[House Report 105-540]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-540
_______________________________________________________________________


 
                     BANKRUPTCY REFORM ACT OF 1998

                                _______
                                

  May 18, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3150]

    The Committe on the Judiciary, to whom was referred the 
bill (H.R. 3150) to amend title 11 of the United States Code, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................    53
Background and Need for Legislation..............................    54
Hearings.........................................................    60
Committee Consideration..........................................    63
Vote of the Committee............................................    63
New Budget Authority and Tax Expenditures........................    68
Committee Cost Estimate..........................................    68
Constitutional Authority Statement...............................    69
Section-by-Section Analysis and Discussion.......................    69
Agency Views.....................................................   125
Changes in Existing Law Made by the Bill, as Reported............   144
Dissenting Views.................................................   229

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Bankruptcy Reform 
Act of 1998''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs-Based Bankruptcy

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

             Subtitle B--Adequate Protections for Consumers

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

         Subtitle C--Adequate Protections for Secured Creditors

Sec. 121. Discouraging bad faith repeat filings.
Sec. 122. Definition of household goods.
Sec. 123. Debtor retention of personal property security.
Sec. 124. Relief from stay when the debtor does not complete intended 
surrender of consumer debt collateral.
Sec. 125. Giving secured creditors fair treatment in chapter 13.
Sec. 126. Prompt relief from stay in individual cases.
Sec. 127. Stopping abusive conversions from chapter 13.
Sec. 128. Restraining abusive purchases on secured credit.
Sec. 129. Fair valuation of collateral.
Sec. 130. Protection of holders of claims secured by debtor's principal 
residence.
Sec. 131. Aircraft equipment and vessels.

        Subtitle D--Adequate Protections for Unsecured Creditors

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

              Subtitle E--Adequate Protections for Lessors

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

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

Sec. 171. Extend period between bankruptcy discharges.

                         Subtitle G--Exemptions

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

                TITLE II--BUSINESS BANKRUPTCY PROVISIONS

                     Subtitle A--General Provisions

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

                    Subtitle B--Specific Provisions

                  Chapter 1--Small Business Bankruptcy

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

                  Chapter 2--Single Asset Real Estate

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

               TITLE III--MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 301. Petition and proceedings related to petition.

                  TITLE IV--BANKRUPTCY ADMINISTRATION

                     Subtitle A--General Provisions

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

                      Subtitle B--Data Provisions

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

                        TITLE V--TAX PROVISIONS

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

            TITLE VI--ANCILLARY AND OTHER CROSS-BORDER CASES

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

                        TITLE VII--MISCELLANEOUS

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

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs-Based Bankruptcy

SEC. 101. NEEDS-BASED BANKRUPTCY.

  Title 11, United States Code, is amended--
          (1) in section 101 as follows:
                  (A) by inserting after paragraph (10) the following:
          ``(10A) `current monthly total income' means the average 
        monthly income from all sources derived which the debtor, or in 
        a joint case, the debtor and the debtor's spouse, receive 
        without regard to whether it is taxable income, in the six 
        months preceding the date of determination, and includes any 
        amount paid by anyone other than the debtor or, in a joint 
        case, the debtor and the debtor's spouse on a regular basis to 
        the household expenses of the debtor or the debtor's dependents 
        and, in a joint case, the debtor's spouse if not otherwise a 
        dependent;''; and
                  (B) by inserting after paragraph (40) the following:
          ``(40A) `national median family income' and `national median 
        household income for 1 earner' shall mean during any calendar 
        year, the national median family income and the national median 
        household income for 1 earner which the Bureau of the Census 
        has reported as of January 1 of such calendar year for the most 
        recent previous calendar year;'';
          (2) in section 104(b)(1) by striking ``109(e)'' and inserting 
        ``subsections (b), (e), and (h) of section 109'';
          (3) in section 109(b)--
                  (A) in paragraph (2) by striking ``or'' at the end;
                  (B) in paragraph (3) by striking the period and 
                inserting ``; or''; and
                  (C) by adding at the end the following:
          ``(4) an individual or, in a joint case, an individual and 
        such individual's spouse, who have income available to pay 
        creditors as determined under subsection (h).'';
          (4) by adding at the end of section 109 the following:
  ``(h)(1) An individual or, in a joint case, an individual and such 
individual's spouse, have income available to pay creditors if the 
individual, or, in a joint case, the individual and the individual's 
spouse combined, as of the date of the order for relief, have--
          ``(A) current monthly total income of not less than the 
        highest national median family income reported for a family of 
        equal or lesser size or, in the case of a household of 1 
        person, of not less than the national median household income 
        for 1 earner, as of the date of the order for relief;
          ``(B) projected monthly net income greater than $50; and
          ``(C) projected monthly net income sufficient to repay twenty 
        percent or more of unsecured nonpriority claims during a five-
        year repayment plan.
  ``(2) Projected monthly net income shall be sufficient under 
paragraph (1)(C) if, when multiplied by 60 months, it equals or exceeds 
20 percent of the total amount scheduled as payable to unsecured 
nonpriority creditors.
  ``(3) `Projected monthly net income' means current monthly total 
income less--
          ``(A) the expense allowances under the applicable National 
        Standards, Local Standards and Other Necessary Expenses 
        allowance (excluding payments for debts) for the debtor, the 
        debtor's dependents, and, in a joint case, the debtor's spouse 
        if not otherwise a dependent, in the area in which the debtor 
        resides as determined under the Internal Revenue Service 
        financial analysis for expenses in effect as of the date of the 
        order for relief;
          ``(B) the average monthly payment on account of secured 
        creditors, which shall be calculated as the total of all 
        amounts scheduled as contractually payable to secured creditors 
        in each month of the 60 months following the date of the 
        petition by the debtor, or, in a joint case, by the debtor and 
        the debtor's spouse combined, and dividing that total by 60 
        months; and
          ``(C) the average monthly payment on account of priority 
        creditors, which shall be calculated as the total amount of 
        debts entitled to priority, reasonably estimated by the debtor 
        as of the date of the petition, and dividing that total by 60 
        months.
  ``(4) In the event that the debtor establishes extraordinary 
circumstances that require allowance for additional expenses or 
adjustment of current monthly income, projected monthly net income for 
purposes of this section shall be the amount calculated under paragraph 
(3) less such additional expenses or income adjustment as such 
extraordinary circumstances require.
          ``(A) This paragraph shall not apply unless the debtor files 
        with the petition--
                  ``(i) a written statement that this paragraph applies 
                in determining the debtor's eligibility for relief 
                under chapter 7 of this title;
                  ``(ii) if adjustment of current monthly income is 
                claimed, an explanation of what income has been lost in 
                the 6 months preceding the date of determination and 
                any replacement income that has been offered or 
                secured, or is expected, and an itemization of such 
                lost and replacement income;
                  ``(iii) if allowance for additional expenses is 
                claimed, a list itemizing each additional expense which 
                exceeds the expenses allowances provided under 
                paragraph (3)(A);
                  ``(iv) a detailed description of the extraordinary 
                circumstances that explain why each loss of income 
                described under clause (ii) will not be replaced or 
                each additional expense itemized under clause (iii) 
                requires allowance; and
                  ``(v) a sworn statement signed by the debtor and, if 
                the debtor is represented by counsel, by the debtor's 
                attorney, that the information required under this 
                paragraph is true and correct.
          ``(B) Until the trustee or any party in interest objects to 
        the debtor's statement that this paragraph applies and the 
        court rejects or modifies the debtor's statement, the projected 
        monthly net income in the debtor's statement shall be the 
        projected monthly net income for the purposes of this section. 
        If an objection is filed with the court within 60 days after 
        the debtor has provided all the information required under 
        subsections (a)(1) and (c)(1)(A) of section 521, the court, 
        after notice and hearing, shall determine whether such 
        extraordinary circumstances exist and shall establish the 
        amount of the additional expense allowance, if any. The burden 
        of proving such extraordinary circumstances shall be on the 
        debtor.'';
          (5) in section 704--
                  (A) by striking ``and'' at the end of paragraph (8);
                  (B) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(10) with respect to an individual debtor, review all 
        materials provided by the debtor under subsections (a)(1) and 
        (c)(1) of section 521, investigate and verify the debtor's 
        projected monthly net income and within 30 days after such 
        materials are so provided--
                  ``(A) file a report with the court as to whether the 
                debtor qualifies for relief under this chapter under 
                section 109(b)(4); and
                  ``(B) if the trustee determines that the debtor does 
                not qualify for such relief, the trustee shall provide 
                a copy of such report to the parties in interest.'';
          (6) in section 1302(b)--
                  (A) in paragraph (4) by striking ``and'' at the end;
                  (B) in paragraph (5) by striking the period and 
                inserting a semicolon; and
                  (C) by adding at the end the following:
          ``(6) investigate and verify the debtor's monthly net income 
        and other information provided by the debtor pursuant to 
        sections 521 and 1322, and pursuant to section 111, if 
        applicable; and
          ``(7) file annual reports with the court, with copies to 
        holders of claims under the plan, as to whether a modification 
        of the amount paid creditors under the plan is appropriate 
        because of changes in the debtor's monthly net income.''.

SEC. 102. ADEQUATE INCOME SHALL BE COMMITTED TO A PLAN THAT PAYS 
                    UNSECURED CREDITORS.

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

``Sec. 111. Adjustment to monthly net income

  ``(a) Monthly net income for purposes of a plan under chapter 13 of 
this title shall be adjusted under this section when the debtor's 
extraordinary circumstances require adjustment as determined herein. 
Under this section, monthly net incomeshall be determined by 
subtracting therefrom such loss of income or additional expenses as the 
debtor's extraordinary circumstances require as determined under this 
section. This section shall not apply unless--
          ``(1) the debtor files with the court and, in a case in which 
        a trustee has been appointed, with the trustee at the times 
        required in subsection (b) a statement of extraordinary 
        circumstances as follows--
                  ``(A) a written statement that this section applies 
                in determining the debtor's monthly net income;
                  ``(B) if applicable, an explanation of what income 
                has been lost in the six months preceding the date of 
                determination and any replacement income which has been 
                secured or is expected, and an itemization of such lost 
                and replacement income;
                  ``(C) if applicable, a list itemizing each additional 
                expense which exceeds the expense allowance provided in 
                determining monthly net income under section 101(39A);
                  ``(D) if applicable, a detailed description of the 
                extraordinary circumstances which explains why each of 
                the additional expenses itemized under paragraph (C) 
                requires allowance; and
                  ``(E) a sworn statement signed by the debtor and, if 
                the debtor is represented by counsel, by the debtor's 
                attorney, of the amount of monthly net income that the 
                debtor has pursuant to this subsection and that the 
                information provided under this subsection is true and 
                correct; and
          ``(2) until the trustee or any party in interest objects to 
        the debtor's request that this section be applied and the court 
        rejects or modifies the debtor's statement, the monthly net 
        income in the debtor's statement shall be the monthly net 
        income for the purposes of the debtor's plan. If an objection 
        is filed with the court within the times provided in subsection 
        (b), the court, after notice and hearing, shall determine 
        whether such extraordinary circumstances asserted by the debtor 
        exist and establish the amount of the loss of income and such 
        additional expense allowance, if any. The burden of proving 
        such extraordinary circumstances and the amount of the loss of 
        income and the additional expense allowance, if any, shall be 
        on the debtor. The court may award to the party that prevails 
        with respect to such objection a reasonable attorney's fee and 
        costs incurred by the prevailing party in connection with such 
        objection if the court finds that the position of the 
        nonprevailing party was not substantially justified, but the 
        court shall not award such fee or such costs if special 
        circumstances make the award unjust.
  ``(b) For the purposes of chapter 13 of this title, the statement of 
extraordinary circumstances shall be filed with the court and served on 
the trustee on or before 45 days before each anniversary of the 
confirmation of the plan in order to be applicable during the next year 
of the plan. Any objection thereto shall be filed 30 days after the 
statement is filed with the trustee. Whenever a statement is timely 
filed with the trustee, the trustee shall give notice to creditors that 
such statement has been filed and the amount of monthly net income 
stated therein within 15 days of receipt of the statement.'';
          (4) in section 1322(a)--
                  (A) by striking ``and'' at the end of paragraph (2);
                  (B) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(4) state, under penalties of perjury, the amount of 
        monthly net income, which may be as adjusted under section 111, 
        if applicable, of this title and the amount of monthly net 
        income which will be paid per month to unsecured nonpriority 
        creditors under the plan.''; and
          (5) by amending section 1325(b)(1)(B) to read as follows:
          ``(B) the plan provides--
                  ``(i) that payments to unsecured nonpriority 
                creditors who are not insiders shall equal or exceed 
                $50 in each month of the plan;
                  ``(ii) that during the applicable commitment period 
                beginning on the date that the first payment is due 
                under the plan, the total amount of monthly net income 
                received by the debtor shall be paid to unsecured 
                nonpriority creditors under the plan less only payments 
                pursuant to section 1326(b); the `applicable commitment 
                period' shall be not less than 5 years if the debtor's 
                total current monthly income is not less than the 
                highest national median family income reported for a 
                family of equal or lesser size or, in the case of a 
                household of 1 person, is not less than the national 
                median household income for 1 earner, as of the date of 
                confirmation of the plan and shall be not less than 3 
                years if the debtor's total current monthly income is 
                less than the highest national median family income 
                reported for a family of equal or lesser size or, in 
                the case of a household of 1 person, is less than the 
                national median household income for 1 earner, as of 
                the date of confirmation of the plan;
                  ``(iii) that the amount payable to each class of 
                unsecured nonpriority claims under the plan shall be 
                increased or decreased during the plan proportionately 
                to the extent the debtor's monthly net income during 
                the plan increases or decreases as reasonably 
                determined by the trustee, subject to section 111 of 
                this title, no less frequently than as of each 
                anniversary of the confirmation of the plan based on 
                monthly net income as of 45 days before such 
                anniversary; and
                  ``(iv) nothing in subparagraph (i) or (ii) shall 
                prevent the payment of obligations described in section 
                507(a)(7) at the times provided for in the plan, and 
                the plan shall specify how payments to other creditors 
                under subparagraph (ii) will be accordingly 
                adjusted.''; and
          (6) by striking section 1325(b)(2).

SEC. 103. DEFINITION OF INAPPROPRIATE USE.

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

SEC. 104. DEBTOR PARTICIPATION IN CREDIT COUNSELING PROGRAM.

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

             Subtitle B--Adequate Protections for Consumers

SEC. 111. NOTICE OF ALTERNATIVES.

  (a) Section 342(b) of title 11, United States Code, is amended to 
read as follows:
  ``(b)(1) Before the commencement of a case under this title by an 
individual whose debts are primarily consumer debts, the individual 
shall be given or obtain (as required to be certified under section 
521(a)(1)(B)(viii)) a written notice that is prescribed by the United 
States trustee for the district in which the petition is filed pursuant 
to section 586 of title 28 and that contains the following:
          ``(A) A brief description of chapters 7, 11, 12 and 13 of 
        this title and the general purpose, benefits, and costs of 
        proceeding under each of such chapters.
          ``(B) A brief description of services that may be available 
        to the individual from an independent nonprofit debt 
        counselling service.
          ``(C) The name, address, and telephone number of each 
        nonprofit debt counselling service (if any)--
                  ``(i) with an office located in the district in which 
                the petition is filed; or
                  ``(ii) that offers toll-free telephone communication 
                to debtors in such district.
  ``(2) Any such nonprofit debt counselling service that registers with 
the clerk of the bankruptcy court on or before December 10 of the 
preceding year shall be included in such list unless the chief 
bankruptcy judge of the district, after notice to the debt counselling 
service and the United States trustee and opportunity for a hearing, 
for good cause, orders that such debt counselling service shall not be 
so listed.
  ``(3) The clerk shall make such notice available to individuals whose 
debts are primarily consumer debts.''.
  (b) Section 586(a) of title 28, United States Code, is amended--
          (1) in paragraph (5) by striking ``and'' at the end;
          (2) in paragraph (6) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(7) on or before January 1 of each calendar year, and also 
        within 30 days of any change in the nonprofit debt counselling 
        services registered with the bankruptcy court, prescribe and 
        make available on request the notice described in section 
        342(b)(1) of title 11 for each district included in the 
        region.''.

SEC. 112. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.

  (a) Development of Financial Management and Training Curriculum and 
Materials.--The Director of the Executive Office for United States 
Trustees (in this section referred to as the ``Director'') shall 
consult with a wide range of individuals who are experts in the field 
of debtor education, including trustees who are appointed under chapter 
13 of title 11 of the United States Code and who operate financial 
management education programs for debtors, and shall develop a 
financial management training curriculum and materials that can be used 
to educate individual debtors on how to better manage their finances.
  (b) Test--(1) The Director shall select 3 judicial districts of the 
United States in which to test the effectiveness of the financial 
management training curriculum and materials developed under subsection 
(a).
  (2) For a 1-year period beginning not later than 60 days after the 
date of the enactment of this Act, such curriculum and materials shall 
be made available by the Director, directly or indirectly, on request 
to individual debtors in cases filed in such 1-year period under 
chapter 7 or 13 of title 11 of the United States Code.
  (3) The bankruptcy courts in each of such districts may require 
individual debtors in such cases to undergo such financial management 
training as a condition to receiving a discharge in such case.
  (c) Evaluation.--(1) During the 1-year period referred to in 
subsection (b), the Director shall evaluate the effectiveness of--
          (A) the financial management training curriculum and 
        materials developed under subsection (a); and
          (B) a sample of existing consumer education programs such as 
        those described in the Report of the National Bankruptcy Review 
        Commission (October 20, 1997) that are representative of 
        consumer education programs carried out by the credit industry, 
        by trustees serving under chapter 13 of title 11 of the United 
        States Code, and by consumer counselling groups.
  (2) Not later than 3 months after concluding such evaluation, the 
Director shall submit a report to the Speaker of the House of 
Representatives and the President pro tempore of the Senate, for 
referral to the appropriate committees of the Congress, containing the 
findings of the Director regarding the effectiveness of such 
curriculum, such materials, and such programs.

SEC. 113. DEFINITIONS.

  (a) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (3) the following:
          ``(3A) `assisted person' means any person whose debts consist 
        primarily of consumer debts and whose non-exempt assets are 
        less than $150,000;'';
          (2) by inserting after paragraph (4) the following:
          ``(4A) `bankruptcy assistance' means any goods or services 
        sold or otherwise provided to an assisted person with the 
        express or implied purpose of providing information, advice, 
        counsel, document preparation or filing, or attendance at a 
        creditors' meeting or appearing in a proceeding on behalf of 
        another or providing legal representation with respect to a 
        proceeding under this title;''; and
          (3) by inserting after paragraph (12A) the following:
          ``(12B) `debt relief counselling agency' means any person who 
        provides any bankruptcy assistance to an assisted person in 
        return for the payment of money or other valuable 
        consideration, or who is a bankruptcy petition preparer 
        pursuant to section 110 of this title, but does not include any 
        person that is any of the following or an officer, director, 
        employee or agent thereof--
                  ``(A) any nonprofit organization which is exempt from 
                taxation under section 501(c)(3) of the Internal 
                Revenue Code of 1986;
                  ``(B) any creditor of the person to the extent the 
                creditor is assisting the person to restructure any 
                debt owed by the person to the creditor; or
                  ``(C) any depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) or any 
                Federal credit union or State credit union (as those 
                terms are defined in section 101 of the Federal Credit 
                Union Act), or any affiliate or subsidiary of such a 
                depository institution or credit union;''.
  (b) Conforming Amendment.--In section 104(b)(1) by inserting 
``101(3),'' after ``sections''.

SEC. 114. DISCLOSURES.

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

``Sec. 526. Disclosures

  ``(a) A debt relief counselling agency providing bankruptcy 
assistance to an assisted person shall provide the following notices to 
the assisted person:
          ``(1) the written notice required under section 342(b)(1) of 
        this title; and
          ``(2) to the extent not covered in the written notice 
        described in paragraph (1) of this section and no later than 
        three business days after the first date on which a debt relief 
        counselling agency first offers to provide any bankruptcy 
        assistance services to an assisted person, a clear and 
        conspicuous written notice advising assisted persons of the 
        following--
                  ``(A) all information the assisted person is required 
                to provide with a petition and thereafter during a case 
                under this title must be complete, accurate and 
                truthful;
                  ``(B) all assets and all liabilities must be 
                completely and accurately disclosed in the documents 
                filed to commence the case, and the replacement value 
                of each asset as defined in section 506 of this title 
                must be stated in those documents where requested after 
                reasonable inquiry to establish such value;
                  ``(C) current monthly total income, projected monthly 
                net income and, in a chapter 13 case, monthly net 
                income must be stated after reasonable inquiry; and
                  ``(D) that information an assisted person provides 
                during their case may be audited pursuant to this title 
                and that failure to provide such information may result 
                in dismissal of the proceeding under this title or 
                other sanction including, in some instances, criminal 
                sanctions.
  ``(b) A debt relief counselling agency providing bankruptcy 
assistance to an assisted person shall provide each assisted person at 
the same time as the notices required under subsection (a)(1) with the 
following statement, to the extent applicable, or one substantially 
similar. The statement shall be clear and conspicuous and shall be in a 
single document separate from other documents or notices provided to 
the assisted person:
  `` `IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM 
AN ATTORNEY OR BANKRUPTCY PETITION PREPARER
  `` `If you decide to seek bankruptcy relief, you can represent 
yourself, you can hire an attorney to represent you, or you can get 
help in some localities from a bankruptcy petition preparer who is not 
an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION 
PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR 
BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. 
Ask to see the contract before you hire anyone.
  `` `The following information helps you understand what must be done 
in a routine bankruptcy case to help you evaluate how much service you 
need. Although bankruptcy can be complex, many cases are routine.
  `` `Before filing a bankruptcy case, either you or your attorney 
should analyze your eligibility for different forms of debt relief made 
available by the Bankruptcy Code and which form of relief is most 
likely to be beneficial for you. Be sure you understand the relief you 
can obtain and its limitations. To file a bankruptcy case, documents 
called a Petition, Schedules and Statement of Financial Affairs, as 
well as in some cases a Statement of Intention need to be prepared 
correctly and filed with the bankruptcy court. You will have to pay a 
filing fee to the bankruptcy court. Once your case starts, you will 
have to attend the required first meeting of creditors where you may be 
questioned by a court official called a ``trustee'' and by creditors.
  `` `If you select a chapter 7 proceeding, you may be asked by a 
creditor to reaffirm a debt. You may want help deciding whether to do 
so.
  `` `If you select a chapter 13 proceeding in which you repay your 
creditors what you can afford over three to seven years, you may also 
want help with preparing your chapter 13 plan and with the confirmation 
hearing on your plan which will be before a bankruptcy judge.'
  `` `If you select another type of proceeding under the Bankruptcy 
Code other than chapter 7 or chapter 13, you will want to find out what 
needs to be done from someone familiar with that type of proceeding.
  `` `Your bankruptcy proceeding may also involve litigation. You are 
generally permitted to represent yourself in litigation in bankruptcy 
court, but only attorneys, not bankruptcy petition preparers, can 
represent you in litigation.'.
  ``(c) Except to the extent the debt relief counselling agency 
provides the required information itself after reasonably diligent 
inquiry of the assisted person or others so as to obtain such 
information reasonably accurately for inclusion on the petition, 
schedules or statement of financial affairs, a debt relief counselling 
agency providing bankruptcy assistance to an assisted person shall 
provide each assisted person at the time required for the notice 
required under subsection (a)(1) reasonably sufficient information 
(which may be provided orally or in a clear and conspicuous writing) to 
the assisted person on how to provide all the information the assisted 
person is required to provide under this title pursuant to section 521, 
including--
          ``(1) how to value assets at replacement value, determine 
        current monthly total income, projected monthly income and, in 
        a chapter 13 case, net monthly income, and related 
        calculations;
          ``(2) how to complete the list of creditors, including how to 
        determine what amount is owed and what address for the creditor 
        should be shown; and
          ``(3) how to determine what property is exempt and how to 
        value exempt property at replacement value as defined in 
        section 506 of this title.
  ``(d) A debt relief counselling agency shall maintain a copy of the 
notices required under subsection (a) of this section for two years 
after the later of the date on which the notice is given the assisted 
person.''.
  (b) Conforming Amendment.--The table of section for chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 525 the following:

``526. Disclosures.''.

SEC. 115. DEBTOR'S BILL OF RIGHTS.

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

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

  ``(a) A debt relief counselling agency shall--
          ``(1) no later than three business days after the first date 
        on which a debt relief counselling agency provides any 
        bankruptcy assistance services to an assisted person, execute a 
        written contract with the assisted person specifying clearly 
        and conspicuously the services the agency will provide the 
        assisted person and the basis on which fees or charges will be 
        made for such services and the terms of payment, and give the 
        assisted person a copy of the fully executed and completed 
        contract in a form the person can keep;
          ``(2) disclose in any advertisement of bankruptcy assistance 
        services or of the benefits of bankruptcy directed to the 
        general public (whether in general media, seminars or specific 
        mailings, telephonic or electronic messages or otherwise) that 
        the services or benefits are with respect to proceedings under 
        this title, clearly and conspicuously using the following 
        statement: `We are a debt relief counselling agency. We help 
        people file Bankruptcy petitions to obtain relief under the 
        Bankruptcy Code.' or a substantially similar statement. An 
        advertisement shall be of bankruptcy assistance services if it 
        describes or offers bankruptcy assistance with a chapter 13 
        plan, regardless of whether chapter 13 is specifically 
        mentioned, including such statements as `federally supervised 
        repayment plan' or `Federal debt restructuring help' or other 
        similar statements which would lead a reasonable consumer to 
        believe that help with debts was being offered when in fact in 
        most cases the help available is bankruptcy assistance with a 
        chapter 13 plan; and
          ``(3) if an advertisement directed to the general public 
        indicates that the debt relief counselling agency provides 
        assistance with respect to credit defaults, mortgage 
        foreclosures, lease eviction proceedings, excessive debt, debt 
        collection pressure, or inability to pay any consumer debt, 
        disclose conspicuously in that advertisement that the 
        assistance is with respect to or may involve proceedings under 
        this title, using the following statement: ``We are a debt 
        relief counselling agency. We help people file Bankruptcy 
        petitions to obtain relief under the Bankruptcy Code.'' or a 
        substantially similar statement.
  ``(b) A debt relief counselling agency shall not--
          ``(1) fail to perform any service which the debt relief 
        counseling agency has told the assisted person or prospective 
        assisted person the agency would provide that person in 
        connection with the preparation for or activities during a 
        proceeding under this title;
          ``(2) make any statement, or counsel or advise any assisted 
        person to make any statement in any document filed in a 
        proceeding under this title, which is untrue or misleading or 
        which upon the exercise of reasonable care, should be known by 
        the debt relief counselling agency to be untrue or misleading;
          ``(3) misrepresent to any assisted person or prospective 
        assisted person, directly or indirectly, affirmatively or by 
        material omission, what services the debt relief counselling 
        agency can reasonably expect to provide that person, or the 
        benefits an assisted person may obtain or the difficulties the 
        person may experience if the person seeks relief in a 
        proceeding pursuant to this title; or
          ``(4) advise an assisted person or prospective assisted 
        person to incur more debt in contemplation of that person 
        filing a proceeding under this title or in order to pay an 
        attorney or bankruptcy petition preparer fee or charge for 
        services performed as part of preparing for or representing a 
        debtor in a proceeding under this title.''.
  (b) Conforming Amendment.--The table of section for chapter 5 of 
title 11, United States Code, as amended by section 114, is amended by 
inserting after the item relating to section 526, the following:

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

SEC. 116. ENFORCEMENT.

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

``Sec. 528. Debt relief counselling agency enforcement

  ``(a) Assisted Person Waivers Invalid.--Any waiver by any assisted 
person of any protection or right provided by or under section 526 or 
527 of this title shall be void and may not be enforced by any Federal 
or State court or any other person.
  ``(b) Noncompliance.--
          ``(1) Any contract between a debt relief counselling agency 
        and an assisted person for bankruptcy assistance which does not 
        comply with the requirements of section 526 or 527 of this 
        title shall be treated as void and may not be enforced by any 
        Federal or State court or by any other person.
          ``(2) Any debt relief counselling agency which has been 
        found, after notice and hearing, to have--
                  ``(A) failed to comply with any provision of section 
                526 or 527 with respect to a bankruptcy case or related 
                proceeding of an assisted person;
                  ``(B) provided bankruptcy assistance to an assisted 
                person in a case or related proceeding which is 
                dismissed or converted in lieu of dismissal under 
                section 707 of this title or because of a failure to 
                file bankruptcy papers, including papers specified in 
                section 521 of this title; or
                  ``(C) negligently or intentionally disregarded the 
                requirements of this title or the Federal Rules of 
                Bankruptcy Procedure applicable to such debt relief 
                counselling agency shall be liable to the assisted 
                person in the amount of any fees and charges in 
                connection with providing bankruptcy assistance to such 
                person which the debt relief counselling agency has 
                already been paid on account of that proceeding and if 
                the case has not been closed, the court may in addition 
                require the debt relief counselling agency to continue 
                to provide bankruptcy assistance services in the 
                pending caseto the assisted person without further fee 
or charge or upon such other terms as the court may order.
          ``(3) In addition to such other remedies as are provided 
        under State law, whenever the chief law enforcement officer of 
        a State, or an official or agency designated by a State, has 
        reason to believe that any person has violated or is violating 
        section 526 or 527 of this title, the State--
                  ``(A) may bring an action to enjoin such violation;
                  ``(B) may bring an action on behalf of its residents 
                to recover the actual damages of assisted persons 
                arising from such violation, including any liability 
                under paragraph (2); and
                  ``(C) in the case of any successful action under 
                subparagraph (A) or (B), shall be awarded the costs of 
                the action and reasonable attorney fees as determined 
                by the court.
          ``(4) The United States District Court for any district 
        located in the State shall have concurrent jurisdiction of any 
        action under subparagraph (A) or (B) of paragraph (3).
  ``(c) Relation to State Law.--This section and sections 526 and 527 
shall not annul, alter, affect or exempt any person subject to those 
sections from complying with any law of any State except to the extent 
that such law is inconsistent with those sections, and then only to the 
extent of the inconsistency.''.
  (b) Conforming Amendment.--The table of section for chapter 5 of 
title 11, United States Code, as amended by sections 114 and 115, is 
amended by inserting after the item relating to section 527, the 
following:

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

SEC. 117. SENSE OF THE CONGRESS.

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

SEC. 118. CHARITABLE CONTRIBUTIONS.

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

SEC. 119. REINFORCE THE FRESH START.

  (a) Restoration of an Effective Discharge.--Section 523(a)(17) of 
title 11, United States Code, is amended--
          (1) by striking ``by a court'' and inserting ``on a prisoner 
        by any court'',
          (2) by striking ``section 1915(b) or (f)'' and inserting 
        ``subsection (b) or (f)(2) of section 1915'', and
          (3) by inserting ``(or a similar non-Federal law)'' after 
        ``title 28'' each place it appears.
  (b) Protection of Retirement Funds in Bankruptcy.--Section 522 of 
title 11, United States Code, is amended--
          (1) in subsection (b)(2)--
                  (A) in subparagraph (A) by striking ``and'' at the 
                end;
                  (B) in subparagraph (B) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(C) retirement funds to the extent exempt from taxation 
        under section 401, 403, 408, 414, 457, or 501(a) of the 
        Internal Revenue Code of 1986.''; and
          (2) in subsection (d) by adding at the end the following:
          ``(12) Retirement funds to the extent exempt from taxation 
        under 401, 403, 408, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.''.
  (c) Effective Protection for Utility Service in the Wake of 
Deregulation.--Section 366 of title 11, United States Code, is amended 
by adding at the end the following:
  ``(c) For the purposes of this section, the term `utility' includes 
any provider of gas, electric, telephone, telecommunication, cable 
television, satellite communication, water, or sewer service, whether 
or not such service is a regulated monopoly.''.

SEC. 119A. CHAPTER 11 DISCHARGE OF DEBTS ARISING FROM TOBACCO-RELATED 
                    DEBTS.

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

         Subtitle C--Adequate Protections for Secured Creditors

SEC. 121. DISCOURAGING BAD FAITH REPEAT FILINGS.

  Section 362(c) of title 11, United States Code, is amended--
          (1) in paragraph (1) by striking ``and'' at the end;
          (2) in paragraph (2) by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following new paragraphs:
          ``(3) If a single or joint case is filed by or against an 
        individual debtor under chapter 7, 11, or 13, and if a single 
        or joint case of that debtor was pending within the previous 1-
        year period but was dismissed, other than a case refiled under 
        a chapter other than chapter 7 after dismissal under section 
        707(b) of this title, the stay under subsection (a) with 
        respect to any action taken with respect to a debt or property 
        securing such debt or with respect to any lease will terminate 
        with respect to the debtor on the 30th day after the filing of 
        the later case. If a party in interest requests, the court may 
        extend the stay in particular cases as to any or all creditors 
        (subject to such conditions or limitations as the court may 
        then impose) after notice and a hearing completed before the 
        expiration of the 30-day period only if the party in interest 
        demonstrates that the filing of the later case is in good faith 
        as to the creditors to be stayed. A case is presumptively filed 
        not in good faith (but such presumption may be rebutted by 
        clear and convincing evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) more than 1 previous case under any of 
                        chapters 7, 11, or 13 in which the individual 
                        was a debtor was pending within such 1-year 
                        period;
                          ``(ii) a previous case under any of chapters 
                        7, 11, or 13 in which the individual was a 
                        debtor was dismissed within such 1-year period, 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to provide adequate 
                        protection as ordered by the court, or failed 
                        to perform the terms of a plan confirmed by the 
                        court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under any of chapters 7, 11, or 
                        13 of this title, or any other reason to 
                        conclude that the later case will be concluded, 
                        if a case under chapter 7 of this title, with a 
                        discharge, and if a chapter 11 or 13 case, a 
                        confirmed plan which will be fully performed;
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of that case, that action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to actions of that creditor.
          ``(4) If a single or joint case is filed by or against an 
        individual debtor under this title, and if 2 or more single or 
        joint cases of that debtor were pending within the previous 
        year but were dismissed, other than a case refiled under 
        section 707(b) of this title, the stay under subsection (a) 
        will not go into effect upon the filing of the later case. On 
        request of a party in interest, the court shall promptly enter 
        an order confirming that no stay is in effect. If a party in 
        interest requests within 30 days of the filing of the later 
        case, the court may order the stay to take effect in the case 
        as to any or all creditors (subject to such conditions or 
        limitations as the court may impose), after notice and hearing, 
        only if the party in interest demonstrates that the filing of 
        the later case is in good faith as to the creditors to be 
        stayed. A stay imposed pursuant to the preceding sentence will 
        be effective on the date of entry of the order allowing the 
        stay to go into effect. A case is presumptively not filed in 
        good faith (but such presumption may be rebutted by clear and 
        convincing evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) 2 or more previous cases under this 
                        title in which the individual was a debtor were 
                        pending within the 1-year period;
                          ``(ii) a previous case under this title in 
                        which the individual was a debtor was dismissed 
                        within the time period stated in this paragraph 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to pay adequate protection as 
                        ordered by the court, or failed to perform the 
                        terms of a plan confirmed by the court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under this title, or any other 
                        reason to conclude that the later case will not 
                        be concluded, if a case under chapter 7, with a 
                        discharge, and if a case under chapter 11 or 
                        13, with a confirmed plan that will be fully 
                        performed; or
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of that case, that action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to action of that creditor.
          ``(5)(A) If a request is made for relief from the stay under 
        subsection (a) with respect to real or personal property of any 
        kind, and such request is granted in whole or in part, the 
        court may order in addition that the relief so granted shall be 
        in rem either for a definite period not less than 1 year or 
        indefinitely. After the issuance of such an order, the stay 
        under subsection (a) shall not apply to any property subject to 
        such an in rem order in any case of the debtor under this 
        title. If such an order so provides, such stay shall also not 
        apply in any pending or later-filed case of any entity under 
        this title that claims or has an interest in the subject 
        property other than those entities identified in the court's 
        order.
          ``(B) The court shall cause any order entered pursuant to 
        this paragraph with respect to real property to be recorded in 
        the applicable real property records, which recording shall 
        constitute notice to all parties having or claiming an interest 
        in such real property for purpose of this section.
          ``(6) For the purposes of this section, a case is pending 
        from the time of the order for relief until the case is 
        closed.''.

SEC. 122. DEFINITION OF HOUSEHOLD GOODS.

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

SEC. 123. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

  Title 11, United States Code, is amended--
          (1) in section 521--
                  (A) in paragraph (4) by striking ``and'' at the end;
                  (B) in paragraph (5) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(6) in an individual case under chapter 7 of this title, 
        not retain possession of personal property as to which a 
        creditor has an allowed claim for the purchase price secured in 
        whole or in part by an interest in that personal property 
        unless, in the case of an individual debtor, the debtor takes 1 
        of the following actions within 30 days after the first meeting 
        of creditors under section 341(a)--
                  ``(A) enters into a reaffirmation agreement with the 
                creditor pursuant to section 524(c) of this title with 
                respect to the claim secured by such property; or
                  ``(B) redeems such property from the security 
                interest pursuant to section 722 of this title.
        ``If the debtor fails to so act within the 30-day period, the 
        personal property affected shall no longer be property of the 
        estate, and the creditor may take whatever action as to such 
        property as is permitted by applicable nonbankruptcy law, 
        unless the court determines on the motion of the trustee, and 
        after notice and a hearing, that such property is of 
        consequential value or benefit to the estate.''; and
          (2) in section 722 by inserting ``in full at the time of 
        redemption'' before the period at the end.

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

  Title 11, United States Code, is amended as follows--
          (1) in section 362--
                  (A) by striking ``(e), and (f)'' in subsection (c) 
                and inserting in lieu thereof ``(e), (f), and (h)''; 
                and
                  (B) by redesignating subsection (h) as subsection (i) 
                and by inserting after subsection (g) the following:
  ``(h) In an individual case pursuant to chapter 7, 11, or 13 the stay 
provided by subsection (a) is terminated with respect to property of 
the estate securing in whole or in part a claim, or subject to an 
unexpired lease, if the debtor fails within the applicable time set by 
section 521(a)(2) of this title--
          ``(1) to file timely any statement of intention required 
        under section 521(a)(2) of this title with respect to that 
        property or to indicate therein that the debtor will either 
        surrender the property or retain it and, if retaining it, 
        either redeem the property pursuant to section 722 of this 
        title, reaffirm the debt it secures pursuant to section 524(c) 
        of this title, or assume the unexpired lease pursuant to 
        section 365(p) of this title if the trustee does not do so, as 
        applicable; or
          ``(2) to take timely the action specified in that statement 
        of intention, as it may be amended before expiration of the 
        period for taking action, unless the statement of intention 
        specifies reaffirmation and the creditor refuses to reaffirm on 
        the original contract terms;
unless the court determines on the motion of the trustee, and after 
notice and a hearing, that such property is of consequential value or 
benefit to the estate.'';
          (2) in section 521, as amended by sections 104, 406, and 
        407--
                  (A) in paragraph (2) by striking ``consumer'';
                  (B) in paragraph (2)(B)--
                          (i) by striking ``forty-five days after the 
                        filing of a notice of intent under this 
                        section'' and inserting ``30 days after the 
                        first date set for the meeting of creditors 
                        under section 341(a)''; and
                          (ii) by striking ``forty-five day'' the 
                        second place it appears and inserting ``30-
                        day'';
                  (C) in paragraph (2)(C) by inserting ``except as 
                provided in section 362(h)'' before the semicolon; and
                  (D) by adding at the end the following:
  ``(h) If the debtor fails timely to take the action specified in 
subsection (a)(6) of this section, or in paragraphs (1) and (2) of 
section 362(h) of this title, with respect to property which a lessor 
or bailor owns and has leased, rented, or bailed to the debtor or as to 
which a creditor holds a security interest not otherwise voidable under 
section 522(f), 544, 545, 547, 548, or 549, nothing in this title shall 
prevent or limit the operation of a provision in the underlying lease 
or agreement which has the effect of placing the debtor in default 
under such lease or agreement by reason of the occurrence, pendency, or 
existence of a proceeding under this title or the insolvency of the 
debtor. Nothing in this subsection shall be deemed to justify limiting 
such a provision in any other circumstance.''.

SEC. 125. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.

  Section 1325(a)(5)(B)(i) of title 11, United States Code, is amended 
to read as follows:
                  ``(i) the plan provides that the holder of such claim 
                retain the lien securing such claim until the earlier 
                of payment of the underlying debt determined under 
                nonbankruptcy law or discharge under section 1328, and 
                that if the case under this chapter is dismissed or 
                converted without completion of the plan, such lien 
                shall also be retained by such holder to the extent 
                recognized by applicable nonbankruptcy law; and''.

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

  Section 362(e) of title 11, United States Code, is amended by 
inserting at the end the following:
``Notwithstanding the foregoing, in the case of an individual filing 
under chapter 7, 11, or 13, the stay under subsection (a) shall 
terminate 60 days after a request under subsection (d) of this section, 
unless--
          ``(1) a final decision is rendered by the court within such 
        60-day period; or
          ``(2) such 60-day period is extended either by agreement of 
        all parties in interest or by the court for a specific time 
        which the court finds is required by compelling 
        circumstances.''.

SEC. 127. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.

  Section 348(f)(1) of title 11, United States Code, is amended--
          (1) by striking in subparagraph (B) ``in the converted case, 
        with allowed secured claims'' and inserting in lieu thereof 
        ``only in a case converted to chapter 11 or 12 but not in one 
        converted to chapter 7, with allowed secured claims in cases 
        under chapters 11 and 12''; and
          (2) in subparagraph (A) by striking ``and'' at the end;
          (3) in subparagraph (B) by striking the period and inserting 
        ``; and''; and
          (4) by adding at the end the following:
          ``(C) with respect to cases converted from chapter 13, the 
        claim of any creditor holding security as of the date of the 
        petition shall continue to be secured by that security unless 
        the full amount of that claim determined under applicable 
        nonbankruptcy law has been paid in full as of the date of 
        conversion, notwithstanding any valuation or determination of 
        the amount of an allowed secured claim made for the purposes of 
        the case under chapter of this title. Unless a prebankruptcy 
        default has been fully cured pursuant to the plan at the time 
        of conversion, in any proceeding under this title or otherwise, 
        the default shall have the effect given under applicable 
        nonbankruptcy law.''.

SEC. 128. RESTRAINING ABUSIVE PURCHASES ON SECURED CREDIT.

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

SEC. 129. FAIR VALUATION OF COLLATERAL.

  Section 506(a) of title 11, United States Code, is amended by adding 
at the end the following:
``In the case of an individual debtor under chapters 7 and 13, such 
value with respect to personal property securing an allowed claim shall 
be determined based on the replacement value of such property as of the 
date of filing the petition without deduction for costs of sale or 
marketing. With respect to property acquired for personal, family, or 
household purpose, replacement value shall mean the price a retail 
merchant would charge for property of that kind considering the age and 
condition of the property at the time value is determined.''.

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

  Title 11, United States Code, is amended--
          (1) in section 101 by inserting after paragraph (13) the 
        following:
          ``(13A) `debtor's principal residence' means a residential 
        structure including incidental property when the structure 
        contains 1 to 4 units, whether or notthat structure is attached 
to real property, and includes, without limitation, an individual 
condominium or cooperative unit or mobile or manufactured home or 
trailer;
          ``(13B) `incidental property' means property incidental to 
        such residence including, without limitation, property commonly 
        conveyed with a principal residence where the real estate is 
        located, window treatments, carpets, appliances and equipment 
        located in the residence, and easements, appurtenances, 
        fixtures, rents, royalties, mineral rights, oil and gas rights, 
        escrow funds and insurance proceeds;'';
          (2) in section 362(b)--
                  (A) in paragraph (17) by striking ``or'' at the end 
                thereof;
                  (B) in paragraph (18) by striking the period at the 
                end and inserting ``; or''; and
                  (C) by inserting after paragraph (18) the following:
          ``(19) under subsection (a), until a prepetition default is 
        cured fully in a case under chapter 13 of this title case by 
        actual payment of all arrears as required by the plan, of the 
        postponement, continuation or other similar delay of a 
        prepetition foreclosure proceeding or sale in accordance with 
        applicable nonbankruptcy law, but nothing herein shall imply 
        that such postponement, continuation or other similar delay is 
        a violation of the stay under subsection (a).''; and
          (3) by amending section 1322(b)(2) to read as follows:
          ``(2) modify the rights of holders of secured claims, other 
        than a claim secured primarily by a security interest in 
        property used as the debtor's principal residence at any time 
        during 180 days prior to the filing of the petition, or of 
        holders of unsecured claims, or leave unaffected the rights of 
        holders of any class of claims;''.

SEC. 131. AIRCRAFT EQUIPMENT AND VESSELS.

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

        Subtitle D--Adequate Protections for Unsecured Creditors

SEC. 141. DEBTS INCURRED TO PAY NONDISCHARGEABLE DEBTS.

  (a) Priority of Claims for Debts Incurred To Pay Nondischargeable 
Debts.--Section 507(a) of title 11, United States Code, is amended by 
adding at the end the following:
          ``(10) Tenth, remaining allowed unsecured claims for debts 
        that are nondischargeable under section 523(a)(19), but which 
        shall be payable under this paragraph in the higher order of 
        priority (if any) as the respective claims paid by incurring 
        such debts.''.
  (b) Nondischargeability of Debts Incurred To Pay Nondischargeable 
Debts.--Section 523(a) of title 11, United States Code, is amended--
          (1) in paragraph (17) by striking ``or'' at the end;
          (2) in paragraph (18) by striking the period and inserting 
        ``; or''; and
          (3) by adding at the end the following:
          ``(19) incurred to pay a debt that is nondischargeable under 
        any other paragraph of this subsection.''.

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

  Section 523(a)(2)(C) of title 11, United States Code, is amended to 
read as follows:
                  ``(C) for purposes of subparagraph (A), consumer 
                debts owed to a single creditor incurred by an 
                individual debtor on or within 90 days before the order 
                for relief under this title are presumed to be 
                nondischargeable, except that such presumption shall 
                not apply to consumer debts owed to a single creditor 
                which are incurred for necessaries and aggregate $250 
                or less.''.

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

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

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

  Section 1301(b) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(b)''; and
          (2) by adding at the end the following:
  ``(2) When the debtor did not receive the consideration for the claim 
held by a creditor, the stay provided by subsection (a) does not apply 
to such creditor, notwithstanding subsection (c), to the extent the 
creditor proceeds against the individual which received such 
consideration or against property not in the possession of the debtor 
which secures such claim, but this subsection shall not apply if the 
debtor is primarily obligated to pay the creditor in whole or in part 
with respect to the claim under a legally binding separation agreement, 
or divorce or dissolution decree, with respect to such individual or 
the person who has possession of such property.
  ``(3) When the debtor's plan provides that the debtor's interest in 
personal property subject to a lease as to which the debtor is the 
lessee will be surrendered or abandoned or no payments will be made 
under the plan on account of the debtor's obligations under the lease, 
the stay provided by subsection (a) shall terminate as of the date of 
confirmation of the plan notwithstanding subsection (c).''.

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

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

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

  (a) Nondischargeability.--Title 11, United States Code, is amended--
          (1) in section 523(a)(18)--
                  (A) by inserting ``(including interest)'' after 
                ``law''; and
                  (B) in subparagraph (A) by striking ``and'' at the 
                end and inserting ``or''; and
          (2) in section 1328(a)(2) by striking ``or (9)'' and 
        inserting ``(9), or (18)''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by section 130, is amended--
          (1) in paragraph (19) by striking ``or'' at the end;
          (2) in paragraph (19) by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following:
          ``(20) under subsection (a) with respect to the withholding 
        of income pursuant to an order as specified in section 466(b) 
        of the Social Security Act; or
          ``(21) under subsection (a) with respect to the withholding, 
        suspension, or restriction of drivers' licenses, professional 
        and occupational licenses, and recreational licenses pursuant 
        to State law as specified in section 466(a)(15) of the Social 
        Security Act or with respect to the reporting of overdue 
        support owed by an absent parent to any consumer reporting 
        agency as specified in section 466(a)(7) of the Social Security 
        Act.''.
  (c) Continued Liability of Property.--Section 522(c) of title 11, 
United States Code, is amended by striking ``section 523(a)(1) or 
523(a)(5)'' and inserting ``paragraph (1), (5), or (18) of section 
523(a)''.
  (d) Priority of Claims.--Section 507(a) of title 11, United States 
Code, as amended by section 141, is amended--
          (1) in paragraph (10) by striking ``(10) Tenth'' and 
        inserting ``(11) Eleventh'';
          (2) in paragraph (9) by striking ``(9) Ninth'' and inserting 
        ``(10) Tenth'';
          (3) in paragraph (8) by striking ``(8) Eighth '' and 
        inserting ``(9) Ninth''; and
          (4) by inserting after paragraph (7) the following:
          ``(8) Eighth, allowed unsecured claims for debts that are 
        nondischargeable under section 523(a)(18).''.
  (e) Confirmation of Plans.--Title 11 of the United States Code is 
amended--
          (1) in section 1129(a) by adding at the end the following:
          ``(14) If the debtor is required by a judicial or 
        administrative order to pay alimony to, maintenance for, or 
        support of a spouse, former spouse, or child of the debtor, the 
        debtor has paid all amounts payable under such order for 
        alimony, maintenance, or support that are due after the date 
        the petition is filed.'';
          (2) in section 1225(a)--
                  (A) in paragraph (5) by striking ``and'' at the end;
                  (B) in paragraph (6) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(7) the debtor is required by a judicial or administrative 
        order to pay alimony to, maintenance for, or support of a 
        spouse, former spouse, or child of the debtor, the debtor has 
        paid all amounts payable under such order for alimony, 
        maintenance, or support that are due after the date the 
        petition is filed.''; and
          (3) in section 1325(a)--
                  (A) in paragraph (5) by striking ``and'' at the end;
                  (B) in paragraph (6) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(7) if the debtor is required by a judicial or 
        administrative order to pay alimony to, maintenance for, or 
        support of a spouse, former spouse, or child of the debtor, the 
        debtor has paid all amounts payable under such order for 
        alimony, maintenance, or support that are due after the date 
        the petition is filed.''.
  (f) Discharge.--Title 11 United States Code is amended--
          (1) in section 1228(a) by inserting ``and only after a debtor 
        who is required by a judicial or administrative order to pay 
        alimony to, maintenance for, or support of a spouse, former 
        spouse, or child of the debtor, certifies that all amounts 
        payable under such order for alimony, maintenance, or support 
        that are due after the date the petition is filed have been 
        paid,'' after ``this title,''; and
          (2) in section 1328(a) by inserting ``and only after a debtor 
        who is required by a judicial or administrative order to pay 
        alimony to, maintenance for, or support of a spouse, former 
        spouse, or child of the debtor, certifies that all amounts 
        payable under such order for alimony, maintenance, or support 
        that are due after the date the petition is filed have been 
        paid,'' after ``plan,'' the 1st place it appears.
  (g) Conforming Amendments.--Section 456(b) of the Social Security Act 
(42 U.S.C. 656(b)) is amended--
          (1) by inserting ``, including interest,'' after ``Code)'';
          (2) by striking ``and'' and inserting ``or''; and
          (3) by striking ``released by a discharge'' and inserting 
        ``dischargeable''.

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

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

SEC. 148. OTHER EXCEPTIONS TO DISCHARGE.

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

SEC. 149. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

  (a) Exception to Discharge.--Section 523(a)(16) of title 11, United 
States Code, is amended--
          (1) by striking ``dwelling'' the 1st place it appears;
          (2) by striking ``ownership or'' and inserting 
        ``ownership,'';
          (3) by striking ``housing'' the 1st place it appears; and
          (4) by striking ``but only'' and all that follows through 
        ``such period,'', and inserting ``or a lot in a homeowners 
        association, for as long as the debtor or the trustee has a 
        legal, equitable, or possessory ownership interest in such 
        unit, such corporation, or such lot,''.
  (b) Executory Contracts.--Section 365 of title 11, United States 
Code, as amended by section 161, is amended by adding at the end the 
following:
  ``(q) A debt of a kind described in section 523(a)(16) of this title 
shall not be considered to be a debt arising from an executory 
contract.''

SEC. 150. PROTECTION OF CHILD SUPPORT AND ALIMONY.

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

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

  ``Notwithstanding the provisions of the constitution or law of any 
State providing a different priority, any debts of the individual who 
has received a discharge under this title to a spouse, former spouse, 
or child for alimony to, maintenance for, or support of such spouse or 
child, in connection with a separation agreement, divorce decree, or 
other order of a court of record, determination made in accordance with 
State or territorial law by a governmental unit, or property settlement 
agreement, but not to the extent that such debt--
          ``(1) is assigned to another entity, voluntarily, by 
        operation of law, or otherwise; or
          ``(2) includes a liability designated as alimony, 
        maintenance, or support, unless such liability is actually in 
        the nature of alimony, maintenance, or support,
shall have priority in payment and collection over a creditor's claim 
which is not discharged in the individual's case pursuant to paragraph 
(2), (4), or (14) of section 523(a) of this title, but such priority 
shall not affect the priority of any consensual lien, mortgage, or 
security interest securing such creditor's claim.''.
  (b) Conforming Amendment.--The table of sections of chapter 5 of 
title 11, United States Code, as amended by section 116, is amended by 
inserting after the item relating to section 528 the following:

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

SEC. 151. ADEQUATE PROTECTION FOR INVESTORS.

  (a) Definition.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (48) the following:
          ``(48A) `securities self regulatory organization' means 
        either a securities association registered with the Securities 
        and Exchange Commission pursuant to section 15A of the 
        Securities Exchange Act of 1934 or a national securities 
        exchange registered with the Securities and Exchange Commission 
        pursuant to section 6 of the Securities Exchange Act of 
        1934;''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by sections 130 and 146, is amended--
          (1) in paragraph (20) by striking ``or'' at the end;
          (2) in paragraph (21) by striking the period at the end and a 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(22) under subsection (a) of this section, of the 
        commencement or continuation of an investigation or action by a 
        securities self regulatory organization to enforce such 
        organization's regulatory power; of the enforcement of an order 
        or decision, other than for monetary sanctions, obtained in an 
        action by the securities self regulatory organization to 
        enforce such organization's regulatory power; or of any act 
        taken by the securities self regulatory organization to delist, 
        delete, or refuse to permit quotation of any stock that does 
        not meet applicable regulatory requirements.''.

              Subtitle E--Adequate Protections for Lessors

SEC. 161. GIVING DEBTORS THE ABILITY TO KEEP LEASED PERSONAL PROPERTY 
                    BY ASSUMPTION.

  Section 365 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(p)(1) If a lease of personal property is rejected or not timely 
assumed by the trustee under subsection (d), the leased property is no 
longer property of the estate and the stay under section 362(a) of this 
title is automatically terminated.
  ``(2) In the case of an individual under chapter 7, the debtor may 
notify the creditor in writing that the debtor desires to assume the 
lease. Upon being so notified, the creditor may, at its option, notify 
the debtor that it is willing to have the lease assumed by the debtor 
and may condition such assumption on cure of any outstanding default on 
terms set by the lessor. If within 30 days of such notice the debtor 
notifies the lessor in writing that the lease is assumed, the liability 
under the lease will be assumed by the debtor and not by the estate. 
The stay under section 362 of this title and the injunction under 
section 524(a)(2) of this title shall not be violated by notification 
of the debtor and negotiation of cure under this subsection.
  ``(3) In a case under chapter 11 of this title in which the debtor is 
an individual and in a case under chapter 13 of this title, if the 
debtor is the lessee with respect to personal property and the lease is 
not assumed in the plan confirmed by the court, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation. If the 
lease is rejected, the stay under section 362 of this title and any 
stay under section 1301 is automatically terminated with respect to the 
property subject to the lease.''.

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

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

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

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

SEC. 163. ADEQUATE PROTECTION FOR LESSORS.

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

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

SEC. 171. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.

  Title 11, United States Code, is amended--
          (1) in section 727(a)(8) by striking ``six'' and inserting 
        ``10''; and
          (2) in section 1328 by adding at the end the following:
  ``(f) Notwithstanding subsections (a) and (b), the court shall not 
grant a discharge of all debts provided for by the plan or disallowed 
under section 502 of this titleif the debtor has received a discharge 
in any case filed under this title within 5 years of the order for 
relief under this chapter.''.

                         Subtitle G--Exemptions

SEC. 181. EXEMPTIONS.

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

SEC. 182. LIMITATION.

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

                TITLE II--BUSINESS BANKRUPTCY PROVISIONS

                     Subtitle A--General Provisions

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

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

SEC. 202. SHARING OF COMPENSATION.

  Section 504 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(c) This section shall not apply with respect to sharing, or 
agreeing to share, compensation with a bona fide public service 
attorney referral program that operatesin accordance with non-Federal 
law regulating attorney referral services and with rules of 
professional responsibility applicable to attorney acceptance of 
referrals.''.

SEC. 203. CHAPTER 12 MADE PERMANENT LAW.

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

SEC. 204. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

  Section 341 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) Notwithstanding subsections (a) and (b), the court, on the 
request of a party in interest and after notice and a hearing, for 
cause may order that the United States trustee not convene a meeting of 
creditors or equity security holders if the debtor has filed a plan as 
to which the debtor solicited acceptances prior to the commencement of 
the case.''.

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

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

SEC. 206. POSTPETITION DISCLOSURE AND SOLICITATION.

  Section 1125 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(g) Notwithstanding subsection (b), an acceptance or rejection of 
the plan may be solicited from a holder of a claim or interest if such 
solicitation complies with applicable nonbankruptcy law and if such 
holder was solicited before the commencement of the case in a manner 
complying with applicable nonbankruptcy law.''.

SEC. 207. PREFERENCES.

  Section 547(c) of title 11, United States Code, is amended--
          (1) by amending paragraph (2) to read as follows:
          ``(2) to the extent that such transfer was in payment of a 
        debt incurred by the debtor in the ordinary course of business 
        or financial affairs of the debtor and the transferee, and such 
        transfer was--
                  ``(A) made in the ordinary course of business or 
                financial affairs of the debtor and the transferee; or
                  ``(B) made according to ordinary business terms;'';
          (2) in paragraph (7) by striking ``or'' at the end;
          (3) in paragraph (8) by striking the period at the end and 
        inserting ``; or''; and
          (4) by adding at the end the following:
          ``(9) if, in a case filed by a debtor whose debts are not 
        primarily consumer debts, the aggregate value of all property 
        that constitutes or is affected by such transfer is less than 
        $5000.''.

SEC. 208. VENUE OF CERTAIN PROCEEDINGS.

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

SEC. 209. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

  Section 1121(d) of title 11, United States Code, is amended--
          (1) by striking ``On'' and inserting ``(1) Subject to 
        paragraph (1), on''; and
          (2) by adding at the end the following:
  ``(2)(A) Such 120-day period may not be extended beyond a date that 
is 18 months after the date of the order for relief under this chapter.
  ``(B) Such 180-day period may not be extended beyond a date that is 
20 months after the date of the order for relief under this chapter.''.

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

  (a) Extension of Period.--Section 1221 of title 11, United States 
Code, is amended by inserting ``to any period not later than 150 days 
after the order for relief'' after ``period''.
  (b) Relief From the Stay.--Section 362(d) of title 11, United States 
Code, is amended--
          (1) in paragraph (2) by striking ``or'' at the end;
          (2) in paragraph (3) by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(4) with respect to a stay of an act against property under 
        subsection (a) of a debtor in a case under chapter 12, by a 
        creditor whose claim is secured by an interest in such 
        property, unless the debtor has filed a plan in accordance with 
        section 1221.''.
  (c) Special Treatment of Secured Claims.--(1) Chapter 12 of title 11, 
United States Code, is amended by inserting after section 1231 the 
following:

``Sec. 1232. Special treatment of secured claims

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

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

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

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

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

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

SEC. 213. UNEXPIRED LEASES OF NONRESIDENTIAL REAL PROPERTY.

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

SEC. 214. DEFINITION OF DISINTERESTED PERSON.

  Section 101(14) of title 11, United States Code, is amended to read 
as follows:
          ``(14) `disinterested person' means a person that--
                  ``(A) is not a creditor, an equity security holder, 
                or an insider;
                  ``(B) is not and was not, within 2 years before the 
                date of the filing of the petition, a director, 
                officer, or employee of the debtor; and
                  ``(C) does not have an interest materially adverse to 
                the interest of the estate or of any class of creditors 
                or equity security holders, by reason of any direct or 
                indirect relationship to, connection with, or interest 
                in, the debtor, or for any other reason;''.

                    Subtitle B--Specific Provisions

                  CHAPTER 1--SMALL BUSINESS BANKRUPTCY

SEC. 231. DEFINITIONS.

  (a) Definitions.--Section 101 of title 11, United States Code, is 
amended by striking paragraph (51C) and inserting the following:
          ``(51C) `small business case' means a case filed under 
        chapter 11 of this title in which the debtor is a small 
        business debtor;
          ``(51D) `small business debtor' means--
                  ``(A) a person (including affiliates of such person 
                that are also debtors under this title) that has 
                aggregate noncontingent, liquidated secured and 
                unsecured debts as of the date of the petition or the 
                order for relief in an amount not more than $5,000,000 
                (excluding debts owed to 1 or more affiliates or 
                insiders); or
                  ``(B) a debtor of the kind described in paragraph 
                (51B) but without regard to the amount of such debtor's 
                debts;
        except that if a group of affiliated debtors has aggregate 
        noncontingent liquidated secured and unsecured debts greater 
        than $5,000,000 (excluding debt owed to 1 or more affiliates or 
        insiders), then no member of such group is a small business 
        debtor;''.
  (b) Conforming Amendment.--Section 1102(a)(3) of title 11, United 
States Code, is amended by inserting ``debtor'' after ``small 
business''.

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

  Section 1125(f) of title 11, United States Code, is amended to read 
as follows:
  ``(f) Notwithstanding subsection (b), in a small business case--
          ``(1) in determining whether a disclosure statement provides 
        adequate information, the court shall consider the complexity 
        of the case, the benefit of additional information to creditors 
        and other parties in interest, and the cost of providing 
        additional information;
          ``(2) the court may determine that the plan itself provides 
        adequate information and that a separate disclosure statement 
        is not necessary;
          ``(3) the court may approve a disclosure statement submitted 
        on standard forms approved by the court or adopted pursuant to 
        section 2075 of title 28; and
          ``(4)(A) the court may conditionally approve a disclosure 
        statement subject to final approval after notice and a hearing;
          ``(B) acceptances and rejections of a plan may be solicited 
        based on a conditionally approved disclosure statement if the 
        debtor provides adequate information to each holder of a claim 
        or interest that is solicited, but a conditionally approved 
        disclosure statement shall be mailed not less than 20 days 
        before the date of the hearing on confirmation of the plan; and
          ``(C) the hearing on the disclosure statement may be combined 
        with the hearing on confirmation of a plan.''.

SEC. 233. STANDARD FORM DISCLOSURE STATEMENTS AND PLANS.

  The Advisory Committee on Bankruptcy Rules of the Judicial Conference 
of the United States shall, within a reasonable period of time after 
the date of the enactment of this Act, propose for adoption standard 
form disclosure statements and plans of reorganization for small 
business debtors (as defined in section 101) of title 11, United States 
Code, as amended by this Act), designed to achieve a practical balance 
between--
          (1) the reasonable needs of the courts, the United States 
        trustee or bankruptcy administrator, creditors, and other 
        parties in interest for reasonably complete information; and
          (2) economy and simplicity for debtors.

SEC. 234. UNIFORM NATIONAL REPORTING REQUIREMENTS.

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

``Sec. 308. Debtor reporting requirements

  ``A small business debtor shall file periodic financial and other 
reports containing information including--
          ``(1) the debtor's profitability, that is, approximately how 
        much money the debtor has been earning or losing during current 
        and recent fiscal periods;
          ``(2) reasonable approximations of the debtor's projected 
        cash receipts and cash disbursements over a reasonable period;
          ``(3) comparisons of actual cash receipts and disbursements 
        with projections in prior reports;
          ``(4) whether the debtor is--
                  ``(A) in compliance in all material respects with 
                postpetition requirements imposed by this title and the 
                Federal Rules of Bankruptcy Procedure; and
                  ``(B) timely filing tax returns and paying taxes and 
                other administrative claims when due, and, if not, what 
                the failures are and how, at what cost, and when the 
                debtor intends to remedy such failures; and
          ``(5) such other matters as are in the best interests of the 
        debtor and creditors, and in the public interest in fair and 
        efficient procedures under chapter 11 of this title.''.
  (2) The table of sections of chapter 3 of title 11, United States 
Code, is amended by inserting after the item relating to section 307 
the following:

``308. Debtor reporting requirements.''.

  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect 60 days after the date on which rules are prescribed pursuant to 
section 2075, title 28, United States Code to establish forms to be 
used to comply with section 308 of title 11, United States Code, as 
added by subsection (a).

SEC. 235. UNIFORM REPORTING RULES AND FORMS.

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

SEC. 236. DUTIES IN SMALL BUSINESS CASES.

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

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

  ``In a small business case, a trustee or the debtor in possession, in 
addition to the duties provided in this title and as otherwise required 
by law, shall--
          ``(1) append to the voluntary petition or, in an involuntary 
        case, file within 3 days after the date of the order for 
        relief--
                  ``(A) its most recent balance sheet, statement of 
                operations, cash-flow statement, Federal income tax 
                return; or
                  ``(B) a statement made under penalty of perjury that 
                no balance sheet, statement of operations, or cash-flow 
                statement has been prepared and no Federal tax return 
                has been filed;
          ``(2) attend, through its senior management personnel and 
        counsel, meetings scheduled by the court or the United States 
        trustee, including initial debtor interviews, scheduling 
        conferences, and meetings of creditors convened under section 
        341 of this title;
          ``(3) timely file all schedules and statements of financial 
        affairs, unless the court, after notice and a hearing, grants 
        an extension, which shall not extend such time period to a date 
        later than 30 days after the date of the order for relief, 
        absent extraordinary and compelling circumstances;
          ``(4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure or by 
        local rule of the district court;
          ``(5) subject to section 363(c)(2), maintain insurance 
        customary and appropriate to the industry;
          ``(6)(A) timely file tax returns;
          ``(B) subject to section 363(c)(2), timely pay all 
        administrative expense tax claims, except those being contested 
        by appropriate proceedings being diligently prosecuted; and
          ``(C) subject to section 363(c)(2), establish 1 or more 
        separate deposit accounts not later than 10 business days after 
        the date of order for relief (or as soon thereafter as possible 
        if all banks contacted decline the business) and deposit 
        therein, not later than 1 business day after receipt thereof, 
        all taxes payable for periods beginning after the date the case 
        is commenced that are collected or withheld by the debtor for 
        governmental units; and
          ``(7) allow the United States trustee or bankruptcy 
        administrator, or its designated representative, to inspect the 
        debtor's business premises, books, and records at reasonable 
        times, after reasonable prior written notice, unless notice is 
        waived by the debtor.''.
  (b) Technical Amendment.--The table of sections of chapter 11, United 
States Code, is amended by inserting after the item relating to section 
1114 the following:

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

SEC. 237. PLAN FILING AND CONFIRMATION DEADLINES.

  Section 1121(e) of title 11, United States Code, is amended to read 
as follows:
  ``(e) In a small business case--
          ``(1) only the debtor may file a plan until after 90 days 
        after the date of the order for relief, unless shortened on 
        request of a party in interest made during the 90-day period, 
        or unless extended as provided by this subsection, after notice 
        and hearing the court, for cause, orders otherwise;
          ``(2) the plan, and any necessary disclosure statement, shall 
        be filed not later than 90 days after the date of the order for 
        relief; and
          ``(3) the time periods specified in paragraphs (1) and (2), 
        and the time fixed in section 1129(e) of this title, within 
        which the plan shall be confirmed may be extended only if--
                  ``(A) the debtor, after providing notice to parties 
                in interest (including the United States trustee), 
                demonstrates by a preponderance of the evidence that it 
                is more likely than not that the court will confirm a 
                plan within a reasonable time;
                  ``(B) a new deadline is imposed at the time the 
                extension is granted; and
                  ``(C) the order extending time is signed before the 
                existing deadline has expired.''.

SEC. 238. PLAN CONFIRMATION DEADLINE.

  Section 1129 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) In a small business case, the plan shall be confirmed not later 
than 150 days after the date of the order for relief unless such 150-
day period is extended as provided in section 1121(e)(3) of this 
title.''.

SEC. 239. PROHIBITION AGAINST EXTENSION OF TIME.

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

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

  (a) Duties of the United States Trustee.--Section 586(a) of title 28, 
United States Code, as amended by section 111, is amended--
          (1) in paragraph (3)--
                  (A) in subparagraph (G) by striking ``and'' at the 
                end;
                  (B) by redesignating subparagraph (H) as subparagraph 
                (I); and
                  (C) by inserting after subparagraph (G) the 
                following:
                  ``(H) in small business cases (as defined in section 
                101 of title 11), performing the additional duties 
                specified in title 11 pertaining to such cases;'',
          (2) in paragraph (6) by striking ``and'' at the end,
          (3) in paragraph (7) by striking the period at the end and 
        inserting ``; and'', and
          (4) by inserting after paragraph (7) the following:
          ``(8) in each of such small business cases--
                  ``(A) conduct an initial debtor interview as soon as 
                practicable after the entry of order for relief but 
                before the first meeting scheduled under section 341(a) 
                of title 11 at which time the United States trustee 
                shall begin to investigate the debtor's viability, 
                inquire about the debtor's business plan, explain the 
                debtor's obligations to file monthly operating reports 
                and other required reports, attempt to develop an 
                agreed scheduling order, and inform the debtor of other 
                obligations;
                  ``(B) when determined to be appropriate and 
                advisable, visit the appropriate business premises of 
                the debtor and ascertain the state of the debtor's 
                books and records and verify that the debtor has filed 
                its tax returns;
                  ``(C) review and monitor diligently the debtor's 
                activities, to identify as promptly as possible whether 
                the debtor will be unable to confirm a plan; and
                  ``(D) in cases where the United States trustee finds 
                material grounds for any relief under section 1112 of 
                title 11 move the court promptly for relief.''.
  (b) Duties of the Bankruptcy Administrator.--In a small business case 
(as defined in section 101 of title 11 of the United States Code), the 
bankruptcy administrator shall perform the duties specified in section 
586(a)(6) of title 28 of the United States Code.

SEC. 241. SCHEDULING CONFERENCES.

  Section 105(d) of title 11, United States Code, is amended--
          (1) in the matter preceding paragraph (1) by striking ``, 
        may'';
          (2) by amending paragraph (1) to read as follows:
          ``(1) shall hold such status conferences as are necessary to 
        further the expeditious and economical resolution of the case; 
        and''; and
          (3) in paragraph (2) by striking ``unless inconsistent with 
        another provision of this title or with applicable Federal 
        Rules of Bankruptcy Procedure,'' and inserting ``may''.

SEC. 242. SERIAL FILER PROVISIONS.

  Section 362 of title 11, United States Code, is amended--
          (1) in subsection (i) as so redesignated by section 124--
                  (A) by striking ``An'' and inserting ``(1) Except as 
                provided in paragraph (2), an''; and
                  (B) by adding at the end the following:
  ``(2) If such violation is based on an action taken by an entity in 
the good-faith belief that subsection (h) applies to the debtor, then 
recovery under paragraph (1) against such entity shall be limited to 
actual damages.''; and
          (2) by inserting after subsection (i), as redesignated by 
        section 124, the following:
  ``() The filing of a petition under chapter 11 of this title operates 
as a stay of the acts described in subsection (a) only in an 
involuntary case involving no collusion by the debtor with creditors 
and in which the debtor--
          ``(1) is a debtor in a small business case pending at the 
        time the petition is filed;
          ``(2) was a debtor in a small business case which was 
        dismissed for any reason by an order that became final in the 
        2-year period ending on the date of the order for relief 
        entered with respect to the petition;
          ``(3) was a debtor in a small business case in which a plan 
        was confirmed in the 2-year period ending on the date of the 
        order for relief entered with respect to the petition; or
          ``(4) is an entity that has succeeded to substantially all of 
        the assets or business of a small business debtor described in 
        subparagraph (A), (B), or (C) unless the debtor proves, by a 
        preponderance of the evidence, that the filing of such petition 
        resulted from circumstances beyond the control of the debtor 
        not foreseeable at the time the case then pending was filed; 
        and that it is more likely than not that the court will confirm 
        a feasible plan, but not a liquidating plan, within a 
        reasonable time.''.

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

  (a) Expanded Grounds for Dismissal or Conversion.--Section 1112(b) of 
title 11, United States Code, is amended to read as follows:
  ``(b)(1) Except as provided in paragraph (2), in subsection (c), and 
in section 1104(a)(3) of this title, on request of a party in interest, 
and after notice and a hearing, the court shall convert a case under 
this chapter to a case under chapter 7 of this title or dismiss a case 
under this chapter, whichever is in the best interest of creditors and 
the estate, if the movant establishes cause.
  ``(2) The relief provided in paragraph (1) shall not be granted if 
the debtor or another party in interest objects and establishes, by a 
preponderance of the evidence that--
          ``(A) it is more likely than not that a plan will be 
        confirmed within a time as fixed by this title or by order of 
        the court entered pursuant to section 1121(e)(3), or within a 
        reasonable time if no time has been fixed; and
          ``(B) if the reason is an act or omission of the debtor 
        that--
                  ``(i) there exists a reasonable justification for the 
                act or omission; and
                  ``(ii) the act or omission will be cured within a 
                reasonable time fixed by the court not to exceed 30 
                days after the court decides the motion, unless the 
                movant expressly consents to a continuance for a 
                specific period of time, or compelling circumstances 
                beyond the control of the debtor justify an extension.
  ``(3) For purposes of this subsection, cause includes--
          ``(A) substantial or continuing loss to or diminution of the 
        estate;
          ``(B) gross mismanagement of the estate;
          ``(C) failure to maintain appropriate insurance;
          ``(D) unauthorized use of cash collateral harmful to 1 or 
        more creditors;
          ``(E) failure to comply with an order of the court;
          ``(F) failure timely to satisfy any filing or reporting 
        requirement established by this title or by any rule applicable 
        to a case under this chapter;
          ``(G) failure to attend the meeting of creditors convened 
        under section 341(a) of this title or an examination ordered 
        under rule 2004 of the Federal Rules of Bankruptcy Procedure;
          ``(H) failure timely to provide information or attend 
        meetings reasonably requested by the United States trustee;
          ``(I) failure timely to pay taxes due after the date of the 
        order for relief or to file tax returns due after the order for 
        relief;
          ``(J) failure to file a disclosure statement, or to file or 
        confirm a plan, within the time fixed by this title or by order 
        of the court;
          ``(K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          ``(L) revocation of an order of confirmation under section 
        1144 of this title, and denial of confirmation of another plan 
        or of a modified plan under section 1129 of this title;
          ``(M) inability to effectuate substantial consummation of a 
        confirmed plan;
          ``(N) material default by the debtor with respect to a 
        confirmed plan; and
          ``(O) termination of a plan by reason of the occurrence of a 
        condition specified in the plan.
  ``(4) The court shall commence the hearing on any motion under this 
subsection not later than 30 days after filing of the motion, and shall 
decide the motion within 15 days after commencement of the hearing, 
unless the movant expressly consentsto a continuance for a specific 
period of time or compelling circumstances prevent the court from 
meeting the time limits established by this paragraph.''.
  (b) Additional Grounds for Appointment of Trustee.--Section 1104(a) 
of title 11, United States Code, is amended--
          (1) in paragraph (1) by striking ``or'' at the end;
          (2) in paragraph (2) by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(3) if grounds exist to convert or dismiss the case under 
        section 1112 of this title, but the court determines that the 
        appointment of a trustee is in the best interests of creditors 
        and the estate.''.

                  CHAPTER 2--SINGLE ASSET REAL ESTATE

SEC. 251. SINGLE ASSET REAL ESTATE DEFINED.

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

SEC. 252. PAYMENT OF INTEREST.

  Section 362(d)(3) of title 11, United States Code, is amended--
          (1) by inserting ``or 30 days after the court determines that 
        the debtor is subject to this paragraph, whichever is later'' 
        after ``90-day period)''; and
          (2) by amending subparagraph (B) to read as follows:
                  ``(B) the debtor has commenced monthly payments 
                (which payments may, in the debtor's sole discretion, 
                notwithstanding section 363(c)(2) of this title, be 
                made from rents or other income generated before or 
                after the commencement of the case by or from the 
                property) to each creditor whose claim is secured by 
                such real estate (other than a claim secured by a 
                judgment lien or by an unmatured statutory lien), which 
                payments are in an amount equal to interest at the 
                then-applicable nondefault contract rate of interest on 
                the value of the creditor's interest in the real 
                estate; or''.

               TITLE III--MUNICIPAL BANKRUPTCY PROVISIONS

SEC. 301. PETITION AND PROCEEDINGS RELATED TO PETITION.

  (a) Technical Amendment Relating to Municipalities.--Section 921(d) 
of title 11, United States Code, is amended by inserting 
``notwithstanding section 301(b)'' before the period at the end.
  (b) Conforming Amendment.--Section 301 of title 11, United States 
Code, is amended--
          (1) by inserting ``(a)'' before ``A voluntary''; and
          (2) by amending the last sentence to read as follows:
  ``(b) The commencement of a voluntary case under a chapter of this 
title constitutes an order for relief under such chapter.''.

                  TITLE IV--BANKRUPTCY ADMINISTRATION

                     Subtitle A--General Provisions

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

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

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

  Section 341(c) of title 11, United States Code, is amended by 
inserting after the first sentence the following: ``Notwithstanding any 
local court rule, provision of a State constitution, any other State or 
Federal nonbankruptcy law, or other requirement that representation at 
the meeting of creditors under subsection (a) be by an attorney, a 
creditor holding a consumer debt or its representatives (which 
representatives may include an entity or an employee of an entity and 
may be a representative for more than 1 creditor) shall be permitted to 
appear at and participate in the meeting of creditors in a case under 
chapter 7 or 13 either alone or in conjunction with an attorney for the 
creditor. Nothing in this subsection shall be construed to require any 
creditor to be represented by an attorney at any meeting of 
creditors.''.

SEC. 403. FILING PROOFS OF CLAIM.

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

SEC. 404. AUDIT PROCEDURES.

  (a) Amendment.--Section 586 of title 28, United States Code, as 
amended by sections 111 and 240, is amended--
          (1) by amending subsection (a)(6) to read as follows:
          ``(6) make such reports as the Attorney General directs, 
        including the results of audits performed under subsection 
        (f),'';
          (2) by inserting at the end the following:
  ``(f)(1) The Attorney General shall establish procedures for the 
auditing of the accuracy and completeness of petitions, schedules, and 
other information which the debtor is required to provide under 
sections 521 and 1322, and, if applicable, section 111, of title 11 in 
individual cases filed under chapter 7 or 13 of such title. Such audits 
shall be in accordance with generally accepted auditing standards and 
performed by independent certified public accountants or independent 
licensed public accountants. Such procedures shall--
          ``(A) establish a method of selecting appropriate qualified 
        persons to contract with the United States trustee to perform 
        such audits;
          ``(B) establish a method of randomly selecting cases to be 
        audited according to generally accepted audit standards, 
        provided that no less than 1 out of every 100 cases in each 
        Federal judicial district shall be selected for audit;
          ``(C) require audits for schedules of income and expenses 
        which reflect higher than average variances from the 
        statistical norm of the district in which the schedules were 
        filed;
          ``(D) establish procedures for reporting the results of such 
        audits and any material misstatement of income, expenditures or 
        assets of a debtor to the Attorney General, the United States 
        Attorney and the court, as appropriate, and for providing 
        public information no less than annually on the aggregate 
        results of such audits including the percentage of cases, by 
        district, in which a material misstatement of income or 
        expenditures is reported; and
          ``(E) establish procedures for fully funding such audits.
  ``(2) The United States trustee for each district is authorized to 
contract with auditors to perform audits in cases designated by the 
United States trustee according to the procedures established under 
paragraph (1) of this subsection.
  ``(3) According to procedures established under paragraph (1), upon 
request of a duly appointed auditor, the debtor shall cause the 
accounts, papers, documents, financial records, files and all other 
papers, things or property belonging to the debtor as the auditor 
requests and which are reasonably necessary to facilitate an audit to 
be made available for inspection and copying.
  ``(4) The report of each such audit shall be filed with the court, 
the Attorney General, and the United States Attorney, as required under 
procedures established by the Attorney General under paragraph (1). If 
a material misstatement of income or expenditures or of assets is 
reported, a statement specifying such misstatement shall be filed with 
the court and the United States trustee shall give notice thereof to 
the creditors in the case and, in an appropriate case, in the opinion 
of the United States trustee, requires investigation with respect to 
possible criminal violations, the United States Attorney for the 
district.''.
  (b) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of the enactment of this Act.

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

  Section 342 of title 11, United States Code, is amended--
          (1) in subsection (c)--
                  (A) by striking ``, but the failure of such notice to 
                contain such information shall not invalidate the legal 
                effect of such notice''; and
                  (B) by adding the following at the end:
``If the credit agreement between the debtor and the creditor or the 
last communication before the filing of the petition in a voluntary 
case from the creditor to a debtor who is an individual states an 
account number of the debtor which is the current account number of the 
debtor with respect to any debt held by the creditor against the 
debtor, the debtor shall include such account number in any notice to 
the creditor required to be given under this title. If the creditor has 
specified to the debtor an address at which the creditor wishes to 
receive correspondence regarding the debtor's account, any notice to 
the creditor required to be given by the debtor under this title shall 
be given at such address. For the purposes of this section, `notice' 
shall include, but shall not be limited to, any correspondence from the 
debtor to the creditor after the commencement of the case, any 
statement of the debtor's intention under section 521(a)(2) of this 
title, notice of the commencement of any proceeding in the case to 
which the creditor is a party, and any notice of the hearing under 
section 1324.'';
          (2) by adding at the end the following:
  ``(d) At any time, a creditor in a case of an individual debtor under 
chapter 7 or 13 may file with the court and serve on the debtor a 
notice of the address to be used to notify the creditor in that case. 
Five days after receipt of such notice, if the court or the debtor is 
required to give the creditor notice, such notice shall be given at 
that address.
  ``(e) An entity may file with the court a notice stating its address 
for notice in cases under chapters 7 and 13. After 30 days following 
the filing of such notice, any notice in any case filed under chapter 7 
or 13 given by the court shall be to that address unless specific 
notice is given under subsection (d) with respect to a particular case.
  ``(f) Notice given to a creditor other than as provided in this 
section shall not be effective notice until it has been brought to the 
attention of the creditor. If the creditor has designated a person or 
department to be responsible for receiving notices concerning 
bankruptcy cases and has established reasonable procedures so that 
bankruptcy notices received by the creditor will be delivered to such 
department or person, notice will not be brought to the attention of 
the creditor until received by such person or department. No sanction 
under section 362(h) of this title or any other sanction which a court 
may impose on account of violations of the stay under section 362(a) of 
this title or failure to comply with section 542 or 543 of this title 
may be imposed on any action of the creditor unless the action takes 
place after the creditor has received notice of the commencement of the 
case effective under this section.''.

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

  Section 521 of title 11, United States Code, is amended--
          (1) by inserting ``(a)'' before ``The'';
          (2) by amending paragraph (1) to read as follows:
          ``(1) file--
                  ``(A) a list of creditors, and
                  ``(B) unless the court orders otherwise--
                          ``(i) a schedule of assets and liabilities;
                          ``(ii) a schedule of current income and 
                        current expenditures;
                          ``(iii) a statement of the debtor's financial 
                        affairs;
                          ``(iv) copies of all payment advices or other 
                        evidence of payment, if any, received by the 
                        debtor from any employer of the debtor in the 
                        period 60 days prior to the filing of the 
                        petition;
                          ``(v) a statement of the amount of projected 
                        monthly net income, itemized to show how 
                        calculated;
                          ``(vi) if applicable, any statement under 
                        paragraphs (3) and (4) of section 109(h);
                          ``(vii) a statement disclosing any reasonably 
                        anticipated increase in income or expenditures 
                        over the next 12 months; and
                          ``(viii) a certificate, if applicable--
                                  ``(I) of an attorney whose name is on 
                                the petition as the attorney for the 
                                debtor, or of any bankruptcy petition 
                                preparer who signed the petition 
                                pursuant to section 110(b)(1) of this 
                                title, indicating that such attorney or 
                                bankruptcy petition preparer delivered 
                                to the debtor any notice required by 
                                section 342(b)(1) of this title; or
                                  ``(II) if no attorney for the debtor 
                                is indicated and no bankruptcy petition 
                                preparer signed the petition of the 
                                debtor, that such notice was obtained 
                                and read by the debtor;''; and
          (3) by adding at the end the following:
  ``(b) At any time, a creditor in a case of an individual debtor under 
chapter 7 or 13 may file with the court and serve on the debtor notice 
that the creditor requests the petition, schedules, and statement of 
financial affairs filed by the debtor in the case. At any time, a 
creditor in a case under chapter 13 of this title may file with the 
court and serve on the debtor notice that the creditor requests the 
plan filed by the debtor in the case. Within 10 days of the first such 
request in a case under this subsection for the petition, schedules, 
and statement of financial affairs and the first such request for the 
plan under this subsection, the debtor shall serve on that creditor a 
conformed copy of the requested documents or plan and any amendments 
thereto as of that date, and shall thereafter promptly serve on that 
creditor at the time filed with the court--
          ``(1) any requested document or plan which is not filed with 
        the court at the time requested; and
          ``(2) any amendment to any requested document or plan.
  ``(c)(1) An individual debtor in a case under chapter 7 or 13 shall 
provide to the United States trustee--
          ``(A) copies of all Federal tax returns (including any 
        schedules and attachments) filed by the debtor for the 3 most 
        recent tax years preceding the order for relief;
          ``(B) at the time the debtor files them with the Commissioner 
        of Internal Revenue, all Federal tax returns (including any 
        schedules and attachments) for the debtor's tax years ending 
        while such case is pending; and
          ``(C) at the time the debtor files them with the Commissioner 
        of Internal Revenue, all amendments to the tax returns 
        (including schedules and attachments) described in 
        subparagraphs (A) and (B).
  ``(2)(A) The United States trustee shall make such Federal tax 
returns (including schedules, attachments, and amendments) available to 
any party in interest for inspection and copying not later than 10 days 
after receiving a request by such party.
  ``(B) If the United States trustee does not comply with subparagraph 
(A), on the motion of such party, the court shall issue an order 
compelling the United States trustee to comply with subparagraph (A).
  ``(d) A debtor in a case under chapter 13 of this title shall file, 
from a time which is the later of 90 days after the close of the 
debtor's tax year or 1 year after the order for relief unless a plan 
has then been confirmed, and thereafter on or before 45 days before 
each anniversary of the confirmation of the plan until the case is 
closed, a statement subject to the penalties of perjury by the debtor 
of the debtor's income and expenditures in the preceding tax year and 
monthly net income, showing how calculated. Such statement shall 
disclose the amount and sources of income of the debtor, the identity 
of any persons responsible with the debtor for the support of any 
dependents of the debtor, and any persons who contributed and the 
amount contributed to the household in which the debtor resides. Such 
tax returns, amendments and statement of income and expenditures shall 
be available to the United States trustee, any bankruptcy 
administrator, any trustee and any party in interest for inspection and 
copying.''.

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

  Section 521 of title 11, United States Code, as amended by section 
406, is amended by adding at the end the following:
  ``(e) Notwithstanding section 707(a) of this title, if an individual 
debtor in a voluntary case under chapter 7 or 13 fails to provide all 
of the information required under subsections (a)(1) and (c)(1)(A) 
within 45 days after the filing of the petition, the case shall be 
automatically dismissed effective on the 46th day after the filing of 
the petition without the need for any order of court, but any party in 
interest may request the court to enter an order dismissing the case 
and the court shall, if so requested, enter an order of dismissal 
within 5 days of such request. Upon request of the debtor made within 
45 days after the filing of the petition, the court may allow the 
debtor up to an additional 15 days to provide the informationrequired 
under subsections (a)(1) and (c)(1)(A) if the court finds compelling 
justification for doing so.
  ``(f) If an individual debtor in a case under chapter 7 or 13 fails 
to perform any of the duties imposed by subsections (b), (c)(1)(B), 
(c)(1)(C), and (d), any party in interest may request that the court 
order the debtor to comply. Within 10 days of such request the court 
shall order that the debtor do so within a period of time set by the 
court no longer than 30 days. If the debtor does not comply with that 
order within the period of time set by the court, the court shall, on 
request of any party in interest certifying that the debtor has not so 
complied, enter an order dismissing the case within 5 days of such 
request.''.

SEC. 408. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE 
                    PLAN.

  Section 1324 of title 11, United States Code, is amended--
          (1) by striking ``After'' and inserting the following:
  ``(a) Except as provided in subsection (b) and after''; and
          (2) by adding at the end the following:
  ``(b) The hearing on confirmation of the plan may be held not earlier 
than 20 days, and not later than 45 days, after the meeting of 
creditors under section 341(a) of this title.''.

SEC. 409. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN CERTAIN CASES.

  Title 11, United States Code, is amended--
          (1) by amending section 1322(d) to read as follows:
  ``(d) If the total current monthly income of the debtor and in a 
joint case, the debtor and the debtor's spouse combined, is not less 
than the highest national median family income reported for a family of 
equal or lesser size or, in the case of a household of 1 person, not 
less than the national median household income for 1 earner, the plan 
may not provide for payments over a period that is longer than 5 years, 
unless the court, for cause, approves a longer period, but the court 
may not approve a period that exceeds 7 years. If the total current 
monthly income of the debtor or in a joint case, the debtor and the 
debtor's spouse combined, is less than the highest national median 
family income reported for a family of equal or lesser size, or in the 
case of a household of 1 person less than the national median household 
income for 1 earner, the plan may not provide for payments over a 
period that is longer than 3 years, unless the court, for cause, 
approves a longer period, but the court may not approve a period that 
is longer than 5 years.'';
          (2) in section 1329--
                  (A) by striking in subsection (c) ``three years'' and 
                inserting ``the applicable commitment period under 
                section 1325(b)(1)(B)(ii)'' and by striking ``five 
                years'' and inserting ``maximum duration period''; and
                  (B) by inserting at the end of subsection (c) the 
                following:
``The maximum duration period shall be 5 years if the total current 
monthly income of the debtor, and in a joint case, the debtor and the 
debtor's spouse combined, is not less than the highest national median 
family income reported for a family of equal or lesser size or, in the 
case of a household of 1 person, not less than the national median 
household income for 1 earner, as of the date of the modification and 
shall be 3 years if the total current monthly income is less than the 
highest national median family income reported for a family of equal or 
lesser size or, in the case of a household of 1 person, less than the 
national median household income for 1 earner as of the date of the 
modification.''.

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

  It is the sense of the Congress that rule 9011 of the Federal Rules 
of Bankruptcy Procedure (11 U.S.C. App) should be modified to include a 
requirement that all documents (including schedules), signed and 
unsigned, submitted to the court or to a trustee by debtors who 
represent themselves and debtors who are represented by an attorney be 
submitted only after the debtor or the debtor's attorney has made 
reasonable inquiry to verify that the information contained in such 
documents is well grounded in fact, and is warranted by existing law or 
a good-faith argument for the extension, modification, or reversal of 
existing law.

SEC. 411. JURISDICTION OF COURTS OF APPEALS.

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

``Sec. 1293. Bankruptcy appeals

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

``1293. Bankruptcy appeals.''.

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

SEC. 412. ESTABLISHMENT OF OFFICIAL FORMS.

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

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

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

                      Subtitle B--Data Provisions

SEC. 441. IMPROVED BANKRUPTCY STATISTICS.

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

``Sec. 159. Bankruptcy statistics

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

SEC. 442. BANKRUPTCY DATA.

  (a) Amendment.--Title 28 of the United States Code is amended by 
inserting after section 589a the following:

``Sec. 589b. Bankruptcy data

  ``(a) Rules.--The Attorney General shall, within a reasonable time 
after the effective date of this section, issue rules requiring uniform 
forms for (and from time to time thereafter to appropriately modify and 
approve)--
          ``(1) final reports by trustees in cases under chapters 7, 
        12, and 13 of title 11; and
          ``(2) periodic reports by debtors in possession or trustees, 
        as the case may be, in cases under chapter 11 of title 11.
  ``(b) Reports.--All reports referred to in subsection (a) shall be 
designed (and the requirements as to place and manner of filing shall 
be established) so as to facilitate compilation of data and maximum 
possible access of the public, both by physical inspection at 1 or more 
central filing locations, and by electronic access through the Internet 
or other appropriate media.
  ``(c) Required Information.--The information required to be filed in 
the reports referred to in subsection (b) shall be that which is in the 
best interests of debtors and creditors, and in the public interest in 
reasonable and adequate information to evaluate the efficiency and 
practicality of the Federal bankruptcy system. In issuing rules 
proposing the forms referred to in subsection (a), the Attorney General 
shall strike the best achievable practical balance between--
          ``(1) the reasonable needs of the public for information 
        about the operational results of the Federal bankruptcy system; 
        and
          ``(2) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
  ``(d) Final Reports.--Final reports proposed for adoption by trustees 
under chapters 7, 12, and 13 of title 11 shall, in addition to such 
other matters as are required by law or as the Attorney General in the 
discretion of the Attorney General, shall propose, include with respect 
to a case under such title--
          ``(1) information about the length of time the case was 
        pending;
          ``(2) assets abandoned;
          ``(3) assets exempted;
          ``(4) receipts and disbursements of the estate;
          ``(5) expenses of administration;
          ``(6) claims asserted;
          ``(7) claims allowed; and
          ``(8) distributions to claimants and claims discharged 
        without payment;
in each case by appropriate category and, in cases under chapters 12 
and 13 of title 11, date of confirmation of the plan, each modification 
thereto, and defaults by the debtor in performance under the plan.
  ``(e) Periodic Reports.--Periodic reports proposed for adoption by 
trustees or debtors in possession under chapter 11 of title 11 shall, 
in addition to such other matters as are required by law or as the 
Attorney General, in the discretion of the Attorney General, shall 
propose, include--
          ``(1) information about the standard industry classification, 
        published by the Department of Commerce, for the businesses 
        conducted by the debtor;
          ``(2) length of time the case has been pending;
          ``(3) number of full-time employees as at the date of the 
        order for relief and at end of each reporting period since the 
        case was filed;
          ``(4) cash receipts, cash disbursements and profitability of 
        the debtor for the most recent period and cumulatively since 
        the date of the order for relief;
          ``(5) compliance with title 11, whether or not tax returns 
        and tax payments since the date of the order for relief have 
        been timely filed and made;
          ``(6) all professional fees approved by the court in the case 
        for the most recent period and cumulatively since the date of 
        the order for relief (separately reported, in for the 
        professional fees incurred by or on behalf of the debtor, 
        between those that would have been incurred absent a bankruptcy 
        case and those not); and
          ``(7) plans of reorganization filed and confirmed and, with 
        respect thereto, by class, the recoveries of the holders, 
        expressed in aggregate dollar values and, in the case of 
        claims, as a percentage of total claims of the class 
        allowed.''.
  (b) Technical Amendment.--The table of sections of chapter 39 of 
title 28, United States Code, is amended by adding at the end the 
following:

``589b. Bankruptcy data.''.

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

  It is the sense of the Congress that--
          (1) the national policy of the United States should be that 
        all data held by bankruptcy clerks in electronic form, to the 
        extent such data reflects only public records (as defined in 
        section 107 of title 11 of the United States Code), should be 
        released in a usable electronic form in bulk to the public 
        subject to such appropriate privacy concerns and safeguards as 
        the Judicial Conference of the United States may determine; and
          (2) there should be established a bankruptcy data system in 
        which--
                  (A) a single set of data definitions and forms are 
                used to collect data nationwide; and
                  (B) data for any particular bankruptcy case are 
                aggregated in the same electronic record.

                        TITLE V--TAX PROVISIONS

SEC. 501. TREATMENT OF CERTAIN LIENS.

  (a) Treatment of Certain Liens.--Section 724 of title 11, United 
States Code, is amended--
          (1) in subsection (b), in the matter preceding paragraph (1), 
        by inserting ``(other than to the extent that there is a 
        properly perfected unavoidable tax lienarising in connection 
with an ad valorem tax on real or personal property of the estate)'' 
after ``under this title'';
          (2) in subsection (b)(2), after ``507(a)(1)'', insert 
        ``(except that such expenses, other than claims for wages, 
        salaries, or commissions which arise after the filing of a 
        petition, shall be limited to expenses incurred under chapter 7 
        of this title and shall not include expenses incurred under 
        chapter 11 of this title)''; and
          (3) by adding at the end the following:
  ``(e) Before subordinating a tax lien on real or personal property of 
the estate, the trustee shall--
          ``(1) exhaust the unencumbered assets of the estate; and
          ``(2) in a manner consistent with section 506(c) of this 
        title, recover from property securing an allowed secured claim 
        the reasonable, necessary costs and expenses of preserving or 
        disposing of that property.
  ``(f) Notwithstanding the exclusion of ad valorem tax liens set forth 
in this section and subject to the requirements of subsection (e)--
          ``(1) claims for wages, salaries, and commissions that are 
        entitled to priority under section 507(a)(3) of this title; or
          ``(2) claims for contributions to an employee benefit plan 
        entitled to priority under section 507(a)(4) of this title,
may be paid from property of the estate which secures a tax lien, or 
the proceeds of such property.''.
  (b) Determination of Tax Liability.--Section 505(a)(2) of title 11, 
United States Code, is amended--
          (1) in subparagraph (A), by striking ``or'' at the end;
          (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
          (3) by adding at the end the following:
          ``(C) the amount or legality of any amount arising in 
        connection with an ad valorem tax on real or personal property 
        of the estate, if the applicable period for contesting or 
        redetermining that amount under any law (other than a 
        bankruptcy law) has expired.''.

SEC. 502. ENFORCEMENT OF CHILD AND SPOUSAL SUPPORT.

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

SEC. 503. EFFECTIVE NOTICE TO GOVERNMENT.

  (a) Effective Notice to Governmental Units.--Section 342 of title 11, 
United States Code, as amended by section 405, is amended by adding at 
the end the following:
  ``(g) If a debtor lists a governmental unit as a creditor in a list 
or schedule, any notice required to be given by the debtor under this 
title, any rule, any applicable law, or any order of the court, shall 
identify the department, agency, or instrumentality through which the 
debtor is indebted. The debtor shall identify (with information such as 
a taxpayer identification number, loan, account or contract number, or 
real estate parcel number, where applicable), and describe the 
underlying basis for the governmental unit's claim. If the debtor's 
liability to a governmental unit arises from a debt or obligation owed 
or incurred by another individual, entity, or organization, or under a 
different name, the debtor shall identify such individual, entity, 
organization, or name.
  ``(h) The clerk shall keep and update quarterly, in the form and 
manner as the Director of the Administrative Office of the United 
States Courts prescribes, and make available to debtors, a register in 
which a governmental unit may designate a safe harbor mailing address 
for service of notice in cases pending in the district. A governmental 
unit may file a statement with the clerk designating a safe harbor 
address to which notices are to be sent, unless such governmental unit 
files a notice of change of address.''.
  (b) Adoption of Rules Providing Notice.--The Advisory Committee on 
Bankruptcy Rules of the Judicial Conference shall, within a reasonable 
period of time after the date of the enactment of this Act, propose for 
adoption enhanced rules for providing notice to State, Federal, and 
local government units that have regulatory authority over the debtor 
or which may be creditors in the debtor's case. Such rules shall be 
reasonably calculated to ensure that notice will reach the 
representatives of the governmental unit, or subdivision thereof, who 
will be the proper persons authorized to act upon the notice. At a 
minimum, the rules should require that the debtor--
          (1) identify in the schedules and the notice, the 
        subdivision, agency, or entity in respect of which such notice 
        should be received;
          (2) provide sufficient information (such as case captions, 
        permit numbers, taxpayer identification numbers, or similar 
        identifying information) to permit the governmental unit or 
        subdivision thereof, entitled to receive such notice, to 
        identify the debtor or the person or entity on behalf of which 
        the debtor is providing notice where the debtor may be a 
        successor in interest or may not be the same as the person or 
        entity which incurred the debt or obligation; and
          (3) identify, in appropriate schedules, served together with 
        the notice, the property in respect of which the claim or 
        regulatory obligation may have arisen, if any, the nature of 
        such claim or regulatory obligation and the purpose for which 
        notice is being given.
  (c) Effect of Failure of Notice.--Section 342 of title 11, United 
States Code, as amended by subsection (a) and section 405, is amended 
by adding at the end the following:
  ``(i)(1) A notice that does not comply with subsections (d) and (e) 
shall have no effect unless the debtor demonstrates, by clear and 
convincing evidence, that timely notice was given in a manner 
reasonably calculated to satisfy the requirements of this section was 
given, and that--
          ``(A) either the notice was timely sent to the safe harbor 
        address provided in the register maintained by the clerk of the 
        district in which the case was pending for such purposes; or
          ``(B) no safe harbor address was provided in such list for 
        the governmental unit and that an officer of the governmental 
        unit who is responsible for the matter or claim had actual 
        knowledge of the case in sufficient time to act.
  ``(2) No sanction under section 362(h) of this title or any other 
sanction which a court may impose on account of violations of the stay 
under section 362(a) of this title or failure to comply with section 
542 or 543 of this title may be imposed unless the action takes place 
after notice of the commencement of the case as required by this 
section has been received.''.

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

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

SEC. 505. RATE OF INTEREST ON TAX CLAIMS.

  Chapter 5 of title 11, United States Code, is amended by adding at 
the end the following:

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

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

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

  Section 507(a)(9)(A) of title 11, United States Code, as so 
redesignated, is amended--
          (1) in clause (i) by inserting after ``petition'' and before 
        the semicolon ``, plus any time, plus 6 months, during which 
        the stay of proceedings was in effect in a prior case under 
        this title''; and
          (2) amend clause (ii) to read as follows:
                          ``(ii) assessed within 240 days before the 
                        date of the filing of the petition, exclusive 
                        of--
                                  ``(I) any time plus 30 days during 
                                which an offer in compromise with 
                                respect of such tax, was pending or in 
                                effect during such 240-day period;
                                  ``(II) any time plus 30 days during 
                                which an installment agreement with 
                                respect of such tax was pending or in 
                                effect during such 240-day period, up 
                                to 1 year; and
                                  ``(III) any time plus 6 months during 
                                which a stay of proceedings against 
                                collections was in effect in a prior 
                                case under this title during such 240-
                                day period.''.

SEC. 507. ASSESSMENT DEFINED.

  (a) Assessment Defined for Priority Purposes.--Section 101 of title 
11, United States Code, is amended by inserting after paragraph (2) the 
following:
          ``(3) `assessment'--
                  ``(A) for purposes of State and local taxes, means 
                that point in time when all actions required have been 
                taken so that thereafter a taxing authority may 
                commence an action to collect the tax, and
                  ``(B) for Federal tax purposes has the meaning given 
                such term in the Internal Revenue Code of 1986;
        and `assessed' and `assessable' shall be interpreted in light 
        of the definition of assessment in this paragraph;''.
  (b) Assessment Defined for the Stay of Proceedings.--Section 
362(b)(9)(D) of title 11, United States Code, is amended by inserting 
after ``the making of an assessment'' the following: ``as defined by 
applicable nonbankruptcy law notwithstanding the definition of an 
`assessment' elsewhere in this title''.

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

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

SEC. 509. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

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

SEC. 510. THE STAY OF TAX PROCEEDINGS.

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

SEC. 511. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.

  Section 1129(a)(9) of title 11, United States Code, is amended--
          (1) in subparagraph (B) by striking ``and'' at the end; and
          (2) in subparagraph (C)--
                  (A) by striking ``deferred cash payments, over a 
                period not exceeding six years after the date of 
                assessment of such claim,'' and inserting ``regular 
                installment payments in cash, but in no case with a 
                balloon provision, and no more than three months apart, 
                beginning no later than the effective date of the plan 
                and ending on the earlier of five years after the 
                petition date or the last date payments are to be made 
                under the plan to unsecured creditors,'';
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (3) by adding at the end the following:
                  ``(D) with respect to a secured claim which would be 
                described in section 507(a)(8) of this title but for 
                its secured status, the holder of such claim will 
                receive on account of such claim cash payments of not 
                less than is required in subparagraph (C) and over a 
                period no greater than is required in such 
                subparagraph.''.

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

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

SEC. 513. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.

  (a) Payment of Taxes Required.--Section 960 of title 28, United 
States Code, is amended--
          (1) by inserting ``(a)'' before ``Any''; and
          (2) by adding at the end the following:
  ``(b) Such taxes shall be paid when due in the conduct of such 
business unless--
          ``(1) the tax is a property tax secured by a lien against 
        property that is abandoned within a reasonable time after the 
        lien attaches, by the trustee of a bankruptcy estate, pursuant 
        to section 554 of title 11; or
          ``(2) payment of the tax is excused under a specific 
        provision of title 11.
  ``(c) In a case pending under chapter 7 of title 11, payment of a tax 
may be deferred until final distribution is made under section 726 of 
title 11 if--
          ``(1) the tax was not incurred by a trustee duly appointed 
        under chapter 7 of title 11; or
          ``(2) before the due date of the tax, the court has made a 
        finding of probable insufficiency of funds of the estate to pay 
        in full the administrative expenses allowed under section 
        503(b) of title 11 that have the same priority in distribution 
        under section 726(b) of title 11 as such tax.''.
  (b) Payment of Ad Valorem Taxes Required.--Section 503(b)(1)(B) of 
title 11, United States Code, is amended in clause (i) by inserting 
after ``estate,'' and before ``except'' the following: ``whether 
secured or unsecured, including property taxes for which liability is 
in rem only, in personam or both,''.
  (c) Request for Payment of Administrative Expense Taxes Eliminated.--
Section 503(b)(1) of title 11, United States Code, is amended by adding 
at the end the following:
          ``(D) notwithstanding the requirements of subsection (a) of 
        this section, a governmental unit shall not be required to file 
        a request for the payment of a claim described in subparagraph 
        (B) or (C);''.
  (d) Payment of Taxes and Fees as Secured Claims.--Section 506 of 
title 11, United States Code, is amended--
          (1) in subsection (b) by inserting ``or State statute'' after 
        ``agreement''; and
          (2) in subsection (c) by inserting ``, including the payment 
        of all ad valorem property taxes in respect of the property'' 
        before the period at the end.

SEC. 514. TARDILY FILED PRIORITY TAX CLAIMS.

  Section 726(a)(1) of title 11, United States Code, is amended by 
striking ``before the date on which the trustee commences distribution 
under this section'' and inserting ``on or before the earlier of 10 
days after the mailing to creditors of the summary of the trustee's 
final report or the date on which the trustee commences final 
distribution under this section''.

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

  Section 523(a)(1)(B) of title 11, United States Code, is amended--
          (1) by inserting ``or equivalent report or notice,'' after 
        ``a return,'';
          (2) in clause (i)--
                  (A) by inserting ``or given'' after ``filed''; and
                  (B) by striking ``or'' at the end;
          (3) in clause (ii)--
                  (A) by inserting ``or given'' after ``filed'';
                  (B) by inserting ``, report, or notice'' after 
                ``return''; and
          (4) by adding at the end the following:
                          ``(iii) for purposes of this subsection, a 
                        return--
                                  ``(I) must satisfy the requirements 
                                of applicable nonbankruptcy law, and 
                                includes a return prepared pursuant to 
                                section 6020(a) of the Internal Revenue 
                                Code of 1986, or similar State or local 
                                law, or a written stipulation to a 
                                judgment entered by a nonbankruptcy 
                                tribunal, but does not include a return 
                                made pursuant to section 6020(b) of the 
                                Internal Revenue Code of 1986, or 
                                similar State or local law, and
                                  ``(II) must have been filed in a 
                                manner permitted by applicable 
                                nonbankruptcy law; or''.

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

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

SEC. 517. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 13 PLANS.

  (a) Filing of Prepetition Tax Returns Required for Plan 
Confirmation.--Section 1325(a) of title 11, United States Code, as 
amended by section 146, is amended--
          (1) in paragraph (6) by striking ``and'' at the end;
          (2) in paragraph (7) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(8) if the debtor has filed all Federal, State, and local 
        tax returns as required by section 1308 of this title.''.
  (b) Additional Time Permitted for Filing Tax Returns.--(1) Chapter 13 
of title 11, United States Code, is amended by adding at the end the 
following:

``Sec. 1308. Filing of prepetition tax returns

  ``(a) On or before the day prior to the day on which the first 
meeting of the creditors is convened under section 341(a) of this 
title, the debtor shall have filed with appropriate tax authorities all 
tax returns for all taxable periods ending in the 6-year period ending 
on the date of filing of the petition.
  ``(b) If the tax returns required by subsection (a) have not been 
filed by the date on which the first meeting of creditors is convened 
under section 341(a) of this title, the trustee may continue such 
meeting for a reasonable period of time, to allow the debtor additional 
time to file any unfiled returns, but such additional time shall be no 
more than--
          ``(1) for returns that are past due as of the date of the 
        filing of the petition, 120 days from such date,
          ``(2) for returns which are not past due as of the date of 
        the filing of the petition, the later of 120 days from such 
        date or the due date for such returns under the last automatic 
        extension of time for filing such returns to which the debtor 
        is entitled, and for which request has been timely made, 
        according to applicable nonbankruptcy law, and
          ``(3) upon notice and hearing, and order entered before the 
        lapse of any deadline fixed according to this subsection, where 
        the debtor demonstrates, by clear and convincing evidence, that 
        the failure to file the returns as required is because of 
        circumstances beyond the control of the debtor, the court may 
        extend the deadlines set by the trustee as provided in this 
        subsection for--
                  ``(A) a period of no more than 30 days for returns 
                described in paragraph (1) of this subsection, and
                  ``(B) for no more than the period of time ending on 
                the applicable extended due date for the returns 
                described in paragraph (2).
  ``(c) For purposes of this section only, a return includes a return 
prepared pursuant to section 6020 (a) or (b) of the Internal Revenue 
Code of 1986 or similar State or local law, or a written stipulation to 
a judgment entered by a nonbankruptcy tribunal.''.
  (2) The table of sections of chapter 13 of title 11, United States 
Code, is amended by inserting after the item relating to section 1307 
the following:

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

  (c) Dismissal or Conversion on Failure To Comply.--Section 1307 of 
title 11, United States Code, is amended--
          (1) by redesignating subsections (e) and (f) as subsections 
        (f) and (g), respectively, and
          (2) by inserting after subsection (d) the following:
  ``(e) Upon the failure of the debtor to file tax returns under 
section 1308 of this title, on request of a party in interest or the 
United States trustee and after notice and a hearing, the court shall 
dismiss a case or convert a case under this chapter to a case under 
chapter 7 of this title, whichever is in the best interests of 
creditors and the estate.''.
  (d) Timely Filed Claims.--Section 502(b)(9) of title 11, United 
States Code, is amended by striking the period at the end and inserting 
``, and except that in a case under chapter 13 of this title, a claim 
of a governmental unit for a tax in respect of a return filed under 
section 1308 of this title shall be timely if it is filed on or before 
60 days after such return or returns were filed as required.''.
  (e) Rules for Objections to Claims and to Confirmation.--It is the 
sense of Congress that the Advisory Committee on Bankruptcy Rules of 
the Judicial Conference should, within a reasonable period of time 
after the date of the enactment of this Act, propose for adoption 
amended Federal Rules of Bankruptcy Procedure which provide that--
          (1) notwithstanding the provisions of Rule 3015(f), in cases 
        under chapter 13 of title 11, United States Code, a 
        governmental unit may object to the confirmation of a plan on 
        or before 60 days after the debtor files all tax returns 
        required under sections 1308 and 1325(a)(7) of title 11, United 
        States Code, and
          (2) in addition to the provisions of Rule 3007, in a case 
        under chapter 13 of title 11, United States Code, no objection 
        to a tax in respect of a return required to be filed under such 
        section 1308 shall be filed until such return has been filed as 
        required.

SEC. 518. STANDARDS FOR TAX DISCLOSURE.

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

SEC. 519. SETOFF OF TAX REFUNDS.

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

            TITLE VI--ANCILLARY AND OTHER CROSS-BORDER CASES

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

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

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

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

                   ``SUBCHAPTER I--GENERAL PROVISIONS

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

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

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

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

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

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

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

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

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

``Sec. 601. Purpose and scope of application

  ``(a) The purpose of this chapter is to incorporate the Model Law on 
Cross-Border Insolvency so as to provide effective mechanisms for 
dealing with cases of cross-border insolvency with the objectives of--
          ``(1) cooperation between--
                  ``(A) United States courts, United States Trustees, 
                trustees, examiners, debtors, and debtors in 
                possession; and
                  ``(B) the courts and other competent authorities of 
                foreign countries involved in cross-border insolvency 
                cases;
          ``(2) greater legal certainty for trade and investment;
          ``(3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all creditors, and 
        other interested entities, including the debtor;
          ``(4) protection and maximization of the value of the 
        debtor's assets; and
          ``(5) facilitation of the rescue of financially troubled 
        businesses, thereby protecting investment and preserving 
        employment.
  ``(b) This chapter applies where--
          ``(1) assistance is sought in the United States by a foreign 
        court or a foreign representative in connection with a foreign 
        proceeding;
          ``(2) assistance is sought in a foreign country in connection 
        with a case under this title;
          ``(3) a foreign proceeding and a case under this title with 
        respect to the same debtor are taking place concurrently; or
          ``(4) creditors or other interested persons in a foreign 
        country have an interest in requesting the commencement of, or 
        participating in, a case or proceeding under this title.
  ``(c) This chapter does not apply to--
          ``(1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b); or
          ``(2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits specified 
        in under section 109(e) and who are citizens of the United 
        States or aliens lawfully admitted for permanent residence in 
        the United States.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``Sec. 602. Definitions

  ``For the purposes of this chapter, the term--
          ``(1) `debtor' means an entity that is the subject of a 
        foreign proceeding;
          ``(2) `establishment' means any place of operations where the 
        debtor carries out a nontransitory economic activity;
          ``(3) `foreign court' means a judicial or other authority 
        competent to control or supervise a foreign proceeding;
          ``(4) `foreign main proceeding' means a foreign proceeding 
        taking place in the country where the debtor has the center of 
        its main interests;
          ``(5) `foreign nonmain proceeding' means a foreign 
        proceeding, other than a foreign main proceeding, taking place 
        in a country where the debtor has an establishment;
          ``(6) `trustee' includes a trustee, a debtor in possession in 
        a case under any chapter of this title, or a debtor under 
        chapters 9 or 13 of this title; and
          ``(7) `within the territorial jurisdiction of the United 
        States' when used with reference to property of a debtor refers 
        to tangible property located within the territory of the United 
        States and intangible property deemed under applicable 
        nonbankruptcy law to be located within that territory, 
        including any property subject to attachment or garnishment 
        that may properly be seized or garnished by an action in a 
        Federal or State court in the United States.

``Sec. 603. International obligations of the United States

  ``To the extent that this chapter conflicts with an obligation of the 
United States arising out of any treaty or other form of agreement to 
which it is a party with 1 or more other countries, the requirements of 
the treaty or agreement prevail.

``Sec. 604. Commencement of ancillary case

  ``A case under this chapter is commenced by the filing of a petition 
for recognition of a foreign proceeding under section 615.

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

  ``A trustee or another entity (including an examiner) authorized by 
the court may be authorized by the court to act in a foreign country on 
behalf of an estate created under section 541. An entity authorized to 
act under this section may act in any way permitted by the applicable 
foreign law.

``Sec. 606. Public policy exception

  ``Nothing in this chapter prevents the court from refusing to take an 
action governed by this chapter if the action would be manifestly 
contrary to the public policy of the United States.

``Sec. 607. Additional assistance

  ``(a) Nothing in this chapter limits the power of the court, upon 
recognition of a foreign proceeding, to provide additional assistance 
to a foreign representative under this title or under other laws of the 
United States.
  ``(b) In determining whether to provide additional assistance under 
this title or under other laws of the United States, the court shall 
consider whether such additional assistance, consistent with the 
principles of comity, will reasonably assure--
          ``(1) just treatment of all holders of claims against or 
        interests in the debtor's property;
          ``(2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing of claims 
        in such foreign proceeding;
          ``(3) prevention of preferential or fraudulent dispositions 
        of property of the debtor;
          ``(4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed by this 
        title; and
          ``(5) if appropriate, the provision of an opportunity for a 
        fresh start for the individual that such foreign proceeding 
        concerns.

``Sec. 608. Interpretation

  ``In interpreting this chapter, the court shall consider its 
international origin, and the need to promote an application of this 
chapter that is consistent with the application of similar statutes 
adopted by foreign jurisdictions.

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

``Sec. 609. Right of direct access

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

``Sec. 610. Limited jurisdiction

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

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

  ``(a) Upon filing a petition for recognition, a foreign 
representative may commence--
          ``(1) an involuntary case under section 303; or
          ``(2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
  ``(b) The petition commencing a case under subsection (a) of this 
section must be accompanied by a statement describing the petition for 
recognition and its current status. The court where the petition for 
recognition has been filed must be advised of the foreign 
representative's intent to commence a case under subsection (a) of this 
section prior to such commencement.
  ``(c) A case under subsection (a) shall be dismissed unless 
recognition is granted.

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

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

``Sec. 613. Access of foreign creditors to a case under this title

  ``(a) Foreign creditors have the same rights regarding the 
commencement of, and participation in, a case under this title as 
domestic creditors.
  ``(b)(1) Subsection (a) of this section does not change or codify 
present law as to the priority of claims under section 507 or 726 of 
this title, except that the claim of a foreign creditor under those 
sections shall not be given a lower priority than that of general 
unsecured claims without priority solely because the holder of such 
claim is a foreign creditor.
  ``(2)(A) Subsection (a) of this section and paragraph (1) of this 
subsection do not change or codify present law as to the allowability 
of foreign revenue claims or other foreign public law claims in a 
proceeding under this title.
  ``(B) Allowance and priority as to a foreign tax claim or other 
foreign public law claim shall be governed by any applicable tax treaty 
of the United States, under the conditions and circumstances specified 
therein.

``Sec. 614. Notification to foreign creditors concerning a case under 
                    this title

  ``(a) Whenever in a case under this title notice is to be given to 
creditors generally or to any class or category of creditors, such 
notice shall also be given to the known creditors generally, or to 
creditors in the notified class or category, that do not have addresses 
in the United States. The court may order that appropriate steps be 
taken with a view to notifying any creditor whose address is not yet 
known.
  ``(b) Such notification to creditors with foreign addresses described 
in subsection (a) shall be given individually, unless the court 
considers that, under the circumstances, some other form of 
notification would be more appropriate. No letters rogatory or other 
similar formality is required.
  ``(c) When a notification of commencement of a case is to be given to 
foreign creditors, the notification shall--
          ``(1) indicate the time period for filing proofs of claim and 
        specify the place for their filing;
          ``(2) indicate whether secured creditors need to file their 
        proofs of claim; and
          ``(3) contain any other information required to be included 
        in such a notification to creditors pursuant to this title and 
        the orders of the court.
  ``(d) Any rule of procedure or order of the court as to notice or the 
filing of a claim shall provide such additional time to creditors with 
foreign addresses as is reasonable under the circumstances.

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

``Sec. 615. Application for recognition of a foreign proceeding

  ``(a) A foreign representative applies to the court for recognition 
of the foreign proceeding in which the foreign representative has been 
appointed by filing a petition for recognition.
  ``(b) A petition for recognition shall be accompanied by--
          ``(1) a certified copy of the decision commencing the foreign 
        proceeding and appointing the foreign representative;
          ``(2) a certificate from the foreign court affirming the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative; or
          ``(3) in the absence of evidence referred to in paragraphs 
        (1) and (2), any other evidence acceptable to the court of the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative.
  ``(c) A petition for recognition shall also be accompanied by a 
statement identifying all foreign proceedings with respect to the 
debtor that are known to the foreign representative.
  ``(d) The documents referred to in paragraphs (1) and (2) of 
subsection (b) must be translated into English. The court may require a 
translation into English of additional documents.

``Sec. 616. Presumptions concerning recognition

  ``(a) If the decision or certificate referred to in section 615(b) 
indicates that the foreign proceeding is a foreign proceeding within 
the meaning of section 101(23) and that the person or body is a foreign 
representative within the meaning of section 101(24), the court is 
entitled to so presume.
  ``(b) The court is entitled to presume that documents submitted in 
support of the petition for recognition are authentic, whether or not 
they have been legalized.
  ``(c) In the absence of evidence to the contrary, the debtor's 
registered office, or habitual residence in the case of an individual, 
is presumed to be the center of the debtor's main interests.

``Sec. 617. Order recognizing a foreign proceeding

  ``(a) Subject to section 606, an order recognizing a foreign 
proceeding shall be entered if--
          ``(1) the foreign proceeding is a foreign main proceeding or 
        foreign nonmain proceeding within the meaning of section 602;
          ``(2) the foreign representative applying for recognition is 
        a person or body within the meaning of section 101(24); and
          ``(3) the petition meets the requirements of section 615.
  ``(b) The foreign proceeding shall be recognized--
          ``(1) as a foreign main proceeding if it is taking place in 
        the country where the debtor has the center of its main 
        interests; or
          ``(2) as a foreign nonmain proceeding if the debtor has an 
        establishment within the meaning of section 602 in the foreign 
        country where the proceeding is pending.
  ``(c) A petition for recognition of a foreign proceeding shall be 
decided upon at the earliest possible time. Entry of an order 
recognizing a foreign proceeding shall constitute recognition under 
this chapter.
  ``(d) The provisions of this subchapter do not prevent modification 
or termination of recognition if it is shown that the grounds for 
granting it were fully or partially lacking or have ceased to exist, 
but in considering such action the court shall give due weight to 
possible prejudice to parties that have relied upon the granting of 
recognition. The case under this chapter may be closed in the manner 
prescribed for a case under section 350.

``Sec. 618. Subsequent information

  ``From the time of filing the petition for recognition of the foreign 
proceeding, the foreign representative shall file with the court 
promptly a notice of change of status concerning--
          ``(1) any substantial change in the status of the foreign 
        proceeding or the status of the foreign representative's 
        appointment; and
          ``(2) any other foreign proceeding regarding the debtor that 
        becomes known to the foreign representative.

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

  ``(a) From the time of filing a petition for recognition until the 
petition is decided upon, the court may, at the request of the foreign 
representative, where relief is urgently needed to protect the assets 
of the debtor or the interests of the creditors, grant relief of a 
provisional nature, including--
          ``(1) staying execution against the debtor's assets;
          ``(2) entrusting the administration or realization of all or 
        part of the debtor's assets located in the United States to the 
        foreign representative or another person authorized by the 
        court, including an examiner, in order to protect and preserve 
        the value of assets that, by their nature or because of other 
        circumstances, are perishable, susceptible to devaluation or 
        otherwise in jeopardy; and
          ``(3) any relief referred to in paragraph (3), (4), or (7) of 
        section 621(a).
  ``(b) Unless extended under section 621(a)(6), the relief granted 
under this section terminates when the petition for recognition is 
decided upon.
  ``(c) It is a ground for denial of relief under this section that 
such relief would interfere with the administration of a foreign main 
proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under this section.

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

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

``Sec. 621. Relief that may be granted upon recognition of a foreign 
                    proceeding

  ``(a) Upon recognition of a foreign proceeding, whether main or 
nonmain, where necessary to effectuate the purpose of this chapter and 
to protect the assets of the debtor or the interests of the creditors, 
the court may, at the request of the foreign representative, grant any 
appropriate relief, including--
          ``(1) staying the commencement or continuation of individual 
        actions or individual proceedings concerning the debtor's 
        assets, rights, obligations or liabilities to the extent they 
        have not been stayed under section 620(a);
          ``(2) staying execution against the debtor's assets to the 
        extent it has not been stayed under section 620(a);
          ``(3) suspending the right to transfer, encumber or otherwise 
        dispose of any assets of the debtor to the extent this right 
        has not been suspended under section 620(a);
          ``(4) providing for the examination of witnesses, the taking 
        of evidence or the delivery of information concerning the 
        debtor's assets, affairs, rights, obligations or liabilities;
          ``(5) entrusting the administration or realization of all or 
        part of the debtor's assets within the territorial jurisdiction 
        of the United States to the foreign representative or another 
        person, including an examiner, authorized by the court;
          ``(6) extending relief granted under section 619(a); and
          ``(7) granting any additional relief that may be available to 
        a trustee, except for relief available under sections 522, 544, 
        545, 547, 548, 550, and 724(a).
  ``(b) Upon recognition of a foreign proceeding, whether main or 
nonmain, the court may, at the request of the foreign representative, 
entrust the distribution of all or part of the debtor's assets located 
in the United States to the foreign representative or another person, 
including an examiner, authorized by the court, provided that the court 
is satisfied that the interests of creditors in the United States are 
sufficiently protected.
  ``(c) In granting relief under this section to a representative of a 
foreign nonmain proceeding, the court must be satisfied that the relief 
relates to assets that, under the law of the United States, should be 
administered in the foreign nonmain proceeding or concerns information 
required in that proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under paragraphs (1), (2), (3), and 
(6) of subsection (a).

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

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

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

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

``Sec. 624. Intervention by a foreign representative

  ``Upon recognition of a foreign proceeding, the foreign 
representative may intervene in any proceedings in a State or Federal 
court in the United States in which the debtor is a party.

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

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

  ``(a) In all matters included within section 601, the court shall 
cooperate to the maximum extent possible with foreign courts or foreign 
representatives, either directly or through the trustee.
  ``(b) The court is entitled to communicate directly with, or to 
request information or assistance directly from, foreign courts or 
foreign representatives, subject to the rights of parties in interest 
to notice and participation.

``Sec. 626. Cooperation and direct communication between the trustee 
                    and foreign courts or foreign representatives

  ``(a) In all matters included in section 601, the trustee or other 
person, including an examiner, authorized by the court, shall, subject 
to the supervision of the court, cooperate to the maximum extent 
possible with foreign courts or foreign representatives.
  ``(b) The trustee or other person, including an examiner, designated 
by the court is entitled, subject to the supervision of the court, to 
communicate directly with foreign courts or foreign representatives.
  ``(c) Section 1104(d) shall apply to the appointment of an examiner 
under this chapter. Any examiner shall comply with the qualification 
requirements imposed on a trustee by section 322.

``Sec. 627. Forms of cooperation

  ``Cooperation referred to in sections 625 and 626 may be implemented 
by any appropriate means, including--
          ``(1) appointment of a person or body, including an examiner, 
        to act at the direction of the court;
          ``(2) communication of information by any means considered 
        appropriate by the court;
          ``(3) coordination of the administration and supervision of 
        the debtor's assets and affairs;
          ``(4) approval or implementation of agreements concerning the 
        coordination of proceedings; and
          ``(5) coordination of concurrent proceedings regarding the 
        same debtor.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``Sec. 628. Commencement of a case under this title after recognition 
                    of a foreign main proceeding

  ``After recognition of a foreign main proceeding, a case under 
another chapter of this title may be commenced only if the debtor has 
assets in the United States. The effects of that case shall be 
restricted to the assets of the debtor that are within the territorial 
jurisdiction of the United States and, to the extent necessary to 
implement cooperation and coordination under sections 625, 626, and 
627, to other assets of the debtor that are within the jurisdiction of 
the court under sections 541(a) of this title, and 1334(e) of title 28, 
to the extent that such other assets are not subject to the 
jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

``Sec. 629. Coordination of a case under this title and a foreign 
                    proceeding

  ``Where a foreign proceeding and a case under another chapter of this 
title are taking place concurrently regarding the same debtor, the 
court shall seek cooperation and coordination under sections 625, 626, 
and 627, and the following shall apply:
          ``(1) When the case in the United States is taking place at 
        the time the petition for recognition of the foreign proceeding 
        is filed--
                  ``(A) any relief granted under sections 619 or 621 
                must be consistent with the case in the United States; 
                and
                  ``(B) even if the foreign proceeding is recognized as 
                a foreign main proceeding, section 620 does not apply.
          ``(2) When a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  ``(A) any relief in effect under sections 619 or 621 
                shall be reviewed by the court and shall be modified or 
                terminated if inconsistent with the case in the United 
                States; and
                  ``(B) if the foreign proceeding is a foreign main 
                proceeding, the stay and suspension referred to in 
                section 620(a) shall be modified or terminated if 
                inconsistent with the case in the United States.
          ``(3) In granting, extending, or modifying relief granted to 
        a representative of a foreign nonmain proceeding, the court 
        must be satisfied that the relief relates to assets that, under 
        the law of the United States, should be administered in the 
        foreign nonmain proceeding or concerns information required in 
        that proceeding.
          ``(4) In achieving cooperation and coordination under 
        sections 628 and 629, the court may grant any of the relief 
        authorized under section 305.

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

  ``In matters referred to in section 601, with respect to more than 1 
foreign proceeding regarding the debtor, the court shall seek 
cooperation and coordination under sections 625, 626, and 627, and the 
following shall apply:
          ``(1) Any relief granted under section 619 or 621 to a 
        representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be consistent 
        with the foreign main proceeding.
          ``(2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for recognition, 
        of a foreign nonmain proceeding, any relief in effect under 
        section 619 or 621 shall be reviewed by the court and shall be 
        modified or terminated if inconsistent with the foreign main 
        proceeding.
          ``(3) If, after recognition of a foreign nonmain proceeding, 
        another foreign nonmain proceeding is recognized, the court 
        shall grant, modify, or terminate relief for the purpose of 
        facilitating coordination of the proceedings.

``Sec. 631. Presumption of insolvency based on recognition of a foreign 
                    main proceeding

  ``In the absence of evidence to the contrary, recognition of a 
foreign main proceeding is for the purpose of commencing a proceeding 
under section 303, proof that the debtor is generally not paying its 
debts.

``Sec. 632. Rule of payment in concurrent proceedings

  ``Without prejudice to secured claims or rights in rem, a creditor 
who has received payment with respect to its claim in a foreign 
proceeding pursuant to a law relating to insolvency may not receive a 
payment for the same claim in a case under any other chapter of this 
title regarding the debtor, so long as the payment to other creditors 
of the same class is proportionately less than the payment the creditor 
has already received.''.
  (b) Clerical Amendment.--The table of chapters for title 11, United 
States Code, is amended by inserting after the item relating to chapter 
5 the following:

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

SEC. 602. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11, UNITED STATES CODE.

  (a) Applicability of Chapters.--Section 103 of title 11, United 
States Code, is amended--
          (1) in subsection (a), by inserting before the period the 
        following: ``and this chapter, sections 307, 555 through 557, 
        559, and 560 apply in a case under chapter 6''; and
          (2) by adding at the end the following:
  ``(j) Chapter 6 applies only in a case under that chapter, except 
that section 605 applies to trustees and to any other entity authorized 
by the court, including an examiner, under chapters 7, 11, and 12, to 
debtors in possession under chapters 11 and 12, and to debtors or 
trustees under chapters 9 and 13 who are authorized to act under 
section 605.''.
  (b) Definitions.--Section 101 of title 11, United States Code, is 
amended by striking paragraphs (23) and (24) and inserting the 
following:
          ``(23) `foreign proceeding' means a collective judicial or 
        administrative proceeding in a foreign state, including an 
        interim proceeding, pursuant to a law relating to insolvency in 
        which proceeding the assets and affairs of the debtor are 
        subject to control or supervision by a foreign court, for the 
        purpose of reorganization or liquidation;
          ``(24) `foreign representative' means a person or body, 
        including a person or body appointed on an interim basis, 
        authorized in a foreign proceeding to administer the 
        reorganization or the liquidation of the debtor's assets or 
        affairs or to act as a representative of the foreign 
        proceeding;''.
  (c) Amendments to Title 28, United States Code.--
          (1) Procedures.--Section 157(b)(2) of title 28, United States 
        Code, is amended--
                  (A) in subparagraph (N), by striking ``and'' at the 
                end;
                  (B) in subparagraph (O), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(P) recognition of foreign proceedings and other matters 
        under chapter 6 of title 11.''.
          (2) Bankruptcy cases and proceedings.--Section 1334(c)(1) of 
        title 28, United States Code, is amended by striking ``Nothing 
        in'' and inserting ``Except with respect to a case under 
        chapter 6 of title 11, nothing in''.
          (3) Duties of trustees.--Section 586(a)(3) of title 28, 
        United States Code, is amended by inserting ``6,'' after 
        ``chapter''.

                        TITLE VII--MISCELLANEOUS

SEC. 701. TECHNICAL AMENDMENTS.

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

SEC. 702. APPLICATION OF AMENDMENTS.

  The amendments made by this Act shall apply only with respect to 
cases commenced under title 11 of the United States Code after the date 
of the enactment of this Act.

                          Purpose and Summary

    The purpose of H.R. 3150 is to improve bankruptcy law and 
practice by restoring personal responsibility and integrity in 
the bankruptcy system and by ensuring that it is fair for both 
debtors and creditors.
    H.R. 3150 is a comprehensive package of reforms pertaining 
to consumer and business bankruptcy law and practice, and 
includes provisions regarding the treatment of tax claims and 
enhanced data collection. H.R. 3150 also establishes a separate 
chapter under the Bankruptcy Code devoted to the special issues 
and concerns presented by international insolvencies.
    The consumer bankruptcy reforms of H.R. 3150 are 
implemented through a self-evaluating income/expense screening 
mechanism, the establishment of new eligibility standards for 
bankruptcy relief, the imposition of additional financial 
disclosure requirements for consumer debtors, and augmented 
responsibilities for those charged with administering consumer 
bankruptcy cases. In addition, H.R. 3150 institutes a panoply 
of consumer bankruptcy reforms designed to increase the 
protections afforded to debtors and creditors.

                Background and Need for the Legislation

                               Background

    Representative George W. Gekas (R-Pa.) (for himself and 
Representatives Bill McCollum (R-Fla.), Rick Boucher (D-Va.), 
and James P. Moran (D-Va.)), introduced H.R. 3150 on February 
3, 1998. H.R. 3150 is derived from four major sources, one of 
which is H.R. 2500, the ``Responsible Borrower Bankruptcy 
Protection Act.'' Introduced by Representative McCollum (for 
himself and Representative Boucher) on September 18, 1997, H.R. 
2500 provided the conceptual foundation for needs-based 
consumer bankruptcy reform, one of the principal precepts of 
H.R. 3150. Since its introduction last fall, H.R. 2500 has 
received broad bipartisan support and currently has 185 co-
sponsors.
    In addition to including the principal features of H.R. 
2500, H.R. 3150 implements many of the recommendations issued 
by the National Bankruptcy Review Commission in its report of 
October 20, 1997, notably those regarding small business 
debtors, appellate reform, international insolvencies, and data 
collection. 1
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    \1\ See Report of the National Bankruptcy Review Commission (Oct. 
20, 1997). The National Bankruptcy Review Commission was an independent 
commission established pursuant to the Bankruptcy Reform Act of 1994, 
Pub. L. No. 103-394, 108 Stat. 4106. The nine-member Commission was 
created to investigate and study issues relating to the Bankruptcy 
Code; solicit divergent views of parties concerned with the operation 
of the bankruptcy system; evaluate the advisability of proposals with 
respect to such issues; and prepare a report for the President, 
Congress and the Chief Justice. The 1300-page Report, which was issued 
on October 20, 1997, contains a detailed statement of the Commission's 
findings and conclusions together with recommendations for legislative 
and administrative action.
---------------------------------------------------------------------------
    Reflecting its bipartisan sponsorship, H.R. 3150 also 
incorporates provisions from H.R. 3146, the ``Consumer Lenders 
and Borrowers Bankruptcy Accountability Act of 1998,'' 
2 which give consumer debtors additional protections 
concerning the treatment of pension funds and the provision of 
utility services under Section 366 of the Bankruptcy Code. In 
addition, H.R. 3150 responds to various issues raised during 
hearings on this legislation before the Subcommittee on 
Commercial and Administrative Law.
---------------------------------------------------------------------------
    \2\ H.R. 3146 was introduced on February 3, 1998 by Representative 
Jerrold Nadler (D-NY) (for himself and Representatives John Conyers, 
Jr. (D-Mich.) and Earl Hilliard (D-Ala.)).
---------------------------------------------------------------------------

                        Need for the Legislation

Consumer bankruptcy

    Overview. According to statistics released by the 
Administrative Office of the United States Courts, more than 
1.4 million Americans filed for bankruptcy relief in calendar 
year 1997.3 The number of bankruptcy cases filed 
last year was 19.1 percent more than the previous year. The 
Administrative Office, which compiles statistics on a quarterly 
basis, reported that this represented the seventh ``consecutive 
record high for a 12-month period since filings passed the one-
million mark for the first time in the 12-month period ending 
June 30, 1996.'' 4 Paradoxically, this explosion in 
bankruptcy filing rates is occurring during a period when the 
economy is robust. Unemployment is low, personal incomes are 
rising, and consumer confidence is high.5
---------------------------------------------------------------------------
    \3\ Administrative Office for United States Courts, Calendar Year 
1997 Shows Bankruptcy Filings Up 19 Percent Over 1996, Feb. 27, 1998, 
at 1 (press release).
    \4\ Id. (emphasis added).
    \5\ See, e.g., Hearing Before the Subcomm. on Commercial and 
Administrative Law on Consumer Bankruptcy Issues in H.R. 3150, 
``Bankruptcy Reform Act of 1988,'' H.R. 2500, ``Responsible Borrower 
Bankruptcy Protection Act,'' and H.R. 3146, ``Consumer Lenders and 
Borrowers Bankruptcy Accountability Act of 1998,'' 105th Cong. (Mar. 
10, 1998) (Statement of Stuart A. Feldstein).
---------------------------------------------------------------------------
    The extraordinary increase in bankruptcy filings has 
significant adverse economic consequences. According to one 
study, financial losses in 1997 resulting from these bankruptcy 
filings are estimated to exceed $44 billion, which translates 
into a loss equal to more than $400 per household.6 
This study projects that even if the growth rate in personal 
bankruptcies slows to only 15 percent over the next three 
years, the American economy will have to absorb a cumulative 
cost of more than $220 billion.7 Notwithstanding 
these projections, recent studies conclude that many debtors 
who file for bankruptcy relief can, in fact, repay a 
significant portion, if not all, of their debts. 8
---------------------------------------------------------------------------
    \6\ See, e.g., id. (Statement of WEFA Group Resource Planning 
Service, ``Final Report: The Financial Costs of Personal Bankruptcy at 
16-17 (Feb. 1998)).
    \7\ Id.
    \8\ See, e.g., Hearing Before the Subcomm. on Commercial and 
Administrative Law on Consumer Bankruptcy Issues in H.R. 3150, 
``Bankruptcy Reform Act of 1988,'' H.R. 2500, ``Responsible Borrower 
Bankruptcy Protection Act,'' and H.R. 3146, ``Consumer Lenders and 
Borrowers Bankruptcy Accountability Act of 1998,'' 105th Cong. (Mar. 
12, 1998) (Statement of Ernst & Young LLP--Policy Economics and 
Quantitative Analysis Group, ``Chapter 7 Bankruptcy Petitioners'' 
Ability to Repay: Additional Evidence from Bankruptcy Petition Files'' 
(Feb. 1998); Michael E. Staten & John M. Barron, ``Personal Bankruptcy: 
A Report on Petitioners'' Ability to Pay'' (Oct. 6, 1997)).
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    The consumer bankruptcy provisions of H.R. 3150 address the 
needs of creditors as well as debtors. Title I's creditor 
protections consist of three main components: needs-based 
bankruptcy, general protections for creditors, and protections 
for specific types of creditors. The debtor protections in 
Title I consist of enhanced requirements for those 
professionals and others who assist consumer debtors in 
connection with their bankruptcy cases, expanded notice 
requirements with regard to alternatives to bankruptcy relief, 
required participation in a debt repayment program, and the 
institution of a pilot program to study the effectiveness of 
consumer financial education for debtors.
    Consumer creditor protections: needs-based reforms. The 
heart of H.R. 3150's consumer bankruptcy reforms is the 
implementation of a mechanism that ensures consumer debtors 
repay their creditors the maximum that they can afford. For 
chapter 7 of the Bankruptcy Code (a form of bankruptcy relief 
where the debtor generally receives a discharge of his or her 
personal liability for most unsecured debts), H.R. 3150 
implements mandatory eligibility standards for those 
individuals who seek this form of bankruptcy relief. Parties in 
interest, such as creditors, are empowered under H.R. 3150 to 
seek dismissal of Chapter 7 cases where debtors are ineligible. 
These reforms should have no impact on consumer debtors who 
lack the ability to repay their debts and deserve a fresh 
start.
    H.R. 3150's needs-based reforms also create additional 
financial disclosure requirements for debtors who file for 
relief under chapter 7 and 13 (a form of bankruptcy relief 
where the debtor commits to a repayment plan in exchange for 
receiving a discharge that is broader than a chapter 7 
discharge), and augment the monitoring responsibilities of 
chapter 7 and 13 trustees, among other measures. With regard to 
chapter 13 cases, H.R. 3150 ensures that these debtors repay 
the most that they can afford over the entire life of the plan.
    The needs-based test operates through objective criteria so 
that debtors and their counsel can self-evaluate their 
eligibility for relief under chapter 7 or chapter 
13.9 The needs-based formula is fair and balanced. 
Expenses are localized and a debtor's extraordinary 
circumstances are recognized, including episodic losses of 
income. H.R. 3150 allows the debtor to identify and explain 
expenses that exceed the specified standards under 
``extraordinary circumstance'' provisions, such as educational 
expenses for dependents or excessive automobile expenses 
associated with the operation of the debtor's business.
---------------------------------------------------------------------------
    \9\ The current system as well as other legislative proposals that 
rely on an amended version of Section 707(b) of the Bankruptcy Code, 
which provides for the dismissal of chapter 7 cases for ``substantial 
abuse,'' suffer from the same problem: lack of certainty. Given its 
inherent uncertainty of application and interpretation, an approach to 
consumer bankruptcy reform that relies on Section 707(b) will simply 
engender more litigation, a cost that would have to be borne by 
creditors and debtors alike, and yield disparate results. H.R. 3150's 
goal of uniformity, on the other hand, assists both creditors and 
debtors.
---------------------------------------------------------------------------
    The Subcommittee on Commercial and Administrative Law heard 
testimony that, if H.R. 3150's needs-based and other consumer 
bankruptcy reforms are implemented, the rate of repayment to 
creditors will increase while the number of bankruptcy filings 
will decrease.10 This is because more debtors will 
be shifted into chapter 13 as opposed to chapter 
7.11
---------------------------------------------------------------------------
    \10\ See, e.g., Hearing Before the Subcomm. on Commercial and 
Administrative Law on Consumer Bankruptcy Issues in H.R. 3150, 
``Bankruptcy Reform Act of 1988,'' H.R. 2500, ``Responsible Borrower 
Bankruptcy Protection Act,'' and H.R. 3146, ``Consumer Lenders and 
Borrowers Bankruptcy Accountability Act of 1998,'' 105th Cong. (Mar. 
10, 1998) (Statement of WEFA Group Resource Planning Service, ``Final 
Report: The Financial Costs of Personal Bankruptcy,'' at 20 (Feb. 
1998)).
    \11\ Based on the results of one economic analysis of H.R. 3150 as 
originally introduced, the cumulative savings to the American economy 
that could result from the implementation of these needs-based reforms 
over the period of 1998 to 2000 may range from $15 billion to $30 
billion. Id. at 23.
---------------------------------------------------------------------------
    A critical component of H.R. 3150's needs-based reforms is 
that they are designed to target only those debtors who have 
the ability to repay. The Committee approved an amendment 
offered by Chairman Hyde (for himself and Ms. Jackson Lee) that 
modifies the needs-based formula by increasing the applicable 
income level in determining chapter 7 eligibility.12 
Those in the upper half of the income scale are more likely to 
have the ability to repay a portion of their debts out of 
future income without significant hardship to themselves and 
their families. Moreover, the 100 percent of national median 
income threshold should significantly reduce administrative 
overhead by limiting numbers of debtors potentially subject to 
the needs based formula.13
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    \12\ The initial screening issue will no longer be whether 
individuals or couples have 75 percent or more of national median 
income figures that take into account family size but whether the 
incomes of debtors at least equal national median figures.
    \13\ According to one study, only 15 percent of consumer debtors 
would met H.R. 3150's needs- based test under the former 75 percent 
income threshold when other requirements of the screening mechanism are 
taken into account. See Hearing Before the Subcomm. on Commercial and 
Administrative Law on Consumer Bankruptcy Issues in H.R. 3150, 
``Bankruptcy Reform Act of 1988,'' H.R. 2500, ``Responsible Borrower 
Bankruptcy Protection Act,'' and H.R. 3146, ``Consumer Lenders and 
Borrowers Bankruptcy Accountability Act of 1998,'' 105th Cong. (Mar. 
12, 1998) (Statement of Ernst & Young, Chapter 7 Bankruptcy 
Petitioners'' Ability to Repay: the National Perspective, 1997). As 
amended, H.R. 3150 will impact on an even lower percent of consumer 
debtors.
---------------------------------------------------------------------------
    Rather than creating entirely new standards defining income 
and expenses, H.R. 3150's needs-based test parallels current 
law and practice. Under current law, a debtor must complete a 
schedule that lists all sources of income and 
expenses.14 Debtors do not have the discretion to 
determine whether any source of income or expense should not be 
disclosed.15 Without this mandatory disclosure 
requirement, debtors could shield important financial 
information.
---------------------------------------------------------------------------
    \14\ 11 U.S.C. Sec. 521; Official and Procedural Bankruptcy Form 
6--Schedules I and J.
    \15\ Id. For example, on Schedule I, a debtor must report all 
sources of income, including: estimated monthly overtime; regular 
income from the operation of a business; alimony, maintenance or 
support payments payable to the debtor for the debtor's use or that of 
the debtor's dependents; social security or other government 
assistance, such as disability income or income a debtor receives from 
other Federal programs that provide financial assistance; and pension 
or retirement income.
    Correlatively, Schedule J requires the debtor to disclose all 
expenses, including: alimony, maintenance, and support paid to others; 
payments for support of additional dependents not living at the 
debtor's home; and regular expenses from the operation of the debtor's 
business, profession, or farm.
---------------------------------------------------------------------------
    Protections for creditors--in general. H.R. 3150 contains a 
panoply of reforms that will provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claims, are not adversely impacted. H.R. 3150 
accomplishes this goal by (1) ensuring that creditors receive 
proper and timely notice and have sufficient time to respond to 
the filing of a bankruptcy case, (2) by limiting abusive serial 
filings and extending the period between successive discharges, 
(3) by implementing various provisions designed to improve the 
accuracy of the information contained in debtors'' schedules 
and statements of financial affairs, and (4) by limiting 
abusive use of exemptions.
    Protection of family support obligations. Family support 
obligations receive a number of special protections in 
bankruptcy, which they will continue to enjoy under the law as 
amended by H.R. 3150. The claims of spouses, former spouses, 
and children for alimony, maintenance, or support will retain 
their current priority status, with the consequence that during 
the life of a bankruptcy case such obligations will be paid 
ahead of lower priority claims and general unsecured claims. 
H.R. 3150 also retains the nondischargeability of family 
support obligations, with the result that such debts will not 
be extinguished at the end of the bankruptcy process.
    H.R. 3150, as reported by the Committee on the Judiciary, 
incorporates additional safeguards for family support. The 
requirements for court confirmation of repayment plans in cases 
under chapter 11 (reorganization), chapter 12 (adjustment of 
debts of family farmers), and chapter 13 (adjustment of debts 
of individuals) are expanded to include full payment of amounts 
due--after the filing of a bankruptcy petition--under orders 
for alimony, maintenance, or support. In addition, a debtor 
will be required to certify full payment of amounts due post-
petition under orders for alimony, maintenance, or support in 
order to qualify for a discharge (of dischargeable obligations) 
based on completion of plan payments in a chapter 12 or 13 
case.
    Underscoring the importance the Committee places on family 
support, the first amendment it adopted was language proposed 
by Chairman Hyde designed to protect spouses, former spouses, 
and children from the diversion of funds to other priority 
creditors.16 That amendment continues to accord 
priority to claims for debts incurred to pay nondischargeable 
obligations, but effectively subordinates such new derivative 
priority claims to the existing priorities. As a result, the 
priority treatment of family support claims of spouses, former 
spouses, and children will not be diluted by according similar 
priority treatment to the claims of banks and others that loan 
money for family support related purposes. Such derivative 
priority claims instead would receive a lower priority.
---------------------------------------------------------------------------
    \16\ Section 141 of H.R. 3150 as introduced had provided that a 
claim arising from a debt incurred to pay a nondischargeable obligation 
would have the same priority as the underlying obligation. The 
potential problem was such derivative debts might compete for priority 
treatment with alimony, maintenance, or support, depending on the 
priority status of a claim for the underlying obligation.
---------------------------------------------------------------------------
    Finally, Chairman Hyde's amendment addressed a related 
problem. The language of the legislation as reported by the 
Subcommittee on Commercial and Administrative Law had given the 
same priority treatment to debts in the nature of support owed 
to a state or a municipality as was accorded to direct support 
obligations to spouses, former spouses, and children. Debts to 
states or municipalities that arise out of support obligations, 
under Chairman Hyde's amendment, were given a priority status 
immediately below direct support obligations--thus not 
competing with family support needs.
    The Committee on the Judiciary adopted Chairman Hyde's 
family support amendment as well as four amendments by Mr. 
Boucher that addressed family support related issues. Mr. 
Boucher's first amendment--now reflected in a new section 150 
of the Committee Amendment in the Nature of a Substitute--
provides enhanced post-bankruptcy protection to family support 
claims of spouses, former spouses, and children (in the nature 
of alimony, maintenance, or support) by subordinating certain 
other nondischargeable obligations. His second amendment 
protects judicial flexibility over the timing of payments for 
family support arrearages; the Committee accepted an amendment 
by Mr. Nadler (to the amendment by Mr. Boucher) that ensures 
family support payments are not adversely affected by the 
minimum chapter 13 planpayment required under H.R. 3150 for 
general unsecured creditors. Mr. Boucher's third amendment makes H.R. 
3150's presumption of nondischargeability for credit extensions during 
the ninety-day prebankruptcy period inapplicable to certain limited 
consumer debts. The fourth amendment offered by Mr. Boucher restores 
the scope of current law's stay of actions against codebtors in limited 
situations involving obligations under separation agreements or divorce 
decrees.
    Protections for secured creditors. H.R. 3150's reforms with 
respect to secured creditors clarify important issues such as 
those concerning the definition of household goods, valuation 
of a secured interest, and the debtor's retention of property 
subject to a secured interest. H.R. 3150 also addresses the 
problem of abusive purchases by debtors on a secured credit 
basis just before they file for bankruptcy relief. In addition, 
H.R. 3150 resolves the issue of whether secured debts with 
respect to personal property of the debtor can ``ride through'' 
bankruptcy. These provisions will reduce the potential for 
abuse that exists under current law.
    Protections for unsecured creditors, including lessors. 
These reforms are reasonable and balanced responses to abuse 
and fraud in the present bankruptcy system. They mainly address 
abusive practices by consumer debtors who, for example, 
knowingly load up with credit card purchases or recklessly 
obtain credit and then file for bankruptcy relief.
    H.R. 3150 responds to the problem of debtors who obtain 
credit extensions on the eve of bankruptcy. It also prevents 
the discharge of debts incurred by debtors who lack any 
reasonable expectation that they can repay their debts on an 
objective basis. In addition, H.R. 3150 prevents the discharge 
of debts based on fraud, embezzlement and malicious injury in 
chapter 13 cases.
    With respect to the interests of lessors, chapter 13 
debtors, under H.R. 3150, must remain current on their personal 
property leases. The bill also addresses a problem faced by 
thousands of small landlords across the nation regarding the 
widespread practice of tenants who file for bankruptcy relief 
so that they can live ``rent free.''
    Debtor protections--in general. H.R. 3150 codifies various 
debtor protections. One requires that notice of bankruptcy 
alternatives be supplied to individuals with primarily consumer 
debts before they file for bankruptcy relief. In addition, H.R. 
3150 creates a pilot consumer debtor financial management 
training program. It also regulates the activities of debt 
relief counseling agencies.
    H.R. 3150 creates a debtor's ``bill of rights'' with regard 
to the services and notice that a consumer should receive from 
those that render assistance in connection with the filing of 
bankruptcy cases. Through misleading advertising and deceptive 
practices, ``petition mills'' deceive consumers about the 
benefits and detriments of bankruptcy. H.R. 3150 responds to 
this problem by instituting mandatory disclosure and 
advertising requirements as well as enforcement mechanisms.
    H.R. 3150 also ensures that consumers are informed about 
alternatives to bankruptcy relief and the availability of 
credit counseling. It is very important that debtors know 
before they file for bankruptcy relief that there may be viable 
and cost-effective alternatives to bankruptcy. Unless otherwise 
excepted, consumers will be required under H.R. 3150 to 
participate in a debt repayment plan sponsored by a credit 
counseling service before they file for bankruptcy relief. The 
bill also establishes a pilot consumer debtor financial 
management training project, which will assess the 
effectiveness of such educational measures.
    The bill also reinforces a debtor's ``fresh start.'' It 
provides a simplified and uniform approach to the exemption of 
tax-qualified retirement funds and protects the interests of 
debtors with regard to the continued provision of basic utility 
services.

Business bankruptcy

    H.R. 3150 addresses the special problems presented by small 
business cases by instituting a variety of time frames and 
enforcement mechanisms that will identify and weed out small 
business debtors who are not likely to reorganize. It also 
requires more active monitoring of these cases by United States 
Trustees and the bankruptcy courts. In addition, H.R. 3150 
includes provisions dealing with business bankruptcy cases in 
general, and chapter 12 (family farmer bankruptcies).
    Small business/single asset real estate debtors. Most 
chapter 11 cases are filed by small business debtors. Although 
the Bankruptcy Code envisions that creditors should play a 
major role in the oversight of chapter 11 cases, in practice 
this does not often occur with small business debtors. The main 
reason is that creditors in these cases do not have claims 
large enough to warrant the time and money to participate 
actively in them. The resulting lack of creditor oversight 
creates a greater need for United States Trustees to monitor 
these cases actively. Nevertheless, monitoring of these debtors 
by United States Trustees varies throughout the nation.
    The small business and single asset real estate provisions 
of H.R. 3150 are largely derived from consensus recommendations 
of the National Bankruptcy Review Commission. These provisions 
in H.R. 3150 have received broad support from those in the 
bankruptcy community, including various bankruptcy judges and 
creditor groups, and the Executive Office for United States 
Trustees.
    With regard to single asset real estate debtors, H.R. 3150 
eliminates the monetary cap from the definition currently in 
the Bankruptcy Code and makes these debtors subject to the 
small business provisions of the bill. It also amends the 
automatic stay provisions by permitting a single asset real 
estate debtor to make requisite interest payments out of rents 
or other proceeds generated by the real property.

Other provisions having general impact

    H.R. 3150 contains several provisions having general impact 
with respect to bankruptcy law and practice. Under H.R. 3150, 
most appeals from final bankruptcy court decisions will be 
heard directly by the court of appeals for the appropriate 
circuit. Another general provision of H.R. 3150 requires the 
Executive Office for United States Trustees to compile various 
statistics regarding chapter 7, 11 and 13 cases and to make 
these data available to the public and to report annually to 
Congress on the data collected. Other general provisions 
include a prohibition against the appointment of fee examiners 
and the allowance of shared compensation with bona fide public 
service attorney referral programs.

                                Hearings

    The Committee began its consideration of comprehensive 
bankruptcy reform more than one year ago. On April 16, 1997, 
the Subcommittee on Commercial and Administrative Law conducted 
a hearing on the operation of the bankruptcy system that was 
combined with a status report from the National Bankruptcy 
Review Commission.17 This was the first of nine 
hearings that the Subcommittee would conduct on bankruptcy 
reform over the ensuing year.18
---------------------------------------------------------------------------
    \17\ Hearing Before the Subcommittee on Commercial and 
Administrative Law on the Operation of the Bankruptcy System and Status 
Report from the National Bankruptcy Review Commission, 105th Cong. 
(1997).
    \18\ The dates and subject matters of these hearings are as 
follows:
    April 16, 1997: Hearing on the operation of the bankruptcy system 
and status report from the National Bankruptcy Review Commission.
    April 30, 1997: H.R. 764 & H.R. 120: Bankruptcy Amendments of 1997.
    October 9, 1997: H.R. 2592: Private Trustee Reform Act.
    November 13, 1997: Hearing on the Report of the National Bankruptcy 
Review Commission.
    February 12, 1998: H.R. 2604 & H.R. 2611: Religious Liberty and 
Charitable Donation Protection Act of 1997.
    March 10, 1998: H.R. 3150, 3146 & 2500: Bankruptcy Reform.
    March 11, 1998: Same.
    March 18, 1998: Same.
    March 19, 1998: Same.
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    With regard to H.R. 3150 alone, the Subcommittee held four 
hearings. Over the course of those hearings, more than 60 
witnesses, representing a broad cross-section of interests and 
constituencies in the bankruptcy community, testified. Nearly 
every major organization having an interest in bankruptcy 
reform had an opportunity to participate in these hearings. 
Witnesses at the March 10, 1998 hearing included the following: 
Congressmen Bill McCollum, Rick Boucher and Jim Moran; Hon. 
Edith Hollan Jones, Judge, United States Court of Appeals for 
the Fifth Circuit; Hon. Randall J. Newsome, United States 
Bankruptcy Judge, Northern District of California; Lloyd N. 
Cutler, Wilmer, Cutler & Pickering, representing the Bankruptcy 
Issues Council; Hon. Heidi Heitkamp, Attorney General of the 
State of North Dakota, representing the National Association of 
Attorneys General; Karen Cosgrove, Vice President of Business 
Operations, Kemp Management, representing the National Multi-
Housing Council and National Apartment Association; John J. 
Gleason, Vice President/Credit, Bon-Ton Department Stores, 
representing the National Retail Federation; Bruce L. Hammonds, 
Senior Vice Chairman, MBNA America Bank, N.A.; Janet Kubica, 
Chief Executive Officer, Postmark Credit Union, representing 
the Credit Union National Association; William T. Kosturko, 
Executive Vice President of People's Bank of Bridgeport, 
representing America's Community Bankers; Nicholl Russell, a 
former chapter 7 debtor; James ``Ike'' Shulman, representing 
the National Association of Consumer Bankruptcy Attorneys; 
Henry J. Sommer, Consumer Bankruptcy Assistance Project; 
Matthew J. Mason, Assistant Director, UAW-GM Legal Services 
Plan; Stuart A. Feldstein, President, SMR Research Corporation; 
Mark Lauritano, Senior Vice President, WEFA, Inc.; Prof. 
Lawrence M. Ausubel, Department of Economics, University of 
Maryland; and Vern McKinley, regular policy contributor for 
Cato Institute.
    Witnesses at the March 12, 1998 hearing included the 
following: Dr. Michael E. Staten, Credit Research Center, 
Georgetown University School of Business; Richard M. Stana, 
Associate Director, Administration of Justice Issues, U.S. 
General Accounting Office; Dr. Thomas S. Neubig, National 
Director, Policy Economics & Quantitative Analysis, Ernst & 
Young; Dr. Fritz J. Scheuren, Associate National Technical 
Director, Statistical Sampling, Ernst & Young; George J. 
Wallace, Eckert Seamons Cherin & Mellott, representing the 
American Financial Services Association; Robert F. Mitsch, 
Mitsch & Crutchfield, representing the National Retail 
Federation; Robert H. Waldschmidt, Howell & Fisher, 
representing the National Association of Bankruptcy Trustees; 
Norma L. Hammes, Gold & Hammes, representing National 
Association of Consumer Bankruptcy Attorneys; Prof. Karen 
Gross, New York Law School; Lewis Mandell, Dean, Marquette 
University; Marion A. Olson, Jr., Standing Chapter 13 Trustee, 
Western District of Texas--San Antonio Division; and William 
Brewer, Jr., National Association of Consumer Bankruptcy 
Attorneys.
    Witnesses at the March 18, 1998 hearing included the 
following: Judith R. Starr, Assistant Chief Litigation Counsel, 
Enforcement Division, Securities and Exchange Commission; 
Donald B. Banks, Director of Legal Services, Hudson 
Corporation, representing the National Retail Federation; Brian 
L. McDonnell, President and Chief Executive Officer, Navy 
Federal Credit Union, representing the National Association of 
Federal Credit Unions; Judith Greenstone Miller, representing 
the Commercial Law League of America; Hon. Bernice Donald, 
Judge, United States District Court for the Western District of 
Tennessee; Thomas H. Boone, Managing Director of Portfolio 
Services, Countrywide Home Loans, Inc.; Jeffrey A. Tassey, 
Senior Vice President of Government & Legal Affairs, American 
Financial Services Association; Mallory B. Duncan, Vice 
President and General Counsel, National Retail Federation; 
Michael F. McEneney, Partner, Morrison & Foerster, representing 
the Bankruptcy Issues Council; Hon. Eugene R. Wedoff, United 
States Bankruptcy Judge, Northern District of Illinois, 
representing the American Bankruptcy Institute; Prof. Jeffrey 
W. Morris, University of Dayton School of Law, representing the 
National Bankruptcy Conference; Michael J. Kane, Deputy 
Secretary for Enforcement, Pennsylvania Department of Revenue; 
James I. Shepard, former member of the National Bankruptcy 
Review Commission; Prof. Grant William Newton, Pepperdine 
University; and Paul H. Asofsky, former member of the Tax 
Advisory Committee of the National Bankruptcy Review 
Commission.
    Witnesses at the fourth and final hearing on March 19, 1998 
included the following: Stephen H. Case of Davis, Polk & 
Wardwell, Senior Advisor to the National Bankruptcy Review 
Commission; John A. Gose of Preston, Gates & Ellis, former 
member of the National Bankruptcy Review Commission; Patricia 
A. Staiano, United States Trustee for Region 3; Christopher F. 
Graham of Thacher Proffit & Wood, representing the American 
Bankruptcy Institute; Prof. Alan N. Resnick, Hofstra University 
School of Law, representing the National Bankruptcy Conference; 
Hon. Robert F. Hershner, Jr., Chief Bankruptcy Judge, Middle 
District of Georgia, and President of the National Conference 
of Bankruptcy Judges; Norman Kranzdorf, President, Kranzco 
Realty Trust, representing the International Council of 
Shopping Centers; James E. Smith, President and Chief Executive 
Officer, Union State Bank and Trust of Clinton, representing 
the American Bankers Association; Charles M. Tatelbaum, 
Johnson, Blakely, Pope, Bakar & Ruppel, representing National 
Association of Credit Managers; Leon S. Forman, Blank Rome 
Comisky & McCauley, representing American College of 
Bankruptcy; William J. Perlstein of Wilmer Cutler & Pickering, 
representing American Bar Association-Business Section; Harold 
J. Bordwin, Keen Realty Consultants Inc.; Kevyn Orr, Deputy 
Director, Executive Office for United States Trustees; Hon. 
Michael J. Kaplan, Chief Bankruptcy Judge, Western District of 
New York; and Prof. Lynn M. LoPucki, Cornell Law School, Senior 
Advisor/Data Study Project for the National Bankruptcy Review 
Commission.

                        Committee Consideration

    On April 23, 1998, the Subcommittee on Commercial and 
Administrative Law met in open session and ordered reported the 
bill H.R. 3150, as amended, by a voice vote, a quorum being 
present. On May 12, 13, and 14, 1998, the Committee met in open 
session and ordered reported favorably the bill H.R. 3150, with 
an amendment in the nature of a substitute, by a recorded vote 
of 18 to 10, a quorum being present.

                         Vote of the Committee

    1. An amendment offered by Ms. Jackson Lee concerning the 
treatment of child support paid by a debtor under section 102 
of H.R. 3150. Defeated 12 to 13.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Gekas
Mr. Nadler                          Mr. Smith
Mr. Scott                           Mr. Gallegly
Mr. Watt                            Mr. Inglis
Ms. Lofgren                         Mr. Goodlatte
Ms. Jackson Lee                     Mr. Buyer
Ms. Waters                          Mr. Bryant
Mr. Meehan                          Mr. Chabot
Mr. Delahunt                        Mr. Pease
Mr. Wexler                          Mr. Cannon
Mr. Rothman                         Mr. Rogan
                                    Mr. Boucher
    2. An amendment offered by Ms. Jackson Lee concerning the 
treatment of child support received by a debtor as income under 
section 101 of H.R. 3150. Defeated 12 to 17.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith
Ms. Lofgren                         Mr. Gallegly
Ms. Jackson Lee                     Mr. Inglis
Ms. Waters                          Mr. Goodlatte
Mr. Meehan                          Mr. Buyer
Mr. Delahunt                        Mr. Bryant
Mr. Wexler                          Mr. Chabot
Mr. Rothman                         Mr. Barr
                                    Mr. Jenkins
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Boucher
    3. An amendment offered by Ms. Jackson Lee striking certain 
provisions under section 102 of H.R. 3150 pertaining to chapter 
13 plans. Defeated 5 to 18.
        AYES                          NAYS
Mr. Nadler                          Mr. Hyde
Mr. Scott                           Mr. Sensenbrenner
Ms. Jackson Lee                     Mr. Gekas
Mr. Meehan                          Mr. Coble
Mr. Delahunt                        Mr. Canady
                                    Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Boucher
                                    Mr. Rothman
    4. An amendment offered by Mr. Meehan striking sections 141 
(debts incurred to pay nondischargeable debts), 142 (credit 
extensions on the eve of bankruptcy presumed nondischargeable) 
and 145 (credit extensions without a reasonable expectation of 
repayment made nondischargeable) from H.R. 3150. Defeated 6 to 
18.
        AYES                          NAYS
Mr. Nadler                          Mr. Hyde
Mr. Scott                           Mr. Sensenbrenner
Mr. Meehan                          Mr. Gekas
Mr. Delahunt                        Mr. Smith
Mr. Wexler                          Mr. Gallegly
Mr. Rothman                         Mr. Canady
                                    Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Boucher
    5. An amendment offered by Mr. Meehan amending the needs-
based formula in section 101 and striking sections 130 
(protection of holders of claims secured by debtor's principal 
residence) and 409 (chapter 13 plans to have a five-year 
duration in certain cases) of H.R. 3150. Defeated 9 to 15.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Ms. Lofgren                         Mr. Canady
Ms. Jackson Lee                     Mr. Goodlatte
Mr. Meehan                          Mr. Buyer
Mr. Delahunt                        Mr. Bryant
Mr. Rothman                         Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Graham
                                    Mr. Boucher
    6. An amendment offered by Mr. Meehan striking the totality 
of the circumstances provision as a ground for dismissal of a 
chapter 7 case. Defeated 9 to 15.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. McCollum
Mr. Watt                            Mr. Gekas
Ms. Lofgren                         Mr. Gallegly
Ms. Jackson Lee                     Mr. Canady
Mr. Meehan                          Mr. Goodlatte
Mr. Delahunt                        Mr. Buyer
Mr. Rothman                         Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Frank
                                    Mr. Boucher
    7. An amendment offered by Mr. Delahunt that would except a 
debtor's receipt of social security as income under H.R. 3150's 
needs-based formula of H.R. 3150. Defeated 7 to 17.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. McCollum
Ms. Lofgren                         Mr. Gekas
Ms. Jackson Lee                     Mr. Coble
Ms. Waters                          Mr. Smith
Mr. Delahunt                        Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Mr. Boucher
    8. An amendment offered by Ms. Jackson Lee providing a safe 
harbor for middle class families under the needs-based formula 
of H.R. 3150. Defeated 4 to 11.
        AYES                          NAYS
Mr. Berman                          Mr. Hyde
Ms. Jackson Lee                     Mr. Gekas
Mr. Meehan                          Mr. Smith
Mr. Delahunt                        Mr. Canady
                                    Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Pease
                                    Mr. Rogan
    9. An amendment offered by Ms. Jackson Lee setting a date 
by which the needs-based reforms of H.R. 3150 must sunset and 
directing the General Accounting Office to study whether they 
have a disparate economic impact on certain categories of 
individuals. Defeated 7 to 14.
        AYES                          NAYS
Mr. Berman                          Mr. Hyde
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Canady
Ms. Jackson Lee                     Mr. Inglis
Ms. Waters                          Mr. Goodlatte
Mr. Meehan                          Mr. Bryant
Mr. Delahunt                        Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Graham
                                    Mr. Boucher
    10. An amendment offered by Ms. Jackson Lee setting a date 
by which the needs-based reforms of H.R. 3150 must sunset and 
directing the General Accounting Office to study whether they 
produced more than $200 in collections. Defeated 10 to 16.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. McCollum
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Coble
Mr. Scott                           Mr. Gallegly
Ms. Lofgren                         Mr. Canady
Ms. Jackson Lee                     Mr. Inglis
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Bryant
Mr. Wexler                          Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Boucher
    11. An amendment offered by Mr. Nadler disallowing certain 
claims incurred in or adjacent to a gambling facility. Defeated 
8 to17.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. McCollum
Mr. Scott                           Mr. Gekas
Ms. Lofgren                         Mr. Coble
Ms. Waters                          Mr. Gallegly
Mr. Delahunt                        Mr. Canady
Mr. Inglis                          Mr. Goodlatte
Mr. Pease                           Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Frank
                                    Mr. Berman
                                    Mr. Boucher
                                    Mr. Wexler
    12. An amendment offered by Mr. Nadler regarding the 
definition of small business case and striking sections 235 
(uniform reporting rules and forms), 236 (duties in small 
business cases) 237 (plan filing and confirmation deadlines), 
238 (plan confirmation deadline), 239 (prohibition against 
extension of time), 240 (duties of the United States Trustee 
and bankruptcy administrator), and 242 (serial filer 
provisions). Defeated 5 to 14.
        AYES                          NAYS
Mr. Nadler                          Mr. Hyde
Mr. Scott                           Mr. Gekas
Ms. Lofgren                         Mr. Coble
Ms. Jackson Lee                     Mr. Gallegly
Mr. Delahunt                        Mr. Canady
                                    Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Boucher
    13. Vote on final passage of H.R. 3150. Adopted 18 to 10.
        AYES                          NAYS
Mr. Hyde                            Mr. Conyers
Mr. Sensenbrenner                   Mr. Nadler
Mr. McCollum                        Mr. Scott
Mr. Gekas                           Mr. Watt
Mr. Coble                           Ms. Lofgren
Mr. Smith                           Ms. Jackson Lee
Mr. Canady                          Ms. Waters
Mr. Goodlatte                       Mr. Meehan
Mr. Buyer                           Mr. Delahunt
Mr. Bryant                          Mr. Wexler
Mr. Chabot
Mr. Barr
Mr. Jenkins
Mr. Pease
Mr. Cannon
Mr. Rogan
Mr. Boucher
Mr. Rothman

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

     Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

                        Committee Cost Estimate

    The estimate of the Congressional Budget Office was not 
available at the time of filing this report. In compliance with 
clause 7 (a) of rule XIII of the Rules of the House of 
Representatives, the Committee believes that enactment of H.R. 
3150 will not have a substantial budget effect for fiscal year 
1999 and subsequent years.
    The Congressional Budget Office, in a letter dated May 8, 
1998 to Senator Charles E. Grassley, compared the bankruptcy 
needs-based provisions of H.R. 3150 (as introduced) and S. 
1301. The Congressional Budget Office estimated preliminarily 
that these provisions of H.R. 3150 would likely cost between 
$16 million and $20 million annually. However, that estimate 
was based on the assumption that there would be no substantial 
change in the number of bankruptcy filings. The Congressional 
Budget Office noted that if, as some experts predict, the 
enactment of H.R. 3150 would lead to a noticeable decline in 
such filings, then federal costs would be reduced. Moreover, an 
amendment to H.R. 3150 adopted during Committee consideration 
raised the income level relevant for the needs-based formula 
under H.R. 3150 from 75 percent of the national median family 
income to 100 percent, which is another factor that would 
likely reduce federal costs required to implement this 
legislation.
    Although the bill provides for eliminating quarterly fees 
for certain chapter 11 debtors, which may result in reduced 
collections in an estimated amount of $6 million dollars 
annually, it is anticipated that there will be offsetting 
adjustments that will be enacted before the effective date of 
this provision.
    It is anticipated that the cost of H.R. 3150's audit 
provisions will require additional expenditure. Nevertheless, 
these costs are likely to be offset by enhanced collections 
resulting from greater protections accorded to federal taxing 
authorities.

                   Constitutional Authority Statement

    Pursuant to Rule XI, clause 2(l)(4) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, section 8, clause 4 of the 
Constitution.

               Section-by-Section Analysis and Discussion

                TITLE I. CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A. Needs Based Bankruptcy

Section 101. Needs-based bankruptcy

    Section 101 implements the needs-based reforms of H.R. 3150 
by creating a self-evaluating mechanism for individuals to 
assess their eligibility for bankruptcy relief based on the 
ability to repay their debts. Specifically, section 101 
establishes an income and expense formula that individuals must 
use before they file for bankruptcy relief. Individuals having 
the ability to repay their debts under this formula would be 
ineligible for relief under chapter 7 of the Bankruptcy Code, 
which grants debtors a discharge of their prepetition unsecured 
debts without any requirement of repayment, unless excepted 
from such discharge. Individuals ineligible for relief under 
chapter 7 would have the option of filing for relief under 
other chapters of the Bankruptcy Code, such as chapter 13, 
which requires debtors to commit their available income to a 
plan of repayment.
    Subsection (1) establishes two new definitions under 
section 101 of the Bankruptcy Code. ``Current monthly total 
income'' means the average monthly income that a debtor derives 
from all sources without regard to whether it is taxable income 
in the six months preceding the date of determination. It also 
includes any amount of money paid by anyone other than the 
debtor or, in a joint case, 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. In 
addition, subsection (1) defines ``national median family 
income'' and ``national median household income for 1 earner'' 
as the amounts reported by the Bureau of the Census as of 
January 1 for the most recent calendar year.
    Subsection (2) amends section 104 of the Bankruptcy Code, 
which provides for the adjustment of dollar amounts, to include 
references to subsections (b), (e) and (h) of section 109 of 
the Bankruptcy Code, as amended by H.R. 3150.
    Subsection (3) amends section 109(b) of the Bankruptcy 
Code, which sets forth the eligibility criteria for who may be 
a chapter 7 debtor. Specifically, subsection (3) provides that 
an individual and such individual's spouse, if they intend to 
file for relief under chapter 7 in a joint case, who have 
income available to pay creditors as determined under new 
section 109(h), are not eligible to be debtors under chapter 7 
of the Bankruptcy Code.
    Subsection (4) adds subsection (h) to section 109 of the 
Bankruptcy Code. Section 109(h) sets forth a three-stage test 
by which an individual must assess his or her ability to repay 
such individual's creditors. Should an individual fail to meet 
one or more stages of this test, such individual is eligible to 
be a debtor under chapter 7 of the Bankruptcy Code. On the 
other hand, should the debtor meet all three stages of this 
test, such individual is ineligible for relief under chapter 7.
    The first stage of this eligibility test requires the 
debtor to have ``current monthly total income,'' as defined in 
section 101(1) of H.R. 3150, that is not less than the highest 
``national median family income,'' 19 as defined in 
section 101(1) of H.R. 3150, for a family of 

------------
    19 The following table sets forth the 1996 median 
household income figures based on size of the household:

                Size of household                    1996 median income
1..........................................................     $17,897
2..........................................................      37,283
3..........................................................      44,813
4..........................................................      51,405
5..........................................................      47,841
6..........................................................      42,438
7 or more..................................................      40,337
equal or lesser size.20 In the case of a household 
of one person, the individual's income must be not less than 
the ``national median household income for 1 earner,'' as 
defined in section 101(1) of H.R. 3150. Should an individual 
have income below the applicable threshold amount, that 
individual is eligible to be a chapter 7 debtor.21
---------------------------------------------------------------------------
    \20\ In light of the fact that the Census Bureau statistics may 
trend downward for larger households, section 101(4) of H.R. 3150 
permits individuals with larger households to claim the highest 
national median family income reported by the Census Bureau for a 
family of equal or lesser size.
    \21\ An individual, in a sworn statement, may explain any lost 
income that occurred during the six-month reachback determination 
period. This statement must also contain an explanation of whether the 
individual was offered any replacement income or whether such 
individual expected the lost income to be replaced. In addition, the 
individual must explain why the lost income will not be replaced.
---------------------------------------------------------------------------
    The second stage requires the individual to determine 
whether he or she has ``projected monthly net income'' greater 
than $50. An individual's ``projected monthly net income'' is 
determined by deducting three categories of expenses from such 
individual's ``current total monthly income,'' as defined in 
section 101(1) of H.R. 3150.
    The first category of expense items that must be deducted 
from an individual's current monthly total income consists of 
certain expenses determined pursuant to the Internal Revenue 
Manual Handbook,22 which sets forth National 
Standards,23 Local Standards24 and Other 
Necessary Expenses Allowances.25 In the event that 
an individual establishes extraordinary circumstances that 
require allowance for expenses in excess of the amounts 
recognized in the Internal Revenue Manual Handbook, such 
individual may deduct these additional expenses from his or her 
current total monthly income. The existence of any 
``extraordinary circumstances'' must be documented by the 
individual in a sworn statement signed by the debtor and his or 
her counsel.26 A trustee or party in interest may 
object to an assertion of extraordinary circumstances within 60 
days from the date on which the debtor's sworn statement of 
extraordinary circumstances is filed. If an objection is filed, 
the court, after notice and hearing, must determine the 
propriety of such claimed extraordinary circumstances and their 
amount. The debtor has the burden of proof on these issues.
---------------------------------------------------------------------------
    \22\ Internal Revenue Manual Handbook, Part 5, Collection Activity 
(Sept. 25, 1996). This Manual is utilized by the Internal Revenue 
Service to assess a taxpayer's ability to repay back taxes.
    \23\ The National Standards Expense Allowances pertain to food, 
housekeeping supplies, apparel, and personal care product expenditures. 
As the title implies, these expense allowances are determined on a 
national basis, without adjustment for regional variation.
    \24\ The Local Standards Expense Allowances consist of housing, 
utilities and transportation costs. These expenses are determined 
regionally by county where the taxpayer resides.
    \25\ Expenses in this category include taxes, health care, court-
ordered payments and involuntary deductions.
    \26\ The amendment in the nature of a substitute responds to 
certain concerns expressed regarding ``phantom income.'' As reported 
out of the Subcommittee, section 101 permits a debtor to file an 
explanation of any income lost within the six-months preceding the date 
of determination. The debtor must also explain any replacement income 
that was offered or expected together with an itemization of such lost 
and replacement income. If applicable, the debtor must explain why the 
lost income will not be replaced.
---------------------------------------------------------------------------
    The two remaining categories of expenses that an individual 
may deduct from his or her current monthly total income consist 
of the following: the individual's average monthly payments to 
secured creditors (calculated as the total of all amounts 
scheduled as contractually payable over a five-year period, 
divided by 60 months) and the individual's average monthly 
payment to priority creditors 27 (calculated as the 
total of all estimated payments over a five-year period, 
divided by 60 months).
---------------------------------------------------------------------------
    \27\ A ``creditor,'' under section 101(10) of the Bankruptcy Code 
means an entity that has a claim against the debtor that arose at the 
time of or before the filing of the debtor's bankruptcy case. Section 
507 of the Bankruptcy Code, inter alia, accords priority status to 
certain types of prepetition debts owed by a debtor. These include 
debts for spousal and child support and certain unsecured claims of 
governmental units, such as income taxes.
---------------------------------------------------------------------------
    If the amount remaining after these three types of expenses 
are deducted from the individual's current total monthly income 
is less than $50, the individual is eligible for relief under 
chapter 7 of the Bankruptcy Code.
    The third and final stage of H.R. 3150's eligibility test 
requires the individual to determine whether he or she has 
sufficient projected monthly net income to repay at least 20% 
of unsecured nonpriority claims scheduled by the debtor 
28 over a five-year repayment plan.29 To 
make this determination, the individual must multiply his or 
her projected monthly net income by 60 months. If the end 
result is less than 20 percent ``of the total amount scheduled 
as payable to unsecured nonpriority creditors,'' then the 
debtor is eligible for relief under chapter 7 of the Bankruptcy 
Code.
---------------------------------------------------------------------------
    \28\ This refers to nonpriority claims as scheduled by the debtor 
and therefore includes contingent, unliquidated and disputed claims, 
which typically are not ``allowed claims'' within the meaning of 11 
U.S.C. Sec. 502 and thus not entitled to payment. By contrast, 11 
U.S.C. Sec. 109(e) presently defines chapter 13 eligibility based on 
the amount of the debtor's ``noncontingent, liquidated'' debts.
    \29\ The requisite percentage does not refer to a present value 
amount nor does it include trustee and attorney fees.
---------------------------------------------------------------------------
    If an individual satisfies all three components of this 
eligibility test, then he or she is not eligible for relief 
under chapter 7. If such individual nevertheless requires 
bankruptcy relief, he or she would have to file under other 
chapters of the Bankruptcy Code, such as chapters 11, 12, or 
13.
    Subsection (5) amends section 704 of the Bankruptcy Code to 
require the chapter 7 trustee to perform additional 
responsibilities. First, the chapter 7 trustee must review 
financial disclosure documents and tax returns filed by the 
debtor under section 521 of the Bankruptcy Code, as amended by 
H.R. 3150. Second, the chapter 7 trustee must verify the 
debtor's ``projected monthly net income,'' as defined in 
subsection 101(4) of H.R. 3150. Third, the chapter 7 trustee 
must file a report within 30 days from the date on which the 
debtor supplies the disclosure document. This report must state 
whether the debtor is eligible for relief under chapter 7. If 
the chapter 7 trustee concludes that an individual is 
ineligible to be a debtor under chapter 7, then the trustee 
must provide a copy of the report to parties in interest.
    Subsection (5) also requires a chapter 13 trustee to 
perform many of the duties it assigns to chapter 7 trustees. In 
addition, subsection (5) amends section 1302(b) of the 
Bankruptcy Code to require a chapter 13 trustee to file annual 
reports with the court, with copies to allowed claimants, 
regarding whether a debtor is devoting sufficient income to 
fund his or her plan of repayment based on changes in the 
debtor's ``monthly net income,'' a term defined in section 102 
of H.R. 3150.

Section 102. Adequate income shall be committed to a plan that pays 
        unsecured creditors

    Section 102 of H.R. 3150 implements needs-based reforms to 
chapter 13 cases to ensure that debtors commit the maximum 
amount of income that they can afford to their repayment plans. 
It also institutes a requirement that chapter 13 trustees 
scrutinize the amount debtors repay prior to confirmation of 
their plans and on an annual basis thereafter.
    Subsection (1) adds to the Bankruptcy Code the definition 
of the term ``monthly net income.'' It is defined as the 
debtor's ``current monthly total income,'' which is, in turn, 
defined in section 101(1) of H.R. 3150, less certain expenses. 
These include the Internal Revenue Service's National 
Standards, Local Standards and Other Necessary Expense 
Allowances; the debtor's average monthly payment to secured 
creditors (calculated as the total of all amounts remaining to 
be paid as of the date of determination [less any amounts to be 
paid by third parties] divided by the total months remaining 
under the chapter 13 plan); the debtor's average monthly 
payment to priority creditors (calculated as the total of all 
amounts remaining to be paid as of the date of determination 
[less any amounts to be paid by third parties] divided by the 
total months remaining under the chapter 13 plan); and any 
additional expenses occasioned by ``extraordinary 
circumstances'' (as documented in a sworn statement by the 
debtor and his or her counsel).
    Subsection (2) amends section 104(b)(1) of the Bankruptcy 
Code, which provides for the adjustment of dollar amounts, to 
include a reference to section 1325(b)(1) of the Bankruptcy 
Code, as amended by H.R. 3150.
    Subsection (3) adds a new provision that allows adjustments 
to a chapter 13 debtor's ``monthly net income'' if the debtor 
has ``extraordinary circumstances,'' which can include loss of 
income or additional expenses. The debtor must document such 
changed financial circumstances by a sworn statement signed by 
the debtor and his or her counsel. This statement must be filed 
with the court and served on the chapter 13 trustee 45 days 
before the anniversary of the confirmation date of his or her 
plan. Within 15 days from receipt of this statement, the 
chapter 13 trustee must notify the debtor's creditors of the 
amount of monthly net income it states. Any objection to this 
statement must be filed within 30 days from when the trustee 
receives the statement.
    Subsection (4) requires a chapter 13 debtor to include a 
statement in his or her plan of repayment, under penalty of 
perjury, specifying the amount of monthly net income to be paid 
to unsecured nonpriority creditors under the plan.
    Subsection (5) amends section 1325(b)(1)(B) of the 
Bankruptcy Code by instituting the following additional 
requirements for confirmation of a chapter 13 plan:
    (1) The plan must provide that the monthly payment to 
unsecured nonpriority creditors equals at least $50.
    (2) The duration of the plan may not be less than five 
years if the debtor's total current monthly income is more than 
the highest national median family income reported for a family 
of equal or lesser size (or in the case of a household of one 
person, the debtor's income is not less than the national 
median household income for one earner). If the debtor's income 
falls below the that income threshold, then the plan can be not 
less than three years in length.
    (3) The amount to be paid to the class of unsecured 
nonpriority claimants under the plan must be increased or 
decreased proportionately to the debtor's monthly net income 
during the term of the plan, as determined by the annual 
statement that the debtor must file under section 102(3) of 
H.R. 3150.
    Section 102(5)'s provisions are not intended to prevent the 
payment of spousal and child support obligations entitled to 
priority under section 507(a)(7) of the Bankruptcy Code.
    Subsection (6) eliminates the current ``disposable income'' 
test of section 1325(b)(2) of the Bankruptcy Code. Under 
current law, if a holder of an allowed unsecured claim or the 
trustee objects to confirmation of a chapter 13 plan, all of 
the debtor's disposable income must be devoted to the plan. 
Section 102(6) replaces the disposable income test under 
chapter 13 with one based on the debtor's monthly net income. 
30
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    \30\ ``Disposable income,'' under section 1325(b)(2) of the 
Bankruptcy Code, is defined as income received by the debtor less that 
portion that is reasonably necessary for the maintenance and support of 
the debtor and his or her dependents. If the debtor is engaged in 
business, operational expenses for the business can be deducted from 
this amount.
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Section 103. Definition of inappropriate use

    Section 707(b) of the Bankruptcy Code provides that a 
bankruptcy court may sua sponte or on motion of the United 
States Trustee dismiss a chapter 7 case filed by an individual 
debtor whose debts are primarily consumer debts if the granting 
of relief under chapter 7 constitutes a ``substantial abuse.'' 
This provision has been inconsistently applied across the 
nation as the case law interpreting the meaning of 
``substantial abuse'' is disparate. 31
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    \31\ See, e.g., David White, Disorder in the Court: Section 707(b) 
of the Bankruptcy Code, 1995-96 Annual Survey of Bankruptcy Law 333, 
476 (1996). Mr. White describes at least four different definitions of 
``substantial abuse'' utilized by the courts as well as other 
interpretive quandaries presented by section 707(b).
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    Section 103 amends section 707(b) in several respects. 
First, it allows parties in interest, such as creditors, to 
seek relief under this provision, in addition to the bankruptcy 
court and United States Trustee. Second, it replaces the term 
``substantial abuse'' with ``inappropriate use'' and defines 
two grounds constituting ``inappropriate use.'' Third, section 
103 makes the dismissal of a chapter 7 case under section 
707(b) mandatory. Under current law, the bankruptcy court has 
discretion as to whether to dismiss a chapter 7 case for 
substantial abuse under section 707(b).
    Under section 707(b), as amended, a chapter 7 case may be 
dismissed for inappropriate use if the debtor is ineligible for 
relief under chapter 7 pursuant to section 109 of the 
Bankruptcy Code, as amended by H.R. 3150. Alternatively, a 
bankruptcy court may dismiss a chapter 7 case if the granting 
of relief under the totality of the circumstances based on the 
debtor's financial condition would constitute an inappropriate 
use of chapter 7.
    Section 103 also provides for the mandatory imposition of 
attorney's fees and costs if the bankruptcy court finds that 
the moving party's position was not substantially justified, 
unless special circumstances would make the award unjust. This 
mandatory provision, however, does not apply to bankruptcy 
trustees or United States Trustees.
    If a chapter 7 debtor's bankruptcy case is dismissed or 
converted to another chapter for relief under the Bankruptcy 
Code on motion of a trustee or the United States Trustee, 
section 103 mandates the award of reasonable attorney's fees 
and costs payable by the debtor, unless the payment of such 
fees and costs would impose an undue hardship on the debtor. 
Section 103 further provides that the signature of a debtor's 
attorney on any paper filed in connection with the debtor's 
bankruptcy case shall constitute a certificate that the 
attorney performed a reasonable investigation into the 
circumstances warranting the filing of such pleading and that 
it is well grounded in fact and comports with existing law or 
can be supported by a good faith argument for the extension, 
modification or reversal of existing law. A paper found to be 
filed in violation of this provision requires the court to 
assess an appropriate civil penalty against the debtor's 
attorney, which is payable to the chapter 7 trustee or United 
States Trustee.

Section 104. Debtor participation in credit counseling program.

    Section 104 creates an additional eligibility requirement 
under section 109 of the Bankruptcy Code. Under this provision, 
an individual may not be a debtor under the Bankruptcy Code 
unless such individual during the 90-day period preceding the 
filing of his or her bankruptcy case has made a good faith 
attempt to participate in a debt repayment plan through a 
credit counseling program approved by the United States Trustee 
or bankruptcy administrator. Such program may not be approved 
unless its services are available without charge or at an 
appropriate reduced charge, if payment at the regular rate 
would impose a hardship on the debtor. To document his or her 
participation in a debt repayment plan, the debtor must file a 
certificate from the credit counseling agency together with a 
copy of the debt repayment plan, if any. If the debtor did not 
participate in a repayment plan, he or she must file a verified 
statement as to why no attempt was required.
    A bankruptcy court may waive the requirement for 
participation in a prepetition debt repayment plan under the 
following circumstances: no credit counseling services are 
available in the debtor's geographic location, the providers of 
the credit counseling services are unable or unwilling to 
provide such services to the debtor, or a foreclosure or 
similar creditor enforcement action that would deprive the 
debtor of his or her property commenced before the debtor could 
complete a good faith attempt to participate in a repayment 
plan. If the debtor does not participate in a repayment plan 
prepetition, then he or she must participate in one within 30 
days following the filing of the bankruptcy case.
    Should the debtor fail to comply with these requirements, 
the United States Trustee may move for dismissal of the 
debtor's bankruptcy case on the basis of such noncompliance.

             Subtitle B. Adequate Protections for Consumers

Section 111. Notice of alternatives

    Under current law, the bankruptcy clerk is required to 
provide written notice of the forms of bankruptcy relief to 
consumer debtors before they file for bankruptcy 
relief.32 Nevertheless, some debtors may not be 
aware that there are alternatives to bankruptcy and the adverse 
consequences that bankruptcy relief may present.
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    \32\ 11 U.S.C. Sec. 342; Official Form 1--Voluntary Petition. This 
notice requirement is effectuated by requiring the consumer debtor and 
his or her attorney to sign a statement that appears on the petition 
used to commence the bankruptcy case: ``I am aware that I may proceed 
under chapter 7, 11, or 12, or 13 of title 11, United States Code, 
understand the relief available under such chapter, and choose to 
proceed under chapter 7 of such title.''
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    To ensure that debtors know about alternatives to 
bankruptcy before they file for bankruptcy relief, section 111 
mandates that notice of these alternatives to bankruptcy be 
supplied to these individuals before they file for bankruptcy 
relief.33 The notice must contain a brief 
description of the forms of relief available under chapters 7, 
11, 12 and 13, including the benefits and costs of each. In 
addition, the notice must include a list of independent 
nonprofit debt counseling entities in the judicial district 
together with a description of the services they provide and 
contact information.34 Section 111 also ensures that 
debtors are notified about the availability of nonprofit debt 
counseling services outside the debtor's district that can be 
contacted toll-free. The procedures for including and removing 
such services from the list of non-profit debt counseling 
services are specified in section 111 as well as the procedures 
for periodic updating of this list.
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    \33\ This requirement only applies to individuals with primarily 
consumer debts. Section 101(8) of the Bankruptcy Code defines 
``consumer debt'' as debt incurred by an individual primarily for a 
personal, family, or household purpose.
    \34\ The bankruptcy clerk's office is responsible for maintaining 
this list. Although any nonprofit debt counseling service is eligible 
to appear on this list, the chief bankruptcy judge of the district, on 
motion of the United States Trustee, may determine that a particular 
debt counseling service should not be included on this list.
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    In addition, section 111 requires bankruptcy clerks to make 
the requisite notice available to debtors upon request. This 
requirement ensures that pro se debtors receive this notice. 
The Committee intends that the clerk provide these materials to 
each debtor whose debts are primarily consumer debts. The 
Committee does not, however, intend the failure of the clerk to 
fulfill his or her duties under this subsection to act as a bar 
to any form of relief to which the debtor might otherwise be 
entitled under title 11, nor does the Committee intend to 
create a cause of action for a United States Trustee, trustee, 
or party in interest against a debtor based on the clerk's 
failure to provide such notice.

Section 112. Debtor financial management training test program.

    Section 112 of H.R. 3150 establishes a one-year pilot 
program on financial management education for debtors under the 
auspices of the Executive Office for United States 
Trustees.35 The program should be tested in three 
judicial districts for the purpose of evaluating individual 
debtor education efforts aimed at assisting debtors in better 
managing their finances. Bankruptcy judges in those districts 
where the pilot program is in effect have the authority to 
require debtors to undergo this financial training as a 
condition to receiving a discharge in their cases. Upon the 
conclusion of the pilot program, the Director of the Executive 
Office for United States Trustees is required to submit a 
report to Congress and the President conveying his or her 
findings regarding the effectiveness of the program as well as 
other consumer education programs described in the Report of 
the National Bankruptcy Review Commission.36
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    \35\ Section 112 requires the Director of the Executive Office for 
United States Trustees to consult with a wide range of individuals who 
are experts in the field of debtor education, in addition to chapter 13 
trustees.
    \36\ Report of the National Bankruptcy Review Commission, at 293-
94; Recommendations for Reform of Consumer Bankruptcy Law by Four 
Dissenting Commissioners, at 49-51 (1997).
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    This provision authorizes bankruptcy courts in each of the 
test districts to require individual debtors to undergo such 
financial management training as a condition to receiving a 
discharge. The Committee intends courts to use this authority 
only on a case-by-case basis after evaluating a debtor's 
individual circumstances, including the debtor's need for such 
training and the likelihood that the debtor would benefit from 
such training. The Committee does not intend to give the 
bankruptcy courts the authority to require such training as a 
condition of discharge of all individual debtors, or to certain 
classes of debtors, in the test districts.

Section 113. Definitions

    Section 113 creates several mechanisms designed to regulate 
the activities of a ``debt relief counseling agency'' 
(``DRCA''). As defined under this section, a DRCA includes any 
person who provides ``bankruptcy assistance'' to ``assisted 
persons.'' 37 It applies to attorneys as well as to 
non-attorneys, such as petition preparers. The term 
``bankruptcy assistance'' includes the provision of any goods 
or services with the ``express or implied purpose of providing 
information, advice, counsel, document preparation or filing,'' 
including the provision of legal representation. Outside the 
scope of H.R. 3150's definition of DRCAs are nonprofit 
organizations and creditors, as well as state and federal 
credit unions.
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    \37\ The term, ``assisted person,'' under H.R. 3150, includes any 
person with primarily consumer debts and whose nonexempt assets were 
less than $150,000.
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Section 114. Disclosures

    Under section 114, a DRCA must provide written notice to 
the assisted person informing him or her that all documents 
filed in connection with a bankruptcy case must be complete, 
accurate, and truthful and that the information they contain 
may be subject to audit.38 The agency must also 
supply a statement alerting the assisted person of his or her 
responsibilities should he or she file for bankruptcy relief. 
In addition, section 114 specifies that an assisted person is 
entitled to a contract specifying exactly what services the 
DRCA will provide in connection with the bankruptcy case.
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    \38\ The DRCA must retain a copy of the requisite notices for two 
years following the date on which it provided the notice to the 
assisted person.
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    Further, section 114 of H.R. 3150 requires the DRCA to 
provide assistance with regard to the following matters:
          (1) How to value assets at replacement value.
          (2) How to determine current monthly total income, 
        projected monthly income and, for chapter 13 cases, how 
        to determine net monthly income and related 
        calculations.
          (3) How to complete the list of creditors (including 
        proper addresses and amounts owed).
          (4) How to determine whether property can be claimed 
        as exempt and how to value such property at replacement 
        value as defined in 11 U.S.C. Sec. 506.

Section 115. Debtor's bill of rights

    DRCAs, under section 115, are required to execute a written 
contract with the assisted person that clearly and 
conspicuously identifies the services to be provided, how fees 
are determined, and the terms of payment. In addition, DRCAs 
must include in any advertisement directed to the public 
regarding the benefits of bankruptcy a statement that contains, 
inter alia, the following statement: ``We are a debt relief 
counseling agency. We help people file Bankruptcy petitions to 
obtain relief under the Bankruptcy Code.'' This requirement 
also applies to advertisements by DRCAs regarding their 
assistance with respect to credit defaults, mortgage 
foreclosures, lease eviction proceedings, excessive debt, debt 
collection pressure or inability to pay consumer debts.
    Section 115 of H.R. 3150 mandates that DRCAs perform all 
services as stated to the assisted person in connection with 
the bankruptcy case. DRCAs are also prohibited from advising 
any assisted person to make an untrue or misleading statement 
in connection with a bankruptcy case. In addition, DRCAs are 
prohibited from advising an assisted person or prospective 
assisted person to incur additional debt in contemplation of 
filing for bankruptcy relief or for the purpose of paying fees 
for services rendered by an attorney or petition preparer in 
connection with the filing of a bankruptcy case.

Section 116. Enforcement.

    A series of enforcement and penalty mechanisms with regard 
to DRCAs are instituted under section 116 of H.R. 3150. These 
include the following:
    (1) Any waiver by an assisted person of the protections and 
rights as established by this legislation is invalid.
    (2) Any DRCA contract that does not comply with the 
requirements as specified by the legislation is deemed void.
    (3) A DRCA may be required to return to the assisted person 
all fees he or she paid to the DRCA for any of the following 
reasons:
          (a) The DRCA failed to comply with the requirements 
        as previously described.
          (b) The DRCA provided assistance to a debtor whose 
        case was dismissed or converted in lieu of dismissal 
        under section 707 or such case was dismissed because of 
        a failure to file any requisite document in connection 
        with the bankruptcy case.
          (c) The DRCA negligently or intentionally disregarded 
        the requirements of the Bankruptcy Code or Federal 
        Rules of Bankruptcy Procedure.
    In addition to ordering the DRCA to return to the debtor 
all fees she or he paid, the bankruptcy court may also direct 
the DRCA to provide bankruptcy assistance services to the 
debtor without further charge or upon such terms as the court 
may order. Section 116 specifies that DRCAs must comply with 
the mandatory disclosure requirements of section 114 as well as 
the mandatory services and other requirements set forth in 
section 115 of H.R. 3150.
    Section 116 authorizes states to seek various remedies 
39 for violation of the requirements imposed on 
DRCAs. The United States District Court, under this provision, 
has concurrent jurisdiction with the state courts to hear such 
actions.
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    \39\ These include injunctions, actual damages, and the imposition 
of costs, including reasonable attorney's fees.
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Section 117. Sense of the Congress

    Section 117 memorializes the sense of the Congress that the 
States develop curricula relating to the subject of personal 
finance to be used in elementary and secondary schools.

Section 118. Charitable contributions

    Section 118 incorporates H.R. 2604, the ``Religious Liberty 
and Charitable Donation Protection Act of 1997,'' which was 
introduced by Mr. Packard on October 2, 1997.40 This 
section institutes several protections for qualified religious 
or charitable entities, defined by reference to the Internal 
Revenue Code.
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    \40\ On February 12, 1998, the Subcommittee on Commercial and 
Administrative Law conducted a hearing on this bill as well as on H.R. 
2611, the ``Religious Fairness in Bankruptcy Act of 1997,'' which was 
introduced by Mrs. Chenoweth. S. 1244, the ``Religious Liberty and 
Charitable Donation Protection Act of 1998,'' which is nearly identical 
to H.R. 2604, was reported by the Senate Judiciary Committee on 
February 28, 1998.
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    Section 118 excepts religious and charitable contributions 
made by a debtor before filing for bankruptcy relief from the 
applicability of certain fraudulent transfer avoidance 
provisions of section 548 of the Bankruptcy Code. In effect, 
prepetition transfers made by a debtor to a religious or 
charitable organization may not be avoided under section 548 if 
they did not exceed 15 percent of the debtor's gross income or 
were in a higher amount if they comported with the debtor's 
prior pattern of giving. This provision also preempts state and 
Federal law with regard to the trustee's status as a lien 
creditor under section 544(b) of the Bankruptcy Code.
    In addition to protecting charitable contributions made by 
a debtor before he or she filed for bankruptcy relief, section 
118 protects a debtor's postpetition charitable contributions. 
For a chapter 7 debtor, it prevents a bankruptcy court from 
considering such debtor's charitable contributions in 
determining a motion to dismiss the case under section 707(b) 
of the Bankruptcy Code. Likewise, section 118 allows a chapter 
13 debtor to contribute up to 15 percent of his or her gross 
income postpetition to qualified religious and charitable 
organizations.

Section 119. Reinforce the fresh start

    Section 119 is derived from section 13 of H.R. 3146, 
``Consumer Lenders and Borrowers Bankruptcy Accountability Act 
of 1998,'' introduced by Representative Nadler, the Ranking 
Member of the Subcommittee on Commercial and Administrative 
Law, on February 3, 1998. This provision has several 
components. First, it clarifies that the nondischargeability 
provisions regarding certain court fees under section 
523(a)(17) of the Bankruptcy Code apply to such fees incurred 
by prisoners. Second, it allows debtors to claim as exempt 
property certain retirement funds to the extent that they are 
exempt from taxation under applicable provisions of the 
Internal Revenue Code of 1986. Third, the amendment clarifies 
the protections against termination of utility services under 
section 366 of the Bankruptcy Code by specifying the types of 
utility services covered. These services include providers of 
gas, electric, telephone, telecommunication, cable television, 
and satellite communication as well as water and sewer service.

Section 119A. Chapter 11 discharge of debts arising from tobacco-
        related products

    Section 119A amends the discharge provisions for confirmed 
chapter 11 cases in section 1141 of the Bankruptcy Code for 
certain claims related to the consumption or consumer purchase 
of a tobacco product. Specifically, claims that are based in 
whole or in part on a false pretense, false representation or 
actual fraud are not discharged notwithstanding confirmation.

         Subtitle C. Adequate Protections for Secured Creditors

Section 121. Discouraging bad faith repeat filings

    Under current law, debtors may file successive bankruptcy 
cases following the dismissal of their prior cases with limited 
exception.41 The filing of a bankruptcy case causes 
the immediate imposition of an automatic stay, which prevents 
creditors from pursuing actions against debtors and their 
property.42 In light of this, some debtors file 
successive bankruptcy cases to prevent secured creditors from 
foreclosing on their collateral.
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    \41\ Section 109(g) of title 11 only imposes a limited ban on 
repeat filings. Under this provision, a debtor is ineligible for 
bankruptcy relief if, within the preceding 180 days, the prior case was 
dismissed based on the debtor's willful failure to abide by orders of 
the court or ``to appear before the court in proper prosecution of the 
case.'' 11 U.S.C. Sec. 109(g)(1). In addition, the debtor is also 
ineligible for bankruptcy relief if, within the preceding 180 days, he 
or she in the prior case sought and obtained its dismissal following 
the filing of a request for relief from the automatic stay.
    \42\ 11 U.S.C. Sec. 362(a). Exceptions to the automatic stay are 
set forth in 11 U.S.C. Sec. 362(b).
---------------------------------------------------------------------------
    Section 121 remedies this problem by terminating the 
automatic stay in cases filed by an individual debtor under 
chapters 7, 11 and 13 if his or her prior case was dismissed 
within the preceding year. In the subsequently filed bankruptcy 
case, the automatic stay terminates 30 days following the 
filing date of the case unless the court, upon request of a 
party in interest, grants an extension. The party in interest 
must demonstrate that the subsequent bankruptcy case was filed 
in good faith ``as to the creditors stayed.'' A case is deemed 
to be presumptively filed in bad faith 43 as to all 
creditors if:
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    \43\ This presumption can be rebutted by clear and convincing 
evidence.
---------------------------------------------------------------------------
          (1) More than one bankruptcy case under chapter 7, 11 
        or 13 was filed either by or against the debtor within 
        the one-year period preceding the filing of the instant 
        bankruptcy case.
          (2) The prior bankruptcy case was dismissed for the 
        debtor's failure to file any requisite bankruptcy 
        document or to amend any bankruptcy document without 
        substantial excuse.44
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    \44\ Mere inadvertence or negligence does not constitute 
substantial excuse, unless the dismissal was caused by the debtor's 
attorney.
---------------------------------------------------------------------------
          (3) The prior bankruptcy case was dismissed for the 
        debtor's failure to provide ``adequate protection.'' 
        45
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    \45\ This term is defined in 11 U.S.C. Sec. 361 as follows:
---------------------------------------------------------------------------

          (1) requiring the trustee to make a cash payment or periodic 
        cash payments to such entity, to the extent that the 
        [automatic] stay under section 362 of this title, use, sale or 
        lease under section 363 of this title, or any grant of a lien 
        under section 364 of this title results in a decrease in the 
        value of such entity's interest in such property;
          (2) providing to such entity an additional or replacement 
        lien to the extent that such stay, use, sale, lease, or grant 
        results in a decrease in the value of such entity's interest in 
        such property; or
          (3) granting such other relief, other than entitling such 
        entity to compensation allowable under section 503(b)(1) of 
        this title as an administrative expense, as will result in the 
        realization by such entity of the indubitable equivalent of 
        such entity's interest in such property.
          (4) There has not been a substantial change in the 
        debtor's financial or personal affairs since the 
        dismissal of the prior case.
A case is presumptively deemed filed in bad faith as to any 
creditor who sought relief from the automatic stay in the prior 
case if such action was still pending at the time of dismissal 
or had been resolved by the granting of relief from the 
automatic stay.
    The court must promptly enter an order confirming that the 
automatic stay does not apply in a bankruptcy case filed by an 
individual debtor where such debtor had previously filed a 
bankruptcy case within the previous year and such case was 
dismissed. Section 121 specifies the grounds that the 
bankruptcy court may consider in reimposing the automatic stay 
in the later filed bankruptcy case.
    Section 121 also responds to another problem presented by 
successive filings. Occasionally, debtors transfer their 
property interests to others who then file for bankruptcy 
relief to invoke the protection of the automatic stay under 
section 362 of the Bankruptcy Code. Under section 121, this 
abuse is addressed by allowing bankruptcy courts to grant 
prospective in rem relief from the automatic stay with respect 
to real or personal property in future bankruptcy cases filed 
by the debtor. It also extends this protection to bankruptcy 
cases filed by other entities to whom the subject property was 
transferred.46 In addition, it requires in rem 
orders pertaining to real property to be recorded. Such 
recording constitutes notice to all parties having or claiming 
an interest in such property.
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    \46\ Both the majority and minority viewpoints expressed by the 
National Bankruptcy Review Commission's members supported in rem relief 
from the automatic stay. See Report of the National Bankruptcy Review 
Commission at 281-287; Recommendations for Reform of Consumer 
Bankruptcy Law by Four Dissenting Commissioners, at 57-59 (1997).
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Section 122. Definition of household goods

    Under current law, debtors must list all personal property 
that they own.47 The applicable official bankruptcy 
form requires inter alia that a description and current market 
valuation of these items be stated. Among the types of personal 
property items that are required to be disclosed by debtors are 
``household goods.'' 48 The Bankruptcy Code, 
however, does not define this term. Accordingly, section 122 
defines this term by reference to applicable regulatory 
provisions issued by the Federal Trade Commission.49
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    \47\ 11 U.S.C. Sec. 521(1); Official Form 6--Schedule B.
    \48\ Official Form 6--Schedule B.
    \49\ C.F.R. 444.1(i). This regulation defines ``household goods'' 
as follows: Clothing, furniture, appliances, one radio and one 
television, linens, china, crockery, kithenware, and personal effects 
(including wedding rings) of the consumer and his or her dependents, 
provided that the following are not included within the scope of the 
term ``household goods'':
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          (1) Works of art;
          (2) Electronic entertainment equipment (except one television 
        and one radio);
          (3) Items acquired as antiques; and
          (4) Jewelry (except wedding rings).

Section 123. Debtor retention of personal property security

    Under the Bankruptcy Code, a debtor may agree to reaffirm a 
debt that is otherwise dischargeable, providing certain 
procedures are followed.50 Alternatively, a chapter 
7 debtor may chose to redeem certain types of personal property 
from a lien securing a dischargeable debt by paying the 
lienholder the amount of the allowed secured 
claim.51
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    \50\ 11 U.S.C. Sec. 524(c), (d).
    \51\ 11 U.S.C. Sec. 722.
---------------------------------------------------------------------------
     Section 123 responds to two areas of uncertainty in the 
law with regard to how personal property interests are treated 
under the current law. One concerns the unsettled law as to 
whether a chapter 7 debtor may retain personal property without 
having either to reaffirm the underlying obligation 
52 or redeem it.53 While a literal 
reading of section 521 of the Bankruptcy Code would appear to 
require that a debtor must either reaffirm the underlying 
obligation or redeem the property, not all courts have so 
interpreted this provision.54
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    \52\ 11 U.S.C. Sec. 524(c).
    \53\ 11 U.S.C. Sec. 722.
    \54\ See, e.g., Capital Communications Fed. Credit Union v. Boodrow 
(In re Boodrow), 126 F.3d 43, 53 (2d Cir. 1997) (holding that 11 U.S.C. 
Sec. 521(2) ``does not prevent a bankruptcy court from allowing a 
debtor who is current on loan obligations to retain the collateral and 
keep making payments under the original loan agreement.'').
---------------------------------------------------------------------------
    Subsection (1) addresses this issue by requiring chapter 7 
debtors to reaffirm the underlying debt for such property or 
redeem it, as recommended by the National Bankruptcy Review 
Commission, 55 If the debtor fails to do either, the 
subject property is no longer property of the estate. This 
means that the creditor having an interest in this personal 
property could take whatever action with regard to such 
property as permitted under applicable nonbankruptcy law. A 
bankruptcy trustee, upon notice and hearing, may oppose the 
automatic abandonment of such property to the extent that such 
property has value for the estate.
---------------------------------------------------------------------------
    \55\ This recommendation had the support of both the Commission's 
majority and minority viewpoints. See Report of the National Bankruptcy 
Review Commission, at 165-69; Recommendation for Reform of Consumer 
Bankruptcy Law by Four Dissenting Commissioners, at 57-59 (1997).
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     Subsection (2) also responds to a current split in 
authority regarding the debtor's redemption rights under 
section 722 of the Bankruptcy Code. While most courts have 
interpreted this provision to require chapter 7 debtors to pay 
the redemption value in a lump sum payment, some permit debtors 
to stretch this payment out over time. H.R. 3150 amends section 
722 to specify that the required payment must be made in full 
at the time of redemption.

Section 124. Relief from stay when the debtor does not complete 
        intended surrender of consumer debt collateral

    Subsection (1) of this provision expands the grounds upon 
which the automatic stay of section 362 of the Bankruptcy Code 
expires. Currently, section 362(c) provides that the automatic 
stay expires once property is no longer property of the 
estate.56 In addition, the automatic stay expires 
once the bankruptcy case is closed, dismissed or a discharge is 
granted or denied.
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    \56\ In consumer bankruptcy cases, the process by which property 
leaves a bankruptcy estate is typically accomplished by abandonment. 11 
U.S.C. Sec. 554. Under section 554, the bankruptcy trustee is permitted 
to abandon any property of the estate that is burdensome to the estate 
or that is of inconsequential value and benefit to the estate. 11 
U.S.C. Sec. 554(a). A party in interest, such as a creditor, may 
likewise seek to have property abandoned from the estate. 11 U.S.C. 
Sec. 554(b). In addition, property of the estate that is not otherwise 
administered by the bankruptcy trustee (e.g., sold or transferred) is 
automatically deemed to be abandoned upon the closing of the bankruptcy 
case pursuant to section 350 of the Bankruptcy Code. 11 U.S.C. 
Sec. 554(c).
---------------------------------------------------------------------------
    To provide greater protection to secured creditors and 
lessors, subsection (1) causes the automatic stay to terminate 
should an individual chapter 7, 11 or 13 debtor fail to comply 
timely with certain duties with respect to property of the 
estate securing a claim or subject to an unexpired lease under 
section 521 of the Bankruptcy Code. Under current law, an 
individual debtor must file a statement of intention with 
respect to his or her secured property. In the statement of 
intention, the debtor is required to indicate whether he or she 
will reaffirm, redeem or surrender the property. Under 
subsection (1), the automatic stay terminates if the debtor 
fails to timely file the statement of intention or to execute 
the stated intention.57 A bankruptcy trustee may 
oppose, upon notice and hearing, the termination of the 
automatic stay with respect to such property.
---------------------------------------------------------------------------
    \57\ H.R. 3150 creates an exception for instances where the debtor 
seeks to reaffirm the underlying obligation, but the creditor refuses 
to enter into a reaffirmation agreement with the debtor. H.R. 3150 also 
provides that the automatic stay does not prevent or limit the 
operation of default provisions in an underlying lease or bailment 
agreement ``by reason of the occurrence, pendency or existence'' of a 
bankruptcy case or the debtor's insolvency.
---------------------------------------------------------------------------
     Subsection (2) makes several revisions to section 
521(a)(2). First, this provision amends section 521(a)(2) to 
make it apply to all debts, not just consumer debts. Second, a 
debtor must fulfill his or her stated intention within 30 days 
after the first date set for the meeting of creditors under 
section 341 of the Bankruptcy Code. 58 With respect 
to property that has been leased or bailed to a debtor or in 
which a creditor holds a security interest, Subsection (2) 
provides that nothing in the Bankruptcy Code 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 
by reason of the debtor's insolvency or filing for bankruptcy 
relief.
---------------------------------------------------------------------------
    \58\ Under current procedure, the section 341 meeting is usually 
held between 25 and 40 days following the petition date. Fed. R. Bankr. 
P. 2003(a).
---------------------------------------------------------------------------

Section 125. Giving secured creditors fair treatment in chapter 13

    During the course of a chapter 13 case, the rights of 
secured creditors may be modified. Notwithstanding such 
modification, the chapter 13 case could thereafter be converted 
to one under chapter 7 or dismissed. Section 125 requires, as 
an element of confirmation, that the chapter 13 plan provide 
that secured creditors retain their lienholder status even if 
the chapter 13 case is subsequently dismissed or converted 
prior to consummation of the plan.

Section 126. Prompt relief from stay in individual cases

    Section 362(e) of the Bankruptcy Code provides that within 
30 days of a request for relief from the automatic stay, such 
stay is terminated unless the bankruptcy court orders the stay 
continued after notice and hearing. The hearing, as 
contemplated under section 362(e), can be preliminary or deemed 
final. If the hearing is preliminary, the final hearing must be 
concluded not later than 30 days from the conclusion of the 
preliminary hearing. This 30-day period can be extended by the 
court with consent of the parties or if the court finds that 
such extension is warranted based on compelling circumstances.
    For chapter 7, 11 or 13 cases filed by individuals, Section 
126 creates an exception to section 362(e). Specifically, this 
provision requires the automatic stay to terminate within 60 
days following a request for relief from the stay, unless the 
bankruptcy court renders a final decision prior to the 
expiration of such 60-day time period, or such 60-day time 
period is extended on consent of the parties, or the court 
finds that there are compelling circumstances.

Section 127. Stopping abusive conversions from chapter 13

    Section 506 of the Bankruptcy Code 59 provides 
that a creditor secured by a lien in property of the estate has 
an allowed secured claim to the extent of the value of such 
creditor's interest in the property and an unsecured claim to 
the extent that the value of the creditor's interest is less 
than the amount of the claim. A chapter 13 debtor, during the 
course of his or her case, may apply for a determination from 
the bankruptcy court that fixes the value of a secured 
creditor's interest in property of the estate. Under present 
law, if the chapter 13 case is subsequently converted to 
another chapter under the Bankruptcy Code, such valuations 
apply in the converted case, with allowance, of course, for any 
payments made on such secured claims.60
---------------------------------------------------------------------------
    \59\ H.R. 3150 provides for an exception with regard to bankruptcy 
cases of individuals under chapters 7, 11, 12 and 13.
    \60\ 11 U.S.C. Sec. 348(f)(1)(B).
---------------------------------------------------------------------------
    Section 127 of H.R. 3150 carves out an exception for 
chapter 13 cases converted to chapter 7. It specifies that a 
secured creditor in any bankruptcy case converted from chapter 
13 continues to be secured unless its claim was paid in full as 
of the date of conversion, notwithstanding any valuation 
determination made during the pendency of the chapter 13 case. 
In addition, H.R. 3150 recognizes the effect of a prebankruptcy 
default under applicable nonbankruptcy law, unless such default 
was cured prior to the conversion of the bankruptcy case.

Section 128. Restraining abusive purchases on secured credit

    Section 128 creates an exception to the valuation standards 
of section 506 of the Bankruptcy Code with regard to personal 
property purchased by the debtor on secured credit within 180 
days preceding the filing of his or her bankruptcy case. This 
provision addresses the following problem. Under present law, a 
debtor, for instance, can finance the purchase of an automobile 
with a showroom value of $20,000 by giving the lender a 
security interest in the vehicle. If the debtor then files for 
bankruptcy relief one day later, then the value of the secured 
creditor's lien must be determined under section 506 of the 
Bankruptcy Code. Even though the vehicle is one day old, the 
amount of the secured creditor's claim is, under current law, 
limited to the value of the automobile taking into account the 
immediate effect of depreciation upon purchase. Accordingly, 
that secured creditor has an allowed secured claim in a reduced 
amount based on the value of a used automobile and an allowed 
unsecured claim for the difference between the present value of 
the automobile and the amount owed to the secured creditor.
    Section 128 protects against this abuse by providing that 
if the claim is secured only by personal property acquired by 
the debtor within 180 days prior to filing for bankruptcy 
relief, then the value of the property as well as the allowed 
amount of the secured claim is the sum of the unpaid principal 
balance and the amount of accrued and unpaid interest and 
charges at the contract rate. If the allowed claim is secured 
by property in addition to the personal property so acquired, 
then section 506 may be used to determine the value of the 
underlying security. Nevertheless, section 128 provides that 
the amount of the allowed secured claim may not be less than 
the unpaid principal balance of the personal property's 
purchase price together with unpaid interest and charges at the 
contract rate. The protections interposed by section 128 also 
apply to any subsequent bankruptcy case that the debtor files 
within two years from the filing date of the original 
bankruptcy case.

Section 129. Fair valuation of collateral

    Section 129 resolves the unsettled state of the law 
following a decision rendered by the Supreme Court that 
concerned the proper valuation standard applicable to secured 
property under section 506 of the Bankruptcy Code.61 
Under section 129, the valuation standard with respect to 
property securing an allowed claim in chapter 7 and 13 cases of 
individuals is based on the property's replacement value as of 
the petition filing date, without deduction for costs of sale 
or marketing. With respect to property acquired for personal, 
family or household use, replacement value is the price a 
retail merchant would charge for such property given its age 
and condition at time of valuation.
---------------------------------------------------------------------------
    \61\ Associates Comm. Corp. v. Rash, 117 S. Ct. 1879, n. 6 (1997) 
(Utilizing ``replacement value,'' the Court explained that this meant 
the ``price a willing buyer in the debtor's trade, business, or 
situation would pay a willing seller to obtain property of like age and 
condition.''). The National Bankruptcy Review Commission also 
considered a valuation test. See Report of National Bankruptcy Review 
Commission, at 243-58; Recommendations for Reform of Consumer 
Bankruptcy Law by Four Dissenting Commissioners, at 44-47(1997).
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Section 130. Protection of holders of claims secured by the debtor's 
        principal residence

    Section 130 provides various protections to creditors 
secured by an interest in a debtor's principal residence.
     Subsection (1) defines the term ``debtor's principal 
residence,'' as including residential structures containing up 
to four units as well as structures not attached to real 
property, such as mobile homes, trailers and manufactured 
homes. This definition also includes an individual condominium 
or cooperative unit as well as ``incidental property.'' 
Subsection (1), in turn, provides that ``incidental property'' 
includes such items as window treatments, carpets, appliances 
and equipment located in the residence as well as easements, 
appurtenances, fixtures, rents, royalties, mineral rights, oil 
and gas rights, escrow funds and insurance proceeds.
    In subsection (2), an additional exception to the automatic 
stay provisions of the Bankruptcy Code is codified with regard 
to chapter 13 cases where a prepetition default has not been 
fully cured. Specifically, until such default is cured, the 
postponement, continuation or other similar delay in a 
prepetition foreclosure proceeding or sale does not constitute 
a violation of the automatic stay. In effect, subsection 2 
permits secured creditors to maintain the status quo with 
regard to prepetition foreclosure actions pending at the time a 
chapter 13 case is filed.
    Subsection (3) further limits the ability of a chapter 13 
debtor to modify the rights of secured creditors having an 
interest in the debtor's principal residence. Specifically, the 
debtor may not modify the rights of claimants secured primarily 
by an interest in property used as the debtor's principal 
residence within the 180 days preceding the filing of the 
bankruptcy case.

Section 131. Aircraft equipment and vessels

    Section 131 amends section 1110(a)(1) of the Bankruptcy 
Code, which defines the rights of secured creditors and lessors 
having an interest in aircraft and aircraft equipment. It 
clarifies that a default under a security agreement, lease or 
conditional sale contract with respect to such property must be 
cured within 60 days from the filing of the bankruptcy case. 
Section 131 also provides that if the default occurs after the 
expiration of this time period, it must be cured in accordance 
with the terms of the underlying security agreement, lease or 
conditional sales contract.

        Subtitle D. Adequate Protections for Unsecured Creditors

Section 141. Debts incurred to pay nondischargeable debts

    Under the Bankruptcy Code, certain unsecured debts are not 
discharged, notwithstanding the entry of a discharge order 
relieving the debtor from personal liability for these 
obligations in general. Section 523(a) of the Bankruptcy Code 
presently lists 18 categories of obligations that may not be 
discharged, under certain circumstances. To avoid the obvious 
consequences of section 523(a), debtors can borrow money to pay 
these nondischargeable debts and then seek to discharge the 
debt incurred for the money borrowed. For example, a debtor, 
under current law, can obtain a cash advance with a credit card 
and use those funds to pay an outstanding obligation for child 
support, which would have not been discharged.
    Under section 141, a debt incurred, such as the cash 
advance, to pay an obligation that otherwise would be 
nondischargeable under section 523(a) is itself 
nondischargeable. Section 523(a)(19) is amended to create a new 
category for these nondischargeable debts.
    In addition, Section 141 accords the same priority of 
payment to these types of debts. Under current law, all 
unsecured creditors are not equal. For various reasons, the 
Bankruptcy Code recognizes a hierarchy of payment among 
unsecured creditors.62 If there are sufficient 
nonexempt assets in a bankruptcy case available for 
distribution to unsecured creditors, the Bankruptcy Code in 
section 507 fixes an order of priority with regard to 
entitlement to payment. Child support obligations, for 
instance, are entitled to paid out of estate assets before tax 
claims are paid. In turn, certain tax claims are entitled to be 
paid in full before the claims of general unsecured creditors 
may be paid.
---------------------------------------------------------------------------
    \62\ 11 U.S.C. Sec. Sec. 507, 726.
---------------------------------------------------------------------------
    Under section 141, a general unsecured claim incurred by a 
debtor to pay a tax or child support obligation is entitled to 
priority of payment after payment of higher order priority 
claims in Section 507(a)(10), as amended by this provision. 
Claims within this tenth category of priority claims are paid 
according to their respective priority. This ensures that 
higher priority claims, such as child support claims, will be 
paid in full, before estate assets can be used to pay those 
obligations accorded a lower priority under section 507 of the 
Bankruptcy Code.

Section 142. Credit extensions on the eve of bankruptcy presumed 
        nondischargeable

    Under current law, only certain credit extensions obtained 
on the eve of a debtor's filing for bankruptcy relief are 
nondischargeable under the Bankruptcy Code. For example, 
consumer debts in excess of $1,000 incurred for ``luxury goods 
or services'' incurred within 60 days or certain cash advances 
obtained within the same time period are presumed to be 
nondischargeable.63
---------------------------------------------------------------------------
    \63\ 11 U.S.C. Sec. 523(a)(2)(C).
---------------------------------------------------------------------------
    Section 142 amends Section 523(a)(2)(C) of the Bankruptcy 
Code to provide that consumer debts incurred by an individual 
debtor within 90 days before the bankruptcy filing are presumed 
to be nondischargeable. This presumption, however, does not 
apply to consumer debts owed to a single creditor that were 
incurred for necessaries and do not exceed $250 in the 
aggregate.

Section 143. Fraudulent debts are nondischargeable in chapter 13 cases

    Under current law, a chapter 13 debtor may discharge the 
following types of obligations for money, property or services 
or extensions of credit obtained by:
          (1) false pretenses, false representations and actual 
        fraud (other than a statement regarding the debtor's or 
        an insider's financial condition);
          (2) materially false written statements regarding the 
        debtor's or insider's financial condition that the 
        debtor prepared with intent to deceive on which the 
        creditor reasonably relied;
          (3) fraud or defalcation while acting in a fiduciary 
        capacity;
          (4) embezzlement; and
          (5) larceny.
In addition, obligations resulting from the debtor's willful 
and malicious injury to another person or to the property of 
another person can also be discharged under chapter 
13.64
---------------------------------------------------------------------------
    \64\ See generally Susan Jensen-Conklin, Nondischargeable Debts in 
Chapter 13: ``Fresh Start'' or ``Haven for Criminals?'', 7 Bankr. Dev. 
J. 517 (1990).
---------------------------------------------------------------------------
    Section 143 amends the discharge provisions of chapter 13 
by making the above-specified debts nondischargeable.

Section 144. Applying the codebtor stay only when it protects the 
        debtor

    With regard to the co-debtor stay provisions of chapter 13, 
section 144 limits the applicability of this stay to instances 
where the debtor received value for the underlying obligation. 
Further, the co-debtor stay does not apply where the chapter 13 
plan provides that the debtor's interest in personal property 
subject to a lease is to be surrendered or abandoned. This 
exception, however, does not apply if the debtor is primarily 
obligated to pay the creditor in whole or in part with respect 
to the claim under a legally binding separation agreement, or 
divorce or dissolution decree, with respect to the person who 
has possession of such property.

Section 145. Credit extensions without a reasonable expectation of 
        repayment made nondischargeable

    To establish the nondischargeability of the underlying 
debt, a creditor, under current law, must prove that the 
debtor, with intent to deceive, prepared a materially false 
financial statement by which money, property, services or 
credit was obtained. With regard to determining whether the use 
of a credit or charge card by a debtor who has no reasonable 
expectation or ability to repay constitutes a nondischargeable 
debt, the courts currently diverge on the factors that should 
be considered to impute intent.65
---------------------------------------------------------------------------
    \65\ See, e.g., Anastas v. American Sav. Bank (In re Anastas), 94 
F.3d 1280 (9th Cir. 1996) (reviews factors).
---------------------------------------------------------------------------
    Section 145 clarifies that obligations incurred through the 
use of a credit or charge card or similar device to access a 
credit line without a reasonable expectation or ability to 
repay are nondischargeable under section 523(a)(2)(A) of the 
Bankruptcy Code, unless access to such credit was extended 
without an application therefor and reasonable evaluation of 
the debtor's ability to repay.
    Section 145 also eliminates the requirement that a creditor 
prove the debtor's intent to deceive in section 523(a)(2(B) of 
the Bankruptcy Code. Rather, the creditor can merely establish 
that the debtor prepared the materially false financial 
statement ``without taking reasonable steps to ensure'' its 
accuracy.

Section 146. Debts for alimony, maintenance, and support

    Section 146 institutes various provisions designed to 
ensure payment of spousal and child support notwithstanding the 
intervention of bankruptcy. It also provides greater 
protections to governmental units that hold claims under 
Section 523(a)(18) of the Bankruptcy Code, which makes 
obligations in the nature of support owed to states or 
municipalities nondischargeable.
    In addition, section 146 excepts from the automatic stay 
certain enforcement actions by governmental units in connection 
with such obligations. Section 146 also provides for the 
continued liability of exempt property to debts under section 
523(a)(18) of the Bankruptcy Code and accords priority status 
to these debts under section 507(a)(7) as well. Further, 
section 146 requires chapter 11, 12 and 13 debtors to be 
current on their postpetition spousal and child support 
payments as a requirement of confirmation of their plans. It 
also imposes a similar requirement with regard to the entry of 
a discharge order in chapter 12 and 13 cases. Finally, section 
146 creates an exception to the discharge provisions of chapter 
13 for debts owed to states or municipalities that are in the 
nature of support. Conforming amendments to Section 456(b) of 
the Social Security Act are made by section 146.

Section 147. Nondischargeability of certain debts for alimony, 
        maintenance, and support

    Section 147 clarifies that spousal and child support 
obligations resulting from property settlements, hold harmless 
agreements or other obligations not in the nature of support 
are also nondischargeable under section 523(a)(5) of the 
Bankruptcy Code. In addition, this provision also deems such 
debts to be nondischargeable if assigned to the obligee's 
attorney.

Section 148. Other exceptions to discharge

    Section 148 amends section 523(a)(7) of the Bankruptcy Code 
to prevent the discharge of judgments for disgorgement and 
restitution obtained by government units. It also eliminates 
section 523(a)(15), which limits the discharge of obligations 
incurred by a debtor in connection with a divorce or separation 
that are not in the nature of support.

Section 149. Fees arising from certain ownership interests

    Section 149 amends section 523(a)(16) of the Bankruptcy 
Code to clarify that it applies to fees or assessments arising 
from the debtor's interest in a condominium, cooperative or 
homeowners association, irrespective of whether or not the 
debtor physically occupies such property. It also provides that 
the executory contract provisions of section 365 of the 
Bankruptcy Code do not apply to this type of obligation.

Section 150. Protection of child support and alimony

    Section 150 provides that, notwithstanding the provisions 
of any state constitution or state law providing otherwise, 
support obligations owed by a debtor who has received a 
discharge are entitled to priority in payment and collection 
over certain debts determined to be nondischargeable under 
section 523(a)(2), (4) and (14) of the Bankruptcy Code. This 
priority, however, does not affect the priority accorded to 
consensual liens, mortgages or security interests.

Section 151. Adequate protection for investors

    Section 151 creates an exception to the automatic stay 
provisions of Section 362 of the Bankruptcy Code for 
nonmonetary enforcement actions 66 by ``securities 
self regulatory organizations.'' Such organizations, as defined 
under Section 151 by reference to applicable provisions of the 
Securities Exchange Act of 1934, include either a securities 
association or a national securities exchange registered with 
the Securities and Exchange Commission.
---------------------------------------------------------------------------
    \66\ Such actions include the delisting or refusal to permit 
quotation of any stock that does not meet applicable regulatory 
requirements.
---------------------------------------------------------------------------

              Subtitle E. Adequate Protections for Lessors

Section 161. Giving debtors the ability to keep leased personal 
        property by assumption

    Under current law, a trustee may assume, reject or assign 
the interest that the bankruptcy estate has in a lease of 
personal property.67 Upon the trustee's rejection or 
failure to timely assume a lease of personal property, section 
161 provides that such lease is no longer property of the 
estate and that the provisions of the automatic stay no longer 
apply. In addition, section 161 allows a chapter 7 debtor to 
notify the lessor of his or her desire to assume the lease. The 
lessor, at its option, may then agree to allow the debtor to 
assume the lease of personal property and may condition such 
assumption upon the cure of any outstanding default by the 
debtor.
---------------------------------------------------------------------------
    \67\ 11 U.S.C. Sec. 365.
---------------------------------------------------------------------------
    For chapter 11 and 13 debtors, if they fail to assume the 
personal property lease prior to confirmation, such lease shall 
be deemed to be rejected as of the conclusion of the 
confirmation hearing, under section 161. Further, if such lease 
is rejected, neither the automatic stay nor the co- debtor 
stay, which applies in chapter 13 cases, applies.

Section 162. Adequate protection in chapter 13 cases for lessors

    Section 162 requires a chapter 13 debtor to make 
postpetition payments on personal property lessors and 
creditors secured by personal property of the debtor within 30 
days from the filing of the bankruptcy case. The payments must 
be in cash and paid at least on a monthly basis. Although the 
bankruptcy court may alter the amount of the requisite 
payments, they cannot be reduced to less than the reasonable 
depreciation of such property on a month-to-month basis. If the 
property was repossessed prepetition, the creditor can retain 
such property postpetition until it receives the first adequate 
protection payments required under this provision. A creditor's 
postpetition possession of the debtor's personal property does 
not constitute a violation of the automatic stay under section 
162. If required, the debtor must provide to the lessor 
evidence of insurance. This requirement continues for as long 
as the debtor remains in possession of such property.

Section 163. Adequate protection for lessors

    Residential lessee-debtors, under current law, can invoke 
the protection of the automatic stay to prevent their eviction 
even if the underlying lease has terminated. As a result, many 
debtors repeatedly file for bankruptcy relief for the sole 
purpose of reinvoking the automatic stay and thereby halt the 
eviction proceeding yet again.68 Section 163 excepts 
from the automatic stay provisions of section 362 of the 
Bankruptcy Code any act by a lessor with respect to a 
residential lease that has terminated prepetition.
---------------------------------------------------------------------------
    \68\ See, e.g, Report of the National Bankruptcy Review Commission, 
Recommendations for Reform of Consumer Bankruptcy Law by Four 
Dissenting Commissioners, at 62-64 (1997).
---------------------------------------------------------------------------

        Subtitle F. Extend Period Between Bankruptcy Discharges

Section 171. Extend period between bankruptcy discharges

    Under current law, a chapter 7 debtor may not receive a 
discharge in a subsequently filed chapter 7 case if the latter 
case was filed within six years of when the debtor obtained a 
discharge in the prior case. Section 171 of H.R. 3150 extends 
the current six-year period to ten years.
    With only limited exception,69 no refiling bar 
currently applies to successively filed chapter 13 cases. 
Section 171 institutes a five-year bar.
---------------------------------------------------------------------------
    \69\ See, e.g., 11 U.S.C. Sec. 109(g).
---------------------------------------------------------------------------

                         Subtitle G. Exemptions

Section 181. Exemptions

    Section 522 of the Bankruptcy Code describes the various 
property interests that a debtor may claim as exempt, that is, 
property that may not be liquidated in order to satisfy the 
claims of his or her creditors. Under section 522(b), states 
may chose to opt out of the federal exemption scheme set forth 
under the Bankruptcy Code. As a result of this provision, the 
amount and type of exempt property interests that may be 
claimed varies widely among the states. Some debtors 
intentionally relocate to states with more generous exemption 
provisions to protect assets, which would have been liquidated 
to pay the debtor's debts under his or her home state's 
exemption provisions.
    Section 181 addresses the potential for abuse under present 
law. Section 522(b)(2)(A) currently provides that the 
applicable exemption laws of the state where the debtor's 
domicile is located for the 180 days 70 preceding 
the filing applies. Section 181 requires a debtor to be 
domiciled in the state for one year before he or she can assert 
that state's exemption scheme.
---------------------------------------------------------------------------
    \70\ Section 522(b)(2)(A) alternatively provides ``or for a longer 
portion of such 180-day period than in any other place[.]''
---------------------------------------------------------------------------

Section 182. Limitation

    Section 182 limits the amount of the exemption in certain 
property that a debtor may claim under Section 522 of the 
Bankruptcy Code. Specifically, a debtor may not exempt under 
state or local law any interest that exceeds $100,000 in 
aggregate value in real or personal property that a debtor uses 
as a residence, a cooperative or burial plot. This limitation 
under Section 182,however, does not apply to the principal 
residence of a family farmer.

                TITLE II. BUSINESS BANKRUPTCY PROVISIONS

                     Subtitle A. General Provisions

Section 201. Limiting the use of fee examiners

    Section 330 of the Bankruptcy Code requires the bankruptcy 
court to approve all applications for compensation and 
reimbursement of expenses made by trustees and professionals 
employed by trustees.71 In practice, some bankruptcy 
courts have appointed fee examiners to review applications for 
compensation. This practice typically occurs in large chapter 
11 cases where professionals seek millions of dollars in 
compensation from these estates.
---------------------------------------------------------------------------
    \71\ The reference to ``trustees'' here also applies to chapter 11 
debtors in possession.
---------------------------------------------------------------------------
    Section 201 prohibits a bankruptcy court from having the 
authority to appoint a fee examiner.72 The National 
Bankruptcy Review Commission, which made a similar 
recommendation, noted that ``fee examiners assume a judicial 
role, akin to special masters, whose appointment is not 
permitted in bankruptcy cases.'' 73
---------------------------------------------------------------------------
    \72\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 888-92 (1997).
    \73\ Id. at 889.
---------------------------------------------------------------------------

Section 202. Sharing of compensation

    Current law prohibits professionals in bankruptcy cases 
from sharing their fees with other persons.74 
Section 202 carves out a limited exception to this prohibition 
to allow compensation to be shared with bona fide public 
service attorney referral programs.75
---------------------------------------------------------------------------
    \74\ See 11 U.S.C. Sec. 504.
    \75\ This proposal comports with one adopted by the National 
Bankruptcy Review Commission. See Report of the National Bankruptcy 
Review Commission, at 892-94 (1997).
---------------------------------------------------------------------------

Section 203. Chapter 12 made permanent law

    Chapter 12 is a form of bankruptcy relief only available to 
``family farmers,'' a defined term.76 It was enacted 
in response to the particularized needs of farmers in financial 
distress as part of the Bankruptcy Judges, United States 
Trustees, and Family Farmer Bankruptcy Act of 1986. 
Nevertheless, the Act only provided for the creation of chapter 
12 on a temporary basis. Chapter 12 is due to sunset on October 
1, 1998.
---------------------------------------------------------------------------
    \76\ See 11 U.S.C. Sec. 101(18).
---------------------------------------------------------------------------
    Section 203 makes chapter 12 a permanent component of the 
Bankruptcy Code. The National Bankruptcy Review Commission made 
a similar recommendation.77
---------------------------------------------------------------------------
    \77\ See Report of the National Bankruptcy Review Commission, at 
1014-16 (1997).
---------------------------------------------------------------------------

Section 204. Meetings of creditors and equity security holders

    Under current law, all chapter 11 debtors must appear for 
examination under oath pursuant to section 341 of the 
Bankruptcy Code. This examination provides an opportunity for 
the United States Trustee, creditors, and other parties in 
interest to assess the debtor's financial condition.
    Section 204 allows the bankruptcy court to dispense with 
this requirement for cause where the chapter 11 debtor 
solicited prepetition acceptances of its plan of 
reorganization.78 This provision particularly 
applies to ``prepackaged chapter 11 plans,'' that is, plans 
where the debtor, before filing for bankruptcy relief, obtained 
the acceptance of creditors and interest holders in its plan of 
reorganization. Section 204 requires notice and hearing as a 
prerequisite to dispensing with the requirement for a meeting 
of creditors and equity security holders.
---------------------------------------------------------------------------
    \78\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 487-89 (1997).
---------------------------------------------------------------------------

Section 205. Creditors' and equity security holders' committees

    An important premise in a chapter 11 case is the need to 
have creditor participation. This participation theoretically 
fosters the debtor's reorganization and serves an oversight 
function as well. One of the principal means by which creditor 
participation is encouraged and implemented is through the 
appointment of a creditors' committee.79 The United 
States Trustee is charged with the responsibility to appoint 
creditors' and equity security holders' committees. The 
membership of a committee ordinarily consists of creditors 
holding the seven largest claims that are representative of the 
types of creditors in the chapter 11 case.
---------------------------------------------------------------------------
    \79\ Correlatively, if the debtor has equity security holders, a 
committee representing these interests can also be appointed. See 11 
U.S.C. Sec. 1102.
---------------------------------------------------------------------------
    Section 205 clarifies that bankruptcy courts may, on their 
own motion or on motion of a party in interest, order a change 
in a committee's membership to ensure adequate representation 
of other parties in a case.80
---------------------------------------------------------------------------
    \80\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 492-501 (1997).
---------------------------------------------------------------------------

Section 206. Postpetition disclosure and solicitation

    Under current law, the acceptance or rejection of a chapter 
11 plan of reorganization may not be solicited from parties 
affected by the plan absent a court-approved disclosure 
statement.81 The disclosure statement is required to 
ensure that these parties receive adequate information about 
the plan and its consequences.
---------------------------------------------------------------------------
    \81\ See 11 U.S.C. Sec. 1125(b).
---------------------------------------------------------------------------
    Section 206 permits postpetition solicitation of creditors 
and equity security holders in chapter 11 cases if they were 
solicited prepetition in compliance with applicable 
nonbankruptcy law.82 This creates an exception to 
the requirement that these parties receive a court-approved 
disclosure statement prior to their solicitation.
---------------------------------------------------------------------------
    \82\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 595-98 (1997).
---------------------------------------------------------------------------

Section 207. Preferences

    One of the linchpins of the Bankruptcy Code is equality of 
treatment among similarly situated creditors. To effectuate 
this goal, section 547 of the Bankruptcy Code permits the 
avoidance of certain prepetition transfers of property made by 
the debtor that effectively prefer some creditors over others. 
While the Bankruptcy Code acknowledges defenses to preferential 
transfer actions,83 defendants cite the difficulty 
of establishing certain defenses as well as the attendant 
inconvenience and costs of litigation.
---------------------------------------------------------------------------
    \83\ See, e.g., 11 U.S.C. Sec. 547(c).
---------------------------------------------------------------------------
    Section 207 allows a defendant in a preference action to 
establish that the transfer was made in the ordinary course of 
the debtor's financial affairs or business or that the transfer 
was made in accordance with ordinary business 
terms.84 Presently, the Bankruptcy Code requires 
both of these grounds to be established in order to sustain a 
defense to a preferential transfer action.
---------------------------------------------------------------------------
    \84\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 800-803 (1997).
---------------------------------------------------------------------------
    Section 207 also establishes a threshold amount for a 
preferential transfer action.85 To file a 
preferential transfer action in a case where the claims are not 
primarily consumer debts, the aggregate amount of all property 
constituting the transfer must be at least $5,000 or more.
---------------------------------------------------------------------------
    \85\ Id. at 797-98.
---------------------------------------------------------------------------

Section 208. Venue of certain proceedings

    Section 208 amends the venue provisions for preferential 
transfer actions. A preferential transfer action in the amount 
of $10,000 or less must be filed in the district where the 
defendant resides. 86 Currently, this amount is 
fixed at $1,000.87
---------------------------------------------------------------------------
    \86\ Id. at 799-800.
    \87\ See 28 U.S.C. Sec. 1409(b).
---------------------------------------------------------------------------

Section 209. Period for filing plan under chapter 11

    Section 209 mandates that a chapter 11 debtor's exclusive 
period for filing a plan may not be extended beyond a date that 
is 18 months after the order for relief. It likewise provides 
that the debtor's exclusive period for obtaining acceptances of 
the plan may not be extended beyond 20 months after the order 
for relief.

Section 210. Period for filing plan under chapter 12

    Section 210 has three components. First, it mandates that a 
chapter 12 debtor must file its plan not later than 150 days 
after the order for relief. Second, it provides for relief from 
theautomatic stay if the debtor has not filed a plan in 
accordance with section 1221 of the Bankruptcy Code. Third, it creates 
a new provision recognizing special treatment for secured claims. This 
provision allows secured claimants to elect to have their claims be 
treated as secured to the extent that such claims are allowed, 
notwithstanding section 506(a) of the Bankruptcy Code.

Section 211. Cases ancillary to foreign proceedings involving foreign 
        insurance companies that are engaged in the business of 
        insurance or reinsurance in the United States

    Section 211 amends section 304 of the Bankruptcy Code to 
prohibit a foreign representative for the estate of an 
insurance company from obtaining relief with respect to certain 
types of property. The property interests that are protected 
under this provision include a deposit required by State 
insurance and reinsurance laws and certain multibeneficiary 
trusts.

Section 212. Rejection of executory contracts affecting intellectual 
        property rights to recordings of artistic performance

    Section 212 provides that the rejection of an executory 
contract affecting the intellectual property rights to 
recordings of artistic performances does not impair any 
applicable nonbankruptcy law to enforce noncompetition or 
exclusivity provisions that may be contained in such contract. 
The enforcement is subject to the nondebtor party's provision 
of notice of an offer to perform the contract under all of its 
original terms. In addition, the amendment provides that the 
rights to enforce such noncompetition and exclusivity 
provisions cannot be treated as dischargeable claims.

Section 213. Unexpired leases of nonresidential real property

    Under current law, a bankruptcy trustee or a chapter 11 
debtor in possession has 60 days to either assume, assign, or 
reject a nonresidential lease of real property in which the 
bankruptcy estate is a lessee.88 In practice, 
however, trustees and debtors typically seek and obtain 
multiple extensions of this period.
---------------------------------------------------------------------------
    \88\ See 11 U.S.C. Sec. 365(d)(4).
---------------------------------------------------------------------------
    Section 213 amends section 365(d)(4) of the Bankruptcy Code 
to establish finite deadlines by which a nonresidential lease 
of real property must be assumed or rejected. It provides that 
this period is the earlier of 120 days after the date of the 
order for relief or the entry of an order confirming a plan. 
The failure to act within that period causes the lease to be 
deemed rejected automatically. This provision does permit the 
120-day period to be extended for an additional period of 150 
days if the lessor agrees or the court approves such extension, 
providing that all postpetition lease obligations have been 
performed by the lessee. Section 213 provides that under no 
circumstance may this period be extended beyond 270 days from 
the order for relief or the entry of an order approving a 
disclosure statement.

Section 214. Definition of disinterested person

    Section 214 amends the definition of a disinterested person 
under section 101(14) of the Bankruptcy Code by eliminating its 
references to investment bankers.89
---------------------------------------------------------------------------
    \89\ Section 101(14) of the Bankruptcy Code provides that an 
investment banker is not a disinterested person nor an attorney for 
such investment banker. See 11 U.S.C. Sec. 101(14)(B),(C), (D).
---------------------------------------------------------------------------

                    Subtitle B. Specific Provisions

                  Chapter 1. Small Business Bankruptcy

Section 231. Definitions

    Section 231 defines a ``small business debtor'' as an 
entity that has aggregate noncontingent, liquidated secured and 
unsecured debts in the amount of $5 million 90 or 
less as of the commencement of the case. The definition also 
includes a single asset real estate debtor without regard to 
the amount of its debts, unless such debtor is one of a group 
of affiliated debtors having aggregate noncontingent liquidated 
secured and unsecured debts greater than $5 million.
---------------------------------------------------------------------------
    \90\ This cap excludes debts owed to one or more affiliates or 
insiders of the debtor.
---------------------------------------------------------------------------

Section 232. Flexible rules for disclosure statements and plans

    Under current law, a chapter 11 debtor must obtain court 
approval of a disclosure statement before it can solicit 
acceptances of its reorganization plan.91 The 
disclosure statement must provide creditors and other 
interested parties basic information about the plan, including 
its feasibility and consequences. Typically, court approval is 
obtained after a hearing on 25 days' notice to all creditors 
and parties in interest. The current process can be costly and 
time- consuming.
---------------------------------------------------------------------------
    \91\ See 11 U.S.C. Sec. 1125(b).
---------------------------------------------------------------------------
    Section 232 authorizes a bankruptcy court, in determining 
whether a disclosure statement provides adequate information, 
to consider the complexity of the small business debtor's case 
and the cost of providing such information to the debtor's 
creditors. If, for example, the court finds that the plan of 
reorganization itself provides adequate information, it may 
allow the debtor to solicit acceptances without having to 
prepare and send a disclosure statement along with the plan. 
Further, it permits a court to approve conditionally a 
disclosure statement subject to final approval after notice and 
hearing, which would then be combined with the confirmation 
hearing.

Section 233. Standard form disclosure statements and plans

    Section 233 implements section 232 of H.R. 3150 bill by 
requiring the Advisory Committee on Bankruptcy Rules of the 
Judicial Conference of the United States Courts to issue form 
disclosure statements and plans of reorganization for small 
business debtors. The forms are designed to achieve a practical 
balance between the needs of those charged with administration 
of these cases and parties in interest who require information 
about the case with the need for economy and simplicity.

Section 234. Uniform national reporting requirements

    The United States Trustee Guidelines generally require 
chapter 11 debtors to report their financial circumstances on a 
monthly basis. These reports are used to determine a chapter 11 
debtor's economic viability. If completed accurately, these 
reports can provide valuable information about the case to the 
bankruptcy court, the United States Trustee, and parties in 
interest, such as creditors. In practice, however, some debtors 
fail to file these reports or file incomplete or inaccurate 
reports, thereby frustrating the ability of those charged with 
the oversight of these cases to fulfill their responsibility. 
Section 234 mandates that a small business debtor file periodic 
financial reports containing specified 
information.92
---------------------------------------------------------------------------
    \92\ The types of disclosures that must appear in these reports are 
the following:
---------------------------------------------------------------------------

          (1) the debtor's profitability;
          (2) reasonable approximations of the debtor's projected cash 
        receipts and disbursements;
          (3) comparisons of actual cash receipts and disbursements 
        with projections in prior reports;
          (4) a statement as to whether or not the debtor is in 
        compliance with certain other postpetition requirements; and
          (5) a statement as to whether the debtor has timely filed tax 
        returns and paid taxes and administrative expenses when due.

Section 235. Uniform reporting rules and forms

    Section 235 mandates that the Attorney General shall issue 
uniform reporting rules and forms and requires the Attorney 
General to consult with the Executive Office for United States 
Trustees and the Administrative Office of the United States 
Courts.

Section 236. Duties in small business cases

    To implement greater administrative controls over small 
business chapter 11 debtors, section 236 institutes additional 
duties that these debtors must perform. First, the small 
business debtor must include with the bankruptcy petition its 
most recent financial statements, including a balance sheet, 
statement of operations, cash flow statement and federal income 
tax return.93
---------------------------------------------------------------------------
    \93\ If the debtor lacks such information, then it must file a 
statement under penalty of perjury verifying this fact.
---------------------------------------------------------------------------
    Second, the small business debtor is required to attend, 
through its senior management, meetings scheduled by the 
bankruptcy court or the United States Trustee as well as 
meetings held pursuant to section 341 of the Bankruptcy Code. 
Meetings held by the bankruptcy court include scheduling 
conferences where the court could fix deadlines by which a plan 
must be filed and confirmation achieved. Meetings scheduled by 
the United States Trustee also include ``initial debtor 
interviews,'' where the United States Trustee explains to the 
debtor various requirements such as the need to maintain 
insurance, to file periodic financial reports, and to remain 
current on postpetition obligations. Meetings held pursuant to 
section 341, alternatively known as ``Section 341 meetings'' or 
the ``first meetings of creditors,'' provide an opportunity for 
the debtor to be examined under oath by the United States 
Trustee and by other parties in interest, such as creditors. 
Third, the small business debtor is required to file in a 
timely manner all requisite schedules and the statement of 
financial affairs as well as postpetition financial reports. 
Fourth, the small business debtor must maintain insurance that 
was customary and appropriate for the industry.
    Fifth, section 236 establishes special protections with 
regard to taxes. All tax returns must be timely 
filed. In addition, all postpetition taxes must be 
paid, except for those that are contested, subject to section 
363(c) of the Bankruptcy Code.94 Separate bank 
accounts for the deposit of taxes collected or withheld for 
government authorities must be established not later than ten 
business days following the entry of the order for relief.
---------------------------------------------------------------------------
    \94\ Section 363(c)(2) prohibits the use of cash collateral without 
consent of those having an interest in such collateral or the court 
authorizes such use.
---------------------------------------------------------------------------
    Sixth, section 236 permits the United States Trustee to 
inspect the debtor's books and records and business premises at 
reasonable hours with proper notice.

Section 237. Plan filing and confirmation deadlines

    Under current law, a chapter 11 debtor has the exclusive 
right to file a plan within the 120 days following the entry of 
the order for relief.95 The Bankruptcy Court also 
extends to the chapter 11 debtor the exclusive right to effect 
confirmation of the plan within 180 days following the entry of 
the order for relief.96 As a result of amendments 
made in 1994 to the Bankruptcy Code, the exclusive period that 
a small business debtor has to file a plan and achieve 
confirmation were reduced to 100 days and 160 days respectively 
from the entry of the order for relief.97
---------------------------------------------------------------------------
    \95\ See 11 U.S.C. Sec. 1121(b).
    \96\ See 11 U.S.C. Sec. 1121(c).
    \97\ See 11 U.S.C. Sec. 1121(e). Under this provision, a party in 
interest may apply for an order reducing or enlarging this period. 11 
U.S.C. Sec. 1121(e)(3).
---------------------------------------------------------------------------
    Section 237 further reduces the time periods for filing 
plans and achieving confirmation for small business debtors. 
First, the small business debtor's exclusive period to file a 
plan is 90 days from the entry date of the order for relief. A 
bankruptcy court may extend this time period on request of a 
party in interest for cause. Section 237 clarifies that while 
the debtor has the exclusive right to file a plan for 90 days 
following the date of the order for relief, this period may be 
shortened on request of a party in interest. Likewise, section 
237 requires a small business debtor to effect confirmation 
within 150 days from the entry date of the order for relief, 
unless this period is extended by the court on request of a 
party in interest.

Section 238. Plan confirmation deadline

    Should a debtor seek to extend either of these time 
periods, the debtor has to demonstrate by a preponderance of 
the evidence that it is more likely than not that the debtor 
will confirm a plan of reorganization within a reasonable time 
under section 238.

Section 239. Prohibition against extension of time

    To ensure that the strict time frames instituted by H.R. 
3150 are not eviscerated, section 239 of this bill limits a 
court's authority to avoid the impact of these 
provisions.98
---------------------------------------------------------------------------
    \98\ Under section 105(a) of the Bankruptcy Code, a bankruptcy 
court is empowered to ``issue any order, process, or judgment that is 
necessary or appropriate to carry out the provisions'' of the 
Bankruptcy Code. In practice, section 105(a) has been used to avoid 
specific provisions of the Bankruptcy Code based on equitable grounds. 
H.R. 3150 specifically limits the court's authority to use section 
105(a) to extend the time frames fixed for filing and comfirming the 
plans of small business debtors.
---------------------------------------------------------------------------

Section 240. Duties of the United States Trustee and bankruptcy 
        administrator

    Section 240 mandates that the United States Trustee conduct 
an ``initial debtor interview'' of all small business debtors. 
This interview, which must be held shortly after the case was 
filed, allows the United States Trustee to investigate the 
debtor's viability and business plan. It also provides an 
opportunity for the United States Trustee to explain the 
debtor's obligation to file monthly operating reports and other 
requirements. During the course of the interview, the United 
States Trustee may explore whether the debtor would consent to 
the entry of a scheduling order fixing various time frames, 
such as the date for filing a plan and effecting confirmation.
    Section 240 also authorizes the United States Trustee to 
inspect the debtor's premises, review its books and records, 
and verify that the debtor has filed its tax returns. The 
United States Trustee, under this provision, is responsible for 
diligently monitoring the small business debtor's activities 
and determining its ability to confirm a plan. Should the 
United States Trustee discover material grounds warranting 
either dismissal or conversion of the chapter 11 case to one 
under chapter 7 for liquidation, section 240 requires the 
United States Trustee to apply promptly for such relief.

Section 241. Scheduling conferences

    Under current law, a bankruptcy court may conduct a 
scheduling conference on its own motion or on request of a 
party in interest in any bankruptcy case. In a chapter 11 case, 
for example, a scheduling conference provides an opportunity 
for the court to set certain dates bywhich the debtor must file 
and confirm a plan, among other matters.
    Section 241 mandates that a bankruptcy court conduct 
scheduling conferences in all bankruptcy cases, if necessary, 
to further the expeditious and economical resolution of such 
cases.

Section 242. Serial filer provisions

    Under section 242, the automatic stay does not apply to 
four categories of small business chapter 11 debtors who have 
previously sought bankruptcy relief. The effect of this 
provision is to restrict repetitive filings by these debtors. 
The automatic stay does not apply when:
          (1) the small business debtor is simultaneously a 
        debtor in another bankruptcy case pending at the time 
        of the filing of the second case;
          (2) the small business debtor's prior case was 
        dismissed within two years from the filing of the 
        second case;
          (3) the second case was filed within two years 
        following the confirmation of the prior case; or
          (4) an entity that acquired substantially all of the 
        assets of a small business debtor has itself filed for 
        bankruptcy relief, unless that entity can establish by 
        a preponderance of the evidence that the filing was 
        necessitated by circumstances beyond its control and 
        that it will confirm a feasible plan of reorganization 
        99 within a reasonable time.
---------------------------------------------------------------------------
    \99\ This exception specifically excludes liquidation plans.
---------------------------------------------------------------------------
    This provision also limits the type of sanctions that may 
be imposed to actual damages for violations of the automatic 
stay resulting from a good faith belief. In addition, it 
provides that the automatic stay applies to an involuntarily 
commenced chapter 11 case involving no collusion between a 
small business debtor and its creditors.

Section 243. Expanded grounds for dismissal or conversion and 
        appointment of trustee

    The Bankruptcy Code currently lists ten grounds that a 
bankruptcy court may consider in determining whether to convert 
a chapter 11 case to one under chapter 7 for liquidation or to 
dismiss the case.100 Section 243 requires the 
conversion or dismissal of a chapter 11 case if the movant 
establishes cause. An exception to this mandate is also 
specified in this Section.101 Cause warranting 
either mandatory conversion or dismissal of a chapter 11 case 
under section 243 includes the following:
---------------------------------------------------------------------------
    \100\ See 11 U.S.C. Sec. 1112(b). The ten grounds enumerated in 
this provision, however, are not exclusive.
    \101\ The debtor or other party in interest must prove by a 
preponderance of the evidence that a plan can be confirmed within a 
time fixed by the court or within a reasonable time. In addition, the 
debtor must establish that a reasonable justification supports its 
action or omission that prompted the filing of the motion under section 
1112(b) and that it will be cured by a date certain.
---------------------------------------------------------------------------
          (1) substantial or continuing loss to or diminution 
        of the estate;
          (2) gross mismanagement of the estate;
          (3) failure to maintain appropriate insurance;
          (4) unauthorized use of cash collateral that is 
        harmful to creditors;
          (5) failure to comply with a court order;
          (6) failure to comply timely with any filing or 
        reporting requirement;
          (7) failure to attend the section 341 meeting of 
        creditors;
          (8) failure to provide timely information or to 
        attend meetings requested by the United States Trustee;
          (9) failure to pay postpetition taxes when due;
          (10) failure to file a disclosure statement or to 
        confirm a plan within the time fixed by a court;
          (11) failure to pay any requisite fees or charges;
          (12) revocation of a confirmation order;
          (13) denial of confirmation of another plan or 
        modified plan;
          (14) inability to effectuate substantial consummation 
        of a confirmed plan;
          (15) material default by a debtor with respect to a 
        confirmed plan; and
          (16) termination of a plan by reason of the 
        occurrence of a condition specified in the plan.
    Section 243 also requires the bankruptcy court to hold a 
hearing on a motion seeking either conversion or dismissal of 
the case within 30 days of the filing of such motion. In 
addition, the bankruptcy court is required to decide this 
motion within 15 days following the commencement of the 
hearing, unless the moving party expressly consents to a 
continuance.
    Should grounds exist for either conversion or dismissal of 
the chapter 11 case, the bankruptcy court, under Section 243, 
has the authority to appoint a chapter 11 trustee, if this is 
in the best interests of creditors and the bankruptcy estate.

               Chapter 2. Single Asset Real Estate Cases

    A single asset real estate chapter 11 case presents special 
concerns. As the name implies, the principal asset in this type 
of case consists of some form of real estate, such as 
undeveloped land, a shopping mall or building. Typically, the 
form of ownership of a single asset real estate debtor is a 
corporation or limited partnership. For tax planning purposes, 
the limited partnership is formed to acquire the underlying 
asset.
    The largest creditor in a single asset real estate case is 
usually the secured lender who advanced the funds to the debtor 
to acquire the real property. Often, a single asset real estate 
debtor resorts to filing for bankruptcy relief for the sole 
purpose of staying an impending foreclosure proceeding or sale 
commenced by the secured lender. Foreclosure actions are filed 
when the debtor lacks sufficient cash flow to service the debt 
and maintain the property. Taxing authorities may also have 
liens against the property.
    Based on the nature of its principal asset, a single asset 
real estate debtor often has few, if any, unsecured creditors. 
If unsecured creditors exist, they may have only nominal claims 
against the single asset real estate debtor. Depending on the 
nature and ownership of any business operating on the debtor's 
real property, the debtor may have few, if any, employees. 
Accordingly, there may be little interest on behalf of 
unsecured creditors in a single asset real estate case to serve 
on a creditors'' committee.
    In 1994, the Bankruptcy Code was amended to accord special 
treatment for a single asset real estate debtor. It defined 
this type of debtor as a bankruptcy estate comprised of a 
single piece of real property or project, other than 
residential real property with fewer than four residential 
units. The property or project must generate substantially all 
of the debtor's gross income. A debtor that conducts 
substantial business on the property beyond that relating to 
its operation is excluded from this definition. In addition, 
the definition fixed a monetary cap. To qualify as a single 
asset real estate debtor, the debtor could not have 
noncontingent, liquidated secured debts in excess of $4 
million.102
---------------------------------------------------------------------------
    \102\ See 11 U.S.C. Sec. 101(51B).
---------------------------------------------------------------------------
    In addition, the 1994 amendments to the Bankruptcy Code 
created two new alternativegrounds for relief from the 
automatic stay as applied to single asset real estate debtors. For 
creditors secured by an interest in the debtor's real property, relief 
from the automatic stay is available if the debtor fails, within 90 
days from entry date of the order for relief, to file a plan that has a 
reasonable likelihood of being confirmed. Another ground is the 
debtor's failure to commence making monthly payments to the secured 
creditor (other than a creditor secured by virtue of a judgment lien or 
unmatured statutory lien) within the same 90-day period. The amount of 
the payment must equal the current fair market interest rate based on 
the value of that creditor's claim against the property.103
---------------------------------------------------------------------------
    \103\ See 11 U.S.C. Sec. 362(d)(3).
---------------------------------------------------------------------------
    Last year, the House passed a bill that amended the 
Bankruptcy Code's definition of a single asset real 
estate.104 It increased the monetary cap from $4 
million to $15 million, determined as of the date the case was 
commenced. The Report accompanying this bill explained:
---------------------------------------------------------------------------
    \104\ Bankruptcy Amendments Act of 1997, H.R. 764, 105th Cong. 
(1997).

          The present $4 million cap prevents use of the 
        expedited relief procedure in many commercial property 
        reorganizations, and effectively provides an 
        opportunity for a number of debtors to abusively file 
        for bankruptcy in order to obtain the protection of the 
        automatic stay against their creditors. The bill raises 
        the ceiling to $15 million at this time, thereby 
        deferring the issue of eliminating the ceiling 
        altogether, as proposed in H.R. 764 as introduced, to a 
        later date.105
---------------------------------------------------------------------------
    \105\ H.R. Rep. No. 105-342, at 10 (1997).
---------------------------------------------------------------------------

Section 251. Single asset real estate defined

    Section 251 restructures the Bankruptcy Code's definition 
of a single asset real estate debtor in several respects. 
First, it eliminates the monetary cap from the definition. 
Second, section 251 includes as part of the definition a 
specific reference to undeveloped real property. Third, the 
definition extends the ``substantial business'' requirement to 
activities conducted by a commonly controlled group of entities 
where they are all concurrently chapter 11 debtors.

Section 252. Payment of interest

    Section 252 amends the automatic stay termination provision 
that applies to single asset real estate debtors. Specifically, 
it permits a debtor to make the requisite interest payments out 
of rents or other proceeds generated by the real property. It, 
however, changes the amount of these payments. Under section 
252, the amount must equal the interest at the then-applicable 
nondefault contract rate of interest based on the value of the 
creditor's claim against the real estate.

               TITLE III. MUNICIPAL BANKRUPTCY PROVISIONS

Section 301. Petition and proceedings

    Chapter 9 is a form of bankruptcy relief that is only 
available to municipalities. Section 301 clarifies that a court 
must enter the order for relief for these cases.

                  TITLE IV. BANKRUPTCY ADMINISTRATION

                     Subtitle A. General Provisions

Section 401. Adequate preparation time for creditors before the first 
        meeting of creditors in individual cases

    The Bankruptcy Code provides that a debtor must be examined 
under oath by a bankruptcy trustee.106 Variously 
known as the ``first meeting of creditors'' or ``section 341 
meeting,'' creditors and other parties in interest are 
permitted to attend this examination. At the section 341 
meeting, creditors can question the debtor with regard to his 
or her financial circumstances and eligibility for a discharge, 
among other matters. Important deadlines, such as the time 
within which to object to the debtor's discharge,107 
obtain a determination of the nondischargeability of a 
particular debt,108 or to file a proof of 
claim,109 are based on the first date set for the 
meeting of creditors. Pursuant to the Federal Rules of 
Bankruptcy Procedure, the first meeting of creditors in a 
chapter 7 or 11 case must be held not less than 20 days and not 
more than 40 days following the order for relief.110 
For chapter 13 cases, the requisite time period is between 20 
and 35 days.
---------------------------------------------------------------------------
    \106\ 11 U.S.C. Sec. 343.
    \107\ 11 U.S.C. Sec. 727(a); Fed. R. Bankr. P. 4004(a).
    \108\ See, e.g., 11 U.S.C. Sec. 523(a)(2), (4), (6); Fed. R. Bankr. 
P. 4007(c).
    \109\ 11 U.S.C. Sec. 502; Fed. R. Bankr. P. 3002(a).
    \110\ Fed. R. Bankr. P. 2003(a).
---------------------------------------------------------------------------
    For chapter 7, 11, or 13 cases filed by individual debtors, 
section 401 amends section 341 of the Bankruptcy Code to 
require that the first meeting of creditors be held not earlier 
than 60 days and not later than 90 days following the order for 
relief. This is intended to give creditors more time to prepare 
for the first meeting of creditors. It also allows creditors 
additional time to object to a debtor's discharge, oppose the 
discharge of certain debts, and file proofs of claim.

Section 402. Creditor participation at first meeting of creditors

    Section 402 permits pro se creditors to appear and 
participate at the section 341 meeting of creditors in chapter 
7 and 13 cases. Currently, some districts require corporate 
creditors and others to be represented by counsel in legal 
proceedings, such as the section 341 meeting of creditors. This 
amendment allows creditors to save the cost of obtaining legal 
representation to participate in the section 341 meeting.

Section 403. Filing proofs of claim

    Currently, creditors in chapter 13 cases and in asset 
chapter 7 cases must timely file proofs of claim to ensure that 
they receive a distribution in the case. The filing of a proof 
of claim is prima facie evidence of its validity and amount. In 
chapter 11 cases, however, creditors are not required to file 
proofs of claim if the debtor has scheduled their claims as 
undisputed, noncontingent, and in a liquidated 
amount.111
---------------------------------------------------------------------------
    \111\ 11 U.S.C. Sec. 1111(a). This, of course, presumes that the 
creditor agrees with how the debt has been scheduled (e.g., priority or 
general unsecured) and its amount.
---------------------------------------------------------------------------
    Section 403 extends the procedure under chapter 11 to 
chapter 7 and chapter 13 cases. As a result, creditors in 
chapter 7 and 13 cases do not have to file proofs of claim if 
their claims were scheduled as undisputed, noncontingent, and 
in a liquidated amount. This amendment is intended to save 
creditors the time and expense of having to file proofs of 
claim.

Section 404. Audit procedures

    Section 404 requires the Attorney General to establish 
procedures for auditing the accuracy and completeness of 
information supplied by individuals in connection with their 
bankruptcy cases under chapter 7 and chapter 13 of the 
Bankruptcy Code. The audit must be performed by independent 
certified public accountants or independent licensed public 
accountants pursuant to generally accepted auditing standards. 
One in every 100 cases are to be selected on a randombasis for 
audit. Procedures for fully funding such audits also must be 
established.
    Should the audit disclose a material misstatement with 
regard to a debtor's income, expenses or assets, a statement 
must be filed with the court specifying the facts constituting 
the material misstatement. Notice thereof must also be provided 
to the debtor's creditors. Where appropriate, the matter could 
be referred to the United States Attorney for possible criminal 
prosecution.

Section 405. Giving creditors fair notice in chapter 7 and chapter 13 
        cases

    To ensure that a creditor receives proper notice, section 
405 requires debtors to identify the account number for all 
obligations and to supply the address as specified by the 
creditor. Failure to do so invalidates any notice otherwise 
provided to the creditor. In addition, noncompliance prevents 
the imposition of sanctions against a creditor who violates the 
automatic stay.112
---------------------------------------------------------------------------
    \112\ Under present law, an individual injured as a result of any 
willful violation of the automatic stay is entitled to actual damages, 
including costs and attorney's fees, and may recover punitive damages 
in appropriate circumstances. 11 U.S.C. Sec. 362(h).
---------------------------------------------------------------------------

Section 406. Debtor to provide tax returns and other information

    To augment the integrity of the financial disclosure that 
must be provided, section 406 requires the debtor to file the 
following additional documents:
          (1) Copies of all payment advices or other evidence 
        of payment from any employer within 60 days of the 
        bankruptcy filing.
          (2) An itemized statement of the debtor's projected 
        net monthly income.
          (3) If applicable, a statement of any extraordinary 
        circumstances with regard to the debtor's financial 
        condition.
          (4) A statement disclosing any reasonable anticipated 
        increase in income that the debtor expects to receive 
        over the next 12 months.
          (5) A certificate by the debtor's attorney or 
        petition preparer stating that the debtor received the 
        notice describing alternatives to bankruptcy relief (if 
        the debtor is pro se, then the debtor must state that 
        he or she received and read this notice).
Should a creditor request a copy of the debtor's petition, 
schedules, or statement of financial affairs, the debtor would 
be required to supply such copy, together with any amendments 
to the subject document, within ten days of the request. This 
requirement also applies to requests for copies of a chapter 13 
debtor's plan.
    In addition to these requirements, an individual chapter 7 
or 13 debtor must provide to the United States Trustee copies 
of all federal tax returns (including any schedules and 
attachments) filed by the debtor for the three most recent 
years preceding the commencement of the bankruptcy case. This 
requirement also applies to tax returns that the debtor files 
while his or her bankruptcy case is pending as well as to any 
amendments to his or her tax returns. In turn, the United 
States Trustee is required to make these tax returns available 
to any party in interest upon request for inspection and 
copying.
    Additional requirements apply to chapter 13 debtors. A 
chapter 13 debtor is required to file a copy of his or her tax 
return 45 days before each anniversary of the plan's 
confirmation date until the case is closed. In addition, the 
chapter 13 debtor must submit a statement under penalty of 
perjury regarding the debtor's income, expenditures for the 
preceding year, and monthly net income, including the way in 
which it was calculated.113
---------------------------------------------------------------------------
    \113\ The statement must disclose the amount and sources of the 
debtor's income as well as identify any persons who contributed to the 
debtor's household and the amounts they contributed.
---------------------------------------------------------------------------

Section 407. Dismissal for failure to file schedules timely or provide 
        required information

    Should an individual chapter 7 or 13 debtor fail to provide 
any of the information required by Section 406 within 45 days 
after the petition filing date, section 407 requires the 
debtor's bankruptcy case to be automatically dismissed, 
effective on the 46th day. No court order is necessary to 
effectuate this dismissal.
    Likewise, should an individual chapter 7 or 13 debtor fail 
to perform certain enumerated duties, any party in interest may 
request that the bankruptcy court order the debtor to comply 
within a period not to exceed 30 days. Should the debtor 
thereafter fail to comply, the court may enter an order 
dismissing the debtor's bankruptcy case upon submission of a 
certification of noncompliance by a party in interest.

Section 408. Adequate time to prepare for hearing on confirmation of 
        the plan

    Section 408 requires the confirmation hearing in a chapter 
13 case to be held not earlier than 20 days following the first 
date set for the meeting of creditors and not later than 45 
days from this date.

Section 409. Chapter 13 plans to have a five-year duration in certain 
        cases

    Under the present law, the duration of a chapter 13 plan is 
three years, unless the court, for cause, extends it to a 
maximum of five years.114 To ensure that creditors 
receive the maximum in a chapter 13 case, section 409 extends 
the permissible duration of a chapter 13 plan under certain 
circumstances. If the debtor's total current monthly income is 
at least the national family median income or more, then the 
duration of the chapter 13 plan may not exceed five years, 
unless the court extends it to a maximum of seven years. If, 
however, the debtor's total current monthly income is less than 
the national family income, then the plan's length may not 
exceed three years, unless the court for cause extends it to a 
maximum of five years.
---------------------------------------------------------------------------
    \114\ 11 U.S.C. Sec. 1322(d).
---------------------------------------------------------------------------

Section 410. Sense of the Congress regarding expansion of Rule 9011 of 
        the Federal Rules of Bankruptcy Procedure

    To reaffirm the need for accuracy, completeness and 
truthfulness of documents filed by debtors and their counsel, 
section 410 provides that it is the sense of the Congress that 
all such documents be submitted only after the debtor or the 
debtor's attorney has made reasonable inquiry to verify the 
information they contain.115 This requirement 
applies to signed as well as unsigned documents.116
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    \115\ One would be required to verify that the information 
contained in such documents is well- grounded in fact and warranted by 
existing law or a good faith argument for the extension, modification, 
or reversal of existing law.
    \116\ Federal Rule of Bankruptcy Procedure 9011 presently only 
applies to signed documents.
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Section 411. Jurisdiction of courts of appeals

    Currently, appeals from decisions rendered by the 
bankruptcy court are either heard by the district court or a 
bankruptcy appellate panel. In addition to the time and cost 
factors attendant to the present appellate system, decisions 
rendered by a district court as an appellate court are not 
binding and lack stare decisis value.
    To address these problems, section 411 permits appeals from 
final bankruptcy court decisions in core proceedings to be 
heard directly by the circuit court of appeals.117 
In addition, section 411 establishes parameters governing 
appeals of interlocutory orders.
---------------------------------------------------------------------------
    \117\ The National Bankruptcy Review Commission made a similar 
recommendation. See National Bankruptcy Review Commission Report, at 
752-67 (1997).
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Section 412. Establishment of Official Forms

    To ensure greater compliance and uniformity, section 412 
directs the Judicial Conference of the United States to issue 
official forms that would effectuate the needs-based 
eligibility formula.

Section 413. Elimination of certain fees payable in chapter 11 
        bankruptcy cases

    Section 1930(6) of title 28 of the United States Code 
requires a chapter 11 debtor to pay a quarterly fee to the 
United States Trustee based on the amount of the debtor's 
disbursements made during the quarter. This requirement applies 
until the case is converted or dismissed and applies even after 
confirmation until the case is closed.118
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    \118\ Pub. L. 104-91, Sec. 101 (1996), as amended, Pub. L. No.104-
99, title II, Sec. 211 (1996).
---------------------------------------------------------------------------
    Section 413 limits this requirement's applicability to 
small business debtors. Specifically, debtors with 
disbursements of less than $300,000 would be required to pay 
this fee only until the case is converted or confirmation is 
obtained, whichever occurs first. For debtors having 
disbursements of $300,000 or more, the requirement to pay these 
quarterly fees would remain the same as under current law.

                      Subtitle B. Data Provisions

Section 441. Improved bankruptcy statistics

    Section 441 requires the Executive Office for United States 
Trustees to compile various statistics regarding chapter 7, 11, 
and 13 cases and to make these data available to the public. In 
addition, the Executive Office is required to report annually 
to the Congress. The statistics that must be compiled under 
section 441 include the following:
          (1) the total assets and liabilities as scheduled by 
        the debtor;
          (2) the debtor's total current monthly income, 
        projected monthly net income, and average expenses;
          (3) the aggregate amount of debt discharged during 
        the reporting period;
          (4) the average time between the filing of the 
        bankruptcy case and the closing of the case;
          (5) information regarding reaffirmation agreements;
          (6) for chapter 13 cases, information on the number 
        of orders determining the amount of secured claims and 
        on the number of cases dismissed for failure to make 
        payments under the plan; and
          (7) for chapter 7 cases, the number of cases in which 
        the debtor had previously sought bankruptcy relief 
        within the six years preceding the filing of the 
        present chapter 7 case.

Section 442. Bankruptcy data

    To implement the data gathering provisions of section 441, 
section 442 requires the Attorney General to issue rules 
establishing uniform forms for final reports filed by 
bankruptcy trustees and monthly operating reports filed by 
chapter 11 debtors in possession. It also specifies the 
information that should be contained in these reports.

Section 443. Sense of the Congress regarding the availability of 
        bankruptcy data

    Section 443 expresses the sense of the Congress that the 
data so collected should be made available to the public in 
electronic form and that a single bankruptcy data system should 
be established. The public records pertaining to bankruptcy 
cases should be released in a useable form in bulk to the 
public subject to appropriate privacy safeguards.

                        TITLE V. TAX PROVISIONS

Section 501. Treatment of certain liens

    Section 501 makes several changes to section 724 to provide 
greater protection for ad valorem tax liens on real or personal 
property of the estate. Although their subordination is still 
possible under section 724(b), the purposes are more limited. 
Subordination is permissible only to pay for chapter 7 
administrative expenses, priority wage claims and priority 
claims for contributions to employee benefit plans. Section 501 
does not permit subordination for the purpose of paying chapter 
11 administrative expenses. Also, section 501 requires the 
chapter 7 trustee to utilize all other estate assets before he 
or she could resort to section 724 to subordinate liens on 
personal and real property of the estate.
    In addition, Section 501 prevents a bankruptcy court from 
determining the amount or legality of ad valorem tax 
obligations if the applicable period for contesting or 
redetermining the amount of the claim has expired. This 
amendment addresses those instances where debtors or trustees 
use section 505 of the Bankruptcy Code as a means to have 
bankruptcy courts set aside these types of taxes, to the 
detriment of the local communities that depend on them for 
revenue.

Section 502. Enforcement of child and spousal support

    Under section 522(c)(1) of the Bankruptcy Code, property 
that a debtor exempts under section 522 is nevertheless liable 
to nondischargeable tax and support debts under section 
523(a)(1) and (5). Section 502 extends the scope of 522(c)(1) 
by making property that is exempt under any other Federal or 
state law nevertheless subject to nondischargeable tax and 
support claims under Section 523(a) of the Bankruptcy Code.

Section 503. Effective notice to government

    To ensure that government entities receive effective 
notice, section 503 requires the debtor to provide specific 
mailing and claim identification information for all government 
creditors. The categories of information that a debtor must 
supply include the following: (1) identification of the 
department or agency of the governmental unit; (2) the debtor's 
taxpayer identification number, if applicable; (3) reference 
information such as permit, loan, account or contract number; 
and (4) the basis of the claim. If the debtor's liability to a 
governmental unit arises from a debt or obligation owed or 
incurred by another entity, the debtor must identify such 
entity. In addition, section 503 requires the bankruptcy clerk 
to maintain a current list, updated quarterly, of addresses 
designated by government units as ``safe harbor'' addresses for 
service of notices in that district.
    Should the debtor fail to provide notice to governmental 
entities pursuant to the requirements of section 503, then such 
notice is deemed to be ineffective unless the debtor could 
demonstrate by clear and convincing evidence that timely notice 
was given in a manner reasonably calculated to provide adequate 
notice. This provision also protects governmental creditors 
from the imposition of sanctions if they act in a way that is 
detrimental to the estate, having failed to receive adequate 
notice.119
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    \119\ Under current law, for instance, a creditor who willfully 
violates the automatic stay may be required to pay actual as well as 
punitive damages for injuries resulting from such violation. 11 U.S.C. 
Sec. 362(h).
---------------------------------------------------------------------------

Section 504. Notice of request for a determination of taxes

    Section 504 amends section 505 of the Bankruptcy Code by 
requiring that notice of a request for a determination of taxes 
comply with the taxing authority's notice 
requirements.120 This amendment comports with 
section 503 of H.R. 3150 requiring adequate notice to 
governmental entities.
---------------------------------------------------------------------------
    \120\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 951 (1997).
---------------------------------------------------------------------------

Section 505. Rate of interest on tax claims

    Section 505 creates a new provision in the Bankruptcy Code 
specifying the rate of interest for tax claims. For ad valorem 
tax claims, secured or unsecured, other unsecured tax claims 
for which interest must be paid under Section 726(a)(5) of the 
Bankruptcy Code, and secured tax claims, the rate is determined 
under applicable nonbankruptcy law.
    For prepetition unsecured tax claims to be paid under a 
plan of reorganization, Section 505 of H.R. 3150 specifies that 
the minimum rate of interest must be the Federal short-term 
rate rounded to the nearest full percent as determined under 
section 1274(d) of the Internal Revenue Code of 1986 for the 
calendar month in which the plan is confirmed, plus three 
percentage points.

Section 506. Tolling of priority of tax claim time periods

    Section 506 of H.R. 3150 suspends the applicable time 
periods under section 507(a)(8) of the Bankruptcy Code by six 
months and for other matters. It provides how installment 
agreements affect the tolling of priority tax claim time 
periods. Specifically, it tolls this period for 30 days plus 
the time that an installment agreement was pending during the 
240-day period prior to the filing of the bankruptcy case. The 
length of the tolling period can be up to one year. The 
amendment also tolls the period for six months with regard to 
collection actions pending within the 240-day period.

Section 507. Assessment defined

    Although the Bankruptcy Code references the term 
``assessment date'' for tax claims, it does not define this 
term.121 Section 507 addresses this problem with 
regard to both state and local taxes, as well as federal taxes, 
by providing a definition for each. For purposes of state and 
local taxes, assessment is defined as that point in time 
``which is sufficiently final so that thereafter a taxing 
authority may commence an action to collect the tax.'' For 
federal tax purposes, section 507 defines assessment by 
reference to the Internal Revenue Code.
---------------------------------------------------------------------------
    \121\ See, e.g., 11 U.S.C. Sec. Sec. 507(a)(8)(A)(ii), 
1129(a)(9)(c).
---------------------------------------------------------------------------
    Section 507, in addition, clarifies the automatic stay 
exception for tax assessments in section 362(b)(9)(D) of the 
Bankruptcy Code. For purposes of section 363(b)(9)(D), 
assessment is defined by applicable nonbankruptcy law.

Section 508. Chapter 13 discharge of fraudulent and other taxes

    Debtors who seek bankruptcy relief under chapter 7 of the 
Bankruptcy Code are not able to discharge certain types of tax 
claims.122 Chapter 13 debtors, on the other hand, 
can discharge these same tax claims. Section 508 modifies 
chapter 13 to prevent the discharge of these tax claims.
---------------------------------------------------------------------------
    \122\ See 11 U.S.C. Sec. 523(a)(1).
---------------------------------------------------------------------------

Section 509. Chapter 11 discharge of fraudulent taxes

    Section 509 amends the discharge provisions of chapter 11 
to prevent the discharge of tax or customs duty claims 
resulting from a corporate debtor's fraudulent tax returns. It 
also prevents the discharge of any unpaid tax obligations that 
resulted from a corporate chapter 11 debtor's willful evasion 
of applicable tax laws.

Section 510. The stay of proceedings in tax court

    Upon the filing of a bankruptcy case, a broad stay of most 
creditor collection actions immediately and automatically goes 
into effect.123 Section 510 modifies the scope of 
the automatic stay to provide that it only prevents the 
commencement or continuation of tax proceedings for tax 
liabilities incurred for a tax period ending before the date on 
which the order for relief is entered. Section 510 also carves 
out a specific exception from the automatic stay for appeals of 
tax determinations by courts or administrative tribunals. Under 
this provision, the automatic stay does not apply to an appeal 
of a decision by either a court or administrative tribunal that 
determines a tax liability of a debtor, regardless of whether 
such determination was made pre- or postpetition.
---------------------------------------------------------------------------
    \123\ See 11 U.S.C. Sec. 362(a).
---------------------------------------------------------------------------

Section 511. Periodic payment of taxes in chapter 11 cases

    Section 1129(a)(9)(C) of the Bankruptcy Code requires, as a 
condition of confirmation, that a chapter 11 plan must provide 
for payment of priority tax claims over a period that does not 
exceed six years from the date of assessment of such claims. 
Section 511 specifies that these payments must be made paid in 
regular cash installments not longer than three months apart. 
The payments must begin on the plan's effective date and be 
substantial and not disproportionate to all payments made to 
other creditors under the chapter 11 plan. Section 511 
specifically prohibits balloon payments. The six-year payment 
period commences, under the amendment, as of the assessment 
date of the tax claim.
    For secured claims entitled to priority under section 
507(a)(8), but for their secured status, the holder of such 
claims must receive cash payments in accordance with section 
1129(a)(9)(C) of the Bankruptcy Code, as amended by section 
511.

Section 512. The avoidance of statutory tax liens prohibited

    Section 512 of H.R. 3150 prevents the avoidance of 
unperfected liens against a bona fide purchaser, if the 
purchaser qualifies as such under section 6323 of the Internal 
Revenue Code 124 or similar provisions of either 
state or local law.
---------------------------------------------------------------------------
    \124\ Section 6323 of the Internal Revenue Code defines 
``purchaser'' as a person who, for adequate consideration, acquires an 
interest (other than a lien or security interest) in property, which is 
valid under local law against subsequent purchasers without notice.
---------------------------------------------------------------------------

Section 513. Payment of taxes in the conduct of business

    Section 513 provides four additional protections to ensure 
the payment of tax obligations in bankruptcy cases. First, it 
requires bankruptcy trustees and chapter 11 debtors in 
possession topay tax obligations in the course of the debtors' 
business,125 with only one limited exception.126 
Section 513 does not, however, require the payment of taxes if excused 
under any provision of the Bankruptcy Code. In addition, it permits a 
chapter 7 trustee to defer payment of a course-of-business tax if the 
tax was not incurred by the trustee or if the court has determined that 
there are insufficient funds in the estate to pay administrative 
expenses.
---------------------------------------------------------------------------
    \125\ Section 960 of Title 28 of the United States Code presently 
requires bankruptcy trustees and debtors in possession to pay tax 
obligations, but does not state how or when such payments must be made.
    \126\ The exception applies to property of the estate, subject to a 
secured property tax lien, that is abandoned.
---------------------------------------------------------------------------
    Second, section 513 clarifies that certain secured and 
postpetition unsecured taxes incurred by a bankruptcy estate, 
including property taxes, are entitled to administrative 
expense priority. The present provisions of the Bankruptcy Code 
do not so specify.127
---------------------------------------------------------------------------
    \127\ See 11 U.S.C. Sec. 503(b)(1)(B). The National Bankruptcy 
Review Commission recommended that postpetition ad valorem real estate 
taxes be entitled to administrative expense status. See Report of the 
National Bankruptcy Review Commission, at 956 (1997).
---------------------------------------------------------------------------
    Third, section 513 eliminates the need for a governmental 
unit to formally request payment of an administrative expense 
relating to a tax liability or tax penalty. Under current law, 
all holders of administrative expense claims must submit a 
request for payment of such claims.
    Four, section 513 amends section 506(b) of the Bankruptcy 
Code, which determines the entitlement of secured claimants to 
interest, fees, and costs pursuant to the underlying agreement. 
Section 513 adds a reference to ``state statute'' to extend 
this entitlement to state tax claimants.
    Fifth, section 513 allows a trustee to recover from 
property securing a claim for the payment of all ad valorem 
property taxes relating to such property.

Section 514. Tardily filed priority tax claims

    To receive a payment in an asset chapter 7 case, a creditor 
must file a proof of claim.128 Once the case is 
fully administered, the chapter 7 trustee prepares a final 
report and account,129 which then is noticed to all 
creditors and other parties in interest. Thereafter, the 
chapter 7 trustee can commence making distribution to creditors 
who have filed proofs of claim. Under current law, creditors 
holding priority claims in asset chapter 7 cases must file 
their proofs of claim before the date on which the trustee 
commences making distribution to creditors in the estate. 
Certain types of tax claims are entitled to priority 
status.130
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    \128\ See 11 U.S.C. Sec. 502.
    \129\ See 11 U.S.C. Sec. 704(9).
    \130\ See, e.g., 11 U.S.C. Sec. 507(a).
---------------------------------------------------------------------------
    Section 514 permits a priority tax claim to be filed either 
before the trustee commences distribution or ten days following 
the mailing to creditors of the summary of the trustee's final 
report, whichever is earlier.

Section 515. Income tax returns prepared by tax authorities

    Section 523(a)(1) of the Bankruptcy Code prevents the 
discharge of certain types of tax claims. Section 515 of H.R. 
3150 extends the nondischargeability provisions of section 
523(a)(1) to obligations based on income tax returns prepared 
by tax authorities as well as to certain reports and notices.

Section 516. The discharge of the estate's liability for unpaid taxes

    Section 505(b) of the Bankruptcy Code provides for the 
discharge of tax liability for bankruptcy trustees and debtors 
after the passage of a stated period of time following a 
request made to a government unit for a determination of such 
liability. Section 516 of H.R. 3150 extends the applicability 
of section 505(b) to bankruptcy estates.

Section 517. Requirement to file tax returns to confirm chapter 13 
        plans

    Section 517 requires chapter 13 debtors to file tax returns 
and institute enforcement mechanisms to ensure 
compliance.131 First, section 517 creates an 
additional requirement for plan confirmation. Namely, the 
debtor must file all prepetition tax returns for the six-year 
period ending prior to the filing of the chapter 13 
case.132 Second, the returns must be filed within 
120 days from the date set for the first meeting of creditors. 
A chapter 13 debtor could apply for an extension of this time 
period upon showing by clear and convincing evidence that the 
failure to file the returns was due to circumstances beyond his 
or her control. Third, the failure to comply with this 
provision constitutes cause warranting dismissal or conversion 
of the chapter 13 case. Fourth, section 517 extends the 
applicable time periods pertaining to the allowance and 
disallowance of tax claims that are the subject of tax returns.
---------------------------------------------------------------------------
    \131\ Report of the National Bankruptcy Review Commission, at 961-
65 (1997).
    \132\ For purposes of this provision, a ``return'' includes one 
prepared under section 6020(a) or (b) of the Internal Revenue Code or 
similar state or local law. In addition, it also includes a judgment 
entered by a nonbankruptcy tribunal.
---------------------------------------------------------------------------

Section 518. Standards for tax disclosure

    A key component of the plan confirmation process in chapter 
11 cases is the disclosure statement. The disclosure statement 
is a document that must be sent to creditors and other parties 
in interest who are affected by a chapter 11 
plan.133 The purpose of the disclosure statement is 
to provide adequate information about the plan so that those 
who are affected by it can make an informed judgment about the 
plan.134
---------------------------------------------------------------------------
    \133\ See 11 U.S.C. Sec. 1125(b).
    \134\ See 11 U.S.C. Sec. 1125(a).
---------------------------------------------------------------------------
    Section 518 of H.R. 3150 mandates that the disclosure 
statement include a full discussion of the potential material 
consequences of the plan with regard to Federal, state, and 
local taxes to the debtor and a hypothetical investor typical 
of creditors and interest holders in the case domiciled in the 
state in which the debtor resides or has its principal place of 
business.135
---------------------------------------------------------------------------
    \135\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 960 (1997).
---------------------------------------------------------------------------

Section 519. Setoff of tax refunds

    The automatic stay prevents the commencement and 
continuation of various efforts by creditors to collect 
prepetition obligations against either the debtor or the 
debtor's property.136 At present, the Bankruptcy 
Code enumerates nearly 20 exceptions to the automatic 
stay.137
---------------------------------------------------------------------------
    \136\ See 11 U.S.C. Sec. 362(a).
    \137\ See 11 U.S.C. Sec. 362(b).
---------------------------------------------------------------------------
    Section 519 of H.R. 3150 creates a further exception to the 
automatic stay. It allows a governmental unit to set off an 
income tax refund relating to a prepetition tax period against 
a prepetition income tax liability for a prepetition tax 
period.138
---------------------------------------------------------------------------
    \138\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 818-22 (1997).
---------------------------------------------------------------------------

            TITLE VI--ANCILLARY AND OTHER CROSS-BORDER CASES

    Title VI of H.R. 3150 adds a new chapter to the Bankruptcy 
Code for transnational bankruptcy cases. This incorporates the 
Model Law on Cross-Border Insolvency to encourage cooperation 
between the United States and foreign countries with respect to 
transnational insolvency cases. Title VI is intended to provide 
greater legal certainty for trade and investment as well as to 
provide for the fair and efficient administration of cross-
border insolvencies, which protects the interests of creditors 
and other interested parties, including the debtor. In 
addition, it serves to protect and maximize the value of 
debtor's assets.

Section 601. Purpose and Scope of Application

    The chapter introduces into the Bankruptcy Code the Model 
Law on Cross-Border Insolvency (``Model Law''), which was 
promulgated by the United Nations Commission on International 
Trade Law (``UNCITRAL'') at its Thirtieth Session, May 12-30, 
1997.139
---------------------------------------------------------------------------
    \139\ The text of the Model Law and the Report of UNCITRAL on its 
adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17) 
[``Report'']. That Report and the Guide to Enactment of the UNCITRAL 
Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th 
Sess. U.N. Doc. A/CN.9/442 (1997) [``Guide''], which was discussed in 
the negotiations leading to the Model Law and published by UNCITRAL as 
an aid to enacting countries, should be consulted for guidance as to 
the meaning and purpose of its provisions. The development of the 
provisions in the negotiations at UNCITRAL, in which the United States 
was an active participant, is recounted in the interim reports of the 
Working Group that are cited in the Report.
---------------------------------------------------------------------------
    Cases brought under this chapter are intended to be 
ancillary to cases brought in a debtor's home country, unless a 
full United States bankruptcy case is brought under another 
chapter. Even if a full case is brought, the court may decide 
under section 305 to stay or dismiss the United States case 
under the other chapter and limit the United States' role to an 
ancillary case under this chapter.140 In any case, a 
petition for recognition is required as a prerequisite to the 
use of sections 301 and 303 by a foreign representative.
---------------------------------------------------------------------------
    \140\ See section 629 and commentary.
---------------------------------------------------------------------------
    Section 601 combines the Preamble to the Model Law 
(subsection 1) with its article 1 (subsections 2 and 
3).141 It largely follows the language of the Model 
Law, except that it adds in subsection 3 an exclusion of 
certain natural persons who may be considered ordinary 
consumers. Although the consumer exclusion is not in the text 
of the Model Law, the discussions at UNCITRAL recognized that 
some such exclusion would be necessary in countries like the 
United States where there are special provisions for consumer 
debtors in the insolvency laws.142 The reference to 
section 109(e) incorporates the debt limitations of that 
section, but not its requirement of regular income. The 
exclusion adds a requirement that the debtor or debtor couple 
be citizens or long-term legal residents of the United States. 
This ensures that residents of other countries will not be able 
to manipulate this exclusion to avoid recognition of foreign 
proceedings in there home countries or elsewhere.
---------------------------------------------------------------------------
    \141\ Guide at 16-19.
    \142\ See id. at 18 para. 60; 19 para. 66.
---------------------------------------------------------------------------
    The first exclusion in subsection 3 constitutes for the 
United States, the exclusion provided in article 1, subsection 
2, of the Model Law.143 The reference to section 
109(b) covers entities governed by different insolvency regimes 
under United States law and therefore excluded from liquidation 
proceedings under Title 11.
---------------------------------------------------------------------------
    \143\ Id. at 17.
---------------------------------------------------------------------------

Section 602. Definitions

    ``Debtor'' is given a special definition for this chapter. 
That definition does not come from the Model Law but is 
necessary to eliminate the need to refer repeatedly to ``the 
same debtor as in the foreign proceeding.'' With certain 
exceptions, the term ``person'' in the Model Law has been 
replaced with ``entity,'' which is defined broadly in section 
101(15) to include natural persons and various legal entities, 
thus matching the intended breadth of the term ``person'' in 
the Model Law. The exceptions include contexts in which a 
natural person is intended and those in which the Model Law 
language already refers to both persons and entities other than 
persons. The definition of ``trustee'' for this chapter ensures 
that debtors in possession and debtors; as well as trustees, 
are included in the term.144
---------------------------------------------------------------------------
    \144\ See section 605.
---------------------------------------------------------------------------
    The definition in subsection (g) is not taken from the 
Model Law. It has been added because the United States, like 
some other countries, asserts insolvency jurisdiction over 
property outside its territorial limits under appropriate 
circumstances. Thus a limiting phrase is useful where the Model 
Law and this chapter intend to refer only to property within 
the territory of the enacting state.
    Two key definitions, of ``foreign proceeding'' and 
``foreign representative,'' are found in subsections 101(24)-
(25), which have been amended consistent with Model Law Article 
2.145
---------------------------------------------------------------------------
    \145\ Guide at 19-21 paras. 67-68.
---------------------------------------------------------------------------
    The definitions ``establishment,'' ``foreign court,'' 
``foreign main proceeding,'' and ``foreign non-main 
proceeding'' have been taken from Model Law Article 2, which 
varies in language only as necessary to comport with United 
States law. Additionally, defined terms have been placed in 
alphabetical order.146 In order to at least be 
recognized as a foreign non-main proceeding, the debtor must at 
least have an establishment in that foreign 
country.147
---------------------------------------------------------------------------
    \146\ See Guide at 19, (Model Law) 21 para 75 (concerning 
establishment) 21 para. 74 (concerning foreign court) 21 paras. 72, 73 
and 75 (concerning foreign main and non-main proceedings).
    \147\ See id. at 21 para. 75.
---------------------------------------------------------------------------

Section 603. International obligations of the United States

    This section is taken exactly from the Model 
Law.148 Although this section makes an international 
obligation prevail, the courts will attempt to read the Model 
Law and the international obligation so as not to conflict, 
especially if the international obligation addresses a subject 
matter less directly related than the Model Law to a case 
before the court.
---------------------------------------------------------------------------
    \148\ See id. at 22 Art. 63.
---------------------------------------------------------------------------

Section 604. Commencement of Ancillary Case

    This section paraphrases current section 304(a), which is 
repealed. Article 4 of the Model Law is designed for 
designation of the competent court, which in United States law 
is done in subsection 1334(a) in title 28, which gives 
exclusive jurisdiction to the district courts in a ``case'' 
under this title.149 Therefore, this section 
provides that a petition for recognition opens a ``case,'' an 
approach that also invokes a number of other useful procedural 
provisions. In addition, a new subsection (P) to section 157 of 
title 28 makes cases under this chapter part of the core 
jurisdiction of bankruptcy courts when referred to them by the 
district courts, thus completing the designation of the 
competent court. Finally, the particular bankruptcy court that 
will rule on the petition is determined pursuant to section 
1410 of title 28 governing venue and transfer.
---------------------------------------------------------------------------
    \149\ See id. at 23 (Article 4).
---------------------------------------------------------------------------
    The title ``ancillary'' in this section and in the title of 
this chapter emphasizes the United States policy in favor of a 
general rule that countries other than the home country of the 
debtor, where a main proceeding would be brought, should 
usually act through ancillary proceedings in aid of the main 
proceedings, in preference to a system of full bankruptcies 
(often called ``secondary'' proceedings) in each state where 
assets are found. Under the Model Law, full bankruptcy cases 
are permitted in each country (see sections 628 and 629), but 
in the United States, the court will have the power to suspend 
or dismiss such cases where appropriate under section 305.
    Additional assistance under the successor provision to 
current section 304 is set forth in section 607.

Section 605. Authorization to act in a foreign country

    The language in this section varies from the wording of 
article 5 of the Model Law only as necessary to comport with 
United States law. In addition, the slight alteration to the 
language in the last sentence is meant to make it clear that 
the identification of the entity entitled to act is under 
United States law, while the scope of actions that may be taken 
by an estate representative under foreign law is limited by 
that foreign law.150 The related amendments to 
chapters 7 and 13 make acting pursuant to authorization under 
this section an additional power of a trustee or debtor in 
possession.
---------------------------------------------------------------------------
    \150\ Id. at 24.
---------------------------------------------------------------------------
    This section requires all trustees and debtors to obtain 
court approval before acting abroad. That requirement is a 
change from the language of the Model Law, but one that is 
purely internalto United States law.151 Its main 
purpose is to ensure that the court has knowledge and control of 
possibly expensive activities, but it will have the collateral benefit 
of providing further assurance to foreign courts that the United States 
debtor or representative is under judicial authority and supervision. 
This requirement means that the first-day order in reorganization cases 
should include authorization to act under this section where 
appropriate.
---------------------------------------------------------------------------
    \151\See id. at 24 (Article 5).
---------------------------------------------------------------------------
    This section also contemplates the designation of an 
examiner or other natural person to act for the estate in one 
or more foreign countries where appropriate. One instance might 
be a case in which the designated person had a special 
expertise relevant to that assignment. Another might be where 
the foreign court would be more comfortable with a designated 
person than with an entity like a debtor in possession. Either 
are to be recognized under the Model Law.152
---------------------------------------------------------------------------
    \152\See id at 23-24 and para. 82.
---------------------------------------------------------------------------

Section 606. Public policy exception

    This provision follows the Model Law Article 5 exactly and 
is standard in UNCITRAL texts and has been narrowly interpreted 
on a consistent basis in courts around the world. The word 
``manifestly'' in international usage restricts the public 
policy exception to the most fundamental policies of the United 
States.153
---------------------------------------------------------------------------
    \153\See id. at 25.
---------------------------------------------------------------------------

Section 607. Additional assistance

    Subsection 1 follows the language of Model Law Article 7. 
154 Subsection 2 makes the authority for additional 
relief subject to existing United States law under section 304, 
which is repealed. This section is intended to permit the 
further development of international cooperation begun under 
section 304, but is not to be the basis for denying or limiting 
relief otherwise available under this chapter. The additional 
assistance is made conditional upon the court's consideration 
of the factors set forth in the current subsection 304(c) in a 
context of a reasonable balancing of interests following 
current case law. The references to ``estate'' in the current 
subsection have been changed to refer to the debtor's property, 
because many foreign systems do not create an estate in 
insolvency proceedings of the sort recognized under this 
chapter. Although the case law construing section 304 clearly 
makes comity the central consideration, its physical placement 
as one of six factors in subsection c of section 304 is 
misleading. Therefore, in subsection 2 of this section, comity 
is raised to the introductory language to make it clear that it 
is the central concept to be addressed.
---------------------------------------------------------------------------
    \154\Id. at 26
---------------------------------------------------------------------------

Section 608. Interpretation

    This provision follows exactly Model Law Article 8 and is a 
standard one in recent UNCITRAL treaties and model 
laws.155 Interpretation of this chapter on a uniform 
basis will be aided by reference to the Guide and the Reports 
cited therein, which explain the reasons for the terms used and 
often cite their origins as well. Uniform interpretation will 
also be aided by reference to CLOUT, the UNCITRAL Case Law On 
Uniform Texts, which is a service of UNCITRAL. CLOUT receives 
reports from national reporters all over the world concerning 
court decisions interpreting treaties, model laws, and other 
text promulgated by UNCITRAL. Not only are these sources 
persuasive, but they are important to the crucial goal of 
uniformity of interpretation. To the extent that the United 
States courts rely on these sources, their decisions will more 
likely be regarded as persuasive elsewhere.
---------------------------------------------------------------------------
    \155\Id. at 26 paras. 91-91.
---------------------------------------------------------------------------

Section 609. Right of direct access

    This section follows the intent of article 9 of the Model 
Law, but varies the language to fit United States procedural 
requirements.156 Subsections 2 and 3 give the 
foreign representative full legal capacity under United States 
law, but also make the representative's operations in the 
United States subject to generally applicable United States 
laws, just as 28 U.S.C. Sec. 959 does for domestic trustees in 
bankruptcy.
---------------------------------------------------------------------------
    \156\ Id. at 27 para. 93.
---------------------------------------------------------------------------
    Subsections 4 and 5 make it clear that Chapter 6 is 
intended to be the exclusive door to ancillary assistance to 
foreign proceedings. The goal is to concentrate control of 
these questions in one court. That goal is important in a 
federal state like the United States with many different 
courts, state and federal, that may have pending actions 
involving the debtor or the debtor's property. This section, 
therefore, completes for the United States the work of article 
4 of the Model Law (``competent court'') as well as article 9. 
157
---------------------------------------------------------------------------
    \157\See id. 23, (Article 4, para. 79-83) 27 (Article 9, para. 93).
---------------------------------------------------------------------------
    Although a petition under current section 304 is the proper 
method for achieving deference by a United States court to a 
foreign insolvency under present law, some cases in state and 
federal courts under current law have granted suspension or 
dismissal of cases involving foreign proceedings without 
requiring a section 304 petition or even referring to the 
requirements of that section. Even if the result is correct in 
a particular case, the procedure is undesirable, because there 
is room for abuse of comity. Parties would be free to avoid the 
requirements of this chapter and the expert scrutiny of the 
bankruptcy court by applying directly to a state or federal 
court unfamiliar with the statutory requirements. Such an 
application could be made after denial of a petition under this 
chapter. This section concentrates the recognition and 
deference process in one United States court, ensures against 
abuse, and empowers a court that will be fully informed of the 
current status of all foreign proceedings involving the 
debtor.158
---------------------------------------------------------------------------
    \158\See id. at 27 (Article 9), 34-35 (Article 15 and paras. 116-
119-35), 39-40 (Article 18, paras. 133-134); see also subsection 615(3) 
and section 618.
---------------------------------------------------------------------------
    Subsection 5 has been added to ensure that a foreign 
representative cannot seek relief incourts in the United States 
after being denied recognition by the court under this chapter.

Section 610. Limited jurisdiction

    Section 610, article 10 of the Model Law, is modeled on 
section 306 of the Code, which has been repealed.159 
Although the language referring to conditional relief in 
section 306 is not included, the court has the power under 
section 622 to attach appropriate conditions to any relief it 
may grant. Nevertheless, the authority in section 622 is not 
intended to permit the imposition of jurisdiction over the 
foreign representative beyond the boundaries of the case under 
this chapter and any related actions the foreign representative 
may take, such as commencing a case under another chapter of 
this title.
---------------------------------------------------------------------------
    \159\ Id. at 27, 28 paras. 94-96.
---------------------------------------------------------------------------

Section 611. Commencement of case under Section 301 or 303

    This section follows the intent of article 11 of the Model 
Law, but adds language that is necessary in the United States 
given its many different courts and the importance of full 
information and coordination among them.160 Article 
11 does not distinguish between voluntary and involuntary 
proceedings, but seems to have implicitly assumed an 
involuntary proceeding.161
---------------------------------------------------------------------------
    \160\ See id. at 28 (Article 11).
    \161\ Id. at 38 paras. 97-99.
---------------------------------------------------------------------------
    Subsection 1(b) goes farther and permits a voluntary 
filing, with its much simpler requirements, if the foreign 
proceeding is a main proceeding.

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

    This section follows article 12 of the Model Law with a 
slight alteration to tie into United States procedural 
terminology.162 The effect of this section is to 
make the recognized foreign representative a party in interest 
in any pending or later commenced United States bankruptcy 
case.163 Throughout this chapter, the word ``case'' 
has been substituted for the word ``proceeding'' in the Model 
Law when referring to cases under the United States Bankruptcy 
Code, to conform to United States usage.
---------------------------------------------------------------------------
    \162\ Id. at 29 (Article 12).
    \163\ Id. at 29 paras. 10-102.
---------------------------------------------------------------------------

Section 613. Access of foreign creditors to a case under this title

    This section mandates nondiscriminatory or ``national'' 
treatment for foreign creditors, except as provided in 
subsection 2 and section 614. It follows the intent of Model 
Law Article 13, but the language required alteration to fit 
into the Bankruptcy Code.164
---------------------------------------------------------------------------
    \164\ Id. at 30 para. 103.
---------------------------------------------------------------------------
    The law as to priority for foreign claims that fit within a 
class given priority treatment under section 507 (for example, 
foreign employees or spouses) is unsettled. This section 
permits the continued development of case law on that subject 
and its general principle of national treatment should be an 
important factor to be considered. At a minimum, under this 
section, foreign claims must receive the treatment given to 
general unsecured claims without priority, unless they are in a 
class of claims in which domestic creditors would also be 
subordinated.165
---------------------------------------------------------------------------
    \165\ See id. at 30 para. 104.
---------------------------------------------------------------------------
    The Model Law allows for an exception to nondiscrimination 
as to foreign revenue and other public law 
claims.166 Such claims (such as tax and social 
security claims) have been denied enforcement in the United 
States traditionally, inside and outside of bankruptcy. The 
Code is silent on this point, so the rule is purely a matter of 
traditional case law. It is not clear if this policy should be 
maintained or modified, so this section leaves it to developing 
case law. It also allows the Department of Treasury to 
negotiate reciprocal arrangements with our tax treaty partners 
in this regard, although it does not mandate any restriction of 
the evolution of case law pending such negotiations.
---------------------------------------------------------------------------
    \166\ See id. at 31 para. 105.
---------------------------------------------------------------------------

Section 614. Notification of foreign creditors concerning a case under 
        title 11

    This section ensures that foreign creditors receive proper 
notice of cases in the United States.167 As 
``foreign creditor'' is not a defined term, foreign addresses 
are used as the distinguishing factor. The Federal Rules of 
Bankruptcy Procedure should be amended to conform to the 
requirements of this section, including a special form for 
notice to such creditors. In particular, the rules must provide 
for additional time for such creditors to file proofs of claim 
where appropriate and must provide for the court to make 
specific orders in that regard in proper circumstances. Of 
course, if a foreign creditor has made an appropriate request 
for notice, it will receive notices in every instance where 
notices would be sent to other creditors who have made such 
requests. The notice must specify that secured claims must be 
asserted, because in many countries such claims are not 
affected by an insolvency proceeding and need not be 
filed.168
---------------------------------------------------------------------------
    \167\ See Model Law Article 14 and Guide at 31-32 paras. 106-109.
    \168\ Guide at 33 para. 111.
---------------------------------------------------------------------------
    Subsection 4 replaces the reference to ``a reasonable time 
period'' in Model Law article 14(3)(a).169 It makes 
clear that the Federal Rules of Bankruptcy Procedure, local 
rules, and court orders must make appropriate adjustments in 
time periods and bar dates so that foreign creditors have a 
reasonable time within which to receive notice or take an 
action.
---------------------------------------------------------------------------
    \169\ Id. at 31 (Article 14(3)(a)).
---------------------------------------------------------------------------

Section 615. Application for recognition of a foreign proceeding

    This section follows article 15 of the Model Law with minor 
changes.170 The rules will require amendment to 
provide forms for some or all of the documents mentioned in 
this section, to make necessary additions to rules 1000 and 
2002 of the Federal Rules of Bankruptcy Procedure to facilitate 
appropriate notices of the hearing on the petition for 
recognition, and to require filing of lists of creditors and 
other interested persons who should receive notices. Throughout 
the Model Law, the question of notice procedure is left to the 
law of the enacting state.171
---------------------------------------------------------------------------
    \170\ Id. at 33.
    \171\ See id. at 36 para. 121.
---------------------------------------------------------------------------

Section 616. Presumptions concerning recognition

    This section follows article 16 of the Model Law with minor 
changes.172 Although sections 615 and 616 are 
designed to make recognition as simple and expedient as 
possible, the court may hear proof on any element stated. The 
ultimate burden as to each element is on the foreign 
representative, although the court is entitled to shift the 
burden to the extent indicated in section 616. The word 
``proof'' in subsection 3 has been changed to ``evidence'' to 
make it clearer using United States terminology that the 
ultimate burden is on the foreign representative.173 
``Registered office'' is the term used in the Model Law to 
refer to the place of incorporation or the equivalent for an 
entity that is not a natural person.174 The 
presumption that the place of the registered office is also the 
center of the debtor's main interest is included for speed and 
convenience of proof where there is no serious controversy.
---------------------------------------------------------------------------
     \172\ Id. at 36.
     \173\ Id. at 36 (Article 16(3)).
     \174\ Id. at 36 (Article 16(3)).
---------------------------------------------------------------------------

Section 617. Order recognizing a foreign proceeding

    This section closely follows article 17 of the Model Law, 
with a few exceptions.175 The decision to grant 
recognition is not dependent upon any findings about the nature 
of the foreign proceedings of the sort previously mandated by 
section 304(c). The requirements of this section, which 
incorporates the definitions in section 602 and subsections 
101(23)-(24), are all that must be fulfilled to attain 
recognition.
---------------------------------------------------------------------------
     \175\ Id. at 37.
---------------------------------------------------------------------------
    The drafters of the Model Law understood that only a main 
proceeding or a non-main proceeding meeting the standards of 
section 602 (that is, one brought where the debtor has an 
establishment) were entitled to recognition under this section. 
The Model Law has been slightly modified to make this point 
clear by referring to the section 602 definition of main and 
non-main proceedings, as well as to the general definition of a 
foreign proceeding in section 101(23). Naturally, a petition 
under section 615 must show that proceeding is a main or a 
qualifying non-main proceeding in order to win recognition 
under this section.
    Consistent with the position of various civil law 
representatives in the drafting of the Model Law, recognition 
creates a status with the effects set forth in section 620, so 
those effects are not viewed as orders to be modified, as are 
orders granting relief under sections 619 and 621. Subsection 4 
states the grounds for modifying or terminating recognition. On 
the other hand, the effects of recognition are subject to 
modification under section 362(d), made applicable by section 
620(2), which permits lifting the stay of section 620 for 
cause.
    Paragraph 1(d) of the Model Law has been omitted as an 
unnecessary requirement for United States purposes, because a 
petition submitted to the wrong court will be dismissed or 
transferred under other provisions of United States 
law.176 The reference to section 350 refers to the 
routine closing of a case that has been completed and will 
invoke requirements including a final report from the foreign 
representative in such form as the rules or a court order may 
provide.
---------------------------------------------------------------------------
    \176\ Id. at 37 (Article 17(1)(d)).
---------------------------------------------------------------------------

Section 618. Subsequent information.

    This section follows the Model Law, except to eliminate the 
word ``same'' which is rendered unnecessary by the definition 
of ``debtor'' in section 602 and to provide for a formal 
document to be filed with the court.177 Judges in 
several jurisdictions, including the United States, have 
reported to need for a requirement of complete and candid 
reports to the court of all proceedings, worldwide, involving 
the debtor. This provision will ensure that such information is 
provided to the court on a timely basis. Any failure to comply 
with this section will be subject to the sanctions available to 
the court for violations of the statute. The section leaves to 
the Rules the form of the required notice and related questions 
of notice to parties in interest, the time for filing, and the 
like.
---------------------------------------------------------------------------
    \177\ Id. at 39-40 paras. 133-134.
---------------------------------------------------------------------------

Section 619. Relief that may be granted upon petition for recognition 
        of a foreign proceeding

    This section generally follows article 19 of the Model 
Law.178 The bankruptcy court will have jurisdiction 
to grant emergency relief under Rule 7065 pending a hearing on 
the petition for recognition. This section does not expand or 
reduce for cases under section 105 nor does it modify the sweep 
of sections 555 to 560.
---------------------------------------------------------------------------
    \178\ Id. at 40.
---------------------------------------------------------------------------

Section 620. Effects of recognition of a foreign main proceeding

    In general, this chapter sets forth all the relief that is 
available as a matter of right based upon recognition 
hereunder, although additional assistance may be provided under 
section 607 and this chapter has no effect on any relief 
currently available under section 105.
    Subsection (1)(a) combines subsection 1(a) and (b) of 
article 20 of the Model Law, because section 362 imposes the 
restrictions required by those two subsections and additional 
restrictionsas well.179 Subsection (1)(b) applies 
the Code sections that impose the restrictions called for by subsection 
1(c) of the Model Law. In both cases, the provisions are broader and 
more complete than those contemplated by the Model Law, but include all 
the restraints the Model Law provisions would impose.180 As 
the foreign proceeding may or may not create an ``estate'' similar to 
that created in cases under this title, the restraints are applicable 
to actions against the debtor under section 362(a) and with respect to 
the property of the debtor under the remaining sections. The only 
property covered by this section is property within the territorial 
jurisdiction of the United States as defined in section 602. To achieve 
effects on property of the debtor which is not within the territorial 
jurisdiction of the United States, the foreign representative would 
have to commence a case under another chapter of this title.
---------------------------------------------------------------------------
    \179\ Id. at 42 (Article 20 1(a), (b)).
    \180\ Id. at 42-45.
---------------------------------------------------------------------------
    Subsection 2 makes applicable the United States exceptions 
and limitations to the restraints imposed on creditors, 
debtors, and other in a case under this title, as stated in 
article 20(2) of the Model Law.181 These exceptions 
and limitations include those set forth in subsections 362 (b), 
(c) and (d). As one result, the court has the power to 
terminate the stay pursuant to section 362(d), for cause.
---------------------------------------------------------------------------
    \181\ Id. at 42 (Article 20(2)); 44, paras. 148-150.
---------------------------------------------------------------------------
    Section 108 of the Bankruptcy Code provides the tolling 
protection intended by Model Law article 20(3), so no exception 
is necessary as to claims that might be extinguished under 
United States law.182 Subsection 3 permits suits in 
other countries to the extent such suits are required to 
preserve the existence of a claim.
---------------------------------------------------------------------------
    \182\ Id. at 42 (Article 20(3)) and 44-45 paras. 151-152.
---------------------------------------------------------------------------

Section 621. Relief that may be granted upon recognition of a foreign 
        proceeding

    This section follows article 21 of the Model Law, with 
detailed changes to fit United States law.183 The 
exceptions in subsection (1)(g) relate to avoiding powers. The 
foreign representative's status as to such powers is governed 
by section 623 below. The avoiding power in section 549 and the 
exceptions to that power are covered by section 620(1)(b).
---------------------------------------------------------------------------
    \183\ Id. at 45-46 (Article 21).
---------------------------------------------------------------------------
    The word ``adequately'' in the Model Law, articles 21(2) 
and 22(1), has been changed to ``sufficiently'' in subsections 
621(2) and 622(1) to avoid confusion with a very specialized 
legal term in United States bankruptcy, ``adequate 
protection.'' 184
---------------------------------------------------------------------------
    \184\ Id. at 46 (Article 21(2), 47 (Article 22(1)).
---------------------------------------------------------------------------
    Subsection (3) is designed to limit relief to assets having 
some direct connection with a non-main proceeding, for example 
where they were part of an operating division in the 
jurisdiction of the non-main proceeding when they were 
fraudulently conveyed and then brought to the United 
States.185
---------------------------------------------------------------------------
    \185\ See id. at 46-47, paras. 158-160.
---------------------------------------------------------------------------
    This section does not expand or reduce the scope of relief 
currently available in ancillary cases under sections 105 and 
304 nor does it modify the sweep of sections 555 through 560.

Section 622. Protection of creditors and other interested persons

    This section follows article 22 of the Model Law 
exactly.186 It gives the bankruptcy court broad 
latitude to mold relief to circumstances, including appropriate 
responses if it is shown that the foreign proceeding is 
seriously and unjustifiably injuring United States creditors. 
For response to a showing that the conditions necessary to 
recognition did not actually exist or have ceased to exist, see 
section 617. Concerning the change of ``adequately'' in the 
Model Law to ``sufficiently'' in this section, see section 621.
---------------------------------------------------------------------------
    \186\ Id. at 47.
---------------------------------------------------------------------------

Section 623. Actions to avoid acts detrimental to creditors

    This section follows article 23 of the Model Law, with 
wording to fit it within procedure under this 
title.187 It merely confers standing on a recognized 
foreign representative to assert an avoiding action in a 
pending case under another chapter of this title. It does not 
create or establish any legal right of avoidance nor does it 
create or imply any legal rules with respect to the choice of 
applicable law as to the avoidance of any transfer or 
obligation.188 The courts will determine the nature 
and extent of any such action and what national law may be 
applicable to such action.
---------------------------------------------------------------------------
    \187\ Id. at 48-49.
    \188\ See id. at 49, para. 166.
---------------------------------------------------------------------------

Section 624. Intervention by a foreign representative

    The wording is the same as the Model Law, except for a few 
clarifying words.189 This section gives the foreign 
representative the right to intervene in United States cases, 
state or federal, where the debtor is a party. Recognition 
being an act under federal bankruptcy law, it must take effect 
in state as well as federal courts. This section does not 
require substituting the foreign representative for the debtor, 
although that result may be appropriate in some circumstances.
---------------------------------------------------------------------------
    \189\ Id. at 49.
---------------------------------------------------------------------------

Section 625. Cooperation and direct communication between the court and 
        foreign courts or foreign representatives

    The wording is almost exactly that of the Model 
Law.190 The right of courts to communicate with 
other courts in worldwide insolvency cases is of central 
importance. This section authorizes courts to do so. This right 
must be exercised, however, with due regard to the rights of 
the parties. Guidelines for such communications are left to the 
rules.
---------------------------------------------------------------------------
    \190\ Id. at 50.
---------------------------------------------------------------------------

Section 626. Cooperation and direct communication between the trustee 
        and foreign courts or foreign representatives

    This section follows the Model Law almost 
exactly.191 The language in Model Law Article 26 
concerning the trustee's function was eliminated as unnecessary 
because always implied under United States law. The section 
authorizes the trustee, including a debtor in possession, to 
cooperate with other proceedings.
---------------------------------------------------------------------------
    \191\ Id. at 51.
---------------------------------------------------------------------------
    Subsection (3) is not taken from the Model Law but is added 
so that any examiner appointed under this chapter will be 
designated by the United States Trustee and will be bonded.

Section 627. Forms of cooperation

    This section follows the Model Law exactly. Guide at 51-53. 
United States bankruptcy courts have already engaged in most of 
the forms of cooperation mentioned here, but they now have 
explicit statutory authorization for acts like the approval of 
protocols of the sort used in cases.192
---------------------------------------------------------------------------
    \192\ See e.g., In re Maxwell Communication Corp., 93 F.3d 1036 (2d 
Cir. 1996).
---------------------------------------------------------------------------

Section 628. Commencement of a case under title 11 after recognition of 
        a foreign main proceeding

    This section follows the Model Law, with specifics of 
United States law replacing the general clause at the end to 
cover assets normally included within the jurisdiction of the 
United States courts in bankruptcy cases, except where assets 
are subject to the jurisdiction of another recognized 
proceeding.193 In a full bankruptcy case, the United 
States bankruptcy court generally has jurisdiction over assets 
outside the United States. Here that jurisdiction is limited 
where those assets are controlled by another recognized 
proceeding.
---------------------------------------------------------------------------
    \193\ Guide at 54-55.
---------------------------------------------------------------------------
    The court may use section 305 of this title to dismiss, 
stay, or limit a case as necessary to promote cooperation and 
coordination in a cross-border case. In addition, although the 
jurisdictional limitation applies only United States bankruptcy 
cases commenced after recognition of a foreign proceeding, the 
court has ample authority under the next section and section 
305 to exercise its discretion to dismiss, stay, or limit a 
United States case filed after a petition for recognition of a 
foreign main proceeding has been filed but before it has been 
approved, if recognition is ultimately granted.

Section 629. Coordination of a case under title 11 and a foreign 
        proceeding

    This section follows the Model Law almost exactly, but 
subsection (d) adds a reference to section 305 to make it clear 
the bankruptcy court may continue to use that section, as under 
present law, to dismiss or suspend a United States case as part 
of coordination and cooperation with foreign 
proceedings.194 This provision is consistent with 
United States policy to act ancillary to a foreign main 
proceeding whenever possible.
---------------------------------------------------------------------------
    \194\ Id. at 55-56.
---------------------------------------------------------------------------

Section 630. Coordination of more than one foreign proceeding

    This section follows exactly article 30 of the Model 
Law.195 It ensures that a foreign main proceeding 
will be given primacy in the United States, consistent with the 
overall approach of the United States favoring assistance to 
foreign main proceedings.
---------------------------------------------------------------------------
    \195\ Id. at 57.
---------------------------------------------------------------------------

Section 631. Presumption of insolvency based on recognition of a 
        foreign main proceeding

    This section follows the Model Law exactly, inserting a 
reference to the standard for an involuntary case under this 
title.196 Where an insolvency proceeding has begun 
in the home country of the debtor, and in the absence of 
contrary evidence, the foreign representative should not have 
to make a new showing that the debtor is in the sort of 
financial distress requiring a collective judicial remedy. The 
word ``proof'' here means ``presumption.'' The presumption does 
not arise for any purpose outside this section.
---------------------------------------------------------------------------
    \196\ Id. at 58.
---------------------------------------------------------------------------

Section 632. Rule of payment in concurrent proceeding

    This section follows the Model Law exactly and is very 
similar to prior section 508(a), which is repealed. The Model 
Law language is somewhat clearer and broader than the 
equivalent language of prior section 508(a).197
---------------------------------------------------------------------------
    \197\ Id. at 59.
---------------------------------------------------------------------------
    The first amendment provides that the bankruptcy court in 
any district in which there has been a reference under 
subsection 157(a) will have core jurisdiction over cases 
commenced under chapter 6, ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapters 7 and 13 of 
this title, subject to deference to foreign proceedings under 
chapter 6 and section 305, the situation is different in a case 
commenced under chapter 6. There the United States is acting 
solely in an ancillary position, so jurisdiction over property 
is limited to that stated in chapter 6.
    The third provision complements the automatic inclusion of 
chapter 6 in the U.S. Trustee's language of prior section 
508(a).\198\
---------------------------------------------------------------------------
    \198\ Id. at 59.
---------------------------------------------------------------------------
    The first amendment provides that the bankruptcy court in 
any district in which there has been a reference under 
subsection 157(a) will have core jurisdiction over cases 
commenced under chapter 6, ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapters 7 and 13 of 
this title, subject to deference to foreign proceedings under 
chapter 6 and section 305, the situation is different in a case 
commenced under chapter 6. There the United States is acting 
solely in an ancillary position, so jurisdiction over property 
is limited to that stated in chapter 6.
    The third provision complements the automatic inclusion of 
chapter 6 in the U.S. Trustee's standing under section 307 and 
provides authority for the Untied States Trustee to act as 
necessary under section 626(3).

                        TITLE VII. MISCELLANEOUS

Section 701. Technical amendments

    This provision of H.R. 3150 makes several conforming and 
typographical corrections to the Bankruptcy Code.

Section 702. Applicability

    Section 702 of H.R. 3150 provides that the amendments apply 
to cases filed after the date of their enactment.

                              Agency Views

                             Department of Justice,
                             Office of Legislative Affairs,
                                       Washington, DC, May 7, 1998.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: We understand the House Judiciary 
Committee will mark up H.R. 3150, the Bankruptcy Reform Act of 
1998, on May 13, 1998. This letter provides the 
Administration's general views on the consumer bankruptcy 
reform proposals currently under consideration in the Congress, 
as well as the views of the Department of Justice on other 
provisions in H.R. 3150.

Consumer provisions

    Over the past two decades, consumer bankruptcy filings have 
risen sharply. While there are many competing theories on the 
cause of that increase, it is clear that there is no single 
explanation. Nonetheless, the growing number of filings, 
examples of abuse of Chapter 7 and state exemptions, and 
evidence of imprudent extensions of credit suggest some changes 
to the consumer bankruptcy laws are appropriate. The lack of 
definitive evidence about the reasons for the rise in 
bankruptcies means reforms. The Administration, therefore, has 
developed the following set of principles to guide its review 
of changes to the consumer bankruptcy laws.
    1. Access to Chapter 7 should not be governed by an 
arbitrary means test; the court must have discretion to account 
fairly for the great variations in circumstances that bring 
debtors into bankruptcy (including medical expenses, 
unemployment, divorce, responsibility for the care of others, 
etc.). to promote more uniform application of bankruptcy 
standards, however, the determination whether a person is 
eligible for a Chapter 7 filing should take place within 
indicative or presumptive guidelines established by Congress 
that take into account factors such as the debtor's current and 
expected income and ability to repay a portion of the debt.
    2. National bankruptcy policy can respect state variation 
in exemption levels without allowing state exemptions to be 
used to shield excessive assets from creditors.
    3. It is appropriate to expect debtors who can afford to 
repay a portion of their debts (taking into account all 
relevant circumstances) to act responsibly; but the bankruptcy 
and the credit reporting and granting system should reward 
those who complete a Chapter 13 plan.
    4. Child support and alimony payments should be carefully 
protected. We must ensure that reforms have no unintended 
adverse impact on debtors' ability to meet those, and other, 
priority payments.
    5. Bankruptcy reform should not create opportunities for 
creditors to coerce debtors to forego bona fide rights in 
bankruptcy.
    6. Bankruptcy rules should discourage bad-faith repeat 
filings and other attempts to abuse the privilege accorded by 
access to bankruptcy.
    7. Bankruptcy data collection and data accuracy must be 
improved. Analysis and understanding of the forces affecting 
bankruptcy filings are impeded by the lack of high-quality, 
nationally uniform data. Better data collection and 
verification procedures should be incorporated into any reform 
proposals. Such data can be used to assess and monitor the 
impact of reform legislation.
    8. Scrutiny must also be given to credit industry practices 
that have led some borrowers to overextend themselves. While 
some of these issues may fall outside of the Judiciary 
Committee's jurisdiction, the Congress and the Administration 
should consider proposals dealing with such issues as deceptive 
credit marketing and granting and enhancing disclosure of the 
implications of consumer credit agreements.
    The Administration is open to responsible consumer 
bankruptcy reforms that meet these principles. The 
Administration has reluctantly concluded that it cannot support 
H.R. 3150 in its present form. The Administration looks forward 
to working with the Congress toward consumer bankruptcy 
legislation more similar to the approach embodied in S. 1301--
with important modifications necessary to meet the principles 
articulated above.
    The following are some additional comments regarding 
specific provisions in H.R. 3150:

Section 111. Notice of alternatives

    Section 111 of H.R. 3150 would, in part, amend section 342 
of the Bankruptcy Code (``the Code'') to ensure that consumer 
debtors receive information about debt counseling services and 
their options before filing bankruptcy. The form of the notice 
would be prescribed by the United States Trustee for the 
district and would contain a brief description of the 
bankruptcy chapters, the benefits and costs of each chapter and 
services available from an independent nonprofit debt 
counseling service. The notice would also provide the name, 
address, and other identifying information of each nonprofit 
debt counseling service in the district. We support the concept 
of consumer education that underlies section 111, but question 
whether the notice will be effective when it is likely provided 
after the debtor has decided to file bankruptcy.
    In addition, we oppose the requirement that the notice list 
the nonprofit debt counseling services in the district. H.R. 
3150 provides no other parameters on what types of services 
should be listed, other than being nonprofit, and we are 
concerned that the provision might put United States Trustees 
in the position of publicizing unscrupulous debt counselors. We 
recommend that this requirement be deleted from this provision, 
or at a minimum, be amended to provide that no listed nonprofit 
debt counseling service can charge the debtor a fee and to 
provide the United States Trustee with the ability to petition 
the bankruptcy court to remove a debt counseling service from 
the notice list where there is evidence indicating that the 
counseling service has engaged in unscrupulous behavior.

Section 112. Debtor financial management test program

    Section 112 of H.R. 3150 would require the Executive Office 
for United States Trustees, in consultation with standing 
trustees, to develop a financial management training curriculum 
for debtor education in three pilot districts for a one-year 
period. The materials would also be made available to 
individual debtors on request. The courts in the pilot 
districts would be authorized to make attendance at the debtor 
education program a condition of discharge. The Director of the 
Executive Office would also be required to evaluate the 
effectiveness of the pilots and existing debtor education 
programs and to submit a report of his findings to Congress.
    The Department supports this test program as the best way 
to refine effective debtor education programs before they are 
extended nationwide. Subsection (b), however, only gives the 
Executive Office 60 days after enactment to develop the 
training curriculum and materials. We recommend that this 
period be extended to 180 days to give the Executive Office 
adequate time to develop an effective curriculum.

Sections 113 to 116. Debt relief counseling agencies

    Sections 113 through 116 H.R. 3150 deal with debt relief 
counseling agencies (``counseling agencies''). Section 113 
defines covered ``counseling agencies.'' Section 114 would 
require such agencies to provide the person they are assisting 
with written notice of the requirements that all bankruptcy 
schedules must be accurate, that the information is subject to 
audit, and that the failure to provide accurate information may 
result in dismissal of the bankruptcy case, sanctions or 
criminal prosecution. Counseling agencies would be required to 
provide a separate notice advising the assisted person that the 
counseling agency is required, inter alia, to enter a written 
contract. Finally, counseling agencies would be required to 
inform assisted individuals on matters such as ``how to 
determine what property is exempt and how to value exempt 
property at replacement value.''
    The Department opposes section 114, as currently drafted, 
because it would undercut the consumer protections currently 
contained in section 110 of the Code and state law, which 
impose penalties on person who negligently or fraudulently 
prepare bankruptcy petitions. Because counseling agencies would 
be defined to include petition preparers and other 
nonattorneys, the advice required to be given by a counseling 
agency could constitute the unauthorized practice of law. To 
avoid this problem, section 114 of H.R. 3150 should be amended 
to exclude nonattorneys from the provisions of new section 
526(c), and to add to the form notice in section 526(b) a 
notice that the debt relief counseling agency employee cannot 
provide legal advice if he or she is not an attorney.
    Section 115 of H.R. 3150 would provide the assisted person 
certain substantive rights when using a debt relief counseling 
agency, including the right to a written contract that fully 
discloses all services and all charges. We do not oppose this 
provision, but believe that the standard of liability in the 
provisions should be changed. New section 115(b)(2) provides 
that a debt relief counseling agency should not ``make any 
statement * * * which is untrue or misleading or which upon the 
exercise of reasonable care, should be known by the debt relief 
counseling agency to be untrue or misleading'' (emphasis 
added). The italicized disjunctive ``or'' would impose strict 
liability upon a debt relief counseling agency by imposing 
liability if the statement is untrue or misleading, even if the 
agency had no reason to know of the untruth or misleading 
nature of the statement. The Department suggests replacing the 
italicized ``or'' with ``and'' to establish a more appropriate 
standard of liability.
    Finally, section 116 of H.R. 3150 would provide penalties 
and other remedies for the failure of a counseling agency to 
comply with the requirements of section 114 and 115; for 
providing bankruptcy assistance in a case which is dismissed 
(or converted to a chapter 13 in lieu of a dismissal) under 
section 707(b) of the Code; or for a failure to file bankruptcy 
papers. In such circumstances, counseling agencies would be 
required to refund or waive fees and, if the case has not been 
closed, a court could require the counseling agency to complete 
the services in the case without charge. In addition, the state 
Attorneys General could bring actions to enjoin such 
violations, and recover for their affected residents actual 
damages, including costs and attorney fees.
    To provide additional protections against abusive 
practices, the Department urges that section 116 be 
strengthened to provide monetary penalties for intentional or 
repeat violations and to empower the United States Trustees to 
bring actions seeking such penalties and injunctions against 
offending counseling agencies and their principals. Section 116 
should also be clarified to allow a debtor to bring an action 
for a violation. The experience of the United States Trustees 
in enforcing violations by petition preparers under section 110 
of the Code is that the penalties must be severe and be able to 
address the enforcement problems posed by shell corporate 
entities. Finally, section 116 should be amended to clarify 
that the enforcement remedies of this section are in addition 
to Chapter 9 of Title 18 and section 110 of the Code. We would 
be happy to work with the Committee to draft appropriate 
language.

Section 121. Repeat filings

    In cases of refiling within a year, section 121 of H.R. 
3150 would provide a 30-day limit on the application of the 
automatic stay of section 362 of the Code, unless, prior to 
termination and upon request of a party-in-interest, the court 
provides notice and a hearing to affected parties regarding the 
potential extension of the stay. Serial filings are a serious 
problem in many jurisdictions and, accordingly, we endorse the 
adoption of firm measures to address this issue. Repeat 
filings--whether to obtain multiple discharges or to hold 
creditors at bay temporarily--should not be encouraged. This 
provision would provide a welcome limitation to abuse of the 
automatic stay provision of the Code by serial filers who have 
no hope or intention of ever being granted a discharge in 
bankruptcy.

Section 125. Giving secured creditors fair treatment in chapter 13

    Section 125 of H.R. 3150 would amend section 1325(a) (5) 
(B) (i) of the Bankruptcy Code to protect the lien of a secured 
creditor from release by a chapter 13 plan if the debtor fails 
to complete the plans. This provision would resolve an issue on 
which the bankruptcy courts are split. The issue arises when 
the debtor confirms a chapter 13 plan that reduces a creditor's 
lien to the current value of the collateral (so-called ``lien 
stripping'') and then, after completing the payments due on the 
secured portion of the claim, but before the plan is completed, 
the debtor seeks to discharge the lien. Some courts hold that 
the collateral does not vest in the debtor until the entire 
plan is completed. See, e.g., In re Pruitt, 203 B.R. 134 
(Bankr. N.D. Ind. 1996); In re Schieirl, 186 B.R. 498 (Bankr. 
D. Minn. 1995). Other courts have held that, upon payment of 
the secured portion of the creditor's claim, the collateral is 
released. See, e.g., In re Lee, 156 B.R. 628 (Bankr. D. Minn.), 
aff'd, 162 B.R. 217 (D. Minn. 1993); In re Nicewonger, 192 B.R. 
886 (Bankr. N.D. Ohio 1996).
    We support the limitations on lien stripping contained in 
section 125. A key advantage that chapter 13 offers debtors 
over chapter 7 is that a larger universe of property is subject 
to lien ``strip down.'' Furthermore, in a chapter 13 plan, the 
debtor can redeem collateral with payment over time from future 
income. These advantages are often the debtor's chief reason 
for undertaking a chapter 13 plan. Because debtors may allocate 
their plan payments preferentially to pay secured indebtedness 
sooner than unsecured debt, the result can be a disincentive 
for debtors to finish their plans after paying enough to redeem 
the collateral. Such ``front loading'' of payments for secured 
debt accounts, in part, for the high percentage of chapter 13 
plans that are uncompleted. Debtors should not be permitted to 
obtain the benefits of chapter 13 without bearing its burdens.

Section 127. Stopping abuse conversions from chapter 13

    Section 127 of H.R. 3150 would amend section 348(f)(1) of 
the Code to reverse the bifurcation of a secured creditor's 
claim into secured and unsecured portions accomplished through 
a chapter 13 plan, if the case is converted to chapter 7. This 
provision thus would limit the debtor's ability to release the 
lien in a chapter 7 case under section 722 of the Code.
    For the same reasons we support section 125 of H.R. 3150, 
we also support this change. This provision addresses a 
different aspect of the same problem dealt with in section 125 
above. Both provisions concern a debtor who confirms a chapter 
13 plan that reduces a creditor's lien to the value of the 
collateral. Unlike section 125, however, section 127 deals with 
the situation where, after paying part of the secured portion 
of the claim, the debtor converts his unfinished 13 plan into 
chapter 7 liquidation. In the chapter 7 case, the debtor then 
redeems the collateral by tendering the balance due on the 
``stripped down'' lien after taking credit for the payments 
made under the chapter 13 plan. Unless this option is barred, 
debtors will have an incentive totake the benefits conferred by 
chapter 13, and then convert to a chapter 7 without finishing their 
chapter 13 plans.

Section 201. Limitation relating to the use of free examiners

    Section 201 of H.R. 3150 would prohibit a court's use of 
third-party examiners to review professional fee applications. 
We oppose this provision in its current form because it is 
overly broad and may be detrimental in large reorganization 
cases where fee applications are frequent, complex and 
voluminous. The use of a fee examiner by a bankruptcy judge is 
not an improper delegation of the court's duty to review and 
award compensation; even with a fee examiner, a court must rule 
on every professional fee application filed. The Department, 
however, would not oppose amendments to correct perceived 
abuses relating to compensating fee examiners based upon a 
percentage of fees successfully challenged and to prohibit the 
use of fee examiners in small business cases (where the expense 
of such examiners is likely unwarranted). We would be happy to 
work with the Committee to draft appropriate language.

Section 204. Meetings of creditors and equity security holders

    Section 204 of H.R. 3150 would amend section 341 of the 
Code to allow a court to direct the United States Trustee to 
dispense with the meeting of creditors in a case with a so-
called ``prepackaged plan,'' i.e., a reorganization plan worked 
out with creditors in advance of the filing of a Chapter 11 
petition. We oppose this provision, which would significantly 
hinder the ability to creditors and the Untied States Trustee 
to examine a debtor's affairs under oath. Dispensing with the 
meeting could also increase the possibility of fraud and 
collusion by a debtor and its major creditors.

Section 205. Creditor and equity security holders committees

    Section 205 of H.R. 3150 would amend section 1102 of the 
Code to allow a court to order changes in the membership of 
creditor and equity security holder committees. We strongly 
oppose this provision. Under section 1102 of the Code, United 
States Trustees are responsible for creating committees and 
appointing their members, while courts are called upon to 
resolve controversies arising from the committees. Section 205 
of H.R. 3150 would upset this balance and improperly involve 
the court in the administration cases. This could create and 
appearance of favoritism if a court were called upon to resolve 
a controversy involving a committee it had constituted. The 
proposal could also result in increased cost and delay because 
early litigation over committee membership would inevitably 
decrease the ability of committees to participate at the early, 
critical stages of cases.
    Nevertheless, the Department recognizes the desirability of 
revising section 1102 to ensure the effective and 
representative committees are appointed. Accordingly, we would 
suggest that this section be amended to require that any 
request to create or alter the membership of a committee be 
first directed to the United States Trustee and to permit the 
court, upon a request of a party in interest after and adverse 
decision by the United States Trustee, to make the requisite 
findings and order the United States Trustee to alter a 
committee. Such an amendment should also reaffirm the United 
States Trustee's authority to alter a committee. We would be 
happy to work with the Committee to draft language to 
accomplish this objective.

Section 207. Preferences

    Section 207 of H.R. 3150 would amend section 547(c) of the 
Code, which deals with preferential transfers of property to 
creditors after the filing of a bankruptcy petition. Section 
207 would eliminate the ability of a trustee to avoid such a 
transfer in a case filed by a debtor whose debts are no 
primarily consumer debts, where all the property that 
constitutes or is affected by the transfer is worth less than 
$5,000.
    We oppose this provision. Although this provision is 
apparently designed to protect the interests of smaller 
creditors, this section, without appropriate supervision, could 
lead to abuse and manipulation by debtors wishing to pay 
preferred creditors. For example, nothing in the provision 
would prohibit a debtor from breaking a larger payment into 
several smaller ones that each total less than $5,000. If such 
preferential payments are not avoidable, the result could be a 
substantial diminution of the property available to pay 
priority claims.

Sections 232 and 233. Flexible rules for disclosure statement and plan; 
        standard form disclosure statements and plans

    Section 232 of H.R. 3150 would add a new section 1125(f) to 
the Code to allow the court to relax the plan confirmation 
procedures in small business bankruptcies. Specifically, for a 
small business case, the court would be empowered to: (i) waive 
the disclosure statement; (ii) use a form disclosure statement; 
(iii) allow plan solicitation based on a ``conditionally 
approved'' disclosure statement; or (iv) combine the 
confirmation and disclosure statement hearing. Section 233 of 
H.R. 3150 would require the Judicial Conference to adopt 
``standard form'' disclosure statements and plans of 
reorganization that balance the need for ``reasonably complete 
information'' with ``economy and simplicity.''
    These provisions would remove procedural barriers to early 
confirmation and, to the extent they encourage quicker 
confirmations, are advantageous to debtors and creditors alike. 
Care will be needed lest the execution of these provisions lead 
to confirmations without adequate disclosure to creditors and 
other affected parties. We believe, however, that this risk is 
manageable.

Section 234. Uniform national reporting requirements

    Section 234 of H.R. 3150 would add a new section 308 to the 
Code requiring a small business debtor to file periodic reports 
explaining: (i) its profitability; (ii) projected income and 
expenses; (iii) how prior projections compare with actuality; 
(iv) compliance with bankruptcy requirements; (v) whether taxes 
returns are timely filed; (vi) what taxes and other 
administrative claim are in default and when remedied; and 
(vii) ``other matters'' needed in the creditors' and the 
public's interest.
    We support these disclosure requirements and the need for 
consistent financial reporting standards. By helping to 
identify faltering cases, financial reports prevent undue delay 
in the administration of chapter 11 cases. We further urge 
extending this section to all chapter 11 debtors, not just 
small business debtors.

Section 235. Uniform reporting rules and forms

    Section 235 of H.R. 3150 would require the Attorney General 
to propose for adoption amended Federal Rules of Bankruptcy 
Procedure and Official Bankruptcy Forms to be used by small 
business debtors to comply with the provisions added by Section 
234 of the bill. We support this provision, but suggest that it 
be amended to indicate that the Attorney General would also 
consult with the Small Business Administration in developing 
the rule and form proposals.

Section 236 through 239. Other small business provisions

    The Department is not taking a position on these provisions 
at this time, which are still under review.

Section 240. Duties of the United States Trustee and Bankruptcy 
        Administrator

    Section 240 of H.R. 3150 would amend 28 U.S.C. Sec. 586 to 
expand the United States Trustee's oversight of small business 
debtors. It would oblige the United States Trustee to interview 
the debtor before the first meeting of creditors, visit the 
debtor's premises, monitor the debtor's actions and, where 
grounds are found to do so, move to convert the case to a 
Chapter 7 or to dismiss the case altogether.
    We support this provision, which would clarify and codify 
the United States Trustee's obligation to move hopeless cases 
out of chapter 11. This section reflects the current practice 
of the United States Trustees, except for the duty to visit the 
debtor's premises. We estimate that site visits would cost an 
additional $9 million over 5 years.

Section 241. Scheduling conferences

    Section 241 of H.R. 3150 would amend section 105(d) of the 
Code to require the courts to hold status conferences, and 
empower the courts to issue administrative orders to establish 
deadlines and relax the disclosure statement requirements. This 
provision would apply to all chapter 11 cases. To the extent it 
empowers the court to override requirements of the Code and 
Bankruptcy Rules, or to intrude into areas currently entrusted 
to the United States trustee, it goes too far. While bankruptcy 
procedures should be somewhat flexible, we believe that it is 
important that bankruptcy judges not be permitted to vary, 
essentially at will, from statutory and rule requirements, 
potentially depriving creditors and other parties in interest 
of key procedural protections. We believe that the standard 
incorporated in section 241--allowing the court to vary from 
the Code and the Bankruptcy Rules if ``necessary to further the 
expeditious and economical resolution of the case''--does not 
adequately preserve these procedural protections, and therefore 
oppose the provision.

Section 242. Serial filer provisions

    Section 242 of H.R. 3150 would amend section 362 of the 
Bankruptcy Code to disable the automatic stay for a small 
business filing, where: (i) the debtor is already in 
bankruptcy; (ii) had a case dismissed or a plan confirmed 
within two years prior to filing; or (iii) acquired the assets 
of a debtor in a proceeding covered by (i) or (ii), unless the 
debtor shows that its filing resulted from causes unforeseeable 
during the prior case and that a non-liquidating plan may be 
confirmed within a reasonable time.
    Serial filings are a serious problem in many jurisdictions 
and we endorse the adoption of firm measures to address this 
issue. Repeat filings--whether to obtain multiple discharges or 
to hold creditors at bay temporarily--should not be permitted. 
Accordingly, we support section 242 of the bill. However, we 
believe that applying this restriction only to small business 
debtors is too limited and that this provision instead should 
apply to all debtors in chapter 11.

Section 243. Expanded grounds for dismissal or conversion and 
        appointment of trustee

    Section 243 of H.R. 3150 would amend section 1112 of the 
Code to require the conversion to chapter 7 or dismissal of any 
chapter 11 case where ``cause'' is shown. This requirement 
would not apply if the debtor could show that a plan may be 
confirmed within a reasonable time and, where the ``cause'' is 
a default, that the default is justified and will be cured 
promptly. ``Cause'' would be defined to include a variety of 
situations, including ``gross mismanagement;'' misuse of cash 
collateral; a violation of a court order; default of a filing 
or reporting requirement; the nonpayment of taxes or nonfiling 
a return; and not filing timely a disclosure statement or plan 
or confirming a plan.
    We support this provision. This provision is one of several 
in the bill designed to move cases that cannot be confirmed out 
of chapter 11. Defining ``cause'' using more objective 
standards would foster uniformity and enhance efficiency. 
Shifting the burden to the debtor to justify defaults and prove 
satisfactory progress when cause is shown appropriately 
conditions the debtor's enjoyment of the benefits of bankruptcy 
on responsible actions.

Section 251. Single asset real estate defined

    Section 251 of H.R. 3150 would amend section 101(51B) of 
the Code to remove the $4 million debt cap from the current 
definition of ``single asset real estate.'' Further, it would 
clarify that unimproved real estate qualifies for this 
designation. Finally, it would exclude from the definition 
property owned by a debtor who is part of a commonly controlled 
group consolidated in one bankruptcy if the group operates a 
business larger than the single property.
    Currently, the mortgagee of Single Asset Real Estate 
(``SARE'') secures relief from the bankruptcy stay 90 days 
after the debtor files unless, prior to the running of the 90 
days, the debtor files a confirmable plan or commences 
interests payments based on the property's fair market value. 
11 U.S.C. Sec. 362(d)(3). Removing the cap under section 251 of 
the bill would allow a larger set of mortgagees to benefit from 
section 362(d)(3). Many bankruptcies considered abusive by 
creditors have concerned SAREs. We strongly favor the proposed 
changes, which would benefit federal lenders and insurers, most 
notably the Department of Housing and Urban Development (HUD).
    HUD, however, needs and deserves additional protection for 
its unique bankruptcy problems. HUD borrowers are usually 
limited partnerships that enjoy tax shelters for their 
investors, favorable interest rates, and, frequently, subsidies 
for their tenants. Projects without sufficient income to 
service indebtedness also lack the income to manage and 
maintain the insured property. Deteriorating property not only 
diminishes property values but also can lead to unsafe and 
unsanitary conditions for the tenants, many of whom have low to 
moderate income. HUD's remedy for the owner's financial and 
regulatory defaults--foreclosure--is easily and completely 
frustrated by the filing of a bankruptcy and the attendant 
invocation of the automatic stay of section 362 of the Code.
    When owners file for bankruptcy, debt service is usually 
reduced or withheld entirely. Some courts allow the rents to 
accumulate as a dollar for dollar reduction in HUD's secured 
claim; hence, in those courts, delay is rewarded because the 
longer the delay, the more the secured debt is paid down. 
Meanwhile, the owners continue to enjoy the tax advantages of 
ownership, such as depreciation deductions. While bankruptcy 
restrictions limit HUD's usual remedies and rights, HUD must 
continue to pay rent and other subsidy payments which inure to 
the benefit of the project owners. Although the owner/
partnership's only asset is the project that is wholly 
encumbered by HUD's mortgage, the owner often can stave off a 
motion by HUD seeking relief from the automatic stay by 
promising new investments to enable a successful 
reorganization. such scenarios can force HUD to accept plans 
that reduce its mortgage and discharge unsecured debt, yet 
allow the debtors to retain their ownership interests through 
relatively small investments of new capital. Even where HUD is 
allowed to proceed with foreclosure, the result can be further 
deterioration of the mortgaged property, creating hazards for 
tenants, and reduced--often sharply--sale values.
    HUD did not suffer these consequences until 1978 when 
Congress repealed a long-held exception to the automatic stay 
for multifamily projects insured under the National Housing 
Act. We recommend that exception be restored. Such a change 
could be accomplished by amending section 362(b)(8) of the Code 
to read:
          (8) under subsection (a) of this section, of any act 
        to foreclose a lien insured or held by the Secretary of 
        Housing and Urban Development, or the Secretary of 
        Agriculture pursuant to title V of the Housing Act of 
        1949, on property that has more than four living units; 
        is a hospital or nursing home; or is a project for the 
        elderly or persons with disabilities.

Section 252. Payment of interest

    Section 252 of H.R. 3150 would amend section 362(d)(3) of 
the Bankruptcy Code to limit the automatic stay in case of a 
SARE, where the debtor fails to file a plan or commence 
interest payments within 90 days of filing, to: (i) allow the 
payment to commence 30 days after the court determines that the 
debtor is aSARE; (ii) allow the debtor to make the interests 
payments from post-petition rents of the SARE; and (iii) specify the 
non-default contract rate as the interest rate.
    We oppose this change. Under current section 362(d)(3) of 
the Code, creditors of a SARE debtor may have the automatic 
stay lifted if the debtor has not filed a ``feasible'' 
reorganization plan within 90 days of filing or has not 
commenced monthly payments to secured creditors. Giving the 
debtor 30 days to comply after the court rules that the debtor 
is subject to section 362(d)(3) is unwise. The exception to the 
automatic stay in section 362(d)(3) takes its force from the 90 
days time limit. That force is substantially diminished by 
relaxing that limit for debtors who claim, or who can find a 
pretext for claiming, that it does not apply. It is also 
unnecessary; the court currently can extend the 90 days for 
``cause.''
    Giving the debtor the ``sole discretion'' to override 
section 363(c)(2) and make interest payments out of post-
petition rents is also ill-advised. First, the amendment does 
not require that the creditor receiving the rents be the same 
as the creditor whose rights are voided. Second, even if the 
creditor receiving the rents is being paid its own collateral, 
the amendment serves to limit that creditor's rights. 
Currently, this section works largely as a predicate to allow 
the secured creditor and the debtor to negotiate a consensual 
payment schedule. Giving the debtor the discretion to override 
the secured creditor's interests stands the purpose of the 
section on its head.
    Finally, allowing the debtor to pay at the contract rate is 
inconsistent with paying a ``stripped down'' value in the case 
of an undersecured creditor. If the payment's principal is a 
function of market value, the interest rate should be 
calculated the same way. We oppose this change as well.

Section 401. Adequate preparation time for creditors before the first 
        meeting of creditors in individual cases

    Section 401 of H.R. 3150 would amend section 341 of the 
Code to provide that the first meeting of creditors in 
individual cases shall not be convened earlier than 60 days, 
nor longer than 90 days, after the Order for Relief, absent a 
court determination of unusual circumstances. This proposal is 
contrary to the expeditious administration of bankruptcy cases. 
Any delay in the meeting of creditors would impeded the ability 
of trustees and the United States Trustee to intervene in 
problem cases, and impair the ability of trustees to obtain 
control of estate property and promptly investigate the 
debtor's financial affairs.
    The Department would not oppose amendments allowing 
creditors additional time to protect their interests, such as 
amendments extending the time periods for objecting to the 
entry of the debtor's discharge, seeking a determination that a 
particular debt is non-dischargeable, filing a motion to 
dismiss for substantial abuse under section 707(b) of the Code, 
and objecting the debtor's claimed exemptions. We would be 
happy to work with the Committee to draft acceptable language.

Section 402. Creditor representation at the first meeting of creditors

    Section 402 of H.R. 3150 would amend section 341 of the 
Code to allow non-attorney consumer creditor representatives to 
attend and participate in chapters 7 and 13 creditor's meetings 
notwithstanding federal, state or local non-bankruptcy law to 
the contrary. The Department supports this provision because it 
promotes the participation of creditors in the bankruptcy 
process. We strongly encourage further amendment to delete the 
phrase ``holding a consumer debt'' from the section to ensure 
the ability of all creditors, including non-lawyer 
representatives of governmental creditors, to participate in 
creditor meetings.

Section 404. Audit procedures

    Section 404 of H.R. 3150 would amend 28 U.S.C. Sec. 586 to 
require the Attorney General to establish procedures for 
auditing of a debtor's petition, schedules, statement of 
financial affairs and other similar information in all consumer 
chapters 7 and 13 cases. At least one percent of the consumer 
cases in each judicial district would be randomly chosen for 
audit, in addition to those cases where the debtor's income and 
expenses exceed the mean variance in the judicial district.
    The Department supports the concept of debtor audits. The 
bankruptcy system is dependent upon the full and voluntary 
disclosure by debtors of accurate information regarding their 
assets, liabilities and financial affairs. A systematic program 
of random audits would serve to deter those who might otherwise 
be tempted to conceal assets and information from their 
creditors. We also believe assigning this responsibility to the 
Department makes sense given the central role of United States 
Trustees in ensuring the integrity of the bankruptcy system.
    The Department, however, opposes section 404 in its current 
form because of its feasibility and cost. The proposal requires 
independent Certified Public Accountants (CPAs) to conduct 
``audits'' in accordance with ``generally accepted auditing 
standards,'' a term of art within the accounting profession. It 
is questionable whether an audit conducted by an independent 
CPA and in accordance with these principles is feasible or 
desirable in most consumer cases given that a debtor's 
financial records are often nonexistent or in disarray.
    Assuming that the practical problems associated with 
conducting an audit can be resolved, the provision as drafted 
would be costly. The Department has estimated that implementing 
the audit program contemplated by this section could cost from 
$45 million to more than $174 million over five years. This 
cost is in large part a function of the number audited and the 
use of independent CPAs. The cost of the audits could easily 
exceed the total sum appropriated to fund the entire United 
States Trustee program in Fiscal Year 1998. Moreover, the bill 
provides no funding mechanism to cover these costs.
    The use of an audit report is left similarly vague. Copies 
of the audit reports are to be filed with the Court, but it is 
uncertain if this would be merely for the purpose of providing 
a public repository for the report accessible to all parties in 
interest, or if it is intended that the Court would, sua 
sponte, initiate action based on the auditors' findings. The 
report of each audit is also to be filed with the United States 
Attorney, thereby burdening that office with storing and 
indexing this information. However, absent notification from 
the United States Trustee that a material misstatement has been 
made in a case that warrants a criminal investigation, it is 
unclear what if any additional role the United States Attorney 
is to play in resolving audit deficiencies.
    We recommend that the following changes be made to Section 
404:
          Require the Attorney General to establish a system to 
        audit consumer debtor cases on either a random or 
        targeted basis, but without a minimal prescribed 
        percentage;
          Eliminate the mandatory use of independent CPAs and 
        generally accepted auditing standards, and grant the 
        Attorney General the authority to determine and define 
        the scope of the audits;
          Eliminate the requirement of filing the audit reports 
        with the court and the United States Attorney;
          Provide a civil sanction to ensure debtor's 
        compliance with the audit and defer a section 727 
        discharge until the U.S. Trustee reports a satisfactory 
        audit; and
          Provide a source to fund the audits other than 
        assessments upon the affected debtors.
    Given the size of the audit program and its cost, the 
Department also urges the committee to consider a pilot program 
for audits that would allow the costs and benefits of various 
approaches to be considered. In addition, consideration should 
be given to limiting random audits to chapter 7 debtors.

Section 405. Giving creditors fair notice in chapter 7 and 13 cases

    Section 405 of H.R. 3150, which is similar to section 309 
of S. 1301, would amend the notice provisions of section 342 of 
the Bankruptcy Code to require, in an individual bankruptcy 
case, that notices to creditors include any account number and 
be sent to the address that a creditor has specified. It also 
would require that a matrix of addresses prescribed by 
creditors for notices in a district be established. Further, 
unless actual notice is sent to the specified addresses and 
received by a responsible person or department at the creditor, 
notice would be ineffective, the creditor could not be 
sanctioned for violating the automatic stay and turnover of 
property could not be enforced.
    While this section has some technical difficulties, we 
strongly support its intent to ensure that debtors know how to 
give effective notice and that the creditors, in fact, receive 
such notice. Indeed, we urge that this provision for fair 
notice apply to all bankruptcy chapters--there is no reason to 
limit this provision only to chapters 7 and 13. We would be 
happy to work with the Committee to draft acceptable language.

Section 406. Debtor to provide tax returns and other information

    Section 406 to H.R. 3150 would, inter alia, require the 
debtor to provide the United States Trustees with copies of all 
Federal tax returns for the 3 most recent tax years, and copies 
of all returns filed during the pendency of the bankruptcy 
case. The United States Trustee would be required to maintain 
these records and to make them available to any party in 
interest for inspection and copying within 10 days of receiving 
a request.
    The Department supports the requirements that tax records 
be provided by the debtor, but opposes the requirement that 
these documents be filed with the United States Trustees. 
Rather, we believe these records should be filed with the court 
as a repository of the public record. In particular, we believe 
that these tax documents should be public records, given the 
consequences that would flow under section 407 of the bill, 
which would lead to a case being automatically dismissed if the 
tax returns are not filed within 45 days following the 
petition. Alternatively, the records could be filed with the 
chapter 7 and chapter 13 trustees, who, both under existing law 
and the provisions of the bill, have an obligation to review 
the debtor's financial conditions.

Section 411. Jurisdiction of courts of appeals

    Section 411 of H.R. 3150 would amend 28 U.S.C. Sec. 1293 to 
allow a court of appeals to review: (i) final orders in core 
bankruptcy matters; (ii) all bankruptcy injunctions; and (iii) 
orders appointing a trustee or extending the period within 
which the debtor exclusively may file a plan. Further, it would 
allow a court of appeals to review all interlocutory bankruptcy 
orders in its discretion or upon certification by the issuing 
court.
    We strongly oppose this change. In the 1978 Bankruptcy 
Reform Act, the Congress established bankruptcy courts that 
were independent of the district courts, but declined to confer 
Article III status on the bankruptcy judges. In Northern 
Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50 
(1982), the Supreme Court found this 1978 grant of jurisdiction 
to bankruptcy judges unconstitutionally broad because it 
conferred Article III authority on judges who lacked the life 
tenure and salary security of Article III judges. Two years 
later, Congress responded by passing the Bankruptcy Amendments 
and Federal Judgeship Act of 1984 (BAFJA), Pub. L. No. 98-353, 
98 Stat. 333. BAFJA sought to remedy the constitutional 
deficiencies identified in Northern Pipeline by vesting 
jurisdiction over the district courts to refer cases to the 
bankruptcy courts, which were expressly made units of the 
federal district courts. 28 U.S.C. Sec. Sec. 151, 157, 1334. 
BAFJA specifies the so-called ``core'' matters as to which 
bankruptcy judges may issue final orders and reserves ``non 
core'' matters for final decision by the federal district 
court.\1\ 28 U.S.C Sec. 157.
---------------------------------------------------------------------------
    \1\ ``Core'' matters are generally those matters arising directly 
under the bankruptcy laws, such as the administration of the estate, 
the allowance or disallowance of claims and the estimation of claims or 
interest for the purposes of confirming a plan. ``Non core'' matters 
are proceedings merely ``related to'' a bankrupcy, for example, a suit 
not arising under the bankruptcy laws brought by a debtor against a 
third party who has not voluntarily entered the bankruptcy proceeding. 
In non core matters, a bankruptcy judge may enter only a recommended 
decision; the final order is entered by a district judge following de 
novo review of the bankruptcy judge's proposed findings.
---------------------------------------------------------------------------
    Currently, the district courts review most bankruptcy court 
rulings before final appeal may be taken to the courts of 
appeals. Section 412 would displace the district court from 
bankruptcy matters, except where it withdraws the reference or 
where it enters a final judgment in a non-core proceeding. This 
would diminish substantially the district court's oversight of 
bankruptcy judges. That oversight is a key element of the 
constitutional cure enacted in BAFJA. The Supreme Court has yet 
to rule upon the BAFJA structure, and its constitutionality has 
been hotly debated. Until this constitutional question is 
resolved, we urge the Congress not to lessen district court 
review and remove this potentially significant basis for the 
constitutionality of the bankruptcy court's exercise of 
judicial power.

Sections 441 and 442. Data collection

    Section 441 of H.R. 3150 would add 28 U.S.C. Sec. 159 to 
require the Executive Office for United States Trustees to 
compile statistics regarding consumer bankruptcy filings and 
report annually to Congress. We support this provision as a 
necessary aid to tracking the health of the consumer bankruptcy 
system.
    The Department opposes, however, provisions in section 441 
that would require the collection of certain categories of data 
for several reasons. First, the report would be based largely 
on information derived from bankruptcy schedules filed by the 
debtors, and this information is often subject to questions 
about accuracy. Second, many of the requirements for data 
required in Section 441 would call for information that would 
not be routinely collected and analyzed by either the United 
States Trustees or the courts. Working with information on a 
day to day basis increases its integrity, and as errors are 
identified they are corrected. Information that is gathered for 
reporting purposes only, as is the case for many of the 
elements of Section 441, lacks this essential safeguard of data 
integrity.
    Finally, the Department also opposes the provision 
directing the Administrative Office of the United States Courts 
(``Administrative Office'') to prescribe the form of the 
statistics. We believe section 441 should be amended to provide 
the Executive Office of the United States Trustees, after 
consultation with the Administrative Office, with the 
discretion on what statistics to compile within certain broad 
categories. This approach would create a flexible tool in which 
to provide Congress with crucial and timely information about 
the bankruptcy system.
    The Department supports the data collection provisions of 
section 442, which would add a new 28 U.S.C. Sec. 589b. This 
provision would build upon data that will be readily 
ascertainable after amendment to the final and periodic report 
forms. We do note two problems with this provision. It 
conflicts with section 235, which requires the Administrative 
Office to create an official form for periodic reports in small 
business chapter 11 cases. Section 235 should be amended to 
reflect the role of the Attorney General in promulgating the 
form of these reports.We also question the provision in section 
442 requiring the Attorney General to maintain final reports in one or 
more central locations. Currently, all final reports are filed with the 
courts, and section 442 provides for electronic access through the 
Internet. We would be happy to work with the Committee to recommend 
appropriate changes to these provisions.

Section 501. Treatment of certain liens

    Section 501 of H.R. 3150 deals with subordination of tax 
liens under section 724(b) of the Code, and is identical to 
section 2 of S. 1149, the Investment in Education Act, a bill 
passed by the Senate on October 30, 1997. Under the proposed 
changes, ad valorem property taxes would generally be protected 
from subordination. Reversing current law, expenses of a failed 
chapter 11 proceeding would not be given preferential treatment 
over tax liens, with a limited exception. Exhaustion of 
unencumbered assets would be required before tax liens could be 
subordinated, and expenses of preserving or disposing of 
secured property must be recovered from the property (reducing 
the expenses to which a tax lien would be subordinated).
    We support this provision. The public fisc should not be 
required to subsidize failed chapter 11 cases by having tax 
liens subordinated in order to pay administrative expenses of 
insolvent reorganization proceedings. Moreover, in chapter 7 
cases, other unencumbered assets should be used to satisfy 
administrative expenses and any expenses properly allocable to 
secured claims should be recovered from the property.

Section 502. Effective notice to government

    Section 502 of H.R. 3150 would amend section 342 of the 
Code to improve notice to the entities most frequently 
participating in the bankruptcy process--governmental units. It 
would require identification of the agency through which the 
debtor is indebted; disclosure of identifying information 
concerning the claim (such as taxpayer identification numbers 
and real estate parcel designations); and creation of a matrix 
of addresses of governmental units. In addition, it would give 
incentives to debtors to use the designated addresses.
    We support these provisions. They are in accord with 
Recommendation 4.2.1 of the National Bankruptcy Review 
Commission, which recommended redressing the current 
deficiencies in notifying governmental units. This provision 
would ensure reasonable identification of both the affected 
government agency and the debtor obligated on the debt. It 
would also create a mechanism for giving debtors accurate 
addresses to which notices should be sent. Finally, it would 
promote compliance with the mechanism by providing exceptions 
to bar dates and discharge-ability when a debtor fails to 
comply with the prescribed mechanism. We suggest, however, that 
the reference point in subsection (c) be corrected from notice 
of the bankruptcy ``case'' to notice of ``the matter or 
proceeding in respect to which the notice was provided.''

Section 503. Notice of request for a determination of taxes

    Section 503 of H.R. 3150 would amend section 505(b) of the 
Code to provide that a request for prompt audit of a tax return 
should be sent to the office designated by the taxing 
authority. Thus, for example, a notice sent to the Secretary of 
the Treasury in Washington, rather than to the Special 
Procedures unit of the IRS District Director where the 
bankruptcy is pending, would not suffice. We support this 
proposal. However, we do not believe it necessary to introduce 
further complications by requiring that the designation must be 
made on a local court registry.

Section 504. Rate of interest on tax claims

    Section 505 of H.R. 3150, as introduced provided that when 
a governmental unit is entitled to postpetition interest on a 
tax claim, the rate of interest would be the rate determined 
under section 6621(a)(2) of the Internal Revenue Code (26 
U.S.C.). Under current law, the court must generally determine 
the ``market rate'' for such interest. As reported by the 
Subcommittee, Section 504 of H.R. 3150 provides that if the 
holder of an unsecured prepetition tax claim is entitled to 
interest on such claim, the minimum rate of interest will be 
the Federal short-term rate rounded to the nearest full 
percent, determined under section 1274(d) of the Internal 
Revenue Code for the calendar month in which the plan is 
confirmed, plus three percentage points.
    We oppose this provision. We believe that the legislation 
should simply fix the interest rate for deferred tax payments 
at the applicable nonbankruptcy interest rate, i.e., the 
section 6621(a)(2) rate. Moreover, the legislation should 
address, as well, the interest rate for secured tax claims.

Section 505. Tolling of priority of tax claims time periods

    Section 505 of H.R. 3150 would suspend the time periods 
under the Code pertaining to the priority and discharge of tax 
claims during the pendency of a prior bankruptcy for the period 
in which the government was prohibited from collecting the 
claim, plus six months. We support this proposal. The filing of 
successive bankruptcies should not disadvantage governmental 
units by reducing their opportunity to collect a tax, and 
should not result in a more expansive discharge of tax claims 
for debtors. Adding six months to the suspension period mirrors 
section 6503(h) of the Internal Revenue Code (26 U.S.C.), and 
is appropriate given the disruption to collection efforts 
caused bythe filing of a bankruptcy petition. The additional 
time is needed to get collection efforts back on track.

Section 507. Chapter 13 discharge of fraudulent and other taxes

    Section 507 of H.R. 3150 would generally conform the 
discharge of tax claims in chapter 13 cases to the discharge of 
such claims available in chapter 7 cases. We support this 
provision Under current law priority tax claims for which a 
proof of claim is filed must be paid in full pursuant to the 
plan, and if a proof of claim is not filed, such taxes may be 
discharged. Taxes attributable to fraud or unfiled returns can 
be discharged upon completion of all payments under the plan, 
but many jurisdictions permit plans providing for ``zero 
payment'' of taxes, or plans distributing payments covering 
only small percentages of such claims. Permitting taxes 
attributable to fraud, or for which returns have never been 
filed, to be discharged on the basis of a tax evader's 
commitment to make payments to his or her creditors for three 
or five years makes bankruptcy a tax haven. In our view, a 
debtor should be entitled to the same discharge in chapters 7 
and 13, as proposed in section 507. Taxes attributable to fraud 
should be not discharged in a chapter 13 proceeding, and 
chapter 13 plans should not be confirmed unless prepetition tax 
returns are filed as proposed in section 516 of the HR. 3150.

Section 508. Chapter 11 discharge of fraudulent taxes

    Section 508 of H.R. 3150 would deny a discharge to a 
chapter 11 corporate debtor for taxes that arose because of 
fraudulent tax returns or an attempt to evade taxes. We support 
this proposal. Corporations that engage in tax fraud or 
otherwise attempt to evade taxes should not be entitled to a 
discharge vis-a-vis those taxes.

Section 509. The stay of proceedings in Tax Court

    Section 509 of H.R. 3150 would limit the automatic stay 
applicable to Tax Court proceedings to proceedings regarding a 
tax liability for a tax period ending before the order for 
relief, and would clarify that the automatic stay does not 
apply to an appeal of a decision determining a tax liability of 
the debtor. We support these proposals. No purpose is served in 
staying the commencement or continuation of a Tax Court 
proceeding for taxes incurred postpetition. Moreover, a court 
of appeals case regarding the liability of a taxpayer for a tax 
should be allowed to continue to a decision.

Section 510. Periodic payment of taxes in chapter 11 cases

    Section 510 of H.R. 3150 would require the payment of tax 
claims in installments over the course of the plan with the 
result that balloon payments would be proscribed. We support 
this prohibition on balloon payments.
    In addition, section 510 would modify the deferral period 
for payment of prepetition tax claims in a chapter 11 plan by 
allowing payments to be made within six years of the petition 
date. Current law provides that payments are to be completed 
within six years of the assessment date of the taxes. We oppose 
the proposal to measure the deferral period from the date of 
the petition, rather than from the assessment date. The 
proposal would extend the payment of some prepetition taxes for 
a period extending beyond the statute of limitations on tax 
collection. This would not only raise questions as to the 
legality of accepting payments for which collection would 
otherwise be barred, but would also prevent the IRS from 
seeking to enforce collection in the event of a default.
    Finally, we note the version of H.R. 3150 approved by the 
Subcommittee does not include a provision that was in the 
original bill that would have treated secured tax claims as 
priority claims for deferred payment purposes under section 
1129(a)(9)(C) of the Code, where such claims would have had 
priority absent their secured status. We urge you to restore 
this provision to the bill. We believe that it is illogical for 
the Bankruptcy Code to treat tax claims that would be entitled 
to priority absent their secured status less favorably than 
unsecured priority claims.

Section 511. The avoidance of statutory tax liens prohibited

    Section 511 of H.R. 3150 would resolve litigation over the 
interaction of section 545(2) of the Code, and the protection 
accorded certain purchasers of property under 26 U.S.C. 
Sec. 6323 even after a notice of tax lien has been filed. We 
support the proposal. The purpose of the special treatment for 
such purchasers is to facilitate the flow of these goods in 
commerce. Debtors would receive a windfall if section 545(2) of 
the Code applied to tax liens.

Section 514. Income tax returns by tax authorities

    Section 514 of H.R. 3150 would concern the exception from 
discharge for taxes relating to unfiled tax returns when 
substitute tax returns are prepared by taxing authorities. For 
tax purposes, a tax return prepared by the IRS is not 
considered a tax return, unless it is signed by the taxpayer. 
The proposal would confirm that a substitute return prepared by 
the IRS is not a return for discharge purposes, unless it is 
signed by thetaxpayer. This section further provides, however, 
that a written stipulation to a judgment entered in a nonbankruptcy 
court would be treated in the same manner and have the same effect as a 
signed tax return. We are uneasy at the prospect of having different 
definitions of ``tax returns'' for Internal Revenue Code and Bankruptcy 
Code purposes. Furthermore, stipulation to a judgment represents a 
level of cooperation much different in degree and kind than the signing 
under penalty of perjury of a return prepared by a taxing authority. 
Thus, we do not support the provision equating a stipulated judgment 
with a signed return.

Section 515. The discharge of the estate's liability for unpaid taxes

    Section 515 of H.R. 3150 would absolve the debtor's estate 
of liability for administrative taxes after a request for a 
prompt audit is made in accordance with section 505(b) of the 
Code. Several courts have held that while a trustee, the 
debtor, and a successor to the debtor are discharged from 
liability for administrative period taxes after a prompt audit 
request is made, the estate remains liable for any taxes 
uncovered by a taxing authority in a subsequent audit. We 
oppose the proposal to extinguish the liability of the estate. 
Section 505(b) already protects the trustee, the debtor and the 
debtor's successors from liability, and extinguishing the 
liability of the estate for taxes that it should have reported 
on its return will result in an unjust windfall for other 
creditors.

Section 516. Requirement to file tax returns to confirm chapter 13 
        plans

    Section 515 of H.R. 3150 would require chapter 13 debtors 
to file all tax returns due for six years prior to the petition 
date, and implements a proposal adopted by the National 
Bankruptcy Review Commission. Tax authorities are placed at a 
severe disadvantage in filing timely proofs of claim when a 
chapter 13 debtor is delinquent in filing prepetition tax 
returns. We support this proposal. It is ironic and troubling 
that individuals who invoke the protections of government 
against their creditors, defy their government in failing to 
discharge their tax return filing responsibilities. We submit 
that chapter 13 plans of debtors who continue to disregard 
their tax return filing obligations should not be confirmed.

Section 518. Setoff of tax refunds

    Section 518 of H.R. 3150 would create an exception to the 
automatic stay allowing taxing authorities to set off 
prepetition tax refunds against prepetition tax claims. We 
support this proposal.
    Even when consumer bankruptcy filings were a mere 300,000 
cases a year, the cost to the government of filing lift stay 
motions for relief from the automatic stay in order to effect a 
setoff of tax refunds would have been significant. With 
consumer filings now surpassing 1.3 million cases a year, the 
cost of filing such lift stay motions would be prohibitive. 
Given the number of cases in which refund offset arise, the 
solution is to permit taxing authorities to use the 
administrative processes that apply outside of bankruptcy 
rather than dealing with the issue on a case-by-case basis 
using a litigation model.
    We look forward to working with the Committee as it 
considers these and other issues raised by H.R. 3150. The 
Office of Management and Budget advises that it has no 
objection to the submission of this letter from the standpoint 
of the Administration's program.
            Sincerely,
                                            Ann M. Harkins,
                                 Acting Assistant Attorney General.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                      TITLE 11--UNITED STATES CODE

Chap.                                                               Sec.
      General Provisions.............................................101
     * * * * * * *
601  Ancillary and Other Cross-Border Cases...........................

           *       *       *       *       *       *       *


CHAPTER 1--GENERAL PROVISIONS

           *       *       *       *       *       *       *


Sec. 101. Definitions

  In this title--
          (1) * * *

           *       *       *       *       *       *       *

          (3) ``assessment''--
                  (A) for purposes of State and local taxes, 
                means that point in time when all actions 
                required have been taken so that thereafter a 
                taxing authority may commence an action to 
                collect the tax, and
                  (B) for Federal tax purposes has the meaning 
                given such term in the Internal Revenue Code of 
                1986;
        and ``assessed'' and ``assessable'' shall be 
        interpreted in light of the definition of assessment in 
        this paragraph;
          (3A) ``assisted person'' means any person whose debts 
        consist primarily of consumer debts and whose non-
        exempt assets are less than $150,000;
          (4) ``attorney'' means attorney, professional law 
        association, corporation, or partnership, authorized 
        under applicable law to practice law;
          (4A) ``bankruptcy assistance'' means any goods or 
        services sold or otherwise provided to an assisted 
        person with the express or implied purpose of providing 
        information, advice, counsel, document preparation or 
        filing, or attendance at a creditors' meeting or 
        appearing in a proceeding on behalf of another or 
        providing legal representation with respect to a 
        proceeding under this title;

           *       *       *       *       *       *       *

          (10) ``creditor'' means--
                  (A) entity that has a claim against the 
                debtor that arose at the time of or before the 
                order for relief concerning the debtor;
                  (B) entity that has a claim against the 
                estate of a kind specified in section 348(d), 
                502(f), 502(g), 502(h) or 502(i) of this title; 
                or
                  (C) entity that has a community claim;
          (10A) ``current monthly total income'' means the 
        average monthly income from all sources derived which 
        the debtor, or in a joint case, the debtor and the 
        debtor's spouse, receive without regard to whether it 
        is taxable income, in the six months preceding the date 
        of determination, and includes any amount paid by 
        anyone other than the debtor or, in a joint case, the 
        debtor and the debtor's spouse on a regular basis to 
        the household expenses of the debtor or the debtor's 
        dependents and, in a joint case, the debtor's spouse if 
        not otherwise a dependent;

           *       *       *       *       *       *       *

          (12A) ``debt for child support'' means a debt of a 
        kind specified in section 523(a)(5) of this title for 
        maintenance or support of a child of the debtor;
          (12B) ``debt relief counselling agency'' means any 
        person who provides any bankruptcy assistance to an 
        assisted person in return for the payment of money or 
        other valuable consideration, or who is a bankruptcy 
        petition preparer pursuant to section 110 of this 
        title, but does not include any person that is any of 
        the following or an officer, director, employee or 
        agent thereof--
                  (A) any nonprofit organization which is 
                exempt from taxation under section 501(c)(3) of 
                the Internal Revenue Code of 1986;
                  (B) any creditor of the person to the extent 
                the creditor is assisting the person to 
                restructure any debt owed by the person to the 
                creditor; or
                  (C) any depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) 
                or any Federal credit union or State credit 
                union (as those terms are defined in section 
                101 of the Federal Credit Union Act), or any 
                affiliate or subsidiary of such a depository 
                institution or credit union;
          (13) ``debtor'' means person or municipality 
        concerning which a case under this title has been 
        commenced;
          (13A) ``debtor's principal residence'' means a 
        residential structure including incidental property 
        when the structure contains 1 to 4 units, whether or 
        not that structure is attached to real property, and 
        includes, without limitation, an individual condominium 
        or cooperative unit or mobile or manufactured home or 
        trailer;
          (13B) ``incidental property'' means property 
        incidental to such residence including, without 
        limitation, property commonly conveyed with a principal 
        residence where the real estate is located, window 
        treatments, carpets, appliances and equipment located 
        in the residence, and easements, appurtenances, 
        fixtures, rents, royalties, mineral rights, oil and gas 
        rights, escrow funds and insurance proceeds;
          [(14) ``disinterested person'' means person that--
                  [(A) is not a creditor, an equity security 
                holder, or an insider;
                  [(B) is not and was not an investment banker 
                for any outstanding security of the debtor;
                  [(C) has not been, within three years before 
                the date of the filing of the petition, an 
                investment banker for a security of the debtor, 
                or an attorney for such an investment banker in 
                connection with the offer, sale, or issuance of 
                a security of the debtor;
                  [(D) is not and was not, within two years 
                before the date of the filing of the petition, 
                a director, officer, or employee of the debtor 
                or of an investment banker specified in 
                subparagraph (B) or (C) of this paragraph; and
                  [(E) 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 an investment banker 
                specified in subparagraph (B) or (C) of this 
                paragraph, or for any other reason;]
          (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;

           *       *       *       *       *       *       *

          [(23) ``foreign proceeding'' means proceeding, 
        whether judicial or administrative and whether or not 
        under bankruptcy law, in a foreign country in which the 
        debtor's domicile, residence, principal place of 
        business, or principal assets were located at the 
        commencement of such proceeding, for the purpose of 
        liquidating an estate, adjusting debts by composition, 
        extension, or discharge, or effecting a reorganization;
          [(24) ''foreign representative'' means duly selected 
        trustee, administrator, or other representative of an 
        estate in a foreign proceeding;]
          (23) ``foreign proceeding'' means a collective 
        judicial or administrative proceeding in a foreign 
        state, including an interim proceeding, pursuant to a 
        law relating to insolvency in which proceeding the 
        assets and affairs of the debtor are subject to control 
        or supervision by a foreign court, for the purpose of 
        reorganization or liquidation;
          (24) ``foreign representative'' means a person or 
        body, including a person or body appointed on an 
        interim basis, authorized in a foreign proceeding to 
        administer the reorganization or the liquidation of the 
        debtor's assets or affairs or to act as a 
        representative of the foreign proceeding;

           *       *       *       *       *       *       *

          (27) ``governmental unit'' means United States; 
        State; Commonwealth; District; Territory; municipality; 
        foreign state; department, agency, or instrumentality 
        of the United States (but not a United States trustee 
        while serving as a trustee in a case under this title), 
        a State, a Commonwealth, a District, a Territory, a 
        municipality, or a foreign state; or other foreign or 
        domestic government;
          (27A) ``household goods'' has the meaning given such 
        term in the Trade Regulation Rule on Credit Practices 
        promulgated by the Federal Trade Commission (16 C.F.R. 
        444.1(i)), as in effect on the effective date of this 
        paragraph;

           *       *       *       *       *       *       *

          (39A) ``monthly net income'' means the amount 
        determined by taking the current monthly total income 
        of the debtor less--
                  (A) the expense allowances under the 
                applicable National Standards, Local Standards 
                and Other Necessary Expenses allowance 
                (excluding payments for debts) for the debtor, 
                the debtor's dependents, and, in a joint case, 
                the debtor's spouse if not otherwise a 
                dependent, in the area in which the debtor 
                resides as determined under the Internal 
                Revenue Service financial analysis for expenses 
                in effect as of the date it is being 
                determined;
                  (B) the average monthly payment on account of 
                secured creditors, which shall be calculated as 
                of the date of determination as the total of 
                all amounts then remaining to be paid on 
                account of secured claims pursuant to the plan 
                less any of such amounts to be paid from 
                sources other than the debtor's income, divided 
                by the total months remaining of the plan; and
                  (C) the average monthly payment on account of 
                priority creditors, which shall be calculated 
                as the total of all amounts then remaining to 
                be paid on account of priority claims pursuant 
                to the plan less any of such amounts to be paid 
                from sources other than the debtor's income, 
                divided by the total months remaining of the 
                plan;
          (40) ``municipality'' means political subdivision or 
        public agency or instrumentality of a State;
          (40A) ``national median family income'' and 
        ``national median household income for 1 earner'' shall 
        mean during any calendar year, the national median 
        family income and the national median household income 
        for 1 earner which the Bureau of the Census has 
        reported as of January 1 of such calendar year for the 
        most recent previous calendar year;

           *       *       *       *       *       *       *

          (48A) ``securities self regulatory organization'' 
        means either a securities association registered with 
        the Securities and Exchange Commission pursuant to 
        section 15A of the Securities Exchange Act of 1934 or a 
        national securities exchange registered with the 
        Securities and Exchange Commission pursuant to section 
        6 of the Securities Exchange Act of 1934;

           *       *       *       *       *       *       *

          [(51B) ``single asset real estate'' means real 
        property constituting a single property or project, 
        other than residential real property with fewer than 4 
        residential units, which generates substantially all of 
        the gross income of a debtor and on which no 
        substantial business is being conducted by a debtor 
        other than the business of operating the real property 
        and activities incidental thereto having aggregate 
        noncontingent, liquidated secured debts in an amount no 
        more than $4,000,000;
          [(51C) ``small business'' means a person engaged in 
        commercial or business activities (but does not include 
        a person whose primary activity is the business of 
        owning or operating real property and activities 
        incidental thereto) whose aggregate noncontingent 
        liquidated secured and unsecured debts as of the date 
        of the petition do not exceed $2,000,000;]
          (51B) ``single asset real estate'' means undeveloped 
        real property or other real property constituting a 
        single property or project, other than residential real 
        property with fewer than 4 residential units, on which 
        is located a single development or project which 
        property or project generates substantially all of the 
        gross income of a debtor and on which no substantial 
        business is being conducted by a debtor, or by a 
        commonly controlled group of entities all of which are 
        concurrently debtors in a case under chapter 11 of this 
        title, other than the business of operating the real 
        property and activities incidental thereto;
          (51C) ``small business case'' means a case filed 
        under chapter 11 of this title in which the debtor is a 
        small business debtor;
          (51D) ``small business debtor'' means--
                  (A) a person (including affiliates of such 
                person that are also debtors under this title) 
                that has aggregate noncontingent, liquidated 
                secured and unsecured debts as of the date of 
                the petition or the order for relief in an 
                amount not more than $5,000,000 (excluding 
                debts owed to 1 or more affiliates or 
                insiders); or
                  (B) a debtor of the kind described in 
                paragraph (51B) but without regard to the 
                amount of such debtor's debts;
        except that if a group of affiliated debtors has 
        aggregate noncontingent liquidated secured and 
        unsecured debts greater than $5,000,000 (excluding debt 
        owed to 1 or more affiliates or insiders), then no 
        member of such group is a small business debtor;

           *       *       *       *       *       *       *


Sec. 103. Applicability of chapters

  (a) Except as provided in section 1161 of this title, 
chapters 1, 3, and 5 of this title apply in a case under 
chapter 7, 11, 12, or 13 of this title and this chapter, 
sections 307, 555 through 557, 559, and 560 apply in a case 
under chapter 6.

           *       *       *       *       *       *       *

  (j) Chapter 6 applies only in a case under that chapter, 
except that section 605 applies to trustees and to any other 
entity authorized by the court, including an examiner, under 
chapters 7, 11, and 12, to debtors in possession under chapters 
11 and 12, and to debtors or trustees under chapters 9 and 13 
who are authorized to act under section 605.

Sec. 104. Adjustment of dollar amounts

  (a) * * *
  (b)(1) On April 1, 1998, and at each 3-year interval ending 
on April 1 thereafter, each dollar amount in effect under 
sections 101(3), [109(e)] subsections (b), (e), and (h) of 
section 109, 303(b), 507(a), 522(d), [and 523(a)(2)(C)] 
523(a)(2)(C), and 1325(b)(1) immediately before such April 1 
shall be adjusted--
          (A) * * *

           *       *       *       *       *       *       *


Sec. 105. Power of court

  (a) * * *

           *       *       *       *       *       *       *

  (d) The court, on its own motion or on the request of a party 
in interest[, may]--
          [(1) hold a status conference regarding any case or 
        proceeding under this title after notice to the parties 
        in interest; and]
          (1) shall hold such status conferences as are 
        necessary to further the expeditious and economical 
        resolution of the case; and
          (2) [unless inconsistent with another provision of 
        this title or with applicable Federal Rules of 
        Bankruptcy Procedure,] may issue an order at any such 
        conference prescribing such limitations and conditions 
        as the court deems appropriate to ensure that the case 
        is handled expeditiously and economically, including an 
        order that--
                  (A) sets the date by which the trustee must 
                assume or reject an executory contract or 
                unexpired lease; or
                  (B) in a case under chapter 11 of this 
                title--
                          (i) * * *

           *       *       *       *       *       *       *

                          (vi) provides that the hearing on 
                        approval of the disclosure statement 
                        may be combined with the hearing on 
                        confirmation of the plan[.]; and
          (3) in a small business case, not extend the time 
        periods specified in sections 1121(e) and 1129(e) of 
        this title except as provided in section 1121(e)(3) of 
        this title.

           *       *       *       *       *       *       *


Sec. 109. Who may be a debtor

  (a) * * *
  (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
          (1) a railroad;
          (2) a domestic insurance company, bank, savings bank, 
        cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        small business investment company licensed by the Small 
        Business Administration under [subsection (c) or (d) 
        of] section 301 of the Small Business Investment Act of 
        1958, credit union, or industrial bank or similar 
        institution which is an insured bank as defined in 
        section 3(h) of the Federal Deposit Insurance Act; [or]
          (3) a foreign insurance company, bank, savings bank, 
        cooperative bank, savings and loan association, 
        building and loan association, homestead association, 
        or credit union, engaged in such business in the United 
        States[.]; or
          (4) an individual or, in a joint case, an individual 
        and such individual's spouse, who have income available 
        to pay creditors as determined under subsection (h).

           *       *       *       *       *       *       *

  (h)(1) An individual or, in a joint case, an individual and 
such individual's spouse, have income available to pay 
creditors if the individual, or, in a joint case, the 
individual and the individual's spouse combined, as of the date 
of the order for relief, have--
          (A) current monthly total income of not less than the 
        highest national median family income reported for a 
        family of equal or lesser size or, in the case of a 
        household of 1 person, of not less than the national 
        median household income for 1 earner, as of the date of 
        the order for relief;
          (B) projected monthly net income greater than $50; 
        and
          (C) projected monthly net income sufficient to repay 
        twenty percent or more of unsecured nonpriority claims 
        during a five-year repayment plan.
  (2) Projected monthly net income shall be sufficient under 
paragraph (1)(C) if, when multiplied by 60 months, it equals or 
exceeds 20 percent of the total amount scheduled as payable to 
unsecured nonpriority creditors.
  (3) ``Projected monthly net income'' means current monthly 
total income less--
          (A) the expense allowances under the applicable 
        National Standards, Local Standards and Other Necessary 
        Expenses allowance (excluding payments for debts) for 
        the debtor, the debtor's dependents, and, in a joint 
        case, the debtor's spouse if not otherwise a dependent, 
        in the area in which the debtor resides as determined 
        under the Internal Revenue Service financial analysis 
        for expenses in effect as of the date of the order for 
        relief;
          (B) the average monthly payment on account of secured 
        creditors, which shall be calculated as the total of 
        all amounts scheduled as contractually payable to 
        secured creditors in each month of the 60 months 
        following the date of the petition by the debtor, or, 
        in a joint case, by the debtor and the debtor's spouse 
        combined, and dividing that total by 60 months; and
          (C) the average monthly payment on account of 
        priority creditors, which shall be calculated as the 
        total amount of debts entitled to priority, reasonably 
        estimated by the debtor as of the date of the petition, 
        and dividing that total by 60 months.
  (4) In the event that the debtor establishes extraordinary 
circumstances that require allowance for additional expenses or 
adjustment of current monthly income, projected monthly net 
income for purposes of this section shall be the amount 
calculated under paragraph (3) less such additional expenses or 
income adjustment as such extraordinary circumstances require.
          (A) This paragraph shall not apply unless the debtor 
        files with the petition--
                  (i) a written statement that this paragraph 
                applies in determining the debtor's eligibility 
                for relief under chapter 7 of this title;
                  (ii) if adjustment of current monthly income 
                is claimed, an explanation of what income has 
                been lost in the 6 months preceding the date of 
                determination and any replacement income that 
                has been offered or secured, or is expected, 
                and an itemization of such lost and replacement 
                income;
                  (iii) if allowance for additional expenses is 
                claimed, a list itemizing each additional 
                expense which exceeds the expenses allowances 
                provided under paragraph (3)(A);
                  (iv) a detailed description of the 
                extraordinary circumstances that explain why 
                each loss of income described under clause (ii) 
                will not be replaced or each additional expense 
                itemized under clause (iii) requires allowance; 
                and
                  (v) a sworn statement signed by the debtor 
                and, if the debtor is represented by counsel, 
                by the debtor's attorney, that the information 
                required under this paragraph is true and 
                correct.
          (B) Until the trustee or any party in interest 
        objects to the debtor's statement that this paragraph 
        applies and the court rejects or modifies the debtor's 
        statement, the projected monthly net income in the 
        debtor's statement shall be the projected monthly net 
        income for the purposes of this section. If an 
        objection is filed with the court within 60 days after 
        the debtor has provided all the information required 
        under subsections (a)(1) and (c)(1)(A) of section 521, 
        the court, after notice and hearing, shall determine 
        whether such extraordinary circumstances exist and 
        shall establish the amount of the additional expense 
        allowance, if any. The burden of proving such 
        extraordinary circumstances shall be on the debtor.
  (i)(1) Subject to paragraph (2) and notwithstanding any other 
provision of this section, an individual may not be a debtor 
under this title unless such individual has, during the 90-day 
period preceding the date of filing of the petition, made a 
good-faith attempt to create a debt repayment plan outside the 
judicial system for bankruptcy law (commonly referred to as the 
``bankruptcy system''), through a credit counseling program 
offered through credit counseling services described in section 
342(b)(2) that has been approved by--
          (A) the United States trustee; or
          (B) the bankruptcy administrator for the district in 
        which the petition is filed.
  (2) The United States trustee or bankruptcy administrator may 
not approve a program for inclusion on the list under paragraph 
(1) unless the counseling service offering the program offers 
the program without charge, or at an appropriately reduced 
charge, if payment of the regular charge would impose a 
hardship on the debtor or the debtor's dependents.
  (3) The United States trustee or bankruptcy administrator 
shall designate any geographical areas in the United States 
trustee region or judicial district, as the case may be, as to 
which the United States trustee or bankruptcy administrator has 
determined that credit counseling services needed to comply 
with this subsection are not available or are too 
geographically remote for debtors residing within the 
designated geographical areas. The clerk of the bankruptcy 
court for each judicial district shall maintain a list of the 
designated areas within the district.
  (4) The clerk shall exclude a particular counseling service 
from the list maintained under section 342(b)(2) of this title 
if the United States trustee or bankruptcy administrator orders 
that the counseling service not be included in the list.
  (5) The court may waive the requirement specified in 
paragraph (1) if--
          (A) no credit counseling services are available as 
        designated under paragraphs (2) and (3);
          (B) the providers of credit counseling services 
        available in the district are unable or unwilling to 
        provide such services to the debtor in a timely manner; 
        or
          (C) foreclosure, garnishment, attachment, eviction, 
        levy of execution, or similar claim enforcement 
        procedure that would have deprived the individual of 
        property had commenced before the debtor could complete 
        a good faith attempt to create such a repayment plan.
  (6) A debtor who is subject to the exemption under paragraph 
(5)(C) shall be required to make a good-faith attempt to create 
a debt repayment plan outside the judicial system in the manner 
prescribed in paragraph (1) during the 30-day period beginning 
on the date of filing of the petition of that debtor.
  (7) A debtor shall be exempted from the bad faith presumption 
for repeat filing under section 362(c) of title 11 if the case 
is dismissed due to the creation of a debt repayment plan.
  (8) Only the United States trustee may make a motion for 
dismissal on the ground that the debtor did not comply with 
this subsection.

           *       *       *       *       *       *       *


Sec. 111. Adjustment to monthly net income

  (a) Monthly net income for purposes of a plan under chapter 
13 of this title shall be adjusted under this section when the 
debtor's extraordinary circumstances require adjustment as 
determined herein. Under this section, monthly net income shall 
be determined by subtracting therefrom such loss of income or 
additional expenses as the debtor's extraordinary circumstances 
require as determined under this section. This section shall 
not apply unless--
          (1) the debtor files with the court and, in a case in 
        which a trustee has been appointed, with the trustee at 
        the times required in subsection (b) a statement of 
        extraordinary circumstances as follows--
                  (A) a written statement that this section 
                applies in determining the debtor's monthly net 
                income;
                  (B) if applicable, an explanation of what 
                income has been lost in the six months 
                preceding the date of determination and any 
                replacement income which has been secured or is 
                expected, and an itemization of such lost and 
                replacement income;
                  (C) if applicable, a list itemizing each 
                additional expense which exceeds the expense 
                allowance provided in determining monthly net 
                income under section 101(39A);
                  (D) if applicable, a detailed description of 
                the extraordinary circumstances which explains 
                why each of the additional expenses itemized 
                under paragraph (C) requires allowance; and
                  (E) a sworn statement signed by the debtor 
                and, if the debtor is represented by counsel, 
                by the debtor's attorney, of the amount of 
                monthly net income that the debtor has pursuant 
                to this subsection and that the information 
                provided under this subsection is true and 
                correct; and
          (2) until the trustee or any party in interest 
        objects to the debtor's request that this section be 
        applied and the court rejects or modifies the debtor's 
        statement, the monthly net income in the debtor's 
        statement shall be the monthly net income for the 
        purposes of the debtor's plan. If an objection is filed 
        with the court within the times provided in subsection 
        (b), the court, after notice and hearing, shall 
        determine whether such extraordinary circumstances 
        asserted by the debtor exist and establish the amount 
        of the loss of income and such additional expense 
        allowance, if any. The burden of proving such 
        extraordinary circumstances and the amount of the loss 
        of income and the additional expense allowance, if any, 
        shall be on the debtor. The court may award to the 
        party that prevails with respect to such objection a 
        reasonable attorney's fee and costs incurred by the 
        prevailing party in connection with such objection if 
        the court finds that the position of the nonprevailing 
        party was not substantially justified, but the court 
        shall not award such fee or such costs if special 
        circumstances make the award unjust.
  (b) For the purposes of chapter 13 of this title, the 
statement of extraordinary circumstances shall be filed with 
the court and served on the trustee on or before 45 days before 
each anniversary of the confirmation of the plan in order to be 
applicable during the next year of the plan. Any objection 
thereto shall be filed 30 days after the statement is filed 
with the trustee. Whenever a statement is timely filed with the 
trustee, the trustee shall give notice to creditors that such 
statement has been filed and the amount of monthly net income 
stated therein within 15 days of receipt of the statement.
  (c) For purposes of subsection (a), charitable contributions 
(that meet the definition of ``charitable contribution'' under 
section 548(d)(3)) to any qualified religious or charitable 
entity or organization (defined in section 548(d)(4)), but not 
to exceed 15 percent of the debtor's gross income for the year 
in which such contributions are made, shall be considered to be 
additional expenses of the debtor required by extraordinary 
circumstances.

           *       *       *       *       *       *       *


                     CHAPTER 3--CASE ADMINISTRATION

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec.
301.  Voluntary cases.
     * * * * * * *
308.  Debtor reporting requirements.

           *       *       *       *       *       *       *


                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec. 301. Voluntary cases

  (a) A voluntary case under a chapter of this title is 
commenced by the filing with the bankruptcy court of a petition 
under such chapter by an entity that may be a debtor under such 
chapter. [The commencement of a voluntary case under a chapter 
of this title constitutes an order for relief under such 
chapter.]
  (b) The commencement of a voluntary case under a chapter of 
this title constitutes an order for relief under such chapter.

           *       *       *       *       *       *       *


Sec. 304. Cases ancillary to foreign proceedings

  (a) * * *
  (b) Subject to the [provisions of subsection (c)] subsections 
(c) and (d) of this section, if a party in interest does not 
timely controvert the petition, or after trial, the court may--
          (1) * * *

           *       *       *       *       *       *       *

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

Sec. 305. Abstention

  (a) * * *

           *       *       *       *       *       *       *

  (c) An order under subsection (a) of this section dismissing 
a case or suspending all proceedings in a case, or a decision 
not so to dismiss or suspend, is not reviewable by appeal or 
otherwise by the court of appeals under section [158(d), 1291, 
or 1292] 1291, 1292, or 1293 of title 28 or by the Supreme 
Court of the United States under section 1254 of title 28.

           *       *       *       *       *       *       *


Sec. 308. Debtor reporting requirements

  A small business debtor shall file periodic financial and 
other reports containing information including--
          (1) the debtor's profitability, that is, 
        approximately how much money the debtor has been 
        earning or losing during current and recent fiscal 
        periods;
          (2) reasonable approximations of the debtor's 
        projected cash receipts and cash disbursements over a 
        reasonable period;
          (3) comparisons of actual cash receipts and 
        disbursements with projections in prior reports;
          (4) whether the debtor is--
                  (A) in compliance in all material respects 
                with postpetition requirements imposed by this 
                title and the Federal Rules of Bankruptcy 
                Procedure; and
                  (B) timely filing tax returns and paying 
                taxes and other administrative claims when due, 
                and, if not, what the failures are and how, at 
                what cost, and when the debtor intends to 
                remedy such failures; and
          (5) such other matters as are in the best interests 
        of the debtor and creditors, and in the public interest 
        in fair and efficient procedures under chapter 11 of 
        this title.

           *       *       *       *       *       *       *


SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *


Sec. 330. Compensation of officers

  (a) * * *

           *       *       *       *       *       *       *

  (e) The court may not appoint any person to examine any 
request for compensation or reimbursement payable under this 
section.

           *       *       *       *       *       *       *


                     SUBCHAPTER III--ADMINISTRATION

Sec. 341. Meetings of creditors and equity security holders

  (a) Within a reasonable time after the order for relief in a 
case under this title, the United States trustee shall convene 
and preside at a meeting of creditors. If the debtor is an 
individual in a voluntary case under chapter 7, 11, or 13, the 
meeting of creditors shall not be convened earlier than 60 days 
(or later than 90 days) after the date of the order for relief, 
unless the court, after notice and hearing, determines unusual 
circumstances justify an earlier meeting.

           *       *       *       *       *       *       *

  (c) The court may not preside at, and may not attend, any 
meeting under this section including any final meeting of 
creditors. Notwithstanding any local court rule, provision of a 
State constitution, any other State or Federal nonbankruptcy 
law, or other requirement that representation at the meeting of 
creditors under subsection (a) be by an attorney, a creditor 
holding a consumer debt or its representatives (which 
representatives may include an entity or an employee of an 
entity and may be a representative for more than 1 creditor) 
shall be permitted to appear at and participate in the meeting 
of creditors in a case under chapter 7 or 13 either alone or in 
conjunction with an attorney for the creditor. Nothing in this 
subsection shall be construed to require any creditor to be 
represented by an attorney at any meeting of creditors.

           *       *       *       *       *       *       *

  (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. 342. Notice

  (a) * * *
  [(b) Prior to the commencement of a case under this title by 
an individual whose debts are primarily consumer debts, the 
clerk shall give written notice to such individual that 
indicates each chapter of this title under which such 
individual may proceed.]
  (b)(1) Before the commencement of a case under this title by 
an individual whose debts are primarily consumer debts, the 
individual shall be given or obtain (as required to be 
certified under section 521(a)(1)(B)(viii)) a written notice 
that is prescribed by the United States trustee for the 
district in which the petition is filed pursuant to section 586 
of title 28 and that contains the following:
          (A) A brief description of chapters 7, 11, 12 and 13 
        of this title and the general purpose, benefits, and 
        costs of proceeding under each of such chapters.
          (B) A brief description of services that may be 
        available to the individual from an independent 
        nonprofit debt counselling service.
          (C) The name, address, and telephone number of each 
        nonprofit debt counselling service (if any)--
                  (i) with an office located in the district in 
                which the petition is filed; or
                  (ii) that offers toll-free telephone 
                communication to debtors in such district.
  (2) Any such nonprofit debt counselling service that 
registers with the clerk of the bankruptcy court on or before 
December 10 of the preceding year shall be included in such 
list unless the chief bankruptcy judge of the district, after 
notice to the debt counselling service and the United States 
trustee and opportunity for a hearing, for good cause, orders 
that such debt counselling service shall not be so listed.
  (3) The clerk shall make such notice available to individuals 
whose debts are primarily consumer debts.
  (c) If notice is required to be given by the debtor to a 
creditor under this title, any rule, any applicable law, or any 
order of the court, such notice shall contain the name, 
address, and taxpayer identification number of the debtor[, but 
the failure of such notice to contain such information shall 
not invalidate the legal effect of such notice]. If the credit 
agreement between the debtor and the creditor or the last 
communication before the filing of the petition in a voluntary 
case from the creditor to a debtor who is an individual states 
an account number of the debtor which is the current account 
number of the debtor with respect to any debt held by the 
creditor against the debtor, the debtor shall include such 
account number in any notice to the creditor required to be 
given under this title. If the creditor has specified to the 
debtor an address at which the creditor wishes to receive 
correspondence regarding the debtor's account, any notice to 
the creditor required to be given by the debtor under this 
title shall be given at such address. For the purposes of this 
section, ``notice'' shall include, but shall not be limited to, 
any correspondence from the debtor to the creditor after the 
commencement of the case, any statement of the debtor's 
intention under section 521(a)(2) of this title, notice of the 
commencement of any proceeding in the case to which the 
creditor is a party, and any notice of the hearing under 
section 1324.
  (d) At any time, a creditor in a case of an individual debtor 
under chapter 7 or 13 may file with the court and serve on the 
debtor a notice of the address to be used to notify the 
creditor in that case. Five days after receipt of such notice, 
if the court or the debtor is required to give the creditor 
notice, such notice shall be given at that address.
  (e) An entity may file with the court a notice stating its 
address for notice in cases under chapters 7 and 13. After 30 
days following the filing of such notice, any notice in any 
case filed under chapter 7 or 13 given by the court shall be to 
that address unless specific notice is given under subsection 
(d) with respect to a particular case.
  (f) Notice given to a creditor other than as provided in this 
section shall not be effective notice until it has been brought 
to the attention of the creditor. If the creditor has 
designated a person or department to be responsible for 
receiving notices concerning bankruptcy cases and has 
established reasonable procedures so that bankruptcy notices 
received by the creditor will be delivered to such department 
or person, notice will not be brought to the attention of the 
creditor until received by such person or department. No 
sanction under section 362(h) of this title or any other 
sanction which a court may impose on account of violations of 
the stay under section 362(a) of this title or failure to 
comply with section 542 or 543 of this title may be imposed on 
any action of the creditor unless the action takes place after 
the creditor has received notice of the commencement of the 
case effective under this section.
  (g) If a debtor lists a governmental unit as a creditor in a 
list or schedule, any notice required to be given by the debtor 
under this title, any rule, any applicable law, or any order of 
the court, shall identify the department, agency, or 
instrumentality through which the debtor is indebted. The 
debtor shall identify (with information such as a taxpayer 
identification number, loan, account or contract number, or 
real estate parcel number, where applicable), and describe the 
underlying basis for the governmental unit's claim. If the 
debtor's liability to a governmental unit arises from a debt or 
obligation owed or incurred by another individual, entity, or 
organization, or under a different name, the debtor shall 
identify such individual, entity, organization, or name.
  (h) The clerk shall keep and update quarterly, in the form 
and manner as the Director of the Administrative Office of the 
United States Courts prescribes, and make available to debtors, 
a register in which a governmental unit may designate a safe 
harbor mailing address for service of notice in cases pending 
in the district. A governmental unit may file a statement with 
the clerk designating a safe harbor address to which notices 
are to be sent, unless such governmental unit files a notice of 
change of address.
  (i)(1) A notice that does not comply with subsections (d) and 
(e) shall have no effect unless the debtor demonstrates, by 
clear and convincing evidence, that timely notice was given in 
a manner reasonably calculated to satisfy the requirements of 
this section was given, and that--
          (A) either the notice was timely sent to the safe 
        harbor address provided in the register maintained by 
        the clerk of the district in which the case was pending 
        for such purposes; or
          (B) no safe harbor address was provided in such list 
        for the governmental unit and that an officer of the 
        governmental unit who is responsible for the matter or 
        claim had actual knowledge of the case in sufficient 
        time to act.
  (2) No sanction under section 362(h) of this title or any 
other sanction which a court may impose on account of 
violations of the stay under section 362(a) of this title or 
failure to comply with section 542 or 543 of this title may be 
imposed unless the action takes place after notice of the 
commencement of the case as required by this section has been 
received.

           *       *       *       *       *       *       *


Sec. 348. Effect of conversion

  (a) * * *

           *       *       *       *       *       *       *

  (f)(1) Except as provided in paragraph (2), when a case under 
chapter 13 of this title is converted to a case under another 
chapter under this title--
          (A) property of the estate in the converted case 
        shall consist of property of the estate, as of the date 
        of filing of the petition, that remains in the 
        possession of or is under the control of the debtor on 
        the date of conversion; [and]
          (B) valuations of property and of allowed secured 
        claims in the chapter 13 case shall apply [in the 
        converted case, with allowed secured claims] only in a 
        case converted to chapter 11 or 12 but not in one 
        converted to chapter 7, with allowed secured claims in 
        cases under chapters 11 and 12 reduced to the extent 
        that they have been paid in accordance with the chapter 
        13 plan[.]; and
          (C) with respect to cases converted from chapter 13, 
        the claim of any creditor holding security as of the 
        date of the petition shall continue to be secured by 
        that security unless the full amount of that claim 
        determined under applicable nonbankruptcy law has been 
        paid in full as of the date of conversion, 
        notwithstanding any valuation or determination of the 
        amount of an allowed secured claim made for the 
        purposes of the case under chapter of this title. 
        Unless a prebankruptcy default has been fully cured 
        pursuant to the plan at the time of conversion, in any 
        proceeding under this title or otherwise, the default 
        shall have the effect given under applicable 
        nonbankruptcy law.

           *       *       *       *       *       *       *


SUBCHAPTER IV--ADMINISTRATIVE POWERS

           *       *       *       *       *       *       *


Sec. 362. Automatic stay

  (a) Except as provided in subsection (b) of this section, a 
petition filed under section 301, 302, or 303 of this title, or 
an application filed under section 5(a)(3) of the Securities 
Investor Protection Act of 1970, operates as a stay, applicable 
to all entities, of--
          (1) * * *

           *       *       *       *       *       *       *

          (8) the commencement or continuation of a proceeding 
        before the United States Tax Court concerning the 
        debtor[.], in respect of a tax liability for a taxable 
        period ending before the order for relief.
  (b) The filing of a petition under section 301, 302, or 303 
of this title, or of an application under section 5(a)(3) of 
the Securities Investor Protection Act of 1970, does not 
operate as a stay--
          (1) * * *

           *       *       *       *       *       *       *

          (9) under subsection (a), of--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) a demand for tax returns; [or]
                  (D) the making of an assessment as defined by 
                applicable nonbankruptcy law notwithstanding 
                the definition of an ``assessment'' elsewhere 
                in this title for any tax and issuance of a 
                notice and demand for payment of such an 
                assessment (but any tax lien that would 
                otherwise attach to property of the estate by 
                reason of such an assessment shall not take 
                effect unless such tax is a debt of the debtor 
                that will not be discharged in the case and 
                such property or its proceeds are transferred 
                out of the estate to, or otherwise revested in, 
                the debtor)[.]; or
                  (E) the appeal of a decision by a court or 
                administrative tribunal which determines a tax 
                liability of the debtor without regard to 
                whether such determination was made prepetition 
                or postpetition.
          (10) under subsection (a) of this section, of any act 
        by a lessor to the debtor under a lease of 
        [nonresidential] real property that has terminated by 
        the expiration of the stated term of the lease before 
        the commencement of or during a case under this title 
        to obtain possession of such property;

           *       *       *       *       *       *       *

          (17) under subsection (a) of this section, of the 
        setoff by a swap participant, of any mutual debt and 
        claim under or in connection with any swap agreement 
        that constitutes the setoff of a claim against the 
        debtor for any payment due from the debtor under or in 
        connection with any swap agreement against any payment 
        due to the debtor from the swap participant under or in 
        connection with any swap agreement or against cash, 
        securities, or other property of the debtor held by or 
        due from such swap participant to guarantee, secure or 
        settle any swap agreement; [or]
          (18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax imposed by the District of Columbia, or a 
        political subdivision of a State, if such tax comes due 
        after the filing of the petition[.];
          (19) under subsection (a), until a prepetition 
        default is cured fully in a case under chapter 13 of 
        this title case by actual payment of all arrears as 
        required by the plan, of the postponement, continuation 
        or other similar delay of a prepetition foreclosure 
        proceeding or sale in accordance with applicable 
        nonbankruptcy law, but nothing herein shall imply that 
        such postponement, continuation or other similar delay 
        is a violation of the stay under subsection (a);
          (20) under subsection (a) with respect to the 
        withholding of income pursuant to an order as specified 
        in section 466(b) of the Social Security Act;
          (21) under subsection (a) with respect to the 
        withholding, suspension, or restriction of drivers' 
        licenses, professional and occupational licenses, and 
        recreational licenses pursuant to State law as 
        specified in section 466(a)(15) of the Social Security 
        Act or with respect to the reporting of overdue support 
        owed by an absent parent to any consumer reporting 
        agency as specified in section 466(a)(7) of the Social 
        Security Act;
          (22) under subsection (a) of this section, of the 
        commencement or continuation of an investigation or 
        action by a securities self regulatory organization to 
        enforce such organization's regulatory power; of the 
        enforcement of an order or decision, other than for 
        monetary sanctions, obtained in an action by the 
        securities self regulatory organization to enforce such 
        organization's regulatory power; or of any act taken by 
        the securities self regulatory organization to delist, 
        delete, or refuse to permit quotation of any stock that 
        does not meet applicable regulatory requirements; or
          (23) under subsection (a) of the setoff of an income 
        tax refund, by a governmental unit, in respect of a 
        taxable period which ended before the order for relief 
        against an income tax liability for a taxable period 
        which also ended before the order for relief, unless--
                  (A) prior to such setoff, an action to 
                determine the amount or legality of such tax 
                liability under section 505(a) was commenced; 
                or
                  (B) where the setoff of an income tax refund 
                is not permitted because of a pending action to 
                determine the amount or legality of a tax 
                liability, the governmental unit may hold the 
                refund pending the resolution of the action.
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989.
  (c) Except as provided in subsections (d), [(e), and (f)] 
(e), (f), and (h) of this section--
          (1) the stay of an act against property of the estate 
        under subsection (a) of this section continues until 
        such property is no longer property of the estate; 
        [and]
          (2) the stay of any other act under subsection (a) of 
        this section continues until the earliest of--
                  (A) the time the case is closed;
                  (B) the time the case is dismissed; or
                  (C) if the case is a case under chapter 7 of 
                this title concerning an individual or a case 
                under chapter 9, 11, 12, or 13 of this title, 
                the time a discharge is granted or denied[.]; 
                and
          (3) If a single or joint case is filed by or against 
        an individual debtor under chapter 7, 11, or 13, and if 
        a single or joint case of that debtor was pending 
        within the previous 1-year period but was dismissed, 
        other than a case refiled under a chapter other than 
        chapter 7 after dismissal under section 707(b) of this 
        title, the stay under subsection (a) with respect to 
        any action taken with respect to a debt or property 
        securing such debt or with respect to any lease will 
        terminate with respect to the debtor on the 30th day 
        after the filing of the later case. If a party in 
        interest requests, the court may extend the stay in 
        particular cases as to any or all creditors (subject to 
        such conditions or limitations as the court may then 
        impose) after notice and a hearing completed before the 
        expiration of the 30-day period only if the party in 
        interest demonstrates that the filing of the later case 
        is in good faith as to the creditors to be stayed. A 
        case is presumptively filed not in good faith (but such 
        presumption may be rebutted by clear and convincing 
        evidence to the contrary)--
                  (A) as to all creditors if--
                          (i) more than 1 previous case under 
                        any of chapters 7, 11, or 13 in which 
                        the individual was a debtor was pending 
                        within such 1-year period;
                          (ii) a previous case under any of 
                        chapters 7, 11, or 13 in which the 
                        individual was a debtor was dismissed 
                        within such 1-year period, after the 
                        debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to provide 
                        adequate protection as ordered by the 
                        court, or failed to perform the terms 
                        of a plan confirmed by the court; or
                          (iii) there has not been a 
                        substantial change in the financial or 
                        personal affairs of the debtor since 
                        the dismissal of the next most previous 
                        case under any of chapters 7, 11, or 13 
                        of this title, or any other reason to 
                        conclude that the later case will be 
                        concluded, if a case under chapter 7 of 
                        this title, with a discharge, and if a 
                        chapter 11 or 13 case, a confirmed plan 
                        which will be fully performed;
                  (B) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individual was a debtor if, as of 
                the date of dismissal of that case, that action 
                was still pending or had been resolved by 
                terminating, conditioning, or limiting the stay 
                as to actions of that creditor.
          (4) If a single or joint case is filed by or against 
        an individual debtor under this title, and if 2 or more 
        single or joint cases of that debtor were pending 
        within the previous year but were dismissed, other than 
        a case refiled under section 707(b) of this title, the 
        stay under subsection (a) will not go into effect upon 
        the filing of the later case. On request of a party in 
        interest, the court shall promptly enter an order 
        confirming that no stay is in effect. If a party in 
        interest requests within 30 days of the filing of the 
        later case, the court may order the stay to take effect 
        in the case as to any or all creditors (subject to such 
        conditions or limitations as the court may impose), 
        after notice and hearing, only if the party in interest 
        demonstrates that the filing of the later case is in 
        good faith as to the creditors to be stayed. A stay 
        imposed pursuant to the preceding sentence will be 
        effective on the date of entry of the order allowing 
        the stay to go into effect. A case is presumptively not 
        filed in good faith (but such presumption may be 
        rebutted by clear and convincing evidence to the 
        contrary)--
                  (A) as to all creditors if--
                          (i) 2 or more previous cases under 
                        this title in which the individual was 
                        a debtor were pending within the 1-year 
                        period;
                          (ii) a previous case under this title 
                        in which the individual was a debtor 
                        was dismissed within the time period 
                        stated in this paragraph after the 
                        debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to pay 
                        adequate protection as ordered by the 
                        court, or failed to perform the terms 
                        of a plan confirmed by the court; or
                          (iii) there has not been a 
                        substantial change in the financial or 
                        personal affairs of the debtor since 
                        the dismissal of the next most previous 
                        case under this title, or any other 
                        reason to conclude that the later case 
                        will not be concluded, if a case under 
                        chapter 7, with a discharge, and if a 
                        case under chapter 11 or 13, with a 
                        confirmed plan that will be fully 
                        performed; or
                  (B) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individualwas a debtor if, as of 
the date of dismissal of that case, that action was still pending or 
had been resolved by terminating, conditioning, or limiting the stay as 
to action of that creditor.
          (5)(A) If a request is made for relief from the stay 
        under subsection (a) with respect to real or personal 
        property of any kind, and such request is granted in 
        whole or in part, the court may order in addition that 
        the relief so granted shall be in rem either for a 
        definite period not less than 1 year or indefinitely. 
        After the issuance of such an order, the stay under 
        subsection (a) shall not apply to any property subject 
        to such an in rem order in any case of the debtor under 
        this title. If such an order so provides, such stay 
        shall also not apply in any pending or later-filed case 
        of any entity under this title that claims or has an 
        interest in the subject property other than those 
        entities identified in the court's order.
          (B) The court shall cause any order entered pursuant 
        to this paragraph with respect to real property to be 
        recorded in the applicable real property records, which 
        recording shall constitute notice to all parties having 
        or claiming an interest in such real property for 
        purpose of this section.
          (6) For the purposes of this section, a case is 
        pending from the time of the order for relief until the 
        case is closed.
  (d) On request of a party in interest and after notice and a 
hearing, the court shall grant relief from the stay provided 
under subsection (a) of this section, such as by terminating, 
annulling, modifying, or conditioning such stay--
          (1) * * *
          (2) with respect to a stay of an act against property 
        under subsection (a) of this section, if--
                  (A) the debtor does not have an equity in 
                such property; and
                  (B) such property is not necessary to an 
                effective reorganization; [or]
          (3) with respect to a stay of an act against single 
        asset real estate under subsection (a), by a creditor 
        whose claim is secured by an interest in such real 
        estate, unless, not later than the date that is 90 days 
        after the entry of the order for relief (or such later 
        date as the court may determine for cause by order 
        entered within that 90-day period) or 30 days after the 
        court determines that the debtor is subject to this 
        paragraph, whichever is later--
                  (A) the debtor has filed a plan of 
                reorganization that has a reasonable 
                possibility of being confirmed within a 
                reasonable time; or
                  [(B) the debtor has commenced monthly 
                payments to each creditor whose claim is 
                secured by such real estate (other than a claim 
                secured by a judgment lien or by an unmatured 
                statutory lien), which payments are in an 
                amount equal to interest at a current fair 
                market rate on the value of the creditor's 
                interest in the real estate.]
                  (B) the debtor has commenced monthly payments 
                (which payments may, in the debtor's sole 
                discretion, notwithstanding section 363(c)(2) 
                of this title, be made from rents or other 
                income generated before or after the 
                commencement of the case by or from the 
                property) to each creditor whose claim is 
                secured by such real estate (other than a claim 
                secured by a judgment lien or by an unmatured 
                statutory lien), which payments are in an 
                amount equal to interest at the then-applicable 
                nondefault contract rate of interest on the 
                value of the creditor's interest in the real 
                estate; or
          (4) with respect to a stay of an act against property 
        under subsection (a) of a debtor in a case under 
        chapter 12, by a creditor whose claim is secured by an 
        interest in such property, unless the debtor has filed 
        a plan in accordance with section 1221.
  (e) Thirty days after a request under subsection (d) of this 
section for relief from the stay of any act against property of 
the estate under subsection (a) of this section, such stay is 
terminated with respect to the party in interest making such 
request, unless the court, after notice and a hearing, orders 
such stay continued in effect pending the conclusion of, or as 
a result of, a final hearing and determination under subsection 
(d) of this section. A hearing under this subsection may be a 
preliminary hearing, or may be consolidated with the final 
hearing under subsection (d) of this section. The court shall 
order such stay continued in effect pending the conclusion of 
the final hearing under subsection (d) of this section if there 
is a reasonable likelihood that the party opposing relief from 
such stay will prevail at the conclusion of such final hearing. 
If the hearing under this subsection is a preliminary hearing, 
then such final hearing shall be concluded not later than 
thirty days after the conclusion of such preliminary hearing, 
unless the 30-day period is extended with the consent of the 
parties in interest or for a specific time which the court 
finds is required by compelling circumstances. Notwithstanding 
the foregoing, in the case of an individual filing under 
chapter 7, 11, or 13, the stay under subsection (a) shall 
terminate 60 days after a request under subsection (d) of this 
section, unless--
          (1) a final decision is rendered by the court within 
        such 60-day period; or
          (2) such 60-day period is extended either by 
        agreement of all parties in interest or by the court 
        for a specific time which the court finds is required 
        by compelling circumstances.

           *       *       *       *       *       *       *

  (h) In an individual case pursuant to chapter 7, 11, or 13 
the stay provided by subsection (a) is terminated with respect 
to property of the estate securing in whole or in part a claim, 
or subject to an unexpired lease, if the debtor fails within 
the applicable time set by section 521(a)(2) of this title--
          (1) to file timely any statement of intention 
        required under section 521(a)(2) of this title with 
        respect to that property or to indicate therein that 
        the debtor will either surrender the property or retain 
        it and, if retaining it, either redeem the property 
        pursuant to section 722 of this title, reaffirm the 
        debt it secures pursuant to section 524(c) of this 
        title, or assume the unexpired lease pursuant to 
        section 365(p) of this title if the trustee does not do 
        so, as applicable; or
          (2) to take timely the action specified in that 
        statement of intention, as it may be amended before 
        expiration of the period for taking action, unless the 
        statement of intention specifies reaffirmation and the 
        creditor refuses to reaffirm on the original contract 
        terms;
unless the court determines on the motion of the trustee, and 
after notice and a hearing, that such property is of 
consequential value or benefit to the estate.
  [(h) An] (i)(1) Except as provided in paragraph (2), an 
individual injured by any willful violation of a stay provided 
by this section shall recover actual damages, including costs 
and attorneys' fees, and, in appropriate circumstances, may 
recover punitive damages.
  (2) If such violation is based on an action taken by an 
entity in the good faith belief that subsection (h) applies to 
the debtor, then recovery under paragraph (1) against such 
entity shall be limited to actual damages.
  (j) The filing of a petition under chapter 11 of this title 
operates as a stay of the acts described in subsection (a) only 
in an involuntary case involving no collusion by the debtor 
with creditors and in which the debtor--
          (1) is a debtor in a small business case pending at 
        the time the petition is filed;
          (2) was a debtor in a small business case which was 
        dismissed for any reason by an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered with respect to the petition;
          (3) was a debtor in a small business case in which a 
        plan was confirmed in the 2-year period ending on the 
        date of the order for relief entered with respect to 
        the petition; or
          (4) is an entity that has succeeded to substantially 
        all of the assets or business of a small business 
        debtor described in subparagraph (A), (B), or (C) 
        unless the debtor proves, by a preponderance of the 
        evidence, that the filing of such petition resulted 
        from circumstances beyond the control of the debtor not 
        foreseeable at the time the case then pending was 
        filed; and that it is more likely than not that the 
        court will confirm a feasible plan, but not a 
        liquidating plan, within a reasonable time.

           *       *       *       *       *       *       *


Sec. 365. Executory contracts and unexpired leases

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  [(4) Notwithstanding paragraphs (1) and (2), in a case under 
any chapter of this title, if the trustee does not assume or 
reject an unexpired lease of nonresidential real property under 
which the debtor is the lessee within 60 days after the date of 
the order for relief, or within such additional time as the 
court, for cause, within such 60-day period, fixes, then such 
lease is deemed rejected, and the trustee shall immediately 
surrender such nonresidential real property to the lessor.]
  (4) In a case under any chapter of this title, if the trustee 
does not assume or reject an unexpired lease of nonresidential 
real property under which the debtor is the lessee before the 
earlier of (A) 120 days after the date of the order for relief, 
or (B) the entry of an order confirming a plan, then such lease 
is deemed rejected, and the trustee shall immediately surrender 
such nonresidential real property to the lessor but in no event 
shall such time period exceed 120 days. Notwithstanding the 
immediately preceding sentence, and provided no plan has been 
confirmed, upon debtor's motion, and after notice and a 
hearing, the court may within such 120-day period extend the 
120-day period by a period not to exceed 150 days, contingent 
upon written consent of the affected lessor or with the 
approval of the court, and provided trustee has timely 
performed all post-petition lease obligations, but in no 
circumstance shall such period extend beyond the earlier of (i) 
270 days from the date of the order for relief or (ii) the 
entry of an order approving a disclosure statement, without the 
consent of the lessor.

           *       *       *       *       *       *       *

  (n)(1) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  (p)(1) If a lease of personal property is rejected or not 
timely assumed by the trustee under subsection (d), the leased 
property is no longer property of the estate and the stay under 
section 362(a) of this title is automatically terminated.
  (2) In the case of an individual under chapter 7, the debtor 
may notify the creditor in writing that the debtor desires to 
assume the lease. Upon being so notified, the creditor may, at 
its option, notify the debtor that it is willing to have the 
lease assumed by the debtor and may condition such assumption 
on cure of any outstanding default on terms set by the lessor. 
If within 30 days of such notice the debtor notifies the lessor 
in writing that the lease is assumed, the liability under the 
lease will be assumed by the debtor and not by the estate. The 
stay under section 362 of this title and the injunction under 
section 524(a)(2) of this title shall not be violated by 
notification of the debtor and negotiation of cure under this 
subsection.
  (3) In a case under chapter 11 of this title in which the 
debtor is an individual and in a case under chapter 13 of this 
title, if the debtor is the lessee with respect to personal 
property and the lease is not assumed in the plan confirmed by 
the court, the lease is deemed rejected as of the conclusion of 
the hearing on confirmation. If the lease is rejected, the stay 
under section 362 of this title and any stay under section 1301 
is automatically terminated with respect to the property 
subject to the lease.
  (q) A debt of a kind described in section 523(a)(16) of this 
title shall not be considered to be a debt arising from an 
executory contract.

Sec. 366. Utility service

  (a) * * *

           *       *       *       *       *       *       *

  (c) For the purposes of this section, the term ``utility'' 
includes any provider of gas, electric, telephone, 
telecommunication, cable television, satellite communication, 
water, or sewer service, whether or not such service is a 
regulated monopoly.

           *       *       *       *       *       *       *


            CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE

                   SUBCHAPTER I--CREDITORS AND CLAIMS

Sec.
501.  Filing of proofs of claims or interest.
     * * * * * * *

               SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

521.  Debtor's duties.
     * * * * * * *
526.  Disclosures.
527.  Debtor's bill of rights.
528.  Debt relief counselling agency enforcement.
529.  Protection of child support and alimony.

           *       *       *       *       *       *       *


                   SUBCHAPTER I--CREDITORS AND CLAIMS

Sec. 501. Filing of proofs of claims or interests

  (a) * * *

           *       *       *       *       *       *       *

  (e) In a case under chapter 7 or 13, a proof of claim or 
interest is deemed filed under this section for any claim or 
interest that appears in the schedules filed under section 
521(a)(1) of this title, except a claim or interest that is 
scheduled as disputed, contingent, or unliquidated.

Sec. 502. Allowance of claims or interests

  (a) * * *
  (b) Except as provided in subsections (e)(2), (f), (g), (h) 
and (i) of this section, if such objection to a claim is made, 
the court, after notice and a hearing, shall determine the 
amount of such claim in lawful currency of the United States as 
of the date of the filing of the petition, and shall allow such 
claim in such amount, except to the extent that--
          (1) * * *

           *       *       *       *       *       *       *

          (9) proof of such claim is not timely filed, except 
        to the extent tardily filed as permitted under 
        paragraph (1), (2), or (3) of section 726(a) of this 
        title or under the Federal Rules of Bankruptcy 
        Procedure, except that a claim of a governmental unit 
        shall be timely filed if it is filed before 180 days 
        after the date of the order for relief or such later 
        time as the Federal Rules of Bankruptcy Procedure may 
        provide[.], and except that in a case under chapter 13 
        of this title, a claim of a governmental unit for a tax 
        in respect of a return filed under section 1308 of this 
        title shall be timely if it is filed on or before 60 
        days after such return or returns were filed as 
        required.

           *       *       *       *       *       *       *


Sec. 503. Allowance of administrative expenses

  (a) * * *
  (b) After notice and a hearing, there shall be allowed, 
administrative expenses, other than claims allowed under 
section 502(f) of this title, including--
          (1)(A) * * *
          (B) any tax--
                  (i) incurred by the estate, whether secured 
                or unsecured, including property taxes for 
                which liability is in rem only, in personam or 
                both, except a tax of a kind specified in 
                section 507(a)(8) of this title; or

           *       *       *       *       *       *       *

          (D) notwithstanding the requirements of subsection 
        (a) of this section, a governmental unit shall not be 
        required to file a request for the payment of a claim 
        described in subparagraph (B) or (C);

           *       *       *       *       *       *       *


Sec. 504. Sharing of compensation

  (a) * * *

           *       *       *       *       *       *       *

  (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. 505. Determination of tax liability

  (a)(1) * * *
  (2) The court may not so determine--
          (A) the amount or legality of a tax, fine, penalty, 
        or addition to tax if such amount or legality was 
        contested before and adjudicated by a judicial or 
        administrative tribunal of competent jurisdiction 
        before the commencement of the case under this title; 
        [or]
          (B) any right of the estate to a tax refund, before 
        the earlier of--
                  (i) 120 days after the trustee properly 
                requests such refund from the governmental unit 
                from which such refund is claimed; or
                  (ii) a determination by such governmental 
                unit of such request[.]; or
          (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.
  (b) A trustee may request a determination of any unpaid 
liability of the estate for any tax incurred during the 
administration of the case by submitting a tax return for such 
tax and a request for such a determination to the governmental 
unit charged with responsibility for collection or 
determination of such tax. [Unless] If the request is made in 
the manner designated by the governmental unit and unless such 
return is fraudulent, or contains a material misrepresentation, 
the estate, the trustee, the debtor, and any successor to the 
debtor are discharged from any liability for such tax--
          (1) * * *

           *       *       *       *       *       *       *


Sec. 506. Determination of secured status

  (a) An allowed claim of a creditor secured by a lien on 
property in which the estate has an interest, or that is 
subject to setoff under section 553 of this title, is a secured 
claim to the extent of the value of such creditor's interest in 
the estate's interest in such property, or to the extent of the 
amount subject to setoff, as the case may be, and is an 
unsecured claim to the extent that the value of such creditor's 
interest or the amount so subject to setoff is less than the 
amount of such allowed claim. Such value shall be determined in 
light of the purpose of the valuation and of the proposed 
disposition or use of such property, and in conjunction with 
any hearing on such disposition or use or on a plan affecting 
such creditor's interest. In the case of an individual debtor 
under chapters 7 and 13, such value with respect to personal 
property securing an allowed claim shall be determined based on 
the replacement value of such property as of the date of filing 
the petition without deduction for costs of sale or marketing. 
With respect to property acquired for personal, family, or 
household purpose, replacement value shall mean the price a 
retail merchant would charge for property of that kind 
considering the age and condition of the property at the time 
value is determined.
  (b) To the extent that an allowed secured claim is secured by 
property the value of which, after any recovery under 
subsection (c) of this section, is greater than the amount of 
such claim, there shall be allowed to the holder of such claim, 
interest on such claim, and any reasonable fees, costs, or 
charges provided for under the agreement or State statute under 
which such claim arose.
  (c) The trustee may recover from property securing an allowed 
secured claim the reasonable, necessary costs and expenses of 
preserving, or disposing of, such property to the extent of any 
benefit to the holder of such claim, including the payment of 
all ad valorem property taxes in respect of the property.

           *       *       *       *       *       *       *

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

Sec. 507. Priorities

  (a) The following expenses and claims have priority in the 
following order:
          (1) * * *

           *       *       *       *       *       *       *

          (8) Eighth, allowed unsecured claims for debts that 
        are nondischargeable under section 523(a)(18).
          [(8) Eighth] (9) Ninth, allowed unsecured claims of 
        governmental units, only to the extent that such claims 
        are for--
                  (A) a tax on or measured by income or gross 
                receipts--
                          (i) for a taxable year ending on or 
                        before the date of the filing of the 
                        petition for which a return, if 
                        required, is last due, including 
                        extensions, after three years before 
                        the date of the filing of the petition, 
                        plus any time, plus 6 months, during 
                        which the stay of proceedings was in 
                        effect in a prior case under this 
                        title;
                          [(ii) assessed within 240 days, plus 
                        any time plus 30 days during which an 
                        offer in compromise with respect to 
                        such tax that was made within 240 days 
                        after such assessment was pending, 
                        before the date of the filing of the 
                        petition; or]
                          (ii) assessed within 240 days before 
                        the date of the filing of the petition, 
                        exclusive of--
                                  (I) any time plus 30 days 
                                during which an offer in 
                                compromise with respect of such 
                                tax, was pending or in effect 
                                during such 240-day period;
                                  (II) any time plus 30 days 
                                during which an installment 
                                agreement with respect of such 
                                tax was pending or in effect 
                                during such 240-day period, up 
                                to 1 year; and
                                  (III) any time plus 6 months 
                                during which a stay of 
                                proceedings against collections 
                                was in effect in a prior case 
                                under this title during such 
                                240-day period.

           *       *       *       *       *       *       *

          [(9) Ninth] (10) Tenth, allowed unsecured claims 
        based upon any commitment by the debtor to a Federal 
        depository institutions regulatory agency (or 
        predecessor to such agency), to maintain the capital of 
        an insured depository institution.
          (11) Eleventh, remaining allowed unsecured claims for 
        debts that are nondischargeable under section 
        523(a)(19), but which shall be payable under this 
        paragraph in the higher order of priority (if any) as 
        the respective claims paid by incurring such debts.

           *       *       *       *       *       *       *


Sec. 511. Rate of interest on tax claims

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

              SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

Sec. 521. Debtor's duties

  (a) The debtor shall--
          [(1) file a list of creditors, and unless the court 
        orders otherwise, a schedule of assets and liabilities, 
        a schedule of current income and current expenditures, 
        and a statement of the debtor's financial affairs;]
          (1) file--
                  (A) a list of creditors, and
                  (B) unless the court orders otherwise--
                          (i) a schedule of assets and 
                        liabilities;
                          (ii) a schedule of current income and 
                        current expenditures;
                          (iii) a statement of the debtor's 
                        financial affairs;
                          (iv) copies of all payment advices or 
                        other evidence of payment, if any, 
                        received by the debtor from any 
                        employer of the debtor in the period 60 
                        days prior to the filing of the 
                        petition;
                          (v) a statement of the amount of 
                        projected monthly net income, itemized 
                        to show how calculated;
                          (vi) if applicable, any statement 
                        under paragraphs (3) and (4) of section 
                        109(h);
                          (vii) a statement disclosing any 
                        reasonably anticipated increase in 
                        income or expenditures over the next 12 
                        months; and
                          (viii) a certificate, if applicable--
                                  (I) of an attorney whose name 
                                is on the petition as the 
                                attorney for the debtor, or of 
                                any bankruptcy petition 
                                preparer who signed the 
                                petition pursuant to section 
                                110(b)(1) of this title, 
                                indicating that such attorney 
                                or bankruptcy petition preparer 
                                delivered to the debtor any 
                                notice required by section 
                                342(b)(1) of this title; or
                                  (II) if no attorney for the 
                                debtor is indicated and no 
                                bankruptcy petition preparer 
                                signed the petition of the 
                                debtor, that such notice was 
                                obtained and read by the 
                                debtor;
          (2) if an individual debtor's schedule of assets and 
        liabilities includes [consumer] debts which are secured 
        by property of the estate--
                  (A) * * *
                  (B) within [forty-five days after the filing 
                of a notice of intent under this section] 30 
                days after the first date set for the meeting 
                of creditors under section 341(a), or within 
                such additional time as the court, for cause, 
                within such [forty-five day] 30-day period 
                fixes, the debtor shall perform his intention 
                with respect to such property, as specified by 
                subparagraph (A) of this paragraph; and
                  (C) nothing in subparagraphs (A) and (B) of 
                this paragraph shall alter the debtor's or the 
                trustee's rights with regard to such property 
                under this title except as provided in section 
                362(h);

           *       *       *       *       *       *       *

          (4) if a trustee is serving in the case, surrender to 
        the trustee all property of the estate and any recorded 
        information, including books, documents, records, and 
        papers, relating to property of the estate, whether or 
        not immunity is granted under section 344 of this 
        title; [and]
          (5) appear at the hearing required under section 
        524(d) of this title[.]; and
          (6) in an individual case under chapter 7 of this 
        title, not retain possession of personal property as to 
        which a creditor has an allowed claim for the purchase 
        price secured in whole or in part by an interest in 
        that personal property unless, in the case of an 
        individual debtor, the debtor takes 1 of the following 
        actions within 30 days after the first meeting of 
        creditors under section 341(a)--
                  (A) enters into a reaffirmation agreement 
                with the creditor pursuant to section 524(c) of 
                this title with respect to the claim secured by 
                such property; or
                  (B) redeems such property from the security 
                interest pursuant to section 722 of this title.
        If the debtor fails to so act within the 30-day period, 
        the personal property affected shall no longer be 
        property of the estate, and the creditor may take 
        whatever action as to such property as is permitted by 
        applicable nonbankruptcy law, unless the court 
        determines on the motion of the trustee, and after 
        notice and a hearing, that such property is of 
        consequential value or benefit to the estate.
  (b) At any time, a creditor in a case of an individual debtor 
under chapter 7 or 13 may file with the court and serve on the 
debtor notice that the creditor requests the petition, 
schedules, and statement of financial affairs filed by the 
debtor in the case. At any time, a creditor in a case under 
chapter 13 of this title may file with the court and serve on 
the debtor notice that the creditor requests the plan filed by 
the debtor in the case. Within 10 days of the first such 
request in a case under this subsection for the petition, 
schedules, and statement of financial affairs and the first 
such request for the plan under this subsection, the debtor 
shall serve on that creditor a conformed copy of the requested 
documents or plan and any amendments thereto as of that date, 
and shall thereafter promptly serve on that creditor at the 
time filed with the court--
          (1) any requested document or plan which is not filed 
        with the court at the time requested; and
          (2) any amendment to any requested document or plan.
  (c)(1) An individual debtor in a case under chapter 7 or 13 
shall provide to the United States trustee--
          (A) copies of all Federal tax returns (including any 
        schedules and attachments) filed by the debtor for the 
        3 most recent tax years preceding the order for relief;
          (B) at the time the debtor files them with the 
        Commissioner of Internal Revenue, all Federal tax 
        returns (including any schedules and attachments) for 
        the debtor's tax years ending while such case is 
        pending; and
          (C) at the time the debtor files them with the 
        Commissioner of Internal Revenue, all amendments to the 
        tax returns (including schedules and attachments) 
        described in subparagraphs (A) and (B).
  (2)(A) The United States trustee shall make such Federal tax 
returns (including schedules, attachments, and amendments) 
available to any party in interest for inspection and copying 
not later than 10 days after receiving a request by such party.
  (B) If the United States trustee does not comply with 
subparagraph (A), on the motion of such party, the court shall 
issue an order compelling the United States trustee to comply 
with subparagraph (A).
  (d) A debtor in a case under chapter 13 of this title shall 
file, from a time which is the later of 90 days after the close 
of the debtor's tax year or 1 year after the order for relief 
unless a plan has then been confirmed, and thereafter on or 
before 45 days before each anniversary of the confirmation of 
the plan until the case is closed, a statement subject to the 
penalties of perjury by the debtor of the debtor's income and 
expenditures in the preceding tax year and monthly net income, 
showing how calculated. Such statement shall disclose the 
amount and sources of income of the debtor, the identity of any 
persons responsible with the debtor for the support of any 
dependents of the debtor, and any persons who contributed and 
the amount contributed to the household in which the debtor 
resides. Such tax returns, amendments and statement of income 
and expenditures shall be available to the United States 
trustee, any bankruptcy administrator, any trustee and any 
party in interest for inspection and copying.
  (e) Notwithstanding section 707(a) of this title, if an 
individual debtor in a voluntary case under chapter 7 or 13 
fails to provide all of the information required under 
subsections (a)(1) and (c)(1)(A) within 45 days after the 
filing of the petition, the case shall be automatically 
dismissed effective on the 46th day after the filing of the 
petition without the need for any order of court, but any party 
in interest may request the court to enter an order dismissing 
the case and the court shall, if so requested, enter an order 
of dismissal within 5 days of such request. Upon request of the 
debtor made within 45 days after the filing of the petition, 
the court may allow the debtor up to an additional 15 days to 
provide the information required under subsections (a)(1) and 
(c)(1)(A) if the court finds compelling justification for doing 
so.
  (f) If an individual debtor in a case under chapter 7 or 13 
fails to perform any of the duties imposed by subsections (b), 
(c)(1)(B), (c)(1)(C), and (d), any party in interest may 
request that the court order the debtor to comply. Within 10 
days of such request the court shall order that the debtor do 
so within a period of time set by the court no longer than 30 
days. If the debtor does not comply with that order within the 
period of time set by the court, the court shall, on request of 
any party in interest certifying that the debtor has not so 
complied, enter an order dismissing the case within 5 days of 
such request.
  (g)(1) In addition to the requirements under subsection (a), 
an individual debtor shall file with the court--
          (A) a certificate from the credit counseling services 
        that provided the debtor services under section 109(i), 
        or a verified statement as to why such attempt was not 
        required under section 109(i) or other substantial 
        evidence of a good-faith attempt to create a debt 
        repayment plan outside the bankruptcy system in the 
        manner prescribed in section 109(i); and
          (B) a copy of the debt repayment plan, if any, 
        developed under section 109(i) through the credit 
        counseling service referred to in paragraph (1).
  (2) Only the United States trustee may make a motion for 
dismissal on the ground that the debtor did not comply with 
this subsection.
  (h) If the debtor fails timely to take the action specified 
in subsection (a)(6) of this section, or in paragraphs (1) and 
(2) of section 362(h) of this title, with respect to property 
which a lessor or bailor owns and has leased, rented, or bailed 
to the debtor or as to which a creditor holds a security 
interest not otherwise voidable under section 522(f), 544, 545, 
547, 548, or 549, nothing in this title shall prevent or limit 
the operation of a provision in the underlying lease or 
agreement which has the effect of placing the debtor in default 
under such lease or agreement by reason of the occurrence, 
pendency, or existence of a proceeding under this title or the 
insolvency of the debtor. Nothing in this subsection shall be 
deemed to justify limiting such a provision in any other 
circumstance.

Sec. 522. Exemptions

  (a) * * *
  (b) Notwithstanding section 541 of this title, an individual 
debtor may exempt from property of the estate the property 
listed in either paragraph (1) or, in the alternative, 
paragraph (2) of this subsection. In joint cases filed under 
section 302 of this title and individual cases filed under 
section 301 or 303 of this title by or against debtors who are 
husband and wife, and whose estates are ordered to be jointly 
administered under Rule 1015(b) of the Federal Rules of 
Bankruptcy Procedure, one debtor may not elect to exempt 
property listed in paragraph (1) and the other debtor elect to 
exempt property listed in paragraph (2) of this subsection. If 
the parties cannot agree on the alternative to be elected, they 
shall be deemed to elect paragraph (1), where such election is 
permitted under the law of the jurisdiction where the case is 
filed. Such property is--
          (1) * * *
          (2)(A) subject to subsection (n), any property that 
        is exempt under Federal law, other than subsection (d) 
        of this section, or State or local law that is 
        applicable on the date of the filing of the petition at 
        the place in which the debtor's domicile has been 
        located for the [180] 365 days immediately preceding 
        the date of the filing of the petition[, or for a 
        longer portion of such 180-day period than in any other 
        place; and];
          (B) any interest in property in which the debtor had, 
        immediately before the commencement of the case, an 
        interest as a tenant by the entirety or joint tenant to 
        the extent that such interest as a tenant by the 
        entirety or joint tenant is exempt from process under 
        applicable nonbankruptcy law[.]; and
          (C) retirement funds to the extent exempt from 
        taxation under section 401, 403, 408, 414, 457, or 
        501(a) of the Internal Revenue Code of 1986.
  (c) Unless the case is dismissed, property exempted under 
this section is not liable during or after the case for any 
debt of the debtor that arose, or that is determined under 
section 502 of this title as if such debt had arisen, before 
the commencement of the case, except--
          (1) a debt of a kind specified in [section 523(a)(1) 
        or 523(a)(5)] paragraph (1), (5), or (18) of section 
        523(a) of this title, except that, notwithstanding any 
        other Federal law or State law relating to exempted 
        property, exempt property shall be liable for debts of 
        a kind specified in paragraph (1) or (5) of section 
        523(a) of this title;

           *       *       *       *       *       *       *

  (d) The following property may be exempted under subsection 
(b)(1) of this section:
          (1) * * *

           *       *       *       *       *       *       *

          (12) Retirement funds to the extent exempt from 
        taxation under 401, 403, 408, 414, 457, or 501(a) of 
        the Internal Revenue Code of 1986.

           *       *       *       *       *       *       *

  (n)(1) Except as provided in paragraph (2), as a result of 
electing under subsection (b)(2)(A) to exempt property under 
State or local law, a debtor may not exempt any interest to the 
extent that such interests exceeds $100,000 in value, in the 
aggregate, in--
          (A) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          (B) a cooperative that owns property that the debtor 
        or a dependent of the debtor uses as a residence; or
          (C) a burial plot for the debtor or a dependent of 
        the debtor.
  (2) The limitation under paragraph (1) shall not apply to an 
exemption claimed under subsection (b)(2)(A) by a family farmer 
for the principal residence of that farmer.

Sec. 523. Exceptions to discharge

  (a) A discharge under section 727, 1141, 1228(a), 1228(b), or 
1328(b) of this title does not discharge an individual debtor 
from any debt--
          (1) for a tax or a customs duty--
                  (A) * * *
                  (B) with respect to which a return, or 
                equivalent report or notice, if required--
                          (i) was not filed or given; [or]
                          (ii) was filed or given after the 
                        date on which such return, report, or 
                        notice was last due, under applicable 
                        law or under any extension, and after 
                        two years before the date of the filing 
                        of the petition; or
                          (iii) for purposes of this 
                        subsection, a return--
                                  (I) must satisfy the 
                                requirements of applicable 
                                nonbankruptcy law, and includes 
                                a return prepared pursuant to 
                                section 6020(a) of the Internal 
                                Revenue Code of 1986, or 
                                similar State or local law, or 
                                a written stipulation to a 
                                judgment entered by a 
                                nonbankruptcy tribunal, but 
                                does not include a return made 
                                pursuant to section 6020(b) of 
                                the Internal Revenue Code of 
                                1986, or similar State or local 
                                law, and
                                  (II) must have been filed in 
                                a manner permitted by 
                                applicable nonbankruptcy law; 
                                or

           *       *       *       *       *       *       *

          (2) for money, property, services, or an extension, 
        renewal, or refinancing of credit, to the extent 
        obtained by--
                  (A) false pretenses, a false representation, 
                [or actual fraud,] actual fraud, or use of a 
                credit or charge card or other device to access 
                a credit line without a reasonable expectation 
                or ability to repay, unless access to such 
                credit, credit or charge card or other device 
                to access the credit line was extended without 
                an application therefor and reasonable 
                evaluation of the debtor's ability to repay, 
                other than a statement respecting the debtor's 
                or an insider's financial condition;
                  (B) use of a statement in writing--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iv) that the debtor caused to be 
                        made or published [with intent to 
                        deceive] without taking reasonable 
                        steps to ensure the accuracy of the 
                        statement; or
                  [(C) for purposes of subparagraph (A) of this 
                paragraph, consumer debts owed to a single 
                creditor and aggregating more than $1,000 for 
                ``luxury goods or services'' incurred by an 
                individual debtor on or within 60 days before 
                the order for relief under this title, or cash 
                advances aggregating more than $1,000 that are 
                extensions of consumer credit under an open end 
                credit plan obtained by an individual debtor on 
                or within 60 days before the order for relief 
                under this title, are presumed to be 
                nondischargeable; ``luxury goods or services'' 
                do not include goods or services reasonably 
                acquired for the support or maintenance of the 
                debtor or a dependent of the debtor; an 
                extension of consumer credit under an open end 
                credit plan is to be defined for purposes of 
                this subparagraph as it is defined in the 
                Consumer Credit Protection Act;]
                  (C) for purposes of subparagraph (A), 
                consumer debts owed to a single creditor 
                incurred by an individual debtor on or within 
                90 days before the order for relief under this 
                title are presumed to be nondischargeable, 
                except that such presumption shall not apply to 
                consumer debts owed to a single creditor which 
                are incurred for necessaries and aggregate $250 
                or less.

           *       *       *       *       *       *       *

          [(5) to a spouse, former spouse, or child of the 
        debtor, for alimony to, maintenance for, or support of 
        such spouse or child, in connection with a separation 
        agreement, divorce decree or other order of a court of 
        record, determination made in accordance with State or 
        territorial law by a governmental unit, or property 
        settlement agreement, but not to the extent that--
                  [(A) such debt is assigned to another entity, 
                voluntarily, by operation of law, or otherwise 
                (other than debts assigned pursuant to section 
                408(a)(3) of the Social Security Act, or any 
                such debt which has been assigned to the 
                Federal Government or to a State or any 
                political subdivision of such State); or
                  [(B) such debt includes a liability 
                designated as alimony, maintenance, or support, 
                unless such liability is actually in the nature 
                of alimony, maintenance, or support;]
          (5) to a spouse, former spouse, or child of the 
        debtor for alimony to, maintenance for, or support of 
        such spouse or child, or to a spouse, former spouse, or 
        child of the debtor, to the extent such debt is the 
        result of a property settlement agreement, a hold 
        harmless agreement, or any other type of debt that is 
        not in the nature of alimony, maintenance, or support 
        in connection with or incurred by the debtor in the 
        course of a separation agreement, divorce decree, any 
        modifications thereof, or other order of a court of 
        record, determination made in accordance with State or 
        territorial law by a governmental unit, but not to the 
        extent that such debt is assigned to another entity, 
        voluntarily, by operation of law, or otherwise (other 
        than debts assigned pursuant to section 408(a)(3) of 
        the Social Security Act, or such debt that has been 
        assigned to the Federal government, or to a State or 
        political subdivision of such State, or the creditor's 
        attorney);

           *       *       *       *       *       *       *

          (7) to the extent such debt is for a fine, penalty 
        (including property or funds required to be disgorged), 
        or forfeiture payable to and for the benefit of a 
        governmental unit, and is not compensation for actual 
        pecuniary loss, other than a tax penalty--
                  (A) * * *

           *       *       *       *       *       *       *

          [(15) not of the kind described in paragraph (5) that 
        is incurred by the debtor in the course of a divorce or 
        separation or in connection with a separation 
        agreement, divorce decree or other order of a court of 
        record, a determination made in accordance with State 
        or territorial law by a governmental unit unless--
                  [(A) the debtor does not have the ability to 
                pay such debt from income or property of the 
                debtor not reasonably necessary to be expended 
                for the maintenance or support of the debtor or 
                a dependent of the debtor and, if the debtor is 
                engaged in a business, for the payment of 
                expenditures necessary for the continuation, 
                preservation, and operation of such business; 
                or
                  [(B) discharging such debt would result in a 
                benefit to the debtor that outweighs the 
                detrimental consequences to a spouse, former 
                spouse, or child of the debtor;]
          (16) for a fee or assessment that becomes due and 
        payable after the order for relief to a membership 
        association with respect to the debtor's interest in a 
        [dwelling] unit that has condominium [ownership or] 
        ownership, in a share of a cooperative [housing] 
        corporation, [but only if such fee or assessment is 
        payable for a period during which--
                  [(A) the debtor physically occupied a 
                dwelling unit in the condominium or cooperative 
                project; or
                  [(B) the debtor rented the dwelling unit to a 
                tenant and received payments from the tenant 
                for such period,] 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,
        but nothing in this paragraph shall except from 
        discharge the debt of a debtor for a membership 
        association fee or assessment for a period arising 
        before entry of the order for relief in a pending or 
        subsequent bankruptcy case;
          (17) for a fee imposed [by a court] on a prisoner by 
        any court for the filing of a case, motion, complaint, 
        or appeal, or for other costs and expenses assessed 
        with respect to such filing, regardless of an assertion 
        of poverty by the debtor under section [1915(b) or (f)] 
        subsection (b) or (f)(2) of section 1915, of title 28 
        (or a similar non-Federal law), or the debtor's status 
        as a prisoner, as defined in section 1915(h) of title 
        28 (or a similar non-Federal law); [or]
          (18) owed under State law (including interest) to a 
        State or municipality that is--
                  (A) in the nature of support, [and] or
                  (B) enforceable under part D of title IV of 
                the Social Security Act ( 42 U.S.C. 601 et 
                seq.)[.]; or
          (19) incurred to pay a debt that is nondischargeable 
        under any other paragraph of this subsection.

           *       *       *       *       *       *       *

  (c)(1) Except as provided in subsection (a)(3)(B) of this 
section, the debtor shall be discharged from a debt of a kind 
specified in paragraph (2), (4), [(6), or (15)] or (6) of 
subsection (a) of this section, unless, on request of the 
creditor to whom such debt is owed, and after notice and a 
hearing, the court determines such debt to be excepted from 
discharge under paragraph (2), (4), (6), or (15), as the case 
may be, of subsection (a) of this section.

           *       *       *       *       *       *       *


Sec. 526. Disclosures

  (a) A debt relief counselling agency providing bankruptcy 
assistance to an assisted person shall provide the following 
notices to the assisted person:
          (1) the written notice required under section 
        342(b)(1) of this title; and
          (2) to the extent not covered in the written notice 
        described in paragraph (1) of this section and no later 
        than three business days after the first date on which 
        a debt relief counselling agency first offers to 
        provide any bankruptcy assistance services to an 
        assisted person, a clear and conspicuous written notice 
        advising assisted persons of the following:
                  (A) all information the assisted person is 
                required to provide with a petition and 
                thereafter during a case under this title must 
                be complete, accurate and truthful;
                  (B) all assets and all liabilities must be 
                completely and accurately disclosed in the 
                documents filed to commence the case, and the 
                replacement value of each asset as defined in 
                section 506 of this title must be stated in 
                those documents where requested after 
                reasonable inquiry to establish such value;
                  (C) current monthly total income, projected 
                monthly net income and, in a chapter 13 case, 
                monthly net income must be stated after 
                reasonable inquiry;
                  (D) that information an assisted person 
                provides during their case may be audited 
                pursuant to this title and that failure to 
                provide such information may result in 
                dismissal of the proceeding under this title or 
                other sanction including, in some instances, 
                criminal sanctions.
  (b) A debt relief counselling agency providing bankruptcy 
assistance to an assisted person shall provide each assisted 
person at the same time as the notices required under 
subsection (a)(1) with the following statement, to the extent 
applicable, or one substantially similar. The statement shall 
be clear and conspicuous and shall be in a single document 
separate from other documents or notices provided to the 
assisted person:
  ``IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES 
FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER
  ``If you decide to seek bankruptcy relief, you can represent 
yourself, you can hire an attorney to represent you, or you can 
get help in some localities from a bankruptcy petition preparer 
who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR 
BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT 
SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER 
WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see the 
contract before you hire anyone.
  ``The following information helps you understand what must be 
done in a routine bankruptcy case to help you evaluate how much 
service you need. Although bankruptcy can be complex, many 
cases are routine.
  ``Before filing a bankruptcy case, either you or your 
attorney should analyze your eligibility for different forms of 
debt relief made available by the Bankruptcy Code and which 
form of relief is most likely to be beneficial for you. Be sure 
you understand the relief you can obtain and its limitations. 
To file a bankruptcy case, documents called a Petition, 
Schedules and Statement of Financial Affairs, as well as in 
some cases a Statement of Intention need to be prepared 
correctly and filed with the bankruptcy court. You will have to 
pay a filing fee to the bankruptcy court. Once your case 
starts, you will have to attend the required first meeting of 
creditors where you may be questioned by a court official 
called a `trustee' and by creditors.
  ``If you select a chapter 7 proceeding, you may be asked by a 
creditor to reaffirm a debt. You may want help deciding whether 
to do so.
  ``If you select a chapter 13 proceeding in which you repay 
your creditors what you can afford over three to seven years, 
you may also want help with preparing your chapter 13 plan and 
with the confirmation hearing on your plan which will be before 
a bankruptcy judge.''
  ``If you select another type of proceeding under the 
Bankruptcy Code other than chapter 7 or chapter 13, you will 
want to find out what needs to be done from someone familiar 
with that type of proceeding.
  ``Your bankruptcy proceeding may also involve litigation. You 
are generally permitted to represent yourself in litigation in 
bankruptcy court, but only attorneys, not bankruptcy petition 
preparers, can represent you in litigation.''.
  (c) Except to the extent the debt relief counselling agency 
provides the required information itself after reasonably 
diligent inquiry of the assisted person or others so as to 
obtain such information reasonably accurately for inclusion on 
the petition, schedules or statement of financial affairs, a 
debt relief counselling agency providing bankruptcy assistance 
to an assisted person shall provide each assisted person at the 
time required for the notice required under subsection (a)(1) 
reasonably sufficient information (which may be provided orally 
or in a clear and conspicuous writing) to the assisted person 
on how to provide all the information the assisted person is 
required to provide under this title pursuant to section 521, 
including--
          (1) how to value assets at replacement value, 
        determine current monthly total income, projected 
        monthly income and, in a chapter 13 case, net monthly 
        income, and related calculations;
          (2) how to complete the list of creditors, including 
        how to determine what amount is owed and what address 
        for the creditor should be shown;
          (3) how to determine what property is exempt and how 
        to value exempt property at replacement value as 
        defined in section 506 of this title.
  (d) A debt relief counselling agency shall maintain a copy of 
the notices required under subsection (a) of this section for 
two years after the later of the date on which the notice is 
given the assisted person.

Sec. 527. Debtor's bill of rights

  (a) A debt relief counselling agency shall--
          (1) no later than three business days after the first 
        date on which a debt relief counselling agency provides 
        any bankruptcy assistance services to an assisted 
        person, execute a written contract with the assisted 
        person specifying clearly and conspicuously the 
        services the agency will provide the assisted person 
        and the basis on which fees or charges will be made for 
        such services and the terms of payment, and give the 
        assisted person a copy of the fully executed and 
        completed contract in a form the person can keep.
          (2) disclose in any advertisement of bankruptcy 
        assistance services or of the benefits of bankruptcy 
        directed to the general public (whether in general 
        media, seminars or specific mailings, telephonic or 
        electronic messages or otherwise) that the services or 
        benefits are with respect to proceedings under this 
        title, clearly and conspicuously using the following 
        statement: ``We are a debt relief counselling agency. 
        We help people file Bankruptcy petitions to obtain 
        relief under the Bankruptcy Code.'' or a substantially 
        similar statement. An advertisement shall be of 
        bankruptcy assistance services if it describes or 
        offers bankruptcy assistance with a chapter 13 plan, 
        regardless of whether chapter 13 is specifically 
        mentioned, including such statements as ``federally 
        supervised repayment plan'' or ``Federal debt 
        restructuring help'' or other similar statements which 
        would lead a reasonable consumer to believe that help 
        with debts was being offered when in fact in most cases 
        the help available is bankruptcy assistance with a 
        chapter 13 plan.
          (3) if an advertisement directed to the general 
        public indicates that the debt relief counselling 
        agency provides assistance with respect to credit 
        defaults, mortgage foreclosures, lease eviction 
        proceedings, excessive debt, debt collection pressure, 
        or inability to pay any consumer debt, disclose 
        conspicuously in that advertisement that the assistance 
        is with respect to or may involve proceedings under 
        this title, using the following statement: ``We are a 
        debt relief counselling agency. We help people file 
        Bankruptcy petitions to obtain relief under the 
        Bankruptcy Code.'' or a substantially similar 
        statement.
  (b) A debt relief counselling agency shall not--
          (1) fail to perform any service which the debt relief 
        counseling agency has told the assisted person or 
        prospective assisted person the agency would provide 
        that person in connection with the preparation for or 
        activities during a proceeding under this title;
          (2) make any statement, or counsel or advise any 
        assisted person to make any statement in any document 
        filed in a proceeding under this title, which is untrue 
        or misleading or which upon the exercise of reasonable 
        care, should be known by the debt relief counselling 
        agency to be untrue or misleading;
          (3) misrepresent to any assisted person or 
        prospective assisted person, directly or indirectly, 
        affirmatively or by material omission, what services 
        the debt relief counselling agency can reasonably 
        expect to provide that person, or the benefits an 
        assisted person may obtain or the difficulties the 
        person may experience if the person seeks relief in a 
        proceeding pursuant to this title; and
          (4) advise an assisted person or prospective assisted 
        person to incur more debt in contemplation of that 
        person filing a proceeding under this title or in order 
        to pay an attorney or bankruptcy petition preparer fee 
        or charge for services performed as part of preparing 
        for or representing a debtor in a proceeding under this 
        title.

Sec. 528. Debt relief counselling agency enforcement

  (a) Assisted Person Waivers Invalid.--Any waiver by any 
assisted person of any protection or right provided by or under 
section 526 or 527 of this title shall be void and may not be 
enforced by any Federal or State court or any other person.
  (b) Noncompliance.--
          (1) Any contract between a debt relief counselling 
        agency and an assisted person for bankruptcy assistance 
        which does not comply with the requirements of section 
        526 or 527 of this title shall be treated as void and 
        may not be enforced by any Federal or State court or by 
        any other person.
          (2) Any debt relief counselling agency which has been 
        found, after notice and hearing, to have--
                  (A) failed to comply with any provision of 
                section 526 or 527 with respect to a bankruptcy 
                case or related proceeding of an assisted 
                person, or
                  (B) provided bankruptcy assistance to an 
                assisted person in a case or related proceeding 
                which is dismissed or converted in lieu of 
                dismissal under section 707 of this title or 
                because of a failure to file bankruptcy papers, 
                including papers specified in section 521 of 
                this title; or
                  (C) negligently or intentionally disregarded 
                the requirements of this title or the Federal 
                Rules of Bankruptcy Procedure applicable to 
                such debt relief counselling agency shall be 
                liable to the assisted person in the amount of 
                any fees and charges in connection with 
                providing bankruptcy assistance to such person 
                which the debt relief counselling agency has 
                already been paid on account of that proceeding 
                and if the case has not been closed, the court 
                may in addition require the debt relief 
                counselling agency to continue to provide 
                bankruptcy assistance services in the pending 
                case to the assisted person without further fee 
                or charge or upon such other terms as the court 
                may order.
          (3) In addition to such other remedies as are 
        provided under State law, whenever the chief law 
        enforcement officer of a State, or an official or 
        agency designated by a State, has reason to believe 
        that any person has violated or is violating section 
        526 or 527 of this title, the State--
                  (A) may bring an action to enjoin such 
                violation;
                  (B) may bring an action on behalf of its 
                residents to recover the actual damages of 
                assisted persons arising from such violation, 
                including any liability under paragraph (2); 
                and
                  (C) in the case of any successful action 
                under subparagraph (A) or (B), shall be awarded 
                the costs of the action and reasonable attorney 
                fees as determined by the court.
          (4) The United States District Court for any district 
        located in the State shall have concurrent jurisdiction 
        of any action under subparagraph (A) or (B) of 
        paragraph (3).
  (c) Relation to State Law.--This section and sections 526 and 
527 shall not annul, alter, affect or exempt any person subject 
to those sections from complying with any law of any State 
except to the extent that such law is inconsistent with those 
sections, and then only to the extent of the inconsistency.

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

  Notwithstanding the provisions of the constitution or law of 
any State providing a different priority, any debts of the 
individual who has received a discharge under this title to a 
spouse, former spouse, or child for alimony to, maintenance 
for, or support of such spouse or child, in connection with a 
separation agreement, divorce decree, or other order of a court 
of record, determination made in accordance with State or 
territorial law by a governmental unit, or property settlement 
agreement, but not to the extent that such debt--
          (1) is assigned to another entity, voluntarily, by 
        operation of law, or otherwise; or
          (2) includes a liability designated as alimony, 
        maintenance, or support, unless such liability is 
        actually in the nature of alimony, maintenance, or 
        support,
shall have priority in payment and collection over a creditor's 
claim which in not discharged in the individual's case pursuant 
to paragraph (2), (4), or (14) of section 523(a) of this title, 
but such priority shall not affect the priority of any 
consensual lien, mortgage, or security interest securing such 
creditor's claim.

                       SUBCHAPTER III--THE ESTATE

Sec. 541. Property of the estate

  (a) * * *
  (b) Property of the estate does not include--
          (1) * * *

           *       *       *       *       *       *       *

          (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                  (A) * * *
                  (B)(i) * * *
                  (ii) but for the operation of this paragraph, 
                the estate could include the interest referred 
                to in clause (i) only by virtue of section 542 
                of this title; or

           *       *       *       *       *       *       *


Sec. 544. Trustee as lien creditor and as successor to certain 
                    creditors and purchasers

  (a) * * *
  [(b) The trustee] (b)(1) Except as provided in paragraph (2), 
the trustee may avoid any transfer of an interest of the debtor 
in property or any obligation incurred by the debtor that is 
voidable under applicable law by a creditor holding an 
unsecured claim that is allowable under section 502 of this 
title or that is not allowable only under section 502(e) of 
this title.
  (2) Paragraph (1) shall not apply to a transfer of a 
charitable contribution (as defined in section 548(d)(3) of 
this title) that is not covered under section 548(a)(1)(B) of 
this title by reason of section 548(a)(2) of this title. Any 
claim by any person to recover a transferred contribution 
described in the preceding sentence under Federal or State law 
in a Federal or State court shall be preempted by the 
commencement of the case.

Sec. 545. Statutory liens

  The trustee may avoid the fixing of a statutory lien on 
property of the debtor to the extent that such lien--
          (1) * * *
          (2) is not perfected or enforceable at the time of 
        the commencement of the case against a bona fide 
        purchaser that purchases such property at the time of 
        the commencement of the case, whether or not such a 
        purchaser exists[;], except where such purchaser is a 
        purchaser described in section 6323 of the Internal 
        Revenue Code of 1986 or similar provision of State or 
        local law;

           *       *       *       *       *       *       *


Sec. 546. Limitations on avoiding powers

  (a) * * *

           *       *       *       *       *       *       *

  (e) Notwithstanding sections 544, 545, 547, [548(a)(2)] 
548(a)(1)(B), and 548(b) of this title, the trustee may not 
avoid a transfer that is a margin payment, as defined in 
section 101, 741, or 761 of this title, or settlement payment, 
as defined in section 101 or 741 of this title, made by or to a 
commodity broker, forward contract merchant, stockbroker, 
financial institution, or securities clearing agency, that is 
made before the commencement of the case, except under section 
[548(a)(1)] 548(a)(1)(A) of this title.
  (f) Notwithstanding sections 544, 545, 547, [548(a)(2)] 
548(a)(1)(B), and 548(b) of this title, the trustee may not 
avoid a transfer that is a margin payment, as defined in 
section 741 or 761 of this title, or settlement payment, as 
defined in section 741 of this title, made by or to a repo 
participant, in connection with a repurchase agreement and that 
is made before the commencement of the case, except under 
section [548(a)(1)] 548(a)(1)(A) of this title.
  (g) Notwithstanding sections 544, 545, 547, [548(a)(2)] 
548(a)(1)(B) and 548(b) of this title, the trustee may not 
avoid a transfer under a swap agreement, made by or to a swap 
participant, in connection with a swap agreement and that is 
made before the commencement of the case, except under section 
[548(a)(1)] 548(a)(1)(A) of this title.
  (g) Notwithstanding the rights and powers of a trustee under 
sections 544(a), 545, 547, 549, and 553, if the court 
determines on a motion by the trustee made not later than 120 
days after the date of the order for relief in a case under 
chapter 11 of this title and after notice and a hearing, that a 
return is in the best interests of the estate, the debtor, with 
the consent of a creditor, may return goods shipped to the 
debtor by the creditor before the commencement of the case, and 
the creditor may offset the purchase price of such goods 
against any claim of the creditor against the debtor that arose 
before the commencement of the case.

Sec. 547. Preferences

  (a) In this section--

           *       *       *       *       *       *       *

  (c) The trustee may not avoid under this section a transfer--
          (1) * * *
          [(2) to the extent that such transfer was--
                  [(A) in payment of a debt incurred by the 
                debtor in the ordinary course of business or 
                financial affairs of the debtor and the 
                transferee;
                  [(B) made in the ordinary course of business 
                or financial affairs of the debtor and the 
                transferee; and
                  [(C) made according to ordinary business 
                terms;]
          (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;

           *       *       *       *       *       *       *

          (7) to the extent such transfer was a bona fide 
        payment of a debt to a spouse, former spouse, or child 
        of the debtor, for alimony to, maintenance for, or 
        support of such spouse or child, in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, determination made in accordance 
        with State or territorial law by a governmental unit, 
        or property settlement agreement, but not to the extent 
        that such debt--
                  (A) * * *
                  (B) includes a liability designated as 
                alimony, maintenance, or support, unless such 
                liability is actually in the nature of alimony, 
                maintenance or support; [or]
          (8) if, in a case filed by an individual debtor whose 
        debts are primarily consumer debts, the aggregate value 
        of all property that constitutes or is affected by such 
        transfer is less than $600[.]; or
          (9) if, in a case filed by a debtor whose debts are 
        not primarily consumer debts, the aggregate value of 
        all property that constitutes or is affected by such 
        transfer is less than $5000.

Sec. 548. Fraudulent transfers and obligations

  (a)(1) The trustee may avoid any transfer of an interest of 
the debtor in property, or any obligation incurred by the 
debtor, that was made or incurred on or within one year before 
the date of the filing of the petition, if the debtor 
voluntarily or involuntarily--
          [(1) made] (A) made such transfer or incurred such 
        obligation 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 or 
        such obligation was incurred, indebted; or
          [(2)(A)] (B)(i) received less than a reasonably 
        equivalent value in exchange for such transfer or 
        obligation; and
          [(B)(i)] (ii)(I) was insolvent on the date that such 
        transfer was made or such obligation was incurred, or 
        became insolvent as a result of such transfer or 
        obligation;
          [(ii) was] (II) was engaged in business or a 
        transaction, or was about to engage in business or a 
        transaction, for which any property remaining with the 
        debtor was an unreasonably small capital; or
          [(iii)] (III) intended to incur, or believed that the 
        debtor would incur, debts that would be beyond the 
        debtor's ability to pay as such debts matured.
  (2) A transfer of a charitable contribution to a qualified 
religious or charitable entity or organization shall not be 
considered to be a transfer covered under paragraph (1)(B) in 
any case in which--
          (A) the amount of such contribution does not exceed 
        15 percent of the gross annual income of the debtor for 
        the year in which the transfer of the contribution is 
        made; or
          (B) the contribution made by a debtor exceeded the 
        percentage amount of gross annual income specified in 
        subparagraph (A), if the transfer was consistent with 
        the practices of the debtor in making charitable 
        contributions.

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (3) In this section, the term ``charitable contribution'' 
means a charitable contribution as defined in section 170(c) of 
the Internal Revenue Code of 1986, if such contribution--
          (A) is made by a natural person; and
          (B) consists of--
                  (i) a financial instrument (as defined in 
                section 731(c)(2)(C) of the Internal Revenue 
                Code of 1986); or
                  (ii) cash.
  (4) In this section, the term ``qualified religious or 
charitable entity or organization'' means--
          (A) an entity described in section 170(c)(1) of the 
        Internal Revenue Code of 1986; or
          (B) an entity or organization described in section 
        170(c)(2) of the Internal Revenue Code of 1986.

           *       *       *       *       *       *       *


Sec. 552. Postpetition effect of security interest

  (a) * * *
  (b)(1) Except as provided in sections 363, 506(c), 522, 544, 
545, 547, and 548 of this title, if the debtor and an entity 
entered into a security agreement before the commencement of 
the case and if the security interest created by such security 
agreement extends to property of the debtor acquired before the 
commencement of the case and to proceeds, [product] products, 
offspring, or profits of such property, then such security 
interest extends to such proceeds, [product] products, 
offspring, or profits acquired by the estate after the 
commencement of the case to the extent provided by such 
security agreement and by applicable nonbankruptcy law, except 
to any extent that the court, after notice and a hearing and 
based on the equities of the case, orders otherwise.

           *       *       *       *       *       *       *


           CHAPTER 6--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec.
601. Purpose and scope of application.

                    SUBCHAPTER I--GENERAL PROVISIONS

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

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

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

     SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

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

       SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                             REPRESENTATIVES

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

                  SUBCHAPTER V--CONCURRENT PROCEEDINGS

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

Sec. 601. Purpose and scope of application

  (a) The purpose of this chapter is to incorporate the Model 
Law on Cross-Border Insolvency so as to provide effective 
mechanisms for dealing with cases of cross-border insolvency 
with the objectives of--
          (1) cooperation between--
                  (A) United States courts, United States 
                Trustees, trustees, examiners, debtors, and 
                debtors in possession; and
                  (B) the courts and other competent 
                authorities of foreign countries involved in 
                cross-border insolvency cases;
          (2) greater legal certainty for trade and investment;
          (3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all 
        creditors, and other interested entities, including the 
        debtor;
          (4) protection and maximization of the value of the 
        debtor's assets; and
          (5) facilitation of the rescue of financially 
        troubled businesses, thereby protecting investment and 
        preserving employment.
  (b) This chapter applies where--
          (1) assistance is sought in the United States by a 
        foreign court or a foreign representative in connection 
        with a foreign proceeding;
          (2) assistance is sought in a foreign country in 
        connection with a case under this title;
          (3) a foreign proceeding and a case under this title 
        with respect to the same debtor are taking place 
        concurrently; or
          (4) creditors or other interested persons in a 
        foreign country have an interest in requesting the 
        commencement of, or participating in, a case or 
        proceeding under this title.
  (c) This chapter does not apply to--
          (1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b); or
          (2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits 
        specified in under section 109(e) and who are citizens 
        of the United States or aliens lawfully admitted for 
        permanent residence in the United States.

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 602. Definitions

  For the purposes of this chapter, the term--
          (1) ``debtor'' means an entity that is the subject of 
        a foreign proceeding;
          (2) ``establishment'' means any place of operations 
        where the debtor carries out a nontransitory economic 
        activity;
          (3) ``foreign court'' means a judicial or other 
        authority competent to control or supervise a foreign 
        proceeding;
          (4) ``foreign main proceeding'' means a foreign 
        proceeding taking place in the country where the debtor 
        has the center of its main interests;
          (5) ``foreign nonmain proceeding'' means a foreign 
        proceeding, other than a foreign main proceeding, 
        taking place in a country where the debtor has an 
        establishment;
          (6) ``trustee'' includes a trustee, a debtor in 
        possession in a case under any chapter of this title, 
        or a debtor under chapters 9 or 13 of this title; and
          (7) ``within the territorial jurisdiction of the 
        United States'' when used with reference to property of 
        a debtor refers to tangible property located within the 
        territory of the United States and intangible property 
        deemed under applicable nonbankruptcy law to be located 
        within that territory, including any property subject 
        to attachment or garnishment that may properly be 
        seized or garnished by an action in a Federal or State 
        court in the United States.

Sec. 603. International obligations of the United States

  To the extent that this chapter conflicts with an obligation 
of the United States arising out of any treaty or other form of 
agreement to which it is a party with 1 or more other 
countries, the requirements of the treaty or agreement prevail.

Sec. 604. Commencement of ancillary case

  A case under this chapter is commenced by the filing of a 
petition for recognition of a foreign proceeding under section 
615.

Sec. 605. Authorization to act in a foreign country

  A trustee or another entity (including an examiner) 
authorized by the court may be authorized by the court to act 
in a foreign country on behalf of an estate created under 
section 541. An entity authorized to act under this section may 
act in any way permitted by the applicable foreign law.

Sec. 606. Public policy exception

  Nothing in this chapter prevents the court from refusing to 
take an action governed by this chapter if the action would be 
manifestly contrary to the public policy of the United States.

Sec. 607. Additional assistance

  (a) Nothing in this chapter limits the power of the court, 
upon recognition of a foreign proceeding, to provide additional 
assistance to a foreign representative under this title or 
under other laws of the United States.
  (b) In determining whether to provide additional assistance 
under this title or under other laws of the United States, the 
court shall consider whether such additional assistance, 
consistent with the principles of comity, will reasonably 
assure--
          (1) just treatment of all holders of claims against 
        or interests in the debtor's property;
          (2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing 
        of claims in such foreign proceeding;
          (3) prevention of preferential or fraudulent 
        dispositions of property of the debtor;
          (4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed 
        by this title; and
          (5) if appropriate, the provision of an opportunity 
        for a fresh start for the individual that such foreign 
        proceeding concerns.

Sec. 608. Interpretation

  In interpreting this chapter, the court shall consider its 
international origin, and the need to promote an application of 
this chapter that is consistent with the application of similar 
statutes adopted by foreign jurisdictions.

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

Sec. 609. Right of direct access

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

Sec. 610. Limited jurisdiction

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

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

  (a) Upon filing a petition for recognition, a foreign 
representative may commence--
          (1) an involuntary case under section 303; or
          (2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
  (b) The petition commencing a case under subsection (a) of 
this section must be accompanied by a statement describing the 
petition for recognition and its current status. The court 
where the petition for recognition has been filed must be 
advised of the foreign representative's intent to commence a 
case under subsection (a) of this section prior to such 
commencement.
  (c) A case under subsection (a) shall be dismissed unless 
recognition is granted.

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

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

Sec. 613. Access of foreign creditors to a case under this title

  (a) Foreign creditors have the same rights regarding the 
commencement of, and participation in, a case under this title 
as domestic creditors.
  (b)(1) Subsection (a) of this section does not change or 
codify present law as to the priority of claims under section 
507 or 726 of this title, except that the claim of a foreign 
creditor under those sections shall not be given a lower 
priority than that of general unsecured claims without priority 
solely because the holder of such claim is a foreign creditor.
  (2)(A) Subsection (a) of this section and paragraph (1) of 
this subsection do not change or codify present law as to the 
allowability of foreign revenue claims or other foreign public 
law claims in a proceeding under this title.
  (B) Allowance and priority as to a foreign tax claim or other 
foreign public law claim shall be governed by any applicable 
tax treaty of the United States, under the conditions and 
circumstances specified therein.

Sec. 614. Notification to foreign creditors concerning a case under 
                    this title

  (a) Whenever in a case under this title notice is to be given 
to creditors generally or to any class or category of 
creditors, such notice shall also be given to the known 
creditors generally, or to creditors in the notified class or 
category, that do not have addresses in the United States. The 
court may order that appropriate steps be taken with a view to 
notifying any creditor whose address is not yet known.
  (b) Such notification to creditors with foreign addresses 
described in subsection (a) shall be given individually, unless 
the court considers that, under the circumstances, some other 
form of notification would be more appropriate. No letters 
rogatory or other similar formality is required.
  (c) When a notification of commencement of a case is to be 
given to foreign creditors, the notification shall--
          (1) indicate the time period for filing proofs of 
        claim and specify the place for their filing;
          (2) indicate whether secured creditors need to file 
        their proofs of claim; and
          (3) contain any other information required to be 
        included in such a notification to creditors pursuant 
        to this title and the orders of the court.
  (d) Any rule of procedure or order of the court as to notice 
or the filing of a claim shall provide such additional time to 
creditors with foreign addresses as is reasonable under the 
circumstances.

     SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

Sec. 615. Application for recognition of a foreign proceeding

  (a) A foreign representative applies to the court for 
recognition of the foreign proceeding in which the foreign 
representative has been appointed by filing a petition for 
recognition.
  (b) A petition for recognition shall be accompanied by--
          (1) a certified copy of the decision commencing the 
        foreign proceeding and appointing the foreign 
        representative;
          (2) a certificate from the foreign court affirming 
        the existence of the foreign proceeding and of the 
        appointment of the foreign representative; or
          (3) in the absence of evidence referred to in 
        paragraphs (1) and (2), any other evidence acceptable 
        to the court of the existence of the foreign proceeding 
        and of the appointment of the foreign representative.
  (c) A petition for recognition shall also be accompanied by a 
statement identifying all foreign proceedings with respect to 
the debtor that are known to the foreign representative.
  (d) The documents referred to in paragraphs (1) and (2) of 
subsection (b) must be translated into English. The court may 
require a translation into English of additional documents.

Sec. 616. Presumptions concerning recognition

  (a) If the decision or certificate referred to in section 
615(b) indicates that the foreign proceeding is a foreign 
proceeding within the meaning of section 101(23) and that the 
person or body is a foreign representative within the meaning 
of section 101(24), the court is entitled to so presume.
  (b) The court is entitled to presume that documents submitted 
in support of the petition for recognition are authentic, 
whether or not they have been legalized.
  (c) In the absence of evidence to the contrary, the debtor's 
registered office, or habitual residence in the case of an 
individual, is presumed to be the center of the debtor's main 
interests.

Sec. 617. Order recognizing a foreign proceeding

  (a) Subject to section 606, an order recognizing a foreign 
proceeding shall be entered if--
          (1) the foreign proceeding is a foreign main 
        proceeding or foreign nonmain proceeding within the 
        meaning of section 602;
          (2) the foreign representative applying for 
        recognition is a person or body within the meaning of 
        section 101(24); and
          (3) the petition meets the requirements of section 
        615.
  (b) The foreign proceeding shall be recognized--
          (1) as a foreign main proceeding if it is taking 
        place in the country where the debtor has the center of 
        its main interests; or
          (2) as a foreign nonmain proceeding if the debtor has 
        an establishment within the meaning of section 602 in 
        the foreign country where the proceeding is pending.
  (c) A petition for recognition of a foreign proceeding shall 
be decided upon at the earliest possible time. Entry of an 
order recognizing a foreign proceeding shall constitute 
recognition under this chapter.
  (d) The provisions of this subchapter do not prevent 
modification or termination of recognition if it is shown that 
the grounds for granting it were fully or partially lacking or 
have ceased to exist, but in considering such action the court 
shall give due weight to possible prejudice to parties that 
have relied upon the granting of recognition. The case under 
this chapter may be closed in the manner prescribed for a case 
under section 350.

Sec. 618. Subsequent information

  From the time of filing the petition for recognition of the 
foreign proceeding, the foreign representative shall file with 
the court promptly a notice of change of status concerning--
          (1) any substantial change in the status of the 
        foreign proceeding or the status of the foreign 
        representative's appointment; and
          (2) any other foreign proceeding regarding the debtor 
        that becomes known to the foreign representative.

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

  (a) From the time of filing a petition for recognition until 
the petition is decided upon, the court may, at the request of 
the foreign representative, where relief is urgently needed to 
protect the assets of the debtor or the interests of the 
creditors, grant relief of a provisional nature, including--
          (1) staying execution against the debtor's assets;
          (2) entrusting the administration or realization of 
        all or part of the debtor's assets located in the 
        United States to the foreign representative or another 
        person authorized by the court, including an examiner, 
        in order to protect and preserve the value of assets 
        that, by their nature or because of other 
        circumstances, are perishable, susceptible to 
        devaluation or otherwise in jeopardy; and
          (3) any relief referred to in paragraph (3), (4), or 
        (7) of section 621(a).
  (b) Unless extended under section 621(a)(6), the relief 
granted under this section terminates when the petition for 
recognition is decided upon.
  (c) It is a ground for denial of relief under this section 
that such relief would interfere with the administration of a 
foreign main proceeding.
  (d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, 
under this section.
  (e) The standards, procedures, and limitations applicable to 
an injunction shall apply to relief under this section.

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

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

Sec. 621. Relief that may be granted upon recognition of a foreign 
                    proceeding

  (a) Upon recognition of a foreign proceeding, whether main or 
nonmain, where necessary to effectuate the purpose of this 
chapter and to protect the assets of the debtor or the 
interests of the creditors, the court may, at the request of 
the foreign representative, grant any appropriate relief, 
including--
          (1) staying the commencement or continuation of 
        individual actions or individual proceedings concerning 
        the debtor's assets, rights, obligations or liabilities 
        to the extent they have not been stayed under section 
        620(a);
          (2) staying execution against the debtor's assets to 
        the extent it has not been stayed under section 620(a);
          (3) suspending the right to transfer, encumber or 
        otherwise dispose of any assets of the debtor to the 
        extent this right has not been suspended under section 
        620(a);
          (4) providing for the examination of witnesses, the 
        taking of evidence or the delivery of information 
        concerning the debtor's assets, affairs, rights, 
        obligations or liabilities;
          (5) entrusting the administration or realization of 
        all or part of the debtor's assets within the 
        territorial jurisdiction of the United States to the 
        foreign representative or another person, including an 
        examiner, authorized by the court;
          (6) extending relief granted under section 619(a); 
        and
          (7) granting any additional relief that may be 
        available to a trustee, except for relief available 
        under sections 522, 544, 545, 547, 548, 550, and 
        724(a).
  (b) Upon recognition of a foreign proceeding, whether main or 
nonmain, the court may, at the request of the foreign 
representative, entrust the distribution of all or part of the 
debtor's assets located in the United States to the foreign 
representative or another person, including an examiner, 
authorized by the court, provided that the court is satisfied 
that the interests of creditors in the United States are 
sufficiently protected.
  (c) In granting relief under this section to a representative 
of a foreign nonmain proceeding, the court must be satisfied 
that the relief relates to assets that, under the law of the 
United States, should be administered in the foreign nonmain 
proceeding or concerns information required in that proceeding.
  (d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, 
under this section.
  (e) The standards, procedures, and limitations applicable to 
an injunction shall apply to relief under paragraphs (1), (2), 
(3), and (6) of subsection (a).

Sec. 622. Protection of creditors and other interested persons

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

Sec. 623. Actions to avoid acts detrimental to creditors

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

Sec. 624. Intervention by a foreign representative

  Upon recognition of a foreign proceeding, the foreign 
representative may intervene in any proceedings in a State or 
Federal court in the United States in which the debtor is a 
party.

      SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

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

  (a) In all matters included within section 601, the court 
shall cooperate to the maximum extent possible with foreign 
courts or foreign representatives, either directly or through 
the trustee.
  (b) The court is entitled to communicate directly with, or to 
request information or assistance directly from, foreign courts 
or foreign representatives, subject to the rights of parties in 
interest to notice and participation.

Sec. 626. Cooperation and direct communication between the trustee and 
                    foreign courts or foreign representatives

  (a) In all matters included in section 601, the trustee or 
other person, including an examiner, authorized by the court, 
shall, subject to the supervision of the court, cooperate to 
the maximum extent possible with foreign courts or foreign 
representatives.
  (b) The trustee or other person, including an examiner, 
designated by the court is entitled, subject to the supervision 
of the court, to communicate directly with foreign courts or 
foreign representatives.
  (c) Section 1104(d) shall apply to the appointment of an 
examiner under this chapter. Any examiner shall comply with the 
qualification requirements imposed on a trustee by section 322.

Sec. 627. Forms of cooperation

  Cooperation referred to in sections 625 and 626 may be 
implemented by any appropriate means, including--
          (1) appointment of a person or body, including an 
        examiner, to act at the direction of the court;
          (2) communication of information by any means 
        considered appropriate by the court;
          (3) coordination of the administration and 
        supervision of the debtor's assets and affairs;
          (4) approval or implementation of agreements 
        concerning the coordination of proceedings; and
          (5) coordination of concurrent proceedings regarding 
        the same debtor.

                  SUBCHAPTER V--CONCURRENT PROCEEDINGS

Sec. 628. Commencement of a case under this title after recognition of 
                    a foreign main proceeding

  After recognition of a foreign main proceeding, a case under 
another chapter of this title may be commenced only if the 
debtor has assets in the United States. The effects of that 
case shall be restricted to the assets of the debtor that are 
within the territorial jurisdiction of the United States and, 
to the extent necessary to implement cooperation and 
coordination under sections 625, 626, and 627, to other assets 
of the debtor that are within the jurisdiction of the court 
under sections 541(a) of this title, and 1334(e) of title 28, 
to the extent that such other assets are not subject to the 
jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

Sec. 629. Coordination of a case under this title and a foreign 
                    proceeding

  Where a foreign proceeding and a case under another chapter 
of this title are taking place concurrently regarding the same 
debtor, the court shall seek cooperation and coordination under 
sections 625, 626, and 627, and the following shall apply:
          (1) When the case in the United States is taking 
        place at the time the petition for recognition of the 
        foreign proceeding is filed--
                  (A) any relief granted under sections 619 or 
                621 must be consistent with the case in the 
                United States; and
                  (B) even if the foreign proceeding is 
                recognized as a foreign main proceeding, 
                section 620 does not apply.
          (2) When a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  (A) any relief in effect under sections 619 
                or 621 shall be reviewed by the court and shall 
                be modified or terminated if inconsistent with 
                the case in the United States; and
                  (B) if the foreign proceeding is a foreign 
                main proceeding, the stay and suspension 
                referred to in section 620(a) shall be modified 
                or terminated if inconsistent with the case in 
                the United States.
          (3) In granting, extending, or modifying relief 
        granted to a representative of a foreign nonmain 
        proceeding, the court must be satisfied that the relief 
        relates to assets that, under the law of the United 
        States, should be administered in the foreign nonmain 
        proceeding or concerns information required in that 
        proceeding.
          (4) In achieving cooperation and coordination under 
        sections 628 and 629, the court may grant any of the 
        relief authorized under section 305.

Sec. 630. Coordination of more than 1 foreign proceeding

  In matters referred to in section 601, with respect to more 
than 1 foreign proceeding regarding the debtor, the court shall 
seek cooperation and coordination under sections 625, 626, and 
627, and the following shall apply:
          (1) Any relief granted under section 619 or 621 to a 
        representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be 
        consistent with the foreign main proceeding.
          (2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for 
        recognition, of a foreign nonmain proceeding, any 
        relief in effect under section 619 or 621 shall be 
        reviewed by the court and shall be modified or 
        terminated if inconsistent with the foreign main 
        proceeding.
          (3) If, after recognition of a foreign nonmain 
        proceeding, another foreign nonmain proceeding is 
        recognized, the court shall grant, modify, or terminate 
        relief for the purpose of facilitating coordination of 
        the proceedings.

Sec. 631. Presumption of insolvency based on recognition of a foreign 
                    main proceeding

  In the absence of evidence to the contrary, recognition of a 
foreign main proceeding is for the purpose of commencing a 
proceeding under section 303, proof that the debtor is 
generally not paying its debts.

Sec. 632. Rule of payment in concurrent proceedings

  Without prejudice to secured claims or rights in rem, a 
creditor who has received payment with respect to its claim in 
a foreign proceeding pursuant to a law relating to insolvency 
may not receive a payment for the same claim in a case under 
any other chapter of this title regarding the debtor, so long 
as the payment to other creditors of the same class is 
proportionately less than the payment the creditor has already 
received.

CHAPTER 7--LIQUIDATION

           *       *       *       *       *       *       *


SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 704. Duties of trustee

  The trustee shall--
          (1) * * *

           *       *       *       *       *       *       *

          (8) if the business of the debtor is authorized to be 
        operated, file with the court, with the United States 
        trustee, and with any governmental unit charged with 
        responsibility for collection or determination of any 
        tax arising out of such operation, periodic reports and 
        summaries of the operation of such business, including 
        a statement of receipts and disbursements, and such 
        other information as the United States trustee or the 
        court requires; [and]
          (9) make a final report and file a final account of 
        the administration of the estate with the court and 
        with the United States trustee[.]; and
          (10) with respect to an individual debtor, review all 
        materials provided by the debtor under subsections 
        (a)(1) and (c)(1) of section 521, investigate and 
        verify the debtor's projected monthly net income and 
        within 30 days after such materials are so provided--
                  (A) file a report with the court as to 
                whether the debtor qualifies for relief under 
                this chapter under section 109(b)(4); and
                  (B) if the trustee determines that the debtor 
                does not qualify for such relief, the trustee 
                shall provide a copy of such report to the 
                parties in interest.

           *       *       *       *       *       *       *


Sec. 707. Dismissal

  (a) * * *
  [(b) After notice and a hearing, the court, on its own motion 
or on a motion by the United States trustee, but not at the 
request or suggestion of any party in interest, may dismiss a 
case filed by an individual debtor under this chapter whose 
debts are primarily consumer debts if it finds that the 
granting of relief would be a substantial abuse of the 
provisions of this chapter. There shall be a presumption in 
favor of granting the relief requested by the debtor.]
  (b)(1) After notice and a hearing, the court--
          (A) on its own motion or on the motion of the United 
        States trustee or any party in interest, shall dismiss 
        a case filed by an individual debtor under this 
        chapter; or
          (B) with the debtor's consent, convert the case to a 
        case under chapter 13 of this title;
if the court finds that the granting of relief would be an 
inappropriate use of the provisions of this chapter.
  (2) The court shall determine that inappropriate use of the 
provisions of this chapter exists if--
          (A) the debtor is excluded from this chapter pursuant 
        to section 109 of this title; or
          (B) the totality of the circumstances of the debtor's 
        financial situation demonstrates such inappropriate 
        use.
  (3) In the case of a motion filed by a party in interest 
other than the trustee or United States trustee under paragraph 
(1) that is denied by the court, the court shall award against 
the moving party a reasonable attorney's fee and costs that the 
debtor incurred in opposing the motion if the court finds that 
the position of the moving party was not substantially 
justified, but the court shall not award such fee and costs if 
special circumstances would make the award unjust.
  (4)(A) If a trustee appointed under this title or the United 
States Trustee files a motion under this subsection and the 
case is subsequently dismissed or converted to another chapter, 
the court shall award to such party in interest a reasonable 
attorney's fee and costs incurred in connection with such 
motion, payable by the debtor, unless the court finds that 
awarding such fee and costs would impose an unreasonable 
hardship on the debtor, considering the debtor's conduct.
  (B) The signature of the debtor's attorney on any petition, 
pleading, motion, or other paper filed with the court in the 
case of the debtor shall constitute a certificate that the 
attorney has--
          (i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition and its 
        schedules and statement of financial affairs or the 
        pleading, as applicable; and
          (ii) determined that the petition and its schedules 
        and statement of financial affairs or the pleading, as 
        applicable, including the choice of this chapter--
                  (I) is well grounded in fact; and
                  (II) is warranted by existing law or a good 
                faith argument for the extension, modification, 
                or reversal of existing law and does not 
                constitute an inappropriate use of the 
                provisions of this chapter.
  (C) If the court finds that the attorney for the debtor 
signed a paper in violation of subparagraph (B), at a minimum, 
the court shall order--
          (i) the assessment of an appropriate civil penalty 
        against the attorney for the debtor; and
          (ii) the payment of the civil penalty to the trustee 
        or the United States Trustee.
  (c) In making a determination whether to dismiss a case under 
this section, the court may not take into consideration whether 
a debtor has made, or continues to make, charitable 
contributions (that meet the definition of ``charitable 
contribution'' under section 548(d)(3)) to any qualified 
religious or charitable entity or organization (as defined in 
section 548(d)(4)).

SUBCHAPTER II--COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE ESTATE

           *       *       *       *       *       *       *


Sec. 722. Redemption

  An individual debtor may, whether or not the debtor has 
waived the right to redeem under this section, redeem tangible 
personal property intended primarily for personal, family, or 
household use, from a lien securing a dischargeable consumer 
debt, if such property is exempted under section 522 of this 
title or has been abandoned under section 554 of this title, by 
paying the holder of such lien the amount of the allowed 
secured claim of such holder that is secured by such lien in 
full at the time of redemption.

           *       *       *       *       *       *       *


Sec. 724. Treatment of certain liens

  (a) * * *
  (b) Property in which the estate has an interest and that is 
subject to a lien that is not avoidable under this title (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) and that 
secures an allowed claim for a tax, or proceeds of such 
property, shall be distributed--
          (1) * * *
          (2) second, to any holder of a claim of a kind 
        specified in section 507(a)(1) (except that such 
        expenses, other than claims for wages, salaries, or 
        commissions which arise after the filing of a petition, 
        shall be limited to expenses incurred under chapter 7 
        of this title and shall not include expenses incurred 
        under chapter 11 of this title), 507(a)(2), 507(a)(3), 
        507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this 
        title, to the extent of the amount of such allowed tax 
        claim that is secured by such tax lien;

           *       *       *       *       *       *       *

  (e) Before subordinating a tax lien on real or personal 
property of the estate, the trustee shall--
          (1) exhaust the unencumbered assets of the estate; 
        and
          (2) in a manner consistent with section 506(c) of 
        this title, recover from property securing an allowed 
        secured claim the reasonable, necessary costs and 
        expenses of preserving or disposing of that property.
  (f) Notwithstanding the exclusion of ad valorem tax liens set 
forth in this section and subject to the requirements of 
subsection (e)--
          (1) claims for wages, salaries, and commissions that 
        are entitled to priority under section 507(a)(3) of 
        this title; or
          (2) claims for contributions to an employee benefit 
        plan entitled to priority under section 507(a)(4) of 
        this title,
may be paid from property of the estate which secures a tax 
lien, or the proceeds of such property.

           *       *       *       *       *       *       *


Sec. 726. Distribution of property of the estate

  (a) Except as provided in section 510 of this title, property 
of the estate shall be distributed--
          (1) first, in payment of claims of the kind specified 
        in, and in the order specified in, section 507 of this 
        title, proof of which is timely filed under section 501 
        of this title or tardily filed [before the date on 
        which the trustee commences distribution under this 
        section] on or before the earlier of 10 days after the 
        mailing to creditors of the summary of the trustee's 
        final report or the date on which the trustee commences 
        final distribution under this section;

           *       *       *       *       *       *       *


Sec. 727. Discharge

  (a) The court shall grant the debtor a discharge, unless--
          (1) * * *

           *       *       *       *       *       *       *

          (8) the debtor has been granted a discharge under 
        this section, under section 1141 of this title, or 
        under section 14, 371, or 476 of the Bankruptcy Act, in 
        a case commenced within [six] 10 years before the date 
        of the filing of the petition;

           *       *       *       *       *       *       *


CHAPTER 9--ADJUSTMENT OF DEBTS OF A MUNICIPALITY

           *       *       *       *       *       *       *


                     SUBCHAPTER II--ADMINISTRATION

Sec. 921. Petition and proceedings relating to petition

  (a) * * *

           *       *       *       *       *       *       *

  (d) If the petition is not dismissed under subsection (c) of 
this section, the court shall order relief under this chapter 
notwithstanding section 301(b).

           *       *       *       *       *       *       *


                       CHAPTER 11--REORGANIZATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
1101.  Definitions for this chapter.
     * * * * * * *
1115.  Duties of trustee or debtor in possession in small business 
          cases.

           *       *       *       *       *       *       *


SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 1102. Creditors' and equity security holders' committees

  (a)(1) * * *

           *       *       *       *       *       *       *

  (3) On request of a party in interest in a case in which the 
debtor is a small business debtor and for cause, the court may 
order that a committee of creditors not be appointed.
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) The court on its own motion or on request of a party in 
interest, and after notice and a hearing, may order a change in 
membership of a committee appointed under subsection (a) if 
necessary to ensure adequate representation of creditors or of 
equity security holders.

           *       *       *       *       *       *       *


Sec. 1104. Appointment of trustee or examiner

  (a) At any time after the commencement of the case but before 
confirmation of a plan, on request of a party in interest or 
the United States trustee, and after notice and a hearing, the 
court shall order the appointment of a trustee--
          (1) for cause, including fraud, dishonesty, 
        incompetence, or gross mismanagement of the affairs of 
        the debtor by current management, either before or 
        after the commencement of the case, or similar cause, 
        but not including the number of holders of securities 
        of the debtor or the amount of assets or liabilities of 
        the debtor; [or]
          (2) if such appointment is in the interests of 
        creditors, any equity security holders, and other 
        interests of the estate, without regard to the number 
        of holders of securities of the debtor or the amount of 
        assets or liabilities of the debtor[.]; or
          (3) if grounds exist to convert or dismiss the case 
        under section 1112 of this title, but the court 
        determines that the appointment of a trustee is in the 
        best interests of creditors and the estate.

           *       *       *       *       *       *       *


Sec. 1110. Aircraft equipment and vessels

  (a)(1) The right of a secured party with a security interest 
in equipment described in paragraph (2) or of a lessor or 
conditional vendor of such equipment to take possession of such 
equipment in compliance with a security agreement, lease, or 
conditional sale contract is not affected by section 362, 363, 
or 1129 or by any power of the court to enjoin the taking of 
possession unless--
          (A) before the date that is 60 days after the date of 
        the order for relief under this chapter, the trustee, 
        subject to the court's approval, agrees to perform all 
        obligations of the debtor [that become due on or after 
        the date of the order] under such security agreement, 
        lease, or conditional sale contract; and
          (B) any default, other than a default of a kind 
        specified in section 365(b)(2), under such security 
        agreement, lease, or conditional sale contract--
                  (i) that occurs before the date of the order 
                is cured before the expiration of such 60-day 
                period; [and]
                  (ii) that occurs after the date of the order 
                and within such 60-day period is cured before 
                the later of--
                          (I) * * *
                          (II) the expiration of such 60-day 
                        period[.]; and
                  (iii) that occurs after the date of the order 
                and such 60-day period is cured in accordance 
                with the terms of such security agreement, 
                lease, or conditional sale contract.

           *       *       *       *       *       *       *


Sec. 1112. Conversion or dismissal

  (a) * * *
  [(b) Except as provided in subsection (c) of this section, on 
request of a party in interest or the United States trustee or 
bankruptcy administrator, and after notice and a hearing, the 
court may convert a case under this chapter to a case under 
chapter 7 of this title or may dismiss a case under this 
chapter, whichever is in the best interest of creditors and the 
estate, for cause, including--
          [(1) continuing loss to or diminution of the estate 
        and absence of a reasonable likelihood of 
        rehabilitation;
          [(2) inability to effectuate a plan;
          [(3) unreasonable delay by the debtor that is 
        prejudicial to creditors;
          [(4) failure to propose a plan under section 1121 of 
        this title within any time fixed by the court;
          [(5) denial of confirmation of every proposed plan 
        and denial of a request made for additional time for 
        filing another plan or a modification of a plan;
          [(6) revocation of an order of confirmation under 
        section 1144 of this title, and denial of confirmation 
        of another plan or a modified plan under section 1129 
        of this title;
          [(7) inability to effectuate substantial consummation 
        of a confirmed plan;
          [(8) material default by the debtor with respect to a 
        confirmed plan;
          [(9) termination of a plan by reason of the 
        occurrence of a condition specified in the plan; or
          [(10) nonpayment of any fees or charges required 
        under chapter 123 of title 28.]
  (b)(1) Except as provided in paragraph (2), in subsection 
(c), and in section 1104(a)(3) of this title, on request of a 
party in interest, and after notice and a hearing, the court 
shall convert a case under this chapter to a case under chapter 
7 of this title or dismiss a case under this chapter, whichever 
is in the best interest of creditors and the estate, if the 
movant establishes cause.
  (2) The relief provided in paragraph (1) shall not be granted 
if the debtor or another party in interest objects and 
establishes, by a preponderance of the evidence that--
          (A) it is more likely than not that a plan will be 
        confirmed within a time as fixed by this title or by 
        order of the court entered pursuant to section 
        1121(e)(3), or within a reasonable time if no time has 
        been fixed; and
          (B) if the reason is an act or omission of the debtor 
        that--
                  (i) there exists a reasonable justification 
                for the act or omission; and
                  (ii) the act or omission will be cured within 
                a reasonable time fixed by the court not to 
                exceed 30 days after the court decides the 
                motion, unless the movant expressly consents to 
                a continuance for a specific period of time, or 
                compelling circumstances beyond the control of 
                the debtor justify an extension.
  (3) For purposes of this subsection, cause includes--
          (A) substantial or continuing loss to or diminution 
        of the estate;
          (B) gross mismanagement of the estate;
          (C) failure to maintain appropriate insurance;
          (D) unauthorized use of cash collateral harmful to 1 
        or more creditors;
          (E) failure to comply with an order of the court;
          (F) failure timely to satisfy any filing or reporting 
        requirement established by this title or by any rule 
        applicable to a case under this chapter;
          (G) failure to attend the meeting of creditors 
        convened under section 341(a) of this title or an 
        examination ordered under rule 2004 of the Federal 
        Rules of Bankruptcy Procedure;
          (H) failure timely to provide information or attend 
        meetings reasonably requested by the United States 
        trustee;
          (I) failure timely to pay taxes due after the date of 
        the order for relief or to file tax returns due after 
        the order for relief;
          (J) failure to file a disclosure statement, or to 
        file or confirm a plan, within the time fixed by this 
        title or by order of the court;
          (K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          (L) revocation of an order of confirmation under 
        section 1144 of this title, and denial of confirmation 
        of another plan or of a modified plan under section 
        1129 of this title;
          (M) inability to effectuate substantial consummation 
        of a confirmed plan;
          (N) material default by the debtor with respect to a 
        confirmed plan; and
          (O) termination of a plan by reason of the occurrence 
        of a condition specified in the plan.
  (4) The court shall commence the hearing on any motion under 
this subsection not later than 30 days after filing of the 
motion, and shall decide the motion within 15 days after 
commencement of the hearing, unless the movant expressly 
consents to a continuance for a specific period of time or 
compelling circumstances prevent the court from meeting the 
time limits established by this paragraph.

           *       *       *       *       *       *       *


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

  In a small business case, a trustee or the debtor in 
possession, in addition to the duties provided in this title 
and as otherwise required by law, shall--
          (1) append to the voluntary petition or, in an 
        involuntary case, file within 3 days after the date of 
        the order for relief--
                  (A) its most recent balance sheet, statement 
                of operations, cash-flow statement, Federal 
                income tax return; or
                  (B) a statement made under penalty of perjury 
                that no balance sheet, statement of operations, 
                or cash-flow statement has been prepared and no 
                Federal tax return has been filed;
          (2) attend, through its senior management personnel 
        and counsel, meetings scheduled by the court or the 
        United States trustee, including initial debtor 
        interviews, scheduling conferences, and meetings of 
        creditors convened under section 341 of this title;
          (3) timely file all schedules and statements of 
        financial affairs, unless the court, after notice and a 
        hearing, grants an extension, which shall not extend 
        such time period to a date later than 30 days after the 
        date of the order for relief, absent extraordinary and 
        compelling circumstances;
          (4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure 
        or by local rule of the district court;
          (5) subject to section 363(c)(2), maintain insurance 
        customary and appropriate to the industry;
          (6)(A) timely file tax returns;
          (B) subject to section 363(c)(2), timely pay all 
        administrative expense tax claims, except those being 
        contested by appropriate proceedings being diligently 
        prosecuted; and
          (C) subject to section 363(c)(2), establish 1 or more 
        separate deposit accounts not later than 10 business 
        days after the date of order for relief (or as soon 
        thereafter as possible if all banks contacted decline 
        the business) and deposit therein, not later than 1 
        business day after receipt thereof, all taxes payable 
        for periods beginning after the date the case is 
        commenced that are collected or withheld by the debtor 
        for governmental units; and
          (7) allow the United States trustee or bankruptcy 
        administrator, or its designated representative, to 
        inspect the debtor's business premises, books, and 
        records at reasonable times, after reasonable prior 
        written notice, unless notice is waived by the debtor.

           *       *       *       *       *       *       *


                        SUBCHAPTER II--THE PLAN

Sec. 1121. Who may file a plan

  (a) * * *

           *       *       *       *       *       *       *

  (d) [On] (1) Subject to paragraph (1), on request of a party 
in interest made within the respective periods specified in 
subsections (b) and (c) of this section and after notice and a 
hearing, the court may for cause reduce or increase the 120-day 
period or the 180-day period referred to in this section.
  (2)(A) Such 120-day period may not be extended beyond a date 
that is 18 months after the date of the order for relief under 
this chapter.
  (B) Such 180-day period may not be extended beyond a date 
that is 20 months after the date of the order for relief under 
this chapter.
  [(e) In a case in which the debtor is a small business and 
elects to be considered a small business--
          [(1) only the debtor may file a plan until after 100 
        days after the date of the order for relief under this 
        chapter;
          [(2) all plans shall be filed within 160 days after 
        the date of the order for relief; and
          [(3) on request of a party in interest made within 
        the respective periods specified in paragraphs (1) and 
        (2) and after notice and a hearing, the court may--
                  [(A) reduce the 100-day period or the 160-day 
                period specified in paragraph (1) or (2) for 
                cause; and
                  [(B) increase the 100-day period specified in 
                paragraph (1) if the debtor shows that the need 
                for an increase is caused by circumstances for 
                which the debtor should not be held 
                accountable.]
  (e) In a small business case--
          (1) only the debtor may file a plan until after 90 
        days after the date of the order for relief, unless 
        shortened on request of a party in interest made during 
        the 90-day period, or unless extended as provided by 
        this subsection, after notice and hearing the court, 
        for cause, orders otherwise;
          (2) the plan, and any necessary disclosure statement, 
        shall be filed not later than 90 days after the date of 
        the order for relief; and
          (3) the time periods specified in paragraphs (1) and 
        (2), and the time fixed in section 1129(e) of this 
        title, within which the plan shall be confirmed may be 
        extended only if--
                  (A) the debtor, after providing notice to 
                parties in interest (including the United 
                States trustee), demonstrates by a 
                preponderance of the evidence that it is more 
                likely than not that the court will confirm a 
                plan within a reasonable time;
                  (B) a new deadline is imposed at the time the 
                extension is granted; and
                  (C) the order extending time is signed before 
                the existing deadline has expired.

           *       *       *       *       *       *       *


Sec. 1125. Postpetition disclosure and solicitation

  (a) In this section--
          (1) ``adequate information'' means information of a 
        kind, and in sufficient detail, as far as is reasonably 
        practicable in light of the nature and history of the 
        debtor and the condition of the debtor's books and 
        records, including a full discussion of the potential 
        material Federal, State, and local tax consequences of 
        the plan to the debtor, any successor to the debtor, 
        and a hypothetical investor domiciled in the State in 
        which the debtor resides or has its principal place of 
        business typical of the holders of claims or interests 
        in the case, that would enable such a hypothetical 
        [reasonable] investor [typical of holders of claims or 
        interests] of the relevant class to make an informed 
        judgment about the plan, but adequate information need 
        not include such information about any other possible 
        or proposed plan; and

           *       *       *       *       *       *       *

  [(f) Notwithstanding subsection (b), in a case in which the 
debtor has elected under section 1121(e) to be considered a 
small business--
          [(1) the court may conditionally approve a disclosure 
        statement subject to final approval after notice and a 
        hearing;
          [(2) acceptances and rejections of a plan may be 
        solicited based on a conditionally approved disclosure 
        statement as long as 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 at least 10 days prior to the 
        date of the hearing on confirmation of the plan; and
          [(3) a hearing on the disclosure statement may be 
        combined with a hearing on confirmation of a plan.]
  (f) Notwithstanding subsection (b), in a small business 
case--
          (1) in determining whether a disclosure statement 
        provides adequate information, the court shall consider 
        the complexity of the case, the benefit of additional 
        information to creditors and other parties in interest, 
        and the cost of providing additional information;
          (2) the court may determine that the plan itself 
        provides adequate information and that a separate 
        disclosure statement is not necessary;
          (3) the court may approve a disclosure statement 
        submitted on standard forms approved by the court or 
        adopted pursuant to section 2075 of title 28; and
          (4)(A) the court may conditionally approve a 
        disclosure statement subject to final approval after 
        notice and a hearing;
          (B) acceptances and rejections of a plan may be 
        solicited based on a conditionally approved disclosure 
        statement if the debtor provides adequate information 
        to each holder of a claim or interest that is 
        solicited, but a conditionally approved disclosure 
        statement shall be mailed not less than 20 days before 
        the date of the hearing on confirmation of the plan; 
        and
          (C) the hearing on the disclosure statement may be 
        combined with the hearing on confirmation of a plan.
  (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. 1129. Confirmation of plan

  (a) The court shall confirm a plan only if all of the 
following requirements are met:
          (1) * * *

           *       *       *       *       *       *       *

          (9) Except to the extent that the holder of a 
        particular claim has agreed to a different treatment of 
        such claim, the plan provides that--
                  (A) * * *
                  (B) with respect to a class of claims of a 
                kind specified in section 507(a)(3), 507(a)(4), 
                507(a)(5), 507(a)(6), or 507(a)(7) of this 
                title, each holder of a claim of such class 
                will receive--
                          (i) * * *
                          (ii) if such class has not accepted 
                        the plan, cash on the effective date of 
                        the plan equal to the allowed amount of 
                        such claim; [and]
                  (C) with respect to a claim of a kind 
                specified in section 507(a)(8) of this title, 
                the holder of such claim will receive on 
                account of such claim [deferred cash payments, 
                over a period not exceeding six years after the 
                date of assessment of such claim,] regular 
                installment payments in cash, but in no case 
                with a balloon provision, and no more than 
                three months apart, beginning no later than the 
                effective date of the plan and ending on the 
                earlier of five years after the petition date 
                or the last date payments are to be made under 
                the plan to unsecured creditors, of a value, as 
                of the effective date of the plan, equal to the 
                allowed amount of such claim[.]; and
                  (D) with respect to a secured claim which 
                would be described in section 507(a)(8) of this 
                title but for its secured status, the holder of 
                such claim will receive on account of such 
                claim cash payments of not less than is 
                required in subparagraph (C) and over a period 
                no greater than is required in such 
                subparagraph.

           *       *       *       *       *       *       *

          (14) If the debtor is required by a judicial or 
        administrative order to pay alimony to, maintenance 
        for, or support of a spouse, former spouse, or child of 
        the debtor, the debtor has paid all amounts payable 
        under such order for alimony, maintenance, or support 
        that are due after the date the petition is filed.

           *       *       *       *       *       *       *

  (e) In a small business case, the plan shall be confirmed not 
later than 150 days after the date of the order for relief 
unless such 150-day period is extended as provided in section 
1121(e)(3) of this title.

                SUBCHAPTER III--POSTCONFIRMATION MATTERS

Sec. 1141. Effect of confirmation

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (5) The confirmation of a plan does not discharge a debtor 
that is a corporation from any debt arising from a judicial, 
administrative, or other action or proceeding that is--
          (A) related to the consumption or consumer purchase 
        of a tobacco product; and
          (B) based in whole or in part on false pretenses, a 
        false representation, or actual fraud.
  (6) Notwithstanding the provisions of paragraph (1), the 
confirmation of a plan does not discharge a debtor which is a 
corporation from any debt for a tax or customs duty with 
respect to which the debtor made a fraudulent return or 
willfully attempted in any manner to evade or defeat such tax.

           *       *       *       *       *       *       *


CHAPTER 12--ADJUSTMENT OF DEBTS OF A FAMILY FARMER WITH REGULAR ANNUAL 
INCOME

           *       *       *       *       *       *       *


                         SUBCHAPTER II--THE PLAN

1221.  Filing of plan.
     * * * * * * *
1232.  Special treatment of secured claims.

           *       *       *       *       *       *       *


                        SUBCHAPTER II--THE PLAN

Sec. 1221. Filing of plan

  The debtor shall file a plan not later than 90 days after the 
order for relief under this chapter, except that the court may 
extend such period to any period not later than 150 days after 
the order for relief if the need for an extension is 
attributable to circumstances for which the debtor should not 
justly be held accountable.

           *       *       *       *       *       *       *


Sec. 1225. Confirmation of plan

  (a) Except as provided in subsection (b), the court shall 
confirm a plan if--
          (1) * * *

           *       *       *       *       *       *       *

          (5) with respect to each allowed secured claim 
        provided for by the plan--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) the debtor surrenders the property 
                securing such claim to such holder; [and]
          (6) the debtor will be able to make all payments 
        under the plan and to comply with the plan[.]; and
          (7) the debtor is required by a judicial or 
        administrative order to pay alimony to, maintenance 
        for, or support of a spouse, former spouse, or child of 
        the debtor, the debtor has paid all amounts payable 
        under such order for alimony, maintenance, or support 
        that are due after the date the petition is filed.

           *       *       *       *       *       *       *


Sec. 1228. Discharge

  (a) As soon as practicable after completion by the debtor of 
all payments under the plan, other than payments to holders of 
allowed claims provided for under section 1222(b)(5) or 
1222(b)(10) of this title, and only after a debtor who is 
required by a judicial or administrative order to pay alimony 
to, maintenance for, or support of a spouse, former spouse, or 
child of the debtor, certifies that all amounts payable under 
such order for alimony, maintenance, or support that are due 
after the date the petition is filed have been paid, unless the 
court approves a written waiver of discharge executed by the 
debtor after the order for relief under this chapter, the court 
shall grant the debtor a discharge of all debts provided for by 
the plan allowed under section 503 of this title or disallowed 
under section 502 of this title, except any debt--
          (1) * * *

           *       *       *       *       *       *       *


Sec. 1232. Special treatment of secured claims

  (a)(1) A claim secured by a lien on property of the estate 
shall be allowed or disallowed under section 502 of this title 
the same as if the holder of such claim had recourse against 
the debtor on account of such claim, whether or not such holder 
has such recourse, unless--
          (A) subject to paragraph (2), the holder of such 
        claim elects to apply subsection (b); or
          (B) such holder does not have such recourse, and such 
        property is sold under section 363 of this title or is 
        to be sold under the plan.
  (2) A holder of a claim may not elect to apply subsection (b) 
if--
          (A) such claim is of inconsequential value; or
          (B) the holder of a claim has recourse against the 
        debtor on account of such claim, and such property is 
        sold under section 363 of this title or is to be sold 
        under the plan.
  (b) If such an election is made to apply this subsection, 
then notwithstanding section 506(a) of this title, such claim 
is a secured claim to the extent such claim is allowed.

  CHAPTER 13--ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME

         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

Sec.
1301.  Stay of action against codebtor.
     * * * * * * *
1308.  Filing of prepetition tax returns.

           *       *       *       *       *       *       *


         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

Sec. 1301. Stay of action against codebtor

  (a) * * *
  (b)(1) A creditor may present a negotiable instrument, and 
may give notice of dishonor of such an instrument.
  (2) When the debtor did not receive the consideration for the 
claim held by a creditor, the stay provided by subsection (a) 
does not apply to such creditor, notwithstanding subsection 
(c), to the extent the creditor proceeds against the individual 
which received such consideration or against property not in 
the possession of the debtor which secures such claim, but this 
subsection shall not apply if the debtor is primarily obligated 
to pay the creditor in whole or in part with respect to the 
claim under a legally binding separation agreement, or divorce 
or dissolution decree, with respect to such individual or the 
person who has possession of such property.
  (3) When the debtor's plan provides that the debtor's 
interest in personal property subject to a lease as to which 
the debtor is the lessee will be surrendered or abandoned or no 
payments will be made under the plan on account of the debtor's 
obligations under the lease, the stay provided by subsection 
(a) shall terminate as of the date of confirmation of the plan 
notwithstanding subsection (c).

           *       *       *       *       *       *       *


Sec. 1302. Trustee

  (a) * * *
  (b) The trustee shall--
          (1) * * *

           *       *       *       *       *       *       *

          (4) advise, other than on legal matters, and assist 
        the debtor in performance under the plan; [and]
          (5) ensure that the debtor commences making timely 
        payments under section 1326 of this title[.];
          (6) investigate and verify the debtor's monthly net 
        income and other information provided by the debtor 
        pursuant to sections 521 and 1322, and pursuant to 
        section 111, if applicable; and
          (7) file annual reports with the court, with copies 
        to holders of claims under the plan, as to whether a 
        modification of the amount paid creditors under the 
        plan is appropriate because of changes in the debtor's 
        monthly net income.

           *       *       *       *       *       *       *


Sec. 1307. Conversion or dismissal

  (a) * * *

           *       *       *       *       *       *       *

  (e) Upon the failure of the debtor to file tax returns under 
section 1308 of this title, on request of a party in interest 
or the United States trustee and after notice and a hearing, 
the court shall dismiss a case or convert a case under this 
chapter to a case under chapter 7 of this title, whichever is 
in the best interests of creditors and the estate.
  [(e)] (f) The court may not convert a case under this chapter 
to a case under chapter 7, 11, or 12 of this title if the 
debtor is a farmer, unless the debtor requests such conversion.
  [(f)] (g) Notwithstanding any other provision of this 
section, a case may not be converted to a case under another 
chapter of this title unless the debtor may be a debtor under 
such chapter.

Sec. 1307A. Adequate protection in chapter 13 cases

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

Sec. 1308. Filing of prepetition tax returns

  (a) On or before the day prior to the day on which the first 
meeting of the creditors is convened under section 341(a) of 
this title, the debtor shall have filed with appropriate tax 
authorities all tax returns for all taxable periods ending in 
the 6-year period ending on the date of filing of the petition.
  (b) If the tax returns required by subsection (a) have not 
been filed by the date on which the first meeting of creditors 
is convened under section 341(a) of this title, the trustee may 
continue such meeting for a reasonable period of time, to allow 
the debtor additional time to file any unfiled returns, but 
such additional time shall be no more than--
          (1) for returns that are past due as of the date of 
        the filing of the petition, 120 days from such date,
          (2) for returns which are not past due as of the date 
        of the filing of the petition, the later of 120 days 
        from such date or the due date for such returns under 
        the last automatic extension of time for filing such 
        returns to which the debtor is entitled, and for which 
        request has been timely made, according to applicable 
        nonbankruptcy law, and
          (3) upon notice and hearing, and order entered before 
        the lapse of any deadline fixed according to this 
        subsection, where the debtor demonstrates, by clear and 
        convincing evidence, that the failure to file the 
        returns as required is because of circumstances beyond 
        the control of the debtor, the court may extend the 
        deadlines set by the trustee as provided in this 
        subsection for--
                  (A) a period of no more than 30 days for 
                returns described in paragraph (1) of this 
                subsection, and
                  (B) for no more than the period of time 
                ending on the applicable extended due date for 
                the returns described in paragraph (2).
  (c) For purposes of this section only, a return includes a 
return prepared pursuant to section 6020 (a) or (b) of the 
Internal Revenue Code of 1986 or similar State or local law, or 
a written stipulation to a judgment entered by a nonbankruptcy 
tribunal.

SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *


Sec. 1322. Contents of plan

  (a) The plan shall--
          (1) * * *
          (2) provide for the full payment, in deferred cash 
        payments, of all claims entitled to priority under 
        section 507 of this title, unless the holder of a 
        particular claim agrees to a different treatment of 
        such claim; [and]
          (3) if the plan classifies claims, provide the same 
        treatment for each claim within a particular class[.]; 
        and
          (4) state, under penalties of perjury, the amount of 
        monthly net income, which may be as adjusted under 
        section 111, if applicable, of this title and the 
        amount of monthly net income which will be paid per 
        month to unsecured nonpriority creditors under the 
        plan.
  (b) Subject to subsections (a) and (c) of this section, the 
plan may--
          (1) * * *
          [(2) modify the rights of holders of secured claims, 
        other than a claim secured only by a security interest 
        in real property that is the debtor's principal 
        residence, or of holders of unsecured claims, or leave 
        unaffected the rights of holders of any class of 
        claims;]
          (2) modify the rights of holders of secured claims, 
        other than a claim secured primarily by a security 
        interest in property used as the debtor's principal 
        residence at any time during 180 days prior to the 
        filing of the petition, or of holders of unsecured 
        claims, or leave unaffected the rights of holders of 
        any class of claims;

           *       *       *       *       *       *       *

  [(d) The plan may not provide for payments over a period that 
is longer than three years, unless the court, for cause, 
approves a longer period, but the court may not approve a 
period that is longer than five years.]
  (d) If the total current monthly income of the debtor and in 
a joint case, the debtor and the debtor's spouse combined, is 
not less than the highest national median family income 
reported for a family of equal or lesser size or, in the case 
of a household of 1 person, not less than the national median 
household income for 1 earner, the plan may not provide for 
payments over a period that is longer than 5 years, unless the 
court, for cause, approves a longer period, but the court may 
not approve a period that exceeds 7 years. If the total current 
monthly income of the debtor or in a joint case, the debtor and 
the debtor's spouse combined, is less than the highest national 
median family income reported for a family of equal or lesser 
size, or in the case of a household of 1 person less than the 
national median household income for 1 earner, the plan may not 
provide for payments over a period that is longer than 3 years, 
unless the court, for cause, approves a longer period, but the 
court may not approve a period that is longer than 5 years.

           *       *       *       *       *       *       *


Sec. 1324. Confirmation hearing

  [After] (a) Except as provided in subsection (b) and after 
notice, the court shall hold a hearing on confirmation of the 
plan. A party in interest may object to confirmation of the 
plan.
  (b) The hearing on confirmation of the plan may be held not 
earlier than 20 days, and not later than 45 days, after the 
meeting of creditors under section 341(a) of this title.

Sec. 1325. Confirmation of plan

  (a) Except as provided in subsection (b), the court shall 
confirm a plan if--
          (1) * * *

           *       *       *       *       *       *       *

          (5) with respect to each allowed secured claim 
        provided for by the plan--
                  (A) the holder of such claim has accepted the 
                plan;
                  (B)[(i) the plan provides that the holder of 
                such claim retain the lien securing such claim; 
                and] (i) the plan provides that the holder of 
                such claim retain the lien securing such claim 
                until the earlier of payment of the underlying 
                debt determined under nonbankruptcy law or 
                discharge under section 1328, and that if the 
                case under this chapter is dismissed or 
                converted without completion of the plan, such 
                lien shall also be retained by such holder to 
                the extent recognized by applicable 
                nonbankruptcy law; and
                  (ii) the value, as of the effective date of 
                the plan, of property to be distributed under 
                the plan on account of such claim is not less 
                than the allowed amount of such claim; or
                  (C) the debtor surrenders the property 
                securing such claim to such holder; [and]
          (6) the debtor will be able to make all payments 
        under the plan and to comply with the plan[.];
          (7) if the debtor is required by a judicial or 
        administrative order to pay alimony to, maintenance 
        for, or support of a spouse, former spouse, or child of 
        the debtor, the debtor has paid all amounts payable 
        under such order for alimony, maintenance, or support 
        that are due after the date the petition is filed; and
          (8) if the debtor has filed all Federal, State, and 
        local tax returns as required by section 1308 of this 
        title.
  (b)(1) If the trustee or the holder of an allowed unsecured 
claim objects to the confirmation of the plan, then the court 
may not approve the plan unless, as of the effective date of 
the plan--
          (A) * * *
          [(B) the plan provides that all of the debtor's 
        projected disposable income to be received in the 
        three-year period beginning on the date that the first 
        payment is due under the plan will be applied to make 
        payments under the plan.]
          (B) the plan provides--
                  (i) that payments to unsecured nonpriority 
                creditors who are not insiders shall equal or 
                exceed $50 in each month of the plan;
                  (ii) that during the applicable commitment 
                period beginning on the date that the first 
                payment is due under the plan, the total amount 
                of monthly net income received by the debtor 
                shall be paid to unsecured nonpriority 
                creditors under the plan less only payments 
                pursuant to section 1326(b); the ``applicable 
                commitment period'' shall be not less than 5 
                years if the debtor's total current monthly 
                income is not less than the highest national 
                median family income reported for a family of 
                equal or lesser size or, in the case of a 
                household of 1 person, is not less than the 
                national median household income for1 earner, 
as of the date of confirmation of the plan and shall be not less than 3 
years if the debtor's total current monthly income is less than the 
highest national median family income reported for a family of equal or 
lesser size or, in the case of a household of 1 person, is less than 
the national median household income for 1 earner, as of the date of 
confirmation of the plan;
                  (iii) that the amount payable to each class 
                of unsecured nonpriority claims under the plan 
                shall be increased or decreased during the plan 
                proportionately to the extent the debtor's 
                monthly net income during the plan increases or 
                decreases as reasonably determined by the 
                trustee, subject to section 111 of this title, 
                no less frequently than as of each anniversary 
                of the confirmation of the plan based on 
                monthly net income as of 45 days before such 
                anniversary; and
                  (iv) nothing in subparagraph (i) or (ii) 
                shall prevent the payment of obligations 
                described in section 507(a)(7) at the times 
                provided for in the plan, and the plan shall 
                specify how payments to other creditors under 
                subparagraph (ii) will be accordingly adjusted.
  [(2) 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 of this title on such date; 
and]

           *       *       *       *       *       *       *


Sec. 1328. Discharge

  (a) As soon as practicable after completion by the debtor of 
all payments under the plan, and only after a debtor who is 
required by a judicial or administrative order to pay alimony 
to, maintenance for, or support of a spouse, former spouse, or 
child of the debtor, certifies that all amounts payable under 
such order for alimony, maintenance, or support that are due 
after the date the petition is filed have been paid, unless the 
court approves a written waiver of discharge executed by the 
debtor after the order for relief under this chapter, the court 
shall grant the debtor a discharge of all debts provided for by 
the plan or disallowed under section 502 of this title, except 
any debt--
          (1) * * *
          (2) of the kind specified in paragraph (1), (2), 
        (3)(B), (4), (5), (6), (8), [or (9)] (9), or (18) of 
        section 523(a) of this title; or

           *       *       *       *       *       *       *

  (f) Notwithstanding subsections (a) and (b), the court shall 
not grant a discharge of all debts provided for by the plan or 
disallowed under section 502 of this title if the debtor has 
received a discharge in any case filed under this title within 
5 years of the order for relief under this chapter.

Sec. 1329. Modification of plan after confirmation

  (a) * * *

           *       *       *       *       *       *       *

  (c) A plan modified under this section may not provide for 
payments over a period that expires after [three years] the 
applicable commitment period under section 1325(b)(1)(B)(ii) 
after the time that the first payment under the original 
confirmed plan was due, unless the court, for cause, approves a 
longer period, but the court may not approve a period that 
expires after [five years] maximum duration period after such 
time. The maximum duration period shall be 5 years if the total 
current monthly income of the debtor, and in a joint case, the 
debtor and the debtor's spouse combined, is not less than the 
highest national median family income reported for a family of 
equal or lesser size or, in the case of a household of 1 
person, not less than the national median household income for 
1 earner, as of the date of the modification and shall be 3 
years if the total current monthly income is less than the 
highest national median family income reported for a family of 
equal or lesser size or, in the case of a household of 1 
person, less than the national median household income for 1 
earner as of the date of the modification.

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 28, UNITED STATES CODE

PART I--ORGANIZATION OF COURTS

           *       *       *       *       *       *       *


                      CHAPTER 6--BANKRUPTCY JUDGES

Sec.
151.  Designation of bankruptcy courts.
     * * * * * * *
[158.  Appeals.]
159.  Bankruptcy statistics.

           *       *       *       *       *       *       *


Sec. 157. Procedures

  (a) * * *
  (b)(1) Bankruptcy judges may hear and determine all cases 
under title 11 and all core proceedings arising under title 11, 
or arising in a case under title 11, referred under subsection 
(a) of this section, and may enter appropriate orders and 
judgments, subject to review under [section 158] section 1293 
of this title.
  (2) Core proceedings include, but are not limited to--
          (A) * * *

           *       *       *       *       *       *       *

          (N) orders approving the sale of property other than 
        property resulting from claims brought by the estate 
        against persons who have not filed claims against the 
        estate; [and]
          (O) other proceedings affecting the liquidation of 
        the assets of the estate or the adjustment of the 
        debtor-creditor or the equity security holder 
        relationship, except personal injury tort or wrongful 
        death claims[.]; and
          (P) recognition of foreign proceedings and other 
        matters under chapter 6.

           *       *       *       *       *       *       *

  (c)(1) * * *
  (2) Notwithstanding the provisions of paragraph (1) of this 
subsection, the district court, with the consent of all the 
parties to the proceeding, may refer a proceeding related to a 
case under title 11 to a bankruptcy judge to hear and determine 
and to enter appropriate orders and judgments, subject to 
review under [section 158] section 1293 of this title.

           *       *       *       *       *       *       *


[Sec. 158. Appeals

  [(a) The district courts of the United States shall have 
jurisdiction to hear appeals--
          [(1) from final judgments, orders, and decrees;
          [(2) from interlocutory orders and decrees issued 
        under section 1121(d) of title 11 increasing or 
        reducing the time periods referred to in section 1121 
        of such title; and
          [(3) with leave of the court, from other 
        interlocutory orders and decrees;
and, with leave of the court, from interlocutory orders and 
decrees, of bankruptcy judges entered in cases and proceedings 
referred to the bankruptcy judges under section 157 of this 
title. An appeal under this subsection shall be taken only to 
the district court for the judicial district in which the 
bankruptcy judge is serving.
  [(b)(1) The judicial council of a circuit shall establish a 
bankruptcy appellate panel service composed of bankruptcy 
judges of the districts in the circuit who are appointed by the 
judicial council in accordance with paragraph (3), to hear and 
determine, with the consent of all the parties, appeals under 
subsection (a) unless the judicial council finds that--
                  [(A) there are insufficient judicial 
                resources available in the circuit; or
                  [(B) establishment of such service would 
                result in undue delay or increased cost to 
                parties in cases under title 11.
Not later than 90 days after making the finding, the judicial 
council shall submit to the Judicial Conference of the United 
States a report containing the factual basis of such finding.
  [(2)(A) A judicial council may reconsider, at any time, the 
finding described in paragraph (1).
  [(B) On the request of a majority of the district judges in a 
circuit for which a bankruptcy appellate panel service is 
established under paragraph (1), made after the expiration of 
the 1-year period beginning on the date such service is 
established, the judicial council of the circuit shall 
determine whether a circumstance specified in subparagraph (A) 
or (B) of such paragraph exists.
  [(C) On its own motion, after the expiration of the 3-year 
period beginning on the date a bankruptcy appellate panel 
service is established under paragraph (1), the judicial 
council of the circuit may determine whether a circumstance 
specified in subparagraph (A) or (B) of such paragraph exists.
  [(D) If the judicial council finds that either of such 
circumstances exists, the judicial council may provide for the 
completion of the appeals then pending before such service and 
the orderly termination of such service.
  [(3) Bankruptcy judges appointed under paragraph (1) shall be 
appointed and may be reappointed under such paragraph.
  [(4) If authorized by the Judicial Conference of the United 
States, the judicial councils of 2 or more circuits may 
establish a joint bankruptcy appellate panel comprised of 
bankruptcy judges from the districts within the circuits for 
which such panel is established, to hear and determine, upon 
the consent of all the parties, appeals under subsection (a) of 
this section.
  [(5) An appeal to be heard under this subsection shall be 
heard by a panel of 3 members of the bankruptcy appellate panel 
service, except that a member of such service may not hear an 
appeal originating in the district for which such member is 
appointed or designated under section 152 of this title.
  [(6) Appeals may not be heard under this subsection by a 
panel of the bankruptcy appellate panel service unless the 
district judges for the district in which the appeals occur, by 
majority vote, have authorized such service to hear and 
determine appeals originating in such district.
  [(c)(1) Subject to subsection (b), each appeal under 
subsection (a) shall be heard by a 3-judge panel of the 
bankruptcy appellate panel service established under subsection 
(b)(1) unless--
          [(A) the appellant elects at the time of filing the 
        appeal; or
          [(B) any other party elects, not later than 30 days 
        after service of notice of the appeal;
to have such appeal heard by the district court.
  [(2) An appeal under subsections (a) and (b) of this section 
shall be taken in the same manner as appeals in civil 
proceedings generally are taken to the courts of appeals from 
the district courts and in the time provided by Rule 8002 of 
the Bankruptcy Rules.
  [(d) The courts of appeals shall have jurisdiction of appeals 
from all final decisions, judgments, orders, and decrees 
entered under subsections (a) and (b) of this section.]

Sec. 159. Bankruptcy statistics

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

           *       *       *       *       *       *       *


PART II--DEPARTMENT OF JUSTICE

           *       *       *       *       *       *       *


                   CHAPTER 39--UNITED STATES TRUSTEES

Sec.
581.  United States trustees.
     * * * * * * *
589b.  Bankruptcy data.

           *       *       *       *       *       *       *


Sec. 586. Duties; supervision by Attorney General

  (a) Each United States trustee, within the region for which 
such United States trustee is appointed, shall--
          (1) * * *

           *       *       *       *       *       *       *

          (3) supervise the administration of cases and 
        trustees in cases under chapter 6, 7, 11, 12, or 13 of 
        title 11 by, whenever the United States trustee 
        considers it to be appropriate--
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) monitoring the progress of cases under 
                title 11 and taking such actions as the United 
                States trustee deems to be appropriate to 
                prevent undue delay in such progress; [and]
                  (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;
                  [(H)] (I) monitoring applications filed under 
                section 327 of title 11 and, whenever the 
                United States trustee deems it to be 
                appropriate, filing with the court comments 
                with respect to the approval of such 
                applications;

           *       *       *       *       *       *       *

          (5) perform the duties prescribed for the United 
        States trustee under title 11 and this title, and such 
        duties consistent with title 11 and this title as the 
        Attorney General may prescribe; [and]
          (6) make such reports as the Attorney General 
        directs.

           *       *       *       *       *       *       *

  (f)(1) The Attorney General shall establish procedures for 
the auditing of the accuracy and completeness of petitions, 
schedules, and other information which the debtor is required 
to provide under sections 521 and 1322, and, if applicable, 
section 111, of title 11 in individual cases filed under 
chapter 7 or 13 of such title. Such audits shall be in 
accordance with generally accepted auditing standards and 
performed by independent certified public accountants or 
independent licensed public accountants. Such procedures 
shall--
          (A) establish a method of selecting appropriate 
        qualified persons to contract with the United States 
        trustee to perform such audits;
          (B) establish a method of randomly selecting cases to 
        be audited according to generally accepted audit 
        standards, provided that no less than 1 out of every 
        100 cases in each Federal judicial district shall be 
        selected for audit;
          (C) require audits for schedules of income and 
        expenses which reflect higher than average variances 
        from the statistical norm of the district in which the 
        schedules were filed;
          (D) establish procedures for reporting the results of 
        such audits and any material misstatement of income, 
        expenditures or assets of a debtor to the Attorney 
        General, the United States Attorney and the court, as 
        appropriate, and for providing public information no 
        less than annually on the aggregate results of such 
        audits including the percentage of cases, by district, 
        in which a material misstatement of income or 
        expenditures is reported; and
          (E) establish procedures for fully funding such 
        audits.
  (2) The United States trustee for each district is authorized 
to contract with auditors to perform audits in cases designated 
by the United States trustee according to the procedures 
established under paragraph (1) of this subsection.
  (3) According to procedures established under paragraph (1), 
upon request of a duly appointed auditor, the debtor shall 
cause the accounts, papers, documents, financial records, files 
and all other papers, things or property belonging to the 
debtor as the auditor requests and which are reasonably 
necessary to facilitate an audit to be made available for 
inspection and copying.
  (4) The report of each such audit shall be filed with the 
court, the Attorney General, and the United States Attorney, as 
required under procedures established by the Attorney General 
under paragraph (1). If a material misstatement of income or 
expenditures or of assets is reported, a statement specifying 
such misstatement shall be filed with the court and the United 
States trustee shall give notice thereof to the creditors in 
the case and, in an appropriate case, in the opinion of the 
United States trustee, requires investigation with respect to 
possible criminal violations, the United States Attorney for 
the district.

           *       *       *       *       *       *       *


Sec. 589b. Bankruptcy data

  (a) Rules.--The Attorney General shall, within a reasonable 
time after the effective date of this section, issue rules 
requiring uniform forms for (and from time to time thereafter 
to appropriately modify and approve)--
          (1) final reports by trustees in cases under chapters 
        7, 12, and 13 of title 11; and
          (2) periodic reports by debtors in possession or 
        trustees, as the case may be, in cases under chapter 11 
        of title 11.
  (b) Reports.--All reports referred to in subsection (a) shall 
be designed (and the requirements as to place and manner of 
filing shall be established) so as to facilitate compilation of 
data and maximum possible access of the public, both by 
physical inspection at 1 or more central filing locations, and 
by electronic access through the Internet or other appropriate 
media.
  (c) Required Information.--The information required to be 
filed in the reports referred to in subsection (b) shall be 
that which is in the best interests of debtors and creditors, 
and in the public interest in reasonable and adequate 
information to evaluate the efficiency and practicality of the 
Federal bankruptcy system. In issuing rules proposing the forms 
referred to in subsection (a), the Attorney General shall 
strike the best achievable practical balance between--
          (1) the reasonable needs of the public for 
        information about the operational results of the 
        Federal bankruptcy system; and
          (2) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
  (d) Final Reports.--Final reports proposed for adoption by 
trustees under chapters 7, 12, and 13 of title 11 shall, in 
addition to such other matters as are required by law oras the 
Attorney General in the discretion of the Attorney General, shall 
propose, include with respect to a case under such title--
          (1) information about the length of time the case was 
        pending;
          (2) assets abandoned;
          (3) assets exempted;
          (4) receipts and disbursements of the estate;
          (5) expenses of administration;
          (6) claims asserted;
          (7) claims allowed;
          (8) distributions to claimants and claims discharged 
        without payment;
in each case by appropriate category and, in cases under 
chapters 12 and 13 of title 11, date of confirmation of the 
plan, each modification thereto, and defaults by the debtor in 
performance under the plan.
  (e) Periodic Reports.--Periodic reports proposed for adoption 
by trustees or debtors in possession under chapter 11 of title 
11 shall, in addition to such other matters as are required by 
law or as the Attorney General, in the discretion of the 
Attorney General, shall propose, include--
          (1) information about the standard industry 
        classification, published by the Department of 
        Commerce, for the businesses conducted by the debtor;
          (2) length of time the case has been pending;
          (3) number of full-time employees as at the date of 
        the order for relief and at end of each reporting 
        period since the case was filed;
          (4) cash receipts, cash disbursements and 
        profitability of the debtor for the most recent period 
        and cumulatively since the date of the order for 
        relief;
          (5) compliance with title 11, whether or not tax 
        returns and tax payments since the date of the order 
        for relief have been timely filed and made;
          (6) all professional fees approved by the court in 
        the case for the most recent period and cumulatively 
        since the date of the order for relief (separately 
        reported, in for the professional fees incurred by or 
        on behalf of the debtor, between those that would have 
        been incurred absent a bankruptcy case and those not); 
        and
          (7) plans of reorganization filed and confirmed and, 
        with respect thereto, by class, the recoveries of the 
        holders, expressed in aggregate dollar values and, in 
        the case of claims, as a percentage of total claims of 
        the class allowed.

           *       *       *       *       *       *       *


PART III--COURT OFFICERS AND EMPLOYEES

           *       *       *       *       *       *       *


    CHAPTER 57--GENERAL PROVISIONS APPLICABLE TO COURT OFFICERS AND 
EMPLOYEES

           *       *       *       *       *       *       *


Sec. 960. Tax liability

  (a) Any officers and agents conducting any business under 
authority of a United States court shall be subject to all 
Federal, State and local taxes applicable to such business to 
the same extent as if it were conducted by an individual or 
corporation.
  (b) Such taxes shall be paid when due in the conduct of such 
business unless--
          (1) the tax is a property tax secured by a lien 
        against property that is abandoned within a reasonable 
        time after the lien attaches, by the trustee of a 
        bankruptcy estate, pursuant to section 554 of title 11; 
        or
          (2) payment of the tax is excused under a specific 
        provision of title 11.
  (c) In a case pending under chapter 7 of title 11, payment of 
a tax may be deferred until final distribution is made under 
section 726 of title 11 if--
          (1) the tax was not incurred by a trustee duly 
        appointed under chapter 7 of title 11; or
          (2) before the due date of the tax, the court has 
        made a finding of probable insufficiency of funds of 
        the estate to pay in full the administrative expenses 
        allowed under section 503(b) of title 11 that have the 
        same priority in distribution under section 726(b) of 
        title 11 as such tax.

           *       *       *       *       *       *       *


PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


                     CHAPTER 83--COURTS OF APPEALS

Sec.
1291.  Final decisions of district courts.
     * * * * * * *
1293.  Bankruptcy appeals.

           *       *       *       *       *       *       *


Sec. 1293. Bankruptcy appeals

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

           *       *       *       *       *       *       *


CHAPTER 85--DISTRICT COURTS; JURISDICTION

           *       *       *       *       *       *       *


Sec. 1334. Bankruptcy cases and proceedings

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) [Nothing in] Except with respect to a case under 
chapter 6 of title 11, nothing in this section prevents a 
district court in the interest of justice, or in the interest 
of comity with State courts or respect for State law, from 
abstaining from hearing a particular proceeding arising under 
title 11 or arising in or related to a case under title 11.
  (2) * * *
  (d) Any decision to abstain or not to abstain made under this 
subsection (other than a decision not to abstain in a 
proceeding described in subsection (c)(2)) is not reviewable by 
appeal or otherwise by the court of appeals under section 
[158(d), 1291, or 1292] 1291, 1292, or 1293 of this title or by 
the Supreme Court of the United States under section 1254 of 
this title. This subsection shall not be construed to limit the 
applicability of the stay provided for by section 362 of title 
11, United States Code, as such section applies to an action 
affecting the property of the estate in bankruptcy.

           *       *       *       *       *       *       *


CHAPTER 87--DISTRICT COURTS; VENUE

           *       *       *       *       *       *       *


Sec. 1409. Venue of proceedings arising under title 11 or arising in or 
                    related to cases under title 11

  (a) * * *
  (b) Except as provided in subsection (d) of this section, a 
trustee in a case under title 11 may commence a proceeding 
arising in or related to such case to recover a money judgment 
of or property worth less than $1,000 or a consumer debt of 
less than $5,000, or a nonconsumer debt against a noninsider of 
less than $10,000, only in the district court for the district 
in which the defendant resides.

           *       *       *       *       *       *       *


CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

           *       *       *       *       *       *       *


Sec. 1452. Removal of claims related to bankruptcy cases

  (a) * * *
  (b) The court to which such claim or cause of action is 
removed may remand such claim or cause of action on any 
equitable ground. An order entered under this subsection 
remanding a claim or cause of action, or a decision to not 
remand, is not reviewable by appeal or otherwise by the court 
of appeals undersection [158(d), 1291, or 1292] 1291, 1292, or 
1293 of this title or by the Supreme Court of the United States 
under section 1254 of this title.

           *       *       *       *       *       *       *


                           PART V--PROCEDURE

                      CHAPTER 123--FEES AND COSTS

Sec. 1930. Bankruptcy fees

  (a) Notwithstanding section 1915 of this title, the parties 
commencing a case under title 11 shall pay to the clerk of the 
district court or the clerk of the bankruptcy court, if one has 
been certified pursuant to section 156(b) of this title, the 
following filing fees:
          (1) * * *

           *       *       *       *       *       *       *

          (6) In addition to the filing fee paid to the clerk, 
        a quarterly fee shall be paid to the United States 
        trustee, for deposit in the Treasury, in each case 
        under chapter 11 of title 11 for each quarter 
        (including any fraction thereof) [until the case is 
        converted or dismissed, whichever occurs first]. [The] 
        Until the plan is confirmed or the case is converted 
        (whichever occurs first) the fee shall be $250 for each 
        quarter in which disbursements total less than $15,000; 
        $500 for each quarter in which disbursements total 
        $15,000 or more but less than $75,000; $750 for each 
        quarter in which disbursements total $75,000 or more 
        but less than $150,000; $1,250 for each quarter in 
        which disbursements total $150,000 or more but less 
        than $225,000; $1,500 for each quarter in which 
        disbursements total $225,000 or more but [less than 
        $300,000;] less than $300,000. Until the case is 
        converted or dismissed (whichever occurs first and 
        without regard to confirmation of the plan) the fee 
        shall be $3,750 for each quarter in which disbursements 
        total $300,000 or more but less than $1,000,000; $5,000 
        for each quarter in which disbursements total 
        $1,000,000 or more but less than $2,000,000; $7,500 for 
        each quarter in which disbursements total $2,000,000 or 
        more but less than $3,000,000; $8,000 for each quarter 
        in which disbursements total $3,000,000 or more but 
        less than $5,000,000; $10,000 for each quarter in which 
        disbursements total $5,000,000 or more. The fee shall 
        be payable on the last day of the calendar month 
        following the calendar quarter for which the fee is 
        owed.

           *       *       *       *       *       *       *


                              ----------                              


                 SECTION 456 OF THE SOCIAL SECURITY ACT

                          SUPPORT OBLIGATIONS

  Sec. 456. (a) * * *
  (b) Nondischargeability.--A debt (as defined in section 101 
of title 11 of the United States Code), including interest 
accrued on such debt under State law, owed under State law to a 
State (as defined in such section) or municipality (as defined 
in such section) that is in the nature of support [and] or that 
is enforceable under this part is not [released by a discharge] 
dischargeable in bankruptcy under title 11 of the United States 
Code.

                              ----------                              


   SECTION 302 OF THE BANKRUPTCY JUDGES, UNITED STATES TRUSTEES, AND 
                  FAMILY FARMER BANKRUPTCY ACT OF 1986

SEC. 302. EFFECTIVE DATES; APPLICATION OF AMENDMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  [(f) Repeal of Chapter 12 of Title 11.--Chapter 12 of title 
11 of the United States Code is repealed on October 1, 1998. 
All cases commenced or pending under chapter 12 of title 11, 
United States Code, and all matters and proceedings in or 
relating to such cases, shall be conducted and determined under 
such chapter as if such chapter had not been repealed. The 
substantive rights of parties in connection with such cases, 
matters, and proceedings shall continue to be governed under 
the laws applicable to such cases, matters, and proceedings as 
if such chapter had not been repealed.]

                            DISSENTING VIEWS

    Although we could support a responsible and balanced 
bankruptcy reform effort, which remedies debtor abuses while 
responding to the legitimate needs and concerns of hardworking 
debtors and small businesses, we believe the legislation 
reported by the Committee is too extreme. The case has not been 
made to support the adoption of a bureaucratic, costly and 
untested one-size fits all ``means test'' approach to consumer 
bankruptcy. The means test, along with other consumer changes 
vastly enhancing the rights of unsecured creditors, will have a 
severe impact on the most vulnerable members of society, 
including women and children reliant on alimony and child 
support payments. At the same time, the small business, real 
estate, and tax provisions of H.R. 3150 unduly elevate the 
rights of creditors at the expense of hundreds of thousands of 
businesses and the many jobs they support.
    The legislation and its rapid pace have been opposed by a 
number of important groups, including:
          (A) groups concerned about the impact of bankruptcy 
        on hardworking Americans and consumers, such as the 
        AFL-CIO, UAW, UNITE, the Consumer Federation of 
        America, Consumers' Union, and Public Citizen;
          (B) groups concerned about the integrity and fairness 
        of the bankruptcy process, such as the National 
        Conference of Bankruptcy Judges, the National 
        Bankruptcy Conference, the American College of 
        Bankruptcy, the National Association of Consumer 
        Bankruptcy Attorneys, the National Association of 
        Bankruptcy Trustees, the National Association of 
        Chapter 13 Trustees, and the Alliance for Justice; and
          (C) groups concerned about the bankruptcy rights of 
        women and children and victims of crimes and torts, 
        such as the National Organization of Women, Mothers 
        Against Drunk Driving, the National Organization for 
        Victim Assistance, the National Victim Center, the 
        Association for Children of Enforcement Support, and 
        the Governing Counsel of the Family Law Section of the 
        American Bar Association.
The Justice Department also has taken a position in opposition 
to many of H.R. 3150's provisions, including the controversial 
consumer portions of the bill, and the Small Business 
Administration is opposed to the small business provisions of 
the bill.
    Many of us support various sections in the bill, such as 
those providing for streamlined bankruptcy administration 
(section 411), enhanced protections for retirement plans in 
bankruptcy (section 118), making chapter 12 concerning family 
farm reorganizations permanent (section 203), protection of 
tithing in bankruptcy (section 118), clarifying the law 
relating to international insolvencies (Title VI), eliminating 
the dishchargeability of smoking claims involving fraud or 
deceipt (section 119A), and capping state homestead exemptions 
(section 182). However, any merit in these sections is in our 
view outweighed by the problems inherent in the consumer, and 
business provisions of H.R. 3150. For these and the following 
reasons, we dissent from H.R. 3150.

       I. The Process Has Been Unnecessarily Hurried and Partisan

    Unlike previous efforts to enact bankruptcy reform, the 
process concerning H.R. 3150 has been unnecessarily hurried and 
partisan. The legislation is being brought to the House floor a 
mere five months and five hearings after receipt of the report 
of the congressionally-created National Bankruptcy Review 
Commission. Unfortunately, we cannot say that the final bill 
reported by the Committee reflects any substantive negotiations 
or give and take with the Democratic Members of the Committee. 
Democrats received a 177-page Chairman's substitute 
effectuating substantial revisions from the original bill less 
than 24 hours before the Subcommittee markup, which took place 
at the same time when the Committee had major legislation on 
the floor. The Committee markup took three contentious days, 
and the final bill is being reported a mere two business days 
after the markup--the bare minimum permitted under House 
Rules--which hardly affords time to complete the reviews, cost 
estimates and examinations needed for a bill of this magnitude.
    By contrast, the last major overhaul of the bankruptcy 
laws--the 1978 Bankruptcy Code--was enacted a full five years 
and sixty days of hearings after the 1973 Bankruptcy Commission 
issued its report. In addition, all of the recent bankruptcy 
law changes (enacted in 1978, 1984, and 1994) were developed in 
close bipartisan cooperation and were approved by the House on 
a consensus basis, typically by voice vote. Such careful and 
bipartisan deliberation is important given the wide-ranging 
impact of the bankruptcy laws, the intricate and technical 
nature of the laws, and the fact that more Americans come into 
contact with the bankruptcy courts than all other federal 
courts combined.
    It is for these reasons, among others, that a wide range of 
mainstream bankruptcy groups have asked Congress to delay 
consideration of omnibus bankruptcy legislation until it can be 
considered deliberately and in depth. The National Conference 
of Bankruptcy Judges (which includes 319 of the nation's 326 
bankruptcy judges) has written to the Speaker that ``[t]he 
fast-paced approach to [bankruptcy legislation] concerns 
[us].'' 1 Separately, 110 bankruptcy judges have 
written a joint letter complaining that the pending bankruptcy 
bills ``are too important and their proposed changes too 
sweeping to be acted on without thorough consideration. We are 
alarmed by how little study appears to have been given to the 
bills.'' 2
---------------------------------------------------------------------------
    \1\ Letter from Robert F. Hershner, Jr., President, The National 
Conference of Bankruptcy Judges, to Rep. Gingrich (Apr. 2, 1998).
    \2\ Letter from 110 United States bankruptcy judges to All Members 
of the United States Congress (Apr. 2, 1998).
---------------------------------------------------------------------------
    Bankruptcy academics are also alarmed by the hurried pace 
of the legislative process, with fifty-seven leading law 
professors writing in March that ``the pace related to the 
examination of [the bankruptcy] legislation has been fast, and 
the study of its consequences was superficial.'' 3 
Leading bankruptcy practitioners, represented by the American 
College of Bankruptcy, have testified also that ``there are 
dangers lurking in a rush to judgment without further study. 
Wrong answers could cause more problems than they solve.'' 
4
---------------------------------------------------------------------------
    \3\ Letter from Professor Bruce A. Markell to All Members of the 
House and Senate Judiciary Committees (Mar. 31, 1998).
    \4\ [cite to hearing testimony] The Alliance for Justice, an 
umbrella organization of more than 40 public interest organizations, 
has also written that ``the Bankruptcy Code is an extremely technical 
area of law, relied upon by Americans in times of great need. In the 
past, substantive revisions to the Code were carefully analyzed and 
only made after a thorough examination of the record. The 1978 
revisions to the Code have worked well, largely because these changes 
were the product of careful deliberation.'' [cite]
---------------------------------------------------------------------------
    The Majority is also acting in the complete absence of any 
objective study establishing any need or basis for the radical 
revisions being proposed by H.R. 3150. The only evidence, other 
than anecdotal evidence, cited by the proponents of this 
legislation has been from studies commissioned and funded by 
the credit card industry, which has a direct financial interest 
in the outcome of this legislation. 5 The reports 
purport to demonstrate that a significant number of debtors 
have the ability to discharge large amounts of debt under 
current law which they are otherwise able to repay. The reports 
also argue that this ability to discharge such debt imposes a 
net cost on other consumers of credit and of goods and 
services.
---------------------------------------------------------------------------
    \5\ John M. Barron, Ph.D., and Michael E. Staten, Ph.D., Personal 
Bankruptcy: A Report on Petitioners' Ability to Pay (October 6, 1997); 
Ernst & Young, LLP, Chapter 7 Bankruptcy Petitioners' Ability to Repay: 
Additional Evidence from Bankruptcy Petition Files (February 1998); 
WEFA Group, The Financial Costs of Personal Bankruptcy (February 1998). 
The Subcommittee requested the underlying data but all three groups 
completing these studies refused to make it available.
---------------------------------------------------------------------------
    These studies have been reviewed by the General Accounting 
Office on numerous occasions.6 In each case, the GAO 
found these industry-sponsored studies to be based on anecdotal 
evidence, questionable assumptions and methodologies, and non-
public data. Thus, the GAO concluded, ``[a] number of these 
data sources and assumptions were discussed only in general 
terms. Without more detailed explanation, it is difficult to 
assess the reliability of the data used; the reasonableness of 
the reports assumptions; and, thus, the accuracy of the 
report's estimates of creditor losses and bankruptcy system 
costs in 1997.'' 7 Similarly, discussing the works 
of the Credit Research Center and Ernst & Young on debtors' 
ability to pay, the GAO concluded:

    \6\ General Accounting Office, Personal Bankruptcy: The Credit 
Research Center Report on Debtors' Ability to Pay (GAO/GGD98-47, 
February 1998); Hearing on Pending Bankruptcy Legislation Before the 
Subcommittee on Commercial and Administrative Law of the House 
Judiciary Committee, 105th Congress (March 12, 1998) (Statement of 
Richard M. Stana); Letter from Richard M. Stana, Associate Director, 
Administration of Justice Issues, General Accounting Office, to The 
Honorable Martin T. Meehan (April 23, 1998). The reviews were competed 
at the request of the Committee Minority on two occasions following 
numerous requests from Subcommittee Ranking Member Jerrold Nadler that 
the request be made on a bipartisan basis, and on one occasion at the 
request of the Chair and Ranking Minority Member of the Senate 
Subcommittee on Administrative Oversight and the Courts.
    \7\ In addition, GAO noted that ``both studies assume that 100 
percent of debtors' net income after allowable expenses for a 5-year 
period would be used for debt repayment, which does not reflect actual 
bankruptcy practice. In fiscal year 1996, 14 percent of chapter 13 
debtor payments were used for administrative costs, such as statutory 
trustee fees. Also, each report's estimate of potential debt repayment 
assumes that all repayment plans will be successfully completed. Data 
from the Administrative Office of the U.S. Courts shows that only about 
one-third of the 953,180 chapter 13 repayment plans terminated between 
1981 and 1993 were successfully completed. . . . The samples were not 
designed to be representative of the nation as a whole or of each city 
for the year in which they were drawn. Therefore, the data on which the 
reports were based may not reflect all bankruptcy filings nationwide or 
in each of the 15 locations for the years from which the petitions were 
drawn.''
---------------------------------------------------------------------------
           * * * both of these studies share two fundamental 
        assumptions that have not been validated: (1) that the 
        information found on debtors' initial schedules of 
        estimated income, estimated expenses, and debts is 
        accurate; and (2) that this information can be used to 
        satisfactorily forecast debtors' income and expenses 
        for a 5-year period.8
---------------------------------------------------------------------------
    \8\ Id. Statement of Richard M. Stana, supra note   , at (i).

    Moreover, other analyses conducted by independent academics 
and governmental agencies have drawn very different 
---------------------------------------------------------------------------
conclusions. For example, Prof. Lawrence M. Ausubel testified:

           * * * [a]ll available statistical evidence points to 
        the record level of household debt as the immediate 
        cause [of the increase in individual bankruptcies] * * 
        * In 1984, aggregate American Household debt (consumer 
        credit outstanding +mortgage debt) equaled 58.0% of 
        aggregate American disposal personal income. By the 
        third quarter of 1997, the household debt had 
        mushroomed to 83.5% of disposal personal income. Along 
        the way, changes in the rate of personal bankruptcy 
        filings fairly closely tracked changes in the household 
        debt burden, with changes in the debt burden leading 
        changes in bankruptcy filings by several quarters.\9\
---------------------------------------------------------------------------
    \9\ Hearing on Pending Bankruptcy Legislation Before the 
Subcommittee on Commercial and Administrative Law of the House 
Judiciary Committee, 105th Congress 4 (March 10, 1998) (Statement of 
Prof. Lawrence M. Ausubel).

    Similarly, a study published by the Federal Deposit 
Insurance Corporation reviewed the impact of interest rate 
deregulation and concluded that ``the pricing and underwriting 
decisions of lenders and the rational borrowing decisions of 
consumers * * * suggests that an increase in both credit 
availability and bankruptcies was a perhaps inevitable result 
of interest rate deregulation.''\10\
---------------------------------------------------------------------------
    \10\ Diane Ellis, Senior Financial Analyst, Economic Analysis 
Section, Division of Insurance, Federal Deposit Insurance Corporation, 
The Effect of Interest Rate Deregulation on Credit Card Volumes, 
Charge-Offs, and the Personal Bankruptcy Rate, Bank Trends, 2 (March 
1998). Similarly, comparing bankruptcy and indebtedness trends in the 
United States and Canada, FDIC noted that ``From 1966 to 1976, the 
personal bankruptcy rate in Canada grew by 340 percent. Over the same 
period, the personal bankruptcy rate in the United States grew by only 
8 percent * * * after interest rate deregulation in the United States, 
the personal bankruptcy rates in both countries a remarkably similar 
pattern * * * Canada's personal bankruptcy rate has taken a very 
similar path to the U.S. personal bankruptcy rate since 1978, although 
there have been no significant recent changes to Canada's bankruptcy 
laws,'' Id. 8-9.
---------------------------------------------------------------------------
    Moreover, other analyses indicate that the rise in 
bankruptcies is more properly attributable to a number of 
changes unrelated to the bankruptcy laws, such as unexpected 
medical costs, increasing divorce, loss of high paying full 
time jobs, and the deregulation of credit card interest rates 
and the increase in credit card solicitations and overall 
consumer debt.11 It also has been shown that the 
average income of persons filing for bankruptcy has declined 
from the 1980's, further contradicting assertions of increasing 
bankruptcy abuse by high income individuals.12
---------------------------------------------------------------------------
    \11\ Professor Elizabeth Warren, et. al., have found that 
unreimbursed medical costs, divorce, and unemployment contribute 
significantly to individual bankruptcies. Nearly 40% of older Americans 
surveyed reported being unable to pay outstanding medical debts as a 
primary reason for filing for bankruptcy. Two-thirds of the debtors 
aged 50-65 cite either a medical reason or a job reason for their 
bankruptcy filings. Similarly, the economic stress following divorce 
plays a significant role in bankruptcy filings. Prof. Warren's sample 
contained 300% more divorced people than the general population. More 
than half of the sample reported a significant period of unemployment 
preceding their filings. See Elizabeth Warren, Consumer Bankruptcy: 
Issues Summary, 2 (April 2, 1998)(Summarizing Elizabeth Warren, The 
Bankruptcy Crisis, 73 Indiana L.J. 1079 (forthcoming, April 1998)).
    \12\ Most significantly, the drop in the median family income of 
chapter 7 individual debtors has fallen in constant 1997 dollars from 
$23,254 in 1981 to $17,652 in 1997. By comparison, the national median 
family income of all families in 1997 was $42,769. See Hearing on 
Pending Bankruptcy Legislation Before the Subcommittee on Commercial 
and Administrative Law of the House Judiciary Committee, 105th 
Congress, 3 (March 26, 1998) (statement of the American Federation of 
Labor--Congress of Industrial Organizations).
---------------------------------------------------------------------------

  II. The Consumer Provisions Are Arbitrary and Unfair, and Will Harm 
      Women and Children and Other Vulnerable Segments of Society

                    Current Law and Proposed Changes

    Under current law, individuals facing financial difficulty 
may seek a variety of forms of relief under the bankruptcy 
laws, with chapter 7 (liquidation) being by far the most common 
form of relief sought. Under this chapter debtors are required 
to forfeit all of their property that is ``exempt'' (i.e., 
deemed necessary for the debtor's maintenance, as determined 
under federal or state law, at the state's option) in exchange 
for receiving a discharge of their unsecured debts. Creditors 
are entitled to receive any net proceeds from the sale of the 
debtor's property, subject to the statutory priority 
schedule.13 The Bankruptcy Code does not permit the 
discharge of certain debts whose payments are considered to be 
important to society. Some of this debt is of the same nature 
as priority debt (e.g., family support obligations and taxes), 
but the law also excepts from discharge debts incurred through 
the debtor's misconduct, such as debts arising from fraud and 
intentional injuries.
---------------------------------------------------------------------------
    \13\ For example, the costs of administering the estate are 
entitled to the first priority, and payments of alimony, child support, 
and taxes are entitled to later priorities, with general unsecured debt 
entitled to any residual assets left over. Secured creditors, such as 
mortgage holders are entitled to be paid at least the value of their 
collateral.
---------------------------------------------------------------------------
     While there are no strict financial criteria for seeking 
chapter 7 relief, section 707(b) of the Bankruptcy Code grants 
the court the discretion to deny relief where the filing is 
found to be a ``substantial abuse.'' 14 This stems 
in part from the costs and potential hardships associated with 
developing specific criteria for chapter 7 eligibility, the 
belief that all honest, hard-working individuals are entitled 
to a ``fresh start,'' and the importance of encouraging risk-
taking and entrepreneurship and avoiding situations akin to 
``debtors prisons'' where it is impossible for individuals to 
escape aggressive creditor collection tactics.15
---------------------------------------------------------------------------
    \14\ The Fourth Circuit has held that the court should apply the 
following factors in determining whether a chapter 7 case should be 
dismissed for ``substantial abuse'': (1) whether the petition was filed 
because of sudden illness, calamity, disability, or unemployment; (2) 
whether the debtor incurred cash advances and made consumer purchases 
far in excess of his ability to pay; (3) whether the debtor's proposed 
family budget is unreasonable or excessive; (4) whether the debtor's 
schedules and statement of current income and expenses reasonably and 
accurately reflect his financial condition; and (5) whether the 
petition was filed in good faith. See In re Green, 934 F. 2d 568, 572-
73 (4th Cir. 1991).
    \15\ There are a number of disincentives to filing for bankruptcy, 
such as the fact that a person filed for a chapter 7 bankruptcy will be 
disclosed on a debtor's credit report, and the law's prohibitions on 
repeat chapter 7 filings for six years.
---------------------------------------------------------------------------
    A separate bankruptcy alternative available to individual 
debtors is chapter 13 (wage earners plan). Under chapter 13, a 
debtor is permitted to retain his or her property, but is 
required to pay to creditors over a 3-5 year period out of 
future wages at least as much as the creditors would have 
received under a chapter 7 liquidation, and is also required to 
pay all priority debts in full. To accomplish this, the debtor 
must propose a plan, administered by a trustee, that pays 
creditors in full or that devotes the debtor's ``disposable 
income'' after accounting for necessary support of the debtor 
and his or her family. In order to encourage the use of chapter 
13 plans, which are currently voluntary to the debtor, Congress 
determined that persons who meet their chapter 13 obligations 
are entitled to a broader discharge of their unpaid debts than 
is available under chapter 7. This ``superdischarge'' results 
in the discharge of several types of debt (such as those for 
fraud) that are not discharged by chapter 7. In addition, 
debtors are permitted to retain property whether or not the 
property is encumbered by liens and the debtor is in default, 
so long as the chapter 13 plan cures any arrearages. In this 
manner, debtors can use chapter 13 to save their homes from 
foreclosure.16 Also, Chapter 13 debtors can also 
propose that they pay off their priority debts, such as taxes 
and family support obligations, before they commence payment on 
their regular unsecured debts.
---------------------------------------------------------------------------
    \16\ In addition, except for certain home mortgages, a debtor in 
chapter 13 may be able to pay to a secured creditor the value of the 
collateral, even if it is less than the full amount of the loan. This 
is known as a ``cramdown.''
---------------------------------------------------------------------------
     H.R. 3150 would institute a number of major changes to 
consumer bankruptcy in general and chapters 7 and 13 in 
particular that will reduce the number of bankruptcy filings 
(but not the number of cases of financial hardship) and 
increase pay-outs to nonpriority unsecured creditors, 
particularly credit card companies. The most far-reaching 
change, set forth in sections 101-103, would institute a so-
called ``means testing'' approach to consumer bankruptcy. This 
new standard would deny chapter 7 relief to debtors with income 
above the national median (based on the most recent six months 
of income) who can pay at least $50 to unsecured creditors per 
month and 20% of their unsecured debts within 5-7 years, after 
allowing for deductions for pro-rated portions of their secured 
and priority debts and their projected living expenses, based 
on Internal Revenue Service collection standards.17 
Debtors fitting this profile would be forced to utilize chapter 
13 of the Bankruptcy Code if they wished to obtain bankruptcy 
relief. As chapter 13 is reconstituted by H.R. 3150, debtors 
would generally be required to dedicate all of their available 
income to unsecured debt, again after allowing deductions for 
secured and priority debts and living expenses per the IRS 
collection standards. Although H.R. 3150 allows for adjustments 
for ``extraordinary circumstances,'' this requires the debtor 
to file a motion with the court, which may be challenged by 
trustee or any creditor, with the burden of proof lying with 
the debtor.
---------------------------------------------------------------------------
    \17\ The consumer provisions were considered so one-sided, that the 
principal sponsor of a predecessor version setting forth these changes 
(H.R. 2500) received a ``Golden Leash'' special interest ``award'' from 
Public Campaign.
---------------------------------------------------------------------------
     Even if a debtor is not barred from chapter 7 by virtue of 
having income below the national median, or having sufficient 
debts or expenses such that he or she cannot meet the means 
testing payment requirements, H.R. 3150 provides another, 
independent grounds for dismissal. Under section 103 of the 
bill, a case may be dismissed under section 707(b) if the 
filing is found to be an ``inappropriate use'' of bankruptcy 
based on ``the totality of the circumstances.'' Rather than 
being discretionary to the court, as under current law, such 
dismissal is mandatory. Also, under H.R. 3150, dismissal 
motions may be brought by creditors, rather than only the court 
or the U.S. Trustee (as under current law).
    H.R. 3150 would also make significant new additions to 
additions to the types of debts that may not be discharged 
under chapters 7 and 13 of the Bankruptcy Code. Section 141 
would grant any debt incurred to pay a non-dischargeable debt 
priority and non-dischargeable status under chapter 7. This 
means, for example, that if a debtor writes a credit card cash 
advance to pay a child support debt, that debt would no longer 
be dischargeable in bankruptcy. Section 142 presumes that any 
person incurring debt within 90 days before bankruptcy is 
committing fraud, even if the debt is used to pay for 
necessities (such as food and clothing), rather than luxury 
goods or items (as is the case under current law). Section 145 
presumes that a debtor is committing fraud by using a credit 
card when he or she ``did not have a reasonable ability to 
repay,'' unless the debtor can prove that he did not apply for 
the credit or that the lender did not reasonably evaluate the 
debtor's repayment ability. Section 143 then goes on to extend 
the exceptions to the superdischarge in chapter 13 to apply to 
these newly-defined cases of credit card ``fraud.''

                Principal Problems with Proposed Changes

 1. the means testing approach is arbitrary and unworkable in practice

    The rigid one-size fits all test taken by H.R. 3150 will 
often operate in an arbitrary fashion. For example, the 
principal safety valve in the operation of the means test--the 
ability to deduct secured and priority debts and other living 
expenses--will be highly problematic inpractice. First, H.R. 
3150 appears to only permit debtors to pay back a prorated amount which 
may be owed on these items (e.g., 1/60 each month over five years). 
Unlike current law,18 the debtor may no longer be able to 
use chapter 13 as a means of quickly catching up on any arrearages 
which may be owed on home mortgage arrearages or past due family 
obligations. Secured lenders and support recipients may have to wait 5 
years to get paid what they are owed. The result will be a far greater 
likelihood of losing one's home or defaulting in alimony and child 
support.
---------------------------------------------------------------------------
    \18\  11 U.S.C. Sec. 1322(a)(2).
---------------------------------------------------------------------------
    Secondly, the bill lays out no comprehensive or specific 
standards for the deduction of living expenses. Unless it is 
clear which of these expenses can be deducted from monthly 
income, it will be very difficult to determine if the 
individuals that are being denied access to chapter 7 actually 
could be able to meet their payment obligations in chapter 13. 
This problem was highlighted by Judge Newsome when he explained 
the results of his efforts to apply the means test to a batch 
of chapter 7 cases: ``I encountered significant problems in 
[applying the proposed means testing formula to a sample of 
cases and] a few unpleasant surprises in the results. * * * I 
believe the [bill's standards] are fatally flawed an 
demonstrably unfair.'' 19
---------------------------------------------------------------------------
    \19\ Hearing on Business Bankruptcy Issues before the Subcommittee 
on Commercial and Administrative Law of the House Judiciary Committee 
105th Congress (Mar. 10, 1998) (statement of Judge Randall J. Newsome).
---------------------------------------------------------------------------
    Part of the problem arises from the fact that the IRS 
standards referenced by the bill are not automatic in many 
cases.20 Although the IRS does set forth national 
standards for some expenses, such as food and 
clothing,21 and local standards for expenses such as 
housing and transportation,22 it leaves the 
determination of ``other necessary expenses'' to the discretion 
of the relevant IRS employee.23 This means that H.R. 
3150 provides no specific guidance concerning the 
appropriateness of deducting all or any of the funds a debtor 
may expend for items such as health care (both medical expenses 
and health insurance), taxes, and accounting and legal fees, 
among other items. Even more dangerously, the IRS collection 
standards specify that it is generally inappropriate to allow 
expense allowances for such important items as school tuition 
and charitable contributions 24, and generally 
discourage payment for expenses relating to care for the 
elderly, invalid, or handicapped.25 As a result, 
H.R. 3150 may have the effect of requiring the payment of 
unsecured debt before allowing for payment of health needs and 
childrens' education. (Efforts to add these items to the 
statutory list of permitted expenses were summarily rejected by 
the Republicans at the markup.26)
---------------------------------------------------------------------------
    \20\ A number of these problems are noted by Judge Wedoff in his 
testimony before the Subcommittee as a Member of the American 
Bankruptcy Institute. [cite]
    \21\ IRS Manual Sec. 5323.432.
    \22\ IRS Manual Sec. 5323.433.
    \23\ IRS Manual Sec. 5323.12.
    \24\ See IRS Manual page 5300-14.3, section 5323.434(4)(a) 
requiring a taxpayer's charitable contributions to provide for the 
taxpayer's or his family's health and welfare or to be a condition of 
employment; and (b) requiring education expenses to be a condition of 
employment or for a physically or mentally handicapped dependent where 
the education is not otherwise provided by public schools.
    \25\ IRS Manual, Exhibit 5300-46.
    \26\ See Amendments offered by Ms. Jackson-Lee, Mr. Scott and Mr. 
Nadler.
---------------------------------------------------------------------------
    Moreover, where the IRS has specific local expense 
standards--such as for housing and transportation--the 
standards allow for wide variations between debtors, leading to 
inequitable results. For example, the current IRS local 
standard for the District of Columbia allows monthly housing 
expenses for a family of four in the amount of $1,397, while a 
household of two in rural Illinois is allowed less than 
$500.27 The permitted automobile expense in the San 
Francisco Bay area for two cars is only $373/month, even 
though, as Judge Newsome points out, most families could barely 
cover the cost of automobile insurance, let alone car payments, 
gasoline, tolls, and insurance under this amount.28
---------------------------------------------------------------------------
    \27\ See website listings at http://www.irs.ustreas.go/prod/
ind__info/coll__stds/cfs-dc.html and il.html.
    \28\ Newsome testimony, supra note 19.
---------------------------------------------------------------------------
    The seemingly arbitrary allowances for transportation and 
housing expenses points to another problem with the means test 
under H.R. 3150--its bias against debtors without secured 
debts. This is because the bill allows all secured debt 
payments to be deducted from monthly income, but limits rental 
and lease payments to the amount permitted by the IRS 
standards. This means that persons renting apartments and 
leasing cars may not be able to deduct the full amount of their 
housing and transportation costs in bankruptcy, while persons 
with mortgages and automobile debt will be able to do so. There 
is no legitimate policy rationale for this discrepancy.
    It is no answer to assert, as the legislation's proponents 
have done, that these ``glitches'' can be resolved through the 
bill's allowance for ``extraordinary circumstances.'' 
Establishing that a particular expense is ``extraordinary'' is 
not simple or cost or risk-free. Extraordinary circumstances 
may be established only on motion to the court prepared by 
legal counsel. Themotion must be heavily detailed and 
documented, and is subject to creditor challenge. Any statement of 
extraordinary circumstances must also be refiled, no less than annually 
during the duration of the bankruptcy plan. Moreover, the burden of 
proof lies with the debtor in establishing extraordinary circumstances, 
and, if the debtor's motion fails, he or she is subject to paying the 
creditor's fees and costs. And all of this is to say nothing of the 
legal costs the debtor himself is required to pay to bring the motion 
(which must be sworn to by his lawyer) and the fact that H.R. 3150 does 
not specifically provide for the deduction of these legal expenses.
    It is also somewhat unrealistic to expect many chapter 13 
cases to reach a successful conclusion as this chapter will be 
reconstituted by H.R. 3150. The current completion rate is less 
than one-third,29 and this is at a time when chapter 
13 is voluntary and the disposable income tests are far less 
strict. Making chapter 13 mandatory and imposing bill's strict 
income and expense tests will undoubtedly result in an even 
smaller proportion of successful chapter 13 plans. A majority 
of the bipartisan National Bankruptcy Review Commission focused 
on this concern, among others, in rejecting the sort of 
inflexible ``means testing'' approach taken by H.R. 3150: 
``with a completion rate of only 32% for voluntary chapter 13 
plans today, forcing unwilling debtors into chapter 13 would 
only burden the system, decreasing both the overall repayment 
to creditors and the successful rehabilitation of debtors.'' 
30
---------------------------------------------------------------------------
    \29\ Bankruptcy: The Next Twenty Years, National Bankruptcy Review 
Commission Final Report, 90-91 (U.S. Government Printing Office, Oct. 
20, 1997).
    \30\ Id.
---------------------------------------------------------------------------

            2. Means Testing Will be Costly and Bureaucratic

    The bill's attempt to impose rigid financial criteria on 
debtors' eligibility for chapter 7 and the operation of chapter 
13 will impose substantial new costs on the bankruptcy system--
both the portions paid for by the federal government (through 
the bankruptcy courts and the U.S. Trustees Program) and the 
debtors (through payment for private chapter 7 and chapter 13 
trustees and higher attorneys' fees).
    Some of these costs would be borne by debtors through 
increased opportunities for litigation, by allowing creditors 
to bring motions for dismissal for ``inappropriate use'' under 
an expanded section 707(b), as well as new opportunity for 
creditors to challenge the dischargeability of certain consumer 
debts, and the right to challenge a debtor's petition to have 
assertion that extraordinary circumstances require an allowance 
for additional expenses or adjustment of current monthly income 
or monthly net income for the purposes of the means test or for 
calculating the amount to be dedicated to repayment of 
unsecured nonpriority debts in chapter 13.31 Other 
costs to the debtor would include increased paperwork and 
filing requirements.32 As Bankruptcy Judge Eugene R. 
Wedoff testified on behalf of the American Bankruptcy 
Institute, ``the proposal requires debtors' counsel to swear to 
the accuracy of any extraordinary expenses claimed by a chapter 
7 debtor * * * this requirement would impose on debtors' 
counsel the obligation of independently verifying all of the 
extraordinary expenses claimed by the debtor, thus increasing 
the cost of the bankruptcy and the time required for the 
case.'' 33
---------------------------------------------------------------------------
    \31\ H.R. 3150, sections 103, 141, 142, 145, 101 and 102.
    \32\ H.R. 3150, section 405 and 406.
    \33\ Hearing on Pending Bankruptcy Legislation Before the 
Subcommittee on Commercial and Administrative Law of the House 
Judiciary Committee, 105th Congress 9 (March 18, 1998)(Statement of 
Hon. Eugene R. Wedoff for the American Bankruptcy Institute).
---------------------------------------------------------------------------
     Increased administration duties imposed on panel and 
standing trustees would also raise the overall cost of this 
legislation. Judge Wedoff, in his testimony, observed that,

          The proposal requires chapter 7 trustees to 
        investigate and report on the debtor's net income in 
        each chapter 7 case. The vast majority of chapter 7 
        cases involve no assets for distribution to creditors, 
        and hence only a nominal fee for the trustee. The new 
        investigation and report will substantially add to the 
        work required of trustees in no-asset cases, with no 
        provision for additional compensation. (The 
        investigation and reporting requirements for chapter 13 
        would increase the costs of the chapter 13 trustee, 
        reducing the portion of plan contributions available to 
        creditors.) 34
---------------------------------------------------------------------------
    \34\ Id.

    Henry E. Hildebrand, Chair of the Legislative Committee of 
the National Association of Chapter Thirteen Trustees estimates 
---------------------------------------------------------------------------
that:

          * * * [i]f the investigation by a [chapter 7] trustee 
        required about an hour and the preparation of the 
        report required on half hour, then the time required 
        would total about 1.5 million hours of time (assuming a 
        bankruptcy filing rate of one million petitions filed 
        in a year which would be a reduction of about 25%). If 
        the value of that time were calculated at $150 per 
        hour, the costs would be $225 million in time. * * * 
        Assuming that one out of nine cases filing for chapter 
        7 relief would be contested and further assuming that 
        the contest would require about two hours of pretrial 
        preparation and one hour of court time, the litigation 
        would require 276,000 additional hours, about 90,000 of 
        which would occupy the court.35
---------------------------------------------------------------------------
    \35\ Henry E. Hildebrand, The Hidden Costs of Bankruptcy Reform 2 
(1998)(unpublished manuscript on file with the Committee on the 
Judiciary, minority staff).

    Another chapter 13 trustee, Devin Deham-Burk, attempted to 
calculate the cost of performing duties imposed on a standing 
trustee by H.R. 3150, based on her own case-load. In that 
study, she estimated that the costs to administer the San Jose 
trusteeship would increase by nearly $1.5 million, an almost 
50% increase. As a result of the increased costs and 
concomitant increased fees, she estimated a net annual amount 
lost to creditors of $1,525,200.00.36
---------------------------------------------------------------------------
    \36\ Devin Derham-Burk, Report on Cost to Administer Chapter 13 
Cases Under H.R. 3150 at 34 (March 5, 1998) (unpublished manuscript on 
file with the Committee on the Judiciary).
---------------------------------------------------------------------------
    Other costs would be charged to the taxpayers. For example, 
the requirement in section 404 that ``audits shall be in 
accordance with generally accepted auditing standards and 
performed by independent certified public accountants or 
independent licensed public accountants at a rate of ``no less 
than 1 out of every 100 cases in each Federal judicial 
district'' will likely be prohibitive. In 1997, individual 
bankruptcies exceeded 1.3 million cases, which, under this 
section would have required in excess of 26,000 audits. 
According to the Department of Justice, which would have to 
administer this mandate, ``implementing the audit program 
contemplated by this section could cost from $45 million to 
more than $174 million over five years. This cost is in large 
part a function of the number audited and the use of 
independent CPAs. The cost of the audits could easily exceed 
the total sum appropriated to fund the entire United States 
Trustee program in Fiscal Year 1998. Moreover, the bill 
provides no funding mechanism to cover these costs.'' 
37
---------------------------------------------------------------------------
    \37\ Letter from Ann M. Harkins, Acting Assistant Attorney General, 
to Honorable Henry J. Hyde, Chairman, House Committee on the Judiciary 
15 (May 7, 1998) (emphasis added).
---------------------------------------------------------------------------
    In a preliminary estimate of the costs to the government of 
H.R. 3150, the Congressional Budget Office estimated that 
``between 20-30 additional bankruptcy judges would be required 
to meet the increased workload requirements that would be 
imposed on the courts under H.R. 3150. Costs for the salaries 
and benefits of judges would be between $4 million and $5 
million annually, and costs for support personnel and other 
administrative expenses would be between $9 million and $12 
million annually.'' 38 An additional $5 million 
annually would be required by the U.S. Trustees for increased 
litigation.39 Overall, CBO estimates that to 
implement the means testing provisions alone ``would most 
likely cost $16 million to $20 million annually.'' 
40
---------------------------------------------------------------------------
    \38\ Congressional Budget Office, Comparison of the Means-Testing 
Provisions in S. 1301, as reported by the Senate Judiciary Committee's 
Subcommittee on Administrative Oversight and the Courts on April 2, 
1998, and in H.R. 3150, as introduced on February 3, 1998 5 (May 8, 
1998).
    \39\ Id. at 4.
    \40\ Id. a 1.
---------------------------------------------------------------------------
    Significantly, it is our understanding that the Majority 
plans to file the report and take H.R. 3150 to the floor 
without a final CBO estimate. This is significant because of 
the potentially major costs of the legislation, which were 
compounded by amendments offered at Committee whose cost and 
scope has never been assessed.41
---------------------------------------------------------------------------
    \41\ For example, and amendment was approved that was offered by 
Mr. Goodlate that reduces chapter 11 fees.
---------------------------------------------------------------------------
    In many cases, the cost of administering the chapter 13 
case will not even approach the payoff to unsecured creditors. 
Consider the fact that under H.R. 3150, families with a mere 
$50 in projected net monthly income could be subjected to a 
mandatory repayment plan under chapter 13 to obtain any 
bankruptcy relief. The estimated supervisory costs would be 
approximately $1,000 in administrative costs and trustees 
fees,42 but the collections would be only $600 per 
year in credit card and other general unsecured debt--a loss of 
$400 per year. And this calculation does not even take into 
account the cost of additional judicial and trustee time and 
resources and private legal fees to implement the new 
proposals.
---------------------------------------------------------------------------
    \42\ Letter from Ralph R. Mabey to Hon. Orrin G. Hatch (Apr. 28, 
1998).
---------------------------------------------------------------------------

 3. means testing and the other consumer provisions will unfairly harm 
                     poor and middle income people

    It is incorrect to assume that the effect of H.R. 3150's 
harmful provisions would be limited to individuals seeking 
bankruptcy relief who earn more than the median income. First, 
there are numerous, significant flaws in the manner in which 
median income is calculated. For example, the median income 
figure required under H.R. 3150 will inevitably be outdated and 
understated. This is because the bill states that household 
income is to be based on the most recent Census Bureau figures 
available as of January 1. But as of January 1, the Census has 
information available for only the second year prior to the 
date. Accordingly, during this year, 1998, census figures are 
only available for 1996. At times of inflation, this two-year 
lag could result in a significant increase in the number of 
individuals denied chapter 7 because they may earn more than 
the median income figure being used. In addition, the starting 
point for the calculation of income may be overstated. 
Averaging one's income during the six month period prior to the 
bankruptcy filing may not accurately reflect the debtor's 
ability to pay debts due to recent drop-offs or declines in 
income stemming from job loss, or new job status.43
---------------------------------------------------------------------------
    \43\ A useful and comprehensive critique of the problems involved 
in the determination of income is also set forth in Judge Wedoff's 
testimony before the Subcommittee.
---------------------------------------------------------------------------
    Another serious flaw in H.R. 3150 is that the means test is 
not the only ground for exclusion from chapter 7. Under the 
revised section 707(b), debtors must be denied chapter 7 relief 
based on the ``totality of the circumstances.'' This means that 
individuals who earn far less than national median income will 
be subject to exclusion--in essence providing a second ``bite 
atthe apple'' for creditors wanting to deny individuals 
bankruptcy relief. And the bill provides no safe harbor whatsoever, so 
the totality of the circumstances test can apply to even the most 
impoverished and hard-pressed debtors.
    The problems caused by the ``totality of the 
circumstances'' test is aggravated by the fact that H.R. 3150 
will permit creditors and other parties in interest to bring 
section 707b motions unlike current law that permits only the 
court and U.S. Trustees to do so. This means that aggressive 
creditors will have extremely wide latitude to use such motions 
as a tool for making bankruptcy an expensive, protracted and 
contentious process for honest debtors. Such creditor motions 
could easily be used as leverage by creditors to obtain 
reaffirmation agreements so that their unsecured debts survive 
bankruptcy.
    The fact that H.R. 3150 seeks to introduce such an open 
ended and subjective test on top of the statutory means test 
belies claims by the bill's supporters that they are attempting 
to develop a ``bright line'' test for chapter 7 eligibility. 
And the fact that the totality of the circumstances test can 
only operate to the debtor's disadvantage further highlights 
the one-sided nature of the bill.
    Several other consumer provisions will exact significant 
hardships on all debtors, regardless of their income level or 
degree of culpability. As noted above, sections 141, 142, 143, 
and 145 would create broad new classes of nondischargeability 
for debt (1) used to pay other non-dischargeable debt; and 
presumptions of nondischargeabililty for debt (2) incurred 
within 90 days of filing for bankruptcy, and (3) credit card 
debt incurred without a ``reasonable ability to repay.'' These 
new exceptions from discharge obviate many of the benefits that 
debtors may realize from filing for bankruptcy, under chapter 7 
or 13. The proposed new fraud presumptions will also increase 
the opportunity for creditor abuse. Consumer bankruptcy expert 
Henry Sommer has explained that these provisions:

          * * * increase the opportunity for creditors to file 
        the types of abusive fraud complaints which have been 
        found by many courts to be baseless and unjustified 
        attempts to coerce reaffirmations by debtors who cannot 
        afford to defend them. The new presumptions of 
        nondischargeability will fall mainly on low income 
        debtors who are unsophisticated, do not have the time, 
        budget flexibility, or attorney advice to plan their 
        bankruptcy cases carefully, have to file on short 
        notice to prevent utility shutoffs or other impending 
        creditor actions and will not have the funds to defend 
        dischargeability complaints.44
---------------------------------------------------------------------------
    \44\ Hearing on Business Bankruptcy Issues before the Subcommittee 
on Commercial and Administrative Law of the House Judiciary Committee, 
105th Congress, (Mar. 10, 1998) (statement of Henry J. Sommer).
---------------------------------------------------------------------------

 4. The Consumer Provisions Will Have a Significant, Adverse Impact on 
    Women and Children as well as Victims of Crimes and Severe Torts

    In addition to the overall impact of H.R. 3150 on women 
struggling to raise families and make ends meet,45 
the bill will have a particularly adverse impact on the payment 
of alimony and child support. The basic problem arises from the 
fact that bankruptcy and insolvency are by definition a zero-
sum game. There is only so much money available to be divided 
among the creditors. By design, H.R. 3150 will increase the 
amount of funds being paid to unsecured creditors, and it 
therefore should come as no surprise that such payments will 
often come at the expense of other, less-aggressive creditors, 
such as women and children owed alimony and child support. This 
problem is by no means insignificant given that an estimated 
243,000-325,000 bankruptcy cases involved child support and 
alimony orders during the most recent years.46
---------------------------------------------------------------------------
    \45\ See Elizabeth Warren, Bankruptcy and Single Parents, (Apr. 27, 
1998) (Summarizing Elizabeth Warren, Teresa Sullivan, and Jay 
Westbrook, The Bankruptcy Crisis, 73 Indiana L.J. 1079 (forthcoming, 
Apr. 1998).
    \46\ The reported data are from the Consumer Bankruptcy Project, 
Phase II. Principal researchers are Dr. Teresa Sullivan, Vice-President 
of the University of Texas, Professor Jay Westbrook, Benno Schmidt 
Chair in Business Law, University of Texas, and Elizabeth Warren, Leo 
Gottlieb Professor of Law, Harvard Law School. These estimates are 
based on data collected in 1991 in sixteen judicial districts around 
the country. For more details about the study, see Sullivan, Warren and 
Westbrook, Consumer Debtors Ten Years Later: A Financial Comparison of 
Consumer Bankruptcy 1981-91, 68 AMERICAN BANKRUPTCY LAW JOURNAL 121 
(1994).
---------------------------------------------------------------------------
    Under current law, alimony and child support are treated as 
priority debt that is not subject to discharge.47 
This preferential treatment dates from as early as 
1903,48 and is based on Congress' determination that 
the payment of these debts is so important to society that it 
should come ahead of more general creditors. Although H.R. 3150 
does not revoke this special treatment, it will have the effect 
of diminishing the likelihood of full payment of alimony and 
child support. This arises as a result of several features of 
the bill--its creation of significant new categories of non-
dischargeable debt; the likely stretch out of payments of 
priority debt in chapter 13 and the extension of the length of 
chapter 13 plans, and the bill's limitations on the 
availability of chapter 7 relief.
---------------------------------------------------------------------------
    \47\ 11 U.S.C. Sec. Sec. 507(a)(7) & 523(a)(5).
    \48\ Dodd Statement on Bankruptcy Reform and Child Support (May 5, 
1998) (Statement of Sen. Dodd).
---------------------------------------------------------------------------
    Each one of these changes will make it less likely that a 
former spouse will be able to make his required alimony and 
child support payments. First, by making significant amounts of 
credit card debt non-dischargeable, more of these debts will 
survive bankruptcy. Since most chapter 7 and 13 debtors do not 
have the ability to repay most of their unsecured debts, 
financialpressure on the debtor will continue after bankruptcy, 
decreasing his ability to handle important support obligations.
    Second, by extending chapter 13 priority payment schedules 
and the length of plans, the legislation will make support 
recipients wait longer to receive their past due payments. 
Under the bill, it will be far more difficult for the debtor to 
provide for accelerated payment of alimony and child support 
arrearages, since the bill still provides that priority debts 
are required to be paid on a pro-rated basis over sixty or more 
months. Also, by extending the length of the plans by at least 
two years--from at least three to five or even seven years--the 
bill further delays the period over which child care and 
alimony arrearages are to be paid.
    The third factor at work against women and children is the 
bill's limitation on bankruptcy as a remedy. Clearly, 
application of the proposed means test and the totality of the 
circumstances test will have the effect of making chapter 7 
less available to the average debtor. The proportion of 
successful chapter 13 cases can be expected to decline also 
under the bill's chapter 13 formula. Financially-troubled 
individuals will be less likely to reorder their financial 
affairs to ensure they can meet their support obligations.
    Collectively considered, these changes will help foster an 
environment where unsecured and credit card debt is far more 
likely to compete against alimony and child support obligations 
in the state law collection process. As a recent Congressional 
Research Service Memorandum analyzing H.R. 3150 concluded, 
under the bill ``child support and credit card obligations 
could be `pitted against' one another.* * * Both the domestic 
creditor and the commercial credit card creditor could pursue 
the debtor and attempt to collect from postpetition assets, but 
not in the bankruptcy court.'' 49
---------------------------------------------------------------------------
    \49\ Memorandum from the Congressional Research Service on Impact 
of consumer bankruptcy reform proposals on child support obligations 
(May 13, 1998).
---------------------------------------------------------------------------
    Of course, outside of the bankruptcy court is precisely the 
arena where sophisticated credit card companies have the 
greatest advantages. While federal bankruptcy court provides a 
strict set of priority and payment rule, State law collection 
is far more akin to ``survival of the fittest.'' Whichever 
creditor engages in the most aggressive tactic--be it through 
repeated collection demands and letters, the ability to cut off 
access to future credit, garnish wages or foreclose on assets--
is most likely to be repaid. As Marshall Wolf has written on 
behalf of the Governing Counsel of the Family Law Section of 
the American Bar Association, ``if credit card debt is added to 
the current list of items that are now not dischargeable after 
a bankruptcy of a support payer, the alimony and child support 
recipient will be forced to compete with the well organized, 
well financed, and obscenely profitable credit card companies 
to receive payments from the limited income of the poor guy who 
just went through a bankruptcy. It is not a fair fight and it 
is one that women and children who rely on support will lose.'' 
50
---------------------------------------------------------------------------
    \50\ Statement of Marshall J. Wolf (May 13, 1998) (on file with the 
House Committee on The Judiciary).
---------------------------------------------------------------------------
    It is for these reasons that groups concerned about the 
payment of alimony and child support have expressed their 
strong opposition to the bill. The California Women's Law 
Center has written that, ``our own analysis and that of experts 
in bankruptcy law indicates that women who are both creditors 
and debtors in bankruptcy will be particularly harmed if [H.R. 
3150 is] allowed to become law.'' 51 Similarly, the 
Association for Children and Enforcement of Support has 
observed, ``placing credit card debt in the same category as 
child support would cause single parents to have to compete 
with credit card companies for the debtor's available cash.'' 
52 And the National Organization of Women has 
written that ``an analysis of the proposed legislation shows 
that * * * many women will be seriously disadvantaged by [the 
bill]. The central problem is that H.R. 3150 would place credit 
card debt on an equal footing with child support and alimony 
obligations in bankruptcy.'' 53 The First Lady has 
also highlighted H.R. 3150's impact on women and children, 
writing, ``I do quarrel with aspects of the bill that would 
force single parents to compete for their child support 
payments with bank banks trying to collect credit card debt.'' 
54
---------------------------------------------------------------------------
    \51\ Letter from Abby J. Leiberman, Executive Director, California 
Women's Law Center, to Hon. Dianne Feinstein (Apr. 27, 1998).
    \52\ Letter from Geraldine Jensen, President, Association for 
Children for Enforcement of Support, Inc., to Rep. Nadler (May 7, 
1998).
    \53\ Letter from Kim Gandy, Executive Vice President, National 
Organization for Women, Inc., to Rep. Nadler (May 6, 1998).
    \54\ Hillary Rodham Clinton, Bankruptcy shouldn't let parents off 
the hook, Washington Times, May 7, 1998.
---------------------------------------------------------------------------
    Assertions by the legislation's supporters that any 
disadvantages to women and children under H.R. 3150 are offset 
by amendments approved at the Subcommittee and Full Committee 
are not persuasive. First off, the bill's proponents adamantly 
denied that the bill created any problems with regard to 
alimony and child support.55 When proponents finally 
acknowledged there was a problem, the amendments offered did 
not respond to the provisions in the bill causing the problem--
namely the provisions providing for non-dischargeability of 
credit card debt, delaying and stretching out chapter 13 
payments, and denying access to bankruptcy generally.
---------------------------------------------------------------------------
    \55\ Letter from Rep. Gekas, Rep. Boucher, Rep. McCollum, and Rep. 
Moran to their Congressional Colleagues (Apr. 29, 1998).
---------------------------------------------------------------------------
    Sections added at Subcommittee creating a new exception for 
discharge for debts owed to the states (Sec. 146) would 
increase the ability of the government to compete for debt 
repayment with innocent spouses and children. And making 
property settlement obligations non-dischargeable (Sec. 147) 
could have the unintended consequence of forcing an ex-spouse 
who is owed alimony and child support to compete against 
another ex-spouse who may be owed significant assets from a 
rich property settlement which has nothing to do with basic 
living expenses. Again, the net result is the needy spouse and 
child could be placed at a relative disadvantage by these 
changes.
    With regard to the Full Committee amendments, new section 
150 purports to preserve the priority of support obligations 
after the debtor has emerged from bankruptcy. Putting aside the 
very questionable constitutional foundation for this provision, 
this amendment is not likely to provide any substantial 
benefits to support recipients. Collection activities often 
proceed informally. The fact that one unsecured debt has legal 
``priority'' over another debt is irrelevant if no legal 
process is ever invoked. Thus, if one creditor has greater 
resources to exercise more leverage than another, the well-
financed aggressive creditor may get paid first without ever 
having to resort to judicial process and is perfectly entitled 
to do so in the state law collection system. In addition, 
unless two creditors actively are seeking to attach, garnish, 
or execute on the same property, it is unclear how state courts 
will be able to ensure that a priority debt gets paid ahead of 
another debt unless a complex noticing system for unsecured 
claims is developed, which would be ineffective if support 
recipients did not know that they had to record their claims.
    Another amendment appended language to the end of section 
102 stating that nothing shall prevent the payment of 
obligations with priority under 11 U.S.C. Sec. 507 and that the 
plan shall specify how payments to other creditors will be 
accordingly adjusted. However, this admonition does not seem to 
alter the other requirements of this subsection dictating the 
calculation of all plan payments, each of which is dependent 
partially on the others and the proration of secured and 
priority debt over the length of the chapter 13 plan. 
Corresponding adjustments to the plan will likely make the plan 
unconfirmable, or, at the very least, infeasible. In addition, 
this provision does not resolve the exclusion of current 
support obligations in the Chapter 13 budget, notwithstanding 
the precatory language in section 146 of the bill.
    A third amendment, offered by Chairman Hyde to section 141 
and 146, purported to fix the problem caused by provisions in 
H.R. 3150 which would require custodial parents seeking to 
recover child support arrears to compete with credit card 
companies both in bankruptcy and post discharge. Although the 
amendment purports to give a higher ``priority'' in the 
distribution of the debtor's funds to child support, the 
amendment continues to allows a credit card debt to receive a 
higher priority if the credit card was used to pay certain 
other debts. Moreover, since credit card debts continue to be 
added to the list of ``priority debts,'' the bill still 
requires that these debts must be paid in full as part of a 
chapter 13 payment plan. If the debtor cannot pay both, he 
cannot move forward with a payment plan to repay past due child 
support and other priority debts.
    These reasons also explain why victim groups are so 
strongly opposed to H.R. 3150. Current law does not discharge 
debts from willful or malicious injury, death or personal 
injury caused by the operation of a motor vehicle, or criminal 
restitution payments.56 Making more credit card debt 
nondischargeable and forcing more financially-troubled 
individuals outside of bankruptcy will place these individuals 
at a relative disadvantage as well.
---------------------------------------------------------------------------
    \56\ 11 U.S.C. Sec. Sec. 523(a)(6), (9), & (13).
---------------------------------------------------------------------------
    As the National Organization for Victim Assistance has 
written, ``more exempted creditors with rights to the same 
finite amount of resources means lower payments to all. 
Inevitably, for vicitim-creditors, that means either a smaller 
return on the restitution owed, or a longer period of 
repayment, or both.'' 57 The National Victim Center 
has similarly observed, ``to equate contractual losses of a 
commercial creditor with personal obligations [for victim 
claims as H.R. 3150 does] is to belittle their importance and 
to reduce directly the likelihood that crime victims will ever 
be financially restored despite obtaining an order of 
restitution or a civil judgment from a court.'' 58 
The Mothers Against Drunk Driving (MADD) has also complained 
that if ``individuals whose lives have been shattered 
financially and emotionally by the death or serious injury of 
their family members * * * have to compete with credit card 
companies for the limited post-discharge income of debtors 
available [as H.R. 3150 requires], they may themselves end up 
in bankruptcy.'' 59 MADD also noted that in contrast 
to crash victims, ``lending institutions have the ability to 
provide some degree of protection to themselves when they issue 
credit cards to individuals and they are in a better financial 
position to absorb losses, which to them is a cost of doing 
business.'' 60
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    \57\ Letter from Marlene A. Young, Executive Director, National 
Organization for Victim Assistance, to Rep. Hyde (May 15, 1998).
    \58\ Letter from David Beatty, Director of Public Policy, National 
Victim Center, to Rep. Nadler (May 11, 1998).
    \59\ Letter from Robert C. Shearouse, Director of Public Policy, 
Mothers Against Drunk Driving, to Rep. Gekas (May 11, 1998).
    \60\ Id.
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  III. The Small Business and Real Estate Provisions of the Bill Will 
              Lead to Premature Liquidation and Cost Jobs

    Businesses may use chapter 11 of the Bankruptcy Code in an 
effort to obtain relief from the creditors while they seek to 
develop a plan to reorder their affairs and pay as much of 
theirdebts as their operations will allow. Under this chapter, 
businesses obtain an ``automatic stay,'' which forestalls creditor 
collection efforts. During this time period, debtors have an 
opportunity to examine their contracts and leases and determine which 
ones to assume and which ones to reject (with rejection leading to a 
claim for damages). Debtors are subject to a number of requirements 
during this period, such as the formation of creditor committees and 
various ongoing financial disclosures. Presently, only 69% of all 
bankruptcy filings are business related reorganizations under chapter 
11. Business-related bankruptcies declined by more than one-third 
between 1987 and 1997.61
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    \61\ Letter from Jere W. Glover, Chief Counsel for Advocacy, U.S. 
Small Business Administration, to Rep. Nadler (Apr. 22, 1998).
---------------------------------------------------------------------------
    The goal of chapter 11 is to determine whether there is any 
ongoing business value that can be preserved to pay off 
creditors while maintaining as many jobs and contractual 
relationships as possible. To this end, the debtor is given an 
exclusive 120-day period (unless lengthened or shortened for 
cause) in which to develop a reorganization plan and convince a 
majority of the creditors that the plan is in their best 
interests and is preferable to a liquidation ``fire sale.'' As 
with chapter 7, any reorganization plan must provide for 
payments in order of statutory priority.
    In 1994, Congress enacted two modest exceptions to the 
general rules of chapter 11. The first related to ``small 
businesses,'' defined as entities engaged in commercial or 
business activities whose aggregate debts do not exceed $2 
million. Such designated small businesses are permitted (but 
not required) to dispense with creditor committees, receive 
only a 100-day plan exclusivity period, and are entitled to 
more liberal provisions for disclosure and solicitation for 
acceptances of their proposed reorganization plan. In 1994, 
Congress also developed a special set of rules applicable to 
``single asset real estate,'' generally defined as cases in 
which the principal asset is a single piece of real estate 
subject to debt of no more than $4 million. In such cases, 
secured creditors are permitted to foreclose on their 
collateral unless the debtor files a reorganization plan which 
is likely to be confirmed or commences payment on the secured 
loan within a 90-day period. This exception to chapter 11 
procedures was justified on the grounds that single asset real 
estate cases were seen as essentially private two-party loan 
disputes, which did not implicate ongoing businesses or jobs.
    The business provisions of the bill would effectuate a 
number of changes in the manner in which corporations, 
partnerships and other business entities are permitted to 
reorganize their financial affairs. With respect to small 
business, H.R. 3150 would expand the definition of eligible 
small business to those companies having debts of less than $5 
million and would include all single asset real estate cases 
regardless of the amount of debt outstanding. It would also 
make the small business requirements mandatory (rather than 
optional) and mandate the operation of numerous additional 
requirements on debtors. For example, under H.R. 3150, small 
business debtors would be required to provide balance sheets, 
statements of operations, cash-flow statements, and income tax 
returns within three days after filing a bankruptcy petition, 
the time period the debtor has the exclusive right to file a 
plan of reorganization would be further shortened (to 90 days), 
and the standards for being able to seek an extension of this 
time period would be substantially narrowed. In addition, by 
striking section 1325(b)(2)(B) from chapter 13 of the 
Bankruptcy Code, section 102(6) of H.R. 3150 prevents sole 
proprietors and other small businesses from being able to use 
chapter 13 to reorganize their businesses.
    It is for these reasons that both the AFL-CIO and the Small 
Business Administration are opposed to the small business 
provisions of the bill. The AFL-CIO has warned, ``the 
potentially broad reach of [the small business provisions] and 
the manner in which they restrict the workings of a bankruptcy 
case for these businesses will likely place numerous jobs at 
risk.'' 62 Similarly, the Small Business 
Administration has written that under H.R. 3150, ``for small 
business debtors, the proposed changes would require such 
substantial additional costs for the reorganization process 
that many small businesses may forego reorganization and 
immediately file for liquidation proceedings under chapter 7 of 
the U.S. Bankruptcy Code, or in the alternative, just close 
their doors leaving all creditors without recourse.'' 
63
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    \62\ Hearing on Business Bankruptcy Issues before the Subcommittee 
on Commercial and Administrative Law of the House Judiciary Committee 
105th Congress, (Mar. 26, 1998) (statement of American Federation of 
Labor and Congress of Industrial Organizations).
    \63\ Small Business Administration testimony, supra note 60.
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    This new bankruptcy mandate would impose substantial new 
costs on small businesses, both in terms of document production 
and legal fees, and limit the time frame that the business has 
to develop a reasonable reorganization plan. In turn, these 
changes will lead to the premature liquidation of small 
businesses with the attendant loss of jobs. The potential costs 
are significant, since it is estimated that the new provisions 
would apply to 85% of all business reorganizations, including 
virtually all the business cases in most districts outside of 
the major money center areas.64
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    \64\ Bankruptcy: The Next Twenty Years, National Bankruptcy Review 
Commission Final Report, supra note 28.
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    A similar concern relates to single asset real estate 
cases. H.R. 3150 would significantly expand the definition of 
single asset real estate by eliminating the $4 million debt 
cap.65 It would also apply the restrictive small 
business provisions of the bill to single asset real estate 
(thereby incorporating the many new restrictions imposed under 
these provisions), and require that adequate protection 
payments measured by interest commence within 90 days of the 
bankruptcy filing. As a result of these changes, real estate 
operations would face significantly higher obstacles when they 
seek to reorganize. These barriers could apply to large 
operating entities such as Rockefeller Center as well as hotels 
and nursing homes. It would create also new incentives for 
lenders to require that all of their real estate borrowers 
place their holdings in the single asset form in order to avoid 
ordinary bankruptcy rules in the future.
---------------------------------------------------------------------------
    \65\ H.R. 764, a bipartisan bankruptcy technical corrections bill 
approved by the Committee and the House last session would have 
increased the debt cap to only $15 million.
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     By design, the single asset real estate changes will 
result in an increase in premature foreclosures and 
liquidations of businesses associated with real estate. This, 
in turn, would likely lead to significant job losses. Even if a 
hotel or nursing home remains in existence, the new owner would 
not necessarily be required to honor any previously negotiated 
collective bargaining agreements applicable to employees at the 
facility. In the case of a large real estate operation, 
premature foreclosure could also allow the new owner to 
terminate many leases, leading to further job losses to the 
extent the business is relying on these leases.
    The AFL-CIO is very concerned about the potential that the 
single asset real estate changes would lead to increased job 
losses in bankruptcy. They have written that ``the job 
preservation goals of chapter 11 require greater certainty 
about the kinds of entities that are subject to the current 
SARE [single asset real estate] rules before Congress considers 
expanding their scope. No urgent need to expand the SARE rules 
has been identified. Expanding the application of the SARE 
provisions without a more thorough review of the employment 
issues, and absent better rules for protecting jobs, is certain 
to undermine one of the most basic goals of chapter 11.'' 
66
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    \66\ AFL-CIO testimony, supra note 61.
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          IV. The Tax Provisions Raise Numerous Policy Issues

    The current bankruptcy code seeks to effectuate a delicate 
balance between the rights of the Internal Revenue Service and 
State tax agencies to the repayment of any taxes, interest and 
penalties owed them, and the rights of other creditors and the 
ability of individuals and corporations to obtain a fresh start 
without being subject to burdensome debts. We are concerned 
that Title V, in seeking to make a number of supposedly 
technical changes may also effectuate a number of substantive 
changes to the Bankruptcy Code which favor the IRS and state 
taxing authorities and disadvantage other participants in the 
bankruptcy system. Concerns have been expressed that not only 
does H.R. 3150 generally enhance the rights and position of the 
IRS and state authorities in bankruptcy, but the bill grants 
the IRS certain rights in bankruptcy cases that it does not 
enjoy outside of bankruptcy, and vests the IRS with new 
enforcement powers thatordinary creditors do not 
posses.67 We are particularly concerned that the Majority 
chose to vary in many significant respects from the nonpartisan 
recommendations of the Bankruptcy Commission and its Tax Advisory 
Committee.
---------------------------------------------------------------------------
    \67\ Hearing on Business Bankruptcy Issues before the Subcommittee 
on Commercial and Administrative Law of the House Judiciary Committee, 
105th Congress, (Mar. 18, 1998) (statement of Paul H. Asofsky).
---------------------------------------------------------------------------
    For example, section 506 would result in increased periods 
during which an IRS claim is ``tolled'' (i.e., placed on hold) 
in bankruptcy, effectively extending the statute of limitations 
to which many Americans are subject to for tax enforcement 
actions. And notwithstanding the fact that the Bankruptcy Code 
prevents ordinary creditors from offsetting amounts they may 
owe to debtors with debts owed by the debtors, section 519 
grants tax agencies the rights to abrogate the automatic stay 
and ``set off'' taxes owed to them against any income tax 
refunds that may be owing to the debtor.
    Another provision of H.R. 3150 raising concerns (section 
508) grants the IRS the same rights to non-dischargeability in 
chapter 13 as persons owed payments for alimony, child support, 
criminal restitution, and payments for death or injury caused 
by the debtor's operation of a motor vehicle. Like other 
provisions in the bill extending the rights and entitlements of 
credit card companies, this would have the effect of placing 
former spouses and other similarly protected creditors at a 
significant disadvantage as compared to their current position 
under bankruptcy law.
    Another tax provision in H.R. 3150 that gives rise to 
concern is one that would allow the IRS to seize all of the 
debtor's exempt property, even property that is otherwise 
immune from seizure under the Internal Revenue Code. At full 
committee markup, Mr. Gekas proposed an amendment to section 
502 entitled ``Enforcement of Child and Spousal Support.'' The 
amendment was adopted and will provide for the enforcement of 
nondischargeable debts for alimony and spousal support. But the 
amendment appears to go much farther and grants State and 
Federal taxing agencies the right to collect nondischargeable 
tax debts from exempt property notwithstanding any other State 
or Federal law. This amendment nullifies exemptions in section 
6334 of the Internal Revenue Code and comparable state laws 
that limit what taxing agencies can seize to satisfy a tax 
debt. Although the Internal Revenue Code would exempt wearing 
apparel and school books from levy to satisfy a tax debt, Mr. 
Gekas' amendment could allow the IRS to take the school books 
and sell them. Wage exemptions and federal wage garnishment 
laws would also be overridden. This amendment was also adopted 
without any hearing or meaningful debate.

                    V. Other Provisions and Concerns

    In addition to the major problems we have outlined above, 
many of us have a number of additional concerns that are 
important to highlight. For example the legislation fails to 
provide any provision allowing for the waiver of bankruptcy 
fees by indigent individuals, even though debtors involved in 
complex reorganizations and force unnecessary liquidations and 
job losses.
    Concerns have also been raised regarding section 163, which 
provides an exception to the automatic stay for residential 
landlords in cases where the lease had expired. This grants 
residential landlords a benefit other creditors are not 
entitled to under the Code. By extending the period permitted 
between chapter 7 filings from the current 6 years to 10 years, 
section 171 could prove a substantial hardship to families with 
unstable economic situations who might, through no fault of 
their own, find themselves in need of bankruptcy relief in less 
than a decade.
    An amendment by Rep. Bryant to section 213 would require a 
landlord's consent to extend the time in which a debtor could 
assume or reject a nonresidential lease beyond 120 days, with 
an absolute cap of 270 days. This could result in the premature 
eviction of many businesses before they have the opportunity to 
reorganize, costing jobs, and compromising the ability of other 
creditors to receive payment on their debts. Concerns have also 
been raised about section 212, which provides that a no-compete 
clause or an exclusivity clause in an contract with a 
performing artist would always survive bankruptcy.

                             VI. Conclusion

    For nearly 100 years, Congress has carefully considered the 
bankruptcy laws and legislated on a deliberate and bipartisan 
basis. In the past, Congress has elected also to carefully 
preserve an insolvency system that provides for a fresh start 
for honest, hard-working debtors, protects ongoing businesses 
and jobs, and balances the rights of and between debtors and 
creditors. Because H.R. 3150 departs from these principles, we 
respectfully dissent.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Bobby C. Scott.
                                   Sheila Jackson Lee.
                                   Martin T. Meehan.
                                   William D. Delahunt.

                                
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