceeding is a foreign main proceeding.
``(b) The petition commencing a case under subsection (a)
must be accompanied by certified copy of an order granting
recognition. The court where the petition for recognition has
been filed must be advised of the foreign representative's
intent to commence a case under subsection (a) prior to such
commencement.
``Sec. 1512. Participation of a foreign representative in a
case under this title
``Upon recognition of a foreign proceeding, the foreign
representative in that proceeding is entitled to participate
as a party in interest in a case regarding the debtor under
this title.
``Sec. 1513. Access of foreign creditors to a case under this
title
``(a) Foreign creditors have the same rights regarding the
commencement of, and participation in, a case under this
title as domestic creditors.
``(b)(1) Subsection (a) does not change or codify present
law as to the priority of claims under section 507 or 726 of
this title, except that the claim of a foreign creditor under
those sections shall not be given a lower priority than that
of general unsecured claims without priority solely because
the holder of such claim is a foreign creditor.
``(2)(A) Subsection (a) and paragraph (1) do not change or
codify present law as to the allowability of foreign revenue
claims or other foreign public law claims in a proceeding
under this title.
``(B) Allowance and priority as to a foreign tax claim or
other foreign public law claim shall be governed by any
applicable tax treaty of the United States, under the
conditions and circumstances specified therein.
``Sec. 1514. Notification to foreign creditors concerning a
case under this title
``(a) Whenever in a case under this title notice is to be
given to creditors generally or to any class or category of
creditors, such notice shall also be given to the known
creditors generally, or to creditors in the notified class or
category, that do not have addresses in the United States.
The court may order that appropriate steps be taken with a
view to notifying any creditor whose address is not yet
known.
``(b) Such notification to creditors with foreign addresses
described in subsection (a) shall be given individually,
unless the court considers that, under the circumstances,
some other form of notification would be more appropriate. No
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 under this title and the
orders of the court.
``(d) Any rule of procedure or order of the court as to
notice or the filing of a claim shall provide such additional
time to creditors with foreign addresses as is reasonable
under the circumstances.
``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
``Sec. 1515. Application for recognition of a foreign
proceeding
``(a) A foreign representative applies to the court for
recognition of the foreign proceeding
[[Page H2692]]
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. 1516. Presumptions concerning recognition
``(a) If the decision or certificate referred to in section
1515(b) indicates that the foreign proceeding is a foreign
proceeding as defined in section 101 and that the person or
body is a foreign representative as defined in section 101,
the court is entitled to so presume.
``(b) The court is entitled to presume that documents
submitted in support of the petition for recognition are
authentic, whether or not they have been legalized.
``(c) In the absence of evidence to the contrary, the
debtor's registered office, or habitual residence in the case
of an individual, is presumed to be the center of the
debtor's main interests.
``Sec. 1517. Order recognizing a foreign proceeding
``(a) Subject to section 1506, after notice and a hearing
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
1502;
``(2) the foreign representative applying for recognition
is a person or body as defined in section 101; and
``(3) the petition meets the requirements of section 1515.
``(b) The foreign proceeding shall be recognized--
``(1) as a foreign main proceeding if it is taking place in
the country where the debtor has the center of its main
interests; or
``(2) as a foreign nonmain proceeding if the debtor has an
establishment within the meaning of section 1502 in the
foreign country where the proceeding is pending.
``(c) A petition for recognition of a foreign proceeding
shall be decided upon at the earliest possible time. Entry of
an order recognizing a foreign proceeding constitutes
recognition under this chapter.
``(d) The provisions of this subchapter do not prevent
modification or termination of recognition if it is shown
that the grounds for granting it were fully or partially
lacking or have ceased to exist, but in considering such
action the court shall give due weight to possible prejudice
to parties that have relied upon the granting of recognition.
The case under this chapter may be closed in the manner
prescribed under section 350.
``Sec. 1518. Subsequent information
``From the time of filing the petition for recognition of
the foreign proceeding, the foreign representative shall file
with the court promptly a notice of change of status
concerning--
``(1) any substantial change in the status of the foreign
proceeding or the status of the foreign representative's
appointment; and
``(2) any other foreign proceeding regarding the debtor
that becomes known to the foreign representative.
``Sec. 1519. Relief that may be granted upon petition for
recognition of a foreign proceeding
``(a) From the time of filing a petition for recognition
until the court rules on the petition, the court may, at the
request of the foreign representative, where relief is
urgently needed to protect the assets of the debtor or the
interests of the creditors, grant relief of a provisional
nature, including--
``(1) staying execution against the debtor's assets;
``(2) entrusting the administration or realization of all
or part of the debtor's assets located in the United States
to the foreign representative or another person authorized by
the court, including an examiner, in order to protect and
preserve the value of assets that, by their nature or because
of other circumstances, are perishable, susceptible to
devaluation or otherwise in jeopardy; and
``(3) any relief referred to in paragraph (3), (4), or (7)
of section 1521(a).
``(b) Unless extended under section 1521(a)(6), the relief
granted under this section terminates when the petition for
recognition is 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. 1520. Effects of recognition of a foreign main
proceeding
``(a) Upon recognition of a foreign proceeding that is a
foreign main proceeding--
``(1) sections 361 and 362 with respect to the debtor and
that property of the debtor that is within the territorial
jurisdiction of the United States;
``(2) sections 363, 549, and 552 of this title apply to a
transfer of an interest of the debtor in property that is
within the territorial jurisdiction of the United States to
the same extent that the sections would apply to property of
an estate;
``(3) unless the court orders otherwise, the foreign
representative may operate the debtor's business and may
exercise the rights and powers of a trustee under and to the
extent provided by sections 363 and 552; and
``(4) section 552 applies to property of the debtor that is
within the territorial jurisdiction of the United States.''.
``(b) Subsection (a) does not affect the right to commence
an individual action or proceeding in a foreign country to
the extent necessary to preserve a claim against the debtor.
``(c) Subsection (a) does not affect the right of a foreign
representative or an entity to file a petition commencing a
case under this title or the right of any party to file
claims or take other proper actions in such a case.
``Sec. 1521. Relief that may be granted upon recognition 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 an
individual action or proceeding concerning the debtor's
assets, rights, obligations or liabilities to the extent they
have not been stayed under section 1520(a);
``(2) staying execution against the debtor's assets to the
extent it has not been stayed under section 1520(a);
``(3) suspending the right to transfer, encumber or
otherwise dispose of any assets of the debtor to the extent
this right has not been suspended under section 1520(a);
``(4) providing for the examination of witnesses, the
taking of evidence or the delivery of information concerning
the debtor's assets, affairs, rights, obligations or
liabilities;
``(5) entrusting the administration or realization of all
or part of the debtor's assets within the territorial
jurisdiction of the United States to the foreign
representative or another person, including an examiner,
authorized by the court;
``(6) extending relief granted under section 1519(a); and
``(7) granting any additional relief that may be available
to a trustee, except for relief available under sections 522,
544, 545, 547, 548, 550, and 724(a).
``(b) Upon recognition of a foreign proceeding, whether
main or nonmain, the court may, at the request of the foreign
representative, entrust the distribution of all or part of
the debtor's assets located in the United States to the
foreign representative or another person, including an
examiner, authorized by the court, provided that the court is
satisfied that the interests of creditors in the United
States are sufficiently protected.
``(c) In granting relief under this section to a
representative of a foreign nonmain proceeding, the court
must be satisfied that the relief relates to assets that,
under the law of the United States, should be administered in
the foreign nonmain proceeding or concerns information
required in that proceeding.
``(d) The court may not enjoin a police or regulatory act
of a governmental unit, including a criminal action or
proceeding, under this section.
``(e) The standards, procedures, and limitations applicable
to an injunction shall apply to relief under paragraphs (1),
(2), (3), and (6) of subsection (a).
``Sec. 1522. Protection of creditors and other interested
persons
``(a) The court may grant relief under section 1519 or
1521, or may modify or terminate relief under subsection (c),
only if the interests of the creditors and other interested
entities, including the debtor, are sufficiently protected.
``(b) The court may subject relief granted under section
1519 or 1521, or the operation of the debtor's business under
section 1520(a)(3) of this title, to conditions it considers
appropriate, including the giving of security or the filing
of a bond.
``(c) The court may, at the request of the foreign
representative or an entity affected by relief granted under
section 1519 or 1521, or at its own motion, modify or
terminate such relief.
``(d) Section 1104(d) shall apply to the appointment of an
examiner under this chapter. Any examiner shall comply with
the qualification requirements imposed on a trustee by
section 322.
``Sec. 1523. Actions to avoid acts detrimental to creditors
``(a) Upon recognition of a foreign proceeding, the foreign
representative has standing in a case concerning the debtor
pending under another chapter of this title to initiate
actions under sections 522, 544, 545, 547, 548, 550, and
724(a).
``(b) When the foreign proceeding is a foreign nonmain
proceeding, the court must be satisfied that an action under
subsection (a) relates to assets that, under United States
law, should be administered in the foreign nonmain
proceeding.
``Sec. 1524. Intervention by a foreign representative
``Upon recognition of a foreign proceeding, the foreign
representative may intervene in any proceedings in a State or
Federal court in the United States in which the debtor is a
party.
[[Page H2693]]
``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
``Sec. 1525. Cooperation and direct communication between the
court and foreign courts or foreign representatives
``(a) Consistent with section 1501, the court shall
cooperate to the maximum extent possible with foreign courts
or foreign representatives, either directly or through the
trustee.
``(b) The court is entitled to communicate directly with,
or to request information or assistance directly from,
foreign courts or foreign representatives, subject to the
rights of parties in interest to notice and participation.
``Sec. 1526. Cooperation and direct communication between the
trustee and foreign courts or foreign representatives
``(a) Consistent with section 1501, the trustee or other
person, including an examiner, authorized by the court,
shall, subject to the supervision of the court, cooperate to
the maximum extent possible with foreign courts or foreign
representatives.
``(b) The trustee or other person, including an examiner,
authorized by the court is entitled, subject to the
supervision of the court, to communicate directly with
foreign courts or foreign representatives.
``Sec. 1527. Forms of cooperation
``Cooperation referred to in sections 1525 and 1526 may be
implemented by any appropriate means, including--
``(1) appointment of a person or body, including an
examiner, to act at the direction of the court;
``(2) communication of information by any means considered
appropriate by the court;
``(3) coordination of the administration and supervision of
the debtor's assets and affairs;
``(4) approval or implementation of agreements concerning
the coordination of proceedings; and
``(5) coordination of concurrent proceedings regarding the
same debtor.
``SUBCHAPTER V--CONCURRENT PROCEEDINGS
``Sec. 1528. Commencement of a case under this title after
recognition of a foreign main proceeding
``After recognition of a foreign main proceeding, a case
under another chapter of this title may be commenced only if
the debtor has assets in the United States. The effects of
such case shall be restricted to the assets of the debtor
that are within the territorial jurisdiction of the United
States and, to the extent necessary to implement cooperation
and coordination under sections 1525, 1526, and 1527, to
other assets of the debtor that are within the jurisdiction
of the court under sections 541(a) of this title, and 1334(e)
of title 28, to the extent that such other assets are not
subject to the jurisdiction and control of a foreign
proceeding that has been recognized under this chapter.
``Sec. 1529. Coordination of a case under this title and a
foreign proceeding
``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 1525, 1526, and 1527, 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 1519 or 1521 must
be consistent with the relief granted in the case in the
United States; and
``(B) even if the foreign proceeding is recognized as a
foreign main proceeding, section 1520 does not apply.
``(2) 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 1519 or 1521
shall be reviewed by the court and shall be modified or
terminated if inconsistent with the case in the United
States; and
``(B) if the foreign proceeding is a foreign main
proceeding, the stay and suspension referred to in section
1520(a) shall be modified or terminated if inconsistent with
the relief granted in the case in the United States.
``(3) In granting, extending, or modifying relief granted
to a representative of a foreign nonmain proceeding, the
court must be satisfied that the relief relates to assets
that, under the 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 1528 and 1529, the court may grant any of the relief
authorized under section 305.
``Sec. 1530. Coordination of more than 1 foreign proceeding
``In matters referred to in section 1501, with respect to
more than 1 foreign proceeding regarding the debtor, the
court shall seek cooperation and coordination under sections
1525, 1526, and 1527, and the following shall apply:
``(1) Any relief granted under section 1519 or 1521 to a
representative of a foreign nonmain proceeding after
recognition of a foreign main proceeding must be consistent
with the foreign main proceeding.
``(2) If a foreign main proceeding is recognized after
recognition, or after the filing of a petition for
recognition, of a foreign nonmain proceeding, any relief in
effect under section 1519 or 1521 shall be reviewed by the
court and shall be modified or terminated if inconsistent
with the foreign main proceeding.
``(3) If, after recognition of a foreign nonmain
proceeding, another foreign nonmain proceeding is recognized,
the court shall grant, modify, or terminate relief for the
purpose of facilitating coordination of the proceedings.
``Sec. 1531. Presumption of insolvency based on recognition
of a foreign main proceeding
``In the absence of evidence to the contrary, recognition
of a foreign main proceeding is for the purpose of commencing
a proceeding under section 303, proof that the debtor is
generally not paying its debts as such debts become due.
``Sec. 1532. Rule of payment in concurrent proceedings
``Without prejudice to secured claims or rights in rem, a
creditor who has received payment with respect to its claim
in a foreign proceeding pursuant to a law relating to
insolvency may not receive a payment for the same claim in a
case under any other chapter of this title regarding the
debtor, so long as the payment to other creditors of the same
class is proportionately less than the payment the creditor
has already received.''.
(b) Clerical Amendment.--The table of chapters for title
11, United States Code, is amended by inserting after the
item relating to chapter 13 the following:
``15. Ancillary and Other Cross-Border Cases................1501''.....
SEC. 902. 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, 304, 555
through 557, 559, and 560 apply in a case under chapter 15'';
and
(2) by adding at the end the following:
``(j) Chapter 15 applies only in a case under such chapter,
except that--
``(1) sections 1505, 1513, and 1514 apply in all cases
under this title; and
``(2) section 1509 applies whether or not a case under this
title is pending.''.
(b) Definitions.--Paragraphs (23) and (24) of title 11,
United States Code, are amended to read as follows:
``(23) `foreign proceeding' means a collective judicial or
administrative proceeding in a foreign country, including an
interim proceeding, under a law relating to insolvency or
adjustment of debt in which proceeding the assets and affairs
of the debtor are subject to control or supervision by a
foreign court, for the purpose of reorganization or
liquidation;
``(24) `foreign representative' means a person or body,
including a person or body appointed on an interim basis,
authorized in a foreign proceeding to administer the
reorganization or the liquidation of the debtor's assets or
affairs or to act as a representative of the foreign
proceeding;''.
(c) Amendments to Title 28, United States Code.--
(1) Procedures.--Section 157(b)(2) of title 28, United
States Code, is amended--
(A) in subparagraph (N), by striking ``and'' at the end;
(B) in subparagraph (O), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following:
``(P) recognition of foreign proceedings and other matters
under chapter 15 of title 11.''.
(2) Bankruptcy cases and proceedings.--Section 1334(c) of
title 28, United States Code, is amended by striking
``Nothing in'' and inserting ``Except with respect to a case
under chapter 15 of title 11, nothing in''.
(3) Duties of trustees.--Section 586(a)(3) of title 28,
United States Code, is amended by striking ``or 13'' and
inserting ``13, or 15,'' after ``chapter''.
(4) Section 305(a)(2) of title 11, United States Code, is
amended to read:
``(2)(A) a petition under section 1515 of this title for
recognition of a foreign proceeding has been granted; and
``(B) the purposes of chapter 15 of this title would be
best served by such dismissal or suspension.''.
(5) Section 508 of title 11, United States Code, is amended
by striking subsection (a) and by striking out the letter
``(b)'' at the beginning of the second paragraph.
TITLE X--FINANCIAL CONTRACT PROVISIONS
SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR
--RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.
(a) Definition of Qualified Financial Contract.--Section
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(i)) is amended by inserting ``,
resolution or order'' after ``any similar agreement that the
Corporation determines by regulation''.
(b) Definition of Securities Contract.--Section
11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows:
``(ii) Securities contract.--The term `securities
contract'--
``(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit, or mortgage loans or interests
therein (including any interest therein or based on the value
thereof) or any option on any of the foregoing, including any
option to purchase or sell any such security, certificate of
deposit, loan, interest, group or index, or option;
``(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan unless the Corporation determines by regulation,
resolution, or order to include any such agreement within the
meaning of such term;
``(III) means any option entered into on a national
securities exchange relating to foreign currencies;
``(IV) means the guarantee by or to any securities clearing
agency of any settlement of cash, securities, certificates of
deposit, mortgage loans
[[Page H2694]]
or interests therein, group or index of securities,
certificates of deposit, or mortgage loans or interests
therein (including any interest therein or based on the value
thereof) or option on any of the foregoing, including any
option to purchase or sell any such security, certificate of
deposit, loan, interest, group or index or option;
``(V) means any margin loan;
``(VI) means any other agreement or transaction that is
similar to any agreement or transaction referred to in this
clause;
``(VII) means any combination of the agreements or
transactions referred to in this clause;
``(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
``(IX) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
(IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a securities contract under this
clause, except that the master agreement shall be considered
to be a securities contract under this clause only with
respect to each agreement or transaction under the master
agreement that is referred to in subclause (I), (III), (IV),
(V), (VI), (VII), or (VIII); and
``(X) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in this clause.''.
(c) Definition of Commodity Contract.--Section
11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:
``(iii) Commodity contract.--The term `commodity contract'
means--
``(I) with respect to a futures commission merchant, a
contract for the purchase or sale of a commodity for future
delivery on, or subject to the rules of, a contract market or
board of trade;
``(II) with respect to a foreign futures commission
merchant, a foreign future;
``(III) with respect to a leverage transaction merchant, a
leverage transaction;
``(IV) with respect to a clearing organization, a contract
for the purchase or sale of a commodity for future delivery
on, or subject to the rules of, a contract market or board of
trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a
contract market or board of trade that is cleared by such
clearing organization;
``(V) with respect to a commodity options dealer, a
commodity option;
``(VI) any other agreement or transaction that is similar
to any agreement or transaction referred to in this clause;
``(VII) any combination of the agreements or transactions
referred to in this clause;
``(VIII) any option to enter into any agreement or
transaction referred to in this clause;
``(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), (IV),
(V), (VI), (VII), or (VIII), together with all supplements to
any such master agreement, without regard to whether the
master agreement provides for an agreement or transaction
that is not a commodity contract under this clause, except
that the master agreement shall be considered to be a
commodity contract under this clause only with respect to
each agreement or transaction under the master agreement that
is referred to in subclause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII); or
``(X) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in this clause.''.
(d) Definition of Forward Contract.--Section
11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
``(iv) Forward contract.--The term `forward contract'
means--
``(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar
good, article, service, right, or interest which is presently
or in the future becomes the subject of dealing in the
forward contract trade, or product or byproduct thereof, with
a maturity date more than 2 days after the date the contract
is entered into, including, but not limited to, a repurchase
agreement, reverse repurchase agreement, consignment, lease,
swap, hedge transaction, deposit, loan, option, allocated
transaction, unallocated transaction, or any other similar
agreement;
``(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
``(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
``(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III),
together with all supplements to any such master agreement,
without regard to whether the master agreement provides for
an agreement or transaction that is not a forward contract
under this clause, except that the master agreement shall be
considered to be a forward contract under this clause only
with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
or (III); or
``(V) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in subclause (I), (II), (III), or (IV).''.
(e) Definition of Repurchase Agreement.--Section
11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows:
``(v) Repurchase agreement.--The term `repurchase
agreement' (which definition also applies to a reverse
repurchase agreement)--
``(I) mean an agreement, including related terms, which
provides for the transfer of 1 or more certificates of
deposit, mortgage-related securities (as such term is defined
in the Securities Exchange Act of 1934), mortgage loans,
interests in mortgage-related securities or mortgage loans,
eligible bankers' acceptances, qualified foreign government
securities or securities that are direct obligations of, or
that are fully guaranteed by, the United States or any agency
of the United States against the transfer of funds by the
transferee of such certificates of deposit, eligible bankers'
acceptances, securities, loans, or interests with a
simultaneous agreement by such transferee to transfer to the
transferor thereof certificates of deposit, eligible bankers'
acceptances, securities, loans, or interests as described
above, at a date certain not later than 1 year after such
transfers or on demand, against the transfer of funds, or any
other similar agreement;
``(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan unless the
Corporation determines by regulation, resolution, or order to
include any such participation within the meaning of such
term;
``(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
``(IV) means any option to enter into any agreement or
transaction referred to in subclause (I) or (III);
``(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
or (IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
provides for an agreement or transaction that is not a
repurchase agreement under this clause, except that the
master agreement shall be considered to be a repurchase
agreement under this subclause only with respect to each
agreement or transaction under the master agreement that is
referred to in subclause (I), (III), or (IV); and
``(VI) means a security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in subclause (I), (III), (IV), or (V).
For purposes of this clause, the term `qualified foreign
government security' means a security that is a direct
obligation of, or that is fully guaranteed by, the central
government of a member of the Organization for Economic
Cooperation and Development (as determined by regulation or
order adopted by the appropriate Federal banking
authority).''.
(f) Definition of Swap Agreement.--Section 11(e)(8)(D)(iv)
of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(vi)) is amended to read as follows:
``(vi) Swap agreement.--The term `swap agreement' means--
``(I) any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, future, or forward
agreement; an equity index or equity swap, option, future, or
forward agreement; a debt index or debt swap, option, future,
or forward agreement; a credit spread or credit swap, option,
future, or forward agreement; a commodity index or commodity
swap, option, future, or forward agreement;
``(II) any agreement or transaction similar to any other
agreement or transaction referred to in this clause that is
presently, or in the future becomes, regularly entered into
in the swap market (including terms and conditions
incorporated by reference in such agreement) and that is a
forward, swap, future, or option on 1 or more rates,
currencies, commodities, equity securities or other equity
instruments, debt securities or other debt instruments, or
economic indices or measures of economic risk or value;
``(III) any combination of agreements or transactions
referred to in this clause;
``(IV) any option to enter into any agreement or
transaction referred to in this clause;
``(V) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), or
(IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
contains an agreement or transaction that is not a swap
agreement under this clause, except that the master agreement
shall be considered to be a swap agreement under this clause
only with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
(III), or (IV); and
``(VI) any security agreement or arrangement or other
credit enhancement related to any agreements or transactions
referred to in subparagraph (I), (II), (III), or (IV).
Such term is applicable for purposes of this title only and
shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
swap agreement under any other statute, regulation, or rule,
including the Securities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding Company Act of 1935,
the Trust Indenture Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act,
and the regulations promulgated by the Securities and
Exchange Commission or the Commodity Futures Trading
Commission.''.
(g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of
the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(viii)) is amended to read as follows:
``(viii) Transfer.--The term `transfer' means every mode,
direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or with
an interest in property, including retention of title as a
security interest and foreclosure of the depository
institutions's equity of redemption.''.
[[Page H2695]]
(h) Treatment of Qualified Financial Contracts.--Section
11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)) is amended--
(1) in subparagraph (A), by striking ``paragraph (10)'' and
inserting ``paragraphs (9) and (10)'';
(2) in subparagraph (A)(i), by striking ``to cause the
termination or liquidation'' and inserting ``such person has
to cause the termination, liquidation, or acceleration'';
(3) by amending subparagraph (A)(ii) to read as follows:
``(ii) any right under any security agreement or
arrangement or other credit enhancement related to 1 or more
qualified financial contracts described in clause (i);''; and
(4) by amending subparagraph (E)(ii) to read as follows:
``(ii) any right under any security agreement or
arrangement or other credit enhancement related to 1 or more
qualified financial contracts described in clause (i);''.
(i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is
amended by inserting ``section 5242 of the Revised Statutes
of the United States (12 U.S.C. 91) or any other Federal or
State law relating to the avoidance of preferential or
fraudulent transfers,'' before ``the Corporation''.
SEC. 1002. AUTHORITY OF THE CORPORATION WITH RESPECT TO
FAILED AND FAILING INSTITUTIONS.
(a) In General.--Section 11(e)(8) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
(1) in subparagraph (E), by striking ``other than paragraph
(12) of this subsection, subsection (d)(9)'' and inserting
``other than subsections (d)(9) and (e)(10)''; and
(2) by adding at the end the following new subparagraphs:
``(F) Clarification.--No provision of law shall be
construed as limiting the right or power of the Corporation,
or authorizing any court or agency to limit or delay, in any
manner, the right or power of the Corporation to transfer any
qualified financial contract in accordance with paragraphs
(9) and (10) of this subsection or to disaffirm or repudiate
any such contract in accordance with subsection (e)(1) of
this section.
``(G) Walkaway clauses not effective.--
``(i) In general.--Notwithstanding the provisions of
subparagraphs (A) and (E), and sections 403 and 404 of the
Federal Deposit Insurance Corporation Improvement Act of
1991, no walkaway clause shall be enforceable in a qualified
financial contract of an insured depository institution in
default.
``(ii) Walkaway clause defined.--For purposes of this
subparagraph, the term `walkaway clause' means a provision in
a qualified financial contract that, after calculation of a
value of a party's position or an amount due to or from 1 of
the parties in accordance with its terms upon termination,
liquidation, or acceleration of the qualified financial
contract, either does not create a payment obligation of a
party or extinguishes a payment obligation of a party in
whole or in part solely because of such party's status as a
nondefaulting party.''.
(b) Technical and Conforming Amendment.--Section
11(e)(12)(A) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(12)(A)) is amended by inserting ``or the exercise of
rights or powers'' after ``the appointment''.
SEC. 1003. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED
FINANCIAL CONTRACTS.
(a) Transfers of Qualified Financial Contracts to Financial
Institutions.--Section 11(e)(9) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as
follows:
``(9) Transfer of qualified financial contracts.--
``(A) In general.--In making any transfer of assets or
liabilities of a depository institution in default which
includes any qualified financial contract, the conservator or
receiver for such depository institution shall either--
``(i) transfer to 1 financial institution, other than a
financial institution for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has been
appointed or which is otherwise the subject of a bankruptcy
or insolvency proceeding--
``(I) all qualified financial contracts between any person
or any affiliate of such person and the depository
institution in default;
``(II) all claims of such person or any affiliate of such
person against such depository institution under any such
contract (other than any claim which, under the terms of any
such contract, is subordinated to the claims of general
unsecured creditors of such institution);
``(III) all claims of such depository institution against
such person or any affiliate of such person under any such
contract; and
``(IV) all property securing or any other credit
enhancement for any contract described in subclause (I) or
any claim described in subclause (II) or (III) under any such
contract; or
``(ii) transfer none of the qualified financial contracts,
claims, property or other credit enhancement referred to in
clause (i) (with respect to such person and any affiliate of
such person).
``(B) Transfer to foreign bank, foreign financial
institution, or branch or agency of a foreign bank or
financial institution.--In transferring any qualified
financial contracts and related claims and property pursuant
to subparagraph (A)(i), the conservator or receiver for such
depository institution shall not make such transfer to a
foreign bank, financial institution organized under the laws
of a foreign country, or a branch or agency of a foreign bank
or financial institution unless, under the law applicable to
such bank, financial institution, branch or agency, to the
qualified financial contracts, and to any netting contract,
any security agreement or arrangement or other credit
enhancement related to 1 or more qualified financial
contracts, the contractual rights of the parties to such
qualified financial contracts, netting contracts, security
agreements or arrangements, or other credit enhancements are
enforceable substantially to the same extent as permitted
under this section.
``(C) Transfer of contracts subject to the rules of a
clearing organization.--In the event that a conservator or
receiver transfers any qualified financial contract and
related claims, property and credit enhancements pursuant to
subparagraph (A)(i) and such contract is subject to the rules
of a clearing organization, the clearing organization shall
not be required to accept the transferee as a member by
virtue of the transfer.
``(D) Definition.--For purposes of this section, the term
`financial institution' means a broker or dealer, a
depository institution, a futures commission merchant, or any
other institution as determined by the Corporation by
regulation to be a financial institution.''.
(b) Notice to Qualified Financial Contract
Counterparties.--Section 11(e)(10)(A) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(10)(A)) is amended by
amending the flush material following clause (ii) to read
as follows: ``the conservator or receiver shall notify any
person who is a party to any such contract of such
transfer by 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the receiver, in
the case of a receivership, or the business day following
such transfer, in the case of a conservatorship.''.
(c) Rights Against Receiver and Treatment of Bridge
Banks.--Section 11(e)(10) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(10)) is further amended--
(1) by redesignating subparagraph (B) as subparagraph (D);
and
(2) by inserting after subparagraph (A) the following new
subparagraphs:
``(B) Certain rights not enforceable.--
``(i) Receivership.--A person who is a party to a qualified
financial contract with an insured depository institution may
not exercise any right such person has to terminate,
liquidate, or net such contract under paragraph (8)(A) or
section 403 or 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 solely by reason of or
incidental to the appointment of a receiver for the
depository institution (or the insolvency or financial
condition of the depository institution for which the
receiver has been appointed)--
``(I) until 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the receiver; or
``(II) after the person has received notice that the
contract has been transferred pursuant to paragraph (9)(A).
``(ii) Conservatorship.--A person who is a party to a
qualified financial contract with an insured depository
institution may not exercise any right such person has to
terminate, liquidate, or net such contract under paragraph
(8)(E) or sections 403 or 404 of the Federal Deposit
Insurance Corporation Improvement Act of 1991, solely by
reason of or incidental to the appointment of a conservator
for the depository institution (or the insolvency or
financial condition of the depository institution for which
the conservator has been appointed).
``(iii) Notice.--For purposes of this subsection, the
Corporation as receiver or conservator of an insured
depository institution shall be deemed to have notified a
person who is a party to a qualified financial contract with
such depository institution if the Corporation has taken
steps reasonably calculated to provide notice to such person
by the time specified in subparagraph (A) of this subsection.
``(C) Treatment of bridge banks.--The following
institutions shall not be considered a financial institution
for which a conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed or which is
otherwise the subject of a bankruptcy or insolvency
proceeding for purposes of subsection (e)(9)--
``(i) a bridge bank; or
``(ii) a depository institution organized by the
Corporation, for which a conservator is appointed either--
``(I) immediately upon the organization of the institution;
or
``(II) at the time of a purchase and assumption transaction
between such institution and the Corporation as receiver for
a depository institution in default.''.
SEC. 1004. AMENDMENTS RELATING TO DISAFFIRMANCE OR
REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.
Section 11(e) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)) is further amended--
(1) by redesignating paragraphs (11) through (15) as
paragraphs (12) through (16), respectively; and
(2) by inserting after paragraph (10) the following new
paragraph:
``(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of a conservator or receiver with respect to any
qualified financial contract to which an insured depository
institution is a party, the conservator or receiver for such
institution shall either--
``(A) disaffirm or repudiate all qualified financial
contracts between--
``(i) any person or any affiliate of such person; and
``(ii) the depository institution in default; or
``(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A) (with
respect to such person or any affiliate of such person).''.
SEC. 1005. CLARIFYING AMENDMENT RELATING TO MASTER
AGREEMENTS.
Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as
follows:
[[Page H2696]]
``(vii) Treatment of master agreement as 1 agreement.--Any
master agreement for any contract or agreement described in
any preceding clause of this subparagraph (or any master
agreement for such master agreement or agreements), together
with all supplements to such master agreement, shall be
treated as a single agreement and a single qualified
financial contract. If a master agreement contains provisions
relating to agreements or transactions that are not
themselves qualified financial contracts, the master
agreement shall be deemed to be a qualified
financial contract only with respect to those transactions
that are themselves qualified financial contracts.''.
SEC. 1006. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT
ACT OF 1991.
(a) Definitions.--Section 402 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12 U.S.C.
4402) is amended--
(1) in paragraph (6)--
(A) by redesignating subparagraphs (B) through (D) as
subparagraphs (C) through (E), respectively;
(B) by inserting after subparagraph (A) the following new
subparagraph:
``(B) an uninsured national bank or an uninsured State bank
that is a member of the Federal Reserve System if the
national bank or State member bank is not eligible to make
application to become an insured bank under section 5 of the
Federal Deposit Insurance Act;''; and
(C) by amending subparagraph (C) (as redesignated) to read
as follows:
``(C) a branch or agency of a foreign bank, a foreign bank
and any branch or agency of the foreign bank, or the foreign
bank that established the branch or agency, as those terms
are defined in section 1(b) of the International Banking Act
of 1978;'';
(2) in paragraph (11), by adding before the period ``and
any other clearing organization with which such clearing
organization has a netting contract'';
(3) by amending paragraph (14)(A)(i) to read as follows:
``(i) means a contract or agreement between 2 or more
financial institutions, clearing organizations, or members
that provides for netting present or future payment
obligations or payment entitlements (including liquidation or
closeout values relating to such obligations or entitlements)
among the parties to the agreement; and''; and
(4) by adding at the end the following new paragraph:
``(15) Payment.--The term `payment' means a payment of
United States dollars, another currency, or a composite
currency, and a noncash delivery, including a payment or
delivery to liquidate an unmatured obligation.''.
(b) Enforceability of Bilateral Netting Contracts.--Section
403 of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (12 U.S.C. 4403) is amended--
(1) by amending subsection (a) to read as follows:
``(a) General Rule.--Notwithstanding any other provision of
State or Federal law (other than paragraphs (8)(E), (8)(F),
and (10)(B) of section 11(e) of the Federal Deposit Insurance
Act or any order authorized under section 5(b)(2) of the
Securities Investor Protection Act of 1970, the covered
contractual payment obligations and the covered contractual
payment entitlements between any 2 financial institutions
shall be netted in accordance with, and subject to the
conditions of, the terms of any applicable netting contract
(except as provided in section 561(b)(2) of title 11).''; and
(2) by adding at the end the following new subsection:
``(f) Enforceability of Security Agreements.--The
provisions of any security agreement or arrangement or other
credit enhancement related to 1 or more netting contracts
between any 2 financial institutions shall be enforceable in
accordance with their terms (except as provided in section
561(b)(2) of title 11) and shall not be stayed, avoided, or
otherwise limited by any State or Federal law (other than
paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of
the Federal Deposit Insurance Act and section 5(b)(2) of the
Securities Investor Protection Act of 1970).''.
(c) Enforceability of Clearing Organization Netting
Contracts.--Section 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4404) is
amended--
(1) by amending subsection (a) to read as follows:
``(a) General Rule.--Notwithstanding any other provision of
State or Federal law (other than paragraphs (8)(E), (8)(F),
and (10)(B) of section 11(e) of the Federal Deposit Insurance
Act and any order authorized under section 5(b)(2) of the
Securities Investor Protection Act of 1970, the covered
contractual payment obligations and the covered contractual
payment entitlements of a member of a clearing organization
to and from all other members of a clearing organization
shall be netted in accordance with and subject to the
conditions of any applicable netting contract (except as
provided in section 561(b)(2) of title 11, United States
Code).''; and
(2) by adding at the end the following new subsection:
``(h) Enforceability of Security Agreements.--The
provisions of any security agreement or arrangement or other
credit enhancement related to 1 or more netting contracts
between any 2 members of a clearing organization shall be
enforceable in accordance with their terms (except as
provided in section 561(b)(2) of title 11, United States
Code) and shall not be stayed, avoided, or otherwise limited
by any State or Federal law other than paragraphs (8)(E),
(8)(F), and (10)(B) of section 11(e) of the Federal Deposit
Insurance Act and section 5(b)(2) of the Securities Investor
Protection Act of 1970.''.
(d) Enforceability of Contracts With Uninsured National
Banks and Uninsured Federal Branches and Agencies.--The
Federal Deposit Insurance Corporation Improvement Act of 1991
(12 U.S.C. 4401 et seq.) is amended--
(1) by redesignating section 407 as section 408; and
(2) by adding after section 406 the following new section:
``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL
BANKS AND UNINSURED FEDERAL BRANCHES AND
AGENCIES.
``(a) In General.--Notwithstanding any other provision of
law, paragraphs (8), (9), (10), and (11) of section 11(e) of
the Federal Deposit Insurance Act shall apply to an
uninsured national bank or uninsured Federal branch or
Federal agency except--
``(1) any reference to the `Corporation as receiver' or
`the receiver or the Corporation' shall refer to the receiver
of an uninsured national bank or uninsured Federal branch or
Federal agency appointed by the Comptroller of the Currency;
``(2) any reference to the `Corporation' (other than in
section 11(e)(8)(D) of such Act), the `Corporation, whether
acting as such or as conservator or receiver', a `receiver',
or a `conservator' shall refer to the receiver or conservator
of an uninsured national bank or uninsured Federal branch or
Federal agency appointed by the Comptroller of the Currency;
and
``(3) any reference to an `insured depository institution'
or `depository institution' shall refer to an uninsured
national bank or an uninsured Federal branch or Federal
agency.
``(b) Liability.--The liability of a receiver or
conservator of an uninsured national bank or uninsured
Federal branch or agency shall be determined in the same
manner and subject to the same limitations that apply to
receivers and conservators of insured depository institutions
under section 11(e) of the Federal Deposit Insurance Act.
``(c) Regulatory Authority.--
``(1) In general.--The Comptroller of the Currency, in
consultation with the Federal Deposit Insurance Corporation,
may promulgate regulations to implement this section.
``(2) Specific requirement.--In promulgating regulations to
implement this section, the Comptroller of the Currency shall
ensure that the regulations generally are consistent with the
regulations and policies of the Federal Deposit Insurance
Corporation adopted pursuant to the Federal Deposit Insurance
Act.
``(d) Definitions.--For purposes of this section, the terms
`Federal branch', `Federal agency', and `foreign bank' have
the same meaning as in section 1(b) of the International
Banking Act.''.
SEC. 1007. BANKRUPTCY CODE AMENDMENTS.
(a) Definitions of Forward Contract, Repurchase Agreement,
Securities Clearing Agency, Swap Agreement, Commodity
Contract, and Securities Contract.--Title 11, United States
Code, is amended--
(1) in section 101--
(A) in paragraph (25)--
(i) by striking ``means a contract'' and inserting
``means--
``(A) a contract'';
(ii) by striking ``, or any combination thereof or option
thereon;'' and inserting ``, or any other similar
agreement;''; and
(iii) by adding at the end the following:
``(B) any combination of agreements or transactions
referred to in subparagraphs (A) and (C);
``(C) any option to enter into an agreement or transaction
referred to in subparagraph (A) or (B);
``(D) a master agreement that provides for an agreement or
transaction referred to in subparagraph (A), (B), or (C),
together with all supplements to any such master agreement,
without regard to whether such master agreement provides for
an agreement or transaction that is not a forward contract
under this paragraph, except that such master agreement shall
be considered to be a forward contract under this paragraph
only with respect to each agreement or transaction under such
master agreement that is referred to in subparagraph (A), (B)
or (C); or
``(E) a security agreement or arrangement, or other credit
enhancement related to any agreement or transaction referred
to in subparagraph (A), (B), (C), or (D), but not to exceed
the actual value of such contract, option, agreement, or
transaction on the date of the filing of the petition;'';
(B) in paragraph (46), by striking ``on any day during the
period beginning 90 days before the date of'' and replacing
it with ``at any time before'';
(C) by amending paragraph (47) to read as follows:
``(47) `repurchase agreement' (which definition also
applies to a reverse repurchase agreement) means--
``(i) an agreement, including related terms, which provides
for the transfer of 1 or more certificates of deposit,
mortgage-related securities (as defined in the Securities
Exchange Act of 1934), mortgage loans, interests in mortgage-
related securities or mortgage loans, eligible bankers'
acceptances, qualified foreign government securities; or
securities that are direct obligations of, or that are fully
guaranteed by, the United States or any agency of the United
States against the transfer of funds by the transferee of
such certificates of deposit, eligible bankers' acceptances,
securities, loans, or interests; with a simultaneous
agreement by such transferee to transfer to the transferor
thereof certificates of deposit, eligible bankers'
acceptance, securities, loans, or interests of the kind
described above, at a date certain not later than 1 year
after such transfer or on demand, against the transfer of
funds;
[[Page H2697]]
``(ii) any combination of agreements or transactions
referred to in clauses (i) and (iii);
``(iii) an option to enter into an agreement or transaction
referred to in clause (i) or (ii);
``(iv) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), or (iii),
together with all supplements to any such master agreement,
without regard to whether such master agreement provides
for an agreement or transaction that is not a repurchase
agreement under this paragraph, except that such master
agreement shall be considered to be a repurchase agreement
under this paragraph only with respect to each agreement
or transaction under the master agreement that is referred
to in clause (i), (ii), or (iii); or
``(v) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in clause (i), (ii), (iii), or (iv), but not to exceed the
actual value of such contract on the date of the filing of
the petition; and
``(B) does not include a repurchase obligation under a
participation in a commercial mortgage loan;
and, for purposes of this paragraph, the term `qualified
foreign government security' means a security that is a
direct obligation of, or that is fully guaranteed by, the
central government of a member of the Organization for
Economic Cooperation and Development;'';
(D) in paragraph (48) by inserting ``or exempt from such
registration under such section pursuant to an order of the
Securities and Exchange Commission'' after ``1934''; and
(E) by amending paragraph (53B) to read as follows:
``(53B) `swap agreement'
``(A) means--
``(i) any agreement, including the terms and conditions
incorporated by reference in such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, future, or forward
agreement; an equity index or an equity swap, option, future,
or forward agreement; a debt index or a debt swap, option,
future, or forward agreement; a credit spread or a credit
swap, option, future, or forward agreement; or a commodity
index or a commodity swap, option, future, or forward
agreement;
``(ii) any agreement or transaction similar to any other
agreement or transaction referred to in this paragraph that--
``(I) is presently, or in the future becomes, regularly
entered into in the swap market (including terms and
conditions incorporated by reference therein); and
``(II) is a forward, swap, future, or option on 1 or more
rates, currencies commodities, equity securities, or other
equity instruments, debt securities or other debt
instruments, or on an economic index or measure of economic
risk or value;
``(iii) any combination of agreements or transactions
referred to in this paragraph;
``(iv) any option to enter into an agreement or transaction
referred to in this paragraph;
``(v) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), (iii), or (iv),
together with all supplements to any such master agreement,
and without regard to whether the master agreement contains
an agreement or transaction that is not a swap agreement
under this paragraph, except that the master agreement shall
be considered to be a swap agreement under this paragraph
only with respect to each agreement or transaction under the
master agreement that is referred to in clause (i), (ii),
(iii), or (iv); or
``(B) any security agreement or arrangement or other credit
enhancement related to any agreements or transactions
referred to in subparagraph (A); and
``(C) is applicable for purposes of this title only and
shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
swap agreement under any other statute, regulation, or rule,
including the Securities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding Company Act of 1935,
the Trust Indenture Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act,
and the regulations prescribed by the Securities and Exchange
Commission or the Commodity Futures Trading Commission.'';
(2) by amending section 741(7) to read as follows:
``(7) `securities contract'--
``(A) means--
``(i) a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit or mortgage loans or interests
therein (including an interest therein or based on the value
thereof), or option on any of the foregoing, including an
option to purchase or sell any such security certificate of
deposit, loan, interest, group or index or option;
``(ii) any option entered into on a national securities
exchange relating to foreign currencies;
``(iii) the guarantee by or to any securities clearing
agency of a settlement of cash, securities, certificates of
deposit mortgage loans or interests therein, group or index
of securities, or mortgage loans or interests therein
(including any interest therein or based on the value
thereof), or option on any of the foregoing, including an
option to purchase or sell any such security certificate of
deposit, loan, interest, group or index or option;
``(iv) any margin loan;
``(v) any other agreement or transaction that is similar to
an agreement or transaction referred to in this paragraph;
``(vi) any combination of the agreements or transactions
referred to in this paragraph;
``(vii) any option to enter into any agreement or
transaction referred to in this paragraph;
``(viii) a master agreement that provides for an agreement
or transaction referred to in clause (i), (ii), (iii), (iv),
(v), (vi), or (vii), together with all supplements to any
such master agreement, without regard to whether the master
agreement provides for an agreement or transaction that is
not a securities contract under this paragraph, except that
such master agreement shall be considered to be a securities
contract under this paragraph only with respect to each
agreement or transaction under such master agreement that
is referred to in clause (i), (ii), (iii), (iv), (v),
(vi), or (vii); or
``(ix) any security agreement or arrangement, or other
credit enhancement, related to any agreement or transaction
referred to in this paragraph, but not to exceed the actual
value of such contract on the date of the filing of the
petition; and
``(B) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan.''; and
(3) in section 761(4)--
(A) by striking ``or'' at the end of subparagraph (D); and
(B) by adding at the end the following:
``(F) any other agreement or transaction that is similar to
an agreement or transaction referred to in this paragraph;
``(G) any combination of the agreements or transactions
referred to in this paragraph;
``(H) any option to enter into an agreement or transaction
referred to in this paragraph;
``(I) a master agreement that provides for an agreement or
transaction referred to in subparagraph (A), (B), (C), (D),
(E), (F), (G), or (H), together with all supplements to such
master netting agreement, without regard to whether the
master netting agreement provides for an agreement or
transaction that is not a commodity contract under this
paragraph, except that the master agreement shall be
considered to be a commodity contract under this paragraph
only with respect to each agreement or transaction under the
master agreement that is referred to in subparagraph (A),
(B), (C), (D), (E), (F), (G), or (H); or
``(J) a security agreement or arrangement, or other credit
enhancement related to any agreement or transaction referred
to in this paragraph, but not to exceed the actual value of
such contract on the date of the filing of the petition;''.
(b) Definitions of Financial Institution, Financial
Participant, and Forward Contract Merchant.--Section 101 of
title 11, United States Code, is amended--
(1) by amending paragraph (22) to read as follows:
``(22) `financial institution' means--
``(A) a Federal reserve bank, or an entity (domestic or
foreign) that is a commercial or savings bank, industrial
savings bank, savings and loan association, trust company, or
receiver or conservator for such entity and, when any such
Federal reserve bank, receiver, conservator or entity is
acting as agent or custodian for a customer in connection
with a securities contract, as defined in section 741 of this
title, such customer; or
``(B) in connection with a securities contract, as defined
in section 741 of this title, an investment company
registered under the Investment Company Act of 1940;'';
(2) by inserting after paragraph (22) the following:
``(22A) `financial participant' means an entity that, at
the time it enters into a securities contract, commodity
contract or forward contract, or at the time of the filing of
the petition, has 1 or more agreements or transactions that
is described in section 561(a)(2) with the debtor or any
other entity (other than an affiliate) of a total gross
dollar value of at least $1,000,000,000 in notional or actual
principal amount outstanding on any day during the previous
15-month period, or has gross mark-to-market positions of at
least $100,000,000 (aggregated across counterparties) in 1 or
more such agreement or transaction with the debtor or any
other entity (other than an affiliate) on any day during the
previous 15-month period;''; and
(3) by amending paragraph (26) to read as follows:
``(26) `forward contract merchant' means a Federal reserve
bank, or an entity whose business consists in whole or in
part of entering into forward contracts as or with merchants
or in a commodity, as defined or in section 761 of this
title, or any similar good, article, service, right, or
interest which is presently or in the future becomes the
subject of dealing or in the forward contract trade;''.
(c) Definition of Master Netting Agreement and Master
Netting Agreement Participant.--Section 101 of title 11,
United States Code, is amended by inserting after paragraph
(38) the following new paragraphs:
``(38A) `master netting agreement' means an agreement
providing for the exercise of rights, including rights of
netting, setoff, liquidation, termination, acceleration, or
closeout, under or in connection with 1 or more contracts
that are described in any 1 or more of paragraphs (1) through
(5) of section 561(a), or any security agreement or
arrangement or other credit enhancement related to 1 or more
of the foregoing. If a master netting agreement contains
provisions relating to agreements or transactions that are
not contracts described in paragraphs (1) through (5) of
section 561(a), the master netting agreement shall be deemed
to be a master netting agreement only with respect to those
agreements or transactions that are described in any 1 or
more of the paragraphs (1) through (5) of section 561(a);
[[Page H2698]]
``(38B) `master netting agreement participant' means an
entity that, at any time before the filing of the petition,
is a party to an outstanding master netting agreement with
the debtor;''.
(d) Swap Agreements, Securities Contracts, Commodity
Contracts, Forward Contracts, Repurchase Agreements, and
Master Netting Agreements Under the Automatic-Stay.--
(1) In general.--Section 362(b) of title 11, United States
Code, as amended by sections 118, 132, 136, 142, 203 and 818,
is amended--
(A) in paragraph (6), by inserting ``, pledged to, and
under the control of,'' after ``held by'';
(B) in paragraph (7), by inserting ``, pledged to, and
under the control of,'' after ``held by'';
(C) by amending paragraph (17) to read as follows:
``(17) under subsection (a), of the setoff by a swap
participant of a mutual debt and claim under or in connection
with 1 or more swap agreements that constitutes the setoff of
a claim against the debtor for any payment or other transfer
of property due from the debtor under or in connection with
any swap agreement against any payment due to the debtor from
the swap participant under or in connection with any swap
agreement or against cash, securities, or other property held
by, pledged to, and under the control of, or due from such
swap participant to margin guarantee, secure, or settle a
swap agreement;'';
(D) in paragraph (30) by striking ``or'' at the end;
(E) in paragraph (31) by striking the period at the end and
inserting ``; or''; and
(F) by inserting after paragraph (31) the following new
paragraph:
``(32) under subsection (a), of the setoff by a master
netting agreement participant of a mutual debt and claim
under or in connection with 1 or more master netting
agreements or any contract or agreement subject to such
agreements that constitutes the setoff of a claim against the
debtor for any payment or other transfer of property due from
the debtor under or in connection with such agreements or any
contract or agreement subject to such agreements against any
payment due to the debtor from such master netting agreement
participant under or in connection with such agreements or
any contract or agreement subject to such agreements or
against cash, securities, or other property held by, pledged
or and under the control of, or due from such master netting
agreement participant to margin, guarantee, secure, or settle
such agreements or any contract or agreement subject to such
agreements, to the extent such participant is eligible to
exercise such offset rights under paragraph (6), (7), or (17)
for each individual contract covered by the master netting
agreement in issue.''.
(2) Limitation.--Section 362 of title 11, United States
Code, as amended by sections 120, 302, and 412, is amended by
adding at the end the following:
``(l) Limitation.--The exercise of rights not subject to
the stay arising under subsection (a) pursuant to paragraph
(6), (7), or (17), or (31) of subsection (b) shall not be
stayed by any order of a court or administrative agency in
any proceeding under this title.''.
(e) Limitation of Avoidance Powers Under Master Netting
Agreement.--Section 546 of title 11, United States Code, as
amended by sections 207 and 302, is amended--
(1) in subsection (g) (as added by section 103 of Public
Law 101-311)--
(A) by striking ``under a swap agreement'';
(B) by striking ``in connection with a swap agreement'' and
inserting ``under or in connection with any swap agreement'';
and
(2) by adding at the end the following:
``(j) Notwithstanding sections 544, 545, 547, 548(a)(2)(B),
and 548(b) of this title, the trustee may not avoid a
transfer made by or to a master netting agreement participant
under or in connection with any master netting agreement or
any individual contract covered thereby that is made before
the commencement of the case, except under section
548(a)(1)(A) of this title, and except to the extent the
trustee could otherwise avoid such a transfer made under an
individual contract covered by such master netting
agreement.''.
(f) Fraudulent Transfers of Master Netting Agreements.--
Section 548(d)(2) of title 11, United States Code, is
amended--
(1) in subparagraph (C), by striking ``and'';
(2) in subparagraph (D), by striking the period and
inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) a master netting agreement participant that receives
a transfer in connection with a master netting agreement or
any individual contract covered thereby takes for value to
the extent of such transfer, except, with respect to a
transfer under any individual contract covered thereby, to
the extent such master netting agreement participant
otherwise did not take (or is otherwise not deemed to have
taken) such transfer for value.''.
(g) Termination or Acceleration of Securities Contracts.--
Section 555 of title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
``Sec. 555. Contractual right to liquidate, terminate, or
accelerate a securities contract''; and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(h) Termination or Acceleration of Commodities or Forward
Contracts.--Section 556 of title 11, United States Code, is
amended--
(1) by amending the section heading to read as follows:
``Sec. 556. Contractual right to liquidate, terminate, or
accelerate a commodities contract or forward contract'';
and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(i) Termination or Acceleration of Repurchase Agreements.--
Section 559 of title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
``Sec. 559. Contractual right to liquidate, terminate, or
accelerate a repurchase agreement''; and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(j) Liquidation, Termination, or Acceleration of Swap
Agreements.--Section 560 of title 11, United States Code, is
amended--
(1) by amending the section heading to read as follows:
``Sec. 560. Contractual right to liquidate, terminate, or
accelerate a swap agreement''; and
(2) in the first sentence, by striking ``termination of a
swap agreement'' and inserting ``liquidation, termination, or
acceleration of 1 or more swap agreements''; and
(3) by striking ``in connection with any swap agreement''
and inserting ``in connection with the termination,
liquidation, or acceleration of 1 or more swap agreements''.
(k) Liquidation, Termination, Acceleration, or Offset Under
a Master Netting Agreement and Across Contracts.--(1) Title
11, United States Code, is amended by inserting after section
560 the following:
``Sec. 561. Contractual right to terminate, liquidate,
accelerate, or offset under a master netting agreement and
across contracts
``(a) In General.--Subject to subsection (b), the exercise
of any contractual right, because of a condition of the kind
specified in section 365(e)(1), to cause the termination,
liquidation, or acceleration of or to offset or net
termination values, payment amounts or other transfer
obligations arising under or in connection with 1 or more (or
the termination, liquidation, or acceleration of 1 or more)--
``(1) securities contracts, as defined in section 741(7);
``(2) commodity contracts, as defined in section 761(4);
``(3) forward contracts;
``(4) repurchase agreements;
``(5) swap agreements; or
``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by
operation of any provision of this title or by any order of a
court or administrative agency in any proceeding under this
title.
``(b) Exception.--
``(1) A party may exercise a contractual right described in
subsection (a) to terminate, liquidate, or accelerate only to
the extent that such party could exercise such a right under
section 555, 556, 559, or 560 for each individual contract
covered by the master netting agreement in issue.
``(2) If a debtor is a commodity broker subject to
subchapter IV of chapter 7 of this title--
``(A) a party may not net or offset an obligation to the
debtor arising under, or in connection with, a commodity
contract against any claim arising under, or in connection
with, other instruments, contracts, or agreements listed in
subsection (a) except to the extent the party has positive
net equity in the commodity accounts at the debtor, as
calculated under subchapter IV; and
``(B) another commodity broker may not net or offset an
obligation to the debtor arising under, or in connection
with, a commodity contract entered into or held on behalf of
a customer of the debtor against any claim arising under, or
in connection with, other instruments, contracts, or
agreements listed in subsection (a).
``(c) Definition.--As used in this section, the term
`contractual right' includes a right set forth in a rule or
bylaw of a national securities exchange, a national
securities association, or a securities clearing agency, a
right set forth in a bylaw of a clearing organization or
contract market or in a resolution of the governing board
thereof, and a right, whether or not evidenced in writing,
arising under common law, under law merchant, or by reason of
normal business practice.''.
(2) Conforming amendment.--The table of sections of chapter
9 of title 11, United States Code, is amended by inserting
after the item relating to section 560 the following:
``561. Contractual right to terminate, liquidate, accelerate, or offset
under a master netting agreement and across contracts.
(l) Ancillary Proceedings.--Section 304 of title 11, United
States Code, as amended by section 215, is amended by adding
at the end the following:
``(c) Any provisions of this title relating to securities
contracts, commodity contracts, forward contracts, repurchase
agreements, swap agreements, or master netting agreements
shall apply in a case ancillary to a foreign proceeding under
this section or any other section of this title, so that
enforcement of contractual provisions of such contracts and
agreements in accordance with their terms will not be stayed
or otherwise limited by operation of any provision of this
title or by order of a court in any case under this title,
and to limit avoidance powers to the same extent as in a
proceeding under chapter 7 or 11 of this title (such
enforcement not to be limited based on the presence or
absence of assets of the debtor in the United States).''.
(m) Commodity Broker Liquidations.--Title 11, United States
Code, is amended by inserting after section 766 the
following:
[[Page H2699]]
``Sec. 767. Commodity broker liquidation and forward contract
merchants, commodity brokers, stockbrokers, financial
institutions, securities clearing agencies, swap
participants, repo participants, and master netting
agreement participants
``Notwithstanding any other provision of this title, the
exercise of rights by a forward contract merchant, commodity
broker, stockbroker, financial institution, securities
clearing agency, swap participant, repo participant, or
master netting agreement participant under this title shall
not affect the priority of any unsecured claim it may have
after the exercise of such rights.''.
(n) Stockbroker Liquidations.--Title 11, United States
Code, is amended by inserting after section 752 the
following:
``Sec. 753. Stockbroker liquidation and forward contract
merchants, commodity brokers, stockbrokers, financial
institutions, securities clearing agencies, swap
participants, repo participants, and master netting
agreement participants
``Notwithstanding any other provision of this title, the
exercise of rights by a forward contract merchant, commodity
broker, stockbroker, financial institution, securities
clearing agency, swap participant, repo participant,
financial participant, or master netting agreement
participant under this title shall not affect the priority of
any unsecured claim it may have after the exercise of such
rights.''.
(o) Setoff.--Section 553 of title 11, United States Code,
is amended--
(1) in subsection (a)(3)(C), by inserting ``(except for a
setoff of a kind described in section 362(b)(6), 362(b)(7),
362(b)(17), 362(b)(19), 555, 556, 559, 560 or 561 of this
title)'' before the period; and
(2) in subsection (b)(1), by striking ``362(b)(14),'' and
inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560,
561''.
(p) Securities Contracts, Commodity Contracts, and Forward
Contracts.--Title 11, United States Code, is amended--
(1) in section 362(b)(6), by striking ``financial
institutions,'' each place such term appears and inserting
``financial institution, financial participant'';
(2) in section 546(e), by inserting ``financial
participant,'' after ``financial institution,'';
(3) in section 548(d)(2)(B), by inserting ``financial
participant,'' after ``financial institution,'';
(4) in section 555--
(A) by inserting ``financial participant,'' after
``financial institution,''; and
(B) by inserting before the period at the end ``, a right
set forth in a bylaw of a clearing organization or contract
market or in a resolution of the governing board thereof, and
a right, whether or not in writing, arising under common law,
under law merchant, or by reason of normal business
practice''; and
(5) in section 556, by inserting ``, financial
participant'' after ``commodity broker''.
(q) Conforming Amendments.--Title 11 of the United States
Code is amended--
(1) in the table of sections of chapter 5--
(A) by amending the items relating to sections 555 and 556
to read as follows:
``555. Contractual right to liquidate, terminate, or accelerate a
securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a
commodities contract or forward contract.''; and
(B) by amending the items relating to sections 559 and 560
to read as follows:
``559. Contractual right to liquidate, terminate, or accelerate a
repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap
agreement.''; and
(2) in the table of sections of chapter 7--
(A) by inserting after the item relating to section 766 the
following:
``767. Commodity broker liquidation and forward contract merchants,
commodity brokers, stockbrokers, financial institutions,
securities clearing agencies, swap participants, repo
participants, and master netting agreement
participants.''; and
(B) by inserting after the item relating to section 752 the
following:
``753. Stockbroker liquidation and forward contract merchants,
commodity brokers, stockbrokers, financial institutions,
securities clearing agencies, swap participants, repo
participants, and master netting agreement
participants.''.
SEC. 1008. RECORDKEEPING REQUIREMENTS.
Section 11(e)(8) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)) is amended by adding at the end the
following new subparagraph:
``(H) Recordkeeping requirements.--The Corporation, in
consultation with the appropriate Federal banking agencies,
may prescribe regulations requiring more detailed
recordkeeping with respect to qualified financial contracts
(including market valuations) by insured depository
institutions.''.
SEC. 1009. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION ---
REQUIREMENT.
Section 13(e)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1823(e)(2)) is amended to read as follows:
``(2) Exemptions from contemporaneous execution
requirement.--An agreement to provide for the lawful
collateralization of--
``(A) deposits of, or other credit extension by, a Federal,
State, or local governmental entity, or of any depositor
referred to in section 11(a)(2), including an agreement to
provide collateral in lieu of a surety bond;
``(B) bankruptcy estate funds pursuant to section 345(b)(2)
of title 11, United States Code;
``(C) extensions of credit, including any overdraft, from a
Federal reserve bank or Federal home loan bank; or
``(D) 1 or more qualified financial contracts, as defined
in section 11(e)(8)(D),
shall not be deemed invalid pursuant to paragraph (1)(B)
solely because such agreement was not executed
contemporaneously with the acquisition of the collateral or
because of pledges, delivery, or substitution of the
collateral made in accordance with such agreement.''.
SEC. 1010. DAMAGE MEASURE.
(a) Title 11, United States Code, as amended by section
1007, is amended--
(1) by inserting after section 561 the following:
``Sec. 562. Damage measure in connection with swap
agreements, securities contracts, forward contracts,
commodity contracts, repurchase agreements, or master
netting agreements
``If the trustee rejects a swap agreement, securities
contract as defined in section 741 of this title, forward
contract, commodity contract (as defined in section 761 of
this title) repurchase agreement, or master netting agreement
pursuant to section 365(a) of this title, or if a forward
contract merchant, stockbroker, financial institution,
securities clearing agency, repo participant, financial
participant, master netting agreement participant, or swap
participant liquidates, terminates, or accelerates such
contract or agreement, damages shall be measured as of the
earlier of--
``(1) the date of such rejection; or
``(2) the date of such liquidation, termination, or
acceleration.''; and
(2) in the table of sections of chapter 5 by inserting
after the item relating to section 561 the following:
``562. Damage measure in connection with swap agreements, securities
contracts, forward contracts, commodity contracts,
repurchase agreements, or master netting agreements.''.
(b) Claims Arising From Rejection.--Section 502(g) of title
11, United States Code, is amended--
(1) by designating the existing text as paragraph (1); and
(2) by adding at the end the following:
``(2) A claim for damages calculated in accordance with
section 561 of this title shall be allowed under subsection
(a), (b), or (c), or disallowed under subsection (d) or (e),
as if such claim had arisen before the date of the filing of
the petition.''.
SEC. 1011. SIPC STAY.
Section 5(b)(2) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding after
subparagraph (B) the following new subparagraph:
``(C) Exception from stay.--
``(i) Notwithstanding section 362 of title 11, United
States Code, neither the filing of an application under
subsection (a)(3) nor any order or decree obtained by
Securities Investor Protection Corporation from the court
shall operate as a stay of any contractual rights of a
creditor to liquidate, terminate, or accelerate a securities
contract, commodity contract, forward contract, repurchase
agreement, swap agreement, or master netting agreement, each
as defined in title 11, to offset or net termination values,
payment amounts, or other transfer obligations arising under
or in connection with 1 or more of such contracts or
agreements, or to foreclose on any cash collateral pledged by
the debtor whether or not with respect to 1 or more of such
contracts or agreements.
``(ii) Notwithstanding clause (i), such application, order,
or decree may operate as a stay of the foreclosure on
securities collateral pledged by the debtor, whether or not
with respect to 1 or more of such contracts or agreements,
securities sold by the debtor under a repurchase agreement or
securities lent under a securities lending agreement.
``(iii) As used in this section, the term `contractual
right' includes a right set forth in a rule or bylaw of a
national securities exchange, a national securities
association, or a securities clearing agency, a right set
forth in a bylaw of a clearing organization or contract
market or in a resolution of the governing board thereof, and
a right, whether or not in writing, arising under common law,
under law merchant, or by reason of normal business
practice.''.
SEC. 1012. ASSET-BACKED SECURITIZATIONS.
Section 541 of title 11, United States Code, as amended by
section 150, is amended--
(1) by redesignating paragraph (5) of subsection (b) as
paragraph (6);
(2) by inserting after paragraph (4) of subsection (b) the
following new paragraph:
``(5) any eligible asset (or proceeds thereof), to the
extent that such eligible asset was transferred by the
debtor, before the date of commencement of the case, to an
eligible entity in connection with an asset-backed
securitization, except to the extent such asset (or proceeds
or value thereof) may be recovered by the trustee under
section 550 by virtue of avoidance under section 548(a);'';
and
(3) by adding at the end the following new subsection:
``(e) For purposes of this section, the following
definitions shall apply:
``(1) the term `asset-backed securitization' means a
transaction in which eligible assets transferred to an
eligible entity are used as the source of payment on
securities, the most senior of which are rated investment
grade by 1 or more nationally recognized securities rating
organizations, issued by an issuer;
``(2) the term `eligible asset' means--
``(A) financial assets (including interests therein and
proceeds thereof), either fixed or revolving, including
residential and commercial
[[Page H2700]]
mortgage loans, consumer receivables, trade receivables, and
lease receivables, that, by their terms, convert into cash
within a finite time period, plus any residual interest in
property subject to receivables included in such financial
assets plus any rights or other assets designed to assure the
servicing or timely distribution of proceeds to security
holders;
``(B) cash; and
``(C) securities.
``(3) the term `eligible entity' means--
``(A) an issuer; or
``(B) a trust, corporation, partnership, or other entity
engaged exclusively in the business of acquiring and
transferring eligible assets directly or indirectly to an
issuer and taking actions ancillary thereto;
``(4) the term `issuer' means a trust, corporation,
partnership, or other entity engaged exclusively in the
business of acquiring and holding eligible assets, issuing
securities backed by eligible assets, and taking actions
ancillary thereto; and
``(5) the term `transferred' means the debtor, pursuant to
a written agreement, represented and warranted that eligible
assets were sold, contributed, or otherwise conveyed with the
intention of removing them from the estate of the debtor
pursuant to subsection (b)(5), irrespective, without
limitation of--
``(A) whether the debtor directly or indirectly obtained or
held an interest in the issuer or in any securities issued by
the issuer;
``(B) whether the debtor had an obligation to repurchase or
to service or supervise the servicing of all or any portion
of such eligible assets; or
``(C) the characterization of such sale, contribution, or
other conveyance for tax, accounting, regulatory reporting,
or other purposes.''.
SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIREMENTS.
The 3d sentence of the 3d undesignated paragraph of section
16 of the Federal Reserve Act (12 U.S.C. 412) is amended by
striking ``acceptances acquired under the provisions of
section 13 of this Act'' and inserting ``acceptances
acquired under section 10A, 10B, 13, or 13A of this Act''.
SEC. 1014. EFFECTIVE DATE; APPLICATION OF ---AMENDMENTS.
(a) Effective Date.--This title shall take effect on the
date of the enactment of this Act.
(b) Application of Amendments.--The amendments made by this
title shall apply with respect to cases commenced or
appointments made under any Federal or State law after the
date of enactment of this Act, but shall not apply with
respect to cases commenced or appointments made under any
Federal or State law before the date of enactment of this
Act.
TITLE XI--TECHNICAL CORRECTIONS
SEC. 1101. DEFINITIONS.
Section 101 of title 11, United States Code, as amended by
sections 102, 105, 132, 138, 301, 302, 402, 902, and 1007, is
amended--
(1) by striking ``In this title--'' and inserting ``In this
title:'';
(2) in each paragraph, by inserting ``The term'' after the
paragraph designation;
(3) in paragraph (35)(B), by striking ``paragraphs (21B)
and (33)(A)'' and inserting ``paragraphs (23) and (35)'';
(4) in each of paragraphs (35A) and (38), by striking ``;
and'' at the end and inserting a period;
(5) in paragraph (51B)--
(A) by inserting ``who is not a family farmer'' after
``debtor'' the first place it appears; and
(B) by striking ``thereto having aggregate'' and all that
follows through the end of the paragraph;
(6) by amending paragraph (54) to read as follows:
``(54) The term `transfer' means--
``(A) the creation of a lien;
``(B) the retention of title as a security interest;
``(C) the foreclosure of a debtor's equity of redemption;
or
``(D) each mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or
parting with--
``(i) property; or
``(ii) an interest in property;'';
(7) in each of paragraphs (1) through (35), in each of
paragraphs (36) and (37), and in each of paragraphs (40)
through (55) (including paragraph (54), as amended by
paragraph (6) of this section), by striking the semicolon at
the end and inserting a period; and
(8) by redesignating paragraphs (4) through (55), including
paragraph (54), as amended by paragraph (6) of this section,
in entirely numerical sequence.
SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.
Section 104 of title 11, United States Code, is amended by
inserting ``522(f)(3), 707(b)(5),'' after ``522(d),'' each
place it appears.
SEC. 1103. EXTENSION OF TIME.
Section 108(c)(2) of title 11, United States Code, is
amended by striking ``922'' and all that follows through
``or'', and inserting ``922, 1201, or''.
SEC. 1104. TECHNICAL AMENDMENTS.
Title 11 of the United States Code is amended--
(1) in section 109(b)(2) by striking ``subsection (c) or
(d) of''; and
(2) in section 552(b)(1) by striking ``product'' each place
it appears and inserting ``products''.
SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR
FRAUDULENTLY PREPARE BANKRUPTCY PETITIONS.
Section 110(j)(3) of title 11, United States Code, is
amended by striking ``attorney's'' and inserting ``attorneys'
''.
SEC. 1106. LIMITATION ON COMPENSATION OF PROFESSIONAL
PERSONS.
Section 328(a) of title 11, United States Code, is amended
by inserting ``on a fixed or percentage fee basis,'' after
``hourly basis,''.
SEC. 1107. SPECIAL TAX PROVISIONS.
Section 346(g)(1)(C) of title 11, United States Code, is
amended by striking ``, except'' and all that follows through
``1986''.
SEC. 1108. EFFECT OF CONVERSION.
Section 348(f)(2) of title 11, United States Code, is
amended by inserting ``of the estate'' after ``property'' the
first place it appears.
SEC. 1109. ALLOWANCE OF ADMINISTRATIVE EXPENSES.
Section 503(b)(4) of title 11, United States Code, is
amended by inserting ``subparagraph (A), (B), (C), (D), or
(E) of'' before ``paragraph (3)''.
SEC. 1110. PRIORITIES.
Section 507(a) of title 11, United States Code, as amended
by section 323, is amended in paragraph (4), as so
redesignated by section 142, by striking the semicolon at the
end and inserting a period.
SEC. 1111. EXEMPTIONS.
Section 522(g)(2) of title 11, United States Code, is
amended by striking ``subsection (f)(2)'' and inserting
``subsection (f)(1)(B)''.
SEC. 1112. EXCEPTIONS TO DISCHARGE.
Section 523 of title 11, United States Code, as amended by
section 146, is amended--
(1) in subsection (a)(3), by striking ``or (6)'' each place
it appears and inserting ``(6), or (15)'';
(2) as amended by section 304(e) of Public Law 103-394 (108
Stat. 4133), in paragraph (15), by transferring such
paragraph so as to insert it after paragraph (14A) of
subsection (a);
(3) in subsection (a)(9), by inserting ``, watercraft, or
aircraft'' after ``motor vehicle'';
(4) in subsection (a)(15), as so redesignated by paragraph
(2) of this subsection, by inserting ``to a spouse, former
spouse, or child of the debtor and'' after ``(15)''; and
(5) in subsection (e), by striking ``a insured'' and
inserting ``an insured''.
SEC. 1113. EFFECT OF DISCHARGE.
Section 524(a)(3) of title 11, United States Code, is
amended by striking ``section 523'' and all that follows
through ``or that'' and inserting ``section 523, 1228(a)(1),
or 1328(a)(1) of this title, or that''.
SEC. 1114. PROTECTION AGAINST DISCRIMINATORY TREATMENT.
Section 525(c) of title 11, United States Code, is
amended--
(1) in paragraph (1), by inserting ``student'' before
``grant'' the second place it appears; and
(2) in paragraph (2), by striking ``the program operated
under part B, D, or E of'' and inserting ``any program
operated under''.
SEC. 1115. PROPERTY OF THE ESTATE.
Section 541(b)(4)(B)(ii) of title 11, United States Code,
is amended by inserting ``365 or'' before ``542''.
SEC. 1116. PREFERENCES.
(a) In General.--Section 547 of title 11, United States
Code, is amended--
(1) in subsection (b), by striking ``subsection (c)'' and
inserting ``subsections (c) and (i)''; and
(2) by adding at the end the following:
``(i) If the trustee avoids under subsection (b) a transfer
made between 90 days and 1 year before the date of the filing
of the petition, by the debtor to an entity that is not an
insider for the benefit of a creditor that is an insider,
such transfer may be avoided under this section only with
respect to the creditor that is an insider.''.
(b) Applicability.--The amendments made by this section
shall apply to any case that is pending or commenced on or
after the date of enactment of this Act.
SEC. 1117. POSTPETITION TRANSACTIONS.
Section 549(c) of title 11, United States Code, is
amended--
(1) by inserting ``an interest in'' after ``transfer of'';
(2) by striking ``such property'' and inserting ``such real
property''; and
(3) by striking ``the interest'' and inserting ``such
interest''.
SEC. 1118. DISPOSITION OF PROPERTY OF THE ESTATE.
Section 726(b) of title 11, United States Code, is amended
by striking ``1009,''.
SEC. 1119. GENERAL PROVISIONS.
Section 901(a) of title 11, United States Code, is amended
by inserting ``1123(d),'' after ``1123(b),''.
SEC. 1120. APPOINTMENT OF ELECTED TRUSTEE.
Section 1104(b) of title 11, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(b)''; and
(2) by adding at the end the following:
``(2)(A) If an eligible, disinterested trustee is elected
at a meeting of creditors under paragraph (1), the United
States trustee shall file a report certifying that election.
Upon the filing of a report under the preceding sentence--
``(i) the trustee elected under paragraph (1) shall be
considered to have been selected and appointed for purposes
of this section; and
``(ii) the service of any trustee appointed under
subsection (d) shall terminate.
``(B) In the case of any dispute arising out of an election
under subparagraph (A), the court shall resolve the
dispute.''.
SEC. 1121. ABANDONMENT OF RAILROAD LINE.
Section 1170(e)(1) of title 11, United States Code, is
amended by striking ``section 11347'' and inserting ``section
11326(a)''.
SEC. 1122. CONTENTS OF PLAN.
Section 1172(c)(1) of title 11, United States Code, is
amended by striking ``section 11347'' and inserting ``section
11326(a)''.
SEC. 1123. DISCHARGE UNDER CHAPTER 12.
Subsections (a) and (c) of section 1228 of title 11, United
States Code, are amended by striking ``1222(b)(10)'' each
place it appears and inserting ``1222(b)(9)''.
[[Page H2701]]
SEC. 1124. BANKRUPTCY CASES AND PROCEEDINGS.
Section 1334(d) of title 28, United States Code, is
amended--
(1) by striking ``made under this subsection'' and
inserting ``made under subsection (c)''; and
(2) by striking ``This subsection'' and inserting
``Subsection (c) and this subsection''.
SEC. 1125. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.
Section 156(a) of title 18, United States Code, is
amended--
(1) in the first undesignated paragraph--
(A) by inserting ``(1) the term'' before `` `bankruptcy'';
and
(B) by striking the period at the end and inserting ``;
and''; and
(2) in the second undesignated paragraph--
(A) by inserting ``(2) the term'' before `` `document'';
and
(B) by striking ``this title'' and inserting ``title 11''.
SEC. 1126. TRANSFERS MADE BY NONPROFIT CHARITABLE
CORPORATIONS.
(a) Sale of Property of Estate.--Section 363(d) of title
11, United States Code, is amended--
(1) by striking ``only'' and all that follows through the
end of the subsection and inserting ``only--
``(1) in accordance with applicable nonbankruptcy law that
governs the transfer of property by a corporation or trust
that is not a moneyed, business, or commercial corporation or
trust; and
``(2) to the extent not inconsistent with any relief
granted under subsection (c), (d), (e), or (f) of section 362
of this title.''.
(b) Confirmation of Plan for Reorganization.--Section
1129(a) of title 11, United States Code, as amended by
section 140, is amended by adding at the end the following:
``(15) All transfers of property of the plan shall be made
in accordance with any applicable provisions of nonbankruptcy
law that govern the transfer of property by a corporation or
trust that is not a moneyed, business, or commercial
corporation or trust.''.
(c) Transfer of Property.--Section 541 of title 11, United
States Code, as amended by section 1102, is amended by adding
at the end the following:
``(f) Notwithstanding any other provision of this title,
property that is held by a debtor that is a corporation
described in section 501(c)(3) of the Internal Revenue Code
of 1986 and exempt from tax under section 501(a) of such Code
may be transferred to an entity that is not such a
corporation, but only under the same conditions as would
apply if the debtor had not filed a case under this title.''.
(d) Applicability.--The amendments made by this section
shall apply to a case pending under title 11, United States
Code, on the date of enactment of this Act, except that the
court shall not confirm a plan under chapter 11 of this title
without considering whether this section would substantially
affect the rights of a party in interest who first acquired
rights with respect to the debtor after the date of the
petition. The parties who may appear and be heard in a
proceeding under this section include the attorney general of
the State in which the debtor is incorporated, was formed, or
does business.
(e) Rule of Construction.--Nothing in this section shall be
deemed to require the court in which a case under chapter 11
is pending to remand or refer any proceeding, issue, or
controversy to any other court or to require the approval of
any other court for the transfer of property.
SEC. 1127. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO
INCUR FINANCE CHARGES.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by adding at the end the following:
``(i) Prohibition on Certain Actions for Failure To Incur
Finance Charges.--A creditor of an account under an open end
consumer credit plan may not terminate an account prior to
its expiration date solely because the consumer has not
incurred finance charges on the account. Nothing in this
subsection shall prohibit a creditor from terminating an
account for inactivity in 3 or more consecutive months.''.
SEC. 1128. PROTECTION OF VALID PURCHASE MONEY SECURITY
INTERESTS.
Section 547(c)(3)(B) of title 11, United States Code, is
amended by striking ``20'' and inserting ``30''.
SEC. 1129. TRUSTEES.
(a) Suspension and Termination of Panel Trustees and
Standing Trustees.--Section 586(d) of title 28, United States
Code, is amended--
(1) by inserting ``(1)'' after ``(d)''; and
(2) by adding at the end the following:
``(2) A trustee whose appointment under subsection (a)(1)
or under subsection (b) is terminated or who ceases to be
assigned to cases filed under title 11 of the United States
Code may obtain judicial review of the final agency decision
by commencing an action in the United States district court
for the district for which the panel to which the trustee is
appointed under subsection (a)(1), or in the United States
district court for the district in which the trustee is
appointed under subsection (b) resides, after first
exhausting all available administrative remedies, which if
the trustee so elects, shall also include an administrative
hearing on the record. Unless the trustee elects to have an
administrative hearing on the record, the trustee shall be
deemed to have exhausted all administrative remedies for
purposes of this paragraph if the agency fails to make a
final agency decision within 90 days after the trustee
requests administrative remedies. The Attorney General shall
prescribe procedures to implement this paragraph. The
decision of the agency shall be affirmed by the district
court unless it is unreasonable and without cause based on
the administrative record before the agency.''.
(b) Expenses of Standing Trustees.--Section 586(e) of title
28, United States Code, is amended by adding at the end the
following:
``(3) After first exhausting all available administrative
remedies, an individual appointed under subsection (b) may
obtain judicial review of final agency action to deny a claim
of actual, necessary expenses under this subsection by
commencing an action in the United States district court in
the district where the individual resides. The decision of
the agency shall be affirmed by the district court unless it
is unreasonable and without cause based upon the
administrative record before the agency.
``(4) The Attorney General shall prescribe procedures to
implement this subsection.''.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided otherwise in this
Act, this Act and the amendments made by this Act shall take
effect 180 days after the date of the enactment of this Act.
(b) Application of Amendments.--Except as otherwise
provided in this Act, the amendments made by this Act shall
not apply with respect to cases commenced under title 11 of
the United States Code before the effective date of this Act.
The CHAIRMAN pro tempore. No amendment shall be in order except those
printed in House Report 106-126. Each amendment may be. 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.
It is now in order to consider Amendment No. 1 printed in House
Report 106-126.
Amendment No. 1 Offered by Mr. Gekas
Mr. GEKAS. Mr. Chairman, I offer amendment No. 1.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 1 offered by Mr. Gekas:
In the table of contents of the bill--
(1) in the item relating to section 107, strike
``congress'' and insert ``Congress'', and
(2) in the item relating to section 134, strike ``Giving
debtors the ability to keep'' and insert ``Allowing a debtor
to retain''.
Page 9, line 1, strike ``applicable'' and insert
``actual''.
Page 9, beginning on line 1, strike ``specifically listed''
and insert ``specified''.
Page 10, line 3, strike ``proceeding brought'' and insert
``motion filed''.
Beginning on page 10, strike line 22 and all that follows
through line 5 on page 11.
Page 11, line 6, strike ``(D)'' and insert ``(C)''.
Page 12, beginning on line 11, strike ``in prosecuting the
motion''.
Page 16, line 13, insert ``or not'' after ``whether''.
Page 17, after line 16, insert the following (and make such
technical and conforming changes as may be appropriate):
(d) Debtor's Duties.--Section 521(a)(1)(B) of title 11,
United States Code, as amended by section 603, is amended--
(1) in clause (v) by striking ``and'' at the end;
(2) in clause (vi) by adding ``and'' at the end;
(3) by inserting the following after clause (vi):
``(vii) a statement of the debtor's current monthly income,
and the calculations which determine whether a presumption
arises under section 707(b)(2)(A)(i), showing how each amount
is calculated.''.
(e) Bankruptcy Forms.--Section 2075 of title 28, United
States Code, is amended by adding the following at the end of
the 1st paragraph:
``The bankruptcy rules promulgated under this section shall
prescribe a form for the statement referred to in section
521(a)(1)(B)(vii) of title 11, United States Code, and may
provide general rules on the content of such statement.''.
(f) Chapter 13.--Section 1325(a) of title 11, United States
Code, is amended--
(1) in paragraph (5) by striking ``and'' at the end;
(2) in paragraph (6) by striking the period and inserting
``; and'';
(3) by inserting the following after paragraph (6):
``(7) the action of the debtor in filing the petition under
this chapter was in good faith.''.
Page 19, line 15, strike ``this title'' and insert ``title
11, United States Code''.
[[Page H2702]]
Page 22, lines 17 and 20, insert ``case or'' after ``a''.
Page 23, lines 9 and 12, strike ``proceeding'' and insert
``case''.
Page 77, strike line 1, and insert the following:
SEC. 134. ALLOWING THE DEBTOR TO RETAIN LEASED
Beginning on page 114, strike line 1 and all that follows
through line 5 on page 115 (and make such technical and
conforming changes as may be appropriate).
Page 91, line 15, insert ``(a) Amend-
ment.--'' before ``Section''.
Page 92, beginning on line 13, strike ``expressly'' and all
that follows through ``this paragraph'', and insert
``provides by statute''.
Page 92, after line 15, insert the following:
(b) Application of Amendment to Individual States.--(1)
Section 522(p) of title 11, United States Code, as added by
subsection (a), shall not apply with respect to a State
before the end of the first regular session of the State
legislature following the date of the enactment of this Act.
(2) For purposes of paragraph (1), the term ``State'' has
the meaning given such term in section 101 of title 11,
United States Code.
Page 115, beginning on line 20, strike ``(excluding'' and
all that follows through ``secret)''.
Page 116, line 7, insert ``(excluding executory contracts
that transfer a right or interest under a filed or issued
patent, copyright, trademark, trade dress, or trade secret)''
after ``contract''.
Page 117, line 15, strike ``365(b)(1)(A)'' and insert
``365(b)(2)''.
Page 174, line 2, insert ``(a) Appeals.--'' before
``Title''.
Page 175, line 9, strike ``(b)'' and insert ``(5)''.
Page 175, indent lines 9 through 11 2 ems to the right.
Page 175, line 12, strike ``(c)(1)'' and insert ``(b)(1)''.
Page 175, line 17, strike ``(1)-(4)'' and insert ``(1)
through (5)''.
Page 175, line 24, strike ``subsection (b)'' and insert
``paragraph (1)''
Page 176, after line 6, insert the following:
(b) Procedural Rules.--Until rules of practice and
procedure are promulgated or amended pursuant to the Rules
Enabling Act (28 U.S.C. sections 2071-77) to govern appeals
to a bankruptcy appellate panel or to a court of appeals
exercising jurisdiction pursuant to section 1293 of title 28,
as added by this Act, the following shall apply:
(1) A notice of appeal with respect to an appeal from an
order or judgment of a bankruptcy court to a court of appeals
or a bankruptcy appellate panel must be filed within the time
provided in Rule 8002 of the Federal Rules of Bankruptcy
Procedure.
(2) An appeal to a bankruptcy appellate panel shall be
taken in the manner provided in Part VIII of the Federal
Rules of Bankruptcy Procedure and local court rules.
(3) An appeal from an order or judgment of a bankruptcy
court directly to a court of appeals shall be governed by the
rules of practice and procedure that apply to a civil appeal
from a judgment of a district court exercising original
jurisdiction, as if the bankruptcy court were a district
court, except as provided in paragraph (1) regarding the time
to appeal or by local court rules.
(4) An appeal to a court of appeals from a decision,
judgment, order, or decree entered by a bankruptcy appellate
panel exercising appellate jurisdiction shall be taken in the
manner provided by Rule 6(b) of the Federal Rules of
Appellate Procedure.
(c) Repealer.--(1) Section 158 of title 28, United States
Code, is repealed.
(2) The table of sections of chapter 6 of title 28, United
States Code, is amended by striking the item relating to
section 158.
Page 208, line 9, insert ``, other than a foreign insurance
company,'' after ``entity''.
Page 208, after line 20, insert the following:
``(d) The court may not grant relief under this chapter
with respect to any deposit, escrow, trust fund, or other
security required or permitted under any applicable State
insurance law or regulation for the benefit of claim holders
in the United States.
Page 231, strike line 13, and insert the following:
``SEC. 902. OTHER AMENDMENTS TO TITLES 11 AND 28 OF THE
UNITED STATES CODE.
Page 233, after line 11, insert the following (and make
such technical and conforming changes as may be appropriate):
(d) Other Sections of Title 11.--(1) Section 109(b)(3) of
title 11, United States Code, is amended to read as follows:
``(3)(A) a foreign insurance company, engaged in such
business in the United States; or
``(B) a foreign bank, savings bank, cooperative bank,
savings and loan association, building and loan association,
or credit union, which has a branch or agency (as defined in
section 3101 of title 12, United States Code) in the United
States.''.
(2) Section 303(k) of title 11, United States Code, is
repealed.
(3)(A) Section 304 of title 11, United States Code, is
repealed.
(B) The table of sections of chapter 3 of title 11, United
States Code, is amended by striking the item relating to
section 304.
(C) Section 306 of title 11, United States Code, is amended
by striking ``, 304,'' each place it appears.
Page 279, beginning on line 1, strike ``that is described
in section 561(a)(2)'' and insert ``described in paragraph
(1), (2), (3), (4), or (5) of section 561(a)''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 158, 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.
{time} 1345
In this amendment, which is the manager's amendment, of course, the
bulk of it is with technical corrections that have to be made, that
almost always appear in a bill that is so mammoth as is ours. But
besides that, there are some other revisions in it of which the
minority is well aware.
For instance, in the homestead exemption portion, we allow the States
who want to opt out to do so, even in advance of the adoption of the
bill, because of the legislative schedules in some of those States.
So the technical corrections bill corrects some of the technical
misgivings that we have had about the original text.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I rise in support of the amendment. This is a technical
amendment, the manager's amendment. It contains 11 changes. We have
examined them carefully and have absolutely no objection to them.
Mr. BENTSEN. Mr. Chairman, I rise today in strong support of the
manager's amendment to H.R. 833, bankruptcy reform legislation.
I believe that adoption of this amendment is necessary to preserve
state homestead laws. I am pleased that the manager's amendment
includes two critically important amendments that I offered yesterday
in the House Rules Committee. The adoption of the manager's amendment
would ensure that states can decide how much property should be
exempted when a consumer files for bankruptcy. This will grant the
states latitude to opt out of this intrusive law protecting their
prerogative in determining what homestead exemptions are allowed.
State's citizens will not be forced to live under this new federal
mandate until such time as a state legislature reconvened.
The first Bentsen amendment would change the effective date of the
new federal homestead cap of $250,000 until the last day of the next
legislative session of any state. The second Bentsen amendment would
preserve the right of states to opt out of the cap and allow states to
prospectively opt out of the new homestead cap prior to this bill being
enacted into law. This would allow the legislatures ample time to pass
legislation opting out of this new federal standard.
The bill as reported by the House Judiciary Committee, includes many
provisions related to the homestead exemption. First, it would place a
monetary cap of $250,000 on the amount of homestead equity individuals
can protect from bankruptcy foreclosure proceedings. If a consumer
holds more than $250,000 in equity, the consumer would be required to
foreclose on the property to repay their non-mortgage debts. Second, it
includes a two-year residency requirement before one can qualify.
Third, this legislation includes a provision that would prohibit them
from transferring assets in their home during this two-year period.
This provision could penalize any homeowner or farmer who tried to pay
more than what's required on their mortgage payments. Finally, this
legislation also would permit states to ``opt out'' of this new federal
standard.
My amendment would address the ``opt out'' provision by ensuring that
states are not required to choose between convening a special
legislative session or forcing their citizens to live under this
intrusive federal mandate.
There is no substantive reason to address state homestead laws in
this or any other legislation. No evidence of abusive practices has
been provided during the debate. When the 105th Congress considered
this legislation we successfully prevailed against such a cap. And,
while I support much of the underlying bill, I will be unable to
support any conference report which includes any restriction on the
states' ability to determine exempt property with respect to one's
homestead including eliminating and limiting the states' ability to opt
out of the new federal standard.
While this legislation is not perfect, I believe that the manager's
amendment makes important improvements to this legislation. With these
additions, I believe we should support the manager's amendment and
would urge colleagues to also support this amendment.
The CHAIRMAN pro tempore (Mr. LaHood). The question is on the
amendment offered by the gentleman from Pennsylvania (Mr. Gekas).
The amendment was agreed to.
The CHAIRMAN pro tempore. It is now in order to consider amendment
number 2 printed in House Report 106-126.
[[Page H2703]]
Amendment No. 2 Offered by Mr. Moran of Virginia
Mr. MORAN of Virginia. Mr. Chairman, I offer an amendment made in
order by the rule.
The CHAIRMAN pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 2 offered by Mr. Moran of Virginia:
Page 34, strike lines 7 through 25 and insert the
following:
``(C) the following examples:
``(i) if the average account balance under a creditor's
open-end consumer credit plan, taken as an average of the
account balances for all consumer accounts under that open-
end consumer credit plan, is $1,000 or less, two examples,
based on an annual percentage rate and method for determining
minimum periodic payments recently in effect for that
creditor, and based on outstanding balances of $250 and $500,
showing the estimated minimum periodic payments, and the
estimated period of time it would take to repay those
outstanding balances of $250 and $500, if the consumer paid
only the minimum periodic payment on each monthly or periodic
statement and obtained no additional extensions of credit; or
``(ii) if the average account balance under a creditor's
open-end consumer credit plan, taken as an average of the
account balances for all consumer accounts under that open-
end consumer credit plan, is more than $1,000, three
examples, based on an annual percentage rate and method for
determining minimum periodic payments recently in effect for
that creditor, and outstanding balances of $1,000, $1,500 and
$2,000, showing the estimated minimum periodic payments, and
the estimated period of time it would take to repay those
outstanding balances of $1,000, $1,500 and $2,000 if the
consumer paid only the minimum periodic payment on each
monthly or periodic statement and obtained no additional
extensions of credit.
``(10) With respect to one billing cycle per calendar year,
the creditor shall transmit to each consumer to whom the
creditor is required to transmit a statement pursuant to
subsection (b) for such billing cycle the following
information:
``(A) the following statement: `The minimum payment amount
shown on your billing statement is the smallest payment which
you can make in order to keep the account in good standing.
This payment option is offered as a convenience and you may
make larger payments at any time. Making only the minimum
payment each month will increase the amount of interest you
pay and the length of time it takes to repay your outstanding
balance.';
``(B) if the plan provides that the consumer will be
permitted to forgo making a minimum payment during a
specified billing cycle, a statement, if applicable, that if
the consumer chooses to forgo making the minimum payment,
finance charges will continue to accrue;
``(C) an example, based on an annual percentage rate and
method for determining minimum periodic payments recently in
effect for that creditor, and a $500 outstanding balance,
showing the estimated minimum periodic payment, and the
estimated period of time it would take to repay the $500
outstanding balance if the consumer paid only the minimum
periodic payment on each monthly or periodic statement and
obtained no additional extensions of credit; and
``(D) a worksheet prescribed by the Board to assist the
consumer in determining the consumer's household income and
debt obligations.''.
Page 35, line 12, strike the close quotation marks and the
period at the end.
Page 35, after line 12 insert the following:
``(12) the required minimum payment amount represented as a
dollar figure.
``(13) the date by which or the period within which the
required minimum payment must be made.''.
(c) Disclosures Related to Introductory Rates.--Section
127(c)(1)(A)(i) of the Truth in Lending Act (15 U.S.C.
1637(c)(1)(A)(i)) is amended by inserting the following at
the end of subclause (III):
``(IV) Where the initial rate is temporary and will expire
within a period of less than 1 year, and is lower than the
rate that will apply after the temporary rate expires--
``(A) the time period during which the initial rate will
remain in effect; and
``(B) the annual percentage rate that will apply to the
account after the temporary rate expires, or if that rate is
a variable rate, the fact that the rate is variable, the rate
at the time of mailing, and how the rate is determined.
``(V)(A) Subject to subclauses (C) and (D), where the
initial rate may increase upon the occurrence of one or more
specific events, the following information:
``(i) the initial rate and the increased rate that may
apply;
``(ii) if the increased rate is a variable rate, the fact
that the increased rate is variable, the rate at the time of
mailing, and how the rate is determined; and
``(iii) the specific event or events that may result in
imposing the increased rate.
``(B) At the creditor's option, the creditor may disclose
the period for which the increased rate will remain in
effect.
``(C) If the increased rate cannot be determined at the
time disclosures are given, an explanation of the specific
event or events that may result in an increased rate must be
disclosed.
``(D) A creditor is not required to disclose an increased
rate that is imposed when credit privileges are permanently
terminated.''.
(d) Internet-Based Credit Card Solicitations.--(1)--Section
127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is
amended by inserting after paragraph (5) the following:
``(6)(A) Any application to open a credit card account for
any person under an open-end consumer credit plan, and any
solicitation to open such an account without requiring an
application, that is made available through the Internet or
an interactive computer service, shall disclose the
following:
``(i) the information.--
``(I) described in paragraph (1)(A) in the form required
under section 122(c) of this chapter, subject to subsection
(e), and
``(II) described in paragraph (1)(B) in a clear and
conspicuous form, subject to subsections (e) and (f);
``(ii) a statement, in a conspicuous and prominent location
on or with the application or solicitation, that--
``(I) the information is accurate as of the date the
application or solicitation was posted;
``(II) the information contained in the application or
solicitation is subject to change after such date;
``(III) the applicant should contact the creditor for
information on any change in the information presented on or
with the application or solicitation since it was posted;
``(iii) a clear and conspicuous disclosure of the date the
application or solicitation was posted and how frequently the
information described in subclause (i) is updated; and
``(iv) a disclosure, in a conspicuous and prominent
location on or with the application or solicitation, of a
toll-free telephone number or e-mail address at which the
applicant may contact the creditor to obtain any change in
the information provided on or with the application or
solicitation since it was posted.
``(B) The disclosures required under subparagraph (A) may
be contained either:
``(i) on the webpage which contains the application or
solicitation; or
``(ii) on a separate webpage which can be directly accessed
using a hypertext link which is contained on the webpage
which contains the application or solicitation.
``(C) Upon receipt of a request for any of the information
referred to in subparagraph (A), the creditor or its agent
shall promptly disclose any change in the information
required to be disclosed under subparagraph (A).
``(D) For purposes of this paragraph (6)--
``(i) the term `Internet' means the international computer
network of both Federal and non-Federal interoperable packets
switched data networks; and
``(ii) the term `interactive computer service' means any
information service system, or access software provider that
provides or enables computer access by multiple users to a
computer server, including specifically a service or system
that provides access to the Internet and such systems
operated or services offered by libraries or educational
institutions.''.
(2) Section 122(c)(1) of the Truth in Lending Act (15
U.S.C. 1632(c)(1)) is amended by striking ``and
(4)(C)(i)(I)'' and inserting ``, (4)(C)(i)(I) and
(6)(A)(i)(I)''.
The CHAIRMAN pro tempore. Pursuant to House Resolution 158, the
gentleman from Virginia (Mr. Moran) and a Member opposed each will
control 10 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, this bill, as reported by the Committee on the
Judiciary, already does require credit card issuers to tell consumers
on every monthly billing statement that making only the minimum payment
each month will increase the amount of interest paid and the length of
time it takes to repay the balance on the account.
Our amendment, which is cosponsored by the gentleman from California
(Mr. Dooley) and the gentleman from New York (Mr. Ackerman), adds four
components to the existing consumer protection provisions of H.R. 833.
These components have been crafted to respond to specific concerns that
have been expressed about whether consumers have adequate information
about certain features of their credit card accounts.
First of all, in terms of minimum payments, it enhances the minimum
payment disclosure requirements already contained in this bill. Under
our amendment credit card issuers would be required to disclose, when
the consumer first opens an account, several examples of how long it
would take to repay a balance if the consumer makes only minimum
payments. The number and type of examples would be tailored to the size
of the card issuer's typical account balance.
Secondly, disclosure of late payment penalties and deadlines: Our
amendment responds to concerns that have
[[Page H2704]]
been raised about whether consumers have the information they need in
order to avoid the imposition of late fees and penalties. Credit card
issuers would have to disclose on each monthly statement the amount of
the minimum payment expressed as a dollar amount and the date by which
it must be paid. Believe it or not, these requirements are not
currently in the Federal code.
The amendment would require applications or solicitations for a
credit card to include a clear and conspicuous disclosure of any so-
called penalty rate that may apply if the consumer does not pay as
agreed. Such penalty rates are higher than the regular interest rate,
and this amendment would ensure that consumers were adequately informed
in advance about the circumstances under which they would apply.
Thirdly, worldwide web-based credit card solicitations: We modify the
Truth in Lending Act to establish for the first time disclosure
requirements that specifically apply to credit card applications or
solicitations that are posted on the worldwide web. The amendment would
require these solicitations to post the same disclosures, usually
presented in a table, that currently apply to every other credit card
offer made through the traditional mail system.
The amendment would require that the web site include the date the
disclosures were posted and a statement that they were accurate as of
that date. It would also require a statement that the information
disclosed on the web site may change, and a toll free telephone number
or e-mail address would have to be provided so the consumer could
obtain the most current information.
Lastly, related to teaser rates, our amendment would ensure that
consumers receive the information they need in order to make informed
decisions regarding credit card introductory rates, sometimes called
teaser rates. Specifically, the amendment would amend the Truth in
Lending Act to require that an application or solicitation for a credit
card that has an introductory rate must include a clear and conspicuous
disclosure of when the introductory rate will expire, as well as the
rate that will apply after the introductory rate will expire, after the
introductory period.
This is the kind of information that consumers desperately need. The
fact that those disclosures are not required by statute points up a
glaring error, and we think that this significantly improves the bill.
It gives balance to this bill by adding these consumer protections, but
does not inappropriately load up the lending industry with onerous and
expensive new requirements that have nothing to do with the underlying
purpose of the bill, which is to provide long overdue reform to the
bankruptcy bill.
So I think these are appropriate, if I do say so myself, Mr.
Chairman, and we would hope that this body would approve them
unanimously.
Mr. GEKAS. Mr. Chairman, will the gentleman yield?
Mr. MORAN of Virginia. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. Mr. Chairman, I want to commend the gentleman for offering
the amendment, and to indicate to all parties that we on this side
agree to the amendment.
Mr. MORAN of Virginia. Mr. Chairman, I yield back the balance of my
time, and thank the gentleman for his comments.
The CHAIRMAN pro tempore. Is there any Member in opposition to the
amendment?
Mr. CONYERS. Mr. Chairman, I rise in opposition to the amendment.
The CHAIRMAN pro tempore. The gentleman from Michigan (Mr. Conyers)
is recognized for 10 minutes.
Mr. CONYERS. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman
from North Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Chairman, I am not rising in
opposition to the amendment, I am rising to express my disappointment
that the Committee on Rules failed to make an even better amendment in
order.
This amendment certainly improves the bill from its current position,
and I intend to vote for it, but it still is nowhere as good as the
amendment should have been. Because instead of providing borrowers the
kind of information they need to really evaluate how much money they
will make in payments on their credit cards, we continue to provide
hypothetical information to them under this amendment.
It would not have been any more costly or any more burdensome to
lenders to provide actual information about the amount of time it takes
to pay off a loan if one pays the minimum amount. And, unfortunately,
we had an amendment that would have done that, but the Committee on
Rules did not see fit to make it in order.
So I will support this amendment because it is better than what is in
the bill, but it is still not anywhere close to being as good as it
could be and should be for the consumers of America.
Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentleman from
Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Chairman, I thank the gentleman for yielding me this
time, and I just wanted to spend a second to speak on the amendment
that was just adopted, the manager's amendment, to say that I strongly
support it; that it includes two important provisions which would
correct the opt-out language related to the equity cap for State
homestead laws.
Without these opt-outs, I think citizens in my State of Texas and
several other States would be unfairly affected by the homestead
provisions in this bill, which I believe are unfair and unnecessary.
Mr. CONYERS. Mr. Chairman, I yield such time as he may consume to the
gentleman from New York (Mr. Ackerman).
(Mr. ACKERMAN asked and was given permission to revise and extend his
remarks.)
Mr. ACKERMAN. Mr. Chairman, I rise in support of this amendment, of
which I am a cosponsor, and ask for its approval.
Mr. CONYERS. Mr. Chairman, I yield the balance of my time to the
gentleman from New York (Mr. Nadler), the ranking member of the
subcommittee.
Mr. NADLER. Mr. Chairman, this amendment is harmless enough, and may
do a little bit of good. I really do not think it is very important one
way or the other.
It is somewhat deceptive, however. It is somewhat deceptive. I am not
going to urge a vote against it, but I do think we should have a word
of caution here. It will lead to some misleading information because it
demands that the credit card information tell us, the credit card
information, not about our credit card, not about what we are doing,
but about what some typical borrower might do if he were borrowing $500
or $300 or $1,000.
Unfortunately, this amendment was made in order by the Committee on
Rules in order to avoid making in order the amendment of the gentleman
from Massachusetts (Mr. Delahunt) which had real consumer protections
in it. The amendment of the gentleman from Massachusetts, which was
voted down on a party line vote in the committee, requires actual
disclosure of minimum payments and interest based on the actual debt on
our own credit card, rather than have the information just give samples
which may bear no relationship to our own situation.
The amendment of the gentleman from Massachusetts (Mr. Delahunt) has
disclosure on teaser rates and penalties. They have to tell us that,
the disclosure on penalties for having no interest, for paying in full,
disclosures regarding prohibiting soliciting kids, and makes other real
consumer protections and disclosures.
Unfortunately, the Committee on Rules chose to make this basically
irrelevant amendment and somewhat misleading amendment in order, and
did not put in order the real amendment by the gentleman from
Massachusetts (Mr. Delahunt), which parallels the provisions the Senate
put in, sponsored by Senator Durbin in last year's bill, but which the
conference committee took out.
Now, I understand the authors of this bill do not want real consumer
protections in this bill. It is supposed to be a one-sided bill. But it
is too bad we have these illusory protections and somewhat misleading
instead of real protections. Just another ground for voting against the
bill.
[[Page H2705]]
Mr. MORAN of Virginia. Mr. Chairman, I ask unanimous consent to
reclaim the time I yielded back. I did not expect there would be these
comments that I understand, while they are supportive, are not
necessarily wholehearted endorsements.
I do have speakers that would use what time is remaining, if the
Speaker would tell me how much time is remaining, and I would ask
unanimous consent if I could reclaim it and use it for speakers on
behalf of the amendment.
The CHAIRMAN pro tempore. The gentleman from Virginia (Mr. Moran) has
6 minutes remaining.
Is there objection to the request of the gentleman from Virginia?
There was no objection.
Mr. MORAN of Virginia. Mr. Chairman, I yield 2 minutes to the
gentleman from California (Mr. Dooley).
(Mr. DOOLEY of California asked and was given permission to revise
and extend his remarks.)
Mr. DOOLEY of California. Mr. Chairman, I am proud to be a cosponsor
of the amendment offered by the gentleman from Virginia (Mr. Moran).
I would say that we are dedicated to providing for true consumer
protection. This amendment does, I think, take a balanced and
responsible approach to ensuring that consumers and those who are
incurring debt will have the information they need in order to make
informed decisions about their purchases and about the debt that they
incur.
The amendment goes a long ways to ensuring that consumers who are
faced with credit card applications coming to them in their homes are
fully aware of the real rates that they will be facing and ensuring
that the teaser rates will be clearly distinguished.
It also ensures that our consumers that unfortunately use credit
cards in a manner which is not consistent with their ability to repay
will have the information that will be disclosed to them, if they did
make that payment of the monthly minimum payment, how long, in fact, it
would take them to repay the obligation that they have incurred.
I would say this: That all consumers are going to have to accept the
personal responsibility to show their due diligence; to understand when
they get a credit card application that nothing comes for nothing; that
they have to read the print, they have to understand the obligations
that they are incurring when they do make a purchase and they do use
this tool, which ensures that many Americans have more affordable and
accessible credit.
I think this is a great amendment and I think it will go a long ways
towards ensuring consumers have the information to make responsible
purchasing decisions.
Mr. MORAN of Virginia. Mr. Chairman, I yield 2 minutes to the
gentleman from New York (Mr. Ackerman), also a cosponsor of this
amendment.
{time} 1400
Mr. ACKERMAN. Mr. Chairman, we all have been told in so many words
that bankruptcies are on the rise, and indeed they are, and that
because of that everybody suffers because of increased interest rates
and other charges. And we are also told, and rightfully so, that
consumers need to take personal responsibility for their obligations.
That is true, as well.
As we address bankruptcy reform today, we have a unique opportunity
to at least modestly combat part of this rising trend in bankruptcies,
and one of the best ways that we can begin to tackle that is to have
more information for consumers so that they are better informed and can
make smarter decisions about their credit needs.
How do we do this? First, with better and clearer disclosure rules
for solicitations and credit applications. Every one of my colleagues
here are familiar were the deluge of solicitations that we get in the
mail almost on a daily basis advertising a particularly low
introductory rate, and the rate is on the envelope and it does not tell
us how long that rate is for and the consumer cannot make an objective
kind of a decision; and then he borrows at a rate that he thinks he is
going to have for a longer period of time and that ends and the
interest rates goes up and he is paying more than he did under a
previous credit card that he might have had that he switched over from.
This is an opportunity for us to fix part of that problem, and that
is why the gentleman from Virginia (Mr. Moran) and the gentleman from
California (Mr. Dooley) and myself have introduced this amendment. The
amendment requires lenders to provide consumers with the information
they need to make informed decisions.
Specifically, they would have to do several things. They would have
to indicate the minimum payment and day that the payment is due on
every periodic statement that they send. They would have to indicate
what the late penalty deadlines are so that consumers have all the
information they need in order to make that appropriate decision and
meet their responsibilities and in order to avoid the imposition of
late fees. And whenever a solicitation includes an introductory rate,
it must be clear when that rate expires.
I think these and some of the other small steps make it much better
to avoid bankruptcy on the part of many consumers and users of credit.
Mr. MORAN of Virginia. Mr. Chairman, I yield the remaining 2 minutes
to the distinguished gentleman from Indiana (Mr. Roemer), co-chairman
of the new Democrat Coalition.
(Mr. ROEMER asked and was given permission to revise and extend his
remarks.)
Mr. ROEMER. Mr. Chairman, I thank my good friend from Virginia (Mr.
Moran) and my good friend from California (Mr. Dooley), co-chairs of
the new Democrat Coalition, for sponsoring the amendment, along with
the gentleman from New York (Mr. Ackerman).
I am a proud cosponsor of this legislation and a strong supporter of
this amendment offered by my friends. I think there are two key issues
as we debate this bankruptcy reform bill. One is personal
responsibilities.
We have seen a 94-percent increase in the filings of bankruptcy since
1990. We need to address this, and I believe this bill does it in a
coherent and fair fashion.
The second issue that this amendment gets to is not so much credit
card availability but consumer protections. There are two provisions in
this amendment that I encourage my colleagues to take a look at and
support. One is the minimum payment that we have, that we have better
disclosures on how long it would simply take to repay a balance if they
pay the minimum amount each month. That is the minimum payments
requirement.
Secondly, the so-called teaser rates is that companies need to
disclose what that introductory rate is, if it is 9 or 10 percent, and
then what it is going to go up to after it teases them with that first
9 or 10 percent, if it is then going to be 11 or 12 or 18 or 19 percent
later on. We need consumer disclosure and consumer protections.
So this is a good amendment offered by the gentleman from Virginia
(Mr. Moran) and the gentleman from California (Mr. Dooley) and the
gentleman from New York (Mr. Ackerman). I strongly encourage my
colleagues to support it. And, hopefully, that will continue to improve
this bill and we will have a sound bill both on personal responsibility
and the consumer protections aspects.
The CHAIRMAN (Mr. Nethercutt). The question is on the amendment
offered by the gentleman from Virginia (Mr. Moran).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider amendment No. 3 printed
in House Report 106-126.
Amendment No. 3 Offered by Mr. Moran of Virginia
Mr. MORAN of Virginia. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 3 offered by Mr. Moran of Virginia:
Page 101, after line 9, insert the following (and make such
technical and conforming changes as may be appropriate):
SEC. 154. DISCLOSURES.
(a) Disclosures.--Subchapter II of chapter 5 of title 11,
United States Code, as amended by section 106, is amended by
adding at the end the following:
``Sec. 527. Disclosures
``(a) A debt relief agency providing bankruptcy assistance
to an assisted person shall provide the following notices to
the assisted person:
``(1) the written notice required under section 342(b)(1)
of this title; and
[[Page H2706]]
``(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 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 income, the amounts specified in
section 707(b)(2) and, in a chapter 13 case, disposable
income (determined in accordance with section 707(b)(2)) 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 agency providing bankruptcy assistance
to an assisted person shall provide each assisted person at
the same time as the notices required under subsection (a)(1)
with the following statement, to the extent applicable, or
one substantially similar. The statement shall be clear and
conspicuous and shall be in a single document separate from
other documents or notices provided to the assisted person:
`` `IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE
SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER
`` `If you decide to seek bankruptcy relief, you can
represent yourself, you can hire an attorney to represent
you, or you can get help in some localities from a bankruptcy
petition preparer who is not an attorney. THE LAW REQUIRES AN
ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A
WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY
PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST.
Ask to see the contract before you hire anyone.
`` `The following information helps you understand what
must be done in a routine bankruptcy case to help you
evaluate how much service you need. Although bankruptcy can
be complex, many cases are routine.
`` `Before filing a bankruptcy case, either you or your
attorney should analyze your eligibility for different forms
of debt relief made available by the Bankruptcy Code and
which form of relief is most likely to be beneficial for you.
Be sure you understand the relief you can obtain and its
limitations. To file a bankruptcy case, documents called a
Petition, Schedules and Statement of Financial Affairs, as
well as in some cases a Statement of Intention need to be
prepared correctly and filed with the bankruptcy court. You
will have to pay a filing fee to the bankruptcy court. Once
your case starts, you will have to attend the required first
meeting of creditors where you may be questioned by a court
official called a ``trustee'' and by creditors.
`` `If you choose to file a chapter 7 case, you may be
asked by a creditor to reaffirm a debt. You may want help
deciding whether to do so and a creditor is not permitted to
coerce you into reaffirming your debts.
`` `If you choose to file a chapter 13 case in which you
repay your creditors what you can afford over three to five
years, you may also want help with preparing your chapter 13
plan and with the confirmation hearing on your plan which
will be before a bankruptcy judge.
`` `If you select another type of relief under the
Bankruptcy Code other than chapter 7 or chapter 13, you will
want to find out what needs to be done from someone familiar
with that type of relief.
`` `Your bankruptcy case may also involve litigation. You
are generally permitted to represent yourself in litigation
in bankruptcy court, but only attorneys, not bankruptcy
petition preparers, can give you legal advice.'.
``(c) Except to the extent the debt relief agency provides
the required information itself after reasonably diligent
inquiry of the assisted person or others so as to obtain such
information reasonably accurately for inclusion on the
petition, schedules or statement of financial affairs, a debt
relief agency providing bankruptcy assistance to an assisted
person, to the extent permitted by nonbankruptcy law, shall
provide each assisted person at the time required for the
notice required under subsection (a)(1) reasonably sufficient
information (which shall be provided in a clear and
conspicuous writing) to the assisted person on how to provide
all the information the assisted person is required to
provide under this title pursuant to section 521, including--
``(1) how to value assets at replacement value, determine
current monthly income, the amounts specified in section
707(b)(2)) and, in a chapter 13 case, how to determine
disposable income in accordance with section 707(b)(2) and
related calculations;
``(2) how to complete the list of creditors, including how
to determine what amount is owed and what address for the
creditor should be shown; and
``(3) how to determine what property is exempt and how to
value exempt property at replacement value as defined in
section 506 of this title.
``(d) A debt relief agency shall maintain a copy of the
notices required under subsection (a) of this section for two
years after the date on which the notice is given the
assisted person.''.
(b) Conforming Amendment.--The table of sections for
chapter 5 of title 11, United States Code, as amended by
section 106, is amended by inserting after the item relating
to section 526 the following:
``527. Disclosures.''.
SEC. 155. DEBTOR'S BILL OF RIGHTS.
Subchapter II of chapter 5 of title 11, United States Code,
as amended by sections 106 and 154, is amended by adding at
the end the following:
``Sec. 528. Debtor's bill of rights
``(a) A debt relief agency shall--
``(1) no later than five business days after the first date
on which a debt relief agency provides any bankruptcy
assistance services to an assisted person, but prior to such
assisted person's petition under this title being filed,
execute a written contract with 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 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 agency provides assistance
with respect to credit defaults, mortgage foreclosures, lease
eviction proceedings, excessive debt, debt collection
pressure, or inability to pay any consumer 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 agency.
We help people file Bankruptcy petitions to obtain relief
under the Bankruptcy Code.' or a substantially similar
statement.''.
(b) Conforming Amendment.--The table of sections for
chapter 5 of title 11, United States Code, as amended by
sections 106 and 154, is amended by inserting after the item
relating to section 527, the following:
``528. Debtor's bill of rights.''.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
Virginia (Mr. Moran) and a Member opposed each will control 10 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, I rise today to offer this amendment for the purpose of
adding to the consumer protections that are already contained in H.R.
833. We have all seen the advertisements. ``Consolidate your bills into
one monthly payment without borrowing'' goes one. ``Stop credit
harassment, foreclosures, repossessions, tax levies and garnishments''
is another advertisement. ``Wipe out your debts. Consolidate your
bills. How? By using the protection that the Federal Government offers
provided by Federal law.''
We have seen these advertisements. They are all opportunities to
exploit the consumer, exploit the consumer's ignorance. And they would
be addressed by this bill. Because only later does the consumer find
out that very often these phrases involve bankruptcy proceedings which
can hurt their credit and cost them substantial attorney's fees. They
often do not realize that very often these are bankruptcy mills that do
not advise consumers on other options that they have, including
consumer credit counseling, working out a repayment plan with their
creditors, or getting a second mortgage.
This amendment adds to the bill provisions requiring so-called ``debt
relief organizations,'' but more appropriately sometimes ``bankruptcy
mills,'' to make certain minimal disclosures to
[[Page H2707]]
consumer debtors and to prevent deceptive and fraudulent advertising
practices that were identified by the Federal Trade Commission in their
Consumer Alert.
The disclosures are designed to ensure that debtors who retain the
services of these organizations understand the nature of the services
that are being provided, the cost of the services and, if the service
includes placing the debtor into bankruptcy, the consequences of that
action.
This requirement was included in the conference report of last year's
bankruptcy reform bill, which was overwhelmingly approved by the House
of Representatives. The requirement is modeled on legislation enacted
by Congress several years ago to address abuses by so-called credit
repair organizations.
Mr. GEKAS. Mr. Chairman, will the gentleman yield?
Mr. MORAN of Virginia. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. Mr. Chairman, I rise to support the amendment of the
gentleman. I must tell my colleagues, I was set back a bit when in the
full committee this group of debtors' rights, ``debtors' rights'' I
repeat, were removed from the bill. Just as the gentleman says, last
year's effort resulted in a conference report that had this debtors'
bill of rights as part and parcel.
Now we are faced with the prospect of attempting to do, and I will
help the gentleman do so, restore this same set of debtors' rights, and
I will do everything I can to help the gentleman succeed.
Mr. MORAN of Virginia. Mr. Chairman, I greatly appreciate the
comments of the chair of the subcommittee.
Mr. Chairman, I reserve the balance of my time.
Mr. WATT of North Carolina. Mr. Chairman, I rise in opposition to the
amendment, and I yield myself such time as I may consume.
Mr. Chairman, I am saddened to have to rise in opposition to this
amendment. This exact language that is proposed in this amendment was
in the bill originally and was considered by the Committee on the
Judiciary, and an amendment passed in the Committee on the Judiciary to
remove this language from the bill.
Now, the chairman of the subcommittee, who has risen to express his
support for this amendment to put it back in, voted against that
amendment in the committee. So it is not surprising that he would be
here saying he likes the Moran amendment. But the majority of the
Committee on the Judiciary, including a bipartisan group of
individuals, not just Democrats or Republicans, both Democrats and
Republicans, voted to remove this language from the bill.
Now, why did they vote to do it? First of all, understand that there
continues to be language in the bill which prohibits misrepresentation
and misleading of the public by these persons who are assisting folks
with bankruptcies. But remember that every attorney who does bankruptcy
practice would be covered by this provision; every credit counseling
service, consumer credit organization, many of which are governed by or
under the city and county governments in our local communities, would
be governed by these provisions; and these agencies would be put to the
task of giving page after page after page of disclosures in an effort
to get at a few bad people who are in this business.
Now, I am not saying that there are not people who are providing
credit counseling advice who are bad. There are people in the business
who are bad. But 99 percent of the people who are providing advice to
bankruptcy applicants or potential bankruptcy applicants are reputable
people, attorneys who provide information and services, credit
counseling services and the like, that we are simply imposing
substantial burdens on if we put this language back in the bill, which
the Committee on the Judiciary, I remind my colleagues, has taken out
of the bill.
If we start on page 3 of this proposed amendment and we go all the
way over to page 5 of this proposed amendment, there are disclosures
that would have to be made by anybody who even sat down and talked to
somebody about the possibility of filing a bankruptcy. This is not for
people who file bankruptcies, because these disclosures have to be
given at the first encounter before there is even a decision to file
bankruptcy.
Most of the disclosures are, essentially, worthless because what most
people will do is print up these disclosures verbatim from the bill and
hand them to people when they come into their offices and nobody is
going to read this stuff. And Republicans and Democrats alike
acknowledge that these kinds of disclosures are simply worthless.
Additionally, for those of us, including the gentleman from Virginia
(Mr. Moran), who is the sponsor of this bill who say that they want to
stop attorneys from soliciting folks to file bankruptcy, there are
additional advertisements that must be given which require folks who
advertise to say to the public, look, I am in the business of providing
bankruptcy advice.
That is exactly the kind of advertising we have been trying to
discourage. That is not something that is furthering the public policy
that underlies this bill.
So, for those reasons, I want to state strongly that we do not want
to impose additional burdens on good reliable business people. We want
to, as the bill still does, prohibit false information from being given
to potential filers of bankruptcy. But we do not need to burden the
people who are the attorneys and credit counseling people who are
reputable by forcing them to give page after page after page of useless
disclosures.
Mr. Chairman, I reserve the balance of my time.
{time} 1415
Mr. MORAN of Virginia. Mr. Chairman, I yield myself such time as I
may consume. I refer for the record to the Consumer Alert issued by the
Federal Trade Commission warning consumers of exactly the situation
that this amendment addresses, the fraudulent advertising, the kind of
advertising that sucks consumers into a situation where they wind up
declaring bankruptcy, which was not their original intent, because they
were misled by the people that would be covered by this amendment.
This amendment addresses abuses by ``bankruptcy mills'' which
advertise themselves as debt counseling organizations or government
sanctioned sources of assistance for consumers having difficulty
meeting debt repayments. According to the Federal Trade Commission,
consumers are frequently using these organizations without
understanding that the only relief that these groups offer is to put
the debtor into bankruptcy, sometimes when the debtor could have
avoided such a drastic step through voluntary repayment arrangements.
The amendment requires debt relief organizations to disclose the
nature of the services they offer, explain to consumers the
alternatives to filing bankruptcy, disclose the rights and obligations
of a debtor who files for bankruptcy and the consequences of a
bankruptcy filing. The purpose of the amendment is to educate the
consumer about bankruptcy and bankruptcy mills before it is too late;
in other words, before the debtor has made an uninformed decision.
Those who feel that the answer to the growth in bankruptcies is
increased disclosure about the consequences of incurring credit card or
other debt should support the up-front disclosure approach of this
amendment and not try to protect these lawyers who are exploiting the
ignorance of their clients.
This is an amendment that is entirely appropriate. It is appropriate
that it be called the Debtor's Bill of Rights. It is directly
addressing a warning that the Federal Trade Commission has made
available to consumers. I would hope that the House would pass this
unanimously.
Federal Trade Commission, For Your Information, March 26, 1997
Debt-burdened consumers who answer ads that offer to
``consolidate bills'' or ``stop credit harassment'' may be
the targets of bankruptcy mills, according to a new
publication from the Federal Trade Commission.
``Advertisements Promising Debt Relief May Be Offering
Bankruptcy,'' the FTC Consumer Alert warns.
A record one million consumers file for bankruptcy in 1996,
according to the Alert. But bankruptcy can have a long-term
negative impact on creditworthiness; stays on
[[Page H2708]]
you credit report for 10 years, and can hinder a consumer's
ability to get credit, a job, insurance or even a place to
live. ``Although bankruptcy is one option to deal with
financial problems, it's generally considered the option of
last resort,'' the publication says.
The Alert says that some newspaper, magazine and telephone
directory ads give tip-offs that their ``debt consolidation''
ads are really toting bankruptcy mills. Ads that make claims
such as:
``Consolidate your bills into one monthly payment without
borrowing;''
``Wipe out your debts! Consolidate your bills! How? By
using the protection and assistance provided by federal
law;'' and
``Stop credit harassment, foreclosures, repossessions'' . .
. ``Keep your Property,'' may be touting bankruptcy services
which can hurt consumers' credit and cost attorneys; fees,
the Alert says.
The FTC advises that before considering bankruptcy,
consumers having trouble paying their bills should:
Talk with their creditors who may be willing to work out a
modified payment plan;
Contact a credit counseling service. Some nonprofit
organizations charge little or nothing for these services;
Consider a second mortgage or home equity line of credit.
____
Advertisements Promising Debt Relief May Be Offering Bankruptcy
Washington, DC--Debt got you down? You're not alone.
Consumer debt is at an all-time high. What's more, record
numbers of consumers--more than 1 million in 1996--are filing
for bankruptcy. Whether your debt dilemma is the result of an
illness, unemployment, or simply overspending, it can seem
overwhelming. In your effort to get solvent, be on the alert
for advertisements that offer seemingly quick fixes. While
the ads pitch the promise of debt relief, they rarely say
relief may be spelled b-a-n-k-r-u-p-t-c-y. And although
bankruptcy is one option to deal with financial problems,
it's generally considered the option of last resort. The
reason: its long-term negative impact on your
creditworthiness. A bankruptcy stays on your credit report
for 10 years, and can hinder your ability to get credit, a
job, insurance, or even a place to live.
The Federal Trade Commission cautions consumers to read
between the lines when faced with ads in newspapers,
magazines or even telephone directories that say:
``Consolidate your bills into one monthly payment without
borrowing.'' ``STOP credit harassment, foreclosures,
repossessions, tax levies and garnishments,'' ``Keep Your
Property.'' ``Wipe out your debts! Consolidate your bills!
How? By using the protection and assistance provided by
Federal law. For once, let the law work for you!''
You'll find out later that such phrases often involve
bankruptcy proceedings, which can hurt your credit and cost
you attorneys' fees.
If you're having trouble paying your bills, consider these
possibilities before considering filing for bankruptcy:
Talk with your creditors. They may be willing to work out a
modified payment plan.
Contact a credit counseling service. These organizations
work with you and your creditors to develop debt repayment
plans. Such plans require you to deposit money each month
with the counseling service. The service then pays your
creditors. Some nonprofit organizations charge little or
nothing for their services.
Carefully consider a second mortgage or home equity line of
credit. While these loans may allow you to consolidate your
debt, they also require your home as collateral.
If none of these options is possible, bankruptcy may be the
likely alternative. There are two kinds of personal
bankruptcy: Chapter 13 and Chapter 7. Each must be filed in
federal court. The current filing fee is $160. Attorney fees
are additional and can vary widely. The consequences of
bankruptcy are significant and require careful consideration.
Chapter 13, also known as a reorganization, allows you to
keep property, such as a mortgaged home or car, that you
otherwise might lose. Reorganization may allow you to pay off
a default during a period of three to five years, rather than
surrender any property.
Chapter 7, known as a straight bankruptcy, involves
liquidating all assets that are not exempt in your state.
Exempt property may include work-related tools and basic
household furnishings. Some property may be sold by a court-
appointed official or turned over to creditors. You can file
for Chapter 7 only once every six years. Both types of
bankruptcy may get rid of unsecured debts and stop
foreclosures, repossessions, garnishments, utility shut-offs,
and debt collection activities. Both also provide exemptions
that allow you to keep certain assets, although exemption
amounts vary among states. Personal bankruptcy usually does
not erase child support, alimony, fines, taxes, and some
student loan obligations. Also, unless you have an acceptable
plan to catch up on your debt under Chapter 13, bankruptcy
usually does not allow you to keep property when your
creditor has an unpaid mortgage or lien on it.
Visit the FTC web site at www.ftc.gov, or contact the
AFSA's Education Foundation at 1-888-400-2233 for more
credit/money management information.
Mr. Chairman, I reserve the balance of my time.
Mr. WATT of North Carolina. Mr. Chairman, I reserve the balance of my
time. I believe it is my right to close as a member of the committee
and in defense of the bill.
The CHAIRMAN. The gentleman from North Carolina is correct.
Mr. MORAN of Virginia. Mr. Chairman, I guess I must not fully
understand parliamentary procedure. I thought that the person
introducing the amendment has the right to close on the amendment.
How much time do I have remaining, Mr. Chairman?
The CHAIRMAN. The gentleman from Virginia (Mr. Moran) has 4 minutes
remaining, and the gentleman from North Carolina (Mr. Watt) has 4
minutes remaining.
Mr. MORAN of Virginia. Mr. Chairman, I yield myself such time as I
may consume.
Since this is going to be challenged, let me again say for the
Members who may be listening that this is a Debtor's Bill of Rights. It
strengthens this bill. It responds to a very serious concern that the
Federal Trade Commission has stipulated in its Consumer Alert. It
informs debtors who retain the services of bankruptcy mills to disclose
the services, the costs and the consequences, and particularly the
consequences of filing for bankruptcy. We do not want people to have to
file for bankruptcy, particularly people who never intended to file for
bankruptcy.
Mr. GEKAS. Mr. Chairman, will the gentleman yield?
Mr. MORAN of Virginia. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. I wanted to add to the gentleman's sentiments, that who
can be opposed to the idea that an individual who is contemplating
bankruptcy should be given full disclosure on what entities or others
out there who are ready to assist him or prod him into bankruptcy? What
we are talking about is if we could do it, to prevent people from
jumping headlong into bankruptcy, we ought to take every step in order
to do that.
The gentleman from North Carolina (Mr. Watt) is correct that I voted
against his amendment in committee. I will remind him at the proper
time of how many other votes then were taken on a bipartisan basis that
he opposes still. So that is not a criterion, that when a bill is
passed on a bipartisan basis, he believes it is worthy of something. So
do I. But I will remind him when the time comes of bipartisan support
for X or Y and see if he has the same rationale applicable to that
amendment.
But in the meantime, it is not a bad thing to let a prospective
bankrupt individual look at all the possible traps into which he can
fall. I commend the gentleman's return to sanity through the debtor's
rights amendment.
Mr. MORAN of Virginia. I thank the gentleman for his comments.
Mr. Chairman, if I may briefly sum up my argument, which is simply
that so-called debt relief agencies that are coming out with this kind
of deliberately misleading advertising suggesting even that they are
government sanctioned organizations, which they are not, they should be
required to give written notice within 3 business days after the first
date of services to advise the people they are allegedly assisting of
their rights and responsibilities of disclosure.
It would require attorneys or bankruptcy petition preparers to give
the person they are assisting a written contract specifying what the
attorney or bankruptcy petition preparer will do, what it will cost and
the terms of payment. That is what we would want for our mother or our
spouse or our children or our neighbor or any other consumer in the
United States, to be able to have the value of that kind of
information.
This is a consumer amendment, to educate consumers so they do not get
taken in by people who are designing to exploit them and exploit the
bankruptcy system. Mr. Chairman, I strongly urge an ``aye'' vote on
this amendment.
Mr. Chairman, I yield back the balance of my time.
Mr. WATT of North Carolina. Mr. Chairman, I yield myself the balance
of my time.
Mr. Chairman, let me just advise my colleagues that these bankruptcy
mills that the gentleman from Virginia (Mr. Moran) is talking about are
attorneys who provide bankruptcy services, consumer credit counseling
services, many
[[Page H2709]]
of whom are sanctioned by local governments because they provide a very
valuable service in local communities. I have one in my own community
of Charlotte. I was on the board of directors of this nonprofit agency
which receives substantial government funds and provides a major
service when people get into debt.
We can characterize every single one of these people as bankruptcy
mills if we want, but they are not. To try to inflame the opinions of
the colleagues in this body by referring to every lawyer who practices
bankruptcy law or every consumer credit counselor as a bankruptcy mill
is just inaccurate and unfair and it should not be done. There are some
bad apples in the barrel.
For those we need to understand, Mr. Chairman, that there is a
specific provision which remains in this bill, this section 526, which
says that a debt relief agency shall not do a whole list of things that
are listed in this bill. One of those things it shall not do is
misrepresent to any assisted person or prospective assisted person,
directly or indirectly, affirmatively or by material omission, what
services the debt relief agency can reasonably expect to provide that
person or the benefits, and it goes on and on and on.
There is a prohibition in this bill against the kind of activity that
the gentleman from Virginia (Mr. Moran) is trying to outlaw. I think it
ought to be outlawed, but we ought not impose the burdens of all of
these disclosures on the reputable people who are in the business.
He says that we have got to stop this faulty advertising, but what
does his amendment do? I am reading directly from page 8 of his
amendment. If you do an advertisement, under the Moran amendment, this
is what you have got to say, in quotes:
``We are a debt relief agency. We help people file bankruptcy
petitions to obtain relief under the Bankruptcy Code.''
I do not want people to be disclosing that or saying that to the
public. I want to stop people from advertising. And yet the same people
he is saying we want to stop from faulty advertising, he is telling
them how to go out and advertise in a misleading way. That is not what
we need to be doing, is undermining the policy of the bill.
Mr. Chairman, I understand his motivations for this amendment. I
understand that there may be some lawyers he does not like, there may
be some consumer credit counselors that he does not like. There are
some that I do not like. That is why we have prohibited them in the
bill from engaging in any kind of sinister activities. But that is
different than requiring every reputable lawyer and every reputable
consumer credit counseling service to give page after page after page
of worthless disclosures. I encourage my colleagues to vote against
this amendment. It just adds paperwork and adds burdens to small
businesses. That is what it does.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Virginia (Mr. Moran).
The question was taken; and the Chairman announced that the ayes
appeared to have it.
Mr. WATT. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 158, further proceedings
on the amendment offered by the gentleman from Virginia (Mr. Moran)
will be postponed.
It is now in order to consider amendment No. 4 printed in House
Report 106-126.
Amendment No. 4 Offered by Ms. Velazquez
Ms. VELAZQUEZ. Mr. Chairman, I offer an amendment made in order by
the rule.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 4 offered by Ms. Velazquez:
Page 109, line 23, insert ``(a) Appointment.--''.
Page 110, line 4, insert the following before the close
quotation marks:
The court may expand the membership of a committee to include
a creditor that is small business if the court determines
that such creditor holds claims of the kind represented by
such committee that are, in the aggregate, disproportionately
large when compared to the annual gross revenue of such
creditor.
Page 110, after line 4, insert the following:
(b) Information.--Section 1102(b) of title 11, United
States Code, is amended by adding at the end the following:
``(3) A committee appointed under subsection (a) shall
provide access to information for creditors who hold claims
of the kind represented by such committee and who are not
appointed such committee, shall to be open for comment from
such creditors, and shall be subject to a court order
compelling additional reports or disclosure to be made to
such creditors.''.
The CHAIRMAN. Pursuant to House Resolution 158, the gentlewoman from
New York (Ms. Velazquez) and a Member opposed each will control 10
minutes.
The Chair recognizes the gentlewoman from New York (Ms. Velazquez).
Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, while H.R. 833 provides a plan for overhauling our
Nation's bankruptcy law, there is one issue that, while seemingly
small, will have a great impact on this Nation's small businesses. That
is the way that the bankruptcy process leaves small businesses who are
creditors on the outside looking in.
To solve this problem, I am offering an amendment that will quickly
and fairly address the issue by ensuring more small business
involvement and greater communication in the bankruptcy process. My
amendment will make two simple changes.
First, it would allow a small business involved as a creditor in a
Chapter 11 bankruptcy case to be added to the creditor committee by the
court. The court could make such an appointment by comparing the amount
of the claim as a proportion of the business' gross annual revenue,
thus showing that a business is disproportionately affected.
Second, my amendment will ensure that those small businesses not
included on the creditor committee will have access to critical
information regarding the credit committee's actions. This could be
achieved by simply making the committee open to comments from and
required to provide additional information to those small businesses
not included on the committee but who will nonetheless be affected by
the outcome.
I urge the adoption of these measures which will help small
businesses. The need to take them can be underscored by looking at just
one example of a company that was nearly devastated when one of its
customers filed for bankruptcy.
Unicare Corporation, a small business located in Ohio, was caught off
guard when one of its largest customers filed for bankruptcy. The debt
to Unicare represented almost 10 percent of the company's annual
revenue. The bankruptcy court created an unsecured creditors committee
based on total outstanding debts owed.
{time} 1430
Not only did Unicare not qualify as a member of the credit committee,
but it was left on the outside looking in with no involvement in the
process. This made Unicare's future uncertain, forcing it to reduce
staff and revise plans for expansion. Fortunately, because of hard work
and strong strategic planning, Unicare was able to recover, and today
it continues as a very strong business.
But, Mr. Chairman, if each of us were to look around our districts,
we will find that we will have many small businesses that could face
the same unfair challenge, which is why we need to adopt this uniform
and practical solution. Because, unlike Unicare, many businesses in our
communities might not be so fortunate. If small businesses had the
ability to appeal to the court based on their claim compared to the
overall effect on the company, devastating problems might be averted.
Finally, Mr. Chairman, when we reconvene in the full House, I will
submit for the record a letter of support from Small Business United,
this Nation's oldest small business trade association. Their support
reflects the same concern that I have heard from small business owners.
They need access to the bankruptcy process.
We must insure that small businesses are not financially crippled
through no fault of their own and that their hard work is not undone by
the failures of others. I urge the adoption of this amendment.
Mr. TALENT. Mr. Chairman, will the gentlewoman yield?
[[Page H2710]]
Ms. VELAZQUEZ. I yield to the gentleman from Missouri.
Mr. TALENT. Mr. Chairman, I rise in support of the gentlewoman from
New York's very timely and important amendment and congratulate her on
this important amendment for small business; and, Mr. Chairman, all of
us who have dealt with small businesses in this kind of a context
understand the problem the gentlewoman's amendment is intended to
adopt.
I mean, let us suppose that a firm goes bankrupt and that it owes
Microsoft $100,000 for software and it owes a small consulting firm,
computer consulting firm, 30 or $35,000 for the work that has been done
and that both of them are unsecured creditors. Well, Microsoft is going
to get on the creditors committee because it has the larger debt, but
$100,000 to Microsoft may be nothing, in terms of that firm is nothing
in terms of that firm's total revenue. But that 30 or $35,000 could be
a crucial account for that small business consulting firm, and they
need to be represented on the creditors committee. That is really the
only way that their interests can be protected.
The gentlewoman's amendment allows the court to appoint that small
business to the creditors committee. It does not require it, but it at
least allows that small business to make its case to the court. I think
it is a timely and important amendment, Mr. Chairman.
There is nothing worse really than a small business caught up in
this, an unforeseen bankruptcy on the part of one of its important
clients. It cannot protect its interests, it does not know what is
going on, does not have the money to hire legions of lawyers the way
the bigger, unsecured creditors do.
Again, I congratulate the gentlewoman for fixing what I think is, if
not a problem in the bill, at least an absence in the bill of an
important protection for small business. I am pleased to support the
amendment, and I thank the gentlewoman from New York for having
yielded.
Mr. CONYERS. Mr. Chairman I yield myself such time as I may consume.
Mr. Chairman, I want to thank the gentlewoman from New York (Ms.
Velazquez) for bringing forward the provision before us now that would
allow the expansion of the credit committee membership and also ensure
better access to information for the small businesses not included on
the committee by allowing them to be open for comment and subject to
additional reports or disclosures. And so we have no problem with this
amendment.
I would also point out to the gentlewoman from New York that there is
another amendment of mine coming up shortly dealing with small
business, she serves with great distinction on the Committee on Small
Business, in which we would allow small business debtors in cases where
application of these provisions could result in the loss of five or
more jobs to waive the provisions of chapter 11 that relate to other
business debtors, and I hope that that will gain her attention and
other members that serve on that committee.
So we have no objection to this amendment whatsoever, Mr. Chairman.
Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may
consume, and I would like to close.
Mr. Chairman, for too long small businesses who are creditors have
been hurt when customers and clients have been unable to pay their
bills. For small businesses, the bankruptcy of other companies can mean
an uncertain future. The adoption of my amendment provides small
businesses with some peace of mind.
I urge my colleagues to support this amendment and to support small
businesses.
Mr. Chairman, I include the following letter for the Record:
National Small Business United,
Washington, DC, May 3, 1999.
Hon. Nydia Valazquez,
House of Representatives,
Washington, DC.
Dear Representative Velazquez: As the House Rules
Committee, and subsequently the entire House of
Representatives, considers H.R. 833--the Bankruptcy Reform
Act of 1999--NSBU fully supports your amendment protecting
small businesses. National Small Business United, the
nation's oldest small business advocacy organization, is a
member of the Coalition for Financial Responsibility and has
been a leading participant in this important debate for many
years. We see your amendment as an important addition to the
bill that has already cleared the Judiciary Committee.
Your amendment provides vital language that would allow for
greater small business representation on the unsecured
creditors committees, the key working group that structures
and partitions the payments a bankrupt company owes its
creditors. Traditionally, those companies that are owed the
greatest lump sum of money have been placed on these
committees, with little to no requirement to keep other
interested companies informed of the situation. Your
amendment would allow for greater communication and a more
vital small business involvement in this process.
For too long, small businesses have been hurt when
customers and clients have been unable to pay their bills
without representation. This practice would be limited by
this important legislation and has the full support of our
65,000 members nationwide. If there is anything else we can
do to assist you in your efforts on before of the nation's
23.3 million small businesses, please let us know.
Sincerely,
Todd McCracken,
President.
Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN. All time has expired.
The question is on the amendment offered by the gentlewoman from New
York (Ms. Velazquez).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider Amendment No. 5 printed
in House Report 106-126.
Amendment No. 5 Offered by Mr. Graham
Mr. GRAHAM. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 5 offered by Mr. Graham:
Page 119, after line 9, insert the following (and make such
technical and conforming changes as may be appropriate):
SEC. 219. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS
AND LOANS.
Section 523(a)(8) of title 11, United States Code, is
amended to read as follows:
``(8) for--
``(A) an educational benefit overpayment or loan made,
insured or guaranteed by a governmental unit, or made under
any program funded in whole or in part by a governmental unit
or nonprofit institution, or for an obligation to repay funds
received as an educational benefit, scholarship or stipend;
or
``(B) any other education loan incurred by an individual
debtor that meets the definition of `Qualified Education
Loan' under section 221(e)(1) of the Internal Revenue Code;
unless excepting such debt from discharge under this
paragraph will impose an undue hardship on the debtor and a
debtor's dependents;''.
Modification to Amendment No. 5 Offered By Mr. Graham
Mr. GRAHAM. Mr. Chairman, I ask unanimous consent to modify my
amendment, that modification is at the desk.
The CHAIRMAN. The Clerk will report the modification.
The Clerk read as follows:
Modification offered by Mr. Graham to Amendment No. 5:
Page 119, after line 9, insert the following (and make such
technical and conforming changes as may be appropriate):
SEC. 219. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS
AND LOANS.
Section 523(a)(8) of title 11, United States Code, is
amended to read as follows:
``(8) for--
``(A) an educational benefit overpayment or loan made,
insured or guaranteed by a governmental unit, or made under
any program funded in whole or in part by a governmental unit
or nonprofit institution, or for an obligation to repay funds
received as an educational benefit, scholarship or stipend;
or
``(B) any other education loan incurred by an individual
debtor that meets the definition of `Qualified Education
Loan' under section 221(e)(1) of the Internal Revenue Code;
unless excepting such debt from discharge under this
paragraph will impose an undue hardship on the debtor and a
debtor's dependents;''.
Mr. GRAHAM (during the reading). Mr. Chairman, I ask unanimous
consent that the modification to Amendment No. 5 be considered read and
printed in the Record.
The CHAIRMAN. Is there objection to the request of the gentleman from
South Carolina?
There was no objection.
The CHAIRMAN. Is there objection to the request of the gentleman from
South Carolina that Amendment No. 5 be modified?
There was no objection.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
South Carolina (Mr. Graham) and a Member opposed each will control 10
minutes.
[[Page H2711]]
The Chair recognizes the gentleman from South Carolina (Mr. Graham).
(Mr. Graham asked and was given permission to revise and extend his
remarks.).
Mr. GRAHAM. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, very briefly, this amendment is designed to correct a,
I think, flaw in the Bankruptcy Code regarding student loans.
Under our current Bankruptcy Code, a Federal- guaranteed student loan
is a nondischargeable loan. As many students graduate from college with
a student debt, they are starting their lives, and we have protected
the Federal-guaranteed student loans from discharge from bankruptcy
because I think that is just a common-sense approach to a problem that
existed in the past.
In addition, nonprofit lending organizations are also protected under
the Bankruptcy Code, that their student loans are nondischargeable.
There is a growing industry in the private sector. There is a $1.25
billion loan volume for where private lenders who will loan money to
students for their college expenses as the federally guaranteed program
does not in every occasion meet the needs of the student, and we are
trying to give the private lender the same protection under bankruptcy
that the federally guaranteed loan program has and nonprofit
organizations have. We are trying to make sure they are available
loans, loans are available to students to meet their financial needs,
and this would have a beneficial effect, make sure that the loan volume
necessary to take care of college expenses are available for students,
and I would appreciate the cooperation from the gentleman from New York
(Mr. Nadler) and the gentleman from Pennsylvania (Mr. Gekas) on this
amendment.
Mr. GEKAS. Mr. Chairman, will the gentleman yield?
Mr. GRAHAM. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. Mr. Chairman, I want to indicate to the gentleman that the
amendment is well thought out and is a necessary change to our original
bill. It draws attention to our intent to treat everybody fairly, and
the student loan quotient is one of the most important features in all
of bankruptcy.
We thank the gentleman for that, and I will agree to the amendment.
Mr. GRAHAM. Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
The CHAIRMAN. Does the gentleman from Michigan claim the time in
opposition to the amendment offered by the gentleman from South
Carolina?
Mr. CONYERS. Absolutely. Mr. Chairman, I claim time in opposition to
the amendment.
The CHAIRMAN. The gentleman from Michigan (Mr. Conyers) is recognized
for 10 minutes.
Mr. CONYERS. Mr. Chairman, I will not oppose the amendment. As a
matter of fact, I think particularly with an inclusion for exceptions
for undue hardships this amendment is an important one.
The Bankruptcy Code prohibits the discharge of federally made
guaranteed or insured education loans or education loans made by
nonprofit institutions. What the gentleman from South Carolina would do
now is extend the prohibition from discharge to all qualified education
loans and include exceptions for undue hardships.
That is the thrust of the amendment, and we have no objection to that
whatsoever.
Mr. Chairman, I yield back the balance of my time.
Mr. GRAHAM. Mr. Chairman, I thank the gentleman from Michigan (Mr.
Conyers), and I yield back the balance of my time.
The CHAIRMAN. All time has expired.
The question is on the amendment, as modified, offered by the
gentleman from South Carolina (Mr. Graham).
The amendment, as modified, was agreed to.
The CHAIRMAN. It is now in order to consider Amendment No. 6 printed
in House Report 106-126.
Amendment No. 6 Offered by Mr. Dooley of California
Mr. DOOLEY of California. 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 offered by Mr. Dooley of California:
Page 124, strike lines 13 through 20, and insert the
following:
``(a) The clerk of each district shall maintain a publicly
available list of credit counseling agencies and of programs
described in section 109(h) and instructional courses offered
by such agencies currently approved by--
``(1) the United States Trustee; or
``(2) the bankruptcy administrator for the district.
``(b) The United States Trustee or bankruptcy administrator
shall only approve credit counseling agencies which satisfy
standards set in regulations promulgated by the Federal Trade
Commission and which are accredited by the Council on
Accreditation or an equivalent third party nonprofit
accrediting organization.
``(c) The United States Trustee or bankruptcy administrator
shall only approve programs or courses under subsection (a)
if they satisfy standards set in regulations promulgated by
the Executive Office of the United States Trustees. The
Executive Office of the United States Trustee is authorized
to promulgate regulations setting such standards.
``(d) The Federal Trade Commission shall have authority to
promulgate regulations setting standards for credit
counseling agencies for the purposes of subsection (b). Such
standards shall establish minimum requirements for such
agencies with respect to providing qualified counselors,
safekeeping and payment of client funds, disclosure to
clients, adequate counseling with respect to client credit
problems, and such other matters as relate to the quality and
financial security of such programs. Nothing in this
provision shall limit the authority of the Federal Trade
Commission pursuant to the Federal Trade Commission Act (15
U.S.C. 45 et seq.).
``(e) The United States Trustee or bankruptcy administrator
may notify the clerk that a credit counseling agency, or a
program or course, is no longer approved, in which case the
clerk shall remove it from the list maintained under
subsection (a).
``(2) Regulations.--The Federal Trade Commission and the
Executive Office of United States Trustees shall promulgate
regulations pursuant to the power delegated in this section
within 180 days of the date of the enactment of this Act.''.
Page 124, line 21, strike ``(2)'' and insert ``(3)''.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
California (Mr. Dooley) and a Member opposed each will control 10
minutes.
The Chair recognizes the gentleman from California (Mr. Dooley).
Mr. DOOLEY of California. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, my amendment is very simple and straightforward. Simply
put, it would require consumer credit counselors to meet basic
professional standards established by the Federal Trade Commission.
One of the most progressive and debtor-friendly reforms made in H.R.
833 is the requirement that debtors seek credit counseling prior to
filing bankruptcy. Many consumers want assistance in dealing with their
bills, not bankruptcy. Legitimate consumer credit counseling helped
approximately 1 million debtors this past year. This bill provides the
opportunity for many more to receive help.
Done properly by a qualified professional, consumer credit counseling
has proven highly successful in helping debtors regain control over
their financial lives, a goal we all share. Many of my colleagues are
familiar with the Federal Trade Commission's struggle to clean up
abusive and fraudulent credit repair clinics that dupe debtors facing
financial problems with promises to clean up their credit records.
The FTC has worked to protect consumers through the provisions
approved by Congress several years ago as a part of the Fair Credit
Reporting Act. However, as the opportunities for credit counseling
would be significantly increased under this bill, we need to ensure
from the outset that fraudulent and abusive credit counseling
operations do not spring up and meet this new demand for services.
My amendment is designed to ensure that consumers have access to
qualified, professional consumer credit counselors and to prevent the
proliferation of substandard counseling practices. The amendment will
provide that the U.S. trustee or bankruptcy administrator can only
approve credit counseling agencies which satisfy standards set in
regulations promulgated by the FTC and are credited by the Council of
Accreditation or equivalent third-party nonprofit accrediting
organization. The FTC is able and experienced in addressing issues of
this nature.
With this amendment we have an opportunity to ensure that the credit
[[Page H2712]]
counseling provisions of this legislation will function as intended
from the outset and that consumers will have access to qualified credit
counseling.
I urge my colleagues to support this common-sense amendment.
Mr. Chairman, I reserve the balance of my time.
The CHAIRMAN. Does any Member claim time in opposition to the
amendment offered by the gentleman from California (Mr. Dooley)?
Mr. CONYERS. For purposes of getting the floor I oppose the
amendment, and I ask to be recognized.
The CHAIRMAN. Without objection, the gentleman from Michigan may have
the time otherwise reserved for those in opposition.
There was no objection.
The CHAIRMAN. The Chair recognizes the gentleman from Michigan (Mr.
Conyers) for 10 minutes.
Mr. CONYERS. Mr. Chairman, this is an amendment that we find
absolutely acceptable, and I plan to support it, and we urge the
Members to join in support of it.
Mr. Chairman, I yield back the balance of my time.
Mr. DOOLEY of California. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, I urge the passage of this amendment.
Mr. Chairman, I yield back the balance of my time.
{time} 1445
The CHAIRMAN. The question is on the amendment offered by the
gentleman from California (Mr. Dooley).
The amendment was agreed to.
The CHAIRMAN. It is now in order to consider amendment No. 7 printed
in House Report 106-126.
Amendment No. 7 Offered by Mr. Conyers
Mr. CONYERS. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 7 offered by Mr. Conyers:
Page 151, after line 24, insert the following (and make
such technical and conforming changes as may be appropriate):
SEC. 416. APPLICABILITY OF CERTAIN PROVISIONS.
The provisions of title 11 of the United States Code
relating to small business debtors or to single asset real
estate shall not apply in a case under such title if the
application of any of such provisions in such case could
result in the loss of 5 or more jobs.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
Michigan (Mr. Conyers), and the gentleman from Pennsylvania (Mr. Gekas)
each will control 10 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, as usual, there is a good deal of talk about preserving
jobs and creating jobs in the House of Representatives. Accordingly, if
we really want to protect jobs, there should be little problem in
supporting my amendment which waives the harsh new small business and
single asset real estate provisions of the bill where they could result
in the loss of five jobs or more. We are now talking about small
business and protecting the jobs therein under the bankruptcy bill.
Now, the measure before us would completely alter the manner in which
small business and real estate concerns may reorganize under the
bankruptcy laws. For small businesses, H.R. 833 would mandate the
operation of a whole host of burdensome new requirements, requiring
them to provide balance sheets, for example, statements of operation,
cash flow statements, income tax returns, within 3 days after filing a
bankruptcy petition.
The bill also shortens the time period the debtor has to file a plan
of reorganization to a mere 90 days, making liquidations far more
likely than they might have otherwise been.
Now I have no problem with these new requirements, as long as the
principal parties involved are the business owner and his creditor, but
where the new deadlines will result in a loss of jobs, there I have a
major concern.
These provisions have drawn the strong opposition of organized labor
and the Small Business Administration's Office of Advocacy. I think my
amendment is a way out of this dilemma.
The American Federation of Labor has warned that the small business
provisions will threaten jobs by placing substantial procedural and
substantive barriers in the way of small businesses and their ability
to access the provisions of Chapter 11, threatening their overall
ability to successfully reorganize and go on to succeed.
Similarly, the Small Business Administration has written that under
the bill H.R. 833, small business owners who are legitimately using
Chapter 11 proceedings to reorganize their businesses may be forced
into a premature dismissal or conversion or may have to expend vital
resources to fend off challenges by any creditor for relatively minor
procedural infractions.
So we urge that this amendment be accepted and crafted into this
bill. It would help at least in a small way those small businesses who
might be in a position to lose five or more jobs as a result of
bankruptcy proceedings.
Mr. Chairman, I reserve the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, the record should indicate right at the outset that the
provisions that we have built into the current legislation having to do
with small business have reached the highest possible approval by the
advocate of the Small Business Administration, the Justice Department
itself, and most importantly for this debate, of the Bankruptcy
Commission on whom we relied for this extensive comprehensive review
that they finished a few years back.
So we start off with a creditable small business set of provisions
which now the gentleman, if this amendment should be adopted, would
absolutely wreck. Beyond that, one can imagine that every case that
came under Title 11, as the gentleman proposes in his amendment, would
first have to be scrutinized to see if five or more jobs would or could
be lost, and we would never get to the first event in a bankruptcy
situation before we had had time to litigate the number of jobs.
What if someone contends there are only four affected or others say
none would be affected? That entire set of circumstances would have to
be litigated. It is a monstrous scenario of additional litigation
proposed in a situation where we have already structured the provisions
in such a way to have met the approval of everybody who looks at the
small business provisions of our bill.
Beyond that, the wording of the bill seems to indicate that not just
the small business provisions of Chapter 11 would be affected but any
and all provisions of the title known as 11 would be affected, and we
would have to take this test of five jobs, which in itself is very
murky, very cloudy. How many jobs would be included, part-time, full-
time? How many individuals? If somebody is carrying on two occupations
in the same firm, would that apply? It is so nondescriptive of any real
problem that we must reject it out of hand.
I ask all the Members to vote ``no'' on this amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield myself 1 minute.
Mr. Chairman, I would like to remind the esteemed chairman of the
subcommittee that the Bankruptcy Commission was the one that turned
down means testing, which has now been put into the bill. So I am glad
that he picks and chooses those that he likes.
There are some people involved in labor that have a strong opposition
to the bill without this amendment. They are called the AFL-CIO. That
is the largest collective bargaining organization in the United States
of America. They have examined it pretty carefully.
Mr. Chairman, I yield such time as he may consume to the gentleman
from New York (Mr. Nadler), the ranking member of the subcommittee.
Mr. NADLER. Mr. Chairman, this amendment is really in the nature of
the truth. We say that this bill imposes very onerous restrictions on
small businesses. It imposes very sharp and restrictive time deadlines
and terrible restrictions only on small businesses.
We think this is going to result in a lot of businesses that
otherwise would have the opportunity to reorganize in Chapter 11 to get
protection from their debtors, reorganize, get back on their feet and
survive and not lay off all their employees, it will require instead
that a lot of these companies liquidate
[[Page H2713]]
and go out of business and lay off their employees because they will
not be able to meet these new restrictions.
Now, the gentleman from Pennsylvania (Mr. Gekas) and the people on
the other side say, no, that will not happen. Well, all this amendment
says is, well, maybe they are right, maybe they are wrong.
In a given case, the judge is looking over the situation in this
case, and if the judge finds that there is a likelihood that this
company, which is now seeking Chapter 11 protection from its creditors,
could reorganize, could get back on its feet, could avoid liquidating,
could avoid laying off its employees, but he further finds that if
these new onerous restrictions are imposed and timetables that that
would probably force the company out of business and would cost at
least five jobs, it lets the judge say, ``It really looks like this is
going to cost five jobs, so I will not impose these new restrictions on
this small business.'' If the judge makes the finding that these new
restrictions will kill this business, force this job loss and force
this business out of business, the judge would be given the discretion
to say, use the old law, not these new restrictions.
What could be fairer than to look at the individual case?
Now, the gentleman from Pennsylvania (Mr. Gekas) will say this is
extensive litigation. No, it is not. It is simply a company asking for
Chapter 11 protection and saying, ``Judge, we think we need X time but
this gives us less time, and here is why we think we need so much
additional time as we could have gotten under the old law,'' and the
judge says either yes or no. Why not let the judge have that
discretion?
I know that the gentleman from Pennsylvania (Mr. Gekas) and other
proponents of this bill do not trust human beings; they do not trust
judges at all. They say throughout this bill judges have no discretion;
they are always wrong. Maybe they are always wrong, but give them a
chance to save some jobs and save some small businesses. That is all
this amendment does.
I do not see how anybody who cares about small businesses or jobs
could oppose this amendment. It just boggles the mind.
Mr. GEKAS. Mr. Chairman, I yield 4 minutes to the gentleman from
Michigan (Mr. Knollenberg).
Mr. KNOLLENBERG. Mr. Chairman, I thank the gentleman from
Pennsylvania (Mr. Gekas) for yielding me this time.
Mr. Chairman, I rise in opposition to this amendment, in opposition
to my good friend the gentleman from Michigan (Mr. Conyers).
This bill, the Bankruptcy Reform Act of 1999, includes a provision
that addresses an injustice that exists within Title 11 of the United
States Code regarding single asset bankruptcies. That is a big long
statement.
This provision mirrors legislation that I introduced in H.R. 624, and
I want to thank the gentleman from Pennsylvania (Chairman Gekas) for
his instructive help on that matter. This was done in the previous
Congress and I thank him for including this in H.R. 833.
Let me say what, in addition to what we have heard, is wrong with
this amendment. The injustice within Title 11 stems from a last-minute
decision that was made in the 103rd Congress, which placed an arbitrary
$4 million ceiling on the single asset provisions of the bankruptcy
reform bill. The effect has been to render investors helpless in
foreclosure on single assets valued at over $4 million.
H.R. 833 provides relief to victims by eliminating this arbitrary
ceiling. Under this law, Chapter 11 of the Bankruptcy Code serves as a
legal shield for the debtor. Upon the investors filing to foreclose,
the debtor preemptively files for Chapter 11 protection, which
postpones indefinitely foreclosure, while in Chapter 11 the debtor will
continue to collect the rents on the commercial asset.
Now listen to this. However, the commercial property will typically
be left to deteriorate and the property taxes go unpaid. When the
investor finally recovers the property through the delayed foreclosure,
they owe an enormous amount in back taxes; they receive a commercial
property left in deterioration which has a lower rent value and resale
value, and meanwhile the rent for all the months or years they were
trying to retain the property went to an uncollectable debtor.
H.R. 833 does not leave the debtor without protection, however.
First, the investor brings a foreclosure against a debtor only as a
last result. This usually comes after all other efforts to reconcile
delinquent mortgage payments have failed.
Second, the debtor has up to 90 days to reorganize under a Chapter
11. It should be noted, however, that single asset reorganizations are
typically a false hope, since the owner of a single asset does not
normally have other properties from which he can recapitalize his
business.
Mr. Chairman, I urge my colleagues to defeat the amendment offered by
the gentleman from Michigan (Mr. Conyers), which could prohibit the
single asset real estate definition from being applied in such case,
which could result in the loss of five or more jobs. This amendment, if
adopted, would effectively nullify the single asset protection
currently in the code and allow Chapter 11 debtors to continue gaming
the system by hiring new employees just before the filing.
Make no mistake about it, this amendment, if approved, would allow
unscrupulous debtors to drag out single asset cases for years to avoid
meeting their financial obligations.
Mr. Chairman, H.R. 833 restores personal responsibility to our
bankruptcy laws; closes the loopholes, in addition, that allow
individuals to game the system. I urge my colleagues on both sides of
the aisle to oppose the Conyers amendment and vote ``yes'' on final
passage.
{time} 1500
Mr. GEKAS. Mr. Chairman, I yield such time as she may consume to the
gentlewoman from Ohio (Ms. Pryce).
Ms. PRYCE of Ohio. Mr. Chairman, I thank the gentleman for yielding
me the time.
Mr. Chairman, I rise in opposition to the amendment offered by the
gentleman from Michigan (Mr. Conyers). By way of background, the great
majority of commercial properties within the United States are owned by
corporations, partnerships, and limited liability companies that only
own one property. These are known as single-asset real estate entities.
The typical single-asset real estate entity has only one major
creditor, the mortgage lender that provided the financing for the
acquisition of the property. In most cases, the mortgage lender's only
remedy in the case of default is to take possession of the property
through foreclosure.
The recession of the late eighties and early 1990s caused a flood of
Chapter 11 filings by single-asset real estate entities. In the typical
case, the single-asset entity merely sought to stave off foreclosure
and to use the bankruptcy process to force concessions from its
mortgage lender. As a result, properties deteriorated and lenders
suffered large losses as cases dragged on and on, sometimes for months
and years.
In the Bankruptcy Reform Act of 1994, Congress recognized that
single-asset entities should receive expedited treatment in bankruptcy
proceedings in order to protect properties from otherwise deteriorating
during these lengthy bankruptcy proceedings.
At that time, Congress amended the automatic stay provision of the
Bankruptcy Code to provide that mortgage lenders may have the stay
lifted and proceed with foreclosure, unless the single-asset debtor
files a feasible reorganization plan within 90 days, or commences
monthly interest payments to the lender. However, these provisions
currently apply only to single-asset debtors whose property are valued
at $4 million or less.
Typically, when the owner of a building is bankrupt and the lender is
allowed to foreclose, there is usually a net economic benefit to the
property, because it is the goal of the lender to maximize the value of
the property. A weak owner is replaced by a strong owner who has
resources to make the repairs, attract new tenants, and effect capital
improvements. This benefits our communities as well, including the
generation of tax revenues.
Moreover, by helping to keep the property commercially viable, we
help ensure that the workers who maintain the building, from the
janitors to the
[[Page H2714]]
engineers, will remain employed. Clearly, everybody benefits from
keeping the property from deteriorating.
Significantly, H.R. 833 would eliminate the arbitrary $4 million cap
with respect to expedited foreclosures on these entities, so that all
commercial properties, regardless of value, can be protected from
deterioration during bankruptcy proceedings.
However, the Conyers amendment would prohibit expedited foreclosure
in any case where five employees of the property could be lost. As
such, the Conyers amendment would not only gut the provision in H.R.
833 which lifts the $4 million cap, but it would also, in effect,
nullify existing expedited foreclosure provisions in the Bankruptcy
Code.
The Conyers amendment would recreate the uncertainty that the current
law seeks to remedy. Bankruptcy courts could hold endless hearings on
the application of this amendment and whether certain employees may or
may not lose their jobs. Chapter 11 debtors could continue to game the
system, as they have sometimes in the past, by hiring employees before
filing, or delaying the bankruptcy action unfairly.
Moreover, the very employees that the gentleman from Michigan (Mr.
Conyers) seeks to protect would be worse off because new entities would
be hampered in their efforts to take over the troubled property and
return it to a going concern, and keep them employed.
Mr. Chairman, I urge my colleagues to defeat the Conyers amendment,
in the very interest of those he purports to protect.
Mr. CONYERS. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, this is puzzling. It is one thing to tighten the
bankruptcy rules on only the parties that are involved that are
borrowing from the lender, but where the changes will harm innocent
third parties, the employees and their families, I believe we have an
obligation to give the business a reasonable chance to reorganize.
The single-asset real estate provision, connected with the five-job
requirement that the judge would look at, suppose it was the
gentleman's job, I say to the gentleman from Pennsylvania (Mr. Gekas),
one of the five. It would not be hard for a referee in bankruptcy or a
judge in bankruptcy to make the decision.
But what we are doing is saying that every single real estate
concern, no matter how large its operation or how many jobs are at
stake, be subject to expedited liquidation and bankruptcy. That is,
within 90 days after filing, they can be subject to foreclosure by
their creditors. Give us a break. All we are doing is giving additional
discretion to the judge.
I urge the Members on both sides of the aisle to support this modest
amendment.
Mr. Chairman I yield the balance of my time to the gentleman from New
York (Mr. Nadler).
The CHAIRMAN. The gentleman from New York (Mr. Nadler) is recognized
for 1 minute.
Mr. NADLER. Mr. Chairman, this amendment does two things. The
gentleman from Michigan (Mr. Conyers) described the impact on the
single-asset realty. But it does something else, and we did not hear
from the other side why it is so terrible, what it does, or why they
rejected it in committee and reject it now, having nothing to do with
single-asset real estate.
What this does is say to the judge, is to give the judge discretion.
When looking at a small business bankruptcy, the judge would have
discretion to say, if he finds that imposition of these new onerous
filing requirements and deadlines was likely to push that business into
liquidation and cost more than five jobs, instead of enabling the
business to reorganize, he is given the discretion to say, never mind
these new restrictions, these new onerous requirements, better the
business shall survive and not lay off the workers.
Why not let judges have that discretion? Why insist that small
businesses have to go out of existence and lay off these people? Let
the judge have discretion, if he makes a finding that imposition of
these new restrictions would likely cause the business to go out of
existence instead of reorganizing, getting on its feet and saving the
jobs.
This is an anti-jobs bill. This is a pro-jobs amendment. I do not
understand the opposition to it.
Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I ask the Members to vote no on this amendment. I
repeat, we have taken great pains to solidify in our bill, the bill
that is before us, those provisions having to do with small business
that have found broad favor across the commercial world, to include the
Justice Department, to include the advocate for the SBA and other
organizations. I ask for a no vote.
The CHAIRMAN. All time has expired.
The question is on the amendment offered by the gentleman from
Michigan (Mr. Conyers).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Mr. CONYERS. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 158, further proceedings
on the amendment offered by the gentleman from Michigan (Mr. Conyers)
will be postponed.
It is now in order to consider amendment No. 8 printed in House
report 106-126.
Amendment No. 8 Offered by Mr. Watt of North Carolina
Mr. WATT of North Carolina. Mr. Chairman, I offer amendment No. 8,
which is made in order under the rule.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 8 offered by Mr. Watt of North Carolina:
Beginning on page 160, strike line 23 and all that follows
through line 2 on page 161.
Page 162, strike lines 1 through 15, and insert the
following (and make such technical and conforming changes as
may be appropriate):
``(f) An individual debtor in a case under chapter 7 or 13
of this title shall file with the court at the request of any
party in interest--
``(1) all tax returns, including any schedules or
attachments, with respect to the period from the commencement
of the case until such time as the case is closed;
``(2) at the time filed with the taxing authority, all tax
returns, including any schedules or attachments, that were
not filed with the taxing authority when the schedules under
subsection (a)(1) were filed with respect to the period that
is 3 years before the order of relief;
``(3) any amendments to any of the tax returns, including
schedules or attachments, described in paragraph (1) or (2);
and
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
North Carolina (Mr. Watt) and a Member opposed each will control 10
minutes.
The Chair recognizes the gentleman from North Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Chairman, I yield myself such time as
I may consume.
Mr. Chairman, this is a simple amendment, and hopefully it will not
take the entire allotted time. This is an amendment that was offered in
the Committee on the Judiciary, and the Committee on the Judiciary
split evenly, so I am sure the chairman of the subcommittee has a
position on it, but the Committee on the Judiciary itself has failed to
express an opinion one way or another because it failed on a split
vote. I believe the vote was 13 to 13.
Mr. Chairman, this bill currently requires that every bankruptcy
filer, no matter whether his filing is or is not contested, file at
least 3 years' worth of tax returns with the court. In our subcommittee
we had hearings, and the bankruptcy judges, bankruptcy trustees, every
single witness who came agreed that requiring all of these tax returns
to be filed simply creates a massive paperwork burden and expense to
the bankruptcy system, and that this was not a good idea. These burdens
are unnecessary.
Credit industry finance studies, consumer advocacy group finance
studies, all indicate that the number of abusive Chapter 7 bankruptcy
filings are approximately 10 percent, at most, of the bankruptcy
filings. They also indicate that the vast majority of bankruptcy
filings are what they categorize as uncontested filings.
So why are we requiring tax returns for 3 years to be filed with the
bankruptcy court, when in the great majority of these cases there will
not be any contest about it, there will not be any need for the tax
returns? They will
[[Page H2715]]
simply sit there in a corner in the bankruptcy court, clutter up space,
take up needed time and energy to move around from place to place. They
are simply unneeded.
So my amendment simply says, look, you do not have to file these
returns unless some party in interest says, I want you to file the
returns. If some party in interest, any party in interest in the
bankruptcy wants the tax returns, all they have to do is file one
sentence which says, I want the tax returns filed. They do not have to
give a reason, there has to be no hearing, there does not have to be
anything but one sentence saying, I want the tax returns of this filer
filed, and that person would have to file them. And for some reason the
author of this bill thinks that is terrible.
Mr. Chairman, I think he is overreacting. What he has decided is that
every person who files a bankruptcy petition is a bad person, and we
are going to impose all these burdens on him.
But Mr. Chairman, listen to what the Congressional Budget Office says
about this provision. I quote: ``This section would require the
Administrative Office of the U.S. courts to receive and retain the tax
returns for the three most recent years preceding the commencement of
the bankruptcy case for all Chapter 7 and Chapter 13 debtors, about 8
million debtors over the 2000 to 2004 period. CBO estimates that
appropriations of $34 million over the next 5 years would be required
to store and provide access to over 20 million tax returns.''
That is the Congressional Budget Office, who is telling the sponsor
of this bill that because he thinks every filer in America of a
bankruptcy petition is a bad person and ought to be subjected to this,
even though nobody is ever going to look at most of these tax returns,
he is willing to cost the taxpayers of America $34 million because he
has this personal agenda that, I do not know, even Republican Members
on the committee said, this is a bad idea. Even members of the
Committee on Rules said, this is a bad idea. We support your amendment.
That is how this amendment got made in order.
Yet, we are taking up valuable legislative time arguing about
something that is completely inconsistent with what the professed
philosophy is, to save taxpayers' money and to do something that is
valuable to the system of bankruptcy. This is a provision in the bill
which is not needed.
Mr. Chairman, I reserve the balance of my time.
{time} 1515
Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
It is amazing to me that we can be criticized for trying to bring
into the bankruptcy world a sense of accountability, of discipline.
What is wrong with asking an individual who approaches the bankruptcy
court and says, I am in terrible shape; I need to have bankruptcy
relief, what is wrong with asking that individual to prove at the
outset or to demonstrate at least prima facie what those financial
circumstances are? That is a common sense requirement in most of the
proceedings and most of the cases that we have of every conceivable
kind in the court system of our country.
So here we have an individual who says, my income cannot match,
cannot meet the debts that have fallen upon me. So we tell that
individual to come to the bankruptcy court, to file for discharge of
their obligations, to bring their income tax returns so they can show
right away, to the lawyer who is helping them or to the bankruptcy
court which will ultimately receive them, what their stream of income
has been and what can be perceived as forecasting what income they will
have in the next year or so beyond the aegis of the bankruptcy court.
That allows a couple of things to happen. Number one, it will allow
many times, in our judgment, right at the outset, that the debtor and
his counselor or bankruptcy adviser will come to the conclusion that he
may not fare well in the bankruptcy court. The income stream that the
individual has, together with the expenses that are matched against it,
they might find that they would be rejected in bankruptcy. So maybe it
would be better to wait a while, try to work out some of these debts
and then decide later whether or not bankruptcy should be approached.
That is a commonsense, valuable, preliminary finding for the debtor to
make with his counselor.
We believe that that is helpful. That brings accountability, personal
responsibility, and a sense of stability to the system, and may prevent
countless individuals from filing bankruptcy where before all they had
to say was, as is the system now, I am bankrupt, I do not have any
income, and so forth. And when asked how much they make; well, they do
not want to be asked those questions. They may say, I think I am making
$85 a week, or whatever calculation that the debtor asserts then
becomes the basis of his asking for bankruptcy relief. Well, that is
wrong.
And furthermore, if we should rely on what the gentleman from North
Carolina says, to ask someone or embed in the law the requirement that
a tax return be requested and that that should be granted
automatically, first of all, it would allow that system itself to be
gamed by some.
For instance, if I am a debtor, ready to approach the filing of
bankruptcy, and my counselor tells me that I may or may not be asked
for an income tax return once I file, if the amendment were carried,
the debtor might say, well, I will take that chance. And if the request
is not made for the tax return, he glides on his merry way towards a
discharge in bankruptcy. If the trustee or the bankruptcy court asks
for the tax return, he still has the option to drop out of the
bankruptcy filing. So, in a way, we have an uncertain system at hand
under the Watt amendment.
I am not ready to vouch for the inevitability that mountains of paper
will be piled on top of the paper that has already been filed. I
believe that with the electronic systems that are at hand, that it may
be after the first filing of the 3 years of income tax returns, that
almost forthwith they would be returned to the bankrupt filer while the
system goes on with an electronic recordation of the data in that
income tax return. So I see some relief even in the paperwork that
might not otherwise be seen. We all agree that the increased technology
is helping these kinds of systems all along.
The other important feature here is that I take it from the offering
by the gentleman from North Carolina that the gentleman intends to vote
against the Nadler substitute which is coming, because as one of the
debtor's duties that even the gentleman from New York recognizes and
applauds and includes in his version of bankruptcy reform is the filing
of tax returns from the previous 3 years for anyone who dares to enter
the bankruptcy courts asking for relief.
The commonsense requirement that a person seeking the help of the
court provide all the information necessary for the court to determine
the real status of that individual is a commonsense precept of our law,
and we should not have any court rely only on the word or the
assertions of the person who wants relief without the evidence that
will make it a more stable set of provisions.
Mr. Chairman, I reserve the balance of my time.
Mr. WATT of North Carolina. Mr. Chairman, how much time remains?
The CHAIRMAN. Both Members have 3\1/2\ minutes remaining.
Mr. WATT of North Carolina. Mr. Chairman, I yield 1 minute to the
gentleman from Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Chairman, I thank the gentleman for yielding me this
time.
I wish to say to the gentleman from Pennsylvania, Mr. Chairman, that
apparently the Congressional Budget Office did not see the savings that
the gentleman envisions in this, and the gentleman has been here long
enough to remember the Paperwork Reduction Act. Whatever happened to
that?
Here, if the gentleman were to examine the proceedings in any
bankruptcy court, he would quickly know that the court can demand an
income tax return, and certainly any party in interest is not about to
forget to bring that in to the proceeding if there is any slight notice
that he needs it. So what the gentleman from North Carolina is doing is
merely making this optional to anybody that wants it, and here the
gentleman from Pennsylvania is resisting it.
If a Federal agency tried to promulgate this rule, the gentleman from
[[Page H2716]]
Pennsylvania would be leading the Congress in demanding to know why
they want such unnecessary authority. So, please, let us improve the
bill to at least this minor amount.
Mr. GEKAS. Mr. Chairman, I yield the balance of my time to the
gentleman from Florida (Mr. Foley).
Mr. FOLEY. Mr. Chairman, I want to thank the gentleman from
Pennsylvania (Mr. Gekas) for his hard work on this vitally important
bill and on the series of amendments we have been debating today.
Clearly, we want to make certain that people pay their debts. Having
been a commercial realtor and involved in the business of real estate
and restaurants and different things, certainly I understand when
people have trouble in society.
The one provision sponsored by the gentleman from North Carolina that
would make a tax return subject to the presentation of one of the
parties interested in asking for it I think strikes at what we should
be trying to accomplish in the bill. Having a tax form as a requirement
of a bankruptcy petition will, in fact, give the courts and all
interested parties a chance to review the assets of the individual, at
least the income of the individual, and whether in fact they can make
due their debts to society. I think it is an important and fundamental
thing that occur at the very, very beginning of a bankruptcy hearing. I
think the court should be able to review in fact that they have income
to satisfy their debts.
It seems time and time again I am reading about somebody who struck
it rich and won the lottery, but somehow, because of the foolish
management of their own money, they leave a lot of creditors out in the
lurch. I would like to see some of those tax returns, and I would like
to see the income from those lottery proceeds, and I think the court is
entitled to them.
I think then to go and require one of the aggrieved parties to step
forward and say, judge, I would like to petition to have a tax return
submitted for the record so we can at least look to see if the income
is there to satisfy the debts, is only going to encumber the process.
It will drag it out. The debtor may say, well, I do not know where my
copies are; well, let me see if I can get them; well, I may have to
acquire them through the IRS to get copies back to make a presentation
to the court, simply looking to delay and obfuscate the problem.
I want to speak for a moment on the amendment offered by the
gentleman from Michigan (Mr. Conyers) on the job requirements.
Mr. WATT of North Carolina. Mr. Chairman, will the gentleman yield?
Mr. FOLEY. I yield to the gentleman from North Carolina.
Mr. WATT of North Carolina. Mr. Chairman, the gentleman is aware, of
course, that that possibility that he just mentioned exists under the
underlying bill. If somebody does not have the tax returns, they can
still come in, in an emergency situation, and have the same kind of
argument.
And there is no hearing required under my amendment. I do not know
which amendment the gentleman is debating. All someone has to do is
file one sentence saying, I would like to have the tax returns. This is
not about not filing the tax returns.
I agree with the gentleman. There are a lot of cases where the tax
returns are needed, and I am not trying to impede that. I am just
trying to keep mountains and mountains of paper from stacking up in the
bankruptcy court.
Mr. FOLEY. Reclaiming my time, Mr. Chairman, I think that is a
mountain of paperwork we desperately need to see. We need to see the
facts. We need to see the proof in the pudding of what the income of
the gentleman or gentlewoman was as they are making their claims to the
courts. I think absent that information the courts have very little to
base whether in fact this is a viable bankruptcy petition filed.
These are the types of things that will strengthen the law; so that
all things that are material are filed accurately in the court and we
are not waiting until we have delay after delay after delay.
So I again strongly urge the Congress to reject the amendment and
proceed to support the underlying bill to bring some semblance of
reasonableness to the Bankruptcy Reform Act of 1999.
Mr. GEKAS. Mr. Chairman, I yield back the balance of my time.
Mr. WATT of North Carolina. Mr. Chairman, I yield 1 minute to the
gentleman from New York (Mr. Nadler).
Mr. NADLER. Mr. Chairman, this is a simply silly provision and does
not, frankly, deserve the attention it is being paid on the floor
today.
Why should we not waste $34 million of the taxpayers' money for no
purpose at all, the gentleman from Pennsylvania asks? My answer is
because it is $34 million of the taxpayers' money.
There are no hearings here. Anyone who practices bankruptcy knows
that in a vast number of cases it is open and shut. Everybody knows
what is going on. There are no assets, very little income, no one has
any desire to see the tax forms. Anyone, any creditor, the judge,
anybody who wants to see the tax form, a one-sentence request suffices.
All that not passing the amendment of the gentleman from North
Carolina will do will be to waste $34 million of the taxpayers' money
in order to pile up tax forms in court that no one will read.
Sure, there are many cases where we may want to see what the assets
are, what the income is, whether the bankruptcy makes sense or not,
whether it meets the requirements of the law. All anyone has to do is
ask, and someone will ask, and those are the complicated ones. But for
those where there is no question, why require the court, as is not now
required, to bury itself under a mountain of paper for no other purpose
than to waste the taxpayers' money?
Mr. WATT of North Carolina. Mr. Chairman, how much time remains?
The CHAIRMAN. The gentleman from North Carolina (Mr. Watt) has 1\1/2\
minutes remaining.
Mr. WATT of North Carolina. Mr. Chairman, I yield myself the balance
of my time.
Mr. Chairman, let me just very quietly and calmly explain to the
gentleman from Pennsylvania (Mr. Gekas) and the gentleman from Florida
(Mr. Foley) that I agree with them. There are a number of cases where
tax returns are necessary in the bankruptcy court. But there are just
as many cases where tax returns are unnecessary in the bankruptcy
court; where no issue exists in the case, no argument about whether the
person is bankrupt, nothing to be gained by having somebody bring in a
stack of papers of 3 years' worth of tax returns other than that they
will stack up in the corner and sit there and the taxpayers of America
will have to pay the storage cost on that.
This whole notion that the gentleman has put together, that every
single person ought to come in with a tax return, is just the gentleman
boxing with a shadow. This is not evidence unless somebody wants it to
be evidence; unless it is relevant to a determination of the outcome of
the case. And all that is required under my amendment to get that tax
return is a one-sentence statement saying I need the tax return. No
reasons, nothing.
{time} 1530
Please save the taxpayers $34 million and vote for this amendment.
The CHAIRMAN (Mr. Nethercutt). All time has expired.
The question is on the amendment offered by the gentleman from North
Carolina (Mr. Watt).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Mr. WATT of North Carolina. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN. Pursuant to House Resolution 158, further proceedings
on the amendment offered by the gentleman from North Carolina (Mr.
Watt) will be postponed.
It is now in order to consider amendment No. 9 printed in House
Report 106-126.
Amendment No. 9 offered by Mr. Whitfield
Mr. WHITFIELD. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 9 offered by Mr. Whitfield:
Page 176, after line 24, insert the following:
SEC. 614. COMPENSATING TRUSTEES.
Title 11, United States Code, is amended--
(1) in section 104(b)(1) in the material preceding
subparagraph (A)--
(A) by striking ``and''; and
(B) by inserting ``, 1326(b)(3)'' before ``immediately'';
[[Page H2717]]
(2) in section 326, by inserting at the end the following:
``(e) Notwithstanding any other provision of this section,
the court shall allow reasonable compensation under section
330(a) of this title for the services and expenses of the
trustee in taking the actions described in paragraphs (1) and
(2) if--
``(1) a trustee in a chapter 7 case commences a motion to
dismiss or convert under section 707(b) and such motion is
granted; or
``(2) the trustee demonstrates by a preponderance of the
evidence that the case was converted or dismissed because of
the trustee's actions.''; and
(3) in section 1326(b)--
(A) in paragraph (1), by striking ``and'';
(B) in paragraph (2), by striking the period at the end
thereof and inserting ``; and''; and
(C) by adding at the end the following:
``(3)(A) the amount of the compensation described in
subclauses (I) and (II) which is unpaid at the time of each
such payment, prorated over the remaining duration of the
plan--
``(i) and which has been allowed in a case--
``(I) converted to this chapter; or
``(II) dismissed from chapter 7 in which the debtor in this
case was a debtor, whether dismissed voluntarily by the
debtor or on motion of the trustee under section 707(b);
``(ii) but only to the extent such compensation has been
allowed to a chapter 7 trustee under section 326(e);
``(B) the compensation payable to the chapter 7 trustee in
the case under this chapter shall not exceed the greater of
the trustee fee allowed pursuant to section 330 of this title
plus--
``(i) $25 per month; or
``(ii) the amount payable to unsecured nonpriority
creditors as provided by the plan multiplied by 5 percent,
and the result divided by the number of months in the plan;
and
``(C) notwithstanding any other provision of this title,
any such compensation awarded to a chapter 7 trustee in a
converted or dismissed case shall be payable and may be
collected in a case under this chapter--
``(i) even if such amount has been discharged in a prior
proceeding under this title; and
``(ii) only to the extent permitted by this section.''.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
Kentucky (Mr. Whitfield) and a Member opposed each will control 10
minutes.
The Chair recognizes the gentleman from Kentucky (Mr. Whitfield).
Mr. WHITFIELD. Mr. Chairman, I yield myself such time as I may
consume.
First of all, I would like to certainly thank and congratulate the
leadership of the gentleman from Pennsylvania (Mr. Gekas) on this
important legislation, as well as that of the gentlemen from Michigan
and New York, for the hard work that they have put in on this
legislation, as well as that of their staffs. It is very important
legislation to reform the bankruptcy laws and to bring it up to date.
This amendment that I have, Mr. Chairman, is an amendment really
about basic fairness; and that is, this legislation requires trustees
to do some additional tasks, some additional work, and to simply
provide them an opportunity to be compensated for that work.
Specifically, it provides the opportunity for the trustees to be
compensated for the additional responsibilities they must perform
pursuant to the terms of H.R. 833.
Under this bill, trustees must comply with new duties, clarifying
which debtors truly need the relief provided by Chapter 7 and whether
those debtors should be converted to the Chapter 13 payment plan.
However, despite those additional duties, there are no provisions
compensating the trustees or even giving them the opportunity to be
compensated for the additional functions.
This amendment will allow the court or the bankruptcy judge to award
a reasonable fee for trustees' actions resulting in a case being
converted from Chapter 7 to Chapter 13.
In addition, in order to avoid overburdening debtors and reducing the
effect this fee would have on the distribution to any creditors, this
fee will be paid monthly over the life of the Chapter 13 plan.
It is only fair that individuals have the opportunity to be
compensated for additional work performed. Therefore, Mr. Chairman, I
would request that this amendment be accepted.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I rise in opposition to the amendment, and
I yield myself such time as I may consume.
Mr. Chairman, I think that we can accept this amendment. This is a
provision that we think will be helpful. We want to make sure that,
whatever fees, that that would come out of the debtor's assets so that
that would not be something else he would have to confront.
Mr. Chairman, I yield to the gentleman from Kentucky (Mr. Whitfield).
Mr. WHITFIELD. Mr. Chairman, that is my understanding; that is the
intent.
Mr. CONYERS. Mr. Chairman, under those circumstances, we approve of
the amendment; and I yield back the balance of my time.
Mr. WHITFIELD. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I thank the gentleman from Michigan (Mr. Conyers) for
his support on this amendment.
Mr. Chairman, I yield the balance of my time to the gentleman from
Pennsylvania (Mr. Gekas).
Mr. GEKAS. Mr. Chairman, I thank the gentleman for yielding me the
time.
I want to indicate, for the record, and to urge the Members that we
support this amendment and that it goes to some of the dependability
and predictability that we are trying to build into the revised
Bankruptcy Code. So the gentleman comes to the Chamber with an
amendment that is worthy of the support of all the Members.
Mr. WHITFIELD. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN. All time has expired.
The question is on the amendment offered by the gentleman from
Kentucky (Mr. Whitfield).
The amendment was agreed to.
Mr. MANZULLO. Mr. Chairman, I ask unanimous consent to speak for 1
minute on the Watt amendment.
The CHAIRMAN. Is there objection to the request of the gentleman from
Illinois?
There was no objection.
Mr. MANZULLO. Mr. Chairman, I was listening to the debate in my
office on the Watt amendment, which would simply say that whenever the
trustee or any party or any attorney requests a copy of the tax returns
that that would be turned over, as opposed to having a mandatory
provision requiring the filing of tax returns with a bankruptcy
petition.
When I practiced law, I probably had somewhere between 300 and 500
bankruptcy petitions representing petitioners, debtors and also
creditors. And if we are going to require, under the present main text
of this bill, the filing of tax returns, we are going to have to pass
an appropriation to increase the size of the Federal courthouses in
order to hold all the paperwork.
So I speak in favor of the Watt amendment, if the tax return is
requested by any party, that it could be turned over, as opposed to
putting additional paperwork into every single bankruptcy petition that
is filed.
The CHAIRMAN. It is now in order to consider amendment No. 10 printed
in House Report 106-126.
Amendment No. 10 Offered by Mr. Hyde
Mr. HYDE. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 10 offered by Mr. Hyde:
Page 8, beginning on line 14, strike ``(which'' and all
that follows through ``104(b))'' on line 19.
Beginning on page 8, strike line 23, and all that follows
through line 13 on page 9, and insert the following (and make
such technical and conforming changes as may be appropriate):
``(ii) The debtor's monthly expenses shall be the debtor's
monthly expenses reasonably necessary to be expended--
``(I) for the maintenance or support of the debtor, the
dependents of the debtor, and, in a joint case, the spouse of
the debtor if the spouse is not otherwise a dependent; and
``(II) if the debtor is engaged in business, for the
payment of expenditures necessary for the continuation,
preservation, and operation of such business.
Notwithstanding any other provision of this clause, the
debtor's monthly expenses shall not include any payments for
debts described in clauses (iii) and (iv).
Page 14, line 15, add close quotation marks and a period at
the end.
Beginning on page 14, strike line 16 and all that follows
through line 3 on page 15.
Page 101, after line 9, insert the following (and make such
technical and conforming changes as may be appropriate):
[[Page H2718]]
SEC. 154. GUIDELINES FOR ASSESSING INCOME.
Section 586 of title 28, United States Code, is amended by
adding at the end the following:
``(f) Not later than 1 year after the effective date of
this subsection, the Director of the Executive Office for
United States Trustees shall issue guidelines to assist in
making assessments of whether income is not reasonably
necessary to be expended by a debtor for the maintenance or
support of the debtor, the dependents of the debtor, and, in
a joint case, the spouse of the debtor if the spouse is not
otherwise a dependent.''.
Page 153, line 23, insert ``as amended by section 154,''
after ``Code,''.
Page 154, line 3, strike ``(f)'' and insert ``(g)''.
Page 154, line 5, strike ``(f)(1)(A)'' and insert
``(g)(1)(A)''.
Page 156, line 22, strike ``586(f)'' and insert ``586(g)''.
Page 157, line 4, strike ``586(f)'' and insert ``586(g)''.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
Illinois (Mr. Hyde) and the gentleman from Pennsylvania (Mr. Gekas)
each will control 20 minutes.
The Chair recognizes the gentleman from Illinois (Mr. Hyde).
Mr. HYDE. Mr. Chairman, I yield half my time to the gentleman from
Michigan (Mr. Conyers), and I ask unanimous consent that he may control
that time.
The CHAIRMAN. Is there objection to the request of the gentleman from
Illinois?
There was no objection.
Mr. HYDE. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I am pleased to speak in support of an amendment that I
am offering, together with the gentleman from Michigan (Mr. Conyers),
that relates to permissible living expenses of debtors and their
families. It replaces the bill's reliance on Internal Revenue Service
expense allowances and instead incorporates a test based on the
disposable income standard of current law, namely, whether income is
reasonably necessary for maintenance or support.
To enhance predictability, the amendment requires the Director of the
Executive Office for United States Trustees to issue guidelines that
will be considered in the application of the ``reasonably necessary''
standard.
Before discussing our proposed amendment relating to living expenses,
I want to emphasize, and I mean ``emphasize,'' that various pro-
creditor enhancements in Section 102, the relevant section of the bill,
are unaffected by this amendment. These enhancements greatly expand the
potential for utilizing Bankruptcy Code Section 707(b) to remove cases
from Chapter 7 of the Bankruptcy Code, where a debtor can receive a
limited discharge of obligations in return for giving up nonexempt
assets.
By recent count, there are a dozen pro-creditor enhancements in
Section 102 that my amendment leaves in place and 63 creditor-friendly
reforms in other sections of the bill. Believe me, we can enact
legislation that is highly favorable to creditors without depriving
debtors and their families of ``reasonably necessary'' living expenses.
This bill effectuates a major shift in bankruptcy policy, a change in
direction that necessitates focusing on what portion of a debtor's
future income will be available to meet the requirements of daily
living. For the last century, individual debtors generally have been
able to receive an immediate financial fresh start without having to
encumber their future incomes. By greatly increasing the potential for
dismissing Chapter 7 liquidation cases, this bill channels many debtors
into 5-year Chapter 13 repayment plans.
What will debtors, their spouses, and children be able to live on
during long repayment periods? This bill says, in effect, that debtors
and their families must adhere to a somewhat modified version of
expense allowances formulated within the Internal Revenue Service to
facilitate compromises with delinquent taxpayers. This model is
inappropriate for imposition in bankruptcy because, firstly, the
successful collection of taxes is a matter of national self-
preservation; and, secondly, the creditors can minimize the risk of
losses by adhering to prudent creditor practices.
I do not think it is a particularly Republican idea to advance the
IRS living standards. Recently, Congress gave legislative expression to
the need for flexibility in the application of IRS expense allowances
with the IRS to determine the appropriateness of applying the schedules
to individual taxpayers. It would be particularly anomalous for this
body to disregard the IRS Restructuring Act of 1998 and mandate an
application of IRS expense allowances in bankruptcy cases that is more
rigid and inflexible than what IRS itself does in the context of
accepting compromises of tax obligations.
Professor Jack Williams of Georgia State University School of Law,
who chaired the National Bankruptcy Review Commission's Tax Advisory
Committee, pointed out to us that tying debtor eligibility to a formula
that the IRS deviates from on a regular basis makes no sense. He
described the IRS collections standards as too parsimonious and said
the standards are unrealistic.
The limited effort to modify the IRS expense allowances during our
markup by including a potential add-on for food and clothing only of up
to 5 percent and providing for continuation of private school expenses
failed to solve major problems with the incorporation of IRS schedules
into our bankruptcy law.
Allowances for food are included in the IRS National Standards which
apply throughout the contiguous 48 States and do not reflect differing
costs from one region to another. In addition, allowable expenses for
food under IRS schedules increase dramatically with increases in
income.
The broader problem, of course, is the bill does not even make an
attempt to address problems with IRS allowances unrelated to food,
clothing, and education.
Leading national organizations with bankruptcy related expertise and
credibility recognize the need to replace the IRS expense allowances in
this bill. I am speaking of the Commercial Law League of America. They
have written us favorably.
Judge Randal Newsome, President of the National Conference of
Bankruptcy Judges, has said that, ``On behalf of the 319 members of the
National Conference of Bankruptcy Judges, I firmly believe your
amendment would lead to a far less complex and far more workable needs-
based bankruptcy system than one which attempts to incorporate IRS
expense standards.''
An unfortunate consequence of applying IRS living allowances in
bankruptcy cases is to penalize some family members because they live
with the debtor and cannot benefit from a support order.
The bill includes protections for the beneficiaries of support orders
issued by family courts, courts that are not constrained by the living
allowances the IRS seeks to impose on delinquent taxpayers.
Mr. Chairman, this is simple. What are they going to live on while
they are playing out the 5 years that they have to play out paying
their bills, paying their debts under Chapter 13?
The bill wants to use the IRS living standards. I want to replace
them with the reasonably necessary standard, which is the current law.
This bill has over 75 creditor enhancements. And to say if my amendment
passes this is a deal breaker, that kills the bill, is ludicrous. There
is so much in here for the creditors they ought to grab it and run.
{time} 1545
It just seems to me a little humanity, a little flexibility, a little
reasonableness in working out the living standards, the rules by which
you are going to live on while you are working out your Chapter 13
obligations, is appropriate.
Mr. Chairman, I reserve the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield such time as he may consume to the
gentleman from Texas (Mr. Armey), the majority leader.
Mr. ARMEY. I thank the gentleman for yielding me this time. I will be
brief.
Mr. Chairman, let me say, first of all, I do not think it is any
secret around here the high esteem with which I hold the gentleman from
Illinois (Mr. Hyde). The gentleman from Illinois is one of my heroes
and a close personal friend. It pains me to find myself ever in
disagreement with a gentleman I admire so much, but I could not be more
in disagreement with the gentleman from Illinois on this point than I
am.
Mr. Chairman, for years we have labored here, watching bills come and
bills go, markups come and markups
[[Page H2719]]
go, legislation pass through the floor. For all those years what I have
looked to is for the Congress to act in such a way as to exercise the
legislative discipline in the way the law is written, to write in an
acceptable objective standard so that anybody that comes under the
jurisdiction of the law will know in fact the rules of the game when
they enter the courtroom.
For too many years, what we have done is we have written law in this
body to leave things at a subjective level and to the discretion of the
court, that for too many times and too many pieces of legislation have
resulted in excessively drawn out cases under the law where in fact the
law was written on an ad hoc basis, in the courtroom, by the court.
Many of us who believe so much in judicial constructionism have
bemoaned that liberalism in the courts.
This legislation as it comes to the floor has a good, acceptable,
reasonable and I believe necessary objective standard. The Hyde-Conyers
amendment would remove that and would leave us again to the vagaries of
judgments in the courts and all that go with it.
No, I think at this point we must practice legislative discipline. We
must write the law as Congress intends the law. And we must give
everybody who would enter the courtroom under the jurisdiction of the
law a clear understanding of what the law is and what are the rules of
the game and what are the compliances required going into it.
I implore all of us to vote against this amendment, uphold clear,
defined standards under the law. Let this legislation go forward as it
does, as it is brought to the floor, as legislation that once again
will connect freedom and responsibility in financial dealings as a
message before all our families.
We all teach these lessons to our children about accepting your
responsibilities and fulfilling your responsibilities. Let the
bankruptcy laws of this great land be a complement to the teachings we
give our children and an encouragement to that, and let our children
know the standards of compliance that are expected of them under the
law. Let us not leave that to the whim of a judicial proceeding.
Mr. CONYERS. Mr. Chairman, I yield myself 5 minutes.
May I make it clear to my colleagues that there is no other amendment
that I support stronger than this one with the gentleman from Illinois
(Mr. Hyde), deleting provisions in the bill that would impose the sort
of one-size-fits-all standard for the income and expense test based on
IRS standards to determine who is eligible for bankruptcy relief and
how much they are required to pay their creditors. I am appalled with
the thought of using IRS expense standards.
First, the IRS standards do not protect a debtor's ability to pay for
health care, for elderly, care for the elderly, taxes, accounting or
legal fees. Now, an IRS standard like this has the effect of requiring
the payment of unsecured credit card debt before allowing for payment
of these important family-friendly items.
In the second place, where the IRS does allow specific expense items,
the permitted amounts are often inhumanely inadequate. For example, the
permitted automobile expense in the San Francisco Bay area for two cars
is $373 per month, even though most families could barely cover the
cost of automobile insurance, let alone car payments, gasoline, tolls
and other items of expense.
Question: How can we expect people to keep their jobs if we do not
provide them with enough money for transportation to get to work?
Number three, the IRS standards have a severe bias against renters
and other debtors without secured debts. This is because the bill
allows all secured debt payments to be deducted from monthly income but
limits rental and lease payments to the amount permitted by the IRS
standards. This means that the person renting apartments or leasing
cars may not be able to deduct the full amount of their housing and
transportation cost in bankruptcy, while persons with mortgages and
automobile debt would be able to do so. There is no legitimate policy
rationale for this discrepancy which punishes persons who try to live
within their means.
I have just a few letters that I will shortly put in the Record. From
the American Federation of State, County and Municipal Employees we
have a strong letter arguing against the means test. From the American
Federation of Labor, we have a legislative alert that says imposing an
unworkable and unfair means test on families seeking to obtain a fresh
start under Chapter 7 is to be avoided. We also have a letter from the
United Automobile Workers of America, who are particularly disturbed by
the up-front arbitrary means test that would unfairly bar many working
families from being able to obtain a fresh start under Chapter 7.
Mr. Chairman, this is probably the touchstone of this whole bill. If
we could move to this agreement to accept this joint amendment, we may
be able to save this bill from being turned down in the administration.
I am urging the Members to give this their consideration and ultimately
their support.
Mr. Chairman, I include the following material for the Record:
American Federation of State, County and Municipal
Employees, AFL-CIO,
Washington, DC, April 19, 1999.
Dear Representative: On behalf of 1.3 million members of
the American Federation of State, County and Municipal
Employees (AFSCME), I am writing concerning the scheduled
mark up of the Bankruptcy Reform Act of 1999 (H.R. 833). We
urge you to oppose H.R. 833 because it represents one-sided
legislation that elevates the interests of banks and credit
card companies above the interests of working men and women.
Many hard-working American families find themselves in
unfortunate financial positions due to circumstances beyond
their control. These families typically struggle with their
debts for substantial periods of time. They work extra hours
at multiple jobs, or borrow money from their relatives and
friends. They try to avoid bankruptcy to protect their homes
and save their credit ratings. But these efforts often fail,
especially when the creditors refuse to give them a second
chance that they desperately need.
H.R. 833 contains numerous provisions that will allow
creditors, particularly the credit card industry, to unfairly
burden or harass working families. Of particular concern is
the ``means test'' that would unfairly bar many working
families from being able to obtain a fresh start under
Chapter 7.
There is no economic evidence to suggest that the profiles
of families in Chapter 7 have improved since last year's
Conference Report was published. During the debate over the
bankruptcy legislation last year, much evidence was presented
to the contrary; families in Chapter 7, on average, are worse
off today than in the past. There is also no evidence that
these families are abusing the system.
AFSCME supports balanced bankruptcy reform, but this bill
departs from the bipartisan version of reform which cleared
the Senate floor last fall. We again urge you to vote against
H.R. 833.
Sincerely,
Charles M. Loveless,
Director of Legislation.
____
American Federation of Labor and Congress of Industrial
Organizations,
Washington, DC, April 20, 1999.
Hon. Henry J. Hyde,
Chairman, House Committee on the Judiciary, Washington, DC.
Dear Mr. Chairman: This week the House is scheduled to take
up H.R. 833, the Bankruptcy Reform Act of 1999. The AFL-CIO
is opposed to this radical legislation. It will harm working
families and weaken a vital safety net protecting small
businesses and jobs in times of economic downturn.
Specifically, the AFL-CIO opposes provisions in the bill
that:
Threaten jobs by placing substantial procedural and
substantive barriers in the way of small businesses' access
to the protections of Chapter 11;
Threaten jobs by broadening the scope of signal asset real
estate debtors subject to rules which increase the threat of
disruptive summary foreclosures of commercial property;
Threaten jobs by requiring commercial debtors to assume or
reject commercial leases within a rigid timetable, which
would force debtors to favor one class of creditors over
others, and threaten their overall ability to successfully
reorganize.
Impose an unworkable and unfair ``means'' test on families
seeking to obtain a fresh start under Chapter 7;
Impose burdensome, bureaucratic requirements on consumer
debtors that could result in the arbitrary dismissal of many
bankruptcy petitions, even when there is no abuse and working
families genuinely need relief; and
Place severe, punitive restrictions on repeat consumer
filings.
The current bankruptcy system is the result of decades of
thoughtful, careful bi-partisan legislative efforts, designed
to balance the interests of creditors, debots and the nation
as a whole. Working families and their unions participate in
this system as debtors, creditors and employees of both
debtors and creditors. We have much to lose if this system
becomes unbalanced or damaged by hasty and poorly thought-out
changes.
[[Page H2720]]
But the real danger posed by H.R. 833 is the threat it
poses to our economy's ability to weather downturns. The bill
aims to make access to the bankruptcy process more difficult
for our economy's most vulnerable links--small businesses and
consumers. This will likely result in increased business
closures, job loss and home foreclosure, increasing the
severity and length of any future economic downturn. It does
so in the face of academic data showing that consumers filing
bankruptcy are overwhelmingly working families who have
experienced a catastrophic event--families whose median
income is less than $18,000.
H.R. 833 threatens jobs and tilts the playing field against
working families and small businesses. We urge the Senate to
reject the harsh and ill-considered proposals embodied in the
current text of H.R. 833.
Sincerely,
Peggy Taylor,
Director, Department of Legislation.
____
International Union, United Automobile, Aerospace &
Agricultural Implement Workers of America--UAW
Washington, DC, April 28, 1999.
Dear Representative: This week the House is scheduled to
vote on H.R. 833, the Bankruptcy Reform Act of 1999. This
bill incorporates the Conference Report on the bankruptcy
legislation in the last Congress. The UAW opposed that
Conference Report, and we urge you to oppose H.R. 833,
because they represent one sided legislation that elevates
the interests of banks and credit card companies above the
interests of working men and women.
Many hard-working American families find themselves in
unfortunate financial positions due to circumstances beyond
their control. Layoffs, divorce and medical crisis can
quickly introduce financial instability into the lives of
workers and their families. These families typically struggle
with their debts for substantial periods of time. They work
extra hours and multiple jobs, or borrow money from their
relatives and friends. They try to avoid bankruptcy to
protect their homes and save their credit rating. But these
efforts often fail, especially when creditors refuse to give
them a second chance that they desperately need.
Like last year's Conference Report, H.R. 833 contains
numerous provisions that will allow creditors, particularly
the credit card industry, to unfairly burden or harass
working families. We are particularly disturbed with its up-
front, arbitrary ``means test'' that would unfairly bar many
working families from being able to obtain a fresh start
under Chapter 7. This concern is shared by Judiciary Chairman
Hyde, as demonstrated by the series of amendments he offered
to overcome the arbitrary and unfair effects of using IRS
standards in the means test and to allow bankruptcy judges
more discretion over the outcome. Unfortunately, these
amendments were rejected by the Committee.
There is no economic evidence to suggest that the profiles
of families in Chapter 7 have improved since the Conference
Report was published. Indeed, during the course of the debate
over the bankruptcy legislation last year, much evidence was
presented to the contrary; families in Chapter 7, on average,
are worse off today than the past. There is also no objective
evidence that these families are abusing the system. Despite
credit industry claims to the contrary, a recent study
commissioned by the American Bankruptcy Institute found that
only 3 percent of Chapter 7 filers could afford to repay some
portion of their debt--a finding that was also confirmed by
the U.S. Trustee's office.
The UAW is also deeply concerned that H.R. 833 contains
only watered-down consumer ``protections''. For example, it
would not provide for meaningful disclosure about the
consequences of making low credit card payments. It also
fails to adequately protect debtors against strong-arm
tactics used by creditors to re-affirm debt, abuses that have
been recently well-documented in the Sears case and others.
The UAW also is troubled that H.R. 833 places substantial
procedural and substantive barriers in the way of small
business seeking to re-organize under Chapter 11. This could
result in the loss of thousands of jobs for American workers.
The UAW supports balanced bankruptcy reform. But that is
not what H.R. 833 is about. Instead, it would favor the
interests of credit card companies and banks over the
interests of hard working families that are experiencing
financial difficulties. We therefore urge you to oppose H.R.
833.
Sincerely,
Alan Reuther,
Legislative Director.
Mr. Chairman, I reserve the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, we share, all of us, the reverence for the gentleman
from Illinois (Mr. Hyde) and the gentleman from Michigan (Mr. Conyers),
two of the statesmen of our organization and to whom we look for
decision-making on a broad spate of subject matters. But here I think
they themselves may not realize what they are espousing.
I say that with all kindness, because there are many times when I do
not realize what I am doing, but this may be an example of good
intentions that result in unintended consequences. We have heard that
phraseology many times.
What the gentlemen do, these two stalwarts of our Chamber, is shower
additional benefits upon the higher income people in our society. How
do they do that? All of us will agree that this whole process begins
with the median income. Those people at the median income or less are
protected by legislation that the gentleman from Illinois himself has
put into this bill, the safe harbor. Those people are beyond the
accountability that we seek from others because they are in such bad
shape that they must be given almost automatically a fresh start.
But now we are going to the higher income, over $50,000, 60, 70, 80,
90. Now, those people under our bill, we have a set of standards to
make sure that when we scrutinize their financial circumstances, we can
find, if at all, the possibility that they could repay some of the
debt. By putting these objective standards in it that we have, the IRS
standards, we are putting a standard into play which allows a
reasonable, objective scrutiny of these financial circumstances.
Look what the gentleman from Illinois and what the gentleman from
Michigan do. They say that for the $90,000 or $100,000 earner, we do
not have to use these objective standards, let us use subjective
standards, reasonable and necessary expenses. That means that before
some fact finder a debtor can plead a Rolls Royce and really make a
case or try to make a case that that is reasonable and necessary--I am
exaggerating, of course, to make a point--for the conduct of that
person's enterprise.
For a variety of things from Oregon to Georgia, there would be 20
different types of decisions made by 25 different courts on 25
different items in a bankruptcy proceeding. Disparity will return. We
are trying to get rid of disparity. Flexibility of outcome will return
where we are trying to contract that, to bring predictability and
stability into the system.
I do not believe that, in looking at it very closely, that the
gentleman from Michigan and the gentleman from Illinois would want to
shower additional benefits on the higher income people, because that is
what the result is. They are loosening those standards, returning them
to the status quo now where so many of the high earners are escaping
scrutiny in the bankruptcy system. That is what their unintended
consequences might be.
Furthermore, all the worry that the gentleman from Illinois
articulates about the lack of discretion and flexibility is taken care
of by one flat phraseology that we employ in our bill, and that is
extraordinary circumstances. When we have a situation, even when we
apply the objective standards which we think are absolutely necessary
for stability of the system, but we also allow a variance from that
when extraordinary circumstances can be demonstrated, then we have
covered all the concerns that the gentleman from Illinois and the
gentleman from Michigan express and still retain that stalwart set of
objective standards that brings predictability and stability to the
system.
We must reject it, while applauding the gentlemen for their
intentions, but the intentions of the proponents and sponsors of this
bill is to make sanity out of a system that has gone awry. What they do
is retain the status quo. We resist that temptation by saying to the
Members, vote ``no'' on the Hyde-Conyers amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield 4 minutes to the gentleman from
New York (Mr. Nadler).
Mr. NADLER. Mr. Chairman, the picture painted by the gentleman from
Pennsylvania (Mr. Gekas) would be funny if it were not serious. The
gentleman from Illinois (Mr. Hyde), that paragon, supporter and
champion of the raging liberal judiciary. Who believes that?
The fact of the matter is that I must commend the gentleman from
Illinois and the gentleman from Michigan for this amendment, for trying
to retain some humanity in the bankruptcy courts.
{time} 1600
The objective standards of which the gentleman from Pennsylvania (Mr.
[[Page H2721]]
Gekas) speaks are rigid and inhumane standards, inhumane standards that
this Congress told the IRS to junk last year because we found they were
inhumane. They are also standards that ignore the facts.
In addition to what the gentleman from Michigan said before about the
things they ignore, the fact is these standards are rigid and are
averages. If you are a bankrupt and you are going to bankruptcy and
they want to figure out how much you can afford to pay, the proper
question is, what is your rent? What is your mortgage? Not what is the
average mortgage payment in the northeast United States. If the IRS
says the average mortgage payment in the United States is $400 a month,
but your mortgage payment is $500, try to tell the bank that you can
only pay $400. See how far you get.
The fact is, a means test ought to be based on the reality, on the
facts. What is your real income? That is a problem with this test that
this amendment does not deal with, but what is your real income? What
are your real expenses? Not what the IRS thinks the expenses of the
average person in New York or California might be.
The gentleman from Pennsylvania (Mr. Gekas) says that you have the
safe harbor, that people under the median income are excluded from this
means test. He forgets his own bill, because this means test is used in
Chapter 13 without the safe harbor. In Chapter 13 this means test says
how much you can afford to repay in a repayment plan, even if you are
making $10,000 or $20,000 and you are under the median. But, again, how
much can you afford to repay? Who cares what your real expenses are?
All we care about is what the IRS says. That is simply unjust. It
simply will produce injustice.
This amendment would have the executive office of the United States
trustee set up standards and the judge could look at the real facts.
That is what a just system is. The gentleman from Pennsylvania (Mr.
Gekas) says, well, you can go in and plead extraordinary circumstances.
Sure you can, if you can spend $7,000 or $8,000 to do that with a
lawyer. And you are bankrupt. Good luck.
The gentleman from Pennsylvania (Mr. Gekas) says the gentleman from
Illinois (Mr. Hyde) and the gentleman from Michigan (Mr. Conyers) do
not understand what they are doing. They certainly do understand what
they are doing, and because they understand what they are doing, that
is why the National Bankruptcy Conference approves of this amendment,
and why the Commercial Law League and the National Association of
Consumer Bankruptcy Attorneys, the National Association of Bankruptcy
Trustees, the National Association of Chapter 13 Trustees, the Consumer
Federation of America, the Consumers Union, Public Citizen, and
everybody who knows anything about bankruptcy, except the creditors who
are buying and paying for this bill, support this amendment.
Mr. GEKAS. Mr. Chairman, I yield 2 minutes to the gentleman from
Tennessee (Mr. Bryant), a member of the committee.
(Mr. BRYANT asked and was given permission to revise and extend his
remarks.)
Mr. BRYANT. Mr. Chairman, I thank the gentleman for yielding me time.
Mr. Chairman, I too stand in opposition to this amendment. In order
to have effective bankruptcy reform, we need to have in this bill a set
of uniform standards as to whether or not someone should be allowed to
file in Chapter 7 or in Chapter 13 bankruptcy. The reason I oppose this
amendment is that it would effectively damage the means test, using an
open-ended subjective standards test. We have talked about that a
little bit. You have heard about that already.
In effect what that does in the real courtroom, it allows the
debtor's expenses, rather than being determined in a uniform fashion,
to be determined on a case-by-case, jurisdiction-by-jurisdiction,
court-by-court basis, bound only by the limits of the debtor's
imagination or the discretion of the judge.
The debtor may deduct any expense, if they can show that it is
reasonably necessary. If there is ever a word that is litigated to the
``Nth'' degree, it is the word ``reasonable.'' That is what you are
inviting in this situation. It invites an open door for litigation
every time there is a dispute over what is meant by ``reasonably
necessary.'' By having more litigation, you increase the administrative
burdens on the bankruptcy system and already add to a costly situation.
The ability to consider in this case that our chairman has spoken
about the extraordinary circumstances I think does give the requisite
flexibility that is needed, while at the same time maintaining some
uniformity to this situation. Allowing bankruptcy judges to create
their own test is an invitation, as has been said before, to disparate
treatment of claims and confusion among creditors and all those who
work within the bankruptcy system.
Mr. Chairman, in conclusion, I would say that my understanding of
H.R. 833 is that it does not actually incorporate the repayment test by
the IRS. Instead, it merely incorporates the categories identified by
the IRS as necessary expenses. So I urge my colleagues to oppose this
amendment and vote no.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from
California (Mr. Royce).
Mr. ROYCE. Mr. Chairman, I rise in strong opposition to the Hyde-
Conyers amendment.
Mr. Chairman, this legislation, H.R. 833, is about personal
responsibility. It is about clear standards. It is about correcting a
system that was designed to help those who have fallen on hard times,
but which is now used to protect those who can afford to pay to repay
some of their debt, but they choose not to.
H.R. 833 imposes clear objective standards to give debtors,
creditors, judges and trustees guidance in applying a means test used
to determine who has the ability to repay some of their debt. How is
this test based? On the median expenditure levels as determined by the
Bureau of Labor Standards and Statistics. This represents what the
average American family spends each month and what someone in
bankruptcy can afford to repay.
This amendment that we are discussing removes this standard and
replaces it with an entirely undefined standard of reasonably necessary
expenses. Essentially this amendment would put us right back where we
started.
Yesterday's Washington Post included an article which, in my view,
exemplifies what is wrong with the current bankruptcy code. This
article reports on a family with an annual income of $180,000. The
family apparently fell on hard times and filed for bankruptcy seeking
to discharge $140,000 in unsecured debt, but, upon filing, they listed
as among their monthly expenses projected $600 for entertainment, $270
for cell phone expenses and so forth.
Under H.R. 833, this family would receive the same allowances for
mortgage, food, clothing and utilities as they do under current law.
However, they would be denied the cell phone and the entertainment
allowances that most Americans who pay their bills on time do not
enjoy.
Under the Conyers-Hyde amendment there would be no clear standard
giving the judges the same discretion they have now, and this family
and thousands in a similar situation could very well continue with the
$600 entertainment and the $270 cell phone calls per month, all at the
expense of the consumers who will ultimately pick up the tab.
Again, H.R. 833 imposes the clear, consistent national standards that
will ensure that those that have the ability to repay their debts are
in fact required to do so. This amendment eviscerates those standards,
and I urge my colleagues to oppose it.
Mr. CONYERS. Mr. Chairman, I yield myself 2 minutes.
Mr. Chairman, first I would point out to the gentleman that the court
would merely disallow those claims that the gentleman rattled off from
the newspaper. Just because someone files them does not mean they are
going to get them. I cannot think of a Federal bankruptcy court that
would allow that sort of thing.
Mr. Chairman, it is no answer to assert that ``glitches'', so-called,
can be resolved through the bill's allowance for extraordinary
circumstances, that has been raised more than once here, because
establishing that a particular expense is extraordinary is neither
simple nor cost free. These circumstances can only be established on
[[Page H2722]]
a motion to the court prepared by legal counsel.
We are talking about bankrupts. The motion must be detailed,
documented and subject to creditor challenge. Moreover, the burden of
proof lies with the debtor in establishing extraordinary circumstances.
So if the debtor's motion fails, he is then subject to paying the
creditor's fees and costs. Collectively, these risks provide a
tremendous disincentive for debtors to claim extraordinary
circumstances. To add insult to injury, the bill does not even provide
for the deduction of the legal expenses needed to establish
extraordinary circumstances.
The IRS standards should offend us all, every Member of this body.
They have been rejected by us, abandoned by the IRS, and, yet, the
credit card companies would have us apply them in bankruptcy. We, who
are so strongly opposed to abusive IRS collection tactics in the income
tax context, cannot be supportive of incorporating these same standards
into bankruptcy law.
Mr. Chairman, this amendment goes to the heart of my concerns about
the bill. If it is adopted, we may have a chance. I urge Members to
give it their unfettered support.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from
Virginia (Mr. Boucher).
Mr. BOUCHER. Mr. Chairman, I thank the gentleman from Pennsylvania
for yielding me time.
Mr. Chairman, I rise in opposition to the amendment offered by the
gentleman from Illinois and the gentleman from Michigan. If adopted,
the amendment would seriously undermine the needs-based test for the
entry into Chapter 7 that is at the very core of this bankruptcy
reform.
Our major goal in proposing bankruptcy reform is to assure that
people who need bankruptcy protection, but who can afford to repay a
substantial part of what they owe, receive their protection in Chapter
13 plans in which the court will supervise the repayment.
In the process of determining who can afford to repay a substantial
part of their debt, the bill subtracts from the debtor's monthly income
a number of items: All secured debt is subtracted; all priority debts,
including child support and back taxes are subtracted; certain school
tuition costs are subtracted; and living expenses based upon standards
determined by the Internal Revenue Service are also subtracted.
The amendment that is now being considered would replace the
certainty of the IRS standard with a discretionary standard for
bankruptcy judges to determine what expenses are reasonably necessary.
The certainty of the IRS standard should be retained, and, in support
of that position, I would cite these arguments.
First, the Internal Revenue Service standards are generous. In a
review of 2,100 bankruptcy filings in 1997 conducted by a major
accounting firm, it was found that the living expenses under the IRS
standard are, on average, 8 percent higher than the actual expenses
reported by Chapter 7 filers. The expenses allowed under the standard
are clearly more than adequate.
Secondly, discretion already exists for bankruptcy judges and
trustees to move filers from Chapter 7 to Chapter 13 by the filing of a
motion alleging that petitioners are substantially abusing Chapter 7
because they can repay a large part of the debt and really belong in
Chapter 13. But, as a practical matter, these motions are rarely filed
today by trustees or by bankruptcy judges.
{time} 1615
The amendment now under consideration would simply move this complete
discretion over whether to bring a substantial abuse motion to the
living expense portion of the process.
Since judges and trustees have been reluctant to use their existing
discretion to require a greater use of Chapter 13 and the lesser use of
Chapter 7, there is little reason to have confidence that essentially
the same discretion will be any better used under the Hyde-Conyers
amendment than it is under the current process. If it is not, the core
reform that we are seeking to achieve will not be achieved.
The better course is to reject this amendment and to retain the
certainty of the IRS standard in determining reasonable living
expenses.
Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentleman from
Michigan (Mr. Smith).
Mr. SMITH of Michigan. Mr. Chairman, the reason I am supporting this
bill is because it has the tendency of making loans more available and
it has the tendency of bringing interest rates down.
This amendment throws open the door for litigation every time there
is a dispute as to whether a debtor's particular expenses are
reasonably necessary. This will dramatically increase administrative
burdens on the bankruptcy system.
It also leaves the door open to indecision based on individual judge
interpretation. Passing this amendment and doing away with the bill's
more definite guidelines means those interest rates will not come down;
it means that the increased availability of those loans will not be
forthcoming until the lenders have decided what judges are going to do
with the discretion that is added by the Hyde amendment.
H.R. 833 does not incorporate the actual repayment test used by the
IRS. Instead, it incorporates the categories identified by the IRS as
necessary expenses. This is an important distinction because the means
test of H.R. 833 is more flexible than anything used by the IRS.
The ability to consider ``extraordinary circumstances'' provided for
under the bill is a better mechanism to establish fair and equitable
reform than the amendment giving bankruptcy judges discretion to create
their own tests of ``reasonableness''.
Allowing bankruptcy judges to create their own test is an invitation
not only to the different treatment of debtors but also to confusion
among creditors and those who work within the bankruptcy system.
I urge defeat of the Hyde amendment.
Mr. GEKAS. Mr. Chairman, I yield 1 minute to the gentlewoman from
California (Mrs. Tauscher).
Mrs. TAUSCHER. Mr. Chairman, I rise in opposition to this amendment.
The Bankruptcy Reform Act would ensure that Americans who can
reasonably repay some of their debt will do so. It is based on the
principle of personal responsibility and intended to stem the tide of
American bankruptcy filings.
The Hyde-Conyers amendment flies in the face of that fundamental
principle. Instead of establishing a reasonable standard of living
expenses, as the bill does, this amendment would give judges broad
authority to determine, quote/unquote, reasonably necessary expenses.
This definition is ambiguous. It provides a loophole for bankruptcy
filers to avoid repayment and maintains one of the deficiencies of the
current system.
This legislation recognizes not everyone who files for bankruptcy is
able to repay their debts but it employs a reasonable standard to make
that determination. The Hyde-Conyers amendment would remove that
reasonableness from the bill. I urge my colleagues to oppose the Hyde-
Conyers amendment and support the Bankruptcy Reform Act.
Mr. HYDE. Mr. Chairman, I yield myself the balance of my time.
Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentleman from
Illinois.
The CHAIRMAN. The gentleman from Illinois (Mr. Hyde) is recognized
for 3 minutes.
(Mr. HYDE asked and was given permission to revise and extend his
remarks.)
Mr. HYDE. Mr. Chairman, my colleagues are making a virtue out of what
is a vice, and that is the inflexibility of the IRS standards. The cost
of food in Omaha, Nebraska or Boise, Idaho, is different than in
downtown Manhattan. So what is realistic about an inflexible standard?
Why not give some wiggle room so that humanity can play out?
This could be a good bill. It is a great bill for the creditors, I
can say. I have 75 enhancements here for the creditors. Why not throw a
little small bone to the debtor?
Do not talk about ``reasonably necessary'' as too vague. Are my
colleagues aware, those who have said that, that there is 15 years of
litigation and decisional authority interpreting that? Of course.
``Reasonable'' is a word used in negligence law, in the exercise of
reasonable care and caution. To hear some of my colleagues talk, I
would think this was from outer space. That is nonsense.
[[Page H2723]]
We have to allow for regional differences, for family differences. A
reasonably necessary standard is ascertainable.
I am as capitalist as anybody, I am as conservative as anybody, but
it does not seem to me when there is a bill that is truly tilted
towards the creditors, that giving a little flexibility for living
standards for people who are bankrupt is a violation of one's
credentials as a conservative.
The median income that the gentleman from Pennsylvania (Mr. Gekas)
mentioned of $51,000 sounds like a lot of money, but that is for a
family of four, a family of four. That may be a lot of money in Boise,
Idaho. It may be very little in New York.
Give some flexibility. The current law is what ought to obtain. My
colleagues are trying to change it by putting the IRS standards in. It
is the first time, and I dare say the last time, so much kind
approbation will be showered on the IRS by this side of the aisle. I
certainly do not join in that showering.
So this litigation, there will be litigation on the IRS standards,
there will be as much litigation as anyone wants.
This could be a good bill. I support this bill, but for goodness sake
give some humanity in the establishment of living standards while
paying out Chapter 13.
Lastly, let me pay my respects to the creditor lobby. They are
awesome.
Mr. GEKAS. Mr. Chairman, I yield myself 2 minutes.
Mr. Chairman, we return to the recurring issue. The current state of
bankruptcy is in a chaotic mess. One of the reasons is that an
individual who wishes to file bankruptcy finds it very easy to do so.
Very few standards are applied.
The system needed tightening up. Everybody in the world knows that.
Creditors, and the credit lobby, really understand that; there is no
question about it. We understand how they understand it. On the other
hand, an objective onlooker, the lawmakers that we are, who are eager
to tighten up the bankruptcy laws because it is good for our society,
it is good for our economy, it saves money for consumers to prevent
bankruptcies, it saves money for taxpayers to prevent bankruptcies, it
helps the tax collecting authorities like State governments, school
boards, municipal governments to be able to regain some of their lost
taxes by reason of unwarranted bankruptcies, all of these societal
needs are met in our bill.
What really is something that must be made clear to first the Members
of Congress and then to the public is that the current system, that
chaotic system, has too much flexibility. What the Hyde-Conyers
amendment does is return too much flexibility to a system where we are
trying to create standards and to tighten up on every corner of the
bankruptcy field.
How ironic it is that on the one hand they remove the IRS standards
because they are odious to many and then they reinsert standards to be
set by a trustee panel. So all of a sudden we are back to establishing
standards anyway.
What we have found throughout the test of the time that has been
engulfed in bankruptcy reform, that the IRS standards provide the
starting point and from there we have a better system at hand.
Mr. DeLAY. Mr. Chairman, I rise today to urge my colleagues to vote
no on this amendment. Bankruptcy reform must be allowed a chance to
work.
The bankruptcy reform bill that is before us today is simply trying
to jump-start a sense of personal responsibility in the area of
consumer financial transactions.
Today's bankruptcy system has made it too easy for irresponsible
people to pass on the burden of their financial debt to responsible
people.
The greatness of this country is based on freedom. But with this
freedom comes responsibility for your actions.
Because the stigma that was once associated with bankruptcy has
disappeared, we see too many people using bankruptcy as a financial
planning tool.
And, too many lawyers are getting rich selling that tool.
Gone is the notion that bankruptcy is to be a last-resort solution to
a personal financial crisis.
Gone is the chance of receiving a fresh start only after agreeing to
a repayment plan.
Instead, we see debtors routinely expecting others to pick up their
tab.
That in fact is what happens when the creditor passes on his or her
losses to other borrowers--everyone pays a portion of that debtor's
bill.
Mr. Chairman, the bankruptcy bill under consideration today is based
on the premise that those debtors who can afford to repay their debt
should do so, rather that have it forgiven.
To accomplish this seemingly simple goal, an income-based means test
is employed to determine if a debtor could do one of three things: have
debt forgiven; reorganize and enter into a repayment plan; or refrain
from filing for bankruptcy at all.
In order to differentiate amongst debtors and to end the abuses of
the bankruptcy system, objective standards are needed to replace
today's vague and ambiguous subjective guidelines in use by the
bankruptcy courts.
Mr. Chairman, the amendment before us will undercut the basic
objective of reforming the bankruptcy system by allowing judges to
continue to make the same subjective decisions about repayment--the
very same decisions that have not prevented recent abuse of the system.
The decision before us is clear: Vote ``yes'' only if you feel that
the majority of your constituents should continue to pay the costs of
these abuses.
But better yet, vote ``no'' to give bankruptcy reform a chance to
instill a sense of personal responsibility in consumer financial
transactions.
I urge my colleagues to vote ``no'' on this amendment.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Illinois (Mr. Hyde).
The question was taken; and the Chairman announced that the ayes
appeared to have it.
Recorded Vote
Mr. GEKAS. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The CHAIRMAN. Pursuant to House Resolution 158, after this 15-minute
vote on the Hyde amendment the Chair will resume proceedings on the
three questions postponed earlier on which demands for recorded votes
are pending. Any electronic vote after the first vote in this series
will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 184,
noes 238, not voting 11, as follows:
[Roll No. 110]
AYES--184
Abercrombie
Ackerman
Allen
Bachus
Baird
Baldacci
Baldwin
Barrett (NE)
Barrett (WI)
Bentsen
Berkley
Bishop
Blagojevich
Blumenauer
Boehlert
Bonior
Borski
Brady (PA)
Brown (FL)
Brown (OH)
Camp
Capps
Capuano
Cardin
Carson
Chambliss
Clay
Clayton
Clement
Clyburn
Conyers
Costello
Coyne
Cummings
Danner
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Filner
Forbes
Ford
Fossella
Frank (MA)
Ganske
Gejdenson
Gilchrest
Gilman
Gonzalez
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holt
Houghton
Hoyer
Hyde
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kind (WI)
King (NY)
Kleczka
Klink
Kucinich
LaFalce
LaHood
Lampson
Lantos
Larson
LaTourette
Leach
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McHugh
McIntosh
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Miller, George
Minge
Mink
Moakley
Morella
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ros-Lehtinen
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sawyer
Schakowsky
Scott
Serrano
Sherman
Shows
Snyder
Spratt
Stabenow
Stark
Strickland
Stupak
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Udall (CO)
Udall (NM)
Vento
Visclosky
Wamp
Waters
Watt (NC)
Waxman
Weiner
Weldon (PA)
Wexler
Wilson
Wise
Woolsey
Wu
NOES--238
Aderholt
Andrews
Archer
Armey
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bateman
Bereuter
Berry
Biggert
Bilbray
Bilirakis
Bliley
Blunt
Boehner
Bonilla
[[Page H2724]]
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Campbell
Canady
Cannon
Castle
Chabot
Chenoweth
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Cox
Cramer
Crane
Crowley
Cubin
Cunningham
Davis (FL)
Davis (VA)
Deal
DeLay
DeMint
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Etheridge
Everett
Ewing
Fletcher
Foley
Fowler
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Gekas
Gibbons
Gillmor
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hobson
Hoekstra
Holden
Hooley
Horn
Hostettler
Hulshof
Hunter
Hutchinson
Isakson
Istook
Jenkins
John
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
Kennedy
Kingston
Knollenberg
Kolbe
Kuykendall
Largent
Latham
Lazio
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
McCollum
McCrery
McInnis
McIntyre
McKeon
Menendez
Metcalf
Mica
Miller (FL)
Miller, Gary
Mollohan
Moore
Moran (KS)
Moran (VA)
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Ose
Oxley
Packard
Pascrell
Pastor
Paul
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Reynolds
Riley
Rivers
Roemer
Rogan
Rogers
Rohrabacher
Rothman
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sandlin
Sanford
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Souder
Spence
Stearns
Stenholm
Stump
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Toomey
Turner
Upton
Velazquez
Walden
Walsh
Watkins
Weldon (FL)
Weller
Weygand
Whitfield
Wicker
Wolf
Young (AK)
NOT VOTING--11
Becerra
Berman
Brown (CA)
Gephardt
Luther
Millender-McDonald
Simpson
Slaughter
Watts (OK)
Wynn
Young (FL)
{time} 1645
Messrs. PAUL, QUINN, LEWIS of California, BASS, PETERSON of
Pennsylvania, and MOLLOHAN changed their vote from ``aye'' to ``no.''
Ms. McCARTHY of Missouri and Mr. EVANS changed their vote from ``no''
to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Stated for:
Mr. BERMAN. Mr. Speaker, I was unable to cast a vote on the Hyde-
Conyers amendment due to a family emergency. However, had I been
present, I would have voted ``aye.''
Stated against:
Mr. DICKEY. Mr. Chairman, I inadvertently voted incorrectly on the
Hyde-Conyers amendment. I would like the Record to reflect that my vote
of ``yes'' should have been a vote of ``no.'' That was my intention.
Sequential Votes Postponed In Committee Of The Whole
The CHAIRMAN. Pursuant to House Resolution 158, proceedings will now
resume on those amendments on which further proceedings were postponed
in the following order: Amendment No. 3 offered by the gentleman from
Virginia (Mr. Moran); amendment No. 7 offered by the gentleman from
Michigan (Mr. Conyers); and amendment No. 8 offered by the gentleman
from North Carolina (Mr. Watt).
The Chair will reduce to 5 minutes the time for any electronic vote
in this series.
Amendment No. 3 Offered by Mr. Moran of Virginia
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment offered by the gentleman from Virginia (Mr. Moran) on
which further proceedings were postponed and on which the ayes
prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 373,
noes 47, not voting 13, as follows:
[Roll No. 111]
AYES--373
Abercrombie
Ackerman
Aderholt
Allen
Andrews
Archer
Armey
Bachus
Baird
Baker
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berkley
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Boswell
Boucher
Boyd
Brady (TX)
Brown (FL)
Brown (OH)
Bryant
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Capps
Capuano
Cardin
Carson
Castle
Chabot
Chambliss
Clay
Clayton
Clement
Clyburn
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Costello
Coyne
Cramer
Crane
Crowley
Cubin
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeGette
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Edwards
Ehrlich
Emerson
Engel
English
Eshoo
Etheridge
Ewing
Farr
Filner
Fletcher
Foley
Forbes
Ford
Fossella
Fowler
Frank (MA)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Green (TX)
Green (WI)
Greenwood
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastings (FL)
Hastings (WA)
Hayes
Hayworth
Herger
Hill (IN)
Hill (MT)
Hilleary
Hilliard
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jackson (IL)
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kasich
Kelly
Kennedy
Kildee
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Knollenberg
Kolbe
Kucinich
Kuykendall
LaFalce
LaHood
Lampson
Lantos
Largent
Larson
Latham
LaTourette
Lazio
Leach
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Maloney (NY)
Manzullo
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McGovern
McHugh
McIntosh
McIntyre
McKeon
McKinney
McNulty
Meek (FL)
Menendez
Metcalf
Mica
Millender-McDonald
Miller (FL)
Miller, Gary
Miller, George
Minge
Mink
Moakley
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Oberstar
Obey
Olver
Ortiz
Ose
Oxley
Packard
Pallone
Pascrell
Pastor
Pease
Pelosi
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Rivers
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Royce
Rush
Ryun (KS)
Sabo
Salmon
Sanchez
Sanders
Sanford
Sawyer
Scarborough
Schakowsky
Scott
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Spence
Stabenow
Stark
Stearns
Stenholm
Strickland
Stump
Stupak
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Tierney
Toomey
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Upton
Velazquez
Vento
Walden
Walsh
Wamp
Watkins
Waxman
Weiner
Weldon (FL)
Weldon (PA)
Weller
Wexler
Weygand
Whitfield
Wicker
Wise
Wolf
Woolsey
Wu
Young (AK)
NOES--47
Baldwin
Bonior
Bono
Borski
Brady (PA)
Burr
Canady
Cannon
Chenoweth
Conyers
DeFazio
Delahunt
DeLauro
Ehlers
Evans
Everett
Fattah
Goodling
Hefley
Hinchey
Jackson-Lee (TX)
Kilpatrick
Lee
Lipinski
Lofgren
Lowey
Martinez
McDermott
McInnis
Meehan
Meeks (NY)
Nadler
Owens
Paul
Payne
[[Page H2725]]
Peterson (MN)
Pombo
Ryan (WI)
Sandlin
Schaffer
Souder
Spratt
Taylor (NC)
Visclosky
Waters
Watt (NC)
Wilson
NOT VOTING--13
Becerra
Berman
Brown (CA)
Cox
Franks (NJ)
Gephardt
Luther
Saxton
Simpson
Slaughter
Watts (OK)
Wynn
Young (FL)
{time} 1654
Ms. JACKSON-LEE of Texas, Mr. MEEKS of New York, and Mr. PAYNE
changed their vote from ``aye'' to ``no.''
So the amendment was agreed to.
The result of the vote was announced as above recorded.
Amendment No. 7 Offered by Mr. Conyers
The CHAIRMAN. The pending business is the demand for a recorded vote
on the amendment offered by the gentleman from Michigan (Mr. Conyers)
on which further proceedings were postponed and on which the noes
prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 143,
noes 278, not voting 12, as follows:
[Roll No. 112]
AYES--143
Abercrombie
Ackerman
Allen
Baird
Baldacci
Baldwin
Barcia
Barrett (WI)
Berkley
Bishop
Blagojevich
Bonior
Borski
Brady (PA)
Brown (FL)
Brown (OH)
Capuano
Carson
Clay
Clayton
Clyburn
Conyers
Coyne
Crowley
Cummings
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dingell
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gejdenson
Gonzalez
Green (TX)
Gutierrez
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Houghton
Jackson (IL)
Jackson-Lee (TX)
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kleczka
Klink
Kucinich
LaFalce
Lampson
Lantos
Larson
Lee
Lewis (GA)
Linder
Lowey
Maloney (NY)
Markey
Martinez
Mascara
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Minge
Moakley
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Payne
Pelosi
Phelps
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Rothman
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Saxton
Schakowsky
Scott
Serrano
Shows
Stark
Strickland
Stupak
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Udall (CO)
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
NOES--278
Aderholt
Andrews
Archer
Armey
Bachus
Baker
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berry
Biggert
Bilbray
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Cardin
Castle
Chabot
Chambliss
Chenoweth
Clement
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Costello
Cox
Cramer
Crane
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dixon
Doggett
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ewing
Fletcher
Foley
Forbes
Fossella
Fowler
Franks (NJ)
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hobson
Hoekstra
Hooley
Horn
Hostettler
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inslee
Isakson
Istook
Jefferson
Jenkins
John
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
Kennedy
Kind (WI)
King (NY)
Kingston
Knollenberg
Kolbe
Kuykendall
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Levin
Lewis (CA)
Lewis (KY)
Lipinski
LoBiondo
Lofgren
Lucas (KY)
Lucas (OK)
Maloney (CT)
Manzullo
Matsui
McCollum
McCrery
McHugh
McInnis
McIntosh
McKeon
Metcalf
Mica
Miller (FL)
Miller, Gary
Mink
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Ose
Oxley
Packard
Pastor
Paul
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Reynolds
Riley
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sanchez
Sandlin
Sanford
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shuster
Sisisky
Skeen
Skelton
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Stenholm
Stump
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Toomey
Turner
Udall (NM)
Upton
Walden
Walsh
Wamp
Watkins
Weldon (FL)
Weldon (PA)
Weller
Weygand
Whitfield
Wicker
Wilson
Wise
Wolf
Young (AK)
NOT VOTING--12
Becerra
Berman
Bilirakis
Brown (CA)
Gephardt
Luther
Simpson
Slaughter
Smith (MI)
Watts (OK)
Wynn
Young (FL)
{time} 1704
Mr. DIXON changed his vote from ``aye'' to ``no.''
Mr. MINGE changed his vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Stated for
Mr. BERMAN. Mr. Speaker, I was unable to cast a vote on the Conyers
amendment due to a family emergency. However, had I been present, I
would have voted ``aye.''
Stated against
Mr. BILIRAKIS. Mr. Chairman, I missed rollcall Vote 112 because I was
unfortunately detained and unable to make it to the floor. Had I been
present, I would have voted ``no.''
Amendment Offered by Mr. Watt of North Carolina
The CHAIRMAN (Mr. Nethercutt). The pending business is the demand for
a recorded vote on the amendment offered by the gentleman from North
Carolina (Mr. Watt) on which further proceedings were postponed and on
which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 192,
noes 230, not voting 11, as follows:
[Roll No. 113]
AYES--192
Abercrombie
Ackerman
Allen
Bachus
Baird
Baldwin
Barcia
Barrett (WI)
Bentsen
Bereuter
Berkley
Bishop
Blagojevich
Blumenauer
Boehlert
Bonior
Borski
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Bryant
Burr
Campbell
Canady
Capps
Capuano
Cardin
Carson
Chenoweth
Clay
Clayton
Clyburn
Coble
Conyers
Costello
Coyne
Crowley
Cummings
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Diaz-Balart
Dicks
Dingell
Dixon
Doggett
Dooley
Doyle
Edwards
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Fossella
Gejdenson
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hill (IN)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holt
Hooley
Hyde
Inslee
Jackson (IL)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
King (NY)
Kleczka
Klink
Kucinich
LaFalce
Lampson
Lantos
Larson
LaTourette
Lee
Levin
Lewis (GA)
Linder
Lipinski
Lofgren
Lowey
Maloney (NY)
Manzullo
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCrery
McDermott
McGovern
McHugh
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
[[Page H2726]]
Miller (FL)
Miller, George
Minge
Mink
Moakley
Mollohan
Moran (VA)
Murtha
Myrick
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pastor
Payne
Pease
Pelosi
Petri
Phelps
Price (NC)
Rahall
Rangel
Reyes
Reynolds
Rivers
Rodriguez
Rothman
Roybal-Allard
Rush
Sabo
Salmon
Sanchez
Sanders
Sandlin
Sanford
Sawyer
Schakowsky
Scott
Serrano
Sherwood
Smith (NJ)
Snyder
Spratt
Stabenow
Stark
Strickland
Stupak
Tancredo
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Whitfield
Wise
Wolf
Woolsey
Wu
NOES--230
Aderholt
Andrews
Archer
Armey
Baker
Baldacci
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Berry
Biggert
Bilbray
Bilirakis
Bliley
Blunt
Boehner
Bonilla
Bono
Boswell
Boucher
Brady (TX)
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Castle
Chabot
Chambliss
Clement
Coburn
Collins
Combest
Condit
Cook
Cooksey
Cox
Cramer
Crane
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeLay
DeMint
Deutsch
Dickey
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
Engel
English
Everett
Ewing
Fletcher
Foley
Forbes
Ford
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (MT)
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Isakson
Istook
Jenkins
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
Kennedy
Kind (WI)
Kingston
Knollenberg
Kolbe
Kuykendall
LaHood
Largent
Latham
Lazio
Leach
Lewis (CA)
Lewis (KY)
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
McCollum
McInnis
McIntosh
McIntyre
McKeon
Metcalf
Mica
Miller, Gary
Moore
Moran (KS)
Morella
Nethercutt
Ney
Northup
Norwood
Nussle
Ose
Oxley
Packard
Pascrell
Paul
Peterson (MN)
Peterson (PA)
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Riley
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Shimkus
Shows
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (TX)
Smith (WA)
Souder
Spence
Stearns
Stenholm
Stump
Sununu
Sweeney
Talent
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Toomey
Udall (NM)
Upton
Walden
Walsh
Wamp
Watkins
Weldon (FL)
Weldon (PA)
Weller
Weygand
Wicker
Wilson
Young (AK)
NOT VOTING--11
Becerra
Berman
Brown (CA)
Gephardt
Jackson-Lee (TX)
Luther
Simpson
Slaughter
Watts (OK)
Wynn
Young (FL)
{time} 1715
Mr. PALLONE changed his vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Stated for:
Mr. BERMAN. Mr. Speaker, I was unable to cast a vote on the Watt
amendment due to a family emergency. However, had I been present, I
would have voted ``aye.''
Ms. JACKSON-LEE of Texas. Madam Speaker, during Rollcall Vote No.
113, the Watt amendment under bill H.R. 833 on May 5, 1999, I was
unavoidably detained. Had I been present, I would have voted ``aye.''
The CHAIRMAN. It is now in order to consider amendment No. 11 printed
in House Report 106-126.
Amendment in the Nature of a Substitute No. 11 Offered by Mr. Nadler
Mr. NADLER. Mr. Chairman, I offer an amendment in the nature of a
substitute.
The CHAIRMAN. The Clerk will designate the amendment in the nature of
a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute No. 11 offered by
Mr. Nadler:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Bankruptcy
Reform Act of 1999''.
(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. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Notice of alternatives.
Sec. 104. Debtor financial management training test program.
Subtitle B--Consumer Bankruptcy Protections
Sec. 105. Definitions.
Sec. 106. Enforcement.
Sec. 107. Sense of the congress.
Sec. 108. Discouraging abusive reaffirmation practices.
Sec. 109. Promotion of alternative dispute resolution.
Sec. 110. Enhanced disclosure for credit extensions secured by a
dwelling.
Sec. 111. Dual use debit card.
Sec. 112. Discouraging reckless lending practices.
Sec. 113. Protection of savings earmarked for the postsecondary
education of children.
Sec. 114. Effect of discharge.
Sec. 115. Limiting trustee liability.
Sec. 116. Reinforce the fresh start.
Sec. 117. Discouraging bad faith repeat filings.
Sec. 118. Curbing abusive filings.
Sec. 119. Debtor retention of personal property security.
Sec. 120. Relief from the automatic stay when the debtor does not
complete intended surrender of consumer debt collateral.
Sec. 121. Giving secured creditors fair treatment in chapter 13.
Sec. 123. Fair valuation of collateral.
Sec. 124. Domiciliary requirements for exemptions.
Sec. 125. Restrictions on certain exempt property obtained through
fraud.
Sec. 126. Rolling stock equipment.
Sec. 127. Discharge under chapter 13.
Sec. 128. Bankruptcy judgeships.
Sec. 129. Additional amendments to title 11, United States Code.
Sec. 131. Application of the codebtor stay only when the stay protects
the debtor.
Sec. 132. Adequate protection for investors.
Sec. 134. Giving debtors the ability to keep leased personal property
by assumption.
Sec. 135. Adequate protection of lessors and purchase money secured
creditors.
Sec. 136. Automatic stay.
Sec. 137. Extend period between bankruptcy discharges.
Sec. 139. Priorities for claims for domestic support obligations.
Sec. 142. Nondischargeability of certain debts for alimony,
maintenance, and support.
Sec. 143. Continued liability of property.
Sec. 144. Protection of domestic support claims against preferential
transfer motions.
Sec. 145. Clarification of meaning of household goods.
Sec. 147. Monetary limitation on certain exempt property.
Sec. 148. Bankruptcy fees.
Sec. 149. Collection of child support.
Sec. 150. Excluding employee benefit plan participant contributions and
other property from the estate.
Sec. 151. Clarification of postpetition wages and benefits.
Sec. 152. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 153. Automatic stay inapplicable to certain proceedings against
the debtor.
Sec. 154. Definition of domestic support obligation.
Sec. 155. Requirements to obtain confirmation and discharge in cases
involving domestic support obligations.
Sec. 156. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 157. Exemption for right to receive certain alimony, maintenance,
or support.
Sec. 158. Automatic stay inapplicable to certain proceedings against
the debtor.
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
Sec. 201. Reenactment of chapter 12.
Sec. 202. Meetings of creditors and equity security holders.
Sec. 203. Protection of retirement savings in bankruptcy.
Sec. 204. Protection of refinance of security interest.
Sec. 205. Executory contracts and unexpired leases.
Sec. 206. Creditors and equity security holders committees.
[[Page H2727]]
Sec. 207. Amendment to section 546 of title 11, United States Code.
Sec. 208. Limitation.
Sec. 209. Amendment to section 330(a) of title 11, United States Code.
Sec. 210. Postpetition disclosure and solicitation.
Sec. 211. Preferences.
Sec. 212. Venue of certain proceedings.
Sec. 213. Period for filing plan under chapter 11.
Sec. 214. Fees arising from certain ownership interests.
Sec. 215. Claims relating to insurance deposits in cases ancillary to
foreign proceedings.
Sec. 216. Defaults based on nonmonetary obligations.
Sec. 217. Sharing of compensation.
Sec. 218. Priority for administrative expenses.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
Sec. 301. Definition of disinterested person.
Sec. 302. Miscellaneous improvements.
Sec. 303. Extensions.
Sec. 304. Local filing of bankruptcy cases.
Sec. 305. Permitting assumption of contracts.
TITLE IV--SMALL BUSINESS BANKRUPTCY PROVISIONS
Sec. 401. Flexible rules for disclosure Statement and plan.
Sec. 402. Definitions.
Sec. 403. Standard form disclosure Statement and plan.
Sec. 404. Uniform national reporting requirements.
Sec. 405. Uniform reporting rules and forms for small business cases.
Sec. 406. Duties in small business cases.
Sec. 407. Plan filing and confirmation deadlines.
Sec. 408. Plan confirmation deadline.
Sec. 409. Prohibition against extension of time.
Sec. 410. Duties of the United States trustee.
Sec. 411. Scheduling conferences.
Sec. 412. Serial filer provisions.
Sec. 413. Expanded grounds for dismissal or conversion and appointment
of trustee or examiner.
Sec. 414. Study of operation of title 11 of the United States Code with
respect to small businesses.
Sec. 415. Payment of interest.
Sec. 416. Protection of jobs.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
Sec. 601. Creditor representation at first meeting of creditors.
Sec. 602. Audit procedures.
Sec. 603. Giving creditors fair notice in chapter 7 and 13 cases.
Sec. 604. Dismissal for failure to timely file schedules or provide
required information.
Sec. 605. Adequate time to prepare for hearing on confirmation of the
plan.
Sec. 606. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 607. Sense of the Congress regarding expansion of rule 9011 of the
Federal Rules of Bankruptcy Procedure.
Sec. 608. Elimination of certain fees payable in chapter 11 bankruptcy
cases.
Sec. 609. Study of bankruptcy impact of credit extended to dependent
students.
Sec. 610. Prompt relief from stay in individual cases.
Sec. 611. Stopping abusive conversions from chapter 13.
Sec. 612. Bankruptcy appeals.
Sec. 613. GAO study.
TITLE VII--BANKRUPTCY DATA
Sec. 701. Improved bankruptcy statistics.
Sec. 702. Uniform rules for the collection of bankruptcy data.
Sec. 703. Sense of the Congress regarding availability of bankruptcy
data.
TITLE VIII--BANKRUPTCY TAX PROVISIONS
Sec. 801. Treatment of certain liens.
Sec. 802. Effective notice to government.
Sec. 803. Notice of request for a determination of taxes.
Sec. 804. Rate of interest on tax claims.
Sec. 805. Tolling of priority of tax claim time periods.
Sec. 806. Priority property taxes incurred.
Sec. 807. Chapter 13 discharge of fraudulent and other taxes.
Sec. 808. Chapter 11 discharge of fraudulent taxes.
Sec. 809. Stay of tax proceedings.
Sec. 810. Periodic payment of taxes in chapter 11 cases.
Sec. 811. Avoidance of statutory tax liens prohibited.
Sec. 812. Payment of taxes in the conduct of business.
Sec. 813. Tardily filed priority tax claims.
Sec. 814. Income tax returns prepared by tax authorities.
Sec. 815. Discharge of the estate's liability for unpaid taxes.
Sec. 816. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 817. Standards for tax disclosure.
Sec. 818. Setoff of tax refunds.
TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES
Sec. 901. Amendment to add chapter 15 to title 11, United States Code.
Sec. 902. Amendments to other chapters in title 11, United States Code.
TITLE X--FINANCIAL CONTRACT PROVISIONS
Sec. 1001. Treatment of certain agreements by conservators or receivers
of insured depository institutions.
Sec. 1002. Authority of the corporation with respect to failed and
failing institutions.
Sec. 1003. Amendments relating to transfers of qualified financial
contracts.
Sec. 1004. Amendments relating to disaffirmance or repudiation of
qualified financial contracts.
Sec. 1005. Clarifying amendment relating to master agreements.
Sec. 1006. Federal Deposit Insurance Corporation Improvement Act of
1991.
Sec. 1007. Bankruptcy Code amendments.
Sec. 1008. Recordkeeping requirements.
Sec. 1009. Exemptions from contemporaneous execution requirement.
Sec. 1010. Damage measure.
Sec. 1011. SIPC stay.
Sec. 1012. Asset-backed securitizations.
Sec. 1013. Federal Reserve collateral requirements.
Sec. 1014. Effective date; application of amendments.
TITLE XI--TECHNICAL CORRECTIONS
Sec. 1101. Definitions.
Sec. 1102. Adjustment of dollar amounts.
Sec. 1103. Extension of time.
Sec. 1104. Technical amendments.
Sec. 1105. Penalty for persons who negligently or fraudulently prepare
bankruptcy petitions.
Sec. 1106. Limitation on compensation of professional persons.
Sec. 1107. Special tax provisions.
Sec. 1108. Effect of conversion.
Sec. 1109. Allowance of administrative expenses.
Sec. 1110. Priorities.
Sec. 1111. Exemptions.
Sec. 1112. Exceptions to discharge.
Sec. 1113. Effect of discharge.
Sec. 1114. Protection against discriminatory treatment.
Sec. 1115. Property of the estate.
Sec. 1116. Preferences.
Sec. 1117. Postpetition transactions.
Sec. 1118. Disposition of property of the estate.
Sec. 1119. General provisions.
Sec. 1120. Appointment of elected trustee.
Sec. 1121. Abandonment of railroad line.
Sec. 1122. Contents of plan.
Sec. 1123. Discharge under chapter 12.
Sec. 1124. Bankruptcy cases and proceedings.
Sec. 1125. Knowing disregard of bankruptcy law or rule.
Sec. 1126. Transfers made by nonprofit charitable corporations.
Sec. 1127. Prohibition on certain actions for failure to incur finance
charges.
Sec. 1128. Protection of valid purchase money security interests.
Sec. 1129. Trustees.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
Sec. 1201. Effective date; application of amendments.
TITLE I--CONSUMER BANKRUPTCY PROVISIONS
Subtitle A--Needs based bankruptcy
SEC. 101. CONVERSION.
Section 706(c) of title 11, United States Code, is amended
by inserting ``or consents to'' after ``requests''.
SEC. 102. DISMISSAL OR CONVERSION.
(a) In General.--Section 707 of title 11, United States
Code, is amended--
(1) by striking the section heading and inserting the
following:
``Sec. 707. Dismissal of a case or conversion to a case under
chapter 13''; and
(2) by amending subsection (b) to read as follows:
``(b)(1) After notice and a hearing, a court, on its own
motion or on a motion by the United States trustee, the
trustee, or any part in interest who is eligible to bring a
motion, may dismiss a case filed by an individual debtor
under this chapter, or with the debtor's consent, convert
such a case to a case under chapter 11 or 13 of this title if
it finds that the granting of relief would be an abuse of the
provisions of this chapter, the court shall consider
whether--
``(A) the debtor has the ability to repay some portion of
the debtor's unsecured nonpriority debt as determined under
paragraphs (2) and (3);
``(B) the debtor has filed the petition in bad faith; or
``(C) the totality of the circumstances (including whether
the debtor seeks to reject a personal services contract and
the financial need for such rejection as sought by the
debtor) of the debtor's financial situation demonstrates
abuse.
``(2) In considering under paragraph (1)(A) whether the
granting of relief would be an abuse of the provisions of
this chapter, the court shall conclusively presume abuse does
not exist if the debtor's current monthly income, when
multiplied by 12, is less than or equal to 100 percent of the
highest national or applicable State or Statistical Area
median family income reported for a family of equal size,
whichever is greater, or in the case of a household of 1
person, less than or
[[Page H2728]]
equal to 100 percent of the highest national or State or
Metropolitan Statistical Area median household income for 1
earner, whichever is greater, as adjusted, if applicable, as
provided in paragraph (6).
``(3) In considering under paragraph (1)(A) whether the
granting of relief would be an abuse of the provision of this
chapter, the court shall presume abuse exists if--
``(A) the debtor's current monthly income, when multiplied
by 12, is less than or equal to 100 percent of the highest
national or applicable State or Metropolitan Statistical Area
median family income reported for a family of equal size,
whichever is greater, or in the case of a household of 1
person, less than or equal to 100 percent of the highest
national or State or Metropolitan Statistical Area median
household income for 1 yearner, whichever is greater, as
adjusted, if applicable, as provided in paragraph (6); and
``(B) the product of--
``(i) the debtor's current monthly income, reduced by
allowable monthly expenses specified in paragraph (4) (which
shall include, if applicable the continuation of actual
expenses of a dependent child under the age of 18 for
tuition, books, and required fees at a private elementary or
secondary school, or comparable expenses stemming from the
home education of such child, or the attendance of such child
at a public elementary or secondary school, not exceeding
$10,000) and monthly debt payments specified in paragraph
(5), and
``(ii) multiplied by 36,
less estimated administrative expenses and reasonable
attorneys' fees, is not less than $6,000 of the debtor's
nonpriority unsecured claims in the case.
``(4) For the purposes of this subsection, the debtor's
allowable monthly expenses shall be the expenses reasonably
necessary--
``(A) for the maintenance or support of the debtor, the
dependents of the debtor, and in a joint case, the spouse of
the debtor if the spouse is not otherwise a dependent; and
``(B) if the debtor is engaged in business, for the payment
of expenditures necessary for the continuation, preservation,
and operation of such business.
Notwithstanding any other provision of this clause, the
debtor's monthly expenses shall not include payments for
debts described in paragraph (5).
``(5) For purposes of this subsection, the debtor's monthly
debt payments shall include--
``(A) the total amount scheduled as contractually due on
all secured debts in each month of the 36 months following
the date of the petition and divided by 36; and
``(B) the debtor's expenses for payment of all priority
claims, including priority domestic support obligations,
calculated as the total amount of debts entitled to priority
in each month of the 36 months following the date of the
petition and divided by 36.
``(6) For the purposes of this subsection--
``(A) national or applicable State or Metropolitan
Statistical Area median family income reported for a
household of more than 4 individuals shall be that of a
household of 4 individuals plus $583 per month for each
additional member of that household;
``(B) a family or household shall consist of the debtor,
the debtor's spouse, and the debtor's dependents, but not a
legally separated spouse unless the spouse files a joint case
with the debtor.
``(7) In any proceeding brought under this subsection, the
presumption of abuse may be rebutted by demonstrating special
circumstances that justify additional reasonable expenses or
adjustments of current monthly total income. In order to
establish such circumstances, the debtor shall be required
to--
``(A) itemize each additional expense or adjustment of
income; and
``(B) provide documentation of such expenses and a detailed
explanation of the circumstances that warrant such expenses.
``(8)(A) As part of the schedule of current income and
expenditures required under section 521, the debtor shall
include--
``(i) a statement of the debtor's current monthly income
and calculations that show whether a presumption arises under
paragraph (1)(A) of this subsection; or
``(ii) a statement of the debtor's current monthly income
showing that the debtor is a debtor described in paragraph
(14) of this subsection.
``(B) The Supreme Court shall promulgate rules under
section 2075 of title 28, United States Code, that prescribe
a form for a statement under subparagraph (A) and may provide
general rules on the content of such statement.
``(9) If a trustee brings a motion for dismissal or
conversion under this subsection, and the court grants that
motion and finds that the action of the counsel for the
debtor in filing under this chapter violated Rule 9011, the
courts hall assess damages, which may include ordering--
``(A) the counsel for the debtor to reimburse the trustee
for all reasonable costs in prosecuting a motion brought
under section 707(b), including reasonable attorneys' fees;
``(B) the assessment of an appropriate civil penalty
against the counsel for the debtor; and
``(C) the payment of the civil penalty to the trustee or
the United States trustee.
``(10) The court may award a debtor all reasonable costs
and other appropriate damages in contesting a motion brought
by a party in interest (other than a trustee, bankruptcy
administrator, or United States trustee) under this
subsection (including reasonable attorneys' fees) if the
court does not grant the motion and the court finds that--
``(A) the position of the party that brought the motion was
not substantially justified; or
``(B) the party brought the motion solely for the purpose
of coercing the debtor into waiving a right guaranteed to the
debtor under this title.
``(11) A party in interest may not bring a motion under
this section until the United States trustee has either filed
a statement under section 704(b)(2)(A) or filed a motion
under section 704(b)(2)(B).
``(12) If an attorney for a party in interest (other than a
trustee, bankruptcy administrator, or United States trustee)
brings a motion for dismissal or conversion under this
subsection, and the court does not grant that motion and
finds that the action of the counsel for the moving party in
filing such motion under this chapter violated Rule 9011, the
court shall assess damages, which may include ordering--
``(A) the counsel for the moving party to reimburse the
debtor for all reasonable costs in defending a motion brought
under section 707(b), including reasonable attorneys' fees;
``(B) the assessment of an appropriate civil penalty
against the counsel for the moving party.
``(13) 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) and as described by
section 548(a)(2)of this title to any qualified religious or
charitable entity or organization (as that term is defined in
section 548(d)(4)) of this title.
``(14) No court, United States trustee, bankruptcy
administrator, or other party in interest shall bring a
motion under subsection (b)(1)(A) if, as of the date of the
order for relief, the debtor's current monthly income, when
multiplied by 12, is less than or equal to 100 percent of the
highest national or applicable State or Metropolitan
Statistical Area median family income reported for a family
of equal size, whichever is greater, or in the case of a
household of 1 person, less than or equal to 100 percent of
the highest national or State or Metropolitan Statistical
Area median household income for 1 earner, whichever is
greater, as adjusted, if applicable, as provided in
paragraph(6);''.
(b) Definition.--Section 101 of title 11, United States
Code, is amended--
(1) by inserting after paragraph (10)the following:
``(10A) `current monthly income'--
``(A) means the average monthly income from all sources
which the debtor, or in a joint case, the debtor and the
debtor's spouse, receive without regard to whether the income
is taxable income, derived during the 180-day period
preceding the date of determination;
``(B) includes any amount paid by any entity other than the
debtor (or, in a joint case, the debtor and the debtor's
spouse), on a regular basis to the household expenses of the
debtor or the debtor's dependents (and, in a joint case, the
debtor's spouse if not otherwise a dependent), but excludes--
``(i) payments to victims of war crimes or crimes against
humanity;
``(ii) benefits received from the Department of Veterans
Affairs in connection with service in the armed forces of the
United States;
``(iii) income received on account of disability;and
``(iv) benefits received under the Social Security Act.'';
(2) by inserting after paragraph (17) the following:
``(17A) `estimated administrative expenses' means 10
percent of projected payments under a chapter 13 plan;''.
(c) Duties of Chapter 7 Trustee.--Section 704 of title 11,
United States Code, is amended--
(1) by inserting ``(a)'' before ``The trustee shall--'';
and
(2) by adding at the end the following:
``(b)(1) With respect to an individual debtor under this
chapter, the trustee shall review all materials filed by the
debtor and, not later than 10 days after the first meeting of
creditors, file with the court and the United States trustee
a statement as to whether the debtor's case could be presumed
to be an abuse under section 707(b).
``(2) Not later than 60 days after receiving a statement
filed under paragraph (1), the United States trustee or
bankruptcy administrator shall--
``(A) file a statement setting forth the reasons why the
bankruptcy administrator does not believe that such a motion
would be appropriate or would be prohibited because the
debtor is a debtor of the kind described in section
707(b)(14) of this title; or
``(B) file a motion to dismiss or convert under section
707(b) if, based on the filing of such statement with the
court, the United States trustee or bankruptcy administrator
determines that the case should be presumed to be an abuse
under section 707(b) and the debtor's current monthly income,
when multiplied by 12, is less than or equal to 100 percent
of the highest national or applicable State or State
Metropolitan Statistical Area median family income reported
for a family of equal size, whichever is greater, or in the
case of a household of 1 person, less than or equal to 100
percent of the highest national or State or Metropolitan
Statistical Area median household income for 1 earner,
[[Page H2729]]
whichever is greater. For the purposes of determining whether
a motion would be appropriate to be filed, the United States
trustee shall consider adjustments to current monthly income
for income items received over the most recent 180 days that
are not reasonably expected to be reflected in future income,
or expenses likely to be due under a chapter 13 plan which
are not included in the required statement of the debtor's
expense. The debtor shall, at the request of the United
States trustee, provide documentation for any current income
items that are not reasonably expected to be reelected in
future income, and a detailed explanation of the
circumstances that warrant making such adjustments. If the
United States trustee determines that, after accounting for
these adjustments, the debtor's current monthly income, which
multiplied by 12, is less than or equal to 100 percent of the
higher of the national, State, or Metropolitan Statistical
Area median family income reported for a family of equal or
lesser size, or in the case of a household of 1 person, the
national median household income for 1 earner, then the case
shall be presumed not be an abuse of the previous of this
chapter.
For the purpose of this subsection, the national or
applicable State or Metropolitan Statistical Area median
family income reported for a household of more than 4
individuals shall be that of a household of 4 individuals
plus $583 per month for each additional member of that
household.
``(3) Paragraph (2) shall not be construed to preclude the
court or any other party who is eligible to file a motion
under section 707(b) from bringing such a motion.''.
(d) Meeting of Creditors and Equity Security Holders.--
Section 341 of title 11, United States Code, is amended by
adding the following new subsection:
``(e) The initial notice of the meeting of creditors shall
indicate whether the debtor's current monthly income is
reported to be equal or greater than the applicable median
income for purposes of subsection 707(b) of this title.''.
(e) Guidelines for Assessing Income.--Section 586 of title
28, United States Code, is amended by adding the following
new subsection:
``(f) Not later than 1 year after the effective date of
this subsection, the Director of the Executive Office for the
United States Trustees shall issue guidelines to assist in
making assessment of whether income is not reasonably
necessary to be expended by a debtor for the maintenance or
support of the debtor, the dependents of the debtor, and in a
joint case, the spouse of the debtor if the spouse is not
otherwise a dependent. The director shall consult with the
Department of the Treasury, and others as needed in
developing the guidelines.''.
(f) Section 104, title 11, United States Code, as amended
by subsection ____ of this Act, is amended by striking out
``523(a)(2)(C), and 707(b)(3)'' each place it appears and
inserting ``523(a)(2)(C), and 707(b)'' in lieu thereof.
(g) Clerical Amendment.--The table of sections at the
beginning of chapter 7 of title 11, United States Code, is
amended by striking the item relating to section 707 and
inserting the following:
``707. Dismissal of a case or conversion to a case under chapter 13.''.
SEC. 103. NOTICE OF ALTERNATIVES.
Section 342(b) of title 11, United States Code, is amended
to read as follows:
``(b) Before the commencement of a case under this title by
an individual whose debts are primarily consumer debts, the
clerk shall give to such individual written notice
containing--
``(1) a brief description of--
``(A) chapters 7, 11, 12, and 13 and the general purpose,
benefits, and costs of proceeding under each of those
chapters; and
``(B) the types of services available from credit
counseling agencies; and
``(2) statements specifying that--
``(A) a person who knowingly and fraudulently conceals
assets or makes a false oath or statement under penalty of
perjury in connection with a bankruptcy case shall be subject
to fine, imprisonment, or both; and
``(B) all information supplied by a debtor in connection
with a bankruptcy case is subject to examination by the
Attorney General.''.
SEC. 104. 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 6 judicial
districts of the United States in which to test the
effectiveness of the financial management training curriculum
and materials developed under subsection (a).
(2) For a 18-month period beginning not later than 270 days
after the date of the enactment of this Act, such curriculum
and materials shall be, for the 6 judicial districts selected
under paragraph (1), used as the instructional course
concerning personal financial management for purposes of
section 111 of this title.
(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 and their costs.
Subtitle B--Consumer Bankruptcy Protections
SEC. 105. DEFINITIONS.
(a) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) by inserting after paragraph (2) the following:
``(3) `assisted person' means any person whose debts
consist primarily of consumer debts and whose non-exempt
assets are less than $150,000;'';
(2) by inserting after paragraph (4) the following:
``(4A) `bankruptcy assistance' means any goods or services
sold or otherwise provided to an assisted person with the
express or implied purpose of providing information, advice,
counsel, document preparation or filing, or attendance at a
creditors' meeting or appearing in a proceeding on behalf of
another or providing legal representation with respect to a
proceeding under this title;''; and
(3) by inserting after paragraph (12A) the following:
``(12B) `debt relief agency' means any person who provides
any bankruptcy assistance to an assisted person in return for
the payment of money or other valuable consideration, or who
is a bankruptcy petition preparer 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. 106. ENFORCEMENT.
(a) Enforcement.--Subchapter II of chapter 5 of title 11,
United States Code, is amended by adding at the end the
following:
``Sec. 526. Debt relief agency enforcement
``(a) A debt relief agency shall not--
``(1) fail to perform any service which the debt relief
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 and misleading
or which upon the exercise of reasonable care, should be
known by the debt relief 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 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) Assisted Person Waivers Invalid.--Any waiver by any
assisted person of any protection or right provided by or
under this section shall not be enforceable against the
debtor by any Federal or State court or any other person, but
may be enforced against a debt relief agency.
``(c) Noncompliance.--
``(1) Any contract between a debt relief agency and an
assisted person for bankruptcy assistance which does not
comply with the material requirements of this section 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 agency shall be liable to an assisted
person in the amount of any
[[Page H2730]]
fees or charges in connection with providing bankruptcy
assistance to such person which the debt relief agency has
received, for actual damages, and for reasonable attorneys'
fees and costs if the debt relief agency is found, after
notice and hearing, to have--
``(A) intentionally or negligently failed to comply with
any provision of this section with respect to a bankruptcy
case or related proceeding of the assisted person;
``(B) provided bankruptcy assistance to an assisted person
in a case or related proceeding which is dismissed or
converted because of the debt relief agency's intentional or
negligent failure to file bankruptcy papers, including papers
specified in section 521 of this title; or
``(C) intentionally or negligently disregarded the material
requirements of this title or the Federal Rules of Bankruptcy
Procedure applicable to such debt relief agency.
``(3) In addition to such other remedies as are provided
under State law, whenever the chief law enforcement officer
of a State, or an official or agency designated by a State,
has reason to believe that any person has violated or is
violating this section, the State--
``(A) may bring an action to enjoin such violation;
``(B) may bring an action on behalf of its residents to
recover the actual damages of assisted persons arising from
such violation, including any liability under paragraph (2);
and
``(C) in the case of any successful action under
subparagraph (A) or (B), shall be awarded the costs of the
action and reasonable attorney fees as determined by the
court.
``(4) The United States District Court for any district
located in the State shall have concurrent jurisdiction of
any action under subparagraph (A) or (B) of paragraph (3).
``(5) Notwithstanding any other provision of Federal law
and in addition to any other remedy provided under Federal or
State law, if the court, on its own motion or on the motion
of the United States trustee or the debtor, finds that a
person intentionally violated this section, or engaged in a
clear and consistent pattern or practice of violating this
section, the court may--
``(A) enjoin the violation of such section; or
``(B) impose an appropriate civil penalty against such
person.
``(c) Relation to State Law.--This section 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 sections for
chapter 5 of title 11, United States Code, is amended by
inserting after the item relating to section 527, the
following:
``526. Debt relief agency enforcement.''.
SEC. 107. 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. 108. DISCOURAGING ABUSIVE REAFFIRMATION PRACTICES.
(a) Section 524 of title 11, United States Code, is
amended--
(1) in subsection (c)(2)(B) by adding at the end the
following:
``(C)(i) such agreement contains a clear and conspicuous
statement advising the debtor of the amount of the monthly
payments, the total amount payable and number of payments if
the payments are made according to schedule, the amount of
the total payment attributable to principal, interest, late
fees, and creditor's attorneys fees, the interest rate, and
the ways in which terms differ from the original agreement;
and
``(ii) if the debt is secured, the agreement is accompanied
by a copy of the instrument creating the debt and any
security interest or lien and the documents necessary to show
perfection of the interest, and the agreement contains a
clear and conspicuous statement that advises the debtor of
the value of the collateral and the date on which the lien
will be released if payments are made according to
schedule;'';
(2) in subsection (c)(6)(B), by inserting after ``real
property'' the following: ``or is a debt described in
subsection (c)(7)''; and
(3) by adding at the end of subsection (c) the following:
``(7) in a case concerning an individual, if the
consideration for such agreement is based on whole or in part
on an unsecured consumer debt, or is based on whole or in
part upon a debt for an item of personalty, the value of
which at point of purchase was $500 or less, and in which the
creditor asserts a security interest, the court approves such
agreement as--
``(A) in the best interest of the debtor in light of the
debtor's income and expenses;
``(B) not imposing an undue hardship on the debtor's future
ability of the debtor to pay for the needs of children and
other dependents (including court ordered support);
``(C) not requiring the debtor to pay the creditor's
attorney's fees, expenses, or other costs relating to the
collection of the debt;
``(D) not agreed upon by the debtor to protect property
necessary for the care and maintenance of children or other
dependents that would have nominal value on repossession;
``(E) not the product of coercive threats or actions by the
creditor in the creditor's course of dealings with the
debtor; and
``(F) not unfair because excessive in amount as compared to
the value of the collateral;
(4) in subsection (d)(2) by striking ``subsections (c)(6)''
and inserting ``subsections (c)(6) and (c)(7)'', and after
``of this section,'' by striking ``if the consideration for
such agreement is based in whole or in part on a consumer
debt that is not secured by real property of the debtor'' and
adding at the end ``as applicable''.
(b) Section 104 of title 11, United States Code, as amended
by subsection ____ of this Act, is amended by striking out
``523(a)(2)(C), and 707(b)(3)'' each place it appears and
inserting ``523(a)(2)(C), 524(c)(7), and 707(b)(3)'' in lieu
thereof.
SEC. 109. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.
(a) Reduction of Claim.--Section 502 of title 11, United
States Code, is amended by adding at the end the following:
``(k)(1) The court, on the motion of the debtor and after a
hearing, may reduce a claim filed under this section based
wholly on unsecured consumer debts by not more than 20
percent, if the debtor can prove by clear and convincing
evidence that the claim was filed by a creditor who
unreasonably refused to negotiate a reasonable alternative
repayment schedule proposed by an approved credit counseling
agency acting on behalf of the debtor, and if--
``(A) such offer was made within the period beginning 60
days before the filing of the petition;
``(B) such offer provided for payment of at least 60
percent of the amount of the debt over a period not to exceed
the repayment period of the loan, or a reasonable extension
thereof; and
``(C) no part of the debt under the alternative repayment
schedule is nondischargeable, is entitled to priority under
section 507 of this title, or would be paid a greater
percentage in a chapter 13 proceeding than offered by the
debtor.
``(2) The debtor shall have the burden of proving that the
proposed alternative repayment schedule was made in the 60-
day period specified in subparagraph (A) and that the
creditor unreasonably refused to consider the debtor's
proposal.''.
(b) Limitation on Avoidability.--Section 547 of title 11,
United States Code, is amended by adding at the end the
following:
``(h) The trustee may not avoid a transfer if such transfer
was made as a part of an alternative repayment plan between
the debtor and any creditor of the debtor created by an
approved credit counseling agency.''.
SEC. 110. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED
BY A DWELLING.
(a) Study Required.--During the period beginning 180 days
after the date of enactment of this Act and ending 18 months
after the date of the enactment, the Board of Governors of
the Federal Reserve System (in this section referred to as
the ``Board'') shall conduct a study and submit to Congress a
report (including recommendations for any appropriate
legislation) regarding--
(1) whether a consumer engaging in an open-end credit
transaction (as defined pursuant to section 103 of the Truth
in lending Act) secured by the consumer's principal dwelling
is provided adequate information under Federal law, including
under section 127A of the Truth in Lending Act, regarding the
tax deductibility of interest paid on such transaction; and
(2) whether a consumer engaging in a closed-end credit
transaction (as defined pursuant to section 103 of the Truth
in Lending Act) secured by the consumer's principal dwelling
is provided adequate information regarding the tax
deductibility of interest paid on such transaction.
In conducting such study, the Board shall specifically
consider whether additional disclosures are necessary with
respect to such open-end or closed-end credit transactions in
which the amount of the credit extended exceeds the fair
market value of the dwelling.
(b) Regulations.--If the Board determines that additional
disclosures are necessary in connection with transactions
described in subsection (a), the Board, pursuant to its
authority under the Truth in Lending Act, may promulgate
regulations that would require such additional disclosures.
Any such regulations promulgated by the Board under this
section shall not take effect before the end of the 36-month
period after the date of the enactment of this Act.
SEC. 111. DUAL USE DEBIT CARD.
(a) Study Required.--The Board of Governors of the Federal
Reserve System (in this section referred to as the ``Board'')
shall conduct a study of existing protections provided to
consumers to limit their liability for unauthorized use of a
debit card or similar access device.
(b) Specific Considerations.--In conducting the study
required by subsection (a), the Board shall specifically
consider the following--
(1) the extent to which existing provisions of section 909
of the Electronic Fund Transfer Act and the Board's
implementing regulations provide adequate unauthorized use
liability protection for consumers;
(2) the extent to which any voluntary industry rules have
enhanced the level of protection afforded consumers in
connection with such unauthorized use liability; and
(3) whether amendments to the Electronic Funds Transfer Act
or the Board's implementing regulations thereto are necessary
to
[[Page H2731]]
provide adequate protection for consumers in this area.
(c) Report and Regulations.--Not later than 2 years after
the date of the enactment of this Act, the Board shall make
public a report on its findings with respect to the adequacy
of existing protections afforded consumers with respect to
unauthorized-use liability for debit cards and similar access
devices. If the Board determines that such protections are
inadequate, the Board, pursuant to its authority under the
Electronic Funds Transfer Act, may issue regulations to
address such inadequacy. Any regulations issued by the Board
shall not be effective before 36 months after the date of the
enactment of this Act.
SEC. 112. DISCOURAGING RECKLESS LENDING PRACTICES.
(a) Limiting Claims Arising From Irresponsible Lending
Practices.--Section 502(b) of title 11, United States Code,
is amended--
(1) in paragraph (8) by striking ``or'' at the end,
(2) in paragraph (9) by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following:
``(10) the claim is for a consumer debt under an open end
credit plan (as defined in section 103 of the Truth in
Lending Act) and before incurring such debt under such plan
the debtor was not informed in writing in a clear and
conspicuous manner (or in the case of a worldwide web-based
solicitation to open a credit card account under such plan,
at the time of solicitation by the person making the
solicitation to open such account)--
``(A) of the method of determining the required minimum
payment amount, if a minimum payment is required that is
different from the amount of any finance charge, and the
charges or penalties, if any, which may be imposed for
failure by the obligor to pay the required finance charge or
minimum payment amount;
``(B) of repayment information that would apply to the
outstanding balance of the consumer under the credit plan,
including--
``(i) the required minimum monthly payment on that balance,
represented as both a dollar figure and a percentage of that
balance;
``(ii) the number of months (rounded to the nearest month)
that it would take to pay the entire amount of that current
balance if the consumer pays only the required minimum
monthly payments and if no further advances are made;
``(iii) the total cost to the consumer, including interest
and principal payments, of paying that balance in full if the
consumer pays only the required minimum monthly payments and
if no further advances are made; and
(iv) the following statement: `If your current rate is a
temporary introductory rate, your total costs may be higher.'
;
``(C) of the method for determining the required minimum
payment amount to be paid for each billing cycle, and the
charge or penalty, if any, to be imposed for any failure by
the obligor to pay the required minimum payment amount;
``(D) of any charge that may be imposed due to the failure
of the obligor to make payment on or before a required
payment due date, the date that payment is due or, if
different, the date on which a late payment fee will be
charged, and that the terms and conditions of such charge
will be stated prominently in a conspicuous location on each
billing statement, together with the amount of the charge to
be imposed if payment is made after such date; and
``(E) in any application or solicitation for a credit card
issued under such plan that offers, during an introductory
period of less than 1 year, an annual percentage rate of
interest that--
``(i) is less than the annual percentage rate of interest
which will apply after the end of such introductory period,
of such rate in a statement that includes the following: `The
annual percentage rate of interest applicable during the
introductory period is not the annual percentage rate which
will apply after the end of the introductory period. The
permanent annual percentage rate will apply after [insert
applicable date] and will be [insert applicable percentage
rate].' ; or
``(ii) varies in accordance with an index, which is less
than the current annual percentage rate under the index which
will apply after the end of such period, of such rate in a
statement that includes the following: `The annual percentage
rate of interest applicable during the introductory period is
not the annual percentage rate which will apply after the end
of the introductory period. The permanent annual percentage
rate will be determined by an index and will apply after
[insert date]. If the index which will apply after such date
were applied to your account today, the annual percentage
rate would be [insert applicable percentage rate].' ;
``(11) such claim is for a debt that arose from a credit
card account under an open end credit plan (as defined in
section 103 of the Truth in Lending Act, for which account a
creditor imposed a fee based on inactivity for the account
during any period in which no advances were made if the
obligor maintains any outstanding balance and is charged a
finance charge applicable to such balance;
``(12) such claim is for a debt that arose from a credit
card account for which a credit card that was issued to or on
behalf of, any individual who has not attained 21 years of
age except in response to a written request or application to
the card issuer to open a credit card account containing--
``(A) the signature of the parent or guardian of such
individual indicating joint liability for debts incurred by
such individual in connection with the account before such
individual reaches the age of 21; or
``(B) a submission by such individual of financial
information indicating an independent means of repaying any
obligation arising from the proposed extension of credit in
connection with the account;
``(13) such claim is for a debt that arose on an account
that a creditor cancelled, imposed a minimum finance charge
for any period (including any annual period), imposed any fee
in lieu of a minimum finance charge, or imposed any other
charge or penalty with regard to such account or credit
extended under such account solely on the basis that any
credit extended has been repaid in full before the end of any
grace period applicable with respect to the extension of
credit, excluding a flat annual fee imposed on the consumer
in advance of any annual period to cover the cost of
maintaining a credit card account during such annual period
without regard to whether any credit is actually extended
under such account during such period, or the actual finance
charge applicable with respect to any credit extended under
such account during such annual period at the annual
percentage rate disclosed to the consumer in accordance with
this title for the period of time any such credit is
outstanding;
``(14) such claim is for a debt that arose from an increase
in any annual percentage rate of interest (other than an
increase due to the expiration of any introductory percentage
rate of interest or due solely to a change in another rate of
interest to which such rate is indexed) applicable to any
outstanding balance of credit under such plan may take effect
before the beginning of the billing cycle which begins not
less than 15 days after the obligor receives notice of such
increase; and
``(15) that if an obligor referred to in paragraph (14)
cancels the credit card account before the beginning of the
billing cycle referred to in such paragraph--
``(A) if the an annual percentage rate of interest
applicable after the cancellation with respect to such
outstanding balance on such account as of the date of
cancellation exceeds any annual percentage rate of interest
applicable with respect to such balance under the terms and
conditions in effect before the increase referred to in
paragraph (14); and
``(B) the repayment of such outstanding balance after the
cancellation is not subject to all other terms and conditions
applicable with respect to such account before the increase
referred to in such paragraph;
(b) Definition.--Section 101 of title 11, United States
Code, is amended by inserting after paragraph (9) the
following:
``(9A) `credit card' includes any dual purpose or
multifunction card, including a stored-value card, debit
card, check card, check guarantee card, or purchase-price
discount card, that is connected with an open end credit plan
(as defined in section 103 of the Truth in Lending Act) and
can be used, either on issuance or upon later activation, to
obtain credit directly or indirectly.''.
SEC. 113. PROTECTION OF SAVINGS EARMARKED FOR THE
POSTSECONDARY EDUCATION OF CHILDREN.
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) except as provided in paragraph (n), funds placed in
an education individual retirement account (as defined in
section 530(b)(1) of the Internal Revenue Code of 1986) not
less than 365 days before the date of entry of the order of
relief but only to the extent such funds--
``(i) are not pledged or promised to any entity in
connection with any extension of credit; and
``(ii) are not excess contributions (as described in
section 4973(e) of the Internal Revenue Code of 1986).''; and
(2) by adding at the end the following:
``(n) For purposes of subsection (b)(3)(C), funds placed in
an education individual retirement account shall not be
exempt under this subsection--
``(1) unless the designated beneficiary of such account was
a dependent child of the debtor for the taxable year for
which the funds were placed in such account; and
``(2) to the extent such funds exceed--
``(A) $50,000 in the aggregate in all such accounts having
the same designated beneficiary; or
``(B) $100,000 in the aggregate in all such accounts
attributable to all such dependent children of the debtor.''.
SEC. 114. EFFECT OF DISCHARGE.
Section 524 of title 11, United States Code, is amended by
adding at the end the following:
``(i) The willful failure of a creditor to credit payments
received under a plan confirmed under this title (including a
plan of reorganization confirmed under chapter 11 of this
title) in the manner required by the plan (including
crediting the amounts required under the plan) shall
constitute a violation of any injunction under subsection
(a)(2) which has arisen at the time of the failure.
[[Page H2732]]
``(j) An individual who is injured by the willful failure
of a creditor to comply with the requirements for a
reaffirmation agreement under subsections (c) and (d), or by
any willful violation of the injunction under subsection
(a)(2), shall be entitled to recover--
``(1) the greater of--
``(A) the amount of actual damages; or
``(B) $1,000; and
``(2) costs and attorneys' fees.''.
SEC. 115. LIMITING TRUSTEE LIABILITY.
(a) Qualification of Trustee.--Section 322 of title 11,
United States Code, is amended--
(1) in subsection (a) by adding at the end the following:
``The trustee in a case under this title is not liable
personally or on such trustee's bond for acts taken within
the scope of the trustee's duties or authority as delineated
by other sections of this title or by order of the court,
except to the extent that the trustee acted with gross
negligence. Gross negligence shall be defined as reckless
indifference or deliberate disregard of the trustee's
fiduciary duty.''; and
(2) in subsection (c) by inserting ``for any acts within
the scope of the trustee's authority defined in subsection
(a)'' before the period at the end.
(b) Role and Capacity of Trustee.--Section 323 of title 11,
United States Code, is amended--
(1) in subsection (b) by inserting at the end the
following: ``in the trustee's official capacity as
representative of the estate'' before the period at the end;
and
(2) by adding at the end the following:
``(c) The trustee in a case under this title may not be
sued, either personally, in a representative capacity, or
against the trustee's bond in favor of the United States--
``(1) for acts taken in furtherance of the trustee's duties
or authority in a case in which the debtor is subsequently
determined to be ineligible for relief under the chapter in
which the trustee was appointed; or
``(2) for the dissemination of statistics and other
information regarding a case or cases, unless the trustee has
actual knowledge that the information is false.
``(d) The trustee in a case under this title may not be
sued in a personal capacity without leave of the bankruptcy
court in which the case is pending.''.
SEC. 116. 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 ``by any
court'',
(2) by striking ``section 1915(b) or (f)'' and inserting
``subsection (b) or (f)(2) of section 1915'', and
(3) by inserting ``(or a similar non-Federal law)'' after
``title 28'' each place it appears.
SEC. 117. 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 (other than a
case refiled under a chapter other than chapter 7 after
dismissal under section 707(b) of this title), and if a
single or joint case of the debtor was pending within the
previous 1-year period but was dismissed, 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. Upon motion by a
party in interest for continuation of the automatic stay and
upon notice and a hearing, the court may extend the stay in
particular cases as to any or all creditors (subject to such
conditions or limitations as the court may then impose) after
notice and a hearing completed before the expiration of the
30-day period only if the party in interest demonstrates that
the filing of the later case is in good faith as to the
creditors to be stayed. 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 chapter 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 there is not 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 such case, that
action was still pending or had been resolved by terminating,
conditioning, or limiting the stay as to actions of such
creditor.
``(4) If a single or joint case is filed by or against an
individual debtor under this title (other than a case refiled
under a chapter other than chapter 7 after a dismissal under
section 707(b) of this title), and if 2 or more single or
joint cases of the debtor were pending within the previous
year but were dismissed, 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 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 this title, or
there is not any other reason to conclude that the later case
will 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 such case, such
action was still pending or had been resolved by terminating,
conditioning, or limiting the stay as to action of such
creditor.''.
SEC. 118. CURBING ABUSIVE FILINGS.
(a) In General.--Section 362(d) of title 11, United States
Code, is amended--
(1) in paragraph (2), by striking ``or'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; or''; and
(3) by adding at the end the following:
``(4) with respect to a stay of an act against real
property under subsection (a), by a creditor whose claim is
secured by an interest in such real estate, if the court
finds that the filing of the bankruptcy petition was part of
a scheme to delay, hinder, and defraud creditors that
involved either--
``(A) transfer of all or part ownership of, or other
interest in, the real property without the consent of the
secured creditor or court approval; or
``(B) multiple bankruptcy filings affecting the real
property.
If recorded in compliance with applicable State laws
governing notices of interests or liens in real property, an
order entered pursuant to this subsection shall be binding in
any other case under this title purporting to affect the real
property filed not later than 2 years after that recording,
except that a debtor in a subsequent case may move for relief
from such order based upon changed circumstances or for good
cause shown, after notice and a hearing. Any Federal, State,
or local governmental unit which accepts notices of interests
or liens in real property shall accept any certified copy of
an order described in this subsection for indexing and
recording.''.
(b) Automatic Stay.--Section 362(b) of title 11, United
States Code, is amended--
(1) in paragraph (17), by striking ``or'' at the end;
(2) in paragraph (18) by striking the period at the end and
inserting a semicolon; and
(3) by inserting after paragraph (18) the following:
``(19) under subsection (a), of any act to enforce any lien
against or security interest in real property following the
entry of an order under section 362(d)(4) of this title as to
that property in any prior bankruptcy case for a period of 2
years after entry of such an order. The debtor in a
subsequent case, however, may move the court for relief from
such order based upon changed circumstances or for other good
cause shown (consistent with the standards for good faith in
subsection (c)), after notice and a hearing; or
``(20) under subsection (a), of any act to enforce any lien
against or security interest in real property--
``(A) if the debtor is ineligible under section 109(g) of
this title to be a debtor in a bankruptcy case; or
``(B) if the bankruptcy case was filed in violation of a
bankruptcy court order in a
[[Page H2733]]
prior bankruptcy case prohibiting the debtor from being a
debtor in another bankruptcy case.''.
SEC. 119. 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 and
inserting a semicolon;
(B) in paragraph (5) by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(6) in an individual case under chapter 7 of this title,
not retain possession of personal property as to which a
creditor has an allowed claim for the purchase price secured
in whole or in part by an interest in that personal property
unless, in the case of an individual debtor, the debtor takes
1 of the following actions within 45 days after the first
meeting of creditors under section 341(a)--
``(A) enters into an agreement with the creditor pursuant
to section 524(c) of this title with respect to the claim
secured by such property; or
``(B) redeems such property from the security interest
pursuant to section 722 of this title.
``If the debtor fails to so act within the 45-day period, the
stay under section 362(a) of this title is terminated with
respect to the personal property of the estate or of the
debtor which is affected, such property shall no longer be
property of the estate, and the creditor may take whatever
action as to such property as is permitted by applicable
nonbankruptcy law, unless the court determines on the motion
of the trustee brought before the expiration of such 45-day
period, and after notice and a hearing, that such property is
of consequential value or benefit to the estate, orders
appropriate adequate protection of the creditor's interest,
and orders the debtor to deliver any collateral in the
debtor's possession to the trustee.''; and
(2) in section 722 by inserting ``in full at the time of
redemption'' before the period at the end.
SEC. 120. RELIEF FROM THE AUTOMATIC 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 personal property of the estate or of the debtor
securing in whole or in part a claim, or subject to an
unexpired lease, and such personal property shall no longer
be property of the estate if the debtor fails within the
applicable time set by section 521(a)(2) of this title--
``(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 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
filed before the expiration of the applicable time set by
section 521(a)(2), and after notice and a hearing, that such
property is of consequential value or benefit to the estate,
orders appropriate adequate protection of the creditor's
interest, and orders the debtor to deliver any collateral in
the debtor's possession to the trustee. If the court does not
so determine an order, the stay shall terminate upon the
conclusion of the proceeding on the motion.''; and
(2) in section 521, as amended by sections 603 and 604--
(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) of this title''; 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) of this title'' before the semicolon; and
(D) by inserting after subsection (b) the following:
``(c) If the debtor fails timely to take the action
specified in subsection (a)(6) of this section, or in
paragraphs (1) and (2) of section 362(h) of this title, with
respect to property which a lessor or bailor owns and has
leased, rented, or bailed to the debtor or as to which a
creditor holds a security interest not otherwise voidable
under section 522(f), 544, 545, 547, 548, or 549 of this
title, nothing in this title shall prevent or limit the
operation of a provision in the underlying lease or agreement
which has the effect of placing the debtor in default under
such lease or agreement by reason of the occurrence,
pendency, or existence of a proceeding under this title or
the insolvency of the debtor. Nothing in this subsection
shall be deemed to justify limiting such a provision in any
other circumstance.''.
SEC. 121. 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 of this title, 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. 123. 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. 124. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.
Section 522(b)(2)(A) of title 11, United States Code, is
amended--
(1) by striking ``180'' and inserting ``730''; and
(2) by striking ``, or for a longer portion of such 180-day
period than in any other place'' and inserting ``or if the
debtor's domicile has not been located at a single State for
such 730-day period, the place in which the debtor's domicile
was located for 180 days immediately preceding the 730-day
period or for a longer portion of such 180-day period than in
any other place''.
SEC. 125. RESTRICTIONS ON CERTAIN EXEMPT PROPERTY OBTAINED
THROUGH FRAUD.
Section 522 of title 11, United States Code, as amended by
section 113, is amended--
(1) in subsection (b)(2)(A) by inserting ``subject to
subsection (o),'' before ``any property''; and
(2) by adding at the end the following:
``(o) For purposes of subsection (b)(3)(A) and
notwithstanding subsection (a), the value of an interest in--
``(1) real or personal property that the debtor or a
dependent of the debtor uses as a residence;
``(2) a cooperative that owns property that the debtor or a
dependent of the debtor uses as a residence; or
``(3) a burial plot for the debtor or a dependent of the
debtor;
shall be reduced to the extent such value is attributable to
any portion of any property that the debtor disposed of in
the 730-day period ending of the date of the filing of the
petition, with the intent to hinder, delay, or defraud a
creditor and that the debtor could not exempt, or that
portion that the debtor could not exempt, under subsection
(b) if on such date the debtor had held the property so
disposed of.''.
SEC. 126. ROLLING STOCK EQUIPMENT.
(a) In General.--Section 1168 of title 11, United States
Code, is amended to read as follows:
``Sec. 1168. Rolling stock equipment
``(a)(1) The right of a secured party with a security
interest in or of a lessor or conditional vendor of equipment
described in paragraph (2) to take possession of such
equipment in compliance with an equipment security agreement,
lease, or conditional sale contract, and to enforce any of
its other rights or remedies under such security agreement,
lease, or conditional sale contract, to sell, lease, or
otherwise retain or dispose of such equipment, is not limited
or otherwise affected by any other provision of this title or
by any power of the court, except that the right to take
possession and enforce those other rights and remedies shall
be subject to section 362 of this title, if--
``(A) before the date that is 60 days after the date of
commencement of a case under this chapter, the trustee,
subject to the court's approval, agrees to perform all
obligations of the debtor under such security agreement,
lease, or conditional sale contract; and
``(B) any default, other than a default of a kind described
in section 365(b)(2) of this title, under such security
agreement, lease, or conditional sale contract--
``(i) that occurs before the date of commencement of the
case and is an event of default therewith is cured before the
expiration of such 60-day period;
``(ii) that occurs or becomes an event of default after the
date of commencement of the case and before the expiration of
such 60-day period is cured before the later of--
``(I) the date that is 30 days after the date of the
default or event of the default; or
``(II) the expiration of such 60-day period; and
``(iii) that occurs on or after the expiration of such 60-
day period is cured in accordance with the terms of such
security agreement, lease, or conditional sale contract, if
cure is permitted under that agreement, lease, or conditional
sale contract.
[[Page H2734]]
``(2) The equipment described in this paragraph--
``(A) is rolling stock equipment or accessories used on
rolling stock equipment, including superstructures or racks,
that is subject to a security interest granted by, leased to,
or conditionally sold to a debtor; and
``(B) includes all records and documents relating to such
equipment that are required, under the terms of the security
agreement, lease, or conditional sale contract, that is to be
surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
``(3) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is
protected under subsection (a) may agree, subject to the
court's approval, to extend the 60-day period specified in
subsection (a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor,
or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(2), if at any time
after the date of commencement of the case under this chapter
such secured party, lessor, or conditional vendor is entitled
pursuant to subsection (a)(1) to take possession of such
equipment and makes a written demand for such possession of
the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(2), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional
sale contract is an executory contract, shall be deemed
rejected.
``(d) With respect to equipment first placed in service on
or prior to October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated
as a lease for Federal income tax purposes; and
``(2) the term `security interest' means a purchase-money
equipment security interest.
``(e) With respect to equipment first placed in service
after October 22, 1994, for purposes of this section, the
term `rolling stock equipment' includes rolling stock
equipment that is substantially rebuilt and accessories used
on such equipment.''.
(b) Aircraft Equipment and Vessels.--Section 1110 of title
11, United States Code, is amended to read as follows:
``Sec. 1110. Aircraft equipment and vessels
``(a)(1) Except as provided in paragraph (2) and subject to
subsection (b), the right of a secured party with a security
interest in equipment described in paragraph (3), or of a
lessor or conditional vendor of such equipment, to take
possession of such equipment in compliance with a security
agreement, lease, or conditional sale contract, and to
enforce any of its other rights or remedies, under such
security agreement, lease, or conditional sale contract, to
sell, lease, or otherwise retain or dispose of such
equipment, is not limited or otherwise affected by any other
provision of this title or by any power of the court.
``(2) The right to take possession and to enforce the other
rights and remedies described in paragraph (1) shall be
subject to section 362 of this title if--
``(A) before the date that is 60 days after the date of the
order for relief under this chapter, the trustee, subject to
the approval of the court, agrees to perform all obligations
of the debtor under such security agreement, lease, or
conditional sale contract; and
``(B) any default, other than a default of a kind specified
in section 365(b)(2) of this title, under such security
agreement, lease, or conditional sale contract--
``(i) that occurs before the date of the order is cured
before the expiration of such 60-day period;
``(ii) that occurs after the date of the order and before
the expiration of such 60-day period is cured before the
later of--
``(I) the date that is 30 days after the date of the
default; or
``(II) the expiration of such 60-day period; and
``(iii) that occurs on or after the expiration of such 60-
day period is cured in compliance with the terms of such
security agreement, lease, or conditional sale contract, if a
cure is permitted under that agreement, lease, or contract.
``(3) The equipment described in this paragraph--
``(A) is--
``(i) an aircraft, aircraft engine, propeller, appliance,
or spare part (as defined in section 40102 of title 49) that
is subject to a security interest granted by, leased to, or
conditionally sold to a debtor that, at the time such
transaction is entered into, holds an air carrier operating
certificate issued pursuant to chapter 447 of title 49 for
aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo; or
``(ii) a documented vessel (as defined in section 30101(1)
of title 46) that is subject to a security interest granted
by, leased to, or conditionally sold to a debtor that is a
water carrier that, at the time such transaction is entered
into, holds a certificate of public convenience and necessity
or permit issued by the Department of Transportation; and
``(B) includes all records and documents relating to such
equipment that are required, under the terms of the security
agreement, lease, or conditional sale contract, to be
surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
``(4) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is
protected under subsection (a) may agree, subject to the
approval of the court, to extend the 60-day period specified
in subsection (a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor,
or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(3), if at any time
after the date of the order for relief under this chapter
such secured party, lessor, or conditional vendor is entitled
pursuant to subsection (a)(1) to take possession of such
equipment and makes a written demand for such possession to
the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(3), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional
sale contract is an executory contract, shall be deemed
rejected.
``(d) With respect to equipment first placed in service on
or before October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated
as a lease for Federal income tax purposes; and
``(2) the term `security interest' means a purchase-money
equipment security interest.''.
SEC. 127. DISCHARGE UNDER CHAPTER 13.
Section 1328(a) of title 11, United States Code, is amended
by striking paragraphs (1) through (3) and inserting the
following:
``(1) provided for under section 1322(b)(5) of this title;
``(2) of the kind specified in paragraph (2), (4), (3)(B),
(5), (8), or (9) of section 523(a) of this title;
``(3) for restitution, or a criminal fine, included in a
sentence on the debtor's conviction of a crime; or
``(4) for restitution, or damages, awarded in a civil
action against the debtor as a result of willful or malicious
injury by the debtor that caused personal injury to an
individual or the death of an individual.''.
SEC. 128. BANKRUPTCY JUDGESHIPS.
(a) Short Title.--This section may be cited as the
``Bankruptcy Judgeship Act of 1999''.
(b) Temporary Judgeships.--
(1) Appointments.--The following judgeship positions shall
be filled in the manner prescribed in section 152(a)(1) of
title 28, United States Code, for the appointment of
bankruptcy judges provided for in section 152(a)(2) of such
title:
(A) One additional bankruptcy judgeship for the eastern
district of California.
(B) Four additional bankruptcy judgeships for the central
district of California.
(C) One additional bankruptcy judgeship for the southern
district of Florida.
(D) Two additional bankruptcy judgeships for the district
of Maryland.
(E) One additional bankruptcy judgeship for the eastern
district of Michigan.
(F) One additional bankruptcy judgeship for the southern
district of Mississippi.
(G) One additional bankruptcy judgeship for the district of
New Jersey.
(H) One additional bankruptcy judgeship for the eastern
district of New York.
(I) One additional bankruptcy judgeship for the northern
district of New York.
(J) One additional bankruptcy judgeship for the southern
district of New York.
(K) One additional bankruptcy judgeship for the eastern
district of Pennsylvania.
(L) One additional bankruptcy judgeship for the middle
district of Pennsylvania.
(M) One additional bankruptcy judgeship for the western
district of Tennessee.
(N) One additional bankruptcy judgeship for the eastern
district of Virginia.
(2) Vacancies.--The first vacancy occurring in the office
of a bankruptcy judge in each of the judicial districts set
forth in paragraph (1) that--
(A) results from the death, retirement, resignation, or
removal of a bankruptcy judge; and
(B) occurs 5 years or more after the appointment date of a
bankruptcy judge appointed under paragraph (1);
shall not be filled.
(c) Extensions.--
(1) In general.--The temporary bankruptcy judgeship
positions authorized for the northern district of Alabama,
the district of Delaware, the district of Puerto Rico, the
district of South Carolina, and the eastern district of
Tennessee under section 3(a) (1), (3), (7), (8), and (9) of
the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note) are
extended until the first vacancy occurring in
[[Page H2735]]
the office of a bankruptcy judge in the applicable district
resulting from the death, retirement, resignation, or removal
of a bankruptcy judge and occurring--
(A) 8 years or more after November 8, 1993, with respect to
the northern district of Alabama;
(B) 10 years or more after October 28, 1993, with respect
to the district of Delaware;
(C) 8 years or more after August 29, 1994, with respect to
the district of Puerto Rico;
(D) 8 years or more after June 27, 1994, with respect to
the district of South Carolina; and
(E) 8 years or more after November 23, 1993, with respect
to the eastern district of Tennessee.
(2) Applicability of other provisions.--All other
provisions of section 3 of the Bankruptcy Judgeship Act of
1992 remain applicable to such temporary judgeship position.
(d) Technical Amendment.--The first sentence of section
152(a)(1) of title 28, United States Code, is amended to read
as follows: ``Each bankruptcy judge to be appointed for a
judicial district as provided in paragraph (2) shall be
appointed by the United States court of appeals for the
circuit in which such district is located.''.
(e) Travel Expenses of Bankruptcy Judges.--Section 156 of
title 28, United States Code, is amended by adding at the end
the following new subsection:
``(g)(1) In this subsection, the term `travel expenses'--
``(A) means the expenses incurred by a bankruptcy judge for
travel that is not directly related to any case assigned to
such bankruptcy judge; and
``(B) shall not include the travel expenses of a bankruptcy
judge if--
``(i) the payment for the travel expenses is paid by such
bankruptcy judge from the personal funds of such bankruptcy
judge; and
``(ii) such bankruptcy judge does not receive funds
(including reimbursement) from the United States or any other
person or entity for the payment of such travel expenses.
``(2) Each bankruptcy judge shall annually submit the
information required under paragraph (3) to the chief
bankruptcy judge for the district in which the bankruptcy
judge is assigned.
``(3)(A) Each chief bankruptcy judge shall submit an annual
report to the Director of the Administrative Office of the
United States Courts on the travel expenses of each
bankruptcy judge assigned to the applicable district
(including the travel expenses of the chief bankruptcy judge
of such district).
``(B) The annual report under this paragraph shall
include--
``(i) the travel expenses of each bankruptcy judge, with
the name of the bankruptcy judge to whom the travel expenses
apply;
``(ii) a description of the subject matter and purpose of
the travel relating to each travel expense identified under
clause (i), with the name of the bankruptcy judge to whom the
travel applies; and
``(iii) the number of days of each travel described under
clause (ii), with the name of the bankruptcy judge to whom
the travel applies.
``(4)(A) The Director of the Administrative Office of the
United States Courts shall--
``(i) consolidate the reports submitted under paragraph (3)
into a single report; and
``(ii) annually submit such consolidated report to
Congress.
``(B) The consolidated report submitted under this
paragraph shall include the specific information required
under paragraph (3)(B), including the name of each bankruptcy
judge with respect to clauses (i), (ii), and (iii) of
paragraph (3)(B).''.
SEC. 129. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES
CODE.
Section 507(a) of title 11, United States Code, is amended
by inserting after paragraph (9) the following:
``(10) Tenth, allowed claims for death or personal injuries
resulting from the operation of a motor vehicle or vessel if
such operation was unlawful because the debtor was
intoxicated from using alcohol, a drug or another
substance.''.
SEC. 131. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY
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)(A) Notwithstanding subsection (c) and except as
provided in subparagraph (B), in any case in which the debtor
did not receive the consideration for the claim held by a
creditor, the stay provided by subsection (a) shall apply to
that creditor for a period not to exceed 30 days beginning on
the date of the order for relief, to the extent the creditor
proceeds against--
``(i) the individual that received that consideration; or
``(ii) property not in the possession of the debtor that
secures that claim.
``(B) Notwithstanding subparagraph (A), the stay provided
by subsection (a) shall apply in any case in which the debtor
is primarily obligated to pay the creditor in whole or in
part with respect to a claim described in subparagraph (A)
under a legally binding separation or property settlement
agreement or divorce or dissolution decree with respect to--
``(i) an individual described in subparagraph (A)(i); or
``(ii) property described in subparagraph (A)(ii).
``(3) Notwithstanding subsection (c), the stay provided by
subsection (a) shall terminate as of the date of confirmation
of the plan, in any case in which the plan of the debtor
provides that the debtor's interest in personal property
subject to a lease with respect 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.''.
SEC. 132. 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 section 118, is amended--
(1) in paragraph (19) by striking ``or'' at the end;
(2) in paragraph (20) by striking the period at the end and
a inserting ``; or''; and
(3) by inserting after paragraph (20) the following:
``(21) under subsection (a), 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.''.
SEC. 134. 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, at
its option, condition such assumption on cure of any
outstanding default on terms set by the contract. If within
30 days of the notice from the creditor 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) of this title shall
not be violated by notification of the debtor and negotiation
of cure under this subsection. Nothing in this paragraph
shall require a debtor to assume a lease, or a creditor to
permit assumption.
``(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. 135. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY
SECURED CREDITORS.
(a) In General.--Chapter 13 of title 11, United States
Code, is amended by adding after section 1307 the following:
``Sec. 1307A. Adequate protection in chapter 13 cases
``(a)(1)(A) On or before the date that is 30 days after the
filing of a case under this chapter, the debtor shall make
cash payments in an amount determined under paragraph (2),
to--
``(i) any lessor of personal property; and
``(ii) any creditor holding a claim secured by personal
property to the extent that the claim is attributable to the
purchase of that property by the debtor.
``(B) The debtor or the plan shall continue making the
adequate protection payments required under subparagraph (A)
until the earlier of the date on which--
``(i) the creditor begins to receive actual payments under
the plan; or
``(ii) the debtor relinquishes possession of the property
referred to in subparagraph (A) to--
``(I) the lessor or creditor; or
``(II) any third party acting under claim of right, as
applicable.
``(2) The payments referred to in paragraph (1)(A) shall be
the contract amount and shall reduce any amount payable under
section 1326(a) of the title.
``(b)(1) Subject to the limitations under paragraph (2),
the court may, after notice and hearing, change the amount
and timing of the dates of payment of payments made under
subsection (a).
[[Page H2736]]
``(2)(A) The payments referred to in paragraph (1) shall be
payable not less frequently than monthly.
``(B) The amount of payments referred to in paragraph (1)
shall not be less than the amount of any weekly, biweekly,
monthly, or other periodic payment scheduled as payable under
the contract between the debtor and creditor.
``(c) Notwithstanding section 1326(b), the payments
referred to in subsection (a)(1)(A) shall be continued in
addition to plan payments under a confirmed plan until actual
payments to the creditor begin under that plan, if the
confirmed plan provides--
``(1) for payments to a creditor or lessor described in
subsection (a)(1); and
``(2) for the deferral of payments to such creditor or
lessor under the plan until the payment of amounts described
in section 1326(b).
``(d) Notwithstanding sections 362, 542, and 543, a lessor
or creditor described in subsection (a) may retain possession
of property described in that subsection that was obtained in
accordance with applicable law before the date of filing of
the petition until the first payment under subsection
(a)(1)(A) is received by the lessor or creditor.
``(e) On or before 60 days after the filling of a case
under this chapter, a debtor retaining possession of personal
property subject to a lease or securing a claim attributable
in whole or in part to the purchase price of such property
shall provide 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.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 13 of title 11, United States Code, is
amended by inserting after the item relating to section 1307
the following:
``1307A. Adequate protection in chapter 13 cases.''.
SEC. 136. AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, as amended
by sections 118 and 132, is amended--
(1) in paragraph (20), by striking ``or'' at the end;
(2) in paragraph (21), by striking the period at the end
and inserting a semicolon; and
(3) by inserting after paragraph (21) the following:
``(22) under subsection (a) of any transfer that is not
avoidable under section 544 of this title and that is not
avoidable under section 549 of this title; or
``(23) under subsection (a)(3), of eviction actions based
on endangerment to property or person or the use of illegal
drugs.''.
SEC. 137. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.
Title 11, United States Code, is amended--
(1) in section 727(a)(8) by striking ``six'' and inserting
``7''; 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.''.
SEC. 139. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT
OBLIGATIONS.
Section 507(a) of title 11, United States Code, is
amended--
(1) by striking paragraph (7);
(2) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively;
(3) in paragraph (2), as redesignated, by striking
``First'' and inserting ``Second'';
(4) in paragraph (3), as redesignated, by striking
``Second'' and inserting ``Third'';
(5) in paragraph (4), as redesignated, by striking
``Third'' and inserting ``Fourth'';
(6) in paragraph (5), as redesignated, by striking
``Fourth'' and inserting ``Fifth'';
(7) in paragraph (6), as redesignated, by striking
``Fifth'' and inserting ``Sixth'';
(8) in paragraph (7), as redesignated, by striking
``Sixth'' and inserting ``Seventh''; and
(9) by inserting before paragraph (2), as redesignated, the
following:
``(1) First, allowed claims for domestic support
obligations to be paid in the following order on the
condition that funds received under this paragraph by a
governmental unit in a case under this title be applied:
``(A) Claims that, as of the date of entry of the order for
relief, are owed directly to a spouse, former spouse, or
child of the debtor, or the parent of such child, without
regard to whether the claim is filed by the spouse, former
spouse, child, or parent, or is filed by a governmental unit
on behalf of that person.
``(B) Claims that, as of the date of entry of the order for
relief, are assigned by a spouse, former spouse, child of the
debtor, or the parent of that child to a governmental unit or
are owed directly to a governmental unit under applicable
nonbankruptcy law.''.
SEC. 142. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY,
MAINTENANCE, AND SUPPORT.
Section 523 of title 11, United States Code, is amended--
(1) in subsection (a), by striking paragraph (5) and
inserting the following:
``(5) for a domestic support obligation;'';
(2) in subsection (a)(15)--
(A) by inserting ``or'' after ``court of record,'';
(B) by striking ``unless--'' and all that follows through
``debtor'' the last place it appears; and
(3) in subsection (c), by striking ``(6), or (15)'' each
place it appears and inserting ``or (6)''.
SEC. 143. CONTINUED LIABILITY OF PROPERTY.
Section 522 of title 11, United States Code, is amended--
(1) in subsection (c), by striking paragraph (1) and
inserting the following:
``(1) a debt of a kind specified in paragraph (1) or (5) of
section 523(a) (in which case, notwithstanding any provision
of applicable nonbankruptcy law to the contrary, such
property shall be liable for a debt of a kind specified in
section 523(a)(5);''; and
(2) in subsection (f)(1)(A), by striking the dash and all
that follows through the end of the subparagraph and
inserting ``of a kind that is specified in section 523(a)(5);
or''.
SEC. 144. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST
PREFERENTIAL TRANSFER MOTIONS.
Section 547(c)(7) of title 11, United States Code, is
amended to read as follows:
``(7) to the extent such transfer was a bona fide payment
of a debt for a domestic support obligation; or''.
SEC. 145. CLARIFICATION OF MEANING OF HOUSEHOLD GOODS.
Section 101 of title 11, United States Code, is amended by
inserting after paragraph (27) the following:
``(27A) `household goods' includes tangible personal
property normally found in or around a residence, but does
not include motorized vehicles used for transportation
purposes;''.
SEC. 147. MONETARY LIMITATION ON CERTAIN EXEMPT PROPERTY.
Section 522 of title 11, United States Code, as amended by
section 125, is amended--
(1) in subsection (b)(2)(A) by striking ``subsection (o)''
and inserting ``subsections (o) and (p)'' before ``any
property''; and
(2) by adding at the end the following:
``(p)(1) Except as provided in paragraphs (2) and (3), as a
result of electing under subsection (b)(3)(A) to exempt
property under State or local law, a debtor may not exempt
any interest that exceeds $250,000 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)(3)(A) by a family
farmer for the principal residence of that farmer.
``(3) Paragraph (1) shall not apply to debtors if
applicable State law expressly provides by a statute enacted
after the effective date of this paragraph that such
paragraph shall not apply to debtors.''.
SEC. 148. BANKRUPTCY FEES.
Section 1930 of title 28, United States Code, is amended--
(1) in subsection (a) by striking ``Notwithstanding section
1915 of this title, the'' and inserting ``The''; and
(2) by adding at the end the following:
``(f)(1) Pursuant to procedures prescribed by the Judicial
Conference of the United States, the district court or the
bankruptcy court may waive the filing fee in a case under
chapter 7 of title 11 for an individual debtor who is unable
to pay such fee in installments. For purposes of this
paragraph, the term `filing fee' means the filing fee
required by subsection (a), or any other fee prescribed by
the Judicial Conference under subsections (b) and (c) that is
payable to the clerk upon the commencement of a case under
chapter 7 of title 11.
``(2) The district court or the bankruptcy court may also
waive for such debtors other fees prescribed pursuant to
subsections (b) and (c).
``(3) This subsection does not restrict the district court
or the bankruptcy court from waiving, in accordance with
Judicial Conference policy, fees prescribed pursuant to such
subsections for other debtors and creditors.''.
SEC. 149. COLLECTION OF CHILD SUPPORT.
(a) Duties of Trustee Under Chapter 7.--Section 704 of
title 11, United States Code, as amended by section 102, is
amended--
(1) by inserting ``(a)'' before ``The trustee'',
(2) in paragraph (9) by striking ``and'' at the end,
(3) in paragraph (10) by striking the period and inserting
``; and'', and
(4) by adding at the end the following:
``(11) if, with respect to an individual debtor, there is a
claim for support of a child of the debtor or a custodial
parent of such child entitled to receive priority under
section 507(a)(1) of this title, provide the applicable
notification specified in subsection (b).
``(b)(1) In any case described in subsection (a)(11), the
trustee shall--
``(A)(i) notify in writing the holder of the claim of the
right of such holder to use the services of a State child
support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which the
holder resides; and
``(ii) include in the notice under this paragraph the
address and telephone number of the child support enforcement
agency; and
``(B)(i) notify in writing the State child support agency
of the State in which the holder of the claim resides of the
claim;
[[Page H2737]]
``(ii) include in the notice under this paragraph the name,
address, and telephone number of the holder of the claim; and
``(iii) at such time as the debtor is granted a discharge
under section 727 of this title, notify the holder of such
claim and the State child support agency of the State in
which such holder resides of--
``(I) the granting of the discharge;
``(II) the last recent known address of the debtor; and
``(III) with respect to the debtor's case, the name of each
creditor that holds a claim that is not discharged under
paragraph (2), (4), or (14A) of section 523(a) of this title
or that was reaffirmed by the debtor under section 524(c) of
this title.
``(2)(A) If, after receiving a notice under paragraph
(1)(B)(iii), a holder of a claim or a State child support
agency is unable to locate the debtor that is the subject of
the notice, such holder or such agency may request from a
creditor described in paragraph (1)(B)(iii)(III) the last
known address of the debtor.
``(B) Notwithstanding any other provision of law, a
creditor that makes a disclosure of a last known address of a
debtor in connection with a request made under subparagraph
(A) shall not be liable to the debtor or any other person by
reason of making such disclosure.''.
(b) Duties of Trustee Under Chapter 13.--Section 1302 of
title 11, United States Code, is amended--
(1) in subsection (b)--
(A) in paragraph (4) by striking ``and'' at the end,
(B) in paragraph (5) by striking the period and inserting
``; and'', and
(C) by adding at the end the following:
``(6) if, with respect to an individual debtor, there is a
claim for support of a child of the debtor or a custodial
parent of such child entitled to receive priority under
section 507(a)(1) of this title, provide the applicable
notification specified in subsection (d).'', and
(2) by adding at the end the following:
``(d)(1) In any case described in subsection (b)(6), the
trustee shall--
``(A)(i) notify in writing the holder of the claim of the
right of such holder to use the services of a State child
support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which the
holder resides; and
``(ii) include in the notice under this paragraph the
address and telephone number of the child support enforcement
agency; and
``(B)(i) notify in writing the State child support agency
of the State in which the holder of the claim resides of the
claim; and
``(ii) include in the notice under this paragraph the name,
address, and telephone number of the holder of the claim;
``(iii) at such time as the debtor is granted a discharge
under section 1328 of this title, notify the holder of the
claim and the State child support agency of the State in
which such holder resides of--
``(I) the granting of the discharge;
``(II) the last recent known address of the debtor; and
``(III) with respect to the debtor's case, the name of each
creditor that holds a claim that is not discharged under
paragraph (2), (4), or (14A) of section 523(a) of this title
or that was reaffirmed by the debtor under section 524(c) of
this title.
``(2)(A) If, after receiving a notice under paragraph
(1)(B)(iii), a holder of a claim or a State child support
agency is unable to locate the debtor that is the subject of
the notice, such holder or such agency may request from a
creditor described in paragraph (1)(B)(iii) the last known
address of the debtor.
``(B) Notwithstanding any other provision of law, a
creditor that makes a disclosure of a last known address of a
debtor in connection with a request made under subparagraph
(A) shall not be liable to the debtor or any other person by
reason of making such disclosure.''.
SEC. 150. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT
CONTRIBUTIONS AND OTHER PROPERTY FROM THE
ESTATE.
(a) In General.--Section 541(b) of title 11 of the United
States Code is amended--
(1) by striking ``or'' at the end of paragraph (4)(B)(ii);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by inserting after paragraph (5) the following:
``(7) any amount or interest in property to the extent that
an employer has withheld amounts from the wages of employees
for contribution to an employee benefit plan subject to title
I of the Employee Retirement Income Security Act of 1974, or
to the extent that the employer has received amounts as a
result of payments by participants or beneficiaries to an
employer for contribution to an employee benefit plan subject
to title I of the Employee Retirement Income Security Act of
1974.''.
(b) Application of Amendment.--The amendment made by this
section shall not apply to cases commenced under title 11 of
the United States Code before the expiration of the 180-day
period beginning on the date of the enactment of this Act.
SEC. 151. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.
Section 503(b)(1)(A) of title 11, United States Code, is
amended to read as follows:
``(A) the actual, necessary costs and expenses of
preserving the estate, including wages, salaries, or
commissions for services rendered after the commencement of
the case, and wages and benefits attributable to any period
of time after commencement of the case as a result of the
debtor's violation of Federal law, without regard to when the
original unlawful act occurred or to whether any services
were rendered;''.
SEC. 152. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT
OBLIGATION PROCEEDINGS.
Section 362(b)(2) of title 11, United States Code, is
amended--
(1) in subparagraph (A) by striking ``or'' at the end;
(2) in subparagraph (B) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(C) under subsection (a) of--
``(i) the withholding of income for payment of a domestic
support obligation pursuant to a judicial or administrative
order or statute for such obligation that first becomes
payable after the date on which the petition is filed; or
``(ii) the withholding of income for payment of a domestic
support obligation owed directly to the spouse, former spouse
or child of the debtor or the parent of such child, pursuant
to a judicial or administrative order or statute for such
obligation that becomes payable before the date on which the
petition is filed unless the court finds, after notice and
hearing, that such withholding would render the plan
infeasible;''.
SEC. 153. AUTOMATIC STAY INAPPLICABLE TO CERTAIN PROCEEDINGS
AGAINST THE DEBTOR.
Section 362(b)(2) of title 11, United States Code, as
amended by section 153, is amended--
(1) in subparagraph (B) by striking ``or'' at the end;
(2) by inserting after subparagraph (C) the following:
``(D) the commencement or continuation of a proceeding
concerning a child custody or visitation;
``(E) the commencement or continuation of a proceeding
alleging domestic violence; or
``(F) the commencement or continuation of a proceeding
seeking a dissolution of marriage, except to the extent the
proceeding concerns property of the estate;''.
SEC. 154. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.
Section 101 of title 11, United States Code, is amended--
(1) by striking paragraph (12A); and
(2) by inserting after paragraph (14) the following:
(14A) `domestic support obligation' means a debt that accrues
before or after the entry of an order for relief under this
title that is--
``(A) owed to or recoverable by--
``(i) a spouse, former spouse, or child of the debtor or
that child's legal guardian; or
``(ii) a governmental unit;
``(B) in the nature of alimony, maintenance, or support
(including assistance provided by a governmental unit) of
such spouse, former spouse, or child, without regard to
whether such debt is expressly so designated;
``(C) established or subject to establishment before or
after entry of an order for relief under this title, by
reason of applicable provisions of--
``(i) a separation agreement, divorce decree, or property
settlement agreement;
``(ii) an order of a court of record; or
``(iii) a determination made in accordance with applicable
nonbankruptcy law by a governmental unit; and
``(D) not assigned to a nongovernmental entity, unless that
obligation is assigned voluntarily by the spouse, former
spouse, child, or parent solely for the purpose of collecting
the debt.''.
SEC. 155. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE
IN CASES INVOLVING DOMESTIC SUPPORT
OBLIGATIONS.
Title 11, United States Code, is amended--
(1) in section 1129(a), by adding at the end the following:
``(14) If the debtor is required by a judicial or
administrative order or statute to pay a domestic support
obligation, the debtor has paid all amounts payable under
such order or statute for such obligation that first
become payable after the date on which the petition is
filed.'';
(2) 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 or statute to pay a domestic support
obligation, the debtor has paid all amounts payable under
such order for such obligation that become payable after the
date on which the petition is filed.''; and
(3) in section 1328(a) in the matter preceding paragraph
(1), by inserting ``, after a debtor who is required by a
judicial or administrative order to pay a domestic support
obligation certifies that all amounts payable under such
order that are due on or after the date the petition was
filed have been paid, and after a debtor who is required by a
judicial or administrative order to pay a domestic support
obligation, certifies that all amounts payable under such
order that are due before the date on which the petition was
filed if such amounts are due solely to a spouse, former
spouse or child of the debtor or the parent of such child
pursuant to a judicial or administrative order, unless the
holder of such claim agrees to a different treatment of such
claim'' after ``completion by the debtor of all payments
under the plan''.
[[Page H2738]]
SEC. 156. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT
OBLIGATION PROCEEDINGS.
Section 362(b) of title 11, United States Code, as amended
by sections 104 and 606, is amended--
(1) amending paragraph (2) to read as follows:
``(2) under subsection (a)--
``(A) of the commencement or continuation of an action or
proceeding for--
``(i) the establishment of paternity as a part of an effort
to collect domestic support obligations; or
``(ii) the establishment or modification of an order for
domestic support obligations; or
``(B) the collection of a domestic support obligation from
property that is not property of the estate; or
``(C) under subsection (a) of--
``(i) the withholding of income for payment of a domestic
support obligation pursuant to a judicial or administrative
order or statute for such obligation that first becomes
payable after the date on which the petition is filed; or
``(ii) the withholding of income for payment of a domestic
support obligation owed directly to the spouse, former spouse
or child of the debtor or the parent of such child, pursuant
to a judicial or administrative order or statute for such
obligation that becomes payable before the date on which the
petition is filed unless the court finds, after notice and
hearing, that such withholding would render the plan
infeasible;'';
(2) in paragraph (19), by striking ``or'' at the end;
(3) in paragraph (20), by striking the period at the end
and inserting a semicolon; and
(4) by inserting after paragraph (20) the following:
``(21) under subsection (a) with respect to--
``(A) 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)(16) of the Social Security Act (42 U.S.C.
666(a)(16)) 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 (42 U.S.C. 666(a)(7)) if such debt is payable
solely to a spouse, former spouse or child of the debtor or
the parent of such child pursuant to a judicial or
administrative order or statute, unless the holder of such
claim agrees to waive such withholding, suspension or
restriction;
``(B) the interception of tax refunds, as specified in
sections 464 and 466(a)(3) of the Social Security Act (42
U.S.C. 664 and 666(a)(3)) if such tax refund is payable
solely to a spouse, former spouse or child of the debtor or
the parent of such child pursuant to a judicial or
administrative order or statute; or
``(C) the enforcement of medical obligations as specified
under title IV of the Social Security Act (42 U.S.C. 601 et
seq.).''.
SEC. 157. EXEMPTION FOR RIGHT TO RECEIVE CERTAIN ALIMONY,
MAINTENANCE, OR SUPPORT.
Section 522(b)(3) of title 11, United States Code, as so
redesignated and amended by sections 115 and 203, is
amended--
(1) in subparagraph (C) by striking ``and'' at the end,
(2) in subparagraph (D) by striking the period at the end
and inserting ``; and'', and
(3) by inserting after subparagraph (D) the following:
``(E) the right to receive--
``(i) alimony, maintenance , support, or property traceable
to alimony, maintenance , support; or
``(ii) amounts payable as a result of a property settlement
agreement with the debtor's spouse or former spouse; or of an
interlocutory or final divorce decree;
to the extent reasonably necessary for the support of the
debtor or a dependent of the debtor.''.
SEC. 158. AUTOMATIC STAY INAPPLICABLE TO CERTAIN PROCEEDINGS
AGAINST THE DEBTOR.
Section 362(b)(2) of title 11, United States Code, as
amended by section 156, is amended--
(1) in subparagraph (A) by striking ``or'' at the end;
(2) by inserting after subparagraph (B) the following:
``(C) the commencement or continuation of a proceeding
concerning a child custody or visitation;
``(D) the commencement or continuation of a proceeding
alleging domestic violence; or
``(E) the commencement or continuation of a proceeding
seeking a dissolution of marriage, except to the extent the
proceeding concerns property of the estate;''.
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
SEC. 201. REENACTMENT OF CHAPTER 12.
(a) Reenactment.--(1) Chapter 12 of title 11 of the United
States Code, as in effect on September 30, 1999, is hereby
reenacted.
(2) Paragraph (1) shall take effect on September 30, 1999.
(b) Contents of Chapter 12 Plan.--Section 1222(a)(2) of
title 11, United States Code, is amended to read as follows:
``(2) provide for the full payment, in deferred cash
payments, of all claims entitled to priority under section
507, unless--
``(A) the claim is a claim owed to a governmental unit that
arises as a result of the sale, transfer, exchange, or other
disposition of any farm asset used in the debtor's farming
operation, in which case the claim shall be treated as an
unsecured claim that is not entitled to priority under
section 507, but the debt shall be treated in such manner
only if the debtor receives a discharge; or
``(B) the holder of a particular claim agrees to a
different treatment of that claim; and''.
(c) Special Notice Provisions.--Section 1231(d) of title
11, United States Code, is amended by striking ``a State or
local governmental unit'' and inserting ``any governmental
unit''.
(d) Expanded definition of family farmer.--Section 101(18)
of title 11, United States Code, is amended--
(1) in subparagraph (A)--
(A) by striking ``$1,500,000'' and inserting
``$3,000,000'';
(B) by striking ``80'' and inserting ``50''; and
(C) by striking ``the taxable year preceding the taxable
year'' and inserting ``at least 1 of the 3 taxable years
preceding the taxable year''; and
(2) in subparagraph (B)--
(A) in clause (i), by striking ``80'' and inserting ``50'';
and
(B) in clause (ii), by striking ``$1,500,000'' and
inserting ``$3,000,000''.
(e) 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. 202. 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. 203. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.
(a) In General.--Section 522 of title 11, United States
Code, as amended by sections 113, 125, and 147 is amended--
(1) in subsection (b)--
(A) in paragraph (2)--
(i) by striking ``(2)(A)'' and inserting:
``(3) Property listed in this paragraph is--
``(A) subject to subsections (o) and (p),'';
(ii) in subparagraph (B), by striking ``and'' at the end;
(iii) in subparagraph (C), by striking the period at the
end and inserting ``; and''; and
(iv) by adding at the end the following:
``(D) retirement funds to the extent that those funds are
in a fund or account that is exempt from taxation under
section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986.'';
(B) by striking paragraph (1) and inserting:
``(2) Property listed in this paragraph is property that is
specified under subsection (d), unless the State law that is
applicable to the debtor under paragraph (3)(A) specifically
does not so authorize.'';
(C) in the matter preceding paragraph (2)--
(i) by striking ``(b)'' and inserting ``(b)(1)'';
(ii) by striking ``paragraph (2)'' both places it appears
and inserting ``paragraph (3)'';
(iii) by striking ``paragraph (1)'' each place it appears
and inserting ``paragraph (2)''; and
(iv) by striking ``Such property is--''; and
(D) by adding at the end of the subsection the following:
``(4) For purposes of paragraph (3)(D) and subsection
(d)(12), the following shall apply:
``(A) If the retirement funds are in a retirement fund that
has received a favorable determination pursuant to section
7805 of the Internal Revenue Code of 1986, and that
determination is in effect as of the date of the commencement
of the case under section 301, 302, or 303 of this title,
those funds shall be presumed to be exempt from the estate.
``(B) If the retirement funds are in a retirement fund that
has not received a favorable determination pursuant to such
section 7805, those funds are exempt from the estate if the
debtor demonstrates that--
``(i) no prior determination to the contrary has been made
by a court or the Internal Revenue Service; and
``(ii) the retirement fund is in substantial compliance
with the applicable requirements of the Internal Revenue Code
of 1986.
``(C) A direct transfer of retirement funds from 1 fund or
account that is exempt from taxation under section 401, 403,
408, 408A, 414, 457, or 501(a) of the Internal Revenue Code
of 1986, pursuant to section 401(a)(31) of the Internal
Revenue Code of 1986, or otherwise, shall not cease to
qualify for exemption under paragraph (3)(D) or subsection
(d)(12) by reason of that direct transfer.
``(D)(i) Any distribution that qualifies as an eligible
rollover distribution within the meaning of section 402(c) of
the Internal Revenue Code of 1986 or that is described in
clause (ii) shall not cease to qualify for exemption under
paragraph (3)(D) or subsection (d)(12) by reason of that
distribution.
``(ii) A distribution described in this clause is an amount
that--
[[Page H2739]]
``(I) has been distributed from a fund or account that is
exempt from taxation under section 401, 403, 408, 408A, 414,
457, or 501(a) of the Internal Revenue Code of 1986; and
``(II) to the extent allowed by law, is deposited in such a
fund or account not later than 60 days after the distribution
of that amount.''; and
(2) in subsection (d)--
(A) in the matter preceding paragraph (1), by striking
``subsection (b)(1)'' and inserting ``subsection (b)(2)'';
and
(B) by adding at the end the following:
``(12) Retirement funds to the extent that those funds are
in a fund or account that is exempt from taxation under
section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986.''.
(b) Automatic Stay.--Section 362(b) of title 11, United
States Code, as amended by sections 118, 132, 136, and 141 is
amended--
(1) in paragraph (27), by striking ``or'' at the end;
(2) in paragraph (28), by striking the period and inserting
``; or'';
(3) by inserting after paragraph (28) the following:
``(29) under subsection (a), of withholding of income from
a debtor's wages and collection of amounts withheld, pursuant
to the debtor's agreement authorizing that withholding and
collection for the benefit of a pension, profit-sharing,
stock bonus, or other plan established under section 401,
403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
Code of 1986 that is sponsored by the employer of the debtor,
or an affiliate, successor, or predecessor of such employer--
``(A) to the extent that the amounts withheld and collected
are used solely for payments relating to a loan from a plan
that satisfies the requirements of section 408(b)(1) of the
Employee Retirement Income Security Act of 1974 or is subject
to section 72(p) of the Internal Revenue Code of 1986; or
``(B) in the case of a loan from a thrift savings plan
described in subchapter III of title 5, that satisfies the
requirements of section 8433(g) of such title.''; and
(4) by adding at the end of the flush material following
paragraph (29) the following: ``Paragraph (29) does not apply
to any amount owed to a plan referred to in that paragraph
that is incurred under a loan made during the 1-year period
preceding the filing of a petition. Nothing in paragraph (29)
may be construed to provide that any loan made under a
governmental plan under section 414(d), or a contract or
account under section 403(b), of the Internal Revenue Code of
1986 constitutes a claim or a debt under this title.''.
(c) Exceptions to Discharge.--Section 523(a) of title 11,
United States Code, is amended--
(1) by striking ``or'' at the end of paragraph (17);
(2) by striking the period at the end of paragraph (18) and
inserting ``; or''; and
(3) by adding at the end the following:
``(19) owed to a pension, profit-sharing, stock bonus, or
other plan established under section 401, 403, 408, 408A,
414, 457, or 501(c) of the Internal Revenue Code of 1986,
pursuant to--
``(A) a loan permitted under section 408(b)(1) of the
Employee Retirement Income Security Act of 1974) or subject
to section 72(p) of the Internal Revenue Code of 1986; or
``(B) a loan from the thrift savings plan described in
subchapter III of title 5, that satisfies the requirements of
section 8433(g) of such title.
Paragraph (19) does not apply to any amount owed to a plan
referred to in that paragraph that is incurred under a loan
made during the 1-year period preceding the filing of a
petition. Nothing in paragraph (19) may be construed to
provide that any loan made under a governmental plan under
section 414(d), or a contract or account under section
403(b), of the Internal Revenue Code of 1986 constitutes a
claim or a debt under this title.''.
(d) Plan Contents.--Section 1322 of title 11, United States
Code, is amended by adding at the end the following:
``(f) A plan may not materially alter the terms of a loan
described in section 362(b)(29) of this title.''.
SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2) of
title 11, United States Code, are amended by striking ``10''
each place it appears and inserting ``30''.
SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Section 365(d)(4) of title 11, United States Code, is
amended to read as follows:
``(4)(A) Subject to subparagraph (B), in any case under any
chapter in this title, an unexpired lease of nonresidential
real property under which the debtor is the lessee shall be
deemed rejected, and the trustee shall immediately surrender
such property to the lessor, if the trustee does not assume
or reject the unexpired lease by the earlier of--
``(i) the date that is 120 days after the date of the order
for relief; or
``(ii) the date of the entry of an order confirming a plan.
``(B)(i) The court may extend the period determined under
subparagraph (A) for 120 days upon motion of the trustee or
the lessor for cause.
``(ii) If the court grants an extension under clause (i),
the court may grant a subsequent extension only upon prior
written consent of the lessor.''.
SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.
Section 1102(a)(2) of title 11, United States Code, is
amended by inserting before the first sentence the following:
``On its own motion or on request of a party in interest, and
after notice and hearing, the court may order a change in the
membership of a committee appointed under this subsection, if
the court determines that the change is necessary to ensure
adequate representation of creditors or equity security
holders.''.
SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES
CODE.
Section 546 of title 11, United States Code, is amended by
inserting at the end thereof:
``(i) Notwithstanding section 545 (2) and (3) of this
title, the trustee may not avoid a warehouseman's lien for
storage, transportation or other costs incidental to the
storage and handling of goods, as provided by section 7-209
of the Uniform Commercial Code.''.
SEC. 208. LIMITATION.
Section 546(c)(1)(B) of title 11, United States Code, is
amended by striking ``20'' and inserting ``45''.
SEC. 209. AMENDMENT TO SECTION 330(A) OF TITLE 11, UNITED
STATES CODE.
Section 330(a) of title 11, United States Code, is
amended--
(1) in paragraph (3)--
(A) in subparagraph (A) after ``awarded'', by inserting
``to an examiner, chapter 11 trustee, or professional
person''; and
(B) by redesignating subdivisions (A) through (E) as
clauses (i) through (iv), respectively; and
(2) by adding at the end the following:
``(B) In determining the amount of reasonable compensation
to be awarded a trustee, the court shall treat such
compensation as a commission based on the results
achieved.''.
SEC. 210. POSTPETITION DISCLOSURE AND SOLICITATION.
Section 1125 of title 11, United States Code, is amended by
adding at the end the following:
``(g) Notwithstanding subsection (b), an acceptance or
rejection of the plan may be solicited from a holder of a
claim or interest if such solicitation complies with
applicable nonbankruptcy law and if such holder was solicited
before the commencement of the case in a manner complying
with applicable nonbankruptcy law.''.
SEC. 211. 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
$5,000.''.
SEC. 212. 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. 213. 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. 214. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.
Section 523(a)(16) of title 11, United States Code, is
amended--
(1) by striking ``dwelling'' the first place it appears;
(2) by striking ``ownership or'' and inserting
``ownership,'';
(3) by striking ``housing'' the first place it appears; and
(4) by striking ``but only'' and all that follows through
``such period,'', and inserting ``or a lot in a homeowners
association, for as long as the debtor or the trustee has a
legal, equitable, or possessory ownership interest in such
unit, such corporation, or such lot,''.
SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN CASES
ANCILLARY TO FOREIGN PROCEEDINGS.
Section 304 of title 11, United States Code, is amended to
read as follows:
``Sec. 304. Cases ancillary to foreign proceedings
``(a) For purposes of this section--
``(1) the term `domestic insurance company' means a
domestic insurance company, as such term is used in section
109(b)(2);
``(2) the term `foreign insurance company' means a foreign
insurance company, as such term is used in section 109(b)(3);
[[Page H2740]]
``(3) the term `United States claimant' means a beneficiary
of any deposit referred to in subsection (b) or any
multibeneficiary trust referred to in subsection (b);
``(4) the term `United States creditor' means, with respect
to a foreign insurance company--
``(A) a United States claimant; or
``(B) any business entity that operates in the United
States and that is a creditor; and
``(5) the term `United States policyholder' means a holder
of an insurance policy issued in the United States.
``(b) The court may not grant relief under chapter 15 of
this title with respect to any deposit, escrow, trust fund,
or other security required or permitted under any applicable
State insurance law or regulation for the benefit of claim
holders in the United States.''.
SEC. 216. 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 (excluding
executory contracts that transfer a right or interest under a
filed or issued patent, copyright, trademark, trade dress, or
trade secret), 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
(excluding executory contracts that transfer a right or
interest under a filed or issued patent, copyright,
trademark, trade dress, or trade secret) 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); and
(4) in subsection (f)(1) by striking ``; except that'' and
all that follows through the end of the paragraph and
inserting a period.
(b) Impairment of Claims or Interests.--Section 1124(2) of
title 11, United States Code, is amended--
(1) in subparagraph (A) by inserting ``or of a kind that
section 365(b)(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:
``(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''.
SEC. 217. 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. 218. PRIORITY FOR ADMINISTRATIVE EXPENSES.
Section 503(b) of title 11, United States Code, is
amended--
(1) by deleting ``and'' at the end of paragraph (5);
(2) by striking the period at the end of paragraph (6) and
inserting ``; and'';
(3) by inserting the following after paragraph (6):
``(7) with respect to a nonresidential real property lease
previously assumed under section 365, and subsequently
rejected, a sum equal to all monetary obligations due,
excluding those arising from or relating to a failure to
operate or penalty provisions, for the period of one year
following the later of the rejection date or date of actual
turnover of the premises, without reduction or setoff for any
reason whatsoever except for sums actually received or to be
received from a nondebtor; and the claim for remaining sums
due for the balance of the term of the lease shall be a claim
under section 502(b)(6).''.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
SEC. 301. DEFINITION OF DISINTERESTED PERSON.
Section 101(14) of title 11, United States Code, is amended
to read as follows:
``(14) `disinterested person' means a person that--
``(A) is not a creditor, an equity security holder, or an
insider;
``(B) is not and was not, within 2 years before the date of
the filing of the petition, a director, officer, or employee
of the debtor; and
``(C) does not have an interest materially adverse to the
interest of the estate or of any class of creditors or equity
security holders, by reason of any direct or indirect
relationship to, connection with, or interest in, the debtor,
or for any other reason;''.
SEC. 302. MISCELLANEOUS IMPROVEMENTS.
(a) Who May Be a Debtor.--Section 109 of title 11, United
States Code, is amended by adding at the end the following:
``(h)(1) Subject to paragraphs (2) and (3) and
notwithstanding any other provision of this section, an
individual may not be a debtor under this title unless that
individual has, during the 90-day period preceding the date
of filing of the petition of that individual, received credit
counseling, including, at a minimum, participation in an
individual or group briefing that outlined the opportunities
for available credit counseling and assisted that individual
in performing an initial budget analysis, through a credit
counseling program (offered through an approved credit
counseling service described in section 111(a)).
``(2)(A) Paragraph (1) shall not apply with respect to a
debtor who resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved credit
counseling services for that district are not reasonably able
to provide adequate services to the additional individuals
who would otherwise seek credit counseling from those
programs by reason of the requirements of paragraph (1).
``(B) Each United States trustee or bankruptcy
administrator that makes a determination described in
subparagraph (A) shall review that determination not later
than one year after the date of that determination, and not
less frequently than every year thereafter.
``(3)(A) Subject to subparagraph (B), the requirements of
paragraph (1) shall not apply with respect to a debtor who
submits to the court a certification that--
``(i) describes exigent circumstances that merit a waiver
of the requirements of paragraph (1);
``(ii) states that the debtor requested credit counseling
services from an approved credit counseling service, but was
unable to obtain the services referred to in paragraph (1)
during the 5-day period beginning on the date on which the
debtor made that request or that the exigent circumstances
require filing before such 5-day period expires; and
``(iii) is satisfactory to the court.
``(B) With respect to a debtor, an exemption under
subparagraph (A) shall cease to apply to that debtor on the
date on which the debtor meets the requirements of paragraph
(1), but in no case may the exemption apply to that debtor
after the date that is 30 days after the debtor files a
petition.''.
(b) Chapter 7 Discharge.--Section 727(a) of title 11,
United States Code, is amended--
(1) in paragraph (9), by striking ``or'' at the end;
(2) in paragraph (10), by striking the period and inserting
``; or''; and
(3) by adding at the end the following:
``(11) after the filing of the petition, the debtor failed
to complete an instructional course concerning personal
financial management described in section 111 unless the
debtor resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved instructional
courses are not adequate to provide service to the additional
individuals who would be required to compete the
instructional course by reason of the requirements of this
section. Each United States trustee or bankruptcy
administrator that makes such a determination shall review
that determination not later than 1 year after the date of
that determination, and not less frequently than every year
thereafter.''.
(c) Chapter 13 Discharge.--Section 1328 of title 11, United
States Code, as amended by section 137, is amended by adding
at the end the following:
``(g) The court shall not grant a discharge under this
section to a debtor, unless after filing a petition the
debtor has completed an instructional course concerning
personal financial management described in section 111.
``(h) Subsection (g) shall not apply with respect to a
debtor who resides in a district for which the United States
trustee or bankruptcy administrator of the bankruptcy court
of that district determines that the approved instructional
courses are not adequate to provide service to the additional
individuals who would be required to complete the
instructional course by reason of the requirements of this
section.
``(i) Each United States trustee or bankruptcy
administrator that makes a determination described in
subsection (h) shall review that determination not later than
1
[[Page H2741]]
year after the date of that determination, and not less
frequently than every year thereafter.''.
(d) Debtor's Duties.--Section 521 of title 11, United
States Code, as amended by sections 604 and 120, is amended
by adding at the end the following:
``(d) In addition to the requirements under subsection (a),
an individual debtor shall file with the court--
``(1) a certificate from the credit counseling service that
provided the debtor services under section 109(h); and
``(2) a copy of the debt repayment plan, if any, developed
under section 109(h) through the credit counseling service
referred to in paragraph (1).''.
(e) General Provisions.--
(1) In general.--Chapter 1 of title 11, United States Code,
is amended by adding at the end the following:
``Sec. 111. Credit counseling services; financial management
instructional courses
``The clerk of each district shall maintain a list of
credit counseling services that provide 1 or more programs
described in section 109(h) and a list of instructional
courses concerning personal financial management that have
been approved by--
``(1) the United States trustee; or
``(2) the bankruptcy administrator for the district.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 1 of title 11, United States Code, is
amended by adding at the end the following:
``111. Credit counseling services; financial management instructional
courses.''.
(e) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) 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;'';
(2) by inserting after paragraph (27A), as added by section
318 of this Act, the following:
``(27B) `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;'';
(3) in section 362(b), as amended by sections 117, 118,
132, 136, 141 203, 818, and 1007,--
(A) in paragraph (28) by striking ``or'' at the end
thereof;
(B) in paragraph (29) by striking the period at the end and
inserting ``; or''; and
(C) by inserting after paragraph (29) the following:
``(30) under subsection (a), until a prepetition default is
cured fully in a case under chapter 13 of this title 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
(4) 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;''.
(f) Limitation.--Section 362 of title 11, United States
Code, is amended by adding at the end the following:
``(j) If one case commenced under chapter 7, 11, or 13 of
this title is dismissed due to the creation of a debt
repayment plan administered by a credit counseling agency
approved pursuant to section 111 of this title, then for
purposes of section 362(c)(3) of this title the subsequent
case commenced under any such chapter shall not be presumed
to be filed not in good faith.''.
(g) Return of Goods Shipped.--Section 546(g) of title 11,
United States Code, as added by section 222(a) of Public Law
103-394, is amended to read as follows:
``(h) Notwithstanding the rights and powers of a trustee
under sections 544(a), 545, 547, 549, and 553 of this title,
if the court determines on a motion by the trustee made not
later than 120 days after the date of the order for relief in
a case under chapter 11 of this title and after notice and
hearing, that a return is in the best interests of the
estate, the debtor, with the consent of the creditor, and
subject to the prior rights, if any, of third parties in such
goods, may return goods shipped to the debtor by the creditor
before the commencement of the case, and the creditor may
offset the purchase price of such goods against any claim of
the creditor against the debtor that arose before the
commencement of the case.''.
SEC. 303. EXTENSIONS.
Section 302(d)(3) of the Bankruptcy, Judges, United States
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.
581 note) is amended--
(1) in subparagraph (A), in the matter following clause
(ii), by striking ``or October 1, 2002, whichever occurs
first''; and
(2) in subparagraph (F)--
(A) in clause (i)--
(i) in subclause (II), by striking ``or October 1, 2002,
whichever occurs first''; and
(ii) in the matter following subclause (II), by striking
``October 1, 2003, or''; and
(B) in clause (ii), in the matter following subclause
(II)--
(i) by striking ``before October 1, 2003, or''; and
(ii) by striking ``, whichever occurs first''.
SEC. 304. LOCAL FILING OF BANKRUPTCY CASES.
Section 1408 of title 28, United States Code, is amended--
(1) by striking ``Except'' and inserting ``(a) Except'';
and
(2) by adding at the end the following:
``(b) For the purposes of subsection (a), if the debtor is
a corporation, the domicile and residence of the debtor are
conclusively presumed to be where the debtor's principal
place of business in the United States is located.''.
SEC. 305. PERMITTING ASSUMPTION OF CONTRACTS.
(a) Section 365(c) of title 11, United States Code, is
amended to read as follows:
``(c)(1) The trustee may not assume or assign an executory
contract or unexpired lease of the debtor, whether or not the
contract or lease prohibits or restricts assignment of rights
or delegation of duties, if--
``(A)(i) applicable law excuses a party to the contract or
lease from accepting performance from or rendering
performance to an assignee of the contract or lease, whether
or not the contract or lease prohibits or restricts
assignment of rights or delegation of duties; and
``(ii) the party does not consent to the assumption or
assignment; or
``(B) the contract is a contract to make a loan, or extend
other debt financing or financial accommodations, to or for
the benefit of the debtor, or to issue a security of the
debtor.
``(2) Notwithstanding paragraph (1)(A) and applicable
nonbankruptcy law, in a case under chapter 11 of this title,
a trustee in a case in which a debtor is a corporation, or a
debtor in possession, may assume an executory contract or
unexpired lease of the debtor, whether or not the contract or
lease prohibits or restricts assignment of rights or
delegation of duties.
``(3) The trustee may not assume or assign an unexpired
lease of the debtor of nonresidential real property, whether
or not the contract or lease prohibits or restricts
assignment of rights or delegation of duties, if the lease
has been terminated under applicable nonbankruptcy law before
the order for relief.''.
(b) Section 365(d) of title 11, United States Code, is
amended by striking paragraphs (5), (6), (7), (8), and (9),
and redesignating paragraph (10) as paragraph (5).
(c) Section 365(e) of title 11, United States Code, is
amended to read as follows:
``(e)(1) Notwithstanding a provision in an executory
contract or unexpired lease, or in applicable law, an
executory contract or unexpired lease of the debtor may not
be terminated or modified, and any right or obligation under
such contract or lease may not be terminated or modified, at
any time after the commencement of the case solely because of
a provision in such contract or lease that is conditioned
on--
``(A) the insolvency or financial condition of the debtor
at any time before the closing of the case;
``(B) the commencement of a case under this title; or
``(C) the appointment of or taking possession by a trustee
in a case under this title or a custodian before such
commencement.
``(2) Paragraph (1) does not apply to an executory contract
or unexpired lease of the debtor if the trustee may not
assume or assign, and the debtor in possession may not
assume, the contract or lease by reason of the provisions of
subsection (c) of this section.''.
(d) Section 365(f)(1) of title 11, United States Code, is
amended by striking the semicolon and all that follows
through ``event''.
TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS
SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.
(a) Section 1125(a)(1) of title 11, United States Code, is
amended by inserting before the semicolon following:
``and in determining whether a disclosure statement provides
adequate information, the court shall consider the complexity
of the case, the benefit of additional information to
creditors and other parties in interest, and the cost of
providing additional information''.
(b) Section 1125(f) of title 11, United States Code, is
amended to read as follows:
``(f) Notwithstanding subsection (b)--
``(1) the court may determine that the plan itself provides
adequate information and that a separate disclosure statement
is not necessary;
``(2) the court may approve a disclosure statement
submitted on standard forms approved by the court or adopted
pursuant to section 2075 of title 28; and
``(3)(A) the court may conditionally approve a disclosure
statement subject to final approval after notice and a
hearing;
``(B) acceptances and rejections of a plan may be solicited
based on a conditionally approved disclosure statement if the
debtor
[[Page H2742]]
provides adequate information to each holder of a claim or
interest that is solicited, but a conditionally approved
disclosure statement shall be mailed not 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. 402. 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; and
``(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
$4,000,000 (excluding debts owed to 1 or more affiliates or
insiders), except that if a group of affiliated debtors has
aggregate noncontingent liquidated secured and unsecured
debts greater than $4,000,000 (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. 403. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.
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, creditors, and other parties in interest for
reasonably complete information; and
(2) economy and simplicity for debtors.
SEC. 404. 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; and
``(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. 405. 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, 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.
SEC. 406. 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
``(a) 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 responsible individual, meetings
scheduled by the court or the United States trustee,
including initial debtor interviews 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) of this title, maintain
insurance customary and appropriate to the industry;
``(6)(A) timely file tax returns;
``(B) subject to section 363(c)(2) of this title, 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) of this title, 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 or a responsible time set by the court,
all taxes payable for periods beginning after the date the
case is commenced that are collected or withheld by the
debtor for governmental units unless the court waives this
requirement after notice and hearing; and
``(7) allow the United States trustee, 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. 407. 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 a trustee has
been appointed under this chapter, or unless the court, on
request of a party in interest and after notice and hearing,
shortens such time;
``(2) the debtor shall file a plan, and any necessary
disclosure statement, not later than 90 days after the date
of the order for relief, unless the United States Trustee has
appointed under section 1102(a)(1) of this title a committee
of unsecured creditors that the court has determined, before
the 90 days has expired, is sufficiently active and
representative to provide effective oversight of the debtor;
and
``(3) the time periods specified in paragraphs (1) and (2)
of this subsection and the time fixed in section 1129(e) of
this title for confirmation of a plan, may be extended only
as follows:
``(A) On request of a party in interest made within the
respective periods, and after notice and hearing, the court
may for cause grant one or more extensions, cumulatively not
to exceed 60 days, if the movant establishes--
``(i) that no cause exists to dismiss or convert the case
or appoint a trustee or examiner under subparagraphs (A) (I)
of section 1112(b) of this title; and
``(ii) that there is a reasonable possibility the court
will confirm a plan within a reasonable time;
``(B) On request of a party in interest made within the
respective periods, and after notice and hearing, the court
may for cause grant one or more extensions in excess of those
authorized under subparagraph (A) of this paragraph, if the
movant establishes:
``(i) that no cause exists to dismiss or convert the case
or appoint a trustee or examiner under subparagraphs (A) (I)
of section 1112(b)(3) of this title; and
``(ii) that it is more likely than not that the court will
confirm a plan within a reasonable time; and
``(C) a new deadline shall be imposed whenever an extension
is granted.''.
SEC. 408. PLAN CONFIRMATION DEADLINE.
Section 1129 of title 11, United States Code, is amended by
adding at the end the following:
[[Page H2743]]
``(e) In a small business case, the debtor shall confirm a
plan not later than 150 days after the date of the order for
relief unless--
``(1) the United States Trustee has appointed, under
section 1102(a)(1) of this title, a committee of unsecured
creditors that the court has determined, before the 150 days
has expired, is sufficiently active and representative to
provide effective oversight of the debtor; or
``(2) such 150-day period is extended as provided in
section 1121(e)(3) of this title.''.
SEC. 409. 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. 410. DUTIES OF THE UNITED STATES TRUSTEE.
(a) Duties of the United States Trustee.--
Section 586(a) of title 28, United States Code, 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 (5) by striking ``and at the end'';
(3) in paragraph (6) by striking the period at the end and
inserting ``; and''; and
(4) by inserting after paragraph (7) the following:
``(7) in each of such small business cases--
``(A) conduct an initial debtor interview as soon as
practicable after the entry of order for relief but before
the first meeting scheduled under section 341(a) of title 11
at which time the United States trustee shall 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; and
``(C) review and monitor diligently the debtor's
activities, to identify as promptly as possible whether the
debtor will be unable to confirm a plan; and
``(8) in 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.''.
SEC. 411. 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
(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. 412. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, as amended by
section 302, is amended--
(1) in subsection (i) as so redesignated by section 122--
(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 (j), as added by section
302, the following:
``(k)(1) Except as provided in paragraph (2) of this
subsection, the provisions of subsection (a) of thissection
shall not apply in a case in which the debtor--
``(A) is a debtor in a case under this title pending at the
time the petition is filed;
``(B) was a debtor in a case under this title 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;
``(C) was a debtor in a case under this title in which a
chapter 11, 12, or 13 plan was confirmed in the 2-year period
ending on the date of the order for relief entered with
respect to the petition; or
``(D) is an entity that has succeeded to substantially all
of the assets or business of a debtor described in
subparagraph (A), (B), or (C).
``(2) This subsection shall not apply--
``(A) to a case initiated by an involuntary petition filed
by a creditor that is not an insider or affiliate of the
debtor; or
``(B) after such time as the debtor, after notice and a
hearing, demonstrates by a preponderance of the evidence,
that the filing of such petition resulted from circumstances
beyond the control of the debtor and not foreseeable at the
time the earlier case was filed; and that it is more likely
than not that the court will confirm a plan, other than a
liquidating plan, within a reasonable time.''.
SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND
APPOINTMENT OF TRUSTEE OR EXAMINER.
(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 paragraphs (2) and (4) of
this subsection, and in subsection (c) of this section, 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, or appoint a trustee or examiner under section
1104(e) of this title, whichever is in the best interest of
creditors and the estate, if the movant establishes cause.
``(2) The court may decline to grant the relief specified
in paragraph (1) of this subsection 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 cause 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 insurance that poses a material
risk to the estate or the public;
``(D) unauthorized use of cash collateral harmful to 1 or
more creditors;
``(E) failure to comply with an order of the court;
``(F) 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;
``(H) failure timely to provide information or attend
meetings reasonably requested by the United States trustee or
bankruptcy administrator;
``(I) failure timely to pay taxes due after the date of the
order for relief or to file tax returns due after the order
for relief;
``(J) failure to file a disclosure statement, or to file or
confirm a plan, within the time fixed by this title or by
order of the court;
``(K) failure to pay any fees or charges required under
chapter 123 of title 28;
``(L) revocation of an order of confirmation under section
1144 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 may grant relief under this subsection for
cause as defined in subparagraphs C, F, G, H, or K of
paragraph 3 of this subsection only upon motion of the United
States trustee or bankruptcy administrator or upon the court
s own motion.
``(5) The court shall commence the hearing on any motion
under this subsection not later than 30 days after filing of
the motion, and shall decide the motion 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 or
Examiner.--Section 1104 of title 11, United States Code, is
amended by adding at the end the following:
``(e) If grounds exist to convert or dismiss the case under
section 1112 of this title, the court may instead appoint a
trustee or examiner, if it determines that such appointment
is in the best interests of creditors and the estate.''.
SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE UNITED STATES
CODE WITH RESPECT TO SMALL BUSINESSES.
Not later than 2 years after the date of the enactment of
this Act, the Administrator of the Small Business
Administration, in consultation with the Attorney General,
the Director of the Administrative Office of United States
Trustees, and the Director of the Administrative Office of
the United States Courts, shall--
(1) conduct a study to determine--
(A) the internal and external factors that cause small
businesses, especially sole proprietorships, to become
debtors in cases under title 11 of the United States Code and
that cause certain small businesses to successfully complete
cases under chapter 11 of such title; and
[[Page H2744]]
(B) how Federal laws relating to bankruptcy may be made
more effective and efficient in assisting small businesses to
remain viable; and
(2) submit to the President pro tempore of the Senate and
the Speaker of the House of Representatives a report
summarizing that study.
SEC. 415. 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''.
SEC. 416. PROTECTION OF JOBS.
The provisions of title 11 of the United States Code
relating to small business debtors or to single asset real
estate shall not apply in a case under such title if the
application of any of such provisions in such case could
result in the loss of 5 or more jobs.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.
(a) Technical Amendment Relating to Municipalities.--
Section 921(d) of title 11, United States Code, is amended by
inserting ``notwithstanding section 301(b)'' before the
period at the end.
(b) Conforming Amendment.--Section 301 of title 11, United
States Code, is amended--
(1) by inserting ``(a)'' before ``A voluntary''; and
(2) by 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.''.
SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.
Section 901(a) of title 11, United States Code, is
amended--
(1) by inserting ``555, 556,'' after ``553,''; and
(2) by inserting ``559, 560, 561, 562'' after ``557,''.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
SEC. 601. 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 Federal or State law that is not a
bankruptcy law, or other requirement that representation at
the meeting of creditors under subsection (a) be by an
attorney, a creditor holding a consumer debt or any
representative of the creditor (which may include an entity
or an employee of an entity and may be a representative for
more than one creditor) shall be permitted to appear at and
participate in the meeting of creditors and activities
related thereto 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. 602. AUDIT PROCEDURES.
(a) Amendments.--Section 586 of title 28, United States
Code, is amended--
(1) in subsection (a) by amending striking paragraph (6) to
read as follows:
``(6) make such reports as the Attorney General directs,
including the results of audits performed under subsection
(f); and''; and
(2) by adding at the end the following:
``(f)(1)(A) The Attorney General shall establish procedures
to determine the accuracy, veracity, and completeness of
petitions, schedules, and other information which the debtor
is required to provide under sections 521 and 1322 of title
11, and, if applicable, section 111 of title 11, in
individual cases filed under chapter 7 or 13 of such title.
Such audits shall be in accordance with generally accepted
auditing standards and performed by independent certified
public accountants or independent licensed public
accountants.
``(B) Those procedures shall--
``(i) establish a method of selecting appropriate qualified
persons to contract to perform those audits;
``(ii) establish a method of randomly selecting cases to be
audited, except that not less than 1 out of every 250 cases
in each Federal judicial district shall be selected for
audit;
``(iii) require audits for schedules of income and expenses
which reflect greater than average variances from the
statistical norm of the district in which the schedules were
filed; and
``(iv) establish procedures for providing, not less
frequently than annually, public information concerning the
aggregate results of such audits including the percentage of
cases, by district, in which a material misstatement of
income or expenditures is reported.
``(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).
``(3)(A) The report of each audit conducted under this
subsection shall be filed with the court and transmitted to
the United States trustee. Each report shall clearly and
conspicuously specify any material misstatement of income or
expenditures or of assets identified by the person performing
the audit. In any case where a material misstatement of
income or expenditures or of assets has been reported, the
clerk of the bankruptcy court shall give notice of the
misstatement to the creditors in the case.
``(B) If a material misstatement of income or expenditures
or of assets is reported, the United States trustee shall--
``(i) report the material misstatement, if appropriate, to
the United States Attorney pursuant to section 3057 of title
18, United States Code; and
``(ii) if advisable, take appropriate action, including but
not limited to commencing an adversary proceeding to revoke
the debtor's discharge pursuant to section 727(d) of title
11, United States Code.''.
(b) Amendments to Section 521 of Title 11, U.S.C.--Section
521(a) of title 11, United States Code, as amended by section
603, is amended in paragraphs (3) and (4) by adding ``or an
auditor appointed pursuant to section 586 of title 28, United
States Code'' after ``serving in the case''.
(c) Amendments to Section 727 of Title 11, U.S.C.--Section
727(d) of title 11, United States Code, is amended--
(1) by deleting ``or'' at the end of paragraph (2);
(2) by substituting ``; or'' for the period at the end of
paragraph (3); and
(3) by adding the following at the end the following:
``(4) the debtor has failed to explain satisfactorily--
``(A) a material misstatement in an audit performed
pursuant to section 586(f) of title 28, United States Code;
or
``(B) a failure to make available for inspection all
necessary accounts, papers, documents, financial records,
files, and all other papers, things, or property belonging to
the debtor that are requested for an audit conducted pursuant
to section 586(f) of title 28, United States Code.''.
(d) Effective Date.--The amendments made by this section
shall take effect 18 months after the date of enactment of
this Act.
SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13
CASES.
(a) Notice.--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 of this
title.'';
(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. After 5 days following
receipt of such notice, any notice the court or the debtor is
required to give the creditor 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
[[Page H2745]]
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.''.
(b) Debtor's Duties.--Section 521 of title 11, United
States Code, as amended by sections 604, 120, and 302, is
amended--
(1) by inserting ``(a)'' before ``The debtor shall--'';
(2) by striking paragraph (1) and inserting the following:
``(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 monthly income and current
expenditures prepared in accordance with section 707(b)(2);
``(iii) a statement of the debtor's financial affairs and,
if applicable, a certificate--
``(I) of an attorney whose name is on the petition as the
attorney for the debtor or any bankruptcy petition preparer
signing the petition 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) 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;
``(iv) copies of any Federal tax returns, including any
schedules or attachments, filed by the debtor for the 3-year
period preceding the order for relief;
``(v) 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; and
``(vi) a statement disclosing any reasonably anticipated
increase in income or expenditures over the 12-month period
following the date of filing;'';
(3) by adding at the end the following:
``(e)(1) At any time, a creditor, in the case of an
individual under chapter 7 or 13, may file with the court
notice that the creditor requests the petition, schedules,
and a statement of affairs filed by the debtor in the case
and the court shall make those documents available to the
creditor who requests those documents at a reasonable cost
within 5 business days after such request.
``(2) At any time, a creditor in a case under chapter 13
may file with the court notice that the creditor requests the
plan filed by the debtor in the case, and the court shall
make such plan available to the creditor who requests such
plan at a reasonable cost and not later than 5 days after
such request.
``(f) An individual debtor in a case under chapter 7 or 13
shall file with the court--
``(1) at the time filed with the taxing authority, all tax
returns, including any schedules or attachments, with respect
to the period from the commencement of the case until such
time as the case is closed;
``(2) at the time filed with the taxing authority, all tax
returns, including any schedules or attachments, that were
not filed with the taxing authority when the schedules under
subsection (a)(1) were filed with respect to the period that
is 3 years before the order for relief;
``(3) any amendments to any of the tax returns, including
schedules or attachments, described in paragraph (1) or (2);
and
``(4) in a case under chapter 13, a statement subject to
the penalties of perjury by the debtor of the debtor's
current monthly income and expenditures in the preceding tax
year and current monthly income less expenditures for the
month preceding the statement prepared in accordance with
section 707(b)(2) that shows how the amounts are calculated--
``(A) beginning on the date that is the later of 90 days
after the close of the debtor's tax year or 1 year after the
order for relief, unless a plan has been confirmed; and
``(B) thereafter, on or before the date that is 45 days
before each anniversary of the confirmation of the plan until
the case is closed.
``(g)(1) A statement referred to in subsection (f)(4) shall
disclose--
``(A) the amount and sources of income of the debtor;
``(B) the identity of any persons responsible with the
debtor for the support of any dependents of the debtor; and
``(C) the identity of any persons who contributed, and the
amount contributed, to the household in which the debtor
resides.
``(2) The tax returns, amendments, and statement of income
and expenditures described in paragraph (1) shall be
available to the United States trustee, any bankruptcy
administrator, any trustee, and any party in interest for
inspection and copying, subject to the requirements of
subsection (h).
``(h)(1) Not later than 30 days after the date of enactment
of the Consumer Bankruptcy Reform Act of 1999, the Director
of the Administrative Office of the United States Courts
shall establish procedures for safeguarding the
confidentiality of any tax information required to be
provided under this section.
``(2) The procedures under paragraph (1) shall include
reasonable restrictions on creditor access to tax information
that is required to be provided under this section to verify
creditor identity and to restrict use of the information
except with respect to the case.
``(3) Not later than 1 year after the date of enactment of
the Consumer Bankruptcy Reform Act of 1999, the Director of
the Administrative Office of the United States Courts shall
prepare, and submit to Congress a report that--
``(A) assesses the effectiveness of the procedures under
paragraph (1) to provide timely and sufficient information to
creditors concerning the case; and
``(B) if appropriate, includes proposed legislation--
``(i) to further protect the confidentiality of tax
information or to make it better available to creditors; and
``(ii) to provide penalties for the improper use by any
person of the tax information required to be provided under
this section.
``(i) If requested by the United States trustee or a
trustee serving in the case, the debtor provide a document
that establishes the identity of the debtor, including a
driver's license, passport, or other document that contains a
photograph of the debtor and such other personal identifying
information relating to the debtor that establishes the
identity of the debtor.''.
(c) Section 1324 of title 11, United States Code, is
amended--
(1) by inserting ``(a)'' before ``After''; and
(2) by inserting at the end thereof--
``(c) Whenever a party in interest is given notice of a
hearing on the confirmation or modification of a plan under
this chapter, such notice shall include the information
provided by the debtor on the most recent statement filed
with the court pursuant to section 521(a)(1)(B)(ii) or (f)(4)
of this title.''.
SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR
PROVIDE REQUIRED INFORMATION.
Section 521 of title 11, United States Code, as amended by
section 603 is amended by inserting after subsection (a) the
following:
``(b)(1) Notwithstanding section 707(a) of this title, and
subject to paragraph (2), if an individual debtor in a
voluntary case under chapter 7 or 13 fails to file all of the
information required under subsection (a)(1) within 45 days
after the filing of the petition commencing the case, the
case shall be automatically dismissed effective on the 46th
day after the filing of the petition.
``(2) With respect to a case described in paragraph (1),
any party in interest may request the court to enter an order
dismissing the case. The court shall, if so requested, enter
an order of dismissal not later than 5 days after such
request.
``(3) Upon request of the debtor made within 45 days after
the filing of the petition commencing a case described in
paragraph (1), the court may allow the debtor an additional
period not to exceed 45 days to file the information required
under subsection (a)(1) if the court finds justification for
extending the period for the filing.''.
SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON
CONFIRMATION OF THE PLAN.
(a) Hearing.--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. 606. 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 current monthly income of the debtor and the
debtor's spouse combined, when multiplied by 12, is not less
than the highest national median family income last reported
by the Bureau of the Census 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. If the current monthly income of the
debtor and the debtor's spouse combined, when multiplied by
12, is less than the highest national median family income
for a family of equal or lesser size, or in the case of a
household of 1 person, 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. Notwithstanding
the foregoing, the national median family income for a family
of more than 4 individuals shall be the national median
family income last reported by the Bureau of the Census for a
family of 4 individuals plus $583 for each additional member
of the family.'';
(2) in section 1325(b)(1)(B) as amended by section 130--
(A) by striking ``three year period'' and inserting
``applicable commitment period''; and
(B) by inserting at the end of subparagraph (B) the
following: ``The `applicable commitment period' shall be not
less than 5 years if the current monthly income of the debtor
and the debtor's spouse combined, when multiplied by 12, is
not less than the highest national median family income last
reported by the Bureau of the Census for a family of equal or
lesser size, or in the case of a household of 1 person, the
national median household income for 1 earner.
Notwithstanding the foregoing, the national median family
[[Page H2746]]
income for a family of more than 4 individuals shall be the
national median family income last reported by the Bureau of
the Census for a family of 4 individuals plus $583 for each
additional member of the family.''; and
(3) in section 1329--
(A) by striking in subsection (c) ``three years'' and
inserting ``the applicable commitment period under section
1325(b)(1)(B)''; and
(B) by inserting at the end of subsection (c) the
following:
``The duration period shall be 5 years if the current monthly
income of the debtor and the debtor's spouse combined, when
multiplied by 12, is not less than the highest national
median family income last reported by the Bureau of the
Census for a family of equal or lesser size or, in the case
of a household of 1 person, the national median household
income for 1 earner, as of the date of the modification and
shall be 3 years if the current monthly total income of the
debtor and the debtor's spouse combined, when multiplied by
12, is less than the highest national median family income
last reported by the Bureau of the Census 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. Notwithstanding
the foregoing, the national median family income for a family
of more than 4 individuals shall be the national median
family income last reported by the Bureau of the Census for a
family of 4 individuals plus $583 for each additional member
of the family.''.
SEC. 607. 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. 608. 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, dismissed,
or closed (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.
SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO
DEPENDENT STUDENTS.
Not later than 1 year after the date of the enactment of
this Act, the Comptroller General of the United States
shall--
(1) conduct a study regarding the impact that the extension
of credit to individuals who are--
(A) claimed as dependents for purposes of the Internal
Revenue Code of 1986; and
(B) enrolled in post-secondary educational institutions,
has on the rate of cases filed under title 11 of the United
States Code; and
(2) submit to the Speaker of the House of Representatives
and the President pro tempore of the Senate a report
summarizing such study.
SEC. 610. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.
Section 362(e) of title 11, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(e)''; and
(2) by adding at the end the following:
``(2) Notwithstanding paragraph (1), in the case of an
individual filing under chapter 7, 11, or 13, the stay under
subsection (a) shall terminate on the date that is 60 days
after a request is made by a party in interest under
subsection (d), unless--
``(A) a final decision is rendered by the court during the
60-day period beginning on the date of the request; or
``(B) that 60-day period is extended--
``(i) by agreement of all parties in interest; or
``(ii) by the court for such specific period of time as the
court finds is required by for good cause as described in
findings made by the court.''.
SEC. 611. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.
Section 348(f)(1) of title 11, United States Code, is
amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) in subparagraph (B)--
(A) by striking ``in the converted case, with allowed
secured claims'' and inserting ``only in a case converted to
chapter 11 or 12 but not in a case converted to chapter 7,
with allowed secured claims in cases under chapters 11 and
12''; and
(B) by striking the period and inserting ``; and''; and
(3) by adding at the end the following:
``(C) with respect to cases converted from chapter 13--
``(i) the claim of any creditor holding security as of the
date of the petition shall continue to be secured by that
security unless the full amount of such claim determined
under applicable nonbankruptcy law has been paid in full as
of the date of conversion, notwithstanding any valuation or
determination of the amount of an allowed secured claim made
for the purposes of the chapter 13 proceeding; and
``(ii) unless a prebankruptcy default has been fully cured
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. 612. BANKRUPTCY APPEALS.
Title 28 of the United States Code is amended by inserting
after section 1292 the following:
``Sec. 1293. Bankruptcy appeals
``(a) The courts of appeals (other than the United States
Court of Appeals for the Federal Circuit) shall have
jurisdiction of appeals from the following:
``(1) Final orders and judgments entered by bankruptcy
courts and district courts in cases under title 11, in
proceedings arising under title 11, and in proceedings
arising in or related to a case under title 11, including
final orders in proceedings regarding the automatic stay of
section 362 of title 11.
``(2) Interlocutory orders entered by bankruptcy courts and
district courts granting, continuing, modifying, refusing or
dissolving injunctions, or refusing to dissolve or modify
injunctions in cases under title 11, in proceedings arising
under title 11, and in proceedings arising in or related to a
case under title 11, other than interlocutory orders in
proceedings regarding the automatic stay of section 362 of
title 11.
``(3) Interlocutory orders of bankruptcy courts and
district courts entered under section 1104(a) or 1121(d) of
title 11, or the refusal to enter an order under such
section.
``(4) 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 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.
``(b) Final decisions, judgments, orders, and decrees
entered by a bankruptcy appellate panel under subsection (b)
of this section.
``(c)(1) The judicial council of a circuit may establish a
bankruptcy appellate panel composed of bankruptcy judges in
the circuit who are appointed by the judicial council, which
panel shall exercise the jurisdiction to review orders and
judgments of bankruptcy courts described in paragraphs (1)-
(4) of subsection (a) of this section unless--
``(A) the appellant elects at the time of filing the
appeal; or
``(B) any other party elects, not later than 10 days after
service of the notice of the appeal;
to have such jurisdiction exercised by the court of appeals.
``(2) An appeal to be heard by a bankruptcy appellate panel
under this subsection (b) shall be heard by 3 members of the
bankruptcy appellate panel, provided that a member of such
panel may not hear an appeal originating in the district for
which such member is appointed or designated under section
152 of this title.
``(3) If authorized by the Judicial Conference of the
United States, the judicial councils of 2 or more circuits
may establish a joint bankruptcy appellate panel.''.
SEC. 613. GAO STUDY.
(a) Study.--Not later than 270 days after the date of the
enactment of this Act, the Comptroller General of the United
States shall conduct a study of the feasibility,
effectiveness, and cost of requiring trustees appointed under
title 11 of the United States Code, or the bankruptcy courts,
to provide to the Office of Child Support Enforcement
promptly after the commencement of cases by individual
debtors under such title, the names and social security
numbers of such debtors for the purposes of allowing such
Office to determine whether such debtors have outstanding
obligations for child support (as determined on the basis of
information in the Federal Case Registry or other national
database).
(b) Report.--Not later than 300 days after the date of the
enactment of this Act, the Comptroller General shall submit
to the Speaker of the House of Representatives and the
President pro tempore of the Senate, a report containing the
results of the study required by subsection (a).
TITLE VII--BANKRUPTCY DATA
SEC. 701. IMPROVED BANKRUPTCY STATISTICS.
(a) Amendment.--Chapter 6 of part I of title 28, United
States Code, is amended by adding at the end the following:
``Sec. 159. Bankruptcy statistics
``(a) The clerk of each district shall compile statistics
regarding individual debtors with primarily consumer debts
seeking relief under chapters 7, 11, and 13 of title 11.
Those statistics shall be in a form prescribed by the
Director of the Administrative Office of the United States
Courts (referred to in this section as the `Office').
``(b) The Director shall--
``(1) compile the statistics referred to in subsection (a);
[[Page H2747]]
``(2) make the statistics available to the public; and
``(3) not later than October 31, 2000, and annually
thereafter, prepare, and submit to Congress a report
concerning the information collected under subsection (a)
that contains an analysis of the information.
``(c) The compilation required under subsection (b) shall--
``(1) be itemized, by chapter, with respect to title 11;
``(2) be presented in the aggregate and for each district;
and
``(3) include information concerning--
``(A) the total assets and total liabilities of the debtors
described in subsection (a), and in each category of assets
and liabilities, as reported in the schedules prescribed
pursuant to section 2075 of this title and filed by those
debtors;
``(B) the current monthly income, and average income and
average expenses of those debtors as reported on the
schedules and statements that each such debtor files under
sections 521 and 1322 of title 11;
``(C) the aggregate amount of debt discharged in the
reporting period, determined as the difference between the
total amount of debt and obligations of a debtor reported on
the schedules and the amount of such debt reported in
categories which are predominantly nondischargeable;
``(D) the average period of time between the filing of the
petition and the closing of the case;
``(E) for the reporting period--
``(i) the number of cases in which a reaffirmation was
filed; and
``(ii)(I) the total number of reaffirmations filed;
``(II) of those cases in which a reaffirmation was filed,
the number in which the debtor was not represented by an
attorney; and
``(III) of those cases, the number of cases in which the
reaffirmation was approved by the court;
``(F) with respect to cases filed under chapter 13 of title
11, for the reporting period--
``(i)(I) the number of cases in which a final order was
entered determining the value of property securing a claim in
an amount less than the amount of the claim; and
``(II) the number of final orders determining the value of
property securing a claim issued;
``(ii) the number of cases dismissed, the number of cases
dismissed for failure to make payments under the plan, the
number of cases refiled after dismissal, and the number of
cases in which the plan was completed, separately itemized
with respect to the number of modifications made before
completion of the plan, if any; and
``(iii) the number of cases in which the debtor filed
another case within the 6 years previous to the filing;
``(G) the number of cases in which creditors were fined for
misconduct and any amount of punitive damages awarded by the
court for creditor misconduct; and
``(H) the number of cases in which sanctions under rule
9011 of the Federal Rules of Bankruptcy Procedure were
imposed against debtor's counsel and damages awarded under
such Rule.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 6 of title 28, United States Code, is
amended by adding at the end the following:
``159. Bankruptcy statistics.''.
(c) Effective Date.--The amendments made by this section
shall take effect 18 months after the date of enactment of
this Act.
SEC. 702. UNIFORM RULES FOR THE COLLECTION OF 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. 703. 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 VIII--BANKRUPTCY TAX PROVISIONS
SEC. 801. 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,
[[Page H2748]]
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. 802. EFFECTIVE NOTICE TO GOVERNMENT.
(a) Effective Notice to Governmental Units.--Section 342 of
title 11, United States Code, as amended by section 603, 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 section 603 and subsection
(a), is amended by adding at the end the following:
``(i) A notice that does not comply with subsections (d)
and (e) shall not be effective 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--
``(1) 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
``(2) 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.''.
SEC. 803. 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
substantially in the manner designated by the governmental
unit and unless''.
SEC. 804. RATE OF INTEREST ON TAX CLAIMS.
(a) Amendment.--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
``If any provision of this title requires the payment of
interest on a tax claim or requires the payment of interest
to enable a creditor to receive the present value of the
allowed amount of a tax claim, the rate of interest shall be
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,
secured tax claims, and administrative tax claims paid under
section 503(b)(1) of this title, the rate shall be determined
under applicable nonbankruptcy law.
``(2) In the case of all other tax claims, the minimum rate
of interest 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, plus 3 percentage points.
``(A) In the case of claims for Federal income taxes, such
rate shall be subject to any adjustment that may be required
under section 6621(d) of the Internal Revenue Code of 1986.
``(B) In the case of taxes paid under a confirmed plan or
reorganization, such rate shall be determined as of the
calendar month in which the plan is confirmed.''.
(b) Conforming Amendment.--The table of sections of chapter
5 of title 11, United States Code, is amended by inserting
after the item relating to section 510 the following:
``511. Rate of interest on tax claims.''.
SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.
Section 507(a)(8)(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. 806. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code, is
amended by striking ``assessed'' and inserting ``incurred''.
SEC. 807. 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. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.
Section 1141(d) of title 11, United States Code, 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. 809. STAY OF TAX PROCEEDINGS.
(a) 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) 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. 810. 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. 811. 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
[[Page H2749]]
purchaser is a purchaser described in section 6323 of the
Internal Revenue Code of 1986 or similar provision of State
or local law;''.
SEC. 812. 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. 813. 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. 814. 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''; and
(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. 815. 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,''.
SEC. 816. 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 140, 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, as amended by
section 135, 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 3-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 the 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. 817. 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. 818. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, as amended
by sections 118, 132, 136, and 203, is amended--
(1) in paragraph (29) by striking ``or'';
(2) in paragraph (30) by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (30) the following:
``(31) 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
[[Page H2750]]
``(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 IX--ANCILLARY AND OTHER CROSS-BORDER CASES
SEC. 901. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED
STATES CODE.
(a) In General.--Title 11, United States Code, is amended
by inserting after chapter 13 the following:
``CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES
``Sec.
``1501. Purpose and scope of application.
``SUBCHAPTER I--GENERAL PROVISIONS
``1502. Definitions.
``1503. International obligations of the United States.
``1504. Commencement of ancillary case.
``1505. Authorization to act in a foreign country.
``1506. Public policy exception.
``1507. Additional assistance.
``1508. Interpretation.
``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
``1509. Right of direct access.
``1510. Limited jurisdiction.
``1511. Commencement of case under section 301 or 303.
``1512. Participation of a foreign representative in a case under this
title.
``1513. Access of foreign creditors to a case under this title.
``1514. Notification to foreign creditors concerning a case under this
title.
``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
``1515. Application for recognition of a foreign proceeding.
``1516. Presumptions concerning recognition.
``1517. Order recognizing a foreign proceeding.
``1518. Subsequent information.
``1519. Relief that may be granted upon petition for recognition of a
foreign proceeding.
``1520. Effects of recognition of a foreign main proceeding.
``1521. Relief that may be granted upon recognition of a foreign
proceeding.
``1522. Protection of creditors and other interested persons.
``1523. Actions to avoid acts detrimental to creditors.
``1524. Intervention by a foreign representative.
``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
``1525. Cooperation and direct communication between the court and
foreign courts or foreign representatives.
``1526. Cooperation and direct communication between the trustee and
foreign courts or foreign representatives.
``1527. Forms of cooperation.
``SUBCHAPTER V--CONCURRENT PROCEEDINGS
``1528. Commencement of a case under this title after recognition of a
foreign main proceeding.
``1529. Coordination of a case under this title and a foreign
proceeding.
``1530. Coordination of more than 1 foreign proceeding.
``1531. Presumption of insolvency based on recognition of a foreign
main proceeding.
``1532. Rule of payment in concurrent proceedings.
``Sec. 1501. Purpose and scope of application
``(a) The purpose of this chapter is to incorporate the
Model Law on Cross-Border Insolvency so as to provide
effective mechanisms for dealing with cases of cross-border
insolvency with the objectives of--
``(1) cooperation between--
``(A) United States courts, United States trustees,
trustees, examiners, debtors, and debtors in possession; and
``(B) the courts and other competent authorities of foreign
countries involved in cross-border insolvency cases;
``(2) greater legal certainty for trade and investment;
``(3) fair and efficient administration of cross-border
insolvencies that protects the interests of all creditors,
and other interested entities, including the debtor;
``(4) protection and maximization of the value of the
debtor's assets; and
``(5) facilitation of the rescue of financially troubled
businesses, thereby protecting investment and preserving
employment.
``(b) This chapter applies where--
``(1) assistance is sought in the United States by a
foreign court or a foreign representative in connection with
a foreign proceeding;
``(2) assistance is sought in a foreign country in
connection with a case under this title;
``(3) a foreign proceeding and a case under this title with
respect to the same debtor are taking place concurrently; or
``(4) creditors or other interested persons in a foreign
country have an interest in requesting the commencement of,
or participating in, a case or proceeding under this title.
``(c) This chapter does not apply to--
``(1) a proceeding concerning an entity identified by
exclusion in subsection 109(b);
``(2) an individual, or to an individual and such
individual's spouse, who have debts within the limits
specified in section 109(e) and who are citizens of the
United States or aliens lawfully admitted for permanent
residence in the United States; or
``(3) an entity subject to a proceeding under the
Securities Investor Protection Act, 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.
``SUBCHAPTER I--GENERAL PROVISIONS
``Sec. 1502. Definitions
``For the purposes of this chapter, the term--
``(1) `debtor' means an entity that is the subject of a
foreign proceeding;
``(2) `establishment' means any place of operations where
the debtor carries out a nontransitory economic activity;
``(3) `foreign court' means a judicial or other authority
competent to control or supervise a foreign proceeding;
``(4) `foreign main proceeding' means a foreign proceeding
taking place in the country where the debtor has the center
of its main interests;
``(5) `foreign nonmain proceeding' means a foreign
proceeding, other than a foreign main proceeding, taking
place in a country where the debtor has an establishment;
``(6) `trustee' includes a trustee, a debtor in possession
in a case under any chapter of this title, or a debtor under
chapter 9 of this title; 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. 1503. International obligations of the United States
``To the extent that this chapter conflicts with an
obligation of the United States arising out of any treaty or
other form of agreement to which it is a party with 1 or more
other countries, the requirements of the treaty or agreement
prevail.
``Sec. 1504. Commencement of ancillary case
``A case under this chapter is commenced by the filing of a
petition for recognition of a foreign proceeding under
section 1515.
``Sec. 1505. Authorization to act in a foreign country
``A trustee or another entity (including an examiner) may
be authorized by the court to act in a foreign country on
behalf of an estate created under section 541. An entity
authorized to act under this section may act in any way
permitted by the applicable foreign law.
``Sec. 1506. Public policy exception
``Nothing in this chapter prevents the court from refusing
to take an action governed by this chapter if the action
would be manifestly contrary to the public policy of the
United States.
``Sec. 1507. Additional assistance
``(a) Subject to the specific limitations stated elsewhere
in this chapter the court, upon recognition of a foreign
proceeding, the court may provide additional assistance to a
foreign representative under this title or under other laws
of the United States.
``(b) In determining whether to provide additional
assistance under this title or under other laws of the United
States, the court shall consider whether such additional
assistance, consistent with the principles of comity, will
reasonably assure--
``(1) just treatment of all holders of claims against or
interests in the debtor's property;
``(2) protection of claim holders in the United States
against prejudice and inconvenience in the processing of
claims in such foreign proceeding;
``(3) prevention of preferential or fraudulent dispositions
of property of the debtor;
``(4) distribution of proceeds of the debtor's property
substantially in accordance with the order prescribed by this
title; and
``(5) if appropriate, the provision of an opportunity for a
fresh start for the individual that such foreign proceeding
concerns.
``Sec. 1508. Interpretation
``In interpreting this chapter, the court shall consider
its international origin, and the need to promote an
application of this chapter that is consistent with the
application of similar statutes adopted by foreign
jurisdictions.
``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE
COURT
``Sec. 1509. Right of direct access
``(a) A foreign representative may commence a case under
section 1504 of this title by filing with the court a
petition for recognition of a foreign proceeding under
section 1515 of this title.
``(b) If the court grants recognition under section 1515 of
this title, and subject to any limitations that the court may
impose consistent with the policy of this chapter--
``(1) the foreign representative has the capacity to sue
and be sued in a court in the United States;
``(2) the foreign representative may apply directly to a
court in the United States for appropriate relief in that
court; and
[[Page H2751]]
``(3) a court in the United States shall grant comity or
cooperation to the foreign representative.
``(c) A request for comity or cooperation by a foreign
representative in a court in the United States shall be
accompanied by a certified copy of an order granting
recognition under section 1517 of this title.
``(d) If the court denies recognition under this chapter,
the court may issue any appropriate order necessary to
prevent the foreign representative from obtaining comity or
cooperation from courts in the United States.
``(e) Whether or not the court grants recognition, and
subject to sections 306 and 1510 of this title, a foreign
representative is subject to applicable nonbankruptcy law.
``(f) Notwithstanding any other provision of this section,
the failure of a foreign representative to commence a case or
to obtain recognition under this chapter does not affect any
right the foreign representative may have to sue in a court
in the United State to collect or recover a claim which is
the property of the debtor.''.
``Sec. 1510. Limited jurisdiction
``The sole fact that a foreign representative files a
petition under section 1515 does not subject the foreign
representative to the jurisdiction of any court in the United
States for any other purpose.
``Sec. 1511. Commencement of case under section 301 or 303
``(a) Upon recognition, a foreign representative may
commence--
``(1) an involuntary case under section 303; or
``(2) a voluntary case under section 301 or 302, if the
foreign proceeding is a foreign main proceeding.
``(b) The petition commencing a case under subsection (a)
must be accompanied by certified copy of an order granting
recognition. The court where the petition for recognition has
been filed must be advised of the foreign representative's
intent to commence a case under subsection (a) prior to such
commencement.
``Sec. 1512. Participation of a foreign representative in a
case under this title
``Upon recognition of a foreign proceeding, the foreign
representative in that proceeding is entitled to participate
as a party in interest in a case regarding the debtor under
this title.
``Sec. 1513. Access of foreign creditors to a case under this
title
``(a) Foreign creditors have the same rights regarding the
commencement of, and participation in, a case under this
title as domestic creditors.
``(b)(1) Subsection (a) does not change or codify present
law as to the priority of claims under section 507 or 726 of
this title, except that the claim of a foreign creditor under
those sections shall not be given a lower priority than that
of general unsecured claims without priority solely because
the holder of such claim is a foreign creditor.
``(2)(A) Subsection (a) and paragraph (1) do not change or
codify present law as to the allowability of foreign revenue
claims or other foreign public law claims in a proceeding
under this title.
``(B) Allowance and priority as to a foreign tax claim or
other foreign public law claim shall be governed by any
applicable tax treaty of the United States, under the
conditions and circumstances specified therein.
``Sec. 1514. Notification to foreign creditors concerning a
case under this title
``(a) Whenever in a case under this title notice is to be
given to creditors generally or to any class or category of
creditors, such notice shall also be given to the known
creditors generally, or to creditors in the notified class or
category, that do not have addresses in the United States.
The court may order that appropriate steps be taken with a
view to notifying any creditor whose address is not yet
known.
``(b) Such notification to creditors with foreign addresses
described in subsection (a) shall be given individually,
unless the court considers that, under the circumstances,
some other form of notification would be more appropriate. No
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 under this title and the
orders of the court.
``(d) Any rule of procedure or order of the court as to
notice or the filing of a claim shall provide such additional
time to creditors with foreign addresses as is reasonable
under the circumstances.
``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
``Sec. 1515. Application for recognition 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. 1516. Presumptions concerning recognition
``(a) If the decision or certificate referred to in section
1515(b) indicates that the foreign proceeding is a foreign
proceeding as defined in section 101 and that the person or
body is a foreign representative as defined in section 101,
the court is entitled to so presume.
``(b) The court is entitled to presume that documents
submitted in support of the petition for recognition are
authentic, whether or not they have been legalized.
``(c) In the absence of evidence to the contrary, the
debtor's registered office, or habitual residence in the case
of an individual, is presumed to be the center of the
debtor's main interests.
``Sec. 1517. Order recognizing a foreign proceeding
``(a) Subject to section 1506, after notice and a hearing
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
1502;
``(2) the foreign representative applying for recognition
is a person or body as defined in section 101; and
``(3) the petition meets the requirements of section 1515.
``(b) The foreign proceeding shall be recognized--
``(1) as a foreign main proceeding if it is taking place in
the country where the debtor has the center of its main
interests; or
``(2) as a foreign nonmain proceeding if the debtor has an
establishment within the meaning of section 1502 in the
foreign country where the proceeding is pending.
``(c) A petition for recognition of a foreign proceeding
shall be decided upon at the earliest possible time. Entry of
an order recognizing a foreign proceeding constitutes
recognition under this chapter.
``(d) The provisions of this subchapter do not prevent
modification or termination of recognition if it is shown
that the grounds for granting it were fully or partially
lacking or have ceased to exist, but in considering such
action the court shall give due weight to possible prejudice
to parties that have relied upon the granting of recognition.
The case under this chapter may be closed in the manner
prescribed under section 350.
``Sec. 1518. Subsequent information
``From the time of filing the petition for recognition of
the foreign proceeding, the foreign representative shall file
with the court promptly a notice of change of status
concerning--
``(1) any substantial change in the status of the foreign
proceeding or the status of the foreign representative's
appointment; and
``(2) any other foreign proceeding regarding the debtor
that becomes known to the foreign representative.
``Sec. 1519. Relief that may be granted upon petition for
recognition of a foreign proceeding
``(a) From the time of filing a petition for recognition
until the court rules on the petition, the court may, at the
request of the foreign representative, where relief is
urgently needed to protect the assets of the debtor or the
interests of the creditors, grant relief of a provisional
nature, including--
``(1) staying execution against the debtor's assets;
``(2) entrusting the administration or realization of all
or part of the debtor's assets located in the United States
to the foreign representative or another person authorized by
the court, including an examiner, in order to protect and
preserve the value of assets that, by their nature or because
of other circumstances, are perishable, susceptible to
devaluation or otherwise in jeopardy; and
``(3) any relief referred to in paragraph (3), (4), or (7)
of section 1521(a).
``(b) Unless extended under section 1521(a)(6), the relief
granted under this section terminates when the petition for
recognition is 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. 1520. Effects of recognition of a foreign main
proceeding
``(a) Upon recognition of a foreign proceeding that is a
foreign main proceeding--
``(1) sections 361 and 362 with respect to the debtor and
that property of the debtor that is within the territorial
jurisdiction of the United States;
[[Page H2752]]
``(2) sections 363, 549, and 552 of this title apply to a
transfer of an interest of the debtor in property that is
within the territorial jurisdiction of the United States to
the same extent that the sections would apply to property of
an estate;
``(3) unless the court orders otherwise, the foreign
representative may operate the debtor's business and may
exercise the rights and powers of a trustee under and to the
extent provided by sections 363 and 552; and
``(4) section 552 applies to property of the debtor that is
within the territorial jurisdiction of the United States.''.
``(b) Subsection (a) does not affect the right to commence
an individual action or proceeding in a foreign country to
the extent necessary to preserve a claim against the debtor.
``(c) Subsection (a) does not affect the right of a foreign
representative or an entity to file a petition commencing a
case under this title or the right of any party to file
claims or take other proper actions in such a case.
``Sec. 1521. Relief that may be granted upon recognition 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 an
individual action or proceeding concerning the debtor's
assets, rights, obligations or liabilities to the extent they
have not been stayed under section 1520(a);
``(2) staying execution against the debtor's assets to the
extent it has not been stayed under section 1520(a);
``(3) suspending the right to transfer, encumber or
otherwise dispose of any assets of the debtor to the extent
this right has not been suspended under section 1520(a);
``(4) providing for the examination of witnesses, the
taking of evidence or the delivery of information concerning
the debtor's assets, affairs, rights, obligations or
liabilities;
``(5) entrusting the administration or realization of all
or part of the debtor's assets within the territorial
jurisdiction of the United States to the foreign
representative or another person, including an examiner,
authorized by the court;
``(6) extending relief granted under section 1519(a); and
``(7) granting any additional relief that may be available
to a trustee, except for relief available under sections 522,
544, 545, 547, 548, 550, and 724(a).
``(b) Upon recognition of a foreign proceeding, whether
main or nonmain, the court may, at the request of the foreign
representative, entrust the distribution of all or part of
the debtor's assets located in the United States to the
foreign representative or another person, including an
examiner, authorized by the court, provided that the court is
satisfied that the interests of creditors in the United
States are sufficiently protected.
``(c) In granting relief under this section to a
representative of a foreign nonmain proceeding, the court
must be satisfied that the relief relates to assets that,
under the law of the United States, should be administered in
the foreign nonmain proceeding or concerns information
required in that proceeding.
``(d) The court may not enjoin a police or regulatory act
of a governmental unit, including a criminal action or
proceeding, under this section.
``(e) The standards, procedures, and limitations applicable
to an injunction shall apply to relief under paragraphs (1),
(2), (3), and (6) of subsection (a).
``Sec. 1522. Protection of creditors and other interested
persons
``(a) The court may grant relief under section 1519 or
1521, or may modify or terminate relief under subsection (c),
only if the interests of the creditors and other interested
entities, including the debtor, are sufficiently protected.
``(b) The court may subject relief granted under section
1519 or 1521, or the operation of the debtor's business under
section 1520(a)(3) of this title, to conditions it considers
appropriate, including the giving of security or the filing
of a bond.
``(c) The court may, at the request of the foreign
representative or an entity affected by relief granted under
section 1519 or 1521, or at its own motion, modify or
terminate such relief.
``(d) Section 1104(d) shall apply to the appointment of an
examiner under this chapter. Any examiner shall comply with
the qualification requirements imposed on a trustee by
section 322.
``Sec. 1523. Actions to avoid acts detrimental to creditors
``(a) Upon recognition of a foreign proceeding, the foreign
representative has standing in a case concerning the debtor
pending under another chapter of this title to initiate
actions under sections 522, 544, 545, 547, 548, 550, and
724(a).
``(b) When the foreign proceeding is a foreign nonmain
proceeding, the court must be satisfied that an action under
subsection (a) relates to assets that, under United States
law, should be administered in the foreign nonmain
proceeding.
``Sec. 1524. Intervention by a foreign representative
``Upon recognition of a foreign proceeding, the foreign
representative may intervene in any proceedings in a State or
Federal court in the United States in which the debtor is a
party.
``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
``Sec. 1525. Cooperation and direct communication between the
court and foreign courts or foreign representatives
``(a) Consistent with section 1501, the court shall
cooperate to the maximum extent possible with foreign courts
or foreign representatives, either directly or through the
trustee.
``(b) The court is entitled to communicate directly with,
or to request information or assistance directly from,
foreign courts or foreign representatives, subject to the
rights of parties in interest to notice and participation.
``Sec. 1526. Cooperation and direct communication between the
trustee and foreign courts or foreign representatives
``(a) Consistent with section 1501, the trustee or other
person, including an examiner, authorized by the court,
shall, subject to the supervision of the court, cooperate to
the maximum extent possible with foreign courts or foreign
representatives.
``(b) The trustee or other person, including an examiner,
authorized by the court is entitled, subject to the
supervision of the court, to communicate directly with
foreign courts or foreign representatives.
``Sec. 1527. Forms of cooperation
``Cooperation referred to in sections 1525 and 1526 may be
implemented by any appropriate means, including--
``(1) appointment of a person or body, including an
examiner, to act at the direction of the court;
``(2) communication of information by any means considered
appropriate by the court;
``(3) coordination of the administration and supervision of
the debtor's assets and affairs;
``(4) approval or implementation of agreements concerning
the coordination of proceedings; and
``(5) coordination of concurrent proceedings regarding the
same debtor.
``SUBCHAPTER V--CONCURRENT PROCEEDINGS
``Sec. 1528. Commencement of a case under this title after
recognition of a foreign main proceeding
``After recognition of a foreign main proceeding, a case
under another chapter of this title may be commenced only if
the debtor has assets in the United States. The effects of
such case shall be restricted to the assets of the debtor
that are within the territorial jurisdiction of the United
States and, to the extent necessary to implement cooperation
and coordination under sections 1525, 1526, and 1527, to
other assets of the debtor that are within the jurisdiction
of the court under sections 541(a) of this title, and 1334(e)
of title 28, to the extent that such other assets are not
subject to the jurisdiction and control of a foreign
proceeding that has been recognized under this chapter.
``Sec. 1529. Coordination of a case under this title and a
foreign proceeding
``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 1525, 1526, and 1527, 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 1519 or 1521 must
be consistent with the relief granted in the case in the
United States; and
``(B) even if the foreign proceeding is recognized as a
foreign main proceeding, section 1520 does not apply.
``(2) 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 1519 or 1521
shall be reviewed by the court and shall be modified or
terminated if inconsistent with the case in the United
States; and
``(B) if the foreign proceeding is a foreign main
proceeding, the stay and suspension referred to in section
1520(a) shall be modified or terminated if inconsistent with
the relief granted in the case in the United States.
``(3) In granting, extending, or modifying relief granted
to a representative of a foreign nonmain proceeding, the
court must be satisfied that the relief relates to assets
that, under the 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 1528 and 1529, the court may grant any of the relief
authorized under section 305.
``Sec. 1530. Coordination of more than 1 foreign proceeding
``In matters referred to in section 1501, with respect to
more than 1 foreign proceeding regarding the debtor, the
court shall seek cooperation and coordination under sections
1525, 1526, and 1527, and the following shall apply:
``(1) Any relief granted under section 1519 or 1521 to a
representative of a foreign nonmain proceeding after
recognition of a foreign main proceeding must be consistent
with the foreign main proceeding.
[[Page H2753]]
``(2) If a foreign main proceeding is recognized after
recognition, or after the filing of a petition for
recognition, of a foreign nonmain proceeding, any relief in
effect under section 1519 or 1521 shall be reviewed by the
court and shall be modified or terminated if inconsistent
with the foreign main proceeding.
``(3) If, after recognition of a foreign nonmain
proceeding, another foreign nonmain proceeding is recognized,
the court shall grant, modify, or terminate relief for the
purpose of facilitating coordination of the proceedings.
``Sec. 1531. Presumption of insolvency based on recognition
of a foreign main proceeding
``In the absence of evidence to the contrary, recognition
of a foreign main proceeding is for the purpose of commencing
a proceeding under section 303, proof that the debtor is
generally not paying its debts as such debts become due.
``Sec. 1532. Rule of payment in concurrent proceedings
``Without prejudice to secured claims or rights in rem, a
creditor who has received payment with respect to its claim
in a foreign proceeding pursuant to a law relating to
insolvency may not receive a payment for the same claim in a
case under any other chapter of this title regarding the
debtor, so long as the payment to other creditors of the same
class is proportionately less than the payment the creditor
has already received.''.
(b) Clerical Amendment.--The table of chapters for title
11, United States Code, is amended by inserting after the
item relating to chapter 13 the following:
``15. Ancillary and Other Cross-Border Cases................1501''.....
SEC. 902. 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, 304, 555
through 557, 559, and 560 apply in a case under chapter 15'';
and
(2) by adding at the end the following:
``(j) Chapter 15 applies only in a case under such chapter,
except that--
``(1) sections 1505, 1513, and 1514 apply in all cases
under this title; and
``(2) section 1509 applies whether or not a case under this
title is pending.''.
(b) Definitions.--Paragraphs (23) and (24) of title 11,
United States Code, are amended to read as follows:
``(23) `foreign proceeding' means a collective judicial or
administrative proceeding in a foreign country, including an
interim proceeding, under a law relating to insolvency or
adjustment of debt in which proceeding the assets and affairs
of the debtor are subject to control or supervision by a
foreign court, for the purpose of reorganization or
liquidation;
``(24) `foreign representative' means a person or body,
including a person or body appointed on an interim basis,
authorized in a foreign proceeding to administer the
reorganization or the liquidation of the debtor's assets or
affairs or to act as a representative of the foreign
proceeding;''.
(c) Amendments to Title 28, United States Code.--
(1) Procedures.--Section 157(b)(2) of title 28, United
States Code, is amended--
(A) in subparagraph (N), by striking ``and'' at the end;
(B) in subparagraph (O), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following:
``(P) recognition of foreign proceedings and other matters
under chapter 15 of title 11.''.
(2) Bankruptcy cases and proceedings.--Section 1334(c) of
title 28, United States Code, is amended by striking
``Nothing in'' and inserting ``Except with respect to a case
under chapter 15 of title 11, nothing in''.
(3) Duties of trustees.--Section 586(a)(3) of title 28,
United States Code, is amended by striking ``or 13'' and
inserting ``13, or 15,'' after ``chapter''.
(4) Section 305(a)(2) of title 11, United States Code, is
amended to read:
``(2)(A) a petition under section 1515 of this title for
recognition of a foreign proceeding has been granted; and
``(B) the purposes of chapter 15 of this title would be
best served by such dismissal or suspension.''.
(5) Section 508 of title 11, United States Code, is amended
by striking subsection (a) and by striking out the letter
``(b)'' at the beginning of the second paragraph.
TITLE X--FINANCIAL CONTRACT PROVISIONS
SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR
--RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.
(a) Definition of Qualified Financial Contract.--Section
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(i)) is amended by inserting ``,
resolution or order'' after ``any similar agreement that the
Corporation determines by regulation''.
(b) Definition of Securities Contract.--Section
11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows:
``(ii) Securities contract.--The term `securities
contract'--
``(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit, or mortgage loans or interests
therein (including any interest therein or based on the value
thereof) or any option on any of the foregoing, including any
option to purchase or sell any such security, certificate of
deposit, loan, interest, group or index, or option;
``(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan unless the Corporation determines by regulation,
resolution, or order to include any such agreement within the
meaning of such term;
``(III) means any option entered into on a national
securities exchange relating to foreign currencies;
``(IV) means the guarantee by or to any securities clearing
agency of any settlement of cash, securities, certificates of
deposit, mortgage loans or interests therein, group or index
of securities, certificates of deposit, or mortgage loans or
interests therein (including any interest therein or based on
the value thereof) or option on any of the foregoing,
including any option to purchase or sell any such security,
certificate of deposit, loan, interest, group or index or
option;
``(V) means any margin loan;
``(VI) means any other agreement or transaction that is
similar to any agreement or transaction referred to in this
clause;
``(VII) means any combination of the agreements or
transactions referred to in this clause;
``(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
``(IX) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
(IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a securities contract under this
clause, except that the master agreement shall be considered
to be a securities contract under this clause only with
respect to each agreement or transaction under the master
agreement that is referred to in subclause (I), (III), (IV),
(V), (VI), (VII), or (VIII); and
``(X) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in this clause.''.
(c) Definition of Commodity Contract.--Section
11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:
``(iii) Commodity contract.--The term `commodity contract'
means--
``(I) with respect to a futures commission merchant, a
contract for the purchase or sale of a commodity for future
delivery on, or subject to the rules of, a contract market or
board of trade;
``(II) with respect to a foreign futures commission
merchant, a foreign future;
``(III) with respect to a leverage transaction merchant, a
leverage transaction;
``(IV) with respect to a clearing organization, a contract
for the purchase or sale of a commodity for future delivery
on, or subject to the rules of, a contract market or board of
trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a
contract market or board of trade that is cleared by such
clearing organization;
``(V) with respect to a commodity options dealer, a
commodity option;
``(VI) any other agreement or transaction that is similar
to any agreement or transaction referred to in this clause;
``(VII) any combination of the agreements or transactions
referred to in this clause;
``(VIII) any option to enter into any agreement or
transaction referred to in this clause;
``(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), (IV),
(V), (VI), (VII), or (VIII), together with all supplements to
any such master agreement, without regard to whether the
master agreement provides for an agreement or transaction
that is not a commodity contract under this clause, except
that the master agreement shall be considered to be a
commodity contract under this clause only with respect to
each agreement or transaction under the master agreement that
is referred to in subclause (I), (II), (III), (IV), (V),
(VI), (VII), or (VIII); or
``(X) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in this clause.''.
(d) Definition of Forward Contract.--Section
11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
``(iv) Forward contract.--The term `forward contract'
means--
``(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar
good, article, service, right, or interest which is presently
or in the future becomes the subject of dealing in the
forward contract trade, or product or byproduct thereof, with
a maturity date more than 2 days after the date the contract
is entered into, including, but not limited to, a repurchase
agreement, reverse repurchase agreement, consignment, lease,
swap, hedge transaction, deposit, loan, option, allocated
transaction, unallocated transaction, or any other similar
agreement;
``(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
[[Page H2754]]
``(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
``(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III),
together with all supplements to any such master agreement,
without regard to whether the master agreement provides for
an agreement or transaction that is not a forward contract
under this clause, except that the master agreement shall be
considered to be a forward contract under this clause only
with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
or (III); or
``(V) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in subclause (I), (II), (III), or (IV).''.
(e) Definition of Repurchase Agreement.--Section
11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows:
``(v) Repurchase agreement.--The term `repurchase
agreement' (which definition also applies to a reverse
repurchase agreement)--
``(I) mean an agreement, including related terms, which
provides for the transfer of 1 or more certificates of
deposit, mortgage-related securities (as such term is defined
in the Securities Exchange Act of 1934), mortgage loans,
interests in mortgage-related securities or mortgage loans,
eligible bankers' acceptances, qualified foreign government
securities or securities that are direct obligations of, or
that are fully guaranteed by, the United States or any agency
of the United States against the transfer of funds by the
transferee of such certificates of deposit, eligible bankers'
acceptances, securities, loans, or interests with a
simultaneous agreement by such transferee to transfer to the
transferor thereof certificates of deposit, eligible bankers'
acceptances, securities, loans, or interests as described
above, at a date certain not later than 1 year after such
transfers or on demand, against the transfer of funds, or any
other similar agreement;
``(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan unless the
Corporation determines by regulation, resolution, or order to
include any such participation within the meaning of such
term;
``(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
``(IV) means any option to enter into any agreement or
transaction referred to in subclause (I) or (III);
``(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I), (III),
or (IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
provides for an agreement or transaction that is not a
repurchase agreement under this clause, except that the
master agreement shall be considered to be a repurchase
agreement under this subclause only with respect to each
agreement or transaction under the master agreement that is
referred to in subclause (I), (III), or (IV); and
``(VI) means a security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in subclause (I), (III), (IV), or (V).
For purposes of this clause, the term `qualified foreign
government security' means a security that is a direct
obligation of, or that is fully guaranteed by, the central
government of a member of the Organization for Economic
Cooperation and Development (as determined by regulation or
order adopted by the appropriate Federal banking
authority).''.
(f) Definition of Swap Agreement.--Section 11(e)(8)(D)(iv)
of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(vi)) is amended to read as follows:
``(vi) Swap agreement.--The term `swap agreement' means--
``(I) any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, future, or forward
agreement; an equity index or equity swap, option, future, or
forward agreement; a debt index or debt swap, option, future,
or forward agreement; a credit spread or credit swap, option,
future, or forward agreement; a commodity index or commodity
swap, option, future, or forward agreement;
``(II) any agreement or transaction similar to any other
agreement or transaction referred to in this clause that is
presently, or in the future becomes, regularly entered into
in the swap market (including terms and conditions
incorporated by reference in such agreement) and that is a
forward, swap, future, or option on 1 or more rates,
currencies, commodities, equity securities or other equity
instruments, debt securities or other debt instruments, or
economic indices or measures of economic risk or value;
``(III) any combination of agreements or transactions
referred to in this clause;
``(IV) any option to enter into any agreement or
transaction referred to in this clause;
``(V) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III), or
(IV), together with all supplements to any such master
agreement, without regard to whether the master agreement
contains an agreement or transaction that is not a swap
agreement under this clause, except that the master agreement
shall be considered to be a swap agreement under this clause
only with respect to each agreement or transaction under the
master agreement that is referred to in subclause (I), (II),
(III), or (IV); and
``(VI) any security agreement or arrangement or other
credit enhancement related to any agreements or transactions
referred to in subparagraph (I), (II), (III), or (IV).
Such term is applicable for purposes of this title only and
shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
swap agreement under any other statute, regulation, or rule,
including the Securities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding Company Act of 1935,
the Trust Indenture Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act,
and the regulations promulgated by the Securities and
Exchange Commission or the Commodity Futures Trading
Commission.''.
(g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of
the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(viii)) is amended to read as follows:
``(viii) Transfer.--The term `transfer' means every mode,
direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or with
an interest in property, including retention of title as a
security interest and foreclosure of the depository
institutions's equity of redemption.''.
(h) Treatment of Qualified Financial Contracts.--Section
11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)) is amended--
(1) in subparagraph (A), by striking ``paragraph (10)'' and
inserting ``paragraphs (9) and (10)'';
(2) in subparagraph (A)(i), by striking ``to cause the
termination or liquidation'' and inserting ``such person has
to cause the termination, liquidation, or acceleration'';
(3) by amending subparagraph (A)(ii) to read as follows:
``(ii) any right under any security agreement or
arrangement or other credit enhancement related to 1 or more
qualified financial contracts described in clause (i);''; and
(4) by amending subparagraph (E)(ii) to read as follows:
``(ii) any right under any security agreement or
arrangement or other credit enhancement related to 1 or more
qualified financial contracts described in clause (i);''.
(i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is
amended by inserting ``section 5242 of the Revised Statutes
of the United States (12 U.S.C. 91) or any other Federal or
State law relating to the avoidance of preferential or
fraudulent transfers,'' before ``the Corporation''.
SEC. 1002. AUTHORITY OF THE CORPORATION WITH RESPECT TO
FAILED AND FAILING INSTITUTIONS.
(a) In General.--Section 11(e)(8) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
(1) in subparagraph (E), by striking ``other than paragraph
(12) of this subsection, subsection (d)(9)'' and inserting
``other than subsections (d)(9) and (e)(10)''; and
(2) by adding at the end the following new subparagraphs:
``(F) Clarification.--No provision of law shall be
construed as limiting the right or power of the Corporation,
or authorizing any court or agency to limit or delay, in any
manner, the right or power of the Corporation to transfer any
qualified financial contract in accordance with paragraphs
(9) and (10) of this subsection or to disaffirm or repudiate
any such contract in accordance with subsection (e)(1) of
this section.
``(G) Walkaway clauses not effective.--
``(i) In general.--Notwithstanding the provisions of
subparagraphs (A) and (E), and sections 403 and 404 of the
Federal Deposit Insurance Corporation Improvement Act of
1991, no walkaway clause shall be enforceable in a qualified
financial contract of an insured depository institution in
default.
``(ii) Walkaway clause defined.--For purposes of this
subparagraph, the term `walkaway clause' means a provision in
a qualified financial contract that, after calculation of a
value of a party's position or an amount due to or from 1 of
the parties in accordance with its terms upon termination,
liquidation, or acceleration of the qualified financial
contract, either does not create a payment obligation of a
party or extinguishes a payment obligation of a party in
whole or in part solely because of such party's status as a
nondefaulting party.''.
(b) Technical and Conforming Amendment.--Section
11(e)(12)(A) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(12)(A)) is amended by inserting ``or the exercise of
rights or powers'' after ``the appointment''.
SEC. 1003. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED
FINANCIAL CONTRACTS.
(a) Transfers of Qualified Financial Contracts to Financial
Institutions.--Section 11(e)(9) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as
follows:
[[Page H2755]]
``(9) Transfer of qualified financial contracts.--
``(A) In general.--In making any transfer of assets or
liabilities of a depository institution in default which
includes any qualified financial contract, the conservator or
receiver for such depository institution shall either--
``(i) transfer to 1 financial institution, other than a
financial institution for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has been
appointed or which is otherwise the subject of a bankruptcy
or insolvency proceeding--
``(I) all qualified financial contracts between any person
or any affiliate of such person and the depository
institution in default;
``(II) all claims of such person or any affiliate of such
person against such depository institution under any such
contract (other than any claim which, under the terms of any
such contract, is subordinated to the claims of general
unsecured creditors of such institution);
``(III) all claims of such depository institution against
such person or any affiliate of such person under any such
contract; and
``(IV) all property securing or any other credit
enhancement for any contract described in subclause (I) or
any claim described in subclause (II) or (III) under any such
contract; or
``(ii) transfer none of the qualified financial contracts,
claims, property or other credit enhancement referred to in
clause (i) (with respect to such person and any affiliate of
such person).
``(B) Transfer to foreign bank, foreign financial
institution, or branch or agency of a foreign bank or
financial institution.--In transferring any qualified
financial contracts and related claims and property pursuant
to subparagraph (A)(i), the conservator or receiver for such
depository institution shall not make such transfer to a
foreign bank, financial institution organized under the laws
of a foreign country, or a branch or agency of a foreign bank
or financial institution unless, under the law applicable to
such bank, financial institution, branch or agency, to the
qualified financial contracts, and to any netting contract,
any security agreement or arrangement or other credit
enhancement related to 1 or more qualified financial
contracts, the contractual rights of the parties to such
qualified financial contracts, netting contracts, security
agreements or arrangements, or other credit enhancements are
enforceable substantially to the same extent as permitted
under this section.
``(C) Transfer of contracts subject to the rules of a
clearing organization.--In the event that a conservator or
receiver transfers any qualified financial contract and
related claims, property and credit enhancements pursuant to
subparagraph (A)(i) and such contract is subject to the rules
of a clearing organization, the clearing organization shall
not be required to accept the transferee as a member by
virtue of the transfer.
``(D) Definition.--For purposes of this section, the term
`financial institution' means a broker or dealer, a
depository institution, a futures commission merchant, or any
other institution as determined by the Corporation by
regulation to be a financial institution.''.
(b) Notice to Qualified Financial Contract
Counterparties.--Section 11(e)(10)(A) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(e)(10)(A)) is amended by
amending the flush material following clause (ii) to read as
follows: ``the conservator or receiver shall notify any
person who is a party to any such contract of such transfer
by 5:00 p.m. (eastern time) on the business day following the
date of the appointment of the receiver, in the case of a
receivership, or the business day following such transfer, in
the case of a conservatorship.''.
(c) Rights Against Receiver and Treatment of Bridge
Banks.--Section 11(e)(10) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(10)) is further amended--
(1) by redesignating subparagraph (B) as subparagraph (D);
and
(2) by inserting after subparagraph (A) the following new
subparagraphs:
``(B) Certain rights not enforceable.--
``(i) Receivership.--A person who is a party to a qualified
financial contract with an insured depository institution may
not exercise any right such person has to terminate,
liquidate, or net such contract under paragraph (8)(A) or
section 403 or 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 solely by reason of or
incidental to the appointment of a receiver for the
depository institution (or the insolvency or financial
condition of the depository institution for which the
receiver has been appointed)--
``(I) until 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the receiver; or
``(II) after the person has received notice that the
contract has been transferred pursuant to paragraph (9)(A).
``(ii) Conservatorship.--A person who is a party to a
qualified financial contract with an insured depository
institution may not exercise any right such person has to
terminate, liquidate, or net such contract under paragraph
(8)(E) or sections 403 or 404 of the Federal Deposit
Insurance Corporation Improvement Act of 1991, solely by
reason of or incidental to the appointment of a conservator
for the depository institution (or the insolvency or
financial condition of the depository institution for which
the conservator has been appointed).
``(iii) Notice.--For purposes of this subsection, the
Corporation as receiver or conservator of an insured
depository institution shall be deemed to have notified a
person who is a party to a qualified financial contract with
such depository institution if the Corporation has taken
steps reasonably calculated to provide notice to such person
by the time specified in subparagraph (A) of this subsection.
``(C) Treatment of bridge banks.--The following
institutions shall not be considered a financial institution
for which a conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed or which is
otherwise the subject of a bankruptcy or insolvency
proceeding for purposes of subsection (e)(9)--
``(i) a bridge bank; or
``(ii) a depository institution organized by the
Corporation, for which a conservator is appointed either--
``(I) immediately upon the organization of the institution;
or
``(II) at the time of a purchase and assumption transaction
between such institution and the Corporation as receiver for
a depository institution in default.''.
SEC. 1004. AMENDMENTS RELATING TO DISAFFIRMANCE OR
REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.
Section 11(e) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)) is further amended--
(1) by redesignating paragraphs (11) through (15) as
paragraphs (12) through (16), respectively; and
(2) by inserting after paragraph (10) the following new
paragraph:
``(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of a conservator or receiver with respect to any
qualified financial contract to which an insured depository
institution is a party, the conservator or receiver for such
institution shall either--
``(A) disaffirm or repudiate all qualified financial
contracts between--
``(i) any person or any affiliate of such person; and
``(ii) the depository institution in default; or
``(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A) (with
respect to such person or any affiliate of such person).''.
SEC. 1005. CLARIFYING AMENDMENT RELATING TO MASTER
AGREEMENTS.
Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as
follows:
``(vii) Treatment of master agreement as 1 agreement.--Any
master agreement for any contract or agreement described in
any preceding clause of this subparagraph (or any master
agreement for such master agreement or agreements), together
with all supplements to such master agreement, shall be
treated as a single agreement and a single qualified
financial contract. If a master agreement contains provisions
relating to agreements or transactions that are not
themselves qualified financial contracts, the master
agreement shall be deemed to be a qualified financial
contract only with respect to those transactions that are
themselves qualified financial contracts.''.
SEC. 1006. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT
ACT OF 1991.
(a) Definitions.--Section 402 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12 U.S.C.
4402) is amended--
(1) in paragraph (6)--
(A) by redesignating subparagraphs (B) through (D) as
subparagraphs (C) through (E), respectively;
(B) by inserting after subparagraph (A) the following new
subparagraph:
``(B) an uninsured national bank or an uninsured State bank
that is a member of the Federal Reserve System if the
national bank or State member bank is not eligible to make
application to become an insured bank under section 5 of the
Federal Deposit Insurance Act;''; and
(C) by amending subparagraph (C) (as redesignated) to read
as follows:
``(C) a branch or agency of a foreign bank, a foreign bank
and any branch or agency of the foreign bank, or the foreign
bank that established the branch or agency, as those terms
are defined in section 1(b) of the International Banking Act
of 1978;'';
(2) in paragraph (11), by adding before the period ``and
any other clearing organization with which such clearing
organization has a netting contract'';
(3) by amending paragraph (14)(A)(i) to read as follows:
``(i) means a contract or agreement between 2 or more
financial institutions, clearing organizations, or members
that provides for netting present or future payment
obligations or payment entitlements (including liquidation or
closeout values relating to such obligations or entitlements)
among the parties to the agreement; and''; and
(4) by adding at the end the following new paragraph:
``(15) Payment.--The term `payment' means a payment of
United States dollars, another currency, or a composite
currency, and a noncash delivery, including a payment or
delivery to liquidate an unmatured obligation.''.
[[Page H2756]]
(b) Enforceability of Bilateral Netting Contracts.--Section
403 of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (12 U.S.C. 4403) is amended--
(1) by amending subsection (a) to read as follows:
``(a) General Rule.--Notwithstanding any other provision of
State or Federal law (other than paragraphs (8)(E), (8)(F),
and (10)(B) of section 11(e) of the Federal Deposit Insurance
Act or any order authorized under section 5(b)(2) of the
Securities Investor Protection Act of 1970, the covered
contractual payment obligations and the covered contractual
payment entitlements between any 2 financial institutions
shall be netted in accordance with, and subject to the
conditions of, the terms of any applicable netting contract
(except as provided in section 561(b)(2) of title 11).''; and
(2) by adding at the end the following new subsection:
``(f) Enforceability of Security Agreements.--The
provisions of any security agreement or arrangement or other
credit enhancement related to 1 or more netting contracts
between any 2 financial institutions shall be enforceable in
accordance with their terms (except as provided in section
561(b)(2) of title 11) and shall not be stayed, avoided, or
otherwise limited by any State or Federal law (other than
paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) of
the Federal Deposit Insurance Act and section 5(b)(2) of the
Securities Investor Protection Act of 1970).''.
(c) Enforceability of Clearing Organization Netting
Contracts.--Section 404 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4404) is
amended--
(1) by amending subsection (a) to read as follows:
``(a) General Rule.--Notwithstanding any other provision of
State or Federal law (other than paragraphs (8)(E), (8)(F),
and (10)(B) of section 11(e) of the Federal Deposit Insurance
Act and any order authorized under section 5(b)(2) of the
Securities Investor Protection Act of 1970, the covered
contractual payment obligations and the covered contractual
payment entitlements of a member of a clearing organization
to and from all other members of a clearing organization
shall be netted in accordance with and subject to the
conditions of any applicable netting contract (except as
provided in section 561(b)(2) of title 11, United States
Code).''; and
(2) by adding at the end the following new subsection:
``(h) Enforceability of Security Agreements.--The
provisions of any security agreement or arrangement or other
credit enhancement related to 1 or more netting contracts
between any 2 members of a clearing organization shall be
enforceable in accordance with their terms (except as
provided in section 561(b)(2) of title 11, United States
Code) and shall not be stayed, avoided, or otherwise limited
by any State or Federal law other than paragraphs (8)(E),
(8)(F), and (10)(B) of section 11(e) of the Federal Deposit
Insurance Act and section 5(b)(2) of the Securities Investor
Protection Act of 1970.''.
(d) Enforceability of Contracts With Uninsured National
Banks and Uninsured Federal Branches and Agencies.--The
Federal Deposit Insurance Corporation Improvement Act of 1991
(12 U.S.C. 4401 et seq.) is amended--
(1) by redesignating section 407 as section 408; and
(2) by adding after section 406 the following new section:
``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL
BANKS AND UNINSURED FEDERAL BRANCHES AND
AGENCIES.
``(a) In General.--Notwithstanding any other provision of
law, paragraphs (8), (9), (10), and (11) of section 11(e) of
the Federal Deposit Insurance Act shall apply to an uninsured
national bank or uninsured Federal branch or Federal agency
except--
``(1) any reference to the `Corporation as receiver' or
`the receiver or the Corporation' shall refer to the receiver
of an uninsured national bank or uninsured Federal branch or
Federal agency appointed by the Comptroller of the Currency;
``(2) any reference to the `Corporation' (other than in
section 11(e)(8)(D) of such Act), the `Corporation, whether
acting as such or as conservator or receiver', a `receiver',
or a `conservator' shall refer to the receiver or conservator
of an uninsured national bank or uninsured Federal branch or
Federal agency appointed by the Comptroller of the Currency;
and
``(3) any reference to an `insured depository institution'
or `depository institution' shall refer to an uninsured
national bank or an uninsured Federal branch or Federal
agency.
``(b) Liability.--The liability of a receiver or
conservator of an uninsured national bank or uninsured
Federal branch or agency shall be determined in the same
manner and subject to the same limitations that apply to
receivers and conservators of insured depository institutions
under section 11(e) of the Federal Deposit Insurance Act.
``(c) Regulatory Authority.--
``(1) In general.--The Comptroller of the Currency, in
consultation with the Federal Deposit Insurance Corporation,
may promulgate regulations to implement this section.
``(2) Specific requirement.--In promulgating regulations to
implement this section, the Comptroller of the Currency shall
ensure that the regulations generally are consistent with the
regulations and policies of the Federal Deposit Insurance
Corporation adopted pursuant to the Federal Deposit Insurance
Act.
``(d) Definitions.--For purposes of this section, the terms
`Federal branch', `Federal agency', and `foreign bank' have
the same meaning as in section 1(b) of the International
Banking Act.''.
SEC. 1007. BANKRUPTCY CODE AMENDMENTS.
(a) Definitions of Forward Contract, Repurchase Agreement,
Securities Clearing Agency, Swap Agreement, Commodity
Contract, and Securities Contract.--Title 11, United States
Code, is amended--
(1) in section 101--
(A) in paragraph (25)--
(i) by striking ``means a contract'' and inserting
``means--
``(A) a contract'';
(ii) by striking ``, or any combination thereof or option
thereon;'' and inserting ``, or any other similar
agreement;''; and
(iii) by adding at the end the following:
``(B) any combination of agreements or transactions
referred to in subparagraphs (A) and (C);
``(C) any option to enter into an agreement or transaction
referred to in subparagraph (A) or (B);
``(D) a master agreement that provides for an agreement or
transaction referred to in subparagraph (A), (B), or (C),
together with all supplements to any such master agreement,
without regard to whether such master agreement provides for
an agreement or transaction that is not a forward contract
under this paragraph, except that such master agreement shall
be considered to be a forward contract under this paragraph
only with respect to each agreement or transaction under such
master agreement that is referred to in subparagraph (A), (B)
or (C); or
``(E) a security agreement or arrangement, or other credit
enhancement related to any agreement or transaction referred
to in subparagraph (A), (B), (C), or (D), but not to exceed
the actual value of such contract, option, agreement, or
transaction on the date of the filing of the petition;'';
(B) in paragraph (46), by striking ``on any day during the
period beginning 90 days before the date of'' and replacing
it with ``at any time before'';
(C) by amending paragraph (47) to read as follows:
``(47) `repurchase agreement' (which definition also
applies to a reverse repurchase agreement) means--
``(i) an agreement, including related terms, which provides
for the transfer of 1 or more certificates of deposit,
mortgage-related securities (as defined in the Securities
Exchange Act of 1934), mortgage loans, interests in mortgage-
related securities or mortgage loans, eligible bankers'
acceptances, qualified foreign government securities; or
securities that are direct obligations of, or that are fully
guaranteed by, the United States or any agency of the United
States against the transfer of funds by the transferee of
such certificates of deposit, eligible bankers' acceptances,
securities, loans, or interests; with a simultaneous
agreement by such transferee to transfer to the transferor
thereof certificates of deposit, eligible bankers'
acceptance, securities, loans, or interests of the kind
described above, at a date certain not later than 1 year
after such transfer or on demand, against the transfer of
funds;
``(ii) any combination of agreements or transactions
referred to in clauses (i) and (iii);
``(iii) an option to enter into an agreement or transaction
referred to in clause (i) or (ii);
``(iv) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), or (iii),
together with all supplements to any such master agreement,
without regard to whether such master agreement provides for
an agreement or transaction that is not a repurchase
agreement under this paragraph, except that such master
agreement shall be considered to be a repurchase agreement
under this paragraph only with respect to each agreement or
transaction under the master agreement that is referred to in
clause (i), (ii), or (iii); or
``(v) a security agreement or arrangement or other credit
enhancement related to any agreement or transaction referred
to in clause (i), (ii), (iii), or (iv), but not to exceed the
actual value of such contract on the date of the filing of
the petition; and
``(B) does not include a repurchase obligation under a
participation in a commercial mortgage loan;
and, for purposes of this paragraph, the term `qualified
foreign government security' means a security that is a
direct obligation of, or that is fully guaranteed by, the
central government of a member of the Organization for
Economic Cooperation and Development;'';
(D) in paragraph (48) by inserting ``or exempt from such
registration under such section pursuant to an order of the
Securities and Exchange Commission'' after ``1934''; and
(E) by amending paragraph (53B) to read as follows:
``(53B) `swap agreement'
``(A) means--
``(i) any agreement, including the terms and conditions
incorporated by reference in such agreement, which is an
interest rate swap, option, future, or forward agreement,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, and basis swap; a
[[Page H2757]]
spot, same day-tomorrow, tomorrow-next, forward, or other
foreign exchange or precious metals agreement; a currency
swap, option, future, or forward agreement; an equity index
or an equity swap, option, future, or forward agreement; a
debt index or a debt swap, option, future, or forward
agreement; a credit spread or a credit swap, option, future,
or forward agreement; or a commodity index or a commodity
swap, option, future, or forward agreement;
``(ii) any agreement or transaction similar to any other
agreement or transaction referred to in this paragraph that--
``(I) is presently, or in the future becomes, regularly
entered into in the swap market (including terms and
conditions incorporated by reference therein); and
``(II) is a forward, swap, future, or option on 1 or more
rates, currencies commodities, equity securities, or other
equity instruments, debt securities or other debt
instruments, or on an economic index or measure of economic
risk or value;
``(iii) any combination of agreements or transactions
referred to in this paragraph;
``(iv) any option to enter into an agreement or transaction
referred to in this paragraph;
``(v) a master agreement that provides for an agreement or
transaction referred to in clause (i), (ii), (iii), or (iv),
together with all supplements to any such master agreement,
and without regard to whether the master agreement contains
an agreement or transaction that is not a swap agreement
under this paragraph, except that the master agreement shall
be considered to be a swap agreement under this paragraph
only with respect to each agreement or transaction under the
master agreement that is referred to in clause (i), (ii),
(iii), or (iv); or
``(B) any security agreement or arrangement or other credit
enhancement related to any agreements or transactions
referred to in subparagraph (A); and
``(C) is applicable for purposes of this title only and
shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
swap agreement under any other statute, regulation, or rule,
including the Securities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding Company Act of 1935,
the Trust Indenture Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of 1940, the Securities
Investor Protection Act of 1970, the Commodity Exchange Act,
and the regulations prescribed by the Securities and Exchange
Commission or the Commodity Futures Trading Commission.'';
(2) by amending section 741(7) to read as follows:
``(7) `securities contract'--
``(A) means--
``(i) a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan or any
interest in a mortgage loan, a group or index of securities,
certificates of deposit or mortgage loans or interests
therein (including an interest therein or based on the value
thereof), or option on any of the foregoing, including an
option to purchase or sell any such security certificate of
deposit, loan, interest, group or index or option;
``(ii) any option entered into on a national securities
exchange relating to foreign currencies;
``(iii) the guarantee by or to any securities clearing
agency of a settlement of cash, securities, certificates of
deposit mortgage loans or interests therein, group or index
of securities, or mortgage loans or interests therein
(including any interest therein or based on the value
thereof), or option on any of the foregoing, including an
option to purchase or sell any such security certificate of
deposit, loan, interest, group or index or option;
``(iv) any margin loan;
``(v) any other agreement or transaction that is similar to
an agreement or transaction referred to in this paragraph;
``(vi) any combination of the agreements or transactions
referred to in this paragraph;
``(vii) any option to enter into any agreement or
transaction referred to in this paragraph;
``(viii) a master agreement that provides for an agreement
or transaction referred to in clause (i), (ii), (iii), (iv),
(v), (vi), or (vii), together with all supplements to any
such master agreement, without regard to whether the master
agreement provides for an agreement or transaction that is
not a securities contract under this paragraph, except that
such master agreement shall be considered to be a securities
contract under this paragraph only with respect to each
agreement or transaction under such master agreement that is
referred to in clause (i), (ii), (iii), (iv), (v), (vi), or
(vii); or
``(ix) any security agreement or arrangement, or other
credit enhancement, related to any agreement or transaction
referred to in this paragraph, but not to exceed the actual
value of such contract on the date of the filing of the
petition; and
``(B) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan.''; and
(3) in section 761(4)--
(A) by striking ``or'' at the end of subparagraph (D); and
(B) by adding at the end the following:
``(F) any other agreement or transaction that is similar to
an agreement or transaction referred to in this paragraph;
``(G) any combination of the agreements or transactions
referred to in this paragraph;
``(H) any option to enter into an agreement or transaction
referred to in this paragraph;
``(I) a master agreement that provides for an agreement or
transaction referred to in subparagraph (A), (B), (C), (D),
(E), (F), (G), or (H), together with all supplements to such
master netting agreement, without regard to whether the
master netting agreement provides for an agreement or
transaction that is not a commodity contract under this
paragraph, except that the master agreement shall be
considered to be a commodity contract under this paragraph
only with respect to each agreement or transaction under the
master agreement that is referred to in subparagraph (A),
(B), (C), (D), (E), (F), (G), or (H); or
``(J) a security agreement or arrangement, or other credit
enhancement related to any agreement or transaction referred
to in this paragraph, but not to exceed the actual value of
such contract on the date of the filing of the petition;''.
(b) Definitions of Financial Institution, Financial
Participant, and Forward Contract Merchant.--Section 101 of
title 11, United States Code, is amended--
(1) by amending paragraph (22) to read as follows:
``(22) `financial institution' means--
``(A) a Federal reserve bank, or an entity (domestic or
foreign) that is a commercial or savings bank, industrial
savings bank, savings and loan association, trust company, or
receiver or conservator for such entity and, when any such
Federal reserve bank, receiver, conservator or entity is
acting as agent or custodian for a customer in connection
with a securities contract, as defined in section 741 of this
title, such customer; or
``(B) in connection with a securities contract, as defined
in section 741 of this title, an investment company
registered under the Investment Company Act of 1940;'';
(2) by inserting after paragraph (22) the following:
``(22A) `financial participant' means an entity that, at
the time it enters into a securities contract, commodity
contract or forward contract, or at the time of the filing of
the petition, has 1 or more agreements or transactions that
is described in section 561(a)(2) with the debtor or any
other entity (other than an affiliate) of a total gross
dollar value of at least $1,000,000,000 in notional or actual
principal amount outstanding on any day during the previous
15-month period, or has gross mark-to-market positions of at
least $100,000,000 (aggregated across counterparties) in 1 or
more such agreement or transaction with the debtor or any
other entity (other than an affiliate) on any day during the
previous 15-month period;''; and
(3) by amending paragraph (26) to read as follows:
``(26) `forward contract merchant' means a Federal reserve
bank, or an entity whose business consists in whole or in
part of entering into forward contracts as or with merchants
or in a commodity, as defined or in section 761 of this
title, or any similar good, article, service, right, or
interest which is presently or in the future becomes the
subject of dealing or in the forward contract trade;''.
(c) Definition of Master Netting Agreement and Master
Netting Agreement Participant.--Section 101 of title 11,
United States Code, is amended by inserting after paragraph
(38) the following new paragraphs:
``(38A) `master netting agreement' means an agreement
providing for the exercise of rights, including rights of
netting, setoff, liquidation, termination, acceleration, or
closeout, under or in connection with 1 or more contracts
that are described in any 1 or more of paragraphs (1) through
(5) of section 561(a), or any security agreement or
arrangement or other credit enhancement related to 1 or more
of the foregoing. If a master netting agreement contains
provisions relating to agreements or transactions that are
not contracts described in paragraphs (1) through (5) of
section 561(a), the master netting agreement shall be deemed
to be a master netting agreement only with respect to those
agreements or transactions that are described in any 1 or
more of the paragraphs (1) through (5) of section 561(a);
``(38B) `master netting agreement participant' means an
entity that, at any time before the filing of the petition,
is a party to an outstanding master netting agreement with
the debtor;''.
(d) Swap Agreements, Securities Contracts, Commodity
Contracts, Forward Contracts, Repurchase Agreements, and
Master Netting Agreements Under the Automatic-Stay.--
(1) In general.--Section 362(b) of title 11, United States
Code, as amended by sections 118, 132, 136, 142, 203 and 818,
is amended--
(A) in paragraph (6), by inserting ``, pledged to, and
under the control of,'' after ``held by'';
(B) in paragraph (7), by inserting ``, pledged to, and
under the control of,'' after ``held by'';
(C) by amending paragraph (17) to read as follows:
``(17) under subsection (a), of the setoff by a swap
participant of a mutual debt and claim under or in connection
with 1 or more swap agreements that constitutes the setoff of
a claim against the debtor for any payment or other transfer
of property due from the debtor under or in connection with
any swap agreement against any payment due to the debtor from
the swap participant under or in connection with any swap
agreement or against cash, securities, or other property held
by, pledged to, and under the control of,
[[Page H2758]]
or due from such swap participant to margin guarantee,
secure, or settle a swap agreement;'';
(D) in paragraph (30) by striking ``or'' at the end;
(E) in paragraph (31) by striking the period at the end and
inserting ``; or''; and
(F) by inserting after paragraph (31) the following new
paragraph:
``(32) under subsection (a), of the setoff by a master
netting agreement participant of a mutual debt and claim
under or in connection with 1 or more master netting
agreements or any contract or agreement subject to such
agreements that constitutes the setoff of a claim against the
debtor for any payment or other transfer of property due from
the debtor under or in connection with such agreements or any
contract or agreement subject to such agreements against any
payment due to the debtor from such master netting agreement
participant under or in connection with such agreements or
any contract or agreement subject to such agreements or
against cash, securities, or other property held by, pledged
or and under the control of, or due from such master netting
agreement participant to margin, guarantee, secure, or settle
such agreements or any contract or agreement subject to such
agreements, to the extent such participant is eligible to
exercise such offset rights under paragraph (6), (7), or (17)
for each individual contract covered by the master netting
agreement in issue.''.
(2) Limitation.--Section 362 of title 11, United States
Code, as amended by sections 120, 302, and 412, is amended by
adding at the end the following:
``(l) Limitation.--The exercise of rights not subject to
the stay arising under subsection (a) pursuant to paragraph
(6), (7), or (17), or (31) of subsection (b) shall not be
stayed by any order of a court or administrative agency in
any proceeding under this title.''.
(e) Limitation of Avoidance Powers Under Master Netting
Agreement.--Section 546 of title 11, United States Code, as
amended by sections 207 and 302, is amended--
(1) in subsection (g) (as added by section 103 of Public
Law 101-311)--
(A) by striking ``under a swap agreement'';
(B) by striking ``in connection with a swap agreement'' and
inserting ``under or in connection with any swap agreement'';
and
(2) by adding at the end the following:
``(j) Notwithstanding sections 544, 545, 547, 548(a)(2)(B),
and 548(b) of this title, the trustee may not avoid a
transfer made by or to a master netting agreement participant
under or in connection with any master netting agreement or
any individual contract covered thereby that is made before
the commencement of the case, except under section
548(a)(1)(A) of this title, and except to the extent the
trustee could otherwise avoid such a transfer made under an
individual contract covered by such master netting
agreement.''.
(f) Fraudulent Transfers of Master Netting Agreements.--
Section 548(d)(2) of title 11, United States Code, is
amended--
(1) in subparagraph (C), by striking ``and'';
(2) in subparagraph (D), by striking the period and
inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) a master netting agreement participant that receives
a transfer in connection with a master netting agreement or
any individual contract covered thereby takes for value to
the extent of such transfer, except, with respect to a
transfer under any individual contract covered thereby, to
the extent such master netting agreement participant
otherwise did not take (or is otherwise not deemed to have
taken) such transfer for value.''.
(g) Termination or Acceleration of Securities Contracts.--
Section 555 of title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
``Sec. 555. Contractual right to liquidate, terminate, or
accelerate a securities contract''; and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(h) Termination or Acceleration of Commodities or Forward
Contracts.--Section 556 of title 11, United States Code, is
amended--
(1) by amending the section heading to read as follows:
``Sec. 556. Contractual right to liquidate, terminate, or
accelerate a commodities contract or forward contract'';
and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(i) Termination or Acceleration of Repurchase Agreements.--
Section 559 of title 11, United States Code, is amended--
(1) by amending the section heading to read as follows:
``Sec. 559. Contractual right to liquidate, terminate, or
accelerate a repurchase agreement''; and
(2) in the first sentence, by striking ``liquidation'' and
inserting ``liquidation, termination, or acceleration''.
(j) Liquidation, Termination, or Acceleration of Swap
Agreements.--Section 560 of title 11, United States Code, is
amended--
(1) by amending the section heading to read as follows:
``Sec. 560. Contractual right to liquidate, terminate, or
accelerate a swap agreement''; and
(2) in the first sentence, by striking ``termination of a
swap agreement'' and inserting ``liquidation, termination, or
acceleration of 1 or more swap agreements''; and
(3) by striking ``in connection with any swap agreement''
and inserting ``in connection with the termination,
liquidation, or acceleration of 1 or more swap agreements''.
(k) Liquidation, Termination, Acceleration, or Offset Under
a Master Netting Agreement and Across Contracts.--(1) Title
11, United States Code, is amended by inserting after section
560 the following:
``Sec. 561. Contractual right to terminate, liquidate,
accelerate, or offset under a master netting agreement and
across contracts
``(a) In General.--Subject to subsection (b), the exercise
of any contractual right, because of a condition of the kind
specified in section 365(e)(1), to cause the termination,
liquidation, or acceleration of or to offset or net
termination values, payment amounts or other transfer
obligations arising under or in connection with 1 or more (or
the termination, liquidation, or acceleration of 1 or more)--
``(1) securities contracts, as defined in section 741(7);
``(2) commodity contracts, as defined in section 761(4);
``(3) forward contracts;
``(4) repurchase agreements;
``(5) swap agreements; or
``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by
operation of any provision of this title or by any order of a
court or administrative agency in any proceeding under this
title.
``(b) Exception.--
``(1) A party may exercise a contractual right described in
subsection (a) to terminate, liquidate, or accelerate only to
the extent that such party could exercise such a right under
section 555, 556, 559, or 560 for each individual contract
covered by the master netting agreement in issue.
``(2) If a debtor is a commodity broker subject to
subchapter IV of chapter 7 of this title--
``(A) a party may not net or offset an obligation to the
debtor arising under, or in connection with, a commodity
contract against any claim arising under, or in connection
with, other instruments, contracts, or agreements listed in
subsection (a) except to the extent the party has positive
net equity in the commodity accounts at the debtor, as
calculated under subchapter IV; and
``(B) another commodity broker may not net or offset an
obligation to the debtor arising under, or in connection
with, a commodity contract entered into or held on behalf of
a customer of the debtor against any claim arising under, or
in connection with, other instruments, contracts, or
agreements listed in subsection (a).
``(c) Definition.--As used in this section, the term
`contractual right' includes a right set forth in a rule or
bylaw of a national securities exchange, a national
securities association, or a securities clearing agency, a
right set forth in a bylaw of a clearing organization or
contract market or in a resolution of the governing board
thereof, and a right, whether or not evidenced in writing,
arising under common law, under law merchant, or by reason of
normal business practice.''.
(2) Conforming amendment.--The table of sections of chapter
9 of title 11, United States Code, is amended by inserting
after the item relating to section 560 the following:
``561. Contractual right to terminate, liquidate, accelerate, or offset
under a master netting agreement and across contracts.
(l) Ancillary Proceedings.--Section 304 of title 11, United
States Code, as amended by section 215, is amended by adding
at the end the following:
``(c) Any provisions of this title relating to securities
contracts, commodity contracts, forward contracts, repurchase
agreements, swap agreements, or master netting agreements
shall apply in a case ancillary to a foreign proceeding under
this section or any other section of this title, so that
enforcement of contractual provisions of such contracts and
agreements in accordance with their terms will not be stayed
or otherwise limited by operation of any provision of this
title or by order of a court in any case under this title,
and to limit avoidance powers to the same extent as in a
proceeding under chapter 7 or 11 of this title (such
enforcement not to be limited based on the presence or
absence of assets of the debtor in the United States).''.
(m) Commodity Broker Liquidations.--Title 11, United States
Code, is amended by inserting after section 766 the
following:
``Sec. 767. Commodity broker liquidation and forward contract
merchants, commodity brokers, stockbrokers, financial
institutions, securities clearing agencies, swap
participants, repo participants, and master netting
agreement participants
``Notwithstanding any other provision of this title, the
exercise of rights by a forward contract merchant, commodity
broker, stockbroker, financial institution, securities
clearing agency, swap participant, repo participant, or
master netting agreement participant under this title shall
not affect the priority of any unsecured claim it may have
after the exercise of such rights.''.
(n) Stockbroker Liquidations.--Title 11, United States
Code, is amended by inserting after section 752 the
following:
[[Page H2759]]
``Sec. 753. Stockbroker liquidation and forward contract
merchants, commodity brokers, stockbrokers, financial
institutions, securities clearing agencies, swap
participants, repo participants, and master netting
agreement participants
``Notwithstanding any other provision of this title, the
exercise of rights by a forward contract merchant, commodity
broker, stockbroker, financial institution, securities
clearing agency, swap participant, repo participant,
financial participant, or master netting agreement
participant under this title shall not affect the priority of
any unsecured claim it may have after the exercise of such
rights.''.
(o) Setoff.--Section 553 of title 11, United States Code,
is amended--
(1) in subsection (a)(3)(C), by inserting ``(except for a
setoff of a kind described in section 362(b)(6), 362(b)(7),
362(b)(17), 362(b)(19), 555, 556, 559, 560 or 561 of this
title)'' before the period; and
(2) in subsection (b)(1), by striking ``362(b)(14),'' and
inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560,
561''.
(p) Securities Contracts, Commodity Contracts, and Forward
Contracts.--Title 11, United States Code, is amended--
(1) in section 362(b)(6), by striking ``financial
institutions,'' each place such term appears and inserting
``financial institution, financial participant'';
(2) in section 546(e), by inserting ``financial
participant,'' after ``financial institution,'';
(3) in section 548(d)(2)(B), by inserting ``financial
participant,'' after ``financial institution,'';
(4) in section 555--
(A) by inserting ``financial participant,'' after
``financial institution,''; and
(B) by inserting before the period at the end ``, a right
set forth in a bylaw of a clearing organization or contract
market or in a resolution of the governing board thereof, and
a right, whether or not in writing, arising under common law,
under law merchant, or by reason of normal business
practice''; and
(5) in section 556, by inserting ``, financial
participant'' after ``commodity broker''.
(q) Conforming Amendments.--Title 11 of the United States
Code is amended--
(1) in the table of sections of chapter 5--
(A) by amending the items relating to sections 555 and 556
to read as follows:
``555. Contractual right to liquidate, terminate, or accelerate a
securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a
commodities contract or forward contract.''; and
(B) by amending the items relating to sections 559 and 560
to read as follows:
``559. Contractual right to liquidate, terminate, or accelerate a
repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap
agreement.''; and
(2) in the table of sections of chapter 7--
(A) by inserting after the item relating to section 766 the
following:
``767. Commodity broker liquidation and forward contract merchants,
commodity brokers, stockbrokers, financial institutions,
securities clearing agencies, swap participants, repo
participants, and master netting agreement
participants.''; and
(B) by inserting after the item relating to section 752 the
following:
``753. Stockbroker liquidation and forward contract merchants,
commodity brokers, stockbrokers, financial institutions,
securities clearing agencies, swap participants, repo
participants, and master netting agreement
participants.''.
SEC. 1008. RECORDKEEPING REQUIREMENTS.
Section 11(e)(8) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)) is amended by adding at the end the
following new subparagraph:
``(H) Recordkeeping requirements.--The Corporation, in
consultation with the appropriate Federal banking agencies,
may prescribe regulations requiring more detailed
recordkeeping with respect to qualified financial contracts
(including market valuations) by insured depository
institutions.''.
SEC. 1009. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION ---
REQUIREMENT.
Section 13(e)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1823(e)(2)) is amended to read as follows:
``(2) Exemptions from contemporaneous execution
requirement.--An agreement to provide for the lawful
collateralization of--
``(A) deposits of, or other credit extension by, a Federal,
State, or local governmental entity, or of any depositor
referred to in section 11(a)(2), including an agreement to
provide collateral in lieu of a surety bond;
``(B) bankruptcy estate funds pursuant to section 345(b)(2)
of title 11, United States Code;
``(C) extensions of credit, including any overdraft, from a
Federal reserve bank or Federal home loan bank; or
``(D) 1 or more qualified financial contracts, as defined
in section 11(e)(8)(D),
shall not be deemed invalid pursuant to paragraph (1)(B)
solely because such agreement was not executed
contemporaneously with the acquisition of the collateral or
because of pledges, delivery, or substitution of the
collateral made in accordance with such agreement.''.
SEC. 1010. DAMAGE MEASURE.
(a) Title 11, United States Code, as amended by section
1007, is amended--
(1) by inserting after section 561 the following:
``Sec. 562. Damage measure in connection with swap
agreements, securities contracts, forward contracts,
commodity contracts, repurchase agreements, or master
netting agreements
``If the trustee rejects a swap agreement, securities
contract as defined in section 741 of this title, forward
contract, commodity contract (as defined in section 761 of
this title) repurchase agreement, or master netting agreement
pursuant to section 365(a) of this title, or if a forward
contract merchant, stockbroker, financial institution,
securities clearing agency, repo participant, financial
participant, master netting agreement participant, or swap
participant liquidates, terminates, or accelerates such
contract or agreement, damages shall be measured as of the
earlier of--
``(1) the date of such rejection; or
``(2) the date of such liquidation, termination, or
acceleration.''; and
(2) in the table of sections of chapter 5 by inserting
after the item relating to section 561 the following:
``562. Damage measure in connection with swap agreements, securities
contracts, forward contracts, commodity contracts,
repurchase agreements, or master netting agreements.''.
(b) Claims Arising From Rejection.--Section 502(g) of title
11, United States Code, is amended--
(1) by designating the existing text as paragraph (1); and
(2) by adding at the end the following:
``(2) A claim for damages calculated in accordance with
section 561 of this title shall be allowed under subsection
(a), (b), or (c), or disallowed under subsection (d) or (e),
as if such claim had arisen before the date of the filing of
the petition.''.
SEC. 1011. SIPC STAY.
Section 5(b)(2) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding after
subparagraph (B) the following new subparagraph:
``(C) Exception from stay.--
``(i) Notwithstanding section 362 of title 11, United
States Code, neither the filing of an application under
subsection (a)(3) nor any order or decree obtained by
Securities Investor Protection Corporation from the court
shall operate as a stay of any contractual rights of a
creditor to liquidate, terminate, or accelerate a securities
contract, commodity contract, forward contract, repurchase
agreement, swap agreement, or master netting agreement, each
as defined in title 11, to offset or net termination values,
payment amounts, or other transfer obligations arising under
or in connection with 1 or more of such contracts or
agreements, or to foreclose on any cash collateral pledged by
the debtor whether or not with respect to 1 or more of such
contracts or agreements.
``(ii) Notwithstanding clause (i), such application, order,
or decree may operate as a stay of the foreclosure on
securities collateral pledged by the debtor, whether or not
with respect to 1 or more of such contracts or agreements,
securities sold by the debtor under a repurchase agreement or
securities lent under a securities lending agreement.
``(iii) As used in this section, the term `contractual
right' includes a right set forth in a rule or bylaw of a
national securities exchange, a national securities
association, or a securities clearing agency, a right set
forth in a bylaw of a clearing organization or contract
market or in a resolution of the governing board thereof, and
a right, whether or not in writing, arising under common law,
under law merchant, or by reason of normal business
practice.''.
SEC. 1012. ASSET-BACKED SECURITIZATIONS.
Section 541 of title 11, United States Code, as amended by
section 150, is amended--
(1) by redesignating paragraph (5) of subsection (b) as
paragraph (6);
(2) by inserting after paragraph (4) of subsection (b) the
following new paragraph:
``(5) any eligible asset (or proceeds thereof), to the
extent that such eligible asset was transferred by the
debtor, before the date of commencement of the case, to an
eligible entity in connection with an asset-backed
securitization, except to the extent such asset (or proceeds
or value thereof) may be recovered by the trustee under
section 550 by virtue of avoidance under section 548(a);'';
and
(3) by adding at the end the following new subsection:
``(e) For purposes of this section, the following
definitions shall apply:
``(1) the term `asset-backed securitization' means a
transaction in which eligible assets transferred to an
eligible entity are used as the source of payment on
securities, the most senior of which are rated investment
grade by 1 or more nationally recognized securities rating
organizations, issued by an issuer;
``(2) the term `eligible asset' means--
``(A) financial assets (including interests therein and
proceeds thereof), either fixed or
[[Page H2760]]
revolving, including residential and commercial mortgage
loans, consumer receivables, trade receivables, and lease
receivables, that, by their terms, convert into cash within a
finite time period, plus any residual interest in property
subject to receivables included in such financial assets plus
any rights or other assets designed to assure the servicing
or timely distribution of proceeds to security holders;
``(B) cash; and
``(C) securities.
``(3) the term `eligible entity' means--
``(A) an issuer; or
``(B) a trust, corporation, partnership, or other entity
engaged exclusively in the business of acquiring and
transferring eligible assets directly or indirectly to an
issuer and taking actions ancillary thereto;
``(4) the term `issuer' means a trust, corporation,
partnership, or other entity engaged exclusively in the
business of acquiring and holding eligible assets, issuing
securities backed by eligible assets, and taking actions
ancillary thereto; and
``(5) the term `transferred' means the debtor, pursuant to
a written agreement, represented and warranted that eligible
assets were sold, contributed, or otherwise conveyed with the
intention of removing them from the estate of the debtor
pursuant to subsection (b)(5), irrespective, without
limitation of--
``(A) whether the debtor directly or indirectly obtained or
held an interest in the issuer or in any securities issued by
the issuer;
``(B) whether the debtor had an obligation to repurchase or
to service or supervise the servicing of all or any portion
of such eligible assets; or
``(C) the characterization of such sale, contribution, or
other conveyance for tax, accounting, regulatory reporting,
or other purposes.''.
SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIREMENTS.
The 3d sentence of the 3d undesignated paragraph of section
16 of the Federal Reserve Act (12 U.S.C. 412) is amended by
striking ``acceptances acquired under the provisions of
section 13 of this Act'' and inserting ``acceptances acquired
under section 10A, 10B, 13, or 13A of this Act''.
SEC. 1014. EFFECTIVE DATE; APPLICATION OF ---AMENDMENTS.
(a) Effective Date.--This title shall take effect on the
date of the enactment of this Act.
(b) Application of Amendments.--The amendments made by this
title shall apply with respect to cases commenced or
appointments made under any Federal or State law after the
date of enactment of this Act, but shall not apply with
respect to cases commenced or appointments made under any
Federal or State law before the date of enactment of this
Act.
TITLE XI--TECHNICAL CORRECTIONS
SEC. 1101. DEFINITIONS.
Section 101 of title 11, United States Code, as amended by
sections 102, 105, 132, 138, 301, 302, 402, 902, and 1007, is
amended--
(1) by striking ``In this title--'' and inserting ``In this
title:'';
(2) in each paragraph, by inserting ``The term'' after the
paragraph designation;
(3) in paragraph (35)(B), by striking ``paragraphs (21B)
and (33)(A)'' and inserting ``paragraphs (23) and (35)'';
(4) in each of paragraphs (35A) and (38), by striking ``;
and'' at the end and inserting a period;
(5) in paragraph (51B)--
(A) by inserting ``who is not a family farmer'' after
``debtor'' the first place it appears; and
(B) by striking ``thereto having aggregate'' and all that
follows through the end of the paragraph;
(6) by amending paragraph (54) to read as follows:
``(54) The term `transfer' means--
``(A) the creation of a lien;
``(B) the retention of title as a security interest;
``(C) the foreclosure of a debtor's equity of redemption;
or
``(D) each mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or
parting with--
``(i) property; or
``(ii) an interest in property;'';
(7) in each of paragraphs (1) through (35), in each of
paragraphs (36) and (37), and in each of paragraphs (40)
through (55) (including paragraph (54), as amended by
paragraph (6) of this section), by striking the semicolon at
the end and inserting a period; and
(8) by redesignating paragraphs (4) through (55), including
paragraph (54), as amended by paragraph (6) of this section,
in entirely numerical sequence.
SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.
Section 104 of title 11, United States Code, is amended by
inserting ``522(f)(3), 707(b)(5),'' after ``522(d),'' each
place it appears.
SEC. 1103. EXTENSION OF TIME.
Section 108(c)(2) of title 11, United States Code, is
amended by striking ``922'' and all that follows through
``or'', and inserting ``922, 1201, or''.
SEC. 1104. TECHNICAL AMENDMENTS.
Title 11 of the United States Code is amended--
(1) in section 109(b)(2) by striking ``subsection (c) or
(d) of''; and
(2) in section 552(b)(1) by striking ``product'' each place
it appears and inserting ``products''.
SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR
FRAUDULENTLY PREPARE BANKRUPTCY PETITIONS.
Section 110(j)(3) of title 11, United States Code, is
amended by striking ``attorney's'' and inserting ``attorneys'
''.
SEC. 1106. LIMITATION ON COMPENSATION OF PROFESSIONAL
PERSONS.
Section 328(a) of title 11, United States Code, is amended
by inserting ``on a fixed or percentage fee basis,'' after
``hourly basis,''.
SEC. 1107. SPECIAL TAX PROVISIONS.
Section 346(g)(1)(C) of title 11, United States Code, is
amended by striking ``, except'' and all that follows through
``1986''.
SEC. 1108. EFFECT OF CONVERSION.
Section 348(f)(2) of title 11, United States Code, is
amended by inserting ``of the estate'' after ``property'' the
first place it appears.
SEC. 1109. ALLOWANCE OF ADMINISTRATIVE EXPENSES.
Section 503(b)(4) of title 11, United States Code, is
amended by inserting ``subparagraph (A), (B), (C), (D), or
(E) of'' before ``paragraph (3)''.
SEC. 1110. PRIORITIES.
Section 507(a) of title 11, United States Code, as amended
by section 323, is amended in paragraph (4), as so
redesignated by section 142, by striking the semicolon at the
end and inserting a period.
SEC. 1111. EXEMPTIONS.
Section 522(g)(2) of title 11, United States Code, is
amended by striking ``subsection (f)(2)'' and inserting
``subsection (f)(1)(B)''.
SEC. 1112. EXCEPTIONS TO DISCHARGE.
Section 523 of title 11, United States Code, as amended by
section 146, is amended--
(1) in subsection (a)(3), by striking ``or (6)'' each place
it appears and inserting ``(6), or (15)'';
(2) as amended by section 304(e) of Public Law 103-394 (108
Stat. 4133), in paragraph (15), by transferring such
paragraph so as to insert it after paragraph (14A) of
subsection (a);
(3) in subsection (a)(9), by inserting ``, watercraft, or
aircraft'' after ``motor vehicle'';
(4) in subsection (a)(15), as so redesignated by paragraph
(2) of this subsection, by inserting ``to a spouse, former
spouse, or child of the debtor and'' after ``(15)''; and
(5) in subsection (e), by striking ``a insured'' and
inserting ``an insured''.
SEC. 1113. EFFECT OF DISCHARGE.
Section 524(a)(3) of title 11, United States Code, is
amended by striking ``section 523'' and all that follows
through ``or that'' and inserting ``section 523, 1228(a)(1),
or 1328(a)(1) of this title, or that''.
SEC. 1114. PROTECTION AGAINST DISCRIMINATORY TREATMENT.
Section 525(c) of title 11, United States Code, is
amended--
(1) in paragraph (1), by inserting ``student'' before
``grant'' the second place it appears; and
(2) in paragraph (2), by striking ``the program operated
under part B, D, or E of'' and inserting ``any program
operated under''.
SEC. 1115. PROPERTY OF THE ESTATE.
Section 541(b)(4)(B)(ii) of title 11, United States Code,
is amended by inserting ``365 or'' before ``542''.
SEC. 1116. PREFERENCES.
(a) In General.--Section 547 of title 11, United States
Code, is amended--
(1) in subsection (b), by striking ``subsection (c)'' and
inserting ``subsections (c) and (i)''; and
(2) by adding at the end the following:
``(i) If the trustee avoids under subsection (b) a transfer
made between 90 days and 1 year before the date of the filing
of the petition, by the debtor to an entity that is not an
insider for the benefit of a creditor that is an insider,
such transfer may be avoided under this section only with
respect to the creditor that is an insider.''.
(b) Applicability.--The amendments made by this section
shall apply to any case that is pending or commenced on or
after the date of enactment of this Act.
SEC. 1117. POSTPETITION TRANSACTIONS.
Section 549(c) of title 11, United States Code, is
amended--
(1) by inserting ``an interest in'' after ``transfer of'';
(2) by striking ``such property'' and inserting ``such real
property''; and
(3) by striking ``the interest'' and inserting ``such
interest''.
SEC. 1118. DISPOSITION OF PROPERTY OF THE ESTATE.
Section 726(b) of title 11, United States Code, is amended
by striking ``1009,''.
SEC. 1119. GENERAL PROVISIONS.
Section 901(a) of title 11, United States Code, is amended
by inserting ``1123(d),'' after ``1123(b),''.
SEC. 1120. APPOINTMENT OF ELECTED TRUSTEE.
Section 1104(b) of title 11, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(b)''; and
(2) by adding at the end the following:
``(2)(A) If an eligible, disinterested trustee is elected
at a meeting of creditors under paragraph (1), the United
States trustee shall file a report certifying that election.
Upon the filing of a report under the preceding sentence--
``(i) the trustee elected under paragraph (1) shall be
considered to have been selected and appointed for purposes
of this section; and
``(ii) the service of any trustee appointed under
subsection (d) shall terminate.
[[Page H2761]]
``(B) In the case of any dispute arising out of an election
under subparagraph (A), the court shall resolve the
dispute.''.
SEC. 1121. ABANDONMENT OF RAILROAD LINE.
Section 1170(e)(1) of title 11, United States Code, is
amended by striking ``section 11347'' and inserting ``section
11326(a)''.
SEC. 1122. CONTENTS OF PLAN.
Section 1172(c)(1) of title 11, United States Code, is
amended by striking ``section 11347'' and inserting ``section
11326(a)''.
SEC. 1123. DISCHARGE UNDER CHAPTER 12.
Subsections (a) and (c) of section 1228 of title 11, United
States Code, are amended by striking ``1222(b)(10)'' each
place it appears and inserting ``1222(b)(9)''.
SEC. 1124. BANKRUPTCY CASES AND PROCEEDINGS.
Section 1334(d) of title 28, United States Code, is
amended--
(1) by striking ``made under this subsection'' and
inserting ``made under subsection (c)''; and
(2) by striking ``This subsection'' and inserting
``Subsection (c) and this subsection''.
SEC. 1125. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.
Section 156(a) of title 18, United States Code, is
amended--
(1) in the first undesignated paragraph--
(A) by inserting ``(1) the term'' before `` `bankruptcy'';
and
(B) by striking the period at the end and inserting ``;
and''; and
(2) in the second undesignated paragraph--
(A) by inserting ``(2) the term'' before `` `document'';
and
(B) by striking ``this title'' and inserting ``title 11''.
SEC. 1126. TRANSFERS MADE BY NONPROFIT CHARITABLE
CORPORATIONS.
(a) Sale of Property of Estate.--Section 363(d) of title
11, United States Code, is amended--
(1) by striking ``only'' and all that follows through the
end of the subsection and inserting ``only--
``(1) in accordance with applicable nonbankruptcy law that
governs the transfer of property by a corporation or trust
that is not a moneyed, business, or commercial corporation or
trust; and
``(2) to the extent not inconsistent with any relief
granted under subsection (c), (d), (e), or (f) of section 362
of this title.''.
(b) Confirmation of Plan for Reorganization.--Section
1129(a) of title 11, United States Code, as amended by
section 140, is amended by adding at the end the following:
``(15) All transfers of property of the plan shall be made
in accordance with any applicable provisions of nonbankruptcy
law that govern the transfer of property by a corporation or
trust that is not a moneyed, business, or commercial
corporation or trust.''.
(c) Transfer of Property.--Section 541 of title 11, United
States Code, as amended by section 1102, is amended by adding
at the end the following:
``(f) Notwithstanding any other provision of this title,
property that is held by a debtor that is a corporation
described in section 501(c)(3) of the Internal Revenue Code
of 1986 and exempt from tax under section 501(a) of such Code
may be transferred to an entity that is not such a
corporation, but only under the same conditions as would
apply if the debtor had not filed a case under this title.''.
(d) Applicability.--The amendments made by this section
shall apply to a case pending under title 11, United States
Code, on the date of enactment of this Act, except that the
court shall not confirm a plan under chapter 11 of this title
without considering whether this section would substantially
affect the rights of a party in interest who first acquired
rights with respect to the debtor after the date of the
petition. The parties who may appear and be heard in a
proceeding under this section include the attorney general of
the State in which the debtor is incorporated, was formed, or
does business.
(e) Rule of Construction.--Nothing in this section shall be
deemed to require the court in which a case under chapter 11
is pending to remand or refer any proceeding, issue, or
controversy to any other court or to require the approval of
any other court for the transfer of property.
SEC. 1127. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO
INCUR FINANCE CHARGES.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by adding at the end the following:
``(i) Prohibition on Certain Actions for Failure To Incur
Finance Charges.--A creditor of an account under an open end
consumer credit plan may not terminate an account prior to
its expiration date solely because the consumer has not
incurred finance charges on the account. Nothing in this
subsection shall prohibit a creditor from terminating an
account for inactivity in 3 or more consecutive months.''.
SEC. 1128. PROTECTION OF VALID PURCHASE MONEY SECURITY
INTERESTS.
Section 547(c)(3)(B) of title 11, United States Code, is
amended by striking ``20'' and inserting ``30''.
SEC. 1129. TRUSTEES.
(a) Suspension and Termination of Panel Trustees and
Standing Trustees.--Section 586(d) of title 28, United States
Code, is amended--
(1) by inserting ``(1)'' after ``(d)''; and
(2) by adding at the end the following:
``(2) A trustee whose appointment under subsection (a)(1)
or under subsection (b) is terminated or who ceases to be
assigned to cases filed under title 11 of the United States
Code may obtain judicial review of the final agency decision
by commencing an action in the United States district court
for the district for which the panel to which the trustee is
appointed under subsection (a)(1), or in the United States
district court for the district in which the trustee is
appointed under subsection (b) resides, after first
exhausting all available administrative remedies, which if
the trustee so elects, shall also include an administrative
hearing on the record. Unless the trustee elects to have an
administrative hearing on the record, the trustee shall be
deemed to have exhausted all administrative remedies for
purposes of this paragraph if the agency fails to make a
final agency decision within 90 days after the trustee
requests administrative remedies. The Attorney General shall
prescribe procedures to implement this paragraph. The
decision of the agency shall be affirmed by the district
court unless it is unreasonable and without cause based on
the administrative record before the agency.''.
(b) Expenses of Standing Trustees.--Section 586(e) of title
28, United States Code, is amended by adding at the end the
following:
``(3) After first exhausting all available administrative
remedies, an individual appointed under subsection (b) may
obtain judicial review of final agency action to deny a claim
of actual, necessary expenses under this subsection by
commencing an action in the United States district court in
the district where the individual resides. The decision of
the agency shall be affirmed by the district court unless it
is unreasonable and without cause based upon the
administrative record before the agency.
``(4) The Attorney General shall prescribe procedures to
implement this subsection.''.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided otherwise in this
Act, this Act and the amendments made by this Act shall take
effect 180 days after the date of the enactment of this Act.
(b) Application of Amendments.--Except as otherwise
provided in this Act, the amendments made by this Act shall
not apply with respect to cases commenced under title 11 of
the United States Code before the effective date of this Act.
Modification of Amendment in the Nature of a Substitute No. 11 Offered
by Mr. Nadler
Mr. NADLER. Mr. Chairman, I ask unanimous consent that the amendment
in the nature of a substitute be modified in the form I have placed at
the desk.
The CHAIRMAN. The Clerk will report the modification.
The Clerk read as follows:
Modification of amendment in the nature of a substitute No.
11 offered by Mr. Nadler:
Page 7, lines 19 and 24, strike ``less than or equal to''
each place it appears and insert ``greater than''.
Page 9, line 8, insert ``allowable'' after ``debtor's''.
Page 11, line 13, strike ``hall'' and insert ``shall''.
Page 16, lines 7 and 12, strike ``less than or equal to''
each place it appears and insert ``greater than''.
Page 17, line 6, strike ``less than or equal to'' and
insert ``greater than''.
Mr. GEKAS (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
Pennsylvania?
There was no objection.
The CHAIRMAN. Is there objection to the modification?
Mr. GEKAS. Mr. Chairman, reserving the right to object, I may object,
but I probably will not.
The gentleman from New York has offered through his counsel in
consultation with me that these are simply technical amendments. They
do not, I trust, constitute sloppy work on the part of anybody, it is
simply that we want to make sure that your amendment is technically
correct. Is that correct, may I ask?
Mr. NADLER. Mr. Chairman, if the gentleman will yield, I am informed
by distinguished counsel that they were typos and errors in drafting,
that he made no substantive changes.
Mr. GEKAS. No way that that was sloppy handwork of any type, is that
correct?
Mr. NADLER. I do not think I would call the work of the staff sloppy.
I would think in view of the haste it was hasty because of the
committee schedule.
Mr. GEKAS. Mr. Chairman, further reserving the right to object, we
will engage in a spelling bee on ``sloppy'' some other time.
Mr. Chairman, I withdraw my reservation of objection.
[[Page H2762]]
The CHAIRMAN. Without objection, the modification is agreed to.
There was no objection.
The CHAIRMAN. Pursuant to House Resolution 158, the gentleman from
New York (Mr. Nadler) and a Member opposed each will control 30
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, I am reluctantly offering this substitute
in the hope that it will open the door to rational discussion and an
eventual compromise that will ensure both that people will be unable to
game the system and that all parties, debtors and creditors alike, will
be treated fairly in our bankruptcy courts. It is an attempt to foster
dialogue and compromise and I hope it will not be misconstrued as my
idea of an ideal bankruptcy bill.
I certainly do not agree with everything in the substitute, and I
hope no one will pull sections out of it and say that I think this is a
good idea. But I certainly do agree with the main changes we make from
the Gekas bill.
In its current form, this bill provides ample loopholes for the
wealthy, well-advised debtor to escape his or her obligations in
bankruptcy but sets numerous traps for the middle and low-income debtor
who will face unnecessary litigation and costs, unrealistic legal
requirements and legal presumptions which bear no relation to reality.
The bill will destroy businesses, it will destroy families and it will
destroy lives. America is better than that.
We can get at that small percentage of people. The ABI, the American
Bankruptcy Institute, estimated 3 percent of debtors can afford to
repay 20 percent or more of their debt. The creditors said oh, no, they
are wrong, it is double that, 6 percent. We can get at that small
percentage, 3 or 6 percent of people who are abusing the system,
without making costs skyrocket and without violating the rights of
small debtors and creditors.
The substitute I am offering makes several major changes in the bill
before us. It makes two changes in the so-called means test. First, it
would look at a debtor's real income rather than his past income. The
bill would average the previous 6 months of income and create a legal
presumption that this is what the debtor will receive every month for
the next 5 years, but we know this is wrong.
For example, people are making $50,000 at middle management at IBM
and they are laid off, now they are making a much less amount of money.
That is why they are going bankrupt. One cannot presume that they are
making $50,000. This amendment would look at their real income and it
looks forward, it does not look back.
Second, the means test does not look at your actual expenses, it
looks at what some IRS bureaucrat thinks that the average expense in
your part of the country ought to be. The substitute makes the same
change here as the Hyde-Conyers amendment we voted on a few minutes ago
would have done.
In the last Congress, the majority declared the IRS to be the great
Satan and held hearings designed to show that these guys could not be
trusted. We even passed legislation to reform the IRS which
specifically directed the IRS to drop these guidelines and to fashion
new ones with greater leniency because we thought these guidelines were
inaccurate and too harsh.
Yet this bill would require that those same guidelines that we judged
last year to be inflexible, inaccurate and too harsh should now be
applied without any flexibility at all. We have been told that you
could just put the debtor through a home computer and find out how much
bankruptcy relief they are entitled to. The gentleman from Illinois
(Mr. Hyde) is right, the IRS should not be entrusted with this task.
If the real circumstances do not match your income from the last 6
months and what the IRS says your landlord should be charging you,
never mind what he actually does charge you, the bill allows you to go
to court and plead extraordinary circumstances. In other words, to get
the court to look at your real situation, you have to hire a lawyer and
litigate a motion.
It is right in the bill, and it is the first roadblock in the path of
someone with no money who really needs bankruptcy relief. How many
people who really have no money are going to be able to afford to
litigate the question of whether their daughter's braces are
extraordinary circumstances? Why should they have to?
Any reasonable means test would say, what are your real means, what
is your real income, what are your real expenses? Not what does the IRS
think the average rent or the average mortgage payment in the Northeast
ought to be, what is your mortgage payment? You cannot take the IRS
estimate to the bank.
The substitute has the court look at reality from the very beginning
of the case, no Alice in Wonderland. The substitute allows the debtor
to bring to the court's attention at the beginning of the case changes
in his or her circumstances which would make the 6-month lookback for
income unrealistic. No special motions, no litigation. Part of the
filing.
Unlike the bill, in addition to allowing people to pay for private
school and counting that as part of his expenses, our bill would allow
expenses for public school, if any, and for home schooling. Private
school should not get a special preference over public schools and over
home schooling.
We have also heard a great deal about the effect nondischargeability
will have on families and child support. Let us talk about what this
bill adds, why it is a problem and what this substitute would do.
The first addition to nondischargeability would make nondischargeable
purchases in the aggregate of $250 or more in the 90 days before the
bankruptcy filing, it would assume that that is for luxury goods or
services. But it presumes that that $250 is for purchase of luxury
goods. If you put your groceries, your gas and your dry cleaning on a
credit card for 3 months for your family, do you think that would be
more than $250?
Now, the credit card company would get to drag you to court and you
would have to prove that it is not a luxury good. The presumption would
be that it is a luxury good and should be nondischargeable in
bankruptcy. You bought a new dishwasher. Could the old one have been
fixed? Can you not do it by hand? Go prove it, at the cost of
litigation.
But the main point is that this is a litigation trap for people who
are really broke and cannot afford a lawyer to defend the discharge
action.
The same with the other section which makes nondischargeable debts on
a credit card incurred to pay nondischargeable debts. We have seen
today that banks are sending live checks and preapproved credit cards
to people, even kids, and saying use it for whatever you want. Now the
same banks want to say, ``Hey, wait a minute, you paid your tax bill
with your credit card. We want our debt on the credit card that you
used to pay your tax to survive bankruptcy because you should not have
paid it with your credit card.''
They do not have to prove any improper intent. They simply make the
debt nondischargeable. The result, these credit card debts would
survive a bankruptcy discharge and would compete with other more
important nondischargeable debts after the case is over.
Your ex-wife wants to collect child support. Too bad. Let her go and
compete with a lawyer for Chemical Bank, which would now be made
nondischargeable. That is why advocates for women, for families with
kids, for crime victims, Mothers Against Drunk Driving have spoken out
so consistently against this provision of the bill.
The substitute also includes improvements to Chapter 11 which
protects family farms. The substitute raises, to keep pace with
inflation, the limit on who can file for Chapter 12, and it assures
that proceeds from the sale of farm equipment are used to help
reorganize the farm and not to go only to taxes. Like the bill, it also
makes Chapter 12 permanent. It is the same language that is in the
bipartisan bill introduced by the gentleman from Michigan (Mr. Smith)
and the gentleman from Minnesota (Mr. Minge).
We have played politics with family farms too long. There is a crisis
in the farm belt. They need these improvements to the law and they need
Chapter 12 to be permanent. We should do it whether the big banks that
hold farm mortgages like it or not.
[[Page H2763]]
There are a number of provisions in this bill for credit card
disclosure, the same provisions that were in the amendment that the
gentleman from Massachusetts (Mr. Delahunt) offered in committee, that
the Committee on Rules refused to make permanent. I will just mention
one.
Under this bill, the credit card companies tell you the interest rate
is X and your minimum payment is $10, but they do not tell you that if
you pay the minimum, how long it will take you to repay. It will take
you 200 years to repay your debt. And what percentage of income you
will pay, 300 percent. They would have to tell you those kinds of
disclosures so you would know that.
The last piece I want to discuss concerns a matter that is very
important to me, child support enforcement. As a member of the New York
State Assembly, I wrote most of the State's child support enforcement
laws.
{time} 1730
There have been a great many fig leafs placed on this bill to make it
appear as if the bill is not anti-family and would not very greatly
damage child support enforcement, but the truth is it most certainly
would.
There are two ways in which this bill would hurt child support
enforcement. In Chapter 7 we are making credit card debts or many of
them, as I have already mentioned, nondischargeable. So mom, after the
bankruptcy is finished now, now has to compete with the bill collector
or the attorney from Chemical Bank to collect the nondischargeable
debt, because there is more debt that is now nondischargeable. She has
got to compete for it.
But the sponsors of the bill say, no, no, no. We are giving child
support a priority so she will not have to compete. But of course, as
any bankruptcy attorney knows, priorities only exist in bankruptcy
court. Once one has the discharge, they are no longer in bankruptcy
court, the priorities are wiped out, the Federal jurisdiction is wiped
out, the bankruptcy proceeding is over, and now she is still stuck
trying to compete in the real world out there, perhaps in State court
with Chemical Bank's attorney or whoever, to collect her child support
as against their nondischarged credit card debt, and priorities do not
exist and do not help us.
Second, the bill defines debts owed to the government for past-due
child support as domestic support. In a Chapter 13 repayment proceeding
the bill says we cannot approve, the judge cannot approve, a Chapter 13
repayment plan to pay the debts unless the plan includes payment of all
the child support due. Period. But it defines the child support as
debts owed to the government for past-due support as well as debts owed
to the custodial parent, to mom, to care for the child.
So if the means test that is inserted into Chapter 13 finds that
there is enough disposable income to pay the child support to mom but
there is not enough disposable income to pay the child support to mom
and pay the government the debts that are owed, we cannot confirm the
Chapter 13 plan, there is no Chapter 13, they cannot go bankrupt. They
are too rich for Chapter 7, they are too poor for Chapter 13, they
cannot get any bankruptcy protection, and mom is left out there trying
to collect her child support against every other debtor, every other
creditor, with no protection at all.
The last issue of debtor coercion I want to address involves
something called reaffirmation agreements. There has been a great deal
of publicity about people being coerced into signing away their rights
to a discharge or agreeing to waive that right without fully
understanding what they are signing. This amendment would require court
review for reaffirmations of unsecured debts and of very small amounts.
It would also require disclosure to the debtor so he knows, so he
understands, what he is agreeing to. Placing some limits on
reaffirmations, requiring some disclosure and some court oversight, not
in every case but in those cases that are most likely to result in
abuses, is important. To the extent that reaffirmation is like
nondischargeable debts, limit a debtor's post-discharge resources, they
interfere with child support.
The bill would abolish the right to bring a class action. We all
remember a few years ago when Sears Roebuck cheated over a million
people through fraud into fraudulent reaffirmations. A class action
suit was brought, and $168 million in damages was paid to over a
million people. The average recovery was $150 per person. Sixty million
dollars criminal penalty was assessed.
This bill says: We want to crack down on the little guy, but the big
guys, if they are crooks, we do not want them to be subject to class
action lawsuits. They cannot maintain a class action lawsuit, and so
Sears Roebuck would get away with it if they only had delayed until
this bill has passed.
This substitute would remove this provision. The only way one can sue
the little guys, can sue the big guys, is through a class action suit.
I hope that Members will support the substitute instead of H.R. 833.
The substitute is supported by the administration. It is a giant step
toward a fair and balanced bill and a giant step away from the gridlock
we experienced in the last Congress. If my colleagues want real and
fair bankruptcy reform, support the substitute. If they do not want a
bill that will be vetoed and leaving us with nothing at the end of the
session, support the substitute.
Mr. Chairman, I reserve the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield myself such time as I might consume.
I ask the Members to vote no on the Nadler substitute. What it does
in its provisions one by one is erase the progress that we have made
already indicated by the votes taken in this Chamber. For instance, one
of the main objects, targets, of the Nadler substitute would be to
eliminate the means test, the needs test which is so vital to a real
reform in bankruptcy.
We have already voted on the Hyde-Conyers amendment. We indicated the
will of the House of Representatives on that very same feature. Now the
gentleman from New York (Mr. Nadler) asks us to repeat the
consideration of that item. The vote naturally will be no. I ask for
that repeat vote.
Mr. Nadler makes a big deal out of some of the provisions in his
proposal that fly right in the face of what we have already
accomplished and what we are trying to accomplish. For instance, we
consulted for weeks and months with residential landlords who were
vexed and are still vexed by the havoc, the absolute havoc that can be
wreaked upon an investment by the automatic stay that would benefit
debtors, and that is tenants who want to stay on, and on, and on
without paying rent. The bill that we have gives relief to the
residential landlords. That is a big step forward, and we really
studied that provision and consulted with a lot of people and heard
testimony to that effect. Mr. Nadler would wipe it out with this
amendment. I think that is retrogressive, completely retrogressive,
anti-reform.
Beyond that, the gentleman from New York makes a big cry out of the
reaffirmation language that we have in the bill. He fails to note, and
this is important for us to recall, that the credit unions who have
supported our bill from the beginning to the end and who have lent
their voices, loaned their voices to us on many different occasions on
this bill, they like our language on reaffirmations.
If my colleagues like credit unions and the work they do and the
loans they provide and the capitalization that they indulge, they will
not support the Nadler substitute. They will be destroying the credit
unions' reliance on our language on reaffirmations just for one item.
Mr. Chairman, there are 10 other flaws in this bill. I do not want to
take up extra time. I will enumerate them for anyone who wants to
corner me in the cloakroom for that purpose, but from time to time I
will remind some of our Members of some of those flaws.
Mr. Chairman, I insert the following for the Record:
National Governors Association, General Debate Nadler
Washington, DC, May 5, 1999.
Hon. J. Dennis Hastert,
Speaker of the House,
House of Representatives, Washington, DC.
Hon. Richard A. Gephardt,
House Minority Leader,
House of Representatives, Washington, DC.
Dear Speaker Hastert and Minority Leader Gephardt: Our
economy has been setting the right kind of records in the
1990s in terms of real economic growth, low inflation,
declining welfare rolls, and falling unemployment rates.
During the same period,
[[Page H2764]]
however, personal bankruptcy filings have repeatedly set the
wrong kind of records, reaching new highs each of the last
three years. Governors accordingly support revising federal
bankruptcy laws to curb the increasing number of bankruptcy
filings in our nation and to stem abuses to the bankruptcy
system.
Specifically, Governors support efforts to prevent debtors
from filing Chapter 7 bankruptcy in lieu of Chapter 13 when
they are financially capable of repaying part or all of their
unsecured debts. We also encourage Congress to place the
highest possible priority on payment of domestic support
obligations in bankruptcy proceedings. Preservation of
states' existing rights to determine their own standards
dealing with homestead exemptions is another important
provision that needs to be included in any bankruptcy
legislation that Congress passes this year.
We applaud the Judiciary Committee's recent efforts to
address this issue. Passage of H.R. 833 by the House
represents an important step to ensuring enactment of
meaningful bankruptcy reform this year. We look forward to
working with Congress to achieve this goal.
Sincerely,
Governor Thomas R. Carper.
Governor Michael O. Leavitt.
Governor George E. Pataki,
Chairman,
Committee on Economic Development and Commerce.
Governor Jeanne Shaheen,
Vice Chair,
Committee on Economic Development and Commerce.
Mr. Chairman, I reserve the balance of my time.
Mr. NADLER. Mr. Chairman, I yield 4 minutes to the distinguished
gentleman from Michigan (Mr. Conyers), the ranking member of the
Committee on the Judiciary.
(Mr. CONYERS asked and was given permission to revise and extend his
remarks.)
Mr. CONYERS. Mr. Chairman, I first want to commend the gentleman from
New York (Mr. Nadler) who has worked indefatigably on this bill. No one
has put in more time than him, and as a result we have crafted a
democratic substitute that I am proud to urge my colleagues'
consideration of.
This amendment retains the vast majority of the provisions in the
underlying bill, but at the same time responds to the most egregious
and one-sided provision in the legislation. In addition to fixing the
problems with the use of IRS expense standards, which is an anathema,
and the bill's impact on jobs also would be corrected, the substitute
also eliminates many of the problems the bill creates for single
mothers and their children as well as the problem of credit card abuse.
So here we are. Here is an amendment that deals with the IRS expense
standards, the small business loss of jobs, the problems created for
single mothers and their children and the problem of credit card abuse.
These four items are so critical to any kind of reasonable bill.
As the bill presently stands, it is a disaster for single mothers and
their children. There has been a lot of conversation that it is not,
but that is the bare truth revealed now at the end of a day's debate.
In addition to the overall impact of the bill on women struggling to
raise families and make ends meet, the legislation will have a
particularly harsh impact on the payment of alimony and child support.
The problem arises from the fact that bankruptcy and insolvency are, by
definition, a zero sum gain. By design, this bill will increase the
amount of funds being paid to unsecured creditors, and it therefore
comes as no surprise that such payments will often come at the expense
of other less aggressive creditors, those without lawyers such as women
and children owed child support or alimony. This problem is by no means
insignificant given that an estimated 243,000 maybe to 325,000
bankruptcy cases per year involve child support and alimony orders.
And so, Mr. Chairman, for these Members who want to support real and
balanced bankruptcy reform without unnecessarily piling on the middle
class, the mothers and their children and without giving the credit
industry a complete pass, I urge a yes vote for the democratic
substitute now being debated.
Mr. GEKAS. Mr. Chairman, I yield 4 minutes to the gentleman from
California (Mr. Royce).
Mr. ROYCE. Mr. Chairman, enacting a substitute bill on which there
has been no hearings or public comment is no way to approach a task as
important as reforming the Nation's bankruptcy system. Our bankruptcy
laws play an important and necessary role in protecting Americans who
really need these laws, and that is the key, need. But what our act
intends to do is to make the existing bankruptcy system a needs-based
system, addressing the flaw in the current system that encourages
people to file for bankruptcy and walk away from debts regardless of
whether they are able to repay any portion of what they owe, and it
does this while protecting those who truly need protection.
Between September of 1997 and September of 1998 in my home State of
California there were 203,000 personal bankruptcy petitions filed. This
translates into one bankruptcy petition filed for every 56 households.
Now that is almost three times the next highest State, New York.
Moreover, the number of bankruptcies in California has more than
doubled since 1990.
The cost to all of us is very great for the rest of the country. This
is the cost borne not only by the business community but by the
consumers who pay their bills responsibly and end up having these costs
shifted to them.
Last year, the 55 of 56 households in my State who paid their bills
on time were forced to pick up the $550 per household tab for those who
walked away from their debts. That is a $550 bill that my colleagues
and I pay when irresponsible spenders who can afford to pay all or some
of their debt declare bankruptcy, and this is the problem that the
Bankruptcy Reform Act addresses.
Therefore, Mr. Chairman, I rise today in strong support of the
Bankruptcy Reform Act of 1999, of which I am a cosponsor, and in
opposition to this substitute. The Bankruptcy Reform Act is almost
identical to legislation passed by the House of Representatives last
year by an overwhelming bipartisan vote. Unfortunately, that
legislation ultimately stalled late in the year in the Senate. We have
another opportunity today to pass this much-needed reform act and send
the Senate a bill with strong bipartisan support, and I urge my
colleagues to vote for this bill and defeat this substitute amendment.
{time} 1745
Mr. NADLER. Mr. Chairman, I yield 3 minutes to the gentleman from
Massachusetts (Mr. Meehan).
Mr. MEEHAN. Mr. Chairman, I rise today in support of the Conyers-
Nadler-Meehan-Berman substitute bankruptcy amendment. There have been
debates on bankruptcy reform both last session and this year. I have
been alarmed by the rise in the number of consumer bankruptcies in this
country and have been convinced that changes need to be made in the
bankruptcy system.
We can all agree that debtors should be obliged to pay more of their
debts to their creditors. I fully support the concept of means testing
to determine which debtors can pay at least some of their debts. In
fact, last year I offered a means test amendment to the bankruptcy bill
that would have done just that.
Today I am a cosponsor of this substitute bill, which includes a key
provision, an improved means test, over the one used in the underlying
bill.
The means test used in H.R. 833 uses an elaborate standard in tests
to determine which debtors would be shifted to Chapter 13 and which
would remain in Chapter 7. In all of those convoluted and exacting
calculations, the test leaves out one fundamental element: Fairness.
The bankruptcy system was designed to provide a fresh start for those
who have fallen on hard times, frequently through little fault of their
own.
Let us look at who is declaring bankruptcy. In 1997, 280,000 older
Americans filed for bankruptcy, two-thirds due to an unsuspected
illness or job loss. 300,000 bankruptcy cases involved child support or
alimony orders, as women could not collect what they were owed or tried
to stabilize their post-divorce economic condition.
We can all agree that these debtors are entitled to a fresh start and
should not be forced to repay their debts for
[[Page H2765]]
the rest of their lives and beyond by leaving debts for their heirs.
This substitute provides fairness by including a realistic means test
which takes into account the real world circumstances of the debtor.
Yet the amendment ensures that debtors who can repay their debts will
repay their debts.
Unlike the underlying bill, this amendment also understands that
blame should not be solely shouldered by the debtors. This amendment
considers the fact that the increasing availability of consumer credit
corresponds with the increased number of bankruptcy filings.
Moving more debtors into repayment plans, even if done correctly, is
not the sole solution to the increased number of bankruptcies. Credit
card applications with large limits are routinely sent to the poor, to
college students, to family pets, and even dead people, and this
significantly contributes to the number of bankruptcies.
In 1997, over 250,000 Americans filed for bankruptcy before their
25th birthday; 250,000. How can people so young have a line of credit
so large that they cannot repay it? Because credit card companies are
sending them all kinds of promises for spring break if they put it on a
credit card.
Mr. Chairman, let us have fair bankruptcy reform.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from
Tennessee (Mr. Bryant), a member of the committee.
(Mr. BRYANT asked and was given permission to revise and extend his
remarks.)
Mr. BRYANT. Mr. Chairman, before I get into my remarks, I want to
express my personal appreciation for the way the gentleman from
Pennsylvania (Mr. Gekas) has chaired the committee and has managed this
bill throughout the years that I have been involved, especially over
the last couple of weeks when we have been in markup with intense
debate and good healthy debate on both sides; as well as thanking the
ranking member, the gentleman from New York (Mr. Nadler) for the
outstanding job that he has done certainly representing the view that
he has and I think is exemplified by this amendment, which I must
oppose.
This amendment effectively undermines many of the most important
provisions of this Bankruptcy Reform Act that have been part of the
House approach to bankruptcy reform since the last Congress.
This amendment should be opposed for many reasons. The Nadler
amendment would do little, if anything, to address the abuse of the
bankruptcy system that has become increasingly prevalent. For instance,
this amendment would strike from the bill key provisions that aim to
prevent debtors from loading up on debt just before declaring
bankruptcy, thereby obtaining a discharge of this debt. Such loading up
has occurred more frequently as bankruptcy planning becomes more common
in this day and age.
In addition, this amendment would eliminate from the bill's needs-
based test the use of clear, objective standards. By doing so, the
Nadler amendment would reverse the bill's efforts to bring significant
administrative efficiencies to the already overburdened U.S. bankruptcy
system.
Moreover, by eliminating the clear objective standards for debtors to
follow in applying the bill's needs-based formula, this amendment would
harm debtors by subjecting them to endless litigation, and I might add
expensive litigation, of which expenses may be taken into account in
that formula.
Furthermore, H.R. 833 already contains provisions that address the
vast majority of concerns that this amendment claims to address. For
instance, H.R. 833 already addresses issues related to reaffirmation
agreements and would impose significant new disclosure requirements on
credit cards and other lenders.
Finally, there has been no prior congressional consideration of most,
if not all, of the provisions of this amendment.
I would urge my colleagues to oppose this, since enacting a
substitute bill on which there have been no hearings or public comment
is no way to approach a task as important as reforming this Nation's
bankruptcy code.
Mr. NADLER. Mr. Chairman, I yield myself 1 minute.
Mr. Chairman, the gentleman from Pennsylvania (Mr. Gekas) talked
about a provision in the bill, in his bill, which would allow landlords
to evict debtors without obtaining permission of the bankruptcy court,
and that that substitute would eliminate that provision, which it would
do.
Every other creditor has to get permission of the bankruptcy court to
have an exemption from the automatic stay. Advocates of battered women
and those involved in rehabilitating debtors have expressed concerns
that these unsupervised evictions would pose a threat to the debtor's
safety and to the safety of his family, and would pose a threat to
debtors' ability to remain productive wage earning citizens.
There is a fundamental question. Why should a property owner be in a
different position to be exempt from an automatic stay, a different
position than any other creditor? We do not see an answer to that
question. Every creditor has the same provisions. There is no reason
why one creditor should be in a preferred position, and that is why the
provision is in the substitute.
Mr. GEKAS. Mr. Chairman, I yield 3 minutes to the gentleman from
Arkansas (Mr. Hutchinson).
Mr. HUTCHINSON. Mr. Chairman, I thank the gentleman from Pennsylvania
(Mr. Gekas) for yielding and I want to congratulate him on the
outstanding work that he has done on this particular bill and in the
leadership he has provided in the committee.
I think we have had a very good process through the Committee on the
Judiciary. This is not an example of where every amendment that was
offered by the Democrats was defeated on a party line vote or vice
versa. There was really an open debate and there were many amendments
that my Democrat colleagues offered that were adopted, and I think that
it is a good product that came through that bill. It is the kind of
process I think we need to have more of in the Committee on the
Judiciary.
As I look at this entire issue of bankruptcy reform, I believe that
bankruptcy is important in America and that we should not do anything
to destroy that system which was really a hallmark of our country,
where people came to this country getting away from debtor's prison,
moving to the United States of America for a fresh start. That is an
important part of our country, to give debtors a fresh start when there
is not any alternative.
I for one would not want to do anything to erode that important part
of our country's history and our country's legal system. So I believe
the fresh start is important. This bill, H.R. 833, preserves that
important right.
I think we all have to concede that there has been some abuse in the
system. Certainly the gentleman from New York (Mr. Nadler) agrees with
that because he has offered a bill before this committee.
Look at the facts that historically bankruptcies have been filed
because of a loss of job or extraordinary circumstances. We almost have
full employment in America and yet bankruptcies still are going up at
almost 20 percent. So this bill preserves the recourse of bankruptcy
for those who truly need it.
Ernst & Young did a study that I thought was very significant, and in
that study it looked at the 10 percent of the people who filed
bankruptcy that would be impacted by a needs-based system, and the
study indicated that those 10 percent of filers would have an average
income of almost $52,000. So clearly we are looking at people who have
an ability to pay a portion of their debt over a period of time based
upon that income.
That study assured me that this approach is reasonable, that it is
going after those who abuse the system and not those who are
legitimately claiming to look to the system for their legitimate
relief.
Also, the means test that is provided here gives something that is
very important to the bankruptcy judge, and that is discretion. Again,
I looked at the bill and on page 10 it says that the judge, under
extraordinary circumstances, can revise the means test to make sure
that the debtor would not be forced into repaying a portion of the debt
when they have some special circumstance that would justify a complete
discharge from bankruptcy.
[[Page H2766]]
Then finally, I think this bill is important because the claim is
that perhaps we should have individual responsibility, but those have
open-ended credit responsibilities; credit card companies should have
more disclosure. It does require this, and so it balances individual
responsibility with the recognition that there are legitimate
circumstances that require bankruptcy.
Mr. NADLER. Mr. Chairman, I yield 2\1/2\ minutes to the distinguished
gentlewoman from California (Ms. Lee).
Ms. LEE. Mr. Chairman, I want to first thank the gentleman from New
York (Mr. Nadler) for this time and also for his very diligent and hard
work on this issue, to really clarify these very important issues which
are very complicated and very important to consumers in this country.
Mr. Chairman, I rise to support the Democratic substitute and in
opposition to H.R. 833. I too am troubled by the increase in bankruptcy
filings since 1980. I am very concerned about the rise in individual
consumer debt, but I am disappointed that we are failing to bring
legislation that is balanced between creditors and debtors.
As drafted, many of the provisions of H.R. 833 are unfair to middle-
and low-income debtors. At the same time, the bill fails to close
loopholes that currently protect the wealthiest debtors.
H.R. 833 focuses on the perceived abuse of the bankruptcy system by
debtors without adequately addressing the abuses by creditors, and
takes a rigid approach to a citizen's ability to discharge debt.
A majority of people surveyed by Consumer Federation of America
believe credit card companies share the blame with debtors for the
rising tide of personal bankruptcies, yet nowhere in H.R. 833 is there
mention of preventing or curbing credit card companies from targeting
people with low incomes.
Credit card companies are actively targeting vulnerable potential new
members. We have seen an increase in the number of bank card mailings
sent out to potential new members. From 1992 to 1998, the numbers
mailed increased by 255 percent. It comes as no surprise that the
amount of per person debt also increased 225 percent in 6 years.
When credit card companies consolidate, cardholders are left without
any protection from rate increases. Credit cards are not like mortgages
or car loans that may be resold but their rates do not change. Not
credit cards. In fact, new owners of credit card businesses are free to
impose whatever interest rates the traffic will bear and are subject to
few remaining State fee ceilings.
{time} 1800
With increased consolidation of credit card companies, payment
periods have really been shortened, grace periods for late payments
have been eliminated, and stiff penalties of up to $29 are now incurred
by cardholders on a regular basis.
I strongly support the Democratic alternative offered by the
gentleman from New York (Mr. Nadler), the gentleman from Michigan (Mr.
Conyers), and the gentleman from Massachusetts (Mr. Meehan), which is a
moderate and balanced approach to behavior.
It offers a realistic means test, allows child support to precede
other debts, requires credit card companies to provide information so
borrowers may avoid bankruptcy, and eliminates new rules for making
credit card debts nondischargeable. It leaves intact pre-bankruptcy
debt run-ups and fraudulently-incurred debt nondischargeable, and
includes bipartisan farm bankruptcy legislation.
Mr. GEKAS. Mr. Chairman, I am pleased to yield 6 minutes to the
gentleman from Virginia (Mr. Goodlatte), who has been extraordinarily
helpful in every stage of the bankruptcy reform effort.
Mr. GOODLATTE. Mr. Chairman, I thank the gentleman from Pennsylvania
for his kind words, and for his leadership in this excellent piece of
legislation that I rise today to strongly support, H.R. 833, the
Bankruptcy Reform Act, and to oppose the Nadler substitute, which would
take us back to the current situation where we reward people who act
irresponsibly and penalize hardworking consumers who make every effort
to pay their bills on time; pay their own bills, and pay a portion of
someone else's bills when that person files bankruptcy and does not
take responsibility for their actions.
With a record high 1.4 million bankruptcy filings last year, every
American must pay more for credit, goods, and services when others go
bankrupt. I worked to pass H.R. 3150 last year, which passed the House
by a vote of 300 to 125 in the final conference report, which this
legislation is very similar to, and am pleased to cosponsor this
legislation this year because it is high time that we relieve consumers
from the burden of paying for the debts of others.
The Bankruptcy Reform Act of 1999 restores personal responsibility,
fairness, and accountability to our bankruptcy laws, and will be of
great benefit to consumers.
For too long our bankruptcy laws have allowed individuals to walk
away from their debts, even though many are able to repay them. That is
not fair to millions of hardworking families who pay their bills,
mortgages, car loans, student loans, and credit card bills every month.
The loopholes in our bankruptcy laws have led to a 400 percent
increase in personal bankruptcy filings since 1980, at a cost of $40
billion per year. These costs have been passed directly to consumers,
costing the average household that pays its bills an average of $400
each year.
Under the current system, some irresponsible people filing for
bankruptcy run up their credit card debt immediately prior to filing,
knowing that their debts will soon be wiped away. These debts, however,
do not just disappear, they are passed along to hardworking folks who
play by the rules and pay their own bills on time.
The Bankruptcy Reform Act ends this practice by requiring bankruptcy
filers to pay back nondischargeable debts made in the period
immediately preceding their filing. In addition, new debts for luxury
goods incurred during this period would be presumed nondischargeable.
While ending the abuses of our bankruptcy laws, the Bankruptcy Reform
Act is strongly pro-consumer in other ways, as well. This legislation,
for example, helps children by strengthening protections in the law
that prioritize child support and alimony payments.
Additionally, the bill protects consumers from bankruptcy mills that
encourage folks to file for bankruptcy without fully informing them of
their rights and the potential harms that bankruptcy can cause.
Mr. Chairman, the gentleman from Pennsylvania (Mr. Gekas) outlined
some of the problems that we have with the Nadler substitute. I would
like to point out some others. The so-called refinements of the
gentleman from New York (Mr. Nadler) are simply inexplicable, or even
worse, inane.
For instance, we allow the debtor's income to be adjusted upward in a
fixed amount on an annual basis if the number of individuals in the
debtor's household exceeds four. The substitute of the gentleman from
New York (Mr. Nadler) takes that annual figure and converts it into a
monthly figure.
As a result, he would allow an adjustment in that in an amount that
is 12 times greater than the amount contemplated in our bill. Thus, for
a family of let us say eight members, their income could be as high as
$79,000 per year and still not be subject to their so-called needs-
based test.
The substitute is also substantively flawed. We spent many months
examining the current consumer bankruptcy law and crafting ways to
reintroduce balance into the bankruptcy system.
One important principle that we wanted to achieve was to allow
greater creditor participation in the system. The substitute in many
respects undercuts that principle. One example is the provision on page
12 of the substitute that would prohibit a creditor from filing a
Section 707(b) motion until the United States Trustee has acted. This
provision is simply unfair to creditors, and effectively resuscitates
current law, which prevents creditors from filing these motions.
Another substantive flaw in the substitute is its provision for
determining a debtor's income. It excepts from the income side of the
needs-based formula a series of items that, under current law, are
considered as income. If we do not take into consideration all of the
debtor's income, but we do take into
[[Page H2767]]
consideration all of the debtor's expenses, the result is a
mathematical imbalance that frustrates the purpose of the formula.
The substitute contains what is in effect a back door effort to amend
the Truth-in-Lending Act. Section 112 would disallow a claim for the
creditor's failure to comply with any of a very long series of
requirements spelled out in that section. Without even reading this
section, one can simply tell from its near seven pages that the
substitute essentially wants to establish an entire new set of
requirements for lenders that do not even exist under the Truth-in-
Lending Act.
This tactic is simply wrong. The Truth-in-Lending Act already imposes
various penalties for violations of its provisions. The effect of this
substitute would be to establish two sets of standards that lenders
would have to comply with, one for purposes of the Truth-in-Lending Act
and the other for purposes of establishing a claim in bankruptcy.
Mr. Chairman, bankruptcy should remain available to folks who truly
need it, but those who can afford to repay their debts should not be
able to stick other folks with the tab. Enactment of this carefully-
crafted legislation by the gentleman from Pennsylvania (Mr. Gekas) and
opposition to the legislation by the gentleman from New York (Mr.
Nadler) would send a big signal towards those who would abuse our
bankruptcy system that the free ride is over.
I want to commend my colleague, the gentleman from Pennsylvania (Mr.
Gekas) for his outstanding work on this issue, and I urge my colleagues
to support this fair and reasonable bill.
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, I thank the gentleman from
New York for yielding time to me, I thank him for his leadership.
Mr. Chairman, it fascinates me to hear this debate go in the
direction that it is going. That is that this country is falling under
the weight of debt, that we are a country of abusers of debt or debtors
who do not want to pay their debt.
It is well known in hearings that we have had on the Committee on the
Judiciary on this very topic that out of the credit card debt that this
Nation has, only 4 percent of it is in default. People do pay their
bills. Now, as those who score credit, they may pay their bills a
little slower than the creditors may like, but they do pay their bills.
In the present bill, the underlying legislation unfortunately does
not seek a level of bipartisanship. It has aspects of mean-
spiritedness, and that is why I am supporting the Nadler-Conyers-Meehan
substitute, because it fairly addresses the concerns we have. It
provides a realistic means test which takes into account the debtor's
actual income and expenses.
Frankly, Mr. Chairman, the National Bankruptcy Review Commission
never supported the means test. The means test, of course, is a
barrier, a bar, a closed door to those who are seeking debt relief. It
suggests that everyone runs to the courthouse to try and file a Chapter
7 as opposed to a Chapter 13.
Knowing many people who tragically have had to file bankruptcy in
light of the economic situation my State of Texas faced with the
falling oil prices in the 1980s, I know that those people were not in
any way championing running away from debt. They were, if you will,
enormously saddened by losing their homes and other assets that they
had, but they went to the bankruptcy court in order to get a fresh
start, or in many instances, to try to find out how to repay their
debt.
Mr. Chairman, this is a wrongheaded, misdirected piece of
legislation, and the Nadler amendment helps to fix the dilemma between
child support that should be paid to help the custodial parent versus
having to have the custodial parent fight the government in order to
get their monies, with some sort of misguided effort to pay back the
government if that person was on welfare.
When we first started out with this legislation, we indicated how
important it was for that woman who had that child to make sure she
does not have to fight against big government or big corporations to
get child support.
It also provides a balance by requiring credit card lenders to behave
responsibly. It was a terrible shame that we did not allow an amendment
in the rules process that would put the burden of responsibility on the
solicitation or the oversolicitation on the credit card companies.
The Nadler-Conyers-Meehan substitute, Mr. Chairman, is a fair and
direct response to the minimal concern that we have that some credit or
debt use or lack of payment may be abused. I would offer that we
support this, and that we vote no on the underlying bill.
As we reject this rule, I would like to voice my support for an
amendment that was jointly offered by myself with Congressman Nadler to
the Rules Committee.
We all know that this bill, as it currently reads, has garnered a
great deal of negative commentary from women's and children's
organizations, and appropriately so. That is because the provisions in
this bill which change the rules on dischargeability, skew the delicate
balance between creditors and debtors, and remain silent on consumer
protection issues hurt families--especially those headed by a single
parent.
Our amendment would make this bill more amenable to families. It is
an omnibus child support amendment because it carries a full set of
technical corrections and substantive revisions.
Our amendment would fix Section 1112, which under the current version
of the bill, could be interpreted to require that all debts to a
custodial parent and the government be paid before a trustee can
approve a repayment plan. This amendment remedies that provision by
allowing a repayment plan to be drafted that only provides funding for
the custodial parent. The result is that funds can flow to children
without being held up by government debt.
Our amendment also makes changes to Section 1113, eliminating its
provision that allows residential landlords to escape the automatic
stay provisions contained in this section. This was done at the request
of women's advocacy groups, who feared that landlords would have too
much discretion in times of alleged domestic violence and divorce. We
must make sure in these delicate times that our courts do not
completely abdicate their responsibility to ensure the safety and well-
being of the people seeking their assistance.
This Omnibus Child Support amendment also contains other exceptions
to the automatic stay mechanism that are aimed to make the bankruptcy
process smarter in domestic support cases. It allows a continuation of
an action, notwithstanding the automatic stay, in order to determine
some facts vitally important in these cases, such as paternity. It also
allows certain issues to be resolved that immediately pay dividends to
women and children. These issues include: the establishment of
modification of a domestic support order; wage garnishment; the
interception of tax refunds; and the enforcement of medical obligations
under the federal child support program. All of these issues are
vitally important, and our system should allow them to move forward in
these cases so as to prevent them from becoming part of the bankruptcy
quagmire.
Finally, our amendment contains an important provision originally
penned by Congressman Shaw last session. It provides that funds
received by a creditor, which have been converted from dischargeable to
non-dischargeable debt under the new provisions in this bill, be held
in trust for five years. Furthermore, during that time, the creditor
must make every effort to pay those funds to individuals who have a
claim of domestic support against the debtor. Simply said, this
provision makes sure that scarce funds that are being parsed by this
bill will always be available to the women and children that deserve
them rather than to the credit card companies. It is a common sense
solution to a problem that needs to be addressed if we are to have an
acceptable bankruptcy reform bill.
Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, we have heard in the last few minutes echoes of the
propaganda of the credit card industry. But the facts are, we have
heard that lots of people can pay their bills and are not. The American
Bankruptcy Institute, in the first nonbipartisan study that was not
bought and paid for by the credit card industry, said and concluded
earlier this year that 3 percent of bankruptcy filers could afford to
pay 20 percent or more of their bills.
The creditors say that is not true, it is twice as much. All right,
granted, maybe 6 percent, between 3 and 6 percent can afford to pay 20
percent or more of their bills. So let us not continue to hear this
slander against American citizens as deadbeats.
[[Page H2768]]
We also heard that because all these people are not paying their
bills to the credit card companies, the average American pays $400 or
$500 more in credit card fees. The fact is, credit card fees 10 years
ago were 16, 17, 18 percent. Interest rates have come down, mortgage
rates have come down, the prime rate has come down, car loan fees have
come down, but credit card rates are still 16, 17, 18, 19 percent, and
they will stay there, no matter what we do with this bill.
This bill will not result in any pass-through to consumers. It will
simply mean more profits for the credit card companies. If Members
think differently, I have a few bridges in my home district I would
like to sell to Members.
Secondly, we have heard about the means test. This substitute imposes
a fairer means test, a means test that looks at real income; not what
you used to make before you were fired and laid off, which is why you
went bankrupt, but what you are making now and likely to make; and real
expenses, not what the IRS thinks the rent ought to be, but what the
rent actually is. That is the only fair means test.
Do not forget, the means test is used in Chapter 13 for everybody,
not just in Chapter 7 with a safe harbor. The bill provides no class
actions against the greatest malefactors. Let Sears Roebuck get away
with stealing $168 million from people in bankruptcy. The substitute
says no, if you are cracking down on the little guys, crack down on
tort feasors and crooks who are big guys. Do not stop the class action.
The bill says we are going to, or it does not say so, but the effect
is to murder child support enforcement. We know some people, that the
supporters of this bill say they have fixed it, but they have not fixed
it. The so-called priority does not survive the bankruptcy and the
discharge, post-discharge. Mom still has to compete with Chemical
Bank's attorney, because the priority does not survive the bankruptcy
proceeding.
And in Chapter 13, if you cannot pay the government, if the means
test says you do not have enough money to pay the government, then you
cannot confirm the plan and you cannot pay the child support.
That is why the only people concerned with child support in any way
who are supporting this bill are the people in charge of collecting
money for the government, the Fort Dietrick people, the Attorneys
General, not the people concerned with the women.
This bill murders small businesses. We have a way of saving that in
this provision, and ditto for farmers. We heard the gentleman from
Virginia (Mr. Goodlatte) say it is a balanced bill. It is not a
balanced bill. The substitute makes it more balanced. The
administration says they will veto it because it is not a balanced
bill.
The gentleman from Illinois (Mr. Hyde), who is not exactly a noted
liberal, says this bill is imbalanced. He says, ``I asked staff to give
me a list of what the creditors are getting out of this bill. I have
pages and pages and pages of advantages that the creditor community is
getting from this bill. I was going to read a list of what the
creditors were getting under this bill. I will not do it, I assume you
know, but there are 12 or 13 pages of single-spaced printed changes
that benefit the creditors.''
{time} 1815
Very imbalanced. That is why this bill is opposed. It is opposed by
all the labor unions, by the Leadership Conference on Civil Rights, by
the National Partnership for Women and Families, the National Women's
Law Center, the consumer groups; and all the bankruptcy groups that
know about bankruptcy, the Bankruptcy Conference, the Commercial Law
League, and the National Association of Bankruptcy Trustees and
Bankruptcy Attorneys.
Mr. Chairman, I urge support for the substitute to make this a more
balanced bill, and I yield back the balance of my time.
Mr. GEKAS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, we have debated these issues very thoroughly, and the
ultimate decision still rests with the Members of the House, of course.
We have voted on several portions of this substitute amendment in
different fashions starting from last year and ending with even the
votes that were cast today. So we urge again that the Members vote
``no'' on the substitute amendment.
One thing that has rankled me in this whole debate from the beginning
was the blitheness with which people who are opposed to the bankruptcy
reform measure that we have produced criticize and bash and ridicule
and attack the credit industry. Now, no one is an apologist or should
be an apologist for the credit industry as such, but to make them the
villain is really unfair and misleads the American public.
What we have got to understand is that this economy of ours that is
so wonderful, that is the wonder of the world, actually the envy of the
world, is based substantially on the extension of credit. Every
household in our Nation is a beneficiary of the credit system. Every
piece of merchandise, every automobile, every item that uplifts the
life of even the lowest of the lowest household in our country has
credit extension to thank for its uplifting in the economic sphere of
our country. So when we consider the credit industry, recognize that
they make things hum. They are the ones that have spread the American
goods and services across the world.
So let us look at the good that our competitive free enterprise
system has done through this global extension of credit of which we are
the beneficiaries, and then look for abuses, perhaps by debtors and
then by creditors, but do not, I beg of my colleagues, continue to
vilify the creditors as being the cause of people going bankrupt. That
is disingenuous, unfair and should be rejected out of hand.
I ask the Members to vote ``no'' on the Nadler amendment.
Mr. MEEKS of New York. Mr. Chairman, I rise today to support the
Democratic Substitute--the Nadler amendment. Specifically, I would like
to point out that this amendment eliminates a provision of H.R. 833
which would have allowed landlords to evict debtors once they have
filed for bankruptcy. This provision is key because of the assistance
it gives to battered women as they seek financial support for
themselves and for their children.
Many times, battered women must file for bankruptcy in order to not
get evicted from the homes they once shared with their spouses. They
may have no financial means because they are not the sole providers of
their family's income. When their spouse leaves the home, these women
have no choice but to file for bankruptcy in order to delay eviction.
We must not roll back provisions that have assisted women who are
victims of domestic violence. We must help them reconstruct their life
by first making certain they maintain a place to live.
Since the Bankruptcy code was enacted, the automatic stay that
becomes effective upon the filing of a bankruptcy petition has always
prohibited a landlord from evicting a tenant unless the landlord
obtains permission from the bankruptcy court.
The stay serves several purposes: In chapter 13, a tenant has a right
to assume a lease and to cure a default. In chapter 7, the debtor
receives a short ``breathing spell''--which is very much needed in
domestic violence cases.
The right to avoid eviction is extremely important to tenants who
would suffer the hardships of moving and having to find new housing and
to tenants in rent controlled or rent-subsidized apartments, who would
lose valuable property rights.
I urge my colleagues to support the Nadler amendment because of
provisions that will assist the helpless and the needy as in the case
of battered women.
Mr. DELAHUNT. Mr. Chairman, I rise in support of the Nadler-Conyers-
Meehan-Berman substitute.
I am particularly pleased to see that the substitute incorporates a
series of consumer credit disclosure provisions which Mr. LaFalce and I
had attempted to offer as a free-standing amendment in an effort to
bring some balance to this legislation.
We all know there are some individuals who abuse the bankruptcy
system. And we all agree that people who let their financial affairs
get out of control should take responsibility for the consequences of
their actions.
But responsibility is a two-way street. And instead of encouraging
responsible use of credit cards and reduction of credit card debt, the
credit card lenders who have promoted this legislation have done all
they can to induce consumers to take on ever-increasing amounts of
debt. They have increased interest rates and fees on current accounts--
often providing inadequate or misleading disclosures. They have imposed
penalties on responsible
[[Page H2769]]
debtors who pay off their card balances without incurring interest
charges. They have engaged in relentless marketing efforts that target
students with no credit histories and consumers already heavily in
debt.
We cannot deal with the rise in consumer bankruptcies if we ignore
the causes. And there is a strong correlation between the bankruptcy
rate and these kinds of irresponsible lending practices. If we are to
fix the problem, we must demand greater responsibility not only from
debtors but from creditors as well.
The substitute would do this by disallowing claims in bankruptcy
arising from various reckless lending practices. Those practices
include the failure to provide complete and conspicuous disclosure of
credit terms--including low temporary ``teaser'' rates; the imposition
of unjustifiable penalties and fees against cardholders who pay their
monthly balances on time or who do not engage in account transactions
that result in finance charges; the issuance of credit cards to minors
without the signature of a parent or guardian or proof of independent
means of repayment; the failure to highlight due dates and penalties
for late payments in monthly billing statements, and to inform
cardholders of the consequences of paying only the minimum due each
month; and the failure to permit consumers to respond to interest rate
increases by canceling their credit cards and paying off their balances
under the old rate.
These are reasonable measures that would help sever the link between
irresponsible credit card lending and the rise in bankruptcy filings.
That is what needs to occur, Mr. Chairman, and I urge support for the
substitute.
Mr. GEKAS. Mr. Chairman, I yield back the balance of my time.
The CHAIRMAN. All time has expired.
The question is on the amendment in the nature of a substitute, as
modified, offered by the gentleman from New York (Mr. Nadler).
The question was taken; and the Chairman announced that the noes
appeared to have it.
Recorded Vote
Mr. NADLER. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 149,
noes 272, not voting 12, as follows:
[Roll No. 114]
AYES--149
Abercrombie
Ackerman
Allen
Baird
Baldwin
Barrett (WI)
Berkley
Bishop
Blagojevich
Bonior
Borski
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson
Clay
Clayton
Clyburn
Conyers
Costello
Coyne
Crowley
Cummings
Danner
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Gejdenson
Gonzalez
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holt
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kildee
Kilpatrick
Kind (WI)
Kleczka
Klink
Kucinich
LaFalce
Lampson
Lantos
Larson
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Maloney (NY)
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Millender-McDonald
Miller, George
Minge
Mink
Moakley
Nadler
Napolitano
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schakowsky
Scott
Serrano
Shows
Spratt
Stabenow
Stark
Stupak
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Udall (CO)
Udall (NM)
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Wise
Woolsey
Wu
NOES--272
Aderholt
Andrews
Archer
Armey
Bachus
Baker
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berry
Biggert
Bilbray
Bilirakis
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Castle
Chabot
Chambliss
Chenoweth
Clement
Coble
Coburn
Collins
Combest
Condit
Cook
Cox
Cramer
Crane
Cubin
Cunningham
Davis (FL)
Davis (VA)
Deal
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ewing
Fletcher
Foley
Forbes
Fossella
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hobson
Hoekstra
Holden
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Istook
Jenkins
John
Johnson (CT)
Johnson, Sam
Jones (NC)
Kasich
Kelly
Kennedy
King (NY)
Kingston
Knollenberg
Kolbe
Kuykendall
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Manzullo
McCollum
McCrery
McHugh
McInnis
McIntosh
McIntyre
McKeon
Menendez
Metcalf
Mica
Miller (FL)
Miller, Gary
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Murtha
Myrick
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Ose
Oxley
Packard
Pastor
Paul
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Porter
Portman
Pryce (OH)
Quinn
Radanovich
Ramstad
Regula
Reynolds
Riley
Rivers
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sanchez
Sandlin
Sanford
Saxton
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Stearns
Stenholm
Strickland
Stump
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Toomey
Turner
Upton
Walden
Walsh
Wamp
Watkins
Weldon (FL)
Weldon (PA)
Weller
Weygand
Whitfield
Wicker
Wilson
Wolf
Young (AK)
NOT VOTING--12
Becerra
Berman
Brown (CA)
Cooksey
Gephardt
Luther
Scarborough
Simpson
Slaughter
Watts (OK)
Wynn
Young (FL)
{time} 1837
Mr. TERRY and Mr. BALDACCI changed their vote from ``aye'' to ``no.''
Mr. DINGELL changed his vote from ``no'' to ``aye.''
So the amendment in the nature of a substitute, as modified, was
rejected.
The result of the vote was announced as above recorded.
Stated for:
Mr. BERMAN. Mr. Speaker, I was unable to cast a vote on the Nadler
substitute due to a family emergency. However, had I been present, I
would have voted ``aye.''
The CHAIRMAN (Mr. Nethercutt). The question is on the committee
amendment in the nature of a substitute, as amended.
The committee amendment in the nature of a substitute, as amended,
was agreed to.
The CHAIRMAN. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
Kolbe) having assumed the chair, Mr. Nethercutt, 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. 833) to
amend title 11 of the United States Code, and for other purposes,
pursuant to House Resolution 158, he reported the bill back to the
House with an amendment adopted by the Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
Is a separate vote demanded on any amendment to the committee
amendment in the nature of a substitute, adopted by the Committee of
the Whole? If not, the question is on the amendment.
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. Conyers
Mr. CONYERS. Mr. Speaker, I offer a motion to recommit the bill, H.R.
833, with instructions.
[[Page H2770]]
The SPEAKER pro tempore. Is the gentleman from Michigan opposed to
the bill?
Mr. CONYERS. Yes, I am, in its present form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Conyers moves to recommit the bill (H.R. 833) to the
Committee on the Judiciary, with instructions to report the
bill back to the House forthwith, with the following
amendment:
Page 15, line 19, insert ``and benefits received under the
Social Security Act'' after ``humanity''.
The SPEAKER pro tempore. The gentleman from Michigan (Mr. Conyers) is
recognized for 5 minutes in favor of his motion to recommit.
Mr. CONYERS. Mr. Speaker, my motion to recommit is simple. It
excludes Social Security and Medicare benefits from the definition of
``income'' for purposes of the bill's means test.
As the law currently stands, any senior is eligible for bankruptcy
relief. The bill, however, would force millions of seniors living on
fixed incomes into mandatory repayment plans. This is because there is
no exclusion from the definition of ``income'' for payments received
for Social Security, retirement, for disability insurance, for
supplemental security income, or for unemployment insurance.
As a matter of fact, there is no exclusion for third-party medical
payments made on behalf of seniors. What does it mean? That anytime a
senior becomes ill and receives substantial Medicare benefits, they
could be denied basic bankruptcy relief.
{time} 1845
This amendment has strong support among senior citizens. It is
supported by the National Committee to Preserve Social Security and
Medicare and the National Council of Senior Citizens. I have letters I
would like to introduce into the Record.
This amendment by no means cures the worst problems in the bill, the
use of IRS standards and its impact on child care and jobs, to name a
few. But it does help fix a problem for seniors. I urge its adoption.
Mr. Speaker, I include the following material for the Record:
National Committee to Preserve Social Security and
Medicare,
Washington, DC, May 3, 1999.
On behalf of the millions of members and supporters of the
National Committee to Preserve Social Security and Medicare,
I strongly urge you to oppose H.R. 833, the bankruptcy reform
legislation, when it comes up for a vote this week. We, too,
are concerned about the increase in bankruptcy filings since
1980 and the rise in consumer debt per household. However, in
its current form H.R. 833 would seriously weaken bankruptcy
protections for vulnerable older and disabled Americans,
while doing nothing to prevent credit card companies from
targeting people with low incomes.
Debtors would be subject to an income-based means test
intended to steer people away from Chapter 7, which allows
consumers to liquidate their assets and divide them among
their creditors in exchange for being discharged from the
majority of their debts. Instead, debtors who are projected
to have $5,000 in disposable income over the next five years
will have to file for Chapter 13 bankruptcy, which requires a
repayment plan.
A debtor's disposable income would be determined by
subtracting allowable expenses such as housing costs and
taxes from an individual's overall income. As reported by the
Judiciary Committee, Social Security, disability and
veteran's benefits are not exempted from overall income. At
the same time an amendment to include medical expenses and
the costs of caring for an elderly parent in the list of
allowable expenses also failed, although private school
tuition was allowed.
In 1997, an estimated 280,000 older Americans filed for
bankruptcy. Since 1993, more than a million people aged 50
and older have turned to the bankruptcy courts to receive
help in dealing with financial catastrophes. Our nation's
senior have worked hard and played by the rules. Most older
American's filing for bankruptcy are not profligate spenders.
Instead, the two major reasons why people over 50 are in
financial difficulty are lost jobs and medical problems.
Many people in their late 50s and early 60s have serious
medical conditions and no health insurance. Even among those
eligible for Medicare, skyrocketing drug costs and other out-
of-pocket medical expenses can spell economic disaster. Among
bankruptcy filers age 65 and older, 37 percent are pushed
into financial collapse by medical debts. Another 33 percent
of those over 65 explain that losing a job has made this
difference between getting by and bankruptcy.
If H.R. 833 is enacted, a senior who has just $100/per
month in ``disposable income'' would meet the means test and
be unable to file under Chapter 7. Since out-of-pocket
medical costs would not generally be considered allowable
expenses, this person could easily be placed in a situation
of having to pay a credit card company instead of purchasing
his blood-pressure medicine.
We believe that most Americans, particularly most seniors,
want to pay their debts. Bankruptcy reform should not punish
vulnerable older Americans who face financial catastrophe
because of a job loss or medical crisis. I hope that you will
oppose H.R. 833 when it is brought to the House floor this
week.
Sincerely,
Martha A. McSteen,
President.
National Council of Senior Citizens,
Silver Spring, MD, May 5, 1999.
Hon. John Conyers, Jr.,
U.S. House of Representatives,
Washington, DC.
Dear Representative Conyers: The National Council of Senior
Citizens supports your motion to recommit H.R. 833. This
legislation is pernicious and destructive of the core
economic rights of seniors and working families. It would
force millions of seniors to make mandatory payments based on
a definition of income that would include payments for social
security, disability, unemployment compensation, supplemental
security income and other income security and welfare needs.
We believe that such payments or resources should be excluded
from a reasonable definition of income for Federal bankruptcy
purposes.
For million of seniors, these payments are the difference
between depravation and survival. They do not fit the
definition of disposable income.
In recent years, fewer than a quarter of a million seniors
have annually filed for bankruptcy protection. They are not
noted as abusers of bankruptcy systems nor as profligate
spenders using credit cards or other forms of credit
purchasing.
However, persons between the ages of 55 and 65 represent
the most rapidly growing group of Americans without health
insurance. Medical crisis is the most important single cause
of credit problems after job loss.
H.R. 833 would force seniors to put credit card debts ahead
of housing needs, family needs, and costs associated with
chronic or disabling illness or disease. No provision citing
``extraordinary circumstances'' claims or potential court
relief will take away the sense of panic which will strike
seniors if current reasonable protections are stripped away
for the convenience of predatory financial organizations.
We urge the recommitment and defeat of H.R. 833.
Sincerely,
Steve Protulis,
Executive Director.
Mr. GEKAS. Mr. Speaker, will the gentleman yield?
Mr. CONYERS. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. Mr. Speaker, for the information of the Members, we are
prepared to accept the motion to recommit with the change as to Social
Security. It is a welcome change to the language already in the bill.
We ask that the Members vote in favor of recommittal, and then vote
``yes'' on final passage.
Mr. CONYERS. Mr. Speaker, I thank the subcommittee chair.
Mr. Speaker, I yield to the gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, this was an amendment that I
offered in committee. I thank the chairman for acknowledging the
importance of the question of protecting Social Security. With that, I
hope we will claim unanimous victory in protecting our senior citizens
and making sure that they do not have to choose between medicine and
food.
The SPEAKER pro tempore (Mr. Kolbe). Without objection, the previous
question is ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The motion to recommit was agreed to.
Mr. GEKAS. Mr. Speaker, pursuant to the instructions of the House, I
report the bill, H.R. 833, back to the House with an amendment.
The SPEAKER pro tempore. The Clerk will report the amendment.
The Clerk read as follows:
Amendment:
Page 15, line 19, insert ``and benefits received under the
Social Security Act'' after ``humanity''.
The SPEAKER pro tempore. The question is on the amendment.
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
[[Page H2771]]
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. CONYERS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 313,
nays 108, not voting 13, as follows:
[Roll No. 115]
YEAS--313
Aderholt
Andrews
Archer
Armey
Bachus
Baird
Baker
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berkley
Berry
Biggert
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Cardin
Castle
Chabot
Chambliss
Chenoweth
Clement
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Costello
Cox
Cramer
Crane
Crowley
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeLay
DeMint
Deutsch
Diaz-Balart
Dickey
Dicks
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Etheridge
Everett
Ewing
Fletcher
Foley
Forbes
Fossella
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Gonzalez
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Green (WI)
Greenwood
Gutknecht
Hall (TX)
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill (IN)
Hill (MT)
Hilleary
Hinojosa
Hobson
Hoekstra
Holden
Holt
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hyde
Inslee
Isakson
Istook
Jefferson
Jenkins
John
Johnson (CT)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Kaptur
Kasich
Kelly
Kennedy
Kind (WI)
King (NY)
Kingston
Kleczka
Knollenberg
Kolbe
Kuykendall
LaHood
Lampson
Largent
Larson
Latham
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Maloney (NY)
Manzullo
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McHugh
McInnis
McIntosh
McIntyre
McKeon
Meeks (NY)
Menendez
Metcalf
Mica
Miller (FL)
Miller, Gary
Minge
Mollohan
Moore
Moran (KS)
Moran (VA)
Morella
Myrick
Napolitano
Neal
Nethercutt
Ney
Northup
Norwood
Nussle
Ortiz
Ose
Oxley
Packard
Pallone
Pascrell
Pastor
Paul
Pease
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Ramstad
Rangel
Regula
Reyes
Reynolds
Riley
Rivers
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Royce
Ryan (WI)
Ryun (KS)
Salmon
Sandlin
Sanford
Saxton
Scarborough
Schaffer
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Sherwood
Shimkus
Shows
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Spence
Spratt
Stabenow
Stearns
Stenholm
Strickland
Stump
Sununu
Sweeney
Talent
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Toomey
Turner
Upton
Velazquez
Walden
Walsh
Wamp
Watkins
Weldon (FL)
Weldon (PA)
Weller
Weygand
Whitfield
Wicker
Wilson
Wise
Wolf
Wu
Young (AK)
NAYS--108
Abercrombie
Allen
Baldacci
Baldwin
Barrett (WI)
Bonior
Borski
Brady (PA)
Brown (FL)
Brown (OH)
Capuano
Carson
Clay
Clayton
Clyburn
Conyers
Coyne
Cummings
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Filner
Ford
Gejdenson
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hilliard
Hinchey
Hoeffel
Jackson (IL)
Jackson-Lee (TX)
Jones (OH)
Kanjorski
Kildee
Kilpatrick
Klink
Kucinich
LaFalce
Lantos
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Markey
Martinez
Mascara
Matsui
McDermott
McGovern
McKinney
McNulty
Meehan
Meek (FL)
Millender-McDonald
Miller, George
Mink
Moakley
Murtha
Nadler
Oberstar
Obey
Olver
Owens
Payne
Pelosi
Rahall
Rodriguez
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sawyer
Schakowsky
Scott
Serrano
Stark
Stupak
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Udall (CO)
Udall (NM)
Vento
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
NOT VOTING--13
Ackerman
Becerra
Berman
Brown (CA)
Gephardt
Hutchinson
LaTourette
Luther
Simpson
Slaughter
Watts (OK)
Wynn
Young (FL)
{time} 1907
Mr. HILLIARD changed his vote from ``yea'' to ``nay.''
Mr. MEEKS of New York and Mr. LAMPSON changed their vote from ``nay''
to ``yea.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
Stated for:
Mr. LaTOURETTE. Mr. Speaker, if I were present, I would have voted
``yea'' on final passage of H.R. 833, the Bankruptcy Reform Act.
Stated against:
Mr. BERMAN. Mr. Speaker, I was unable to cast a vote on final passage
of H.R. 833 due to a family emergency. However, had I been present, I
would have voted ``nay.''
____________________