[Congressional Record (Bound Edition), Volume 151 (2005), Part 3]
[Senate]
[Pages 2899-2965]
[From the U.S. Government Publishing Office, www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
proceed to the consideration of S. 256, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 256) to amend title 11 of the United States 
     Code, and for other purposes.

  The Senate proceeded to consider the bill which had been reported 
from the Committee on the Judiciary, with amendments.
  (Strike the part shown in black brackets and insert the parts shown 
in italic.)

                                 S. 256

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

     SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Bankruptcy 
     Abuse Prevention and Consumer Protection Act of 2005''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; references; table of contents.

                    TITLE I--NEEDS-BASED BANKRUPTCY

Sec. 101. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Sense of Congress and study.
Sec. 104. Notice of alternatives.
Sec. 105. Debtor financial management training test program.


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Sec. 106. Credit counseling.
Sec. 107. Schedules of reasonable and necessary expenses.

                 TITLE II--ENHANCED CONSUMER PROTECTION

          Subtitle A--Penalties for Abusive Creditor Practices

Sec. 201. Promotion of alternative dispute resolution.
Sec. 202. Effect of discharge.
Sec. 203. Discouraging abuse of reaffirmation agreement practices.
Sec. 204. Preservation of claims and defenses upon sale of predatory 
              loans.
Sec. 205. GAO study and report on reaffirmation agreement process.

                   Subtitle B--Priority Child Support

Sec. 211. Definition of domestic support obligation.
Sec. 212. Priorities for claims for domestic support obligations.
Sec. 213. Requirements to obtain confirmation and discharge in cases 
              involving domestic support obligations.
Sec. 214. Exceptions to automatic stay in domestic support obligation 
              proceedings.
Sec. 215. Nondischargeability of certain debts for alimony, 
              maintenance, and support.
Sec. 216. Continued liability of property.
Sec. 217. Protection of domestic support claims against preferential 
              transfer motions.
Sec. 218. Disposable income defined.
Sec. 219. Collection of child support.
Sec. 220. Nondischargeability of certain educational benefits and 
              loans.

                 Subtitle C--Other Consumer Protections

Sec. 221. Amendments to discourage abusive bankruptcy filings.
Sec. 222. Sense of Congress.
Sec. 223. Additional amendments to title 11, United States Code.
Sec. 224. Protection of retirement savings in bankruptcy.
Sec. 225. Protection of education savings in bankruptcy.
Sec. 226. Definitions.
Sec. 227. Restrictions on debt relief agencies.
Sec. 228. Disclosures.
Sec. 229. Requirements for debt relief agencies.
Sec. 230. GAO study.
Sec. 231. Protection of personally identifiable information.
Sec. 232. Consumer privacy ombudsman.
Sec. 233. Prohibition on disclosure of name of minor children.

                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.
Sec. 302. Discouraging bad faith repeat filings.
Sec. 303. Curbing abusive filings.
Sec. 304. Debtor retention of personal property security.
Sec. 305. Relief from the automatic stay when the debtor does not 
              complete intended surrender of consumer debt collateral.
Sec. 306. Giving secured creditors fair treatment in chapter 13.
Sec. 307. Domiciliary requirements for exemptions.
Sec. 308. Reduction of homestead exemption for fraud.
Sec. 309. Protecting secured creditors in chapter 13 cases.
Sec. 310. Limitation on luxury goods.
Sec. 311. Automatic stay.
Sec. 312. Extension of period between bankruptcy discharges.
Sec. 313. Definition of household goods and antiques.
Sec. 314. Debt incurred to pay nondischargeable debts.
Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases.
Sec. 316. Dismissal for failure to timely file schedules or provide 
              required information.
Sec. 317. Adequate time to prepare for hearing on confirmation of the 
              plan.
Sec. 318. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 319. Sense of Congress regarding expansion of rule 9011 of the 
              Federal Rules of Bankruptcy Procedure.
Sec. 320. Prompt relief from stay in individual cases.
Sec. 321. Chapter 11 cases filed by individuals.
Sec. 322. Limitations on homestead exemption.
Sec. 323. Excluding employee benefit plan participant contributions and 
              other property from the estate.
Sec. 324. Exclusive jurisdiction in matters involving bankruptcy 
              professionals.
Sec. 325. United States trustee program filing fee increase.
Sec. 326. Sharing of compensation.
Sec. 327. Fair valuation of collateral.
Sec. 328. Defaults based on nonmonetary obligations.
Sec. 329. Clarification of postpetition wages and benefits.
Sec. 330. Delay of discharge during pendency of certain proceedings.
Sec. 331. Limitation on retention bonuses, severance pay, and certain 
              other payments.

       TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

           Subtitle A--General Business Bankruptcy Provisions

Sec. 401. Adequate protection for investors.
Sec. 402. Meetings of creditors and equity security holders.
Sec. 403. Protection of refinance of security interest.
Sec. 404. Executory contracts and unexpired leases.
Sec. 405. Creditors and equity security holders committees.
Sec. 406. Amendment to section 546 of title 11, United States Code.
Sec. 407. Amendments to section 330(a) of title 11, United States Code.
Sec. 408. Postpetition disclosure and solicitation.
Sec. 409. Preferences.
Sec. 410. Venue of certain proceedings.
Sec. 411. Period for filing plan under chapter 11.
Sec. 412. Fees arising from certain ownership interests.
Sec. 413. Creditor representation at first meeting of creditors.
Sec. 414. Definition of disinterested person.
Sec. 415. Factors for compensation of professional persons.
Sec. 416. Appointment of elected trustee.
Sec. 417. Utility service.
Sec. 418. Bankruptcy fees.
Sec. 419. More complete information regarding assets of the estate.

            Subtitle B--Small Business Bankruptcy Provisions

Sec. 431. Flexible rules for disclosure statement and plan.
Sec. 432. Definitions.
Sec. 433. Standard form disclosure statement and plan.
Sec. 434. Uniform national reporting requirements.
Sec. 435. Uniform reporting rules and forms for small business cases.
Sec. 436. Duties in small business cases.
Sec. 437. Plan filing and confirmation deadlines.
Sec. 438. Plan confirmation deadline.
Sec. 439. Duties of the United States trustee.
Sec. 440. Scheduling conferences.
Sec. 441. Serial filer provisions.
Sec. 442. Expanded grounds for dismissal or conversion and appointment 
              of trustee.
Sec. 443. Study of operation of title 11, United States Code, with 
              respect to small businesses.
Sec. 444. Payment of interest.
Sec. 445. Priority for administrative expenses.
Sec. 446. Duties with respect to a debtor who is a plan administrator 
              of an employee benefit plan.
Sec. 447. Appointment of committee of retired employees.

                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.

                       TITLE VI--BANKRUPTCY DATA

Sec. 601. Improved bankruptcy statistics.
Sec. 602. Uniform rules for the collection of bankruptcy data.
Sec. 603. Audit procedures.
Sec. 604. Sense of Congress regarding availability of bankruptcy data.

                  TITLE VII--BANKRUPTCY TAX PROVISIONS

Sec. 701. Treatment of certain liens.
Sec. 702. Treatment of fuel tax claims.
Sec. 703. Notice of request for a determination of taxes.
Sec. 704. Rate of interest on tax claims.
Sec. 705. Priority of tax claims.
Sec. 706. Priority property taxes incurred.
Sec. 707. No discharge of fraudulent taxes in chapter 13.
Sec. 708. No discharge of fraudulent taxes in chapter 11.
Sec. 709. Stay of tax proceedings limited to prepetition taxes.
Sec. 710. Periodic payment of taxes in chapter 11 cases.
Sec. 711. Avoidance of statutory tax liens prohibited.
Sec. 712. Payment of taxes in the conduct of business.
Sec. 713. Tardily filed priority tax claims.
Sec. 714. Income tax returns prepared by tax authorities.
Sec. 715. Discharge of the estate's liability for unpaid taxes.
Sec. 716. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 717. Standards for tax disclosure.
Sec. 718. Setoff of tax refunds.
Sec. 719. Special provisions related to the treatment of State and 
              local taxes.
Sec. 720. Dismissal for failure to timely file tax returns.

           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 801. Amendment to add chapter 15 to title 11, United States Code.
Sec. 802. Other amendments to titles 11 and 28, United States Code.

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                TITLE IX--FINANCIAL CONTRACT PROVISIONS

Sec. 901. Treatment of certain agreements by conservators or receivers 
              of insured depository institutions.
Sec. 902. Authority of the FDIC and NCUAB with respect to failed and 
              failing institutions.
Sec. 903. Amendments relating to transfers of qualified financial 
              contracts.
Sec. 904. Amendments relating to disaffirmance or repudiation of 
              qualified financial contracts.
Sec. 905. Clarifying amendment relating to master agreements.
Sec. 906. Federal Deposit Insurance Corporation Improvement Act of 
              1991.
Sec. 907. Bankruptcy law amendments.
Sec. 908. Recordkeeping requirements.
Sec. 909. Exemptions from contemporaneous execution requirement.
Sec. 910. Damage measure.
Sec. 911. SIPC stay.

       TITLE X--PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMEN

Sec. 1001. Permanent reenactment of chapter 12.
Sec. 1002. Debt limit increase.
Sec. 1003. Certain claims owed to governmental units.
Sec. 1004. Definition of family farmer.
Sec. 1005. Elimination of requirement that family farmer and spouse 
              receive over 50 percent of income from farming operation 
              in year prior to bankruptcy.
Sec. 1006. Prohibition of retroactive assessment of disposable income.
Sec. 1007. Family fishermen.

              TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 1101. Definitions.
Sec. 1102. Disposal of patient records.
Sec. 1103. Administrative expense claim for costs of closing a health 
              care business and other administrative expenses.
Sec. 1104. Appointment of ombudsman to act as patient advocate.
Sec. 1105. Debtor in possession; duty of trustee to transfer patients.
Sec. 1106. Exclusion from program participation not subject to 
              automatic stay.

                    TITLE XII--TECHNICAL AMENDMENTS

Sec. 1201. Definitions.
Sec. 1202. Adjustment of dollar amounts.
Sec. 1203. Extension of time.
Sec. 1204. Technical amendments.
Sec. 1205. Penalty for persons who negligently or fraudulently prepare 
              bankruptcy petitions.
Sec. 1206. Limitation on compensation of professional persons.
Sec. 1207. Effect of conversion.
Sec. 1208. Allowance of administrative expenses.
Sec. 1209. Exceptions to discharge.
Sec. 1210. Effect of discharge.
Sec. 1211. Protection against discriminatory treatment.
Sec. 1212. Property of the estate.
Sec. 1213. Preferences.
Sec. 1214. Postpetition transactions.
Sec. 1215. Disposition of property of the estate.
Sec. 1216. General provisions.
Sec. 1217. Abandonment of railroad line.
Sec. 1218. Contents of plan.
Sec. 1219. Bankruptcy cases and proceedings.
Sec. 1220. Knowing disregard of bankruptcy law or rule.
Sec. 1221. Transfers made by nonprofit charitable corporations.
Sec. 1222. Protection of valid purchase money security interests.
Sec. 1223. Bankruptcy Judgeships.
Sec. 1224. Compensating trustees.
Sec. 1225. Amendment to section 362 of title 11, United States Code.
Sec. 1226. Judicial education.
Sec. 1227. Reclamation.
Sec. 1228. Providing requested tax documents to the court.
Sec. 1229. Encouraging creditworthiness.
Sec. 1230. Property no longer subject to redemption.
Sec. 1231. Trustees.
Sec. 1232. Bankruptcy forms.
Sec. 1233. Direct appeals of bankruptcy matters to courts of appeals.
Sec. 1234. Involuntary cases.
Sec. 1235. Federal election law fines and penalties as nondischargeable 
              debt.

                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

Sec. 1301. Enhanced disclosures under an open end credit plan.
Sec. 1302. Enhanced disclosure for credit extensions secured by a 
              dwelling.
Sec. 1303. Disclosures related to ``introductory rates''.
Sec. 1304. Internet-based credit card solicitations.
Sec. 1305. Disclosures related to late payment deadlines and penalties.
Sec. 1306. Prohibition on certain actions for failure to incur finance 
              charges.
Sec. 1307. Dual use debit card.
Sec. 1308. Study of bankruptcy impact of credit extended to dependent 
              students.
Sec. 1309. Clarification of clear and conspicuous.

            TITLE XIV--PREVENTING CORPORATE BANKRUPTCY ABUSE

Sec. 1401. Employee wage and benefit priorities.
Sec. 1402. Fraudulent transfers and obligations.
Sec. 1403. Payment of insurance benefits to retired employees.
Sec. 1404. Debts nondischargeable if incurred in violation of 
              securities fraud laws.
Sec. 1405. Appointment of trustee in cases of suspected fraud.
Sec. [1404.] 1406.  Effective date; application of amendments.

      TITLE XV--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1501. Effective date; application of amendments.
Sec. 1502. Technical corrections.

                    TITLE I--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 11 or 13'';

     and
       (2) in subsection (b)--
       (A) by inserting ``(1)'' after ``(b)'';
       (B) in paragraph (1), as so 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 ``trustee (or bankruptcy administrator, if 
     any), or'';
       (II) by inserting ``, or, with the debtor's consent, 
     convert such a case to a case under chapter 11 or 13 of this 
     title,'' after ``consumer debts''; and
       (III) by striking ``a substantial abuse'' and inserting 
     ``an abuse''; and

       (ii) by striking the next to last sentence; and
       (C) by adding at the end 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 reduced by the amounts 
     determined under clauses (ii), (iii), and (iv), and 
     multiplied by 60 is not less than the lesser of--
       ``(I) 25 percent of the debtor's nonpriority unsecured 
     claims in the case, or $6,000, whichever is greater; or
       ``(II) $10,000.
       ``(ii)(I) 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 
     actual monthly expenses for the categories specified 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 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.] dependent. Such 
     expenses shall include reasonably necessary health insurance, 
     disability insurance, and health savings account expenses for 
     the debtor, the spouse of the debtor, or the dependents of 
     the debtor. Notwithstanding any other provision of this 
     clause, the monthly expenses of the debtor shall not include 
     any payments for debts. In addition, the debtor's monthly 
     expenses shall include the debtor's reasonably necessary 
     expenses incurred to maintain the safety of the debtor and 
     the family of the debtor from family violence as identified 
     under section 309 of the Family Violence Prevention and 
     Services Act, or other applicable Federal law. The expenses 
     included in the debtor's monthly expenses described in the 
     preceding sentence shall be kept confidential by the court. 
     In addition, if it is demonstrated that it is reasonable and 
     necessary, the debtor's monthly expenses may also include an 
     additional allowance for food and clothing of up to 5 percent 
     of the food and clothing categories as specified by the 
     National Standards issued by the Internal Revenue Service.
       ``(II) In addition, the debtor's monthly expenses may 
     include, if applicable, the continuation of actual expenses 
     paid by the debtor that are reasonable and necessary for care 
     and support of an elderly, chronically ill, or disabled 
     household member or member of the debtor's immediate family 
     (including parents, grandparents, siblings, children, and 
     grandchildren of the debtor, the dependents of the debtor, 
     and the spouse of the debtor in a joint case who is not a 
     dependent) and who is unable to pay for such reasonable and 
     necessary expenses.
       ``(III) In addition, for a debtor eligible for chapter 13, 
     the debtor's monthly expenses may include the actual 
     administrative expenses of administering a chapter 13 plan 
     for the district in which the debtor resides, up to an amount 
     of 10 percent of the projected plan payments, as determined 
     under schedules issued by the Executive Office for United 
     States Trustees.
       ``(IV) In addition, the debtor's monthly expenses may 
     include the actual expenses for each dependent child less 
     than 18 years of age, not to exceed $1,500 per year per 
     child, to attend a private or public elementary or secondary 
     school if the debtor provides documentation of such expenses 
     and a detailed

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     explanation of why such expenses are reasonable and 
     necessary, and why such expenses are not already accounted 
     for in the National Standards, Local Standards, or Other 
     Necessary Expenses referred to in subclause (I).
       ``(V) In addition, the debtor's monthly expenses may 
     include an allowance for housing and utilities, in excess of 
     the allowance specified by the Local Standards for housing 
     and utilities issued by the Internal Revenue Service, based 
     on the actual expenses for home energy costs if the debtor 
     provides documentation of such actual expenses and 
     demonstrates that such actual expenses are reasonable and 
     necessary.
       ``(iii) The debtor's average monthly payments on account of 
     secured debts shall be calculated as the sum of--
       ``(I) 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
       ``(II) any additional payments to secured creditors 
     necessary for the debtor, in filing a plan under chapter 13 
     of this title, to maintain possession of the debtor's primary 
     residence, motor vehicle, or other property necessary for the 
     support of the debtor and the debtor's dependents, that 
     serves as collateral for secured debts;

     divided by 60.
       ``(iv) The debtor's expenses for payment of all priority 
     claims (including priority child support and alimony claims) 
     shall be calculated as the total amount of debts entitled to 
     priority, divided by 60.
       ``(B)(i) In any proceeding brought under this subsection, 
     the presumption of abuse may only be rebutted by 
     demonstrating special circumstances that justify additional 
     expenses or adjustments of current monthly income for which 
     there is no reasonable alternative.
       ``(ii) In order to establish special circumstances, the 
     debtor shall be required to itemize each additional expense 
     or adjustment of income and to provide--
       ``(I) documentation for such expense or adjustment to 
     income; and
       ``(II) a detailed explanation of the special circumstances 
     that make such expenses or adjustment to income necessary and 
     reasonable.
       ``(iii) The debtor shall attest under oath to the accuracy 
     of any information provided to demonstrate that additional 
     expenses or adjustments to income are required.
       ``(iv) The presumption of abuse may only be rebutted if the 
     additional expenses or adjustments to income referred to in 
     clause (i) cause the product of the debtor's current monthly 
     income reduced by the amounts determined under clauses (ii), 
     (iii), and (iv) of subparagraph (A) when multiplied by 60 to 
     be less than the lesser of--
       ``(I) 25 percent of the debtor's nonpriority unsecured 
     claims, or $6,000, whichever is greater; or
       ``(II) $10,000.
       ``(C) As part of the schedule of current income and 
     expenditures required under section 521, the debtor shall 
     include a statement of the debtor's current monthly income, 
     and the calculations that determine whether a presumption 
     arises under subparagraph (A)(i), that show how each such 
     amount is calculated.
       ``(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 
     subparagraph (A)(i) of such paragraph does not arise or is 
     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) The court, on its own initiative or on the motion 
     of a party in interest, in accordance with the procedures 
     described in rule 9011 of the Federal Rules of Bankruptcy 
     Procedure, may order the attorney for the debtor to reimburse 
     the trustee for all reasonable costs in prosecuting a motion 
     filed under section 707(b), including reasonable attorneys' 
     fees, if--
       ``(i) a trustee files a motion for dismissal or conversion 
     under this subsection; and
       ``(ii) the court--
       ``(I) grants such motion; and
       ``(II) finds that the action of the attorney for the debtor 
     in filing a case under this chapter violated rule 9011 of the 
     Federal Rules of Bankruptcy Procedure.
       ``(B) If the court finds that the attorney for the debtor 
     violated rule 9011 of the Federal Rules of Bankruptcy 
     Procedure, the court, on its own initiative or on the motion 
     of a party in interest, in accordance with such procedures, 
     may order--
       ``(i) the assessment of an appropriate civil penalty 
     against the attorney for the debtor; and
       ``(ii) the payment of such civil penalty to the trustee, 
     the United States trustee (or the bankruptcy administrator, 
     if any).
       ``(C) The signature of an attorney on a petition, pleading, 
     or written motion shall constitute a certification that the 
     attorney has--
       ``(i) performed a reasonable investigation into the 
     circumstances that gave rise to the petition, pleading, or 
     written motion; and
       ``(ii) determined that the petition, pleading, or written 
     motion--
       ``(I) is well grounded in fact; and
       ``(II) is warranted by existing law or a good faith 
     argument for the extension, modification, or reversal of 
     existing law and does not constitute an abuse under paragraph 
     (1).
       ``(D) The signature of an attorney on the petition shall 
     constitute a certification that the attorney has no knowledge 
     after an inquiry that the information in the schedules filed 
     with such petition is incorrect.
       ``(5)(A) Except as provided in subparagraph (B) and subject 
     to paragraph (6), the court, on its own initiative or on the 
     motion of a party in interest, in accordance with the 
     procedures described in rule 9011 of the Federal Rules of 
     Bankruptcy Procedure, may award a debtor all reasonable costs 
     (including reasonable attorneys' fees) in contesting a motion 
     filed by a party in interest (other than a trustee or United 
     States trustee (or bankruptcy administrator, if any)) under 
     this subsection if--
       ``(i) the court does not grant the motion; and
       ``(ii) the court finds that--
       ``(I) the position of the party that filed the motion 
     violated rule 9011 of the Federal Rules of Bankruptcy 
     Procedure; or
       ``(II) the attorney (if any) who filed the motion did not 
     comply with the requirements of clauses (i) and (ii) of 
     paragraph (4)(C), and the motion was made solely for the 
     purpose of coercing a debtor into waiving a right guaranteed 
     to the debtor under this title.
       ``(B) A small business that has a claim of an aggregate 
     amount less than $1,000 shall not be subject to subparagraph 
     (A)(ii)(I).
       ``(C) For purposes of this paragraph--
       ``(i) the term `small business' means an unincorporated 
     business, partnership, corporation, association, or 
     organization that--
       ``(I) has fewer than 25 full-time employees as determined 
     on the date on which the motion is filed; and
       ``(II) is engaged in commercial or business activity; and
       ``(ii) the number of employees of a wholly owned subsidiary 
     of a corporation includes the employees of--
       ``(I) a parent corporation; and
       ``(II) any other subsidiary corporation of the parent 
     corporation.
       ``(6) Only the judge or United States trustee (or 
     bankruptcy administrator, if any) may file a motion under 
     section 707(b), if the current monthly income of the debtor, 
     or in a joint case, the debtor and the debtor's spouse, as of 
     the date of the order for relief, when multiplied by 12, is 
     equal to or less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.
       ``(7)(A) No judge, United States trustee (or bankruptcy 
     administrator, if any), trustee, or other party in interest 
     may file a motion under paragraph (2) 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 
     equal to or less than--
       ``(i) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(ii) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(iii) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.
       ``(B) In a case that is not a joint case, current monthly 
     income of the debtor's spouse shall not be considered for 
     purposes of subparagraph (A) if--
       ``(i)(I) the debtor and the debtor's spouse are separated 
     under applicable nonbankruptcy law; or
       ``(II) the debtor and the debtor's spouse are living 
     separate and apart, other than for the purpose of evading 
     subparagraph (A); and
       ``(ii) the debtor files a statement under penalty of 
     perjury--
       ``(I) specifying that the debtor meets the requirement of 
     subclause (I) or (II) of clause (i); and
       ``(II) disclosing the aggregate, or best estimate of the 
     aggregate, amount of any cash or money payments received from 
     the debtor's spouse attributed to the debtor's current 
     monthly income.''.
       (b) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (10) the 
     following:
       ``(10A) `current monthly income'--
       ``(A) means the average monthly income from all sources 
     that the debtor receives (or in a joint case the debtor and 
     the debtor's

[[Page 2903]]

     spouse receive) without regard to whether such income is 
     taxable income, derived during the 6-month period ending on--
       ``(i) the last day of the calendar month immediately 
     preceding the date of the commencement of the case if the 
     debtor files the schedule of current income required by 
     section 521(a)(1)(B)(ii); or
       ``(ii) the date on which current income is determined by 
     the court for purposes of this title if the debtor does not 
     file the schedule of current income required by section 
     521(a)(1)(B)(ii); and
       ``(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 for 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 
     benefits received under the Social Security Act, payments to 
     victims of war crimes or crimes against humanity on account 
     of their status as victims of such crimes, and payments to 
     victims of international terrorism (as defined in section 
     2331 of title 18) or domestic terrorism (as defined in 
     section 2331 of title 18) on account of their status as 
     victims of such terrorism;''.
       (c) United States Trustee and Bankruptcy Administrator 
     Duties.--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 a debtor who is an individual in a 
     case under this chapter--
       ``(A) the United States trustee (or the bankruptcy 
     administrator, if any) shall review all materials filed by 
     the debtor and, not later than 10 days after the date of the 
     first meeting of creditors, file with the court a statement 
     as to whether the debtor's case would be presumed to be an 
     abuse under section 707(b); and
       ``(B) not later than 5 days after receiving a statement 
     under subparagraph (A), the court shall provide a copy of the 
     statement to all creditors.
       ``(2) The United States trustee (or bankruptcy 
     administrator, if any) shall, not later than 30 days after 
     the date of filing a statement under paragraph (1), either 
     file a motion to dismiss or convert under section 707(b) or 
     file a statement setting forth the reasons the United States 
     trustee (or the bankruptcy administrator, if any) does not 
     consider such a motion to be appropriate, if the United 
     States trustee (or the bankruptcy administrator, if any) 
     determines that the debtor's case should be presumed to be an 
     abuse under section 707(b) and the product of the debtor's 
     current monthly income, multiplied by 12 is not less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner; or
       ``(B) in the case of a debtor in a household of 2 or more 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals.''.
       (d) Notice.--Section 342 of title 11, United States Code, 
     is amended by adding at the end the following:
       ``(d) In a case under chapter 7 of this title in which the 
     debtor is an individual and in which the presumption of abuse 
     arises under section 707(b), the clerk shall give written 
     notice to all creditors not later than 10 days after the date 
     of the filing of the petition that the presumption of abuse 
     has arisen.''.
       (e) Nonlimitation of Information.--Nothing in this title 
     shall limit the ability of a creditor to provide information 
     to a judge (except for information communicated ex parte, 
     unless otherwise permitted by applicable law), United States 
     trustee (or bankruptcy administrator, if any), or trustee.
       (f) Dismissal for Certain Crimes.--Section 707 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(c)(1) In this subsection--
       ``(A) the term `crime of violence' has the meaning given 
     such term in section 16 of title 18; and
       ``(B) the term `drug trafficking crime' has the meaning 
     given such term in section 924(c)(2) of title 18.
       ``(2) Except as provided in paragraph (3), after notice and 
     a hearing, the court, on a motion by the victim of a crime of 
     violence or a drug trafficking crime, may when it is in the 
     best interest of the victim dismiss a voluntary case filed 
     under this chapter by a debtor who is an individual if such 
     individual was convicted of such crime.
       ``(3) The court may not dismiss a case under paragraph (2) 
     if the debtor establishes by a preponderance of the evidence 
     that the filing of a case under this chapter is necessary to 
     satisfy a claim for a domestic support obligation.''.
       (g) Confirmation of Plan.--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 
     a semicolon; and
       (3) by inserting after paragraph (6) the following:
       ``(7) the action of the debtor in filing the petition was 
     in good faith;''.
       (h) Applicability of Means Test to Chapter 13.--Section 
     1325(b) of title 11, United States Code, is amended--
       (1) in paragraph (1)(B), by inserting ``to unsecured 
     creditors'' after ``to make payments''; and
       (2) by striking paragraph (2) and inserting the following:
       ``(2) For purposes of this subsection, the term `disposable 
     income' means current monthly income 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 to the extent reasonably 
     necessary to be expended for such child) less amounts 
     reasonably necessary to be expended--
       ``(A)(i) for the maintenance or support of the debtor or a 
     dependent of the debtor, or for a domestic support 
     obligation, that first becomes payable after the date the 
     petition is filed; and
       ``(ii) for charitable contributions (that meet the 
     definition of `charitable contribution' under section 
     548(d)(3) to a qualified religious or charitable entity or 
     organization (as defined in section 548(d)(4)) in an amount 
     not to exceed 15 percent of gross income of the debtor for 
     the year in which the contributions are made; and
       ``(B) if the debtor is engaged in business, for the payment 
     of expenditures necessary for the continuation, preservation, 
     and operation of such business.
       ``(3) Amounts reasonably necessary to be expended under 
     paragraph (2) shall be determined in accordance with 
     subparagraphs (A) and (B) of section 707(b)(2), if the debtor 
     has current monthly income, when multiplied by 12, greater 
     than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.''.
       (i) Special Allowance for Health Insurance.--Section 
     1329(a) 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) reduce amounts to be paid under the plan by the 
     actual amount expended by the debtor to purchase health 
     insurance for the debtor (and for any dependent of the debtor 
     if such dependent does not otherwise have health insurance 
     coverage) if the debtor documents the cost of such insurance 
     and demonstrates that--
       ``(A) such expenses are reasonable and necessary;
       ``(B)(i) if the debtor previously paid for health 
     insurance, the amount is not materially larger than the cost 
     the debtor previously paid or the cost necessary to maintain 
     the lapsed policy; or
       ``(ii) if the debtor did not have health insurance, the 
     amount is not materially larger than the reasonable cost that 
     would be incurred by a debtor who purchases health insurance, 
     who has similar income, expenses, age, and health status, and 
     who lives in the same geographical location with the same 
     number of dependents who do not otherwise have health 
     insurance coverage; and
       ``(C) the amount is not otherwise allowed for purposes of 
     determining disposable income under section 1325(b) of this 
     title;

     and upon request of any party in interest, files proof that a 
     health insurance policy was purchased.''.
       (j) Adjustment of Dollar Amounts.--Section 104(b) of title 
     11, United States Code, is amended by striking ``and 
     523(a)(2)(C)'' each place it appears and inserting 
     ``523(a)(2)(C), 707(b), and 1325(b)(3)''.
       (k) Definition of `Median Family Income'.--Section 101 of 
     title 11, United States Code, is amended by inserting after 
     paragraph (39) the following:
       ``(39A) `median family income' means for any year--
       ``(A) the median family income both calculated and reported 
     by the Bureau of the Census in the then most recent year; and
       ``(B) if not so calculated and reported in the then current 
     year, adjusted annually after such most recent year until the 
     next year in which median family income is both calculated 
     and reported by the Bureau of the Census, to reflect the 
     percentage change in the Consumer Price Index for All Urban 
     Consumers during the period of years occurring after such 
     most recent year and before such current year;''.
       (k) Clerical Amendment.--The table of sections for 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 11 or 
              13.''.

     SEC. 103. SENSE OF CONGRESS AND STUDY.

       (a) Sense of Congress.--It is the sense of Congress that 
     the Secretary of the Treasury has the authority to alter the 
     Internal Revenue Service standards established to set 
     guidelines for repayment plans as needed to accommodate their 
     use under section 707(b) of title 11, United States Code.

[[Page 2904]]

       (b) Study.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Director of the Executive Office 
     for United States Trustees shall submit a report to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives containing the 
     findings of the Director regarding the utilization of 
     Internal Revenue Service standards for determining--
       (A) the current monthly expenses of a debtor under section 
     707(b) of title 11, United States Code; and
       (B) the impact that the application of such standards has 
     had on debtors and on the bankruptcy courts.
       (2) Recommendation.--The report under paragraph (1) may 
     include recommendations for amendments to title 11, United 
     States Code, that are consistent with the findings of the 
     Director under paragraph (1).

     SEC. 104. 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 case under this title shall be 
     subject to fine, imprisonment, or both; and
       ``(B) all information supplied by a debtor in connection 
     with a case under this title is subject to examination by the 
     Attorney General.''.

     SEC. 105. 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 serve in cases under chapter 13 of 
     title 11, 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 debtors who are individuals on how to 
     better manage their finances.
       (b) Test.--
       (1) Selection of districts.--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) Use.--For an 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 title 11, United States Code.
       (c) Evaluation.--
       (1) In general.--During the 18-month 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, 
     United States Code, and by consumer counseling groups.
       (2) Report.--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.

     SEC. 106. CREDIT COUNSELING.

       (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 such 
     individual has, during the 180-day period preceding the date 
     of filing of the petition by such individual, received from 
     an approved nonprofit budget and credit counseling agency 
     described in section 111(a) an individual or group briefing 
     (including a briefing conducted by telephone or on the 
     Internet) that outlined the opportunities for available 
     credit counseling and assisted such individual in performing 
     a related budget analysis.
       ``(2)(A) Paragraph (1) shall not apply with respect to a 
     debtor who resides in a district for which the United States 
     trustee (or the bankruptcy administrator, if any) determines 
     that the approved nonprofit budget and credit counseling 
     agencies for such district are not reasonably able to provide 
     adequate services to the additional individuals who would 
     otherwise seek credit counseling from such agencies by reason 
     of the requirements of paragraph (1).
       ``(B) The United States trustee (or the bankruptcy 
     administrator, if any) who makes a determination described in 
     subparagraph (A) shall review such determination not later 
     than 1 year after the date of such determination, and not 
     less frequently than annually thereafter. Notwithstanding the 
     preceding sentence, a nonprofit budget and credit counseling 
     agency may be disapproved by the United States trustee (or 
     the bankruptcy administrator, if any) at any time.
       ``(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 nonprofit budget and credit 
     counseling agency, 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; 
     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, except that the court, for cause, may order an 
     additional 15 days.''.
       (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 filing the petition, the debtor failed to 
     complete an instructional course concerning personal 
     financial management described in section 111, except that 
     this paragraph shall not apply with respect to a debtor who 
     resides in a district for which the United States trustee (or 
     the bankruptcy administrator, if any) determines that the 
     approved instructional courses are not adequate to service 
     the additional individuals who would otherwise be required to 
     complete such instructional courses under this section (The 
     United States trustee (or the bankruptcy administrator, if 
     any) who makes a determination described in this paragraph 
     shall review such determination not later than 1 year after 
     the date of such determination, and not less frequently than 
     annually thereafter.).''.
       (c) Chapter 13 Discharge.--Section 1328 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(g)(1) 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.
       ``(2) Paragraph (1) shall not apply with respect to a 
     debtor who resides in a district for which the United States 
     trustee (or the bankruptcy administrator, if any) determines 
     that the approved instructional courses are not adequate to 
     service the additional individuals who would otherwise be 
     required to complete such instructional course by reason of 
     the requirements of paragraph (1).
       ``(3) The United States trustee (or the bankruptcy 
     administrator, if any) who makes a determination described in 
     paragraph (2) shall review such determination not later than 
     1 year after the date of such determination, and not less 
     frequently than annually thereafter.''.
       (d) Debtor's Duties.--Section 521 of title 11, United 
     States Code, is amended--
       (1) by inserting ``(a)'' before ``The debtor shall--''; and
       (2) by adding at the end the following:
       ``(b) In addition to the requirements under subsection (a), 
     a debtor who is an individual shall file with the court--
       ``(1) a certificate from the approved nonprofit budget and 
     credit counseling agency that provided the debtor services 
     under section 109(h) describing the services provided to the 
     debtor; and
       ``(2) a copy of the debt repayment plan, if any, developed 
     under section 109(h) through the approved nonprofit budget 
     and credit counseling agency 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. Nonprofit budget and credit counseling agencies; 
       financial management instructional courses

       ``(a) The clerk shall maintain a publicly available list 
     of--
       ``(1) nonprofit budget and credit counseling agencies that 
     provide 1 or more services described in section 109(h) 
     currently approved

[[Page 2905]]

     by the United States trustee (or the bankruptcy 
     administrator, if any); and
       ``(2) instructional courses concerning personal financial 
     management currently approved by the United States trustee 
     (or the bankruptcy administrator, if any), as applicable.
       ``(b) The United States trustee (or bankruptcy 
     administrator, if any) shall only approve a nonprofit budget 
     and credit counseling agency or an instructional course 
     concerning personal financial management as follows:
       ``(1) The United States trustee (or bankruptcy 
     administrator, if any) shall have thoroughly reviewed the 
     qualifications of the nonprofit budget and credit counseling 
     agency or of the provider of the instructional course under 
     the standards set forth in this section, and the services or 
     instructional courses that will be offered by such agency or 
     such provider, and may require such agency or such provider 
     that has sought approval to provide information with respect 
     to such review.
       ``(2) The United States trustee (or bankruptcy 
     administrator, if any) shall have determined that such agency 
     or such instructional course fully satisfies the applicable 
     standards set forth in this section.
       ``(3) If a nonprofit budget and credit counseling agency or 
     instructional course did not appear on the approved list for 
     the district under subsection (a) immediately before approval 
     under this section, approval under this subsection of such 
     agency or such instructional course shall be for a 
     probationary period not to exceed 6 months.
       ``(4) At the conclusion of the applicable probationary 
     period under paragraph (3), the United States trustee (or 
     bankruptcy administrator, if any) may only approve for an 
     additional 1-year period, and for successive 1-year periods 
     thereafter, an agency or instructional course that has 
     demonstrated during the probationary or applicable subsequent 
     period of approval that such agency or instructional course--
       ``(A) has met the standards set forth under this section 
     during such period; and
       ``(B) can satisfy such standards in the future.
       ``(5) Not later than 30 days after any final decision under 
     paragraph (4), an interested person may seek judicial review 
     of such decision in the appropriate district court of the 
     United States.
       ``(c)(1) The United States trustee (or the bankruptcy 
     administrator, if any) shall only approve a nonprofit budget 
     and credit counseling agency that demonstrates that it will 
     provide qualified counselors, maintain adequate provision for 
     safekeeping and payment of client funds, provide adequate 
     counseling with respect to client credit problems, and deal 
     responsibly and effectively with other matters relating to 
     the quality, effectiveness, and financial security of the 
     services it provides.
       ``(2) To be approved by the United States trustee (or the 
     bankruptcy administrator, if any), a nonprofit budget and 
     credit counseling agency shall, at a minimum--
       ``(A) have a board of directors the majority of which--
       ``(i) are not employed by such agency; and
       ``(ii) will not directly or indirectly benefit financially 
     from the outcome of the counseling services provided by such 
     agency;
       ``(B) if a fee is charged for counseling services, charge a 
     reasonable fee, and provide services without regard to 
     ability to pay the fee;
       ``(C) provide for safekeeping and payment of client funds, 
     including an annual audit of the trust accounts and 
     appropriate employee bonding;
       ``(D) provide full disclosures to a client, including 
     funding sources, counselor qualifications, possible impact on 
     credit reports, and any costs of such program that will be 
     paid by such client and how such costs will be paid;
       ``(E) provide adequate counseling with respect to a 
     client's credit problems that includes an analysis of such 
     client's current financial condition, factors that caused 
     such financial condition, and how such client can develop a 
     plan to respond to the problems without incurring negative 
     amortization of debt;
       ``(F) provide trained counselors who receive no commissions 
     or bonuses based on the outcome of the counseling services 
     provided by such agency, and who have adequate experience, 
     and have been adequately trained to provide counseling 
     services to individuals in financial difficulty, including 
     the matters described in subparagraph (E);
       ``(G) demonstrate adequate experience and background in 
     providing credit counseling; and
       ``(H) have adequate financial resources to provide 
     continuing support services for budgeting plans over the life 
     of any repayment plan.
       ``(d) The United States trustee (or the bankruptcy 
     administrator, if any) shall only approve an instructional 
     course concerning personal financial management--
       ``(1) for an initial probationary period under subsection 
     (b)(3) if the course will provide at a minimum--
       ``(A) trained personnel with adequate experience and 
     training in providing effective instruction and services;
       ``(B) learning materials and teaching methodologies 
     designed to assist debtors in understanding personal 
     financial management and that are consistent with stated 
     objectives directly related to the goals of such 
     instructional course;
       ``(C) adequate facilities situated in reasonably convenient 
     locations at which such instructional course is offered, 
     except that such facilities may include the provision of such 
     instructional course by telephone or through the Internet, if 
     such instructional course is effective; and
       ``(D) the preparation and retention of reasonable records 
     (which shall include the debtor's bankruptcy case number) to 
     permit evaluation of the effectiveness of such instructional 
     course, including any evaluation of satisfaction of 
     instructional course requirements for each debtor attending 
     such instructional course, which shall be available for 
     inspection and evaluation by the Executive Office for United 
     States Trustees, the United States trustee (or the bankruptcy 
     administrator, if any), or the chief bankruptcy judge for the 
     district in which such instructional course is offered; and
       ``(2) for any 1-year period if the provider thereof has 
     demonstrated that the course meets the standards of paragraph 
     (1) and, in addition--
       ``(A) has been effective in assisting a substantial number 
     of debtors to understand personal financial management; and
       ``(B) is otherwise likely to increase substantially the 
     debtor's understanding of personal financial management.
       ``(e) The district court may, at any time, investigate the 
     qualifications of a nonprofit budget and credit counseling 
     agency referred to in subsection (a), and request production 
     of documents to ensure the integrity and effectiveness of 
     such agency. The district court may, at any time, remove from 
     the approved list under subsection (a) a nonprofit budget and 
     credit counseling agency upon finding such agency does not 
     meet the qualifications of subsection (b).
       ``(f) The United States trustee (or the bankruptcy 
     administrator, if any) shall notify the clerk that a 
     nonprofit budget and credit counseling agency or an 
     instructional course is no longer approved, in which case the 
     clerk shall remove it from the list maintained under 
     subsection (a).
       ``(g)(1) No nonprofit budget and credit counseling agency 
     may provide to a credit reporting agency information 
     concerning whether a debtor has received or sought 
     instruction concerning personal financial management from 
     such agency.
       ``(2) A nonprofit budget and credit counseling agency that 
     willfully or negligently fails to comply with any requirement 
     under this title with respect to a debtor shall be liable for 
     damages in an amount equal to the sum of--
       ``(A) any actual damages sustained by the debtor as a 
     result of the violation; and
       ``(B) any court costs or reasonable attorneys' fees (as 
     determined by the court) incurred in an action to recover 
     those damages.''.
       (2) Clerical amendment.--The table of sections for chapter 
     1 of title 11, United States Code, is amended by adding at 
     the end the following:

``111. Nonprofit budget and credit counseling agencies; financial 
              management instructional courses.''.
       (f) Limitation.--Section 362 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(i) If a case commenced under chapter 7, 11, or 13 is 
     dismissed due to the creation of a debt repayment plan, for 
     purposes of subsection (c)(3), any subsequent case commenced 
     by the debtor under any such chapter shall not be presumed to 
     be filed not in good faith.
       ``(j) On request of a party in interest, the court shall 
     issue an order under subsection (c) confirming that the 
     automatic stay has been terminated.''.

     SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY EXPENSES.

       For purposes of section 707(b) of title 11, United States 
     Code, as amended by this Act, the Director of the Executive 
     Office for United States Trustees shall, not later than 180 
     days after the date of enactment of this Act, issue schedules 
     of reasonable and necessary administrative expenses of 
     administering a chapter 13 plan for each judicial district of 
     the United States.

                 TITLE II--ENHANCED CONSUMER PROTECTION

          Subtitle A--Penalties for Abusive Creditor Practices

     SEC. 201. 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 in 
     whole on an unsecured consumer debt by not more than 20 
     percent of the claim, if--
       ``(A) the claim was filed by a creditor who unreasonably 
     refused to negotiate a reasonable alternative repayment 
     schedule proposed on behalf of the debtor by an approved 
     nonprofit budget and credit counseling agency described in 
     section 111;
       ``(B) the offer of the debtor under subparagraph (A)--

[[Page 2906]]

       ``(i) was made at least 60 days before the date of the 
     filing of the petition; and
       ``(ii) 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.
       ``(2) The debtor shall have the burden of proving, by clear 
     and convincing evidence, that--
       ``(A) the creditor unreasonably refused to consider the 
     debtor's proposal; and
       ``(B) the proposed alternative repayment schedule was made 
     prior to expiration of the 60-day period specified in 
     paragraph (1)(B)(i).''.
       (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 schedule 
     between the debtor and any creditor of the debtor created by 
     an approved nonprofit budget and credit counseling agency.''.

     SEC. 202. 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, unless the 
     order confirming the plan is revoked, the plan is in default, 
     or the creditor has not received payments required to be made 
     under the plan in the manner required by the plan (including 
     crediting the amounts required under the plan), shall 
     constitute a violation of an injunction under subsection 
     (a)(2) if the act of the creditor to collect and failure to 
     credit payments in the manner required by the plan caused 
     material injury to the debtor.
       ``(j) Subsection (a)(2) does not operate as an injunction 
     against an act by a creditor that is the holder of a secured 
     claim, if--
       ``(1) such creditor retains a security interest in real 
     property that is the principal residence of the debtor;
       ``(2) such act is in the ordinary course of business 
     between the creditor and the debtor; and
       ``(3) such act is limited to seeking or obtaining periodic 
     payments associated with a valid security interest in lieu of 
     pursuit of in rem relief to enforce the lien.''.

     SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION AGREEMENT 
                   PRACTICES.

       (a) In General.--Section 524 of title 11, United States 
     Code, as amended section 202, is amended--
       (1) in subsection (c), by striking paragraph (2) and 
     inserting the following:
       ``(2) the debtor received the disclosures described in 
     subsection (k) at or before the time at which the debtor 
     signed the agreement;''; and
       (2) by adding at the end the following:
       ``(k)(1) The disclosures required under subsection (c)(2) 
     shall consist of the disclosure statement described in 
     paragraph (3), completed as required in that paragraph, 
     together with the agreement specified in subsection (c), 
     statement, declaration, motion and order described, 
     respectively, in paragraphs (4) through (8), and shall be the 
     only disclosures required in connection with entering into 
     such agreement.
       ``(2) Disclosures made under paragraph (1) shall be made 
     clearly and conspicuously and in writing. The terms `Amount 
     Reaffirmed' and `Annual Percentage Rate' shall be disclosed 
     more conspicuously than other terms, data or information 
     provided in connection with this disclosure, except that the 
     phrases `Before agreeing to reaffirm a debt, review these 
     important disclosures' and `Summary of Reaffirmation 
     Agreement' may be equally conspicuous. Disclosures may be 
     made in a different order and may use terminology different 
     from that set forth in paragraphs (2) through (8), except 
     that the terms `Amount Reaffirmed' and `Annual Percentage 
     Rate' must be used where indicated.
       ``(3) The disclosure statement required under this 
     paragraph shall consist of the following:
       ``(A) The statement: `Part A: Before agreeing to reaffirm a 
     debt, review these important disclosures:';
       ``(B) Under the heading `Summary of Reaffirmation 
     Agreement', the statement: `This Summary is made pursuant to 
     the requirements of the Bankruptcy Code';
       ``(C) The `Amount Reaffirmed', using that term, which shall 
     be--
       ``(i) the total amount of debt that the debtor agrees to 
     reaffirm by entering into an agreement of the kind specified 
     in subsection (c), and
       ``(ii) the total of any fees and costs accrued as of the 
     date of the disclosure statement, related to such total 
     amount.
       ``(D) In conjunction with the disclosure of the `Amount 
     Reaffirmed', the statements--
       ``(i) `The amount of debt you have agreed to reaffirm'; and
       ``(ii) `Your credit agreement may obligate you to pay 
     additional amounts which may come due after the date of this 
     disclosure. Consult your credit agreement.'.
       ``(E) The `Annual Percentage Rate', using that term, which 
     shall be disclosed as--
       ``(i) if, at the time the petition is filed, the debt is an 
     extension of credit under an open end credit plan, as the 
     terms `credit' and `open end credit plan' are defined in 
     section 103 of the Truth in Lending Act, then--
       ``(I) the annual percentage rate determined under 
     paragraphs (5) and (6) of section 127(b) of the Truth in 
     Lending Act, as applicable, as disclosed to the debtor in the 
     most recent periodic statement prior to entering into an 
     agreement of the kind specified in subsection (c) or, if no 
     such periodic statement has been given to the debtor during 
     the prior 6 months, the annual percentage rate as it would 
     have been so disclosed at the time the disclosure statement 
     is given to the debtor, or to the extent this annual 
     percentage rate is not readily available or not applicable, 
     then
       ``(II) the simple interest rate applicable to the amount 
     reaffirmed as of the date the disclosure statement is given 
     to the debtor, or if different simple interest rates apply to 
     different balances, the simple interest rate applicable to 
     each such balance, identifying the amount of each such 
     balance included in the amount reaffirmed, or
       ``(III) if the entity making the disclosure elects, to 
     disclose the annual percentage rate under subclause (I) and 
     the simple interest rate under subclause (II); or
       ``(ii) if, at the time the petition is filed, the debt is 
     an extension of credit other than under an open end credit 
     plan, as the terms `credit' and `open end credit plan' are 
     defined in section 103 of the Truth in Lending Act, then--
       ``(I) the annual percentage rate under section 128(a)(4) of 
     the Truth in Lending Act, as disclosed to the debtor in the 
     most recent disclosure statement given to the debtor prior to 
     the entering into an agreement of the kind specified in 
     subsection (c) with respect to the debt, or, if no such 
     disclosure statement was given to the debtor, the annual 
     percentage rate as it would have been so disclosed at the 
     time the disclosure statement is given to the debtor, or to 
     the extent this annual percentage rate is not readily 
     available or not applicable, then
       ``(II) the simple interest rate applicable to the amount 
     reaffirmed as of the date the disclosure statement is given 
     to the debtor, or if different simple interest rates apply to 
     different balances, the simple interest rate applicable to 
     each such balance, identifying the amount of such balance 
     included in the amount reaffirmed, or
       ``(III) if the entity making the disclosure elects, to 
     disclose the annual percentage rate under (I) and the simple 
     interest rate under (II).
       ``(F) If the underlying debt transaction was disclosed as a 
     variable rate transaction on the most recent disclosure given 
     under the Truth in Lending Act, by stating `The interest rate 
     on your loan may be a variable interest rate which changes 
     from time to time, so that the annual percentage rate 
     disclosed here may be higher or lower.'.
       ``(G) If the debt is secured by a security interest which 
     has not been waived in whole or in part or determined to be 
     void by a final order of the court at the time of the 
     disclosure, by disclosing that a security interest or lien in 
     goods or property is asserted over some or all of the debts 
     the debtor is reaffirming and listing the items and their 
     original purchase price that are subject to the asserted 
     security interest, or if not a purchase-money security 
     interest then listing by items or types and the original 
     amount of the loan.
       ``(H) At the election of the creditor, a statement of the 
     repayment schedule using 1 or a combination of the 
     following--
       ``(i) by making the statement: `Your first payment in the 
     amount of $___ is due on ___ but the future payment amount 
     may be different. Consult your reaffirmation agreement or 
     credit agreement, as applicable.', and stating the amount of 
     the first payment and the due date of that payment in the 
     places provided;
       ``(ii) by making the statement: `Your payment schedule will 
     be:', and describing the repayment schedule with the number, 
     amount, and due dates or period of payments scheduled to 
     repay the debts reaffirmed to the extent then known by the 
     disclosing party; or
       ``(iii) by describing the debtor's repayment obligations 
     with reasonable specificity to the extent then known by the 
     disclosing party.
       ``(I) The following statement: `Note: When this disclosure 
     refers to what a creditor ``may'' do, it does not use the 
     word ``may'' to give the creditor specific permission. The 
     word ``may'' is used to tell you what might occur if the law 
     permits the creditor to take the action. If you have 
     questions about your reaffirming a debt or what the law 
     requires, consult with the attorney who helped you negotiate 
     this agreement reaffirming a debt. If you don't have an 
     attorney helping you, the judge will explain the effect of 
     your reaffirming a debt when the hearing on the reaffirmation 
     agreement is held.'.
       ``(J)(i) The following additional statements:
       `` `Reaffirming a debt is a serious financial decision. The 
     law requires you to take certain steps to make sure the 
     decision is in your best interest. If these steps are not 
     completed, the reaffirmation agreement is not effective, even 
     though you have signed it.

[[Page 2907]]

       `` `1. Read the disclosures in this Part A carefully. 
     Consider the decision to reaffirm carefully. Then, if you 
     want to reaffirm, sign the reaffirmation agreement in Part B 
     (or you may use a separate agreement you and your creditor 
     agree on).
       `` `2. Complete and sign Part D and be sure you can afford 
     to make the payments you are agreeing to make and have 
     received a copy of the disclosure statement and a completed 
     and signed reaffirmation agreement.
       `` `3. If you were represented by an attorney during the 
     negotiation of your reaffirmation agreement, the attorney 
     must have signed the certification in Part C.
       `` `4. If you were not represented by an attorney during 
     the negotiation of your reaffirmation agreement, you must 
     have completed and signed Part E.
       `` `5. The original of this disclosure must be filed with 
     the court by you or your creditor. If a separate 
     reaffirmation agreement (other than the one in Part B) has 
     been signed, it must be attached.
       `` `6. If you were represented by an attorney during the 
     negotiation of your reaffirmation agreement, your 
     reaffirmation agreement becomes effective upon filing with 
     the court unless the reaffirmation is presumed to be an undue 
     hardship as explained in Part D.
       `` `7. If you were not represented by an attorney during 
     the negotiation of your reaffirmation agreement, it will not 
     be effective unless the court approves it. The court will 
     notify you of the hearing on your reaffirmation agreement. 
     You must attend this hearing in bankruptcy court where the 
     judge will review your reaffirmation agreement. The 
     bankruptcy court must approve your reaffirmation agreement as 
     consistent with your best interests, except that no court 
     approval is required if your reaffirmation agreement is for a 
     consumer debt secured by a mortgage, deed of trust, security 
     deed, or other lien on your real property, like your home.
       `` `Your right to rescind (cancel) your reaffirmation 
     agreement. You may rescind (cancel) your reaffirmation 
     agreement at any time before the bankruptcy court enters a 
     discharge order, or before the expiration of the 60-day 
     period that begins on the date your reaffirmation agreement 
     is filed with the court, whichever occurs later. To rescind 
     (cancel) your reaffirmation agreement, you must notify the 
     creditor that your reaffirmation agreement is rescinded (or 
     canceled).
       `` `What are your obligations if you reaffirm the debt? A 
     reaffirmed debt remains your personal legal obligation. It is 
     not discharged in your bankruptcy case. That means that if 
     you default on your reaffirmed debt after your bankruptcy 
     case is over, your creditor may be able to take your property 
     or your wages. Otherwise, your obligations will be determined 
     by the reaffirmation agreement which may have changed the 
     terms of the original agreement. For example, if you are 
     reaffirming an open end credit agreement, the creditor may be 
     permitted by that agreement or applicable law to change the 
     terms of that agreement in the future under certain 
     conditions.
       `` `Are you required to enter into a reaffirmation 
     agreement by any law? No, you are not required to reaffirm a 
     debt by any law. Only agree to reaffirm a debt if it is in 
     your best interest. Be sure you can afford the payments you 
     agree to make.
       `` `What if your creditor has a security interest or lien? 
     Your bankruptcy discharge does not eliminate any lien on your 
     property. A ``lien'' is often referred to as a security 
     interest, deed of trust, mortgage or security deed. Even if 
     you do not reaffirm and your personal liability on the debt 
     is discharged, because of the lien your creditor may still 
     have the right to take the security property if you do not 
     pay the debt or default on it. If the lien is on an item of 
     personal property that is exempt under your State's law or 
     that the trustee has abandoned, you may be able to redeem the 
     item rather than reaffirm the debt. To redeem, you make a 
     single payment to the creditor equal to the current value of 
     the security property, as agreed by the parties or determined 
     by the court.'.
       ``(ii) In the case of a reaffirmation under subsection 
     (m)(2), numbered paragraph 6 in the disclosures required by 
     clause (i) of this subparagraph shall read as follows:
       `` `6. If you were represented by an attorney during the 
     negotiation of your reaffirmation agreement, your 
     reaffirmation agreement becomes effective upon filing with 
     the court.'.
       ``(4) The form of such agreement required under this 
     paragraph shall consist of the following:
       `` `Part B: Reaffirmation Agreement. I (we) agree to 
     reaffirm the debts arising under the credit agreement 
     described below.
       `` `Brief description of credit agreement:
       `` `Description of any changes to the credit agreement made 
     as part of this reaffirmation agreement:
       `` `Signature:      Date:
       `` `Borrower:
       `` `Co-borrower, if also reaffirming these debts:
       `` `Accepted by creditor:
       `` `Date of creditor acceptance:'.
       ``(5) The declaration shall consist of the following:
       ``(A) The following certification:
       `` `Part C: Certification by Debtor's Attorney (If Any).
       `` `I hereby certify that (1) this agreement represents a 
     fully informed and voluntary agreement by the debtor; (2) 
     this agreement does not impose an undue hardship on the 
     debtor or any dependent of the debtor; and (3) I have fully 
     advised the debtor of the legal effect and consequences of 
     this agreement and any default under this agreement.
       `` `Signature of Debtor's Attorney:  Date:'.
       ``(B) If a presumption of undue hardship has been 
     established with respect to such agreement, such 
     certification shall state that in the opinion of the 
     attorney, the debtor is able to make the payment.
       ``(C) In the case of a reaffirmation agreement under 
     subsection (m)(2), subparagraph (B) is not applicable.
       ``(6)(A) The statement in support of such agreement, which 
     the debtor shall sign and date prior to filing with the 
     court, shall consist of the following:
       `` `Part D: Debtor's Statement in Support of Reaffirmation 
     Agreement.
       `` `1. I believe this reaffirmation agreement will not 
     impose an undue hardship on my dependents or me. I can afford 
     to make the payments on the reaffirmed debt because my 
     monthly income (take home pay plus any other income received) 
     is $___, and my actual current monthly expenses including 
     monthly payments on post-bankruptcy debt and other 
     reaffirmation agreements total $___, leaving $___ to make the 
     required payments on this reaffirmed debt. I understand that 
     if my income less my monthly expenses does not leave enough 
     to make the payments, this reaffirmation agreement is 
     presumed to be an undue hardship on me and must be reviewed 
     by the court. However, this presumption may be overcome if I 
     explain to the satisfaction of the court how I can afford to 
     make the payments here: ___.
       `` `2. I received a copy of the Reaffirmation Disclosure 
     Statement in Part A and a completed and signed reaffirmation 
     agreement.'.
       ``(B) Where the debtor is represented by an attorney and is 
     reaffirming a debt owed to a creditor defined in section 
     19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of 
     support of the reaffirmation agreement, which the debtor 
     shall sign and date prior to filing with the court, shall 
     consist of the following:
       `` `I believe this reaffirmation agreement is in my 
     financial interest. I can afford to make the payments on the 
     reaffirmed debt. I received a copy of the Reaffirmation 
     Disclosure Statement in Part A and a completed and signed 
     reaffirmation agreement.'.
       ``(7) The motion that may be used if approval of such 
     agreement by the court is required in order for it to be 
     effective, shall be signed and dated by the movant and shall 
     consist of the following:
       `` `Part E: Motion for Court Approval (To be completed only 
     if the debtor is not represented by an attorney.). I (we), 
     the debtor(s), affirm the following to be true and correct:
       `` `I am not represented by an attorney in connection with 
     this reaffirmation agreement.
       `` `I believe this reaffirmation agreement is in my best 
     interest based on the income and expenses I have disclosed in 
     my Statement in Support of this reaffirmation agreement, and 
     because (provide any additional relevant reasons the court 
     should consider):
       `` `Therefore, I ask the court for an order approving this 
     reaffirmation agreement.'.
       ``(8) The court order, which may be used to approve such 
     agreement, shall consist of the following:
       `` `Court Order: The court grants the debtor's motion and 
     approves the reaffirmation agreement described above.'.
       ``(l) Notwithstanding any other provision of this title the 
     following shall apply:
       ``(1) A creditor may accept payments from a debtor before 
     and after the filing of an agreement of the kind specified in 
     subsection (c) with the court.
       ``(2) A creditor may accept payments from a debtor under 
     such agreement that the creditor believes in good faith to be 
     effective.
       ``(3) The requirements of subsections (c)(2) and (k) shall 
     be satisfied if disclosures required under those subsections 
     are given in good faith.
       ``(m)(1) Until 60 days after an agreement of the kind 
     specified in subsection (c) is filed with the court (or such 
     additional period as the court, after notice and a hearing 
     and for cause, orders before the expiration of such period), 
     it shall be presumed that such agreement is an undue hardship 
     on the debtor if the debtor's monthly income less the 
     debtor's monthly expenses as shown on the debtor's completed 
     and signed statement in support of such agreement required 
     under subsection (k)(6)(A) is less than the scheduled 
     payments on the reaffirmed debt. This presumption shall be 
     reviewed by the court. The presumption may be rebutted in 
     writing by the debtor if the statement includes an 
     explanation that identifies additional sources of funds to 
     make the payments as agreed upon under the terms of such 
     agreement. If the presumption is not rebutted to the 
     satisfaction of the court, the court may disapprove such 
     agreement. No agreement shall be disapproved without notice 
     and a hearing to the debtor and creditor, and such hearing 
     shall be concluded before the entry of the debtor's 
     discharge.
       ``(2) This subsection does not apply to reaffirmation 
     agreements where the creditor is a

[[Page 2908]]

     credit union, as defined in section 19(b)(1)(A)(iv) of the 
     Federal Reserve Act.''.
       (b) Law Enforcement.--
       (1) In general.--Chapter 9 of title 18, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 158. Designation of United States attorneys and agents 
       of the Federal Bureau of Investigation to address abusive 
       reaffirmations of debt and materially fraudulent statements 
       in bankruptcy schedules

       ``(a) In General.--The Attorney General of the United 
     States shall designate the individuals described in 
     subsection (b) to have primary responsibility in carrying out 
     enforcement activities in addressing violations of section 
     152 or 157 relating to abusive reaffirmations of debt. In 
     addition to addressing the violations referred to in the 
     preceding sentence, the individuals described under 
     subsection (b) shall address violations of section 152 or 157 
     relating to materially fraudulent statements in bankruptcy 
     schedules that are intentionally false or intentionally 
     misleading.
       ``(b) United States Attorneys and Agents of the Federal 
     Bureau of Investigation.--The individuals referred to in 
     subsection (a) are--
       ``(1) the United States attorney for each judicial district 
     of the United States; and
       ``(2) an agent of the Federal Bureau of Investigation for 
     each field office of the Federal Bureau of Investigation.
       ``(c) Bankruptcy Investigations.--Each United States 
     attorney designated under this section shall, in addition to 
     any other responsibilities, have primary responsibility for 
     carrying out the duties of a United States attorney under 
     section 3057.
       ``(d) Bankruptcy Procedures.--The bankruptcy courts shall 
     establish procedures for referring any case that may contain 
     a materially fraudulent statement in a bankruptcy schedule to 
     the individuals designated under this section.''.
       (2) Clerical amendment.--The table of sections for chapter 
     9 of title 18, United States Code, is amended by adding at 
     the end the following:

``158. Designation of United States attorneys and agents of the Federal 
              Bureau of Investigation to address abusive reaffirmations 
              of debt and materially fraudulent statements in 
              bankruptcy schedules.''.

     SEC. 204. PRESERVATION OF CLAIMS AND DEFENSES UPON SALE OF 
                   PREDATORY LOANS.

       Section 363 of title 11, United States Code, is amended--
       (1) by redesignating subsection (o) as subsection (p), and
       (2) by inserting after subsection (n) the following:
       ``(o) Notwithstanding subsection (f), if a person purchases 
     any interest in a consumer credit transaction that is subject 
     to the Truth in Lending Act or any interest in a consumer 
     credit contract (as defined in section 433.1 of title 16 of 
     the Code of Federal Regulations (January 1, 2004), as amended 
     from time to time), and if such interest is purchased through 
     a sale under this section, then such person shall remain 
     subject to all claims and defenses that are related to such 
     consumer credit transaction or such consumer credit contract, 
     to the same extent as such person would be subject to such 
     claims and defenses of the consumer had such interest been 
     purchased at a sale not under this section.''.

     SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION AGREEMENT 
                   PROCESS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the reaffirmation agreement process 
     that occurs under title 11 of the United States Code, to 
     determine the overall treatment of consumers within the 
     context of such process, and shall include in such study 
     consideration of--
       (1) the policies and activities of creditors with respect 
     to reaffirmation agreements; and
       (2) whether consumers are fully, fairly, and consistently 
     informed of their rights pursuant to such title.
       (b) Report to the Congress.--Not later than 18 months after 
     the date of the enactment of this Act, the Comptroller 
     General shall submit to the President pro tempore of the 
     Senate and the Speaker of the House of Representatives a 
     report on the results of the study conducted under subsection 
     (a), together with recommendations for legislation (if any) 
     to address any abusive or coercive tactics found in 
     connection with the reaffirmation agreement process that 
     occurs under title 11 of the United States Code.

                   Subtitle B--Priority Child Support

     SEC. 211. 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, on, or after the date of the order for relief 
     in a case under this title, including interest that accrues 
     on that debt as provided under applicable nonbankruptcy law 
     notwithstanding any other provision of this title, that is--
       ``(A) owed to or recoverable by--
       ``(i) a spouse, former spouse, or child of the debtor or 
     such child's parent, legal guardian, or responsible relative; 
     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 of the debtor or such 
     child's parent, without regard to whether such debt is 
     expressly so designated;
       ``(C) established or subject to establishment before, on, 
     or after the date of the order for relief in a case 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 of the debtor, or such child's parent, legal 
     guardian, or responsible relative for the purpose of 
     collecting the debt;''.

     SEC. 212. 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 so redesignated, by striking 
     ``First'' and inserting ``Second'';
       (4) in paragraph (3), as so redesignated, by striking 
     ``Second'' and inserting ``Third'';
       (5) in paragraph (4), as so redesignated--
       (A) by striking ``Third'' and inserting ``Fourth''; and
       (B) by striking the semicolon at the end and inserting a 
     period;
       (6) in paragraph (5), as so redesignated, by striking 
     ``Fourth'' and inserting ``Fifth'';
       (7) in paragraph (6), as so redesignated, by striking 
     ``Fifth'' and inserting ``Sixth'';
       (8) in paragraph (7), as so redesignated, by striking 
     ``Sixth'' and inserting ``Seventh''; and
       (9) by inserting before paragraph (2), as so redesignated, 
     the following:
       ``(1) First:
       ``(A) Allowed unsecured claims for domestic support 
     obligations that, as of the date of the filing of the 
     petition in a case under this title, are owed to or 
     recoverable by a spouse, former spouse, or child of the 
     debtor, or such child's parent, legal guardian, or 
     responsible relative, without regard to whether the claim is 
     filed by such person or is filed by a governmental unit on 
     behalf of such person, on the condition that funds received 
     under this paragraph by a governmental unit under this title 
     after the date of the filing of the petition shall be applied 
     and distributed in accordance with applicable nonbankruptcy 
     law.
       ``(B) Subject to claims under subparagraph (A), allowed 
     unsecured claims for domestic support obligations that, as of 
     the date of the filing of the petition, are assigned by a 
     spouse, former spouse, child of the debtor, or such child's 
     parent, legal guardian, or responsible relative to a 
     governmental unit (unless such obligation is assigned 
     voluntarily by the spouse, former spouse, child, parent, 
     legal guardian, or responsible relative of the child for the 
     purpose of collecting the debt) or are owed directly to or 
     recoverable by a governmental unit under applicable 
     nonbankruptcy law, on the condition that funds received under 
     this paragraph by a governmental unit under this title after 
     the date of the filing of the petition be applied and 
     distributed in accordance with applicable nonbankruptcy law.
       ``(C) If a trustee is appointed or elected under section 
     701, 702, 703, 1104, 1202, or 1302, the administrative 
     expenses of the trustee allowed under paragraphs (1)(A), (2), 
     and (6) of section 503(b) shall be paid before payment of 
     claims under subparagraphs (A) and (B), to the extent that 
     the trustee administers assets that are otherwise available 
     for the payment of such claims.''.

     SEC. 213. 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 by statute, to pay a domestic 
     support obligation, the debtor has paid all amounts payable 
     under such order or such statute for such obligation that 
     first become payable after the date of the filing of the 
     petition.'';
       (2) in section 1208(c)--
       (A) in paragraph (8), by striking ``or'' at the end;
       (B) in paragraph (9), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(10) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date of the 
     filing of the petition.'';
       (3) in section 1222(a)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:

[[Page 2909]]

       ``(4) notwithstanding any other provision of this section, 
     a plan may provide for less than full payment of all amounts 
     owed for a claim entitled to priority under section 
     507(a)(1)(B) only if the plan provides that all of the 
     debtor's projected disposable income for a 5-year period 
     beginning on the date that the first payment is due under the 
     plan will be applied to make payments under the plan.'';
       (4) in section 1222(b)--
       (A) in paragraph (10), by striking ``and'' at the end;
       (B) by redesignating paragraph (11) as paragraph (12); and
       (C) by inserting after paragraph (10) the following:
       ``(11) provide for the payment of interest accruing after 
     the date of the filing of the petition on unsecured claims 
     that are nondischargeable under section 1228(a), except that 
     such interest may be paid only to the extent that the debtor 
     has disposable income available to pay such interest after 
     making provision for full payment of all allowed claims; 
     and'';
       (5) in section 1225(a)--
       (A) in paragraph (5), by striking ``and'' at the end;
       (B) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(7) the debtor has paid all amounts that are required to 
     be paid under a domestic support obligation and that first 
     become payable after the date of the filing of the petition 
     if the debtor is required by a judicial or administrative 
     order, or by statute, to pay such domestic support 
     obligation.'';
       (6) in section 1228(a), in the matter preceding paragraph 
     (1), by inserting ``, and in the case of a debtor who is 
     required by a judicial or administrative order, or by 
     statute, to pay a domestic support obligation, after such 
     debtor certifies that all amounts payable under such order or 
     such statute that are due on or before the date of the 
     certification (including amounts due before the petition was 
     filed, but only to the extent provided for by the plan) have 
     been paid'' after ``completion by the debtor of all payments 
     under the plan'';
       (7) in section 1307(c)--
       (A) in paragraph (9), by striking ``or'' at the end;
       (B) in paragraph (10), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following:
       ``(11) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date of the 
     filing of the petition.'';
       (8) in section 1322(a)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) notwithstanding any other provision of this section, 
     a plan may provide for less than full payment of all amounts 
     owed for a claim entitled to priority under section 
     507(a)(1)(B) only if the plan provides that all of the 
     debtor's projected disposable income for a 5-year period 
     beginning on the date that the first payment is due under the 
     plan will be applied to make payments under the plan.'';
       (9) in section 1322(b)--
       (A) in paragraph (9), by striking ``; and'' and inserting a 
     semicolon;
       (B) by redesignating paragraph (10) as paragraph (11); and
       (C) inserting after paragraph (9) the following:
       ``(10) provide for the payment of interest accruing after 
     the date of the filing of the petition on unsecured claims 
     that are nondischargeable under section 1328(a), except that 
     such interest may be paid only to the extent that the debtor 
     has disposable income available to pay such interest after 
     making provision for full payment of all allowed claims; 
     and'';
       (10) in section 1325(a), as amended by section 102, by 
     inserting after paragraph (7) the following:
       ``(8) the debtor has paid all amounts that are required to 
     be paid under a domestic support obligation and that first 
     become payable after the date of the filing of the petition 
     if the debtor is required by a judicial or administrative 
     order, or by statute, to pay such domestic support 
     obligation; and'';
       (11) in section 1328(a), in the matter preceding paragraph 
     (1), by inserting ``, and in the case of a debtor who is 
     required by a judicial or administrative order, or by 
     statute, to pay a domestic support obligation, after such 
     debtor certifies that all amounts payable under such order or 
     such statute that are due on or before the date of the 
     certification (including amounts due before the petition was 
     filed, but only to the extent provided for by the plan) have 
     been paid'' after ``completion by the debtor of all payments 
     under the plan''.

     SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT 
                   OBLIGATION PROCEEDINGS.

       Section 362(b) of title 11, United States Code, is amended 
     by striking paragraph (2) and inserting the following:
       ``(2) under subsection (a)--
       ``(A) of the commencement or continuation of a civil action 
     or proceeding--
       ``(i) for the establishment of paternity;
       ``(ii) for the establishment or modification of an order 
     for domestic support obligations;
       ``(iii) concerning child custody or visitation;
       ``(iv) for the dissolution of a marriage, except to the 
     extent that such proceeding seeks to determine the division 
     of property that is property of the estate; or
       ``(v) regarding domestic violence;
       ``(B) of the collection of a domestic support obligation 
     from property that is not property of the estate;
       ``(C) with respect to the withholding of income that is 
     property of the estate or property of the debtor for payment 
     of a domestic support obligation under a judicial or 
     administrative order or a statute;
       ``(D) of the withholding, suspension, or restriction of a 
     driver's license, a professional or occupational license, or 
     a recreational license, under State law, as specified in 
     section 466(a)(16) of the Social Security Act;
       ``(E) of the reporting of overdue support owed by a parent 
     to any consumer reporting agency as specified in section 
     466(a)(7) of the Social Security Act;
       ``(F) of the interception of a tax refund, as specified in 
     sections 464 and 466(a)(3) of the Social Security Act or 
     under an analogous State law; or
       ``(G) of the enforcement of a medical obligation, as 
     specified under title IV of the Social Security Act;''.

     SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 
                   MAINTENANCE, AND SUPPORT.

       Section 523 of title 11, United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (5) and inserting the following:
       ``(5) for a domestic support obligation;''; and
       (B) by striking paragraph (18);
       (2) in subsection (c), by striking ``(6), or (15)'' each 
     place it appears and inserting ``or (6)''; and
       (3) in paragraph (15), as added by Public Law 103-394 (108 
     Stat. 4133)--
       (A) by inserting ``to a spouse, former spouse, or child of 
     the debtor and'' before ``not of the kind'';
       (B) by inserting ``or'' after ``court of record,''; and
       (C) by striking ``unless--'' and all that follows through 
     the end of the paragraph and inserting a semicolon.

     SEC. 216. 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));'';
       (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''; and
       (3) in subsection (g)(2), by striking ``subsection (f)(2)'' 
     and inserting ``subsection (f)(1)(B)''.

     SEC. 217. 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;''.

     SEC. 218. DISPOSABLE INCOME DEFINED.

       Section 1225(b)(2)(A) of title 11, United States Code, is 
     amended by inserting ``or for a domestic support obligation 
     that first becomes payable after the date of the filing of 
     the petition'' after ``dependent of the debtor''.

     SEC. 219. 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) in subsection (a)--
       (A) in paragraph (8), by striking ``and'' at the end;
       (B) in paragraph (9), by striking the period and inserting 
     a semicolon; and
       (C) by adding at the end the following:
       ``(10) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c); and''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (a)(10) to which 
     subsection (a)(10) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (a)(10) of such claim and of the 
     right of such holder to use the services of the State child 
     support enforcement agency established under sections 464 and 
     466 of the Social Security Act for the State in which such 
     holder resides, for assistance in collecting child support 
     during and after the case under this title;
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency; and
       ``(iii) include in the notice provided under clause (i) an 
     explanation of the rights of such holder to payment of such 
     claim under this chapter;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and

[[Page 2910]]

       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 727, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (4), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (a)(10) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) 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 by reason of making such 
     disclosure.''.
       (b) Duties of Trustee Under Chapter 11.--Section 1106 of 
     title 11, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (6), by striking ``and'' at the end;
       (B) in paragraph (7), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(8) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (a)(8) to which 
     subsection (a)(8) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (a)(8) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice required by clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice required by clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1141, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (4), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (a)(8) or the State child enforcement support agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) 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 by reason of making such 
     disclosure.''.
       (c) Duties of Trustee Under Chapter 12.--Section 1202 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 the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (b)(6) to which 
     subsection (b)(6) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (b)(6) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1228, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (4), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (b)(6) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) 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 by reason of making that 
     disclosure.''.
       (d) 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 the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (d).''; and
       (2) by adding at the end the following:
       ``(d)(1) In a case described in subsection (b)(6) to which 
     subsection (b)(6) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (b)(6) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1328, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2) or (4) of 
     section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (b)(6) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) 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 by reason of making that 
     disclosure.''.

     SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS 
                   AND LOANS.

       Section 523(a) of title 11, United States Code, is amended 
     by striking paragraph (8) and inserting the following:
       ``(8) unless excepting such debt from discharge under this 
     paragraph would impose an undue hardship on the debtor and 
     the debtor's dependents, for--
       ``(A)(i) 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
       ``(ii) an obligation to repay funds received as an 
     educational benefit, scholarship, or stipend; or
       ``(B) any other educational loan that is a qualified 
     education loan, as defined in section 221(d)(1) of the 
     Internal Revenue Code of 1986, incurred by a debtor who is an 
     individual;''.

                 Subtitle C--Other Consumer Protections

     SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANKRUPTCY 
                   FILINGS.

       Section 110 of title 11, United States Code, is amended--
       (1) in subsection (a)(1), by striking ``or an employee of 
     an attorney'' and inserting ``for the debtor or an employee 
     of such attorney

[[Page 2911]]

     under the direct supervision of such attorney'';
       (2) in subsection (b)--
       (A) in paragraph (1), by adding at the end the following: 
     ``If a bankruptcy petition preparer is not an individual, 
     then an officer, principal, responsible person, or partner of 
     the bankruptcy petition preparer shall be required to--
       ``(A) sign the document for filing; and
       ``(B) print on the document the name and address of that 
     officer, principal, responsible person, or partner.''; and
       (B) by striking paragraph (2) and inserting the following:
       ``(2)(A) Before preparing any document for filing or 
     accepting any fees from a debtor, the bankruptcy petition 
     preparer shall provide to the debtor a written notice which 
     shall be on an official form prescribed by the Judicial 
     Conference of the United States in accordance with rule 9009 
     of the Federal Rules of Bankruptcy Procedure.
       ``(B) The notice under subparagraph (A)--
       ``(i) shall inform the debtor in simple language that a 
     bankruptcy petition preparer is not an attorney and may not 
     practice law or give legal advice;
       ``(ii) may contain a description of examples of legal 
     advice that a bankruptcy petition preparer is not authorized 
     to give, in addition to any advice that the preparer may not 
     give by reason of subsection (e)(2); and
       ``(iii) shall--
       ``(I) be signed by the debtor and, under penalty of 
     perjury, by the bankruptcy petition preparer; and
       ``(II) be filed with any document for filing.'';
       (3) in subsection (c)--
       (A) in paragraph (2)--
       (i) by striking ``(2) For purposes'' and inserting ``(2)(A) 
     Subject to subparagraph (B), for purposes''; and
       (ii) by adding at the end the following:
       ``(B) If a bankruptcy petition preparer is not an 
     individual, the identifying number of the bankruptcy petition 
     preparer shall be the Social Security account number of the 
     officer, principal, responsible person, or partner of the 
     bankruptcy petition preparer.''; and
       (B) by striking paragraph (3);
       (4) in subsection (d)--
       (A) by striking ``(d)(1)'' and inserting ``(d)''; and
       (B) by striking paragraph (2);
       (5) in subsection (e)--
       (A) by striking paragraph (2); and
       (B) by adding at the end the following:
       ``(2)(A) A bankruptcy petition preparer may not offer a 
     potential bankruptcy debtor any legal advice, including any 
     legal advice described in subparagraph (B).
       ``(B) The legal advice referred to in subparagraph (A) 
     includes advising the debtor--
       ``(i) whether--
       ``(I) to file a petition under this title; or
       ``(II) commencing a case under chapter 7, 11, 12, or 13 is 
     appropriate;
       ``(ii) whether the debtor's debts will be discharged in a 
     case under this title;
       ``(iii) whether the debtor will be able to retain the 
     debtor's home, car, or other property after commencing a case 
     under this title;
       ``(iv) concerning--
       ``(I) the tax consequences of a case brought under this 
     title; or
       ``(II) the dischargeability of tax claims;
       ``(v) whether the debtor may or should promise to repay 
     debts to a creditor or enter into a reaffirmation agreement 
     with a creditor to reaffirm a debt;
       ``(vi) concerning how to characterize the nature of the 
     debtor's interests in property or the debtor's debts; or
       ``(vii) concerning bankruptcy procedures and rights.'';
       (6) in subsection (f)--
       (A) by striking ``(f)(1)'' and inserting ``(f)''; and
       (B) by striking paragraph (2);
       (7) in subsection (g)--
       (A) by striking ``(g)(1)'' and inserting ``(g)''; and
       (B) by striking paragraph (2);
       (8) in subsection (h)--
       (A) by redesignating paragraphs (1) through (4) as 
     paragraphs (2) through (5), respectively;
       (B) by inserting before paragraph (2), as so redesignated, 
     the following:
       ``(1) The Supreme Court may promulgate rules under section 
     2075 of title 28, or the Judicial Conference of the United 
     States may prescribe guidelines, for setting a maximum 
     allowable fee chargeable by a bankruptcy petition preparer. A 
     bankruptcy petition preparer shall notify the debtor of any 
     such maximum amount before preparing any document for filing 
     for a debtor or accepting any fee from the debtor.'';
       (C) in paragraph (2), as so redesignated--
       (i) by striking ``Within 10 days after the date of the 
     filing of a petition, a bankruptcy petition preparer shall 
     file a'' and inserting ``A'';
       (ii) by inserting ``by the bankruptcy petition preparer 
     shall be filed together with the petition,'' after 
     ``perjury''; and
       (iii) by adding at the end the following: ``If rules or 
     guidelines setting a maximum fee for services have been 
     promulgated or prescribed under paragraph (1), the 
     declaration under this paragraph shall include a 
     certification that the bankruptcy petition preparer complied 
     with the notification requirement under paragraph (1).'';
       (D) by striking paragraph (3), as so redesignated, and 
     inserting the following:
       ``(3)(A) The court shall disallow and order the immediate 
     turnover to the bankruptcy trustee any fee referred to in 
     paragraph (2) found to be in excess of the value of any 
     services--
       ``(i) rendered by the bankruptcy petition preparer during 
     the 12-month period immediately preceding the date of the 
     filing of the petition; or
       ``(ii) found to be in violation of any rule or guideline 
     promulgated or prescribed under paragraph (1).
       ``(B) All fees charged by a bankruptcy petition preparer 
     may be forfeited in any case in which the bankruptcy petition 
     preparer fails to comply with this subsection or subsection 
     (b), (c), (d), (e), (f), or (g).
       ``(C) An individual may exempt any funds recovered under 
     this paragraph under section 522(b).''; and
       (E) in paragraph (4), as so redesignated, by striking ``or 
     the United States trustee'' and inserting ``the United States 
     trustee (or the bankruptcy administrator, if any) or the 
     court, on the initiative of the court,'';
       (9) in subsection (i)(1), by striking the matter preceding 
     subparagraph (A) and inserting the following:
       ``(i)(1) If a bankruptcy petition preparer violates this 
     section or commits any act that the court finds to be 
     fraudulent, unfair, or deceptive, on the motion of the 
     debtor, trustee, United States trustee (or the bankruptcy 
     administrator, if any), and after notice and a hearing, the 
     court shall order the bankruptcy petition preparer to pay to 
     the debtor--'';
       (10) in subsection (j)--
       (A) in paragraph (2)--
       (i) in subparagraph (A)(i)(I), by striking ``a violation of 
     which subjects a person to criminal penalty'';
       (ii) in subparagraph (B)--

       (I) by striking ``or has not paid a penalty'' and inserting 
     ``has not paid a penalty''; and
       (II) by inserting ``or failed to disgorge all fees ordered 
     by the court'' after ``a penalty imposed under this 
     section,'';

       (B) by redesignating paragraph (3) as paragraph (4); and
       (C) by inserting after paragraph (2) the following:
       ``(3) The court, as part of its contempt power, may enjoin 
     a bankruptcy petition preparer that has failed to comply with 
     a previous order issued under this section. The injunction 
     under this paragraph may be issued on the motion of the 
     court, the trustee, or the United States trustee (or the 
     bankruptcy administrator, if any).''; and
       (11) by adding at the end the following:
       ``(l)(1) A bankruptcy petition preparer who fails to comply 
     with any provision of subsection (b), (c), (d), (e), (f), 
     (g), or (h) may be fined not more than $500 for each such 
     failure.
       ``(2) The court shall triple the amount of a fine assessed 
     under paragraph (1) in any case in which the court finds that 
     a bankruptcy petition preparer--
       ``(A) advised the debtor to exclude assets or income that 
     should have been included on applicable schedules;
       ``(B) advised the debtor to use a false Social Security 
     account number;
       ``(C) failed to inform the debtor that the debtor was 
     filing for relief under this title; or
       ``(D) prepared a document for filing in a manner that 
     failed to disclose the identity of the bankruptcy petition 
     preparer.
       ``(3) A debtor, trustee, creditor, or United States trustee 
     (or the bankruptcy administrator, if any) may file a motion 
     for an order imposing a fine on the bankruptcy petition 
     preparer for any violation of this section.
       ``(4)(A) Fines imposed under this subsection in judicial 
     districts served by United States trustees shall be paid to 
     the United States trustee, who shall deposit an amount equal 
     to such fines in a special account of the United States 
     Trustee System Fund referred to in section 586(e)(2) of title 
     28. Amounts deposited under this subparagraph shall be 
     available to fund the enforcement of this section on a 
     national basis.
       ``(B) Fines imposed under this subsection in judicial 
     districts served by bankruptcy administrators shall be 
     deposited as offsetting receipts to the fund established 
     under section 1931 of title 28, and shall remain available 
     until expended to reimburse any appropriation for the amount 
     paid out of such appropriation for expenses of the operation 
     and maintenance of the courts of the United States.''.

     SEC. 222. SENSE OF CONGRESS.

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

     SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES 
                   CODE.

       Section 507(a) of title 11, United States Code, as amended 
     by section 212, is amended by inserting after paragraph (9) 
     the following:
       ``(10) Tenth, allowed claims for death or personal injury 
     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.''.

[[Page 2912]]



     SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

       (a) In General.--Section 522 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (2)--
       (i) in subparagraph (A), by striking ``and'' at the end;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``; and'';
       (iii) by adding at the end the following:
       ``(C) 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.''; and
       (iv) by striking ``(2)(A) any property'' and inserting:
       ``(3) Property listed in this paragraph is--
       ``(A) any property'';
       (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) by striking ``(b) Notwithstanding'' and inserting 
     ``(b)(1) Notwithstanding'';
       (D) by striking ``paragraph (2)'' each place it appears and 
     inserting ``paragraph (3)'';
       (E) by striking ``paragraph (1)'' each place it appears and 
     inserting ``paragraph (2)'';
       (F) by striking ``Such property is--''; and
       (G) by adding at the end the following:
       ``(4) For purposes of paragraph (3)(C) and subsection 
     (d)(12), the following shall apply:
       ``(A) If the retirement funds are in a retirement fund that 
     has received a favorable determination under section 7805 of 
     the Internal Revenue Code of 1986, and that determination is 
     in effect as of the date of the filing of the petition in a 
     case under 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 under 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)(I) the retirement fund is in substantial compliance 
     with the applicable requirements of the Internal Revenue Code 
     of 1986; or
       ``(II) the retirement fund fails to be in substantial 
     compliance with the applicable requirements of the Internal 
     Revenue Code of 1986 and the debtor is not materially 
     responsible for that failure.
       ``(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, under section 401(a)(31) of the Internal Revenue 
     Code of 1986, or otherwise, shall not cease to qualify for 
     exemption under paragraph (3)(C) or subsection (d)(12) by 
     reason of such 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)(C) or subsection (d)(12) by reason of such 
     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 such 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, is amended--
       (1) in paragraph (17), by striking ``or'' at the end;
       (2) in paragraph (18), by striking the period and inserting 
     a semicolon; and
       (3) by inserting after paragraph (18) the following:
       ``(19) under subsection (a), of withholding of income from 
     a debtor's wages and collection of amounts withheld, under 
     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(c) 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 
     under 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) a loan from a thrift savings plan permitted under 
     subchapter III of chapter 84 of title 5, that satisfies the 
     requirements of section 8433(g) of such title;

     but nothing in this paragraph 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, as amended by section 215, is amended by 
     inserting after paragraph (17) the following:
       ``(18) 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, 
     under--
       ``(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 a thrift savings plan permitted under 
     subchapter III of chapter 84 of title 5, that satisfies the 
     requirements of section 8433(g) of such title;

     but nothing in this paragraph 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; or''.
       (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)(19) and any amounts required to 
     repay such loan shall not constitute `disposable income' 
     under section 1325.''.
       (e) Asset Limitation.--
       (1) Limitation.--Section 522 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(n) For assets in individual retirement accounts 
     described in section 408 or 408A of the Internal Revenue Code 
     of 1986, other than a simplified employee pension under 
     section 408(k) of such Code or a simple retirement account 
     under section 408(p) of such Code, the aggregate value of 
     such assets exempted under this section, without regard to 
     amounts attributable to rollover contributions under section 
     402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the 
     Internal Revenue Code of 1986, and earnings thereon, shall 
     not exceed $1,000,000 in a case filed by a debtor who is an 
     individual, except that such amount may be increased if the 
     interests of justice so require.''.
       (2) Adjustment of dollar amounts.--Paragraphs (1) and (2) 
     of section 104(b) of title 11, United States Code, are 
     amended by inserting ``522(n),'' after ``522(d),''.

     SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANKRUPTCY.

       (a) Exclusions.--Section 541 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (4), by striking ``or'' at the end;
       (B) by redesignating paragraph (5) as paragraph (9); and
       (C) by inserting after paragraph (4) the following:
       ``(5) funds placed in an education individual retirement 
     account (as defined in section 530(b)(1) of the Internal 
     Revenue Code of 1986) not later than 365 days before the date 
     of the filing of the petition in a case under this title, 
     but--
       ``(A) only if the designated beneficiary of such account 
     was a child, stepchild, grandchild, or stepgrandchild of the 
     debtor for the taxable year for which funds were placed in 
     such account;
       ``(B) only to the extent that 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
       ``(C) in the case of funds placed in all such accounts 
     having the same designated beneficiary not earlier than 720 
     days nor later than 365 days before such date, only so much 
     of such funds as does not exceed $5,000;
       ``(6) funds used to purchase a tuition credit or 
     certificate or contributed to an account in accordance with 
     section 529(b)(1)(A) of the Internal Revenue Code of 1986 
     under a qualified State tuition program (as defined in 
     section 529(b)(1) of such Code) not later than 365 days 
     before the date of the filing of the petition in a case under 
     this title, but--
       ``(A) only if the designated beneficiary of the amounts 
     paid or contributed to such tuition program was a child, 
     stepchild, grandchild, or stepgrandchild of the debtor for 
     the taxable year for which funds were paid or contributed;
       ``(B) with respect to the aggregate amount paid or 
     contributed to such program having the same designated 
     beneficiary, only so much of such amount as does not exceed 
     the total contributions permitted under section 529(b)(7) of 
     such Code with respect to such beneficiary, as adjusted 
     beginning on the date of the filing of the petition in a case 
     under this title by the annual increase or decrease (rounded 
     to the nearest tenth of 1 percent) in the education 
     expenditure category of the Consumer Price Index prepared by 
     the Department of Labor; and
       ``(C) in the case of funds paid or contributed to such 
     program having the same designated beneficiary not earlier 
     than 720 days nor later than 365 days before such date, only 
     so much of such funds as does not exceed $5,000;''; and

[[Page 2913]]

       (2) by adding at the end the following:
       ``(e) In determining whether any of the relationships 
     specified in paragraph (5)(A) or (6)(A) of subsection (b) 
     exists, a legally adopted child of an individual (and a child 
     who is a member of an individual's household, if placed with 
     such individual by an authorized placement agency for legal 
     adoption by such individual), or a foster child of an 
     individual (if such child has as the child's principal place 
     of abode the home of the debtor and is a member of the 
     debtor's household) shall be treated as a child of such 
     individual by blood.''.
       (b) Debtor's Duties.--Section 521 of title 11, United 
     States Code, as amended by section 106, is amended by adding 
     at the end the following:
       ``(c) In addition to meeting the requirements under 
     subsection (a), a debtor shall file with the court a record 
     of any interest that a debtor has in an education individual 
     retirement account (as defined in section 530(b)(1) of the 
     Internal Revenue Code of 1986) or under a qualified State 
     tuition program (as defined in section 529(b)(1) of such 
     Code).''.

     SEC. 226. 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 the value of whose 
     nonexempt property is 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 case or proceeding on 
     behalf of another or providing legal representation with 
     respect to a case or proceeding under this title;''; and
       (3) by inserting after paragraph (12) the following:
       ``(12A) `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 under section 110, but does 
     not include--
       ``(A) any person who is an officer, director, employee, or 
     agent of a person who provides such assistance or of the 
     bankruptcy petition preparer;
       ``(B) a nonprofit organization that is exempt from taxation 
     under section 501(c)(3) of the Internal Revenue Code of 1986;
       ``(C) a creditor of such assisted person, to the extent 
     that the creditor is assisting such assisted person to 
     restructure any debt owed by such assisted person to the 
     creditor;
       ``(D) a 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 depository institution or 
     credit union; or
       ``(E) an author, publisher, distributor, or seller of works 
     subject to copyright protection under title 17, when acting 
     in such capacity.''.
       (b) Conforming Amendment.--Section 104(b) of title 11, 
     United States Code, is amended by inserting ``101(3),'' after 
     ``sections'' each place it appears.

     SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

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

     ``Sec. 526. Restrictions on debt relief agencies

       ``(a) A debt relief agency shall not--
       ``(1) fail to perform any service that such agency informed 
     an assisted person or prospective assisted person it would 
     provide in connection with a case or proceeding under this 
     title;
       ``(2) make any statement, or counsel or advise any assisted 
     person or prospective assisted person to make a statement in 
     a document filed in a case or proceeding under this title, 
     that is untrue and misleading, or that upon the exercise of 
     reasonable care, should have been known by such agency to be 
     untrue or misleading;
       ``(3) misrepresent to any assisted person or prospective 
     assisted person, directly or indirectly, affirmatively or by 
     material omission, with respect to--
       ``(A) the services that such agency will provide to such 
     person; or
       ``(B) the benefits and risks that may result if such person 
     becomes a debtor in a case under this title; or
       ``(4) advise an assisted person or prospective assisted 
     person to incur more debt in contemplation of such person 
     filing a case under this title or 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 case under this title.
       ``(b) Any waiver by any assisted person of any protection 
     or right provided 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)(1) Any contract for bankruptcy assistance between a 
     debt relief agency and an assisted person that does not 
     comply with the material requirements of this section, 
     section 527, or section 528 shall be void and may not be 
     enforced by any Federal or State court or by any other 
     person, other than such assisted 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 that such 
     debt relief agency has received, for actual damages, and for 
     reasonable attorneys' fees and costs if such agency is found, 
     after notice and a hearing, to have--
       ``(A) intentionally or negligently failed to comply with 
     any provision of this section, section 527, or section 528 
     with respect to a case or proceeding under this title for 
     such assisted person;
       ``(B) provided bankruptcy assistance to an assisted person 
     in a case or proceeding under this title that is dismissed or 
     converted to a case under another chapter of this title 
     because of such agency's intentional or negligent failure to 
     file any required document including those specified in 
     section 521; or
       ``(C) intentionally or negligently disregarded the material 
     requirements of this title or the Federal Rules of Bankruptcy 
     Procedure applicable to such 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 attorneys' fees as determined by the 
     court.
       ``(4) The district courts of the United States for 
     districts 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.
       ``(d) No provision of this section, section 527, or section 
     528 shall--
       ``(1) annul, alter, affect, or exempt any person subject to 
     such 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; 
     or
       ``(2) be deemed to limit or curtail the authority or 
     ability--
       ``(A) of a State or subdivision or instrumentality thereof, 
     to determine and enforce qualifications for the practice of 
     law under the laws of that State; or
       ``(B) of a Federal court to determine and enforce the 
     qualifications for the practice of law before that court.''.
       (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 525, the 
     following:

``526. Restrictions on debt relief agencies.''.

     SEC. 228. DISCLOSURES.

       (a) Disclosures.--Subchapter II of chapter 5 of title 11, 
     United States Code, as amended by section 227, 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--
       ``(1) the written notice required under section 342(b)(1); 
     and
       ``(2) to the extent not covered in the written notice 
     described in paragraph (1), and not later than 3 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 that--
       ``(A) all information that the assisted person is required 
     to provide with a petition and thereafter during a case under 
     this title is required to be complete, accurate, and 
     truthful;
       ``(B) all assets and all liabilities are required to 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 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 case

[[Page 2914]]

     under chapter 13 of this title, disposable income (determined 
     in accordance with section 707(b)(2)), are required to be 
     stated after reasonable inquiry; and
       ``(D) information that 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 case under this title or other sanction, including a 
     criminal sanction.
       ``(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) 
     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 available under 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. 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 3 to 5 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 should 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.
       ``(d) A debt relief agency shall maintain a copy of the 
     notices required under subsection (a) of this section for 2 
     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 227, is amended by inserting after the item relating 
     to section 526 the following:

``527. Disclosures.''.

     SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.

       (a) Enforcement.--Subchapter II of chapter 5 of title 11, 
     United States Code, as amended by sections 227 and 228, is 
     amended by adding at the end the following:

     ``Sec. 528. Requirements for debt relief agencies

       ``(a) A debt relief agency shall--
       ``(1) not later than 5 business days after the first date 
     on which such 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 such assisted person that explains 
     clearly and conspicuously--
       ``(A) the services such agency will provide to such 
     assisted person; and
       ``(B) the fees or charges for such services, and the terms 
     of payment;
       ``(2) provide the assisted person with a copy of the fully 
     executed and completed contract;
       ``(3) clearly and conspicuously 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 bankruptcy relief 
     under this title; and
       ``(4) clearly and conspicuously use the following statement 
     in such advertisement: `We are a debt relief agency. We help 
     people file for bankruptcy relief under the Bankruptcy Code.' 
     or a substantially similar statement.
       ``(b)(1) An advertisement of bankruptcy assistance services 
     or of the benefits of bankruptcy directed to the general 
     public includes--
       ``(A) descriptions of bankruptcy assistance in connection 
     with a chapter 13 plan whether or not chapter 13 is 
     specifically mentioned in such advertisement; and
       ``(B) statements such as `federally supervised repayment 
     plan' or `Federal debt restructuring help' or other similar 
     statements that could lead a reasonable consumer to believe 
     that debt counseling was being offered when in fact the 
     services were directed to providing bankruptcy assistance 
     with a chapter 13 plan or other form of bankruptcy relief 
     under this title.
       ``(2) An advertisement, directed to the general public, 
     indicating that the debt relief agency provides assistance 
     with respect to credit defaults, mortgage foreclosures, 
     eviction proceedings, excessive debt, debt collection 
     pressure, or inability to pay any consumer debt shall--
       ``(A) disclose clearly and conspicuously in such 
     advertisement that the assistance may involve bankruptcy 
     relief under this title; and
       ``(B) include the following statement: `We are a debt 
     relief agency. We help people file for bankruptcy 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 
     section 227 and 228, is amended by inserting after the item 
     relating to section 527, the following:

``528. Requirements for debt relief agencies.''.

     SEC. 230. GAO STUDY.

       (a) Study.--Not later than 270 days after the date of 
     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, United States Code, or the bankruptcy courts, to 
     provide to the Office of Child Support Enforcement promptly 
     after the commencement of cases by debtors who are 
     individuals under such title, the names and social security 
     account 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 
     enactment of this Act, the Comptroller General shall submit 
     to the President pro tempore of the Senate and the Speaker of 
     the House of Representatives a report containing the results 
     of the study required by subsection (a).

     SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE INFORMATION.

       (a) Limitation.--Section 363(b)(1) of title 11, United 
     States Code, is amended by striking the period at the end and 
     inserting the following:

     ``, except that if the debtor in connection with offering a 
     product or a service discloses to an individual a policy 
     prohibiting the transfer of personally identifiable 
     information about individuals to persons that are not 
     affiliated with the debtor and if such policy is in effect on 
     the date of the commencement of the case, then the trustee 
     may not sell or lease personally identifiable information to 
     any person unless--
       ``(A) such sale or such lease is consistent with such 
     policy; or
       ``(B) after appointment of a consumer privacy ombudsman in 
     accordance with section 332, and after notice and a hearing, 
     the court approves such sale or such lease--
       ``(i) giving due consideration to the facts, circumstances, 
     and conditions of such sale or such lease; and
       ``(ii) finding that no showing was made that such sale or 
     such lease would violate applicable nonbankruptcy law.''.

[[Page 2915]]

       (b) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (41) the 
     following:
       ``(41A) `personally identifiable information' means--
       ``(A) if provided by an individual to the debtor in 
     connection with obtaining a product or a service from the 
     debtor primarily for personal, family, or household 
     purposes--
       ``(i) the first name (or initial) and last name of such 
     individual, whether given at birth or time of adoption, or 
     resulting from a lawful change of name;
       ``(ii) the geographical address of a physical place of 
     residence of such individual;
       ``(iii) an electronic address (including an e-mail address) 
     of such individual;
       ``(iv) a telephone number dedicated to contacting such 
     individual at such physical place of residence;
       ``(v) a social security account number issued to such 
     individual; or
       ``(vi) the account number of a credit card issued to such 
     individual; or
       ``(B) if identified in connection with 1 or more of the 
     items of information specified in subparagraph (A)--
       ``(i) a birth date, the number of a certificate of birth or 
     adoption, or a place of birth; or
       ``(ii) any other information concerning an identified 
     individual that, if disclosed, will result in contacting or 
     identifying such individual physically or electronically;''.

     SEC. 232. CONSUMER PRIVACY OMBUDSMAN.

       (a) Consumer Privacy Ombudsman.--Title 11 of the United 
     States Code is amended by inserting after section 331 the 
     following:

     ``Sec. 332. Consumer privacy ombudsman

       ``(a) If a hearing is required under section 363(b)(1)(B), 
     the court shall order the United States trustee to appoint, 
     not later than 5 days before the commencement of the hearing, 
     1 disinterested person (other than the United States trustee) 
     to serve as the consumer privacy ombudsman in the case and 
     shall require that notice of such hearing be timely given to 
     such ombudsman.
       ``(b) The consumer privacy ombudsman may appear and be 
     heard at such hearing and shall provide to the court 
     information to assist the court in its consideration of the 
     facts, circumstances, and conditions of the proposed sale or 
     lease of personally identifiable information under section 
     363(b)(1)(B). Such information may include presentation of--
       ``(1) the debtor's privacy policy;
       ``(2) the potential losses or gains of privacy to consumers 
     if such sale or such lease is approved by the court;
       ``(3) the potential costs or benefits to consumers if such 
     sale or such lease is approved by the court; and
       ``(4) the potential alternatives that would mitigate 
     potential privacy losses or potential costs to consumers.
       ``(c) A consumer privacy ombudsman shall not disclose any 
     personally identifiable information obtained by the ombudsman 
     under this title.''.
       (b) Compensation of Consumer Privacy Ombudsman.--Section 
     330(a)(1) of title 11, United States Code, is amended in the 
     matter preceding subparagraph (A), by inserting ``a consumer 
     privacy ombudsman appointed under section 332,'' before ``an 
     examiner''.
       (c) Conforming Amendment.--The table of sections for 
     subchapter II of chapter 3 of title 11, United States Code, 
     is amended by adding at the end the following:

``332. Consumer privacy ombudsman.''.

     SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF MINOR 
                   CHILDREN.

       (a) Prohibition.--Title 11 of the United States Code, as 
     amended by section 106, is amended by inserting after section 
     111 the following:

     ``Sec. 112. Prohibition on disclosure of name of minor 
       children

       ``The debtor may be required to provide information 
     regarding a minor child involved in matters under this title 
     but may not be required to disclose in the public records in 
     the case the name of such minor child. The debtor may be 
     required to disclose the name of such minor child in a 
     nonpublic record that is maintained by the court and made 
     available by the court for examination by the United States 
     trustee, the trustee, and the auditor (if any) serving under 
     section 586(f) of title 28, in the case. The court, the 
     United States trustee, the trustee, and such auditor shall 
     not disclose the name of such minor child maintained in such 
     nonpublic record.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     1 of title 11, United States Code, as amended by section 106, 
     is amended by inserting after the item relating to section 
     111 the following:

``112. Prohibition on disclosure of name of minor children.''.
       (c) Conforming Amendment.--Section 107(a) of title 11, 
     United States Code, is amended by inserting ``and subject to 
     section 112'' after ``section''.

               TITLE III --DISCOURAGING BANKRUPTCY ABUSE

     SEC. 301. TECHNICAL AMENDMENTS.

       Section 523(a)(17) of title 11, United States Code, is 
     amended--
       (1) by striking ``by a court'' and inserting ``on a 
     prisoner by any court'';
       (2) by striking ``section 1915(b) or (f)'' and inserting 
     ``subsection (b) or (f)(2) of section 1915''; and
       (3) by inserting ``(or a similar non-Federal law)'' after 
     ``title 28'' each place it appears.

     SEC. 302. 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:
       ``(3) if a single or joint case is filed by or against 
     debtor who is an individual in a case under chapter 7, 11, or 
     13, and if a single or joint case of the debtor was pending 
     within the preceding 1-year period but was dismissed, other 
     than a case refiled under a chapter other than chapter 7 
     after dismissal under section 707(b)--
       ``(A) 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 shall terminate with 
     respect to the debtor on the 30th day after the filing of the 
     later case;
       ``(B) on the motion of 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; 
     and
       ``(C) for purposes of subparagraph (B), a case is 
     presumptively filed not in good faith (but such presumption 
     may be rebutted by clear and convincing evidence to the 
     contrary)--
       ``(i) as to all creditors, if--

       ``(I) more than 1 previous case under any of chapters 7, 
     11, and 13 in which the individual was a debtor was pending 
     within the preceding 1-year period;
       ``(II) a previous case under any of chapters 7, 11, and 13 
     in which the individual was a debtor was dismissed within 
     such 1-year period, after the debtor failed to--

       ``(aa) 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 a 
     substantial excuse unless the dismissal was caused by the 
     negligence of the debtor's attorney);
       ``(bb) provide adequate protection as ordered by the court; 
     or
       ``(cc) 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 chapter 7, 11, 
     or 13 or any other reason to conclude that the later case 
     will be concluded--

       ``(aa) if a case under chapter 7, with a discharge; or
       ``(bb) if a case under chapter 11 or 13, with a confirmed 
     plan that will be fully performed; and
       ``(ii) 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; and
       ``(4)(A)(i) if a single or joint case is filed by or 
     against a debtor who is an individual under this title, and 
     if 2 or more single or joint cases of the debtor were pending 
     within the previous year but were dismissed, other than a 
     case refiled under section 707(b), the stay under subsection 
     (a) shall not go into effect upon the filing of the later 
     case; and
       ``(ii) on request of a party in interest, the court shall 
     promptly enter an order confirming that no stay is in effect;
       ``(B) if, within 30 days after the filing of the later 
     case, a party in interest requests 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 a 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;
       ``(C) a stay imposed under subparagraph (B) shall be 
     effective on the date of the entry of the order allowing the 
     stay to go into effect; and
       ``(D) for purposes of subparagraph (B), a case is 
     presumptively filed not in good faith (but such presumption 
     may be rebutted by clear and convincing evidence to the 
     contrary)--
       ``(i) 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

[[Page 2916]]

     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 
     any other reason to conclude that the later case will not be 
     concluded, if a case under chapter 7, with a discharge, and 
     if a case under chapter 11 or 13, with a confirmed plan that 
     will be fully performed; or
       ``(ii) 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 such action of such 
     creditor.''.

     SEC. 303. 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 property, if the court 
     finds that the filing of the 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, such real property without the consent of the 
     secured creditor or court approval; or
       ``(B) multiple bankruptcy filings affecting such real 
     property.

     If recorded in compliance with applicable State laws 
     governing notices of interests or liens in real property, an 
     order entered under paragraph (4) shall be binding in any 
     other case under this title purporting to affect such real 
     property filed not later than 2 years after the date of the 
     entry of such order by the court, except that a debtor in a 
     subsequent case under this title 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 that 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, as amended by section 224, is amended by 
     inserting after paragraph (19), the following:
       ``(20) under subsection (a), of any act to enforce any lien 
     against or security interest in real property following entry 
     of the order under subsection (d)(4) as to such real property 
     in any prior case under this title, for a period of 2 years 
     after the date of the entry of such an order, except that the 
     debtor, in a subsequent case under this title, may move for 
     relief from such order based upon changed circumstances or 
     for other good cause shown, after notice and a hearing;
       ``(21) 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) to 
     be a debtor in a case under this title; or
       ``(B) if the case under this title was filed in violation 
     of a bankruptcy court order in a prior case under this title 
     prohibiting the debtor from being a debtor in another case 
     under this title;''.

     SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

       Title 11, United States Code, is amended--
       (1) in section 521(a), as so designated by section 106--
       (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 a case under chapter 7 of this title in which the 
     debtor is an individual, 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 
     such personal property unless the debtor, not later than 45 
     days after the first meeting of creditors under section 
     341(a), either--
       ``(A) enters into an agreement with the creditor pursuant 
     to section 524(c) with respect to the claim secured by such 
     property; or
       ``(B) redeems such property from the security interest 
     pursuant to section 722.

     If the debtor fails to so act within the 45-day period 
     referred to in paragraph (6), the stay under section 362(a) 
     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 filed 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. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES 
                   NOT COMPLETE INTENDED SURRENDER OF CONSUMER 
                   DEBT COLLATERAL.

       Title 11, United States Code, is amended--
       (1) in section 362, as amended by section 106--
       (A) in subsection (c), by striking ``(e), and (f)'' and 
     inserting ``(e), (f), and (h)'';
       (B) by redesignating subsection (h) as subsection (k) and 
     transferring such subsection so as to insert it after 
     subsection (j) as added by section 106; and
       (C) by inserting after subsection (g) the following:
       ``(h)(1) In a case in which the debtor is an individual, 
     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)--
       ``(A) to file timely any statement of intention required 
     under section 521(a)(2) with respect to such personal 
     property or to indicate in such statement that the debtor 
     will either surrender such personal property or retain it 
     and, if retaining such personal property, either redeem such 
     personal property pursuant to section 722, enter into an 
     agreement of the kind specified in section 524(c) applicable 
     to the debt secured by such personal property, or assume such 
     unexpired lease pursuant to section 365(p) if the trustee 
     does not do so, as applicable; and
       ``(B) to take timely the action specified in such 
     statement, as it may be amended before expiration of the 
     period for taking action, unless such statement specifies the 
     debtor's intention to reaffirm such debt on the original 
     contract terms and the creditor refuses to agree to the 
     reaffirmation on such terms.
       ``(2) Paragraph (1) does not apply if the court determines, 
     on the motion of the trustee filed before the expiration of 
     the applicable time set by section 521(a)(2), after notice 
     and a hearing, that such personal property is of 
     consequential value or benefit to the estate, and 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, the stay provided by subsection (a) shall 
     terminate upon the conclusion of the hearing on the 
     motion.''; and
       (2) in section 521, as amended by sections 106 and 225--
       (A) in subsection (a)(2) by striking ``consumer'';
       (B) in subsection (a)(2)(B)--
       (i) by striking ``forty-five days after the filing of a 
     notice of intent under this section'' and inserting ``30 days 
     after the first date set for the meeting of creditors under 
     section 341(a)''; and
       (ii) by striking ``forty-five day'' and inserting ``30-
     day'';
       (C) in subsection (a)(2)(C) by inserting ``, except as 
     provided in section 362(h)'' before the semicolon; and
       (D) by adding at the end the following:
       ``(d) 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), with respect to 
     property which a lessor or bailor owns and has leased, 
     rented, or bailed to the debtor or as to which a creditor 
     holds a security interest not otherwise voidable under 
     section 522(f), 544, 545, 547, 548, or 549, nothing in this 
     title shall prevent or limit the operation of a provision in 
     the underlying lease or agreement that 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. 306. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 
                   13.

       (a) In General.--Section 1325(a)(5)(B)(i) of title 11, 
     United States Code, is amended to read as follows:
       ``(i) the plan provides that--
       ``(I) the holder of such claim retain the lien securing 
     such claim until the earlier of--

       ``(aa) the payment of the underlying debt determined under 
     nonbankruptcy law; or
       ``(bb) discharge under section 1328; and

       ``(II) 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''.
       (b) Restoring the Foundation for Secured Credit.--Section 
     1325(a) of title 11, United States Code, is amended by adding 
     at the end the following:

     ``For purposes of paragraph (5), section 506 shall not apply 
     to a claim described in that paragraph if the creditor has a 
     purchase money security interest securing the debt that is 
     the subject of the claim, the debt was incurred within the 
     910-day preceding the date of the filing of the petition, and 
     the collateral for that debt consists of a motor vehicle (as 
     defined in section 30102 of title 49) acquired for the 
     personal use of the debtor, or if collateral for that debt 
     consists of any other thing of value, if the debt was 
     incurred

[[Page 2917]]

     during the 1-year period preceding that filing.''.
       (c) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (13) the following:
       ``(13A) `debtor's principal residence'--
       ``(A) means a residential structure, including incidental 
     property, without regard to whether that structure is 
     attached to real property; and
       ``(B) includes an individual condominium or cooperative 
     unit, a mobile or manufactured home, or trailer;''; and
       (2) by inserting after paragraph (27), the following:
       ``(27A) `incidental property' means, with respect to a 
     debtor's principal residence--
       ``(A) property commonly conveyed with a principal residence 
     in the area where the real property is located;
       ``(B) all easements, rights, appurtenances, fixtures, 
     rents, royalties, mineral rights, oil or gas rights or 
     profits, water rights, escrow funds, or insurance proceeds; 
     and
       ``(C) all replacements or additions;''.

     SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

       Section 522(b)(3) of title 11, United States Code, as so 
     designated by section 106, is amended--
       (1) in subparagraph (A)--
       (A) by striking ``180 days'' and inserting ``730 days''; 
     and
       (B) 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''; and
       (2) by adding at the end the following:

     ``If the effect of the domiciliary requirement under 
     subparagraph (A) is to render the debtor ineligible for any 
     exemption, the debtor may elect to exempt property that is 
     specified under subsection (d).''.

     SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR FRAUD.

       Section 522 of title 11, United States Code, as amended by 
     section 224, is amended--
       (1) in subsection (b)(3)(A), as so designated by this Act, 
     by inserting ``subject to subsections (o) and (p),'' 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;
       ``(3) a burial plot for the debtor or a dependent of the 
     debtor; or
       ``(4) real or personal property that the debtor or a 
     dependent of the debtor claims as a homestead;

     shall be reduced to the extent that such value is 
     attributable to any portion of any property that the debtor 
     disposed of in the 10-year period ending on 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. 309. PROTECTING SECURED CREDITORS IN CHAPTER 13 CASES.

       (a) 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 
     a case under chapter 11 or 12, but not in a case converted to 
     a case under 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 case under chapter 13; and
       ``(ii) unless a prebankruptcy default has been fully cured 
     under 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.''.
       (b) 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) is automatically terminated.
       ``(2)(A) If the debtor in a case under chapter 7 is an 
     individual, the debtor may notify the creditor in writing 
     that the debtor desires to assume the lease. Upon being so 
     notified, the creditor may, at its option, notify the debtor 
     that it is willing to have the lease assumed by the debtor 
     and may condition such assumption on cure of any outstanding 
     default on terms set by the contract.
       ``(B) If, not later than 30 days after notice is provided 
     under subparagraph (A), 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.
       ``(C) The stay under section 362 and the injunction under 
     section 524(a)(2) shall not be violated by notification of 
     the debtor and negotiation of cure under this subsection.
       ``(3) In a case under chapter 11 in which the debtor is an 
     individual and in a case under chapter 13, 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 and any stay under section 1301 is automatically 
     terminated with respect to the property subject to the 
     lease.''.
       (c) Adequate Protection of Lessors and Purchase Money 
     Secured Creditors.--
       (1) Confirmation of plan.--Section 1325(a)(5)(B) of title 
     11, United States Code, as amended by section 306, is 
     amended--
       (A) in clause (i), by striking ``and'' at the end;
       (B) in clause (ii), by striking ``or'' at the end and 
     inserting ``and''; and
       (C) by adding at the end the following:
       ``(iii) if--
       ``(I) property to be distributed pursuant to this 
     subsection is in the form of periodic payments, such payments 
     shall be in equal monthly amounts; and
       ``(II) the holder of the claim is secured by personal 
     property, the amount of such payments shall not be less than 
     an amount sufficient to provide to the holder of such claim 
     adequate protection during the period of the plan; or''.
       (2) Payments.--Section 1326(a) of title 11, United States 
     Code, is amended to read as follows:
       ``(a)(1) Unless the court orders otherwise, the debtor 
     shall commence making payments not later than 30 days after 
     the date of the filing of the plan or the order for relief, 
     whichever is earlier, in the amount--
       ``(A) proposed by the plan to the trustee;
       ``(B) scheduled in a lease of personal property directly to 
     the lessor for that portion of the obligation that becomes 
     due after the order for relief, reducing the payments under 
     subparagraph (A) by the amount so paid and providing the 
     trustee with evidence of such payment, including the amount 
     and date of payment; and
       ``(C) that provides adequate protection directly to a 
     creditor holding an allowed claim secured by personal 
     property to the extent the claim is attributable to the 
     purchase of such property by the debtor for that portion of 
     the obligation that becomes due after the order for relief, 
     reducing the payments under subparagraph (A) by the amount so 
     paid and providing the trustee with evidence of such payment, 
     including the amount and date of payment.
       ``(2) A payment made under paragraph (1)(A) shall be 
     retained by the trustee until confirmation or denial of 
     confirmation. If a plan is confirmed, the trustee shall 
     distribute any such payment in accordance with the plan as 
     soon as is practicable. If a plan is not confirmed, the 
     trustee shall return any such payments not previously paid 
     and not yet due and owing to creditors pursuant to paragraph 
     (3) to the debtor, after deducting any unpaid claim allowed 
     under section 503(b).
       ``(3) Subject to section 363, the court may, upon notice 
     and a hearing, modify, increase, or reduce the payments 
     required under this subsection pending confirmation of a 
     plan.
       ``(4) Not later than 60 days after the date of filing of a 
     case under this chapter, a debtor retaining possession of 
     personal property subject to a lease or securing a claim 
     attributable in whole or in part to the purchase price of 
     such property shall provide the lessor or secured creditor 
     reasonable evidence of the maintenance of any required 
     insurance coverage with respect to the use or ownership of 
     such property and continue to do so for so long as the debtor 
     retains possession of such property.''.

     SEC. 310. 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)--
       ``(I) consumer debts owed to a single creditor and 
     aggregating more than $500 for luxury goods or services 
     incurred by an individual debtor on or within 90 days before 
     the order for relief under this title are presumed to be 
     nondischargeable; and
       ``(II) cash advances aggregating more than $750 that are 
     extensions of consumer credit under an open end credit plan 
     obtained by an individual debtor on or within 70 days before 
     the order for relief under this title, are presumed to be 
     nondischargeable; and

[[Page 2918]]

       ``(ii) for purposes of this subparagraph--
       ``(I) the terms `consumer', `credit', and `open end credit 
     plan' have the same meanings as in section 103 of the Truth 
     in Lending Act; and
       ``(II) 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.''.

     SEC. 311. AUTOMATIC STAY.

       (a) In General.--Section 362(b) of title 11, United States 
     Code, as amended by sections 224 and 303, is amended by 
     inserting after paragraph (21), the following:
       ``(22) subject to subsection (l), under subsection (a)(3), 
     of the continuation of any eviction, unlawful detainer 
     action, or similar proceeding by a lessor against a debtor 
     involving residential property in which the debtor resides as 
     a tenant under a lease or rental agreement and with respect 
     to which the lessor has obtained before the date of the 
     filing of the bankruptcy petition, a judgment for possession 
     of such property against the debtor;
       ``(23) subject to subsection (m), under subsection (a)(3), 
     of an eviction action that seeks possession of the 
     residential property in which the debtor resides as a tenant 
     under a lease or rental agreement based on endangerment of 
     such property or the illegal use of controlled substances on 
     such property, but only if the lessor files with the court, 
     and serves upon the debtor, a certification under penalty of 
     perjury that such an eviction action has been filed, or that 
     the debtor, during the 30-day period preceding the date of 
     the filing of the certification, has endangered property or 
     illegally used or allowed to be used a controlled substance 
     on the property;
       ``(24) under subsection (a), of any transfer that is not 
     avoidable under section 544 and that is not avoidable under 
     section 549;''.
       (b) Limitations.--Section 362 of title 11, United States 
     Code, as amended by sections 106 and 305, is amended by 
     adding at the end the following:
       ``(l)(1) Except as otherwise provided in this subsection, 
     subsection (b)(22) shall apply on the date that is 30 days 
     after the date on which the bankruptcy petition is filed, if 
     the debtor files with the petition and serves upon the lessor 
     a certification under penalty of perjury that--
       ``(A) under nonbankruptcy law applicable in the 
     jurisdiction, there are circumstances under which the debtor 
     would be permitted to cure the entire monetary default that 
     gave rise to the judgment for possession, after that judgment 
     for possession was entered; and
       ``(B) the debtor (or an adult dependent of the debtor) has 
     deposited with the clerk of the court, any rent that would 
     become due during the 30-day period after the filing of the 
     bankruptcy petition.
       ``(2) If, within the 30-day period after the filing of the 
     bankruptcy petition, the debtor (or an adult dependent of the 
     debtor) complies with paragraph (1) and files with the court 
     and serves upon the lessor a further certification under 
     penalty of perjury that the debtor (or an adult dependent of 
     the debtor) has cured, under nonbankrupcty law applicable in 
     the jurisdiction, the entire monetary default that gave rise 
     to the judgment under which possession is sought by the 
     lessor, subsection (b)(22) shall not apply, unless ordered to 
     apply by the court under paragraph (3).
       ``(3)(A) If the lessor files an objection to any 
     certification filed by the debtor under paragraph (1) or (2), 
     and serves such objection upon the debtor, the court shall 
     hold a hearing within 10 days after the filing and service of 
     such objection to determine if the certification filed by the 
     debtor under paragraph (1) or (2) is true.
       ``(B) If the court upholds the objection of the lessor 
     filed under subparagraph (A)--
       ``(i) subsection (b)(22) shall apply immediately and relief 
     from the stay provided under subsection (a)(3) shall not be 
     required to enable the lessor to complete the process to 
     recover full possession of the property; and
       ``(ii) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the court's 
     order upholding the lessor's objection.
       ``(4) If a debtor, in accordance with paragraph (5), 
     indicates on the petition that there was a judgment for 
     possession of the residential rental property in which the 
     debtor resides and does not file a certification under 
     paragraph (1) or (2)--
       ``(A) subsection (b)(22) shall apply immediately upon 
     failure to file such certification, and relief from the stay 
     provided under subsection (a)(3) shall not be required to 
     enable the lessor to complete the process to recover full 
     possession of the property; and
       ``(B) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the docket 
     indicating the absence of a filed certification and the 
     applicability of the exception to the stay under subsection 
     (b)(22).
       ``(5)(A) Where a judgment for possession of residential 
     property in which the debtor resides as a tenant under a 
     lease or rental agreement has been obtained by the lessor, 
     the debtor shall so indicate on the bankruptcy petition and 
     shall provide the name and address of the lessor that 
     obtained that pre-petition judgment on the petition and on 
     any certification filed under this subsection.
       ``(B) The form of certification filed with the petition, as 
     specified in this subsection, shall provide for the debtor to 
     certify, and the debtor shall certify--
       ``(i) whether a judgment for possession of residential 
     rental housing in which the debtor resides has been obtained 
     against the debtor before the date of the filing of the 
     petition; and
       ``(ii) whether the debtor is claiming under paragraph (1) 
     that under nonbankruptcy law applicable in the jurisdiction, 
     there are circumstances under which the debtor would be 
     permitted to cure the entire monetary default that gave rise 
     to the judgment for possession, after that judgment of 
     possession was entered, and has made the appropriate deposit 
     with the court.
       ``(C) The standard forms (electronic and otherwise) used in 
     a bankruptcy proceeding shall be amended to reflect the 
     requirements of this subsection.
       ``(D) The clerk of the court shall arrange for the prompt 
     transmittal of the rent deposited in accordance with 
     paragraph (1)(B) to the lessor.
       ``(m)(1) Except as otherwise provided in this subsection, 
     subsection (b)(23) shall apply on the date that is 15 days 
     after the date on which the lessor files and serves a 
     certification described in subsection (b)(23).
       ``(2)(A) If the debtor files with the court an objection to 
     the truth or legal sufficiency of the certification described 
     in subsection (b)(23) and serves such objection upon the 
     lessor, subsection (b)(23) shall not apply, unless ordered to 
     apply by the court under this subsection.
       ``(B) If the debtor files and serves the objection under 
     subparagraph (A), the court shall hold a hearing within 10 
     days after the filing and service of such objection to 
     determine if the situation giving rise to the lessor's 
     certification under paragraph (1) existed or has been 
     remedied.
       ``(C) If the debtor can demonstrate to the satisfaction of 
     the court that the situation giving rise to the lessor's 
     certification under paragraph (1) did not exist or has been 
     remedied, the stay provided under subsection (a)(3) shall 
     remain in effect until the termination of the stay under this 
     section.
       ``(D) If the debtor cannot demonstrate to the satisfaction 
     of the court that the situation giving rise to the lessor's 
     certification under paragraph (1) did not exist or has been 
     remedied--
       ``(i) relief from the stay provided under subsection (a)(3) 
     shall not be required to enable the lessor to proceed with 
     the eviction; and
       ``(ii) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the court's 
     order upholding the lessor's certification.
       ``(3) If the debtor fails to file, within 15 days, an 
     objection under paragraph (2)(A)--
       ``(A) subsection (b)(23) shall apply immediately upon such 
     failure and relief from the stay provided under subsection 
     (a)(3) shall not be required to enable the lessor to complete 
     the process to recover full possession of the property; and
       ``(B) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the docket 
     indicating such failure.''.

     SEC. 312. EXTENSION OF 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 inserting after subsection (e) the 
     following:
       ``(f) Notwithstanding subsections (a) and (b), the court 
     shall not grant a discharge of all debts provided for in the 
     plan or disallowed under section 502, if the debtor has 
     received a discharge--
       ``(1) in a case filed under chapter 7, 11, or 12 of this 
     title during the 4-year period preceding the date of the 
     order for relief under this chapter, or
       ``(2) in a case filed under chapter 13 of this title during 
     the 2-year period preceding the date of such order.''.

     SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND ANTIQUES.

       (a) Definition.--Section 522(f) of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(4)(A) Subject to subparagraph (B), for purposes of 
     paragraph (1)(B), the term `household goods' means--
       ``(i) clothing;
       ``(ii) furniture;
       ``(iii) appliances;
       ``(iv) 1 radio;
       ``(v) 1 television;
       ``(vi) 1 VCR;
       ``(vii) linens;
       ``(viii) china;
       ``(ix) crockery;
       ``(x) kitchenware;
       ``(xi) educational materials and educational equipment 
     primarily for the use of minor dependent children of the 
     debtor;
       ``(xii) medical equipment and supplies;
       ``(xiii) furniture exclusively for the use of minor 
     children, or elderly or disabled dependents of the debtor;
       ``(xiv) personal effects (including the toys and hobby 
     equipment of minor dependent children and wedding rings) of 
     the debtor and the dependents of the debtor; and

[[Page 2919]]

       ``(xv) 1 personal computer and related equipment.
       ``(B) The term `household goods' does not include--
       ``(i) works of art (unless by or of the debtor, or any 
     relative of the debtor);
       ``(ii) electronic entertainment equipment with a fair 
     market value of more than $500 in the aggregate (except 1 
     television, 1 radio, and 1 VCR);
       ``(iii) items acquired as antiques with a fair market value 
     of more than $500 in the aggregate;
       ``(iv) jewelry with a fair market value of more than $500 
     in the aggregate (except wedding rings); and
       ``(v) a computer (except as otherwise provided for in this 
     section), motor vehicle (including a tractor or lawn 
     tractor), boat, or a motorized recreational device, 
     conveyance, vehicle, watercraft, or aircraft.''.
       (b) Study.--Not later than 2 years after the date of 
     enactment of this Act, the Director of the Executive Office 
     for United States Trustees shall submit a report to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives containing its 
     findings regarding utilization of the definition of household 
     goods, as defined in section 522(f)(4) of title 11, United 
     States Code, as added by subsection (a), with respect to the 
     avoidance of nonpossessory, nonpurchase money security 
     interests in household goods under section 522(f)(1)(B) of 
     title 11, United States Code, and the impact such section 
     522(f)(4) has had on debtors and on the bankruptcy courts. 
     Such report may include recommendations for amendments to 
     such section 522(f)(4) consistent with the Director's 
     findings.

     SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE DEBTS.

       (a) In General.--Section 523(a) of title 11, United States 
     Code, is amended by inserting after paragraph (14) the 
     following:
       ``(14A) incurred to pay a tax to a governmental unit, other 
     than the United States, that would be nondischargeable under 
     paragraph (1);''.
       (b) 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);
       ``(2) of the kind specified in paragraph (2), (3), (4), 
     (5), (8), or (9) of section 523(a);
       ``(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. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 AND 13 
                   CASES.

       (a) Notice.--Section 342 of title 11, United States Code, 
     as amended by section 102, is amended--
       (1) in subsection (c)--
       (A) by inserting ``(1)'' after ``(c)'';
       (B) by striking ``, but the failure of such notice to 
     contain such information shall not invalidate the legal 
     effect of such notice''; and
       (C) by adding at the end the following:
       ``(2)(A) If, within the 90 days before the commencement of 
     a voluntary case, a creditor supplies the debtor in at least 
     2 communications sent to the debtor with the current account 
     number of the debtor and the address at which such creditor 
     requests to receive correspondence, then any notice required 
     by this title to be sent by the debtor to such creditor shall 
     be sent to such address and shall include such account 
     number.
       ``(B) If a creditor would be in violation of applicable 
     nonbankruptcy law by sending any such communication within 
     such 90-day period and if such creditor supplies the debtor 
     in the last 2 communications with the current account number 
     of the debtor and the address at which such creditor requests 
     to receive correspondence, then any notice required by this 
     title to be sent by the debtor to such creditor shall be sent 
     to such address and shall include such account number.''; and
       (2) by adding at the end the following:
       ``(e)(1) In a case under chapter 7 or 13 of this title of a 
     debtor who is an individual, a creditor at any time may both 
     file with the court and serve on the debtor a notice of 
     address to be used to provide notice in such case to such 
     creditor.
       ``(2) Any notice in such case required to be provided to 
     such creditor by the debtor or the court later than 5 days 
     after the court and the debtor receive such creditor's notice 
     of address, shall be provided to such address.
       ``(f)(1) An entity may file with any bankruptcy court a 
     notice of address to be used by all the bankruptcy courts or 
     by particular bankruptcy courts, as so specified by such 
     entity at the time such notice is filed, to provide notice to 
     such entity in all cases under chapters 7 and 13 pending in 
     the courts with respect to which such notice is filed, in 
     which such entity is a creditor.
       ``(2) In any case filed under chapter 7 or 13, any notice 
     required to be provided by a court with respect to which a 
     notice is filed under paragraph (1), to such entity later 
     than 30 days after the filing of such notice under paragraph 
     (1) shall be provided to such address unless with respect to 
     a particular case a different address is specified in a 
     notice filed and served in accordance with subsection (e).
       ``(3) A notice filed under paragraph (1) may be withdrawn 
     by such entity.
       ``(g)(1) Notice provided to a creditor by the debtor or the 
     court other than in accordance with this section (excluding 
     this subsection) shall not be effective notice until such 
     notice is brought to the attention of such creditor. If such 
     creditor designates a person or an organizational subdivision 
     of such creditor to be responsible for receiving notices 
     under this title and establishes reasonable procedures so 
     that such notices receivable by such creditor are to be 
     delivered to such person or such subdivision, then a notice 
     provided to such creditor other than in accordance with this 
     section (excluding this subsection) shall not be considered 
     to have been brought to the attention of such creditor until 
     such notice is received by such person or such subdivision.
       ``(2) A monetary penalty may not be imposed on a creditor 
     for a violation of a stay in effect under section 362(a) 
     (including a monetary penalty imposed under section 362(k)) 
     or for failure to comply with section 542 or 543 unless the 
     conduct that is the basis of such violation or of such 
     failure occurs after such creditor receives notice effective 
     under this section of the order for relief.''.
       (b) Debtor's Duties.--Section 521 of title 11, United 
     States Code, as amended by sections 106, 225, and 305, is 
     amended--
       (1) in subsection (a), as so designated by section 106, by 
     amending paragraph (1) to read as follows:
       ``(1) file--
       ``(A) a list of creditors; and
       ``(B) unless the court orders otherwise--
       ``(i) a schedule of assets and liabilities;
       ``(ii) a schedule of current income and current 
     expenditures;
       ``(iii) a statement of the debtor's financial affairs and, 
     if section 342(b) applies, a certificate--

       ``(I) of an attorney whose name is indicated on the 
     petition as the attorney for the debtor, or a bankruptcy 
     petition preparer signing the petition under section 
     110(b)(1), indicating that such attorney or the bankruptcy 
     petition preparer delivered to the debtor the notice required 
     by section 342(b); or
       ``(II) if no attorney is so indicated, and no bankruptcy 
     petition preparer signed the petition, of the debtor that 
     such notice was received and read by the debtor;

       ``(iv) copies of all payment advices or other evidence of 
     payment received within 60 days before the date of the filing 
     of the petition, by the debtor from any employer of the 
     debtor;
       ``(v) a statement of the amount of monthly net income, 
     itemized to show how the amount is calculated; and
       ``(vi) a statement disclosing any reasonably anticipated 
     increase in income or expenditures over the 12-month period 
     following the date of the filing of the petition;''; and
       (2) by adding at the end the following:
       ``(e)(1) If the debtor in a case under chapter 7 or 13 is 
     an individual and if a creditor files with the court at any 
     time a request to receive a copy of the petition, schedules, 
     and statement of financial affairs filed by the debtor, then 
     the court shall make such petition, such schedules, and such 
     statement available to such creditor.
       ``(2)(A) The debtor shall provide--
       ``(i) not later than 7 days before the date first set for 
     the first meeting of creditors, to the trustee a copy of the 
     Federal income tax return required under applicable law (or 
     at the election of the debtor, a transcript of such return) 
     for the most recent tax year ending immediately before the 
     commencement of the case and for which a Federal income tax 
     return was filed; and
       ``(ii) at the same time the debtor complies with clause 
     (i), a copy of such return (or if elected under clause (i), 
     such transcript) to any creditor that timely requests such 
     copy.
       ``(B) If the debtor fails to comply with clause (i) or (ii) 
     of subparagraph (A), the court shall dismiss the case unless 
     the debtor demonstrates that the failure to so comply is due 
     to circumstances beyond the control of the debtor.
       ``(C) If a creditor requests a copy of such tax return or 
     such transcript and if the debtor fails to provide a copy of 
     such tax return or such transcript to such creditor at the 
     time the debtor provides such tax return or such transcript 
     to the trustee, then the court shall dismiss the case unless 
     the debtor demonstrates that the failure to provide a copy of 
     such tax return or such transcript is due to circumstances 
     beyond the control of the debtor.
       ``(3) If a creditor in a case under chapter 13 files with 
     the court at any time a request to receive a copy of the plan 
     filed by the debtor, then the court shall make available to 
     such creditor a copy of the plan--
       ``(A) at a reasonable cost; and
       ``(B) not later than 5 days after such request is filed.
       ``(f) At the request of the court, the United States 
     trustee, or any party in interest in a case under chapter 7, 
     11, or 13, a debtor who is an individual shall file with the 
     court--
       ``(1) at the same time filed with the taxing authority, a 
     copy of each Federal income tax return required under 
     applicable law (or at

[[Page 2920]]

     the election of the debtor, a transcript of such tax return) 
     with respect to each tax year of the debtor ending while the 
     case is pending under such chapter;
       ``(2) at the same time filed with the taxing authority, 
     each Federal income tax return required under applicable law 
     (or at the election of the debtor, a transcript of such tax 
     return) that had not been filed with such authority as of the 
     date of the commencement of the case and that was 
     subsequently filed for any tax year of the debtor ending in 
     the 3-year period ending on the date of the commencement of 
     the case;
       ``(3) a copy of each amendment to any Federal income tax 
     return or transcript filed with the court under paragraph (1) 
     or (2); and
       ``(4) in a case under chapter 13--
       ``(A) on the date that is either 90 days after the end of 
     such tax year or 1 year after the date of the commencement of 
     the case, whichever is later, if a plan is not confirmed 
     before such later date; and
       ``(B) annually after the plan is confirmed and until the 
     case is closed, not later than the date that is 45 days 
     before the anniversary of the confirmation of the plan;

     a statement, under penalty of perjury, of the income and 
     expenditures of the debtor during the tax year of the debtor 
     most recently concluded before such statement is filed under 
     this paragraph, and of the monthly income of the debtor, that 
     shows how income, expenditures, and monthly income are 
     calculated.
       ``(g)(1) A statement referred to in subsection (f)(4) shall 
     disclose--
       ``(A) the amount and sources of the income of the debtor;
       ``(B) the identity of any person responsible with the 
     debtor for the support of any dependent of the debtor; and
       ``(C) the identity of any person 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 subsections (e)(2)(A) and (f) 
     shall be available to the United States trustee (or the 
     bankruptcy administrator, if any), the trustee, and any party 
     in interest for inspection and copying, subject to the 
     requirements of section 315(c) of the Bankruptcy Abuse 
     Prevention and Consumer Protection Act of 2005.
       ``(h) If requested by the United States trustee or by the 
     trustee, the debtor shall provide--
       ``(1) 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; or
       ``(2) such other personal identifying information relating 
     to the debtor that establishes the identity of the debtor.''.
       (c)(1) Not later than 180 days after the date of the 
     enactment of this Act, 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 
     restrictions on creditor access to tax information that is 
     required to be provided under this section.
       (3) Not later than 540 days after the date of enactment of 
     this Act, the Director of the Administrative Office of the 
     United States Courts shall prepare and submit to the 
     President pro tempore of the Senate and the Speaker of the 
     House of Representatives a report that--
       (A) assesses the effectiveness of the procedures 
     established under paragraph (1); and
       (B) if appropriate, includes proposed legislation to--
       (i) further protect the confidentiality of tax information; 
     and
       (ii) provide penalties for the improper use by any person 
     of the tax information required to be provided under this 
     section.

     SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR 
                   PROVIDE REQUIRED INFORMATION.

       Section 521 of title 11, United States Code, as amended by 
     sections 106, 225, 305, and 315, is amended by adding at the 
     end the following:
       ``(i)(1) Subject to paragraphs (2) and (4) and 
     notwithstanding section 707(a), 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 date of the filing of the petition, the case shall 
     be automatically dismissed effective on the 46th day after 
     the date of the filing of the petition.
       ``(2) Subject to paragraph (4) and with respect to a case 
     described in paragraph (1), any party in interest may request 
     the court to enter an order dismissing the case. If 
     requested, the court shall enter an order of dismissal not 
     later than 5 days after such request.
       ``(3) Subject to paragraph (4) and upon request of the 
     debtor made within 45 days after the date of the filing of 
     the petition described in paragraph (1), the court may allow 
     the debtor an additional period of 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.
       ``(4) Notwithstanding any other provision of this 
     subsection, on the motion of the trustee filed before the 
     expiration of the applicable period of time specified in 
     paragraph (1), (2), or (3), and after notice and a hearing, 
     the court may decline to dismiss the case if the court finds 
     that the debtor attempted in good faith to file all the 
     information required by subsection (a)(1)(B)(iv) and that the 
     best interests of creditors would be served by administration 
     of the case.''.

     SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON 
                   CONFIRMATION OF THE PLAN.

       Section 1324 of title 11, United States Code, is amended--
       (1) by striking ``After'' and inserting the following:
       ``(a) Except as provided in subsection (b) and after''; and
       (2) by adding at the end the following:
       ``(b) The hearing on confirmation of the plan may be held 
     not earlier than 20 days and not later than 45 days after the 
     date of the meeting of creditors under section 341(a), unless 
     the court determines that it would be in the best interests 
     of the creditors and the estate to hold such hearing at an 
     earlier date and there is no objection to such earlier 
     date.''.

     SEC. 318. 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)(1) If the current monthly income of the debtor and 
     the debtor's spouse combined, when multiplied by 12, is not 
     less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4,

     the plan may not provide for payments over a period that is 
     longer than 5 years.
       ``(2) If the current monthly income of the debtor and the 
     debtor's spouse combined, when multiplied by 12, is less 
     than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4,

     the plan may not provide for payments over a period that is 
     longer than 3 years, unless the court, for cause, approves a 
     longer period, but the court may not approve a period that is 
     longer than 5 years.'';
       (2) in section 1325(b)(1)(B), by striking ``three-year 
     period'' and inserting ``applicable commitment period''; and
       (3) in section 1325(b), as amended by section 102, by 
     adding at the end the following:
       ``(4) For purposes of this subsection, the `applicable 
     commitment period'--
       ``(A) subject to subparagraph (B), shall be--
       ``(i) 3 years; or
       ``(ii) 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--
       ``(I) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(II) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(III) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4; and
       ``(B) may be less than 3 or 5 years, whichever is 
     applicable under subparagraph (A), but only if the plan 
     provides for payment in full of all allowed unsecured claims 
     over a shorter period.''; and
       (4) in section 1329(c), by striking ``three years'' and 
     inserting ``the applicable commitment period under section 
     1325(b)(1)(B)''.

     SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF RULE 9011 
                   OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE.

       It is the sense of 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 attorneys be submitted only 
     after the debtors or the debtors' attorneys have made 
     reasonable inquiry to verify that the information contained 
     in such documents is--
       (1) well grounded in fact; and
       (2) warranted by existing law or a good faith argument for 
     the extension, modification, or reversal of existing law.

[[Page 2921]]



     SEC. 320. 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 a case under 
     chapter 7, 11, or 13 in which the debtor is an individual, 
     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) such 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 for good cause, as described in 
     findings made by the court.''.

     SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.

       (a) Property of the Estate.--
       (1) In general.--Subchapter I of chapter 11 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 1115. Property of the estate

       ``(a) In a case in which the debtor is an individual, 
     property of the estate includes, in addition to the property 
     specified in section 541--
       ``(1) all property of the kind specified in section 541 
     that the debtor acquires after the commencement of the case 
     but before the case is closed, dismissed, or converted to a 
     case under chapter 7, 12, or 13, whichever occurs first; and
       ``(2) earnings from services performed by the debtor after 
     the commencement of the case but before the case is closed, 
     dismissed, or converted to a case under chapter 7, 12, or 13, 
     whichever occurs first.
       ``(b) Except as provided in section 1104 or a confirmed 
     plan or order confirming a plan, the debtor shall remain in 
     possession of all property of the estate.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter I of chapter 11 of title 11, United States Code, 
     is amended by adding at the end the following:

``1115. Property of the estate.''.

       (b) Contents of Plan.--Section 1123(a) of title 11, United 
     States Code, is amended--
       (1) in paragraph (6), by striking ``and'' at the end;
       (2) in paragraph (7), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(8) in a case in which the debtor is an individual, 
     provide for the payment to creditors under the plan of all or 
     such portion of earnings from personal services performed by 
     the debtor after the commencement of the case or other future 
     income of the debtor as is necessary for the execution of the 
     plan.''.
       (c) Confirmation of Plan.--
       (1) Requirements relating to value of property.--Section 
     1129(a) of title 11, United States Code, as amended by 
     section 213, is amended by adding at the end the following:
       ``(15) In a case in which the debtor is an individual and 
     in which the holder of an allowed unsecured claim objects to 
     the confirmation of the plan--
       ``(A) the value, as of the effective date of the plan, of 
     the property to be distributed under the plan on account of 
     such claim is not less than the amount of such claim; or
       ``(B) the value of the property to be distributed under the 
     plan is not less than the projected disposable income of the 
     debtor (as defined in section 1325(b)(2)) to be received 
     during the 5-year period beginning on the date that the first 
     payment is due under the plan, or during the period for which 
     the plan provides payments, whichever is longer.''.
       (2) Requirement relating to interests in property.--Section 
     1129(b)(2)(B)(ii) of title 11, United States Code, is amended 
     by inserting before the period at the end the following: ``, 
     except that in a case in which the debtor is an individual, 
     the debtor may retain property included in the estate under 
     section 1115, subject to the requirements of subsection 
     (a)(14) of this section''.
       (d) Effect of Confirmation.--Section 1141(d) of title 11, 
     United States Code, is amended--
       (1) in paragraph (2), by striking ``The confirmation of a 
     plan does not discharge an individual debtor'' and inserting 
     ``A discharge under this chapter does not discharge a debtor 
     who is an individual''; and
       (2) by adding at the end the following:
       ``(5) In a case in which the debtor is an individual--
       ``(A) unless after notice and a hearing the court orders 
     otherwise for cause, confirmation of the plan does not 
     discharge any debt provided for in the plan until the court 
     grants a discharge on completion of all payments under the 
     plan;
       ``(B) at any time after the confirmation of the plan, and 
     after notice and a hearing, the court may grant a discharge 
     to the debtor who has not completed payments under the plan 
     if--
       ``(i) the value, as of the effective date of the plan, of 
     property actually distributed under the plan on account of 
     each allowed unsecured claim is not less than the amount that 
     would have been paid on such claim if the estate of the 
     debtor had been liquidated under chapter 7 on such date; and
       ``(ii) modification of the plan under section 1127 is not 
     practicable; and''.
       (e) Modification of Plan.--Section 1127 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(e) If the debtor is an individual, the plan may be 
     modified at any time after confirmation of the plan but 
     before the completion of payments under the plan, whether or 
     not the plan has been substantially consummated, upon request 
     of the debtor, the trustee, the United States trustee, or the 
     holder of an allowed unsecured claim, to--
       ``(1) increase or reduce the amount of payments on claims 
     of a particular class provided for by the plan;
       ``(2) extend or reduce the time period for such payments; 
     or
       ``(3) alter the amount of the distribution to a creditor 
     whose claim is provided for by the plan to the extent 
     necessary to take account of any payment of such claim made 
     other than under the plan.
       ``(f)(1) Sections 1121 through 1128 and the requirements of 
     section 1129 apply to any modification under subsection (a).
       ``(2) The plan, as modified, shall become the plan only 
     after there has been disclosure under section 1125 as the 
     court may direct, notice and a hearing, and such modification 
     is approved.''.

     SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION.

       (a) Exemptions.--Section 522 of title 11, United States 
     Code, as amended by sections 224 and 308, is amended by 
     adding at the end the following:
       ``(p)(1) Except as provided in paragraph (2) of this 
     subsection and sections 544 and 548, as a result of electing 
     under subsection (b)(3)(A) to exempt property under State or 
     local law, a debtor may not exempt any amount of interest 
     that was acquired by the debtor during the 1215-day period 
     preceding the date of the filing of the petition that exceeds 
     in the aggregate $125,000 in value 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;
       ``(C) a burial plot for the debtor or a dependent of the 
     debtor; or
       ``(D) real or personal property that the debtor or 
     dependent of the debtor claims as a homestead.
       ``(2)(A) 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 such farmer.
       ``(B) For purposes of paragraph (1), any amount of such 
     interest does not include any interest transferred from a 
     debtor's previous principal residence (which was acquired 
     prior to the beginning of such 1215-day period) into the 
     debtor's current principal residence, if the debtor's 
     previous and current residences are located in the same 
     State.
       ``(q)(1) As a result of electing under subsection (b)(3)(A) 
     to exempt property under State or local law, a debtor may not 
     exempt any amount of an interest in property described in 
     subparagraphs (A), (B), (C), and (D) of subsection (p)(1) 
     which exceeds in the aggregate $125,000 if--
       ``(A) the court determines, after notice and a hearing, 
     that the debtor has been convicted of a felony (as defined in 
     section 3156 of title 18), which under the circumstances, 
     demonstrates that the filing of the case was an abuse of the 
     provisions of this title; or
       ``(B) the debtor owes a debt arising from--
       ``(i) any violation of the Federal securities laws (as 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934), any State securities laws, or any regulation or order 
     issued under Federal securities laws or State securities 
     laws;
       ``(ii) fraud, deceit, or manipulation in a fiduciary 
     capacity or in connection with the purchase or sale of any 
     security registered under section 12 or 15(d) of the 
     Securities Exchange Act of 1934 or under section 6 of the 
     Securities Act of 1933;
       ``(iii) any civil remedy under section 1964 of title 18; or
       ``(iv) any criminal act, intentional tort, or willful or 
     reckless misconduct that caused serious physical injury or 
     death to another individual in the preceding 5 years.
       ``(2) Paragraph (1) shall not apply to the extent the 
     amount of an interest in property described in subparagraphs 
     (A), (B), (C), and (D) of subsection (p)(1) is reasonably 
     necessary for the support of the debtor and any dependent of 
     the debtor.''.
       (b) Adjustment of Dollar Amounts.--Paragraphs (1) and (2) 
     of section 104(b) of title 11, United States Code, as amended 
     by section 224, are amended by inserting ``522(p), 522(q),'' 
     after ``522(n),''.

     SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT 
                   CONTRIBUTIONS AND OTHER PROPERTY FROM THE 
                   ESTATE.

       Section 541(b) of title 11, United States Code, as amended 
     by section 225, is amended by adding after paragraph (6), as 
     added by section 225(a)(1)(C), the following:
       ``(7) any amount--
       ``(A) withheld by an employer from the wages of employees 
     for payment as contributions--
       ``(i) to--

[[Page 2922]]

       ``(I) an employee benefit plan that is subject to title I 
     of the Employee Retirement Income Security Act of 1974 or 
     under an employee benefit plan which is a governmental plan 
     under section 414(d) of the Internal Revenue Code of 1986;
       ``(II) a deferred compensation plan under section 457 of 
     the Internal Revenue Code of 1986; or
       ``(III) a tax-deferred annuity under section 403(b) of the 
     Internal Revenue Code of 1986;

     except that such amount under this subparagraph shall not 
     constitute disposable income as defined in section 
     1325(b)(2); or
       ``(ii) to a health insurance plan regulated by State law 
     whether or not subject to such title; or
       ``(B) received by an employer from employees for payment as 
     contributions--
       ``(i) to--

       ``(I) an employee benefit plan that is subject to title I 
     of the Employee Retirement Income Security Act of 1974 or 
     under an employee benefit plan which is a governmental plan 
     under section 414(d) of the Internal Revenue Code of 1986;
       ``(II) a deferred compensation plan under section 457 of 
     the Internal Revenue Code of 1986; or
       ``(III) a tax-deferred annuity under section 403(b) of the 
     Internal Revenue Code of 1986;

     except that such amount under this subparagraph shall not 
     constitute disposable income, as defined in section 
     1325(b)(2); or
       ``(ii) to a health insurance plan regulated by State law 
     whether or not subject to such title;''.

     SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLVING 
                   BANKRUPTCY PROFESSIONALS.

       (a) In General.--Section 1334 of title 28, United States 
     Code, is amended--
       (1) in subsection (b), by striking ``Notwithstanding'' and 
     inserting ``Except as provided in subsection (e)(2), and 
     notwithstanding''; and
       (2) by striking subsection (e) and inserting the following:
       ``(e) The district court in which a case under title 11 is 
     commenced or is pending shall have exclusive jurisdiction--
       ``(1) of all the property, wherever located, of the debtor 
     as of the commencement of such case, and of property of the 
     estate; and
       ``(2) over all claims or causes of action that involve 
     construction of section 327 of title 11, United States Code, 
     or rules relating to disclosure requirements under section 
     327.''.
       (b) Applicability.--This section shall only apply to cases 
     filed after the date of enactment of this Act.

     SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE.

       (a) Actions Under Chapter 7 or 13 of Title 11, United 
     States Code.--Section 1930(a) of title 28, United States 
     Code, is amended by striking paragraph (1) and inserting the 
     following:
       ``(1) For a case commenced--
       ``(A) under chapter 7 of title 11, $160; or
       ``(B) under chapter 13 of title 11, $150.''.
       (b) United States Trustee System Fund.--Section 589a(b) of 
     title 28, United States Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1)(A) 40.63 percent of the fees collected under section 
     1930(a)(1)(A) of this title in cases commenced under chapter 
     7 of title 11; and
       ``(B) 70.00 percent of the fees collected under section 
     1930(a)(1)(B) of this title in cases commenced under chapter 
     13 of title 11;'';
       (2) in paragraph (2), by striking ``one-half'' and 
     inserting ``three-fourths''; and
       (3) in paragraph (4), by striking ``one-half'' and 
     inserting ``100 percent''.
       (c) Collection and Deposit of Miscellaneous Bankruptcy 
     Fees.--Section 406(b) of the Judiciary Appropriations Act, 
     1990 (28 U.S.C. 1931 note) is amended by striking ``pursuant 
     to 28 U.S.C. section 1930(b)'' and all that follows through 
     ``28 U.S.C. section 1931'' and inserting ``under section 
     1930(b) of title 28, United States Code, and 31.25 percent of 
     the fees collected under section 1930(a)(1)(A) of that title, 
     30.00 percent of the fees collected under section 
     1930(a)(1)(B) of that title, and 25 percent of the fees 
     collected under section 1930(a)(3) of that title shall be 
     deposited as offsetting receipts to the fund established 
     under section 1931 of that title''.

     SEC. 326. 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. 327. FAIR VALUATION OF COLLATERAL.

       Section 506(a) of title 11, United States Code, is amended 
     by--
       (1) inserting ``(1)'' after ``(a)''; and
       (2) by adding at the end the following:
       ``(2) If the debtor is an individual in a case under 
     chapter 7 or 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 the 
     filing of the petition without deduction for costs of sale or 
     marketing. With respect to property acquired for personal, 
     family, or household purposes, 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. 328. 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 the satisfaction of 
     any provision (other than a penalty rate or penalty 
     provision) relating to a default arising from any failure to 
     perform nonmonetary obligations under an unexpired lease of 
     real property, if it is impossible for the trustee to cure 
     such default by performing nonmonetary acts at and after the 
     time of assumption, except that if such default arises from a 
     failure to operate in accordance with a nonresidential real 
     property lease, then such default shall be cured by 
     performance at and after the time of assumption in accordance 
     with such lease, and pecuniary losses resulting from such 
     default shall be compensated in accordance with the 
     provisions of this paragraph;''; and
       (B) in paragraph (2)(D), by striking ``penalty rate or 
     provision'' and inserting ``penalty rate or penalty 
     provision'';
       (2) in subsection (c)--
       (A) in paragraph (2), by inserting ``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)(2) 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, other than a 
     default arising from failure to operate a nonresidential real 
     property lease subject to section 365(b)(1)(A), 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. 329. 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--
       ``(i) wages, salaries, and commissions for services 
     rendered after the commencement of the case; and
       ``(ii) wages and benefits awarded pursuant to a judicial 
     proceeding or a proceeding of the National Labor Relations 
     Board as back pay attributable to any period of time 
     occurring after commencement of the case under this title, as 
     a result of a violation of Federal or State law by the 
     debtor, without regard to the time of the occurrence of 
     unlawful conduct on which such award is based or to whether 
     any services were rendered, if the court determines that 
     payment of wages and benefits by reason of the operation of 
     this clause will not substantially increase the probability 
     of layoff or termination of current employees, or of 
     nonpayment of domestic support obligations, during the case 
     under this title;''.

     SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF CERTAIN 
                   PROCEEDINGS.

       (a) Chapter 7.--Section 727(a) of title 11, United States 
     Code, as amended by section 106, is amended--
       (1) in paragraph (10), by striking ``or'' at the end;
       (2) in paragraph (11) by striking the period at the end and 
     inserting ``; or''; and
       (3) by inserting after paragraph (11) the following:
       ``(12) the court after notice and a hearing held not more 
     than 10 days before the date of the entry of the order 
     granting the discharge finds that there is reasonable cause 
     to believe that--
       ``(A) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(B) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       (b) Chapter 11.--Section 1141(d) of title 11, United States 
     Code, as amended by section 321, is amended by adding at the 
     end the following:
       ``(C) unless after notice and a hearing held not more than 
     10 days before the date of the

[[Page 2923]]

     entry of the order granting the discharge, the court finds 
     that there is no reasonable cause to believe that--
       ``(i) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(ii) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       (c) Chapter 12.--Section 1228 of title 11, United States 
     Code, is amended--
       (1) in subsection (a) by striking ``As'' and inserting 
     ``Subject to subsection (d), as'',
       (2) in subsection (b) by striking ``At'' and inserting 
     ``Subject to subsection (d), at'', and
       (3) by adding at the end the following:
       ``(f) The court may not grant a discharge under this 
     chapter unless the court after notice and a hearing held not 
     more than 10 days before the date of the entry of the order 
     granting the discharge finds that there is no reasonable 
     cause to believe that--
       ``(1) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(2) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       (d) Chapter 13.--Section 1328 of title 11, United States 
     Code, as amended by section 106, is amended--
       (1) in subsection (a) by striking ``As'' and inserting 
     ``Subject to subsection (d), as'',
       (2) in subsection (b) by striking ``At'' and inserting 
     ``Subject to subsection (d), at'', and
       (3) by adding at the end the following:
       ``(h) The court may not grant a discharge under this 
     chapter unless the court after notice and a hearing held not 
     more than 10 days before the date of the entry of the order 
     granting the discharge finds that there is no reasonable 
     cause to believe that--
       ``(1) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(2) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.

     SEC. 331. LIMITATION ON RETENTION BONUSES, SEVERANCE PAY, AND 
                   CERTAIN OTHER PAYMENTS.

       Section 503 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(c) Notwithstanding subsection (b), there shall neither 
     be allowed, nor paid--
       ``(1) a transfer made to, or an obligation incurred for the 
     benefit of, an insider of the debtor for the purpose of 
     inducing such person to remain with the debtor's business, 
     absent a finding by the court based on evidence in the record 
     that--
       ``(A) the transfer or obligation is essential to retention 
     of the person because the individual has a bona fide job 
     offer from another business at the same or greater rate of 
     compensation;
       ``(B) the services provided by the person are essential to 
     the survival of the business; and
       ``(C) either--
       ``(i) the amount of the transfer made to, or obligation 
     incurred for the benefit of, the person is not greater than 
     an amount equal to 10 times the amount of the mean transfer 
     or obligation of a similar kind given to nonmanagement 
     employees for any purpose during the calendar year in which 
     the transfer is made or the obligation is incurred; or
       ``(ii) if no such similar transfers were made to, or 
     obligations were incurred for the benefit of, such 
     nonmanagement employees during such calendar year, the amount 
     of the transfer or obligation is not greater than an amount 
     equal to 25 percent of the amount of any similar transfer or 
     obligation made to or incurred for the benefit of such 
     insider for any purpose during the calendar year before the 
     year in which such transfer is made or obligation is 
     incurred;
       ``(2) a severance payment to an insider of the debtor, 
     unless--
       ``(A) the payment is part of a program that is generally 
     applicable to all full-time employees; and
       ``(B) the amount of the payment is not greater than 10 
     times the amount of the mean severance pay given to 
     nonmanagement employees during the calendar year in which the 
     payment is made; or
       ``(3) other transfers or obligations that are outside the 
     ordinary course of business and not justified by the facts 
     and circumstances of the case, including transfers made to, 
     or obligations incurred for the benefit of, officers, 
     managers, or consultants hired after the date of the filing 
     of the petition.''.

       TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

           Subtitle A--General Business Bankruptcy Provisions

     SEC. 401. 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 under section 15A of the 
     Securities Exchange Act of 1934 or a national securities 
     exchange registered with the Securities and Exchange 
     Commission under section 6 of the Securities Exchange Act of 
     1934;''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, as amended by sections 224, 303, and 311, is 
     amended by inserting after paragraph (24) the following:
       ``(25) under subsection (a), of--
       ``(A) the commencement or continuation of an investigation 
     or action by a securities self regulatory organization to 
     enforce such organization's regulatory power;
       ``(B) the enforcement of an order or decision, other than 
     for monetary sanctions, obtained in an action by such 
     securities self regulatory organization to enforce such 
     organization's regulatory power; or
       ``(C) any act taken by such securities self regulatory 
     organization to delist, delete, or refuse to permit quotation 
     of any stock that does not meet applicable regulatory 
     requirements;''.

     SEC. 402. 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. 403. PROTECTION OF REFINANCE OF SECURITY INTEREST.

       Subparagraphs (A), (B), and (C) of section 547(e)(2) of 
     title 11, United States Code, are each amended by striking 
     ``10'' each place it appears and inserting ``30''.

     SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

       (a) In General.--Section 365(d)(4) of title 11, United 
     States Code, is amended to read as follows:
       ``(4)(A) Subject to subparagraph (B), an unexpired lease of 
     nonresidential real property under which the debtor is the 
     lessee shall be deemed rejected, and the trustee shall 
     immediately surrender that nonresidential real 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), prior to the expiration of the 120-day 
     period, for 90 days on the motion of the trustee or 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 in each instance.''.
       (b) Exception.--Section 365(f)(1) of title 11, United 
     States Code, is amended by striking ``subsection'' the first 
     place it appears and inserting ``subsections (b) and''.

     SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.

       (a) Appointment.--Section 1102(a) of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(4) On request of a party in interest and after notice 
     and a hearing, the court may order the United States trustee 
     to change 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. The court may order the United 
     States trustee to increase the number of members of a 
     committee to include a creditor that is a small business 
     concern (as described in section 3(a)(1) of the Small 
     Business Act), if the court determines that the creditor 
     holds claims (of the kind represented by the committee) the 
     aggregate amount of which, in comparison to the annual gross 
     revenue of that creditor, is disproportionately large.''.
       (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--
       ``(A) provide access to information for creditors who--
       ``(i) hold claims of the kind represented by that 
     committee; and
       ``(ii) are not appointed to the committee;
       ``(B) solicit and receive comments from the creditors 
     described in subparagraph (A); and
       ``(C) be subject to a court order that compels any 
     additional report or disclosure to be made to the creditors 
     described in subparagraph (A).''.

     SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES 
                   CODE.

       Section 546 of title 11, United States Code, is amended--
       (1) by redesignating the second subsection (g) (as added by 
     section 222(a) of Public Law 103-394) as subsection (h);
       (2) in subsection (h), as so redesignated, by inserting 
     ``and subject to the prior rights of holders of security 
     interests in such goods or the proceeds of such goods'' after 
     ``consent of a creditor''; and
       (3) by adding at the end the following:
       ``(i)(1) Notwithstanding paragraphs (2) and (3) of section 
     545, the trustee may not avoid a warehouseman's lien for 
     storage, transportation, or other costs incidental to the 
     storage and handling of goods.
       ``(2) The prohibition under paragraph (1) shall be applied 
     in a manner consistent with

[[Page 2924]]

     any State statute applicable to such lien that is similar to 
     section 7-209 of the Uniform Commercial Code, as in effect on 
     the date of enactment of the Bankruptcy Abuse Prevention and 
     Consumer Protection Act of 2005, or any successor to such 
     section 7-209.''.

     SEC. 407. AMENDMENTS 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) by striking ``(A) In'' and inserting ``In''; and
       (B) by inserting ``to an examiner, trustee under chapter 
     11, or professional person'' after ``awarded''; and
       (2) by adding at the end the following:
       ``(7) In determining the amount of reasonable compensation 
     to be awarded to a trustee, the court shall treat such 
     compensation as a commission, based on section 326.''.

     SEC. 408. 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. 409. PREFERENCES.

       Section 547(c) of title 11, United States Code, is 
     amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(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 (8), by striking the period at the end and 
     inserting ``; or''; and
       (3) 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. 410. VENUE OF CERTAIN PROCEEDINGS.

       Section 1409(b) of title 28, United States Code, is amended 
     by inserting ``, or a debt (excluding a consumer debt) 
     against a noninsider of less than $10,000,'' after 
     ``$5,000''. Section 1409(b) of title 28, United States Code, 
     is further amended by striking ``$5,000'' and inserting 
     ``$15,000''.

     SEC. 411. 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 (2), on''; and
       (2) by adding at the end the following:
       ``(2)(A) The 120-day period specified in paragraph (1) may 
     not be extended beyond a date that is 18 months after the 
     date of the order for relief under this chapter.
       ``(B) The 180-day period specified in paragraph (1) may not 
     be extended beyond a date that is 20 months after the date of 
     the order for relief under this chapter.''.

     SEC. 412. 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. 413. CREDITOR REPRESENTATION AT FIRST MEETING OF 
                   CREDITORS.

       Section 341(c) of title 11, United States Code, is amended 
     by inserting at the end the following: ``Notwithstanding any 
     local court rule, provision of a State constitution, any 
     otherwise applicable nonbankruptcy law, or any 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 1 creditor) shall be permitted 
     to appear at and participate in the meeting of creditors in a 
     case under chapter 7 or 13, either alone or in conjunction 
     with an attorney for the creditor. Nothing in this subsection 
     shall be construed to require any creditor to be represented 
     by an attorney at any meeting of creditors.''.

     SEC. 414. 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. 415. FACTORS FOR COMPENSATION OF PROFESSIONAL PERSONS.

       Section 330(a)(3) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (D), by striking ``and'' at the end;
       (2) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (3) by inserting after subparagraph (D) the following:
       ``(E) with respect to a professional person, whether the 
     person is board certified or otherwise has demonstrated skill 
     and experience in the bankruptcy field; and''.

     SEC. 416. 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.
       ``(B) Upon the filing of a report under subparagraph (A)--
       ``(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.
       ``(C) The court shall resolve any dispute arising out of an 
     election described in subparagraph (A).''.

     SEC. 417. UTILITY SERVICE.

       Section 366 of title 11, United States Code, is amended--
       (1) in subsection (a), by striking ``subsection (b)'' and 
     inserting ``subsections (b) and (c)''; and
       (2) by adding at the end the following:
       ``(c)(1)(A) For purposes of this subsection, the term 
     `assurance of payment' means--
       ``(i) a cash deposit;
       ``(ii) a letter of credit;
       ``(iii) a certificate of deposit;
       ``(iv) a surety bond;
       ``(v) a prepayment of utility consumption; or
       ``(vi) another form of security that is mutually agreed on 
     between the utility and the debtor or the trustee.
       ``(B) For purposes of this subsection an administrative 
     expense priority shall not constitute an assurance of 
     payment.
       ``(2) Subject to paragraphs (3) and (4), with respect to a 
     case filed under chapter 11, a utility referred to in 
     subsection (a) may alter, refuse, or discontinue utility 
     service, if during the 30-day period beginning on the date of 
     the filing of the petition, the utility does not receive from 
     the debtor or the trustee adequate assurance of payment for 
     utility service that is satisfactory to the utility.
       ``(3)(A) On request of a party in interest and after notice 
     and a hearing, the court may order modification of the amount 
     of an assurance of payment under paragraph (2).
       ``(B) In making a determination under this paragraph 
     whether an assurance of payment is adequate, the court may 
     not consider--
       ``(i) the absence of security before the date of the filing 
     of the petition;
       ``(ii) the payment by the debtor of charges for utility 
     service in a timely manner before the date of the filing of 
     the petition; or
       ``(iii) the availability of an administrative expense 
     priority.
       ``(4) Notwithstanding any other provision of law, with 
     respect to a case subject to this subsection, a utility may 
     recover or set off against a security deposit provided to the 
     utility by the debtor before the date of the filing of the 
     petition without notice or order of the court.''.

     SEC. 418. 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) Under the 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 if the court 
     determines that such individual has income less than 150 
     percent of the income official poverty line (as defined by 
     the Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981) applicable to a family of the 
     size involved and is unable to pay that 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.
       ``(2) The district court or the bankruptcy court may waive 
     for such debtors other fees prescribed under subsections (b) 
     and (c).
       ``(3) This subsection does not restrict the district court 
     or the bankruptcy court from

[[Page 2925]]

     waiving, in accordance with Judicial Conference policy, fees 
     prescribed under this section for other debtors and 
     creditors.''.

     SEC. 419. MORE COMPLETE INFORMATION REGARDING ASSETS OF THE 
                   ESTATE.

       (a) In General.--
       (1) Disclosure.--The Judicial Conference of the United 
     States, in accordance with section 2075 of title 28 of the 
     United States Code and after consideration of the views of 
     the Director of the Executive Office for United States 
     Trustees, shall propose amended Federal Rules of Bankruptcy 
     Procedure and in accordance with rule 9009 of the Federal 
     Rules of Bankruptcy Procedure shall prescribe official 
     bankruptcy forms directing debtors under chapter 11 of title 
     11 of United States Code, to disclose the information 
     described in paragraph (2) by filing and serving periodic 
     financial and other reports designed to provide such 
     information.
       (2) Information.--The information referred to in paragraph 
     (1) is the value, operations, and profitability of any 
     closely held corporation, partnership, or of any other entity 
     in which the debtor holds a substantial or controlling 
     interest.
       (b) Purpose.--The purpose of the rules and reports under 
     subsection (a) shall be to assist parties in interest taking 
     steps to ensure that the debtor's interest in any entity 
     referred to in subsection (a)(2) is used for the payment of 
     allowed claims against debtor.

            Subtitle B--Small Business Bankruptcy Provisions

     SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

       Section 1125 of title 11, United States Code, is amended--
       (1) in subsection (a)(1), by inserting before the semicolon 
     ``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''; and
       (2) by striking subsection (f), and inserting the 
     following:
       ``(f) Notwithstanding subsection (b), in a small business 
     case--
       ``(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 
     under 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 later than 
     25 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. 432. DEFINITIONS.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended by striking paragraph (51C) and inserting 
     the following:
       ``(51C) `small business case' means a case filed under 
     chapter 11 of this title in which the debtor is a small 
     business debtor;
       ``(51D) `small business debtor'--
       ``(A) subject to subparagraph (B), means a person engaged 
     in commercial or business activities (including any affiliate 
     of such person that is also a debtor under this title and 
     excluding a person whose primary activity is the business of 
     owning or operating real property or activities incidental 
     thereto) that has aggregate noncontingent liquidated secured 
     and unsecured debts as of the date of the petition or the 
     date of the order for relief in an amount not more than 
     $2,000,000 (excluding debts owed to 1 or more affiliates or 
     insiders) for a case in which the United States trustee has 
     not appointed under section 1102(a)(1) a committee of 
     unsecured creditors or where the court has determined that 
     the committee of unsecured creditors is not sufficiently 
     active and representative to provide effective oversight of 
     the debtor; and
       ``(B) does not include any member of a group of affiliated 
     debtors that has aggregate noncontingent liquidated secured 
     and unsecured debts in an amount greater than $2,000,000 
     (excluding debt owed to 1 or more affiliates or insiders);''.
       (b) Conforming Amendment.--Section 1102(a)(3) of title 11, 
     United States Code, is amended by inserting ``debtor'' after 
     ``small business''.
       (c) Adjustment of Dollar Amounts.--Section 104(b) of title 
     11, United States Code, as amended by section 226, is amended 
     by inserting ``101(51D),'' after ``101(3),'' each place it 
     appears.

     SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.

       Within a reasonable period of time after the date of 
     enactment of this Act, the Judicial Conference of the United 
     States shall prescribe in accordance with rule 9009 of the 
     Federal Rules of Bankruptcy Procedure official 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. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS.

       (a) Reporting Required.--
       (1) In general.--Chapter 3 of title 11, United States Code, 
     is amended by inserting after section 307 the following:

     ``Sec. 308. Debtor reporting requirements

       ``(a) For purposes of this section, the term 
     `profitability' means, with respect to a debtor, the amount 
     of money that the debtor has earned or lost during current 
     and recent fiscal periods.
       ``(b) A small business debtor shall file periodic financial 
     and other reports containing information including--
       ``(1) the debtor's profitability;
       ``(2) reasonable approximations of the debtor's projected 
     cash receipts and cash disbursements over a reasonable 
     period;
       ``(3) comparisons of actual cash receipts and disbursements 
     with projections in prior reports;
       ``(4)(A) whether the debtor is--
       ``(i) in compliance in all material respects with 
     postpetition requirements imposed by this title and the 
     Federal Rules of Bankruptcy Procedure; and
       ``(ii) timely filing tax returns and other required 
     government filings and paying taxes and other administrative 
     expenses when due;
       ``(B) if the debtor is not in compliance with the 
     requirements referred to in subparagraph (A)(i) or filing tax 
     returns and other required government filings and making the 
     payments referred to in subparagraph (A)(ii), what the 
     failures are and how, at what cost, and when the debtor 
     intends to remedy such failures; and
       ``(C) 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) Clerical amendment.--The table of sections for 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 under section 2075 of 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. 435. UNIFORM REPORTING RULES AND FORMS FOR SMALL 
                   BUSINESS CASES.

       (a) Proposal of Rules and Forms.--The Judicial Conference 
     of the United States shall propose in accordance with section 
     2073 of title 28 of the United States Code amended Federal 
     Rules of Bankruptcy Procedure, and shall prescribe in 
     accordance with rule 9009 of the Federal Rules of Bankruptcy 
     Procedure official bankruptcy forms, directing 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 expenses when due.
       (b) Purpose.--The rules and forms proposed under subsection 
     (a) shall be designed to achieve a practical balance among--
       (1) the reasonable needs of the bankruptcy court, the 
     United States trustee, creditors, and other parties in 
     interest for reasonably complete information;
       (2) a 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 such debtor to understand such debtor's financial 
     condition and plan the such debtor's future.

     SEC. 436. DUTIES IN SMALL BUSINESS CASES.

       (a) Duties in Chapter 11 Cases.--Subchapter I of chapter 11 
     of title 11, United States Code, as amended by section 321, 
     is amended by adding at the end the following:

     ``Sec. 1116. Duties of trustee or debtor in possession in 
       small business cases

       ``In a small business case, a trustee or the debtor in 
     possession, in addition to the duties provided in this title 
     and as otherwise required by law, shall--
       ``(1) append to the voluntary petition or, in an 
     involuntary case, file not later than 7 days after the date 
     of the order for relief--
       ``(A) its most recent balance sheet, statement of 
     operations, cash-flow statement, and Federal income tax 
     return; or
       ``(B) a statement made under penalty of perjury that no 
     balance sheet, statement of operations, or cash-flow 
     statement has been prepared and no Federal tax return has 
     been filed;
       ``(2) attend, through its senior management personnel and 
     counsel, meetings scheduled by the court or the United States 
     trustee, including initial debtor interviews, scheduling 
     conferences, and meetings of

[[Page 2926]]

     creditors convened under section 341 unless the court, after 
     notice and a hearing, waives that requirement upon a finding 
     of extraordinary and compelling circumstances;
       ``(3) timely file all schedules and statements of financial 
     affairs, unless the court, after notice and a hearing, grants 
     an extension, which shall not extend such time period to a 
     date later than 30 days after the date of the order for 
     relief, absent extraordinary and compelling circumstances;
       ``(4) file all postpetition financial and other reports 
     required by the Federal Rules of Bankruptcy Procedure or by 
     local rule of the district court;
       ``(5) subject to section 363(c)(2), maintain insurance 
     customary and appropriate to the industry;
       ``(6)(A) timely file tax returns and other required 
     government filings; and
       ``(B) subject to section 363(c)(2), timely pay all taxes 
     entitled to administrative expense priority except those 
     being contested by appropriate proceedings being diligently 
     prosecuted; and
       ``(7) allow the United States trustee, or a designated 
     representative of the United States trustee, 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) Clerical Amendment.--The table of sections for chapter 
     11 of title 11, United States Code, as amended by section 
     321, is amended by inserting after the item relating to 
     section 1115 the following:

``1116. Duties of trustee or debtor in possession in small business 
              cases.''.

     SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.

       Section 1121 of title 11, United States Code, is amended by 
     striking subsection (e) and inserting the following:
       ``(e) In a small business case--
       ``(1) only the debtor may file a plan until after 180 days 
     after the date of the order for relief, unless that period 
     is--
       ``(A) extended as provided by this subsection, after notice 
     and a hearing; or
       ``(B) the court, for cause, orders otherwise;
       ``(2) the plan and a disclosure statement (if any) shall be 
     filed not later than 300 days after the date of the order for 
     relief; and
       ``(3) the time periods specified in paragraphs (1) and (2), 
     and the time fixed in section 1129(e) within which the plan 
     shall be confirmed, may be extended only if--
       ``(A) the debtor, after providing notice to parties in 
     interest (including the United States trustee), demonstrates 
     by a preponderance of the evidence that it is more likely 
     than not that the court will confirm a plan within a 
     reasonable period of time;
       ``(B) a new deadline is imposed at the time the extension 
     is granted; and
       ``(C) the order extending time is signed before the 
     existing deadline has expired.''.

     SEC. 438. 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 court shall confirm a 
     plan that complies with the applicable provisions of this 
     title and that is filed in accordance with section 1121(e) 
     not later than 45 days after the plan is filed unless the 
     time for confirmation is extended in accordance with section 
     1121(e)(3).''.

     SEC. 439. 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; and'';
       (2) in paragraph (5), by striking ``and'' at the end;
       (3) in paragraph (6), by striking the period at the end and 
     inserting a semicolon; and
       (4) by adding at the end the following:
       ``(7) in each of such small business cases--
       ``(A) conduct an initial debtor interview as soon as 
     practicable after the date of the order for relief but before 
     the first meeting scheduled under section 341(a) of title 11, 
     at which time the United States trustee shall--
       ``(i) begin to investigate the debtor's viability;
       ``(ii) inquire about the debtor's business plan;
       ``(iii) explain the debtor's obligations to file monthly 
     operating reports and other required reports;
       ``(iv) attempt to develop an agreed scheduling order; and
       ``(v) inform the debtor of other obligations;
       ``(B) if determined to be appropriate and advisable, visit 
     the appropriate business premises of the debtor, 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 any case 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 after 
     making that finding to the court for relief.''.

     SEC. 440. SCHEDULING CONFERENCES.

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

     SEC. 441. SERIAL FILER PROVISIONS.

       Section 362 of title 11, United States Code, as amended by 
     sections 106, 305, and 311, is amended--
       (1) in subsection (k), as so redesignated by section 305--
       (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, the recovery under paragraph (1) of this 
     subsection against such entity shall be limited to actual 
     damages.''; and
       (2) by adding at the end the following:
       ``(n)(1) Except as provided in paragraph (2), subsection 
     (a) does not apply in a case in which the debtor--
       ``(A) is a debtor in a small business case pending at the 
     time the petition is filed;
       ``(B) was a debtor in a small business case that 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 small business case in which a plan 
     was confirmed in the 2-year period ending on the date of the 
     order for relief entered with respect to the petition; or
       ``(D) is an entity that has acquired substantially all of 
     the assets or business of a small business debtor described 
     in subparagraph (A), (B), or (C), unless such entity 
     establishes by a preponderance of the evidence that such 
     entity acquired substantially all of the assets or business 
     of such small business debtor in good faith and not for the 
     purpose of evading this paragraph.
       ``(2) Paragraph (1) does not apply--
       ``(A) to an involuntary case involving no collusion by the 
     debtor with creditors; or
       ``(B) to the filing of a petition if--
       ``(i) the debtor proves by a preponderance of the evidence 
     that the filing of the petition resulted from circumstances 
     beyond the control of the debtor not foreseeable at the time 
     the case then pending was filed; and
       ``(ii) it is more likely than not that the court will 
     confirm a feasible plan, but not a liquidating plan, within a 
     reasonable period of time.''.

     SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND 
                   APPOINTMENT OF TRUSTEE.

       (a) Expanded Grounds for Dismissal or Conversion.--Section 
     1112 of title 11, United States Code, is amended by striking 
     subsection (b) and inserting the following:
       ``(b)(1) Except as provided in paragraph (2) of this 
     subsection, subsection (c) of this section, and section 
     1104(a)(3), on request of a party in interest, and after 
     notice and a hearing, absent unusual circumstances 
     specifically identified by the court that establish that the 
     requested conversion or dismissal is not in the best 
     interests of creditors and the estate, the court shall 
     convert a case under this chapter to a case under chapter 7 
     or dismiss a case under this chapter, whichever is in the 
     best interests of creditors and the estate, if the movant 
     establishes cause.
       ``(2) The relief provided in paragraph (1) shall not be 
     granted absent unusual circumstances specifically identified 
     by the court that establish that such relief is not in the 
     best interests of creditors and the estate, if the debtor or 
     another party in interest objects and establishes that--
       ``(A) there is a reasonable likelihood that a plan will be 
     confirmed within the timeframes established in sections 
     1121(e) and 1129(e) of this title, or if such sections do not 
     apply, within a reasonable period of time; and
       ``(B) the grounds for granting such relief include an act 
     or omission of the debtor other than under paragraph (4)(A)--
       ``(i) for which there exists a reasonable justification for 
     the act or omission; and
       ``(ii) that will be cured within a reasonable period of 
     time fixed by the court.
       ``(3) The court shall commence the hearing on a motion 
     under this subsection not later than 30 days after filing of 
     the motion, and shall decide the motion not later than 15 
     days after commencement of such 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.
       ``(4) For purposes of this subsection, the term `cause' 
     includes--
       ``(A) substantial or continuing loss to or diminution of 
     the estate and the absence of a reasonable likelihood of 
     rehabilitation;
       ``(B) gross mismanagement of the estate;
       ``(C) failure to maintain appropriate insurance that poses 
     a risk to the estate or to the public;
       ``(D) unauthorized use of cash collateral substantially 
     harmful to 1 or more creditors;
       ``(E) failure to comply with an order of the court;

[[Page 2927]]

       ``(F) unexcused failure to satisfy timely 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) or an examination ordered under rule 
     2004 of the Federal Rules of Bankruptcy Procedure without 
     good cause shown by the debtor;
       ``(H) failure timely to provide information or attend 
     meetings reasonably requested by the United States trustee 
     (or the bankruptcy administrator, if any);
       ``(I) failure timely to pay taxes owed after the date of 
     the order for relief or to file tax returns due after the 
     date of 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;
       ``(M) inability to effectuate substantial consummation of a 
     confirmed plan;
       ``(N) material default by the debtor with respect to a 
     confirmed plan;
       ``(O) termination of a confirmed plan by reason of the 
     occurrence of a condition specified in the plan; and
       ``(P) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date of the 
     filing of the petition.''.
       (b) Additional Grounds for Appointment of Trustee.--Section 
     1104(a) of title 11, United States Code, is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(3) if grounds exist to convert or dismiss the case under 
     section 1112, but the court determines that the appointment 
     of a trustee or an examiner is in the best interests of 
     creditors and the estate.''.

     SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED STATES CODE, 
                   WITH RESPECT TO SMALL BUSINESSES.

       Not later than 2 years after the date of enactment of this 
     Act, the Administrator of the Small Business Administration, 
     in consultation with the Attorney General, the Director of 
     the Executive Office for 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, 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. 444. 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 striking subparagraph (B) and inserting the 
     following:
       ``(B) the debtor has commenced monthly payments that--
       ``(i) may, in the debtor's sole discretion, notwithstanding 
     section 363(c)(2), be made from rents or other income 
     generated before, on, or after the date of 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); and
       ``(ii) 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. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.

       Section 503(b) 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 at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(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 a penalty provision, for the period of 2 years 
     following the later of the rejection date or the 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 an entity other than the debtor, 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);''.

     SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A PLAN 
                   ADMINISTRATOR OF AN EMPLOYEE BENEFIT PLAN.

       (a) In General.--Section 521(a) of title 11, United States 
     Code, as amended by sections 106 and 304, is amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding after paragraph (6) the following:
       ``(7) unless a trustee is serving in the case, continue to 
     perform the obligations required of the administrator (as 
     defined in section 3 of the Employee Retirement Income 
     Security Act of 1974) of an employee benefit plan if at the 
     time of the commencement of the case the debtor (or any 
     entity designated by the debtor) served as such 
     administrator.''.
       (b) Duties of Trustees.--Section 704(a) of title 11, United 
     States Code, as amended by sections 102 and 219, is amended--
       (1) in paragraph (10), by striking ``and'' at the end; and
       (2) by adding at the end the following:
       ``(11) if, at the time of the commencement of the case, the 
     debtor (or any entity designated by the debtor) served as the 
     administrator (as defined in section 3 of the Employee 
     Retirement Income Security Act of 1974) of an employee 
     benefit plan, continue to perform the obligations required of 
     the administrator; and''.
       (c) Conforming Amendment.--Section 1106(a)(1) of title 11, 
     United States Code, is amended to read as follows:
       ``(1) perform the duties of the trustee, as specified in 
     paragraphs (2), (5), (7), (8), (9), (10), and (11) of section 
     704;''.

     SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EMPLOYEES.

       Section 1114(d) of title 11, United States Code, is 
     amended--
       (1) by striking ``appoint'' and inserting ``order the 
     appointment of'', and
       (2) by adding at the end the following: ``The United States 
     trustee shall appoint any such committee.''.

                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 striking the last sentence and inserting the 
     following:
       ``(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--BANKRUPTCY DATA

     SEC. 601. IMPROVED BANKRUPTCY STATISTICS.

       (a) In General.--Chapter 6 of title 28, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 159. Bankruptcy statistics

       ``(a) The clerk of the district court, or the clerk of the 
     bankruptcy court if one is certified pursuant to section 
     156(b) of this title, shall collect statistics regarding 
     debtors who are individuals with primarily consumer debts 
     seeking relief under chapters 7, 11, and 13 of title 11. 
     Those statistics shall be in a standardized format prescribed 
     by the Director of the Administrative Office of the United 
     States Courts (referred to in this section as the 
     `Director').
       ``(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 July 1, 2008, 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 debtors;
       ``(B) the current monthly income, average income, and 
     average expenses of 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 cases 
     filed during 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 date of the 
     filing of the petition and the closing of the case for cases 
     closed during the reporting period;

[[Page 2928]]

       ``(E) for cases closed during the reporting period--
       ``(i) the number of cases in which a reaffirmation 
     agreement was filed; and
       ``(ii)(I) the total number of reaffirmation agreements 
     filed;
       ``(II) of those cases in which a reaffirmation agreement 
     was filed, the number of cases in which the debtor was not 
     represented by an attorney; and
       ``(III) of those cases in which a reaffirmation agreement 
     was filed, the number of cases in which the reaffirmation 
     agreement 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 entered determining the 
     value of property securing a claim;
       ``(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 during the 6-year period preceding 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 attorney or damages awarded under 
     such Rule.''.
       (b) Clerical Amendment.--The table of sections for 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. 602. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY 
                   DATA.

       (a) Amendment.--Chapter 39 of title 28, United States Code, 
     is amended by adding at the end 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 
     in cases under chapter 11 of title 11.
       ``(b) Reports.--Each report 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 one 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;
       ``(2) economy, simplicity, and lack of undue burden on 
     persons with a duty to file reports; and
       ``(3) appropriate privacy concerns and safeguards.
       ``(d) Final Reports.--The uniform forms for final reports 
     required under subsection (a) for use 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, including for use under 
     section 707(b), actual costs of administering cases under 
     chapter 13 of title 11;
       ``(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.--The uniform forms for periodic 
     reports required under subsection (a) for use 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 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 of the date of the 
     order for relief and at the 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, 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) Clerical Amendment.--The table of sections for chapter 
     39 of title 28, United States Code, is amended by adding at 
     the end the following:

``589b. Bankruptcy data.''.

     SEC. 603. AUDIT PROCEDURES.

       (a) In General.--
       (1) Establishment of procedures.--The Attorney General (in 
     judicial districts served by United States trustees) and the 
     Judicial Conference of the United States (in judicial 
     districts served by bankruptcy administrators) shall 
     establish procedures to determine the accuracy, veracity, and 
     completeness of petitions, schedules, and other information 
     that the debtor is required to provide under sections 521 and 
     1322 of title 11, United States Code, and, if applicable, 
     section 111 of such title, in cases filed under chapter 7 or 
     13 of such title in which the debtor is an individual. Such 
     audits shall be in accordance with generally accepted 
     auditing standards and performed by independent certified 
     public accountants or independent licensed public 
     accountants, provided that the Attorney General and the 
     Judicial Conference, as appropriate, may develop alternative 
     auditing standards not later than 2 years after the date of 
     enactment of this Act.
       (2) Procedures.--Those procedures required by paragraph (1) 
     shall--
       (A) establish a method of selecting appropriate qualified 
     persons to contract to perform those audits;
       (B) 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;
       (C) require audits of schedules of income and expenses that 
     reflect greater than average variances from the statistical 
     norm of the district in which the schedules were filed if 
     those variances occur by reason of higher income or higher 
     expenses than the statistical norm of the district in which 
     the schedules were filed; and
       (D) 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.
       (b) Amendments.--Section 586 of title 28, United States 
     Code, is amended--
       (1) in subsection (a), by striking paragraph (6) and 
     inserting the following:
       ``(6) make such reports as the Attorney General directs, 
     including the results of audits performed under section 
     603(a) of the Bankruptcy Abuse Prevention and Consumer 
     Protection Act of 2005;''; and
       (2) by adding at the end the following:
       ``(f)(1) The United States trustee for each district is 
     authorized to contract with auditors to perform audits in 
     cases designated by the United States trustee, in accordance 
     with the procedures established under section 603(a) of the 
     Bankruptcy Abuse Prevention and Consumer Protection Act of 
     2005.
       ``(2)(A) The report of each audit referred to in paragraph 
     (1) 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 in which a material misstatement of 
     income or expenditures or of assets has been reported, the 
     clerk of the district court (or the clerk of the bankruptcy 
     court if one is certified under section 156(b) of this title) 
     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--

[[Page 2929]]

       ``(i) report the material misstatement, if appropriate, to 
     the United States Attorney pursuant to section 3057 of title 
     18; 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.''.
       (c) Amendments to Section 521 of Title 11, U.S.C.--Section 
     521(a) of title 11, United States Code, as so designated by 
     section 106, is amended in each of paragraphs (3) and (4) by 
     inserting ``or an auditor serving under section 586(f) of 
     title 28'' after ``serving in the case''.
       (d) Amendments to Section 727 of Title 11, U.S.C.--Section 
     727(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) the debtor has failed to explain satisfactorily--
       ``(A) a material misstatement in an audit referred to in 
     section 586(f) of title 28; 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 referred to in 
     section 586(f) of title 28.''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect 18 months after the date of enactment of 
     this Act.

     SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY OF 
                   BANKRUPTCY DATA.

       It is the sense of 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, 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 Congress and 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 VII--BANKRUPTCY TAX PROVISIONS

     SEC. 701. 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), by inserting ``(except that such 
     expenses, other than claims for wages, salaries, or 
     commissions that arise after the date of the filing of the 
     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)'' after ``507(a)(1)''; 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), recover 
     from property securing an allowed secured claim the 
     reasonable, necessary costs and expenses of preserving or 
     disposing of such property.
       ``(f) Notwithstanding the exclusion of ad valorem tax liens 
     under this section and subject to the requirements of 
     subsection (e), the following may be paid from property of 
     the estate which secures a tax lien, or the proceeds of such 
     property:
       ``(1) Claims for wages, salaries, and commissions that are 
     entitled to priority under section 507(a)(4).
       ``(2) Claims for contributions to an employee benefit plan 
     entitled to priority under section 507(a)(5).''.
       (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. 702. TREATMENT OF FUEL TAX CLAIMS.

       Section 501 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) A claim arising from the liability of a debtor for 
     fuel use tax assessed consistent with the requirements of 
     section 31705 of title 49 may be filed by the base 
     jurisdiction designated pursuant to the International Fuel 
     Tax Agreement (as defined in section 31701 of title 49) and, 
     if so filed, shall be allowed as a single claim.''.

     SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

       Section 505(b) of title 11, United States Code, is 
     amended--
       (1) in the first sentence, by inserting ``at the address 
     and in the manner designated in paragraph (1)'' after 
     ``determination of such tax'';
       (2) by striking ``(1) upon payment'' and inserting ``(A) 
     upon payment'';
       (3) by striking ``(A) such governmental unit'' and 
     inserting ``(i) such governmental unit'';
       (4) by striking ``(B) such governmental unit'' and 
     inserting ``(ii) such governmental unit'';
       (5) by striking ``(2) upon payment'' and inserting ``(B) 
     upon payment'';
       (6) by striking ``(3) upon payment'' and inserting ``(C) 
     upon payment'';
       (7) by striking ``(b)'' and inserting ``(2)''; and
       (8) by inserting before paragraph (2), as so designated, 
     the following:
       ``(b)(1)(A) The clerk shall maintain a list under which a 
     Federal, State, or local governmental unit responsible for 
     the collection of taxes within the district may--
       ``(i) designate an address for service of requests under 
     this subsection; and
       ``(ii) describe where further information concerning 
     additional requirements for filing such requests may be 
     found.
       ``(B) If such governmental unit does not designate an 
     address and provide such address to the clerk under 
     subparagraph (A), any request made under this subsection may 
     be served at the address for the filing of a tax return or 
     protest with the appropriate taxing authority of such 
     governmental unit.''.

     SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

       (a) In General.--Subchapter I of 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

       ``(a) If any provision of this title requires the payment 
     of interest on a tax claim or on an administrative expense 
     tax, or 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 the rate determined 
     under applicable nonbankruptcy law.
       ``(b) In the case of taxes paid under a confirmed plan 
     under this title, the rate of interest shall be determined as 
     of the calendar month in which the plan is confirmed.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter I of chapter 5 of title 11, United States Code, is 
     amended by adding at the end the following:

``511. Rate of interest on tax claims.''.

     SEC. 705. PRIORITY OF TAX CLAIMS.

       Section 507(a)(8) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A)--
       (A) in the matter preceding clause (i), by inserting ``for 
     a taxable year ending on or before the date of the filing of 
     the petition'' after ``gross receipts'';
       (B) in clause (i), by striking ``for a taxable year ending 
     on or before the date of the filing of the petition''; and
       (C) by striking clause (ii) and inserting the following:
       ``(ii) assessed within 240 days before the date of the 
     filing of the petition, exclusive of--

       ``(I) any time during which an offer in compromise with 
     respect to that tax was pending or in effect during that 240-
     day period, plus 30 days; and
       ``(II) any time during which a stay of proceedings against 
     collections was in effect in a prior case under this title 
     during that 240-day period, plus 90 days.''; and

       (2) by adding at the end the following:
     ``An otherwise applicable time period specified in this 
     paragraph shall be suspended for any period during which a 
     governmental unit is prohibited under applicable 
     nonbankruptcy law from collecting a tax as a result of a 
     request by the debtor for a hearing and an appeal of any 
     collection action taken or proposed against the debtor, plus 
     90 days; plus any time during which the stay of proceedings 
     was in effect in a prior case under this title or during 
     which collection was precluded by the existence of 1 or more 
     confirmed plans under this title, plus 90 days.''.

     SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

       Section 507(a)(8)(B) of title 11, United States Code, is 
     amended by striking ``assessed'' and inserting ``incurred''.

     SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 13.

       Section 1328(a)(2) of title 11, United States Code, as 
     amended by section 314, is amended by striking ``paragraph'' 
     and inserting ``section 507(a)(8)(C) or in paragraph (1)(B), 
     (1)(C),''.

     SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 11.

       Section 1141(d) of title 11, United States Code, as amended 
     by sections 321 and 330, is amended by adding at the end the 
     following:
       ``(6) Notwithstanding paragraph (1), the confirmation of a 
     plan does not discharge a debtor that is a corporation from 
     any debt--
       ``(A) of a kind specified in paragraph (2)(A) or (2)(B) of 
     section 523(a) that is owed to a

[[Page 2930]]

     domestic governmental unit, or owed to a person as the result 
     of an action filed under subchapter III of chapter 37 of 
     title 31 or any similar State statute; or
       ``(B) for a tax or customs duty with respect to which the 
     debtor--
       ``(i) made a fraudulent return; or
       ``(ii) willfully attempted in any manner to evade or to 
     defeat such tax or such customs duty.''.

     SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO PREPETITION 
                   TAXES.

       Section 362(a)(8) of title 11, United States Code, is 
     amended by striking ``the debtor'' and inserting ``a 
     corporate debtor's tax liability for a taxable period the 
     bankruptcy court may determine or concerning the tax 
     liability of a debtor who is an individual for a taxable 
     period ending before the date of the order for relief under 
     this title''.

     SEC. 710. 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;
       (2) in subparagraph (C), by striking ``deferred cash 
     payments,'' and all that follows through the end of the 
     subparagraph, and inserting ``regular installment payments in 
     cash--
       ``(i) of a total value, as of the effective date of the 
     plan, equal to the allowed amount of such claim;
       ``(ii) over a period ending not later than 5 years after 
     the date of the order for relief under section 301, 302, or 
     303; and
       ``(iii) in a manner not less favorable than the most 
     favored nonpriority unsecured claim provided for by the plan 
     (other than cash payments made to a class of creditors under 
     section 1122(b)); and''; and
       (3) by adding at the end the following:
       ``(D) with respect to a secured claim which would otherwise 
     meet the description of an unsecured claim of a governmental 
     unit under section 507(a)(8), but for the secured status of 
     that claim, the holder of that claim will receive on account 
     of that claim, cash payments, in the same manner and over the 
     same period, as prescribed in subparagraph (C).''.

     SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

       Section 545(2) of title 11, United States Code, is amended 
     by inserting before the semicolon at the end the following: 
     ``, except in any case in which a purchaser is a purchaser 
     described in section 6323 of the Internal Revenue Code of 
     1986, or in any other similar provision of State or local 
     law''.

     SEC. 712. 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) A tax under subsection (a) shall be paid on or before 
     the due date of the tax under applicable nonbankruptcy law, 
     unless--
       ``(1) the tax is a property tax secured by a lien against 
     property that is abandoned under section 554 of title 11, 
     within a reasonable period of time after the lien attaches, 
     by the trustee in a case under 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 
     or elected under chapter 7 of title 11; or
       ``(2) before the due date of the tax, an order of the court 
     makes 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 the 
     priority of that tax.''.
       (b) Payment of Ad Valorem Taxes Required.--Section 
     503(b)(1)(B)(i) of title 11, United States Code, is amended 
     by inserting ``whether secured or unsecured, including 
     property taxes for which liability is in rem, in personam, or 
     both,'' before ``except''.
       (c) Request for Payment of Administrative Expense Taxes 
     Eliminated.--Section 503(b)(1) of title 11, United States 
     Code, is amended--
       (1) in subparagraph (B), by striking ``and'' at the end;
       (2) in subparagraph (C), by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(D) notwithstanding the requirements of subsection (a), a 
     governmental unit shall not be required to file a request for 
     the payment of an expense described in subparagraph (B) or 
     (C), as a condition of its being an allowed administrative 
     expense;''.
       (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 with respect to the 
     property'' before the period at the end.

     SEC. 713. 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 
     the following: ``on or before the earlier of--
       ``(A) the date that is 10 days after the mailing to 
     creditors of the summary of the trustee's final report; or
       ``(B) the date on which the trustee commences final 
     distribution under this section;''.

     SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

       Section 523(a) of title 11, United States Code, as amended 
     by sections 215 and 224, is amended--
       (1) in paragraph (1)(B)--
       (A) in the matter preceding clause (i), by inserting ``or 
     equivalent report or notice,'' after ``a return,'';
       (B) in clause (i), by inserting ``or given'' after 
     ``filed''; and
       (C) in clause (ii)--
       (i) by inserting ``or given'' after ``filed''; and
       (ii) by inserting ``, report, or notice'' after ``return''; 
     and
       (2) by adding at the end the following:
     ``For purposes of this subsection, the term `return' means a 
     return that satisfies the requirements of applicable 
     nonbankruptcy law (including applicable filing requirements). 
     Such term 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 or 
     a final order 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 a similar State or local 
     law.''.

     SEC. 715. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID 
                   TAXES.

       Section 505(b)(2) of title 11, United States Code, as 
     amended by section 703, is amended by inserting ``the 
     estate,'' after ``misrepresentation,''.

     SEC. 716. 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 sections 102, 213, and 306, is amended by 
     inserting after paragraph (8) the following:
       ``(9) the debtor has filed all applicable Federal, State, 
     and local tax returns as required by section 1308.''.
       (b) Additional Time Permitted for Filing Tax Returns.--
       (1) In general.--Subchapter I of chapter 13 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 1308. Filing of prepetition tax returns

       ``(a) Not later than the day before the date on which the 
     meeting of the creditors is first scheduled to be held under 
     section 341(a), if the debtor was required to file a tax 
     return under applicable nonbankruptcy law, the debtor shall 
     file with appropriate tax authorities all tax returns for all 
     taxable periods ending during the 4-year period ending on the 
     date of the filing of the petition.
       ``(b)(1) Subject to paragraph (2), if the tax returns 
     required by subsection (a) have not been filed by the date on 
     which the meeting of creditors is first scheduled to be held 
     under section 341(a), the trustee may hold open that meeting 
     for a reasonable period of time to allow the debtor an 
     additional period of time to file any unfiled returns, but 
     such additional period of time shall not extend beyond--
       ``(A) for any return that is past due as of the date of the 
     filing of the petition, the date that is 120 days after the 
     date of that meeting; or
       ``(B) for any return that is not past due as of the date of 
     the filing of the petition, the later of--
       ``(i) the date that is 120 days after the date of that 
     meeting; or
       ``(ii) the date on which the return is due under the last 
     automatic extension of time for filing that return to which 
     the debtor is entitled, and for which request is timely made, 
     in accordance with applicable nonbankruptcy law.
       ``(2) After notice and a hearing, and order entered before 
     the tolling of any applicable filing period determined under 
     this subsection, if the debtor demonstrates by a 
     preponderance of the evidence that the failure to file a 
     return as required under this subsection is attributable to 
     circumstances beyond the control of the debtor, the court may 
     extend the filing period established by the trustee under 
     this subsection for--
       ``(A) a period of not more than 30 days for returns 
     described in paragraph (1); and
       ``(B) a period not to extend after the applicable extended 
     due date for a return described in paragraph (2).
       ``(c) For purposes of this section, the term `return' 
     includes a return prepared pursuant to subsection (a) or (b) 
     of section 6020 of the Internal Revenue Code of 1986, or a 
     similar State or local law, or a written stipulation to a 
     judgment or a final order entered by a nonbankruptcy 
     tribunal.''.
       (2) Conforming amendment.--The table of sections for 
     subchapter I of chapter 13 of title 11, United States Code, 
     is amended by adding at the end the following:

``1308. Filing of prepetition tax returns.''.


[[Page 2931]]


       (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 a tax return 
     under section 1308, 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 interest of the creditors and the estate.''.
       (d) Timely Filed Claims.--Section 502(b)(9) of title 11, 
     United States Code, is amended by inserting before the period 
     at the end the following: ``, and except that in a case under 
     chapter 13, a claim of a governmental unit for a tax with 
     respect to a return filed under section 1308 shall be timely 
     if the claim is filed on or before the date that is 60 days 
     after the date on which such return was filed as required''.
       (e) Rules for Objections to Claims and to Confirmation.--It 
     is the sense of Congress that the Judicial Conference of the 
     United States should, as soon as practicable after the date 
     of enactment of this Act, propose amended Federal Rules of 
     Bankruptcy Procedure that provide--
       (1) notwithstanding the provisions of Rule 3015(f), in 
     cases under chapter 13 of title 11, United States Code, that 
     an objection to the confirmation of a plan filed by a 
     governmental unit on or before the date that is 60 days after 
     the date on which the debtor files all tax returns required 
     under sections 1308 and 1325(a)(7) of title 11, United States 
     Code, shall be treated for all purposes as if such objection 
     had been timely filed before such confirmation; and
       (2) in addition to the provisions of Rule 3007, in a case 
     under chapter 13 of title 11, United States Code, that no 
     objection to a claim for a tax with respect to which a return 
     is required to be filed under section 1308 of title 11, 
     United States Code, shall be filed until such return has been 
     filed as required.

     SEC. 717. STANDARDS FOR TAX DISCLOSURE.

       Section 1125(a)(1) of title 11, United States Code, is 
     amended--
       (1) by inserting ``including a discussion of the potential 
     material Federal tax consequences of the plan to the debtor, 
     any successor to the debtor, and a hypothetical investor 
     typical of the holders of claims or interests in the case,'' 
     after ``records,''; and
       (2) by striking ``a hypothetical reasonable investor 
     typical of holders of claims or interests'' and inserting 
     ``such a hypothetical investor''.

     SEC. 718. SETOFF OF TAX REFUNDS.

       Section 362(b) of title 11, United States Code, as amended 
     by sections 224, 303, 311, and 401, is amended by inserting 
     after paragraph (25) the following:
       ``(26) under subsection (a), of the setoff under applicable 
     nonbankruptcy law of an income tax refund, by a governmental 
     unit, with respect to a taxable period that ended before the 
     date of the order for relief against an income tax liability 
     for a taxable period that also ended before the date of the 
     order for relief, except that in any case in which the setoff 
     of an income tax refund is not permitted under applicable 
     nonbankruptcy law 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, unless the court, on the motion of the trustee and 
     after notice and a hearing, grants the taxing authority 
     adequate protection (within the meaning of section 361) for 
     the secured claim of such authority in the setoff under 
     section 506(a);''.

     SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREATMENT OF 
                   STATE AND LOCAL TAXES.

       (a) In General.--
       (1) Special provisions.--Section 346 of title 11, United 
     States Code, is amended to read as follows:

     ``Sec. 346. Special provisions related to the treatment of 
       State and local taxes

       ``(a) Whenever the Internal Revenue Code of 1986 provides 
     that a separate taxable estate or entity is created in a case 
     concerning a debtor under this title, and the income, gain, 
     loss, deductions, and credits of such estate shall be taxed 
     to or claimed by the estate, a separate taxable estate is 
     also created for purposes of any State and local law imposing 
     a tax on or measured by income and such income, gain, loss, 
     deductions, and credits shall be taxed to or claimed by the 
     estate and may not be taxed to or claimed by the debtor. The 
     preceding sentence shall not apply if the case is dismissed. 
     The trustee shall make tax returns of income required under 
     any such State or local law.
       ``(b) Whenever the Internal Revenue Code of 1986 provides 
     that no separate taxable estate shall be created in a case 
     concerning a debtor under this title, and the income, gain, 
     loss, deductions, and credits of an estate shall be taxed to 
     or claimed by the debtor, such income, gain, loss, 
     deductions, and credits shall be taxed to or claimed by the 
     debtor under a State or local law imposing a tax on or 
     measured by income and may not be taxed to or claimed by the 
     estate. The trustee shall make such tax returns of income of 
     corporations and of partnerships as are required under any 
     State or local law, but with respect to partnerships, shall 
     make such returns only to the extent such returns are also 
     required to be made under such Code. The estate shall be 
     liable for any tax imposed on such corporation or 
     partnership, but not for any tax imposed on partners or 
     members.
       ``(c) With respect to a partnership or any entity treated 
     as a partnership under a State or local law imposing a tax on 
     or measured by income that is a debtor in a case under this 
     title, any gain or loss resulting from a distribution of 
     property from such partnership, or any distributive share of 
     any income, gain, loss, deduction, or credit of a partner or 
     member that is distributed, or considered distributed, from 
     such partnership, after the commencement of the case, is 
     gain, loss, income, deduction, or credit, as the case may be, 
     of the partner or member, and if such partner or member is a 
     debtor in a case under this title, shall be subject to tax in 
     accordance with subsection (a) or (b).
       ``(d) For purposes of any State or local law imposing a tax 
     on or measured by income, the taxable period of a debtor in a 
     case under this title shall terminate only if and to the 
     extent that the taxable period of such debtor terminates 
     under the Internal Revenue Code of 1986.
       ``(e) The estate in any case described in subsection (a) 
     shall use the same accounting method as the debtor used 
     immediately before the commencement of the case, if such 
     method of accounting complies with applicable nonbankruptcy 
     tax law.
       ``(f) For purposes of any State or local law imposing a tax 
     on or measured by income, a transfer of property from the 
     debtor to the estate or from the estate to the debtor shall 
     not be treated as a disposition for purposes of any provision 
     assigning tax consequences to a disposition, except to the 
     extent that such transfer is treated as a disposition under 
     the Internal Revenue Code of 1986.
       ``(g) Whenever a tax is imposed pursuant to a State or 
     local law imposing a tax on or measured by income pursuant to 
     subsection (a) or (b), such tax shall be imposed at rates 
     generally applicable to the same types of entities under such 
     State or local law.
       ``(h) The trustee shall withhold from any payment of claims 
     for wages, salaries, commissions, dividends, interest, or 
     other payments, or collect, any amount required to be 
     withheld or collected under applicable State or local tax 
     law, and shall pay such withheld or collected amount to the 
     appropriate governmental unit at the time and in the manner 
     required by such tax law, and with the same priority as the 
     claim from which such amount was withheld or collected was 
     paid.
       ``(i)(1) To the extent that any State or local law imposing 
     a tax on or measured by income provides for the carryover of 
     any tax attribute from one taxable period to a subsequent 
     taxable period, the estate shall succeed to such tax 
     attribute in any case in which such estate is subject to tax 
     under subsection (a).
       ``(2) After such a case is closed or dismissed, the debtor 
     shall succeed to any tax attribute to which the estate 
     succeeded under paragraph (1) to the extent consistent with 
     the Internal Revenue Code of 1986.
       ``(3) The estate may carry back any loss or tax attribute 
     to a taxable period of the debtor that ended before the date 
     of the order for relief under this title to the extent that--
       ``(A) applicable State or local tax law provides for a 
     carryback in the case of the debtor; and
       ``(B) the same or a similar tax attribute may be carried 
     back by the estate to such a taxable period of the debtor 
     under the Internal Revenue Code of 1986.
       ``(j)(1) For purposes of any State or local law imposing a 
     tax on or measured by income, income is not realized by the 
     estate, the debtor, or a successor to the debtor by reason of 
     discharge of indebtedness in a case under this title, except 
     to the extent, if any, that such income is subject to tax 
     under the Internal Revenue Code of 1986.
       ``(2) Whenever the Internal Revenue Code of 1986 provides 
     that the amount excluded from gross income in respect of the 
     discharge of indebtedness in a case under this title shall be 
     applied to reduce the tax attributes of the debtor or the 
     estate, a similar reduction shall be made under any State or 
     local law imposing a tax on or measured by income to the 
     extent such State or local law recognizes such attributes. 
     Such State or local law may also provide for the reduction of 
     other attributes to the extent that the full amount of income 
     from the discharge of indebtedness has not been applied.
       ``(k)(1) Except as provided in this section and section 
     505, the time and manner of filing tax returns and the items 
     of income, gain, loss, deduction, and credit of any taxpayer 
     shall be determined under applicable nonbankruptcy law.
       ``(2) For Federal tax purposes, the provisions of this 
     section are subject to the Internal Revenue Code of 1986 and 
     other applicable Federal nonbankruptcy law.''.
       (2) Clerical Amendment.--The table of sections for chapter 
     3 of title 11, United States Code, is amended by striking the 
     item relating to section 346 and inserting the following:

``346. Special provisions related to the treatment of State and local 
              taxes.''.


[[Page 2932]]


       (b) Conforming Amendments.--Title 11 of the United States 
     Code is amended--
       (1) by striking section 728;
       (2) in the table of sections for chapter 7 by striking the 
     item relating to section 728;
       (3) in section 1146--
       (A) by striking subsections (a) and (b); and
       (B) by redesignating subsections (c) and (d) as subsections 
     (a) and (b), respectively; and
       (4) in section 1231--
       (A) by striking subsections (a) and (b); and
       (B) by redesignating subsections (c) and (d) as subsections 
     (a) and (b), respectively.

     SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX RETURNS.

       Section 521 of title 11, United States Code, as amended by 
     sections 106, 225, 305, 315, and 316, is amended by adding at 
     the end the following:
       ``(j)(1) Notwithstanding any other provision of this title, 
     if the debtor fails to file a tax return that becomes due 
     after the commencement of the case or to properly obtain an 
     extension of the due date for filing such return, the taxing 
     authority may request that the court enter an order 
     converting or dismissing the case.
       ``(2) If the debtor does not file the required return or 
     obtain the extension referred to in paragraph (1) within 90 
     days after a request is filed by the taxing authority under 
     that paragraph, the court shall convert or dismiss the case, 
     whichever is in the best interests of creditors and the 
     estate.''.

           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

     SEC. 801. 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.
``1516. Presumptions concerning recognition.
``1517. Order granting recognition.
``1518. Subsequent information.
``1519. Relief that may be granted upon filing petition for 
              recognition.
``1520. Effects of recognition of a foreign main proceeding.
``1521. Relief that may be granted upon recognition.
``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) courts of the United States, 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 pending 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, other than a 
     foreign insurance company, identified by exclusion in section 
     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 of 1970, 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.
       ``(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.

                   ``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 
     pending 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, pending 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;
       ``(7) `recognition' means the entry of an order granting 
     recognition of a foreign main proceeding or foreign nonmain 
     proceeding under this chapter; and
       ``(8) `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 one 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, if recognition is granted, may 
     provide additional assistance to a foreign representative 
     under this title or under other laws of the United States.

[[Page 2933]]

       ``(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 by filing directly with the court a petition for 
     recognition of a foreign proceeding under section 1515.
       ``(b) If the court grants recognition under section 1517, 
     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 other than the 
     court which granted recognition shall be accompanied by a 
     certified copy of an order granting recognition under section 
     1517.
       ``(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, 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 States 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 a 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 the recognized 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, 
     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 
     letter or other formality is required.
       ``(c) When a notification of commencement of a case is to 
     be given to foreign creditors, such notification shall--
       ``(1) indicate the time period for filing proofs of claim 
     and specify the place for filing such proofs of claim;
       ``(2) indicate whether secured creditors need to file 
     proofs of claim; and
       ``(3) contain any other information required to be included 
     in such 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 proof of 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

       ``(a) A foreign representative applies to the court for 
     recognition of a 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 such 
     foreign proceeding and appointing the foreign representative;
       ``(2) a certificate from the foreign court affirming the 
     existence of such 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 such 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) shall 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 and that the person or body is a foreign 
     representative, 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 granting recognition

       ``(a) Subject to section 1506, after notice and a hearing, 
     an order recognizing a foreign proceeding shall be entered 
     if--
       ``(1) such foreign proceeding for which recognition is 
     sought 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; and
       ``(3) the petition meets the requirements of section 1515.
       ``(b) Such foreign proceeding shall be recognized--
       ``(1) as a foreign main proceeding if it is pending 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 order granting 
     recognition. A case under this chapter may be

[[Page 2934]]

     closed in the manner prescribed under section 350.

     ``Sec. 1518. Subsequent information

       ``From the time of filing the petition for recognition of a 
     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 such 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 filing petition 
       for recognition

       ``(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 granted.
       ``(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.
       ``(f) The exercise of rights not subject to the stay 
     arising under section 362(a) pursuant to paragraph (6), (7), 
     (17), or (27) of section 362(b) or pursuant to section 362(n) 
     shall not be stayed by any order of a court or administrative 
     agency in any proceeding under this chapter.

     ``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 apply with respect to the debtor 
     and the property of the debtor that is within the territorial 
     jurisdiction of the United States;
       ``(2) sections 363, 549, and 552 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

       ``(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).
       ``(f) The exercise of rights not subject to the stay 
     arising under section 362(a) pursuant to paragraph (6), (7), 
     (17), or (27) of section 362(b) or pursuant to section 362(n) 
     shall not be stayed by any order of a court or administrative 
     agency in any proceeding under this chapter.

     ``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), 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, 553, and 
     724(a).
       ``(b) When a 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 a foreign court 
     or a foreign representative, either directly or through the 
     trustee.
       ``(b) The court is entitled to communicate directly with, 
     or to request information or assistance directly from, a 
     foreign court or a foreign representative, subject to the 
     rights of a party 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 a foreign court or a foreign 
     representative.
       ``(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 a 
     foreign court or a foreign representative.

     ``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;

[[Page 2935]]

       ``(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

       ``If a foreign proceeding and a case under another chapter 
     of this title are pending concurrently regarding the same 
     debtor, the court shall seek cooperation and coordination 
     under sections 1525, 1526, and 1527, and the following shall 
     apply:
       ``(1) If the case in the United States pending at the time 
     the petition for recognition of such foreign proceeding is 
     filed--
       ``(A) any relief granted under section 1519 or 1521 must be 
     consistent with the relief granted in the case in the United 
     States; and
       ``(B) section 1520 does not apply even if such foreign 
     proceeding is recognized as a foreign main proceeding.
       ``(2) If a case in the United States under this title 
     commences after recognition, or after the date of the filing 
     of the petition for recognition, of such foreign proceeding--
       ``(A) 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 case in the United States; and
       ``(B) if such 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 laws 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. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, 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, 362(n), 555 
     through 557, and 559 through 562 apply in a case under 
     chapter 15''; and
       (2) by adding at the end the following:
       ``(k) 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.--Section 101 of title 11, United States 
     Code, is amended by striking paragraphs (23) and (24) and 
     inserting the following:
       ``(23) `foreign proceeding' means a collective judicial or 
     administrative proceeding in a foreign 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 such 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''.
       (4) Venue of cases ancillary to foreign proceedings.--
     Section 1410 of title 28, United States Code, is amended to 
     read as follows:

     ``Sec. 1410. Venue of cases ancillary to foreign proceedings

       ``A case under chapter 15 of title 11 may be commenced in 
     the district court of the United States for the district--
       ``(1) in which the debtor has its principal place of 
     business or principal assets in the United States;
       ``(2) if the debtor does not have a place of business or 
     assets in the United States, in which there is pending 
     against the debtor an action or proceeding in a Federal or 
     State court; or
       ``(3) in a case other than those specified in paragraph (1) 
     or (2), in which venue will be consistent with the interests 
     of justice and the convenience of the parties, having regard 
     to the relief sought by the foreign representative.''.
       (d) Other Sections of Title 11.--Title 11 of the United 
     States Code is amended--
       (1) in section 109(b), by striking paragraph (3) and 
     inserting the following:
       ``(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, that has a branch or agency (as defined in 
     section 1(b) of the International Banking Act of 1978 in the 
     United States.'';
       (2) in section 303, by striking subsection (k);
       (3) by striking section 304;
       (4) in the table of sections for chapter 3 by striking the 
     item relating to section 304;
       (5) in section 306 by striking ``, 304,'' each place it 
     appears;
       (6) in section 305(a) by striking paragraph (2) and 
     inserting the following:
       ``(2)(A) a petition under section 1515 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.''; and
       (7) in section 508--
       (A) by striking subsection (a); and
       (B) in subsection (b), by striking ``(b)''.

                TITLE IX--FINANCIAL CONTRACT PROVISIONS

     SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR 
                   RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

       (a) Definition of Qualified Financial Contract.--
       (1) FDIC-insured depository institutions.--Section 
     11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)) is amended--
       (A) by striking ``subsection--'' and inserting 
     ``subsection, the following definitions shall apply:''; and
       (B) in clause (i), by inserting ``, resolution, or order'' 
     after ``any similar agreement that the Corporation determines 
     by regulation''.

[[Page 2936]]

       (2) Insured credit unions.--Section 207(c)(8)(D) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is 
     amended--
       (A) by striking ``subsection--'' and inserting 
     ``subsection, the following definitions shall apply:''; and
       (B) in clause (i), by inserting ``, resolution, or order'' 
     after ``any similar agreement that the Board determines by 
     regulation''.
       (b) Definition of Securities Contract.--
       (1) FDIC-insured depository institutions.--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, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage 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, mortgage 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, including any guarantee or 
     reimbursement obligation in connection with any agreement or 
     transaction referred to in this clause.''.

       (2) Insured credit unions.--Section 207(c)(8)(D)(ii) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(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, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage 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 Board 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, mortgage 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, including any guarantee or 
     reimbursement obligation in connection with any agreement or 
     transaction referred to in this clause.''.

       (c) Definition of Commodity Contract.--
       (1) FDIC-insured depository institutions.--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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause, including any guarantee or reimbursement 
     obligation in connection with any agreement or transaction 
     referred to in this clause.''.

       (2) Insured credit unions.--Section 207(c)(8)(D)(iii) of 
     the Federal Credit Union Act (12 U.S.C. 1787(c)(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),

[[Page 2937]]

     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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause, including any guarantee or reimbursement 
     obligation in connection with any agreement or transaction 
     referred to in this clause.''.

       (d) Definition of Forward Contract.--
       (1) FDIC-insured depository institutions.--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, a repurchase transaction, reverse 
     repurchase transaction, 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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV), including any 
     guarantee or reimbursement obligation in connection with any 
     agreement or transaction referred to in any such 
     subclause.''.

       (2) Insured credit unions.--Section 207(c)(8)(D)(iv) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(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, a repurchase transaction, reverse 
     repurchase transaction, 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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV), including any 
     guarantee or reimbursement obligation in connection with any 
     agreement or transaction referred to in any such 
     subclause.''.

       (e) Definition of Repurchase Agreement.--
       (1) FDIC-insured depository institutions.--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) means an agreement, including related terms, which 
     provides for the transfer of one 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, mortgage loans, or interests with a 
     simultaneous agreement by such transferee to transfer to the 
     transferor thereof certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage 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 any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V), including 
     any guarantee or reimbursement obligation in connection with 
     any agreement or transaction referred to in any such 
     subclause.

     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).''.
       (2) Insured credit unions.--Section 207(c)(8)(D)(v) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(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) means an agreement, including related terms, which 
     provides for the transfer of one 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, mortgage loans, or interests with a 
     simultaneous agreement by such transferee to transfer to the 
     transferor thereof certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage 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 Board 
     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 any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V), including 
     any guarantee or reimbursement obligation in connection with 
     any agreement

[[Page 2938]]

     or transaction referred to in any such subclause.

     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.--
       (1) FDIC-insured depository institutions.--Section 
     11(e)(8)(D)(vi) 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 total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option;
       ``(II) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this clause and 
     that is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference in such agreement) and that is a forward, swap, 
     future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial 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 subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

     Such term is applicable for purposes of this subsection 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, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000.''.
       (2) Insured credit unions.--Section 207(c)(8)(D) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended 
     by adding at the end the following new clause:
       ``(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 total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option;
       ``(II) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this clause and 
     that is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference in such agreement) and that is a forward, 
     swap,future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial 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 subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

     Such term is applicable for purposes of this subsection 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, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000.''.
       (g) Definition of Transfer.--
       (1) FDIC-insured depository institutions.--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 
     institution's equity of redemption.''.
       (2) Insured credit unions.--Section 207(c)(8)(D) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) (as 
     amended by subsection (f) of this section) is amended by 
     adding at the end the following new clause:
       ``(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 
     institution's equity of redemption.''.
       (h) Treatment of Qualified Financial Contracts.--
       (1) FDIC-insured depository institutions.--Section 11(e)(8) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) 
     is amended--
       (A) in subparagraph (A)--
       (i) by striking ``paragraph (10)'' and inserting 
     ``paragraphs (9) and (10)'';
       (ii) in clause (i), by striking ``to cause the termination 
     or liquidation'' and inserting ``such person has to cause the 
     termination, liquidation, or acceleration''; and
       (iii) by striking clause (ii) and inserting the following 
     new clause:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to one or 
     more qualified financial contracts described in clause 
     (i);''; and
       (B) in subparagraph (E), by striking clause (ii) and 
     inserting the following:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to one or 
     more qualified financial contracts described in clause 
     (i);''.
       (2) Insured credit unions.--Section 207(c)(8) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``paragraph (12)'' and inserting 
     ``paragraphs (9) and (10)'';
       (ii) in clause (i), by striking ``to cause the termination 
     or liquidation'' and inserting ``such person has to cause the 
     termination, liquidation, or acceleration''; and
       (iii) by striking clause (ii) and inserting the following 
     new clause:
       ``(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
       (B) in subparagraph (E), by striking clause (ii) and 
     inserting the following new clause:

[[Page 2939]]

       ``(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.--
       (1) FDIC-insured depository institutions.--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 or any 
     other Federal or State law relating to the avoidance of 
     preferential or fraudulent transfers,'' before ``the 
     Corporation''.
       (2) Insured credit unions.--Section 207(c)(8)(C)(i) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(C)(i)) is 
     amended by inserting ``section 5242 of the Revised Statutes 
     of the United States or any other Federal or State law 
     relating to the avoidance of preferential or fraudulent 
     transfers,'' before ``the Board''.

     SEC. 902. AUTHORITY OF THE FDIC AND NCUAB WITH RESPECT TO 
                   FAILED AND FAILING INSTITUTIONS.

       (a) Federal Deposit Insurance Corporation.--
       (1) In general.--Section 11(e)(8) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
       (A) 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
       (B) 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.''.
       (2) 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 by'' after ``the appointment of''.
       (b) National Credit Union Administration Board.--
       (1) In general.--Section 207(c)(8) of the Federal Credit 
     Union Act (12 U.S.C. 1787(c)(8)) is amended--
       (A) in subparagraph (E) (as amended by section 901(h)), by 
     striking ``other than paragraph (12) of this subsection, 
     subsection (b)(9)'' and inserting ``other than subsections 
     (b)(9) and (c)(10)''; and
       (B) 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 Board, or 
     authorizing any court or agency to limit or delay, in any 
     manner, the right or power of the Board 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 (c)(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 credit union 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.''.
       (2) Technical and conforming amendment.--Section 
     207(c)(12)(A) of the Federal Credit Union Act (12 U.S.C. 
     1787(c)(12)(A)) is amended by inserting ``or the exercise of 
     rights or powers by'' after ``the appointment of''.

     SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED 
                   FINANCIAL CONTRACTS.

       (a) FDIC-Insured Depository Institutions.--
       (1) 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 one 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 under 
     subparagraph (A)(i), the conservator or receiver for the 
     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 one 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 cleared by or 
     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) Definitions.--For purposes of this paragraph, 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, and the term 
     `clearing organization' has the same meaning as in section 
     402 of the Federal Deposit Insurance Corporation Improvement 
     Act of 1991.''.
       (2) 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 in the 
     material immediately following clause (ii) by striking ``the 
     conservator'' and all that follows through the period and 
     inserting the following: ``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.''.
       (3) Rights against receiver and conservator and treatment 
     of bridge banks.--Section 11(e)(10) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(10)) is amended--
       (A) by redesignating subparagraph (B) as subparagraph (D); 
     and
       (B) 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 that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(A) of 
     this subsection 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)--

[[Page 2940]]

       ``(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 that such person has 
     to terminate, liquidate, or net such contract under paragraph 
     (8)(E) of this subsection 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 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 paragraph, 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).
       ``(C) Treatment of bridge banks.--The following 
     institutions shall not be considered to be 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 paragraph (9):
       ``(i) A bridge bank.
       ``(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 the depository institution and the Corporation as 
     receiver for a depository institution in default.''.

       (b) Insured Credit Unions.--
       (1) Transfers of qualified financial contracts to financial 
     institutions.--Section 207(c)(9) of the Federal Credit Union 
     Act (12 U.S.C. 1787(c)(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 credit union in default which includes any 
     qualified financial contract, the conservator or liquidating 
     agent for such credit union 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 credit union in 
     default;
       ``(II) all claims of such person or any affiliate of such 
     person against such credit union 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 credit union);
       ``(III) all claims of such credit union 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 under 
     subparagraph (A)(i), the conservator or liquidating agent for 
     the credit union 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 
     liquidating agent transfers any qualified financial contract 
     and related claims, property, and credit enhancements 
     pursuant to subparagraph (A)(i) and such contract is cleared 
     by or 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) Definitions.--For purposes of this paragraph--
       ``(i) the term `financial institution' means a broker or 
     dealer, a depository institution, a futures commission 
     merchant, a credit union, or any other institution, as 
     determined by the Board by regulation to be a financial 
     institution; and
       ``(ii) the term `clearing organization' has the same 
     meaning as in section 402 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991.''.
       (2) Notice to qualified financial contract 
     counterparties.--Section 207(c)(10)(A) of the Federal Credit 
     Union Act (12 U.S.C. 1787(c)(10)(A)) is amended in the 
     material immediately following clause (ii) by striking ``the 
     conservator'' and all that follows through the period and 
     inserting the following: ``the conservator or liquidating 
     agent 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 
     liquidating agent in the case of a liquidation, or the 
     business day following such transfer in the case of a 
     conservatorship.''.
       (3) Rights against liquidating agent and conservator and 
     treatment of bridge banks.--Section 207(c)(10) of the Federal 
     Credit Union Act (12 U.S.C. 1787(c)(10)) is amended--
       (A) by redesignating subparagraph (B) as subparagraph (D); 
     and
       (B) by inserting after subparagraph (A) the following new 
     subparagraphs:
       ``(B) Certain rights not enforceable.--
       ``(i) Liquidation.--A person who is a party to a qualified 
     financial contract with an insured credit union may not 
     exercise any right that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(A) of 
     this subsection 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 liquidating 
     agent for the credit union institution (or the insolvency or 
     financial condition of the credit union for which the 
     liquidating agent has been appointed)--

       ``(I) until 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the liquidating 
     agent; 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 credit union may 
     not exercise any right that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(E) of 
     this subsection 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 conservator 
     for the credit union or the insolvency or financial condition 
     of the credit union for which the conservator has been 
     appointed).
       ``(iii) Notice.--For purposes of this paragraph, the Board 
     as conservator or liquidating agent of an insured credit 
     union shall be deemed to have notified a person who is a 
     party to a qualified financial contract with such credit 
     union if the Board has taken steps reasonably calculated to 
     provide notice to such person by the time specified in 
     subparagraph (A).
       ``(C) Treatment of bridge banks.--The following 
     institutions shall not be considered to be 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 paragraph (9):
       ``(i) A bridge bank.
       ``(ii) A credit union organized by the Board, for which a 
     conservator is appointed either--

       ``(I) immediately upon the organization of the credit 
     union; or
       ``(II) at the time of a purchase and assumption transaction 
     between the credit union and the Board as receiver for a 
     credit union in default.''.

     SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION 
                   OF QUALIFIED FINANCIAL CONTRACTS.

       (a) FDIC-Insured Depository Institutions.--Section 11(e) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is 
     amended--
       (1) by redesignating paragraphs (11) through (15) as 
     paragraphs (12) through (16), respectively;
       (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).''; 
     and
       (3) by adding at the end the following new paragraph:

[[Page 2941]]

       ``(17) Savings clause.--The meanings of terms used in this 
     subsection are applicable for purposes of this subsection 
     only, and shall not be construed or applied so as to 
     challenge or affect the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities laws (as that term is defined in section 3(a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.''.
       (b) Insured Credit Unions.--Section 207(c) of the Federal 
     Credit Union Act (12 U.S.C. 1787(c)) is amended--
       (1) by redesignating paragraphs (11), (12), and (13) as 
     paragraphs (12), (13), and (14), respectively;
       (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 liquidating agent with 
     respect to any qualified financial contract to which an 
     insured credit union is a party, the conservator or 
     liquidating agent for such credit union shall either--
       ``(A) disaffirm or repudiate all qualified financial 
     contracts between--
       ``(i) any person or any affiliate of such person; and
       ``(ii) the credit union 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).''; 
     and
       (3) by adding at the end the following new paragraph:
       ``(15) Savings clause.--The meanings of terms used in this 
     subsection are applicable for purposes of this subsection 
     only, and shall not be construed or applied so as to 
     challenge or affect the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities laws (as that term is defined in section (a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.''.

     SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

       (a) FDIC-Insured Depository Institutions.--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 one 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.''.
       (b) Insured Credit Unions.--Section 207(c)(8)(D) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended 
     by inserting after clause (vi) (as added by section 901(f)) 
     the following new clause:
       ``(vii) Treatment of master agreement as one 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. 906. 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 (2)--
       (A) in subparagraph (A)(ii), by inserting before the 
     semicolon ``, or is exempt from such registration by order of 
     the Securities and Exchange Commission''; and
       (B) in subparagraph (B), by inserting before the period ``, 
     that has been granted an exemption under section 4(c)(1) of 
     the Commodity Exchange Act, or that is a multilateral 
     clearing organization (as defined in section 408 of this 
     Act)'';
       (2) 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), so 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;'';
       (3) in paragraph (11), by inserting before the period ``and 
     any other clearing organization with which such clearing 
     organization has a netting contract'';
       (4) 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 
     close out values relating to such obligations or 
     entitlements) among the parties to the agreement; and''; and
       (5) 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 striking subsection (a) and inserting the following:
       ``(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, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) 
     of the Federal Credit Union 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, United States Code).''; 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 one 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, 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, 
     paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of 
     the Federal Credit Union 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 striking subsection (a) and inserting the following:
       ``(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, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) 
     of the Federal Credit Union 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 one 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, paragraphs (8)(E), (8)(F), and (10)(B) of 
     section 207(c) of the Federal Credit Union Act, and section 
     5(b)(2) of the Securities Investor Protection Act of 
     1970).''.
       (d) Enforceability of Contracts With Uninsured National 
     Banks, Uninsured Federal Branches and Agencies, Certain 
     Uninsured State Member Banks, and Edge Act Corporations.--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 407A; and
       (2) by inserting after section 406 the following new 
     section:

[[Page 2942]]



     ``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL 
                   BANKS, UNINSURED FEDERAL BRANCHES AND AGENCIES, 
                   CERTAIN UNINSURED STATE MEMBER BANKS, AND EDGE 
                   ACT CORPORATIONS.

       ``(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, 
     a corporation chartered under section 25A of the Federal 
     Reserve Act, or an uninsured State member bank which 
     operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act, except that 
     for such purpose--
       ``(1) any reference to the `Corporation as receiver' or 
     `the receiver or the Corporation' shall refer to the receiver 
     appointed by the Comptroller of the Currency in the case of 
     an uninsured national bank or uninsured Federal branch or 
     agency, or to the receiver appointed by the Board of 
     Governors of the Federal Reserve System in the case of a 
     corporation chartered under section 25A of the Federal 
     Reserve Act or an uninsured State member bank;
       ``(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 
     appointed by the Comptroller of the Currency in the case of 
     an uninsured national bank or uninsured Federal branch or 
     agency, or to the receiver or conservator appointed by the 
     Board of Governors of the Federal Reserve System in the case 
     of a corporation chartered under section 25A of the Federal 
     Reserve Act or an uninsured State member bank; and
       ``(3) any reference to an `insured depository institution' 
     or `depository institution' shall refer to an uninsured 
     national bank, an uninsured Federal branch or Federal agency, 
     a corporation chartered under section 25A of the Federal 
     Reserve Act, or an uninsured State member bank which 
     operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act.
       ``(b) Liability.--The liability of a receiver or 
     conservator of an uninsured national bank, uninsured Federal 
     branch or agency, a corporation chartered under section 25A 
     of the Federal Reserve Act, or an uninsured State member bank 
     which operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act, 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 the 
     case of an uninsured national bank or uninsured Federal 
     branch or agency and the Board of Governors of the Federal 
     Reserve System in the case of a corporation chartered under 
     section 25A of the Federal Reserve Act, or an uninsured State 
     member bank that operates, or operates as, a multilateral 
     clearing organization pursuant to section 409 of this Act, in 
     consultation with the Federal Deposit Insurance Corporation, 
     may each promulgate regulations solely to implement this 
     section.
       ``(2) Specific requirement.--In promulgating regulations, 
     limited solely to implementing paragraphs (8), (9), (10), and 
     (11) of section 11(e) of the Federal Deposit Insurance Act, 
     the Comptroller of the Currency and the Board of Governors of 
     the Federal Reserve System each 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 meanings as in section 1(b) of the International 
     Banking Act of 1978.''.

     SEC. 907. BANKRUPTCY LAW 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) any security agreement or arrangement, or other 
     credit enhancement related to any agreement or transaction 
     referred to in subparagraph (A), (B), (C), or (D), including 
     any guarantee or reimbursement obligation by or to a forward 
     contract merchant or financial participant in connection with 
     any agreement or transaction referred to in any such 
     subparagraph, but not to exceed the damages in connection 
     with any such agreement or transaction, measured in 
     accordance with section 562;'';
       (B) in paragraph (46), by striking ``on any day during the 
     period beginning 90 days before the date of'' and inserting 
     ``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)--
       ``(A) means--
       ``(i) an agreement, including related terms, which provides 
     for the transfer of one or more certificates of deposit, 
     mortgage related securities (as defined in section 3 of the 
     Securities Exchange Act of 1934), mortgage loans, interests 
     in mortgage related securities or mortgage loans, eligible 
     bankers' acceptances, qualified foreign government securities 
     (defined as 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), 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, mortgage loans, or 
     interests, with a simultaneous agreement by such transferee 
     to transfer to the transferor thereof certificates of 
     deposit, eligible bankers' acceptance, securities, mortgage 
     loans, or interests of the kind described in this clause, 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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in clause (i), (ii), (iii), or (iv), including any 
     guarantee or reimbursement obligation by or to a repo 
     participant or financial participant in connection with any 
     agreement or transaction referred to in any such clause, but 
     not to exceed the damages in connection with any such 
     agreement or transaction, measured in accordance with section 
     562 of this title; and
       ``(B) does not include a repurchase obligation under a 
     participation in a commercial mortgage loan;'';
       (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--

       ``(I) an interest rate swap, option, future, or forward 
     agreement, including a rate floor, rate cap, rate collar, 
     cross-currency rate swap, and basis swap;
       ``(II) a spot, same day-tomorrow, tomorrow-next, forward, 
     or other foreign exchange or precious metals agreement;
       ``(III) a currency swap, option, future, or forward 
     agreement;
       ``(IV) an equity index or equity swap, option, future, or 
     forward agreement;
       ``(V) a debt index or debt swap, option, future, or forward 
     agreement;
       ``(VI) a total return, credit spread or credit swap, 
     option, future, or forward agreement;
       ``(VII) a commodity index or a commodity swap, option, 
     future, or forward agreement; or
       ``(VIII) a weather swap, weather derivative, or weather 
     option;

       ``(ii) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this paragraph 
     and that--

       ``(I) is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference therein); and

[[Page 2943]]

       ``(II) is a forward, swap, future, or option on one or more 
     rates, currencies, commodities, equity securities, or other 
     equity instruments, debt securities or other debt 
     instruments, quantitative measures associated with an 
     occurrence, extent of an occurrence, or contingency 
     associated with a financial, commercial, or economic 
     consequence, or economic or financial indices or measures of 
     economic or financial risk or value;

       ``(iii) any combination of agreements or transactions 
     referred to in this subparagraph;
       ``(iv) any option to enter into an agreement or transaction 
     referred to in this subparagraph;
       ``(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
       ``(vi) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in clause (i) through (v), including any 
     guarantee or reimbursement obligation by or to a swap 
     participant or financial participant in connection with any 
     agreement or transaction referred to in any such clause, but 
     not to exceed the damages in connection with any such 
     agreement or transaction, measured in accordance with section 
     562; and
       ``(B) 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, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000;'';
       (2) in section 741(7), by striking paragraph (7) and 
     inserting the following:
       ``(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, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage 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, mortgage 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 subparagraph;
       ``(vi) any combination of the agreements or transactions 
     referred to in this subparagraph;
       ``(vii) any option to enter into any agreement or 
     transaction referred to in this subparagraph;
       ``(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 subparagraph, except 
     that such master agreement shall be considered to be a 
     securities contract under this subparagraph 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 subparagraph, including any guarantee or 
     reimbursement obligation by or to a stockbroker, securities 
     clearing agency, financial institution, or financial 
     participant in connection with any agreement or transaction 
     referred to in this subparagraph, but not to exceed the 
     damages in connection with any such agreement or transaction, 
     measured in accordance with section 562; 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 agreement, without regard to whether the master 
     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) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this paragraph, including any guarantee or 
     reimbursement obligation by or to a commodity broker or 
     financial participant in connection with any agreement or 
     transaction referred to in this paragraph, but not to exceed 
     the damages in connection with any such agreement or 
     transaction, measured in accordance with section 562;''.
       (b) Definitions of Financial Institution, Financial 
     Participant, and Forward Contract Merchant.--Section 101 of 
     title 11, United States Code, is amended--
       (1) by striking paragraph (22) and inserting the following:
       ``(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, 
     federally-insured credit union, or receiver, liquidating 
     agent, or conservator for such entity and, when any such 
     Federal reserve bank, receiver, liquidating agent, 
     conservator or entity is acting as agent or custodian for a 
     customer in connection with a securities contract (as defined 
     in section 741) such customer; or
       ``(B) in connection with a securities contract (as defined 
     in section 741) an investment company registered under the 
     Investment Company Act of 1940;'';
       (2) by inserting after paragraph (22) the following:
       ``(22A) `financial participant' means--
       ``(A) an entity that, at the time it enters into a 
     securities contract, commodity contract, swap agreement, 
     repurchase agreement, or forward contract, or at the time of 
     the date of the filing of the petition, has one or more 
     agreements or transactions described in paragraph (1), (2), 
     (3), (4), (5), or (6) of section 561(a) with the debtor or 
     any other entity (other than an affiliate) of a total gross 
     dollar value of not less than $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 not less than $100,000,000 (aggregated across 
     counterparties) in one or more such agreements or 
     transactions with the debtor or any other entity (other than 
     an affiliate) on any day during the previous 15-month period; 
     or
       ``(B) a clearing organization (as defined in section 402 of 
     the Federal Deposit Insurance Corporation Improvement Act of 
     1991);''; and
       (3) by striking paragraph (26) and inserting the following:
       ``(26) `forward contract merchant' means a Federal reserve 
     bank, or an entity the business of which consists in whole or 
     in part of entering into forward contracts as or with 
     merchants in a commodity (as defined in section 761) 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;''.
       (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'--
       ``(A) means an agreement providing for the exercise of 
     rights, including rights of netting, setoff, liquidation, 
     termination, acceleration, or close out, under or in 
     connection with one or more contracts that are described in 
     any one or more of paragraphs (1) through (5) of section 
     561(a), or any security agreement or arrangement or other 
     credit enhancement related to one or more of the foregoing, 
     including any guarantee or reimbursement obligation related 
     to 1 or more of the foregoing; and
       ``(B) if the agreement contains provisions relating to 
     agreements or transactions that are not contracts described 
     in paragraphs (1) through (5) of section 561(a), shall be 
     deemed to be a master netting agreement only with respect to 
     those agreements or transactions that are described in any 
     one or more of paragraphs (1) through (5) of section 561(a);
       ``(38B) `master netting agreement participant' means an 
     entity that, at any time before the date of the filing of the 
     petition, is a party to an outstanding master netting 
     agreement with the debtor;''.

[[Page 2944]]

       (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 224, 303, 311, 401, and 718, is 
     amended--
       (A) in paragraph (6), by inserting ``, pledged to, under 
     the control of,'' after ``held by'';
       (B) in paragraph (7), by inserting ``, pledged to, under 
     the control of,'' after ``held by'';
       (C) by striking paragraph (17) and inserting the following:
       ``(17) under subsection (a), of the setoff by a swap 
     participant or financial participant of a mutual debt and 
     claim under or in connection with one 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 or 
     financial participant under or in connection with any swap 
     agreement or against cash, securities, or other property held 
     by, pledged to, under the control of, or due from such swap 
     participant or financial participant to margin, guarantee, 
     secure, or settle any swap agreement;''; and
       (D) by inserting after paragraph (26) the following:
       ``(27) under subsection (a), of the setoff by a master 
     netting agreement participant of a mutual debt and claim 
     under or in connection with one 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 
     to, 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 that 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; and''.
       (2) Limitation.--Section 362 of title 11, United States 
     Code, as amended by sections 106, 305, 311, and 441, is 
     amended by adding at the end the following:
       ``(o) The exercise of rights not subject to the stay 
     arising under subsection (a) pursuant to paragraph (6), (7), 
     (17), or (27) 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, 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
       (C) by inserting ``or financial participant'' after ``swap 
     participant''; and
       (2) by adding at the end the following:
       ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), 
     and 548(b) 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) and except to the 
     extent that 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'' at the end;
       (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 that, with respect to a 
     transfer under any individual contract covered thereby, to 
     the extent that 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'';

       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''; and
       (3) in the second sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (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'';

       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''; and
       (3) in the third sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (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'';

       (2) in the first sentence, by striking ``termination of a 
     swap agreement'' and inserting ``liquidation, termination, or 
     acceleration of one or more swap agreements'';
       (3) by striking ``in connection with any swap agreement'' 
     and inserting ``in connection with the termination, 
     liquidation, or acceleration of one or more swap 
     agreements''; and
       (4) in the second sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (k) Liquidation, Termination, Acceleration, or Offset Under 
     a Master Netting Agreement and Across Contracts.--
       (1) In general.--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; proceedings under chapter 15

       ``(a) 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 one or more 
     (or the termination, liquidation, or acceleration of one 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.

[[Page 2945]]

       ``(b)(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--
       ``(A) a party may not net or offset an obligation to the 
     debtor arising under, or in connection with, a commodity 
     contract traded on or subject to the rules of a contract 
     market designated under the Commodity Exchange Act or a 
     derivatives transaction execution facility registered under 
     the Commodity Exchange Act against any claim arising under, 
     or in connection with, other instruments, contracts, or 
     agreements listed in subsection (a) except to the extent that 
     the party has positive net equity in the commodity accounts 
     at the debtor, as calculated under such subchapter; 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 and traded on or subject to the 
     rules of a contract market designated under the Commodity 
     Exchange Act or a derivatives transaction execution facility 
     registered under the Commodity Exchange Act against any claim 
     arising under, or in connection with, other instruments, 
     contracts, or agreements listed in subsection (a).
       ``(3) No provision of subparagraph (A) or (B) of paragraph 
     (2) shall prohibit the offset of claims and obligations that 
     arise under--
       ``(A) a cross-margining agreement or similar arrangement 
     that has been approved by the Commodity Futures Trading 
     Commission or submitted to the Commodity Futures Trading 
     Commission under paragraph (1) or (2) of section 5c(c) of the 
     Commodity Exchange Act and has not been abrogated or rendered 
     ineffective by the Commodity Futures Trading Commission; or
       ``(B) any other netting agreement between a clearing 
     organization (as defined in section 761) and another entity 
     that has been approved by the Commodity Futures Trading 
     Commission.
       ``(c) As used in this section, the term `contractual right' 
     includes a right set forth in a rule or bylaw of a 
     derivatives clearing organization (as defined in the 
     Commodity Exchange Act), a multilateral clearing organization 
     (as defined in the Federal Deposit Insurance Corporation 
     Improvement Act of 1991), a national securities exchange, a 
     national securities association, a securities clearing 
     agency, a contract market designated under the Commodity 
     Exchange Act, a derivatives transaction execution facility 
     registered under the Commodity Exchange Act, or a board of 
     trade (as defined in the Commodity Exchange Act) 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.
       ``(d) 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 under chapter 15, 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).''.
       (2) 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 560 the 
     following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
              under a master netting agreement and across contracts; 
              proceedings under chapter 15.''.

       (l) 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, financial participants, 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, financial 
     participant, 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.''.
       (m) 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, financial participants, 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, financial 
     participant, 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) Setoff.--Section 553 of title 11, United States Code, 
     is amended--
       (1) in subsection (a)(2)(B)(ii), by inserting before the 
     semicolon the following: ``(except for a setoff of a kind 
     described in section 362(b)(6), 362(b)(7), 362(b)(17), 
     362(b)(27), 555, 556, 559, 560, or 561)'';
       (2) in subsection (a)(3)(C), by inserting before the period 
     the following: ``(except for a setoff of a kind described in 
     section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 
     556, 559, 560, or 561)''; and
       (3) in subsection (b)(1), by striking ``362(b)(14),'' and 
     inserting ``362(b)(17), 362(b)(27), 555, 556, 559, 560, 
     561,''.
       (o) 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 sections 362(b)(7) and 546(f), by inserting ``or 
     financial participant'' after ``repo participant'' each place 
     such term appears;
       (3) in section 546(e), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (4) in section 548(d)(2)(B), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (5) in section 548(d)(2)(C), by inserting ``or financial 
     participant'' after ``repo participant'';
       (6) in section 548(d)(2)(D), by inserting ``or financial 
     participant'' after ``swap participant'';
       (7) in section 555--
       (A) by inserting ``financial participant,'' after 
     ``financial institution,''; and
       (B) by striking the second sentence and inserting the 
     following: ``As used in this section, the term `contractual 
     right' includes a right set forth in a rule or bylaw of a 
     derivatives clearing organization (as defined in the 
     Commodity Exchange Act), a multilateral clearing organization 
     (as defined in the Federal Deposit Insurance Corporation 
     Improvement Act of 1991), a national securities exchange, a 
     national securities association, a securities clearing 
     agency, a contract market designated under the Commodity 
     Exchange Act, a derivatives transaction execution facility 
     registered under the Commodity Exchange Act, or a board of 
     trade (as defined in the Commodity Exchange Act), 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.'';
       (8) in section 556, by inserting ``, financial 
     participant,'' after ``commodity broker'';
       (9) in section 559, by inserting ``or financial 
     participant'' after ``repo participant'' each place such term 
     appears; and
       (10) in section 560, by inserting ``or financial 
     participant'' after ``swap participant''.
       (p) Conforming Amendments.--Title 11, United States Code, 
     is amended--
       (1) in the table of sections for 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 for 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, 
              financial participants, 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, 
              financial participants, securities clearing agencies, 
              swap participants, repo participants, and master netting 
              agreement participants.''.

[[Page 2946]]



     SEC. 908. RECORDKEEPING REQUIREMENTS.

       (a) FDIC-Insured Depository Institutions.--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 by any insured depository institution with 
     respect to qualified financial contracts (including market 
     valuations) only if such insured depository institution is in 
     a troubled condition (as such term is defined by the 
     Corporation pursuant to section 32).''.
       (b) Insured Credit Unions.--Section 207(c)(8) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)) is amended by 
     adding at the end the following new subparagraph:
       ``(H) Recordkeeping requirements.--The Board, in 
     consultation with the appropriate Federal banking agencies, 
     may prescribe regulations requiring more detailed 
     recordkeeping by any insured credit union with respect to 
     qualified financial contracts (including market valuations) 
     only if such insured credit union is in a troubled condition 
     (as such term is defined by the Board pursuant to section 
     212).''.

     SEC. 909. 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) one 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. 910. DAMAGE MEASURE.

       (a) In General.--Title 11, United States Code, is amended--
       (1) by inserting after section 561, as added by section 
     907, the following:

     ``Sec. 562. Timing of damage measurement in connection with 
       swap agreements, securities contracts, forward contracts, 
       commodity contracts, repurchase agreements, and master 
       netting agreements

       ``(a) If the trustee rejects a swap agreement, securities 
     contract (as defined in section 741), forward contract, 
     commodity contract (as defined in section 761), repurchase 
     agreement, or master netting agreement pursuant to section 
     365(a), 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 or dates of such liquidation, termination, 
     or acceleration.
       ``(b) If there are not any commercially reasonable 
     determinants of value as of any date referred to in paragraph 
     (1) or (2) of subsection (a), damages shall be measured as of 
     the earliest subsequent date or dates on which there are 
     commercially reasonable determinants of value.
       ``(c) For the purposes of subsection (b), if damages are 
     not measured as of the date or dates of rejection, 
     liquidation, termination, or acceleration, and the forward 
     contract merchant, stockbroker, financial institution, 
     securities clearing agency, repo participant, financial 
     participant, master netting agreement participant, or swap 
     participant or the trustee objects to the timing of the 
     measurement of damages--
       ``(1) the trustee, in the case of an objection by a forward 
     contract merchant, stockbroker, financial institution, 
     securities clearing agency, repo participant, financial 
     participant, master netting agreement participant, or swap 
     participant; or
       ``(2) the forward contract merchant, stockbroker, financial 
     institution, securities clearing agency, repo participant, 
     financial participant, master netting agreement participant, 
     or swap participant, in the case of an objection by the 
     trustee,

     has the burden of proving that there were no commercially 
     reasonable determinants of value as of such date or dates.''; 
     and
       (2) in the table of sections for chapter 5, by inserting 
     after the item relating to section 561 (as added by section 
     907) the following new item:

``562. Timing of 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 inserting ``(1)'' after ``(g)''; and
       (2) by adding at the end the following:
       ``(2) A claim for damages calculated in accordance with 
     section 562 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. 911. 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 at the 
     end 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 SIPC 
     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, as those terms are defined in sections 101, 741, 
     and 761 of title 11, United States Code, to offset or net 
     termination values, payment amounts, or other transfer 
     obligations arising under or in connection with one or more 
     of such contracts or agreements, or to foreclose on any cash 
     collateral pledged by the debtor, whether or not with respect 
     to one 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, or 
     disposition of, securities collateral pledged by the debtor, 
     whether or not with respect to one 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 subparagraph, 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.''.

       TITLE X--PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMEN

     SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12.

       (a) Reenactment.--
       (1) In general.--Chapter 12 of title 11, United States 
     Code, as reenacted by section 149 of division C of the 
     Omnibus Consolidated and Emergency Supplemental 
     Appropriations Act, 1999 (Public Law 105-277), and as in 
     effect on June 30, 2005, is hereby reenacted.
       (2) Effective date of reenactment.--Paragraph (1) shall 
     take effect on July 1, 2005.
       (b) Amendments--Chapter 12 of title 11, United States Code, 
     as reenacted by subsection (a), is amended by this Act.
       (c) Conforming Amendment.--Section 302 of the Bankruptcy 
     Judges, United States Trustees, and Family Farmer Bankruptcy 
     Act of 1986 (28 U.S.C. 581 note) is amended by striking 
     subsection (f).

     SEC. 1002. DEBT LIMIT INCREASE.

       Section 104(b) of title 11, United States Code, as amended 
     by section 226, is amended by inserting ``101(18),'' after 
     ``101(3),'' each place it appears.

     SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL UNITS.

       (a) Contents of Plan.--Section 1222(a)(2) of title 11, 
     United States Code, as amended by section 213, 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;''.
       (b) Special Notice Provisions.--Section 1231(b) of title 
     11, United States Code, as so designated by section 719, is 
     amended by striking ``a State or local governmental unit'' 
     and inserting ``any governmental unit''.
       (c) Effective Date; Application of Amendments.--This 
     section and the amendments made by this section shall take 
     effect on the date of the enactment of this Act and shall not 
     apply with respect to cases commenced under title 11 of the 
     United States Code before such date.

     SEC. 1004. 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 
     ``$3,237,000''; and
       (B) by striking ``80'' and inserting ``50''; and
       (2) in subparagraph (B)(ii)--

[[Page 2947]]

       (A) by striking ``$1,500,000'' and inserting 
     ``$3,237,000''; and
       (B) by striking ``80'' and inserting ``50''.

     SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY FARMER AND 
                   SPOUSE RECEIVE OVER 50 PERCENT OF INCOME FROM 
                   FARMING OPERATION IN YEAR PRIOR TO BANKRUPTCY.

       Section 101(18)(A) of title 11, United States Code, is 
     amended by striking ``for the taxable year preceding the 
     taxable year'' and inserting the following:
     ``for--
       ``(i) the taxable year preceding; or
       ``(ii) each of the 2d and 3d taxable years preceding;
     the taxable year''.

     SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 
                   DISPOSABLE INCOME.

       (a) Confirmation of Plan.--Section 1225(b)(1) 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 value of the property to be distributed under the 
     plan in the 3-year period, or such longer period as the court 
     may approve under section 1222(c), beginning on the date that 
     the first distribution is due under the plan is not less than 
     the debtor's projected disposable income for such period.''.
       (b) Modification of Plan.--Section 1229 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(d) A plan may not be modified under this section--
       ``(1) to increase the amount of any payment due before the 
     plan as modified becomes the plan;
       ``(2) by anyone except the debtor, based on an increase in 
     the debtor's disposable income, to increase the amount of 
     payments to unsecured creditors required for a particular 
     month so that the aggregate of such payments exceeds the 
     debtor's disposable income for such month; or
       ``(3) in the last year of the plan by anyone except the 
     debtor, to require payments that would leave the debtor with 
     insufficient funds to carry on the farming operation after 
     the plan is completed.''.

     SEC. 1007. FAMILY FISHERMEN.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (7) the following:
       ``(7A) `commercial fishing operation' means--
       ``(A) the catching or harvesting of fish, shrimp, lobsters, 
     urchins, seaweed, shellfish, or other aquatic species or 
     products of such species; or
       ``(B) for purposes of section 109 and chapter 12, 
     aquaculture activities consisting of raising for market any 
     species or product described in subparagraph (A);
       ``(7B) `commercial fishing vessel' means a vessel used by a 
     family fisherman to carry out a commercial fishing 
     operation;''; and
       (2) by inserting after paragraph (19) the following:
       ``(19A) `family fisherman' means--
       ``(A) an individual or individual and spouse engaged in a 
     commercial fishing operation--
       ``(i) whose aggregate debts do not exceed $1,500,000 and 
     not less than 80 percent of whose aggregate noncontingent, 
     liquidated debts (excluding a debt for the principal 
     residence of such individual or such individual and spouse, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case is filed, arise out of a 
     commercial fishing operation owned or operated by such 
     individual or such individual and spouse; and
       ``(ii) who receive from such commercial fishing operation 
     more than 50 percent of such individual's or such 
     individual's and spouse's gross income for the taxable year 
     preceding the taxable year in which the case concerning such 
     individual or such individual and spouse was filed; or
       ``(B) a corporation or partnership--
       ``(i) in which more than 50 percent of the outstanding 
     stock or equity is held by--

       ``(I) 1 family that conducts the commercial fishing 
     operation; or
       ``(II) 1 family and the relatives of the members of such 
     family, and such family or such relatives conduct the 
     commercial fishing operation; and

       ``(ii)(I) more than 80 percent of the value of its assets 
     consists of assets related to the commercial fishing 
     operation;
       ``(II) its aggregate debts do not exceed $1,500,000 and not 
     less than 80 percent of its aggregate noncontingent, 
     liquidated debts (excluding a debt for 1 dwelling which is 
     owned by such corporation or partnership and which a 
     shareholder or partner maintains as a principal residence, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case is filed, arise out of a 
     commercial fishing operation owned or operated by such 
     corporation or such partnership; and
       ``(III) if such corporation issues stock, such stock is not 
     publicly traded;
       ``(19B) `family fisherman with regular annual income' means 
     a family fisherman whose annual income is sufficiently stable 
     and regular to enable such family fisherman to make payments 
     under a plan under chapter 12 of this title;''.
       (b) Who May Be a Debtor.--Section 109(f) of title 11, 
     United States Code, is amended by inserting ``or family 
     fisherman'' after ``family farmer''.
       (c)  Chapter 12.--Chapter 12 of title 11, United States 
     Code, is amended--
       (1) in the chapter heading, by inserting ``OR FISHERMAN'' 
     after ``FAMILY FARMER'';
       (2) in section 1203, by inserting ``or commercial fishing 
     operation'' after ``farm''; and
       (3) in section 1206, by striking ``if the property is 
     farmland or farm equipment'' and inserting ``if the property 
     is farmland, farm equipment, or property used to carry out a 
     commercial fishing operation (including a commercial fishing 
     vessel)''.
       (d) Clerical Amendment.--In the table of chapters for title 
     11, United States Code, the item relating to chapter 12, is 
     amended to read as follows:

``12. Adjustments of Debts of a Family Farmer or Family Fisherman with 
    Regular Annual Income...................................1201''.....

       (e) Applicability.--Nothing in this section shall change, 
     affect, or amend the Fishery Conservation and Management Act 
     of 1976 (16 U.S.C. 1801 et seq.).

              TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS

     SEC. 1101. DEFINITIONS.

       (a) Health Care Business Defined.--Section 101 of title 11, 
     United States Code, as amended by section 306, is amended--
       (1) by redesignating paragraph (27A) as paragraph (27B); 
     and
       (2) by inserting after paragraph (27) the following:
       ``(27A) `health care business'--
       ``(A) means any public or private entity (without regard to 
     whether that entity is organized for profit or not for 
     profit) that is primarily engaged in offering to the general 
     public facilities and services for--
       ``(i) the diagnosis or treatment of injury, deformity, or 
     disease; and
       ``(ii) surgical, drug treatment, psychiatric, or obstetric 
     care; and
       ``(B) includes--
       ``(i) any--

       ``(I) general or specialized hospital;
       ``(II) ancillary ambulatory, emergency, or surgical 
     treatment facility;
       ``(III) hospice;
       ``(IV) home health agency; and
       ``(V) other health care institution that is similar to an 
     entity referred to in subclause (I), (II), (III), or (IV); 
     and

       ``(ii) any long-term care facility, including any--

       ``(I) skilled nursing facility;
       ``(II) intermediate care facility;
       ``(III) assisted living facility;
       ``(IV) home for the aged;
       ``(V) domiciliary care facility; and
       ``(VI) health care institution that is related to a 
     facility referred to in subclause (I), (II), (III), (IV), or 
     (V), if that institution is primarily engaged in offering 
     room, board, laundry, or personal assistance with activities 
     of daily living and incidentals to activities of daily 
     living;''.

       (b) Patient and Patient Records Defined.--Section 101 of 
     title 11, United States Code, is amended by inserting after 
     paragraph (40) the following:
       ``(40A) `patient' means any individual who obtains or 
     receives services from a health care business;
       ``(40B) `patient records' means any written document 
     relating to a patient or a record recorded in a magnetic, 
     optical, or other form of electronic medium;''.
       (c) Rule of Construction.--The amendments made by 
     subsection (a) of this section shall not affect the 
     interpretation of section 109(b) of title 11, United States 
     Code.

     SEC. 1102. DISPOSAL OF PATIENT RECORDS.

       (a) In General.--Subchapter III of chapter 3 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 351. Disposal of patient records

       ``If a health care business commences a case under chapter 
     7, 9, or 11, and the trustee does not have a sufficient 
     amount of funds to pay for the storage of patient records in 
     the manner required under applicable Federal or State law, 
     the following requirements shall apply:
       ``(1) The trustee shall--
       ``(A) promptly publish notice, in 1 or more appropriate 
     newspapers, that if patient records are not claimed by the 
     patient or an insurance provider (if applicable law permits 
     the insurance provider to make that claim) by the date that 
     is 365 days after the date of that notification, the trustee 
     will destroy the patient records; and
       ``(B) during the first 180 days of the 365-day period 
     described in subparagraph (A), promptly attempt to notify 
     directly each patient that is the subject of the patient 
     records and appropriate insurance carrier concerning the 
     patient records by mailing to the most recent known address 
     of that patient, or a family member or contact person for 
     that patient, and to the appropriate insurance carrier an 
     appropriate notice regarding the claiming or disposing of 
     patient records.
       ``(2) If, after providing the notification under paragraph 
     (1), patient records are not claimed during the 365-day 
     period described under that paragraph, the trustee shall 
     mail, by certified mail, at the end of such 365-day

[[Page 2948]]

     period a written request to each appropriate Federal agency 
     to request permission from that agency to deposit the patient 
     records with that agency, except that no Federal agency is 
     required to accept patient records under this paragraph.
       ``(3) If, following the 365-day period described in 
     paragraph (2) and after providing the notification under 
     paragraph (1), patient records are not claimed by a patient 
     or insurance provider, or request is not granted by a Federal 
     agency to deposit such records with that agency, the trustee 
     shall destroy those records by--
       ``(A) if the records are written, shredding or burning the 
     records; or
       ``(B) if the records are magnetic, optical, or other 
     electronic records, by otherwise destroying those records so 
     that those records cannot be retrieved.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter III of chapter 3 of title 11, United States Code, 
     is amended by adding at the end the following:

``351. Disposal of patient records.''.

     SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF CLOSING 
                   A HEALTH CARE BUSINESS AND OTHER ADMINISTRATIVE 
                   EXPENSES.

       Section 503(b) of title 11, United States Code, as amended 
     by section 445, is amended by adding at the end the 
     following:
       ``(8) the actual, necessary costs and expenses of closing a 
     health care business incurred by a trustee or by a Federal 
     agency (as defined in section 551(1) of title 5) or a 
     department or agency of a State or political subdivision 
     thereof, including any cost or expense incurred--
       ``(A) in disposing of patient records in accordance with 
     section 351; or
       ``(B) in connection with transferring patients from the 
     health care business that is in the process of being closed 
     to another health care business; and''.

     SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT 
                   ADVOCATE.

       (a) Ombudsman To Act as Patient Advocate.--
       (1) Appointment of ombudsman.--Title 11, United States 
     Code, as amended by section 232, is amended by inserting 
     after section 332 the following:

     ``Sec. 333. Appointment of patient care ombudsman

       ``(a)(1) If the debtor in a case under chapter 7, 9, or 11 
     is a health care business, the court shall order, not later 
     than 30 days after the commencement of the case, the 
     appointment of an ombudsman to monitor the quality of patient 
     care and to represent the interests of the patients of the 
     health care business unless the court finds that the 
     appointment of such ombudsman is not necessary for the 
     protection of patients under the specific facts of the case.
       ``(2)(A) If the court orders the appointment of an 
     ombudsman under paragraph (1), the United States trustee 
     shall appoint 1 disinterested person (other than the United 
     States trustee) to serve as such ombudsman.
       ``(B) If the debtor is a health care business that provides 
     long-term care, then the United States trustee may appoint 
     the State Long-Term Care Ombudsman appointed under the Older 
     Americans Act of 1965 for the State in which the case is 
     pending to serve as the ombudsman required by paragraph (1).
       ``(C) If the United States trustee does not appoint a State 
     Long-Term Care Ombudsman under subparagraph (B), the court 
     shall notify the State Long-Term Care Ombudsman appointed 
     under the Older Americans Act of 1965 for the State in which 
     the case is pending, of the name and address of the person 
     who is appointed under subparagraph (A).
       ``(b) An ombudsman appointed under subsection (a) shall--
       ``(1) monitor the quality of patient care provided to 
     patients of the debtor, to the extent necessary under the 
     circumstances, including interviewing patients and 
     physicians;
       ``(2) not later than 60 days after the date of appointment, 
     and not less frequently than at 60-day intervals thereafter, 
     report to the court after notice to the parties in interest, 
     at a hearing or in writing, regarding the quality of patient 
     care provided to patients of the debtor; and
       ``(3) if such ombudsman determines that the quality of 
     patient care provided to patients of the debtor is declining 
     significantly or is otherwise being materially compromised, 
     file with the court a motion or a written report, with notice 
     to the parties in interest immediately upon making such 
     determination.
       ``(c)(1) An ombudsman appointed under subsection (a) shall 
     maintain any information obtained by such ombudsman under 
     this section that relates to patients (including information 
     relating to patient records) as confidential information. 
     Such ombudsman may not review confidential patient records 
     unless the court approves such review in advance and imposes 
     restrictions on such ombudsman to protect the confidentiality 
     of such records.
       ``(2) An ombudsman appointed under subsection (a)(2)(B) 
     shall have access to patient records consistent with 
     authority of such ombudsman under the Older Americans Act of 
     1965 and under non-Federal laws governing the State Long-Term 
     Care Ombudsman program.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter II of chapter 3 of title 11, United States Code, 
     as amended by section 232, is amended by adding at the end 
     the following:

``333. Appointment of ombudsman.''.

       (b) Compensation of Ombudsman.--Section 330(a)(1) of title 
     11, United States Code, is amended--
       (1) in the matter preceding subparagraph (A), by inserting 
     ``an ombudsman appointed under section 333, or'' before ``a 
     professional person''; and
       (2) in subparagraph (A), by inserting ``ombudsman,'' before 
     ``professional person''.

     SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO TRANSFER 
                   PATIENTS.

       (a) In General.--Section 704(a) of title 11, United States 
     Code, as amended by sections 102, 219, and 446, is amended by 
     adding at the end the following:
       ``(12) use all reasonable and best efforts to transfer 
     patients from a health care business that is in the process 
     of being closed to an appropriate health care business that--
       ``(A) is in the vicinity of the health care business that 
     is closing;
       ``(B) provides the patient with services that are 
     substantially similar to those provided by the health care 
     business that is in the process of being closed; and
       ``(C) maintains a reasonable quality of care.''.
       (b) Conforming Amendment.--Section 1106(a)(1) of title 11, 
     United States Code, as amended by section 446, is amended by 
     striking ``and (11)'' and inserting ``(11), and (12)''.

     SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION NOT SUBJECT 
                   TO AUTOMATIC STAY.

       Section 362(b) of title 11, United States Code, is amended 
     by inserting after paragraph (27), as amended by sections 
     224, 303, 311, 401, 718, and 907, the following:
       ``(28) under subsection (a), of the exclusion by the 
     Secretary of Health and Human Services of the debtor from 
     participation in the medicare program or any other Federal 
     health care program (as defined in section 1128B(f) of the 
     Social Security Act pursuant to title XI or XVIII of such 
     Act).''.

                    TITLE XII--TECHNICAL AMENDMENTS

     SEC. 1201. DEFINITIONS.

       Section 101 of title 11, United States Code, as amended by 
     this Act, is further amended--
       (1) by striking ``In this title--'' and inserting ``In this 
     title the following definitions shall apply:'';
       (2) in each paragraph (other than paragraph (54A)), 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), (38), and (54A), 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 and inserting a 
     semicolon;
       (6) by striking paragraph (54) and inserting the following:
       ``(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 paragraph (54A)--
       (A) by striking ``the term'' and inserting ``The term''; 
     and
       (B) by indenting the left margin of paragraph (54A) 2 ems 
     to the right; and
       (8) in each of paragraphs (1) through (35), in each of 
     paragraphs (36), (37), (38A), (38B) and (39A), and in each of 
     paragraphs (40) through (55), by striking the semicolon at 
     the end and inserting a period.

     SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

       Section 104 of title 11, United States Code, is amended by 
     inserting ``522(f)(3),'' after ``522(d),'' each place it 
     appears.

     SEC. 1203. 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. 1204. TECHNICAL AMENDMENTS.

       Title 11, 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. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 
                   FRAUDULENTLY PREPARE BANKRUPTCY PETITIONS.

       Section 110(j)(4) of title 11, United States Code, as so 
     redesignated by section 221, is amended by striking 
     ``attorney's'' and inserting ``attorneys' ''.

     SEC. 1206. 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,''.

[[Page 2949]]



     SEC. 1207. 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. 1208. 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. 1209. EXCEPTIONS TO DISCHARGE.

       Section 523 of title 11, United States Code, as amended by 
     sections 215 and 314, is amended--
       (1) by transferring paragraph (15), as added by section 
     304(e) of Public Law 103-394 (108 Stat. 4133), so as to 
     insert such paragraph after subsection (a)(14A);
       (2) in subsection (a)(9), by striking ``motor vehicle'' and 
     inserting ``motor vehicle, vessel, or aircraft''; and
       (3) in subsection (e), by striking ``a insured'' and 
     inserting ``an insured''.

     SEC. 1210. 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), or that''.

     SEC. 1211. 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. 1212. 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. 1213. PREFERENCES.

       (a) In General.--Section 547 of title 11, United States 
     Code, as amended by section 201, 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 shall be considered to 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. 1214. POSTPETITION TRANSACTIONS.

       Section 549(c) of title 11, United States Code, is 
     amended--
       (1) by inserting ``an interest in'' after ``transfer of'' 
     each place it appears;
       (2) by striking ``such property'' and inserting ``such real 
     property''; and
       (3) by striking ``the interest'' and inserting ``such 
     interest''.

     SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE.

       Section 726(b) of title 11, United States Code, is amended 
     by striking ``1009,''.

     SEC. 1216. GENERAL PROVISIONS.

       Section 901(a) of title 11, United States Code, is amended 
     by inserting ``1123(d),'' after ``1123(b),''.

     SEC. 1217. 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. 1218. 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. 1219. 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. 1220. 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. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 
                   CORPORATIONS.

       (a) Sale of Property of Estate.--Section 363(d) of title 
     11, United States Code, is amended 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.''.
       (b) Confirmation of Plan of Reorganization.--Section 
     1129(a) of title 11, United States Code, as amended by 
     sections 213 and 321, is amended by adding at the end the 
     following:
       ``(16) 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 225, 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, or filed under 
     that title on or after that date of enactment, except that 
     the court shall not confirm a plan under chapter 11 of title 
     11, United States Code, 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 filing 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 
     construed to require the court in which a case under chapter 
     11 of title 11, United States Code, 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. 1222. 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. 1223. BANKRUPTCY JUDGESHIPS.

       (a) Short Title.--This section may be cited as the 
     ``Bankruptcy Judgeship Act of 2005''.
       (b) Temporary Judgeships.--
       (1) Appointments.--The following bankruptcy judges shall be 
     appointed 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 judge for the eastern 
     district of California.
       (B) Three additional bankruptcy judges for the central 
     district of California.
       (C) Four additional bankruptcy judges for the district of 
     Delaware.
       (D) Two additional bankruptcy judges for the southern 
     district of Florida.
       (E) One additional bankruptcy judge for the southern 
     district of Georgia.
       (F) Three additional bankruptcy judges for the district of 
     Maryland.
       (G) One additional bankruptcy judge for the eastern 
     district of Michigan.
       (H) One additional bankruptcy judge for the southern 
     district of Mississippi.
       (I) One additional bankruptcy judge for the district of New 
     Jersey.
       (J) One additional bankruptcy judge for the eastern 
     district of New York.
       (K) One additional bankruptcy judge for the northern 
     district of New York.
       (L) One additional bankruptcy judge for the southern 
     district of New York.
       (M) One additional bankruptcy judge for the eastern 
     district of North Carolina.
       (N) One additional bankruptcy judge for the eastern 
     district of Pennsylvania.
       (O) One additional bankruptcy judge for the middle district 
     of Pennsylvania.
       (P) One additional bankruptcy judge for the district of 
     Puerto Rico.
       (Q) One additional bankruptcy judge for the western 
     district of Tennessee.
       (R) One additional bankruptcy judge for the eastern 
     district of Virginia.
       (S) One additional bankruptcy judge for the district of 
     South Carolina.
       (T) One additional bankruptcy judge for the district of 
     Nevada.
       (2) Vacancies.--
       (A) Districts with single appointments.--Except as provided 
     in subparagraphs (B), (C), (D), and (E), the first vacancy 
     occurring in the office of bankruptcy judge in each of the 
     judicial districts set forth in paragraph (1)--
       (i) occurring 5 years or more after the appointment date of 
     the bankruptcy judge appointed under paragraph (1) to such 
     office; and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (B) Central district of california.--The 1st, 2d, and 3d 
     vacancies in the office of bankruptcy judge in the central 
     district of California--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     and 3d appointment dates of

[[Page 2950]]

     the bankruptcy judges appointed under paragraph (1)(B); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (C) District of delaware.--The 1st, 2d, 3d, and 4th 
     vacancies in the office of bankruptcy judge in the district 
     of Delaware--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     3d, and 4th appointment dates of the bankruptcy judges 
     appointed under paragraph (1)(F); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (D) Southern district of florida.--The 1st and 2d vacancies 
     in the office of bankruptcy judge in the southern district of 
     Florida--
       (i) occurring 5 years or more after the respective 1st and 
     2d appointment dates of the bankruptcy judges appointed under 
     paragraph (1)(D); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (E) District of maryland.--The 1st, 2d, and 3d vacancies in 
     the office of bankruptcy judge in the district of Maryland--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     and 3d appointment dates of the bankruptcy judges appointed 
     under paragraph (1)(F); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (c) Extensions.--
       (1) In general.--The temporary office of bankruptcy judges 
     authorized for the northern district of Alabama, the district 
     of Delaware, the district of Puerto Rico, and the eastern 
     district of Tennessee under paragraphs (1), (3), (7), and (9) 
     of section 3(a) 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 5 
     years after the date of the enactment of this Act.
       (2) Applicability of other provisions.--All other 
     provisions of section 3 of the Bankruptcy Judgeship Act of 
     1992 (28 U.S.C. 152 note) remain applicable to the temporary 
     office of bankruptcy judges referred to in this subsection.
       (d) Technical Amendments.--Section 152(a) of title 28, 
     United States Code, is amended--
       (1) in paragraph (1), by striking the first sentence and 
     inserting the following: ``Each bankruptcy judge to be 
     appointed for a judicial district, as provided in paragraph 
     (2), shall be appointed by the court of appeals of the United 
     States for the circuit in which such district is located.''; 
     and
       (2) in paragraph (2)--
       (A) in the item relating to the middle district of Georgia, 
     by striking ``2'' and inserting ``3''; and
       (B) in the collective item relating to the middle and 
     southern districts of Georgia, by striking ``Middle and 
     Southern . . . . . . 1''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1224. COMPENSATING TRUSTEES.

       Section 1326 of title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``and'';
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) if a chapter 7 trustee has been allowed compensation 
     due to the conversion or dismissal of the debtor's prior case 
     pursuant to section 707(b), and some portion of that 
     compensation remains unpaid in a case converted to this 
     chapter or in the case dismissed under section 707(b) and 
     refiled under this chapter, the amount of any such unpaid 
     compensation, which shall be paid monthly--
       ``(A) by prorating such amount over the remaining duration 
     of the plan; and
       ``(B) by monthly payments not to exceed the greater of--
       ``(i) $25; 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
       (2) by adding at the end the following:
       ``(d) Notwithstanding any other provision of this title--
       ``(1) compensation referred to in subsection (b)(3) is 
     payable and may be collected by the trustee under that 
     paragraph, even if such amount has been discharged in a prior 
     case under this title; and
       ``(2) such compensation is payable in a case under this 
     chapter only to the extent permitted by subsection (b)(3).''.

     SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, UNITED 
                   STATES CODE.

       Section 362(b)(18) of title 11, United States Code, is 
     amended to read as follows:
       ``(18) under subsection (a) of the creation or perfection 
     of a statutory lien for an ad valorem property tax, or a 
     special tax or special assessment on real property whether or 
     not ad valorem, imposed by a governmental unit, if such tax 
     or assessment comes due after the date of the filing of the 
     petition;''.

     SEC. 1226. JUDICIAL EDUCATION.

       The Director of the Federal Judicial Center, in 
     consultation with the Director of the Executive Office for 
     United States Trustees, shall develop materials and conduct 
     such training as may be useful to courts in implementing this 
     Act and the amendments made by this Act, including the 
     requirements relating to the means test under section 707(b), 
     and reaffirmation agreements under section 524, of title 11 
     of the United States Code, as amended by this Act.

     SEC. 1227. RECLAMATION.

       (a) Rights and Powers of the Trustee.--Section 546(c) of 
     title 11, United States Code, is amended to read as follows:
       ``(c)(1) Except as provided in subsection (d) of this 
     section and in section 507(c), and subject to the prior 
     rights of a holder of a security interest in such goods or 
     the proceeds thereof, the rights and powers of the trustee 
     under sections 544(a), 545, 547, and 549 are subject to the 
     right of a seller of goods that has sold goods to the debtor, 
     in the ordinary course of such seller's business, to reclaim 
     such goods if the debtor has received such goods while 
     insolvent, within 45 days before the date of the commencement 
     of a case under this title, but such seller may not reclaim 
     such goods unless such seller demands in writing reclamation 
     of such goods--
       ``(A) not later than 45 days after the date of receipt of 
     such goods by the debtor; or
       ``(B) not later than 20 days after the date of commencement 
     of the case, if the 45-day period expires after the 
     commencement of the case.
       ``(2) If a seller of goods fails to provide notice in the 
     manner described in paragraph (1), the seller still may 
     assert the rights contained in section 503(b)(9).''.
       (b) Administrative Expenses.--Section 503(b) of title 11, 
     United States Code, as amended by sections 445 and 1103, is 
     amended by adding at the end the following:
       ``(9) the value of any goods received by the debtor within 
     20 days before the date of commencement of a case under this 
     title in which the goods have been sold to the debtor in the 
     ordinary course of such debtor's business.''.

     SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO THE COURT.

       (a) Chapter 7 Cases.--The court shall not grant a discharge 
     in the case of an individual who is a debtor in a case under 
     chapter 7 of title 11, United States Code, unless requested 
     tax documents have been provided to the court.
       (b) Chapter 11 and Chapter 13 Cases.--The court shall not 
     confirm a plan of reorganization in the case of an individual 
     under chapter 11 or 13 of title 11, United States Code, 
     unless requested tax documents have been filed with the 
     court.
       (c) Document Retention.--The court shall destroy documents 
     submitted in support of a bankruptcy claim not sooner than 3 
     years after the date of the conclusion of a case filed by an 
     individual under chapter 7, 11, or 13 of title 11, United 
     States Code. In the event of a pending audit or enforcement 
     action, the court may extend the time for destruction of such 
     requested tax documents.

     SEC. 1229. ENCOURAGING CREDITWORTHINESS.

       (a) Sense of the Congress.--It is the sense of the Congress 
     that--
       (1) certain lenders may sometimes offer credit to consumers 
     indiscriminately, without taking steps to ensure that 
     consumers are capable of repaying the resulting debt, and in 
     a manner which may encourage certain consumers to accumulate 
     additional debt; and
       (2) resulting consumer debt may increasingly be a major 
     contributing factor to consumer insolvency.
       (b) Study Required.--The Board of Governors of the Federal 
     Reserve System (hereafter in this section referred to as the 
     ``Board'') shall conduct a study of--
       (1) consumer credit industry practices of soliciting and 
     extending credit--
       (A) indiscriminately;
       (B) without taking steps to ensure that consumers are 
     capable of repaying the resulting debt; and
       (C) in a manner that encourages consumers to accumulate 
     additional debt; and
       (2) the effects of such practices on consumer debt and 
     insolvency.
       (c) Report and Regulations.--Not later than 12 months after 
     the date of enactment of this Act, the Board--
       (1) shall make public a report on its findings with respect 
     to the indiscriminate solicitation and extension of credit by 
     the credit industry;
       (2) may issue regulations that would require additional 
     disclosures to consumers; and
       (3) may take any other actions, consistent with its 
     existing statutory authority, that the Board finds necessary 
     to ensure responsible industrywide practices and to prevent 
     resulting consumer debt and insolvency.

     SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMPTION.

       Section 541(b) of title 11, United States Code, as amended 
     by sections 225 and 323, is amended by adding after paragraph 
     (7), as added by section 323, the following:
       ``(8) subject to subchapter III of chapter 5, any interest 
     of the debtor in property where

[[Page 2951]]

     the debtor pledged or sold tangible personal property (other 
     than securities or written or printed evidences of 
     indebtedness or title) as collateral for a loan or advance of 
     money given by a person licensed under law to make such loans 
     or advances, where--
       ``(A) the tangible personal property is in the possession 
     of the pledgee or transferee;
       ``(B) the debtor has no obligation to repay the money, 
     redeem the collateral, or buy back the property at a 
     stipulated price; and
       ``(C) neither the debtor nor the trustee have exercised any 
     right to redeem provided under the contract or State law, in 
     a timely manner as provided under State law and section 
     108(b); or''.

     SEC. 1231. 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, United States Code, 
     may obtain judicial review of the final agency decision by 
     commencing an action in the district court of the United 
     States for the district for which the panel to which the 
     trustee is appointed under subsection (a)(1), or in the 
     district court of the United States 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 district court of the United 
     States for 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.''.

     SEC. 1232. BANKRUPTCY FORMS.

       Section 2075 of title 28, United States Code, is amended by 
     adding at the end the following:
       ``The bankruptcy rules promulgated under this section shall 
     prescribe a form for the statement required under section 
     707(b)(2)(C) of title 11 and may provide general rules on the 
     content of such statement.''.

     SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO COURTS OF 
                   APPEALS.

       (a) Appeals.--Section 158 of title 28, United States Code, 
     is amended--
       (1) in subsection (c)(1), by striking ``Subject to 
     subsection (b),'' and inserting ``Subject to subsections (b) 
     and (d)(2),''; and
       (2) in subsection (d)--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following:
       ``(2)(A) The appropriate court of appeals shall have 
     jurisdiction of appeals described in the first sentence of 
     subsection (a) if the bankruptcy court, the district court, 
     or the bankruptcy appellate panel involved, acting on its own 
     motion or on the request of a party to the judgment, order, 
     or decree described in such first sentence, or all the 
     appellants and appellees (if any) acting jointly, certify 
     that--
       ``(i) the judgment, order, or decree involves a question of 
     law as to which there is no controlling decision of the court 
     of appeals for the circuit or of the Supreme Court of the 
     United States, or involves a matter of public importance;
       ``(ii) the judgment, order, or decree involves a question 
     of law requiring resolution of conflicting decisions; or
       ``(iii) an immediate appeal from the judgment, order, or 
     decree may materially advance the progress of the case or 
     proceeding in which the appeal is taken;

     and if the court of appeals authorizes the direct appeal of 
     the judgment, order, or decree.
       ``(B) If the bankruptcy court, the district court, or the 
     bankruptcy appellate panel--
       ``(i) on its own motion or on the request of a party, 
     determines that a circumstance specified in clause (i), (ii), 
     or (iii) of subparagraph (A) exists; or
       ``(ii) receives a request made by a majority of the 
     appellants and a majority of appellees (if any) to make the 
     certification described in subparagraph (A);

     then the bankruptcy court, the district court, or the 
     bankruptcy appellate panel shall make the certification 
     described in subparagraph (A).
       ``(C) The parties may supplement the certification with a 
     short statement of the basis for the certification.
       ``(D) An appeal under this paragraph does not stay any 
     proceeding of the bankruptcy court, the district court, or 
     the bankruptcy appellate panel from which the appeal is 
     taken, unless the respective bankruptcy court, district 
     court, or bankruptcy appellate panel, or the court of appeals 
     in which the appeal in pending, issues a stay of such 
     proceeding pending the appeal.
       ``(E) Any request under subparagraph (B) for certification 
     shall be made not later than 60 days after the entry of the 
     judgment, order, or decree.''.
       (b) Procedural Rules.--
       (1) Temporary application.--A provision of this subsection 
     shall apply to appeals under section 158(d)(2) of title 28, 
     United States Code, until a rule of practice and procedure 
     relating to such provision and such appeals is promulgated or 
     amended under chapter 131 of such title.
       (2) Certification.--A district court, a bankruptcy court, 
     or a bankruptcy appellate panel may make a certification 
     under section 158(d)(2) of title 28, United States Code, only 
     with respect to matters pending in the respective bankruptcy 
     court, district court, or bankruptcy appellate panel.
       (3) Procedure.--Subject to any other provision of this 
     subsection, an appeal authorized by the court of appeals 
     under section 158(d)(2)(A) of title 28, United States Code, 
     shall be taken in the manner prescribed in subdivisions 
     (a)(1), (b), (c), and (d) of rule 5 of the Federal Rules of 
     Appellate Procedure. For purposes of subdivision (a)(1) of 
     rule 5--
       (A) a reference in such subdivision to a district court 
     shall be deemed to include a reference to a bankruptcy court 
     and a bankruptcy appellate panel, as appropriate; and
       (B) a reference in such subdivision to the parties 
     requesting permission to appeal to be served with the 
     petition shall be deemed to include a reference to the 
     parties to the judgment, order, or decree from which the 
     appeal is taken.
       (4) Filing of petition with attachment.--A petition 
     requesting permission to appeal, that is based on a 
     certification made under subparagraph (A) or (B) of section 
     158(d)(2) shall--
       (A) be filed with the circuit clerk not later than 10 days 
     after the certification is entered on the docket of the 
     bankruptcy court, the district court, or the bankruptcy 
     appellate panel from which the appeal is taken; and
       (B) have attached a copy of such certification.
       (5) References in rule 5.--For purposes of rule 5 of the 
     Federal Rules of Appellate Procedure--
       (A) a reference in such rule to a district court shall be 
     deemed to include a reference to a bankruptcy court and to a 
     bankruptcy appellate panel; and
       (B) a reference in such rule to a district clerk shall be 
     deemed to include a reference to a clerk of a bankruptcy 
     court and to a clerk of a bankruptcy appellate panel.
       (6) Application of rules.--The Federal Rules of Appellate 
     Procedure shall apply in the courts of appeals with respect 
     to appeals authorized under section 158(d)(2)(A), to the 
     extent relevant and as if such appeals were taken from final 
     judgments, orders, or decrees of the district courts or 
     bankruptcy appellate panels exercising appellate jurisdiction 
     under subsection (a) or (b) of section 158 of title 28, 
     United States Code.

     SEC. 1234. INVOLUNTARY CASES.

       (a) Amendments.--Section 303 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)(1), by--
       (A) inserting ``as to liability or amount'' after ``bona 
     fide dispute''; and
       (B) striking ``if such claims'' and inserting ``if such 
     noncontingent, undisputed claims''; and
       (2) in subsection (h)(1), by inserting ``as to liability or 
     amount'' before the semicolon at the end.
       (b) Effective Date; Application of Amendments.--This 
     section and the amendments made by this section shall take 
     effect on the date of the enactment of this Act and shall 
     apply with respect to cases commenced under title 11 of the 
     United States Code before, on, and after such date.

     SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES AS 
                   NONDISCHARGEABLE DEBT.

       Section 523(a) of title 11, United States Code, as amended 
     by section 314, is amended by inserting after paragraph (14A) 
     the following:
       ``(14B) incurred to pay fines or penalties imposed under 
     Federal election law;''.

                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

     SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END CREDIT 
                   PLAN.

       (a) 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)(A) In the case of an open end credit plan that 
     requires a minimum monthly payment of not more than 4 percent 
     of the balance on which finance charges are accruing, the 
     following statement, located on the front of the billing 
     statement, disclosed clearly and conspicuously: `Minimum 
     Payment Warning: Making only the minimum payment will 
     increase the interest you pay and

[[Page 2952]]

     the time it takes to repay your balance. For example, making 
     only the typical 2% minimum monthly payment on a balance of 
     $1,000 at an interest rate of 17% would take 88 months to 
     repay the balance in full. For an estimate of the time it 
     would take to repay your balance, making only minimum 
     payments, call this toll-free number: ______.' (the blank 
     space to be filled in by the creditor).
       ``(B) In the case of an open end credit plan that requires 
     a minimum monthly payment of more than 4 percent of the 
     balance on which finance charges are accruing, the following 
     statement, in a prominent location on the front of the 
     billing statement, disclosed clearly and conspicuously: 
     `Minimum Payment Warning: Making only the required minimum 
     payment will increase the interest you pay and the time it 
     takes to repay your balance. Making a typical 5% minimum 
     monthly payment on a balance of $300 at an interest rate of 
     17% would take 24 months to repay the balance in full. For an 
     estimate of the time it would take to repay your balance, 
     making only minimum monthly payments, call this toll-free 
     number: ______.' (the blank space to be filled in by the 
     creditor).
       ``(C) Notwithstanding subparagraphs (A) and (B), in the 
     case of a creditor with respect to which compliance with this 
     title is enforced by the Federal Trade Commission, the 
     following statement, in a prominent location on the front of 
     the billing statement, disclosed clearly and conspicuously: 
     `Minimum Payment Warning: Making only the required minimum 
     payment will increase the interest you pay and the time it 
     takes to repay your balance. For example, making only the 
     typical 5% minimum monthly payment on a balance of $300 at an 
     interest rate of 17% would take 24 months to repay the 
     balance in full. For an estimate of the time it would take to 
     repay your balance, making only minimum monthly payments, 
     call the Federal Trade Commission at this toll-free number: 
     ______.' (the blank space to be filled in by the creditor). A 
     creditor who is subject to this subparagraph shall not be 
     subject to subparagraph (A) or (B).
       ``(D) Notwithstanding subparagraph (A), (B), or (C), in 
     complying with any such subparagraph, a creditor may 
     substitute an example based on an interest rate that is 
     greater than 17 percent. Any creditor that is subject to 
     subparagraph (B) may elect to provide the disclosure required 
     under subparagraph (A) in lieu of the disclosure required 
     under subparagraph (B).
       ``(E) The Board shall, by rule, periodically recalculate, 
     as necessary, the interest rate and repayment period under 
     subparagraphs (A), (B), and (C).
       ``(F)(i) The toll-free telephone number disclosed by a 
     creditor or the Federal Trade Commission under subparagraph 
     (A), (B), or (G), as appropriate, may be a toll-free 
     telephone number established and maintained by the creditor 
     or the Federal Trade Commission, as appropriate, or may be a 
     toll-free telephone number established and maintained by a 
     third party for use by the creditor or multiple creditors or 
     the Federal Trade Commission, as appropriate. The toll-free 
     telephone number may connect consumers to an automated device 
     through which consumers may obtain information described in 
     subparagraph (A), (B), or (C), by inputting information using 
     a touch-tone telephone or similar device, if consumers whose 
     telephones are not equipped to use such automated device are 
     provided the opportunity to be connected to an individual 
     from whom the information described in subparagraph (A), (B), 
     or (C), as applicable, may be obtained. A person that 
     receives a request for information described in subparagraph 
     (A), (B), or (C) from an obligor through the toll-free 
     telephone number disclosed under subparagraph (A), (B), or 
     (C), as applicable, shall disclose in response to such 
     request only the information set forth in the table 
     promulgated by the Board under subparagraph (H)(i).
       ``(ii)(I) The Board shall establish and maintain for a 
     period not to exceed 24 months following the effective date 
     of the Bankruptcy Abuse Prevention and Consumer Protection 
     Act of 2005, a toll-free telephone number, or provide a toll-
     free telephone number established and maintained by a third 
     party, for use by creditors that are depository institutions 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act), including a Federal credit union or State credit union 
     (as defined in section 101 of the Federal Credit Union Act), 
     with total assets not exceeding $250,000,000. The toll-free 
     telephone number may connect consumers to an automated device 
     through which consumers may obtain information described in 
     subparagraph (A) or (B), as applicable, by inputting 
     information using a touch-tone telephone or similar device, 
     if consumers whose telephones are not equipped to use such 
     automated device are provided the opportunity to be connected 
     to an individual from whom the information described in 
     subparagraph (A) or (B), as applicable, may be obtained. A 
     person that receives a request for information described in 
     subparagraph (A) or (B) from an obligor through the toll-free 
     telephone number disclosed under subparagraph (A) or (B), as 
     applicable, shall disclose in response to such request only 
     the information set forth in the table promulgated by the 
     Board under subparagraph (H)(i). The dollar amount contained 
     in this subclause shall be adjusted according to an indexing 
     mechanism established by the Board.
       ``(II) Not later than 6 months prior to the expiration of 
     the 24-month period referenced in subclause (I), the Board 
     shall submit to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives a report on the program 
     described in subclause (I).
       ``(G) The Federal Trade Commission shall establish and 
     maintain a toll-free number for the purpose of providing to 
     consumers the information required to be disclosed under 
     subparagraph (C).
       ``(H) The Board shall--
       ``(i) establish a detailed table illustrating the 
     approximate number of months that it would take to repay an 
     outstanding balance if a consumer pays only the required 
     minimum monthly payments and if no other advances are made, 
     which table shall clearly present standardized information to 
     be used to disclose the information required to be disclosed 
     under subparagraph (A), (B), or (C), as applicable;
       ``(ii) establish the table required under clause (i) by 
     assuming--
       ``(I) a significant number of different annual percentage 
     rates;
       ``(II) a significant number of different account balances;
       ``(III) a significant number of different minimum payment 
     amounts; and
       ``(IV) that only minimum monthly payments are made and no 
     additional extensions of credit are obtained; and
       ``(iii) promulgate regulations that provide instructional 
     guidance regarding the manner in which the information 
     contained in the table established under clause (i) should be 
     used in responding to the request of an obligor for any 
     information required to be disclosed under subparagraph (A), 
     (B), or (C).
       ``(I) The disclosure requirements of this paragraph do not 
     apply to any charge card account, the primary purpose of 
     which is to require payment of charges in full each month.
       ``(J) A creditor that maintains a toll-free telephone 
     number for the purpose of providing customers with the actual 
     number of months that it will take to repay the customer's 
     outstanding balance is not subject to the requirements of 
     subparagraph (A) or (B).
       ``(K) A creditor that maintains a toll-free telephone 
     number for the purpose of providing customers with the actual 
     number of months that it will take to repay an outstanding 
     balance shall include the following statement on each billing 
     statement: `Making only the minimum payment will increase the 
     interest you pay and the time it takes to repay your balance. 
     For more information, call this toll-free number: ____.' (the 
     blank space to be filled in by the creditor).''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board of Governors of the Federal 
     Reserve System (hereafter in this title referred to as the 
     ``Board'') shall promulgate regulations implementing the 
     requirements of section 127(b)(11) of the Truth in Lending 
     Act, as added by subsection (a) of this section.
       (2) Effective date.--Section 127(b)(11) of the Truth in 
     Lending Act, as added by subsection (a) of this section, and 
     the regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 18 months after the date of enactment of this Act; or
       (B) 12 months after the publication of such final 
     regulations by the Board.
       (c) Study of Financial Disclosures.--
       (1) In general.--The Board may conduct a study to determine 
     the types of information available to potential borrowers 
     from consumer credit lending institutions regarding factors 
     qualifying potential borrowers for credit, repayment 
     requirements, and the consequences of default.
       (2) Factors for consideration.--In conducting a study under 
     paragraph (1), the Board should, in consultation with the 
     other Federal banking agencies (as defined in section 3 of 
     the Federal Deposit Insurance Act), the National Credit Union 
     Administration, and the Federal Trade Commission, consider 
     the extent to which--
       (A) 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;
       (B) minimum periodic payment features offered in connection 
     with open end credit plans impact consumer default rates;
       (C) consumers make only the required minimum payment under 
     open end credit plans;
       (D) consumers are aware that making only required minimum 
     payments will increase the cost and repayment period of an 
     open end credit obligation; and
       (E) the availability of low minimum payment options is a 
     cause of consumers experiencing financial difficulty.
       (3) Report to congress.--Findings of the Board in 
     connection with any study conducted under this subsection 
     shall be submitted to Congress. Such report shall also

[[Page 2953]]

     include recommendations for legislative initiatives, if any, 
     of the Board, based on its findings.

     SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED 
                   BY A DWELLING.

       (a) Open End Credit Extensions.--
       (1) Credit applications.--Section 127A(a)(13) of the Truth 
     in Lending Act (15 U.S.C. 1637a(a)(13)) is amended--
       (A) by striking ``consultation of tax adviser.--A statement 
     that the'' and inserting the following: ``tax 
     deductibility.--A statement that--
       ``(A) the''; and
       (B) by striking the period at the end and inserting the 
     following: ``; and
       ``(B) in any case in which the extension of credit exceeds 
     the fair market value (as defined under the Internal Revenue 
     Code of 1986) of the dwelling, the interest on the portion of 
     the credit extension that is greater than the fair market 
     value of the dwelling is not tax deductible for Federal 
     income tax purposes.''.
       (2) Credit advertisements.--Section 147(b) of the Truth in 
     Lending Act (15 U.S.C. 1665b(b)) is amended--
       (A) by striking ``If any'' and inserting the following:
       ``(1) In general.--If any''; and
       (B) by adding at the end the following:
       ``(2) Credit in excess of fair market value.--Each 
     advertisement described in subsection (a) that relates to an 
     extension of credit that may exceed the fair market value of 
     the dwelling, and which advertisement is disseminated in 
     paper form to the public or through the Internet, as opposed 
     to by radio or television, shall include a clear and 
     conspicuous statement that--
       ``(A) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(B) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''.
       (b) Non-Open End Credit Extensions.--
       (1) Credit applications.--Section 128 of the Truth in 
     Lending Act (15 U.S.C. 1638) is amended--
       (A) in subsection (a), by adding at the end the following:
       ``(15) In the case of a consumer credit transaction that is 
     secured by the principal dwelling of the consumer, in which 
     the extension of credit may exceed the fair market value of 
     the dwelling, a clear and conspicuous statement that--
       ``(A) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(B) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''; and
       (B) in subsection (b), by adding at the end the following:
       ``(3) In the case of a credit transaction described in 
     paragraph (15) of subsection (a), disclosures required by 
     that paragraph shall be made to the consumer at the time of 
     application for such extension of credit.''.
       (2) Credit advertisements.--Section 144 of the Truth in 
     Lending Act (15 U.S.C. 1664) is amended by adding at the end 
     the following:
       ``(e) Each advertisement to which this section applies that 
     relates to a consumer credit transaction that is secured by 
     the principal dwelling of a consumer in which the extension 
     of credit may exceed the fair market value of the dwelling, 
     and which advertisement is disseminated in paper form to the 
     public or through the Internet, as opposed to by radio or 
     television, shall clearly and conspicuously state that--
       ``(1) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(2) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''.
       (c) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the amendments made by this section.
       (2) Effective date.--Regulations issued under paragraph (1) 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1303. DISCLOSURES RELATED TO ``INTRODUCTORY RATES''.

       (a) Introductory Rate Disclosures.--Section 127(c) of the 
     Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding 
     at the end the following:
       ``(6) Additional notice concerning `introductory rates'.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an application or solicitation to open a credit card account 
     and all promotional materials accompanying such application 
     or solicitation for which a disclosure is required under 
     paragraph (1), and that offers a temporary annual percentage 
     rate of interest, shall--
       ``(i) use the term `introductory' in immediate proximity to 
     each listing of the temporary annual percentage rate 
     applicable to such account, which term shall appear clearly 
     and conspicuously;
       ``(ii) if the annual percentage rate of interest that will 
     apply after the end of the temporary rate period will be a 
     fixed rate, state in a clear and conspicuous manner in a 
     prominent location closely proximate to the first listing of 
     the temporary annual percentage rate (other than a listing of 
     the temporary annual percentage rate in the tabular format 
     described in section 122(c)), the time period in which the 
     introductory period will end and the annual percentage rate 
     that will apply after the end of the introductory period; and
       ``(iii) if the annual percentage rate that will apply after 
     the end of the temporary rate period will vary in accordance 
     with an index, state in a clear and conspicuous manner in a 
     prominent location closely proximate to the first listing of 
     the temporary annual percentage rate (other than a listing in 
     the tabular format prescribed by section 122(c)), the time 
     period in which the introductory period will end and the rate 
     that will apply after that, based on an annual percentage 
     rate that was in effect within 60 days before the date of 
     mailing the application or solicitation.
       ``(B) Exception.--Clauses (ii) and (iii) of subparagraph 
     (A) do not apply with respect to any listing of a temporary 
     annual percentage rate on an envelope or other enclosure in 
     which an application or solicitation to open a credit card 
     account is mailed.
       ``(C) Conditions for introductory rates.--An application or 
     solicitation to open a credit card account for which a 
     disclosure is required under paragraph (1), and that offers a 
     temporary annual percentage rate of interest shall, if that 
     rate of interest is revocable under any circumstance or upon 
     any event, clearly and conspicuously disclose, in a prominent 
     manner on or with such application or solicitation--
       ``(i) a general description of the circumstances that may 
     result in the revocation of the temporary annual percentage 
     rate; and
       ``(ii) if the annual percentage rate that will apply upon 
     the revocation of the temporary annual percentage rate--

       ``(I) will be a fixed rate, the annual percentage rate that 
     will apply upon the revocation of the temporary annual 
     percentage rate; or
       ``(II) will vary in accordance with an index, the rate that 
     will apply after the temporary rate, based on an annual 
     percentage rate that was in effect within 60 days before the 
     date of mailing the application or solicitation.

       ``(D) Definitions.--In this paragraph--
       ``(i) the terms `temporary annual percentage rate of 
     interest' and `temporary annual percentage rate' mean any 
     rate of interest applicable to a credit card account for an 
     introductory period of less than 1 year, if that rate is less 
     than an annual percentage rate that was in effect within 60 
     days before the date of mailing the application or 
     solicitation; and
       ``(ii) the term `introductory period' means the maximum 
     time period for which the temporary annual percentage rate 
     may be applicable.
       ``(E) Relation to other disclosure requirements.--Nothing 
     in this paragraph may be construed to supersede subsection 
     (a) of section 122, or any disclosure required by paragraph 
     (1) or any other provision of this subsection.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(c)(6) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--Section 127(c)(6) of the Truth in 
     Lending Act, as added by this section, and regulations issued 
     under paragraph (1) of this subsection shall not take effect 
     until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.

       (a) Internet-Based Solicitations.--Section 127(c) of the 
     Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding 
     at the end the following:
       ``(7) Internet-based solicitations.--
       ``(A) In general.--In any solicitation to open a credit 
     card account for any person under an open end consumer credit 
     plan using the Internet or other interactive computer 
     service, the person making the solicitation shall clearly and 
     conspicuously disclose--
       ``(i) the information described in subparagraphs (A) and 
     (B) of paragraph (1); and
       ``(ii) the information described in paragraph (6).
       ``(B) Form of disclosure.--The disclosures required by 
     subparagraph (A) shall be--
       ``(i) readily accessible to consumers in close proximity to 
     the solicitation to open a credit card account; and
       ``(ii) updated regularly to reflect the current policies, 
     terms, and fee amounts applicable to the credit card account.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) the term `Internet' means the international computer 
     network of both Federal

[[Page 2954]]

     and non-Federal interoperable packet 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.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(c)(7) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and the regulations issued under paragraph (1) of this 
     subsection shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT DEADLINES AND 
                   PENALTIES.

       (a) Disclosures Related to Late Payment Deadlines and 
     Penalties.--Section 127(b) of the Truth in Lending Act (15 
     U.S.C. 1637(b)) is amended by adding at the end the 
     following:
       ``(12) If a late payment fee is to be imposed due to the 
     failure of the obligor to make payment on or before a 
     required payment due date, the following shall be stated 
     clearly and conspicuously on the billing statement:
       ``(A) The date on which that payment is due or, if 
     different, the earliest date on which a late payment fee may 
     be charged.
       ``(B) The amount of the late payment fee to be imposed if 
     payment is made after such date.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(b)(12) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO 
                   INCUR FINANCE CHARGES.

       (a) 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:
       ``(h) 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.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(h) of the Truth 
     in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1307. DUAL USE DEBIT CARD.

       (a) Report.--The Board may conduct a study of, and present 
     to Congress a report containing its analysis of, consumer 
     protections under existing law to limit the liability of 
     consumers for unauthorized use of a debit card or similar 
     access device. Such report, if submitted, shall include 
     recommendations for legislative initiatives, if any, of the 
     Board, based on its findings.
       (b) Considerations.--In preparing a report under subsection 
     (a), the Board may include--
       (1) the extent to which section 909 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693g), as in effect at the time of 
     the report, and the implementing regulations promulgated by 
     the Board to carry out that section provide adequate 
     unauthorized use liability protection for consumers;
       (2) the extent to which any voluntary industry rules have 
     enhanced or may enhance the level of protection afforded 
     consumers in connection with such unauthorized use liability; 
     and
       (3) whether amendments to the Electronic Fund Transfer Act 
     (15 U.S.C. 1693 et seq.), or revisions to regulations 
     promulgated by the Board to carry out that Act, are necessary 
     to further address adequate protection for consumers 
     concerning unauthorized use liability.

     SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO 
                   DEPENDENT STUDENTS.

       (a) Study.--
       (1) In general.--The Board shall conduct a study regarding 
     the impact that the extension of credit described in 
     paragraph (2) has on the rate of cases filed under title 11 
     of the United States Code.
       (2) Extension of credit.--The extension of credit described 
     in this paragraph is the extension of credit to individuals 
     who are--
       (A) claimed as dependents for purposes of the Internal 
     Revenue Code of 1986; and
       (B) enrolled within 1 year of successfully completing all 
     required secondary education requirements and on a full-time 
     basis, in postsecondary educational institutions.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Board shall submit to the Senate 
     and the House of Representatives a report summarizing the 
     results of the study conducted under subsection (a).

     SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS.

       (a) Regulations.--Not later than 6 months after the date of 
     enactment of this Act, the Board, in consultation with the 
     other Federal banking agencies (as defined in section 3 of 
     the Federal Deposit Insurance Act), the National Credit Union 
     Administration Board, and the Federal Trade Commission, shall 
     promulgate regulations to provide guidance regarding the 
     meaning of the term ``clear and conspicuous'', as used in 
     subparagraphs (A), (B), and (C) of section 127(b)(11) and 
     clauses (ii) and (iii) of section 127(c)(6)(A) of the Truth 
     in Lending Act.
       (b) Examples.--Regulations promulgated under subsection (a) 
     shall include examples of clear and conspicuous model 
     disclosures for the purposes of disclosures required by the 
     provisions of the Truth in Lending Act referred to in 
     subsection (a).
       (c) Standards.--In promulgating regulations under this 
     section, the Board shall ensure that the clear and 
     conspicuous standard required for disclosures made under the 
     provisions of the Truth in Lending Act referred to in 
     subsection (a) can be implemented in a manner which results 
     in disclosures which are reasonably understandable and 
     designed to call attention to the nature and significance of 
     the information in the notice.

            TITLE XIV--PREVENTING CORPORATE BANKRUPTCY ABUSE

     SEC. 1401. EMPLOYEE WAGE AND BENEFIT PRIORITIES.

       Section 507(a) of title 11, United States Code, as amended 
     by section 212, is amended--
       (1) in paragraph (4) by striking ``90'' and inserting 
     ``180'', and
       (2) in paragraphs (4) and (5) by striking ``$4,000'' and 
     inserting ``$10,000''.

     SEC. 1402. FRAUDULENT TRANSFERS AND OBLIGATIONS.

       Section 548 of title 11, United States Code, is amended--
       (1) in subsections (a) and (b) by striking ``one year'' and 
     inserting ``2 years'',
       (2) in subsection (a)--
       (A) by inserting ``(including any transfer to or for the 
     benefit of an insider under an employment contract)'' after 
     ``transfer'' the 1st place it appears, and
       (B) by inserting ``(including any obligation to or for the 
     benefit of an insider under an employment contract)'' after 
     ``obligation'' the 1st place it appears, and
       (3) in subsection (a)(1)(B)(ii)--
       (A) in subclause (II) by striking ``or'' at the end,
       (B) in subclause (III) by striking the period at the end 
     and inserting ``; or'', and
       (C) by adding at the end the following:
       ``(IV) made such transfer to or for the benefit of an 
     insider, or incurred such obligation to or for the benefit of 
     an insider, under an employment contract and not in the 
     ordinary course of business.''.

     SEC. 1403. PAYMENT OF INSURANCE BENEFITS TO RETIRED 
                   EMPLOYEES.

       Section 1114 of title 11, United States Code, is amended--
       (1) by redesignating subsection (l) as subsection (m), and
       (2) by inserting after subsection (k) the following:
       ``(l) If the debtor, during the 180-day period ending on 
     the date of the filing of the petition--
       ``(1) modified retiree benefits; and
       ``(2) was insolvent on the date such benefits were 
     modified;

     the court, on motion of a party in interest, and after notice 
     and a hearing, shall issue an order reinstating as of the 
     date the modification was made, such benefits as in effect 
     immediately before such date unless the court finds that the 
     balance of the equities clearly favors such modification.''.

     [SEC. 1404. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.]

     SEC. 1404. DEBTS NONDISCHARGEABLE IF INCURRED IN VIOLATION OF 
                   SECURITIES FRAUD LAWS.

       (a) Prepetition and Postpetition Effect.--Section 
     523(a)(19)(B) of title 11, United States Code, is amended by 
     inserting ``, before, on, or after the date on which the 
     petition was filed,'' after ``results''.
       (b) Effective Date Upon Enactment of Sarbanes-Oxley Act.--
     The amendment made by subsection (a) is effective beginning 
     July 30, 2002.

     SEC. 1405. APPOINTMENT OF TRUSTEE IN CASES OF SUSPECTED 
                   FRAUD.

       Section 1104 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) The United States trustee shall move for the 
     appointment of a trustee under subsection

[[Page 2955]]

     (a) if there are reasonable grounds to suspect that current 
     members of the governing body of the debtor, the debtor's 
     chief executive or chief financial officer, or members of the 
     governing body who selected the debtor's chief executive or 
     chief financial officer, participated in actual fraud, 
     dishonesty, or criminal conduct in the management of the 
     debtor or the debtor's public financial reporting.''.

     SEC. 1406. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as provided in subsection (b), 
     this title and the amendments made by this title shall take 
     effect on the date of the enactment of this Act.
       (b) Application of Amendments.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this title shall apply only with respect 
     to cases commenced under title 11 of the United States Code 
     on or after the date of the enactment of this Act.
       (2) Avoidance period.--The amendment made by section 
     1402(1) shall apply only with respect to cases commenced 
     under title 11 of the United States Code more than 1 year 
     after the date of the enactment of this Act.

      TITLE XV--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

     SEC. 1501. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as otherwise provided in this 
     Act, this Act and the amendments made by this Act shall take 
     effect 180 days after the date of enactment of this Act.
       (b) Application of Amendments.--
       (1) In general.--Except as otherwise provided in this Act 
     and paragraph (2), the amendments made by this Act shall not 
     apply with respect to cases commenced under title 11, United 
     States Code, before the effective date of this Act.
       (2) Certain limitations applicable to debtors.--The 
     amendments made by sections 308, 322, and 330 shall apply 
     with respect to cases commenced under title 11, United States 
     Code, on or after the date of the enactment of this Act.

     SEC. 1502. TECHNICAL CORRECTIONS.

       (a) Conforming Amendments to Title 11 of the United States 
     Code.--Title 11 of the United States Code, as amended by the 
     preceding provisions of this Act, is amended--
       (1) in section 507--
       (A) in subsection (a)--
       (i) in paragraph (5)(B)(ii) by striking ``paragraph (3)'' 
     and inserting ``paragraph (4)''; and
       (ii) in paragraph (8)(D) by striking ``paragraph (3)'' and 
     inserting ``paragraph (4)'';
       (B) in subsection (b) by striking ``subsection (a)(1)'' and 
     inserting ``subsection (a)(2)''; and
       (C) in subsection (d) by striking ``subsection (a)(3)'' and 
     inserting ``subsection (a)(1)'';
       (2) in section 523(a)(1)(A) by striking ``507(a)(2)'' and 
     inserting ``507(a)(3)'';
       (3) in section 752(a) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)'';
       (4) in section 766--
       (A) in subsection (h) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)''; and
       (B) in subsection (i) by striking ``507(a)(1)'' each place 
     it appears and inserting ``507(a)(2)'';
       (5) in section 901(a) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)'';
       (6) in section 943(b)(5) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)'';
       (7) in section 1123(a)(1) by striking ``507(a)(1), 
     507(a)(2)'' and inserting ``507(a)(2), 507(a)(3)'';
       (8) in section 1129(a)(9)--
       (A) in subparagraph (A) by striking ``507(a)(1) or 
     507(a)(2)'' and inserting ``507(a)(2) or 507(a)(3)''; and
       (B) in subparagraph (B) by striking ``507(a)(3)'' and 
     inserting ``507(a)(1)'';
       (9) in section 1226(b)(1) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)''; and
       (10) in section 1326(b)(1) by striking ``507(a)(1)'' and 
     inserting ``507(a)(2)''.
       (b) Related Conforming Amendment.--Section 6(e) of the 
     Securities Investor Protection Act of 1970 (15 U.S.C. 
     78fff(e)) is amended by striking ``507(a)(1)'' and inserting 
     ``507(a)(2)''.

  The PRESIDENT pro tempore. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, in my capacity as chairman of the Senate 
Judiciary Committee, I am pleased to join my distinguished colleague 
from Vermont, the ranking member, in beginning the debate on this very 
important legislation.
  At the outset, I congratulate Senator Grassley for the work he has 
done over the past decade, and also former chairman, Senator Hatch, for 
the outstanding job he has done. I thank Senator Hatch especially for 
filling in for me a week ago Thursday on the executive session when the 
committee took up the bill and reported it to the Senate.
  I thank both Republicans and Democrats on the committee for 
withholding amendments until the floor.
  We had one very extensive hearing. I know there was an interest in 
having more hearings, but the reality is this issue has been debated 
and has been heard. There is a very comprehensive idea on both sides as 
to the underlying merits of the bill.
  It is important to note that going back to the 105th Congress the 
Senate passed a similar bill by a vote of 97 to 1, and subsequently 
voted to proceed to conference by a vote of 94 to 2. The Senate again 
took up a similar bill in the 106th Congress and passed legislation 
again by a wide margin, 83 to 14. The House also passed legislation 
during the 106th Congress, but President Clinton resorted to a pocket 
veto, so the bill was not enacted. The Senate took up the bill again in 
the 107th Congress but never reached agreement with the House on 
certain language. So here we are today with reform legislation that 
seeks to protect the interests of the debtors, honest Americans, who 
need relief from bankruptcy, and still address those who take advantage 
of the bankruptcy laws.
  Bankruptcy is obviously a necessary tool for many people who find 
they simply are not able to repay their debts. Indeed, the vast 
majority of bankruptcy filers have nothing with which to pay their 
creditors. They file for bankruptcy as a last resort. And for them 
bankruptcy will continue to provide a fresh start.
  Unfortunately, at the same time, there are some who use bankruptcy as 
a means of avoiding debts they have the ability to pay. Some bankruptcy 
filers have the ability to pay a significant portion of their debts, 
but the current bankruptcy system, which presumes that most people are 
acting honestly, does not require them to do so. At a recent Judiciary 
Committee hearing on the bill, the expert testimony was that up to 10 
percent of people who file for bankruptcy have the ability to pay for 
at least part of their debts.
  The consequence of having people avoid their debts when they can pay 
for them has resulted in having these obligations absorbed by other 
people in the commercial system. The estimate is that there are some 
$44 billion in debts discharged annually. There has been an enormous 
increase in the filings. In recent years, annual bankruptcy filings 
have exceeded 1.6 million for the first time in history. They more than 
doubled in the 1980s and again doubled from 1990 to the year 2003.
  This legislation is an effort to achieve some balance, balance to see 
to it that people who genuinely need bankruptcy and cannot pay their 
debts are able to get the relief in bankruptcy, and at the same time 
looking at many practices which are in need of reform.
  For example, this legislation will require high-income debtors who 
have the ability to repay some of their debts to do so. The heart of 
this bill is a means test. It requires the bankruptcy trustee to 
examine the income and expenses of high-income debtors and determine 
whether they have the ability to pay something toward their debts. If 
so, they must complete a chapter 13 reorganization plan, which requires 
that they repay part of their debts over time before they can have the 
rest discharged.
  The legislation will also bring to an end other abuses that occur 
under the current bankruptcy system. For example, it closes the 
``mansion loophole,'' which allows opportunistic debtors to avoid 
paying their creditors by buying a house in a State with an unlimited 
or extremely generous homestead exemption, and then declaring 
bankruptcy. It extends the statute of limitations for fraudulent use of 
the homestead exemption to 10 years.
  Another provision prevents debtors from purchasing large amounts of 
luxury goods on credit and then filing for bankruptcy to have that debt 
discharged. Other provisions will discourage debtors from repeatedly 
filing for bankruptcy, and then invoking the automatic stay to avoid 
repaying their creditors.
  The legislation also aims at ensuring that debtors cannot escape 
their spousal and child support obligations by filing for bankruptcy. 
That is, of course, a very important item, with dodging child support 
and spousal support being a matter of an enormous problem nationwide. 
Chapter 13 debtors cannot

[[Page 2956]]

have a repayment plan approved or their debts discharged until they are 
current on their spousal and child support obligations.
  The legislation will further improve the bankruptcy process for small 
businesses and enhance bankruptcy protections for family farmers as 
well as family fishermen. Small businesses that can restructure will 
still be able to obtain a fresh start. However, for the many small 
businesses that will never survive a protracted bankruptcy, the bill 
imposes deadlines to keep cases from languishing and creditors from 
waiting indefinitely.
  In addition, the bill makes it easier for family farmers to obtain 
bankruptcy protection under Chapter 12, a form of bankruptcy that takes 
account of the unique concerns of farmers. And, for the first time, 
family fishermen will also be able to file for Chapter 12 bankruptcy.
  Further, the bill contains protections aimed at helping consumers 
avoid excessive debt and bankruptcy. It requires credit card companies 
to warn their cardholders that making the minimum payment on a credit 
card balance can significantly increase the time it takes to pay off 
the balance. Many credit card practices are extremely deceptive. Credit 
card companies must also provide certain disclosures in credit card 
solicitations, including clear indications when an advertised interest 
rate is merely introductory--again, a practice which is very deceptive. 
So the bill is aimed at preventing the little guy from being misled, 
which leads him into bankruptcy.
  The legislation further provides that creditors make certain 
disclosures before debtors can reaffirm their debts so that debtors 
fully understand the implications of signing a reaffirmation 
agreement--a technical matter. The legislation requires that debtors 
receive credit counseling before filing for bankruptcy so they can 
understand the consequences of filing and are aware of the alternatives 
to bankruptcy. A little knowledge there can go a long way.
  At the outset, I want to acknowledge that there are many low-income 
people who will not be able to repay any of their debts. The means test 
will not affect those people. If they are below the median income for 
their State, the means test will not apply. However, for those who are 
above the median income, there will be a balance so those who can 
afford to do so must repay part of their debts, to help prevent the $44 
billion in discharged debts from burdening other honest Americans, and 
part of the commercial system will not be saddled with those 
obligations.
  In analyzing this legislation, it is my concern to ensure that it is 
fair to the ``little guy,'' the working men and women who need 
bankruptcy as a last resort and who do not abuse the system.
  We had a lively debate in the hearing in the Judiciary Committee. We 
had a lively hearing. I know there are many amendments which will be 
offered, and I will have an open mind in considering these amendments 
as we work through the process. It is a very complicated bill. But it 
has been analyzed and reanalyzed. Again, it attempts to strike a 
balance so that the person who needs the discharge in bankruptcy will 
be able to obtain it, but those who game the system will not be able to 
do so.
  Let me reiterate the comments of the majority leader in urging 
Senators who have opening statements to come to the floor to offer 
those opening statements. It will be the objective of Senator Leahy, 
the ranking member, and myself to try to move through to amendments. It 
is anticipated there will be amendments.
  We have a very active calendar ahead of us. One of the items on the 
Judiciary Committee agenda that we are moving forward on is asbestos 
legislation, an issue of tremendous importance, where many Americans 
are dying from mesothelioma and other deadly ailments from exposure to 
asbestos, who collect nothing because the companies are bankrupt. Some 
74 companies have gone bankrupt, and more are in the process. I filed a 
draft discussion bill. There have been very extensive negotiations with 
Republicans and Democrats, and we are anxious to move ahead. We will be 
taking that issue up on the executive calendar of the Judiciary 
Committee on Thursday. But I mention that to underscore the importance 
of moving ahead on this legislation because there will be, doubtless, 
many amendments, and the sooner they are offered, the sooner we can 
come to grips with the substance of the bill.
  At this time, I yield to my distinguished ranking member, Senator 
Leahy.
  The PRESIDENT pro tempore. The Senator from Vermont is recognized.
  Mr. LEAHY. Mr. President, I thank the distinguished chairman of the 
committee, the senior Senator from Pennsylvania, for his opening 
statement. I know he has worked hard on this matter.
  The Senator from Pennsylvania, the Senator from Vermont, and the 
distinguished President pro tempore have noted that it is spitting snow 
outside. Unfortunately, some think this is a time for panic. They 
should go to Alaska. They should go to Vermont. They should go over to 
the mountains of Pennsylvania.
  I say to the President pro tempore, you heard me mention not so long 
ago that I was back home in Vermont. I was listening to the news, and 
almost as an afterthought they said: By the way, we should have a 
dusting of snow tonight; No more than 3 to 5 inches. Down here, of 
course, everything comes to a screeching halt.
  Why I bring this up I have no idea, except that when watching TV 
crews going out begging to get one shot of a snowflake, I say: Go to 
Alaska. Go to Vermont. We will show them what real weather is.
  Today, we are beginning debate on the Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2005--a big title for S. 256. But it is an 
important debate. It is the first time in 4 years the Senate has 
debated bankruptcy reform legislation. I hope it is going to be a fair 
and informed and beneficial debate that will improve this bipartisan 
bill and help us enact bankruptcy reform into law.
  Both the chairman and I have worked very hard with Senators on our 
sides of the aisle. We have tried to move this legislation forward. But 
we know that bankruptcy is a complex area of law. It has many competing 
public policy interests between debtors and creditors and even among 
competing creditors.
  The very complex and competing interests involved in achieving fair 
reforms of our bankruptcy system demand that we work in a bipartisan 
manner throughout the legislative process.
  I mentioned that 4 years ago we debated this issue. I mentioned that 
because today our Nation has an entirely different face than it did 
then. We have endured the terrorist attacks of September 11, 2001. We 
have immersed ourselves in wars in Afghanistan and Iraq. We have 
witnessed a parade of financial misdeeds--more than misdeeds, financial 
thefts and skulduggery by major U.S. corporations. We have even watched 
as pension programs, and the promises of the pension programs, were 
shortchanged by nearly $100 billion. All these factors have only 
deepened the financial woes of an already struggling economy. So when 
we debate this issue today we are discussing real life today, not what 
it was in 2001.
  I think for this legislation to be appropriate and fair, the key 
provisions have to be carefully examined. If necessary, they have to be 
modernized, they have to be amended.
  Earlier this month, our committee held a bipartisan hearing on 
bankruptcy reform legislation. As I said, that was our first hearing in 
4 years. It was an informed discussion. A week later, the Judiciary 
Committee held its first markup on bankruptcy legislation in 4 years. 
During that meeting, we considered 11 amendments, 5 of which were 
accepted.
  They improved the bill. In fact, they were accepted unanimously. I am 
particularly pleased the committee accepted the Leahy-Grassley 
amendment that clarifies that any judgment, order, or settlement 
agreement for violation of securities fraud law after the filing of a 
bankruptcy case is nondischargeable. In other words, if you want to 
defraud somebody in securities, if you

[[Page 2957]]

want to pull some of these big fraud actions we have seen in the past 
few years, you are not going to escape the consequences by bankruptcy.
  During consideration of the Sarbanes-Oxley Act of 2002, Senator 
Grassley and I worked together to amend the Bankruptcy Code to make 
judgments and settlements based on security law violations 
nondischargeable. We wanted to protect the victims' ability to recoup 
their losses and hold wrongdoers accountable for their actions. This 
change in the law was based on a Judiciary Committee amendment that 
Senator Grassley and I introduced to my corporate fraud legislation, S. 
2010, the Corporate and Criminal Fraud Accountability Act that was 
unanimously reported by the Judiciary Committee. It was later adopted 
as a floor amendment by a vote of 99 to nothing in 2002.
  Recently a bankruptcy court wrongly interpreted the new law by 
finding that a securities fraud judgment, order, or settlement must be 
in existence at the time the bankruptcy petition is filed to be 
nondischargeable. That was never intended. This court precedent could 
result in future courts discharging securities frauds judgments, 
orders, or settlements that are entered into after a debtor files for 
bankruptcy.
  To give you an idea of what a get-out-of-jail-free card this is, an 
Enron executive could avoid paying his securities fraud judgment by 
filing for bankruptcy where the securities fraud litigation is pending. 
That would be wrong. Neither Republicans nor Democrats who supported 
that amendment want that to happen. So the Leahy-Grassley amendment, 
which was accepted by all Members, Republicans and Democrats, in the 
committee during committee consideration, would remedy that injustice 
and makes it clear that Congress intended for all securities fraud 
judgments, orders, or settlements to be nondischargeable.
  Another area we have to consider is the economic hardships faced by 
service members' families. When you get a call to serve your country in 
Iraq or Afghanistan or elsewhere--and now it is a disproportionate 
number of guardsmen and reservists who are called up; I watch this as 
the cochair of the National Guard caucus of the Senate--it can cause 
loss of family income, the close of a family business, a whole lot of 
other unexpected expenses. Unfortunately, it is not uncommon for 
service members and their families to be forced into filing for 
bankruptcy relief. We have to protect those who are fighting for us. I 
know Senators Durbin and Nelson have taken an interest in this issue. I 
look forward to hearing their thoughts on how we can help the 
situations faced by service members serving our Nation and their 
families.
  I spoke of the financial misdeeds of U.S. corporations. When you talk 
about Enron and WorldCom, others, it leaves a very bitter taste in the 
mouths of average Americans. If an average American were to steal $500 
or $1,000, they might go to jail. Apparently, if you steel $100 
million, $200 million, or $500 million, you are a hero. When it is 
done, there are no heroes, not to any of us. They have damaged investor 
confidence. They have shaken our capital markets. Senators Sarbanes, 
Kennedy, Durbin, Harkin, and Cantwell have prepared amendments to 
address the ongoing problems caused by corporate abuse.
  We must strengthen the financial safety net for hard-working American 
families who confront illness or injury. Medical problems contribute to 
about half of all bankruptcies, even though most of those who file had 
health insurance when they became sick. Many lose their jobs and their 
insurance because they got sick. Others face thousands of dollars in 
copayments and deductibles for services not covered by their insurance. 
Senators Kennedy, Durbin, Clinton, and Corzine will be leading the 
debate on this issue.
  Since we last considered bankruptcy reform legislation, financially 
troubled companies have shortchanged their pension promises by nearly 
$100 billion, putting workers approaching retirement age or responsible 
companies and actually taxpayers at risk. We will hear from Senators 
Harkin, Rockefeller, and Dayton during debate over this issue.
  I know that Senators Grassley, Durbin, Dodd, Feinstein, and others 
share a commitment to include credit industry reform in a balanced 
bankruptcy bill. The millions of credit card solicitations made to 
American consumers in the past year have contributed to the rise in 
consumer debt and bankruptcy. It is relatively easy to obtain credit. 
We have heard the stories of a neighbor's dog getting a $3,000 
preapproved credit card. Kids go to college and are inundated with 
preapproved credit cards. So it is relatively easy to obtain them. Not 
nearly enough is done to ensure that credit is properly managed. 
Currently, credit card statements fail to include all of the 
information necessary to allow individuals to make fully informed 
financial decisions. Additional disclosure is needed to ensure that 
individuals completely understand the implications of their credit card 
use.
  Senator Akaka intends to offer the credit card minimum payment 
warning act. I am proud to be an original cosponsor with him. It will 
provide a wake-up call for consumers by making it very clear what costs 
they are going to incur if they make only the minimum payments on their 
credit cards. The personalized information they will receive for each 
of their accounts will help consumers make informed choices about their 
debts. In an era of computers, this is not a real burden on the 
companies.
  Senator Feingold, a longtime protector of working middle and lower 
income families who rely on the ability to resolve overwhelming 
financial burdens through bankruptcy, is going to offer several 
amendments to improve this bill. Senator Feingold and I have worked 
together on bankruptcy reform issues for a long time. I know his 
expertise and the measures he means to propose will enhance this 
legislation.
  We have to be careful that our efforts to ensure accountability in 
the bankruptcy process do not inadvertently create problems for privacy 
and security. We are in an age where personal information--far too much 
personal information--can be easily digitized and shared. If it falls 
into the wrong hands, it is abused. Identity theft is one danger, as is 
tracking and harassing a battered spouse. We can look for 
accountability, but we have to find ways to minimize the possibilities 
of abuse.
  Four years ago, the committee adopted the Leahy-Hatch amendment to 
protect the personal privacy of consumers whose information is held by 
firms in bankruptcy as part of bankruptcy reform legislation. I am 
pleased this bill retains this proprivacy provision.
  Our bipartisan provision permits bankruptcy courts to honor the 
privacy policies of business debtors. It creates a consumer privacy 
ombudsman to protect personal privacy in bankruptcy proceedings. I 
appreciate Senator Hatch's efforts to add important consumer privacy 
protections to the code.
  Unfortunately, the Leahy-Hatch amendment is needed because the 
customer lists and databases of failed firms now can be put up for sale 
in bankruptcy without any privacy considerations, even in violation of 
the failed firm's own public privacy policy against sale of personal 
customer information to third parties.
  Let me just tell you what happened in this case, and it is not 
untypical. We had an online toy store called Toysmart.com. Toysmart.com 
wanted to encourage parents to allow their children to go online and, 
in doing so, they promised on their Web site that personal information 
voluntarily submitted by visitors to the site--such as name, address, 
billing information, childhood preferences--would never be shared with 
a third party. If you are a parent, you would look at that and say: I 
feel a little bit better about this. I don't want my son or daughter's 
names out there.
  Guess what happened. They filed for bankruptcy in 2000. Even though 
they had made this promise to parents and children, the personal 
customer information was put on the auction block. In a way, the 
bankruptcy court had a catch-22. I suspect the judge realized

[[Page 2958]]

that this was violating everything every parent thought of, but under 
the law at that time, there was only one real asset. It was this 
mailing list. It wasn't the old desks or loading docks or the 
warehouse. Those were empty. It wasn't the computers. Those would be 
out of date every few months. The one item of any value was the mailing 
list. The mailing list that parents had been promised would never go 
out, the children's names would never be sold, that had to go into 
bankruptcy. That is why we have the Leahy-Hatch amendment.
  The Leahy-Hatch provision included in this legislation adds privacy 
protections and a consumer privacy ombudsman to the bankruptcy code. We 
wanted to prevent future cases like Toysmart.com. Once somebody tells 
you we are going to keep your kids, information confidential, it will 
be.
  We have seen in the news recently the ChoicePoint Inc. breach. It is 
just the latest example of why we need to take special care with 
databases containing America's personal information. It is astounding 
that a company in the business of providing data for background checks 
and law enforcement purposes failed to assess the legitimacy of its own 
customers. It sold personal data on 145,000 individuals to scam 
artists. Many of the victims had no idea that ChoicePoint existed, let 
alone that the company compiled data. How irresponsible, how wrong. How 
can the people who run ChoicePoint sleep at night? This is one of the 
most outrageous things we have heard. How can they possibly hold 
themselves up as a company? We now find that as this was going on, some 
of them were making millions of dollars in stock options. This is 
outrageous. I would hope that the Department of Justice and others are 
looking at this. How can anybody be this negligent? How can anybody be 
this criminal? They make millions of dollars, the people running it. 
Somebody who has a mom and pop somewhere can find, because they were so 
negligent, because they opened the doors and let the scam artists come 
in, they may lose their business. Somebody who has a child in college 
may not be able to pay the tuition. Somebody who is trying to make the 
rent or the mortgage, living paycheck to paycheck, may not be able to.
  Apparently, according to the press this past week, their executives 
will make millions of dollars on stock while their customers are being 
clobbered. What shame. And we haven't heard a single one of them step 
forward and say how ashamed they are by this outrageous action.
  It has become all too familiar. In recent years, headlines have 
recounted how personal information has been compromised and database 
breaches of government contractors, at banks, at universities, even a 
blood bank. One hospital on the west coast sends things to be 
translated in Pakistan. All these secret medical records that you think 
are so private, they sent it over to Pakistan, and the person in 
Pakistan said: I want more money.
  If you don't give me more money--because I am in Pakistan, and you 
cannot touch me here--I am going to put all of these people's medical 
records online. What were they thinking, the people who run this thing? 
They make a whole lot of money, but, boy, they are clobbering the 
people who go there. This puts America's most private information at 
risk not only for financial crimes but for stalking. You can find out 
who lives alone, who is vulnerable, who could be blackmailed, and find 
out who may be a victim for scam artists. The administration talks 
about fighting terrorism. This creates a potential avenue for a 
terrorist to masquerade as an innocent person.
  I have called for a series of hearings on how we ensure data 
security, privacy and proper use in the information age. I am pleased 
that Chairman Specter has agreed to my request for hearings, and I look 
forward to these opportunities to consider these issues closely.
  We need to take reasonable measures in the bankruptcy process to 
guide what information will be available publicly and to whom. Debtors 
are often required to submit documents containing highly personal 
information. Declaring bankruptcy is challenging enough for those who 
find themselves in that circumstance, we shouldn't make it worse by 
creating the possibility that they will be victimized later on. I am 
submitting an amendment to provide protections in handling personal 
data in those submissions. These changes reflect current Judicial 
Conference policy and were included in last term's Hatch-Leahy Federal 
Courts Improvement Act.
  First, my amendment expands the court's discretion to protect 
information such as social security numbers and passport numbers. The 
bankruptcy courts are in a unique position to properly balance the need 
to share information with the need to protect privacy, and we should 
rely on their good judgment and discretion as much as possible. The 
amendment draws from the current civil procedure discovery rules to set 
a standard against which the court can apply its discretion. The 
amendment also allows individuals to request that the court protect 
sensitive information before it is placed in the public record. This 
protection is particularly important given our increasing reliance on 
electronic filing, where information is immediately available to the 
public.
  Second, my amendment provides important protection for social 
security numbers. Originally promised to be narrow in purpose and use, 
social security numbers are now the universal identifier with the key 
to unlock access to bank accounts and other highly sensitive areas. We 
must treat these numbers commensurate with their power, and ensure that 
they are only accessed in appropriate situations by authorized users. 
My amendment would allow debtors to limit disclosure to only the last 
four digits of his or her social security number in the notices that 
are filed with the court. The amendment still protects creditors where 
necessary, and specifies that creditors who are on the schedule of 
assets and liabilities should receive the full tax payer identification 
number in the notices sent specifically to the creditor.
  This idea of truncation isn't new. Just last year, we passed the Fair 
and Accurate Credit Transactions Act of 2003, and that Act required 
truncation of credit card and debit card numbers on receipts given to 
cardholders.
  As I stand here on the Senate floor, I look at the Presiding Officer, 
my neighbor from New Hampshire, and I see waiting to speak the other 
distinguished Senator from New Hampshire. We come from an area where we 
believe in privacy. We live in a country where we are giving up more 
and more of our privacy all the time. We have to be careful. We are 
giving it up not just in corporate areas but in government. Both 
conservatives and liberals ought to join hands on how much information 
we are willing to give up on ourselves and allow to go into databanks. 
An example is what happened with Bank of America, which is one of the 
dumbest things I have ever seen. All of their records were lost. Good 
Lord, they send something off or ship it off by plane--not private, but 
they mail it to a location with backup files of all of their customers. 
I don't know. I suspect maybe their top executives fly by private jets. 
Maybe they don't understand that the three Senators on the floor right 
now fly commercially, and we know how often you get your bags lost or a 
suitcase lost. They just lost thousands upon thousands upon thousands 
of files on their customers. How would you like to be a Bank of America 
customer and wake up and find out they were so stupid and negligent 
that they lost all your information? They ought to be ashamed of 
themselves.
  But I digress. I mentioned privacy. I have kept an article. It is the 
only thing I have ever framed that was written about me in one of our 
newspapers. To put this into context, you have to understand that we 
live on a dirt road in an old farmhouse. We have an adjoining farm 
family who kind of watches over the place when we are not there. The 
reporter in this article drives up on a Saturday with out-of-State 
license plates and asks the farmer sitting on the porch, ``Does Senator 
Leahy live up this road?''
  The farmer said, ``Are you a relative of his?''

[[Page 2959]]

  He said, ``No.''
  ``Are you a friend of his?''
  He answered, ``Not really.''
  ``Is he expecting you?''
  ``No.''
  ``Never heard of him.''
  That is the kind of privacy we like. These people in a cavalier way--
like Bank of America and all--are giving information away. We are 
finding more and more that our own Government is being lax with the 
information they have. Of course, the information can often be wrong. 
The third most senior Member of the Senate has been stopped half a 
dozen times getting on an airplane when going home--something he has 
been doing for decades--because he is on a terrorist list. He is one of 
the most recognizable people in America, and he cannot get off this 
list. You have to kind of ask, how much are we willing to give up and 
what does it do for us? Bank of America didn't do much of anything. 
These are some of the reforms included in the bill. I hope we will all 
look at this carefully and work together closely.
  Requiring truncation of social security numbers is similarly 
reasonable. It provides protection against abuse, but still allows for 
important information sharing to take place.
  These are just some of the reforms that should be included in this 
bill. I hope that all Senators will give fair and thoughtful 
consideration to amendments proposed on either side of the aisle. When 
the Senate works productively and constructively, we can improve 
legislation on a bipartisan basis. I have worked with Senator Grassley 
and others to make bipartisan improvements in the past and I hope that 
we can do that again on this bankruptcy reform legislation.
  In particular, I urge my colleagues to give full consideration to an 
amendment Senator Schumer will offer to make sure debts incurred 
through violence and other illegal acts at health clinics may not be 
discharged in bankruptcy. Senator Schumer has been the leader on ending 
this bankruptcy abuse and I have always been proud to support his 
efforts. Any fair bankruptcy reform measure should end abusive 
bankruptcy filings used to avoid the legal consequences of violence, 
vandalism and obstruction to deny access to legal health services.
  As we move forward with reforms that are appropriate to eliminate 
abuses in the system, we need to remember the people who use the 
system, both the debtor and the creditor. We need to balance the 
interests of creditors with those of the poor and middle class who need 
the opportunity to resolve overwhelming financial burdens.
  These are important subjects that have a real impact on the lives of 
many people who have already suffered from illnesses or divorce or job 
loss. We should utilize the expertise of our colleagues on both sides 
of the aisle to ensure that the Senate passes balanced legislation.
  I look forward to continuing to work with Senator Grassley, Senator 
Specter and the rest of my colleagues to make more bipartisan 
improvements on the Senate floor to enact balanced bankruptcy reform 
legislation into law.
  The PRESIDING OFFICER (Mr. Sununu). The Senator from New Hampshire is 
recognized.
  Mr. GREGG. Mr. President, we are on the bill, I take it.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GREGG. Mr. President, first, it was a pleasure to hear the 
presentation by the chairman of the Judiciary Committee and the ranking 
member relative to the bankruptcy bill, which is an extraordinarily 
important piece of legislation, which has been to the floor before--in 
fact, too many times. Hopefully, this year we will pass it and send it 
to the President to be signed. I congratulate the Judiciary Committee 
for bringing it out. Certainly, it is a piece of legislation that is 
very important to the commerce of our country and needs to be passed.


                               The Budget

  I wanted to speak about another subject--specifically, the budget of 
the United States and the fiscal policy, as we are presently dealing 
with the funding of the Federal Government. Within the next 3 weeks, 
hopefully, we will take up a budget in committee and here on the floor 
of the Senate. The budget is a blueprint of where we are going as a 
country relative to our spending policies and fiscal policies. What is 
important to remember is that the budget is just an outline. It doesn't 
get into too much specific detail of how we function as a Government 
but, rather, it sets goals that we as a Government wish to pursue in 
the area of policy relative to spending and relative to taxes.
  What we need to focus on, I believe, this year--and I believe 
Congress did focus on it, and certainly the President did in his 
budget, which is a very laudable document, and it does focus 
specifically on these issues--there are two things: the deficit, as we 
confront as a Nation the short-term liabilities, and what we confront 
in the long-term.
  The deficit in the short term is having an unfortunate impact on our 
country. It arises for a lot of reasons. I argue that it arises for two 
primary reasons. First is that in the mid and late 1990s, we started to 
run very significant surpluses in this Nation as a result of an 
economic boom known as the Internet bubble--a bubble that is an 
aberration on the economic landscape. There have been other major 
bubbles in our history. It is basically when people have created 
artificial money. The Internet bubble was probably the largest bubble 
in the history of the world. In many instances, it was an artificial 
expansion of the economy relative to real productivity and growth. That 
bubble collapsed, as they do. As a result of that collapse, the economy 
slowed dramatically, and the revenues to the Federal Government dropped 
significantly.
  The second major cause, obviously, of the deficits we confront today, 
in my opinion, was the fact that we were attacked on 9/11. We are at 
war, and as a nation we must fight that war with every tool we have 
available, and that means fully arming and manning our soldiers. Also, 
it means regearing ourselves as a nation, retooling as a nation. We 
have had to make what I would call significant investments in our 
national security, both in the homeland area, bringing first responders 
up to speed, in the area of protecting ourselves from biological, 
chemical, or potentially nuclear attacks, and in the area, obviously, 
of rearming and retooling our military and our intelligence community 
across the country and the globe. It has been extremely expensive for 
us as a nation, but it is money we must spend because we have been 
attacked, we are at war.
  There are people who wish to do us harm in the most heinous way. They 
want to kill Americans simply because they are Americans. They wish to 
destroy our culture and Nation because they don't like our freedoms, 
they don't like the fact that we are prosperous. Those people are still 
out there, and they must be found and brought to justice, and, most 
importantly, kept from attacking us here in America. That is a 
commitment we have made as a nation, and this President has pursued 
that with a focus.
  So we went through a period of significant surpluses in the late 
1990s to a period of deficit. That deficit has been rather large. We 
are now as a nation trying to address that fact. The deficit in the 
short term is having deleterious effect on our Nation. It is obviously 
causing us to pass on to our children the debts for the operation of 
today's Government. You are basically borrowing from the future, and 
the people who are going to have to pay that are your children, not 
you, because that note becomes due not in your lifetime--well, maybe in 
your lifetime--but 10, 15 years from now. Who has to pay it? The people 
who work 10, 15 years from now, in their taxes. They have less money to 
keep because they have to pay more taxes. So we are borrowing from our 
children's future to pay for this deficit.
  Second, it is having an impact on our economy internationally. The 
dollar is weakened in large part because the international community 
looks at our deficit and says we are not doing a heck of a lot about 
it.
  So we need to address the short-term deficit, and I will get to the 
specifics of

[[Page 2960]]

that, how we have done that. But the President's budget has attempted 
to do that. That is an important public policy issue.
  The second largest public policy issue we have is the question of how 
we deal with the long-term liabilities of our country, liabilities that 
already exist. What does that mean?
  We have basically put in place today a large number of Federal 
programs that we have to pay for today because these programs survive 
for as far as the eye can see--infinity. We know they are going to cost 
money. Most of these programs--the most expensive ones, called 
entitlements--deal with making sure that people who are retired have a 
decent lifestyle. This has been a great benefit to our Nation--Social 
Security, Medicare, Medicaid. These programs have truly improved the 
quality of life of the American population, especially those who are 
retired. But as we look into the future, we see huge and very 
complicated and difficult problems for us as a country as we try to 
maintain those programs and make sure that people who are retired have 
a decent lifestyle.
  What is driving this major concern, this huge cost which we are going 
to face as a nation, is a fact which has never existed before in our 
history. It is called demographics. After World War II, the largest 
expansion ever in our population occurred. More children were born 
during a period from about 1946 to about 1955 than at any other period 
in American history. It is called the baby boom generation.
  That generation was so large--and I happen to be a member of it--that 
it totally restructured every lifestyle event it impacted. As children, 
that generation caused a massive expansion in schools. As college 
students, that generation created the huge social concern of the 
sixties, in the area of rights of African Americans and minorities and 
the rights of women and, of course, with regard to the issue of how 
Vietnam was fought. In the seventies and eighties, as that generation 
went into the workplace, it became the most productive engine of 
economic wealth this country had ever seen and continues to be a 
producer of economic wealth.
  Now that generation is headed toward retirement, and we know, because 
everyone is alive today, that generation will be the largest retired 
generation in the history of our country. We know the benefits 
structure which we have put in place to help senior citizens through 
retirement so they can live a decent lifestyle is also in place. When 
those two merge--this huge generation and that benefits structure 
called Social Security, Medicare, and Medicaid--it is going to put 
dramatic demands on our society in the area of costs to pay for the 
benefits which are in place.
  Think of it this way: Almost all the retirement programs we have--
Social Security and Medicare especially--were designed with the genius 
of Franklin Roosevelt. His policy essentially said there will always be 
many more people working than those retired. So the working Americans 
can always support the retired Americans.
  It was always perceived there would be a pyramid. In fact, in 1950, 
there were about 16 Americans working for every 1 American retired. 
That meant programs such as Social Security and Medicare not only 
generated money to support those who were retired, they actually 
generated more money than needed to support the people who retired. 
That is happening today even. But the number of people retiring 
compared to the number of people working has been changing. It has gone 
from 16 in 1950 down to about 3\1/2\ today. And further into this 
century, as the baby boom generation retires, it will drop to 2 people 
working for every 1 person retired.
  There is where the problem is. We go from a pyramid to essentially a 
rectangle. It becomes pretty obvious, if you only have two people 
working to pay for one person retired, those two people are going to 
have to pay a lot more in taxes to support that one person retired than 
if we have 10 people working or 3\1/2\ people working, as we have 
today.
  So this creates a huge what is called unfunded liability, contingent 
liability. We do not know how we are going to pay for this in the 
outyears. We do know the problem is going to exist, but we do not know 
how we are going to pay for it.
  I want to give you some context of this problem because it is so 
massive, and we should be so concerned about it.
  Entitlements--which basically is what I am talking about, which is 
Social Security, Medicare, and Medicaid--represent this orange bar on 
this chart as a percentage of Federal spending. One will see today that 
orange bar is approximately 56 percent of the Federal Government, with 
defense spending being about 18 percent of the Federal Government, 
nondefense spending about 18 percent of the Federal Government, and 
interest on the Federal debt being about 7 percent.
  When the baby boom generation is headed to full retirement, beginning 
about the year 2015--actually, it starts in the year 2008--there is an 
explosion in the entitlement spending as a percentage of Federal 
spending. Defense spending does not change much, discretionary spending 
does not change much, but retirement spending jumps to 64 percent of 
the Federal Government. In fact, if it continues on its present track, 
spending to support Social Security will create this massive problem 
for us as a nation, which I have alluded to, which is we will have so 
many programmatic demands placed on the younger working Americans that 
their taxes will have to go up radically in order to pay for this.
  This chart shows it pretty clearly. The historic spending levels of 
the Federal Government since the year 1960 have been right around 20 
percent. That is historic spending. That is all Federal spending in the 
post-World War II period. But entitlement spending as a percentage of 
gross national product has always been--or up until now--fairly flat--
not flat, going up, but still staying within the 5 to 10-percent range.
  However, beginning in the year 2008, it starts to climb 
precipitously. By the year 2030, Medicare and Social Security spending 
will be 20 percent of the gross national product. By the year 2040, it 
will exceed that and be 25 percent of the gross national product. We 
will essentially be spending more on those two programs alone within a 
few years, about a decade and a half to two decades, than we spend 
today on the entire Federal Government.
  What does that mean? It means either at that point you do not have 
any part of the Federal Government--you do not have national defense, 
you do not have any education programs, you do not have any 
environmental programs--or you have to jump the tax rates dramatically 
to pay for Social Security and Medicare expenditures.
  What is the implication of this other than we are headed toward clear 
fiscal disaster? One of the implications is if this graph were carried 
out to its logical conclusion, the tax rate on working Americans--my 
children, your children, and our grandchildren--will have to be doubled 
to support the system.
  Another implication is that there is, according to the Comptroller 
General, approximately $44 trillion of potential liability over the 
natural lifetime of Social Security, which is deemed to be 75 years, or 
Medicare. Mr. President, $44 trillion--that is trillion, and I do not 
even know what a trillion is, but that is what it is--$44 trillion of 
costs which we have no idea how we are going to pay. We have no idea at 
all. It is called unfunded liabilities, $44 trillion.
  To try to put this in perspective: If you take all the taxes paid 
into the Federal Government since the beginning of America, all the 
taxes paid into the Federal Government in U.S. history, that represents 
$38 trillion. We are talking about a liability that exceeds that 
number. We are talking about a liability that would actually be about 
the same as the present value net worth. That is the present value 
number, by the way. It means it is discounted to today's dollar, which 
actually would be almost the same as the present net worth of every 
American.
  The present net worth of every American is about $47 trillion. The 
present liability of just the Medicare and Social Security funds--with 
not even

[[Page 2961]]

Medicaid included in this--is $44 trillion. So essentially we would 
have to use every dollar of every American, every asset of every 
American to pay this.
  We can see the problem is astronomical, so large, in fact, that many 
are burying their heads on the issue and saying it does not exist, 
which is a very unique approach to the problem. Obviously, we are not 
going to solve it this year or in the next couple of weeks. But what we 
can do in the next couple of weeks as we address the budget is try to 
start addressing these two major issues. One is the short-term deficit; 
the other is this long-term, looming problem which we confront as a 
nation. And that brings us back to the budget process and why it is 
important.
  It is important because it is the blueprint off which we can begin 
this process of addressing these huge public policy issues. If we do 
not address them now, it is like that old television ad, you can pay me 
now or you can pay me later. When you pay later, the cost is going to 
be basically unacceptable because if we wait until 2008 or 2015 to 
start addressing these issues, we are essentially going to have to do 
something extraordinarily precipitous. We are either going to have to 
radically cut the benefits of seniors who are retired or we are going 
to have to radically increase the taxes on our children and their 
children's children, meaning their quality of life is going to be 
reduced significantly.
  The President sent up a budget which begins the process of trying to 
address some of these core issues. On the first issue of the deficit, 
he has proposed a budget which reduces in half the deficit over the 
next few years. You can see he takes it from about 4.5 percent of GDP, 
the deficit. That is what we need to look at because the actual numbers 
do not relate to what their effect is on the economy.
  The deficit was projected to be about 4.5 percent of gross domestic 
product back in 2004, down to approximately 1.3 percent of gross 
domestic product in 2009, 1.5 percent in 2009, 1.7 percent in 2008, or 
he reduces it in half. I would be the first to say that in that 
estimate, especially the 2008 number, there is no accounting for the 
war. The war is a one-time item, hopefully, or two-time item. We do not 
expect the war to go on forever. In fact, by 2008, we hope the war to 
be over relative to Iraq and Afghanistan. It will not be built into the 
base, and we expect it will not be.
  These numbers may be inaccurate in that they may be off in not 
accounting for the war. But the point is, when you go from 4.5 percent 
to 1.7 percent, that should still be able to be accomplished whether we 
are at war, with accounting for the war correctly. We can reduce this 
deficit, and the President has proposed this.
  How has he proposed it? He proposed to do it in a series of ways, but 
there is a consistency within his proposal, which is this: Basically, 
he said we have to get fiscal discipline in place. We have to be 
responsible for how much money we spend, and in order to accomplish 
that, we are going to have to reduce the rate of growth--we never 
actually cut spending--reduce the rate of growth of Federal spending 
right across the board.
  So he has essentially proposed goring everybody's ox, and maybe that 
is the way we have to approach something like this. He suggests we 
freeze nondiscretionary defense spending, which is going to be 
difficult, but it is something we have to do. He suggests the defense 
core budget not rise as fast as it is projected to rise. We are already 
hearing discussions from many of the defense subcontractors and 
contractors around the city that they cannot live with that number. So 
I guess it must be stepping on some toes out there.
  He is suggesting in the entitlement accounts--and this is the most 
important--that we begin to reduce the rate of growth; not cut them but 
reduce their rate of growth. That is a courageous step but a step that 
has to be taken.
  The only accounting he did not address, quite honestly, was Medicare 
because of his recent enactment of the Medicare reform bill which I 
guess they would like to play out a little while before they move into 
that account. Everybody else has been impacted. He has put in place and 
suggested a series of enforcement mechanisms which will allow us to 
accomplish this type of a budget, and we intend to put in even more to 
accomplish this because the numbers mean nothing if they are not 
enforceable.
  As we move forward in this debate--I see the Senator from Utah is 
here. He wished to speak at 3 o'clock, and I have gone past my time. I 
will come back to the topic again and talk a little bit about the tax 
side of this. As we move forward in this debate, it is critical we 
understand that we are facing these two huge public policy issues: the 
need to bring under control the short-term deficit but even more 
importantly the need to address the long-term entitlement reform 
question.
  I should mention on that point that not only did he address the 
entitlements, such as Medicaid and some others within the budget, but 
he has set forth a proposal to address Social Security. That is a 
courageous act, and that, of course, is one of the key components of 
any sort of major entitlement reform. We must address the issue of 
Social Security.
  The President has stepped up to the plate, so to speak, to move 
forward with a plan which will put in place fiscal discipline. As the 
Senate moves forward, it is our responsibility to pursue this course 
also, to put in place a budget which is fiscally responsible and which 
addresses not only the discretionary side of the ledger but the 
entitlement side of the ledger. That is going to be our challenge. It 
is very doable. All it takes is a willingness to stand up and recognize 
that if we do not do it, we will be passing on to our children a nation 
which does not guarantee them as high a quality of life as we have had 
because of the burden of taxation which we will be placing on them.
  It is our responsibility to move forward in this area, and I look 
forward to the next few weeks as an opportunity to debate and discuss 
these proposals even further.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I ask that my remarks be as in morning 
business.
  THE PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. I thank the Chair.


            boy scouts of america land transfer act of 2005

  Mr. HATCH. Mr. President, I rise today to speak to the Boy Scouts of 
America Land Transfer Act of 2005. This important legislation will 
allow the exchange of two small parcels of land between the Utah 
National Parks Council of the Boy Scouts of America and Brian Head Ski 
Resort.
  In a 1983 land patent, the Bureau of Land Management granted roughly 
1,300 acres to the Utah National Parks Council of the Boy Scouts of 
America to be used as a Boy Scout camp. The Scout camp, known as Camp 
Thunder Ridge, is situated in the mountains adjacent to Brian Head Ski 
Resort and near Cedar Breaks National Monument.
  At the time the land patent was granted, a local rancher owned a 
parcel of land adjacent to the camp and another parcel right in the 
middle of the camp. Several years ago, the rancher gave those lands to 
Brian Head Ski Resort. The Scouts need to obtain the land, totaling 120 
acres, from Brian Head. However, under the patent, land cannot be sold 
or exchanged without an act of Congress.
  While Camp Thunder Ridge is located in a steep, rough, mountainous 
area, much of the land the Boy Scouts seek is flat, making it 
particularly important for the camp. Obtaining the land would make it 
possible for the Scouts to make the camp's shooting area and archery 
range safer and would allow them to improve and expand their camping 
facilities. It also would allow for the installation of much-needed 
septic tanks.
  I am a strong supporter of the Boy Scouts of America. The Boy Scouts 
have a long tradition of instilling strong values in young men.
  Scout camps such as Camp Thunder Ridge give young men the opportunity 
to learn vital skills, fulfil merit badge

[[Page 2962]]

requirements, and otherwise improve themselves. This small land 
exchange will allow Camp Thunder Ridge to more fully help these young 
men learn and grow.
  For their part, Brian Head Ski Resort is seeking to expand their 
operations and have received preliminary approval from local officials. 
The local planning commission, however, has required them to build an 
emergency exit from their property. The only place to build such a road 
is through land owned by the Boy Scouts. The exchange will allow Brian 
Head to construct the access road and comply with county fire safety 
regulations.
  The Boy Scouts have been working for more than 20 years to secure the 
lands in question, and Brian Head needs to build a road on lands 
currently owned by the Scouts. This exchange is desperately needed by 
both parties, and I urge my colleagues to support this important 
legislation.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I rise in support of S. 256, the Bankruptcy 
Abuse Prevention and Consumer Protection Act of 2005. The purpose of 
this bill is to make our bankruptcy system more fair and efficient. 
Every citizen has a stake in this bill. It is obvious that bankruptcy 
filers have a lot at stake in this legislation.
  In recent years, the number of bankruptcies has been on the rise, and 
I understand that today more bankruptcies are filed every year than 
during the entire decade of the Great Depression, and this chart shows 
that. It begins in the year 1900. It is basically a flat line until we 
get to about 1984--actually, 1995--and then it heads straight up. These 
are bankruptcy filings per 100,000 population, and they have gone up 
dramatically over the years. Annual bankruptcy filings have now reached 
about 1.6 million Americans, and this is up significantly since the 
time we started working on the overhaul of the bankruptcy system now 8 
years ago.
  One of the key goals of legislation we have before us today is to 
make sure the system is not abused by the unscrupulous who leave their 
creditors high and dry. At the same time, the concept of allowing those 
citizens who have become saddled by debt to use bankruptcy to get a 
fresh start is firmly entrenched in the American legal system. Gone are 
the days of debtor prisons.
  We want to treat debtors fairly and give those who become overwhelmed 
by debt a second chance. We do not want to send a signal to those who 
for whatever reason get into a financial hole that it is okay to go 
deeper in that hole prior to filing for and become absolved by 
bankruptcy. We want to give those in debt a fair second chance to bring 
their fiscal houses in order.
  We also want to treat creditors fairly. At the end of the day, it is 
law-abiding, bill-paying citizens who pay for the bankruptcy of others, 
regardless of whether the debts involved were taken on by con men or 
those whose situations simply got out of hand.
  As this debate goes forward, it is important for all to understand 
that according to some experts, a conservative estimate is that every 
American family pays about $400 a year in a hidden tax associated with 
bankruptcies, taxes they should not have to pay. I am told that others 
place the fair estimate of this hidden bankruptcy tax in the range of 
$550 per person per year. There are numerous examples of people who 
take advantage of loopholes today at the expense of everyone else 
tomorrow.
  We recently heard from a Wisconsin credit union president who 
testified before the Judiciary Committee about a young couple who 
wanted a clean financial slate before they got married. What did they 
do? They ran up their credit card purchases. One of them prepaid a car 
loan with the credit union to have the other cosigner released. Then, 
although they were both employed full-time, they filed for bankruptcy 
to wipe out their debt. Their credit union and its members had to 
absorb the $3,000 in credit card debt and then another couple of 
hundred dollars on the car itself. Bankruptcy relief was never meant to 
allow this kind of abuse. Hard-working Americans, including the members 
of credit unions nationwide, have been victimized by abusers of the 
current bankruptcy system long enough.
  Bankruptcy abuse also hurts our Nation's small businesses. Without 
reforms from this bill, losses from bankruptcy abuse will continue to 
break the backs of the Nation's small businesses and retailers, which 
work with slim profit margins and have even smaller margins for error.
  Throughout this debate, I want those who pay their bills in full and 
on time to understand that our attempt to rebalance some of the aspects 
of the bankruptcy system will have a positive impact on their 
pocketbooks each time they go to the store. In effect, we all pay for 
the bankruptcies of others through this ``hidden tax.'' In some 
respects, I suppose one could view this bill as a tax cut for the 
responsible people.
  While one large impact of bankruptcy is felt in the wallet, perhaps 
the most important principle involved in this is when one borrows 
money, they need to take personal responsibility to pay it back. 
Personal responsibility is a core American value. This legislation, 
which has been crafted over years of debate and compromise, reflects 
that basic value.
  We are mindful of the old adage there is no such thing as a free 
lunch. When some people do not pay their credit card bills, the rest of 
us pay for them in the form of increased prices. We do not get off. We 
have to pay for it. Great strain is placed on businesses, particularly 
small businesses, when customers do not pay for their purchases.
  While we want to be fair to those who are in serious debt, we must 
also be mindful that sometimes it is employees and their families who 
have to pay through lost salary increases or even pay cuts or job loss 
when some do not pay their bills. No firm can expand or even maintain 
its operations or stay in business for long if a substantial portion of 
goods and services it sells is not paid for by its customers. We all 
simply have a stake in bankruptcy policy and, therefore, we all have a 
stake in this bill.
  Unfortunately, our current system allows certain people with the 
ability to repay at least some of their debt load to take advantage of 
the system at the expense of everyone else. Today, individuals with 
relatively high incomes can run up substantial debts and then too 
easily use bankruptcy to get out of honoring them. In the end, all of 
us pay for those who abuse the system.
  As I will describe, one of the key improvements made by this bill is 
to devise a new and equitable system to see that those who declare 
bankruptcy will be called upon to repay a fair portion of their past 
debts with future earnings if they are able to do so. This is the so-
called means test that I will describe in a few minutes.
  First, I will take a few minutes to highlight some of the key 
proconsumer provisions of this bill. S. 256, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2005, includes a debtor's 
bill of rights with new consumer protections to prevent the bankruptcy 
mills from preying upon those who are uninformed of their legal rights 
and needlessly pushing them into bankruptcy. This is an important 
improvement over current law and helps rectify the current practice 
whereby some, both debtors and creditors alike, lose out in the long 
run to some shady legal advisers who take their fees and run.
  The bill also includes new consumer protections under the Truth in 
Lending Act, such as new required disclosures regarding minimum monthly 
payments and introductory rates for credit cards. It protects consumers 
from unscrupulous creditors with new penalties on creditors who refuse 
to negotiate reasonable payment schedules outside of bankruptcy.
  Our bill provides penalties on creditors who fail to properly credit 
planned payments in bankruptcy. It includes credit counseling programs 
to help people avoid the cycle of indebtedness. This is an important 
provision for consumers.
  Except for those with evil motivations and a willingness to take 
advantage of the system, no one likes to be in debt. This bill helps 
consumers learn how to better protect their financial

[[Page 2963]]

resources. S. 256 provides for a protection of educational savings 
accounts, and it gives equal protection for retirement accounts or 
retirement savings in bankruptcy. These provisions will help our 
children and our parents have adequate resources.
  The bankruptcy legislation also contains important changes in current 
law that will benefit women and children. We have heard some people 
complain that our bankruptcy laws do not adequately take care of women 
and children. Through our years of work on this bill, we have tried to 
make the law more protective in these areas, and this bill accomplishes 
that goal.
  Current law provides that child support obligations are seventh in 
overall priority among unsecured claims. This bill dramatically changes 
the world with respect to child support. This bill contains a large set 
of provisions addressing the treatment of child support, including 
making domestic support obligations first in priority after certain 
required expenditures.
  I will repeat that for emphasis. Child support goes from seventh to 
first in priority within its category for repayment under this bill. 
From seventh in line to top priority, this is a big change. 
Unfortunately, those who have slow walked this bill for the last 8 
years have prevented this important change from taking effect.
  The legislation also includes a provision that makes staying current 
on child support a condition of getting a discharge in bankruptcy. It 
makes debt discharge in bankruptcy conditional upon full payment of 
past due child support and alimony. S. 256 makes domestic support 
obligations automatically nondischargeable without the costs of 
litigation. It prevents bankruptcy from holding up child custody, 
visitation, and domestic violation cases. It helps eliminate 
administrative roadblocks in the current system so children can get the 
support they need. All of these measures are valuable additions and 
changes in the bankruptcy laws.
  It is in the best interests of women and children to pass this bill. 
It is a tremendous improvement for children and families over current 
law. That is why there is such overwhelming support for this 
legislation from the child support professionals across the country--
the very people who go after deadbeats to help get children the 
financial support they need.
  That is not all. Let me cite a few more improvements over current law 
for women and children.
  The bill makes the payment of child support arrears a condition of 
plan confirmation. It provides stronger and more comprehensive notice 
requirements and more information for easier child support collection. 
It provides help in tracking down deadbeats.
  It allows for claims against a deadbeat parent's property. It allows 
for payment of child support with interest by those with means. It 
facilitates wage withholding to collect child support from deadbeat 
parents.
  As I have just described, there are many important provisions in this 
bill for children, women, and the aged. I hope that we can finally get 
this bill to the President's desk for signature. This is a bill that is 
way overdue.
  This legislation, S. 256, also requires extensive new disclosure 
requirements by creditors in the area of reaffirmations and more 
judicial oversight of reaffirmations to protect people from being 
pressured into agreements against their interests.
  These are important provisions. Let me explain why.
  Reaffirmation agreements commonly occur in conjunction with 
bankruptcy proceedings when debtors agree to repay a debt they would 
not otherwise have to pay. These reaffirmation agreements can be very 
helpful to debtors as they seek to reestablish their good financial 
status with their creditors as they emerge from bankruptcy.
  By increasing disclosure requirements and judicial oversight, the 
reaffirmation process can operate to the advantage of debtor and 
creditor alike.
  Next, I would like to briefly describe one of the key features of the 
bill, the means test, and how it relates to, and will improve, the 
overall operation of our bankruptcy system.
  The premise behind the means test is that those who are able to pay 
all, or some, of their past debts should do so. The means test helps 
the courts determine who can and who can not repay their debts and, 
perhaps most importantly, how much they can afford to pay.
  The challenge is to set this figure at the right level, neither too 
high nor too low.
  If the figure is set too high, the debtor may be placed in a vicious 
cycle from which he or she can never escape and get a fair chance to 
start over. Of course, if the repayment schedule is set too low, the 
debtors will escape responsibility at the expense of those who they 
owe.
  Through this new means test, in certain circumstances, the bill 
requires those filing for bankruptcy to pay a fair but not overly 
burdensome portion of their future earnings.
  The means test allows for a straight deduction of actual expenses for 
the care and support of an elderly, chronically ill, or disabled 
household member, or member of the debtor's immediate family.
  This test allows for a straight deduction for food and clothing 
expenses.
  This test allows for up to $1,500 to be deducted per child for 
educational purposes.
  This test includes an allowance for housing and utilities costs.
  This test includes all the categories enumerated under the National 
Standards, Local Standards and Other National Expenses issued by the 
Internal Revenue Service.
  This test allows for the straight deduction of expenses incurred in 
maintaining the safety of the debtor and the family of the debtor from 
family violence.
  This test includes a special circumstances safety valve that allows 
debtors to adjust their income or expenditures based on unforeseen 
circumstances such as military activation and deployment or unexpected 
and catastrophic medical conditions.
  Finally, this test includes a safe harbor provision which exempts 
debtors below their respective State median incomes.
  After all of these exemptions are applied, including the safe harbor, 
it is estimated that 90 percent of debtors will not be affected by the 
changes in the repayment provisions of this bill.
  Who constitutes the remaining 10 percent? They are the people who can 
afford to pay at least some of their debts. And that is what the means 
test is all about.
  All of these changes that I have described are important. Many of us 
have worked for many years on this bill. Frankly, some of us think this 
bill has already taken way too many years to complete.
  I want to take a few minutes describing the extensive legislative 
history of the bill. This is important for many reasons. One of those 
reasons is that this history will reveal that this measure has already 
been fully debated and this bill reflects literally dozens and dozens 
of compromises along its 8-year journey.
  I will describe the nadir of this bill when President Clinton pocket 
vetoed the legislation after Congress adjourned in the fall of 2000.
  This bill has had broad bipartisan support from the very beginning.
  In the Senate, Senators Grassley and Biden have been at this for a 
long time, as have many others on both sides of the aisle.
  When we debate amendments over the next few days, I want my 
colleagues to pay close attention to those who are offering amendments.
  If what occurred at the Judiciary Committee mark-up of the bill 
repeats itself on the floor, it might be the case that many amendments 
will be offered by that relatively small group of Senators who have 
steadfastly opposed this bill each step of the way during the last 8 
years. If that is the case, we must examine their amendments with both 
exacting scrutiny and heavy skepticism.
  It is one thing to attempt to improve a bill and bring it more to 
your liking, it is another matter altogether to try to scuttle a bill. 
This can be a fine line on any bill. But with a bill with the extensive 
history as this, it is easier to

[[Page 2964]]

assess who is trying to get this bill over the goal line finally and 
who is trying to push us out of bounds and into yet another period of 
legislative overtime.
  The House and Senate have been engaged in the process of deliberating 
on this issue since 1997, back during the 105th Congress. Turning back 
the clock to 1997, we see that the comprehensive bankruptcy reform bill 
was developed and passed in both bodies by overwhelming votes. The 
actual substance of bankruptcy reform legislation has been a 
bipartisan, bicameral effort.
  The successful work by each chamber of Congress in 1997 was followed 
by the appointment of conferees, negotiations with the House, and, in 
October of 1998, an overwhelming vote by House Members in favor of the 
conference report. Unfortunately, the Senate did not complete its vote 
on final passage before the end of the Congress.
  Next, in February of 1999, Congressman Gekas and Senator Grassley 
reintroduced the same bankruptcy bill agreed to by both bodies during 
the previous conference committee. That bill passed the House in May by 
an overwhelming margin. Later that same month, the Senate Judiciary 
Committee marked up our bill and we reported it from committee.
  Finally, in February of 2000, after months of procedural delays and 
debate on the Senate floor, the reform legislation passed by another 
impressive margin of 83 to 14.
  I suspect this body will approve this bill by a similar lopsided 
margin when a vote on final passage is taken in this Congress if we can 
get to a vote on final passage. There are some who have indicated they 
are going to filibuster this bill. We will have to see. But there have 
been far too many people, on both sides of the aisle, who promised they 
would work to get this bill through, and they should fight against any 
filibuster.
  Turning back to the year 2000 after the bipartisan 83-14 vote, the 
Senate then requested a conference. This should be a routine matter, 
but the objection of a single Senator blocked the appointment of 
conferees. As a result, the House and Senate had to turn to an informal 
conference process.
  With a great deal of effort by Members on both sides of the aisle, we 
reached a compromise agreement on over 400 pages of legislation.
  Ultimately, both the House and Senate were able to pass that 
conference report in another series of decisive votes in the fall of 
2000.
  However, President Clinton chose to pocket-veto the legislation and 
(refused to sign it into law, despite the overwhelming support. Once 
again, the stone pushed by Sisyphus was at the bottom of the mountain.
  Representative Gekas introduced the bill, yet again, in January of 
2001. The conference report for that bill, H.R. 333, became the 
backbone of the legislation pending before us today. It too, had 
overwhelming support, except for what is now understood to be a poison-
pill amendment.
  I will not take the time today to discuss just how this important 
comprehensive change in the bankruptcy bill got waylaid in the eleventh 
hour by this problematical and, many believe, perhaps mostly 
hypothetical and politically motivated, provision.
  We all know that this bill has repeatedly won the overwhelming 
approval of our colleagues in both Houses of Congress.
  Before we began a conference meeting on an earlier version a few 
years ago I referred to that meeting as being the last leg of a 
legislative marathon. I was wrong then--but I hope, and I have every 
confidence, that this floor debate represents the final beginning of 
that last leg.
  We succeeded in finally enacting the class action reform bill 2 weeks 
ago and I am hopeful that we can duplicate this success with the 
bankruptcy bill over the next several days.
  As many have said, this is a compromise bill that enjoys broad 
bipartisan support among Democrats and Republicans, and conservatives 
and liberals.
  Even after having worked for 8 years already, we agreed to make some 
additional compromises in the Judiciary Committee during mark-up 2 
weeks ago to satisfy some concerns of our colleagues on the other side 
of the aisle. Those compromises were difficult to make, but we have 
made them.
  I should add that there are some on our side of the aisle, such as 
Senator Cornyn, who would like to make additional changes in this bill. 
He has a very substantial proposal addressing the issue of venue 
reform. It is an area in which he has special expertise from his 
experiences with some important bankruptcies that affected many 
citizens of Texas but were litigated out of State.
  There are things I would like to see changed in the bill.
  But I also recognize that many have cooperated and compromised in 
order to reach the state where this legislation is today. Given the 
extensive and lengthy history of this bill, I think it best for my 
colleagues to refrain from offering controversial amendments on this 
vehicle at this time--and I will do so because I know that any further 
amendments might scuttle this bill.
  This bill provides new consumer protections, helps children in need 
of child support, and makes other necessary reforms to a system that is 
open to abuse.
  I want to stress the fact that this legislation does not make it more 
difficult for people to file for bankruptcy, but it does eliminate some 
of the opportunities for abuse that exist under the current system.
  This is a good bill. We should pass it promptly and send it to the 
House.
  It is possible that during this debate that some may falsely suggest 
that this bill unfairly treats low-income persons. Let me tell you at 
the outset that the poor are not affected by the means test. The 
legislation provides a safe harbor for those who fall below the median 
income, so they are not subjected to the means test at all. What the 
means test is designed to do, and what it will do, is to prevent abuse 
by those who can and should pay a portion of their debts wit future 
earnings. It will stop the fraud. It will stop the abuse of a system 
that has been going on through some of these unscrupulous lawyers and 
bankruptcy helpers.
  Another misconception that I have heard again and again from 
opponents of the bill is that this legislation will not let people file 
for bankruptcy relief when they need it. The fact is that this 
legislation does not deny anyone access to bankruptcy relief, it just 
requires those who have the means to repay their debts based on their 
income and ability to pay.
  It is that simple. It is fair. It is a long overdue change for the 
better.
  Some opponents of this legislation have also claimed that it somehow 
hurts women and children. This falsehood is particularly disturbing for 
me to hear, because I have had a long history of advocating for 
children and families in Congress, and I have worked tirelessly, 
provision by provision, to make this legislation dramatically improve 
the position of children and ex-spouses who are entitled to domestic 
support. I have already told you in some detail why these allegations 
are baseless and how this bill works to help women and children.
  I look forward to participating in this debate.
  This is a very good bill.
  It represents years of bipartisan, bicameral work. It is time we pass 
this bill. This President will sign this bill.
  I hope that we will not get sidetracked by nonrelevant or 
counterproductive, controversial amendments on a consensus bill that 
has been so long in the making.
  I hope there will not be any frivolous amendments or amendments 
designed to kill the bill or message amendments trying to make 
political points rather than solve the problems we have regarding 
bankruptcy.
  Let us pass this bill for the fourth and final time and get on to 
other business.
  I urge all of my colleagues to support S. 256, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2005.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.

[[Page 2965]]

  The assistant bill clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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