[Congressional Record (Bound Edition), Volume 151 (2005), Part 5]
[House]
[Pages 6400-6473]
[From the U.S. Government Publishing Office, www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

  Mr. SENSENBRENNER. Mr. Speaker, pursuant to House Resolution 211, I 
call up the Senate bill (S. 256) to amend title 11 of the United States 
Code, and for other purposes, and ask for its immediate consideration 
in the House.
  The Clerk read the title of the Senate bill.
  The text of S. 256 is as follows:

                                 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.

[[Page 6401]]

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.
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.
Sec. 234. Protection of personal information.

                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Technical amendments.
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.
Sec. 332. Fraudulent involuntary bankruptcy.

       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.

[[Page 6402]]

           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.

                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. 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. 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

[[Page 6403]]

     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 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, such as a serious 
     medical condition or a call or order to active duty in the 
     Armed Forces, to the extent such 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.
       ``(D) Subparagraphs (A) through (C) shall not apply, and 
     the court may not dismiss or convert a case based on any form 
     of means testing, if the debtor is a disabled veteran (as 
     defined in section 3741(1) of title 38), and the indebtedness 
     occurred primarily during a period during which he or she 
     was--
       ``(i) on active duty (as defined in section 101(d)(1) of 
     title 10); or
       ``(ii) performing a homeland defense activity (as defined 
     in section 901(1) of title 32).
       ``(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, including a veteran (as that term is 
     defined in section 101 of title 38), 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--

[[Page 6404]]

       ``(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 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

[[Page 6405]]

     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.
       (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.
       ``(4) The requirements of paragraph (1) shall not apply 
     with respect to a debtor whom the court determines, after 
     notice and hearing, is unable to complete those requirements 
     because of incapacity, disability, or active military duty in 
     a military combat zone. For the purposes of this paragraph, 
     incapacity means that the debtor is impaired by reason of 
     mental illness or mental deficiency so that he is incapable 
     of realizing and making rational decisions with respect to 
     his financial responsibilities; and ``disability'' means that 
     the debtor is so physically impaired as to be unable, after 
     reasonable effort, to participate in an in person, telephone, 
     or Internet briefing required under paragraph (1).''.
       (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 
     is a person described in section 109(h)(4) or 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 is a person described in section 109(h)(4) or 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

[[Page 6406]]

     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 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 if necessary
       ``(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;
       ``(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
       ``(E) if a fee is charged for the instructional course, 
     charge a reasonable fee, and provide services without regard 
     to ability to pay the fee.
       ``(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:

[[Page 6407]]

       ``(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)--
       ``(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.

[[Page 6408]]

       ``(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.
       ```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.'.

[[Page 6409]]

       ``(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 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,

[[Page 6410]]

     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:
       ``(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)''.

[[Page 6411]]



     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
       ``(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--

[[Page 6412]]

       ``(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 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

[[Page 6413]]

     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.''.

     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:

[[Page 6414]]

       ``(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
       (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--

[[Page 6415]]

       ``(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 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:


[[Page 6416]]


``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.''.
       (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''.

     SEC. 234. PROTECTION OF PERSONAL INFORMATION.

       (a) Restriction of Public Access to Certain Information 
     Contained in Bankruptcy Case Files.--Section 107 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(c)(1) The bankruptcy court, for cause, may protect an 
     individual, with respect to the following types of 
     information to the extent the court finds that disclosure of 
     such information would create undue risk of identity theft or 
     other unlawful injury to the individual or the individual's 
     property:
       ``(A) Any means of identification (as defined in section 
     1028(d) of title 18) contained in a paper filed, or to be 
     filed, in a case under this title.
       ``(B) Other information contained in a paper described in 
     subparagraph (A).
       ``(2) Upon ex parte application demonstrating cause, the 
     court shall provide access to information protected pursuant 
     to paragraph (1) to an entity acting pursuant to the police 
     or regulatory power of a domestic governmental unit.
       ``(3) The United States trustee, bankruptcy administrator, 
     trustee, and any auditor serving under section 586(f) of 
     title 28--
       ``(A) shall have full access to all information contained 
     in any paper filed or submitted in a case under this title; 
     and
       ``(B) shall not disclose information specifically protected 
     by the court under this title.''.
       (b) Security of Social Security Account Number of Debtor in 
     Notice to Creditor.--Section 342(c) of title 11, United 
     States Code, is amended--
       (1) by inserting ``last 4 digits of the'' before ``taxpayer 
     identification number''; and
       (2) by adding at the end the following: ``If the notice 
     concerns an amendment that adds a creditor to the schedules 
     of assets and liabilities, the debtor shall include the full 
     taxpayer identification number in the notice sent to that 
     creditor, but the debtor shall include only the last 4 digits 
     of the taxpayer identification number in the copy of the 
     notice filed with the court.''.
       (c) Conforming Amendment.--Section 107(a) of title 11, 
     United States Code, is amended by striking ``subsection 
     (b),'' and inserting ``subsections (b) and (c),''.

                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

[[Page 6417]]

     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 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

[[Page 6418]]

     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 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.

[[Page 6419]]

       ``(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
       ``(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

[[Page 6420]]

     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
       ``(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.

[[Page 6421]]

       ``(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 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),

[[Page 6422]]

     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.

     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

[[Page 6423]]

     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--

       ``(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, 11, or 13 of Title 11, United 
     States Code.--Section 1930(a) of title 28, United States 
     Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) For a case commenced under--
       ``(A) chapter 7 of title 11, $200; and
       ``(B) chapter 13 of title 11, $150.''; and
       (2) in paragraph (3), by striking ``$800'' and inserting 
     ``$1000''.
       (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; and
       ``(B) 70.00 percent of the fees collected under section 
     1930(a)(1)(B);'';
       (2) in paragraph (2), by striking ``one-half'' and 
     inserting ``75 percent''; 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, 31.25 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''.
       (d) Sunset Date.--The amendments made by subsections (b) 
     and (c) shall be effective during the 2-year period beginning 
     on the date of enactment of this Act.
       (e) Use of Increased Receipts.--
       (1) Judges' salaries and benefits.--The amount of fees 
     collected under paragraphs (1) and (3) of section 1930(a) of 
     title 28, United States Code, during the 5-year period 
     beginning on the date of enactment of this Act, that is 
     greater than the amount that would have been collected if the 
     amendments made by subsection (a) had not taken effect shall 
     be used, to the extent necessary, to pay the salaries and 
     benefits of the judges appointed pursuant to section 1223 of 
     this Act.
       (2) Remainder.--Any amount described in paragraph (1), 
     which is not used for the purpose described in paragraph (1), 
     shall be deposited into the Treasury of the United States to 
     the extent necessary to offset the decrease in governmental 
     receipts resulting from the amendments made by subsections 
     (b) and (c).

     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

[[Page 6424]]

     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 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.''.

     SEC. 332. FRAUDULENT INVOLUNTARY BANKRUPTCY.

       (a) Short Title.--This section may be cited as the 
     ``Involuntary Bankruptcy Improvement Act of 2005''.
       (b) Involuntary Cases.--Section 303 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(l)(1) If--
       ``(A) the petition under this section is false or contains 
     any materially false, fictitious, or fraudulent statement;
       ``(B) the debtor is an individual; and
       ``(C) the court dismisses such petition,


[[Page 6425]]


     the court, upon the motion of the debtor, shall seal all the 
     records of the court relating to such petition, and all 
     references to such petition.
       ``(2) If the debtor is an individual and the court 
     dismisses a petition under this section, the court may enter 
     an order prohibiting all consumer reporting agencies (as 
     defined in section 603(f) of the Fair Credit Reporting Act 
     (15 U.S.C. 1681a(f))) from making any consumer report (as 
     defined in section 603(d) of that Act) that contains any 
     information relating to such petition or to the case 
     commenced by the filing of such petition.
       ``(3) Upon the expiration of the statute of limitations 
     described in section 3282 of title 18, for a violation of 
     section 152 or 157 of such title, the court, upon the motion 
     of the debtor and for good cause, may expunge any records 
     relating to a petition filed under this section.''.
       (c) Bankruptcy Fraud.--Section 157 of title 18, United 
     States Code, is amended by inserting ``, including a 
     fraudulent involuntary bankruptcy petition under section 303 
     of such title'' after ``title 11''.

       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 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.''.

[[Page 6426]]



     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 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'--

[[Page 6427]]

       ``(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 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)--

[[Page 6428]]

       (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;
       ``(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

[[Page 6429]]

       (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.--apter 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;
       ``(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

[[Page 6430]]

     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--
       ``(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''; andby 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--

[[Page 6431]]

       ``(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 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--

[[Page 6432]]

       ``(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.''.

       (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

[[Page 6433]]

     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.''.

       (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.

[[Page 6434]]

``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.
       ``(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

[[Page 6435]]

       ``(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 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

[[Page 6436]]

     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;
       ``(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

[[Page 6437]]

     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''.
       (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

[[Page 6438]]

     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), 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;

[[Page 6439]]

       ``(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 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,

[[Page 6440]]

     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:
       ``(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

[[Page 6441]]

     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)--

       ``(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)

[[Page 6442]]

     (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:
       ``(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

[[Page 6443]]

     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:

     ``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

[[Page 6444]]

     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
       ``(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

[[Page 6445]]

     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;''.
       (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

[[Page 6446]]

     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.
       ``(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

[[Page 6447]]

     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.''.

     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

[[Page 6448]]

     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)--
       (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

[[Page 6449]]

       ``(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 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).

[[Page 6450]]

       ``(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(b) of title 11, United States Code, as amended 
     by this Act, is further amended--
       (1) by inserting ``101(19A),'' after ``101(18),'' each 
     place it appears;
       (2) by inserting ``522(f)(3) and 522(f)(4),'' after 
     ``522(d),'' each place it appears;
       (3) by inserting ``541(b), 547(c)(9),'' after 
     ``523(a)(2)(C),'' each place it appears;
       (4) in paragraph (1), by striking ``and 1325(b)(3)'' and 
     inserting ``1322(d), 1325(b), and 1326(b)(3) of this title 
     and section 1409(b) of title 28''; and
       (5) in paragraph (2), by striking ``and 1325(b)(3) of this 
     title'' and inserting ``1322(d), 1325(b), and 1326(b)(3) of 
     this title and section 1409(b) of title 28''.

     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,''.

     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

[[Page 6451]]

       (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 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

[[Page 6452]]

     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 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.''.

[[Page 6453]]



     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 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

[[Page 6454]]

     (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 
     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

[[Page 6455]]

       (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 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

[[Page 6456]]

     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.''.
       (4) by adding at the end the following:
       ``(e)(1) In addition to any transfer that the trustee may 
     otherwise avoid, the trustee may avoid any transfer of an 
     interest of the debtor in property that was made on or within 
     10 years before the date of the filing of the petition, if--
       ``(A) such transfer was made to a self-settled trust or 
     similar device;
       ``(B) such transfer was by the debtor;
       ``(C) the debtor is a beneficiary of such trust or similar 
     device; and
       ``(D) the debtor made such transfer with actual intent to 
     hinder, delay, or defraud any entity to which the debtor was 
     or became, on or after the date that such transfer was made, 
     indebted.
       ``(2) For the purposes of this subsection, a transfer 
     includes a transfer made in anticipation of any money 
     judgment, settlement, civil penalty, equitable order, or 
     criminal fine incurred by, or which the debtor believed would 
     be incurred by--
       ``(A) any violation of the securities laws (as defined in 
     section 3(a)(47) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(47))), any State securities laws, or any 
     regulation or order issued under Federal securities laws or 
     State securities laws; or
       ``(B) 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 (15 U.S.C. 78l and 78o(d)) or 
     under section 6 of the Securities Act of 1933 (15 U.S.C. 
     77f).''.

     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. 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 (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.--cept 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.

[[Page 6457]]



      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 SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution 
211, the gentleman from Wisconsin (Mr. Sensenbrenner) and the gentleman 
from Michigan (Mr. Conyers) each will control 30 minutes.
  The Chair recognizes the gentleman from Michigan (Mr. Sensenbrenner).


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous material on S. 256.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield by myself such time as I may 
consume.
  Mr. Speaker, I rise in support of S. 256, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2005. This legislation 
consists of a comprehensive package of reform measures pertaining to 
consumer and business bankruptcy cases. The current system has created 
a set of incentives that encourage opportunistic personal filings and 
the abuse of a bankruptcy system originally intended to strike a 
delicate balance between debtor and creditor rights. These abuses 
ultimately hurt debtors as well as creditors, consumers as well as 
businesses, suppliers as well as purchasers. The only winners in the 
current bankruptcy system are those who game the system for personal 
gain.
  S. 256 restores personal responsibility and integrity to the 
bankruptcy system and ensures that the system is fair to both debtors 
and creditors. This legislation represents the most comprehensive 
reform of the bankruptcy system in more than 25 years.
  As many of us know, bankruptcy reform has been subject to exhaustive 
congressional review for more than a decade, beginning with the 
establishment of a National Bankruptcy Review Commission in 1994. It is 
important to note that over the course of the last four Congresses, the 
House has passed bankruptcy reform on eight separate occasions by 
overwhelming and bipartisan margins.
  This bill will help stop fraudulent, abusive, and opportunistic 
bankruptcy claims by closing various loopholes and incentives that have 
produced steadily cascading claims.
  Central to these reforms is a merit-based test that reflects the 
commonsense proposition that those who are capable of repaying their 
debts after seeking bankruptcy relief must actually repay their debts. 
S. 256 will also give the courts greater powers to dismiss abusive 
bankruptcy cases and to punish attorneys who encourage their clients to 
file such claims. In addition, the bill prevents violent criminals or 
drug traffickers from using bankruptcy relief to evade their creditors.
  The bill closes the ``millionaire's mansion'' loophole in the current 
bankruptcy code that permits corporate criminals to shield their multi-
million dollar homesteads from deserving creditors. Of critical 
importance, the legislation prevents deadbeat parents from abusing the 
bankruptcy system to shirk their child support obligations. With 
respect to these reforms, the National Child Support Enforcement 
Association stated that S. 256 is ``crucial to the collection of child 
support during bankruptcy.''
  Some might ask why Congress has been so concerned about abuse in the 
bankruptcy system. The answer to this question should be obvious. It is 
estimated that every American household bears an annual $400 hidden tax 
for profligate and abusive bankruptcy filings. That is a $400 tax on 
every household that no politician has to vote for, but gets paid 
anyhow.
  As a result, every abusive bankruptcy filing impacts hard-working 
Americans in the form of higher interest rates and increased costs of 
goods and service. Our economy and the hard-working Americans who 
sustain it should not suffer any longer from the billions of dollars in 
losses associated with abusive bankruptcy filings.
  Mr. Speaker, this legislation not only deals with abuse in the 
bankruptcy system; it includes many vital consumer protections as well. 
S. 256 will provide the tools to crack down on bankruptcy petition 
mills, which often misrepresent the benefits and risks of bankruptcy 
relief. It will impose heightened standards of professional 
responsibility for attorneys who represent debtors. It will require 
certain credit card solicitations, monthly billing statements, and 
related materials to include important disclosures and explanatory 
statements on a broad range of credit terms and conditions, including 
introductory interest rates and minimum payments.
  The bill also helps America's family farmers and fishermen 
confronting economic hard times by providing more tools to assist in 
their bankruptcy reorganization. The bill includes protections for 
medical patients in bankruptcy health care facilities and pro-privacy 
provisions that protect against the unwanted disclosure of personal 
information.
  There are several other critical reforms contained in this 
comprehensive legislation, but the limits of time prevent an exhaustive 
recitation.
  Mr. Speaker, the time for bankruptcy reform is long overdue. 
Bankruptcy reform legislation has been subject to more process, more 
consideration, more deliberation, more debate, and more voting than 
virtually any other legislative item in the past decade. We have before 
us legislation that represents the culmination of a decade of 
legislative toil and persistence. It is the product of extensive 
bicameral and bipartisan compromise and was approved by the other body 
by a vote of 74 to 25.
  We also have before us a historic opportunity to return a measure of 
fairness and accountability to the bankruptcy system in a manner that 
will curb bankruptcy abuse while rewarding the vast majority of hard-
working

[[Page 6458]]

Americans who play by the rules and pay their bills as agreed upon.
  Mr. Speaker, I urge my colleagues to seize this opportunity to join 
me in supporting this legislation.
  Mr. Speaker, before closing, I include for the Record a supplemental 
statement acknowledging the hard work of many Members and staff who 
have helped make this legislation possible, as well as a summary of the 
principal provisions of this bill.
  Mr. Speaker, over the many years this legislation has been pending in 
the Congress, many Members, Senators, and staff members have devoted 
themselves to making S. 256 a reality. I would like to take this 
opportunity to recognize these individuals.
  Beginning with my colleagues in the House, I would like to mention 
the many contributions of the Chairman of the Subcommittee on 
Commercial and Administrative Law (Mr. Cannon) for his hard work on 
behalf of this legislation. The Chairman of the Financial Services 
Committee (Mr. Oxley) has also been a great resource. I also appreciate 
the contributions of my colleagues on the other side of the aisle, the 
Ranking Member of the Judiciary Committee (Mr. Conyers) and the 
gentleman from Virginia (Mr. Boucher). Former Members should also be 
recognized for their contributions. Bill McCollum is to be commended 
for being the first to introduce comprehensive bankruptcy reform and 
George Gekas deserves our gratitude for his tireless efforts.
  In addition, I would like to mention the following staff on the 
Judiciary Committee for their contributions: Phil Kiko, Majority 
Committee General Counsel and Chief of Staff; Rob Tracci, Chief 
Legislative Counsel and Parliamentarian; Raymond Smietanka, Chief 
Counsel, Subcommittee on Commercial and Administrative Law; Perry 
Apelbaum; David Lachmann; Matt Iandoli, Legislative Director for 
Representative Cannon; Todd Thorpe, Chief of Staff for Representative 
Cannon; Laura Vaught, Deputy Chief of Staff for Representative Boucher; 
Jean Harmann, House Legislative Counsel and Dina Ellis, Counsel for the 
House Financial Services Committee.
  Former staffers who should also be recognized, include Will 
Moschella, Joe Rubin, Alan Cagnoli, and Liz Trainer.
  The vital and indispensable efforts of one staff member have uniquely 
contributed to the bankruptcy reform legislation we consider today. 
From her service as general counsel on the congressionally-created 
National Bankruptcy Review Commission to her often behind the scenes 
work on bankruptcy reform legislation extending to the 105th Congress, 
Susan Jensen, counsel to the Judiciary Subcommittee on Commercial and 
Administrative Law, deserves special recognition. Her technical 
expertise in a complex area of law has resulted in dramatic 
improvements in successive drafts of bankruptcy reform legislation and 
helped establish a record of legislative history that elucidates the 
legislation we consider today. Her professionalism, attention to 
detail, and commitment to serving the House of Representatives deserves 
the recognition and commendation of this House.
  I would also like to acknowledge the countless contributions of our 
colleagues in the other body. These include Senators Grassley, Hatch, 
Sessions, Specter, Biden and Leahy.
  This legislation has also benefitted from the hard work and devoted 
assistance of numerous Senate staff members. These include, Rita Lari, 
counsel for Senator Grassley, who has been a wonderful resource for our 
staff. In addition, the following individuals must also be 
acknowledged: Harold Kim and Tim Strachan, counsels for Senator 
Specter; Perry Barber, Rene Augustine, and former staffer Makan 
Delrahim, counsels for Senator Hatch; and Ed Pagano, Chief of Staff for 
Senator Leahy.

   Summary of Principal Provisions of S. 256, ``The Bankruptcy Abuse 
            Prevention and Consumer Protection Act of 2005''


                      CONSUMER BANKRUPTCY REFORMS

       Abuse prevention: S. 256 instills a greater level of 
     personal responsibility by closing various loopholes and 
     eliminating incentives in the current bankruptcy system that 
     encourage opportunistic consumer bankruptcy filings and 
     abuse. The bill's needs-based provisions target, for example, 
     those debtors who have a demonstrated ability to repay their 
     debts and channels them into a form of bankruptcy relief that 
     requires debt repayment. Courts, under S. 256, are given 
     greater powers to dismiss abusive bankruptcy cases and to 
     punish attorneys who encourage their clients to file such 
     cases. Debtors who have committed crimes of violence or 
     engaged in drug trafficking will no longer be able to use 
     bankruptcy to hide from their creditors. Likewise, deadbeat 
     parents will be prevented from using bankruptcy to shirk 
     their child support obligations. In addition, this 
     legislation prevents debtors from avoiding their 
     responsibility to pay for luxury goods and services purchased 
     on the eve of filing for bankruptcy.
       Needs-based reforms: S. 256 implements an income and 
     expense analysis to determine whether a debtor has a 
     demonstrated ability to repay a significant portion of his or 
     her debts. If a debtor has the ability to repay debts, he or 
     she must either be channeled into a form of bankruptcy relief 
     that requires repayment or risk having the bankruptcy case 
     dismissed as an abusive filing. This needs-based test 
     specifies certain expense amounts--derived from IRS expense 
     standards and other specified expenses--that are deducted 
     from the debtor's income. These include expenses for food, 
     clothing, housing, and transportation as well as certain 
     educational expenses for the debtor's children. The debtor 
     may rebut the presumption of abuse by demonstrating special 
     circumstances warranting additional expenses or income 
     adjustment.
       Spousal and child support protections: S. 256 prioritizes 
     the collection and payment of spousal and child support in 
     bankruptcy cases by giving these claims the highest payment 
     priority (current law gives these claimants an only 7th level 
     payment priority). The bill requires bankruptcy trustees to 
     give child support claimants important information about the 
     availability of state child support enforcement assistance 
     and to notify the proper state child support enforcement 
     authorities of the deadbeat parent's bankruptcy filing. S. 
     256 allows various enforcement actions to be brought against 
     a bankrupt deadbeat parent, including the withholding of his 
     or her driver's license, or the suspension of the debtor's 
     professional or occupational license. It also allows state 
     child support enforcement agencies to intercept a debtor's 
     tax refund for nonpayment of spousal or child support. In 
     addition, it ensures that a deadbeat parent do not escape 
     responsibility to pay a child's medical bills. The National 
     Child Support Enforcement Association says S. 256's reforms 
     are ``crucial to the collection of child support during 
     bankruptcy.''
       Closes the ``mansion loophole'' for greedy corporate 
     culprits: Under current bankruptcy law, debtors living in 
     certain states can shield from their creditors virtually all 
     of the equity in their homes. In light of this, some debtors 
     actually move to these states just to take advantage of their 
     ``mansion loophole'' laws. S. 256 closes this loophole for 
     abuse by requiring a debtor to reside in the state for at 
     least 2 years before he or she can claim that state's 
     homestead exemption--the current residency requirement is 
     only 91 days! The bill further reduces the opportunity for 
     abuse by requiring a debtor to own the homestead for at least 
     40 months before he or she can use state exemption law--
     current law imposes no such requirement. In addition, S. 256 
     requires a debtor's homestead exemption to be reduced for to 
     the extent attributable to the debtor's fraudulent conversion 
     of nonexempt assets (e.g., cash) into a homestead exemption. 
     Most importantly, the bill stops securities law violators and 
     other culprits from hiding their homestead assets from those 
     whom they have defrauded or injured If a debtor was convicted 
     of a felony, violated a securities law, or committed a 
     criminal act, intentional tort, or engaged in reckless 
     misconduct that caused serious physical injury or death, S. 
     256 overrides state homestead exemption law and caps the 
     debtor's homestead exemption at $125,000.
       Debtor protections: S. 256 requires debtors to receive 
     credit counseling before they can be eligible for bankruptcy 
     relief so that they will make an informed choice about 
     bankruptcy--its alternatives and consequences. The bill also 
     requires debtors, after they have filed for bankruptcy, to 
     participate in financial management instructional courses so 
     they can hopefully avoid future financial distress. S. 256 
     penalizes creditors who unreasonably refuse to negotiate a 
     pre-bankruptcy debt repayment plan with a debtor. The bill 
     strengthens the disclosure requirements for reaffirmation 
     agreements so that debtors will be better informed about 
     their rights and responsibilities. In addition, S. 256 
     requires certain monthly credit card billing statements to 
     include specified disclosures regarding the increased 
     interest and repayment time associated with making minimum 
     payments. The bill also requires certain home equity loan and 
     credit card solicitations to include enhanced consumer 
     disclosures. S. 256 prohibits a creditor from terminating an 
     open end consumer credit plan simply because the consumer has 
     not incurred finance charges on the account. Further, the 
     bill cracks down on bankruptcy petition mills and imposes 
     heightened standards of professional responsibility for 
     attorneys who represent debtors.


                 BUSINESS BANKRUPTCY AND OTHER REFORMS

       Protections for small business owners: Under current 
     bankruptcy law, a business can be sued by a bankruptcy 
     trustee and forced to pay back monies previously paid to it 
     by a firm that later files for bankruptcy protection. S. 256 
     contains provisions making it easier--particularly for small 
     businesses--to successfully defend against these suits.
       Promotes greater certainty in the financial market place: 
     S. 256 reduces systemic risk in the banking system and 
     financial marketplace by minimizing the risk of disruption 
     when parties to certain financial

[[Page 6459]]

     transactions become bankrupt or insolvent. Federal Reserve 
     Board Chairman Alan Greenspan says these reforms are 
     ``extremely important.''
       Family farmers: S. 256 helps small family farmers facing 
     financial distress. While current bankruptcy law has a 
     specialized form of bankruptcy relief--Chapter 12--that is 
     specifically designed for family farmers, its benefits for 
     farmers are limited because of its restrictive eligibility 
     requirements. The bill responds to this problem in several 
     key respects: it more than doubles the debt eligibility limit 
     and requires it to be periodically adjusted for inflation; it 
     lowers the requisite percentage of a farmer's income that 
     must be derived from farming operations; and it gives farmers 
     more flexibility with respect to how certain creditors can be 
     repaid. As a result, many more deserving family farmers 
     facing financial hard times will be able to avail themselves 
     of Chapter 12. In addition, S. 256 makes Chapter 12 a 
     permanent component of the bankruptcy laws and extends the 
     benefits of this form of bankruptcy relief to family 
     fishermen.
       Small business debtors: S. 256 addresses the special 
     problems presented by small business debtors by instituting 
     firm deadlines and enforcement mechanisms to weed out those 
     debtors who are not likely to reorganize. It also requires 
     the court and other designated entities to monitor these 
     cases more actively.
       Transnational insolvencies: In response to the increasing 
     globalization of business dealings and operations, S. 256 
     establishes a separate chapter under the Bankruptcy Code 
     devoted to transnational insolvencies. These provisions are 
     intended to provide greater legal certainty for trade and 
     investment as well promote the fair and efficient 
     administration of these cases.
       Privacy protections: Under current law, nearly every item 
     of information supplied by a debtor in connection with his or 
     her bankruptcy case is made available to the public. S. 256 
     prohibits the disclosure of the names of the debtor's minor 
     children and requires such information to be kept in a 
     nonpublic record, which can be made available for inspection 
     only by the court and certain other designated entities. In 
     addition, if a business debtor had a policy prohibiting it 
     from selling ``personally identifiable information'' about 
     its customers and the policy was in effect at the time of the 
     bankruptcy filing, then S. 256 prohibits the sale of such 
     information unless certain conditions are satisfied.
       Protections for employees: S. 256 requires certain back pay 
     awards granted as a result of the debtor's violation of 
     Federal or State law to receive one of the highest payment 
     priorities in a bankruptcy case. In addition, S. 256 
     streamlines the appointment of an ERISA administrator for an 
     employee benefit plan, under certain circumstances, to 
     minimize the disruption that results when an employer files 
     for bankruptcy relief. In light of the disaterous impact that 
     bankruptcy cases like WorldCom and Enron have had on their 
     employees, reforms that more than double current the monetary 
     cap on wage and employee benefit claims entitled to priority 
     under the Bankruptcy Code. Other provisions would protect 
     retirees in cases where Chapter 11 debtors unilaterally 
     modify their benefits, such as health insurance. These 
     reforms would also make it easier to recover excessive pre-
     petition compensation, such as bonuses, paid to insiders of a 
     debtor that can then be used to pay unpaid employee wage 
     claims.

  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this is the most special interest-vested bill that I 
have ever dealt with in my career in Congress. It massively tilts the 
playing field in favor of banks and credit card companies and against 
working people and their families. I have never, ever faced such a 
piece of legislation. That explains to me why it took 8 years to get 
this thing up here, because they kept fixing it up, making it wrong.
  Mr. Speaker, all I want to say as we open this debate is that to 
those who assert that this bill cracks down on creditor abuse, I would 
ask them to realize that this bill does absolutely nothing to 
discourage abusive, underage lending; nothing to discourage reckless 
lending to the developmentally disabled; nothing to regulate the 
practice of sub-prime lending to persons with no means or little 
ability to repay their debts; nothing to crack down on the sharks, the 
lenders, that charge members of the Armed Forces up to 500 percent 
interest per year or more. They hang around the bases and lure them in.
  What this is is something that we should all be truly embarrassed 
about. This bill is opposed by every consumer group, by all the 
bankruptcy judges, the trustees, law professors, by all of organized 
labor, by the military groups, by the civil rights organizations, and 
by every major group concerned about seniors, women, and children.
  Please, if we do not do anything else in the 109th Congress, let us 
not let this bill get out of the House of Representatives.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Virginia (Mr. Boucher) to show that this is truly a bipartisan 
effort.
  Mr. BOUCHER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, the reform of the nation's bankruptcy laws which our 
actions today will accomplish is well justified. This reform is 
strongly in the interests of consumers. It will significantly reduce 
the annual hidden tax of approximately $400 that the typical consumer 
pays because others are misusing the bankruptcy laws. That amount 
represents the increased cost of credit and the increased price of 
goods and services caused by bankruptcy law misuse. This reform will 
lower that hidden tax.
  The reform also helps consumers by requiring clearer disclosures of 
the cost of credit on credit card statements, and the reform will be a 
major benefit to single parents who receive alimony or child support. 
That person today is fifth in priority for the receipt of payment under 
the bankruptcy laws. The reform before us today elevates the spouse 
support recipient to number one in priority.
  This reform proceeds from the basic premise that people who can 
afford to repay a substantial portion of what they owe should do so. 
The bill requires that repayment while allowing a discharge in 
bankruptcy of the debts that cannot be repaid. In so doing, it responds 
to the broad misuse of chapter 7's complete liquidation provisions that 
we have observed in recent years.
  The reform measure sets a threshold for the use of chapter 7. Debtors 
who can make little or no repayment can use its provisions and 
discharge all of their debts. Debtors whose annual income is below the 
national mean of about $50,000 per year are untouched by this reform. 
They can make full use of chapter 7 and discharge all of their debts, 
whether or not they can afford to make repayments.
  This reform imposes a modest measure of personal responsibility that 
is well justified, and I urge its approval by the House.
  Mr. CONYERS. Mr. Speaker, I am pleased to yield 2\1/2\ minutes to the 
gentleman from Massachusetts (Mr. Delahunt), a distinguished member of 
the committee.
  Mr. DELAHUNT. Mr. Speaker, let me just suggest the following, with 
all due respect to my friend from Wisconsin and my friend from 
Virginia.

                              {time}  1345

  The figure of $400 is a mythical figure. It is inaccurate.
  In addition to that, be rest assured, if you are a consumer, you will 
not benefit one penny from this bill. Do my colleagues know who is 
going to benefit? The credit card industry. Anyone familiar with the 
history of this bill knows that it was written by and for the credit 
card industry, and they spent north of $40 million to make sure that 
they got what they wanted.
  The American people are the losers here, unless you happen to be a 
senior executive of a credit card company or an investor in credit card 
companies, because they are going to make a good score here today, but 
the American taxpayer is going to pay for it.
  According to the CBO, the bill will cost taxpayers $392 million over 
a 5-year period and simultaneously reduce tax revenue by $456 million, 
increasing the budget deficit, by the way, that we are all so concerned 
about. The bill is nothing more than a public subsidy for one of the 
most profitable businesses in our economy.
  What is sad is that we could have produced legislation which would 
have been fair and balanced. We continue to hear that fair and balanced 
theme, but the credit card industry would not allow it. They would not 
tolerate any effort to make them accountable, no matter how minimal.

[[Page 6460]]

  To cite just one example, myself and the gentleman from North 
Carolina (Mr. Watt) proposed an amendment to limit the interest charged 
on a credit card to 75 percent. I said 75 percent. The credit card 
industry said, no; and, of course, their supporters defeated our 
amendment; and this amendment is not before us today. I would suggest 
75 percent is not bad, even by Mafia standards. Loan sharking used to 
be a crime in this country. Maybe this bill should be renamed as the 
Loan Sharking Decriminalization Act of 2000.
  We hear the term personal responsibility, but when it comes to the 
concept of corporate responsibility, silence.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 3 minutes to the gentleman 
from Utah (Mr. Cannon), the chairman of the Subcommittee on Commercial 
and Administrative Law.
  Mr. CANNON. Mr. Speaker, I rise in support of Senate bill 256 and 
urge its adoption by the House.
  Whether or not we have a cost of $400 per household or some other 
cost, I think it is clear to all Americans that we pay a cost if we 
have excessive bankruptcies in America. What we are looking for here is 
workable markets where consumers have the opportunity to borrow money 
at the lowest cost. Hopefully, they are not above 18 percent; certainly 
not at 75 percent. The market does a remarkable job for that purpose.
  For more than 7 years now, almost as long as I have been in Congress, 
we have struggled with the rising tide of bankruptcy abuse which 
threatens the delicate balance in this country between creditors and 
debtors. As this reform measure has developed, slowly, inexorably, we 
have dealt with each issue: framing, debating, considering, and 
ultimately resolving each controversy. Progressive Congresses have 
moved toward ultimate resolution, until finally today the House has 
been presented with a bill that it can send directly to the President 
for signature.
  As chairman of the Subcommittee on Commercial and Administrative Law, 
I take considerable satisfaction that, through collective effort, we 
would be able to achieve what many said would never happen. We have 
crafted fair and balanced legislation dealing in a straightforward 
manner with a problem that has vexed the Nation for the past decade and 
threatens economic growth and stability. By the way, the Bankruptcy Act 
has not been amended for 25 years in a serious way.
  The American people will truly be well served by this effort. This 
bill is a rare achievement of reducing disparity in the bankruptcy 
system. It establishes more uniform and predictable standards. It 
strengthens the integrity of the bankruptcy process. It deals with the 
continuing wave of bankruptcy filings and abuse of State homestead 
exemptions. It will reinforce the public perception that the system is 
fair for all participants. It improves the administration of the 
bankruptcy process. And, finally, it restores a measure of personal 
responsibility to the bankruptcy system that is spiraling out of 
control.
  Mr. Speaker, my constituents need this legislation, and America needs 
this legislation, and I urge support today for S. 256.
  I would also note that the need for additional bankruptcy judgeships 
may need to be considered to reflect the numbers submitted by the 
Judicial Conference's most recent report. Additional judgeships are 
sorely needed in a number of districts across the country, including my 
State of Utah. I was heartened by the assurance of the chairman of the 
Committee on the Judiciary during the markup of Senate 256 that this 
matter will be considered later this year. In that regard, I would like 
to thank the gentleman from Georgia (Mr. Kingston) who has worked 
tirelessly on the issue of expanding the number of bankruptcy judges we 
have to meet this need.
  Mr. Speaker, at this point I will place additional information on the 
bill in the Record.
  During the course of the Senate Judiciary Committee's consideration 
of S. 256, a provision was added to deal with excessive retention 
bonuses, severance payments and other forms of inducements paid by a 
debtor to retain key personnel or otherwise induce a debtor's 
management to remain with the debtor.
  This provision addresses serious concerns and I support the intent of 
its drafters. Nevertheless, this provision should not be construed to 
invalidate all key employee retention programs for companies that may 
someday wind up in Chapter 11. It is very important that a Chapter 11 
debtor be able to retain management that is dedicated to maintaining 
the company's value for the benefit of its creditors, investors, 
employees, and other stakeholders. All too often, companies that fail 
to reorganize successfully are converted to Chapter 7 for liquidation, 
where creditors receive pennies on the dollar and employees face job 
dislocation.
  Where appropriate, key employee retention programs may be necessary 
to bring a company in financial distress successfully through the 
Chapter 11 process. Accordingly, section 331 of S. 256 should not be 
applied to invalidate such programs where there is no evidence of 
insider negligence, mismanagement, or fraudulent conduct contributed to 
a company's insolvency--in whole or in part.
  Given the possibility that the intent of the Congress with respect to 
this provision and the interpretation of Section 331's text may not be 
consistent, legislation clarifying language may be necessary. If so, I 
will work with my colleagues in the House and Senate to address any 
such inconsistencies.
  I ask that a letter from the Association of Insolvency and 
Restructuring Advisors be printed at this point in the Record.

                                        Association of Insolvency,


                                   and Restructuring Advisors,

                                       Medford, OR, March 1, 2005.
     Senator Arlen Specter,
     Chairman, Committee on the Judiciary, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: The undersigned are financial and legal 
     professionals who serve as the Board of Directors of the 
     Association of Insolvency and Restructuring Advisors (AIRA). 
     As board members we work to further the AIRA's goal of 
     increasing industry awareness of the organization as an 
     important educational and technical resource for 
     professionals in business turnaround, restructuring, and 
     bankruptcy practice, and of the Certified Insolvency and 
     Restructuring Advisor (CIRA) designation as an assurance of 
     expertise in this area.
       We write to make you aware of serious concerns we have 
     regarding a provision contained in S. 256, the ``Bankruptcy 
     Abuse Prevention and Consumer Protection Act of 2005.'' The 
     provision in question effectively prohibits the use of key 
     employee retention plans in Chapter 11 reorganizations. It 
     was added during the Judiciary Committee mark-up of the bill 
     and elicited little attention at the time. However, we 
     believe this provision will cause considerable harm to a 
     number of companies that will become subject to bankruptcy 
     proceedings, and, most importantly, to their employees, 
     customers, and creditors.
       When a company is operating in Chapter 11, a primary 
     responsibility of management is to maintain and grow the 
     company's value for the benefit of all of its stakeholders. A 
     company that is well-managed through its restructuring 
     benefits its creditors, employees, retirees, unions and the 
     local communities of which the company is a part. Companies 
     that fail to successfully reorganize in Chapter 11 are 
     liquidated. Creditors receive pennies on the dollar and 
     employees see their jobs and retirement savings destroyed.
       When companies enter Chapter 11, it is critical that they 
     attract and retain top management talent. But Chapter 11 is 
     also the most difficult time to attract and retain such 
     talent. Managers of Chapter 11 companies are faced with 
     intense scrutiny, stress, insecurity, and an enormously 
     complex process. Compensation and incentive tools used by 
     non-bankrupt companies such as equity compensation programs 
     are not available to assist with attracting and retaining the 
     type of management talent necessary to bring the company 
     successfully through the Chapter 11 process--this is because 
     the pre-petition equity is almost always without value. Key 
     employee retention plans (``KERPs'') have become common 
     practice since the early 1990's and have been viewed by 
     courts, debtors, and creditors alike as an important and 
     useful way to help reorganization by retaining key employees.
       Bankruptcy courts have agreed with this reasoning, and many 
     judges have used their judicial discretion to approve KERPs. 
     For a court to approve a KERP under existing law, however, a 
     debtor must use proper business judgment in formulating the 
     program, and the court must find the program to be reasonable 
     and fair. Creditors have the right to object to proposed 
     KERPs, and judges are presented with a full evidentiary 
     record upon which to make a determination. If a KERP is not 
     appropriate or if it is not in the best interest of the 
     company's creditors, the judge can refuse to approve it.
       In the last few years, there has been a trend, with which 
     we agree, towards stricter judicial scrutiny of proposed 
     KERPs by

[[Page 6461]]

     bankruptcy judges. Such a trend seems appropriate in the wake 
     of numerous high profile bankruptcy filings where 
     management's misconduct or mismanagement has led to the 
     Chapter 11 filing. Judges have discretion to deny KERPs in 
     these circumstances, and they do so when the facts and 
     circumstances warrant.
       Unfortunately, S. 256 as reported by the Senate Judiciary 
     Committee includes an amendment authored by Senator Edward M. 
     Kennedy (the Kennedy amendment) that places significant 
     limits on retention bonuses and severance payments to 
     employees of companies in Chapter 11. It would prohibit a 
     bankruptcy judge from approving retention bonuses in every 
     Chapter 11 case unless he or she finds that the company in 
     question has proven that the employee has a bona fide job 
     offer at the same or greater rate of compensation; was 
     prepared to accept the job offer; and the services of that 
     employee are ``essential to the survival of the business.'' 
     The amendment also places significant caps on the amount of 
     such bonus and payments.
       The Kennedy amendment appears to be motivated by a desire 
     to combat KERPs in Chapter 11 cases where employee-related 
     fraud substantially contributed to the bankruptcy of the 
     company. Yet, by painting with such a broad brush, the 
     Kennedy amendment will, if enacted, effectively eliminate all 
     companies' ability to ever receive court approval for a KERP. 
     Federal bankruptcy judges would have little or no discretion 
     to approve KERPs. In turn, bankrupt companies would have less 
     flexibility in trying to retain or attract necessary 
     employees. This result will cause considerable harm to 
     companies in bankruptcy, their employees, and their 
     creditors.
       It is apparent that the Kennedy amendment is designed to 
     prevent abuses of the system, where creditors', employees' 
     and retirees' monies are unnecessarily expended for the 
     enrichment of management. Whether there currently is or is 
     not sufficient judicial scrutiny of KERPs is a valid 
     question, insofar as the overall bankruptcy system allows 
     debtors a fair amount of flexibility in exercising reasonable 
     judgment--but there must be an approach better than 
     handcuffing the judiciary and stakeholders in bankruptcy 
     cases by essentially precluding all use KERPs. The proper use 
     of KERPs requires an analysis of all facts and circumstances 
     of the case, and not what is essentially a blanket 
     proscription of these tools.
       Senator Kennedy has advanced an important public policy 
     discussion with his amendment. Managers who have had 
     responsibility for driving a company into bankruptcy should 
     not be paid a bonus to remain. Similarly, if the retention of 
     an employee would not enhance a company's value for its 
     stakeholders, they should not be paid a bonus to stay. 
     Current law provides bankruptcy judges with the discretion 
     necessary to deny a KERP in such circumstances and bankruptcy 
     judges do deny KERP payments in these circumstances. Still, 
     if the Congress wishes to improve the operation of current 
     law while still safeguarding the ability of the courts to 
     approve legitimate KERPs, we would welcome a discussion on 
     how best to achieve that end. Unfortunately, S. 256, as 
     reported by the Committee, goes too far and should be amended 
     so as not to unnecessarily limit the bankruptcy court's 
     ability to determine what is in the best interest of each 
     individual bankruptcy estate.
       Mr. Chairman, we thank you for considering our views on 
     this important matter. We would be pleased to address any 
     questions you or other members of the Committee on the 
     Judiciary may have.
           Sincerely,
       The members of the board and management of the Association 
     of Insolvency and Restructuring Advisors.
       Soneet R. Kapila, CIRA, Kapila & Company; President, AIRA.
       James M. Lukenda, CIRA, Huron Consulting Group; Chairman, 
     AIRA.
       Grant Newton, CIRA, Executive Director, AIRA.
       Daniel Armel, CIRA, Baymark Strategies LLC.
       Dennis Bean, CIRA, Dennis Bean & Company.
       Francis G. Conrad, CIRA, ARG Capital Partners LLP.
       Stephen Darr, CIRA, Mesirow Financial Consulting LLC.
       Louis DeArias, CIRA, PricewaterhouseCoopers LLP.
       James Decker, CIRA, Houlihan Lokey Howard & Zukin.
       Mitchell Drucker, CIT Business Credit.
       Howard Fielstein, CIRA, Margolin Winer & Evens LLP.
       Philip Gund, CIR, Marotta Gund Budd & Dzera LL.
       Gina Gutzeit, FTI Palladium Partners.
       Alan Holtz, CIRA, Giuliani Capital Advisors LLC.
       Margaret Hunter, CIRA, Protiviti Inc.
       Alan Jacobs, CIRA, AMJ Advisors LLC.
       David Judd, Neilson Elggren LLP.
       Bernard Katz, CIRA, JH Cohn LLP.
       Farley Lee, CIRA, Deloitte.
       Kenneth Lefoldt, CIRA, Lefoldt & Company.
       William Lenhart, CIRA, BDO Seidman LLP.
       Kenneth Malek, CIRA, Navigant Consulting Inc.
       J. Robert Medlin, CIRA, FTI Consulting Inc.
       Thomas Morrow, CIRA, AlixPartners LLC.
       Michael Murphy, Mesirow Financial Consulting LLC.
       Steven Panagos CIRA, Kroll Zolfo Cooper LLC.
       David Payne, CIRA, D R Payne & Associates Inc.
       David Ringer, CIRA, Eisner LLP.
       Anthony Sasso, CIRA, Deloitte.
       Matthew Schwartz, CIRA, Bederson & Company LLP.
       Keith Shapiro, Esq., Greenberg Traurig LLP.
       Grant Stein, Esq., Alston & Bird LLP.
       Peter Stenger, CIRA, Stout Risius Ross Inc.
       Michael Straneva, CIRA, Ernst & Young LLP.

  Mr. Speaker, I urge again the adoption of S. 256.
  Mr. CONYERS. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from North Carolina (Mr. Watt), the ranking member of the 
Subcommittee on Commercial and Administrative Law.
  Mr. WATT. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, those of us who started this process 6 years or so ago 
in the good faith belief that there were problems with the bankruptcy 
system, in the sense that people were gaming the system, and felt that 
there needed to be genuine reform cannot help but be disappointed today 
because, in the process, we have lost sight of the objective of 
reforming to do away with the sinister influences and the advantageous 
corruption that is going on in the system.
  I have never seen a bill that has violated more principles throughout 
this process. The first one was that the consumers and the lenders got 
together and decided that, because the lenders were not sure that they 
could do bankruptcy reform without reaching a compromise and the 
consumer groups realized that they might not be able to stop bankruptcy 
reform, they set up this system called the means test, which 
effectively exempted from the whole bankruptcy reform system those who 
fall below the means test threshold. The result is that individuals who 
fall below the means test threshold can continue with impunity to game 
the system without any kind of responsibility, and those who fall above 
the threshold get subjected to a set of arbitrary rules that, even if 
they are not gaming the system, they are taken advantage of. So we have 
lost sight of that.
  The second thing is we have built in a set of perverse incentives for 
easy credit now. For people who fall below the means test, there is 
really no disincentive for them to go out and get as much credit as 
they can. And for people above the means test there is no incentive for 
lenders to be responsible in their lending practices, because they know 
now they have this system that is going to protect them from people 
that they have made irresponsible loans to.
  The third problem is that, as we have gone through this process, the 
more we have bought into this means test philosophy and debated this, 
we now get to a point at the end of the process where it has corrupted 
even our democratic process. Because we are here on the floor with 30 
minutes of debate on our side to tell the public the problems with this 
bill.
  This is irresponsible legislating at its worst, and I encourage my 
colleagues to reject this bill and vote no.
  Mr. SENSENBRENNER. Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentleman from New 
York (Mr. Nadler), the former ranking member of the Subcommittee on 
Commercial and Administrative Law. This is an 8-year-old bill, and the 
gentleman has been foremost in this process for all of those years.
  Mr. NADLER. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, this bill is the worst giveaway to special interests, 
the worst rip-off of the public, of the middle class than I have ever 
seen in my public life. The people who understand how bankruptcy law 
functions in the real world, the scholars, judges, trustees and 
lawyers, whether they represent debtors, creditors, businesses or

[[Page 6462]]

individuals, have all told us this bill will not work, that it will be 
costly, and that it will produce unfair and irrational results. But we 
are ignoring them, trusting instead lobbyists, credit card companies, 
banks, and anyone else who wants a special favor; and, boy, are there 
special favors galore.
  The credit card companies are the big winners, but so are shopping 
centers, car lenders, crooked debt collectors, investment bankers, 
credit unions, and assorted sub-prime lenders.
  Those credit counseling operations that we have investigated for 
dishonest activity, they now get a monopoly on granting access to 
bankruptcy. Credit card companies that want their debts to survive the 
bankruptcy and compete with child support claims, they get their wish. 
Landlords who want to boot tenants out of their apartments, it is 
easier.
  Did you buy a trailer home or a car on credit? Now you will have to 
pay the lender more than the home or car is worth to keep it.
  Are you a tax collector? There is an entire title in the bill just to 
squeeze more money out of debtors.
  Are you a pawnbroker? Section 1230 is for you. You get to keep the 
pawned property, and it cannot be sold to pay other debts like child 
support or medical expenses. That is right. Congress is more worried 
about the rights of pawnbrokers than about the rights of children.
  So what is going on here? Why are bankers and bureaucrats telling us 
this bill is great for single parents with children while children and 
family advocates are telling us that it is not? Why does Congress 
believe studies paid for by the credit card industry that label 
millions of Americans crooks, while ignoring our own Congressional 
Budget Office, the independent and nonpartisan American Bankruptcy 
Institute, and the Government Accountability Office, all say these 
studies are bunk?
  The supporters say if we help the banks collect more money from 
bankrupt families, we will not have to pay that $400 bankruptcy tax. 
Our interest rates will go down because the banks will be able to 
collect more money. But the Republican leadership would not allow us to 
consider an amendment that would sunset the bill in several years if no 
savings are passed on to consumers, and they will not be. Interest 
rates have come down over the last 10 years on mortgages, on cars, on 
everything, but not on credit cards.
  Does anyone here trust VISA and MasterCard? Because we are writing 
them a blank check paid for with taxpayer money and trusting them to 
share the benefits with American consumers. Trust the banks. Trust the 
lobbyists. Do not trust the people who do these cases for a living. Do 
not trust the advocates for women and kids. Do not trust the civil 
rights community. Do not trust the laboring community. Do not trust 
disabled veterans and military family advocates. Do not trust crime 
victims organizations.
  Trust the banks. Trust the credit card companies. Trust VISA card. 
Trust MasterCard. They are the beneficiaries. The public will be the 
victims, and we will rue the day in a few years when the 60 or 70 
different ways in which this bill enables the credit card companies to 
stick their hands in the pockets of low- and middle-income people and 
extremists going bankrupt because of a medical emergency, and take more 
money out of that. Then the voters will know who really owns this 
place.
  Mr. Speaker, this bill is the worst giveaway to special interests, 
the worst rip-off of the public, of the middle class, I have ever seen 
in my public life.
  Mr. Speaker, it is fitting that this House take up this 512-page 
goodie bag for every special interest in town. Just yesterday, the 
Republican majority rammed through a bill that would eliminate the 
estate tax for the very wealthiest Americans. At least the Republican 
majority is consistent: more for the very wealthy, no responsibility 
for big banks, and squeeze the middle class.
  This bill, which can only be described as the poster-child for 
campaign finance reform, will soon shoot through this House and to a 
President who has vowed that he would sign it.
  Mr. Speaker, bankruptcy is notoriously complicated, but the members 
of this House have certainly never let the complexity of a problem get 
in the way of a good deal. The people who understand how bankruptcy law 
functions in the real world: the scholars, judges, trustees, and 
lawyers--whether they represent debtors, creditors, businesses or 
individuals--have all told us this bill won't work, that it will be 
costly, that it will produce unfair and irrational results. But we are 
ignoring them, trusting instead lobbyists, credit card companies, 
banks, and anyone else who wants some special favor.
  And boy, are there favors galore. The credit card companies are the 
big winners, but so are shopping centers, car lenders, crooked debt 
collectors, investment bankers, credit unions, and assorted sub-prime 
lenders.
  Those credit counseling operations that we've investigated for 
dishonest activity? They now get a monopoly on granting access to 
bankruptcy. Credit card companies that want their debts to survive the 
bankruptcy and compete with child support claims? They get their wish?
  Landlords who want to boot tenants out of their apartments? This bill 
makes it easier.
  Did you buy a trailer home or a car on credit? Now you will have to 
pay the lender more than the home or car is worth to keep it.
  Are you a tax collector? There is an entire title in this bill just 
for you to squeeze more money out of debtors.
  Are you a pawn broker? Section 1230 is for you! You get to keep the 
pawned property and it can't be sold to pay other debts, like child 
support, or medical expenses. That's right, Congress is more worried 
about the rights of pawn brokers than about the rights of children.
  So what's going on here? Why are bankers and bureaucrats telling us 
that this bill is great for single parents with children while children 
and family advocates are telling us that it is not? More to the point--
why are so many members of Congress so willing to believe bankers over 
the people who we work with day in and day out to protect the rights of 
children?
  Why does Congress believe studies paid for by the credit card 
industry that label millions of Americans crooks, while ignoring our 
own Congressional Budget Office, the independent and non-partisan 
American Bankruptcy Institute, and the Government Accountability 
Office, all of whom tell us these studies are bunk?
  Why are we willing to spend so much public money to collect private 
debts for banks? According to the Congressional Budget Office, this 
bill will cost the government $392 million over the first 5 years, 
increasing the deficit by $280 million. It will impose new costs on the 
private sector of more than $123 million per year, in violation of the 
Unfunded Mandate Reform Act. That number does not include increased 
costs to debtors.
  What are we spending this money on?
  Means testing alone will cost the government $150 million over the 
first 5 years.
  The government will be a private collection agency for credit card 
companies. Government funded audits will cost $66 million. The 
government will collect and store debtors' tax returns for another $10 
million.
  Just to administer this whole mess, we will spend another $26 million 
on extra judges--and no one here thinks that will be enough.
  So why should taxpayers spend all these millions to collect private 
debts for MasterCard and Visa? I asked George Wallace, the 
representative of the creditor coalition, that question. I asked 
whether he was aware that current law gives creditors the right to 
challenge the discharge of debts, examine debtors under oath, demand 
any documents from the debtors, seek dismissal of a case, and many 
other legal remedies.
  He said ``I have done these things and they do take a fair amount of 
time and I bill my clients for them. They are expensive.'' So I asked 
him why the government should pay to collect these debts if the banks 
think it's too expensive to collect their debts themselves.
  His response explains this whole bill. ``Because it's a governmental 
program, sir. Because it is not the job of the creditor.''
  A governmental program? We need to spend millions of taxpayer dollars 
to help the nation's biggest banks collect money from bankrupt 
families? Is this the new welfare?
  I want to thank Mr. Wallace for his honesty. He may be the only 
honest lobbyist left in Washington.
  Some will say that if we help the banks collect more money from 
bankrupt families, then we won't have to pay that $400 ``bankruptcy 
tax.'' Our interest rates will go down because the banks will be able 
to collect more money.
  The distinguished chairman of the Judiciary Committee has made this 
the cornerstone of the legislation. He recently told the Financial 
Times of London, ``The responsible thing for the credit card issuers to 
do would be to reduce interest rates because there is less risk.

[[Page 6463]]

If they don't they will play into the hands of the opponents of the 
bill--it would reduce their credibility.''
  I agree, but the Republican leadership wouldn't allow us to consider 
an amendment that would sunset the bill in 2 years if no savings are 
passed on to consumers. So I guess we're being asked to trust the 
biggest banks in America not to pocket the extra money. And they won't 
be. Interest rates have come down. Mortgage rates, car loans, but not 
credit card rates.
  Ask yourself: Where's my $400? Does any one here trust Visa and 
MasterCard? Because you are writing them a blank check, paid for with 
taxpayer money, and trusting them to share the benefits with American 
consumers.
  Anyone who really trust them to do this, raise your hand. Anyone?
  Go ahead and vote for this. Why not? It's a done deal. Trust the 
banks. Trust the lobbyists. Don't trust the people who do these cases 
for a living. Don't trust the advocates for women and kids. Don't trust 
the civil rights community. Don't trust labor. Don't trust disabled 
veterans' and military family advocates. Don't trust crime victims 
organizations. Trust the banks. Trust Visa. Trust MasterCard.
  At least the voters will know who really runs this place.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Putnam). The Chair reminds Members that 
they should heed the gavel.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Speaker, bankruptcy filings are at an all-time 
high. When bankruptcy filings increase, every American must pay more 
for credit, goods, and services through higher rates and charges. It is 
time that we relieve consumers from the burden of paying for the debts 
of others.
  Since the 105th Congress, the House has passed bankruptcy reform 
legislation eighty times. S. 256, the Bankruptcy Abuse Prevention and 
Consumer Protection Act, is the culmination of years of work and 
bicameral as well as bipartisan negotiations.
  A key aspect of S. 256 is retention of the income-based means test. 
The means test applies clear and well-defined standards to determine 
whether a debtor has the financial capability to pay his or her debts. 
The application of such objective standards will help ensure that the 
fresh start provisions of Chapter VII will be granted to those who need 
them, while debtors that can afford to repay some of their debts are 
steered toward filing chapter 13 bankruptcies.
  S. 256 is good for America's family farmers. As Chairman of the House 
Committee on Agriculture, I am pleased that we are finally making the 
chapter 12 provisions of the Bankruptcy Code permanent. Bankruptcy 
relief for family farmers will be made easier for those to obtain a 
discharge of their indebtedness. In addition, the bill allows more 
family farmers to qualify for chapter 12 relief by doubling the debt 
limit and lowering the percentage of income that must be derived from 
farming operations.

                              {time}  1400

  In addition, S. 256 prevents fraud. Under the current system, 
irresponsible people filing for bankruptcy could run up their credit 
card debt immediately prior to filing knowing that their debts will 
soon be wind away. What these people may not realize or care about is 
that these debts do not just disappear. They are passed along in higher 
charges and rates to hard working people.
  Mr. Speaker, I rise in strong support of the ``Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2005.''
  Bankruptcy filings are at an all time high. When Bankruptcy filings 
increase every American must pay more for credit, goods, and services 
through higher rates and charges. It is time that we relieve consumers 
from the burden of paying for the debts of others.
  Since the 105th Congress, the House has passed bankruptcy reform 
legislation eight times. S. 256, the ``Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2005'' is the culmination of years of work 
and bi-camerla, as well as bi-partisan negotiations.
  A key aspect of S. 256 is the retention of the income-based means 
test. The means test applies clear and well-defined standards to 
determine whether a debtor has the financial capability to pay his or 
her debts. The application of such objective standards will help ensure 
that the fresh start provisions of Chapter 7 will be granted to those 
who need them, while debtors that can afford to repay some of their 
debts are steered toward filing Chapter 13 bankruptcies.
  S. 256 is good for America's family farmers, who are the backbone of 
our agriculture industry. The bill permanently extends Chapter 12 
bankruptcy relief for family farmers and makes it easier for family 
farmers to obtain discharges of their indebtedness. In addition, the 
bill allows more family farmers to qualify for Chapter 12 relief by 
doubling the debt limit and lowering the percentage of income that must 
be derived from farming operations.
  In addition, S. 256 prevents fraud. Under the current system, 
irresponsible people filing for bankruptcy could run up their credit 
card debt immediately prior to filing, knowing that their debts will 
soon be wiped away. What these people may not realize or care about is 
that these debts do not just disappear--they are passed along in higher 
chargers and rates to hard-working folks who pay their bills on time. 
S. 256 ends this fraudulent practice by requiring bankruptcy filers to 
pay back nondischargable debts made in the period immediately preceding 
their filing.
  S. 256 also helps consumers. For example, this legislation helps 
children by strengthening the protections in the law that prioritize 
child support and alimony payments. In addition, it protects consumers 
from ``bankruptcy mills'' that encourage people to file for bankruptcy 
without fully informing them of their rights and the potential harms 
that bankruptcy can cause.
  S. 256 also ensures the fair treatment of those that administer our 
bankruptcy laws. Specifically, this legislation restores fairness and 
equity to the relationship between the U.S. trustee and private 
standing bankruptcy trustees by providing that in certain 
circumstances, after an administrative hearing on the record, private 
trustees may seek judicial review of U.S. trustee actions related to 
trustee removal. This compromise, worked out between the U.S. trustee's 
office and representatives of the private bankruptcy trustees, will 
ensure fairness for those who dedicate themselves to their duties as 
private trustees while ensuring that the U.S. trustee is subject to the 
same checks and balances as other government agencies.
  Bankruptcy should remain available to people who truly need it, but 
those who can afford to repay their debts should repay their debts. S. 
256 provides bankruptcy relief for those who truly cannot pay their 
debts, but also clearly demonstrates to those who would abuse our 
system that the free ride is over. I believe that S. 256 strikes the 
appropriate balance between these two important goals. I want to 
commend Chairmen Sensenbrenner and Cannon for their tremendous work on 
this legislation, and I urge each of my colleagues to support this fair 
and reasonable overhaul of the U.S. bankruptcy system.
  Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
Houston, Texas (Ms. Jackson-Lee), a member of the committee.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I think it is important as we 
debate this question that the opponents of this bill not be defined or 
classified as opposing responsibility and opposing the responsibility 
of being a good citizen and adhering to the debt that you accrue. I 
think that is a wrong-headed definition of the opponents.
  We have been described as non-patriot in other debates; in war and 
peace, scoundrels and socialists. But I think it is important for the 
American people to understand that we are engaging in a democratic 
process to be able to allow a voice of opposition to be heard for a 
tainted, stale and stagnant piece of legislation that has been bought 
and paid for by special interests.
  Our desire is to possibly encourage our colleagues in the House to 
take a serious and deliberative review of S. 256.
  Now, we have heard already that we were refused and denied amendments 
and one would ask the question why. If we are a deliberative body, why 
not make a bill that is as dated almost as the Gulf War, not the Iraq 
war, to make it better.
  Now, I hear my colleagues talking about $400 that will go to each 
household. What a misnomer. Someone said that there was a tax refund a 
couple of years ago, $350, $400. I can tell you that the constituents 
in the 18th Congressional District never saw that money. I would like 
to suggest to you that really what is happening is what Professor

[[Page 6464]]

Elizabeth Warren has said, that this is an overreaching problem, the 
overreaching problem with this bill this time is that the American 
economy has passed it by.
  We are in the depth almost of a deficit that is about to stagnate and 
stifle us. This bill will close the door to working and middle class 
persons. Since this bill was written, Mr. Speaker, Enron, WorldCom, 
Adelphia, United Airlines, LTV Steel, M-Mart, Polaroid, Global Crossing 
have filed bankruptcy and they did not have to use a means test.
  So let me suggest to you as I look at the medical conditions, I would 
ask my colleagues on the other side of the aisle does their stale old 
bill, this stack of old papers respond to the medical causes of 
bankruptcy that shows that because there is death in the family, 
illness or injury, people who go try to repay their bills and they fall 
into bankruptcy and this old stale 1998 bill does not respond to that.
  My next question, Mr. Speaker, is whether or not this old stale bill 
deals with the military, the military who is in Iraq right now, does 
this old stale bill deal with it? Does the old stale bill deal with the 
loan sharks. That is a travesty and should be defeated.

   Testimony of Elizabeth Warren Before the Senate Committee on the 
                               Judiciary

       My name is Elizabeth Warren. I teach bankruptcy law. As 
     some of you know, I have followed this issue with interest 
     for some time.
       The overarching problem with this bill is that time and the 
     American economy have passed it by. It was drafted--never 
     mind by whom--eight years ago. Even if it had been a flawless 
     piece of legislation then, and it surely was not, the events 
     of the past eight years have dramatically changed the 
     economic and social environment in which you must consider 
     this bill.
       In the eight years since this bill was introduced, new 
     cases have burst on the scene. The names are burned in our 
     collective memories: Enron, Worldcom, Adelphia, United 
     Airlines, USAirways and TWA, LTV Steel, K-Mart, Polaroid, 
     Global Crossing.
       While the actual number of consumer bankruptcy cases has 
     declined slightly in the past year, many of the largest 
     corporate bankruptcy cases in American history have occurred 
     since the Senate last reevaluated the bankruptcy laws, and 
     some of those cases are already legend for the corporate 
     scandals that accompanied them. Because it was written eight 
     years ago, this bill has nothing to deal with these abuses, 
     with these dangers, with the needs that these cases have made 
     so painfully clear.
       Problems not even on the horizon when this bill was written 
     are now front and center.
       Companies in Chapter 11 that cancel pension plans and 
     health benefits, leaving thousands of families economically 
     devastated.
       Companies that continue to pay executives and insiders tens 
     of millions of dollars, while they demand concessions from 
     their creditors.
       Military families targeted for payday loans at 400% 
     interest, insurance scams, and other forms of financial 
     chicanery.
       Scandals have rocked the so-called non-profit credit 
     counseling industry, exposing how tens of thousands of 
     consumers struggling desperately to pay their bills and not 
     file for bankruptcy were cheated.
       Sub-prime mortgage companies, financed by some of the best 
     names in American banking, have unlawfully taken millions of 
     dollars from homeowners, then fled to the bankruptcy courts 
     to protect their insiders and bank lenders.
       In the eight years since this bill was introduced, there 
     has been a revolution in the data available to us. Unlike 
     eight years ago, we need not have a theoretical debate about 
     who turns to the bankruptcy system. We now know:
       One million men and women each year are turning to 
     bankruptcy in the aftermath of a serious medical problem--and 
     three-quarters of them have health Insurance.
       A family with children is nearly three times more likely to 
     file for bankruptcy than an individual or couple with no 
     children.
       More children now live through their parents' bankruptcy 
     than through their parents' divorce.
       Unlike eight years ago, we need not have a theoretical 
     debate about the homestead exemption because we have had 
     example after example of abuse tied directly to the failure 
     of American companies. Millions of jobs have been lost but 
     not the Florida and Texas fortunes of their corporate 
     executives. Others are welcome to use the unlimited homestead 
     exemption as well.
       After he lost a $33 million lawsuit in California, O.J. 
     Simpson moved to Florida, explaining to a reporter that the 
     unlimited exemption would permit him to protect a 
     multimillion-dollar house.
       Abe Grossman ran up $233 million in debts in Massachusetts 
     and Rhode Island, then fled to Florida to purchase a 64,000 
     square foot home valued at $55 million.
       Some physicians are reportedly dropping their malpractice 
     insurance and putting all their assets in their homes--where 
     they can't be touched by bankruptcy.
       Under S. 256, they would still be welcome to file for 
     bankruptcy and to keep their fortunes and properties intact 
     while leaving their creditors with nothing.
       Unlike eight years ago, we need not have a theoretical 
     debate about the effects of the proposed legislation on small 
     business.
       It takes time to negotiate a reorganization, even for a 
     small company. The time-lines in S. 256 would have denied 
     reorganization to more than a third of the small businesses 
     that eventually saved themselves--destroying value for the 
     companies, their creditors, their employees and their 
     communities.
       This bill would be the first in American history to 
     discriminate affirmatively against small businesses. For the 
     first time ever, Congress would pass a law that says 
     companies like Enron and Worldcom don't have to file extra 
     forms, Enron and Worldcom don't have to schedule meetings 
     with the Office of the United States Trustee, and Enron and 
     Worldcom don't have to meet fixed deadlines that a judge 
     cannot waive for any reason--but every troubled small 
     business in the Chapter 11 system would have to file those 
     papers, undergo that supervision and meet those deadlines or 
     be liquidated. No exceptions allowed for small companies.
       Unlike eight years ago, we need not have a theoretical 
     debate about the economic impact of bankruptcies on credit 
     card company profits.
       In the eight years since this bill was introduced, credit 
     has not been curtailed. Minors--under 18 years of age--with 
     no incomes and no credit history are now described as an 
     ``emerging market'' for the credit industry. Credit card 
     solicitations have doubled to 5 billion a year. Bankruptcy 
     filings have increased 17 percent, while credit card profits 
     have increased 163 percent, from $11.5 billion to $30.2 
     billion.
       Some courts have demanded that credit card companies 
     disclose how much of their claims are the amounts actually 
     borrowed and how much are fees, penalties and interest. 
     Companies have admitted that for every dollar they claim the 
     customer borrowed, they are demanding two more dollars in 
     fees and interest.
       With increased fees and universal default clauses that 
     drive up interest rates even for customers paying on time, a 
     growing number of people have no option but to declare 
     bankruptcy. Cases continue to surface like In re McCarthy, in 
     which a woman borrowed $2200, paid back $2010 in the two 
     years before bankruptcy, and was told by her credit card 
     company that she still owed $2600 more. Ms. McCarthy had two 
     choices: She could either declare bankruptcy or she could pay 
     $2000 every year for life--and die owing as much as she owes 
     today.
       The means test in this bill, Section 102, has been one of 
     its most controversial provisions. Proponents like to say 
     that the means test will put pressure only on the families 
     that can afford to repay. And yet, the bill has 217 sections 
     that run for 239 pages. The means test aside, virtually every 
     consumer provision aims in the same direction. The bill 
     increases the cost of bankruptcy protection for every family, 
     regardless of income or the cause of financial crisis, and it 
     decreases the protection of bankruptcy for every family, 
     regardless of income or the cause of financial crisis.
       There are provisions that will make Chapter 13 impossible 
     for many of the debtors who would file today, provisions that 
     make it easier than ever to abuse the unlimited homestead 
     provisions in some states and yet at the same time hurt 
     people with more modest homesteads in those same states. 
     Other provisions will compromise the privacy of millions of 
     families by putting their entire tax returns in the court 
     files and potentially on the Internet, making them easy prey 
     for identity thieves. Women trying to collect alimony or 
     child support will more often be forced to compete with 
     credit card companies that can have more of their debts 
     declared non-dischargeable. All these provisions apply 
     whether a person earns $20,000 a year or $200,000 a year.
       But the means test as written has another, more basic 
     problem: It treats all families alike. It assumes that 
     everyone is in bankruptcy for the same reason--too much 
     unnecessary spending. A family driven to bankruptcy by the 
     increased costs of caring for an elderly parent with 
     Alzheimer's disease is treated the same as someone who maxed 
     out his credit cards at a casino. A person who had a heart 
     attack is treated the same as someone who had a spending 
     spree at the shopping mall. A mother who works two jobs and 
     who cannot manage the prescription drugs needed for a child 
     with diabetes is treated the same as someone who charged a 
     bunch of credit cards with only a vague intent to repay. A 
     person cheated by a sub-prime mortgage lender and lied to by 
     a credit counseling agency is treated the same as a person 
     who gamed the system in every possible way.
       If Congress is determined to sort the good debtors from the 
     bad, then it is both morally

[[Page 6465]]

     and economically imperative that they distinguish those who 
     have worked hard and played by the rules from those who have 
     shirked their responsibilities. If Congress is determined to 
     sort the good from the bad, then begin by sorting those who 
     have been laid low by medical debts, those who lost their 
     jobs, those whose breadwinners have been called to active 
     duty and sent to Iraq, those who are caring for elderly 
     parents and sick children from those few who overspend on 
     frivolous purchases.
       This Congress wants to set a new moral tone. Do it with the 
     bankruptcy bill. Don't press ``one-size-fits-all-and-they-
     are-all-bad'' judgments on the very good and the very bad. 
     Spend the time to make the hard decisions. Leave discretion 
     with the bankruptcy judges to evaluate these families. Based 
     on the Harvard medical study and other research, I think you 
     will find that most debtors are filing for bankruptcy not 
     because they had too many Rolex watches and Gameboys, but 
     because they had no choice.
       You have a choice. It's a choice that you're making for the 
     American people. Adopt new bankruptcy legislation. Establish 
     a means test that targets abuse. But do not enact a proposal 
     written to address myth and mirage more than reality. Do not 
     enact a proposal written for 1997 when the problems of the 
     American corporate economy in 1997 deserve far more attention 
     and the problems of the American middle class can no longer 
     be ignored.
       Overwhelmingly, American families file for bankruptcy 
     because they have been driven there--largely by medical and 
     economic catastrophe--not because they want to go there. Your 
     legislation should respect that harsh reality and the 
     families who face it.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Putnam). The gentlewoman is out of order 
in defying the gavel.
  The gentlewoman's time has expired.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentlewoman 
from Illinois (Mrs. Biggert).
  Mrs. BIGGERT. Mr. Speaker, I thank the gentleman for yielding me 
time.
  Mr. Speaker, it is about great pleasure that I rise today to express 
my strong support for the Bankruptcy Abuse Prevention and Consumer 
Protection Act.
  A Chinese proverb says, Give a man a fish and you feed him for a day. 
Teach a man to fish and you feed him for a lifetime. And that is 
exactly what this bill before us does today.
  There are many reasons to support this bankruptcy reform bill, but I 
want to focus on one that is important to many of my colleagues, to me, 
and to the American people.
  We should support the bill because it contains important financial 
literacy provisions. Financial literacy goes hand in hand with helping 
our citizens of all ages and walks of life to negotiate the complex 
world of personal finance. Financial literacy can help Americans avoid 
or survive bankruptcy.
  We pass many laws that require the disclosure of the terms and 
conditions of the rich mix of financial products and services that are 
available to consumers. Unfortunately for too many Americans, knowing 
the terms and conditions of financial products and services is 
challenging enough. However, understanding those terms and conditions 
is often an even greater challenge.
  Recognizing this fact, Congress included provisions in the Fair and 
Accurate Credit Transactions Act to address the issue of financial 
literacy. The Bankruptcy Abuse Prevention and Consumer Protection Act 
also contains important provisions addressing economic education and 
financial literacy. These provisions are designed to ensure that those 
who enter the bankruptcy system will learn the skills to more 
effectively manage their money in an increasingly complicated 
marketplace.
  Last week we passed House Resolution 148, a bill that supports the 
goals and ideals of Financial Literacy Month, which is this month, 
April 2005. H. Res. 148 was co-sponsored by 82 Members of this body, 
and 409 Members of this body voted for it.
  Mr. Speaker, the number of bankruptcies remain at a historic high, 
over 1.6 million bankruptcy cases were filed in Federal courts in 2004. 
With this in mind, I urge my colleagues to support this bill.
  Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
California (Ms. Zoe Lofgren), a distinguished member of the committee.
  Ms. ZOE LOFGREN of California. Mr. Speaker, this bill hurts 
Americans. One group who will be especially hurt are family forced into 
bankruptcy because of a medical crisis.
  A recent study conducted by professors at Harvard Medical and Law 
School showed that about half of all personal bankruptcies can be 
attributed to medical costs.
  Among those who cited illnesses as a cause of bankruptcy, the average 
unreimbursed medical costs totaled nearly $12,000 even though more than 
three-quarters had health insurance.
  How does the bill hurt the families? Under the bill for the first 
time there will be a presumption that many of these families abuse the 
bankruptcy system. Under current law, people facing a medical 
bankruptcy can seek several forms of relief. Chapter 7 is by far the 
most common. Under 7 debtors are required to forfeit all of their 
property other than the exempt assets in exchange for having their 
debts extinguished.
  Current law already gives bankruptcy courts discretion to deny 
chapter 7 relieve where the filing is found to be a substantial abuse. 
But unlike this bill, current law provides a presumption in favor of 
granting relief to the debtor.
  The other option is chapter 13 where a debtor is required to continue 
paying creditors. This makes it more difficult for debtors to get back 
on their feet.
  This bill will hurt families facing medical bankruptcy because it 
will force many of them into chapter 13. That is because it presumes 
that these families are abusing the bankruptcy system if they fail the 
means test. The means tests starts with a family's income and then 
subtracts monthly expenses permitted by IRS guidelines. But instead of 
using a debtor's actual projected income, the means tests uses the 
debtor's average income over the prior 6 months. Thus, if a family's 
bankruptcy was triggered by a loss of income resulting from a serious 
illness, the means test would still attribute the lost income for the 
purpose of determining whether the family is abusing the bankruptcy 
system.
  Further, the means test uses the median income for a State. My 
constituents in Santa Clara County live in a high-cost area. Almost 
nobody will be able to discharge their debts in bankruptcy from Santa 
Clara County because of that high cost, no matter how meritorious for 
their claim for relief.
  Similarly, instead of using the debtor's actual expenses, the 
inflexible guidelines developed by the IRS is used. As a result, more 
families facing medical bankruptcy will be presumed to be abusing the 
system, will be forced into chapter 13 and will never be able to stand 
on their feet again. That is not right.
  The Harvard study found that these struggling families did everything 
they could to pay their medical bills to avoid bankruptcy. One in five 
skipped meals. One-third had their electricity cut off. Almost half 
lost their phone service. One in five was forced to move.
  Incredibly, they also cut back on needed medications to try to avoid 
bankruptcy. In fact, half went without needed prescriptions. And a full 
60 percent went without a needed doctor appointment.
  Please join me in opposing this unfair bill.

                          [From Market Watch]

            Illness and Injury as Contributors to Bankruptcy

(By David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie 
                              Woolhandler)

       ABSTRACT: In 2001, 1.458 million American families filed 
     for bankruptcy. To investigate medical contributors to 
     bankruptcy, we surveyed 1,771 personal bankruptcy filers in 
     five federal courts and subsequently completed in-depth 
     interviews with 931 of them. About half cited medical causes, 
     which indicates that 1.9-2.2 million Americans (filers plus 
     dependents) experienced medical bankruptcy. Among those whose 
     illnesses led to bankruptcy, out-of-pocket costs averaged 
     $11,854 since the start of illness; 75.7 percent had 
     insurance at the onset of illness. Medical debtors were 42 
     percent more likely than other debtors to experience lapses 
     in coverage. Even middle-class insured families often fall 
     prey to financial catastrophe when sick.
       ``If the debtor be insolvent to serve creditors, let his 
     body be cut in pieces on the

[[Page 6466]]

     third market day. It may be cut into more or fewer pieces 
     with impunity. Or, if his creditors consent to it, let him be 
     sold to foreigners beyond the Tiber.''
     --Twelve Tables, Table III, 6 (ca. 450 B.C.)
       Our bankruptcy system works differently from that of 
     ancient Rome; creditors carve up the debtor's assets, not the 
     debtor. Even so, bankruptcy leaves painful problems in its 
     wake. It remains on credit reports for a decade, making 
     everything from car insurance to house payments more 
     expensive. Debtors' names are often published in the 
     newspaper, and the fact of their bankruptcy may show up 
     whenever someone tries to find them via the Internet. 
     Potential employers who run routine credit checks (a common 
     screening practice) will discover the bankruptcy, which can 
     lead to embarrassment or, worse, the lost chance for a much-
     needed job.
       Personal bankruptcy is common. Nearly 1.5 million couples 
     or individuals filed bankruptcy petitions in 2001, a 360 
     percent increase since 1980. Fragmentary data from the legal 
     literature suggest that illness and medical bills contribute 
     to bankruptcy. Most previous studies of medical bankruptcy, 
     however, have relied on court records--where medical debts 
     may be subsumed under credit card or mortgage debt--or on 
     responses to a single survey question. None has collected 
     detailed information on medical expenses, diagnoses, access 
     to care, work loss, or insurance coverage. Research has been 
     impeded both by the absence of a national repository for 
     bankruptcy filings and by debtors' reticence to discuss their 
     bankruptcy, in population-based surveys, only half of those 
     who have undergone bankruptcy admit to it.
       The health policy literature is virtually silent on 
     bankruptcy, although a few studies have looked at 
     impoverishment attributable to illness. In his 1972 book, 
     Sen. Edward Kennedy (D-MA) gave an impressionistic account of 
     ``sickness and bankruptcy.'' The likelihood of incurring high 
     out-of-pocket costs was incorporated into older estimates of 
     the number of underinsured Americans: twenty-nine million in 
     1987. About 16 percent of families now spend more than one-
     twentieth of their income on health care. Among terminally 
     ill patients (most of them insured), 39 percent reported that 
     health care costs caused moderate or severe financial 
     problems. Medical debt is common among the poor, even those 
     with insurance, and interferes with access to care. At least 
     8 percent, and perhaps as many as 21 percent of American 
     families are contacted by collection agencies about medical 
     bills annually.
       Our study provides the first extensive data on the medical 
     concomitants of bankruptcy, based on a survey of debtors in 
     bankruptcy courts. We address the following questions: (1) 
     Who files for bankruptcy? (2) How frequently do illness and 
     medical bills contribute to bankruptcy? (3) When medical 
     bills contribute, how large are they and for what services? 
     (4) Does inadequate health insurance play a role in 
     bankruptcy? (5) Does bankruptcy compromise access to care?


                      a brief primer on bankruptcy

       ``Bankrupt'' is not synonymous with ``broke.'' ``Bankrupt'' 
     means filing a petition in a federal court asking for 
     protection from creditors via the bankruptcy laws. A single 
     petition may cover an individual or married couple. The 
     instant a debtor files for bankruptcy, the court assumes 
     legal control of the debtor's assets and halts all collection 
     efforts.
       Shortly after the filing, a court-appointed trustee 
     convenes a meeting to inventory the debtor's assets and debts 
     and to determine which assets are exempt from seizure. States 
     may regulate these exemptions, which often include work 
     tools, clothes, Bibles, and some equity in a home.
       About 70 percent of all consumer debtors file under Chapter 
     7 of the Bankruptcy Code; most others file under Chapter 13. 
     In Chapter 7 the trustee liquidates all nonexempt assets--
     although 96 percent of debtors have so little unencumbered 
     property that there is nothing left to liquidate. At the 
     conclusion of the bankruptcy, the debtor is freed from many 
     debts. In Chapter 13 the debtor proposes a repayment plan, 
     which extends for up to five years. Chapter 13 debtors may 
     retain their property so long as they stay current with their 
     repayments.
       Under both chapters, taxes, student loans, alimony, and 
     child support remain payable in full, and debtors must make 
     payments on all secured loans (such as home mortgages and car 
     loans) or forfeit the collateral.


                         study data and methods

       This study is based on a cohort of 1,771 bankruptcy filings 
     in 2001. For each filing, a debtor completed a written 
     questionnaire at the mandatory meeting with the trustee, and 
     we abstracted financial data from public court records. In 
     addition, we conducted follow-up telephone interviews with 
     about half (931) of these debtors.
       Sampling strategy. We used cluster sampling to assemble a 
     cohort to households filing for personal bankruptcy in five 
     (of the seventy-seven total) federal judicial districts. We 
     collected 250 questionnaires in each district, representative 
     of the proportion of Chapters 7 and 13 filings in that 
     district. These 1,250 cases constitute our ``core sample.'' 
     For planned studies on housing, we collected identical data 
     from an additional 521 homeowners filing for bankruptcy. We 
     based our analyses on all 1,771 bankruptcies with responses 
     weighted to maintain the representativeness of the sample.
       Data collection. With the cooperation of the judges in each 
     district, we contacted the trustees who officiate at meetings 
     with debtors. The trustees agreed to distribute, or to allow 
     a research assistant to distribute, a self-administered 
     questionnaire to debtors appearing at the bankruptcy meeting. 
     Questionnaires (which were available in English and Spanish) 
     included a cover letter explaining the research project and 
     human subjects protections and encouraging debtors to consult 
     their attorneys (who were almost always present) before 
     participating.
       The questionnaire asked about demographics, employment, 
     housing, and specific reasons for filing for bankruptcy, it 
     also asked whether the debtor had medical debts exceeding 
     $1,000, had lost two or more weeks of work-related income 
     because of illness, or had health insurance coverage for 
     themselves and all dependents at the time of filing, and 
     whether there had been a gap of one month or more in that 
     coverage during the past two years. In joint filings, we 
     collected demographic information for each spouse.
       During the spring and summer of 2001 we collected 
     questionnaires from consecutive debtors in each district 
     until the target number was reached.
       Follow-up telephone interviews. The written questionnaire 
     distributed at the time of bankruptcy filing invited debtors 
     to participate in future telephone interviews, for which they 
     would receive $50; 70 percent agreed to such interviews. We 
     ultimately completed follow-up telephone interviews with 931 
     of the 1,771 debtor families, a response rate of 53 percent. 
     The telephone interviews, conducted between June 2001 and 
     February 2002 using a structured, computer-assisted protocol, 
     explored financial, housing, and medical issues. Many debtors 
     also provided a narrative description of their bankruptcy 
     experience.
       Detailed medical questions. Each of the 931 interviewees 
     was asked if any of the following had been a significant 
     cause of their bankruptcy: an illness or injury; the death of 
     a family member; or the addition of a family member through 
     birth, adoption, custody, or fostering. Those who answered 
     yes to this screening question were queried about diagnoses, 
     health insurance during the illness, and medical care use and 
     spending. Interviewers collected information about each 
     household member with medical problems. In total, we 
     collected in-depth medical information on 391 people with 
     health problems in 332 debtor households.
       Data analysis. We used data from the self-administered 
     questionnaires (and court records) obtained from all 1,771 
     filters to analyze demographics, health coverage at the time 
     of filing, and gaps in coverage in the two years before 
     filing.
       We also used the questionnaire to estimate how frequently 
     illness and medical bills contributed to bankruptcy. We 
     developed two summary measures of medical bankruptcy. Under 
     the rubric ``Major Medical Bankruptcy'' we included debtors 
     who either (1) cited illness or injury as a specific reason 
     for bankruptcy, or (2) reported uncovered medical bills 
     exceeding $1,000 in the past years, or (3) lost at least two 
     weeks of work-related income because of illness/injury, or 
     (4) mortgaged a home to pay medical bills. Our more inclusive 
     category, ``Any Medical Bankruptcy,'' included debtors who 
     cited any of the above, or addiction, or uncontrolled 
     gambling, or birth, or the death of a family member.
       Data from the 931 follow-up telephone interviews were used 
     to analyze hardships experienced by debtors in the period 
     surrounding their bankruptcy, including problems gaining 
     access to medical care. The in-depth medical interviews 
     regarding 391 people with medical problems are the basis for 
     our analyses of which household members were ill, diagnoses, 
     health insurance at onset of illness, and out-of-pocket 
     spending. Two physicians (Himmelstein and Woolhandler) coded 
     the diagnoses given by debtors into categories for analysis.
       SAS and SUDAAN were used for statistical analyses, 
     adjusting for complex sample design. To extrapolate our 
     findings nationally, we assumed that our sample was 
     representative of the 1,457,572 households filing for 
     bankruptcy during 2001. Human subject committees at Harvard 
     Law School and the Cambridge Hospital approved the project.


                             study findings

       Who files for bankruptcy? Exhibit 1 displays the 
     demographic characteristics of our weighted sample of 1,771 
     bankruptcy filers. The average debtor was a forty-one-year-
     old woman with children and at least some college education. 
     Most debtors owned homes; their occupational prestige scores 
     place them predominantly in the middle or working classes.
       On average, each bankruptcy involved 1.32 debtors 
     (reflecting some joint filings by married couples) and 1.33 
     dependents. Extrapolating from our data, the 1.5 million 
     personal bankruptcy filings nationally in 2001 involved 3.9 
     million people: 1.9 million debtors, 1.3 million children 
     under age eighteen, and 0.7 million other dependents.
       Medical causes of bankruptcy. Exhibit 2 shows the 
     proportion of debtors (N = 1,771)

[[Page 6467]]

     citing various medical contributors to their bankruptcy and 
     the estimated number of debtors and dependents nationally 
     affected by each cause. More than one-quarter cited illness 
     or injury as a specific reason for bankruptcy; a similar 
     number reported uncovered medical bills exceeding $1,000. 
     Some debtors cited more than one medical contributor. Nearly 
     half (46.2 percent) (95 percent confidence interval = 43.5, 
     48.9) of debtors met at least one of our criteria for ``major 
     medical bankruptcy.'' Slightly more than half (54.5 percent) 
     (95 percent CI = 51.8, 57.2) met criteria for ``any medical 
     bankruptcy.''
       A lapse in health insurance coverage during the two years 
     before filing was a strong predictor of a medical cause of 
     bankruptcy (Exhibit 3). Nearly four-tenths (38.4 percent) of 
     debtors who had a ``major medical bankruptcy'' had 
     experienced a lapse, compared with 27.1 percent of debtors 
     with no medical cause (p < .0001). Surprisingly, medical 
     debtors were no less likely than other debtors to have 
     coverage at the time of filing. (More detailed coverage and 
     cost data for the subsample we interviewed appears below.)
       Medical debtors resembled other debtors in most other 
     respects (Exhibit 1). However, the ``major medical 
     bankruptcy'' group was 16 percent (p < 03) less likely than 
     other debtors to cite trouble managing money as a cause of 
     their bankruptcy (data not shown).
       Privations in the period surrounding bankruptcy. In our 
     follow-up telephone interviews with 931 debtors, they 
     reported substantial problems. During the two years before 
     filing, 40.3 percent had lost telephone service; 19.4 percent 
     had gone without food; 53.6 percent had gone without needed 
     doctor or dentist visits because of the cost, and 43.0 
     percent had failed to fill a prescription, also because of 
     the cost. Medical debtors experienced more problems in access 
     to care than other debtors did; three-fifths went without a 
     needed doctor or dentist visit, and nearly half failed to 
     fill a prescription.
       Medical debt was also associated with mortgage problems. 
     Among the total sample of 1,771 debtors, those with more than 
     $1,000 in medical bills were more likely than others to have 
     taken out a mortgage to pay medical bills (5.0 percent versus 
     0.8 percent). Fifteen percent of all homeowners who had taken 
     out a second or third mortgage cited medical expenses as a 
     reason. Follow-up phone interviews revealed that among 
     homeowners with high-risk mortgages (interest rates greater 
     than 12 percent, or points plus fees of at least 8 percent), 
     13.8 percent cited a medical reason for taking out the loan.
       Following their bankruptcy filings, about one-third of 
     debtors continued to have problems paying their bills. 
     Medical debtors reported particular problems making mortgage/
     rent payments and paying for utilities. Although our 
     interviews occurred soon after the bankruptcy filings (seven 
     months, on average), many debtors had already been turned 
     down for jobs (3.1 percent), mortgages (5.8 percent), 
     apartment rentals (4.9 percent), or car loans (9.3 percent) 
     because of the bankruptcy on their credit reports.
       Medical diagnoses, spending, and type of coverage. Our 
     interviews yielded detailed data on diagnoses, health 
     insurance coverage, and medical bills for 391 debtors or 
     family members whose medical problems contributed to 
     bankruptcy. In three-quarters of cases, the person 
     experiencing the illness/injury was the debt or spouse of the 
     debtor; in 13.3 percent, a child; and in 8.2 percent, an 
     elderly relative.
       Illness begot financial problems both directly (because of 
     medical costs) and through lost income. Three-fifths (59.9 
     percent) of families bankrupted by medical problems indicated 
     that medical bills (from medical care providers) contributed 
     to bankruptcy; 47.6 percent cited drug costs; 35.3 percent 
     had curtailed employment because of illness, often (52.8 
     percent) to care for someone else. Many families had problems 
     with both medical bills and income loss.
       Families bankrupted by medical problems cited varied, and 
     sometimes multiple, diagnoses. Cardiovascular disorders were 
     reported by 26.6 percent; trauma/orthopedic/back problems by 
     nearly one-third; and cancer, diabetes, pulmonary, or mental 
     disorders and childbirth-related and congenital disorders by 
     about 10 percent each. Half (51.7 percent) of the medical 
     problems involved ongoing chronic illnesses.
       Our in-depth interviews with medical debtors confirmed that 
     gaps in coverage were a common problem. Three-fourths (75.7 
     percent) of these debtors were insured at the on-set of the 
     bankrupting illness. Three-fifths (60.1 percent) initially 
     had private coverage, but one-third of them lost coverage 
     during the course of their illness. Of debtors, 5.7 percent 
     had Medicare, 8.4 percent Medicaid, and 1.6 percent veterans/
     military coverage. Those covered under government programs 
     were less likely than others to have experienced coverage 
     interruptions.
       Few medical debtors had elected to go without coverage. 
     Only 2.9 percent of those who were uninsured or suffered a 
     gap in coverage said that they had not thought they needed 
     insurance; 55.9 percent said that premiums were unaffordable, 
     7.1 percent were unable to obtain coverage because of 
     preexisting medical conditions, and most others cited 
     employment issues, such as job loss or ineligibility for 
     employer-sponsored coverage.
       Debtors' out-of-pocket medical costs were often below 
     levels that are commonly labeled catastrophic. In the year 
     prior to bankruptcy, out-of-pocket costs (excluding insurance 
     premiums) averaged $3,686 (95 percent CI = $2,693, $4,679) 
     (Exhibit 5). Presumably, such costs were often ruinous 
     because of concomitant income loss or because the need for 
     costly care persisted over several years. Out-of-pocket costs 
     since the onset of illness/injury averaged $11,854 (95 
     percent CI = $8,532, $15,175). Those with continuous 
     insurance coverage paid $734 annually in premiums on average 
     over and above the expenditures detailed above. Debtors with 
     private insurance at the onset of their illnesses had even 
     higher out-of-pocket costs than those with no insurance. This 
     paradox is explained by the very high costs--$18,005--
     incurred by patients who initially had private insurance but 
     lost it. Among families with medical expenses, hospital bills 
     were the biggest medical expense for 42.5 percent 
     prescription medications for 21.0 percent, and doctors' bills 
     for 20.0 percent. Virtually all of those with Medicare 
     coverage, and most patients with psychiatric disorders, said 
     that prescription drugs were their biggest expense.
       The human face of bankruptcy. Debtors' narratives painted a 
     picture of families arriving at the bankruptcy courthouse 
     emotionally and financially exhausted, hoping to stop the 
     collection calls, save their homes, and stabilize their 
     economic circumstances. Many of the debtors detailed ongoing 
     problems with access to care. Some expressed fear that their 
     medical care providers would refuse to continue their care, 
     and a few recounted actual experiences of this kind. Several 
     had used credit cards to charge medical bills they had no 
     hope of paying.
       The co-occurrence of medical and job problems was a common 
     theme. For instance, one debtor underwent lung surgery and 
     suffered a heart attack. Both hospitalizations were covered 
     by his employer-based insurance, but he was unable to return 
     to his physically demanding job. He found new employment but 
     was denied coverage because of his preexisting conditions, 
     which required costly ongoing care. Similarly, a teacher who 
     suffered a heart attack was unable to return to work for many 
     months, and hence her coverage lapsed. A hospital wrote off 
     her $20,000 debt, but she was nevertheless bankrupted by 
     doctor's bills and the cost of medications.
       A second common theme was sounded by parents of premature 
     infants or chronically ill children; many took time off from 
     work or incurred large bills for home care while they were at 
     their jobs.
       Finally, many of the insured debtors blamed high copayments 
     and deductibles for their financial ruin. For example, a man 
     insured through his employer (a large national firm) suffered 
     a broken leg and torn knee ligaments, He incurred $13,000 in 
     out-of-pocket costs for copayments, deductibles, and 
     uncovered services--much of it for physical therapy.


                               Discussion

       Bankruptcy is common in the United States, involving nearly 
     four million debtors and dependents in 2001; medical problems 
     contribute to about half of all bankruptcies. Medical 
     debtors, like other bankruptcy filer, were primarily middle 
     class (by education and occupation). The chronically poor are 
     less likely to build up debt, have fewer assets (such as a 
     home) to protect, and have less access to the legal resources 
     needed to navigate a complex financial rehabilitation. The 
     medical debtors we surveyed were demographically typical 
     Americans who got sick. They differed from others filing for 
     bankruptcy in one important respect: They were more likely to 
     have experienced a lapse in health coverage. Many had 
     coverage at the onset of their illness but lost it. In other 
     cases, even continuous coverage left families with ruinous 
     medical bills.
       Study strengths and limitations. Our study's strengths are 
     the use of multiple overlapping data sources; a large sample 
     size; geographic diversity; and in-depth data collection. 
     Although our sample may not be fully representative of all 
     personal bankruptcies, the Chapter 7 filers we studied 
     resemble Chapter 7 filers nationally (the only group for whom 
     demographic data has been complied nationally from court 
     records). Several indicators suggest that response bias did 
     not greatly distort our findings.
       As in all surveys, we relied on respondents' truthfulness. 
     Might some debtors blame their predicament on socially 
     acceptable medical problems rather than admitting to 
     irresponsible spending? Several factors suggest that our 
     respondents were candid. First, just prior to answering our 
     questionnaire, debtors had filed extensive information with 
     the court under penalty of perjury--information that was 
     available to use in the court records and that virtually 
     never contradicted the questionnaire data. They were about to 
     be sworn in by a trustee (who often administered our 
     questionnaire) and examined under oath. At few other points 
     in life are full disclosure and honesty so aggressively 
     emphasized.
       Second, the details called for in our telephone interview--
     questions about out-of-pocket medical expenses, who was ill, 
     diagnoses, and so forth--would make a generic claim that ``we 
     had medical problems'' difficult to sustain. Third, one of us 
     (Thorne)

[[Page 6468]]

     interviewed (for other studies) many debtors in their homes. 
     Almost all specifically denied spend-thrift habits, and 
     observation of their homes supported these claims. Most 
     reflected the lifestyle of people under economic constraint, 
     with modest furnishings and few luxuries. Finally, our 
     findings receive indirect corroboration from recent surveys 
     of the general public that have found high levels of medical 
     debt, which often result in calls from collection agencies.
       Even when data are reliable, making casual inferences from 
     a cross-sectional study such as ours is perilous. Many 
     debtors described a complex web of problems involving 
     illness, work, and family. Dissecting medical from other 
     causes of bankruptcy is difficult. We cannot presume that 
     eliminating the medical antecedents of bankruptcy would have 
     preventing all of the filings we classified as ``medical 
     bankruptcies.'' Conversely, many people financially ruined by 
     illness are undoubtedly too ill, too destitute, or too 
     demoralized to pursue formal bankruptcy. In sum, bankruptcy 
     is an imperfect proxy for financial ruin.
       Trends in medical bankruptcy. Although methodological 
     inconsistencies between studies preclude precise 
     quantification of time trends, medical bankruptcies are 
     clearly increasing. In 1981 the best evidence available 
     suggests that about 25,000 families filed for bankruptcy in 
     the aftermath of a serious medical problem (8 percent of the 
     312,000 bankruptcy filings that year). Our findings suggest 
     that the number of medical bankruptcies had increased twenty-
     threefold by 2001. Since the number of bankruptcy filings 
     rose 11 percent in the eighteen months after the completion 
     of our data collection, the absolute number of medical 
     bankruptcies almost surely continues to increase.
       Policy implications. Our data highlight four deficiencies 
     in the financial safety net for American families confronting 
     illness. First, even brief lapses in insurance coverage may 
     be ruinous and should not be viewed as benign. While forty-
     five million Americans are uninsured at any point in time, 
     many more experience spells without coverage. We found little 
     evidence that such gaps were voluntary. Only a handful of 
     medical debtors with a gap in coverage had chosen to forgo 
     insurance because they had not perceived a need for it; the 
     overwhelming majority had found coverage unaffordable or 
     effectively unavailable. The privations suffered by many 
     debtors--going without food, telephone service, electricity, 
     and health care--lend credence to claims that coverage was 
     unaffordable and belie the common perception that bankruptcy 
     is an ``easy way out.''
       Second, many health insurance policies prove to be too 
     skimpy in the face of serious illness. We doubt that such 
     underinsurance reflects families' preference for risk; few 
     Americans have more than one or two health insurance options. 
     Many insured families are bankrupted by medical expenses well 
     below the ``catastrophic'' thresholds of high-deductible 
     plans that are increasingly popular with employers. Indeed, 
     even the most comprehensive plan available to us through 
     Harvard University leaves faculty at risk for out-of-pocket 
     expenses as large as those reported by our medical debtors.
       Third, even good employment-based coverage sometimes fails 
     to protect families, because illness may lead to job loss and 
     the consequent loss of coverage. Lost jobs, of course, also 
     leave families without health coverage when they are at their 
     financially most vulnerable.
       Finally, illness often leads to financial catastrophe 
     through loss of income, as well as high medical bills. Hence, 
     disability insurance and paid sick leave are also critical to 
     financial survival of a serious illness.
       Only broad reforms can address these problems. Even 
     universal coverage could leave many Americans vulnerable to 
     bankruptcy unless such coverage was much more comprehensive 
     than many current policies. As in Canada and most of western 
     Europe, health insurance should be divorced from employment 
     to avoid coverage disruptions at the time of illness. 
     Insurance policies should incorporate comprehensive stop-loss 
     provisions, closing coverage loopholes that expose insured 
     families to unaffordable out-of-pocket costs. Additionally, 
     improved programs are needed to replace breadwinners' incomes 
     when they are disabled or must care for a loved one. The low 
     rate of medical bankruptcy in Canada suggests that better 
     medical and social insurance could greatly ameliorate this 
     problem in the United States.
       In 1591 Pope Gregory XIV fell gravely ill. His doctors 
     prescribed pulverized gold and gems. According to legend, the 
     resulting depletion of the papal treasury is reflected in his 
     unadorned plaster sarcophagus in St. Peter's Basilica. Four 
     centuries later, solidly middle-class Americans still face 
     impoverishment following a serious illness.

  Mr. SENSENBRENNER. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, unfortunately what the gentlewoman from California (Ms. 
Zoe Lofgren) said is not correct. There is a means test that is 
contained in this bill, but 11 United States Code, section 1307 which 
permits the conversion of a chapter 13 case to a chapter 7 case is not 
amended at all in any respect.
  I would just like to read 11 U.S.C. 1307(a): ``A debtor may convert a 
case under this chapter to a case under chapter 7 of this title at any 
time. Any waiver of the right to convert under this subsection is 
unenforceable.''
  So if chapter 13 is such a straight jacket, the way out is through 
the conversion as provided for in section 1307.
  Mr. Speaker, I yield 4 minutes to the gentleman from Ohio (Mr. 
Chabot).
  Mr. CHABOT. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise in strong support for this long overdue 
legislation. I want to thank the chairman of the Committee on the 
Judiciary, the gentleman from Wisconsin (Mr. Sensenbrenner), for his 
leadership and his efforts in making this bill a reality. It represent 
years of work, compromise and what I believe to be necessary reforms.
  Our bankruptcy laws have shifted away from what was their original 
purpose. In 1915 the Supreme Court wrote that our bankruptcy laws were 
intended to give honest debtors a chance to ``start afresh, free from 
obligations and responsibilities consequent upon business 
misfortunes.''
  This view was later reaffirmed in the 1934 case, Local Loan Company 
v. Hunt, in which the court wrote that ``the purpose of the act has 
been again and again emphasized by the courts in that it gives to the 
honest but unfortunate debtor a new opportunity in life and a clear 
field for future effort, unhampered by the pressure and discouragement 
of preexisting debt.''
  Over the last several decades, bankruptcy protections have expanded 
to cover basically anyone and everyone, not just those who truly need 
it. Statistics reveal that in 2004 approximately 1.5 million 
individuals sought bankruptcy protection. Increasingly, this protection 
is being sought for the consumer debt that has skyrocketed out of 
control as a result of the misuse of credit cards and other credit 
options. This expansive coverage comes at a price.
  Personal bankruptcy filing cost businesses and our economy tens of 
billions of dollars every year. It is basically a $500 per family 
annual tax on each and every American family. H.R. 685 the Bankruptcy 
Abuse and Consumer Protection Act of 2005, the bill that is here before 
us today, strikes a balance. It requires those who have the means to 
repay debts to do so while protecting those who truly need the 
assistance provided by chapter 7, such as those with serious medical 
conditions, the men and women of our armed services who are on active 
duty, as well as those disabled veterans who served in years past.
  Decisions to seek the protection of bankruptcy should be taken 
seriously. The consequences of filing are not just personal but impact 
our economy and society as a whole. As I mentioned, it is $600 per 
family that we are essentially taxed this year for everybody who is 
paying their debts from those who are not.

                              {time}  1415

  Personal filings cannot continue at the current rate. This bill 
represents a long overdue, much necessary first step; and I urge my 
colleagues to support this legislation.
  Mr. CONYERS. Mr. Speaker, I yield 20 seconds to my friend, the 
gentleman from Virginia (Mr. Scott).
  Mr. SCOTT of Virginia. Mr. Speaker, what the gentleman suggested was, 
if someone has overwhelming medical bills, hundreds of thousands in 
medical bills, that they can file under Chapter 7. That is not true. If 
they have a job and they have $100 a month left over after essential 
expenses, they are going to have to go under a wage earner plan for the 
next 5 years. Every dime they have got after food and rent will go to 
all of their bills. They cannot file under Chapter 7.
  Mr. CONYERS. Mr. Speaker, I yield to the gentleman from Ohio (Mr. 
Kucinich) for a unanimous consent request.
  Mr. KUCINICH. Mr. Speaker, almost half of the bankruptcies in the 
United States are connected to an illness in the family, whether people 
had health insurance or not. Middle-class Americans, who had the 
misfortune of either experiencing a medical emergency themselves

[[Page 6469]]

or watching a family member suffer, were then forced to face the 
daunting task of pulling themselves out of debt. Bankruptcy law has 
allowed them to start over. It has given hope. Now this new law will 
put people on their own. Illness or emergency creates medical bills. We 
are telling the people that they themselves are to blame. At the same 
time, we are removing protections that would stay an eviction, that 
would keep a roof over the head of a working family. We allow the 
credit industry to trick consumers into using subprime cards, with 
exorbitant interest rate hikes and fees. Then we hand those same 
consumers over to an unforgiving prison of debt, to be put on a rack of 
insolvency and squeezed dry by the credit card industry. We are 
protecting the profits of the credit card industry instead of 
protecting the economic future of the American people. Americans are 
left on their own. That's what this Administration's ``Ownership 
Society'' is all about--you're on your own--and your ship is sinking.
  Mr. CONYERS. Mr. Speaker, I am now pleased to break the line of 
members of the committee. I yield 1 minute and 15 seconds to a 
distinguished friend of mine, the gentleman from New Jersey (Mr. 
Pascrell).
  Mr. PASCRELL. Mr. Speaker, you would not even exempt our brothers and 
sisters coming back from war, and you want me to believe that this is 
reasonable legislation?
  Rising debt levels in turn reflect a shift in our economy away from a 
time when families could afford to save and into a time when their 
wages are stagnant. The costs of their health premiums increased 163 
percent since 1988. Their tuitions have increased 170 percent. Their 
mortgages, their child care. This is not a stable economy.
  They are not crooks. They are not evil people. The American 
Bankruptcy Institute says that 96.3 percent of the people filing 
Chapter 7 just do not have the money. Now we are not saying forget 
about all of this, but we are saying let us be reasonable.
  Who should we help? Who should be first on the list of congressional 
priorities? The families who are in financial straits or the credit 
card companies who made a record $30 billion in profits last year and 
whose profits have soared almost triple in the last decade?
  This legislation does nothing to put caps on interest rates or late 
fees or the overtime limits and other penalties, even those among 
reasonable people.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 1\1/2\ minutes to the 
gentleman from Delaware (Mr. Castle).
  Mr. CASTLE. Mr. Speaker, I rise today in strong support of S. 256, 
the Bankruptcy Abuse and Consumer Prevention Act.
  Mr. Speaker, we have seen a sharp increase in bankruptcies in the 
past 25 years. In 2003, consumer filings peaked at over 1.6 million 
filings, a 465 percent increase from 1980. Those who believe credit 
card companies, mortgage lenders and other financial institutions are 
bearing the cost of consumers filing for bankruptcy do not understand 
how business works. These costs will be shifted to American families 
who are paying the price for this debt, some studies reflect $400 per 
year in every household, by higher interest rates on their credit 
cards, auto loans, school loans and mortgages. When the legislation 
passes today it will be the American families who are the real winners.
  This legislation balances the consumer's challenge of debt repayment 
with the needs of businesses that collect money rightfully owed to 
them. In an effort to better educate consumers and improve financial 
literacy, the legislation requires many filers of bankruptcy to attend 
financial counseling. This change coupled with congressional 
encouragement for schools to incorporate personal finance curricula in 
elementary and secondary education programs are both useful methods of 
curbing future debt. As chairman of the Subcommittee on Education 
Reform, which has jurisdiction over K through 12, I feel strongly that 
educating future spenders can prevent debts incurred as adults.
  Again, Mr. Speaker, I want to thank Chairman Sensenbrenner for his 
years of strong and tenacious support for this legislation and thank 
him for not giving up on these important, common-sense changes to our 
bankruptcy system. I urge my colleagues to support this bipartisan 
legislation.
  Mr. CONYERS. Mr. Speaker, before I recognize the gentleman from 
Massachusetts, I want to go back and yield 10 seconds to the gentleman 
from New Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Speaker, I want to make sure that everybody quite 
understands that I will no longer support this legislation. I am 
changing my vote this year to a no vote. This is terrible legislation, 
and we have only made it worse.
  Mr. CONYERS. Mr. Speaker, I am pleased to yield 2 minutes to my 
friend, the gentleman from Massachusetts (Mr. Meehan), an excellent 
member of the committee.
  Mr. MEEHAN. Mr. Speaker, this bankruptcy bill is but the latest 
attempt by the Republican Congress to undermine the economic security 
of the middle class. Health care costs, not spending sprees, are the 
single largest causes of bankruptcies in America. Health care costs. 
Medical bankruptcies have gone up by more than 2,000 percent in the 
last 25 years. Why are we here trying to increase the profits of credit 
card companies while doing nothing to lower the cost of health care for 
middle-class American families?
  It is disgraceful that this bill is being considered under a closed 
rule, with just an hour of debate, with no opportunity for amendment.
  Supporters of this bill claim to have exempted service members who 
become disabled on active duty, but to be exempted you have to go into 
debt while on active duty.
  A veteran who returns home from Iraq or Afghanistan and then goes 
into debt because of the injuries sustained on active duty is still 
subject to the punitive means test. What a way to treat the men and 
women in uniform fighting on behalf of the United States. It is an 
unfair loophole that we should have had the opportunity to close here 
on the House floor.
  Another blatant unfairness is that this bill allows millionaires to 
shield their assets in estates in Florida and Texas, but no such 
homestead exemption exists for middle-class families who suffer serious 
medical expenses. We tried to offer an amendment allowing a limited 
homestead exemption for families with crushing medical debts. 
Unfortunately, no amendments were allowed.
  It is an outrage that we cannot debate these issues here on the House 
floor. This bill is simply an attempt to reward credit card companies 
by removing a last resort available to middle-class families who fall 
on hard times.
  I urge Members to oppose this terrible bill.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself a minute and a half.
  Mr. Speaker, once again the opponents of this legislation are not 
correct. My friend, the gentleman from Massachusetts, says that someone 
who is injured in Iraq and comes home is not going to be protected from 
medical expenses. The United States Government has stood behind 
everybody who has a service-connected injury or disability and pays for 
the medical treatment out of taxpayers' money because that is the right 
thing to do.
  Secondly, he says that this bill continues the millionaires' 
exemption in the eight States that have unlimited exemption. Wrong. It 
plugs that exemption.
  And if this bill goes down, a corporate crook can build a 
multimillion dollar mansion on the Intercostal waterway in Florida and 
be able to shield that asset from bankruptcy. What this bill does is it 
does plug that unlimited exemption and it plugs it in a way that was 
negotiated out in a bipartisan manner in the conference committee two 
Congresses ago with a motion that was made in that conference committee 
by my senior Senator, Herb Kohl, who is a Democrat.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield 10 seconds to the gentleman from 
Massachusetts (Mr. Meehan).
  Mr. MEEHAN. Mr. Speaker, I did not say the bill did not pay for 
service members' medical expenses who are injured in Iraq or 
Afghanistan. I said if

[[Page 6470]]

they incur debt after they come back from serving this country and are 
forced to bankruptcy, they get the punitive means test. That is wrong. 
We should not do it to people serving in Iraq and Afghanistan.
  Mr. CONYERS. Mr. Speaker, how much time remains on either side?
  The SPEAKER pro tempore (Mr. Putnam). The gentleman from Michigan 
(Mr. Conyers) has 9 minutes and 20 seconds. The gentleman from 
Wisconsin (Mr. Sensenbrenner) has 8 minutes remaining.
  Mr. CONYERS. Mr. Speaker, I am now pleased to yield 2 minutes to the 
gentlewoman from California (Ms. Linda T. Sanchez), who is an able 
member of the committee.
  Ms. LINDA T. SANCHEZ of California. Mr. Speaker, I rise in strong 
opposition to the so-called Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005.
  Contrary to its name, this bill does not protect consumers and it 
certainly does not help honest, hard-working families with financial 
problems. The only thing that this bill does is distort our bankruptcy 
laws so that working families are treated more like criminals than 
people in need of relief.
  Our bankruptcy laws must strike a fair and practical balance between 
debtors and creditors. This means that honest people with financial 
troubles can make a fresh start by getting creditors off their backs.
  But this bill does the exact opposite of that. Instead of helping 
struggling families in debt, this bill erects harsh legal and monetary 
roadblocks for people who are trying to file bankruptcy.
  The vast majority of people who file for bankruptcy, 9 out of 10, do 
so because they have either lost their job, suffered a medical 
emergency, or there has been a divorce or separation in their family. 
These are not people who are abusing the bankruptcy system.
  We are talking about recently divorced, single working mothers trying 
to support their children who may not be getting their child support. 
We are talking about young men and women in our Armed Forces returning 
home after serving their country in Iraq. We are talking about some of 
the 1.6 million families who have lost their private-sector jobs since 
2001 when a Republican administration took over the White House. These 
are honest, hard-working families who have resorted to bankruptcy to 
find some relief for their debts and a chance to start their lives 
anew.
  This is a terrible bill. It is harmful to struggling families and 
goes against the basic policy of our bankruptcy laws, helping families 
in financial trouble get a fresh start.
  I urge every Member of the House to stand by America's working 
families by voting no for passage of S. 256.
  Mr. SENSENBRENNER. Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
Los Angeles, California (Ms. Waters), a member of the committee.
  Ms. WATERS. Mr. Speaker, the passing of this bill would be a complete 
detriment to the American people. For many Americans find themselves, 
usually through no fault of their own, facing bankruptcy. This scenario 
could happen to almost anyone.
  Mr. Speaker, the main reasons Americans file for bankruptcy is not to 
abuse the system and avoid paying their bills. Americans file for 
bankruptcy usually due to catastrophic medical expenses, divorce, or 
the loss of their jobs.
  Many important, common-sense amendments on subjects such as alimony, 
child support, exemptions for medical emergencies, and job loss, 
underage credit card lending, predatory lending and protection for 
disabled veterans, just to name a few, were all rejected by the 
Judiciary Committee.
  Mr. Speaker, amendments should have been made to this bill to carve 
out exemptions for certain basic needs so Americans can still have some 
equity or resources should they be forced into bankruptcy.
  More specifically, one loophole in the bankruptcy bill leaves the 
victims of domestic violence and their children left with no resources 
should they file for bankruptcy. This is so unfair. The bill should 
have been allowed to be modified to secure better protection for 
domestic abuse victims by granting them relief from summary eviction 
from their houses.
  Please note, this relief would have only been available if a domestic 
violence debtor is certified, under penalty of perjury, that the debtor 
was in fact a victim of domestic abuse and that their physical well-
being or the physical well-being of the debtor's child would be 
threatened if this debtor were evicted.
  Mr. Speaker, this amendment would have provided a safe harbor for 
those victims who faced the great threat of more violence and extreme 
danger if their homes are taken as a result of bankruptcy.
  We also tried to do something about this underage credit card 
lending. It is a travesty. These credit card companies set up on the 
college campuses. They have vendors from the day these kids walk into 
college. They send them all of this unsolicited mail, and they 
telephone them unrelentlessly to get them involved in taking these 
credit cards.
  They do it. They run up the debt. Some of them are now 30, 35 years 
old, out of college for years, still paying on these credit cards 
because they allowed their minimum payments that do not even take into 
account all of the interest on the debt.

                              {time}  1430

  It is outright unreasonable that we did not have an amendment allowed 
by my friends on the opposite side of the aisle to try and protect 
families and future young families from this kind of exploitation.
  Also, I want to point out that the means test includes disaster 
assistance and veterans benefits. This is a rip-off.
  Mr. SENSENBRENNER. Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield myself 5 seconds to let the 
gentlewoman from California know that the credit card companies solicit 
five billion mailings every year to college kids and others.
  Mr. Speaker, may I ask the chairman how many speakers he may have 
remaining.
  Mr. SENSENBRENNER. Mr. Speaker, if the gentleman will yield, just me 
at the present time.
  Mr. CONYERS. Mr. Speaker, I yield 1 minute to the dynamic gentlewoman 
from California (Ms. Woolsey).
  Ms. WOOLSEY. Mr. Speaker, over the last 18 months the House 
leadership has passed bills that are windfalls for the pharmaceutical 
industry, big oil, and they have given massive tax breaks to 
corporations while the deficit in this country continues to grow by 
records.
  Now lining up for their share and licking their lips is the credit 
card industry who stands to make billions of dollars at the expense of 
American consumers.
  With the hope of helping to protect veterans from these regulations, 
I offered an amendment to this bill to simply waive any fee charged for 
credit counseling for any servicemember returning from a combat area 
for a period of 2 years. Do my colleagues think that was allowed to 
come down here on the House floor for a vote? Absolutely not.
  Many of these men and women have been away from their families, from 
their homes, their jobs for long periods of time because of unethical 
procedures that keep them overseas. Many of these individuals have lost 
their businesses, they have lost their homes and they have bills and 
are going to suffer. Our veterans, they will suffer because of this 
bankruptcy bill.
  Mr. Speaker, over the last eighteen months, the House leadership has 
passed bills that are windfalls to the pharmaceutical industry and big 
oil and, have given massive tax breaks to corporations, while the 
deficit continues to break records.
  Now lining up for their share and licking their lips is the credit 
card industry, that stand to make billions of dollars at the expense of 
the American consumer.
  With the hope of helping to protect Veterans from these new 
regulations, I offered an Amendment to this bill to simply waive any 
fee charged for credit counseling for any service member returning from 
a combat area, for a

[[Page 6471]]

period of two years. Unfortunately, the majority didn't allow any.
  Many of these men and women have been away from their families, homes 
and jobs for long periods of time because of unethical procedures that 
keep them overseas. This is resulting in severe economic hardships, 
business closures, homes foreclosures and bills unpaid.
  We must not penalize our troops for serving our country. It is 
appalling that any Veteran would face bankruptcy because of their 
sacrifice.
  Mr. Speaker, I urge my colleagues to vote against this bill to 
protect American families and maintain a core American value to allow 
people a fresh start.
  Mr. CONYERS. Mr. Speaker, I yield myself 1 minute.
  We should all be embarrassed that instead of repealing the biggest 
loophole in the bankruptcy code, we have had 8 years to study it, the 
homestead exemption, the bill places only weak obstacles in its path. 
Instead of protecting women and health care providers from those who 
would terrorize abortion clinics, we lay out a blueprint for them to 
avoid their debts. Instead of helping individuals who have lost their 
job or faced a health care emergency, we deny them the chance for a 
fresh start.
  By passing this measure in this form, the majority is telling the 
American people, Republicans are telling the American people, it is 
more important to help credit card companies than innocent spouses and 
children; that it is more important to protect corporate scam artists 
than workers losing their pension; that it is more important to protect 
unscrupulous lenders than disabled veterans.
  Mr. Speaker, I yield the remainder of my time to the gentlewoman from 
California (Ms. Pelosi), the distinguished minority leader.
  Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding me time 
and thank him for his distinguished leadership as the ranking member on 
the Committee on the Judiciary and his important statements on this 
bankruptcy bill today.
  Mr. Speaker, we all agree that every person in our country must be 
financially responsible, that we take responsibility for our action, 
for our debts and we do so in a way that is honorable.
  In the course of our country's history, our economy, our government 
has always provided for people to get a fresh start under the 
bankruptcy law to enable them to go forward to make a contribution to 
our economy and our society. Recognizing that tradition and recognizing 
the appreciation that we have for personal responsibility, I 
regretfully rise in opposition to this bill because this bankruptcy 
bill seeks to squeeze even more money for credit card companies from 
the most hard-pressed Americans.
  It would bind hardworking and honest Americans to credit card 
companies and other lenders as modern day indentured servants. I think 
it is our duty to speak up for those who would be hurt by this bill.
  This duty is paramount because we have been shut out of the process 
here, the legislative process to bring any amendments to the floor. 
That would have been an amendment on identity theft, which this week's 
news accounts demonstrate there are real problems of identity theft, 
and an amendment was rejected.
  We tried to take a legislative course of action in our previous 
question, which is a technicality, is a procedure here on the floor; 
but we were not able to get any Republican support to address the issue 
of identity theft and how individuals can be protected from identity 
theft under the bankruptcy bill.
  According to the sponsors of this bill, 1.6 million Americans who 
filed for bankruptcy last year are deadbeats who are avoiding their 
debts. That is really the essence of what they are saying with this 
bill. Proponents claim that there is a bankruptcy tax in which honest 
Americans are footing the bill for abusive users of credit cards.
  We should be vigilant for any abuse of any legal process. There is no 
evidence, however, of widespread bankruptcy abuse. In fact, a recent 
study indicated that 45 percent of those filing for bankruptcy had 
skipped a needed doctor's visit, 25 percent had utilities shut off, 20 
percent went without food. They are not using this money that they 
should be paying in for luxuries. They just simply do not have money to 
survive.
  As a distinguished group of law professors wrote: ``Some people do 
abuse the bankruptcy system, but the overwhelming majority of people in 
bankruptcy are in financial distress as a result of job loss, medical 
expense, divorce, or a combination of those causes. This bill attempts 
to kill a mosquito with a shotgun.''
  I have a problem with the bill on several counts as to what is 
contained in the bill. The bankruptcy bill fails miserably, I believe, 
on its merits. It employs, for the first time, a stringent and 
unworkable means test that limits access to chapter 7 and forces 
individuals into payment plans that will fail.
  It frustrates a key goal of the bankruptcy code, to give individuals 
who suffer economic misfortunes through no fault of their own a fresh 
start. That is an American tradition.
  The bill neglects the real causes of bankruptcies, as I just 
mentioned, medical concerns, divorce, in some cases death, while 
rewarding irresponsible corporate behavior.
  It lets those who truly abuse and game the bankruptcy system, the 
wealthy debtors who shield their assets in asset trusts and homestead 
exemptions, keep their loopholes and get off, in some cases, scot-free.
  It is wholly unnecessary. Current law already allows a bankruptcy 
judge to deny a discharge in chapter 7 to prevent abuses. That is why 
bankruptcy judges are uniformly opposed to the bill.
  I just would like to quote Keith Lundin, a Federal bankruptcy judge 
in Tennessee and an authority on bankruptcy repayment plans. Judge 
Lundin says, ``The folks who brought you `those who can pay, should 
pay' are pulling the stuffing out of the very part of the bankruptcy 
law where debtors do pay.'' He says, ``The advocates aren't trying to 
fix the bankruptcy law; they're trying to mess it up so much that 
nobody can use it.''
  They interviewed dozens of bankruptcy judges, whose names have been 
suggested by proponents and opponents of this legislation, for their 
standing on this issue, to speak out; and the reasons why these judges 
are opposed are several reasons.
  One is the judges now have broad discretion to determine how much a 
debtor must pay to creditors and on what schedule, and the schedule is 
very important, after declaring bankruptcy under what is known as 
chapter 13; but under the legislation, that discretion would be 
substantially curtailed.
  The new legislation would bar courts from reducing the amount that 
many debtors would have to repay on their cars and other big-ticket 
items. It would also extend the length of time people would have to 
make repayments and impose repayment schedules that critics describe as 
so onerous that debtors would fall behind. It just prescribes that they 
would.
  The bankruptcy judges say the result would be the collapse of more 
repayment plans, forcing debtors out of bankruptcy court protection. 
Creditors could then force debtors to pay the full amount owed, not the 
reduced amount, and by moving to repossess their belongings. Many 
people would have to pay creditors far into the future and thus be 
unable to restart their economic lives, a long-held aim of bankruptcy.
  I will submit this article from the Los Angeles Times for the Record 
at this point.

              [From the Los Angeles Times, Mar. 29, 2005]

           Judges Say Overhaul Would Weaken Bankruptcy System

                         (By Peter G. Gosselin)

       For nearly a decade, proponents of overhauling the nation's 
     bankruptcy laws have described their aim as ensuring that 
     Americans who enter bankruptcy court do not escape bills that 
     they can truly afford to pay.
       But only weeks before Congress is likely to approve the 
     long-sought overhaul, bankruptcy judges across the country 
     warn that the measure would undermine the very section of the 
     law under which debtors are now repaying more than $3 billion 
     annually to their creditors.

[[Page 6472]]

       These judges say the effect of the overhaul would be to 
     discourage most forms of personal bankruptcy, which--for 
     nearly two centuries has served as a safety net for people in 
     economic trouble.
       ``The folks who brought you `those who can pay, should pay' 
     are pulling the stuffing out of the very part of the 
     bankruptcy law where debtors do pay,'' said Keith Lundin, a 
     federal bankruptcy judge in the eastern district of Tennessee 
     in Nashville and an authority on bankruptcy repayment plans.
       ``The advocates aren't trying to fix the bankruptcy law; 
     they're trying to mess it up so much that nobody can use 
     it,'' Lundin charged.
       In interviews, a dozen current or former bankruptcy judges, 
     whose names were suggested by proponents as well as opponents 
     of the overhaul legislation, described what they saw as the 
     problems that could result from key provisions of the new 
     measure.
       Judges now have broad discretion to determine how much a 
     debtor must pay to creditors and on what schedule after 
     declaring bankruptcy under what is known as Chapter 13. But 
     under the legislation, that discretion would be substantially 
     curtailed.
       The new legislation would bar courts from reducing the 
     amount that many debtors would have to repay on their cars 
     and other big-ticket items. It would also extend the length 
     of time people would have to make repayments and impose 
     repayment schedules that critics describe as so onerous that 
     many debtors would fall behind.
       The result, the judges said, would be the collapse of more 
     repayment plans, forcing debtors out of bankruptcy court 
     protection. Creditors then could try to force debtors to pay 
     the full amount owed--not the reduced amount a judge had 
     ordered--by moving to repossess their belongings or bringing 
     legal actions. Many people would have to pay creditors far 
     into the future, the critics said, and thus be unable to 
     restart their economic lives, a long-held aim of bankruptcy.
       Repayment plans ``are pretty fragile documents to begin 
     with, but they're going to get a lot more fragile under these 
     conditions,'' said Ronald Barliant, a former bankruptcy judge 
     from the northern district of Illinois in Chicago.
       ``It's going to take away a lot of the incentives'' for 
     people to enter repayment plans, said David W. Houston III, a 
     bankruptcy judge from the northern district of Mississippi in 
     Aberdeen.
       Overhaul proponents respond to such criticisms by 
     contending that the current bankruptcy system is rife with 
     fraud and abuse and is stacked against creditors. Many 
     proponents are deeply scornful of bankruptcy judges, who they 
     charge have let the system spin out of control.
       ``They're part of the . . . problem,'' declared Jeff 
     Tassey, a Washington lobbyist who heads the coalition of 
     credit card companies, banks and others that has spearheaded 
     the overhaul drive.
       ``They're not real judges, not Article 3 judges,'' Tassey 
     said. He was referring to Article 3 of the U.S. Constitution, 
     under which judges in the regular federal court system are 
     appointed for life. Bankruptcy judges are appointed under 
     Article 1 to 14-year renewable terms.
       As matters now stand, financially distressed Americans 
     generally have two options in bankruptcy. They can file a 
     Chapter 7 case, in which they forfeit most of their assets in 
     return for cancellation of most debts and a debt-free ``fresh 
     start.'' Or, they can file a Chapter 13 case, in which they 
     get to keep most of their property but must agree to repay a 
     portion of their debts over a period of time.
       Some advocates for changing the system have contended that 
     these provisions should be rewritten to address a kind of 
     moral laxness in bankruptcy practices.
       ``When you have seen a system that has gone from a few 
     hundred thousand cases to 1.5 million last year--most of that 
     increase during the fat years of the Clinton administration--
     you must conclude something is not right,'' said Edith H. 
     Jones, a federal appellate court judge in Houston who served 
     on a blue-ribbon panel to review bankruptcy law in the 1990s 
     and is widely believed to be seen as on President Bush's 
     short list for a position on the Supreme Court.
       ``People have been encouraged to see bankruptcy as an easy 
     way out of uncomfortable situations,'' Jones said.
       Overhaul proponents have also said that the new measure is 
     so narrowly cast that it would affect no more than 15 pecent 
     of bankruptcy filers.
       The legislation would require courts to check whether 
     people make more than their state's median income and can 
     pass a ``means test,'' which gauges whether they have enough 
     to cover allowable living expenses, pay secured creditors 
     such as mortgage lenders and still have some left over for 
     unsecured creditors such as credit card companies. Those who 
     are above the median and have the means would no longer be 
     allowed to file under Chapter 7 and wipe out most of their 
     debts, but would have to file Chapter 13 cases and agree to a 
     repayment plan.
       Nearly all congressional Republicans, together with many 
     Democrats, support the overhaul measure, which the president 
     has warmly endorsed and said he would sign. The Senate passed 
     the measure this month in a 74-25 vote. Approval from the 
     House is expected next month.
       However, largely overlooked in the debate has been a series 
     of proposed changes in Chapter 13 that critics say would make 
     it harder for debtors to stick with repayment plans--the 
     opposite effect of what supporters say they want.
       Critics, including bankruptcy judges in California, North 
     Carolina, Massachusetts, and Florida say there is nowhere 
     near the fraud in the system that advocates claim.
       They cite a study by the nonpartisan American Bankruptcy 
     Institute, which concludes that only about 3 percent of those 
     who wipe out their debts in Chapter 7 could afford to repay a 
     portion in Chapter 13. Lobbyists for the credit card and 
     banking industries estimate that 10 percent or more would be 
     able to pay.
       Those opposed to the changes contend that most people who 
     file for bankruptcy are truly distressed finanacially--and 
     say the success that courts have in collecting as much as 
     they do under Chapter 13 shows the system is working.
       According to figures from the U.S. Trustee Program, a 
     Justice Department agency, Chapter 13 debtors repaid almost 
     $3.6 billion in 2003, the latest year for which figures are 
     available.
       But critics say the courts' success with Chapter 13 is 
     threatened by several little-noticed elements of the proposed 
     legislation:
       Under current law, those who file under Chapter 13 must 
     repay car loans only up to the amount the car is worth at the 
     time they enter court, or they risk losing the vehicle. A 
     debtor who bought a $24,000 sport utility vehicle and filed 
     for bankruptcy two years later, for example, might have to 
     pay far less because the vehicle had depreciated.
       By reducing what debtors owe auto lenders in this fashion, 
     the law ensures more money for other creditors. And, 
     according to bankruptcy experts, it means that auto lenders 
     are treated on an equal footing with other ``secured'' 
     creditors--they are promised repayment only to the value of 
     the item they could repossess.
       Under the new measure, debtors would have to pay the full 
     amount on any vehicle purchased within 2\1/2\ years of 
     bankruptcy, or risk losing the vehicle. The change may seem 
     minor to an outsider, but not to Chapter 13 debtors or 
     bankruptcy judges. ``That's going to be a big deal,'' 
     predicted A. Thomas Small, a bankruptcy judge for the eastern 
     district of North Carolina in Raleigh. It would mean that 
     many repayment plans that work now would fail under the new 
     measure, he said.
       Under current law, the debtor and his lawyer work out a 
     repayment plan that they think represents the most the debtor 
     can pay and still cover basic living expenses. A bankruptcy 
     judge must eventually approve the plan, which usually has 
     reduced or stretched-out payments to creditors. In the 
     meantime, the debtor immediately begins making payments to a 
     court-appointed trustee.
       Under the legislation, many debtors would have to make full 
     payments on such big-ticket items as houses, furniture and 
     appliances. They would have to make those payments directly 
     to the lenders. And at the same time, they would have to 
     start paying the court-appointed trustee for debts to 
     doctors, credit card companies and other unsecured creditors.
       Many bankruptcy judges say debtors who come before them 
     often do not have enough income to make both sets of 
     payments.
       The result, they warned, would be that many debtors' plans 
     would quickly fail.
       Under current bankruptcy law, two guiding principles are 
     that debtors should not be required to repay indefinitely, or 
     they effectively become indentured servants to their 
     creditors, and that they should eventually be given a debt-
     free ``fresh start'' on their economic lives.
       The legislation would require debtors to agree to repayment 
     plans with a five-year minimum repayment schedule, up from 
     the current three-year minimum. It would also boost the 
     chances that debtors would be required to continue paying 
     some debts even after a plan's successful completion.
       Todd Zywicki, a law professor at George Mason University in 
     Virginia, said the shift away from the ``fresh start'' 
     philosophy is justified because another bedrock American 
     value--that people who incur debts should pay them--is being 
     sullied under the current system.
       But many bankruptcy judges and independent experts warn 
     that equally compelling values would be lost if the proposed 
     measure becomes law.
       Practically, they warn, debtors who would no longer qualify 
     for Chapter 7 and fail to complete Chapter 13 repayment plans 
     would either have to keep paying creditors indefinitely or 
     drop out.
       ``If you're confronted with a mountain of debt and have no 
     hope of getting out from under it, you're either going to go 
     underground or turn to crime,'' said Kenneth N. Klee, a 
     former Republican congressional staffer who was one of the 
     chief authors of the last major bankruptcy law change in 1978 
     and now teaches law at UCLA.
       More broadly, say judges and others, the ability to start 
     over after running into financial problems should not be 
     discounted.

[[Page 6473]]

       ``Loads of people have filed bankruptcy--Mark Twain, Buster 
     Keaton, Walt Disney,'' said Lundin, the Nashville-based 
     bankruptcy judge. ``Bankruptcy is a very American safety net.
       ``It's part and parcel of the American dream.''

  Mr. Speaker, while this bill fails to improve the bankruptcy system, 
the bill succeeds in being harsh, punitive and mean-spirited.
  The bill is particularly harsh on women who are often the primary 
care givers for their children or their parents and are the largest 
single group in bankruptcy; on older Americans who are the fastest 
growing group in bankruptcy due to medical costs; and on children. 
Parents seeking child support will compete with credit card companies 
and other lenders in State courts, but will have little protection and 
fewer resources than the large credit card companies they are up 
against.
  Finally, the bill does a disservice to those who serve our Nation, 
especially our National Guard troops and Reservists who are not 
protected by an amendment passed by the other body.
  National Guard and Reservists make up nearly 40 percent of those 
serving in the Iraqi theater. They often leave behind small businesses 
and jobs and incur debt, but they do not have the benefits and services 
offered to active duty Armed Forces.
  This bill would not stop abusive creditors who are stalking down 
military families while their loved ones are serving our Nation bravely 
and heroically.
  I would hope that our Republican colleagues would join us in a 
bipartisan way to support our motion to recommit that would give some 
opportunities for the National Guard not to be treated this way under 
the bankruptcy bill.
  As for the bill, instead of addressing real causes of bankruptcy, 
this bill rewards irresponsible corporate behavior and fattens the 
already large profits of the credit card industry.
  While bankruptcy filings have increased 17 percent in the last 8 
years, credit card profits have increased more than 160 percent, from 
$11 billion to more than $30 billion. There are now 5 billion credit 
card solicitations a year stuffed into our mail boxes and many targeted 
at teenagers with no jobs, no income, no visible means of support to 
pay these credit card bills.
  It is an industry with little oversight and loose underwriting that 
charges enormous fees and unfair interest payments. The legislation 
does nothing to address these failings. In fact, the other body 
rejected an amendment to tell customers how much it would cost in 
additional interest if they make only minimum payments on their credit 
card bills.
  For these and other reasons, Mr. Speaker, I sadly oppose this bill. I 
say sadly because this is an area where there should not be any major 
disagreement. If the point is to honor a tradition in our country where 
people are entitled to a fresh start so they can begin contributing 
back to our economy and to our society, then we should uphold that; and 
if people are abusing the system, existing law already covers that.
  Instead, we have a situation where it is mean and harsh to those who 
can least afford to pay back and gives opportunity to the wealthiest, 
the wealthiest, and corporate abusers of the system.
  With that, Mr. Speaker, I am giving my reasons for why I oppose the 
bill.

                          ____________________